PERCEIVED SHORTCOMINGS IN UNHCR FINANCIAL MANAGEMENT SCRUTINIZED IN FIFTH COMMITTEE

22 October 2001
GA/AB/3467

PERCEIVED SHORTCOMINGS IN UNHCR FINANCIAL MANAGEMENT SCRUTINIZED IN FIFTH COMMITTEE

 

 

 

 

 

 

 

Fifty-sixth General Assembly                                  GA/AB/3467

Fifth Committee                                             22 October 2001

15th Meeting (AM)

 

 

PERCEIVED SHORTCOMINGS IN UNHCR FINANCIAL MANAGEMENT

SCRUTINIZED IN FIFTH COMMITTEE

 

UN Controller Warns That Inflation, Exchange Rate

Fluctuations Could Increase 2002-2003 Budget to $2.7 Billion

 

 

As the Fifth Committee (Administrative and Budgetary) began its consideration of the results of the audit of voluntary funds administered by the Office of the United Nations High Commissioner for Refugees (UNHCR), several speakers expressed concern over the fact that the Board of Auditors had been obliged to qualify its audit opinion in regard of some $43.5 million, and urged the UNHCR to promptly implement the auditors’ recommendations.

 

      The reports were introduced by Marieta S.F. Acorda, Director of External Audit, Philippines, and Chairperson of the Audit Operations Committee, on behalf of the Chairman of the United Nations Board of Auditors; and Joseph E. Connor, Under-Secretary-General for Management.

 

[The audit covered both financial and management issues, and reports before the Committee stress the need for the UNHCR to have stricter control over the operations of its field offices and implementing partners.  As a result of certain irregularities it observed, the Board of Auditors qualified its audit opinion on

the financial statements amounting to some $43.5 million.  Although the number of missing reports on outstanding advances to implementing partners had been reduced

by some 88 per cent, some $55.5 million remained outstanding in advances to implementing partners for the years 1994 to 2000.  One country denied the UNHCR access to accounting records of implementing partners.]

 

Speaking on behalf of the European Union and associated States, the representative of Belgium said that despite the difficult circumstances in which the UNHCR must work, its administration should promptly and effectively improve monitoring and stringent application of accounting rules, especially at the level of local offices and implementing partners.  The Union was also concerned over the deterioration of the financial situation of the UNHCR, and asked the Office to align its expenditure with expected revenue.

 

The representative of the United States said that the audit was an essential component of ongoing efforts to improve financial management and accountability within the Organization.  UNHCR’s mandate and its ability to respond flexibly to humanitarian crises were being put to the test in many places today.  The UNHCR

 

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Fifth Committee                     - 1a -              Press Release GA/AB/3467

15th Meeting (AM)                                        22 October 2001

 

 

should determine why a country was denying it access to the accounting records, and if such denial reflected a deliberate lack of cooperation with the UNHCR, the issue should be addressed by the High Commissioner and, if necessary, the Secretary-General.

 

On the appropriateness of the UNHCR engaging in projects which did not directly assist refugees, Norway’s representative said that the distinction between core and non-core activities could only serve as a guide to what part it should play in an international division of labour.  It should not be an excuse for the international community to neglect such important tasks as rebuilding local communities.  She also reiterated her country’s concern over UNHCR’s excessive reliance on voluntary funding from a small group of countries, with

10 donors providing 90 per cent of the contributions.

 

Also this morning, as the Committee concluded its general discussion on the proposed budget for 2002-2003, United Nations Controller Jean-Pierre Halbwachs said that, while it was difficult to provide an exact figure, the budget could amount to some $2.7 billion, following recosting.  In accordance with the established procedure, the revised amount to be provided in early December would take account of inflation and exchange fluctuations, as well as pending decisions by relevant United Nations bodies.

 

Wrapping up the debate, he said that 38 interventions had been made on this important issue.  Many speakers had addressed the question of the results-based format, which represented a continuing effort to shift the focus from process to achievements.  Useful comments had been made on how to improve the results-based budgeting, and he looked forward to the advice and guidance of the Fifth Committee on the matter.

 

Statements on the proposed budget for the next biennium were also made by the representatives of Bahrain, Ethiopia, Croatia and Cuba.

 

In other business, the Committee continued its consideration of the question of honorariums payable to members of organs and subsidiary organs of the United Nations.  [According to the report before the Committee, the amount of such payments had not been increased since 1981, and the Secretary-General had proposed to increase them by 25 per cent.]

