BUDGET COMMITTEE TAKES UP REVISED TERMS OF REFERENCE FOR INDEPENDENT AUDIT ADVISORY COMMITTEE, PROPOSALS TO STRENGTHEN INTERNAL OVERSIGHT OFFICE
|Department of Public Information • News and Media Division • New York|
Sixty-first General Assembly
47th Meeting (AM)
Budget committee takes up revised terms of reference for independent audit
Advisory committee, proposals to strengthen internal oversight office
Continuing its efforts to improve the Organization’s governance and oversight system, the Fifth Committee (Administrative and Budgetary) this morning focused on the revised terms of reference for the Independent Audit Advisory Committee (IAAC) and proposals to strengthen the Office of Internal Oversight Services (OIOS), as well as recommendations to revise the Office’s funding arrangements to ensure its independence and flexibility.
Delegates agreed on the need to take prompt action on the IAAC’s terms of reference and modalities for appointing its members, which would allow the Organization to proceed with putting the new body into operation.
Presenting the updated terms of reference, United Nations Controller, Warren Sach, said that, while more succinct than the two earlier versions, they retained the key elements required of an audit committee, which was expected to comment on the work plans of the OIOS and the Board of Auditors, examine progress in implementing oversight recommendations, and review the audited financial statements of the Organization and its approach to risk management and internal controls. In selecting the candidates to serve on the Committee, he emphasized the importance of competence and representativeness, saying that those factors were both essential and there was no need to dilute either factor in selection arrangements.
The “Group of 77” developing countries and China, whose position was presented by Pakistan, supported the establishment of the IAAC as the Assembly’s subsidiary and expert advisory body, with a view to ensuring the implementation of the recommendations of the existing oversight bodies -- the OIOS and Board of Auditors -- as well as examining the work plan of the OIOS. However, the Group would find it difficult to assign the IAAC a role that went beyond the status of an advisory body and would oppose attempts to use the Committee as an instrument to influence or undermine the oversight authority of the Assembly, the Board of Auditors and OIOS under the pretext of strengthening oversight or accountability. The IAAC should not have any operational role with regard to the budget or any other substantive functions of the OIOS and Board of Auditors.
The Republic of Korea’s representative said he agreed with the Advisory Committee on Administrative and Budgetary Questions that the IAAC should be authorized to examine the full range of OIOS functions, rather than just the audit functions. Also, preventing an overlap in the functions of the IAAC with other oversight entities was a prerequisite for its successful operation. He, thus, agreed with the ACABQ that providing advice to the Assembly on the integrity of audited financial statements of the United Nations should remain the purview of the Board of Auditors.
The United States’ representative said he disagreed with those who were concerned that the IAAC could become a “superfluous and unnecessary layer of bureaucracy”. Rather, the IAAC would provide confidence, through independent confirmation, that the internal oversight mechanism of the Organization was carrying out its mandate effectively. It would shed light on challenges and vulnerabilities faced by the Organization and empower Member States to fulfil their oversight responsibilities, aided by independent expert advice. Further, it was essential that candidates nominated to serve on the IAAC possess the highest level of integrity and a high level of technical training in finance, auditing, evaluation and investigation.
As the Committee took up the proposals to strengthen the OIOS, the Under-Secretary-General for Internal Oversight Services, Inga-Britt Ahlenius, said that she had taken “a prudent approach to strengthening the OIOS with the view that this is not only an exercise to add posts, but also requires a fundamental rethink on how to deliver the OIOS mandate effectively”.
She emphasized the importance of the Office’s funding arrangements, which should ensure adherence to the principle of operational independence and provide the OIOS the flexibility to prioritize oversight activities based on the risk to the Organization. It was critical to change the present situation, where the Office was obliged to negotiate up front for its resources. It was necessary to separate between the two processes. The first established the risk-based oversight work plan, which was the responsibility of OIOS, with examination by the IAAC. The second was the apportionment of the Assembly-approved budget, which was the responsibility of the Department of Management.
Japan’s delegate said that any proposal to strengthen the OIOS must be based on an understanding of its purpose and functions and asked how the OIOS planned to implement its “risk assessment framework”, on which it would base its programme and budget. The ad hoc management of risk and absence of clear responsibility constituted a serious gap that must be addressed quickly.
He added that the establishment of a risk management framework should be led by the Secretary-General, agreeing with the ACABQ’s conclusions that the Secretary-General should continue to have responsibility for presenting the Office’s budgetary requirements. Excluding the Secretary-General from the budget process was more likely to undermine the Office, rather than enhance its operational independence. Operational independence would be secured through the “thorough examination” of the Office’s work plan and budget by the IAAC.
Speaking on behalf of the European Union, Germany’s representative emphasized the importance of the examination of the work plan and budget of the OIOS by the IAAC, saying that the OIOS, IAAC and the Secretariat should view themselves as a “triangle of strength” rather that the “Bermuda Triangle”.
Also this morning, the Committee recommended, by acclamation, appointment of Thomas Thomma of Germany as a member of the Committee on Contributions for a term of office ending on 31 December 2008, following the resignation of Sujata Ghorai, also of Germany.
Following a discussion of the organization of work for the second resumed session, the Committee also approved its programme of work through 1 June this year.
Statements were also made by representatives of the Dominican Republic (on behalf of the Rio Group), Switzerland, New Zealand (also on behalf of Australia and Canada) and Cuba. Reports of the ACABQ were introduced by its Chairman, Rajat Saha.
