UN Internal Oversight: Progress Made on Independence and Staffing Issues, but Further Actions Are Needed
Published: 2011-09-20T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The United States has long advocated for strong oversight of the United Nations (UN). In 2005, GAO raised long-standing concerns that the ability of the UN's Office of Internal Oversight Services (OIOS) to carry out its mandate was constrained in scope and authority, and in 2006, GAO found that funding arrangements impeded OIOS's ability to operate independently. The U.S. Mission to the UN also expressed concern that OIOS's independence is limited in that it cannot make final hiring decisions for senior staff. In response to such concerns, the UN General Assembly in 2006 created an Independent Audit Advisory Committee (IAAC). GAO was asked to examine actions taken to address (1) impediments to OIOS's ability to provide independent oversight and (2) staffing issues that may have hindered its performance. GAO assessed OIOS's independence based on internationally recognized auditing standards, analyzed OIOS and other UN documents and data, and interviewed agency officials.
section_title: What GAO Found
paragraphs: The UN has taken worthwhile steps to enhance OIOS's independence, but certain UN funding and oversight arrangements continue to impede OIOS's ability to provide independent oversight. The General Assembly has supported OIOS's independence by creating the IAAC, which reviews OIOS's budgets and work plans for audits of the Secretariat and peacekeeping missions, and by recommending that OIOS base its planning and budget requests on risk in accordance with standards of the Institute of Internal Auditors (IIA). The General Assembly also clarified the role OIOS plays in internal oversight of funds and programs by adopting a resolution that reaffirmed the prerogatives of separately administered funds and programs to decide their own oversight mechanisms and relationship with OIOS. However, an independent review found that the arrangements for funding OIOS audits of those entities that choose to utilize its audit services do not meet IIA standards for independence. OIOS also remains constrained in its ability to issue consolidated audit reports for joint UN activities that include entities over which it does not have oversight authority, even when directed to do so by the General Assembly. High vacancy rates for authorized positions have hindered OIOS's ability to provide sufficient oversight, but the UN and OIOS are taking steps to address this issue. As of July 2011, 19 percent of OIOS staff positions were unfilled, and 30 percent were vacant for investigations of peacekeeping activities--the most challenging positions to fill. The UN's external auditor found that OIOS's staffing shortages hampered its Internal Audit Division's completion of its work plans. The UN and OIOS have made filling vacant positions a priority, and OIOS has hired 82 staff members since the start of the term of the new Under-Secretary-General for Internal Oversight Services in September 2010. The IAAC also expressed concern that vacancies at the senior management level would make it difficult for OIOS to accomplish its work. In August 2011, OIOS filled two director-level positions that had been vacant for more than a year. Further, the Under-Secretary-General has begun an initiative to strengthen OIOS's management and coordination and has requested an additional staff position for her front office. The Secretary-General has concurred with this request.
section_title: What GAO Recommends
paragraphs: GAO recommends that the Secretary of State and the U.S. Permanent Representative to the UN work with the General Assembly and member states to address remaining impediments to OIOS's ability to provide independent oversight resulting from its relationships with certain UN funds and programs and other clients. State and OIOS generally concurred with GAO's findings and recommendation. However, State misinterpreted the report's discussion of OIOS's oversight authority. GAO added language to the report to clarify this discussion.

section_title: Letter
paragraphs: In 1994, the United Nations (UN) General Assembly established the  Office of Internal Oversight Services (OIOS) for the purpose of assisting  the UN Secretary-General in fulfilling internal oversight responsibilities.  To carry out its role as the UN’s internal oversight unit, OIOS has over  300 staff positions worldwide and provides oversight services to multiple  entities within the UN system that reported a total budget of about $15  billion in 2009. In 2005, we raised concerns that OIOS’s internal audits of  the Oil for Food Program were constrained in scope and authority,  preventing auditors from scrutinizing and reporting problems with the  program. In 2006, we found that funding arrangements impeded OIOS’s  ability to operate independently, as mandated by the General Assembly  and called for by international auditing standards, severely limiting OIOS’s  ability to reallocate resources among revenue streams, locations, and  operating divisions. Additionally, we found that OIOS depended on the  provision of auditing resources by specific UN funds and programs and,  therefore, it could provide oversight only when requested by the  management of these funds and programs, hindering its ability to identify  waste, fraud, and abuse. The U.S. Mission to the UN has also expressed  concern that OIOS’s operational independence is limited in that it cannot  make final hiring decisions for high-level staff positions. In response to  these and similar issues raised by the UN’s Advisory Committee on  Administrative and Budgetary Questions, the General Assembly in  February 2006 established the Independent Audit Advisory Committee  (IAAC) to assist it in fulfilling its oversight responsibilities. One of the  IAAC’s key roles is to advise the General Assembly on the effectiveness  of OIOS by reviewing OIOS’s proposed budgets and work plans.
The United States, as the largest contributor to the UN—with assessed  and voluntary contributions totaling about $4 billion in fiscal year 2010 for  UN activities over which OIOS has audit authority—has long advocated  for strong oversight of the UN and supported the establishment of both  OIOS and the IAAC. Responding to your request for a follow-up study on  the internal oversight function at the UN, we examined actions taken to  address (1) impediments to OIOS’s ability to provide independent  oversight and (2) staffing issues that may have hindered its performance.
