Seventy-ninth session
Item 137 of the provisional agenda*
Review of the efficiency of the administrative and financial functioning of the United Nations
Activities of the Independent Audit Advisory Committee for the period from 1 August 2023 to 31 July 2024
Report of the Independent Audit Advisory Committee
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Summary |
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The present report covers the period from 1 August 2023 to 31 July 2024. During the period, the Independent Audit Advisory Committee held four sessions, which were chaired by Imran Vanker (South Africa), with Janet St. Laurent (United States of America) as Vice-Chair until 31 December 2023 and with Anton V. Kosyanenko (Russian Federation) as Vice-Chair during 2024. All members attended all of the sessions. |
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Section II of the report contains an overview of the activities of the Committee and its plans for 2025. The detailed comments, observations and conclusions of the Committee are set out in section III. |
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Contents
I. Introduction
1. The General Assembly, by its resolution , established the Independent Audit Advisory Committee as a subsidiary body to serve in an expert advisory capacity and to assist it in fulfilling its oversight responsibilities. By its resolution , the Assembly approved the terms of reference for the Committee.
2. In accordance with its terms of reference, the Committee submits an annual report containing a summary of its activities and related advice to the General Assembly. The present seventeenth annual report covers the period from 1 August 2023 to 31 July 2024.
3. The Committee is required to advise the General Assembly on the compliance of management with audit and other oversight bodies¡¯ recommendations; the overall effectiveness of the internal oversight function and risk management procedures; deficiencies in the internal control systems; the operational implications of the issues and trends set out in the financial statements and the reports of the Board of Auditors; and the appropriateness of the accounting and disclosure practices in the Organization. The Committee also advises the Assembly on the steps necessary to facilitate cooperation among the oversight bodies. Following the approval of the revised terms of reference (see annex II), the Committee will also advise the Assembly on the ethics function.
II. Activities of the Independent Audit Advisory Committee
A. Overview of the sessions of the Committee
4. During the reporting period, the Committee held four sessions. One of its sessions (the sixty-sixth session) was held at the headquarters of the Economic Commission for Latin America and the Caribbean in Santiago.
5. During the sixty-fourth session, in December 2023, the members unanimously re-elected Imran Vanker (South Africa) as Chair and elected Anton V. Kosyanenko (Russian Federation) as Vice-Chair for 2024. Furthermore, the Committee hosted the eighth meeting of the representatives (Chairs or members) of the United Nations system oversight committees to discuss best practices, lessons learned and other issues of importance to the United Nations oversight community. Additional information about the Committee can be found on its website ().
6. During the reporting period, the Committee published three reports: the Committee¡¯s annual report to the General Assembly for the period from 1 August 2022 to 31 July 2023 (); and two reports to the Assembly, through the Advisory Committee on Administrative and Budgetary Questions, on the proposed budget of the Office of Internal Oversight Services (OIOS) under the support account for peacekeeping operations for the period from 1 July 2024 to 30 June 2025 () and the proposed programme budget of OIOS for 2025 ().
B. Overview of the plans of the Committee for the fiscal year 2024/25
7. The Committee undertook its responsibilities, as set out in its terms of reference, in accordance with the scheduling of the sessions of the Advisory Committee on Administrative and Budgetary Questions and the General Assembly. The Committee will continue to schedule its sessions and activities to ensure coordinated interaction with intergovernmental bodies and the timely availability of its reports. In a preliminary review of its workplan, the Committee identified the areas that will be the main focus for each of its four sessions for fiscal year 2024/25 (see annex I).
III. Observations and recommendations of the Committee
8. Section III of the present report covers six major areas consistent with the Committee¡¯s terms of reference, namely, recommendations of United Nations oversight bodies; the effectiveness of the internal oversight function; the ethics function; risk management and the internal control framework; financial reporting; and cooperation and coordination among oversight bodies, as well as other, related topics.
A. Status of the recommendations of United Nations oversight bodies
9. The Committee is mandated to advise the General Assembly on measures to ensure the compliance of management with audit and other oversight recommendations. The Committee maintains that when the observations made by the oversight bodies are fully addressed in a timely manner, the likelihood of the Organization achieving its objectives is greatly enhanced.
10. During the reporting period, the Committee reviewed the status of implementation by management of the recommendations of United Nations oversight bodies. The Committee notes that, overall, implementation of the recommendations of the Board of Auditors, the Joint Inspection Unit and OIOS is uneven, with worrying trends in some entities. The Committee encourages management to make meaningful progress in that regard.
Board of Auditors
11. The Committee received the advance copies of the independent external audit reports of the Board of Auditors for the period ending 31 December 2023. According to the concise summary of the principal findings and conclusions contained in the reports of the Board of Auditors for the annual financial period 2023 (), the average implementation rate of outstanding prior period recommendations for the entities under the Secretariat¡¯s purview[1] was 42 per cent in 2023. As the trend analysis shows, that proportion is significantly lower than the implementation rate for entities outside the Secretariat¡¯s purview, which was 63 per cent (see figure I).
12. The rates of implementation of recommendations by underlying entities varied widely. Four entities had implementation rates under 50 per cent, including the United Nations Secretariat, at 40 per cent, and the United Nations peacekeeping operations, at 32 per cent (the lowest rate). Conversely, the United Nations Capital Development Fund had the highest implementation rate, at 100 per cent, followed by the United Nations Entity for Gender Equality and the Empowerment of Women, with 92 per cent.
