INTERNAL AUDIT REPORT OF CAMBODIA OPERATIONS CENTRE (KHOC) IN PHNOM PENH, CAMBODIA Final Internal Audit Report No. IAIG/4003 Issue Date: 28 November 2014
Contents I. Executive summary... 2 II. Audit report... 3 1. Audit objectives and scope...3 2. Background of the Office...3 III. Detailed assessment... 4 1. Strategic management and leadership... 4 2. Project management... 5 3. Procurement and supply chain management... 8 4. Human resources... 9 5. Finance... 10 6. Asset management... 11 Annex 1. Definitions of audit terms ratings and priorities... 12 Annex 2. Glossary... 13 Audit report no. IAIG/4003: Cambodia Operations Centre (KHOC) 1
Report on the internal audit of the Cambodia Operations Centre (KHOC) I. Executive summary Introduction As part of its annual work plan for 2014, the Internal Audit and Investigations Group (IAIG) conducted an audit of the Cambodia Operations Centre (KHOC) in Phnom Penh, Cambodia. The audit was carried out in accordance with the International Standards for the Professional Practice of Internal Auditing. These standards require that IAIG performs the audit to obtain reasonable assurance on the adequacy and effectiveness of governance, risk management, and control processes. Audit rating In IAIG s opinion, the overall level of internal control over KHOC activities is satisfactory. 1 This opinion is based on limited scope audit procedures which were performed on a sample basis. During the audit, no material issues have come to IAIG s attention which would indicate that a different rating is more appropriate. Key audit issues and recommendations The audit report contains 11 recommendations, one of which is high priority and the remaining ten are medium priority. The high priority recommendation is as follows: Function Project Management Audit recommendation The Director, KHOC, should: a) Ensure regular sample verification of individual SR transactions with supporting documentation before the PUDR is submitted to the LFA and funds are released to SRs and programme partners; and b) Ensure that cumulative funds disbursed to programme partners are backed up by sufficient details. The medium priority recommendations to KHOC include actions required to: develop a terms of reference document for the KHOC; ensure leads are entered into the system as soon as they are identified; ensure spot verifications are completed in monitoring visits to ensure bed nets reach the intended beneficiaries; work with the Principal Implementing Partner regarding to establish expected frequency of supervision visits to Provincial Health Departments and Operational Districts; obtain documented donor approval to changes to approved procurements; ensure formal appointment is completed and communicated for the Programme Coordinator position and reallocate staff budget costs accordingly; consider whether the planned merger of the Public Health Programme Officer and the Monitoring and Evaluation Specialist positions is appropriate given the short- and long-term needs of KHOC; and, to provide a local instruction to clarify the processes for the recovery of costs associated with the use of official vehicles for personal and other purposes. One recommendation is addressed to UNOPS Corporate Support Practice Group (CSPG) to clarify the term official business, as it relates to the use of UNOPS vehicles. 1 See definitions in Annex 1 Audit report no. IAIG/4003: Cambodia Operations Centre (KHOC) 2
II. Audit report 1. Audit objectives and scope The audit objectives were to determine whether the governance, risk management, and control processes over the Office s operations provide reasonable assurance to the Executive Director that: a) Significant objectives will be achieved in all projects, programmes, plans and businesses; b) Resources are used economically and efficiently; c) Financial, managerial and operating information is accurate, reliable, relevant and timely; d) Activities and transactions comply with policies and procedures and the relevant agreements and contracts; and e) Assets are safeguarded. The audit was completed as per the approved planning memorandum and took into account the findings of the risk assessment exercise carried out prior to the audit. IAIG reviewed the effectiveness of key controls over operational processes and management practices, with particular focus on the functional areas relating to (i) project management, (ii) procurement and supply chain, (iii) human resources, and (iv) finance. Identified opportunities for improving management control over other functional areas are also reported as deemed appropriate. The audit covered the activities of the office from July 2013 to September 2014. The audit covers the activities of the Cambodia office, with a particular focus on its major project, the Global Fund to Fight Aids, Tuberculosis and Malaria Single Stream of Funding (SSF) for Malaria in Cambodia. 