FC 102/7 |
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FC 102/7 |
Hundred-and-second Session |
Rome, 5 - 9 May 2003 |
2002 Annual Activity Report of the Office of the Inspector-General |
Attached for the information of the Members of the Finance Committee is the 2002 Annual Activity Report of the Office of the Inspector-General.
Paragraphs | ||||
I. |
Introduction | 1-3 | ||
II. |
Matters of Special Importance | 4-45 | ||
III. |
Audit Operations | 46-47 | ||
A. |
48-50 | |||
B. |
Decentralized Activities | 51-53 | ||
C. |
Special Assignments and Investigations | 54-57 | ||
IV. |
Tender Panel Operations | 58-59 | ||
V. |
Management Activities | 60-65 | ||
Attachment A - |
Comparison of Work Performed in 2002 to Work Planned |
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(i) |
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(ii) |
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(iii) |
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Attachment B - |
Major Recommendations and Implementation Status |
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(i) |
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(ii) |
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(iii) |
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Attachment C - |
(i) |
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(ii) |
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1. This is the seventh annual activity report of the Office of the Inspector-General. The first was developed in 1995, and was intended to provide the Director-General with a summary of the work carried out by the Office. Since 1996, the Director-General has made the annual reports available to the Finance Committee to enable its members to review the nature of the work carried out by the Office. This practice was much appreciated and it has since become a standing item on the agenda of the May sessions. It is provided to the Secretary of the Committee for translation and distribution at the same time as it is presented to the Director-General.
2. The annual report has generated considerable discussion in the Finance Committee and from time to time suggestions for improvement in the presentation have been made. These have been accommodated wherever feasible. During 2002, comments were also made by the External Auditor, intended to further enhance the Office’s annual report. These were considered by the Finance Committee, and accordingly the current report provides greater detail on the implementation of recommendations, and on the work performed as compared to the work planned.
3. In 2002, a total of 59 reports were released by the Office. These are listed by organizational group in Attachment A which also compares the work done to the work planned for the year. The major recommendations from the reports are outlined in Attachment B, together with notes on the implementation status. The staffing situation at the date of preparation of this report is indicated in Attachment C. The work of the Office was conducted within the net allotment ($2,157,700) provided for the first year of the 2002-03 Programme of Work and Budget.
4. This section highlights a variety of issues addressed by the Office in the year 2002 and provides a summary indication of the measures taken by various levels of management in responding to the issues identified.
5. The Charter for the Office of the Inspector-General has become enshrined in the Administrative Manual of the Organization. Among other things it provides an opportunity for the Inspector-General, at his discretion, to submit any specific report to the Finance Committee where he deems that senior management has failed to deal appropriately with any issues raised. Again this year no such situation prevailed.
6. The internal auditors located in the Regional Offices, complemented by audit missions from Headquarters, directed particular attention to the internal control framework in these offices, as well as general management performance. The reviews covered financial, administrative and operational management capacity, programme development activities, programme of work and budget, responsibilities and relationships, information technology systems, travel arrangements, procurement activities, and personnel matters including staffing, recruitment and servicing. Generally, where specific recommendations for corrective action or improvement were made, the various levels of management took appropriate steps to address the issues raised.
7. In 2002, handover arrangements for the Regional Representatives in RNE and RAF were also reviewed.
8. Several audit missions were carried out in specific countries according to the audit plan. In conjunction with audits of FAO Representations, the auditors generally undertake reviews of specific projects, which often include Technical Cooperation Projects and projects under the Special Programme for Food Security. In general, the scope of work covers the internal control environment in the country and project offices. Specifically, a wide variety of financial, administrative and personnel matters, as well as relations with host governments, donors and other liaison issues are addressed. Local management has been receptive to audit recommendations and those responsible at Headquarters have followed up accordingly.
9. As new operational arrangements have been implemented in many countries, audit efforts at the FAO Representations placed increased emphasis on assessing operational management capacity, programme development activities, and support received by the country offices for the proper discharge of the new responsibilities.
10. In 2002, significant issues regarding field programme operations and financial arrangements for nationally executed projects financed through trust funds were identified. To respond to development opportunities and improve FAO’s comparative advantage, recommendations were made to strengthen the capacity of Representations in terms of staffing, banking arrangements, accounting and information technology systems. Similarly, the need for improvement in operational arrangements and internal controls was emphasized.
11. The recommendations were received positively by management in the field, and at Headquarters. Corrective action has been undertaken, where possible, or is in the process of being taken or otherwise under active consideration.
12. Fraud has been defined by the Panel of External Auditors of the United Nations, the Specialized Agencies and the International Atomic Energy Agency and their definition was reported to the Finance Committee in the Activity Report for the year 2001. The cases reported to the External Auditor for the 2000-01 biennium were revisited in the light of the Panel’s definition. No further comments are offered and from an audit perspective the cases are considered closed.
13. The External Auditor specifically recommended that another review of the Internal Controls over the use of the Organization’s resources should be conducted. In this respect an expert consultant has been contracted to assist in developing new risk assessment methodology, and with this tool the issue will be revisited in the first half of 2003.
14. In 2002 one report was issued covering the loss of $34,300 in an FAO Representation, as a result of a fraudulent conversion of cheques intended for bona fide creditors. The fraud was perpetrated over a number of years. The staff member involved was separated from the Organization and chances of recovery are considered remote.
15. In August 2002, staff in another FAO Representation discovered that the recently separated administrative assistant had altered the name of the payee on six cheques and had surrendered them for cash. The Office undertook a mission in November 2002 and has established that in the course of two years, the officer had altered over 70 cheques, originally made out to various nationalized industries, private companies and consultants. This review is still ongoing, but the final loss is likely to be between $50,000 and $60,000. The complete results of this investigation will be reported in 2003.
