Report by the external auditor on the Court of Auditors' accounts for the financial year 1999
Date: 2000-09-18
Institutions: European Court of Auditors
Subjects: European Court of Auditors, accounting, auditing, financial management, financial year, report

25.10.2000

EN

Official Journal of the European Communities

C 306/1

I

(Information)

COURT OF AUDITORS

REPORT BY THE EXTERNAL AUDITOR ON THE COURT OF AUDITORS’ ACCOUNTS FOR
THE FINANCIAL YEAR 1999

(2000/C 306/01)

NOTE TO READERS

Without prejudice to the provisions of Article 248 EC, which gives the Court of Auditors responsibility for
auditing all of the Community’s revenue and expenditure, and the provisions of Article 276 EC on the grant-
ing of the discharge, the Court of Auditors has had its revenue and expenditure accounts audited by an external
auditor every year since the close of the financial year 1987.

The reports which the external auditor of the Court of Auditors have drawn up in respect of the Court’s
accounts for the financial years 1987 to 1991 were sent only to the Chairman of the European Parliament’s
Budgetary Accounts Committee.

Pursuant to a decision taken by the Members of the Court of Auditors at the Court meeting of 8 July 1993,
the external auditor’s reports have been published in the Official Journal of the European Communities, starting
with the report on the financial year 1992.

The financial statements annexed to the enclosed report are based on the accounting data that the Court of
Auditors sent to the Commission so that the revenue and expenditure account and the financial balance sheet
of the European Communities could be drawn up for the financial year 1999. These accounting data may be
supplied to anyone who submits a written request to the External Relations Department of the Court of Audi-
tors.

For the Court of Auditors

Jan O. KARLSSON

President

C 306/2

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Official Journal of the European Communities

25.10.2000

Certificate concerning the regularity and fairness of the financial statements at 31 December 1999

To the Members of the European Court of Auditors

In accordance with the instructions given to us by the European Court of Auditors, we have examined:

— the accounting data sent by the European Court of Auditors to the Commission for the purpose of draw-
ing up the revenue and expenditure account and the balance sheet of the European Communities for the
financial year 1999,

— the financial statements of the European Court of Auditors as at 31 December 1999, which were drawn
up on the basis of the same accounting data and prepared for the purpose of publication in the Official
Journal of the European Communities.

The accounting data and the financial statements are the responsibility of the European Court of Auditors. Our
responsibility is, on the basis of our audit work, to express an opinion on the accounting data and the financial
statements.

We have conducted our work in accordance with international auditing standards. These standards require us
to plan and carry out our work in such a way as to obtain reasonable assurance that the accounting data and
financial statements do not contain any material misstatement. As required, the audit included examination,
on the basis of a sample, of the evidence in support of the amounts and information contained in the account-
ing data and financial statements. It also included appraisal of the accounting principles and practices applied
and of the significant estimates used by the European Court of Auditors in drawing up the accounts, as well as
a review of their overall presentation. We think that the audit provided a reasonable basis for the opinion
expressed.

In our opinion, the enclosed accounting data and financial statements give a true and fair view, in accordance
with the Financial Regulation, the implementing rules, generally accepted accounting principles and the Euro-
pean Court of Auditors’ Internal Rules, of the assets and financial position of the European Court of Auditors
at 31 December 1999 and of its revenue and expenditure for the financial year then ended.

Luxembourg, 18 September 2000.

KPMG Audit

Auditors

Stephen NYE

25.10.2000

EN

Official Journal of the European Communities

C 306/3

Financial statements at 31 December 1999

Revenue and expenditure accounts for the financial years ending 31 December 1999 and 1998

Notes

1999

1998

(1 000 EUR)

Revenue

Contribution from the general revenue of the European Communities
Court of Auditors’ own resources
— Community levies and dues deducted from remuneration
— Revenue accruing from the administrative operation of the institution
— Miscellaneous revenue

Total revenue

Expenditure

Expenditure relating to persons working for the institution
— Members of the institution
— Staff in active employment
— Allowances and miscellaneous contributions relating to termination of

service

— Missions and duty travel
— Other

Operating expenditure
— Expenditure on immovable property
— Expenditure on data processing
— Movable property and associated costs
— Current administrative expenditure
— Publishing and information
— Other

1(b)

2
1(f)

1(c)

1(f)

50 240

48 067

8 274
637
14

8 068
697
28

59 165

56 860

5 042
44 255

123
1 531
1 235

5 038
42 972

203
1 945
918

52 186

51 076

2 590
1 036
583
476
986
484

6 155

2 464
995
692
433
1 016
403

6 003

Balance for the financial year

7

824

(219)

The notes annexed hereto form an integral part of these financial statements.

