Report on the financial statements of the European Monitoring Centre on Racism and Xenophobia for the financial year 2002, together with the Centre's replies
Date: 2003-10-16
Institutions: European Court of Auditors
Subjects: European Union Agency for Fundamental Rights, financial control, financial year, report

30.12.2003

EN

Official Journal of the European Union

C 319/69

on the financial statements of the European Monitoring Centre on Racism and Xenophobia for the
financial year 2002, together with the Centre’s replies

REPORT

(2003/C 319/11)

CONTENTS

Paragraph

Page

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

OBSERVATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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

Legality and regularity of the underlying transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Management of contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1-4

5-14

5

6-9

10-11

12

13-14

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

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

70

70

70

70

70

71

71

72

75

C 319/70

EN

Official Journal of the European Union

30.12.2003

THE COURT’S OPINION

for the collection of information on racism and xenophobia
(RAXEN) and to carry out research into these phenomena.

1.
This report is addressed to the European Parliament and to
the Council, in accordance with Article 185(2) of Council Regula-
tion (EC, Euratom) No 1605/2002 (1).

Implementation of the budget

2.
The Court has examined the financial statements of the
Centre for the financial year ended 31 December 2002. In accor-
dance with Article 12(8) of Council Regulation (EC) No 1035/
97 (2), the budget was implemented on the responsibility of the
Executive Director. This responsibility includes the drawing-up
and presentation of the financial statements (3), 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 pursuant to Article 248 of the Treaty
establishing the European Community to examine these accounts.

The Court carried out the audit in accordance with its
3.
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 audit procedures as it deemed necessary in the circum-
stances. 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 2002 are reliable and that the underlying
transactions, taken as a whole, are legal and regular.

OBSERVATIONS

Introduction

6.
Table 1 (4) shows the implementation of the appropria-
tions of the financial year 2002 and the appropriations carried
over from the previous financial year.

The 2002 appropriations committed totalled 6 million-
7.
euro. Payments made against these commitments amounted to
4,5 million euro. The balance of the appropriations was either
carried over (1,5 million euro) or cancelled (0,2 million euro).
With regard to the appropriations for operating activities (3,0 mil-
lion euro), the amount carried over, 1,2 million, i.e. 40 % of the
appropriations allocated, remains high. The Centre should con-
tinue its efforts to reduce still further the proportion of appro-
priations carried over, the volume of which hardly changes from
one year to the next.

8.
Numerous provisional commitments were carried over
automatically, contrary to the provisions of Article 6 of the Cen-
tre’s Financial Regulation.

9.
Recovery orders are often drawn up a posteriori, once the
funds have been received, which is not in accordance with
Article 23 of the Centre’s Financial Regulation and makes effec-
tive monitoring of revenue to be collected impossible (for example,
no recovery order has yet been issued for an amount of 60 000 euro
owed by the Austrian government for the reimbursement of rent).

5.
The Centre was established by Council Regulation
(EC) No 1035/97. The Centre’s task is to collect and analyse objec-
tive, reliable and comparable information on racist, xenophobic
and anti-Semitic phenomena, so as to enable the European Union
to fulfil its obligation to respect fundamental rights when formu-
lating and applying its policies. In order to do this, the Centre is
required to set up and coordinate a network of national centres

(1) OJ L 248, 16.9.2002, p. 1.
(2) OJ L 151, 10.6.1997, p. 6.
(3) As required pursuant to Article 12(10) of Council Regulation (EC)
No 1035/97, the accounts for all the Centre’s revenue and expenditure
for the financial year 2002 were drawn up on 27 February 2003 and
then forwarded to the Court of Auditors. These accounts were received
by the Court on 3 March 2003. A summarised version of these finan-
cial statements is presented in the tables annexed to this report.

Financial statements

The revenue and expenditure account and the balance
10.
sheet published by the Centre in its activity report for the finan-
cial year 2002 are presented in summary form in Tables 2 and 3.

(4) 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, which may produce minor differences in the
totals. A dash indicates a non-existent or zero value and 0,0 indicates
a value below the rounding threshold.

