15 October 2010
General Assembly
GA/AB/3961

Department of Public Information • News and Media Division • New York

Sixty-fifth General Assembly

Fifth Committee

7th Meeting (AM)


Budget Committee Approves Consensus Texts on Contributions Committee, Statistical

 

Report on Financial Situation of United Nations Organizations

 

Also Begins Discussion on Board of Auditors Report,

Takes Up Financing for Special Representative on Sexual Violence in Conflict


After approving two draft texts on financial issues for adoption by the General Assembly, delegates at the Fifth Committee (Administrative and Budgetary) this morning backed the Board of Auditors’ role as a key watchdog of the Organization, while raising concerns about the procedure the Secretariat had used to create the Office of the Special Representative on Sexual Violence in Conflict.


The Committee approved by consensus a draft resolution on the scale of assessments for the apportionment of expenses of the United Nations, and noted the report of the Committee on Contributions and the report of the Secretary-General on multi-year payment plans.


It then approved by consensus a draft decision regarding the statistical report of the United Nations System Chief Executives Board for Coordination on the budgetary and financial situation of the organizations of the United Nations system.


In introducing the reports of the Board of Auditors, Imran Vanker, speaking on behalf of the Audit Operations Committee of the Board of Auditors, said the Board had produced 18 reports for the Assembly’s consideration at its current session.  Sixteen of the reports concerned financial statements of the United Nations and its funds and programmes, and the other report was the Board’s annual report on the Capital Master Plan.  The main findings of those 17 reports were summed up in the eighteenth report, which was a concise summary report.  The Board’s reports also contained some 500 findings and recommendations about such matters as programme expenditure, procurement, information and communications technology, he said.


The Board was concerned about the delay in implementation of International Public Sector Accounting Standards (IPSAS) and the lack of uniformity in relation to national executive expenditures, he said.  Another area of concern was the deficiencies in the management of expendable and non-expendable property, especially with regard to recordkeeping, periodic physical verifications, reconciliations, investigation of discrepancies and taking of prompt corrective action.


Susan McLurg, Chairperson of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced the ACABQ report on the financial reports and audited financial statements and reports of the Board of Auditors, and expressed concern at the number of cross-cutting issues that were still unresolved.  The United Nations and its entities, regardless of their current audit opinions, faced additional operational and reputational risks over the coming bienniums, she said.  The failure to effectively address the existing systemic issues highlighted the need for greater senior management focus and accountability, particularly in view of the new vulnerabilities arising from the implementation of the international accounting standards.  She said the challenges concerning implementation of IPSAS was the Advisory Committee’s greatest concern and it recommended that the Board report on progress on an annual basis.


Commending the Board of Auditors’ work, the representative of Yemen spoke on behalf of the “Group of 77” developing countries and China and generally concurred with its findings, conclusions and recommendations.  He was concerned about the drop in the overall implementation rate to 59 per cent in the biennium 2006-2007, down from 64 per cent for the 2004-2005 biennium, and looked forward to hearing the Secretariat’s reasons for the decline.


Turning to the Board’s audit of 16 organizations, he said the Group of 77 was concerned that the Board had issued modified opinions on seven reports and four of those reports were modified because of weaknesses in the management of non-expendable property, which had been pointed out by the Board for several bienniums.


He said the Group of 77 was also concerned that all entities had delayed implementation of IPSAS to 2012 while the United Nations Secretariat was delaying implementation until 2014, at the earliest.  The shift in accounting standards was to have started in 2010.  The representative of Belgium, on behalf of the European Union, also expressed concern about the delay in the shift to IPSAS and the decline in the overall implementation rate.


The representative of the United States said the Board’s qualified audit opinion of the United Nations Population Fund (UNFPA) and the delay in using IPSAS were among the issues that had generated concern for his delegation.  He called the lack of sufficient supporting documentation for expenditures as “troubling” and said it left UNFPA’s resources unnecessarily vulnerable to fraud and waste.  “The inability to locate and properly account for non-expendable property represented a serious lapse in accountability,” he added.  He called on all organizations to act immediately to address the issue so “donors can have confidence that their contributions are being utilized efficiently and effectively”.


United Nations Controller Jun Yamazaki presented the Secretary-General’s report on the Office of the Special Representative on Sexual Violence in Conflict, saying the report reflected a total of nine new posts to be established effective 1 July 2010, for which additional resources of about $1.23 million were requested.  But, because the report’s consideration was delayed, the figure would have to be revised, according to the number of posts approved after considering the Advisory Committee’s recommendations and the effective date of the posts.  The full cost of the proposed nine posts in the biennium 2012-2013 was now estimated at $3.33 million, he said.


