BOARD OF AUDITORS SHOULD BETTER REFLECT GENERAL ASSEMBLY COMPOSITION, UNITED REPUBLIC OF TANZANIA TELLS FIFTH COMMITTEE

17 March 1997

Press Release
GA/AB/3138

BOARD OF AUDITORS SHOULD BETTER REFLECT GENERAL ASSEMBLY COMPOSITION, UNITED REPUBLIC OF TANZANIA TELLS FIFTH COMMITTEE

19970317 Committee Reviews UN Efficiency, Oversight Mechanisms; Four Reports of Office of Internal Oversight Services Introduced

The United Nations Board of Auditors should be constituted to better reflect the composition of the General Assembly and enable the participation of different accounting systems, the representative of the United Republic of Tanzania told the Fifth Committee (Administrative and Budgetary) this afternoon, speaking on behalf of the "Group of 77" developing countries and China. Addressing the review of United Nations administrative and financial efficiency, in particular the strengthening of oversight mechanisms, the representative also called for immediate action to grant the Joint Inspection Unit (JIU) operational and budgetary independence. Also speaking on the Board of Auditors, the representative of Cuba said that the role of the Board vis-à-vis the Office of Internal Oversight Services should be strengthened, with the Board having the power to supervise the Office, especially in cases of fraud or mismanagement. Statements on the review of efficiency were also made by the representatives of Argentina and the United States. The Under-Secretary-General for Internal Oversight Services, Karl Theodor Paschke, introduced his Office's reports on: internal oversight mechanisms in United Nations operational funds and programmes; outsourcing practices in the United Nations system; Headquarters catering operations; and the United Nations Environment Programme (UNEP) and the United Nations Office in Nairobi. Speaking on the reports, the representative of Saudi Arabia expressed the hope that the Office would continue its efforts to detect fraud and mismanagement and set up a comprehensive internal control system that could be used in the entire United Nations system. He would welcome future oversight reports on all income-generating units in the United Nations, especially those that incurred substantial losses, he said. The United States also spoke on the Office's reports. The Committee is scheduled to meet again at 3 p.m. Monday, 24 March, to consider a performance report of the 1996-1997 budget and the financing of the Military Observer Group of the United Nations Mission for the Verification of Human Rights and of Compliance with the Comprehensive Agreement on Human Rights in Guatemala (MINUGUA).

Committee Work Programme

The Fifth Committee (Administrative and Budgetary) met this afternoon to take up the Secretary-General's report on the work of the Office of Internal Oversight Services and continue discussing the review of the United Nations administrative and financial efficiency. The Committee had before it reports of the Secretary-General and notes from him transmitting various Oversight Office reports.

(For background on the report on the review of the United Nations administrative and financial efficiency, see Press Release GA/AB/3134 of 10 March.)

Reports on Internal Oversight

A note by the Secretary-General transmits a report of the Office of Internal Oversight Services on the audit of procurements handled by the Contracts and Procurement Service of the Department for Development Support and Management Services (document A/50/945). In the report, the Office says it expects the Department to strengthen the planning and control of the procurement process and thereby enhance the integrity of the process, diversify better the sources of procurement and improve cost-effectiveness. There is also a need to reorganize the Department's Contracts and Procurement Service due to the decline in its workload. The Secretary-General agrees with the recommendations.

An audit of procurements handled by the Procurement Service was carried out in 1995, the report says. The audit covered a sample check of 26 procurement actions involving $5.8 million, each involving at least $20,000, thereby requiring formal bidding. The audit's main objectives were to assess compliance with financial rules and to determine whether procurements were made economically and efficiently. The audit findings and recommendations were reported to the Department. In response, the management has taken or initiated the corrections recommended.

