EU Presidency Statement - Financial reports

Mr. Chairman,

I have the honour to speak on behalf of the European Union. The countries of Central and Eastern Europe associated with the European Union - Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia, and the Associated Countries - Cyprus, Malta and Turkey, as well as the EFTA countries of the European Economic Area - Iceland and Liechtenstein align themselves with this statement.

Allow me to begin by thanking the Chairman of the Board of Auditors, Mr. Shauket Fakie, for his introduction and his colleagues for their customary high standard of in-depth reports on the United Nations and the 14 other reports on funds, programmes and the two International Criminal Tribunals. We thank also Ambassador Mselle for the observations of the ACABQ with which we concur.

The European Union attaches great importance to the external audit function and the outstanding quality of the reports we have come to expect from the Board of Auditors. We therefore must express our dismay that, yet again, the General Assembly has been presented with these detailed and comprehensive reports so late that it has been impossible to give them the full attention they deserve. We have also noted a number of serious problems in the translation of technical terms from English into the other UN official languages. We fully concur with the sentiments expressed in the report of the ACABQ on these problems and call on the Secretariat to ensure prompt submission of these reports in the future, and proper quality control in their translation.

Mr. Chairman,

We are encouraged by the indications by the Board of an improvement in the implementation of previous recommendations and willingness by programme managers to address those points raised in the current reports. We urge the Secretariat to take steps to address in particular those cases where recommendations have not been addressed at all or those that are outstanding from the biennium 1996-97 or earlier. Where such omissions are apparent, we should favour a detailed explanation from the programme manager concerned in explanation of this. Like the ACABQ, we look forward to the advice of the Audit Operations Committee on establishing criteria for evaluating the results of the implementation of Board recommendations. We believe this will be a valuable tool for programme managers to deploy when reporting back to the General Assembly or Executive Bodies on measures taken to improve their performance.

Mr. Chairman, the Board of Auditors' reports provide valuable guidance and assurances to the contributing states of the United Nations that proper financial safeguards and standards are being observed. We are pleased that, this year, none of the Board's reports were qualified, although we have carefully noted the modifications they have made in five out of the sixteen programmes. We note the continuing concerns expressed by the Board regarding the monitoring of nationally executed expenditure by UNDP, UNFPA and UNHCR and trust that the Executive Boards of these organisations will give due priority to improving the situation. Other commonly occurring themes throughout the reports include the many instances of lax inventory management and custody of equipment, the lack of provision to take account of end-of-service benefit liabilities and the deteriorating financial position, including financial reserves of some of the funds. We also wish to highlight the Board's observations regarding the high number of inactive or obsolete trust funds, which continue to tie up resources. All of these areas are of major concern to the European Union and call for rigorous management to contain expenditure and restore the confidence of contributing parties. This in turn will help boost income and lead to a more secure financial position. This will require tough decisions on priorities and resources in many cases as well as greater accountability for those officials in positions of responsibility.

Equally as significant as the examination of financial accounts are the recommendations of the Board for managerial improvements and dissemination of best practice. The thematic summary in document A/57/201 was particularly helpful in identifying and recommending improvements in a number of cross-cutting issues for the organisations. On information technology, for example, the Board's review of the wider UN system organisations enabled it to make helpful and constructive suggestions on the use of IMIS and IMDIS. We fully endorse the related proposals, in particular the Board's view that the UN needs a co-ordinated ICT effort involving all concerned UN entities, regarding management, security, continuity and disaster plans. We trust that the Secretariat has taken these conclusions on board as it finalises the revised IT strategy for this Committee to consider later in the session.

The observations of the Board on the use of consultants, staffing issues and ethics also contain valuable insights. The problems of recruitment delays and improper use of consultants and/or temporary staff are clearly related. We expect that future studies by the Board will report improvements in these areas as a result of the ongoing Human Resource Management reforms in the organisation.

Mr. Chairman,

The European Union observes that under this agenda item we are due to consider reports on a number of funds and programmes for which budgetary approval is not required by the General Assembly, since they do not draw on Regular Budget resources. In this regard, we question whether the General Assembly needs to review Board of Auditors reports on these programmes on the same basis, since they are considered both by the ACABQ and the relevant Executive Board. We would favour some rationalisation in this area to provide more consistency and to give a clearer picture to Member States of the organisation as a whole. This issue is illustrative of a more fundamental issue - that of governance throughout the UN system. In this respect, we should like to request a review of not only the reporting procedures but also the governance structures and principles for the whole UN system.

A similar issue on reporting and governance is raised in the Board's discussion in the report on the UN Compensation Commission. The Board makes a number of key recommendations on the management of the Commission and we are pleased that UNCC is taking steps to address these. But we agree with the ACABQ conclusion that financial statements and schedules prepared by the Board should be submitted directly to the Governing Council. It is the Council that has primary responsibility for implementation of any recommendations.

Mr. Chairman, allow me now to comment on some of the individual reports:

United Nations

I begin with the report on the United Nations itself in document A/57/5 Volume I.

We thank the Board for their useful review of the inter-agency services in the UN duty stations. We agree with the view that it is important for these service organisations to conclude clear and detailed MOUs with the entities to whom they provide services and look forward to rapid progress in this regard. We also noted the recommendation of the Board that the UN Office at Geneva be delegated the administration of all Geneva trust funds. We understand this recommendation is under review by the Controller and would be interested in hearing preliminary reactions to this proposal.

