52003TA1230(05)

Report

on the financial statements of the Translation Centre for the bodies of the European Union for the financial year 2002, together with the Centre's replies

(2003/C 319/05)

CONTENTS

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THE COURT'S OPINION

1. This report is addressed to the European Parliament and to the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002(1).

2. The Court of Auditors has examined the financial statements of the Translation Centre for the bodies of the European Union for the financial year ended 31 December 2002. In accordance with Article 14(1) of Council Regulation (EC) No 2965/94(2), the budget was implemented on the responsibility of the Director. This responsibility includes the drawing-up and presentation of the financial statements(3) in accordance with the internal financial provisions provided for in Article 15 of Regulation (EC) No 2965/94. The Court is required pursuant to Article 248 of the Treaty establishing the European Community to examine 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 applied such other audit procedures as it deemed necessary in the circumstances. Through 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 2002 are reliable and that the underlying transactions, taken as a whole, are legal and regular. Nevertheless, the Court wishes to draw attention to the situation described in paragraph 7.

OBSERVATIONS

Introduction

5. The Centre was established by Council Regulation (EC) No 2965/94. The Centre's main purpose is to provide the necessary translation services to the decentralised bodies created by the Council and it holds a monopoly in translation services as far as they are concerned. The other Community bodies may use the Centre's services on the basis of ad hoc arrangements. The Centre makes widespread use of private translation services in order to fulfil its mission. The total number of pages translated by the Centre in 2002 came to 228000.

Implementation of the budget

6. The implementation of appropriations for the financial year 2002 and of the appropriations carried over from the previous financial year is shown in Table 1(4).

7. Article 26a of the Centre's Financial Regulation provides that the balance for the previous financial year shall be entered as revenue for the financial year. The way that the Centre interprets this Article is to enter as revenue for the year solely that part of the balance for the previous financial year which corresponds to the outturn for the year preceding that one. For 2002, this has the effect of leaving 3,4 million euro of resources temporarily unused; this sum is to be found under liquid assets.

Financial statements

8. The revenue and expenditure account and the balance sheet published by the Centre in its activity report for the financial year 2002 are presented in summary form in Tables 2 and 3.

9. Since the Centre does not fully exploit the capabilities of its general accounting software, it uses a spreadsheet to monitor its revenue and client accounts, thus giving rise to a major risk of error which was highlighted during the audits.

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 15 and 16 October 2003.

For the Court of Auditors

Juan Manuel Fabra Vallés

President

(1) OJ L 248, 16.9.2002, p. 1.

(2) OJ L 314, 7.12.1994, p. 1.

(3) As laid down in Article 14(3) of Council Regulation (EC) No 2965/94, the accounts for all the Centre's revenue and expenditure for the financial year 2002 were drawn up on 23 February 2003 and sent to the Court of Auditors. The final version of these accounts was received by the Court on 6 May 2003. A summarised version of these financial statements is presented in the tables attached to this report.

(4) All the tables in this report have been drawn up on the basis of the most exact values possible for the data employed. For presentation purposes, the figures have been rounded, which may produce minor differences in the totals. A dash indicates a non-existent or zero value and 0,0 indicates a value below the rounding threshold.

Table 1

Translation Centre for the Bodies of the European Union - Implementation of the budget for the financial year 2002NB:

Any discrepancies in totals are due to the effects of rounding.

Source:

Data compiled by the Centre - These tables summarise the data supplied by the Centre in its own financial statements.

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Table 2

Translation Centre for the Bodies of the European Union - Revenue and expenditure account for the financial years 2002 and 2001

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NB:

Any discrepancies in totals are due to the effects of rounding.

Source:

Data compiled by the Centre - These tables summarise the data supplied by the Centre in its own financial statements.

Table 3

Translation Centre for the Bodies of the European Union - Balance sheet at 31 December 2002 and 31 December 2001NB:

Any discrepancies in totals are due to the effects of rounding.

Source:

Data compiled by the Centre - These tables summarise the data supplied by the Centre in its own financial statements.

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The Centre's replies

OBSERVATIONS

Implementation of the budget

7. Since the end of its start-up phase on 31 December 1997, the Translation Centre has interpreted Article 26a of its Financial Regulation on a permanent basis, considering the balance for the financial year to be that established at the time when the Management Board, following the report by the Court of Auditors for the financial year in question, grants discharge to the Director in respect of the implementation of the budget.

When presenting its revenue and expenditure account and balance sheet, the Translation Centre has always informed the Management Board before 31 March of the following year of the balances for each financial year. For 2002, the Translation Centre informed the Management Board of the outturn for 2001 at their first meeting following the close of the financial year, which was held on 14 March 2002. At this meeting, the Management Board decided to enter the 3,4 million euro as revenue in the preliminary draft budget for 2003. The Centre has always entered the balances for the financial years as liabilities in its balance sheet.

In accordance with Article 185 of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities, the Centre submitted a specific draft financial regulation based on Commission Regulation (EC, Euratom) No 2343/2002 of 23 December 2002 on the framework Financial Regulation for the decentralised bodies. Article 16 of this draft financial regulation, in particular paragraph 3, states that: "The revenue or payment appropriations shall be entered in the budget during the budgetary procedure using the letter of amendment procedure or, while budget implementation is under way, by means of an amending budget."

We believe that this new wording will resolve the problem of interpretation mentioned by the Court.

Financial statements

9. The Translation Centre takes note of the Court's recommendation on the use of its general accounting software. The abolition of advances as of 1 January 2003 will simplify the monitoring of client accounts and reduce the associated risks.