 

The representative of the United States questioned the need to consider the issue, for the Committee had not requested the report on the matter.  Following an inquiry by the representative of Syria, the Controller explained that the question of honorariums was not covered by the staff rules as it did not refer to staff members.  The Secretariat wanted a clear decision from the Committee whether it agreed to raise the current level of honorariums.

 

      The Committee will continue its discussion of the Board of Auditors’ reports and begin its consideration of the pattern of conferences at 10 a.m. tomorrow,

23 October.

 

 

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      Background

 

      This morning, the Fifth Committee (Administrative and Budgetary) was expected to take up a series of the Board of Auditors’ reports and conclude its debate on the proposed programme budget for 2002-2003.  The budget was introduced to the Committee by the Secretary-General on 15 October.  (For detailed information, see background Press Release GA/AB/3458 of 12 October.)  Also this morning, the Committee was to continue its consideration of reports on honorariums (first introduced on 15 October -- see Press Release GA/AB/3459) and the Development Account (see Press Release GA/AB/3457 of 11 October).

 

      The Committee had before it a report of the Board of Auditors on voluntary funds administered by the Office of the United Nations High Commissioner for Refugees (UNHCR) for the year ending 31 December 2000 (document A/56/5/Add.5).  The document states that although the UNHCR had reduced the level of current biennium expenditure unsubstantiated by subproject monitoring reports by some $186.5 million, some $55.5 million remained outstanding in advances to implementing partners for the years 1994 to 2000.  Serious inadequacies were also identified in the verification and validation of some $32 million incurred by implementing partners.  One country denied UNHCR access to accounting records of implementing partners with expenditures totalling about $3 million.  The Board

has qualified its audit opinion based on a limitation of scope regarding some $43.5 million of implementing partner expenditure. 

 

The auditors state that while the UNHCR had succeeded in securing independent audit certificates to cover about $330 million (79 per cent) of expenditures incurred during 1999, some $90 million remained uncertified as of  May 2001.  Action was also taken to strengthen control over 42 major implementing partners.  The income of the UNHCR had declined by some 28 per cent since 1996.  As of 31 December 2000, reserves and fund balances had declined by about 53 per cent to $127 million. 

 

The report also comments on UNHCR's new integrated information system.  The Board notes that, in its initial appraisal of this project, the UNHCR did not rank its likely benefits and failed to identify the extent of the modification needed to make the software meet the needs of the UNHCR.  Although the UNHCR negotiated benefits to offset some of the costs, it spent some $781,651 for the purchase of some unnecessary modules.  In selecting a contractor to implement the project,  the Office had rejected a bid of $8.9 million, choosing instead a bid of

$17.9 million.  After almost three years and expenditure of $8.7 million against  a total budget of some $34 million, the integrated system project remains

non-operational.

 

The Board also notes that, in some countries, the UNHCR engaged in infrastructure development, including road building and bridge construction, to assist whole populations, rather than focusing on the specific needs of refugees.  The High Commissioner had yet to establish a reliable system for establishing accurate information on the size and characteristics of refugee populations.

 

In its recommendations, the Board pointed out the need to strengthen oversight of field offices, which should engage in thorough subproject monitoring.  Those efforts should include verification of supporting documentation and bank statements, as well as review of audit certificates for projects and follow-up on any significant issues.  The UNHCR should establish realistic milestones against which progress can be measured.  A single line of project management should also be developed, through which staff can report on all aspects of integrated system project development.  Also recommended are reviews of appropriateness of projects not providing direct assistance to refugees, and collection of accurate information on the size and characteristics of refugee populations.  Subproject agreements should include clearly stated and quantified objectives.

 

      Also before the Committee were several reports concerning the implementation of the Board’s recommendations by various organs of the United Nations. 

 

The first of those documents contains the Secretary-General’s second report on the matter (document A/56/66), which provides detailed information on measures in response to the auditors’ recommendations for the period ended 31 December 1999 that were not fully implemented by September 2000.  The document contains information concerning various United Nations bodies mentioned in the Board’s reports.

 

For instance, the report states that a financial task force has been established within the Office for the Coordination of Humanitarian Affairs to monitor the Disaster Relief Assistance Fund.  An overall review of the policy on the utilization of unearmarked funds is being undertaken in order to formulate final guidelines on their use in the near future.  The report indicates that the Office of Programme Planning, Budget and Accounts has been aggressively pursuing recovery of all receivables.  At the end of 2000, the amount outstanding for more than one year was reduced to $4.45 million from $5.43 million on 31 December 1999 (those amounts exclude $16.6 million representing an unpaid contribution by China, which has been held in a special receivable account pursuant to a relevant Assembly resolution).

