UN Board of Auditors recommendations Status Actions taken or intended to be taken and/or recent update + Estimated time for completion Main Recommendations 09(a) Continue to implement a strict Staff In Between Assignments policy, with a view to provide every staff member with a full-time assignment in order to limit the cost for the organization (para. 14) DHRM 09 (b) Improve its treasury risk management; prepare guidelines in respect of its centralized pooling policy; and implement better segregation of duties in banking operations (para. 35). Treasury Section 09 (c) Take comprehensive steps to manage its foreign exchange risk exposure (para. 40) Treasury Section 09 (d) Incorporate into its contributions tracking system an indicator to assess the time-lag between the due date and payment of contributions, and formalize the payment due dates of pledged contribution into contractual agreements (para. 42) DER / DRRM 09(e) Update periodically the status of the bank accounts (para. 44) Finance Section 09 (f) Improve the effectiveness of the communication between the Finance Department and the Treasury Section with regard to the closing of field office bank accounts (para. 46) Treasury Section 09 (g) Fully reconcile all bank accounts in a timely manner (para. 51) Finance Section TMS part implemented, the rest is under (Centralization during 2008) (during 2008) One of the High Commissioner policy priorities is to ensure that the Office maintains an effective balance between positions and actual staffing. The comparative review mechanism, in accordance with the United Nations Staff Rules, is implemented regularly for locally recruited staff in field locations. It has also been introduced for General Service staff in Headquarters, and renewed efforts are underway to find a sustainable solution to the complex problem of Indefinite-Appointment holders who are not appointed to regular positions. UNHCR is currently looking into the budget of the working and non-working SIBAs with the aim to understand the reasons behind the increase that was observed in 2007. This will allow UNHCR to develop preventive measures to ensure maximum control over these budgets, and in the process minimize the charges against them. Update of June 08 While the Treasury Management System (TMS) was implemented on 12 November 2007, the of global Centralization will be staged by region throughout 2008. The TMS functionality will permit more effective mitigation of the foreign exchange risk derived from both balance sheet and income and expenditure exposures, through global system-enabled cash flow forecasting and positioning. UNHCR s contributions are voluntary and are negotiated accordingly. Pledges pending payment are regularly monitored through PeopleSoft reports. Draw-down schedules exist for some major donor Governments. The draw-down on pledges is advanced whenever possible, and regularly reviewed. UNHCR is continuing to promote donor commitment to specific payment dates for pledged contributions within contractual agreements, in order to improve the predictability in timing of the receipt of pledged contributions and to encourage the early payment of pledges. UNHCR agrees with the Board s recommendation and action will be taken accordingly. To be looked at again in the first quarter of 2009. Update July 08 UNHCR agrees with this recommendation. The integrated tasks and duties derived from banking operations between Treasury and Finance will be segregated through the allocation of system-based roles and responsibilities within the MSRP Treasury Management and Finance systems. UNHCR agrees with this recommendation. With automated on-line reconciliation available to all offices by the end of 2007, UNHCR is better equipped to ensure timely and accurate bank account reconciliation. In 2007, UNHCR is monitoring field offices timely compliance on a monthly basis and following up any instances of noncompliance with direct instructions to Representatives. 04/09/2008 1
09 (h) Introduce controls to avoid negative balances on petty cash accounts (para. 54) Finance Section 09 (j) UNHCR should a) significantly increase the proportion of audit certificates received in respect of implementing partners expenditure; (b) shorten the deadline for the submission if audit certificates and continue to improve its statistical monitoring of audit certificates; and (c) determine overall impact on its financial position of qualified audit certificates and reflect this impact in its financial statements as needed (para. 60) Controller s Office & Finance Section 09 (k) Take all necessary steps to secure reasonable assurance on the reported use of funds by implementing partners prior to the final audit of its financial statements and (b) to disclose any relevant concerns regarding this usage in the notes to the financial statements (para. 62) Controller s Office & Finance Section 09 (l) Strengthen the monitoring of sub-projects and ensure that adequate records are maintained