Budget Committee Takes Up Annual Reports by Office of Internal Oversight Services, Independent Audit Advisory Committee

8 October 2010
GA/AB/3959

Budget Committee Takes Up Annual Reports by Office of Internal Oversight Services, Independent Audit Advisory Committee

8 October 2010
General Assembly
GA/AB/3959
Department of Public Information • News and Media Division • New York

Sixty-fifth General Assembly

Fifth Committee

5th Meeting (AM)


Budget Committee Takes Up Annual Reports by Office of Internal Oversight Services,


Independent Audit Advisory Committee

 


As part of its ongoing efforts to strengthen the accountability and transparency of United Nations activities, delegates to the Fifth Committee (Administrative and Budgetary) today expressed strong support for the work of the two crucial oversight bodies — the Office of Internal Oversight Services (OIOS), and the Independent Audit Advisory Committee — as it took up their wide-ranging annual reports.


Speakers at the Committee’s fifth formal session welcomed the newly appointed Under-Secretary–General for Internal Oversight Services, Carman Lapointe, and her early efforts to fill OIOS vacancies, in particular two Director level posts, one at the Investigations Division and the other at the Inspections and Evaluation Division.  Covering the 12-month period ending 30 June 2010, the annual report introduced by Ms. Lapointe set out 1,922 recommendations to improve internal controls, accountability mechanisms, and efficiencies throughout the Organization.


Several delegates supported moving OIOS towards greater operational independence and were concerned that some of its most critical recommendations were not being carried out. The representative of the United States was encouraged that the new Under-Secretary-General aimed to forge a more cooperative relationship with OIOS clients and managers throughout the system, while maintaining the Office’s operational independence.


Norway’s representative said it was essential that the United Nations manage its funds in a way that showed zero tolerance for corruption, fraud and any other misuse of funds. Norway expected that adequate policies, mechanisms and routines would be in place to detect, report, handle and provide information about financial mismanagement.  The vision for OIOS was as “a world-class oversight body, respected and trusted by stakeholders”, she added.


The Group of 77 developing countries and China, offering its views through Yemen’s delegate, reiterated its support for the Office’s operational independence, within the context of Assembly resolution 48/218 B.  He also supported the Office’s role in helping the Secretary-General meet his own internal oversight responsibilities.  The Group backed the Office’s coordination with the two other United Nations oversight entities, the Board of Auditors and the Joint Inspection Unit.


Delegates also threw their support behind the recommendations of the Independent Audit Advisory Committee, established through Assembly resolution 60/248 to serve in an expert advisory capacity and help the United Nation’s legislative body meet its oversight responsibilities.  Advisory Committee Chairman David M. Walker introduced the body’s third annual report, which included a preliminary work plan for 2011.  Since its inception in January 2008, the Committee had issued 55 recommendations, including seven that related to the OIOS, which were to be considered by the Assembly by the main part of its sixty-sixth session.


Noting that OIOS faced a large number of complex and sensitive issues, the Russian Federation delegate said the Advisory Committee would play an important role in ensuring the accountability and transparency of entities throughout the United Nations.  The representative of New Zealand, speaking also on behalf of Canada and Australia, added that the Fifth Committee had the opportunity to fine tune the IAAC mandate at this session


Also speaking today were the representatives of Belgium (on behalf of the European Union), Singapore, Switzerland (on Behalf of Liechtenstein) and Mexico.


Ms. Lapointe introduced three reports, the report of the activities of the Office of Internal Oversight Services for the period from 1 July 2009 to 30 June 2010, an addendum to the report, and a corrigenda to the report.  Mr. Walker introduced the Report of the Independent Audit advisory Committee.


The Fifth Committee (Administrative and Budgetary) will reconvene at 10 a.m. Tuesday, 12 October, to begin discussion on three agenda items:  Improving the financial situation of the United Nations; Programme budget:  biennium 2010-2011; and Administration and budgetary coordination of United Nations & Specialized Agencies and the International Atomic Energy Agency (IAEA).


