VZCZCXYZ0034
RR RUEHWEB

DE RUCNDT #1103/01 3341942
ZNR UUUUU ZZH
R 301942Z NOV 07
FM USMISSION USUN NEW YORK
TO SECSTATE WASHDC 3238

UNCLAS USUN NEW YORK 001103 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: AORC PREL UNGA
SUBJECT: UNGA/C-5: OIOS REPORTS ON LACK OF UN-WIDE INTERNAL 
CONTROL FRAMEWORK 
 
REF: USUN NEW YORK 1099 
 
¶1. (U) The UN General Assembly Fifth Committee met in formal 
session on October 10 to hear introduction of several 
financial reports (REF). UN Undersecretary-General for 
Internal Oversight Services (OIOS) Inga-Britt Ahlenius 
presented the OIOS Annual Report (A62/281/Part 1/Add. 1), 
covering OIOS activities from July 1, 2006 to June 30, 2007, 
except for the results of OIOS peacekeeping oversight 
activities, which will be reported in Part II of the Annual 
Report during the resumed 62nd GA session. 
 
¶2. (U) During the reporting period, OIOS issued 268 oversight 
reports, including 15 reports to the GA. The reports included 
1,792 recommendations to improve internal controls, 
accountability mechanisms and organization efficiency and 
effectiveness. Of those recommendations, 960 were classified 
as critical to the UN. OIOS identified $27.8 million in 
potential savings through cost avoidance, recoveries of 
overpayments, efficiency gains and other measurable 
improvements that may be attained through implementation of 
OIOS recommendations. Actual savings and recoveries during 
the reporting period amounted to $12.8 million. The Annual 
Report addendum provided detailed analysis of the 
implementation status, and specifies that the overall 
implementation rate of OIOS recommendations achieved within 
one year of their issuance has increased by 10 per cent. The 
addendum also highlighted recommendations of concern that are 
still outstanding or were not acted upon in a timely manner 
by management. Oversight findings 
were broken down into seven risk areas, reflecting OIOS's 
adoption of a risk-based approach to prioritizing its work. 
The report findings indicate the lack of a UN-wide internal 
control framework, and that management is not uniformly and 
systematically taking responsibility for ensuring that the 
system of internal control is established and functioning 
effectively. U/SYG Ahlenius called for the adoption of a 
formal internal control framework, along with adequate 
accountability mechanisms as a front line defense to guard 
against inefficient, ineffective and unethical management of 
Member States' resources. 
 
¶3. (U) U/SYG Ahlenius also announced that the OIOS Report on 
the activities of the Procurement Task Force (PTF) for the 
18-month period ending on June 30, 2007 had recently been 
issued (A/62/272). She expressed the view that the work of 
the PTF should continue as part of a comprehensive strategy 
for strengthening the investigation function. Note: The OIOS 
Report on the PTF was introduced to the Committee on November 
¶20. 
 
¶4. (U) Regional Groups and several Member States intervened 
following U/SYG Ahlenius' formal presentation. Speakers 
included: Pakistan on behalf of the Group of 77 and China, 
Portugal on behalf of the European Union, Tanzania on behalf 
of the African Group, New Zealand on behalf of CANZ, the 
United States, Switzerland, Singapore, Cuba, and Russia. 
While Member States were encouraged by the overall increase 
in the implementation rate of OIOS recommendations, all were 
gravely concerned by non-implementation of several critical 
recommendations. All raised the issue of deficiencies in 
internal control as a serious concern. Switzerland stated 
that they "stand ready to consider how implementation 
discipline (can) further be increased" in the context of the 
Accountability Framework should there be no progress on 
implementation within the next year. Several states shared 
U/SYG Ahlenius' concerns that the OIOS funding dependence on 
extra budgetary program support accounts undermines OIOS' 
internal audit capacity. 
 
