Report on the annual accounts of the European Agency for Safety and Health at Work for the 2003 financial year together with the Agency's replies
Date: 2004-09-30
Institutions: European Court of Auditors
Subjects: European Agency for Safety and Health at Work, 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 324/1

I

(Information)

COURT OF AUDITORS

on the annual accounts of the European Agency for Safety and Health at Work for the
2003 financial year together with the Agency’s replies

REPORT

(2004/C 324/01)

CONTENTS

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

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

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

1

2-5

6-11

Tables 1-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Agency’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

2

2

4

8

Paragraph

Page

C 324/2

EN

Official Journal of the European Union

30.12.2004

INTRODUCTION

OBSERVATIONS

1.
The European Agency for Safety and Health at Work
(hereinafter referred to as the Agency) was established by Council
Regulation (EC) No 2062/94 of 18 July 1994 (1). The Agency’s
task is to collect and disseminate information on national and
Community priorities in the field of safety and health at work, to
support national and Community organisations involved in the
formulation and implementation of policy and to provide infor-
mation on preventive measures. Table 1 contains a summary of
the Agency’s responsibilities and activities based on information
provided by the Agency.

THE COURT’S OPINION

The implementation of the appropriations for the finan-
6.
cial year 2003 and of the appropriations carried over from the
previous financial year is shown in Table 2. The revenue and
expenditure account and balance sheet drawn up by the Agency
for 2003 are set out in summary form in Tables 3 and 4.

7.
The carry-overs of appropriations mainly concern Title III
of the budget and, despite a significant reduction, represent more
than 45 % of the commitments entered into. The Court once
again draws the Agency’s attention to the necessity of improving
the monitoring of its activities.

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).

8.
For the financial year ending on 31 December 2003 the
Agency began to apply the accounting principles set out in its
new financial regulation. Nevertheless, the data concerning the
financial year 2002 were not reprocessed, so it is not possible to
compare the two financial years.

The Court has examined the Agency’s annual accounts for
3.
the financial year ended 31 December 2003. In accordance with
Article 14(1) of Council Regulation (EC) No 2062/94, the budget
was implemented on the responsibility of the Director. This
responsibility included the drawing-up and presentation of the
accounts (3) in accordance with the internal financial rules pro-
vided for under Article 15 of Council Regulation (EC)
No 2062/94. The Court 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
auditing 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 con-
sidered necessary in this context.

9.
In its report concerning the financial year 2002 (4), the
Court noted shortcomings in checks on a programme of subsi-
dies for the collation and dissemination of good practices to
reduce the risks to health and safety in small and medium-sized
enterprises. In 2003 the Agency paid 3,1 million euro on the
basis of an analysis of the activity reports and financial reports
concerning 53 projects under this programme. The declarations
of expenditure of 20 of these projects were audited by the Court.
As the date of the end of the programme approached, the Agency
reduced its demands in terms of financial documentation in sup-
port of requests for final payment. The result was that, in the case
of five of the 20 files examined, payments had been made to the
extent of 348 000 euro on the basis of nothing more than a dec-
laration of expenditure, without adequate supporting documents
and in some cases with none (5). In its reply to the Court’s report
concerning the financial year 2002 (6), the Agency was examin-
ing the possibility of carrying out checks at project holder level.
No such check was carried out in 2003.

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

As the Court pointed out in its opinion on the financial
10.
year 2002 (7), the audit of the budgetary accounts again revealed
shortcomings in the definition of ex ante financial checks and the
relevant formal procedures.

(1) OJ L 216, 20.8.1994, p. 1. The Regulation was amended by Council
Regulation (EC) No 1654/2003 of 18 June 2003 (OJ L 245,
29.9.2003, p. 38).

(2) OJ L 248, 16.9.2002, p. 1.
(3) In accordance with Article 14(3) of the Agency’s Financial Regulation,
the final accounts for the financial year 2003 were drawn up on
27 July 2004 and forwarded to the Court of Auditors, which received
them on 24 September 2004. A short form of these accounts is pre-
sented in the tables annexed to this report.

(4) See paragraph 12 of the report concerning the financial year 2002

(OJ C 319, 30.12.2003, p. 10).

(5) In four cases, no supporting document was attached to the request and
in one case the supporting documents covered only part of the
amount requested.

(6) See paragraph 13 of the reply to the report concerning the financial

year 2002 (OJ C 319, 30.12.2003, p. 14).

(7) See paragraph 9 of the report concerning the financial year 2002

(OJ C 319, 30.12.2003, p. 9).

30.12.2004

EN

Official Journal of the European Union

C 324/3

According to Article 4 of the Agency’s basic regulation,
11.
the national authorities are to inform the Agency of the names
of the institutions with which the Agency is able to cooperate
and which can act as topic centres. The Agency has financed
two centres (1) which cover a large range of topics. One of them
cooperates with 14 institutions and the other with 12. The main

added value of the studies carried out by the centres is the fact
that they collect data which are sometimes difficult to obtain
and analyse at European level. The Agency should strengthen its
system for checking expenditure declared by topic centres, in
particular by asking for them to be certified by an external
auditor.

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) A third centre was set up in June 2003 solely for the collection of data
in the candidate countries; this centre ceased operations in April 2004.

