Report on the financial statements of The European Agency for Safety and Health at Work (EASH-Bilbao) for the financial year ended 31 December 1997 together with the Agency's reply
28. 12. 98 EN Official Journal of the European Communities C 406/19 on the financial statements of The European Agency for Safety and Health at Work (EASH-Bilbao) for the financial year ended 31 December 1997 together with the Agency’s reply REPORT (98/C 406/03) 1. 1. This report is addressed to the Management Board of the European Agency for Safety and Health at Work in conformity with Article 14(4), of Council Regulation (EC) No 2062/94 (1). MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUDGET OF THE EUROPEAN AGENCY FOR SAFETY AND HEALTH AT WORK FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 1997 Budgetary and general accounts 1. 2. The Court has examined the financial statements of the European Agency for Safety and Health at Work for the In financial year ended 31 December 1997. accordance with Article 14(1), of Council Regulation (EC) No 2062/94, the budget was implemented on the responsibility of the Director. This responsibility included the drawing-up and presentation of financial statements (2) in accordance with the internal financial provisions, as provided for in Article 15 of Council Regulation (EC) No 2062/94. The Court of Auditors is required under Article 188c of the Treaty establishing the European Community to examine these accounts. 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. 5. As the Court observed in its report concerning the financial statements of the Agency for the financial year 1996 (3), the Agency’s budgetary accounts needed to be improved in a number of areas. The audit of the accounts for these shortcomings were still present. financial year 1997 showed that the 1. 6. No general accounts were kept during the reference year. The accounting officer, an auxiliary member of staff who was not recruited until November 1997, had to reconstruct the Agency’s assets entirely before drawing up the year-end balance sheet, which, moreover, had to be revised following the Court’s audit. 1. 7. The budgetary accounts continue to be kept by than appropriate means of a accounting software. They are not detailed enough and only allow a rudimentary monitoring of budgetary bookings. spreadsheet rather 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. Imprest accounts (1) OJ L 216, 20. 8. 1994, p. 5. (2) As required under Article 14(3), of Council Regulation (EC) No 2062/94, the accounts for all the Agency’s revenue and expenditure for the financial year 1997 were drawn up on 30 March 1998 and forwarded to the Agency’s Management Board, the Commission and the Court of Auditors. These accounts were received by the Court on 3 April 1998. A summarised version of these financial statements is presented in the tables attached to this report. 1. 8. Nearly 46 % of the payments for the financial year (ECU 1,4 million out of a total of ECU 3 million) were carried out via the Agency’s imprest account. This account was not cleared at regular intervals and this is how, in September 1997, a partial regularisation of payments came to be carried out en bloc for a total of ECU 1,1 million (despite the fact that the ceiling for the (3) OJ C 393, 29. 12. 1997, p. 58. C 406/20 EN Official Journal of the European Communities 28. 12. 98 account was fixed at ECU 25 000). Furthermore, the regularisation orders only mention the overall amount paid out, without giving details of the budgetary bookings concerned. 1. 9. The Decisions setting up the Agency’s imprest account should be revised so as to include, in particular, the establishment of an individual ceiling for payments. Call for tenders Other observations 1. 11. Contrary to the Agency’s Financial Regulation, neither the budget nor the organisation chart for the financial year 1997 was published in the Official Journal of the European Communities. 1. 12. Moreover, in the minutes of the November 1996 meeting, during which the Management Board examined the Agency’s draft budget, there is no mention of either the draft budget’s adoption or the content of the document that was adopted. 1. 10. The Agency should issue a call for tenders for the selection of new contractors. When the Agency was starting up, contracts with companies were made by private treaty or following restricted invitations to tender. 1. 13. The payments for the financial year amounted to only 46,1 % the current (ECU 1,94 million) of appropriations (ECU 4,21 million). Cancellations (ECU 1,15 million, or 27,3 %) and carry-overs to 1998 (ECU 1,12 million, or 26,6 %) therefore represented significant sums for the Agency’s 1997 budget. 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 406/21 Table 1 Balance sheet for the financial years 1996 and 1997 Assets 1997 1996 Liabilities 1997 1996 (ECU 1 000) Fixed assets Equipment and furniture Movable equipment Computer equipment Sub-total Supplies Office equipment Liquid assets Sundry accounts receivable Recoverable VAT and duties Cash accounts Banks — demand accounts Imprest account Cash Sub-total Sub-total Fixed capital Own capital (1) Balance for the financial year Sub-total 575 731 1 306 32 830 862 295 30 235 560 15 5 152 157 25 7 32 34 16 50 Short-term liabilities Appropriations carried over by Budgetary Authority Automatic carry-overs Sundry accounts due Recoverable VAT and duties Sub-total 74 1 048 10 152 1 284 234 969 76 16 1 295 1 799 58 1 1 858 1 975 100 2 075 Total assets 2 590 2 157 Total liabilities 2 590 2 157 (1) The amount corresponds to fixed assets and supplies. Source: Prepared by the Court on the basis of data from the Agency. C 406/22 EN Official Journal of the European Communities 28. 