16. Both cases require improvements to the internal control environment in decentralized FAO offices in general, and the adequacy of supervision, segregation of duties, cash management, bank reconciliations, and financial reporting in particular. Management is addressing these matters now. The two specific cases also raise concerns about the quality of work of some of the local auditors. This concern was covered at length during the recent special examination of the local audit scheme and is reported elsewhere in this report.
17. In the opinion of the Legal Office, both cases highlight the objective limits of the Organization’s power to investigate particular matters beyond a certain point, either because the investigations concern persons who are no longer in the service of the Organization, or third parties, or facts that occurred completely outside FAO and over which it has no control. In such cases the Director-General “has not the investigatory police powers needed to establish” the facts in a complete manner. Therefore, FAO is approaching the United Nations in order to obtain detailed information on the approach and criteria followed when dealing with such situations, with particular reference to the extent to which the United Nations involve local specialists or police authorities in their investigations. Overall, the issue is complex and sensitive because it may conflict with the immunity of the Organization.
Oil-for-Food
18. The Oil-for-Food programme continues to be an area of major audit attention and a top priority for the Organization. Throughout 2002, a resident auditor was operational in Iraq. Furthermore, the internal auditor based in Cairo had additional responsibilities in this area. Overall supervision of this programme rests with the Special Assignments and Investigations group at Headquarters.
19. The Office issued eight specific reports in 2002 addressing a variety of matters as outlined in Attachment A (iii). Recommendations were made to improve local procurement procedures and practices as well as methods for evaluating bids and selecting vendors. Additional recommendations were made to enhance inventory management of deep well pumps and other equipment, to improve methods for safeguarding assets, and to establish certain mechanisms to better address human resources issues. Such recommendations continue to be received positively by management in the field as well as at Headquarters and by the relevant authorities at UN headquarters in New York. Appropriate follow-up action has been undertaken or is in the process of being taken or otherwise is under active consideration.
20. In 2002, FAO established a Representation in Afghanistan and an FAO Representative was recruited. In November 2002, the field programme consisted of 34 operational projects with a budget of approximately $38 million.
21. Considerable work is already in progress and arrangements are well underway to address the audit needs of the programme for Afghanistan. In view of field programme development expectations, the establishment of a resident internal audit post in Kabul has been approved. An audit consultant has been hired for an initial period of six months and a full-time auditor is expected to be in place in the latter part of 2003. In the interim, an audit mission has been fielded by the internal auditor based in Bangkok. Overall supervision of these activities rests with the Decentralized Activities group.
22. In 2002, we reviewed the Caribbean Amblyomma Programme (also known as the Bont Tick) in Barbados for the fourth time. The Programme is one of the most important project activities in the Caribbean area in terms of visibility and financial volume. The latest report issued in January 2003, highlighted the need for improvement in oversight arrangements and stronger justification for a proposed relocation of the project base to Antigua.
23. Currently, the Programme is operated from Santiago, however it is the view of this Office that operational management responsibilities for this Programme would be better served from Barbados. This would be in line with the policy to decentralize operations closer to the field. Furthermore, it has been noted that management efficiency and ease of contact with those responsible for implementation would be greatly enhanced by the location of the responsible country project officer within the sub-region. The whole issue is currently under consideration by management.
24. In 2002 the Office conducted a review of Gender Mainstreaming to assess the process used by the Organization in preparing the third Gender and Development Plan of Action for 2002-2007. Gender Mainstreaming is one of the sixteen Priority Areas for Inter-disciplinary Action identified in the FAO Medium Term Plan for 2002-2007.
25. Generally, we found the procedures and practices followed to develop the new Plan of Action to be reasonable and in line with the requirements of the Organization and the Programme Committee. However, we identified certain areas where there is potential for improvement and made a number of recommendations to enhance identification, measurement and monitoring of outputs, use of databases, training, co-ordination between the responsible Headquarters and decentralized units and budget allocation procedures. We are pleased to report that the recommendations have received appropriate attention by management.
26. This area has suffered as a result of scarce financial resources at FAO during the past several biennia. Our review concluded that disaster recovery planning is insufficient and actions are performed in an uncoordinated manner. Formal policies developed a decade ago have never been updated. In case of disaster, recovery would depend on the skills of the staff of the Information Systems and Technology Division to improvise the necessary actions under pressure of the situation. In this context, there is concern that FAO would not be able to recover an acceptable level of activity in a reasonable period of time and the impact on operations and related cost could be severe.
27. A more proactive approach to disaster recovery planning was recommended as a matter of urgency including implementation of a comprehensive Disaster Recovery Plan in the context of an Organization-wide IT framework. The responsible division was urged to pursue the matter with the necessary force through the appropriate channels (the Information Management & Technology Committee) in order to obtain the required financial resources. As a result of this review there is a more acute awareness of the potential problem, and the issue will be followed up by this Office in 2004 to determine what specific action has been taken in this area.
28. With the issuance of the umbrella report on policy issues, the Office concluded its Organization-wide review of the use of Letters of Agreement (LOAs)started in 2001. Letters of Agreement are signed with governmental, regional, inter-governmental, parastatal or other non-profit institutions, referred to as Recipient Organizations, for the supply of particular services or other specified work. With commitments of over $22 million in 2002, Letters of Agreement represent a substantial outlay for the Organization.
29. We found that justifications for selecting particular Recipient Organizations were rarely documented, there was minimal monitoring or evaluation of activities foreseen and financial control was often inadequate. Concern was expressed that users did not always adhere to applicable regulations and, in the few cases where we rendered an opinion on value-for-money, we noted that the assessed value of the specified output was somewhat lower than the amount paid.
