Report on the financial statements of the European Agency for Safety and Health at Work for the financial year 2002, together with the Agency's replies
Date: 2003-10-16
Institutions: European Court of Auditors
Subjects: European Agency for Safety and Health at Work, financial control, financial year, report

C 319/8

EN

Official Journal of the European Union

30.12.2003

on the financial statements of the European Agency for Safety and Health at Work for the
financial year 2002, together with the Agency’s replies

REPORT

(2003/C 319/02)

CONTENTS

Paragraph

Page

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

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

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

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

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

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

1-4

5-4

5

6-9

10-11

12-14

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

The Agency’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

9

9

9

9

10

11

14

30.12.2003

EN

Official Journal of the European Union

C 319/9

THE COURT’S OPINION

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

2.
The Court has examined the Agency’s financial statements
for the financial year ended 31 December 2002. In accordance
with Article 14(1) of Council Regulation (EC) No 2062/94, the
budget was implemented on the responsibility of the director.
This responsibility included the drawing-up and presentation of
the financial statements (2) in accordance with the internal finan-
cial rules provided for under Article 15 of Council Regulation (EC)
No 2062/94. The Court of Auditors is required under Article 248
of the Treaty establishing the European Community to examine
these accounts.

The Court carried out its 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
examined the accounting records and applied the audit proce-
dures it deemed necessary in the circumstances. By means of this
audit, the Court obtained a reasonable basis for the opinion
expressed below.

In order to achieve its objectives, it has set up a network compris-
ing national centres in various participating countries and the-
matic centres. It works together with numerous Community and
national bodies, especially the main health and safety bodies of
the Member States.

Implementation of the budget

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

The appropriations available for the financial year amounted
7.
to 20 million euro, consisting of 13,2 million euro of the financial
year and 6,8 million in carryovers from the previous financial
year. Of the 2002 appropriations, a total of 12,5 million euro was
committed and payments of 6,2 million euro made against them.
The balance of appropriations was either carried over (6 million)
or cancelled. The carryovers mainly concerned Title III of the bud-
get and represented more than 70 % of the commitments entered
into. The Court once again (4) draws the Agency’s attention to the
fact that it should programme its activities in a way that complies
better with the annuality principle and should also improve the
monitoring of its activities.

4.
This examination enabled the Court to obtain reasonable
assurance that the annual accounts for the financial year ended
31 December 2002 are reliable and that the underlying transac-
tions, taken as a whole, are legal and regular.

8.
Article 6(4) of the Agency’s financial regulation provides
that the amount of appropriations to be carried over should be
established before the end of the financial year. In March 2003,
however, an amount of 202 500 euro was carried over from the
financial year 2002 to the financial year 2003.

OBSERVATIONS

Introduction

The Agency was set up by Council Regulation (EC)
5.
No 2062/94 of 18 July 1994 (3) to collect technical, scientific and
economic information useful for the promotion of health and
safety at work and to pass it on to the Community bodies, Mem-
ber States and interested parties. Its activities also extend to the
Member States of EFTA and the 13 accession candidate countries.

(1) OJ L 248, 16.9.2002, p. 1.
(2)

In accordance with Article 14(3) of Council Regulation (EC) No 2062/
94, the accounts for all the Agency’s revenue and expenditure for the
financial year 2002 were drawn up on 27 June 2003 and forwarded
to the Court of Auditors, which received them on 12 September 2003.
A short form of these financial statements is presented in the tables
annexed to this report.
(3) OJ L 216, 20.7.1994, p. 1.

Generally speaking, the audit of the budgetary accounts
9.
revealed shortcomings in the coordination between the authoris-
ing officer for expenditure and the department responsible for
financial monitoring. Moreover, there was no formal procedure
for reconciling the authorising officer for expenditure’s estimates
of the volume of appropriations to be carried over with the
amounts calculated on the basis of the financial department’s
accounts. The Agency should take the necessary steps to improve
the effectiveness of its internal control system.

Financial statements

10.
Tables 2 and 3 set out in summary form the revenue and
expenditure account and balance sheet published by the Agency
in its Activity Report for the financial year 2002.