The Committee is expected to take up administrative and budgetary aspects of peacekeeping financing at 10 a.m. Wednesday, 9 May.
At the opening of its second resumed session today, the Fifth Committee (Administrative and Budgetary) was expected to consider an appointment of a member of the Committee on Contributions and take up several reports under its governance and oversight agenda item.
The first report before the Committee (document A/61/812) contains updated terms of reference for the Independent Audit Advisory Committee (IAAC), to be established by the terms of resolution 60/248 to assist the Assembly with its oversight responsibilities. The revisions arise from the recommendations contained in the report of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) on the comprehensive review of governance and oversight within the United Nations, as well as the outcome of further consultations with the Office of Internal Oversight Services (OIOS) and the Board of Auditors.
Among other things, the ACABQ recommended that the IAAC should be composed of 5 members rather than 10; underscored the importance of clear and verifiable qualifications; and saw merit in the procedure whereby the Committee would undertake an expert technical review of the oversight budget and advise the Assembly through the Advisory Committee of its findings and recommendations.
According to the report, as recommended by the ACABQ, updated terms of reference place particular emphasis on the advisory nature of the IAAC and contain a requirement that Committee members have an understanding of the terms of reference governing the role of the Board of Auditors, in recognition of their independence. They also address such issues as the appointment process and compensation of the Committee’s members.
According to the terms of reference, all IAAC members must be suitably qualified with recent and relevant senior-level financial, audit and oversight-related experience, preferably including experience of membership in an audit committee. There is also a requirement that all members of the Committee must be independent of the United Nations Secretariat, Member States’ Governments and of the Board of Auditors, and that members must also be free from any material relationship with the Secretariat. Members shall not hold any position or engage in any activity which might be liable to -- or appear to -- impair their impartiality in the exercise of their functions.
The Secretary-General reports that the OIOS is in agreement with the provisions in the draft terms that have direct implications for the Office. Also reflected in the text are many of the Board of Auditors’ comments. The Board of Auditors stated, however, that it would continue to seek clarification with regard to the risk of overlapping functions between the IAAC and the ACABQ.
The comprehensive review of oversight recommends that the members of the IAAC be compensated and that the Committee have a small secretariat support unit. Based on the assumption that the Committee will become operational in October 2007, the resource requirements for three months in 2007 are estimated at $450,900.
The Advisory Committee on Administrative and Budgetary Questions (ACABQ), in a related report (document A/61/825), proposes numerous changes to the language of the proposed terms of reference and states that it is not convinced that the proposed staffing for the secretariat of IAAC, as set out in the Secretary-General’s report, is justified at this point. The Committee, therefore, recommends approval of one P-5 and one General Service post for the secretariat. Furthermore, the ACABQ is not persuaded that the proposed $50,000 in consultancy fees to assist in the establishment of the Committee is warranted. In the Advisory Committee’s view, this should be handled by the Secretariat and the members of IAAC themselves.
The Secretary-General’s report on strengthening of the Office of Internal Oversight Services (OIOS) (document A/61/610) contains revised estimates to the approved 2006-2007 budget, taking into account the OIOS proposals contained in document A/61/901. The Secretary-General asks the Assembly to approve an additional appropriation of some $1.31 million to strengthen the Office.
As detailed in the document, 39 general assistance positions previously approved are proposed for conversion to established posts. Also reflected are a number of redeployments, including four posts from the OIOS to the Office of the Under-Secretary-General for Management for transfer of responsibility for management consulting services, to be offset by an addition of five regular budget posts to ensure sufficient capacity in the area of inspection and evaluation.
All post adjustments in the Office have been effected through a reduction in general temporary assistance, within the resources already approved for the biennium. No new non-post resources for new converted posts are requested at this time, to be dealt with through internal redeployment of funds and reported in the context of the second performance report. However, a number of key non-post requirements previously detailed in the proposals for the strengthening of the Office are incorporated for approval in the document, including a provision relating to the development of a training strategy for the OIOS.
Also before the Committee was a report containing a proposal for revised funding arrangements for OIOS (document A/61/810), which has been prepared pursuant to resolution 61/245, in which the Assembly endorsed the conclusions and recommendations of the ACABQ on the comprehensive review of the Organization’s governance and oversight system, including the recommendation that the Secretary-General be requested to prepare a proposal for revised funding arrangements for the OIOS, drawing upon existing cost-sharing experience.
Under the revised arrangements, several sources of funding, including the regular budget, the peacekeeping support account, the budgets of the International Tribunals and the capital master plan, as well as centrally administered extrabudgetary accounts, will be consolidated under a gross budget that would be apportioned to respective funds on a net basis. However, other sources of extrabudgetary funding from various funds, agencies and programmes cannot be apportioned under applicable decentralized administrative arrangements and would be treated separately. It is also proposed that, within the context of the biennial resolution on unforeseen and extraordinary expenditures, authority be provided to enter into commitments not to exceed a total of $8 million in any one year of the biennium to meet unforeseen expenses for oversight services as the Under-Secretary-General for Internal Oversight Services certifies relate to emerging risks, in particular those related to audits and investigations.
Commenting on those proposals in a related report (document A/61/880), the ACABQ reiterates that OIOS is an internal oversight body and a part of the Secretariat discharging its mandates under the authority of the Secretary-General. In a previous report, the ACABQ had stressed the need for OIOS and management to cooperate and urged the Secretary-General and the Under-Secretary-General for OIOS to give careful consideration to the Steering Committee’s suggestions for improving the working relationship between OIOS and management. The Advisory Committee recommends that information in that regard be provided to the Assembly at its sixty-second session.