for all project assets (para. 75); Africa Bureau 9 (m) Review its process to ensure the validity of unliquidated obligations (para. 79); Finance Section For (a) & (c) (BoA agreed to disregard item b from the recommendation) Related to 09 (j) To be looked at again in the first quarter of 2009. Update Jul 08 UNHCR agrees with the Board s recommendation and has reinforced procedures for monthly monitoring of petty cash balances during 2007. Negative balances are flagged during monthly closure of accounts and appropriate corrective actions are taken accordingly. To be looked at again in the first quarter of 2009. Update July 08 a) As at 25 June 2008, the increase in the percentage of audit certification received in 2007 versus 2006 had risen sixteen-fold from 3% to 49%. Hence, in the period between 11 June and 25 June, compliance had further grown from 35% to 49%. This increase is an impressive result in the first year of the introduction of the reduced timetable for audit certification of Implementing Partners expenditures (three months instead of six months after the liquidation period, i.e. end of April 2008). It illustrates the high level of importance placed on the audit certification process by UNHCR managers and staff. When projects with liquidation periods extended past 11 March 2008 are excluded, the rate of audit certification received and recorded rises from 49% to 57%. These statistics demonstrate that UNHCR has made a successful start to the of the 2006 BoA recommendations. c) The value of qualified audit certification is mainly attributable to non-compliance with procurement procedures and the lack of supporting documentation for payments. In cases where audit reports are qualified, the Financial Control Section is advising Field Offices and Desks on appropriate strategy and will ensure that recommendations contained in the audit report are implemented by listing all the observations in a matrix and requesting Field Offices to confirm compliance. At this early stage, UNHCR considers that it is premature to make accounting adjustments to the 2007 accounts related to 2007 audit certificates with a qualified audit opinion. These adjustments should be made only after conducting a thorough analysis and justification; therefore they can be reviewed only in the year following the accounting year under audit. UNHCR considers that its Sub-Project Monitoring Reports (SPMRs) constitute the fundamental internal management tool and process for the verification of the use of funds by implementing partners (IP). IP audit certification is a complementary tool to examine the appropriate use of funds further, and as an additional independent basis for the identification of deficiencies that may require closer monitoring or remedial follow-up, and which might otherwise fall beyond the reach of the OIOS audit plan. b) UNHCR will not be able to disclose information about the IP use of funds, based on IP audit certification process, as by the time of closure of accounts it will be premature to conclude any analytical information on the process, as explained in our reply to recommendation 9 (j) c) above. The Representation carried out physical verification of all assets in refugee hosting areas in February and March 2008. Assets in good condition have been kept whilst those in bad condition have been compiled for disposal. Unliquidated obligations include the use of accounting estimates, where exact amounts are unknown at the yearend deadline. Accordingly, there will continue to be adjustments to these estimates up to final settlement. In addition, operational circumstances in the field require, in some instances, the postponement of certain activities. That was the case for some of the 2006 projects in United Rep. of Tanzania; the reasons for the delays have been explained to the Auditors in the context of the responses to the Board with regard to that specific audit revision. 04/09/2008 2
9 (n) Complete the data clean-up exercise of the asset database started in 2005 (para. 83); 9 (o) Periodically reconcile the amount of the purchases recorded in the accounts and those entered into the database (para. 85); 9 (p) Pursue its efforts to perform timely annual physical inventories (para. 89); 9 (q) Update the assets database and report the decisions made by local asset management boards in a timely manner (para. 94); 9 (r) Reduce the time between changes in country assessment and their approval (para. 130); ESS/DOS Further efforts are being made to ensure that only valid unliquidated obligations are retained at year-end, including monthly review and follow up on purchase orders not received. In addition, significant balances at the end of the year will be further scrutinized. As of end 2007 all transactions from the old "AssetTrack" system have been imported into MSRP. This should stabilize the assets database and the clean up can start. There are approximately active 120,000 assets recorded in the database at present. The clean up will therefore take some time to complete. The AMU is due to relocate to Budapest in January 2009 and be strengthened at the same time. UNHCR sends the up-dates on procurement to field operations on a quarterly basis. In addition UNHCR conducted a follow up on assets procured but not recorded in the system. Results revealed a technical problem in MSRP, which was rectified in December 2007. New instructions were sent to field operations as part of the continuous follow up process during 2008. /validated Jul 08 UNHCR confirms that efforts continue to ensure maximum compliance with the physical verification exercise. 