Ministers' Deputies
CM Documents

CM(2009)1011 26 August 2009

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1068 Meeting, 21 October 2009
11 Administration and Logistics

11.2 Accounts of the Partial Agreement establishing the European Centre for Global Interdependence and Solidarity for the year ended 31 December 2008

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THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

FOREWORD

The activities of the North-South Centre are funded by obligatory contributions from member states, voluntary contributions by government agencies or other International Organisations, and by miscellaneous revenue, including interest.

The 2008 budget amounted to €1 002K and was approved by the Executive Council in November 2007. In the course of the year, with the accession of the Republic of Montenegro to the Centre, and the receipt of other additional or voluntary contributions from member states and other North-South Centre stakeholders, the budget increased to €1 112K, the additional 11% being mostly channeled to programme expenditure.

Following the trend of previous years, the Centre has also been able to mobilize additional resources through contributions in kind or co-organised activities, which can be estimated at €251K.

These additional resources (financial and in kind) represent a total of €361K which have considerably reinforced the Centre’s capacity to implement its activities.

During the first quarter of 2008 the work of the Centre was mainly focused on internal reflection and the strategic positioning of the Organisation. Between April and the end of the year the funds allocated to programme expenditure have been steadily used in line with the flow of activities. However the impact of the first quarter and the need to adjust the programme of activities to the outcome of the strategic document led to the postponement or cancelation of some activities. This explains why the budgetary surplus amounted to some €62K at the end of the year. On the other hand, the reduction of staff members from 2007 to 2008 also contributed to reduce the volume of expenditure on the general running of the secretariat (e.g. communications, office supplies, correspondence, production of documents).

In November 2008, the Centre signed a Joint Management Agreement with the European Commission (EuropAid Cooperation Office), that will run between 2009 and 2011. Commission contributions under the Agreement will total €900K (68% of the total cost of the Action). Furthermore, in the framework of its participation in the Euro-Med Partnership on youth, in 2009 the North-South Centre will be responsible for managing a new programme of €200K, 50% financed by the European Commission, to foster Euro-African youth co-operation.

These developments allowed the North-South Centre to implement a “zero nominal growth” policy regarding the obligatory contributions of its member States for the 2009 budget.

With regard to memberships, the return of Italy, together with the accession of Serbia and Morocco in 2009 constitute convincing signals of the Centre’s renewed credibility and trust for the future. It is likely that these new accessions will enhance existing prospects for a further enlargement of the North-South Centre.

Signed
Denis Huber
Executive Director of the European Centre for global interdependence and solidarity

FINANCIAL STATEMENTS AND BUDGETARY MANAGEMENT ACCOUNTS OF THE PARTIAL
AGREEMENT ESTABLISHING THE EUROPEAN CENTRE FOR GLOBAL INTERDEPENDENCE AND
SOLIDARITY FOR THE YEAR ENDING 31 DECEMBER 2008

The European Centre for Global Interdependence and Solidarity was established by Resolution (89)14 of the Committee of Ministers adopted on 16 November 1989 at its 85th session by the Representatives of the following states: Cyprus, France, Italy, Luxembourg, Malta, Netherlands, Norway, Portugal, San Marino and Spain.

The aims of the Centre are to provide a framework for European co-operation for the purpose of increasing public awareness of global interdependence issues and to promote policies of solidarity in conformity with the aims and principles of the Council of Europe.

The headquarters of the Centre were established in Lisbon thanks to the generosity of the Portuguese government.

The Secretary General shall keep accounts in the manner prescribed in the Financial Regulations. These accounts shall be made available to the External Auditor before 10 May of the year following the financial year to which the accounts refer.

The Secretary General herewith presents to the Committee of Ministers, in its composition limited to the Representatives of the states which were members in 2008, to the Partial Agreement establishing the European Centre for Global Interdependence and Solidarity, the financial statements of the Centre for the year ended 31 December 2008.

Drawn up in accordance with Articles 65 to 68 of the Financial Regulations of the Council of Europe, the financial statements of the Partial Agreement establishing the European Centre for Global Interdependence and Solidarity have been examined by the External Auditor (CM(2009)101) and will be submitted for approval at the meeting of Representatives of the members of the Centre on 2 October 2009.

