Report on the financial statements of the Community Plant Variety Office for the financial year ended 31 December 2000, together with the Office's replies
Date: 2001-10-10
Institutions: European Court of Auditors
Subjects: Community Plant Variety Office, activity report, financial control, financial year

C 372/78

EN

Official Journal of the European Communities

28.12.2001

on the financial statements of the Community Plant Variety Office for the financial year ended
31 December 2000, together with the Office’s replies

REPORT

(2001/C 372/10)

CONTENTS

Paragraph

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

1-4

MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUDGET OF THE COMMUNITY
PLANT VARIETY OFFICE (ANGERS) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2000

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

Financial statements and bookkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Management

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Management of human resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Staff policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Keeping of staff files . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Changes in staff and in the Office’s activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

5-30

5-8

9-12

13-14

15-30

15-16

17

18-27

28-30

Tables 1 to 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Office’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

79

79

79

79

80

80

80

80

80

81

82

85

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Official Journal of the European Communities

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THE COURT’S OPINION

1. This report is addressed to the Administrative Council of the
Community Plant Variety Office, in accordance with Article 111(2)
of Council Regulation (EC) No 2100/94 (1).

2. The Court has examined the financial statements of the Com-
munity Plant Variety Office for the financial year ended 31 Decem-
ber 2000. In accordance with Article 110 of Council Regulation
(EC) No 2100/94, the budget was implemented on the responsi-
bility of the President of the Office. This responsibility includes
drawing up and presenting the financial statements (2) in accor-
dance with the internal financial provisions provided for in
Article 112 of Council Regulation (EC) No 2100/94 (3). The Court
of Auditors is required under Article 248 of the Treaty establish-
ing the European Community to audit those accounts.

3. The Court performed its audit in accordance with its audit
policies and standards. These have been adapted from generally
accepted international auditing standards to reflect the particular
nature of the Community context. The Court carried out such
tests of the accounting records and applied such other audit pro-
cedures 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 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 COMMUNITY PLANT VARIETY OFFICE
(ANGERS) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER
2000

Implementation of the budget and budgetary accounts

5. The implementation of the budget for the financial year 2000
is presented in Table 1 (4).

(1) OJ L 227, 1.9.1994, p. 27.
(2)

In accordance with Article 111(2) of Council Regulation (EC)
No 2100/94, the accounts for all the Office’s revenue and expenditure
for the financial year 2000 were drawn up on 16 March 2001, and
were sent to the Office’s Administrative Council, the Commission and
the Court of Auditors, and the latter received them on 26 March
2001. A summary of the balance sheet at 31 December 1999 and
31 December 2000 and of the revenue and expenditure account for
the financial years 1999 and 2000 is given in the tables at the end of
this report.

(3) OJ L 227, 1.9.1994, p. 28.
(4) All the tables in this report have been calculated on the basis of the
most precise values possible for the data used. These have been
rounded up or down in the presentation of the figures, which may
give the impression that calculation errors have been made. A dash is
used to indicate that a value is non-existent or nil, and 0,0 indicates a
value below the rounding-off threshold.

6. The most noteworthy point is the scale of the cancellations of
appropriations carried over from 1999 (36 %), and more specifi-
cally the cancellations of operating appropriations (Title III),
0,9 million euro or 63 % of which had to be cancelled in 2000.
This phenomenon has become larger from year to year (0,2 mil-
lion euro in 1998 and 0,5 million euro in 1999). One of the con-
sequences of this is that the accounts do not fully reflect legal
commitments that are spread over more than two years.

In order to carry over appropriations from one year to another,
7.
the Office calculates the appropriations to be carried over not on
the basis of the real amounts still to be settled, but on the basis of
the unutilised balance of provisional commitments.

8. The Court (5) recommends that the Office hold discussions
with the Commission to check that the Financial Regulation
applicable to the general budget is suited to the Office’s specific
characteristics, not least in the light of the proposal for the recast-
ing of the Financial Regulation presented by the Commission (6)
and the Court’s opinion on that proposal (7).

Financial statements and bookkeeping

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

10. Until now, the Office has not taken depreciation into account
in its balance sheet. This will be included in the balance sheet as
of the financial year 2001. A procedure should be initiated whereby
the inventory is no longer used to record write-downs of obsolete
equipment, and office equipment in particular, or property of a
low value (less than 400 euro (8).

11. Cheques issued by the Office are not entered in the accounts
and there is no system for ascertaining the outstanding amount
represented by cheques issued but not cashed. The Office esti-
mated that the sum total of payments pending amounted to
12 000 euro at the beginning of March 2001. The Office should
adjust its accounting system in order to take into account the
cheques it has issued and evaluate the payments outstanding. In
addition, the security surrounding the Office’s cheque books
should be improved (physical security, record of the numbers of
unused cheques).

