Report on the financial statements of the European Agency for Safety and Health at Work concerning the financial year 2001, together with the Agency's replies
Date: 2002-09-26
Institutions: European Court of Auditors
Subjects: European Agency for Safety and Health at Work, financial control, financial year, report

27.12.2002

EN

Official Journal of the European Communities

C 326/9

on the financial statements of the European Agency for Safety and Health at Work concerning the
financial year 2001, together with the Agency’s replies

REPORT

(2002/C 326/02)

CONTENTS

Paragraph

Page

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

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

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

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

1-4

5-17

5-8

9-12

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

13-17

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

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

10

10

10

10

11

12

15

C 326/10

EN

Official Journal of the European Communities

27.12.2002

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).

The Court has examined the financial statements of the
2.
European Agency for Safety and Health at Work for the financial
year ended 31 December 2001. 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 rules provided
for under Article 15 of Council Regulation (EC) No 2062/94. The
Court of Auditors is required under Article 248 of the Treaty
establishing the European Community to examine these accounts.

3.
The Court undertook its audit in accordance with its audit-
ing policies and standards. These have been adapted from gener-
ally accepted international auditing standards to reflect the spe-
cific characteristics of the Community context. Accordingly, the
Court examined the accounting records and applied the audit
procedures it deemed necessary in the circumstances. By means
of this audit, the Court obtained a reasonable basis for the opin-
ion expressed below.

The appropriations available (4) for the financial year
6.
amounted to 14,0 million euro, consisting of 12,0 million euro
for the financial year 2001 and 2,0 million in carry-overs from
the previous financial year. In addition to its budgetary allocation,
the Agency received a subsidy from the Commission of
624 000 euro for a multiannual operation to prepare the candi-
date countries for membership. A total of 126 959 euro of these
appropriations was committed in 2001 and payments of
17 048 euro were made, with the balance being carried over.

7.
Of the appropriations for the financial year 2001, 11,3 mil-
lion euro was committed and payments were made for 5,0 mil-
lion euro, or 44 % of the commitments entered into. The balance
of the appropriations was either carried over (6,2 million euro) or
cancelled (0,8 million euro). Out of the operating appropriations
(Title III), which totalled 7,6 million euro, a sum of 7,3 million
euro was committed, of which 1,5 million euro was paid out and
5,8 million euro had to be carried over to the following financial
year. The balance was cancelled. The very large total for carry-
overs of operating appropriations is due to the fact that the Com-
mission entrusted the Agency with an important measure (4,5
million euro) during the course of the financial year 2001. The
time required for its preparation meant that it could not be imple-
mented in 2001 and all the appropriations allocated to it had to
be carried over to the financial year 2002. Irrespective of this fac-
tor, however, the carry-over rate for operating appropriations is
still very high and the Agency should continue to improve the
quality and monitoring of the programming of its activities.

This examination has allowed 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.

The appropriations carried over from the previous finan-
8.
cial year totalled 2,0 million euro, 1,7 million of which related to
Title III. Out of these appropriations, payments totalling 1,7 mil-
lion euro were made, 1,5 million euro of which related to Title III,
and the balance was cancelled.

MAIN OBSERVATIONS

Implementation of the budget

5.
The implementation of the appropriations for the financial
year 2001 and of those carried over from the previous financial
year is shown in Table 1 (3).

(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 2001 were drawn up on 9 April 2002 and forwarded to the
Agency’s Administrative Board, the Commission and the Court of
Auditors. The Court received these accounts on 15 April 2002. 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 drawn up on the basis of the
most precise values possible using the data available. The figures have
been rounded up or down for the purposes of presentation, which
may result in small discrepancies in the totals. A dash indicates that a
value is non-existent or nil, and 0,0 indicates a value lower than the
rounding-off threshold.

Financial statements

9.
Tables 2 and 3 set out in summary form the revenue and
expenditure account and balance sheet published by the Agency
in its Activity Report for 2001.

10.
The Agency does not depreciate its fixed assets. It should
apply the valuation and depreciation rules adopted by the Com-
mission (5) so that the values entered in the balance sheet provide
a faithful picture of the goods comprising its assets.

11.
The Agency should step up the measures already taken to
minimise the risk of repayments being made twice over and must
therefore reimburse mission expenses to the persons it invites to
its offices on the basis of original documents, rather than copies.

(4) Non-differentiated appropriations.
(5) Commission Regulation (EC) No 2909/2000 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 326/11

The SI2 budgetary accounting system used by the Agency
12.
should not allow the operations for a financial year to be amended
after the closure date (15 January of the following financial year),
except in the cases provided for in the rules.

Recoveries totalling 82 500 euro had still not been made
15.
by the end of the financial year 2001, in breach of the provisions
of the corresponding recovery orders. The Agency should take
steps to ensure that the orders are enforced.

