NEW AUDITS BY THE EXTERNAL AUDITOR SHORT-FORM AUDIT REPORT ON THE UNESCO FIELD OFFICE NETWORK SUMMARY

Transcription

1 Executive Board Two hundred and fourth session 204 EX/21 Part I PARIS, 9 March 2018 Original: French Item 21 of the provisional agenda NEW AUDITS BY THE EXTERNAL AUDITOR SHORT-FORM AUDIT REPORT ON THE UNESCO FIELD OFFICE NETWORK SUMMARY This document is the short-form report of the External Auditor s audit report on the UNESCO field office network as submitted in document 204 EX/21.INF pursuant to Article 12.6 of the Financial Regulations. Action expected of the Executive Board: proposed decision in paragraph 63. Job:

2 204 EX/21 Part I EXECUTIVE SUMMARY AUDIT OF THE UNESCO FIELD OFFICE NEWORK DISCLAIMER: This executive summary was drawn up by the External Auditor at the Secretariat s request in order to optimize translation costs and facilitate discussion by the governing bodies. Only the long-form report is authoritative in terms of exact content and the nature and scope of the External Auditor s findings and recommendations. A. The need to review the functions and size of the field network 1. Given the lack of a long-standing official policy regarding the size and functions of the field network, UNESCO has defined successive objectives that have not always coincided with each other, when making reforms to the network. In 2001, it decided to apply a cluster strategy, refocusing the network on thematic regional bureaux and cluster offices, and considering the national offices as exceptions that should be justified by specific criteria. 2. The 2011 reform partly revisited that policy: while, in principle, it maintained the cluster strategy and decided to create multisectoral regional offices to replace both thematic regional bureaux and cluster offices, in practice it did not continue to reduce the number of national offices to bring down the costs of the network. 3. On the contrary, it opted to assign a greater number of programme specialists to the multisectoral regional offices. This new strategy, which sought to improve the effectiveness of implementing the Organization s programme through the field network pushed concerns about reducing expenditure into the background, as it should have translated into a significant increase in the number of staff and funds allocated to the network. 4. Due to the budgetary crisis, which began just as the reform was being launched, the reform was only applied in Africa, where it was only partially implemented. 5. The network's costs have increased by $2.14 million, even though it has not been sufficiently bolstered in terms of human resources. Moreover, the links between the network and Headquarters have become more complex, since the two UNESCO sectors that had specialized thematic regional bureaux in Africa must now deal with the five multisectoral regional offices and no longer a single thematic regional bureau that can play a coordination role for the whole of Africa. 6. However, the 2011 reform has led to undeniable progress, by introducing a hierarchy between the offices. Its partial application in Africa has also been a useful experiment, from which it is now possible to learn lessons in order to complete the field network reform process. 7. Applying the 2011 reform to the rest of the world as originally intended is quite simply not possible, as the Organization does not have the necessary funds to assign specialists from the five sectors to the nine multisectoral regional offices to be set up outside of Africa with the planned numbers of staff and there is no sign of the current budgetary crisis ending in the near future. In addition, such a decision would extend to the rest of the world the difficulties which the sections have encountered in Africa in relation to communicating with the field network. 8. Therefore, it would seem to be preferable to complete the reorganization of the network building on the positive achievements of the two previous reforms, which are: creating or maintaining poles of expertise grouping together specialists from the Education and Natural Sciences Sectors in certain offices in each broad region of the world (in accordance with the model of the 2001 thematic regional bureaux) to facilitate

3 204 EX/21 Part I page 2 relations between the heads of those sectors at Headquarters and the field network and to reduce the number of specialized staff in those sectors by concentrating them in a few offices; giving specific functions to those poles of expertise, such as: organization of meetings of specialists from each sector in the region concerned; strategic reflection on the evolution of each sector in the region, preparation of programmes and budgets for each biennium for the sector in question, within the framework of preparing the programme and budget for each sector's major programme; publication of periodic reports on implementation of the sector s programme in the region, within the framework of preparing the implementation report for each major programme; reaffirming the exceptional nature of the national offices retained in 2011 and, therefore, continuing to close some of them, even if that means setting up temporary teams, antennas or desks in their place; establishing, throughout the world, hierarchical links between the different categories of offices, as was done in Africa under the 2011 reform, which involves reducing the number of offices with a regional role (the current cluster offices) in the regions other than Africa. 9. Furthermore, it seems necessary to stress the importance of field offices raising extrabudgetary funds from all potential donors (States, international organizations, foundations, associations and businesses), as do other United Nations agencies, making fundraising one of the key tasks of those offices. 10. Indeed, the External Auditor noted that heads of World Food Programme (WFP) offices, for example, played a very important role in seeking extrabudgetary funding, which constitutes one of their priority duties. Similarly, within UNICEF, raising voluntary contributions is one of the main tasks of the national committees and offices covering the whole world, in this case since this United Nations agency is financed almost entirely by donations. B. Possibilities for rationalizing organization and reducing costs 1. Increasing the authority of the regional offices 11. The positions of the Assistant Directors-General (ADGs) and the responses to the questionnaire sent out by the External Auditor to the field office heads show that there is consensus within the Organization regarding strengthening offices that have a regional role. This is fully in line with United Nations policy. It will have different consequences in Africa and in the other regions of the world and must make it possible to harmonize organization of the field network throughout the world. In Africa 12. In Africa, where the 2011 reform structured the network around five multisectoral regional offices with hierarchical authority over the national offices, it seems logical to keep the current organization in place, with just a few important adjustments. Indeed, it would be useful to: reduce the number of multisectoral regional offices (MROs) to three; it seems logical to group together the Dakar and Abuja MROs in favour of the Dakar office, located in one of the capitals of the African network of United Nations agencies, as these two offices share West Africa and have smaller budgets than the other MROs; the MRO in Yaoundé has the smallest staff, after the Abuja MRO, and the amount of its extrabudgetary funds has decreased significantly; it could also be attached to the Dakar MRO; give the Culture and Natural Sciences Sectors one coordinator each for the whole Africa region, to coordinate questions regarding these sectors and mediate any conflicts without them automatically being referred to Headquarters; this coordinator should be one of the

4 204 EX/21 Part I page 3 directors of the multisectoral regional offices, whose coordination authority in relation to the other MRO directors should be precisely defined; this solution would consist of giving some of the MROs the role of thematic regional bureau, as was the case under the 2001 reform, where some of the cluster offices simultaneously had the status of thematic regional bureau; strengthen the team of specialists in a given sector in the office of the person in charge of coordinating that sector for the whole of Africa; continue closing national offices, making it possible to increase the staff and funding for the multisectoral regional offices; the closed national offices could be replaced by temporary project teams, antennas or desks if there are sufficient extrabudgetary funds to finance such entities. 13. The case of the Dakar multisectoral regional office shows that such a replacement is not always necessary, as the Dakar MRO currently oversees seven countries, with just one decentralized relay entity, the national office in Bamako. 14. Such an approach would be more aligned with the organization of the United Nations network in Africa, which is structured around the hubs of Dakar, Nairobi and Johannesburg, giving greater weight to the UNESCO offices of Dakar and Nairobi (by setting up new poles of expertise with larger staffs). Regarding Johannesburg, UNESCO has an antenna there dependent on the Harare multisectoral regional office, which is well suited to serve as correspondent for the United Nations hub for Southern Africa. This would enable UNESCO to be more present in regional meetings organized by the United Nations Development Group (UNDG) in Dakar and Nairobi. 15. This organization of the UNESCO network in Africa is compatible with that of the eight Regional Economic Committees of the African Union; indeed, the Director-General recently defined the list of field offices officially responsible for liaising with each of those Committees in a Note dated 2 June 2017). In the rest of the world 16. In the other regions of the world, it would seem preferable to: create multisectoral regional offices (MRO), giving them hierarchical authority over all the national offices; the cluster offices currently only have the authority to coordinate certain national offices, as other national offices report directly to Headquarters; this approach involves transforming a small proportion of the current cluster offices into MROs; close some offices, regardless of their current status, particularly when they manage too few projects due to insufficient extrabudgetary funds, or when their teams of specialists are too small; appoint a coordinator for matters relating to the Education and Natural Sciences Sectors in each broad region of the world, who will be assisted by a small team of specialists from those sectors; the simplest solution in this regard consists of keeping the current thematic regional bureaux, which would perform the function of coordinating those sectors concurrently with that of MRO, in a similar manner to the way concurrently perform the functions of thematic regional bureau and cluster office at present; specify, as in Africa, the authority given to the aforementioned coordinators in relation to the directors of the regional cluster offices (or, more precisely, the other regional cluster offices, if those coordinators are the directors of thematic regional bureaux that also have the status of MRO); appoint one coordinator for each of the other sectors in each region of the world, if this role is not already fulfilled;

5 204 EX/21 Part I page 4 staff the MROs with specialists from each sector; some of the current cluster offices already have as many sector specialists as the African MROs; reducing the number of national offices and MROs compared with the number of cluster offices should facilitate the process of increasing the staff of the thematic regional bureaux and MROs. 17. This policy of strengthening the importance of regional offices should be facilitated by the increased use of digital applications within the Organization, which enable offices in a given region to communicate instantly with each other in all areas (programme preparation, budget and human resources management, project monitoring, etc.). Recommendation No. 1: The External Auditor recommends giving hierarchical authority to offices with a regional role over all national offices throughout the field network. Recommendation No. 2. The External Auditor recommends appointing a coordinator for each of the Organization s sectors in each broad region of the world. 2. Reducing the number of national offices 18. Taking into account the current budgetary constraints, it seems essential to reaffirm the exceptional nature of the existence of national offices and to resume the policy of closing some offices, which was commenced within the framework of the 2001 reform. 19. It would be desirable to define several criteria according to which the existence of an office could be re-evaluated: a minimum budget (including budgetary and extrabudgetary resources), below which the existence of an office should be reconsidered; a threshold of $1 million could be adopted, for example; this report highlights the situation of 16 offices that manage very small total budgets (which is not to say that they should be automatically closed, as the continued existence of some of them may be justified by reasons other than the size of the projects they manage and the extrabudgetary funds they raise); the percentage of each office's total resources (regular budget funds plus extrabudgetary funds) spent on the programme; a study conducted by the Secretariat in 2013 considered that the continued existence of a national office could be re-evaluated if less than 20% of the total resources of that office were spent on projects; an excessively small proportion of extrabudgetary resources in an office's total resources; any situation where extrabudgetary funds account for less than 50% of the total resources warrants further consideration. 20. This policy could be compensated for by the establishment of antennas, temporary project teams or desks housed in the offices of other United Nations agencies. These solutions are less costly in terms of human and financial resources than maintaining national offices, but can only be implemented if the Organization has sufficient extrabudgetary funds to finance them, given that such entities hardly ever receive regular budget funds. 21. The creation of desks should be encouraged as it limits the costs linked to premises and facilitates coordination with other United Nations agencies. 22. The precedents of the African multisectoral regional office in Dakar or the cluster offices in Almaty, Apia, Beijing, New Delhi and Kingston, show that all countries in a given region can be managed from a regional office with a single or no national office and without local antennas.

6 204 EX/21 Part I page Following the examples of the Brasilia and Lima offices, large local voluntary contributions should be considered a factor for maintaining the presence of a national office. The criteria suggested above for re-assessing the situation of certain offices should moreover automatically save countries raising large amounts of extrabudgetary funds, whether due to crises that they are going through or their dynamic policy for fundraising and involving UNESCO in their national policy. Recommendation No. 3. The External Auditor recommends effectively applying the principle defined in 2001 according to which national offices are considered as exceptional, and revising the map of national offices, which could mean replacing some with project teams, antennas or desks. 3. The temporary nature of the establishment of any new offices or antennas in the event of a crisis 24. In the event of the establishment of new national offices, project teams, antennas or desks to respond to a post-conflict or post-crisis situation, these entities must systematically be given temporary status, with a date being set for their closure from the outset; of course, this date could be put back in the event of prolongation of the situation that prompted their establishment. Recommendation No. 4. The External Auditor recommends, in the event of the establishment of a new entity (office, project team, antenna or desk), giving it a timelimited mandate, extending that mandate if necessary. 4. Creating joint administrative platforms to be used by several offices 25. The 2011 reform envisaged the creation of joint administrative platforms to be used by all the offices in each broad region of the world. In the case of Africa, the only region where the reform was applied, the joint administrative platform planned for Addis Ababa was not in the end created. 26. However, such joint administrative platforms have been created within the network, in New Delhi and Addis Ababa, between the UNESCO field offices and institutes, and in Amman, for the two offices in Jordan and Iraq. The functioning of the latter, explained in the External Auditor's report on the Office in Amman, is satisfactory, thanks to the geographical proximity of the two offices, which allows their managers to frequently meet with the members of the platform, and to the presence of a grade P-4 platform chief and some experienced mid-level managers (level NO-B). 27. The creation of joint platforms for the multisectoral regional offices in Africa or for the cluster offices in the rest of the world (offices which it is proposed here to transform into MROs) seems to be a more realistic solution than creating a single platform for a whole continent. That would make it possible to assign, more easily than at present, a chief having a grade of P-2 or higher to each platform, as is desirable, and would facilitate the decentralization of certain administrative responsibilities to the field offices, in accordance with the objective of the Secretariat (in line with the role of FSC) and the hopes of the office managers. 28. It is suggested that a few joint administrative platforms be created in offices that have a regional role (MROs and current COs), on an experimental basis. 5. Pooling services of United Nations field offices 29. An alternative solution would consist of pooling with other United Nations agencies present on the ground a certain number of functions such as procurement, the management of contracts

7 204 EX/21 Part I page 6 concluded within the framework of implementing projects and contracts for the recruitment of temporary staff. 30. The field office audits and the responses to the External Auditor s questionnaire show that all the offices cooperate with other agencies, particularly for booking hotel rooms or airline tickets. 31. Opinion is divided regarding the possibility of pooling certain services via the creation of an administrative and financial platform common to several United Nations agencies. One of the reasons put forward to explain this scepticism is the differences of culture between United Nations agencies, which could only cooperate well in the field once the methods of their respective Headquarters had been aligned. 32. To promote economies of scale and cooperation between agencies, it is suggested that experiments be tested in countries where heads of UNESCO offices and other organizations support such an initiative. Recommendation No. 5. The External Auditor recommends setting up trial administrative platforms common to several offices and pooling certain services between several field offices from different United Nations agencies. 6. Decentralizing some authority from Headquarters to the field office network for the preparation and implementation of programmes and budgets 33. The responses to the External Auditor's questionnaire show that the field offices regret the slowness with which answers are received from Headquarters. Slow response times were not reported for routine matters such as authorizations for expenditure, leave or travel, which are subject to precise protocols defined by the Administrative Manual or by circulars clearly setting out the procedures to follow and each person s responsibilities. 34. However, it takes longer to obtain answers to questions about the drafting of agreements entered into with UNESCO partners for the implementation of projects financed by extrabudgetary funds, which involves coordinating several Headquarters entities (several sectors, BSP and BFM), whose points of view FSC seeks to reconcile, which takes time. 35. The most effective solution to speed up processing times in this case seems to be to decentralize to the multisectoral regional offices responsibility for preparing and monitoring application of the details for determining the programme and budget of each sector of the Organization. 36. Currently, all of UNESCO s sectoral programmes and budgets are prepared in detail by each of the sectors, at the Organization's Headquarters, before being submitted to the Executive Board and the General Conference. 37. No one wants to undermine the coherence of UNESCO s programmes, which is one of the keys of its reputation. However, leaving to the MROs the preparation of the details of each programme, below a certain expenditure threshold, would make it possible to adapt each programme to the realities of the field and more easily organize the launch of joint projects involving several sectors. Recommendation No. 6. The External Auditor recommends examining the possibility of decentralizing to the field network a greater part of the preparation and monitoring of implementation of the Organization s sectoral programmes and budgets.

