FIFTH COMMITTEE TAKES UP BOARD OF AUDITORS REPORT ON UN PEACEKEEPING 1998-1999

Press Release
GA/AB/3370

FIFTH COMMITTEE TAKES UP BOARD OF AUDITORS REPORT ON UN PEACEKEEPING 1998-1999

The United Nations peacekeeping bill was $837.8 million for the period 1 July 1998 to 30 June 1999, down from $879.3 million for the previous 12 months, the United Nations Board of Auditors told the Fifth Committee (Administrative and Budgetary), as the Committee began its consideration of the Auditors’ report on peacekeeping operations.

As at 30 June 1999, total unpaid assessments for peacekeeping totalled $1.687 billion, compared with some $1.74 billion the year before. The United Nations had peacekeeping liabilities of $1.364 million at that date, according to the Auditor’s report -- twice its available cash of $668.9 million.

The Board of Auditors report states that the Auditors have examined the financial statements presented by the United Nations Secretariat and that, in all material respects, they represented the peacekeeping financial position fairly. It also states that peacekeeping financial transactions for the period were in accordance with relevant United Nations financial rules and regulations.

They expressed concern about the way some $320.8 million in claims from 53 troop-contributing countries was not recorded in the accounts of peacekeeping missions, because funds to pay them had not been reserved.

Among their recommendations was a call for better screening and testing of civilian police, to avoid excessive levels of repatriation of those police after they had arrived at a mission site. They also recommended that personnel not be assigned to missions without obtaining prior medical clearance.

Speakers in the Committee this morning expressed concern about the timing of the publication of the Board’s 300-page report, which left them little opportunity to thoroughly review and analyse the findings and recommendations.

The United States representative expressed satisfaction with the establishment of a global procurement process for peacekeeping, but also noted the Board had found that, in six of nine missions it examined, procurement was not properly planned -- “good news and not-so-good news on procurement”. He called for further improvement.

Ghana’s representative asked the Secretariat to give special attention to the liquidation of peacekeeping missions, to ensure established rules, regulations

Fifth Committee - 1a - Press Release GA/AB/3370 64th Meeting (AM) 15 May 2000

and procedures were enforced and that there was, therefore, greater transparency in peacekeeping operations.

The representative of Canada suggested that the Board focus more on management issues, in particular on problems concerning the timely staffing of peacekeeping missions.

Speaking on behalf of the European Union and associated States, the representative of Portugal expressed concern at the finding that missions’ management was not enforcing policies concerning money owed to the Organization by mission staff. Management and staff were equally responsible for ensuring compliance with the relevant financial rules.

David Woodward, the Director of External Audit of the United Kingdom, introduced the Board of Auditors’ report. The Chairman of the Advisory Committee on Administrative and Budgetary Questions, C.S.M. Mselle, introduced that body’s comments on the Auditors’ report and the Secretary-General’s response. The United Nations Controller, Jean-Pierre Halbwachs, spoke on behalf of the Secretary- General.

The Committee also continued consideration of the proposed inclusion of international Guidelines for Internal Control Standards in the United Nations Financial Rules and Regulations.

The representatives of the United States, Canada and Portugal (on behalf of the European Union) and the Committee Chairman, Penny Wensley (Australia), spoke on the matter, and Under Secretary-General for Management Joseph Connor answered Member States’ questions.

The Committee will meet again at 10 a.m. Tuesday, 16 May, when it continues its discussion of the financing of peacekeeping missions, looking specifically at the Headquarters’ support account for peacekeeping, reimbursement for contingent- owned equipment and to troop-contributing countries, and the United Nations Logistic Base. It will also take up a proposed change to the level of South Africa’s financial responsibility for peacekeeping.

Fifth Committee - 3 - Press Release GA/AB/3370 64th Meeting (AM) 15 May 2000

Work Programme

The Fifth Committee (Administrative and Budgetary) met this morning to commence its consideration of the report of the United Nations Board of Auditors on peacekeeping operations. It also took up the Secretary-General's report on the Guidelines for Internal Control Standards.

