FC 109/18

Finance Committee

1. The purpose of this document is to provide an update of the status of the work of the Task Force on Accounting Standards, chaired by the UN Secretariat.

2. At its 107th Session, May 2004, the Finance Committee was informed that the UN’s High Level Committee on Management (HLCM) has adopted a “two track” approach: gradually introduce necessary changes to United Nations System Accounting Standards (UNSAS) while conducting a full review of existing international standards which could be adopted by the UN.

3. In this regard, the HLCM approved a two year project to take forward the development of Accounting Standards within the UN system to be executed in two phases:

• Phase 1: presentation of recommendations on accounting standards or best practice (or combination thereof) by early 2005, with a recommended timeline for adoption.
• Phase 2: detailed analysis of the implications of adopting the recommended standards and the impact on each organization’s financial regulations and rules and consideration of the implementation costs, including systems changes, for each organization.

4. The Task Force on Accounting Standards at its December 2004 meeting reported that due to difficulties encountered in the recruitment of the appropriate expertise from the accounting profession to help review the impact on UN accounting standards of accounting standards in the public and private sector, such as International Public Sector Accounting Standards (IPSAS) and International Accounting Standards (IAS), Phase 1 of the project was delayed.

5. It was further reported that the HLCM would be advised on the status at its next session in April 2005 and provided with a revised timetable for the completion of Phase 1, by early 2006, and completion of Phase 2 and presentation of the final report, by August 2006.

6. One member of the Task Force, World Food Programme, advised that its External Auditor was carrying out an analysis of its financial statements with a view to presenting the case for consideration of adoption of independent accounting and financial reporting standards.

7. The report of the WFP External Auditor (WFP/EB.1/2005/5.E) was issued in January 2005 and concluded that there should be benefits in adoption of an independent, widely accepted and widely understood set of accounting and financial reporting standards and recommended that World Food Programme consider the adoption of such standards.

8. FAO is in agreement with the adoption of a more stringent set of standards than is provided by the United Nations System Accounting Standards and feels that the plan outlined by the Task Force is in line with the conclusions of the above mentioned WFP External Audit report.