(1) At the 5th session (April 1949: CC/A.5/SR.2-4 and CO-ORD/PREP/118) the Committee drew up a series of principles to govern external audit in UN and the specialized agencies (CO-ORD-PREP/118, annex 1).
With regard to a joint system of external audit, the Committee recommended that there should be a Joint Panel of Auditors of UN and the specialized agencies composed of persons having in their national administrations the rank of Auditor-General. Membership should be limited to 6 persons chosen by common consent of UN and the specialized agencies. Each organization would then select from the Panel one or more members to perform its audit, their honoraria to be settled between the parties directly concerned.
Members of the Panel selected to perform audit should meet annually to co-ordinate their duties and to exchange information on methods and findings. The cost of the meetings was to be borne by the participating organizations.
(2) At the 8th session (February 1950: CO-ORD-PREP/R.176), the principles to govern audit having been accepted by all agencies, the Committee decided on the steps to be taken to implement the plan and to establish the Panel as from 1 July 1950. It also agreed that where one agency spent money on behalf of another, the audit of the accounts performed by the auditor of the spending agency should suffice as a certificate to the other agency.
(3) At the 14th session (April 1953: CO-ORDINATION/R.142), further to General Assembly resolution 672 B (VII), the Committee reviewed the existing audit arrangements in the organizations and concluded that there was no need for a general change. With regard to a problem specific to UN, i.e. the appointment of full-time external audit staff, there was a consensus that such staff should not replace the existing UN Board of Auditors but should carry out duties on its behalf; nor would the appointment of such staff eliminate the need for an internal audit service. The Committee proposed that the ACC should transmit its opinion to the Panel.
(4) At the 17th (second part) and 18th sessions (April 1956; March 1957: CO-ORDINATION/R.224 and CO-ORDINATION/R.245) the Committee reviewed audit procedures (after members had consulted their own auditors), in consequence of General Assembly resolution 971 (X). The organizations expressed continued satisfaction with the arrangements.
(5) At the 20th session (April 1959: CO-ORDINATION/R.295) CCAQ noted that the General Assembly was to be asked to amend resolution 347 (IV), under which the Panel had been established, to bring it into line with gradual changes which had occurred since the adoption of the resolution.
(6) For financial regulations concerning external audit, first discussed at the 31st session, see Section 21.2.
(7) At the 37th session (March 1973: CO-ORDINATION/R.985, paras. 31 and 32) CCAQ noted that the Panel of External Auditors in November 1972 had agreed on a more precise definition of the minimum standards required for a satisfactory external audit of organizations of the system. CCAQ considered that the standards provided an acceptable frame of reference, consistent with the auditing standards applied by the accounting profession as a whole.
(8) At the 42nd session (September 1975: CO-ORDINATION/R.1114, para. 21), CCAQ recommended that donors of trust funds and similar funds should not be granted access to the accounting records and vouchers relating to expenditures. This ruling would not prevent an organization from providing specific reports or summaries of transactions.
(9) At the 53rd session (September 1980) the Committee was informed of a request formulated by the UNDP Governing Council at its 27th session that the Administrator of UNDP should henceforth provide "salient comments on the substantive observations of the auditors, indicating what follow-up has been taken on their observations by the Administrator and by the participating and executing agencies". UNDP intended to consult the organizations concerned where such comments were required. The Committee further noted that the Governing Council would accept unaudited interim accounts where the accounts of executing agencies were examined by auditors only at the end of a biennial financial period (ACC/1980/32, paras. 40 and 41).
(10) Reverting to the question of access by donors of funds to accounting records, the Committee recalled at the 55th session (September 1981: ACC/1981/30, paras. 55-58) that all organizations were required to follow their financial regulations and rules, and that they had extensive internal and external auditing procedures. All organizations normally declined to let donors or their auditors have access to accounting records. Most, but not all, also refused requests for special audits of individual activities by their regular auditors, as well as requests for special audit certificates or opinions. All were prepared to supply special financial reports provided for in the relevant agreements. The Committee concluded that it would be desirable to adopt a standard procedure on audits and financial reports for inclusion in all agreements concerning trust funds and other special funds. Since it would be helpful in this context to be able to refer to a single policy statement, UN was requested to seek an opinion from the Panel of External Auditors. This opinion was subsequently taken into account in the form of a model provision for trust-fund agreements (see Section 20.1).