The Committee had before it the report of the United Nations Board of Auditors on peacekeeping operations for 1 July 1998 to 30 June 1999 (document A/54/5 Volume II). The report states that expenditures for peacekeeping over that period amounted to $837.8 million compared to $879.3 million for the previous 12 months. The financial situation of peacekeeping operations continued to be affected by serious cash shortages, which necessitated borrowing across peacekeeping missions and meant reimbursements to many Member States were not paid.

The failure of some Member States to pay their assessed contributions led to recurring cash crises and exacerbated the Organization's inability to meet financial obligations, the report states. As at 30 June 1999, total unpaid assessments for peacekeeping totalled $1.687 billion, compared with $1.74 billion the year before. Available cash for operations totalled $668.9 million, while liabilities were twice that -- $1.364 billion. Figures for each mission are provided in the report.

Of the $150 million authorized for the peacekeeping reserve fund, $51.8 million could not be collected, the report notes. Total expenses for administrative support for peacekeeping, funded from the peacekeeping support account, were $32.8 million for the 12 months, compared to $29 million for the previous period. Those expenses were mostly for personnel. Expenditures for the Logistics Base at Brindisi were about $6.7 million, compared to $9.5 million for 1997-1998.

Some $401,425 was written off, the report notes, with property to the value of $68.3 million (original costs) written off.

The Board of Auditors audited Headquarters' peacekeeping activities, three field missions funded from the regular budget, 12 special missions and six missions in liquidation, the report notes. It found that claims totalling $320.8 million submitted in the period by 53 troop-contributing countries in respect of 14 missions had not been recorded in the accounts, mainly because funds to pay them had not been reserved.

A periodic review of unliquidated obligations the Board recommended led to savings of $389.3 million, and use of a global procurement planning process it sought had saved $802,000, the report notes. However six of nine peacekeeping missions it examined procured piecemeal, as they still had no procurement plan.

Free-on-board contracts, whereby payment for goods was made on the basis of proof of shipment, was not consistent with United Nations financial rules or regulations, the Auditors found. In addition, failure to provide receipt and inspection information for those goods and services delivered to missions by vendors to Headquarters’ Procurement Division inhibited prompt action. It also found that a major reason for wear-and-tear write-offs of mission goods was lack of spare parts.

Missing documents meant that the Auditors’ could not confirm the final disposition of assets from the United Nations Observer Mission in Liberia (UNOMIL), the report notes. The Auditors also found that some equipment transferred to the United Nations Logistic Base in Brindisi from the United Nations Transitional Administration in Eastern Slavonia, Baranja and Western Sirmium (UNTAES) was obsolete.

The Auditors found that an increasing number of civilian police sent to United Nations missions were subsequently repatriated because they failed the English-language test or the driving test, or for medical reasons.

The Auditors recommend that inter-office vouchers awaiting clearance be disclosed in financial statements, the report states, and that all expenditure for a financial period be captured in the accounts for that period. They called for better coordination between the Office of Programme Planning, Budget and Accounts and the Department of Peacekeeping Operations to ensure accurate financial reporting.

The Peacekeeping Department is urged to explore the possibility of extending global procurement planning to take advantage of economies of scale, the report states. That Department is also asked to remind missions to comply with Procurement Manual provisions that require procurement plans to be based on realistic estimates. They recommend free-on-board contracts be reviewed to ensure they meet applicable rules and regulations, and that procedures for ensuring prompt receipt of information on the status of goods delivered to missions be established. UNOMIL asset disposition records should be located, and in future all such records should be available to the Auditors.

To improve maintenance and use, assets like generators, vehicles and communication and data-processing equipment should be standardized, the Auditors recommend. The Department of Peacekeeping Operations should also ask liquidating missions to properly evaluate the cost-effectiveness of any proposed transfer of assets.

Arrangements for screening and testing civilian police monitors should be reviewed to improve the selection process, and personnel should never be assigned to missions prior to obtaining medical clearance, according to the Auditors.

The Board of Auditors report also contains a certification of financial statements and the financial statements of all missions and operations the Auditors examined.

