Report by the external auditor on the Court of Auditors' accounts for the financial year 2002
Date: 2003-07-28
Institutions: European Court of Auditors
Subjects: European Court of Auditors, auditing, budgetary control, financial year, report

28.10.2003

EN

Official Journal of the European Union

C 259/1

I

(Information)

COURT OF AUDITORS

REPORT BY THE EXTERNAL AUDITOR ON THE COURT OF AUDITORS’ ACCOUNTS FOR
THE FINANCIAL YEAR 2002

(2003/C 259/01)

NOTE TO READERS

Without prejudice to the provisions of Article 248 of the Treaty establishing the European Community, which
gives the Court of Auditors responsibility for auditing all of the Community’s revenue and expenditure, and
the provisions of Article 276 of the said Treaty on the granting of the discharge, the Court of Auditors has had
its revenue and expenditure accounts audited by an external auditor every year since the close of the financial
year 1987.

The reports which the external auditor of the Court of Auditors drew up in respect of the Court’s accounts for
the financial years 1987 to 1991 were sent only to the Chairman of the European Parliament’s Budgetary
Control Committee.

Pursuant to a decision taken by the Members of the Court of Auditors at the Court meeting of 8 July 1993,
the external auditor’s reports have since been published in the Official Journal of the European Union, starting
with the report on the financial year 1992.

For the Court of Auditors

Juan Manuel FABRA VALLÉS

President

C 259/2

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Official Journal of the European Union

28.10.2003

CONTENTS

Certificate concerning the regularity and fairness of the financial statements at 31 December 2002 . . . . .

Report on the administrative and accounting procedures, the soundness of the financial management
and the internal control system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial statements at 31 December 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

3

4

5

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Official Journal of the European Union

C 259/3

Certificate concerning the regularity and fairness of the financial statements at 31 December 2002

To the Members of the European Court of Auditors

In accordance with the instructions given to us by the European Court of Auditors, we have examined:

— the accounting data sent by the European Court of Auditors to the Commission for the purpose of draw-
ing up the revenue and expenditure account and the balance sheet of the European Communities for the
financial year 2002,

— the financial statements of the European Court of Auditors at 31 December 2002, which were drawn up
on the basis of the same accounting data and prepared for the purpose of publication in the Official
Journal of the European Union.

The accounting data and the financial statements are the responsibility of the European Court of Auditors. Our
responsibility is, on the basis of our audit work, to express an opinion on the accounting data and the financial
statements.

We have conducted our work in accordance with international auditing standards. These standards require us
to plan and carry out our work in such a way as to obtain reasonable assurance that the accounting data and
the financial statements do not contain any material misstatement. As required, the audit included an examina-
tion, on the basis of a sample, of the evidence in support of the amounts and information contained in the
accounting data and financial statements. It also included an appraisal of the accounting principles and prac-
tices applied and of the significant estimates used by the European Court of Auditors in drawing up the
accounts, as well as a review of their overall presentation. We think that the audit provided a reasonable basis
for the opinion expressed.

In our opinion, the enclosed accounting data and financial statements give a true and fair view, in accordance
with the Financial Regulation, the implementing rules, generally accepted accounting principles and the Euro-
pean Court of Auditors Internal Rules, of the assets and financial position of the European Court of Auditors
at 31 December 2002 and of the economic result and the revenue and expenditure for the financial year then
ended.

Luxembourg, 28 July 2003.

KPMG Audit

Auditors

S. NYE

C 259/4

EN

Official Journal of the European Union

28.10.2003

Report on the administrative and accounting procedures, the soundness of the financial
management and the internal control system

To the Members of the European Court of Auditors

As part of our audit of the annual financial statements of the European Court of Auditors for the financial
year ending 31 December 2002, we examined the administrative and accounting procedures, the soundness
of the financial management and the internal control system. The purpose of our examination was to ensure
that the various departments of the Court of Auditors can be reasonably sure that:

— they have a clear view of the extent to which operational objectives are being achieved,

— the basis on which the published financial statements are drawn up is reliable,

— the financial management of the Court of Auditors complies with current regulations.

