IN CURRENT BUDGET PROCESS, LINK BETWEEN RESULTS AND RESOURCES WEAK, FIFTH COMMITTEE TOLD AS IT TAKES UP RESULTS-BASED BUDGETING

20 November 1998

Press Release
GA/AB/3268

IN CURRENT BUDGET PROCESS, LINK BETWEEN RESULTS AND RESOURCES WEAK, FIFTH COMMITTEE TOLD AS IT TAKES UP RESULTS-BASED BUDGETING

19981120 Committee Also Discusses Proposed Revolving Credit Fund, Coherence of Oversight and Board of Auditors Reports

In the current budget process, the link between results and resources was weak, and Member States were provided little information on how the objectives they determined were achieved, the Fifth Committee was told this morning as it took up the subject of results-based budgeting.

Australia's representative, speaking also for Canada and New Zealand, said the Fifth Committee's unseemly horse-trading in individual posts, which had become a feature of its negotiations on the regular budget, did little to enhance the Secretariat's accountability to Member States.

Speaking for the European Union and associated States, Austria's representative said that by focusing on results rather than on inputs, Member States would increase their ability to ensure that the Secretariat fulfilled mandated activities. The Union endorsed the Secretary-General's proposal to begin gradually shifting to results-based budgeting.

However, Indonesia's representative, speaking for the "Group of 77" developing countries and China, said the proposal would constitute a radical departure from processes that had been constantly reaffirmed by the General Assembly. The Secretariat should take no action until the General Assembly had decided on the appropriate action on the matter.

Mexico's representative said results-based budgeting was like a custom- made suit -- a model could not be borrowed from somewhere else and applied. He noted that Member States' earlier concerns had not yet been dispelled and that there was need for more information.

The views of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) on the matter were introduced by its Chairman, C.S.M. Mselle. The United Nations Controller, Jean-Pierre Halbwachs, introduced the Secretary-General's report on results-based budgeting.

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The representatives of the United States, Uganda, Pakistan and Algeria also spoke.

As the Committee began its consideration of the proposed revolving credit fund, Indonesia's representative reaffirmed the earlier position of the Group of 77 and China. The proposal could not be a solution to the Organization's financial crisis, which was attributable to non-payment of assessed contributions, especially by the major contributor.

Uganda's representative said the General Assembly should focus on the problem of non-payment of assessed dues, not on creating other funds that would be an additional burden to Member States.

The representatives of Pakistan, China, Cuba, Australia, Egypt, Pakistan and Zambia also spoke.

The Chairman of the ACABQ introduced that body's views, and the Under-Secretary-General for Management, Joseph E. Connor, introduced the Secretary-General's report.

As the Committee turned to the coherence of oversight, John Fox, Inspector, Joint Inspection Unit (JIU), presented the Unit's report. There were still major issues on oversight that needed to be resolved by Member States, he said. The report did not advocate using the same mechanism in every organization of the United Nations system, he added. One size did not fit all.

The representatives of Austria, for the European Union and associated States, Pakistan, Cuba, United States and Syria also spoke. The ACABQ Chairman, Mr. Mselle, introduced that body's report, and Mr. Fox responded to Member States comments.

The Committee then continued its discussion on the Board of Auditors' reports.

The United States was disappointed that Member States had again been subjected to a litany of management deficiencies and recommendations from previous years that had not been implemented, that country's representative said. He asked if they would ever hear that United Nations agencies had provided sufficient documentation to meet the financial regulations. One encouraging example in a barrage of alarming accounts was the improvement in United Nations procurement, he noted. That improvement should spread throughout the United Nations organizations.

The representative of Norway said he was concerned that the Board's reports be put to good use, which meant that delegations must have sufficient time to analyse them. That would be easier if they reached Member States before the start of the main General Assembly session.

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Many States expressed concern about persistent deficiencies in the procurement process, and about the qualification of the Auditors' reports for three agencies.

The representatives of Ghana, Russian Federation, China, Japan, and the Republic of Korea also spoke.

The Committee will meet again this afternoon to continue its discussion of the reports of the Board of Auditors.

Fifth Committee Work Programme

The Fifth Committee (Administrative and Budgetary) met this morning to discuss reports related to United Nations reform and to the review of the Organization's administrative and financial efficiency; to continue discussing reports of the Board of Auditors; and to take up the financing of the International Criminal Tribunals for the Former Yugoslavia and for Rwanda. It was also to consider a report on the conditions of service for the two Tribunals and the International Court of Justice.

Under review of efficiency and United Nations reform, it had before it reports on proposals for a revolving credit fund from which the Secretary- General could borrow when States' contributions were outstanding, and reports on how to implement the proposed system of results-based budgeting, where pre- defined objectives and performance indicators would be used to determine the budget level and monitor use of funds. Also under review of efficiency, it was to take up reports on oversight in the United Nations.

(For background on the reports of the Board of Auditors see Press Release GA/AB/3264 of 16 November 1998.)

Revolving Credit Fund

The Secretary-General's report on the revolving credit fund (document A/52/822) elaborates on his proposal to establish a fund to relieve cash flow pressures on the Organization through temporary advances against unpaid assessments. The fund would be established on an indefinite basis and at an initial level of up to $1 billion, through voluntary contributions from Member States, or any other means the General Assembly might decide. The Secretary-General would notify Member States of any new balance of unpaid assessed contributions if the assessment was 90 days past due and ask the State concerned to specify the future date of payment in a legal form that would allow him to pledge the notification in reply as security for an advance from the fund.

Member States whose unpaid contributions resulted in advances being drawn from the fund would bear the cost of interest lost -- the opportunity cost of financing the advances -- while those who contributed to the fund would receive corresponding credit adjustments in amounts owed to them by the Organization for prior years, the report explains.

According to the report, income from the balance of the fund would be retained in it. When the Organization's financial situation improves to the extent that it can handle normal delays in payments of assessed contributions through the Working Capital Fund, the principal of all contributions will be returned to donors, together with their share of accrued interest.

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The proposal would not affect the determination of arrears for the purposes of Article 19 of the Charter, but it would require the Assembly to approve amendments to the Financial Regulations, the report states. The Secretary-General recommends that the Assembly establish the fund as outlined in the report; approve related revisions to the Financial Regulations and Rules; authorize him to consolidate authorized retained surpluses in a retained surpluses account; take note of Member States' share in currently authorized retained surpluses; and decide that their shares in future retained surpluses would be allocated according to the scales of assessment in force for the budget year in question.

Annexed to the report are suggested amendments to the Financial Rules and Regulations; draft written notifications of payment; and a list of indicative allocation of existing retained surpluses, based on assessment rates for 1997.

However, in its related report (document A/53/645 and Corr.1), the Advisory Committee on Administrative and Budgetary Questions (ACABQ) says creating the revolving credit fund might dilute Member States' focus on finding an effective political solution to the financial crisis. Also, the proposed fund might burden States that already meet their financial obligations while it would not induce delinquent Member States to pay their contributions in full and on time.

The ACABQ will not comment on the fund's operations and procedures until the Assembly pronounces on the principles involved, the report states. Meanwhile, certain issues require clarification. For example, why should the fund be capitalized at the level of $1 billion, when unpaid assessments come to more than $2.5 billion? Also, what options would the Secretary-General have if Member States do not indicate the future date of their payments, since such notification is pledged as security for borrowing against the fund? The ACABQ also questions the link between the treatment of retained surpluses and the fund.

Results-based Budgeting

In his report on results-based budgeting (document A/53/500), the Secretary-General recommends that the General Assembly endorse his proposal that, in addition to presenting the full programme budget for the biennium 2000-2001 in the current format, he also present fascicles for three budget sections using the proposed format for results-based budgeting as a prototype.

