INTERNAL OVERSIGHT OFFICE RECOMMENDATIONS SHOULD BE IMPLEMENTED ONLY WHEN GENERAL ASSEMBLY SO DECIDES, FIFTH COMMITTEE TOLD
Press Release
GA/AB/3264
INTERNAL OVERSIGHT OFFICE RECOMMENDATIONS SHOULD BE IMPLEMENTED ONLY WHEN GENERAL ASSEMBLY SO DECIDES, FIFTH COMMITTEE TOLD
19981116 Administrative and Budgetary Committee Concludes Consideration of Oversight Office, Takes Up Board of Auditors ReportsThe recommendations of the Office of Internal Oversight Services must be implemented only when the General Assembly so decides, the Fifth Committee (Administrative and Budgetary) was told this morning, as it continued discussing the activities of that body.
Despite extensive debate last year on whether the Office's recommendations were for information or for action, it appeared that some ambiguity remained, the representative of Syria said. It seemed that the Office's recommendations were sometimes implemented without the Assembly's consent.
The representative of Cuba said while she accepted that recommendations in the Office's reports were, in some cases, only for information, recommendations which would require legislative action should be submitted through the proper channels.
In response, the Under-Secretary-General for Internal Oversight Services, Karl Th. Paschke, said all the Oversight Office did was make recommendations to management, which then had to take account of the political environment and the wishes of Member States. Oversight Office recommendations were only made under management and efficiency criteria. They were not meant to have an impact on the political situation.
The Assembly, as the supreme authority in the United Nations, considered any proposals or recommendations and took decisions on them, Algeria's representative stressed. The Oversight Office's mandate was clear.
Austria's representative, speaking for the European Union, said it was within the Oversight Office's purview to make recommendations on enhancing the Organization's efficiency, including the reduction of posts. It was up to Member States to make decisions on those matters, but the Oversight Office could make comments.
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Statements were also made by the representatives of Bahrain, Pakistan and Poland, as the Committee concluded its discussion on the item.
As the Committee began discussing the reports of the Board of Auditors on 1996-1997, that body's Chairman, V.K. Shunglu, said there were persistent inadequacies in the use of consultants. They were employed to handle regular work, records of selection basis were not available and consultancy agreements had been signed after work commenced. Established instructions should be complied with by all administrations.
The Board's review of procurement revealed continued deficiencies in planning, inviting bids and awarding contracts and lack of verification of completion of contracts before disbursing funds, he continued. The Procurement Manual should be adhered to, and should include guidelines for open tendering.
The Board had been provided with information on 107 cases of fraud or presumptive fraud, involving some $2.8 million, from eight organizations, he said. Of that, $549,000 had been recovered while, in some cases, recovery efforts were ongoing.
Introducing the views of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), that body's Chairman, C.S.M. Mselle, said efforts to reform procurement practices had been implemented, but their effectiveness had yet to be evaluated. The Auditors should analyse efforts to date.
The Under-Secretary-General for Management, Joseph E. Connor, introduced the Secretary-General's reports on implementing the Board's recommendations.
The Committee will meet again at 3 p.m. today, to continue discussing human resources management and to resume its consideration of the programme budget for the biennium 1998-1999.
Committee Work Programme
The Fifth Committee (Administrative and Budgetary) met this morning with a series of reports from the Board of Auditors before it. The Auditors reviewed the entire United Nations system, producing a document in three volumes (a fourth is still to be issued) and 10 addenda covering all the United Nations funds and programmes during the 1996-1997 biennium.
In addition to reviews of the well-known United Nations bodies, the reports contain financial statements indicating the status of lesser known funds. The Organization's 189 general trust funds include: the Trust Fund for United Nations Reform; the Trust Fund for the United Nations Philatelic Museum; Meditation Room Gifts from New York City; Trust Fund for Property Willed to the United Nations; Trust Fund for Expanding Public Information Activities in Japan; and the Trust Fund for Assistance in the Training of United Nations Staff in the French Language.
The General Fund contains all regular budget income and expenditures, as well as the assets and liabilities of the Organization, other than those specifically identified with other funds.
The Committee also had before it reports on implementation of the Board's recommendations from the Secretariat and relevant bodies, and the related report of the Advisory Committee on Administrative and Budgetary Questions (ACABQ). In addition, it had before it reports on guidelines for internal control standards.
(For background on the report of the Auditors on their management audit of the International Civil Service Commission (ICSC), see Press Release GA/AB/3255 of 2 November.)
Financial Statements and Auditors' Reports
The report of the Board of Auditors on the United Nations (document A/53/5-Vol.I) recommends that the Administration formulate and implement a strategy for career development without further delay. On information systems, it recommends that all accounting systems be integrated with the Integrated Management Information System (IMIS) as a matter of priority. Further, the IMIS should be modified to better identify payables and receivables. The Administration should accelerate the pace of preparing for managing the year 2000 issue. On procurement, the Board recommends that the Administration plan its major maintenance work sufficiently in advance to avoid exigency contracts, and ensure that prospective bidders have time to respond, according to the report. Guidelines for open tendering should be included in the Procurement Manual, which should also specify the frequency at which the Supplier Review Committee should review the evaluation of potential suppliers.
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The Board reviewed common services at United Nations Offices in Geneva and Vienna and found that, for some United Nations organizations, services were provided free of charge by those offices and that there was no incentive for them to modify their demands on the services. It recommended consideration of establishing a system whereby users of common services provided by those offices would be required to pay for such services.
During the biennium, seven cases of fraud and presumptive fraud were reported to the Board, the report states. Four of the reported cases involved staff members of the Organization. In five of the cases, losses totalling $534,013 were suffered by the Organization, while the Administration recovered $331,603. In two cases, no financial losses were incurred.
The United Nations General Fund, for the 1996-1997 biennium, had income of some $2.6 billion and expenditures of $2.5 billion, the report states. Total assets at the end of 1997 were about $1 billion, while total liabilities came to $879 million.
