Rome, 8 - 12 May 2000
1999 Annual Activity Report of the Office of Inspector-General
Attached for the information of the Finance Committee members is the 1999 Annual Activity Report of the Office of Inspector-General.
Table of Contents
2 Matters of Special Importance
3 Audit Operations
a) Headquarters Activities
b) Decentralized Activities
c) Special Management Assignments
4 Tender Panel Operations
5 Management Activities
Attachment A - Internal Audit Reports
(i) Headquarters Activities, and Special Management Assignments
(ii) Decentralized Activities
Attachment B - Structure of the Office
(i) Organization Chart
(ii) Staffing Table
The annual activity report was originally intended simply to consolidate the quarterly reports provided to the Director-General on the work of the Office of the Inspector-General. It presents in a familiar format a convenient summary of the major issues of concern addressed by the Office and comments on the actions taken by the Organization in response to them. It also gives an indication of the variety of matters dealt with by the Office, and the extent of activity in the previous year.
In keeping with the decision taken by the Director-General to make his annual activity report available to members of the Finance Committee, this is the fourth such report to be given this broader exposure and it will be distributed for information purposes prior to the Committee's next session in May 2000. The 1998 report generated considerable discussion at the last meeting and a number of suggestions were made for consideration in future reports. In this respect, efforts have been made to indicate the degree of acceptance of audit recommendations by management and the nature of our reporting in the next biennium should provide even more information in this respect. We have also included a brief section on "audit outreach" to demonstrate the extent of cooperation with other oversight regimes, both the Rome-based agencies and other international entities. This report also features an annex listing all audit reports released in the year, rather than the numerical summary and detailed listing of project audits reported in prior years.
This section highlights some of the more important matters raised in audit reports, or as a result of other significant activities of the Office throughout the year. Wherever possible, it provides a summary of the measures taken by various levels of management in responding to the issues identified.
In May 1999, the Director-General informed the Programme and Finance Committees that a
Charter for the Office of the Inspector-General would be developed and made available to
the Finance Committee. At its meeting in September 1999, the Finance Committee discussed
the Charter and made several suggestions related thereto. The Charter is now an integral
part of the regulatory framework of the Organization in the form of an annex to Section
107 of the FAO Manual.
We contributed the expertise of two Senior Auditors to assist in the implementation of the new financial management arrangements, and have followed closely the development and introduction of the new systems. It is also worthy of note that a major piece of work in connection with the introduction of the Oracle/Atlas systems was carried out by the regional auditor in Cairo. While not strictly an audit per se a detailed report and `on the spot' assistance was provided. This was much appreciated by the ADG/RNE and the Oracle team at headquarters.
Several anomalies came to our attention during the year which required special attention. These included the misuse of computer access leading to improper payments, loss of blank cheques leading to apparent forgeries, loss of cash as a result of a car accident while transporting funds, unapproved overexpenditure on one specific project, and misuse of telephone privileges. All cases are being actively pursued, some of which may lead to criminal charges or appropriate disciplinary action depending on the outcome of the investigations.
In the course of the year, we were actively involved in the follow-up of management's responses to issues concerning major contracts at headquarters. This included the banking arrangements (both for the Organization and for staff), selection of the money managers for the FAO Investment portfolio, and the travel arrangements for both official and personal travel. The participation of this Office in these developments not only adds value to the outcome, but also provides us with useful knowledge, understanding and experience for future substantive audit work.
We continued to follow-up on this programme, probably the largest project ever undertaken by the Organization. We released two specific reports during 1999 and a third was "in the pipeline" at year-end. In essence, we concluded that the difficulties with control over cash had improved considerably, and that in general internal controls were satisfactory (although we made several proposals for improvement). In addition, we are pleased to report that appropriate action is being taken by management at headquarters and in the field on recommendations we made dealing with procurement procedures, certain staffing and languages issues, and establishing workable and practical performance measurement criteria.
AUD was instrumental in ensuring that appropriate mechanisms were in place to deal with any computer-related problems resulting from Y2K. The overall effort, which started in the summer of 1997, was completed in time and culminated in a year-end plan designed to minimize any potential date rollover problems. During the actual rollover, the Y2K team was on duty or on call and had to deal with only a few minor glitches such as the failure of the e-mail link from two field offices which had not applied correctly the Y2K patches. Vigilance will continue, but FAO can already take some satisfaction from the project whose legacy, beside Y2K-compliance, is a more up-to-date, efficient and reliable IT infrastructure and computer system.