In this kind of budgeting process, programmes would be formulated based on a set of pre-defined objectives and expected results, according to the report. Performance indicators would be included in the narrative of the proposed programme budget. Within six months after the end of the budget period, and based on those indicators, programme managers would prepare a "results report" on the results achieved and the resources used, and present this to the Committee for Programme and Coordination (CPC) and the ACABQ.

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Those bodies' recommendations would then be submitted to the General Assembly. The Secretariat would be held accountable for achieving results.

The proposal would modify existing planning, programming, budgeting, monitoring and evaluation, according to the report. Significant issues, such as the level of resources to be committed under each budget section, would be retained centrally, but matters relating to the internal mix of expenditures would be determined at each location and within each department or office.

Changes would be required in the format of the budget, which would contain an introduction and summary tables, budget sections with information on objectives for the biennium, expected results, performance indicators, outputs, and resource requirements showing simplified staffing tables and requirements for non-post items, the report says. Resources would be presented at the aggregate level. Detailed information by object of expenditures, as at present, would be provided as supporting material so the ACABQ could thoroughly consider resource requirements.

The CPC's role might be enhanced, in its review of results to be achieved at the time the proposed programme budget was considered, and also in terms of its review of the "results report", to determine the budget outline for the next biennium, the report explains. Down the road, there might be implications for revising the Regulations and Rules Governing Programme Planning, but the existing Rules do not preclude introducing the new system. A guide to results-based budgeting has been prepared to help programme managers formulate programme narratives and establish performance indicators, and training sessions will be held.

Annexed to an addendum to the report (document A/500/Add.1) are prototypes of two subprogrammes of section 6 (Legal affairs) of the programme budget for 1998-1999. They present the Organization's objectives as they pertain to the subprogrammes, the results emanating from those objectives -- expressed as benefits to end-users/clients -- and indicators by which programme managers would measure the extent to which results had been achieved.

New elements in the format are: a statement of objectives, statement of expected results and performance indicators, the Secretary-General writes. Certain elements are modified. The subprogramme introduction is augmented by an indication of major changes since the previous biennium. Outputs reflect only final products or services delivered and not activities leading to that final phase or service. Resource requirements are presented at the aggregate level. The budget methodology would not change in terms of resource base, proposed resource changes to the current budget and re-costing for currency and inflation fluctuations.

According to the ACABQ's related report (document A/53/655) it will thoroughly analyse the proposal for results-based budgeting when it considers

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the proposed budget for 2000-2001 in the early part of 1999. It will submit its recommendations on such budgeting to the Assembly's fifty-fourth session.

The best way for the ACABQ to analyse the proposal would be by comparing prototypes with the current budget format, the report says. The Secretary-General should present the proposed programme budget for the upcoming biennium in the current format, and submit prototype fascicles on complex budget areas such as international cooperation for development, a regional commission, and common support services.

Coherence in Oversight

A note by the Secretary-General transmits a report of the Joint Inspection Unit (JIU) entitled "More Coherence for Enhanced Oversight in the United Nations System" (document A/53/171). The JIU says that in the process of reforming the Organization, trust between Member States and secretariats must be rebuilt, with each playing their proper legislative and executive roles. Enhancing oversight could reassure Member States and, in turn, reduce micromanagement.

The JIU makes recommendations for enhancing logic and consistency in oversight mechanisms without imposing uniformity, according to the report. They are based on the premise that oversight requires partnership between Member States, secretariats, and oversight mechanisms, with the former playing the leading role.

The JIU calls for agreed plans for conducting internal oversight in each system body, in the report. It recommends that consolidated annual summary reports be prepared by internal oversight bodies and made available to the appropriate legislative organs of each organization. The JIU would periodically analyse these reports to put them in system-wide perspective and assist in using them for identifying system-wide problems and practices.

Another recommendation would have internal and external oversight bodies highlight in their reports good practices which could be of benefit to other system bodies. The Unit recommends fostering a stronger professional oversight community to encourage complementarity of efforts and avoid overlap. Also, it recommends increased dialogue among the oversight partners for understanding and accountability.

Stressing the importance of maintaining distinctions between internal and external oversight mechanisms, the JIU says that internal oversight mechanisms are primarily accountable to executive heads, providing them with advice on internal control and management practices. External oversight bodies, on the other hand, are accountable to Member States and provide information and advice regarding the management of the Organization. The JIU identifies five elements of internal oversight: audit, evaluation, inspection, monitoring and

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investigation. An annex to the report describes how internal oversight is conducted in the United Nations system of organizations.

In its related report (document A/53/670), the ACABQ notes that the Secretary-General agreed with the essence of the report. The ACABQ agrees with the Unit that neither a single oversight mechanism nor an oversight model would be appropriate for the United Nations system. It shares the JIU's concern about the blurring of internal and external oversight roles and cautions against overuse of the term "oversight". Oversight bodies, according to the report, perform the five functions set out in the JIU report, whereas bodies like the ACABQ and the CPC are part of the legislative decision-making process.

The ACABQ reports that the oversight plan the JIU proposes executive heads of bodies draft and submit should be submitted to each body's legislative organ, and is not intended to imply centralized arrangements on the different organizations. It adds that it notes the JIU proposal that executive heads indicate which oversight recommendations required legislative responses and which were for information only, but stresses that it is for each legislative body to determine the reporting procedures for both internal and external oversight bodies.

The JIU recommendation that good practices be included in reports would be particularly useful in procurement, communications, software application and staff training, according to the report, although the ACABQ cautions that outside practices are not necessary applicable to the United Nations. Regarding the JIU proposal to create a single-document review of the consolidated annual summary reports, it warns this may exacerbate the "oversight indigestion" already experienced by Member States.

International Criminal Tribunal for the Former Yugoslavia

The Secretary-General's third annual budget performance report for the Tribunal covers the one-year period ending 31 December 1997 (document A/C.5/52/47). Of the approximately $48.6 million net appropriated by the General Assembly for the Tribunal for 1997, recorded expenditures had totalled some $36.4 million net, resulting in an unencumbered balance of about $12 million net. Of that, $10 million net had been allocated for the Tribunal's activities in 1998 (by resolution 52/217 of 22 December 1997). The Secretary-General asks the Assembly to take note of the report.

The report explains that most of the decrease -- about $7.9 million -- was attributed to posts. Vacancy rates were higher than anticipated, so common staff costs were also lower. Exchange rate fluctuations and the difference between standard and actual salaries were other factors. Other areas that recorded lower than projected costs were: salaries, travel, contractual services, general operating expenses, supplies, furniture and premises.

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The Secretary-General's report of revised 1998 estimates for the Tribunal (document A/C.5/53/12) says that as a result of the adoption of two Security Council resolutions -- resolutions 1160 of March 1998, which mandated the Tribunal to consider the violence in Kosovo, and 1166 of September 1998, establishing a third Trial Chamber for the Tribunal -- a commitment authority of about $2.4 million had been approved for the Tribunal. Following analysis of expenditure trends since then, the General Assembly should approve for 1998 a revised staffing table of 75 additional posts and a revised appropriation of some $68.6 million gross ($62.2 million net), which is a decrease of about $217,900.

The Committee also had before it the Secretary-General's report on financing the Tribunal for 1999 (document A/C.5/53/13), in which he requests resources for 1999 of some $106.4 million gross ($96.6 million net) -- a net increase of roughly $34.3 million from 1998 -- and an additional 267 posts over the 1998 authorized staff level.

The Hague-based Tribunal consists of Chambers, the Office of the Prosecutor, and the Registry.

