Report on the annual accounts of the European Monitoring Centre for Drugs and Drug Addiction 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 Monitoring Centre for Drugs and Drug Addiction, administration of the Institutions, financial control, interinstitutional relations (EU), report

C 312/86

EN

Official Journal of the European Union

19.12.2006

REPORT

on the annual accounts of the European Monitoring Centre for Drugs
and Drug Addiction for the financial year 2005 together
with the Centre’s replies

(2006/C 312/15)

CONTENTS

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

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

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

1-2

3-6

7-13

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

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

87

87

87

89

92

Paragraph

Page

19.12.2006

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Official Journal of the European Union

C 312/87

INTRODUCTION

Reliability of the accounts

The European Monitoring Centre for Drugs and Drug
1.
Addiction (hereinafter the Centre) was established by Council
Regulation (EEC) No 302/93 of 8 February 1993 (1). Its main task
is to collect data on drugs and drug addiction in order to prepare
and publish information that is objective, reliable and comparable
at European level. The information is intended to provide a basis
for analysing the demand for drugs and ways of reducing both it
and, in general, phenomena associated with the drug market.

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

Legality and regularity of 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.

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 presented in Tables 2, 3
and 4.

OBSERVATIONS

STATEMENT OF ASSURANCE

3.
This Statement of Assurance 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 following 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 11 of Regulation (EEC) No 302/93, 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.

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.

The Court has thus obtained a reasonable basis for the

6.
Statement below.

(1) OJ L 36, 12.2.1993 This Regulation was amended by Regulations (EC)
No 3294/94 of 22 December 1994 (OJ L 341, 30.12.1994, p. 7.)
and (EC) No 1651/2003 of 18 June 2003 (OJ L 245, 29.9.2003, p. 30).

(2) OJ L 248, 16.9.2002, p. 1.
(3) These accounts were drawn up on 15 June 2006 and received by the

7.
The utilisation rate of commitment appropriations is
greater than 90 %, whereas the corresponding rate for payment
appropriations is only 85 %. Expenditure on administration
shows a high carry-over rate of almost 40 %. This situation is the
result of concentrating purchases in the latter part of the year,
which has concomitant risks for the quality of acquisition proce-
dures. The Centre should manage its procurement policy better,
in order to avoid carrying over appropriations, which makes
management more cumbersome.

For the purposes of management, the Centre has prepared
8.
an activity-based budget. This initiative must be taken further
with a view to improved performance monitoring and evaluation
of its effectiveness by introducing analytical accounts so that the
cost of the Centre’s various activities can be ascertained.

9.
In its previous report, the Court noted that only the
accounting officer’s signature was needed for the bank accounts,
and the Centre undertook to implement a countersigning system.
As at February 2006, no such system had yet been introduced.

10.
The fixed asset inventory systems are not included in the
general accounts. Without a reliable labelling system, the trace-
ability of the assets entered in the inventory cannot be assured.

11.
There are deficiencies in the staff recruitment procedures.
In one selection procedure, the selection board was not com-
posed in accordance with the parity principle established in the
Staff Regulations (4). In another case, the successful candidate had
not obtained the best assessment in the selection procedure.

Court on 13 July 2006.

(4) Article 12 of the Rules applicable to other servants.

C 312/88

EN

Official Journal of the European Union

19.12.2006

At the end of 2004, a member of staff was sent on a
12.
long-term (two-year) mission to Brussels. It has not been possible
to ascertain the purpose of this mission, which had cost around
70 000 euro (in pay and allowances) by the end of 2005, and the
person concerned did not have a heavy workload. When the mis-
sion was terminated, he was seconded to the Commission, yet the
Centre continued to pay his salary.

A number of anomalies were revealed in the course of
13.
checks on procurement and contracting procedures. In two cases,
the earliest date for the receipt of bids after the date of the invi-
tation to tender was not adhered to. In one supplementary con-
tract procedure, the value of the works exceeded the ceilings laid
down in the regulations. In two cases audited, there was no for-
mal decision concerning the appointment of the members of the
committee responsible for opening the bids or the members of
the evaluation committee. Lastly, in one case the contract value
was clearly under-estimated, which infringed the principle of the
equal treatment of tenderers.

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

Areas of Community
competence deriving from
the Treaty

The
Community
complements the Mem-
ber States’ action in
reducing drugs-related
health damage, includ-
ing information and
prevention.