The current regulations in question are:

— the Financial Regulation of 21 December 1977 applicable to the general budget of the European Com-

munities, as last amended by Council Regulation (EC, ECSC, Euratom) No 762/2001 of 9 April 2001,

— Commission Regulation (EC, ECSC, Euratom) No 3418/93 of 9 December 1993 laying down detailed rules
for the implementation of certain provisions of the Financial Regulation of 21 December 1977, as amended
by Commission Regulation (EC) No 1687/2001 of 21 August 2001,

— the Internal Rules of the European Court of Auditors for the implementation of the Court’s budget, laid
down by Court Decision No 97-47 of 4 December 1997 (as last amended by Written Procedure No 3/97
of 16 January 1998).

The aforementioned Council and Commission Regulations were repealed on 1 January 2003. The Financial
Regulation was replaced by Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 and the imple-
menting rules by Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002.

We therefore examined very closely the control environment, risk evaluation, control activities, information
and communications systems and management procedures of the European Court of Auditors. The initial
descriptive phase was followed by systems evaluation based on sample checks of supporting documents and
interviews with staff. The nature and extent of our tests were determined by our appraisal of the control envi-
ronment. We think that our work forms a reasonable basis for our conclusions regarding the European Court
of Auditors procedures, the soundness of its financial management and its internal control system.

In our opinion the current internal control rules ensure that the operational objectives are achieved satisfac-
torily, the financial statements are reliably drawn up and the legal framework is complied with.

Luxembourg, 28 July 2003.

KPMG Audit

Auditors

S. NYE

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Official Journal of the European Union

C 259/5

Financial statements at 31 December 2002

Balance sheet at 31 December 2002 and 2001

Notes

2002

2001

(in EUR thousands)

ASSETS

Intangible fixed assets

Tangible fixed assets

Land and buildings

Plant, machinery and tools

Furniture and vehicle fleet

Computer hardware

Tangible assets in course of construction, advances and payments
on account in respect of tangible assets

Financial assets

Other financial assets

Stocks

Short-term assets

Current assets

Sundry debtors

Disposable assets

Transitional accounts

LIABILITIES

Own capital

Economic result of the financial year

Results carried over from previous years

Long-term liabilities

Other long-term liabilities

Short-term liabilities

Other short-term financial liabilities

Current liabilities

— Community institutions and bodies

— Sundry creditors

Transitional accounts

Total assets

2

2

3

4

5

6

7

7

454

128

31 222

12 289

279

409

550

24 367

13 248

253

385

391

17 695

10 090

577

577

169

499

211

288

843

—

289

289

132

763

216

547

946

16

33 764

26 641

31 928

7 369

24 559

88

88

1 637

48

1 589

902

687

111

24 559

4 049

20 510

87

87

1 695

31

1 664

980

684

300

The notes annexed hereto form an integral part of these financial statements.

Total liabilities

33 764

26 641

C 259/6

EN

Official Journal of the European Union

28.10.2003

Statement of economic result at 31 December 2002

Notes

2002

2001

(in EUR thousands)

Positive adjustments

Decrease in expenditure: increase in assets

— Intangible fixed assets

— Tangible fixed assets

— Stocks

Write-back of depreciation

Revenue arising from budgetary entitlements acquired during the
year and not collected

2

2

2

8

502

8 531

37

436

188

146

5 617

7

122

92

Negative adjustments

Decrease in revenue: decrease in assets

— Tangible fixed assets

— Collection of entitlements established in previous years

Allocation for depreciation

Non-budgetary expenditure

Economic result for the year

Total

9 694

5 984

2

9

2

10

6

Total

447

69

1 842

(33)

2 325

7 369

157

28

1 706

44

1 935

4 049

The notes annexed hereto form an integral part of these financial statements.

