Report on the financial statements of the European Training Foundation (ETF-Turin) for the financial year ended 31 December 1997, together with the Foundation's reply
C 406/38 EN Official Journal of the European Communities 28. 12. 98 on the financial statements of the European Training Foundation (ETF — Turin) for the financial year ended 31 December 1997, together with the Foundation’s reply REPORT (98/C 406/07) 1. 1. This report is addressed to the Governing Board of the European Training Foundation in conformity with Article 11(4), of Council Regulation (EEC) No 1360/90 (1). MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUDGET OF THE EUROPEAN TRAINING FOUNDATION FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 1997 PHARE, TACIS and TEMPUS subsidies not included in the budget 1. 2. The Court has examined the financial statements of the European Training Foundation for the financial year ended 31 December 1997. In accordance with Article 11(1), of Council Regulation (EEC) No 1360/90, the budget was implemented on the responsibility of the Director. This responsibility included the drawing-up and presentation of the financial statements (2) in accordance with the internal financial provisions, as provided for in Article 12 of Council Regulation (EEC) No 1360/90. The Court of Auditors is required under Article 188c of the Treaty establishing the European Community to examine these accounts. 1. 3. The Court performed its audit in accordance with its auditing policies and standards. These have been adapted from generally accepted international auditing standards to reflect the specific characteristics of the Community context. Accordingly, the Court carried out such tests of the accounting records and other audit procedures as it deemed necessary in the circumstances. By means of this audit, the Court obtained a reasonable basis for the opinion expressed below. 1. 4. This examination has enabled the Court to obtain reasonable assurance that the annual accounts for the financial year which ended on 31 December 1997 are reliable and that the underlying transactions, taken as a whole, are legal and regular. In the context of 1. 5. the PHARE and TACIS programmes and for TEMPUS, the Foundation manages the funds made available to it by the Commission. Subsidies amounting to a significant sum (around ECU the 380 million Foundation’s budget, but in separate accounts. Moreover, the total balance (ECU 56,6 million as at 31 December 1997) of the thirty-odd bank accounts used by the Foundation to manage these transactions is not shown in the financial statements of the Foundation. in 1997) are not recorded in The Court would once again ask the Foundation (3) to include the transactions relating to the management of these funds in its own accounts. New system payments for the procedures for implementing 1. 6. The use of the new SI 2 computer system has improved the speed and efficiency of all the entries for commitments and payment orders. 1. 7. Nevertheless, it would be desirable for SI 2, which currently only covers budgetary management, to be extended to include the general accounts as soon as possible. Inventory (1) OJ L 131, 23. 5. 1990, p. 4. (2) As required under Article 11(3) of Council Regulation (EEC) No 1360/90, the detailed accounts for all the Foundation’s revenue and expenditure for the financial year 1997 were drawn up on 31 March 1998 and forwarded to the Foundation’s Governing Board, the Commission and the Court of Auditors. These accounts were received by the Court on 17 April 1998. A summarised version of these financial statements is presented in the tables attached to this report. 1. 8. During its verification of the physical existence of the goods shown in the inventory, the Court found that obsolete computer equipment (PCs, printers, etc. ) with an inventory value of around ECU 0,3 million was stored on the Foundation’s premises. The Agency should sell or scrap the obsolete equipment. (3) OJ C 393, 29. 12. 1997, p. 41. 28. 12. 98 EN Official Journal of the European Communities C 406/39 This report was adopted by the Court of Auditors in Luxembourg at its meeting of 5 November 1998. For the Court of Auditors Bernhard FRIEDMANN President C 406/40 EN Official Journal of the European Communities 28. 12. 98 Table 1 Balance sheet for the financial year 1997 Assets 1997 1996 Liabilities 1997 1996 (ECU 1 000) Fixed assets Equipment and furniture Supplies 1 892 13 1 905 1 562 16 1 578 Sub-total Fixed capital Own capital Out-turn to be carried over Sub-total 1 905 2 212 4 117 1 578 1 794 3 372 Current assets Sundry accounts receivable Commission subsidy (1995) Commission subsidy (1996) 10 10 12 543 431 986 Sub-total Cash accounts Banks - demand accounts Imprest account 4 459 1 860 6 319 6 088 6 088 Sub-total Short-term liabilities Non-automatic carry-overs Commission subsidy 1996 Automatic carry-overs of appropriations Payments in progress Deductions from salaries Sundry accounts payable Accounting officers’ allowances Recovery orders Revenue allocated 665 431 3 288 350 56 432 4 9 45 2 727 658 311 391 4 10 16 Sub-total 4 117 5 280 Total assets 8 234 8 652 Total liabilities 8 234 8 652 Source: Prepared by the Court of Auditors on the basis of the Foundation’s data. 28. 12. 98 EN Official Journal of the European Communities C 406/41 Table 2 Revenue and expenditure account for the financial year 1997 (ECU 1 000) 1997 1996 15 303 391 3 262 16 069 132 27 23 Total revenue 15 959 16 251 Revenue Subsidy received from the Commission Bank interest Sundry revenue Exchange-rate profits Expenditure Staff expenditure — Title I Payments Appropriations carried over Buildings, equipment and miscellaneous administrative expenditure — Title II Payments Appropriations carried over Operating expenditure — Title III Payments Appropriations carried over Exchange-rate losses 9 231 303 1 928 552 1 383 1 872 128 8 277 439 1 743 711 1 201 2 802 1 030 Total expenditure 15 397 16 203 Out-turn for the financial year Out-turn carried over from the previous year Commission repayments 1995 subsidy cancelled Appropriations carried over from the previous year and cancelled 562 1 794 0 − 543 399 48 1 566 − 184 364 Out-turn to be carried over 2 212 1 794 Source: Prepared by the Court of Auditors on the basis of the Foundation’s data. C 406/42 EN Official Journal of the European Communities 28. 12. 98 FOUNDATION’S REPLY PHARE, TACIS and TEMPUS subsidies not included in the budget New system payments for the procedures for implementing The Court renewed its request previously included in its report on the 1996 accounts that all funds transferred by the Commission to the Foundation be incorporated into the Foundation’s own accounts. On 27 October 1998 a meeting between the Court of Auditors, the Commission (DG XX, DG XXII) and the Foundation took place. Agreement was reached on the inclusion of all monies handled by the Foundation in the accounts. All amounts that are integrated in the accounts of the Foundation will also be shown in the annual report. It was furthermore agreed that all amounts should be visible in the budget document. While the subsidy to the Foundation will be subject to the approval of the Governing Board, all further amounts, namely those in context with technical assistance and conventions agreed with the Commission, will be shown in an Annex to the budget document for information and thus enhance visibility and transparency for all those who are involved in the the management, control and audit of Foundation. The Court refers to the improvements brought about by the introduction of SI 2, the new budgetary system, and suggests that it be extended to all general accounting issues. The Foundation welcomes the positive views of the Court and agrees with the Court’s recommendations. My staff have already started working towards this goal. A project plan and specifications have already been drawn up and the computer development work is underway. Data transfer from the ledger data will be accessible. It is planned that the new system will be in place by early 1999. Inventory The Court addressed the question of obsolete computer and other equipment. A procedure was agreed between the Foundation and Financial Control. In compliance with this a non-profit making organisation was selected to re-employ the equipment. The equipment will be handed over to the Organisation in the first week of November and consequently the inventory will be adjusted at that time