Report on the annual accounts of the Office for Harmonization in the Internal Market for the financial year 2008, together with the Office’s replies
Date: 2009-10-08
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








C_2009304EN.01015901.xml










15.12.2009   


EN


Official Journal of the European Union


C 304/159






REPORT

on the annual accounts of the Office for Harmonization in the Internal Market for the financial year 2008, together with the Office’s replies
2009/C 304/29

CONTENTS








 



Paragraph




Page





INTRODUCTION …


1-2


160




STATEMENT OF ASSURANCE …


3-12


160




OTHER MATTERS …


13


161




Table …


162





The Office’s replies …


163





INTRODUCTION







1.


The Office for Harmonization in the Internal Market (hereinafter ‘the Office’), located in Alicante, 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).










2.


The Office’s 2008 budget amounted to 318,4 million euro compared to 275,6 million euro the previous year. The number of staff employed by the Office at the end of the year was 643 as compared with 647 the previous year.






STATEMENT OF ASSURANCE









3.



Pursuant to the provisions of Article 248 of the Treaty the Court has audited the annual accounts (3) of the Office, which comprise the ‘financial statements’ (4) and the ‘reports on implementation of the budget’ (5) for the financial year ended 31 December 2008 and the legality and regularity of the transactions underlying those accounts.











4.



This Statement is adressed to the Office Budget Committee in accordance with Article 137 of Council Regulation (EC) No 40/94.






The President’s responsibility









5.



As authorising officer, the President implements the revenue and expenditure of the budget in accordance with the financial rules of the Office under his own responsibility and within the limits of authorised appropriations (6). The President is responsible for putting in place (7) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (8) that are free from material misstatement, whether due to fraud or error, and for ensuring that the transactions underlying those accounts are legal and regular.






The Court’s responsibility









6.



The Court’s responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the annual accounts of the Office and the legality and regularity of the transactions underlying them.











7.



The Court conducted its audit in accordance with the IFAC and ISSAI (9) International Auditing Standards and Codes of Ethics. Those standards require that the Court complies with ethical requirements and plans and performs the audit to obtain reasonable assurance about whether the accounts are free from material misstatement and whether the underlying transactions are legal and regular.











8.



The Court’s audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and about the legality and regularity of the transactions underlying them. The procedures selected depend on its audit judgment including the assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error. In making those risk assessments internal control relevant to the entity’s preparation and presentation of accounts is considered in order to design audit procedures that are appropriate in the circumstances. The Court’s audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the accounts.











9.



The Court believes that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below.







Opinion on the reliability of the accounts










10.



In the Court’s opinion, the Office’s Annual Accounts (10) fairly present, in all material respects, its financial position as of 31 December 2008 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation.







Opinion on the legality and the regularity of the transactions underlying the accounts










11.



In the Court’s opinion, the transactions underlying the Office’s annual accounts for the financial year ended 31 December 2008 are, in all material respects, legal and regular.










12.


The comments which follow do not call the Court’s opinions into question.





OTHER MATTERS







13.


For the past two years (11) the Court has observed the need for the Office to propose to the Commission to establish a level of fees which reflects more accurately its real costs (12). The accumulated budgetary surplus (13) has increased from 201 million euro in 2006 to 273 million euro in 2007 and 350 million euro in 2008. The impact of measures envisaged by the Office to prevent further increases in its surplus and, in the longer term, to bring the Office’s expenses more closely into line with its resources cannot yet be evaluated.





This report was adopted by the Court of Auditors in Luxembourg at its meeting of 8 October 2009.


For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA


President





Table


Office for Harmonization 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


Governance


Resources made available to the Office in 2008

(Data for 2007)



Products and services supplied in the 2008 financial year

(Data for 2007)






Free movement of goods

Prohibitions or restrictions justified on grounds of the protection of industrial and commercial property must not constitute a means of arbitrary discrimination or a disguised 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 established in a State of the Community other than that of the person for whom the services are intended.

(From Article 49 of the Treaty)




Objectives

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



Tasks







—


To receive and enter applications for registration.










