UN Office for Project Services
Management Reforms Proceeding but Effectiveness Not Assessed, and USAID's Oversight of Grants Has Weaknesses Gao ID: GAO-10-168 November 19, 2009The United Nations (UN) Office for Project Services (UNOPS) provides numerous services for its clients, including procurement and project management. Recent audits and investigations of UNOPS have revealed alleged violations of law, weak internal controls, and financial mismanagement. UNOPS officials misused some of the more than $400 million awarded to UNOPS by the U.S. Agency for International Development (USAID) from 2004 through 2008. GAO was asked to (1) assess the extent to which UNOPS has addressed key concerns about its internal controls, and (2) evaluate USAID's oversight of UNOPS-implemented projects. To address these objectives, GAO reviewed UNOPS and USAID policies and grant documentation.
While UNOPS management continues to implement reforms that address key concerns raised by audits and investigations, the effectiveness of some implemented reforms has not been assessed. Management efforts to improve UNOPS include (1) development of UNOPS's project tracking system, Atlas; (2) establishment of an internal oversight office; and (3) establishment of an ethics office. While changes to Atlas have improved UNOPS's financial documentation, UNOPS does not systematically assess data reliability in Atlas. Although UNOPS's internal oversight has been strengthened by the creation of an oversight office, two phases of an investigation of activities in Afghanistan have not begun. UNOPS had no investigative capacity of its own and had to seek out external investigators for which it is still negotiating the scope and cost. In addition, while UNOPS's ethics office complies with most UN requirements, no one has assessed the effectiveness of the office's activities. Finally, UNOPS's Executive Board lacks full access to internal audit reports that could provide greater insights into UNOPS's operations. USAID has not consistently implemented its oversight policies when making grant awards with UNOPS and has been vulnerable to program fraud and abuse. While USAID has policies that require it to perform pre-award assessments of Public International Organizations (PIO), such as UNOPS, USAID could not provide official documentation of these assessments for 7 of its 11 awards made to UNOPS from 2004 through 2008. In the 4 assessments USAID provided, there were no statements acknowledging findings of weak internal controls from UN audits and investigations. In addition, USAID did not negotiate to include audit authority for 9 of these awards that would have allowed USAID access to UNOPS project financial records. We found that an absence of clear guidance, training, and monitoring contributed to these failures. USAID's noncompliance with its policies resulted in limited access to data on UNOPS grants that were associated with findings of possible criminal
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-10-168, UN Office for Project Services: Management Reforms Proceeding but Effectiveness Not Assessed, and USAID's Oversight of Grants Has Weaknesses
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Report to the Permanent Subcommittee on Investigations, Committee on
Homeland Security and Governmental Affairs, U.S. Senate:
United States Government Accountability Office:
GAO:
November 2009:
UN Office for Project Services:
Management Reforms Proceeding but Effectiveness Not Assessed, and
USAID's Oversight of Grants Has Weaknesses:
GAO-10-168:
GAO Highlights:
Highlights of GAO-10-168, a report to the Permanent Subcommittee on
Investigations, Committee on Homeland Security and Governmental
Affairs, U.S. Senate.
Why GAO Did This Study:
The United Nations (UN) Office for Project Services (UNOPS) provides
numerous services for its clients, including procurement and project
management. Recent audits and investigations of UNOPS have revealed
alleged violations of law, weak internal controls, and financial
mismanagement. UNOPS officials misused some of the more than $400
million awarded to UNOPS by the U.S. Agency for International
Development (USAID) from 2004 through 2008. GAO was asked to (1) assess
the extent to which UNOPS has addressed key concerns about its internal
controls, and (2) evaluate USAID‘s oversight of UNOPS-implemented
projects. To address these objectives, GAO reviewed UNOPS and USAID
policies and grant documentation.
What GAO Found:
While UNOPS management continues to implement reforms that address key
concerns raised by audits and investigations, the effectiveness of some
implemented reforms has not been assessed. Management efforts to
improve UNOPS include (1) development of UNOPS‘s project tracking
system, Atlas; (2) establishment of an internal oversight office; and
(3) establishment of an ethics office. While changes to Atlas have
improved UNOPS‘s financial documentation, UNOPS does not systematically
assess data reliability in Atlas. Although UNOPS‘s internal oversight
has been strengthened by the creation of an oversight office, two
phases of an investigation of activities in Afghanistan have not begun.
UNOPS had no investigative capacity of its own and had to seek out
external investigators for which it is still negotiating the scope and
cost. In addition, while UNOPS‘s ethics office complies with most UN
requirements, no one has assessed the effectiveness of the office‘s
activities. Finally, UNOPS‘s Executive Board lacks full access to
internal audit reports that could provide greater insights into UNOPS‘s
operations.
USAID has not consistently implemented its oversight policies when
making grant awards with UNOPS and has been vulnerable to program fraud
and abuse. While USAID has policies that require it to perform pre-
award assessments of Public International Organizations (PIO), such as
UNOPS, USAID could not provide official documentation of these
assessments for 7 of its 11 awards made to UNOPS from 2004 through
2008. In the 4 assessments USAID provided, there were no statements
acknowledging findings of weak internal controls from UN audits and
investigations. In addition, USAID did not negotiate to include audit
authority for 9 of these awards that would have allowed USAID access to
UNOPS project financial records. We found that an absence of clear
guidance, training, and monitoring contributed to these failures. USAID‘
s noncompliance with its policies resulted in limited access to data on
UNOPS grants that were associated with findings of possible criminal
actions.
Figure: UN oversight reports with critical findings on UNOPS:
[Refer to PDF for image: timeline]
Length of the USAID-funded project: Early 2004 through 2009. Includes
dates when USAID was required to assess UNOPS‘s eligibility as a
grantee.
2004:
Early, 2004:
New grant award: USAID performed no official pre-award assessment (3);
UN Board of Auditors Report, July 2004;
New grant award: USAID performed official pre-award assessment (1);
USAID increased grant's budget but performed no official assessment
(3).
2005:
New grant award: USAID performed no official pre-award assessment (1);
New grant award: USAID performed official pre-award assessment (2);
USAID increased grant's budget but performed no official assessment
(1).
2006:
UNDP Office of Audit and Performance Review, May 2006;
New grant award: USAID performed official pre-award assessment (2);
USAID increased grant's budget but performed no official assessment
(4);
USAID increased grant's budget and performed an official assessment
(1).
2007:
UNDP Office of Audit and Performance Review, May 2007;
UN Board of Auditors Report, June 2007;
OIOS Procurement Task Force Kenya, August 2007;
New grant award: USAID performed no official pre-award assessment (1);
USAID increased grant's budget but performed no official assessment
(2).
2008:
UN Board of Auditors Report, June 2008:
OIOS Procurement Task Force, Afghanistan, December 2008:
New grant award: USAID performed no official pre-award assessment (1);
USAID increased grant's budget but performed no official assessment
(1);
USAID increased grant's budget and performed an official assessment
(1).
Source: GAO analysis of UNOPS data.
[End of figure]
What GAO Recommends:
GAO recommends that the Secretary of State work with other member
states to encourage UNOPS‘s continued reform in areas of vulnerability
identified by UN auditors and assessment of the effectiveness of the
reform effort. We also recommend that the USAID Administrator ensure
that USAID document its approach for assessing PIOs‘ eligibility for
USAID funding and improve its guidance, training, and monitoring
relating to the use of PIO audit provisions. State and USAID agreed
with our recommendations. UNOPS acknowledged the need for an assessment
of reforms, but stated that improvements have already been
demonstrated.
View [hyperlink, http://www.gao.gov/products/GAO-10-168] or key
components. For more information, contact Thomas Melito at (202) 512-
9601 or melitot@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
UNOPS Reforms Are Proceeding, but the Effectiveness of Some Implemented
Reforms Has Not Been Assessed:
USAID Has Not Consistently Implemented Its Oversight Policies When
Making Grant Awards with UNOPS and Has Been Vulnerable to Program Fraud
and Abuse:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: UNOPS's Locations Worldwide:
Appendix III: Types of Services Provided by UNOPS:
Appendix IV: Designated International Organizations by the Department
of State:
Appendix V: Results of GAO's Survey of UNOPS Field Office Managers:
Appendix VI: USAID Oversight Policies for Grants with Public
International Organizations:
Appendix VII: USAID's Documented Pre-Award Assessments of UNOPS:
Appendix VIII: Comments from the Department of State:
Appendix IX: Comments from the U.S. Agency for International
Development:
Appendix X: Comments from the UN Office for Project Services:
Appendix XI: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: UNOPS Expenditures on Service Delivery Per Year, from 2004
through 2008:
Table 2: Summary of Critical Findings from Selected UN Audits and
Investigations of UNOPS, 2002 through 2008:
Table 3: UNOPS's Efforts to Comply With Key International Internal
Audit Standards:
Table 4: UNOPS's Efforts to Comply with Key UN Ethics Requirements, as
of October 2009:
Table 5: Audit Provisions USAID Used in Its Awards with UNOPS, 2004
through 2008:
Table 6: Types of Services Provided by UNOPS:
Table 7: Department of State Designated International Organizations:
Table 8: UNOPS Field Office Responses to GAO Survey Question about
Atlas Data Reliability:
Table 9: UNOPS Field Office Responses to GAO Survey Question about
Conditions Making Atlas Use Difficult:
Table 10: USAID's ADS Policies and Provisions for Grants with PIOs:
Figures:
Figure 1: Timing of USAID Grant Awards and Issuance Dates of UN
Oversight Reports, 2004 through 2008:
Figure 2: Locations of UNOPS Offices, as of 2009:
Figure 3: USAID's Documented Assessments of UNOPS, 2004 through 2008:
Abbreviations:
ADS: Automated Directives System:
BOA: Board of Auditors:
FASS: Field Administrative Support Service:
IIA: Institute of Internal Auditors:
MCC: Management Coordination Committee:
NGO: nongovernmental organization:
OIOS: United Nations Office of Internal Oversight Services:
OAA: USAID Office of Acquisition and Assistance:
PIO: Public International Organization:
PTF: Procurement Task Force:
State: Department of State:
UN: United Nations:
UNDP: United Nations Development Program:
UNOPS: United Nations Office for Project Services:
USAID: U.S. Agency for International Development:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
November 19, 2009:
The Honorable Carl Levin:
Chairman:
The Honorable Tom Coburn:
Ranking Member:
Permanent Subcommittee on Investigations:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The United Nations (UN) Office for Project Services (UNOPS) provides
about $1 billion a year in services including procurement and project
management to UN and other international clients. Since 2002, audits
and investigations of UNOPS have revealed alleged violations of law,
weak internal controls, financial mismanagement, and breaches in
accounting and procurement policies. Several projects that UNOPS
implemented with U.S. funds were associated with these adverse
findings.
In 2006, UNOPS was near insolvency and the UN Controller placed
restrictions--which lasted for about 2 years--on UN agencies' use of
UNOPS services. However, UN entities and U.S. agencies continued to use
UNOPS to perform projects in post-conflict nations and other difficult
environments because, according to some clients, UNOPS had the capacity
to move quickly and maintain a presence in difficult operating
environments. The UN Secretary-General appointed new management
[Footnote 1] in 2006 to help restore the financial stability of UNOPS
and to make changes that responded to weaknesses identified by UN
auditors. The new management team stated that strengthening UNOPS's
internal controls was a major focus. To accomplish this goal, the
management team took a number of steps within its first 3 years at
UNOPS, including establishing an ethics office in 2006 and an internal
oversight office in 2007.[Footnote 2]
From 2004 to 2008, UNOPS spent approximately $430 million implementing
U.S. government grants awarded directly to UNOPS.[Footnote 3] The
majority of expenditures from these direct awards--about 92 percent--
were from the U.S. Agency for International Development
(USAID).[Footnote 4] Of the USAID grants awarded to UNOPS from 2004
through 2008, 84 percent were awarded to projects in Afghanistan, where
most of the misconduct identified by audits and investigations
occurred. As a member of the Executive Board, the United States has
expressed concern over weaknesses at UNOPS identified in the UN audit
reports. For example, in 2004 a Department of State (State) official at
the U.S. Mission to the UN called for UNOPS management to report on
steps it was taking to ensure sound financial controls, and encouraged
member states to do whatever was necessary to ensure that UN managers
implemented the UN audit recommendations. In addition, in 2008, State
officials made public statements about UNOPS's internal oversight
arrangements and inaccurate inventory reports.
Given the concerns that have arisen regarding UNOPS's management and
relationship with UN and U.S. organizations, you asked us to examine
oversight and accountability within UNOPS operations. Specifically,
this report (1) assesses the extent to which UNOPS has addressed key
concerns about its internal controls and (2) evaluates USAID's
oversight of UNOPS-implemented projects.
To address these objectives, we examined audits and investigations of
UNOPS's activities, interviewed UNOPS officials, and analyzed documents
relating to initiatives designed to strengthen UNOPS's internal
controls. We also interviewed UNOPS clients in New York, New York;
Washington, D.C.; and Geneva, Switzerland. We reviewed applicable
professional standards and guidelines for performing audits and
investigations, including the Institute of Internal Auditors'
International Standards for the Professional Practice of Internal
Auditing[Footnote 5] and the UN Uniform Guidelines for Investigations.