(4) See paragraph 7 of the Report on the financial statements of the
Agency for the financial year 2001 (OJ C 326, 27.12.2002, p. 10).

C 319/10

EN

Official Journal of the European Union

30.12.2003

No physical inventory has been taken since 1997. The
11.
inventory lists are not reliable. They contain inaccuracies, are not
complete and do not take into account disposals that should have
been carried out. Moreover, despite the Court’s previous recom-
mendations (1), in which it asked the Agency to apply the rules
adopted by the Commission (2), the Agency does still not carry
out any depreciation of its fixed assets.

Legality and regularity of the underlying transactions

12.
The Agency financed 51 projects under a 4 million euro
programme in favour of small and medium-sized enterprises.
Checks carried out on a sample of seven projects showed up vari-
ous failings. No formal procedure was introduced for carrying out
on-the-spot checks of the reality of expenditure declared by bene-
ficiaries. In four cases (3), the Agency’s final evaluation report

showed significant differences between the product promised by
the beneficiaries and the final product; nevertheless, the aid was
paid in full, or almost in full. The Court draws attention to the
responsibility of the competent departments and recommends
that appropriate measures be introduced.

13.
The Agency concluded a number of contracts for various
technical and administrative services. These contracts were poorly
monitored. In five cases they were extended without any legal
basis.

The decision setting up the imprest account should be
14.
amended, the ceiling on it (60 000 euro) should be lowered to
take into account its actual utilisation and the procedures for
operating it should also be reviewed.

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

For the Court of Auditors

Juan Manuel FABRA VALLÉS

President

(1) See paragraph 10 of the Report on the financial statements of the
Agency for the financial year 2001 (OJ C 326, 27.12.2002, p. 10).
(2) Commission Regulation (EC) No 2909/2000 of 29 December 2000

(OJ L 336, 30.12.2002, p. 75).
(3) Total amount: 353 000 euro.

European Agency for Safety and Health at Work — Implementation of the budget for the financial year 2002

Table 1

Expenditure

(million EUR)

Appropriations in the final budget

Appropriations carried over from the previ-
ous financial year

Available appropriations
(2002 budget and financial year 2001)

Revenue
collected

Expenditure
allocation

entered

com-
mitted

paid

carried
over

can-
celled

initial (1)

paid

Title I
Staff

Title II
Administration

Title III
Operational
activities

12,3

0,3

0,1

12,7

3,7

3,3

3,0

0,1

0,5

1,5

1,4

1,1

0,2

0,1

8,1

7,8

Total

13,2

12,5

2,0

6,2

5,6

6,0

0,4

1,0

to be
carried
over

—

—

cancelled

appro-
priations

com-
mitted

paid

carried
over

cancelled

0,1

4,0

3,6

3,3

0,1

0,6

0,0

1,7

1,6

1,3

0,2

0,1

0,2

0,2

0,4

0,6

14,5

20,2

14,1

19,3

7,6

12,2

5,8

6,2

0,9

1,6

0,3

0,2

6,4

7,0

0,2

0,2

5,8

6,2

Revenue

Revenue
entered
in the final
budget
for the
financial
year

13,0

p.m.

0,2

13,2

Source of revenue

Community
subsidies

Other
subsidies

Miscellaneous
revenue

Total

(1) Data referring to the implementation of revenue allocated to Phare has been included in budgetary implementation for the first time, resulting in 0,8 million euro being added to appropriations carried over from the previous financial year.
NB: Differences in totals are due to the effects of rounding.
Source: The Agency’s data. The table presents, in summary form, the data provided by the Agency in its own financial statement.

.

3
0
1
2
2
0
0
3

.

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

C
3
1
9
/
1
1

C 319/12

EN

Official Journal of the European Union

30.12.2003

European Agency for Safety and Health at Work — Revenue and expenditure account for the financial years 2002 and 2001

(1 000 EUR)

Table 2

Revenue
Commission subsidies
Other subsidies
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)

Total revenue (a)

2002

12 324
252
8
73

12 657

3 024
136

1 140
247

2 030
5 623

Total expenditure (b)

12 199

2001

9 400
184
0
91

9 676

2 654
168

846
229

1 543
5 814

11 255

- 1 579

- 886
242
9
2
27

- 2 185

Balance carried over from the previous financial year
Appropriations carried over from the previous financial year and cancelled
Sums to be reused carried over from the previous financial year and not used
Exchange-rate differences
Adjustment entries

Balance for the financial year

(1) Calculation according to the principles of Article 15 of Council Regulation (EC, Euratom) No 1150/2000 (OJ L 130, 31.5.2000, p. 8).
NB: Differences in totals are due to the effects of rounding.
Source: European Agency for Safety and Health at Work.