Figure I
Trends in the implementation rate of recommendations of the Board of Auditors, 2019¨C2023
13. With regard to its recommendations on Secretariat operations as reported in volume I (see ), the Committee was informed that for the year ended 31 December 2023, out of the 220 prior period recommendations, 88 (40 per cent) had been assessed as fully implemented, compared with 42 per cent in 2022. A further 17 such recommendations (7.7 per cent) had been assessed as having been overtaken by events. The Committee was further informed that, of the 115 prior period recommendations that remained under implementation, 11 had been outstanding for 7 to 10 years, having been issued between 2015 and 2018.
14. With respect to its recommendations on peacekeeping operations as reported in volume II (see ), the Committee was informed that for the year ending 30 June 2023, out of the 41 prior period recommendations, 13 (32 per cent) had been assessed as fully implemented, compared with 46 per cent in the 2021/22 fiscal year. That figure represents a significant decline from the recent high of 60 per cent reported for the 2020/21 fiscal year.
15. The Committee is concerned about the declining trend in the implementation of the recommendations for volume I and volume II entities. The Committee is also concerned about the relative utility and relevance of the recommendations that have been outstanding for almost 10 years. The Committee reiterates its call for management to either expeditiously implement those recommendations or have them reassessed by the Board for relevance.
Office of Internal Oversight Services
16. In the report on its activities for the 2023/24 period ()), OIOS noted that long-term trends showed that more than 90 per cent of OIOS recommendations had been eventually implemented, with an average of 6 per cent of recommendations closed without implementation. The rate of recommendations closed without implementation was higher than the 1 per cent reported for the previous period.
17. In the report on its activities for the 2022/23 period, the Committee recommended that OIOS continue to evaluate its policy on long-outstanding recommendations with a view to analysing the root cause as to why some recommendations remained unimplemented for such a long time (, para. 24). OIOS informed the Committee that it had made recent changes to the way it formulated its recommendations, to ensure that they were recommending actions that could be implemented within 24 months. According to OIOS, those improvements were aimed at reducing the number of recommendations being closed without implementation, and at improving the overall implementation rate.
18. On the basis of its recent review of its recommendations, OIOS informed the Committee that, as at 30 June 2024, 53 per cent of the recommendations issued during the previous 12 months were considered to have been implemented ¨C an improvement over the rate of 32 per cent as at 30 June 2023.
19. The Committee acknowledges the effort being made by OIOS to ensure that OIOS recommendations are actionable within two years from issuance and urges management to ensure prompt implementation of those recommendations.
20. The Committee recalls that, in paragraph 23 of the report on its activities for the 2022/23 period (), it noted its concern regarding the risks associated with the delayed implementation of the 101 recommendations issued between 2013 and 2018 (including the 55 pre-reform recommendations) that remained outstanding. The Committee recommended that management address the matter expeditiously. The Committee considers recommendations that are more than four years old to be long outstanding and underlines that four years may be too long for recommendations that address significant risks.
21. Upon follow-up, the Committee was informed that, as at 30 June 2024, the outstanding recommendations relating to the pre-reform period had decreased from 101 to 55, and that the Management Committee had requested the entities concerned to make efforts to close all long-outstanding recommendations. OIOS subsequently informed the Committee that a further 27 recommendations from 2019 were outstanding, bringing the total number of long-outstanding recommendations as at 30 June 2024 to 82.
22. The Committee acknowledges the progress made by management in addressing long-outstanding OIOS recommendations, from the period 2013¨C2018. The Committee, however, continues to express its concern over those outstanding recommendations. The Committee will continue to monitor the associated trends.
Joint Inspection Unit
23. In its annual report for 2023 and programme of work for 2024 (), the Joint Inspection Unit noted that the average rate of acceptance of its recommendations made between 2015 and 2022 for system-wide reports and notes covering several organizations had increased (from 73.0 per cent in the period 2014¨C2021 to 76.5 per cent in the period 2015¨C2022). The Unit also noted that, during the same period, the implementation rate of recommendations for system-wide reports and notes stood at 79.4 per cent, a slight improvement over the rate of 77.6 per cent reported in the period 2014¨C2021.
24. In the report on its activities for the 2020/21 period (), the Committee had expressed its concern regarding the low acceptance rate of Joint Inspection Unit recommendations by some entities under the purview of the Secretariat, such as the United Nations Environment Programme (UNEP) and the United Nations Human Settlements Programme (UN-Habitat). The Committee subsequently recommended that the Unit, the Secretariat and the entities concerned review the root causes of the low rates of acceptance and implementation of recommendations by those entities. Since then the Committee notes that the average acceptance rate by UNEP has shown improvement.
25. In the report on its activities for the 2021/22 period (), the Committee noted the initiatives that had been put in place by stakeholders to address the Committee¡¯s recommendations. While welcoming those initiatives, the Committee underscored the importance and value of the recommendations of the Joint Inspection Unit to the Organization and looked forward to improvement in the acceptance and implementation rates of the Unit¡¯s recommendations.
26. The Committee continues to note with concern the low acceptance rate of Joint Inspection Unit recommendations by UN-Habitat, which, at 23.9 per cent, is significantly below the average acceptance rate of 76.5 per cent for Unit recommendations. The Unit reported that no information had been forthcoming from UN-Habitat regarding the status of the recommendations that had not been formally accepted. Moreover, of the 23.9 per cent that had been accepted, only 38.8 per cent had been implemented.
27. The Committee followed up with management on the status of the acceptance and implementation rates. It was informed that management had taken note of the status of acceptance and implementation rates pertaining to the Secretariat and other entities under its purview and would continue to engage with the relevant entities to enhance their implementation efforts ahead of the next annual report of the Joint Inspection Unit.