12. All applications for the protection of plant varieties, along
with the corresponding payments, are recorded in an electronic
register which lists the application and examination fees along

(5) Opinion No 2/2000 on a proposal to amend the Financial Regula-
tion of the Community Plant Variety Office, adopted by the Court of
Auditors on 5 October 2000.

(6) COM (2000) 461 final, 17 October 2000.
(7) Opinion No 2/2001 of the Court of Auditors of the European Com-

munities, 8 March 2001.

(8) Article 119 of

the implementing procedures, on the basis of
Article 54 of the Financial Regulation of 7 April 1998 applicable to
the Office.

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Official Journal of the European Communities

28.12.2001

with the annual fees. When incorrect amounts have been paid or
when additional fees are payable, the repayments to be made or
the supplementary payments to be requested are recorded in
separate accounts. The register should be adjusted so as to allow
for the recording of all the operations relating to a given file.

Their financial entitlements are established on the basis of sup-
porting documents provided at the time they take up their duties
and on statements that they are required to make in the event of
any changes liable to affect these entitlements. The Office does
not have a system for monitoring financial entitlements and
should ensure that regular checks are conducted on its staff’s
financial entitlements.

Management

13. The Office’s rules provide for the creation of a reserve
(Article 6(d) of its Financial Regulation). The purpose of this
reserve is to maintain the Office’s financial autonomy in relation
to the Commission. For reasons of prudence, a very sizeable
reserve has been built up in recent years. In 2000 this reserve
totalled 8,6 million euro, which is more than the budget for 2001
(8,2 million euro).

14. The initial findings of an on-going study of the real cost of
examinations have led the Office to provisionally increase the
payments made to examination centres by between 20 and 50 %.
For commercial reasons, and considering the size of its reserve,
the Office has nevertheless decided not to change the examina-
tion tariffs and has reduced the fee for registration applications.
A methodology for analysing costs has been adopted, and once
the necessary data have been collated the payments made to the
centres will be reconsidered. The Office should complete its analy-
sis of the real cost of examinations by national centres and repeat
this exercise at regular intervals so that it can adjust its tariffs
accordingly.

Management of human resources

Staff policy

15. Concerning personnel management, its is important to be
able to call on documentation on general staff policy and the vari-
ous facets thereof (staff reports, promotion, professional training).
Staff policy should be built around descriptions of tasks based on
the Office’s objectives and duties, in order to establish a rational
management system. At the end of 2000, the only documents
available related to specific issues or were preparatory documents.

16. Concerning the description of tasks, a draft document exists
which is based on a description of the activities of members of
staff in the administrative and financial unit, and on the amend-
ments to be made to this in the light of that unit’s needs. In the
case of the other units, discussions are taking place but no docu-
ment has yet been produced. There is currently no documenta-
tion concerning employment forecasts.

Keeping of staff files

17. The staff’s financial entitlements change as a function of their
career bracket and of other factors such as their family situation.

Changes in staff and in the Office’s activities

18. Prior to 2000, the Office’s establishment plan only provided
for temporary posts. In 2000, it provided for the creation of 14
permanent posts, eight of which were filled at the beginning of
2001. In addition to the temporary members of staff there are
auxiliary members of staff, whose term of employment is limited
to a maximum of one year. Table 4 shows the changes in the
Office’s staff and the breakdown by type of post. It is clear from
this table that using auxiliary and agency staff only enables the
Office to partially cover staff vacancies (permanent and tempo-
rary members of staff). Expenditure on agency staff more than
tripled between 1996 and 2000 and stood at 0,23 million euro
in the financial year 2000.

19. A specific type of recruitment model emerges concerning
the recruitment of the staff at the Office. Of the 35 people that
the Office has recruited since it was created, 18 have been recruited
as temporary members of staff and 17 as auxiliary members of
staff. After taking departures into account, of the 28 members of
staff working at the Office at the end of 2000, 26 were temporary
members of staff and two were auxiliary members of staff. This
change in the relative numbers of temporary and auxiliary staff
has been brought about through a series of internal procedures.

20. Members of staff initially recruited on an auxiliary basis
(often after working as temporary agency staff, in the case of the
lower categories) have become temporary members of staff as the
result of procedures for the publication of posts which, in the
main, were limited to the Institutions.

21. The essentially internal nature of this staff management
model is reflected in the fact that no staff have been recruited by
way of an open competition procedure of the type recommended
for the Community Institutions (see Table 5). At the end of 2000,
the Office held internal competitions which led to the establish-
ment of eight members of staff as of 1 January 2001. On average,
expenditure on recruitment totalled around 2 160 euro per mem-
ber of staff hired.

