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

27.12.2002

EN

Official Journal of the European Communities

C 326/35

on the financial statements of the Translation Centre for the bodies of the European Union for the
financial year 2001, together with the Centre’s replies

REPORT

(2002/C 326/05)

TABLE OF CONTENTS

Paragraph

Page

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

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

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

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

Purchases of goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Estimation of requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cooperation with the Institutions and other Community bodies . . . . . . . . . . . . . . . . . . . .

Evaluation of bids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Evaluation of external translation services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1-4

5-15

5

6-7

8-15

8

9

10-13

14-15

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

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

36

36

36

36

36

36

36

37

37

38

41

C 326/36

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
Translation Centre for the Bodies of the European Union in con-
formity with Article 14(4) of Council Regulation (EC)
No 2965/94 (1).

2.
The Court of Auditors has examined the financial state-
ments of the Translation Centre for the Bodies of the European
Union for the financial year ended 31 December 2001. In accor-
dance with Article 14(1) of Council Regulation (EC) No 2965/94,
the budget was implemented under the responsibility of the
Director. This responsibility includes the drawing-up and presen-
tation of the financial statements (2) in accordance with the inter-
nal financial provisions provided for in Article 15 of Regulation
(EC) No 2965/94. The Court is required pursuant to Article 248 of
the Treaty establishing the European Community to examine
these 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 specific
characteristics of the Community context. 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 enabled the Court to obtain reason-
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

The implementation of appropriations for the financial
5.
year 2001 and of the appropriations carried over from the previ-
ous financial year is shown in Table 1 (3). It should be noted that
staffing expenditure (Title 1) includes not only expenditure on the
Centre’s own staff but also expenditure on external translators.

(1) OJ L 314 of 7.12.1994, p. 1.
(2) As laid down in Article 14(3) of Council Regulation (EC) No 2965/94,
the accounts for all the Centre’s revenue and expenditure for the
financial year 2001 were established on 14 March 2002 and sent to
the Centre’s Management Board, the Commission and the Court of
Auditors. These accounts were received by the Court on 21 June
2002. A summarised version of these financial statements is pre-
sented in the tables attached to this report.

(3) All of the tables in this report have been drawn up on the basis of the
most exact possible values of the data employed. For presentation
purposes, the figures have been rounded off, which may create very
minor differences in the totals. A hyphen indicates a non-existent or
zero figure and 0,0 indicates a figure below the rounding-off thresh-
old.

The appropriations available totalled 27,2 million euro, of which
24,8 million were for the financial year and 2,4 million had been
carried over from the previous financial year. Commitments in
respect of the appropriations for the financial year proper
amounted to 16,8 million euro, which led to payments totalling
15,0 million euro. The balance of the appropriations was either
carried over (1,8 million euro) or cancelled. The considerable value
of the cancellations (8,1 million euro) is explained by the fact that
the reserve (3,9 million euro) was not used. The appropriations
carried over from the previous financial year totalled 2,4 million
euro, 2,2 million of which resulted in payments (the balance was
cancelled).

Financial statements

The revenue and expenditure account and the balance
6.
sheet published by the Centre in its activity report for the finan-
cial year 2001 are presented in summary form in Tables 2 and 3.

7.
Since April 1997, the Centre has occupied the premises
placed at its disposal by the Luxembourg authorities even though
the conditions for this were never laid down in a formal agree-
ment (4). At its meeting of 14 March 2002, the Centre’s Manage-
ment Board decided to establish a reserve as from 2002 to meet
any demands made by the Luxembourg authorities as regards the
cost of these premises.

Purchases of goods and services

Estimation of requirements

8.
Generally, the Centre should improve its system for esti-
mating requirements and for planning the totality of its purchases
by going beyond the current framework, which is essentially
annual. It could be more formalised and documented, thereby
enabling estimates to be compared with actual requirements.

Cooperation with the Institutions and other Community
bodies

9.
The Centre participates in the Interinstitutional Group for
the Harmonisation of Purchasing Procedures and in interinstitu-
tional calls for tender, as well as in exchanges of information on
purchases of everyday goods and services. Regarding the organi-
sation of invitations to tender for translations, coordination
between the Community bodies could be improved. Furthermore,
differences in approach between the Institutions and the Centre
as regards the appraisal and utilisation of qualitative criteria for
translations must be resolved so as to enable joint calls for tender,
which would make it possible to obtain better conditions.