Our audit plan for 1999 contained provision for a thorough review of the MSUs both at headquarters and in the regional offices. During the course of the year a policy change was announced whereby with the exception of those in the regional offices (and consequently the one in OCD), the departmental MSUs would be consolidated into one corporate Management Support Service to be located in the AF Department. Nonetheless, we completed the reviews already underway, and many of our findings and recommendations have already been adopted or are being considered in connection with the new arrangements.
We performed an audit of TeleFood bank accounts and associated transactions from the inception of TeleFood and issued our report in July 1999. We made recommendations to bring transaction recording up to date and strengthen the internal control environment over the bank accounts. We commented on diverse aspects of cash management and made recommendations for improvement. We made suggestions as to how the management of TeleFood bank accounts could be streamlined. Management is reviewing the TeleFood financial accounting operations with a view to responding to our concerns and improving the overall management of the TeleFood accounts. A review of TeleFood operations has also been conducted and a report will be issued early in 2000.
As part of our comprehensive audit approach, we reviewed the call for more strategic planning within departments as stressed by the Director-General and Governing Bodies. In particular we took up the issue at the level of the Money and Medals Programme and the Information Products Revolving Fund. In both cases we examined the operating plans and the continuing relevance of the historical funding and accounting methodology and made suggestions for improvements and changes. Management has actively addressed these issues and developed business-like operating plans for the coming years.
We looked at two different elements of language coverage in the past year. One dealt with the need for greater capacity in the Arabic language in the hiring of staff in relation to the Oil for Food programme in Iraq, and the other dealt with the operations of the five translation groups at headquarters. We made several specific recommendations in relation to both these aspects and are pleased to report that management has taken a series of positive initiatives to address the issues raised in our reports.
We performed a review of selected Credit Union operations and issued our report in October 1999. We concluded that the controls and procedures pertaining to the selected areas were functioning adequately, and we thus concentrated the substance of our report on the management or value for money issues, making recommendations to improve efficiency and reporting to the Board of Directors. The report was well received by Credit Union management, who took appropriate action on our proposals.
The Inspector-General continued to be an active participant in the annual meeting of heads of internal audit services in the United Nations, the Specialized Agencies, the IAEA and other international organizations, and the Bretton Woods and other multi-lateral banking institutions. He also represented the Office at an international conference on Best Practices in Internal Auditing. Several meetings were held in 1999 with the heads of audit in the other Rome-based agencies, and regular joint meetings on substantial issues were held with the Evaluation Services Unit. The senior staff of the Office also participated in a briefing session with permanent representatives of Member Nations on the topic of Oversight Arrangements at FAO. In addition, several meetings were held with the External Auditors and representatives of the Joint Inspection Unit throughout the year.
The audit activities of the Office are organized, managed, and reported upon by programme element in accordance with a formal audit plan of work. The audit plan is conceived on a top-down basis with reference to the Strategic Framework, the Medium Term Plan, the Programme of Work and Budget, decisions and resolutions of the Conference and Council, discussions in the Programme and Finance Committees and various policy statements and initiatives by the Director-General. The plan is subsequently developed in more detail within the Office on a bottom-up basis and presented to the Director-General for his concurrence.
While audit activities are primarily represented by specific audit reports, that does not by any means represent the full picture of the contribution of the Office of the Inspector-General to the overall process of management control in the Organization. The following sections provide a brief summary of the nature and extent of the work carried out in the course of the year, and Attachment A identifies the specific reports released in 1999.
a) Headquarters Activities
The headquarters unit houses much of the Office's expertise in financial, accounting and treasury functions. It also serves as the focal point for office technology and other areas of information systems and electronic data processing. Its prime responsibility is for conducting comprehensive audits at Headquarters and providing advice to all levels of management on matters falling within its competence. It also conducts a number of audits for WFP in accordance with a negotiated biennial agreement.
