Report on the financial statements of the European Training Foundation for the financial year 2001, together with the Foundation's replies
Date: 2002-09-26
Institutions: European Court of Auditors
Subjects: European Training Foundation, financial control, financial year, report

C 326/50

EN

Official Journal of the European Communities

27.12.2002

on the financial statements of the European Training Foundation for the financial year 2001,
together with the Foundation’s replies

REPORT

(2002/C 326/07)

CONTENTS

Paragraph

Page

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

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

Budgetary implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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

1-4

5-11

5-6

7-10

11

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

The Foundation’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

51

51

51

51

52

53

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Official Journal of the European Communities

C 326/51

THE COURT’S OPINION

1.
This Report is addressed to the Governing Board of the
European Training Foundation in accordance with Article 11(4)
of Council Regulation (EEC) No 1360/90 (1).

The Court has examined the financial statements of the
2.
European Training Foundation for the financial year ended
31 December 2001. In accordance with Article 11(1) of Council
Regulation (EEC) No 1360/90, the budget was implemented on
the responsibility of the Director. This responsibility included the
drawing-up and presentation of the financial statements (2) in
accordance with the internal financial provisions provided for in
Article 12 of Council Regulation (EEC) No 1360/90. The Court of
Auditors is required under Article 248 of the Treaty establishing
the European Community to audit 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 characteristics of the Community context. The Court car-
ried out such tests of the accounting records and applied such
other 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

Budgetary implementation

The appropriations available amounted to 19,4 million
6.
euro, of which 16,8 million euro were granted for 2001 and 2,6
million euro carried over from the previous financial year. Almost
all of the appropriations for the financial year 2001 were com-
mitted and disbursed in payments amounting to 13,2 million
euro, i.e. 79 % of the commitments entered into. The balance of
the appropriations was either carried over (3,5 million euro) or
cancelled (0,5 million euro). Almost all of the operating appro-
priations (Title III), i.e. 5,2 million euro, were committed and a
total of 2,6 million euro was carried over. The extent of these
carry-overs, equal to 50 % of the commitments, reveals the need
for the Foundation to improve the quality of its planning and the
monitoring of its work. The appropriations carried over from the
previous financial year totalled 2,6 million euro, 0,2 million of
which lapsed at the end of the financial year. The Foundation
should do its utmost to reduce the delays in the implementation
of its annual programme in order to improve compliance with the
principle of budgetary annuality.

Financial statements

7.
The revenue and expenditure account and balance sheet
published by the Foundation in its activity report for the financial
year 2001 are presented in summary form in Tables 2 and 3.

8.
In previous reports (4) the Court drew attention to the
management of the PHARE and TACIS programmes. In 2001 the
total sum of these programmes amounted to 232,8 million euro,
210,0 million of which were committed, giving rise to 185,9 mil-
lion in payments. These programmes are managed outside the
budget. The balance (37,8 million euro at 31 December 2001) of
the bank accounts available to the Foundation for managing these
programmes does not appear in the financial statements. Finan-
cial information in respect of these programmes is shown by the
Foundation in an annex to its financial statements.

5.
Table 1 (3) shows the implementation of the appropria-
tions for the year 2001 and the appropriations carried over from
the previous financial year.

9.
The Foundation does not depreciate its fixed assets. It
should apply the valuation and depreciation rules adopted by the
Commission (5) so that the book values faithfully reflect the real
value of the goods which form part of its assets.

(1) OJ L 131, 23.5.1990, p. 4.
(2) As required under Article 11(3) of Council Regulation (EEC)
No 1360/90, the accounts for all the Foundation’s revenue and expen-
diture for the financial year 2001 were drawn up on 27 March 2002
and forwarded to the Foundation’s Governing Board, the Commis-
sion and the Court of Auditors. These accounts were received by the
Court on 8 April 2002. A summarised version of these financial
statements is presented in the tables annexed to this Report.

(3) All the tables in this Report were drawn up on the basis of the most
exact values possible for the data used. For presentation purposes, the
figures were rounded up or down, which may produce minor differ-
ences in the totals. A dash indicates a non-existent or nil value and
0,0 indicates a value below the rounding threshold.

The inventory records are not reliable because no physi-
10.
cal inventory has been carried out since 1999. They include lost
or obsolete goods and no inventory withdrawal can be made. The
Foundation should give priority to updating its inventory.

(4) See paragraph 11 of the report concerning the financial year 1999

(OJ C 373, 27.12.2000, p. 34).

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

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

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Application of the financial provisions

11.
The Foundation often makes use of framework contracts.
These contracts stipulate the maximum amount of purchases that

may be made. No system has been introduced, however, to ensure
that this maximum is not exceeded.