(11) At the 56th session (March 1982) CCAQ endorsed views communicated to it by the Chairman of the Panel of External Auditors on the content of interim financial statements. The Panel considered that it would be inappropriate for the External Auditors to issue any form of opinion on such statements, and that the heading of the statement should therefore indicate that they were unaudited. The External Auditors should, however, feel free to issue a report concerning the first year of biennial financial periods if there were matters which they wished to bring to notice without delay. The Committee believed that the unaudited nature of interim statements could best be pointed out in an introductory text, which would also make it clear that the organization's accounts were the subject of continuing audit (ACC/1982/6, paras. 11 and 12).
(12) At the 57th session (September 1982) the Committee was apprised of decision 82/37 of the Governing Council of UNDP, which in particular requested the Administrator to reiterate to executing agencies the importance that it attached to external audit reports including observations on substantive matters. It was noted that reports already submitted, or which had not yet been submitted because of the timing of governing body sessions, met or were likely to meet this concern; however, the External Auditors alone were responsible for determining the scope and content of their reports (ACC/1982/25, paras. 24 and 25).
(13) At the 58th session (March 1983) CCAQ considered a letter from the Chairman of the Panel to the Secretary-General of UN in his capacity as Chairman of ACC, suggesting that governing bodies should be requested to bring the position of External Auditors of other organizations into line with that of the External Auditors of UN, who enjoyed immunity from potential claims relating to their work. The Committee believed that the possibility of such claims was remote and that unilateral action by the organizations could not forestall them; in addition, the revision of the varying instruments and agreements which established the privileges and immunities of the organizations and their staff would be difficult in present circumstances. However, the organizations should employ their best efforts to ensure that the legitimate interests of External Auditors were protected if any claim should be made in connection with their work (ACC/1983/11, paras. 69-71).
(14) At the 59th session (September 1983) CCAQ was informed that the UNDP Governing Council, following previous decisions, had called at its 30th session for the inclusion as promptly as possible of observations on substantive matters in audit reports for funds provided to UNDP's executing agencies. It was pointed out in the Committee that the organizations' UNDP funds were administered subject to the same controls and intergovernmental supervision as all their other revenues, and that audit reports were addressed in the first instance to their own governing bodies. The principle that organizations' External Auditors were solely responsible for determining the scope and content of audit reports was also reaffirmed. However, since the Governing Council intended to pursue examination of reports covering funds provided by UNDP, further explanations of the organizations' position on the matter should be supplied to it (ACC/1983/21, paras. 19-21). (Such explanations were given orally at the Governing Council's 31st session, in 1984).
(15) At the 60th session (March 1984) CCAQ discussed, as planned at the preceding session, a proposal by the Panel of External Auditors that the organizations should be prepared to provide their auditors with "letters of representation" giving assurances about factors affecting their accounts. Some participants observed that such letters were a development in line with recent trends and which had been approved by professional bodies; since they were only a communication of information known to management, they posed no problem if they contained appropriate qualifying language. Other participants considered that these letters might limit auditors' responsibilities and lead them to reduce the scope of audits; auditors were required to satisfy themselves about certain matters under the terms of the organizations' financial regulations, and letters of representation were a questionable way of doing so. Moreover, the direct relationship of the organizations' External Auditors with governing bodies obviated the need for such letters. CCAQ concluded that the question of providing them should be left to the discretion of individual organizations (ACC/1984/10, paras. 11-14).
