Report on the financial statements of the European Agency for Safety and Health at Work for the financial year ended 31 December 2000, together with the Agency's replies
Date: 2001-10-10
Institutions: European Court of Auditors
Subjects: European Agency for Safety and Health at Work, activity report, financial control, financial year

28.12.2001

EN

Official Journal of the European Communities

C 372/1

I

(Information)

COURT OF AUDITORS

on the financial statements of the European Agency for Safety and Health at Work for the
financial year ended 31 December 2000, together with the Agency’s replies

REPORT

(2001/C 372/01)

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 (BILBAO) FOR THE FINANCIAL YEAR ENDED
31 DECEMBER 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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

Financial and regulatory provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Management of the Agency’s human resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Staffing policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Job descriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Seconded national experts (SNEs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Growth of the Agency’s staff and activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

5-28

5

6-7

8-9

10-28

10-11

12

13-14

15-24

25-28

Tables 1 to 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

2

2

2

2

2

2

2

3

3

3

4

5

8

C 372/2

EN

Official Journal of the European Communities

28.12.2001

THE COURT’S OPINION

1. This report is addressed to the Administrative 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).

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 2000. 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

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 proce-
dures 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 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 AGENCY FOR SAFETY AND
HEALTH AT WORK (BILBAO) FOR THE FINANCIAL YEAR
ENDED 31 DECEMBER 2000

Implementation of the budget and keeping of the budgetary
accounts

5. The implementation of the budget for the financial year 2000
is shown in Table 1 (3). The Agency had to carry over 57 %

(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 2000 were drawn up on 29 March 2001 and forwarded to
the Agency’s Administrative Board, the Commission and the Court of
Auditors. The Court received these accounts on 17 April 2001. A
summarised version of these financial statements is presented in the
tables attached to this report.

(3) All the tables in this report have been based on the most precise val-
ues possible for the data used. These have been rounded up or down
in the presentation of the figures, which may give the impression that
there are mistakes in the calculations. A dash indicates that a value is
non-existent or nil, and 0,0 indicates a value lower than the rounding-
off threshold.

(1,7 million euro) of the appropriations committed during the
financial year 2000 for the implementation of its operating expen-
diture (Title III). Such a high carryover rate shows that the Agency
needs to improve the quality of the monitoring and the planning
of its activities.

Financial statements and keeping of the accounts

6. Tables 2 and 3 show, respectively, the revenue and expenditure
account for the financial year 2000 and the balance sheet as at
31 December 2000.

7. Due to a shortage of budgetary appropriations under the bud-
get headings concerned, and in the absence of any transfers, the
Agency had to carry over to the financial year 2001 bank charges
amounting to 12 155,72 euro and additional expenditure
(3 624,72 euro) caused by exchange-rate losses during 2000.

Financial and regulatory provisions

8. For the purpose of fitting out a meeting room, the Agency
issued two calls for tenders for the installation of interpretation
equipment. If they had been issued together, the amount con-
cerned (a total of 50 712 euro) would have required the Agency
to have submitted them to the Advisory Committee on Procure-
ments and Contracts, which it managed to avoid in this way.

9. Four series of multiannual contracts signed by the Agency in
1998 for an amount of 354 964 euro provided for two payments
for each annual tranche:

— an advance of 50 % within 60 days of the payment request,

— the payment of the balance after the approval of the final

report and the relevant payment request.

This procedure does not comply with the call for tenders, which
provided that the first payment would be carried out after the first
interim report had been sent in. Contrary to the terms of their
contracts (Article 5), the beneficiaries justified the payment of the
balance by sending in a list of expenditure with their payment
requests, but no supporting documents.

Management of the Agency’s human resources

Staffing policy

10. The Agency was created by Council Regulation (EC)
No 2062/94 of 18 July 1994 and was set up following the

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Official Journal of the European Communities

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appointment of its director in September 1996. During its early
months, the Agency was run with only seconded national experts
(SNEs) and auxiliary staff. The advertising for the recruitment of
the SNEs was limited to certain Member States (1).

16. Table 4 shows the development of the Agency’s staff and
gives a breakdown of the establishment. The growth in staff num-
bers has tended to stabilise. Initially, the Agency made use of
agency staff to make up for its lack of staff, but had very little
need of them in 2000.

