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Document 52004TA1230(15)

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Report on the annual accounts of the Office for Harmonization in the Internal Market for the 2003 financial year together with the Office's replies

SL C 324, 30.12.2004, p. 106–112 (ES, CS, DA, DE, ET, EL, EN, FR, IT, LV, LT, HU, MT, NL, PL, PT, SK, SL, FI, SV)

Date of document:: 30/09/2004

Author:: Europski revizorski sud
Form:: Izvješće

Treaty:

Ugovor o osnivanju Europske zajednice

Legal basis:

12002E248

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Subject matter:

Proračun

Directory code:

01.60.20.00 Opća financijska i institucionalna pitanja / Financijske i proračunske odredbe / Proračun

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Official Journal

30.12.2004

Official Journal of the European Union

C 324/106

REPORT

on the annual accounts of the Office for Harmonization in the Internal Market for the 2003 financial year together with the Office's replies

(2004/C 0324/15)

CONTENTS

1	INTRODUCTION

2-5	THE COURT'S OPINION

6-10	OBSERVATIONS

Tables 1–4

The Office's replies

INTRODUCTION

The Office for Harmonization in the Internal Market (hereinafter called ‘the Office’) was set up by Council Regulation (EC) No 40/94 (1) of 20 December 1993. Its mandate is to implement the Community legislation on trade marks and designs, which gives undertakings uniform protection throughout the area of the Union. The Office's duties and activities are summarised, on the basis of information submitted by the Office, in Table 1.

THE COURT's OPINION

2.	This opinion is addressed to the Office's Budget Committee pursuant to Article 137(2) of Council Regulation (EC) No 40/94 ().

The Court has examined the Office's annual accounts for the financial ended 31 December 2003. In accordance with Article 119(2)(c) of Council Regulation (EC) No 40/94, the Office's budget was implemented on the responsibility of its President. This responsibility includes the drawing-up and presentation of the accounts (2), in accordance with the internal financial provisions provided for in Article 138 of Council Regulation (EC) No 40/94. The Court of Auditors is required under Article 248 of the Treaty establishing the European Community to examine these accounts.

The Court carried out its audit in accordance with its audit policies and standards, which have been adapted from generally accepted international auditing standards to reflect the specific nature of the Community context. It examined the accounting documents and applied the audit procedures it considered necessary in that context.

The Court has thus obtained reasonable assurance that the annual accounts for the financial year ended on 31 December 2003 are reliable and that the underlying transactions, taken as a whole, are legal and regular. The content of the following observations does not call into question the audit opinion expressed by the Court in this report.

OBSERVATIONS

6.	The implementation of the appropriations for the financial year 2003, and of the appropriations carried over from the previous year, is set out in Table 2. The Office's revenue and expenditure account and balance sheet for the financial year 2003 are presented in summary form in Tables 3 and 4.

The total value of appropriations carried over was 18,3 million euro. More attention should be given to evaluating whether carry-overs are really necessary. Tests performed on a 35 % sample of this amount revealed unjustified carry-overs of around 586 000 euro, 350 000 euro for search reports and 236 000 euro for professional training activities.

8.	A large number of carry-overs correspond to provisional commitments, the unused balance of which is carried over at the year's end in its entirety, even where all or part of this balance does not relate to duly contracted obligations. This situation is irregular.

9.	Computer licences and software are not included under fixed assets, in contravention of the Regulation on inventory (3). As at 31 December 2003, it was estimated that they might have a value of up to 700 000 euro.

10.

In spite of the Court's previous observations (4), the Office has not reviewed its inventory system: duties are still poorly defined and there is still insufficient staff training. It is difficult to keep the inventory correctly in such circumstances. For example, items of computer equipment and furniture recorded in the accounts at a value of around 500 000 euro could not be located when a physical inventory was made.

This Report was adopted by the Court of Auditors in Luxembourg at its meeting of 29 and 30 September 2004.

For the Court of Auditors

Juan Manuel FABRA VALLÉS

President

(1) OJ L 11, 14.1.1994.

(2) As required under Article 137(1) of Council Regulation (EC) No 40/94, the accounts of all the Office's revenue and expenditure for the 2003 financial year were drawn up on 28 February 2004 and sent to the Court of Auditors. They were received by the Court on 24 September 2004. A summarised version of these accounts is presented in the tables annexed to this report.

