Ministers' Deputies
    CM Documents

    CM(2009)102 1 26 August 2009

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    1068 Meeting, 21 October 2009
    11 Administration and Logistics

    11.3 Accounts of the Partial Agreement of the European Support Fund for the co-production and distribution of creative cinematographic and audio-visual works "EURIMAGES" for the year ended 31 December 2008

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    "EURIMAGES" FINANCIAL STATEMENTS

    FOREWORD

    Eurimages is a fund set up to provide financial support to European cinematographic co-productions and to the distribution of these works.

    To this end, it has developed four support programmes, of which the largest in terms of budgetary package is the co-production support programme. The Fund has also included in its programme of activities a "Promotion" programme to finance promotional and partnership operations, particularly at film festivals.

    The 2008 budget, totalling € 22 665K, is detailed below:

Expenses

€K

%

Receipts

€K

%

Operating expenses

2 205

9.73

Contributions from States

20 270

89.43

Co-production programme

18 405

81.20

Bank interest

1 100

4.86

Digitisation programme

500

2.21

Reimbursements

1 295

5.71

Distribution programme

795

3.51

     
Cinemas programme

660

2.91

     
Promotion programme

100

0.44

     
Total

22 665

100

Total

22 665

100

    It is interesting to note that the internal resources generated by the Fund's activity (10.57%) exceed the operating budget (9.73%). This ratio, however, might well deteriorate during the 2009 financial year, given the fall in interest rates.

    During the year 2008, the Secretariat of the Fund received 195 applications for co-production support. Following verification of their eligibility by the Secretariat, 114 co-production projects were placed on the agenda of the Eurimages Board of Management, which decided to support 57 of them; this represented a selection rate of 50%, slightly lower than the previous year (55.96%).

    Similarly, 184 requests for distribution support were examined by the Secretariat, of which 174 were placed on the agenda of the Eurimages Board of Management, which selected 149; this represented a selection rate of 85.63%, also slightly down on the previous year (87.95%).

    In the framework of its cinema support programme, the Fund in 2008, in the light of the cinemas’ European film programming in 2007, supported 40 cinemas in Fund member states which are not part of the Media network.

    In the framework of the digitisation programme, Eurimages supported the production of digital masters for eight films which had previously received co-production support. This support programme, which had been started early in 2007 for a trial period of two years, has been continued, but with conditions for the allocation of support which have been changed to make them more appropriate to producers' needs and to simplify the processing of applications.

    Films supported by Eurimages were awarded numerous prizes in 2008. In particular, three films won awards during the Cannes Film Festival, and "Yumurta", a film by Semih Kaplanoglu, won first prize at the Istanbul Festival and more than 20 prizes at other festivals. The San Sebastian, Amsterdam and Seville festivals also awarded prizes to films which had received Eurimages support.

    Finally, it should be pointed out that towards the end of 2008 the Eurimages Board of Management adopted several measures which came into force at the beginning of 2009, so as to improve the management of the Fund and the selection of applications. In particular, the Board introduced into the project selection procedure a script analysis by independent experts, and reduced (from 5) to 4 the number of its meetings each year, so as to enable this measure to be set up (time for processing applications and financing of the cost of the experts). The Board also made compulsory the setting up of a collection account for all supported co-production projects with a budget of more than 3 million euros. This should enable Eurimages better to monitor the flow back of receipts and to reduce the risk of outstanding payments. The effects of this measure will be felt in two to three years' time, as the films financed with effect from 1 January 2009 are released.

    Signed
    Roberto Olla
    Executive Secretary of the European Support Fund for the co-production and distribution of creative cinematographic and audiovisual works “Eurimages”

    FINANCIAL STATEMENTS AND BUDGETARY MANAGEMENT ACCOUNTS OF THE PARTIAL AGREEMENT "EURIMAGES" FOR THE YEAR ENDED 31 DECEMBER 2008

    The European Support Fund for the co-production and distribution of creative cinematographic and audio-visual works “Eurimages” was set up for an indefinite period under Resolution (88) 15, which was adopted by the Committee of Ministers at the 420th meeting of the Ministers’ Deputies on 26 October 1988.