The Chamber is the judicial organ of the Tribunal and conducts the trial and determination of guilt or innocence of accused. Three new Judges have recently been elected, following a Security Council resolution that established a third Trial Chamber which will become active in 1999. A fourth Appeals Chamber handles appeals from this Tribunal and the Rwanda Tribunal.

The additional Trial Chamber will increase the number of appeals, and, as the Rwanda Tribunal has this year completed its first trials, at least five appeals are anticipated from it, according to the report. The Chambers expects to conduct nine trails and six appeals in 1999. The $720,800 reduction, to some $2.3 million, requested for 1999 largely reflects administrative changes that have moved support staff to the Registry.

The Office of the Prosecutor's Prosecution Division has been restructured to meet the increase in trials. The Prosecutor intends to have 14 fully active investigations in 1999, of which eight could result in public indictments in the year. It requests some $24.3 million; an increase of $8.2 million covering: new standard costs, the delayed impact of 105 posts established in 1998; reclassification of two posts; and 104 new temporary posts, of which 27 were proposed in 1998 revised estimates. The annual cost of the 77 new posts would be some $4.9 million gross, and they are broken down by title and classification in the report.

The Registry is responsible for the Tribunal's administration. It requests about $24 million; an increase of some $10.1 million to cover: new standard costs; the delayed impact of 97 posts established in 1998; provision for 161 new temporary posts (including 46 proposed in the 1998 budget revisions); and the reclassification of 16 posts. The cost of the 115 posts

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newly proposed would be some $6 million, and they are detailed by title and classification in the report.

However, in its related report (document A/53/651), the ACABQ recommends appropriating about $103.1 million gross (some $93.9 million net) for the Tribunal for 1999 -- about $3.3 million less than the Secretary-General's request. The ACABQ recommends approving 143 new posts (42 for the Office of the Prosecutor -- 35 less than requested -- and 101 for the Registry -- 14 less than requested), and makes recommendations on where approved posts should be deployed.

It also recommends an expert review of the management and organizational structure of each organ of the Tribunal, conducted by a group of experts convened by the Secretary-General. The cost of the evaluation should be borne by the Tribunal's budget and an evaluation report submitted to the forty-fourth General Assembly through the ACABQ.

International Criminal Tribunal for Rwanda

Also before the Committee is a note by the Secretary-General transmitting the report of the Office of Internal Oversight Services on the International Criminal Tribunal for Rwanda (document A/52/784), reviewing the Tribunal's implementation of recommendations stemming from a 1996 investigation. The follow-up review, conducted during September and October 1997, found that most of the recommendations of the earlier investigation have been at least partially implemented. While the Secretary-General generally concurs with the Office's recommendations, subject to further review of personnel matters, the Registrar has stated that its conclusions are biased against his Office.

Problems were identified in a number of areas, including security of Tribunal personnel, witnesses and documents; procurement and recruitment processes; asset management; defence counsel management; and press and public affairs, according to the report. A Trust Fund with more than $7 million in voluntary contributions from Member States was administered without written policies and procedures.

Regarding the lack of security, the Oversight Office recommends that the Tribunal consider obtaining funding for suitable facilities in each of the host countries (Rwanda and United Republic of Tanzania) rather than trying to adapt existing infrastructures to meet its needs.

Some $1 million was spent in 1997 for counsel for the accused, yet the Tribunal lacked policies and procedures for reviewing such expenses, the report states. The Oversight Office discovered private financial arrangements between two defence attorneys and the Registrar's legal adviser, who handled reimbursement papers. Further, attorneys selected for defence were not required to have criminal or trial experience. In light of the above, the

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Office recommends the formulation of guidelines for defence counsel expenses, replacement of the legal adviser, and revision of the Rules of Procedure and Evidence to require that defence counsel have relevant experience.

The Oversight Office recommends that the post of the Deputy Prosecutor be reclassified as Assistant Secretary-General, in light of his regular high-level discussions with governments in connection with investigations undertaken on behalf of the Prosecutor, who is an Under-Secretary-General. It also recommends that the Tribunal should be allowed to accept gratis personnel until the vacancy rate in the Prosecutor's Office has fallen to an acceptable level, or until the end of 1998, in accordance with General Assembly resolution 51/243 of 15 September 1997 on gratis personnel. All secondees had left the Tribunal by July 1997, increasing the workload of the remaining investigation teams, the report states.

Also before the Committee was the third annual budget performance report of the International Criminal Tribunal for Rwanda (document A/C.5/52/48). While almost $36 million net ($41.5 million gross) had been appropriated for 1997, the actual expenditure came to some $35.7 million, resulting in an unencumbered balance of $257,200. The Secretary-General asks the Assembly to take note of the report.

The performance indicators for 1997 are provided in annex I to the report. Costs for posts had decreased by $577,300, reflecting savings under salaries (almost $2.3 million) due to an average vacancy rate of 23 per cent and offset by an increase of some $1.7 million in common staff costs, owing in large part to the vigorous recruitment efforts by the Tribunal to fill the vacant posts.

Judges' salaries and allowances increased by $744,300, due to the Secretary-General's decision to compensate them retroactively to their appointment, the report states. Requirements for travel increased by $248,300, related to the Office of the Prosecutor ($405,800), and partially offset by savings in the amount of $157,500 owing to lower requirements in the Chambers and the Registry. Contractual services increased by $697,300, due largely to costs for legal defence counsel for indigent accused.

In response to a request for information contained in General Assembly resolution 52/218 of 22 December 1997, annex II of the report provides information on support received from United Nations Headquarters. In 1997, the Secretary-General assigned a focal point within the Department of Management to assist in coordinating and expediting the Tribunal's administrative decisions. Also, some of its activities are monitored and processed by the following United Nations offices: Human Resources Management; Programme Planning, Budget and Accounts; and Central Support Services. In addition, the Office of Legal Affairs advises the Tribunal in several areas.

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In his report on revised estimates for 1998 (document A/C.5/53/14), the Secretary-General asks the General Assembly to approve a revised staffing table providing for 34 additional posts, to accommodate the third Trial Chamber that the Security Council established in 1998. Also, the Assembly is requested to approve a revised appropriation of about $52.3 million gross ($48 million net), which is some $4.3 million gross (some $2.8 million net) less than the approximately $56.7 million gross (almost $50.9 million net) the Assembly had appropriated for 1998. After a review of actual and projected 1998 expenditures, it was found that the total would yield an unencumbered balance of $2.8 million net against appropriations.

Annex I of the report describes voluntary contributions in 1998, which focused on books, facilitating press coverage, upgrading audio and video equipment and enhancing the Tribunal's telecommunications system. Annex II shows selected workload indicators, and annex III explains the budgetary assumptions used in formulating the report.

In his report on financing the Tribunal for 1999 (document A/C.5/53/15), the Secretary-General asks for about $73.1 million net (some $80.6 million gross), which reflects an increase of $22.2 million net over the 1998 appropriation. The overall level of post requirements would include the 582 posts approved for 1998, reclassification of 9 posts and an additional 256 posts. The overall requirements also involve increases in other expenditures, reflecting requirements arising from the third Trial Chamber, increased activities in investigations and the arrest and transfer of detainees, as well as major enhancements envisaged for the delivery of support services. A full cost budget, using the proposed staffing table, would amount to some $80.9 million net (about $89.6 million gross).

Recalling that the Assembly, by resolution 52/218, had decided to assess 50 per cent of the resource requirements for 1998 according to the scale of assessments for the regular budget and the remaining 50 per cent -- after exhausting the unencumbered balance of the Special Account for the United Nations Assistance Mission for Rwanda -- at assessment rates applicable for financing peacekeeping operations. With the absence of any unencumbered balance in the Special Account, the proposed $73.1 million would be apportioned in the same manner.

