UN Internal Oversight: Progress Made on Independence and Staffing Issues, but Further Actions Are Needed
Released: 2011-10-20T00:00:00

Letter

Background

Internal Oversight in the UN System

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.

OIOS’s Organizational Structure

OIOS’s Three Divisions

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.

OIOS Funding

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.

IAAC Role in Internal Oversight

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.

OIOS Role Clarified and Independence Strengthened, but Some Funding and Oversight Issues Remain

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.

The General Assembly Has Clarified OIOS’s Role in Internal Oversight of Funds and Programs

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.

Staffing Shortages Have Hindered OIOS Performance, but Efforts Are Under Way to Address Them

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.

Staffing Shortages Have Constrained OIOS’s Oversight Capabilities

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.

Prolonged Vacancies at Director Level Resolved, but Underlying Weakness in Hiring Process Remains

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.

Under-Secretary-General for Internal Oversight Services Has Reported a Need for More Staff to Assist Her in Managing OIOS

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.

Conclusions

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.

Recommendation for Executive Action

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.

Agency Comments and Our Evaluation

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.

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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.

Appendix I: Objectives, Scope, and Methodology

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.

Appendix II: OIOS’s Locations and Staffing

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).

Appendix III: Timeline for the Preparation, Approval, and Execution of OIOS’s Regular Budget

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.

Appendix IV: UN Resolutions and Administrative Issuances Affecting OIOS

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.

Appendix V: UN Organizations, Their Relationship with OIOS, and Their Oversight Capacity

Table 3 lists the organizations that comprise the UN system and information about their relationship with OIOS and their internal oversight capacity.

Appendix VI: Status of Recommendations from Our 2006 Report

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.

Appendix VII: Comments from the Office of Internal Oversight Services

Appendix VIII: Comments from the Department of State

GAO Comment

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.

Appendix IX: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

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.

Glossary

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.

WB Group

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