CONTENTS Pages

Draft Resolution submitted to the Committee of Ministers in its composition limited to
the Representatives of the member states of the Partial Agreement 4

Draft Resolution of the meeting of Representatives of members of the Centre approving
the accounts for the year ended 31 December 2008 5
The accounts for the financial year:

I. Certification of the North-South Centre Financial Statements 6
Statement of internal control 7 – 8
Opinion of the External Auditor 9 – 10
The statement of financial position, statement of financial
performance, cash flow statement, statement of changes in net
assets/equity and notes to the financial statements as at 31 December 2008 11 – 28

II. Certification of the Budgetary Management Accounts 29
Opinion of the External Auditor 30 – 31
The budgetary management accounts by which the Secretary
General reports on the collection of receipts and the utilisation of appropriations 32 - 38

In accordance with the recommendation of the External Auditor, the Committee of Ministers, in its composition limited to the Representatives of the states which were members of the Centre in 20082, is invited to give discharge to the Secretary General in respect of the year ended 31 December 2008 by adopting the draft Resolution on page 4.

Draft Resolution CM/Res(2009)…
concerning the financial statements and the budgetary management accounts of the Partial Agreement establishing the European Centre for Global Interdependence and Solidarity for the year ended 31 December 2008

(Adopted by the Committee of Ministers on … 2008,
at the … meeting of the Ministers' Deputies)

The Committee of Ministers, under the terms of Article 16 of the Statute of the Council of Europe, and in its composition restricted to the Representatives of the states which were members in 2008 of the European Centre for Global Interdependence and Solidarity3,

Having regard to Article 70 of the Financial Regulations of the Council of Europe;

Having regard to the financial statements of the Partial Agreement of the European Centre for Global Interdependence and Solidarity for the year ended 31 December 2008, submitted by the Secretary General (CM(2009)101);

Having regard to the decision taken by the Committee of Ministers at the 456th meeting of the Ministers’ Deputies (April 1991, item 20) to submit the financial statements of the Centre for approval to the meeting of Representatives of the members of the Centre;

Having regard to Resolution MS/NS(2009)ACC ... of the meeting of Representatives of members of the Centre regarding the 2008 financial statements;

Having regard to the opinion of the External Auditor (CM(2009)101, page 9 - 10 and 30 - 31);

Having regard to the report of the External Auditor (CM(2009)100),

Resolves as follows:

Single article

Discharge is hereby given to the Secretary General in respect of his management of the Partial Agreement establishing the European Centre for Global Interdependence and Solidarity for the year from 1 January to 31 December 2008.

Draft Resolution MS/NS(2008)ACC ...
concerning the financial statements and the budgetary management accounts of the
Partial Agreement establishing the European Centre for Global Interdependence and Solidarity
for the year ended 31 December 2008

The meeting of Representatives of members of the European Centre for Global Interdependence and Solidarity, in its composition limited to the Representatives of the states which were members of the Centre in 20084,

Having regard to the financial statements of the Centre for the financial year 2008, submitted by the Secretary General (CM(2009)101);

Having regard to the opinion of the External Auditor;

Having regard to the report on the financial statements of the Centre for the financial year 2008 presented by the External Auditor, pursuant to Article 74 of the Financial Regulations of the Council of Europe;

Having regard to the decision taken by the Committee of Ministers at the 456th meeting of the Ministers’ Deputies (April 1991, item 20) to submit the financial statements of the Centre for approval to the meeting of Representatives of members of the Centre,

Resolves as follows:

1. The financial statements of the European Centre for Global Interdependence and Solidarity for the year ended 31 December 2008 as submitted by the Secretary General are hereby approved;

2. The budgetary surplus for the financial year 2008 (€ 62 349.96) is allocated to the programme special account for 2009;

3. The annual financial statements together with the present Resolution and the report of the External Auditor shall be transmitted to the Committee of Ministers.


DIRECTORATE GENERAL OF ADMINISTRATION

AND LOGISTICS

CERTIFICATION OF THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

The Statement of Financial Position, the Statement of Financial Performance, the Cash Flow Statement, the Statement of changes in Net Assets / Equity and the supporting notes for the year ended 31 December 2008 are hereby approved.