Financial rules demand that all bids should be publicly opened at the same time and place and recorded immediately, according to the report. While the rule implies that sealed bids should be received, the audit team found that in 13 out of 26 cases reviewed, the requirements of sealed bids and public opening of bids were either not communicated to vendors or not observed. There was frequent use of facsimile-transmitted bids, which could compromise the confidentiality of the bidding process and encourage malpractice. The audit team recommended that the practice of receiving facsimile bids should be stopped until the security and confidentiality of the bids could be fully assured.

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The report states that the relevant Policies and Procedures Handbook calls for efforts to draw up specifications that are either generic or "neutral", since the requirements for competitive bidding cannot be met if the specifications point towards one supplier. But, the audit found, in nearly one half of the cases, technical specifications were either restrictive or pointed towards one source. That made it extremely difficult to have a real competitive bidding process. The team recommended that the Procurement Service ensure that the specifications its technical advisers drew up are generic. It also recommended an independent scrutiny of the technical advisers' recommendations and that any complaints about specifications should be examined by the Procurement Service objectively. Management agreed.

General Assembly resolution 2688 (XXV) of 11 December 1970, the report says, stated that the principle of equitable geographical distribution should be observed in procuring equipment and supplies. But the audit team noted that in 12 cases reviewed, invitations to bid were not issued to vendors from developing nations. The team found no significant effort to attain geographical distribution in procurements. It then recommended that efforts be made to identify potential vendors in the developing countries and to increase the presentation of vendors from those countries in bidding and awarding contracts. The management assured that it would set up and monitor a system to include firms from developing countries in its international procurement cases wherever possible. Noting four instances where late bids were considered fully, the audit team recommends that the acceptance of late bids be stopped immediately, according to the report. Undue familiarity with prospective vendors should be discouraged in order to project a proper image of the procurement staff. Management said it had acted on the recommendation on bid openings and late bids.

Through a note by the Secretary-General transmitting the comments of the Joint Inspection Unit (JIU) on the Oversight Office reports (documents A/51/530 and Corr.1), the Unit says that the full implementation of the report's recommendations would contribute to the establishment of a general environment that supports a transparent competitive procurement system.

A note by the Secretary-General transmits the report of the Office on the investigation of alleged misappropriation of United Nations assets at the United Nations Gift Centre (document A/50/1004). According to the report, the review by the Investigations Section of the Oversight Office into the Centre was conducted following a report that mismanagement by the General Manager had led to the misappropriation of United Nations assets at the Centre and in the drop of its profits. The review covered the period between 1 January 1992 and 30 June 1994.

The United Nations, which owns the capital, assets and revenues of the Gift Centre, in 1986 entered into a labour contract with Ogden Allied Building and Airport Services, Inc. for the provision of personnel for the Centre,

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according to the report. The contract with Ogden, signed on 5 March 1994, covered the period 1 October 1993 to 14 February 1995.

After the contract expired on 14 February 1995, it was renewed on a monthly basis pending further review of the Centre's operations by the Commercial Activities Service, Office of Conference and Support Services, which has been responsible for the Centre since May 1993. Prior to that date, the responsibility rested with the Purchase and Transportation Service. The Centre's personnel are employed by Ogden, not the United Nations. However, an administrative officer from the Commercial Activities Service oversees the Centre's operations.

The report says that, due to inadequate or non-existent documentation of Gift Centre activities managed by Ogden, it was not possible to confirm whether assets had been misappropriated. But the United Nations has allowed deviations from its financial rules and sound retail management practices by failing to monitor Ogden's management.

The findings raise questions about the Centre Manager's ability to implement the simplest of controls, according to the report. They indicate that the General Manager did not abide by the United Nations financial rules or written procedures, and regularly overrode the few controls established. Serious doubts were created regarding the General Manager's competence and good faith to continue in that position. The investigation also indicates a lack of supervision of the Centre on the part of the Commercial Activities Service.

Among the findings was a lack of correlation between gross receipts and the cost of sales, says the report. Initial analysis showed that there had been a drop in receipts during the last two bienniums (1990-1991 and 1992-1993) of 12 per cent and 15 per cent, respectively. There was also a slide in net income over the same bienniums of 11 per cent and 58 per cent, respectively. The cost of sales reported in the United Nations financial statement for 1992-1993 should have yielded gross receipts of about $8 million, whereas actual receipts totalled $6 million. The Chief of the Commercial Activities Service disagreed with the estimate.