(4) See paragraph 13 of the Report concerning the financial year 2000

(OJ C 372, 28.12.2001, p. 29).

27.12.2002

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Official Journal of the European Communities

C 326/37

Evaluation of bids

10.
Very often, and particularly in the case of external trans-
lation services and computer systems, the Centre uses a value-for-
money ratio to select tenderers. The Centre justifies this approach
in the interests of prudence and economy: the better the product,
the greater the likelihood that the cost of using or maintaining it
will be lower (e.g. the cost of revising translations or of maintain-
ing computer systems).

11.
For the purchase of goods and services other than exter-
nal translations, quality-assessment procedures vary from con-
tract to contract even if they concern purchases of the same kind.
As a rule, the evaluation is carried out by a committee made up
of three members who give their opinions on the various aspects
of the quality of the product on the basis of the documents pro-
duced. In certain cases, the individual opinions are cited; in oth-
ers, the result is an amalgam of the various opinions expressed.

12.

The qualitative criteria selected should be:

— more standardised for purchases of the same kind;

— based more on objective indicators which are as quantifiable

as possible;

— applied more as part of a precise procedure so as to guaran-
tee the independence and impartiality of the members of the
evaluation committee.

In order to facilitate the assessors’ work, the format of the
13.
replies to be provided by tenderers should be developed and
specified so as to make them as comprehensive and as compa-
rable as possible.

Evaluation of external translation services

Over time, the provisions of the contracts concluded with
14.
translation agencies have become more precise and rigorous, in
particular as regards quality control.

Any document translated by external translators is exam-
15.
ined by one of the Centre’s revisers in order to assess its quality.
The Centre’s customers are also invited to give their opinions as
to the quality of the translations. However, the complexity of the
documents to be translated differs from one translation agency to
another, which makes it difficult to compare their work in terms
of value for money. The Centre and the other Community bodies
that use external translation services should consult one another
with a view to defining common criteria for the quality of transla-
tions.

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

Table 1

Revenue

Revenue entered
in the final
budget for the
financial year

Origin of the
revenue

Revenue
received

Allocation of
expenditure

Expenditure

(Mio EUR)

Appropriations in final budget

Appropriations carried over from
previous year

Available appropriations
(2001 budget and 2000 financial year)

entered

commit-
ted

paid

carried
over

cancelled

outstanding
commitments

paid

cancelled

appro-
priations

commit-
ted

paid

carried
over

cancelled

Own revenue

21,5

Financial
income

Previous
surplus and
reserve

Total

0,2

3,1

24,8

20,8

0,4

—

21,2

Title I
Staff

Title II
Administration

Title X
Reserve

18,3

14,8

13,9

0,9

3,6

2,6

2,0

1,1

0,9

0,6

3,9

—

—

—

Total

24,8

16,8

15,0

1,8

3,9

8,1

NB: The totals may include differences due to rounding off.
Source: Data compiled by the Centre — These tables summarise the data provided by the Centre in its own financial statements.

0,9

1,5

—

2,4

0,7

0,1

19,2

15,6

14,6

0,9

3,7

1,4

0,1

4,1

3,5

2,5

0,9

0,7

—

—

2,2

0,2

3,9

27,2

—

—

—

19,2

17,1

1,8

3,9

8,3

C
3
2
6
/
3
8

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 326/39

Revenue and expenditure account for the financial years 2001 and 2000

Table 2

2001

2000

(1 000 EUR)

Revenue received during the financial year
Own revenue
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

Total revenue (a)

Total expenditure (b)

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

Balance carried over from the previous financial year
Appropriations carried over from the previous financial year which lapsed
Refund to Europol
Contingency reserve
Exchange-rate differences

Balance for the financial year

20 182
5
458

20 646

13 861
891

1 090
929

16 772

3 873

4 977
240
—
– 1 221
6

7 875

21 264
263

21 527

12 640
881

849
1 512

15 882

5 645

1 854
358
– 217
– 2 653
– 10

4 977

(1) Calculation based on the principles of Article 15 of Council Regulation (EC, EURATOM) No 1150/2000 of 22 May 2000 (OJ L 130 of 31.5.2000, p. 8).
NB: The totals may include differences due to rounding off.
Source: Data compiled by the Centre — These tables summarise the data provided by the Centre in its own financial statements.