Strasbourg, 09 July 2009

THE SECRETARY GENERAL THE DIRECTOR GENERAL
OF ADMINISTRATION
AND LOGISTICS

Signed Signed
Right Hon TERRY DAVIS MARIO MARTINS

Statement of internal control 2008

    1. SCOPE OF RESPONSIBILITY

As Secretary General I have responsibility for maintaining a sound system of internal control which supports the organisation’s policies, aims and objectives. I also have responsibility for ensuring that funds are safeguarded and properly accounted for, and that they are used economically, efficiently and effectively.

    2. THE PURPOSE OF THE SYSTEM OF INTERNAL CONTROL

The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives. It has been in place in the Council of Europe for the year ended 31 December 2008 and up to the date of the approval of the accounts and accords with proper practice.

    3. THE INTERNAL CONTROL ENVIRONMENT

The key elements of the internal control environment, include:

· Ensuring compliance with established policies and procedures – the Council of Europe has comprehensive Financial Regulations, Instructions, and Rules, together with a comprehensive set of Human Resources Policies, which are reviewed at regular intervals. These arrangements promote compliance with norms and best practices in order to ensure that public funds are properly safeguarded and are used economically, efficiently and effectively and in accordance with the authority which governs their use.

· The principles which must be respected by all staff are stated explicitly in the Charter of Professional Ethics. This is supplemented by the Purchasing Code of Ethics, which addresses the issues of conflicts of interest and the receipt of gifts, and by the Rules requiring declarations of interest.

· Each year I send to the head of each Major Administrative Entity a Letter Of Delegation, specifying the details of operation of delegated financial authority and responsibility and underlining internal control responsibilities.

· Financial Management and Reporting - the Council of Europe’s financial managers (the Secretary General, the Commitments Officers, and the Cost Centre Managers) have access to and receive regular financial management reports which monitor actual income and expenditure against approved budgets. Each quarter an organisation-wide variance report is produced so that corrective action can be taken. All budgets are based on the Expected Results of defined activities. Performance is monitored formally by means of a Progress Review report.

· Accounting - financial information is obtained from and reliance is therefore placed upon the Council of Europe’s accounting system. This system has adequate processes in respect of authorisation levels and access controls, and there is a degree of segregation of duties within the Major Administrative Entities and the Finance Directorate of the Council of Europe to complement these controls.

· Risk Management – a pilot project is currently being undertaken with the assistance of a consultant.

· Training - there is a programme of internal control training in order to increase awareness and encourage best practice. I have instructed all financial managers to attend this training.

    4. REVIEW OF EFFECTIVENESS

I have responsibility for reviewing the effectiveness of the system of internal control. My review of the effectiveness of the system of internal control is informed by:

· the Commitments Officers and their Cost Centre Managers within the organisation who have explicit responsibility for the development and maintenance of the internal control framework within their respective administrative entities.

· the work of the Directorate of Internal Audit throughout the year, and the Internal Auditor’s quarterly follow-up reports and annual report. The Directorate plays a central role in providing the required assurance on internal controls through conducting audits in accordance with its Annual Plan which is produced in consultation with senior managers and approved by myself. Effectiveness is enhanced by ensuring that recommendations are systematically subject to follow-up procedures, and are tracked by a dedicated IT tool.

· the Audit Committee which was established by the Committee of Ministers and which started work in 2008.

· the annual report and management letters on the accounts by the External Auditor. This report is not limited to strictly accounting issues because it may also address more general internal control issues. Recent issues have been Cost Centre financial controls, the efficiency of payment processing and risk management.

    5. AREAS FOR DEVELOPMENT 2009

The following have been identified as areas for development in 2009:

· A Fraud Awareness and Prevention Policy will be put into force in late 2009. The objective of the policy will be to ensure that all staff are made aware of the nature of fraud and what action should be taken if they suspect it. This will help to minimise the risk of fraudulent activity. The policy will be complemented by a legally binding Instrument.

· Risk management has been identified as an area to be developed. A pilot project has been launched. An interim report will be produced by June and a final report by November 2009. This pilot is being used to test the risk management methodology and the feasibility of organisation-wide application.