8 204 EX/21 Part I page 7 C. Career development of staff of the offices 1. Optimizing the distribution of international staff 38. The Assistant Directors-General (ADGs) would like staff with international status (particularly those with permanent contracts) to primarily be assigned to offices with a regional role, while the day-to-day running of projects, which on the whole are predominantly financed by extrabudgetary funds, will be entrusted to national staff (NAOs or consultants). 39. Today, a significant proportion of Secretariat staff (RS) are dispersed in the national offices: of the 307 RS assigned to the sectors, 93 work in national offices. 40. Merging some of the multisectoral regional offices and, in particular, the poles of expertise intended to assist one sector coordinator per broad world region, would give a real critical mass to offices that have a regional role. 41. This approach implies that national staff (NAOs) could, in some cases, be given the legal possibility of working on projects concerning several countries at the same time, which they sometimes already do in practice. Indeed, the United Nations has initiated a reflection about assigning national staff in its agencies field offices to perform tasks concerning several countries. 2. Adopting a more active policy to encourage staff rotation 42. The overly limited staff mobility noted does not conform to rules regarding the standard duration of assignment (two to five years in a post); it does not make it possible to fully build on the experience acquired by staff or to increase the attractiveness of careers; it limits exchanges between Headquarters and the field offices, which spread Headquarters knowledge about the programmes through the network, and gives Headquarters a better understanding of the realities of the field. 43. During the External Auditor s survey, the Bureau of Human Resources Management (HRM) indicated that in 2018 it intended to introduce a new (compulsory) staff mobility programme that would focus on the career development of young professionals and changing of posts of staff who have exceeded their standard duration of assignment. Recommendation No. 7. The External Auditor recommends adopting an active policy to organize staff mobility between Headquarters and the field office network. D. The necessary clarification of mandates 1. Clarifying the terms of reference of office directors 44. When field office managers are appointed, they are given a job description and a letter explaining in detail their financial responsibilities, which they sign. The job description lists all the tasks that fall to each manager, the rules to be followed (the Administrative Manual, notes and instructions issued by the Director-General, etc.) and the people to report to. In the case of cluster offices, it specifies the countries for which the office is responsible. 45. The performance appraisals of field office managers, carried out online using the MyTalent application, list these tasks in greater detail. 46. These documents are comprehensive but are impersonal. The job descriptions do not give any indication about specific objectives to be achieved in each office according to its particular situation at the time of the manager s appointment. They only describe the main activities of the post and its environment.

9 204 EX/21 Part I page Similarly, the online evaluations of office managers indicate that the work has been carried out but do not generally give a precise indication of the successes achieved, any gaps noted or progress to be made. 48. The External Auditor has already recommended that the number of objectives listed in the performance agreement of the field office directors be targeted in order to permit a more appropriate evaluation. It would be logical for those objectives to be personalized according to the situation of each office and for their achievement to be monitored in the periodic appraisals of the managers concerned. This approach would be facilitated by the creation, already recommended above, of multisectoral regional offices in all regions of the world and by transferring to the directors of those offices the authority to assess the performance of national office heads. Recommendation No. 8. The External Auditor recommends (i) personalizing the terms of reference given to managers of field offices, (ii) personalizing their periodic performance appraisals, which should verify effective fulfilment of their mandates, and (iii) have these appraisals carried out worldwide by the directors of offices with a regional remit. 2. Establishing clear strategic plans for each office 49. Personalizing the terms of reference of office managers would be easier if the objectives assigned to each office were always clearly defined. However, the External Auditor observed that monitoring of the implementation of projects by the field offices audited was inconsistent from one office to the next and sometimes presented the following shortcomings, which reveal insufficient precision of the objectives assigned to those offices, particularly in terms of impact on the population of the country concerned, the implementation timetable and the project funding arrangements: poorly defined performance indicators, which are often resource indicators rather than indicators showing the impact of the projects; sometimes haphazard record-keeping (missing documents, documents not dated and signed); delays in raising extrabudgetary funds and insufficient funding for certain projects given the initial objectives. 50. Consequently, he recommended that each office have a clear strategic plan consistent with the UNESCO Country Strategy (UCS) for the country concerned. 3. Contractualization of relations between offices and national administrations 51. In Viet Nam, the national office and the ministry responsible for education signed a specific agreement and, each year, sign a work plan that sets out the arrangements for its implementation. In Peru, the ministry responsible for education has asked the national office to assist it in designing and implementing basic education reform and they are concluding successive agreements to that end. 52. The External Auditor has already recommended that relations between the Organization s field offices and the national authorities be subject to an annual consultation or even a contracting procedure that could specify the common objectives for the year in question. Recommendation No. 9. The External Auditor reiterates his previous recommendations to (i) ask each field office to establish a strategic plan consistent with the country programming documents (UCSs) and (ii) organize an annual consultation or even a contracting procedure to specify their common objectives for the year in question.

10 204 EX/21 Part I page 9 E. Optimizing the role of the National Commissions vis-à-vis the field offices 53. The external audit reports on the field offices show that they have good relations with the National Commissions but that the role of those Commissions is less important than that of the national authorities in project programming and implementation. 54. The 55 responses received by the External Auditor to a questionnaire on extrabudgetary fundraising show that their action in this area is marginal, even though the policy framework for strategic partnerships stipulates that UNESCO s National Commissions have a particular role to play in the engagement with a private partner. 55. To strengthen the role of the National Commissions, UNESCO has set up a tripartite working group (made up of an unlimited number of representatives of the Permanent Delegations, National Commissions and Secretariat), which has proposed an action plan with 14 recommendations, which was adopted by the General Conference in This action plan, which was based on the conclusions of the 2011 IOS report, includes several recommendations that specifically concern the field offices, in particular: Recommendation No. 5 encouraging the National Commissions to establish and/or expand a network of public and private partners in their countries and seek sponsorship; Recommendation No. 10 calling for revision of the guidelines on relations between the National Commissions and the field offices; Recommendation No. 12 asking the Secretariat to inform the Permanent Delegations and National Commissions of every new UNESCO activity in the country concerned; Recommendation No. 14 calling for a strengthening of links between Headquarters, the field offices and the National Commissions. 57. These initiatives have highlighted great unevenness in the actions of the National Commissions with regard to extrabudgetary fundraising: the National Commissions of China, Republic of Korea, Japan, New Zealand, El Salvador, Gabon, Trinidad and Tobago and Estonia have made considerable efforts to mobilize voluntary contributions, although those contributions sometimes benefit programmes led by Headquarters more than programmes managed by the field offices (particularly in the cases of China, Republic of Korea and Japan). 58. However, these cases are relatively isolated and these initiatives have much poorer results than those of the UNICEF National Committees. Moreover, fundraising efforts by the National Commissions to finance their own initiatives often compete with the mobilization of funds for UNESCO programmes. That is why the External Auditor recommended asking the National Commissions to play a more active and better organized role in mobilizing extrabudgetary funds.

11 204 EX/21 Part I page 10 F. CONCLUSION 59. The External Auditor recommends that UNESCO relaunch the cluster strategy adopted by the 2001 reform, adapting it to a budget context that is much less favourable than it was in With that in mind, it should refocus its activity on a small number of multisectoral regional offices in each broad region of the world, giving them hierarchical authority over the national offices and significantly reducing the number of national offices. 60. One regional cluster office per world region should be staffed with a coordinator for matters concerning the Education and Natural Sciences Sectors, assisted by a small team of programme specialists enabling him or her to assist the other offices in that region in these areas of activity and mediate in the event of possible differences of opinion between those offices This approach would be in line with that recommended by the United Nations, which is keen to promote regional offices. Its implementation should be facilitated by new technologies, which enable joint work in a large region without increasing travel. It should be accompanied by a much more precise and personalized definition of the objectives assigned to each office and each office manager, and contractualization of relations between the offices and the governments of the host countries. Achievement of these objectives must be the essential element taken into account in the periodic appraisals of office managers. 62. One of the priority objectives to assign to the field office network is the mobilization of extrabudgetary contributions, which should be one of the main tasks of the offices, as is the case for other United Nations agencies. The possibility of raising considerable extrabudgetary contributions must also be one of the main justifications for maintaining certain national offices and establishing antennas or desks in countries that do not have a national office. Proposed decision 63. The Executive Board may wish to adopt a decision worded as follows: The Executive Board, 1. Having examined documents 204 EX/21 Part I and 204 EX/21.INF, 2. Expresses its satisfaction to the External Auditor for the high quality of his report; 3. Invites the Director-General to report on progress achieved in the implementation of the recommendations in the report on the follow-up to all recommendations made by the External Auditor. Director-General s comments The Director-General thanks the External Auditor for his audit report on the UNESCO field office network. She accepts the recommendations it contains and will report on the progress of their implementation in accordance with the usual practice. She wishes, nonetheless, to draw attention to Recommendations No. 6 and No. 9. Details in Annex I. 1 The other sectors have already developed flexible coordination arrangements in each region of the world.

12 ANNEX I Letter of provisional observations on the network of UNESCO field offices Preliminary implementation plan Audit recommendations Owner Preliminary implementation plan and comments The recommendation will require additional resources for implementation Estimated implementation date Recommendation No. 1. The External Auditor recommends giving hierarchical authority to offices with a regional role over all national offices throughout the field network. FSC+B SP The Secretariat accepts this recommendation. The implementation of the recommendation is closely linked to the full implementation of the reform adopted by the General Conference in 2011, in particular the roll out of the establishment of multisectoral subregional offices in all regions. Yes Additional resources may be required, if a decision would be taken to increase the human resources to allow subregional offices to fully play the oversight function, in particular as regards strategy and programme planning and programme implementation at the national level. 1 January 2020 (Start of 40 C/5) Recommendation No. 2. The External Auditor recommends appointing a coordinator for each of the Organization s sectors in each broad region of the world. BSP+ Sectors The Secretariat accepts this recommendation in principle. The implementation of the recommendation is closely linked to the full implementation of the reform adopted by the General Conference in 2011, in particular the roll out of the establishment of multisectoral subregional offices in all regions Yes One-off additional resources (staff relocation) may be required for the full staffing of this new scheme 1 January 2020 (Start of 40 C/5) Recommendation No. 3. The External Auditor recommends effectively applying the principle defined in 2001 according to which national offices are considered as exceptional, and revising the map FSC The Secretariat accepts this recommendation. The established criteria for defining the need for a national presence established in 2001 will be applied and complemented by operational aspects that will be regularly Yes One-off additional resources (staff relocation/separation costs, termination of lease agreements, etc.) would be required if a representational presence would be transformed in a non- Full review methodology in place as of April 2019 (206 th session of the Executive Board) 204 EX/21 Part I Annex I

13 Audit recommendations of national offices, which could mean replacing some with project teams, antennas or desks. Owner Preliminary implementation plan and comments monitored through a performance management tool (Balanced scorecard). An assessment will be made whether this presence requires to have a representational (national office) or a nonrepresentational (antenna, project office, desk) character. Discussions with the hosting member states will be undertaken accordingly. The recommendation will require additional resources for implementation representational presence or discontinued. Estimated implementation date 204 EX/21 Part I Annex I page 2 The maintenance of a national representational presence and the creation/maintenance of a nonrepresentational presence will be time bound (temporality factor) and be subject to a regular assessment. The implementation of the principles will also take account of the recommendations by the UN SG on the field presence of entities of the UN Development System within the framework of the UNDS review presently being undertaken. Recommendation No. 4. The External Auditor recommends, in the event of the establishment of a new entity (office, project team, antenna or desk), giving it a time-limited mandate, extending that mandate if necessary.. FSC The Secretariat accepts this recommendation. The maintenance of a national representational presence and the creation/maintenance of a nonrepresentational presence will be time bound (temporality factor) and be subject to a regular assessment. Yes One-off investment (staff relocation/separation costs, termination of lease agreements, etc.) would be required if a representational presence would be transformed in a nonrepresentational presence or discontinued. Starting as soon as possible

14 Audit recommendations Owner Preliminary implementation plan and comments The recommendation will require additional resources for implementation Estimated implementation date Recommendation No. 5. The External Auditor recommends setting up trial administrative platforms common to several offices and pooling certain services between several field offices from different United Nations agencies. BFM The Secretariat accepts this recommendation. The Secretariat will continue to establish joint administrative platforms, where two or more UNESCO entities are in the same location. These will build on the evaluation and lessons learnt from the experiences of existing joint platforms e.g. in Trieste (ICTP and TWAS), Amman (Amman and Baghdad offices), Addis Ababa (ICBA and Addis Ababa office) and New Delhi (New Delhi office and MGIEP). Further restructuring of administrative functions may require additional resources including set up investments. Exact figures will be available at a later stage. 1 January 2020 (Starting of 40 C/5) In line with the full implementation of the reform adopted by the General Conference in 2011, reporting mechanisms have been established between administrative officers in multisectoral subregional offices and those of national offices in Africa. The Secretariat will consider whether this model can serve as a basis for other regions. Recommendation No. 6. The External Auditor recommends examining the possibility of decentralizing to the field network a greater part of the preparation and BSP With regard to consolidation of administrative functions at the UN level, further analysis of the Joint Operations Facility (JOF) in Brazil will be undertaken to define the Organization s position and way forward, in light of the UNDS review of back office functions presently underway. The Secretariat partially accepts this recommendation. Yes 31 December 2018: Study with accompanying measure available 204 EX/21 Part I Annex I page 3

15 Audit recommendations monitoring of implementation of the Organization s sectoral programmes and budgets. Owner Preliminary implementation plan and comments The Secretariat recognizes that there are challenges at the implementing stage in field offices. In the proper RBB process, field offices have the possibility to propose the programmes that are most relevant to their country/regions, and have the authority to decide on the most suitable modality, select their partners and sign agreements while applying UNESCO s rules and procedures for partnerships. The recommendation will require additional resources for implementation Estimated implementation date 204 EX/21 Part I Annex I page 4 Nevertheless, the Secretariat agrees that: (a) Delegated authority to field offices need to be enhanced to allow them to deliver their programme effectively and efficiently, once the work plans are agreed to; this includes the need for further clarification of the delegated authority for field office heads/directors by establishing thresholds, revising the accountability policy, and further simplifying administrative processes. (b) Practices across Sectors need to be harmonized, especially with regard to centralizing budgets in regional offices. The Secretariat will establish consultative processes at lower levels, based on joint analysis and programming, and the setting of common objectives; (c) The issues of dispersion of funds across micro-budgets leading to an excessive work planning burden, needs to be more efficiently addressed.