Also before the Committee was a Secretary-General’s report on implementation of the Board of Auditors’ recommendations (document A/54/748).

The Secretary-General advises that the recommendation that inter-office vouchers be disclosed in financial statements pending clearance has been implemented.

On the recommendation that all expenditures be captured in accounts and that the relevant Secretariat areas improve coordination to ensure accurate financial reporting, the Secretary-General notes that sometimes the Department of Peacekeeping Operations cannot record expenditures because funds to meet them are not available. It has been asked to provide financial data so the information can be disclosed as a contingent liability, pending Assembly approval of additional appropriations to satisfy pending liabilities, the Secretary-General explains.

If a troop-contributing country's claim is submitted after the financial period has ended or at the liquidation phase of a mission, it can only be reflected as a contingent liability, the Secretary-General continues. Government claims were therefore not inaccurately reported in the financial statements, as information on them was included in the notes to the financial statements.

Coordination between the Department of Peacekeeping Operations and the Office of Programme Planning, Budget and Accounts has been strengthened, the report states. Troop contributors’ claims are reviewed and verified by the Department and forwarded to the Office. A monthly report on all claims is forwarded to the Office for information and review.

The Peacekeeping Department continually reviews procurement requirements to identify additional cost-saving mechanisms, such as volume purchase agreements or systems contracts, the report states, in response to the Auditors’ recommendation. Initiatives have led to savings and administrative efficiencies, but missions sometimes require tailored services, so volume purchases and systems contracts are inappropriate. Exploration for cost savings will continue, and the ongoing expansion and improvement of the Procurement Division’s supplier database is therefore welcome.

The recommendation that field missions be reminded of the need to comply with Procurement Manual provisions has been implemented, the report states, and will be followed up.

Responding to the Auditors’ recommendation on free-on-board contracts, the Secretary-General states that discussions are under way to determine when inspections are appropriate, but that costs must also be considered. Technical inspectors must be flown in to some shipping points, and the cost of inspection may, therefore, outweigh the risk of faulty delivery.

The report describes existing practices to determine the status of goods received, in response to the recommendation regarding advice on status of goods received. It also notes that, wherever possible, responsibility for paying is being transferred to the field to speed things up.

Records on disposition of UNOMIL assets have been located and in future such records will be available for audit review, the Secretary-General reports. Lessons learned from past liquidations are now taken into account, and liquidation guidelines are sent to chief administrative officers to facilitate and speed up the processes.

The Department of Peacekeeping Operations concurs with the recommendation to standardize certain assets to improve maintenance and usage, the report notes, and is moving in that direction wherever conditions in missions permit. However operational and political exigencies may, at times, override standardization.

The report states that the cost-effectiveness of proposed redeployment of assets from liquidating missions is closely monitored by the Peacekeeping Department.

In response to the recommendation that screening and testing for civilian police monitors be reviewed, the report states that train-the-trainers workshops to assist police-contributing countries are being arranged. Contributing countries can also ask for a visit by a selection assistance team, comprising personnel from the Civilian Police Unit and field missions who test candidates before deployment. The training curriculum for civilian police is also being reviewed, and curricula for a three-week United Nations police officers course has been prepared.

Civilian police personnel have been deployed without medical clearance, the report notes, because established policies and procedures proved insufficient to deal with the recent increases in civilian police numbers. The search for a solution to avoid those problems recurring is under way.

The possibility of establishing separate identifying codes in the Integrated Management Information System to classify government-related obligations, as recommended, is being considered, the report notes.

Recommended action to remind missions to take appropriate steps to review accounts receivable, to enforce recovery from mission staff for telephone and mileage charges and to initiate write-offs where there is little chance of recovery have been undertaken, the report notes. As requested, reminders have also been sent on established procedures for recovery from separating staff.

Recommendations that reminders be sent on the need for full compliance with established procedures on miscellaneous obligating documents and that, even during liquidation, proper separation of duties in the initiation of expenditure be maintained, have been implemented. A field finance manual that includes liquidation procedures for missions has been sent to all missions and relevant Headquarters’ offices, the report adds. All missions have also been reminded they must report on performance of vendors and contractors.