To address our objectives, we reviewed relevant UN and OIOS reports,  policies and procedures manuals, and other documents, and assessed  OIOS’s independence by applying internationally recognized standards  such as those of the Institute of Internal Auditors (IIA), which OIOS  formally adopted in 2002. We met with State Department officials in  Washington, D.C., and officials in New York from the U.S. Mission to the  UN. In New York, we also met with OIOS management and staff,  representatives of Secretariat departments and UN funds and programs,  and members of the UN’s external oversight body, the Board of Auditors.  We also spoke with senior OIOS audit and investigations officials based in  Geneva and Vienna via videoconference; with the IAAC Chairman in  Washington, D.C., in person and via video and teleconference; and with a  Joint Inspection Unit official in Geneva via teleconference. In addition, we  evaluated the reliability of UN and OIOS budget data taken from UN source  documents and concluded that they were sufficiently reliable to present  trends of the regular, peacekeeping, and extrabudgetary appropriations for  the biennia 1994-1995 through 2010-2011.  We used staffing data provided  by OIOS, which we determined were reliable for our purposes of presenting  staffing levels as of July 31, 2011. We conducted our work between  October 2010 and September 2011 in accordance with generally accepted  government auditing standards. Those standards require that we plan and  perform our work to obtain sufficient, appropriate evidence to provide a  reasonable basis for our findings and conclusions based on our objectives.  We believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our objectives. (App. I provides a  detailed discussion of our objectives, scope, and methodology.)
subsections: section_title: Background
subsections: section_title: Internal Oversight in the UN System
paragraphs: The UN system includes the General Assembly, the Secretariat,  peacekeeping missions throughout the world, and separately  administered funds, programs, and specialized agencies that have their  own governing bodies. The General Assembly established the  separately administered funds and programs with responsibility for  particular issues, such as children (United Nations Children’s Fund) or the  environment (United Nations Environment Program), that are funded  mainly by voluntary contributions. While separately administered, these  entities are under the authority of the Secretary-General, who appoints  the heads of each entity, but they have their own governing bodies  instead of being governed by the General Assembly. In contrast, the  heads of the specialized agencies are elected by their own governing  bodies, and these autonomous agencies do not fall under the authority of  the Secretary-General and therefore are not within OIOS’s purview.
OIOS is part of the Secretariat and is under the authority of the Secretary- General, who reports to the General Assembly. According to its mandate,  OIOS’s purpose is “to assist the Secretary-General in fulfilling his internal  oversight responsibilities in respect of the resources and staff of the  Organisation,” and OIOS’s chief executive, the Under-Secretary- General for Internal Oversight Services, reports directly to the General  Assembly. The Secretary-General has therefore stated that OIOS is  mandated to provide oversight only of activities that fall under the  Secretary-General’s authority. These include activities of the Secretariat  in New York, Geneva, Nairobi, and Vienna; the UN’s five regional  commissions; peacekeeping missions and humanitarian operations; funds  and programs administered separately under the authority of the  Secretary-General (including the Office of the United Nations High  Commissioner for Refugees, the United Nations Environment Program,  the United Nations Human Settlements Program, and the Office of the  United Nations High Commissioner for Human Rights); and other entities  that have requested OIOS services such as the United Nations  Convention to Combat Desertification and the United Nations Framework  Convention on Climate Change. In addition to the OIOS mandate, the  Financial Regulations and Rules of the United Nations designate OIOS as  the financial management internal auditor for the UN.
section_title: OIOS’s Organizational Structure
subsections: section_title: OIOS’s Three Divisions
paragraphs: OIOS is composed of the Office of the Under-Secretary-General, an  Executive Office, and three divisions, namely, Internal Audit,  Investigations, and Inspection and Evaluation. Figure 1 provides the  number and location of staff for each of these divisions as of September  2011. Appendix II provides additional information on OIOS’s locations and  staffing.
The Internal Audit Division provides  assurance and advice designed to improve and  add value to the UN’s operations. Internal audits  bring a systematic approach to evaluating and  improving the effectiveness of risk management,  control, and governance processes.
The Inspection and Evaluation Division  assists UN intergovernmental bodies and  program managers in assessing the relevance,  efficiency, effectiveness, and impact of UN  Secretariat programs. The division’s role is  twofold: to help assure that these programs  follow their mandates and to foster institutional  learning and improvement through reflection by  program officials and UN member states on  performance and results.
section_title: OIOS Funding
paragraphs: The majority of OIOS funding comes from two budgets approved by the  General Assembly: one for normal, recurrent activities such as the core  functions of the Secretariat (regular budget), and the other for  peacekeeping activities (peacekeeping account). Both the regular and  peacekeeping budgets are financed largely through assessed  contributions from member states. A small portion of the peacekeeping  account, the peacekeeping support account, provides funds for OIOS to  conduct audits, investigations, inspections, and evaluations of  peacekeeping activities.
In addition to funding from the regular budget and peacekeeping account,  OIOS receives funds from “extrabudgetary” sources. These are voluntary  contributions from member states that pay for the activities of UN funds,  programs, and other entities. The United States contributes a fixed  percentage to the regular budget, which was 25 percent prior to 2000 and  22 percent thereafter, and which funds the UN Secretariat and its various  activities and functions, including OIOS (shown in figs. 2 and 3,  respectively). For example, the United States contributed about $1.2 billion  to the UN Secretariat regular budget in the current biennium (2010-2011).  The United States also contributes annually to peacekeeping operations  and to extrabudgetary items. For example, in 2010, the United States  contributed about $2.6 billion to peacekeeping operations (about 27.3  percent of the total peacekeeping budget) and about $4.4 billion to other  UN activities, including those funded through extrabudgetary sources.
As shown in figure 4, OIOS funding from all three sources—regular  budget, peacekeeping, and extrabudgetary—has generally increased  over time. The peacekeeping portion has been the fastest growing  component over the last 10 years due to the rapid rise in peacekeeping  activities around the world, while the regular and extrabudgetary portions  have grown more slowly. OIOS’s total appropriations for the 2010-2011  biennium were over $100 million, approximately five times what they were  when OIOS was established in 1994.
