Report on the financial statements of the Community Plant Variety Office concerning the financial year 2001, together with the Office's replies
Date: 2002-09-26
Institutions: European Court of Auditors
Subjects: Community Plant Variety Office, financial control, financial year, report

27.12.2002

EN

Official Journal of the European Communities

C 326/79

on the financial statements of the Community Plant Variety Office concerning the financial year
2001, together with the Office’s replies

REPORT

(2002/C 326/11)

CONTENTS

Paragraph

Page

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

MAIN OBSERVATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Implementation of the budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1-4

5-14

5-7

8-12

Application of financial provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13-14

Tables 1 to 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

80

80

80

80

81

82

85

C 326/80

EN

Official Journal of the European Communities

27.12.2002

THE COURT’S OPINION

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

2.
The Court has examined the Office’s financial statements
for the financial year ended 31 December 2001. In accordance
with Article 110 of Council Regulation (EC) No 2100/94, the
Office’s budget was implemented on the responsibility of its Presi-
dent. This responsibility includes the drawing-up and presenta-
tion of the financial statements (2) in accordance with the internal
financial provisions adopted on the basis of Article 112 of Coun-
cil Regulation (EC) No 2100/94. The Court of Auditors is required
under Article 248 of the Treaty establishing the European Com-
munity to examine these accounts.

3.
The Court carried out the audit in accordance with its
auditing policies and standards. These have been adapted from
generally accepted international auditing standards to reflect the
specific nature 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. Through
this audit the Court obtained a reasonable basis for the opinion
expressed below.

This examination has enabled the Court to obtain reason-
4.
able assurance that the annual accounts for the financial year
ended 31 December 2001 are reliable and that the underlying
transactions, taken as a whole, are legal and regular.

MAIN OBSERVATIONS

Implementation of the budget

5.
The implementation of the appropriations for the financial
year 2001 and of the appropriations carried over from the previ-
ous financial year is set out in Table 1 (3).

(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 2001 were drawn up on 5 April 2002 and for-
warded to the Office’s Management Board, the Commission and the
Court of Auditors. The Court received these accounts on 10 April
2002. A summarised version of these financial statements is pre-
sented in the tables attached to this report.

(3) All the tables in this report have been calculated on the basis of the
most exact values possible for the data used. For presentation pur-
poses, the figures were rounded up or down, which may produce
minor differences in the totals. A dash indicates a non-existent or nil
value and 0,0 indicates a value below the rounding threshold.

The final appropriations for the financial year amounted
6.
to 8,6 million euro and the commitments totalled 8 million euro.
3,8 million euro were committed out of the operating appropria-
tions (Title III), which amounted to 4,1 million euro. Payments
made against the appropriations for the financial year amounted
to 4,4 million euro, of which 3 million euro were carried over to
the following financial year and a sum of 1,1 million euro had to
be cancelled. Only 26 % of the operating appropriations commit-
ted were paid out during the financial year.

7.
The appropriations carried over to 2002 amount to 3 mil-
lion euro. These relate mainly to operating appropriations (2,9 mil-
lion euro), the amount of which that is carried over increases
from year to year (4). The Court reiterates the recommendation it
made in its 2000 Annual Report (5) concerning checking whether
the Financial Regulation applicable to the general budget is suited
to the Office’s specific characteristics.

Financial statements

8.
Tables 2 and 3 set out in summary form the revenue and
expenditure account and balance sheet published by the Office in
its Activity Report for the financial year 2001. The balance sheet
as at 31 December 2001 shows a balance of 11 028 828 euro for
the financial year. This comprises the reserve fund provided for in
Article 6(d.2) of the Office’s financial regulation. The reserve fund
sums were correctly entered in the ‘Legal Reserve’ account in the
Office’s general accounts, but should be shown in the same
account in the balance sheet.

9.
The general accounting system used by the Office up until
the end of 2001 was inadequate and did not meet management
needs. A new system was set up at the beginning of 2002. The
accounts were opened in the new accounting system on the basis
of the balances contained in the general accounts alone, because
the subsidiary accounts could not be used for this purpose. For
example, the subsidiary account balances for ‘Customers’ and
‘Suppliers’ do not provide a breakdown of the balances that are
shown in the balance sheet. Particular attention should be paid to
identifying the balances for customers and suppliers, in respect of
which the previous system largely suffered from serious short-
comings.

