Report on the annual accounts of the European Monitoring Centre on Racism and Xenophobia for the financial year 2005 together with the Centre's replies
Date: 2006-09-28
Institutions: European Court of Auditors
Subjects: European Court of Auditors, European Union Agency for Fundamental Rights, administration of the Institutions, financial control, interinstitutional relations (EU), report

19.12.2006

EN

Official Journal of the European Union

C 312/93

REPORT

on the annual accounts of the European Monitoring Centre on Racism
and Xenophobia for the financial year 2005 together with the Centre’s
replies

(2006/C 312/16)

CONTENTS

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

STATEMENT OF ASSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

1-2

3-6

7-12

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

The Centre’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

94

94

94

96

98

Paragraph

Page

C 312/94

EN

Official Journal of the European Union

19.12.2006

INTRODUCTION

Reliability of the accounts

The European Monitoring Centre on Racism and Xeno-
1.
phobia (hereinafter the Centre) was established by Council Regu-
lation (EC) No 1035/97 of 2 June 1997 (1). The Centre’s primary
tasks are to provide the Union and the Member States with reli-
able information on racism, xenophobia and anti-Semitism in the
Union and to cooperate with the Council of Europe in these areas.

2.
Table 1 summarises the Centre’s competences and activi-
ties. Key information from the financial statements drawn up by
the Centre for the financial year 2005 is shown in Tables 2, 3
and 4.

STATEMENT OF ASSURANCE

3.
This Statement is addressed to the European Parliament
and the Council in accordance with Article 185(2) of Council
Regulation (EC, Euratom) No 1605/2002 (2); it was drawn up fol-
lowing an examination of the Centre’s accounts, as required by
Article 248 of the Treaty establishing the European Community.

4.
The Centre’s accounts for the financial year ended
31 December 2005 (3) were drawn up by its Director, pursuant
to Article 12 of Regulation (EC) No 1035/97, and sent to the
Court, which is required to provide a statement of assurance on
their reliability and on the legality and regularity of the underly-
ing transactions.

The Centre’s accounts for the financial year ended 31 Decem-
ber 2005 are, in all material respects, reliable.

Legality and regularity of the underlying transactions

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

The observations which follow do not call the Court’s state-
ment into question.

OBSERVATIONS

7.
Although the rate of commitment for the appropriations
for the financial year 2005 was over 90 %, it was found that more
than 50 % of the commitments for administrative expenditure
were carried over and that in general there was a high rate of can-
cellation of the appropriations carried over (between 15 %
and 25 %, depending on the title). This situation shows that there
is still a need for the Centre to improve its expenditure planning
and the way it monitors the implementation of this expenditure.
Transfers between budget headings need to be justified and docu-
mented in accordance with the provisions in force.

8.
The Court noted that no activity-based management had
been brought in, despite the Centre’s financial regulation making
provision for its introduction, on the lines of that applied to the
general budget, with a view to improving the monitoring of per-
formance. In this context, achieving the Centre’s aims should not
mean merely carrying out a series of tasks. It should rather be
seen as contributing to the goals laid down in its basic Regula-
tion. The Centre’s work programme should, in principle, express
this contribution in operational and measurable terms.

5.
The Court conducted its audit in accordance with its poli-
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.

9.
The Centre had no system for planning and managing its
equipment acquisitions. Furthermore, it did not make any cycli-
cal checks on its inventory, although this would have improved
the inventory’s reliability.

The Court has thus obtained a reasonable basis for the

6.
statement expressed below.

(1) OJ L 151, 10.6.1997, p. 6.
(2) OJ L 248, 16.9.2002, p. 1.
(3) These accounts were drawn up on 3 May 2006 and received by the

Court on 29 June 2006.

10.
The Centre’s internal control system suffered from vari-
ous shortcomings. The financial circuits set up by the authorising
officer had not been described. The systems whereby the autho-
rising officer and his delegatees supplied information to the
accounting officer had in particular not been validated by the lat-
ter. The principle of the segregation of duties was not applied
strictly, especially between the duties of initiation and verification.
Furthermore, for commitments the lists of ex ante verifications
should include sound financial management criteria.