The Advisory Committee recommends approval of the transfer of several management consulting posts from section 29 to section 28A of the budget, stating that it will take into account the further transfer of two posts (P-4) funded from the peacekeeping support account when it considers the Secretary-General’s proposals for that account for 2007-2008. The ACABQ notes, however, that this redeployment is offset by the proposal to add five additional regular budget posts to ensure sufficient capacity in the area of inspection and evaluation in OIOS. There is no link between the transfer of the management consulting functions and the required capacity for inspection and evaluation, and any resources required to strengthen the inspection and evaluation functions should be proposed in the context of the proposed 2008-2009 programme budget.
As for the arrangements for the transfer of the performance report preparation to the Department of Management, the ACABQ points out that the relevant capacity needs to be identified for the transfer, drawing attention to the provision that contracts of OIOS staff are limited to service with the Office. With the Assembly’s decision to transfer the function, the incumbents carrying out the functions should not be disadvantaged by virtue of the transfer. It would also be necessary to amend the relevant rules.
The Advisory Committee is concerned that, of the 39 positions authorized in resolution 60/246, only a few have been utilized and, in some cases, they have not been used for the purposes for which they were authorized. All 39 positions are now proposed forconversion, but some for different functions and with some adjustment to the grade levels. The conversion to established posts should be confined to those cases where the functions are as originally envisaged.
The ACABQ, therefore, recommends the conversion of nine posts for the Audit Division and 16 posts for the Investigations Division. The remaining positions would be retained as general temporary assistance and their proposed establishment as posts and redeployment would be considered in the context of the next budget. In that context, the Advisory Committee requests a full and transparent explanation of the proposals in relation to the mandate of the Office. The ACABQ also recommends that further clarification be provided as to how the OIOS intends to carry out its monitoring functions in support of the Secretary-General’s fulfilment of his oversight responsibilities. Regarding additional non-staff costs, the Advisory Committee recommends against additional appropriations for those requirements, which could be accommodated from the existing appropriation.
On another proposal, the Advisory Committee disagrees with the exclusion of the Secretary-General from the preparation of the draft of the OIOS budget. While fully cognizant of the OIOS requirements for operational independence, it believes that this would be secured through the examination of the workplan and review of the budget by the IAAC, should the Assembly confer that mandate. The Secretary-General should continue to have responsibility to present the budgetary requirements of OIOS, in accordance with his responsibilities as the chief administrative officer of the Organization.
The Advisory Committee also notes that arrangements in relation to services provided by OIOS to the funds and programmes are not addressed in the Secretary-General’s report. Respective governing bodies need to address this issue, in the light of views of OIOS and the funds and programmes.
On the Secretary-General’s recommendation that the biennial resolution on unforeseen and extraordinary expenses should include a provision for oversight services, the Advisory Committee does not see the need for establishing such a mechanism, given the flexibility that will be built in through the budgetary arrangements proposed. It is of the view that existing procedures, including the provisions for the use of the contingency fund, are sufficient for managing additional needs.
Programme of Work
Speaking on behalf of the “Group of 77” developing countries and China, IMTIAZ HUSSAIN (Pakistan) reiterated the Group’s serious concern over the status of documentation for the current session, which, according to the relevant General Assembly resolutions, had called for their issuances six weeks before the session’s opening. The Group regretted that the six-week rule had not been complied with, leaving the Committee to consider the documents it received hours before the formal session. Very often, there was no reason for the delay.
He said the late submission of documents constrained large groups such as the Group of 77 and China. Smaller delegations could not read the “voluminous reports” to seek guidance from their capitals, depriving them of valuable input. The late submissions of reports often led to lengthy question-and-answer sessions, since there was no time for the Group to seek informal briefing from Secretariat officials. The Group requested the Secretary-General and the Chairman of the Advisory Committee on Administrative and Budgetary Questions to pay serious attention to that long-standing question.
He said the second resumed session would be dedicated to the adoption of peacekeeping budgets, but the Group would approach other items on the agenda with an open mind and consideration of those issues would have no impact on the approval of the peacekeeping budgets. The Group was also concerned that the Committee was not likely to adhere to its timeline because of the introduction of additional reports. It had hoped to consider reports on human resources management, procurement and information and communications technology, as envisaged in resolutions adopted during earlier sessions.
PETE WOESTE ( Germany), speaking on behalf of the European Union and associated States, expressed deep concern that important reports of the Secretariat and ACABQ would not appear until late in the session. Timely reports were essential to the Committee’s functioning.
He noted that the session would be devoted to the financing of peacekeeping operations, which was a priority for the European Union. A high priority was also attached to Department of Peacekeeping Operations restructuring; a well-established mandate for the Independent Audit Advisory Committee; and strengthening the independence of the Office of Internal Oversight Services.
He said the European Union attached great importance to peacekeeping as a core function of the Organization. Efficient budgeting and sound management must go hand in hand with political and financial commitment. He hoped agreement would also be reached on a cross-cutting resolution. As for strengthening the Organization’s ability to manage and sustain peace operations, the Union was concerned over the late submission of related reports, since it constrained the Committee’s work. It was key that the Committee translated the General Assembly’s will, as expressed in the framework resolution of 15 March, into “sound reform measures”.
