52003TA1230(10)

Report

on the financial statements of the European Monitoring Centre for Drugs and Drug Addiction for the financial year 2002, together with the Monitoring Centre's replies

(2003/C 319/10)

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 has examined the financial statements of the Monitoring Centre for the financial year ended 31 December 2002. In accordance with Article 11(8) of Council Regulation (EEC) No 302/93(2), the budget was implemented under the responsibility of the executive director. This responsibility included the drawing-up and presentation of the financial statements(3) in accordance with the internal financial provisions adopted pursuant to Article 11(12) of Council Regulation (EEC) No 302/93, as amended by Article 1 of Council Regulation (EC) No 3294/94(4). The Court of Auditors is required pursuant to Article 248 of the Treaty establishing the European Community to audit 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 auditing procedures as it deemed necessary in the circumstances. By means of this audit, the Court obtained an adequate 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.

5. Without prejudice to the opinion expressed above, the Court wishes nevertheless to draw to the attention of the discharge authority the situations described in paragraphs 8, 9, 12 and, in particular, 13.

OBSERVATIONS

Introduction

6. The European Monitoring Centre for Drugs and Drug Addiction was established by Council Regulation (EEC) No 302/93 of 8 February 1993. Its main objective is to collect and publish objective, reliable and comparable information concerning drugs and drug addiction in Europe. It has set up a network of national centres for that purpose. It also cooperates with various international organisations working in the same field.

Implementation of the budget

7. The implementation of the appropriations for the financial year 2002 and of the appropriations carried over from the previous financial year is shown in Table 1(5).

8. The Monitoring Centre has not taken account of the provisions of the Financial Regulation that apply to carryovers of appropriations(6). Justification for the commitment proposals totalling 308300 euro issued in December 2001 was only provided in the course of the following year.

9. As regards the non-automatic carryovers amounting to 212400 euro, the decision taken by the Management Board at the end of the financial year is irregular(7). These carryovers related to Titles I and II appropriations that had not been committed and were unduly transferred to Title III with a view to their being carried over to the next financial year(8).

The financial statements

10. The short-form revenue and expenditure account and balance sheet published by the Monitoring Centre for the financial year 2002 are presented in Tables 2 and 3.

11. The inventory should be more strictly maintained. There has been no physical inventory in recent years. The goods listed in the inventory (which is not complete) are not identified and their location is not specified. Furthermore, obsolete items have not been decommissioned.

Legality and regularity of the underlying transactions

12. Pursuant to a decision dated 18 April 2002 the executive director authorised three authorising officers responsible for the Phare project to sign cheques and bank transfer orders. This type of authorisation, delegating accounting officer powers to authorising officers, is incompatible with the principle of segregation of duties(9).

Personnel management

13. The Court has already had occasion to draw to the Monitoring Centre's attention the necessity of making its personnel management system more rigorous(10). The audits carried out in 2002 revealed persistent shortcomings such as files without essential documents that made it impossible to assess the justification for the financial entitlements attributed to the members of staff concerned. Similar findings applied to the selection procedures, including: notice imprecise, selection committees' minutes incomplete, criteria for assessing candidates not defined in advance. For example, the organisation and holding of an internal competition in order to give various members of the Centre's staff the status of permanent officials were tainted by various irregularities relating, in particular, to certain candidates' admissibility and the composition of the selection board. The seriousness of the anomalies that it detected led the Commission to lodge objections with the Centre about various aspects of the procedures that had been applied.

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 23 October 2003.

For the Court of Auditors

Juan Manuel Fabra Vallés

President

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

(2) OJ L 36, 12.2.1993.

(3) As required pursuant to Article 82 of Commission Regulation (EC) No 2343/2002 the final accounts for all the Monitoring Centre's revenue and expenditure for the financial year 2002 were drawn up on 15 September 2003 and forwarded to the Court of Auditors. These accounts were received by the Court on 19 September 2003. A summarised version of these financial statements is presented in the tables annexed to this report.

(4) OJ L 341, 30.12.1994, p. 7.

(5) Figures have been rounded, which may give rise to minor differences in totals.

(6) Article 6(1)(a) of the Monitoring Centre's financial regulation.

(7) Article 6(2) of the Monitoring Centre's financial regulation.

(8) Article 21 of the Monitoring Centre's financial regulation only authorises transfers from one chapter to another.

(9) Article 16 of the Monitoring Centre's financial regulation.

(10) See paragraphs 16 to 34 of the annual report for the financial year 2000 (OJ C 372, 28.12.2001, p. 64).

Table 1

European Monitoring Centre for Drugs and Drug Addiction - 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 Monitoring Centre - These tables summarise the data supplied by the Monitoring Centre in its own financial statements.

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Table 2

European Monitoring Centre for Drugs and Drug Addiction - Revenue and expenditure account for the financial years 2002 and 2001((In its accounts, the Monitoring Centre included under revenue and expenditure the use of earmarked revenue not used in 2001.))

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NB:

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

Source:

Data compiled by the Monitoring Centre.

Table 3

European Monitoring Centre for Drugs and Drug Addiction - Balance sheet at 31 December 2002 and 31 December 2001NB:

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

Source:

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

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The Monitoring Centre's Replies

8. The Monitoring Centre recognises the need to keep automatic carryovers to a minimum, in line with the principle of annuality. As a result of efforts undertaken in this regard, the Monitoring Centre reduced automatic carryovers at the end of 2002 from the previous year's level.

9. The aim of the Management Board's decision was to satisfy the need - which became apparent at the end of the financial year - to finance temporary working premises pending approval of a more permanent solution.

11. Considerable efforts have already been made to improve the inventory system. Since 2003, the inventory management system ELS has been able to calculate the value of fixed assets in the Monitoring Centre's balance sheet. There will be further efforts to improve the system in the future. A physical inventory will be carried out by the end of 2003.

On 12 May 2003, the Monitoring Centre decided to decommission obsolete computer equipment with a total value (purchase price) of EUR 226959.

12. This system was adopted exceptionally for this particular project. Measures have been taken to rectify the situation.

13. Specific problems identified by the Court will be subject to a detailed examination by the Monitoring Centre. Where necessary, appropriate measures will be taken to ensure each matter is resolved. As regards the recruitment of temporary staff, the Monitoring Centre's selection procedures are in line with the provisions of Annex III to the Staff Regulations ("Competitions"). With regard to competitions for permanent posts, given the complex nature of the relevant procedures and the shortage of specialised staff in an organisation as small as the Monitoring Centre, shortcomings have been identified, despite the precautions taken, thanks mainly to the involvement of representatives of the Commission in establishing and implementing the procedure. The Monitoring Centre wishes to underline the fact that, ultimately, once detailed checks were carried out by, among others, the specialised services of the Commission, the shortcomings identified did not undermine the validity of the procedure or its outcome. The Monitoring Centre will continue its efforts to make recruitment procedures even more stringent, while at the same time calling on the services of the European Personnel Selection Office (EPSO) as consistently as possible.