The Board's report on United Nations peacekeeping operations (document A/52/5-Vol.II) covers peacekeeping accounts from 1 January 1996 to 30 June 1997. Because of high levels of outstanding assessed contributions, certain peacekeeping operations were in cash deficits during the period, and there was need for internal borrowing from other peacekeeping missions.
Regarding losses of cash and receivables, the report states that write- offs of $3.9 million had been approved during the period. Property losses at various peacekeeping operations received by the Headquarters Property Survey Board and approved by the Controller amounted to $11.3 million (based on original costs) for write-off.
The report states that some States declared their intention not to pay assessed contributions amounting to $116.1 million out of the total outstanding contributions of $2.5 billion as at 30 June 1997, but that no provisions had been made in the financial statements for the delays. Provision should be made for these in the financial statements, the Auditors recommend. Also, the value of pending arbitration claims against peacekeeping operations should be disclosed in the notes to the financial statements, since these claims constitute contingent liabilities.
The Board was unable to confirm the validity of adjustments totalling $130.4 million in accounts arising from conversion from the old general accounting system to the IMIS, the report states. Other findings included that procurement purchases valued over $188 million were considered on ex post facto, or partially ex post facto, basis, and contracts were extended without bidding for a total value of $72.4 million.
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United Nations Operation in Somalia
The Board reviewed payments for logistical services provided by a contractor to the United Nations Operation in Somalia (UNOSOM) and the United Nations Assistance Mission for Rwanda (UNAMIR) for the period from 1 April 1994 to 31 May 1996. It was unable to confirm all payments, which, according to the Administration, amounted to $100.9 million. During the 18 months under review, 41 cases of fraud and presumptive fraud were reported, the Auditors state. Twenty-one of these involved staff members. In 26 cases, no financial losses had been incurred; in 12 cases, losses totalling $611,172 had been suffered. The Administration has recovered $95,785 and intends to continue to pursue recovery of the remaining amount.
In a report on the recommendations of the Board relating to peacekeeping operations (document A/52/879), the Secretary-General describes the United Nations response to 13 recommendations made by the Board, on issues ranging from arbitration to liquidation. Regarding procurement, the Secretary-General explains that in certain circumstances recommended lead times were not practical, in which cases procurement sections resorted to known suppliers.
Several recommendations refer to managing inventory and assets of peacekeeping operations. The Secretary-General says that the new system of field asset control will provide a near global view of all peacekeeping assets. Where write-offs were concerned, the Department of Peacekeeping Operations was engaged in a comprehensive review of the property survey process. Some proposed changes would enhance records management systems and would allow local cases to be settled at the field level.
The Board's report on the International Trade Centre of the United Nations Conference on Trade and Development (UNCTAD)/World Trade Organization (WTO) (document A/53/5-Vol.III) notes that four projects with expenditures totalling nearly $5 million were found to have had limited or no impact in seven of the 12 companies receiving assistance, and performance gains for the remaining five companies could not reliably be attributed to the projects. The Board recommends that the International Trade Centre ensure that, as part of project design, suitable arrangements are made to collect basic data to help facilitate future assessments of project impact and that the Centre develop a system through which achievements could be recorded and aggregated to provide an annual assessment of its impact.
Regarding the Centre's publications, the Board found that the Centre held stocks of between 27 and 80 per cent of the original production run for 23 out of 26 publications examined, the report says. The Board recommends that the Centre review its procedures for determining print volume, with a view to reducing excess stock levels. Further, the Trade Centre should ensure that its publication proposals include justification of need and resource implications.
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Finding that the International Trade Centre had completed 84 (53 per cent) of the 159 research and development outputs planned for delivery in 1997 -- for reasons including poor planning and changes in priorities -- the Board recommends that the Centre improve its planning and prioritizing and strengthen its management of contractors to assure timely delivery of outputs.
According to the report, the Centre's General Fund income was $40.9 million in 1997, and its expenditure was $41 million. It had assets of $2.2 million and liabilities of $1.4 million.
In the report on the United Nations University (document A/53/5-Vol.IV), the Board recommends that the University establish a time-bound strategy and action plan to improve the representation of consultants and experts from developing countries. It should intensify its efforts to attract the desired level of income and continue to explore ways to increase income through utilization of its headquarters building.
In two cases, consultants had been partially paid for work overdue for as long as six years, the report states. The Board recommends that the University reassess the need for those assignments and take action to recover the $25,000 paid in advances, if necessary. On posts, it recommends that the Administration review the optimum staffing requirements and make efforts to fill vacancies to ensure that the University's objectives are not adversely affected.
The University derives its income from an endowment fund and voluntary contributions. According to the report, total income was $84.8 million (almost $11.5 million less than the previous biennium) while total expenditure amounted to $87.8 million. Its combined assets were $325.2 million, while combined liabilities were some $13.7 million.
Among the Board's main findings in its report on the United Nations Development Programme (UNDP) (document A/53/5/Add.1) were that: the absence of audit assurance from governments regarding $520 million of national execution expenditure restricted the Board's scope in this regard; $2.6 million had been written off against a $14.1 million provision made for potential and actual losses on a Reserve for Field Action; at the end of 1997, $89 million was outstanding from advance payments made to agencies.
The Board also found that field offices had advanced $43.1 million to governments for projects where reports for previous periods were outstanding; rent-free premises were provided in only 43 of 136 countries despite being a requirement of UNDP's standard host country agreement; the budget for its information management programme had almost doubled to $47 million from December 1996 to May 1997, and monitoring of projects did not identify expenditures; it was heavily reliant on one consultant firm for its information technology programme, and contracts, with terms insufficiently
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related to outputs, had been extended without competitive bidding; it did not assess financial benefits from its change programme; and despite performance shortcomings, the head of its main change management consultant was still employed and with no competitive bidding process.
Key recommendations beyond those directly addressing findings included that: where possible, it reimburse agencies for actual expenditure, rather than via advances; and that it standardize procedures for investment appraisal of information technology projects to take full account of benefits and operational requirements.
