Report on the annual accounts of the Office for Harmonisation in the Internal Market for the financial year 2006 together with the Office's replies
Date: 2007-09-27
Institutions: European Court of Auditors
Subjects: European Court of Auditors, European Union Intellectual Property Office, administration of the Institutions, financial control, implementation of the budget, powers of the institutions (EU), report

19.12.2007

EN

Official Journal of the European Union

C 309/141

REPORT

on the annual accounts of the Office for Harmonisation in the Internal
Market for the financial year 2006 together with the Office’s replies

(2007/C 309/24)

CONTENTS

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

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

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

Paragraph

1-2

3-6

7-9

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

The Office’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

142

142

142

144

146

C 309/142

EN

Official Journal of the European Union

19.12.2007

INTRODUCTION

The Court has thus obtained a reasonable basis for the

6.
Statement set out below.

1.
The Office for Harmonisation in the Internal Market (here-
inafter ‘the Office’) was set up by Council Regulation (EC)
No 40/94 (1) of 20 December 1993. Its mandate is to implement
the Community legislation on trade marks and designs, which
gives undertakings uniform protection throughout the entire area
of the European Union.

2.
Table 1 summarises the Office’s competences and activi-
ties. Key data summarised from the financial statements drawn up
by the Office for the financial year 2006 is presented in Tables 2,
3 and 4 for information purposes.

Reliability of the accounts

The Office’s accounts for the financial year ended 31 Decem-
ber 2006 are, in all material respects, reliable.

Legality and regularity of the underlying transactions

The transactions underlying the Office’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.

STATEMENT OF ASSURANCE

OBSERVATIONS

3.
This Statement is addressed to the Office Budget Commit-
tee in accordance with Article 137 of Council Regulation (EC)
No 40/94.

The Office’s accounts for

4.
the financial year ended
31 December 2006 (2) were drawn up by its President, pursuant
to Article 119 of Council Regulation (EC) No 40/94, and sent to
the Court, which is required to provide a statement on their reli-
ability and on the legality and regularity of the underlying
transactions.

and payment

7.
Implementation of the budget was characterised by a sig-
nificant increase in revenue (27 % higher than the initial budget)
and a lower overall level of expenditure resulting in a budgetary
surplus of 69 million euro. The implementation rates for the
appropriations were 92,7 %
commitment
and 72,6 % respectively. Around 15 % of the appropriations for
administrative expenditure (Title II) for the year and those carried
over from the previous financial year were cancelled. More than
one third of the commitments for the 2006 financial year were
carried over. A high number of budgetary transfers were made (3).
All transfers initiated in one day or within defined short periods
are not processed for approval together. Thus, the budgetary prin-
ciples of annuality and specification were not strictly observed.

5.
The Court conducted its audit in accordance with the IFAC
and INTOSAI International Auditing Standards and Codes of Eth-
ics, insofar as these are applicable in the European Community
context. The audit was planned and performed to obtain reason-
able assurance that the accounts are reliable and that the under-
lying transactions are legal and regular.

The accumulated surplus in 2006 reached 200 million
8.
euro, the equivalent of the annual budget. On the basis of the
recent analysis made, there was a need for the Office to propose
to the Commission a level of fees which more accurately reflects
its real costs (4).

(1) OJ L 11, 14.1.1994
(2) These accounts were drawn up on 1 July 2007 and received by the

(3) During 2006 there were more than 30 transfers.
(4) Article 134(2) of the Council Regulation (EC) No 40/94 of 20 Decem-

Court on 2 July 2007.

ber 1993.

19.12.2007

EN

Official Journal of the European Union

C 309/143

The examination of procedures for

recruiting staff
9.
showed the following shortcomings: a lack of formal decisions
in appointing selection boards, selection board incomplete
once having been set up, parity of members of the selection

board not assured and no minutes of the selection board
meetings. Written procedures and guidelines for the recruitment
of
yet been adopted and
implemented (1).

staff have not

temporary

This report was adopted by the Court of Auditors in Luxembourg at
27 September 2007.

its meeting of

For the Court of Auditors
Hubert WEBER
President

(1) Article 12(5) of the Conditions of Employment of other servants of

the EC.

Table 1

Office for Harmonisation in the Internal Market (Alicante)

Area of Community competence
deriving from the Treaty

Competences of the Office as specified in Council Regulation (EC) No 40/94
of 20 December 1993

Gouvernance

Resources made available to the Office
in 2006
(2005)

Products and services supplied
in the 2006 financial year

Free movement of goods

Objectives

Tasks

1. Administrative Board

Final budget

Trade marks

212 million euro (218 million euro)
including a Community subsidy:
0 % (0%)

Number of applications: 77 461

Number of registrations: 66 954

To implement the Community leg-
islation on trade marks and designs,
which gives undertakings the right
to uniform protection throughout
the entire area of the European
Union.

Prohibitions or restrictions justified
on grounds of the protection of
industrial and commercial prop-
erty must not constitute a means
of arbitrary discrimination or a dis-
guised restriction on trade between
Member States.

(From Article 30 of the Treaty)

Restrictions on freedom to provide
services within the Community are
prohibited in respect of nationals
of Member States who are estab-
lished in a State of the Community
other than that of the person for
whom the services are intended.

(From Article 49 of the Treaty)

— To receive and enter applica-
tions for registration.

— To examine the conditions
for entry in the Register and
compatibility with Commu-
nity legislation.

— To search at the industrial
property offices of the Mem-
ber States for any pre-existing
national trade marks.

— To publish applications.

— To examine any opposition

by third parties.

— To register or reject applica-

tions.