11. The Agency’s staff are subject to the ‘Rules and Regulations
applicable to officials and other servants of the Communities’. As
provided for in Article 20(3) of Regulation (EC) No 2062/94, the
Administrative Board, in agreement with the Commission, is
responsible for adopting the appropriate implementing rules.

Job descriptions

12.
Job descriptions, reflecting those published in the notice of
vacancy, only exist for each category A post. A job description
should be drawn up for all the staff on the basis of the Agency’s
objectives and tasks. It should be easily accessible to staff, be regu-
larly updated and be included in their personal files.

Seconded national experts (SNEs)

13.
In the absence of a formal decision by its Administrative
Board, the Agency applies the Commission’s rules for seconded
national experts. According to these rules, the probable duration
of the secondment must be established in an exchange of letters
with the national authority concerned. However, in two cases,
there was no such correspondence and in another case, the dura-
tion was not established.

14. The Agency refunded the salaries of three SNEs to the national
authorities concerned, even though the rules provide that they
should be in paid employment in an international or national
public body during their secondment. The Agency refunded these
salaries on the grounds that it had not yet formally incorporated
the provisions in force at the Commission into its rules. The regu-
larity of these payments is therefore questionable.

Growth of the Agency’s staff and activities

15. The Agency’s establishment plan only comprises temporary
staff. The number of posts to be occupied is authorised by the
budgetary authority every year at the same time as the budget.
The budget may also grant appropriations for the recruitment of
auxiliary staff, who may be employed for a maximum of one year,
local staff and SNEs.

(1) Germany, Denmark, Ireland, the Netherlands, the United Kingdom

and Sweden.

17. Since its creation, the Agency has taken on more than 40
people, 27 of whom were temporary staff and the others auxilia-
ries or SNEs. At the end of 2000, 24 were temporary employees.
Three employees had been recruited via an external procedure
and the others by more informal means. On average, recruitment
expenditure totalled around 3 140 euro per person recruited.

18. For the purposes of the audit, employees were broken down
into two categories:

— staff responsible for support activities (support staff), i.e. activi-
ties needed for the Agency to continue to function (e.g. admin-
istration, accounts, secretariat, etc.),

— other,

‘operational’ staff, who directly help to achieve the

Agency’s objectives.

19. On average, nearly all the category A staff, or 40 % of all
staff, may be classified as operational. All the others (60 % of the
total staff) may be classified as support staff.

20. Table 5 shows the growth of costs associated with staff and
operating expenditure. On average, salary-related expenditure
grew almost in parallel with staff numbers.

21. Among the other staff-related costs, the Court’s analysis
looked more particularly at expenditure on vocational training
and operating expenditure, in particular in the IT field.

22. Vocational training expenditure grew more quickly than staff
numbers. Operating expenditure fell slightly, on average, because
of the initial expenditure that had to be effected when the Agency
was being started up.

23.
In order to obtain a better understanding of the relationship
between the activities of the Agency and the changes in its staff
numbers and staff-related costs, the latter were compared with
the fluctuations in the total operating appropriations (Title III)
actually spent in the course of the year (appropriations for the
year and appropriations carried over). This comparison suggests
that the Agency’s staff numbers and staff-related costs have

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Official Journal of the European Communities

28.12.2001

increased more rapidly than the volume of its activities. This is
corroborated by the fact that, on average, support expenditure
(Titles I and II — Staff and Administrative expenditure) has grown
faster than operating expenditure. This ought to prompt the
Agency to look into ways of improving its staff’s productivity.

26. For the purpose of staff recruitment, the Agency has based
itself on very limited contacts. This approach, which has the
advantage of being speedy and cost-effective, uses informal meth-
ods for advertising the posts and selection procedures. The qual-
ity of the staff recruited does not seem to have been adversely
affected.

24. These observations must be qualified by the fact that the
Agency is not yet up to its ‘cruising speed’ and that, because of its
small size, it cannot benefit from substantial economies of scale
for its physical and administrative infrastructure. In this context,
the relationship between the rate of growth of its operational staff
and its volume of expenditure is following a satisfactory trend.
Moreover, over the last three years, there has been a tendency for
the growth rate of personnel and administrative expenditure to
fall in relation to the growth rate for operating expenditure and
become lower than the latter (in particular as a result of the use
of SNEs).

