Science Blog -- MEETING OF FIFTH COMMITTEE

Background

During its first substantive meeting this morning, the Fifth Committee (Administrative and Budgetary) was expected to address several issues on its agenda, including the reports of the Board of Auditors, review of efficiency, and profitability of commercial activities of the United Nations.

Board of Auditors

The first document before the Committee was a report of the Board of Auditors on the voluntary funds administered by the Office of the United Nations High Commissioner for Refugees (UNHCR) (document A/58/5/Add.5).

Without qualifying its opinion on the 2002 statements, the Board draws attention to its findings on the inadequacy of assurance obtained by the UNHCR that funds had been properly used by its implementing partners (as of June 2003, the 2002 expenditure not yet supported by implementing partners’ financial reports amounted to $14.2 million); and on the $70 million understatement of non-expendable property. The Board made recommendations to improve financial management and reporting, human resources management and programme management. It has noted that, in most respects, the UNHCR has actively responded to recommendations, although some had yet to be implemented.

The report notes that, in terms of financial management, 2002 was a difficult year, with a shortfall of $50 million in income. Unallocated available reserves at the end of 2002 ($50 million) were insufficient to cover the end-of-service, and post-retirement benefits estimated at some $263 million. Invalid expenditure reported in the financial statements amounted to some $5.9 million.

Regarding human resources issues, the Board states that between 1998 and 2002 the number of staff employed has constantly exceeded the number of posts, with the difference reaching 952 in 2002. In addition, as at 1 January 2002, there were 1,099 administrative “project staff” employed nominally by other organizations, but working, in fact, under direct UNHCR management. As a result, while the official staffing table included 4,553 posts as of 1 July 2002, the actual staff roster was over 6,600. At the end of December 2002, 113 Professionals (9 per cent of the Professional staff) were “in-between-assignment”. As of

1 October 2002, three D-1 and one P-5 staff members had been without assignment for, respectively, 15, 30, 43 and 44 months, while being on special leave with full pay.

Also before the Committee were three reports on the implementation of the Board of Auditors’ recommendations. The Board’s proposals on this follow-up were adopted by the Assembly in resolution 52/212, which emphasized managerial accountability for the implementation and addressed the need to disclose the position of individuals responsible and provide explanations if recommendations are not implemented.

The Board’s report updated as of 25 June 2003 (document A/58/114), which relates to recommendations made in 2000-2001, covers 15 organizations on which the Board reports on a biennial basis and includes comments by the Board based on the Secretary-General’s reports on the implementation of recommendations by the United Nations (document A/58/97) and by its funds and programmes (document A/58/97/Add.1). Also included in the document are the auditors’ comments on the implementation of recommendations by the United Nations Joint Staff Pension Fund and by the Office of Legal Affairs on a Board report on the handling of arbitration and claims cases.

The Board reports that all the organizations have included timetables for the implementation of the recommendations and identified office holders responsible for that. In general, the organizations have continued to operate effective mechanisms to strengthen oversight and monitoring in regard to the implementation of audit recommendations through special or existing committees. The number of recommendations themselves has more than doubled over the past three bienniums, from 156 in 1996-1997 to 337 in 2000-2001, and this is a possible explanation why only 117 recommendations had been fully implemented by June 2003, while 195 were under implementation and 24 had not been implemented at all. The remaining three recommendations were overtaken by events.

Taking up the Board reports, the Advisory Committee for Administrative and Budgetary Questions (ACABQ) (document A/58/384) recommends approving the Board’s suggestion related to consolidation of three of its reports into a single document.

In response to a request regarding reporting on the impact of audit recommendations, the Advisory Committee was informed that a concept paper had been prepared by the Audit Operations Committee, containing a definition of the responsibilities of the Board and those of the administrations of the various entities. The Audit Operations Committee also planned to meet with representatives of the administrations with a view to finalizing the approach and the procedures, including a timeline for implementation. Welcoming this development, which would be consistent with the results-based concept, the ACABQ looks forward to receiving information on progress made in this regard.

Joint Inspection Unit

According to the report of the Joint Inspection Unit (JIU) for 2002 (document A/58/34), during the period under review, the Unit pursued the series of comprehensive reviews of the administration and management of its participating organizations that it had commenced in 1999. In 2002, it completed 12 reports, one addressed to a single organization, the Food and Agriculture Organization (FAO), eight dealing with system-wide issues and three with several organizations. The Unit intends to maintain a similar mix of reports in the future.