10.
In its Annual Report on the Office’s financial statements
concerning the financial year 2000 (6), the Court highlighted
shortcomings in the inventory system. In 2001 the Office began
applying the depreciation rules adopted by the Commission in
December 2000 (7). Coordination between the department respon-
sible for keeping the inventory and the accounts department
should be improved, so as to avoid discrepancies between the val-
ues shown in the balance sheet and those shown in the inventory
lists.

(4) 1,7 million euro in 2000 and 1,5 million euro in 1999.
(5) OJ C 372, 28.12.2001, paragraph 8.
(6) OJ C 372, 28.12.2001, paragraph 10.
(7) Commission Regulation (EC) No 2909 of 29 December 2000

(OJ L 336, 30.12.2000, p. 75).

27.12.2002

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Official Journal of the European Communities

C 326/81

Most of the Office’s transactions (crediting of fees and
11.
debiting of expenditure) are effected through one bank account.
The amounts placed in reserve are also held in this current
account, which receives interest at the European Central Bank
refinancing rate, less 0,25 %. Given that the average monthly bal-
ances in this account amounted to over 11 million euro in 2001,
the Office should review its cash management with a view to
increasing the yield on its funds. In the same spirit, it should con-
sider closing an additional bank account it holds which continues
to be virtually unused (1).

Article 79 of the detailed rules for the implementation of the
Office’s financial regulation.

Application of financial provisions

13.
The Office’s headquarters have been renovated and refit-
ted. The work began in 1999 and was physically completed in
September 2000. Part of the electrical installation work was not
covered by a commitment (3) and the appropriations that remained
available under the budget heading concerned (4) were insufficient
to meet the obligation entered into by the Office.

The Office maintains an imprest account, as provided for
12.
in Article 45 of its financial regulation and in Article 71 of the
implementing rules. An audit of this account (2) revealed that the
balance exceeded the 75 000 euro ceiling fixed by the decision of
10 May 2001 concerning the establishment of the Office. Further-
more, some expenditure was still not backed up by supporting
documents. The Accounting Officer should systematically carry
out spot checks on the imprest account, in accordance with

The Office’s Management Board met on 20 and 21 Sep-
14.
tember 2001 in Lisbon. The commitment (5) in respect of the
reimbursement of mission expenses and subsistence allowances
to members of the Management Board was entered into on
23 October 2001, i.e. a month after the meeting had taken place,
on the basis of expenditure already incurred. This practice does
not comply with the provisions of the Financial Regulation and
could prove particularly critical at the end of the financial year.

This report was adopted by the Court of Auditors in Luxembourg at the Court meeting of 25 and
26 September 2002.

For the Court of Auditors

Juan Manuel FABRA VALLÉS

President

(1) The account shows an average balance of 970 000 euro and was used

for only about a dozen transactions in 2001.

(2) Audit carried out in October 2001.
(3) Uncovered amount: 11 933 euro.
(4) Budget heading 2040.
(5) Commitment No CPV 3157.

Implementation of the budget for the financial year 2001

Table 1

Revenue

Revenue entered
in the final
budget for the
financial year

Revenue
collected

Expenditure
allocation

Expenditure

(Mio EUR)

Appropriations in the final budget

Appropriations carried over from the
previous financial year

Available Appropriations
(2001 budget and financial year 2000)

entered

commit-
ted

paid

carried
over

cancelled

outstanding
commitments

paid

cancelled

appro-
priations

commit-
ted

paid

carried
over

cancelled

7,5

0,7

0,4

8,6

7,7

0,5

0,5

8,7

Title I
Staff

Title II
Administration

3,4

3,3

2,8

0,0

0,6

0,05

0,04

0,01

3,5

3,4

2,8

0,0

1,0

0,9

0,6

0,1

0,3

0,2

0,2

0,0

1,2

1,1

0,8

0,1

Title III
Operating
activities

4,1

8,6

3,8

8,0

1,0

4,4

2,9

3,0

0,2

1,1

Total

1,7

2,0

0,6

0,8

1,1

1,1

5,8

5,5

10,5

10,0

1,6

5,2

2,9

3,0

0,6

0,3

1,3

2,2

Origin of revenue

Own revenue

Other revenue

Financial
revenue

Total

NB: The totals may contain discrepancies due to the effect of rounding.
Source: The Office’s data. These tables summarise the data provided by the Office in its own financial statements.

C
3
2
6
/
8
2

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n
C
o
m
m
u
n
i
t
i
e
s

.

.

