Report on the financial statements of the European Monitoring Centre on Racism and Xenophobia (Vienna) for the financial year ended 31 December 1999 together with the Centre's replies
Date: 2000-10-26
Institutions: European Court of Auditors
Subjects: Community body, financial control, financial year, management audit, report, xenophobia

27.12.2000

EN

Official Journal of the European Communities

C 373/53

on the financial statements of the European Monitoring Centre on Racism and Xenophobia
(Vienna) for the financial year ended 31 December 1999 together with the Centre’s replies

REPORT

(2000/C 373/09)

CONTENTS

Paragraph

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

1-4

MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUDGET OF THE EUROPEAN
MONITORING CENTRE ON RACISM AND XENOPHOBIA (VIENNA) FOR THE FINANCIAL
YEAR ENDED 31 DECEMBER 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Analysis of the budgetary implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Budgetary and general accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Booking of VAT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5-8

5

6

7

8

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

The Centre’s replies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

54

54

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54

54

54

56

58

C 373/54

EN

Official Journal of the European Communities

27.12.2000

THE COURT’S OPINION

1. This report is addressed to the Management Board of the
European Monitoring Centre on Racism and Xenophobia (here-
inafter referred to as ‘the Centre’), in accordance with Article 12(11)
of Council Regulation (EC) No 1035/97 (1).

2. The Court has examined the financial statements of the Cen-
tre for the financial year ended 31 December 1999. In accordance
with Article 12(8) of Council Regulation (EC) No 1035/97, the
budget was implemented on the responsibility of the Director.
This responsibility includes drawing up and presenting the finan-
cial statements (2), in accordance with the internal financial provi-
sions stipulated in Article 12(12) of Council Regulation (EC)
No 1035/97. The Court of Auditors is required under Article 248
of the Treaty establishing the European Community to examine
these accounts.

3. The Court performed 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
carried out such tests of the accounting records and other audit-
ing procedures as 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 enabled the Court to obtain reasonable
assurance that the annual accounts for the financial year ended
31 December 1999 are reliable. However, a large number of errors
were found in respect of the underlying transactions, due notably
to weaknesses in the internal control system (see paragraph 8).

lion euro. The 2,8 million euro of commitments gave rise to pay-
ments worth 1,8 million euro and 1,0 million euro in carry-overs
to the following financial year: for the most part, these carry-
overs concerned administrative expenditure (furniture and com-
puter equipment) and operating expenditure (organisation of con-
ferences). The scale of the carry-overs, which account for over a
third of the commitments, should prompt the Centre to monitor
its activities more closely so as to cut carry-overs down to a mini-
mum.

Budgetary and general accounts

6. The Centre drew up its budgetary accounts using a spread-
sheet, with all the risks that this type of tool entails. No comput-
erised accounting system has yet been introduced for keeping the
general accounts. Furthermore, the Court found many errors in
the accounts which ought to have been rectified before the
accounts were closed. The Centre should take immediate steps to
equip itself with complete, reliable accounting systems. Whilst
observing the principles of sound financial management, these
systems should take account of expected developments in the
regulations and of the volume of operations to be handled.

Booking of VAT

7. Until December 1998, the general Financial Regulation stipu-
lated that expenditure was to be booked inclusive of VAT, as the
latter, once refunded, could be reused. Since then (3), the general
Financial Regulation has laid down that expenditure must be
charged exclusive of VAT. The Court invites the Centre to incor-
porate these new provisions into its own rules.

MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE
BUDGET OF THE EUROPEAN MONITORING CENTRE ON RAC-
ISM AND XENOPHOBIA (VIENNA) FOR THE FINANCIAL YEAR
ENDED 31 DECEMBER 1999

Contracts

Analysis of the budgetary implementation

5. Total final appropriations for the financial year were 3,9 mil-
lion euro, of which 2,8 million euro were committed: the balance
was cancelled, except for a non-automatic carry-over of 0,3 mil-

(1) OJ L 151, 10.6.1997, p. 6.
(2) As required under Article 12(10) of Council Regulation (EC)
No 1035/97, the accounts for all the Centre’s revenue and expenditure
in respect of the financial year 1999 were drawn up on 10 March
2000 and forwarded to the Centre’s Management Board, the Com-
mission and the Court of Auditors. These accounts were received by
the Court on 21 April 2000. A summarised version of these accounts
is presented in the tables annexed to this report.

