DP-WGOC-V-CRP4 - GC Int Gov Wk Grp 5th Ses Jun 1980web.undp.org/execbrd/archives/sessions/gc/36th-1989/DP-1989-58-A… · Item 9(d) of the provisional agenda ORIGINAL: ENGLISH I SUPPORT

UNITEDNATIONS

DP

Governing Councilof theUnited NationsDevelopment Programme

Distr.GENERAL

DP/1989/58/Add. I31 January 1989

Thirty-sixth session5 June - 30 June 1989, New YorkItem 9(d) of the provisional agenda

ORIGINAL: ENGLISH

I SUPPORTI

FINANCIAL, BUDGETARY AND ADMINISTRATIVE MATTERS

Audit report~

Addendum

89-02639

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DP/1989/58/Add. IEnglishPage 2

Contents

Su~nary of the Status of funds ofthe executing agencies ........................................................ 3

Audited accounts of the Participa<ing add Exg~A~encies and reports of External Auditors

United Nations, including Economic Commission for Africa,

Economic and Social Commission for Asia and the Pacific,Economic Commission for Europe, Economic Commission for

Latin America and the Caribbean, Economic and SocialCommission for Western Asia, United Nations Conference onTrade and Development and United Nations Centre for

Human Settlements ........................................................ 6

United Nations Industrial Development Organization (UNIDO) ............... 8

International Labour Organization (ILO) ................................. 21

Food and Agriculture Organization of the United Nations (FAO) ........... 25

United Nations Educational, Scientific and CulturalOrganization (UNESCO) ................................................... 46

International Civil Aviation Organization (ICAO) ........................ 58

World Health Organization (WHO) ......................................... 61

World Bank (IBRD) ....................................................... 62

Universal Postal Union (UPU) ............................................ 64

International Telecommunication Union (ITU) ............................. 70

World Meteorological Organization (WMO) ................................. 77

International Maritime Organization (IMO) ............................... 81

World Intellectual Property Organization (WIPO) ......................... 84

International Atomic Energy Agency (IAEA) ............................... 90

World Tourism Organization (WTO) ........................................ 93

African Development Bank (ADB) .......................................... 95

Arab Fund for Economic and Social Development (AFESD) ................... 98

Asian Development Bank (AsDB) .......................................... I00

United Nations Development Programme (UNDP) as executing agency for its projects ...................................... 108

, 0,

Summary of

UNITED NATIONS DEVELOPMENT PROGRAMME

the Audited Status of Funds Submitted by the Executing Agencies

as at 31 December 1987 (expressed in US Dollars)

~at1~ nmd

Balance at 1 January 1987

Add: Cash drawings frum L~DPlOVsOtbar ~ (~t)Nts~ll~-~ous income and

exe.B~ ad~u~.mnts (~t)Miscellansons items refunded

to (by) IJNDP (net)

(34,356,238) (2,136,818) 23,757 (1,532,058) (2,475,510) (275,254) (25,021,648) (2,996,123) (4,677,952) (10,827,392)

80,245,860 5,350,000 150,000 900,000 4,571,400 581,347 61,277,446 8,329,632 8,789,112 42,173,51958,825,071 2,140,551 30,258 2,352,362 2,776,898 292,201 22,415,944 2,324,947 6,849,014 17,571,022

(25,358,641) (206,956) (5,026) (2,540,374) 262,765 (205,320) (746,851) 986,030 634,563 (186,036)

1,394,038 54 63,762 i0,360 486,631 68,404 7,457 45,082

113,760 26,230 (5,253) 8,775 14,729 42,421 (21,265) 4,290 (14,558)........................................................................................................................................................................

80,863,850 5,173,007 193,790 (811,295) 5,199,315 418,063 58,453,943 8,682,625 11,606,414 48,761,637

Deduct: Expencl~ture during 1987For ProjectsFor ProT~mme Suplx)rt

Co~ts

Balanc~ as at 31 ~ 1%7

Reprnsented by:

Caab at bank, on hand andin transit

accounts Receivable

Deduct: accounts Payable1987 Unliquidated

Obligations

Salance as above _a/

a_/ Explanatory Note:

87,873,544 6,379,785 154,248 1,595,426 5,139,664 577,803 69,667,926 8,236,185 13,100,821 49,122,168

11,079,778 829,372 2~,735 207,405 668,156 75,114 9,690,910 1,073,468 1,700,678 6,337,116........................................................................................................................................................................

98,953,322 7,209,157 174,983 1,802,831 5,807,820 652,917 79,358,836 9,309,653 14,801,499 55,459,284........................................................................................................................................................................

(18,089,472) (2,036,150) 18,B07 (2,614,126) (60B,505) (234,$54) (20,904,893) (627,028) (3,195,085) (6,697,~7)============================================== ...... .A- _-_=-~--==.*-=~_-==---=====~_=~ = =~ .........................................

The mounts credlted to the above Olmratlnq Fund Statem~ts are record~ on a cash basis, i.e. cash actv~dll remitted or Im~ts ~I made by D~DP o~behalf of the e~ecuting a~encies. Expenditure, however, is recorded on an accrual besis, i.e. includes ~aliquidated obligations for which the executi~9 agencieswill receive the necessary funds from t~DP at or near the time of disbursmant, at any reporting date, therefore, the expenditure incurred normally exceeds thef~ds receive<l and for this renson the balance of funds is normally negative.

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Summary of the Audited Status of Funds Submitted by the Executing Agencies

as at 31 December 1987 (expressed in US Dollarsl(cont’d)

(12,711,151) (8,142,751) (m,669,620) (2,108,781) (12,2~,026) (290,588) (3,670,865) (9~5,360} (539,562) (682,710)

62,277,280 16,987,007 30,630,000 15,700,562 43,243,577 550,000 14,590,976 6,529,884 4,759,549 2,304,00088,098,909 21,483,129 11,514,321 5,347,275 20,419,826 1,250,575 8,713,811 5,785,624 1,477,061 1,544,173(8,605,426) (5,688,070) 1,438,910 (43,020) (513,971) (166,722) (300,860) (92,389)

(90,615) 403,642 292,506 40,280 (372,427) 78,161 176,409 138,253 31,826 3,550

3,072 608,168 (93) 24,673 (412) (8,910) (5,824) (12,781) 10,996.......................................................................................................................................................................

128,972,069 25,651,125 31,767,114 19,004,009 52,484,960 1,544,716 19,387,450 11,335,855 5,415,233 3,087,620

Deduct: Fxpenditure during 1987For Pro~e~~or ~ Support

Coetm

129,659,223 27,410,703 29,865,645 18,593,018 50,442,061 1,650,894 22,452,026 10,101,606 5,259,580 2,402,833

16,657,422 3,450,687 3,655,326 1,904,069 5,411,588 363,197 2,809,053 1,900,798 1,100,0O0 526,204.......................................................................................................................................................................

146,316,645 30,861,390 33,520,971 20,497,087 55,853,649 2,014,091 25,261,079 12,002,404 6,359,580 2,929,037..................................................................................... __ ............................................................................

(17,344,576) (5,210,265) (1,753,857) (1,493,078) (3,368,689) (469,375) (5,873,629) (666,549) (944,347) 158,583

a_/ Explanator~ Note:

5%0 em~mbJ credited to the above Oparating ~ Statem~ta are L’OC(EdSd on I c~h bulJ, i.e. ca~ ectual/y reaitted or pal~m~t~ ah~dl made b~ I]~DP onof tim u~mt~ ~ct~-. F~lltum, bmmver, la ~ cm em uc=’uml biudJ, i.e. inclu~ mllqu~t~d ~la~tinu for vhich tl~ mmcctl~

rill mce/w tim oeceu~/fund~ from ~ at or ram, the ttm of dl~zw~mmt. It e~/rmporttn~ d~to, ~ot~, Um ~dittw~ lmmrred ~l/I ~ thefmxk mcatmd ~1 f~ th~ mum tim kthm~ of fmd~ t~ ~m~lll m~tim.


Summary of the Audited Status of Funds Submitted by the Executing Agencies

as at 31 December 1987 (expressed in US Dollars) (Cont’d)

(1,140,~) (1,~,822) (174,910) (166,690) (30~,sm) - (139,~,ms) 9,629,m (17,5%8,~0) (147,767,~9)

705,0(}0 7,393,791 2,031,000 197,741 6,760,395 - 427,120,178 32,209,086 - 459,329,2642,164,023 3,792,816 569,092 ~,I19 - 288,086,022 29,055,363 78,261,239 3%,382,624

(183,~4) (322,340) 518 133,558 - (41,709,042) 6,115,021 {35,594,021)

36,772 42,416 14,818 6,721 - 2,878,100 360,441 46,008 3,284,549

21,547 31,101 941 - 841,517 4,709 59,774 906,000

1,765,462 9,340,3~4 2,148,761 31,569 6,920,914 - 537,3%8,570 77,374,466 60,768,151 675,541,187

Y~pQ~ItUrQ d~X~ 1%87For h~JectJFor ~ Support

2,240,621 9,176,164 1,629,253 68,294 7,269,340 487,021 560,555,852 67,157,944 73,748,638 701,462,434

492.937 1,188,886 357,496 957.914 63,313 72,521,622 846,441 7,162,675 80,530,738

2,733,558 10,365,050 1,986,749 68,294 8,227,254 550,334 633,077,474 68,004,385 80,911,313 781,993,172............................ ......°. ................................... . ................................................ . .................... . .........................

~lanoe ~.. at 31 ~ 1987

~pnmented br

Cash at ~e~, on band andin tran~t

~cc~mt~ i~elw~le

(%8,096) (I,024,68~) 162,012 (56,725) (1,306,340) (558,334) (95,678,904) 9,370,081 (20,143,162) (108,~1,965)~:=r- .-====-.===---

(485,731) 734,291 199,498 278,406 - 40,230,924 - 40,230,924273,979 377,141 385,036 522,469 55,962,161 9,370,081 65,332,242

(211,752) 1,111,432 584,534 800,875 - %8,193,085 9,370,081 105,563,166...... ° ..................... . ...... . ........................... . ....... . ............. . ................................... . ..............................................

Deduct" lccotmts Pa]rable1%87 l~nllq~14at~l

(~11gatto~

93,142 375,493 194,064 36,725 193,132 530,T~8 58,458,556 58,458,556

663,202 1,760,625 228,458 1,914,083 19,556 133,413,433 20,143,162 153,556,595

756,344 2.156,118 422,522 36,725 2,107,215 550.334 191,871,989 20,143,162 212,015,151...... . ............................................................................................................................... . ................................

a/ Explanatory Note:

(%8,096) (1,024,686) 162,012 (56,725) (1,306,340) (558,334) (95,678,904) 9,370,081 (20,143,162) (106,451,%85)

Tim mmmt~ e-,~ltted to tim above Ope~ting Fund Statemnts are record~ o~ a cash basis, 1.*. caah actually remitted or parmnt~ ~ made W I]~)P o~of the e~mt1~ ~w..~. l~.~lit~m, ~r, in ~ m an accr~ b~L~, i.e. incl-a- ~ali~dated ck~J~tA~ fx ~ic~ the ¢.aV~ W~t-.

,ill r~c~lw the ~c~rj fm~k free ~DP at or near the tim of di~n~t, at ~nJ rqxEt~ d~t~, tbamfcn, the ~ditum incurred nm~a]/~ ~ t~fun~ r~c~lved md f= th~ m~ t~ ~ of f~k in nomall! .~/m. OuOu ~

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I. Statement of inc~ end e×penditure

for the twe|ve-~th period

of the biennium 1986-1987

eficl~ 31 DecOr 1987 ~/

|nc~

Expendi ture

Excess of incomeover expenditurefor the above period

II. Statement of assets, Liabilitiesend La~enc~red fund balance

Assets

CashAccoclnts receivableDue from UMDP, UNFPA

and UNEP for excess ofexpenditure over fundsprovided

Deferred charges and

other assetsUnspent allocations

lnterfund balancesreceivable

Due from United NationgGeneral Fund

1oral asse~s

TECHNICAL CO’OPERATIONACTIVITIES EXECUTED BY THE UNITED NATIONS, UNITED NATIONS REGIONAL COMMISSIONSUNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT AND UNITED NATIONS CENTRE FOR HUMAN SETTLEMENT

COMBINED STATUS OF FUNDS FOR THE BIENN|UM ENDED 31 DECEMBER 1987.....................................................................................................

(EXPRESSED IN US DOLLARS)

UNITEDNATIONS

REGIONAL COMMISSIONS

LATIN AMERICAASIA AND AND THE WESTERN

AFRICA THE PACIFIC EUROPE CARRIBBEAN ASIA UHCTAD URCHS TC........................................................................................................................

214,862,791

214,862,791

===============

8,385,2351,843,685

18,089,472

12,688,158168,301,324

1,443,678

678,164

12,619,244 14,462,619 520,513 3,426,554 1,267,821 18,293,930 29,188,984 294,642,456

12,619,244 14,462,619 520,513 3,426,554 1,267#821 18,293,930 29,188,984 294,642,456

........................................................................................................................

1,663,345 800,704 1,464,404 12,313,688599,679 80,442 46,311 386,703 151,977 912.598 95,976 4,117,371

2,036,150 608,505 2,614,126 234,854 627,028 3.195,085 27,405,220

687.104 1,701 49,072 24,735 13,450,7705,036,426 24,490,852 773,355 4,554.082 121,271 13,022,719 18,367,284 234,667,313

377.043 170,260 685,622 2,676,603

678.1~4

211,429,716 ~.359.3Sg 27.220,187 991,b27 7,554.911 508,102 I~,097,/43 23,147,484 295.309.129

=============== ==:============ =============== =============== ====:========== ======:=~-===:= =======:===- ~= ===========:=== ====:::====.===

Liabilities and unencumberedfund bat ance

TECHNICAL CO-OPERATION ACTIVITIES EXECUTED BY THE UNITED NATIONS, UNITED NATIONS REGIONAL COMMISSIONSUNITED NATIONS CONFERENCE ON TRAOE AND DEVELOPNENT AND UNITED NATIONS CENTRE FOR HUHAN SETTLEHENT

CONBINED STATUS OF FUNDS FOR THE BIENN|I.~ENDED 31 DECENBER 1987 (Cont’d).....................................................................................................

(EXPRESSED IN US DOLLARS)

Accounts Payable 1,382,080 647,827 866,8~9Untiquidated obtigations 29,562,975 1,937,981 1,768,805 4,156Untiquidated obligations

for future years 12,183,337lnterfund balances payabte 43,772 72,403Due to United Nations

Generet Fund 737,125 49,939

D~e to speciat accounts forprogramne support costs = 122,907

Operating fund 18,806Deferred income 168,301,324 5,036,426 24,490,852 773,355

Totat [iabitities andand fund balance

126,175 136,292 4~4,336 539,861 4,173,390

Z26,263 118,016 2,021,513 3,823,584 39,463,293

12,183,337116,175

2,648,391 132,523 ~W>9,547 283,547 4,221,072

209.628 133o208 k65,74318,806

4.554,082 121,271 13,022,719 18,367.284 234,667,313

211,¢29,716 8,359,359 27,220,187 991,627 7,554,911 508,102 16,09T,743 23,147,484 295,309,129==:s====:=:==== ===:==:=====:== ======:======== =============== ==~:=========== =====:====:==== ==============~ mm============= =========---===

a/ This statement comprises information extracted From Schedutes 14.4 to 14.11 of Supplement No. A/43/5 of the United NationsFinancial Report and Audited Financiat Statements for the biennium ended 310ecenC~r 198Z and Report of the Board of Auditors, Volume 1.

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DP/1989/58/Add. I

EnglishPage 8

REPORT OF THE EXTERNAL AUDITOR ON THE STATEMENTSRELATING TO THE PARTICIPATION OF THE UNITED NATIONSINDUSTRIAL DEVELOPMENT ORGANIZATION (UNIDO) AS EXECUTING AGENCY IN THE UNITED NATIONS DEVELOPMENTPROGRAMME (UNDP) AND IN UNDP-ADMINISTERED TRUST FUNDS~YIR THE FINANCIAL PERIOD ENDED 31 DECEMBER 1987.

GENERAL

I. The statements and supporting schedules relatingto the participation of UNIDO in the United Nations Develop-ment Programme are in the form prescribed by UNDP. Myexamination of them has been carried out in conjunction

with my audit of the regular budget and subsidiary fundsof the Organisation. It inoluded a general review of theaccounting procedures andsuch tests of the accountingrecords as I considered necessary.

2. With regard to technical co-operation activitieswe conducted a general review of UNIDO policies and proce-dures on projects design, monitoring and follow-up. Inthis connection an in-depth examination of fifty-fourlarge-scale projects executed in Bangladesh, the SocialistRepublic of the Union of Burma, the People’s Republic of

China, the Republic of India, Nepal, Pakistan and Vietnam,most of them with a budget exceeding $ 1,000,000 financedby UNDP was carried out.

SUMMARY OF FINDINGS

3. Our examination revealed serious shortcomingswith regard to the preparation and submission of the Pro-ject Self-Evaluation Reports (PER) and Project PerformanceEvaluation Reports (PPER), especially with respect to theIndia projects.

4. We also noted that the flow of informationgenerated by the UNIDO PER System, the UNDP/UNIDO PPERsystem and from the in-depth evaluations, was analysedfor integration into the UNIDO activities. On the otherhand, we had to draw Management’s attention to the recur-rence of situations affecting normal progress of projects.

5. Our review further disclosed an unusual practiceestablished in India with respect to in-depth evaluationsbeing mostly conducted by the UNDP representative only,thus leaving UNIDO’s interests inadequately protected.With regard to the China projects, we observed that althoughprovision for tripartite in-depth evaluations was made inthe project documents, they were so far not c6-ried out.

6. Thought efforts have been made to improve theappraisal process by UNDP and UNIDO, which may have a posi-tive impact on the quality of project design, in 1987 theproduction of outputs for a number of projects was stillhampered by the fact that project design had been ratherpoor.

.. °


7. Our audit furthermore indicated that quite oftenhighly sophisticated equipment arrived at project sitesin severely damaged condition, missing substantial compo-nents and/or showing defects in its construction. Likewiseit revealed that considerable insurance claims were only

settled at the exchange rate applicable at the date of in-suring the goods, whereas all costs relating to replacement/

repair of missing/ faulty/damaged equipment should normallybe borne by the vendor/contractor and/or the insurance com-pany, and therefore the exchange rate applicable should be

the one valid at the time of settlement.

8. Our examination finally evidenced that in1986-1987 project implementation continued to be hamperedby delays in the approval of job descriptions for and theacceptance of consultant and expert candidates as well asin nominating fellows and participants in study tours,and by the lack of/or late provision of required counter-part staff as well as delays in completion of projectbuildings and construction facilities.

TECHNICAL CO-OPERATION ACTIVITIES

Internal evaluation system

A. Project Sel~Evaluation Reports (PER) andProject Per~rmance Evaluation Reports (PPER).

9. We noted that the UNIDO PER, revised in 1984,was designed to elicit precise information on whether aproject is producing outputs at the right time and inthe quality and quantity foreseen, thus providing Mangementwith a factual basis for prompt decisions on factors affec-ting outputs. It aimed at bringing together result-orien-

ted reporting and Headquarters’ feedback with the princi-pal review and decision-making mechanism for field projects,namely the Tripartite Reviews (TPR).

10. We also noticed that as of August 1987 a revisedUNDP PPER has been gradually introduced, incorporatingUNDP’s progress reports and UNIDO PERs.

B. Timely submission of PERs and PPERs by the Field Offices

ii. We observed that :(i) at the time of our audit in April 1987 fourteen

PERs on India projects to be submitted in 1986 were notreceived yet from the field, in spite of repeated remindersby cable ;

(ii) at the time of our review in April 1988 UNIDOwas still not in receipt of nine of them, while at thesame time, eleven PPERs, scheduled for 1987, on Indiaprojects and two on China projects had not yet been trans-mitte£. In this connection, we noted from the October 1987"Anal}sis of Experience with fripartite %n-depth Evaluationsin 1986" that in projects which were assessed as "in trouble"no PERs had been prepared during the projects’ lifetime.Since inadequate management and monitoring, and lack ofcorrective action over a long period were mentioned as im-portant causes for the deplorable situation, a PER couldhave initiated a more timely handling of these problems.

.,.


We, therefore, strongly recommended that urgent steps betaken with a view to reaching a timely submission of allPERs and PPERs by the field officers or project authorities.

12. UNIDO Management agreed and stated that on occa-sion of the semi-annual PPER scheduling of July 1988, aletter will be sent to all field officers to urge compliancewith PPER requirements.

13. In view of UNDP’s responsibility for ensuringthat its funds are always being utilized with maximum effi-ciency, effectiveness and economy, we suggest that UNDPAdministration should fully support the action taken by

UNIDO.

C. Utilization of the Flow of Information generated bythe PER/PPER System

14. We noticed that in 1985 and 1986 PERs were usedin some 50 per cent of the TPRs held, as opposed to the

26 per cent in the period prior to August 1984. Since1987 the use of the PPER document as the main backgroundpaper for TPRs appears significantly improving.

15. In response to our questioning on the utiliza-tion of the information generated by the PER/PPER systemwith a view to taking organization-wide corrective actionUNIDO Management stated that implicitly findings fromevaluation activities have been taken into considerationin the past and will continue to be taken into account,when developing procedures, considering changes in theorganization, conducting training courses, appraisingprojects, etc. In 1987, a detailed analysis was made ofthe PERs submitted and processed in 1986. Another analysis,also carried out in 1987 of the experience with tripartitein-depth evaluations, confirmed the results of the PERsanalysis. The lessons learned through these analyses werepassed on to the Departments charged with project design andimplementation. The report on these analyses was shared withthe missions in Vienna, UNDP and other United Nations agen-cies. Further feedback to project design and implementationwas ensured through six workshops on design and evaluationof technical co-operation.