16 Audit recommendations Owner Preliminary implementation plan and comments The recommendation will require additional resources for implementation Estimated implementation date Recommendation No. 7. The External Auditor recommends adopting an active policy to organize staff mobility between Headquarters and the field office network. HRM The Secretariat accepts this recommendation. Preliminary work has begun on developing a managed geographical mobility policy for international professional and higher-level category staff. It is planned to have the policy in place in Sept The possible financial impact of the managed geographical mobility policy is being evaluated as the details of the policy are being elaborated. September 2018 Recommendation No. 8. The External Auditor recommends (i) personalizing the terms of reference given to managers of field offices, (ii) personalizing their periodic performance appraisals, which should verify effective fulfilment of their mandates, and (iii) have these appraisals carried out worldwide by the directors of offices with a regional remit. HRM+F SC The Secretariat accepts this recommendation. Based on the generic performance objectives, expected results should be customized for each of the Directors/Heads of Field Offices to reflect activities to be implemented in their respective offices. Also, adding one objective that is officespecific can also be considered, in addition to the generic objectives. This will result in a more personalized performance assessment at the end of the biennium. No Starting with objective setting for 2018/2019 The reporting lines to be established between offices at the national level and offices at the regional level (ref. Rec. 1) will include the responsibility of directors of multisectoral subregional offices to carry out the full assessment cycle of heads of national offices, which they supervise. 204 EX/21 Part I Annex I page 5

17 Audit recommendations Recommendation No. 9. The External Auditor reiterates his previous recommendations to (i) ask each field office to establish a strategic plan consistent with the country programming documents (UCSs) and (ii) organize an annual consultation or even a contracting procedure to specify their common objectives for the year in question. Owner BSP Preliminary implementation plan and comments The Secretariat partially accepts this recommendation. As regards part (i) of the recommendation, the Secretariat observes that the critical issue of the difference between a strategic document and an operational document, and between a regional document and a countrylevel document needs to be addressed. Hence, the Secretariat considers that the External Auditor has not sufficiently indicated the format of these documents. Yes The recommendation will require additional resources for implementation Significant additional resources needed ; amount to be determined Estimated implementation date January 2018: validation of the UCS guidelines. These guidelines will be rolled-out and piloted during the biennium, with careful monitoring of its implementation 204 EX/21 Part I Annex I page 6 Printed on recycled paper The Secretariat is developing new guidelines for the successor to the UCPD ( UNESCO Country Strategy (UCS)), which will focus on strategic areas where UNESCO has a comparative advantage, with details on the relation with national priorities and alignment to UN programming frameworks, and provide details on resource mobilization/partnership approaches and targets. This format can be used at the regional level also. As regards part (ii) of the recommendation, the Secretariat believes that a separate contractualization would violate the C/5 budget and programme logic and approach, in which the Secretariat already consults national authorities adequately in its programme preparation and implementation.

18 Executive Board Two hundred and fourth session 204 EX/21 Part II PARIS, 6 March s2018 Original: French Item 21 of the provisional agenda NEW AUDITS BY THE EXTERNAL AUDITOR PART II SHORT-FORM REPORT AUDIT OF THE UNESCO OFFICE IN LIMA SUMMARY This document is the short-form report of the External Auditor s audit of the UNESCO Office in Lima as submitted in document 204 EX/21.INF.2 pursuant to Article 12.4 of the Financial Regulations. Action expected of the Executive Board: proposed decision in paragraph 53. Job :

19 204 EX/21 Part II EXECUTIVE SUMMARY AUDIT REPORT ON THE UNESCO OFFICE IN LIMA DISCLAIMER: This executive summary was drawn up by the External Auditor at the Secretariat s request in order to optimize translation costs and facilitate discussion by the governing bodies. Only the long-form report is authoritative in terms of exact content and the nature and scope of the External Auditor s findings and recommendations. 1. Strategy of the Office 1. The strategy committee of the Office in Lima, made up of the Director and the sector coordinators, develops a multi-year strategy and monitors its application at monthly meetings of its management team (composed of the same members and the administrative officer). 2. The strategy is at the root of the Office s success, which takes the form of numerous projects launched and a very substantial amount of extrabudgetary funds raised. 3. The Office Director reports that the strategy has three mainstays: the characteristics of the country, the support provided by Headquarters and other field offices, and the Office s own efforts. The document drafted by the Director on the fundraising strategy warrants being used in training organized by Headquarters on the matter. (a) Characteristics conducive to cooperation between UNESCO and Peru 4. Peru is a middle-income country with high enough income to make voluntary contributions of a significant amount to an international organization, but it lacks technical expertise and wishes to benefit from technical assistance, in particular in the fields of education and culture. 5. Its extensive historic and pre-hispanic heritage has not yet been researched exhaustively: only 20% of some 100,000 identified sites are well known and visited. Showcasing this heritage is a factor of tourist and economic development with tremendous potential. 6. Peru welcomes international cooperation in all its forms and in particular with United Nations agencies. Legislation enables it to involve them in project design and implementation. 7. UNESCO has clear advantages for Peru: possible listing of sites (and intangible heritage) as world heritage, reputation, technical expertise, and continuity despite political changes. 8. The senior civil servants involved in projects stress this last point in particular: UNESCO s assistance is a factor in the durability of major projects implemented under several governments. 9. The UNESCO Office also plays a role as facilitator in several situations, thanks to its very good knowledge of the country: between the government and local authorities, between the government and Indian communities, and between the various ministries. (b) Support provided by Headquarters and other field offices 10. The Office in Lima considers that its good relations with Headquarters and certain field offices constitute one of the keys to its success.

20 204 EX/21 Part II page It mentions, in particular: the rapidity of Headquarters response when its agreement is required when negotiating a new project with a local partner; the quality of assistance from Headquarters in drafting agreements with the project s partners. 12. The Office is also assisted by the Montevideo and Santiago thematic regional bureaux in the Latin America and the Caribbean region, responsible for coordinating matters concerning, respectively, the natural sciences and education. It does not, however, have such close relations with the thematic regional bureau in Havana, responsible for culture, owing to the fewer number of culture specialists in the Lima Office. 13. Likewise, it does not have such close relations with the Cluster Office in Quito, which covers Peru but does not have supervisory authority over the Office in Lima. In fact, the Office in Quito is not as active and has fewer staff than the Office in Lima. 14. It welcomes the methodological assistance provided by the Office in Brasilia, which has a very large budget and a situation comparable to that of the Office in Lima (they both benefit from a high level of host-country funding). (c) The Office in Lima s own efforts 15. The Office in Lima s action to encourage new projects and raise new extrabudgetary contributions is thought-out and planned: the document Evaluation and planning , prepared after a workshop of the Office s strategy team in February 2016, sets specific objectives. 16. It includes in particular a list of all the Office s partners in a position to assist it, who should be paid particular attention by the Office s team: ministers, senior civil servants and prominent private sector individuals. 17. This contact policy involves the active and continued presence of the Office s team and Director: the recent annual evolution of funds mobilized by the Office shows that the arrival of the present Director on 1 February 2014 after a lengthy interim period led to a substantial increase in extrabudgetary funds mobilized: Table 1. Evolution of extrabudgetary funds mobilized by the Office in Lima (United States dollars) Total of funds mobilized 444, , ,118, ,598, ,448, Source: External Auditor, based on data communicated by the Office in Lima. 18. The development of private contacts is complemented by significant media outreach to strengthen the Office s image: press conferences, active presence on social networks, organization of cultural events, and the production of events enabling UNESCO and its sponsors to raise their profile with a specific professional category.

21 204 EX/21 Part II page The Office attaches great importance to respecting some guiding principles that bolster its reputation with local partners: - it provides technical assistance but never takes the place of the competent authorities, which control final decisions; for instance, for the major MUNA project preparing a national museum, the minister and vice-minister of education and the relevant officials in the UNESCO and United Nations Office for Project Services (UNOPS) offices met weekly, which enabled the political authority to choose between the options proposed; - it observes UNESCO s specific procedures, monitored by Headquarters, which is a factor of confidence for those with whom it works; - it does not only call on UNESCO experts but mobilizes many international experts, which enables the country to make choices on the basis of highly diversified advice; - it remains politically neutral and cultivates many relations with local authorities of different political tendencies, the regional departments of ministries and influential individuals in the Indian communities, which prevents it from being accused of bias. 20. The strategy of the Office in Lima is not then a direct fundraising strategy (approaching potential donors for funding) but rather a strategy of image creation, maintenance of its reputation and public relations, which encourages the local authorities to entrust it with projects and directly fund some of them. 21. The experience of the Office in Lima and the documents produced by its strategy committee could be used in the context of training sessions organized by Headquarters on seeking new projects and raising extrabudgetary contributions. Recommendation No. 1. The External Auditor recommends that Headquarters use the experience of the Office in Lima in training for field office managers in extrabudgetary fundraising. 22. It is suggested that the Office s strategy committee reflect on the durability of the requests it receives from the Ministry of Education. A large number of them at present are connected with the education reform that is under way. They are, then, likely to fall in number in the future, when the reform has been essentially completed. Accordingly, it is desirable for the Office to consider both the themes of the projects it might propose to the ministry, whose needs are immense, and how to continue to diversify its fields of activity. Recommendation No. 2. The External Auditor recommends that the Office in Lima steer the deliberations of its strategy committee towards diversifying its projects in the field of education (where most of the projects are connected to the reform under way) and in UNESCO s other fields of competence. 2. Staff management 23. Three specific points warrant mention: the difference between the staff counted by the Office itself and by Headquarters; the impersonal nature of staff appraisals, and the existence of training plans.

22 204 EX/21 Part II page 4 (a) Difference between the staff numbers counted by the Office and by Headquarters 24. While the staff numbers counted by the Office as at 31 July 2017 stood at 35, Headquarters evaluated the number of UNESCO staff members at roughly the same date (17 August 2017) at 99 individuals, which would make the Office in Lima the office with the most staff in the entire field network, other than the Office in Bangkok (145 staff members). 25. The difference stems from consultants, who are all considered by Headquarters as being part of the Office in Lima, when the vast majority of them are recruited exclusively for a specific project, financed exclusively with funds allocated to that project and never working on the premises of the Office itself. The 22 consultants who are assigned coordination tasks on the premises of the Office in Lima are included among the 35 individuals declared by the Office. 26. Headquarters includes in the Office s staffing consultants assigned to projects who are generally recruited, in the case of other field offices, by NGO partners of UNESCO and not directly hired by the Organization. Recommendation No. 3. The External Auditor recommends that Headquarters take into account the specific circumstances of the Office in Lima, which directly recruits consultants for project implementation, while in other offices nongovernmental organization partners of UNESCO would usually recruit such consultants, by referring to this particular case in its statistical documents comparing staffing levels in different field offices. (b) The impersonal nature of staff appraisals 27. The Office staff performance report forms are filled out properly every year but give no precise and personal indication of staff performance. The same comment 1 features in all the evaluations of all staff members. 28. This practice is in line with that of Headquarters for the rating of the Office Director and is therefore a usual practice at UNESCO. More precise information about the performance of each staff member and the progress they could make would be able to assist them in their future career. Recommendation No. 4. The External Auditor recommends assessing the staff in a more personal way, enabling accurate reporting on the qualities of each staff member and the progress asked of them. (c) Establishment of continuing training plans 29. The Office has drawn up two-yearly training plans ( and ) mostly intended for all staff members. The 21 sessions in were devoted to security (nine cases), human resources management (five cases), financial management (three cases), information technology (one case) and themes linked to the Office s projects (three cases). The three training sessions on financial matters took place in Montevideo; 12 sessions were held online. In seven cases, the training was organized by a member of the Office, an initiative worth mentioning as some field offices complain that they lack funding to organize training. 1 Results in progress in accordance with work assignments planned.

23 204 EX/21 Part II page After the 2016 visit to Lima by the Headquarters team responsible for gender equality, training on the subject was held in February The themes of the 18 training sessions planned for are more varied: although nine are again on security and one on IT, two are on ethics and three on general matters (the United Nations, the decision-making process and the respective roles of managers and experts). 3. Contract management 32. The Office in Lima complies with the procedures provided for in the Administrative Manual for the procurement of supplies and services and for contracting. 33. Verification of a sample of procedures nevertheless calls for the following comments. (a) The criteria for selecting bids attaches far more importance to their technical value than to their price 34. For the establishment of contracts for project implementation, the procurement committee assesses the bids according to two main criteria, weighted according to the technical value of the bids (70% of the points) and the price (30% of the points). 35. The minutes of the committee s meetings show that the weighting is properly observed and that the sub-criteria for rating the technical value of bids are explained. 36. In some cases, the rates obtained by the two best-placed candidates were very close, and the one selected was not the lowest bidder. It won the contract because it obtained a higher technical rating, benefiting from a higher weighting (70% as against 30%). This situation complies with the rules of the consultation but calls for particular care as the criteria for evaluating the value of bids are more subjective than the price criterion. 37. The decisions taken by the procurement committee of the Office in Lima do seem unbiased though, as the sub-criteria retained to assess the technical value of bids are numerous and factual, which limits the risk of subjectivity. It was moreover noted that the candidates retained for some contracts missed out on others, and that none of the Office s partners was in a privileged position. 38. Furthermore, declarations of interest are requested of the committee member who is a consultant and does not hold a fixed-term contract. 39. For instance, in the case of a contract for provision of modules and materials for an initial teacher education programme, the Marcelino Champagnat University of Lima was selected with points, of which 596 were for technical value and for price, when it was more expensive than the second best-placed candidate ($125,605 as against $92,441.40), the consultancy Miral, which had obtained 805 points (505 technical points and 300 financial points). 40. Likewise, for a qualitative study of the pedagogical accompaniment strategy and factors influencing the school day, the Instituto de Estudios Peruanos was selected with points, of which 640 were technical and financial, when it was more expensive than the best-placed candidate after it ($97,432 as against $77,700), the Pontificia Universidad Católica del Perú, which obtained points ( technical and 300 financial).

24 204 EX/21 Part II page 6 (b) One case of a double contract with a consultant, exceeding a regulatory threshold 41. One consultant was awarded two successive contracts of $19,998 and $7,989, from May to December The cumulative value of the two contracts, that is, $27,987, exceeded the threshold of $20,000 beyond which all consultants must write a technical and financial proposal on the approach he/she would adopt, instead of only providing the detailed curriculum vitae required for all consultancy contracts (Item of the Human Resources Manual, paragraph 19). Recommendation No. 5. The External Auditor recommends ensuring compliance with the formalities required for the awarding of consultant contracts of more than $20, Project management (a) The scale of projects 42. The projects implemented by the Office in Lima are numerous, mobilize substantial resources and concern matters of prime importance to the host country. 43. In the field of education, most of the projects concern the preparation and implementation of a thoroughgoing reform of education policy in Peruvian primary and secondary education, which was launched according to the following timetable: analysis of the situation in , design of the reform in and application of the reform in (with adoption of a law in 2016 and adoption of regulations under the law in 2017). 44. Throughout its duration, the process benefited from technical assistance from UNESCO and 92 international experts selected with the Organization s help. The Office in Lima implemented its projects on the basis of a group of 1,000 State-school pupils attending school at different urban and rural sites. 45. Some other projects are connected to the consequences of the 2016 El Niño-related flooding. 46. Most of the projects under way in the field of culture are linked to tangible and intangible properties included in the UNESCO World Heritage List: design of the master plan for the future National Museum of Archaeology of Peru (MUNA), assistance to the network of world heritage cities and historic cities of Peru through capacity building, promotion of the intangible heritage linked to seed cultivation in the Andes as a factor of sustainable development in Ayacucho and Puno, etc. 47. The only Natural Sciences Sector project (involving the Sector s one coordinator) is in fact implemented with the assistance of the Office s other sectors; it is a genuinely intersectoral project on building local capacities for climate change adaptation and water resources management in Huascarán National Park. 48. The Communication and Information Sector implemented two projects, training students and journalists in freedom of expression and capacity building for the staff of Peru s National Library. 49. It also assists the other sectors in managing the communication of their projects and in the case of publications checks that they comply with UNESCO standards.