In response, the Chief of the Commercial Activities Service has told the Oversight Office that the majority of the recommendations have been implemented, except for the replacement of the General Manager. The Chief told the Office that he lacks evidence, even with the report's findings, which he could present to Ogden and ask it to replace the General Manager.

In its comments cited above, the JIU says, on the Gift Centre, that the Oversight report highlights the risks outsourcing activities without sufficient control by the United Nations. Damage to the Organization, besides financial losses, would have been decreased with proper negotiation of initial

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contracts and sufficient monitoring of the services provided. The Unit would make further comment in its forthcoming report on outsourcing.

A note by the Secretary-General transmits a report of the Office on the management audit of electronic mail at the United Nations Secretariat (document A/50/1005). In his note, the Secretary-General agrees that attention should be given to the management of electronic mail in order to maximize its contribution to greater efficiency and economies within the Organization.

According to the report, the electronic mail (e-mail) audit focused on management's practices related to its development and implementation. Electronic mail has, since its 1993 inception, been used to improve horizontal and vertical communications throughout the United Nations system. It has become an essential form of communication for management and staff at the Secretariat, regional commissions and major peace-keeping missions. Along with the Internet, electronic mail reaches to government missions, outside agencies and millions of subscribers throughout the world. With such reliance placed on e-mail services, the system's availability, reliability and timeliness have become critical.

The audit team recommended, among other things, that since e-mail was used by management to discuss sensitive topics, security should also be considered an objective, the report states. It noted some shortcomings concerning security and expressed concern that passwords could be breached and messages intercepted and/or altered. The Secretariat should ensure that security standards are maintained. The Office of Conference and Support Services agrees with the recommendation, stating that they would comply as much as feasible with the security standards set by the Electronic Services Division Security Chief.

On electronic mail, the JIU report cited above supports the Oversight recommendations, adding that they should be implemented within specific time- frames. Sharing the Office's concern on the need for security for e-mail, it urges the enhancement of security arrangements to help avoid breakdowns of the system resulting from misuse by unauthorized persons.

A note by the Secretary-General transmits the second annual report of the Office (document A/51/432), covering the period 1 July 1995 to 30 June 1996. Commenting generally on the Office, the Under-Secretary-General for Internal Oversight Services, Karl Theodor Paschke, says: "My overall assessment after 20 months in office is that the creation of the Office of Internal Oversight Services is one of the most meaningful initiatives taken by the General Assembly in the context of United Nations reform."

During the year, the Office identified and recommended cost savings of $18.7 million and actually helped to save and recover about $15.8 million,

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states the report. The savings include budget cuts of $6.7 million in 1996-1997 in conformity with the Office's recommendations, the prevention of excessive or unjustified expenditure of some $4 million, and another $4 million from the recovery or prevention of overpayment. Since October 1994, the Office has made 4,042 audit recommendations on compliance with rules, economic use of resources, the protection of assets and on internal control. The average implementation rate was 61 per cent.

While the 1995 report identified three areas of priority for oversight -- peace-keeping, humanitarian work and procurement -- this year's report treats the problem of establishing new bodies as a priority matter, since the beginning of new operations and organizations is always risk-prone.

Under peace-keeping, the Office states that a Lessons Learned Unit was set up in the Department of Peace-keeping Operations in April 1995 in response to the Office's recommendations. Useful end-of-mission assessments have been completed on the Mozambique and Somalia operations and reviews have been drafted on most aspects of the Cambodia mission. The Unit is a first step along the road to institutional arrangements in the United Nations that will permit it to make efficient use in new missions of the lessons of past experience.