Commenting on the report, the representative of Yemen, again speaking for Group of 77, said the Group was very concerned about the violation of procedure in establishing posts funded through extrabudgetary resources, as was done when creating a post at the Under-Secretary-General level for the Secretary-General’s Special Representative on Sexual Violence in Conflict.  He agreed with the observation of ACABQ on the issue and recalled the provisions of Assembly resolution 35/217, which stated that the creation of all extrabudgetary posts at the D-1 level and above were subject to the concurrence of ACABQ.  The Group of 77 requested a detailed explanation of the reasons for the violation of procedure.


He asked the Advisory Committee, in the context of its forthcoming report on UN Women, to look at the structural challenges that could emerge among UN Women, the Office of Special Representative of the Secretary-General on Children in Armed Conflict and Office of the Special Representative of the Secretary-General on Sexual Violence in Conflict.


Japan’s representative also agreed with the Advisory Committee’s comments on the issue and noted that the Secretariat did not explain the roles of the nine posts requested for the Office.  Japan wanted to know whether the mandates conferred on the Special Representative and UN Women were mutually complementary.


Mr. Yamazaki also introduced the report of the Secretary-General on the implementation of the recommendations of the Board of Auditors contained in its reports on the United Nations and the funds and programmes for the financial period ending 31 December 2009.


Ms. McLurg also introduced the ACABQ report on the establishment of the Office of the Secretary-General’s Special Representative on Sexual Violence in Conflict.


Also speaking on the issue of the Board of Auditors was the representative of Belgium, speaking on behalf of the European Union.


The representative of the Russian Federation spoke before action on the draft resolution on the scale of assessment.  The representatives of Belgium, on behalf of the European Union, and Yemen, on behalf of the Group of 77, spoke after approval of the resolution.


The Fifth Committee (Administrative and Budgetary) will reconvene at 10 a.m. Wednesday, 20 October, to begin discussion on overseas property management, after-service health insurance, the Economic and Social Council and the Committee on the Rights of Persons with Disabilities.


Background


The Fifth Committee (Administrative and Budgetary) had before it the financial report and audited financial statements for the biennium ended 31 December 2009 and report of the Board of Auditors Volume I United Nations (document A/65/5/Vol.I) that include the Board’s financial overview of the Organization for the period under review as well as its findings.


The financial overview noted that for the biennium 2008-2009, total income was $9.71 billion, compared with $7.98 billion for the previous biennium, an increase of 21.7 per cent.  Total expenditure amounted to $9.28 billion, compared with $6.94 billion for the previous biennium, an increase of 33.7 per cent.  This resulted in a net excess of income over expenditure of $585.2 million, compared with an excess of $667.4 million in the previous biennium.  The increase in the Organization’s income was due mainly to an increase in assessed contributions and the increase in overall expenditure was due primarily to the execution of the Capital Master Plan.


The Board found that the International Public Sector Accounting Standards (IPSAS) project team was not fully staffed and a detailed timetable and project plan had not been prepared and approved.  In terms of results-based management of the programme budget, the Board found that the formulation of some objectives lacked clarity with no provision for progress and indicators of achievement were often flawed.  The Board also found that issues relating to procurement and contract management mostly derived from an imprecise legal and procedural framework.  As regarded human resources management, the Board found that staff competencies did not take into account the greater number of peacekeeping operations and that the monitoring of training efforts was inadequate.


The Committee had before it the financial report and audited financial statements for the biennium ended 31 December 2009 and report of the Board of Auditors Volume III International Trade Centre UNCTAD/WTO (documents A/65/5/Vol.III and corr.1) that include the Board’s financial overview of the International Trade Centre (ITC) for the period under review as well as its findings.


The financial overview noted that the total income for the biennium 2008‑2009 was $141.6 million, while total expenditure amounted to $129.5 million, resulting in a net excess of $12.1 million.  This compared to an excess of $4.2 million for the preceding biennium.


