Report on the financial statements of the European Centre for the Development of Vocational Training (Cedefop - Thessaloniki) for the financial year ended 31 December 1999, together with the Centre's replies
Date: 2000-10-26
Institutions: European Court of Auditors
Subjects: Cedefop, financial control, financial year, management audit, report

27.12.2000

EN

Official Journal of the European Communities

C 373/27

on the financial statements of the European Centre for the Development of Vocational Training
(Cedefop — Thessaloniki) for the financial year ended 31 December 1999, together with the
Centre’s replies

REPORT

(2000/C 373/05)

CONTENTS

Paragraph

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

1-4

MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUDGET OF THE EUROPEAN
CENTRE FOR THE DEVELOPMENT OF VOCATIONAL TRAINING (CEDEFOP —
THESSALONIKI) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 1999. . . . . . . . . . . . . . .

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

Budget and general accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Imprest accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charging of VAT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Buildings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5-15

5-6

7

8

9-11

12

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

13-14

Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15

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

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

Page

28

28

28

28

28

28

29

29

29

30

32

C 373/28

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Official Journal of the European Communities

27.12.2000

THE COURT’S OPINION

priations for the year amounted to 15,2 million euro. Of this
total, 14,5 million euro (95 %) were committed and 0,7 million
euro (5 %) lapsed at 31 December 1999 (6).

1. This report is addressed to the Council and the European Par-
liament in accordance with Article 12 of Council Regulation (EEC)
No 337/75 (1), as amended by Council Regulation (EEC)
No 1946/93 (2).

2. The Court has examined the financial statements of the Euro-
pean Centre for the Development of Vocational Training for the
financial year ended 31 December 1999. In accordance with
Article 18(1) of Council Regulation (EEC) No 1416/76 (3), as
amended by Council Regulation (EEC) No 1948/93 (4), the budget
was implemented on the responsibility of the management board.
This responsibility includes the drawing-up and presentation of
the financial statements (5), in accordance with the internal finan-
cial provisions provided for in Articles 65, 67 and 68 of Council
Regulation (EEC) No 1948/93 amending Council Regulation (EEC)
No 1416/76. The Court of Auditors is required under Article 248
of the Treaty establishing the European Community to audit those
accounts.

3. The Court performed its audit in accordance with its audit
standards and policies. These have been adapted from generally
accepted international auditing standards to reflect the specific
characteristics of the Community context. The Court carried out
such tests of the accounting records and applied such other audit
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 and that the underlying transactions,
taken as a whole, are legal and regular.

6. Carry-overs of appropriations stood at 3,7 million euro (some
26 % of commitments) and related mainly to Title III (2,2 million
euro) and Title II (1 million euro — financing of the last phase of
the new Cedefop building). By way of comparison, appropria-
tions carried over from the financial year 1998 to the financial
year 1999 amounted to 3,9 million euro. Of this total, 0,6 mil-
lion euro (15 %) lapsed, most of them in Title III.

Budget and general accounts

7. The Centre had planned (7) to finalise its new accounting sys-
tem, FIBUS, by the end of 1999 so that it could be used from the
second half of 2000 onwards. Following a specific audit of this
project and pending an in-depth evaluation, the Court draws the
Centre’s attention to the need to test the system’s capabilities thor-
oughly before it is actually brought into service.

Imprest accounts

8. Although far less use was made of imprest accounts than in
the previous financial year (8), the Centre continued to make a sig-
nificant proportion of its payments (2,6 million euro or 23 %)
through these accounts in 1999. The Court calls upon the Centre
to continue its efforts to make even less use of this method of
payment and thus limit the associated risks.

MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE
BUDGET OF THE EUROPEAN CENTRE FOR THE DEVELOPMENT
OF VOCATIONAL TRAINING (CEDEFOP — THESSALONIKI) FOR
THE FINANCIAL YEAR ENDED 31 DECEMBER 1999

Charging of VAT

Analysis of the implementation of the budget

5. Following the adoption of a supplementary and amending
budget of 0,3 million euro in September 1999, definitive appro-

(1) OJ L 39, 13.2.1975, p. 1.
(2) OJ L 181, 23.7.1993, p. 11.
(3) OJ L 164, 24.6.1976, p. 1.
(4) OJ L 181, 23.7.1993, p. 15.
(5) Pursuant to Article 1 of Council Regulation (EEC) No 1948/93 amend-
ing Council Regulation (EEC) No 1416/76, the accounts for all the
Centre’s revenue and expenditure for the financial year 1999 were
drawn up on 29 March 2000 and forwarded to the Commission and
the Court of Auditors. They were received by the Court on 5 April
2000. A summarised version of these financial statements is pub-
lished in the tables annexed to this report.