The Board of Auditors reports it was informed of 39 cases of fraud or presumptive fraud during the biennium, involving amounts totalling some $695,000, of which some $192,000 had been recovered. In six cases, the amount defrauded had yet to be determined, and in 10, no financial loss had occurred. In all 35 cases involving staff, disciplinary action had been taken.
The UNDP's total income for the 1996-1997 biennium was about $4.67 billion, and its total expenditure was some $4.46 billion, leaving unexpended resources of approximately $1.61 billion.
The Board's main findings, in its report on the United Nations Children's Fund (UNICEF) (document A/53/5/Add.2), were that: the programme expenditure of some $1.36 billion for the 1996-1997 biennium included some $100.6 million that was not liquidated by governments; in some cases, accounting for cash assistance to governments was inadequate, and was not checked before processing; for 1996- 1997, expenditure exceeded income by $14.6 million, against $5.4 million in 1994- 1995, due mainly to a 6.6 per cent decline in supplementary funds and a 42 per cent decline in emergency programmes funds; implementation of programmes increased 6 per cent to 78 per cent in 1997, but supplementary programmes implementation lagged; and that four projects were included in UNICEF capital assets funding without Executive Board approval.
The Board's keys recommendations were that: oversight on the review of liquidation statements on cash assistance to governments be strengthened; that fund raising, and the monitoring of expenditures, should be intensified; that more greeting cards should be sold and fund raising increased through new strategies; and that transfer of sales proceeds from National Committees should be more frequent.
During the 1996-1997 biennium, according to the report, 54 cases of fraud and presumptive fraud were reported to the Board and 42 of these involved UNICEF staff. In 30 cases, losses totalled $777,000, in 16 there was no loss, and in eight, losses could not be determined. In one instance, responsibility had not been determined for a loss $445,000, and the Board recommended UNICEF take steps to determine responsibility.
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The UNICEF's 1996-1997 income totalled approximately $1.84 billion, of which some 65 per cent came from governments. Expenditures totalled some $1.83 billion.
Among the Board's main findings, in its report on the United Nations Relief and Works Agency for Palestinian Refugees in the Near East (UNRWA) (document A/53/5/Add.3) were that: because of a decline in income and the inability of donors to honour their pledges, UNRWA operated at a $17.7 million deficit in the 1996-1997 biennium; the Agency's liquidity ratio of 1.49:1 at biennium's end was not the standard required of current assets at twice current liabilities, and so was not satisfactory; programme delivery rates for the Peace Implementation Programme, capital and special projects, and extraordinary measures in Lebanon and the occupied territories were low, ranging from 43 to 64 per cent, due to low donor support, border closures, late award of contracts and inadequate monitoring; and the Gaza General Hospital had not been commissioned in April 1998 because of delays in the management team appointment.
Key recommendations included that: allotments for specific purposes projects should only be issued after sufficient donor funds had been received; it should review fund-raising strategies and monitor donor agreements and contract award procedures; the Project Monitoring Unit should be adequately resourced for more efficient project monitoring; and steps should be taken to recover outstanding donations and reimburse the General Fund for $11.2 million spent on the Gaza General Hospital.
The Board of Auditors reports that UNRWA informed it of three cases of fraud during the biennium, involving amounts totalling some $358,000, of which only $900 had been recovered. In all three cases, the frauds were perpetrated by staff members, and the staff had been terminated.
UNRWA's total income for the 1996-1997 biennium was about $633.8 million, and its total expenditure was some $651.5 million. The operation, therefore, had a deficit of $17.7 million.
Among the Board's main findings, in its report on the United Nations Institute for Training and Research (UNITAR) (document A/53/5/Add.4) were that: as per a General Assembly request, UNITAR should review implications of submitting biennial reports; it had resolved its dispute with United Nations Headquarters involving some $94,000 in charges incurred in New York after UNITAR's move to Geneva; the Special Purpose Grant's Fund had a shortfall of some $415,000 in 1997, compared to about $853,000 surplus for 1996. In March 1998, the United Nations cancelled 11 long-outstanding deficits totalling some $283,000; and proposals for merit-based promotions were less exacting than other United Nations organizations.
The Board also found that UNITAR plans to establish a formal performance management system to monitor staff performance and serve as a basis for staff
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promotion cases; UNITAR now had delegation from the United Nations Office in Geneva for procurement below $25,000, which meant better, quicker service, but did not allow it to use Geneva Office expertise. More flexible arrangements were planned.
Key recommendations included that: it seek clarification from the Office of Legal Affairs on the regularity of planned promotion procedures before implementation; and it review its procurement procedures in light of changed procedures pending at the Geneva Office.
According to the Board of Auditors, UNITAR's secretariat reported no cases of fraud during the biennium.
UNITAR's General Fund total income for the 1996-1997 biennium was about $1 million, and its total expenditure was some $788,000. The General Fund, therefore, had a surplus of some $211,000, reduced to about $133,000 after a prior period adjustment. It held a balance at biennium end of some $549,000. Additionally, UNITAR's Special Purposes Grant Fund received about $4.1 million, and expended around $4.5 million, with the deficit of some $415,000 reduced to $345,000 after a prior period adjustment. Its balance was about $2.6 million.
Among the Board's main findings, in its report on the voluntary funds administered by the Office of the United Nations High Commissioner for Refugees (UNHCR) (document A/53/5/Add.5), were that: practices generally accorded with United Nations Accounting Standards, except in certain income items and disclosure of non-expendable property; steps had been taken to encourage implementing partners to provide audit certificates for funds advanced; delays in signing agreements and account maintenance deficiencies with implementing partners persist; policy concerns on refugee women were not fully integrated or implemented in project formulation, and inadequate age/sex disaggregated statistics constrained needs assessments; 25 offices had not been able to implement the UNHCR's asset tracking system; and that an agreement between the UNHCR and the Office of Internal Oversight Services was at an early stage.