    The aim of the Fund is to promote, by way of a multilateral support fund, an increasing number of European cinematographic and audio-visual co-productions and to facilitate their distribution (CM(89)136 Corrigendum). The headquarters of the Fund are based in Strasbourg.

    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 submits to the Committee of Ministers for examination the 2008 financial statements of the Partial Agreement of the European Support Fund for the co-production and distribution of creative cinematographic and audio-visual works "Eurimages".

    The financial statements of the Partial Agreement of the European Support Fund for the co-production and distribution of creative cinematographic and audio-visual works "Eurimages" for the year ended 31 December 2008 were drawn up in accordance with Articles 65 to 68 of the Council of Europe’s Financial Regulations and were subsequently submitted to the External Auditor (CM(2009)102) and will be submitted for approval by the Board of Management at its 116th meeting held in Strasbourg on 24 September 2009.

    In the light of the report of the External Auditor, the Committee of Ministers is invited to discharge the Secretary General from responsibility for the financial year 2008 and to this end a Draft Resolution is submitted to the Committee of Ministers for adoption (see page 5).

    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 5

    The accounts for the financial year:

    I. Certification of the Partial Agreement Eurimages Financial Statements 6
    Statement of internal control 7 - 8
    Opinion of the External Auditor 9 - 10
    Statement of financial position, statement of financial performance, cash 11 - 29
    flow statement, statement of changes in net assets/equity, accounting
    policies and notes to the financial statements for the financial year

    II. Certification of the Budgetary Management Accounts 30
    Opinion of the External Auditor 31 - 32
    The budgetary management accounts by which the Secretary General
    reports on the collection of receipts and the utilisation of appropriations 33 - 35

    III. Statement of financial support awarded and charged to the budget as
    at 31 December 2008 36 - 47

    IV. Statement of financial support granted awaiting signature of contracts as
    at 31 December 2008 48 - 50

    Draft Resolution CM/Res(2009)…
    concerning the financial statements and the budgetary management accounts of the Partial Agreement of the European Support Fund for the co-production and distribution of creative cinematographic and audio-visual works “Eurimages” for the year ended 31 December 2008

    (Adopted by the Committee of Ministers on ... 2009,
    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 party in 2008 to the Partial Agreement of the European Support Fund for the co-production and distribution of creative cinematographic and audio-visual works “Eurimages2”,

    Having regard to Articles 1, 2 and 3 of the Financial Regulations of the “Eurimages” Fund;

    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 Support Fund for the co-production and distribution of creative cinematographic and audio-visual works “Eurimages” for the year ended 31 December 2008, presented by the Secretary General (CM(2009)102);

    Having regard to the opinion of the External Auditor;

    Having regard to the report of the External Auditor;

    Having regard to the decisions taken by the Board of Management, at its 116th meeting on 24th September 2009 concerning the presentation of the 2008 financial statements,

    Resolves as follows:

    1. Discharge is hereby given to the Secretary General in respect of his management of the Partial Agreement of the European Support Fund for the co-production and distribution of creative cinematographic and audio-visual works “Eurimages” for the financial year from 1 January to 31 December 2008

    2. The cumulative surplus of €16 411 092.97 as at 31 December 2008 is allocated to the financial year 2009.


    DIRECTORATE GENERAL OF ADMINISTRATION

    AND LOGISTICS

    CERTIFICATION OF THE PARTIAL AGREEMENT “EURIMAGES” 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.

    Statement of internal control 2008

    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.

