Report on the financial statements of the European Monitoring Centre on Racism and Xenophobia for the financial year 2001, together with the Centre's replies
Date: 2002-09-26
Institutions: European Court of Auditors
Subjects: European Union Agency for Fundamental Rights, financial control, financial year, report

C 326/72

EN

Official Journal of the European Communities

27.12.2002

on the financial statements of the European Monitoring Centre on Racism and Xenophobia for the
financial year 2001, together with the Centre’s replies

REPORT

(2002/C 326/10)

CONTENTS

Paragraph

Page

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

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

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

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

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

1-5

6-20

6-9

10-11

12-20

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

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

73

73

73

73

73

75

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27.12.2002

EN

Official Journal of the European Communities

C 326/73

THE COURT’S OPINION

1.
This report is addressed to the Management Board of the
European Monitoring Centre on Racism and Xenophobia (here-
inafter called ‘the Centre’), in accordance with Article 12(11) of
Council Regulation (EC) No 1035/97 (1).

2.
The Court has examined the financial statements of the
Centre for the financial year ended 31 December 2001. In accor-
dance with Article 12(8) of Council Regulation (EC) No 1035/97,
the budget was implemented on the responsibility of the Execu-
tive Director. This responsibility included the drawing-up and pre-
sentation of the financial statements (2), in accordance with the
internal financial provisions adopted pursuant to Article 12(12)
of Council Regulation (EC) No 1035/97. The Court of Auditors is
required under Article 248 of the Treaty establishing the Euro-
pean Community 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 characteristics of the Community context. Accordingly,
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 reason-
able basis for the opinion expressed below.

4.
This examination has allowed the Court to obtain reason-
ale assurance that the annual accounts for the finacial year ended
31 December 2001 are reliable and that the underlying transac-
tioins, taken as a whole, are legal and regular.

5.
Without calling into question the audit opinion expressed
in paragraph 4, the Court would like, however, to draw attention
to the situations described in paragraph 8 and from paragraph 18
onwards.

MAIN OBSERVATIONS

Budgetary implementation

6.
Table 1 (3) shows the implementation of the budget for the
financial year 2001 and the appropriations carried over from the
previous financial year.

(1) OJ L 151, 10.6.1997, p. 6.
(2) As required under Article 12(10) of Council Regulation (EC)
No 1035/97, the accounts for all the Centre’s revenue and expenditure
for the financial year 2001 were drawn up on 6 February 2002 and
forwarded to the Centre’s Management Board, the Commission and
the Court of Auditors. These accounts were received by the Court on
8 February 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.

Final appropriations for the financial year totalled 5,3 mil-
7.
lion euro, 5,1 million euro of which were committed. Operating
appropriations (Title III) amounted to 2,2 million euro, almost all
of which was committed. Payments in respect of the appropria-
tions of the financial year amounted to 3,8 million; 1,4 million
were carried over to the following financial year and 0,1 million
had to be cancelled. Approximately 50 % of payments in respect
of operating appropriations were made during the last three
months of the year.

8.
Appropriations carried over to 2002 amounted to 1,2 mil-
lion euro (twice the previous year’s figure) and mainly concerned
operating appropriations. The volume of appropriations carried
over was due to the late approval of the work programme by the
Centre’s Management Board and to the slowness in implement-
ing the RAXEN Network (4), which is the main reason for the
Centre’s creation. It shows the need for the Centre to increase the
quality and monitoring of the planning of its operational activi-
ties.

9.
The appropriations carried over from the financial year
2000 to 2001 amounted to 0,8 million euro; they were almost all
disbursed. Over 40 % of the payments in respect of operating
appropriations were made, however, during the last three months
of 2001, which indicates that there was inadequate monitoring of
the projects financed during the previous financial year.

Financial statements

10.
The revenue and expenditure account and balance sheet
published by the Centre in its activity report for the financial year
2001 are presented in summary form in Tables 2 and 3.

11.
The Centre does not depreciate its fixed assets. It should
apply the valuation and depreciation rules adopted by the Com-
mission (5) so that the book values faithfully reflect the real value
of the goods which form part of its assets.

Application of the financial provisions

12.
The Centre did not publish its budget for the financial
year 2001 in the Official Journal, which is contrary to Article 13
of its Financial Regulation.

