Report on the annual accounts of the Office for Harmonization in the Internal Market for the 2003 financial year together with the Office's replies
Date: 2004-09-30
Institutions: European Court of Auditors
Subjects: European Court of Auditors, European Union Intellectual Property Office, administration of the Institutions, financial control, interinstitutional relations (EU), operating result, report

C 324/106

EN

Official Journal of the European Union

30.12.2004

on the annual accounts of the Office for Harmonization in the Internal Market for the
2003 financial year together with the Office’s replies

REPORT

(2004/C 324/15)

CONTENTS

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

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

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

Paragraph

1

2-5

6-10

Tables 1–4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Office’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

107

107

107

108

112

30.12.2004

EN

Official Journal of the European Union

C 324/107

INTRODUCTION

1.
The Office for Harmonization in the Internal Market (here-
inafter called ‘the Office’) was set up by Council Regulation (EC)
No 40/94 (1) of 20 December 1993. Its mandate is to implement
the Community legislation on trade marks and designs, which
gives undertakings uniform protection throughout the area of the
Union. The Office’s duties and activities are summarised, on the
basis of information submitted by the Office, in Table 1.

THE COURT’s OPINION

This opinion is addressed to the Office’s Budget Commit-
to Article 137(2) of Council Regulation (EC)

2.
tee pursuant
No 40/94 (1).

3.
The Court has examined the Office’s annual accounts for
the financial ended 31 December 2003. In accordance with
Article 119(2)(c) of Council Regulation (EC) No 40/94, the
Office’s budget was implemented on the responsibility of its Presi-
dent. This responsibility includes the drawing-up and presenta-
tion of the accounts (2), in accordance with the internal financial
provisions provided for in Article 138 of Council Regulation (EC)
No 40/94. 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 its audit in accordance with its audit
policies and standards, which have been adapted from generally
accepted international auditing standards to reflect the specific
nature of the Community context. It examined the accounting
documents and applied the audit procedures it considered neces-
sary in that context.

5.
The Court has thus obtained reasonable assurance that the
annual accounts for the financial year ended on 31 December
2003 are reliable and that the underlying transactions, taken as a

whole, are legal and regular. The content of the following obser-
vations does not call into question the audit opinion expressed by
the Court in this report.

OBSERVATIONS

6.
The implementation of the appropriations for the finan-
cial year 2003, and of the appropriations carried over from the
previous year, is set out in Table 2. The Office’s revenue and
expenditure account and balance sheet for the financial year 2003
are presented in summary form in Tables 3 and 4.

7.
The total value of appropriations carried over was
18,3 million euro. More attention should be given to evaluating
whether carry-overs are really necessary. Tests performed on a
35 % sample of this amount revealed unjustified carry-overs of
around 586 000 euro, 350 000 euro for search reports and
236 000 euro for professional training activities.

8.
A large number of carry-overs correspond to provisional
commitments, the unused balance of which is carried over at the
year’s end in its entirety, even where all or part of this balance
does not relate to duly contracted obligations. This situation is
irregular.

9.
Computer licences and software are not included under
fixed assets, in contravention of the Regulation on inventory (3).
As at 31 December 2003, it was estimated that they might have
a value of up to 700 000 euro.

10.
In spite of the Court’s previous observations (4), the
Office has not reviewed its inventory system: duties are still
poorly defined and there is still insufficient staff training. It is dif-
ficult to keep the inventory correctly in such circumstances. For
example, items of computer equipment and furniture recorded in
the accounts at a value of around 500 000 euro could not be
located when a physical inventory was made.

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 11, 14.1.1994.
(2) As required under Article 137(1) of Council Regulation (EC) No 40/94,
the accounts of all the Office’s revenue and expenditure for the 2003
financial year were drawn up on 28 February 2004 and sent to the
Court of Auditors. They were received by the Court on 24 September
2004. A summarised version of these accounts is presented in the
tables annexed to this report.

(3) Commission Regulation (EC) No 2909/2000 of 29 December 2000

(OJ L 336, 30.12.2000, p. 75).

(4) Paragraph 13 of the report on the financial year 2002 (OJ C 319,

30.12.2003, p. 84).

C 324/108

EN

Official Journal of the European Union

30.12.2004

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EN

Official Journal of the European Union

30.12.2004

Office for Harmonization in the Internal Market — Revenue and expenditure account for the financial years 2003 and 2002

Table 3

2003

2002

(1 000 euro)

107 056
3 460

Total revenue (a)

110 516

Revenue
Own revenue
Financial revenue

Budgetary expenditure for the financial year

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

Other expenditure/provisions for the year

Total expenditure (b)

Outturn for the financial year (a – b)

Provision for procedural expenditure

Subtotal

Balance carried over from the previous financial year
Appropriations carried over and cancelled
Sums for re-use from the previous financial year not used
Provision for procedural expenditure from previous financial years
Exchange-rate differences and extraordinary revenue

NB: Totals may include differences due to rounding.
Source: Office data — These tables summarise the data supplied by the Office in its own accounts.

Balance for the financial year

97 329
3 141

100 470

46 106
934

15 095
9 718

16 431
8 651

96 934

3 536

– 1 363

– 1 363

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1 817
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47 416
1 168

16 366
7 891

14 137
9 262

96 240

14 276

1 094

1 094

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1 506
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72 353

30.12.2004

EN

Official Journal of the European Union

C 324/111

Office for Harmonization in the Internal Market — Balance sheet as at 31 December 2003 and 31 December 2002

Table 4

Assets

2003

2002

Liabilities

2003

2002

(1 000 euro)

Fixed assets

Buildings

Equipment and furniture

Transport equipment

Computer equipment

Intangible assets

Depreciation

Current assets

Suppliers and missions

Other sundry accounts receivable

Cash accounts

Bank accounts

Cash

Fixed capital

26 747

26 286 Own capital

3 828

3 783

Balance for the financial year

27 921

72 353

115

111

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100 274

28 065

55 368

83 433

11 241

9 636

Long-term debt

24

24

Long-term creditors

– 14 035

– 11 775

Subtotal

27 920

28 065 Current liabilities

Subtotal

24

24

23

23

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200

107

307

167 Advances from clients

89 Amounts outstanding

256

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18 322

29 395

51

757

13 644

134 239

112 256

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62 169

19 303

22 289

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14 738

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2

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Subtotal

134 240

112 258

Revenue to be re-used

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0

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115

115

Total

162 467

140 579

NB: Totals may include differences due to rounding.
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Total

162 467

140 579

C 324/112

EN

Official Journal of the European Union

30.12.2004

THE OFFICE’S REPLIES

Concerning the search reports, the improvement in the
7.
computer application used to manage these reports, the abolition
of the annual adjustment as from 1 January 2004 and the estab-
lishment of specific commitments for each of the national offices
will help to better evaluate the appropriations to be carried over.
For training, commitment requirements will be the subject of two
examinations as from 2004, one in August and another in
December. Amounts are already being decommitted as measures
are being implemented.

8.
The Office has taken note of this observation and will take
the necessary measures to reduce the carry-overs corresponding
to provisional commitments.

The Office will examine all the contracts concerned in
9.
order to determine the exact amount to be recorded as intangible
assets
in accordance with Commission Regulation (EC)
No 2909/2000.

Since 2003, the Office has been implementing measures
10.
to improve the keeping of its inventory, in particular by reorga-
nising the inventory under a single department, aligning the head-
ings with those of the Commission and reviewing the labelling
and decommissioning of assets. Concerning the definition of
duties and training, the Office is currently reviewing the Regula-
tion on inventory and the underlying procedures and drawing up
written instructions for physical inventory verification.