Apart from addressing those problems noted above, the Board reports key recommendations that: UNHCR should more closely monitor the timing of project delivery, particularly where timing was critical; and that it should encourage responses from field offices so it can assess requirements to implement the recommendations of the Machel report on refugee children.
The UNHCR advised the Board that no cases of fraud had been brought to its attention in 1997.
The total income of the UNHCR reserves and funds in 1997 was some $820.1 million, down from about $992.7 million in 1996. Total expenditures were some $974.3 million, leaving total reserves and balances of about $190.6 million.
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Among the Board's main findings, in its report on the United Nations Environment Programme (UNEP) (document A/53/5/Add.6), were that: UNEP accounts conform to United Nations Accounting Standards, except that they fail to disclose the value of non-expendable property purchased with UNEP funds by cooperating agencies and supporting organizations; pledged contributions more than four years outstanding from the environment fund are proposed as write-offs, but not some $45.2 million four years outstanding from other funds; of 147 projects implemented by supporting organizations which cost $50,000 or more, audit certificates were not received for 87; and reconciliation of inter-office vouchers was 24 months in arrears as of 31 December 1997, compared with 15 months at 31 December 1995.
The Board also found that: UNEP signed an agreement with the European Space Agency on behalf of the United Nations in November 1994, despite not establishing how the project would fit the global network, and despite UNEP not having formal instruments to sign on behalf of the United Nations; and there were weaknesses in environment and trust funds programme management, such as projects started before acceptance or approval, delayed or no quarterly expenditure statements of half-yearly project reports, and delay in terminal reports, self-evaluation fact sheets, and closure of projects.
Key recommendations included that: UNEP should review all unpaid pledges and make provisions where collection is doubtful; it should consider recognizing pledges as income only when funds are received; it should continue efforts to ensure audit certificates, regarding environment fund money, required from executing agencies, are received promptly; as a matter of urgency, it should review the cost-efficiency, viability and compatibility of the Mercure satellite communications system; and that it should improve project management and control.
The Board of Auditors reports that UNEP informed it that there were no cases of fraud during the biennium.
UNEP's total appropriations for the 1996-1997 biennium were about $102.4 million, and its total expenditure was some $88.5 million. Unexpended appropriations were $13.9 million.
Among the Board's main findings, in its report on the United Nations Populations Fund (UNFPA) (document A/53/5/Add.7), were that: because $83.1 million worth of audit reports had not been received from governments and non-government organizations, there was insufficient evidence to allow the Board to form an opinion on these expenses despite their appearing in UNFPA's financial statements; the value of contributions in kind was not included in its financial statements, contrary to United Nations Accounting Standards; at end 1997, non-government organizations held advances of $18.1 million, and in excess of permitted one quarter's expenditure; the UNFPA had no premises performance indicators to allow comparisons; only 21 governments supplied free
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premises, and host country agreements did not require such free premises; and the ratio of headquarters to field staff had grown from 1:2.3 in 1992-1993 to 1:3 in 1998-1999, due to increases in field staff.
Key recommendations included that: Finance Manual provisions prohibiting advances where disbursement reports were outstanding, and limiting advances to one quarter's expenditure, should be strictly applied; the UNFPA should negotiate for free premises or contributions to costs from governments; and a comprehensive staff review should be undertaken, to ensure headquarters to field ratios were appropriate.
The Board of Auditors reports it was informed of two cases of fraud during the biennium. One case involved a total of some $7,200, involved improper purchase and use of equipment and petty cash. Controls had been strengthened in the field office concerned. In the other, a UNFPA vehicle was used as a taxi, and it was not possible to estimate loss. The Board of Auditors was satisfied that proper procedures were followed.
UNFPA's total income, including cost-sharing income, for the 1996-1997 biennium was about $598.4 million, and its total expenditure was some $603.9 million. The operation, therefore, had excess expenditure of $5.5 million. The balance of General Fund resources and reserves, after $6.7 million transfers to trust funds, was $79.5 million.
Among the Board's main findings, in its report on the United Nations Habitat and Human Settlements Foundation (document A/53/5/Add.8), were that: financial statements for the Foundation and the United Nations Conference on Human Settlements (Habitat II) were consistent with United Nations Accounting Standards, except for contributions in kind and accounting for contributions; non-earmarked contributions fell to 41 per cent of total contributions for 1996-1997, against 92 per cent in 1990-1991, thus restricting the United Nations Centre for Human Settlements' (Habitat) scope for initiating projects; at end of biennium, the ratio of current assets to liabilities was 1.46:1, below the recommended 2:1; there were time overruns in more than half its projects, and 137 of 154 operationally closed projects had not been financially closed; and the administration had succeeded in reducing both the number and cost of consultants.
Key recommendations included that: financial statements should be consistent with the Standards; the fund-raising strategy should be reviewed to increase contributions, especially non-earmarked contributions; time overruns should be analysed and corrective measures taken; and a time-frame should be set for financial closure of projects.
The Board of Auditors reports the Administration reported no new cases of fraud in this biennium.
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The Foundation's total income for the 1996-1997 biennium was about $16.6 million, and its total expenditure was some $16.1 million. The operation had an excess of income over expenditure of $479,000. After provision for delayed contributions and prior period adjustments, the Foundation had a shortfall of some $1.2 million. Reserves and fund balances at biennium end totalled some $4.6 million.
Among the Board's main findings, in its report on the Fund of the United Nations International Drug Control Programme (UNDCP) (document A/53/5/Add.9), were that: the UNDCP had made significant progress in encouraging executing agencies to provide audited statements, but no statements were received for $17.9 million of disbursements on nationally executed projects, so the Board was unable to form an audit opinion on them; there was a real need for improved policy guidelines to clarify the basis of activities and ensure consistent treatment; improvements had been made in setting objectives, criteria and benchmarks for technical cooperation projects, but there was scope for further improvement; despite its objective of preferring national execution of projects, from 1992-1996, they were the smallest proportion of project allocations; and in a sample of five projects totalling $23.5 million evaluated, there were reservations about the contribution of all five to drug control.