Application of financial provisions

13.
On 23 February 2001, the Agency implemented the bud-
get heading relating to the field of ‘Research — Work and Safety’
by signing a contract valued at 225 000 euro, even though the
available appropriations amounted to just 185 000 euro. In order
to cover the shortfall of 40 000 euro between the available appro-
priations and the contract amount, the Agency used appropria-
tions entered under a different budget heading relating to a pro-
gramme for small and medium-sized enterprises, without
submitting any justification. This practice does not comply with
the principle of budgetary specification.

16.
In January 2001, i.e. after the time-limit of 31 December
2000 laid down by the Agency’s Director, one national centre
requested a subsidy to cover activities costing a total of 184 768
euro. In the end, the programme was approved by the Agency in
September 2001 for a sum of 27 781 euro, which was to be
financed entirely by the subsidy from the latter. The justification
provided was that, in the previous year, the centre concerned had
received a subsidy which had been smaller than that provided for,
due to the fact that some of the planned activities had not been
carried out. Such a change in the volume of planned activities,
along with the length of time needed to reach a final decision,
demonstrate the need for the Agency to make its work program-
ming system far stricter.

14.
The Agency systematically carries over the entire balance
of provisional commitments to the following financial year with-
out justifying this on the basis of order forms that have already
been issued. For example, 114 134 euro was carried over to 2002
under the heading of mission expenses, whereas the payments
outstanding amounted to less than 50 000 euro. Such carry-overs
are not justified.

17.
It was only as of the second quarter of 2001 that the
Agency developed a genuine system for estimating the volume of
translations that would be placed with the Translation Centre for
Bodies of the European Union. The system concerned should be
developed within the framework of the Agency’s programming of
its work to avoid local translation companies having to be used
in an emergency.

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

Table 1

Budget implementation for the financial year 2001

Expenditure

(Mio EUR)

Revenue
collected

Expenditure
allocation

Appropriations under 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

3,2

3,0

2,7

0,2

0,5

0,04

0,02

0,02

3,3

3,0

2,7

0,2

1,1

1,1

0,8

0,2

0,0

0,2

0,2

0,0

1,3

1,3

1,0

0,2

7,6

7,3

Total

12,0

11,3

1,5

5,0

5,8

6,2

0,3

0,8

1,7

2,0

1,5

1,7

0,2

0,2

9,4

9,0

14,0

13,3

3,1

6,8

5,8

6,2

0,5

0,1

0,5

1,0

Revenue

Revenue entered
under the final
budget for the
financial year

11,8

0,2

Origin of revenue

EC/EFTA
subsidies

Other subsidies

Other yields

p.m

Total

12,0

Title I
Staff

Title II
Administration

Title III
Operational
activities

9,4

0,2

0,1

9,7

NB: Any discrepancies in totals are due to the effects of rounding.
Source: The Agency’s data — These tables present, in summary form, the data provided by the Agency in its own financial statements.

C
3
2
6
/
1
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 326/13

Revenue and expenditure accounts for the financial years 2001 and 2000

Table 2

(1 000 EUR)

Revenue collected for the financial year
Commission subsidies
Other subsidies
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

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

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 and cancelled
Sums to be re-used carried over from the previous financial year
Exchange-rate differences
Adjustment entries

Total revenue (a)

Total expenditure (b)

2001

9 400
184
91

9 676

2 654
168

846
229

1 543
5 814

11 255

– 1 579

– 886
242
9
2
27

Balance for the financial year

– 2 185

2000

6 188
288
97

6 573

2 358
36

746
204

1 339
1 745

6 427

146

– 1 273
234
—
—
—

– 886

(1) The negative out-turn and own capital balances do not represent a capital loss. They result from applying the Financial Regulation as it pertains to revenue (collected only)

and expenditure (payments made plus appropriations carried over).

NB: Any discrepancies in totals are due to the effects of rounding.
Source: The Agency’s data — These tables present, in summary form, the data provided by the Agency in its own financial statements.

C 326/14

EN

Official Journal of the European Communities

27.12.2002

Balance sheet as at 31 December 2001 and 31 December 2000

Table 3

Assets

2001

2000

Liabilities

2001

2000

(1 000 EUR)

Fixed assets
Fittings and furniture
Transportation equipment
Computer equipment
Intangible assets

Stocks

Current assets
Recoverable VAT
Sundry accounts receivable

Cash accounts
Bank accounts and cash
Imprest account

516
26
311
75

929

15

0
159

159

Subtotal

Subtotal

4 039
60

Subtotal

4 098

Total

5 202

488
26
354
0

868

1

21
20

41

1 522
59

1 582

2 492

Fixed capital
Own capital
Balance for the financial year (1)

944
– 2 185

Subtotal

– 1 241

Current liabilities
Commission
Non-automatic carry-overs of appropriations
Automatic carry-overs of appropriations
Sundry accounts payable
Payroll deductions
VAT/Other taxes

12
190
6 021
27
33

Suspense accounts
Sums to be re-used
Other accounts

Subtotal

6 283

33
128

160

Subtotal

869
– 886

– 17

1 985
433
28
21

2 467

42

42

Total

5 202

2 492

(1) The negative out-turn and own capital balances do not represent a capital loss. They result from applying the Financial Regulation as it pertains to revenue (collected only)

and expenditure (payments made plus appropriations carried over).