25 204 EX/21 Part II page 7 (b) The utility of harmonizing and enriching the performance indicators of projects under different sectors 50. The performance indicators of projects conducted by each sector represented in the Office in Lima vary in value; some merely indicate the number of people affected by actions undertaken; others indicate the documents and tools produced or to be produced (if the project has not ended); few of them attempt to measure the effectiveness of the actions and draw conclusions from them for the future. 51. It is suggested that the Office reflect on how to harmonize and improve the quality of each sector s and each project s performance indicators. Recommendation No. 6. The External Auditor recommends that the Office in Lima reflect on how to harmonize and improve the performance indicators of all the projects of the different sectors in the Office, by aiming for indicators that enable measurement of the effectiveness of actions taken. 52. Following the audit, and bearing this in mind, the Office in Lima was due to hold workshops in December 2017 and January 2018 to enrich and harmonize the performance indicators used for the projects under different sectors. Proposed decision 53. The Executive Board may wish to consider adopting a decision along the following lines: The Executive Board, 1. Having examined documents 204 EX/21 Part II and 204 EX/21.INF.2, 2. Expresses its satisfaction to the External Auditor for the high quality of his report; 3. Invites the Director-General to report on progress achieved in the implementation of recommendations in a report on the follow-up to all recommendations made by the External Auditor. Director-General s comments The Director-General thanks the External Auditor for his audit report on the UNESCO Office in Lima. She accepts the recommendations made therein and will report on the progress of their implementation in accordance with the usual practice. Detailed comments on the different recommendations are set out below. Details in Annex II.

26 204 EX/21 Part II Annex I ANNEX I LIST OF RECOMMENDATIONS Recommendation No. 1. The External Auditor recommends that Headquarters use the experience of the Office in Lima in training for field office managers in extrabudgetary fundraising. Recommendation No. 2. The External Auditor recommends that the Office in Lima steer the deliberations of its strategy committee towards diversifying its projects in the field of education (where most of the projects are connected to the reform under way) and in UNESCO s other fields of competence. Recommendation No. 3. The External Auditor recommends that Headquarters take into account the specific circumstances of the Office in Lima, which directly recruits consultants for project implementation, while in other offices non-governmental organization partners of UNESCO would usually recruit such consultants, by referring to this particular case in its statistical documents comparing staffing levels in different field offices. Recommendation No. 4. The External Auditor recommends assessing the staff in a more personal way, enabling accurate reporting on the qualities of each staff member and the progress asked of them. Recommendation No. 5. The External Auditor recommends ensuring compliance with the formalities required for the awarding of consultant contracts of more than $20,000. Recommendation No. 6. The External Auditor recommends that the Office in Lima reflect on how to harmonize and improve the performance indicators of all the projects of the different sectors in the Office, by aiming for indicators that enable measurement of the effectiveness of actions taken.

27 ANNEX II PRELIMINARY IMPLEMENTATION PLAN BY RECOMMENDATION Audit recommendations Preliminary implementation plan and comments The recommendation will require additional resources for implementation (YES/NO) Estimated date for the implementation of the recommendation Recommendation No. 1. The External Auditor recommends that Headquarters use the experience of the Office in Lima in training for field office managers in extrabudgetary fundraising. Recommendation accepted. The lessons from the audit will indeed enrich our training on resource mobilization. Recommendation No. 2. The External Auditor recommends that the Office in Lima steer the deliberations of its strategy committee towards diversifying its projects in the field of education (where most of the projects are connected to the reform under way) and in UNESCO s other fields of competence. The UNESCO Lima Office takes note of this recommendation, and agrees on the need to continue expanding our strategy of alliances and mobilization of resources, taking advantage of the interesting opportunities offered by Peru and the positioning that the Office has achieved in all its Sectors. ln fact, our team is currently preparing two major inter sectorial projects to provide technical assistance in the regions of Ayacucho and Piura to promote inclusive social and economic development processes incorporating the axes of culture, environment, education and disaster risk management. We hope, for the next biennium, to strengthen our presence at the territorial level by expanding the participation of the regional and local government in the UNESCO programs. Likewise, we are coordinating with the Ministry of Education, with potential donors and with other actors of the Sector, to initiate projects on topics such as Rural Secondary Education, Inclusive Education, Comprehensive Sexual Education, promotion of the Culture of Peace and coexistence in school, among others, themes that will diversify the assistance in the Education Sector. Implementation in progress 204 EX/21 Part II Annex II

28 Audit recommendations Recommendation No. 3. The External Auditor recommends that Headquarters take into account the specific circumstances of the Office in Lima, which directly recruits consultants for project implementation, while in other offices non-governmental organization partners of UNESCO would usually recruit such consultants, by referring to this particular case in its statistical documents comparing staffing levels in different field offices. Preliminary implementation plan and comments Consultant contracts are registered in the contract management system. HRM s statistical reports are generated on the basis of that data. It is not possible for HRM to introduce a specific reference in the system to explain specific situations. For reasons of transparency, in its statistical reports, HRM will continue to take account of all the staff of each office so as to reflect the total number of individuals with a contractual relationship with the Organization. The recommendation will require additional resources for implementation (YES/NO) Estimated date for the implementation of the recommendation 204 EX/21 Part II Annex II page 2 Recommendation No. 4. The External Auditor recommends assessing the staff in a more personal way, enabling accurate reporting on the qualities of each staff member and the progress asked of them. The UNESCO Lima Office takes into account this recommendation and shall ensure a process of personalized and detailed evaluation to evidence the objectives, the assigned tasks of each colleague and their respective progress. NO Implementation in progress Recommendation No. 5. The External Auditor recommends ensuring compliance with the formalities required for the awarding of consultant contracts of more than $20,000. UNESCO LIMA Office has already taken measures to ensure the strict compliance of the standards in this type of contracts. The Administration Office will conduct a thorough monitoring and training processes, whenever necessary, so that the colleagues involved keep in mind the standards of the Organization in these matters. NO Implementation in progress Recommendation No. 6. The External Auditor recommends that the Office in Lima reflect on how to harmonize and improve the UNESCO Lima Office shall take into account this recommendation. We have foreseen immediately a technical process with the coordinators and professional team to guarantee that the projects that are starting their NoO Implementation in progress

29 Audit recommendations Preliminary implementation plan and comments The recommendation will require additional resources for implementation (YES/NO) Estimated date for the implementation of the recommendation performance indicators of all the projects of the different sectors in the Office, by aiming for indicators that enable measurement of the effectiveness of actions taken. implementation consider the guidelines from UNESCO to ensure that the performance indicators give an objective account of the effect of the actions implemented and the impact of UNESCO technical assistance on interventions on people's lives. Therefore, we will develop two workshops (December 2017 and January 2018) where we will revise the logical framework of our planning matrix to evaluate the scope of the indicators. The objective of these momentums is to obtain a harmonized planning office matrix between sectors, projects and accountability tools (SISTER among others).thus, the product obtained can be useful to face next annual biennium plan from an evaluation process. Printed on recycled paper 204 EX/21 Part II Annex II page 3

30 Executive Board Two hundred and fourth session 204 EX/21 Part III PARIS, 6 March 2018 Original: French Item 21 of the provisional agenda NEW AUDITS BY THE EXTERNAL AUDITOR SHORT-FORM AUDIT REPORT ON THE UNESCO OFFICE IN JAKARTA SUMMARY This document is the short-form report of the External Auditor s audit report on the UNESCO Office in Jakarta as submitted in document 204 EX/21.INF.3 in compliance with Article 12.6 of the Financial Regulations. Action expected of the Executive Board: proposed decision in paragraph 45. Job:

31 204 EX/21 Part III EXECUTIVE SUMMARY AUDIT OF THE UNESCO OFFICE IN JAKARTA (INDONESIA) DISCLAIMER: This executive summary was drawn up by the External Auditor at the Secretariat s request in order to optimize translation costs and facilitate discussion by the governing bodies. Only the long-form report is authoritative in terms of exact content and the nature and scope of the External Auditor s findings and recommendations. 1. An external audit of the UNESCO Office in Jakarta was conducted from 21 August to 1 September The audit mainly concerned the activities and management of the Office during the current biennium. The audit was conducted in accordance with the International Standards of Supreme Audit Institutions (ISSAI). Each finding and recommendation has been discussed with the Office s managers. The Office in Jakarta and Headquarters were able to submit their comments on the draft audit report. These comments were taken into account for the finalization of the report. 2. The audit results were positive, both from the point of view of the quality of the local management and the support provided by Headquarters. The External Auditors have endeavoured, in particular, to identify the areas in which the UNESCO Office in Jakarta can bring ideas of good methods for other offices: internal contracting processes; team management; resource mobilization strategy; bi-monthly financial reports on each project; and management of funds for the benefit of the donor. 3. A permanent UNESCO office has been established in Indonesia since In 2017, it combined the responsibilities of a thematic regional bureau for sciences for the 46 Member States and two Associate Members of the Asia and the Pacific region, a cluster office for five Southeast Asian States (Indonesia, Malaysia and Philippines since 2001, Brunei Darussalam since 2002 and Timor-Leste since 2005) and, de facto, a national office for Indonesia. 4. The Office conducts activities and projects in all of the Organization s sectors. For the biennium, the Office had a regular programme (RP) budget of $2 million and extrabudgetary appropriation (EXB, additional contributions included) of $13.5 million, as well as $2.5 million for the funding of international staff. At the time of the audit, across all categories, the Office in Jakarta had 87 staff members, including eight permanent staff members with international status. 5. The agreement with the host country, signed in 1967, has never been updated and is in part a dead letter and obsolete. All UNESCO receives from the Indonesian Government is a fixed cash contribution of $18,000 per year. This amount has remained unchanged since It does not correspond to the 1967 agreement, which included a contribution to the cost of local staff and the premises. It can thus be estimated that UNESCO is paying an annual net amount of approximately $113,000 to $128,000 for its presence, which should be borne by the Indonesian Government. Recommendation No. 1: The External Auditor recommends updating the 1967 agreement with the Indonesian Government, taking care especially to maintain that Government s financial contribution at a significant level (Office in Jakarta and Headquarters). 6. Relations between the Office and the three countries in the cluster where it has no permanent presence are governed only by letters from the Director-General to the local authorities dated 25 September 2015, introducing the current Director of the Office. The activities are only defined by the C/4 and C/5 programme documents and the existence of United Nations Development Assistance Framework (UNDAF) documents.

32 204 EX/21 Part III page 2 7. This situation does not seem to afford the same level of protection to the employees and assets of the Organization as would an express agreement entered into with the authorities in those countries at a time when there is intensified activity in some of them (particularly in the Philippines). Recommendation No. 2. The External Auditor recommends that agreements be entered into between the Office in Jakarta and the national authorities of Brunei Darussalam, Malaysia and the Philippines to provide better legal guarantees for the activities of the Organization in those countries (Office in Jakarta and Headquarters). 8. The Office in Jakarta has a sectoral strategy for the region, the Regional Science Strategy There are no plans at present to update it, with the Office instead endeavouring to break it down into specialized strategies. The Office has renewed its frameworks for action with the countries in its cluster. It drew up four UNESCO Country Programming Documents (UCPD) for the period and had them approved in It also has a set of five UNESCO country strategies, just finalized in summer 2017, which are useful documents for communication with third parties. 9. The activity of the Office primarily benefits the cluster countries (74.5% of spending on activities and projects 1 in the present biennium). Among these countries, Indonesia stands out, accounting for more than one-quarter (28.5%). 10. Relations between the Office and the Indonesian National Commission (NatCom) (established in 1952) are close. The Indonesian Government is highly committed to the United Nations and views several of UNESCO s fields of action (particularly in education) as priorities. The Indonesian Government is supposed, according to the Commission, to have allocated approximately $535,000 in to the programmes conducted by UNESCO. The NatCom considers that the Organization enjoys a good image and is well known in Indonesia. 11. The Office transfers credits to the National Commissions, particularly to that of Timor-Leste ($812,886 between 2015 and 2017), for execution of projects. 12. The United Nations has 23 agencies (country offices for the most part) in Indonesia. The Office takes part fairly regularly in the joint activities, in particular for drawing up the document known as the United Nations Partnership for Development Framework (UNPDF) , jointly signed by the Director of the Office and the Indonesian Government. South-South cooperation is another priority. UNESCO participates in many of the actions in the annual work plan, and chairs, for instance, the working group on human rights. 13. The last time the External Auditor audited the Office was in October-November There has been no significant intervention by UNESCO s Internal Oversight Service (IOS) in recent years at the Office. The report by the External Auditor resulted in ten recommendations. All the recommendations were suppose to have been implemented by June According to comments made at the time of the present audit and despite the earlier assurances given by the Office to the External Auditor, which resulted in those recommendations being closed, the situation is in fact more uneven: one of the recommendations (No. 6) has not been implemented and there are persistent problems with implementation of two of them (Nos. 1 and 8). Recommendation No. 3. The External Auditor recommends that implementation of the external audit recommendations be documented (Office in Jakarta and Headquarters). 1 Excluding transfers to the National Commissions.