Responding to a recommendation on training for chief administrative officers and other management personnel, the report notes that such training continues to be a high priority. Relevant staff are now invited to New York to discuss and review mission budget proposals and to participate in the Advisory Committee on Administrative and Budgetary Questions (ACABQ) deliberations.

Necessary entries in the accounts to record proceeds from the sale of two defective generators by the UNOMIL have been made, the report notes, accepting that it was unfortunate that the information was not available during the audit review.

Acknowledgment of assets transferred by the United Nations Military Observer Group in Guatemala or retained for the subsequent Guatemala mission have been requested, the report notes, in response to another recommendation.

Regarding a call to reduce the backlog of property survey cases and consider streamlining and strengthening operations to process them, the Secretariat states it shares the Auditors’ concerns. As some 60 per cent of the backlog relates to matters of less than $500, the best way to address it is to delegate authority for cases under $500.

The report also details responses to the Auditors’ recommendations on mission security strategies, the security of assets and measures to protect United Nations-owned vehicles. It states that recommendations on responsibility for welfare items, staff departure procedures, condition reports on properties that missions plan to occupy, trust funds and information on fraud and presumptive fraud are being implemented.

The related comments of the ACABQ on both the Auditor’s reports and the Secretary-General’s responses are also before the Committee (document A/54/801).

The ACABQ confirms that all the Board's recommendations for the 18-month period ending 30 June 1997 have been implemented. Noting that the Auditors had conducted special audits requested by the Assembly in addition to those for peacekeeping missions and related activities at United Nations Headquarters, it asks the Board to monitor its work on special audits and report where appropriate on the implications of that work for its audit priorities.

It also asks the Consultative Committee on Administrative Questions (Financial and Budgetary Questions) to provide it with the results of that body’s review of United Nations accounting standards.

The ACABQ welcomes the reduction in inter-office transactions for peacekeeping operations in the period covered by the audits.

The Auditors’ report confirms that the problem of non-recognition of claims from troop-contributing countries -- a serious deficiency needing urgent attention -– persists, the ACABQ states. It notes the problem will be minimized with full implementation of the new contingent-owned equipment reimbursement arrangements.

Regarding some $149 million in certified claims from troop contributors reflected as contingent liabilities, rather than accounts payable, it notes the Secretariat has promised to report on the matter, and asks that the report clearly explain current practice. The report should be produced as soon as possible.

Claims from governments that participate in peacekeeping operations must be settled promptly, the ACABQ states, welcoming measures introduced to enhance transparency and thereby improve the monitoring of unliquidated obligation.

The amounts owed to the United Nations by mission staff for personal phone calls and other activities causes the ACABQ concern, the report states. While acknowledging efforts to improve recovery from mission staff, it believes urgent measures are needed to speed up collection and to reduce the amounts owed. It asks the Auditors to follow up on the matter.

The ACABQ believes that little appreciable progress has been made to improve inventory management in peacekeeping operations, the report states. It is not satisfied with the Administration’s response to the audit finding on the loss of laptop computers in the United Nations Verification Mission in Guatemala, and asks that the circumstances leading to the loss be fully investigated.

It welcomes progress made on procurement for peacekeeping operations and notes that the planning and systems contracts used to buy some items in bulk has led to savings. The cost-effectiveness of standardization should be carefully analysed for items like communication and data-processing assets.

However, the audit pointed out weaknesses in procurement that need to be addressed, it continues, in areas like the receiving, inspecting and reporting processes. Purchase contracts should include clauses that protect the United Nations where vendors do not fully conform to contract terms.

Given considerable procurement decentralization and increased delegation of authority (from $50,000 to $200,000), the ACABQ calls for an effective and efficient mechanism for monitoring field procurement. Meanwhile, the workload and functions of related Headquarters’ units and divisions should be assessed to ensure optimum efficiency. Use of new technology should help in monitoring in such a way as to avoid excessive bureaucracy and paperwork. The importance of training in procurement for peacekeeping operations, especially in newly established missions, is also stressed.