Among the findings in peace-keeping was a lack of guidance to the field personnel of the United Nations Peace Forces in the former Yugoslavia (UNPF) about preparations for the transfer of authority, the report states. As a result, inventories of the United Nations-owned equipment worth over $35 million were transferred to the North Atlantic Treaty Organization (NATO) Implementation Force (IFOR) without proper accounting when the action was taken. There was also a lack of internal control over nearly $60 million in reimbursements to troop-contributing States for certain equipment.

The Office made recommendations to recover $185,000 in reimbursements that had been based on fraudulent claims. Further, the valuation of contingent-owned equipment, for which depreciation expenses and reimbursement for losses are expected to exceed $720 million, should be more closely monitored. The UNPF bought about 650 generators valued at $7.2 million that were either not used or sent to other missions.

In the United Nations Mission in Haiti (UNMIH), avoidable delays in establishing ration and service contracts cost the Organization $12.4 million, the report goes on. The United Nations Mission of Observers in Tajikistan (UNMOT) made overpayments of about $400,000 between January and August 1995. The United Nations Iraq-Kuwait Observation Mission (UNIKOM) identified overpayments of Mission subsistence allowances estimated at $844,000, which are being recovered.

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The report summarizes the work of the Office's divisions, which deal with: audit and management consulting; investigation; inspection; and monitoring and evaluation. For example, the audit division identified almost $12 million in potential recoveries and savings. Almost $9 million in savings and recoveries were realized from actions recommended by the division during this and prior reporting periods. It opened 131 audit assignments and 2,105 recommendations.

A note by the Secretary-General transmits a report of the Office on enhancing the internal oversight mechanisms in operational funds and programmes (document A/51/801), which makes eight recommendations suggesting methods by which the Office can assist those bodies enhance their oversight. The recommendations have also been drafted to enable the General Assembly to formulate a policy regarding those entities' oversight functions.

The report covers the following: International Trade Centre; United Nations Habitat and Human Settlement Foundation (UNCHS/Habitat); Fund of the United Nations International Drug Control Programme; United Nations Development Programme (UNDP); Fund of the United Nations Environment Programme (UNEP); United Nations Population Fund (UNFPA); and the voluntary funds administered by the Office of the United Nations High Commissioner for Refugees (UNHCR). The others covered are: United Nations Children's Fund (UNICEF); United Nations Institute for Training and Research (UNITAR); United Nations Office of Project Services; United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA); United Nations University (UNU); and the World Food Programme (WFP).

According to the report, the Office analysed: the adequacy, effectiveness and efficiency of services and resources available to the entities; the operational independence of the mechanisms; and accountability to their governing bodies.

Among the Office's recommendations, according to the report, was that the entities should develop mechanisms for the continued monitoring of the implementation of their recommendations and for reporting on the status of implementation to executive heads. They should establish clear procedures for addressing non-compliance with recommendations.

Since it provides investigation services to the entities, the Office states they should allocate adequate resources to the budget of its Investigations Section to ensure effective coverage. Entities that set up their investigation units should ensure their operational independence and develop confidential procedures to protect those who make or are the subject of reports. For entities lacking reporting procedures, the Office recommended that their oversight units be authorized to submit, through their executive heads, reports on specific issues to their governing bodies.

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A note by the Secretary-General transmits a report of the Office on the audit of Headquarters catering operations (document A/51/802), which recommends that the operations' objectives be clearly defined and the catering service be completely outsourced, with the United Nations monitoring the contractor's performance. United Nations costs in providing catering facilities and equipment should be identified and, to the extent possible, reimbursed by the contractor. The Office calls for an equitable profit- sharing arrangement between the Organization and the contractor and for clear vendor-selection criteria. The contractor made profits of some $12.1 million on sales of about $89 million from 1986 to 1996.

The Office recommends that the various catering committees be reactivated and regular health inspections of the facilities and health examinations of the employees ensured.