2. Background of the Office The UNOPS Cambodia Operational Centre (KHOC) was established in 2013 to support ongoing and new projects. In March 2013, UNOPS was selected as the Principal Recipient (PR-UNOPS) for the SSF malaria grant Cambodia. PR responsibilities were formally transferred to UNOPS on 1 April 2013, recruitments were undertaken and KHOC became fully operational on 1 August 2013. By the end of 2013, UNOPS had completed its project activities for supporting the Royal Government of Cambodia (RGC) in fulfilling its obligations under the UN-RGC Agreement Concerning the Establishment of the Extraordinary Chambers for Prosecution under Cambodian Law of the Crimes Committed during the Period of Democratic Kampuchea. In 2014, KHOC was assigned the Cambodian component of the Global Fund Multi-Country East Asia and Pacific Regional Artemisinin Initiative (RAI) malaria grant, for which UNOPS Myanmar is the PR. KHOC also added two small projects to its roster in 2014, one in the Lao People's Democratic Republic and one in Vietnam. The SSF is a complex programme for its SRs to deliver and for PR-UNOPS to oversee. UNOPS assumed responsibility as PR for the SSF in the second phase of the project while the former PR became the largest sub-recipient (SR) and Principal Implementing Partner (PIP) for the grant. The PR- UNOPS manages 14 sub-recipients (SRs), including government and non-governmental organizations, with operations in all Cambodian provinces through 20 Provincial Health Departments. There are approximately 40 individuals, staff and individual contractors employed by KHOC across finance, administration, procurement, public health (programme) and monitoring & evaluation, whose positions are almost exclusively funded by the SSF project. A few delays were encountered during the initial set-up and implementation of project activities, some of which were due to reasons beyond the control of KHOC; however, many deliverables were met despite a challenging operational and political environment. Significant efforts and improvements continue to be made by all sections within KHOC to deliver the programme and to solicit new business to ensure the sustainability of the OC. IAIG wishes to extend its appreciation to the management and personnel involved in the audit at KOHC, as well as practice personnel at Headquarters, for their cooperation during the audit. The detailed audit observations and recommendations are provided in Part III of the report. Audit report no. IAIG/4003: Cambodia Operations Centre (KHOC) 3
III. Detailed assessment 1. Strategic management and leadership Observation 1 Terms of reference of the Cambodia Operations Centre Paragraph 2.2 of Organizational Directive (OD) 15 (addendum 2) sets out the criteria for the establishment and internal designation of entities, and states that the delivery and business development focus for an OC is one country/territory, and Annex 3 provides the operational scope. IAIG noted that the KHOC business development focus is regional, and includes the Lao People's Democratic Republic, Vietnam and the Philippines. However, the operational scope of KHOC has not been defined in a terms of reference document or the OD15. Defining the operational scope will help to avoid overlap between offices. Recommendation: IAIG/4003/01 The Director, KHOC, should formulate a terms of reference, and this should define the operational scope for KHOC. Management comments: Agreed Terms of Reference duly reflecting hub responsibilities of KHOC will be prepared in consultation with AEMO. Observation 2 Leads system As stated in chapter 2.1 of the Book of Knowledge, issued by SPMPG, as soon as business opportunities are identified and a conversation with a partner has taken place, they should be entered in the leads system. IAIG noted that some of KHOC s potential opportunities at the pre-engagement stage were not included in the leads system. The Expression of Interest submitted for Phase III of the GFATM New Funding Model grant for 2015-2017 for USD 25-30 million and the Expression of Interest for the PR for the GFATM AIDS grant in Cambodia, valued at approximately USD 30 million were not in the system. In addition, a potential public works/transport feeder roads project is also not in the system. IAIG noted that both these Expressions of Interest were entered into the leads system upon being raised by audit during the site visit. A third lead for USD 25 million for the Calmette Hospital was also included in the leads system following the audit site visit. Recommendation: IAIG/4003/02 The Director, KHOC, should ensure that all leads are entered in the leads system as soon as they are identified. Management comments: Agreed Potential engagements with clear business cases that are aligned with the priorities and mandate of UNOPS and KHOC will be entered into the Leads System in a timely manner henceforth. Audit report no. IAIG/4003: Cambodia Operations Centre (KHOC) 4