 

The document further reports that the Integrated Management Information System (IMIS) team and the Office of Programme Planning, Budget and Accounts agreed with the recommendation to consolidate the accounts for 2000.  Through further deployment of IMIS, this approach was implemented for the accounts of the United Nations Offices in Geneva and Vienna, the Economic and Social Commission for Western Asia (ESCWA), the Economic Commission for Latin America and the Caribbean (ECLAC), and the Economic Commission for Africa (ECA).  Among other recommendations in the process of implementation, the report mentions those for the Office of Legal Affairs to review all new contracts over $200,000 not identical to previous ones; for closer coordination between the Procurement and General Legal Divisions; for the monitoring of trust funds; and for a review of legal fee caps to strengthen control over the expenditures for outside legal counsel.

 

In an addendum to the above report (document A/56/66/Add.1), the Secretary-General transmits to the Assembly responses from executive heads of numerous organizations and programmes involved, including the International Trade Centre/ United Nations Conference on Trade and Development (UNCTAD)/World Trade Organization (WTO), the United Nations University, the United Nations Development Programme (UNDP), the United Nations Children's Fund (UNICEF), the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), the International Tribunals for Rwanda and the Former Yugoslavia, the United Nations Institute for Training and Research (UNITAR), and several specialized funds.

      [Of particular interest are the responses from the UNDP, the United Nations Population Fund (UNFPA), and United Nations International Drug Control Programme (UNDCP), on which the Board had qualified its certification for the period ending 31 December 1999.  Following remedial action, during its resumed fifty-fifth session, the Fifth Committee returned to the financial statements of those organizations, recommending that the Assembly accept the Board’s qualified opinions.  The organizations in question were requested to adhere to plans they had submitted to correct the deficiencies observed by the auditors and to take all the necessary steps to prevent them from occurring again.  For background information and previous reports on the matter, see Press Release GA/AB/3431 of  20 March 2000.]  

 

      According to the document, the UNDP, the UNFPA and the UNDCP have taken steps to address the reasons that led to the qualified audit opinions.  They include systematic follow-up with the country offices by the UNDP as part of its efforts to explore the reasons for non-compliance with the audit procedures for nationally executed project portfolios.  Among other measures, the Programme has also completed reconciliation of the main contribution account at the end of 2000 and made the necessary adjustments to its financial records. 

 

It has also strengthened its monitoring of projects and set clear timetables for the completion of unfinished tasks. On the recommendation that the UNDP should establish a separate database of potential suppliers, the Programme indicates that such a measure might not be effective.  Instead, it has an informal roster of potential suppliers and takes advantage of the roster maintained by the Procurement Division of the United Nations.

 

      Other actions include closer monitoring and evaluation of audit plans and their timely submission.  In particular, the UNFPA reports that it is committed to strict financial and budgetary control and undertakes to ensure an operational reserve of at least $50 million by the end of the biennium.  It has requested country offices and headquarters divisions to prepare annual audit plans and required their managers to ensure that a minimum of 90 per cent of annual government- and NGO-executed expenditures are audited.  Regarding the recommendation to set expenditure ceilings within the expected level of income, the Population Fund indicates that it might not be the most efficient solution and that it will explore more appropriate and efficient mechanisms to control the level of cash disbursements.

 

      The UNDCP states that it has remained in close contact with the UNDP on securing the necessary audit reports for nationally executed projects and has also engaged local accounting firms to ensure that outstanding audit certificates are submitted.  Bank reconciliations are now carried out on a regular basis, with outstanding items cleared as soon as possible.  Help is being provided to national governments in drawing up national drug control strategies and plans.  The Programme also continues to pursue the implementation of the auditors’ recommendation to prepare procurement plans in collaboration with responsible procuring agencies, such as the United Nations Office in Vienna, the United Nations Office for Project Services (UNOPS) and the UNDP.

 

Also before the Committee was the Secretary-General’s note (document A/56/132) transmitting a report of the Board on the implementation of its recommendations relating to the biennium 1998-1999.  The report covers

15 organizations on which the Board reports on a biennial basis and includes the auditors’ comments, based on the reports of the Secretary-General summarized above.

 

According to this document (updated as of 25 June 2001), the Board had made general recommendations to specify timetables for the implementation of its suggestions; to disclose office holders to be held accountable; and to strengthen oversight of audit implementation.  In its resolution 52/212 B, the Assembly emphasized that primary responsibility and accountability for the implementation of the auditors’ recommendations should remain with department heads and programme managers.