ERASMO LARA-PEÑA (Dominican Republic), speaking on behalf of the Rio Group and aligning with the Group of 77 and China, said the Rio Group supported the provisional programme of work, but was concerned, again, over the delayed release of documents. Some members of the Rio Group did not have enough staff to examine those reports in such a short time.
Turning to peacekeeping budgets, he said they had reached a “historic level”. Like other States, the Rio Group would work to reaffirm their commitment to fund the missions, but reiterated the need for requests for resources to be “duly justified”. The Group looked forward to analysing cross-cutting issues, since it was the basis for rationalizing the way those operations functioned. While it was necessary to consider the unique aspects of each mission, there was still a need for a uniform approach.
He said the Group reaffirmed its commitment to end sex exploitation and abuse, as perpetrated by United Nations peacekeeping personnel. The Group supported the zero-tolerance policy, as advocated by the Secretary-General. It also followed the situation in Haiti with concern. In a press statement by Rio Group ministers in March, members had pledged to continue working on the short-, medium- and long-term stabilization of Haiti. The United Nations Stabilization Mission in Haiti (MINUSTAH) was seen as having provided genuine support, and the Rio Group supported the idea of a role for the mission in “a new phase in Haiti”. The Group also paid tribute to the work done by Ambassador Edmond Mulet of Guatemala. He noted that a related Security Council resolution had stressed the need for the continuity of “quick-impact projects”.
He said the Group planned to participate actively on the issue of the IAAC, particularly regarding its revised mandate. The IAAC needed a coherent auditing system that was transparent. The Group wanted to ensure that the new mandate included provisions for even geographic representation and rotation. Committee members should be elected by the General Assembly and not by external bodies. Regarding the International Research and Training Institute for the Advancement of Women (INSTRAW), the Group believed it was important to ensure its long-term viability. The Group looked forward to examining the consequences of the General Assembly decision to embark on the restructuring of the Department of Peacekeeping Operations.
MARK D. WALLACE (United States) said, at a time of rapidly escalating expenses, the Committee must demonstrate a renewed commitment to reform by maximizing the efficient and effective use of United Nations resources. The commitment of the Organization and its Members to addressing ongoing threats to international peace and security came at a high price -- a record $5.4 billion annually for currently deployed missions, and the possible yearly expenditure of $6 billion or even $7 billion should new missions be established in Darfur, Chad and the Central African Republic.
He said that, given such costs, the management and organization of each peacekeeping mission must be reviewed. Careful consideration must be given to the Secretary-General’s detailed proposals on strengthening the capacity of the Organization to manage and sustain peace operations. Strong leadership and management were to be expected, as well as more effective implementation of mandates and greater accountability. The United States looked forward to the Committee’s consideration of the Secretary-General’s proposals to strengthen support for peacekeeping operations in the field, keeping in mind the need to ensure that human and financial resources were at hand. The adoption of a cross-cutting resolution was also important.
Among other issues, he emphasized the issue of governance and oversight, welcoming the long-postponed introduction of the Secretary-General’s report on updated terms of reference for the IAAC and measures to strengthen the operational and budgetary independence of the OIOS. The General Assembly had already endorsed the conclusions and recommendations of the ACABQ regarding governance and oversight, and so he urged Member States to implement those recommendations. The United States also hoped for progress in considering the Secretary-General’s recommendations to strengthen OIOS.
RAJAT SAHA, Chairman of the ACABQ, said the Advisory Committee was hampered by the late submission of documents, and often worked on unedited advance copies. That subject was dealt with in its report regarding peacekeeping missions, which was to be introduced on Wednesday.
The Committee then approved its programme of work.
Introduction of Documents
United Nations Controller, WARREN SACH, introduced the reports of the Secretary-General on the updated terms of reference for the IAAC and strengthening of the OIOS, as well as the proposed funding arrangements for that Office.
On the IAAC, he said that updated terms of reference, more succinct than the two earlier versions considered by the Assembly, continued to retain the key elements required of an audit committee -- including that it would comment on the work plans of the OIOS and the Board of Auditors, review progress in implementing oversight recommendations, review the audited financial statements of the Organization, and review the Organization’s approach to risk management and internal controls.
Regarding the selection of candidates, he said that the Secretary-General believed that his proposals maintained an appropriate and improved balance between the need to ensure the highest level of technical competence together with arrangements to ensure that the membership of the IAAC was fully representative of the Membership of the General Assembly. The factors of competence and representativeness were both essential and there was no need to dilute either factor in selection arrangements.
Inviting Member States to focus on the prompt implementation of the decision to establish the IAAC through a decision on its terms of reference and the modality for appointment of its members during the current session, he said that access to technical advice from independent experts was essential to help Member States, as a whole, execute their oversight role of the United Nations. That strengthened oversight role was becoming increasingly needed, not only with the future adoption of International Public Sector Accounting Standards, but also with forthcoming initiatives to strengthen the Organization’s accountability framework, the adoption of an internal control framework, risk management on an enterprise-wide basis, as well as steady progress towards better results-based management. The IAAC, once established, would help the Assembly ensure full coherence between the internal and external audit functions. It would also strengthen the Assembly’s capacity to use auditing expertise in the interests of better overall governance.
He said that the revised estimates for the OIOS drew on and realigned resources consistent with an earlier OIOS report on its strengthening (document A/60/901). A number of general temporary assistance positions, previously approved in the context of consideration of revised estimates for the 2005 Summit Outcome, were now proposed for conversion. Consistent with the recommendations stemming from the review of governance and oversight, it was proposed that the management consulting function be relocated within the Secretariat. It was also expected that the responsibility for the preparation of the programme performance report would be transferred. Detailed arrangements in that regard would need to be addressed later in the context of the outcome of the results-based management review. The net result of those revised estimates would be an additional 40 posts under section 29, internal oversight, together with a transfer of management consulting posts. The total additional appropriation sought in the report amounted to $1.3 million.