For the purposes of our study, we selected key audit and investigation
standards to examine the extent to which UNOPS has implemented them. In
addition, we prepared and administered a survey to help us assess the
extent to which UNOPS's implementation of an electronic project
database, Atlas, has strengthened its internal controls.[Footnote 6]
Finally, we reviewed USAID's acquisitions policies, collected and
reviewed documentation from the USAID missions that awarded grants to
UNOPS from 2004 through 2008, examined agreements between U.S. agencies
and UNOPS during this time, and interviewed USAID officials in
Washington, D.C. and at USAID missions in Afghanistan, Haiti, Liberia,
and Sudan. Appendix I provides a detailed discussion of our scope and
methodology.
We conducted this performance audit from July 2008 to November 2009 in
accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Results in Brief:
UNOPS management is taking action to implement reforms that address
concerns about the organization's internal controls, as identified by
audits and investigations, but the effectiveness of some of the
implemented reforms has not been assessed. Examples of management's
efforts include (1) the development of UNOPS's centralized project
tracking system, Atlas, which is designed to provide project financial
data more quickly to management; (2) the establishment of an internal
oversight office in 2007; and (3) the establishment of an ethics office
in 2006 to provide a mechanism for identifying ethical concerns. While
changes to Atlas have improved UNOPS's documentation of financial data,
the extent of the improvement is uncertain, because, for example, UNOPS
management does not systematically assess the reliability of data in
Atlas. Although UNOPS's internal oversight has been strengthened by the
creation of an oversight office, 2 phases of an investigation of
UNOPS's activities in Afghanistan have yet to begin. UNOPS had no
investigative capacity of its own and had to seek out external
investigation services for which it is still negotiating the scope and
cost. In addition, while UNOPS's ethics office meets most of the UN
Secretary-General's requirements, the extent to which the office is
performing its mandated duties is uncertain because the effectiveness
of the office's activities has not been assessed. Finally, UNOPS's
Executive Board lacks full access to internal audit reports that could
provide greater insights into UNOPS's operations.
While USAID's policies for making grants with Public International
Organizations (PIO)--such as UNOPS--require it to assess grantees and
in some cases to include a provision under which the grantee agrees to
give USAID access to oversight information, USAID has not consistently
applied these policies when making grant awards with UNOPS. USAID could
not provide documentary evidence of required assessments for 7 of the
11 awards to UNOPS issued from 2004 through 2008. USAID did provide
evidence of 4 assessments; however, it did not acknowledge the adverse
findings from multiple UN audits and investigations, including
weaknesses in UNOPS's internal controls and financial management. In
addition, for 5 of its 11 awards USAID, as the sole contributor, did
not include the required audit provision that would have allowed USAID
access to financial records substantiating how UNOPS spent U.S. grant
funds. Furthermore, for 4 additional awards, USAID had the discretion,
as the largest contributor, to negotiate for the same provision but did
not exercise such discretion, even though in 3 cases the only other
contributions to the awards were small contributions from UNOPS. The
omission of the required audit authority was due to an absence of clear
guidance, and no training or monitoring of this provision. USAID's
failure to adhere to its policies severely limited its audit access to
UNOPS grants that were associated with alleged findings of criminal
actions and mismanaged funds. For example, in Afghanistan USAID
investigators were unable to acquire information needed to substantiate
UNOPS use of USAID grant funds for several projects of concern.
We make recommendations in this report to the Secretary of State to
work with member states to (1) support UNOPS's continued reform in
areas of vulnerability identified by UN auditors and (2) encourage
UNOPS management to assess the effectiveness of the reform effort. We
also recommend that the USAID Administrator ensure that USAID (1)
develop and document its approach for assessing eligibility of PIOs for
USAID funding, (2) define the terms and definitions in its existing
guidance on PIO audit provisions permitting USAID access to financial
records and documents, (3) ensure that cognizant contracting staff are
sufficiently trained on the use of the PIO audit provisions, and (4)
establish an approach to monitor whether the PIO audit provisions are
implemented as required.
We requested and received written comments on a draft of this report
from State, USAID, and UNOPS. We have reprinted these comments, with
our responses, in appendixes VIII through X. State endorsed the main
findings and conclusions of the draft report and concurred with the
recommendation that it encourage assessment of the impact of UNOPS's
reform efforts. USAID concurred with our recommendations and proposed
an agency plan to implement each recommendation including target
completion dates. Specifically, USAID agreed that it needs to adopt
improved procedures, stronger guidance, training, and monitoring
related to the use of Public International Organizations (PIO) audit
provisions. UNOPS acknowledged the need for assessment of long-term
impact of its reforms, but stated that the most recent external audit
and improved financial position are indicators that demonstrate
improvement. We incorporated technical comments from UNOPS in our
report where appropriate.
Background:
UNOPS is an Autonomous, Self-Financing UN Entity:
UNOPS originated in 1974 as part of the UN Development Program (UNDP),
but has since become an autonomous, self-financing UN entity. UNDP,
which is the UN's global development agency, established the office to
provide flexible procurement services for multidisciplinary
projects.[Footnote 7] Effective January 1995, the UN General Assembly
established UNOPS as a "separate and identifiable UN entity" to provide
services to UN organizations and to governmental, intergovernmental,
and nongovernmental entities.[Footnote 8] At the time UNOPS did not
report directly to its governing body, the Executive Board,[Footnote 9]
but instead reported to it through a Management Coordination Committee
(MCC) chaired by the UNDP Administrator to provide additional oversight
over UNOPS. In September 2008, based on an MCC recommendation, the
Executive Board moved to make UNOPS completely autonomous by removing
all ties to UNDP. The MCC was renamed the Policy Advisory Committee to
reflect its change from being a part of UNOPS's governance structure to
now serving in an advisory capacity. As a result, UNOPS's Executive
Director now has independent authority and accountability for the
conduct of UNOPS's business. See appendix II for a description of
UNOPS's locations.
UNOPS was created to be a self-financing entity and does not receive
any of its annual budget from assessed or voluntary contributions from
member states. All of its resources come as fees-for-service. However,
UNOPS does benefit from UN exemptions and immunities.[Footnote 10] For
example, UNOPS is exempt from some taxes and custom duties on imports
and exports. According to UNOPS officials, UNOPS and most of its
officials can import and purchase goods duty-free.
UNOPS Provides Services to a Range of Clients:
UNOPS provides services to a range of UN and other clients. These
services include project management, procurement, human resources
management, financial management, and UN common services.[Footnote 11]
See appendix III for a detailed list of UNOPS services by type. Its
clients include governments, UN agencies, international financial
institutions, intergovernmental organizations, and nongovernmental
organizations (NGO). In addition, UNOPS is responsible for
administration of the UN Global Marketplace Web site, which helps
connect UN organizations and potential vendors and prepares the annual
statistical report on the procurement activities of the UN system.
UNOPS provides many of these services in difficult work environments,
such as post-disaster and peace-building settings, developing
countries, and economies in transition. Some UNOPS clients said they
use UNOPS to implement programs because UNOPS can move quickly and
maintain a presence in difficult environments, such as after natural
disasters and in post-conflict and politically unstable countries.
[Footnote 12] For example, the UN Children's Fund used UNOPS as an
implementing partner to perform rehabilitation, refurbishment, and
other tsunami-related construction projects in Indonesia, Maldives, and
Sri Lanka when there were no local contractors on the ground to perform
the work. The UN Mine Action Service also uses UNOPS as its implementer
of global demining services because UNOPS is one of the few
organizations with expertise in mine detection and removal that has a
presence in post-conflict and politically unstable countries.
From 2004 to 2008 UNOPS Funding Levels Have Increased:
In the last 5 years, UNOPS spent about $4 billion delivering services
to its clients, and its annual service delivery expenditures increased
from less than $500 million in 2004 to more than $1 billion in 2008.
(See table 1 for the amount spent on implementation of projects.)
During the same time period, UNOPS's operational reserve fund fell to
as low as $4.4 million in 2005, but was restored to more than $30
million in 2008. UNOPS has also increased its annual acquisition of new
business from $728 million in 2004 to $1.5 billion in 2008.
Table 1: UNOPS Expenditures on Service Delivery Per Year, from 2004
through 2008 (U.S. dollars in millions):
Year: 2004:
Amount: $495.27;
Year: 2005:
Amount: $888.24;
Year: 2006:
Amount: $706.00;
Year: 2007:
Amount: $850.00;
Year: 2008:
Amount: $1,060.
Source: GAO analysis of data from UNOPS annual reports.
[End of table]
Multiple UN Audits Found Widespread Financial Mismanagement and
Insufficient Documentation of UNOPS's Financial Transactions:
As shown in table 2, UN audits and investigations from 2002 through
2008 have found significant financial mismanagement at UNOPS and a lack
of financial transaction documentation.[Footnote 13]
Table 2: Summary of Critical Findings from Selected UN Audits and
Investigations of UNOPS, 2002 through 2008:
UN Board of Auditors Report, July 2002:
* Insufficient revenue to cover costs;
* Lack of contingency plan if deficits exceed the organization's
operational reserve;
* Lack of system that can accurately compute and monitor actual project
costs.
UN Board of Auditors Report, July 2004:
* Lack of valid information for some costs and financial statements;
* Lack of independently validated internal control framework;
* Lack of information and communications technology strategy;
* Lack of a proper system to estimate the cost of the services
provided.
UNDP Office of Audit and Performance Review,[A] May 2006:
* Lack of compliance with rules, regulations and procedures;
* Absence of written procedures to guide staff;
* Recurring expenditures in excess of approved budget;
* Inadequate or lack of supervision by supervisors.
UNDP Office of Audit and Performance Review,[A] May 2007:
* Deficiencies in managing project budgets and expenditures in the
field;
* Inaccurate expenditure reporting due to limited use of Atlas in the
field;
* Recurring expenditures in excess of approved budget;
* Inadequate or lack of supervision by supervisors.
UN Board of Auditors Report, June 2007:
* Operational reserves below desired level;
* Balances not corroborated by supporting documents or in accordance
with accounting records;
* Breakdown in internal controls and financial reporting;
* Lack of transparency and consistency in funding and fee-setting
process.
Procurement Task Force,[B] Kenya, August 2007:
* Lack of integrity and transparency in the UNOPS procurement process;
* Alleged criminal activities to obtain UN contracts and money for
personal use.
UN Board of Auditors Report, July 2008:
* Unresolved interfund balances with UNDP, UN Population Fund, and
other UN entities;
* Shortcomings in assets management;
* Inadequate Atlas project controls;
* Inability to verify financial transactions.
Procurement Task Force, Afghanistan, December 2008:
* Alleged embezzlement;
* Misuse of project and UNOPS funds;
* Fraudulent and wasteful procurement.
Source: GAO analysis of data from UN audit and investigation reports.
[A] The Office of Audit and Performance Review is UNDP's internal audit
office.
[B] The Procurement Task Force was created on January 12, 2006, to
address all procurement matters referred to the Office of Internal
Oversight Services.
[End of table]
The UN Board of Auditors (BOA) is the only external auditor authorized
to audit UNOPS's financial statements and reports to member states
through the UN General Assembly.
UNOPS Management Has Identified Areas for Reform based on Key Concerns
about Internal Controls:
The UNOPS management team has identified areas for reform to address
previously identified concerns about internal controls. These areas--
which include financial documentation, internal oversight, and ethics--
are critical to developing a robust internal controls environment and
reducing vulnerability to waste, fraud, and abuse.
Audits of UNOPS found deficiencies in financial documentation and
reporting, including a lack of required information on UNOPS's costs
and financial statements and a lack of documentation corroborating
project balances. International internal control standards emphasize
that a strong financial documentation system is essential to effective
management. Without a system in place that can document timely,
accurate, and complete information, management's capacity to ensure
effective internal audits is limited.
Internal oversight, which includes audits and investigations, provides
management with information about the effectiveness of internal
controls, compliance with rules and regulations, and proposed
corrective measures. Internal audits can be used to track
recommendations to ensure that management addresses these areas. UNOPS
has adopted Institute for Internal Auditors standards, which are
internationally recognized best practices for internal audits. Findings
from investigations can be used to hold an organization or individuals
accountable for wrongdoing. UN Uniform Guidelines for Investigations
require, among other things, that management ensure sufficient
resources to perform investigations.
Previous audit reports have highlighted a lack of compliance with rules
and a lack of documentation to support financial transactions at UNOPS,
suggesting that some of the organization's practices were at risk of
ethics violations. Ethics policies could strengthen the organization's
internal controls environment by helping to ensure accountability and
transparency within the organization.
USAID Has Distinct Policies for Awarding Grants with PIOs, including
UNOPS:
USAID, which provides the large majority of U.S. funding to UNOPS, has
policies for making awards with PIOs that are distinct from its
policies for making contracts, grants, or cooperative agreements with
for-profit, nonprofit, international partners, and other organizations.
[Footnote 14] For grants with PIOs, USAID primarily relies on policies
in its Automated Directives System (ADS) 308, which outlines a
different set of procedures for making grant awards with PIOs.[Footnote
15] For example, competition is not required for grants with PIOs.
USAID also follows a simplified grant format, uses a separate set of
pre-award assessment criteria, and generally relies on the PIO's own
management for oversight--including internal audit and procurement
policies--except when USAID is the sole contributor to the grant award.