28. The Committee notes a small improvement in the acceptance and implementation rates of Joint Inspection Unit recommendations. The Committee, however, is concerned that the remedial efforts aimed at the underperforming entities have led to only limited levels of improvement in some cases. The Committee calls on the Management Committee to review and address the challenges associated with the acceptance and implementation of Joint Inspection Unit recommendations by such entities.
B. Effectiveness, efficiency and impact of the audit, investigation, inspection and evaluation activities of the Office of Internal Oversight Services
29. Under its terms of reference, the Committee has the responsibility to advise the General Assembly on aspects of internal oversight (resolution , annex, paras. 2 (c)¨C(e)). In fulfilling that mandate, the Committee has maintained its standard practice of meeting with the Under-Secretary-General for Internal Oversight Services and other senior OIOS officials during its sessions. The discussions have been focused on the OIOS workplan and budget execution, significant findings reported by OIOS, operational constraints (if any), post-incumbency, the status of implementation by management of OIOS recommendations, including critical recommendations, and the strengthening of the investigations function.
30. During the current period, the Committee continued to focus its assessment on: (a) risk-based planning, OIOS effectiveness and performance measurement; (b) the quality and impact of OIOS recommendations; (c) matters associated with the Investigations Division; and (d) the role of OIOS in the context of the 2030 Agenda for Sustainable Development. The assessment continued to be conducted against the backdrop of the OIOS priorities referred to in paragraph 3 of the report of the Committee entitled ¡°Internal oversight: proposed programme budget for 2025¡± ().
Effectiveness of the Office of Internal Oversight Services and performance measurement
External quality assessment
31. In the report on its activities for the 2014/15 period (), the Committee observed that, although all three divisions of OIOS had gone through peer reviews in recent years, the Committee was not aware of any formal reviews in which OIOS as a whole and the working relationship across the OIOS divisions had been systematically examined. Consequently, the Committee recommended a holistic review of OIOS, with a strong implementation mandate to strengthen and streamline the operations and structure of the three divisions of OIOS.
32. The Committee followed up with OIOS on the status of the overall assessment of OIOS and was informed that planning had commenced for an assessment that incorporated the results of each of the external quality assessments of the three divisions of OIOS.
33. With regard to the external quality assessment of the Investigations Division, the Committee had previously reported that the assessment had been completed. It was also reported that the assessment had led to 22 recommendations, 12 of which fell under the purview of OIOS, and that the implementation of the remaining 10 recommendations required collaboration with other organizations.
34. In the report on its activities for the 2022/23 period (), the Committee emphasized the importance of prompt implementation of external quality assessment recommendations and therefore called upon OIOS to expedite the implementation of the accepted recommendations emanating from the external quality assessment of the Investigations Division.
35. The Committee followed up with OIOS on the status of the implementation of the recommendations and was informed that 4 of the 22 recommendations had been implemented and 3 had been closed without implementation. According to OIOS, the four recommendations implemented pertained to the following: (a) reviewing the structure, location and adequacy of investigation resources; (b) engaging other entities on standards of conduct; (c) reporting on allegations of misconduct by OIOS staff; and (d) handling investigations of OIOS staff. The three recommendations that were closed without implementation pertained to policy matters.
36. OIOS further noted that, of the 15 pending recommendations, 5 recommendations pertained to Secretariat policy questions, were still under consideration and were dependent on other responsible Secretariat entities, and the remaining 10 recommendations, on internal process and resourcing, were being addressed. Of those being addressed, the Committee was informed that three recommendations (on investigation recommendation follow-up and on enhanced reporting of misconduct by senior officials) would soon be implemented. OIOS also indicated that five recommendations were dependent on the outcome of requests contained in budget proposals under the 2024/25 support account (11 positions requested, 8 approved) and the 2025 regular budget (10 positions requested) for enhancing investigative capacity, digital forensics, intake, quality assurance and protection against retaliation. According to OIOS, two recommendations (on standards of proof and proactive investigations) were being implemented.
37. With regard to the external quality assessment of the Internal Audit Division, the Committee was informed that the review had been completed, and that OIOS was found to ¡°generally conform¡± across all Institute of Internal Auditors standards. OIOS further noted that an action plan had been prepared to address identified gaps and areas for improvement. It also noted that of the nine recommendations issued by the external quality assessment review team, all but one were slated for full implementation by 31 December 2024. The remaining recommendation (on data analytics) would be implemented by 31 March 2025.
38. The Committee was further informed that the external quality assessment of the Inspection and Evaluation Division was under way and was expected to be completed in the third quarter of 2024.
39. The Committee acknowledges that some of the recommendations stemming from the external quality assessment of the Investigations Division were dependent on factors outside the control of OIOS. The Committee commends OIOS for the effort it has put into implementing the external quality assessment recommendations thus far. The Committee looks forward to the full implementation of the recommendations, which should lead to a stronger and more effective Internal Audit Division. It also looks forward to receiving the final report on the external quality assessment of the Inspection and Evaluation Division, as well as the results of the holistic review.
Performance metrics of the Office of Internal Oversight Services
40. In the report on its activities for the 2022/23 period (), the Committee reiterated its previous observation that the various metrics used by OIOS to gauge its internal and external performance did not constitute a streamlined set of metrics that could be used from year to year to compare its performance and facilitate trend analysis. The Committee therefore reiterated its recommendation that OIOS review its numerous performance metrics and identify those critical and enduring metrics that would be most useful to stakeholders in assessing the effectiveness of OIOS.