30. While it was concluded that the FAO Administrative Manual provides a reasonable framework for the use of LOAs, there is still a need to reassess some aspects and scope of its application. In particular, the following areas were identified: clarifying the roles and accountability of FAO staff involved in the process (i.e. initiating officers, certifying officers, monitoring officers, responsible officers and authorized signatories); establishing an independent and well-resourced LOA monitoring function; as well as a clear role for decentralized offices in the process. To address all concerns and focus on the improvements to the Manual Sections proposed in the audit report, it was recommended that the Department of Administration and Finance take the lead in establishing an appropriate working group comprising the various user departments as well as other concerned units, including the Office of the Legal Counsel. The prime objective would be to develop the most appropriate administrative framework for the instrument and identify the unit(s) responsible for administration.
31. Divisions use author’s contracts to engage technical writers, technical editors, illustrators, translators, revisers, typists, proof-readers, publishers, designers and desktop publishing operators to prepare material to be issued as an FAO publication or document. During 2002, $9.8 million was spent on this type of contract.
32. The Office reviewed the use of this instrument throughout FAO to provide assurance to management that it is being used properly and judiciously. Individual reports were issued to seven departments in addition to an umbrella report.
33. It was noted that, overall, divisions follow appropriate procedures and practices for the use of this contractual instrument. However, certain areas for improvement were identified and recommendations were presented for better segregation of duties, provision of rate history for previously-engaged individuals, the need for improved exception reporting, controls over pertinent computer system warnings, performance assessment of contracted individuals as well as more complete and current guidelines and procedures.
34. The recommendations were well received by the various departments, which undertook to make all efforts to ensure proper use of author’s contracts in conformity with the new provisions of the Administrative Manual.
35. As reported in the 2001 annual report, the Office carried out extensive work on the controls surrounding the area of staff members’ educational qualifications. Throughout 2002 follow-up continued. One investigation revealed that a staff member had presented a falsified university degree to the Organization in support of his promotion from the General Service to the Professional category. As the promotion had been fraudulently obtained, it was declared null and void, and the staff member was reclassified to the General Service category and dismissed. The full amount of the salary and entitlements differential was recovered from the staff member’s terminal emoluments.
36. In October 2001, Seattle hosted a series of concerts aimed to raise awareness and funds for TeleFood. Every seat was sold, and the events caught the imagination of the public and the press. The initiative was the first on this scale, and the Office carried out a review of the entire process. The concerts were ambitious, not at all easy to plan and produce, and yet a success both in terms of awareness-raising and fund-raising despite the fact that they ran close on the heels of the 11 September 2001 terrorist attacks in the USA. The Office highlighted the key lessons learnt and issues which need to be considered in organizing an event of this nature in the future. Issues covered included sponsorship, costs and funds raised, public relations, legal liability, follow-up, and internal communication. The recommendations and observations in the report received a favourable response from management, and were considered of significant value in planning TeleFood events for 2002, and beyond.
37. The Charter for the Office of the Inspector-General states that the Office of the Inspector-General is available to receive complaints or information concerning the possible existence of fraud, waste, abuse of authority or other irregular activities and practices. In order to facilitate such communication, and in keeping with the recommendation of the External Auditor, a confidential fax “hotline” was installed in 2002 and its existence widely communicated to all staff.
38. It is interesting to note that at the time of writing this report, the more traditional methods of communication remain the preferred channels for staff in reporting such matters. Nonetheless, the existence of the new fax hotline is readily available to staff for contacting the Office.
39. A review of the local audit scheme was concluded in December 2002. The report assessed the costs and benefits of the scheme. It was concluded that there is a clear and present need for the provision of reasonable and independent assurance on the operation and financial management of FAO’s field operations. It was also reported that the use of local auditors is significantly less costly than an in-house alternative. However, we noted that despite being some seven years in operation, the scheme has not yet lived up to its full potential in ensuring that field operations are subject to an appropriate level of managerial and financial control. The report was issued as input to a parallel exercise on the scheme being conducted by the Department of Finance and Administration.
40. During this year, cooperation and collaboration with other UN Agencies continued. The Office collaborated on personnel issues with the IAEA,WFP, IFAD and the UN Secretariat. In several cases, and for a variety of reasons, this resulted in disciplinary measures being taken up to and including separation. The Office also performed various benchmarking exercises with the United Nations and other Specialized Agencies.
41. The matter of “audit resolution” is taken very seriously at FAO. The Assistant Director-General/Directeur de Cabinet follows up on the most important audit recommendations. He accomplishes this task by informing individual programme managers of the Director-General’s instructions with regard to implementation, by setting specific dates for information on action taken and by conducting subsequent follow up when necessary. This is an extremely powerful “audit resolution” tool, which complements the normal follow-up by the Office of the Inspector-General. The combination has proven to be highly effective.
42. The Representatives of Internal Audit Services of the United Nations and Multilateral Financial Institutions met in New York in June 2002. The Inspector-General represented FAO at this meeting. The highlight was the adoption of the new Standards Framework for the Professional Practice of Internal Auditing and the Code of Ethics. The third Conference of Investigators of UN Organizations and Multilateral Financial Institutions, organized by the World Bank, took place in Washington in March 2002. This conference was attended by the Principal Auditor. The above meetings provided excellent fora for the exchange of views and experiences of internal auditors, investigators and other oversight bodies from the international community of audit and investigation professionals.