OIOS’s authorized staffing levels have also increased, due in part to the  expansion of UN peacekeeping activities (see fig. 11 in app. II). We have  previously reported that OIOS has had difficulty filling its authorized staff  positions.
section_title: IAAC Role in Internal Oversight
paragraphs: The UN General Assembly strengthened internal oversight of the  Secretariat and peacekeeping missions by creating the IAAC, which is  responsible for advising the General Assembly on the scope, results, and  effectiveness of audit and other oversight functions, especially OIOS. The  IAAC is also responsible for advising the General Assembly on measures  to ensure management’s compliance with audit and other oversight  recommendations, as well as with various risk management, internal  control, operational, and accounting and disclosure issues. The  committee examines OIOS’s work plans, taking into account the work  plans of other UN oversight bodies, reviews OIOS’s proposed budget,  and makes recommendations to the General Assembly through the  Advisory Committee on Administrative and Budgetary Questions. (See  app. III for a timeline showing the preparation, approval, and execution of  OIOS’s regular budget and the IAAC’s role in that process.) The  committee also advises the General Assembly on the quality and overall  effectiveness of risk management procedures, on deficiencies in the  internal control framework of the UN, and on steps to increase and  facilitate cooperation among UN oversight bodies.
The General Assembly in 2007 appointed three members to serve a 3- year term and two members to serve a 4-year term on the IAAC, all  beginning on January 1, 2008; the committee, which generally meets four  times a year, held its first session in February 2008. It has issued 11  reports, including one on vacant positions at OIOS. The IAAC held its  15th session in July 2011, during which it discussed with the Under- Secretary-General for Internal Oversight Services a wide range of issues,  including funding arrangements, risk assessments conducted, value  provided by OIOS, and performance audits. In addition, the committee  covered standard agenda items with OIOS, such as relationships with  management, high risks identified by OIOS, coordination with various  oversight bodies, implementation of oversight recommendations, and  OIOS staff vacancies. The committee is scheduled to hold its next  meeting in December 2011.
The U.S. Mission to the UN strongly supported the establishment of the  IAAC and has also supported other initiatives to improve transparency  and accountability in the UN system. For example, it has endorsed a new  UN effort to consolidate the management of all financial, human, and  physical resources, including for peacekeeping and field missions, under  one integrated information management system.
section_title: OIOS Role Clarified and Independence Strengthened, but Some Funding and Oversight Issues Remain
paragraphs: The UN General Assembly is addressing some previously identified  impediments to OIOS’s ability to provide independent oversight, but  certain UN funding arrangements and oversight relationships continue to  limit the independence and authority of OIOS. In January 2003, the  General Assembly reaffirmed the prerogatives of separately administered  funds and programs to decide their own oversight mechanisms and their  relationship with OIOS. The UN Secretariat’s Office of Legal Affairs stated  that this action clarified the role OIOS plays in the internal oversight of  separately administered funds and programs, with these entities deciding  their own oversight mechanisms and their relationship with OIOS. An  independent review of UN oversight commissioned by the Secretary- General noted, however, that the arrangements used to fund OIOS’s  audits of those separately administered entities that choose to utilize its  audit services do not meet Institute of Internal Auditors (IIA) standards for  independence. OIOS also reported that it is not able to issue  consolidated audit reports for joint UN activities that included entities over  which OIOS does not have oversight authority, even when directed to do  so by the General Assembly.
subsections: section_title: The General Assembly Has Clarified OIOS’s Role in Internal Oversight of Funds and Programs
paragraphs: The General Assembly has addressed OIOS’s oversight authority several  times since the creation of the office (see app. IV), and the new Under- Secretary-General for Internal Oversight Services requested a legal  opinion from the UN Secretariat’s Office of Legal Affairs regarding OIOS’s  oversight responsibility for funds and programs.  OIOS’s founding  mandate states that OIOS’s purpose is to assist the Secretary-General in  fulfilling his internal oversight responsibilities with respect to the resources  and staff of the organization. The Secretary-General has stated that the  resources and staff of the organization include separately administered  organs. The General Assembly also stated that OIOS has the authority to  initiate, carry out, and report on any action that it considers necessary to  fulfill its responsibilities with regard to monitoring, internal audit,  inspection and evaluation, and investigations.  In January 2003, the  General Assembly adopted a resolution that reaffirmed the prerogatives  of separately administered funds and programs to decide their own  oversight mechanisms and their relationship with OIOS. In May 2011, in  response to her request, the UN’s Office of Legal Affairs issued a  memorandum to the Under-Secretary-General stating that the General  Assembly, through the 2003 resolution, clarified OIOS’s jurisdiction over  the funds and programs, which suggested that the involvement of OIOS  in their internal oversight functions is contingent on the consent of the  funds and programs.
According to OIOS’s website and audit manual, OIOS provides internal  oversight to UN organizations that are under the direct authority of the  Secretary-General, including departments and offices within the  Secretariat and peacekeeping missions and related offices, and to funds,  programs, and other organizations under the authority of the Secretary- General, but administered separately, that have requested OIOS’s audit  services (see fig. 5). The amounts these organizations pay for internal  oversight are based on negotiated fees for services, sometimes defined in  a memorandum of understanding (MOU). Some UN funds and programs,  including, for example, the United Nations Development Program and the  World Food Program, have their own internal oversight offices, which they  use to oversee their activities instead of using the services of OIOS.  Others, such as the International Trade Center and the Office of the  United Nations High Commissioner for Human Rights, have partial or no  internal audit capacity. Funds or programs with their own internal  oversight capacity may also use certain OIOS services, for example, if  they determine that they need outside experts to conduct a sensitive  investigation. (App. V provides a more detailed listing of UN  organizations, their relationship with OIOS, and their oversight capacity.)  According to OIOS, as of September 2011, it provided oversight to a  number of separately administered entities, including seven funds and  programs that have partial or no internal oversight capacity. The Under- Secretary-General for Internal Oversight Services told us that she is  conducting a review of all separately administered entities under the  authority of the Secretary-General to determine their internal oversight  capacities, which conforms with her mandate to support the Secretary- General in his oversight responsibilities.
