LE PRESIDENT: Je déclare ouverte la douzième séance de notre Conseil.
Le point 15 comprend trois documents différents qui seront soumis à la Conférence. Les deux premiers documents nécessitent la présentation, par le Conseil, d'un projet de résolution à la Conférence pour l'adoption du rapport et des états financiers du Programme ordinaire 1990-91 et du Programme des Nations Unies pour le développement 1990-91.
Le document concernant le Programme alimentaire mondial est soumis à votre examen mais nous n'allons pas nous prononcer sur ce document pour la simple raison qu'il devra être présenté au CPA qui aura à l'examiner lors de l'une de ses prochaines sessions.
Nous prenons le point 15.1: Programme ordinaire 1990-91: Programme ordinaire 1990-91. Il s'agit du document C 93/5 "Rapport et état financier du Programme ordinaire de la FAO pour l'exercice 1990-91"; il contient toutes les remarques faites par le vérificateur externe et je tiens à cet égard à souligner la qualité de ce document qui présente de nombreuses suggestions particulièrement intéressantes. Je dois avouer que je l'ai relu - je l'avais lu pour le Comité des finances - avec beaucoup d'intérêt, hier.
Je vais demander à M. Mehboob, Sous-Directeur général, de bien vouloir présenter ce document.
K. MEHBOOB (Assistant Director-General, Administration and Finance Department): Allow me first, Mr Chairman, to make a clarification on the World Food Programme Accounts. I have been informed that the WFP Accounts, in accordance with the new General Regulations, would go to the CFA first in the Spring Session and then go to the Council in June. So we will be considering the Regular Programme Accounts and the United Nations Development Programme Accounts today.
The Council has before it documents C 93/5 and C 93/6. These are the final Audited Accounts for the biennium 1990-91 for the Regular Programme and the project activities funded by the United Nations Development Programme. I am pleased to report that the opinion of the External Auditor on the Accounts is an unqualified one.
Mr Chairman, you will note a change in the presentation of these statements from those prepared in the past. Previous reports have included an introductory report by the Director-General which provided explanations for some of the information contained in the statements.
In line with modern accounting practice this explanatory information is now contained in a section called "Notes to the financial statement" which follows the statements and schedules.
In accordance with General Rule XXVII.7 (1) the Finance Committee at its 74th session has examined the Audited Accounts on behalf of the Council. It has also recommended that the Council submit to the Conference, for adoption, the Audited Accounts for the Regular Programme and the UNDP. The comments of the Finance Committee are to be found in document CL 102/17 paragraphs 3.37 to 3.42.
Mr Chairman, you will recall that in his introduction to the report of the Finance Committee the Chairman informed you that the Committee had endorsed the recommendations of the External Auditor and had recommended a draft resolution for adoption by the Conference. This resolution is to be found in paragraph 3.42 of document CL 102/17. I shall be pleased to respond to any queries which the Council members may have on these Audited Accounts.
LE PRESIDENT: Je proposerais que nous examinions tout d'abord le document C 93/5, le rapport financier du Programme ordinaire 1990-91.
Ms Teresa HOBGOOD (United States of America): As a member of FAO's Finance Committee, the United States had the opportunity to engage in frank and open discussions among the external auditor, other members of the Finance Committee and FAO staff concerning the audited accounts. At this time, we would like to make some additional comments and observations.
With respect to the format of C 93/5, FAO's Audited Accounts for 1990-91, we were particularly pleased to see the new section of the Report entitled, "notes to the financial statements". We hope that this section will be included in future FAO reports, since the notes are a customary feature of many financial statements and assist the reader in understanding the nature and scope of significant financial transactions.
With respect to steps that can be taken to enhance the transparency of the "notes to the financial statements", we support the views of the external auditor that the notes should contain more descriptive information on interest charges, both internal and external, incurred by the Organization. In this respect, we would hope to find descriptive information on FAO's borrowing practices in the 1992-93 financial statements when they become available.
We were pleased also to see the section in the report on actions taken in response to the external auditor's previous recommendations. We note, in particular, the auditor's comments in paragraphs 16 through 28 of C 93/5 on the control of manpower. While we appreciate that FAO has taken some positive steps to redress the shortcomings identified by the external auditor, it has not made sufficient progress in addressing adequately all of the deficiencies. For example, we note the external auditor's remarks in paragraph 22 that an improved methodology and a more systematic approach to staffing reviews could
offer scope for further savings by the Organization. We wholeheartedly endorse this comment.
We note also the auditor's remarks in paragraph 15 that he has deferred his review of progress on the procurement of field equipment and services, pending the Secretariat's response. This situation is regrettable. We would like to know when the Secretariat's response will be forthcoming.
Turning to the auditor's comprehensive and very helpful report on management matters, detailed from paragraphs 43 through 136, we read with keen interest his discussion regarding the serious difficulties which FAO encountered implementing its FINSYS/PERSYS computer system. We would hope that the Organization is well on its way to resolving these problems to enable Member States to place even greater reliance on the information contained in the financial statements. Focus should not continue to be on the mistakes of the past, but rather on the actions necessary to develop FINSYS/PERSYS into the system that was originally envisaged. In this regard, the United States delegation endorses the recommendations made by the external auditor in paragraphs 37 and 38 of the document.
We also endorse the external auditor's remarks in paragraph 9 that "if permanent solutions are not found in the 1992-93 biennium, it is possible that another expensive and resource-intensive emergency exercise will be required". In our view, such a dire warning warrants very careful attention to the FINSYS/PERSYS system in the coming months. In this respect, we would strongly urge the external auditor to monitor the situation very carefully and to perhaps provide the Finance Committee with a progress report on the implementation of the auditor's recommendations regarding FINSYS/PERSYS at its next session. Given the US$30 million spent, thus far, on the system, it is imperative that the successful implementation of FINSYS/PERSYS be realized and that future needs be addressed adequately to enable Member States to fully reap the rewards of this enormous investment.
