Report on the annual accounts of the European Centre for the Development of Vocational Training for the financial year 2005 together with the Centre's replies
Date: 2006-09-28
Institutions: European Court of Auditors
Subjects: Cedefop, European Court of Auditors, administration of the Institutions, financial control, interinstitutional relations (EU), report

C 312/60

EN

Official Journal of the European Union

19.12.2006

REPORT

on the annual accounts of the European Centre for the Development
of Vocational Training for the financial year 2005 together
with the Centre’s replies

(2006/C 312/11)

CONTENTS

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

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

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

1-2

3-6

7-14

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

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

61

61

61

63

66

Paragraph

Page

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Official Journal of the European Union

C 312/61

INTRODUCTION

Reliability of the accounts

The European Centre for the Development of Vocational
1.
Training (hereinafter the Centre) was established by Council
Regulation (EEC) No 337/75 (1). Its core mandate is to serve the
development of vocational training at Community level. In order
to achieve this objective, it has the task of compiling and dissemi-
nating documentation on vocational training systems.

2.
The Centre’s competences and activities are summarised in
Table 1. Key information from the financial statements drawn up
by the Centre for the financial year 2005 is presented in Tables 2,
3 and 4.

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

Subject to the reservation concerning the situation described
in paragraph 13, the transactions underlying the Centre’s
annual accounts, taken as a whole, are legal and regular.

The Court would also like to draw attention to the observa-
tion in paragraph 11.

STATEMENT OF ASSURANCE

OBSERVATIONS

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 a of Regulation (EEC) No 337/75, and sent to the
Court, which is required to provide a statement concerning their
reliability and the legality and regularity of the underlying
transactions.

7.
The Centre’s budget for the financial year 2005 shows a
utilisation rate of 90 % of commitment appropriations and
approximately 85 % of payment appropriations. However, the
appropriations for operating activities were under-utilised (can-
cellations of 15 % of commitment appropriations, 20 % of pay-
ment appropriations and 15 % of appropriations carried over), in
particular after the reorganisation of the procedures for awarding
contracts. The Centre must fine-tune the programming of its
work and ensure that it is monitored more rigorously. In this con-
nection, the Court notes that activity-based management has not
been introduced, even though the Centre’s financial regulation
provides for this form of management with a view to improved
performance monitoring.

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.

The accounting software (FIBUS) used by the Centre does
8.
not allow expired commitments to be blocked and the procedure
for the electronic signing of payment orders does not comply
with the provisions currently in force. Operations cannot easily
be traced within the FIBUS system. The Centre should remedy the
shortcomings identified and consider replacing its present
accounting software as soon as possible with the new system pro-
posed by the Commission for the Agencies.

The Court has thus obtained a reasonable basis for the fol-

6.
lowing statement:

(1) OJ L 39, 13.2.1975, p. 1.
(2) OJ L 248, 16.9.2002, p. 1.
(3) These accounts were drawn up on 30 June 2006 and received by the

Court on 4 July 2006.

9.
Some of the accounting officer’s duties are performed by
departments for which the authorising officer is responsible. Clo-
sure adjustments of around 700 000 euro were thus made in the
accounts on the initiative of the authorising departments, but
these departments did not document them. Application of the
principle of the segregation of the duties of authorising officer
and accounting officer would have prevented such a situation.

C 312/62

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Official Journal of the European Union

19.12.2006

The Centre has neither made a risk analysis to date, nor
10.
defined the nature and frequency of ex post checks, and there are
no descriptions of the management procedures and internal con-
trol systems. In 2005, the accounting officer had still not vali-
dated the financial information systems.

11.
In 2000, the Centre set up an appeals committee to deal
with staff complaints. In one case, this committee, acting beyond
its powers, granted allowances that were not envisaged in the
rules in force. In order to ensure that there are no more cases of
this kind in future, the Director should reserve the power to revise
and, if necessary, revoke these decisions.

of the selection in question. The Court reiterates the observation
made in its previous annual report on the need for the Centre to
tighten up its recruitment procedures.

