FC 95/11


Ninety-fifth Session

Rome, 25 - 29 September 2000

Arrangements for the Selection and Procedure for Appointment of the External Auditor

I. Introduction

1. At the one hundred-and-thirteenth Session of the Council in November 1997, the Council decided to appoint the Cour des Comptes of France as External Auditor of the Organization for a period of four years commencing with the year 1998. This four year term will come to an end in 2001.

2. The Financial Regulation relevant to the appointment of the External Auditor is as follows:

Financial Regulation 12.1:

"An External Auditor, who shall be the Auditor-General (or person exercising an equivalent function) of a Member Nation, shall be appointed in the manner and for the period decided by the Council".

3. At its One Hundred-and-Fifteenth Session in November 1998, the Council endorsed the proposal, as submitted in FC 89/7, covering the arrangements foreseen under Financial Regulation 12 for External Audit.

4. The Council noted that the proposal met the concern to achieve greater participation of developing countries in the audit process by permitting "joint proposals" under the sole responsibility of a lead auditor, but involving the sub-contracting of work to one or more other eligible auditors.

5. This paper proposes further detailed operational procedures and arrangements for the selection and appointment of the Organization's External Auditor.

6. It is proposed that this paper form the basis of the Organization's standard procedures in this area.


7. In the years 2000 and 2001, the Secretariat will work towards accomplishing the process from invitation to appointment of the External Auditor of FAO according to the following indicative time frame:

Milestone event Time frame Action by

Invitation for proposals October 2000 Secretariat
Receipt of proposals December 2000 Secretariat
Preparation of comparative analysis and Finance Committee Paper February 2001 Secretariat
Oral presentation, evaluation and recommendation May 2001 Finance Committee
Appointment by the Council June 2001 Council

8. The process for selecting and appointing the External Auditor of FAO, would be as follows:

9. The Secretariat will provide administrative support as needed to the Finance Committee and Council throughout the whole process.


10. In order to ensure that proposals are prepared in a consistent manner, in terms of nature and scope of information provided, and therefore to facilitate comparison of bids, the guidelines issued to eligible auditors should broadly follow the standard procedures employed by FAO when issuing invitations to tender for the provision of professional services. Such standard procedures should be adapted as required to meet the particular requirements of the appointment of the External Auditor by the FAO Council.

11. In particular, such guidelines should include:


12. The proposed selection criteria, for the approval of the Finance Committee, are:


13. The Secretariat will prepare a comparative analysis based on the following rating system:

Rating weight (%)

Technical 80  
- Independence   15
- Qualifications of officials and staff   15
- Training and experience   15
- Audit approach and strategy   25
- Audit reports   10
Cost 20  
Total 100  

14. The Secretariat will score each of the proposals based on the specific criteria listed in the Annex to this paper using a score scale of 1 to 5 (1 as worst and 5 as best). At the same time, each of the specific criteria will be given a specific weighting totalling 100% as per the above table to reflect the relative importance or relevance to the overall competency of the proposals.

15. The Secretariat may further detail the selection criteria and assign weights to these details. In order to safeguard the confidentiality of the process, the detailed weights assigned by the Secretariat are not disclosed but only recorded on the comparative analysis.

16. Scores on the scale of 1 to 5 will be assigned for each criterion based on the replies to a questionnaire completed by the invited state auditors. The scores will be multiplied by the weight to arrive at a total score for each criterion. The total scores for each criterion are then added up to arrive at an overall total score obtained. A short-list of candidates with the highest overall scores will be prepared by the Secretariat and submitted to the Committee for their approval.

17. The Annex provides indicative guidance on how each criterion would be scored at the lowest and highest ranges of the scale from 1 to 5.


18. The short-listed candidates will be requested to make an oral presentation to the Finance Committee. The purpose of the oral presentation is to provide an opportunity to the Committee to seek further clarification or obtain a better understanding of the proposals from the candidates, in order to confirm their overall rating.

19. The oral presentation should cover in a similar manner the matters in the original proposals, and should not be an opportunity to submit new or significantly altered proposals.

20. The Finance Committee will recommend to the Council the candidate with the highest overall score achieved after the oral presentation.


21. To enable the Secretariat to initiate and oversee the process for the selection and appointment of the External Auditor of FAO for 2002-2005, it is recommended that the Finance Committee approve the time frame presented in paragraph 4 above and the rating system presented in paragraph 8 above.




These are only indicative guidelines which are not necessarily exhaustive and may be supplemented and expanded by the Secretariat, as necessary, upon receipt of the actual proposals.

For example, a maximum score of 5 could be awarded if all the requirements are fully met. The lowest score of 1 could be awarded if none of the requirements are met.





  Demonstrated autonomy from other institutions of the government Audit institution is independent and reports to legislature, parliament or other body independent of the government.

Audit institution head serves full term in office (i.e. cannot be removed without completing full term).