Background


The Fifth Committee (Administrative and Budget) had before it a report of the Office of Internal Oversight Services (OIOS), for the period from 1 July 2009 to 30 June 2010 (document A/65/271 (Part I)) and Corr.1.  It provides an overview of its activities during this time period and includes three main sections:  initiatives aimed at improving OIOS operations and quality of work; oversight findings by risk category; and mandated reporting on oversight activities concerning the Capital Master Plan, the United Nations Compensation Commission and the construction of additional facilities at the United Nations Office at Nairobi and the Economic Commission for Africa.


The report does not cover oversight findings pertaining to the Department of Peacekeeping Operations, the Department of Field Support or the peacekeeping and special political missions, which will be presented to the Assembly in Part II of the report during the resumed part of the sixty-fifth session.


During the reporting period, the agency issued 382 oversight reports, including 12 reports to the Assembly and 89 closure reports.  The reports included 1,992 recommendations to improve internal controls, accountability mechanisms and organizational efficiency and effectiveness. Of those recommendations, 669 were classified as critical to the Organization. The financial implications of OIOS recommendations issued during the period amount to approximately $5 million.


The recommendations were aimed at cost savings, recoveries of overpayment, efficiency gains and other improvements.  The financial implications of similar recommendations that were satisfactorily implemented during the period totalled approximately $19 million.  The addendum to the present report (A/65/271 (Part I)/Add.1) provides a detailed analysis of the status of implementation of the recommendations, a breakdown of recommendations with financial implications and an analysis of selected recommendations of particular concern.


Established by the Assembly to enhance oversight of the Organization, the agency operates independently and helps the Secretary-General fulfil his internal oversight responsibilities regarding the resources and staff of the Organization through internal audit, monitoring, inspection, evaluation and investigation.


Pursuant to paragraph 1 (c) of resolution 59/272, Member States have access to OIOS reports upon request.  The full titles of all OIOS reports are available online at www.un.org/Depts/oios.


An addendum to the OIOS report (document A/65/271 (Part I/Add.1) provides a detailed analysis of the status of implementation of recommendations issued by the Office.  Although a number of United Nations entities under OIOS oversight consistently implement recommendations in a timely manner, the addendum highlights those recommendations that are of greatest concern because their implementation has lagged and/or management has failed to respond in a timely manner.


This report is divided into four main sections (II-V).  Section II provides an overall assessment of the implementation of recommendations.  Using a consolidated ageing table, section III provides a closer look at outstanding recommendations by entity, including, where applicable, separate comments on the recommendations of concern.  Section IV includes a list of OIOS recommendations with financial implications for cost avoidance, recovery of overpayments, efficiency gains and other improvements.  Section V presents the list of oversight reports issued by OIOS between 1 July 2009 and 30 June 2010.


Of the 1,992 recommendations OIOS issued to United Nations entities during the report period, 669, or 34 per cent, were deemed critical.  As of 30 June 2010, programme managers had implemented 904, or 51 per cent, of all recommendations issued between 1 July 2009 and 31 May 2010 and 264, or 43 per cent, of the critical recommendations issued during the same period.


The report of the Independent Audit Advisory Committee (document A/65/329), for the period 1 August 2009 to 31 July 2010 includes the status of the Committee’s recommendations and its detailed comments, particularly as regards the Office of Internal Oversight Services.


Concerning the status of recommendations of the Committee, it notes that the General Assembly plans to consider its recommendations during the main part of its sixty-sixth session, and highlights as particularly important those that deal with the operational independence of OIOS.  Further, the Committee reiterates its recommendation that OIOS take into account the effect of controls that management puts in place to mitigate risks when it completes a risk analysis.


In its detailed comments, the Committee recommends that the administration assess the lessons learned from the OIOS audit of the African Union-United Nations Hybrid Operation in Darfur (UNAMID) in establishing other United Nations operations in the future.  In addition, the Committee considers it important that the Board of Auditors and OIOS continue to remain sufficiently engaged in the International Public Sector Accounting Standards project and recommends that the Board provide comments on IPSAS-compliant policies on an urgent basis, as and when they are developed.


Introduction of Report


CARMAN LAPOINTE, Under-Secretary General for Internal Oversight Services, who assumed her position just over 3 weeks ago and was making her first address to the Committee as head of the Office, introduced the annual report of OIOS.  The report did not cover, she noted, oversight activities pertaining to the Department of Peacekeeping Operations, the Department of Field Support, or the peacekeeping and special political missions.