2. Project management The GFATM follows a performance-based funding model, which aims to ensure that funding decisions are based on an assessment of results against targets. 2 Programme objectives and deliverables are identified in the programme performance framework, developed during grant negotiations, and disbursement is directly correlated to the performance rating. As per paragraph 10 b (2) of the Programme Grant Agreement between the Global Fund (GFATM) and UNOPS, the Principal Recipient s accountability and reporting shall encompass the funds disbursed to all Sub-Recipients and the activities SRs carry out using programme funds. The PR shall establish and maintain systems to assess (before the PR transfers any resources to the SR) the capacity of the SRs, monitor their performance, and assure regular reporting from them in accordance with this agreement. Some good project management practices were observed during the audit. Field visits by the monitoring and evaluation, programme and procurement sections were conducted using standardized checklists. Detailed reports were written, including findings and recommendations, and shared with the SRs either at the provincial, district or SR level following the visits. Areas that could be strengthened are identified below. Observation 3 Monitoring performance and follow-up on findings and recommendations As per the programme agreement, PR-UNOPS developed a monitoring and evaluation plan which was approved by the GFATM. In this plan, PR-UNOPS committed to visiting each sub-recipient once per semester (six-month period). In order to achieve this target, a work plan was developed, giving details both of the sites to be visited and the sections that would carry out the visit, for the period from October 2013 to June 2014. Although there was no formal plan for July to September 2014, visits were conducted in July and August. Planning for October to December 2014 was underway at the time of the audit site visit. A number of variables, some fixed and some dynamic, were considered when locations were selected for site visits; however, the methodology was not formally documented. Although it is not a GFATM requirement, a documented methodology would help to systematically identify risk areas and provide assurance to the donor that coverage is adequate and in accordance with the approved plan. This riskbased approach is particularly useful when resources are limited, as is the case for next phase of the SSF program. The methodology could also be adapted for other programmes, if the need arises. Systematic tracking of and follow-up on recommendations provided to the SRs was also not carried out, although in certain cases where immediate action was required, follow-up was done with the SR. In 2014, some field visits were combined with capacity assessments. Significant effort was put into these capacity assessment reports, but due to a change in PR-UNOPS management priorities and reduction of future funding, only one report was fully completed and shared with the relevant SR. The remaining incomplete capacity reports contain findings and recommendations which have yet to be shared and could provide valuable feedback to the SRs. Formal tracking and following up on findings and recommendations from field visits would help to ensure that issues are addressed in a timely manner. This information would also assist in the identification of trends, which could in turn help inform planning for upcoming site visits. It is noted that a register of recommendations and actions taken was created in Excel during the audit site visit; KHOC is encouraged to continue using and building on this tool and to include recommendations from the capacity assessments, once they are finalized and shared with the SRs. 2 The Global Fund to Fight AIDS, Tuberculosis and Malaria. Performance-based funding at the Global Fund. Geneva: GFATM, November 2009. www.theglobalfund.org. GFATM. Web. 27 October, 2014. Audit report no. IAIG/4003: Cambodia Operations Centre (KHOC) 5
Recommendation: IAIG/4003/03 The Director, KHOC, should: a) Implement formal tracking and follow up of findings and recommendations resultant from monitoring visits to SRs to ensure issues are addressed in a timely manner; and b) Document its risk assessment methodology for selecting locations for monitoring visits. Management comments: a) Formal tracking and follow up on findings and recommendations from field visits is indeed essential for improving program implementation. Some actions have already been taken in this regard. After the audit, a process for grant monitoring and follow-up with clear roles, responsibilities and timelines has been drafted. b) M&E requirements of the Global Fund do not prescribe or require a risk assessment methodology for the selection of sites. At the moment, there is no documented methodology for selecting locations for monitoring visits due to the many variables that influence the process (such as strategic importance of SRs, complexity of implemented activities, previous visit history, issues identified during latest reporting or on-going grant work, availability of members of different functional teams, and travel logistics). While some of these variables are fixed and known well in advance, other variables are less known and