Report on the annual accounts of the European Monitoring Centre for Drugs and Drug Addiction for the 2003 financial year together with the Monitoring Centre's replies
Date: 2004-09-30
Institutions: European Court of Auditors
Subjects: European Court of Auditors, European Monitoring Centre for Drugs and Drug Addiction, administration of the Institutions, financial control, interinstitutional relations (EU), operating result, report

30.12.2004

EN

Official Journal of the European Union

C 324/83

on the annual accounts of the European Monitoring Centre for Drugs and Drug
Addiction for the 2003 financial year together with the Monitoring Centre’s replies

REPORT

(2004/C 324/12)

CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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

1

2-5

6-11

Tables 1 to 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

84

84

84

86

90

Paragraph

Page

C 324/84

EN

Official Journal of the European Union

30.12.2004

INTRODUCTION

The European Monitoring Centre for Drugs and Drug
1.
Addiction (hereinafter called ‘the Monitoring Centre’) was estab-
lished by Council Regulation (EEC) No 302/93 of 8 February
1993 (1). Its main objective is to collect data on drugs and drug
addiction in order to prepare and publish information that is
objective, reliable and comparable at European level. The infor-
mation is intended to provide a basis for analysing demand for
drugs and ways of reducing both it and drug-market-related
events in general. Table 1 summarises the Monitoring Centre’s
competencies and activities on the basis of information received
from it.

THE COURT’S OPINION

2.
This opinion is addressed to the European Parliament and
the Council, in accordance with Article 185(2) of Council Regu-
lation (EC, Euratom) No 1605/2002 (2).

3.
The Court has examined the annual accounts of the Moni-
toring Centre for the financial year ended 31 December 2003. In
accordance with Article 11 of Council Regulation (EEC)
No 302/93, the budget was implemented on the responsibility of
the Director. This responsibility included the drawing-up and pre-
sentation of the accounts (3) in accordance with the internal
financial provisions adopted under the same article. The Court of
Auditors is required under Article 248 of the Treaty establishing
the European Community to audit these accounts.

4.
The Court carried out its audit in accordance with its
auditing policies and standards, which have been adapted from
generally accepted international auditing standards to reflect the
specific nature of the Community context. The Court carried out
such tests on the accounting records and applied such other pro-
cedures as it deemed necessary in the circumstances.

(1) OJ L 36, 12.2.1993. Regulation amended by Regulation (EC)
No 3294/94 of 22 December 1994 (OJ L 341, 30.12.1994, p. 7) and
Regulation (EC) No 1651/2003 of 18 June 2003 (OJ L 245,
29.9.2003).

(2) OJ L 248, 16.9.2002, p. 1.
(3) As required under Article 82 of Commission Regulation (EC)
No 2343/2002, the Monitoring Centre’s final accounts for the 2003
financial year were drawn up on 15 September 2004 and forwarded
to the Court of Auditors. They were received by the Court on 21 Sep-
tember 2004. A summarised version of these accounts is presented in
the tables annexed to this report.

The Court has thus obtained reasonable assurance that the
5.
annual accounts for the year ended 31 December 2003 are reli-
able and that the underlying transactions, taken as a whole, are
legal and regular. The observations which follow do not call into
question the audit opinion expressed by the Court in this report.

OBSERVATIONS

6.
The implementation of the appropriations for the 2003
financial year and of the appropriations carried over from the pre-
vious financial year is shown in Table 2. The Monitoring Centre’s
revenue and expenditure account and balance sheet for the finan-
cial year 2003 are presented in summary form in Tables 3 and 4.

7.
The duties of Authorising Officer for the greater part of
the Monitoring Centre’s budget (Titles I and II) and of the ex ante
Controller for the entire budget are performed by just one per-
son, who also carries out the duties of Head of Administration
and of Quality Control. This combination of responsibilities sig-
nificantly undermines internal control, which is based in particu-
lar on the principle of segregation of duties.

Following the adoption of its new financial regulation (4),
8.
the Monitoring Centre issued in-house instructions for checking
commitments, payments and recoveries. However, the files do
not contain documents enabling the Authorising Officer to obtain
assurance that all these instructions have actually been followed.

9.
Article 42(1)(e) of the Monitoring Centre’s financial regu-
lation provides that the Accounting Officer should validate the
systems laid down by the Authorising Officer and intended to
provide or substantiate accounting information. This validation
had still not been carried out at the end of the 2003 financial year.

10.
Under its annual work programme, the Monitoring Cen-
tre concludes contracts with national centres. The deadline for the
performance of these contracts is fixed at 31 December. The con-
tracts for the 2003 programme (1,5 million euro in total) were
not signed until July 2003. In May 2004, no final payments had
yet been made in respect of the scheduled work and no additional
clauses extending the length of
the contracts had been
signed. Moreover, the 2004 programme contracts had already
been concluded. As regards renewal of these types of contract,
due consideration should be given to the real progress achieved
in the work requested the year before and to an evaluation of its
quality.

In its reply (5) to the Court’s annual report concerning the
11.
2002 financial year, the Monitoring Centre stated that a physical
inventory would be carried out by the end of 2003. This had still
not been done by the end of the first quarter of 2004. In addi-
tion, there is still no document that clearly defines the responsi-
bilities and procedures regarding the inventory.

