Report on the financial statements of the Translation Centre for the bodies of the European Union (TCBEU - Luxembourg) for the financial year ended 31 December 1998, together with the Centre's replies
C 372/20 EN Official Journal of the European Communities 22. 12. 1999 on the financial statements of the Translation Centre for the bodies of the European Union (TCBEU-Luxembourg) for the financial year ended 31 December 1998, together with the Centreís replies REPORT (1999/C 372/04) CONTENTS Paragraph reference THE COURT S OPINION. 1 to 4 MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUDGET OF THE TRANSLATION CENTRE FOR BODIES OF THE EUROPEAN UNION FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 1998. 5 to 8 Budget. Cash position. Analytical accounts. Premises. 5 6 7 8 Tables 1 and 2. The Centreís replies. Page 21 21 21 21 21 21 23 25 22. 12. 1999 EN Official Journal of the European Communities C 372/21 THE COURT S OPINION 1. This report is addressed to the Management Board of the Translation Centre for the bodies of the European Union in con- formity with Article 14(4) of Council Regulation (EC) No 2965/94 (1). 2. The Court has examined the financial statements of the Trans- lation Centre for the bodies of the European Union for the finan- cial year ended 31 December 1998. In accordance with Article 14(1) of Council Regulation (EC) No 2965/94, the budget was implemented at the responsibility of the Director. This responsi- bility included the drawing-up and presentation of the financial statements (2) in accordance with the internal financial provisions, as provided for in Article 15 of Regulation (EC) No 2965/94. The Court of Auditors is required under Article 248 of the Treaty establishing the European Community to audit these accounts. 3. The Court performed its audit in accordance with its audit policies and standards. These have been adapted from generally accepted international auditing standards to reflect the specific characteristics of the Community context. 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. 4. This examination has enabled the Court to obtain reasonable assurance that the annual accounts for the financial year ended 31 December 1998 are reliable and that the underlying transactions, taken as a whole, are legal and regular. MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUD- GET OF THE TRANSLATION CENTRE FOR THE BODIES OF THE EUROPEAN UNION FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 1998 so that the allocations for the translation work to be entrusted by the various bodies and institutions to the TCBEU under the regu- lations or by virtue of contracts can be accurately identified. The main advantage of this would be to make it possible to carry out a reconciliation of the expenditure forecast of the client bodies with the corresponding revenue forecast of the TCBEU, and thus to correct certain discrepancies detected in 1998 and to draw up more realistic budgets in the future. Cash position 6. Since the Centre has never provided its Management Board with the quarterly cash position forecasts laid down by its Finan- cial Regulation, it has not been possible to establish whether the level of the TCBEUís cash account is appropriate in view of actual needs. However, the Court observes that covering the Centreís obligations in a prudent manner does not justify the large amount of cash available nor the fact that it has almost doubled (from ECU 5,9 million as at 31 December 1997 to ECU 10,7 million as at 31 December 1998). Analytical accounts 7. In view of the considerable variations seen between the cost price of one page of translation, as set out in the draft budget esti- mates (ECU 76 per page) and as given by the data in the Centreís revenue and expenditure account for the financial year 1998 (ECU 65 per page (3)), the Court reiterates its previous recommenda- tion (4) that the TCBEU set up analytical accounts in order to be able to establish, by body and by type of work, the real cost of the various services that it provides. Budget Premises 5. It is recommended that the Centre should obtain from all the bodies concerned the information which it requires in order to improve the planning of the work to be carried out by the Centre, (1) OJ L 314, 7. 12. 1994, p. 1. (2) As required under Article 14(3) of Council Regulation (EC) No 2965/94, the accounts for all the Centreís revenue and expenditure for the financial year 1998 were drawn up on 24 March 1999 and forwarded to the Centreís Management Board, the Commission and the Court of Auditors. These accounts were received by the Court on 26 March 1999. A summarised version of these financial statements is presented in the tables attached to this report. 8. There was no change during 1998 in the situation observed by the Court in 1997 (5): the TCBEU is still occupying premises made available by the Luxembourg authorities, but no agreement has been made between the parties on the basic tenancy condi- tions applicable to these premises (amount of any possible rent, surface area and facilities rented, duration of the lease, etc. ). (3) See paragraph 4 of the Analysis of financial managementí chapter in the Revenue and expenditure accountí. (4) OJ C 393, 29. 