C 324/4

EN

Official Journal of the European Union

30.12.2004

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EN

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C 324/5

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EN

Official Journal of the European Union

30.12.2004

European Agency for Safety and Health at Work — Revenue and expenditure account for the financial years 2003 and 2002

Table 3

2003

2002

(1 000 euro)

Total revenue (a)

Revenue
Community subsidies
Other subsidies
Other revenue
Phare 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

PHARE expenditure
Payments
Appropriations carried over

Total expenditure (b)

Outturn for the financial year (c = a – b) (1)

Balance carried over from the previous financial year
Appropriations carried over from the previous financial year and cancelled
Sums to be re-used carried over from the previous financial year and not used
Payments against commitment cancelled in 2002
Exchange-rate differences
Adjustment entries

Outturn for the financial year before economic adjustment (d)

Budget revenue to be recovered
Other revenue to be recovered
Acquisitions of fixed assets
Depreciation (2)
Miscellaneous expenditure

Economic adjustments (e)

11 641
66
157
824

12 688

3 245
87

1 146
186

2 559
5 859

548
502

14 131

– 1 443

– 1 108
766
1
– 191
4
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– 1 987

850
3
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12 324
252
81
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12 657

3 024
136

1 140
247

2 030
5 623

0
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12 199

458

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609
0
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7

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0
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Balance for the financial year (d + e) (3)

– 1 113

– 1 108

(1) Calculation according to the principles of Article 15 of Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 (OJ L 130, 31.5.2000, p. 8).
(2)
(3) The negative balance is due to the fact that carry-overs are still being treated as expenditure, without any economic adjustment. A rough estimate of the adjustment to be

In 2003 the Agency depreciated its fixed assets for the first time.

applied suggests that the actual balance for the financial year is of the order of a million euro.

NB: Differences in totals are due to the effects of rounding.
Source: The Agency’s data — The tables present, in summary form, the data provided by the Agency in its own accounts.

30.12.2004

EN

Official Journal of the European Union

C 324/7

European Agency for Safety and Health at Work — Balance sheet at 31 December 2003 and 31 December 2002

Table 4

Assets

2003

2002

Liabilities

2003

2002

(million euro)

Fixed assets

Computer software

IT equipment

Fittings and furniture

Transportation equipment

Medium and long-term assets

Community subsidies

Stocks

Office supplies

Current assets

Community subsidies

Sundry accounts receivable

Recoverable VAT

Cash accounts

Bank and cash

Imprest account

Suspense accounts

Advances

95

136

215

0

445

0

0

6

6

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Subtotal

Subtotal

Own capital

Own capital (1)

Balance for the financial year

Medium and long-term liabilities

145

428

614

26

431

1 229

– 1 113

– 1 108

Subtotal

– 682

121

1 214

Liabilities against assigned revenue

Subtotal

369

369

15

15

Current liabilities

Non-automatic carry-overs

Automatic carry-overs

Commission

Sundry accounts payable

Payroll deductions

0

0

135

6 498

282

128

73

0

1 035

681

Liabilities against assigned revenue

62

0

53

5

Suspense accounts

Subtotal

1 097

739

Recovery orders

Revenue for re-use

4 889

4 922

1

61

Subtotal

4 890

4 982

Subtotal

6

6

0

0

Total

6 445

7 319

Subtotal

7 117

11

0

11

Subtotal

369

369

193

5 813

7

19

24

736

6 791

21

17

37

(1) The total for capital at 31 December 2003 corresponds to the sum of the gross value of fixed assets at 31 December 2002 minus historical depreciation for the period
1996 to 2002 plus the variation in the value of stock between 31.12.2002 and 31.12.2003 and adjustments on the valuation, recognition and downgrading of fixed assets.
The depreciation for 2003 has been included in the result for the year and therefore has not been deducted directly from capital.

NB: Differences in totals are due to the effects of rounding.
Source: The Agency’s data — The tables present, in summary form, the data provided by the Agency in its own accounts.

Total

6 445

7 319

C 324/8

EN

Official Journal of the European Union

30.12.2004

THE AGENCY’S REPLIES

The Agency would like to confirm its continuous commit-
7.
ment towards reducing the amount of carry-overs in line with the
principle of annuality of the budget. Compared with 2002, the
Agency has significantly reduced carry-overs in 2003 (from 60 to
45 %). As in 2002 carry-overs are mainly due to the proper
implementation of the SME funding scheme, which has a clear
two-year implementation cycle.

8.
Following various meetings between the Commission and
the Accountants of all Agencies, it was decided that the with-
drawal of credits carried over at the end of the year, required the
use of specific IT tools, which were not available but are now
being developed by the Agency.

financial statement, and no adjustment was required. The fifth
project holder provided some of the requested information justi-
fying the total payment of EUR 11 000. In 2004, the Agency
commissioned a contractor to carry out five ex post financial
audits, including on-site inspections of the SME project holders’
accounts. The final reports are due in October 2004 moreover, an
independent evaluation of the first two SME schemes has con-
cluded to the sustainability and the added value of the awarded
projects as well as sound management of the schemes.

The Agency notes the comments of the Court of Audi-
10.
tors. At the end of 2003, the internal restructuring of the Resource
and Service Centre was completed, all operations are now subject
to an ex ante verification check (operational and financial aspects).

9.
Concerning the projects of the SME programme, the
Agency did not pay the full grant to more than half of the project
holders and six recovery orders were issued, following the inter-
nal assessment by Agency staff of the activity and financial reports
and supporting documents provided by the 53 beneficiaries. The
difference between the total amount foreseen and the total grant
amount paid was EUR 382 377. The Agency would highlight that
additional information provided by four of the five project hold-
ers mentioned by the Court, at the request of the Agency after the
auditors’ visit, confirmed the information provided earlier in the

11.
The Agency wishes to note that, in order to reinforce the
control of expenditures, all contracts signed from September
2003 onwards with the Topic Centres include a clause by which
the beneficiary will carry out an external audit of the use of the
funds made available by the grant agreement. The auditors shall
produce their professional opinion, the purpose of the audit being
to certify that the financial documents submitted to the Agency
by the beneficiary comply with the financial provisions of the
agreement, that the costs declared are the actual costs and that all
receipts have been declared.