Turning to financial matters, there are several specific questions we would like to raise at this time.
First, we note that the Director-General's comments were excluded from the financial statements for the 1992-93 biennium. We had no difficulties with this change but we believe it would have been helpful if the cash-accrual table contained in previous financial statements remained.
Second, we note that FAO received 99 percent of the contributions owed for the 1990-91 biennium. This suggests that the Organization was in relatively good financial shape at the end of 1991, although we were disappointed that external borrowing continued through 1992. FAO's difficulties with FINSYS/PERSYS and its pervasive problems in controlling receivables and payables, particularly those related to field accounts, suggest that financial difficulties may have been attributable somewhat to FAO's inability to determine its level of cash flow position. In this respect, may I draw the Council's attention to paragraph 92 of the External Auditor's report. My delegation trusts that the situation has been rectified.
Third, that in schedule 3.5 the authorized level of the special reserve account is shown as 5 percent of the 1992-93 Programme of Work and Budget of the US$676.9 million. We would appreciate clarification on the figure of
US$676.9 million since the authorized level of the Special Reserve Account is 5 percent of the effective working budget or US$645.6 million.
Fourth, my delegation has taken note of the External Auditor's comments with respect to the status of the development of common accounting standards. While UN General Assembly document A/47/443 suggests that some progress has been made on this issue, we are somewhat disappointed at the pace of developments.
Moreover, we are not certain that the results achieved will enhance the transparency of financial data and enable Member States to make meaningful comparisons of financial data among the UN, the specialized agencies, including FAO and IAEA.
Finally, we would like to express appreciation to the Comptroller and Auditor General of the United Kingdom and his staff and to FAO for their tremendous efforts in putting this voluminous report and the financial statements together. Given the unqualified opinion of the external auditor on FAO's financial statements, we can support a recommendation that the Conference in 1993 approve FAO's audited Accounts for 1990-91.
C.B. HOUTMAN (Netherlands): In going through the considerable volume of the accounts for the Regular Programme there is something on the subject of Trust Funds and, as is said in paragraph 168, the Trust Funds amounted in 1990-91 to US$ 388 000 000. When I read paragraph 167 there was an explanation as to what the content of the various projects were and I quote "the project should be consistent with the policies, aims and activities of the Organization". At that time I thought that was very nice. I thought the auditor would say something about this, but when I continued to read on, not only on figures, my optimism was not justified because there was nothing about that.
As you know, some countries, such as the Netherlands and Belgium, are sizeable donors to the Trust Funds and we think it would be nice sometimes if the external auditor could go more deeply into that which was defined as the policies, aims and activities of the Organization, and of the projects and programmes undertaken in line with this and whether there are any improvements to be made.
On the other hand, I must say the statement that the reporting was not done, as it had been done before, and apparently as it is going to be in the future, was worked out very well by the external auditor, with this request; that the auditor could possibly give more attention to the content of the present programmes. Apart from the financial situation, we could support the recommendation from this Council on the resolution for adoption by the Conference.
LE PRESIDENT: Je remercie le délégué des Pays-Bas. Il a précédé ce que je comptais dire en soulignant que les Pays-Bas ont été le premier donateur en fonds fiduciaires du Programme ordinaire. Je tenais tout particulièrement à souligner que le rythme des paiements en 1990 et 1991 dépasse pour chaque année 30 millions de dollars. On atteint plus de 64 millions de dollars, ce qui place les Pays-Bas en toute première position comme donateur en fonds fiduciaires. Il a été utile de le souligner et nous en reparlerons parce que c'est un point important. La lecture et l'interprétation du tableau 3.3:
Fonds fiduciaires du Programme ordinaire, sont particulièrement intéressantes et instructives.
Vishnu BHAGWAN (India): I wish to be very brief. With your permission, I will give my delegation's comments on the Auditor's Report of FAO's field programme and the UNDP report, which we have read.
In the opinion of my delegation the Auditor has done a commendable job in giving a detailed and thorough report in both the cases under consideration. A perusal of page 57 of document C 93/5 and page 26 of document C 93/6 shows that the Auditor has issued a clear and unqualified certificate in both cases for which they deserve to be congratulated. The Finance Committee has also endorsed these reports for approval.
My delegation agrees with the recommendations of the Finance Committee. We also concur with the observations of the Finance Committee in paragraphs 3.39 and 3.40 of document CL 102/17 regarding the timely and corrective action taken by the FAO Management to resolve the problems relating to the introduction of the new computerized system of financial and personnel management, as well as the acceptance of recommendations of the External Auditor in his report.
LE PRESIDENT: Je propose maintenant de suspendre pendant quelques minutes l'examen de ce point de notre ordre du jour pour saluer la présence du Ministre de l'agriculture de la Fédération de Russie, Son Excellence Viktor Khlystun qui, accompagné de sa délégation, vient de prendre place dans la salle. Le Ministre prendra la parole en russe. Il sera traduit dans toutes les langues officielles de l'Organisation. Un de ses collaborateurs lira la suite de son discours en anglais, pour éviter de gros problèmes de traduction. Mais le début du discours sera prononcé en langue russe et traduit par un de ses collaborateurs en anglais et retraduit dans toutes les langues de notre Organisation.
Viktor Ν. KHLYSTUN (Russian Federation) (Original language Russian): I am very glad to present to your distinguished Council information on the agrarian reform issues in Russia.
I have a great hope that after a time there will be a possibility for Russia to take its place here in FAO.
Permit me to present you with a brief review of some issues on agrarian reform in Russia.
The current agricultural policy in Russia places high priority on sustainable stabilization of the economic environment in agriculture and the implementation of agrarian reform.
At the end of January 1991/January 1992 the necessary legal framework had been created and a radically adjusted general economic policy was initiated.