(3) Commission Regulation (EC) No 2909/2000 of 29 December 2000 (OJ L 336, 30.12.2000, p. 75).

(4) Paragraph 13 of the report on the financial year 2002 (OJ C 319, 30.12.2003, p. 84).

Table 1

Office for Harmonization in the Internal Market (Alicante)

Area of Community competence deriving from the Treaty

Competence of the Office as specified in the Parliament and Council Regulation — Council Regulation (EC) No 40/94 of 20 December 1993

Governance

Resources available to the Office in 2003

(2002 figures)

Products and services supplied in 2003

Free movement of goods

Prohibitions or restrictions justified on grounds of the protection of industrial and commercial property must not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. (From Article 30 of the Treaty)

Restrictions on freedom to provide services within the Community are prohibited in respect of nationals of Member States who are established in a State of the Community other than that of the person for whom the services are intended. (From Article 49 of the Treaty)

Objectives

To implement the Community legislation on trade marks and designs, which gives undertakings the right to uniform protection throughout the area of the Union

Tasks

—	To receive and enter applications for registration

—	To examine the conditions for entry in the Register and compatibility with Community legislation

—	To search at the industrial property offices of the Member States for any pre-existing national trade marks

—	To publish applications

—	To examine any opposition by third parties

—	To register or reject applications

—	To examine applications for revocation or invalidity

—	To handle appeals against decisions

Administrative Board

Composition

—	one representative of each Member State

—	one representative of the Commission

Task

—	To advise the President on matters for which the Office is responsible To prepare lists of candidates (Article 120) for President, Vice-Presidents and chairmen and members of the Boards of Appeal

2.	President of the Office Appointed by the Council from a list of at most three candidates which has been prepared by the Administrative Board

3.	Budget Committee Composition One representative of each Member State and one representative of the Commission and their alternates Task To adopt the budget and the financial regulation, grant discharge to the President and determine the cost of search reports

Decisions in connection with procedures

Decisions are taken by:

(a)	the Examiners;

(b)	the Opposition Divisions;

(c)	the Administration of Trade Marks and Legal Division;

(d)	the Cancellation Divisions;

(e)	the Boards of Appeal

5.	External audit The European Court of Auditors

6.	Discharge authority The Office's Budget Committee

Final budget

157 million euro (155 million euro). Community contribution: 0 % (0 %)

Staff numbers as at 31 December 2003

Number of posts in establishment plan: 675 (675)

Posts occupied: 650 (633)

+31 (*) other staff (auxiliary contracts, seconded national experts, local employees, temporary replacements)

Total staff: 681 (*)

Assigned to the following duties:

—	operational: 423 (*)

—	administrative: 245 (*)

—	mixed: 13 (*)

(*): figures unavailable for 2002

Trade marks

Number of applications: 57 637

Number of registrations: 34 290

Number of cases of opposition: 9 929

Number of cases settled: 9 396

Appeals to the Boards of Appeal: 719

Average time for registration (excluding opposition or appeal):

—	before publication: 12 months

—	between publication and registration: 6 months

Designs

Designs received: 37 084

Designs registered: 24 801

Source:Information submitted by the Office.

Table 2

Office for Harmonization in the Internal Market — Implementation of the budget for the 2003 financial year

(million euro)
Revenue			Expenditure
Source of revenue	Revenue entered in the final budget for the financial year	Revenue received	Allocation of expenditure	Final budget appropriations					Appropriations carried over from the previous financial year			Appropriations available (2003 budget and 2002 financial year)
Source of revenue	Revenue entered in the final budget for the financial year	Revenue received	Allocation of expenditure	entered	committed	paid	carried over	cancelled	commitments outstanding	paid	cancelled	appropriations	committed	paid	carried over	cancelled
Fees	101,4	105,6	Title I Staff	52,4	48,6	47,4	1,2	3,8	0,9	0,7	0,2	53,3	49,5	48,1	1,2	4,0
Other revenue	4,3	4,9	Title II Administration	26,1	24,3	16,4	7,9	1,8	9,7	9,3	0,4	35,8	34,0	25,7	7,9	2,2
Outturn for the previous financial year	51,7	55,4	Title III Operating activities	27,2	23,4	14,1	9,3	3,8	8,7	7,8	0,9	35,9	32,1	21,9	9,3	4,7
Outturn for the previous financial year	51,7	55,4	Title X Reserve	51,7	0,0	0,0	0,0	51,7	0,0	0,0	0,0	51,7	0,0	0,0	0,0	51,7
Total	157,4	165,9	Total	157,4	96,3	77,9	18,4	61,1	19,3	17,8	1,5	176,7	115,6	95,7	18,4	62,6
NB:Totals may include differences due to rounding Source:Office data — These tables summarise the data supplied by the Office in its own accounts.

