Report on the financial statements of the European Monitoring Centre on Racism and Xenophobia for the financial year ended 31 December 2000, together with the Centre's replies
Date: 2001-10-10
Institutions: European Court of Auditors
Subjects: European Union Agency for Fundamental Rights, activity report, financial control, financial year

28.12.2001

EN

Official Journal of the European Communities

C 372/71

on the financial statements of the European Monitoring Centre on Racism and Xenophobia for the
financial year ended 31 December 2000, together with the Centre’s replies

REPORT

(2001/C 372/09)

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 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Implementation of the budget and budgetary accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5-23

5-10

Financial statements and keeping of the accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11-15

Keeping of the accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accounting management of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Recovery orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Follow-up of the Court’s previous observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Centre’s staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11

12

13

14-15

16-17

18-23

22-23

Tables 1 to 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Page

72

72

72

72

72

73

73

73

73

73

73

75

77

C 372/72

EN

Official Journal of the European Communities

28.12.2001

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 2000. In accordance
with Article12(8) of Council Regulation (EC) No 1035/97, the
budget was implemented on the responsibility of the Executive
Director. This responsibility included the drawing-up and presen-
tation of the financial statements (2) in accordance with the inter-
nal financial provisions, as laid down 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 Euro-
pean Community to examine these accounts.

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
carried out such tests of the accounting records and other audit
procedures as it deemed necessary in the circumstances. Through
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 2000 are reliable and that the underlying transac-
tions, taken as a whole, are legal and regular.

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 2000

Implementation of the budget and budgetary accounts

5. The implementation of the appropriations for the financial
year 2000 and of the appropriations carried over from the previ-
ous year is set out in Table 1 (3).

(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 2000 were drawn up on 30 March
2001 and forwarded to the Centre’s Management Board, the Com-
mission and the Court of Auditors. These accounts were received by
the Court on 10 May 2001. A summarised version of these accounts
is presented in the tables annexed to this report.

(3) The calculations in all tables in this report are based on the most
accurate data available. As regards the presentation of figures, they
have been rounded off, which may give the appearance of arithmeti-
cal errors. A dash indicates a non-existent or zero value and 0,0 indi-
cates a value lower than the rounding-off threshold.

6. Final appropriations for the financial year totalled 4,9 million
euro, 4,6 million euro (94 %) of which were committed. Operat-
ing appropriations (Title III) amounted to 1,7 million euro, 88 %
(1,5 million euro) of which were committed.

7. The significant under-utilisation of payment appropriations
under Title III (59 %) was brought about, in the main, by the delay
in setting up the Raxen network (4). The first contracts with part-
ner organisations in seven Member States, the focal points of the
Centre’s activities, were not signed until November 2000 and no
payments had been made by the end of the year. The Court’s
analysis of the payments under Title III showed that, from the
appropriations for the financial year, no payments were made in
the first half of the year and that 36 % of the payments were made
in the last three months of the year.

8. Appropriations carried over to 2001 amount to 0,8 million
euro (18 % of commitments) and mainly concern operating appro-
priations, 0,6 million euro of which were carried over (42,5 % of
commitments). Of all the appropriations that were carried over
from 1999, 0,4 million euro (approximately 23 %) were cancelled
at the end of 2000. The Centre should continue to endeavour to
ensure that the measures financed are implemented and paid for
during the year, thus keeping carryovers to a minimum.

9. The Centre drew up only one commitment proposal to com-
mit appropriations under the various budget headings. This com-
mitment proposal, signed and approved by the Financial Control-
ler, did not indicate either the items concerned or the amounts
committed. The annex to this proposal, which contained this
information, was neither signed nor approved. The Centre should
draw up detailed commitments in order to ensure greater trans-
parency.

10.
In 2000, as in 1999, the Centre drew up its budgetary
accounts using a spreadsheet, with all the risks that this entails.
The S12 budgetary accounts system was installed in 2001 but
does not yet include a module allowing the recording of amounts
to be recovered and this should be added.

Financial statements and keeping of the accounts

Keeping of the accounts

11. Tables 2 and 3 show, respectively, the revenue and expendi-
ture account for the financial year 2000 and the balance sheet as
at 31 December 2000.

(4) A network for the exchange of information on racist and xenophobic

phenomena.

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Official Journal of the European Communities

C 372/73

Accounting management of fixed assets

12. The Centre’s Financial Regulation contains no provisions
concerning the accounting management of fixed assets. Since
December 2000 there has been a Commission Regulation (1) lay-
ing down provisions for accounting operations relating to tan-
gible and intangible fixed assets. The Centre should incorporate
these provisions into its own Regulation so as to avoid, among
other things, problems with the evaluation of inventory items.