According to its PIO policy, USAID uses a list of international
organizations compiled by State and maintained by the Office of
Personnel Management to designate those PIOs that may receive USAID
grant funds (see appendix IV for this list). The 124 international
organizations on the list are separated into six categories:
* UN organizations.
* Specialized agencies of the UN and related organizations.
* International financial institutions.
* Inter-American organizations.
* Other regional organizations.
* Other international organizations.
According to USAID data, from January 2004 to July 2009, USAID issued
approximately $8.1 billion in grants or cooperative agreements to 50
different PIOs. USAID's data showed that the majority--60 percent--of
USAID's grants to PIOs had been awarded to UN organizations and
specialized UN agencies.
UNOPS Reforms Are Proceeding, but the Effectiveness of Some Implemented
Reforms Has Not Been Assessed:
UNOPS Reforms to Its Documentation System, Internal Oversight, and
Ethics Are Proceeding:
UNOPS has taken actions to implement reforms in areas including its
documentation system; internal oversight, including internal audits and
investigations; and ethics.
The current UNOPS management team has continued to develop Atlas, its
centralized project management system, to address previously identified
deficiencies in UNOPS's documentation. In 2007, UNOPS established an
internal oversight office, including an internal audit program modeled
after Institute for Internal Auditors standards. As part of its effort
to address previously identified deficiencies through internal
oversight, UNOPS management proposed investigations into allegations of
wrongdoing by UNOPS employees. In addition, the management team
established an ethics office in 2006 according to UN guidance on the
roles of UN ethics offices.
Documentation System:
The current UNOPS management team has continued to develop Atlas, its
centralized electronic project management system, to address previously
identified deficiencies and thereby ensure that its design reduces the
risk of fraud, waste, and abuse and strengthens internal and financial
controls. Atlas has been in use at UNOPS since 2004 and is designed to
systematically consolidate and track project data worldwide, including
financial transactions.
Prior to Atlas, UNOPS field offices used the Field Administrative
Support Service (FASS). FASS, which is not a common platform, required
UNOPS offices to each maintain their own database for tracking
projects. Headquarters management did not have real-time capability for
tracking project or field office expenditures and, therefore, had
limited capacity to identify either poor performance or other problems
with grants or contracts. According to a UNOPS official, most
countries' data systems before Atlas were unsatisfactory and were not
integrated for centralized use or oversight. In addition, FASS provided
no systematic way to include electronic documentation for every
disbursement made by officials in the field. Under the new system,
project managers enter financial transaction data and Atlas creates and
documents vouchers used to make payments. Information is now more
readily accessible to management in headquarters and in the field
offices.
Internal Oversight:
In July 2007 UNOPS management established the Internal Audit Office.
Before UNOPS established this office, it had only minimal internal
audit capacity. UNDP provided internal audit coverage to UNOPS until
the office was established, but its capacity to audit UNOPS was
limited. In 2007, for example, the three staff members performing
internal audits for UNOPS were only able to complete one of the nine
planned audits and management reviews of UNOPS core units and
activities before the establishment of UNOPS's office in July.
To address previously identified deficiencies, UNOPS management agreed
to fund investigations into allegations of wrongdoing by UNOPS
employees. In 2006 and 2007 UNOPS management agreed to pay for the UN
Office of Internal Oversight Services (OIOS) to investigate UNOPS
activities in Afghanistan, Argentina, and Kenya. In 2007 UNOPS
management requested further investigation of misconduct in
Afghanistan.[Footnote 16] One investigation in Kenya and the first
phase of the Afghanistan investigation found evidence of alleged
criminal activity. In 2009 UNOPS management approved the hiring of its
first investigator and, in September, changed the name of the office
from the Internal Audit Office to the Internal Audit and Investigations
Group to reflect its expanded capacity.
Ethics:
In July 2006 the current UNOPS management team established an ethics
office modeled upon the UN Secretariat Ethics Office and UN guidance.
The UN Secretary-General had made ethics reform a priority in 2005 and
established a Secretariat Ethics Office in January 2006.[Footnote 17]
UNOPS appointed its Ethics Officer "to advance United Nations reform
and as part of its commitment to the highest standards of ethics,
integrity, accountability and transparency." Prior to 2006 UNOPS had
neither an ethics office nor an ethics officer, thus no one had
responsibility to identify and address ethics concerns.
Reforms Have Strengthened Internal Controls, but the Extent of Their
Effectiveness Has Not Been Assessed:
Project Tracking System Has Improved Documentation of Projects, but
Weaknesses Remain:
While changes to UNOPS's project tracking system, Atlas, have improved
documentation of projects at UNOPS, the effectiveness of these
improvements is limited by the lack of systematic data reliability
assessments and other system implementation inadequacies. Atlas has
improved the internal controls environment at UNOPS in three primary
ways:
* Atlas allows UNOPS management real-time global access to system data.
[Footnote 18] According to UNOPS officials, this improves management's
capacity to oversee worldwide operations and track progress toward
project completion by country office or region. As a result, managers
have the opportunity to identify and correct problems, such as poor
performance or fraud, much more quickly than they could under FASS.
* Atlas requires some data to be entered for each project, allowing
managers the ability to more systematically measure, track, and compare
performance by project or office. For example, financial data and
procurements for each project must be systematically entered into
Atlas. In addition, the system requires documentation of every purchase
order and allows each one to be checked, either in the field or from
headquarters, against the project's budget and cash balance. UNOPS
officials said that these additional requirements have made Atlas more
effective at tracking UNOPS's assets than FASS.
* Atlas incorporates some functions that may reduce the risk of fraud.
For example, within months after he was appointed, the Executive
Director stated plans to require UNOPS field offices to document
imprest[Footnote 19] account transactions in Atlas, because such
transactions present a particularly high risk of fraud. Until they
implemented this requirement, headquarters gave offices cash advances
in imprest accounts and replenished the accounts monthly with only
limited documentation of how offices spent the money.[Footnote 20] In
September 2009, the officials reported that all offices were tracking
imprest transactions in Atlas. Atlas also reduces vulnerability to
fraud by using an electronic signature to verify that more than one
person has been involved in every transaction as a management oversight
measure.
We found that three major weaknesses may limit Atlas's potential to
address some of UNOPS's previously identified internal and financial
control problems.
* The timeliness, accuracy, and completeness of data in Atlas are
limited, and UNOPS does not systematically assess the reliability of
data in Atlas. Based on our survey of UNOPS's field offices, more than
a third of the offices reported that the timeliness, accuracy, and
completeness of data in Atlas were limited (see appendix V for more
complete results of our survey). The UNOPS Director of internal
oversight also told us in December 2008 that the accuracy and
completeness of data entry remain a concern. However, UNOPS management
does not know the extent to which data reliability is a problem because
UNOPS has not sought any systematic check on data accuracy. While UNOPS
officials periodically run reports to see if information is consistent,
these reports are run on an ad-hoc basis, particularly when issues
arise on a particular project or office. UNOPS officials said there
have not been any UNOPS management reports on frequency or types of
errors discovered in reviewing data entered into Atlas.
* The Atlas system can be difficult to use and frequent turnover
presents a training challenge. Managers from all of the UNOPS field
offices we surveyed identified some conditions that made Atlas
difficult to use (see appendix V). For example, according to 15 of the
17 field managers who responded to our survey, Atlas produced reports
that did not meet the needs of their offices, which made the system at
least "somewhat difficult" to use. In addition, more than half of the
respondents indicated that the system was slow, data entry took too
long, system connectivity or access was poor, and the system contained
technical glitches.[Footnote 21] A UNOPS official we interviewed told
us that one of Atlas's technical glitches was its failure to release
funds when expenses are re-evaluated. Another UNOPS official also said
that UNOPS faces continued financial risk because it had not integrated
all the necessary management controls. For example, UN WebBuy--the
online procurement tool used by UNOPS--is not linked to Atlas, so there
is no function for electronic approval of contract award ceilings,
which leaves the organization vulnerable to possible price
manipulation. Furthermore, while UNOPS's Chief Information Officer told
us UNOPS has offered nine training sessions on using Atlas in 2009 as
of October, UNOPS officials said frequent turnover of staff at UNOPS
presents a continuing training challenge. One official said there was a
need to make the training more tailor-made for shorter-term employees
and offer introduction training at more frequent intervals.
* Several recommendations relating to Atlas from UNOPS internal
oversight office have not been fully implemented. Several of the
unresolved high priority audit recommendations from UNOPS's 2007 and
2008 internal audits relate to deficiencies in the Atlas system. For
example, the Director of internal oversight at UNOPS reported to the
UNOPS Executive Board in 2009 that there is a need to (1) reconcile
Atlas records and bank statements for all ongoing projects, (2) issue a
guideline on budget overrides and a control mechanism to mitigate the
risk of nonauthorized expenditures, and (3) expedite the review and
application of the new version of Atlas where all operational technical
concerns are solved.
Internal Audits at UNOPS Generally Comply with International Standards,
but Phases of a Remaining Investigation of Alleged Wrongdoing Have Not
Begun:
UNOPS Has Established More Systematic Internal Audits:
As of August 2009, we found that UNOPS's internal audit function
generally complies with key Institute of Internal Auditors (IIA)
standards, as discussed in table 3.[Footnote 22]
Table 3: UNOPS's Efforts to Comply With Key International Internal
Audit Standards:
Risk-based planning (IIA standards 2010 and 2110): Annual risk-based
work plans informed by entity's risk-management framework:
* In 2007, UNOPS hired a Director of internal oversight--then called
the Head of the Internal Audit Office--who has developed a risk-based
audit plan. UNOPS complied with the IIA standards for risk-based
planning by completing a risk-based audit plan for 2009 and 2010.
Resource management--Audit (IIA standard 2030); Sufficient resources to
achieve audit work plans;
* UNOPS's Director of internal oversight and UNOPS management maintain
that the organization has sufficient resources to achieve its audit
work plans, which is consistent with the IIA standard for resource
management. UNOPS internal oversight staff allocations rose from 3
employees when UNDP performed UNOPS's internal audits in 2007 to 10 in
the fall of 2009, according to UNOPS's Director of internal oversight,
and UNOPS has almost tripled the office's budget from about $620
thousand in 2006 to nearly $1.6 million in 2009. He also said, that
based on the size of UNOPS, the staffing levels of its oversight office
fall within the average range, according to an annual benchmark
conducted for the international network of auditors within
international organizations. The UNOPS Executive Board's decision at
its June 2009 session welcomed "the progress made to increase the
internal audit capacity of the organization" and "the increased
internal audit coverage in 2008."
Quality assurance (IIA standard 1312); External assessment (every 5
years);
* In accordance with an IIA standard on quality assurance, UNOPS's
oversight office successfully underwent an external review in August
2009 by the former Director of Internal Oversight Services at UNESCO
and Inspector General of the European Investment Bank, who is
accredited with the IIA.
Recommendation tracking (IIA standards 2500 and 2500.A1); System in
place to monitor recommendations; Process for following up on
implementation status;
* UNOPS has complied with the IIA standards on recommendation tracking.
UNOPS's Director of internal oversight submitted a list of high
priority audit recommendations from the oversight office and a list of
audit recommendations unresolved for 18 months or more to the Executive
Board, along with UNOPS's 2009 annual report on the internal oversight
office's activities.
Source: GAO analysis of UNOPS data.
[End of table]
Sufficiency of Resources for UNOPS Investigations Is Unclear Because
Remaining Phases of an Investigation Have Not Begun:
While UNOPS management has committed resources to investigations, the
sufficiency of UNOPS's resources for investigations is unclear because
two phases of the investigation of its operations in Afghanistan have
not yet begun. Although UN Uniform Guidelines for Investigations
require management to ensure sufficient resources for investigations,
the remaining phases of the investigation have not begun because
negotiations between UNOPS and the OIOS over the investigation's cost
and scope have been slow.[Footnote 23] In 2007, when UNOPS management
proposed the first phase of the investigation, UNOPS had no
investigative capacity of its own and, thus, had to request and pay
other investigators for their services.[Footnote 24] UNOPS management
told us they selected OIOS because it is commonly viewed as the
principal investigative authority for UN organizations. UNOPS
management officials also said that selecting OIOS over other
alternatives would be less likely to be seen as inappropriately
influencing the investigations. However, as we reported previously,
OIOS is not fully independent in investigating matters for UN funds and
programs (and other UN entities), such as UNOPS. OIOS must negotiate
the terms of work and payment for any investigations it conducts for UN
funds, programs, and other UN entities.[Footnote 25] OIOS sent UNOPS a
proposal for the second phase of the investigation about 5 months after
the case was transferred to the OIOS Investigations Division from the
Procurement Task Force (PTF),[Footnote 26] and UNOPS and OIOS
management said negotiations were still ongoing because of
disagreements over the proposed scope and cost of work. UNOPS
management officials told us they found OIOS's proposed cost too high
and the proposed scope too narrow. State officials and a former PTF
investigator said they are concerned that OIOS is not committed to
pursuing the UNOPS investigations. However, OIOS officials said they
were concerned about UNOPS's willingness to pay, because UNOPS
contested the cost of the first investigation of Afghanistan after it
was completed by the PTF. Therefore, OIOS officials said they would not
agree to the investigation until UNOPS had confirmed a payment
schedule. As a result, the remaining phases of the investigation have
not begun about 3 years after the activities in Afghanistan that are
the proposed subject of the investigation occurred.[Footnote 27]
According to investigators who worked on the first phase of the
Afghanistan investigation, lengthy delays increase the chance that
documentation of the activities to be investigated may be lost or
destroyed, thus hindering any eventual investigation and ultimately,
accountability. Because arrangements for the investigation of UNOPS are
not finalized, it is unclear whether UNOPS has met the UN Investigative
Guideline requiring the organization to provide sufficient resources to
perform investigations.