(4) Adopted by the Management Board at the meeting of 15 to 17 Janu-

ary 2003.

(5) OJ C 319, 30.12.2003, p. 68, paragraph 11.

30.12.2004

EN

Official Journal of the European Union

C 324/85

This Report was adopted by the Court of Auditors in Luxembourg at its meeting of 29 and 30 September
2004.

For the Court of Auditors
Juan Manuel FABRA VALLÉS
President

C 324/86

EN

Official Journal of the European Union

30.12.2004

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EN

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C 324/87

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C 324/88

EN

Official Journal of the European Union

30.12.2004

European Monitoring Centre for Drugs and Drug Addiction — Revenue and expenditure account for the financial years 2003 and 2002

Table 3

2003

9 300
421
334
67

(1 000 euro)

2002

9 000
413
735
133

Total revenue (a)

10 122

10 280

Revenue
Commission subsidies
Subsidies from Norway
Phare subsidies
Other revenue

Expenditure

Staff — Title I of the budget
Payments
Appropriations carried over

Administration — Title II of the budget
Payments
Appropriations carried over

Operating expenditure — Title III of the budget
Payments
Appropriations carried over

Balance carried over from the previous financial year
Appropriations carried over and cancelled
Sums for reuse from the previous financial year not used
Refunds to the Commission
Exchange-rate differences

NB: The totals may include differences due to rounding.
Source: Data from the Monitoring Centre.

Total expenditure (b)

10 117

Outturn for the financial year (a – b)

Balance for the financial year

5

1 626
221
21
– 1 584
6

295

5 240
88

558
272

2 281
1 679

4 951
80

632
509

2 525
1 001

9 698

582

639
392
9

—

3

1 626

30.12.2004

EN

Official Journal of the European Union

C 324/89

European Monitoring Centre for Drugs and Drug Addiction — Balance sheet at 31 December 2003 and 31 December 2002

Table 4

Assets

2003

2002

Liabilities

2003

2002

(1 000 euro)

Fixed assets

Intangible fixed assets

Buildings

Equipment and furniture

Computer equipment

Vehicles

Depreciation

Fixed capital

94

66

Own capital

3 559

3 559

Balance for the financial year

3 057

295

2 797

1 626

157

659

50

152

785

74

– 1 496

– 1 867

Current liabilities

Subtotal

3 352

4 423

Subtotal

3 023

2 768

Automatic carry-overs

1 815

1 377

Stocks

34

28

Non-automatic carry-overs

Current assets

Recoverable VAT

Sundry accounts receivable

Advances

Cash accounts

Bank accounts

Imprest account

Phare carry-overs

Sundry accounts payable

Recovery orders (1)

94

66

78

Subtotal

238

84

18

—

101

Suspense accounts

2 291

3 474

Sums to be reused

0

4

Deferred revenue

—

223

18

55

212

—

18

101

Subtotal

2 111

1 709

—

123

123

265

4

269

Subtotal

Suspense accounts

0

24

Subtotal

2 291

3 478

Total

5 586

6 400

Total

5 586

6 400

(1) Recovery orders issued, but not yet collected, that have not yet resulted in the entering of appropriations for reuse.
NB: The totals may include differences due to rounding.
Source: Data from the Monitoring Centre. These tables summarise the data provided by the Monitoring Centre in its own accounts.

C 324/90

EN

Official Journal of the European Union

30.12.2004

THE MONITORING CENTRE’S REPLIES

The combination of responsibilities mentioned by the
7.
Court was one of the consequences of the departure of the Head
of the Financial Sector. The Head of administration was obliged
to take on this role for a transitional period until the new Head of
the Financial Sector took up his duties on 1 February 2004. This
person, who has become the ex ante verifying officer, does not
perform the duties of Authorising Officer.

8.
In accordance with the financial provisions applicable, the
instructions in question set out the various procedures of budget-
ary implementation, the persons in charge of these procedures,
and their tasks and responsibilities, including in terms of check-
ing. The procedural stages were described in a circulation sheet,
for approval by the persons responsible for their execution, who,
in addition, in most cases, have to give, their electronic visa before
the file is being sent to the authorizing officer. The EMCDDA has
taken note of the Court’s comment, and in order to take better
account of the checks made, has prepared checklists to be added
to files relating to budgetary operations.

The validation was carried out and submitted to the Court

9.
on 27 July 2004.

10.
The budget for 2003 allocated to the activities of the
national focal points of the REITOX network was the subject of a
parliamentary reservation until the end of April. Therefore, it was
not possible to sign the subsidies until very late in the year. Fur-
thermore, the EMCDDA decided not to make advance payments
for 2004 until it had examined and closed the cost statements of
the 2003. When renewing contracts in the future, the EMCDDA
will naturally give due consideration to the real progress achieved
in the work requested the year before and to an evaluation of its
quality.

11.
Great efforts were taken in May 2004 to identify all
EMCDDA assets and to finalise the physical inventory. This exer-
cise and the redefinition of responsibilities and procedures will be
completed before the end of 2004.