41. OIOS informed the Committee that its priority areas were a formal part of the OIOS programme strategy and were based on analysis of the Secretary-General¡¯s priorities, mandates outlined in resolutions of intergovernmental bodies and areas of high risk identified in previous periods, including risks identified by other oversight bodies. OIOS further noted that, in assessing risks and developing its priority areas, it consulted with the Management Committee, heads of entities, the Board of Auditors and the Joint Inspection Unit, as well as other relevant stakeholders. According to OIOS, those priority areas were communicated to stakeholders through the proposed programme plan, as well as through other formal and informal mechanisms and, eventually, approved by the General Assembly. OIOS also informed the Committee that, once approved, the priorities were included in the annual OIOS directive on the process for the development of the overall OIOS and divisional workplans, thereby ensuring that they were reviewed at least once a year and could be revised on the basis of emerging risks and new mandates.
42. In that regard, OIOS noted that it included markers (performance measures) for tracking individual assignments and recommendations that addressed priority areas and that it reported on key results in priority areas in the performance section of the programme plan. OIOS informed the Committee that, in addition to reporting on performance, it reported on contribution to priority areas in part I (Secretariat and other non-peace operations entities) and part II (peace operations) of its annual reports. According to OIOS, an enhanced analysis of results against priority areas, linked to enterprise risk management, would be included in its next annual report, which was currently being finalized.
43. The Committee appreciates the effort OIOS has put into enhancing its performance measures. In the light of the above, the Committee considers the recommendation to have been fully implemented.
Effectiveness of the investigations function
44. The Committee continued to examine some of the indicators being used by OIOS, including the timeliness of completing investigations and referrals to gauge the effectiveness of the investigations function. The Committee continued to advocate timeliness for the completion of oversight work (in the present case, investigations) as an essential element of an effective accountability system. During the reporting period, the Committee met with senior officials both at Headquarters and at a field mission. During the discussions, the main concerns of the Committee were: (a) the exponential growth in the number of cases reported; (b) the length of time taken for investigations, (c) the number of cases referred back to management; (d) the number of fraud and presumptive fraud investigations, (e) the staffing situation; and (f) the implementation of external quality assessment recommendations.
Growth in the number of investigations
45. The Committee was provided with the case intake trend analysis for the period 2017¨C2024. According to OIOS, a record was expected to be set in 2024 for the total case intake, referrals back to management and investigation decisions. As shown in the table below, between 2017 and 2024, the total case intake increased by 172 per cent, referrals by 151 per cent and investigation decisions by 251 per cent. The Committee requested that management provide reasons for the high case intake. OIOS responded that it was because improvements in its awareness-raising mechanism had led to an increase in reporting of cases of sexual exploitation and abuse, sexual harassment, racial discrimination and harassment.
Office of Internal Oversight Services investigation case volume and status, 2017 compared with 2024
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2017 (number of cases) |
2024 (number of cases) |
Change (percentage) |
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Total case intake |
656 |
1 782 |
172 |
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Referrals back to management |
294 |
738 |
151 |
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Investigation decisions |
152 |
534 |
251 |
46. As noted in the reports of the Committee on the proposed budget of OIOS under the support account for the 2024/25 period (, para. 40) and on the proposed programme budget for internal oversight for 2025 (, para. 38), the increases indicated above had put pressure on the resources available to OIOS, leading the Committee to recommend increasing the resources for the Investigations Division.
47. The large number of cases referred back to management is of concern to the Committee, and the Committee plans to consider the matter in more depth during future sessions. The cases that were referred back to management represented a significant percentage of the total case intake by OIOS. Moreover, OIOS indicated that the situation had also placed a strain on its management of the referral process. According to the OIOS investigation manual, such cases, known as ¡°category II¡± cases as they are of lower risk to the Organization, included such issues as personnel matters, traffic inquiries, simple theft, contract disputes, office management disputes, basic misuse of equipment or staff, prohibited conduct by staff and basic mismanagement issues.
48. The Committee is concerned about the trends indicated in the table above, including the resulting backlog of cases. It therefore recommends that a comprehensive review to address the increasing load of complaints and cases should be undertaken. The Committee further notes that such a review would require additional input from OIOS, management and other stakeholders, beyond that of the scope of the recent external quality assessment.
Length of investigations
49. The Committee was informed that, as at 31 March 2024, the average completion time for investigations had increased to 15.8 months, which was the highest seen since 2022, when it reached a low of less than 10 months, and a change in direction following several years of reduction in average completion time. In its report entitled ¡°Internal oversight: proposed programme budget for 2023¡±, the Committee, while aware that the timeliness of investigations was governed by several factors, such as the complexity of a case and the availability of information, reiterated its call for improvement in the average time taken to complete investigations (, para. 40).
50. The Committee continues to be of the view that timeliness of investigation is an essential element of an accountable Organization, as it minimizes impunity. The Committee is aware that improving timeliness would involve, inter alia, additional resources, which the Committee has consistently supported. The Committee, however, is also of the view that addressing the root causes of the issue would provide a more lasting solution.
Role of the Office of Internal Oversight Services in the context of the 2030 Agenda
51. The Committee was informed that analysis of the results of recent OIOS assignments had shown, inter alia, that there was a need to improve the effectiveness of planning, implementing and monitoring capacity-building activities related to the strengthening of national statistical systems, including those supporting the disaggregation of data relating to the Sustainable Development Goals. Furthermore, although the selected resident coordinator offices had delivered on their mandates in line with their strategic objectives, some improvements were needed to strengthen the capacity and efficiency of coordination mechanisms supporting the implementation of the United Nations Sustainable Development Cooperation Frameworks.