quite dynamic. Observation 4 Accountability for disbursement of funds In accordance with the grant agreement, PR-UNOPS completes standardized semi-annual reports called Progress and Update Disbursement Requests (PUDRs). The PUDR is a compilation of SR and PR progress and expenditures reports against the performance framework, which is submitted via the Local Fund Agent (LFA) to the GFATM. GFATM reviews these reports, including the LFA s input, and assigns a performance rating. The Annual Funding Decision (amount to be disbursed) is directly correlated to this rating. Prior to submission to the LFA, PR-UNOPS requests documentary evidence to support budgets and expenditures from the SRs, but detailed information is only requested if there are questions or concerns about expenses against a particular budget line item. IAIG noted that following a verification exercise done by the LFA for the January-June 2014 PUDR, a total of USD 17,767 in SR expenditures was identified as unsupported or ineligible. The majority of these expenditures were deemed ineligible because vendor contact information was not included on the invoices, despite this being a GFATM requirement for payment. IAIG also noted that more detailed review of expenditure details was needed for technical assistance provided by the World Health Organization (WHO). Cumulatively, USD 257,647 of the USD 300,217 staff budget, and the full indirect support cost budget of USD 21,365 has been funded. However, the approved P5 Technical Assistant position has been vacant since October 2013 and the WHO funded a P4 position in its place. The donor is aware of this issue. PR-UNOPS should verify that the expenditure claimed by WHO is backed up by fulfilment of the Technical Assistant s terms of reference and full expenditure details to support the cumulative disbursement of funds. A Risk and Compliance Officer recently engaged in the Cambodia National Malaria Centre (CNM), the programme s Principal Implementing Partner (PIP), will help to build financial capacity and perform verification exercises aimed at preventing recurrence of these issues. At the request of GFATM, this capacity building activity currently focuses on the CNM-PIP through whom the majority of the programme is delivered. However, strengthening capacity in all SRs will further help to improve program performance. IAIG also noted that a few spot checks were carried out to verify expenditures and supporting documentation during field missions by Finance unit. Thus, while controls were in place, there is room to strengthen and document the implementation of these controls. Audit report no. IAIG/4003: Cambodia Operations Centre (KHOC) 6
Recommendation: IAIG/4003/04 Priority: High The Director, KHOC, should: a) Ensure regular sample verification of individual SR transactions with supporting documentation before the PUDR is submitted to the LFA and funds are released to SRs and programme partners; and b) Ensure cumulative funds disbursed to programme partners are supported by sufficient details. Management comments: a) Finance has been making verification missions to SRs and Provincial Health Departments on an ongoing basis. Additional verifications will be undertaken by the UNOPS Compliance Officer or by requesting a fixed set of samples for verification of each SR s expenditures for each PUDR. Currently the supporting documentation from each SR in the form of PUDR s are being reviewed for details of actual expenditures, commitments, amounts to be carried forward and savings. In addition, the PUDR section 3G SSUF (Statement of Sources and Uses of Funds) provides for an overview of the cash position, interest gained, possible additional income etc. from each SR, which provides for a full insight to how much cash is needed for the future period by each SR. This review is currently taking place in KHOC Finance. KHOC however will improve the supporting documentation following each disbursement so that it is evident that a thorough review has taken place before disbursements are carried out. b) Expenditure details will be obtained from programme partners to support disbursement of funds. Observation 5 Distribution of Long Lasting Insecticidal Nets At the request of the former PR (CNM-PIP), PR-UNOPS took over the distribution of 586,874 Long Lasting Insecticidal Nets (LLINs) to mobile and migrant population (MMP) groups that had remained undistributed from Phase 1 of the Grant. In July 2014, PR-UNOPS teams were sent to the field to identify additional MMPs that needed to be covered with LLINs, and to support PHDs in submitting micro plans to the PR to complete the distribution of all remaining LLINs and achieve the targets set under the Performance Framework. IAIG noted that: a) While controls exist to check for duplications in the distribution of LLINs, evidence of these controls having been tested through field visits should be obtained. During field monitoring visits, concerns regarding proper identification and potential duplication in coverage of plantations and villages were raised