The JIU continued to enhance its interactions with Member States and other oversight bodies of the United Nations system to achieve greater synergy and coordination. Efforts were also under way to further develop a follow-up system that would allow systematic tracking of the status of implementation of the Unit’s recommendations. In 2002, the JIU reached agreements on the handling/follow-up of its reports with the secretariats of six additional organizations -- FAO, World Food Programme (WFP), World Meteorological Organization (WMO), United Nations Educational, Scientific and Cultural Organization (UNESCO), International Civil Aviation Organization (ICAO), and the World Intellectual Property Organization (WIPO). Five of these agreements were subsequently endorsed by relevant legislative organs, and the sixth is scheduled to be submitted to the legislative organ concerned in 2003.

Also before the Committee were two notes by the Secretary-General on the JIU (documents A/58/64 and A/58/291), transmitting the programme of work for the Unit for 2003 and the preliminary listing of reports for potential inclusion in the programme for 2004 and beyond. Subjects to be addressed in the near future include harmonization of administrative practices and entitlements for United Nations field staff and reviews of human resources management, budgetary process and coherence for development.

Another Secretary-General’s report discusses the implementation of the recommendations of the JIU (document A/58/220) contained in its reports on strengthening the United Nations capacity for conflict prevention (document A/50/853); sharing responsibilities in peacekeeping: the United Nations and regional organizations (document A/50/571); and travel in the United Nations (document A/50/692). The report shows that the Secretary-General and executive heads of organizations of the United Nations system continue to give priority to implementation of approved JIU recommendations and that there have been significant developments in all the cases under review.

Also before the Committee was a note by the Secretary-General, which transmits the report of the JIU on the preliminary review of its statute and working methods (document A/58/343). Regarding selection of candidates for appointment within the Unit, the document notes the need to establish scrutiny mechanisms to assess individual candidacies, because the current process is widely perceived as cumbersome. The report also addresses the imbalance between the number of inspectors and research officers within the Unit, taking into account the principle of equitable geographical distribution and reasonable rotation.

Also according to the report, the JIU intends to carefully examine the balance between evaluations, inspections and investigations in order to increase the cost-effectiveness of its activities. The Unit also intends to improve its work programme through selection of relevant and timely subjects for its reports and invite more requests and suggestions from legislative organs and the United Nations System Chief Executives Board for Coordination. Other goals include further improvement in the quality of the reports and the relevance of inspectors’ recommendations, and monitoring the implementation of approved/rejected recommendations.

Review of Efficiency

The Secretary-General’s report on outsourcing practices (document A/57/185) contains a list of activities that have been outsourced during a three-year period from 1999 to 2001 and provides notations regarding planned duration of activities.

In a related report (document A/57/7/Add.1) the ACABQ requests that whenever an activity is outsourced for reasons of efficiency, the related savings should be indicated in the Secretary-General’s report.

The objective of the Joint Inspection Unit’s report on management audit of outsourcing within the United Nations system (document A/58/92) was to determine if outsourced operations conducted in 1999 and 2000 were consistent with the policy directives contained in resolution 55/232 regarding the reasons, goals and criteria for outsourcing. According to the document, new policy measures are not yet fully operational and many of the weaknesses identified by the Unit and the Office of Internal Oversight Services in their previous reports are still being rectified.

The Inspectors conclude that the new policy guidelines, together with a more distinctive concept of outsourcing, should be incorporated in the relevant policy instruments of the organizations. They also point out that United Nations procurement policies and procedures should be further reinforced with new standard contract clauses. Priority attention should be given to improved monitoring and control over outsourced contracts to ensure delivery of the efficiency and cost benefits expected from them.

The addendum to this report (document A/58/92/Add.1) contains the Secretary-General’s comments to the JIU’s recommendations. Expressing general support for the findings of the Inspectors, the Secretary-General calls attention to the need for flexibility, stating that decentralization would enable each organization to better determine what procedures should be applied, given its own unique circumstances. Appropriate control, regulation and oversight mechanisms also should be tailor-made to each body. They should not be overly strict, to avoid limiting the range of choice or negotiations leading to the most satisfactory arrangements.

According to the document, measures to improve uniformity of contracts include a database of contract templates; reviews of contract changes by the Office of Legal Affairs; and development of a Web site on procurement best practices by the Inter-Agency Procurement Working Group. The administration believes that all aspects of United Nations procurement, including outsourcing, are adequately covered by existing policies and procedures. Also, as long as a supplier continues to offer the most efficient and cost-effective service and is selected through a fair, transparent and competitive process, the administration is unable to support the suggestion that the same supplier should not be used for more than 10 years.

