INVESTIGATION OF UN ACCESS CONTROL SYSTEM AMONG ISSUES DISCUSSED BY ADMINISTRATIVE AND BUDGETARY COMMITTEE

Press Release
GA/AB/3116

INVESTIGATION OF UN ACCESS CONTROL SYSTEM AMONG ISSUES DISCUSSED BY ADMINISTRATIVE AND BUDGETARY COMMITTEE

The Joint Inspection Unit (JIU) should proceed with its own investigation on the United Nations access control system since the investigation of the Office of Internal Oversight Services into the matter had failed to hold anyone responsible for a system that lost more than $1 million of the Organization's money, the Fifth Committee (Administrative and Budgetary) was told this morning as it discussed the reports of the Office and of the Board of Auditors.

The proposal was made by Cuba's representative, who also said that the Office should not be investigating mandated activities such as the seminars of the Special Committee on the Situation with regard to the Implementation of the Declaration on the Granting of Independence to Colonial Countries and Peoples. Only competent legislative bodies had the prerogative to evaluate the results of such activities, she said, adding that, if such investigations by the Office were allowed to continue, Member States might be placing themselves at the mercy of the Secretariat.

Speaking on the reports of the Board of Auditors, the representative of Canada said, also on behalf of Australia and New Zealand, that organizations of the United Nations system should take quick, corrective action to avoid receiving qualified audit opinions in future. Furthermore, concerning peace- keeping operations, inventory and appropriate evaluation of assets should be conducted according to guidelines before assets were transferred from a liquidating mission to other locations, he added.

The representative of Bangladesh said that staff involved in the losses and in mismanagement that led to the shipping of poor equipment to various parts of the world should be held personally accountable. The liquidation of peace-keeping missions should be expedited within specified time-frames.

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The representative of China said that the eligible experts and scholars from the developing countries should be allowed to compete in a transparent and equitable system of recruiting consultants. Any geographical imbalance should be eliminated, he added.

Statements on the reports of the Board of Auditors were also made by the representative of the United States and Saudi Arabia. Statements on the Oversight Office were also made by Canada, for Australia and New Zealand, Bangladesh, Russian Federation and Uganda.

The reports on the administrative and budgetary coordination with United Nations specialized agencies and the International Atomic Energy Agency (IAEA) were introduced by the Chief of the Contribution Service of the Department of Administration and Management, Mark Gilpin.

The Committee is scheduled to meet again at 10 a.m., on Thursday, 21 November, to take up reports on the reform of the Secretariat's internal justice, under the agenda item on human resources management. It is then due to continue discussing the reports of the Board of Auditors, coordination with the specialized agencies and the IAEA, the administrative and budgetary aspects of the financing of peace-keeping operations, and the reports of the Oversight Office.

Committee Work Programme The Fifth Committee (Administrative and Budgetary) met this morning to take up administrative and budgetary coordination of the United Nations and the specialized agencies and the International Atomic Energy Agency (IAEA). It had reports on their financial situations, accounting standards and on how they allocated funds to non-governmental organizations. The Committee would also discuss the reports of the Board of Auditors and of the Office of Internal Oversight Services. Coordination between United Nations and Specialized Agencies The report of the Administrative Committee on Coordination (ACC) on the budgetary and financial situation of organizations of the United Nations system (document A/51/505) submits tables on their regular budgets, assessed contributions, working capital funds and voluntary contributions. The organizations considered are the United Nations, the International Labour Organization (ILO), the Food and Agriculture Organization of the United Nations (FAO), the United Nations Educational, Scientific and Cultural Organization (UNESCO), the International Civil Aviation Organization (ICAO), the World Health Organization (WHO), the Universal Postal Union (UPU), the International Telecommunication Union (ITU), the World Meteorological Organization (WMO), the International Maritime Organization (IMO), the World Intellectual Property Organization (WIPO), the United Nations Industrial Development Organization (UNIDO) and the International Atomic Energy Agency (IAEA).