During an audit it carried out between February and June 1996, the Office states that it examined the management and operations of the Headquarters catering facilities from March 1986, when the first contract with the present contractor was awarded, to March 1996, when the second five-year term expired. The Office reviewed the contractor selection process, terms of the contract and United Nations monitoring of the contractor's performance and the costs and profits earned.

The Office states that, in 1986, the United Nations awarded a five-year contract for running catering facilities under a profit-and-loss arrangement. Although the original proposal had stipulated that the contractor offer a profit-sharing arrangement, that condition was excluded from the final contract. Under the current pact, the contractor retains the operation's profits. From the 1986 to 1991 period, the contractor took profits of $4.7 million out of $46 million in receipts. The United Nations, on the other hand, bore space, equipment and other costs, indirectly subsidizing the service. In 1991, the Organization extended the catering contract for another five-year period, without rebidding. From 1991 to 1996, the contractor's profit rose to $7.4 million from revenues of $43 million. Had the Organization included a profit-sharing clause in the catering contract, its share of the profit would have been close to $5 million between 1986 and 1996.

The Office stated that, while the current contract has protected the United Nations from absorbing any losses, management failed to secure a fair share of profits and did not ensure reimbursement of the costs the Organization incurred in the catering operations.

Commenting on contract's terms, the Office states that the pact is a concession granted by the United Nations to secure favourable prices for its staff. But the generation of significant profits by the contractor, with limited capital investment, suggests that staff may not be receiving the best prices available, while the Organization is subsidizing the operation. The

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situation should be remedied. The movement of prices should be verified by referring to objective price indicators. The establishment of quality assurance indicators, such as variation in menus, queuing times, capacity utilization and reports of hygiene inspections, should be required. The Office reports that its recommendations will be considered in developing the new contract for the Headquarters operation.

A note by the Secretary-General transmits a report of the Office on a review of outsourcing practice at the United Nations (document A/51/804), written after an audit of more than 25 contracts worth over $100 million, which states that well-managed outsourcing can help achieve efficiency, cost reductions and provide the expertise the United Nations needs to supplement its personnel. It would allow managers to concentrate on substantive work and better perform core functions.

Examples of the outsourcing contracts the Office reviewed are those for: cleaning services at Headquarters from 1990 to 1996, worth some $41.5 million; catering services from 1986 to 1996, worth about $88 million; logistical and service support for the United Nations Angola Verification Mission (UNAVEM III) from 1995-1996, worth some $17.7 million; as well as fuel and water distribution, camp maintenance, laundry and ground transportation for UNMIH from 1995-1996.

Among the Office's recommendations are that the United Nations should develop Organization-wide guidelines for managing outsourcing. Managers should be able to say the extent to which they achieved outsourcing goals, such as the acquisition of technical expertise and cost-savings. For a majority of outsourcing contracts reviewed, programme managers did not formally evaluate vendors' performance. That should be corrected. The Office asks the Organization to consider expanding the use of outsourcing when it was justified by cost-benefit analyses. It proposes the outsourcing of the United Nations Postal Administration's marketing and sales, as well as the bookshop operations.

The Office says it found no standard operational definition for "outsourcing" within the Organization. It, therefore, takes different forms, ranging from personnel contracts and purchase orders. As a result, some outsourced services and their contracts, initially identified as outsourcing, were in fact management efforts to supplement their personnel resources. But, given that outsourcing would replace United Nations staff with outsiders, it could hurt their prospects for career development.

The report states that several managers suggested that outside experts be used more often for core functions requiring specialized knowledge. Some of them were prepared to use part of the resources for regular posts to hire consultants on an "as needed" basis, even if that would lead to cuts in their resources. The Office recommends the creation of a focal point in the

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Department of Administration and Management to help identify potential areas for outsourcing and the development of criteria and initiation of "market testing" of some activities, to see if they should be performed by outside providers.

Commenting on the goals of outsourcing, the Office states that, with the exception of garage administration and translation services, which conducted thorough cost-benefit analyses, managers did not articulate any reasons before deciding to outsource some services and work. Thus, it was difficult to determine the extent to which objectives had been achieved. With no benchmarks for measuring success, management had been unable to judge whether outsourcing was effective or deficient, requiring the consideration of alternative strategies.

