Report by the Court of Auditors on the audit of the operational efficiency of the management of the European Central Bank for the financial year 2004 together with the replies of the European Central Bank
Date: 2006-04-05
Institutions: European Court of Auditors
Subjects: European Central Bank, European Court of Auditors, audit, personnel administration, report

19.5.2006

EN

Official Journal of the European Union

C 119/17

Report by the Court of Auditors on the audit of the operational efficiency of the management
of the European Central Bank for the financial year 2004 together with the replies
of the European Central Bank

(2006/C 119/02)

1.
The Court’s audit of the operational efficiency of the Euro-
pean Central Bank (ECB) is a requirement of Article 27(2) of the
Protocol on the Statute of the European System of Central Banks
(ESCB) and of the European Central Bank (1). The audit subject
selected for the 2004 financial year was the efficiency of human
resources policy at the ECB. The Court also did a follow-up audit
on the monitoring of projects and on the procurement and man-
agement of external services.

5.
The completeness of the ECB’s human resources policy in
the selected areas was compared with other international organi-
sations, these being the European Investment Bank (EIB), the
European Bank for Reconstruction and Development (EBRD) and
the EU institutions. In addition, the Court examined the manage-
ment information available to the central services of the ECB to
monitor the implementation of HR policy. In a sample of Busi-
ness Areas (4) the Court then reviewed how the HR policy in the
selected areas was being implemented.

HUMAN RESOURCES POLICY

The ECB’s 2004 budget amounted to 376,4 million euro,

2.
of which staff costs were 145,9 million euro (39 %) (2).

3.
Since its inception in 1999 the ECB has experienced a
period of rapid growth, from 518 staff members in 1999 to
1 309 staff members at the end of 2004. In its start-up phase, the
Directorate Human Resources (D-HR) was mainly occupied with
recruitment, day-to-day administrative tasks and coping with
short-term constraints regarding human resources policy. In the
current consolidation phase, the ECB has identified (3) several
areas for improvement and fields for action in the HR (Human
Resources) area.

4.
The objective of the Court’s audit was to assess the opera-
tional efficiency of the ECB’s HR policy in respect of recruitment
and mobility, remuneration and compensation, and absence man-
agement. The Court assessed whether the ECB had:

— developed a comprehensive and coherent HR policy address-

ing its organisational needs,

— established adequate mechanisms at the central
monitoring the implementation of its HR policy,

level for

— properly implemented its HR policy at all levels.

(1) Article 27(2) stipulates ’The provisions of Article 248 of the Treaty
shall only apply to an examination of the operational efficiency of the
management of the ECB’. The institutional provisions relating to the
European Central Bank are included in Article 110 of the EC Treaty.
(2) Comprising 133,2 million euro of direct salary costs and 12,7 mil-
lion euro of indirect human resources costs, such as recruitment and
removal allowances.

(3) Within the context of an organisational change programme called
‘ECB in Motion’, the Executive Board launched a number of surveys
conducted among staff in order to improve the effectiveness and effi-
ciency of the ECB.

6.
Over the years, the ECB has developed a coherent HR
policy addressing its main organisational needs. However, there
is still room for improvement in the areas of recruitment, grad-
ing, disciplinary action and the prevention of bullying and harass-
ment. For some of these areas, full compliance with Council
Directives has not yet been achieved.

7.
While mechanisms have been established at the central
level for monitoring the implementation of HR policy, the moni-
toring role of D-HR still shows weaknesses, particularly in the
areas of recruitment, training organised by Business Areas and
leave and absence management.

8.
Overall, the ECB has implemented most of its HR policy
at all levels according to the policy it had established, although
weaknesses relating to consistency and uniformity were found in
the areas of salary setting, bonus distribution, recruitment and
training. However, the most significant weakness concerned the
low level of compliance with the leave and absence rules.

9.

The Court recommends that the ECB should:

— make its HR policy more comprehensive and review it more
regularly to keep it updated, having regard to developments
in comparable international organisations,

— strengthen the central monitoring function in the HR area in
order to ensure that HR policy is equally implemented
throughout the ECB and introduce performance measure-
ment in the HR area by using key performance indicators
and critical success factors,

(4) The term ‘Business Areas’ is used in the text for ‘Directorates General’

and ‘Directorates’ of the ECB.

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Official Journal of the European Union

19.5.2006

— address the problems found in the leave and absence area by
improved monitoring, clearer communication and a better
definition of responsibilities.

FOLLOW-UP OF PREVIOUS OBSERVATIONS

10.
The Court carried out a follow-up audit on the monitor-
ing of projects (1) and on the procurement and management of
external services (2).

11.
Central monitoring is only performed for projects with
IT involvement and only encompasses IT resources. Other
projects are still only monitored locally by the Business Areas

concerned without an independent second level of control for
these activities at prioritisation, approving and monitoring level.
Furthermore, nearly half of the projects monitored at the central
level in 2004 were subject to delays of more than 20 % compared
to the initial planning.

12.
A new Administrative Circular on the ECB’s Procurement
Rules was issued in September 2003 and a prototype database
has been developed to record all exemptions to the Procurement
Rules with an amount above 10 000 euro and all large purchases
(amount above 250 000 euro). However, the ECB has still not
implemented quality control of work performed by consultants
and suppliers, neither at central monitoring level nor at the
decentralised level.

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 5 April 2006.

For the Court of Auditors
Hubert WEBER
President

(1) OJ C 286, 23.11.2004 and OJ C 341, 4.12.2001.
(2) OJ C 45, 20.2.2004.

19.5.2006

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Official Journal of the European Union

C 119/19

REPLY OF THE EUROPEAN CENTRAL BANK

The European Central Bank (ECB) welcomes the report of the
European Court of Auditors for the financial year 2004 and
expresses its appreciation of the Court’s acknowledgment that the
ECB has developed a coherent HR policy addressing its main
organisational needs.

The ECB takes note of the findings and recommendations for
improvement made by the Court. In this respect, the ECB has pri-
oritised the development of a diversity policy and a framework
for preventing bullying and harassment. Work on these issues is
now in its final stage. Although the ECB’s practice complies with
the substance of the European Union Directives, the ECB will
address further improvements to ensure that its rules and regula-
tions fully reflect the Directives.
In all policy development
projects, the ECB takes account of developments not only in com-
parable international organisations, but also in the other national

central banks of the European System of Central Banks. Further-
more, as regards compliance with leave and absence rules, par-
ticular attention will be given to improving the monitoring of
absence management in the near future. With regard to perfor-
mance measurement in the HR area, the ECB has decided on a
process to gradually introduce key performance indicators.

Major IT- and non-IT-related projects have always been centrally
monitored by the ECB’s Project Steering Committee. Since the
third quarter of 2005, the Project Steering Committee’s central
monitoring has been extended to cover all IT related projects
thereby covering the vast majority of the ECB’s project undertak-
ing. The quality control of work performed by consultants and
suppliers is carried out as an integrated part of line management
responsibility.