33 204 EX/21 Part III page The Office has been headed since August 2015 by Mr Shahbaz Khan. He has brief terms of reference and a job description. The organization of management through regular well-structured meetings seems to be effective. The internal organization of the Office has remained unchanged since January It is traditional and appears to suit the needs of the Office. 16. The Office has a Finance and Administration Unit of twelve people. The current chief (P-3), in post since June 2016, is very involved in day-to-day management and improving the quality of management of the Office. The administrative team appears to be the right size and well trained, as shown by the various tests carried out as part of the audit. Its head holds meetings each month. 17. The project officers also have administrative and financial assistants attached to the project specialists. At the time of the audit, there were ten of them (not counting the Timor-Leste antenna office). Their workload is not constant because of the project life cycles, so grouping these assistants together into an administrative and financial project support platform would equalize the workload, relieve the central administrative team and perhaps save on one or two posts or contracts. Recommendation No. 4. The External Auditor recommends that consideration be given to grouping the administrative and financial assistants attached to the project specialists into a single administrative and financial project support platform (Office in Jakarta). 18. The Office has drawn up standard operating procedures (SOP) for some management processes, which is not only good practice but also a precondition for effective internal control. The scope of these procedures is very incomplete. Recommendation No. 5. The External Auditor recommends that an up-to-date register of standard operating procedures (SOP), signed and dated by the Director, be established (Office in Jakarta). 19. In the circumstances, annual internal control self-assessment appears a largely formal exercise. It does not point up any particular weakness, and the internal control self-assessment analysis table sent in for 2016 is almost identical to the one sent in for Based on revised standard operating procedures, a plan to resolve the items in the self-assessment requiring attention could be put in place to enhance the quality of local management. In its response to the draft audit report, the Office indicated that, following the audit, it had taken steps to resolve the problems identified. 20. The costs of the Office s premises are significant. They were $206,514 in 2016, 49.4% of that for rent alone. Given the high rent, this level of spending can currently be considered as acceptable though there is a definite risk that it will increase. However, none of the alternatives, such as moving to another property or to joint United Nations offices, appears realistic in the short term. 21. The total budgeted resources for the Regional Bureau for Science in Asia and the Pacific in Jakarta were more than $18.17 million for the biennium ($2 million from the regular budget, $13.5 million of extrabudgetary resources and $2.67 million in resources used for the salaries of international staff). The regular budget and international staff allocated to the Office were strengthened to make use of the substantial extrabudgetary resources acquired during the period, with a peak in In , extrabudgetary resources contributed over 92% to the funding of activities. 22. For the forthcoming biennium , the Office carried out a provisional assessment of its budgetary projections at the request of the External Auditor. Extrabudgetary contributions already committed come to $6.1 million, and $1.2 million are currently under negotiation, which is close to the level of its spending over the last two biennia, given a resource consumption rate, depending on the year, of between 51% and 66%. There has been a shift in the balance of resources

34 204 EX/21 Part III page 4 per sector, with the Education Sector dominating ($3.6 million in acquired resources) compared to the Natural Sciences Sector, and growth in the Communication and Information Sector, which should receive $0.6 million. 23. The current breakdown of resources by sector is consistent with the regional role of the Office for the benefit of the Natural Sciences Sector. Figure 1: Breakdown of resources of the Office by sector for the biennium Source: Office in Jakarta 24. The rate of consumption of the resources available is 100% for regular resources and for the Funds-in-Trust Overhead Costs Account (FITOCA). The rate of consumption of extrabudgetary resources, compared to the level of annual allotments, shows the capacity of the Office to use its appropriations in conformity with the commitments made to the donors. The average rate of consumption of extrabudgetary appropriations was particularly low in 2014 and 2015, below 50%. Close attention must be paid to the rate of consumption of these appropriations as an indicator, as it involves the credibility of the Organization. The rate of consumption of resources improved markedly in 2016 with the strengthening of the team of programme specialists. The Office considers that this trend is likely to continue. 25. The procurement procedures are understood and respected by its staff members, who have mastered the relevant tools. The first level control functions are exercised effectively. A procurement plan was put in place in Information and communications technologies (ICT) procurement is planned annually. On the initiative of the Administrative Officer (AO), a standardized contract authorization form was introduced in October This reduces delays and uncertainty, and is a good practice to be encouraged. 26. The Office does not conduct regular analyses of the waivers to which it has recourse when awarding these contracts. However, it was able to reconstitute the summary facts when asked to do so by the External Auditors. These showed a rate of waivers for contracts over $5,000 hovering between 19% and 22%, which is significantly higher than the average for the whole Organization. It seems desirable, therefore, to monitor this indicator more regularly and take action to limit waivers to a strict minimum. Recommendation No. 6. The External Auditor recommends better tracking of competitive bidding waivers so as to reduce their relative proportion (Office in Jakarta). 27. The Office regularly has recourse to consultants for its projects, but contrary to the impression given by the positive response to one of the recommendations of the previous external audit, the

35 204 EX/21 Part III page 5 Office still has no roster of potential consultants, nor a fortiori any roster shared with the other United Nations agencies or the Organization s other offices in the region. Recommendation No. 7. The External Auditor recommends setting up a roster of potential consultants, shared with the other United Nations agencies and the other offices of the Organization in the region (Office in Jakarta). 28. The number of missions undertaken by staff members of the Office is high: 1,000 cumulative days of absence were recorded in That was an increase over 2015, but should henceforth be contained by virtue of the strengthening of the project structures in Dili and Manila. Recommendation No. 8. The External Auditor recommends reducing the number and cost of missions of the Regional Bureau for Science in Asia and the Pacific in Jakarta (Office in Jakarta). 29. At the time of the previous external audit, the observation had been made that the time limit of 14 days laid down for programming a mission was not respected. Waivers persist and have even increased (12% of missions in 2016, 21% in 2017). Recommendation No. 9. The External Auditor recommends reducing the proportion of waivers of the minimum time limits laid down for programming missions (Office in Jakarta). 30. The Office regularly organizes events (workshops, conferences, etc.) in Indonesia and abroad, to which it invites local and foreign participants. As such, it agrees to bear their travel and accommodation costs. It therefore pays them daily subsistence allowances (DSA) funded from the budgets of the projects. As in other field offices in the network, the established practice is to use the personal bank accounts of staff members of the Office to transfer the amounts of these indemnities, with those staff members responsible for making the payments in cash to the participants actually attending the events. Such a practice, which involves risk for the Organization and the staff members concerned, was criticized in previous field audits, but no satisfactory alternative has been found. 31. It should be noted that UNDP has put in place, in Timor-Leste, an alternative procedure to act as intermediary instead of the staff member (the PROSPER procedure). Recommendation No. 10. The External Auditor recommends making systematic use of UNDP for payment of daily subsistence allowances (DSA) in Timor-Leste (Office in Jakarta). 32. Extrabudgetary funding represents around 90% of the funding of the Office s activities. Resources acquired as at 31 July 2017 represented an amount of $12.4 million, below the peak recorded in This performance is mainly the result of the mobilization of three Funds-in-Trust, (FIT), respectively provided by the governments of Indonesia, Japan and Malaysia. Over the period since 2014, the resources derived from these three FIT have amounted to $11.3 million, or 45% of all extrabudgetary resources of the Office. 34. The eight principal donors have a governmental profile and account for 95% of the funding ($24 million). Four private sector donors appear on the list for very limited amounts (totalling $0.5 million) but the Office is counting on fresh commitments for significant amounts from local companies in the short term. International organizations, in particular those in the United Nations system, contribute $0.9 million.

36 204 EX/21 Part III page Aside from those prospects, one surprising feature is the total absence of Brunei Darussalam and Singapore and the almost total absence of Australia from the list of donor countries with potentially substantial resources available for regional cooperation, and which could have a marked interest in the countries in the cluster. Furthermore, by contrast with the practice observed in many of the Organization s offices, the Gulf States and their foundations (Qatar, etc.) are not funding any projects through the Office in Indonesia. Recommendation No. 11. The External Auditor recommends setting up plans of action to seek funds from certain potential donors in the cluster countries (Brunei Darussalam, Singapore and Australia) or those interested in them (the Gulf States) (Office in Jakarta and Regional Bureau for Education in Asia and the Pacific in Bangkok). 36. The staffing table of the Office has changed little over the biennia covered by documents 37 C/5 and 38 C/5. The trend in the salaried staff of the Office has been stable since the start of the current biennium, after the significant increase in The upturn in activity has resulted in the recruitment of temporary staff under service contracts (SC) from extrabudgetary funding. When consultants, volunteers and interns are taken into account, the Office has had a staff of between 75 and 90 persons for the current biennium, depending on the period, 60 to 70 of them in the Office in Jakarta. 37. The Office has, however, had several vacant posts in recent years and this has restricted its activity, but with the support of Headquarters, they have since been filled. The vacancy rate was particularly severe in 2015, especially for international staff. Since the administration team was strengthened in 2015, the ratio of administration/total staff has been stable (23%). The proportion of programme sector staff hovers around two-thirds (69% in 2014, 64% in 2017) of which the Natural Sciences Sector represents half. While the Office has expanded the scope of its mandate by boosting its teams in the fields of Social and Human Sciences and Communication and Information, it has on the other hand cut back its Education team because of the decrease in projects in that area. 38. Estimated staff costs for all categories of staff assigned to the Office are growing: they are expected to reach $2.36 million in 2017, representing an increase of 38% between 2015 and Because the vacant posts have gradually been filled, the proportion of costs relating to staff on service contracts (SC) has not increased in recent years: it is expected to be 23% of the estimated cost in 2017 against 27% in It is a number of years since the Office had a specific training budget allocated by Headquarters. Nor does it have a training plan for its staff. It appears desirable to put a staff training plan in place, to take maximum advantage of the skills of the existing staff. 40. The Office has the Security Risk Management Process document drawn up by the United Nations Department of Safety and Security (UNDSS) for Indonesia, the latest version of which dates from October It carried out a self-assessment of conformity with the regulations in July 2017 and recently (February 2017) had the benefit of a security audit conducted by a UNDSS staff member. That audit led to the issue of 12 recommendations. At the time of the external audit, half (six out of 12) of the recommendations had not been implemented, mainly for budget reasons. It is to be hoped that the corresponding improvements can be provided for in the budget for the next biennium. Recommendation No. 12. The External Auditor recommends making provision in the regular budget for the biennium for the amounts needed to implement the recommendations of the security audit by the United Nations Department of Safety and Security (Office in Jakarta and Headquarters).

37 204 EX/21 Part III page UNESCO has been active in Timor-Leste since the country became independent in autumn 2002, and set up an antenna office in the capital, Dili, in February The Timor-Leste antenna office is covered by an official agreement that is particularly complete but not properly respected. Recommendation No. 13. The External Auditor recommends implementing the provisions of the bilateral agreement whereby the Timor-Leste authorities should bear the costs of the premises of the antenna office in Dili and their maintenance (Office in Jakarta). 42. Some 105 projects (with a total budget of $25.57 million) have been implemented by the Office, at least in part, between 1 January 2015 and 31 July The projects financed from extrabudgetary funds represent 50% of the number and 90% of the budget. The average size of the projects appears reasonable ($243,000 on average) despite the relatively high number of small projects of less than $100,000. The spread of projects between the sectors reflects the priority given to the Natural Sciences Sector (50% of projects and 61% of funding) and, to a lesser degree, to the Education Sector (15% of projects and 23% of funding). 43. As at 31 July 2017, the portfolio contained 49 active projects representing a total budget of $12.7 million. The breakdown of projects among the programme specialists is still strongly affected by the post vacancies previously noted. The Director has retained responsibility for six of those projects. In order to make full use of the Director s skills and free up his time, a transfer of responsibilities to the specialists present might be considered. 44. The Office managed 52 projects funded from extrabudgetary resources in the period For 30 of these, the date forecast for closure was prior to 31 July Of those, only 12 (40%) have actually been closed by Headquarters while six (20%) are deemed to be technically closed (TECO) and 12 (40%) still in the process of implementation. Recommendation No. 14. The External Auditor recommends that the six projects that have been technically completed since 2015 and 2016 should be administratively closed (Office in Jakarta and Headquarters). Proposed decision 45. The Executive Board may wish to adopt a decision along the following lines: The Executive Board, 1. Having considered documents 204 EX/21 Part III and 204 EX/21.INF.3, 2. Expresses its satisfaction to the External Auditor for the high quality of his report; 3. Invites the Director-General to report on progress achieved in the implementation of recommendations in a report on the follow-up to all recommendations made by the External Auditor. Director-General s comments The Director-General thanks the External Auditor for his audit report on the UNESCO Office in Jakarta. She accepts the recommendations made with the exception of No. 2 and will report on the progress of their implementation in accordance with the usual practice. Detailed comments on the various recommendations are provided below. Details in Annex II.

38 204 EX/21 Part III Annex I ANNEX I Recommendation No. 1. The External Auditor recommends updating the 1967 agreement with the Indonesian Government, taking care especially to maintain that Government s financial contribution at a significant level (Office in Jakarta and Headquarters). Recommendation No. 2. The External Auditor recommends that agreements be entered into between the Office in Jakarta and the national authorities of Brunei Darussalam, Malaysia and the Philippines to provide better legal guarantees for the activities of the Organization in those countries (Office in Jakarta and Headquarters). Recommendation No. 3. The External Auditor recommends that implementation of the external audit recommendations be documented (Office in Jakarta and Headquarters). Recommendation No. 4. The External Auditor recommends that consideration be given to grouping the administrative and financial assistants attached to the project specialists into a single administrative and financial project support platform (Office in Jakarta). Recommendation No. 5. The External Auditor recommends that an up-to-date register of standard operating procedures (SOP), signed and dated by the Director, be established (Office in Jakarta). Recommendation No. 6. The External Auditor recommends better tracking of competitive bidding waivers so as to reduce their relative proportion (Office in Jakarta). Recommendation No. 7. The External Auditor recommends setting up a roster of potential consultants, shared with the other United Nations agencies and the other offices of the Organization in the region (Office in Jakarta). Recommendation No. 8. The External Auditor recommends reducing the number and cost of missions of the Regional Bureau for Science in Asia and the Pacific in Jakarta (Office in Jakarta). Recommendation No. 9. The External Auditor recommends reducing the proportion of waivers of the minimum time limits laid down for programming missions (Office in Jakarta). Recommendation No. 10. The External Auditor recommends making systematic use of UNDP for payment of daily subsistence allowances (DSA) in Timor-Leste (Office in Jakarta). Recommendation No. 11. The External Auditor recommends setting up plans of action to seek funds from certain potential donors in the cluster countries (Brunei Darussalam, Singapore and Australia) or those interested in them (the Gulf States) (Office in Jakarta and Regional Bureau for Education in Asia and the Pacific in Bangkok). Recommendation No. 12. The External Auditor recommends making provision in the regular budget for the biennium for the amounts needed to implement the recommendations of the security audit by the United Nations Department of Safety and Security (Office in Jakarta and Headquarters). Recommendation No. 13. The External Auditor recommends implementing the provisions of the bilateral agreement whereby the Timor-Leste authorities should bear the costs of the premises of the antenna office in Dili and their maintenance (Office in Jakarta). Recommendation No. 14. The External Auditor recommends that the six projects that have been technically completed since 2015 and 2016 should be administratively closed (Office in Jakarta and Headquarters).