The UN General Assembly has supported OIOS’s independence in audits  of organizations within the Secretariat and peacekeeping missions by  creating the Independent Audit Advisory Committee (IAAC), which  reviews OIOS’s audit plans and budget requests, and compares them to  the Secretary-General’s proposed budgets for oversight to ensure that  they reflect the resources OIOS needs to audit identified risks. In a July  2006 report to the General Assembly, OIOS noted that a main obstacle to  the independence of its audits was that it was responsible for auditing  departments in the Secretariat, such as the Department of Management,  which reviews its budget. While OIOS did not report any specific  examples of budget restrictions that had been imposed, the IAAC  mitigates the potential impairment to OIOS’s independence caused by its  dependence on funding from entities it audits by making  recommendations that would ensure that OIOS has sufficient resources,  and keeping the General Assembly apprised of issues related to OIOS’s  operational independence. The IAAC became operational in 2008 and  serves some of the functions of an independent audit committee, which  the IIA considers critical to ensuring strong and effective processes  related to independence, internal control, risk management, compliance,  ethics, and financial disclosure.
The IAAC advises the General Assembly in accordance with terms of  reference adopted by the General Assembly in 2007. The IAAC reviews a  proposed budget for internal oversight prepared by the Secretary-General  and compares that to the resources requested by OIOS. The IAAC then  provides independent comments directly to the budget committee of the  General Assembly on the resources OIOS will need (see app. III for a  timeline showing the preparation, approval, and execution of OIOS’s  regular budget). An IAAC official reported that, while part of its function is  to ensure OIOS’s independence, the committee does not automatically  take OIOS’s side in disputes over resources with the Secretary-General.
In some instances, the IAAC has advised the General Assembly that  OIOS needed more resources and independence; in others, it has  advised that OIOS resources were sufficient or excessive.
Managing the internal audit activity:  The chief     audit executive must effectively manage the     internal audit activity to ensure it adds value to     the organization.
Risk management:  The internal audit activity     must evaluate the effectiveness and contribute     to the improvement of risk management     processes.
Definition of risk management:  A process to     identify, assess, manage, and control potential     events or situations to provide reasonable     assurance regarding the achievement of the     organization’s objectives.
The UN also strengthened OIOS’s independence by supporting its efforts  to improve its risk-based planning and budgeting process in accordance  with IIA standards, but OIOS is still working to improve its risk  assessments in response to IAAC concerns. As part of the outcome of a  2005 World Summit gathering at the UN, the General Assembly  requested that the Secretary-General submit an independent external  evaluation of the auditing and oversight system of the UN, with  recommendations for improving these processes. The external review  commissioned by the Secretary-General recommended that OIOS  improve its annual risk-assessment methodology, and specified several  improvements, including building an inventory of risks in consultation with  its clients, and ranking the risk of each item in OIOS’s audit universe. As  the Secretary-General reported, in addition to ensuring that oversight  resources are prioritized for high-risk areas, a risk-based approach also  provides the General Assembly with a basis for determining the level of  risk it is willing to accept for the organization. In its 2006 report to the  General Assembly, OIOS committed to having fully risk-based work plans  by 2008. OIOS was able to meet this schedule, completing risk  assessments of approximately 90 percent of its clients from July 2007 to  September 2008. An OIOS official also reported that its separately  administered, extrabudgetary clients were included in its risk  assessments.
In 2008, its first year of operation, the IAAC reported that OIOS’s risk- assessment methodology provided a reasonable basis for establishing  preliminary work plans. However, in 2009, the IAAC reported that OIOS’s  risk assessments were not practical for determining OIOS’s resource  requirements because they did not take into account its clients’ efforts to  mitigate these risks and therefore gave an inflated estimate of risks and  oversight needs. The IAAC recommended that OIOS modify its risk  assessments to include the effect of controls that its clients have already  put in place, and in February 2011, OIOS officials reported that they are  working to change OIOS’s methodology in accordance with the  recommendations.
The Secretary-General found that OIOS’s funding arrangements with  separately administered organizations do not meet IIA standards for  independence because OIOS must negotiate oversight agreements with  these organizations without an independent review to ensure that the  oversight resources provided are sufficient. These negotiations include  discussions of the number and level of staff and resources that will be  used for an audit based on an amount of funding that the individual fund  or program is able to provide OIOS. The IAAC mitigates this potential  impediment to OIOS’s independence within the Secretariat and  peacekeeping missions; however, the IAAC Chairman stated that  although the IAAC reviews OIOS’s budget requests for separately  administered organizations, it does not have the authority to work with the  governing bodies of these entities to resolve funding issues, and thus  potential impediments to OIOS’s ability to provide independent oversight  remain.
Threats to independence must be managed at     the individual auditor, engagement, functional,     and organizational levels.
OIOS officials stated that some of these clients have provided limited  audit resources to assist OIOS in its efforts. OIOS officials emphasized  that these resource limitations have not impeded the office’s audit  activities because improvements to risk-based planning have allowed it to  better prioritize audit work and manage resources more effectively and  economically. However, OIOS officials reported that several smaller  entities that have adopted the UN financial regulations and rules (and  therefore fall under OIOS’s audit authority for financial management  audits) have not provided OIOS with resources for conducting audits.  These entities include the United Nations Convention to Combat  Desertification, the United Nations Interregional Crime and Justice  Research Institute, the United Nations Institute for Training and  Research, the United Nations Research Institute for Social Development,  the United Nations System Staff College, and the United Nations  University.
