Rebeca Grynspan: UNDP on implementation of recommendations/UN Board of Auditors
Statement by Rebeca Grynspan Associate Administrator,
United Nations Development Programme
on Item 6: Report of UNDP on the implementation of the recommendations of the UN Board of Auditors, 2008-2009 (DP/2011/14)
Executive Board of UNDP and UNFPA
First Regular Session, 3rd February 2011, New York
Mr. President, Distinguished Members of the Executive Board, Ladies and Gentlemen,
- I am pleased to introduce the Report of UNDP on the implementation of the recommendations of the UN Board of Auditors, 2008-2009, contained in document DP/2011/14. Pursuant to Executive Board decision 2010/9, the details and status of all 89 audit recommendations of the Board of Auditors is available in tabular form on the website of the Executive Board Secretariat including the full report of the Board of Auditors (A/65/5/Add.1).
- I am informed that Members of the Executive Board already had a fruitful informal consultation on this report on 14th January 2011. Recognizing the packed agenda for this joint segment, I shall limit my remarks to brief comments about UNDP’s management strategy in addressing the revised Top 10 audit related management priorities for the biennium 2010-2011. I will also speak briefly on the three topics that I understand are of specific interest to the Board. These are: (a) UNDP’s preparation for the adoption of the International Public Sector Accounting Standard (IPSAS) by January 2012; (b) UNDP’s strategy in the management of high risk programme portfolios; and (c) implementation status of the Harmonized Approach to Cash Transfer (HACT) modality in UNDP.
A risk-based and accountability-centered approach to managing Top 10 audit priorities
- Members of the Executive Board are aware that UNDP adopts a risk-based and accountability-centered approach in managing audit issues. In 2007, UNDP started the practice of prioritizing and focusing on a manageable set of Top audit priorities gleaned from audit recommendations of both internal and external auditors and supported by an integrated system of monitoring and review. This ensures that key audit risks are systematically addressed, that necessary resources and attention are given to key audit related management priorities, and that audit recommendations are implemented and reported based on target completion dates as discussed with the Board of Auditors.
- UNDP has also established the practice of seeking the independent view of the UN Board of Auditors, the Office of Audit and Investigations, and the Audit Advisory Committee on the management’s assessment of progress made and the establishment of the next set of Top audit priorities. The original list of Top 15 priority items in 2006-2007 was reduced to a list of Top 11 audit priorities for the 2008-2009 biennium. This list has been further reduced to Top 10 audit priorities for the biennium 2010-2011 as summarized in Annex 1 of the paper. The progress from Top 15 audit priorities to Top 10 audit priorities reflects that UNDP has made important strides in several areas over the past few years as noted by the UN Board of Auditors. The new Top 10 audit priorities include the anticipated audit risks and reflect a proactive approach to managing audit matters.
- The Management Group (MG) meeting chaired by the Administrator sets the tone by endorsing the Top 10 audit priorities for the biennium 2010-2011. Progress is reviewed at the Management Group meeting with Directors of Regional and Central Bureaus while operational issues are discussed at the Operations Group chaired by myself. Audit issues are also one of the several dimensions reviewed in the country scan exercise conducted by my office with Regional Bureaus to identify country specific challenges and agree on action plans to address recurring issues. The Bureau of Management also holds regular financial reviews with the Regional and Central Bureaus to address unit specific issues.
- With these initiatives, UNDP continues to ensure the timely implementation of audit recommendations. As at 31 December 2010, UNDP has implemented 90% of the 42 audit recommendations targeted for completion by the fourth quarter of 2010. UNDP expects to fully implement three of the remaining 4 recommendations by the end of the 1st quarter of 2011 and the remaining one by the second quarter with the closing of the accounts for 2010.
- Members of the Board should take note that this is the second consecutive biennium that the UN Board of Auditors has issued an “unqualified” or “clean” audit opinion on the financial statements of UNDP. For the biennium 2008-2009, UNDP was one of nine UN organizations (out of a total of 16 organizations audited by the Board of Auditors) to have received such “clean” audit opinion. The Administrator and I are fully committed to ensure that positive gains derived from the key management initiatives taken to date are protected and that underlying issues are addressed over the longer term.
UNDP is on track for the adoption of IPSAS by January 2012
- I am happy to report that UNDP is on track to adopt the International Public Sector Accounting Standards (IPSAS) by January 2012, further enhancing the organization’s transparency, and pursuant to Executive Board decision 2009/15. Major efforts are currently under way to accelerate efforts to ensure the overall readiness of staff, stakeholders, IPSAS-related policies, and data system for IPSAS. Some of the major steps taken this year towards the adoption of IPSAS include the completion of all IPSAS related policies, the enhanced Financial Training and Certification Programme; the launch of self paced on-line IPSAS training modules, and the launch of a series of Webinars with UNDP staff targeted specifically at reviewing more specific impacts of anticipated business process changes arising from the adoption of IPSAS.
- With the above being said the implementation of IPSAS will increase the work-load of country offices and certain offices in headquarters. In order to ensure the successful implementation of IPSAS in an efficient and effective manner, another key milestone was reached recently when the Operations Group that I chair endorsed the decision to establish a Global Shared Service Center to perform complex IPSAS-related functions. Steps are being taken by UNDP to establish a global shared service centre by the end of the year to provide IPSAS transactional and advisory services to country offices and headquarters units alike. The presence of IPSAS experts in a global service centre will create economies of scale; contribute to knowledge sharing and the formulation of best practices; and facilitate the career development of staff. By establishing the centre in a low-cost location with available skilled personnel, it ensures that investment in IPSAS is optimized, and provides a first step towards a new service delivery model for UNDP. The establishment of the Centre will not in any way affect services provided to UN agencies and other development partners
UNDP takes a risk-informed approach in managing high risk programme portfolio
- Consistent with its Enterprise Risk Management policy, UNDP management recognizes that its country offices operate in increasingly volatile and risky environments with sometimes limited national capacities and/or in special development situations. UNDP Headquarters units are working closely with these country offices to address related policy and capacity issues so as to mitigate key risks in programmes/projects identified through the country scan exercise with the Regional Bureaux. These include a handful of country offices entrusted with the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM), as well as some euro-denominated trust funds which are subjected to foreign exchange losses.
- UNDP management is committed to ensuring that lessons learnt from the various audits are applied at the country office level. Currently UNDP manages around 10% (or about $1 billion over a multi-year period) of the total Global Fund’s spending. In 2010, total Global Fund spending in UNDP approximated $400 million. The Office of Audit and Investigations will continue to include the audit of Global Fund projects in its 2011 audit work plan. At the same time, the Bureau of Management is issuing guidelines to mitigate risks associated with currency fluctuations with euro-based Trust Funds.
Implementation of the Harmonized Approach to Cash Transfer (HACT) in UNDP country offices
- The Harmonized Approach to Cash Transfers (HACT) modality is an important management tool in managing the associated fiduciary risks in the transfers of financial resources to implementing partners whilst providing an indication as to the areas where capacity development of national counterparts is required. Over the last year HACT compliance has increased from 15 country offices to 58 country offices.
- In conclusion, I would like to thank the Executive Board for your continuing interest and guidance on audit and oversight matters. I and my colleagues are ready to respond to any questions or comments from Members of the Executive Board.