in the micro-planning exercise by the programme and monitoring & evaluation teams. Controls are set by the National Malaria Programme through the National Strategy (instructing on distribution lists and household cards). The National Strategy cannot be altered by the PR. It can only request the National Malaria Programme to update the Strategy. This policy and strategy is implemented in the field, with the aim of preventing duplication by asking PHDs to submit receipts given by beneficiaries to distributors, which is further verified through on-site data verification exercise and an annual survey by the PR. b) Objections were raised by the programme section in several micro-plans on the planned number of supervision visits by PHDs and OHs. Their concerns relate to budgetary control. No norms or instructions are available in this regard, which would provide greater clarity to the PHD/OHDs regarding expected frequency of these visits. Recommendation: IAIG/4003/05 The Director, KHOC, should: a) Ensure that, following distribution, field visits by PR-UNOPS monitoring & evaluation and programme sections should check for duplication and ensure that the LLINs are received and acknowledged by the beneficiaries; and Audit report no. IAIG/4003: Cambodia Operations Centre (KHOC) 7
b) Work with CNM to implement more robust controls regarding the expected frequency of supervision visits by PHDs/OHDs. Management comments: a) PR UNOPS conducts M&E visits in accordance with the National Strategy already. Such spotchecks do include verification of data on household cards and distribution lists (this includes checks for duplication as well as receipt of LLINs by beneficiaries). These household cards and distribution lists are the only means of verification set out in the National Strategy, and will be reviewed during field visits. b) The issuance of instructions/norms regarding the expected frequency of supervision visits by PHDs/OHDs is the prerogative of the Ministry of Health and the National Malaria Programme and UNOPS will coordinate with them. 3. Procurement and supply chain management IAIG noted some good practices in the area of procurement and supply chain management. These include documentation of conduct of supplier background checks using a standard template, development of a system for monitoring of timelines for procurement and contract management, field monitoring checklists, monitoring of implementation of work plans, and development of Standard Operating Procedures for staff. Observation 6 Procurement of vehicles In accordance with standard practices followed by the GF, procurement planning begins with an approved Procurement Strategy and Management plan, followed by the execution of procurement in accordance with approved budgets. In one procurement case reviewed, the specifications and requirements for one of 15 vehicles purchased was different than the approved specifications. In this case, specifications were determined by the Programme and Administration sections and a quote was requested from UN Web Buy by the administration section without the involvement of Procurement. Donor approval was provided for the purchase of 15 pick-up vehicles for program delivery in the provinces; however, 14 vehicles of this type were purchased for the provinces and one SUV was purchased for use at the PIP headquarters. Documented approval from the donor for this change was not available. Recommendation: IAIG/4003/06 The Director, KHOC, should ensure that documented donor approval is obtained for changes in the description of the vehicles procured, which may be done at the time of submission of the next PUDR. Management comments: The above reference was an isolated case that has been tackled already. In providing a justification for procurement of those 15 vehicles to the GF on 21 March 2014, the justification note referred to the procurement of 15 Pick-Up off-road truck (4x4) vehicles, which was approved by the Global Fund. However, later in June 2014, when Requisition was finalised by the Programme and Admin section together with CNM, taking cognizance of the needs to ensure that programmatic objectives are fully achieved, it was found prudent to procure one Toyota Station Wagon for use by CNM and remaining 14 vehicles as Pick-Up off-road trucks. The rationale for procuring one Toyota Station Wagon instead of a Pick-Up was communicated to the Global Fund and verbal approval was provided. Notwithstanding this isolated case, KHOC will continue to ensure that written approval is ascertained for any change to the procurement plan. The upcoming PUDR will serve to ensure due (post facto) approval that is in writing. Audit report no. IAIG/4003: Cambodia Operations Centre (KHOC) 8