19.12.2006

EN

Official Journal of the European Union

C 312/95

The rule whereby members of the selection boards must
11.
always be of a grade equivalent to or higher than that of the post
to be filled was not always complied with.

12.
The invitations to tender issued by the Centre do not
offer much by way of explanation as regards the minimum qual-
ity of bids and the weighting of price factors. As a result of this

situation, an adequate level of transparency cannot be guaranteed
and risks are entailed as regards the quality of the products and
services to be provided. Barring a specific reason to the contrary,
the price-quality ratio method should be used as it ensures that
the goods and services to be purchased are of the highest possible
quality.

This report was adopted by the Court of Auditors in Luxembourg at
28 September 2006.

its meeting of

For the Court of Auditors
Hubert WEBER
President

European Monitoring Centre on Racism and Xenophobia (Vienna)

Table 1

Areas of Community competence
deriving from the Treaty

Competences of the Centre as specified in the Council Regulation
(Council Regulation (EC) No 1035/97 of 2 June 1997)

Governance

Resources made available
to the Centre (2004)

Products and services supplied

Collection of information
The Commission may, within the
limits and under conditions laid
down by the Council in accor-
dance with the provisions of this
Treaty, collect any information
and carry out any checks required
for the performance of the tasks
entrusted to it.
(Article 284)

Objectives:
— to provide the Community
and its Member States with
objective, reliable and compa-
rable data at European level
on the phenomena of racism,
anti-
xenophobia
Semitism,

and

— close cooperation with the
Council of Europe in order to
avoid duplication and obtain
added value.

Tasks:
— to study the extent and devel-
opment of the phenomena of
racism and xenophobia,
— to collect and analyse infor-
mation, via the European Rac-
ism and Xenophobia Informa-
tion Network (RAXEN),
— to carry out scientific surveys,
— to encourage widespread dis-
semination of such informa-
tion,

— to formulate opinions for the
Community and its Member
States,

— to develop indicators and cri-
teria to improve the compara-
bility of data,

— to publish an annual report on
the situation regarding racism
and xenophobia.

2005 final budget:
8,279 million euro (7,9 million
euro) including Community con-
tribution: 100 % (98,7 %).
Staff numbers at 31 Decem-
ber 2005:
37 (34) posts in the establishment
plan,
posts occupied: 35 (30)
+ 4 (4) other staff (auxiliary con-
tracts, seconded national experts,
local
and employment-agency
staff)
Total staff: 41 (34)
assigned to the following duties:
operational: 24 (21)
administrative: 13 (8)
mixed: 4 (5).

independent

1. Management Board
Composition:
one
person
appointed by each Member
State, one independent person
appointed by the European Par-
liament, one independent per-
son appointed by the Council
of Europe and a representative
of the Commission.
Duties:
to adopt the work programme
and the general annual report.
To adopt the final budget and
the establishment plan. To give
an opinion on the final accounts.
2. Executive Board
Composition:
— Chairman of the Manage-

ment Board,

— one representative of
Council of Europe,
— one representative of

the

the

Commission,

— two other members of the

Management Board.

3. Director
Appointed by the Management
Board on a proposal from the
Commission.
4. External audit
European Court of Auditors.
5. Internal control
The Commission’s
Audit Service.
6. Discharge authority
Parliament on a recommenda-
tion from the Council.

Internal

Source:

Information supplied by the Centre.

RAXEN:
Number of contributions through
the 25 national focal points: 400
Number of meetings: 5
RESEARCH REPORTS:
Number of reports: 13
Number of meetings: 7
Annual Reports: 2
EUMC Newsletter: 5
Equal Voices: 2
COOPERATION WITH THE
MEMBER STATES AND THE
OTHER INSTITUTIONS
(number
of
jointly):
— Member States: 4
— Commission: 14
— European Parliament: 8
— COR: 3
— EESC: 3
— Council of Europe: 10
— OSCE: 3
— UN: 3
— Inter-agency: 3
— NRT: 6
— ERT: 1

organised

events

C
3
1
2
/
9
6

E
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2
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.

EUROPEAN MONITORING CENTRE ON RACISM AND XENOPHOBIA

Table 2

Implementation of the budget for the financial year 2005

.

