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

C 324/68

EN

Official Journal of the European Union

30.12.2004

on the annual accounts of the European Training Foundation for the 2003 financial
year together with the Foundation’s replies

REPORT

(2004/C 324/10)

CONTENTS

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

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

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

1

2-5

6-11

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

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

69

69

69

70

74

Paragraph

Page

30.12.2004

EN

Official Journal of the European Union

C 324/69

INTRODUCTION

The European Training Foundation (hereinafter called the
1.
Foundation) was
created by Council Regulation (EEC)
No 1360/90 of 7 May 1990 (1). The Foundation’s purpose is to
support the reform of vocational training in the European Union’s
partner countries. As such, it assists the Commission in the imple-
mentation of various programmes (Phare, Tacis, Cards, Meda).
Table 1 summarises the powers and activities of the Foundation
on the basis of information supplied by 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 Foun-
dation for the financial year ended 31 December 2003. In accor-
dance with Article 11(1) of Council Regulation (EEC)
No 1360/90, the budget was implemented on the responsibility
of the Director. This responsibility includes the drawing-up and
presentation of the accounts (3) in accordance with the internal
financial provisions adopted on the bases of Article 12 of the
same regulation. The Court of Auditors is required under
Article 248 of the Treaty establishing the European Community
to examine these accounts.

4.
The Court carried out the audit in accordance with its
auditing policies and standards, which are adapted from interna-
tional standards to reflect the Community context.

5.
The Court has thus obtained reasonable assurance that the
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 content of the following observations does
not call the opinion expressed by the Court in this report into
question.

OBSERVATIONS

6.
Table 2 shows the implementation of appropriations for
the 2003 financial year and of appropriations carried over from

the previous financial year. The Foundation’s revenue and expen-
diture account and the balance sheet for the financial year 2003
are summarised in Tables 3 and 4.

7.
On the basis of agreements concluded with the Commis-
sion, the Foundation manages Tempus programmes which also
include technical assistance. In 2003, the Foundation made pay-
ments of 23,1 million euro on behalf of the Commission for
those programmes and, on 31 December 2003, the balance of the
relevant bank accounts amounted to 24,2 million euro. About
20 % of the staff employed by the Foundation work full-time on
these programmes. As
the Court mentioned in previous
reports (4), no data relating to these programmes appear in the
budget or in the balance sheet; the Foundation presents the rel-
evant financial information in an annex to its annual accounts.
This does not comply with the budgetary principles of unity and
accuracy (5).

In 2003 the Foundation concluded two agreements with
8.
donors (total amount 0,5 million euro). These agreements are
correctly disclosed in the accounts but the Foundation did not
produce a supplementary and amending budget.

Due to payment delays by the Commission, the Founda-
9.
tion was unable to meet its financial commitments. The Founda-
tion had to make in November 2003 a temporary transfer of
1 million euro from bank accounts dedicated to the Tempus pro-
gramme to its own bank accounts. This operation was done with-
out informing either the Governing Board, or the Commission.

10.
In accordance with Article 43(1) of the Foundation’s
financial regulation, the accounting officer is required to validate
the systems put in place by the authorising officer on accounting
information. This validation did not take place during the finan-
cial year.

An analysis of five selection procedures showed that the
11.
process for selecting candidates for the interview (pre-selection
phase) is not formalised in a transparent way. In many cases the
selection criteria are neither laid down before the interview, nor
is their use documented in the files.

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

(1) OJ L 131, 23.5.1990
(2) OJ L 248, 16.9.2002, p. 1.
(3) As required under Article 83(3) of the Foundation’s financial regula-
tion, the final accounts for the financial year 2003 were drawn up on
September 8 2004 and forwarded to the Court of Auditors, which
received them on September 20 2004. A summarised version of the
accounts is presented in the tables annexed to this report.

(4) Paragraph 9 of the report concerning the financial year 2002
(OJ C 319, 30.12.2003, p. 48), see also paragraph 8 of the report con-
cerning the financial year 2001 (OJ C 326, 27.12.2002, p. 51) and
paragraph 11 of the report concerning the financial year 1999
(OJ C 373, 27.12.2000, p. 34).

(5) Article 6 of the Foundation’s financial regulation.

