Report on the financial statements of the European Foundation for the Improvement of Living and Working Conditions for the financial year 2002, together with the Foundation's replies
Date: 2003-10-16
Institutions: European Court of Auditors
Subjects: Eurofound, financial control, financial year, report

30.12.2003

EN

Official Journal of the European Union

C 319/55

on the financial statements of the European Foundation for the Improvement of Living and
Working Conditions for the financial year 2002, together with the Foundation’s replies

REPORT

(2003/C 319/09)

CONTENTS

Paragraph

Page

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

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

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

The implementation of the budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Underlying transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1-4

5-10

5

6-7

8-9

10

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

The Foundation’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56

56

56

56

56

57

58

61

C 319/56

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 has examined the financial statements of the
European Foundation for the Improvement of Living and Work-
ing Conditions for the financial year ended 31 December 2002. In
accordance with Article 18 of Council Regulation (EEC) No 1417/
76 (2), as amended by Article 1(16) of Council Regulation (EEC)
No 1949/93 (3), the Foundation’s budget was implemented under
the responsibility of its Administrative Board. This responsibility
includes the drawing-up and presentation of the financial state-
ments (4), in accordance with the internal financial provisions
provided for by Articles 65 to 68 of Council Regulation (EEC)
No 1417/76, as amended by Article 1(52) to (55) of Council Regu-
lation (EEC) No 1949/93. The Court of Auditors is required pur-
suant to Article 248 of the Treaty establishing the European Com-
munity to examine these accounts.

3.
The Court undertook its audit in accordance with its audit
policies and standards. These have been adapted from generally
accepted international auditing standards to reflect the specific
characteristics of the Community context. Accordingly, the Court
carried out such tests of the accounting records and 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 Foundation was set up in 1975 to contribute towards
the planning and establishment of better living and working con-
ditions throughout the European Union (5). It has started extend-
ing its field of activity to the candidate countries. The Foundation
has a network of experts throughout Europe, to which it delegates
research work, including, for example, producing assessments of
the current situation in the individual countries, drawing up case
studies and national reports and carrying out surveys.

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 committed for the financial year 2002
7.
amounted to 17,3 million euro, of which 13,3 million resulted in
payments and 4 million were carried over. The carryovers repre-
sented nearly 50 % of the year’s commitments for operational
activities (Title III). The large amount of carryovers relating to
operational activities shows that the Foundation needs to moni-
tor and programme them better.

Financial statements

4.
This examination has allowed the Court to obtain reason-
able assurance that the accounts for the financial year ended
31 December 2002 are reliable and that the underlying opera-
tions are, taken as a whole, legal and regular.

8.
The revenue and expenditure account and the balance
sheet published by the Foundation in its activity report for the
financial year 2002 are presented in summary form in
Tables 2 and 3.

(1) OJ L 248, 16.9.2002, p. 1.
(2) OJ L 164, 24.6.1976, p. 16.
(3) OJ L 181, 23.7.1993, p. 26.
(4) As required pursuant to Article 16 of Council Regulation (EEC)
No 1365/75, as amended by Regulation (EEC) No 1947/93, the
accounts for all the Foundation’s revenue and expenditure for the
financial year 2002 were drawn up on 23 September 2003 and for-
warded to the Court of Auditors. These accounts were received by the
Court on 29 September 2003. A summarised version of the financial
statements is presented in the tables annexed to this report.

The Foundation’s accounting system is characterised by a
9.
great heterogeneity in the tools it uses. This means the data has
to be re-entered and reprocessed many times, which is a potential
source of error. The Foundation does not have an integrated sys-
tem for monitoring fixed assets and calculating depreciation. It
uses two separate databases, which are managed by two different
departments.

(5) Council Regulation (EEC) No 1365/75 of 26 May 1975.

30.12.2003

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Official Journal of the European Union

C 319/57

Underlying transactions

10.
Article 46(c) of the Foundation’s Financial Regulation
provides for the possibility of concluding contracts with suppli-
ers by private treaty where the tender procedure is unsuccessful.
Thus, in a call for tenders, the price range envisaged for two bid

packages was between 25 000 and 35 000 euro. As the call for
tenders produced no results, they were allocated by private treaty
for 53 500 and 86 000 euro respectively. The Court suggests that
the Foundation should improve the transparency of its proce-
dures by specifying more clearly the conditions on the basis of
which it makes use of the tender procedure.