(16) At the 61st session (September 1984) it was noted that the UNDP Governing Council, in its decision 84/40, had requested narrative audit reports for activities financed by UNFPA as well as for those financed by UNDP itself (ACC/1984/17, para. 64). At the 62nd session (March 1985), it was further noted that the Panel of External Auditors had taken the view that the length of an audit report was determined by the size of the account being audited, and that in the case of certain executing agencies for UNFPA the amount of expenditures was not substantial enough for a long-form report to be produced. CCAQ generally agreed with this view. It was recalled that audits were system-based or covered related groups of activities, and that separate audits according to sources of funds would lead to heavy costs. Furthermore, the integrated approach of some organizations to the delivery of programmes made it difficult to have separate audit reports on the effectiveness of technical and financial management for components financed from different sources. When activities under audit included projects financed by UNFPA such projects would, however, naturally attract the kind of audit reporting that was sought by the Governing Council (ACC/1985/7, paras. 28 and 29). At the 63rd session (September 1985) it was noted that the Governing Council had requested the Executive Director of UNFPA to reiterate to agencies the importance that it attached to long-form audit reports and to continue his efforts to obtain them (ACC/1985/17, para. 24).
(17) At the 64th session (March 1986), with reference to the use of a standard agreement developed for trust funds financed by the Federal Republic of Germany, the Committee reiterated its opposition, both in principle and for reasons of efficiency, to arrangements under which normal internal and external auditing procedures would be replaced or duplicated (ACC/1986/4, para. 43).
(18) At the 65th session (September 1986) CCAQ noted the content of Governing Council decision 86/48, reaffirming the Council's wish that for activities funded by UNDP increasing emphasis should be given by external auditors to the preparation of long-form narrative audit reports including observations on the effectiveness of financial management. The Administrator of UNDP was to pursue this matter with the Panel of External Auditors with a view to assuring that long-form audit reports were submitted in respect of any executing agency carrying out a significant volume of UNDP-financed activities (ACC/1986/12, paras. 31 and 32).
(19) At the 66th session (March-April 1987) the Committee considered a message from the Panel of External Auditors raising the issue of audit arrangements for government-executed projects involving large-scale assistance from organizations of the system. For such cases the Committee recommended the inclusion of a clause in project agreements stipulating as appropriate that the external auditors of the organization were to be provided with copies of the audit reports of national auditors. Organizations would also be free to introduce clauses such as that used by the ILO requiring facilities for the audit of project accounts by the internal and/or external auditors of the organization (ACC/1987/6, paras. 11 and 12).
(20) At the 68th session (March 1988) CCAQ discussed a number of accounting and audit issues affecting the executing agencies of UNDP, raised by the UN Board of Auditors. The Board had cited certain of its observations and recommendations as grounds for qualifying its opinion on the financial statements. After a review of this situation in the light of developments since publication of the Board's report, the Committee observed that certain organizations sensed that a spirit of competition might be developing among external auditors and feared that some audit observations, taken out of context, might undermine confidence in the system of multilateral co-operation. Moreover, several criticisms made in the audit reports challenged established financial policies, responsibility for which lay not with external auditors but with governing bodies. Some arrangements envisaged by the Board called for reports to be submitted to it by the external auditors of individual executing agencies of UNDP, but those auditors were responsible to the organizations' legislative organs, and the policy of the organizations and of CCAQ was that the accounts of an organization should be subject to audit exclusively by its own internal and external auditors. Concern was also expressed at the proposed changes in the frequency and timing of the preparation of accounts for audit.
(21) The Committee went on to express its views on four individual issues raised in the report of the Board. On (a) criteria for recording unliquidated obligations for travel on official business and group training, and for equipment, it agreed that travel which began before the end of one financial year and ended in the next should be regarded as a charge to the first; for equipment, the delivery principle had been found in both 1980 and 1982 to be not appropriate to the circumstances of the organizations of the UN system, and CCAQ believed the reasons for that conclusion were still valid. On (b) acceptance by UNDP of unaudited figures for executing agencies' programme expenditure as a basis for closing its accounts and determination of support costs on this basis, CCAQ considered these practices a natural consequence of the adaptation of audit programmes to conditions in the organizations audited; they rested upon confidence of the Board in the work of executing agencies' external auditors, a relationship which the Committee considered both normal and indispensable. On (c) differences in reciprocal balances between UNDP accounts and statements submitted by executing agencies, the Committee observed that such differences, which arose because of different cut-off dates for recording expenditures, did not affect the overall accuracy of expenditure figures. Finally, on (d) the basis for recording income and expenditure for cost-sharing, Government cash counterpart and trust funds, CCAQ observed that for UNDP operations financed on a voluntary basis the most prudent and appropriate method was to record income on a cash basis and expenditure on an accrual basis (ACC/1988/5, paras. 16-23).