However, in the ACABQ report (document A/53/659), the Advisory Committee recommends that the General Assembly approve appropriation of some $76.2 million gross (about $69.3 million net) for the Tribunal's operations in 1999. This would represent a reduction of about $4.5 million gross ($3.8 million net) from the Secretary-General's request, corresponding to 59 posts and other non-post resources that the ACABQ does not recommend for approval. The ACABQ identifies 16 Professional, 6 General Service, 6 Field Service and 31 Local level posts that it feels should not be approved, as well as some $683,600 for general temporary assistance, supplies and materials and furniture and equipment.

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The proposed budget increase for 1999 had been attributed to: costs arising from the third Trial Chamber, stepped-up investigations and the arrest and transfer of detainees, major enhancements envisaged for the delivery of support services, and the projected increase in the number of suspects in custody from 23 in 1997 to 54 in 1999, the report states. However, the ACABQ finds that the number of investigations planned for 1999 is 90, which is the same number for 1998. Five trial cases were planned for 1998 (in the two Chambers) and six for 1999 (in the three Chambers). Regarding the number of suspects, the ACABQ notes that their increase would not lead to the need for more holding cells at the detention centre.

It was time to have an expert review of the management and organizational structure of each organ of the Tribunal, especially the Registry and the Office of the Prosecutor, the ACABQ writes. The Secretary-General should convene a group of independent experts to evaluate the operations and functioning of both the Rwanda and the Former Yugoslavia Tribunals. That group should comprise legal professionals and academics able to evaluate tribunals of an international character. The cost of the evaluation should be borne by the two Tribunals and reported in performance reports. The report should be submitted to the General Assembly, through the ACABQ, at its fifty-fourth sessions.

International Criminal Tribunals

A 5 May 1998 letter from the Secretary-General addressed to the President of the General Assembly and the President of the Security Council (document A/52/891) transmits a 16 April 1998 letter from the President of the International Tribunal for the Former Yugoslavia. In it, the Tribunal President notes that it might take considerable time to complete all the trials, contrary to the right of the accused to a fair and expeditious trial. She requests that a third Trial Chamber be added and staffed by additional judges. Attached to the letter is a report estimating annual costs for an additional Chamber put at some $14.2 million.

The Secretary-General's report on the conditions of service for the Judges for both Tribunals (document A/52/520) contains recommendations based on the conditions of service of the International Court of Justice and in accordance with the Tribunals' Statutes. He urges the Assembly to adopt his recommendations for the conditions of service for the Judges of the Tribunal for the Former Yugoslavia with effect from 17 November 1993, and for the Rwanda Tribunal with effect from 26 June 1995. He recommends that each Judge receive an annual salary of $145,000, with the President receiving a special allowance of $15,000 per year and the Vice-President receiving $94 per day for each day he or she acts as President, to a maximum of $9,400 per year. According to the report, upon retirement, a Judge who served the full four-year term would receive an annual pension of $22,000 and a Judge who was re-elected would receive a maximum pension of $33,000 per year. Education

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grants would be granted up to $9,750 per child, and relocation allowances, upon termination of work, are put at a net sum of 12 weeks' salary.

The report states that if the Assembly approves the proposed pension scheme and the system of benefits for the survivors of Judges, the financial implications for 1998 will be $113,300 for the Former Yugoslavia Tribunal. That amount comprises the survivor's benefits in respect of one deceased Judge ($40,200) plus pension entitlements of retired Judges ($73,100). For the Rwanda Tribunal, there would be no financial implications for 1998, since the Judges' four-year terms only began in 1995.

Statements on Revolving Credit Fund

JOSEPH E. CONNOR, Under-Secretary-General for Management, introduced the Secretary-General's report on the revolving credit fund, which he said provided more detail on the proposal made originally in the Secretary- General's Programme for Reform. The concept of the fund attempted to address the cash flow problems of the Organization. Despite contributions received recently from the major contributor, a deficit of some $50 million was expected by the end of the year. The only way the United Nations had been able to function had been by borrowing from peacekeeping funds, and it was therefore unable to pay some $864 million to troop- and equipment-providing countries. That measure was unsatisfactory and financially imprudent, but it was also unsustainable as peacekeeping activities declined.

As the Secretary-General had emphasized, the only way to completely resolve the cash flow problems was for Member States to pay in full and on time, he said. However, until that happened, it would be necessary to find ways to deal with periodic cash shortages. As borrowing from peacekeeping became less possible, it was prudent to find other means, even as short-term measures.

Some measures had been employed temporarily in the past. The level of the Working Capital Fund had been increased to $100 million, and, on occasion, the General Assembly had allowed suspension of regulations to allow the retention of specified surplus balances. However, proposals for subsequent increases to the Working Capital Fund, for commercial borrowing and bond issues, had been rejected. To date, no action on new incentives to pay had been taken.

There were important questions to discuss, he said. The success of that proposal required the active cooperation of Member States -- both donors and those in arrears. Some new measures would likely be needed in the future to sustain the Organization. Such measures could include the revolving credit fund, or other measures including those that had been rejected in the past. He invited Member States to rise to the challenge to create new incentives to encourage Member States to pay.

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C.S.M. MSELLE, Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced that body's report. The ACABQ had not reviewed in detail the operations and procedures of the fund. It would do so when the Assembly pronounced itself on the principles involved.

PRAYONO ATIYANTO (Indonesia) recalled the position of the "Group of 77" developing countries and China, as reflected in a letter to the Secretary- General dated 5 March 1998, which stressed, among other things, that according to the United Nations Charter, the Organization's expenses should be borne by Member States as apportioned by the Assembly. The Secretary-General had acknowledged that the only way to finance the Organization was through assessed contributions. It was imperative that all Member States pay their contributions in full, on time and without conditions. The proposal for establishing the revolving credit fund could not be a solution to the Organization's financial crisis, which was attributable to non-payment of assessed contributions, especially by the major contributor.

AMJAD SIAL (Pakistan) supported the initiatives for reform and revitalizing the Organization. He noted with concern that the Organization's precarious financial situation had led to many unusual practices, including cross-borrowing from peacekeeping funds. The proposed fund merited serious consideration. There was need to find solutions to the crisis. He thanked the ACABQ for drawing the Committee's attention to the political dimensions of the problem, and said those issues would be discussed by the Fifth Committee.

The Committee should take a decision on the proposal for establishing the fund, he said, but the ACABQ's comments on the operations and procedures of the proposal would facilitate a well-considered decision on the issue. He supported the statement made by the representative of Indonesia.

CHEN YUE (China) supported the statement made by Indonesia, recalling the Group's earlier letter, and the observations in the report of the ACABQ. Many delegations, including her own, had repeatedly stressed that the Organization's financial crisis was due to the fact that the largest contributor and others lacked the political will to pay their contributions in time. The issue was political and could not be resolved by technical means.

The Secretary-General had tried to solve the crisis, and China appreciated those efforts, she said. However, the proposal for the fund should not be viewed only from a technical point of view. Nor should it be seen as a means to resolve the question of arrears, or to ensure Member States fulfilled their financial obligations. The Committee should consider the proposal rather than taking action. The recommendations of the ACABQ were needed for action.

NESTER ODAGA-JALOMAYO (Uganda) said he took note of the Secretary- General's efforts to resolve the impasse on financial problems the United Nations was facing. The General Assembly would always be willing to assist

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the Secretary-General in resolving the issue. He shared the strong belief expressed that the issue was not going to be resolved by creating another fund, but only by Member States paying their assessments in full, on time and without conditions. The General Assembly should concentrate on getting that resolved, not on creating other funds that would be an additional burden to Member States. Therefore, he supported the views of the ACABQ and sought their serious examination of the proposal before action.