She stated that, during the reporting period, 382 reports, including 12 reports to the General Assembly, were issued.  Those reports provided 1,922 recommendations to improve internal controls, accountability mechanisms and organizational efficiency and effectiveness.  As of the 30 June 2010, 52 per cent had been implemented.  The implementation performance rate over the last three years, she said, remained consistent at 95 per cent.  The results of those recommendations contained in Section III of the report would be discussed during informal consultations.


DAVID M. WALKER, Chairman, Independent Audit Advisory Committee (IAAC), introduced the Committee’s report.  He noted this was the third report of its kind and contained a preliminary work plan for 2011.  Since its inception, he stated, the IAAC had made a total of 55 recommendations, 7 of which related to OIOS and would be considered by the General Assembly in the main part of its sixty-sixth session.


With regard to an accountability system, the IAAC agreed to provide in the current annual report supplementary comments on risk management procedures and an internal control framework that fall within its terms of reference.  He highlighted a few issues in that regard.  First, he stated, OIOS would need to compile its risk-based work plans, taking into consideration the quality and effectiveness of internal controls that management had put in place to mitigate risks.  Second, OIOS, he said, could add value to its work by placing greater emphasis on horizontal audits of thematic issues.  Third, OIOS needed to increase its efforts to expedite the finalization and issuance of its reports and — last — urgent action was required to fill the high number of vacant posts, in particular at the senior management levels.


As concerned the Committee’s terms of reference, he stated, the proposals provided in Annex II of the report related to expanding the terms of reference to include:  the responsibility to review management’s system for accounting for performance results; to advise the General Assembly on potential changes to accounting policies and disclosure practices; to provide for the IAAC to facilitate sharing of experiences and best practices with other United Nations audit and oversight bodies, including audit committees; and to better align the term of office for members of the Committee with the cooling-off period relating to membership.


Statements


Speaking on behalf of the Group of 77 developing countries and China, WALEED AL-SHAHARI (Yemen) said the procedures used by the Secretary-General to appoint the Under-Secretary-General for OIOS were not in conformity with the principle of geographical rotation, as contained in paragraph 3 (e) of General Assembly resolution 46/232 of 1992.  In that resolution, the Assembly decided that generally “no national of a Member State should succeed another national of that state in a senior post and that there should be no monopoly of senior posts by nationals of any State or Group of States”.  It was the Group’s expectation that future appointments would be made in conformity with those provisions.  The Group was concerned that overall vacancy rates in OIOS had slightly increased from last year and two posts at Director level had not been filled and were adversely impacting the Office’s work.


The Group attached great importance to the Office’s work in strengthening accountability and oversight throughout the Organization.  The Group reiterated its support for the operational independence of OIOS, within the context of Assembly resolution 48/218 B, and its role in assisting the Secretary-General meet his internal oversight responsibilities.  The Group also reaffirmed the separate and distinct roles of internal and external oversight mechanisms and appreciated its regular co-ordination and consultation with other United Nations oversight entities, the Board of Auditors and the Joint Inspection Unit.


Regarding the 1,992 recommendations that OIOS had issued to United Nations entities between 1 July 2009 and 30 June 2010, the Group was concerned that implementation was lagging for a greater number of critical recommendations, or management had failed to respond in a timely manner.  He urged OIOS to work with the Secretariat and other United Nations entities on these recommendations to resolve differences before issues surfaced in other parts of the Organization, or the Fifth Committee deliberations.


He noted the Office’s oversight findings relating to the seven risk categories outlined in the report, which reflected a comprehensive approach that covered the full spectrum of risks that faced the Organization.  The Group also noted that the OIOS report highlights other issues, such as procurement, the Capital Master Plan, United Nations Compensation Commission, and the construction of additional office facilities at the United Nations Office at Nairobi and the Economic Commission for Africa.


In addition, he thanked the IAAC for its role as an advisory committee to the Assembly and its recommendations to enhance the effectiveness, efficiency and impact of the audit activities and other oversight functions.  He emphasized that any modification to the Committee’s terms of reference was the sole prerogative of the Assembly.


JAN DE PRETER (Belgium) speaking on behalf of the European Union, welcomed the continued risk-based approach of the Office of Internal Oversight Services in order to prioritize its work, as well as the adjustment of its risk assessment to include residual risk in its work planning process.


