Office of the Inspector General 2007 Annual and Activity Reports CP/doc. 4347/08 and CP/doc.4346/08

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1 Office of the Inspector General 2007 Annual and Activity Reports CP/doc. 4347/08 and CP/doc.4346/08 Summary Presented by: Linda P. Fealing Inspector General 1

2 Introduction GS/OAS management is responsible for establishing and maintaining a satisfactory internal control environment to provide reasonable assurance that OAS objectives are met. 2

3 Mandate Executive Order Office of the Inspector General Responsible to the Member States and the Secretary General for: Systematic review of the effectiveness of internal management and accounting controls. Identifying areas of High Risk and assisting in strengthening controls. Recommending improvements for the overall efficiency of all GS/OAS offices, departments, programs, divisions, units, activities and projects, both at Headquarters and in the Member States. Reporting on audit activities. Providing follow-up action on implementation of approved recommendations. 3

4 Anti-Corruption Hotline Executive Order 05-8 Corr. 1 Provides protection from retaliation for whistleblowers and informants. Encourages the reporting of misconduct that violate OAS financial and administrative rules. Allegations may be reported to the Inspector General in person, by telephone, by , by facsimile, by regular mail, anonymously or identification. 4

5 Unqualified 2007 Opinion of the Board of External Auditors on Internal Controls The Internal Control environment at the GS/OAS was effective. Unqualified clean opinions were rendered. No material weaknesses were reported. 5

6 Quality of Work and Independence Quality of Work OIG carries out its audit activities in accordance with its mandate, rules and directives of General Secretariat and the Standards for the Professional Practice of Internal Auditing approved by the Institute of Internal Auditors (IIA). All professional staff members are members of IIA. Independence - The Office of the Inspector General reports to the Secretary General and performs its functions with full technical autonomy and the broadest possible managerial autonomy. 6

7 Summary of 2007 Activities Completed Annex 1 of CP/doc. 4347/08 10 Audits operational (5) and compliance (5) including 15 projects 1 Investigation 1 Inspection 3 Internal Control Memoranda to directors for matters of lesser significance 7

8 Analysis of 2007 Activities Conducted Audits of Operational processes Headquarters Accountable Advances managed by DBFS Inventory of the GS/OAS Fixed Assets recorded for the year ended December 31, 2007 Remote Blind Penetration Analysis of the Internet Attachment Environment managed by the Department of Information and Technology Services Remote Seeded Penetration Analysis of the Internet Attachment Environment Managed by the Department of Information and Technology Services Risk Assessment Procurement, Disbursement & Payroll Processes at Headquarters and the National Offices managed by the Secretariat for Administration and Finance 8

9 Analysis of 2007 Activities Conducted (cont.) Compliance audit activities Implementation of the Strategic Action Program for the Bermejo River Binational Basin managed by the Department of Sustainable Development GS/OAS Offices field audits, including 15 projects Venezuela Guatemala Guyana Nicaragua 9

10 Analysis of 2007 Activities Conducted (cont.) Inspection: Emergency and Petty Cash Funds at Headquarters Investigation: Complaint Submitted by a Former SOC and CPR Internal Control Memoranda: Employees Hired at a Higher Step on Initial Appointments during 2006 and 2007 Review of GS/OAS Office in Suriname office audit OIG Observation of the Bidding Process on August 15,

11 Recommendations All OIG reports were approved by the Secretary General 54 recommendations were issued to address OIG findings that identified the need to: Comply with GS/OAS directives, including the Budgetary and Financial Rules, the Field Financial Manual and Administrative Memoranda Update operational manuals and distribute procedural directives Improve business processes Address Systems weaknesses Manage operational processes and projects at Headquarters more effectively Address staffing and training needs Record and safeguard OAS property and update inventory listings of fixed assets 11

12 Follow-Up 2007 Forty-nine (91%) of the fifty-four recommendations have been implemented and five (9%) are still in various stages of implementation of which four are High Risk. The 2007 outstanding recommendations primarily focus on the need for: Improved SAF operational processes related to the contract mechanism, procurement, plan of action prior to implementing IPSAS Twelve recommendations are still in various stages of implementation, of which eight were considered High Risk The 2006 outstanding recommendations relate to: Development and distribution of procedural directives and improved SAF operational processes related to procurement and travel. 12

