Board of Auditors Holds Seventy-First Regular Session at New York Headquarters, 25-26 July

The Board of Auditors has approved 28 audit reports during its seventy-first regular session at the United Nations Headquarters in New York, held from 25 to 26 July.

The 28 reports approved by the Board contained a wide range of findings and recommendations intended to improve the cost-effective delivery of mandates.  Some highlights are included below:

• This year the Board received all the financial statements in a timely manner.Of the 20 entities’ financial statements that were audited for the General Assembly, all received unqualified audit opinions⁽¹⁾.  Of those, the International Criminal Tribunal for Rwanda and International Criminal Tribunal for the Former Yugoslavia received an unqualified opinion with an emphasis of matter.
• This was the first year of preparation of financial statements using Umoja fully for nine entities⁽²⁾.This represents that Umoja is now stabilized for preparation of financial statements.  The implementation of Umoja, globally, across more than 40,000 staff in 400 locations, is a significant achievement for the United Nations given the project’s complexity and difficult start.It is common for major enterprise resource planning implementations to experience problems, but the decision to prioritize adherence to the deployment schedule above the need to ensure organizational readiness has increased the scale of problems encountered.  The Board noted an improvement in the methodology for the assessment of benefit realization from Umoja with a shift from the top-down approach to the bottom-up approach. However, there is a need to assess the total cost of ownership of Umoja, including both the direct costs, as well as the indirect costs including training cost.
• The Board observed from the analysis of the financial statements of the 19 audited entities⁽³⁾ that eight — United Nations Development Programme (UNDP), United Nations Environment Programme (UNEP), United Nations Human Settlements Programme (UN-Habitat), United Nations Office of the United Nations High Commissioner for Refugees (UNHCR), United Nations Office on Drugs and Crime (UNODC), United Nations Office for Project Services (UNOPS), International Criminal Tribunal for Rwanda and International Residual Mechanism for Criminal Tribunals — closed the financial year with a surplus, while 11 — United Nations Vol. I, United Nations Peacekeeping Operations, International Telecommunications Union (ITU), United Nations Capital Development Fund, United Nations Population Fund (UNFPA), United Nations Children’s Fund (UNICEF), United Nations Institute for Training and Research (UNITAR), United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), United Nations University (UNU), United Nations Entity for Gender Equality and the Empowerment of Women (UN-Women) and International Criminal Tribunal for the Former Yugoslavia — recorded a deficit. Of these 11 entities, 6 entities — United Nations Vol. I, United Nations Peacekeeping Operations, UNITAR, UN‑Women, UNFPA and the International Criminal Tribunal for the Former Yugoslavia — recorded a deficit in contrast to the surplus recorded in the previous financial year due to factors, such as increase in operating expenses, decrease in voluntary contributions and accounting adjustments to revenues, mismatch between the budget allocation and assessed contribution.
• The Board noted that employee benefit liability is one of the major liabilities for most of the entities. For 17 entities, employee benefit liability is more than 25 per cent of the total liability, whereas, for 11 entities, employee benefit liability is more than half of the total liability. It is as high as 93.79 per cent in the United Nations Capital Development Fund and more than 75 per cent of total liability for United Nations Vol. I, UNFPA, UNITAR, UNRWA and UNHCR. It is important for entities to have a funding plan for this liability. Absence of the funding arrangement would make it very difficult for entity to make payment of the employee benefit liabilities in the long term. The Board noted that six entities⁽⁴⁾ have no funding arrangements for the employee benefit liability and UNICEF has only a partial funding arrangement.
• All the reporting entities believe they have adequate strategies in place to prevent fraud. The Board noted that seven entities — United Nations Vol. I, ITC, UNEP, UNITAR, UNODC, International Criminal Tribunal for the Former Yugoslavia and the International Residual Mechanism for Criminal Tribunals — have not conducted fraud risk assessments. Without fraud risk assessment, it would be difficult for the entity to identify the vulnerable areas to the fraud and procedural weaknesses which may lead to fraud. Further, it would be difficult for these entities to develop appropriate strategies to prevent fraud in the Organization. The Board plans to keep this function under comprehensive review in the next year.
• The Board noted that not all entities under review have formulated a long‑term strategy on their role in the implementation of Sustainable Development Goals. Similarly, many entities have not clearly allocated budget for supporting their role in implementing the Sustainable Development Goals. Without clear allocation of the budget, it would be difficult to finance the activities related to the implementation of the Sustainable Development Goals.
• The Board reviewed the status of old recommendations and noted that the overall rate of implementation of the old recommendations have increased to 45 per cent in 2016 over 43 per cent in 2015. The Board is concerned over the number of recommendations pending for more than two years. There are 53 recommendations pending for more than two years, which is 9 per cent of the total recommendation outstanding as at year ending 31 December 2015.

Several other topics are covered in the Board’s individual reports of entities. Further background information on the Board is available on the United Nations Board of Auditors’ website at www.un.org/en/auditors/board/index.shtml.  The Board’s reports covering the financial year ended 31 December 2016 will be available on the website between August and September 2017.

List of Members

The Board comprises Shashi Kant Sharma, Comptroller and Auditor General of India (Chair); Mussa Juma Assad, Controller and Auditor General of the United Republic of Tanzania; and Kay Scheller, President of the German Federal Court of Auditors.  Each member has a non-consecutive tenure of six years.

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⁽¹⁾ This excludes the nine reports of United Nations Framework Convention on Climate Change, United Nations Convention to Combat Desertification, ESCROW, United Nations Compensation Commission (reporting to other governing bodies) or topic specific reports (Capital Master Plan, UMOJA, Information and Communications Technology), the Concise Summary Report and UNRWA Staff Provident Fund, but includes the Peacekeeping Operations report which was finalized in January 2017.

⁽²⁾ United Nations Volume I, United Nations Peacekeeping Operations, UNEP, UN-Habitat, UNODC, ITC, ICTR, ICTY and IRMCT.

⁽³⁾ The United Nations Joint Staff Pension Fund is not included because it follows International Accounting Standard 26 for the reporting framework and International Public Sector Accounting Standards for accounting treatments.

⁽⁴⁾ United Nations Vol. I, United Nations Peacekeeping Operations, ITC, UNEP, UNRWA and UNITAR.