BoA Statement - Photo:Rina Kristmoen
Rina Kristmoen

UNDP/UNFPA/UNOPS: Board of Auditors

Joint statement by Rina Kristmoen at the Executive Board of UNDP/UNFPA/UNOPS on recommendations of the Board of Auditors, 3 February 2020.

| Executive Board

Mr. President,

We make this statement on behalf of Austria, Belgium, Botswana, Canada, France, Germany, Ireland, Japan, Nigeria, New Zealand, Rwanda, Sweden, Switzerland, United Kingdom, United States of America, and our own countries, the Kingdom of Netherlands and Norway.

I will start with general remarks, followed by organization-specific ones.

First, we would like to highlight the importance of the Board of Auditors as “the third line of defense”, whose role and work is critical for ensuring transparency and trust between the agencies and their respective executive boards.

Second, we would like to thank the Board of Auditors for their insightful recommendations which provide valuable guidance for the agencies as well as for informing executive board decisions and overall governance of the agencies. We also thank the agencies for their responses to the audit recommendations and for their updates on the status of implementation of these.

Third, we very much welcome the unqualified audit opinions that all the agencies received for the year 2018, whilst also noting that there is still some room for improvements.

Going forward we do want to re-emphasize the importance of a strong focus on measures targeted towards preventative actions and quality assurance, as well as ethics awareness raising, and protection of whistle-blowers. We welcome the agencies’ recent technology investments which hopefully will facilitate increased quality of risk-management, cost savings from more efficient procurement processes and higher compliance to internal control frameworks, as well as reducing the vulnerability to human errors.  

With regard to the UN Board of Auditors Report, we would welcome UN BOA to briefly note in future reports the most pertinent findings and recommendations from country visits. Highlights and recommendations from country visits have been included, although to a varying degree, in earlier UN BOA reports and we have found these very useful and important.

Turning to our agency specific remarks.

With regards to UNDP we appreciate the reduction in new audit recommendations issued by the Board of Auditors for 2018 compared to 2017, and also the reduction in audit recommendations of “high priority”. We welcome progress in important areas and encourage UNDP to continue its efforts in strengthening its top seven audit-related management priorities, particularly those priorities not ranked “on target”. We note and appreciate, UNDP’s holistic approach to address recurring audit issues.

We also note that the majority of the audit recommendations for 2018 was related to Human Resources Management. HACT and programme/project management are areas still in need of some improvements. Whilst noting progress in implementation of recommendations related to HACT, it is concerning that progress in the area of HR Management seems to have lost pace compared to 2017. We also note that projects funded with government cost-sharing continueto face challenges and would be interested to hear what strategies are being used to address these.

With regard to the corporate internal control framework, findings revealed different levels of maturity and awareness amongst bureaux and country offices. As seen in prior years, also for 2018 many recommendations relate to the country level. We strongly encourage UNDP to continue to strengthen the country level in a systematic manner and foster stringent compliance of UNDP’s accountability and internal control frameworks.

We hope that various initiatives taken by UNDP, like the People for 2030 strategy, the clustering of transactional activities, and technology investments in procurement, will have the intended impact in addressing audit-related priorities.

Could you please elaborate on the recommendations from your study in late 2019, where you looked into the root causes underlying recurring audit observations, and how these are informing priority actions to address recurring concerns?

The importance of competitive processes for recruitment should not be undermined as the lack of these reduces transparency and limits fair competition which ultimately reduces the talent pool available, as well as poses a risk to the credibility of the agency. Whilst we do understand that certain circumstances may require rapid action and that UNDP operates in challenging situations, we still note with concern the audit recommendation relating to improper use of exceptions for direct contracting and waiving of competitive recruitment processes. We would like to know what UNDP foresees in response to opportunities to refine the internal control framework and policies related to workforce/personnel management.

Finally, we note that UNDP has potential to further enhance its processes and procedures to ensure effective use of resources and look forward to information about how these findings will be addressed.

Thank you, Mr. President

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Regarding UNFPA we welcome the reduced number of audit recommendations for 2018 compared to 2017, and support UNFPA’s continued efforts in closing outstanding audit recommendations. We are concerned, however, that 8 out 12 audit recommendations from previous audits are still in progress of implementation given that two to three years have passed. We encourage the Board of Auditors to continue to monitor and work with management to have audit recommendations fully implemented and closed. Open audit recommendations represent a risk to the effectiveness of UNFPA’s operations.

Weaknesses in risk management has been a recurring area for UNFPA in the UN BOA reports, hence we welcome  UNFPA’s to finalization and roll-out of its “Enterprise Risk Management Policy”, as this has the potential to be a strong driver in  strengthening UNFPA’s risk management system across all operational areas. What is the expected timeline for finalization and agency-wide roll-out of this? Does UNFPA anticipate any significant barriers in rolling out this policy?

We note and welcome UNFPA’s completion of the design of the “last mile” assurance process and training programme, and the completion of the “last mile” audits of the 16 largest implementing partners. What lessons have been learned from this exercise and how will those lessons inform country-level risk management processes?

Whilst improvements in some areas are evident, and appreciated, we note that UNFPA management’s responsibility to carry out a monitoring role in various domains requires strengthening as demonstrated by recommendations to monitor system user access, workplans, the condition of the warehouse, the purchasing process and to conduct spot checks of implementing partners’ programmes. We reiterate the importance of this role to ensure effective risk management and control.

We would like UNFPA’s management to update the Board on their efforts to systematically strengthen its monitoring role so that improvements can be solid and long-lasting.

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Regarding UNOPS we appreciate the progress in closing outstanding audit recommendations in 2018 whilst also taking note of the large increase in new recommendations for 2018 compared to 2017. Most of these recommendations relate to financial management processes, particularly the areas of inventory, asset valuation and depreciation procedures.

We note that four of the new recommendations relate to the one UNOPS system. Particularly the lack of segregation of duties for procurement processes is concerning as this is a high-risk area with regards to financial mismanagement and fraud.

We would like to reiterate the need for UNOPS to develop a strategy for the utilization of the excess reserve as pointed out by the Joint Inspection Unit and the Board of Auditors in several consecutive years – and look forward to the update on this – in line with the request in Executive Board Decision 2019/20.

We note the recommendation from the UN BOA regarding the need to make gender mainstreaming an intrinsic part of the project management process and welcome the new guidelines for gender mainstreaming in projects as well as the inclusion in oneUNOPS.

We encourage UNOPS to continue the development of oneUNOPS to also enable generation of financial statements to reduce the risks of human errors and promptly address the weaknesses identified regarding segregation of duties.

Finally, we urge UNOPS to strengthen its financial management system, particularly the areas of inventory, asset valuation and depreciation procedures, and would appreciate additional information regarding any ongoing initiatives, or planned, that UNOPS is undertaking to strengthen these areas.

Regarding UNCDF we welcome the unqualified audit report for 2018 and also the effective closing of audit recommendations from previous periods.

To close,

We encourage all agencies to continue their efforts in implementing the recommendations and thank the Board of Auditors for their continuous commitment.

Thank you, Mr President.