 

      The auditors point out that, in general, the organizations operate effective oversight mechanisms through establishing special committees or including a monitoring requirement in the terms of reference of existing bodies.  During the reporting period, only one of the 15 organizations involved (the Pension Fund) did not present implementation timetables to the Board.  Another one of those organizations -- the International Criminal Tribunal for Rwanda -- did not provide information on office holders to be held accountable for non-compliance with the recommendations.  Consequently, the Board recommends that those two bodies comply with the requirements.

 

      The Board also notes that of the 208 recommendations, 130 (62 per cent) have been fully implemented; 72 (35 per cent) are under implementation, and 1 per cent has not been implemented.  In the remaining 5 cases (2 per cent), the organizations were unable to implement the recommendations as they have been overtaken by events. 

 

      The Board is pleased to note the efforts of the UNDP in several areas, including the establishment of a business plan monitoring system, the report states.  It encourages the Programme to continue its efforts to improve controls to ensure accountability, particularly on outstanding audit reports.  The UNDP should also require project managers to collect and report all available costs, which should be included in regular status report in future projects.  The Programme has accepted most main recommendations and is in the process of implementing them. 

 

      The auditors also remark that both the UNFPA and the UNDCP are taking steps to carry out most of the recommendations.  Regarding the UNFPA, the auditors note that disciplinary proceedings have been completed against all but one staff member involved in the violations.  The UNFPA should make every effort to recover the overpayment of up to $1.8 million from contractors, once the final value of actual work done is verified.  Given the fact that the advance for the UNFPA share of the construction costs of common new premises has remained outstanding for six years, the Fund should take action to bring the matter to a conclusion.  The UNFPA has informed the Board that it is engaged in active negotiations with the partners concerned.

 

      As for the UNDCP, among other actions it has informed the Board that it has obtained audit certificates for $16.9 million (92 per cent) of the expenditures for nationally executed projects, while for 2000, as at 20 June 2001, it has obtained certificates covering $11.3 million (59 per cent) of the $19.2 million reported expenditures.

      In a related report (document A/56/436), the Advisory Committee on Administrative and Budgetary Questions (ACABQ) reiterates that a biennial audit of the UNHCR would give that body more time to implement the recommendations of the auditors.  It notes the progress achieved by the UNHCR in improving its financial accountability, but notes that further efforts should be made with regard to the remaining $55.5 million outstanding in advances to implementing partners (for 1994-2000).  It also notes with concern that the Board has qualified its audit opinion on the financial statements of the UNHCR in connection with a total of $43.5 million of implementing partner expenditures. 

 

      The ACABQ further points out that denial of access to the accounting records of implementing partners continues to be a very serious problem with a potential for fraud.  The problem should be thoroughly examined by the UNHCR administration, which should also take all the necessary measures to improve performance of those country offices where the Board had found significant gaps in the audit certificates.  Among other proposed measures are increased training of staff and stricter application of accountability requirements.  The UNHCR administration is also requested to present a report addressing the findings of the Board no later than autumn 2002.

 

      Regarding the implementation of the Board’s recommendations, the ACABQ welcomes the fact that six entities –- the United Nations, United Nations University, UNICEF, UNITAR, UNDCP and the United Nations Joint Staff Pension Fund -- have substantially improved their implementation rate, compared with 1996-1997.  The Board is requested to concentrate in its reports on the extent to which its recommendations have been implemented, and on their impact.  The Secretary-General’s reports should focus on the actions taken and results achieved.

 

      Introduction of reports

 

      MARIETA S.F. ACORDA, Director of External Audit, Philippines, and Chairperson of the Audit Operations Committee, introduced, on behalf of the Chairman of the United Nations Board of Auditors, the report of the UNHCR for the year ending 31 December 2000.  She also introduced the report of the Board of Auditors on the implementation of its recommendations.  On the first report, she described the current situation, saying that the Board had worked closely with the UNHCR to improve accountability.  In past audits, the Board referred mainly to the extent of coverage obtained from audit certificates covering implementing partner expenditures.  For the current audit, however, the Board attempted to obtain audit assurance from UNHCR’s own internal control systems, such as sub-monitoring reports to validate implementing partner expenditures instead of only on audit certificates received.  For 2000, the Board considered that uncertainty regarding the expenditure incurred by some implementing partners needed to be reflected in the Board’s present audit opinion.