    · the Audit Committee which was established by the Committee of Ministers and 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 of the European Support Fund for the co-production and distribution of creative cinematographic and audio-visual works “Eurimages” (Eurimages Fund) 2008

    The External Auditor’s report to the Committee of Ministers – Representatives of the states party to the Partial Agreement of the European Support Fund for the co-production and distribution of creative cinematographic and audio-visual works “Eurimages” (Eurimages Fund)

    I have audited the financial statements of the Partial Agreement of the European Support Fund for the co-production and distribution of creative cinematographic and audio-visual works “Eurimages” (Eurimages Fund) 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 Eurimages Fund’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 Eurimages Fund’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 of the European Support Fund for the co-production and distribution of creative cinematographic and audio-visual works “Eurimages” (Eurimages Fund) 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 Eurimages Fund 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

    "EURIMAGES" FINANCIAL STATEMENTS

    STATEMENT OF FINANCIAL POSITION AS AT:

    The notes on pages 15 - 29 form part of these accounts.

    "EURIMAGES" FINANCIAL STATEMENTS

    STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR

    The notes on pages 15 - 29 form part of these accounts.

    "EURIMAGES" FINANCIAL STATEMENTS

    CASH FLOW STATEMENT FOR THE YEAR

    See note 18 for the reconciliation between the net surplus from operating activities and the net cash flows from operating activities.

    The notes on pages 15 - 29 form part of these accounts.

    "EURIMAGES" FINANCIAL STATEMENTS

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

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

    The notes on pages 15 - 29 form part of these accounts.

    "EURIMAGES" 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 "Eurimages” have been prepared in accordance with International Public Sector Accounting Standards (IPSAS), as required under the Council of Europe Financial Regulations.

    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

    No receivables are shown for repayment of the financial support provided for film production due to the uncertainty of its recovery.
    Other 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 made on the basis of a review of the outstanding amounts at the end of the reporting period.

    Financial support for film production

    As part of its programme of activities, "Eurimages" provides financial support to film producers which may become reimbursable. This financial support is not recorded as a non-current asset, in view of the uncertainty of its recovery, but considered as grants.

    Property, plant and equipment

    "Eurimages" benefits from the use of the Council of Europe property, plant and equipment for which, like all other Partial Agreements, it pays a fixed sum contribution to the Ordinary Budget.

    However, since 2003, various property, plant and equipment and intangible assets have been acquired to cover specific needs and charged to the budget of “Eurimages”. These assets are capitalised and stated at historical cost less depreciation.

    Since 2006 the Council of Europe has introduced a new property, plant and equipment accounting policy under which only items with a unit cost, or, if bought in quantity, a combined value of more than €1.5K will be capitalised. All property, plant and equipment capitalised in previous reporting periods and not meeting these criteria were expensed in 2006.

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

    Hardware and audiovisual equipment 3 years

    Software 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 "creditors", at the end of the reporting period.

    "EURIMAGES" FINANCIAL STATEMENTS

    Commitments on signed contracts

    During the reporting period, "Eurimages" may make commitments to provide financial support on forthcoming receipts for the production of films, or grants for the distribution of films, support of cinemas, or digitisation. These payments may be subject to the completion or partial completion of the projects. At the end of the reporting period, such commitments are recorded as short-term liabilities when the completion or partial completion of the projects has been justified to “Eurimages”.

    Revenue recognition

    a) Obligatory contributions of member states

    The annual activities of “Eurimages” are financed by obligatory contributions. 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 on an accrual basis, when information about the forthcoming receipt is available.

      c) Repayment of financial support for film production

    Due to the uncertainty of their recovery, repayments of the financial support provided to film producers are treated as operating revenue in the year of receipt.

    d) Financial income

    Interest earned from the "Eurimages" short-term deposits, as well as that earned from its current account are recognised on an accruals basis.

    Expense recognition

    Accrual accounting is applied to expenses. Invoices paid after the end of the reporting period and relating to the previous financial year are recognised as expenditure for that year. Financial support for film production and grants for distribution, cinema support and digitisation are recorded as expenses when obligations arise under the terms of the contracts.

    "EURIMAGES" FINANCIAL STATEMENTS

    2. CASH AND CASH EQUIVALENTS

    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 cash surplus generated from the timing difference between the receipt of contributions and the actual payment of grants is placed on short-term deposit with a duration of between 1 and 6 months. These deposits yield interest based on the European Interbank Offered Rate (Euribor) applicable on the date of the deposit and for the duration agreed.