It was of “great importance”, he said, to expedite the filling of the considerable number of vacant posts at OIOS, especially those at the senior management level, and in particular the posts of the Director of Investigations Division and the Inspection and Evaluation Division.


He further welcomed the continued close coordination between OIOS, Joint Inspection Unit, Board of Auditors and the Independent Audit Advisory Committee in order to avoid potential duplication and overlap.  Further, he stressed that the operational independence of OIOS was of fundamental importance, and commended the Office for its efforts towards “creating a culture of transparency and accountability at the United Nations”.


PAUL BALLANTYNE (New Zealand), speaking on behalf of Australia, Canada and New Zealand, said he was pleased with the adoption of resolution 64/259 on accountability.  It strongly endorsed the IAAC recommendation that would see the Secretariat develop a clearly defined and well-documented plan and timeline to implement the resolution.  That would ensure that the tangible improvements to the Organization’s accountability framework were realized.


He praised the IAAC’s comments in the area of risk management and fully agreed with its recommendations to have the Secretary-General integrate Enterprise Risk Management into the programme planning process.  That would ensure that programme managers considered risks as an integral part of the planning process.


He remained committed to engaging constructively with Member States to strengthen the Organization’s governance and oversight framework and put the expert advice of the IAAC to the best possible use.  The Fifth Committee had a unique opportunity to fine tune the IAAC mandate at this session.  He noted the IAAC’s recommendation that Member States’ consider enhancing the Committee’s responsibility to include responsibility for reviewing management’s system of accounting for performance results.  He saw merit it the recommendation and looked forward to discussing the issue during informal consultations.


JASMINE TAN ( Singapore) welcomed Ms. Lapointe to the United Nations family, but at the same time expressed concern about the separate issue of the appointment process itself, following the departure of the former Under-Secretary-General.  In particular, he regretted that the principle of geographic rotation had not been adhered to, which was important within the broader context of accountability.  The manner in which the post of Under-Secretary-General for Internal Oversight Services was filled — without full consultation with Member States or application of geographic rotation — did not set a precedent for future appointments.


Concerning the operations of OIOS, it was critical that Member States monitor and ensure its operational independence in order for it to function effectively as an audit and oversight body for the Secretary-General.  Further, it was urgent that OIOS remedy the staffing situation in its Investigations Division and ensure that all investigations were “conducted fairly and in a transparent manner”.


Finally, she acknowledged the work of the Independent Audit Advisory Committee, stating that the Committee had consistently provided useful insights on how OIOS could improve its work.


ALEXANDER A. PANKIN (Russian Federation) stated that OIOS faced a large number of complex and sensitive issues and the Independent Audit Advisory Committee would play an important role in ensuring the accountability and transparency of the work of the United Nations and its agencies.  He noted that Member States had allocated, for 2010 and 2011, $100 million for OIOS activities and were, thus, justified in expecting enhanced accountability and effectiveness of United Nations operations. 


He noted that discussions of Member States regarding OIOS recommendations had become politicized, a fact that made it difficult for States to adopt balanced and objective decisions on those recommendations.  Further, such politicization provided the Secretary-General with an opportunity to not undertake specific measures on said recommendations.  Of the 174 recommendations not implemented, he said, many of them were viewed as exceptionally important.  One of the priorities for the Under-Secretary-General, he stressed, should be to address that situation, or Member States would become hostage to a deadlock situation.  He added that the establishment of normal working relations between the Secretariat and OIOS would ensure the healthy functioning of the Organization.


RITA GRÜNENFELDER (Switzerland), also speaking on behalf of Liechtenstein, stated that recent negotiations in the Fifth Committee demonstrated that different ideas existed among Member States as to the role of OIOS and its position within the Organization.  Further, Member States had been unable to develop a consensus regarding the appointing authority for the Office’s senior leadership.  She hoped that the new Under-Secretary-General would strengthen her Office and generate trust and confidence amongst Member States.


Concerning the analysis of IAAC, OIOS needed to further refine its risk based approach to work planning, basing it on residual versus inherent risks.  Further, vacancy rates as high as 38.9 per cent were “simply not acceptable”, she said.  The delegations endorsed the IAAC recommendation that OIOS carry out more audits of systemic issues and attached special importance to those recommendations relating to OIOS operational independence.  On the latter matter, she asked the Advisory Committee to further elaborate on its recommendations, taking into account relevant discussions and developments.