The Board found that ITC had not made progress in applying IPSAS to its administrative and accounting procedures.  As regarded the principle of equal sharing of funding of the regular budget of ITC by the United Nations Conference on Trade and Development (UNCTAD) and the World Trade Organization, it was found to be unfavourable to ITC when one of the two organizations approves a smaller contribution than the other.  As regarded results-based management, it was found that ITC did not attempt to assess the qualitative impact of its projects on international trade.  Furthermore, accounting irregularities were found regarding non-expendable property.


The Committee also had before it the financial report and audited financial statements for the biennium ended 31 December 2009 and report of the Board of Auditors Volume IV United Nations University (document A/65/5/Vol.IV) that includes the Board’s financial overview of the United Nations University for the period under review, as well as its findings.


The financial overview noted that for the biennium 2008-2009, total income was $120.14 million, compared with $141.41 million for the previous biennium, a decrease of 15 per cent.  Total expenditure amounted to $156.40 million, compared with $79.44 million for the previous biennium, an increase of 97 per cent.  This resulted in a deficit of income over expenditure of $36.27 million, compared with an excess of income over expenditure of $61.98 million in the preceding biennium.


As for progress related to the implementation of IPSAS, it was noted that the United Nations University would follow the United Nations Development Programme (UNDP) deadline of 2012.  The Board found that a project management manual was not established to monitor project implementation and procurement plans for some projects were not updated in a timely manner.  In addition, it was found that the United Nations University Centre did not prepare contract performance reports on a regular basis.  The UNU Centre offices in Tokyo and Kuala Lumpur were found to have no physical verification of non-expendable property valued at $2.83 million for the biennium 2008-2009. Also, there was no information in the asset records in relation to the location of 125 items valued at $0.38 million. 


The Committee also had before it the financial reports and audited financial statements for the biennium ended 31 December 2009 and reports of the Board of Auditors for the United Nations Development Programme (UNDP) (document A/65/5/Add.1); the United Nations Children’s Fund (document A/65/5/Add.2); the United Nations Relief and Works Agency for Palestine Refugees in the Near East (document A/65/5/Add.3); the United Nations Institute for Training and Research (document A/65/5/Add.4); voluntary funds administered by the Office of the United Nations High Commissioner for Refugees, which is for the year ending 31 December 2009 and not the biennium (document A/65/5/Add.5); the Fund of the United Nations Environment Programme (document A/65/5/Add.6); the United Nations Population Fund (document A/65/5/Add.7); the United Nations Human Settlements Programme (document A/65/5/Add.8); the United Nations Office on Drugs and Crime (document A/65/5/Add.9); and the United Nations Office for Project Services (document A/65/5/Add.10).  All include the Board’s financial overview and findings on the organizations’ financial statements for the period under review.


The Committee also had before it the report and audited financial statements for the biennium ended 31 December 2009 and report of the Board of Auditors forthe International Criminal Tribunal for Rwanda (document A/65/5/Add.11); and the International Tribunal for the Former Yugoslavia (document A/65/5/Add.12).  Each includes the Board’s financial overview and finding of the Tribunals’ financial statements for the period under review.


The Committee also had before it the Secretary-General’s report on implementation of the recommendations of the Board of Auditors contained in its reports on the United Nations for the biennium ended 31 December 2009 and on the Capital Master Plan for the year ended 31 December 2009 (documents A/65/296), issued in accordance with paragraph 7 of resolution 48/216 B, in which the General Assembly requested the Secretary-General to report to it at the same time that the Board of Auditors submitted its recommendations to the Assembly on measures taken or to be taken to implement those recommendations.


The report provides additional comments from the Administration only where required, as well as information on the status of implementation, the office responsible, the estimated completion date and the priority for each recommendation contained in the reports of the Board of Auditors.  In addition, the report contains updated information on the status of implementation of the recommendations of the Board relating to prior periods that were reported by the Board as not having been fully implemented in the annexes to its reports.


Regarding the status of implementation of main recommendations, as of August 2010, 20 out of 25 main recommendations of the Board were in progress.  The Department of Management, in particular, had 13 recommendations, out of which 4 were implemented.


The Committee also had before the Secretary-General’s report on implementation of the recommendations of the Board of Auditors contained in its reports on the United Nations funds and programmes for the financial period ended 31 December 2009 (document A/65/296/Add.1), which transmits to the General Assembly the responses of the executive heads of the funds and programme.


The report provides additional comments from the executive heads only where required, as well as information on the status of implementation, the office responsible, the estimated completion date and the priority for each recommendation contained in the report of the Board of Auditors.  In addition, the present report contains an update on the status of implementation of recommendations of the Board relating to prior periods that the Board considered not to have been fully implemented.