Compounding the potential for limitations to OIOS’s ability to provide  independent oversight, developing oversight relationships on a case-by- case basis has also created inconsistent funding arrangements, and the  IAAC has recommended that these funding arrangements be revised.  OIOS has MOUs formalizing its relationships with only seven of the  separately administered entities it lists as clients (see table 1). These  MOUs describe OIOS’s oversight activities and resources, but the IAAC  does not review the MOUs and they do not necessarily ensure  independent oversight. OIOS has not established formal MOUs with its  other separately administered clients, including three funds and  programs—the United Nations Environment Program, the United Nations  Human Settlements Program, and the United Nations Conference on  Trade and Development. In its report pending with the Secretariat, the  IAAC is recommending that the General Assembly reconsider OIOS’s  current funding arrangements with separately administered entities.
Since OIOS does not have oversight authority over all separately  administered UN entities, it may not be able to provide sufficient oversight  of crosscutting activities undertaken jointly by multiple UN entities even  when it is directed to do so by the General Assembly. UN humanitarian,  reconstruction, and development program activities can involve multiple  entities not covered by OIOS’s existing mandate, which have their own  internal oversight offices. For example, the United Nations Development  Group Iraq Trust Fund has 22 separate participating UN organizations,  and some of these entities also have their own internal oversight capacity.  In August 2006, an external review commissioned by the Secretary- General found that OIOS could not fully assess risks in joint activities  involving entities not covered in its mandate, and it recommended that  OIOS be given audit authority over joint activities that include entities  within its mandate, with support from other audit organizations. In 2007,  OIOS and other internal audit offices in the UN system adopted a  framework for auditing multi-donor trust funds, in part to address this  issue. The framework established that a summary report of all internal  audit work would be prepared after the completion of the individual audits,  and OIOS officials stated that OIOS has subsequently participated in a  summary report of a joint audit of the Common Humanitarian Fund for  Sudan that was issued by the United Nations Development Program.
While OIOS is not responsible for coordinating the internal oversight of all  joint activities, the General Assembly has previously directed it to prepare  the consolidated report of the audit and investigative reviews undertaken  by other UN organizations. However, in December of 2006, OIOS  reported that it had been unable to issue a consolidated report on the  audits of tsunami relief efforts, as directed by the General Assembly,  because the internal auditors of funds, programs, and specialized  agencies were unable to share their audit reports with OIOS. In 2010,  OIOS reemphasized its recommendation that the Secretary-General, in  collaboration with the heads of funds, programs, and specialized  agencies, specify in a single policy document the applicable rules and  regulations, coordination mechanisms, and reporting systems for  oversight of interagency activities. OIOS officials noted in the summer of  2011 that it still would not be possible for OIOS to issue a consolidated  audit report because funds and programs, and specialized agencies  cannot share their audit reports.
section_title: Staffing Shortages Have Hindered OIOS Performance, but Efforts Are Under Way to Address Them
paragraphs: High vacancy rates for authorized positions, for both rank-and-file and  senior staff, have historically hindered OIOS’s ability to provide sufficient  oversight. In addition, the Under-Secretary-General for Internal  Oversight Services reported that she has insufficient staff in the Office of  the Under-Secretary-General to manage OIOS’s operations. The UN  Secretariat and OIOS are taking steps to address these staffing issues.  OIOS has had staffing shortages in its three divisions, and the UN’s  external auditors (the Board of Auditors) found that these shortages  hampered the Internal Audit Division’s completion of its work plans. The  UN Secretariat and OIOS have prioritized filling vacant positions,  particularly since the start of the new Under-Secretary-General’s term in  2010. The IAAC also expressed concern that vacancies at the senior  management level would make it difficult for OIOS to accomplish its work,  but OIOS has recently filled the two director-level positions that had been  vacant for more than a year. Further, the Under-Secretary-General has  begun an initiative within OIOS to strengthen OIOS’s management and  coordination; this involves a comprehensive review of the office’s  responsibilities and capabilities, and may result in requests for additional  management resources. To facilitate this effort, the Under-Secretary- General has requested staff and additional consultant positions through  the end of 2011, and the Secretary-General has concurred with this  request.
subsections: section_title: Staffing Shortages Have Constrained OIOS’s Oversight Capabilities
paragraphs: Since our last report on OIOS in 2006, OIOS has had staffing shortages  due to authorized but unfilled positions that have limited the office’s ability  to provide sufficient oversight. (See app. VI for the status of our 2006  recommendations.) According to the UN Office of Human Resources  Management, OIOS’s vacancy rate for professional service staff was 21  percent, as of September 2010, an increase from the period between  2006 and 2009 when rates were between 12 and 17 percent. As of the  end of July 2011, OIOS data indicated that 19 percent of its approved  staff positions were unfilled and that, as shown in figure 6, the vacancy  rates were highest in the Internal Audit and Investigations Divisions, with  the highest rate (30 percent) for investigations of peacekeeping activities.  According to the Board of Auditors, staffing shortages hampered the  Internal Audit Division’s completion of its planned audits in 2008 and  2009. In 2009 and again in 2010, the IAAC also expressed concern that  the high rate of unfilled positions in OIOS would make it difficult for OIOS  to accomplish its work. The Under-Secretary-General for Internal  Oversight Services noted that this is because OIOS is required to submit  a work plan based on 100 percent of its authorized positions, rather than  filled positions. She further stated that OIOS should be allowed to submit  a work plan based on anticipated staffing shortages.