The core elements of the policy were the fiscal stabilization programme and the structural reform in a number of sectors, including agriculture. The general price liberalization, started on January 2, did not cover a limiting range of the most socially significant commodities.
The rigid fiscal policy implied contraction of the budget allocations for all kinds of subsidies and military expenses.
The taxation and credit systems were reorganized, the Central Bank of Russia, permitted to lend to commercial banks, instituted strict controls on credit expansion. However, interest rates for agricultural loans remained subsidized.
Foreign trade has experienced significant liberalization through certain steps in unification of exchange rates and elimination of excessive licensing.
The agrarian reform acceleration was backed by a set of laws and by-laws. The obligatory agricultural state procurement system was altered and the amounts of the state purchases were drastically reduced (for state and collective farms - by 25-45 percent of the average output of the last five years).
These and other actions created a new incentive framework for food sector development in Russia, but also induced negative trends in this development, the most dangerous among them being severe agricultural input and output price distortions. The consumption pattern has shifted towards bread and potatoes at the expense of meat, dairy products, vegetables and fruit.
The Russian Federation Ministry of Agriculture has elaborated and adopted the policy to ensure financial profitability of efficient agricultural producers and to encourage appropriate structural reforms in the food sector.
In 1992, the output of grains, sugar beets and oilseeds exceeded the previous year's level, while the production of vegetables, fruit and berries remained the same. The rates of decline in the food processing industry have slowed down.
However, in general we failed to overcome the negative trends in the agro-food sector performance. The agricultural output reached only 88 percent and the food processing industry output 80 percent of the previous year's level. Less winter crops for the harvest of 1993 have been planted; less fertilizers have been applied.
The crisis situation remains severe in livestock production: during nine-months of 1992 the state procurements have declined in cattle and poultry by 29 percent, milk and eggs by 24 percent and wool by 53 percent. Following a poor harvest, feed supplies will remain tight. The productivity and numbers of livestock and poultry have decreased.
The volume of investments, construction and instalment activities has dropped significantly. The deficit of financial resources is still huge.
Reduced demand, higher production costs entailed reduction of the profitability of farms and their insolvency.
The major targets of the current agrarian reform are the following:
- structural adjustments in the food sector, consistent with a market environment;
- transition from the central planning to reliance on market principles in the state regulation of agriculture.
The underlying concept of the current agrarian reform does not follow the common Soviet approach, dealing with "sustainable improvement" of food sector production relations but implies their radical transformation and affects the basic economic, social, political and even ethnic interests of various layers of society.
The agrarian reform focuses on the establishment of institutional arrangements to enhance creation of economically independent, flexible, sensitive to market signals producers.
According to the legislation currently in force, there are two ways to set up a private farm. The rural inhabitants have got the right to withdraw from a collective or state farm with certain land and asset shares. The former city dwellers and newcomers can create their private farms by land acquisition from the formed regional land reserves.
The underlying principle of land redistribution contains the possibility for every rural inhabitant to get a land plot within the average district share free of charge and to lease extra land (again within certain limitations) with the right to buy it out later.
The policy-makers realize the shortcomings of this approach, since it prevents the formation of viable farms of economical size and leads to the need for structural adjustments in future. However, the rejection of such principles will cause severe social upheavals which would make the reform implementation impossible.
The Government is conducting the policy of private farming movement support which covers direct input supply, preferential credit terms, taxation and education.
However the provision of material and financial resources to farmers lags behind the rise in their numbers, and that is why the expansion of the private farm sector should not be enforced.
The state and collective farms still predominate in agriculture, but in their present form they do not fit the market environment. On December 29, 1991 the Russian Government issued a decree on the state and collective farms reorganization with the options of joint-stock companies, cooperatives or associations of private farms.
In the course of reorganization the main part of lands and assets of state and collective farms was given freely into ownership.
Since the beginning of 1992 7 500 state and collective farms, of a total number of 27 000, had reregistered. Half of them preferred a form of joint-stock company. Six hundred were dissolved in favour of creation of private farms. Often the reorganization is conducted nominally, but strict refusal of budget funding, state supply and procurement systems, price liberalization and high interest rates will make the enterprises realize the necessity of real transformation.
The important element of the new agrarian structure is the so-called individual subsidiary holding. In contrast to private farms, these holdings are usually run by workers of state or collective farms in their free time. This sector contribution amounts to one-quarter of the total output of some crops in Russia. In the course of the reform all former restrictions on individual holdings' development were abolished. Today this sector plays an important buffer role in the rural economy. On the one hand this sector allows more gradual transition from collective to private farming; on the other hand this sector, by expanding the area under some crops, compensates for the drop in production in the collective sector.
The downstream sector of the food chain in Russia is poorly developed. All previous efforts to improve storage, transportation, processing and packaging of agricultural products through state investments ended in failure. Today attempts are being made to address the challenge with privatization and demonopolization in these industries.
The state privatization program of 1992 considers the transfer of processing and servicing enterprises into private ownership a top priority task. Taking into account the monopoly position of the majority of such enterprises, the government tends to provide favourable terms for agricultural producers to buy them out.
The lack of facilities in the downstream sector cannot be eliminated simply by privatization of existing enterprises. The sector needs sound additional funding, and the government is planning to encourage private investments in this area.
The next urgent issue in agro-business development in Russia is the severe shortage of adequate market infrastructures: wholesale, banking, insurance, transport and communications systems. In this direction, perhaps, the reform has achieved the poorest progress, although in recent years commodity exchanges were established in Russia, but they operate mostly like auctions, and only a modest part of agricultural output is sold through them. Due to the lack of a well-operating marketing system, the producers, regardless of the general decline in production, are facing difficulties in marketing of agricultural products.
To attract investment to the agricultural sector it is vital to introduce collateral loans, which is impossible without elimination of the moratorium on land sale/purchase and development of a farming insurance system.