(22) The Committee returned to this question at its following (69th) session (September 1988). It was informed by UNDP that in the audit report on its 1987 accounts two of the individual issues discussed in paragraph (21) above - items (b) (acceptance by UNDP of unaudited figures for executing agencies' programme expenditure as a basis for closing its accounts), and (a) (the recording of unliquidated obligations for equipment on the basis of purchase orders issued rather than actual delivery) - continued to be cited as reasons for qualification of the audit opinion. On (b), the Committee considered a suggestion by the Board that, for those organizations whose financial regulations provided for biennial audit, arrangements be made under which for the first year of each biennium a limited audit, not involving the issue of an audit opinion, would be made of the annual status-of-funds statement submitted to UNDP. CCAQ expressed reservations: while it was important to find ways as soon as possible of avoiding qualified opinions on UNDP's accounts, the limited audits proposed would have to be much more clearly defined, and their relation with the audit of other funds clarified; the Committee also questioned the channel of reporting envisaged. On (a) (equipment), CCAQ reiterated the views expressed at its previous session. The Committee emphasized that audit reports were not an appropriate vehicle for the auditors to use for proposing to governing bodies changes in the existing rules, regulations and other applicable directives (ACC/1988/13, paras. 26-33).
(23) At the 70th session (March 1989) the Committee returned to these issues in the light of subsequent developments, including action by the General Assembly (resolution 43/216), recommendations by the Technical Group of the Panel of External Auditors, and proposals by the Chairman of the Board. On the question of timing, the representatives of organizations with annual accounting systems indicated that it should be possible for an audit clearance in respect of 1988 to be sent to the External Auditors of UNDP by 24 April 1989, as the Chairman of the Board had envisaged. The representatives of organizations with biennial accounting systems were prepared to agree to limited mid-biennium audits of the accounts for their UNDP programme, provided that no significant extra work was involved for their staff and that they would not have to meet additional audit costs; if the UNDP Governing Council desired such audits UNDP would have to cover the costs. On the question of the delivery principle for recording equipment purchases, on which the Chairman of the Board of Auditors had suggested alternatives, the participants expressed a preference for that of assessing the possible shortcomings of the existing system by calculating the unliquidated obligations raised during one year and cancelled during the next as a percentage of unliquidated obligations at the end of the first. Here also they would expect UNDP to meet the costs involved (ACC/1989/7, paras. 25-30).
(24) CCAQ noted that audit and related costs appeared to represent an increasingly heavy burden for a number of organizations; it asked its secretariat to compile information on the size and evolution of the direct costs of both internal and external audit and inspection (ibid., para. 31).
(25) At the 71st session (September 1989) the Committee returned again to outstanding aspects of the audit matters discussed in paragraphs (20)-(23) above. It welcomed a decision of the UNDP Governing Council (36th session, June 1989) that from the biennium 1990-1991 UNDP's financial statements should be audited on a biennial basis; the Board of Auditors would continue to prepare a report on its findings and recommendations arising from an audit examination of substantive matters carried out with regard to the first year of each biennium. This change, CCAQ noted, brought UNDP into line with many other organizations and would also obviate the costs arising from mid-biennium audits. On the reconciliation of expenditures in respect of government cash counterpart contributions, a matter which had been one of those originally raised by the Board (see para. (20) above), the Committee noted that the help of executing agencies was needed to report such expenditures in local currency as well as in US dollars. Finally, on the treatment of unliquidated obligations for equipment, the Committee noted that a study by the Board of Auditors had shown that in 1988, on average, 17 per cent of unliquidated obligations reported as 1987 expenditure by executing agencies had been cancelled; the Board had concluded that the current criteria were too flexible and created an uncertainty as to the fair representation of reported expenditure. CCAQ, however, questioned that conclusion, on the grounds that a variety of factors beyond executing agencies' control could cause cancellation of obligations, and that in several agencies the percentage of equipment cancellations was negligible. It went on to reaffirm its position that the delivery principle was not appropriate for field operations, setting out the reasons for that view (see paras. (20)-(23) above). At the same time the Committee recognized that executing agencies should ensure that the procedures for establishing and validating obligations were effective and did not lead to abuse (ACC/1989/15, paras. 37-39).