As reasons for high vacancy rates, OIOS officials cited complexities in the  hiring process, difficulty filling oversight positions in peacekeeping  missions, and a new online system for human resources management  that was unfamiliar to OIOS staff. OIOS officials stated that the human  resource policies of the Secretariat require that vacancies be posted  individually, preventing OIOS from conducting a single hiring process for  multiple positions, and that this requirement makes reducing the vacancy  rate more difficult. Compounding this problem, OIOS officials added that  when a high-level position becomes vacant, it is often filled internally,  which creates a new vacancy at a lower level. Thus, the filling of one  position can result in the creation of a new vacancy, which requires  another extended recruitment period. OIOS officials also stated that it is  difficult to fill vacant positions in peacekeeping missions due to  challenging working and living conditions. According to a high-level official  in the Investigations Division, OIOS staff in peacekeeping missions feel  isolated by their remote locations and by the fact that they are seen as  outsiders by the peacekeeping staff. Finally, OIOS officials said the  Secretariat had difficulty implementing the new online human resources  recruitment tool, and that this contributed to delays in filling vacancies in  the most recent biennium. UN Office of Human Resources Management  officials confirmed that there had been some technical problems with the  rollout of the new system and that vacancy rates had increased  systemwide.
The UN and OIOS have made reducing staffing shortages a priority. The  new Under-Secretary-General for Internal Oversight Services stated that  she has hired 82 new staff since the beginning of her term in September  2010 and has received clearance to bring in consultants to work on  recruitment through December 2011. The Under-Secretary-General noted  that the UN financial regulations and rules do not provide her the flexibility  to redeploy funds to hire consultants, as may be necessary.  To reduce  the number of unfilled positions, the Under-Secretary-General requested  an exemption from Secretariat hiring policies in order to conduct mass  recruitment to identify qualified candidates. She said that a key to this  effort would be the ability to interview and prequalify candidates at the  appropriate level in order to be able to fill multiple vacancies at once. She  reported that she did not have to use the exemption because, in the final  analysis, she was able to work within current policies to permit selection  of prequalified candidates more expeditiously.
Officials from the UN Office of Human Resources Management stated  that in April 2010, the UN revised its recruitment policy to expedite the  process for departments with high vacancy rates. The revised policy  allows department managers (including the Under-Secretary-General for  Internal Oversight Services) to place qualified candidates that are not  selected for a particular position onto a roster, which they or other  department managers can then use to fill similar vacancies without  repeating the full recruitment process. The new policy provides the Office  of Human Resources Management with incremental resources to fully  verify credentials and references of rostered candidates (with their  permission), rather than waiting until they have been selected for a  position to complete this verification process, as this can delay their  placement for up to 6 months. This revision is expected to expedite future  placement of prequalified candidates. OIOS also reported that the  difficulties with the online human resources recruitment tool are being  resolved, and that the office expects vacancy rates to decline over the  next year.
section_title: Prolonged Vacancies at Director Level Resolved, but Underlying Weakness in Hiring Process Remains
paragraphs: OIOS had prolonged vacancies at the director level in two of its three  divisions, one of which persisted for 5 years, but both positions have now  been filled. In its 2008-2009 report, the IAAC expressed concern that  these vacancies would make it difficult for OIOS to accomplish its work.  Vacancies at the director level differ from other vacancies because OIOS  cannot fill director-level vacancies without the approval of the Secretary- General, in accordance with a Secretariat-wide human resources policy.  According to this policy, the head of a department or office must submit at  least three candidates—one of which must be a woman—to the  Secretary-General, who ultimately decides which candidate to appoint.  This process was a point of contention between the previous Under- Secretary-General and the Secretary-General and resulted in prolonged  vacancies at the director level in two of OIOS’s three divisions. In 2009,  the IAAC proposed a definition of operational independence for OIOS that  includes the ability to select staff for appointment and promotion, and the  General Assembly will consider this proposal during its 66th session  starting in September 2011. However, the new Under-Secretary-General  was able to nominate candidates in accordance with the Secretariat’s  policy. She stated that the process was not overly restrictive and that it  was appropriate for an internal auditor to follow the policies of the  Secretariat. In the spring of 2011, the Secretary-General approved the  candidates she had recommended to fill both the Director of  Investigations and the Director of Inspection and Evaluation positions,  who assumed their positions in August 2011.
section_title: Under-Secretary-General for Internal Oversight Services Has Reported a Need for More Staff to Assist Her in Managing OIOS
paragraphs: Since assuming her position in September 2010, the new Under- Secretary-General for Internal Oversight Services stated that she has not  had the ability to sufficiently oversee OIOS activities because the Office of  the Under-Secretary-General is under resourced. She said she has made  reviewing all of OIOS’s reports prior to release a priority for quality  control, and that OIOS issues about 300 reports per year.  In 2011, the  Office of the Under-Secretary-General has been reviewing all reports  before they are released, but this has strained available resources. This  office is authorized seven staff, including the Under-Secretary-General,  and all of these positions are currently filled. In May 2011, the IAAC  endorsed a new Assistant Secretary-General position, which OIOS had  included in its budget submission. OIOS reported that it will request  additional staff as needed after completing a comprehensive review of  OIOS’s responsibilities and capabilities. The Under-Secretary-General  also stated that additional management staff could improve collaboration  between the divisions to better share information on risk assessments  and internal control shortfalls—such as risk of fraud identified by the  Internal Audit Division, or systemic control weaknesses found by the  Investigations Division—and is developing a team to identify potential  areas for collaboration among OIOS divisions.
section_title: Conclusions
paragraphs: The United States and other member states have long advocated a wide  range of UN management reforms that have included a call for greater  transparency and accountability throughout the UN system. As part of its  efforts to advance UN reforms, the U.S. Mission to the UN has included  among its priorities strengthening the UN’s main internal oversight body— OIOS—to better identify, obtain, and deploy the resources needed to  ensure that the billions in U.S. and international contributions are spent  wisely and that UN programs are managed effectively. Although OIOS  plays a vital role in improving the UN’s effectiveness, OIOS’s ability to  provide sufficient oversight of UN entities under the authority of the  Secretary-General is limited due to impediments to its operational  independence in providing full oversight of funds and programs and high  rates of unfilled staff positions.