The European Union noted with interest that the UN Fund for International Partnerships operates a sunset clause whereby funding of projects are withdrawn if project documents are not submitted within 180 days of approval. We commend UNFIP for this firm management, whilst agreeing with the Board that alternative criteria should be available for more complex projects where longer timescales are needed.

On the question of advances made by the Central Emergency Revolving Fund, we agree with the Board that there is a lack of clarity regarding the status of the advance to OCHA in 1998. We should also like some further information on the question of the advance paid to UNDP over two years ago, for which repayment is overdue. More generally, we were disturbed by the examples discovered by the Board of the serious practical problems in recipient countries being caused by procedural delays in administering payments. We believe this warrants further discussion in the informal sessions.

International Criminal Tribunals

Mr. Chairman, I now turn to the Board's reports on the International Criminal Tribunals, which highlight areas of grave concern for the European Union. The Board, whilst noting that the Tribunals have for the most part complied with previous recommendations, describes in both cases organisations with few apparent controls on rising budgets and alarming inadequacies in many areas of their management and regulatory systems. Like the ACABQ, we are particularly struck by the open-ended approach to the costs of defence counsel for the Tribunals. We concur with the Board's view that standards need to be introduced to measure the financial status of accused in both Tribunals and that a mechanism is necessary for capping the overall cost, and for policing the use of fees. Furthermore, we fail to understand why, after years of operation, it is still possible for loopholes to exist in the staffing regulations of the tribunals which allow counsel to recruit both former staff members of the Court or relatives of accused. We welcome the recommendations in respect of the belated implementation of a code of professional conduct for defence lawyers and a professional bar with powers to enforce it.

On a more administrative level, there appear to be no established controls regarding document translation or arrangements for the appearance of witnesses. When we see that the Board estimates that up to 95% of translated materials are never used, we must question why this practice is allowed to continue. Similarly, greater control needs to be exercised before agreeing to fund travel for witnesses to testify. We also question the very high sums attributed without proper explanation to 'write-offs and losses', particularly in respect of equipment.

The European Union expects high standards of budgetary and management discipline in the Tribunals and the Board's reports make it clear that these are sorely lacking in many areas. No national administration of justice anywhere in the world can operate without due regard for such controls and we expect them in the Tribunals. We do not believe that this approach is in any way inconsistent with the provision of full and fair justice for those accused.

We commend the Board for its rigorous analysis of these financial and management issues and shall return to these in the discussion of the Tribunals later in the session where the European Union will be pressing for urgent action to combat these serious problems.

United Nations Development Programme

Mr. Chairman, the European Union, whilst noting that the report on UNDP was not qualified as in previous years, was nevertheless concerned at a number of issues raised by the Board. The failure to account for the value of non-expendable equipment, the under-funded health insurance liabilities and the list of problems concerning nationally executed expenditure all testify to significant shortcomings in the administration of the programme. We expect the programme managers to address these as a matter of urgency and look forward to hearing the responses of UNDP to the Board's recommendations.

United Nations Children's Fund

Mr. Chairman,

Officials in administrations the world over will be all too familiar with the temptation to use up spare money in budgets as the financial period draws to a close. However, we must express concern at the Board's findings with regard to UNICEF where so much expenditure is loaded into the final quarter or final month. It is difficult to understand, for example, how one country office managed to purchase 89% of its supplies in December 2001. We agree with the Board that this is probably more indicative of poor programme implementation and procurement planning than any other factors and we look to the fund to review the pattern of its expenditure. We should be interested in the Board's views on the extent to which this occurs in other UN organizations and how this can best be addressed.

United Nations Population Fund

Mr. Chairman, we noted in the report on the UN Population Fund that a previous recommendation from 1999 regarding procurement for the Fund has still not been implemented. Given the fact that the Fund itself observed that procurement of supplies had increased dramatically last year, we suggest that the development of a process for formally recording and monitoring suppliers' performance be given high priority.

United Nations Office for Project Services

Mr. Chairman, with regard to UNOPS, we are deeply concerned that the Board of Auditors had to modify their opinion in view of the financial position of UNOPS and its ability to fund in full any deficit from the operational reserve. We welcome the fact that the Office now has a contingency plan in case the operational reserve falls to $2 million or less. However, the measures indicated in the contingency plan, such as raising the fees for several clients, are of a structural nature and should be implemented without delay, particularly since the previous biennium saw a 20% rise in the recurrent administrative expenditure, while income decreased. We believe that the review of the organisation due to take place in early 2003 will be an important step in determining the future direction of UNOPS.

In conclusion, Mr. Chairman, we should like once again to express our sincere appreciation to the Board for their excellent work. The European Union has also noted the comments of the ACABQ regarding resources made available to the Board for carrying out their tasks. We believe that this crucial function must be adequately funded. We agree with the ACABQ that resources should be identified and requested by the Board for some of the specialised areas of its work, such as the review of the legal aid system in the Tribunals and the IT programme in the Secretariat, in addition to possible future work on reform of governance across the UN system.

I thank you Mr. Chairman.

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