 

She said the UNHCR had secured independent audit certificates to cover some $330 million or 79 per cent of 1999 expenditures incurred by some implementing partners, with some $90 million of those expenditures remaining uncertified as of May 2001.  In some countries visited by the Board, it found that the UNHCR had engaged in infrastructure development to assist whole populations, rather than focusing on the specific needs of refugees.  In 2001, the UNHCR had initiated a review to ensure that priority was given to its core mandate objective within the limits of expected donor contribution.  The Board was pleased to note that the UNHCR had already taken action to implement some of the recommendations.

 

      Turning to the second report, on implementation of the recommendations of the Board, she said it addressed those recommendations that were under implementation, those that had not yet been implemented, and those that had been overtaken by events.   In overall terms, of the 208 recommendations made in respect of the 15 organizations covered in the report, 130 (62 per cent) recommendations had been fully implemented, 72 (35 per cent) were under implementation, and 1 (1 per cent) had not been implemented.   In the remaining five cases (2 per cent), the organizations had not been able to implement the recommendations as they had been overtaken by events.

 

      Regarding the report of the ACABQ, she said the Board noted two requests for action.  First, the Advisory Committee reiterated its recommendation that the UNHCR be audited biennially, and that the UNHCR and the Board discuss the modalities for planning for a biennial audit.  The Board would renew and pursue the initial discussions with the UNHCR during the next audit cycle and would report on the outcome of those discussions in its report on the UNHCR to the General Assembly at its fifty-seventh session.  The ACABQ also requested the Board to concentrate on indicating the extent to which recommendations had been implemented and on their impact.  The Board would address the ACABQ’s concerns in its next summary report on the implementation of its recommendations.

 

      Introducing the Secretary-General’s reports before the Committee, the Under-Secretary-General for Management, JOSEPH E. CONNOR, said that the administration attached great priority to the timely and comprehensive implementation of the auditors’ proposals.  He went on to summarize action taken in that regard and said that, in general, the progress of implementation was being closely monitored by senior managers.  The administration had also taken note of the recommendations of the ACABQ on the matter, including the need to focus on action taken and results achieved.  However, in many instances, the implementation involved a series of actions, and the results could be measured only over a long period of time.

 

      Statements

 

      THIERRY RONSE (Belgium), speaking on behalf of the European Union and associated States, said that the Union approved the Board’s report on the audited financial statements of the voluntary funds administered by the UNHCR, as well as a related ACABQ report.  He was pleased to note that the UNHCR had managed to reduce by $186.5 million the expenditure, for which subproject monitoring reports had not been received.  He also noted the auditors’ qualified opinion on the financial statements amounting to some $43.5 million, due to a number of irregularities, and the Board’s conclusion on the lack of monitoring reports from implementing partners, and the inadequacies in verification by officers responsible for field monitoring of implementing partners’ expenditure.

 

      He said the Union regretted that access to the accounts of some implementing partners had been denied.  Also, like the ACABQ, the European Union stressed the need to improve the quality of the certificates.  Although fully aware of the difficult circumstances in which the UNHCR must work, the Union asked its administration to promptly and effectively put into effect the Board’s recommendations for improving monitoring and stringent application of accounting rules, especially at the level of local offices and implementing partners.  The Union was also concerned at the deterioration of the financial situation of the UNHCR, and asked the Office to align its expenditure with expected revenue.

 

Finally, he emphasized UNHCR’s shortcomings in the management of information technology, in particular the Integrated System Project.  Regarding the implementation of the auditors’ recommendations, he welcomed the fact that the majority of the 15 bodies listed in the report had substantially improved their rate of implementation in 1998-1999, compared with the previous biennium.  Nevertheless, he would like the reports on the matter to indicate the results of implementing the recommendations.

 

      KJERSTI RODSMOEN (Norway) said her delegation had repeatedly voiced its concern about UNHCR’s excessive reliance on voluntary funding from a group of countries that remained small, with 10 donors providing 90 per cent of the contributions.  As one of the major contributors, Norway continued to be especially concerned about the balance between the regular budget and the use of extrabudgetary resources to finance core activities.  The report clearly showed that the Board had done a meticulous and commendable job.  While she regretted that the Board had had to qualify its audit opinion, she was pleased with the resolute way in which the UNHCR had responded to the recommendations.  The audit covered both financial and management issues, and many of them related to the need for the UNHCR to have stricter control of the operations of field offices, and particularly of implementing partners. 