4. Human resources Observation 7 Appointment of Programme Coordinator KHOC carried out a recruitment exercise in 2013 for the position of a Senior Country Programme Advisor, to support delivery of the SSF and other projects. IAIG noted that until early July 2014, the Director of KHOC also acted as the Programme Coordinator. Since then, the Senior Country Programme Advisor has been functioning as acting Programme Coordinator for the SSF project. A formal approval for this appointment has not yet been issued by Headquarters (HQ). This gap also affects the manner in which the salary costs of these positions are allocated between the project and management budgets. Recommendation: IAIG/4003/07 The Regional Office should issue formal approval for the appointment of the Programme Coordinator and the Director KHOC should retroactively adjust staffing cost allocations based on the effective date of the appointment. Management comments: Agreed A request has been submitted by AEMO to PCPG for the formal appointment of the Programme Coordinator and staffing cost allocations will be adjusted in accordance with the effective date of the appointment. Observation 8 Merger of Public Health Programme Officer and Monitoring and Evaluation Specialist positions The monitoring and evaluation function includes programme data collection, routine tracking of performance against programme objectives and indicators, and systematic reviews of programme activities and results. It is generally accepted that a certain degree of independence is required to objectively review programme activities. Further, in line with its performance-based funding model, the GFATM monitoring and evaluation expectations are robust and significant resources were budgeted for these activities. Due to a reduction in planned funding in Cambodia for the SSF Malaria grant, PR-UNOPS was requested to reduce its expenditures for the remainder of the programme phase until June 2015. KHOC conducted a budget review, and with agreement of the donor, one area where savings were identified was through the consolidation of the Public Health Programme Officer (Programme) position with the Monitoring and Evaluation Specialist position. KHOC committed to this merger in the Global Fund s management letter dated 26 August 2014. While this merger would result in tangible short-term savings for the SSF program, IAIG raised concerns whether the consolidation of these positions is appropriate for KHOC and should be undertaken in light of the important oversight and independent role that the Monitoring and Evaluation function plays, the volume of work required to meet GFATM expectations, and the long-term sustainability of the office should the OC continue to grow and add more projects to its roster. Recommendation: IAIG/4003/08 The Director, KHOC, should consider the impact of consolidating the positions of Monitoring and Evaluation Specialist and Public Health Programme Officer and decide whether this is in the shortand long-term interests of the OC. Audit report no. IAIG/4003: Cambodia Operations Centre (KHOC) 9
Management comments: The observation is fine and will be helpful. Such consideration has taken place already after the next phase malaria funding was reduced. Naturally, such consolidation will be re-thought if and when the circumstances change. The latter is part of a normal continuous change process related to adjustments pertaining to the project portfolio and associated resources. 5. Finance Observation 9 Control over supporting documentation As per the AP voucher and payment section of the Knowledge System, ATLAS should identify duplicate invoice numbers for the same supplier. To complement this electronic verification, Finance staff person should review vendor records to ensure that duplication of invoices is avoided. A further manual control which can help to avoid duplicate payments is to mark or stamp invoices that have been paid so that they cannot be resubmitted for payment. In the review of vouchers performed, it was noted that the practice of marking invoices was not consistently implemented at KHOC. Marking all invoices would cancel the document and help to mitigate the risk that documents are presented more than once for payment. Recommendation: IAIG/4003/09 The Director, KHOC, should ensure that all supporting documents for payments are cancelled by stamping or marking them as paid. Management comments: Agreed The office will implement the recommendation to stamp invoices as paid in order to avoid any possible duplication of payment that is not traced by ATLAS. Observation 10 VAT refund According to the RGC decree, United Nations and non-governmental agencies are eligible for a Value- Added Tax (VAT) refund for goods purchased in Cambodia on a reimbursement basis. A request for refund of USD 16,415 paid by PR-UNOPS for goods between April 1, 2013 and August 31, 2014 has been submitted to the RGC. A refund of the VAT paid for contracted services is currently not available. The KHOC is coordinating on this issue with the GFATM, who has requested the Ministry of Economy and Finance to grant tax exemption to all goods and services procured under Global Fund grants. KHOC should continue its efforts to ensure that all VAT paid for goods and services are recovered by the end of the programme phase in June 2015. Audit report no. IAIG/4003: Cambodia Operations Centre (KHOC) 10