DULCE BUERGO-RODRIGUEZ (Cuba) said her delegation agreed with comments that the main cause of the difficult financial situation was the non-payment by the main contributor, and the repeated conditions imposed on such payment. With a proposal such as this, the expected results would not be achieved. Cuba fully supported the comments of the ACABQ, in particular that the fund would be an additional burden on those Member States that met their obligations. Cuba believed it would also be appropriate, before the General Assembly views were stated, to obtain concrete comments from the ACABQ and then take up the fund. That proposal did not provide a solution to the problem, which was the main reason it had been made. The problem was political, not financial.

MOVSES ABELIAN (Armenia), Chairman of the Fifth Committee, proposed that the discussion of the item be continued on Monday.

Mr. ODAGA-JALOMAYO (Uganda) said that, given the programme of work, he proposed that consideration be postponed until the resumed session.

The CHAIRMAN said he had suggested a continuation of discussion because other delegations might wish to express views. He would put the proposal from Uganda to the Committee.

Mr. MSELLE, Chairman of the ACABQ, said the Advisory Committee would prepare a report if the General Assembly took a decision on the principles of the establishment of the revolving credit fund. Until the General Assembly took that decision, the ACABQ would not be in a position to submit another report.

Mr. ODAGA-JALOMAYO (Uganda) said that, in that case, perhaps the proposal could be considered in the fifty-fourth session of the General Assembly.

MILES ARMITAGE (Australia) said he recalled that the item had been referred to the Fifth Committee from the plenary of the General Assembly, and that the General Assembly had asked for a report. He asked what the procedural basis for a postponement would be. He was also unsure that the Ugandan proposal got the Committee very far. He had no objection to it, but given the statements that had been made, perhaps the Committee could just note the two reports and move on to other business. He offered that as an alternative proposal.

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Mr. MSELLE, Chairman of the ACABQ, said the Advisory Committee frankly did not want to pronounce itself on the proposals on the fund. The Secretary- General had prepared a detailed report. The procedure would have to be that the General Assembly would decide whether to establish the fund or not. Once that decision was taken, the questions on rules, regulations and procedures became quite easy for the ACABQ to comment on. The ACABQ was in a difficult situation because the principal decision to establish the fund had not been taken. This was the reason the ACABQ view was expressed as it was. If the item was postponed, he imagined that would be to allow delegations to further exchange views on the key issue of establishing the fund. The procedures of operation would not be a problem for the ACABQ to report on.

Mr. ODAGA-JALOMAYO (Uganda) said the Chairman could report to the plenary that the issue would be taken up at a later date. His recommendation was that the decision be deferred.

The CHAIRMAN said the decision on the fund could be deferred to the fifty-fourth session, or the Committee could take note of the two reports and resume consideration at the fifty-fourth session.

Mr. ARMITAGE (Australia) said his delegation was flexible on the issue, but he had intended that the Committee simply take note of the report; he had not mentioned deferring consideration.

The CHAIRMAN said the Committee could defer consideration to the fifty- fourth session or just take note of the reports. He had earlier combined the two proposals.

AHMED DARWISH (Egypt) said he supported merging the two proposals as the Chairman had suggested.

Mr. SIAL (Pakistan) said the decision could be taken Monday morning. While the political decision could be taken in the Committee, he would appreciate hearing the ACABQ's views on the fund's procedures and modalities if the Committee deferred consideration to the first or second resumed session.

The CHAIRMAN said if there was consensus, the Committee's decision would take only minutes. The exchange of views could continue Monday morning, with other exchanges before then.

MATTHIAS DAKA (Zambia) supported deferring the item. Since there were other matters that had not yet been touched, and the Committee was beginning night meetings next week, his delegation could support combining the deferment and the noting of the reports.

The CHAIRMAN said delegations should refrain from commenting on the programme of work in the current discussion. There was no consensus, so he

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proposed informal discussions take place outside the room to attempt to achieve consensus. If such consensus was reached before the meeting ended, he would propose a decision. If not, the matter would be taken up Monday.

Statements on Results-based Budgeting

JEAN-PIERRE HALBWACHS, United Nations Controller, introduced the Secretary-General's report on results-based budgeting. The idea was to enhance the Assembly's ability to provide meaningful direction to the Secretariat, while also enhancing the Secretariat's accountability to the Member States. The proposal was not that results-based budgeting be introduced, but rather that the Secretariat be allowed to proceed and present side-by-side the prototype for the format with the current budget format, with the idea of identifying need for further refinement.

Mr. MSELLE, ACABQ Chairman, agreed with the proposal that the proposed budget for 2000-2001 be prepared using the current method, in addition to prototypes, to allow the Fifth Committee and the ACABQ to discuss the new format at the fifty-fourth session. Fascicles in the results-based format should cover more complex budget sections.

Mr. ARMITAGE (Australia) spoke also for Canada and New Zealand. The Secretary-General had said that results-based budgeting would give the Organization the flexibility it needed in an era of rapid change, while enhancing transparency and accountability to Member States. He agreed. In the current budget process, the link between results and resources was weak, and Member States were provided little information on how the objectives they determined were achieved. Quantitative information provided in the current format was not a meaningful measure of a programme's success, unless it was accompanied by qualitative information.

The Fifth Committee's focus in budget negotiations on the detail of the staffing table for each Department and each individual category of expenditure did not constitute effective control of resources, he said. The unseemly horse-trading in individual posts, which had become a feature of the negotiations for the regular budget in recent years, did little to enhance the accountability of the Secretariat to Member States.

Existing deficiencies could not be rectified overnight, and therefore the Secretary-General's evolutionary approach was prudent, he said. The necessary changes could be made within the existing framework of programme budgeting. There was no one model for results-based budgeting, and it would take time to perfect the system. He had hoped that more than a year after the initial proposal, consideration of the issue would be more advanced, but acknowledged that the requisite learning process should not be rushed. The Secretariat should develop a range of prototypes to be considered in the context of the proposed budget for the next biennium.

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THOMAS SCHLESINGER (Austria) spoke for the European Union, Bulgaria, Czech Republic, Estonia, Hungary, Poland, Lithuania, Romania, Cyprus and Norway. He hoped that the introduction of results-based budgeting would improve identification of clear objectives and expected results, as well as indicators for monitoring and determining the impact of programmes. The present procedures did not provide a satisfactory link between results and resources. Member States could not accurately assess the quality of implementation of their decisions. At present, programme performance reports might indicate that all programme outputs were delivered, yet objectives were not met and desired results not achieved. Consequently, Member States could not determine the quality of the impact of the work of the Organization.

In the past, oversight bodies had addressed deficiencies in the system of input accounting, he said. Results-based budgeting should contribute to enhancing the oversight role of the General Assembly and the management capacity of the Secretariat with regard to ensuring effective programme implementation. A higher degree in the Secretary-General's authority for managing human and financial resources would be offset by commensurate accountability for the results to be achieved. Results-based budgeting would strengthen the links in the cycle and facilitate the focus on policy implications of resource allocations. Introduction of the new format should be an evolutionary development to improve the Organization's management culture, and thereby its effectiveness in meeting objectives of Member States. Adequate training of programme managers would be necessary.

More focus by Member States on results, and less on inputs, would increase, rather than diminish, States ability to ensure that the Secretariat fulfilled mandated activities, he said. The Union endorsed the Secretary- General's proposal to begin shifting from input budgeting to results-based budgeting and to present additional fascicles in the proposed format, in addition to the full programme budget for the biennium 2000-2001 in the current format.