Notable were the United Nations Population Fund (UNFPA) and UNDP.  UNFPA had a total of 44 main recommendations, 7 of which were implemented and 37 of which were in progress.  UNDP had a total of 35 main recommendations, 4 of which were implemented and 31 of which were in progress.


Also before the Committee was the related report of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) on financial reports and audited financial statements and reports of the Board of Auditors for the period ended 31 December 2009 (document A/65/498) that provide observations and recommendations on the reports of the Board of Auditors.


Notable in the report was the Advisory Committee’s concern regarding delays in the implementation of the recommendations of the Board of Auditors by the United Nations and its funds and programmes, indicating an exposure to financial risk and insufficient accountability.  Another concern related to continual delays in IPSAS implementation, signifying that the project was more complex and complicated than had been anticipated.  The fact that the Secretary-General had not been able to implement a comprehensive results-based budgeting framework in view of the planned move towards results-based management was also reason for concern, as was the improper accounting for non-expendable property.  The latter issue posed a financial and reputational risk to the Organization.


Regarding the budget for the Office of the Special Representative of the Secretary-General on Sexual Violence in Conflict, the Committee had two reports before it.


The report of the Secretary General on revised estimates relating to the programme budget for the biennium 2010-2011 for the Office of the Special Representative of the Secretary-General on Sexual Violence in Conflict (document A/64/763), was issued in April 2010 and describes the creation of the Office.  If the Assembly agrees with the proposal to provide resources to support the Office on an ongoing basis, additional resources of $2.28 million would be required under the programme budget for the biennium 2010-2011.  This would include increases under section 1, overall policymaking, direction and coordination of $1.69 million; section 28D, Office of Central Support Services, of $591,600; and section 35, staff assessment, of $202,000, which would be offset by a corresponding amount under income section 1, income from staff assessment.  The provision would represent a charge against the contingency fund.


To function effectively, the Office needs nine posts: one Under-Secretary-General, one D-1, one P-5, one P-4, two P-3 and three General Service staff, the report states.


On the same issue, the Committee also had before it the related ACABQ report (document A/64/7/Add.23),which was issued in June 2010.  It states that ACABQ has considered the Secretary-General’s report and met with representatives of the Secretary-General, whom provided additional information.  Among several Advisory Committee concerns was the procedure followed by the Secretary-General in creating a post at the Under-Secretary-General level for his Special Representative on Sexual Violence in Conflict.  The Committee recalls the provisions of General Assembly resolution 35/217, under which the creation of all extrabudgetary posts at the D-1 level and above are to be subject to the concurrence of the Advisory Committee.  ACABQ is disappointed by the Secretary-General’s apparent failure to respect established procedure in this case and trusts that such situations would be avoided in the future.


Bearing in mind the observations and recommendations contained in the report, ACABQ recommends that the Assembly approve the establishment of seven new posts (one Under-Secretary-General, one D-1, one P-5, one P-4, one P-3, two General Service (other level)) for the Office, effective from 1 July 2010, under the programme budget for the biennium 2010-2011.  It also recommends that the Assembly appropriate $1.96 million under the programme budget for the biennium 2010-2011, comprising increases under section 1, overall policymaking, direction and coordination ($1.47 million); section 28D, Office of Central Support Services ($486,500); and section 35, staff assessment ($169,000), to be offset by a corresponding amount under income section 1, income from staff assessment. The Committee notes that, according to the Secretary-General, this provision would represent a charge against the contingency fund.


Action on Drafts


The committee resumed its discussion on the scale of assessments and had before it a draft resolution (document A/C.5/65/L.3) on the “Scale of Assessments for the apportionment of the expenses of the United Nations”.


Speaking before action, DMITRY CHUMAKOV (Russian Federation) noted that the  report of the Committee on Contributions had not been presented in a balanced way. He also noted that a number of directives had not been implemented.  The Russian Federation, he stated, agreed to take note of that report, but said that if the report next year was also presented in an unbalanced way and if the directives were also not implemented, it was unlikely that his delegation would even take note of the report.


The Committee then approved the draft resolution by consensus.


After approval, JAN DE PRETER (Belgium), speaking on behalf of the European Union, stated that the effective funding of the United Nations was the joint responsibility of each Member State.  The Union would continue to advocate for the need to protect the most vulnerable countries from contributing beyond their capacities to pay, but “one should recognize that all Member States with a capacity to do so should take a larger share in the expenses of the Organization”, he said.