The ACABQ recommends consideration be given to issuing the Procurement Manual in all official United Nations languages.

It asks the Secretary-General to submit a comprehensive report on the field assets control system and the extent to which it has benefited procurement and the management of peacekeeping assets, as part of the 2000-2001 peacekeeping budget reports. The report should address recommendations from the Auditors, the ACABQ and the Office of Internal Oversight Services, and also the adequacy of resources devoted to peacekeeping asset management and to liquidation activities.

Shortcomings identified by the audit in the selection and medical clearance of police monitors are a cause of concern, and the ACABQ believes current selection and clearance process should be urgently reviewed to make them more efficient and less costly, the report states. Countries that provide civilian police should be responsible for repatriation costs for those who do not meet United Nations standards. Specific standards should be set to meet the operational needs of each mission.

Regarding cases of fraud and presumptive fraud, the ACABQ notes with concern that a fraud on the United Nations Mission in Bosnia and Herzegovina (UNMIBH)went on for over two years, even after a resident auditor confirmed irregularities in October 1998. It also notes with concern that some missions have not responded to the Secretariat’s request to provide details of cases of fraud or presumptive fraud during the period ending 30 June 1999.

Guidelines for Internal Control Standards

Also before the Committee was a report from the Secretary-General on guidelines for internal control standards (document A/54/427). The report notes that the Board of Auditors had indicated to the ACABQ that it recommended against a proposed change to the United Nations Financial Rules, whereby United Nations financial regulations and procedures would be required to be in conformity with the Guidelines for Internal Control Standards promulgated by the International Organization of Supreme Audit Institutions.

The Board was subsequently formally invited to comment on the draft, and confirmed its earlier position, the report notes. The ACABQ considered the guidelines too general to be operational, but said they should be useful for those concerned with formulation or improvement of the existing specific United Nations internal control instruments. It recommended they be publicized, rather than incorporated into the Financial Regulations.

The Secretary-General advises that the Secretariat will undertake to publicize the Guidelines as widely as possible, including on the United Nations Intranet.

Statements

DAVID WOODWARD, Director of External Audit of the United Kingdom, introduced the Auditors Board report on behalf of its Chairman and other members.

C.S.M. MSELLE, Chairman of the ACABQ, then introduced that bodies report reviewing the audit recommendations and the Secretary-General’s response. He said the ACABQ welcomed the provision of an advanced copy of the Auditors report to allow proper consideration. He drew The attention of Member States to ACABQ recommendations on practices of reimbursement of troop-contributing countries. He also drew attention to the ACABQ’s perception that there was a need for continued improvement in procurement practices, and an explanation for laptops missing from the United Nations Verification Mission in Guatemala.

He also advised that, given that the Secretary-General’s report on actions on the Guidelines for Internal Control standards indicated that he intended to act on the ACABQ recommendations, the ACABQ had no further comment on that report.

EDUARDO RAMOS (Portugal), speaking on behalf of the European Union and Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, Cyprus, Malta, Turkey and Norway, said the Union again regretted late submission of some of the documentation on the issue, which hindered the Committee’s work.

The Union welcomed the complete implementation of the Auditors’ reports for the period ending 30 June 1997, he said, but noted that the Auditors had not always been provided with all documentation they required, and invited the Secretariat to do its utmost to assist the Board in doing its work. Noting that there had been progress in dealing with inter-office vouchers, he shared the ACABQ’s view that technology could secure a more efficient method of dealing with them.

It noted with concern the finding that management in peacekeeping missions was failing to enforce the policy of obtaining from staff money owed to the Organization and that some of that debt was long overdue, he said. Management and staff were equally responsible for ensuring compliance with the relevant financial rules. The Union also noted with concern the lack of progress in inventory management in peacekeeping operations. There was a need to reduce risk of loss and unnecessary and excessive acquisitions. Efficient and effective asset control for mission use or transfer, coupled with a standardized system, should lead to savings.

An essential prerequisite for efficient management of resources was the training of staff, he said. The Union shared the Board’s view on the reintroduction of training for chief administrative officers, with the proviso that it be accompanied by an obligation for mobility to serve in missions.