(26) Following up the decision taken at the previous session (see para. (23) above), the Committee considered at the 71st session (September 1989) data on the system-wide costs of external and internal audit and on the budget of JIU from 1981 to 1989. It noted that audit costs - particularly for internal audit - appeared to have grown considerably faster than the nominal level of organizations' regular budgets. Expenditures for JIU were also high in relation to the system-wide cost of external audit. The Committee agreed to keep the evolution of these costs under review (ACC/1989/15, paras. 44-46).
(27) Returning at the 73rd session (September 1990) to problems arising from audit of UNDP accounts (see paras. (20)-(23) above), the Committee was informed by executing agencies that in 1991 they would intensify their efforts to ensure that audit confirmations of their programme expenditures on behalf of UNDP and UNFPA reached the Board of Auditors by its deadline of 30 April. On the subject of unliquidated obligations for equipment, UNDP informed the Committee that the Panel of External Auditors had investigated practice in the executing agencies based on purchase orders issued (rather than actual delivery) and had found no evidence of abuse (ACC/1990/12, paras. 25-27).
(28) At the 74th session (March 1991) the Committee noted that the Panel of External Auditors had asked the UN Board of Auditors to seek greater clarity in the accounts closure instructions issued to executing agencies for their UNDP accounts. It agreed, in response to a UNDP request, that its members should review the matters raised and advise UNDP of their views on how the accounts closure instructions might be clarified (ACC/1991/6, paras. 31, 32). On a related issue, the Committee considered a suggestion by the Panel that UNDP's basic agreements with its executing agencies might be amended to permit the latter's external auditors to communicate to those of UNDP findings not included in audit reports. The Committee reiterated its earlier position (see para. (20) above) that the organizations' external auditors were responsible only to the respective governing bodies that appointed them. Obligations of confidentiality were involved which would make unacceptable the direct exchange of information between external auditors (ibid., paras. 33, 34).
(29) Following a review by the Committee at its 75th session (September 1991) of action taken by the UNDP Governing Council on the audit of accounts financed from UNDP sources (decision 91/47), members indicated that they would employ their best efforts to provide in good time the audit certificates and audit confirmation for programme expenditure, and information on specific corrective action to implement the recommendations of their external auditors on activities financed by UNDP (ACC/1991/18, paras. 40-42).
(30) However, difficulties arising from the audit of UNDP accounts were again on the Committee's agenda at the 76th session (March 1992), in the context of concern expressed by ACABQ at four aspects of the findings of the UN Board of Auditors: late submission of audited information by executing agencies; insufficient information on whether UNDP funds had been spent "with maximum efficiency and effectiveness"; the accountability of executing agencies for the use of resources entrusted to them; and the need for binding agreements to be signed with all such agencies. On the last subject two organizations (ILO and FAO) confirmed that they were on the point of signing a standard basic executing agency agreement with UNDP. On the first, the agencies represented in the Committee undertook to intensify efforts to remedy the problem. On the second point, the Committee was informed that the auditors of several agencies already carried out very comprehensive audits; additional audit reports for UNDP-financed activities would involve special instructions and extra costs. Once again opposition was expressed to the suggestion that audit information (including observations in management letters) should be routinely made available by agencies' external auditors to those of UNDP (see paras. (20) and (28) above); since the Panel had made no formal recommendation in that sense the Committee would be reluctant to pursue the matter further (ACC/1992/11, paras. 19-23). Subsequently UNDP called to the Committee's attention the 1992 decision of its Governing Council (decision 92/38) on UNDP audit reports, which covered some of the points singled out by ACABQ (77th session, August-September 1992: ACC/1992/25, para. 23).
