Report on the financial statements of the Community Plant Variety Office (CPVO - Angers) for the financial year ended 31 December 1998, together with the Office's replies
22. 12. 1999 EN Official Journal of the European Communities C 372/55 on the financial statements of the Community Plant Variety Office (CPVO - Angers) for the financial year ended 31 December 1998, together with the Officeís replies REPORT (1999/C 372/10) CONTENTS Paragraph reference THE COURT S OPINION. 1-4 MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUDGET OF THE COMMUNITY PLANT VARIETY OFFICE FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 1998. 5-11 New premises. Advisory Committee on Procurement and Contracts (ACPC). Language courses. Staffing policy. 5 6 7 8 Missions and reimbursement of expenses to experts and members of the administrative council 9-10 Delay in setting examination fees. 11 Tables 1 and 2. The Officeís replies. Page 56 56 56 56 57 57 57 57 58 60 C 372/56 EN Official Journal of the European Communities 22. 12. 1999 THE COURT S OPINION 1. This report is addressed to the administrative council of the Community Plant Variety Office in accordance with Article 111(2) of Council Regulation (EC) No 2100/94 (1). 2. The Court has examined the financial statements of the Com- munity Plant Variety Office for the financial year ended 31 Decem- ber 1998. In accordance with Article 110 of Regulation (EC) No 2100/94 the budget was implemented under the responsibility of the President of the Office. This responsibility included the drawing-up and presentation of the financial statements (2) in accordance with the internal financial provisions provided for in Article 112 of Council Regulation (EC) No 2100/94. The Court of Auditors is required under Article 248 of the Treaty establishing the European Community to audit those accounts. The interior layout of the building and the impracticality of some areas of it make it impossible to accommodate all the Officeís staff of around 30 people. For that reason it has been necessary to pur- chase additional office space in a building behind the main build- ing. The two buildings have a total area of 1 150 m2, only part of which will be usable as offices. The interior of the main building is to be totally redone, in order to accommodate the change of use from hotel and restaurant to offices. A preliminary survey esti- mated the cost of essential work as EUR 0,8 million, the amount which was entered in the 1999 budget. The cost of the initial design by the architect finally selected was around EUR 1,3 mil- lion, an increase of 61 % on the estimate used at the time of the decision to buy. The estimated total for this transaction now breaks down as follows: 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. Acquisition of main building Acquisition of offices in annex (in EUR) 705 000 511 000 Estimates for conversion and fitting-out work 1 332 000 Total for transaction 2 548 000 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 BUDGET OF THE COMMUNITY PLANT VARIETY OFFICE FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 1998 New premises The total amount actually charged to the Officeís budget will be reduced by the remaining part of the EUR 1,524 million subsidy awarded by the local authorities to cover the costs of accommod- ating the Office at Angers. As of 31 December 1998 EUR 0,172 million of the subsidy had already been used in connection with the occupation of the Officeís current premises. In view of the nature of the conversion work, the Office should take care to ensure that the proposed budget is adhered to. 5. In 1998 the Office purchased a detached building (part of it a listed building) situated in the centre of Angers, which, until recently, was used as a hotel and restaurant. Advisory Committee on Procurement and Contracts (ACPC) (1) OJ L 227, 1. 9. 1994, p. 1. (2) Pursuant to Article 111(2) of Regulation (EC) No 2100/94 the accounts for all the Officeís revenue and expenditure for the financial year 1998 were drawn up on 26 March 1999 and were sent to the Officeís Administrative Council, the Commission and the Court of Auditors and the latter received them on 30 March 1999. The summary form of those financial statements is published in the tables annexed to this report. 6. The ACPC comprises three temporary officials of the Office plus a representative of the financial controller in the capacity of observer. Most of the draft decisions submitted to the ACPC are from the President of the Office, who determines the work to be carried out and the enterprise to which the contract is to be awarded. Where the authorising officer is the President of the Office, it would be preferable for him to nominate a manager to submit the file to the ACPC. 22. 12. 1999 EN Official Journal of the European Communities C 372/57 Language courses Missions and reimbursement of expenses to experts and members of the administrative council 7. Expenditure on language courses for staff and members of their families for the 1998 financial year amounted to ECU 48 524. The courses were given and billed by only one enterprise. Since the amount in question was over the threshold above which the ACPC must be consulted, the matter was referred to that Com- mittee. The statement of grounds submitted to the Committee by the President of the Office with the draft decision announcing his intention of continuing to work with the same enterprise for courses in all languages was insufficient and no time limit was given. 9. The Office reimburses part of the expenses of experts and members of the administrative council through personal accounts. Reimbursement to national administrations should be the rule for all experts and members of the administrative council, any excep- tion requiring due justification. 10. In addition, travel tickets should always be presented, includ- ing those for rail travel, and stamped clearly to show that they are the object of a refund. In the case of air travel, the boarding card should be presented to the Office. Staffing policy Delay in setting examination fees 8. The entire permanent workforce of the Office is made up of temporary officials, of whom only three have contracts for an unlimited period. There is considerable use of agency workers and the expenditure on employment of this type amounted to ECU 136 382, an increase of 67 % compared with the previous year. Despite all its efforts, the Office finds it difficult to recruit admin- istrative staff on the basis of short-term temporary contracts, while trying to preserve a balance between the various national- ities. 