This unit also has responsibility for reviewing and expressing an opinion on the periodic financial statements and cash flow forecasts presented to the Director-General
Specific audits were conducted and reports released on seven areas throughout the year as noted in Attachment A to this report.
b) Decentralized Activities
This unit is responsible for all audits, special reviews, inspections and investigations at offices away from headquarters, and in related activities operated from headquarters. This includes not only the Regional, Sub-Regional and Liaison offices, but also the FAO Representations and specific projects in the field. It also serves as a major source of expertise on decentralization and regionalization issues, and the work associated with the use of local audit firms. It is the prime focal point for the auditors in the four major regional offices, who not only perform the whole range of audits in their regions, but also provide advice on management issues such as staff establishment, recruitment and selection as well as organization and internal control matters that arise from time to time.
This unit also participates actively in the briefing and orientation programme for all newly appointed FAORs, provides input to the evaluation of their performance and is involved in the handover procedures on the termination of their assignments
In the course of the year, this unit produced 14 reports relating to various aspects of Regional and Sub-Regional Offices, 12 reports on FAO Representations and liaison offices and 11 reports on specific projects. The nature of these reports is indicated in Attachment A.
c) Special Management Assignments
This group deals with the majority of the requests for enquiries, inspections, and investigations originating in the Office of the Director-General or with other members of Senior Management or on occasion from individual staff members. These activities, particularly the special investigations, do not always lead to formal audit reports, but more often are concluded by informal briefings or confidential memoranda. This group houses the Office's legal expertise and is also involved with matters relating to procurement, (notably the review of requests for waivers from the competitive process and Tender Panel operations), communications, travel, health insurance and employee benefits. It also represents the Office of the Director-General on the FAO Appeals Committee.
This group also reviews and comments on the monthly expenditures in the immediate Office of the Director-General (including his expense reports) and the related expenses carried in departmental budgets. Seven specific audit reports were produced in the course of the year as identified in Attachment A.
The procurement of equipment, supplies, and services is governed by the principles and procedures set out in the FAO Manual. This assigns to the Office of the Inspector-General responsibility for receiving, opening, recording and retaining under secure conditions, all bids in response to tender invitations. This ensures the independence, objectivity, security and transparency of the tendering process.
In the past year, the "Tender Panel" met on 97 occasions and dealt with 279 tenders. For these tenders 3,652 firms were invited to submit bids and 1,519 were received. The level of activity in terms of panel sessions and number of tenders is reasonably consistent with that of previous years, but there was a considerable increase in the number of firms invited to bid and accordingly of bids received.
The Office is an active participant or observer in a number of important "standing committees" in the Organization: the Programme Policy and Advisory Board, the Information Management Technology Committee (and its sub-committees), the WAICENT Committee, the Procurement Committee, the Advisory Committee on Medical Coverage, the Committee on Investments and its Advisory Committee, the Advisory Committee on Borrowing, the Oracle Implementation Steering Committee, the Joint Committee on Food Services and the Board of the Credit Union. We are also called upon to participate in ad hoc internal review groups, task forces, evaluation panels and so forth. In addition, we follow closely the deliberations of the Programme and Finance Committees, Council and the Conference and meet from time to time with senior officials and representatives of Member Nations.
On the staffing side, we underwent an important streamlining exercise resulting in an internal reorganization reflecting the need for increased emphasis on decentralized activities and a sharper focus on headquarters audits and special management assignments. These changes are graphically depicted in Attachment B to this report. With two remaining vacancies in the professional category, we are now practically at full strength with a well balanced team of highly qualified and experienced staff both at the professional and general service levels. However, during 1999 we were considerably short-handed, particularly at the senior level at headquarters, but we were able to cope with the situation through the use of the various partnership programmes, short-term consultancies, and work realignments as appropriate. Attachment B to this report provides details on the staffing situation as well as some summary demographic information.
Training and development is an important aspect of AUD's management activities. This comprises three elements: professional audit training; language training; and training in the use of office technology. On the professional side we had an "on-site" seminar on Fraud Detection and Investigation (conducted by one of the world's leading experts in this field). Several sister organizations participated on a cost-sharing basis. An "in-house" language training programme has been developed for eligible AUD staff, and we have made good use of the facilities available within FAO for our office technology training needs. One auditor is enrolled in a distant learning programme with a U.K. university, and we also participate in other senior management training programmes arranged through the Personnel Division.
