Report on the financial statements of the Community Plant Variety Office concerning the financial year 2002, together with the Office's replies
Date: 2003-10-16
Institutions: European Court of Auditors
Subjects: Community Plant Variety Office, financial control, financial year, report

C 319/76

EN

Official Journal of the European Union

30.12.2003

on the financial statements of the Community Plant Variety Office concerning the financial year
2002, together with the Office’s replies

REPORT

(2003/C 319/12)

CONTENTS

Paragraph

Page

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

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

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

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

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

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

1-4

5-18

5

6-8

9-12

13-18

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

The Office’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

77

77

77

77

77

78

79

82

30.12.2003

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Official Journal of the European Union

C 319/77

THE COURT’S OPINION

Implementation of the budget

1.
This report is addressed to the Management Board of the
Community Plant Variety Office (hereinafter referred to as ‘the
Office’), pursuant to Article 111(2) of Council Regulation (EC)
No 2100/94 (1).

The implementation of the appropriations for the financial
6.
year 2002 and of the appropriations carried over from the previ-
ous financial year is shown in Table 1.

2.
The Court has examined the Office’s financial statements
for the financial year ended 31 December 2002. In accordance
with Article 110 of Council Regulation (EC) No 2100/94, the
Office’s budget was implemented on the responsibility of its Presi-
dent. This responsibility includes the drawing-up and presenta-
tion of the financial statements (2) in accordance with the internal
financial provisions adopted on the basis of Article 112 of Coun-
cil Regulation (EC) No 2100/94. The Court is required pursuant
to Article 248 of the Treaty establishing the European Commu-
nity 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 nature of the Community context. 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 reasonable basis for the opinion
expressed below.

7.
Commitments against the appropriations for the financial
year 2002 totalled 8,9 million euro. Payments made against the
commitments amounted to 4,3 million euro and a total of 3,9 mil-
lion euro was carried over. The volume of carryovers remained
high, especially in the case of appropriations for operating activi-
ties.

8.
The monitoring and recovery of non-recurring revenue
could be improved. Debit notes are not sent to debtors or, when
they are issued, are inadequately monitored from an accounting
point of view. By way of example, the Office failed to seek pay-
ment from the Office for Official Publications of the European
Communities of revenue totalling 0,1 million euro owed since
1999.

Financial statements

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.

9.
The revenue and expenditure account and the balance
sheet published by the Office in its activity report for the financial
year 2002 are shown in summary form in Tables 2 and 3.

OBSERVATIONS

Introduction

5.
The Office was created by Regulation (EC) No 2100/94 of
27 July 1994 to grant industrial property rights for plant varieties
that would be valid throughout the European Union. In order to
grant such rights, the Office first examines the admissibility of the
applications which are submitted to it. Applications which are
deemed valid are forwarded for analysis to national examination
centres which, for a fee, assess the originality of the varieties for
which a protection application has been submitted.

The balance sheet as at 31 December 2002 mentions a
10.
reserve of 11 029 000 euro. The reserve fund in question is the
one provided for in Article 6(2)(d) of the Office’s Financial Regu-
lation. As the Office has its own resources, it may establish a
reserve fund so as to preserve its self-financing capacity. However,
in keeping with the spirit of the basic Regulation, the Court asks
the Office to ensure that this reserve does not needlessly exceed
its envisaged financial requirements.

11.
The Office makes no checks to ensure that the charges
and interest (615 000 euro in 2002) of which it is notified by its
banks are accurate.

(1) OJ L 227, 1.9.1994, p. 27.
(2)

In accordance with Article 111(2) of Council Regulation (EC) No 2100/
94, the accounts for all the Office’s revenue and expenditure for the
financial year 2002 were drawn up on 16 September 2003 and for-
warded to the Court of Auditors. The Court received these accounts
on 25 September 2003. A summarised version of these financial
statements is presented in the tables attached to this report.

12.
When the Office closed the accounts for the financial
year 2002, it had to adjust the VAT amounts entered in the
accounts in order to correct errors that had arisen following
changes in the accounting methods used. The Office should con-
tinue its efforts to ensure that VAT is correctly entered in the
accounts. Furthermore, it should take greater care when submit-
ting its requests for VAT refunds.

C 319/78

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Official Journal of the European Union

30.12.2003

Legality and regularity of the underlying transactions

13.
In order to receive Community protection, a new plant
variety must display certain technical characteristics. These char-
acteristics are verified by examination centres, according to a
standard protocol, at the request and on behalf of the Office. The
centres charge the Office a flat rate stipulated by contract.

14.
In some cases one of the characteristics of a plant variety
cannot be verified on the basis of the standard protocol and the
examination centre has to carry out additional work. The cost of
the additional work is billed either directly to the applicant or to
the Office, which then passes on the charge to the applicant.

As regards the billing of employment-agency staff, the
16.
Office issued commitments only after it had received each invoice.
This practice is contrary to Article 29(1) of the Office’s Financial
Regulation.

17.
Advances are paid by the Office in the absence of an
invoice. According to the applicable legislation, this type of pay-
ment should be made only on the basis of formal invoices (1)
which explicitly mention the amount of VAT.

