FC 100/8

Finance Committee

Hundredth Session

Rome, 9 – 13 September 2002

Programme of Work of the External Auditor – Biennium 2002-2003

Table of Contents


1. At its Ninety-ninth session, the Finance Committee requested the External Auditor to present his proposed work programme for review at the September session. This document is prepared in response to this request.

2. This document recalls the provision of the Basic Text and Financial Regulations in relation to the scope of Terms of Reference of the External Auditor and the principles that govern his programme of work. It then recalls the major functions entrusted to him. This is followed by a brief discussion of the approach of work in the beginning of the term of work as a new auditor and the thematic areas for examination as part of the proposed programme of work. The last section deals with the Special Audit Examination requested by the Finance Committee.


3. The scope of activity of the External Auditor is governed in terms of the Financial Regulations of the Basic Text, Article 12.3 to 12.6. These are reproduced below:

4. The above provisions indicate two major functions of the External Auditor viz, examination of the accounts and providing opinion on the Financial Statements (Financial and Compliance audit) and audit of the administrative and management operations (Value for Money Audit).

5. While discussing the proposed audit programme for the Biennium 2002-2003, the Comptroller and Auditor General (CAG) of India will like to mention that he is taking over the audit of FAO in this year from the month of July 2002 and will initially spend part of his resources to understand the audit entity’s nature of activity, main operations and the major areas of internal control as essential foundation for developing the audit approach and audit programme. Therefore the time of the audit teams in the FAO Headquarters during the initial period of the commencement of his tenure of work as the external auditor in 2002 would be largely spent on appreciation of the structure and working of the various wings of the organisation and the major systems and controls in operations in the Headquarters and decentralised structures in order to tailor our audit scrutiny accordingly.

6. This process will also involve the transition of the tenure of work of the new auditor from their predecessor. The transition will be guided among other things by the UN Audit guidelines regarding the transition.

7. It is to be noted that this proposed audit programme was to be prepared within the short time frame available after the joining of the Director of Audit in Rome in the middle of July 2002. The later part of July being the start of the usual vacation period, adequate consultation with the concerned officers was not always possible. Therefore, some adjustments in the audit programme of work may be necessary in the light of subsequent work.

8. It is the intention of the CAG of India as the External Auditor of FAO that the audit process would be transparent and that the reports would be factual and supported by discussion and exchange of views and contact with management. As a result there should be no surprise when the audit reports are conveyed.


9. The CAG of India will carry out this audit as per the provisions of Article 12.3 of the Financial Regulations and also the provisions of the additional terms of reference governing external audit as annexed to the Financial Regulations.

10. The CAG of India will spend approximately 60% of its earmarked audit resources for financial and compliance audit of FAO by visit of its teams in the next year and the year after at the Headquarters of FAO following the issue of the interim accounts of the first year and after the issue of biennium accounts. These visits in the years 2003 and 2004 will take place in the Spring and Fall cycle. Examination of the accounts and transactions in the Regional and sub-regional offices will also contribute to this audit and will be taken up in addition to the visit of Headquarters by separate teams.


11. This audit will be conducted in the light of the concepts of efficiency, economy and effectiveness which constitute the core of value for money considerations, covering the areas which involve use of significant resources and/or are otherwise considered important.

12. The audit of such items will be conducted by selection of one or two major areas of internal control as operating in the Headquarters and also the decentralised structure of FAO. This audit will account for approximately 40% of the earmarked resources of CAG of India. These audits will be conducted by audit teams having relevant experience in similar audit. For this purpose the audit teams will visit at least two Regional offices and also cover the examination of the records in the offices of FAO Representative (country offices) within the region.

13. Thematic areas of FAO Administrative and Financial Management proposed to be taken up under section (B) above during the Biennium of 2002-2003 are the following:

    1. Examination of the procurement and contracting system in the Headquarters and the decentralised structures including major procurements made for specific projects
    2. Examination of the preparation of the Programme of Work and Budget and monitoring of the programme and financial performance
    3. Examination of implementation of selected areas under a major programme of work.


14. A follow up on the recommendations made by the External Auditor for the Biennium of 2000-2001 will form part of the programme of work.


15. The request of the Finance Committee at its Ninety-ninth session for special Biennial Audit of the FAO-GEF Fund will be complied with. For this purpose necessary details of the working of the Fund will be obtained from the concerned project officials and the timing of the audit work will be separately worked out. The audit will be conducted through separate resources other than the earmarked resources for audit of FAO for which cost estimates will be submitted.