Contents -

Continued

CASH RECEIPTS AND DISBURSEMENTS
1 July 1946 to 31 December 1946

Auditors' Report

The Executive Committee,
Food and Agriculture Organization of the United Nations,
2000 Massachusetts Avenue, N.W.,
Washington 6, D. C.

Dear Sirs:

In accordance with instructions, we have made an examination of the cash receipt and disbursement records of the Food and Agriculture, Organization of the United Nations for the six months ended 31 December 1946, and submit herewith our report together with the following exhibits:

At the Second Session of the Conference, held in September 1946, the Financial year of the Organization was changed from a fiscal year ending 30 June to a calendar year, and, to conform with the revised budget, the second Financial period was extended to run from 1 July 1946 to 31 December 1947.

The accounts of the Organization have been maintained substantially on a cash basis. Regulation XI, Part I of the Financial Regulations, provides for allocation to a Working Capital Fund of "The unspent and uncommitted balance of the budget voted for the first Financial year..." and that similar allocations may be made in later years. Accordingly, the balance of $1,354,358.19 in the General Fund at the close of the first Financial period ended 30 June 1946 was allocated to a Working Capital fund. The amount so allocated Included collections of $7,363.38 made prior to 30 June 1946 which represented contributions applicable to the second financial follows period.

The funds at 31 December 1946 may, therefore, be summarized as follows:

The records of the Organization are now being set up on an accrual basis and it is expected that the report which will be issued in respect to the transactions of the second Financial period ending 31 December 1947 will reflect all liabilities and commitments at that date.

Our examination was directed to the recorded cash receipts and disbursements for the period from 1 July 1948 to 31 December 1946. We examined correspondence on file in respect of recorded contributions from member countries, but did not confirm the amounts of the contributions by direct correspondence with the contributors. The contributions recorded in the cash book were traced to deposits shown on bank statements.

The paid checks returned by the bank were compared with the entries in the cash disbursement record, and vouchers, payrolls, expense reports and relative data were examined by us in support of the disbursements. The bank account w as reconciled with the balance reported to us direct by the McLachlen Banking Corporation. The petty cash fund of $500.00 was counted in the course of our examination.

The amount of $224,375.00 due at 30 June 1946 from member countries for the first Financial period was reduced by collection of $107,245.00 during the six-month period ended 31 December 1946, leaving a balance of $117,130.00 revisable at 31 December 1946 as shown in Exhibit III.

Contributions for the second Financial period of the Organization (designated, as previously mentioned in this report, at the Second Session of the Conference as the period from 1 July 1946 to 31 December 1947) amounting to $8,796,500.00 for member nations and an additional provision of $703,500.00 for new members were Included in the income budget approved at the Second Session of the Conference. During the period from 1 July 1946 to 31 December 1946, contribution collections for the second Financial period amounted to $2,462,011.62 as shown on Exhibit III. At 31 December 1946 contributions toward the second Financial period which were due and not yet received amounted to $4,327,125.00.

The disbursements for the six-month period are shown on Exhibit II together with the approved budget for the second Financial period. As previously mentioned the accounts have been maintained substantially on a cash basis. Accordingly, the attached statements do not reflect the liabilities and commitments of the Organization as at 31 December 1946. During the three-month period ended 31 March 1947 approximately $141,000.00 was disbursed for 1946 expenses.

Included in the disbursements is an amount of $156,497.86 for the Second Session of the Conference (Exhibit II), which amount included $120,000.00 advanced to the Finance Officer for expenses of the Conference. A report has been submitted to the Organization covering these expenses but has not been audited inasmuch as the supporting documents have not as yet been assembled We understand that there will be additional expenditures to the Danish FAO Committee for expenses incurred during the Conference but a final statement has not yet been received.

The budget approved at the Second Session of the Conference for the second financial period does not include any amount for the International Emergency Food Council. However the Executive Committee of the Organization subsequently approved the issuance of joint reports with the International Emergency Food Council, and in this connection $29,839.51 was expended by the Organization during the six month period ended 31 December 1946, as shown in Exhibit II.

The Staff Provident Fund, which was set up pending the establishment of a permanent pension system, had a cash balance of $66,468.70 at 31 December 1946 (see Exhibit I). Contributions to the fund are deducted from the salary of full-time, permanent employees at a rate of seven and one-half percent of the monthly salary. An equal amount is contributed by the Organization. The cash balance of this fund at 31 December 1946 was included with the cash balances of the General Fund and Working Capital Fund in one deposit account at the MeLachlen Banking Corporation. We understand that subsequently a separate bank account was opened for the Staff Provident Fund.

As at the completion date of our examination the accounting department was in process of development and therefore it is not feasible for us to report on the effectiveness of internal accounting control or make recommendations with respect thereto. However, we are pleased to report that, insofar as our examination extended, the accounting records and supporting data were found in order.

Exhibit I

FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS

Summary Statement of Cash Receipts and Disbursements of the General Fund for the Period 1 July 1946 to 31 December 1946

Statement of Cash Receipts and Disbursements of the Staff Provident Fund for the Period 1 July 1946 to 31 December 1946

Exhibit II

FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS

General Fund Statement of Disbursements by Classification for the Period 1 July 1946 to 31 December 1946 and Budget for the Second Financial Period (1 July 1946 to 31 December 1947)

Exhibit III

FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS

Statements of Contributions

Contents -