Report on the annual accounts of the Office for Harmonization in the Internal Market for the financial year 2004 together with the Office's replies
Date: 2005-10-05
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 332/112

EN

Official Journal of the European Union

28.12.2005

on the annual accounts of the Office for Harmonization in the Internal Market
for the financial year 2004 together with the Office’s replies

REPORT

(2005/C 332/16)

CONTENTS

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

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

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

Paragraph

1-2

3-6

7-10

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

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

Page

113

113

113

114

118

28.12.2005

EN

Official Journal of the European Union

C 332/113

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 entire area
of the European Union. The Office’s duties and activities are sum-
marised, on the basis of information submitted by the Office, in
Table 1.

Reliability of the accounts

The Office’s accounts for the financial year ended 31 Decem-
ber 2004, in all material respects, are reliable.

Legality and regularity of the underlying transactions

The transactions underlying the Office’s annual accounts,
taken as a whole, are legal and regular.

2.
For information, the annual accounts drawn up by the
Office for the financial year 2004 are summarised in Tables 2, 3
and 4.

The observations which follow do not call the Court’s opi-
nion into question.

THE COURT’S OPINION

3.
This opinion is addressed to the Office’s Budget Commit-
tee pursuant to Article 137 of Council Regulation (EC) No 40/94.

The Office’s accounts for

4.
the financial year ended
31 December 2004 (2) were drawn up by its President, pursuant
to Article 119 of Regulation (EC) No 40/94, and sent to the Court,
which is required to give its opinion on their reliability and on the
legality and regularity of the underlying transactions.

The Court conducted an audit in accordance with its poli-
5.
cies and standards, which are based on international auditing
standards that have been adapted to the Community context. The
audit was planned and performed to obtain reasonable assurance
that the accounts are reliable and the underlying transactions are
legal and regular.

The Court has obtained a reasonable basis for the opinion

6.
expressed below.

OBSERVATIONS

The revenue received between 21 and 31 December 2004,
7.
i.e. 2,3 million euro, was entered in the accounts as revenue for
the financial year 2005, in breach of the principle of the annual
nature of the budget.

In its 2003 Annual Report (3), the Court drew attention to
8.
the need for rigorous evaluation of appropriations to be carried
over. The checks carried out for the financial year 2004 showed
that a total of 515 000 euro was carried over unnecessarily, which
also conflicts with the principle of the annual nature of the
budget.

9.
The Office has not made provision in its 2004 balance
sheet for two legal disputes, the potential financial impact of
which cannot be considered negligible.

10.
There are still failings in the inventory system (4). The
lists of assets entered in the accounts as fixed assets had not been
reconciled with the inventories, and discrepancies were found.
Beginning in 2004 the Office includes computer licences and
software in its fixed assets. However, the corresponding fixed
assets have been understated by some 550 000 euro as a result of
the use of incorrect criteria for determining the value of the com-
puter licences and software.

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 5 October 2005.

For the Court of Auditors
Hubert WEBER
President

(1) OJ L 11, 14.1.1994.
(2) These accounts were drawn up on 28 February 2005 and received by

the Court on 29 June 2005.

(3) Paragraph 7 of the Report concerning the financial year 2003

(OJ C 324, 30.12.2004, p. 107).

(4) Paragraph 10 of the Report concerning the financial year 2003

(OJ C 324, 30.12.2004, p. 107).

C 332/114

EN

Official Journal of the European Union

28.12.2005

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EN

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C 332/116

EN

Official Journal of the European Union

28.12.2005

Office for Harmonization in the Internal Market — Revenue and expenditure account for the financial years 2004 and 2003

Table 3

2004

2003

(1 000 euro)

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

Provision for procedural expenditure

Balance carried over from the previous financial year

Appropriations carried over and cancelled

Sums for re-use from the previous financial year not used

Exchange-rate differences and extraordinary revenue

Total revenue (a)

Total expenditure (b)

Outturn for the financial year (a – b)

Subtotal

127 465

3 190

130 655

53 665

1 001

18 324

8 890

16 455

16 323

114 658

15 997

1 398

1 398

72 353

1 828

0

– 7

NB: Variations in totals are due to the effects of rounding.
Source: Office data — This table summarises the data supplied by the Office in its annual accounts.

Balance for the financial year

91 569

107 056

3 460

110 516

47 416

1 168

16 366

7 891

14 137

9 262

96 240

14 276

1 094

1 094

55 368

1 506

115

– 6

72 353

28.12.2005

EN

Official Journal of the European Union

C 332/117

Office for Harmonization in the Internal Market — Balance sheet at 31 December 2004 and 31 December 2003

Table 4

Assets

2004

2003

Liabilities

2004

2003

(1 000 euro)

Fixed assets

Buildings

Equipment and furniture

Transport equipment

Computer equipment

Intangible assets

Depreciation

Current assets

Suppliers and missions

Sundry accounts receivable

Cash accounts

Banks

Cash

Fixed capital

27 915

26 747 Own capital

3 800

3 828

Balance for the financial year

27 656

91 569

27 920

72 353

97

115

Subtotal

119 225

100 273

12 606

11 241

Long-term debt

373

24

Long-term creditors

– 17 135

– 14 035

Subtotal

27 656

27 920 Current liabilities

Subtotal

25

25

24

24

Automatic carry-overs of appropriations

173

90

263

200 Advances from clients

107 Amount outstanding

307

Sundry accounts payable

Subtotal

Provision for procedural expenditure

26 214

26 582

37

228

12 246

Subtotal

65 307

18 322

29 395

52

757

13 644

62 170

156 406

134 239

232

1

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156 638

134 240

Total

184 557

162 467

Total

184 557

162 467

NB: Variations in totals are due to the effects of rounding.
Source: Office data — This table summarises the data supplied by the Office in its annual accounts.

C 332/118

EN

Official Journal of the European Union

28.12.2005

THE OFFICE’S REPLIES

The problem highlighted by the Court was due to the con-
7.
straints of the computer system used. The implementation of the
new general accounting system should prevent this situation from
recurring.

The Office takes note of the Court’s observation. In one
9.
case, the Office believes that when the accounts were closed it was
not in a position to assess the probability of having to pay
compensation.

8.
The Office will continue its efforts in this domain. To this
end, for the close of the financial year 2005, measures have
already been taken to improve the evaluation of any carry-overs
required.

10.
Since February 2005 a system integrating the inventory
and the accounting systems has been in place. This has enabled
the inventory and the fixed-assets accounts to be reconciled fully.
Since 2005, the Office has been applying IPSAS standards for the
valuation of computer licences and software.