27.
In the Agency’s case, given the expected growth of its activi-
ties, and therefore of its staff numbers, it might be desirable for it
to cooperate with the institutions and other decentralised bodies
in the recruitment of administrative staff, so as to be able to recruit
from as large a pool as possible.

Conclusion

25. Although, since its creation, the Agency has not been able
to take on all the staff provided for in its budget, it has been able
to make up for this by recruiting auxiliary staff and SNEs.

28. The Agency should monitor the growth of its staff and their
costs very carefully and continue its efforts to improve the pro-
ductivity of its human and physical resources. Generally speak-
ing, it should improve its system of management and informa-
tion in the personnel field.

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

28.12.2001

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Official Journal of the European Communities

C 372/5

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

TABLES 1 TO 5

Table 1

Implementation of the budget

Appropria-
tions

Commitments

Payments

%

Carryovers

Cancellations

%

(Mio EUR)

(c)

2,4
0,0

2,4

0,7
0,1

0,9

1,3
1,8

3,1

4,5
1,9

6,4

(d=c/b)

93 %
65 %

93 %

77 %
74 %

77 %

43 %
92 %

62 %

68 %
90 %

73 %

(f)

0,0

0,0

0,2

0,2

1,7

1,7

2,0

2,0

(g=a-c-f)

(h=g/a)

0,4
0,0

0,4

0,0
0,1

0,1

0,0
0,2

0,2

0,4
0,2

0,6

13 %
35 %

13 %

5 %
26 %

8 %

1 %
8 %

4 %

6 %
10 %

7 %

(a)

2,8
0,0

2,8

1,0
0,2

1,2

3,1
1,9

5,0

6,9
2,1

9,0

(b)

2,6
0,0

2,6

1,0
0,2

1,2

3,1
1,9

5,0

6,6
2,1

8,8

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
Miscellaneous 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

Outturn for the financial year
Balance carried over from the previous financial year
Repayment to/from the Commission
Appropriations carried over from the previous financial year and cancelled

Total expenditure

6 188
288
96

6 572

2 357
36

745
204

1 339
1 745

6 426

146
– 1 273
—
241

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

Balance for the financial year

– 886

4 989
120
77

5 186

1 962
28

708
201

1 064
2 803

6 766

– 1 580
668
– 731
370

– 1 273

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Official Journal of the European Communities

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Balance sheet as at 31 December 2000 and 31 December 1999

Table 3

Assets

2000

1999

Liabilities

2000

1999

(1 000 EUR)

Fixed assets
Fittings 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

Subtotal

488
26
354

868

445
26
322

793

1

20

—

21
20

41

1 522
59
1

1 005
124
19

1 148

2 034
50
1

2 085

Fixed capital
Own capital
Balance for the financial year

869
– 886

– 17

813
– 1 273

– 460

Subtotal

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

—
1 985
433
28

—

21

Subtotal

2 467

900
2 132
82
34
1 005
124

4 277

Suspense accounts
Sums to be reused

Subtotal

42

42

229

229

Subtotal

1 582

Total assets

2 492

4 046

Total liabilities

2 492

4 046

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

Table 4

Changes in staff numbers

Establishment plan

Posts taken up

Other staff

TE

1

4

15

22

24

AE

2

2

1

0

1

LS

0

0

7,5

8,5

7,5

SNE

0,25

4

0

1

1

Total

2,25

6

8,5

9,5

9,5

Total

3,25

10

23,5

31,5

33,5

1996

1997

1998

1999

2000

TE

14

14

24

24

26

TE: Temporary employees.
AE: Auxiliary employees.
LS: Local staff.
SNE: Seconded national experts.

Table 5

Changes in staff numbers and staff-related costs

Salary costs

Total staff

Direct (1)

Indirect (2)

Total

Other
salary-
related
costs (3)

3,25

52,25

1,41

53,66

141,87

468,60

17,00

485,60

168,80

Overall
total (4)

195,53

654,40

961,23

46,15

1 007,39

171,25

1 178,64

1 584,58

100,46

1 685,04

23,50

1 708,54

1 985,82

108,53

2 094,35

12,67

2 107,01

1996

1997

1998

1999

2000

10

23,5

31,5

33,5

(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.