He said the European Union regretted that the Committee on Contributions tended to act along the same “polarized lines” as the Fifth Committee.  Thus, although the report of the Committee on Contributions was an important element towards implementing General Assembly resolution 64/248, it could not be the only element.  He concluded by stating that he looked forward to the review being taken forward in due course.


WALEED M. A. AL-SHAHARI (Yemen), speaking on behalf of the “Group of 77” developing countries and China, said that in light of the statement by the European Union, the Group of 77 reiterated their firm position on the scale of assessments.  The Group of 77 reaffirmed that the Fifth Committee was the sole committee to discuss budgetary, financial and administrative matters, in accordance with the United Nations Charter.


Resolution 64/248, he noted, approved the three-year plan of the scale of assessments from 2010-2012 on the basis of current methodology.  In that regard, the ministers of the Group of 77 had further reaffirmed the principle of capacity to pay as a fundamental criterion in the apportionment of United Nations expenses and recalled that resolution 64/248 rejected any changes to the current methodology for the preparation of the scale of assessments.


He further emphasized that core elements of the methodology of the scale of assessments must be kept intact and were not negotiable.  Also, the Group of 77 stressed that the current ceiling was fixed as political compromise and was contrary to the principal of capacity to pay and a fundamental source of distortion in the scale of assessments.  In that context, he urged the General Assembly to undertake a review of the arrangement, in accordance with paragraph 2 of resolution 55/5C.


The Committee then resumed its discussion of the Administrative and budgetary coordination of the United Nations with the specialized agencies and the International Atomic Energy Agency (IAEA).  The Committee had before it a draft decision (document A/C.5/65/L.4) on the “budgetary and financial situation of the organizations of the United Nations system”, which it approved by consensus.


Financial Reports and Reports of Board of Auditors


IMRAN VANKER, speaking on behalf of the Audit Operations Committee of the Board of Auditors, said that the Board had produced 18 reports for the consideration of the General Assembly at the current session.  Sixteen of those concerned financial statements of the United Nations and its funds and programmes, including 15 for the biennium that ended 31 December 2009 and one on the Office of the United Nations High Commissioner for Refugees (UNHCR) related to the year that ended 31 December 2009.  The other report was the Board’s annual report on the Capital Master Plan.  The main findings of those 17 reports were summed up in the eighteenth report, which was a concise summary report.


Presenting the 16 reports on financial statements as captured in the concise summary, he said that nine of them reflected unmodified audit opinions, indicating that there had been minimal material issues that affected the fair presentation of the financial statements.  In the case of UNFPA, however, the Board considered that the issue relating to the management of nationally executed expenditure constituted a significant risk to the organization.  As a result, the Board had decided to issue a modified audit opinion with a qualification.


He said that in the remaining six reports, as well as in the report on UNFPA, although not material enough to affect the fair presentation of the financial statements, the Board drew attention, by way of emphasis of matter, to several issues that the various administrations needed to address urgently.  Those included the management of expendable and non-expendable property, funding of end-of-service and post-retirement liabilities and losses on investments (both realized and unrealized) due to the recent global market turmoil.


The Board’s detailed long-form reports also reflected several matters of general concern, he continued.  Those included the delay in the implementation of IPSAS, which, in the case of the United Nations Secretariat, had been pushed back from 2012 to 2014, mainly due to the new enterprise resource planning system not being in place.  Another was the disclosure and funding of after-service health insurance and end-of-service liabilities.  The Board, in each report, provided its response to the request of the legislative body to validate the amounts disclosed for end-of-service liabilities and also noted that, in organizations where the recording of liabilities led to negative equity, there was a risk that they might not be in a position to discharge their liabilities as, and when, they were due unless funding strategies were in place to meet those liabilities.


Another matter of general concern was the lack of uniformity in relation to nationally executed expenditures, he went on.  Some organizations accounted for cash transfers to implementing partners initially as advances, while others treated them as expenditures, similarly, some organizations required third-party audit certificates to substantiate expenditure, while others did not.  The final area of general concern was deficiencies in the management of expendable and non-expendable property, especially with regard to recordkeeping, periodic physical verifications, reconciliations, investigation of discrepancies and taking of prompt corrective action.