(31) Also at the 76th session, the question of clarity in the accounts closure instructions issued by UNDP to executing agencies (see para. (28) above) was again before the Committee. Members stated that they had found the UNDP criteria to be clear; any deficiencies noted by UNDP's external auditors would appear to result from faulty application of the instructions, and in this respect corrective measures were being taken (ACC/1992/11, paras. 17, 18).
(32) At the 78th session (March 1993) the Committee took note of Audit Guideline 12, "Using the work of another auditor of United Nations organizations", adopted by the Panel of External Auditors in November 1992 (ACC/1993/7, para. 40).
(33) At the 79th session (August-September 1993), after study of an exchange of correspondence between the Chairman of the Panel of External Auditors and UN, the Committee drew up for ACC approval by correspondence a statement concerning (a) independent audits requested by auditors of extrabudgetary funds, and (b) management reviews requested by States. The statement was subsequently submitted to the GA in A/48/587, 10 November 1993, but gave rise to no action.
(34) At its 80th session (February - March 1994), CCAQ(FB) held an exchange of information on the subject of provisions in financial statements for unpaid assessed contributions. In the context of a discussion on requests for original documentation, CCAQ(FB) reiterated its position that original documentation supporting financial transactions should in all cases be retained by the organization effecting the expenditure (ACC/1994/5, para. 50).
(35) See section 20.1A for discussion of the efforts of the World Bank and the European Union to subject Common System organizations to the WB and EU audit provisions.
(36) At the February 2004 meeting (CEB/2004/HLCM/12/Rev.1, paras. 24-25) of the FB Network, WHO brought to the attention of the Network the fact that its external auditors had requested the inclusion of three new issues in the management representation letter which accompanied the audited accounts. The Network (a) agreed on a common response to the inclusion, or not, of the three new items and encouraged all organizations to respond accordingly; and (b) decided that the FB Network should have regular consultations with the UN Board of Auditors on items such as accounting standards, content of representation letters and emerging issues affecting particular agencies but with implications for all.
(37) At its September 2004 video-conference (CEB/2004/HLCM/28, paras. 21-23) the FB Network recalled that voluntary funding agreements between the European Commission and UN organizations traditionally contained a verification clause that permitted the Commission to audit, on a spot check basis, how funds had been spent. Such a clause contradicted the single audit principle that all organizations held with their respective external auditors, as embodied in each organization's financial rules and regulations. In the past, this had not proved to be a contentious issue as the Commission's checks had usually been comprised of short visits to organizations where they were briefed on organizational procedures and practices in the form of information sessions. However, the UN Secretariat had been put on notice that the European Commission intended to conduct a full audit in October and that it had begun a practice of employing private audit companies to conduct what were increasingly becoming invasive and time consuming audits. Whilst some Network members cautioned about the risks of losing EU funding through a refusal to allow full audits, the Network reaffirmed the single audit principle. To this end, and with a view to limiting the accommodation organizations were expected to afford when accepting funds from the Commission, the Network agreed that the document being produced by the UN Controller should be used as a starting point to establish common parameters across the UN system to be presented to the Commission as a single UN system wide position.
(38) At its 9th session (April 2005: CEB/2005/3, paras. 51-53) HLCM considered a document presented by FAO requesting the Committee to consider the matter of eligibility to bid as external auditor of the organizations of the UN system, in particular whether private sector auditors could be invited to bid. One organization reported that it currently used a private firm as its external auditor. Several other organizations advised that private firms had been used for various project- specific audits. Still others mentioned that their internal and/or external auditors had on occasion subcontracted elements of their audits to private firms. The Committee noted that nothing would preclude an organization’s governing body from taking a decision, if it so wished, through amendment to its financial regulations or as otherwise appropriate, to allow private sector firms to participate in the bidding process along with the auditors general of Member States.