30.12.2003

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Official Journal of the European Union

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In the revenue and expenditure account, the most strik-
11.
ing development concerns the balance for the financial year,
which has changed from an almost break-even situation to a defi-
cit of 1,6 million euro. Although a subsidy of 6,1 million euro
was allocated to the Centre and entered in the Commission’s com-
mitment appropriations, the corresponding payment appropria-
tions only came to 4,3 million euro. This situation impedes imple-
mentation of the Centre’s work programme. In addition, the first
instalment of funds requested in March 2002 was not paid until
June 2002, which created cash-flow problems. The Centre and
the Commission should improve their financial coordination in
order to avoid a recurrence of such situations.

Management of contracts

The contracts with the RAXEN national focus points (see
13.
paragraph 5) were renewed for the year 2002 in April. Commit-
ment appropriations totalling 1,6 million euro were earmarked
for this. The renewals were carried out without any evaluation of
the results of the contracts for the preceding year and, in one case,
even before these results had been provided. In addition, no evalu-
ation procedure has been set up for validating the interim pay-
ment requests.

Legality and regularity of the underlying transactions

12.
A member of staff who had no authorisation signed a
contract which was not covered by a commitment approved in
due form by the Financial Controller. Problems of the same type
have been brought to the Centre’s attention by the Court in previ-
ous years, in particular in the Court’s report concerning the finan-
cial year 2001 (1). It is a question of a persistent internal control
problem, which the Centre has endeavoured to rectify, but as yet
to no avail.

14.
With regard to the other types of contract, the way they
are managed differs from one unit to another, and this manage-
ment would benefit from being rationalised so as to make it more
efficient and economical. For instance, no fewer than four con-
tracts were concluded with various undertakings, travel agencies
and specialist companies in connection with the organisation of
meetings and seminars. The Centre uses two different printing
companies to print its publications. In some cases no contract
was signed with the service provider, which is contrary to the
Financial Regulation.

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 15 and 16 October 2003.

For the Court of Auditors

Juan Manuel FABRA VALLÉS

President

(1) Similar problems were noted before, during the audits carried out in
previous years; see, in particular, the Court’s previous report concern-
ing the financial year 2001, paragraphs 18 to 20 (OJ C 326,
27.12.2002, p. 74).

European Monitoring Centre on Racism and Xenophobia — Implementation of the budget for the financial year 2002

Table 1

Revenue

Revenue
entered in the
final budget
for the
financial year

6,1

p.m.

0,1

6,2

Source of
revenue

Community
subsidies

Administrative
revenue

Miscellaneous
revenue

Total

Expenditure

(EUR million)

Revenue
received

Allocation of
expenditure

Appropriations in the final budget

Appropriations carried over from the
previous financial year

Available appropriations
(2002 budget and financial year 2001)

entered

com-
mitted

paid

carried
over

cancelled

outstanding
commitments

paid

cancelled

appro-
priations

com-
mitted

paid

carried
over

cancelled

4,3

0,0

—

4,4

Title I
Staff

Title II
Administration

2,7

2,6

2,4

0,2

0,1

0,5

0,4

0,4

0,1

0,0

Title III
Operating
activities

3,0

6,2

2,9

6,0

1,7

4,5

1,2

1,5

0,1

0,2

Total

0,1

0,2

1,2

1,4

0,1

0,0

2,8

2,7

2,5

0,2

0,1

0,0

0,6

0,6

0,5

0,1

1,1

1,3

0,0

0,1

4,2

7,6

4,1

7,4

2,8

5,8

1,2

1,5

0,1

0,0

0,1

0,3

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.

C
3
1
9
/
7
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
U
n
o
n

i

.

3
0
1
2
2
0
0
3

.

30.12.2003

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Official Journal of the European Union

C 319/73

European Monitoring Centre on Racism and Xenophobia — Revenue and expenditure account for the financial years 2002 and 2001

Table 2

2002

2001

(EUR 1 000)

Revenue
Own revenue
Commission subsidy
Miscellaneous revenue
Financial revenue

Expenditure
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

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

Balance carried over from the previous financial year
Appropriations carried over, cancelled
Appropriations for re-use from the previous financial year, not utilised
Repayment to the Commission
Exchange-rate differences

Total revenue (a)

Total expenditure (b)

4 320

43

4 363

2 416
187

377
60

1 686
1 234

5 960

- 1 597

- 8
52
151
- 179
2

(1) Calculation based on the principles of Article 15 of Council Regulation (EC, Euratom) No 1150/2000 (OJ L 130, 31.5.2000, p. 8).
NB: Any discrepancies in totals are due to the effects of rounding.
Source: Centre data.