In its 1999 Annual Report (4), the Court also pointed out
17.
that numerous errors in the accounts had had to be rectified just
before they were closed. Progress was noted in 2000 but there is
still considerable room for improvement of the internal control
system. The Centre should carry out a systematic reconciliation
of the data contained in the budgetary accounts and in the general
accounts with a view to reducing rectifications at the end of the
financial year and, in particular, to ensure better monitoring of its
financial management during the year.

Inventory

The Centre’s staff

13. According to its Financial Regulation, the Centre is required
to keep a permanent inventory of all the movable and immov-
able property which makes up its assets. During the year 2000
the inventory was not kept in a satisfactory manner and correc-
tions had to be made when the accounts were closed. In April
2001, the Centre installed an inventory system which should
enable it to carry out regular monitoring of its fixed assets. Nev-
ertheless, the responsibilities in connection with keeping the
inventory should be laid down clearly.

18. The Centre’s staff is made up entirely of temporary employ-
ees (TEs). The number of posts is authorised by the budgetary
authority each year when the budget is adopted. Furthermore, the
budget may allocate appropriations for the recruitment of auxil-
iary employees (AEs), whose contracts are limited to a maximum
of one year, and of seconded national experts (SNEs). Table 4
shows the growth in the Centre’s staff, broken down by type of
post.

Recovery orders

In contravention of its Financial Regulation (2), the Centre
14.
does not always draw up a recovery order when a debt has been
identified and never draws up debt forecasts. This results in a lack
of control as far as recoveries are concerned. As there was no debt
forcast as at 31 December 2000, the Austrian authorities’ contri-
bution in respect of expenditure on rents for the period from Sep-
tember to December 2000 (58 026 euro) was not recorded in the
accounts.

15. When the Centre draws up a recovery order, it does not sys-
tematically forward a debit note to the debtor with a view to
ensuring that the amount owed is collected. Of eleven recovery
orders examined, three had not been covered by a debit note, for
which reason the debtors had not made any payment.

Follow-up of the Court’s previous observations

19. Since the Centre was set up, it has recruited its staff by means
of vacancy notices distributed mainly to the European Institutions
and other bodies. On average, recruitment expenditure amounted
to 6 610 euro per person recruited. Staff departures, due to the
expiry of their contracts, resulted in an average staff turnover rate
(TEs, AEs and SNEs) of 6 % per year.

20. For the purposes of the audit, staff were placed in two cat-
egories:

— staff responsible for support activities (support staff), i.e. activi-
ties necessary for the continuity of the Centre’s operations
(e.g. administrative, accounting and secretarial services etc.);

— other, so-called operational, staff, who contribute directly to

achieving the Centre’s objectives.

21. Virtually three quarters of A-grade staff may be regarded as
operational. When all categories are taken together, 55 % of the
Centre’s staff could be considered operational members of staff.

16.
In its 1999 Annual Report on the Centre (3), the Court called
on the Centre to incorporate into its own Financial Regulation the
amendments concerning VAT made to the Financial Regulation
applicable to the general budget. This has not yet been done.

(1) Commission Regulation (EC) No 2909/2000 of 29 December 2000,

OJ L 336, 30.12.2000.

(2) Articles 23 and 24 of the Centre’s Financial Regulation.
(3) OJ C 373, 27.12.2000, paragraph 7.

Conclusion

22.
In view of the fact that the Centre was set up only recently,
it is difficult to come to any final judgement on the growth of the
Centre’s staff in relation to its workload. Nevertheless, the infor-
mation available does not reveal any major problems.

(4) OJ C 373, 27.12.2000, paragraph 6.

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Official Journal of the European Communities

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It might be preferable for the Centre, in the case of posts
23.
involving support and operational activities which require quali-
fications of an administrative nature, to join forces with the Com-

munity Institutions and other decentralised bodies to recruit staff
on the broadest possible basis.

This Report was adopted by the Court of Auditors in Luxembourg at its meeting of 10 October 2001.