The UN General Assembly has taken steps to help strengthen OIOS— most notably, by creating the IAAC to review OIOS’s budgets and work  plans for audits of entities within the Secretariat and peacekeeping  missions to ensure that OIOS resources are sufficient to address risks in  the UN. However, in order to provide essential internal oversight services,  OIOS still has to negotiate individual agreements with funds, programs,  and other clients under the authority of the Secretary-General but  administered separately and funded with extrabudgetary resources. This  practice may unduly limit the scope of OIOS’s oversight. As the United  States and other member states place new demands for fiscal discipline  and cost-effective management on the UN and the myriad funds and  programs under it, strengthening OIOS oversight will help the UN be  more responsive to these demands. Improvements in these areas can  help OIOS address some of the difficulties it faces in effectively carrying  out its mandate.
section_title: Recommendation for Executive Action
paragraphs: We recommend that the Secretary of State and the Permanent  Representative of the United States to the United Nations work with the  General Assembly and member states to address remaining impediments  to OIOS’s ability to provide independent oversight resulting from its  relationships with certain UN funds and programs and other clients.
section_title: Agency Comments and Our Evaluation
paragraphs: OIOS and State provided written comments on a draft of this report. We  have reprinted their comments in appendixes VII and VIII, respectively.  These agencies also provided technical comments and updated  information, which we have incorporated throughout this report, as  appropriate.
OIOS agreed with the overall conclusion of the report that progress has  been made in addressing independence and staffing issues and that  further actions are needed in some areas. OIOS stated that it has  developed a comprehensive plan to address the issues we identified and  is currently working to systematically examine options and implications for  their resolution within the scope of OIOS’s authority and responsibility as  mandated by the General Assembly. OIOS also stated that the report  fairly reflected its efforts and current views and noted that the efforts  invested by GAO, OIOS, and others have contributed to the usefulness of  the reported results.
State endorsed most of our main findings and conclusions, noting that it  agreed that OIOS’s budgetary and operational independence could be  strengthened further. State also accepted our recommendation that  impediments to OIOS’s ability to provide independent oversight be  addressed. However, State appears to have misinterpreted our  discussion of OIOS oversight authority over the separately administered  UN funds and programs that have opted to use OIOS as their internal  auditor. State attributed to GAO the assertion that OIOS’s involvement in  the internal oversight of funds and programs is contingent on the consent  of the funds and programs. This interpretation was made instead by the  UN Secretariat’s Office of Legal Affairs. We have added language to  make this distinction clearer.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution of it until 30 days from  the report date. At that time, we will send copies of this report to  appropriate congressional committees, the Secretary of State, and the  Permanent Representative of the United States to the United Nations.  This report will be available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff members have any questions about this report, please  contact me at (202) 512-9601 or melitot@gao.gov. Contact points for our  Office of Congressional Relations and Public Affairs may be found on the  last page of this report. GAO staff who made major contributions to this  report are listed in appendix IX.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to examine actions being taken to address (1)  impediments to OIOS’s ability to provide independent oversight and (2)  staffing issues that may have hindered its performance.
To address our objectives, we reviewed relevant United Nations (UN) and  Office of Internal Oversight Services (OIOS) reports, policies and  procedures manuals, and other documents, as well as internationally  recognized standards such as those of the Institute of Internal Auditors  (IIA). We met with Department of State (State) officials in Washington,  D.C., and officials in New York from the U.S. Mission to the UN. In New  York, we also met with the Under-Secretary-General for Internal  Oversight Services, OIOS management officials and staff in each of the  Office’s divisions (the Internal Audit Division, the Investigations Division,  and the Inspection and Evaluation Division), and with staff from the Office  of the Under-Secretary-General.  In addition, we met with representatives  of UN Secretariat departments and UN funds and programs, and the  members of the UN Board of Auditors, which carries out external audits of  the accounts of the UN organization and the funds and programs that are  under the authority of the Secretary-General. Through in-person  interviews, videoconference, and teleconference, we spoke with senior  OIOS audit and investigations officials based in Geneva and Vienna; with  the Independent Audit Advisory Committee (IAAC) Chairman in  Washington, D.C.; and with an official from the UN’s Joint Inspection Unit  in Geneva, which conducts evaluations and inspections of the UN  system.
To assess the reliability of UN and OIOS funding and staffing data, we  reviewed the office’s budget reports for fiscal biennia 1994-1995 through  2010-2011 and vetted the data with relevant OIOS and UN budget  officials and interviewed an international relations specialist at the  Congressional Research Service who reports on U.S. contributions to the  UN; however, we did not independently verify the underlying source data.  We determined that UN and OIOS budget data were sufficiently reliable  to present trends of the regular, peacekeeping, and extrabudgetary  appropriations for the biennia 1994-1995 through 2010-2011.  We used  staffing data provided by OIOS, which we determined were reliable for  our purposes of presenting staffing levels as of July 31, 2011.
To assess OIOS’s consistency with key international auditing standards,  we reviewed relevant internationally accepted standards for oversight  such as the International Standards for the Professional Practice of  Internal Auditing issued by the IIA, which OIOS adopted in 2002. The IIA  standards apply to internal audit activities—not to investigations,  inspections, or evaluation activities. However, we applied these standards  OIOS-wide, as appropriate.   We also reviewed the International  Standards of Supreme Audit Institutions issued by the International  Organization of Supreme Audit Institutions, as well as guidelines for  oversight such as the Uniform Guidelines for Investigations issued by the  Conference of International Investigators, and the Norms for Evaluation in  the UN System issued by the United Nations Evaluation Group.  Finally,  we examined documentation for OIOS’s risk-based planning methodology  and annual work plans, recommendations tracking, and ethics practices.