16. We were further informed by UNIDO Administration

that in May 1988 a new analysis of experience with theinternal evaluation system in 1987 was undertaken, showingan improvement in performance in large-scale projects asagainst 1986. The proportion of projects progressing succes-fully increased by fourteen percentage points. The propor-tion of projects experiencing problems and requiring cor-rective action decreased by eight percentage points. Thenumbec of projects progresa ng better than planned increasedappreciably, while the number of projects deemed to be "introuble" decreased (from nine to six). Administration addedthat another new analysis of the in-depth evaluation carriedout in 1987 is under preparation. As in the previous year,the report will be widely distributed.

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DP/1989/58/Add. IEnglishPage II

17. Although we understand that an organization-widefeedback of evaluation findings and its materializationin projects design and implementation may take considerabletime, we drew UNIDO Management’s attention to the recurrenceof situations affecting normal progress of projects, asshown by the PERs, PPERs, TPR reports and tripartite in-depthevaluation reports, submitted in 1987-1988 for a number of

projects. Some typical examples of inadequacies are indicatedhereafter.

a) Project DP/BGD/84/018

(i) Late or non-acceptance of experts for reasonsof an administrative nature rather than because of lack ofqualifications ;

(ii) Considerable delays in conducting projectin-depth evaluation.

b) Project DP/BUR/80/011

(i) Overoptimistic planning and timing of inputs

on all sides ;(ii) TPRs erroneously not held since implementa-

tion was significantly delayed ;(iii) Long delays in decision-making ; and UNDP’s

and UNIDO’s inability to cope efficiently with crisis situa-

tions, such as the necessity of a major project revision.

c) Project DP/NEP/80/O03

In this case, evaluation comments given on pre-vious PERs were not taken into account.

d) Project DP/PAK/83/014

(i) The expert’s ability to train counterpartpersonnel has been largely constrained by the lack of coun-terparts ;

(ii) Many of the shortcomings experienced by theproject could have been better identified earlier if theproject outputs had been fully defined in the project docu-ment ;

(iii) Closer co-operation between all partiesinvolved is required ;

(iv) Sophisticated equipment should not be purchasedunless covered by adequate warranty protection and writtenacsurance that after sales servicing will be provided ;

(v) The usefulness of the visiting experts couldbe greatly enhanced if they may stay for a longer periodinstead of splitting up their total time into short stays ;

(vi) Mid-term evaluations should be more frequentlyconducted for projects with substantial implementation delays.

e) Project DP/VIE/82/O04 (i) The project aiming at the improvement of main-

tenance and repair of rice mill equipment, is very importantfor the country ;

(ii) The formulation of the Government and UNDPinputs was incomplete retarding the details of both personnaland equipment components ;

(iii) Delays have occurred because of the lateordering of vital equipment owing to the fact that duringprocurement the value of the US dollar fell drastically, andtherefore the ordering of equipment had to be suspended

while awaiting the required additional funds, approvalof which took several months ;


(iv) As for the expert in repair and maintenanceof rice mills, the CTA had time and again reported delaysby the Government in accepting a candidate.

18. As regards these typical examples of inadequacies,we were informed by UNIDO Administration that the backstop-

ping Branches are taking the necessary corrective action.

19. We recommended that due consideration should alsobe given by UNDP Administration to all such findings inorder to assist UNIDO in systematically improving, interalia :

(i) the quality and timely delivery of all techni-cal backstopping ;

(ii) more realistic planning and timing of inputs (iii) timeliness of major project revisions and

rephasings ;(iv) procedures concerning recruitment of experts

and consultants, and placement of fellows ;(v) timely procurement of vital equipment,

well as its reliability ;(vi) timeliness of mid-term evaluation exercises (vii) the decision-making process.

Tripartite in-depth evaluations

20. From the Analysis of experience with Tripartitein-depth Evaluations of UNIDO-executed Projects in 1986,we noted following valuable conclusions :

(i) Sometimes the in-depth evaluation is theonly tool available to solve a long-standing problem ormisunderstanding between the three parties concerned ;

(ii) Quick reaction and effective follow-up

can significantly increase chances for improvement ofon-going projects or the launching of new ones ;

(iii) The full participation of a capable andactive government representative had often led to con-structive and realistic recommendations for project impro-vement and increased chances for effective follow-up ;

(iv) Mid-term evaluations seem to have the mostimmediate effect on improving project implementation ; andin projects where problems are identified early, it ismore appropriate to have a mid-term in-depth evaluationwhich can introduce corrective action or project re-orien-tation at an early stage, rather than to wait for a termi-nal evaluation carried out simply to satisfy formal require-ments.

21. Our audit, however, revealed an unusual practiceestablished in India with respect to in-depth evaluations,being mostly conducted by the UNDP representative only,thus leaving UNIDO’s interests inadequately protected. Wetherefore questioned UNIDO Management on the action taken

in this respect and were informed that UNIDO h~s repeatedlyreminded UNDP in India and at Headquarters about tripartiteevaluation requirements and particulary the need for UNIDO’sparticipation ; the more so as in the past UNDP evaluationexercises had been rather poorly conducted resulting inGovernment’s doubts on the utility of spending "IndicativePlanning Figures (IPF)" resources for evaluations.


22. Though the observations we made in this respectresulted in a satisfactory agreement with the Government,it appears this agreement is not carried into effect yet.

23. With regard to the China projects, we observedthat, although provision for tripartite in-depth evaluationsis made in the project documents, they were so far not ta-king place, despite repeated approaches made by UNIDO,directly or through the Senior Industrial Development FieldAdviser (SIDFA).

24. We strongly recommend that UNDP Administrationshould take special care in having proper triparite in-depthevaluations carried out in India as well as in China.

Factors affecting timely production of project outputs andhampering substantial increases in the rate of projectimplementation

A. Project Design and Appraisal

25. As stated in the Analysis of Experience withTripartite in-depth Evaluations of UNIDO-executed Projectsin 1986, deficiences in project design (such as overambi-tious or ill-defined objectives and expected outputs ;failure to take external factors into account or to includebaseline data for measuring and evaluating results ; faultyestimates of time, money and human resources needed toachieve objectives ; unrealistic assessment of the Govern-ment’s absorptive capacity and ability to meet its committ-ments to the project or to sustain it after completion)were the most frequent cause of problems in the implementa-tion of the UNIDO technical cooperation programme.This situation appears significantly improving with thesplit of responsibilities for project design and implemen-

tation, and the establishment of an independant ProjectAppraisal Section at UNIDO Headquarters, Project AppraisalSection which became fully functional in early 1987. Sinceat the same time the UNDP appraisal process has also beentightened, UNIDO Administration is convinced of the positiveimpact all these efforts will have on design quality, themore so as six workshops on design and evaluation of technicalco-operation were also conducted.

26. We were further informed by Administration thatinadequate project design appears less frequently thanbefore as a cause for projects progressing below plan ;this percentage dropped from 58 in 1986 to 25 in 1987.The analysis made recently revealed a significant numberof better designed projects in 1987.

27. For the sake of completeness, we had to mentionin this cegaru that still in 1987 the production of outputs

was hampered by the fact that design had been rather poor.For example, projects DP/BUR/80/OII, DP/BUR/80/015,

DP/IND/82/007, DP/IND/84/013, DP/NEP/80/003, DP/VIE/80/039and DP/VIE/82/004.

°.° D


B. Project Equipment

28. Our audit disclosed that in 1986-1987 severalprojects had serious problems with delivery, installationand commissioning of major equipment components. This canbe illustrated by following typical examples.

a) Project DP/IND/79/026

(i) The acoustic emission equipment arrivedwithout certain major components, therefore causing delaysin installation and commissioning. The components werereceived end 1983, but the company’s engineers failed twiceto operate the unit, which could only be satisfactorilycommissioned end 1986 ;

(ii) The electron beam welding facility, purchasedfor about $ 300,000 could not bee successfully commissionedin 1983 due to defects in its construction. After severalmodifications, costing about $ 40,000 the equipment wasfinally commissioned and working satisfactorily in early1987.

b) Project DP/IND/82/O07 (i) Six pieces of equipment with a total value

$ 514,890 have not been put into operation due to variousreasons such as delays in building constructions, delaysin the supply of equipment, delays in the arrival of themanufacturer’s engineers for installation, and lack ofcertain accessories ;

(ii) With an equipment component of $ 1,2 million(or almost 80 per cent), more attention should have been

given to advice on the optimum selection, operation andmaintenance of equipment. Furthermore, with a Governmentbudget for equipment of $ 1 million in 1987-1988, the pro-blem faced did not appear to be one of lack of equipment.In combination with poor timing and co-ordination of deli-very, this project did not use the resources to it in acost-effective manner ;

(iii) Most of the equipment was more or lessseriously damaged during transportation. In some cases,

a long period of time was required to settle claims withthe suppliers or insurance companies in order to start

remedial action. In other cases, the manufacturers werenot able to send their installation engineers, or thelocal representative of the supplier was not in a positionto repair the equipment on the spot so that the wholepiece of equipment needed to be sent back to the manufac-turer ;

(iv) Among others, the principal lessons learnedwith regard to this particular project were ¯

(a) More attention should be given to the selection,operation and maintenance of equipment, especially as concernsexpensive and modern items of equipment ;

(b) Expert serv’ces should be used at the begin-ning of the project in order to pre~are more detailed spe-cifications for the equipment and to provide recommendationson the necesssity of external training of project staff inmaintenance and operation of the equipment ;

(c) While placing purchase orders for technicallycomplicated equipment, attention should be paid to re-

o°,


questing the services of the suppliers in installation ofequipment, putting the same into operation and training ofproject staff in the use of equipment ;

(d) Planning of UNIDO expert missions should done in a better way in order to get a higher input of theirservices to the project. Fielding of some experts should bebetter co-ordinated with status of delivery and installationof certain pieces of equipment.

(c) Project DP/IND/83/011

(i) The establishment of the Laboratories was de-layed for two years, because the various offers for equipmentwere beyond the budgeted amount ;

(ii) Delay in the design of the test rigs alsocaused delay in the finalization of equipment requisitions ;

(iii) Decision on various matters was often de-layed by difficulties in co-ordination between UNIDO,Vienna/CTA, UNDP and the counterpart.

(d) Project DP/IND/83/017

(i) There will be a delay of 18 months in pro-ducing the output concerning "the Mobile Instrumentation

Laboratory for lead data acquisition on vehicles in ser-vice", which is partly due to considerable time in finali-zing ordering information with the selected supplier ofthe equipment to sort out the warranty, after-sales-serviceand procurement of ancillary computer equipment ;

(ii) There will be a delay of i0 months in achie-ving the output regarding "the wide range of servo-hydrau-lic actuators..", due to, on the one hand, the supplier

who took unduly long time in giving technical clarificationsof some fabrication problems and, on the other hand, thecontractor who was not able to continue and complete hisjob, due to his own problems.

(e) Projec~ DP/CPR/85/O04

(i) The National Project Director (NPD), proposedto cancel the request for seven pieces of equipment, becauseof shortage of funds in the UNDP budget, due to the under-estimation of the prices during project formulation, and

to the devaluation of the US dollar ;(ii) The inspection of the "particle size measuring

(laser) meter" was delayed for several months due to wrongindication of the power voltage. During the adjustment andtrial test serious quality problems were observed, requiringthe presence of the supplier’s commissioning engineer andthe replacement of the optical system or of the whole appa-ratus.

(f) Project DP/PAK/83/014 (i) Breakdowns causing significant delays in tes-

ting have occurred on the hardness tester, the ozone ageingtester, the salt spray cabinet and the taper test machine :

(ii) The inability or unwillingnes~, of vendorsto impliment Quality Control advice meant that there wasno feedback regarding its effectiveness in further developingthe counterpart "Vendor Development and Training Cell (VDTC) capability.

o..


29. In connection with our findings indicated above,we drew Management’s attention to the fact that the GeneralConditions on procurement of equipment(which, inter alia, prescribe that

(i) the vendor should warrant the goods furnished

to be new and unused and to be free from defects in work-manship or materials ;

(ii) the vendor should pack the goods with new

sound materials and with every care .. ; such packing ma-terials must be adequate to safeguard the goods while intransit ; the vendor is responsible for any damage or losswhich can be shown to have resulted from faulty or inadequatepacking ;

(iii) in case of default by the vendor, including

but not limited to failure or refusal to make deliverieswithin the limit specified, UNIDO may procure the goods orservices from other sources and hold the vendor responsiblefor any excess cost occasioned thereby ;)were not always adhered to and in some cases appeared totallyinadequate for fully protecting UNIDO’s interests.We further recommended that all contracts for equipmentshould have warranty running for twelve months after com-missioning and, as the current practice of paying all costsin shipping leaves no incentive to commission except toavoid trouble, payment for equipment should be by instal-ments. We also suggested that in order to compel suppliers,freight forwarders and shippers to accomplish their contractproperly and on time, and to indemnify UNIDO for all damagesand Costs due to non-timely implementation of projects, aPenalty Clause should always be laid down in the contracts.

30. Management replied that most contracts for heavy

equipment have a warranty for twelve months after commis-sioning and a schedule of payments is employed from timeto time for larger orders with a final percentage only oncompletion of commissioning. It added that under the con-ditions of UNIDO’s turnkey contract, where equipment issupplied in connection with the establishment of a complete

plant, the clause on progress payments already providesfor instalment payments depending on the performance ofthe contractor in respect of the delivery of the equipment,

while the penultimate progress payment would not be madebefore UNIDO has accepted the contractor’s commissioningreport.

31. UNIDO Management also m4ntioned that it has com-

pleted a thorough review of the model turnkey contractwhich may be used in a somewhat abbreviated form if the

goods and services are provided for a semi-turnkey plant.In this review the mechanical warranty clause is changedin such a way that the twelve-months warranty period wouldstart to run from the time of the completion of the c~r-tificate on achievement of the required capacity to per-form, instead of twelve months from the start-up of theplant (no-load testing). This change should also take careof any delays which may occur in the contractor’s perfor-mance, including warranty work. The final instalment ofthe contract price would not be paid before the contractor’s

°.,


final report has been accepted by UNIDO ; at that time all

warranty work must have been satisfactorily completed.Management further stated that it is intended to review alsothe Purchase Order. During this review special attentionshall be given to the clauses in the General Conditionsdealing with warranty, inspection, packing and default.We endorsed this action.

32. In respect of our suggestion concerning the in-clusion of a Penalty Clause, Management replied that ithas always felt that such a clause would not be necessaryin view of the clauses on the progress payments, on a bankbond covering the last progress payment, on the withholdingof payments and on default. Furthermore it argued that sucha Penalty Clause would raise the contract price. It may beenvisaged, however, to make the progress payments clauseseven stricter by reducing the percentage paid at each stageof performance by the contractor. We, nevertheless, feelthat a Penalty Clause not necessarily would increase thecontract prices of seriously interested vendors and we,

therefore, recommended that its usefulness should be re-examined.

33. With regard to our observation on the non-coveringof the extra Agency support costs, the important lossesin productiveness of the project because of the serious

delays in major project activities and outputs, etc.,UNIDO Management felt that to claim these types of losses

and compensation from vendors is traditionally extremelydifficult, time consuming and ultimately costly. In largescale cases UNIDO would probably need to resort to arbitra-tion with the concurrent legal involvment.Whereas this action is very rarely (or never) resorted to,Management concurred that it may well be advisable in cer-tain cases. We agree with this conclusion.

34. Concerning our observation that the "inflexible"policy of not authorizing replacement/repair of damagedequipment awaiting the settling of the insurance claims,should be reviewed, UNIDO Management mentioned that since1986 Purchase Section has taken replacement/repair actionon damaged or lost equipment, if funds have been available,without waiting for the conclusion of the insurance claim.

35. Our audit of projects DP/IND/82/002, DP/IND/82/006and DP/IND/82/007, furthermore disclosed that substantialinsurance claims were settled at the exchange rate applicableon the date when the shipments were insured, though the

replacement/repair of the missing/damaged equipment requiredconsiderably higher amounts. In view of the fact that quiteoften highly sophisticated equipment arrives at projectssite in severely damaged condition or missing substantialcomponents, we suggested that insurance arrangements shouldbe revised, e.g. in order to have the claims settled at therate of exchange applicable at the time of settlement.

36. In this regard, Administration stated that UNIDOendeavours to handle the cases of equipment arriving ina damanged condition, in conformity with standing instruc-tions, which provide, inter alia, for settlement of total

,, ,


losses or damage to shipment at the rate of exchange appli-cable at the time the shipment was insured, whereas compen-sation for replacement of parts not listed on the invoiceis effected at the current rate of exchange.However, it is never easy to obtain settlement for substan-

tial claims as underwriters usually opt for partial settle-ment or incur long delays. Management added that in the

revised model turnkey contract a new clause on packing,shipping and insurance of the goods has been included accor-ding to which the contractor will have to replace or repairgoods lost or damaged, except in cases where insurrancewill cover the lost of replacement and/or repair. In thesecases the insurrance shall cover the full CIF (Cost, Insur-ance and Freight) price of the goods plus ten per cent andshall be in the currency of the contract price.

C. Project Experts and Fellows - Training

37. During our examination we discovered that in1986-1987 project implementation continued to be hamperedby delays in the approval of job descriptions for and accep-tance of consultant and expert candidates, and also in

nominating fellows and participants in study tours. Forexample, projects DP/BDG/84/018 ; DP/BUR/80/OI5 ;

DP/CPR/85/013 ; DP/CPR/85/022 ; DP/IND/83/OO8 ; DP/IND/83/011 ;DP/IND/84/013 ; DP/PAK/83/014 ; DP/VIE/82/004 andDP/VIE/85/006. Management agreed with our findings on the

facts.

D. Deficiencies on the part of Government Counterpart

38. Our audit also disclosed that in 1986-1987 severalprojects were still hindered by the lack of or late provi-sion of required counterpart staff, and by delays in comple-

tion of project buildings and construction facilities soas with delays in decision making. For example,projects DP/BGD/84/018 ; DP/IND/82/007 ; DP/IND/83/008 ;DP/IND/83/011 ; DP/IND/83/017 ; DP/IND/84/030 ;DP/IND/85/002 ; DP/PAK/83/014 and DP/VIE/82/004.

39. In response to our observations, Management stated

that UNIDO, both directly in correspondence and throughthe PER/PPER system and the Tripartite Reviews, bringscounterpart shortcomings systematically to the attentionof UNDP and the Government, and that also in the projectdesign state a more critical look is given to the required

government inputs and the likelihood of their timely availa-bility.

Eo General recommendation

40. Administration agreed with our standpoint thatwhenever UNIDO has been chosen for executing UNDP funded

large-scale projects because of its technical and scienti-fic possibilitles (supplemented by high-level expertise onan ad-hoc basis), it is fully responsible for the technicalquality of these projects. Administration, however, addedthat it is also important to recognize the tripartite na-ture of projects and the critical role that government in-

.o.


puts play in terms of staff and other resources ; in otherwords UNIDO alone cannot ensure that project implementationproceeds as planned.

41. We, therefore, strongly recommend that UNDP Ad-ministration should actually assist UNIDO in its endeavoursto preclude the recurrence of factors affecting timelyproduction of project outputs and hampering substantialincreases in the rate of project implementation.

42. I wish to record my appreciation for the willingco-operation and assistance extended by the Officiers andthe Staff of the Organization.

Brussels, 28 June 1988

Jeroom L.E. VAN de VELDESenior President of theCourt of Audit, BelgiumExternal Auditor

DP/1989/58/Add. I

English

Page 20 UNITED NATIONS DEVELOPMENT PROGRAMME

(Name of Participating and Ewecutlng Agency) ISNIDO

~tatus of F~nd$ as at ~I Dec~ber 1987(Expressed in US dollars)

I~Z$ S $ $

Balance at beglnnlng of year

Add: Cash drawings from UNDP

IOVs

Other charges/credlt (net)Miscellaneous income and

exchange adjustments (net)

Miscellaneous items refunded to UNDP

trust fund (net)

Less: Expenditure during 1986-1987

For projects

Disbursements (Schedule 1A)

Unliquidated obligations(Schedule 1A)

For support costs (Schedule IA)

Increase of 1986 programme

support costs to 14%

55,500,566

22,683,545(a)

281,426

___~ZIZI

47,037,174

25;064,397

(21,982,830)

56,459,990

81,481,639

(25,021,648)

61,277,446

22,415,944

(746,851)

486,631

44,234,88625,433,0409,0Z3,909

___~6_L0_~

(25,021,648)

Add~ Subtract Adjustment to prioryear’s expendlture

Substract Adjustment to prior year’s

programme support costsBalance at end of year

Represented by:

(25,021,648)== -_===== =

(20,904,893)======~====

Cash at banks, on hand and in transit 3,613,931Accounts receiveable !~.~!~.~!~ 22,026,450

4,512,196

Less: Accounts payable

Unliquidated obligations21,983,701

(a) including other charges/credits (net)

CERTIFIED CORRECT

H. Pichler

Director

Financial Services Division

(25,021,648)== =====~=

23,322,584

(20,904,893)===========~

D.L.Directd~General

AUDIT OPINION

The above Statement and the related Schedules have been examined in

accordance with my directions. I have obtained all the information and explana-

tion that I have required and I am of the opinion, as a result of the audit, that

the Statement properly reflects the recorded financial transactions for the

period concerned.

Brussels, 15 April 1988.

Z~,~z.~.~~ ¯

Jeroom L.E. VAN de VELDE.

Senior President of the

Court of Audit, Belgium.