Key recommendations included that: it liaise with the UNDP to ensure audit reports are received for all nationally executed projects; systematically incorporate baselines, targets, monitoring and evaluation into project documents; and thoroughly appraise the scale of the drug problem and the cost-benefit of proposals before approval.
The Board of Auditors reports the UNDCP informed it of two cases of fraud during the biennium. One involved an official of the Northern Narcotics Control Centre who embezzled the equivalent of $11,000. Full restitution was obtained, but the matter was not referred to Internal Audit for investigation, nor to the United Nations Controller, as required. The Board recommended that, in future, both be advised, and the UNDCP undertook to comply. The second case involved embezzlement of some $95,000, of which $45,000 had been recovered. The staff member was dismissed and agreed to repay the entire amount with interest. The UNDCP is seeking compensation from the banks involved.
Total income for the Fund of the UNDCP for the 1996-1997 biennium was about $103.3 million, and its total expenditure was some $104.3 million, leaving a deficit of some $1 million.
Among the Board's main findings, in its report on the United Nations Office for Project Services (document A/53/5/Add.10), were that: in the absence of receipt and inspection reports, the Office had no assurance that goods had arrived in satisfactory condition; and the financial system did not give a complete picture of the financial progress of projects.
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Key recommendations included that: all field offices should be reminded of the importance of receipt and inspection reports; and the Office should identify the shortcomings of its financial reports, and address them and decide on the frequency and form of reports.
The Board reports that the Office informed it of five cases of fraud during the biennium, involving amounts totalling some $162,000, of which recovery action for about $20,000 had been initiated. In all five cases, those involved were staff members, and four remained under investigation. The Board was satisfied with the completeness and accuracy of reporting of fraud by the Office, but noted it did not have an established process for such reporting, and recommended one should be established.
The Office's total income for the 1996-1997 biennium was about $78.4 million, and its administrative expenditure was some $70.2 million. Income, therefore, exceeded expenditure by some $8.2 million.
A note by the Secretary-General transmits the concise summary of the principle findings, conclusions and recommendations of the Board (document A/53/217) for 1996-1997. It says that overall, the Auditors were provided with information on 111 cases of fraud or presumptive fraud involving a total of $2.8 million that became known to eight organizations during the biennium 1996-1997. Of that amount, approximately $549,098 had been recovered. Disciplinary action in the form of summary dismissal was taken against some staff members, while other cases were still under investigation.
The Board qualified its audit opinion on the financial statements of three organizations: UNDP, UNFPA and UNDCP, in each case, because of insufficient evidence, that funds advanced to them for national execution projects had been expended for the purposes intended.
The Board studied the preparedness of the various organizations to manage the year 2000 issue, which threatens all information systems, the report states. It found that the organizations were at varying levels of preparedness. In the United Nations, most of the critical information technology systems are proposed for transfer to the IMIS. Thus, it is imperative that the IMIS be implemented in all offices away from Headquarters, with sufficient lead time to address deficiencies. All data interfaces that are not year 2000 compliant need to be addressed.
The Committee also had before it the Secretary-General's report on implementation of the Board's recommendations (document A/53/335). The report says the Administration had established a career development policy and was putting in place a number of career support mechanisms. The Assistant Secretary-General for Human Resources is responsible for implementing that recommendation.
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Regarding the recommendation to integrate all accounting systems with the IMIS and to modify the System to ensure better management of receivables and payables, the report says that the implementation of the IMIS at offices away from Headquarters, excluding peacekeeping missions, would begin in the first part of 1999 and should be completed by the end of that year. On the basis of a thorough review of the processing of receivables and payables in the IMIS, various changes are to be implemented by mid-1999, with the Controller and the Assistant Secretary-General for Central Support Services being responsible for implementation.
Regarding the need to avoid exigency contracts, the Secretary-General writes that, owing to the age of the buildings, the need for emergency repairs will continue. The Administration intends to develop an acceptable design and procurement methodology for dealing with such emergencies.
On procurement, the report says that the Administration will seek to ensure sufficient time for bids to be submitted, although the actual time allowed would vary the procurement requirement. Also, the Procurement Manual would include guidelines for open tendering and specify the frequency at which the Supplier Review Committee should review the evaluation of potential suppliers when the Manual is updated.
The report says all necessary measures will be taken to ensure year-2000 compliance, with the Under-Secretary-General for Management being responsible.
An addendum to the report (document A/53/335/Add.1) contains the responses of the executive heads of organizations and programmes: International Trade Centre, United Nations University, UNDP, UNICEF, UNRWA, UNITAR, UNHCR, UNEP, UNFPA, UNDCP and the United Nations Office for Project Services. For the most part, these responses indicate measures to be taken to implement the recommendations, as well as target dates for completion.
In its related report (document A/53/513), the ACABQ concurs with most of the Board's findings. It expresses concern about irregularities in procurement during 1996-1997. Regarding contracts for cleaning, maintenance and electrical maintenance, the ACABQ recommends that the Secretary-General supply additional written explanation to the Fifth Committee, including an indication of action taken to ensure that irregularities, such as the practice of using vendors or suppliers suggested by requisitioners, are not repeated.
For the year 2000 issue, the ACABQ recommends that the United Nations Administration and all the administrations of the funds and programmes mentioned above report to it by May 1999 on the progress made in this regard, the report states. The United Nations Secretariat is requested to coordinate the preparation of this report.
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On peacekeeping financing, the Advisory Committee notes that the audit opinion had been qualified owing to doubts about the collectability of $116.1 million in assessed contributions for the period ending 31 December 1997 and because of its inability to confirm the validity of adjustments of $130.4 million resulting from gaps arising from the conversion of the old accounting system to the IMIS, the report states. The ACABQ is of the opinion that assessed contributions are collectable until the General Assembly decides otherwise. Expressing serious concern about the Board's findings regarding payments for services to UNOSOM and UNAMIR, the Advisory Committee recommends that the Secretary-General report to it by February 1999 on the results of his review, in order to finally clear all outstanding issues concerning this matter.