 

      She realized that several of the Board’s findings referred to problems that predated the present High Commissioner.  She was eager to see, however, whether the measures announced would have the desired results in terms of more adequate expense reporting and improved control of payments made to implementing partners.  Norway would keep an eye on the development of the Integrated System Project.  On the recommendation of the appropriateness of the UNHCR engaging in projects which did not directly assist refugees, she said the distinction between core and non-core activities could only be useful as a guide to what part the UNHCR should play in an international division of labour.  It should not be an excuse for the international community to neglect tasks that were not core to the UNHCR. In cases where the UNHCR had been engaged in rebuilding local communities as part of its mandate to work for durable solutions for returned refugees, it was insular to criticize the agency for efforts which had benefited the entire local community.  The UNHCR had special responsibility for coordinating its efforts to arrive at durable solutions for persons under its mandate.  Such coordination was a core function, even though it limited the agency’s involvement in the field.

 

      M. DEBORAH WYNES, Director of the United States Department of State Office of the United Nations System Administration, said the Board’s task was a critical one.  It was an essential component of the ongoing efforts to improve financial management and accountability of the Organization’s resources.  The mandate of the UNHCR and its ability to respond flexibly to humanitarian crises were being put to the test in many places today.  While the report reflected the positive working relationship that the Board and the UNHCR had cultivated over the years, the Board had felt it necessary to render a qualified opinion of UNHCR’s financial statements.  The UNHCR had been able to reduce the amount of the backlog of subproject monitoring reports from its partners to $8.5 million as of June 2001, an 88 per cent reduction in the amount of missing reports on outstanding advances.  Some $35 million, however, could not be validated, and the UNHCR could not completely account for some $43.5 million in expenditures.  The United States was disappointed that the Board needed to render a qualified audit opinion, and urged the UNHCR to act decisively in implementing the Board’s recommendations.

 

      She asked for information on how the UNHCR had strengthened oversight at the field office level, as well as on the status of advances made to its partners from 1996 to 2000.  She strongly agreed with the ACABQ’s recommendation that the UNHCR should determine why a country continued to deny access to the accounting records of implementing partners.  She fully supported the ACABQ’s request that the issue be addressed by the High Commissioner and, if necessary, the Secretary-General, if it reflected a deliberate lack of cooperation with the UNHCR.  The United States endorsed the Board’s recommendation for the UNHCR to focus on projects that directly aided refugees.  She wanted to know what concrete actions the UNHCR had taken recently in that regard. 

 

On the integrated information system, she agreed with the ACABQ’s concern that after three years the project was still not operational.  The UNHCR should address the Board’s findings and move forward with the project.  On the report of the implementation of the Board’s recommendations, she was pleased to see that managers were seeking to improve their operations by implementing recommendations.  She urged United Nations organizations to continue that effort until all issues were resolved.

 

Proposed 2002-2003 Budget

 

      The Committee then turned to the proposed budget for 2002-2003.

 

      ZAMZAM F. SULTAN (Bahrain) supported the statement made on behalf of the “Group of 77” developing countries and China, and said that her delegation appreciated the efforts to adopt results-based budgeting in the new budget presentation.  The lack of clarity in some parts of the presentation was a source of concern, however.  The budget must reflect the priorities set in the medium-term plan, but that was not the case in several sections, including those on human rights and the Office of Legal Affairs.  The objectives and expected achievements in those sections needed to be reformulated.  It was important for the expected accomplishments to be fully in line with those in the medium-term plan.  She hoped that there would be a gradual and incremental improvement in the application of the results-based budgeting format.

 

      The proposed budget was almost identical to the previous one in real terms, she said, adding that attempts to put an artificial ceiling would be detrimental to the activities of the Organization.  She also expressed concern over the high vacancy rates and stressed the need to avoid using vacancies as a means to achieve economy.

 

Her country had always honoured its obligations to the Organization, she continued.  Despite the fact that its contributions had increased after the reformulation of the scale of assessments, Bahrain had not received more posts within the Secretariat.  Its citizens were almost non-existent in the Secretariat.  It was important to ensure just geographical distribution of posts, attracting staff from unrepresented and under-represented Member States.  As for promotion, it was important to avoid an unbalanced approach.  There must be clear criteria for promotions to ensure just treatment of staff. 

 

      AJEBE LIGABA (Ethiopia) associated himself with the position of the Group

of 77 and China and welcomed the new format and presentation of the proposed programme budget, as well as the timely submission.  There was still room for further improvements, however, in particular on such issues as consolidated information on training, standardized reports on publications, workload indicators, post additions and reclassifications. 

