Report on the financial statements of the Community Plant Variety Office (CPVO-Angers) for the financial year ended 31 December 1997, together with the Office's reply
28. 12. 98 EN Official Journal of the European Communities C 406/49 on the financial statements of the Community Plant Variety Office (CPVO — Angers) for the financial year ended 31 December 1997, together with the Office’s reply REPORT (98/C 406/09) 1. 1. This report is addressed to the Management Board of the Community Plant Variety Office in conformity with Article 111(2), of Council Regulation (EC) No 2100/94 (1). MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUDGET OF THE COMMUNITY PLANT VARIETY OFFICE FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 1997 the responsibility of 1. 2. The Court has examined the financial statements of the Community Plant Variety Office for the financial year ended 31 December 1997. In accordance with Article 110 of Council Regulation (EC) No 2100/94, the budget was implemented on the Office’s President. This responsibility included the drawing-up and presentation of in accordance with the internal financial provisions, as provided for in Article 112 of Council Regulation (EC) No 2100/94. The Court of Auditors is required under Article 188c of the Treaty establishing the European Community to examine these accounts. financial statements (2) the 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. Budgetary and general accounts 1. 5. The delays in the monitoring of the accounts, which had already been noted last year, have still not been dealt with. 1. 6. Throughout the year, the general accounts were several months behind. Reconciliation with the budgetary accounts could only be carried out well after the latter had been closed. 1. 7. All the revenue for the financial year was included under one single recovery order at the end of the financial year. Technical activities 1. 8. The delay in establishing the procedure for verifying the eligibility of variety designations and, in particular, in drawing up the contracts with the national offices concerned prevented the issuing of several hundred additional protection certificates in 1997. 1. 9. The Management Board has still not issued a Decision concerning the factors to be taken into consideration for the calculation of the costs of the technical examinations and the method for calculating them (to be used as the basis for determining the remuneration of the examinations in question). the offices responsible for Other observations (1) OJ L 227, 1. 9. 1994, p. 27. (2) As required under Article 111(2), of Council Regulation (EC) No 2100/94, the accounts for all the Office’s revenue and expenditure for the financial year 1997 were drawn up on 27 March 1998 and forwarded to the Office’s Management Board, the Commission and the Court of Auditors. These accounts were received by the Court on 31 March 1998. A summarised version of these accounts is presented in the tables attached to this report. 1. 10. The Office’s budget has not been published in the Official Journal of the European Communities. 1. 11. The procedures for the implementation of the Office’s Financial Regulation have not yet been adopted. 1. 12. The Annual Report concerning the financial year 1996 has still not been published. C 406/50 EN Official Journal of the European Communities 28. 12. 98 Separation of duties 1. 13. Although there have been improvements, the principle of the separation of the duties of authorising officer and accounting officer is still not fully complied with. The accounting officer continues to help with drawing up or making prior checks on budgetary documents (commitment proposals, payment orders, recovery orders, the regularisation of imprests). 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 28. 12. 98 EN Official Journal of the European Communities C 406/51 Table 1 Balance sheet as at 31 December 1997 Assets 1997 1996 Liabilities 1997 1996 (ECU 1 000) Fixed assets Equipment and furniture Computer equipment Intangible fixed assets Sub-total Current assets VAT Sundry accounts receivable Administrative expenditure — Title II 40 68 6 114 41 5 46 15 35 2 52 0 20 20 Cash accounts Banks - demand accounts Imprest account 6 068 150 6 218 4 498 150 4 648 Sub-total Fixed capital Own capital Balance for the financial year Sub-total 114 5 131 5 245 52 3 885 3 937 Short-term liabilities Automatic carry-overs Applicants Sundry accounts payable VAT 916 132 43 41 Sub-total 1 133 472 283 28 0 783 Total assets 6 378 4 720 Total liabilities 6 378 4 720 NB: The amounts are rounded up/down to the nearest thousand and always represent the rounding-up/down of each exact figure and not the sum of the roundings-up/down. Source: Prepared by the Court of Auditors on the basis of the Office’s data. C 406/52 EN Official Journal of the European Communities 28. 12. 98 Table 2 Revenue and expenditure account for the financial year 1997 (ECU 1 000) 1997 1996 Revenue Subsidy received from the Commission Charges collected (1) Bank interest Expenditure Staff expenditure — Title I Payments Appropriations carried forward Buildings, equipment and miscellaneous administrative expenditure — Title II Payments Appropriations carried forward Operating expenditure — Title III Payments Appropriations carried forward Miscellaneous expenditure — Title X (Repayment 1995 Commission subsidy) Payments Miscellaneous expenditure outside the budget Exchange-rate losses 0 3 959 206 Total revenue 4 165 0 1 825 197 2 022 507 9 195 21 42 442 0 8 1 392 49 374 80 147 787 300 12 Total expenditure 3 142 1 224 Out-turn for the financial year Out-turn carried over from the previous year Appropriations carried over from the previous financial year and cancelled 1 022 3 885 223 798 3 065 22 Out-turn to be carried over 5 131 3 885 (1) This total includes an amount of ECU 78 800 collected in 1998. NB: The amounts are rounded up/down to the nearest thousand and always represent the rounding-up/down of each exact figure and not the sum of the roundings-up/down. Source: Prepared by the Court of Auditors on the basis of the Office’s data. 28. 