13 Results of 2007 GS/OAS Activities that Strengthen Internal Control 2007 achievements related to the OAS internal control environment: Various Staff Rules were updated New indirect cost recovery policy was established Finance Portal was developed Training was provided for the Certification in Government Financial Management (CGFM) The first annual operational process was established by DPCE Electoral Observation Missions manual was developed Training - OASES, a new performance evaluation system, project management, monitoring and evaluating, electoral cooperation and observation A Manual of Procedures for the Fellowship and Training Programs was distributed Financial Handbook for Specific Fund Agreements was distributed to Member States IPSAS proposal was submitted to the Member States to improve financial statements reporting STAMP was established to transform and modernize SAF processes OASES overall performance improved through OASES upgrade and business processes New inventory control module was initiated and training was recently provided 13

14 Other OIG Functions OIG observes OAS meetings to evaluate the effect on the internal control environment. Inspector General meets with managers of the General Secretariat to discuss issues that may impact internal controls and inherent risks, such as proposed business processes, review of draft procedures, implementation of recommendations and other areas of concern. The Board was pleased with the continued strong cooperation between OIG and GS/OAS. The Board was also pleased to note beneficial cooperation between the OIG and the financial statement auditors. The Board encourages all parties to maintain this open and constructive working relationship. 14

15 Staffing OIG positions provided in the 2008 Regular Fund Program Budget are: Inspector General 1 P03 3 P02 1 P01 Junior Auditor 2 Audit Technician (G05) is paid from ICR Funds. Vacancies that existed in 2008 have now been filled and all positions are occupied. The OIG utilizes the CPR Mechanism as necessary to supplement resources. The Board and the Inspector General have expressed concern for OIG staffing resources and the Board has recommended that the Inspector General s request for additional OIG resources be given priority and favorable consideration. In compliance with the 2006 recommendations of the Board of External Auditors, DHR worked jointly with the Inspector General to develop a staffing plan that includes 2 P04 positions. Funds have not yet been made available to implement this new structure. Effect of Inadequate Resources Lack of sufficient resources adversely affects, the timeliness of the audit reports, as well as the overall audit coverage. 15

16 Board of External Auditors The status and role of OIG within OAS is important to the Board since OIG is an essential continuing safeguard to assess and maintain the internal control environment. March 31, Quote from the Board of External Auditors 16

17 Reminder Recommendations from the 2007 Report of the Board of External Auditors 17

18 Inspector General s Concerns Outstanding 2006 Recommendations. Lack of sufficient resources in the General Secretariat to carry out mandates. Significant use of the performance contract mechanism throughout the General Secretariat to address staffing shortage and contract mechanism. Need for a staffing plan to determine human resource requirements throughout the General Secretariat, as well as an improved employment and contract mechanism. OASES training for all administrative personnel including the GS/OAS Offices in the Member States and entities to enable those persons to carry out the necessary administrative financial transactions. The internal control environment in the GS/OAS Offices and entities in the Member States particularly because of the significant amount of specific fund disbursements. Provision of a systematic review process of financial processes and DBFS site visits to those GS/OAS offices in the Member States. Effectiveness of the ICR policy in achieving desired objectives. Inadequate or outdated policies and procedures. Improvements to SAF operational processes such as travel and procurement. Plan for OAS properties and their maintenance Improved project monitoring, evaluation and management at Headquarters. Conversion to IPSAS 18 Funding for the OIG

19 2008 Work Plan Annex 3 of CP/doc. 4347/08 The OIG Work Plan focuses on areas of Significant (High) Risk and recommendations from the Board of External Auditors Audit activities include: Special Observer Mission Process DBFS Processes, including duplication of payments Travel Advances (TECs) GS/OAS Office in Uruguay GS/OAS Office in Ecuador GS/OAS Office in Belize GS/OAS Office in Panama GS/OAS Office in Trinidad and Tobago GS/OAS Office in Grenada GS/OAS Office in Paraguay Selected FEMCIDI Projects Selected Specific Fund Projects in Brazil and Argentina 19

20 Member States Concerns? 20

21 Thank You To the Member States, the Secretary General and the General Secretariat for their continued support to the Office of the Inspector General. To my OIG team for their dedication, hard work and commitment. OIG contact information (202) Hotline (fax) 21

22 Questions? 22