Delegates Urge Better Budget, Financial Management as Fifth Committee Examines Board of Auditors’ Reports on United Nations Finances in 2023
Delegates at the Fifth Committee (Administrative and Budgetary) today urged the Secretariat to bolster its budget and financial management activities after considering 18 reports issued by the United Nations top auditing watchdog as part of its annual review of the Organization’s finances.
The representative of Uganda, speaking on behalf of the Group of 77 and China, said the Group is pleased all entities under review received unqualified audit opinions, yet it is troubled by several issues raised by the Board of Auditors, including loss or waste of resources, inactive funds and idle resources, low efficiency in operations, and challenges in meeting performance targets, among other issues. The Group notes that financial and budget management made up 43.8 per cent of the total key findings in 2023, up from 36.1 per cent in 2022.
“We believe that efficient financial and budget management is crucial for the United Nations to effectively deliver its mandate in addressing global challenges and achieving the 2030 Agenda of Sustainable Development,” he said, urging the Secretariat to expand its efforts to improve its financial and budget management.
He said that the Group is deeply concerned with the significant financial losses at the United Nations Office for Project Services (UNOPS) during the past few years. He pointed to another inappropriate financial derivative hedging transaction with unqualified instruments that has caused a net financial loss of $15.23 million. “We are looking forward to seeing accountability measures to be taken and internal control to be strengthened to avoid the recurrence of such cases,” he added. Concerned with the imbalance of geographical representation of staff in several entities and the resident coordinator system, the Group stressed the need to intensify efforts to achieve equitable geographical representation among staff, with a special focus on unrepresented or underrepresented Member States.
Noting that the Board’s work is in the common interest of all Member States as it enhances the Organization’s transparency, efficiency and compliance with financial management, the representative of China said her delegation is concerned with the ineffective implementation of UN administrative rules, the loss and waste of many resources, and operational inefficiencies. “This is at a time when countries are faced with enormous economic and financial challenges,” she said.
She expressed hope the UN Administration would cherish Member States’ valuable financial contributions, abide by financial and budgetary regulations and improve the use of funds and efficiencies. Turning to the carrying out of Board recommendations, she noted that the overall implementation rate was 51.08 per cent in 2023, down from 2022. In the UN Secretariat, where the rate dropped from 42 per cent to 40 per cent, she hoped officials would act to raise that figure and “set a good example for other entities in the UN system”.
Board of Auditors Reports for 2023
In presenting the Board’s report, GE Sheng, Director of External Audit (China) and Chair of the Audit Operations Committee of the Board, said all 18 entities reviewed received unqualified audit opinions. The United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) received an unqualified opinion with an emphasis of matter relating to the full impairment of all property, plant and equipment in Gaza, totalling $199.81 million.
An emphasis of matter is intended to draw users’ attention to a matter, presented or disclosed in the financial statements, that is fundamental to users’ understanding of the statements.
Mr. Ge said all 18 entities displayed healthy financial performances in 2023, and the overall rate of outstanding recommendations was 51.08 per cent in 2023, a drop of 1.41 per cent compared with 2022 and down 1.7 per cent from 2021. There were 130 key findings identified in the 2023 financial year, compared to 108 in 2022. Findings related to financial and budget management, governance and accountability, and procurement management made up 72.31 per cent of the 2023 findings.
The Board organized the weaknesses negatively impacting operational efficiency and performance into four categories: loss or waste of resources; inactiveness of funds and idleness of resources; inefficiencies in operations; and challenges in meeting targets. He said several organizations, such as the Office of the United Nations High Commissioner for Refugees (UNHCR) and United Nations Development Programme (UNDP), are under financial pressure, with a limited number of major donors, a decline in unearmarked contributions and many earmarked contributions facing greater scrutiny by stakeholders.