(4) The European Racism and Xenophobia Information Network.
(5) Commission Regulation (EC) No 2909/2000 of 29 December 2000

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

C 326/74

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Official Journal of the European Communities

27.12.2002

In its 1999 and 2000 Annual Reports on the Centre (1),
13.
the Court called on the Centre to incorporate into its own finan-
cial regulation the amendments concerning VAT made to the
Financial Regulation applicable to the general budget of the Euro-
pean Communities. This has not yet been done.

14.
In the aftermath of 11 September 2001, the Centre made
fifteen addenda to the various contracts linking the Centre with
the national centres making up the Raxen network for which a
specific budgetary heading is provided. To finance these addenda,
a commitment was made and charged to another budgetary head-
ing in violation of the principle of specificity. The Centre should
have made a transfer in due and proper form to cover the short-
age of appropriations.

absence of sufficient supporting documents concerning the ser-
vices actually rendered or the contracting parties’ VAT arrange-
ments.

These suspended payments included a payment of 70 961
18.
euro concerning a contribution of 100 000 euro for a project
jointly financed with the Council of Europe. This financing in fact
constitutes a subsidy intended mainly to reimburse work carried
out beforehand by experts. The Authorising Officer responsible
was able neither to give a precise description of the project nor to
produce documentary evidence in support of the payment
requested. The production of supporting documents is required at
all stages of expenditure (Articles 32, 35 and 39 of the Centre’s
Financial Regulation).

15.
This provisional commitment was booked on 8 October
2001 and the contracts were concluded on 21 October 2001. The
presentation date for the first reports was fixed at 19 October
2001, i.e. before the date on which the contract was signed.

19.
From the point of view of sound financial management,
it is not wise to grant retroactive financing which, precisely
because it is retroactive, does not give any added value to the
actions undertaken by the Centre.

While the annex to the commitment specified that the
16.
contracts expired at the end of 2001, only 16 % of the corre-
sponding payments had been made at 31 December 2001.

At the end of 2001, a considerable number of payments,
17.
totalling 297 546 euro, were suspended,
in accordance with
Article 40 of the Centre’s Financial Regulation, on account of the

The Centre’s Director should consider applying Article 61
20.
of the Financial Regulation concerning the responsibility of Autho-
rising Officers. Given that the payment was suspended pursuant
to Article 40 of the Centre’s Financial Regulation, the commit-
ment in question should be cancelled. In accordance with the pro-
visions of Article 41 of this same Regulation, the Centre’s Man-
agement Board may, however, ask, in writing and on its own
responsibility, for the suspended payment to be made.

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

(1) OJ C 373, 27.12.2000, paragraph 7 and OJ C 372, 28.12.2001, para-

graph 16.

.

.

2
7
1
2
2
0
0
2

Implementation of the budget for the financial year 2001

Table 1

Expenditure

(Mio EUR)

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

5,0

—

—

5,0

Title I
Staff

Title II
Administration

2,2

2,1

2,1

0,1

0,0

0,9

0,8

0,7

0,1

0,1

Title III
Operating
activities

2,2

5,3

2,2

5,1

1,0

3,8

1,2

1,4

0,0

0,1

Total

0,1

0,1

0,6

0,8

0,1

0,0

2,3

2,2

2,2

0,1

0,1

0,0

1,0

0,9

0,8

0,1

0,6

0,8

0,0

0,0

2,8

6,1

2,8

5,9

1,6

4,6

1,2

1,4

0,0

0,1

0,0

0,1

Revenue

Revenue entered
in the final
budget for the
financial year

Source of revenue

Community
subsidies

5,3

Other subsidies

—

Other revenue

Total

—

5,3

NB: Any discrepancies in totals are due to the effects of rounding.
Source: Centre data. These tables summarise the data supplied by the Centre in its own financial statements.