The Union believed that civilian police were a crucial element in modern peacekeeping operations, and was grateful to the Auditors for highlighting problems with arrangements for selection of those police, he said. Urgent field requirements underlined the need for utmost care in the selection process, which was the responsibility of both Member States and the Secretariat. It noted that the Secretary-General and the Board would continue to monitor that situation.

L.K. CHRISTIAN (Ghana) said that he was grateful to the Committee for its informed opinions and recommendations on various aspects concerning the financial administration of United Nations peacekeeping operations. After 24 years of service to the Organization, Ghana would cease to be a member of the United Nations Board of Auditors on 30 June. The Board of Auditors had been commended over those years for its role in strengthening accountability in the United Nations system through its insistence on the implementation of sound accounting and efficient managerial practices. His Government wanted to put on record its appreciation of that fine achievement, which had made Ghana very proud.

Ghana noted that considerable progress had been made by the administration in ensuring that the monitoring and reconciliation of inter-office vouchers was done on a more regular basis, he said. Inter-office transactions pending processing in respect of peacekeeping operations had been significantly reduced, from a debit balance of $24.3 million as at 30 June 1998 to $2.4 million by 30 June 1999. The administration had also significantly reduced inter-office vouchers pending processing for the same period.

Purchases in the field by 16 field missions for the 12-month period from January to December 1999 was more than purchases handled at Headquarters because of the increase in the value of procurement that could be handled by field missions under delegated authority from $50,000 to $200,000, he said. The Board, however, noted that out of the nine field missions it had examined, only two had prepared procurement plans. The result was that procurement activities were not guided by any procurement plan, as a result of which, in some cases, similar items were purchased on a piecemeal basis. Ghana strongly urged that planning based on the Procurement Manual should be given the required attention by field missions for bulk buying, in order to achieve economies of scale.

Ghana noted with concern that some peacekeeping missions had failed to prepare and submit to the Procurement Division relevant forms evaluating the performance of suppliers whose contracts exceeded $200,000, as required by the administration, he said. His delegation endorsed the Board’s recommendations that all field mission should comply with the established procedures relating to reporting on the performance of vendors and contractors. Previous and current audit reports to the General Assembly had referred to lapses in the liquidation management of peacekeeping missions. Ghana was concerned at that state of affairs.

In the report under consideration, he continued, it was stated that supporting documentation could not be provided to the Board to confirm the accuracy of the acknowledgement of non-expendable property items transferred to other missions and assets. The Board also reported that the Department of Peacekeeping Operations had not been able to provide it with a relevant schedule and the records of the Local Property Survey Board in order to confirm write-off cases. It was a matter of importance that special attention be given to the liquidation management of peacekeeping missions, to ensure that established rules, regulations and procedures were enforced.

JOHN ORR (Canada) said that financial statements were the responsibility of the Secretary-General. It would have been helpful if the comments of a representative of the Secretary-General had introduced the highlights of those statements. Concerning the reports, the issue of lengthy reporting in all of the official languages needed to be dramatically improved for Member States to properly evaluate the information provided. While the complexity of the work of the Secretariat was appreciated, Canada urged them to ensure that, for proper consideration of the report, it should be issued in early April of each year.

Canada was disturbed by the statement of the Board that $320.8 million in claims submitted by troop-contributing countries was not reflected in the financial statements, he said. It was a serious deficiency that needed serious attention. He requested an examination of the impact of that practice. Canada noted that $389 million of unliquidated obligations had been cancelled. While grateful for the reduction in liability, he wondered why the matter of unliquidated obligations that were no longer applicable had not been raised in previous years.

He also noted that income had exceeded expenditures by about 10 per cent. While the excess was down, consistent overbudgeting remained a concern, he said. Canada believed that it would useful for the Board to explore reasons for chronic overbudgeting. The Board of Auditors major report should focus more on management issues. The size of that report could be reduced by reporting more information in management letters. One of the broader management issues that should be focused on was the issue of the timely staffing of peacekeeping. That was an especially critical issue now.