(39) At its July 2005 meeting (CEB/2005/HLCM/26, paras. 32-43) the FB Network had an informal exchange of information on their recent experience with the Single Audit Principle. Some of the recent pressure to break the single audit principle had come, as in the past, in connection with activities funded by the EC, as well as with joint programming activities and situations such as the UNDG Iraq Trust Fund. UNDP indicated its agreement with its External Auditors to carry out a special audit of the Trust Fund, and they thought this could be a reasonable solution for situations where the pressure to perform such extra audits could not be avoided. WHO indicated that it would be desirable, in the future, for decisions of this nature that involved other UN organizations to be taken by UNDP only after full agreement of those organizations had been secured. The UN stressed the fact that no exceptions to the single audit principle should be authorized, no matter in what forms. It was suggested that the single audit principle be re-affirmed by a body with adequate authority and legitimacy, at the level of the CEB or the Board of Auditors and respective External Auditor of each organization. The Network agreed to raise the issue at the next meeting of the HLCM in October 2005, for appropriate decision and action at the CEB level.
(40) At its 10th Session (October 2005: CEB/2005/5, paras. 39-41) HLCM considered the Single Audit Principle according to which the UN Financial Regulations gave the UN’s external auditors, the United Nations Board of Auditors, the exclusive right to audit the accounts and statements of the United Nations. Comparable principles applied to the specialized agencies. Recent pressures to break the single audit principle in connection with activities funded by the European Commission as well as with joint programming activities and situations such as the UNDG Iraq Trust Fund had resulted in official positions being taken by the Chairman of the Panel of External Auditors who had expressed the Panel as not being in favour of the introduction of clauses in agreements to which External Auditors were not signatories, which would commit the United Nations to have its External Auditors produce upon request a special audit opinion or report on a particular project programme. The External Auditor was entirely independent of the UN Secretariat and as such must be free to choose whether to accept any additional audit mandate. Such a choice would be dependent on the request received from the appropriate authority, agreement as to the scope and report, arrangements for the audit and the availability of sufficient resources. HLCM agreed to recommend that CEB adopt the following policy statement reaffirming the single audit principle: "The United Nations Board of Auditors and the appointed External Auditors of the specialized agencies and of the International Atomic Energy Agency, retain the exclusive right to carry out external audits of the accounts and statements of the United Nations Organizations. If special reviews are required, governing bodies should request the appointed External Auditor to carry out specific examinations and to issue separate reports to them on the results".
(41) At its sixth meeting of August 2006 (CEB/2006/HLCM/34, paras.57-74), n response to a UNESCO report (CEB/2006/HLCM/33), and in light of the attention conferred upon the internal control among UN organisations, it was agreed that the FB Network would explore the potential development of a best practice framework for internal control across the UN system, including, among others, Human Resources, Procurement and Asset Management. Initially, this would be led by the CEB Secretariat. It was reaffirmed that the responsibility of internal control lay with management. There was a need for an increase in quality in addition to quantity of internal audit across organisations.
(42) At its 13th session (CEB/2007/3, paras. 87-94, regarding the confidentiality of internal audit reports, the HLCM decided that the Finance and Budget Network, in consultation with the Heads of Internal Oversight of member organizations, as well as with their External Auditors and with the Institute of Internal Auditors, should prepare a position paper on behalf of the HLCM as a document to support the discussion of this item by Executive Heads at the upcoming CEB meeting of 20-21 April 2007. Any newly developed position on such issue should not be applied retroactively to past reports, but only to future ones. The HLCM would review (electronically) the output from the Finance and Budget Network prior to consideration by the CEB.
(43) Also at the 13th session (CEB/2007/3, paras. 115-116), the Committee took note of the report P/47/06/1 of the Panel of External Auditors, on the intervention of the UN in the aftermath of the Tsunami, particularly the observations and recommendations contained in paragraphs 5 through 24, and noted that some of them had already been taken into consideration in the development of the Business Practices proposal outlined in document CEB/2007/HLCM/3, while some others were referred to other inter-agency fora, as appropriate. The Committee requested its members to bring the Panel’s report to the attention of their Executive Heads in preparation for the upcoming CEB meeting of 20-21 April 2007.
(44) At its seventh session (CEB/2007/HLCM/FB/10 23, paras. 52-57), regarding the disclosure of information in internal audit reports, the FB decided that it would recommend that this decision be accompanied by the determination of precise modalities and criteria for disclosure, should the High Level Committee on Management, on the basis of considerations of technical, managerial and governance nature, and having evaluated the alternative scenarios outlined in document CEB/2007/HLCM/8, concur to suggest that some form of disclosure of information contained in Internal Audit Reports be accepted by UN system organizations.