REPORT OF THE EXTERNAL AUDITOR ON THE STATEMENTSHOWING AT 31 DECEMBER 1987 THE STATUS OF FUNDSADVANCED TO THE INTERNATIONAL LABOUR ORGANISATION

BY THE UNITED NATIONS DEVELOPMENT PROGRAMME

GENERAL

I. The statement and supporting schedules relatingto the participation of the International LabourOrganisation (ILO) in the United Nations DevelopmentProgramme (UNDP) are generally in the form prescribedby UNDP. My audit of them has been carried out inconjunction with my audit of the regular budget andsubsidiary funds of the ILO.

PROJECT MONITORING AND EVALUATION

2. My predecessor’s report for the 1984-85 bienniumreferred to the introduction by UNDP of draft revisedprocedures for the monitoring, evaluation andreporting of UNDP funded projects, which were to beoperated on a trial basis. Accordingly, the ILO hadsuspended its own procedures for evaluating UNDPprojects, but copies of UNDP evaluation reports wereto be provided to the ILO’s Headquarters technical

units and to the Evaluation Unit.

3. UNDP introduced revised procedures from 1 July1987 for the monitoring, evaluation and reporting ofUNDP funded projects following a field trial anddiscussions with the various agencies involved.Under these procedures progress reporting has beencombined with internal (self-) evaluation carried out

by project management in a Project PerformanceEvaluation Report. However, the procedures requirethat at least one independent evaluation beundertaken for large or technically demandingprojects.

4. Under these new procedures responsibility forensuring compliance with UNDP’s procedures rests withthe executing agency. However, ILO considers itimpracticable to introduce a centralised system toensure compliance with UNDP procedures and has placedresponsibility for compliance with ILO Regional

Offices for a trial period of one year.Headquarters’ staff will monitor compliance duringthis period by reference to a number of UNDP projectsexecuted by the ILO.

5. The ILO’s Evaluation Unit is developing anevaluation database to enhance the feedback oflesson~ learned f"om project evaluations with the aim

of improving the quality of project planning anddesign. However, my staff noted that although ILOhave approximately 450 live UNDP projects only 32evaluation reports of ILO executed UNDP projects hadbeen received by the Evaluation Unit in the periodJanuary 1985 to August 1987. This suggests that not

o,o

DP/1989/58/Add.l

EnglishPage 22

all evaluation reports are being sent to the unit.No other central record exists of the number of UNDPproject evaluations that have been carried out.

6. In my view the absence of a significant number ofUNDP evaluation reports from the Evaluation Unit’sdatabase undermines its value as an information base.In my Report on the accounts of the ILO for the1986-87 biennium I have recommended that ILO takesappropriate steps to ensure that all UNDP evaluationreports are sent to the Evaluation Unit.

ACKNOWLEDGEMENT

7. I wish to record my appreciation for theco-operation and assistance extended by theDirector-General and the staff of the Office during

my audit.

JOHN BOURN(Comptroller and Auditor General, United Kingdom)

External Auditor

I~ April 1988

,, °

DP/1989/58/Add. I

English

Page 23

STATEMENT I

UNITED NATIONS DEVELOPMENT PROGRAMMEINTERNATIONAL LABOUR ORGANISATION

Status of funds as at 31 December 1987(Expressed in US dollars)

Balance as at 1 January 1986

Add: Cash drawings from UNDP19861987

[OVs and other charges (net)

1986

1987

Miscellaneous income and


1986

1987

29 060 125

42 173 519

15 331 86117 384 986

33 263

45 082

71 233 644

32 716 847

78 345

Less: Expenditure for projects

Disb(Jrsements

1986 39 761 050

1987 42 953 359

Unliquidated obligations1986 6 151 7691987 6 168 809

For programme support costs

1986 6 426 101

1987 6 337 116

Miscellaneous items charged

to UNDP (net)

1986

1987

Balance as at 31 December 1987

(82 714 409)

(12 320 578)

(12 763 217)

(79 720)(14 558)

(107 798 204)

(94 278)

(2 834 001)

104 028 836

101 194 835

(107 892 482)

(6 697 647)===========

/°,°

DP/1989/58/Add. I

English

Page 24 STATEMENT I (page 2 of 2)


INTERNATIONAL LABOUR ORGANISATION

Status of funds as at 31 December 1987(Expressed in US dollars)

The balance at 31 December 1987 was represented by:

Cash at banks 2 000 000

Accounts receivable 880 668 2 880 668

Less: Accounts payable

1987 Unliquidated obligations

(3 409 506)

(6 168 809) (9 578 3!5)

(6 697 647)

The above Status of Funds Statement and supporting Schedules I and 2 are approved:

r

Financial and CentralAdministrative Services

Department

A. Ah~d

Assistant Director-General

Treasurer and Financial

C~trol ler

OPINION OF THE EXTERNAL AUDITOR

TO THE GOVERNING BODY OF THE

INTERNATIONAL LABOUR OFFICE

I have examined the above Status of Funds Statement I and Schedules 1 and 2 ofthe International Labour Organisation as Executing Agency of the United NationsDevelopment Programme for the financial period ended 31 December 1987, in accordance

with the Common Auditing Standards of the Panel of External Auditors of the United Nations,the Specialised Agencies and the International Atomic Energy Agency. My examinationincluded a general review of the accounting procedures and such tests of the accountingrecords and other supporting evidence as I considered necessary in the circumstances.

As a result of my examination I am of the opinion that the Statement and Schedules

present fairly the financial position at 31 December 1987 and the results of the

operations for the period then ended; that they were prepared in accordance with the

Organisation’s stated accounting policies which were applied on a basis consistentwith that of the preceding financial period; and that the transactions were inaccordance with the Financial Regulations and legislative authority.

John Bourn(Comptroller and Auditor General,

United Kingdom)External Auditor //,, ¯


DP/1989EnglishPage 25

58/Add.l

REPORT OF THE EXTERNAL AUDITOR ON THE STATEMENTSHOWING AS AT 31 DECEMBER 1987 THE STATUS OF FUNDSADVANCED TO THE FOOD AND AGRICULTURE ORGANIZATION BY

THE UNITED NATIONS DEVELOPMENT PROGRAMME

GENERAL

I. The Statement and supporting Schedules relating to theparticipation of the Food and Agriculture Organization(FAO) in the United Nations Development Programme for thefinancial period ended 31 December 1987 are in the formprescribed by UNDP. My audit of them has been carried outin conjunction with my audit of the Regular Program~e andsubsidiary funds of the Organization. The commonaccounting systems have been examined and tested havingregard to the work of the Office of Internal Audit,Inspection and Management Control. I have examined andreviewed the internal audit reports and supporting papers

relating to UNDP and have taken account of their findings.Their work has materially assisted my examination.

2. During the 1986-87 biennium, as part of theircontinuing review of FAO’s operational activities my staffreviewed the procedures established and used by FAO in itsadministration of UNDP funded projects (paragraphs 3-53).My staff also carried out a parallel review of FAO’s

administration of projects supported by Trust Fund donorsthe results of which are recorded in my report on theaccounts of the FAO Regular Programme for the 1986-87biennium. In addition, my staff reviewed progress made by

FAO in the introduction of improvements in the inventorycontrol system on which my predessor reported in the1984-85 biennium (paragraphs 54 to 58).

FAO ADMINISTRATION OF UNDP PROJECTS

3. FAO executes on behalf of UNDP some 880 projects inmore than 130 countries. The average project value is

$920,000, and their planned duration is normally 3 to 4years. During 1986-87 FAO’s expenditure on behalf of UNDPwas $257 million, excluding support costs but includingcommitments, against a final budgeted expenditure of $323million for the period. FAO was responsible foradministering some 19 per cent of UNDP’s field expenditurein 1986-87.

4. During 1986-87 my staff undertook a review of FAO’sprocedures for administering UNDP projects to determine:

a. whether procedures for project formulation andappraisal were satisfactoly;

b. whether controls ensured adequate monitoring ofprogress and of the resources required in projectimplementation;

c. whether arrangements for evaluation were satisfactory

..,


and useful to management.

5. The scope of the review was discussed and agreed withFAO. It included an analysis of headquarters information,monitoring and control systems, an examination ofheadquarters file documentation relating to 32 projects in20 countries, discussions with headquarters staff andfield visits to 15 of the projects in 6 countries. Mystaff developed questionnaires to assist them inidentifying the issues to be addressed in their review ofprojects at headquarters and in the field. The selectionof projects to be reviewed or visited was discussed withFAO. The basis of project selection took into account, sofar as possible, the balance of activities between theAgriculture, Fisheries and Forestry Departments and theregional distribution of projects. However, resource andgeographical considerations constrained the selection ofthe 15 projects visited. The review concentrated on

ongoing projects in order to achieve coverage of currentissues. The 32 UNDP projects selected for examination bymy staff represented about 3.6 per cent by number of thosein operation during the biennium.

Project Planning

6. Project planning involves two distinct stages offormulation and appraisal. Project formulation is the

process by which an identified need for technicalassistance is translated into a project document. UNDPdefines appraisal as the independent critical examinationof the design and potential effectiveness of proposedprojects. Although ultimately formulation is a governmentresponsibility, FAO frequently provides technical adviceto UNDP and member governments in its role as the UNspecialized agency for food and agriculture. As part ofUNDP’s new dimensions policy, governments are increasinglyfulfilling the responsibility for formulation without suchassistance. Where involved, FAO Representatives have,since 1985, carried out a preliminary in-country appraisalof requests for technical assistance including an initialassessment of feasibility. The final project document,which specifies the needs for UNDP assistance, issubmitted by the government to UNDP for consideration andappraisal in accordance with arrangements referred to inparagraphs 10 to 13 below.

7. Guidance on procedures to be applied duringformulation are contained in the UNDP Policy andProcedures Manual. Since 1985 UNDP has substantiallyrevised the procedures established in 1976 in closeconsultation with agencies and governments. After a

period of trial running, these were further revised inApril 1988. The latest procedures include, inter alia,the following main improvements:

revised project document format incorporating anexplicit relationship between objectives, outputs and

activities;

o,

b. standard work plan format;

DP/1989/58/Add.1EnglishPage 27

Co a simplified project formulation framework based on aquestionnaire and including a requirement to identifysignificant risks which could seriously delay orprevent the achievement of project outputs andobjectives;

a checklist for use by UNDP for their appraisal aswell as by those concerned during formulation as anadditional guidance for issues to be addressed duringthis process.

8. The capability and experience of those responsible forformulation will remain the most important determinant ofits effectiveness even under these more detailedguidelines. Not all of those involved, whetherconsultants or the staff of governments, FAO or UNDP, haveexperience or training in project formulation. Followingcomments in the External Auditor’s Report on the 1982-83Accounts, FAO have acted to improve their input to theformulation process. Since December 1985 a trainingcourse on project formulation has been attended by some300 FAO staff but my staff noted that the course has notbeen extended to government staff whose inexperience inproject design has been recognized by agencies and UNDP asan increasing problem. This problem arises particularlyin projects under the new dimensions arrangements whichinvolve greater use of national staff. However, theOrganization does provide training to government staff onproject planning and design as part of other courses heldin the field and at headquarters.

9. The Organization told my staff that a process ofcontinuing adjustments and revisions takes place duringformulation and implementation in agreement with thedifferent parties concerned. It said that in many cases arigid adherence to procedures, to the provisions ofproject documents and to the work plan would lead toserious delays or deadlocks among the parties concernedand be detrimental to efficient management.

10. Appraisal is primarily a UNDP responsibility carriedout in accordance with procedures detailed in the UNDPProgramme and Projects Manual. These procedures requirethat project documents be sent to the executing agency fortheir review and comment. Working papers and otherdocumentation prepared during formulation are not normallyavailable to the appraisal function and there is norequirement for these to be submitted in support of theproject proposal.

ii. The objectives of FAO’s review function have not beenformally defined nor nave detailed instructions anddocumentation been developed to ensure that for exampletechnical and operational feasibility have beenconsidered. The Organization told my staff thatresponsibility for project appraisal lay with UNDP and thegovernment and not with the executing agency. FAO said

/°,,


that the objective of its review is to ensure that UNDP’sformulation guidelines have been followed and moreparticularly that the proposed project is technically

sound.

12. FAO’s Development Department is responsible for thereview and final scrutiny and a~proval of projectproposals prior to signature by the Organization. Itconducts a preliminary review of proposals to confirmtheir compatibility with FAO’s mandate and countrypriorities and then passes them to technical and otherdivisions to obtain their specialist advice. The extentof review by these divisions varies according to thequality of the proposal presented to the Organization. Atthis stage a major reformulation of the projects may befound to be necessary. The Development Departmentconducts a final review of project proposals prior totheir submission to UNDP along with FAO’s comments. Inmost cases, submission is effected through the FAORepresentative, who is normally authorized to sign thedocument for the Organization following its clearance byGovernment and UNDP.

13. The arrangements under which technical and otherdivisions review project proposals differ according to thetype of project. For fishery and forestry projects, thereview is coordinated by the respective operationsservices. For agricultural projects, which account forsome 80% of all projects executed by FAO, DevelopmentDepartment designate a lead technical division to beresponsible for establishing a Formulation Task Force tocoordinate review of the proposal and report its findingsto Development Department. The Task Force comprisesrepresentatives from the operations divisions and otherconcerned divisions, including Development Department.

14. In more than half of the 23 agricultural projectsreviewed my staff found no evidence of the formalestablishment of a Formulation Task Force and it appearedthat operations and technical divisions actedindependently in their review role. The Organization toldmy staff that the nature or size of some projects did notalways justify establishment of a Formulation Task Force,but this did not mean that review by the different unitsinvolved had not been carried out and its results conveyedto Development Department.

15. In their review of the evidence available inDevelopment Department of technical division clearance ofproject documents, my staff noted that the extent andquality of documentation varied considerably within thegroup of 32 projects reviewed. Comments were providedonly where changes to the project document were considelednecessary. In particular they found three cases wheretechnical division clearance of the document was missingfrom the file or not provided to Development Department,and two examples of technical division disagreement withthe project document although the projects were signed byFAO without the technical deficiencies apparently being


brought to the specific attention of UNDP and Government.In one of the latter cases the FAO Representativeapparently signed the project document without authorityfrom headquarters; and in the other case the document wassigned by FAO with the intention of making the necessarytechnical changes duri,~ the implementation of theproject.

16. The most common criticism made by evaluation missionscontinued to be the absence of a well defined link betweenactivities, outputs and objectives, including developmentobjectives. The establishment of a clear relationshipbetween these factors {s an essential element in projectdesign and is the subject of precise guidance by UNDP andsince April 1988, a statement explicitly detailing thisrelationship is required in project documents. Althoughthe projects reviewed by my staff were formulated earlier,almost half contained such statements. My staff asked

Development Department how, in the absence of workingpapers supporting the formulation of projects (paragraph10 above), the existence of a clear relationship betweenactivities, outputs and objectives was confirmed in thebalance of the projects they reviewed. The DevelopmentDepartment replied that this relationship was usuallyclear from the technical contents of the project documentand this was corroborated by the subsequent approvals ofthe project document by UNDP and the government.

17. My staff found that there was often no specificevidence to support review by the Development Department.

They were informed by the Organization that the formalcommunication to the FAO Representative, which containsFAO’s comments on project proposals for on-wardtransmission to UNDP, is regarded by the Organization asimplicit evidence of final appraisal and approval byDevelopment Department. My staff found that thisdocumentation varied in extent from three or four lines ina cable to a formal memorandum mainly repeating operationsand technical division comments. FAO assured my staffthat, however brief the documentation, final appraisal byDevelopment Department was always carried out before thesignature of a project document by the Organization.

18. The extent to which my staff could review theoperation of formulation and appraisal procedures wastherefore limited by the lack of supporting documentationand the number of varied units involved in formulation.Consequently, their enquiries centred mainly on theeffectiveness of FAO’s scrutiny and review in detectingand remedying deficiencies in formulation which fallwithin the Organization’s competence to assess as aspecialised and executing agency. Some of the issuesraised reflect on the effectiveness of appraisalundertaken by UNDP and government and, by implication, onthe formulation process itself. My staff’s examinationidentified three main problems in the formulation andappraisal process which may have led to delays in projectimplementation or the extension of project duration.

, ,,


a. the accuracy of the assessment of the recipientcountry’s capacity to contribute planned inputs;

the utilisation of national staff in projectmanagement;

the realism of output targets and the timescale ofimplementation.

Implementation of projects

19. The 1986-87 FAO Field Programme Review reported thatevaluation missions had found that in 64 per cent of casesexamined output targets were poorly defined or absent. Mystaff’s review of 32 projects found that in 27 cases thescope of the project was too ambitious within thetimeframe planned: in over one-third of these, the scopewas reduced or substantially altered in order to makeobjectives achievable. The~e factors were confirmed byevaluation missions in those projects where they had beenmounted.

20. Over two-thirds of the 32 projects reviewed by mystaff experienced delays in implementation as a result ofproblems which, having regard to the experience of UNDPand FAO within the countries concerned, might possiblyhave been identified during project planning. The effectof such delays varied. In some projects they had nosignificant effect on the achievement of objectives,whilst in many they proved to be an impediment to thecompletion of significant activities or the achievement ofone or more objectives. In particular, 20 of the projectshad been extended for periods from a few months up to twoyears, two had been terminated with major activitiesoutstanding, one had been suspended pending the outcome ofan evaluation and three were experiencing difficultieswhich suggested that an extension would be necessary toachieve objectives. Projects can be extended for avariety of reasons and often there is a mix of factors

rather than a single cause and paragraphs 21 to 25identify the factors that emerged from my staff’s reviewof projects. The Organization informed my staff thatother examples of the reasons for project extensioninclude re-orientation of project design, new governmentrequests, political changes and environmental causes.

21. The most common cause of delay on projectimplementation affecting over half of the 32 projectsreviewed was the problems experienced by governments inproviding their planned inputs. FAO’s Review of FieldProgrammes for 1986-87 drew attention to this aspect in

its assessment of project implementation. It noted thatsevere i.nplementat[on problems arose in 65 per cent ofcases because of delay in the provision of national staff,and in 60 per cent of cases because of insufficientgovernment financial support.

22. In one of the countries visited by my staff, the

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policy of UNDP agreed with the government, was to use.National Project Directors instead of full-timeinternational staff. My staff noted from their review offour projects in that country that progress reports werenot being submitted in accordance with the requiredfrequency or in the prescribed format. Headquarters staffconfirmed that a similar position often applied to othernationally-managed projects executed by FAO in thatcountry. Difficulties extended across the range ofproject management responsibilities, including work plans,equipment procurement and terminal reporting, andfrequently resulted in delayed implementation. FAO staffconfirmed that difficulties of this type are frequentlyexperienced in other countries where national staff haveresponsibility for project management.

23. Project Directors receive the guidance materialissued to all FAO projects. Almost all this guidance isprinted in English, with selected translations intoFrench. Very little is available in Spanish, Chinese orArabic, which are the other official languages of theOrganization. When visiting nationally managed projectsin two Asian countries, my staff noted that project staffwere generally unable to make adequate use of thisguidance because of language constraints as well asgeneral unfamiliarity with FAO and UNDP procedures andterminology. The scope of the material received wasconsidered by them to be beyond their needs.

24. Measures taken by FAO to alleviate these problemsinclude provision of training courses and briefingsessions for selected national staff. Additionally UNDPhave funded a number of projects with the specificobjective of providing training to national staff, usuallyon a country basis, and one Asian country has agreed withUNDP and FAO to include a budget of $5,000 in new projectsfor training purposes. More recently, UNDP have agreedwith FAO to fund the course fees of national staffreceiving training at FAO, Rome, provided governmentsagree to projects meeting the related travel and per diemcosts. My staff noted that policy guidelines defining thedetailed training and other requirements of nationalproject managers and how these are to be met, have notbeen issued by UNDP or FAO.

25. My staff observed that particular problems attachedto long lead activities where a number of projectsexperienced significant delays because the time plannedfor implementation had not been realistic. This appliedparticularly to contracts where the time necessary toprepare for and obtain bids was frequently underestimated.This had led to project extensions in some cases.Contracts for the procurement of high technology equipmentappeared more susceptible to such delays.

26. Other activities which require careful considerationduring the planning of a project include constructionworks, and the procurement of scarce or difficult toobtain materials. A specific example of the latter


concerns an oil palm breeding project where a budget of$5,000 was initially provided for the procurement ofgerm-plasm. The activity is about 2 years behind schedulebecause this product proved difficult to obtain and newrequirements were identified during implementation.Negotiations are currently taking place with a possiblesupplier but estimated costs are now in excess of

$200,000.

27. FAO’s new system of project monitoring has recognisedthe need to identify critical activities during theformulation process but such identification is not arequirement of UNDP’s formulation procedures.

Supply of equipment

28. In the majority of projects examined by my staff,equipment was a significant element of project cost. Theyfound that many of these projects had experienced delaysin the delivery of part of the equipment required. Thesedelays had sometimes arisen from local factors includingdifficulties in deliveries to land-locked countries orproblems with customs clearance procedures in recipient or

neighbouring countries. The staff of some projectsvisited told my staff that the time required to satisfyHQ’s procedures and their limited authority to placeorders directly were also common causes of delay. TheOrganization pointed out to my staff that this limiteddelegated authority and the strict procedures reflect theOrganization’s accountability for the use of internationalpublic funds. My staff noted that the financial limit onthe direct placing of orders by projects from the fieldwas raised in April 1988 to US$ 20,000 from its 1977 level

of US$ i0,000.

29. Whilst contracts let by headquarters account for only4 per cent of total project expenditure they were oftencritical to timely project implementation. Eight of the

projects reviewed by my staff contained contractactivities. They found that seven of these had

experienced substantial delay in the progression of someor all contract activities, which had necessitated projectextensions of up to 2 years.