Expected economies were achieved for garage administration, the report states. For translation at Headquarters, more could have been saved if more outsourcing had been implemented. In some cases, however, outsourcing proved more costly than in-house services. For example, at UNMIH, monthly costs were cut 66.5 per cent from $157,288 to $52,870 after camp maintenance and laundry services were taken in-house.

A note by the Secretary-General transmits a report of the Office on the review of the United Nations Environment Programme (UNEP) and the administrative practices of its secretariat, including the United Nations Office at Nairobi (document A/51/810). In the note, the Secretary-General concurs with the recommendations the Office made after a September 1996 review. He says he trusts the special session of the General Assembly on the review of Agenda 21 will help further rationalize UNEP's roles and strengthen complementarities in the United Nations system in the areas of environment and sustainable development.

Among the recommendations he agrees with, according to the report, are that UNEP's management should urgently clarify the body's role following the United Nations Conference on Environment and Development (UNCED). The role should be translated into a plan of action for the next five years, with measurable goals and indicators of progress applicable to each of its units. Immediate steps should be taken to translate UNEP's global role as a catalyst, coordinator and stimulator of environmental action into a single budget document. Urgent action should be taken to introduce a system of programme oversight, with the authority necessary to ensure the coordination and implementation of an integrated and comprehensive programme of work.

The Office also recommends that the relationship between the secretariats of the environmental conventions and UNEP be revisited. Fulfilling its Agenda 21 mandate for coordinating the work of those secretariats might give UNEP a tool for achieving its larger goals. Also, UNEP management should reduce its top-heavy organizational structure to:

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delineate clearly the functions of each unit; avoid a too thin distribution of resources; and reflect clear lines of authority.

Since its position in the Global Environment Facility (GEF) seems minimal, the Office recommends UNEP urge the Assembly's follow-up to UNCED to consider revising relationships among the implementing agencies of the GEF.

On the United Nations Office at Nairobi, the Oversight Office recommends a delegation of authority, further training of staff and the provision of a stable resource base to ensure the continuous presence of an institutional critical mass. Headquarters should urgently assign to Nairobi for one month a senior administrator with experience in establishing and managing United Nations common service outputs.

Prior to making the recommendations, the Office made various observations on UNEP and the United Nations Office in Nairobi. Observations cover: the role of UNEP after UNCED; its organization and management; and programme formulation and management. On UNEP's role after UNCED, the Office states that UNEP, once the only United Nations player in the environmental arena, now has such partners as the Department for Policy Coordination and Sustainable Development of the Secretariat, as well as the World Bank. But, it has a modest role in managing the GEF.

Regarding its post-Conference choices, the report states that UNEP could: continue as a catalyst for international environmental action; sponsor applied research and help promote the application of the results; or convert itself into an executing agency of the United Nations development system. However, since UNEP has been cut off from a financial role by the creation of the GEF, any catalytic role would be circumscribed. As for research, UNEP did not have the capacity to supervise it, except in some limited areas.

On management, the Office says UNEP is decentralized, with about 60 per cent of its staff in Nairobi and the rest spread over four continents, with concentrations in Africa and Europe. The organizational structure does not provide an adequate framework for managing the organization's activities efficiently, and the problem is heightened by two factors: absence of clear lines of authority; and the frequent and extended absences of the Executive Director and the Deputy Executive Director from Nairobi. Some senior staff have expressed concern over such absences and their inability to reach the Executive Director for consultations on urgent matters. The presence of the Executive Director or her Deputy at headquarters at all times should be ensured, the Office recommends.

Overall, the Office states, the lack of transparency in UNEP's secretariat was replicated in its budget. The Oversight team could not find any document submitted to legislative bodies providing a comprehensive picture of activities and the corresponding resources by subprogramme. On the

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implementation side, there was no document showing UNEP's overall achievements in any budget cycle. When the team visited last September, UNEP was reducing its programme of work to match its resources. The 1996-1997 programme of work was originally set at $105 million, then cut to $90 million. In September, it was being cut further to $62.5 million.