43. The Office arranged a highly successful on-site seminar in Rome on preventing, detecting and investigating fraud. The seminar was conducted by an internationally recognised expert in the area of white-collar crime, and was attended by all staff of the Office. In addition, staff from other organizations were invited. These included WFP, IFAD, UNOG, UNIDO, WHO and OSCE who accepted and participated on a cost sharing basis. As part of this seminar a special session was arranged for ADGs and Heads of Independent Offices on “fraud awareness”.
44. The Inspector-General continued to have regular monthly meetings with counterparts from the Rome-based agencies, and maintained close contact with the heads of audit and investigation units in other UN agencies and international institutions. He also conducted a mini peer review of the oversight function at the Organization for Security and Cooperation in Europe (OSCE).
45. In order to improve outreach to FAO staff members in general, the Office has developed an Intranet site, providing such information as the Office’s mandate, code of ethics, charter, and how to contact the Office including through the confidential fax number.
46. The operations of the Office are planned, organized, managed and reported upon in accordance with the organigram displayed in Attachment C. The audit plan of work follows the pattern of the PWB and is thus developed on a biennial basis. It also takes into account the Strategic Framework, the Medium Term Plan, and of course the Programme of Work and Budget itself. The discussions in the Conference, Council and the Programme and Finance Committees as well as policy statements and initiatives of the Director-General are also an integral part of the planning process. The plan is then prepared in more detail within the Office taking into account the normal planning tools of audit risk, rotation, management requests, or items requiring special attention. Subsequently it is made available to the Director-General for his review and concurrence. Notwithstanding the foregoing, it is a flexible plan. It can be modified depending on changing circumstances, either on the request of senior management or by the Inspector-General himself. It is updated between the first and second year of a biennium, and this year a comparison between work planned and work performed can be found in Attachment A to this report, while Attachment B reviews the major recommendations.
47. All audit work results in the production of specific audit reports. However the Office of the Inspector-General contributes to the overall process of management control in the Organization in a variety of ways and goes considerably beyond the issuance of formal reports. These activities are outlined in the following paragraphs indicating the nature and extent of the work carried out throughout the year.
48. One of the most important clients of the Headquarters group is the Administration and Finance Department, encompassing finance, information technology, human resources and administrative services. However, more and more of the audit work is encompassing the technical departments at Headquarters. The main expertise in this group continues to embrace the disciplines associated with finance, treasury, accounting and administration, but it also serves as the focal point for office technology, information systems and other aspects of electronic data processing. The Headquarters group also carries out annual reviews of the Credit Union and the Commissary, on a fixed fee basis, and plays an important role in advising other units at Headquarters on audit-related issues.
49. The Headquarters group is also responsible for the review of audit arrangements and audit clauses contained in partnership and similar agreements. In 2002, 58 such agreements were reviewed.
50. A total of 10 specific audit reports were released by this group in 2002, and these are identified in Attachment A (i).
51. This group deals with audits, special reviews and investigations carried out at the Regional, Sub-regional and Liaison Offices, Representations, and selected projects in the various regions. It also covers the elements of decentralized activities at Headquarters. The group is responsible for the supervision of the outposted auditors, including the planning, clearance and review of all audits conducted at the field level. The only exception to this is the Oil-for-Food Programme.
52. This group is also the prime source of expertise on decentralization, regionalization and the new arrangements for the field programme. It follows closely the work of the local audit firms engaged by the Finance Division, and frequently refers to their reports for planning audit work and monitoring management performance. This group also discusses audit concerns as part of the briefing and orientation programme for newly appointed FAO Representatives and other senior staff. This also involves subsequent contributions to the evaluation of performance, while in service, and the handover arrangements on the termination of FAOR assignments.
53. In 2002 this group produced 28 reports: nine were related to various administrative and operational aspects of Regional and Sub-regional Offices, eleven on FAO Representations and eight reports on specific projects and other topics. Due to emerging priorities, mainly investigation work, some reports of missions carried out in 2002 remain in the pipeline. These reports will be issued early in 2003.
54. This group handles practically all special enquiries, inspections, special audits and investigations in the Office of the Inspector-General. The vast majority of them involve operations at Headquarters. Many of them originate in the Office of the Director-General or from other members of senior management, or on occasion from individual staff members.
55. This group 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, and oversees the Oil-for-Food audit activities in Iraq. It also represents the Office of the Director-General on the FAO Appeals Committee, and supports the Inspector-General with many of the internal management, personnel and administrative matters.
56. The Special Assignments and Investigations group is also responsible for the review and expression of opinion on the financial situation and monthly expenditures in the immediate office of the Director-General and the related expenses carried in departmental budgets.
57. A total of 21 specific audit reports were produced in the course of the year, of which eight pertain to Iraq and 13 to Headquarters.
58. The procurement of equipment, supplies and services is governed by the principles and procedures set out in the FAO Administrative 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.
59. In the past year, the Tender Panel met on 113 occasions and dealt with 387 tenders. For these tenders 6,801 firms were invited to submit bids and 1,881 were received. The level of operations remains close to the high level of the previous year, due largely to the Oil-for-Food Programme, the activities in Kosovo, and a deliberate more frequent and wider testing of the market for procurement activities.
60. The Office is represented on a number of important “standing committees” in the Organization: the Programme Policy and Advisory Board, the Human Resources Committee, Information Management Technology Committee (and its sub-committees), the WAICENT Committee, the Sponsorship Committee and its working group, the Procurement Committee, the Advisory Committee on Medical Coverage, the Committee on Investments and its Advisory Committee, the Oracle Project Management Committee, the Joint Committee on Food Services, the TeleFood Coordination Committee, the Corporate Communication Committee, the Field Programme Committee and the Board of the Credit Union. The Office also participates in ad-hoc internal review groups, task forces, evaluation panels and so forth. It follows closely the deliberations of the Programme and Finance Committees, Council and Conference, and its senior members meet from time to time with senior officials and representatives from Member Nations, the External Auditor, the Joint Inspection Unit and colleagues from oversight functions in other UN and international organizations.
