Report on the financial statements of the European Agency for Safety and Health at Work (EASH - Bilbao) for the financial year ended 31 December 1998, together with the Agency's replies
22. 12. 1999 EN Official Journal of the European Communities C 372/1 I (Information) COURT OF AUDITORS on the financial statements of the European Agency for Safety and Health at Work (EASH-Bilbao) for the financial year ended 31 December 1998, together with the Agencyís replies REPORT (1999/C 372/01) CONTENTS Paragraph reference Page THE COURT S OPINION. 1 to 4 MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUDGET OF THE EUROPEAN AGENCY FOR SAFETY AND HEALTH AT WORK (EASH - BILBAO) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 1998. 5 to 11 Financial statements and accounting. 5 to 6 Implementation of the budget/Principle of annuality. 7 to 8 VAT. Calls for tender/Advisory Committee on Procurements and Contracts (ACPC). Premises. 9 10 11 Tables 1 and 2. The Agencyís replies. 2 2 2 2 2 2 2 4 6 C 372/2 EN Official Journal of the European Communities 22. 12. 1999 THE COURT S OPINION 1. This report is addressed to the Management Board of the European Agency for Safety and Health at Work in accordance with Article 14(4) of Council Regulation (EC) No 2062/94 (1). 2. The Court has examined the financial statements of the Euro- pean Agency for Safety and Health at Work for the financial year ended 31 December 1998. In accordance with Article 14(1) of Council Regulation (EC) No 2062/94, the budget was imple- mented under the responsibility of the Director. This responsibil- ity included the drawing-up and presentation of the financial statements (2), in accordance with the internal financial provi- sions, as provided for in Article 15 of Council Regulation (EC) No 2062/94. 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 auditing 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. 6. The Agencyís accounts department should balance the accounts regularly and carry out the reconciliations and analyses of the various balances which the implementing provisions for its financial regulation provide for. Implementation of the budget/Principle of annuality 7. Out of a total of ECU 1,05 million of appropriations auto- matically carried over from the financial year 1997, only ECU 0,65 million (62 %) was actually used. The remaining 38 % (ECU 0,4 million) was cancelled. The total amount of cancellations does not comply with the nature of automatic carry-overs, which ought to correspond to obligations to third parties remaining unfulfilled at the end of the financial year. 8. Commitments automatically carried over to the financial year 1999 (ECU 1,9 million) were examined, and in the case of some carry-overs it was not possible to confirm that they were justi- fied. The Agencyís practice concerning carry-overs of appropria- tions does not conform to the principle of annuality enshrined in its Financial Regulation. VAT 9. The Agency has still not recovered the VAT paid during the financial years 1996 and 1997 (ECU 145 000). MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUDGET OF THE EUROPEAN AGENCY FOR SAFETY AND HEALTH AT WORK (EASH-BILBAO) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 1998 Calls for tender/Advisory Committee on Procurements and Con- tracts (ACPC) Financial statements and accounting 10. The deadline for submitting tenders should be at least 40 days, to enable more tenders to be received. Calls for tender should lay down clearly defined criteria, which should be used as a basis for the ACPCís assessments. 5. The Agency did not provide any supporting documents to substantiate a sum of ECU 5 000 which appears in the liabilities section of the end-of-year balance sheet under the description Sundry accounts dueí. Premises (1) OJ L 216, 20. 8. 1994, p. 1. (2) As required under Article 14(3) of Council Regulation (EC) No 2062/94, the accounts for all the Agencyís revenue and expenditure for the financial year 1998 were drawn up on 25 March 1999 and forwarded to the Agencyís Management Board, the Commission and the Court of Auditors. These accounts were received by the Court on 9 April 1999. A summarised version of these financial statements is presented in the tables attached to this report. 11. The landlord has negotiated a bank guarantee to ensure that the Agency fulfils its obligations in relation to its tenancy agree- ment. In general, this type of guarantee is not needed for a Euro- pean Union body. In order to prevent it being extended, it would be advisable to restart negotiations before it expires. 22. 12. 1999 EN Official Journal of the European Communities C 372/3 This report was adopted by the Court of Auditors in Luxembourg at the Court meeting of 7 October 1999. For the Court of Auditors Jan O. KARLSSON President C 372/4 EN Official Journal of the European Communities 22. 12. 