E
N

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C
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m
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C
3
2
6
/
7
5

C 326/76

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Official Journal of the European Communities

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Revenue and expenditure account for the financial years 2001and 2000

Table 2

(1 000 EUR)

Revenue received during the financial year
Commission 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

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

Total revenue (a)

Total expenditure (b)

Outturn for the financial year (a-b) (1)

Balance carried over from the previous financial year
Appropriations carried over from the previous financial year which lapse
Appropriations for re-use from the financial year 2000, not utilised
Repayments to the Commission
Exchange-rate differences

Balance for the financial year

2001

5 000
46

5 046

2 072
67

662
151

990
1 181

5 123

– 77

179
75
—
– 174
– 11

– 8

2000

4 250
61

4 311

1 935
84

987
106

898
643

4 653

– 342

737
310
5
– 533
2

179

(1) The negative balance of the outturn and own capital does not constitute a capital loss. It results from the application of the financial regulation in respect of revenue (only

revenue collected) and expenditure (payments plus appropriations carried over).

NB: Any discrepancies in totals are due to the effects of rounding.
Source: European Monitoring Centre on Racism and Xenophobia.

27.12.2002

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Official Journal of the European Communities

C 326/77

Balance sheet as at 31 December 2001 and 31 December 2000

Table 3

Assets

2001

2000

Liabilities

2001

2000

(1 000 EUR)

Fixed assets
Equipment and furniture
Computer equipment
Intangible fixed assets

Current assets
Other advances
VAT to be recovered
Sundry accounts receivable

Cash accounts
Bank accounts
Imprest account

Subtotal

245
85
55

385

3
454
2

Subtotal

459

2 029
1

Subtotal

2 030

209
75
41

325

10
456
119

585

1 179
—

1 179

Fixed capital
Own capital
Balance for the financial year

385
– 8

Subtotal

377

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

0
1 400
318
488

325
179

504

27
807
158
563

Suspense accounts
Sums to be reused

Subtotal

2 206

1 555

291

Subtotal

291

30

30

NB: Any discrepancies in totals are due to the effects of rounding.
Source: European Monitoring Centre on Racism and Xenophobia. These tables summarise the data supplied by the Centre in its own financial statements.

Total

2 874

2 089

Total

2 874

2 089

C 326/78

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Official Journal of the European Communities

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THE CENTRE’S REPLIES

The Centre welcomes the Court’s statement that the

4.
accounts for 2001 are reliable.

8 and 9.
The Centre has already implemented a number of
procedures to improve its planning system and the follow up to
operational activities, to ensure a sound implementation of its
budget. In 2002 the draft work programme for 2003 was fina-
lised from April and was discussed by the Management Board at
its meeting of 19 June 2002.

11.
In the first half of 2002, the Centre added to its current
financial accounting package ‘EXACT’ the module ‘Fixed asset’.
The tests have been completed and respect the rules laid down in
Commission Regulation (EC) No 2909/2000 (1). From now on, a
physical control is operated by a person responsible for the fixed
assets of the Centre (by sampling). An internal procedure has been
put in place regarding the treatment of this point.

The Centre published its budget for 2002 in Official Jour-

12.
nal of the European Communities L 178 of 9 July 2002.

From 4 July 2001, the Centre had been preparing a draft
13.
proposal with a view to updating its Financial Regulation. The
exercise was delayed in order not to introduce different provisions
than those to be introduced with the new recast Financial Regula-
tion to come into force on 1 January 2003.

Concerning the VAT regime applicable to the expenditure of the
Centre, it has been decided to anticipate from 1 January 2002 the
new provisions implementing the procedure in the internal rules.

Following the events of 11 September 2001, the Centre
14.
had to develop at very short notice a rapid response system to
collect urgently data to meet the expectations of the Communi-
ties and the Member States. The Centre agrees that a separate con-
tract should have been prepared. The only reason this did not
happen was the urgency for the Centre to react to the very special
situation.

15.
The urgency the Centre had to face to implement the pro-
cedures did not permit changing the date of presentation of the
reports which was mentioned in the draft contract. One result
was that there was some confusion over the deadlines.

The Centre can agree that there was some absence of

16.
consistency in the deadlines for commitments and payments.

18 to 20.
In order to avoid difficulties, the Centre has decided
to follow the recommendation of the Court and to cancel the
commitment relating to the common project with the Council of
Europe.

The Centre would like also to underline that this initiative was
based on the general agreement for cooperation between the Cen-
tre and the Council of Europe mentioned in Council Regulation
(EC) No 1035/97.

The Centre is willing to improve permanently the budget manage-
ment of operational activities. After the current evaluation of the
situation, it is intended to introduce the necessary corrections in
the internal rules and to complement it with special training ses-
sions.

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