Related reports of the ACABQ were introduced by its Chairman, RAJAT SAHA, who said that, in general, the terms of reference for IAAC appeared to be “audit-centric”. Given the fact that the Committee was to be charged with reviewing the budget of OIOS, the terms of reference and the qualifications of members should reflect the full range of OIOS functions. The ACABQ pointed out that, under the Financial Rules and Regulations, it was fully within the purview of the Board of Auditors to advise the General Assembly on the integrity of audited financial statements. Therefore, the Advisory Committee shared the Board’s view that the paragraph in the terms of reference that would bestow that function on IAAC should be deleted. Instead, the ACABQ recommended a wording that would provide for the IAAC to advise the Assembly on the operational implications for the United Nations of the trends and issues apparent in the financial statements. Among other things, the Advisory Committee also recommended that IAAC should meet up to four times a year, that its members should receive per diem and compensation for air travel; and that the determination of the terms of membership amongst the initial five members should be done by the drawing of lots.
On the revised estimates for the current biennium in connection with the efforts to strengthen the OIOS, he said that implementation of the recommendations would not entail any overall additional appropriation under the 2006-2007 budget. The Advisory Committee was recommending, at this stage, the conversion to established posts of 25 general temporary assistance out of the total 39 proposed. Taking into account the current level of expenditure, no additional resources would be required under section 29. As to section 28A (the Office of the Under-Secretary-General for Management), the ACABQ was recommending the approval of the additional resources requested, which reflected the transfer of the management consulting function from section 29. Additional resources under section 28A would, therefore, be offset by a corresponding reduction under section 29. As those recommendations did not involve any net addition in terms of staffing resources, no changes would be required in the resources under staff assessment or income from staff assessment.
As to the proposed funding arrangements for the OIOS, the ACABQ was recommending that the arrangements be reformulated to take into account the observations and recommendations of the Advisory Committee and that such reformulation be presented to the General Assembly for implementation with respect to the 2010-2011 budget. However, the Committee did not see the need for establishing the mechanism proposed in the Secretary-General’s report to provide additional resources for addressing emergent risks. Existing budgetary procedures, including the provisions for the utilization of the contingency fund, together with the new budgetary arrangements, should provide sufficient flexibility to deal with any additional needs.
INGA-BRITT AHLENIUS, Under-Secretary-General for Internal Oversight Services, said that one of the key areas for strengthening OIOS was the funding arrangements for the Office. The proposed funding changes had two main objectives: to ensure that the principle of operational independence was met; and to provide the OIOS the flexibility to prioritize oversight activities based on the risk to the Organization, rather than the extent to which an entity provided funding to the Office. On the first of those goals, she said that it was critical to understand that operational independence did not imply that OIOS should be autonomous from the Secretariat. The Office operated under the same regulations and rules as the rest of the Secretariat, thereby placing it administratively under the authority of the Secretary-General.
She looked forward to working to find a solution that would provide flexibility to the Office, which was fundamental to a risk-based approach to oversight, she continued. Such an audit approach was not only required by the international standards to which OIOS must adhere, but also served the best interests of the Organization, as it ensured that oversight resources were applied efficiently to the highest risk areas. The Office was currently working with management to assess risks. Such assessments, conducted with participation from departments and offices, would serve as the basis for setting priorities for OIOS’s work and would also serve as valuable input for management in the development of the Organization’s Enterprise Risk Management framework.
It was critical for operational independence that the final solution for the OIOS funding arrangements changed the present situation, where the Office was obliged to negotiate up front for its resources, into a system where OIOS resources, once decided by the Assembly, were ex-post apportioned by the Department of Management. The process should provide for separation between the two processes the first process would establish the risk-based oversight work plan and corresponding budget, which was the responsibility of OIOS, with examination by the IAAC. The second process would apportion the Assembly-approved budget, which was the responsibility of the Department of Management.
In developing her proposals for strengthening the OIOS, she had used as her primary guide the General Assembly resolution, which had established the OIOS in 1994, she said. She had, therefore, focused on all aspects of the Office’s mandate. More resources should be added to evaluation and inspection functions to enhance the quality and increase the coverage that evaluation and inspections reports delivered. She proposed to increase the number of evaluation and inspection reports from 3 to 4 to about 8 to 10 reports annually, each. With monitoring being a mandated function of the Office, the OIOS would concentrate on reviewing the implementation of programme monitoring in the departments in the course of its inspections, determining relevant weaknesses and strengths.
Regarding investigations, she said that she would not hide her disappointment that the comprehensive review of the OIOS by the Steering Committee had not adequately addressed that important function in its report. As a result, she had commissioned a separate review, which was now in its final stages. She was looking forward to the results of that review and to the implementation of actions to bring the OIOS investigation function up to world class standards.
“I have taken a prudent approach to strengthening the OIOS, with the view that this is not only an exercise to add posts, but also requires a fundamental rethink on how to deliver the OIOS mandate effectively,” she said. In strengthening the Office, adherence to standards and best practices in processes, quality skills and technology must be reviewed. She was pleased that the efforts in the Internal Audit Division were firmly on that road and the results were already being seen. Strengthening OIOS was a significant part of the Organization’s reform initiative and, while it had taken some time to get to the current stage, the effort was worthwhile.