39 ANNEX II PRELIMINARY IMPLEMENTATION PLAN BY RECOMMENDATION Audit recommendations Preliminary implementation plan and comments The recommendation will require additional resources for implementation (YES/NO) Estimated date for the implementation of the recommendation Recommendation No. 1. The External Auditor recommends updating the 1967 agreement with the Indonesian Government, taking care especially to maintain that Government s financial contribution at a significant level (Office in Jakarta and Headquarters). A draft Headquarters Agreement is being prepared by the Office in Jakarta and will be sent to the Ministry of Foreign Affairs of the host country, following approval by Headquarters Recommendation No. 2. The External Auditor recommends that agreements be entered into between the Office in Jakarta and the national authorities of Brunei Darussalam, Malaysia and the Philippines to provide better legal guarantees for the activities of the Organization in those countries (Office in Jakarta and Headquarters). Recommendation not accepted. In many of the countries where the Organization does not have an office and/or an agreement with the government, the protection of UNESCO s activities are legally covered by the 1947 Convention on the Privileges and Immunities of the Specialized Agencies, to which Brunei Darussalam, Malaysia and the Philippines have acceded. Furthermore, these countries have approved UNESCO s Mediumterm Strategy (C/4) and the Programme and Budget (C/5) agreeing on the strategic directions and programmatic focus of the Organization that also apply to activities in their territories. They are also regularly reflected in the United Nations Development Assistance Frameworks 204 EX/21 Part III Annex II

40 Audit recommendations Preliminary implementation plan and comments (UNDAFs), which are signed between the governments and the United Nations agencies, including UNESCO. The recommendation will require additional resources for implementation (YES/NO) Estimated date for the implementation of the recommendation 204 EX/21 Part III Annex II page 2 For large-scale operational projects, UNESCO prepares plans of operation to be signed by UNESCO and the beneficiary country (AM Item 5.4, Section 5.2). Therefore, considering the activities that UNESCO carries out in those countries, the Secretariat is of the view that the legal protection of the Organization s activities in the three countries is sufficient and does not require additional agreements. However, if UNESCO engages into activities that require greater protection, the Secretariat will seek the conclusion of suitable agreements aimed at legally ensuring the activities of the Organization. Recommendation No. 3. The External Auditor recommends that implementation of the external audit recommendations be documented (Office in Jakarta and Headquarters). BFM wishes to recall that it is the responsibility of audited entities to follow up on the recommendations addressed to them and to provide, at the request of the External Auditor, evidence of their implementation. Please reword the recommendation Recommendation taken into account by the Office in Jakarta and 2010 audit

41 Audit recommendations Preliminary implementation plan and comments The recommendation will require additional resources for implementation (YES/NO) Estimated date for the implementation of the recommendation recommendations that are still open will be reconsidered and dealt with. Recommendation No. 4. The External Auditor recommends that consideration be given to grouping the administrative and financial assistants attached to the project specialists into a single administrative and financial project support platform (Office in Jakarta). Between 2015 and 2016, a first attempt at setting up a support platform of assistants was unsuccessful, as the assistants were not abreast of the files and projects of the other sectors. The assignment of assistants to specific programme specialists means these assistants are familiar with the files of the one or two projects they spend all their time working on. The recommendation is under discussion internally Recommendation No. 5. The External Auditor recommends that an up-to-date register of standard operating procedures (SOP), signed and dated by the Director, be established (Office in Jakarta). Recommendation pertinent. The Office in Jakarta will systematically comply with it Recommendation No. 6. The External Auditor recommends better tracking of competitive bidding waivers so as to reduce their relative proportion (Office in Jakarta). Recommendation No. 7. The External Auditor recommends setting up a roster of potential Recommendation brought to the attention of all staff in order to improve planning, particularly with regard to mission travel and procurement. For all consultant posts, the Office in Jakarta requests assistance from UNDP, which has a directory of potential candidates. However, to EX/21 Part III Annex II page 3

42 Audit recommendations consultants, shared with the other United Nations agencies and the other offices of the Organization in the region (Office in Jakarta). Preliminary implementation plan and comments maintain the institutional memory of the Office while encouraging international staff mobility, we welcome this recommendation and will implement it. The recommendation will require additional resources for implementation (YES/NO) Estimated date for the implementation of the recommendation 204 EX/21 Part III Annex II page 4 Recommendation No. 8. The External Auditor recommends reducing the number and cost of missions of the Regional Bureau for Science in Asia and the Pacific in Jakarta (Office in Jakarta). Recommendation being discussed internally for a sharp reduction in travel. By 31 December 2017, the Office in Jakarta shall produce statistics showing a substantial reduction in travel. There are, however, trips that the Office will not be able to cut back on: requests by the Director-General or Assistant Director-General for high-level conferences in the Asia and the Pacific region. It should also be noted that the cost of this travel is supported by the Office. In the same vein, as noted in the preliminary report of the External Auditors, the Office has put a stop to the travel of the assistants for the activities being carried out in Dili and Manilla where an antenna and a project respectively serve as support for seminars/conferences. In addition, a threshold of not more than 10% for travel expenses on the allocation for the biennium (regular programme) has been established in order to minimize travel Recommendation No. 9. The External Auditor recommends reducing the proportion of waivers of the minimum time limits laid down for Recommendation pertinent. The attention of staff was drawn to this subject and a decision was made to start the travel arrangements as soon as these were approved by the Director

43 Audit recommendations Preliminary implementation plan and comments The recommendation will require additional resources for implementation (YES/NO) Estimated date for the implementation of the recommendation programming missions (Office in Jakarta). through the quarterly travel plan submitted under their programmes. Recommendation No. 10. The External Auditor recommends making systematic use of UNDP for payment of daily subsistence allowances (DSA) in Timor-Leste (Office in Jakarta). Recommendation duly noted. Implementation: immediate effect Recommendation No. 11. The External Auditor recommends setting up plans of action to seek funds from certain potential donors in the cluster countries (Brunei Darussalam, Singapore and Australia) or those interested in them (the Gulf States) (Office in Jakarta and Regional Bureau for Education in Asia and the Pacific in Bangkok). The Office in Jakarta has established a plan of action to raise funds from donors in the region. However, since Singapore is not part of the cluster, it would be difficult for the Office to initiate actions whose prerogatives are normally within the remit of the UNESCO Office in Bangkok. Regarding the Gulf States, the Office considers that its coverage is limited to Asia and the Pacific. As to Australia, negotiations by the Director of the Office in Jakarta are already under way. Difficult to implement by the Office in Jakarta Recommendation pending Recommendation No. 12. The External Auditor recommends making provision in the regular budget for the biennium for the amounts needed to implement the recommendations of the security audit by the United Nations Department of Safety and Recommendation pending. Recommendation pending 204 EX/21 Part III Annex II page 5

44 Audit recommendations Security (Office in Jakarta and Headquarters). Preliminary implementation plan and comments The recommendation will require additional resources for implementation (YES/NO) Estimated date for the implementation of the recommendation 204 EX/21 Part III Annex II page 6 Printed on recycled paper Recommendation No. 13. The External Auditor recommends implementing the provisions of the bilateral agreement whereby the Timor-Leste authorities should bear the costs of the premises of the antenna office in Dili and their maintenance (Office in Jakarta). Recommendation No. 14. The External Auditor recommends that the six projects that have been technically completed since 2015 and 2016 should be administratively closed (Office in Jakarta and Headquarters). A letter will be sent to the Ministry of Foreign Affairs of Timor-Leste. A request has been sent to BFM for the closure of these projects. Recommendation pending (Recommendation pending)

45 Executive Board Two hundred and fourth session 204 EX/21 Part IV PARIS, 9 March 2018 Original: French Item 21 of the provisional agenda NEW AUDITS BY THE EXTERNAL AUDITOR SHORT-FORM AUDIT REPORT ON THE UNESCO OFFICE IN PORT-AU-PRINCE SUMMARY This document is the short-form report of the External Auditor s audit report on the UNESCO Office in Port-au-Prince as submitted in document 204 EX/21.INF.4 in compliance with Article 12.4 of the Financial Regulations. Action expected of the Executive Board: proposed decision in paragraph 43. Job:

46 204 EX/21 Part IV EXECUTIVE SUMMARY AUDIT OF THE UNESCO OFFICE IN PORT-AU PRINCE (HAITI) DISCLAIMER: This executive summary was drawn up by the External Auditor at the Secretariat s request in order to optimize translation costs and facilitate discussion by the governing bodies. Only the long-form report is authoritative in terms of exact content and the nature and scope of the External Auditor s findings and recommendations. 1. Organization of the Office 1. The Office in Port-au-Prince is organized in the usual way: in addition to the Head and his Assistant, it includes: a finance and administrative office, managed by an Administrative Officer (AO), who arrived in June 2017 and manages financial and administrative matters and human resources; support staff (drivers, maintenance staff and security officers from a security company) are directly answerable to him; an Education Sector, run by a programme specialist who also arrived recently and replaces the Head of Office in his absence; a Culture Sector, run by a P2-grade programme specialist; a Natural Sciences Sector, mainly concerned with disaster risk management; a Communication and Information Sector, composed of a single officer, who also deals with Social and Human Sciences Sector questions. 2. The Office has not adopted a document containing all its operating rules, such as working hours, leave and security standards. 3. Drawing up such a document would facilitate knowledge and application of these rules, particularly since staff turnover is so high. Recommendation No. 1. The External Auditor recommends adopting a document containing the operating rules of the Office. (Office) 2. Modalities of inter-agency collaboration 4. After the 2016 elections, the United Nations Security Council ended, as from 15 October 2017, the mandate of MINUSTAH, which, apart from two years interruption, had been in place since 2004 and contributed, among other things, to the internal security of the country. 5. A new mission, the United Nations Mission for Justice Support in Haiti (MINUJUSTH), succeeded it with the task of helping to strengthen the rule of law and working for sustainable development in coordination with other agencies. 6. Despite the impetus given by the new mission to inter-agency coordination, joint procurement remains limited to hotels, although much is being done to develop it. 7. In several other areas, agencies are preparing joint procurement with improved conditions in the framework of several Operations Management Team (OMT) subgroups: air travel, banking services, vehicle maintenance, fuel procurement and mobile telephony.

47 204 EX/21 Part IV page 2 8. There seems to be a real wish on the part of the agencies to work together in several working groups but, so far, the results are limited. The turnover of resident coordinators may be an explanatory factor. Priority areas probably need to be identified. In any case, an approach based on priority areas could be adopted. The emphasis should be on seeking concrete agreements fairly quickly. 9. Without underestimating the fact that this does not only depend upon the UNESCO Office in Haiti, the External Auditor recommends that the Office urge all United Nations agencies in the country to clarify the areas on which the conclusion of joint agreements is possible in 2018 and to appoint a leading agency for each. 3. Performance reviews 10. According to the list provided by Headquarters, six persons in the Office had objectives, but two of them did not sign the final validation. There are no objectives for 11 others, including the support staff. 11. Two files the auditors accessed, including that of the Head of Office, contained a great many objectives. They were often worded in very general terms, and were more like a mission advocate for and strengthen the policy of than precise objectives, the achievement of which is easily measurable. Recommendation No. 2. The External Auditor recommends that the Office in Port-au-Prince systematically conduct performance reviews and record them in MyTalent. (Office) Recommendation No. 3. The External Auditor recommends that at least some of the individual objectives be sufficiently precise in time and space for their evaluation to be unquestionable. (Office and Headquarters) 4. Recruitment of consultants 12. According to Item of the Human Resources Manual, in order to apply for a contract exceeding $20,000, consultants must draft a technical and financial proposal on the approach they will adopt, rather than simply provide the detailed curriculum vitae required for all consultancy contracts. 13. In 2017, however, one consultant had a contract with a value of $42,000 without providing a technical and financial proposal. Two other consultants were in an identical situation, having had contracts amounting to $22,980 and $21,000 respectively. Recommendation No. 4. The External Auditor recommends that the Office systematically request a technical and financial proposal from consultants whose remuneration is likely to exceed $20,000. (Office) 5. Expenditure 14. One transfer was not signed off by either the Head of Office or the Administrative Officer. This procedure is not necessarily irregular if both signatories are authorized but, in the opinion of the External Auditor, it is questionable. 15. In view of the limited size of the Office, the Head of Office or the Administrative Officer should sign off all payments.

48 204 EX/21 Part IV page The Office stated that since the arrival of the current Head of Office, in June 2014, the signature by both the Head of Office and the Administrative Officer has been, in principle, the rule. Recommendation No. 5. The External Auditor recommends that all payments be signed off at least by the Head of Office or the Administrative Officer. (Office) 6. Record-keeping 17. Paper files, like the electronic files such as SISTER and MyTalent, are on the whole kept upto-date. The service contracts are particularly well kept. 18. That said, there are gaps, either because a particular document does not exist, or simply because a file has not been updated. This has been noted at various points in this report. 19. The high staff turnover in Haiti requires records to be kept meticulously to enable new arrivals to be operational as speedily as possible. Recommendation No. 6. The External Auditor recommends that a firm reminder be given to staff concerning record-keeping and updating files, which are the memory of the Office. (Office) 7. The project to improve the quality of teacher training and teaching in Haiti 20. The project to improve the quality of teacher training and teaching in Haiti was launched in 2011 after the 2010 earthquake and was due to end in late It is funded by the Canadian Department of Foreign Affairs, Trade and Development (DFATD) to the tune of 5 million Canadian dollars and implemented with Haiti s Ministry of National Education and Vocational Training (MENFP), with technical support from UNESCO. 21. The project s aim is to formulate a new teacher training policy for all levels (from pre-school to university, including vocational training) and to strengthen the capacities of the Ministry steering this policy. 22. Implementation was slow initially, owing to the attitude of the MENFP department concerned: the project s strategic framework document was only adopted in March The project has clearly been financially overestimated, and the depreciation of the Canadian dollar has not hampered implementation. Canada has paid 4 million Canadian dollars, or $3.6 million. In the light of the project s overestimates and delays, without contesting its management, Canada decided against paying the final funding tranche (1 million Canadian dollars or $0.785 million) and in 2016 authorized the Office to use $200,000 to finance a study on the psychosocial consequences of Hurricane Matthew in Despite the non-payment of the final tranche and the use of the above-mentioned sum for another project, in November 2017, there remained $0.9 million to spend (while the project was practically over with the imminent arrival of the two aforementioned reports). 25. Although the Office still had to fund the presentations to explain the project in various departments, it seemed unlikely that the aforementioned remaining balance of $0.9 million would be spent by the end of the year 2017.

49 204 EX/21 Part IV page 4 Recommendation No. 7. The External Auditor recommends that the Office return the remaining unspent balance of appropriations from the project to improve the quality of teacher training and teaching in Haiti, or negotiate carrying over the appropriations to another project. (Office) 8. The project for the construction and rehabilitation of infrastructure and facilities to improve access to and quality of public secondary schools in Haiti 26. This $400,000 project is funded by the Jogye Order of Korean Buddhism. It was due to be implemented over 12 months from the signing of the agreement on 23 September The donor representatives were involved in the opening of the school that they had paid to have rebuilt. 28. According to data from the SISTER application, 53% of funds had been spent by In fact, the financial report dated 4 August 2015 shows that 99.84% of appropriations had been spent. 29. Furthermore, the SISTER application mentions no final implementation report for the donor, despite the fact that a final narrative report clearly exists in the paper file held at the Office. Recommendation No. 8. The External Auditor recommends ensuring that the data within the SISTER application be kept up to date. (Office) 9. Cultural Heritage Preservation and Tourism Sector Support Project PAST 30. The objective of the PAST project is to preserve and enhance the National History Park Citadel, Sans Souci, Ramiers, 1 which is Haiti s only World Heritage Site, to make it into a hub of tourist and economic development by involving the communities living in the park. The project was the subject of a Convention in force until 31 May 2020 that was signed on 22 July 2015 by the Ministry of Economy and Finance on behalf of the Government of Haiti. 31. UNESCO is only involved in a small part of the overall project ($2.6 million out of the $45 million funded by the World Bank - with only the first $531,683 tranche having been committed and spent). 32. The Office has encountered the following difficulties in managing the project: The steering committee that had initially been planned does not meet and therefore does not know the progress of elements of the project that do not come under its remit. This is highly regrettable as the project s success is conditional upon improving access to the National History Park in the far north (which is an eight-hour car journey from Port-au- Prince on very poor roads). The possible construction of a cable car to the citadel might risk ruining the World Heritage Site; Although the three above-mentioned documents were endorsed by ISPAN, the Technical Evaluation Unit (TEU) of the Ministry of Economy and Finance refuses to move onto the second phase of the project and to ask the World Bank to release funding for that phase. In July 2017, this situation forced the Office to end the contract of the project management consultant due to a lack of extrabudgetary funding to pay her; According to the Office, the TEU is blocking the project due to its dissatisfaction with some of the Office s reports, while the Office itself is critical of the contradictory positions 1 The Citadel La Ferrière is a fortress built in 1804 to house 5,000 soldiers; the Palace of Sans Souci is in the style of Versailles; and Ramiers is a remarkable natural site 900 metres above sea level that is the setting for the abovementioned buildings.