458

- 2 185
609
0
4
7

- 1 108

30.12.2003

EN

Official Journal of the European Union

C 319/13

European Agency for Safety and Health at Work — Balance sheet at 31 December 2002 and 31 December 2001

Table 3

Assets

2002

2001

Liabilities

2002

2001

(1 000 EUR)

Fixed assets
Fittings and furniture
Transportation equipment
Computer equipment
Intangible assets

Stocks

Long-term assets
Commission subsidies

Current assets
Recoverable VAT
Sundry accounts receivable
Commission subsidies

Cash accounts
Bank and cash
Imprest account

614
26
428
145

Subtotal

1 214

Subtotal

Subtotal

Subtotal

15

15

369

369

5
54
681

739

4 922
61

Subtotal

4 982

Total

7 319

516
26
311
75

929

15

15

0

0

0
159
0

159

4 039
60

4 098

5 202

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

1 229
- 1 108

944
- 2 185

Subtotal

121

- 1 241

Long term debts
Liabilities against allocated revenue

369

Subtotal

369

Current liabilities
Commission
Non-automatic carryovers of appropriations
Automatic carryovers of appropriations
Sundry accounts payable
Payroll deductions
Liabilities against allocated revenue

6
193
5 813
19
24
736

0

0

12
190
6 021
27
33
0

Suspense accounts
Sums for reuse
Recovery orders

Subtotal

6 791

6 283

17
21

38

33
128

160

Subtotal

Total

7 319

5 202

(1) The negative difference between the balance for the financial year and own capital does not represent a capital loss. It is the result of applying the Financial Regulation as it

pertains to revenue (collected only) and expenditure (payments made plus appropriations carried over).

NB: Any discrepancies in totals are due to the effects of rounding.
Source: European Agency for Safety and Health at Work.

C 319/14

EN

Official Journal of the European Union

30.12.2003

THE AGENCY’S REPLIES

The Agency notes the comment of the Court. The Agency
7.
wishes to note the fact that 60 % of the total carryovers are for the
SME scheme, which has a strict two-year implementation cycle.

In the framework of the new Financial Regulation, the Agency is
looking into options to properly implement the programmes and,
simultaneously, to respect the principle of annuality of the bud-
get.

The Agency notes the comment of the Court of Auditors,
8.
and will establish appropriate mechanisms to avoid this type of
occurrence.

10.
The Agency notes the comment. At the end of 2002, the
Agency put in place a new controller’s function, to improve its
systems of internal control. Further substantial improvements are
expected when the ongoing internal restructuring of the Agency
is fully implemented.

12.
Early in the year 2003, the Agency contracted an account-
ing firm to undertake a complete updating of all aspects of the
management of its fixed asset, in accordance to the EU financial
rules. The work is expected to be finalised this year, in order to
reflect the new value of the Agency’s fixed assets into the 2003
accounts.

The Agency would like to draw the attention of the Court
13.
to the fact that all available resources have been dedicated to con-
ducting an in-depth assessment of the final activity reports and
the final financial reports provided by the 51 project holders.

Following those examinations, the Agency did not pay the full
grant to half of the project holders. In the four specific cases men-
tioned by the Court, the Agency considered that despite the
shortcomings in the final products the objectives of the project
were reasonably achieved and, consequently, that the project
holders deserved the full payment of the grant. The Agency will
examine the possibility of carrying out checks at project holder
level during the implementation of the scheme in 2003.

14.
To eliminate the type of problems mentioned by the
Court, the Agency has developed a database for contract manage-
ment, and is in the process of recruiting a ‘general services officer’
responsible for the management of service contracts.

15.
The cash imprest account has been replaced by a new one
at a considerable lower level, more appropriate to the present
Agency needs.