52001TA1228(01)

Report

on the financial statements of the European Agency for Safety and Health at Work for the financial year ended 31 December 2000, together with the Agency's replies

(2001/C 372/01)

CONTENTS

>TABLE>

THE COURT'S OPINION

1. This report is addressed to the Administrative 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).

2. The Court has examined the financial statements of the European Agency for Safety and Health at Work for the financial year ended 31 December 2000. In 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 the financial statements(2) in accordance with the internal financial provisions, as provided for under 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 examine these accounts.

3. The Court undertook 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 examined the accounting records and applied the audit procedures 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 allowed the Court to obtain reasonable assurance that the annual accounts for the financial year ended 31 December 2000 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 EUROPEAN AGENCY FOR SAFETY AND HEALTH AT WORK (BILBAO) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2000

Implementation of the budget and keeping of the budgetary accounts

5. The implementation of the budget for the financial year 2000 is shown in Table 1(3). The Agency had to carry over 57 % (1,7 million euro) of the appropriations committed during the financial year 2000 for the implementation of its operating expenditure (Title III). Such a high carryover rate shows that the Agency needs to improve the quality of the monitoring and the planning of its activities.

Financial statements and keeping of the accounts

6. Tables 2 and 3 show, respectively, the revenue and expenditure account for the financial year 2000 and the balance sheet as at 31 December 2000.

7. Due to a shortage of budgetary appropriations under the budget headings concerned, and in the absence of any transfers, the Agency had to carry over to the financial year 2001 bank charges amounting to 12155,72 euro and additional expenditure (3624,72 euro) caused by exchange-rate losses during 2000.

Financial and regulatory provisions

8. For the purpose of fitting out a meeting room, the Agency issued two calls for tenders for the installation of interpretation equipment. If they had been issued together, the amount concerned (a total of 50712 euro) would have required the Agency to have submitted them to the Advisory Committee on Procurements and Contracts, which it managed to avoid in this way.

9. Four series of multiannual contracts signed by the Agency in 1998 for an amount of 354964 euro provided for two payments for each annual tranche:

- an advance of 50 % within 60 days of the payment request,

- the payment of the balance after the approval of the final report and the relevant payment request.

This procedure does not comply with the call for tenders, which provided that the first payment would be carried out after the first interim report had been sent in. Contrary to the terms of their contracts (Article 5), the beneficiaries justified the payment of the balance by sending in a list of expenditure with their payment requests, but no supporting documents.

Management of the Agency's human resources

Staffing policy

10. The Agency was created by Council Regulation (EC) No 2062/94 of 18 July 1994 and was set up following the appointment of its director in September 1996. During its early months, the Agency was run with only seconded national experts (SNEs) and auxiliary staff. The advertising for the recruitment of the SNEs was limited to certain Member States(4).

11. The Agency's staff are subject to the "Rules and Regulations applicable to officials and other servants of the Communities". As provided for in Article 20(3) of Regulation (EC) No 2062/94, the Administrative Board, in agreement with the Commission, is responsible for adopting the appropriate implementing rules.

Job descriptions

12. Job descriptions, reflecting those published in the notice of vacancy, only exist for each category A post. A job description should be drawn up for all the staff on the basis of the Agency's objectives and tasks. It should be easily accessible to staff, be regularly updated and be included in their personal files.

Seconded national experts (SNEs)

13. In the absence of a formal decision by its Administrative Board, the Agency applies the Commission's rules for seconded national experts. According to these rules, the probable duration of the secondment must be established in an exchange of letters with the national authority concerned. However, in two cases, there was no such correspondence and in another case, the duration was not established.

14. The Agency refunded the salaries of three SNEs to the national authorities concerned, even though the rules provide that they should be in paid employment in an international or national public body during their secondment. The Agency refunded these salaries on the grounds that it had not yet formally incorporated the provisions in force at the Commission into its rules. The regularity of these payments is therefore questionable.

Growth of the Agency's staff and activities

15. The Agency's establishment plan only comprises temporary staff. The number of posts to be occupied is authorised by the budgetary authority every year at the same time as the budget. The budget may also grant appropriations for the recruitment of auxiliary staff, who may be employed for a maximum of one year, local staff and SNEs.