Total expenditure

58 341

57 079

C 306/4

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Official Journal of the European Communities

25.10.2000

Balance sheets at 31 December 1999 and 1998

Note

1999

1998

(1 000 EUR)

ASSETS

Fixed assets
Software
Land and buildings
Furniture and equipment
Other fixed assets

Current assets
Supplies
Sundry accounts receivable
Cash accounts

LIABILITIES

Fixed capital
Own capital
Balance carried forward from previous financial years
Balance for the financial year

Current liabilities
Sundry accounts payable
Payments in hand

1(d)

1(e)
4

61
15 109
1 452
493

17 115

133
535
867

1 535

37
16 177
1 278
493

17 985

109
388
216

713

Total assets

18 650

18 698

3
7
7

5
6

16 755
76
824

17 655

995
—

995

17 601
295
(219)

17 677

962
59

1 021

The notes annexed hereto form an integral part of these financial statements.

Total liabilities

18 650

18 698

25.10.2000

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Official Journal of the European Communities

C 306/5

Notes to the financial statements at 31 December 1999

ACCOUNTING PRINCIPLES

1(a) Accounting rules

The accounts of the European Court of Auditors are kept and the
financial statements drawn up in accordance with the provisions
of the Financial Regulation of 21 December 1977, as last amended
by Council Regulation (EC, ECSC, Euratom) No 2673/1999 of
13 December 1999, and the provisions of Commission Regula-
tion (Euratom, ECSC, EC) No 3418/93 of 9 December 1993 lay-
ing down detailed rules for the implementation of certain provi-
sions of the Financial Regulation.

In accordance with Article 136 of the said implementing rules,
the financial statements are presented in accordance with gener-
ally accepted accounting principles, including the principles pro-
vided for in Council directives, except where otherwise provided
for by regulation.

1(b)

Court of Auditors’ own resources

The Court of Auditors’ own resources are entered in the accounts
on the basis of the amounts actually received during the financial
year.

Amounts owing but not yet received by the end of the financial
year are entered on the assets side of the balance sheet under the
heading ‘Sundry accounts receivable’ in the ‘Revenue to be col-
lected’ item. They have a counterpart entry on the liabilities side
of the balance sheet in an item with the same title under the head-
ing ‘Sundry accounts payable’. These entries are reversed once the
amounts have been collected.

1(c)

Expenditure

Expenditure for the financial year, which is shown in the ‘State-
ment of revenue and expenditure’, represents the payments made
against the appropriations for the financial year and against the
appropriations carried over from the previous financial year in
accordance with the provisions of the regulations applicable in
this field.

In accordance with the sixth subparagraph of Article 6 of the
Financial Regulation, the expenditure for the financial year is
entered in the accounts for that year on the basis of the expendi-
ture for which authorisation reached the Financial Controller not
later than 31 December and the accounting officer not later than
the following 10 January, and for which payment was effected by
the accounting officer not later than 15 January.

1(d)

Fixed assets

The Court’s tangible and intangible assets are valued at acquisition cost. Where the value is expressed in
national currency, it is converted into euro at the accounting rate in force at the time of purchase.

The acquisition cost of the land and the net value, calculated after depreciation, of the other tangible assets are
entered on the assets side for the entire period of their use, with a counterpart entry for an equivalent amount
on the liabilities side under the heading ‘Own capital’.

Tangible and intangible assets other than land and buildings are not recorded in fixed assets accounts unless
their value is EUR 400 or more.

According to Article 70a of Council Regulation (EC, ECSC, Euratom) No 2548/98 of 23 November 1998
amending the Financial Regulation of 21 December 1977 applicable to the general budget of the European
Communities, the European Court of Auditors has calculated the depreciation of its fixed assets by analogy
with the rules laid down by the European Commission for its own assets.

The depreciation data, calculated according to the linear method by full year, are as follows at the year-end
1998 and 1999:

C 306/6

EN

Official Journal of the European Communities

25.10.2000

1999

(in 1 000 EUR)

1998

Depreciable value

Cumulated
depreciations

Net accounting
value

Net accounting
value

Intangible assets
— Software

Subtotal

Tangible assets
— Land and buildings (*)
— Fittings, machines and equipment
— Furniture
— Car fleet
— Informatics equipment

102

102

23 728
960
787
636
1 926

Subtotal

28 037

Total

28 139

(*) The acquisition value of EUR 777 000 for a plot of land is not included.