¶5. (U) In addition to the sentiments shared with other Member 
States, USUN/MR highlighted in our statement several areas of 
the OIOS Annual Report that merited special consideration. We 
noted that dialogue between OIOS and Member States has 
increased transparency and strengthened the UN. We urged the 
SYG, as head of the Chief Executives Board (CEB), to help 
facilitate the establishment of similar practices throughout 
the UN system and ensure the sharing of internal oversight 
reports with Member States. USUN/MR also urged the UN to take 
immediate steps to recover funds from the bribery and fraud 
schemes of convicted former UN procurement official Sanjaya 
Bahel. We also raised the issue that the 2008-2009 proposed 
budget does not provide funding to allow PTF to conclude its 
work, and called upon the SYG for his plan to provide 
appropriate funding for the PTF. 
 
¶6. (U) Though the PTF report was not on the agenda for 
discussion, other Member States also made reference to the 
funding issue of the Task Force. Pakistan, intervening on 
behalf of the G-77 and China, asked for details on the 
funding arrangements of the PTF, as well as the amount of 
resources already spent in carrying out procurement-related 
investigations. New Zealand on behalf of CANZ pointed out 
 
 
that OIOS is "going through a necessary period of further 
professionalization and refocusing," listing a number of OIOS 
activities, including PTF, and stated that "it is important 
for the Fifth Committee to be able to form a coherent view of 
what is expected of the OIOS and what it requires to 
deliver." Russia and Singapore stated they would comment 
further on the PTF when the Committee takes up the PTF report 
for discussion on November 20. 
 
¶7. (U) U.S. Statement - 
 
The United States Delegation would like to thank Under 
Secretary-General Inga-Britt Ahlenius for her presentation of 
 
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the annual report on the work of the Office of Internal 
Oversight Services (OIOS). The work of OIOS continues to be 
of critical importance to the ongoing viability of the United 
Nations. OIOS has played and will continue to play a central 
role in enhancing the effectiveness of all UN programs by 
exercising appropriate internal oversight, by promoting 
responsible administration of resources, and by identifying 
instances of abuse, fraud, and mismanagement if and when they 
occur, as well as relevant measures to correct such actions. 
In this regard, OIOS plays an active role in assisting the UN 
to operate according to the highest standards of efficiency, 
competence, and integrity. 
 
The United States commends OIOS for improvements in its 
annual report that have made it more readable and 
user-friendly. In particular, the presentation of OIOS' 
findings by risk area is a welcome and helpful approach that 
provides Member States with a better understanding of those 
aspects of the Organization's work that involve significant 
risk. 
 
In the preface to this year's report, Under Secretary-General 
Ahlenius notes that the United Nations does not yet have a 
formal and structured internal control framework to ensure 
that financial resources are being handled effectively and 
that the Organization's objectives are being met. As Under 
Secretary-General Ahlenius points out, this serious 
 
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deficiency in internal control has left the UN susceptible to 
mismanagement and fraud as demonstrated by various abuses and 
scandals that have come to light in the past few years. 
 
The United States believes it is essential that an internal 
control framework for the Organization be adopted as soon as 
possible. In this regard, we strongly urge the Secretariat to 
complete and circulate to Member States the reports on risk 
management and accountability that were requested by the 
General Assembly in previous sessions. It is essential that 
we take action on this matter, as Under Secretary-General 
Ahlenius suggests, to "foster an environment conducive to 
successfully fulfilling the Organization's mission, while 
strengthening accountability and transparency." 
 
The United States welcomes the approval during the Fifth 
Committee's resumed 61st session of terms of reference for 
the Independent Audit Advisory Committee. We look forward to 
the election of IAAC members this November and the start of 
the IAAC's work in January. 
 
In particular, we look forward to the contribution that the 
IAAC will make in ensuring the operational independence of 
OIOS, including that it has sufficient resources to perform 
its core functions, free from any real or perceived influence 
by the very bodies or officials it is intended to oversee. 
The IAAC can also be helpful in ensuring that OIOS has 
adequate flexibility to deploy its resources to address 
emerging risks and changing priorities. As Under 
Secretary-General Ahlenius noted in the OIOS annual report, 
 
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the current funding structure "does not necessarily allow for 
attention to be focused on the areas of highest risk." It is 
time for Member States to address this critical shortcoming. 
 