30. My staff also identified instances where FAO’scontract procedures were not followed. They noted a casewhere the project document provided for a contract foraerial photography which, contrary to FAO procedures, wascompleted locally using imprest purchase arrangementsbecause of expected delays in using headquarters contractprocedures. In another case, because of its urgency acontract for US$ 49,700 had been negotiated in the UNDP

office locally wit lout prior involvment of FAO’s ContractBranch which subsequently gave retrospective approval.They also observed that procedural problems appeared tocontribute to delays. These included the unavailabilityof authorized signatories for contracts, the need forContracts Branch to route documents through eachoperations division rather than direct to staff concerned,

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and apparent misunderstanding by staff concerning theirresponsibilities and role during the award of contracts.

31. My staff were informed by the Organization thatmeasures to improve procurement procedures are underconsideration but that no decision on their implementationhad yet been made. In particular, a review of the FAOmanual section dealing with contract activities had beencompleted by Contracts Branch during early 1987 and was

now under further consideration by other units although adate for issue has still to be agreed.

Monitoring of projects

32. In 1987 UNDP issued revised procedures for projectmonitoring and reporting which had been developed inconsultation with executing agencies and finalised after

field trials in which governments had also been involved.The new procedures, effective from July 1987, form part ofa strategy for evaluation of projects in which routinemonitoring and reporting functions are an integral part.The revisions introduced included a move from six-monthlyto annual reporting, and a more systematic and standar-dised format for periodic monitoring reports compiled byproject directors. FAO has decided to maintain inaddition to the annual report a simplified six-monthlyreporting system in recognition of the importance of morefrequent progress reports for adequate monitoring ofproject implementation.

33. Progress reports are required to arrive atheadquarters within one month of the end of the reportingperiod to allow timely consideration of matters requiringattention. Since 1983 the largest operating division hasused a computerised system to monitor the timeliness ofprogress reports and remind responsible officers of thosedue or overdue. A review by the Organization in August1987 revealed that more than half of the six-monthlyprogress reports for UNDP projects failed to reach theoffice of the Director within the month following the endof the reporting period. By 31 March 1988 there had been,following management action, a significant improvement inthe timeliness of receipt of progress reports.

34. My staff examined the progress reporting arrangementsin each of the 32 projects reviewed and found thatalthough the timeliness and format of reports weregenerally satisfactory difficulties continued to exist infive projects managed by national staff. In those casesFAO staff and consultants were either assisting projectmanagers in the completion of progress reports or wereproviding reports of their ~wn to ’AO headquarters.

35. Where project work plans have not been preparedduring formulation they should be prepared by fieldproject staff at the start of projects. These plansshould link inputs, activities and outputs to facilitatemonitoring of progress against plans for early identifi-cation of problems that required action. In the early

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DP/1989/58/Add.lEnglishPage 34

1970s, FAO introduced computerised network analysistechniques into field programme management and workplanning but by the end of 1975 it proved impractical andusage of the system had virtually ceased. In response tocomments by the External Auditor in his Report on the 1975Accounts, the Organization said that the computer systemhad been over-ambitious and not readily adaptable toconstantly changing project conditions. Nevertheless,they recognised the need for sound planning and proposedto undertake in-depth studies to identify a more suitablesystem.

36. The External Auditors report on the 1982-83 Accountsdrew attention to continuing deficiencies in work plans.The Organization replied that important recommendationsmade by the Field Programme Committee would be adoptedduring 1984 including the improvement and greaterstandardisation of project work plans and their use, and

continuing progress on their computerisation. Standardwork plans have now been introduced by UNDP but FAO have

decided not to proceed with full computerisation in favourof more practical and realistic procedures being developedfor headquarters monitoring of programmes and projects(PROSYS).

37. My staff reviewed compliance with the requirement tosubmit work plans to headquarters and the extent to whichthey were used by operating divisions as a monitoringtool. They found that work plans were held in diversefiles under various file headings and as a result theycould not be immediately located in 17 of the 32 projectsreviewed. Operations division staff subsequently providedseven of the outstanding work plans but in ten cases it

appeared that they had not been submitted to headquarters.Moreover, discussions with operations staff indicated thatwork plans were seldom used as a monitoring tool. The

1986-87 Field Programme Review recorded that, althoughthere had been a definite improvement since 1981-82 andwork plans were now an essential feature of all fieldprojects, some 50 per cent were judged to beunsatisfactory.

38. The Organization told my staff that in addition toformalized procedures involving work plans and periodicreports more immediate action to remedy problems etc, istaken on the basis of routine correspondence, field visits

by the staff of headquarters and FAO countryrepresentations.

Computerised Monitoring Arrangements

39. In 1981 the Organization introduced IFIS - theIntegrate~ Field Programme Information System - to exp~ndand improve the collection, maintenance and reporting ofinformation relevant to FAO’s field programme activities.A particular aim of IFIS was to enhance operationalmonitoring and control by linking existing independent

management information systems. The intention was toconsolidate project-related data in order to provide a

o,,


basis for assessing the performance of projects and of the

field programmes as a whole, with the aim of improvedoperational decisions and policies. An essential featurewas the need for user divisions to ensure that thestanding information on each project was fully up-to-date.

40. My staff noted that the IFIS system now referred toas FIELDATA has not been fully developed or used asplanned. A major problem has been the inability of some

divisions to provide the continuous up-date which thesystem required, particularly in the case of Fishery andForestry Divisions which are located outside the mainbuilding and do not have direct access to the main FAOcomputer. Additionally user divisions have continued todevelop local management systems and this has contributed

further to a decline in their use of IFIS/FIELDATA withthe exception of regularly updated financial and someother information from the official project accounts.

41. The IFIS/FIELDATA system included a module (PIPELINE)which has recently been subject to substantialre-development. It is now used by Development Departmentto store data on UNDP pipeline project ideas and tomonitor the progress of projects through formulation andappraisal. Regular and ad-hoc reports generated by thesystem are widely used within the Organization and by

FAORs for management purposes. PIPELINE will only befully operational after the transfer of data on tomicro-computer. It will eventually be part of a largermonitoring system, currently under development anddescribed below.

42. The Director-General approved in early 1988 theintroduction of PROSYS - a computerised system forheadquarters monitoring of field programmes and projects.Through PROSYS, including the PIPELINE module, FAO propose

to monitor the planning and implementation of all fieldprojects against clearly defined events and target dates.PROSYS will be used not only to monitor individualprojects but also for the analysis of data relating to thefield programme as a whole. The system will provide forregular and ad hoc management reports.

43. With the PROSYS development FAO has recognised theneed to improve systems and procedures in a number of keyareas. These include improvements in the projectformulation process, the establishment of an appraisalgroup independent of project formulation, the codificationof guidelines for formulation and appraisal, and thepreparation of a comprehensive FAO Field Programme Manual.Discussions are continuing with the Organization tofinalize these arrange nents and agree the detailedguidance necessary for their effective implementation.

Evaluation and review of projects

44. Evaluation is the assessment of the design,

implementation, results and effectiveness of a project bypersons not directly concerned with its formulation or

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implementation. The main purpose of the evaluation ofprojects is to assess their relevance, efficiency andeffectiveness through the systematic identification andcritical review of their direct and indirect results. Theoutcome of project evaluations should be used by FAO’smanagement, recipient governments and funding sourcesto:-

a. assist in improving the design and implementation ofon-going projects and programmes;

b, identify critical issues and lessons to help improvethe formulation and execution of future programmes andprojects;

provide an objective assessment of the effects andimpact of FAO’s activities in relation to theirobjectives and resource cost;

d. assemble and analyse evaluation material forsubmission to FAO’s governing bodies.

45. A provision for evaluation is normally included inproject documents. UNDP is responsible for theorganization of evaluation missions which invariablyinclude at least one FAO representative as well as arepresentative of the recipient government and UNDP. Thenumber of UNDP projects executed by FAO and subject toevaluation has increased from 56 in 1982-83 to 97 in1986-87 (including 4 completed projects) although thetotal number of projects has decreased from 927 to 880 inthe same period. Seven of the evaluations undertakenduring 1986-87 involved participation by a member of FAO’sEvaluation Service.

46. FAO’s Evaluation Service was formally established in1968. In 1984, the Director-General issued a bulletin(DGB 84/28) which reinforced the objectives of evaluation,described the procedures for conducting evaluation activi-ties and clarified the functions and responsibilities ofthe units concerned, including that of the EvaluationService. Under these arrangements the Evaluation Serviceis responsible for the development of evaluation metho-dology and procedures and coordinating all evaluationactivities in FAO. For this purpose, in October 1984, theEvaluation Service issued FAO’s new "Guidelines for theEvaluation of Technichal Cooperation Projects’. My staffhave noted that the number of evaluation officer postsincluding the chief of service was increased from eight tonine in the 1986-87 Programme of Work and Budget, thoughone senior post has not been filled since 1984. Four ofthe Evaluation Service’s 13 filled posts are funded fromthe contribution to support costs made by trust funds,while three are fun~ed from UNDP support costs.

47~ Existing FAO guidance provides that the EvaluationService should be able to decide its participation inproject evaluations on the basis of annual plans drawn upby operations units in consultation with Development

°.,


Department. My staff found that such plans had beenprepared on a regular basis only for Forestry projects andthat the Evaluation Service was therefore constrained inadequately planning their input to evaluations. TheOrganization told my staff that the number of unitsproviding annual evaluation plans was increasing but thatcoverage was still incomplete.

48. The Evaluation Service produces its own annual workplan based on information available to it of evaluationsplanned by operations divisions or others. Theorganization told my staff that in this plan projectevaluation missions were programmed three months ahead andconstantly updated. The Organization added that, while anevaluation plan is useful, in practice it is oftenchanged.

49. The Evaluation Service maintains a computeriseddatabase of summarised findings from evaluation missions.It is required to produce an annual synthesis of thesefindings but in practice it is produced every two years.This information is used in the preparation by theEvaluation Service of an assessment of the performance andshort-comings of projects that is published in thebiennial Review of Field Programmes. My staff noted thatsuccessive Field Programme Reviews have acknowledgeddeficiencies in the quality of reporting by evaluationmissions, attributing these inter alia to the inexperienceof mission participants, a lack of time for the workrequired and the short notice at which missions weremounted. They also noted that routine analysis ofevaluation findings e.g. by country or by sector ofactivity, are not produced from the database although theOrganization told them that divisions are increasinglyrequesting ad hoc reports.

50. Development Department is responsible for monitoringthe implementation by operations units of recommendationsarising from individual evaluations. The Organizationtold my staff that, in order to monitor the implementationof recommendations resulting from evaluations, staff ofthe Development Department attend mission debriefings,hold regular informal discussions with operations staff onthe progress of projects and regularly review the periodicreports of FAO Representatives. However my staff foundthat no specific procedures had been established to guidestaff in the follow-up of evaluation findings nor was therecording of action taken required.

51. The Development Department is also responsible forensuring, in conjunction with technical divisions, thefeedback of all findings from the evaluation of projectsand programmes into the programming, f,~rmulation andappraisal of new programmes and projects. To fulfil thisresponsibility DGB 84/28 requires it to designate a focalpoint for liaison with Evaluation Service and otherDepartments to ensure the feedback of all findings arisingfrom evaluation of field activities. My staff found thatDevelopment Department had not designated a single formal


focal point nor had procedures been established to ensuresuch feedback on a regular basis. However, theOrganization pointed out to my staff that the Secretary ofthe Field Programme Review Committee acted as a focalpoint for general feedback from evaluation in the FieldProgramme Review produced at two yearly intervals. Withregard to the feedback from reviews and evaluation ofspecific projects, the Development Department designatesindividual officers to participate in the relevant TaskForce meeting as noted in para 50 above.

52. The co-ordination and monitoring of field programmesis overseen by the Field Programme Committee, whichcomprises directors of operating units and of twoDevelopment Department divisions under the chairmanship ofthe Assistant Director-General, Development Department.This committee is required inter alia to review "overallproblems and questions relating to quality, efficiency andeffectiveness in the organization’s programming anddelivery of its field programme". It is also required toreview regularly the effectiveness of the feedback ofevaluation findings.

53. My staff asked how the Committee discharged thisresponsibility. The Organization replied that the FieldProgramme Committee relied on its members’ practicalexperience in their day-to-day monitoring of theirdivision’s activities, on periodic reports from individualprojects and from FAO Representatives, and on the biennialReview of Field programmes. The Organization told mystaff that the only direct involvement of the Committee asa whole was its joint consideration of the completed draftof the review although individual members of theCommitteee are consulted in the course of the Review’spreparation. The Organization added that members of theCommittee are also requested to review findings relevantto their divisions from evaluations of trust fund and UNDPprojects falling under special action programmes. Threesuch evaluations were reported to governing bodies in1987.

INVENTORY CONTROL SYSTEM

54. An inventory of non-expendable UNDP equipment ismaintained at FAO Headquarters. At 31 December 1987 theinventory was valued at $96.3 million. Items are recordedat cost (purchase) price but are not included in theannual financial statements although they are referred toby the Director-General in his report on the Accounts. Ontermination of a UNDP project, title to the equipmentpurchased by FAO is usually transferred to the Governmentconcerned to provide continued support to the project.

55. In his report on the 1984-85 Accounts, my predecessordrew attention to the need for revisions and improvementsto the inventory systems and procedures. As a consequenceFAO proposed:

(a) the introduction of an improved system of inventory/...


control and reporting by managers on field projectsincluding review of existing procedures,documentation and staff responsibilities;

(b) redevelopment of the existing Headquarterscomputerised inventory recording system, includingimproved interrogation, monitoring and reportingfacilities;

(c) revision of the FAO Manual to take account of develop-ments in computerisation of records and otherprocedural changes arising from items (a) and (b)above.

56. My staff have reviewed the progress made by theOrganization in introducing the proposed changes. Theyfound that although all proposed improvements had not beenfully implemented, some measures for specific aspects ofthe inventory control system had been introduced:

- improved briefing of project managers;

- inventory checks to be made by headquarters staffvisiting field projects;

- re-design of the year-end inventory report form.

Improvements to date have resulted in the percentage ofyear-end inventory reports for UNDP projects decreasingfrom 60% in 1985 to 17% in 1986. (The 1987 results willnot be available until later this year). A factor to betaken into account is the increasing number of fieldprojects without any international experts or headed bynational officers who were generally unfamiliar with theOrganization’s Administrative procedures and rules.

57. Revisions to the FAO Manual sections have not beenissued. The drafts had been completed, but have remainedin draft pending completion of improvements in the systemof control and the development of an enlargedHeadquarter’s computer system for inventory control; thiswork has been delayed by resource constraints.

58. The proposal to develop an improved computerisedinventory system was approved in September 1986, but isnot yet in operation. The main reason for the delay waslack of resources due to financial constraints.Nevertheless the Organization accepts the importance of asound inventory control system and they expect toimplement fully improvements, including computerdevelopment work, in the third quarter of 1989.

FINDINGS AND ~ECOMMENDA"IONS

On project administration

59. My staff’s review has focussed on FAO’s participationin the planning, implementation, monitoring and evaluationof projects funded by UNDP. It has not extended to a


detailed examination of the role of UNDP or governmentswho also have important responsibilities for projectdesign and management.

60. -In carrying out its administration of UNDP projectsthe Organization has not only to take account of thewishes of UNDP and governments but also the demanding andchanging conditions encountered in the field. In myfindings and recommendations I have sought to take account

of these factors and I recognise that a number ofoperational problems that have been identified lie outsideFAO’s direct responsibility.

61. My main findings are:-

Government staff who are increasingly responsible forformulation often have little experience in projectdesign but FAO is continuing to extend its trainingcourses in project formulation to them. Beyond theexisting general guidelines of UNDP for project reviewby the specialized agencies, the Organization has notyet defined formally the extent of, or procedures for,its review or to document fully its input to theappraisal process. This may have affected its abilityto detect and remedy deficiencies in formulation.Because some weaknesses in formulation remainedundetected by the review process, and because of the

nature of project activities and other factorsmentioned in paragraph 60 above and sub-paragraph (b)below, projects are often extended or undergoadjustments in their scope in order to achieveobjectives (paragraphs 6 to 17);

b. over two-thirds of projects reviewed by my staffexperienced delays in implementation. There were avariety of reasons for this and many projects wereaffected by more than one factor. Apart fromover-ambitious or unrealistic planning which mighthave been detected during the appraisal process themost common cause of delay were changes in the localconditions which could not be anticipated and problemsexperienced by governments in providing planned inputs(paragraphs 18 to 21). Other factors contributing delays include:

the inexperience of national staff in projectmanagement, their unfamiliarity with FAO and UNDPprocedures and language diffculties; FAO areproviding increased training to overcome this(paragraphs 22 to 24);

some project plans may not always allow adequatetime for criticial activities such as the settingof contracts for high technology equipment orscarce materials (paragraphs 25 and 26);

the extent of time required to obtain equipment,caused by difficult delivery locations, climaticextremes, administrative problems in recipient

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DP/1989/58/Add. 1

EnglishPage 41

countries or cumbersome administrative procedures

(paragraph 28).

Co In a few cases FAO procurement procedures were not~ollowed by Field Officers (paragraph 30). A reviewof the relevant FAO Manual Sections on procurement isunderway which, along with the related trainingcourses, will take into consideration the problems

experienced by Field Officers (paragraph 31);

do the timeliness and format of project progress reportswas generally satisfactory although difficulties existin projects managed by national staff (paragraphs 32to 34). Work plans are not always submitted to

headquarters in accordance with requirements, theirquality is variable and they are not rountinely usedby headquarters staff as a monitoring tool (paragraph

35 to 37);

the Organization’s computerised database for projectmonitoring introduced in 1981 was only partiallysuccessful and has not been fully developed. The

Organization is currently developing a newcomputerised system for headquarters monitoring offield programmes and projects which will subsume mostof the objectives of the earlier system and will

permit analysis of data relating to the fieldprogramme as a whole (paragraphs 39 to 43);

f, the Evaluation Service is responsible for developmentand co-ordination of evaluation procedures and

activities and Development Department should ensurewith other donors that the findings of evaluation

missions are used to benefit the individual projectconcerned and those being planned. Requirements thatdivisions should prepare annual plans of projectsrequiring evaluation have not been met fully althoughthe number of divisions doing so is increasing. TheEvaluation Service maintains a data-base of evaluationmission findings which is used in the preparation ofthe biennial Review of Field Programmes. Beyond thediscussion by project Task Forces and in tripartitereview meetings and the development of trainingmaterial in project formulation and use of projectformat for FAO staff, no other formal procedures havebeen established to ensure that the findings ofevaluations are used systematically to improve theoperation of individual projects and to use them tobenefit the planning of new projects. (paragraphs 44to 53).

62. In my view the Organization’s procedures for theadministration of UNDP projects would be eni]anced if theOrganization took steps to:

a. maintain its efforts to improve the formulationprocess through continued staff training, includingthe participation of government staff in FAO’scourses;

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b. define the objectives of its review of projectdocuments and develop procedures and documentation toguide and evidence the process;

Co ensure that the new UNDP guidelines are fully appliedso that project documents more clearly relateobjectives to outputs, activities and inputs, thusproviding a firm basis for monitoring;

d. ensure that a realistic assessment of the ability ofgovernments to provide inputs to projects is madeduring formulation and appraisal and during subsequentproject reviews at the implementation stage: cost andtime budgets should take full account of the results;

e. in consultation with UNDP and government, ensure thatthe formulation process identifies critical activitiesand provides whenever possible recommendations onspecifications, lead times and other detailedarrangements necessary for timely implementation;

complete as soon as possible their review of theManual Section on contract procedures taking account

of the issues referred to in paragraphs 28 to 30;

ensure for all projects, preparation and submission toheadquarters of work plans and their systematic use asa basis for improved monitoring by headquarters staff;take steps to improve the quality of work plans so asto facilitate effective monitoring at headquarters;

h. improve the use made of the findings of projectevaluations in order to further assist in themanagement of current projects and inform theformulation and appraisal of project proposals;

i. improve the quality of evaluation reports through

(i) increased participation of Evaluation Servicestaff in project evaluations;

and

(ii) improved planning of missions and, wheneverpossible, the selection of FAO’s participantswith relevant evaluation experience.

63. In view of the difficulties experienced by nationalproject managers, which frequently delay projectimplementation I further recommend that:

FAO consult with UNDP and governments on the wi ~s inwhich the problems caused by the delays in the provi-sion of suitable national staff can be overcome andthe identification of the training needs of such

staff;

b. simplified guidance packs, especially designed for

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national project managers, should be devised by FAO;printing in local languages may also be advantageousin certain circumstances.

64. -I wish to acknowledge that the Organization has alsorecognised the need for improvements in many of the issuesreferred to above and that these were addressed, interalia, in the consultations which UNDP had with FAO andother specialized agencies in the preparation of its newguidelines. These are being further addressed in thedevelopment of FAO project support systems and relatedcomputerized monitoring procedures. However, thecomputerized systems will not be fully operational forsome time and I note that, in the interim, theOrganization intends to take such steps as are necessaryto ensure as soon as possible effective improvements inthe formulation and appraisal process by issuing thenecessary guidelines and revised procedures, prior to theimplementation of the computerized controls.

On inventory control

65. My findings are that although some measures have beentaken to improve specific aspects of the inventory controlsystem since my predecessor’s report on 1984-85 Account,the main proposals for improvement approved in 1986 havenot been fully implemented. I note that theimplementation of the improved system has been delayed byresource constraints but the Organization hope to overcomethese and introduce the improved system before the end of1989.

LOSSES ETC

66. I have examined with satisfactory results, details ofcompensation payments, ex-gratia payments, losses andwrites off to the value of $714,446 submitted to me by theDirector-General with the Account in accordancewithFinancial Regulation 10.4. I am satisfied with theinformation and explanations which I have obtained aboutthese cases and I have no observations to make.

ACKNOWLEDGEMENT

67. I wish to record my appreciation for the co-operationand assistance extended by the Director-General and thestaff of the Organization during my audit.