61. Attachment C to this report depicts the most recent staffing situation of the Office. Three professional posts were vacant at that date, two of which are in the final appointment stage. The third is at the interview stage. The Office expects that it will soon be at full strength with a well balanced team of highly qualified and experienced staff both at the professional and general service levels. However, 2002 was a difficult year with significant staff vacancies and unexpected delays in being able to fill those posts. Nonetheless, the Office compensated with the use of the various partnership programmes, short-term consultancies and work realignments where appropriate. Some summary demographic information on the Office’s staffing is contained in Attachment C.
62. Training and development continue to be important aspects of the overall management of the Office. This comprises three elements: professional audit training; language training; and training in the use of office technology. On the professional side the “on-site” seminar described in section 2 under audit outreach was highly successful. Good use was made of the facilities available within FAO for language training and for office technology training needs. One auditor is enrolled in a distance learning programme with a UK university and another on a MBA course part time at a university in Rome. Staff also participate from time to time in other training programmes arranged through the Human Resources Management Division. This commitment to training is reflected in the percentage of staff time devoted to training activities, which has grown from 2.5% in 2000 to 3% in 2001 and 3.5% in 2002. This investment in training and development will continue in the year 2003.
63. The Office continues to have regular theme-oriented staff meetings where experts both from FAO and other international organizations make presentations to the audit staff on current developments in their areas of expertise. This not only covers the traditional finance and administrative fields, but also draws on senior officers from technical divisions. In the year 2002 this included subjects such as commodities and trade, procurement, evaluation, the Oil-for-Food Programme, relations with CGIAR, the “hot topics” in Europe, and the role of the legal unit in the Human Resources Management Division.
64. A useful internal management device used in the Office is the time reporting and control system. All staff record their time in half-hour units of activity and the time sheets are reported to the Inspector-General. In this way the audit effort is monitored against the target set at the beginning of the year. The target established for 2002 was 25% for Headquarters activities, 50% for decentralized activities, and 25% for special assignments and investigations. The actual audit effort reported in 2002 was 27% for Headquarters activities, 50% for decentralized activities, and 23% for special assignments and investigations. As mentioned earlier the vast majority of the special assignments take place at Headquarters making the current audit effort a 50-50 split between Headquarters and the field.
65. In closing, the Office would once again like to express its appreciation to all levels of staff contacted in the course of its audit work, and particularly to members of management for their support and positive responses, cooperation and assistance throughout the year.
Office of the Inspector-General
Comparison of Work Performed in 2002 to Work Planned
Headquarters Activities
| Reports Issued | Work In Progress | |
|
Planned for 2002 |
||
| TeleFood Seattle 2001 | X | |
| Pension Fund Documentation | X | |
| Review of Commissary Operations | X | |
| Market Survey for the Credit Union | X | |
| Field Bank Account Reconciliations in Headquarters | X | |
| Volunteer Programme | X | |
| Proposed Reform of Travel Processing: Rate for Additional Travel Expenses | X | |
| Proposed Reform of Travel Processing: Control Implications | X | |
| Payroll Processing | X | |
| World Food Summit: five years later | X | |
| Internet Use and Security * | ||
| Headquarters Banking Transactions * | ||
|
From 2003 plan (Brought Forward) |
||
| Recruitment and Selection Policy and Procedures | X | |
|
Unplanned |
||
| FAO Retail Outlet | X | |
| Review of a Staff Member’s Educational Qualifications | X |
N.B. Due to realignment of priorities and the prevailing staffing situation, two reviews planned for 2002 and one brought forward from 2003 are still in progress.
* Two planned reviews have been deferred for later in 2003.
Office of the Inspector-General
Comparison of Work Performed in 2002 to Work Planned
Decentralized Activities
| Reports Issued | Work in Progress | |
|
Planned for 2002 |
||
| Regional, Sub-Regional Offices and Liaison Offices: | ||
| RAF – Travel Agency Arrangements | X | |
| RNE – Selected Internal Controls | X | |
| SAFR – Planning and Field Programme Support | X | |
| SAFR – Management Performance | X | |
| SAFR – Procurement Function | X | |
| SAPA - Management Performance | X | |
| SNEA – Tunis | X | |
| SLAC – Barbados* | X | |
| LOWA - Staffing | X | |
| Handover Arrangements RNE/ADG | X | |
| Handover Arrangements RAF/ADG | X | |
| FAO Representations | ||
| Handover Arrangements - Benin | X | |
| Handover Arrangements - Indonesia | X | |
| Honduras – New Arrangements for the Field Programme | X | |
| Brazil – Comprehensive Management Review | X | |
| Brazil Field Programme – Financial Arrangements | X | |
| Syria | X | |
| Nigeria | X | |
| Zimbabwe | X | |
| Botswana - Double Accreditation | X | |
| Madagascar - Multiple Accreditation | X | |
| Madagascar - Loss of Cash | X | |
| Madagascar* | X | |
| Dominican Republic | X | |
| Yemen | X | |
| Reports on specific projects and other topics | ||
| Food Insecurity and Rural Poverty in Honduras | X | |
| Sustainable Forestry in Central Honduras | X | |
| Population and Environment Education in Egypt | X | |
| National Tree Planting and Development Plan in Egypt | X | |
| Special Programme for Food Security – Water Control in Egypt | X | |
| Monitoring, Forecasting and Simulation of the Nile River | X | |
| Food Security Promotion Phase II in Comoros | X | |
| Investigation – Nigeria | X | |
| Caribbean Amblyomma Programme* | X | |
| Examination of Local Audit Scheme – Special Request | X |
N.B. Due to changing priorities and the prevailing staffing situation, seven audits of FAO Representations planned for completion 2002 were in progress in 2003. *Three of the audits in progress were reported in January 2003. One planned audit was cancelled to avoid duplication of work with External Audit.