52. The Committee was also informed that OIOS evaluation activities pertaining to the Sustainable Development Goals for the period from April 2023 to June 2024 had covered four themes: peace and security, human rights, development and cross-cutting issues. According to OIOS, 13 of the 17 Sustainable Development Goals were addressed under those themes.
53. As part of its findings, OIOS stated that, although support from the Secretariat for achieving the Sustainable Development Goals had been provided both in regions of greatest need and in areas of comparative advantage, the Secretariat was not optimally placed to provide the additional support needed to accelerate progress towards achieving the Goals by 2030. OIOS also indicated that support from the Secretariat was still lagging in terms of statistical capacity. OIOS did note, however, that where support relating to the Sustainable Development Goals had been provided to Member States, it had generally been of good quality and was well aligned with national development priorities.
54. OIOS also informed the Committee of other results of its recent evaluations of progress made towards achieving the Sustainable Development Goals. With respect to the Development Coordination Office, integrated United Nations policy advice from OIOS had contributed to enhanced government capacity to advance progress on achieving the Sustainable Development Goals. The implementation of the UN?Habitat strategic plan had led to significant contributions to the improvement of the lives of beneficiaries and had left a positive impact on communities. Regarding its synthesis of evaluations of regional commissions, OIOS found that, while considerations relating to the Sustainable Development Goals and the coronavirus disease (COVID-19) had been well integrated into subprogramme workplans, the mainstreaming of other cross-cutting issues was fragmented. With regard to the synthesis of rule of law evaluations, the Committee was informed that the results of the evaluations of five peacekeeping operations confirmed the overall contribution of those operations to strengthening the rule of law, increasing access to justice and improving security, thereby contributing to sustaining peace in the relevant country or territory. Lastly, OIOS noted that country offices of the Office for the Coordination of Humanitarian Affairs contributed to meeting the humanitarian needs of affected populations and supported and strengthened the coordination of humanitarian responses despite multiple challenges.
55. The Committee commends OIOS for its efforts in incorporating the Sustainable Development Goals into its programme of work. The Committee is of the view that the lessons learned from the relevant evaluations and audits will contribute to the success of the 2030 Agenda.
C. Ethics function
56. In paragraph 65 of its resolution , the General Assembly approved a new mandate for the Committee aimed at strengthening the independence of the Ethics Office, upon direct presentation of the annual report by the Office to the Assembly, and an enhanced role for the Independent Audit Advisory Committee, to strengthen the accountability framework. In the report on its activities for 2022/23 (), the Committee indicated that it was consulting with stakeholders and would propose any potential changes to its terms of reference that might be needed to comply with the resolution.
57. The Committee¡¯s proposal is guided by the relevant General Assembly resolutions, the report of the Joint Inspection Unit, the practices of other United Nations organizations and consultations with United Nations system oversight groups.
58. The Committee is pleased to provide the revised terms of reference (see annex II) and requests that the General Assembly approve the revisions contained in articles 2 (newly added paragraphs (c) and (k)¨C(n)) and in article 11 (c).
D. Risk management and internal control framework
59. Under its current terms of reference, the Committee is mandated to advise the General Assembly on the quality and overall effectiveness of risk management procedures and on deficiencies in the internal control framework of the United Nations (Assembly resolution , annex, para. 2 (f) and (g)).
Enterprise risk management
60. The Committee has long noted that enterprise risk management is an integral and important management tool of the Organization. The Committee has emphasized that top management attention is needed to continue to actively lead enterprise risk management efforts to ensure that identifying and managing risks become standard ways of doing business across the Organization. During the current reporting period, the Committee continued to follow up with management on the progress made in making enterprise risk management a management tool that is fully embedded in the Organization.
61. The Committee was informed that, as part of the revision of the Secretariat-wide risk register, management had: (a) carried out desk reviews of relevant United Nations and external documentation and over 1,000 recommendations by oversight bodies; (b) analysed 40 entity-level risk registers, to feed into the revision of the Secretariat-wide register; (c) undertaken interviews and workshops with the heads and senior management teams of 43 entities, including 38 heads of entity; and (d) undertaken additional consultations with 21 entities on the revision of the Secretariat-wide risk register, following a preliminary review thereof by the Management Committee enterprise risk management task force.
62. As a result of that exercise, management informed the Committee that, of the 43 total risks, 14 were critical. Of the 14 risks identified as critical, the following 4 were new risks: humanitarian assistance, misinformation and crisis communication, political climate and sexual exploitation and abuse. At the same time, management indicated that, due to changes in external factors and the effectiveness of the additional risk treatment measures, some risks were no longer considered critical and had thus been downgraded.
63. The Committee also continued its practice of visiting offices away from Headquarters, in part to gain a first-hand impression of the status of enterprise risk management. The Committee continues to note progress made in implementing enterprise risk management. At the regional commission visited, there continues to be an appreciation for the enterprise risk management process. In particular, the enterprise risk management process has assisted the regional commission in its efforts to implement the 2030 Agenda and achieve the Sustainable Development Goals. Regarding the status of enterprise risk management implementation at the entity level, the Committee was informed that, of the 57 entities identified, implementation had been finalized at 52 entities and was in progress at the other 5.
64. The Committee commends management for the effort it has put in to ensure that enterprise risk management is an integral part of the accountability architecture. The Committee reiterates its prior recommendation that, to reap maximum benefit, the enterprise risk management process should be embedded in all departments and offices and linked to the performance plans of both the unit and individual staff.