Mr. Ge presented the following reports: Financial report and audited financial statements for the year ended 31 December 2023 Volume I, United Nations (document A/79/5(Vol.I)); International Trade Centre (document Vol. III); United Nations University (document Vol.IV); United Nations Development Programme (document A/79/5/Add.1); United Nations Capital Development Fund (document Add.2); United Nations Children’s Fund (UNICEF) (document Add.3); UNRWA(document Add.4); the United Nations Institute for Training and Research (UNITAR)(document Add.5); and Voluntary funds administered by UNHCR (document Add.6).
Also included were Fund of the United Nations Environment Programme (UNEP) (document Add.7); United Nations Population Fund (UNFPA)(document Add.8); United Nations Human Settlements Programme (UN‑Habitat)(document Add.9); United Nations Office on Drugs and Crime (UNODC)(document Add.10); UNOPS (document Add.11); United Nations Entity for Gender Equality and the Empowerment of Women (UN-Women) (document Add.12 ); International Residual Mechanism for Criminal Tribunals (document Add.15); and the United Nations Joint Staff Pension Fund (document Add.16).
Secretariat Delivers Report on Implementation of Board Recommendations
Chandramouli Ramanathan, United Nations Controller and Assistant Secretary-General for Programme Planning, Finance and Budget in the Department of Management Strategy, Policy and Compliance, then presented the Secretary-General’s reports titled “Implementation of the recommendations of the Board of Auditors contained in its report for the year ended 31 December 2023 on the United Nations” (document A/79/328/Add.1). He said it is important to note that the Board issued unqualified audit opinions for all 18 entities that it audited, with an emphasis of matter for UNRWA related to impairment of Gaza property, plant and equipment attributed to the conflict in the Gaza Strip.
Regarding the United Nations Volume I report for 2023, he said that out of the Board’s 72 new recommendations, the Administration requested closure of nine recommendations, and the remaining 63 recommendations were under implementation as of August 2024. The Board’s summary of the implementation status, as of December 2023, showed that of its 220 extant recommendations relating to eight prior financial periods, 88 (40 per cent) had been fully implemented, 17 (8 per cent) had been overtaken by events and 115 (52 per cent) were under implementation. For the fourth year in a row, more than 100 open recommendations were closed by the Board for United Nations Volume I, resulting in a decline in the total number of extant recommendations from 224 to 187. “This reflects the significant efforts made by the administration to close outstanding recommendations,” he added.
Advisory Committee on Administrative and Budgetary Questions (ACABQ) Delivers Its Report on Audits
Abdallah Bachar Bong, Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), presented that body’s related report (document A/79/513). Commending the Board for its high-quality reports, he said the Advisory Committee agrees with the Board’s view and stresses the importance of improving financial and budgetary performance. He reiterated the need for more effective oversight and accountability mechanisms to address underperformance in a timely manner and “greater compliance with regulations and rules to support enhanced mandate delivery across the audited entities”.
Compensation Costs Across UN Common System
Martha Helena Lopez, Assistant Secretary-General for Human Resources, presented the Secretary-General’s report concerning data on system-wide compensation costs (document A/79/497). She said this is the first annual report produced after the General Assembly’s request, at its seventy-sixth session, for comprehensive data on system-wide compensation costs for all staff categories, including all compensation package components. In response, the secretariat of the Chief Executives Board for Coordination laid down a list of categories and subcategories of compensation elements based on the International Civil Service Commission’s booklet United Nations Common System of Salaries, Allowances and Benefits.
Mr. Bong then presented the Advisory Committee’s related report (document A/79/607). Noting the systemic challenges experienced during data collection, the Advisory Committee believes the report’s analytical value could have been enhanced by obtaining disaggregated information from the organizations that could provide this information and grouping the organizations according to demographic size and different levels of data availability and compatibility. To achieve greater transparency and visibility of system-wide compensation costs, he said the Assembly may ask the Commission to work with the UN common system organizations to gradually enhance the granularity and comparability of the comprehensive data related to such costs and relevant expenditures.
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