JOHN BOURN(Comptroller and Auditor General,

United Kingdom)External Auditor

~September 1988



TO: The Conference of the Food and Agriculture Organization

I have examined the following Status of Funds Statement I andSchedules 1 and 2 of the Food and Agriculture Organization asExecuting Agency of the United Nations Development Programmefor the financial period ended 31 December 1987, in accordancewith the Common Auditing Standards of the Panel of ExternalAuditors of the United Nations, the Specialized Agencies andthe International Atomic Energy Agency. My examinationincluded a general review of the accounting procedures and suchtests of the accounting records and other supporting evidenceas I considered necessary in the circumstances.

As a result of my examination I am of the opinion that theStatement and Schedules present fairly the financial positionat 31 December 1987 and the results of the operations for theperiod then ended; that they were prepared in accordance withthe Organization’s stated accounting policies which wereapplied on a basis consistent with that of the precedingfinancial period; and that the transactions were in accordance

~.with Regulations legislative authority.the Financial and

JOHN BOURNComptroller and Auditor General, United Kingdom

External Auditor

,oo

STATEMENT I


UNITED NATIONS D~ PROGRAMME

FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS

Status of Funds as at 31 December 1987(Expressed in US dollars)

Operating Fund


Add: Cash drawings from UNDPIOVs and other charges (net)Miscellaneous income and

exchange adjustments (net)Miscellaneous items refunded

to UNDP (net)

Less: Expenditure during 1986-1987For projectsDisbursements (Schedule I)Unliqu~dated obligations (Schedule I)

For programme support costs (Schedule I)

Balance at 31 December 1987

139,113,391150,348,852

(232,919)

226,547

239,284,86825,495,41935,258,639

$(6,761,521)

289,455,871

282,694,350

300,038,926

(17,344,576)

Represented by:

Cash at banks, on hand and in-transitAccounts receivable

7,139,7708,823,066

15,962,836

Less: Accounts payable 7,811,9931986-87 Unliquidated obligations (Schedule i) 25,495,419 33,307,412

(17,344,576)

The amounts shown in thestatements properly reflectthe recorded financialtransactions for the period.

Frederic A. HelmDirector

Financial Services DivisionROVED:

o°,



REPORT OF THE EXTERNAL AUDITOR ON THE STATEMENTSHOWING AS AT 31 DECEMBER 1987 THE STATUS OF FUNDS

ADVANCED TO THE UNITED NATIONS EDUCATIONAL,SCIENTIFIC, AND CULTURAL ORGANIZATION BY THE


GENERAL

i. The Statement and supporting schedules relating to theparticipation of the United Nations Educational,Scientific and Cultural Organization (UNESCO) in theUnited Nations Development Programme (UNDP) are in theformat prescribed by UNDP. My audit of them has beencarried out in conjunction with my audit of the regularprogramme and subsidiary funds of UNESCO.

2. During 1986 and 1987, as part of their continuingreview of UNESCO’s operational activities, my staffcarried out a headquarters based review of the proceduresestablished and followed by UNESCO in respect of itsadministration of UNDP funded projects.

3. The overall purpose of the review was to assessUNESCO’s control over UNDP projects, including projectformulation, implementation, monitoring and evaluation.The review also included an analysis of historicalfinancial information; an examination of relevantdocumentation; interviews with UNESCO staff members; andan examination of eighteen individual projects beingadministered by UNESCO on behalf of UNDP to assess how

efficiently UNESCO’s procedures were working and whetherthey were consistent with the guidelines laid down byUNDP.

Financial Information

4. The following table shows the UNDP funds allocated toUNESCO in the 7 years from 1981 to 1987 and the outturn

against that allocation. The table also shows thepercentage rate of delivery achieved in financial terms.

Year 1981 1982 1983 1984 1985 1986 1987Sm Sm Sm Sm Sm Sm Sm

Allocation 67.1 55.9 54.7 48.2 43.3 45.5 36.6

Outturn 52.2 44.5 41.8 36.4 33.6 35.2 27.4

Rate ofDelivery (%) 78 79 76 76 78 77

5. The above analysis indicates that, whilst thefix ~ncial delivery rate of UNDP funded activities hadremained more or less constant over the 7 year period,UNESCO’s allocation of UNDP funds and actual outturn haddeclined by some 46 per cent. The Secretariat considerthat this decline is mainly attributable to "structural

...


adjustment policies" in developing countries. This policydictated reductions in assistance to public administrationand social services in favour of maximum investment inproductive sectors such as agriculture and industry. As aconsequence there has been a sharp reduction in the shareof UNDP funding allocated to UNESCO’s education sector.However, my staff were told that the impact of the

reduction in the overall level of UNESCO’s UNDP activitiesat the country level was somewhat less severe because ofsignificant economies achieved by the use of the servicesof national instead of more expensive internationalexperts. UNESCO is of the view that this trend has alsoencouraged self-reliance by the countries.

UNDP Country Programmes

6. The main objective of UNDP is to support the effortsol developing countries in solving their most importanteconomic and social development problems. UNDP aims, bytechnical co-operation, to promote self-reliance indeveloping countries with regard to the managerial,technical, administrative and research capabilitiesrequired to formulate and implement development plans andpolicies.

7. Country Programmes are prepared by nationalgovernments with the assistance of UNDP and UN Agencies,such as UNESCO, to identify development objectives whichwould benefit from UNDP assistance and help towards theachievement of national development plans. The UNDP

Resident Representative has the responsibility to suggestto governments how UNESCO’s expertise might assist in thereview of the Country Programming exercise and to

ascertain whether the government wishes to avail itself ofthis expertise. My staff noted that UNESCO’s substantivecontribution to the UNDP Country Programming exercise hadbeen limited to providing information and assistance onlyon request. The Secretariat told my staff that often

UNESCO came to know about a country planning exerciseafter the exercise had been completed and when UNDP

circulated the draft programme for comment. TheSecretariat considers it important that the planning,

development and review stages of the country programmingexercise should benefit from UNESCO’s expertise.

8. The Country Programmes do not in themselves constitutea request for assistance. Governments must make officialrequests to the UNDP Resident Representative forassistance in respect of individual projects. Theserequests establish a basis on which UNDP is able to planits overall assistance and consider projects for approval.Once a project is approved UNDP select a technicallycompetent executing agency, either from within the UNsystem or the country’ ~ own resources. The next stage inthe procedure is the formulation of the project. Until1986 this was the responsibility of the recipientgovernment but since then, the Secretariat told my staff,the responsibility for project formulation has become less

focussed and can now be at the initiative of national

.,o

DP/1989/58/Add. 1EnglishPage 48

governments, UNDP or executing agencies.

UNDP/UNESCO Project Budgets

9. If designated as the executing agency for a project,UNESCO has the responsibility of preparing annual projectbudgets in terms of the phasing and costing of projectinputs. On the basis of this information UNDP is able toplan delivery of the necessary financial resources for theimplementation of the project.

i0. Until 1987 UNDP issued UNESCO with multi-yearannualized project budgets, against which UNESCO couldincur current year obligations and future year forwardcommitments for projects within its responsibility.However, the rigid application of the annualized budgetingprocedures caused Agencies operational difficulties whichin turn affected pr~ect delivery. Notably projectprocurement action was held up during the early part ofthe year awaiting the annual resource rephasing exercise.The procedure also resulted in an increase in projectactivities late in the year as project managers rushed toutilize the year’s allocation before the closure of theaccounts. UNDP recognised that these distortions in thework pattern caused problems and delays in the phasing ofthe procurement of project inputs.

ii. During 1986, UN agencies put forward proposals aimedat improving the project budgeting procedures. As aresult of this UNDP introduced, in July 1987, a rollingtwo year project budget concept on a three year trialbasis. This was intended to increase the flexibility ofUNDP’s budgeting procedures and thereby improve theplanning, control and execution of projects. UNDP expectthat this will enable Agencies to formulate more realisticproject budgets and achieve an even distribution ofprocurement actions during a year. The benefits of thisnew procedure will be assessed at the end of the trialperiod.

12. In accordance with established procedures UNESCO arerequired to revise and rephase project budgets asnecessary to take account both of prior year’s expenditureand of actual or anticipated slippage of project inputsand inform UNDP accordingly. UNDP are therefore keptinformed at all times of UNESCO’s latest estimates ofproject expenditures.

Formulation of projects

13. In his previous reports on UNESCO’s UNDP fundedactivities the External Auditor noted that projectdocuments had frequently been drawn up on the basis ofvague and unclear objectives which did not facilitateevaluation. This led the External Auditor to recommendthat, wherever possible, project documents should includeclearly defined objectives and performance indicatorsagainst which progress and results can be measured. Thismatter was also of concern to UNDP who issued revised


guidelines in 1980 relating to the formulation of projectobjectives including stricter requirements for the quanti-fication of outputs and relevant performance indicators.The Secretariat informed my staff that UNDP have issuedfurther guidelines on the formulation of project objec-tives which will be introduced in the 1988-89 biennium.

14. My staff noted from their review of UNESCO’s currentUNDP project documents that they closely followed UNDPguidelines. Project objectives are defined in a way thatpermits evaluation of a project’s achievements andindividual activities and inputs are set out in a waywhich facilitates the monitoring of implementation.

CONTROL OF PROJECTS

Project examination

15. In previous reports the External Auditor concludedthat the success of a project depends to a large extent onboth the national governments and UNESCO fulfilling theirobligations under the terms of the project document. Mystaff, therefore, paid particular attention during theirexamination of 18 projects to whether UNESCO and nationalgovernments had provided all the necessary inputs for thesuccessful implementation of the projects. They foundthat problems had arisen and delays had been encounteredduring project implementation with regard to the recruit-ment of international personnel (7 projects); procurementand delivery of equipment items (6 projects); availabilityof suitable fellowship candidates (3 projects) and thetimely provision of government inputs (9 projects). Inmost of the projects examined UNESCO had managed tomitigate the effect of these problems by revising the workschedules in order to maintain the required level andco-ordination of inputs necessary for successfulimplementation.

16. It appeared to my staff that the need to revise workSchedules was generally due to projects failing to takeadvance account of the difficulties referred to above.They noted that such difficulties were more frequentlyexperienced in projects which were managed by NationalProject Directors. No allowance appeared to have beenmade for their inexperience of UNESCO/ UNDP procedures.The Secretariat informed my staff that an in-house reviewcarried out in 1985 indicated that projects managed byinternational staff had an average implementation rate 19per cent higher than projects managed by national staff.This suggests that although the use of national staff hasresulted in significant economies and encouraged self-reliance (paragraph 5 refers) their inexperience /ealing wi h the difficulties arising during the course ofa project has led to a reduced level of projectimplementation.

17. A UNDP requirement is that the project documentshould include a detailed work plan, indicating inputs,activities and outputs; and which schedules them in a

° °,


manner that permits monitoring. My staff found that 5 ofthe 18 project documents examined did not contain thenecessary work plans when project activities commenced,thereby creating initial difficulties for the monitoringof progress. The Secretariat informed my staff that therevised UNDP guidelines introduced in the 1988-89 bienniumrequire all project documents to include detailed workplans.

Budgetary Control

18. Budgetary control of UNESCO’s UNDP projects isachieved through the annualized project budget allocationsand the computerised allotment ledger system. Thisprovides for the obligation and forward commitment ofavailable funds against which expenditure is recorded.This financial information enables the Secretariat toprepare UNESCO’s UNDP financial statements and assiststhem in taking decisions on whether rephasing of budgetallotments are necessary.

Sectoral Control

19. The responsibility for the implementation and controlof projects is delegated to specialist sectoral staff inUNESCO’s secretariat. These project officers areresponsible for ensuring that activities scheduled in theproject document work plan are implemented on time. Inprevious reports the External Auditor has observed thatinputs are not always implemented according to the workplan, but my staff found the procedures now establishedand followed by UNESCO are designed to bring suchimplementation delays to light.

Monitoring Progress

20. The Secretariat’s control over the progress of UNDPoperations is assisted by the system of Project ProgressReports (PPR) and end of assignment reports produced UNESCO staff members and recruited internationalpersonnel.

21. In general, my staff considered that the variousformats of report information available provided theSecretariat with an adequate basis from which to monitorproject progress. However, in their examination of 18projects they noted in 8 cases there were delays in thesubmission of reports, in one case of 12 months. My staffconsider that timely receipt of these reports is importantin that they provide management with an early opportunityto address problems as they arise. My staff also foundthat for the projects examined reports did not always showprogress measured aga.nst miles ones or performanceindicators. They tended to be descriptive about inputsimplemented and funds expended rather than analytical.

Project Management Information System {PMIS)

22. The PMIS was developed and introduced in UNESCO’s


education sector in 1978. In 1984 it was extended to theScience secto- and by mid-1986 was operational in all thesectors of UNESCO. By developing and introducing PMIS,UNESCO aimed to create and develop an information databasewhich was accessible to both headquarters and fieldpersonnel and would provide the necessary informationrequired for the current management of operationalprojects. Current PMIS data on projects is circulated toproject offices monthly.

23. For information systems to be of maximum value totheir users, the data-base should be complete andregularly up-dated. My staff examined the PMIS reports asat 31 December 1987 relating to UNDP projects to assesswhether the system contained the information necessary toperform its expected role. They found that of the 309on-going UNDP projects, 43 projects (14 per cent) had notbeen up-dated during 1987; 176 projects (57 per cent) hadno information regarding milestones; 83 projects (27 percent) had no information regarding specific objectives; 54projects (17 per cent) had no information regarding theresources involved; and 29 projects (9 per cent) had information regarding their duration. My staff considerthat this lack of up-to-date information is likely toimpair effective project control. Without it managementmay be unable to identify problems and take the necessaryremedial action and unable to compare actualimplementation with planned activities.

Tripartite Reviews

24. The ultimate level of project monitoring is theTripartite Review (TPR) for which the mandatory annualprogress report for all projects that have a UNDPcontribution in excess of $400,000 constitutes anessential input. The TPR provides the three partiesdirectly involved in implementation (UNDP, UNESCO andrecipient) with an opportunity to consider projectachievements and the progress made towards the achievementof the stated aims and objectives.

25. In 1986 UNESCO employed a Consultant to carry out adesk review of TPRs of UNESCO executed UNDP projectscarried out in 1985 and 1986. The Consultant’s report wasbased on a test examination of 26 projects due for a TPR.The report noted that UNESCO representatives participatedin 17 TPRs (65 per cent) of the 26 TPRs reviewed, but thatin all cases governments and UNDP were represented. TheConsultant noted that the UNESCO Representative had apositive influence in 10.(59 per cent) of the 17 TPRs which UNESCO participated, but that on no occasion hadthere been feedback from either UNESCO or UNDPheadquarters to the projects in relation I.o the TPRreports, project progress reports and internal evaluationreports. It appeared to my staff therefore, that bothUNESCO and UNDP are missing an important opportunity toimprove the effectiveness of operational projects by notproviding project managers with information on the resultsof the TPRs.


Project evaluation

26. In 1983 and 1984, UNDP re-examined its procedures formonitoring and evaluation. This led to a set of revisedprocedures being issued to field offices to be appliedduring 1985 and 1986 on a trial basis. As a result of thesatisfactory culmination of the field trial, UNDP issuedthe revised procedures for monitoring, evaluation andreporting to be applied from July 1987.

27. The most significant change is the amalgamation ofthe project progress report (paragraph 20) and the projectinternal evaluation report into the Project PerformanceEvaluation Report (PPER). The PPER is required to submitted annually in order to establish a linkage withthe yearly tripartite review. In the past, the projectprogress report was requited to be submitted every sixmonths to assist regular monitoring of projectimplementation. It is too early to assess the impact ofthese changes and whether the change from 6 monthlyprogress reports to an annual progress report will delayaction in resolving problems.

28. My staff therefore consider that the Secretariatshould take action to keep themselves fully informed ofthe operation of the new UNDP procedures. In particularthey should ensure that the delays currently occuring inthe submission of progress reports for some projects(paragraph 21) do not occur under the new procedures andthat the progress reports are presented in such a way asto provide all required information, adequate analysis andrecommendations for action. The Secretariat might alsoconsider extending the scope of the annual in-housetraining course on evaluation methodology to ensure thatall staff members involved in the planning, monitoring andevaluation of UNDP projects are fully conversant with therequirements of the revised UNDP procedures.

PROGRAMME SUPPORT COSTS

29. As reported to the Executive Board, in document127/Ex/26, the Secretariat had estimated that due to thedecline in delivery levels support cost reimbursementsfrom UNDP would be some $1.34 million less thananticipated in the Appropriation Resolution for 1986-87(23c/Resolution 21, Note 2 refers). The Secretariat havetaken a number of measures to compensate for thisestimated shortfall in support cost income from UNDP,including keeping a number of posts vacant and reducingmission, telephone and telex costs. However, theyinformed my staff that the decline in UNDP financed-delivery by UNESCO had not been accompanied by aproportionate reduction in the level of administrative andtechnical support required to implement these projects.Under the arrangements for UNDP programme support costs,UNESCO received reimbursement of $8.3 million based on 14per cent of project expenditure for 1986 and 13 per centfor 1987.


30. Although UNESCO do not keep records of the actualcost of administering UNDP projects, past reviews havebeen carried out by the Secretariat to assess the cost ofprogramme support. The most recent review was carried outin 1981 and concluded that the direct staff costsexcluding any associated overheads, incurred by UNESCOduring 1981 in providing programme support to UNDPprojects amounted to some $12 million. In the same periodUNESCO received $7.29 million in programme support incomefrom UNDP, leaving the balance of $4.71 million to besubsidised from other funding sources. In my staff’sview, the difference between the programme support costsincurred and income received from UNDP is likely to haveincreased since 1981, since the decline in UNDP financeddelivery by UNESCO has not been accompanied by aproportionate reduction in the level of programme supportrequired to implement these projects. I note, though,that percentage level of programme support cost reimburse-ment has decreased from 14 per cent in 1986 to 13 per centin 1987.

SUMMARY OF FINDINGS AND CONCLUSIONS

31. UNDP Country Programmes are drawn up by governmentsto indicate the proposed use of UNDP resources towards theachievement of national development objectives. Informulating these programmes governments are assisted by

UNDP and, where requested, by the UN Agencies. However,my staff’s review indicated that UNESCO’s role in the

Country Programming exercise is limited to providinginformation upon request and its technical expertise ineducation, science and culture has not been called uponfor an overall identification of country needs in these

areas (paragraphs 7 to 8 refers).

32. From their examination of procedures for the controlof projects and a desk review of a sample of 18 projectsmy staff found that UNESCO generally followed UNDPguidelines. However they noted (paragraph 15) that thesuccessful implementation and completion of projects hadbeen impeded because of operational problems caused bydelays in:-

- the recruitment of international personnel;

- the procurement and delivery of equipment;- the selection of candidates for fellowships;- the provision of government inputs.

33. I recognise that not all of the delays referred toabove are within UNESCO’s responsibility. However, itseems to me that an ongoing analysis, by country and by

type of project of the reasonF for the delays andproblems would ~rovide a c~ntral planning informationdata-base. In this way, as experience was gained, theproblems likely to arise could be recognised and providedfor, in so far as possible, at the project formulationstage. In this respect, my staff noted that theinexperience of national project directors may also have


caused some of the project implementation delays(paragraph 16) and in my view UNESCO should considerwhether a programme of training for these directors shouldbe established, either by appropriate training material orby an increased level of technical support by UNESCO

staff.

34. My staff’s examination of project documents andprocedures also revealed a number of areas where, in myview the Organization should take action to:-

(a) ensure that in all cases the project documentsinclude a detailed work plan which schedules inputs,activities and outputs so as to facilitate themonitoring of a project’s progress (paragraph 17);

(b) ensure the timely receipt of Project Progress Reportsat UNESCO headquarters (paragraph 21);

(c) improve the timeliness and content of the informationcontained in Project Management Information System

(PMIS) so that management can take early correctiveaction where necessary and to provide the basis forbetter evaluation of projects (paragraphs 22 to 23);

(d) consider the need for UNESCO to participate in allTripartite Review meetings and provide technicalfeedback to project managers in respect of thesereviews (paragraphs 24 to 25);

(e) improve the content of progress reports to providemore analysis of project progress and considerwhether in-house training should be enhanced(paragraphs 21 and 28); and

(f) assess, in due course, whether the change from 6monthly to annual reporting has reduced headquarters’control over project implementation and has resultedin delays in taking appropriate remedial action(paragraph 27).

35. I note that UNESCO receives a fixed percentage ofUNDP project expenditure to cover the cost of itsadministration of the projects, but that no record is keptof the actual cost. In my view the Organization shouldeither establish such a record or carry out periodicreviews to assess the actual cost of providing UNDP

~projects with programme support. This would enable theOrganization to determine whether its UNDP work is fullycovered by support cost receipts and does not fall as acharge against its Regular Programme or otherextra-budgetary activities.


ACKNOWLEDGMENT

36. I wish to record my appreciation for the co-operationand assistance extended by the officers of theOrganization during my audit.

JOHN BOURN(Comptroller and Auditor Genera’, United Kingdom)

External Auditor

j.~ August 1988


UNITED NATIONAL DEVELOPMENT PROGRAMME(Participating and Executing Agency: UNESCO)

Status of Funds as at 31 December 1987

Opinion of the External Auditor

To: The General Conference of the United NationsEducational, Scientific and CulturalOrganization

I have examined the appended Status of Funds Statement

I and Schedules 1 and 2 of the United NationsEducational, Scientific and Cultural Organization asExecuting Agency of the United Nations DevelopmentProgramme for the financial period ended 31 December

1987, in accordance with the Common Auditing Standardsof the Panel of External Auditors of the UnitedNations, the Specialized Agencies and the International%tomic Energy Agency. My examination included ageneral review of the accounting procedures and suchtests of the accounting records and other supportingevidence as I considered necessary in thecircumstances.