8. An examination of the commitments for the financial year
has revealed poor application of the rules in force: in total, 25 %
of the commitments, i.e. 0,7 million euro, are affected by errors.
Of these irregularities, a sum of 0,2 million euro relates to Title I
— Staff expenditure — (lack of proper legal contracts), 0,3 mil-
lion euro to Title II — Administrative expenditure — (lack of
proper legal contracts and failure to consult the market) and
0,2 million euro to Title III — Operating expenditure — (unsuit-
able choice of contractors, non-existent or incorrect order forms).

(3) 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).

27.12.2000

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Official Journal of the European Communities

C 373/55

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 26 October 2000.

For the Court of Auditors

Jan O. KARLSSON

President

C 373/56

EN

Official Journal of the European Communities

27.12.2000

Table 1
Balance sheets for the financial years 1999 and 1998 (1)

(1 000 EUR)

Assets

1999

1998

Liabilities

1999

1998

Fixed assets

Current assets
Sums to be recovered from the Commission
Advances on salaries
Recoverable VAT

Subtotal

20

0
36
116

152

Cash accounts
Bank account(s)

Suspense account

2 200

Subtotal

2 200

Total assets

2 372

Fixed capital

Capital
Balance for the financial year

Subtotal

Current liabilities
Non-automatic carry-overs of appropriations
Automatic carry-overs
Salaries to be paid
Social liabilities
Commission account
VAT
Sundry accounts payable
Reuse

Subtotal

20
737

757

290
1 037
66
64
0
116
37
5

1 615

Total liabilities

2 372

42
78
14

134

310

310

9

453

– 42

– 42

292
118
29
42
14

495

453

(1) The financial year 1998 began on 1 May.
Source: Table drawn up by the Court of Auditors on the basis of data from the Centre.

27.12.2000

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Official Journal of the European Communities

C 373/57

Table 2
Revenue and expenditure accounts for the financial years 1999 and 1998 (1)

(1 000 EUR)

1999

1998

Revenue
Subsidy received from the Commission
Miscellaneous revenue

Expenditure

Staff expenditure — Title I of the budget
Payments
Appropriations carried over

Administrative expenditure — Title II of the budget
Payments
Appropriations carried over

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

Total revenue

3 750
27

3 777

985
131

392
564

444
633

Total expenditure

3 149

Out-turn for the financial year
Exchange-rate differences
Cancellation of appropriations carried forward from 1998
Out-turn for the previous financial year

(1) The financial year 1998 began on 1 May.
Source: Table drawn up by the Court of Auditors on the basis of data from the Centre.

Balance for the financial year

628
—
151
– 42

737

500
4

504

212
120

14
61

29
111

547

– 43
1
—
—

– 42

C 373/58

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Official Journal of the European Communities

27.12.2000

THE CENTRE’S REPLIES

5. The Centre can agree with the Court that payments carried
forward have been important. This is mainly due to the difficul-
ties initiating activities during the first semester of 1999 due to
the absence of an adapted location and of the length of recruit-
ment. Necessary corrections have been implemented from the
beginning of 2000 with the new annual work programme.

8. — In 1999, the Centre had a number of interim staff before
statutory agents took up their duties, and can agree with
the Court that no ad-hoc up contract was prepared. Con-
cerning Title II expenditure, a survey of the market was
organised for IT equipment and for furnishing the location
and the Centre received a favourable opinion of the ACPC.

6. Due to the late nomination of the accounting officer at the
end of 1999, computerised systems for accounting and budget
execution have been implemented only during 2000. The selec-
tion of systems has taken into account the experience in the other
decentralised bodies of the Union and the expected developments
of the Financial Regulation.

7. When preparing a draft modification to its financial rules, the
Centre has taken into account the adjustments of the VAT regime.
The modifications will be submitted to the Management Board by
the end of 2000 with prior notification of the Court of Auditors
and Financial Control.

— Regarding expenditure under Title III, the Centre can admit
that some projects were initialised without open competi-
tion but, nevertheless, had been submitted to the Manage-
ment Board for prior approval. The Centre can also admit
that documentation provided for some projects was not
satisfactory.

— Necessary steps have already been undertaken to avoid this

situation in the future.