C 326/40

EN

Official Journal of the European Communities

27.12.2002

Balance sheet at 31 December 2001 and 31 December 2000

Table 3

Assets

2001

2000

Liabilities

2001

2000

(1 000 EUR)

Fixed assets
Equipment and furniture
I. T.
Intangible fixed assets
Provision for amortisation

Current assets (1)
Recovery orders
Reoverable VAT
Sundry accounts receivable

Cash accounts
Banks
Cash

225
2 754
97
– 381

182
893
44
0

Fixed capital
Own capital
Community pension reserve
Balance for the financial year

2 695
3 874
7 875

1 118
2 653
4 977

Sub-total

2 695

1 118

Sub-total

14 444

8 748

4 556
15
452

3 190
17
693

Current liabilities (1)
Automatic carry-overs of appropriations
Advances received
Outstanding sums
Sundry accounts payable

Sub-total

5 024

3 901

Sub-total

14 173
1

Sub-total

14 174

10 724
0

10 724

Suspense accounts
Re-used revenue

Sub-total

1 820
596
4 992
20

7 429

21

21

2 393
458
3 860
271

6 982

14

14

Total

21 893

15 743

Total

21 893

15 743

(1) In order to make the information more exact, certain balances were reallocated among the existing headings.
NB: The totals may include differences due to rounding off.
Source: Data compiled by the Centre — These tables summarise the data provided by the Centre in its own financial statements.

27.12.2002

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Official Journal of the European Communities

C 326/41

THE CENTRE’S REPLIES

MAIN OBSERVATIONS

Financial statements

The Luxembourg authorities have expressed on several
7.
occasions their intention to deal with this matter, as well as to
approve the seat and security issues once the financing plan for
the permanent seat of the Centre has been established. At its
meeting on 14 March 2002, the Management Board established
budget heading 10 0 0 3 ‘Reserve for potential obligations relat-
ing to rental of buildings’ in the preliminary draft budget for
2003 to take account of the uncertainty regarding any obligations
arising from the premises made available to the Centre. The Man-
agement Board will examine progress made with regard to this
matter at its next meeting on 24 October 2002.

Purchases of goods and services

Estimation of requirements

The Centre has taken good note of the Court’s observa-

8.
tions.

Cooperation with the institutions and other Community
bodies

9.
The Centre completely shares the Court’s opinion. For the
organisation of calls for tenders, the Centre is already striving to
pursue greater interinstitutional cooperation as far as possible,
and special efforts have been made to harmonise documents
relating to calls for tenders to enable greater economies of scale.

Despite this, it must be borne in mind that a number of statutory,
budgetary and policy constraints remain (the rules applicable, dif-
ferences of interpretation as regards the rules to be followed
because of different financial controls and ACPCs, the margin for
manoeuvre of each institution to carry out the tasks which have
been assigned to it).

Evaluation of bids

10.
Concerning external translation services, contracts are
awarded on the basis of various criteria enabling the most advan-
tageous bid in economic terms to be determined. In applying a
value-for-money ratio, the Centre is convinced, through its expe-
rience in procuring external translation services, of the impor-
tance of the quality factor, which will enable, inter alia, a reduc-
tion in revision costs. Because of this, for the last calls for tenders
for language services, the quality criteria was revised upwards (a
minimum quality score of 60 % now being necessary in order for
a bid to be considered of sufficient quality and accepted for the
rest of the procedure).

For services other than translation services, the authorising author-
ity may however base its decision to award contracts only on the
basis of the lowest price.

11 to 13.
The Centre recognises the importance of absolute
clarity in the operational procedures of the evaluation commit-
tees. Constant efforts are being made to this end.

For services other than translation, the procedures have been
clearly established. The committees are always made up of a mini-
mum of three persons, at least one of whom does not belong to
the department concerned. The committees are composed accord-
ing to field of expertise. Thus, even though the decisions of the
committees are always taken jointly, the expert’s opinion is high-
lighted in specific areas.

Evaluation of external translation services

Concerning cooperation between the external translation
15.
services in the field of quality, an interinstitutional evaluation sys-
tem project is underway. The difficulty of the texts to be trans-
lated is one of the points to be considered, among others, in this
project. The cooperation recommended by the Court is already
underway within the framework of the Interinstitutional Com-
mittee for the Evaluation of Quality (CIEQ), to whom the docu-
ments are sent for an opinion as soon as a quality problem arises
in house.