Report on the financial statements of the European Foundation for the Improvement of Living and Working Conditions for the 2003 financial year together with the Foundation's replies
Date: 2004-09-30
Institutions: European Court of Auditors
Subjects: Eurofound, European Court of Auditors, administration of the Institutions, financial control, interinstitutional relations (EU), operating result, report

30.12.2004

EN

Official Journal of the European Union

C 324/75

REPORT

on the financial statements of the European Foundation for the Improvement of
Living and Working Conditions for the 2003 financial year together with the
Foundation’s replies

(2004/C 324/11)

CONTENTS

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

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

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

1

2-5

6-12

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

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

76

76

76

78

82

Paragraph

Page

C 324/76

EN

Official Journal of the European Union

30.12.2004

INTRODUCTION

OBSERVATIONS

The European Foundation for the Improvement of Living
1.
and Working Conditions (hereinafter referred to as the Founda-
tion) was set up by Council Regulation (EEC) No 1365/75 of
26 May 1975 (1). Its aim is to contribute to the planning and
establishment of better living and working conditions in the Euro-
pean Union by increasing and disseminating knowledge which is
relevant to this subject. Table 1 summarises the powers and activi-
ties of the Foundation on the basis of information supplied by it.

THE COURT’S OPINION

2.
This report 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 Foundation’s annual accounts
for the financial year ended 31 December 2003. In accordance
with Article 16 of Council Regulation (EEC) No 1365/75, the
budget was implemented on the responsibility of its Director.
This responsibility includes the drawing-up and presentation of
the accounts (3), in accordance with the internal financial provi-
sions provided for in the same article. The Court of Auditors is
required under Article 248 of the Treaty establishing the Euro-
pean Community to examine these accounts.

The Court carried out its audit in accordance with its
4.
auditing policies and standards. These 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 con-
sidered necessary in this context.

The Court thus obtained reasonable assurance that the
5.
annual accounts for the financial year ended 31 December 2003
were reliable and that the underlying transactions were, taken as
a whole, legal and regular. The content of the observations which
follow does not call into question the audit opinion expressed by
the Court in this report.

(1) OJ L 139, 30.5.1975, p. 1.
(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
3 September 2004 and forwarded to the Court of Auditors, which
received them on 24 September 2004. A summarised version of the
accounts is presented in the tables annexed to this report.

6.
Table 2 shows the implementation of appropriations for
the financial year 2003 and the 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.
The Foundation signed an agreement with the Commis-
sion in the context of the Phare programme. Under this agree-
ment, the Foundation received an allocation of one million euro,
of which 639 000 euro were received in 2003. These funds were
managed outside the budget. An amending budget should have
been drawn up.

8.
The revenue and expenditure account shows a loss which
has accumulated over several financial years and which the Foun-
dation has asked the Commission to reimburse. The Commission
has regarded the corresponding payment as part of the subsidy
for the financial year 2003, which means that the loss has not
been discharged. Under the new provisions of the Foundation’s
financial regulation, if the balance of the outturn account for a
particular year is negative, an amending budget (4) must be drawn
up for the following year.

The Foundation’s new financial regulation and its imple-
9.
menting rules were adopted by the Governing Board on 28 March
2003. These rules (5) provide for the introduction of a new inter-
nal control system (including internal audit), which was not fina-
lised until the beginning of 2004.

10.
Article 43(1)(e) of the Foundation’s financial regulation
provides that the accounting officer is to validate the systems laid
down by the authorising officer to supply or justify accounting
information. This validation did not take place during the finan-
cial year.

11.
According to the basic regulation drawn up in 1975, the
Foundation’s principal aim is to contribute to the establishment
of better living and working conditions by increasing and dis-
seminating knowledge which is relevant to this subject. In par-
ticular, the Foundation is required to consider the following areas:
man at work, organisation of work, problems peculiar to certain
categories of workers, long-term aspects of the improvement of
the environment and the distribution of human activities in space
and in time. Certain aspects of these subjects have in practice been
dealt with by other Agencies which have been set up since then
(European Environment Agency, European Agency for Safety and
Health at Work). The Foundation on the other hand has devel-
oped the analysis of other, more specific, aspects such as indus-
trial relations.

(4) Article 16 of the new financial regulation.
(5) Article 38 of the Foundation’s new financial regulation.

