VZCZCXYZ0001
RR RUEHWEB

DE RUEHGV #0598/01 2011017
ZNR UUUUU ZZH
R 201017Z JUL 09
FM USMISSION GENEVA
TO RUEHC/SECSTATE WASHDC 8877
RUCPDC/NOAA WASHINGTON DC
RUEHDOI/DEPT OF INTERIOR WASHINGTON DC
INFO RUCNDT/USMISSION USUN NEW YORK 3082

UNCLAS GENEVA 000598 
 
 
SIPDIS 
 
DEPT PASS TO IO FOR DISSELKOEN 
DEPT PASS TO NOAA FOR DTHOMPSON 
 
E.O. 12958: N/A 
 
TAGS: EFIN WMO SENV ENRG UN
SUBJECT:  WMO FINANCIAL ADVISORY COMMITTEE REPORT 
 
¶1.  SUMMARY:  The 28th Session of the World Meteorological 
Organization's (WMO) Financial Advisory Committee (FINAC) met prior 
to the June WMO Executive Council (EC) Meeting.  FINAC-28 tracked 
closely with the EC agenda.  Significant discussion centered on the 
need for a budget increase if the WMO is to continue to credibly 
contribute to climate science and to enhance capabilities of 
National Meteorological and Hydrological Services (NMHS). The 
Secretary General (SG) stated that 13 years of zero nominal growth 
(ZNG) were affecting the organization's ability to implement 
programs.  In general, the global economic crisis loomed over issues 
such as an unlikely increase in the budget, any impact on the 
Working Capital Fund, and payroll reserves.  END SUMMARY. 
 
 ¶2. Dr. Jack Hayes, the U.S. Permanent Representative to the WMO, 
led the U.S. FINAC-28 delegation.  Although FINAC is held on the 
margins of the EC, it is a body of the WMO Congress and as such in 
accordance with the WMO convention Dr. Hayes serves as a 
representative of the U.S. government.  This is in contrast to the 
EC where Dr. Hayes serves in his individual capacity in accordance 
with the relevant organizational rules.  Major agenda items 
included: 
-  the report from the Audit Committee, 
-  implementation of the International Public Sector Accounting 
Standards (IPSAS), 
-  a proposal to increase the load on payroll reserves for 
recruitment, termination costs, and after-service health insurance 
benefits, 
-  a proposal to finance the increase in the capital of the WCF, 
-  the interim financial situation and status of Members' 
contributions, 
-  a review of budget proposals for 2010-2011, including high 
priority activities funded with surplus from 14th financial period, 
and 
-  the preliminary discussion on the budget for the 16th financial 
period (2011-15). 
 
¶3.  Overall, the WMO has made significant strides towards promoting 
transparency and good governance practices within the organization. 
The U.S. has worked with the WMO to ensure that various policies 
have been instituted and structures put in place that can monitor 
and evaluate the running of the WMO.  For example, the EC in recent 
past has approved policies concerning financial disclosure reports 
for certain staff, as well as deciding to open the EC and its 
relevant working group meetings to all WMO Members States. 
Additionally, the WMO Secretariat has worked well with the WMO Audit 
Committee (established previously as a result of U.S. efforts) to 
ensure proper oversight of the organization.  This has been a 
successful model and resulted in the WMO, at least on paper, being 
in the forefront of other UN organizations on matters such as the 
establishment of an ethics officer and the drafting of annual 
accountability reports, among other things.  The WMO has also taken 
significant measures to safeguard against fraud by reorganizing and 
combining the internal oversight function into a strengthened 
Internal Oversight Office or IOO.  These are all very positive steps 
toward instituting a culture of financial and managerial practices 
that are sound, as well as efficient and effective. 
 
 
Agenda Highlights 
------------------------ 
¶4.  Audit Committee.  Following the trend seen in the bi-annual 
Audit Committee meetings, the WMO continues to make timely advances 
on recommendations based on the results of the reports from both the 
internal and external auditors.  The external audit of WMO financial 
statements "revealed no material errors to the validity of financial 
statements."  The external auditor further stated that "there is no 
problem with the figures and that the Secretariat may rely on the 
accounts presented today."  He commended the WMO for reducing the 
time taken to deliver the financial statements and stated that 
quicker reporting reflects successful application of a more 
stringent reporting process and provides for closer monitoring of 
balances.  He further stated that efficient reporting will also help 
WMO as they proceed forward with the implementation of IPSAS.  The 
auditor noted that the WMO does not have a process in place to track 
expenditures by expected result.  During the EC, the U.S. proposal 
was adopted, which requires that future recommendations of the Joint 
Inspection Unit, Internal Oversight Office, and External Auditor 
accepted by the Secretary General be assigned to a responsible party 
within WMO Secretariat and an official timetable set for completion 
of each recommendation.  The proposal also calls the Secretary 
General to continue to provide members of the Audit Committee with a 
list of all recommendations made during the current and previous 
years, along with the status of implementation for each 
recommendation, and if rejected, justification for such action. 
 