11. The basic Regulation (1) provides, as regards proceedings before the Office, that áby 27 April 1997 the Administrative Council shall have determined uniform methods for calculating the costs. , which shall apply to all designated Examination Officesí. The administrative council has still not taken such a deci- sion. The initial deadline of 27 April 1997 has been postponed several times. The latest decision on this subject was taken during the meeting of the administrative council on 7 and 8 April 1998 and deferred the target date to 31 December 1999. 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 (1) Commission Regulation (EC) No 1239/95 (OJ L 121, 1. 10. 1995, p. 37). C 372/58 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 Land and buildings Equipment and furniture Computer equipment Intangible assets Current assets Recoverable VAT Sundry accounts receivable Cash accounts Bank - demand accounts Imprest account Subtotal 1 202 58 93 29 1 383 185 138 Subtotal 323 6 902 150 7 052 Subtotal Total assets 8 758 40 68 6 114 41 5 46 6 068 150 6 218 6 378 Source: Prepared by the Court of Auditors on the basis of data compiled by the Office. Fixed capital Own capital Balance for the financial year Provisions for charges Subtotal Current liabilities Automatic carryovers of appropriations Social liabilities VAT Sundry accounts receivable 1 383 4 994 165 6 542 1 552 36 185 443 114 5 131 5 245 916 43 41 132 Subtotal 2 216 1 133 Total liabilities 8 758 6 378 22. 12. 1999 EN Official Journal of the European Communities C 372/59 Revenue and expenditure account for the financial years 1998 and 1997 Table 2 (ECU 1 000) 1998 1997 0 306 4 873 263 Total revenue 5 443 Revenue Subsidy received from the Commission Other subsidies Taxes (1) Bank interest Expenditure Staff expenditure - Title I of the budget Payments Appropriations carried over 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 Other expenditure - Title X of the budget (reimbursement of 1995 Commission subsidy) Payments Total expenditure Out-turn for the financial year Balance carried over from previous financial year Appropriations carried over from previous financial year, which lapse Exchange-rate differences (1) For 1997 this amount includes a sum of ECU 78 800 collected in 1998. Source: Prepared by the Court of Auditors on the basis of data compiled by the Office. Balance for the financial year 1 948 37 1 776 222 497 1 293 5 772 - 329 5 131 197 - 5 4 994 0 3 959 206 4 165 1 392 49 374 80 147 787 300 3 130 1 035 3 885 223 - 12 5 131 C 372/60 EN Official Journal of the European Communities 22. 12. 1999 REPLIES OF THE OFFICE New premises (paragraph 5) Staffing policy (paragraph 8) The total area of the two buildings purchased by the Office is 1 150 m†. Eleven nationalities are currently represented on the Officeís staff. The area usable as offices is 418 m† in the first building and 188 m† in the second. The remaining area is composed of utility areas that will be used for meeting rooms, waiting rooms, file deposi- tories, control rooms, washrooms and corridors. Concerning the refurbishment work, the Office will carefully respect the criteria of sound financial management mentioned in Article 2 of its Financial Regulation. Through its new policy, the Office plans to phase out its use of agency workers, to extend the contracts of temporary staff and to organise competitions for certain staff posts within the Office, with a view to being established, in accordance with the pro- cedures laid down in the Staff Regulations. Advisory Committee on Procurement and Contracts - ACPC (paragraph 6) Missions and reimbursement of expenses to experts and members of the administrative council (paragraphs 9 and 10) Except for exceptional cases that may justify submission of files to the ACPC by the President of the Office, the files, in keeping with past practice, will be submitted by a manager from the Financial and Administrative Unit of the Office. The Office undertakes to follow the reimbursement procedure recommended by the Court. Language courses (paragraph 7) In the case mentioned by the Court, the draft decision submitted to the ACPC was justified by the good past experience with the provider of the services (language courses) and the attractive price of these services. In consideration of the observations issued by the Advisory Com- mittee on Procurement and Contracts (ACPC), the contracts drawn up with this contractor (fixed-term contracts) were renewed only after an official evaluation of the courses by the participants (quality of the enterprise and teachers, content and quality of the courses). Furthermore, the improvement levels of the participantsí language skills was and is tested on a regular basis. However, in order to limit the long-term provision of language courses for the members of staffís families, the President of the Office will introduce a maximum time limit on the availability of such courses. Delay in setting examination fees (paragraph 11) A call for expressions of interest was organised with a view to recruiting a specialised accounting company to draw up methods for calculating the costs of technical examinations, which shall apply to all examination offices. This call for expressions of inter- est was, however, unsuccessful. The Office therefore has recruited as temporary agent a chartered accountant (auditor) to perform this task. The administrative council has in its meeting of 28 and 29 September 1999 decided to continue until 1 January 1999 payment for tests performed on request of the Office on the basis of the so-called in/out principle (the examination fee received from an applicant is integrally paid to the examination office that tests the variety in question). The Office is of the opinion that the level of technical fees on the aver- age is in line with the testing costs involved