Report on the financial statements of the European Centre for the Development of Vocational Training (Cedefop - Thessaloniki) for the financial year ended 31 December 1998, together with the Centre's replies
C 372/26 EN Official Journal of the European Communities 22. 12. 1999 on the financial statements of the European Centre for the Development of Vocational Training (Cedefop-Thessaloniki) for the financial year ended 31 December 1998, together with the Centreís replies REPORT (1999/C 372/05) CONTENTS Paragraph reference THE COURT S OPINION. 1 to 4 MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUDGET OF THE EUROPEAN CENTRE FOR THE DEVELOPMENT OF VOCATIONAL TRAINING FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 1998. 5 to 12 General and budget accounts. Imprest accounts. Buildings. Recovery orders. 5 6 7 8 Staff. 9 to 10 VAT. Contracts. 11 12 Tables 1 and 2. The Centreís replies. Page 27 27 27 27 27 27 27 28 28 29 31 22. 12. 1999 EN Official Journal of the European Communities C 372/27 THE COURT S OPINION 1. This report is addressed to the Council and the European Par- liament in accordance with Article 12 of Council Regulation (EEC) No 337/75 (1), as amended by Council Regulation (EEC) No 1946/93 (2). 2. The Court has examined the financial statements of the Euro- pean Centre for the Development of Vocational Training for the financial year ended 31 December 1998. In accordance with the provisions of Article 18(1) of Council Regulation (EEC) No 1416/76 (3), as amended by Council Regulation (EEC) No 1948/93 (4) the budget was implemented at the responsibility of the Management Board. This responsibility included the drawing-up and presentation of the financial statements (5) in accordance with the internal financial provisions provided for in Articles 65, 67 and 68 of Council Regulation (EEC) No 1948/93 amending Council Regulation (EEC) No 1416/76. The Court of Auditors is required under Article 248 of the Treaty establishing the European Community to audit those 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 applied such 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. the Centre has still not completely developed and installed FIBUS (a custom-made system). Apart from the delays in introducing it and an absence of validation, the system is affected by a shortage of documentation and the only person who knows the system is the designer. The amount spent on developing this system dur- ing the last two years was approximately ECU 0,2 million. Imprest accounts 6. The Centre continues to make payments (especially in the case of Title I) through imprest accounts (ECU 6 million). It would be preferable for the use of imprest accounts to be reduced. Buildings 7. According to the latest information from the Centre, owner- ship of the land on which its offices are located will be transferred to the Centre free of charge by the Greek Government when the building work is completed. 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. Recovery orders In future the Centre should establish all orders for recovery of 8. revenue when the debt falls due. MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUDGET OF THE EUROPEAN CENTRE FOR THE DEVELOPMENT OF VOCATIONAL TRAINING FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 1998 Staff General and budget accounts 5. At present the Centre uses an old and complex system for drawing up the budget and the balance sheet. Despite its efforts, 9. The determination of the financial entitlements of members of staff does not systematically form the subject of decisions by the Appointing Authority. (1) OJ L 39, 13. 2. 1975, p. 1. (2) OJ L 181, 23. 7. 1993, p. 11. (3) OJ L 164, 24. 6. 1976, p. 1. (4) OJ L 181, 23. 7. 1993, p. 15. (5) Pursuant to Article 1 of Council Regulation (EEC) No 1948/93 amend- ing Regulation (EEC) No 1416/76 the accounts for all the Centreís rev- enue and expenditure for the financial year 1998 were drawn up on 29 March 1999 and were sent to the Commission and the Court of Auditors and the latter received them on 30 March 1999. The sum- mary form of those financial statements is published in the tables annexed to this report. 10. Moreover, because the administration has not systematically reviewed the entitlements acquired, the Court found that: (a) individual files do not always contain certain information that is essential for calculating entitlements; (b) some allowances may be paid after the end of the period for which they were granted or without supporting documents. C 372/28 EN Official Journal of the European Communities 22. 12. 1999 VAT Contracts 11. The requests for refund of VAT for 1998 had not been pre- pared at the time of the audit (May 1999). 12. As regards calls for tender and contract management, some reorganisation is called for. There were delays in issuing some calls for tender. This report was adopted by the Court of Auditors in Luxembourg at the Court meeting of 11 November 1999. For the Court of Auditors Jan O. KARLSSON President 22. 12. 