Approved Annual Regular Budgets for 1997

United Nations $1.12 billion a/ ILO $289.8 million FAO $325 million UNESCO $259.2 million ICAO $52.2 million WHO $421.3 million UPU $30.8 million a/ ITU $142.7 million WMO $53.6 million IMO $28.7 million a/ WIPO $129.4 million UNIDO $99 million IAEA $222 million b/ TOTAL $3.17 billion

Note: a/ Provisional; b/ Subject to approval by General Conference. Figures are rounded.

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The voluntarily funded organizations highlighted in the report are the United Nations Children's Fund (UNICEF), the United Nations Development Programme (UNDP), the United Nations Population Fund (UNFPA), the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), the Office of the United Nations High Commissioner for Refugees (UNHCR) and the World Food Programme (WFP).

Also before the Committee was a report of the Secretary-General on the organizations' accounting standards (document A/51/523), which invites the General Assembly to take note of the standards and of the organizations' plans for their application and their future development. He says that the standards represent an important advance for the United Nations system.

The aims of the accounting standards, he says, are to ensure consistent and transparent treatment and disclosure of financial transactions, to assess the financial positions and their evolution and to ascertain the sources and uses of incomes. They would provide information on incomes, expenditure, assets, liabilities, reserves and fund balances

While organizations have made significant efforts to use the standards in preparing their financial statements for the fiscal periods ending 1995, the Secretary-General cites some of them as saying that a few areas of the standards should be further clarified. The financial rules of some bodies have not been brought into line with the standards.

Statements on Reports of Board of Auditors

THOMAS REPASCH (United States), noting with concern that the Board had expressed a qualified opinion on the financial statements of six organizations, said they should take immediate action to remedy the situation. The organizations were the UNDP, UNFPA, United Nations International Drug Control Programme (UNDCP), United Nations Environment Programme (UNEP), United Nations Centre for Human Settlements and Human Settlements Foundation and peace-keeping operations taken together. He expressed concern about the possibility of the Board also rendering qualified opinions for the 1996-1997 budget cycle.

He asked about the degree of cooperation between the Board and the Office of Internal Oversight Services. With about 80 per cent of consultants hired by the Headquarters coming from 12 countries, the Board should provide more information about the norms for selecting consultants from a wider geographical base. Consultancies should be arranged on their merits. He sought more information as to what would be the level of staffing that would be adequate for the Audit and Management Consulting Division of the Office of Internal Oversight Services, which the Board Chairman had said was operating at staff strengths of 69 per cent to 76 per cent. The United States supported the extension of the terms of office of the members of the Board of Auditors

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from three to six years. The extension should be phased in through the election process and not by merely extending the terms of the existing Board members.

The representative said he was concerned by the similarities in the current findings with those from the previous reports. "Over 200 years ago in the United States, one of our founding fathers, Benjamin Franklin, said there are two things that one can be sure of in life: death and taxes. Were he alive today, he would probably add to that list, `procurement problems in the United Nations'." He said that management should take action to solve the procurement problems by holding programme managers responsible for implementing audit recommendations. Progress made in implementing audit recommendations should be included as a component of managers' performance evaluations.

ANWARUL KARIM CHOWDHURY (Bangladesh) called for greater coordination between the Board, the Office of Internal Oversight Services, the Joint Inspection Unit (JIU) and the Advisory Committee on Administrative and Budgetary Questions (ACABQ). He agreed with the ACABQ that the recommendations of the Board should be considered collectively in the context of the ACC. The extension of the terms of office for the members of the Board should be evaluated carefully from the viewpoints of rotation, efficiency and harmonization with the United Nations budgetary cycle. The Board's expression of qualified opinion on some organizations showed long-standing problems, such as the failure of the implementing agencies to comply with funding and project agreements. Oversight and control should be improved in those bodies. The UNDP, for example, should improve the national execution arrangements and modalities in consultation with its Executive Board. The UNICEF should enhance the transparency of how it handled cash assistance to governments.