The agrarian reform management is conducted by the Russian Federation Ministry of Agriculture, the Russian Federation Land Resources and Land Management Committee, and their local departments. The Federal Centre for Land and Agro-Industrial Reform, the Council of Agrarian Union of Russia, the Russian Council of collective farms and public organizations of rural commodity producers are also involved.
The world community can provide, and has already been providing, sound assistance for agrarian reform implementation in Russia. The crucial aspects of foreign economic involvement should be the following: attraction of foreign credits to finance the imports of vital inputs, including "know-how" and licences for manufacturing of farm machinery, equipment, implements, plant and animal protection means; reorientation of a part of foreign food credits towards financing of production for import substitution in Russia; and introduction of the most favourable foreign trade terms for agro-business enterprises.
The valuable element of the world community contribution to agrarian reform development is an advisory assistance at all levels, assigning of advisers to governmental structures responsible for agricultural support, expertise in elaborating laws and by-laws, consultancy of private agro-business firms, training of farmers, managers and extension agents and promotion in cooperative movement development.
The extension of interactions with the world organizations, and especially with the Food and Agriculture Organization of the United Nations, matches the interests of further agrarian reform advancement. It is a well-known fact that even in 1945 the Soviet Union was directly involved in the establishment of FAO. Now the governmental circles in Russian are seriously considering the possibility of joining FAO. The Ministry of Agriculture actively supports this idea and is making initial preparations. In the opinion of the Ministry of Agriculture, Russia's membership of FAO will be the real approval of the course towards unification of international cooperation, focusing of the world community efforts on upgrading of agro-business effectiveness and elimination on this basis of hunger and malnutrition in the world.
Membership of FAO will encourage sound agrarian reform development in Russia, since it provides access to information about achievements of world research and practices, innovations in the food sector and the world plant and animal genetic banks.
The broad experience accumulated by FAO in such areas as agrarian and land reform implementation and rural development, marketing, cooperative development promotion, upgrading of research and extension, methodology of price formation, GIS development, remote sensing of natural resources, environmental actions and rational land and water use will be of great value to Russia.
Membership of FAO will facilitate participation of the Russian food sector in the international labour division, based on comparative advantage, and will enhance agricultural international cooperation.
CHAIRMAN: I thank His Excellency the Minister of Agriculture of the Russian Federation, Viktor Khlystun, for his very important speech. As you know, the former USSR were involved at the formation of FAO in 1945. We have had a declaration by the Russian Federation about the possibility of entering our Organization. They are now considering the possibility of joining FAO. We hope they will join us in a very near future.
Thank you for your presentation, Minister. We wish you great success in your very difficult task. We hope that the Russian Federation will join FAO as soon as possible.
Shahid RASHID (Pakistan): The delegation of Pakistan has read the Report of the External Auditor with great interest. It is a very detailed review of the financial position and accounting procedures of FAO. We are pleased to note that the External Auditor has acknowledged that the financial statements have been presented fairly in the light of meticulous checks of accounting entries. We also welcome and appreciate the fact that the External Auditor has placed unqualified audit opinions on all the Organization's financial statements for 1990-91. The Secretariat is also to be commended for its satisfactory performance in this regard.
The External Auditor has, however, dwelt at great length on the development and implementation of a new computerized financial and personnel system. This system ran into serious difficulties soon after being launched. Most of these difficulties were apparently technical problems, though some were directly related to management decisions, while others emanated from financial constraints. A system which is a complex and sophisticated one and which caters for the elaborate requirements of FAO can seldom be introduced without great difficulties. The difficulties in this case appear to have been quite numerous in the past, but it is gratifying for us to note that the major problems have now been overcome.
Correct management and organizational decisions have been taken to effect what has been termed as a dramatic improvement by the External Auditor.
While we are satisfied with the positive measures that have been taken successfully to rescue this important system, we would urge the Secretariat to take the necessary steps recommended by the External Auditor, especially at paragraphs 37 and 38 of the Report, so as to ensure that this project is able to meet its objectives and proves to be a worthwhile investment which yields substantial benefits.
Amin ABDEL-MALEK (Liban) (Langue originale arabe): La délégation libanaise félicite le Directeur général de son rapport très clair et approfondi. L'opinion du Commissaire aux comptes sur la situation financière du PNUD et du budget ordinaire pour l'exercice biennal 1990-91 ne fait l'objet d'aucune restriction. Cette opinion est favorable. Nous voyons dans les commentaires faits du paragraphe 34 au paragraphe 44 que le FINSYS est un système de base de données complexe assez raffiné, qui remplace le système antérieur qui datait d'il y a 20 ans. Le rapport signale que la dernière phase de mise en oeuvre de ce système a présenté des difficultés au moment de l'application.
Ma délégation constate que l'on rencontre assez fréquemment de telles difficultés dans les grands systèmes similaires que l'on veut mettre en place dans le monde. Ces problèmes de FINSYS sont étroitement liés aux difficultés financières de l'Organisation. D'ailleurs, les paragraphes 95 à 97 du rapport du vérificateur externe évoquent la question. Mais ne nous appesantissons pas sur le passé, envisageons plutôt l'avenir, d'autant que la FAO - nous le savons - fait tout son possible pour faire face à cette situation. Nous nous réjouissons à cet égard de constater que l'Organisation a pris, en temps voulu, des mesures correctives pour affronter ces difficultés - cela est évoqué dans les paragraphes 102 à 105 du rapport du vérificateur externe. D'ailleurs, le paragraphe 39 résume la situation: "La vérification longue et méticuleuse des registres comptables par l'Organisation, et les mesures prises ensuite, ont permis de résoudre nombre des problèmes critiques qui se sont posés au moment de la mise en oeuvre du nouveau système de comptabilité informatisé".
A cet égard, nous félicitons l'Organisation d'avoir accompli un effort conséquent.