Financial contributions
65. According to the revised risk register, financial contributions have been identified as among the critical risks of the Organization. According to the Controller, from whom the Committee received regular updates during the year, the key drivers for this risk include the following: (a) the challenges in liquidity planning caused by unpredictable payment patterns from Member States; and (b) cash shortfalls that exacerbate the inherent weaknesses and rigidities in budget methodologies and the regulatory framework. According to the Controller, both the regular and the peacekeeping budgets are facing challenging liquidity situations, making the management of that risk all the more urgent.
66. The Committee notes the deteriorating liquidity situation, which is disruptive to operations and has the potential to upend the Organization¡¯s programmes and missions. The Committee considers that this risk can begin to be addressed if Member States take concrete steps to address the root causes of the situation. The Committee also noted that the General Assembly is fully seized of the matter, with a view to providing working alternatives and a sustainable solution.
Alignment of the statement of internal control with the enterprise risk management process
67. Regarding the alignment of enterprise risk management and internal controls, management informed the Committee that the Enterprise Risk Management Section of the Business Transformation and Accountability Division of the Department of Management Strategy, Policy and Compliance continued to work closely with the Internal Controls Section of the Financial Policy and Internal Controls Service of the Finance Division of the Office of Programme Planning, Finance and Budget to align the controls from the risk registers at the corporate and entity levels. According to management, once the alignment is completed, the testing of those controls to support the statement of internal controls will follow. The Committee was further informed that 16 entities had had their risk registers harmonized with the internal controls framework and were being migrated to the Enterprise Risk Management module in Umoja, and that efforts were under way to continue the harmonization of the internal controls in the remaining risk registers.
68. The Committee welcomes these initiatives, which will continue to improve and strengthen the accountability system of the Organization.
Memorandum of understanding between the United Nations and the United Nations Office for Project Services
69. In the report on its activities for 2021/22 (), the Committee recommended that management quickly finalize the amended memorandum of understanding with United Nations Office for Project Services (UNOPS), replacing the memorandum of understanding from 2014. The Controller informed the Committee that the new memorandum of understanding had become effective on 1 May 2024.
70. With regard to the next steps, the Controller indicated that work was under way to address requirements relating to partner personnel services and that his Office would be engaging with key stakeholders to examine the fundamental requirements relating to human resources in order to develop a framework for UNOPS engagement.
71. The Committee welcomes the progress made and looks forward to a status update, especially on partner personnel services.
E. Financial reporting
72. During the reporting period, the Committee engaged in discussions with the Board of Auditors, the Under-Secretary-General for Management Strategy, Policy and Compliance and the Controller on issues relating to financial reporting. The issues discussed included the following: (a) the statement of internal control; (b) fraud and presumptive fraud; (c) the status of the risk mitigation plan for extrabudgetary management and implementing partners; (d) after-service health insurance liability; and (e) issues and trends apparent in the financial statements of the Organization and the reports of the Board of Auditors.
Fraud and presumptive fraud
73. With respect to fraud and presumptive fraud, as in previous years, the Committee considered the number of cases and value of reported fraud and presumptive fraud since 2019 (see figure II). Whereas the number of presumptive fraud matters averaged about 200 cases per year, the number of confirmed fraud cases proven through investigations was much lower, at about 32 cases per year. On the other hand, although the value of presumptive fraud averaged $17 million per year, the value of the confirmed fraud was negligible, averaging only $0.32 million per year. In 2023, the number of presumptive fraud matters stood at 208 cases, with an associated value of $15.36 million, whereas the number of confirmed fraud cases reported for the year was 33 cases, with a value of $0.66 million.
Figure II
Trends in fraud and presumptive fraud, 2019¨C2023
Note: For the purposes of the period covered, the volume I and volume II cycles have been combined to reflect the general trends
74. The Committee continues to raise this topic with management to encourage a better understanding of the reasons for these trends and to improve reporting. Quality reporting of the relevant data could enhance the Organisation¡¯s response to the critical risk of fraud. The Committee plans to consider this risk and its reporting in more depth during future sessions.
End-of-service liabilities
75. With respect to the end-of-service liabilities, the Committee recalls its prior comments and recommendations (see and ), in which the Committee had called upon the General Assembly to decide whether, how and to what extent the liabilities would be funded. Furthermore, during the Committee¡¯s discussions with various offices, management continued to consider the issue of employee benefits liabilities, specifically after-service health insurance as a major concern.
76. Using the concise summary based on the reports of the Board of Auditors (), the Committee extracted a five-year trend showing that after-service health insurance liabilities for the United Nations (as reported on in volume I and volume II) had peaked in 2020, then declined in 2021 and 2022 (see figure III). For 2023, however, the value increased by 8.8 per cent to $6.04 billion, from $5.5 billion in 2022. According to management, the changes in those liabilities were due largely to changes in the discount rates and to increases in health-care costs, partially offset by changes in demographics assumptions. Furthermore, the Board of Auditors reported that, for 2023, employee liabilities as a percentage of the total liabilities for the regular budget stood at 73.13 per cent.
Figure III
Trends in total after-service health insurance liabilities, 2019¨C2023
Note: 91Â鶹ÌìÃÀkeeping operations (volume II entities) have an annual financial cycle ending 30 June; numbers relating to those operations are therefore as at that date.
77. The Committee continues to note that after-service health insurance liabilities remain a significant liability and risk and is of the view that the General Assembly may wish to revisit this matter, including funding strategies.