As a result of my examination I am of the opinion thatthe Statement and Schedules present fairly thefinancial position at 31 December 1987 and the resultsof the transactions for the period then ended; thatthey were prepared in accordance with theOrganization’s stated accounting policies which wereapplied on a basis consistent with that of the

preceding financial period; and that the transactionswere in accordance with the Financial Regulations and

F legislative authority.

JOHN BOURN(Comptroller and Auditor General

United Kingdom)External Auditor

I~ August 1988/...

UNITED NATIONS DEVELOPMENT PROGRAMME(Participating and Executing Agency: Unesco)


(Expressed in US doLLars)

DP/1989/58/Add. I

Stat~.en~I English

Page 57

Operating Fund

Batance at 1 January 1986

Add:

Cash drawings from UNDP

]OVs and other charges/credit (net)

Miscel|aneous income andexchange adjustments (net) (Note

Miscellaneous items refunded to UNDP (net) (Note 426,390

1,047,509

(4,419,408)

70,051,443

Less:Expenditure during 1986/1987:

For projects

Disbursements (Schedule I)

Untiquidated ob[igations (Schedute 1)

For programme support costs (Schedule I)

55,122,1977,415,0908,305,013

65,632,035

70,842,300

Batance at 31 December 1987

Represented by:Cash at banks

Accounts rece~vabte (Note 2)2,359,159

2,689,468

(5,210,265)

5,048,627

Less:Accounts payabte (Note 2)1987 un[iquidated obtigations ((Schedu[e

2,843,8027,415,090

5,048,627

I0,258,892

(5,210,265)

Certified correct

D. C. DaiyComptroller a.i.

APl )ved

D i rector- General*,°


INTERNATIONAL CIVIL AVIATION ORGANIZATION


Notes to the Statement of the Status of Funds

(Statement IX)

31 December 1987

I. Nature of Activities

Under the United Nations Development Programme (UNDP), the execution projects related to civil aviation, financed by UNDP, is delegated to theInternational Civil Aviation Organization (ICAO).

2. Significant Accounting Policies

(a) Method of Accounting

The Statement of the Status of Funds has been prepared in accordancewith the format and directives prescribed by UNDP. The accounts ofICAO are recorded in United States dollars. Transactions and account

balances in other currencies are converted into United States dollarsat the United Nations operational rates of exchange.

(b) Expenditures for Projects

Expenditures include disbursements and unliquidated obligations forwhich funds have been provided in approved project budgets in thecurrent year. Expenditures are accounted for as follows:

for experts: on the basis of services rendered to the endof the year;

for equipment: on the basis of purchase orders or signedcontractual agreements issued to the end of

the year;

for training: on the basis of the costs incurred forfellowships to the end of the year;

for sub-contracts: on the basis of the payment schedule included

in the contract with the sub-contractor;

for miscellaneous: on the basis of issuance of authorization topay for miscellaneous goods or services

delivered or for which firm orders have beenplaced for delivery in the current year.

(c) Programme Support Costs

Programme support costs are calculated on project expenditures on abasis determined by UNDP.

o,,


AUDIT OPINION

To the AssemblyInternational Civil Aviation Organization

I have examined the Statement.s of the Status of Funds of the InternationalCivil Aviation Organization as Executing Agency of the United Nations DevelopmentProgramme, Statements IX and X and relevant schedules9 for the financial period ended31 December 1987. My examination included a general review of the accountingprocedures and such tests of the accounting records and other supporting evidence as 1considered necessary in the circumstances.

As a result of the examination, I am of the opinion that these Statements ofthe Status of Funds properly reflect the recorded financial transactions for thefinancial period, which [ransactions were in accordance with the Financial Regulationsand Rules of the United Nations Development Programme and legislative authority, andpresent fairly the financial position as at 31 December 1957, in conformity with theaccounting policies described in Note 2 to the Statements applied on a basis consistentwith that of the preceding financial period.

Kenneth M. Dye, F.C.A.(Auditor General of Canada)

External Auditor ¯

Ottawa, Canada13 May 1988

° o,

DP/1989/58/Add.1

English

Page 60

STATEMENT IX

~ OF ~ STAT~S (IF Ft%D8

AS AT 31 I]~C~[IR 1987

(in United States dollars)

1987 1986

OP~ATI~ FUND

Add:C~h dr~s from b1~

inter-offlee ~uchers ~ other chargesH.i.scelhmeotm inane md ~hm~e adjusmmtsHi.scellameou~ i¢,,m to be refunded to

Deduct :F~itures du~ing the ye.~ (Schedules H,I,J)

For project,,Disbur se~st%1iqui~t,~ ~lipt i=~

For progr~e support cos~

Balance at ~ of year

Cash in banks, on h~d and in ~ansitDue from other Ptmds:

AOSC F~Aervna~ical Technical l’ra/ning Fu~IG~ G~eral FundTemination Pa~mmt Fundgovemm*mts’ Trust Fund ~c~mtsUN~P Administered Tnmt Fun,ls

Accotmts receivable and sundry debit belamces

(10 669 62D)

30 630 000 25 595 0~11 514 321 I0 388 596

292 506 421 593(93) 42 436 734 (6 716)

31 767 114

24 467 759 24 908 8005 397 886 I0 77&-8973 655 325 33 520 971 4 ~3 16~

(I 753 857)

3 211 802

447 91279 gg&

336 495 1DZ 38357 504 87 685

335 465 321 447101 814 1 279 269 i~2 853

1 312 909

(6 701 228)

36 398 473

29 697 245

40366865

(10 669 629)

1063 t19

695 ~541 408 611

5 8O3 980 3 167 194

Due to otbe~ Funds:AOSC F~l 619 949Gov~’ ~’u~t Ftmd ~ccounts 188 146 188 146 300 654

Acco~te payable and sundry (=edit balaaces i 971 805Unliquida~ed obligatm - current yar 5 397 886

7 557 837

(1 753 857)

9~D 603

2 141 314I0 774 897

13 836 814

(I0 669 620)

S. MiyazakiChief, Finance Bramch

...


WORLDHEALTH ORGANIZATION


Statement I

Status of funds for the financial period 1 January 1986 - 31 December 1987

(expressed in US dollars)

OPERATING FUND

Balance at I January 1986 ...................

Cash drawings from UNDP ...............Inter-office vouchers and other charges (net) ....Miscellaneous income and exchange adjustments (net)Miscellaneous items refunded to UNDP (net) ......

Deduct: Expenditure during 1986-1987 (Schedule i)

For projects (Schedule 2)Disbursements ..... 22 833 675Unllquldated obligations i0 584 494

For programme support costs .....

33 418"169

3 960 458

Balance at 31 December 1987 ..................

Represented by:

Accounts payable (due to WHO) .................

146 093

22 830 56212 700 197

47 370161 327

35 885 549

37 378 627

(i 493 078)

(1 493 078)

The above status of funds statement and supporting schedules 1 and 2 areapproved.

Chief, Accounts


TO the World Health Assembly

I have examined the above Status of Funds Statement I and Schedules 1 and2 of the World Fealth Organization as Executing Agency of the United NationsDevelopment Programme for the financial period ended 31 December 1987, inaccordance with the Common Auditing Standards of the Panel of ExternalAuditors of the Unlted Natlons~ the Specialized Agencies and the InternationalAtomic Energy Agency. My examination included a general review of the accoun-ting procedures and such tests of the accounting records and other supportingevidence as I considered necessary in the circumstances.

As a result of my examination I am of the opinion that the Statement andSchedules present fairly the financial position at 31 December 1987 and theresults of the tranaactlon$ for the perlod then ended; that they were preparedin accordance with the Organization’s seated accounting p~licies which wereapplied on a basis consistent with that of the preceding financlal period; andthat the transactions were in accordance with the Financia: Regulations andlegislative authority.

I have no observations to make on these financial statements,

John Bourn(Comptroller and ~uditor General, United Kingdom)

External Auditor ,o.


1801 K Street N WWas~mgt0r DC 20006

Price tlbterhouse 0

April 15, 1988

To International Bank for Reconstructionand Development and Board of AuditorsUnited Nations

We have examined the accompanying Statement I of the Status of Funds,Statement II of Expenditure by Source of Funds, and Statement III ofExpenditures of the International Bank for Reconstruction andDeve]opment as ExecutinE Agency for certain United Nations DevelopmentProgramme projects for the year ended December 31, 1987. Our examina-tion was made in accordance with generally accepted auditing standardsand accordingly included such tests of the accounting records and suchother auditing procedures as we considered necessary in the circum-stances.

As described in Note 2, these statements are prepared in accordancewith the format and accounting practices prescribed by the UnitedNations Development Programme. These practices differ in somerespects from generally accepted accounting principles. Accordingly,the accompanying statements are not intended to present financialposition and results of operations in conformity with generallyaccepted accounting principles. This report Is intended solely forfiling with the United Nations and is not intended for any otherpurpose.

In our opinion, the accompanying statements present fairly the statusof funds and expenditures of the International Bank for Reconstructionand Development as Executing A~ency for certain United NationsDevelopment Programme projects for the year ended December 31, 1087,on the basis of accountln~ described In Note 2, which basis has beenapplied in a manner consistent with that of the preceding year.

o°*

DP/1989/58/Add. IEnglish

Page 63


EXECUTING AGENCY: INTERNATIONAL BANK FOR

RECONSTRUCTION AND DEVELOPMENT

STATUS OF FUNDS

YEAR ENDED DECE~CBER 31~ 1987

(Expressed in U.S. dollars)

STATEMENT I

OperatinR Fund

Balance as of December 31, 1986

Add:Cash drawlngs from UNDPOther charges (net)Inter-offlce voucher charges

Miscellaneous income andexchange adjustments (net)

Deduct:Expenditures durln~ 1987

(Statements II and III)For projects

DisbursementsUnll0uidated obligations

For Programme supnort costsFor Mditional support costs

Balance as of December 31, 1987

$43,243,6771,438,910

20,419,826

(372a427)

$40,231,220I0,210,8415,401,088

IQ,500

S(12,245,026)

64,729t986

52,484,960

55~853~649

$ (3,368,689)

Represented by:Cash at banks and in transitAccounts receivable

Deduct:Accounts payable and accrued expenses

1987 unliQuidated obligatlons$ 3,170,845

I0~210~841

$ 3,320,0706#692t927

10,012,997

13)381)686

$ (3,368,689)

The accompanying footnotes are an integral part

of the financial statements.

°.,


Page 64

Translation from French

Swiss Federal Audit Office

942.0.1.22/87

E1/Ve-st~

3003 Berne, 19 April 1988

UNIVERSAL POSTAL UNION, BERNE

ACCOUNTS OF TECHNICAL COOPERATION PROJECTS OF THE UNITED NATIONS DEVELOPMENT

PROGRAMME

FINANCIAL YEAR 1987

EXTERNAL AUDITOR’S REPORT


TERMS OF REFERENCE

In accordance with article 35 of the Financial Regulations of the Universal

Postal Union (UPU) and article XVII of the Financial Regulations and Rules

of the United Nations Development Programme (UNDP), I have, as external

auditor appointed by the Government of the Swiss Confederation, examined

the Technical Cooperation project accounts, kept in United States of America

dollars drawn up at 31 December 1987. In performing my duties at the head-quarters of the UPU in Berne, I was assisted by Messrs F Faessler, J-P Vessaz

and D Neier, from the staff of the Federal Audit Office.

I should like to express my appreciation of the helpfulness shown by all

the UPU International Bureau officials whom my colleagues approached in

providing the information and documents I required to carry out my task.

During our audit, my assistants had regular talks with Mr J Ascandoni,

Assistant Director-General, Head of the Technical Cooperation Division,

and Mr G Beney, Senior Counsellor, Head of the Finance Section.

2

2.1

AUDITS AND OBSERVATIONS

General

Our audits were conducted in conformity with generally accepted common

auditing standards, respecting the additional terms of reference attached

to the UPU Financial Regulations and in accordance with the rules issued

by the UNDP.

Our audits by sampling dealt with the accounting of the movements relating

to the "Indicative Planning Figures" (IPF) and "Special Programme Resources"

(SPR) allocations, the expenditure and proceeds of the financial statements

at 31 December 1987 (Statement I, Schedules ]A and 2) was checked, and the

balances of the various cash accounts at that same date were compared with

those given in the statements issued by the banks and postal giro centres.

The other main assets and liabilities were examined and a comparison was

made with the latest UNDP document (OFS 87-12) at 31 December 1987.

2.2 Cash management

2.3

For a selected period during the financial year, the movement~ of liquid

funds and their correct recording in the accounts were analyzed and veri-

fied. The checks made show that the funds needed for executing projectsare requested from the UNDP as the need arises.

Experts and consultants

By sampling, my colleagues satisfied themselves, in this field, that the

salaries, post adjustments, and family allowances had been calculated

according to th~ scales in force, on the basis of the classif cation of

the persons concerned and in accordance with the rules applicuble to tech

nical assistance project personnel.

The other benefits received by the experts and consultants, whose files

were examined, were checked, in particular, as to entitlement, the method

of calculating the amounts and the appropriate bringing to account.

°°°

DP/1989/58/Add. I

English

Page 66

2.4

2.5

2.6

Execution of projects

On the basis of the documents available at the headquarters of the UPU

International Bureau, the financial and budgetary progress of a number of

projects was examined.

While, from the financial point of view, the checks made produced positive

results, analysis of the content of the reports provided for by UNDP rules,in particular, the progress reports, tripartite monitoring reviews, evalua-

tions and the terminal reports, did not always make it possible to form

an opinion on the extent of implementation of the objectives set. TheInternational Bureau of the UPU was therefore asked to give its view on

this subject. From the replies given to me, it appears that, despite some

delays and some logistical difficu%ties for which the executing agency was

not responsible, the objectives assigned to the projects were attained.

As regards two operationally terminated projects, I shall ensure that the

titles of transfer of property are included in the files with the requisite

signature; this was not yet the case at the time of writing.

From the report of an evaluation mission submitted to me, I noted that the

last post office mentioned in my report on financial year 1986 (para-

graph 2.3) had been built. It was inaugurated on 10 September 1987.

Sectoral support allocation

I had an audit made of the short missions, the costs of which were charged

to the sectoral support allocation. My colleagues verified the accuracy

of the salaries and travel and living expenses paid. They also noted thereports drafted to satisfy themselves that the missions carried out cor-

responded to the definitions given in the Instructions of 3 December 1985

by the UNDP Administrator.

Of the allocations granted for 1984, 1985 and 1986, the UPU International

Bureau still had, at 31 December 1987, a residue of 1586.90 dollars. This

amount will be put in order in 1988. As regards the expenses recorded in1987, they exceeded the allocation granted by 5368 dollars. UNDP agreement

has been requested to charge this uncovered amount to the 1988 allocation.

Outstanding obligations

Of the total brought forward from financial years 1984 and 1986, a sum of

103 700 dollars in round figures, or 23 percent, was credited to variousprojects because it did not correspond to obligations which had fallen due.

Outstanding obligations in the statement of funds at 31 December 1987totalled 514 255 dollars. Apart from two consultants’ missions totalling

10 500 dollars, the criteria applied in putting these obligations to

account corresponded to UNDP rules.

,,,


Page 67

2.7 Support costs

The 1987 support costs put to account by the UPU International Bureau were

calculated on the basis of the expenditure on 1987 projects, including out-

standing obligations. In accordance with the decision of the Governing

Council, 28th session, and the agreement given by the UNDP Administrator,the rate applied was 22 percent.

As regards the conversion into Swiss francs and the transfer of sums pay-

able to the executing agency, UNDP rules were regularly observed.

CONCLUSIONS

The audits carried out revealed that the accounts are kept accurately and

that the book entries are in accord with the supporting documents.

Following our work, I am in a position to issue the audit certificate

appended at the foot of annex ! to this report (Statement I).

W FREI

Deputy Director

SWISS FEDERAL AUDIT OFFICE

(External Auditor)

o,,

De/1989/58/Add.lEnglishPage 68

UNIVERSAL POSTAL UNION

INTERNATIONAL BUREAU

STATEMENT I


Status of Funds as at 31 December 1987(in US dollars)

Operst inR Pund

Balance at I January 1987

Add: Cash drJving8 from UIrDPlOVeOther chsrgel/credit (net)Miscellaneous income sad

exchmnge adjustments (net)Hiacellsneou8 irene te~unded

to lYl~P (net)

Expenditure during 1987War projects

DitburaementaUnliquidated obligations

(Schedule 1~)(Schedule 1.4)

For progrtrms support coats (Schedule L4)

Add/ Adjustment to prior year’sSubtract: expenditure (Schedule lS)

Adjustment to prior year’s progrmmmesupport coats (Schedule IS)

Silence at 31Deceuber 1987

!

550000.001 250 575.04

(43 019.44)

78 160.54

(412.39)

1 136 639.00514 255.00

363 196.68

1 544 715..c6

2 014 090.68

(469 374.72)

(469 3"74.72)

59 697.09106 042.32

165 739.,I1

Reprelentsd by:

Csah st banks, on hind and in transitAccounts receivable (Schedule 8)

Accounts payable (Schedule 9)1987 Unliquidated obligations (Schedule IA)

CERTIFIED CORRECT

R TALLONAssistant Counsellor

120 859.13514 255.00 635 !"4.!~

(46? 74.72)r------

APPROVF:D/

: -L "-’-]

/Director-Ceneral

, ,


Audit Certificate

I have examined the above financial statement. My examination included a general review of theaccounting procedures and such tests of the accounting records and other supporting evidence as I

considered necessary in the circumstances.

The financial statement presents fairly the financial position as at )I December1987 and the resultsof its operations for the period then ended. For further details, I refer to my audit reportof 19 April 1988.

Berne, 19 April 1988

W. Frei

Deputy DirectorSwiss Federal Audit Office

(External Auditor)


EidgenOsslsche FinanzkontrolleContr61e f4d~ral des financesControllo federale delle finanzeSwiss Federal Audit Office943.0.i,19/87E1 Ve/im

3003 Bern, II May 1988

INTERNATIONAL TELECOMMUNICATION UNION, GENEVA

ACCOUNTSFOR THE TECHNICAL COOPERATION PROJECTS OF THE


Financial year 1987

Report by the External Audlto;

DP/1989/58/Add. I

English

Page 71

I. Terms of reference

Under Article 48 of the Financial Regulations of the International

Telecommunication Union (ITU) and Article XVll of the Financial Regulations andRules of the United Nations Development Programme (UNDP), I inspected theaccounts of Technical Cooperation projects, kept in United States dollars, as at31 December 1987, in my capacity as External Auditor appointed by the Government

of the Swiss Confederation.

In carrying out this task at ITU Headquarters in Geneva, I was assisted

by Mr. F. Faessler, Mr. J.-P. Vessaz, Mr. D. Neier and Mr. H. Brendow, officialsof the Federal Audit Office.

I wish to express my appreciation for the courtesy shown by all the

officials of the ITU who were approached in supplying the information anddocuments needed for the performance of my task.

During the audit my colleagues maintained regular contact with

Mr. R. Prdlaz, Chief of the ITU Finance Department, and withMr. A.E. Embedoklis, Chief of the Department of Technical Cooperation.

2. Verifications and comments

2.1 ~eneral

The audit was carried out in keeping with standard auditing procedures,

in conformity with both the additional terms of reference attached to theFinancial Regulations of the ITU and the relevant UNDP rules.

Spot checks were made of the posting to account of movements relatingto allocations for indicative planning figures (IPF), special programmeresources (SPR) and special measures for the least developed countries (LDCs),expenditure and income during the financial year and liquid funds. The accuracyof items appearing in the financial statements at 31 December 1987 (Statement I,

Schedules IA and 2) was verified. The balances in the various accounts on thesame date were checked against those appearing in the bank statements. The othermain items, both assets and liabilities, were inspected and the amounts werecompared with those appearing in the latest UNDP document (OFS 87-13)

31 December 1987.

2.2 Managemen~ of ¢asb Tesources

For a selected period in the financial year, the movements of liquidfunds and their correct entry in cash and bank accounts were analyzed andverified. The verification showed that the financial resources required for the

implementation of projects are obtained from the UNDP as needs arise.

°,°

DP/1989/58/Add. I

English

Page 72

Available funds in currencies other than US dollars are kept to a

minimum, thereby limiting adjustments due to exchange rate fluctuations torelatively low levels.

2.3 Experts and consultants

In the course of spot checks, my colleagues found that salaries, postadjustments, dependency allowances and contributions to the Joint Staff Pension

Fund had been calculated on the basis of the scales in force, in accordance withthe contracts of the staff concerned and in accordince with the rules applied toofficials recruited under technical assistance projects.

The other benefits paid to the experts and consultants whose files wereexamined, such as housing allowances, installation grants, removal costs, studygrants and repatriation grants, were also verified, particularly with respect to

legitimacy, to the manner in which amounts are determined and to the properaccounting thereof.

2.4 ImDlementatlon of Drolect@

On the basis of the documents available at ITU Headquarters in Geneva,my colleagues inspected the budgetary and financial development of a certain

number of projects. They examined the reports required under UNDP rules,especially progress reports, tripartite review reports, evaluations and finalreports, with particular reference to the assessments of the level of attainment

of project objectives.

Their observations concerning the projects analyzed may be summarizedas follows:

Implementation of the projects complies with UNDP procedures and

is conscientiously and ably supervised by the ITU.

Several projects are subject to implementation delays and some donot achieve all the immediate objectives initially set.

This can result in additional allocations to pay for extensionsof the duration of expert missions, or in the preparation of afurther project requiring a new allocation.

The causes of the delays and of incomplete attainment of objectiveswhich emerge from the documents consulted and from information gathered on the

subject are chiefly attributable to the difficulties which host countries havein supplying their Inputs or supply them on time. A number of examples are givenbelow concerning five projects.