In an effort to develop its own internal investigative capacity, UNOPS
announced the opening of a position to hire a full-time investigator in
August 2009, which has not been filled as of October 2009. UNOPS
management officials told us they would consider contracting with
additional investigators as needed.
UNOPS Ethics Office Has Met Most UN Requirements but Its Effectiveness
Has Not Been Assessed:
While we found that UNOPS's Ethics Office generally complies with most
of the key requirements for UN ethics offices of organizations outside
the UN Secretariat as outlined in a 2007 UN Secretary-General's
bulletin, it has not met the requirement of annual reporting and has
not fully met its own requirement for ethics training (see table 4).
Furthermore, assessments of the effectiveness of UNOPS's Ethics Office
have not been conducted.
Table 4: UNOPS's Efforts to Comply with Key UN Ethics Requirements, as
of October 2009:
UN ethics requirement: Develops ethics standards;
Efforts to comply with requirement: UNOPS has adopted ethics standards
consistent with those of the UN Secretariat Ethics Office and conforms
to the positions of that office. In addition, UNOPS employees are
subject to the basic rights and duties of UN staff outlined in the 2002
UN Secretary-General's bulletin[A];
Compliance status: Generally compliant[B].
UN ethics requirement: Holds annual training on ethics issues;
Efforts to comply with requirement: In January 2009 UNOPS management
stated that UNOPS had redesigned and modernized its online course on
ethics--developed by the United Nations Office on Drugs and Crime and
used by the UN Secretariat--and required all UNOPS personnel to
complete it by the end of March 2009;
Compliance status: According to the UNOPS Ethics Officer, UNOPS's
ethics training is one-time training, not annual as required. Although
the training is required for all UNOPS personnel, UNOPS officials told
us they have targeted between 800 and 1,000 of their approximately
2,000 personnel to complete the online training. They said that several
hundred personnel cannot be expected to complete the training, because,
for example, many personnel in the field are illiterate and many UNOPS
contractors are only subject to the rules of the agencies for whom they
are performing UNOPS contract work. As of October 2009 only 600 of the
800 to 1,000 personnel expected to complete the training had saved a
copy of the completion certificate online. Technical issues prevented
the Ethics Officer from seeing directly who had taken the course, and
thus the Ethics Officer cannot know if more than 600 UNOPS staff have
completed the training. According to UNOPS management, UNOPS's policy
requiring all personnel to complete ethics training exceeds the minimum
UN-wide requirement.
UN ethics requirement: Provides confidential advice and guidance to
staff on ethical issues;
Efforts to comply with requirement: The UNOPS Ethics Officer said he
has provided confidential guidance on ethical issues to "a few" UNOPS
employees, but that UNOPS does not have a record of the number of staff
who have sought counsel on ethical issues;
Compliance status: Generally compliant.
UN ethics requirement: Plays a role in the protection of staff against
retaliation (whistleblower protection policy);
Efforts to comply with requirement: The UNOPS Ethics Office has
mechanisms in place for staff to report fraud or seek protection from
retaliation. UNOPS has established an anonymous hotline to report
possible fraudulent or corrupt activity. In addition, submissions can
be sent to fraudhotline@unops.org. UNOPS has adopted a whistleblower
protection policy that formalizes protective measures for UN staff
members, interns, and volunteers who have experienced retaliation for
reporting misconduct in their working environment or for cooperating
with a duly authorized audit or investigation, in accordance with a UN
Secretary-General's bulletin from 2005;
Compliance status: Generally compliant.
UN ethics requirement: Administers the organization's financial
disclosure program;
Efforts to comply with requirement: UNOPS has implemented a process for
submission and review of financial disclosures and has taken steps to
ensure compliance with its requirement. According to UNOPS's 2008
policy on financial disclosure, many UNOPS personnel have an obligation
to file either an annual financial declaration or a financial
disclosure statement, including senior level personnel, all UNOPS
personnel who are procurement specialists or whose principal duties are
the procurement of goods and services, all operations center directors
and managers, all project managers, UNOPS internal auditors, and the
UNOPS Focal Point for Financial Disclosure. Management has taken
appropriate actions to address incidents of noncompliance with the
financial disclosure policy. For example, according to UNOPS
management, when six staff did not meet the requirement by the May 31,
2008 deadline, they were sent notices that they would be terminated if
they did not comply. As a result, four of them eventually complied and
two chose to leave UNOPS. As of September 2009, UNOPS management was
unaware of any outstanding cases. An official said management was
waiting for an independent contractor to complete required random
checks of 2009 financial disclosures;
Compliance status: Generally compliant.
UN ethics requirement: Prepares an annual report of ethics-related
activities;
Efforts to comply with requirement: UNOPS's Executive Director included
a brief summary of ethics-related activities in UNOPS's 2008 annual
report to the Executive Board;
Compliance status: The UNOPS Ethics Officer did not prepare an annual
report of the office's activities in 2007 or 2008. The Ethics Officer
told us that because the Ethics Office became independent in January
2009, he will complete the office's first formal annual report of
ethics-related activities for activities in 2009.
UN ethics requirement: Participates as a member of the UN Ethics
Committee, which is chaired by the head of the UN Secretariat's Ethics
Office;
Efforts to comply with requirement: The head of the UN Secretariat's
Ethics Office, who chairs the UN Ethics Committee, told us that UNOPS's
Ethics Officer participates regularly in committee meetings and that he
is one of the major contributors. The committee reviews annual ethics
reports of the committee members' organizations and has drafted a UN-
wide Code of Ethics, which was approved by the UN Secretary-General and
is awaiting approval by member states in the UN General Assembly;
Compliance status: Generally compliant.
Source: GAO analysis of UNOPS data.
[A] The purpose of the bulletin is to ensure that all UN staff are
aware of the "standards of conduct for the international civil service"
adopted in 2001. The bulletin is also based on the Charter of the
United Nations, which establishes the universal standard for all staff
members employed by the UN as the "highest standards of efficiency,
competence and integrity."
[B] Evidence of a series of actions that indicate the organization has
generally complied with the guideline.
[End of table]
The effectiveness of the UNOPS Ethics Office remains unclear because
the office's activities have not been assessed. The UNOPS Director of
internal oversight and the Ethics Officer told us that there have been
no audits or assessments of UNOPS's Ethics Office. Although the Ethics
Office was established in 2006, they said it is too early to assess its
effectiveness because the office has only been independent since
February 2009.[Footnote 28] By contrast, the UN Secretariat Ethics
Office, which was also established in 2006, has been audited or
assessed by three entities in the last year.[Footnote 29]
UNOPS's Executive Board Lacks Full Access to Internal Audit Reports
that Could Provide Greater Insights into UNOPS's Operations:
While UNOPS's Executive Board receives information from various sources
about the effectiveness of UNOPS's financial and programmatic
operations, the board members--including the United States--do not have
full access to internal audit reports, which could increase
transparency and provide further insight into UNOPS's operations.
[Footnote 30] As a member of the Executive Board, the United States
works with other member states represented on the Board to ensure
oversight and accountability of UNOPS's resources. Currently, the
Executive Board receives information on UNOPS's operations from the
BOA's external audit reports on the organization's financial statements
and the UNOPS internal oversight office's annual report summarizing the
office's findings and activities. For example, in 2009, UNOPS's
internal oversight office provided the Executive Board with the annual
report for its first full year of operation. While these existing
information sources help the Executive Board exercise its oversight
responsibilities, access to UNOPS's internal audit reports is limited.
In September 2008, at its annual meetings, UNOPS's Executive Board
approved a policy that granted member states limited access to internal
audit reports completed after their decision entered into effect.
Member states are not given copies of the reports, but are able to read
them at the UNOPS internal oversight office after officially requesting
access. However, the United States and other member states may still be
denied access to any UNOPS internal audit reports that were completed
before September 2008, covering the time frame when the negative
findings were identified. By contrast, since December 2004, OIOS has
provided members with full access to internal audit reports upon
request.
USAID Has Not Consistently Implemented Its Oversight Policies When
Making Grant Awards with UNOPS and Has Been Vulnerable to Program Fraud
and Abuse:
While USAID's general policies for making grants with PIOs require
USAID to evaluate grantees and to include provisions in some cases
under which the grantee agrees to give USAID access to oversight
information, USAID has not consistently implemented these policies when
making grant awards with UNOPS. From 2004 through 2008, USAID did not
meet its criteria for assessing UNOPS's eligibility as a grantee before
awarding each grant. Furthermore, in those assessments it did perform,
USAID did not acknowledge adverse findings from a series of UN
investigations and public UN audit reports. In addition, in the
majority of these awards USAID did not negotiate to include a provision
where UNOPS would agree to allow USAID access to UNOPS's expenditure
records and documents. We found that some of these omissions can be
attributed to USAID's lack of clear guidance, training, and monitoring
of its required audit provisions. USAID's failure to adhere to its
policies limited its oversight of grants that were subsequently
associated with alleged findings of criminal actions and mismanaged
funds.
USAID's Policies Require USAID to Evaluate Grantees Before Making an
Award and to Include Provisions Allowing Access to Oversight
Information When Applicable:
USAID has policies that require it to evaluate PIOs before making an
award and to include provisions to obtain access to information needed
to oversee grant expenditures when USAID is the sole contributor to the
award. According to the Domestic Working Group on Grant Accountability-
-a collection of federal, state, and local audit organizations tasked
by the U.S. Comptroller General to suggest ways to improve grant
accountability--pre-award assessments can provide the government with
confidence that the grantee has the required financial systems to allow
sufficient oversight. These assessments should ensure that an applicant
has adequate financial systems and they should enable government
agencies to decide whether to award the grant and if oversight
conditions should be added.[Footnote 31] For grants with NGOs, USAID
uses criteria for assessing grantees outlined by the Office of
Management and Budget's (OMB) Circular A-110. According to the
Circular, these criteria can also apply to PIOs. In addition, USAID
requires that the missions perform pre-award assessments, as well as
additional assessments whenever a modification significantly increases
the amount of the original grant. The assessments are to ensure that
(1) the grantee's program is an effective and efficient way to achieve
a USAID objective, (2) the grantee's program and objectives are
compatible with USAID, (3) there are no reasons to consider the grantee
not responsible, and (4) the grant is made for a specific program of
interest to USAID.
In addition, under USAID policies, the application of certain audit
provisions with PIOs depends on its contribution to the award relative
to other donors--whether USAID is the sole or largest contributor.
According to a 1988 USAID policy, when USAID is the sole contributor in
a grant to a PIO, USAID shall include a provision in the grant
requiring that the grantee provide all records and documents that
support program expenditures to USAID or to the U.S. Comptroller
General.[Footnote 32] USAID policy further states that if USAID is the
largest contributor to a project it can, with the concurrence of State,
seek to negotiate to apply increased audit authority to protect U.S.
interests. Moreover, according to policy, when USAID is not the sole
contributor to a UN award, USAID can apply the UN grant provision and
the grant will be audited with established UN procedures.[Footnote 33]
Appendix VI contains these USAID policies.
USAID's Process for Awarding Grants to UNOPS Did Not Include Required
Steps for Evaluating the Responsibility of Grantees or Include Findings
from Multiple UN Reports:
USAID Did Not Consistently Assess UNOPS's Responsibility as a Grantee:
During the years that the UN issued negative findings on UNOPS, USAID
did not consistently perform pre-award assessments to justify selecting
UNOPS as a responsible grantee. While USAID could apply the OMB
Circular A-110 to perform eligibility assessments as it does for NGOs,
it does not use this guidance to perform similar assessments for PIOs.
[Footnote 34] According to USAID officials, USAID does not perform the
same type of assessments that it performs for other grantees or
contractors, although one USAID official said that addressing this lack
of assessment is currently one of their top priorities.[Footnote 35] To
the extent that USAID does perform assessments of PIOs, the assessments
occur at the mission level before the grant is awarded and whenever a
modification significantly increases the amount of the original grant.
The assessments are to be recorded in memos and documented with the
grant award. According to USAID Office of Acquisition and Assistance
(OAA) officials, this requirement is the only policy that requires
eligibility screening activities of PIOs.
However, USAID missions did not have official documentation of pre-
award assessments for more than half of its grants with UNOPS in the
last 5 years or for the majority of modifications that increased grant
budgets. USAID could not provide official documentation of assessments
for 7 of the 11 grants it made to UNOPS from 2004 through 2008 (see
app. VII).[Footnote 36]
USAID also lacked assessment documentation for the majority of
modifications to UNOPS grant programs that increased the budget of the
grant award. According to USAID OAA officials, procurement staff should
document assessment criteria in a memo whenever a modification
increases the budget or introduces new work to the program. However,
USAID did not have records of assessments for 11 out of 14
modifications that increased UNOPS's grant budgets from 2004 through
2008. We previously reported that documentation is necessary to ensure
that third parties can fully understand and review the actions that
have occurred during the project period.[Footnote 37] For example,
until 2006, the Afghanistan Mission had no documented assessments for
modifications to the largest USAID-funded UNOPS project in Afghanistan--
Rehabilitation of Secondary Roads--even though these modifications
increased the scope and budget of the program by more than ten times
its original amount. In 2006 the Afghanistan Deputy Mission Director
reported in an official memo that there was no information in the grant
files justifying these modifications and thus he had to rely on limited
information, including anecdotal inputs, to justify additional
increases to the program.