In terms of modifying the IAAC terms of reference, she concurred that it should be mandated to review management’s system for accounting for performance results and values.  She also welcomed the Advisory Committee in assuming a more active role in advising the General Assembly on the International Public Sector Accounting Standards project.  Finally, she saw merit in allowing IAAC to collect, share and utilize best practices and lessons learned with other United Nations audit and oversight bodies.


JOSEPH H. MELROSE (United States) said his country continued to consider the work of OIOS as critically important to the United Nations ongoing viability and effectiveness.  The Office would continue to play an important role in the Organization’s transparency, accountability and effectiveness by exercising appropriate internal oversight, promoting the responsible use of resources, and identifying and reporting instances of waste, fraud and mismanagement.  With that in mind, the United States was encouraged by Ms. Lapointe’s goals to build a more cooperative relationship with OIOS clients and management, while maintaining her Office’s operational independence and providing more concise recommendations.


The United States would continue to monitor efforts to strengthen the investigative capacity of OIOS and looked forward to efforts to create a forensic investigate capacity within the Office and fill critical vacancies in other parts of the Investigation Division, such as the unit handling procurement and financial crimes.


The United States believed the IAAC report highlighted some critical issues with its recommendations, such as:  the urgent need to fill Director level posts within OIOS; the Office’s need to refine its risk-based approach to work planning and conducting more cross-cutting audits; and the need for oversight bodies recommendations to be fully implemented in a timely manner.  The Fifth Committee had an important task before it this session to review the terms of reference for the IAAC, he added.


JULIE M. JACOBSEN TAKAHASHI (Norway) said Norway looked forward to working with Ms. Lapointe as the new Under-Secretary-General for Internal Oversight Services.  It was essential that the United Nations managed its funds effectively, efficiently and in a manner consistent with the principle of zero tolerance for corruption, fraud and any other misuse of funds.  Norway expected the United Nations as a whole to have appropriate policies, mechanisms and routines in place to prevent corruption, fraud and any misuse of funds, and that those policies were used in a consistent manner.  Norway expected that adequate policies, mechanisms and routines were in place to detect, report, handle and provide information about financial mismanagement.


The vision of OIOS was to be “a world-class oversight body respected and trusted by stakeholders”, she added.  Norway commended the commitment to the highest standards of professionalism, quality and efficiency in auditing, inspection, evaluation and investigation.  She noted that the OIOS report referred to 382 reports — with 1,922 recommendations — to improve internal controls, accountability mechanisms and organizational efficiency and effectiveness.  “These are quite staggering figures that leave no room for complacency,” she said, adding that the implementation rate of recommendations had to be closely monitored.  She appreciated that 52 per cent of the recommendations had been implemented.


INGRID BERLANGA ( Mexico) stated that both bodies, the OIOS and the IAAC, played an essential role in the accountability system of the United Nations.  Mexico hoped, she said, that the appointment of the new Under-Secretary-General for Internal Oversight would bridge the gaps in transparency and accountability.


In that context, she emphasized the importance of more strict controls on the use of financial resources, including measures for the recovery of lost funds due to fraud.  The recommendations of the IAAC regarding the review of an accountability system on OIOS performance would be important, in that regard.


Concerning other IACC recommendations, she stated that OIOS risk-based work plans should include the report on residual risk.  As for existing vacancies, those had to be filled soon.  Finally, concerning the operational independence of OIOS, she stated that Mexico would cooperate towards a solution acceptable for all on any measures ensuring better accountability and transparency.


Secretariat Response


Ms. LAPOINTE said that OIOS was working to address many of the delegate’s concerns in a timely manner.  She was working to move the stalled appointments at the Director level forward, as well as filling the Office’s other vacancies.  Many candidates had already been identified.  She agreed that it was necessary to look at the Organization’s residual risks and the quality of control already in place, in order to come up with a valid risk management plan.


Mr. WALKER thanked the delegates for their support and their consideration of the IAAC’s recommendations.  He stressed the importance of the Assembly’s intention to consider its recommendations no later than the main part of its sixty-sixth session.


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For information media • not an official record
For information media. Not an official record.