12. 1997, paragraph 1. 6, p. 47 and OJ C 406, 28. 12. 1998, paragraph 1. 6, p. 33. (5) OJ C 406, 28. 12. 1998, paragraph 1. 13, p. 34. C 372/22 EN Official Journal of the European Communities 22. 12. 1999 This report was adopted by the Court of Auditors in Luxembourg at the Court meeting of 9 September 1999. For the Court of Auditors Jan O. KARLSSON President 22. 12. 1999 EN Official Journal of the European Communities C 372/23 Table 1 Balance sheet as at 31 December 1998 and 1997 Assets 1998 1997 Liabilities 1998 1997 (ECU 1 000) Fixed assets Equipment and furniture Computer equipment Intangible fixed assets Current assets Balance of advances to be received Sundry accounts receivable Subtotal 95 220 46 361 977 10 71 156 48 275 693 - Fixed capital Own capital Net result Current liabilities Automatic carry-overs Advances received Balance of advances to be received Sundry accounts payable Subtotal 987 693 Subtotal Cash accounts Bank accounts Imprest accounts 10 711 2 Subtotal 10 713 5 915 2 5 917 Suspense accounts Revenue for reuse 361 5 062 275 2 666 Subtotal 5 423 2 941 2 461 2 843 977 344 6 625 3 007 - 693 241 3 941 13 3 Source: Prepared by the Court of Auditors on the basis of data provided by the Centre. Total assets 12 061 6 885 Total liabilities 12 061 6 885 C 372/24 EN Official Journal of the European Communities 22. 12. 1999 Revenue and expenditure account for the financial years 1998 and 1997 Table 2 (ECU 1 000) 1998 1997 - 14 743 245 3 300 9 809 - 118 Total revenue 14 991 10 227 Revenue Contribution from the general budget Own revenue Bank interest Sundry revenue Expenditure Staff expenditure - Title I of the budget Payments Appropriations carried over 9 702 1 079 675 1 382 Buildings, equipment and various admin. expenditure items - Title II of the budget Payments Appropriations carried over Total expenditure 12 838 Out-turn for the financial year Balance carried over from the previous financial year Repayment of the excess received under previous financial years Appropriations carried over from the previous financial year, which lapsed Exchange rate differences Source: Prepared by the Court of Auditors on the basis of data provided by the Centre. Balance for the financial year 2 153 2 666 - 653 880 16 5 062 5 217 2 171 441 836 8 665 1 562 464 - 649 - 9 2 666 22. 12. 1999 EN Official Journal of the European Communities C 372/25 REPLIES OF THE TRANSLATION CENTRE Budget Analytical accounts In accordance with Article 4 of Council Regulation (EC) No 2965/94 setting up a Translation Centre for the bodies of the European Union, a representative of each of the bodies, agencies, offices and institutions has a seat on the Management Board and participates in the budget procedure. These representatives inform the management of the Centre of their estimated requirements at Management Board meetings. To complement this procedure, the Centre will put in place a written consultation procedure, in order to avoid discrepancies and draw up more realistic budgets. Nev- ertheless, as the bodies and institutions have their own budget approval and implementation procedures, the Centre is not in a position to guarantee, by itself, either the consistency of the data or whether they are realistic. Cash position The large amount of cash in hand results from the fact that the Centre was still in its start-up phase. During this period, require- ments and the amount of contributions were uncertain. The Translation Centre will provide its Management Board with the cash position forecasts laid down in its Financial Regulation and will take appropriate measures to guarantee that obligations are covered in a prudent manner. As indicated in the reply to the report on the financial year ended 31 December 1997, the Centre is aware of the utmost importance attaching to the establishment of an effective accounting system for expenditure, which should be incorporated into the account- ing system for the budget (SI 2) and the general accounts. In col- laboration with other agencies, the Centre introduced the SI 2 sys- tem during the first quarter of 1999; general and analytical accounts modules are currently being developed. The Centre is to strengthen the finance section, in order to ensure that it can respond more efficiently to information needs. Premises As regards the Nouvel HØmicycleí building, the Luxembourg authorities did not submit a draft tenancy agreement to the Cen- tre until 29 October 1998. The Centreís ACPC had a number of comments to make on this draft, which were forwarded to the Luxembourg authorities on 17 December 1998. The Centre is still waiting for a response. Furthermore, on 10 February 1999, the Centre submitted to the same authorities draft headquarters and security agreements to be concluded between the Centre and the Grand Duchy of Luxembourg. Finally, the Centre wrote to the Luxembourg authorities on 26 March 1999, reminding them of these outstanding matters