Balance for the financial year

- 1 579

5 000

46

5 046

2 072
67

662
151

990
1 181

5 123

- 77

179
75
0
- 174
- 11

- 8

C 319/74

EN

Official Journal of the European Union

30.12.2003

European Monitoring Centre on Racism and Xenophobia — Balance sheet as at 31 December 2002 and 31 December 2001

Table 3

(EUR 1 000)

Assets

2002

2001

Liabilities

2002

2001

Fixed assets
Equipment and furniture
Computer equipment
Intangible assets
Depreciation

Current assets
Commission subsidy
Other advances
Recoverable VAT
Sundry accounts receivable

Cash accounts
Bank accounts
Imprest accounts

Fixed capital
Own capital
Balance for the financial year

183
- 1 579

385
- 8

234
141
70
- 262

245
85
55

Subtotal

183

385

Subtotal

- 1 396

377

13
1
541
66

621

113

113

917

3
454
2

459

2 029
1

2 030

2 874

Subtotal

Subtotal

Total

Current liabilities
Automatic carryovers of appropriations
Sundry accounts payable
VAT/Other taxes

1 482
225
507

1 400
318
488

Suspense accounts
Sums to be reused

Subtotal

2 214

2 206

99

291

Subtotal

Total

99

917

291

2 874

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.

30.12.2003

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Official Journal of the European Union

C 319/75

THE CENTRE’S REPLIES

7. (i) A large part of the Centre’s operational activities are sea-
sonally biased towards the end of the financial year. The
final invoices relating to the RAXEN network, which rep-
resents around 50 % of the operational appropriations car-
ried forward (which themselves represent over 80 % of the
total appropriations carried forward) are usually received
in November and December each year. Before these invoices
can be paid, the RAXEN data that is supplied in parallel has
to be approved, which can result in these invoices being
paid at the beginning of the following year.

(ii) The execution of the budget and the implementation of the
work programme in 2002 were affected adversely by the
slow payment of the subsidy and the low level of payment
appropriations available to the Centre during the year.
However, the Centre is continuing its efforts to further
improve the implementation of the budget.

The Centre agrees with the observations made by the
8.
Court. The Centre will take the necessary action to ensure that the
respective legal requirements will be adhered to in the future.

9.
The Centre agrees with the observations made by the Court
and has taken appropriate measures to recover money on a timely
basis.

11.
The Centre welcomes the comments of the Court in
respect of the low level of payment appropriations received and
the delayed payment of the subsidy.

The Centre has already taken measures to avoid similar problems
in the future by implementing the new formal procedure that was

imposed by the Commission in 2003 for receiving payment of
the annual subsidy. The subsidy will now be paid to the Centre by
the Commission in four instalments, each instalment being paid
around six weeks after the submission of a written request by the
Centre.

12.
With the implementation of the new financial regulation
in 2003, the internal control system was adapted to meet the new
requirements and to address already known weaknesses and short-
comings.

As part of the implementation of the new financial regulation in
2003, the Centre has provided training to all authorising officers
explaining clearly the difference between a delegation for the cre-
ation of budgetary commitments and a delegation for the creation
of legal commitments.

13.
An external evaluation of all the deliverables took place
in January and February 2003 and a meeting with the evaluators
was held in Vienna. The results were communicated to the NFPs
to improve the quality of the reports. To improve further the situ-
ation in 2003 the evaluation is being done on a continuous basis.

14.
The Centre agrees with the observations made by the
Court and has already taken measures to avoid such problems in
the future.

For example, in 2003 the Centre joined the Commission’s frame-
work contracts for IT supplies and for publications. The Centre is
also party
regarding
to the new framework contract
accommodation/travel arrangements that is currently being drawn
up by the Commission.