USAID OAA officials acknowledged that some of the memos documenting pre-
award assessments from 2004 through 2008 could be missing. USAID
officials told us that finding these memos from field offices was a
difficult task, because the memos may be stored in the field and are
not available from a centralized location. In addition, one USAID
official said that institutional knowledge of grants is difficult to
maintain at hardship posts where staff generally have only 1-year
rotations.
USAID Did Not Acknowledge Information from UN Audits and Investigations
of UNOPS while Continuing to Award Grants to UNOPS:
None of USAID's four official pre-award assessments of UNOPS from 2004
through 2008 acknowledged adverse findings from publicly available UN
audits and investigations. [Footnote 38] As we noted earlier in this
report, from 2002 through 2008, OIOS, the BOA, the UNDP Office of Audit
and Performance Review, and the UNOPS Internal Audit Office all issued
negative findings on UNOPS's internal controls, financial monitoring,
and lack of transparency. Furthermore, in 2004 and 2007, the BOA was
unable to make a judgment about UNOPS's financial statements due to
UNOPS's lack of sound financial controls and its unreliable financial
accounting data. In 2008, the BOA expressed an unqualified audit
opinion of UNOPS's financial statements, although the report also
expressed the need for improvements in financial controls, asset
management, and project monitoring. However, USAID headquarters
officials said they did not have knowledge of UN findings from the 2004
BOA report and several Mission officials had no knowledge of any UN
findings, despite criticisms of UNOPS management by State. From 2004
through 2008, USAID awarded 11 grants with multiple modifications that
increased the grant budgets, all of which were required instances for
USAID to reassess UNOPS as a responsible grantee.[Footnote 39] During
this time USAID obligated $478.3 million to UNOPS.[Footnote 40] Figure
1 juxtaposes the timing of USAID's grant awards and modifications with
the issuance dates of these UN reports.
Figure 1: Timing of USAID Grant Awards and Issuance Dates of UN
Oversight Reports, 2004 through 2008:
[Refer to PDF for image: timeline]
Length of the USAID-funded project:
2004:
UN Board of Auditors Report, July 2004;
* Lack of financial information and internal control framework.
2006:
UNDP Office of Audit and Performance Review, May 2006;
* Lack of compliance with rules, regulations and procedures.
2007:
UNDP Office of Audit and Performance Review, May 2007;
* Inaccurate expenditure reporting;
UN Board of Auditors Report, June 2007;
* Continued lack of internal control framework;
OIOS Procurement Task Force Kenya, August 2007;
* Criminal activities to obtain UN contracts and money for personal
use.
2008:
UN Board of Auditors Report, June 2008:
* Inadequate Atlas project controls and unresolved balances with UN
entities;
OIOS Procurement Task Force, Afghanistan, December 2008:
* Embezzlement, misuse of project funds, fraudulent and wasteful
procurement.
Dates when USAID was required to assess UNOPS‘s eligibility as a
grantee:
Rehabilitation of secondary roads: Early 2004 - End 2007;
New grant award: USAID performed no official pre-award assessment
(early 2004);
USAID increased grant's budget but performed no official assessment
(September 2004);
USAID increased grant's budget and performed an official assessment
(April, 2006);
USAID increased grant's budget but performed no official assessment
(October 2006);
USAID increased grant's budget but performed no official assessment
(December 2006).
Women's dorm: Early 2004 - End 2008;
New grant award: USAID performed no official pre-award assessment
(February 2004);
USAID increased grant's budget but performed no official assessment
(August 2004);
USAID increased grant's budget but performed no official
assessment(January 2005);
USAID increased grant's budget but performed no official
assessment(June 2006);
USAID increased grant's budget but performed no official
assessment(November 2007);
USAID increased grant's budget but performed no official assessment
(December 2008);
Schools and clinics: Mid-2004 - Mid-2007;
New grant award: USAID performed no official pre-award assessment (May
2004);
USAID increased grant's budget but performed no official assessment
(January 2007).
Emergency drought relief;
New grant award: USAID performed official pre-award assessment (March
2005);
USAID increased grant's budget but performed no official assessment
(April 2005).
Bridge construction: Mid-2005-Mid-2006;
New grant award: USAID performed official pre-award assessment (June
2005);
USAID increased grant's budget but performed no official assessment
(April, 2006).
Election assistance to democratic parties: Mid-2005-Early 2006;
New grant award: USAID performed official pre-award assessment (August
2005);
USAID increased grant's budget but performed no official assessment
(November 2005).
Rehabilitation of Afghanistan Geologic Survey and Ministry of Mines and
Industry Complex: Mid-2005-Mid-2007;
New grant award: USAID performed no official pre-award assessment
(October 2005).
Hydroelectric plants: Mid-2006-Mid-2007:
New grant award: USAID performed no official pre-award assessment
(September 2006).
Building bridges/health posts: Mid-2007-Late 2009;
New grant award: USAID performed official pre-award assessment
(September 2006);
USAID increased grant's budget and performed an official assessment
(January 2007);
USAID increased grant's budget and performed an official assessment
(October 2008).
Design and construction of boys and girls high schools: Mid-2007-Late
2009;
New grant award: USAID performed no official pre-award assessment (June
2007).
Stabilization along the Rutshuru-Ishasa Axis: Late 2008-Late 2009;
New grant award: USAID performed no official pre-award assessment
(November 2008).
Source: GAO analysis of UNOPS data.
[End of figure]
USAID Grants Have Lacked Certain Required Audit Provisions and Were
Associated With Findings of Criminal Actions and Mismanaged Funds:
USAID Did Not Consistently Include Audit Provisions Allowing Direct
Access to UNOPS Grant Expenditure Documentation:
USAID did not consistently include the audit provision that would have
allowed it access to documentation of how UNOPS spent funds from grants
awarded to UNOPS during the last 5 years. Under USAID policy, for
awards where USAID was the sole contributor, the audit provision was
required. Where USAID was not the sole contributor, the inclusion of
the audit provision was not required, but USAID could have negotiated
for its inclusion. USAID only included the sole contributor audit
provision in 2 of its 11 awards. (See table 5.)
For five of the awards, neither UNOPS nor USAID recorded additional
contributors to the award--making USAID unequivocally the sole
contributor--but USAID failed to include the sole contributor audit
provision in those awards. USAID mission officials said there was no
explanation in USAID's documentation to indicate why contracting
officials did not apply the sole contributor audit provision when USAID
was the sole contributor. In addition, for four of the awards, USAID
had the discretion to negotiate for the same provision and did not
exercise such discretion.
Table 5: Audit Provisions USAID Used in Its Awards with UNOPS, 2004
through 2008:
Award date: February 2004;
Location: Afghanistan;
USAID contribution to grant award: Sole contributor;
Other contributors documented in grant: None;
Audit provision[A]: UN grants.
Award date: February 2004;
Location: Afghanistan;
USAID contribution to grant award: Sole contributor;
Other contributors documented in grant: None;
Audit provision[A]: UN grants.
Award date: May 2004;
Location: Afghanistan;
USAID contribution to grant award: Sole contributor;
Other contributors documented in grant: None;
Audit provision[A]: UN grants.
Award date: September 2004;
Location: Afghanistan;
USAID contribution to grant award: Sole contributor;
Other contributors documented in grant: None;
Audit provision[A]: UN grants.
Award date: August 2006;
Location: Sudan;
USAID contribution to grant award: Sole contributor;
Other contributors documented in grant: None[B];
Audit provision[A]: UN grants.
Award date: May 2005;
Location: Liberia;
USAID contribution to grant award: Largest contributor;
Other contributors documented in grant: UNOPS in-kind contribution;
Audit provision[A]: UN grants.
Award date: August 2005;
Location: Haiti;
USAID contribution to grant award: Largest contributor;
Other contributors documented in grant: UNOPS in-kind contribution;
Audit provision[A]: UN grants.
Award date: September 2005;
Location: Afghanistan;
USAID contribution to grant award: Largest contributor;
Other contributors documented in grant: UNOPS in-kind contribution;
Audit provision[A]: UN grants.
Award date: September 2008;
Location: Democratic Republic of the Congo;
USAID contribution to grant award: Largest contributor;
Other contributors documented in grant: Nonfederal contribution[C];
Audit provision[A]: UN grants.
Award date: July 2006;
Location: Haiti;
USAID contribution to grant award: Sole contributor;
Other contributors documented in grant: None;
Audit provision[A]: Sole contributor.
Award date: June 2007;
Location: Afghanistan;
USAID contribution to grant award: Sole contributor;
Other contributors documented in grant: None;
Audit provision[A]: Sole contributor.
Source: GAO analysis of UNOPS and USAID data.
[A] When USAID uses the UN grants audit provision, it relinquishes its
access to grantee expenditure documentation. When USAID uses the sole
contributor audit provision, it can require access to grantee
expenditure documentation.
[B] According to a USAID official at the Sudan Mission, there was an
indication in the grant file that UNOPS provided cost sharing by
supplying staff and other services, but the official could not find
this documented in the grant budget.
[C] USAID did not have records describing the "nonfederal contribution"
documented in the budget section of its grant award. UNOPS officials
said that additional contributions could have been made as in-kind
contributions by UNOPS, which would not be recorded as transactions in
UNOPS records.
[End of table]
According to UNOPS data, USAID has been the only outside contributor to
all 11 of its grants with UNOPS during the last 5 years, but these data
did not include any in-kind contributions made to the award.[Footnote
41] In at least three awards, UNOPS made small, in-kind contributions
to the award--for example, they provided staff to perform landscaping
services and administrative support. USAID also listed a nonfederal
donor contributing to another award. UNOPS senior officials said they
were unaware of the contributions UNOPS made to the three USAID grants.
They said that these contributions were "strange" because UNOPS's
mandate is to provide implementation services, not to be a donor. They
told us that these in-kind contributions might have been made to avoid
USAID's regulations.
Consistent with these statements, USAID gave us a 2005 e-mail exchange
where a UNOPS official asked that the proposed grant use a UN provision
as an alternative to the sole contributor provision.[Footnote 42] When
asked, the USAID contracting officer in charge of the grant mentioned
what actions could be taken in order for the sole contributor audit
authority not to be required, such as contributions to the grants from
another entity. As a result, UNOPS then contributed to the grant's
budget, and USAID did not include the sole contributor audit provision
within the grant award.
USAID policy does not define sole contributor for the purposes of
grants to PIOs. As a result we were unable to determine whether the
four remaining awards would be considered sole contributor awards
requiring, unless waived, the inclusion of the sole contributor audit
provision. Nevertheless, as the largest contributor, USAID could have
elected to negotiate for the application of selected procurement and
audit policies with UNOPS to protect U.S. interests. USAID applied the
UN grants provision to these four awards.
USAID Lacks Clear Guidance, Training, and Monitoring of Its Required
Audit Provisions with UNOPS and Other PIOs:
USAID has not provided clear guidance to ensure its audit provisions
are correctly implemented. We found that contracting officers have not
been consistent in their use of the sole contributor audit provision
because there is no clear definition of what constitutes a sole
contributor in USAID policy. USAID OAA officials said this lack of
definitional clarity might weaken contracting officers' abilities to
include the provision when negotiating to include audit access with UN
officials. For example, USAID has not defined the amount of
contribution, the type of contribution, or the type of contributor
necessary to establish USAID as the sole contributor. In addition,
USAID provides no guidance to ensure that the contracting officers
drafting the grant award know whether USAID is the sole contributor to
the grant, because contracting officers do not participate in country
donor meetings. USAID officials acknowledged that the absence of
definitions and the absence of clear guidance for implementing the sole
contributor audit authority have been weaknesses in their PIO policies.
USAID has also not provided contracting officers with specific training
on how to apply the provisions in its grants with PIOs. For example,
contracting officers at three missions that awarded grants to UNOPS
said they received no training on awarding grants to PIOs, and the most
recent assistance management workbook for contracting officers did not
include any guidance on when to use the different PIO audit provisions.
[Footnote 43]
Finally, USAID does not monitor whether the PIO audit provisions are
implemented as required, in part because it has not developed or
documented an approach to such monitoring. According to internal
control standards for the federal government, management should provide
ongoing monitoring of grant implementation performance.[Footnote 44]
However, USAID OAA officials were not aware that in five of the seven
grants with UNOPS for which USAID was unequivocally the sole
contributor, the contracting officers had used the incorrect audit
provision, in part because they had not monitored the provisions in
these awards. While USAID's Mission Compliance Checklist includes
monitoring criteria to confirm other provisions specific to PIOs, it
does not include a requirement to monitor whether the mission used the
appropriate audit provision.[Footnote 45] USAID officials acknowledged
that monitoring appropriate oversight provisions may not be a standard
part of their monitoring protocol. According to USAID officials,
missions do not document how and when the sole contributor audit
provision is used in grant awards. The missions never check to
determine if the provisions are correctly implemented, and the
contracting officer's choice of audit provision in the original grant
award is not reviewed unless there are major changes to the award's
financial contributors. Furthermore, while USAID's policy indicates
that the sole contributor audit provision can be waived, the policy
does not include criteria for requesting a waiver. USAID OAA officials
said they have never seen a request to deviate from the sole
contributor provision.