12. 98 EN Official Journal of the European Communities C 406/53 REPLY OF THE OFFICE 1. Delay in the monitoring of the accounts Various factors were responsible for the delays in the monitoring of the accounts in 1997, for example: the unsettling nature of the structural changes within the Office; the successive changes in location and the ensuing staff turnover; the absence of accounting software (for the general accounts and budget accounts) matching Community requirements (double-entry book-keeping); the turnover of staff; Community procedures because of the complexity of the systems for managing fees; and the rapid expansion of the Community plant variety protection system, etc. limited number and high (budget Both the general accounts and the budget accounts are now monitored. Partially-automated data entry systems have been developed for the general accounts and all the necessary measures have been taken to introduce the S1 2 system 1999. Furthermore, steps are being taken to link, via the computer, the accounting and the programme for managing plant variety rights (PVR), to recruit an assistant accounting officer and to put in place a system of monthly income recovery orders, and accounting reconciliations are now undertaken on a regular basis. accounting) January in 2. Delays linked to technical activities (a) Contracts with the national offices The need to draw up contracts governing the procedure for verifying the eligibility of variety designations was discussed with the national offices concerned. They all approved the content of the draft versions which were submitted. The final version of these contracts has been translated so that they can soon be signed by the offices concerned. In any event, the offices have already begun to draw up verification procedures based on the draft contracts. The backlog which had initially occurred at this level as regards the granting of rights has now been absorbed. (b) Calculation of the verification costs At its meeting in April 1998, and based on the proposal tabled by the Office, the Administrative Council agreed to appoint an independent financial expert, following an invitation to tender, to evaluate the method used to calculate the costs of technical examinations carried out by the national offices concerned, a method largely formulated at the outset by the Office itself. At this meeting, the Office’s Administrative Council extended, until December 1999, the validity of its agreement on the ‘in-out’ principle whereby the amounts paid to examination offices for any work undertaken are based on the examination fees received by the Office. 3. Other failures to publish (a) The Office’s budget The Office’s amending budget for 1998, adopted by the Administrative Council at its extraordinary meeting on 10 June 1998, will be published by the Office for Official Publications of the European Communities in Luxembourg at the end of the second half of 1998. Indeed, with a view to reducing the costs of publication in the Official Journal of the European Communities, (Bilbao, Lisbon, Luxembourg, Angers) have agreed to publish their budgets in a joint publication, coordinated by the Translation Centre for the Bodies of the European Union. several agencies The publication containing the amending budget for 1998, will also include: — the 1996 budget; — the 1997 budget; — the preliminary budget for 1998; — the amending budget for 1998. (b) The procedures for implementing the Financial Regulation Work is currently underway on the draft Regulation laying down Detailed Rules for the Implementation of the Financial Regulation of the Office. Because of the specific nature of the Office, and hence of its Financial Regulation, great care is needed in drawing up this draft Regulation, and the experience already gained by other self-financing agencies operating along similar lines to the Office (Alicante, London) must be taken into account. The draft should be presented to the Office’s Administrative Council at its meeting in December 1998. C 406/54 EN Official Journal of the European Communities 28. 12. 98 (c) Annual Report for 1996 to the Office the European Communities for 1996 has been The draft Annual Report for Official translated and sent for Publications of publication in the second half of 1998. It should be noted that, in contrast to the 1995 Annual Report, the Report for 1996 includes a sizeable technical annex. comply fully with the principle of separation of duties. Proposals for expenditure commitments, payment orders and recovery orders (except for the fees) are generally prepared financial administrators. for electronic signature by the regard With imprest administrator and the assistant imprest administrator draw up the documents for regularisation. imprest accounts, the to 4. Inadequate separation of duties Following the gradual increase in staff in the Financial and Administrative Unit, it is now proving possible to Finally, the accounting officer is currently assisted by a temporary assistant book-keeper