66% of field operations have reported completion of the exercise during 2007. However, it will be unavoidable to have less compliance by large emergency operations where volatile security situations prevail. The exercise is an ongoing process which will continue to be closely monitored. Further instructions will be issued to enhance the process of physical verification in the field during 2008. The physical verification of HQ assets for 2007 was conducted in December. /validated Jul 08 UNHCR has conducted a review of all disposal requests prepared in PeopleSoft including the Local and Headquarters Asset Management Boards LAMB/HAMB authority and the timeliness of of decisions etc. As a result of the exercise revealed that 83 % of the decisions made during the years 2004 to 2006 were implemented and cases were closed. A second round of quality control started in November 2007and will continue during 2008. A regular feed back is given to LAMBs in the field and fair discussion of the cases is conducted. In Jan. 2008, a standard format for LAMB minutes was sent to the field with a recommendation to use it in future. In 2007, 93 LAMBs were created. The remaining countries are lacking sufficient staff to form a LAMB and therefore submit their cases directly to the HAMB. A close follow up has been done on LAMB cases and minutes, and the collected information is available in Livelink. Further enhancement to the system is required in order to obtain information about agreements of transfer of ownership to implementing partners. After consultations with desks/bureaux and AHC, the crisis scanning mechanism tested in 2007 was considered too time consuming for the purpose of updating desks with an analysis (delivered by ERPS). The IASC Subworking group on early warning agreed on the establishment of the HEWS (Humanitarian Early Warning System) Web Phase II, which is a IASC based early warning/preparedness mechanism and an inter-agency effort uniting UNICEF, WHO, WFP, and OCHA to build phase II of the HEWS Web project. While phase I had targeted natural disasters, phase II will target socio political crises. The mechanism will be designed to provide humanitarian actors with a systematic sharing of information, based on A) continuously updated information of global threats, B) Facilitation of consensus on such threats in near-real time, so as to support interagency coordination at the decision making level. EPRS has so far consulted desks/bureaux/ahc on their needs and this consultation 04/09/2008 3
9 (t) Improve the accuracy of its demographic estimates and test them for reasonableness (para. 142; Africa Bureau & DIPS 9 (u) In consultation with the United Nations ethics office, request the Chief Executives Board for Coordination to address the gap in current conflict of interest policies (para. 149). LAS / DHRM OTHER RECOMMENDATIONS 66 UNHCR agreed with the Board s recommendation that it integrate all the sub-projects into the MSRP database as quickly as possible. Finance Section 68 UNHCR agreed with the Board s recommendation that it determine and address the causes of discrepancies between MSRP and Livelink. Finance Section Agreed Agreed emphasizes 1) timely and clear information, 2) support to decision makers, 3) Better coordination efforts within the mechanism. HEWS Web Phase II will target all of these issues, in a cost and time effective manner, bringing the lead time from warning to decision making substantially down. A pilot of the project which falls in three modules, A, B, C, will implement module B and C throughout rest of 2008. Funding of the pilot and the design of B and C modules is supported by the European commission's Joint Research Center. The verification of refugees using biometrics in Nakivali and Oruichinga settlements in Uganda was concluded in April 2008, after completing the Congolese influx which was the main reason to postpone from last year. Nakivale settlement is the only receiving settlement in Uganda currently consisting of eight nationalities with an increment of nearly 800 refugees per month. New arrivals are being included in the database using the continuous registration process. Similar exercise was completed in Kyaka II and being carried out in Kyangwali settlement. According to the current plan, all refugees and asylum seekers in Uganda will be verified and fixed using