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

European Foundation for the Improvement of Living and Working Conditions — Implementation of the budget for the financial year 2002

Table 1

Revenue

Revenue
entered
in the
final budget
for the
financial year

17,1

0,0

0,3

17,4

Origin of
revenue

Community
subsidies

Other
subsidies

Other
revenue

Total

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

Expenditure

(EUR million)

Title I
Staff

Title II
Administration

Title III
Operational
activities

16,5

0,0

0,1

16,6

9,4

9,3

9,1

0,2

0,1

1,6

1,6

0,9

0,7

0,0

6,4

6,4

17,3

3,3

13,3

3,1

4,0

0,0

0,1

Total

17,4

0,2

0,2

3,2

3,6

0,2

0,0

9,6

9,5

9,3

0,2

0,2

0,0

1,8

1,8

1,1

0,7

3,1

3,5

0,1

0,1

9,6

9,5

6,4

21,0

20,8

16,8

3,1

4,0

0,1

0,0

0,1

0,2

NB: Any discrepancies in totals are due to the effects of rounding.
Source: Data compiled by the Foundation — These tables summarise the data provided by the Foundation in its own financial statements.

C
3
1
9
/
5
8

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 319/59

European Foundation for the Improvement of Living and Working Conditions — Revenue and expenditure account for the financial years
2002 and 2001

Table 2

2002

2001

(EUR 1 000)

Revenue
Commission subsidies
Sundry revenue
Financial revenue

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

Administration — Title II of the budget
Payments
Appropriations carried over

Operational activities — Title III of the budget
Payments
Carryovers

Total revenue (a)

16 500
62
57

16 619

9 111
216

938
683

3 290
3 105

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

Balance carried over from the previous financial year
Appropriations carried over and cancelled
Sums from the financial year 2001 for reuse that were not used
Exchange-rate differences

Total expenditure (b)

17 343

- 724

- 1 209
81
13
3

- 1 836

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: Any discrepancies in totals are due to the effects of rounding.
Source: Data compiled by the Foundation — These tables summarise the data supplied by the Foundation in its own financial statements.

14 958
16
96

15 070

7 583
190

854
245

3 129
3 148

15 150

- 80

- 1 210
59
24
- 2

- 1 209

C 319/60

EN

Official Journal of the European Union

30.12.2003

European Foundation for the Improvement of Living and Working Conditions — Balance sheet at 31 December 2002 and 31 December
2001 (1)

(EUR 1 000)

Assets

2002

2001

Liabilities

2002

2001

Table 3

Fixed assets
Intangible fixed assets
Buildings
Fittings and furniture (2)
Transportation equipment
Computer equipment
Fixed assets under construction
Depreciations

Stocks
Office supplies

Current assets
Other advances
Recoverable VAT
Recovery orders
Sundry accounts receivable

Cash accounts
Banks
Cash
Imprest account

154
7 137
809
49
553
31
- 4 452

Subtotal

4 281

Subtotal

13

13

11
274
1 840
13

Subtotal

2 138

1 960
1
228

Subtotal

2 189

0
7 137
1 665
49
0
0
0

8 851

23

23

15
337
1 231
4

1 587

2 390
0
145

2 535

Fixed capital
Own capital
Balance for the financial year

4 294
- 1 836

8 865
- 1 209

Subtotal

2 458

7 656

Short-term debts
Automatic carryovers of appropriations
Non-automatic carryovers of appropriations
Sundry accounts payable
Payroll deductions

3 940
64
0
139

Suspense accounts
Sums to be reused
Deferred revenue
Payments in progress

Subtotal

4 143

150
1 840
30

3 583
0
4
327

3 914

195
1 231
0

Subtotal

2 020

1 426

Total

8 621

12 996

Total

8 621

12 996

(1) The balance sheet does not show an amount of one million euro relating to a convention signed with the Commission on 15 December 2002 and referring to allocated

revenue receivable in 2003 and 2004.

(2) In 2001, this item also included computer equipment and software.
NB: Any discrepancies in totals are due to the effects of rounding.
Source: Data compiled by the Foundation — These tables summarise the data supplied by the Foundation in its own financial statements.

30.12.2003

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Official Journal of the European Union

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THE FOUNDATION’S REPLIES

For the cases where contracts are repetitive in nature, the
7.
timing of contracting procedures has, where possible, been brought
forward. In the other cases, where the nature of the actions is
more innovative and complex, the Foundation will continue to
explore possibilities to expedite their implementation, from their
initiation to their contractual execution. Those efforts as well as
the application of the new Financial Regulation are expected to
reduce the volume of carryovers.

The Foundation is currently implementing measures to
9.
improve the integration of its accounting systems. Computerised
systems for asset control are also currently being assessed.

The circumstances in which the Foundation found itself
10.
in this case were exceptional and the Foundation did raise the
issue with the Board before proceeding to contract. It is the clear
intention of the Foundation to ensure that, if such cases arise in
the future, the limits applied to the original call for tenders will
normally apply to the negotiated procedure (‘private treaty’). In
cases where the foreseen funding is found to be inadequate, the
option of holding a new call with revised funding will be consid-
ered. Any deviation from this procedure in the future will only be
implemented with the express approval of the authorising officer.