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

For the Court of Auditors

Juan Manuel FABRA VALLÉS

President

Implementation of the budget for the financial year 2001 (1)

Table 1

Revenue
received

Allocation of
expenditure

Final budget appropriations

Appropriations carried over from the
previous financial year

Appropriations available
(2001 budget and financial year 2000)

entered

commit-
ted

paid

carried
over

cancelled

commitments
outstanding

paid

cancelled

appro-
priations

commit-
ted

paid

carried
over

cancelled

Expenditure

(Mio EUR)

Title I
Staff

Title II
Administration

Title III
Operating
activities

16,8

0,3

0,05

17,1

10,2

10,2

9,7

0,5

0,0

1,4

1,4

0,9

0,5

—

5,2

5,2

2,6

Total

16,8

16,8

13,2

2,6

3,6

0,0

0,0

0,2

0,5

1,9

2,6

0,2

0,4

1,8

2,4

—

—

0,2

0,2

10,4

10,4

9,9

0,5

0,0

1,9

1,9

1,3

0,5

—

7,1

7,1

4,4

19,4

19,4

15,6

2,6

3,6

0,2

0,2

Revenue

Revenue entered
in the final
budget for the
financial year

Source of revenue

Community
subsidies

16,8

Other subsidies

p.m

Other revenue

p.m

Total

16,8

(1) The budget does not include the appropriations granted by the Commission to finance programmes which the Foundation manages on its behalf.
NB: Any discrepancies in totals are due to the effects of rounding.
Source: Foundation data. These tables summarise the data supplied by the Foundation in its own financial statements.

.

.

2
7
1
2
2
0
0
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

C
3
2
6
/
5
3

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Official Journal of the European Communities

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Revenue and expenditure account for the financial years 2001 and 2000 (1)

Table 2

2001

2000

(1 000 EUR)

Revenue received during the financial year
Commission subsidies
Miscellaneous revenue
Financial revenue

Budgetary 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

Total revenue (a)

16 800
47
290

17 137

9 746
356

862
541

2 572
2 595

Total expenditure (b)

16 672

Outturn for the financial year (2) (a-b)

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

Balance for the financial year

465

3 352
242
– 20

4 055

(1) The revenue and expenditure account and balance sheet only take account of the Foundation’s specific activities: they ignore the managed programmes.
(2) Calculated according to the provisions of Article 15 of Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 (OJ L 130, 31.5.2000, p. 8).
NB: Any discrepancies in totals are due to the effects of rounding.
Source: Foundation data. These tables summarise the data supplied by the Foundation in its own financial statements.

16 200
240
2

16 442

9 952
258

890
472

2 608
1 920

16 100

342

2 812
227
– 29

3 352

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Balance sheet as at 31 December 2001 and 31 December 2000 (1)

Table 3

Assets

2001

2000

Liabilities

2001

2000

(1 000 EUR)

Fixed assets
Equipment and furniture
Computer equipment

Stocks

Current assets

Sundry accounts receivable

Cash accounts

Bank accounts

Imprest account

Subtotal

618
1 565

2 183

617
1 373

1 990

55

21

203

203

215

215

Subtotal

Fixed capital
Own capital
Balance for the financial year

Subtotal

Current liabilities
Automatic carry-overs of appropriations
Adjustment to carry-overs
Sundry accounts payable
Deductions from salaries
Commission and other contributors

8 011

42

6 054

105

Suspense accounts
Sums to be reused
Payments in progress

Subtotal

8 053

6 159

Total

10 495

8 385

2 238
4 055

6 293

3 492
24
176
0
502

4 194

2
5

7

2 010
3 352

5 362

2 704 (2)
0
67
130
10

2 911

0
111

111

Subtotal

Subtotal

Total

10 495

8 384

(1) The revenue and expenditure account and balance sheet ONLY take account of the Foundation’s specific activities: they ignore the managed programmes.
(2) Including 54 000 euro in differentiated appropriations for commitments carried over from the previous financial year.
NB: Any discrepancies in totals are due to the effects of rounding.
Source: Foundation data. These tables summarise the data supplied by the Foundation in its own financial statements.

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THE FOUNDATION’S REPLIES

Financial statements

8. Budget management of Phare and Tacis programmes

The Foundation is working on the integration of Tempus conven-
tions into the budgetary accounting system (SI2), starting from
the technical assistance conventions. Tempus budgets have so far
had extra-budgetary management as specifically requested by DG
EAC.

As regards other Phare, Tacis, and CARDS conventions, the Foun-
dation is evaluating the cost-benefit ratio of transferring them
into SI2 as well, since project-management services given to the
Commission are being phased out according to the agreed mid-
term strategy of the Foundation.

9 and 10. Depreciation and inventory

The Foundation plans to launch a complete input of property
records in the new inventory system by the end of November to
replace completely the old systems and records. The record input
will be based on a physical inventory to be carried out first.

In this framework, the Foundation has drafted guidelines, includ-
ing work flows and responsibilities for asset identification, regis-
tration, management, disposal and depreciation that comply with
Community regulations in force. These guidelines are available
upon request.

Application of the financial provisions

11. Framework contracts

The Foundation intends to apply depreciation to its non-financial
fixed assets as from this year’s accounts. The depreciation will be
applied retroactively and en bloc to account for what should have
been deducted in previous years. The depreciation rates and pro-
cedure applied will be based on Regulation (EC) No 2909/2000.

By nature, framework contracts do not indicate a maximum
amount, but only a list of prices for the various items/services,
which might be purchased under the contract. In the tender docu-
ments for the selection of framework contractors the estimated
volume/amount of the services requested under the contract is
often mentioned.

The in-house development of an electronic asset-management
system (inventory) has just been completed. The system is cur-
rently undergoing testing, and some minor modifications will be
made before implementation.

The Finance unit and Legal service are currently working to put
in place a mechanism to control the level of spending under each
running framework contract.