28.10.2003

EN

Official Journal of the European Union

C 259/7

Statement of revenue and expenditure for the financial years at 31 December 2002 and 2001

Notes

2002

2001

(in EUR thousands)

Revenue

Contribution from the general revenue of the European Communi-
ties

European Court of Auditors own revenue

— Community levies and dues deducted from remuneration

— Revenue accruing from the administrative operation of the insti-

tution

— Miscellaneous revenue

11

13

65 020

58 393

9 695

1 118

35

9 112

1 546

6

Total revenue

75 868

69 057

Expenditure

12, 15

Expenditure relating to persons working for the institution

— Members of the institution

— Staff in active employment

— Missions and duty travel

— Other

Operating expenditure

— Expenditure on immovable property

— Expenditure on data processing

— Movable property and associated costs

— Current administrative expenditure

— Publishing and information

— Other

Total expenditure

Balance for the financial year

The notes annexed hereto form an integral part of these financial statements.

7 102

50 022

2 211

1 442

60 777

10 450

1 646

650

509

1 186

725

15 166

75 943

(75)

5 916

47 998

1 932

1 337

57 183

7 775

1 078

565

496

1 213

434

11 561

68 744

313

13

14

C 259/8

EN

Official Journal of the European Union

28.10.2003

Notes to the financial statements at 31 December 2002

ACCOUNTING PRINCIPLES

1.

The accounts of the European Court of Auditors are kept
and the financial statements drawn up in accordance with
the provisions of the Financial Regulation of 21 December
1977, as last amended by Council Regulation (EC, ECSC,
Euratom) No 762/2001 of 9 April 2001, and the provisions
of Commission Regulation (Euratom, EC, ECSC) No 3418/93
of 9 December 1993, as amended by Commission Regula-
tion (EC) No 1687/2001 of 21 August 2001, laying down
detailed rules for the implementation of certain provisions
of the Financial Regulation.

In accordance with Article 136 of the said implementing
rules, the financial statements are presented in accordance
with generally accepted accounting principles, including
the principles provided for in Council Directives, except
where otherwise provided for by regulation.

BALANCE SHEET

2.

Tangible and intangible fixed assets

The Court’s tangible and intangible fixed assets are valued
at their acquisition value in national currency, converted
into euro at the accounting rate in force at the time of pur-
chase.

The acquisition cost of
the land and the net value,
calculated after depreciation, of the other tangible fixed
assets are entered on the assets side for the entire period of
their use.

Tangible and intangible fixed assets other than land and
buildings are not recorded in fixed assets accounts unless
their value is EUR 420 or more, as a result of the Commis-
sion’s Decision of 16 November 2000 updating, with effect
from 1 January 2000, the amounts specified in Regulation
(Euratom, EC, ECSC) No 3418/93 laying down detailed rules
for the implementation of the Financial Regulation.

The European Court of Auditors has calculated the depre-
ciation of its fixed assets in accordance with Commission
Regulation (EC) No 2909/2000 of 29 December 2000 on
the accounting management of the European Communities
non-financial fixed assets.

Changes in value and depreciation data, calculated using the
straight-line method and by complete year, were as follows
at the end of the financial year:

Land and
buildings

Plant, machinery
and tools

Furniture and
vehicle fleet

Computer
hardware

(in EUR thousands)

Fixed assets in
course of
construction
and payments
on accounts

Total

Acquisition value
At end of the previous year

Changes over the year:
— Acquisitions
— Disposals and withdrawals
— Other adjustments

24 560

1 109

1 450

2 038

10 090

39 247

—
—
—

217
(56)
8

216
(230)
(4)

493
(161)
(4)

7 605
—
—

8 531
(447)
—

At end of the financial year

24 560

1 278

1 432

2 366

17 695

47 331

Depreciation and value adjustments
At end of the preceding financial
year

Changes over the year:
— Recorded
— Cancelled following disposal,

withdrawal

— Other adjustments

(11 312)

(856)

(1 065)

(1 647)

(959)

(184)

(197)

(326)

—
—

48
(7)

230
9

151
6

At end of the financial year

(12 271)

(999)

(1 023)

(1 816)

—

—

—
—

—

(14 880)

(1 666)

429
8

(16 109)

Net book value at end of financial
year

12 289

279

409

550

17 695

31 222

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Official Journal of the European Union

C 259/9

The fixed assets in course of construction include an amount
of EUR 17 695 311 relating to the planned extension of the
Court building.