We are in the process of finalizing our web-site for the Internet, and we continue to have regular theme-oriented staff meetings where FAO experts address the audit staff on current developments in their areas of expertise, and where audit and administrative (including budget monitoring) matters are discussed.
In closing, the Office would once again like to express its appreciation to senior management, and indeed to staff at all levels for the positive responses, cooperation and assistance received in carrying out our various assignments throughout the year.
ATTACHMENT A (i)
List of Internal Audit Reports Released in 1999
· Review of Commitment and Payment Authorizations
· Review of the UNDP Operating Fund
· Telefood Bank Accounts
· Money and Medals Programme
· Follow-Up Reviews of the Rental Subsidy Scheme, Rental Advances, and Rental Deductions
· Selected Credit Union Operations
· Review of Operations of SDDX
Special Management Assignments
· Translation Groups in GI Department
· Structure, Efficiency and Effectiveness of FFDX
· Investigation of Irregular Transactions in FFDX
· 1998 Commissary Report
· Review of New Catering Arrangements
· Efficiency and Effectiveness in OCDX
· Follow-up on FAO Travel Arrangements
Attachment A (ii)
List of Internal Audit Reports Released in 1999
(i) Relating to Regional and Sub-Regional Offices
· Sub-Regional Office in Zimbabwe
· RLC Imprest Returns (and certain personnel matters)
· RLC Inventory Management System
· Chilean Trust Fund
· Procurement Function in RAF
· Inventory Control in RAF
· Special Review of Certain Leave Records in RLC
· RAP Imprest Returns (1998)
· Principal Auditor Report on RAF
· Implementation of Oracle/Atlas at RNE
· RAP Imprest Returns (1999)
· Communications and Publishing at RAP
· Follow-Up on Prior Recommendations at SLAC
· Sub-Regional Office in Budapest
(ii) Relating to FAO Representations (and Liaison Offices)
· Costa Rica
· Indonesia (Handover Arrangements)
· Philippines (Handover Arrangements)
· Liaison Office in Japan
· Central African Republic
· Central African Republic (Handover Arrangements)
· Uruguay (Handover Arrangements)
· Togo (Handover Arrangements)
· Guinea (Handover Arrangements)
(iii) Relating to Specific Projects
· Rural Development in Central Guinea
· Hybrid Rice Development in the Philippines
· Special Programme on Food Security in Bolivia
· Agrarian Reform and Rural Development in the Philippines
· Soil Management and Plant Nutrition in Bolivia
· Various mattes pertaining to Forest Resources in Bolivia
· Prevention of Post Harvest Losses in Bolivia
· Special Programme on Food Security in Haiti
· Investigation of TCP Project in Colombia
- Oil for Food Programme in Iraq
· Review of Internal Controls
· Review of Management Constraints
Attachment B (i)
Office of the Inspector-General
Food and Agriculture Organization of the United Nations
G. Peter Wilson (D-2)
|V. Brooke G-3
K. Travers (80% G-4) (1) G-3
|C. Bricknell G-6
M. T. Baiani (Registry) G-4
||O.C. Khanna D-1
Ogino (RAP) P-4
|SPECIAL MANAGEMENT ASSIGNMENTS
|L. Elliott P-5
|A. Lo Faso P-5
A. Jansson P-4
(1) Mr. Ciocca is replacing Ms. Travers while she is on extended leave
(2) Selection approved, but not yet appointed.
Attachment B (ii)
Staffing Table for the Office of the Inspector-General
|Professional Audit Posts||15|
|1 Principal Auditor||D1||1|
|2 Senior Auditors||P5||2|
|4 Regional Auditors||P4||3||1|
|Para-professional Audit Posts||3|
|1 Audit Assistant||G6||1|
|1 Audit Clerk||G5||1|
|1 Audit Clerk||G4||1|
|Secretarial Support for Audit||3|
|1 Director's Secretary||G6||1|
|1 Bilingual Typist (80%)||G3||1|
|Other Support Staff||1|
|1 Records clerk||G4||1|
The following countries are represented in the above:
N.B. The average age of all staff is 45 years.