    Cash equivalents included in the cash flow statement comprise the following statement of financial position amounts:

    3. DEBTORS

    "EURIMAGES" FINANCIAL STATEMENTS

    Of the total of €121K due by France as at 31 December 2007 in respect of late payment interest, an amount of €41K was paid during 2008. The remaining €80K has been written off in accordance with the decision of the Committee of Ministers (CM/Del/Dec(2008)1042/11.3).(Note 17).

    Montenegro decided to withdraw from “Eurimages” with retroactive effect as at 6 June 2006. The Deputies took note of this decision and authorised the Secretariat to cancel the 2007 call for contribution, which amounted to €100K (CM/Del/Dec(2008)1042/11.8).

    4. PROPERTY, PLANT AND EQUIPMENT

    In 2006 the Council of Europe introduced a property, plant and equipment accounting policy under which only items with a unit cost, or, if bought in quantity, a combined value of more than €1.5K are capitalised.
    There were no disposals of tangible assets or transfers between classes of tangible assets during 2008.

    Changes in tangible assets and related depreciation for the year were as follows:

    5. INTANGIBLE ASSETS

    In 2004 “Eurimages” started to develop software customised to its activities, which was implemented in 2007. The final value of this software (€305K) is based on a valuation method defined by Eurimages Secretariat in cooperation with the Directorate of Information Technologies in 2006.

    Although the software is in use since 2007, new functionalities to help in the preparation of statistics have been added in 2008. The development of these new functionalities had a cost of €31K.

    There were no disposals of intangible assets or transfers between classes of intangible assets during 2008.

    "EURIMAGES" FINANCIAL STATEMENTS

    Changes in intangible assets and related amortisation for the year were as follows:

    6. PAYABLES AND ACCRUED EXPENDITURE

    Production, distribution, cinema support and digitisation creditors at year-end consist of amounts committed on contracts already signed. Where payment depends on completion, or partial completion of the films supported, the creditor is only recorded when the completion or partial completion of the project has been evidenced by the beneficiary.

    Details of the commitments signed by “Eurimages” are shown in the table of amounts granted and charged to the budget (pages 36-47).

    "EURIMAGES" FINANCIAL STATEMENTS

    7. CONTRIBUTIONS FROM MEMBER STATES

    "EURIMAGES" FINANCIAL STATEMENTS

    8. VOLUNTARY CONTRIBUTIONS

    9. REPAYMENT OF FINANCIAL SUPPORT

    The financial support provided for film productions is reimbursable to "Eurimages" by the producers according to the commercial success of the film. “Eurimages” has a credit risk that film producers fail to discharge their obligations to repay “Eurimages” financial support when payment is due. The reimbursements collected during 2008 and 2007 that amounted individually to more than €40K were as follows:


    (*) Individual reimbursements of less than €40K.

    "EURIMAGES" FINANCIAL STATEMENTS

    10. CANCELLA TION OF CONTRIBUTION

    In its composition restricted to the member states of Eurimages, the Committee of Ministers took note on 25 November 2008, at the 1042nd meeting of the Ministers’ Deputies, of the decision by Montenegro to withdraw from the Partial Agreement, as well as its request to give retroactive effect to its withdrawal as at 6 June 2006 (CM/Del/Dec(2008)1042/11.8).

    Considering that Montenegro had never exercised its membership of the Partial Agreement, the Deputies agreed to grant this request and, consequently, authorised the Secretary General to cancel the call for contribution notified to Montenegro in respect of the budget of “Eurimages” for 2007. This call for contribution amounted to €100K.

    11. SUNDRY INCOME

    Part year contributions paid by new member states that join “Eurimages” 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. Lithuania joined “Eurimages” on 29 May 2007; no new member states joined the Partial Agreement in 2008.

    12. FINANCIAL SUPPORT AND GRANTS

    Financial support for film production is paid in three instalments. “Eurimages” incurs the obligation to pay the first instalment on signature of the contract, while the obligation to pay the other two instalments only comes into force once producers have justified completion or partial completion of the project.