It is clear from the reports under review (A/62/281/Part I 
and A/62/281/Part I/Add.1) that OIOS activities in the areas 
of internal audit, monitoring, inspection, evaluation, and 
investigation have been extensive. OIOS' production during 
the period from July 1, 2006, through June 30, 2007, of 268 
oversight reports - an average of more than 20 reports per 
month - containing 1,792 separate recommendations represents 
a significant output designed to improve the work of the 
Organization. We commend OIOS for identifying a total of 
$27.8 million in cost savings, even though actual savings and 
recoveries only amounted to $12.8 million. It is imperative 
that appropriate action be taken to realize the remaining 
savings recommended by OIOS but not yet recovered. 
 
As important as the nearly 1800 OIOS recommendations are to 
the work of the Organization, they have little value unless 
management takes appropriate action to implement them. We are 
encouraged to learn that the overall implementation rate of 
OIOS recommendations achieved within one year of their 
 
 
issuance increased by 10 per cent. We commend UN management 
for such progress. However, there are a number of OIOS 
recommendations identified in the Addendum to the Annual 
Report in which management has either not accepted or failed 
to take swift and adequate action. We would like to know what 
steps the Secretary-General has taken to review regularly the 
status of Secretariat action and to follow up on those 
recommendations in a timely manner with concerned Secretariat 
offices. We also would welcome information concerning the 
implementation rate during the current reporting period of 
those recommendations that OIOS has identified as "critical." 
We urge OIOS to resume providing this information in future 
reports. 
 
I would now like to take a moment to highlight several areas 
of this year's OIOS Annual Report that merit special 
consideration: 
 
We are pleased that the steps to increase transparency in 
General Assembly Resolution 59/272 have "significantly 
facilitated the dialogue between OIOS and Member States," and 
we share Under Secretary-General Ahlenius' view that this 
dialogue has strengthened the Organization. As the next step 
toward even greater transparency, we urge the 
Secretary-General, in his role as head of the Chief 
 
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Executives Board, to help facilitate the establishment of 
similar practices throughout the UN system and to ensure the 
sharing of internal oversight reports with Member States. 
 
The failure, for example, of the Organization to seek 
recovery of $589,000 associated with the procurement of 
substandard goods in violation of existing rules and 
regulations is not acceptable, nor is the decision not to 
hold staff members financially responsible for such losses. 
Similarly, the Organization needs to take immediate steps to 
recover funds from staff members and vendors who allegedly 
helped recently convicted former UN procurement official 
Sanjaya Bahel in his bribery and fraud schemes. Allowing such 
transgressions to occur without penalty sends the wrong 
message and does little to discourage those willing to 
undermine the work of the Organization in exchange for 
personal gain. 
 
The work of the Procurement Task Force (PTF) in reviewing 
cases of possible fraud and abuse remains essential to 
identifying those who may be guilty of misconduct in order to 
re-establish a sense of trust in the integrity of the 
procurement system. We were concerned to observe that the 
2008-2009 proposed budget does not provide funding to allow 
the PTF to conclude its important work. We would like to know 
what measures the Secretary-General has in mind to provide 
appropriate funding for the PTF. 
 
We look forward to a more detailed exchange of views with 
Under Secretary-General Ahlenius and her OIOS colleagues as 
well as with representatives of UN management who are the 
ones responsible for implementing the recommendations of OIOS 
and other UN oversight bodies. In this regard, we would 
welcome Under Secretary-General Ahlenius' comments concerning 
OIOS' working relationship with senior UN management. For 
example, what is the format and frequency of 
Undersecretary-General Ahlenius' interaction with the 
Secretary-General on matters relating to the work of OIOS? 
 
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We also look forward to the release later this fall of the 
OIOS report on investigations, including recommendations on 
how this key oversight function can be strengthened. 
 
OIOS has played, and will continue to play, a critical role 
in promoting the effectiveness of the United Nations. The 
United States commends Undersecretary-General Ahlenius and 
her staff for their continued efforts to foster 
accountability, transparency, and integrity in the 
Organization. 
 
Khalilzad