DP/1989/58/Add. I

English

Page 73

No. I: In this project, designed to equip the country concerned with a planning

unit to establish a telecommunications master plan, the set objectives wereattained. To achieve them, however, UNDP was obliged to supply certain resources

in the form of equipment which should have been made available as governmentinputs. In the final analysis, an allocation of 258,000 dollars was needed as

against an initial budget of 155,000 dollars.

No 2: This project designed to assist with initial investments under the

telecommunications master plan was disrupted in particular by the fact that theadministration did not provide the scheduled logistic support and support staff

and that a number of counterpart staff trained under an earlier project wereredeployed and replaced by staff without adequate skills and lacking initiative.As a result, in order to be completed-the project had to be extended and actualexpenditure finally amounted to 588,892 dollars as against 399,050 dollarsinitially budgeted.

No 3: The budget of a telecommunications planning project was revised such thatthe salaries of auxiliary staff, in particular drivers and secretaries, who

should have been made available as inputs by the host country, were charged toUNDP, thereby increasing the initial allocation by 26% (378,000 dollars).

No4: The building required to implement a project to set up a

telecommunications centre, to be supplied under government inputs, was built twoyears late. Some of the objectives - training of instructors and monitors forradio, telecommunications operation, line installation, etc. - could not be

achieved because national personnel were not made available in good time.

~: From the very beginning of a telecommunications assistance project, thecoordinator was confronted with an inadequate supply of equipment and tools, the

complete lack of any vehicles and measuring apparatus and insufficient qualifiedstaff. Other problems encountered include interference from people outside theproject.

2.5 Unliqulda=ed obligations

The unllquldated funds appearing on the statement as at

31 December 1987 stand at 6,506,498 dollars, of which 5,724,899 relate to thecurrent financial year and 781,599 dollars are carried over from previous years.

Checks made in this regard show that UNDP instructions concerning the posting ofthese commitments to account have been followed as regards equipment, expert andconsultancy costs and fellowships. In several cases, however, the cost ofequipment expressed in other currencies was converted into dollars at theJanuary 1988 exchange rate instead of the rate valid on 31 December 1987.

°°°


Page 74

2.6 SuDpor~ ~osts

Support costs for 1987 posted to account by the ITU were determined on

the basis of project expenditure, including unliquidated obligations. Ingeneral, the rate applied was 13%, except in the case of three projects, forwhich a lower rate was agreed.

3. Conclusions

As a result of the operations carried out, we are in a position tostate that the accounts are kept correctly and that the entries are in

conformity with the supporting vouchers.

I am therefore able to issue the certificate which appears at the end

of the following documents:

Statement for UNDP projects (Annex I);

Statement for UNDP funds-ln-trust for Lesotho 76/020;

Statement for UNDP sectoral support project INT78/020.

(signed) W. Frel

Deputy DirectorSWISS FEDERAL AUDIT OFFICE

(External Auditor)

Annexes:

i.

2.

3.

Statement IStatus of Funds at 31 December 1987

Schedule IA

Schedule 2

,o,

DP/1989/58/Add. I

English

Page75

STATEMENT I

UNITED NATIONS DEVELOPMENT PROGKAMME

(International Telecommunication Union)


(Expressed in U.S. Dollars)

Operating_ Fund

Balance as at 01.01.1987

Add : Cash drawings from U.N.D.P.

I .O.V.Other charges/credit (net)

Miscellaneous income and

exchange adjustment, c (net)Expenses incurred on completed prc]ects

$

(3.670.864,51)

14.690.976,-

8.713.811,08

( 513.970,49)

176.408,53

( 8.910,46)

19.387.450,15

Deduct: Expenditure during 1787

(schedule I)For projects : disbursements

unliq, obligations

For programme support co~t

Balance as at 31.December 1987

16.727,127,-

5.724.899,-

2.809.053,- 25.261.079,-

Represented by :

Cash at banks, on hand and in transitAccounts receivable : (Schedule 8)

Deduct : Accounts payable (Schedule 9)

1987 Unliquidated obligations

1.860.381,90

5.724.899,-

1.188.543,80

523.108,25

1.711.652,05

7.585.280,90

(5.873.628,85)

,o,


STATEMENT I (continued)

Certified correct :

R. PRELAZ

Chief of the Finance Department

Approved :

R.E. BUTLER

Sec re tary-Gene r a I

Audit Certificate

I have examined the above financial statement. My examination included

a general review of the accounting procedures and such tests of the accountingrecords and other supporting evidence as I considered necessary in the circum -

stances.

The financial statement presents fairly the financial position as at

31 December 1987 and the results of its operations for the period then ended.

W. FREI

Deputy Director

Swiss Federal Audit Office

(External Auditor)

Date : I0 March 1988

D~/1089/SS/Add.1English

Page 77

Asdit Office of the French RepublicSenior President

Paris, 15 June 1988


REPORT OF THE EXTERNAL AUDITOR

General observations:

i. The statements and schedules relating to the participation of the WorldMeteorological Organization (WMO) in the United Nations Development Programme(UNDP) were submitted in the format required by UNDP. I examined them duringmy audit of the Organization’s regular budget and subsidiary funds.

2. Statement I shows the financial resources provided to WMO by UNDP in1987, expenditures incurred by WMO during the financial year for the payment

of goods and services provided in connection with projects, and programmesupport costs and the balance of operating funds as at 31 December. In 1987,as in 1986, this fund registered a negative balance in the case of WMO owingto the practice of recording unliquidated obligations as expenditures. Incash terms, the balance of this fund is positive for WMO.

Schedule 1 shows programme expenditure by source of financing and thecorresponding support costs for 1987. Schedule 2 shows project-relateddisbursements and unliquidated obligations by country and region during theyear. Total programme and support expenditures amounted to US$12,002,404for 1987, down 17.7 per cent from 1986.

Programme support costs

Expenditure by WMO for the administration of UNDP projects is chargedagainst the WMO technical co-operation fund. UNDP contributed $1.9 million tothis fund to which must be added all support costs covered by government cashcounterpart contributions ($798).

The UNDP contribution can be broken down into a contribution forreimbursable costs at the standard rate, or $1,311,000, which can be adjustedupward or downward by $589,000. The method used to calculate this margin ofadjustment did not change in 1987.


Page 78

Total UNDP project costs decreased in 1987, but there was no comparabledecrease in the amount of reimbursed WMO programme support costs; consequentlythe WMO rate of adjustment was 2.9 points higher than the 1986 rate, 18.8 percent as compared with 15.9 per cent.

(~) Andr~ ChandernagorSenior President of the Audit Office

External Auditor of the World Meteorological Organization


Translated from French

Audit OfficeSenior President Paris, 15 June 1988


WORLD METEOROLOGICAL ORGANIZATION

STATUS OF FUNDS AS AT 31 DECEMBER 1987

EXTERNAL AUDITOR’S CERTIFICATE

I have examined Statement I, enclosed herewith, as well as schedules 1

and 2 pertaining thereto. I have received all the information and

explanations which I requested, and I hereby certify upon completion of the

audit that the attached statement and corresponding schedules are, in my

opinion, correct.

(Signed) Andr4 ChandernagorSenior President of the Audit Office of the French Republic

External Auditor of the World Meteorological Organization


STATEMENT I

United Nations Development Programme

WORLD METEOROLOGICAL ORGANIZATION


(An US dollars)

opersttn~ Fund

Balance at i January 1987

Adds Cash drawings from UNDPIOVsOther charges/cre4Lit (net)Miscellaneous income and

exchange adjustments (net)Miscellaneous items refunded to UNDP (net)

6,529,8845,785,624

(166,722)

138,253(5,824)

Lesst E~penditure during 1987

For projectsDisbursementsUnliquidated obligations

(Schedule IA)(Schedule IA)

For programme support costs (Schedule 1A)

Add: Adjustment to prior year’sexpenditure (Schedule IB)

Adjustment to prior year’s programmesupport costs (Schedule IB)

8,037,8702,063,736

1,900,798

(945,360)

12,281,215

11,335,855

12,002,404

Balance at 31 December 1987 (666,~9)~mm

Represented by,

Cash at banks, on hand and in transitAccounts receivable (Schedule 8)

Lessz Accounts payable (Schedule 9)1987 Unliquidated obligations (Schedule IA)

CERTIFIED CORRECT

iX. J~(M. Husain)

Chief, Finance andBudget Divisior,

1,137,4782,063,736

APPROVED

(~-O. R. Obas i)Secretary General

1,984,666549,999

2,534,665

3,201,214

(666,549)

°,°



INTERNATIONAL MARITIME ORGANIZATION

I. Introduction

i.i. The transactions of the International Maritime Organization as anExecutive Agency of the United Nations Development Programme, during the year

ended 31 December 1987, are recorded in the annexed Statement I and theaccompanying schedules in the form prescribed by the UNDP. The number ofschedules has been reduced from earlier years to simplify the presentation.

2. Statement I

2.1. Cash drawn from the UNDP during the year amounted to ~4,759,549whilst payments made on behalf of IMO directly from UNDP funds for programmeexpenditure and charged to IMO by Inter-offlce voucher, totalled ~1,477,061.Net miscellaneous charges were $281,815.

2.2. Expenditure on project activities during 1987 amounted to~5,259,580 (compared with $5,302,914 in 1986) made up of disbursements~4,602,545 plus unliquidated obligations of ~657,035. Programme support

costs of ~i,i00,000 brought the total expenditure to ~6,359,580. The balanceof ~944,347 as at 31 December 1987 represents the cash resources still to be

provided by the UNDP to meet the expenditure committed on the programme as atthat date.

2.3 Unliquidated obligations remaining from previous years amountingto ~129,201 are included in accounts payable.

2.4. The support cost of ~i,i00,000 charged in the account to meet the

cost of IMO’s technical and administrative support of the programme, consistsof 13% of the ~5,259,580 project expenditure (~683,745) plus an amount ~416,255 claimed under the arrangement for support cost flexibility for small

Agencies approved by the UNDP Governing Council.

2.5. The number of individual projects on which expenditure wasincurred in 1987 was 54.

3. Equipment

3.1. Expenditure on equipment supplied to projects has been charged ascurrent expenditure and is included in the total of expenditure on projects.Non-expendable items of equipment delivered to projects, costing $25 or over,are recorded in invent,ries.

/ /r

C.P. SRIVASTAVASecretary-General

,°°


Opinion of the External Auditor

To: the Assembly of the International Maritime Organization

I have examined the appended Status of Funds Statement 1 and

Schedules 1 and 2 of the International Maritime Organization

as Executing Agency of the United Nations Development

Programme for the year ended 31 December 1987, in accordance

with the Common Auditing Standards of the Panel of External

Auditors of the United Nations, the Specialized Agencies and

the International Atomic Energy Agency. My examination

included a general review of the accounting procedures and

such tests of the accounting records and other supporting

evidence as I considered necessary in the circumstances.

As a result of my examination I am of the opinion that the

Statement and Schedules pr.esent fairly the financial

position as at 31 December 1987 and the results of the

operations for the period then ended; that they were

prepared in accordance with the Organization’s stated

accounting policies which were applied on a basis consistent

with that of the preceding financial period; and that the

transactions were in accordance with the Financial

Regulations and legislative authority.

I have no observations to make on these financial

¯ statements.

JOHN BOURN

(Comptroller and Auditor General, United Kingdom)

External Auditor

¯ I,°°


STATEMENT I

UNITED NATIONS DEVELOPMENT PROGRAMMEInternational Maritime Organization

O~eratln~ Fund

Status of Funds as at 31 December 1987(in US Dollars)


Add: Cash drawings from UNDP

lOVsOther charges (net)


Miscellaneous items charged toUNDP (net)

4,759,5491,477,061

(300,860)

31,826

(12t781)

Less: Expenditure during 1987

For projects:

Disbursements (Schedule IA) 4,602,545Unllquldated obligations (Schedule IA) 657,035

For programme support costs (Schedule IA) itlOOtO00

Add: Adjustment to prior year’s

expenditure

Adjustment to prior year’s programme

support costs


(539,562)

5t954t795

5,415,233

6p359~580

(944,347)

(944,347)

Represented by:

Cash at banks, on hand and in transitAccounts receivable

135,541332~870

468,411

Less: Accounts payable1987 unliquidated obligations (Sch. IA)

755,723

657t035

CERTIFIED CORRECT

D. MuthumalaHead, Finance Section

APPROVED/

/

~ ~. , ,/

C.P. SrlvastavaSecretary-General

(it412 ~758)

(944,347)

°.,

DP/1989/S8/Add. IEnglish

Page 84

SWISS FEDERAL AUDIT OFFICE[Original: French]

3003 Berne, 28 April 1988

WORLD INTELLECTUAL PROPERTY ORGANIZATION, GENEVA

ACCOUNTS OF TECHNICAL CO-OPERATION PROJECTS OFTHE UNITED NATIONS DEVELOPMENT PROGRAMME

Financial year 1987

External Auditor’s report


I. General remarks

In accordance with the agreements concluded between the WorldIntellectual Property Organization (WIPO) and the Government of the SwissConfederation on the external audit of accounts, and pursuant to article XVIIof the Financial Regulations and Rules of the United Nations DevelopmentProgramme (UNDP), I have in my capacity as External Auditor audited thetechnical co-operation project accounts kept in United States dollars as at31 December 1987.

In carrying out my work at the headquarters of the WIPO InternationalBureau in Geneva, I was assisted by Mr. F. Faessler, Mr. J. P. Vessaz andMr. D. Neier of the Swiss Federal Audit Office.

I wish to express my gratitude for the courteous way in which theinformation and documents necessary for the performance of my assignment weremade available by all the staff members of the International Bureau called

upon for this purpose.

During the audit, the findings and comments were regularly discussedwith Mr. T. A. J. Keefer, Director of the Division of Budget and Finance of

WIPO, and Mr. B. Machado, chief of the support unit of the WIPO PermanentProgramme for Development Co-operation.

2. Audits and findings

2.1 General remarks

The audit was carried out in accordance with the generally acceptedcommon auditing standards, the terms of reference annexed to the WIPOFinancial Regulations and UNDP Rules.

Spot checks were made of the posting to account of changes inexpenditures and income for the financial year, and in cash items. Theaccuracy of the entries in the financial statements, as at 31 December 1987,

(Statement I, Schedules IA and 2) was checked. The cash-account balance as the same date was checked against the bank statement. The other main entriesunder assets and liabilities were audited. Reconciliation between the last

UNDP statement of accounts (OFS 87-13) and the amounts recorded in the WIPOaccounts as at 31 December 1987 was carried out.

2.2 Cash manaqement

For the period 1 January - 31 October 1987 cash movements and theircorrect posting to account were analysed and verified.


Page 86

I noted the steps taken by the International Bureau of WIPO to ensure

that throughout the year cash levels were as closely as possible in line with

the requirements of project delivery.

2.3 Experts and consultants

In the course of spot checks, my colleagues found that salaries, post

adjustments, dependency allowances and contributions to the Joint staff

Pension Fund had been determined on the basis of the scales in force, in

accordance with the classification and contracts of the staff concerned and in

accordance with the rules applicable to technical assistance project

personnel.

The other benefits paid to the experts and consultants whose files wereexamined were also verified, particularly with respect to entitlement, to the

manner in which amounts were determined and to the proper accounting thereof.

2.4 Project delivery

On the basis of the records available at the headquarters of the WIPO

International Bureau, my colleagues reviewed the financial and budgetary

development of a number of completed projects, and analysed successive budget

revisions.

In the light of the additional information made available to them they

were able to endorse the conclusions of the evaluations. In the interests of

proper procedure a transfer of title to equipment will be drawn up at my

request.

2.5 Unliquidated obligations

After examining the unliquidated obligations in the amount of

$283,206.41 which appear in the statement of the status of funds as at

31 December 1987, I am in a position to confirm that the instructions of the

UNDP Administrator regarding the posting to account of such obligations have

been duly taken into consideration and followed. With reference specifically

to equipment, the unliquidated obligations were generated as at 31 December

1987 when an order was placed and the corresponding appropriation had beenentered in the budget for 1987. Where local procurement is concerned, the

purchase authorization by the executing agency is regarded as an order.

,o,

DP/1989/SS/Add.1English

Page 87

2.6 Sectoral support allocation

The 1987 allocation and the residual carry-over from previous years were

used to finance the activities described in the program~es and the related

reports submitted by the International Bureau to the UNDP Administrator.

There was no year-end balance.

2.7 Support costs

The support costs posted by the WIPO International Bureau for 1987 were

calculated, as in previous years, on the basis of the figures for expenditure

and unliquidated obligations in respect of indicative planning figure (IPF)

and government cash counterpart contribution (GCCC) projects at a global rate

of 22 per cent, in accordance with the decision adopted by the Governing

Council at its twenty-eighth session and with the agreement of the

Administrator of UNDP.

3. Conc lus ions

The audit has verified that the accounts are accurate and that

accounting records agree with supporting documentation.

With the conclusion of the audit, I am in a position to issue the

attached audit certificate, annexed with the following documents:

- Statement of UNDP funds (annex i).

- Statement of UNDP trust funds (annex 4)

(~) W. FreiDeputy Director of the

FEDERAL AUDIT OFFICE OF THE

SWISS CONFEDERATION

(External Auditor)

Attachments:

i. Statement I - Status of funds as at 31 December 1987

2. Schedule IA

3. Schedule 2

4. Statement I - Trust fund for the training in the USSR of Specialists

from Developing Countries

DP/1989/58/Add. I

English

Page 88

Status of F%Inds as at 31 Dece,uber 1987(EXl~ressed in US dollars)

Operatinq F~nd

Balance at I January 1987

Add: Cash drawings from %~P 2’304’000.--IOVs 1’544’173.35Other charges/credlt (net) (92’389.13)Miscellaneous income and

exchange adjustments (net)"(Sched. 3’550.23Miscellaneous items refunded

to UNDP (net) (Schedule I0’995.59

Less: Expenditure during 1987For projects

Disbursements (Schedule IA)Unliquldated obligations

(Schedule 1A)For prograrmue support costs

(Schedule IA)

2’119’626.50

283’206.41

526’204.21

Balance at 31Decen%ber 1987

i

(682’709.72)

3’770’330.04

(2’929’037.12)

158’583.20l======= ~= ==

Represented by:

Cash at bax~ks, on hand and in trlunsitAccotmts receivable (Schedule 8)

Less: Accotunts payable (Schedule 9)1987 Unliquidated obligations

(Schedule IA)

57.90459’516.47

17’784.76283’206.41

459’574.37

(3oo’991.17)158’583.20

(~KRTIFIED t’~1~/%EC"r

Gilles Fran~nerySenior Finance Officer

A~/DIT CY.RTIFICATE

er

r

Q,,


STATEMENT I (continued)

(UNDP)

Audit Certificate

I have examined the above financial statement. My examination included ageneral review of the accounting procedures and such tests of the accoun-ting records and other supporting evidence as I considered necessary in thecircumstances.

The financial statement presents fairlythe financial position as at31 December 1987 and the results of its operations for the period thenended.

For further details, I refer to my audit report of 28 April 1988.

Berne, 28 April 1988 W. Frei

Deputy DirectorSWISS FEDERAL AUDIT OFFICE

(External Auditor)

°,.

DP/1989/58/add.lEnglishPage 90

REPORT OF THE EXTERNAL AUDITORON THE ACCOUNTS OF THE INTERNATIONAL ATOMIC ENERGY AGENCY

AS THE EXECUTING AGENCY

UNDER THE UNITED NATIONS DEVELOPPMENT PROGRAMME (UNDP~ AND THEUNITED NATIONS FINANCING SYSTEM FOR SCIENCE AND TECHNOLOGY

FOR DEVELOPMENT (UNFSSTD)FOR THE YEAR ENDED 31 DECEMBER 1987

The Director General of the International Atomic Energy Agency hassubmitted to me for audit the following Statement and supporting Schedulesrelating to the participation of the International Atomic Energy Agency as theExecuting Agency under the United Nations Development Progran~ne (UNDP) and theUnited Nations Financing System for Science and Technology for Development

(UNFSSTD).

United Nations Development Pro~ra~e

(i) Statement I - Status of Funds as at31 December 1987 - Operating Fund

(ii) Schedule I - Expenditure by Source of Funds for theyear ended 31 December 1987

(iii) Schedule 2 - Expenditure by Country for the year ended31 December 1987

United Nations FinancinK Systemfor Science and TechnoloKy for Development

(i) Statement I - Status of Funds as at 31 December 1987Operating Fund

(ii) Statement II - Status of Funds as at 31 December 1987Unspent Allocations

(iii) Schedule 1 - Project Expenditure for the year ended

31 December 1987

(iv) Schedule 2 - Expenditure by Component

,°°


2. The Statements and Schedules have been examined in accordance withmy direction in conjunction with the audit of the Agency’s Accounts for 1987and in conformity with the generally accepted auditing standards. I haveobtained all the information and explanations that I have required for theaudit and as a result of that audit, I have certified the Statement andSchedules as being correct.

The following observations however, applies:-

UNDP - Operatin K Fund

3. The Statement for the UNDP Operating Fund - Status of funds as at31 December 1987 reflects a year-end deficit of $ 968 096 as against a deficitof $ 1 140 333 realised in 1986. The Statement also shows UnliquidatedObligations of $ 663 202 as at 31 December 1987 compared with $ 1 075 831 asat 31 December 1986.

I wish to record my special appreciation for the co-operation thathas been extended to me and my officers by the staff of the InternationalAtomic Energy Agency during the audit of these

Vienna, 29 March 1988.