Office of the Inspector-General
Comparison of Work Performed in 2002 to Work Planned
Special Assignments and Investigations
| Reports Issued | Work in Progress | |
|
Planned for 2002 |
||
| Health and safety in the headquarters workplace | X | |
| Language policy | X | |
| Disaster Recovery | X | |
| Author’s Contracts - Umbrella Report | X | |
| Author’s contracts in AG | X | |
| Author’s Contracts in ES | X | |
| Author’s contracts in FI | X | |
| Author’s Contracts in FO | X | |
| Author’s contracts in GI | X | |
| Author’s Contracts in SD | X | |
| Author’s Contracts in TC | X | |
| Contract Competition Waivers | X | |
| Procurement function* | ||
| Travel agency services* | ||
| Oil-for-Food Programme – Iraq - Inventory Management of Deep Well Pumps - Follow-up on Transportation Services Contracts - Local Procurement Unit - Special Human Resource Issues - Bids for Freight Transportation Contracts - Mechanization Sub-Sector Distribution Centres - Thefts in warehouses - Follow-up on Inventory Verification |
X X X X X X X X |
|
| Umbrella Review of Letters of Agreement – Policy Issues | X | |
| Gender Mainstreaming at FAO | X | |
|
Unplanned |
||
| - Special Investigation of Cable Room | X | |
| - Oil-for-Food Programme – Locally Generated Funds | X |
N.B. * Due to changing priorities and the prevailing staffing situation, the travel agency services audit was delayed to 2003, and the review of the procurement function to the next biennium to avoid duplication with the External Auditor’s plan for 2003.
Office of the Inspector-General
Major recommendations and implementation status
Headquarters Activities
| Audit Area | Major recommendation | Implementation status |
| TeleFood Seattle 2001 | Lessons learnt for future TeleFood events | Accepted by management and already used in TeleFood 2002 |
| Pension Fund Documentation | The Pension Fund in New York should provide improved information regarding withdrawal settlements | The Personnel Division has discussed the matter with the Pension Fund in New York, which is exploring ways of providing the information needed |
| Review of Commissary Operations | Procurement procedures require improvement and more complete documentation | The Office of the Inspector-General is currently performing a more detailed review of the procurement procedures in the Commissary and this matter will be reported further in 2003 |
| Market Survey for the Credit Union | Establish a marketing strategy | The Board of Directors of the Credit Union agreed. Implementation is waiting appointment of new Credit Union manager |
| Field Bank Account Reconciliations in Headquarters | Clear dormant bank accounts, improve control over clearing accounts, amend accounting for certain accounts in Iraq and review of Zero Balance account procedures | Full management agreement to the recommendations, implementation is in progress |
| Volunteer Programme | In the context of the volunteer programme, Consider developing an internship programme, and improvement required in certain administrative matters | Internship programme is under consideration. Implementation regarding administrative matters is in progress |
| Proposed Reform of Travel Processing: Rate for Additional Travel Expenses | Present alternative rates to ensure at least a cost-neutral structure | To be considered by the incoming chief of the Travel Unit in the Finance Division |
| Proposed Reform of Travel Processing: Control Implications | Improve quality of travel expense claims submitted by line units | To be considered by the incoming chief of the Travel Unit in the Finance Division |
| FAO Retail Outlet | Outsource operations to a third party | Management is undertaking a feasibility review |
| Review of a Staff Member’s Educational Qualifications | FAO should not recognize the “degree mill” from which the staff member obtained his “degree” | Human Resources Division is taking appropriate action |
Office of the Inspector-General
Major recommendations and implementation status
Decentralized Activities
| Audit Area | Major recommendation | Implementation status |
| RAF – Travel Agency Arrangements | Improve supervision of travel agency’s staff and
assess RAF's capacity to provide independent verification of travel costs and
ticketing restrictions. Obtain assistance from the travel agency to pursue negotiations with the airlines for better rates. |
In progress
|
| RNE – Selected Internal Controls | Improve internal controls over cash handling. | Implemented |
| SAFR – Planning and Field Programme Support | The Sub-regional Representative should take the
lead in promoting a multi-disciplinary environment in the office. The OCD
circular on roles and responsibilities should be reviewed and clarified.
