Editorials



Internal Journal of Auditing – January 2003

Internal Oversight-A Key to Reform at the United Nations

Editor’s note: Since INTOSAI’s creation in 1953 as an affiliate of the United Nations, the two bodies have developed a strong professional relationship, with Supreme Audit Institutions that are members of INTOSAI playing a vital role as the external auditors of the United Nations and its specialized agencies. Senior United Nations officials also participate regularly in INTOSAI’s triennial congresses and other activities. In this context, Secretary-General Kofi Annan shares his views with Journal readers on the importance of oversight to his reform program for the United Nations.

Effective oversight services are a high priority for the United Nations and a crucial ingredient in my efforts to reform and strengthen the Organization to meet the challenges of the 21st century.

Two years ago, heads of State and Government, meeting as the Millennium Assembly of the United Nations, reaffirmed their faith in the Organization and its Charter as indispensable foundations for a more peaceful, prosperous and just world. They defined their priorities for the new century: “the fight for development for all the peoples of the world; the fight against poverty, ignorance and disease; the fight against injustice; the fight against violence, terror and crime; and the fight against the degradation of our common home”. And they resolved to make the United Nations a more effective instrument for pursuing all of these priorities.

Indeed, the need for a strong multilateral institution has never been more acutely felt than in the current era of globalization. This new age of interdependence and integration offers many opportunities, but it also poses many dangers. The challenge ahead is to strengthen our capability for collective action and thus forge a common destiny in a time of accelerating global change.

The United Nations exists, not as a static memorial to the aspirations of an earlier age, but as a work in progress - imperfect, as all human endeavours must be, but capable of adaptation and improvement. The United Nations can change, and it has changed, notably since the end of the Cold War, which removed the deepest and most intractable source of mistrust among its Members, thus opening up new fields of creative action and cooperation. When I took office as Secretary-General in 1997, one of my first priorities was to adapt the structures and the culture of the Secretariat to the new expectations and challenges that it faced.

Much has been achieved, not least the Millennium Declaration itself, which offers a common vision for the new century and, in the economic and social sphere, includes precise, time-bound development targets for the first 15 years of the century – the Millennium Development Goals - that now serve as a common policy framework for the entire UN system. The United Nations has been in the forefront of the battle to stop the spread of HIV/AIDS. The Organization’s capacity to deploy and manage peacekeeping and peace-building operations is being improved. The disparate elements of the system are working better together. Fruitful partnerships have been built with non-governmental organizations, the private sector, academic institutions, think tanks, philanthropic foundations and other non-State actors. In short, the Organization is evolving with the times. It is more efficient, more open and more creative. But more changes are needed, and so last year I initiated another round of what I hope will be similarly wide-ranging change and improvement.

The Office of Internal Oversight Services (OIOS) plays a central role in this process as one of the Organization’s main instruments for ensuring effective internal oversight and accountability. OIOS was created by the General Assembly in 1994. As an independent office reporting directly to the Secretary-General, it provides worldwide audit, investigation, inspection, program monitoring, evaluation and consulting services to the United Nations Secretariat and a wide range of United Nations operational funds and programs. These efforts have exposed waste, fraud and mismanagement, and identified potential savings totalling approximately $250 million, of which nearly $115 million was actually recovered and saved. Each year, the Office issues more than 2,000 recommendations aimed at improving internal controls and surmounting obstacles to efficiency and effectiveness. The overall implementation rate of its recommendations after 3 years is more than 80 percent, and Member States and staff alike have responded positively to the Office’s work.

Internal Reviews of Reform Issues

In support of my current reform efforts, OIOS is undertaking several major consulting
and inspection projects, including steps to eliminate the administrative duplication
that has long plagued the Organization; a management review of the Office of the
United Nations High Commissioner for Human Rights; and a review of the
implementation of results-based budgeting, which seeks to improve flexibility by
shifting the focus of planning, budgeting and reporting from how things are done to
what is accomplished. A recent report on UN information centers around the world
gave weight to my proposed consolidation of these offices, which is now moving ahead.
OIOS is a member of my Steering Committee on Reform and Management, which
produced my latest set of proposals and which will monitor progress. OIOS also
intends to provide increased support to UN departments so that they can strengthen
their own capacities for self-evaluation and monitoring.

Field Operations

A major test for UN reform is the changes it generates in the field, where our contacts with the people we serve are closest, and where our successes and setbacks are most visible. In recent years, the number of UN field offices and high-risk peacekeeping and
humanitarian missions has expanded dramatically, as has the complexity of the tasks
with which they are entrusted. The largest field missions are often deployed in war-torn
regions with limited infrastructure and support systems. This poses significant managerial and oversight challenges for the Organization and its personnel, and increases the risk that resources will be lost because of fraud, waste or abuse. In response, OIOS has sharpened its focus on procurement, human resources, and the management of newly established bodies. It has also developed a comprehensive and rigorous risk management methodology to guide the strategic planning of its oversight activities in this area.

Internal Auditing

Although there has always been an internal audit function in the United Nations, it was not operationally independent until 1994, when it was integrated into OIOS. In establishing OIOS’s scope and mandate, the General Assembly also strengthened oversight by integrating all internal oversight functions in one office reporting directly to the Secretary-General. At the same time, two other major initiatives were taken to improve the effectiveness of audits. First, the two classic types of audit — financial and compliance audits — are now complemented by a stronger emphasis on management and performance audits, which focus on organizational questions and the economy, efficiency and effectiveness of operations. It is OIOS’s policy to include a comprehensive management perspective in all major audit assignments. Second, the implementation of audit recommendations is receiving greater attention by both management and the various legislative bodies of the United Nations. Auditors follow up and monitor the Office’s recommendations until they are fully implemented. Program managers are expected to ensure prompt compliance and are required to report the status of their implementation to OIOS on a quarterly basis.

Investigations

An independent investigations function has existed in the United Nations only since 1994, when it was made a part of the OIOS oversight mechanism. OIOS’s Investigations Division is staffed by highly trained professionals who probe allegations of employee misconduct, abuse of authority, payment of kickbacks, embezzlement offunds, and waste and mismanagement of the Organization’s resources. The caseload increases every year, since the more OIOS is known, the more staff and management report allegations to the Division. But the heightened volume of allegations has put strains on the resources available for this area of oversight. The Office is exploring ways to deal with this, not least through greater attention to preventive approaches, including the proposed establishment of an Organizational Integrity System based on UN standards of conduct for the international civil service and promoted through ethics training for all staff.

Success in a world in rapid flux depends greatly on the ability to manage change. In recent years, the United Nations has shown that it can respond to novel and unexpected challenges, and is willing and quick to adapt, while being fiscally prudent. Further change will not be realized automatically or overnight. Reform is a process, not an event. As that process expands and deepens, I look forward to working with all the Organization’s partners, including INTOSAI, to ensure that the United Nations can meet the needs and aspirations of the world’s peoples in the 21st century.