C 324/70

EN

Official Journal of the European Union

30.12.2004

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EN

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C 324/72

EN

Official Journal of the European Union

30.12.2004

European Training Foundation — Revenue and expenditure account for the financial years 2003 and 2002 (1)

Table 3

2003

2002

(1 000 euro)

Total revenue (a)

Revenue
Commission subsidies
Other donors
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

Earmarked revenues
Payments
Appropriations carried over

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

Total expenditure (b)

Outturn for the financial year(a – b)

Balance for the financial year

18 100
523
17

—

18 640

10 771
329

1 076
310

3 396
1 087

237
286

17 492

1 148

– 2 155
375
– 703
17

– 1 318

13 179
—

23
140

13 342

10 153
215

805
559

2 307
2 591

—
—

16 631

– 3 289

4 055
424
– 3 352
6

– 2 155

(1) The revenue and expenditure account and balance sheet only take account of the Foundation’s specific activities: they do not include programmes managed on behalf of the

Commission.

Source: Foundation data. This table summarise the date supplied by the Foundation in its own accounts.

30.12.2004

EN

Official Journal of the European Union

C 324/73

European Training Foundation — Balance sheet at 31 December 2003 and 31 December 2002 (1)

Table 4

Assets

2003

2002

Liabilities

2003

2002

Intangible fixed assets (2)

Fixed capital

(1 000 euro)

Occupational rights

Software licences

Depreciation

Tangible fixed assets

Equipment and furniture

Computer equipment

Depreciation

Stocks

Office equipment

Current assets

Commission subsidy receivable

Other advances

Recovery orders

Sundry accounts receivable

Cash accounts

Bank accounts

Imprest account

5 000

5 000

Own capital

146

—

Balance for the financial year

3 852

4 059

– 1 318

– 2 155

– 1 611

– 1 333

Subtotal

2 534

1 904

Subtotal

3 535

3 667

Current liabilities

Automatic carry-overs of appropriations

273

618

Automatic carry-overs of earmarked revenues

1 438

1 235

Other contributors

– 1 444

– 1 521

Sundry accounts payable

Subtotal

267

332

Deferred revenue

1 726

286

30

1

83

Subtotal

2 126

3 366

273

85

28

3 537

7 289

Subtotal

Subtotal

Subtotal

50

50

0

4

43

39

86

719

3

722

Total

4 660

60

60

3 366

2

171

30

3 569

1 524

41

1 565

9 193

Total

4 660

9 193

(1) The revenue and expenditure account and balance sheet only take account of the Foundation’s specific activities: they don’t include programmes managed on behalf of the

Commission.

(2) The Foundation paid to the owner of its building five millions euros for its renovation. This payment gives the Foundation the right to use the building for one euro per year

during 30 years from 1995 on. This item has been taken into account for the first time in 2003. The figure for year 2002 has been restated accordingly.

Source: Foundation data. This table summarise the date supplied by the Foundation in its own accounts.

C 324/74

EN

Official Journal of the European Union

30.12.2004

THE FOUNDATION’S REPLIES

At the time the Annual Accounts for 2003 were first
7.
drawn up, it was not clear yet under which rules the Tempus con-
ventions had to be reported in the budget and in other financial
statements. ETF decided to report about these amounts in detail
in an annex, while coming to a clear agreement with the Com-
mission services on the presentation of accounts 2005.

A meeting of agencies’ accountants organised by the Commission
and held on 11 June 2004 in Brussels gave concrete guidance on
new accounting methodologies to apply to funds managed on
behalf of the Commission which will be followed as of first Janu-
ary 2005 onwards.

8.
ETF takes note of the Court’s remark. From 2004 onward,
any donation will be integrated into an amended budget which
will be submitted for approval to the Governing Board and sub-
sequently published.

ETF takes note of the Court’s remark. A second occurrence
9.
happened in January 2004 when the first instalment of ETF 2004
subvention could not be paid to ETF in time. ETF had again to rely
on a temporary transfer out of Tempus funds to overcome an
urgent financial shortfall.

Learning from the previous occurrence, ETF formally informed
the Commission and the chairman of the Governing Board
through a letter dated 16 January 2004. Since that date, an
arrangement has been agreed with the Commission to reduce the
risk that such situations arise in the future.

The Accounting Officer validated the systems with a note

10.
in June 2004.

11.
Since April 2004, applications are stored in a computer-
ised database, where the screening of candidates against eligibil-
ity criteria is recorded. Eligible candidates are then assessed inde-
pendently by each of the members of the selection committee,
against pre-defined criteria. The shortlist of the candidates to be
interviewed is the result of the average score of these independent
assessments. Also the performance of interviewed candidates is
scored independently by each member of the selection commit-
tee, against pre-defined criteria. A more systematic and compre-
hensive documentation of all steps is kept on file.