Signed
Right Hon Terry Davis
Secretary General

Audit Opinion
Financial Statements of the Partial Agreement establishing the European Centre for Global Interdependence and Solidarity (North-South Centre) 2008.

The External Auditor’s report to the Committee of Ministers – Representatives of the states party to the Partial Agreement establishing the European Centre for Global Interdependence and Solidarity (North-South Centre).

I have audited the financial statements of the Partial Agreement establishing the European Centre for Global Interdependence and Solidarity (North-South Centre) for the year ended 31 December 2008. These comprise the statements of financial position, financial performance, cash flow and changes in net assets/equity and the related notes. These financial statements have been prepared under the accounting policies set out within them.

Respective Responsibilities of the Secretary General and Auditor

The Secretary General of the Council of Europe is responsible for the preparation and fair presentation of the financial statements, in accordance with requirements of the Financial Regulations as authorised by the Committee of Ministers. This responsibility includes: designing, implementing and maintaining internal control; the fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
My responsibility is to issue a report on the audit of the financial statements, in accordance with Article 74 of the Financial Regulations and Supplementary Provisions. I am required to express an opinion as to whether the financial statements present fairly the financial position at the end of the period and the results of the operations for the period; and that the financial statements were prepared in accordance with International Public Sector Accounting Standards and the stated accounting policies. I also report to you whether, in all material respects, the transactions have been made in accordance with the Financial Regulations.
I read the other information attached to the financial statements and consider whether it is consistent with the audited financial statements. This other information consists of the Foreword and the Statement of Internal Control. I consider the implications for my report if I become aware of any apparent misstatements or material inconsistencies with the financial statements. I am not required to consider whether the statement of internal control covers all risks and controls, or form an opinion on the effectiveness of the North-South Centre’s corporate governance procedures or its risk and control procedures. My responsibilities do not extend to any other information.

Basis of audit opinion

I conducted my audit in accordance with International Standards on Auditing issued by the International Auditing and Assurance Standards Board. My audit includes examination, on a test basis, of evidence relevant to the amounts, disclosures and regularity of financial transactions included in the financial statements. It also includes an assessment of the significant estimates and judgments made by the Secretary General in the preparation of the financial statements, and of whether the accounting policies are most appropriate to the North-South Centre’s circumstances, consistently applied and adequately disclosed.

I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error, and that in all material respects the transactions have been made in accordance with the Financial Regulations and applied to the purposes intended by the Committee of Ministers. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the financial statements.
Opinion
In my opinion the financial statements present fairly, in all material respects, the financial position of the Partial Agreement establishing the European Centre for Global Interdependence and Solidarity (North-South Centre) as at 31 December 2008 and, for the year then ended, the results of its financial performance, changes in fund balances and reserves, and cash flow, in accordance with International Public Sector Accounting Standards.
Opinion on Regularity
In my opinion, in all material respects, the transactions of the North-South Centre have been made in accordance with the Financial Regulations and applied to the purposes intended by the Committee of Ministers.
Long Form Report
In accordance with Article 74 of the Financial Regulations, I have also issued a long form report on my audit of the Council of Europe as a whole.

Signed
Amyas C E Morse
Comptroller and Auditor General, United Kingdom
External Auditor

National Audit Office
London,
21 July 2009

THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITION AS AT:

The notes on pages 15 to 28 form part of these accounts.
THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR

The notes on pages 15 to 28 form part of these accounts.

THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

CASH FLOW STATEMENT FOR THE YEAR

See note 19 for the reconciliation between the net surplus from operating activities and the net cash flows from operating activities.

The notes on pages 15 to 28 form part of these accounts.

THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

STATEMENT OF CHANGES IN NET ASSETS/EQUITY FOR THE YEAR ENDED:

The presentation of the 2007 equity movements has been changed in 2008, in order to provide more detailed information on the allocation of the previous year’s result.

The notes on pages 15 to 28 form part of these accounts.

THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008

1. STATEMENT OF ACCOUNTING POLICIES

Basis of preparation

The financial statements of the European Centre for Global Interdependence and Solidarity have been prepared in accordance with International Public Sector Accounting Standards (IPSAS), as stated in the Financial Regulations of the Council of Europe.