2
7
1
2
2
0
0
2

27.12.2002

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Official Journal of the European Communities

C 326/83

Revenue and expenditure account for the financial years 2001 and 2000

Table 2

2001

2000

(1 000 EUR)

Revenue
Own revenue (taxes)
Miscellaneous revenue
Financial revenue

Expenditure for the financial year
Staff — Title I of the budget
Payments
Appropriations carried over

Administration — Title II of the budget
Payments
Appropriations carried over

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

7 691,00
463,00
534,00

Total revenue (a)

8 688,00

2 767,00
27,00

565,00
141,00

1 048,00
2 873,00

Out-turn for the financial year (a-b) (1)

Balance carried over from the previous financial year
Appropriations carried over and cancelled
Exchange-rate differences

Total expenditure (b)

7 421,00

1 267,00

8 644,00
1 121,00
– 3,00

(1) Calculated in accordance with the principles laid down in Article 15 of Council Regulation (EC, Euratom) No 1150/2000 (OJ L 130, 31.5.2000, p. 8).
NB: The totals may contain discrepancies due to the effects of rounding.
Source: The Office’s data. These tables summarise the data provided by the Office in its own financial statements.

Balance for the financial year

11 029,00

6 848,00
232,00
371,00

7 451,00

2 689,00
46,00

568,00
208,00

797,00
1 701,00

6 009,00

1 442,00

6 096,00
1 109,00
– 3,00

8 644,00

C 326/84

EN

Official Journal of the European Communities

27.12.2002

Balance sheets as at 31 December 2001 and 31 December 2000

Table 3

Assets

2001

2000

Liabilities

2001

2000

(1 000 EUR)

Fixes assets
Buildings
Equipment and furniture
Computer equipment
Intangible assets
Depreciation

Current assets
Subsidies receivable
VAT to be recovered
Sundry accounts receivable

Cash accounts
Banks
Imprest account

Fixed capital
Own capital
Balance for the financial year

2 397,00
144,00
154,00
60,00
– 271,00

2 384,00
139,00
135,00
59,00
0,00

Subtotal

2 484,00

2 717,00

Current liabilities

2 484,00
11 029,00

2 717,00
8 644,00

Subtotal 13 513,00

11 361,00

0,00
5 434,00

284,00
382,00
48,00

714,00

0,00
731,00
25,00

Subtotal

756,00

14 702,00
75,00

11 434,00
150,00

Subtotal 14 777,00

11 584,00

Total 18 017,00

15 015,00

Automatic carry-overs of appropriations

3 041,00

1 954,00

Social liabilities

VAT

14,00

38,00

528,00

382,00

Adv. from customers and sundry acc. payable

239,00

846,00

Applicant current accounts

64,00

36,00

Suppliers

Deferred payments

423,00

195,00

0,00

0,00

Accruals and deferred income

0,00

398,00

Subtotal

4 504,00

3 654,00

Total 18 017,00

15 015,00

NB: The total may contain discepancies due to the effects of rounding.
Source: The Office’s data. These tables summarise the data provided by the Office in its own financial statements.

27.12.2002

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Official Journal of the European Communities

C 326/85

THE OFFICE’S REPLIES

5 and 6.

No observations made.

7.
The Office’s Financial Regulation must be amended in
order to bring it into line with the amendments made to the new
Commission regulation recently adopted by the Council. The
Office will take advantage of this to introduce the possibility of
using differentiated appropriations in order to better manage car-
ryovers of operating appropriations.

The Office is considering reusing the account which the
11.
Court suggested be examined for possible closure, given that it
currently offers more favourable conditions than the other account
referred to by the Court.

12.
Following the decision of 10 May 2001 amending the
ceiling set for imprest transactions, several months were needed
to settle the amount owing to delays in administrative procedures.

8.
The Office takes note of this observation. It will be taken
into account from the next publication of the annual accounts.

The Office agrees with the Court’s observations set out in

13.
this paragraph.

9.
The previous general accounting system was replaced from
the beginning of the new financial year 2002 by a more reliable
product, the EXACT software, which is also used by other decen-
tralised agencies and offices. An in-depth analysis of customers’
and suppliers’ accounts was undertaken for the past three years’
entries. The Court will be informed later of the results of that
analysis.

The Office takes good note of the Court’s observation

10.
and, as a result, will change its working methods.

It is very difficult, as far as the experts or members of the
14.
Management Board are concerned, to calculate accurately the
exact number of participants and their travel costs prior to the
meeting. This being the case, the Office will henceforth put in
place a system of flat-rate or provisional commitments based on
data gathered in the past (estimated number of participants, cal-
culation of daily subsistence allowances and estimated travel costs)
with a safety margin of 5 % to 10 %. Any necessary changes will
be made when the final statement of expenses is drawn up fol-
lowing the meetings.