Report on the financial statements of the Translation Centre for the bodies of the European Union for the financial year 2002, together with the Centre's replies
Date: 2003-10-16
Institutions: European Court of Auditors
Subjects: Translation Centre for the Bodies of the European Union, financial control, financial year, report

30.12.2003

EN

Official Journal of the European Union

C 319/29

on the financial statements of the Translation Centre for the bodies of the European Union for the
financial year 2002, together with the Centre’s replies

REPORT

(2003/C 319/05)

CONTENTS

Paragraph

Page

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

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

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

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

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

1-4

5-9

5

6-7

8-9

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

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

30

30

30

30

30

32

35

C 319/30

EN

Official Journal of the European Union

30.12.2003

THE COURT’S OPINION

OBSERVATIONS

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).

2.
The Court of Auditors has examined the financial state-
ments of the Translation Centre for the bodies of the European
Union for the financial year ended 31 December 2002. In accor-
dance with Article 14(1) of Council Regulation (EC) No 2965/
94 (2), the budget was implemented on the responsibility of the
Director. This responsibility includes the drawing-up and presen-
tation of the financial statements (3) in accordance with the inter-
nal financial provisions provided for in Article 15 of Regulation
(EC) No 2965/94. The Court is required pursuant to Article 248 of
the Treaty establishing the European Community to examine
these accounts.

3.
The Court performed 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. 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.

Introduction

5.
The Centre was established by Council Regulation (EC)
No 2965/94. The Centre’s main purpose is to provide the neces-
sary translation services to the decentralised bodies created by the
Council and it holds a monopoly in translation services as far as
they are concerned. The other Community bodies may use the
Centre’s services on the basis of ad hoc arrangements. The Centre
makes widespread use of private translation services in order to
fulfil its mission. The total number of pages translated by the Cen-
tre in 2002 came to 228 000.

Implementation of the budget

6.
The implementation of appropriations for the financial
year 2002 and of the appropriations carried over from the previ-
ous financial year is shown in Table 1 (4).

Article 26a of the Centre’s Financial Regulation provides
7.
that the balance for the previous financial year shall be entered as
revenue for the financial year. The way that the Centre interprets
this Article is to enter as revenue for the year solely that part of
the balance for the previous financial year which corresponds to
the outturn for the year preceding that one. For 2002, this has the
effect of leaving 3,4 million euro of resources temporarily unused;
this sum is to be found under liquid assets.

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. Nevertheless,
the Court wishes to draw attention to the situation described in
paragraph 7.

(1) OJ L 248, 16.9.2002, p. 1.
(2) OJ L 314, 7.12.1994, p. 1.
(3) As laid down in Article 14(3) of Council Regulation (EC) No 2965/
94, the accounts for all the Centre’s revenue and expenditure for the
financial year 2002 were drawn up on 23 February 2003 and sent to
the Court of Auditors. The final version of these accounts was received
by the Court on 6 May 2003. A summarised version of these finan-
cial statements is presented in the tables attached to this report.

8.
The revenue and expenditure account and the balance
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.

Since the Centre does not fully exploit the capabilities of
9.
its general accounting software, it uses a spreadsheet to monitor
its revenue and client accounts, thus giving rise to a major risk of
error which was highlighted during the audits.

(4) All the tables in this report have been drawn up on the basis of the
most exact values possible for the data employed. For presentation
purposes, the figures have been 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

EN

Official Journal of the European Union

C 319/31

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

Translation Centre for the Bodies of the European Union — Implementation of the budget for the financial year 2002

Table 1

Origin of revenue

Revenue

Revenue
entered
in the
final
budget
for the
financial year

Appropriations in the final budget

Appropriations carried over from the
previous financial year

Available appropriations
(2002 budget and financial year 2001)

Revenue
received

Allocation of
expenditure

entered

commit-
ted

paid

carried
over

cancelled

outstanding
commitments

paid

cancelled

appro-
priations

commit-
ted

paid

carried
over

cancelled

Expenditure

(EUR million)

Revenue paid
by the bodies

Revenue paid by
the Institutions

17,7

1,1

17,2

0,9

Financial income

0,3

0,5

Title I
Staff

Title II
Administration

Title III
Operating
activities (1)

11,3

10,1

10,0

0,1

1,2

3,0

2,1

1,4

0,7

0,9

0,9

0,9

0,9

0,0

12,2

11,0

10,9

0,1

0,7

0,2

3,9

3,0

2,1

0,7

1,2

1,1

6,0

3,7

3,3

0,4

2,3

—

—

—

6,0

3,7

3,3

0,4

2,3

Balance for
the previous
financial year

Total

4,5

23,6

0,0

18,6

Title X
Reserve
and
provisions

3,3

0,0

0,0

Total

23,6

15,9

14,7

0,0

1,2

3,3

7,7

—

1,8

—

—

3,3

0,0

0,0

1,6

0,2

25,4

17,7

16,3

0,0

1,2

3,3

7,9

(1) In 2002 the Centre decided to create a Title III in its budget, grouping together all expenditure in respect of contracts to be concluded with freelance translators or translation agencies. This expenditure was formerly included under Title I.
NB: Any discrepancies in totals are due to the effects of rounding.
Source: Data compiled by the Centre — These tables summarise the data supplied by the Centre in its own financial statements.