50 204 EX/21 Part IV page 5 of its public partners: the Institute for the Safeguarding of National Heritage (ISPAN) of the Ministry of Culture often approves reports submitted by the Office, while the TEU expresses reservations. The Office also mentioned the growing influence of a private company that has a contract with the TEU without UNESCO coordination. 33. The Office is therefore critical of the role of the TEU. In contrast, other stakeholders see the TEU as being a positive influence that guarantees rigorous standards. 34. In order to make progress without a project management consultant, the Office asked UNESCO Headquarters to send a delegation to help re-launch the project and secured the agreement of Haiti s authorities to host the delegation. 35. This call for Headquarters representatives appears to be a policy aimed at shifting the deadlock. It is important for the delegation to tackle all anomalies observed throughout the project: lack of steering committee meetings, respective roles of all of the project s national partners and addressing the TEU s criticisms of the handling of the project by ISPAN (with UNESCO assistance). Should those difficulties be overcome, then the next step would be to initiate the second phase, along with a request for the relevant appropriations from the World Bank. 36. Within the framework of the partnership between UNESCO and the World Bank, the latter contacted the Organization s Headquarters in March 2017 to help resolve the problems with the PAST project in Haiti. The Culture Sector at Headquarters launched a mission and exchanged information with the World Bank and the Haitian authorities. If the negotiations are conclusive, the UNESCO Office in Port-au-Prince will need a senior consultant to operate under the direct authority of the Head of the Office. Recommendation No. 9. The External Auditor recommends that: (i) the Office in Port-au- Prince, with the help of a Headquarters delegation, should tackle all the problems observed throughout the Cultural Heritage Preservation and Tourism Sector Support Project (PAST) in order to re-launch the project; and (ii) if the negotiations prove successful, the Office should hire a senior consultant to work under the direct authority of the Head of the Office to monitor the project. (Office and Headquarters) CONCLUSION 37. The administrative and financial management of the Office in Port-au-Prince is of a good standard, although some technical advances could nonetheless be made on the basis of this report s recommendations. 38. The existing team, which will be consolidated by the arrival of a P-3 programme specialist for the Capacity Development for Education (CapED) project and another experienced professional in the Culture Sector, is capable of running complex projects despite difficulties specific to the national context. Such problems mainly arise in the largest projects involving several central departments run by people who have changed jobs often in recent years and have only just been almost entirely replaced. 39. The team could probably be more ambitious than suggested by the contents of its most recent country strategy document by managing a higher number of projects worth more than the $4 million budget that it sensibly set as its own ceiling. This could be done by calling on the many donors prepared to invest in Haiti and taking advantage of UNESCO s very good image with the country s authorities, donors and other United Nations agencies. 40. The Office in Port-au-Prince might develop in the areas of culture, natural sciences, social and human sciences and communication in particular, based on successful projects that could be followed up (the inventory of the heritage in the town of Jacmel could be extended by planning

51 204 EX/21 Part IV page 6 restoration works and then replicated at other sites such as Saint-Louis-du-Sud; the various projects involving craft workers show that local artisans need assistance; exercises relating to tsunamis in municipalities and schools could be carried out in other departments, and so forth). 41. The Office could try to circumvent the difficulties encountered with central departments by implementing projects with local partners, such as local education departments that seek help and can play a positive role in distributing the actions of various international cooperation actors throughout their territory. Such guidance would be in keeping with that provided by the United Nations Development Assistance Framework (UNDAF). Local projects that have already been implemented demonstrate that such initiatives do not give rise to stumbling blocks involving central departments. 42. Practically speaking, the Office could attempt to use some major projects to combine a portion focused on central departments and another part of implementation concentrated in the field. Proposed decision 43. The Executive Board may wish to adopt a decision along the following lines: The Executive Board, 1. Having examined documents 204 EX/21 Part IV and 204 EX/21.INF.4, 2. Expresses its satisfaction to the External Auditor for the high quality of his report; 3. Invites the Director-General to report on progress achieved in the implementation of recommendations in a report on the follow-up to all recommendations made by the External Auditor. Director-General s comments: The Director-General thanks the External Auditor for his audit report on the UNESCO Office in Port-au-Prince. She accepts the recommendations made and will report on the progress of their implementation in accordance with the usual practice. Details in the annex.

52 ANNEX PRELIMINARY IMPLEMENTATION PLAN, BY RECOMMENDATION Audit recommendations Preliminary implementation plan and comments The recommendation will require additional resources for implementation (YES/NO) Estimated date for the implementation of the recommendation Recommendation No. 1. The External Auditor recommends adopting a document containing the operating rules of the Office. (Office) The Secretariat accepts the recommendation. The Office will prepare a document containing the operating rules that are specific to the Office. NO 30/06/2018 Recommendation No. 2. The External Auditor recommends that the Office in Port-au-Prince systematically conduct performance reviews and record them in MyTalent. (Office) The Secretariat accepts the recommendation. Performance reviews are regularly and systematically conducted and will also be documented in paper form owing to the lack of regular access to the MyTalent system. NO 30/06/2018 Recommendation No. 3. The External Auditor recommends that at least some of the individual objectives be sufficiently precise in time and space for their evaluation to be unquestionable. (Office and Headquarters) Recommendation No. 4. The External Auditor recommends that the Office systematically request a technical and financial proposal from consultants whose The Secretariat accepts the recommendation. The Office will ensure that supervisors strengthen the identification of specific individual objectives, particularly for programme specialists, for staff appraisals. The Secretariat accepts the recommendation. The Office will apply the provisions of Item of the Human Resources Manual ( Individual consultants and other specialists contracts ) more strictly for all consultant contracts. NO 30/06/2018 NO Implemented 204 EIX/21 Part IV Annex

53 Audit recommendations remuneration is likely to exceed $20,000. (Office) Preliminary implementation plan and comments The recommendation will require additional resources for implementation (YES/NO) Estimated date for the implementation of the recommendation 204 EX/21 Part IV Annex page 2 Recommendation No. 5. The External Auditor recommends that all payments be signed off at least by the Head of Office or the Administrative Officer. (Office) The Secretariat accepts the recommendation. In accordance with the procedures set out in Chapter 3.7 of the UNESCO Administrative Manual ( Cash Management ), bank signatory rights can be limited up to a certain amount and the limit is decided by the Treasurer on the basis of the proposal by the Director of the respective bank account holding entity. NO Implemented The Office will ensure that the double signature principle is applied in respect of all payments made from the bank accounts of the Organization. Recommendation No. 6. The External Auditor recommends that a firm reminder be given to staff concerning record-keeping and updating files, which are the memory of the Office. (Office) The Secretariat accepts the recommendation. The Office will remind the staff concerned of the importance of compliance with the provisions of Chapter 9 of the UNESCO Administrative Manual ( Information Management and Services ) in the form of a memo, and will discuss with the relevant services at Headquarters the possibility of setting up a capacity-building programme in this area. NO 30/06/2018

54 Audit recommendations Preliminary implementation plan and comments The recommendation will require additional resources for implementation (YES/NO) Estimated date for the implementation of the recommendation Recommendation No. 7. The External Auditor recommends that the Office return the remaining unspent balance of appropriations from the project to improve the quality of teacher training and teaching in Haiti, or negotiate carrying over the appropriations to another project. (Office) The Secretariat accepts the recommendation. Canada was notified in October 2017 of the nonuse of the balance of appropriations by the Office and confirmed by amendment No. 4 of the grant agreement between the Government of Canada and UNESCO on 28 December NO Implemented Recommendation No. 8. The External Auditor recommends ensuring that the data within the SISTER application be kept up to date. (Office) The Secretariat accepts the recommendation. The Office will ensure the regular updating of project data in SISTER. NO Implemented Recommendation No. 9. The External Auditor recommends that: (i) the Office in Port-au-Prince, with the help of a Headquarters delegation, should tackle all the problems observed throughout the Cultural Heritage Preservation and Tourism Sector Support Project (PAST) in order to re-launch the project; and (ii) if the negotiations prove successful, the Office should hire a senior consultant to work under the direct authority of the The Secretariat accepts the recommendation. Follow-up of the recommendation is being implemented. In fact, following consultations conducted directly by the Assistant Director-General for Culture (ADG/CLT), in consultation with the Office, with World Bank Headquarters in Washington D.C. in the framework of the renewed partnership in July 2017 with the World Bank, a dialogue process was launched on the results actually achieved so far and on the follow-up to the project in Haiti that should be ensured. A senior consultant has been NO Implemented 204 EX/21 Part IV Annex page 3

55 Audit recommendations Head of the Office to monitor the project. (Office and Headquarters) Preliminary implementation plan and comments appointed to carry out this process, which should be finalized by mid-march 2018, with an agreement between UNESCO, the Government of Haiti and the World Bank on the project s follow-up. The recommendation will require additional resources for implementation (YES/NO) Estimated date for the implementation of the recommendation 204 EX/21 Part IV Annex page 4 Printed on recycled paper

56 Executive Board Two hundred and fourth session 204 EX/21 Part V PARIS, 21 March 2018 Original: French Item 21 of the provisional agenda NEW AUDITS BY THE EXTERNAL AUDITOR SHORT-FORM AUDIT REPORT ON UNESCO PROCUREMENT SUMMARY This document is the short-form report of the External Auditor s audit report on UNESCO procurement as submitted in document 204 EX/21.INF.5 in compliance with Article 12.4 of the Financial Regulations. Action expected of the Executive Board: proposed decision in paragraph 15. Job:

57 204 EX/21 Part V EXECUTIVE SUMMARY AUDIT OF UNESCO PROCUREMENT DISCLAIMER: This executive summary was drawn up by the External Auditor at the Secretariat s request in order to optimize translation costs and facilitate discussion by the governing bodies. Only the long-form report is authoritative in terms of exact content and the nature and scope of the External Auditor s findings and recommendations. 1. The audit concerned procurement contracts stricto sensu (procurement of goods, services, works, etc.), representing a volume of $109 million in 2016, and individual consultant contracts, representing a volume of $39 million in It involved two approaches: an evaluation of the Organization s current procurement management system, the review of a sample of 110 contracts on a case-by-case basis. Three points stood out: 1. Complete, consistent UNESCO procurement regulations 3. The External Auditor noted that the procurement regulations established at UNESCO were complete and consistent and that they complied with practices generally accepted in international organizations. 4. The legal foundations of the regulations are dispersed (Basic Texts, Administrative Manual, Human Resources Manual), but most of the operational provisions are clearly gathered in the Administrative Manual (Annex 10.2A), except those regarding individual consultancy procurement, as they come under the authority of the Bureau of Human Resources Management (HRM). 5. However, the External Auditor noted that the Financial Rules did not take into account the consequences of some structural reforms that had been recently introduced and recommended that they be updated. Recommendation No. 1. The External Auditor recommends updating the Financial Rules, and particularly Article 6.29, to take into account the structures currently in place. 2. The division of the procurement function between several responsibility centres 6. Regarding procurement in the field offices, UNESCO s system is greatly decentralized. Given the number and variety of the local office situations, this seems a wise choice. 7. However, at the level of Headquarters, the fact that higher responsibilities are divided between the Bureau of Financial Management (BFM), which defines the procurement policy and supervises field office procurement, and the Bureau for the Management of Support Services (MSS), which supervises and carries out procurement at Headquarters, is a result of the desire to maintain a certain balance between the responsibilities of the central services, which has emerged in recent reforms. 8. Individual consultancy procurement comes under the responsibility of HRM.

58 204 EX/21 Part V page 2 3. The various anomalies within this pragmatic organization (a) Non-compliance with second-level control regulations 9. The audit revealed that a significant number of contracts were submitted for validation post facto (11% of high-value contracts). This situation also occurred regarding contracts with a value under the competence threshold of the Contracts Committee. 10. These anomalies are monitored by BFM, but in a passive way. They result in neither sanctions, nor other enforcement measures that would give some hope of the abandonment of such practices. Recommendation No. 2. The External Auditor recommends effectively implementing the sanctions provided for in the Financial Regulations and internally disseminating information on the sanctions adopted, in order to put an end to current practices leading to a high number of contracts submitted post facto to the authorities that are supposed to authorize them. (b) Absence of independent compliance monitoring for Headquarters procurement 11. The External Auditor noted that, to remedy the current absence of independent compliance monitoring for Headquarters procurement, two different models were supported by BFM and MSS. An arbitration settled by the Director-General in 2015 to designate BFM as the compliance reviewer for the contracts concluded by MSS was not implemented due to a disagreement between BFM and MSS. This solution would have had the advantage, at least in theory, of enabling a certain unification of procurement practices for the entire Organization, bearing in mind that BFM defines UNESCO s procurement policy. However, the unification would be incomplete, because individual consultancy procurement (representing about $39 million in 2016) would still be under the full responsibility of HRM, including for compliance monitoring. MSS alternative proposal, consisting in entrusting a strengthened secretariat of the Contracts Committee with the function of compliance monitoring of all high-value procurement, is based on a different logic: field office procurement would still be supervised by BFM, that of Headquarters by MSS and that of individual consultancy by HRM. However, second-level compliance monitoring for high-value procurement (of a unit amount exceeding $150,000 for goods, services or services related to goods, or an amount exceeding $100,000 for individual consultancy procurement) would be entrusted entirely to the Contracts Committee and its secretariat. 12. Both proposals seem viable, provided that one is clearly chosen and effectively implemented, which is not currently the case. 13. The External Auditor did not give his opinion on which solution to adopt, as that depended on senior management s governance choices, but he noted that the debate under way for a year and a half would not lead to a consensus and that it was delaying the implementation of a robust internal control mechanism covering all contracts, particularly those of high value, whatever the entity responsible for compliance review.

59 204 EX/21 Part V page 3 Recommendation No. 3. The External Auditor recommends quickly settling the debate over the organization of internal control of procurement that has been under way between BFM and MSS since mid-2016, and, whichever solution is adopted, ensuring: the separation of tasks between compliance monitoring on one hand and on the other the functions of contract preparation and negotiation and purchaser training, advice and assistance; the implementation of a systematic, exhaustive compliance review for highvalue contracts, as at present the contracts concluded by the most significant purchaser, MSS, are no longer subject to compliance reviews. Such reviews should be conducted by a staff member of an appropriate professional level, who is independent of the purchasers and their trainers and advisers. (c) Much procurement is non-compliant with current regulations 14. The External Auditor s detailed review of a sample of 110 contracts revealed that about 13% presented anomalies. For the procurement of services, goods and related services and minor works: cases where orders were artificially divided into several orders, each being under $5,000; the absence of a price framework for standard long-term agreements (LTAs); insufficiently justified exceptions to competitive bidding; a situation of prolonged dependence on one service provider. For individual consultancy procurement: non-compliance with the 11-month rule (the aim of which is to avoid situations of consultants who are almost employees of the Organization); non-compliance with the one-off nature of the need; accumulation of irregularities in a single contract. For procurement requiring an opinion of the Contracts Committee: as well as the high proportion of post facto situations revealed in the audit of the internal control mechanism (see above), with 11% of contracts signed before their submission to the Committee, the External Auditor found insufficient information, within compliance review, on the circumstances in which some contracts had been negotiated. Had that information been divulged, the Contracts Committee would probably have issued a negative opinion. Recommendation No. 4. The External Auditor recommends organizing and formalizing the content of the compliance reviews of the contracts submitted to the Contracts Committee, providing in every case systematic, accurate, exhaustive information including: the history of the contracts concluded with the same supplier (purpose, amount, any waivers to competitive bidding for prior contracts); in the event a waiver is granted, a critical and objective appraisal of its justification so as to verify the validity of the reasons cited by the purchaser; any incidents that have arisen in connection with previous contracts (for example, refusal to pay due to lack of services rendered); any information available on the personal relations that might exist or might have existed between the supplier and the purchaser.