Mr. ATIYANTO (Indonesia), speaking on behalf of the Group of 77 and China, said, as the Group's Foreign Ministers had stated, this proposal would constitute a radical departure from processes that had been constantly reaffirmed by the General Assembly. No action should be taken by the Secretariat until the General Assembly had decided on the appropriate action on the matter.

ERNESTO HERRERA (Mexico) said the Secretary-General's reform would be the basis of a stronger Organization. Mexico had no prejudice against results-based budgeting, but it had certain reservations. Results-based budgeting was like a custom-made suit -- a model could not be borrowed from somewhere else and applied. He appreciated the documents submitted by the Secretariat, but felt that doubts previously expressed by Mexico had not been dispelled. There was a need for more information on the prototype. The nature of the process was complicated.

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To save succeeding generations from the scourge of war, as stated in the United Nations Charter, was a serious responsibility, he said. Achieving such a goal took years, and little was accomplished on the first attempt. With the system being presented, the objective of saving succeeding generations from war would not be achieved in the biennium. To implement it would require the flexibility of all. Member States should work together.

SUSAN SHEAROUSE (United States) said the United States had been a major supporter of results-based budgeting since the Secretary-General had first proposed it. For a long time, the United States had believed the United Nations' approach to planning and budgeting was too focused on inputs. Therefore, it fully supported that concept, which had been instituted by many Member States and fully complemented their drive to make governments accountable.

The United States was disappointed at the lack of progress towards implementation of results-based budgeting, which it had hoped would form the basis of the next United Nations budget, she said. It urged the Secretariat to find ways to fully implement the planning and budgeting rules.

Mr. ODAGA-JALOMAYO (Uganda) said the concept of results-based budgeting received great sympathy from his delegation. Australia had said previously that a proposal contained new concepts, and that therefore the necessary processes should not be rushed. That had been an important comment that should be applied to results-based budgeting. It could only be meaningful if resources were available to perform it properly.

He asked why the Office of Legal Affairs had been used as the prototype, as he understood it to be a small and not very complex department. Uganda would prefer to see a prototype based on a large, complex department.

Additionally, due to the pressure of work of the Fifth Committee, he said Uganda felt this was another issue that should not take up a lot of the Committee's time. The Committee could formulate a decision along the lines of paragraph 4 of the ACABQ report and move on to other issues.

Mr. SIAL (Pakistan) said the matter, along with other reform proposals, deserved serious attention. He noted the ACABQ would consider the proposals when considering the proposed budget for 2000-2001. In that context, the main policy issues should be thoroughly examined. Before a final decision was taken, a comprehensive study should be made to identify the strengths and weaknesses of the current system, why the current system needed to be changed and what its shortcomings were for the preparation or implementing of the programme budget.

In Pakistan's understanding there was an elaborate system in place, he said. Something must be lacking as it was not functioning properly. Pakistan called on the Secretary-General to review and report on similarities and

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differences between the current and the proposed systems. That review could be submitted through the ACABQ to the Fifth Committee.

DJAMEL MOKTEFI (Algeria) wished to pose questions to the Secretariat, so that answers might be received before the discussion was closed. As the representative of Pakistan had said, before setting up a new system, the shortcomings and gaps in the old one should be examined to see what change was appropriate. Algeria had concerns about results-based budgeting. It was used in some countries, but transplanting it required a careful analysis to avoid strategic errors. He asked for information on how the bureaucracy would function and react to the proposal.

Substantive problems existed, he said. He wished to be informed how this system would rise above the bureaucracy's reactions to the current system. He also sought information on how the Secretariat envisaged using increased performance indicators for political activities, as it was unclear how they could be evaluated on the basis of performance criteria. He also wanted to be informed of what, precisely, the role of Member States would be in a budget process based solely on results.

The CHAIRMAN proposed conclusion of the discussion on Monday.

Statements on Coherence of Oversight

JOHN FOX, Inspector, Joint Inspection Unit (JIU), presented the Unit's report. Progress had been made on oversight, he said, and accountability was increasingly accepted as a management tool. However, there were still major issues that needed to be resolved by Member States. There was an increasing recognition of the fact that effective oversight was a shared responsibility, and that oversight alone would not solve management problems. Member States played a leading role in the shared responsibility, as they created the oversight benchmarks. The oversight process must be open and transparent, so that Member States could receive information they needed as decision-makers. There was also a need to know which recommendations could be implemented within the mandate of the executive, and which required legislative action.

The report did not advocate using the same mechanism in every United Nations system organization, he said. One size did not fit all. The report sought to establish commonality without uniformity. There was also a need to maintain the distinction between internal and external oversight. While that had been discussed, one aspect had not been adequately addressed. Internal oversight must not distract from full accountability of management for effective operation. He then outlined the recommendations in the report.

Mr. MSELLE, ACABQ Chairman, introducing that body's report, commended the Inspectors for their well-prepared and structured report. He also commended them for analysing the functions of internal and external oversight, and identifying five functions of internal oversight: audit, evaluation,

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inspection, monitoring and investigation. Overuse of the word "oversight", to cover bodies which might not be so described, should be avoided. "Oversight" should not cover the ACABQ and the CPC, because it would obscure their distinct functions. He supported the Unit's recommendations, in light of comments made in his report.

Mr. SCHLESINGER (Austria) spoke for the European Union, Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, Cyprus, Iceland and Norway. He said the report was a useful contribution to the ongoing debate regarding the roles of internal and external oversight, both of which were important for change and reform in the United Nations system. Internal oversight must be preserved as a critically important tool of executive heads for fulfilling their management responsibilities. Executive heads must indicate, when submitting the internal oversight reports to legislative bodies, any recommendation for which legislative action was required and make proposals accordingly. The comments of the Administrative Committee on Coordination (ACC) would have been welcome, and he noted that those would soon be presented.

The Secretary-General had, in the fifty-first session, pointed out a lack of coherence in internal oversight mechanisms in the funds and programmes, he said. Many of the questions he had raised had since been addressed. The Union welcomed the oversight bodies' efforts to enhance coordination and cooperation, and recognized that the Inspectors' conclusions and recommendations did not aim at any fundamental change in the existing system. There was no "one size fits all" approach to internal oversight for United Nations organizations. Each organization should define its own problems and needs while paying due regard to existing opportunities for cooperation, and without prejudice to the role of the Secretary- General under the Charter.

Internal oversight offered an opportunity to improve the Organization's efficiency and, by extension, its effectiveness, he said. To enhance oversight in the United Nations, implementation of oversight recommendations must be monitored. As demonstrated by the Office of Oversight Services, monitoring was a critical oversight function that contributed to the Office's effectiveness.

Mr. SIAL (Pakistan) said the Committee Chairman had pointed out the legal requirement to consider the report along with the comments of the ACC. The deadline for the ACC's comments was 9 January 1999. The Committee was under time pressure. He wondered why a meeting had been scheduled to consider a report whose submission did not respond to that legal requirement. The Unit's report should be considered with the cluster of reports listed under strengthening of oversight mechanisms to enable a comprehensive review.

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EVA SILOT BRAVO (Cuba) welcomed the report as contributing to more transparency of oversight system-wide. The report did not prejudge the negotiations on the subject in the context of consultations in the Fifth Committee. She regretted the fact that the ACC's comments had not been submitted. She reaffirmed the role of the General Assembly as the highest body regarding implementation of oversight recommendations.