NB: Any discrepancies in totals are due to the effects of rounding.
Source: The Agency’s data — These tables present, in summary form, the data provided by the Agency in its own financial statements.

27.12.2002

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Official Journal of the European Communities

C 326/15

THE AGENCY’S REPLIES

The European Agency for Safety and Health at Work replies as fol-
lows to the Court of Auditors’ observations on the Agency’s
financial statements for the financial year 2001.

transfer to the claimants’ official bank accounts, the details of
which will have been entered onto an Agency form.

Implementation of the budget

Paragraphs 7 and 8

As the Court has pointed out, there was a high carryover rate for
operating appropriations from 2001 to the next financial year.
This is in particular due to the fact that of the EUR 5,8 million
mentioned by the Court, EUR 4,5 million directly concerned the
‘SME funding scheme 2001 to 2002’ which was a new activity
desired by the European Parliament and entrusted to the Agency
by the European Commission.

Paragraph 12

By all accounts the operation mentioned by the Court was excep-
tional and concerned an adjustment transaction for a limited
amount intended to correct a booking error on a line of expen-
diture relating to staff, which could not be carried over to the fol-
lowing year.

The Agency will ensure that this kind of operation does not hap-
pen in the future.

As for the rest, within the limits of the statutory framework in
which it operates, the Agency made every effort to limit its rate
of appropriations carried over. To this end, the topic centres will
from now on be paid during the year for which the appropria-
tions were allocated.

Application of the financial provisions

Paragraph 13

Finally, the Agency is constantly seeking to put suitable tools in
place or to improve those already in use with a view to produc-
ing a lasting improvement in the quality and monitoring of its
programming of activities.

Financial statements

Paragraph 10

In reply to the Court’s observations, the Agency did at first con-
sider applying the valuation and depreciation rules adopted by the
Commission by integrating them into its own regulation. How-
ever, in view of the fact that the general recasting of the Financial
Regulation currently in progress is about to reach a conclusion,
the Agency decided to wait until it was finally approved before
ensuring this implementation and to obtain a suitable form of
software.

Paragraph 11

The contract to which the Court referred (EUR 225 000) con-
cerned the carrying-out of two distinct series of tasks concerning
the area of ‘Research — work and safety’: one relating specifically
to this field (budget Item 3 0 2 2: EUR 185 000), the other also
concerns this field but could relate to the field of ‘Small and medi-
um–sized enterprises (SMEs)’ (budget Item 3 0 7 1: EUR 40 000).
Therefore, in order not to allow the issue of which item to book
them under to delay the start-up of this action, the Agency decided
to finance and enter the expenditure onto these two budget head-
ings and within the limits of the available appropriations.

Paragraph 14

In the majority of cases, the appropriations carried over concern
the outstanding balances payable on contracts or order forms for
the current financial year. In certain cases, the amounts had not
been specifically set as they concerned invoices in which the
variation in costs depends on the type of utility or services pro-
vided (e.g.: electricity, telephones, maintenance).

As far as mission expenses are concerned, the Agency decided to
carry over the entire balance of provisional commitments so as
to be able to make repayments on outstanding mission expenses.

To avoid repayments being made twice over, and in harmony
with the Court’s recommendations, the Agency will stamp the
supporting documents (tickets) for travelling expenses for experts’
meetings with the words ‘paid by EU-Agency’. It will also as a
matter of principle arrange for repayments to be made by bank

The Agency will follow the Court’s recommendations with respect
to outstanding balances in order to make the appropriations car-
ried over conform to them.

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Official Journal of the European Communities

27.12.2002

Paragraph 15

The Agency will follow the Court’s recommendations by setting
up a system for conducting monthly checks on pending recovery
orders.

These recovery orders essentially concerned projects for which
the final implementation reports had not been sent by the date
required. Since then these situations have been regularised or are
in the process of being regularised, which will enable the recovery
orders to be cancelled. In other cases, the non-recoveries in 2001
were due to problems connected with not having received the
bank documents in good time.

Paragraph 16

As far as circumstances and procedures allow, and in accordance
with the Court’s recommendations, the Agency will seek to

improve its work programming system in terms of a limitation of
change in the volume of activity, reducing delays with respect to
implementing programmes, reducing the length of time needed
to reach a decision and respect for the principle of the annual
nature of the budget (see the section on ‘Implementation of the
budget’).

Paragraph 17

Profiting from the experience of the financial year 2001, by
December 2001 the Agency had drawn up a first estimate of the
volume of translation requests for 2002. By making a monthly
comparison between the estimated numbers of translation requests
and those actually made, as well as regular revisions of the esti-
mates, it should henceforth be easier to ensure a good follow-up
to the allotted appropriations.