The Court examined six contracts that were concluded in
13.
the financial year 2005. All but one were affected by irregulari-
ties (2). In two of the cases examined, the competition rules had
not been observed (3). The Court takes note of the steps taken by
the Centre during the last quarter of 2005 to remedy the weak-
nesses found in its organisation and tender procedures.

12.
In 2005, an important management post was filled via an
internal selection procedure when an external procedure would
have provided a wider range of candidates. Actually only one can-
didate participated in the selection and was appointed to the post.
Moreover, two of the criteria adopted for the evaluation of appli-
cations (1) were not applied strictly enough to ensure the quality

14.
The Centre has set up 17 internet and intranet sites using
different types of technology. The management of these sites and
the IT systems supporting them is fragmented, i.e. some systems
are managed by the IT department, others by operational depart-
ments and others,
lastly, by consultants. This fragmentation
engenders technical risks and excessive costs.

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

(1) Studies (Philosophy and international relations) unrelated to the post
and professional experience directly related to the post 50 % less than
was required in the vacancy notice; in addition, the professional expe-
rience of the person appointed was only partly related to the tasks to
be performed.

(2) Failure to justify the chosen procedure or say why the tenderers invited
to submit tenders were selected, plus inadequate documentation
thereof.

(3) Translation services (376 000 euro) and IT services (146 000 euro).

European Centre for the Development of Vocational Training (Thessaloniki)

Table 1

Areas of Community competence
deriving from the Treaty

Competence of the Centre as specified in Articles 2 and 3 of
Council Regulation (EEC) No 337/75 of 10 February 1975

Governance

Resources made available to the
Centre in 2005 (2004)

Products and services supplied in 2005 (2004)

The Centre’s mandate:

Tasks:

1. Management Board

Final budget:

The Community implements a
vocational training policy to sup-
port and supplement the action
of the Member States as regards
the content and organisation of
vocational training.

Action aims to:

— facilitate adaptation to indus-
trial changes,
in particular
through vocational training
and retraining,

— improve initial and continu-
ing vocational
training in
order to facilitate vocational
integration and reintegration
into the labour market,

— facilitate access to vocational
training
encourage
and
mobility of instructors and
trainees
particularly
and
young people,

— stimulate

cooperation on
training between educational
or vocational training estab-
lishments and firms,

— develop exchanges of infor-
mation and experience on
issues common to the train-
ing systems of the Member
States.

(From Article 150 of the Treaty)

— to compile selected docu-
mentation and produce a
data analysis,

— to contribute to research
development and coordi-
nation,

— to utilise and disseminate
relevant information,

— to encourage and support
a concerted approach to
matters relating to the
development of
voca-
tional training,

— to provide a forum for a
broad and diverse public.

for

In its capacity as a Euro-
pean Union reference
centre
vocational
training and education,
Cedefop provides politi-
decision-makers,
cal
researchers and profes-
sionals with information
aimed at developing a
clearer understanding of
current trends that will
thus enable them to reach
more soundly based deci-
sions with a view to
future action.

Cedefop assists the Euro-
pean Commission in pro-
moting and developing
vocational
training and
education at Community
level.

Per Member State:

— one Government represen-

tative,

— one

representative

employers’ organisations,

— one

representative

employees’ organisations.

of

of

Three members representing the
and observers
Commission,
from the associated countries
(Norway and Iceland).

2. Director

Appointed by the Commission
from a list of candidates submit-
ted by the Management Board;
carries out the decisions of the
Management Board and is
responsible for the day-to-day
administration of the Centre.

3. Internal control

Commission’s
Service.

Internal Audit

4. External audit

European Court of Auditors.

5. Discharge

Parliament, on the Council’s rec-
ommendation.