THOMAS REPASCH (United States) said, as an auditor himself, he believed that one should never pick a fight with the auditors. Indeed the substance of the Board of Auditors report was very good. However, the lateness of the report made it virtually impossible to review and analyse such an important report. Improved timeliness in its issue was needed in future. The matter had been discussed during the Committee’s consideration of improvements of its working methods.

One of the Auditors’ major findings stated that $320.8 million of claims had not been recorded because funds were not reserved, he said. That was a large amount and the failure to record it represented a breakdown in the way things were done. He noted that a global procurement process had been established. That was welcome and led to savings. However, he also noted that in six of nine missions procurement was not guided by a plan. Thus, there was good news and not-so-good news on procurement. He hoped all possible action would be taken to improve the procurement process.

He also noted the increase in the number of civilian police being repatriated, and asked the Secretariat to explain what was being done to improve that record. Those police were sorely needed, and the recruitment process needed to support that urgency. Also, he was pleased to hear that all the Auditors’ recommendations for the 18 months ending June 1997 had been implemented. That was testament to the good work of the Board and also to the seriousness with which the Secretariat treated those recommendations.

He noted the ACABQ report had discussed the United Nations Accounting Standards, and called for the results of a review that was under way. He would like information from the Secretariat on the processes of the review, and what stage it was currently at.

Regarding the money owed to the Organization for staff and non-staff activities that resulted from management’s failure to implement policy, he asked why there was not a more aggressive approach to collecting those legitimate accounts.

Referring to ACABQ comments on missing laptop computers, he said, as a representative of a country that had recently had its own problems with missing laptops, he was curious as to the status of the matter, and asked exactly what the ACABQ would want in terms of a fuller examination. Clearly not all information on the matter had come out, and he wondered what additional information the Secretariat could provide.

The ACABQ called for issuance of the Procurement Manual in all six official languages, he noted, and he asked the Secretariat to explain how useful that would be, since it was a purely internal document and should be mainly for the use of people in the Secretariat.

The discussion on fraud and presumptive fraud in the ACABQ report contained a reference to a case of fraud in Bosnia and Herzegovina, he said, and the ACABQ noted that the fraud continued for some two years after the mission auditor confirmed irregularities. The Secretariat should provide information about the internal problems that resulted in that instance of fraud. He noted that the perpetrator had been prosecuted, but sought information on what action had been taken regarding those who were responsible for overseeing the Chief Transport Officer’s work, what internal controls had been in place, and whether they were being implemented.

JEAN-PIERRE HALLBWACHS, United Nations Controller, said he would respond to questions raised by Member States in writing and would provide the answers this afternoon to the Committee’s informal consultations on the reports.

Mr. WOODWARD, on behalf of the Auditors, then responded to the call for earlier issuance of the report. He explained that the Board had responded to a request from the ACABQ to try to speed up the report, so it could be used in the ACABQ’s examination of peacekeeping budgets. The Board had succeeded in doing that, and had issued the report to the ACABQ by 28 January this year. Thereafter, the process of issuance was one of translation into the official languages and publication of the completed document. However, to the extent that the Board and others could work together to speed up the process, that must be done.

Regarding the $320.8 million in claims from troop-contributing countries that had been assessed but which were not listed as accounts payable in the financial statements, he explained that the Board of Auditors was slowly uncovering the full picture. A number of claims received, but not yet assessed, appeared as contingent liabilities in the financial statements, but a number of others did not. Some assessed claims were listed as accounts payable and others were not. The Board aimed to ensure that the financial statements presented a true picture of the financial situation. The reason the money was not consistently and properly reflected in the accounts was that the United Nations accounting system did not permit claims to be recognized until a budget had been approved to allow payment to be made. That problem must be examined long and hard, and the Board would do so, he said.

Regarding the large amount of unliquidated obligations that were cancelled, he said that this was also a consequence of United Nations processes. The Board asked for the review because every year, in all United Nations agencies and bodies that it audited, that was a high-risk area. It was inevitable, given the system, that obligations would be raised and later found to be not needed. Unliquidated obligations were a key focus of United Nations audits, and would remain an area to which the Board would draw the attention of the Secretariat.