On the use of consultants, the Office says that UNEP spent about $7 million on consultancies in 1994-1995. There were instances when consultants' fees were not specified in their contracts and others when the fees were excessive in relation to the services to be rendered. On the filling of vacancies, as of 18 September 1996, some 20 staff were recruited without the review of the Appointment and Promotion Board.

Turning to the United Nations Office at Nairobi, the Oversight Office states that the establishment has 328 staff, including 100 Professional and 228 General Service posts. Of them, 68 per cent were funded from extrabudgetary sources, primarily through UNEP. Since the start of its operations, the Nairobi Office had faced several difficulties, partly due to the manner in which it had been formed and financed. Some of the problems in the area of finance could further disrupt the functions of the service. For example, the computerized system of payroll and accounts brought into the Nairobi Office from UNEP and the United Nations Centre for Human Settlements (Habitat) are entirely different, one being personal computer-based and the other suffering from design flaws that made it slow. That has disrupted the recording of some financial transactions.

Statements on Office of Internal Oversight Services

KARL THEODOR PASCHKE, Under-Secretary-General for Internal Oversight Services, introduced the Oversight reports on: internal oversight mechanisms in United Nations operational funds and programmes; outsourcing practices in the United Nations system; Headquarters catering operations; and UNEP and the United Nations Office in Nairobi.

AHMED FARID (Saudi Arabia) said he saw the detection of fraud and mismanagement as one of the main functions of the Office and expressed support for its intention to set up a manual for internal control. The document should contain guidelines that would demand that all cash received by mail be recorded in advance of transfer to the cashier and deposited intact daily. It should also demand that the function of receiving and disbursing cash be kept separate and that the actual handling of cash be kept entirely separate from the maintenance of records.

The representative said the Office must ensure that adequate inventory and equipment records were kept, which would include: descriptions of the types of equipment; dates of acquisition; estimates of life; rates of depreciation; and scrap value. He welcomed the effort towards developing an

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assets management system -- the IMIS -- as a means of enhancing the effectiveness of internal control and facilitating the Office's detection of fraud and mismanagement. He expressed hope that the Office would continue its efforts to detect fraud and mismanagement and set up a comprehensive internal control system that could be used at the United Nations and all of its organizations. He would welcome future Oversight reports on all income- generating units in the United Nations, especially those that incurred substantial losses.

THOMAS REPASCH (United States) said he welcomed the recent series of reports of the Office of Internal Oversight Services, which showed that the Office was serving the valuable functions for which it was created. The reports did not always show that things were running smoothly. His delegation would play an active role to ensure that the Office's recommendations were implemented and that it received the necessary resources to carry out its mandate.

Referring to the report on the funds and programmes, he said it provided useful insight on the status of internal oversight in the United Nations. Welcoming the Office's recommendations, he said they should be implemented by the relevant organizations. Concerning the report on catering services, he noted the problems cited in the report, such as the lack of a profit-sharing arrangement in the catering contract at Headquarters and the apparent non- existence of any rationale for the different approaches to catering services in other United Nations offices.

Regarding the report on outsourcing, he said it was extremely useful at a time when the Organization looked for ways to be more efficient. However, some matters, such as irregularities in procurement, must be dealt with before the United Nations could benefit from outsourcing. The report on UNEP had depicted an organization that was struggling. Among other things, its excessive use of consultants and its top-heavy staffing structure were of concern. He was further concerned about what would be done to rectify the problems highlighted by the Office.

Statements on Review of United Nations Efficiency

MUHAMMAD YUSSUF (United Republic of Tanzania), speaking on behalf of the "Group of 77" developing countries and China, said the role of the intergovernmental machineries in the efficiency measures should be strengthened. Therefore, the Secretary-General should submit proposals to the Assembly for improving the Secretariat's efficiency that would have an impact on the regular budget and other mandates of the Assembly.