Transactions are recorded in the financial statements of the period to which they relate. The accounting policies have been applied consistently throughout the period and the amounts presented in these financial
statements are denominated in thousand euros (€K).

Accounts receivable

Receivables are stated at their nominal value. No doubtful debt provision is recognised in respect of receivables related to member states contributions. For all other receivables, a doubtful debt provision is identified based on a review of the outstanding amounts at the end of the reporting period.

Property, plant and equipment

In 2006 the Council of Europe introduced a new property, plant and equipment accounting policy by which only items with a unit cost, or if bought in quantity at a combined value of more than €1.5K are capitalised.

All property, plant and equipment capitalised in previous reporting periods, and not corresponding to these criteria were expensed in 2006.

Depreciation is calculated on the straight-line method over the estimated useful life of the assets as follows:

Computer hardware and audiovisual equipment 3 years

Furniture and fittings 5 years

Others 3 years

Accounts payable

Payables are stated at their nominal value.

Invoices received from suppliers for goods delivered or services provided and not yet settled are recognised as outstanding liabilities under the creditors heading at the end of the reporting period.

Deferred income

The year end surplus on the special account is recognised as deferred income. This surplus is allocated to finance activities for which expenditure will be incurred after the reporting date.

THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

1. STATEMENT OF ACCOUNTING POLICIES

Revenue recognition

a) Obligatory contributions of member states

Obligatory contributions are destined to finance the annual activities of the Centre. Income is recognised on an accrual basis, as collection orders are issued. Obligatory contributions are recognised and reported in the accounts of the periods to which they relate and not as cash is received.

b) Voluntary contributions

Income related to voluntary contributions is recognised when the corresponding expense is incurred. The balance of unspent voluntary contributions relating to future periods is deferred accordingly.

c) Other income

Part year contributions paid by new member states that join the Centre during the reporting period are in addition to the contributions included in the initial approved budget. They are not presented in the Statement of Financial Performance as Contributions from member states, but as other income.

d) Financial income

The interest earned from the Centre's current accounts is recognised on an accrual basis.

Expense recognition

Accrual accounting is applied to expenses. Invoices paid after the end of the reporting period relating to the previous financial year, are recognised as expenditure for that year.

Segmental reporting

Segmental information is provided on the basis of the activities run by the Centre and also on the basis of the source of financing of these activities. These sources of financing can be the obligatory contributions paid by member states to finance the budget of the Centre, or the voluntary contributions paid to finance additional activities recorded under the Special Account.
Segmental information is only available for revenues and expenditure, as assets and liabilities are jointly used by all segments.

Changes in respect of the 2007 presentation

The line named “Special Account contributions” which appeared in the 2007 financial statements under operating revenue, has been merged in 2008 with the line “Voluntary contributions”. The “Special Account contributions” represented voluntary contributions income deferred from previous years recognised during the period.
The presentation has been changed in order to show together all the voluntary contributions recognised as income during the period. However, the amount corresponding to income deferred from previous years recognised during the period is still provided in the breakdown of note 9.

The presentation of the Statement of Net Assets has also been changed in order to provide more detailed information on the allocation of the previous year’s result to the various Net Assets lines.

THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

2. CASH AT BANK

Cash is held in interest bearing current bank accounts, which yielded interest at an average rate of 3.86% in 2008 and 3.74% in 2007. This interest rate corresponds to the yearly average European Overnight Index Average (EONIA) minus 0.125. The breakdown as at 31 December 2008 and 2007 is as follows:

3. OTHER RECEIVABLES AND PREPAID EXPENSES

4. PROPERTY, PLANT AND EQUIPMENT

In 2006 the Council of Europe introduced a new property, plant and equipment accounting policy by which only items with a unit cost, or if bought in quantity at a combined value of more than €1.5K are capitalised.

There were no disposals or acquisitions of property, plant and equipment during 2008.

THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

Changes in property, plant and equipment and related depreciation for the year were as follows:

5. PAYABLES AND ACCRUED EXPENDITURE

6. DEFERRED INCOME

Deferred income corresponds to income committed by donors in 2008 or before, but for which the corresponding expenditure will be incurred after the reporting date.

THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

The deferred income balance is the year end surplus on the special account, which includes the surplus on the North-South Centre budget at the end of the previous reporting period.

7. NET ASSETS

a) A reserve was created to cover expenditure against voluntary contributions pending their receipt (Resolution MS/NS (93)1 and decision taken at the 6th meeting of the member states, 5 November 1991).

b) The impact in Net Assets of the reconciliation items between budgetary and IPSAS accounting had been presented in 2007, the first year of IPSAS compliance, under IPSAS Adjustments Reserve. In the 2008 presentation, it has been considered more appropriate not to make reference to the IPSAS adjustments any more, but to allocate these adjustments to Other reserves. The 2007 figures have been represented accordingly.

c) The property, plant and equipment reserve represents the impact of the capitalisation of property, plant and equipment.

8. CONTRIBUTIONS FROM MEMBER AND NON-MEMBER STATES

THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

9. VOLUNTARY CONTRIBUTIONS

Voluntary contributions received during the year, but unspent at year-end are recorded as deferred income and recognised as income when they are spent.
Voluntary contributions recognised as income during the period were as follows:

THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

10. SERVICES IN KIND

The contributions received in kind in 2008 were estimated to amount to €251K and €901K in 2007. The main contributions in kind and their estimated value were as follows:

11. OTHER INCOME

Other income for 2008 amount to €12K. Montenegro was the last member state to join the North-South Centre on 1st March 2008, paying a part year contribution of €8K.

12. OPERATIONAL EXPENDITURE

THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

13. STAFF EXPENDITURE

Staff expenditure and number of employees were as follows:

14. CONTRIBUTION TO THE ORDINARY BUDGET AND THE PENSION RESERVE FUND

The North-South Centre benefits from common services such as telecommunications, computer purchase and maintenance, central administration and other expenditure financed from the Ordinary Budget.
A fixed sum contribution based on the number of permanent and temporary staff of the partial agreement proposed for the period is paid to the Ordinary Budget. The North-South Centre also pays a contribution to the Council's Pension Reserve Fund for its staff members.

The breakdown of the contributions paid in respect of the reporting period is as follows:

15. OTHER EXPENDITURE

The authorities of the Netherlands asked in 2007 for the reimbursement of the outstanding balance from a voluntary contribution credited to the North-South Centre in 2004. The purpose of this grant was to finance the project "Programme for Strengthening Global Development Education at National Level in 4 countries (Czech Republic, Hungary, Poland, Slovakia)".
The unspent balance which amounted to €58K was reimbursed to the Dutch authorities in May 2007. In 2008 there have been no reimbursements of contributions.

THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

16. FINANCIAL REVENUE AND EXPENSES


Net financial revenue decreased due mainly to the decrease in the volume of obligatory contributions, and to the later payment of these contributions in 2008 compared to 2007.

17. EMPLOYEE BENEFITS

The Council of Europe operates two defined benefit pension schemes, which also provide health coverage for retired staff members and their dependents. The North-South Centre staff members are covered by these pension schemes, for which the Centre pays an annual contribution to the Pension Reserve Fund (note 14).

The future pension benefits liability is not held by the North-South Centre, but transferred to the General Budget through the payment of an annual contribution.

THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

18. SEGMENT INFORMATION AND RECONCILIATION OF BUDGETARY AND NET ACCOUNTING RESULTS

Segment information is based on the budgetary and non budgetary sources of financing of the North-South Centre activities, as well as on the nature of the activities. Assets and liabilities are jointly used by the segments, and cannot be allocated by source of financing or nature of activities.

Segment information based on the budgetary or non budgetary source of financing

The table below presents the Statement of Financial Performance split by source of financing. It combines budgetary and IPSAS reporting, the IPSAS adjustments are accounting entries in conformity with IPSAS but not included in the Budgetary Management Accounts.

THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

The allocation of the operating expenses by activities is based on the Budgetary Tables presentation. Where revenue was not earmarked to specific operational activities, it has been allocated pro-rata to actual expenditure. The resources available for the Centre in 2008 have been allocated to the following activity areas:

THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

The presentation of the segment note below has been changed in respect of the 2007 presentation to follow a standard presentation
in all segment tables. The resources available for the Centre in 2007 were allocated to the following activities:

THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

19. RECONCILIATION OF CASH FLOWS

The net cash flows from operating activities amounts to €124K in 2008.The reconciliation of net cash flows from operating activities to net surplus from operating activities is as follows:

20. POST BALANCE SHEET EVENTS

The agreement signed between the North-South Centre and the European Commission in November 2008, to finance a maximum of €900K is being implemented since the beginning of 2009 and will be run over a period of 36 months. A first contribution of €240K has been credited to the North-South Centre bank account in February 2009.
The Centre will participate in the “Framework Partnership Agreement CoE/European Commission”, and will be responsible for the implementation of activities with a budget of €200K in 2009, jointly financed between the Centre and the European Commission.
Serbia and Italy joined the North-South Centre with effect from 1 and 15 March 2009 respectively and the accession of Morocco has been approved with effect 1 July 2009.

21. RELATED PARTIES

The North-South Centre is a Partial Agreement forming part of the Council of Europe. The Council is governed by a Committee of Ministers composed of representatives of all the member states. They do not receive any remuneration from the Council, however the member states should be considered as related parties. The information concerning transactions with member states is provided in notes 3, 5, 8, 9, 10 and 11.
The overall budget of the Council of Europe comprises a number of different budgets which are grouped for accounting purposes in three sets of accounts. These three sets of accounts are Eurimages, the North-South Centre (NSC) and the General Budget. The North-South Centre (NSC) and the General Budget are considered as related parties. However, there are no transactions between Eurimages and the NSC; the disclosure of transactions with the General Budget is as follows:

THE NORTH-SOUTH CENTRE FINANCIAL STATEMENTS

The Council is placed under the direct control of the member states, and has no ownership interest in associations or joint ventures.

22. KEY MANAGEMENT REMUNERATION

The Council Secretariat is managed by the Secretary General who directs the Secretariat, assisted by the Deputy Secretary General and other senior managers and officers (key management personnel comprising the Executive Board). They are remunerated by the Council. Details of the remuneration paid to the Secretary General and other members of the Executive Board are given in the consolidated financial statements of the Council of Europe.

The detail of remuneration and compensation received by the Director of the North South Centre is as follows:

Mr. Correia Nunes worked as Director of the North-South Centre until July 2007. He was replaced by Mr. Huber
in December 2007.

The key management personnel and their close family members did not receive any loans from the Council.

Staff members are exonerated from the payment of taxes on the purchase of a limited quantity of alcohol and
tobacco products. Expatriate staff members are exonerated from the payment of VAT on the acquisition of vehicles and their replacement on a two-yearly basis. All staff also receive exemption from the payment of income tax on the remuneration received from the Council.

Staff members with diplomatic status are also exonerated from the payment of taxes on a limited quantity of petrol.

23. GOING CONCERN

After the very difficult period it faced in 2006-2007, the Centre has entered into a recovery phase in 2008, with the setting-up of a new Executive Council, the accession of a new member state (Montenegro) and the adoption of a strategy document, which provides a sound roadmap for the 2008-2010 period. These enhanced prospects were confirmed in the autumn of 2008, when the then member states (with the exception of Malta which withdrew from the partial agreement at the end of 2008) and the other NSC stakeholders confirmed their commitment to the Centre and European Commission funding (€400K / year) for two pluri-annual joint programmes on education and youth has been secured. Another important development took place in 2009 with the accession of Serbia and Italy in March and the later accession of Morocco in July. On this basis, the Centre is regarded as a going concern.



DIRECTORATE GENERAL OF ADMINISTRATION
AND LOGISTICS

CERTIFICATION OF THE NORTH-SOUTH CENTRE BUDGETARY MANAGEMENT ACCOUNTS

The Budgetary Management Accounts of the Partial Agreement establishing the European Centre for Global Interdependence and Solidarity for the year ended 31 December 2008 are hereby approved.