1999 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 Movable equipment Computer equipment Supplies Office equipment Subtotal 405 26 273 704 295 30 235 560 9 15 Debts receivable in the short term VAT to be recovered Sundry accounts receivable 145 Cash accounts Bank - demand accounts Imprest account Cash Subtotal 145 3 067 61 1 3 129 Subtotal Total assets 3 987 Source: Prepared by the Court on the basis of data from the Agency. 152 5 157 1 799 58 1 1 858 2 590 Fixed capital Own capital Balance for the financial year 713 668 575 731 Subtotal 1 381 1 306 Short-term liabilities Non-automatic carry-overs of appropriations Automatic carry-overs Sundry accounts due Tax and social security debts VAT Subtotal Transit accounts Revenue for reuse 74 1 048 10 152 1 284 270 1 925 174 31 145 2 545 61 Total liabilities 3 987 2 590 22. 12. 1999 EN Official Journal of the European Communities C 372/5 Revenue and expenditure accounts for the financial years 1998 and 1997 Table 2 (ECU 1 000) 1998 1997 Revenue Commission subsidy Other subsidies Interest Expenditure Staff expenditure - Title I of the budget Payments Appropriations carried forward Total revenue Buildings, equipment and various items of operating expenditure - Title II of the budget Payments Appropriations carried forward Operating expenditure - Title III of the budget Payments Appropriations carried forward Total expenditure Out-turn for the financial year Balance carried over from the previous financial year Appropriations carried over from the previous financial year and cancelled Exchange rate differences Source: Prepared by the Court of Auditors on the basis of data from the Agency. Balance for the financial year 4 196 180 101 4 477 1 486 27 589 148 686 2 020 4 956 - 479 731 402 14 668 2 592 192 71 2 855 808 28 562 358 573 736 3 065 - 210 830 144 - 33 731 C 372/6 EN Official Journal of the European Communities 22. 12. 1999 REPLIES FROM THE EUROPEAN AGENCY FOR SAFETY AND HEALTH AT WORK 1. The Court of Auditors visited the European Agency for Safety and Health at Work from 14 to 18 December 1998 and from 3 to 7 May 1999 and carried out the audit for the financial year 1998. 2. 3. In order to facilitate the work of the Court, the accounts and all relevant supporting documents were made available to the Court. The personnel files and the contracts concluded were also presented. In its letter of 24 June 1999, the Court communicated to the Agency its observations that were likely to appear in its report on the financial statements of the Agency for the financial year ended 31 December 1998. The Court requested the Agency to submit its comments on these observations. 4. For this purpose, the Agency would like to comment on the following paragraphs. Financial statements and accounting 5. Observation relating to third-party creditors The balance of suppliersí accounts indicated by the Court of Audi- tors, i. e. ECU 5 000 (3 % of the total for the suppliersí accounts) is constituted by a number of arrears which are difficult to ident- ify due to the large number of movements on the suppliersí accounts. The Agency undertakes to provide, at the end of the financial year 1999, a breakdown by supplier of the Sundry accounts dueí entry in the balance sheet; this measure is included in the review of the progress achieved during the financial years 1998 and 1999. 6. Observation relating to monthly balances of accounts Concerning monthly balances of accounts, the Agency fully sup- ports the Court of Auditorsí observation, which will be imple- mented through the establishment of procedures and appropri- ate measures during the financial year 1999. These last payments will be covered by appropriations commit- ted under the budget for 1999. 8. The Agency will endeavour in the future to no longer carry over appropriations under the conditions indicated by the Court. VAT 9. The Agency, following the advice of the Spanish tax office, is in the process of launching procedures to recover VAT directly from suppliers. The first reimbursements are expected before the end of the year. Calls for tender/Advisory Committee on Procurements and Contracts (ACPC) 10. The Agency will follow the Courtís recommendations on this matter by setting deadlines for submitting tenders of at least 40 days to enable all tenders to be submitted to the ACPC for its opinion. Implementation of the budget/Principle of annuality Premises 7. The cancellations relate to appropriations earmarked for mea- sures which have been cancelled in full agreement with the con- tracting parties, for whom every obligation was met. Other can- cellations concern appropriations committed to cover the last payment of the contracts with the focal points which had not been paid due to the delay in the implementation of the projects. 11. The tenancy agreement is subject to Spanish legislation and local customs, which make provision for the constitution of a bank guarantee. To follow up the Courtís recommendation, the Agency will raise the subject of this tenancy requirement at the negotiations to renew the lease at the end of the year 2000