(41)

(41)

(9 396)
(599)
(528)
(361)
(1 369)

(12 253)

(12 294)

61

61

14 332
361
259
275
557

15 784

15 845

37

37

15 400
160
276
256
586

16 678

16 715

The heading ‘Intangible assets’ includes computer software packages acquired with a value of more than EUR
400 covered by a site licence or a major account contract.

In the absence of a clear definition, laid down by common agreement between the Community institutions, of
the term ‘intangible asset’, no value was entered under this heading on the balance sheet as at 31 December
1998.

1(e)

Supplies

Supplies comprise a stock of office and other supplies, valued at
the most recent acquisition price, with a counterpart entry, for an
equivalent amount, on the liabilities side under the ‘Own capital’
heading. Where the acquisition cost is expressed in national cur-
rency, it is converted into euro at the accounting rate used in
drawing up the balance sheet.

— the payment of actuarial reserves by national pension bodies
and provident societies by way of transfers of officials’ pen-
sion rights.

OWN CAPITAL

1(f)

Exchange differences

Exchange gains or losses are entered as ‘Miscellaneous revenue’ or
‘Operating expenditure — Other’.

3. The amount of own capital determined according to the prin-
ciples described in 1(d) and 1(e) at the year-end is broken down
as follows.

REVENUE ACCRUING FROM THE ADMINISTRATIVE OPERATION OF
THE INSTITUTION

2. Revenue accruing from the administrative operation of the
institution comprises mainly:

— revenue accruing from the publication of the European Court
of Auditors’ reports and opinions in the Official Journal of the
European Communities,

Fixed assets

— Software

— Land and buildings

— Furniture and equipment

Current assets

— Supplies

Own capital

(1 000 EUR)

1999

1998

61

15 109

1 452

37

16 177

1 278

133

109

16 755

17 601

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Official Journal of the European Communities

C 306/7

SUNDRY ACCOUNTS RECEIVABLE

4. The sundry accounts receivable heading at the year-end is
broken down as follows.

Sums owing to a credit card organisation combines all the amounts
invoiced by the travel agency under contract to the Court of Audi-
tors pending their recovery by the credit organisation.

Claims relating to persons working for the
institution

Revenue to be collected

Expenditure to be charged

Other

(1 000 EUR)

1999

1998

270

86

91

88

535

142

142

23

81

388

Revenue available for reuse is the unused counterpart of the
amounts entered on the assets side for refunds of insurance pay-
ments, tax refunds or proceeds from the sale of fixed assets. The
revenue available for reuse is earmarked for new expenditure of
the same kind and must be used by the end of the following
financial year at the latest.

Revenue to be collected represents the established entitlements
vis-à-vis Member States for transfers of pension rights for which
no funds have yet been transferred.

Claims relating to persons working for the institution relate mainly
to advances paid on mission expenses already incurred but not
yet charged.

PAYMENTS IN HAND

Revenue to be collected consists almost entirely of established
entitlements vis-à-vis Member States for transfers of pension
entitlements for which no funds have yet been transferred. There
is a counterpart entry in the suspense account with the same title
under sundry accounts payable.

6. Under the Financial Regulation, payments which are made
between 1 and 15 January of the following financial year and
which are authorised before the year-end are entered in the
accounts as expenditure for the financial year and are shown on
the liabilities side of the balance sheet as payments in hand.

Expenditure to be charged comprises amounts which were invoiced
by the Commission at the year-end and which it was not materi-
ally possible to charge to the budget.

BALANCE TO BE CARRIED FORWARD TO THE FOLLOWING
FINANCIAL YEAR

SUNDRY ACCOUNTS PAYABLE

5. The sundry accounts payable heading at the year-end is bro-
ken down as follows.

7. The balance for the financial year is the difference between the
total revenue for the year and the expenditure against appropria-
tions specific to the year and appropriations carried forward from
the previous year.

(1 000 EUR)

1999

1998

The changes in the balance to be carried forward to the following
financial year are as follows:

Sums owing to a credit card organisation

Revenue available for reuse

Revenue to be collected

Provision for accident insurance

Other

134

145

143

229

344

995

316

159

171

225

91

962

Balance carried forward from previous years

Balance for the financial year

Balance to be carried forward to the following
year

(1 000 EUR)

1998

295

(219)

76

1999

76

824

900

C 306/8

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Official Journal of the European Communities

25.10.2000

IMPLEMENTATION OF THE BUDGET

8. The implementation of the budget for the financial year 1999 can be divided up into the implementation of appropriations brought
forward and the implementation of appropriations for the financial year.