    Under the contracts for financial support which “Eurimages” signs with film producers, such support may become reimbursable depending on the commercial success of the film. However, in view of historic levels of reimbursement, it is deemed prudent to record financial support to producers in the financial statements not as a non-current asset but to treat is as grants for accounting purposes.

    All cancellations of financial support for film production in 2008 and 2007 correspond to projects for which an obligation had not yet been incurred and no expenditure had been recorded. These cancellations have therefore no impact on the Statement of Financial Performance.

    Grants for distribution, cinema support and digitisation are paid in one single instalment and the obligation is incurred upon signature of the contract.

    Cancellations of grants for cinema support correspond to grants already recorded as expenditure on signature of the contract. Cancellations of grants are credited to grant expenditure.

    "EURIMAGES" FINANCIAL STATEMENTS

    The movements in contracts signed in 2008 and 2007 are as follows:

    Details of financial support for film production, grants and cancellations are given in the statement of financial support awarded and charged to the budget (pages 36-47).

    "EURIMAGES" FINANCIAL STATEMENTS

    13. OPERATIONAL EXPENDITURE

    14. STAFF EXPENDITURE

    Staff expenditure and number of employees in "Eurimages" were as follows:

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

    "Eurimages" benefits from common services such as accommodation, telecommunications, computer purchase and maintenance, central administration, etc. financed from the Ordinary Budget. A fixed sum contribution based on the budgeted permanent and temporary staff for the period is paid to the Ordinary Budget. "Eurimages" also pays a contribution to the Council's Pension Reserve Fund for its staff members.

    The breakdown of the contributions paid by “Eurimages” is as follows:

    "EURIMAGES" FINANCIAL STATEMENTS

    16. EMPLOYEE BENEFITS

    The Council of Europe operates two defined benefit pension schemes, which also provide health coverage for retired staff members and their dependents. “Eurimages” staff members are covered by these pension schemes, for which “Eurimages” pays annual employer contributions to the Pension Reserve Fund from its budget (note 15).
    The future pension benefits liability does not lie with “Eurimages”, but is transferred to the General Budget through payment of this annual contribution.

    17. FINANCIAL REVENUE AND EXPENSES

    Net financial revenue increased by €286K due to a rise in the interest rate applied to short-term deposits in 2008.

    18. NOTE TO THE CASH FLOW STATEMENT

    Reconciliation of Net Cash Flows from Operating Activities to Net Surplus/(Deficit) from Operating Activities.

    "EURIMAGES" FINANCIAL STATEMENTS

    19. CONTINGENT LIABILITIES

    Contingent liabilities at year-end consist of amounts committed against contracts already signed, and financial support authorised by the Board of Management but for which contracts had not yet been signed. In the former case, although the contracts had already been signed, the payment obligation depends on completion, or partial completion of the films supported.

    Details of these contracts are shown in the table of amounts granted and charged to the budget (pages 36-47).

    a) On signed contracts

    b) On contracts awaiting signature

    The Board of Management also authorised financial support of films for which contracts had not yet been signed by the year-end. These amounts are not included in the Statement of Financial Position since contracts had not yet been signed.

The total amount allocated to projects awaiting signature is €14 785K.

    Details are given in the table of amounts granted awaiting signature of contracts on pages 48-50.

    The amounts allocated but still awaiting contract signature impact on the financial situation at the year-end and the funds freely available for future projects (see note 21 below).

    20. CONTINGENT ASSETS

    “Eurimages” provides financial support to film producers which may become reimbursable depending on the commercial success of the project. Due to the uncertainty of their recovery (see note 12 above), such reimbursements are treated as operating revenue in the year of receipt.

    Considering the information made available to “Eurimages” as at the date of production of these financial statements, the financial support which will probably be reimbursed is estimated to be €717K at 31 December 2008.