The Committee also had before it a report from the Secretary General on guidelines for Internal Control Standards (document A/52/867), in which he proposes certain changes regarding streamlining and strengthening of internal controls, and a report from the ACABQ on the same matter (document A/53/508) in which the Advisory Committee states that the Guidelines are too general to be operational.
Statements on Reports of Board of Auditors
V.K. SHUNGLU, the Comptroller and Auditor General of India and Chairman of the United Nations Board of Auditors, introduced the reports of the Board of Auditors on the various financial statements and on the management review of the secretariat of the International Civil Service Commission (ICSC). The Board had finalized its reports for 1996-1997 two weeks earlier this year than last year, he said. In its report on peacekeeping operations, the Board reported by "thrust area", rather than by mission as previously. It also introduced a summary at the beginning of the report. As the period of financial reporting for peacekeeping had changed, the report exceptionally covered an 18-month period to 30 June 1997.
In addition to addressing the requirements of the General Assembly, the Board had also conducted "horizontal" audits of cash management, capital assets and management of premises, he said. A constant dialogue with management of audited organizations was maintained as was close cooperation with the Office of Internal Oversight Services. The Board exchanged information with the Joint Inspection Unit (JIU), and a tripartite meeting was held in November this year with the Oversight Office and the JIU.
The ACABQ had met with the Audit Operations Committee twice, he said. The Board had noted ACABQ observations that inconsistent operation of several articles of the United Nations Accounting Standards required urgent review. The ACABQ had also stated that the Board's reports should be published before the start of the General Assembly session. The Board noted that additional resources were to be discussed by the ACABQ and the Board.
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The Board would keep in mind the ACABQ request for a horizontal audit of procurement procedures, he said. He also noted the ACABQ opinion on application of the Guidelines for Internal Control Standards. He then introduced the specific reports.
On peacekeeping, he said the Board's main points were that it had issued a qualified opinion for two reasons. Although some Member States had indicated they would not pay their assessments in full as of 30 June 1997, no provision had been made for the delay in the financial statements. The Board had also been unable to confirm validity of total adjustments arising from conversion from the old accounting system to the IMIS. Those matters were material, and, therefore, the Board had been unable to express an unqualified opinion.
On the other financial reports, he said that, with the exception of the International Trade Centre, the United Nations Development Programme (UNDP) and the United Nations Joint Staff Pension Fund, all organizations audited had previous recommendations not fully implemented. The Board issued qualified audits for three organizations -- the UNDP, the United Nations Population Fund (UNFPA) and the United Nations International Drug Control Programme -- because it had been unable to obtain sufficient evidence, in the form of audit reports from governments and non-governmental organizations, that funds advanced for national execution projects had been expended for the purposes intended.
On the treatment of programme expenditure, he said that the United Nations Children's Fund (UNICEF) had intended to modify its Financial Regulations to allow it to address recommendations about cash advances to governments, and that the Office of the United Nations High Commissioner for Refugees (UNHCR) had stated it planned to introduce changes to address the Board's concern that financial statements did not truly reflect the year's expenditure, as an amount of $193.5 million was not supported by accounts from implementing partners.
On procurement, the Board's review of major contracts revealed deficiencies in planning specific needs, and in inviting bids and awarding contracts, and lack of verification of completion of contracts before disbursing funds, he said. The Board recommended that administrations should ensure that instructions and provisions of the Procurement Manual were adhered to, and the benefits of economies of scale were obtained where possible. The Procurement Manual should include guidelines for open tendering and should specify the frequency at which the Supplier Review Committee should review the evaluation of the potential suppliers.
The Board had noted many areas where programme management could be improved, he said. Administrations should analyse reasons for substantial time overruns in projects and take corrective measures. Time-frames for financial closure of projects soon after operational closure should be set.
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On the use of consultants, he said a number of inadequacies had persisted in 1996-1997. For example, consultants had been employed to handle regular work, records of selection basis had not been available, and consultancy agreements had been signed after work had commenced. The Board recommended that administrations ensure full compliance with established instructions on the engagement of consultants. Additionally, some organizations needed to make considerable progress in addressing the year 2000 computer problems.
The Board had been provided with information on 107 cases of fraud or presumptive fraud, involving some $2.8 million, from eight organizations, he said. Of that, $549,000 had been recovered. The cases involved staff and non-staff, and summary dismissal had been taken against some staff members, while others were still under investigation.
On the report on the ICSC secretariat, he said that secretariat, when proposing salaries and competitiveness of United Nations Professional salaries, did not include health and pension benefits in their comparisons. The margins at the higher levels were sometimes negative, whereas at the lower levels the margins were very large. The present salary structures tended to reward length of service and seniority rather than merit, and there were frequent changes in criteria for determining out-of-area weights for headquarters' duty stations. Regarding General Service level staff salaries and conditions, the Board found that exclusion of important social security benefits in their establishment resulted in overcompensation at some duty stations and under- compensation at others.
The Board recommended that the ICSC secretariat propose a total compensation methodology for assessing competitiveness of Professional staff, he said. It also recommended the establishment of a United Nations common system personnel database, with comprehensive data on staff deployment, salary and allowances.
JOSEPH E. CONNOR, Under-Secretary-General for Management, introduced reports on implementation of the recommendations of the Board of Auditors. The Secretary-General's responses and efforts to implement recommendations were contained in one report, and an addendum contained responses from executive heads of 12 organizations. Some of the recommendations had been addressed through separate documents. Comprehensive guidelines on the use of consultants had been issued as a separate document, while the reports of the Secretary-General on human resources management and related reform set out a policy and course of action for career development.
The Adminstration attached priority to the timely implementation of each recommendation it concurred with, and would continue to consider those recommendations with which it had not concurred, he said. Progress in implementation would be under continuous review and would be reported on regularly. The Auditors' professionalism, combined with the Administration's
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commitment to the timely and thorough implementation of their recommendations, would contribute greatly to the Organization's efficiency.