She said she agreed with the conclusions about excessive dependency on oversight mechanisms as a solution for shortcomings in the performance of organization in the system, and also regarding the blurring of distinctions between internal and external oversight. She also reaffirmed the fundamental guiding role to be played by Member States. She noted with satisfaction the report's conclusion on the non-violability of having a single oversight mechanism or even the same model for all United Nations organizations.

Efforts to coordinate internal oversight work must respect the independent, differentiated mechanisms and arrangements of each organization, she said. Legislative organs of each organization in the system should consider the proposals of executive heads on coordinating oversight. She noted the report's recognition that certain recommendations in connection with internal oversight required adoption of measures by the competent legislative body, and she supported the ACABQ's comments that appropriate legislative bodies should determine the reporting procedures of oversight bodies. Executive heads should submit their views, along with the reports of the internal oversight bodies, for consideration and action by legislative bodies.

The JIU should resume commenting on the reports of the Oversight Office, but that should not lead to duplication and further saturate Member States, she said. Cuba agreed about the need for oversight mechanisms to increase dialogue with Member States and the Secretariat.

THOMAS REPASCH (United States) commended the report's format and the distinction made between internal and external oversight. He agreed with the report's broad sense that oversight should be improved within the United Nations system, but did not concur with certain findings. The Unit should explain the basis of its sense of "oversight indigestion". The United States delegation was more nauseated by reading media accounts of alleged fraud and mismanagement, than by hearing how these were being properly addressed.

The evaluation function had not been fully developed, and should have been treated more thoroughly in the report -- including an appraisal of the evaluation function, he said. Reviewing each of the Unit's recommendations, he said that regarding reporting by internal oversight bodies, the annual report approach used by the Oversight Office worked well. Since internal oversight bodies, by definition, reported to executive bodies, their recommendations were clearly for those bodies. It was up to executive heads to decide whether there was need for action by legislative bodies, and therefore there was no need to distinguish between recommendations.

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He agreed with the goal of fostering cooperation between oversight professionals, and said it should be expanded to include those working outside the United Nations. He endorsed the goal of increasing dialogue between oversight bodies, Member States and the organizations concerned, but there was need for further details on how it would be implemented.

Mr. SULAIMAN (Syria) drew attention to a translation matter. The Secretariat should change the word "watching" to "oversight". That should also be reflected in the relevant resolutions.

Mr. FOX, of the JIU, responded to comments and questions from Member States. He said he was pleased at the appreciation of the reader-friendly report. One problem that had been identified was the lack of comments from the ACC. He understood that they were not yet overdue. They would be ready shortly and the Fifth Committee would revert to the issue once they were in hand.

He wished to address the recommendation regarding the JIU overview analysis which some Member States and the ACABQ were concerned might add to duplication, he said. That was not the JIU's intention. It was concerned that, if its recommendation that oversight reports went to executive heads was implemented, there should be some means to bring the elements or recommendations that might be useful across the United Nations system to the attention of other interested parties. The JIU did not plan to create a compendium, but rather to try to identify good practices in one organization that may be useful in another. Contrary to a Member State's suggestion, that was not aimed at making the JIU the chief mechanism for oversight analysis, but at allowing the JIU to identify useful elements for other bodies.

He recognized the vagueness in JIU recommendation 6, which was something that remained a goal supported by the Unit, and which seemed to be endorsed by others. How it would be addressed would evolve over time, and further attention would be put to it.

Statements on Financial and Board of Auditors Reports

Mr. REPASCH (United States) said the Board of Auditors had provided a comprehensive overview of the operation of the United Nations bodies. The Board played a key external oversight role. The United States appreciated the effort to improve the readability of the Board's reports, and looked forward to further refinements. It hoped the Board's efforts would be emulated by other bodies, including the ACABQ.

However, the United States was disappointed with the Board's findings, he said. Member States had again been subjected to a litany of management deficiencies and recommendations from previous years that had not been implemented. He asked if they would ever hear that United Nations agencies had provided sufficient documentation to meet the financial regulations.

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On the reports' general findings, the United States noted the qualified opinions on the United Nations Development Programme (UNDP), the United Nations Population Fund (UNFPA) and the United Nations International Drug Control Programme for much the same reasons as in previous reports. The United States had said in the discussion of those reports that the necessary actions must be taken, yet little had be done. It believed the ACABQ recommendations on the UNDP must be implemented.

The ACABQ had concluded that the inconsistent implementation of accounting standards warranted a review of those standards, and the United States supported that, he said. It was clear that many agencies had trouble ensuring that the engagement of implementing partners and consultants fully complied with the established rules and procedures. Programme managers were ultimately responsible for ensuring that the service for which consultants were engaged was provided. The United States fully supported the Board's recommendations on that and would monitor the situation to ensure they were implemented without delay.

One encouraging example in barrage of alarming accounts was the improvement in United Nations procurement, he said. That had been noted and should spread throughout the organizations.

In the last discussion of the Board of Auditors' reports, the United States had supported the introduction of performance measures for consultants and for procurement, he said. The findings in the current report endorsed that. The United Nations system would benefit from such measures. The United States recognized the difficulty of establishing effective evaluation systems for consultants and contractors, but hoped that a greater effort would be made in the future.

The United States was disturbed by the report of the 23 payments made by the United Nations Children's Fund (UNICEF) without evaluation reports, he said, and it supported the European Union's statement on the matter. On the year 2000 computer system problem, the Board had noted a need for greater effort, and the United States was concerned about the relaxed approach many bodies seemed to be taking. Holding a meeting in 1999 on the problem was too little, too late. The United States urged responsible managers to assess the risks that the year 2000 problem posed and mitigate them.

On the United Nations High Commissioner for Refugees (UNHCR) audit, the United States believed the deficiencies reported were serious and needed to be urgently addressed, he said. He noted that the High Commissioner had moved forward and had acted to implement solutions, but would like a report on the difference in the way the UNHCR reported income and on annual audits of the UNHCR.

The Board's reports were filled with numerous examples of waste, mismanagement and the breakdown of internal controls, he said. The multi- million dollar rehabilitation of the parking garage was a disconcerting example of disregard for rules, and the United States would like to know what action had been taken to guarantee such a transgression would not be repeated. Similarly, the example of the UNHCR branch office purchasing 7 vehicles, contrary to instructions to rent them, without a competitive process was of

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concern, particularly given that they had become additional to requirements. The peacekeeping-related double payment made to a hotel was extraordinary, and the United States fully endorsed the Board's two-step recommendations on the matter. Greater emphasis needed to be placed on the implementation of the Board's recommendations, he stressed.

Earlier this year the United States had supported incorporation into the United Nations' financial rules of the guidelines for internal control standards approved by the International Organization of Supreme Audit Institutions. His delegation was surprised and disappointed that the ACABQ had recommended against such an inclusion. The standards were not operational, but they were an important statement of policy and practice. By not endorsing the Secretary-General's proposal that they be incorporated, the United Nations was sending the wrong signal.

TRYGGVE GJESDAL (Norway) noted that in light of increased workloads, the Board would be seeking additional resources. As many requests for special reviews originated in the Fifth Committee and the ACABQ, the Committee might also give consideration to establishing priorities among the requests, as well as considering extra resources.

Norway was concerned that the Board's reports be put to good use, he said, which meant that delegations must have sufficient time to analyse them. That would easier if they reached Member States before the start of main General Assembly session.

Regarding the audit report on peacekeeping operations, all assessed peacekeeping contributions remained collectable unless the General Assembly decided otherwise, he said. Therefore, Norway did not concur with the recommendation that provision be made in the financial statements for delays in receipt of assessed contributions.