F. Coordination and cooperation among United Nations oversight bodies
78. During the reporting period, in addition to its regularly scheduled meetings with OIOS, the Committee met with other oversight bodies, including the Joint Inspection Unit and the Board of Auditors, through its Audit Operations Committee. The dialogue allowed for the sharing of perspectives on matters of mutual concern and provided a valuable opportunity for cooperation among United Nations oversight bodies.
79. The Committee continued to seek comments from the three oversight bodies, each of which emphasized, in its comments, the existing coordination mechanisms, including the sharing of their programmes of work. In separate meetings with the Board of Auditors, the Joint Inspection Unit and OIOS, the Committee noted the positive relationship fostered through the tripartite coordination meetings of the oversight bodies and the sharing of workplans in an effort to avoid duplication.
80. The Committee continues to maintain that such coordination among the Board of Auditors, the Joint Inspection Unit and OIOS provides a valuable platform for additional opportunities for cooperation. The Committee therefore supports such cooperation and coordination among the oversight bodies to avoid both duplication and oversight gaps and to provide sufficient oversight of significant risks.
81. In December 2023, the Committee hosted the eighth meeting of the representatives of the United Nations system oversight committees. A total of 32 representatives from 22 oversight committees, from organizations within the Secretariat, the funds and programmes and the specialized agencies, attended the meeting.
82. During the meeting, discussions resumed regarding common challenges and potential identification of good practices in the work and conduct of the United Nations system oversight committees. Participants focused on the following: (a) the mental health strategies of United Nations system entities in the context of human capital in the United Nations system and the future workforce; (b) the role of oversight committees with respect to ethics functions; (c) the consistency and practices of the executive secretariats supporting oversight committees; (d) organizational culture and the role of the tone from the top; (e) general data protection regulation; and (f) continued discussion on the role of oversight bodies with respect to the environmental, social and governance reporting initiative as an element of the 2030 Agenda.
83. Following the conclusion of the meeting, the participants agreed to convey their observations outlined above to the Secretary-General, in his capacity as Chair of the United Nations System Chief Executives Board for Coordination. In his letter of reply, the Secretary-General highlighted the Organization¡¯s progress in that respect.
84. Furthermore, during its sixty-seventh session, the Committee held an interim virtual meeting of the representatives of the United Nations system oversight committees. The meeting saw a robust exchange of information on the proposal for a terms of reference for the group of oversight committees and on the agenda of its ninth meeting, to be hosted by the Universal Postal Union on 3 and 4 December 2024.
G. Cooperation and access
85. The Committee reports that it received good cooperation from OIOS and management in the Secretariat, including the Department of Management Strategy, Policy and Compliance, in discharging its responsibilities. The Committee was given appropriate access to the staff, documents and information needed to conduct its work. The Committee is pleased to report that it continued to work closely with the Joint Inspection Unit and the Audit Operations Committee of the Board of Auditors. The Committee looks forward to continued cooperation with the entities with which it interacts in order to discharge its responsibilities, as set out in its terms of reference, in a timely manner.
IV. Conclusion
86. In the context of its terms of reference, the Independent Audit Advisory Committee presents the preceding observations, comments and recommendations, as contained in paragraphs 10, 15, 19, 22, 28, 39, 43, 47, 48, 50, 55, 58, 64, 66, 68, 71, 74, 77 and 80, for the consideration of the General Assembly.
Annex I
Workplan of the Committee from 1 August 2024 to 31 July 2025
|
Session |
Key focus area |
Intergovernmental consideration of the report of the Committee |
|
|
|
|
|
Sixty-eighth |
Review of the 2025 workplan of the Office of Internal Oversight Services (OIOS) in the light of the workplans of other oversight bodies |
Advisory Committee on Administrative and Budgetary Questions, first quarter of 2025 |
|
Proposed budget of OIOS under the support account for peacekeeping operations for the period from 1 July 2025 to 30 June 2026 |
General Assembly, second part of the resumed seventy-ninth session |
|
|
Operational implications of issues and trends in the financial statements and reports of the Board of Auditors |
|
|
|
Coordination and cooperation among oversight bodies, including hosting a coordination meeting of oversight committees |
|
|
|
Election of the Chair and Vice-Chair for 2025 |
|
|
|
Sixty-ninth |
Status of implementation of oversight bodies¡¯ recommendations |
General Assembly, second part of the resumed seventy-ninth session |
|
Report of the Committee on the OIOS support account budget |
||
|
Review of the enterprise risk management and internal control framework in the Organization |
||
|
Seventieth |
Operational implications of issues and trends in the financial statements and reports of the Board of Auditors |
Advisory Committee on Administrative and Budgetary Questions, second quarter of 2025 General Assembly, main part of the eightieth session |
|
Proposed programme budget for OIOS for the year ended 31 December 2026 |
||
|
Consideration of relevant aspects of the Ethics Office programme of work |
||
|
Coordination and cooperation among oversight bodies |
||
|
Transformational projects and other emerging issues |
|
|
|
Seventy-first |
Preparation of the annual report of the Committee |
General Assembly, main part of the eightieth session |
|
Review of the enterprise risk management and internal control framework in the Organization |
||
|
Status of implementation of oversight bodies¡¯ recommendations |
||
|
Coordination and cooperation among oversight bodies |
Annex II
Terms of reference for and criteria for membership in the Independent Audit Advisory Committee
I. Terms of reference
Role
1. The Independent Audit Advisory Committee, as a subsidiary body of the General Assembly, serves in an expert advisory capacity and assists the Assembly in fulfilling its oversight responsibilities.