 

      Turning to the level of the budget, he underscored the need for correlation between resources and mandated programmes and activities, saying that imposition of an arbitrary ceiling not only ran counter to that principle, but also put the Secretariat under considerable constraints in implementing its mandated activities.  Of particular concern to his delegation was the fact that over the last few years, the budget had been frozen to the levels of almost a decade ago and that estimates for 2002-2003 actually showed a decrease in real terms.  Although it was necessary to maintain efficiency, there was room for a real growth in the budget.

 

      Continuing, he expressed appreciation for the Secretary-General’s efforts to ensure that the priorities set in the medium-term plan were reflected in the proposed budget.  He would have preferred more resources to be allocated to the sections dealing with economic and social issues, particularly for regional cooperation for development.  He also registered his delegation’s continuing concern over the high vacancy rates that were more prevalent on sections dealing with regional commissions, and especially Africa.  The Secretariat should exert additional efforts in speeding the recruitment process, with particular attention paid to those budget sections. 

 

      It was also with unease that he observed that extrabudgetary resources constituted a significant share of the budget, he said.  Such resources should be an exception, rather than the norm.  They must be used to complement the regular budget in fulfilling mandated programmes and activities, and not the other way around.  He also agreed with the ACABQ with respect to the management of posts funded from such resources.  Regarding the results-based budgeting, he said that its application must be handled with the highest care.  He agreed with the Group of 77 that it should be implemented in a gradual and incremental manner, bearing in mind the unique nature of the Organization.  It was important to be pragmatic in realizing that the objectives of the United Nations might not be achieved in one biennium or medium-term plan.

 

      JASMINKA DINIC (Croatia) said if the Organization was expected to be able to deal with the global agenda, sufficient resources should be allocated to the programme budget, and full cooperation of its Member States and the Secretariat should be developed.  Croatia fully supported the efforts of the Secretary-General in the ongoing reform process and welcomed the first proposed budget in the results-based budgeting format. By using objectives and indicators of achievement, Member States would be able to evaluate programmes and measure the effectiveness of the Secretariat.  Bearing in mind that some 80 per cent of regular budget expenditures was devoted to staff costs, she agreed that proper monitoring of expenditures deserved particular attention.  Croatia welcomed the adoption of the comprehensive human resources reform, and would continue to support implementation of management reform within the Organization. 

 

      Adoption of the programme budget was certainly one of the most important issues on the Assembly’s agenda, she said.  She believed that it would be adopted by consensus, with the aim of providing adequate resources for the implementation of mandated activities in compliance with the priorities set by the medium-term plan.  Croatia recognized the important role of the United Nations in peacekeeping and peace-building.  She supported the second phase of the peacekeeping reform process, including implementation of all necessary measures to ensure safety and security of staff, both in the field and at Headquarters.  It would also be necessary to improve the Organization’s capacity to deal with the interdependence between peace and development.  She proposed that sufficient resources be given to sections related to economic and social development.

 

      BRUNO RODRIGUEZ PARRILLA (Cuba) said the exercise before the Committee was one of the most important because the Organization’s capacity to execute decisions depended on it.  It was, therefore, paradoxical that there was an attempt to impose arbitrary limits and erode that capacity.  He shared the concern that budget cuts were putting great strains on the Organization’s ability to fulfil its mandates.  He affirmed the need to provide the Organization with the necessary level of resources to complete its mandates and objectives.  While he agreed with those who called for greater financial discipline, for him it included the efficient use of human and financial resources.  He noted that the proposed budget was slightly higher than projected and that it did not account for the financial implications of the Brahimi report and the issue of staff security.

 

      He said there was an attempt to use the budget to renegotiate priorities agreed upon in the medium-term plan.  It seemed that in practice there was an attempt to establish priorities within programmes despite the General Assembly’s decision.  Budget cuts in previous bienniums had meant a transfer of responsibility from the Assembly to the Secretariat.  That was a redefinition of priorities.  According to the draft, a considerable part of the Organization’s work programme would be funded through extrabudgetary resources.  He agreed with delegations voicing concern over that situation.  On the proposal to establish new posts, Cuba would analyse each proposal and would consider the requests for reclassifications, although, in general, he endorsed the concerns of several delegations already expressed on that point.