Norway was seriously concerned that the Board had qualified its report on the UNDP because of the lack of audit certificates for nationally-executed programmes, he said. Norway strongly favoured nationally-executed programmes, but it agreed with the ACABQ recommendations that the UNDP Administrator should report to the Executive Board on efforts to implement previous recommendations on the matter.

Norway agreed with the Board's recommendations on UNICEF, and was particularly concerned that it should strengthen oversight on liquidation statements in respect of cash assistance to governments, he said. Before UNICEF changed its financial rules and regulations, it should look at the

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experience of other organizations like the UNHCR. It was also concerned that the qualification attached to the UNFPA audit had been made for the same reason as for the last qualified report. Norway welcomed the initiative to shift responsibility for obtaining audit certificates from executing agencies to field offices and looked forward to the results of that reform.

The UNDP, UNICEF and the UNFPA faced the same problems, he said. Norway encouraged them to cooperate in meeting those challenges, particularly by developing governments' abilities to meet the financial requirements.

The United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) was performing a difficult task under difficult circumstances, he said, and Norway noted it had received an unqualified audit report. It noted the reported cases of fraud, but welcomed efforts already taken to implement the Auditor's recommendations. It also appreciated UNHCR efforts to address the recommendations made by the Board last year. In this year's report, many comments had a bearing on enhanced transparency and communication in budgeting and reporting. Those could be addressed through the ongoing renovation of the UNHCR budget structure. Norway appreciated steps taken by the UNHCR to encourage implementing partners to provide audit certificates.

More generally, Norway supported action through implementing partners, but the process obviously needed further reflection and action on common challenges and responses, he said.

L.K. CHRISTIAN (Ghana) said that except for the International Trade Centre, the UNDP and the United Nations Joint Staff Pension Fund, United Nations system bodies had not fully implemented the Board's previous recommendations. The Board had to qualify its audit opinion on the financial statements of the UNDP, the UNFPA and the United Nations International Drug Control Programme, because it was unable to obtain evidence confirming that funds advanced to governments and non-governmental organizations had been expended for the intended purposes. While he recognized that those organizations had made real efforts to improve audit arrangements, they should make further efforts to increase the percentage of projects covered by audit reports.

Noting differences between the United Nations and its funds and programmes in compliance with United Nations accounting standards, he said there was need for an urgent review of those.

The Board's report on United Nations peacekeeping operations indicated that the liquidation of several operations had been delayed, he said. Liquidation should be accomplished in the shortest period of time to minimize costs. The Department of Peacekeeping Operations should produce a plan with that in mind and closely monitor the completion of outstanding tasks in all missions in liquidation.

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Turning to procurement, he said the Board had found a number of deficiencies in the planning and awarding of contracts entered into at Headquarters for cleaning and maintenance (worth some $38.3 million) and electrical operation and maintenance (worth about $14.5 million). All major maintenance works should be planned sufficiently in advance to avoid exigency contracts. Competitive bids should be obtained and adequate time allowed for the approval process. United Nations administrators should adhere to the provisions of the revised manual and obtain the benefits of economies of scale wherever possible. The UNRWA should refine its procedures for selecting and awarding contracts, update its vendor register in a timely manner and closely supervise its contracts.

Consultants were often used to handle work that should have been assigned to regular staff, he said. Moreover, the basis for selecting consultants and calculating their remuneration were not put on record. Those practices were improper. The Administration should fully comply with established instructions on the engagement of consultants.

He expressed concern at reported cases of fraud or presumptive fraud involving almost $2.8 million in eight organizations during 1996-1997. Fraud could be minimized by strict observance of accounting rules and the strengthening of internal control measures. Internal and external courses of action to recover embezzled funds should be reviewed to remove limitations that impeded decisive action.

NIKOLAI LOZINSKI (Russian Federation) said the quality of information in the reports had improved, and there had been progress in implementing the Board's recommendations. However, the deadline for submitting the reports must be respected. He stressed the need to conclude, as a priority, the inclusion of all information systems within the Integrated Management Information System. The Board should carefully monitor efforts to address the year 2000 issue. He supported the Auditors' comments on human resources, particulary regarding consultants. The time had come to resolve the issue of ex gratia payments, and he supported the ACABQ's recommendations in that regard.

Fraud not only harmed the Organization, but harmed its prestige as well, he said. He supported taking the strongest measures possible against those found guilty.

Turning to peacekeeping operations, he noted the Secretary-General's comments on the acute cash shortage. The Organization's debt to troop- and equipment-contributing States was at an unacceptably high level. He thanked the Board for its contributions to strengthening procurement processes and enhancing transparency, competitiveness and fairness. The effectiveness of efforts to reform procurement should be evaluated during the next cycle, as the ACABQ recommended.

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He said the awarding of contracts on the garage, cleaning and electrical maintenance were sources of concern. The Board must adhere to the mandate given it by Member States, he noted, referring to the management review of the International Civil Service Commission (ICSC). Improved cooperation between oversight bodies in the United Nations was welcome.

NIU HONGBO (China) commended the Board's work and agreed in principle with its conclusions and recommendations. Her delegation had not had enough time to study the voluminous reports, because they had been issued late. Those reports, and the ACABQ's related comments, should be issued before the start of the regular session. She noted that the Auditors had found management deficiencies, including the inability to recover outstanding advances, in a number of specialized agencies. Prompt and positive responses were needed by the various organizations.

The United Nations must address procurement in a fair manner, she said. Further efforts were needed to increase procurement from developing countries. Maintenance projects should be planned in advance to allow adequate time to obtain competitive bids. The question of how to ensure implementation of the Board's recommendations was a matter of great concern. In the future, the Board should indicate to the Committee what percentage of its recommendations had been implemented and what was holding up implementation of the remainder.

KOJI F.X. YAMAGIWA (Japan) said the Board's role would be more significant if the United Nations took steps towards decentralizing authority and responsibility. However, there was still a long way to go before the Organization could, without concern, delegate authority to programme managers. A culture of full compliance with rules and regulations was a prerequisite for delegating authority.

Japan supported the recommendations of the Board and urged that they be fully implemented, he said. The fact that most system bodies were implementing the Board's recommendations slowly, or only partially, was a matter of grave concern.

Serious and persistent irregularities in procurement had been identified, he said. There were serious irregularities in the purchasing practices of the United Nations Joint Staff Pension Fund. The Board had also identified problems with the UNDP. For $520 million spent by the UNDP for nationally executed programmes -- one quarter of its total expenditures -- audit certificates were not available, and the Board's opinion had therefore been qualified. The UNDP Administrator should report to the Executive Board on measures taken in that regard.

In light of progress made on the Integrated Management Information System, the Secretary-General should consider closing regular budget and peacekeeping operations accounts sooner after the end of their financial

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periods, he said. That could help ensure that the Board's reports were ready as the Assembly's regular session began.

HAE-HUN PARK (Republic of Korea) viewed the Board's request for more resources favourably, but was concerned at the lateness of the reports. His delegation generally endorsed the Board's recommendations, as well as the findings of the ACABQ. It attached great priority to procurement reform and was concerned at continuing improprieties in procurement contracts, despite recommendations to address those. Other concerns were poor contract management, the improper use of vendors and suppliers, and the lack of verification before funds were disbursed. He noted with concern the lack of adherence to rules and procedures, and looked forward to a horizontal audit of procurement.

His delegation did not concur with the Board's proposal that provisions should be made in the financial statements because of uncollectability of funds, he said. Assessed contributions remained due unless the Assembly decided otherwise. He was concerned by the continuing uncertainty about the collectability of assessments that Member States had declared they would not be able to pay. The Board's recommendations must be implemented without delay, and a monitoring mechanism was needed.

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