It was suggested that the Board of Auditors’ report might be shorter, with some material relegated to management letters, he noted. One example given was the complex matter of inter-office vouchers. What should be included was a matter of judgement, as to what issues would be of interest and concern to governing bodies. Interoffice vouchers may be less exciting than certain other areas, but they required attention, and had drawn comment from several Member States this morning. In the current report, the Board’s judgement was that they should be reported. However, consideration would be given to the use of management letters to deal with areas the Auditors believed would not be of interest to Member States. On the call for the Board to examine staffing, he said the proposal would be considered by the Board.

The Committee then decided to conclude its general discussion on this agenda item, and turned its attention to the issue of the Guidelines for Internal Control Standards.

Mr. REPASCH (United States) said that he wanted to put on the record that when the issue of the use of the international Guidelines for Internal Control Standards first came up, the United States believed it had been reasonable for an international organization to observe the standards promulgated by the International Organization of Supreme Audit Institutions. It would be good for the United Nations to both adopt and use those Guidelines on a daily basis. The United States had stated its disagreement with the ACABQ position on those Guidelines. Rather, they should be incorporated, so as to highlight the need for strengthened internal controls. Standards should not only appear in the books, but be used in daily practice. The United States had no problem with taking note of the report, yet it felt that the Internal Control Standards should be fully incorporated into the United Nations “rule book”.

Mr. ORR (Canada) said that he concurred with the United States that the Guidelines should be included in the financial rules. A number of issues raised in the Board of Auditors reports, as well as those in Oversight Office reports, would not have arisen had there been a more vigorous system of internal control. He also asked when the anticipated update of the Staff Rules applicable to 100 series contracts would be available. The copy of the Staff Rules he used was dated 1985, he noted.

Mr. RAMOS (Portugal), speaking on behalf of the European Union, said that the Union was happy to go along with the document. The Union agreed with the United States, however, that internal control standards should be fully integrated into the United Nations “rule book” and be used on a regular basis.

JOSEPH CONNOR, Under-Secretary-General for Management, said that a complete revision of the Staff Rules should be available shortly. He stated that the Secretariat had not included the Guidelines on Internal Control Standards in the Financial Rules and Regulations because it had anticipated, given the comments of the Auditors Board and the ACABQ, that Member States would not decide to incorporate them. Unless Member States so decided, it would be inappropriate to include them.

Mr. REPASCH (United States) said that there was some value in incorporating the Guidelines into the Financial Rules and Regulations. He asked what the Secretariat would have to do to accomplish that.

Under Secretary-General CONNOR said that the initial proposal had attempted to incorporate the Guidelines into the Financial Rules and Regulations through language that would distinguish them from more explicit rules and regulations. He was not sure what the Secretariat could do further to that initial proposal.

Mr. ORR (Canada) asked what action the Committee could take.

PENNY WENSLEY (Australia), the Chairman, said that she had noted that all those who spoke had indicated they had no difficulty with the Committee taking note of the Secretary-General’s report on the Guidelines. It had been her original intention to put a draft decision, by which the Assembly would note the report, to the Committee and it remained her intention to do so.

Mr. RAMOS (Portugal), speaking on behalf of the European Union, said that the Union had no difficulty with noting the report. However, he wondered if it was feasible to enlarge the text of the draft decision to make the inclusion of the Guidelines in the United Nations Financial Rules and Regulation possible.

The CHAIRMAN said that. in the light of support for the inclusion by certain Member States, the Committee would revisit the item.

Mr. ORR (Canada) asked if it might not be possible to approve a draft decision endorsing the recommendation the Secretary-General made in his earlier report on the Guidelines for Internal Control Standards (document A/52/867) -– the report that originally proposed the General Assembly amend article 10 of the Financial Regulations.

Mr. RAMOS (Portugal) said that he supported the proposal made by Canada’s representative.

The CHAIRMAN, said she would prefer not put decisions drafted on the run to the Committee, as she felt action did not, in the long run, save time. She would, rather, prepare a text that could be distributed to Member States for their consideration.

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