Ma délégation est prête à faire siennes les recommandations du vérificateur externe telles qu'elles figurent au paragraphe 37 de ce rapport sur les comptes du budget ordinaire et surtout pour ce qui concerne l'adéquation des effectifs d'informations qualifiés et le recrutement des comptables informaticiens dans la Division des finances. Ces recommandations ont d'ailleurs été approuvées par le Comité financier lors de la réunion de juillet.
W.A. ELKHEREIJI (Saudi Arabia, Kingdom of) (Original language Arabic): Allow me first of all to congratulate the External Auditor for the clarity and transparency of his Report concerning the audited accounts for the Regular Programme and the UNDP accounts for the period 1990-91. We should like to congratulate FAO on the excellent cooperation that the Organization provided for the External Auditor which facilitated his task, providing him with careful documentation, showing also the situation of the Organization up to date.
I should like to refer to paragraph 34 of document C 93/5, the Financial Report and Statements and the comments it makes on the new system, the FINSYS/PERSYS system, which was introduced into FAO as a new computerized personnel system, the purpose of which was, of course, to improve personnel management procedures and financial procedures, and the measures to be taken to cope with problems which had arisen initially. This has been addressed by the External Auditor. We note that there have been these problems. We note that measures have been taken to correct the teething troubles and that FAO has applied these measures successfully. This is, of course, a lesson for the future; we must learn from it.
We have full trust in the competence of FAO staff in this field, now that the teething troubles have been overcome. We would like to say that we approve the Auditor's Report.
R. ALLEN (United Kingdom): Firstly, I should like to endorse the comments made by the delegation of the United States of America. We fully support their statement.
We are particularly pleased to see that the auditors have given unqualified audit opinions on these accounts.
I cannot help but draw this Council's attention to the Auditor's remarks about the FINSYS/PERSYS system. Doubtless, many members of this Council will recall my many remarks expressing concern about the implementation of this system. My concerns go back as far as 1989. At each and every Council Session I was assured that there was nothing to worry about. This is not borne out by the comments of the auditors regarding the implementation of this system.
We should like to bring to the attention of this Council the comments of the auditors, in particular those in paragraph 72 of document C 93/6. These comments serve to highlight the tremendous efforts on the part of the Secretariat which ensured that the work of the External Auditor was not adversely affected by the problems encountered by the recent implementation of the new financial system.
Whilst my delegation is heartened by the response of FAO to this crisis, we note the Auditor's concerns expressed in document C 93/5, that preparations may not have been fully completed when implementation of these systems began.
We were also particularly concerned by the comments in paragraph 85 of document 93/5, and if I may quote, the auditors say, "it is also a matter of great concern that the prime records of cash and bank balances were not reconciled at a time when the Organization was entering into borrowing arrangements". This is particularly disturbing.
The implications of the finding for the Auditor are clear, and we are confident that the Auditor's recommendations in paragraphs 37 and 38 have been noted and will be acted upon by the Secretariat.
Paragraph 119 of this same document makes clear that the failure to identify and correct the existing problems could provoke a costly repetition of last year's events. I am sure this is something that we all wish to avoid.
The External Auditor has made a number of further recommendations in each of the documents before us. In this regard, we note a few areas to which my delegation would like to draw the council's attention. The first of these is the signing of the UNDP Executing Agency Agreement. This must be considered as a matter of the highest priority, as the Auditor makes clear in document C 93/6, paragraphs 95-98.
We fully appreciate that the new support cost successor arrangements may well have complicated this whole issue, but we hope that the Secretariat will be able to bring negotiations with the UNDP to a close in the very near future.
Paragraph 8 of C 93/5 makes the point that a strong, independent and fully-staffed internal audit team is essential for FAO, and we should like to support that view.
I would also like to draw attention to the accumulated personnel-related contingent liabilities which are estimated at over 350 million dollars, and significantly under-funded.
As I recall, the Auditor did just say that this would be over a long period of time, but my delegation would like to advise that the Secretariat might find it useful to seek the Auditor's further comments on how this under-funding would be dealt with.
We have no specific comments on the audited accounts of the WFP, but we support the recommendations of the External Auditor as contained in the Report.
On a note of presentation, we would welcome the inclusion of additional cash flow information in this Report. I think this would enable us to expand upon the most useful information already provided by the Summary and Common Expenditure Account and the Statement of Assets and Liabilities for Trust Funds.
Also in document C 93/5 there is a comment that further work is required in the implementation of staff reviews. We note with interest the Auditor's assertion that an improved methodology and a more systematic approach to staff reviews could offer scope for further savings by the Organization. Given the substantial percentage of the Organization's overheads represented by staff costs, we have no doubt that the Secretariat will take the appropriate action on this matter, and we look forward to hearing of the findings of these reviews in the future.
As a final point, we have been made fully aware of the financial problems encountered last year. The Secretariat appears to have painted a very black picture for the coming year. However, it is clear from the table on page 42 of document C 93/5 that at the end of the last financial period FAO's income had exceeded expenditure, and our Organization was able to record a cash surplus. When combined with the present high level of contributions received from Member Nations, this information can only lead us to conclude that the Organization is, at least financially speaking, reasonably healthy. I think it is clear that FAO's finances are now pretty sound and the present predictions of serious problems in the Regular Programme may have to be revised, taking into account this very positive turn of events.
K. MEHBOOB (Assistant Director-General, Administration and Finance Department): I should like to thank the members of the Council for their comments on the Audit Report and their valuable suggestions, of which we have taken note. There were a few questions or requests for clarification which I shall try to answer. If I miss any, I shall be pleased to come back to them.
The first point is regarding staffing reviews. As the Audit Report states, FAO has made some progress in this area. One of the comments which the External Auditor is making, of which we have taken note, concerns his suggestion for an improved methodology. The Organization's view has always been that the most effective way of carrying out such staffing reviews, apart from the specific ones we carry out during the biennium - and those are listed by the External Auditor, a major one in process being the one concerning the administrative units and the management support units - is at the time of the preparation of the biennial Programme of Work and Budget. The supervision and the programme managers are the ones best placed to carry out these reviews. These are done every biennium when the Organization is preparing its Programme of Work. That programme is valid for two years, and it comes up for review again at the end of two years.