Table 3

Office for Harmonization in the Internal Market — Revenue and expenditure account for the financial years 2003 and 2002

(1000 euro)
	2003	2002
Revenue
Own revenue	107 056	97 329
Financial revenue	3 460	3 141
Total revenue (a)	110 516	100 470
Budgetary expenditure for the financial year
Staff — Title I of the budget
Payments	47 416	46 106
Appropriations carried over	1 168	934
Administration — Title II of the budget
Payments	16 366	15 095
Appropriations carried over	7 891	9 718
Operating activities — Title III of the budget
Payments	14 137	16 431
Appropriations carried over	9 262	8 651
Total expenditure (b)	96 240	96 934
Outturn for the financial year (a – b)	14 276	3 536
Other expenditure/provisions for the year
Provision for procedural expenditure	1 094	–1 363
Subtotal	1 094	–1 363
Balance carried over from the previous financial year	55 368	51 349
Appropriations carried over and cancelled	1 506	1 817
Sums for re-use from the previous financial year not used	115	11
Provision for procedural expenditure from previous financial years	0	0
Exchange-rate differences and extraordinary revenue	–6	17
Balance for the financial year	72 353	55 368
NB:Totals may include differences due to rounding. Source:Office data — These tables summarise the data supplied by the Office in its own accounts.

Table 4

Office for Harmonization in the Internal Market — Balance sheet as at 31 December 2003 and 31 December 2002

(1000 euro)
Assets	2003	2002	Liabilities	2003	2002
Fixed assets			Fixed capital
Buildings	26 747	26 286	Own capital	27 921	28 065
Equipment and furniture	3 828	3 783	Balance for the financial year	72 353	55 368
Transport equipment	115	111	Subtotal	100 274	83 433
Computer equipment	11 241	9 636	Long-term debt
Intangible assets	24	24	Long-term creditors	24	23
Depreciation	–14 035	–11 775	Subtotal	24	23
Subtotal	27 920	28 065	Current liabilities
Current assets			Automatic carry-overs of appropriations	18 322	19 303
Suppliers and missions	200	167	Advances from clients	29 395	22 289
Other sundry accounts receivable	107	89	Amounts outstanding	51	14
Subtotal	307	256	Sundry accounts payable	757	664
Cash accounts			Provision for procedural expenditure	13 644	14 738
Bank accounts	134 239	112 256	Subtotal	62 169	57 008
Cash	1	2	Suspense accounts
Subtotal	134 240	112 258	Revenue to be re-used	0	115
			Subtotal	0	115
Total	162 467	140 579	Total	162 467	140 579
NB:Totals may include differences due to rounding. Source:Office data — These tables summarise the data supplied by the Office in its own accounts.

THE OFFICE'SREPLIES

Concerning the search reports, the improvement in the computer application used to manage these reports, the abolition of the annual adjustment as from 1 January 2004 and the establishment of specific commitments for each of the national offices will help to better evaluate the appropriations to be carried over. For training, commitment requirements will be the subject of two examinations as from 2004, one in August and another in December. Amounts are already being decommitted as measures are being implemented.

8.	The Office has taken note of this observation and will take the necessary measures to reduce the carry-overs corresponding to provisional commitments.

9.	The Office will examine all the contracts concerned in order to determine the exact amount to be recorded as intangible assets in accordance with Commission Regulation (EC) No 2909/2000.

10.

Since 2003, the Office has been implementing measures to improve the keeping of its inventory, in particular by reorganising the inventory under a single department, aligning the headings with those of the Commission and reviewing the labelling and decommissioning of assets. Concerning the definition of duties and training, the Office is currently reviewing the Regulation on inventory and the underlying procedures and drawing up written instructions for physical inventory verification.

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