Report on the annual accounts of the European Foundation for the Improvement of Living and Working Conditions for the financial year 2007 together with the Foundation's replies
Date: 2008-09-18
Institutions: European Court of Auditors
Subjects: Eurofound, European Court of Auditors, administration of the Institutions, financial control, implementation of the budget, powers of the institutions (EU), report

C 311/156

EN

Official Journal of the European Union

5.12.2008

REPORT

on the annual accounts of the European Foundation for the Improvement
of Living and Working Conditions for the financial year 2007 together
with the Foundation’s replies

(2008/C 311/23)

CONTENTS

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

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

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

Paragraph

1-2

3-6

7-10

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

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

Page

157

157

157

159

163

5.12.2008

EN

Official Journal of the European Union

C 311/157

INTRODUCTION

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.

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.

2.
Table 1 summarises the Foundation’s competences and
activities. Key data summarised from the financial statements
drawn up by the Foundation for the financial year 2007 are pre-
sented in Tables 2, 3 and 4 for information purposes.

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 Foundation’s accounts,
as required by Article 248 of the Treaty establishing the European
Community.

7.
The Foundation’s 2007 budget amounted to 20,2 million
euro, as compared to 19,8 million euro for the previous year. It
included contributions from the Commission to prepare the
future membership of Croatia and Turkey. These contributions
should have been treated as assigned revenue in the budget, but
that was not the case. This situation was not in conformity with
the Financial Regulation.

4.
The Foundation’s accounts for the financial year ended
31 December 2007 (3) were drawn up by its Director, pursuant
to Article 16 of Council Regulation (EEC) No 1365/75, and sent
to the Court, which is required to provide a statement on their
reliability and on the legality and regularity of the underlying
transactions.

Recoverable VAT for

8.
the 2007 financial year of
376 611 euro was not claimed by the year end. VAT claims
should be recovered from time to time during the year. This situ-
ation was at odds with the principle of sound financial
management.

The Court conducted its audit in accordance with the IFAC
5.
and ISSAI (4) International Auditing Standards and Codes of Eth-
ics, in so far 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 Court has thus obtained a reasonable basis for the

6.
Statement set out below:

Reliability of the accounts

The Foundation’s accounts for the financial year ended
31 December 2007 are, in all material respects, reliable.

(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 2008 and received by the

Court on 18 July 2008.

9.
In the case of recruitment procedures, neither the weight-
ing of the selection criteria nor the minimal scores to be achieved
were decided by the Selection Board from the outset. Moreover,
in one case, the selection criteria defined were either not in con-
formity with the vacancy notice or remained vague. This did not
ensure transparent and non-discriminatory procedures.

With regard to procurement procedures, the following
10.
anomalies were observed: financial evaluation procedure for a
contract not clearly specified in the tender documents and selec-
tion criteria not allowing proper performance of an evaluation of
the financial capacity of the candidates (5). These weaknesses
undermined the quality of the procedure and risked biasing the
final selection.

(4) International Federation of Accountants (IFAC) and International Stan-

dards of Supreme Audit Institutions (ISSAI).

(5) Three cases.

C 311/158

EN

Official Journal of the European Union

5.12.2008

This report was adopted by the Court of Auditors in Luxembourg at
18 September 2008.

its meeting of

For the Court of Auditors
Vítor Manuel da SILVA CALDEIRA
President

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

Table 1

Areas of Community
competence deriving from the
Treaty

Competences of the Foundation as defined in Council
Regulation (EEC) No 1365/75 as amended by Regulation (EC)
No 1111/2005

Governance

Resources available to the Foundation
(Data for 2006)

Activities and services provided in 2007

Objectives

Tasks

1. The Governing Board (GB)

Final Budget 2007:

Monitoring and surveys:

‘The Community and the
Member States, having in
social
mind fundamental
rights, … shall have as their
objectives … improved liv-
ing and working conditions,
… the Community shall sup-
port and complement the
the Member
activities of
States in the following fields;
… b) working conditions; 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;
representation
and the collective defence of
the interests of workers and
employers,
including
co-determination; g) condi-
tions of employment
for
third-country nationals; h)
the integration of persons
excluded from the labour
market; i) equality between
men and women …’

f)

(Articles 136 and 137 of the
Treaty)

The aim of the Foundation
shall be to contribute to the
establishment of better liv-
ing and working condi-
tions by increasing and
disseminating knowledge
which is relevant to this
subject. In particular, it is
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.