There were some comments on FINSYS and the need to look at the future. Several delegates made comments about looking at the future needs of the Organization. In fact, that is what we have been focusing on in the last year. Apart from producing the Financial Statements, we were addressing certain areas of the system to sort out the problems wherever we could. But even more important is that a Functional Review of the whole system is in process. This Functional Review, apart from having very comprehensive terms of reference, takes into account paragraph 37 of the External Auditor's Report which contains several of his recommendations of how to go about sorting out the system. So those have been included in the terms of reference of the Functional Review. We hope to have the results of the Review by the end of the year, and then we shall start implementing the recommendations whatever they may be. We hope quickly to get the problems of FINSYS behind us. We are very conscious that we should not get into the same situation as in 1990-91. We shall be paying particular attention to the recommendations of the Functional Review and seeing that they are implemented quickly so that we can get rid of the problems of FINSYS.
There was also a question with regard to procurement and that in response to the Conference's request we were supposed to prepare a response. We shall be preparing a document. In fact, the Conference's request to us was that in future we prepare a document giving the status of the implementation of the External Auditor's Reports. That is what we plan to do, and procurement would be one of the items included in that document.
There was a question on the Special Reserve Account. In fact, it was the Conference Resolution which prescribed the Special Assessment. This was for US$28 million in two instalments, on the basis of a proposal by the Director-General. However, the authorized level of the Special Reserve Account remains at 5 percent of the total of the effective working budget, and the total effective working budget is the figure of US$676.9 million.
There was also a comment on the delay with which the Accounting Standards are being implemented. There is an inter-agency working group at the present time dealing with this. The Panel of External Auditors of the United Nations are reviewing and studying the draft Standards, and once their comments are in, the working group will be considering them some time in December. There was also a suggestion to include an additional cash flow statement with the Financial Statements. It is our intention to do so with the Financial Statements of the next biennium.
There was a comment on the healthy financial position of the Organization in that there is an excess of income over expenditure in the 1990-91 biennium. This excess of income arose through the special contribution of the Italian Government of US$15 million. It was the application of this US$15 million which made us have this excess of income over expenditure.
I think I have commented on all the questions I had noted, but if I have left any out I shall be happy to come back to them.
LE PRESIDENT: Il est évident que ce document aborde des questions qui ont déjà, en tout ou en partie, été discutées au cours des travaux de notre Conseil dans sa session actuelle. La question de FINSYS/PERSYS a déjà été longuement examinée; elle le sera encore certainement, en ce qui concerne le FINSYS, dans l'avenir.
L'excellent rapport de l'auditeur externe aborde la question de la fluctuation des taux des changes et du Plan d'incitation. Il examine les opérations de coopération technique et l'état du Projet du Programme de coopération technique. Il examine la situation du compte de réserve spécial. Il est fait état, au paragraphe 145, à propos des emprunts, du fait que le Directeur Général a créé un Comité Consultatif chargé de lui donner des avis et de l'aider à contrôler les opérations d'emprunts. Ce Comité s'est réuni 16 fois entre juillet 1990 et décembre 1991; ceci, pour un montant d'emprunts relativement réduit auquel le Directeur Général a été contraint de souscrire, me parait dénoter la prudence et la circonspection avec lesquelles le Directeur Général a pris sa décision dans le domaine des emprunts.
Je voudrais également souligner, en ce qui concerne les fonds fiduciaires du Programme ordinaire qui sont abordés dans le Programme ordinaire, qu'en réalité ces fonds fiduciaires recouvrent des réalités diverses. Ce sont soit les fonds fiduciaires d'un certain nombre de pays développés, soit des fonds fiduciaires pour un programme précis, soit des fonds fiduciaires des pays en développement qui assurent le financement de projets réalisés dans leur pays. Ce tableau 3.3 recouvre des réalités très diverses. J'ai souligné l'importance de la contribution de certains pays. Je me suis permis de citer les Pays-Bas qui est le premier contributeur. Il appartient également de citer l'Italie qui est un contributeur très important, puisque l'Italie intervient pour 53 millions de dollars, venant après les 63 millions de dollars des Pays-Bas, mais incontestablement l'Italie est également un contributeur important.
Ces tableaux 3.3 qui figurent aux pages 82 à 87 serviront d'éclairage pour l'examen du point 16 qui concerne les coûts de soutien des programmes des fonds fiduciaires, non seulement du PNUD, mais également des fonds fiduciaires autres que ceux du Programme des Nations Unies pour le développement.
C.B. HOUTMAN (Netherlands): We have not so much a question to raise with the Secretariat but a suggestion. I do not know whether we should suggest to the Secretariat they should go deeper into the Trust Fund business, as I explained during my intervention, or whether we should suggest it to the External Auditor. I am not completely sure of the procedure in that regard. If it is the Auditor who should be approached, possibly the Secretariat could do that on our behalf, to give him an idea that the Council would like to have a more in-depth study or report as to what extent: the Trust Fund Programme, or more specifically the bilateral Trust Fund Programme, is in line with or consistent with the policies, aims and activities of the Organization, and whether improvements are possible.
LE PRESIDENT: Enfin je crois qu'on peut toujours améliorer un certain nombre de choses et la question mérite d'être examinée.
K. MEHBOOB (Assistant Director-General, Administration and Finance Department): The External Auditor carries out his audit in accordance with the terms of reference which are laid down in the Basic Texts. It is for him to determine the scope of his audit. He decides what he has to follow up and whether the Trust Funds are conforming to the aims and policies of FAO. In particular, he decides what aspects he will concentrate on in carrying out his audit, as well as the financial figures.
We can certainly pass on your concern to him, and the message, but in the last analysis it is the External Auditor who decides on the scope of his audit, because he is independent and carries out his audit the way he thinks best.