22. For the purposes of the audit, the members of staff were
grouped into two categories:

— members of staff responsible for support activities (support
staff), which is to say activities which ensure the on-going
operation of the Office (e.g. administrative, accounting and
secretarial services, etc.);

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— the other, so-called ‘operational’ members of staff, who con-

tribute directly to achieving the Office’s objectives.

23. On average, 80 % of the category A staff can be considered
operational members of staff. In determining whether or not the
duties of the other categories of staff, who in spite of the category
to which they belong perform tasks which are not straightfor-
ward executive and support tasks, the sample shows that when all
categories are taken together, 33 % of the Office’s staff could be
considered operational members of staff.

in line with the growth in its activities over the period 1997-2000.
This trend is confirmed by a comparison of the rates of increase
in expenditure under Title III, which brings together expenditure
connected with the realisation of the Office’s objectives, and
expenditure under Titles I and II (Staff expenditure and Adminis-
trative expenditure): while in overall terms the increase in admin-
istrative expenditure is lower than that in operating expenditure,
it has tended to accelerate in recent years.

Conclusion

24. Table 6 illustrates the changes in staff-related costs and in
administrative expenditure over the period 1995 to 2000. Expen-
diture on salaries has evolved in line with changes in staff num-
bers, allowing for the effect of automatic salary increases.

28. Generally speaking, it is clear that even if the Office has been
unable, since its inception, to take on the numbers of staff it has
requested during the budgetary procedure, this has not had a
marked effect on the development of its activities, thanks mainly
to the recruitment of auxiliary members of staff.

25. Among the other staff-related costs, the analysis focused
more specifically on expenditure on professional training and on
administrative expenditure, including IT expenditure. Expenditure
on professional training increased a little more quickly than staff
numbers. Administrative expenditure rose rapidly due to spend-
ing on the new building and is therefore exceptional in nature.

26.
In order to grasp the relationship between the activities of
the Office and the changes in its staff numbers and in staff-related
costs, the latter were compared to fluctuations in the total rev-
enue. In fact, the revenue is an expression both of the number of
applications submitted to the Office and of the respective diffi-
culty of processing these applications, which is reflected in the
differences between the fees charged.

27. This comparison suggests that the Office should keep a
watchful eye on the increase in its staff numbers, which is almost

29. The Office has based its approach to the recruitment of staff
on methods that are limited to the Institutions in terms of the
amount of advertising of posts. Auxiliary members of staff, who
have often already been hired as temporary agency staff, fre-
quently become temporary members of staff by way of internal
procedures and, in some cases, permanent members of staff fol-
lowing an internal competition. This approach reduces recruit-
ment lead times and costs and allows the staff recruited to be
assessed over a long period (see paragraph 21).

30. Given the anticipated expansion of its activities and the
increase in its staff numbers, it would perhaps be desirable for the
Office to join forces with the Institutions and with the other
decentralised bodies to recruit staff from as wide a base as pos-
sible in the case of support activities posts and of its operational
activities that call for administrative qualifications. Generally
speaking, moreover, it should also improve its staff management
and information system.

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

For the Court of Auditors

Jan O. KARLSSON

President

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Official Journal of the European Communities

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TABLES 1 TO 6

Table 1

Implementation of the budget

Appropria-
tions

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

(a)

3,3
0,1

3,3

1,2
1,5

2,7

2,7
1,5

4,2

7,2
3,1

Total

10,2

(c)

2,7
0,0

2,7

0,6
1,4

1,9

0,8
0,6

1,3

4,1
2,0

6,0

(d=c/b)

84 %
94 %

84 %

57 %
89 %

76 %

31 %
37 %

33 %

60 %
64 %

61 %

(f)

0,0

0,0

0,2

0,2

1,7

1,7

2,0

2,0

(g=a-c-f)

(h=g/a)

0,5
0,0

0,5

0,4
0,2

0,6

0,2
0,9

1,1

1,2
1,1

2,3

16 %
6 %

16 %

36 %
11 %

22 %

8 %
63 %

27 %

16 %
36 %

22 %

(b)

3,2
0,1

3,3

1,0
1,5

2,5

2,6
1,5

4,1

6,8
3,1

9,9

Table 2

Revenue and expenditure account for the financial years 2000 and 1999

(1 000 EUR)

2000

1999

Revenue
Subsidy received from the Commission
Other subsidies
Fees
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

Total expenditure

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

—
232
6 848
371

7 451

2 689
46

568
208

797
1 701

6 009

1 442
6 096
—
1 109
– 3

NB: Discrepancies in the totals are due to the effects of rounding.
Source: Prepared by the Court on the basis of data compiled by the Office.