The heading ‘Intangible fixed assets’ includes computer soft-
ware packages acquired that are covered by a site licence or
a major account contract.

4.

Stocks

The stocks comprise office supplies and other consumables,
valued at the price of the last supplies entered. Where the
acquisition cost is expressed in national currency, it is con-
verted into euro at the accounting rate used in drawing up
the balance sheet.

5.

Claims

(in EUR thousands)

Computer
software

The heading ‘Current assets’ at the year-end is broken down
as follows:

Acquisition value
At end of the preceding financial year

Changes over the financial year:
— Acquisitions in the financial year

At end of the financial year

Depreciation and reductions in value
At end of the preceding financial year
Changes over the financial year:
— Recorded

At end of the financial year

Net book value at end of financial year

264

502

766

(136)

(176)

(312)

454

Claims relating to Community institu-
tions and bodies
Sundry debtors

Total

(in EUR thousands)

2002

2001

166
45

211

146
70

216

3.

Financial assets

The heading ‘Other financial assets’ comprises two operat-
ing funds, one of which relates to the Office for Official
Publications of the European Communities, and the other
to the Translation Centre for the bodies of the European
Union.

(in EUR thousands)

Acquisition
value at
31.12.2001

Changes over
the financial
year

Acquisition
value at
31.12.2002

Guarantees and
advances granted

1. Guarantees
2. Advances
granted

Total

1

288

289

—

288

288

1

576

577

There is no reduction in value to be recorded for the finan-
cial year 2002.

The item ‘Sundry debtors’ consists solely of claims relating
to staff, and mainly concerns advances paid on mission
expenses already incurred but not yet charged.

6.

Own capital

For the 2002 financial year, the total for own capital com-
prises the economic result for the year and the result car-
ried over from previous years.

The economic result for the year comprises the result of the
implementation of the budget for the year and the result of
adjustments.

The result of the implementation of the budget for the year
can only be established at the level of the consolidation of
the financial statements by the European Commission.

Consequently, for the other institutions, the economic result
for the financial year is limited to the sum of the positive
and negative adjustments entered in accounts of non-
budgetary expenditure and revenue.

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Official Journal of the European Union

28.10.2003

7.

Liabilities

7.1.

Long-term liabilities

The item ‘Other long-term liabilities’ comprises the part of
the architect’s and consulting engineer’s fees withheld as a
performance guarantee for their work in respect of the
extension of the Court building.

7.2.

Short-term liabilities

The item ‘Other short-term financial liabilities’ comprises
payments effected in accordance with Article 6 of the Finan-
cial Regulation, between 1 and 15 January of the following
financial year (formerly called ‘Payments in hand’).

The item ‘Community institutions and bodies’ comprises
sums due to the European Communities Medical Insurance
Fund and the balance to be carried forward to the follow-
ing financial year.

The item ‘Sundry creditors’ mainly comprises sums due in
respect of social security and insurance contributions for
staff as well as mission expenses still to be invoiced by the
credit card organisation.

8.

Revenue arising from budgetary entitlements
acquired during the financial year and not collected

This item concerns revenue established during the financial
year under review and not yet collected.

The heading ‘Revenue accruing from the administrative
operation of the institution’ comprises mainly:

— revenue accruing from the publication of the Euro-
pean Court of Auditors reports and opinions in the
Official Journal of the European Union,

— the payment of actuarial reserves by national pension
bodies and provident societies by way of transfers of
officials pension rights.

12.

Expenditure

Expenditure for the financial year, which is shown in the
Statement of revenue and expenditure, represents the pay-
ments made against the appropriations for the financial
year and against the appropriations carried over from the
previous financial year in accordance with the provisions of
the applicable regulations.