LE PRESIDENT: Je crois que le caractère d'indépendance du contrôleur externe doit être maintenu. En ce qui concerne les fonds fiduciaires, le Comité du Programme peut à l'occasion se pencher sur la question soulevée par les Pays-Bas, parce que le Comité du Programme est parfaitement habilité à examiner la conformité des grands projets financés par fonds fiduciaires avec les objectifs de la FAO. Les projets financés par fonds fiduciaires constituent d'ailleurs le sang de l'Organisation et sans ce sang l'organisme se trouverait profondément débile et malade.
Nous avons examiné de manière très complète le document C 93/5 concernant le Programme ordinaire et le Conseil est d'accord pour transmettre à la Conférence un projet de résolution pour l'adoption des états financiers du Programme ordinaire 1990-91.
It was so decided.
Il en est ainsi décidé.
Asi se acuerda.
William H. MARSH (United States of America): Mr Chairman, concerning the financial report and statement of the UN Development Programme for the year 1990-91, my delegation can support all of the recommendations of the external auditor. Permit us to highlight just a few of his observations regarding the UNDP financial report and statements for 1990-91.
With respect to the report of the external auditor - a well-organized and excellent report by the way - we strongly favour his recommendations on management matters found in paragraphs 28 through 48 of document C 93/6 suggesting ways to improve the utilization of fishing vessels available to developing countries for fisheries' research, development and training.
In particular, we agree with the assessment by the auditor that FAO should seek independent valuations of assets when proceeds from their sale are expected to realize over US$25 000. We also agree that, where practicable, all sales should be negotiated in a hard currency at a pre-determined exchange rate. Unless FAO takes prudent measures to minimize the risks involved when engaging in financial transactions, valuable resources that could be used to sustain FAO's vitally important programmes will be lost. In addition, we agree with the external auditor's recommendation that FAO should explore the potential for commercial sale of its database as an additional source of revenue for the organization.
Turning to the sections of the external auditor's report on financial and other matters, we were disappointed to learn from the auditor that the problem of accounting accurately for unliquidated obligations persists. We believe
that efforts should be intensified to control such expenditures through more precise and timely reporting.
With regard to FAO's inventory system, we are concerned about somewhat lax treatment of fundamental internal control accounting measures, such as valuing and inventorying property, plant and equipment, given the huge investment made in acquisition of these assets. According to paragraph 89 of C 93/6, nonexpendable UNDP equipment in FAO's control was valued at US$113.4 million. In view of this significant amount, we believe that more concrete measures should be taken to ensure the proper accountability for such equipment.
We note the comments of the external auditor in paragraphs 27(e) and 95 through 98 regarding the status of developments between FAO and UNDP concerning the signing of a standard basic executing agency agreement. My delegation attaches great importance to the successful outcome of negotiations between the parties on this issue and that in a timely manner. In this regard, we would like to know when an agreement will be reached. Finally, Mr Chairman, as a member of the Finance Committee my delegation can support this recommendation that the Conference approve the audited accounts of UNDP for 1990-91.
C.B. HOUTMAN (Netherlands): I have just one remark: we always wished to have a Field Programme Committee and we never imagined that the External Auditor would give us one. When we read in paragraph 14, Mr Chairman, we see that in addition to the well-established feedback through the Field Programme Committee and the high-level biennial review of Field Programmes, I welcome the Organization's decision. We also welcome the decision on the Field Programme Committee, but I do not know whether it is official or not. We would like to participate in that.
K. MEHBOOB (Assistant Director-General, Administration and Finance Department): With regard to the question of the Field Programme Committee, this is an internal secretariat committee. It has been in existence for many years. It is headed by the Assistant Director-General of the Development Department and its membership includes the Directors of the operating divisions and certain other Division Directors in FAO. It is not a committee open to representatives of Member Governments but is an internal mechanism as are several other committees in-house.
We have noted the comments of the distinguished delegate from the United States on the question of unliquidated obligations and the inventory records. In fact, the inventory records give just the book value. Whenever equipment is bought, it is charged straight away to expenditure. As a consequence, the inventory records of the Organization are at historical cost and they are memorandum accounts. But the comments of the External Auditor and of the distinguished representative from the United States are taken note of and we will be addressing them.
LE PRESIDENT: Les questions qui ont été soulevées sont importantes. Un certain nombre de pays en développement reçoivent une assistance technique. Est-ce qu'ils sont dans la situation voulue pour rembourser en monnaie convertible? C'est un problème qu'il faut examiner cas par cas parce qu'il est difficile
d'établir des normes, compte tenu de la situation très différente dans laquelle peuvent se trouver les pays.
De même, en ce qui concerne le transfert aux pays des équipements et projets du PNUD, c'est une question qui doit être examinée cas par cas. Quant à la nécessité de tenir un inventaire très précis du matériel, je crois que cela doit pouvoir se réaliser dans les meilleures conditions.
Le représentant des Etats-Unis a soulevé, à juste titre, le problème de l'accord de base entre la FAO et le PNUD. Je crois savoir qu'un texte est actuellement soumis à l'appréciation du Programme des Nations Unies pour le développement avec les avis et appréciations de la FAO. Le PNUD est en train d'examiner ce texte et j'espère que nous aurons des nouvelles à ce sujet dans un proche avenir.
