Select Committee on European Scrutiny Twentieth Report



Court of Auditors Report on the financial statements and the management of the European Foundation for the Improvement of Living and Working Conditions (Dublin Foundation) for the financial year ended 31 December 2000.

Legal base:
Document originated:12 October 2001
Forwarded to the Council: 30 November 2001
Deposited in Parliament: 3 January 2002
Department:Work and Pensions
Basis of consideration: EM of 9 January 2002
Previous Committee Report: None; but see (19717) 14254/98: HC 34­xxi (1998­99), paragraph 11 (26 May 1999)
Committee's assessment:Politically important
Committee's decision:Cleared


  17.1  The European Foundation (known as the Dublin Foundation) was established in 1975 by the Council of Ministers as an autonomous body of the European Union to assist in the formulation of policy on social and work­related matters. It provides research-based information for policy makers on the improvement of living and working conditions. Its current thematic priorities are: promoting better employment; extending equal opportunities for women and men; managing diversity; supporting social inclusion; and examining the changing use of time

  17.2  The Dublin Foundation is controlled by an Administrative Board consisting of three representatives (for government, employers and employees) of each Member State and three from the Commission. The UK representatives are officials from the Department for Work and Pensions, the Confederation of British Industry and the Trades Union Congress.

  17.3  The total Commission subsidy to the Foundation for 2000 was £15 million (£9.4 million) and it is expected to be £16 million (£10.5 million) in 2002. The work of the Foundation, which is planned within four-year rolling programmes, is contracted out through open tender to research organisations across Member States.

The document

  17.4  The European Court of Auditors (ECA) finds that the accounts of the Dublin Foundation for the financial year ended 31 December 2000 were reliable and the underlying transactions, taken as a whole, were legal and regular. However, the report makes several observations and recommendations. Responses from the Foundation are also contained in the report. The ECA's observations are helpfully summarised by the Parliamentary Under-Secretary of State (Mr Malcolm Wicks) in his Explanatory Memorandum:

"—  In 2000, the Foundation again made heavy use of carry-overs of appropriations and for some budget lines, the cancellations of appropriations made at the end of the year exceeded the amounts of transfers made. The Foundation should seek to minimise the cancellation of appropriations.

  • The continued under­implementation of the appropriations for the year, as well as the high level of carry­overs, is evidence of weaknesses in the Foundation's monitoring of its annual programme, a situation that has shown little improvement compared to the previous year.

  • In its 1999 Annual Report on the Foundation, the Court referred to the weakness of the Foundation's accounting systems and this still exists in 2000. The general accounts were still kept using a spreadsheet and the introduction of the SAGE general accounting system had to be abandoned. The replacement system was still not operational in April 2001. The monitoring of the implementation of the Foundation's work programme and of the financial implementation of projects was hampered throughout the year by an inability to obtain, from the accounts, financial data on individual projects.

  • The Foundation continues to make excessive use of the imprest account which appears to be the result of the slowness of normal payment methods. The Foundation should remedy this problem rather than having recourse to the imprest account which should only be used exceptionally.

  • Since 1997, the Foundation has not drawn up staff reports as it is required to do at least every 2 years and it has still not produced a 'Guide to staff reports'. Under these circumstances, promotions for 1999 and 2000 were approved without consideration being given to this essential means of comparing employees' relative merits.

  • As laid down in Article 43a of the Foundation's financial regulation, a file should be held that identifies the posts and contains a job description for each category A post. The latest version of the file was not up to date."

  17.5  The report also commented:

"—  The organisation and documentation of staff files are very inconsistent.

  • On average recruitment costs amounted to £9,810 (£6,133) per recruit.

  • On average, 64% of A­grade staff, i.e. 23% of all staff, may be regarded as operational. All other staff, i.e. 73% of the total may be regarded as support staff.

  • Over the 1996­2000 period, salary costs increased more quickly than the number of staff.