USAID's Failure to Adhere to its Policies Severely Limited Its Access
to Information about UNOPS Grants Associated with Findings of Alleged
Criminal Actions and Mismanaged Funds:
USAID's failure to adhere to its policies severely limited its ability
to require expenditure documentation from grants that were associated
with findings of alleged criminal actions and mismanaged funds. From
2004 through 2008 USAID obligated $450 million in awards to UNOPS that
did not include the sole contributor audit provision to provide access
to UNOPS's expenditure documents.[Footnote 46] In 2008, the PTF found
instances of fraud, embezzlement, conversion of public funds, conflict
of interest, and severe mismanagement of USAID-funded UNOPS projects in
Afghanistan, including the $365.8 million Rehabilitation of Secondary
Roads project. According to the allegations in the investigation, a
UNOPS official diverted reconstruction funds for personal use,
including hundreds of thousands of dollars in USAID funds for rent, a
home renovation, and other luxury items. In addition, the investigation
found that the UNOPS official repeatedly violated rules and regulations
by severely misappropriating project funds and by engaging in
fraudulent and unlawful acts.[Footnote 47] The USAID Office of
Inspector General also reported in 2008 that UNOPS did not complete
projects as claimed and that projects had defects and warranty issues,
as well as numerous design errors, neglected repairs, and uninstalled
equipment and materials--all of which were billed as complete. UNOPS
was also missing key documentation for expenditures and bills of
quantity.
USAID had limited access to expenditure records and documents during
these grant awards and during subsequent investigations because it did
not include the sole contributor provision in its awards with UNOPS.
[Footnote 48] As a result, USAID officials have not been able to
require UNOPS to provide information to substantiate how it spent U.S.
grant funds. USAID officials said that certain UNOPS officials were
unwilling to furnish requested documents during the grant, and UNOPS
would not respond to requests for meetings and documentation after the
grant. For example, a lead USAID investigator asked for bills of
quantity for UNOPS projects that were underperforming to see if USAID
had overpaid for those projects and to quantify how much money USAID
had lost. Although the investigator sought meetings with the head of
UNOPS in Afghanistan and the Acting Country Director of UNDP, the
officials never responded to his requests for meetings and never
provided the requested documentation. The investigator said that such
problems will likely continue to occur with UN entities if USAID does
not have a way to compel the UN to cooperate. However, some UNOPS
officials have subsequently cooperated with requests for grant
information made by the USAID Inspector General and other USAID OAA
officials.
While USAID took actions related to UNOPS projects in Afghanistan based
on the severity of the findings in the investigation reports, it took
more than a year to reconcile the accounts, and USAID is still working
to substantiate some claims from UNOPS. In July 2008 the Afghanistan
Mission decreased UNOPS's scope of work, deobligated unexpended
balances from expired awards, and issued bills for collection for
outstanding amounts that had been advanced to UNOPS.[Footnote 49]
According to the Afghanistan Mission, UNOPS has since refunded the
amounts requested in the bills for collection--including accrued
interest and additional funds--and has also provided documentation for
funds that had been incorrectly entered as expenditures for another
international donor in the payment management system instead of
expenditures belonging to USAID. However, the Afghanistan Mission is
still working with UNOPS to substantiate claims for reimbursement that
are being made for the Secondary Roads project that was terminated in
December 2007. The UNOPS letter of credit was suspended in January
2008, requiring UNOPS to provide supporting documentation for approval
before any additional funds were released. UNOPS has since requested
$16 million from USAID for costs incurred before USAID canceled the
program, and while USAID Mission officials have already reimbursed
UNOPS $1.2 million, they are still reviewing and clarifying UNOPS's
documentation to determine additional amounts of repayment.[Footnote
50]
Conclusions:
The current UNOPS management team has made significant progress in
improving UNOPS's financial position and in making changes to its
systems that are designed to address the deficiencies highlighted in
numerous UN oversight organizations' audits and investigations.
However, problems with data reliability in UNOPS's project management
system, lengthy negotiations slowing its investigations, and limited
ethics reporting are evidence that UNOPS management's reform efforts
have not yet fully addressed UNOPS's internal control weaknesses. By
fully implementing remaining reforms and assessing the overall
effectiveness of the reform effort, UNOPS can provide the Executive
Board assurance that the problems have been addressed.
USAID's policies are designed to provide USAID assurance that its
project implementers are capable of responsibly managing U.S. funds.
However, USAID's pre-award assessments of UNOPS did not include the
numerous negative findings in UN audit reports that would have alerted
USAID to the risks involved when using UNOPS as an implementing
partner. If these assessments had shown UNOPS's risks, including its
deficiencies in internal controls and inaccurate expenditure reporting,
USAID may have recognized the importance of applying its required
oversight authority to its grant awards. Instead, USAID's inconsistent
implementation of its audit policies made its programs vulnerable to
fraud, waste, and abuse. USAID forfeited access to information that may
have revealed mismanagement of USAID funds years before costly post-
project investigations did.
Recommendations for Executive Action:
We recommend that the Secretary of State work with other member states
to take the following 2 actions:
1. support UNOPS's continued management reforms as it addresses the
areas of vulnerability that UN auditors have identified and:
2. encourage UNOPS management to assess the effectiveness of the reform
effort.
For adequate accountability of grants made with Public International
Organizations (PIO), we make 4 recommendations to the USAID
Administrator to ensure that USAID:
1. develop and document its approach for assessing the eligibility of
Public International Organizations deemed responsible for use by USAID,
2. define the terms and definitions in its existing guidance on PIO
audit provisions permitting USAID access to financial records and
documents,
3. ensure that cognizant contracting staff are sufficiently trained on
the use of the PIO audit provisions, and:
4. establish an approach to monitor whether the PIO audit provisions
are implemented as required.
Agency Comments and Our Evaluation:
We requested and received written comments on a draft of this report
from State, USAID, and UNOPS. These comments are reprinted in
appendixes VIII through X, along with our responses to specific points.
UNOPS also submitted technical comments that we have incorporated into
this report, as appropriate. In commenting on the draft, State endorsed
the main findings and conclusions of the draft report. Specifically,
State concurred with the recommendation that it support UNOPS in its
continued efforts to improve management practices and committed to
continue to encourage and monitor assessment of the impact of the
reform effort. State noted that our assessment of UNOPS's progress is
both accurate and balanced. State also noted that reforms in Executive
Board access to internal audit reports is particularly important to
fostering integrity, ethical conduct, and transparency. USAID concurred
with our recommendations and proposed an agency plan to implement each
recommendation and a target completion date. USAID agreed that it needs
to adopt improved procedures, stronger guidance, training, and
monitoring related to the use of Public International Organizations
(PIO) audit provisions. For each recommendation, USAID set an
implementation target date of either May or June of 2010. UNOPS
provided comments on some of our findings and acknowledged the need for
assessment of long-term impact of its reforms, but stated that the most
recent external audit and improved financial position are indicators
that demonstrate improvement.
As agreed with your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies to the
Executive Director of UNOPS, the Acting Administrator at the U.S.
Agency for International Development, the Secretary of State, the U.S.
Permanent Representative to the United Nations, and other interested
congressional committees. In addition, the report will be available at
no charge on the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staffs have any questions about this report, please
contact me at (202) 512-9601 or melitot@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made major contributions to
this report are listed in appendix XI.
Signed by:
Thomas Melito:
Director, International Affairs and Trade:
[End of section]
Appendix I: Scope and Methodology:
To assess the extent to which United Nations (UN) Office of Project
Services (UNOPS) has addressed key concerns about its internal
controls, we reviewed key UN and UNOPS reports and documents outlining
changes UNOPS management made to the organization and its operations
from 2006 to 2009. We obtained and reviewed official reports from
UNOPS's Executive Board and the UN General Assembly, UN Secretary-
General bulletins, and UNOPS operational directives. We interviewed
senior officials from UNOPS in New York, New York; Copenhagen, Denmark;
and Geneva, Switzerland; and other UN officials in New York.
Specifically, we met with officials from:
* the UN Children's Fund,
* the UN Development Program (UNDP),
* the UN Population Fund,
* the Advisory Committee on Administrative and Budgetary Questions,
* the UN Mine Action Service,
* UN Ethics Office,
* the Office of Internal Oversight Services, and:
* the Board of Auditors (BOA).
We also met with clients of UNOPS in Geneva--the Global Fund to Fight
AIDS, Tuberculosis, and Malaria; and the Enhanced Integrated Framework--
and Washington, D.C.--the U.S. Agency for International Development and
the Departments of State, Defense, and Agriculture. We also discussed
UNOPS reforms with Department of State (State) officials in Washington,
D.C. and New York City.
We selected reforms in the areas of documentation, internal oversight,
and ethics to track in more detail. We determined that these were key
areas of reform through our review of UNOPS's annual reports to its
Executive Board and UNOPS's Accountability Framework and in our
discussions with UNOPS officials. We focused on reform efforts
undertaken by the current management team since it was appointed in
2006. To assess the extent to which the Atlas project tracking system
has improved the organization's financial documentation, we
administered a survey--with a response rate of 100 percent--to the
managers of UNOPS's 5 regional offices and 12 operations centers. We
sent a draft of the survey to UNOPS management, who required that we
cut almost half of the proposed questions in the survey, including
questions we felt were important in assessing Atlas's capacity to
capture data and document transactions that could strengthen internal
and financial controls. To determine how many survey respondents
reported data reliability limitations in Atlas, we counted all
respondents who answered that data were to no extent, to a little
extent, to some extent, or to a moderate extent timely, accurate, or
complete. To evaluate UNOPS's reforms in internal oversight, we
compared UNOPS's internal audit program to Institute for Internal
Auditors' International Standards for the Professional Practice of
Internal Auditing and UNOPS's investigative program to the UN Uniform
Guidelines for Investigations. We evaluated UNOPS's ethics program
against the requirements for UN Ethics Offices established by UN
Secretary-General's Bulletins ST/SGB/2007/11 and ST/SGB/2005/22 and
against its own ethics policies.
To evaluate USAID's oversight of UNOPS-implemented projects, we
reviewed information from both headquarters and the USAID missions. At
headquarters, we reviewed USAID's policies for awarding, monitoring,
and obtaining results from grants, including USAID's policies in the
Automated Directives System, USAID's Acquisition Regulations, the
Office of Management and Budget's Circular A-110, and the Federal
Acquisition Regulations. We also reviewed reports on USAID's Office of
Acquisition and Assistance, including prior reports from GAO[Footnote
51] and USAID's Inspector General.[Footnote 52] We reviewed program
information from USAID's missions, including pre-award assessment
memos, grant agreements, and modification memos. We compared USAID's
grant-related activities from 2004 through 2008 with the criteria in
GAO's Standards for Internal Control in the Federal Government.
[Footnote 53] These standards, issued pursuant to the requirements of
the Federal Managers' Financial Integrity Act of 1982, provide the
overall framework for establishing and maintaining internal control in
the federal government. We identified whether USAID was the sole,
largest, or smallest contributor to its grants with UNOPS from 2004
through 2008 by reviewing the grant awards for additional donors and
comparing this data with information from UNOPS officials. We then
reviewed the Audit and Records provisions that were used in the grants.
We created a comprehensive spreadsheet to compare the levels of USAID
contributions with the Audit and Records provisions used. To determine
whether USAID had documented pre-award assessments of UNOPS, we
requested pre-award memorandum in accordance with USAID's policies for
11 awards and for any modifications to those awards made with UNOPS
from 2004 through 2008. We reviewed all available memos that the USAID
missions maintained, but for some grants the missions did not have
documentation of these memos in their files. To determine if USAID had
included findings from UN reports when completing the pre-award
assessments, we reviewed audits and investigations from the BOA
[Footnote 54] and the UNDP Office of Audit and Performance Review,
[Footnote 55] which we compared to findings in USAID's pre-award
assessments of UNOPS. We also reviewed investigations from the
Procurement Task Force on UNOPS programs in Kenya and Afghanistan,
[Footnote 56] and from the USAID Inspector General on UNOPS programs in
Afghanistan.[Footnote 57]
We used data provided by USAID from its database sources to determine
the amount of funding USAID obligated to Public International
Organizations (PIO), including UNOPS, from 2004 to July 2009. However,
USAID was unable to provide accurate counts of its obligation
information. For example, USAID provided us a list of its PIO grants
from its Electronic Procurement Information Collection System, New
Management System, and Global Acquisition and Assistance System
databases, but this information contained numerous inconsistencies. We
made numerous attempts to resolve inconsistencies in the information
USAID provided over the course of our review, which caused us to
question its accuracy. As a result, we used UNOPS expenditure data from
its U.S. grant awards to identify the total amount of USAID funding
UNOPS has spent in the last 5 years. We used this data to supplement
the obligation information provided by USAID.
In addition to our review of documents and grant files described above,
we interviewed key staff at USAID headquarters in Washington, D.C., and
USAID missions in Afghanistan, Haiti, Liberia, and Sudan and about how
they conducted and documented grant-related activities since 2004.
