EU Presidency Statement - Financial Reports and Reports of the Board of Auditors

Mr Chairman,

I have the honor to speak on behalf of the European Union. The Candidate Countries Bulgaria, Romania, Turkey and Croatia, the countries of the Stabilisation and Association Process and potential candidates Albania, Bosnia and Herzegovina, the Former Yoguslav Republic of Macedonia, Serbia and Montenegro, and the EFTA countries Iceland and Norway, members of the European Economic Area, align themselves with this statement.

First of all, allow me to thank Mr. Fakie for introducing the reports of the Board of Auditors, and the representatives of the Secretariat and the ACABQ for introducing their related reports. The work of the Auditors is a cornerstone in the oversight of the UN system, and, again, the Board of Auditors presented us with reports of high quality.

We have 20 reports in front of us under this agenda-item, totaling over 2000 pages. Because of the importance of the external audit, we have to voice our dismay that many of these reports arrived too late to give them the full attention they deserve. We find it difficult to digest these amounts of information in the short time that was given to us. We ask the Secretariat, especially in light of the discussions we had earlier this session on the late issuance of documents, to consider the need of Member States to be able to carefully study these reports.

Mr Chairman,

I will first turn to the main issues in the concise report, and then address some of the individual reports that deserve our particular attention.

On the concise report: we consider this report as an essential tool to identify common issues and deficiencies in the management of the United Nations system. The report gives a clear overview of the most important recommendations of the Board for improvements in this regard. As such, we are pleased to note the progress in the implementation of recommendations. However, the EU urges action by the SG and the executive heads of the funds and programmes, in those cases where recommendations are not yet implemented; especially those recommendations that date back from the biennium '98-'99. We wonder how much money could have been saved if the recommendations where implemented on time, especially in the cases of procurement and ICT. We will ask for detailed explanations why it has taken some programme managers five years or more to follow up on the recommendations. In these cases, a mandatory timeframe for implementation, with a clear accountability for the manager overseeing this process, could be the way forward.

Mr Chairman, we would especially like to see a follow-up with regard to the recommendations concerning governance principles and best practices. We fully agree with the Board that important improvements can be made in this regard. The fact that none of the 16 financial reports submitted to the Board mentioned performance in terms of organisational objectives, mandate or system-wide objectives like the MDG's, is a case in point. Good governance requires a clear insight in the performance of an organization, and this requires a clear link between resources spent and objectives achieved. It is regrettable therefore, that no action has been taken to act upon the request in resolution A/57/278, where the SG and the executive heads of the funds and programmes were asked to examine governance, principles and accountability throughout the UN-system; and to make proposals thereon. We would like to see a report on this important matter in the near future.

Mr Chairman, the effectiveness of governance is closely linked with the abilities for effective internal oversight. On the system-wide level, we are already discussing the JIU and OIOS this session; and we reiterate our commitment to improve and strengthen both organizations. But we should also direct our attention to effective internal oversight within the organizations, to create an accountability culture. It is encouraging to see that the organizations turn to so-called ERP-systems to improve their control over resources planning and monitoring, thus strengthening their capacity for internal oversight. Unfortunately, the efforts are marred by serious problems with implementation, most notably by poor procedures for internal control. Also, the use of ERP-systems has not yet resolved the serious issues with inter-agency balances.

Related to the implementation of ERP-systems, it is worrying to see that there appears to be no system-wide coherence in the adaptation of ICT-strategies. In fact, many organizations lack a documented strategy. We fully concur with the Boards view that the commonality under the UN-system calls for greater inter-agency cooperation on information and communication technology. We agree with their recommendation that a comprehensive, UN-wide review on coordination of ICT efforts should take place. The EU is always reluctant in asking for more reports from the Secretariat, but how much savings could we already have achieved in the USD 700 million spend on direct ICT expenditures for the previous biennium alone? And, as we are in a personnel year, how much frustration would we have saved the employees that have to deal with all these different IT-systems? In the light of these questions, we think an even sharper focus on IT-questions within the Board is appropriate. If the Board estimates that it is necessary to employ more resources to IT-audits, the EU would be in favor of this.

Mr Chairman, apart from governance, internal oversight and ICT, there is more to be said about the recommendations in the concise report. Serious attention needs to be given to the matter of unfunded end-of-service liabilities, which exceeded USD 3 billion at the beginning of this year. Other important items concern the prevention of internal corruption and fraud, the management of non-expendable equipment, and procurement. We will raise these and some of our other observations during informals.

Mr Chairman,

Allow me to turn to several individual reports, namely UNDP, UNFPA, UNDCP and UNOPS. (We will deal with the reports of the tribunals and the CMP under their respective agenda items.)

Mr Chairman, the audit opinions on UNDP, UNFPA and UNDCP were unqualified, but with clear concerns. All three organizations seem to have taken little heed of earlier recommendations of the Board. We do not understand why these organizations, that had qualified opinions only four years ago and were also negatively mentioned two years ago, still do not have their accounts in proper order.

The issues we highlighted in the context of the concise report seem to be especially applicable for these organisations. In the case of UNDP we noted a particularly striking example, where one of the field offices implemented a different ERP-system than the rest of the organization. In our view, such behavior not only hampers governance and internal control, it is also simply wasteful: the cost for this 'go-at-it-alone' attitude was USD 1,5 million.

Mr. Chairman, of great concern to the EU is the Board's report on UNOPS and the fact that the Board was unable to express an opinion on the financial statements of the Office. The report speaks for itself, so I will not dwell on the findings of the Board, but rather focus on the Board's recommendations and the way ahead.

The EU has noted that UNOPS has already taken several steps to rectify the critical situation, and we would like to get the assessment of the Board of Auditors, the controller, the ACABQ, and the Executive Director of UNOPS, on whether these steps are deemed sufficient with a view to resolving the problems identified as expeditiously as possible.

Furthermore, we would like clarification of the following: if the GA takes note with concern of the Board's report and fully endorses the recommendations therein, will this form a sufficient basis for a renewed audit within the current session of the GA? And will this enable the Board of Auditors to form an opinion on the UNOPS financial statements for the biennium ended 31 December 2003?

Mr Chairman,

I have outlined several of the main items that are of importance to the EU under this agenda item. We would like to once again commend the Board of Auditors for their excellent work. We look forward to discussing their findings in more detail during the informal consultations.

Thank you, Mr Chairman.

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• EU Presidency Statement - Financial reports and reports of the Board of Auditors (7/10/2003)
• EU Presidency Statement - Reports of the Board of Auditors (7/5/2003)