Report on the annual accounts of the European Foundation for the Improvement of Living and Working Conditions for the financial year 2005 together with the Foundation's replies
Date: 2006-09-28
Institutions: European Court of Auditors
Subjects: Eurofound, European Court of Auditors, administration of the Institutions, financial control, interinstitutional relations (EU), report

C 312/80

EN

Official Journal of the European Union

19.12.2006

REPORT

on the annual accounts of the European Foundation for the Improvement
of Living and Working Conditions for the financial year 2005 together
with the Foundation’s replies

(2006/C 312/14)

CONTENTS

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

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

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

1-2

3-6

7-10

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

The Foundation’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

81

81

81

83

85

Paragraph

Page

19.12.2006

EN

Official Journal of the European Union

C 312/81

INTRODUCTION

The Court has thus obtained a reasonable basis for the

6.
statement below.

1.
The European Foundation for the Improvement of Living
and Working Conditions (hereinafter referred to as the Founda-
tion) was set up by Council Regulation (EEC) No 1365/75 of
26 May 1975 (1). Its aim is to contribute to the planning and
establishment of better living and working conditions in the Euro-
pean Union by increasing and disseminating knowledge which is
relevant to this subject.

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

STATEMENT OF ASSURANCE

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

4.
The Foundation’s accounts for the financial year ended
31 December 2005 (3) were drawn up by its Director, pursuant
to Article 16 of Regulation (EEC) No 1365/75, and sent to the
Court, which is required to provide a statement on their reliabil-
ity and on the legality and regularity of
the underlying
transactions.

5.
The Court conducted an 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.

(1) OJ L 139, 30.5.1975, 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.

Reliability of the accounts

The Foundation’s accounts for the financial year ended
31 December 2005 are, in all material respects, reliable.

Legality and regularity of the underlying transactions

transactions underlying the Foundation’s

The
accounts, taken as a whole, are legal and regular.

annual

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

OBSERVATIONS

The utilisation rates for the commitment appropriations
7.
entered in the budget for the financial year are very high; in addi-
tion, the cancellation rate for appropriations carried over is very
low. Nevertheless, carry-over rates in respect of commitments for
administrative expenditure (Title II) and operating activities (Title
III) remain high at 37 % and 44 % respectively.

In 1998, the Foundation recorded a budgetary loss of
8.
2,4 million euro. Inasmuch as the Foundation did not need the
appropriations carried over at that time, the Commission did not
take these carry-overs into consideration when it paid over the
grants. Over time, this loss has been partially offset by the Foun-
dation’s various revenues and came to 1 million euro at the end
of 2005. In the meantime, the Commission has challenged the
necessity of covering a loss due to the non-cancellation of appro-
priations which, in the end, were not used. The Foundation and
the Commission should continue their efforts to clarify this
situation.

9.
Achieving the Foundation’s objectives should be seen as
contributing to the goals laid down in the Foundation’s basic
regulation. The Foundation’s work programme should express
this contribution in operational and measurable terms.

10.
There is no comprehensive document analysing the risks
arising from the financial and operational aspects of the Founda-
tion’s activities. Moreover, there was no validation of the proce-
dures introduced by the Authorising Officers in order to ensure
the accuracy and the exhaustivity of the financial information
they send to the Accounting Officer, except as regards the data-
processing aspects.

C 312/82

EN

Official Journal of the European Union

19.12.2006

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
Président

Areas of Community
competence deriving from
the Treaty

‘The Community and the
Member States, having in
mind fundamental social
rights, … shall have as
objectives…
their
and
living
improved
working conditions, …
the Community shall sup-
port and complement the
activities of the Member
States in the following
fields; … b) working con-
ditions; c) social security
and the social protection
of workers; d) protection
of workers where their
employment contract
is
terminated; e) the infor-
mation and consultation
of workers; f) representa-
tion and the collective
defence of the interests of
workers and employers,
including
co-determination; g) con-
ditions of employment
for third-country nation-
als; h) the integration of
persons excluded from
the
i)
labour market;
equality between men and
women…’

(Articles 136 and 137 of
the Treaty)

European Foundation for the Improvement of Living and Working Conditions (Dublin)

Table 1

Competences of the Foundation as defined in Council
Regulation (EEC) No 1365/75 of 26 May 1975

Governance

Resources available to the
Foundation (2004 data)

Products and services provided

Objectives:

Tasks:

1. Administrative Board

Final budget 2005:

— to foster the exchange
information and
in these

of
experience
fields,

— to facilitate

and

contact
between universities,
study
research
institutes,
economic
and social administra-
tions
and organisa-
tions,

— to carry out studies or
to conclude study con-
tracts and to provide
assistance
for pilot
projects,

— to cooperate as closely
as possible with exist-
ing specialised insti-
tutes.

living

The aim of the Founda-
tion shall be to contrib-
ute to the establishment
and
of better
working conditions by
increasing and dissemi-
nating knowledge which
is relevant to this sub-
it is
ject. In particular,
required to consider the
following areas:

— man at work,

— organisation of work
and particularly job
design,

— problems

peculiar
to certain categories
of workers,

— long-term aspects of
the improvement of
the environment,

— the distribution of
human activities in
space and in time.