We conducted this performance audit from July 2008 to November 2009 in
accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
[End of section]
Appendix II: UNOPS's Locations Worldwide:
United Nations Office of Project Services (UNOPS) operates from offices
located worldwide, including headquarters, regional offices, operations
centers, and project centers.[Footnote 58] UNOPS's five regional
offices are located in New York, New York; Bangkok, Thailand;
Copenhagen, Denmark; Johannesburg, South Africa; and Panama City,
Panama. In 2006, UNOPS moved its headquarters from New York to
Copenhagen.[Footnote 59] UNOPS also has 12 operations centers and 10
project centers throughout the world. Figure 2 shows UNOPS's primary
office locations worldwide. From these locations UNOPS oversees
activities in more than 50 countries.
Figure 2: Locations of UNOPS Offices, as of 2009:
[Refer to PDF for image: world map]
Locations of UNOPS Offices:
Afghanistan: Kabul;
Argentina: Buenos Aires;
Burma: Rangoon;
Côted'Ivoire: Abidjan;
Democratic Republic of the Congo: Kinshasa;
Denmark: Copenhagen;
El Salvador: San Salavdor;
Guatemala: Guatemala City;
Haiti: Port-au-Prince;
India: New Delhi;
Indonesia: Banda Aceh;
Israel: Jerusalem;
Jordan: Amman;
Kenya: Nairobi;
Kosovo: Pristina;
Nicaragua: Managua;
Panama: Panama City;
Peru: Lima;
Senegal: Dakar;
South Africa: Johannesburg;
Sri Lanka: Colombo;
Sudan: Juba;
Switzerland: Geneva;
Thailand: Bangkok;
Tunisia: Tunis;
United States: New York City;
Uruguay: Montevideo.
Sources: GAO analysis of UNOPS data and Map Resources (map).
[End of figure]
[End of section]
Appendix III: Types of Services Provided by UNOPS:
As shown in table 6, United Nations Office for Project Services (UNOPS)
services may be grouped according to the types of services it provides,
although project management may encompass many different types of UNOPS
services.
Table 6: Types of Services Provided by UNOPS:
Service type: Project management;
Explanation of service type:
* Designing projects and preparing annual action plans;
* Identifying, recruiting, and managing human resources;
* Procuring goods and services;
* Capacity-building for institutions and training key personnel to
ensure long-term sustainability;
* Financial management, including provision of accounting services and
customized reporting per client requirements;
* Fund management, where resources are disbursed through pooled funding
mechanisms;
* Establishing and conducting monitoring and evaluation systems, and
reporting on project implementation.
Service type: Procurement;
Explanation of service type:
* Implementation of information technology procurement systems;
* One-time stand-alone procurement services;
* Complete management of procurement process;
* Advisory services relating to, for example, sustainable procurement.
Service type: Human resources management;
Explanation of service type:
* Recruitment and selection;
* Human resources advice;
* Managing contracts and entitlements.
Service type: Financial management;
Explanation of service type:
* Trust-fund management, financial services and reporting;
* Review and approval (or recommendation for approval) of applications;
* Assessment of national capacity, including government institutions
and nongovernmental organizations (NGO), to implement loan or grant
activities;
* Assessment of capacities and mandates of international organizations
and NGOs to implement activities;
* Capacity development of national institutions, including NGOs, in
financial management and accounting, reporting, project management,
procurement, human resource management, knowledge management, and
monitoring and evaluation;
* Advice to applicants on interpreting and responding to loan or grant
requirements through all phases from pre-project to final reporting;
* Project monitoring and reporting;
* Certification of use of funds;
* Recommendation of additional disbursements;
* Independent audit of financial records;
* Audit of compliance with applicable agreements and procedures.
Service type: UN common services;
Explanation of service type:
* Negotiating and administering contracts for shared services;
* Designing, contracting, and supervising construction of shared
buildings and facilities.
Source: GAO analysis of UNOPS data.
[End of table]
[End of section]
Appendix IV: Designated International Organizations by the Department
of State:
The U.S. Agency for International Development (USAID) uses a list of
international organizations approved for detail and transfer of federal
employees to designate Public International Organizations (PIO) that
may receive assistance agreements.[Footnote 60] This list is composed
of 124 organizations that the Department of State has designated as an
international organization, as shown in table 7.
According to USAID data, USAID awarded grants or cooperative agreements
to 50 different PIOs from January 2004 to July 2009 at a total
estimated cost of approximately $8.1 billion.[Footnote 61] The majority
of the awards were to United Nations (UN) entities. The largest amount
of money was budgeted for World Food Program grants, at about $1.9
billion, and for UN Children's Fund grants, at about $1 billion.
Table 7: Department of State Designated International Organizations:
United Nations (UN Secretariat, organs, and their subsidiary bodies and
special programs):
* United Nations Secretariat (UN);
* UN Capital Development Fund (UNCDF);
* UN Center for Human Settlements (UNCHS);
* UN Children's Fund (UNICEF);
* UN Development Fund for Women (UNIFEM);
* UN Development Program (UNDP);
* UN Environmental Program (UNEP);
* UN High Commissioner for Refugees (UNHCR);
* UN International Training and Research Center (UNITAR);
* UN Office on Drugs and Crime (UNODC);
* UN Population Fund (UNFPA);
* UN Relief and Works Agency for Palestine Refugees in the Near East
(UNRWA);
* UN University (UNU);
* UN Volunteers (UNV);
* International Court of Justice (ICJ);
* International Civil Service Commission (ICSC);
* International Criminal Tribunal for the Former Yugoslavia (ICTY);
* International Criminal Tribunal for Rwanda (ICTR);
* International Research and Training Institute for the Advancement of
Women (INSTRAW);
* World Food Program (WFP).
Specialized agencies of the UN and related organizations:
* Food and Agriculture Organization (FAO);
* International Agency for Research on Cancer (IARC);
* International Atomic Energy Agency (IAEA);
* International Civil Aviation Organization (ICAO);
* International Fund for Agricultural Development (IFAD);
* International Labor Organization (ILO);
* International Maritime Organization (IMO);
* International Telecommunication Union (ITU);
* UN Educational, Scientific and Cultural Organization (UNESCO);
* Universal Postal Union (UPU);
* World Health Organization (WHO);
* World Intellectual Property Organization (WIPO);
* World Meteorological Organization (WMO).
International financial institutions:
* Bank for International Settlements (BIS);
* International Monetary Fund (IMF);
* North American Development Bank (NADB);
* UN Regional Development Banks;
- African Development Bank;
- Asian Development Bank;
- European Bank for Reconstruction and Development (EBRD);
- Inter-American Development Bank (IDB);
* World Bank Group;
- International Bank for Reconstruction & Development (IBRD);
- International Center for Settlement of Investment Disputes (ICSID);
- International Finance Corporation (IFC);
- Multilateral Investment Guarantee Agency (MIGA).
Inter-American organizations:
* Border Environment Cooperation Commission (BECC);
* Inter-American Center of Tax Administrators (CIAT);
* Inter-American Indian Institute (IAII);
* Inter-American Institute for Cooperation in Agriculture (IICA);
* Inter-American Institute for Global Change Research (IAI);
* Inter-American Tropical Tuna Commission (IATTC);
* Organization of American States (OAS);
* Pan American Health Organization (PAHO);
* Pan American Institute of Geography and History (PAIGH);
* Pan American Railway Congress Association (ACPF) (Argentina);
* Postal Union of the Americas, Spain and Portugal (PUASP).
Other regional organizations:
* Asia Pacific Energy Research Center (APERC);
* Colombo Plan Council;
* Great Lakes Fisheries Commission (GLFC);
* International Energy Agency (IEA);
* North Atlantic Assembly (NAA);
* North Atlantic Treaty Organization (NATO);
* Nuclear Energy Agency (NEA);
* Organization for Economic Cooperation and Development (OECD);
* South Pacific Commission (SPC).
Other international organizations:
* Center for International Forestry Research (CIFOR);
* Commission for Environmental Cooperation (CEC);
* Commission for Labor Cooperation;
* Commission for the Conservation of Antarctic Marine Living Resources
(CCAMLR);
* Comprehensive Nuclear-Test-Ban Treaty Organization (CTBTO);
* Convention on International Trade in Endangered Species of Wild Fauna
and Flora (CITES);
* COPAS-SARSAT (Search and Rescue Satellite System);
* Global Biodiversity Information Facility (GBIF);
* The Global Fund (to Fight AIDS, Tuberculosis and Malaria);
* The Hague Conference on Private International Law (HCOPIL);
* International Agreement on the Maintenance of Certain Lights in the
Red Sea;
* International Bureau for the Permanent Court of Arbitration (PCA);
* International Bureau for the Protection of Industrial Property;
* International Bureau for the Publication of Customs Tariffs;
* International Bureau of Weights and Measures (BIPM);
* International Center for Agricultural Research in the Dry Areas
(ICARDA);
* International Center for the Study of the Preservation and
Restoration of Cultural Property;
* International Coffee Organization (ICO);
* International Committee of the Red Cross (ICRC);
* International Cotton Advisory Committee (ICAC);
* International Council for the Exploration of the Sea (ICES);
* International Criminal Police Organization (INTERPOL);
* International Crops Research Institute for the Semi-Arid Tropics
(ICRISAT);
* International Development Law Institute (IDLI);
* International Energy Forum Secretariat (IEFS);
* International Fertilizer Development Center (IFDC);
* International Grains Council (IGC);
* International Human Frontier Science Program Organization (HFSP);
* International Hydrographic Organization (IHO);
* International Institute for Cotton;
* International Institute for the Unification of Private Law
(UNIDROIT);
* International Mobile Satellite Organization (IMSO);
* International Organization for Legal Metrology (OIML);
* International Organization for Migration (IOM);
* International Organization of Supreme Audit Institutions (INTOSAI);
* International Plant Genetics Resources Institute (IPGRI);
* International Rubber Study Group (IRSG);
* International Science and Technology Center (ISTC);
* International Seed Testing Association (ISTA);
* International Service for National Agriculture Research (ISNAR);
* International Tropical Timber Organization (ITTO);
* International Union of Credit and Investment Insurers (Berne Union);
* International Whaling Commission (IWC);
* Inter-Parliamentary Union (IPU);
* Iran-United States Claims Tribunal;
* Korean Peninsula Energy Development Organization (KEDO);
* Multinational Force and Observers (MFO);
* North American Commission for Environmental Cooperation (CEC);
* North Pacific Anadromous Fish Commission (NPAFC);
* Organization for the Prohibition of Chemical Weapons (OPCW);
* Organization for Security and Cooperation in Europe (OSCE);
* Pacific Aviation Safety Office (PASO);
* Permanent International Association of Navigation Congresses (PIANC);
* Regional Environmental Center for Central and Eastern Europe (REC);
* Science and Technology Center in Ukraine (STCU);
* Other international organizations;
* Sierra Leone Special Court;
* World Customs Organization (WCO);
* The World Heritage Fund;
* The World Organization for Animal Health (OIE);
* World Trade Organization (WTO).
Source: GAO presentation of Department of State data.
[End of table]
[End of section]
Appendix V: Results of GAO's Survey of UNOPS Field Office Managers:
We sent a survey to the managers of 17 United Nations Office of Project
Service (UNOPS) field offices--its 5 regional offices and 12 operations
centers. All 17 managers responded to the survey. Questions focused on
UNOPS's project management system, Atlas. See tables 8 and 9 below for
a compilation of all the responses to survey questions referred to in
this report.
Table 8: UNOPS Field Office Responses to GAO Survey Question about
Atlas Data Reliability:
To what extent, if any, do you believe that the data in Atlas for the
entire UNOPS system have each of the attributes listed below?.
Timeliness;
To no extent: 0;
To a little extent: 0;
To some extent: 4;
To a moderate extent: 3;
To a great extent: 9;
To a very great extent: 1.
Accuracy;
To no extent: 0;
To a little extent: 0;
To some extent: 4;
To a moderate extent: 2;
To a great extent: 8;
To a very great extent: 3.
Completeness;
To no extent: 0;
To a little extent: 2;
To some extent: 2;
To a moderate extent: 2;
To a great extent: 9;
To a very great extent: 2.
Source: GAO analysis of survey responses from UNOPS field office
managers.
[End of table]
Table 9: UNOPS Field Office Responses to GAO Survey Question about
Conditions Making Atlas Use Difficult:
Listed below are some conditions that might make it difficult for an
organization to use Atlas. For each condition that your office has
encountered please indicate how difficult if at all that condition
typically has made it for your office to use Atlas.
Listed below are some conditions that might make it difficult for an
organization to use Atlas. For each condition that your office has
encountered please indicate how difficult if at all that condition
typically has made it for your office to use Atlas.
Condition has been encountered and has made it:
System is slow:
Condition has not been encountered: 3;
Not at all or a little difficult: 3;
Somewhat difficult: 8;
Moderately difficult: 2;
Very difficult: 1;
Extremely difficult: 0.
Poor connectivity or inability to access:
Condition has not been encountered: 5;
Not at all or a little difficult: 3;
Somewhat difficult: 5;
Moderately difficult: 4;
Very difficult: 0;
Extremely difficult: 0.
Unclear what information the system is requesting:
Condition has not been encountered: 7;
Not at all or a little difficult: 7;
Somewhat difficult: 2;
Moderately difficult: 1;
Very difficult: 0;
Extremely difficult: 0.