Audit institution has full control over its budget (i.e. the institution's budget is not under the control of the executive or other government office).

  Integrity Audit institution has a code of professional and ethical conduct applicable to all its staff and this code is frequently updated.

Audit institution has clear and documented disciplinary procedures and these are applicable to all audit institution staff in the case of deviation from the code of professional and ethical conduct.

Audit institution staff are required to sign off yearly compliance statements of having abided by the code of professional and ethical conduct of the audit institution.

  Objectivity in the discharge of duties and responsibilities Audit institution work is demonstrably guided and performed in accordance with generally accepted auditing standards.
  Ability to self-determine scope of audit Audit institution demonstrates scope of work is determined solely by the institution.
Qualification of officers and staff
  Conformity to the auditing standards of the United Nations Panel of external Auditors and ethics governing their work Audit institution demonstrates its officers and staff have extensive experience in the performance of work in conformity with auditing standards of the United Nations Panel of External Auditors and ethics governing their work.




  Professional qualifications, skills and size of work force Audit institution demonstrates it has high number of qualified professional accountant staff (and professional qualification certificates are from an internationally recognized board or standard), including staff with accounting, finance, operations, procurements, transport and information technology audit experience, particularly in client/server applications such as those used by FAO.

Audit institution demonstrates it has sufficient and commensurate number of professional staff to ensure adequate audit coverage of all resources of FAO, as well as to maintain any other commitments the institution may have in addition to the audit of FAO.

Audit institution demonstrates its staff have relevant skills and experience in the audit of other United Nations agencies, international NGOs, etc.

  Membership in internationally recognized accounting or auditing bodies such as INTOSAI, IFAC Audit institution demonstrates it is a member of an internationally recognized accounting or auditing body.
  Language proficiency Audit institution demonstrates it has sufficient number of staff who speak and are proficient in at least two official FAO languages.
Training and experience
  Existence of a programme for a continuing professional education for staff Audit institution professional staff required to attend continuing professional education training of at least two weeks every two years, and the institution demonstrates how this requirement is monitored and adhered to.
  Experience in the audit of United Nations organizations or other national or international non-governmental organizations Audit institution demonstrates its officers and staff have extensive experience in performance of audit work at United Nations organizations or other national or international non-governmental organizations, and that its officers and staff are up to date on emerging issues and trends in the audit and businesses of these organizations.
  Staff adequately trained in modern trends of auditing and with extensive audit experience Audit institution demonstrates that its officers and staff regularly and proficiently attend auditing `best practices' professional seminars or other means of adequate training in modern and emerging audit trends and techniques, and that officers and staff individually have extensive audit experience.
Audit approach and strategy
  Comprehensive work plans to ensure adequate audit coverage of all FAO resources Audit institution demonstrates it prepares extensive and comprehensive work plans, coordinates and communicates this with management of the audited organization. The audit institution demonstrates its audit methodology conforms to best practices. The audit institution demonstrates it implements adequate quality assurance procedures and programmes to ensure audit work is always of high standard.




  Performance of financial and compliance audits as well as economy, efficiency and value-for-money audits Audit institution demonstrates it has extensive experience in conducting financial, compliance, economy, efficiency and value-for-money audits. Audit institution demonstrates it has adequate division and structure in the organization of responsibility along lines of types and nature of work undertaken (to ensure specialization and extensive audit skill and experienced resources available to the institution). Audit institution demonstrates it is able to take initiative and to deal effectively with new and emerging or particular issues relevant to the audit and business of FAO, in an innovative manner, and in coordination and cooperation with management,.
  Collaboration with FAO's internal audit to optimize the use of limited audit resources Audit institution demonstrates extensive experience and reliance placed on work of internal audit units. The audit institution demonstrates how the use of limited audit resources was optimized in the institution's own experience, and how the institution will optimize this in the audit of FAO.
Audit Report
  Timely communication of audit results presented to management through comprehensive management letters and audit reports Audit institution demonstrates its audit reports are structured in a format judged to be adequate to convey clearly results of the audit. Audit institution demonstrates it conveys audit results in a timely manner and with effective basis to management, discusses audit results on a preliminary basis with management, provides opportunity to management to make comments and provide input before management letters or audit reports are finalized, and reflects in the final management letter or audit report management's comments and input, as necessary.
  Audit reports are accurate, complete, balanced, fair and constructive Audit institution demonstrates its management letters and audit reports do not appear to be superficial, reflect an adequate understanding of the business and issues relevant to FAO, are well written, and provide very helpful, practical, feasible and constructive recommendations to management.
  Most competitive fees Audit institution's fees are very competitive and judged to be adequate and proportionate to the work to be undertaken, and the institution demonstrates these fees are neither too low so as to inhibit effective and efficient execution of audit work nor too high as may be judged to be disproportionate to work to be undertaken.