(Article 152(1) of
Treaty)

the

European Monitoring Centre for Drugs and Drug Addiction (Lisbon)

Table 1

Competences of the Centre as defined in Council Regulation
(EEC) No 302/93

Governance

Resources available to the
Centre in 2005
(2004)

Products and services supplied in 2005

Objectives:

Tasks:

1. The Management Board

Final budget

Network

— to collect and analyse

data,

— to make

enquiries
and carry out prepara-
tory actions,

— to

ensure
European-level
are more reliable,

that
data

— to

publish
information,

reliable

— to improve coordina-
tion between national
Community
and
actions,

— to promote the incor-
poration
drug-
related data into inter-
national programmes.

of

to provide
the Union
and its Member States with
reliable
information at
European level concerning
drugs and drug addiction
and their consequences.

The Monitoring Centre
should give priority to
analysing:

1. The demand and reduc-
tion of the demand for
drugs;

2. National and Commu-
nity strategies and poli-
cies;

3. International coopera-
tion and the geopolitics
of supply;

4. Control of the trade in
narcotics, psychotropic
substances and drug
precursors;

5. The

implications of
drug use for producer,
consumer and transit
countries,
including
money laundering.

Comprises one representative
from each Member State, two
representatives of the Commis-
sion and two qualified scien-
tists appointed by the Euro-
pean Parliament.

It approves
the work pro-
gramme and general annual
report and adopts the budget.

2. Director

Appointed by the Management
Board at
the Commission’s
proposal.

3. Scientific Committee

Delivers opinions. It is made
up of one representative from
each Member State. The Man-
also
agement Board may
appoint a maximum of six
other members on the basis of
their specific qualifications.
4. External control
Court of Auditors
5. Discharge authority
European Parliament on the
Council’s recommendation.

12,8 million euro
(12,2 million euro). Com-
munity contribution:
96 % (96 %).

Staff numbers
as
31 December 2005:

at

Number of posts in estab-
lishment plan: 77 (77)

Posts occupied: 58 (61)

+ 25 (22) other staff (aux-
iliary contracts, contract
staff
temporary
replacements)

and

The Centre runs a computerised network for the collection and
exchange of information called the ‘European Information Net-
work on Drugs and Drug Addiction’ (Reitox); this network con-
nects national drug information networks, specialist centres in the
Member States and the information systems of international
organisations working with the Centre.

Publications:

— Annual report on the state of the drug problem in Europe
(22 language versions, publication and interactive website)

— Annual report on selected issues (EN, publication and interac-

tive website)

— Statistical bulletin and interactive website containing over

200 tables, 100 graphs and PDF files

Total staff: 83 (83)

— General activity report (annual, EN)

Assigned to the following
duties:

— Drugnet Europe newsletter (4 issues, two of them in five lan-

guages and two in EN, 12 products)

operational: 50,5 (54,5)

— Technical and scientific studies and articles (28)

administrative and IT sup-
port: 25 (20)
mixed: 7,5 (8,5)

Other websites:
Set-up/updating/content development:
— Country situation summaries
— Country data profiles
— Drug treatment overviews
— European legal database on drugs
— Evaluation instruments bank
— Exchange on drug demand reduction action
Promotional brochures (3 products)
Media products (110 miscellaneous products)
Participation in international conferences/meetings (75)
Organisation of technical and scientific meetings (24)

Source:

Information supplied by the Centre.

.

1
9
1
2
2
0
0
6

.

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f
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i
a
l

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3
1
2
/
8
9

EUROPEAN MONITORING CENTRE FOR DRUGS AND DRUG ADDICTION

Table 2

Implementation of the budget for the financial year 2005

Expenditure

(1 000 euro)

Final budget appropriations for the financial year

Appropriations carried over
from the previous financial
year

Available appropriations
(appropriations for the financial year plus appropria-
tions for the previous financial year)

entered

com-
mitted

paid

carried
over

can-
celled

avail-
able

paid

can-
celled

avail-
able

com-
mitted

paid

carried
over

cancelled

6 194

5 932

5 762

154

279

122

101

21

6 316

6 054

5 863

154

300

1 791

1 720

1 070

650

71

356

332

24

2 147

2 076

1 402

650

95

Revenue
received

12 000

516

Allocation of expenditure

Title I
Staff (NDA)

Title II
Administration (NDA)

8

Title III
Operating activities (DA)

— CA

— PA

4 531

4 298

4 531

4 085

300

190

Allocated revenue (Phare)

300

49

16

284

Total CA 12 816 11 999

1 088

Total

12 816

12 714

Total PA 12 816

10 933

1 088

233

446

583

796

1 260

66

1 194

5 791

4 151

4 531

4 298

233

1 640

300

49

16

284

478

45 13 294 12 477

1 088

628

1 738

499

1 239 14 554

11 432

1 088

2 035

NDA: non-differentiated appropriations (commitment appropriations equal payment appropriations).
DA:
CA:
PA:

differentiated appropriations (commitment appropriations and payment appropriations may differ).
commitment appropriations in a system of differentiated appropriations.
payment appropriations in a system of differentiated appropriations.