(a) Appropriations brought forward represent, on the one hand, all the commitments chargeable to the Court that have been entered
into but not settled before the year-end, and, on the other hand, appropriations which the budgetary authority has decided to carry
forward. Appropriations brought forward from the previous year and not used during the following year are cancelled.

Expenditure relating to persons working for the institution
— Members of the institution
— Staff in active employment
— Missions and duty travel
— Other

Operating expenditure
— Expenditure on immovable property
— Expenditure on data processing
— Movable property and associated costs
— Current administrative expenditure
— Publishing and information
— Other

Appropriations carried
forward from 1998 to
1999

(1 000 EUR)

Payments

Appropriations cancelled

16
103
210
556

885

300
143
107
175
527
174

1 426

2 311

Total

12
103
182
440

737

274
141
99
165
523
143

1 345

2 082

4
—
28
116

148

26
2
8
10
4
31

81

229

(b) The implementation of the appropriations for the financial year represents the payments made against appropriations committed.
The unpaid balance of the commitments may be carried forward to the following year. Appropriations still uncommitted at the end
of the year usually lapse.

Appropria-
tions for the
financial
year

Commitments
chargeable to the
financial year

Payments

Appropriations
carried forward to
2000

(1 000 EUR)

Lapsed appro-
priations

Expenditure relating to persons working for the institution
— Members of the institution
— Staff in active employment
— Allowances and miscellaneous contributions relating to termi-

nation of service

— Missions and duty travel
— Other

Buildings, equipment and sundry items of operating expen-
diture
— Expenditure on immovable property
— Expenditure on data processing
— Movable property and associated costs
— Current administrative expenditure
— Publishing and information
— Other

Total

5 140
46 115

132
1 985
1 144

54 516

7 704
990
591
522
1 170
522

11 499

66 015

5 097
44 196

123
1 985
1 119

52 520

7 691
988
579
516
1 162
483

11 419

63 939

5 030
44 152

123
1 349
795

51 449

2 316
895
484
311
463
268

4 737

56 186

67
44

—
636
324

43
1 919

9
—
25

1 071

1 996

5 375
93
95
205
699
215

6 682

7 753

13
2
12
6
8
39

80

2 076

Payments against appropriations carried forward (EUR 2 082 000) and the appropriations for the financial year (EUR 56 186 000) totalled
EUR 58 268 000 which, with the addition of the total for exchange losses, is equal to the total expenditure shown in the statement of
revenue and expenditure for the financial year 1999.

25.10.2000

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Official Journal of the European Communities

C 306/9

Report on the administrative and accounting procedures, the soundness of the financial
management and the internal control system

To the Members of the European Court of Auditors

As part of our audit of the annual financial statements of the European Court of Auditors for the financial
year ending 31 December 1999, we examined the administrative and accounting procedures, the soundness
of the financial management and the internal control system. The purpose of our examination was to ensure
that the various departments of the Court of Auditors can be reasonably sure that:

— they have a clear view of the extent to which operational objectives are being achieved,

— the basis on which the published financial statements are drawn up is reliable,

— the financial management of the Court of Auditors complies with current regulations.

The current regulations in question are:

— the Financial Regulation of 21 December 1977 applicable to the general budget of the European Com-
munities, as last amended by Council Regulation (EC, ECSC, Euratom) No 2673/1999 of 13 December
1999,

— Commission Regulation (Euratom, ECSC, EC) No 3418/93 of 9 December 1993 laying down detailed rules

for the implementation of certain provisions of the Financial Regulation of 21 December 1977,

— the Internal Rules of the Court of Auditors for the implementation of the Court’s budget, laid down by
Court Decision No 97-47 of 4 December 1997 (as last amended by Written Procedure No 3/97 of 16 Janu-
ary 1998).

We therefore examined very closely the control environment, risk evaluation, control activities, information
and communications systems and management procedures of the Court of Auditors. The initial descriptive
phase was followed by systems evaluation based on sample checks of supporting documents and interviews
with staff. The nature and extent of our tests were determined by our appraisal of the control environment.
We think that our work forms a reasonable basis for our conclusions regarding the Court of Auditors’ proce-
dures, the soundness of its financial management and its internal control system.

In our opinion the current internal control rules ensure that the operational objectives are achieved satisfac-
torily, the financial statements are reliably drawn up and the legal framework is complied with.

Luxembourg, 18 September 2000.

KPMG Audit

Auditors

Stephen NYE