16. Table 4 shows the development of the Agency's staff and gives a breakdown of the establishment. The growth in staff numbers has tended to stabilise. Initially, the Agency made use of agency staff to make up for its lack of staff, but had very little need of them in 2000.

17. Since its creation, the Agency has taken on more than 40 people, 27 of whom were temporary staff and the others auxiliaries or SNEs. At the end of 2000, 24 were temporary employees. Three employees had been recruited via an external procedure and the others by more informal means. On average, recruitment expenditure totalled around 3140 euro per person recruited.

18. For the purposes of the audit, employees were broken down into two categories:

- staff responsible for support activities (support staff), i.e. activities needed for the Agency to continue to function (e.g. administration, accounts, secretariat, etc.),

- other, "operational" staff, who directly help to achieve the Agency's objectives.

19. On average, nearly all the category A staff, or 40 % of all staff, may be classified as operational. All the others (60 % of the total staff) may be classified as support staff.

20. Table 5 shows the growth of costs associated with staff and operating expenditure. On average, salary-related expenditure grew almost in parallel with staff numbers.

21. Among the other staff-related costs, the Court's analysis looked more particularly at expenditure on vocational training and operating expenditure, in particular in the IT field.

22. Vocational training expenditure grew more quickly than staff numbers. Operating expenditure fell slightly, on average, because of the initial expenditure that had to be effected when the Agency was being started up.

23. In order to obtain a better understanding of the relationship between the activities of the Agency and the changes in its staff numbers and staff-related costs, the latter were compared with the fluctuations in the total operating appropriations (Title III) actually spent in the course of the year (appropriations for the year and appropriations carried over). This comparison suggests that the Agency's staff numbers and staff-related costs have increased more rapidly than the volume of its activities. This is corroborated by the fact that, on average, support expenditure (Titles I and II - Staff and Administrative expenditure) has grown faster than operating expenditure. This ought to prompt the Agency to look into ways of improving its staff's productivity.

24. These observations must be qualified by the fact that the Agency is not yet up to its "cruising speed" and that, because of its small size, it cannot benefit from substantial economies of scale for its physical and administrative infrastructure. In this context, the relationship between the rate of growth of its operational staff and its volume of expenditure is following a satisfactory trend. Moreover, over the last three years, there has been a tendency for the growth rate of personnel and administrative expenditure to fall in relation to the growth rate for operating expenditure and become lower than the latter (in particular as a result of the use of SNEs).

Conclusion

25. Although, since its creation, the Agency has not been able to take on all the staff provided for in its budget, it has been able to make up for this by recruiting auxiliary staff and SNEs.

26. For the purpose of staff recruitment, the Agency has based itself on very limited contacts. This approach, which has the advantage of being speedy and cost-effective, uses informal methods for advertising the posts and selection procedures. The quality of the staff recruited does not seem to have been adversely affected.

27. In the Agency's case, given the expected growth of its activities, and therefore of its staff numbers, it might be desirable for it to cooperate with the institutions and other decentralised bodies in the recruitment of administrative staff, so as to be able to recruit from as large a pool as possible.

28. The Agency should monitor the growth of its staff and their costs very carefully and continue its efforts to improve the productivity of its human and physical resources. Generally speaking, it should improve its system of management and information in the personnel field.

This Report was adopted by the Court of Auditors in Luxembourg at its meeting of 10 October 2001.

For the Court of Auditors

Jan O. Karlsson

President

(1) OJ L 216, 20.8.1994, p. 5.

(2) 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 2000 were drawn up on 29 March 2001 and forwarded to the Agency's Administrative Board, the Commission and the Court of Auditors. The Court received these accounts on 17 April 2001. A summarised version of these financial statements is presented in the tables attached to this report.

(3) All the tables in this report have been based on the most precise values possible for the data used. These have been rounded up or down in the presentation of the figures, which may give the impression that there are mistakes in the calculations. A dash indicates that a value is non-existent or nil, and 0,0 indicates a value lower than the rounding-off threshold.

(4) Germany, Denmark, Ireland, the Netherlands, the United Kingdom and Sweden.

TABLES 1 TO 5

Table 1

Implementation of the budget

>TABLE>

Table 2

Revenue and expenditure account for the financial years 2000 and 1999

>TABLE>

NB:Discrepancies in the totals are due to the effects of rounding.