¶5.  International Public Sector Accounting Standards (IPSAS).  IPSAS 
is on target for implementation on January 1, 2010.  WMO is expected 
to be one of the first UN agencies to achieve this milestone as 
originally scheduled.  Under IPSAS, true assets and liabilities will 
be more transparent and facilitate greater comparability over time 
between agencies in the UN system. The Secretary General's 
recommendations to facilitate IPSAS were approved and the U.S. 
joined consensus. 
 
¶6.  Payroll. Once the WMO moves to IPSAS, health insurance liability 
will be included as a liability on the balance sheet; currently it 
is considered an extra-budgetary liability.  There is currently an 
estimated 79 million Swiss Francs (CHF) in liability; however it is 
important to note, that this liability is paid out over time on an 
as-needed basis and will not be due in full when IPSAS is adopted in 
¶2010.  In response to this shortfall the EC approved the 
Secretary-General's proposals to increase the charges on payroll 
costs for the funding of the reserve for after-service health 
insurance benefits from 2 to 3 percent.  Separately, the EC approved 
the Secretary-General's proposals to increase the charges on payroll 
costs for the funding of the reserve for recruitment and termination 
benefits from 3 to 4 percent.  The USDEL supported this position. 
 
¶7.  Financing the increase in the Working Capital Fund (WCF). 
Discussion on the WCF began early in the session when the Secretary 
General noted that the global financial crises necessitated shifting 
funds into less volatile accounts, though no funds have been lost 
through poor investments the resulting interest rates are lower. 
Despite the global economic trends the USDEL was successful in 
garnering support for option B, which states that the shortfall of 
CHF 1.2 million in the capital of the WCF will be funded from 
interest income of the WCF over the 3 year financial period that 
began in 2008.  There was strong support for Option B also by Japan, 
Germany, and the UK.  The point was also made that the WCF has not 
been used in recent years. 
 
¶8.  Member contributions.   The Secretary General reported that 
member payments "are on track" and they "expect no problems."  The 
EC adopted a recommendation urging Members in whose contributions 
are in arrears to settle their dues as early as possible so that the 
approved programmes of WMO may be implemented according to the 
established time frame and at the expected planned level. 
 
¶9.  Review of budget proposals for 2010-2011.  The EC recommended 
that the Council further review programmatic priorities before 
adopting the Draft Resolution. 
 
¶10.  Preliminary discussion on the budget for the 16th financial 
period (2011-2015).  The Secretary General began discussions by 
proposing a budget increase in real terms by 2% annually over the 
previous budget. This would translate as an annual increase of 
approximately 20 million CHF, from 245 million CHF to 265 million 
CHF annually.  The Secretary General stated that the "WMO must 
overcome deterioration of resources, since they have been held at 
zero nominal growth since 1996."  He further stated that, "to 
continue on this path would have drastic impact on programs of 
members and render them incapable of following through on their 
promised deliverables."  The U.S. was unequivocal in stating that 
all budgetary options should remain open for consideration by 
Congress in 2012.  The USDEL was successful in including the 
following language, coordinated with DOS, in the EC report: "The 
Council decides to develop three options for budget proposals for 
consideration by Congress for the sixteenth financial period 
(2012-2015).  One should reflect ZNG, another ZRG, and a third to 
include a 2% annual increase over the previous budget.  Furthermore, 
each budget proposal should include an analysis of the impacts on 
the achievement of expected results." 
 
¶11.  There was a significant audit issue discovered in the report 
from the External Auditor, the National Audit Office (NAO) of the 
United Kingdom.  The statement containing the report of expenditure 
against appropriations (Statement IV), required by the financial 
regulations, had to be recast in 2008 since the basis for 
appropriations for the current financial period was changed from 
"programs" to "Expected Results."  For 2008, the statement by ER was 
based on management estimates rather than a process with adequate 
audit trail.  This resulted in a qualified opinion from the External 
Auditor (see EC-LXI/INF. 5, Appendix E, p.25, caption: budget 
monitoring) with recommendations 11 and 12 urging corrective action. 
 The Secretariat issued an action plan for these particular 
recommendations in EC-LXI/INF. 5 Appendix G, p. 3.  If the matter is 
not appropriately addressed it may lead to further qualified 
opinions of the financial statements.  It is critical that the 
Council follow-up with the Secretariat confirming that the issues 
raised by the NAO are addressed (see recommendation 11, in 
particular) and the action plan offered by the Secretariat will 
adequately address the concerns raised by the NAO. 
 
 
¶12.  One area of governance that State Department and NOAA will work 
together is in improving the rules and regulations governing the 
WMO's financial disclosure policies.  Currently there is a provision 
that an alternate mechanism will apply to staff at the Assistant 
Secretary General (ASG) level.  NOAA and DOS plan to work with WMO 
to revisit this policy to ensure that senior members of the WMO 
management team receive the same scrutiny as all staff required to 
complete the disclosure forms.    Moreover, DOS and NOAA plan to 
inquire as to the number of staff who are required to divest 
holdings or have their duties curtailed due to an identified 
conflict of interest based on their financial disclosure form. 
 
GRIFFITHS