In accordance with the sixth subparagraph of Article 6 of
the Financial Regulation, the expenditure for the financial
year is entered in the accounts for that year on the basis of
the expenditure for which authorisation reached the Finan-
cial Controller not later than 31 December and the account-
ing officer not later than the following 10 January, and for
which payment was effected by the accounting officer not
later than 15 January.

13.

Exchange differences

Exchange gains or losses are entered in the statement of rev-
enue and expenditure as ‘Miscellaneous revenue’ or ‘Operat-
ing expenditure — Other’.

9.

Revenue arising from budgetary entitlements
established during previous financial years

14. Balance for the financial year

This item concerns revenue established in a previous finan-
cial year which has been collected and entered in the
accounts in the financial year under review.

10. Non-budgetary expenditure

This item concerns variations in sundry expenditure which
could not be materially booked to the budget.

REVENUE AND EXPENDITURE

The balance for the year is the difference between the total
revenue for the year and the expenditure against appropria-
tions specific to the year and appropriations carried for-
ward from the previous year.

The changes in the balance to be carried forward to the fol-
lowing financial year are as follows:

(in EUR thousands)

2002

2001

Balance carried forward from previous
years
Balance for the year

778
(75)

465
313

Balance to be carried forward to the
following financial year

703

778

11.

European Court of Auditors own revenue

The European Court of Auditor’s own revenue is entered in
the accounts on the basis of the amounts actually received
during the financial year.

15. Budgetary implementation

The implementation of the budget for the financial year
2002 can be divided up into the implementation of appro-
priations brought forward and the implementation of appro-
priations for the financial year.

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Official Journal of the European Union

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(a) Appropriations brought forward represent, on the one hand, all the commitments chargeable to
the Court that have been entered into but not settled before the year-end and, on the other hand,
appropriations which the budgetary authority has decided to carry forward. Appropriations
brought forward from the previous year and not used during the following year lapse:

(in EUR thousands)

Payments

Lapsed
appropriations

Appropria-
tions carried
forward from
2001 to 2002

Expenditure relating to persons working for the institu-
tion
— Members of the institution
— Staff in active employment
— Missions and duty travel
— Other

Operating expenditure
— Expenditure on immovable property
— Expenditure on data processing
— Movable property and associated costs
— Current administrative expenditure
— Publishing and information
— Other

74
70
647
390

59
67
620
347

1 181

1 093

7 848
111
148
228
835
306

9 476

7 840
110
144
178
764
290

9 326

Total

10 657

10 419

15
3
27
43

88

8
1
4
50
71
16

150

238

(b) The implementation of the appropriations for the financial year represents the payments made
against appropriations committed. The unpaid balance of the commitments may be carried for-
ward to the following financial year. Appropriations still uncommitted at the end of the year usu-
ally lapse:

Expenditure relating to persons
working for the institution
— Members of the institution
— Staff in active employment
— Missions and duty travel
— Other

Operating expenditure
— Expenditure on immovable property
— Expenditure on data processing
— Movable property and associated

costs

— Current administrative expenditure
— Publishing and information
— Other

Appropria-
tions for the
year

Commit-
ments
chargeable to
the year

Payments

(in EUR thousands)

Appropria-
tions carried
forward to
2003

Lapsed
appro-
priations

7 231
50 898
2 379
1 798

7 074
50 029
2 091
1 698

7 043
49 955
1 591
1 095

31
74
500
603

157
869
288
100

62 306

60 892

59 684

1 208

1 414

14 759
2 447

695
560
2 206
606

14 694
2 447

667
544
2 195
564

2 610
1 536

506
331
422
435

12 084
911

161
213
1 773
129

65
—

28
16
11
42

21 273

21 111

5 840

15 271

162

Total

83 579

82 003

65 524

16 479

1 576

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Official Journal of the European Union

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Payments against appropriations carried forward (EUR 10 419 000) and the appropriations for the
year (EUR 65 524 000) totalled EUR 75 943 000, which is equal to the total expenditure shown in
the statement of revenue and expenditure for the financial year 2002.