15.
At the very least, the contracts between the Office and
the examination centres should include the provisions covering
these additional tests and the guarantees for ensuring that they are
actually paid for.

18.
As regards the procedures for signing contracts, short-
comings were noted in estimates of the volume of services to be
provided and in the procedures for evaluating bids. As a result,
companies obtained additional contracts worth more than 50 %
of the initial contract.

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) Obligation stipulated by Article 289. I of the Code général des impôts
français: ‘Tout assujetti doit délivrer une facture ou un document en
tenant lieu pour les biens livrés ou les services rendus à un autre
assujetti ou à une personne morale non assujettie, ainsi que pour les
acomptes perçus au titre de ces opérations lorsqu’ils donnent lieu à
exigibilité de la taxe’ [Every taxable person shall issue an invoice or
acceptable substitute document in respect of goods supplied or ser-
vices rendered to another taxable person or to a legal person not sub-
ject to taxation and, similarly, in respect of advanced payments received
as part of such transaction when tax is due on them].

.

3
0
1
2
2
0
0
3

.

Community Plant Variety Office — Implementation of the budget for the financial year 2002

Table 1

Revenue

Revenue
entered
in the
final budget
for the
financial year

8,3

1,8

0,5

10,5

Origin of
revenue

Own
revenue

Other
revenue

Financial
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

commit-
ted

paid

carried
over

cancelled

outstanding
commitments

paid

cancelled

appro-
priations

commit-
ted

paid

carried
over

cancelled

8,6

0,0

0,6

9,2

Title I
Staff

Title II
Administration

3,6

3,5

2,8

0,0

0,8

1,1

0,8

0,6

0,2

0,4

Title III
Operating
activities

5,8

Total

10,5

4,7

8,9

1,0

4,3

3,7

3,9

1,1

2,3

0,0

0,1

2,9

3,0

0,0

0,0

3,7

3,5

2,8

0,0

0,1

0,1

1,3

0,9

0,7

0,2

1,0

1,0

1,9

2,0

8,6

7,6

13,6

12,0

2,0

5,4

3,7

3,9

0,8

0,5

3,0

4,2

NB: Any discrepancies in the totals are due to the effect of rounding.
Source: Office data. These tables summarise the data provided by the Office in its own financial statements.

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C 319/80

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Official Journal of the European Union

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Community Plant Variety Office — Revenue and expenditure account for the financial years 2002 and 2001

Table 2

(EUR 1 000)

Revenue
Own revenue
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

Total revenue (a)

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

Balance carried over from the previous financial year
Appropriations carried over and cancelled
Exchange-rate differences

Total expenditure (b)

Balance for the financial year

2002

8 564
61
615

9 240

2 807
26

570
163

975
3 699

8 239

1 001

11 029
1 949
- 3

13 977

2001

7 691
463
535

8 688

2 767
27

565
141

1 048
2 873

7 421

1 267

8 644
1 122
- 3

11 029

(1) Calculated according to the principles laid down in 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: The Office’s data.

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Community Plant Variety Office — Balance sheet as at 31 December 2002 and 31 December 2001

Table 3

Assets

2002

2001

Liabilities

2002

2001

(EUR 1 000)

Fixed assets
Buildings
Equipment and furniture
Computer equipment
Intangible assets
Depreciation

Current assets
VAT to be recovered
Recovery orders
Sundry accounts receivable

Cash accounts
Banks
Imprest account

Fixed capital
Own capital
Reserve
Balance for the financial year

2 404
140
229
68
- 338

2 397
144
154
60
- 271

2 503
11 029
2 948

2 484
8 644
2 385

Subtotal

2 503

2 484

Subtotal

16 480

13 513

384
51
24

459

731
0
25

756

Current liabilities
Automatic carryovers of appropriations
Sundry accounts payable
Salary deductions
VAT/Other taxes
Advances from customers

Subtotal

3 887
160
32
216
366

3 041
618
14
528
303

18 103
75

14 702
75

Subtotal

18 178

14 777

Total

21 141

18 017

Subtotal

4 661

4 504

Total

21 141

18 017

NB: Any discrepancies in totals are due to the effects of rounding.
Source: The Office’s data.

C 319/82

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Official Journal of the European Union

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THE OFFICE’S REPLIES

For the follow-up of non-routine operations, the Office
8.
will take action to try to improve the follow-up of non-routine
receipts.

A more explicit reference to the contractual handling of
15.
additional tests and their remuneration will be made when amend-
ing the contracts with the examination offices.

The fees regulation has been revised with the aim of
10.
reducing the reserve to a level that is in line with the financial
needs of the Office.

The practice described by the Court has been discontin-
16.
ued. Since the beginning of 2003 provisional commitments are
registered as such, rather than as ‘pre-commitments’.

The Office is considering the possibilities of checking the

11.
amounts of bank charges and interest reported by the banks.

The Office will insist on receiving invoices in full compli-

17.
ance with the applicable law.

12.
The Office takes note of the observation of the Court. It
will study the ways to improve the management and the follow-up
of its VAT accounts.

In the future, the Office will take measures to evaluate as

18.
precisely as possible the expected values of the contract.