IMTIAZ HUSSAIN (Pakistan), speaking on behalf of the Group of 77, said that he trusted that the creation of an IAAC would contribute to the efforts to improve accountability of the Secretariat to Member States and create a comprehensive management accountability and oversight framework in the United Nations. He also emphasized the paramount role of the General Assembly in the entire process of establishing the Committee, including defining its terms of reference, the qualification criteria of its members and their verification, the Committee’s reporting line and compensation package. None of those functions would be outsourced to any other institution. The United Nations had the necessary technical expertise to accomplish that task without external consultancy. Furthermore, the composition of the Committee had to respect the principle of equitable geographical representation.
The Group of 77 supported the establishment of the IAAC as a subsidiary and expert advisory body to the Assembly, with a view to ensuring the implementation of the recommendations of the OIOS and Board of Auditors, as well as examining the work plan of the OIOS. The Group would find it difficult to assign the IAAC a role that went beyond the status of an advisory body and would oppose attempts to use IAAC as an instrument to influence or undermine the oversight authority of the General Assembly, the Board of Auditors and OIOS, under the pretext of strengthening oversight or accountability in the Organization. The Group had resisted similar attempts in the past and would do that in the future. The IAAC should not have any operational role with regard to the budget or any other substantive functions of the OIOS, as well as the Board of Auditors. The terms of reference and functions of those entities had been established in relevant resolutions of the General Assembly and the financial rules and regulations of the United Nations.
On strengthening the OIOS, he stressed the need for strong mutual cooperation between the Secretary-General and OIOS within their respective mandates. While management was obligated to develop and implement an internal control framework and necessary mechanisms to assess and manage risks, the OIOS must provide objective oversight to support management in the process. He looked forward to the information the Secretary-General would be presenting on the steps taken to improve the working relations between the two offices.
The Group considered OIOS a part of the Secretariat, discharging its mandate as an operationally independent body under the authority of the Secretary-General, he said. It supported the importance of operational independence as a principle of good governance and oversight and was ready to engage in discussions for establishing an appropriate modality to achieve that objective. He supported the transfer of the responsibility for the preparation of the programme performance report and related posts from the OIOS to the Department of Management. However, the Group did not see any linkage between the transfer of those resources and the additional posts requested to strengthen evaluation and inspection. He looked forward to receiving further clarifications from the OIOS and Secretariat on those proposals, as well as how they would improve the monitoring and evaluation functions of the OIOS.
On the new funding arrangements for the OIOS, he said that, under the proposal, the IAAC, whose terms of reference had yet to be agreed upon, would examine the basis for the OIOS work plan and review its budget. The extent of the role that the management should play in the OIOS budget after the establishment of the IAAC deserved careful consideration. The Group would also seek further clarification regarding the utilization of the contingency fund for meeting unforeseen needs. Taking into consideration the recommendations of the ACABQ, the Group agreed with the need for a revised report by the Secretary-General at future sessions.
In conclusion, he emphasized the importance of strengthening the monitoring and evaluation functions in the Organization. The Assembly had requested the Secretary-General to ensure a more extensive and uniform use of self-evaluation at the programme and subprogramme levels, and to develop and implement common professional standards and methodologies for self-evaluation throughout the system, in consultation with the United Nations System Chief Executives Board for Coordination (CEB). The Group would appreciate being provided with a status report from the Secretariat on its efforts in that regard, bearing in mind that the Secretary-General had been requested to report at the sixty-second session on the measures taken.
PETER WOESTE ( Germany), speaking on behalf of the European Union and associated States, welcomed the Secretary-General’s report on, as well as the ACABQ’s consideration of, the IAAC’s terms of reference. Strengthening oversight had been a priority for the Union for a long time and, in December 2006, it had emphasized the importance of putting the IAAC into operation.
He said to establish a body that added real value to the oversight process, it was important to have strict criteria for membership to that body. Procedures for ensuring that members met the necessary criteria should be water-tight. There was also the question of funding arrangements for the Office of Internal Oversight Services, in which the examination of its work plan and budget by the IAAC was an important element. The OIOS, IAAC and the Secretariat should view themselves as a “triangle of strength” rather that the “Bermuda Triangle”. The Union looked forward to constructive negotiations, and viewed the General Assembly’s endorsement of the ACABQ report in December 2006 as a good sign.
THOMAS SCHNEIDER ( Switzerland) emphasized the importance of strengthening oversight, recalling that, in December, the Committee had followed the recommendations of the ACABQ, which set out a road map of five concrete measures to further improve internal oversight in the Organization. Now, the Committee had an opportunity to agree on the terms of reference for the IAAC and to finally put that body into operation. The documents before the Committee formed a good basis for that long-overdue decision. He welcomed the streamlined formulation of the terms of reference, which reflected the purely advisory role of the IAAC and its main responsibility to advise the Assembly. It was his delegation’s understanding that those were the result of extensive consultations with the OIOS and Board of Auditors. He also noted the expressed concerns by the Board of Auditors with regard to the risk of overlapping functions between the IAAC and ACABQ. That question should be given well-needed attention, in order to avoid duplication.
The value added by the IAAC depended crucially on the expertise of its members, he continued. It was, therefore, important to have clear and verifiable qualifications. He welcomed the proposed technical assessment of the candidates by an independent international organization, which, hopefully, would allow the best qualified candidates to be chosen and ensure their independence. The proposed criteria, however, were hardly measurable and, therefore, formed a weak basis for the envisaged professional and objective assessment.