— To

the
foster
exchange of informa-
tion and experience in
these fields.

— To facilitate contact
between universities,
study and research
institutes, economic
and social administra-
tions and organisa-
tions.

— To carry out studies
or to conclude study
contracts and to pro-
for
assistance
vide
pilot projects.

— To

cooperate

as
closely
as possible
with existing special-
ised institutes in the
Member States and at
international level.

20,2 million Euro
euro)

(19,8 million

Staff in December 2007:

— European Industrial Relations Observa-
tory (EIRO), European Working Condi-
tions Observatory
and
European Restructuring Monitor (ERM);

(EWCO)

— From each MemberState: one
government representative, one
representative from employers’
organisations and one workers’
representative.

— Three representatives from the

Commission.

94 (94) posts provided for in the
establishment plan, of which 84
(89) were occupied

2. The Bureau of the GB

Other Staff:

Seconded National Experts and
employment agency staff: 3 (1)

Contract Agents: 10 (9)

Total Staff employed: 97 (99)

Operating activities: 55 (58)

Administrative tasks: 30 (32)

Mixed: 4 (4)

— Consists of 11 members; three
members from each of the social
partners and the governments,
two from the Commission.

— It monitors the implementation
of decisions of the GB and takes
measures to ensure proper man-
agement between GB meetings.

3. The Director is appointed by the
Commission from a list of candidates
submitted by the GB, he implements
the decisions of the GB and the Bureau
of the GB and manages the Founda-
tion.

4. The Advisory Committees are
composed of up to 3 members from
the Commission, governments and
the social partners, with the aim of
advising on the implementation of
major projects and the assessment of
results.

5. External audit

Court of Auditors.

6. Discharge authority

Parliament acting on recommenda-
tion of the Council.

— 4th European Working Conditions Sur-
vey: secondary analysis (themes of gen-
der and working conditions, ageing
workforce, work organisation, working
time and work intensity …);

— European survey on working time and
work-life balance: five reports published
in 2007. Preparations for the second sur-
vey.

Employment and restructuring:

— Undeclared work;

— European Restructuring Monitor case

studies;

— Stakeholder enquiry service.

Work–life balance and working condi-
tions:

— Attractive workplace for all;

— Flexibility and security over the life

course;

— Changes in the job structure.

Industrial relations and partnership:

— Codes of conduct and framework agree-

ments;

— Capacity building for sectoral and local
level; social dialogue in the EU 10;

— Working time and industrial relations.

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Areas of Community
competence deriving from the
Treaty

Competences of the Foundation as defined in Council
Regulation (EEC) No 1365/75 as amended by Regulation (EC)
No 1111/2005

Governance

Resources available to the Foundation
(Data for 2006)

Activities and services provided in 2007

Social cohesion and quality of life:

— Role of local authorities in the integra-

tion of migrants;

— Developments in childcare services in

disadvantaged areas;

— Promoting quality of life in rural Europe.

Communication and sharing ideas and
experience:

— 376 publications, 1,57 million users ses-

sions (average of 4 303/day);

— 37 press activities, 45 press releases, up

28 % on 2006;

— 1 126 article cuttings with advertising
value equivalent (AVE) of 2,1 million
euro, reaching ca 58 765 000 people,
up 80 % from 32 536 000 in 2006. 252
journalist enquiries, + 9 % up on the pre-
vious year;

— Promotion campaign ‘Fourth Working
Conditions Survey: what workers say’,
‘Quality of Life in Turkey’;

— Roadshows in five countries;

— Company Network Seminars on Diver-
and Environmental

sity in Europe
Changes;

— Foundation Seminar Series ‘Youth and

Work’;

— National Outreach Centres covering 10

Members States;

— 16 exhibitions;

— 58 visits to the Foundation, including

the Finnish President.