1
9
1
2
2
0
0
6

.

Revenue

Expenditure

(1 000 euro)

E
N

Source of revenue

Revenue entered in
the final budget for
the financial year

Revenue
received

Allocation of expenditure

Community subsi-
dies (1)
Allocated revenue
(Phare)
Other revenue

8 189

8 189

90
0

90
151

Title I
Staff
Title II
Administration
Title III
Operating activities
Allocated revenue (Phare
and other)

Total

8 279

8 430

Total

(1)

Including subsidies on behalf of the European Economic Area.

Final budget appropriations for the financial year

Appropriations carried over
from the previous financial
year

Available appropriations
(appropriations for the financial year and for the pre-
vious financial year)

final

commit-
ted

paid

carried
over

can-
celled

out-
standing
commit-
ments

paid

can-
celled

appro-
priations

commit-
ted

paid

carried
over

cancelled

3 152

3 078

3 008

70

1 222

1 132

551

581

74

91

85

37

71

30

14

3 237

3 163

3 079

70

7

1 259

1 169

581

581

88

98

3 815

3 398

2 731

667

416

745

556

189

4 560

4 143

3 287

667

605

90
8 279

0
7 608

0
6 290

90
1 408

0
581

0
867

0
657

0
210

90
9 146

0
8 475

0
6 947

90
1 408

0
791

Revenue and expenditure account for the financial year 2005 (1)

Balance sheet at 31 December 2005 and 2004 (1)

Table 3

Table 4

Operating revenue
Community subsidies
Other subsidies/revenue

Operating expenditure
Staff
Administration
Operating activities

(1 000 euro)

2005

7 466
14
7 480

2 729
1 029
3 304
7 062
418

Total (a)

Total (b)
Economic result (c = a – b)

(1) The data for the financial year 2004 are not shown as they are not comparable with those for 2005 because of a

change in the accounting methods used.

Source: Data supplied by the Centre. These tables summarise the data supplied by the Centre in its annual accounts.

Assets
Fixed assets
Receivables
Cash and cash equivalents

Liabilities
Cumulative results for previous years
Result for the year
Current liabilities

(1 000 euro)

2005

2004

152
361
2 832
3 345

725
418
2 202
3 345

Total

Total

123
366
1 279
1 768

725
0
1 043
1 768

(1) The data for the financial year 2004 have been restated to make them comparable with those for 2005.

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7

C 312/98

EN

Official Journal of the European Union

19.12.2006

THE CENTRE’S REPLIES

The high rate of the administrative appropriations carried
7.
forward is due to the fact that the Procurement Section was cre-
ated late in 2005. Tenders were launched after this, in order to
ensure the legality of the procedures. A procedure has been put
in place to decrease the level of cancelled carry-overs. Future bud-
getary transfers will be fully documented.

8.
The Annual Work Programme 2006 has been prepared in
a format which meets the needs of Article 40 of the Framework
FR, setting the key activities, objectives, tasks, output, perfor-
mance indicators, and outcome/impact of the work of the Cen-
tre. Consequently, the Annual Activity Report for year 2006 will
be drawn corresponding to the structure of the Work Programme
thus providing the required performance indicators and perfor-
mance review based on quantifiable data.

9.
An inventory management application has been procured
and is currently configured and installed. An inventory count is
planned to be performed in the last quarter of the year, as soon
as the application has been installed and the preparatory works
have been finalised.

In February 2006, the financial workflows were changed
10.
to improve internal controls over transactions and adhere to the
requirements of the FR. The abovementioned changes have been
documented in a series of Instruction Notes signed by the Direc-
tor, after consultation of the Accounting Officer and the Internal
Auditor of the EUMC. The new workflows were tested in a test
SI2 universe and the validation of the test is documented.

11.
Whilst the EUMC’s staffing table foresees a total of only
37 posts, it is very difficult and, in some cases impossible, to con-
stitute boards with agents having at least the same grade of the
position to be filled.

12.
The Centre will consider improving the clarity of infor-
mation provided in the call for tenders and shall apply the method
of ‘price/quality’ ratio where it is deemed to be appropriate.