Report on the financial statements of the European Agency for Safety and Health at Work (EASH - Bilbao) for the financial year ended 31 December 1999 together with the Agency's replies
Date: 2000-09-27
Institutions: European Court of Auditors
Subjects: European Agency for Safety and Health at Work, financial control, financial year, management audit, report

27.12.2000

EN

Official Journal of the European Communities

C 373/1

I

(Information)

COURT OF AUDITORS

on the financial statements of the European Agency for Safety and Health at Work
(EASH — Bilbao) for the financial year ended 31 December 1999 together with the Agency’s
replies

REPORT

(2000/C 373/01)

CONTENTS

Paragraph

Page

THE COURT’S OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1-4

MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUDGET OF THE EUROPEAN
AGENCY FOR SAFETY AND HEALTH AT WORK (EASH — BILBAO) FOR THE FINANCIAL
YEAR ENDED 31 DECEMBER 1999. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Analysis of the implementation of the budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5-12

5-9

Accounting systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10-11

Charging VAT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

Tables 1 and 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Agency’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

2

2

2

3

4

6

C 373/2

EN

Official Journal of the European Communities

27.12.2000

THE COURT’S OPINION

— 0,9 million euro (i.e. 12 %) were not utilised,

1. This report is addressed to the Management Board of the
European Agency for Safety and Health at Work in conformity
with Article 14(4) of Council Regulation (EC) No 2062/94 (1).

— 0,9 million euro (i.e. 12 %) were the subject of a non-automatic

carry-over, and

— 2,1 million euro (i.e. 28 %) were carried over automatically.

2. The Court has examined the financial statements of the Euro-
pean Agency for Safety and Health at Work for the financial year
ended 31 December 1999. In accordance with Article 14(1) of
Council Regulation (EC) No 2062/94, the budget was imple-
mented on the responsibility of the Director. This responsibility
included the drawing-up and presentation of the financial state-
ments (2) in accordance with the internal financial provisions, as
provided for under Article 15 of Council Regulation (EC)
No 2062/94. The Court of Auditors
required under
Article 248 of the Treaty establishing the European Community
to examine these accounts.

is

The Agency used a total of only half of the definitive appropria-
tions allocated to it for the financial year 1999.

6. The non-automatic carry-over of 0,9 million euro was due
mainly to the late approval, in November 1999, of the supple-
mentary and amending budget. Given the large proportion of
1999 appropriations that was not utilised, there are grounds for
questioning the validity, or at least the tardiness, of the decision
to increase the resources allocated to the Agency.

3. The Court undertook its audit in accordance with its auditing
policies and standards. These have been adapted from generally
accepted international auditing standards to reflect the specific
characteristics of the Community context. Accordingly, the Court
examined the accounting records and applied the audit proced-
ures it deemed necessary in the circumstances. By means of this
audit, the Court obtained a reasonable basis for the opinion
expressed below.

4. This examination has allowed the Court to obtain reasonable
assurance that the annual accounts for the financial year ended
31 December 1999 are reliable and that the underlying transac-
tions are, taken as a whole, legal and regular.

MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE
BUDGET OF THE EUROPEAN AGENCY FOR SAFETY AND
HEALTH AT WORK (EASH — BILBAO) FOR THE FINANCIAL
YEAR ENDED 31 DECEMBER 1999

7. The automatic carry-overs amounted to 2,1 million euro, a
proportion that was almost identical to that of the previous finan-
cial year, in which they amounted to 1,9 million euro, i.e. 90 %,
of the operating appropriations (Title III). Almost two thirds
(63 %) of the carry-overs of operating appropriations related to
topic centres, studies and telematics projects.

8. The commitments carried over automatically from the finan-
cial year 1998 to 1999 amounted to 1,9 million euro, 0,4 million
euro (or 21 %) of which was cancelled at the end of 1999. With
regard to budget operating appropriations (Title III), of a total of
1,7 million euro in appropriations carried over, 0,3 million euro
(or 18 %) was cancelled, mainly because of inaccurate cost esti-
mates and failure to carry out planned tasks.

9. The extent and persistence of the underutilisation of appro-
priations demonstrate weaknesses in the Agency’s monitoring of
its annual programme. The Agency should improve its monitor-
ing system so that carry-overs of appropriations are minimised
and the principle of annuality is complied with more fully.

Accounting systems

Analysis of the implementation of the budget

5. The definitive appropriations granted for 1999 amounted to
7,6 million euro, 6,7 million euro of which was granted under the
initial budget. Of this amount:

(1) OJ L 216, 20.8.1994, p. 5.
(2) Under Article 14(3) of Council Regulation (EC) No 2062/94, the
accounts for all the Agency’s revenue and expenditure for the finan-
cial year 1999 were drawn up on 20 March 2000 and forwarded to
the Agency’s Management Board, the Commission and the Court of
Auditors. The Court received these accounts on 7 April 2000. A sum-
marised version of these financial statements is presented in the tables
attached to this report.

10. The budgetary accounts were still being kept in a spread-
sheet programme (Excel) throughout 1999, while the general
accounts continued to be drawn up using a business accounting
software package. The Sincom 2 (SI2) system was not installed
until January 2000.

11. According to the Financial Regulation and its implementing
provisions, bank and budget reconciliations must be effected
monthly. These rules are still not being applied, although the
Agency undertook to rectify the situation last year (3).

(3) See the 1998 Annual Report, paragraph 6, p. 4.