(45) At its 14th session (CEB/2007/6, paras. 78-79), the Committee welcomed UN-RIAS’ request towards an improvement of the institutional links between HLCM and the UN Internal Audit community, and agreed that UN-RIAS would develop a proposal on the modalities and mechanisms for participation in the HLCM framework, to be submitted to the Committee for approval at its next session.
(46) The Committee endorsed UN-RIAS’ recommendation on disclosure of Internal Audit Reports (IARs), as outlined in paragraphs 23-24 of CEB/2007/HLCM/18, which favours option three (paragraph 76 (c) below) but states that each UN entity has the prerogative to choose which option to adopt, as follows:
o Whilst each UN entity has the prerogative to choose which option to follow, the heads of UN internal audit functions would like to express the professional view that option three may offer the most appropriate solution to the issue of disclosure of IARs. The Executive Heads may wish to approach their governing bodies on this.
o The heads of UN internal audit functions further recommend that the disclosure policy be consistent with the IIA professional guidance as referred to in paragraph 4 and 5 of document CEB/2007/HLCM/18.
Paragraph 76 (c): Option 3: Disclosure of IARs based on an organization policy - In this option, IARs will be disclosed to Members States, subject to conditions / criteria defined in a policy that should not be applied retrospectively. This option could include giving Member States the possibility to read IARs in the IOS office, and ask questions to the Chief Audit Executive (CAE) as needed. - Audit/Oversight committees could provide a useful conduit through which to draw the attention of the governing bodies to any internal audit reports of particular concern. - Notwithstanding the options above, the standards and code of ethics contained in the Professional Practices Framework of the Institute of Internal Auditors (IIA) would allow in exceptional circumstances, the chief audit executive to bring a report to the attention of Member States.
(47) At the FB Network’s eight session (CEB/2008/HLCM/FB/4, paras. 4-14), organizations agreed that further negotiations with the EC should take into consideration the difficulties that may be encountered by the EC to completely remove the clause from the Agreement, as part of its own Financial Regulations and Rules, and the need by UN system organizations to find appropriate mechanisms to implement the clause in a manner that is compatible with the single audit principle and with their internal financial management requirements.
In order to develop a common position of UN system organizations to be presented at the up coming 5th meeting of the FAFA working group on 10-11 April, Geneva, a preparatory meeting would be held on 9 April, in Geneva. In preparation for the FAFA meeting, organizations should provide the Office of the UN Controller with information on the latest developments in their internal financial control systems.
(48) At the same session (CEB/2008/HLCM/FB/4, paras. 15-21), the FB Network took note of the report of the Task Force CEB/2008/HLCM/FB/2. The IPSAS system-wide team would continue to work on the remaining issues identified by the Task Force from February 2008 and prior meetings, and continue to work on further guidance to complete papers for submission to the Task Force Meeting in June 2008.
(49) At its fifteenth session in Rome, 2008 (CEB/2008/3, paras. 107-113), the Committee confirmed its support for strengthened institutional links between HLCM and the Representatives of Internal Audit Services of the United Nations System (UN-RIAS), and approved the conceptual framework and the modus operandi of the HLCM/UN-RIAS working arrangement, as outlined in CEB/2008/HLCM/8. The recommendations and decisions that would result from the exchange of practices and experience between UN-RIAS and HCLM would not be binding for their respective members. UN-RIAS and the HLCM would remain accountable to their own constituencies and would not receive instructions from each other.
(50) At its sixteenth session (CEB/2008/5, para. 130), the Committee also observed that, as recognized in the UN-RIAS document presented CEB/2008/HLCM/17, UN system organizations have different statutory regulations and governance and, as audit and oversight mechanisms are a matter normally under the purview of Governing Bodies, their establishment and functioning should be determined accordingly.
(51) At its 21th session in Paris (CEB/2011/3, paras. 128-129), HLCM thanked UN-RIAS for the update, took note of the concept paper for an "Auditing as One" initiative and asked to be kept informed on further developments on the subject of auditing Delivering as One programmes.