19,3 million euro
(18,1 million euro)

Of which a Community
98,8 %
of:
subsidy
(99,6 %)

Staff in December 2005:

94 (91) posts provided for
in the establishment plan,
of which 82 (74) were
occupied

staff:

Seconded
Other
and
National
employment agency staff:
12 (16)

Experts

Total staff employed: 94 (90)

Operating activities: 54
(53)

Administrative: 33 (32)

Mixed: 7 (5)

— from each Member
one
govern-
State:
representative,
ment
representative
one
from
employers’
organisations and one
workers’
representa-
tive,

— 3 representatives from
the Commission.

2. Director appointed by
the Commission from a list
of candidates submitted by
the Administrative Board,
he implements the deci-
sions of the Administrative
Board and directs
the
Foundation.

3. The Committee of
Experts is composed of
15 members appointed by
the Council on a proposal
from the Commission,
gives opinions in particu-
lar on the work pro-
gramme.

4. External audit

Court of Auditors.

5. Discharge given by the
Parliament on a recom-
mendation by the Council.

Living Conditions:
— analytical reports on quality of life in Europe,
— database on age management in companies,
— reports on labour supply in care services for children and older

people,

— studies on organisation of time over working life.
Working Conditions:
— European Working Conditions Observatory (EWCO: news articles,

survey reports and comparative topic reports),

— EWCO co-hosted EU presidency conference with Luxembourg gov-

ernment, June 2005,

— annual review of working conditions in the EU, 2004-2005,
— fieldwork for 4th European Working Conditions Survey (sample of

30 000 workers in 31 countries).

Industrial Relations:
— European Industrial Relations Observatory (EIRO),
— circulation of reports and articles on EIRonline,
— various reports.
European Monitoring Centre on Change (EMCC):
— two in-depth sector studies,
— Various case files,
— sector future series: seven industry sectors have been covered,
— organisation of and participation in various seminars.
Transversal Themes:
— various general and country reports.
Information and communication:
— the Foundation has organised 71 conferences and taken part in 95
conferences and seminars. Excluding translations, the Foundation
has produced 178 publications and circulated 10 newsletters.

Source:

Information supplied by the Foundation.

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EUROPEAN FOUNDATION FOR THE IMPROVEMENT OF LIVING AND WORKING CONDITIONS

Table 2

Implementation of the budget for the financial year 2005

Revenue

Source of revenue

Revenue entered in
the final budget for
the financial year

Revenue collected

Allocation of expenditure

Final budget appropriations

Expenditure

Appropriations carried over
from the previous financial
year

Available appropriations
(current financial year and previous financial year)

entered

commit-
ted

paid

carried
over

cancelled

out-
standing
commit-
ments

paid

cancelled

appro-
priations

commit-
ted

paid

carried
over

cancelled

(1 000 euro)

Community subsi-
dies (1)

19 060

19 060

Other revenue

220

163

Total

19 280

19 223

(1)

Including European Economic Area subsidies.

Title I
Staff
Title II
Administration
Title III
Operating activities

8 974

8 971

8 815

157

1 382

1 382

875

507

8 924

4 967
Total 19 280 19 275 14 657

8 922

3 954
4 618

3

0

2
5

134

127

503

481

2 526
3 163

2 484
3 092

7

22

42
71

9 108

9 105

8 942

157

1 885

1 885

1 356

507

11 450 11 448
7 451
22 443 22 438 17 749

3 954
4 618

10

22

44
76

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

Table 3

Balance sheet at 31 December 2005 and 31 December 2004 (1)

Table 4

Operating revenue
Community subsidies
Other subsidies/revenue

Operating expenditure
Staff
Administration
Operating activities

Other income (d)
Other charges (e)

(1 000 euro)

2005

18 600
366
18 966

8 035
2 692
8 581
19 308
– 342
0
9
– 351

Total (a)

Total (b)
Operating result (c = a – b)

Economic result (f = c + d – e)

(1) Data for the financial year 2004 are not shown as they are not comparable with the year 2005 because of the change

in the accounting principles applied.

Assets

Fixed assets

Receivables

Cash

Liabilities

Cumulative results of previous years

Result for the year

Current liabilities

(1 000 euro)

2005

2004

2 800

1 044

3 244

7 088

4 444

– 351

2 995

7 088

Total

Total

3 121

1 007

1 649

5 777

4 515

– 71

1 333

5 777

(1) Data for the financial year 2004 have been restated to allow comparison with those for 2005.

Source: Data supplied by the Foundation — These tables summarise the data provided by the Foundation in its annual accounts.

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19.12.2006

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Official Journal of the European Union

C 312/85

THE FOUNDATION’S REPLIES

The Foundation has undertaken considerable efforts in the
7.
past to reduce the number of carry-overs. Given the very nature
of the Foundation’s work, it is, however, a challenge to keep it in
balance with the principle of sound financial management, which
requires that suppliers not be paid before agreed milestones of the
work have been reached.

8.
In 2006, the Foundation and the Commission came to an
agreement on the nature and solution of the problem. It is
acknowledged by all parties that the Foundation did not at any
time spend more money than the amount approved by the Bud-
getary Authority. The Foundation will gradually reduce the accu-
mulated imbalance to zero within four years.

The Foundation is currently developing two tools in order
9.
to set goals that are measurable and to subsequently monitor its
performance: a project-management system linked to a financial
forecasting software system and a performance-monitoring sys-
tem, using a balanced scorecard, both to be introduced in 2007.

10.
The Foundation does carry out a risk analysis at both
project and unit level, documented in the project plans and annual
management plans. It is currently developing a comprehensive
risk-management approach at Foundation level.