The Board’s reports also contained some 500 findings and recommendations about such matters as programme expenditure, procurement, information and communications technology, he said.  As regards the follow-up on previous recommendations, the Board found that of the 518 recommendations made in the pervious biennium, 305 had been fully implemented, 169 were partially implemented and 16 had not been implemented, while 28 had been overtaken by events.  The Board noted little overall change in the rate of implementation of recommendations.


JUN YAMAZAKI, United Nations Controller, introduced the report of the Secretary-General on the implementation of the recommendations of the Board of Auditors contained in its reports on the United Nations and the funds and programmes for the financial period ended 31 December 2009.  The report, he noted, contained information regarding the United Nations and the Capital Master Plan, while addendum 1 provided information on the United Nations funds and programmes.


In respect to the target dates for implementing recommendations in the report, he noted that those were the responsibility of the programme managers and had, thus, been assigned by them.  That said, some of the target dates depended on the implementation of IPSAS or the enterprise resource planning system.  With regard to prioritization, he highlighted that those recommendations referred to in the report as “main” recommendations received the highest priority.  In addition, in the interest of streamlining the report, only information on those areas that benefited from further clarification was provided, with the exception of prior recommendations not fully implemented.


As regarding recommendations addressed to the United Nations, the Secretariat would provide further information and explanation on specific issues if and when necessary.  Information on recommendations addressed to the funds and programmes, he stated, would be the responsibility of the respective executive heads.


SUSAN MCLURG, Chairperson of the Advisory Committee on Administrative and Budgetary Questions, introducing the ACABQ report on the financial reports and audited financial statements and reports of the Board of Auditors, expressed concern at the number of cross-cutting issues that remained unresolved.  The United Nations and its entities, regardless of their current audit opinions, faced additional operational and reputational risks over the coming bienniums, she said.  The failure to effectively address the existing systemic issues highlighted the need for greater senior management focus and accountability, particularly in view of the new vulnerabilities arising from the implementation of IPSAS.  Enhanced efforts, therefore, needed to be made to minimize the risks to the Organization.


Highlighting the major issues of concern, she referred to the delays that had occurred in respect of the implementation of IPSAS and said that strong leadership by senior management was required to ensure that all preparatory tasks were completed in a timely manner and that no further slippage in the dates of implementation occurred.  The Board of Auditors had highlighted the current inconsistencies in the presentation of financial statements among United Nations entities, which ranged from their layout to the accounting policies used.  That situation made comparison of the statements of different entities problematic.  It was, therefore, important that the implementation of IPSAS be done in a manner which remedied the current divergence of accounting policies rather than perpetuated them.  The Board of Auditors was uniquely placed to pay a key role in ensuring that that uniformity was achieved.  ACABQ encouraged the Board to provide advice and guidance on matters of interpretation of IPSAS standards, when requested by the United Nations of its entities.


A second area of concern was improper accounting for expendable and non-expendable property, which was a recurring issue in audit reports on the United Nations and its entities, she went on.  While the Board noted efforts to improve in that area, the continued weaknesses that had been found demonstrated the need for more effective senior management action.  Given that the value of non-expendable property in the United Nations and its entities exceeded $1 billion, the weaknesses in its accounting represented a clear financial risk that needed to be addressed.


She further highlighted the Board’s comments on implementation of results-based budgeting where a variety of weaknesses had been noted.  That was of particular concern, since, despite the time and resources devoted to that area, those shortcomings mirrored similar findings in a number of examinations carried out by various oversight bodies over several years.  Greater efforts were needed if results-based budgeting was to provide the benefits that its implementation intended.  In addition, any move to results-based management would be compromised if the current problems were not remedied.


In closing, she said the challenges concerning implementation of IPSAS was the Advisory Committee’s greatest concern.  As such, it recommended that the Board report on progress on an annual basis.


Mr. AL-SHAHARI (Yemen), speaking on behalf of the Group of 77 and China, said the Group gave great attention to the work of the Board of Auditors, which was a pillar of the United Nations oversight mechanism.  He commended the Board for refining the presentations of the reports and appreciated the level of detail and reader friendly nature of the reports.  The Group of 77 generally concurred with the findings and recommendations of the Board, which had considered the root causes and possible impacts, and made recommendations to address the gaps it had observed.  The Group of 77 was encouraged by the constant efforts of the Board to follow up on the implementation of its recommendations and shared the Board’s concern that little change had taken place in the overall implementation rate of the Board’s recommendations.