9. Until December 1998 the general Financial Regulation required
expenditure to be charged inclusive of VAT, since VAT, once it had
been refunded, could be used again. Since that date (9), the general
Financial Regulation has required expenditure to be charged exclu-
sive of VAT. The Court calls upon the Centre to incorporate this
new procedure into its own internal rules.

(6)

In April 2000, however, a non-automatic carry-over of 0,55 million
euro was authorised, reducing the amount of 1999 appropriations
actually cancelled to only 0,15 million euro.

(7) See reply to paragraph 5 of the report on the financial year 1998

(OJ C 372, 22.12.1999, p. 27).

(8) OJ C 372, 22.12.1999, paragraph 6, p. 27.
(9) 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).

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Official Journal of the European Communities

C 373/29

10. The Centre was not able to perform a thorough reconcilia-
tion of its applications for refunding of VAT with its accounts.
Moreover, recovery orders should have been drawn up at the
same time as the refund applications.

11. Operations concerning the recovery of VAT paid in 1999
began in May 2000. In the interests of sound management, it
would be desirable for the preparation of these applications to be
planned in such a way as to enable this VAT to be recovered as
swiftly as possible.

subject of contracts concluded by private treaty with the autho-
risation of the executive office of the management board. The
nature of the work (fitting-out of a kitchen and additional security
work) does not justify recourse to private treaty and the grounds
given of urgency should not have been accepted, since the lack of
such fittings did not affect the main use of the building. The value
of both these contracts, however, exceeds the threshold (46 000
euro) above which the Financial Regulation stipulates that an
Advisory Committee on Purchases and Contracts must be con-
sulted, regardless of the purchasing procedure envisaged.

Buildings

12. The Centre disbursed an amount of 1,2 million euro less
than initially foreseen in connection with the construction of its
new building due to favourable conditions (exchange rates, terms
of contract). It assigned this amount to the development of addi-
tional facilities which had not been expressly planned in the
agreement with the Greek authorities. Given the scale of this sav-
ing in relation to the expenditure initially envisaged for the build-
ing (6,8 million euro), the Centre should, in the interests of sound
management and transparency in respect of the budgetary author-
ity, have informed not only the Parliament but also the Council
of its intentions.

14. An examination of the contracts for informatics projects
revealed certain weaknesses: lack of consultation with the infor-
matics department, lack of clarity as regards objectives and a fail-
ure to follow administrative and financial procedures and proce-
dures for invitations to tender. Besides this, the Court’s audit of
the implementation of Internet-based projects showed that deci-
sions were taken on the basis of ill-founded or irrelevant assump-
tions. The Centre is requested to continue its efforts to manage its
informatics projects in accordance with the rules and to adapt
them to the developments that have taken place since they started.

Staff

Contracts

13. Two of the additional facilities referred to in paragraph 122,
costing 195 000 euro and 136 000 euro respectively, formed the

In 1998 (1) the Court noted the absence of formal decisions
15.
by the Appointing Authority determining the financial entitle-
ments of members of staff. In 1999 the measures announced by
the Centre had not been fully implemented. Moreover, the provi-
sions in the Staff Regulations to the effect that members of staff
should be reported on at least once every two years have not been
observed in certain cases.

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

(1) OJ C 372, 22.12.1999, paragraphs 9 and 10, p. 27.

C 373/30

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Official Journal of the European Communities

27.12.2000

Table 1

Balance sheet as at 31 December 1999 and 1998

Assets

1999

1998

Liabilities

1999

1998

(1 000 EUR)

Building in course of construction (1)
Fixed assets
Stocks

Current assets
Sundry accounts receivable
Recoverable VAT
Expenditure to be charged

Cash accounts
Bank — demand accounts
Imprest account

5 160
2 918
24

8 102

104
282
17

403

0
1 721
28

1 749

63
230
628

921

Subtotal

Subtotal

3 492
201

3 693

5 025
365

5 390

Subtotal

Fixed capital
Own capital
Balance for the financial year

Current liabilities
Social liabilities
VAT
Sundry accounts payable
Automatic carryovers of appropriations

Suspense accounts
Sums to be reused
Payments in progress
Revenue to be charged

Subtotal

8 102
– 520

7 582

71
282
39
3719

1 749
697

2 446

22
230
377
3928

Subtotal

4 111

4 557

235
266
4

505

832
205
20

1 057

Subtotal

Total assets

12 198

8 060

Total liabilities

12 198

8 060

(1) The building was completed and provisionally accepted in September 1999. Only the final part remains to be paid for (EUR 1 719 937). The Centre will only become the

owner of the land upon final acceptance of the building, provided that this is granted on schedule.