30.12.2004

EN

Official Journal of the European Union

C 324/77

The Foundation’s activities are governed by four-year
12.
rolling programmes, the most recent of which covers the period
2001 to 2004. While the main aim of the most recent pro-
gramme was to achieve a greater concentration on certain key
areas, in 2002 the Foundation added a further area to the three
already selected. The planning of the Foundation’s work pro-
gramme ought to be reviewed in consultation with the other

Agencies that deal with subjects related to its area of activity so
as to ensure that the basic priorities are well covered, to develop
possible synergies and to avoid repeating work already carried
out. The review of the Foundation’s basic regulation which has
been proposed by the Commission ought to be the occasion to
do it.

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 324/78

EN

Official Journal of the European Union

30.12.2004

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C 324/80

EN

Official Journal of the European Union

30.12.2004

European Foundation for the Improvement of Living and Working Conditions — Revenue and expenditure accounts for the financial
years 2003 and 2002

Table 3

2003

2002

(1 000 euro)

Revenue
Commission 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

Total revenue (a)

17 090
47
35

17 172

8 927
109

968
224

3 733
2 817

Total expenditure (b)

16 778

Outturn for the financial year (a – b)

Balance carried over from the previous financial year
Appropriations carried over and cancelled
Sums from the previous financial year for re-use that were not used
PHARE revenue collected
PHARE revenue to be collected
PHARE expenditure

Exchange-rate differences

394

– 1 836
118
19
639
361
– 1 000

9

Source: The Foundation’s data. This table summarises the data provided by the Foundation in its own accounts.

Balance for the financial year

– 1 296

16 500
62
57

16 619

9 111
216

938
683

3 290
3 105

17 343

– 724

– 1 209
81
13
0
0
0

3

– 1 836

30.12.2004

EN

Official Journal of the European Union

C 324/81

European Foundation for the Improvement of Living and Working Conditions — Balance sheet as at 31 December 2003
and 31 December 2002

Table 4

Assets

2003

2002

Liabilities

2003

2002

(1 000 euro)

Subtotal

16 476

4 281

Non-automatic carry-overs of appropriations

Automatic carry-overs of appropriations

3 150

3 940

Fixed assets (1)

Intangible fixed assets

Buildings (2)

Fixed capital

27

31

Own capital

15 682

3 826

Revaluation reserve

Furniture and vehicle transportation material

Computer equipment

Technical and other equipment

Fixed assets under construction

142

107

518

0

139

149

105

31

Balance for the financial year

Current liabilities

Stocks

Office supplies

Current assets

Commission Phare receivables

Advances

VAT to be recovered

Recovery orders to be collected

Sundry accounts receivable

Cash accounts

Banks

Cash

Imprest account

Subtotal

Phare liabilities

Salary deductions

Suspense accounts

Sums to be re-used

Deferred revenue

13

13

0

11

274

Payments in progress

1 840

13

7

7

361

2

281

5

41

Subtotal

690

2 138

1 331

1 960

3

183

Subtotal

1 517

Total

18 690

1

228

2 189

8 621

(1) The net value of the fixed assets is shown. The data for 2002 have been reprocessed for the purposes of comparison.
(2) The Foundation has decided to revalue its fixed assets (12,1 million euro).
Source: The Foundation’s data. This table summarises the data provided by the Foundation in its own accounts.

4 389

12 094

4 294

0

– 1 296

– 1 836

Subtotal

15 187

2 458

0

329

0

Subtotal

3 479

22

2

0

24

Subtotal

64

0

139

4 143

150

1 840

30

2 020

Total

18 690

8 621

C 324/82

EN

Official Journal of the European Union

30.12.2004

THE FOUNDATION’S REPLIES

The Phare activity, not being explicitly covered by the
7.
Foundations establishing regulation, was not judged appropriate
for integration it in its budget. The Foundation takes note of the
observation of the Court and will include Phare financing in his
future budgets.

8.
The Foundation is in contact with the Commission’s ser-
vices to clarify the issue of the accumulated deficit and the treat-
ment of future deficits or surpluses.

9.
Provision for the internal control function was finalised
with the introduction of a financial and operational verification
function in November 2003. This function and other control
work is carried out by a specialised unit. The function of internal
audit is provided by the Commission’s Internal Audit Service.

The Accounting Officer relies on the validations per-
10.
formed by the Commission’s services, which have provided the
accounting systems in use by the Foundation.

In developing its programmes the Foundation has
12.
achieved synergies with other agencies to the effect that each
deals with complementary aspects within common thematic
competences in order to avoid duplication of work. This has been
formalised in joint declarations e.g. with the European Agency for
Safety and Health at Work in Bilbao.