Balance for the financial year

8 644

—
377
6 388
528

7 293

2 500
51

525
1 526

677
1 484

6 763

529
4 994
16
557
1

6 096

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Balance sheet as at 31 December 2000 and 31 December 1999

Table 3

Assets

2000

1999

Lialibities

2000

1999

(1 000 EUR)

Fixed assets
Furniture and equipment
Intangible assets
IT equipment
Land and buildings

Current assets
Subsidies receivable
Recoverable VAT
Sundry accounts receivable

Cash accounts
Bank — Demand accounts
Imprest account

Subtotal

Subtotal

139
59
135
2 384

2 717

284
382
48

714

11 434
150

Subtotal

11 584

70
31
123
1 295

1 519

0
133
363

496

9 731
150

9 881

Fixed capital
Own capital
Balance for the financial year
Provision for charges

2 717
8 644
0

1 519
6 096
453

Subtotal

11 361

8 068

Current liabilities
Automatic carryovers of appropriations
Social liabilities
Sundry accounts payable
VAT
Applicant current accounts
Accruals and deferred income

1 954
38
846
382
36
398

3 061
18
616
133
0
0

Subtotal

3 654

3 828

Total assets

15 015

11 896

Total liabilities

15 015

11 896

NB: Discrepancies in the totals are due to the effects of rounding off.
Source: Prepared by the Court on the basis of data compiled by the Office.

Table 4

Changes in staff numbers

Establishment plan

Posts filled

Other staff

TE

2
10
22
22
29
30

Total

2
10
22
22
29
44

TE

0
6
13
18
28
26

AE

4
2
0
4
1
2

Total

4
8
13
22
29
28

1995
1996
1997
1998
1999
2000

PE

0
0
0
0
0
14

PE: Permanent employees.
TE: Temporary employees.
AE: Auxiliary employees.

Table 5

Analysis of changes in staff numbers

Increase

Decrease

Competition

Other

Total

Expiry of contract

Termination of
contract

Total

1996
1997
1998
1999
2000

Total

0
0
0
0
0

0

4
5
9
8
5

31

4
5
9
8
5

31

0
0
0
1
4

5

0
0
0
0
2

2

0
0
0
1
6

7

Net change

Turnover
(%)

4
5
9
7
– 1

0 %
0 %
0 %
3 %
21 %

Table 6

Changes in staff and related costs

Salary costs/head

Other staff-related costs

Administrative expenditure

(1 000 EUR)

Salary costs

Total Staff

Direct (1)

Indirect (2)

Total

Other
salary-
related
costs (3)

Overall
total (4)

Direct

Indirect

Total

PT (5)

PT/head

1995

1996

1997

1998

1999

2000

4

8

13

22

29

28

172,94

401,23

950,85

0,00

10,47

34,57

172,94

0,00

411,71

62,01

172,94

473,71

985,42

93,45

1 078,87

1 322,39

226,68

1 549,07

230,42

1 779,49

1 751,04

362,58

2 113,62

191,52

2 305,14

1 967,31

318,99

2 286,30

229,22

2 515,52

43,24

50,15

73,14

60,11

60,38

70,26

0,00

1,31

2,66

10,30

12,50

11,39

43,24

51,46

75,80

70,41

72,88

81,65

0,34

0,00

7,04

25,99

25,81

20,49

0,08

0,00

0,54

1,18

0,89

0,73

(1) Salaries paid to staff in active employment (all categories taken together).
(2) Social benefits and other salary adjustments.
(3) Overtime and supplementary services.
(4) Expenditure related to salaries under Title I, excluding mission expenses, etc.
(5) PT: Professional training.
(6) IT: Expenditure on informatics.

Recruitment
and
installation

0,29

32,10

Total

123,46

241,30

Of wich
IT (6)

28,09

31,66

225,01

383,49

107,26

28,58

28,08

46,06

1 850,30

139,90

524,87

165,42

1 922,55

43,36

Total/head

IT/head

30,86

30,16

29,50

84,10

18,10

68,66

7,02

3,96

8,25

6,36

5,70

1,55

C
3
7
2
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8
4

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o
m
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u
n
i
t
i
e
s

.

2
8
1
2
2
0
0
1

.

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THE OFFICE’S REPLIES

6, 7 & 8. The CPVO will follow the Court’s recommendation in
paragraph 8.

16. There are job descriptions for all posts at the Office, with the
exception of one or two posts in the Technical Unit. Job descrip-
tions for these posts are being prepared.

10. The Office has developed a procedure for recording write-
downs of obsolete equipment and is currently introducing a
depreciation policy to be followed from the financial year 2001.

11. The CVPO will follow the Court’s recommendation in para-
graph 11.

17. A system for checking financial entitlements of staff has been
introduced.

12. The Office agrees with the Court’s observation in this para-
graph and has already begun to adapt its computer system, PVR,
to allow for the recording of all the operations relating to a given
file.

20 and 29. The CPVO publishes all vacancies for temporary
members of staff on the Internet and also in the institutions’
vacancy notices. Permanent members of staff are appointed after
an internal competition.