    "EURIMAGES" FINANCIAL STATEMENTS

    21. CUMULATIVE BUDGETARY RESULT AS AT 31 DECEMBER

    22. RECONCILIATION OF BUDGETARY AND NET ACCOUNTING RESULT

    In order to comply with IPSAS accounting requirements, property, plant and equipment, considered as current year expenditure under the Budgetary Management Accounts have been capitalised in the financial statements.

    This cost is amortised over several years under IPSAS. The property, plant and equipment are recorded in the Statement of Financial Position, and their depreciation is recorded in the statement of financial performance.

    Under IPSAS reporting requirements the contracts signed for the support of film producers are provided for only when the completion or partial completion of the project is evidenced by the producer. The budgetary result includes the whole adjustment for all contracts upon their signature.

    The surplus brought forward from previous years is allocated to reserves under IPSAS while it is considered as income of the reporting period under budgetary reporting.

    "EURIMAGES" FINANCIAL STATEMENTS

    23. RELATED PARTIES

    “Eurimages” is a Partial Agreement 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, 7, 8, and 11.

    The overall budget of the Council of Europe comprises different budgets grouped for accounting purposes into 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 related parties. However, there are no transactions between “Eurimages” and the NSC; disclosure of transactions with the General Budget is as follows:

    24. KEY MANAGEMENT REMUNERATION

    The Council Secretariat is managed by the Secretary General who directs the Secretariat and is 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 members of the Executive Board are given in the consolidated financial statements of the Council of Europe.

    The details of the remuneration and compensation paid to the Director of “Eurimages” are as follows:

    "EURIMAGES" FINANCIAL STATEMENTS

    Mr. Vandierendonck worked as Director of “Eurimages” until May 2008. He was replaced by Mr. Olla in July 2008.

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

    The French authorities grant exemption from the payment of taxes on the purchase of a limited quantity of alcohol and tobacco products. Expatriate staff members are exempted from the payment of VAT on the acquisition of personal 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 exempted from the payment of taxes on a limited amount of petrol, and from the payment of local taxes on the occupation of property.

    25. NET ASSETS

    a) 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.

    b) The property, plant and equipment reserve shows the impact on Net Assets of the capitalisation of property, plant and equipment and intangible assets.

    26. POST BALANCE SHEET EVENTS

    Albania has joined the Partial Agreement “Eurimages” with effect from 1 September 2009.
    There have been no other material post-balance sheet events which would require disclosure or adjustment to the 2008 financial statements.



    DIRECTORATE GENERAL OF ADMINISTRATION
    AND LOGISTICS

    CERTIFICATION OF THE “EURIMAGES” BUDGETARY MANAGEMENT ACCOUNTS

    The Budgetary Management Accounts of the Partial Agreement of the European Support Fund for the co-production and distribution of creative cinematographic and audio-visual works – EURIMAGES for the year ended 31 December 2008 are hereby approved.

    Strasbourg, 09 July 2009

    THE DIRECTOR GENERAL
    OF ADMINISTRATION
    AND LOGISTICS

    Signed
    M. MARTINS

    Audit Opinion
    Budgetary management accounts of the of the Partial Agreement of the European Support Fund for the co-production and distribution of creative cinematographic and audio-visual works “Eurimages” (Eurimages Fund) 2008

The External Auditor’s report to the Committee of Ministers of the Council of Europe

I have audited the budgetary management accounts of the Partial Agreement of the European Support Fund for the co-production and distribution of creative cinematographic and audio-visual works “Eurimages” (Eurimages Fund), on pages 33 to 35, 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 of the European Support Fund for the co-production and distribution of creative cinematographic and audio-visual works “Eurimages” (Eurimages Fund) 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 Eurimages Fund.

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

    EURIMAGES
    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.

    BUDGETARY MANAGEMENT ACCOUNTS - OPERATING REVENUE

    BUDGETARY MANAGEMENT ACCOUNTS - OPERATING EXPENSES

    APPENDICES

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

2 1 States concerned: Austria, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Serbia, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, “the former Yugoslav Republic of Macedonia” and Turkey.



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