Source:Prepared by the Court of Auditors on the basis of data compiled by the Agency.

Table 3

Balance sheet as at 31 December 2000 and 31 December 1999

NB:Discrepancies in the totals are due to the effects of rounding.

Source:Prepared by the Court of Auditors on the basis of data compiled by the Agency.

>TABLE>

>TABLE>

Table 4

Changes in staff numbers

>TABLE>

TE: Temporary employees.

AE: Auxiliary employees.

LS: Local staff.

SNE: Seconded national experts.

Table 5

Changes in staff numbers and staff-related costs

>TABLE>

The agency's replies

Implementation of the budget and keeping of the budgetary accounts

5. Almost 50 % of automatic carryovers concerned subsidies agreed in the framework of contract agreements concluded with the Focal Points and Topic Centres resulting from a decision taken by the Administrative Board at its last meeting in November 1999. It was inevitable that there would be carryovers in view of the fact that the commitments, which are in accordance with Article 6(d) of the Agency's Financial Regulation, were only approved in December. Nevertheless the agency will examine the possibility of amending the decision process in the field with a view to respecting the annuity principle and avoiding, as far as possible, the necessity for regular carryovers of appropriations.

The remaining percentage concerns final payments which had not yet been made by 31 December and to which the abovementioned Article normally applies.

Financial statements and keeping of the accounts

7. With regard to foreign exchange differences and transfer costs, the Agency will correct the budgetary lines in order to avoid a similar situation in 2001.

Financial and regulatory provisions

8. With respect to the two invitations to tender, it should be emphasised that they referred to two different contracts. The first, 2000/ADM/IT/1, concerned multimedia installations and electronic control systems for the conference rooms. By contrast, the second, 2000/ADM/IT/2, was intended for official suppliers of Philips conference equipments. In view of the urgent need to fit out this new meeting room, the Agency published a limited call for tender (2000/ADM/IT/1) and invited two suppliers to tender who had already worked with the Agency on the installation of multimedia systems and electronic conference control systems, and the quality of whose services had been found to be good.

Management of the Agency's human resources

Staffing Policy

10. Between the Agency's start-up period in September 1996 and the time when the first temporary agents were recruited to perform operational tasks at the beginning of 1998, the Director had to rely on a narrow circle of experts who were available for a limited period and the basis of whose recruitment varied according to the circumstances of the time. These were national officials from the Member States or people seconded from Community institutions on one year auxiliary contracts.

As far as recruitment notices for detached national experts are concerned, it should be emphasised that, to meet its needs in this respect, the Agency was dependent on them being made available after making applications to the authorities of the 15 Member States. These only resulted in seven positive responses in order to meet precise requirements during the start-up phase or to fulfil very specific tasks.

Job descriptions

12. The Court of Auditors' comment will be taken into account when finalising the staff reports and matching human resources to the goals and tasks relevant to each unit in the framework of their "contract agreement" with the Directorate of the Agency. The fact that staff are involved in drawing up and signing these "contract agreements" ensures that information is passed and exchanged.

Secondment national experts

13. The Regulation which governs national experts seconded to the services of the Commission has not yet formally been adopted by the Management Board. It has only been used as a reference document by the Agency. The lack of supporting documentation in certain detachment files is attributable to the fact that when the Agency was in the process of being set up in Bilbao, the director had in some cases made verbal agreements.

14. The Commission Regulation provides that "if its interests so require, but only in the case of national experts not on detachment from the private sector, the Commission may reimburse all or part of the remuneration of a detached national expert during the period of detachment...". The Agency was thus acting within the spirit of the Regulation. Nevertheless the Agency wishes to emphasise that these were exceptional circumstances and that the period of secondment was very brief.

Growth of the Agency's staff and activities

17. All temporary agents were recruited according to the procedures approved by the Administrative Board. Applicants are not only interviewed, but are given a preliminary grading based on their academic and professional qualifications. In some cases there is also a written exam to test the specific knowledge required for the post.

The recruitment process is expensive because of the high cost of moving to Bilbao.

19. The majority of B grade agents working in the "Working environment" and "Information and communications" units should also be considered as operational.