We conducted our work from October 2010 to September 2011 in  accordance with generally accepted U.S. government auditing standards.  Those standards require that we plan and perform our work to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our objectives. We believe that the  evidence obtained provides a reasonable basis for our findings and  conclusions based on our objectives.
section_title: Appendix II: OIOS’s Locations and Staffing
paragraphs: Figure 7 displays the locations of OIOS staff, as of September 2011,  including the UN’s peacekeeping missions.
The Internal Audit Division is by far the largest OIOS division, comprising  57 percent of the office’s authorized staff; the Investigations Division is  second in size, at 29 percent (see fig. 8).
More staff positions are tied to oversight of peacekeeping activities (47  percent overall, or 153 of 327) than activities funded by the regular  budget (37 percent, or 121 of 327) or extrabudgetary sources (16 percent,  or 53 of 327). The Internal Audit Division is the only division with a  significant number of staff positions financed by extrabudgetary sources  (26 percent, or 49 of 186). (See fig. 9.)
OIOS’s authorized staff positions have increased slightly (by 12 percent,  or 34 new positions) from 5 years ago, largely due to a 30-percent  increase (43 new positions) in Internal Audit Division positions, whereas  the positions in the Investigations Division dropped by 15 percent (17  positions). (See fig. 10.)
Total authorized staff positions have generally increased over the past  nine UN fiscal biennium budget cycles, from 1994-1995 through 2010- 2011, growing from just over 100 positions in 1994-1995 to over 300 in  2010-2011, due largely to an increase in authorized positions for  overseeing the UN’s expanding peacekeeping activities around the world  (see figs. 11 and 12).
section_title: Appendix III: Timeline for the Preparation, Approval, and Execution of OIOS’s Regular Budget
paragraphs: Figure 13 is a timeline showing the process of preparing, approving, and  executing OIOS’s regular budget. As shown in this figure, we have  updated this timeline since our 2006 report to reflect IAAC’s creation and  its role in that budget process.
section_title: Appendix IV: UN Resolutions and Administrative Issuances Affecting OIOS
paragraphs: Table 2 lists the UN resolutions and administrative issuances affecting  OIOS, including its establishment in 1994, a 2003 resolution reaffirming  the prerogative of the funds and programs to decide on their own  oversight mechanisms and their relationship with OIOS, and the 2006  resolution establishing the IAAC.
section_title: Appendix V: UN Organizations, Their Relationship with OIOS, and Their Oversight Capacity
paragraphs: Table 3 lists the organizations that comprise the UN system and  information about their relationship with OIOS and their internal oversight  capacity.
section_title: Appendix VI: Status of Recommendations from Our 2006 Report
paragraphs: Our 2006 report made seven recommendations to State and the U.S.  Mission to the UN—of these, we closed three recommendations as  implemented and four as not implemented. (GAO practice is to close out  all recommendations within a 4-year period.) Table 4 summarizes the  status of each of our recommendations as of July 31, 2011—including the  three recommendations that were implemented within the GAO 4-year  time frame, and four that have not been fully implemented, but actions  have been taken.
section_title: Appendix VII: Comments from the Office of Internal Oversight Services
section_title: Appendix VIII: Comments from the Department of State
subsections: section_title: GAO Comment
paragraphs: We believe that State misinterpreted our discussion of OIOS oversight  authority over the separately administered UN funds and programs that  have opted to use OIOS as their internal auditor. Our report did not  conclude that OIOS may only exercise oversight authority over those  separately administered UN funds and programs that have opted to use  OIOS as their internal auditor; we reported that this was the interpretation  of the UN Secretariat’s Office of Legal Affairs. We have added language  in the report to make this distinction clearer.
section_title: Appendix IX: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Joy Labez, Assistant Director;  Kay Halpern; Jeremy Conley; David Dayton; Etana Finkler; Jack  Hufnagle; Marya Link; Grace Lui; and Steven Putansu made key  contributions to this report. Other contributors to this report include  Kirsten Lauber, Jeremy Sebest, Barbara Shields, and Phillip J. Thomas.
section_title: Glossary
paragraphs: This glossary of abbreviations and acronyms contains the full names of  the United Nations entities referred to in figure 5 and tables 1 and 3.
subsections: section_title: WB Group
section_title: Related GAO Products
paragraphs: United Nations Organizations: Oversight and Accountability Could Be  Strengthened by Further Instituting International Best Practices.  GAO-07-597. Washington, D.C.: June 18, 2007.
United Nations: Management Reforms Progressing Slowly with Many  Awaiting General Assembly Review. GAO-07-14. Washington, D.C.:  October 5, 2006.
United Nations: Weaknesses in Internal Oversight and Procurement  Could Affect the Effective Implementation of the Planned Renovation.  GAO-06-877T. Washington, D.C.: June 20, 2006.
United Nations: Oil for Food Program Provides Lessons for Future  Sanctions and Ongoing Reform. GAO-06-711T. Washington, D.C.:   May 2, 2006.
United Nations: Internal Oversight and Procurement Controls and  Processes Need Strengthening. GAO-06-701T. Washington, D.C.:  April 27, 2006.
United Nations: Funding Arrangements Impede Independence of Internal  Auditors. GAO-06-575. Washington, D.C.: April 25, 2006.
United Nations: Lessons Learned from Oil for Food Program Indicate the  Need to Strengthen UN Internal Controls and Oversight. GAO-06-330.  Washington, D.C.: April 25, 2006.
United Nations: Procurement Internal Controls Are Weak. GAO-06-577.  Washington, D.C., April 25, 2006.
United Nations: Preliminary Observations on Internal Oversight and  Procurement Practices. GAO-06-226T. Washington, D.C.:   October 31, 2005.
United Nations: Sustained Oversight Is Needed for Reforms to Achieve  Lasting Results. GAO-05-392T. Washington, D.C.: March 2, 2005.
United Nations: Oil for Food Program Audits. GAO-05-346T. Washington,  D.C.: February 15, 2005.