Another document before the Committee was a note by the Secretary-General (document A/58/258) transmitting the report of the Joint Inspection Unit on common and joint services of United Nations system organizations at Vienna. The report reviews the framework under which such services are provided, highlights best practices, identifies areas for improvement and examines the scope for expansion. It underlines the need for appropriate follow-through for each entity in terms of consultation with their respective governing bodies and exercise of leadership for such projects as common interpretation services and information and communication technologies.

The document contains 12 recommendations, including the proposal to develop plans for the establishment of a single common administrative unit under the management of the United Nations Office at Vienna, to be implemented no later that the 2006-2007 budget cycle. Also recommended in the report is a review of the existing cost-sharing mechanisms among the Vienna based organizations.

An addendum to this report (document A/58/258/Add.1) contains comments of the Secretary-General and the United Nations System Chief Executives Board for Coordination on a wide range of issues raised by the Unit. Having considered this report, the Consultative Committee on Common Services, in particular, states that it does not consider establishment of a single administrative unit desirable. However, the Committee and the Vienna Office will continue to review all common services to improve their efficiency. The recommendation to conduct a review of cost-sharing mechanisms is found acceptable, and a review of the cost of running parallel language training services will be undertaken soon.

Having considered several JIU reports, including those on outsourcing and revenue producing activities, the ACABQ, in a related report (document A/58/389) recommends that the Assembly consider those documents in the light of its comments. The matters dealt with in the report of Unit on common and joint services in Vienna are of continuing concern to the Advisory Committee, and it intends to revert to the report in the context of its future consideration of the issue.

The ACABQ also concurs with the Secretary-General’s comments on the outsourcing report, in which he expresses general support for the findings of the Unit, but emphasizes the need for flexibility and due consideration of the unique environments in which individual organizations operate. It also agrees that “the recommendations may be seen more as guidelines than as prescriptions for action” and that, as long as a supplier continues to offer the most efficient and cost-effective service and is selected through a fair, transparent and competitive process, it is in the interest of the Organization to continue to use him.

Profitability of Commercial Activities

In his report on measures to improve the profitability of the Organization’s commercial activities (document A/57/398), the Secretary-General expresses his intention to present such proposals in connection with the consideration of the programme budget this autumn. It would be the Secretary-General’s intention to propose the creation, under the jurisdiction of the Department of Public Information (DPI), of a unit to further public outreach through revenue-producing activities and reactivate the senior Advisory Board on Services to the Public. In a related report (document A/57/7/Add.1), the Advisory Committee notes this intention.

The Joint Inspection Unit report on the United Nations system revenue-producing activities (document A/57/707) points out that most so-called revenue-producing, or “commercial activities” are integral to the work programmes of the United Nations, but also present an opportunity to generate revenue. The activities reviewed in the document range from those that generate small amounts of income -— for example, the sale of souvenir items —- to those considered major revenue producers, such as fee-for-service operations at the World Intellectual Property Organization (WIPO) or the sale of greeting cards at the United Nations Children’s Fund (UNICEF).

The report recommends consideration of new management arrangements for revenue-producing activities in order to improve efficiency, proposing corresponding changes in the financial and administrative regulations and rules of various organizations involved. The document notes the need to manage existing revenue-producing activities in a more efficient and businesslike fashion, including through improved marketing strategies and techniques and expanded geographical coverage of sales networks, as may be appropriate to the nature and mandate of the organizations concerned.

In their comments to the JIU report (document A/57/707/Add.1), members of the United Nations System Chief Executives Board for Coordination note its timeliness in light of efforts to tap possible new sources of income in support of the organizations’ mandates. In some cases, greater specificity on the means of implementation is essential before the recommendations can be considered, however. Some of the recommended measures have already been addressed in the Secretary-General’s recent reports.

Some Board members observe that the report focuses more on the publications and related products than on the development of new income-generating activities. The use of the level of sales of publications as an indicator of efficiency, as well as the establishment of revenue targets, would be relevant only in those cases where publications are targeted at high-income recipients. Clearly, this is not the situation for many of the organizations of the system, for which dissemination of information and cultivation of a positive image of the United Nations are clearly the priorities.

In a related report (document A/58/7), the ACABQ takes note of the report of the Joint Inspection Unit, as well as the comments of the Secretary-General thereon. With regard to the recommendation in which the Unit requests the Secretary-General to consider merging revenue-producing activities into a single Business Division managed by an interdepartmental body, it is noted that the Secretary-General will explore this recommendation in a report to be submitted to the Assembly at its fifty-eighth session.