OCD should lead a joint review of the technical staff composition of the office. |
In progress
|
| SAFR – Management Performance | SAFR should explore ways of mitigating the
impact of the local economic conditions on its purchasing power. Follow-up with
the bank to clear long-outstanding items. Strengthen the capacity of the Administrative Unit. Consider alternative arrangements for ticketing. Improve inventory management. Consider access to ATLAS and strengthen IT support. |
Implemented
In progress
Under consideration |
| SAFR – Procurement Function | Announce and fill the vacant administrative
clerk post. Ensure adequate segregation of duties in procurement and inventory functions. Improve internal controls in procurement and compliance. Assess conditions for the use of Field Purchase Orders and spending authority limits. |
Implemented
Under consideration |
| SAPA – Management Performance | Clarify government counterpart cash contribution status and accounting. Improve various administrative, accounting and budgeting procedures. | In progress |
| LOWA – Staffing | Reorganize general service staffing and duties according to actual needs. | In progress |
| Handover Arrangements:RNE/ADG | The Regional Representatives should submit terminal reports. | Under consideration |
| Handover Arrangements: RAF/ADG | The report does not contain major recommendations. | Not applicable |
| Handover Arrangements: FAO Representative Benin | The report does not contain major recommendations. | Not applicable |
| Handover Arrangements: FAO Representative Indonesia | The report does not contain major recommendations. | Not applicable |
| FAO Representation Honduras – New Arrangements for the Field Programme | A local press agent should be engaged to
formulate strategy and handle media relations.Train FAORs in the design of a
project and on impact of project support costs (PSC) rates. Annual Reports should include clear objectives for work in the year ahead, and should also include comments on accomplishments on current year’s objectives. |
GIIM has regular discussions with TC, OCD and
technical divisions on the importance of media management.In progress
Under consideration |
| FAO Representation Brazil – Comprehensive Management Review | Increase resources, both in human and technical terms. AFF should correct long-standing errors in project accounts. | The Representation has received an additional G-5 and other proposals are under discussion. Errors corrected. |
| FAO Representation Brazil –Field Programme – Financial Arrangements | Reassess the accounting and financial framework applicable to the National Execution (NEX) modality. Evaluate several accounting procedural issues (e.g., budget control, call for funds, banking arrangements) where problems were observed. AFF should field a senior staff to Brazil. | Some issues are being actively considered by the NEX ad-hoc Working Group of the Field Programme Committee. Consensus has been reached that the current situation needs to improve. AFF recently sent a senior staff to the country, who partially resolved some issues. |
| FAO Representation Syria – | A clear policy to deal with political interferences is required. | Under consideration |
| FAO Representation Nigeria – | Strengthen the administrative function. Consider
fielding an administrative officer. Improve supervision. Irregularities in administration must be explained. Additional training is required. Improve field programme development and operations management, as well as financial and administrative controls. |
FAOR was transferred and the administrative
clerk resigned. Further investigation is ongoing. Implemented
|
| FAO Representation Zimbabwe – | Improve liaison activities. Control overtime costs. | In progress |
| FAO Office Botswana - Double Accreditation | NPO grades should be reviewed. Renegotiate
Government provided facilities. Improve liaison activities. |
Implemented
|
| FAO Representation Madagascar – Multiple Accreditation | Strengthen year-end closure procedures. Monitor
expenditure, as well as use of FAO’s assets. Disseminate rules on use of
resources. Assess options to improve telecommunications. Improve field programme
development. Review terms of reference of national consultants. Undertake a cost/benefit analysis of the National Correspondent (NC) scheme. |
In progress
|
| FAO Representation Madagascar – Loss of Cash | Follow-up options to recover misappropriated funds (i.e., prosecuting in the civil and criminal courts; recovery from the bank) or write-off the loss. | Under consideration |
| Food Insecurity and Rural Poverty in Honduras | Few high level performance indicators should be set, to allow better monitoring on progress and measurement and reporting on achievements. | In progress |
| Sustainable Forestry in Central Honduras | Few high level performance indicators should be set, to allow better monitoring on progress and measurement and reporting on achievements. | In progress |
| Population and Environment Education in Egypt | Responsibility for financial management and
control over Egypt projects should be assigned to the RNE Finance Officer. Government should officially sign the project's financing agreement. Assign proper delegation of authority. |
Under consideration
|
| National Tree Planting and Development Plan in Egypt | RNE should perform all project procurements over $1,000 | A joint procurement committee, i.e., RNE and FAOR, has been established |
| Special Programme for Food Security – Water Control in Egypt | The project document should state if payments are to be made to government staff, otherwise, payments should be borne by the Government. | This will be considered when planning for new projects. |
| Monitoring, Forecasting and Simulation of the Nile River | The Project should be administratively closed.
Return surplus funds to USAID. Contracts with the National Project Director and national consultants should be amended to reflect extra payments. |
Surplus funds were returned
|
| Food Security Promotion Phase II in Comoros | Train the National Project Coordinator and the
FAO-NC on project operations. IOVs should be reviewed prior to submission to
AFF. Performance indicators should be included in the implementation plans. |
Implemented
|
| Examination of Local Audit Scheme | Major adjustments are required to the design, implementation and monitoring of the scheme to ensure that it fully achieves its objectives and costs are minimised. | The recommendations are in the course of being addressed by AFF during their own review of the scheme. |
Office of the Inspector-General
Major recommendations and implementation status
Special Assignments and Investigations
| Audit Area | Major recommendation | Implementation status |
| Disaster Recovery | Implement a comprehensive Disaster Recovery Plan in the context of an Organization-wide IT framework. | AFI management is considering the recommendations. |
| Author’s Contracts – Umbrella Report Author’s Contracts in AG Author’s Contracts in ES Author’s Contracts in FI Author’s Contracts in FO Author’s Contracts in GI Author’s Contracts in SD Author’s Contracts in TC |
Establish proper segregation of
duties; establish appropriate procedures for handling overrides of validation
messages; ensure compliance with the Administrative Manual guidelines; Enable budget holders to automatically access rates for individuals engaged under these instruments. |
Technical divisions and AFF have initiated implementation of AUD’s suggestions. |
| Contract Competition Waivers | Consider the merits of continuing the existing procedure for reviewing requests for waiver of competition. | ODG is studying the recommendations in this report, which was issued in late November 2002. |
| Oil-for-Food Programme - Inventory Management of Deep Well Pumps | Review specifications of pumps in the Distribution Plans for conformity to the pattern and speed of expected usage. | Further procurement of pumps has been deferred except for 150 submersible pumps.Sale of pumps has been initiated to reduce excess inventory. |
| Follow-up on Transportation Service Contracts | Review renewal of contracts of international staff responsible for awarding two specific transport contracts. | TCES has implemented this recommendation. |
| Local Procurement Unit | Complete rosters of contractors and
suppliers expeditiously. Enhance financial delegation to the FAOR.