Source:

Information supplied by the Foundation.

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European Foundation for the Improvement of Living and Working Conditions (Dublin) — Implementation of the budget for the financial year 2007

Table 2

Source of revenue

Revenue (1)

Revenue entered in the
final budget for the
financial year

Revenue collected

Community subsidy

19 600

19 600

Other subsidies

Other revenue

300

280

340

321

Title I
Staff

Title II
Administration

Title III
Operating activities

Expenditure (1)

Appropriations for the financial year

(1 000 euro)

Appropriations carried over from
previous financial year

entered

committed

paid

carried over

cancelled

available

paid

cancelled

10 687

10 260

10 084

243

360

1 272

1 190

892

370

10

120

635

94

567

26

68

147

241

Total

20 180

20 261

Total

20 180

19 393

14 688

8 221

7 943

3 712

4 397

5 010

112

482

3 557

4 312

3 410

4 071

Includes assigned revenue.

(1)
Source: Data supplied by the Foundation — This table summarises the data supplied by the Foundation in its annual accounts. Revenue collected and payments are estimated on a cash basis.

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C 311/162

EN

Official Journal of the European Union

5.12.2008

European Foundation for the Improvement of Living and Working Conditions (Dublin) — Economic outturn
account for the financial years 2007 and 2006

Table 3

Operating revenue

Community subsidies

Other subsidies

Other revenue

Operating expenses

Staff expenses

Fixed asset related expenses

Other administrative expenses

Operational expenses

(1 000 euro)

2007

2006

19 600

19 000

340

884

517

248

Total (a)

20 824

19 765

9 132

608

2 416

8 597

Total (b)

20 753

8 908

724

2 106

7 409

19 147

618

0

10

– 10

608

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

Financial operations revenue (e)

Financial operations expenses (f)

Surplus/(deficit) from non-operating activities (g = e – f)

Economic result for the year (h = c + g)

71

0

4

– 4

67

Source: Data supplied by the Foundation — This table summarises the data provided by the Foundation in its annual accounts: these accounts

are drawn up on an accrual basis.

European Foundation for the Improvement of Living and Working Conditions (Dublin) — Balance sheet at
31 December 2007 and 2006

Table 4

Non-current assets

Intangible fixed assets

Tangible fixed assets

Current assets

Short-term pre-financing

Short-term receivables

Cash and cash equivalents

Current liabilities

Provisions for risks and charges

Accounts payable

Reserve

Accumulated surplus/deficit

Economic result for the year

(1 000 euro)

2007

2006

46

3 327

732

1 095

4 635

9 835

141

3 695

3 836

5 999

5 932

67

5 999

Total assets

Total liabilities

Net assets

Net capital

84

2 388

344

690

3 111

6 617

274

1 643

1 917

4 700

4 092

608

4 700

Source: Data supplied by the Foundation — This table summarises the data provided by the Foundation in its annual accounts: these accounts

are drawn up on an accrual basis.

5.12.2008

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Official Journal of the European Union

C 311/163

THE FOUNDATION’S REPLIES

From 2008 on, we have set up budget lines for assigned revenues in ABAC and will proceed according

7.
to the Court’s recommendation.

Due to introduction of the new financial software ABAC, the VAT recovery for 2007 was delayed. It

8.
was processed in April 2008 and fully recovered.

In 2008 Eurofound has already adapted the recruitment procedure to address the issues highlighted by

9.
the Court.

The Foundation used the criticised procedure due to budgetary uncertainties. However, the Founda-
10.
tion is confident that best value for money was achieved. In future, price evaluation methods will be defined in
a way that avoids discretionary power from the outset.

With regard to the financial capacity, Article 135(2) of the Implementing Rules stipulates that the Foundation
may lay down minimum capacity levels. In future, the Foundation will lay down criteria for the application of
minimum financial capacity levels.