Responsibilities
2. The responsibilities of the Committee are:
General
(a) To advise the General Assembly on the scope, results and effectiveness of audit as well as other oversight functions;
(b) To advise the Assembly on measures to ensure the compliance of management with audit and other oversight recommendations;
(c) To advise the Assembly and the Secretary-General on matters pertaining to the ethics function; [NEW]
Internal oversight
(d) To examine the workplan of the Office of Internal Oversight Services, taking into account the workplans of the other oversight bodies, with the Under-Secretary-General for Internal Oversight Services and to advise the Assembly thereon;
(e) To review the budget proposal of the Office of Internal Oversight Services, taking into account its workplan, and to make recommendations to the Assembly through the Advisory Committee on Administrative and Budgetary Questions; the formal report of the Independent Audit Advisory Committee should be made available to the Assembly and to the Advisory Committee on Administrative and Budgetary Questions prior to their consideration of the budget;
(f) To advise the Assembly on the effectiveness, efficiency and impact of the audit activities and other oversight functions of the Office of Internal Oversight Services;
Management of risk and internal controls
(g) To advise the Assembly on the quality and overall effectiveness of risk management procedures;
(h) To advise the Assembly on deficiencies in the internal control framework of the United Nations;
Financial reporting
(i) To advise the Assembly on the operational implications for the United Nations of the issues and trends apparent in the financial statements of the Organization and the reports of the Board of Auditors;
(j) To advise the Assembly on the appropriateness of accounting policies and disclosure practices and to assess changes and risks in those policies;
Ethics [NEW SECTION]
(k) To advise the Assembly and the Secretary-General on the state and performance of the ethics function and other related matters, as needed;
(l) To review and advise the Assembly and the Secretary-General on the workplans and performance of the Ethics Office;
(m) To review and advise the Assembly and the Secretary-General on the adequacy of the ethics function, including its independence, the code of?ethics, financial disclosure and whistle-blower policies;??
(n) To provide a forum for discussing ethics-related matters;?
Other
(o) To advise the Assembly on steps to increase and facilitate cooperation among United Nations oversight bodies.
Membership
3. The Committee shall comprise five members, no two of whom shall be nationals of the same State, appointed by the General Assembly on the basis of equitable geographical representation, personal qualifications and experience.
Meetings and reporting
4. The Committee may adopt its own rules of procedure, which shall be communicated to the General Assembly. The Committee shall meet up to four times a year, in coordination with the relevant activities of the United Nations and the Assembly and in accordance with Assembly resolutions on the pattern of conferences. The Committee shall work on the basis of consensus. Any three members of the Committee shall constitute a quorum.
5. The Committee shall submit an annual report to the General Assembly containing its advice. The Committee shall also report key findings and matters of importance to the Assembly at any time. The Chairperson of the Committee shall attend hearings to respond to questions on the activities and findings of the Committee.
Conditions of service
6. The members of the Committee shall receive a per diem and shall be reimbursed for travel expenses incurred to attend the sessions of the Committee.
7. The members of the Committee shall be appointed and shall serve for three years, and can be reappointed for a second and final term of three years, with the exception of two of the initial five members of the Committee, who shall be appointed by drawing of lots to serve for four years.
Review of the terms of reference
8. The terms of reference and mandate of the Committee shall be subject to review by the General Assembly.
Secretariat support
9. The Committee shall be supported by a dedicated secretariat that will operate with autonomy similar to that of the secretariats of the Advisory Committee on Administrative and Budgetary Questions and the International Civil Service Commission.
II. Criteria for membership
Experience, qualifications and independence
10. All members of the Committee shall reflect the highest level of integrity and shall serve in their personal capacity, and in performing their duties they shall not seek or receive instructions from any Government. They shall be independent of the Board of Auditors, the Joint Inspection Unit and the Secretariat and shall not hold any position or engage in any activity that could impair their independence from the Secretariat or from companies that maintain a business relationship with the United Nations, in fact or perception.
11. All members of the Committee must have recent and relevant senior-level financial, audit and/or other oversight-related experience. Such experience should reflect, to the extent possible:
(a) Experience in preparing, auditing, analysing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues faced by the United Nations, including an understanding of relevant accepted accounting principles;
(b) An understanding of and, if possible, relevant experience in the inspection, monitoring and evaluation and investigative processes;
(c) An understanding of internal control, risk management and procedures for financial reporting and of the ethics function; [REVISED]
(d) A general understanding of the organization, structure and functioning of the United Nations.
12. Former senior United Nations Secretariat officials shall not be eligible for appointment to the Committee for five years following their separation from service. The members of the Committee shall not be eligible for appointment in the Secretariat for five years following the expiry of their terms.
Identification and selection
13. Members of the Committee shall be nominated by Member States and shall be appointed by the General Assembly, preferably from a compendium of at least ten suitably qualified candidates, with due regard being paid to equitable geographic representation. Before nominating candidates, Member States are recommended to evaluate their candidates and attest to their qualifications on the basis of paragraph?11 above on the criteria for membership in the Committee through consultation with an international organization with relevant expertise in the functions performed by audit and oversight organizations, such as the International Organization of Supreme Audit Institutions, and to make this information available to Member States.
[1] These entities include the United Nations Secretariat itself, the United Nations peacekeeping operations, the International Trade Centre, the United Nations Environment Programme, the United Nations Human Settlements Programme (UN-Habitat), the United Nations Office on Drugs and Crime and the International Residual Mechanism for Criminal Tribunals, which are covered in the concise summary of the principal findings of the Board of Auditors ().