Strasbourg, 09 July 2009

THE DIRECTOR GENERAL
OF ADMINISTRATION
AND LOGISTICS

Signed
MARIO MARTINS

Audit Opinion
Budgetary management accounts of the Partial Agreement establishing the European Centre for Global Interdependence and Solidarity (North-South Centre) 2008

The External Auditor’s report to the Committee of Ministers of the Council of Europe - Representatives of the states party to the Partial Agreement establishing the European Centre for Global Interdependence and Solidarity (North-South Centre)

I have audited the budgetary management accounts of the Partial Agreement establishing the European Centre for Global Interdependence and Solidarity (North-South Centre), on pages 32 to 38, for the year ended 31 December 2008. These accounts comprise a schedule of operating revenue and expenses.

Statement of Responsibilities

The Secretary General of the Council of Europe is responsible for the preparation of the budgetary management accounts in accordance with requirements of the Financial Regulations as authorised by the Committee of Ministers.

My responsibility is to undertake an audit of, and express an opinion on, whether the budgetary management accounts have been prepared in accordance with Article 74 of the Financial Regulations and Supplementary Provisions, and in all material respects, the transactions were in accordance with the Financial Regulations and budgetary authorisations.

Basis of audit opinion

I conducted my audit in accordance with International Standards on Auditing, issued by the International Auditing and Assurance Standards Board and in accordance with the Financial Regulations.

I planned and performed my audit to obtain reasonable assurance that the budgetary management accounts have been prepared in accordance with the Financial Regulations. My audit included an examination, on a test basis, of evidence supporting the information in the budgetary management accounts, of procedures and of a sample of transactions. My audit also included an assessment of the accounting principles used and significant estimates made by management, as well as evaluating overall the presentation of the budgetary management accounts. I believe that my audit provides a reasonable basis for my opinion.

Opinion

In my opinion, the budgetary management accounts of the Partial Agreement establishing the European Centre for Global Interdependence and Solidarity (North-South Centre) for the year ended 31 December 2008, in all material respects, have been properly prepared in accordance with the Financial Regulations and properly reflect the financial records and transactions of the North-South Centre.

I have separately provided a long form audit report for the Council of Europe as a whole, as required by Article 74 of the Financial Regulations.

Signed
Amyas C E Morse
Comptroller and Auditor General
United Kingdom

External Auditor

National Audit Office
London,
21 July 2009

NORTH-SOUTH CENTRE

BUDGETARY MANAGEMENT ACCOUNTS
BASIS OF PREPARATION

The Budgetary Management Accounts of the Organisation show:

a) in the case of receipts:

- collection orders issued;

- other receipts collected.

b) in the case of expenditure:

- commitments entered into;

- payment authorisations issued;

- payments effected.

c) the extent to which budgetary appropriations have been utilised;

d) movements and availability of funds.

The budgetary management accounts are presented in Euros, following the presentation of the approved
budget.

SPECIAL ACCOUNT LC PROGRAMME - OPERATING REVENUE

SPECIAL ACCOUNT LC PROGRAMME - OPERATING EXPENSES

SPECIAL ACCOUNT LC PROGRAMME - OPERATING EXPENSES

BUDGETARY MANAGEMENT ACCOUNTS - OPERATING REVENUE

BUDGETARY MANAGEMENT ACCOUNTS - OPERATING EXPENSES

BUDGETARY MANAGEMENT ACCOUNTS - OPERATING EXPENSES

1 This document has been classified "restricted" until the date of its adoption by the Committee of Ministers.

Note Internet: http://www.coe.int/cm
Note 2 States concerned: Cyprus, Finland, Germany, Greece, Iceland, Ireland, Liechtenstein, Luxembourg, Malta, Montenegro, Netherlands, Norway, Portugal, San Marino, Slovenia, Spain, Sweden and Switzerland.

3 States concerned: Cyprus, Finland, Germany, Greece, Iceland, Ireland, Liechtenstein, Luxembourg, Malta, Montenegro, Netherlands, Norway, Portugal, San Marino, Slovenia, Spain, Sweden and Switzerland.

4 States concerned: Cyprus, Finland, Germany, Greece, Holy See, Iceland, Ireland, Liechtenstein, Luxembourg, Malta, Montenegro, Netherlands, Norway, Portugal, San Marino, Slovenia, Spain, Sweden and Switzerland.



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