Regarding procurement, he said that the number of ex post facto awards of contracts should be minimized and granted only on exceptional bases. The recommendations of the Board and the ACABQ in that regard should be implemented. Staff involved in the losses and mismanagement that led to the shipping of poor equipment to various parts of the world should be held personally accountable. The liquidation of peace-keeping missions should be expedited within specified time-frames. The Secretariat should make efforts to improve performance and inventory control and avoid wasteful expenditure. Host countries should conclude early status-of-forces agreements and abide by their obligations. Regarding the use of consultants, he said that the consideration of sole candidates for appointment should be discouraged. Set procedures should be worked out to short-list potential candidates from wider geographical bases. The Secretariat should submit biennial reports on the recruitment of consultants, indicating their tenure, salaries and nationality.

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AHMED FARID (Saudi Arabia), referred to the report of the ACABQ requesting the Board of Auditors to set out clearly recommendations that had not been implemented as well as to ensure that they were more specific and less general. In that connection, there was cause for concern that the serious violations of financial rules identified in the previous reports of the Board had not been remedied to date. The issue of internal audit functions deserved to be given higher priority as should the improvement of planning for audits. It was also important to have appropriate mechanisms to implement audit recommendations. Inaction would lead to an inefficient use of Member States resources as was the case in a number of United Nations bodies, such as the UNDP.

Referring to the Board of Auditors' report for the period ending 1995, he cited aspects of poor management in UNICEF, particularly in the policy of recording cash assistance to governments. There were also indications of overambitious supplementary funds forecasting. The policy regarding cash assistance should be reviewed through more realistic budgeting and fund- raising. The UNICEF should also review the basis for allocating resources to country programmes. In light of his country's contribution to UNICEF annually, he called strongly for the implementation of the recommendations by the Board of Auditors regarding that agency.

Concerning the serious problem of inventory management in all areas in the Organization, he called for steps to be taken to speed up corrective action in that area. The Assembly should be provided with periodic reports on the implementation of the remedial action and also on action taken to rectify the internal audit systems. Also of concern were the gaps in UNHCR's programme planning and the lack of precision regarding the numbers and the needs of refugees. In that connection, he cited his country's experience with hosting a large number of Iraqi refugees for whom an entire town had been set up at a cost of $18 million per month. The refugees were provided with a range of services including air-conditioning, pocket money, housing, food and clothing. He endorsed the ACABQ's recommendation that there was need for improved management in the UNHCR and for assisting its partners to improve their ability to implement projects.

WANG YUHUI (China) said that the serious deficiencies and loopholes in procurement practices were of concern. The most serious problems in that area included the narrow geographical base of suppliers and ex post facto approval of awards of contracts. The limited geographical base from which vendors were recruited did not arise by chance. The Organization had become excessively dependent on a very limited number of suppliers and had suffered losses in terms of price advantages as well as in the failure to make compensation claims for the breaking of contracts. The practice of ex post facto approval of contracts was unacceptable. Top priority should be given to procurement reform to ensure that it was done in a fair and rational way.

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Errors in decision-making, lack of accountability and problems of delegation of authority had resulted in financial losses for the United Nations system, he continued. The misconduct of staff members had also contributed to financial losses. That was a truly lamentable situation that aroused indignation. The Secretariat should take strong measures to punish those directly responsible as well as to strengthen monitoring mechanisms and hold accountable those management personnel who were involved. Regarding the recruitment of consultants, he said there must be eligible experts and scholars in developing countries. It was essential that they compete in a transparent and equitable recruitment system. There should be an elimination of the geographical imbalance, he added.