17,1 million euro (16,6 mil-
lion euro)

Community subsidy: 96 %
(99 %)

Staff numbers at 31 Decem-
ber:

Number of posts in establish-
ment plan: 91 (88)

Posts occupied: 85 (81)

Other staff: contract staff, sec-
onded national experts.

Total staff: 123

Conferences and seminars: 90 (90) with an average
of 24 participants.

Studies: 26 (2004: 55 (not comparable)). Studies on
the same project with various contributors (under
different contracts) have been counted as one study.

Projects: 29 (2 of which administrative) plus 20 vir-
tual communities (1 of which administrative)
(2004: 38 (not comparable)).

Participation in:

follow-up, Education and Training
Maastricht
2010 programme, Leonardo da Vinci programme,
social partners’ joint action framework, Advisory
Committee for Vocational Training, Directors-
General for Vocational Training, Education and
Training 2010 Coordination Group.

assigned to the following
duties:

Publications: 60 (62).

3 issues of Cedefop info (3),

operational: 85

administrative: 33

mixed: 5.

4 issues of the European journal on voca-

1.
tional training (3).

2.

Circulation of documents:

8 582 (10 293) on request,

2 462 (2 034) subscriptions to the European jour-
nal,

7 493 (8 460) subscriptions to Cedefop info.

Electronic publications:

— 3 160 (2 427) subscriptions to ETV newsletter,

— 60 440 (53 167) registered ETV users,

— 3 366 490 (3 306 920) ETV page views.

7 553 registered members in the virtual

3.
communities.

762 (730) participants in the study visits pro-
gramme.

Source:

Information supplied by the Centre.

.

1
9
1
2
2
0
0
6

.

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i
a
l

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o
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i

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3
1
2
/
6
3

EUROPEAN CENTRE FOR THE DEVELOPMENT OF VOCATIONAL TRAINING

Table 2

Implementation of the budget for the financial year 2005

Revenue

Expenditure

Source of revenue

Revenue entered
in the final budget
for the financial
year

Revenue
received

Allocation of expenditure

Final budget appropriations for the financial year

Appropriations carried over
from the previous financial
year

Appropriations for the financial year and carried
over from the previous financial year

entered

commit-
ted

paid

carried
over

cancelled available

paid

cancelled available

commit-
ted

paid

carried
over

cancelled

Community subsidies

16 418

16 418

Title I
Staff (NDA)

9 468

9 075

8 862

213

393

466

395

72

9 934

9 541

9 257

213

465

(1 000 euro)

Other revenue

140

Title II
Administration (NDA)

36

Title III
Operating activities (DA)

1 372

1 158

865

334

214

542

503

39

1 914

1 700

1 368

334

253

— CA

— PA

5 578

4 774

0

5 718

4 585

71

0

804

1 133

0

0

0

0

Assigned revenue
(Phare)

535

535

Assigned revenue
(Phare and others)

535

283

68

467

0

312

175

Total

17 093

16 989

Total PA 17 093

0 14 381

1 014

1 740

1 320

1 073

Total CA 16 953 15 290

0

1 085

1 411

1 320

0

0

0

93

204

204

5 578

4 774

0

5 718

0

4 585

71

0

804

1 133

847

596

243

467

93

18 273 16 611

0

1 085

1 615

18 413

0 15 543

1 014

1 944

NDA: non-differentiated appropriations (commitment appropriations are equal in amount to payment appropriations).
differentiated appropriations (commitment appropriations may differ in amount from payment appropriations).
DA:
commitment appropriations in the context of differentiated appropriations.
CA:
payment appropriations in the context of differentiated appropriations.
PA:

C
3
1
2
/
6
4

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
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E
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o
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i

.

1
9
1
2
2
0
0
6

.