6. Asset management Observation 11 Use of official vehicles As per paragraph 4.4 of AI/CSPG/2013/01, UNOPS vehicles should not be used for personal purposes or for transportation between personal residences and the office without the prior written approval of the Head of Office or Director, Corporate Support Group. As per paragraph 4.1, a vehicle may be assigned to the Head of Office to use for official business. The term official business is not defined in the AI. Clarification regarding application of this terminology at KHOC has not been determined. A local instruction stating the rates and procedures for the recovery of costs from the personal use of vehicles, as well as from use by partner agencies or other projects would help in this regard. Templates for requesting to deviate from the AI for use of official vehicles are also available on the UNOPS-CSPG intranet page. Further, clarification on the term official business by HQ would help to avoid any misinterpretation of the AI. Recommendation: IAIG/4003/10 The Director, KHOC, should develop and implement an instruction for recovery of costs associated with the use of official vehicles for purposes other than those defined in AI/CSPG/2013/01. Management comments: Agreed KHOC will develop the recommended instruction and implement it. Recommendation: IAIG/4003/11 The Director, CSPG, should provide a clarification regarding the term official business as noted in AI/CSPG/2013/01. Management comments: Agreed CSPG will clarify the term and communicate it to the field offices. Audit report no. IAIG/4003: Cambodia Operations Centre (KHOC) 11
Annex 1. Definitions of audit terms ratings and priorities A. Audit ratings Effective 1 January 2010, the internal audit services of UNDP, UNFPA, UNICEF, UNOPS and WFP adopted harmonized audit rating definitions, as described below. IAIG assesses the entity under review as a whole as well as the specific audit areas within the audited entity: Satisfactory: Internal controls, governance and risk management processes were adequately established and functioning well. No issues were identified that would significantly affect the achievement of the objectives of the audited entity. Partially Satisfactory: Internal controls, governance and risk management processes were generally established and functioning, but needed improvement. One or several issues were identified that may negatively affect the achievement of the objectives of the audited entity. Unsatisfactory: Internal controls, governance and risk management processes were either not established or not functioning well. The issues were such that the achievement of the overall objectives of the audited entity could be seriously compromised. B. Priorities of audit recommendations The audit recommendations are categorized according to priority, as a further guide to management in addressing the issues in a timely manner. The following categories of priorities are used: High: Prompt action is considered imperative to ensure that UNOPS is not exposed to high risks (that is, where failure to take action could result in critical or major consequences for the organization). Medium: Action is considered necessary to avoid exposure to significant risks (that is, where failure to take action could result in significant consequences). Low: Action is desirable and should result in enhanced control or better value for money. Low priority recommendations, if any, are dealt with by the audit team directly with the management of the entity under review, either during the exit meeting or through a separate memo subsequent to the fieldwork. Therefore, low priority recommendations are not included in this Report. Audit report no. IAIG/4003: Cambodia Operations Centre (KHOC) 12
Annex 2. Glossary AI ATLAS CCM CNM CSPG ERP GFATM HQ HR IAIG KHOC LFA LLIN MMP MOU OC OD OHD PHD PIP PR-UNOPS PUDR RAI RGC SPMPG SR SSF TA UNDP UNOPS USD VAT WHO Administrative Instruction UNOPS ERP system, jointly with other agencies Country Coordination Mechanism Cambodia National Malaria Centre Corporate Support Practice Group Enterprise Resource Planning system Global Fund to Fight AIDS, Tuberculosis and Malaria Headquarters Human Resources Internal Audit and Investigations Group Cambodia Operations Centre Local Fund Agent Long Lasting Insecticidal Nets (bed nets) Mobile and Migrant Population Memorandum of Understanding Operations Centre Organizational Directive Operational Health District Provincial Health Department Principal Implementing Partner Principal Recipient UNOPS, per the agreement with the GFATM Progress and Update Disbursement Request GFATM Multi-country East Asia and Pacific Regional Artemisinin Initiative Royal Government of Cambodia Sustainable Project Management Practice Group Sub-recipient Single Stream Funding (GFATM) Technical Assistant United Nations Development Programme United Nations Office for Project Services United States Dollars Value-Added Tax World Health Organization Audit report no. IAIG/4003: Cambodia Operations Centre (KHOC) 13