New procurement procedures require approval of the Representation and AFS. |
Rosters have now been completed and
are expected to be approved shortly. Enhanced delegation has been implemented in
the FAO Representation and will be implemented in sub-offices in due course.
Revised procurement procedures currently being drafted in consultation with the Representation and AFSP. |
| Special Human Resource Issues | Close the case as no evidence
supporting reported allegations of wrongdoing with regard to local procurement
was found. Request additional international telephone and facsimile lines for procurement office in Iraq. Conduct a comprehensive assessment of human resource problems and needs of FAO staff in Iraq and recommend cost-justified solutions. Improve preparation process for travel to Iraq, ensuring sufficient time for visa and availability of necessary staff in Iraq. Consider the feasibility of establishing a small Conflict Resolution Unit at HQ. |
This case is now closed.
A mission has been fielded and AFH will act on recommendations.
|
| Bids for Freight Transportation Contracts | Evaluate bids on the basis of weighted average of freight movement and taking into account two unloadings and one loading. | Implemented. |
| Mechanization Sub-sector Distribution Centres | Design an upgraded computer programme with additional features for monitoring inventory and cash receipts. | The first programme was not found satisfactory and another one is being designed. |
| Thefts in warehouses | Initiate action against the storekeeper responsible for detected shortages. | The storekeeper has been reprimanded and warned that any further shortages would lead to dismissal. |
| Follow-up on Inventory Verification | Improve inventory verification and follow up procedures and practices. | One recommendation has been implemented and action in being taken on the others. |
| Umbrella Review of Letters of Agreement - Policy Issues | Establish a working group to reassess the administrative framework and agree on improvements. | The report, which was issued on 17 December 2002, is being considered by the responsible units. |
| Gender Mainstreaming at FAO | Identify gender-sensitive indicators in the Medium Term Plan and in the Gender and Development Plan; enhance training activity to develop a common understanding of gender policies and concepts: clarify organizational arrangements and resource implications. | SDW and PBE have taken steps to train and raise divisions’ awareness about gender outputs and the logical framework. |
| Special Investigation of Cable Room | Formalize operating procedures for the Cable Room. | Recommendation under consideration in AFI. |
N.B. Due to realignment of priorities and the prevailing staffing situation, two audits planned for 2002 and one unplanned audit were still in progress. One audit planned for 2002 has been deferred to later in 2003, and a second one to the next biennium to avoid duplication with the External Auditor’s plan for 2003.
Office of the Inspector-General
Organization Chart
January 2003
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| Secretarial Support | Administrative Support | |||||||||
|
|
|
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|
V. Brooke
K. Travers (80% G-4) |
G-3
G-3 |
C. Bricknell
M.T. Baiani (Registry) |
G-6 G-4 |
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|
|
SPECIAL |
|
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| HEADQUARTERS ACTIVITIES |
A. Lo Faso | D-1 | DECENTRALIZED ACTIVITIES |
|||||||
|
L. Elliott
vacant |
P-5
P-3 |
A. Jansson S. Saluja1 |
P-4 P-4 |
J. Cortés
D. Richards (RAP) vacant (HQ) |
P-5
P-4 P-2 |
|||||
N.B. Staffing actions in final stages for vacant posts.
__________________________
1 Stationed in Iraq with the Oil-for-Food Programme
2 EOD mid-March 2003
3 Consultant to be stationed in Afghanistan EOD 1/3/03
Office of the Inspector-General
Staffing table as at January 2003
| Grade | Male | Female | Vacant | Total | |
| Professional Audit Posts | 17 | ||||
| 1 Director | D2 | 1 | |||
| 1 Principal Auditor | D1 | 1 | |||
| 2 Senior Auditors | P5 | 1 | 1 | ||
| 1 Regional Auditor | P5 | 1 | |||
| 5 Regional Auditors* | P4 | 4 | 1 | ||
| 2 Auditors | P4 | 1 | 1 | ||
| 3 Auditors | P3 | 1 | 2 | ||
| 2 Auditors | P2 | 1 | 1 | ||
| General Service Audit Posts | 3 | ||||
| 1 Audit Assistant | G7 | 1 | |||
| 1 Audit Clerk | G6 | 1 | |||
| 1 Audit Clerk | G4 | 1 | |||
| Secretarial Support for Audit | 2 | ||||
| 1 Bilingual Typist (80%) | G3 | 1 | |||
| 1 Stenographer | G3 | 1 | |||
| Other Support Staff | 2 | ||||
| 1 Director’s Secretary | G6 | 1 | |||
| 1 Records clerk | G4 | 1 | |||
| 10 | 11 | 3 | 24 | ||
The following countries are represented in the above:
| Country | Professional | General Service | Total | |
| Headquarters | Region | |||
| Brazil | 1 | 1 | ||
| Canada | 1 | 1(RNE) | 2 | |
| India | 2(Iraq + Afghanistan) | 2 | ||
| Italy | 4 | 4 | ||
| Jamaica | 1(RAF) | 1 | ||
| Spain | 1 | 1 | ||
| Sweden | 1 | 1 | ||
| UK | 2 | 3 | 5 | |
| USA | 2 | 2 (RAP)(RLC) | 4 | |
| Vacant | 3 | 3 | ||
| 11 | 6 | 7 | 24 | |
* Includes auditor stationed in Iraq with Oil-for-Food Programme and 6 months consultant in Afghanistan