Updated information on the structure and mechanisms dealing with efficiency should be provided to the Fifth Committee's current session, with a view to assessing the extent to which efforts had been made to avoid

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duplication, he continued. Any resolution on the implementation of Assembly decision 47/454 should present proposals for strengthening all oversight bodies. As for the Committee for Programme and Coordination (CPC), it should remain the main intergovernmental body for programming, planning and coordination.

The CPC's evaluation functions should be strengthened to determine the relevance of United Nations activities to their objectives, he added. The coordination functions of the CPC should also be strengthened. The CPC should evaluate in depth the report of the Administrative Committee on Coordination (ACC), since the Economic and Social Council did not pay due attention to it. The CPC should also ensure the follow-up to the coordination session of the Economic and Social Council.

The Board of Auditors should be constituted to better reflect the composition of the General Assembly and to facilitate the participation of different accounting systems, he said. Its role in cases of fraud should be strengthened. On the JIU, he said immediate action should be taken to ensure its operational and budgetary independence. More details would be proposed in informal consultations. The distinct and separate characters of the internal and external oversight functions should be clearly identified in any resolution on the question.

EVA SILOT (Cuba) said that achieving greater efficiency would help ensure better intergovernmental work. It seemed that decisions that contradicted those of the Assembly were taken on some occasions, departing from the political decisions reached by Member States. Such a situation should be corrected. The Assembly should decide that all aspects in the administrative and budgetary field should be considered under the relevant items in the fifty-first session of the Assembly. She called for information on the status of the Efficiency Board and the changes that were being taken to implement the decision on the pattern of conferences. She also asked how cuts in documentation would affect Member States and how the Secretariat would integrate the Office of Programme Planning, Budget and Accounts and the Office of Internal Oversight Services into the new reforms.

The entire reform exercise must be guided by transparency and dialogue among Member States, she continued. The strengthening of external oversight bodies must also be considered in the current session. Strengthening the roles, working procedures and dynamism of the external bodies should be an important consideration of the Committee. The priority should be demonstrated in the human and financial resources made available to those oversight bodies. The CPC should continue to be the main intergovernmental for programming, planning and coordination, as well as for analysing the medium-term plan.

As for the Board of Auditors, she said its membership should be expanded to represent all regional groups and auditing systems in the world. The role

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of the Board vis-à-vis the Office of Internal Oversight Services, should be strengthened. The Board should supervise the Office, especially in cases of fraud or mismanagement. The Assembly should adopt specific measures on the composition and selection of the inspectors of the JIU, as well as on the strengthening of the Unit.

CARLOS RIVA (Argentina), while supporting the views expressed by the representative of the United Republic of Tanzania, said he agreed with the inspectors that nothing should obstruct the progressive organization of non- core functions, but that should be done with the consideration of other relevant factors. The question of common services provided at the United Nations should be included in the programme of institutional reforms currently under way in the Organization. To ensure that common services at United Nations Headquarters provided more coherent outputs, the report of the JIU should be considered, taking into account the particularities of each service and of its users.

VICTOR MARRERO (United States) said the statements of the Group of 77 and Cuba contained a number of the ideas for strengthening oversight mechanisms that merited the Committee's attention. Last week, his delegation had introduced an idea on the expansion and strengthening of the Advisory Committee on Administrative and Budgetary Questions (ACABQ). That proposal should be part of the discussion that was alluded to in the Group of 77 statement. He hoped that informal consultations would be organized on the matter.

The Committee Chairman, NGONI FRANCIS SENGWE (Zimbabwe), informed the Committee that informal consultations on the review of efficiency would be coordinated by Klaus-Dieter Stein (Germany), a vice-chairman of the Committee. Also, the question of travel and related expenses would be dealt with under the chairmanship of the Committee's Rapporteur, Ihor Humenny (Ukraine).

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