He noted that, of the total 518 recommendations made in the biennium 2006‑2007, 305 recommendations, or 59 per cent, had been fully implemented.  That was a drop in the rate of implementation compared to the 2004-2005 biennium, of which 64 per cent of the 788 recommendations had been fully implemented.  He looked forward to hearing from the Secretariat the reasons for the decline.  He called on all entities that had not fully implemented the recommendations to do so, with more focused attention on recurring and outstanding recommendations.


Regarding financial issues, the Group noted that, for the 16 organizations audited, the Board had issued unqualified audit opinions for nine entities, and modified audit reports with one or more emphasis of matter paragraphs for seven entities, including one entity that had also received a qualified audit opinion.  He noted with concern that, of seven reports that had modified opinions, four of the reports were modified because of weaknesses in the management of non-expendable property, which had been pointed out by the Board for several bienniums.


He noted that eight funds and programmes had recorded a positive change in the status of their audit opinions in the biennium 2008-2009.  The Group of 77 was concerned that the implementation of IPSAS by all entities would be delayed from 2010 to 2012 and, at the Untied Nations, to 2014 by the earliest.


Regarding after-service health insurance liabilities, he noted that the values of the liabilities had dropped compared to 31 December 2007 and he hoped to obtain more clarification on the change in accounting policies and estimation.  The Group of 77 was very concerned that the cash and investment holdings in the United Nations and its funds and programmes were as high as $18 billion, which did not even include the $33 billion of the United Nations Joint Staff Pension Fund (UNJSP).  The Board of Auditos had qualified its opinion on the financial statement of UNFPA, but he noted that UNFPA was a decentralized organization, and that nationally executive expenditure came with a level of complexity and UNFPA had started to address the issues raised by the Board.  The Group of 77 concurred in general with the findings, conclusions and recommendations of the Board on other issues.


Mr. DE PRETER (Belgium), speaking on behalf of the European Union, stated that the Union attached great importance to the role of the Board of Auditors and welcomed its approach to use a consistent format in the preparation of its reports with a concise summary of its principle findings.


He said the Union was pleased to see that the International Tribunal for the Former Yugoslavia and the United Nations Office for Project Services (UNOPS) had recorded a positive change in the status of their audit opinions, but noted with concern that the Board had issued a qualified audit opinion for UNFPA, as a result of the weakness in the audit process of the nationally executed expenditure modality and the improper accounting for non-expendable property.  Further, the Union regretted that all the entities had delayed their implementation of IPSAS until January 2012, or, as in the case of the United Nations Secretariat, until January 2014.  Last, the Union noted with concern that, compared to the previous biennium, the overall implementation rate of the recommendations of the Board had decreased.


JOSEPH H. MELROSE (United States) said his country was concerned by the findings related to UNFPA, which had given rise to a qualified audit opinion.  The lack of sufficient supporting documentation for expenditures was troubling and left the entity’s resources unnecessarily vulnerable to fraud and waste.  The Boards recommendation had to be addressed without delay.


The United States was concerned about the treatment of non-expendable property by the United Nations and its funds and programmes, and the recurring recommendations of the Board on the subject.  The inability to locate and properly account for non-expendable property represented a serious lapse in accountability and he called on all organizations to take immediate action to address the issue, so donors could have confidence that their contributions were being used efficiently and effectively.


He said the United States was also concerned, and would continue to monitor, the amount of cash and investment holdings in the United Nations and its funds and programmes, as shown in document A/65/169, table 2.  About $18 billion in available cash resources were held as either investments or cash in the organizations.  As noted in the Board’s report, the management of those funds was a significant responsibility.  The organizations had to ensure that the strong internal controls and management existed to prevent any fraud, waste, or abuse of those funds.  Such large cash balances exposed the organizations to significant financial risk.


The United States continued to be disappointed by the slow efforts made by various agencies in preparing for the implementation of IPSAS and shared the Board’s concern that, if appropriate measures were not taken today to prepare administratively for IPSAS requirements, the Untied Nations as a whole would be at risk of significantly failing to meet the standards.  Though the implementation might seem far off in the future, with the delays in the enterprise resource planning systems, agencies needed to redouble their preparation efforts.  Since the IPSAS implementation would change how liabilities were recorded on the financial statements, the Organization would be faced with some important changes on how to address the accrued after-service health insurance and end-of-service liabilities.  It was imperative to take a balanced approach to meet the Organization’s obligations in a financially prudent manner.