— To examine applications for
revocation or invalidity.

— To handle appeals against

decisions.

Source:

Information supplied by the Office.

Composition

— One representative of each Member State

— One representative of the Commission and

their alternates

Task

— To advise the President on matters for which

the Office is responsible

— To prepare lists of candidates (Article 120) for
President, Vice-Presidents and chairmen and
members of the Boards of Appeal

2. President of the Office

Staff numbers as at 31 Decem-
ber 2006

675 (675) posts in the establish-
ment plan,

posts occupied: 603 (611)

+ 72 (78) other staff (auxiliary con-
tracts, seconded national experts,
local and employment agency staff)

— Appointed by the Council from a list of at
most three candidates which has been pre-
pared by the Administrative Board

Total staff: 675 (689)

assigned to the following duties:

— production: 480 (548)

— support: 195 (141)

3. Budget Committee

Composition

One representative of each Member State and one
representative of the Commission and their alternates

Task

— To adopt the budget and the financial regula-
tion, grant discharge to the President and
determine the cost of search reports

4. Decisions in connection with procedures

Decisions are taken by:

(a)

(b)

(c)

(d)

(e)

the Examiners;

the Opposition Divisions;

the Administration of Trade Marks and
Legal Division;

the Cancellation Divisions;

the Boards of Appeal

5. External audit

The Court of Auditors

6. Discharge authority

The Office’s Budget Committee

Number of cases of opposition:
13 995

of which cases settled: 13 979

Appeals to the Boards of Appeal:
1 659

Average time for registration (exclud-
ing opposition or appeal):

— before publication: 8 months

— between publication and regis-

tration: 6 months

Designs

Designs received: 68 500

Designs registered: 69 555

C
3
0
9
/
1
4
4

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
7

.

Office for Harmonisation in the Internal Market (Alicante) — Implementation of the budget for the financial year 2006

Table 2

Revenue

Source of revenue

Revenue entered in the final budget
for the financial year

Revenue received

Allocation of expenditure

Own revenue

146 723

184 020

Other revenue

Interest
Balance of the previ-
ous financial year

Total

709

4 500

59 797
211 729

553

7 692

59 296
251 561

Title I
Staff
Title II
Administration
Title III
Operating activities
Title X
Reserve

Expenditure

Final budget appropriations

(1 000 euro)

Appropriations carried over from the
previous financial year

entered

committed

paid

carried
over

cancelled

available

paid

cancelled

60 431

59 348

56 758

1 390

2 283

995

835

37 772

31 337

20 639

10 691

6 442

9 685

8 866

160

819

36 541

35 371

20 963

14 407

1 170

14 226

13 015

1 212

76 985
211 729

0
126 056

0
98 360

0
26 488

76 985
86 880

0
24 906

0
22 716

0
2 191

Total

Source: Data supplied by the Office. This table summarises the data provided by the Office in its annual accounts. Revenue collected and payments are estimated on a cash basis.

Table 3

Table 4

Office for Harmonization in the Internal Market (Alicante) — Economic outturn account
for the financial years 2006 and 2005

Office for Harmonization in the Internal Market (Alicante) — Balance sheet
at 31 December 2006 and 2005

Operating revenue
Revenue from fees
Revenue from the sale of publications
Other revenue

Operating expenses
Staff expenses
Fixed asset related expenses
Other administrative expenses
Operational expenses

Total (a)

Total (b)
Surplus/(deficit) from operating activities (c = a – b)

Financial operations revenues (e)
Financial operations expenses (f)

Surplus/(deficit) from non-operating activities (g = e – f)
Economic result for the year (h = c + g)

(1 000 euro)

2006

2005

184 066
285
172
184 523

58 055
3 586
26 833
34 720
123 194
61 329
8 149
63
8 086
69 415

156 945
512
310
157 767

56 278
3 386
25 224
35 850
120 738
37 029
4 451
38
4 413
41 442

Non-current assets
Intangible fixed assets
Tangible fixed assets
Current assets
Short-term pre-financing
Short-term receivables
Cash and cash equivalents

Non-current liabilities
Provisions for risks and charges
Other long-term liabilities

Current liabilities
Provisions for risks and charges
Accounts payable

Net assets
Reserves
Accumulated surplus/deficit
Economic result of the year

Total assets

Total liabilities

Total net assets
Total liabilities and net assets

2006

1 023
25 948

190
2 453
281 510
311 125

727
20

12 266
54 681
67 693

72 353
101 663
69 415
243 431
311 125

(1 000 euro)

2005

829
26 627

185
2 011
208 020
237 672

597
16

10 499
52 544
63 656

—
132 575
41 442
174 017
237 672

Source: Data supplied by the Office. This table summarises the data supplied by the Office in its annual accounts: these accounts are drawn up on an accrual basis.

.

1
9
1
2
2
0
0
7

.

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

C
3
0
9
/
1
4
5

C 309/146

EN

Official Journal of the European Union

19.12.2007

THE OFFICE’S REPLIES

The Office is continuing its efforts to improve its forecasts
7.
of its revenue and expenditure. The significant amount of carried
over appropriations form 2006 to 2007 is mainly due to delays
of some IT projects. The Office has put in April 2007 an improved
procedure for handling transfers.

8.
The Office takes good note of the observations of the
Court of Auditors. In December 2006, the Commission made

proposals for a new fee mechanism. The Council, in May 2007,
asked the Commission to make a proposal for a substantial
reduction.

9.
In 2006, the Office has already improved the formalising
of its procedures regarding human resources management and in
particular recruitment. In 2007, this effort will be pursued to take
account of the Court’s remarks.