There was need to tackle the procurement reform as a priority in peace- keeping operations as well as to strengthen the review of procurement before contract payment, inventory control and the evaluation of assets of liquidating missions, he continued. The phenomenon of contract overpayment and the transfer of unserviceable properties should be eliminated. It was important that the many problems in United Nations financial management and its related organs be remedied. They should not be swept under the rug or tolerated. Many problems that had been identified had persisted. The Secretariat and the organs concerned must make the necessary corrective measures to address the audit problems in order to promote the sound financial management in the United Nations system. The Assembly should consider the treatment of the delayed contributions in the accounting system and take appropriate action.

SAM HANSON (Canada), speaking also for Australia and New Zealand, said all recommendations by the Board of Auditors deserved close attention. The Secretariat should act expeditiously to implement corrective actions. Although organizations in the United Nations system had complied with the common accounting standards, further work needed to be done in certain areas. There was cause for concern in the increase in the number of qualified audit opinions, particularly with regard to United Nations Centre for Human Settlements (Habitat) and the Human Settlements Foundation, in which income had been overstated and separate trust fund accounts for the United Nations Conference on Human Settlements (Habitat II) were not maintained. He called for corrective action to avoid receiving a qualified audit opinion in the future.

In the Board's qualified opinion of peace-keeping operations, it was noted that no provision had been made for assessed contributions receivable, some of which were very long-standing, he said. That issue should be addressed. It was not an accounting problem. It should be solved by Member States taking the political decision to pay their contributions in full and on time. The Secretariat's performance on procurement had not greatly improved. Significant amounts of money were at risk, including in the lack of procurement expertise in peace-keeping operations and overpayment of contracts

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found by the Board. The role of the Headquarters Committee on Contracts had been seriously compromised. Control of the process was ineffective when the Committee was asked to review and approve contracts after the fact. Reform of procurement and the administration of contracts should continue to be a priority for the Secretariat.

Before assets were transferred from a liquidating mission, inventory and appropriate evaluation of assets should be done according to established guidelines, he said. Residual assets should be disposed of in the most cost- effective manner. The Board's recommendation that closing operations should produce and circulate lists of surplus equipment to all missions for selection should be implemented. He supported the recommendation that the practice of reporting regularly to the Assembly on the hiring of consultants be resumed. Appropriate steps should be taken to improve the management of trust funds. He also stressed the importance of the self-evaluation of subprogrammes by programme managers.

He said there was need to pay careful attention to a number of other areas, including the overall management of the United Nations Postal Administration and particularly its loss of $2.4 million in 1994-1995; the unliquidated travel advances at UNICEF which amounted to $3 million; and a questionable fund-raising contract awarded by Habitat. The Administration's response to the last-mentioned contractual arrangement and payments was unsatisfactory. He called for assurances that such situations would not be repeated.

Introduction of Reports on Specialized Agencies

MARK GILPIN, Chief of the Contributions Service, Department of Administration and Management, introducing the report on the budgetary and financial situations of the United Nations, the specialized agencies and the IAEA, said they had been produced solely to provide information to Member States, requiring no particular action from the General Assembly. He also introduced the report on the accounting standards.

Statements on Reports of Oversight Office

Mr. HANSON (Canada), also speaking for Australia and New Zealand, said that the request for more resources by the Under-Secretary-General for Internal Oversight Services must be subject to the same constraints as other parts of the Organization, given the present financial situation. However, the Office should be provided with adequate funds for travel, as its staff had to visit the field in order to be effective. He agreed with the statement by Japan that the Office should become more proactive. It should provide more management advice on the efficiency and effectiveness of the United Nations system in order to prevent problems from arising.

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The representative said that the results of the work of the Lessons Learned Unit should be reflected in future peace-keeping operations and the Office should follow up on developments regarding the Unit. The Office's review of the management structure of the civilian component of the United Nations Peace Forces in the former Yugoslavia (UNPF) had provided some disturbing details. Basic elements of management such as sound planning, directing, monitoring and internal controls had been either deficient or non- existent. While several initiatives had been taken to correct the situation, a subsequent audit had found that improvements in internal controls had not materialized as envisaged.