12. 98 Table 2 Balance for the financial years 1996 and 1997 Revenue Commission subsidy Sundry revenue Expenditure Staff — Title I Payments Appropriations carried forward Buildings, equipment, etc. — Title II Payments Appropriations carried forward Operating — Title III Payments Appropriations carried forward Total revenue (ECU 1 000) 1997 1996 2 592 263 2 855 3 000 36 3 036 808 28 562 358 573 736 292 81 884 630 319 Out-turn for the financial year Out-turn carried over from previous year Appropriations carried over and cancelled Exchange-rate differences Total expenditure 3 065 2 206 830 (210) 830 144 (33) Balance for the financial year 731 830 Source: Prepared by the Court on the basis of data from the Agency. 28. 12. 98 EN Official Journal of the European Communities C 406/23 REPLY 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 30 March to 3 April 1998 and carried out the audit for the financial year 1997. 2. 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. 3. In its letter of 15 July 1998, the Court informed the Agency of its main observations with a view to drawing up the report on the financial statements of the Agency (financial year 1997). 4. The Agency would like to comment on the following paragraphs: Budgetary and general accounts cases where payment foreseen. is urgent and could not be 1. 5 and 1. 7. As regards the use of the Excel programme for the budgetary accounts, the Agency is aware of the weaknesses of the system currently being used but it should be emphasised that the agencies are currently involved in a joint action to implement the SI 2 programme provided by the European Commission. It would not be appropriate to install a special system under these circumstances. the Court of Auditors, 1. 6. As observed by the accounting officer was recruited towards the end of the financial year, in mid-November 1997. The delay in his appointment explains the absence of any general accounts for 1997. The accounting officer had to reconstruct the year’s financial operations on the basis primarily of cash movements. In this context, the audit conducted by the Court, which also carried out the audit for the financial year 1996, allowed certain important adjustments to be made. The Agency now has up-to-date general accounts. Imprest accounts the regards imprest accounts, 1. 8. As suitable administrative staff were recruited in May 1997, which explains the global regularisation made in September. Since then, a new imprest administrator has been appointed. The amount of the imprest accounts has been reduced by half and the relevant budget items relate only to expenditure involving compulsory standing orders or Calls for tenders to follow is endeavouring 1. 10. The Agency the recommendation of the Court in issuing calls for tenders. It has therefore published two calls for expressions of interest (provision of services, technical assistance and supply products, and cooperation in the implementation of its work programme) and three open invitations to tender (security guards, travel agency, and telephonist and receptionist services). Finally, it has organised several restricted (security, helpdesk, selection of staff, training, receptionist, equipment storekeeping, medical services and travel insurance). invitations tender to Other comments 1. 11. In order to avoid this situation arising again with regard to the 1998 budget and to comply with the Financial Regulation, and with a view to reducing the very high costs of publication (between ECU 35 000 and ECU 50 000), the Agency put forward the proposal that the budgets of several agencies be published jointly. To this end, the Office for Official Publications of the European Communities has been asked to indicate the price and timetable for a joint publication involving six agencies. The Agency is concerned to ensure that its budget receives maximum publicity by publishing it on the Internet (http://www. eu-osha. es). C 406/24 EN Official Journal of the European Communities 28. 12. 98 1. 12. It is true that there is no documentary evidence to show that the Administrative Board of the Agency approved the 1996 budget. In order to forestall comment in this regard it was agreed, at the meeting of the Bureau of the Administrative Board on 5 and 6 June 1997, that the minutes of meetings would include, in addition to the account of the discussions at meetings, a document explaining the formal decisions taken, in order to facilitate their retrieval. view, it would appear logical that staff expenditure for 1997 was less than estimated in the budget. As regards Title II, the difference between commitments and payments can be justified in particular by the orders for computer and security equipment which were made at the end of the financial year and which had to be paid for in 1998. 1. 13. The under-utilisation of appropriations, which was of some magnitude as regards Title I, is due to the fact that staff recruitment procedures launched in 1997 were not concluded until 1998. From an economic point of in Title level of utilisation The III, operational expenditure, is a direct consequence of the staff situation in 1997. However, the level of commitments was very high and contracts regarding studies and pilot projects concerning safety and health at work will continue to be implemented throughout 1998. 5. The Agency would like to assure the Court that it will take account of all the Court’s observations, in order to respect in full the rules arising from financial and other regulations to which all its actions should be subject