For the Court of Auditors

Jan O. KARLSSON

President

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TABLES 1 TO 4

Table 1

Implementation of the budget

Appropriations

Commitments

Payments

%

Carryovers

Cancellations

(Mio EUR)

Title

I — Staff

Budget 2000
Carryovers 1999

II — Administration

Budget 2000
Carryovers 1999

III — Operations

Budget 2000
Carryovers 1999

Total

Budget 2000
Carryovers 1999

Total

Total

Total

Total

(a)

2,1
0,1

2,2

1,1
0,6

1,7

1,7
0,6

2,3

4,9
1,3

6,2

(b)

2,0
0,1

2,1

1,1
0,6

1,7

1,5
0,6

2,1

4,6
1,3

6,0

Table 2

(c)

1,9
0,1

2,0

1,0
0,4

1,4

0,9
0,6

1,5

3,8
1,0

4,8

(d=c/b)

(g=a-c-f)

(h=g/a)

96 %
61 %

94 %

90 %
66 %

82 %

59 %
89 %

68 %

83 %
77 %

81 %

0,1
0,0

0,1

0,1
0,0

0,1

0,6
0,0

0,6

0,8
0,0

0,8

0,0
0,1

0,1

0,0
0,2

0,2

0,2
0,1

0,2

0,2
0,4

0,5

Revenue and expenditure accounts for the financial years 2000 and 1999

Revenue
Commission subsidy
Miscellaneous revenue (bank interest)

Expenditure
Staff expenditure — 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

(1 000 EUR)

2000

1999

4 250
61

4 311

1 935
84

987
106

898
643

3 750
27

3 777

985
131

392
564

444
633

Total expenditure

4 653

3 149

Outturn for the financial year
Outturn carried over from the previous financial year
Repayment to the Commission
Appropriations carried over and cancelled or re-used
Exchange rate differences/exceptional charges

Source: Table drawn up by the Court of Auditors on the basis of data compiled by the Centre.

Balance for the financial year

– 342
737
– 533
315
2

179

628
– 42
0
151
0

737

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Official Journal of the European Communities

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Balance sheet as at 31 December 2000 and at 31 December 1999

Table 3

(1 000 EUR)

Assets

2000

1999

Liabilities

2000

1999

Fixed assets
Fixed assets

Sub-total

Current assets
Advances on salaries and amounts to be deducted
from remunerations
Recoverable VAT
Sundry accounts receivable

Sub-total

326

326

10
456
119

585

20

20

36
116
0

152

Cash accounts
Bank account(s)

1 178

1 178

Sub-total

Total assets

2 089

2 200

2 200

2 372

Fixed capital
Own capital
Balance of the year

Sub-total

Current liabilities
Automatic carryovers of appropriations
Non-automatic carryovers of appropriations
Social liabilities
Salaries to be paid
Sundry accounts payable
Recoverable VAT
Re-use

326
179

505

806
27
107
0
158
456
30

Sub-total

1 584

20
737

757

1 037
290
64
66
37
116
5

1 615

Total liabilities

2 089

2 372

Source: Table drawn up by the Court of Auditors on the basis of data compiled by the Centre.

Table 4

Changes in staff numbers

Establishment
plan

Posts filled

1998

1999

2000

TEs

0

17

26

Tes: Temporary employees.
Aes: Auxiliary employees.
SNEs: Seconded national experts.

TEs

3

14

24

AEs

0

3,5

1

Other staff

SNEs

0

0

1

Total

0

3,5

2

Total

3

17,5

26

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THE CENTRE’S REPLIES

4. The Centre welcomes the Court’s opinion that annual accounts
for year 2000 are reliable and that transactions are legal and regu-
lar.

14. The entry into force in May 2001 of the Headquarters’
Agreement with Austria contributed to this clarification. After
this date, the Centre could benefit of resources other than those
of the EU Budget.

8. Within its planning system, the Centre already introduced a
monthly report and co-ordination to ensure carryovers to be
reduced to the very minimum.

In order to avoid the omission the Court has mentioned, every
9.
provisional commitment has been prepared separately per budget
line from 2001.

In 2001, the recovery order module in SI2 was set up and

10.
tested; at present, this module is fully operational within SI2.

15. Debit notes have been designed in order to inform the debt-
ors about the debt due and terms of reimbursement.

16. The VAT regime is included in the new draft Financial Regu-
lation to be approved by the Management Board.

12. New rules concerning inventory and asset matters have been
included in the new draft financial regulation of the EUMC to be
approved by the Management Board. An inventory exists and is
operational.

17. For the financial year 2001, bank reconciliation has been
done up to June 2001, in August 2001, and transactions will be
input in the general ledger on a weekly basis.

13.
In February 2001, the inventory system has been modified.
The new draft Financial Regulation of the EUMC and the instruc-
tions issued by the Director on 5 June 2001 clarifies the respon-
sibilities of the accounting officer concerning the inventory.

22 and 23. The Centre has taken note of the comments of the
Court of Auditors.