60 204 EX/21 Part V page 4 Proposed decision 15. The Executive Board may wish to adopt a decision worded as follows: The Executive Board, 1. Having examined documents 204 EX/21 Part V and 204 EX/21.INF.5, 2. Expresses its satisfaction to the External Auditor for the high quality of his report; 3. Invites the Director-General to report on the progress achieved in the implementation of the recommendations in the report on follow-up to all recommendations made by the External Auditor. Director-General s comments The Director-General thanks the External Auditor for his audit report on UNESCO procurement. She accepts the recommendations it contains and will report on the progress of their implementation in accordance with the usual practice. Detailed comments on the different recommendations are submitted below. Details in Annex I.

61 ANNEX I PRELIMINARY IMPLEMENTATION PLAN BY RECOMMENDATION Audit recommendations Preliminary implementation plan and comments The recommendation will require additional resources for implementation (YES/NO) Estimated date for the implementation of the recommendation Recommendation No.1. The External Auditor recommends updating the Financial Rules, and particularly Article 6.29, to take into account the structures currently in place. Recommendation accepted. In accordance with Article 1.7 of the Financial Rules, the updated Rules will be submitted to the Executive Board for approval in spring 2019, provided that the Director-General takes the decision regarding structures within the timeframe established for the document s production. May 2019 after the spring 2019 session of the Executive Board Recommendation No. 2. The External Auditor recommends effectively implementing the sanctions provided for in the Financial Rules and internally disseminating information on the sanctions adopted, to put an end to current practices leading to a high number of contracts submitted post facto to the authorities meant to authorize them. Recommendation accepted in principle. Implementation modalities will have to be defined in collaboration with HRM and the Internal Oversight Service (IOS). The Secretariat plans to formalize reporting and processing procedures in the event of noncompliance with the rules of the Organization. December EX/21 Part V Annex I

62 Audit recommendations Recommendation No. 3. The External Auditor recommends quickly settling the debate over the organization of internal procurement monitoring that has raged between BFM and MSS since mid-2016, and, whichever solution is adopted, ensuring: the separation of tasks between compliance monitoring on one hand and the functions of contract preparation and negotiation and purchaser training and advice on the other; the implementation of a systematic, exhaustive compliance review for high-value contracts, as currently, the contracts concluded by the most significant purchaser, MSS, are not subject to compliance reviews. Such reviews should be conducted by an agent of an adequate professional level, who is independent from the purchasers and their trainers and advisers. Preliminary implementation plan and comments Recommendation accepted in principle. Implementation modalities will have to be defined in collaboration with the Chief of Staff of the Office of the Director-General (DIR/CAB) and/or the Deputy Director-General (DDG). The recommendation will require additional resources for implementation (YES/NO) Estimated date for the implementation of the recommendation December EX/21 Part V Annex I page 2

63 Audit recommendations Preliminary implementation plan and comments The recommendation will require additional resources for implementation (YES/NO) Estimated date for the implementation of the recommendation Printed on recycled paper Recommendation No. 4. The External Auditor recommends organizing and formalizing the content of the compliance reviews of the contracts submitted to the Contracts Committee, providing in every case systematic, accurate, exhaustive information including: the history of the contracts concluded with the same supplier (purpose, amount, potential exceptions to competitive bidding for prior contracts); in the event a waiver on competitive bidding is granted, a critical and objective appraisal of its justification, to check the validity of the reasons cited by the purchaser; the issues that occurred in previous contracts (for example, refusal to pay for lack of services rendered); any information available on the personal relations that could exist or have existed between the supplier and the purchaser. Recommendation accepted: the process and content of compliance reviews will be revised, while taking into account the approach adopted for the implementation of Recommendation No. 3. Compliance reviews will, in particular, present a global analysis that will consider the information listed in the External Auditor s Recommendation No. 4. Specific comment on individual consultant contracts: HRM will implement a conformity review of individual consultant contracts above $100,000 to be submitted to the Contracts Committee as recommended by the external auditor except for verifying personal relationship between the service requester (UNESCO staff member) and the service provider. UNESCO staff members are international civil servants having an obligation to respect Standards of Conduct of International Civil servants which sets out that If a conflict of interest or possible conflict of interest does arise, the conflict shall be disclosed, addressed and resolved in the best interest of the organization. Estimated date for implementation: March 2018 Yes, due to resource constraints consultancy services may be bought to deliver the updated compliance review checklist based on best practices December EX/21 Part V Annex I page 3

64 Executive Board Two hundred and fourth session 204 EX/21 Part VI PARIS, 9 March 2018 Original: French Item 21 of the provisional agenda NEW AUDITS BY THE EXTERNAL AUDITOR SHORT-FORM AUDIT REPORT ON UNESCO S INTERNAL HUMAN RESOURCES MANAGEMENT PROCEDURES SUMMARY This document is the short-form report of the External Auditor s audit report on UNESCO s internal human resources management procedures as set out in document 204 EX/21.INF.6, pursuant to Article 12.4 of the Financial Regulations. Action expected of the Executive Board: proposed decision in paragraph 31. Job:

65 204 EX/21 Part VI EXECUTIVE SUMMARY AUDIT OF INTERNAL HUMAN RESOURCES MANAGEMENT PROCEDURES DISCLAIMER: This executive summary was drawn up by the External Auditor at the Secretariat s request in order to optimize translation costs and facilitate discussion by the governing bodies. Only the long-form report is authoritative in terms of exact content and the nature and scope of the External Auditor s findings and recommendations. 1. In view of the time allotted for the audit, the external auditors selected a limited number of procedures in order to be able to study their implementation in detail. The fact that human resources management procedures are vital to UNESCO s smooth functioning, that UNESCO services have spontaneously mentioned that some of those procedures are a source of concern, and that an initial rapid analysis hinted at possible ways to optimize such procedures led the External Auditor to select: (A) individual performance evaluation; (B) selection and appointment of heads of field offices; (C) project appointments (PA); (D) internal transfers and (E) post reclassification. 2. Since the audit focused on a limited number of procedures, its aim was not an overall analysis of human resources management, which could not be conducted without also studying, in particular, the recruitment policy for staff members (with a fixed-term appointment (FT)), and skills management. The report nonetheless presents three major findings: serious weaknesses in terms of accountability, which neither the methodology nor the evaluation software used, although each could be improved, can explain; significant potential for simplifying and rationalizing the procedures studied; a post reclassification procedure that has been diverted from its original aim. B. Individual performance evaluations: indispensable improvements accompanied by effective governance at the Organization s highest level 3. The performance evaluation system was revised in July 2014 following the introduction of MyTalent software and a new standard for the biennium. The standard explicitly links individual performance with that of the Organization. The main expected results and/or the responsibilities of each individual must be consistent with the performance targets/expected results of the team or unit concerned, and must contribute to it (the cascade principle). They must be defined in accordance with the SMART approach, and be: (a) Specific and concise; (b) Measurable, in relation to specific indicators/results; (c) Attainable (achievable by the deadlines set); (d) Realistic and (e) Timely (to be carried out within a specific time limit). 4. The performance evaluation cycle has in principle two stages: definition of the expected results and the competency plan before 31 March of the first year of the biennium; evaluation of the results achieved before 31 March of the first year of the following biennium. 5. The supervisor provides a global assessment based on a four-level scale in which the numbers 1 to 4 correspond respectively to: exceeds the goals, fully meets expectations, partially meets expectations, does not meet expectations. The report is then sent to the second-level supervisor who reviews it and adds his or her own comments, as necessary. 6. The external auditors observed that while the individual performance evaluation system follows good practices by incorporating an initial planning phase, it does not follow them with regard to the performance evaluation itself. The procedure should include monitoring throughout the year, with an evaluation at the end of the year. Furthermore, analysis of the evaluation files demonstrates that in most cases there is a failure to understand the principles of cascading and individualized

66 204 EX/21 Part VI page 2 goal-setting, since the goals are most often a simple copy of the strategic axes or items in the post description. 7. The audit revealed an unusually low rate of completed individual evaluations. The rate during the last biennium ( ) was only 58%, which is significantly less than the 85% obtained by the Secretary-General of the United Nations. The vast differences between sectors, six of which had 84% or more validated cases, while in five sectors less than 33% of staff had been evaluated, and between locations, practically eliminates any systemic methodological causes or technical software problems and points rather to a failure of supervisors to meet their commitments. Graph No. 1. Rate of validation of performance evaluations, by sector Source: External Auditor, from the MyTalent database 8. The non-submission of individual goal plans for the biennium prefigures the failure of the evaluation procedure under way: by the deadline of 31 March 2016, only 35% had been finalized and that figure reached 64% on 31 October 2017, namely, at the end of the biennium. In addition to the fact that no plan was submitted for one quarter of the staff, the definition of goals for another quarter of the staff during the last phase of the two-year period is hardly meaningful. 9. The grades given for the biennium, all of which tended towards excellence or the full satisfaction of goals, are too optimistic. Out of a total of 1,245 staff members (FT and PA) whose evaluation was validated, 157 received a grade of 1; 1,071 a grade of 2; only 13 received a grade of 3; and two received a grade of 4, or, respectively, 13%, 86%, 1% and 0.2% of staff members with validated evaluations. This distribution is more a sign of supervisors avoiding addressing the question of under-performance than of the actual extent to which staff members attained their goals. Such a situation, although not specific to UNESCO among United Nations system organizations, is an obstacle to good human resources management and affects the image that the Organization projects to the outside world, and especially to its Member States. 10. The sectors questioned all mentioned that staff members and managers had experienced technical difficulties and criticized the MyTalent software, which is apparently not completely reliable. The auditors, who were given administrator privileges during the audit, did not encounter any difficulties in using the software. They also tested the software from the viewpoint of supervisors and employees undergoing evaluation. They concluded that the software had been greatly improved since it was initially installed, but could still benefit from becoming more user-friendly and more flexible. Nevertheless, as presently configured, the software can still be used by staff and supervisors. Even though it could be improved, MyTalent should not be used as an excuse for the poor execution of performance evaluations.

67 204 EX/21 Part VI page Given the importance of the individual performance evaluation for the Organization, the External Auditor considers it vital that UNESCO consolidate its individual evaluation procedure. To do so, staff must engage with the process, through the widespread use of staff training, in particular for managers, in the setting and realization of individual goals, and through a commitment to accountability at the Organization s highest level. 12. Managers must make the definition of goals and monitoring of goal attainment a management tool. This requires frequent access to the individual performance evaluation files of their colleagues, which should be made as easy as possible. 13. The process of monitoring individual performance must finally become much more dynamic and be regarded by staff as an ongoing, or even permanent, requirement. To attain this, the evaluation cycle should be shortened from two years to one. Interim measures should be introduced beginning with the cycle. 14. In summary, the External Auditor s requirements and recommendations in this field are aimed at: greater staff commitment to the importance of accountability, including the obligation of training; making the grading system more credible; making heads of sectors more responsible for ensuring that all their staff respect the performance evaluation process; and energizing the process by making it annual, thus nearly continuous. Commitment to a culture of performance by supervisors and line staff must become one of the Organization s priorities. C. Recruitment of heads of field offices and project appointment staff: a drastic reduction in delays is possible 15. The auditors examined the process for recruitment of heads of field offices, an average of 10 of whom are replaced each year, and of project appointment (P.A.) staff, for which recruitment is continuous. 1 Those processes appear to be exceedingly long: the average vacancy for posts of head of field office is greater than 13 months, and it takes more than six months to recruit a project appointment employee, whose contract will not last longer than two years. 16. The audit revealed that recruitment procedures involved multiple sequential stages and required incessant hand-overs between services, which made long waits between each stage inevitable and, in the end, a considerable amount of wasted time. For example, the stages involved in the validation process prior to the publication of a post vacancy for a head of field office takes nearly two months on average; the time between the last day that the vacancy notice is posted and the candidate interviews is five months on average for heads of field offices and two months for project appointment staff. 17. In addition, in the case of recruitment of heads of field offices, the external auditors observed that for some stages, a higher degree of validation than that provided for under the procedure is sought, for example, for the drafting of a vacancy notice and the formation of the panel, which adds to the delay. 1 UNESCO employs approximately 350 persons under contracts of this kind.

68 204 EX/21 Part VI page 4 Graph No. 2: Procedure for recruitment of a head of field office Current procedure: average of one year* Proposal for vacancy announcement Validation of panel composition Pre-selection of candidates Selection of candidate Interviews Authorization by host country Start of employment 1 month Optimized procedure 4 months in the majority of cases * Average length of time, excluding transfers and procedures declared unsuccessful Source: External Auditor 18. The External Auditor has issued suggestions and recommendations that should enable UNESCO to reduce recruitment delays by 50% or 75%. With regard to the two types of recruitment considered, simplification of administrative procedures, delegation of authority at the appropriate level, refocusing of selection panels on their basic function and planning for the examination of applications will make the procedure more efficient, limit the amount of waiting time involved and enable it to be completed much more rapidly. Simplification of the procedures will also lead, with the elimination of superfluous tasks, to cost savings. 19. In particular, with respect to recruitment of heads of field offices, implementation of a simplified procedure in the initial stage, using as little paper as possible, and assigning intermediate decisions to the Director of the Bureau of Human Resources Management (HRM) and the Director of the Division of Field Support and Coordination (FSC) (or the Office of the Director-General, when a liaison office is involved) would be the best policy. In the case of project assignment recruitments, administrative verifications should be conducted earlier in the procedure and should be streamlined. 20. The External Auditor also endorses the recommendation made by the internal auditor 2 to draw up generic post descriptions, which should be used both for vacancy announcements and for candidate questionnaires. 21. Advance recruitment planning should also be implemented in any case where the need for recruitment is known in advance so that prior notice can be used as a means of limiting post vacancies. 22. Some of the recommendations, in particular No. 14 relating to host country approval for heads of field offices, require the involvement of Member States, which are both stakeholders in the procedure and direct beneficiaries of UNESCO s action. 23. Furthermore, the External Auditor points out that recruitment of heads of field offices ends in failure in nearly one case out of four, either because the candidate withdraws his or her application, the candidate does not obtain the endorsement of the host country, or UNESCO does not select a candidate from the applications submitted. The latter reason is the most frequent and the result is that the procedure is declared unsuccessful, the post is again opened for recruitment and the recruitment time is therefore considerably lengthened. It is surprising that UNESCO does not manage to find quality candidates for locations that are not always the least attractive. Such a situation should only arise from time to time if UNESCO implemented a forward-looking management system for filling such posts, based on identification and follow-up of staff with 2 See Audit report IOS/AUD/2015/07 of September 2015, concerning the recruitment procedure for international staff.