Source of revenue

Revenue

Revenue entered
in the final budget
for the financial
year

Community subsidies

12 000

Own revenue

516

Other revenue

Allocated
revenue (Phare)

C
3
1
2
/
9
0

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n
U
n
o
n

i

.

1
9
1
2
2
0
0
6

.

19.12.2006

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Official Journal of the European Union

C 312/91

EUROPEAN MONITORING CENTRE FOR DRUGS AND DRUG ADDICTION

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 charges (e)

(1 000 euro)

2005

10 592

312

10 904

5 843

2 269

4 181

12 293

– 1 389

0

35

Total (a)

Total (b)

Operating result (c = a – b)

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

methods applied.

Economic result (f = c + d – e)

– 1 424

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

Table 4

Assets

Fixed assets

Stocks

Receivables and long-term assets

Liquid assets

Liabilities

Cumulative results of previous years

Result for the year

Long-term liabilities

Current liabilities

(1 000 euro)

2005

2004

2 989

3 058

224

3 005

6 218

4 296

– 1 424

3 346

6 218

Total

Total

619

3 644

7 321

4 296

0

3 025

7 321

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

Source: Centre data — These tables summarise the data provided by the Centre in its annual accounts.

C 312/92

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Official Journal of the European Union

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THE CENTRE’S REPLIES

The Monitoring Centre has taken note of the Court’s obser-
7.
vation and has taken steps to improve the planning of its calls for
tenders, spreading them more evenly over the year. The Monitor-
ing Centre will continue its efforts which, in 2005, allowed it
to increase the rate of utilisation of payment appropriations com-
pared with 2004 levels (from 77 % to 85 %), especially with
regard to administrative expenditure (Title II).

The Monitoring Centre terminated the mission with
12.
effect from 31 May 2005. At the end of 2005, the Monitoring
Centre decided, in accordance with Article 38 of the Staff Regu-
lations, to second the staff member in question to the Commis-
sion for a duration of nine months, without the possibility of
extension. As agreed with the Commission, the salary of this staff
member would be paid by the Monitoring Centre.

8.
The Monitoring Centre has taken note of the Court’s obser-
vation and will continue to develop its activity-based manage-
ment system. In place since 2001, this system calculates the cost
of the Monitoring Centre’s projects and programmes, though
strictly speaking it is not an analytical accounting system.

On 22 March 2006, the Monitoring Centre implemented
9.
a double signature system for the management of its bank
accounts.

From 2006, the Monitoring Centre has established an
10.
automatic link between budgetary and general accounting. Rec-
onciliation between the accounts and the inventory is scheduled
for the month of January following the end of the relevant finan-
cial year. In addition, in July 2006 the Monitoring Centre com-
pleted a physical check of its inventory items. The results of this
check were entered in a dedicated computer system.

11.
Pending a final agreement with the Commission on the
rules for implementing the Staff Regulations, the Monitoring Cen-
tre will continue to apply the principles governing Community
recruitment procedures to all its selection procedures. As its staff
complement is relatively small, the Monitoring Centre ensures at
all times that a representative of the Staff Committee participates
in the selection committees as a full member. In future, the Moni-
toring Centre will state explicit reasons why it selected the suc-
cessful candidate if the selection deviates from the ranking drawn
up by the selection committee.

The Monitoring Centre has taken note of the Court’s

13.
remarks and has taken the following steps in particular:

— to improve the planning of its calls for tenders, above all to

keep emergency cases to a minimum,

— to provide a more structured use of framework contracts,

— to formalise the appointment of members of the tender

opening and evaluation committees,

— to provide greater support to authorising officers by delega-
tion and to managers in the awarding of contracts and the
granting of subsidies.

The Monitoring Centre believes that the supplementary contract
referred to by the Court actually involved recurring services which
could be the subject of an additional contract without the ceil-
ings laid down for supplementary contracts. The above measures
should reduce — or even eliminate — this type of contract.