DP/1989/58/Add. I

English

Page 92

UN I T E D

STATEMENT I

NATIONS DEVELOPMENT PROGRAMME

INTERNATIONAL ATOMIC ENERGY AGENCY

Status of funds as st 31 December 1987(Expressed in US dollars)

OPERATING FUND

Balance as at 1 January 1987

Cash drawings from UNDPInteroffice vouchers and other charges (net)Miscellaneous income and exchange adjystments (net)

Expenditure during 1987

For projectsDisbursements (Schedule 1)Unliquidated obligations (Schedule 1)

For proEr~e support costs (Schedule 1)


REPRESENTED BY:

Cash at banks, on hand and in transitAccounts receivable

Accounts payable1987 unliquidated obligations (Schedule i)

ANDRE R. GUEDirector, Divison of Budget and Finance

705 0002 164 023

36 772

(1 140 333)

2 905 795

1 765 462

1 577 419663 202

492 937 2 733 558

(968 096)

(485 731)273 979

(211 752)

756 344

(968 096)

93 142663 202

HANS BLIXDirector General

The above Statement has been examined in accordance with my directions.I have obtained all the infotnuation and explanations that I have required and

I certify, as a result of the audit, that ~Dinlon the Statement is correct,

° °°



Page 93

REPORT OF THE EXTERNAL AUDITORS ON THE ACCOUNTS OFTHE WORLD TOURISM ORGANIZATION AS AN EXECUTING AGENCY FOR

THE UNITED NATIONS DEVELOPMENT PROGRAMME (UNDP)FOR THE FINANCIAL YEAR 1987

i. We have carefully examined the financial report and tablessubmitted to us by the World Tourism Organization (WTO) in its

capacity as an executing agency for the funds allocated to itby the United Nations Development Programme (UNDP), as containedin pages 73 to 76 of financial document CE/33/3 e) on the ad-ministrative accounts for the financial year 1987, and the ex-

planatory notes submitted by the World Tourism Organization ford~financial year closed on 31 December 1987.

2. We have jointly and separately reviewed the accounting

procedures and such texts of the accounting records and othersupporting evidence as we considered necessary in the circum-stances.

3. As a result of our examination, we are of the opinionthat, from the accounting standpoint , the financial statementsproperly reflect the financial transactions for the year 1987and that, in accordance with the applicable provisions, theypresent fairly the financial position at 31 December 1987.

4. With respect to personnel matters, we note that theOrganization’s Staff Rules have practically been completed.We have also been advised that work is under way on the pre-

paration of general rules for hiring and remunerating con-sultants to ensure uniformity and equality in all cases, aswe had suggested in our audit report on the accounts for thefinancial year 1985.

5. We wish to express our gratitude to the Secretary-Generalof the World Tourism Organization and his staff, and theFinance Service in particular, for their diligent and cordial

cooperation throughout our assignment. We have been suppliedwith all the information we considered necessary, which hasgreatly facilitated our examination of the Organization’sbooks and accountina documents.

,.,


STATEMENT I


World Tourism Organization


(Expressed in US dollars)

Operating Fund


Add: Cash drawings from UNDPIOVsOther charges/credlt (net)Miscellaneous income and

exchange adjustment (net)Miscellaneous items refunded

to UNDP (net)

Less: Expenditure during 1987 for projects

Disbursements (Schedule IA)Unliq. obligations (Schedule IA)For support costs (Schedule IA)


Represented by:

Cash at banksAccounts receivable (Schedule 8)

Less: Accounts payable (Schedule 9)1987 Unliq. obligations (Schedule IA)

CERTIFIED CORRECT

Chief a.i. of the TechnicalCoop. and Relations Division

ASDIT CERTIFICATE

2,031,000.00569,092.28

(322,340.32)

14,818.27

31,101.85

1,400,793.97228,458.75357,496.41

194,064.01228,458.75

/

iAPPROVED

Willibald P. PahrSecre tary-General

(174,910.43)

2,323,672.08

2,148,761.65

1,986,749.13

162,012.52

199,498.69385,036.59584,535.28

422,522.76162,012.52

.,*


AKINT[XA WILLIamS & I-IASSAN Inc. EELOITIE }-Ia.SKINS t’~ SILLS

DP/1989/58/Add. 1EnglishPage 96

AKINICLAWILLIA~,~ &HASSAN Inc.

80 Broad Street

M3nrovia

Liberia

ItlDITTEHASKINS& SELLS

Avenue Louise 287, Rte 7

B-1050 Brussels

Belgium

In accordance with Article XI.3 of the Agre~T~ent dated 4 ~rch 1977

between the United Nations Develorrnent Progr~rme and the African

Development Bank, we have exa-nined the accorrpanying financial

stat~aaents. The statements are in agreement with the books of account

of the African Develorrnent Bank which record the financial aspects of

the projects. Our examination was made in accordance with

internationally accepted auditing standards and accordingly included

such tests of the accounting records and other auditing procedures as

we considered necessary in the circtrnstances.

In our opinion, the financial stat~nents present fairly the financial

position of the projects as of 31Dec~r|ber 1987 and the results of

their operations for the year then ended in conformity with the terms

of the Agreement referred to above as well as the Agreements which

govern the individual projects.

DB.DITIE HASKIN~ & SELLS

o.,


Operatin$ Fun~

STATE~ENT I

UNITED NATIONS DEVELOPMEN~ PROGRA~__;EAFRICAN DEVELOPMENE BANK

Status of Funds as at 31 December 1987(in US dollars)


Add: Cash drawings from U~PIOVsOther charges/credlt (net)~iiscellaneous income and


Miscellaneous items refundedto Uh~P (net)

l~s~

Less: Expenditure during 1987For projects

Disbursements (Schedule IA)

Unliquidated obligation (Schedule IA)

For.programme support cost (gchedule IA)

467 46519 556

63 313 550 334

Add/Subtract:

Adjustment to prior year’sexpenditure (Schedule IB)

Adjustment to prior year’s prograrmesupport costs (Schedule IB)


(550 33~)

Represented by ;

Cash at banks, on hand and in transitAccounts xeceivable (Schedule 8)

Less Accounts payable (Schedule 9)1987 Unliquidated obligations (Schedule IA)

530 77~

19 556

(550 334)

NOTE: Cash drawings from L~P amounting to US$ 540,000 were received in 198~.

°,,

DP/1989/58/Add,I

English

Page 98

NO.

11-0111-0211-0311-0416294959

99

,~ ,..<." T ~’ ~ oT --.~--~,. , ~ - ,, ...~., ~ . ....

ARAB FUND FOR ECONOMIC AND SOCIAL DEVELOPMENTTEL 2451580 ̄ P O BOx 2%923 SAFAT 13~80 KUWAtT CABL£ ~M~AABi ~U~&t~ T£LEk ~NMARA~ 22%3 KT

RAB/74/01~PROG~ FOR THE IDENTIFICATION ~ND

PREPARATION OF INTER-COUNTRY INVESTMENT PROJECTSAND RELATED FEASIBILITY STUDIES

SIATEMEN~ OF EXPENDITURES ]/I/1987- 31/12/1987................................................

U.N.D.P. SHARE

( IN U.S.DOLLAR

C O M P O N E N T M/__~M A M O U N T

Team leaderProject economistFinancia | Analyst - -Project Engineer - -Other Costs - -Sub-Contracts - 60,437/54EquipmentMiscellaneous - -

Total - 60,437/54Admin. Expenses 13% 7,856/88

68,294/42============

A.Al-Rahsed, C.P.A

Faiz Abed

~gDi;ec tor-o f Finance

Arab Fund for Economic andSocial Development

We have examined the financial statements of the ARAB fund for Economicand Social Development for the year ended 31.12.1987.Our examination was conducted for the purpose of expressing an opinionon the financial statements taken as a whole.During our examination nothing came to our attention to indicate thatthe amounts reflected in the fund’s accounts related to the above state-ment of expenditures for the year ended )1.12.1987 (KD 18,566/522) not fairly presented.

A.A. AE-RASHED

° ....... _’_IL

,..


.L~...,,,.,<Jt T~"~o~" ..r/ ,.,,.,. I : j--.~JJ..j, ,.,..t :h~j. ,.L,%,,5. 13080 ;~,L,~ y~l yy,, :,..f, ~, . Tto’~=A. ’,~.t,-.~

ARAB FUND FOR ECONOMIC AND SOCIAL DEVELOPMENTTEL 2451580 - P O BOX 21923 SAFAT 13080 KUWAIT CABLE INMARA81 KUWAIT TELEX INMARAB 22153 KT

RAB/74/011

PROG~ FOR THE IDENTIFICATION AND PRE-PARATION OF INTER COUNTRY INVESTMENT PRO-JECTS AND RELATED--FEASIBILITY STUDIES.

STATEMENT OF EXPENDITURES BY PROJECT I/I-31/12/1987

PROJECT

Agricultural Machinery and Equipmentin the Arab Countries (phase If)

K D .

16,430/550

us $

60,437/54

Adminstration expenses 13%

Grand Total

2,1351972

18,566/522

7,856/88

68,294/42

DP/1989/58/Add. IEnglishPage i00

DeloitteHaskins÷Sells

Executive Office 1114 Avenue of the AmericasNew York, New York 10036(212) 790-0500Telex 12267

OPINION OF INDEPENDENT AUDITORS

Asian Development Bank - Executing Agencyfor the United Nations Development Programme:

We have examined the following statement and supplementalschedules relating to funds for projects as to which the Bankis the Executing Agency for the United Nations DevelopmentProgramme:

Statement I - Status of Funds as at 31 December1987

Schedule

Schedule

1 - Expenditures by Source of Funds for theyear ended 31 December 1987

2 - Expenditures by Country for the year ended31 December 1987

Our examination was made in accordance with generally acceptedauditing standards and, accordingly, included such tests ofthe accounting records and such other auditing procedures aswe considered necessary in the circumstances.

The aforementioned statement and schedules have been preparedin accordance with the format and accounting practices pre-scribed by United Nations Development Programme ("UNDP"); such basis, expenditures are recognized when obligations areincurred but allocations are recognized as a fund asset whendrawn from UNDP. Accordingly, the statement is not intendedto present financial position or results of operations inconformity with generally accepted accounting principles.

, ¯ ¯

DP/1989/58/Add. IEnglishPage i01

In our opinion, the accompanying statement presents fairlythe status as of 31 December 1987 of funds for which the Bankis the Executing Agency for the United Nations DevelopmentProgramme and the receipts and expenditures of such fundsfor the year tben ended on the basis of accounting describedin the preceding paragraph, which basis has been applied ina manner consistent with that of the preceding year, and theaccompanying supplemental schedules, when considered inrelation to the aforementioned statement, present fairly inall material respects the information shown therein.

26 February 1988

o,.


SUPPLEMENTARY INFORMATION PROVIDED BYDELOITTE HASKINS AND SELLS, 26 FEBRUARY 1988,

ON THE AUDIT OF THE AC~S OF THE ASIAN DEVELOPMENT BANK

SECTION I - SUMMARY OF OBSERVATIONS AND CONCLUSIONS

The following is a summary of our observations and conclusionsresulting from the work performed as set forth in Sections II,llI, and IV.

. UNDP-financed projects assigned to the Asian DevelopmentBank as Executing Agency are being administered by theBank on a regular and timely basis.

The Bank appears to be taking appropriate follow-upactions, to the extent practicable, on problems identi-fied in consultants’ progress reports.

¯ The Bank is complying with its established procurementprocedures pertaining to the engagement of consultants.

The work of the Bank’s Internal Audit Office ("IAO")encompasses surveys and audits of areas that impact bothdirectly and indirectly on UNDP-financed projects; in1987 IAO’s work focused on the follow-up of previousrecommendations and the status of the implementation ofsuch recommendations. All of their major recommenda-tions have been implemented.

No material weaknesses were identified in the system ofinternal accounting control.

SECTION II - PRINCIPAL AUDIT PROCEDURES

Our examination of tbe financial statements referred topreviously was made in accordance with generally acceptedauditing standards and, accordingly, included such tests ofthe accounting records and such other auditing procedures aswe considered necessary in the circumstances. Our study andevaluation of internal accounting control is separatelydescribed in Section IV. Other principal audit procedureswhich we believe would be of interest to the Governing Councilof the UNDP are briefly described as follows:

Cash at Banks - Obtained confirmations of all bank balances asof 31 December 1987 and tested related bank reconciliations.

Accounts Receivable - Requested positive confirmation ofrecorded amounts for a statistical selection of accounts.All confirmatS~n requests were received without eyception,except one a~count, for hich we received the confirmationreply with exception. We, however, satisfactorily resolvedsuch exceptlon by examining appropriate supportingdocumentation.

. o.


Accounts Payable and Unliquidated Obligations -Requestedindependent confirmations from vendors selected from cash-disbursements records. Differences disclosed in confirma-tion replies were satisfactorily resolved and appropriatesupporting documentation was examined for the accounts forwhich no confirmation reply was received.

Reviewed subsequent disbursement records for possibleunrecorded liabilities at 31 December 1987, noting noexceptions.

Cash Drawings, IOVs and Other Charges - Obtained positiveconfirmation of 1987 amounts directly from UNDP.

Project Expenditures - Statistically selected individualdisbursements and examined supporting documents for proprietyof project distribution and for approval and other indepen-dent indications of validity.

Programme Support Costs - Recomputed total costs for 1987which were based on 13~ of project expenditures in accordancewith correspondence between the Bank and UNDP.

External Audit Cost - Examined supporting documents forapproval and other independent indication of validity.

SECTION III - ADDITIONAL PROCEDURES

In connection with our examination of the UNDP financialstatements, we performed the following additional proceduresas requested by you.

Contracts with Consultants - We selected three of the fourprojects to which expenditures were substantially started in1987. For each of the selected projects we ascertained, byreference to supporting contract documentation, that the Bankhad complied with its procurement procedures pertaining tothe engagement of technical assistance consulting firmsconsultants as provided for in its published guidelinesapproved by the Board of Directors.

Review of Selected Projects - We selected four of theforty-three UNDP-financed projects being administered bythe Bank as of 31 December 1987 and performed the followingprocedures for each of the selected projects:

Compared project expenditures accumulated through 31December 1987, in total and (where applicable) cmtegory, to the related budget.

..0

DP/1989/58/Add. iEnglishPage 104

Reviewed the project’s progress to date in relation tothe anticipated progress outlined in the underlyingproject documents.

Read progress reports issued during the year by theconsultant in charge.

In performing the foregoing procedures, nothing came to ourattention that caused us to believe that the projects werenot being monitored, or that progress reports were not beingsubmitted, on a timely basis. Furthermore, the Bank appearsto be taking appropriate follow-up actions, to the extentpracticable, with respect to problems identified in theprogress reports.

Accounting for Equipment - Expenditures for equipment arerecognized based on signed contractual agreement or firmorder placed. With respect to the 1987 financial statementsall equipment was delivered before the year-end. Accord-ingly, no financial effects of an accounting policy changenoted even if the delivery concept was to also be appliedfor equipment.

Work of Internal Auditors - We obtained and read finalreports issued by the Bank’s Internal Audit Office (IAO)from January 1987 through January 1988 that pertained, eitherdirectly or indirectly, to UNDP-financed projects beingadministered by the Bank. A brief description of thesereports follows:

¯ Report on an Audit of Individual Consultants System(issued in January 1987)

Report on an Audit of Consultants Data System (issued inJanuary 1987)

The objectives of these audits were to (a) evaluate theadequacy of internal controls existing in the computerizedconsultants (or individual consultants) systems, which aredesigned to maintain information concerning capabilities andexperience of the consultants (or individual consultants),(b) evaluate whether such systems were operating efficientlyas to enable appropriate interface with other systems andprocedures, and (c) ascertain that modifications or enhance-ments to the systems subsequent to its implementation hadbeen made in accordance with the Bank’s prescribed procedures.

The overall conclusions in the above reports indicate thatinternal accounting controls in the various areas reviewedwere, on the whole, adequate and that relevant policies ~nd

~rocedures established by the Bank were being properlyollowed. Specific recommendations in the IAO reports were

principally directed towards possible improvements in effici-ency and effectiveness, which were reviewed with officials ofthe department concerned.

..


We also read the semi-annual "Audit RecommendationsImplementation Reports" prepared by IAO during the year whichprovide information on the findings and audit recommendationsfrom prior IAO reports and the current status of their imple-mentation. We identified those reports pertaining to UNDP-financed projects administered by the Bank and noted thatimplementation of all major recommendations, which wereprincipally directed towards improvements in efficiency andeffectiveness, had been ascertained by IAO by theiradditional compliance tests.

SECTION IV - INTERNAL ACCOUNTING CONTROL

As part of our examination, we made a study and evaluationof the Bank’s system of internal accounting control to theextent we considered necessary to evaluate the system asrequired by generally accepted auditing standards. Thepurpose of our study and evaluation was to determine thenature, timing, and extent of the auditing procedures neces-sary for expressing an opinion on the financial statements.Our study and evaluation was more limited than would benecessary to express an opinion on the system of internalaccounting control taken as a whole.

The management of the Bank is responsible for establishingand maintaining a system of internal accounting control.In fulfilling this responsibility, estimates and judgments bymanagement are required to assess the expected benefits andrelated costs of control procedures. The objectives of asystem are to provide management with reasonable, but notabsolute, assurance that assets are safeguarded against lossfrom unauthorized use or disposition, and that transactionsare executed in accordance with management’s authorizationand recorded properly to permit tbe preparation of financialstatements in accordance with generally accepted accountingprinciples.

Because of inherent limitations in any system of internalaccounting control, errors or irregularities nevertheless mayoccur and not be detected. Also, projection of any evalu-ation of the system to future periods is subject to the riskthat procedures may become inadequate because of changes inconditions or that the degree of compliance with the proce-dures may deteriorate.

DPI1989/58/Add. IEnglishPage 106

A material weakness (for the auditor’s purpose) is condition in which the specific control procedures, or thedegree of compliance with them, do not (in the auditor’sjudgment) reduce to a relatively low level the risk thaterrors or irregularities in amounts that would be material inrelation to the financial statements being audited may occurand not be detected within a timely period by employees inthe normal course of performing their assigned functions.These criteria may be broader than those that may be appro-priate for evaluating weaknesses in accounting control formanagement or other purposes.

Our study and evaluation made for the limited purposedescribed in the first paragraph of this section would noLnecessarily disclose all material weaknesses in the system.Accordingly, we do not express an opinion on the Bank’ssystem of internal accounting control taken as a whole.However, our study and evaluation disclosed no conditionthat we believed to be a material weakness.

°,.


Page 107

STA~ IUnited Nations Development Progranr~e

Asian DevelopmentBank

(Executing Agency)Status of Funds as at 31 December 1987

(Expressed in US dollars)

Operating Fund


Add: Cash drawings from UNDPIOVsOther charges/credit (net)


Miscellaneous ite~ refundedto UNDP (net)

$6,760,395.07327,118.51

133,558.50

6,721.43

940.78

less: Expenditures during 1987

For projects:

Disburse~nentsUnliquidated obligations

(Schedule IA)(Schedule IA)

For programme support costs (Schedule IA)

PSC for additional audit services


5,355,256.481,914,083.12

945,014.158,214,353.75

12,900.00

($ 307,820.76)

7,228,734.29

6,920,913.53

( 8,227,253.75)

($1,306,340.22)

Represented by:

Cash at banks, on hand and in transitAccounts receivable (Note C) (Schedule 8

$ 278,406.44522,469.15 $ 800,875.59

less: Accounts payable (Note D) (Schedule 1987 Unliquidated obligations (Schedule IA)

193,132.691,914,083.12 (2,107,215.81)

($1,306,340.22)

See notes to financial statements.

CERTIFIE]] CORRIZ~:

/~IS WONG

~--~ssistant Control ler

F/

SHAMSHAD ALI KHAN

Control ] er

°o,

DP/1989/58/Add.i

English

Page 108

1986

(12 297 074)

65 951 838

291234 079

53 889 134

57 407 291

571 928

57 979 219

7 399 530

65 378 749

4 828 1691 072 413

I0 767

5 911 349

197 906

6 109 255

71 488 004

(17 598 870)

(16 996 042)(14 250)

~588 578)

(17 598 870)

STATEMENT V

UNDP: UNITED NATIONS DEVELOPMENT PROGRAMME ACCOUNT

United Nations Development Programme as an executin~ a~enc~ for its projects

Status of funds as at 31 December 1987

(United States dollars)

Balance at beginning of year

Add: Cash drawings, inter-office vouchersand other charges (net)

Miscellaneous income and exchangeadjustments (net)

Miscellaneous items refunded to UNDP (net)

Less: Programme expenditure

Executed by the Office for Projects ExecutionAdministered by units other than the Office

for Projects Execution

Executed by the United Nations VolunteersProgramme

(note 12)

Support costs:

Office for Projects ExecutionInter-Agency Procurement Services UnitPaid by the Office for Projects Executionto associated agencies (net)

Paid to the extrabudgetary activities of theUnited Nations Volunteers programme

(note 16)(note 16)

(note Ii (a))

(note 15)

Balance at end of year

Represented by:

Unliquidated obligations:

Office for Projects ExecutionUnited Nations Volunteers programmeUNDP units other than the Office for Projects

Execution

1987

(17 598 870)

78 261 239

46 00859 774

60 768 151

63 199 440

2 095 510

65 294 950 ~/

8 453 688 a/

73 748 638

5 119 6011 323 328

126 022

6 568 951 a/

593 724 a/

7 162 675

80 911 313

(20 143 162)

(18 855 184)(15 190)

(i 272 788)

(20 143 162)

As shown in schedule 5 to the nearest thousand dollars.

Extract from Official Records of the General Assembly, Forty-thlrd Session,Supplement No. 5A (A/43/5/Add.l), which also contains the report of theUnited Nations Board of Auditors on the UNDP financial statements for 1987.

Documents

DP-WGOC-V-CRP4 - GC Int Gov Wk Grp 5th Ses Jun 1980web.undp.org/execbrd/archives/sessions/gc/36th-1989/DP-1989-58-A… · Item 9(d) of the provisional agenda ORIGINAL: ENGLISH I SUPPORT