Such controls were important for the early stages of peace-keeping missions, he continued. Since the UNPF was now being liquidated, the recommendations of the Board of Auditors on the liquidation of missions should be considered in all relevant instances. He expressed concern about the reaction of some missions to the recommendations of the Office. For instance, the failure by the United Nations Mission of Observers in Tajikistan (UNMOT) to apply immediate corrective measures might have cost the Organization an additional $300,000. Overpayment of mission subsistence allowances must be recovered and managers held accountable for losses due to their mismanagement.

Turning to the problem of setting up new bodies, the representative said that the Office should help avoid repetitions of situations such as those of the International Criminal Tribunal for the Former Yugoslavia, where guards were engaged more than six months before the arrival of any detainee.

Mr. CHOWDHURY (Bangladesh) said that the Office and similar bodies should work in a complementary manner. Internal audit should form part of the overall internal control system, whereas external audit should provide objective information and advice to the General Assembly by conducting independent financial audits and management reviews. A review of the terms of reference of the JIU, the Oversight Office and the Board of Auditors might be considered in order to avoid duplication and overlap in their functions.

The representative asked for more information on the allegations of misappropriation of United Nations assets in the United Nations Gift Centre. He asked how the Secretariat could remain satisfied with the Centre's management even though it had been incurring a continued drop in receipts since January 1992. He also asked whether any civil or criminal action had been initiated against the Centre's General Manager.

Regarding the civilian staffing of the UNPF, he said that the findings and recommendations of the Office should be adhered to by the Secretariat in the future planning and management of peace-keeping operations. Turning to the Office itself, he sought more information on the criteria it used in identifying the issues and problems that required "inspection" or "investigations". The conceptual approach and work methods of both types of

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activities should be clarified. He expressed hope that the restructuring of the Centre for Human Rights could be implemented quickly, that it would strengthen the Centre's management, boost staff morale and help fulfil the Centre's mandate more efficiently. "The Office of Internal Oversight Service is a potential instrument for upholding the public image of the United Nations", he said.

EVGUENI DEINEKO (Russian Federation) said he had noted that the amounts of the actual savings and recoveries had substantially increased in comparison to those in the previous reporting period. The current report had not provided the information his delegation had requested last year on the progress made in recovering more than $10 million worth of improperly spent resources. The Secretariat should clarify that situation in the Committee's informal meetings. The result of the investigation into the United Nations access control system had been disappointing, since it had led nowhere. He was worried by the resistance, within the Secretariat, to the introduction of the access control system.

He welcomed the cooperation among the Office, the Board of Auditors and the JIU. He drew attention to the interaction between the Office and the JIU regarding United Nations outsourcing practice. That area provided opportunities for suggesting ways to enhance United Nations administrative efficiency. There was a need to look carefully into the question of how cost- effective it was to set up joint administrative and conference services in places where several international organizations were located.

ANA SILVIA RODRIGUEZ ABASCAL (Cuba) said she shared the conclusions of the JIU, that the effective functioning of any organization required a stable and competent Secretariat. However, the ongoing streamlining might create an impression which could affect the ability of staff to work effectively. She said she was pleased by the efforts to ensure coordination between the Oversight Office, the JIU and the Board of Auditors. She asked why the Board had not submitted its comments on the reports of the Office, which would have contributed to the Committee's deliberations. The Office's request for more resources should be considered on the basis of the priorities established by the Assembly and on the need to strengthen the functions of monitoring, audit and evaluation. The Secretariat should elaborate on the scope of the proposal to have programme managers implement recommendations and report on a quarterly basis. She asked for explanations as to how that would relate to Assembly resolution 48/218B, which established the Oversight Office, and as to the impact it would have in future.