C.S. MSELLE, Chairman of the ACABQ, said the ACABQ paid particular attention to recommendations about which the various administrations and the Board had different positions, as well as those it felt required strengthening or clarification. The timing of the reports continued to be of serious concern to the ACABQ. Responses from administrations should be further clarified, to facilitate monitoring of implementation of the Board's recommendations. The Board had continued to improve the quality of its reports, but the ACABQ had not had enough time to review information on implementation.
The Board had emphasized the need for administrations to take urgent measures to ensure that technology systems in use were year 2000 compliant, he said. The ACABQ recommended that a consolidated report on those efforts be submitted by May 1999. On compliance with United Nations system accounting standards, he said there was need to review some of those standards. Action on that was under way in the Administrative Committee on Coordination (ACC) machinery, and the ACABQ would discuss the matter later this year.
Turning then to procurement practices, he said that while efforts to reform such practices had been implemented, their effectiveness had yet to be evaluated. In the next audit cycle, the Board should conduct a horizontal analysis of the efficiency of efforts to date. Regarding implementing partners, the ACABQ noted measures to enhance accountability, but many shortcomings remained that must be addressed. Administrations should take effective corrective measures.
Currently, all auditing reports, except those of the UNHCR and UNITAR, were submitted on a biennial basis, he said. The ACABQ recommended that all reports be submitted biennially, to allow administrations more time to implement recommendations of the Board. Also, such conformity would be less costly and would allow the ACABQ to have a complete overview of administrative efficiency. The UNITAR had agreed to switch to biennial auditing, but the UNHCR seemed reluctant to do the same. Representatives of the High Commissioner had not put forward convincing arguments to support retaining the current annual pattern. He noted that biennial reporting was not incompatible with annual budgets -- it simply meant that accounts were closed the second year instead of the first. There was no compelling reason for the UNHCR not to switch from an annual to a biennial cycle.
Regarding the internal control standards, the ACABQ had concluded that it was not advisable to amend Financial Regulation X as proposed, he said. The ACABQ supported the guidelines, but they should be used to improve existing internal control instruments. The Secretary-General should publicize the Guidelines in whatever form he deemed appropriate, rather than attempt to incorporate them in or otherwise amend the Financial Regulations.
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Statements on Activities of Internal Oversight Office
ABDULLAH ABDULLATIF ABDULLAH (Bahrain) said that Bahrain supported the pioneering role played by the Oversight Office, as well as the mechanisms it had developed. The Organization was in dire need of them. In paragraph 30 of the Oversight Office report, which dealt with the United Nations Truce Supervision Organization (UNTSO), certain proposed reductions in staffing levels were mentioned. Bahrain still believed the current staffing level was less than was needed and stressed that it should be maintained because of the political situation. Regarding the overpayment of mission subsistence allowance at the United Nations Iraq-Kuwait Observation Mission (UNIKOM), those overpayments had not been restored to the Organization and they must be.
EVA SILOT BRAVO (Cuba) thanked the Under-Secretary-General for Internal Oversight Services, Karl Th. Paschke, for replies he had given at the previous meeting to meet the concerns of delegations. While she recognized that Mr. Paschke had said his intention was not to propose additional posts for the Oversight Office in the context of the report, that was not the first time the Oversight Office had mentioned additional posts in such a context. That was not done by other areas. In the future, normal procedures should be followed, and no posts should be requested outside the budget process.
Regarding his response on the reference to the conference in Montreaux, she said she understood Mr. Paschke's statement that he did not intend that the conference be used as a frame of reference for the Fifth Committee. She stressed that the conference, for which there was no United Nations mandate, should not be a reference for the Fifth Committee on that item.
She said Cuba would like to hear comments from the Oversight Office on the improvements to oversight of United Nations funds and programmes noted in the report. Regarding the savings and reductions the Oversight Office had identified, Cuba sought explanations of the relationships between those savings and activities that could not be carried out in the biennium. The relationship was not clear. She added that recommendations in the Office's reports, which would require legislative action, should be submitted through the proper channels.
AMJAD SIAL (Pakistan) thanked Mr. Paschke, but believed some issues needed further qualification or information which he would seek in informal consultations. Any proposal requiring legislative actions should be submitted by executive heads, as per normal processes. Regarding staff levels, he noted that those were proposed by programme managers and department heads, then considered by the Secretary-General, then sent to the ACABQ, before being discussed for over two months by the Fifth Committee, and then passed to the General Assembly. He asked by what means the Oversight Office reached conclusions on levels of staff.
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On the concentration of Oversight Office activities in certain areas, a table in the report indicated that the Oversight Office functions were not performed in an even and balanced fashion. There was a high concentration in some areas, while in one area there was none. Functions of the Office set by the General Assembly should have equal weight in the function of the Office. He asked why the Office had adopted that selective approach.
Mr. PASCHKE, Under-Secretary-General for Internal Oversight Services, said, in response, that the recommendation the Oversight Office had made on streamlining UNTSO's administrative structure had been based on an audit analysis of the situation. The Office had come to the conclusion that synergies in the administration of the programme could result in a moderate reduction of staffing levels. The Office had not offered a view on political aspects of UNTSO, as it had no mandate to do so.
He had just heard that delegations were of the opinion that the administrative arrangements should not be changed, he said. All the Oversight Office did was make recommendations to management, which then had to take account of the political environment and the wishes of Member States. Management would then conclude in such a way as to meet the interests of Member States, which were the principal shareholders of UNTSO as of any other mission. Oversight Office recommendations were only made under management and efficiency criteria. They were not meant to have an impact on the political situation.
On the question of mission subsistence payments in UNIKOM, he said that issue was a part of a more general review of all the relevant Secretariat entities, and he would come back to it when a management decision had been taken.