—


To examine the conditions for entry in the Register and compatibility with Community legislation.










—


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










—


To publish applications.










—


To examine any opposition by third parties.










—


To register or reject applications.










—


To examine applications for revocation or invalidity.










—


To handle appeals against decisions.







1 —   Administrative Board


Composition







—


One representative of each Member State.










—


One representative of the Commission and their alternates.





Tasks







—


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







—


Appointed by the Council from a list of at most three candidates which has been prepared by the Administrative Board.





3 —   Budget Committee


Composition







—


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





Tasks







—


To adopt the budget and the financial regulation, grant discharge to the President and determine the cost of search reports.





4 —   Decisions related to the applications

Decisions are taken by:






(a)


the Examiners;










(b)


the Opposition Divisions;










(c)


the Administration of Trade Marks and Legal Division;










(d)


the Cancellation Divisions;










(e)


the Boards of Appeal.





5 —   External audit

Court of Auditors.

6 —   Discharge authority

The Office’s Budget Committee.



Budget

318 million euro

(276 million euro)


Staff at 31 December 2008

643 (647) posts in the establishment plan, posts occupied: 606 (619) + 118 (89) other staff (auxiliary contracts, seconded national experts, local and employment agency staff, special advisers)
Total staff: 724 (708)




Trade marks

Numbers of applications: 87 400(88 200)

Number of registrations: 81 400(68 000)

Cases of opposition: 18 700(16 400)

of which cases settled: 13 600(12 200)

Appeals to the Boards of Appeal: 1 815(1 970)

Appeals pending: 1 618(1 670)


Average time of registration (excluding opposition or appeal)







—


before publication: 6 (7,5) months










—


between publication and registration: 5,5 (6,5) months





Designs

Designs received: 72 700(78 000)

Designs registered: 78 400(77 000)






Source: Information supplied by the Office.






THE OFFICE’S REPLIES






13.


Amendments to the Fees Regulation came into effect on 1 May 2009. Budget forecasts made by the Office show that the new fees should result in the budget coming into balance in the near future, depending on volumes of applications. It has also been agreed that the Commission will review every 2 years whether there is a need for further adjustments to fees to maintain a balanced budget.







(1)  OJ L 11, 14.1.1994. p. 1.

(2)  The Table summarises the Office’s competences and activities. It is presented for information purposes.

(3)  These accounts are accompanied by a report on the budgetary and financial management during the year which gives inter alia an account of the rate of implementation of the appropriations with summary information on the transfers of appropriations among the various budget items.

(4)  The financial statements include the balance sheet and the economic outturn account, the cash-flow table, the statement of changes in capital and the annex to the financial statements which includes the description of the significant accounting policies and other explanatory information.

(5)  The budget implementation reports comprise the budget outturn account and its annex.

(6)  Article 33 of Commission Regulation (EC, Euratom) No 2343/2002 of 23 December 2002 (OJ L 357, 31.12.2002, p. 72).

(7)  Article 38 of Regulation (EC, Euratom) No 2343/2002.

(8)  The rules concerning the presentation of the accounts and accounting by the Agencies are laid down in Chapter 1 of Title VII of Regulation (EC, Euratom) No 2343/2002 as last amended by Commission Regulation (EC, Euratom) No 652/2008 of 9 July 2008 (OJ L 181, 10.7.2008, p. 23) and are integrated as such in the Financial Regulation of the Office.

(9)  International Federation of Accountants (IFAC) and International Standards of Supreme Audit Institutions (ISSAI).

(10)  The Final Annual Accounts were drawn up on 19 June 2009 and received by the Court on 1 July 2009. The Final Annual Accounts, consolidated with those of the Commission are published in the Official Journal of the European Union by 15 November of the following year. These can be found on the following website http://eca.europa.eu or http://www.oami.europa.eu

(11)  OJ C 311, 5.12.2008, p. 179 and OJ C 309, 19.12.2007, p. 141.

(12)  Article 134(2) of Council Regulation (EC) No 40/94 of 20 December 1993.

(13)  Carried over budgetary results plus reserve fund according to Article 16 of the Office’s Financial Regulation.