En ce qui concerne le paragraphe 14 - nouveau service d'évaluation fonctionnant sous la direction du Directeur général adjoint, M. Shah - il existe dans la maison un Comité du programme interne composé de différentes sous-directions générales de l'Organisation, mais il existe aussi un Comité du programme qui a été créé par nos Textes fondamentaux et qui fonctionne bien. Certains souhaiteraient un Comité des programmes de terrain. Je crois qu'il faut être très circonspect dans ce domaine et qu'il faut bien étudier la question parce que la plupart des pays donateurs ont des comités triangulaires - qu'il s'agisse des Pays-Bas, de l'Italie ou d'autres pays, peut-être de la Belgique - qui se réunissent annuellement de manière tripartite avec des bénéficiaires qui sont divers. Or je pense que la participation triangulaire du donateur, du bénéficiaire et de la FAO est très importante et qu'il est parfois difficile pour ceux qui ne font pas partie de ce triangle d'y participer de manière efficace. La situation des fonds fiduciaires est très différente selon qu'il s'agit d'un fonds fiduciaire pour le criquet pèlerin ou pour le développement des forêts au Népal ou au Cap-Vert. Les situations sont extrêmement variées et chaque cas mérite d'être étudié. Il faut être saisi au niveau du Comité du Programme de propositions concrètes qui tiennent compte de l'extraordinaire diversité de la situation des fonds fiduciaires.
Après avoir entendu les différentes interventions concernant le document C 93/6 (Rapport et états financiers: Volume II, Programme des Nations Unies pour le développement 1990-91), puis-je considérer que le Conseil est d'accord pour qu'un projet de résolution soit transmis à la Conférence pour l'adoption des états financiers 1990-91 du Programme des Nations Unies pour le développement?
William H. MARSH (United States of America): Let me assure you, Mr Chairman, I am supporting what you have just said, but at the same time, I wish to thank you for you intervention which provided more information than the Secretariat had done. Thank you, Sir.
LE PRESIDENT: Je crois que les contacts que vous avez avec le Secrétariat vous permettront de recueillir un maximum d'informations sur des points précis et concrets qui sont intéressants mais qui peuvent difficilement être largement développés au Conseil. Je crois que la pêche est un point qui retient particulièrement votre attention et sur lequel vous recevrez certainement
toutes les précisions et tous les éclaircissements voulus de la part du Secrétariat.
Daniel Yoman KONAN (Côte d'Ivoire): Mon intervention n'est pas destinée à retarder nos travaux, loin de là. Je voudrais simplement poser une question au Secrétariat. Si j'ai bien compris son exposé, le représentant des Etats-Unis a parlé de la possibilité de commercialiser les données de la FAO pour augmenter les ressources de l'Organisation. C'est ce que j'ai cru comprendre. Suis-je dans le vrai?
LE PRESIDENT: Vous n'êtes pas tout à fait dans le vrai parce que le représentant des Etats-Unis a spécialement parlé des navires et du matériel du PNUD. Je ne crois pas que le transfert des technologies fasse l'objet d'une vente contre monnaie convertible ou non. Ce n'était certainement pas l'intention du représentant des Etats-Unis. Mais je traduis peut-être mal sa pensée? S'il veut répondre au représentant de la Côte d'Ivoire, je lui donne la parole.
William H. MARSH (United States of America): In response, perhaps I might just read that particular section for the benefit of all concerned. I particularly thank the distinguished representative of Côte d'Ivoire for having raised the question. After that set of remarks concerning the sale of superfluous fishing vessels, the sentence is this: "In addition, we agree with the External Auditor's recommendation that FAO should explore the potential for commercial sale of its database as an additional source of revenue for the Organization."
Daniel Yoman KONAN (Côte d'Ivoire): Je crois que je suis dans le vrai. Je voudrais tout simplement demander au Secrétariat de bien vouloir réagir à cela et de nous dire quelles sont les possibilités qui existent, à l'heure actuelle, pour satisfaire cette requête éventuelle. Je voudrais avoir le point de vue du Secrétariat.
LE PRESIDENT: Je crois que les données peuvent être transmises aux pays dans le besoin ou dans une situation difficile sur la base d'une information gratuite et à d'autres contre paiement.
V.J. SHAH (Deputy Director-General, Office of Programme, Budget and Evaluation): Perhaps it would help if I were to set my reply in a context which is broader than merely of fishing operations, fishing vessels and related databases. The policy of this Organization as set by you, the Member Nations, and operated by the Secretariat is that databases are the intellectual property of this Organization. As an intergovernmental organization of course they are the property of our Member Nations.
However, the databases, whether they deal with statistics or with textual data which is of interest or potential interest to parties other than Member Nations, are available for disposal on the basis of sales. I can give several examples which I think may satisfy the distinguished delegates.
Firstly, the principle of the Publications Revolving Fund: Aside from the publications which are distributed to Member Nations as their rightful quotas and the publications which are distributed to national institutes, research institutions, etc., with whom we collaborate, the priced publications are sold. The revenue from those sales goes into the Publications Revolving Fund. The principle of the Publications Revolving Fund is not limited to hard text on paper. The same principle is followed with data which can be commercialized in machine-readable form, whether as compact discs in CD ROM or other means of data transfer and exchange.
Another example I would give is that of data and information which is acquired through projects - projects which are funded by UNDP and also projects which are funded by Trust Funds - where the information acquired through the projects is of interest to non-governmental and particularly to commercial interests. An example of that is the complex of INFOFISH project in Malaysia for the Asian South Pacific countries; one in Panama for Central and Latin America; one in Abidjan for Francophone West Africa. The results of these projects are really commercialized in terms of applications which are sold and information which is sought by commercial interests.
I think the point which is made in the External Auditor's Report that such avenues be further considered is certainly one that the Secretariat accepts, as is the endorsement of this suggestion by the distinguished representative of the United States.
LE PRESIDENT: Merci à M. Shah de sa réponse très complète et merci à ceux qui ont posé la question, ce qui a permis à M. Shah d'apporter les précisions qu'il vient de nous donner.
Puis-je considérer maintenant que le document C 93/6 peut faire l'objet d'un projet de résolution adressé à la Conférence pour qu'elle adopte les états financiers 1990-91? S'il n'y a pas d'autres remarques, le projet de résolution sera transmis à la Conférence.
The meeting rose at 16.30 hours.
La séance est levée à 16 h 30.
Se levanta la sesión a las 16.30 horas.