In response to the questions from the representative of Cuba on the adequacy of comments on staffing levels and on the request for an additional post that would be made in the next budget proposal, he reminded delegates that the relevant Administrative Instruction required him to report on the adequacy of the Office's resources, and so he had always done that. If other bodies did not, they were probably not requested to do so. He repeated that he was not requesting additional resources, but flagging views on staffing levels of the Office, and he would come back to the question in the appropriate way.
He said he had difficulty understanding Cuba's position on his Montreaux conference reference. The reference had been made in the preface to the report, and he likened it to a quote he might use from a scientific book on oversight. Nothing more had been intended.
Cuba had also commented on the funds and programmes situation, he said, and had asked how the process of improvement had played out in the view of
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Oversight Office. In the past two or three years, the Office had conducted more and more dialogue with the management of funds and programmes on how internal oversight functions in programmes could be improved. The decision to enter dialogue had come from their senior management, and he believed the discussion had improved their oversight.
Responding to comments on recommendations requiring legislative action to be implemented, he said that was a subject he hoped would be meaningfully and usefully addressed as part of the review of the Oversight Office activities. He hoped the discussions would come up with practical and useful procedures to facilitate the review of Oversight Office recommendations in the future.
Responding to questions from the representative of Pakistan on the mechanisms used by the Oversight Office when it looked at the adequacy of resources and staff, he said he thought that would be discussed in the informal consultations, and the same was true of the different functions of Oversight Office. The functions were being carried out in even and balanced manner. Different functions might not have the same volume of activity, but all the functions worked together and resulted in a balanced approach to oversight. He looked forward to further discussion during informal consultations.
TAMMAM SULAIMAN (Syria) said his question had been clear: on what basis had Mr. Paschke reached his conclusion in proposing reductions of posts for UNTSO? No answer had been given.
He had also asked what duty station had been meant in comments on the rental subsidy in the duty station in Israel, he said. His third question had been on reporting methodology. Mr. Paschke's response to the delegate from Iraq had not answered this. Had the Under-Secretary-General told the Assembly of an investigation before completing that investigation, or only upon completion? he asked. There had been differences in practice.
He said that the representative of the United States had mentioned a meeting outside of the United Nations which had led to the cancellation of a meeting of the Fifth Committee. However, his delegation did not recognize that outside meeting. Committee members should confine themselves to the documents before it. When the role of the Oversight Office was evaluated, it would be done in the context of the provisions of resolution 48/218B, and any consultations outside the scope of the United Nations must not be taken into consideration.
On the United States representative's comments about the need for continued debate on evaluating the Oversight Office, he said such evaluation was an important element in strengthening its functioning. There had been many cases where the Office had deviated from its mandated activities. For instance, it had interfered when it had suggested reducing the staffing levels
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of UNTSO, which was only up to the Secretary-General to do. Also, it had interfered in the political positions of countries when it considered some positions were based on the provocations of staff members. Evaluation was important in ensuring that the Office adopted its correct role.
Ms. SILOT BRAVO (Cuba) said she was pleased that the Office recognized the concerns that many Member States had regarding resolution 48/218B and the need to distinguish between recommendations that were within the Office's competence and those requiring legislative action. The Office recognized the importance of abiding by the provisions of that resolution.
She said Mr. Paschke had referred to an administrative instruction in which the Secretary-General had asked him to include the situation of resources of the Office, but that had nothing to do with posts. The annual report should not include issues which related to the budgetary functions. Mr. Paschke was requesting a post for responsibilities which had been fulfilled by gratis personnel, but there was no need for such a request, since the Secretariat had assured Member States that an established machinery was in place for such transition.
References had been made to the Montreaux conference in the preface and the body of the Oversight Office's report, she said. However, the event had not been organized by the United Nations, and not all Member States supported it. It should be analysed in the academic, not the intergovernmental, context. Indiscriminate references to the results of that conference could prejudge the debate and should be avoided.
MOVSES ABELIAN (Armenia), Fifth Committee Chairman, said more details could be discussed in the informal consultations.
Mr. PASCHKE apologized to the delegate from Syria for not answering his question. No inappropriate payments had been discovered in Israel, but the audit team had noted that excessive rental subsidy payments could have been avoided if a reasonable maximum rent level had been established, as had been done in Europe and North America. The two rental subsidy schemes could be consolidated to provide equitable treatment of all staff concerned and simplifying administrative procedures.
Regarding the appropriateness of mentioning an ongoing investigation in the report, he said the document contained a brief synopsis of the case and did not name the staff members out of concern for the staff member's due process. He was obligated to report on the Office's activities and cases that consumed considerable resources. He reminded the Syrian delegate that he had offered to hold a bilateral briefing on the matter.
On the Cuban delegate's questions, he said he recognized what she had said and heard her insistence that mentioning the conference was inappropriate.
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In drafting future prefaces to annual reports, he would not include things the Committee would view as inappropriate.
THOMAS SCHLESINGER (Austria), speaking for the European Union, said the Oversight Office was supposed to contribute to making the United Nations more effective. It was within that body's purview to make recommendations on streamlining, including the reduction of posts. While it was up to Member States to make decisions on those matters, the Union did not share the views expressed by some that the Oversight Office should not make comments.
Mr. SULAIMAN (Syria) agreed that the Oversight Office could make recommendations, provided they were not implemented without the General Assembly's consent. There had been extensive debate last year on whether the Office's recommendations were for information or for action. When recommendations were made, it was up to the Committee to take action on them. If recommendations were for information purposes only, his delegation would follow them up under the appropriate agenda items. However, many recommendations were being implemented without the Assembly's consent. There was ambiguity on the nature of the recommendations: were they for information or for action? he asked.
JAN JAREMCZUK (Poland) said his delegation supported the statement made for the European Union.
DJAMEL MOKTEFI (Algeria) said the Oversight Office's mandate was clear. The Assembly, as the United Nations supreme authority, considered proposals or recommendations and took decisions on them.
Mr. SCHLESINGER (Austria) said he had not said that any recommendation of the Office would have to be agreed to by Member States.
The Committee concluded its discussion on the agenda item.
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