 

      On the transformation of budget appropriations to the UNHCR, he felt that that arrangement hampered transparency in analysing Secretariat staff and he hoped that corrective measures would be taken.  On the proposed budget’s new format, he endorsed the recommendations of the Committee for Programme and Coordination (CPC) and the ACABQ in that regard.  The trend of the Secretariat to include controversial decisions and concepts had meant that section 22 of the budget could not be agreed upon by the CPC.  Given the importance he attached to that programme, he hoped that an acceptable solution would be reached.  While Cuba had agreed to discuss the budget in informal consultations, he regretted that, as a result of that decision, the official summary records would not include the Committee’s discussion of the budget.

 

      In his concluding remarks on the proposed budget, The Assistant Secretary-General for Programme Planning, Budget and Accounts and United Nations Controller, JEAN-PIERRE HALBWACHS, said that 38 interventions had been made on that important subject.  He thanked those who had commented on the timely manner and quality of the budget presentation.  Many speakers had addressed the question of the results-based format, which represented a continuing effort to shift the focus from process to achievements.  Everybody agreed that it was “work in progress”, and it might take several years to arrive at a product that was to everybody’s liking.  Useful comments had been made on how to improve the results-based budgeting, and he looked forward to the advice and guidance of the Fifth Committee on the matter. 

 

A number of points had also been made on the structure and top-heaviness of the Secretariat, he continued.  Like Member States, the Secretariat wished to maintain a viable staffing pyramid, and its recommendations had only involved some fine-tuning.  The proposed reclassifications only represented one half per cent of the staffing table. 

 

Regarding the need to ensure sufficiency of funds, he said the Secretary-General had indicated in the introduction to the budget that paramount consideration had been given to ensuring that the priorities identified in the medium-term plan were addressed.  For several bienniums now, the Organization had managed to fulfil its mandates without significant budget growth through reforms, training, efficiency measures and introduction of new technology. 

 

He added that the proposal included only preliminary recosting.  As was the practice, in early December a revised amount would be provided, taking account of inflation and exchange rates, as well as new decisions of relevant bodies.  As the United States’ dollar was experiencing difficulties, the amount could be expected to be higher than the preliminary figures.  While it was hard to provide an exact amount, it could come to some $2.7 billion. Quoting the Secretary-General, he said that the Organization had been doing more with less, but that could go only up to a certain point.  Sooner or later, the quality of work would suffer.  He hoped the Committee would take that into account when making a decision on the matter.

 

      As the Committee turned to the question of honorariums, the Committee was reminded that on 15 October the Chairman of the ACABQ, Conrad S.M. Mselle, had introduced orally that body’s report on the matter.  His statement had been distributed to the members of the Fifth Committee.

 

THOMAS REPASCH (United States) said that a report on the question of honorariums had not been requested by the Committee.  He was unaware of any urgency to deal with the issue, as the General Assembly had chosen not to deal with previous proposals.  At the current time, he believed that the document had not been requested and was not needed.

 

The CONTROLLER replied that the level of honorariums had been set by the General Assembly some 20 years ago.  The Secretariat had been asked to keep the issue under review.  A report had been submitted two years ago because various committees recognized that the level of honorariums was 20 years old.  The ACABQ indicated that, if the General Assembly wanted to increase the level, it have would to be done that way.  The Fifth Committee had taken no explicit action.  The Secretariat took the view that silence did not mean consent.  It wanted a clear answer by the Assembly as to whether honorariums should be increased or not.  That was why the paper was before the Committee.

ABDOU AL-MOULA NAKKARI (Syria) asked if the issue of honorariums was subject to United Nations staff rules and regulations.

 

The CONTROLLER said that question was not covered by the staff rules, as the people who received honorariums were not staff members.

 

The CHAIRMAN then informed the Committee that it would revert to the question of honorariums in informal consultations, at a date to be announced.

 

      Mr. REPASCH (United States) asked why the Committee was taking the question to informals.  In his view, the document was not requested and, therefore, did not need to be discussed in informals.  He proposed that the document be dispensed with expeditiously.

 

      RAMESH CHANDRA (India) informed the Committee that consultations on the scale of assessments had been held last week and another meeting was scheduled for tomorrow.  As he had been given the task of putting together a draft, informal consultations scheduled for tomorrow would not be necessary.  He would come back to the Bureau when he saw that consensus was emerging on a possible text.

 

      The CONTROLLER said that a comprehensive report on the issue of honorariums had been before the Committee two years ago.  The Committee had not taken action.  The Secretariat wanted a clear decision from the Committee whether it agreed to raise the current level of honorariums.

 

      The CHAIRPERSON suggested that informals be held on the matter.  As no action had been taken, the Committee would need to pronounce on the matter.

 

 

 

 

 

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For information media. Not an official record.