27.12.2000

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Official Journal of the European Communities

C 373/3

Charging VAT

12. Until December 1998, the general Financial Regulation pro-
vided for expenditure to be charged including VAT, as VAT could

be reused after it had been refunded. Since then (1), the general
Financial Regulation has required expenditure to be charged net
of VAT. Consequently, the Court invites the Office to transpose
these new procedures into its own internal rules.

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 27 September 2000.

For the Court of Auditors

Jan. O. KARLSSON

President

(1) See Article 27(2a) of the Financial Regulation applicable to the gen-
eral budget of the European Communities, as amended by Council
Regulation (EC, ECSC, Euratom) No 2548/98 of 23 November 1998,
OJ L 320, 28.11.1998, p. 1.

C 373/4

EN

Official Journal of the European Communities

27.12.2000

Table 1

Balance sheet at 31 December 1999 and 1998

Assets

1999

1998

Liabilities

1999

1998

(1 000 EUR)

Fixed assets
Installations and furniture
Movable equipment
Computer equipment

Stocks
Office supplies

Current assets
Subsidies receivable
Recoverable VAT
Sundry accounts receivable

Cash accounts
Banks — demand accounts
Imprest account
Cash

Subtotal

445
26
322

793

20

1 005
124
19

405
26
273

704

9

145

Fixed capital
Own capital
Balance for the financial year

813
– 1 273

713
668

Subtotal

– 460

1 381

Current liabilities
Non-automatic carry-overs of appropriations
Automatic carry-overs of appropriations
Current payments
Payroll deductions
Recovery orders to be issued
VAT

900
2 132
82
34
1 005
124

270
1 925
174
31

145

Subtotal

1 148

145

Subtotal

4 277

2 545

Suspense accounts
Sums to be reused

2 034
50
1

Subtotal

2 085

Total assets

4 046

3 067
62
0

3 129

3 987

229

Subtotal

229

61

61

Total liabilities

4 046

3 987

NB: differences in totals are due to the effects of rounding.
Source: prepared by the Court of Auditors on the basis of data from the Agency.

27.12.2000

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Official Journal of the European Communities

C 373/5

Revenue and expenditure account for the financial years 1999 and 1998

Table 2

(1 000 EUR)

1999

1998

Revenue
Subsidy received from the Commission
Other subsidies
Sundry revenue (bank interest)

Expenditure

Staff — Title I of the budget
Payments
Appropriations carried over

Total revenue

Buildings, equipment and miscellaneous administrative expenditure — Title II of the budget
Payments
Appropriations carried over

Operating expenditure — Title III of the budget
Payments
Appropriations carried over

Total expenditure

Out-turn for the financial year
Balance carried over from the previous financial year
Amount refunded to/received from the Commission
Appropriations carried over from the previous financial year which lapse
Exchange rate differences

4 989
120
77

5 186

1 962
28

708
201

1 064
2 803

6 766

– 1 580
668
– 731
370

NB: differences in totals are due to the effects of rounding.
Source: prepared by the Court of Auditors on the basis of data from the Agency.

Balance for the financial year

– 1 273

4 196
180
101

4 477

1 486
27

589
148

686
2 020

4 956

– 479
731

402
14

668

C 373/6

EN

Official Journal of the European Communities

27.12.2000

THE AGENCY’S REPLIES

With reference to the observations of the Court, the Agency would
like to comment on the following paragraphs.

General and budgetary accounts

6. The total amount of EUR 900 000 which has been carried
over is meant to finance the European Week actions to be organ-
ised by the Agency through 2000. This event has until now been
organised by the European Commission itself.

The decision of the Board to organise this event was taken early
in 1999 but on the condition that an additional budget was avail-
able as it was not foreseen in the Agency’s work programme. The
European Parliament agreed to allow this additional budget in
June 1999 and the Administrative Board adopted an amending
budget for this purpose in November 1999.

The non-automatic carry-over is fully justified as the Agency had
already started in 1999 the procedure for the selection of projects
to be financed by a call for proposals (subvention exercise) pub-
lished in the Official Journal on 26 October 1999. Projects have
now been selected and and will be implemented by the end of this
year.

Centre contracts, both submitted to a Board’s decision taken
at its last meeting in November 1999. As the subsequent com-
mitments are approved in December, carry-overs, which are
in conformity with Article 6 of the Agency’s Financial Regula-
tion, are inevitable.

Nevertheless, the Agency will study the possibility to adapt
the decision-making process on this issue to the principle of
annuity by committing appropriations in the same financial
year that subsidies and contracts are to be implemented and
paid.

(b) For the rest, they are related to payments still outstanding at
31 December to which the abovementioned Article normally
applies.

(c) Finally, with reference to lapsed appropriations, the Agency
fully agrees with the Court’s remarks. However cancellations
relate to appropriations earmarked for measures which have
been cancelled in full agreement with the contracting parties.

11. The Agency notes the remark from the Court. Since 1 Janu-
ary 2000, the implementation of monthly trial balances has been
in progress.

Without agreement on the non-automatic carry-over, the Agency
could not support the European Week expenses, as they were not
covered by the Agency’s 2000 budget appropriations.

12. The Agency has launched the procedures to recover VAT
directly from suppliers. To date EUR 86 144 have been already
recovered.

8, 9 and 10. The Agency is aware of the remark from the Court
and would like to make the following comments:

(a) Almost 50 % is related to subsidies for Focal Points and Topic

The Agency will follow the recommendation of the Court of
Auditors concerning the amendment of the Agency’s Financial
Regulation in order to adapt it to the European Communities
Financial Regulation 1999 amended provisions on VAT.