Source: Table prepared by the Court of Auditors using data supplied by the Centre.

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Official Journal of the European Communities

C 373/31

Revenue and expenditure account for the financial years 1999 and 1998

Table 2

(1 000 EUR)

1999

1998

12 415
150
152

Total revenue

12 717

Revenue
Subsidy from the Commission
Miscellaneous revenue
Earmarked revenue

Expenditure

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

6 226
395

1 658
1 058

3 021
2 238

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

14 596

Outturn for the financial year
Balance carried over from the previous financial year
Appropriations carried over from the previous financial year which lapse
Exchange-rate differences

– 1 879
697
760
– 98

Balance for the financial year

– 520

Source: Table prepared by the Court of Auditors using data supplied by the Centre.

12 793
10
150

12 953

5 421
599

878
528

2 433
2 776

12 635

318
0
320
59

697

C 373/32

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Official Journal of the European Communities

27.12.2000

THE CENTRE’S REPLIES

Paragraph 8

Following the recommendations of
the Court of Auditors,
Cedefop has continued its efforts to reduce even further payments
from the imprest accounts; during the first nine months of 2000,
such payments did not exceed EUR 20 000 per month.

For reasons of economy, but also to make the building as func-
tional as possible as soon as possible, Cedefop took the view that,
in the special circumstances, it was preferable to proceed by direct
contracting. The Bureau delivered a positive opinion on the two
matters, taking the view that, technically, the additional work
could not be separated from the main contract.

Paragraph 9

The Centre will draw up a memorandum on the updates and
improvements to be made in its revised general financial provi-
sions. The memorandum will be sent to the Commission so that
it can present to the legislative authority any proposals it con-
siders useful.

Moreover, Cedefop would point out that it is the Centre’s financial
provisions that have vested in its Management Board and Bureau
the powers normally vested in advisory committees on procure-
ments and contracts. Cedefop will raise the problems posed by
that situation in the memorandum it intends to send to the Com-
mission about revision of its financial provisions (see reply to
paragraph 9).

Paragraph 10 and 11

Paragraph 14

In 1999 the completion of the new building and the finalisation
of the Fibus system created extra work for the Financial Unit, and
this fact delayed full treatment of certain matters. In 2000, the
necessary steps have been taken to reduce those delays and pre-
vent their reoccurrence.

Paragraph 12

Thanks to the combined efforts of the various parties concerned
(Greek Government, Commission and Cedefop), substantial sav-
ings were made during the construction of the building as ori-
ginally envisaged. It was decided by common accord to earmark
those sums for additional work that would help to enhance and
optimise the functionality and security of the building.

The budgetary authority was kept abreast of those developments.
Cedefop would stress that, while there was no formal communi-
cation, the Centre’s representatives fully informed the Council
about the additional work in question and the need for such work
during the discussions before the Budgets Committee.

Paragraph 13

The work in question relates to equipment the need for which
emerged from information that was not available at the outset.

It is inevitable that with IT projects on the scale and of the com-
plexity of those undertaken by Cedefop, which extend over sev-
eral years, teething problems arise and the rapid pace of develop-
ment in the IT field quickly render the initial assumptions obsolete,
which in some cases has led to errors in the management of the
projects. Over the years, with the experience it has gained, and
following the observations of the Court of Auditors, Cedefop has
strengthened the procedures for the management and develop-
ment of its IT projects and it will continue its efforts in the mat-
ter so as to optimise the results already obtained. Cedefop is keen
to stress that the creation of a Contracts Management Unit in
1999, which has been systematically examining all contracts since
1 January 2000, will undoubtedly contribute to this improve-
ment.

Paragraph 15

In 1999, Cedefop launched a review of the data relating to the
staff’s financial entitlements. Once the data have been validated,
they will be incorporated in the individual files and the ‘person-
nel management’ module of the Fibus system. Moreover, since
early 2000, procedures have been in place for checking the data
annually and updating them if necessary. With regard to staff
reports, in 2000 Cedefop took the necessary steps to regularise
the files of the staff concerned and to ensure that from the year
2000, reports on staff are made systematically every two years.