Rome, 9 – 13 May 2005
Structure of the FAO and WFP Internal Audit Committees
1. At its Hundred-and-eighth Session held on 27 September – 1 October 2004, the Finance Committee requested information on the Structure of the FAO and WFP Internal Audit Committees, including their terms of reference (discussed under Working Methods of the Committee).
2. In line with the above request, the attached annex has been prepared to identify the salient features of the respective committees and provide details on their structure, composition, and main functions. It should be noted that issuance of the Terms of Reference of the WFP Committee (as presented) is awaiting final approval from the Executive Director.
3. The establishment of the FAO Audit Committee is fully consistent with the best management practices observed in public and private sector domains and fulfils an important and valuable oversight function. The impetus for the creation of this Committee was provided following a recommendation by the External Auditor and a commitment made by the Director- General to the 100th session of the Finance Committee in September 2002. The main aim of the Audit Committee is to enhance organizational governance and improve the framework of systems and controls. In addition, the Committee provides an active forum for discussion of key issues, acts as an advisory body to the Director-General and Inspector General, enhances transparency, and promotes in-house understanding of audit issues. Since its establishment in April 2003, the Director-General has provided his full support to the Committee to enable it to fulfill its mandate and role.
4. Within the context of the UN system, FAO is well ahead of most of the other UN agencies in creating such a Committee, ensuring that it functions efficiently and effectively, and accomplishes its intended role and mandate without impediments. The FAO Audit Committee is based on the model adopted by UNESCO.
5. The Committee meets regularly and deals with a range of issues relating to governance and controls. Since its establishment, the Committee has proved to work well and provide effective and beneficial guidance. The Committee provides an annual report to the Director- General, who, in turn, shares it with the Finance Committee.
6. The main highlights of the annex, comparing information on the FAO and WFP Audit Committees, are as follows:
|Establishment of Committee (i.e. advisory committee to Head of Organization)||The WFP (the Programme) has established an Audit Committee to assist the Executive Director in fulfilling his responsibilities for financial reporting, use of resources, the Programme’s internal control arrangements, risk management process, and other audit related matters. The Audit Committee primarily advises the Executive Director on these matters and its purpose is not to substitute for the advisory functions provided to the Executive Board by the United Nations Advisory Committee for Administrative and Budgetary Questions (ACABQ) or the FAO Finance Committee. To facilitate transparency and relative independence of the Audit Committee from day-to-day management, the majority of the Audit Committee members shall be external to the Programme. They should possess competence in the relevant aspects of the Programme (including finance, management and audit). An external member will chair the Audit Committee.||The Committee operates as an advisory panel to the Director-General and to the Office of the Inspector General (AUD). Its aim is to assist the Organization in gaining house-wide acceptance of the importance and value of the internal audit, inspection and investigation functions and provide the Director-General with assurance that these functions are operating effectively and efficiently.|
|Terms of Reference||The Audit Committee shall:
||The Audit Committee shall:
|Composition||One Chairperson, two external members, two internal members (in a personal capacity) and a Secretary (not a member of the Committee).|
The Committee consists of seven members: five internal and two external, as follows:
|Member Selection (Internal & External)||Members designated in personal capacity by Executive Director.||All members are appointed by the Director-General. External members are selected on the basis of their qualifications as senior audit and investigation professionals.|
|Duration of Members' Mandate||Terms of office will be two years renewable once, with the renewal period phased so as to provide continuity of oversight.||The Assistant Director-General, AF and the Legal Counsel are permanent members. The second Assistant Director-General and his/her alternate (a third Assistant Director-General nominated by the Director-General) hold a term of two years, extendible at the discretion of the Director-General, to be replaced on a rotational basis. The external members serve for a two-year period, which may be renewed at the discretion of the Director-General for one or more years.|
|Reporting Lines and Authority||The Audit Committee shall prepare a report on its work for the previous year for presentation to the Executive Director during the first calendar quarter. It will include recommendations with respect to changes to its mandate. The Audit Committee will also prepare a report for the annual session of the Executive Board in May each year. The Chairman shall present these reports. The Chairman will interact regularly with the Executive Director on the results of Audit Committee deliberations as well as on forthcoming issues relevant to its business.||The Committee reports to the Director-General. The Director-General will provide a copy of the Committee’s annual report to the Finance Committee. The Audit Committee will have the authority to:
|Number of Meetings||The Audit Committee shall normally meet at least four times a year. The Chairman, any Member and the External Auditor may request additional meetings.||At the discretion of the Chairperson, the Committee will meet three to four times each year. Additional meetings may be called by the Chairperson if deemed appropriate. The Inspector General has the right to request the Chairperson to convene a meeting if necessary.|
|Procedure Rules||The Executive Director shall appoint the five members of the Audit Committee; three members will be external to the Programme and two members will be employees. An alternate cannot represent members. Any three members (of whom two will be external members) shall constitute a quorum.||The presence of all seven members, or the alternate ADG and the representative of the Legal Counsel, as applicable, is expected at each meeting. At the discretion of the Chairperson, when necessary, meetings can take place with at least five members, one of whom will be external. The Secretary to the meeting (Inspector General) will have no voting rights.|