biometric (finger printing), issued new ration cards and family attestation (for those in the settlements), issued ID Cards (for the urban caseload) before the end of the year. This is to be line with the Regional Strategic Objectives for Africa 2007 2009 to achieve 100% in registration and documentation or profiling of persons of concern. Update of June 08 UNHCR has received the feed back from the Ethics Office (EO) in New York regarding the issue of the gap in current conflict of interest policies. The EO surmises that the "gap" can be addressed by: (i) ensuring that s/m participating in the procurement process in which family members may be involved are required to comply with the financial disclosure programme, (ii) ensuring that individuals who are not engaged in the procurement process are able to voluntarily disclose potential conflicts of interest and seek advice from the organization. and (iii) providing continued education to raise awareness of s/m of the existing staff rules. and in particular UNHCR's code of conduct as they relate to the aforementioned examples. While the EO endorses UNHCR's view that there are sufficient references in the UN rules and UNHCR's Code of conduct to address conflict of interest, some of the Guidelines will nevertheless be amended for clarity. Once the EO/NY has made the amendments to the guidelines, UNHCR will work on the next steps to strengthen the education of staff regarding issues of conflict of interest. Action has being taken to update MSRP records for implementing partner sub-projects up to 2006. The responsibility for adding IP Agreements in MSRP is passed to field offices with the MSRP roll-out up to end 2007. Where MSRP was rolled out to field offices in late 2007, further actions among Finance, Bureaux and field offices will be required to ensure that all data for 2007 IP Agreements in the MSRP records is complete. Update Feb.08 UNHCR recognizes that discrepancies exist between the two systems. As Livelink is a flat PDF file system and MSRP/PS is an online real-time data generator the means of replicating more accurate and complete data transfer between MSRP and Livelink will be further assessed during 2008 subject to availability of adequate resources within agreed priorities. 04/09/2008 4
72 The Board recommends that UNHCR review the expenditure channelled to the Uganda Office of the Prime Minister to determine whether it strictly complies with its mandate and legislative authority. Africa Bureau 98 UNHCR agreed with the Board s recommendation that it record accrued interest not yet due in the appropriate account at the end of each year. Finance Section 106 UNHCR agreed with the Board s recommendation to prepare briefing kits in a harmonized and improved format that comply with the guidelines. Executive Office 138 The Board recommends that UNHCR ensure full compliance with MOSS/MORSS regulations, especially for duty stations in phase III. FSSS/DOS An external Audit Firm was recruited to audit the 2007 accounts of all qualifying IPs including government counterpart OPM. It is interesting to note that the audit which focused on compliance with UNHCR subagreements and use of resources rendered an unqualified opinion on the accounts of OPM. Africa Bureau update of July 08 UNHCR agrees and will implement this recommendation. The Executive Office has shared the relevant instructions and guidelines on the proper form, preparation of briefing kits and talking/speaking points for the High Commissioner with all the relevant Bureaux and Divisions ahead of the HC's missions and/or meetings. These are also shared upon individual request. UNHCR monitors the Minimum Operating Security Standards (MOSS) compliance continuously as new offices are established, existing offices are relocated and Security Risk Assessments are reviewed at country level. Information is updated on a regular basis. UNHCR makes a systematic effort to verify the reliability of the information provided through the 45 UNHCR Field Safety Advisors deployed worldwide, missions by Regional Field Safety Advisors, its country security focal points where no Field Safety Advisors (FSAs) exist, and occasionally reports of Country Designated Security Officials. The comprehensive review of office security in more than 80 UNHCR offices which was launched by UNHCR in 2007 following the Algiers bombing is still ongoing. It is anticipated that by the end of 2008, a comprehensive and detailed analysis of the mitigating measures, including MOSS would be established. Progress in the of the survey has been conditioned by the changing Security Risk Assessments (SRAs) and subsequently MOSS standards during the period under review In an attempt to address the MOSS compliance issues, UNHCR has launched a review of its internal budgeting procedures relating to security with bureaux, DFAM, and DRRM. The quality of surveys conducted has also been improved to contain specific questions on all items of MOSS compliance. 04/09/2008 5