On the funding arrangements for the OIOS, he said that changing the existing mechanism was a critical element in further strengthening the Office. The objective for establishing a new funding mechanism seemed to be crystal clear: making OIOS truly operationally independent by making it financially independent from the Secretariat entities it audited. In accordance with best practices, an audited organization should have no influence on the financial resources of the auditor. Consequently, the budget should be prepared according to a risk tolerance as decided by the governing body -- in this case, the General Assembly -- without any substantial involvement of the respective organization, i.e., the Secretariat. He welcomed the revised funding arrangements as set out in document A/61/810, based on practices. He also commended the Secretary-General for swift action on the issue, which had been clearly pointed out as a matter of urgency by the Steering Committee. Noting a divergence between the Secretary-General’s proposal and the ACABQ’s recommendation, he was ready to constructively engage in negotiations in order to find the best suitable solution in the interest of all stakeholders.
PHILLIP TAULA (New Zealand), speaking on behalf of Canada and Australia (CANZ), said the revised terms of reference helped resolve ambiguities in an earlier draft presented in 2006, by making clear the body’s purely advisory role. Specific textual changes suggested by ACABQ were noted, and would be clarified during informal meetings. Of concern to the Group were the scope of IAAC responsibilities, ensuring the required expertise and the selection process. The Group noted that the ACABQ envisaged a broader scope for the IAAC purview to embrace the full range of Office of Internal Oversight Services activities, but cautioned that the scope should not be so broad that it prevented clear and verifiable qualifications for membership.
He said that the selection process was critical to a good result, and that the decision belonged to Member States. While the Group was open to a range of means of identifying possible candidates, the importance of independent expert verification was stressed. As for strengthening the OIOS, the Group welcomed the restraint with which Ms. Ahlenius had used the supplementary resources provided at the end of 2005. The Group was open to proposals to shift resources to inspection and evaluation functions, but recalled that the General Assembly had provided the 39 positions for specific purposes. It was wise to understand the requirements comprehensively, through the new budget for 2008-09 and in light of the outcome of the review of the investigation function. The ACABQ report offered a “sound path” forward.
As for the budget process for the Office of Internal Oversight Services, he said the Group wanted to avoid the appearance of having to negotiate its resources. The Group envisaged a continuing role for the Secretary-General in preparing the budget, given that the Office was an arm of the Secretariat. Operational independence could be secured through the envisaged role of the IAAC, which would review, and advise the General Assembly on, the Office’s work plan and budget. Independence would be further enhanced by the proposal to give the Office the flexibility to manage its budgetary resources as a pool, and to deploy them in accordance with evolving risk.
MARK D. WALLACE ( United States) noted that the IAAC was intended to assist the General Assembly in discharging its oversight responsibilities with respect to the Office of Internal Oversight Services. The United States believed that the IAAC would perform that function, by providing technical advice to the General Assembly on the scope, results and cost-effectiveness of audit, evaluation and investigations as performed by the Office; providing technical advice to enhance coordination among the United Nations oversight bodies, such as the Joint Inspection Unit and Board of Auditors; and enhance management’s compliance with the Office’s recommendations.
He said the United States disagreed with the view of some, who were concerned that the IAAC could become a “superfluous and unnecessary layer of bureaucracy”. Rather, the IAAC would provide confidence through independent confirmation that the internal oversight mechanism of the Organization was carrying out its mandate effectively. It would shed light on challenges and vulnerabilities faced by the Organization and empower Member States to fulfil their oversight responsibilities, aided by independent expert advice. The United States saw it as essential that candidates nominated to serve on the IAAC possess the highest level of integrity and a high level of technical training in finance, auditing, evaluation and investigation.
He said the United States agreed with the proposal to transfer the management consulting function and corresponding posts from the Office of Internal Oversight Services to the Department of Management. The United States shared the ACABQ’s concern that the incumbents currently carrying out those functions should not be penalized as a result. As for the conversion of 39 positions from general temporary assistance to established posts, the United States would have preferred a different profile of functions to be performed, but it could support ACABQ’s position on the matter.
He said that, by mandating that the Department of Management “would not make comment or give substantive input on the OIOS budget proposal”, the Secretary-General had worked towards fulfilling the commitment to the full operational independence of the Office. The United States understood that the ACABQ’s recommendation was different, but would nonetheless contain provisions for independent and informed views from the IAAC regarding the Office’s budget to the General Assembly. While he continued to support the Secretary-General’s proposal, he was prepared to discuss the ACABQ proposal.
CHO HYUN ( Republic of Korea) said that the success of the IAAC would largely depend on how Member States devised its terms of reference, for which the Secretary-General’s report offered a concrete basis for building consensus. His delegation believed that the IAAC should be authorized to examine the full range of OIOS functions, rather than just the audit functions, in order to fully implement its agreed mandate to assist the General Assembly in discharging its oversight responsibilities. He supported the Advisory Committee’s recommendation that the relevant paragraph of the updated terms of reference be revised to reflect the full range of OIOS functions. As preventing the overlap of functions of the IAAC with other oversight entities was a prerequisite for its successful operation, he agreed with the ACABQ that providing advice to the Assembly on the integrity of audited financial statements of the United Nations should remain the purview of the Board of Auditors.
Concerning criteria for membership, he said that the effectiveness of the IAAC, as rightly pointed out by the ACABQ, would depend on the expertise of its members. He looked forward to an active discussion on criteria for membership based on the proposals of the Secretary-General and ACABQ.