19.12.2006

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Official Journal of the European Union

C 312/65

EUROPEAN CENTRE FOR THE DEVELOPMENT OF VOCATIONAL TRAINING

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

Table 3

Operating revenue

Community subsidies

Other subsidies/revenue

Operating expenditure

Staff

Administration

Operating activities

Other income (d)

Other expenses (e)

(1 000 euro)

2005

15 020

290

15 310

9 091

1 962

5 021

16 074

– 764

0

4

Total (a)

Total (b)

Operating result (c = a – b)

(1) The data for the financial year 2004 are not presented because, following the change in accounting methods, they cannot be compared

with the data for the financial year 2005.

Economic result (f = c + d – e)

– 768

Table 4

Balance sheet at 31 December 2005 and 2004 (1)

Assets

Fixed assets

Receivables

Cash and cash equivalents

Liabilities

Cumulative outturn for previous financial years

Result for the year

Current liabilities

(1 000 euro)

2005

2004

5 359

369

3 344

9 072

5 856

– 768

3 984

9 072

Total

Total

5 702

182

1 948

7 832

5 856

0

1 976

7 832

(1) The data for the financial year 2004 have been restated for the purpose of comparison with those for the financial year 2005.

Source:

Information supplied by the Centre — These tables summarise the data provided by the Centre in its annual accounts.

C 312/66

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Official Journal of the European Union

19.12.2006

THE CENTRE’S REPLIES

The Centre takes note of the Court’s observation. In the
7.
last quarter of 2005, the Centre took prompt measures to ensure
the strict application of the rules governing procurement proce-
dures, and it strictly limited the use of negotiated procedures.
Those measures and the weaknesses of the procurement service
affected the level of budget execution. While ensuring the regu-
larity of procedures, the Centre has progressed in improving its
planning and will introduce activity based budgeting.

8.
The Centre is considering replacing Fibus with the soft-
ware proposed by the Commission. However, ABAC, is still in the
pilot phase. The Centre is following developments closely through
its participation in ICTAC, CSS and the agencies’ accountants
network.

9.
Steps have already been taken to reorganise the
Finance/Procurement Service and this will also ensure the clearer
separation of functions called for by the Court. The Centre is
aware that the correct procedure is for the authorising officers (by
delegation) to propose the adjustments in question to the accoun-
tant. The Centre is working to improve the situation.

10.
Validation of parts of the financial system took place at
the beginning of 2006. The documentation of procedures will
need to be completed before further progress can be made on the
validation of the system. The Centre will implement regular risk
assessment. This will be supported by the Internal Auditor whose
recruitment is currently under way.

The Centre takes note of the remarks of the Court. The
11.
appeals committee has been established by the Governing Board
as an organ distinct from the director for dealing with complaints
to increase objectivity. This has been a valuable tool and increased
the trust of staff. The Centre considers that it is correct in law and
that it is a reasonable use of the power to designate appointing
authorities which belongs to every organisation under the staff
regulation. The Court refers to one individual case: the Appeals
Committee gave a fully reasoned decision in which is explained
that it was awarding a sum ex aequo et bono. This is frequently done
by the Community Courts and by the Appointing Authorities of
the other institutions. However, the Centre has requested an offi-
cial opinion and assessment by the legal services of the European
Commission.

12.
The recruitment had been started in June 2005 with an
internal phase in compliance with the Statute. In order to foster
competition, the Centre has decided end of 2005 to favour the
running of
and external phases,
to increase publicity and to apply EPSO standards for selection.
Concerning the two criteria mentioned, the jurisprudence states
that it is the responsibility of the jury to appreciate if criteria cor-
respond to the level requested.

internal/interistitutional

13.
The Centre has revised and tightened up all procurement
and award procedures and taken the necessary measures to adapt
the organisation. Checks safeguard that procedures are conducted
in a regular way. Specific measures such as suspension of pay-
ments and special audits have been taken in regard to former pro-
cedures and contracts which have been criticised by the Court or
the IAS to contain risks.

14.
The Centre agrees with the remarks of the Court. In order
to solve the problem the Centre has already reorganised the
respective services.