In its examination of the establishment of new bodies, the representative said, the Office should be limited only to analysing the working of such new organs while the decision to establish new bodies remained the prerogative of legislative organs. She asked whether the identified savings of about $15.8 million had been calculated by the Office or whether

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they had been checked with the United Nations Controller's office. If so, she wanted to know how the Controller's office would reflect those savings in the upcoming revised estimates for the biennium 1996-1997.

She said the Secretariat should state the criteria it used in choosing subjects for investigation and or evaluations. She expressed surprise that the Office's investigation into the seminars on the situation of Non-Self- Governing Territories, organized by the Special Committee on decolonization, had been taken pending any decision by a relevant intergovernmental body. The powers of evaluation of the Oversight Office did not extend to its evaluating Member States' decisions or the bodies that they established. The Office should not repeat such transgressions. Since the seminars had been mandated by competent legislative bodies, the evaluation of their results was the prerogative of Member States themselves. She was concerned that the Office had carried out its investigation after receiving reports that the Special Committee might have misused funds. If such investigations were allowed to continue, Member States might be placing themselves at the mercy of the Secretariat. She wanted to know the criteria used to initiate that investigation. She wondered why the Department of Political Affairs had not raised the issue of waste in the Special Committee rather than going to the Office of Internal Oversight Services.

She said that, since the investigation into the access control system had found no particular staff member responsible for a project that had lost more than $1 million in United Nations money, the JIU should proceed with its own investigations into the matter.

NESTER ODAGA JALOMAYO (Uganda) said he would focus on the issue of human resources of the Office of Internal Oversight. In spite of its achievements to date, the Office's work could be improved. Referring to the Office's mandates, he recalled that it had been proposed to supplement the work of the internal audit unit. Investigations had been included in the mandate and staff had been provided to make the Office operationally viable. However, the emphasis on law enforcement appeared puzzling since the mandate should be primarily audit-related in the interest of safeguarding the Organization's resources. The Office should be more concerned with cases such as fraud and the wastage and abuse of resources, and not acts related to police work. Stressing that he had a contrary view of the matter, he called for information on how enforcement fitted into the Office's mandate. The Office should also explain the difference between investigation and audit functions.

He also called for information on cases in which auditors who had reported cases of fraud and mismanagement had been subjected to reprisals. He asked how many of the audit posts were encumbered by people who were fully qualified and certified as well as the nationality and level of such staff. Referring to cases of fraud and misuse of funds reported in the press in the

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past few months, he noted that of two cases -- in Geneva and Arusha -- there had been much publicity for the Arusha case but very little for the Geneva case. What steps had been taken to investigate those cases? he asked.

Other Matters

Committee Chairman, NGONI FRANCIS SENGWE (Zimbabwe), said the President of the Staff Committee, Rosemarie Waters, had requested to address the Committee during the present session. In accordance with the Fifth Committee's practice, he assumed that it would invite the staff representative to make a statement under the agenda item on human resources management.

The Committee agreed to invite the Staff Committee President to address it.

Committee Chairman, Mr. SENGWE (Zimbabwe), said the President of the Federation of International Civil Servants Associations (FICSA), Wayne Dixon, and a representative of the Coordinating Committee for International Staff Unions and Associations (CCISUA) had also asked to address the Fifth Committee at the present session under the agenda item on the United Nations common system.

Mr. ODAGA JALOMAYO (Uganda) said he was willing to accept the proposal that the staff representatives address the Committee, on the understanding that they would give the members of the Fifth Committee the respect they deserved. They looked forward to hearing statements which would help the Committee to make decisions. The kind of statements heard in the Committee from a staff representative last year was not acceptable.

NIKOLAI LOZINSKI (Russian Federation) said he supported the statement made by the representative of Uganda.

Committee Chairman, Mr. SENGWE (Zimbabwe), said he would inform the staff representatives of the Committee's concerns.

The Committee agreed to allow the representatives of both FICSA and CCISUA to address Fifth Committee members.

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