1999 EN Official Journal of the European Communities C 372/29 Revenue and expenditure account for the financial years 1998 and 1997 Table 1 Assets 1998 1997 Liabilities 1998 1997 (ECU 1 000) Fixed assets (1) Stocks Current assets Subsidy from the Commission Sundry accounts receivable Recoverable VAT Expenditure to be charged Cash accounts Bank - demand accounts Imprest account 1 721 28 1 501 22 Fixed capital Own capital Balance for the financial year 1 749 697 Subtotal 2 446 Subtotal 0 63 230 628 921 5 025 365 Subtotal 5 390 3 989 53 679 335 5 056 331 442 773 Current liabilities Social liabilities VAT Sundry accounts payable Automatic carryovers of appropriations Suspense accounts Sums to be reused Payments in progress Sums to be collected - imprest account Subtotal 22 230 377 3 928 4 557 832 205 20 Subtotal 1 057 1 523 0 1 523 26 0 767 4 829 5 622 107 100 0 207 Total assets 8 060 7 352 Total liabilities 8 060 7 352 (1) An amount of ECU 5,4 million has already been paid for the construction of the building (estimated final cost approximately ECU 6,8 million). Source: Prepared by the Court of Auditors on the basis of data from the Centre. C 372/30 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 12 943 10 0 Total revenue 12 953 Revenue Subsidy from the Commission Miscellaneous revenue Earmarked revenue Expenditure Staff expenditure - Title I of the budget Payments Appropriations carried over 5 421 599 878 528 2 433 2 776 Buildings, equipment and miscellaneous administrative expenditure - Title II of the budget Payments Appropriations carried over Operating expenditure - Title III of the budget Payments Appropriations carried over Total expenditure 12 635 Out-turn for the financial year Balance carried over from the previous financial year Amount refunded to the Commission Appropriations carried over from the previous financial year which lapse Exchange rate differences Recovery orders to be cancelled Source: Prepared by the Court of Auditors on the basis of data from the Centre. Balance for the financial year 318 0 0 320 59 0 697 13 522 152 134 13 808 5 579 541 981 2 067 2 544 2 219 13 931 - 123 1 623 - 1 623 199 - 61 - 15 0 22. 12. 1999 EN Official Journal of the European Communities C 372/31 REPLIES OF CEDEFOP Cedefop considers that this preliminary report is generally posi- tive and wishes to thank the Court of Auditors. the appointing authority (Director) for signature. The sheets will be placed in a special section of the personal file so as to make them more accessible and transparent. The nature of the Courtís observations makes it possible for the Management Board of the Centre to give a direct reply. The Man- agement Board will follow the structure of the observations and conclusions of the Court. The numbering of the annotated para- graphs corresponds to the numbering used in the Courtís report. General and budget accounts 5. The Centre has appreciably accelerated and intensified its efforts to complete this project since last year. All necessary resources, including in terms of staff, have been deployed in order to be able to finalise the experimental operation of the new sys- tem by the end of 1999. The test phase to perfect the system is currently under way. Parallel application with the current system should cover the first half of the year 2000. Thus FIBUS will be in full and exclusive operation from summer 2000. Throughout this procedure there will be constant collaboration with the compe- tent services of the Commission (in particular Financial Control). Imprest accounts 6. The Centre has already taken the necessary steps to reduce the payments made through imprest accounts. Indeed, since Febru- ary 1999 salaries have been paid through the accounting system, which means that the volume of transactions passing through the imprest accounts has been reduced almost by half. Recovery orders 8. The Centre has taken note of the Courtís remarks and has already introduced appropriate measures for this purpose. In future, Excel sheets will be created for all these cases and this will continue until FIBUS has also integrated this aspect and has become fully operational. 10. The information and supporting documents mentioned by the Court are available to the Administration, which will in future ensure regular monitoring and updating. Staff management will be updated more often by checking the accuracy of all staff data. As indicated above, individual entitlements (including those of a financial nature) will form the subject of formal decisions that will be revised annually. VAT 11. Most of the requests for refund of VAT for 1998 (– 90 % of the total) were presented during June 1999. Because of the special procedures which have been adopted, there is a small delay with regard to Belgium, the Netherlands and Spain, but this will be rec- tified in the course of summer 1999. Contracts 12. The Centre has already recognised this necessity for change and at the end of 1998 it recruited a specialist with long years of Community experience in this field. Reorganisation began with the aim of setting up a ácontract managementí unit in the Admin- istration. An efficient electronic system is being developed, par- ticularly with a view to improving the management and follow-up of study contracts, and its integration into FIBUS is currently well advanced. Since this new ácontract managementí unit was set up (early 1999), all calls for tender relating to the sole occupation of the new building from September 1999 (two relating to equipment (audio- visual conference equipment and security systems), two relating to long-term services (cleaning and security) and one to the car- rying out of the move) have been given priority in order to make up the delay signalled by the Court. Others, relating to a new sur- vey of the market for services continuously provided since the establishment of Cedefop in Thessaloniki (bank, travel agency, express courier, etc. ) will be launched in the coming months. Staff 9. In order to ensure that the Courtís recommendation is sys- tematically followed, the Director has decided that the Adminis- tration will from now on be responsible for drawing up the sheets determining staff entitlements and that those sheets will then be forwarded, at the responsibility of the Head of Administration, to Finally, the responsibility for supervision and continuation of a coherent approach to the execution of all the contracts covering operations and services of a horizontal nature, including docu- mentation, publications, data processing, etc. , will be progres- sively put under the administrative responsibility of this new unit, which will then cover this aspect of operations