He emphasized the Board’s recommendation to the Pension Fund to enhance description and disclosure in the financial statements of the underlying realized gains and losses, as well as the unrealized positions.  Full disclosure was a matter of good governance and the proper thing to do.


Finally, he reiterated that effective oversight could only make the United Nations activities stronger.  Improperly disbursed funds could be recovered, inefficient practices terminated and culpable officials held accountable. He encouraged the Chairperson of the Board of Auditors to keep sending representatives to the executive board meetings of the funds and programmes, as well.


Office of Special Representative on Sexual Violence in Conflict


Mr. YAMAZAKI, United Nations Controller, introduced the Secretary-General’s report on the revised estimates relating to the programme budget for the biennium 2010-2011 for the Office of the Special Representative of the Secretary-General on Sexual Violence in Conflict, pursuant to paragraph 4 of Security Council resolution 1888 (2009).  The report, he stated, described the rationale for a concerted focus on sexual violence in conflict, as well as the functions and requirements of the Office.  He noted that the Secretary-General had appointed Margot Wallstrom as his Special Representative on Sexual Violence in Conflict and that the initial funding for the Office would be provided by the United Nations Action multi-donor trust fund.


He further noted that a total of nine new posts representing additional resources of $1.23 million had been proposed with an effective date of July 2010, but due to the postponement of the consideration of the report that figure would have to be revised, pending approval and effective dates.  The full costing of the proposed nine posts for the biennium 2012-2013 was currently estimated at $3.33 million.  In addition to the post resources, he said, other costs related to the functioning of the Office would be required, representing a charge against the contingency fund for the biennium 2010-2011.


Ms. MCLURG, Chairperson of ACABQ, introduced the Advisory Committee’s report on the revised estimates relating to the programme budget for the biennium 2010‑2011 for the Office of the Special Representative of the Secretary General on Sexual Violence in Conflict, noting that ACABQ had approved seven of the nine posts proposed.  It also recommended approval of the non-post resources requested.


She drew attention to the Advisory Committee’s disappointment that the Secretary-General had established an extrabudgetary post at the Under-Secretary-General level without the Advisory Committee’s prior agreement, in defiance of established procedures.  In reference to the role and functions of the Office of the Special Representative, ACABQ expected that the Special Representative would develop a work plan for the biennium 2010-2011 and share with the General Assembly information about the activities she intended to undertake.


Mr. AL-SHAHARI (Yemen), speaking on behalf of the Group of 77 and China, said the Group of 77 was very concerned about the violation of the procedure for establishing posts funded through extrabudgetary resources, in this case the Office of the Special Representative on Sexual Violence in Conflict, at the Under-Secretary-General level.  He concurred with the observation of ACABQ on the issue and recalled the provisions of Assembly resolution 35/217, which stated that the creation of all extrabudgetary posts at the D-1 level and above were subject to the concurrence of ACABQ.  The Group of 77 requested a detailed explanation of the reasons for the violation of procedure.  In that context, the Group of 77 demanded greater transparency and accountability over extrabudgetary resources and urged that all extrabudgetary resources be administered and managed with the same rigor as regular budget funds.


He said that, with the recent creation of UN Women and the work being carried out by the Special Representative of the Secretary-General on Children in Armed Conflict, the Group of 77 trusted that the Secretary-General would take all steps necessary to ensure the maximum level of cooperation, coordination and integration of the efforts among those entities in order to avoid duplication and overlaps.  In that regard, the Group of 77 kindly asked ACABQ, in the context of its forthcoming report on UN Women, to look into the structural challenges that could arise among those entities.


JUN YAMADA (Japan) welcomed the appointment by the Secretary-General of Margot Wallström as his Special Representative on Sexual Violence in Conflict, and hoped that she would implement the mandates conferred on her by the Security Council in its resolution 1888 (2009).


He agreed with the comments of ACABQ in its report that the information provided in the Secretary-General’s report, particularly section III, was general in nature and he, thus, hoped to hear more details about the activities and work plan of the Office of the Special Representative for the current biennium.  He also noted that there was no explanation as to the roles of the nine posts requested for the Office.  Further, Japan wanted to hear from the Secretariat as to whether the mandates conferred on the Special Representative and UN Women were, in fact, mutually complementary.  He also expressed Japan’s disappointment that, in creating the post of the Special Representative, the Secretary-General had not followed the procedure established by the General Assembly.


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For information media • not an official record