C
3
1
9
/
3
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

EN

Official Journal of the European Union

C 319/33

Translation Centre for the Bodies of the European Union — Revenue and expenditure account for the financial years 2002 and 2001

Table 2

2002

2001

(EUR 1 000)

Revenue
Revenue paid by EU bodies
Revenue paid by the European Institutions
Miscellaneous revenue
Financial revenue

Expenditure
Staff — Title I of the budget
Payments
Appropriations carried over

Administration — Title II of the budget (1)
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) (2)

Balance carried over from the previous financial year
Appropriations carried over which lapsed
Miscellaneous revenue
Allocations to provision for liabilities
Exchange-rate differences

Total expenditure (b)

Balance for the financial year

17 200
913
0
494

18 607

10 005
98

1 388
676

3 274
473

15 914

2 693

7 875
259
33
- 2 532
2

8 330

19 550
633
5
458

20 646

13 862
892

1 090
929

0
0

16 773

3 873

4 977
240
—
- 1 221
6

7 875

(1) In 2002 the Centre decided for the sake of clarity to create a Title III in its budget, grouping together all expenditure in respect of translation contracts concluded with natural

or legal persons.

(2) Calculation based on the principles of Article 15 of Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 (OJ L 130, 31.5.2000, p. 8).
NB: Any discrepancies in totals are due to the effects of rounding.
Source: Data compiled by the Centre — These tables summarise the data supplied by the Centre in its own financial statements.

C 319/34

EN

Official Journal of the European Union

30.12.2003

Translation Centre for the Bodies of the European Union — Balance sheet 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 fixed assets
Provision for amortisation

Current assets
Recovery orders
Recoverable VAT
Sundry accounts receivable

509
1 382
1 880
- 2 129

225
2 754
97
- 381

Subtotal

1 642

2 695

3 360
25
26

4 556
16
452

1 642
8 330

2 695
7 875

Subtotal

9 972

10 570

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

Provision for liabilities
Provision for pensions
Other provisions

Subtotal

Current liabilities
Automatic carryovers of appropriations
Advances received
Amounts outstanding
Sundry accounts payable

4 906
1 500
6 406

1 247
164
3 360
15

Subtotal

3 411

5 024

Subtotal

4 786

Cash accounts
Bank accounts
Cash

16 126
0

14 173
1

Suspense accounts
Revenue to be re-used

Subtotal

16 126

14 174

Total

21 179

21 893

15

Subtotal

15

Total

21 179

21 893

(1) In order to make the presentation comply better with the usual standards, certain balances were reallocated among the existing headings.
NB: Any discrepancies in totals are due to the effects of rounding.
Source: Data compiled by the Centre — These tables summarise the data supplied by the Centre in its own financial statements.

3 874
0
3 874

1 820
596
4 992
20

7 428

21

21

30.12.2003

EN

Official Journal of the European Union

C 319/35

THE CENTRE’S REPLIES

OBSERVATIONS

Implementation of the budget

7.
Since the end of its start-up phase on 31 December 1997,
the Translation Centre has interpreted Article 26a of its Financial
Regulation on a permanent basis, considering the balance for the
financial year to be that established at the time when the Manage-
ment Board, following the report by the Court of Auditors for the
financial year in question, grants discharge to the Director in
respect of the implementation of the budget.

When presenting its revenue and expenditure account and bal-
ance sheet, the Translation Centre has always informed the Man-
agement Board before 31 March of the following year of the bal-
ances for each financial year. For 2002, the Translation Centre
informed the Management Board of the outturn for 2001 at their
first meeting following the close of the financial year, which was
held on 14 March 2002. At this meeting, the Management Board
decided to enter the 3,4 million euro as revenue in the prelimi-
nary draft budget for 2003. The Centre has always entered the
balances for the financial years as liabilities in its balance sheet.

In accordance with Article 185 of Council Regulation (EC, Eura-
tom) No 1605/2002 on the Financial Regulation applicable to the

general budget of the European Communities, the Centre submit-
ted a specific draft financial regulation based on Commission
Regulation (EC, Euratom) No 2343/2002 of 23 December 2002
on the framework Financial Regulation for the decentralised bod-
ies. Article 16 of this draft financial regulation, in particular para-
graph 3, states that: ‘The revenue or payment appropriations shall
be entered in the budget during the budgetary procedure using
the letter of amendment procedure or, while budget implementa-
tion is under way, by means of an amending budget.’

We believe that this new wording will resolve the problem of
interpretation mentioned by the Court.

Financial statements

9.
The Translation Centre takes note of the Court’s recom-
mendation on the use of its general accounting software. The
abolition of advances as of 1 January 2003 will simplify the
monitoring of client accounts and reduce the associated risks.