  • On average, staff numbers have increased more slowly than the Foundation s workload. However, the Foundation should take great care to maintain control of the increase in salary costs and administrative expenditure which is greater than the increase in its activities over the 1995­2000 period.

  • It might be preferable for the Foundation, in the case of posts involving support and administrative activities which require qualifications of an administrative nature to join forces with the Community institutions and the other decentralised bodies with a view to recruiting staff on the broadest possible basis."

  17.6  The Explanatory Memorandum also summarises the Foundation's responses to the ECA's observations and comments:

"—   It is the Foundation's practice to transfer surpluses arising towards the end of the financial year to budgetary items where there is a potential for utilisation, notwithstanding the fact that usage of funds is not always possible on all occasions. The Foundation notes the Court's comments and seeks to minimise any cancellations resulting from this exercise;

  • In general, monitoring is carried out in a comprehensive and effective manner. With regard to the level of carry-overs the Foundation comments that the nature of its operational activities are innovative/exploratory rather than repetitive and this requires complex and time consuming preparatory procedures prior to the initiation of research on a contractual basis. The level of carry-overs is affected by the relation of the Foundation's annual budgeting cycle to its operational cycle with its associated detailed preparatory procedures. However, particularly in those cases where contracts are repetitive in nature, steps have been taken to bring forward the timing of contractual procedures;

  • As the Foundation reply to the Court's 1999 report stated, the use of a spreadsheet for the General Ledger was an interim arrangement and has now been replaced by the EXACT accounting system. The alternative system to SAGE which became available in the latter half of 2000 has now been installed. The issue of producing project costings is being addressed in the context of the 2001 Budget by using the facilities provided by the Sl2 system that has now been delivered;

  • Subsequent to the delivery of the Sl2 system, the Foundation should be able to fully exploit the on­line visa facility which should further reduce the usage of the imprest account which has been reduced annually since 1997;

  • Measures now put in place should ensure that promotion exercises in the future are conducted in the context of full information;

  • Accepted that in certain cases all necessary documentation is not available on one single file and where this occurs that situation will be reviewed. It will not be possible to supply the missing documentation for older files. Measures are being put in place to ensure that the recruitment checklist specifies all documentation necessary for files;

  • Because of its geographical location, the Foundation tends to incur higher travel and installation costs since it recruits largely from the EU mainland. Access costs to Ireland are high but necessary if the Foundation is to maintain its multinational work force representative of all Member States of the Union;

  • However, of the Category B staff 43% (6 in total) are involved in operational activities and many Category C staff are in practice also engaged in operational activities and make a direct contribution to the added value of the Foundation's output;

  • When exchange rates, salary table increases and weighting factors for the years 1996­2000 are excluded, there was an increase in salary costs of only 0.4% compared to an increase in staff of 4%. The actual increases in salary costs are due largely to the increase in the weighting factor for Ireland from 93.6 in 1996 to 116.5 in 2000. In effect this has resulted in an increase of 24.5% in salary costs;

  • Over the period under review there has been a shift in the role of Research Manager from collecting information also to playing a key role in its dissemination. Also, the breakdown shown in the Foundation's Activity Based Budget provides a more rational indication of the relationship between resources allocated to support and those allocated to operational activities;

  • Where possible the Foundation tries to minimise recruitment costs in regard to generic posts, for instance it has and will use the Commission reserve lists. Collaboration with other agencies could be problematic given that the Foundation has its own Staff Regulation and follow closely the recruitment practices of the European Commission; and

  • The Foundation is actively considering the implementation of the SIC Personnel system in order to improve the quality of its administrative information."

The Government's view

  17.7  The Minister comments:

    "The Foundation's responses indicate that some action has already been taken to implement the changes suggested in the report. Through its membership of the Foundation's Administration Board, the UK will continue to press for improvement in its administrative and financial procedures."


  17.8  We note that the ECA provides a clean bill of financial health for the Dublin Foundation. However, it is also clear that there are a number of administrative and financial weaknesses that still need addressing. We further note that the UK representatives will continue to press for improvement. We have no questions and are content to clear the document.

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