Turning to strengthening the OIOS, he reiterated that the related reform process should be predicated on the understanding that the OIOS, an internal oversight body, was part of the Secretariat and discharged its mandate as conferred by the Assembly under the authority of the Secretary-General. He agreed with the ACABQ that, as its Chief Administrative Officer, the Secretary-General should continue to have responsibility for budgetary matters pertaining to the OIOS. With two reports on the funding of the OIOS before the Committee, delegates must pay attention to their contents, because they were closely related with the future direction of OIOS reform.
In conclusion, he said that it was time to flesh out the agreement at which world leaders had arrived during the 2005 Summit by building consensus on important agenda items before the Committee. His delegation was committed to the reform of current United Nations governance and oversight.
TAKESHI MATSUNAGA ( Japan) said Member States should address and act on the terms of reference for the IAAC in a speedy manner, since that body would considerably enhance the operational independence of the OIOS. There was merit in having the IAAC undertake an expert technical review of the oversight budget and, through the ACABQ, advise the General Assembly of its findings and recommendations. That action would preserve the integrity of the budget review process. Japan joined the ACABQ in saying that the IAAC’s recommendation on the Office of Internal Oversight Services budget be made through the ACABQ.
Turning to the mission and functions of the OIOS, he said any proposal to strengthen the Office must be based on an understanding of its purpose and functions. He recalled that the Office had been created “with a view to strengthening the executive capabilities of the Secretary-General” and would “exercise operational independence under the authority of the Secretary-General” to “assist in fulfilling [the Secretary-General’s] internal oversight responsibilities”. The ACABQ also viewed the Office’s role as that of an internal oversight body that was part of the Secretariat, which discharged the mandates conferred upon it by the Assembly under the Secretary-General’s authority.
He noted that recent proposals on the Office’s funding arrangement (document A/61/810), as well as revised estimates (document A/61/610), were based on a separate policy document containing the Office’s own proposals (document A/60/901), which was also on the table. The OIOS must reveal how it planned to implement its “risk assessment framework”, on which it would base its programme of work and budget, as described in its proposal. As recommended by the Steering Committee, management should acknowledge its responsibility for: setting “risk tolerance”; implementing controls; and managing risk. Japan saw risk management as central to the internal control framework, requiring strong leadership from the Secretary-General and “unequivocal commitment” from programme managers. The ad hoc management of risk and absence of clear responsibility constituted a serious gap that must be addressed quickly.
He said the establishment of a risk management framework should be led by the Secretary-General, and Japan was concerned by the approach set out in document A/60/901 and other reports. He recalled that the General Assembly had endorsed the ACABQ’s recommendations that the Secretary-General be responsible for establishing a “comprehensive risk management framework”, and the audit function be a means to monitor and evaluate the adequacy of risk management efforts. Also, the ACABQ had recommended that the Secretary-General be responsible for maintaining an effective internal control regime at all levels of the Organization, to be built into the accountability framework. The Secretary-General would also report to the General Assembly on the Organization’s risk management and internal control framework on a regular basis.
He voiced agreement with ACABQ’s conclusions that the Secretary-General continue to have responsibility for presenting the Office’s budgetary requirements, and disagreed with the idea of excluding the Secretary-General from preparing the Office’s draft budget. Excluding the Secretary-General would more likely undermine the integrity of the budget review process, rather than enhance the Office’s operational independence. Indeed, operational independence would be secured through the IAAC’s “thorough examination” of the Office’s work plan and budget. As for the revised estimates, Japan agreed with the ACABQ’s conclusions and recommendations. The country’s positions on more specific issues would be explained during informal consultations.
PABLO BERTI OLIVA ( Cuba) aligned himself with the position of the Group of 77 and China and said that the report of ACABQ was a good basis for negotiations. It was his understanding that the issues related to the OIOS must be looked at under the mandate given to that Office in relevant resolutions, and its character as an internal oversight body and a part of the Secretariat discharging its mandates under the authority of the Secretary-General. He would not support any proposal that worked against those parameters. He hoped to receive more information regarding the proposal for conversion of 39 general temporary assistance posts to fixed ones, as the reasons had not been made fully clear. He supported the ACABQ’s comments in that respect. Likewise, he was not in agreement with the proposal regarding providing the Secretary-General with commitment authority of $8 million for extraordinary expenses for oversight services. He saw that matter in light of paragraph 38 of the ACABQ report on the matter, [where the Advisory Committee “does not see the need to establish such a mechanism, given the flexibility that will be built in through the budgetary arrangements proposed”].
He hoped that the name of the OIOS would be maintained in the future, he said. He also hoped to receive more information on a separate examination of investigative functions mentioned by Ms. Ahlenius. He hoped the subject of strengthening and reform of OIOS would not become a permanent item on the agenda and the Committee would be able to act in an expeditious manner, in that regard.
Commenting on the debate, Mr. SACH said he was pleased at the great interest shown today to the proposals before the Committee. There was a general trend recognizing that the time for action had come. There also seemed to be some convergence as far as the IAAC proposed terms of reference were concerned. As for the elements of strengthening the OIOS, as well as proposals for its financing and budgeting arrangements, there was a spread of opinion, particularly where the recommendations of the ACABQ differed from those of the Secretary-General. Secretariat officials would be available to work towards an acceptable arrangement, so that the Committee could arrive at an appropriate conclusion.
* *** *For information media • not an official record