(1 000 EUR)

Salary costs/head

Other staff-related costs

Administrative expenditure

Direct

Indirect

Total

PT (5)

PT/head

16,08

46,86

40,90

50,30

59,28

0,43

1,70

1,96

3,19

3,24

16,51

48,56

42,87

53,49

62,52

0,00

1,63

15,81

29,87

36,93

0,00

0,16

0,67

0,95

1,10

Recruitment
and
installation

83,64

75,69

192,26

105,07

53,40

Total

Of which
IT (6)

Total/head

IT/head

80,06

0,00

24,63

1 378,45

34,48

137,85

870,34

149,86

833,17

11,44

894,31

146,19

37,04

26,45

26,70

0,00

3,45

6,38

0,36

4,36

.

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1
2
2
0
0
1

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THE AGENCY’S REPLIES

Implementation of the budget and keeping of the budgetary
accounts

5. Almost 50 % of automatic carryovers concerned subsidies
agreed in the framework of contract agreements concluded with
the Focal Points and Topic Centres resulting from a decision taken
by the Administrative Board at its last meeting in November 1999.
It was inevitable that there would be carryovers in view of the fact
that the commitments, which are in accordance with Article 6(d)
of the Agency’s Financial Regulation, were only approved in
December. Nevertheless the agency will examine the possibility of
amending the decision process in the field with a view to respect-
ing the annuity principle and avoiding, as far as possible, the
necessity for regular carryovers of appropriations.

The remaining percentage concerns final payments which had
not yet been made by 31 December and to which the abovemen-
tioned Article normally applies.

Financial statements and keeping of the accounts

7. With regard to foreign exchange differences and transfer costs,
the Agency will correct the budgetary lines in order to avoid a
similar situation in 2001.

Financial and regulatory provisions

8. With respect to the two invitations to tender, it should be
emphasised that they referred to two different contracts. The first,
2000/ADM/IT/1, concerned multimedia installations and elec-
tronic control systems for the conference rooms. By contrast, the
second, 2000/ADM/IT/2, was intended for official suppliers of
Philips conference equipments. In view of the urgent need to fit
out this new meeting room, the Agency published a limited call
for tender (2000/ADM/IT/1) and invited two suppliers to tender
who had already worked with the Agency on the installation of
multimedia systems and electronic conference control systems,
and the quality of whose services had been found to be good.

Management of the Agency’s human resources

Staffing Policy

10. Between the Agency’s start-up period in September 1996
and the time when the first temporary agents were recruited to
perform operational tasks at the beginning of 1998, the Director
had to rely on a narrow circle of experts who were available for a
limited period and the basis of whose recruitment varied accord-
ing to the circumstances of the time. These were national officials
from the Member States or people seconded from Community
institutions on one year auxiliary contracts.

As far as recruitment notices for detached national experts are
concerned, it should be emphasised that, to meet its needs in this
respect, the Agency was dependent on them being made available
after making applications to the authorities of the 15 Member
States. These only resulted in seven positive responses in order to
meet precise requirements during the start-up phase or to fulfil
very specific tasks.

Job descriptions

12. The Court of Auditors’ comment will be taken into account
when finalising the staff reports and matching human resources
to the goals and tasks relevant to each unit in the framework of
their ‘contract agreement’ with the Directorate of the Agency. The
fact that staff are involved in drawing up and signing these ‘con-
tract agreements’ ensures that information is passed and exchanged.

Secondment national experts

13. The Regulation which governs national experts seconded to
the services of the Commission has not yet formally been adopted
by the Management Board. It has only been used as a reference
document by the Agency. The lack of supporting documentation
in certain detachment files is attributable to the fact that when the
Agency was in the process of being set up in Bilbao, the director
had in some cases made verbal agreements.

14. The Commission Regulation provides that ‘if its interests so
require, but only in the case of national experts not on detach-
ment from the private sector, the Commission may reimburse all
or part of the remuneration of a detached national expert during
the period of detachment...’. The Agency was thus acting within
the spirit of the Regulation. Nevertheless the Agency wishes to
emphasise that these were exceptional circumstances and that the
period of secondment was very brief.

Growth of the Agency’s staff and activities

17. All temporary agents were recruited according to the proce-
dures approved by the Administrative Board. Applicants are not
only interviewed, but are given a preliminary grading based on
their academic and professional qualifications. In some cases there
is also a written exam to test the specific knowledge required for
the post.

The recruitment process is expensive because of the high cost of
moving to Bilbao.

19. The majority of B grade agents working in the ‘Working
environment’ and ‘Information and communications’ units should
also be considered as operational.