Unclear what information the system is requiring:
Condition has not been encountered: 7;
Not at all or a little difficult: 7;
Somewhat difficult: 2;
Moderately difficult: 1;
Very difficult: 0;
Extremely difficult: 0.
Entering data takes too long:
Condition has not been encountered: 3;
Not at all or a little difficult: 4;
Somewhat difficult: 3;
Moderately difficult: 6;
Very difficult: 1;
Extremely difficult: 0.
System requires documentation that is too detailed[A]:
Condition has not been encountered: 6;
Not at all or a little difficult: 7;
Somewhat difficult: 2;
Moderately difficult: 1;
Very difficult: 0; Extremely difficult: 0.
System is not flexible enough to capture different types of projects:
Condition has not been encountered: 6;
Not at all or a little difficult: 7;
Somewhat difficult: 3;
Moderately difficult: 0;
Very difficult: 1;
Extremely difficult: 0.
Technical glitches:
Condition has not been encountered: 2;
Not at all or a little difficult: 5;
Somewhat difficult: 4;
Moderately difficult: 5;
Very difficult: 1;
Extremely difficult: 0.
System produces reports that do not meet the needs of the field
offices:
Condition has not been encountered: 1;
Not at all or a little difficult: 1;
Somewhat difficult: 6;
Moderately difficult: 5;
Very difficult: 4;
Extremely difficult: 0.
System does not permit complete project documentation:
Condition has not been encountered: 8;
Not at all or a little difficult: 3;
Somewhat difficult: 4;
Moderately difficult: 2;
Very difficult: 0;
Extremely difficult: 0.
Source: GAO analysis of survey responses from UNOPS field office
managers.
[A] One office did not respond to this question.
[End of table]
[End of section]
Appendix VI: USAID Oversight Policies for Grants with Public
International Organizations:
According to U.S. Agency for International Development's (USAID)
policies outlined in its Automated Directive System (ADS) 308, USAID is
required to apply specific pre-award assessment policies when making
grants with Public International Organizations (PIO). In addition, the
ADS 308 Mandatory Standard Provisions outline standard provisions that
USAID, when applicable, is required to use. According to this policy,
when a standard provision is determined to be applicable in accordance
with the applicability statement, the use of such standard provision is
mandatory unless a deviation has been approved.
Table 10: USAID's ADS Policies and Provisions for Grants with PIOs:
ADS 308.3.2-Grant Agreements with PIOs: Effective October 10, 2003:
Grant Agreements with PIOs are appropriate when the Agreement Officer
makes a pre-award determination that all of the following conditions
are met:
A: Support for a PIO's program or activity (either an expansion of its
current program or the initiation of a new program or activity) is
considered to be an effective and efficient way to achieve a particular
development assistance or disaster relief objective.
B: The program and objectives of the PIO are compatible with those of
USAID.
C: There is no reason to consider the PIO not responsible; and.
D: Grants are made for specific programs of interest of USAID. Under
the "augmentation" rule, a USAID grant may not fund the general
operating budget of a PIO if that general operating budget is being
funded by voluntary contributions from the Department of State under
its "international organizations" budget or U.S. assessed contributions
or dues. This does not prohibit funding of administrative fees
applicable to the USAID activity.
The requesting office must include a memo addressing the points in this
section in any implementation request to the Agreement Officer to award
a grant to a PIO.
ADS 308.3.6.2-Application of USAID's Procurement and Audit Policies to
a PIO; Effective October 10, 2003:
If USAID is the sole contributor, USAID procurement policies and
procedures will apply to purchases of goods and services by the grantee
to the same extent as in grants to non-U.S. nongovernmental
organizations (ADS 303.5.15), unless they are specifically waived.
If USAID is not the sole contributor but is still the largest
contributor, USAID, with the concurrence of the Department of State,
Office of International Organizations (IO), may elect to negotiate the
application of selected procurement and audit policies with the PIO to
protect U.S. interests.
If USAID is a minor contributor to a program, USAID will rely on the
international organization's procurement policies and procedures.
ADS 308 Required as Applicable Standard Provisions for Grants to PIOs:
Standard Audit and Records Provision-Non-UN Grantees (December 2003):
Applicable when USAID is not the sole contributor to the grant;
The grantee is required to maintain books, records, documents, and
other evidence in accordance with the grantee's usual accounting
procedures to sufficiently substantiate charges to the grant. The
grantee confirms that this program will be subject to an independent
audit in accordance with the Grantee's usual auditing procedures, and
agrees to furnish copies of these audit reports to USAID along with
such other related information as may be reasonably requested by USAID
with respect to questions arising from the audit report.
USAID Sole Contributor Provision (December 2003);
Applicable when USAID is the sole contributor to the grant;
The grantee is required to maintain books, records, documents, and
other evidence in accordance with the grantee's usual accounting
procedures to sufficiently substantiate charges to the grant. The
grantee agrees to make available to USAID or the Comptroller General of
the United States all records and documents that support expenditures
made under the program.
Audit and Records - UN Grants (July 1988);
Applicable to grants to the United Nations when USAID is not the sole
contributor;
The grantee agrees to furnish the U.S. Government with a final report
on activities carried out under this grant, including accounting for
grant funds in sufficient detail to enable USAID to liquidate the
grant. It is understood that financial records, including documentation
to support entries on accounting records and to substantiate charges
against the grant, will be maintained in accordance with the grantee's
usual accounting procedures, which must follow generally accepted
accounting practices. All such financial records must be maintained for
at least three years after the final disbursement of funds under this
grant. The grantee confirms that the grant account will be audited
applying established procedures under appropriate provisions of the
financial regulations and rules of the United Nations. The report must
be submitted to the U.S. Mission to the UN in New York for forwarding
to the USAID program office.
Source: USAID policies.
[End of table]
[End of section]
Appendix VII: USAID's Documented Pre-Award Assessments of UNOPS:
According to policy directives, the U.S. Agency for International
Development's (USAID) agreement officers, who are responsible for
signing grants to Public International Organizations (PIO), must
complete pre-award assessments documented in a memo from the requesting
office that justify using the PIO as a grantee for the program. In
addition, USAID officials told us that this assessment should also be
specifically completed before a modification that significantly
increases the budget of the original award. We reviewed available
information from USAID missions for all 11 of USAID's awards with UNOPS
from 2004 through 2008 to determine which awards and modifications
documented these assessments (see figure 3).
Figure 3: USAID's Documented Assessments of UNOPS, 2004 through 2008:
[Refer to PDF for image: illustrated tale]
Date: Feb. 5, 2004
Award title: Afghanistan: Rehabilitation and Reconstruction of National
Secondary Roads;
Starting budget: $35,000,000
USAID provided documentation of pre-award assessment: USAID provided
documentation of an assessment memo, but the memo was an unsigned,
unofficial document that did not address the ADS 308.3.2 criteria.
Date: Aug. 23, 2004
Award title: Afghanistan: Rehabilitation and Reconstruction of National
Secondary Roads; Modification 04
Modification increased budget by: $182,769,875
USAID provided documentation of pre-award assessment: USAID did not
provide documentation of an assessment memo.
Date: Apr. 17, 2006
Award title: Afghanistan: Rehabilitation and Reconstruction of National
Secondary Roads; Modification 11
Modification increased budget by: $93,290,125
USAID provided documentation of pre-award assessment: USAID provided
documentation of an assessment IIP memo addressing the Automatic
Directive System (ADS) 308.3.2 criteria.
Date: Oct. 17, 2006
Award title: Afghanistan: Rehabilitation and Reconstruction of National
Secondary Roads; Modification 14
Modification increased budget by: $2,980,100
USAID provided documentation of pre-award assessment: USAID did not
provide documentation of an assessment memo.
Date: Dec. 16, 2006
Award title: Afghanistan: Rehabilitation and Reconstruction of National
Secondary Roads; Modification 15
Modification increased budget by: $51,902,538
USAID provided documentation of pre-award assessment: USAID did not
provide documentation of an assessment memo.
Date: Feb. 24, 2004
Award title: Afghanistan: Rehabilitation Restoration of the Women's
Dormitory Building of the University of Kabul;
Starting budget: $8,150,000
USAID provided documentation of pre-award assessment: USAID provided
documentation of an assessment memo, but the memo was an unsigned,
unofficial document that did not address the ADS 308.3.2 criteria.
Date: Aug. 31, 2004
Award title: Afghanistan: Rehabilitation Restoration of the Women's
Dormitory Building of the University of Kabul; Modification 02
Modification increased budget by: $2,974,898
USAID provided documentation of pre-award assessment: USAID did not
provide documentation of an assessment memo.
Date: Jan. 8, 2005
Award title: Afghanistan: Rehabilitation Restoration of the Women's
Dormitory Building of the University of Kabul; Modification 03
Modification increased budget by: $228,210
USAID provided documentation of pre-award assessment: USAID did not
provide documentation of an assessment memo.
Date: May 31, 2006
Award title: Afghanistan: Rehabilitation Restoration of the Women's
Dormitory Building of the University of Kabul; Modification 06
Modification increased budget by: $236,450
USAID provided documentation of pre-award assessment: USAID did not
provide documentation of an assessment memo.
Date: Nov. 21, 2007
Award title: Afghanistan: Rehabilitation Restoration of the Women's
Dormitory Building of the University of Kabul; Modification 08
Modification increased budget by: $2,568
USAID provided documentation of pre-award assessment: USAID did not
provide documentation of an assessment memo.
Date: Nov. 17, 2008
Award title: Afghanistan: Rehabilitation Restoration of the Women's
Dormitory Building of the University of Kabul; Modification 10
Modification increased budget by: $128,475
USAID provided documentation of pre-award assessment: USAID did not
provide documentation of an assessment memo.
Date: May 2004
Award title: Afghanistan: Rehabilitation Restoration of the Women's
Afghanistan: Schools and Clinics Construction and Refurbishment
Program;
Starting budget: $6,888,175
USAID provided documentation of pre-award assessment: USAID did not
provide documentation of an assessment memo.
Date: Jan. 18, 2007
Award title: Afghanistan: Rehabilitation Restoration of the Women's
Afghanistan: Schools and Clinics Construction and Refurbishment
Program; Modification 07
Modification increased budget by: $594,230
USAID provided documentation of pre-award assessment:
Date: Sept. 1, 2004
Award title: Afghanistan: Emergency Drought Relief;
Starting budget: $50,000
USAID provided documentation of pre-award assessment: USAID provided
documentation of an assessment IIP memo addressing the Automatic
Directive System (ADS) 308.3.2 criteria.
Date: Sept. 20, 2004
Award title: Afghanistan: Emergency Drought Relief; Modification 01
Modification increased budget by: $100,000
USAID provided documentation of pre-award assessment: USAID did not
provide documentation of an assessment memo.
Date: May 16, 2005
Award title: Liberia: Barclayville Rapid Bridge Construction;
Starting budget: $996,408
USAID provided documentation of pre-award assessment: USAID provided
documentation of an assessment IIP memo addressing the Automatic
Directive System (ADS) 308.3.2 criteria.
Date: July 19, 2006
Award title: Liberia: Barclayville Rapid Bridge Construction;
Modification 01;
Modification increased budget by: $64,742
USAID provided documentation of pre-award assessment: USAID did not
provide documentation of an assessment memo.
Date: Aug. 22, 2005
Award title: Haiti: Election Assistance to Democratic Parties;
Starting budget: $3,000,000
USAID provided documentation of pre-award assessment:
Date: Dec. 5, 2005
Award title: Haiti: Election Assistance to Democratic Parties;
Modification 01
Modification increased budget by: $824,890
USAID provided documentation of pre-award assessment: USAID did not
provide documentation of an assessment memo.
Date: Sept. 25, 2005
Award title: Afghanistan: Rehabilitation of Afghanistan Geologic Survey
and Ministry of Mines and Industry Complex;
Starting budget: $6,804,774
USAID provided documentation of pre-award assessment: USAID did not
provide documentation of an assessment memo.
Date: July 10, 2006
Award title: Haiti: Rehabilitation of Hydro-Electric Plants
Starting budget: $4,100,000
USAID provided documentation of pre-award assessment: USAID did not
provide documentation of an assessment memo.
Date: Aug. 23, 2006
Award title: Sudan: Building Bridges/Health Posts;
Starting budget: $31,850,000
USAID provided documentation of pre-award assessment: USAID provided
documentation of an assessment IIP memo addressing the Automatic
Directive System (ADS) 308.3.2 criteria.
Date: Dec. 27, 2006
Award title: Sudan: Building Bridges/Health Posts; Modification 02;
Modification increased budget by: $8,000,000
USAID provided documentation of pre-award assessment: USAID provided
documentation of an assessment IIP memo addressing the Automatic
Directive System (ADS) 308.3.2 criteria.
Date: Sept. 30, 2008
Award title: Sudan: Building Bridges/Health Posts; Modification 05;
Modification increased budget by: $22,462,000
USAID provided documentation of pre-award assessment: USAID provided
documentation of an assessment IIP memo addressing the Automatic
Directive System (ADS) 308.3.2 criteria.
Date: June 7, 2007
Award title: Afghanistan: Design and Construction of Boys and Girls
High Schools;
Starting budget: $23,400,000
USAID provided documentation of pre-award assessment: USAID did not
provide documentation of an assessment memo.
Date: Sept. 30, 2008
Award title: Democratic Republic of the Congo: Stabilization along the
Rutshuru-Ishasa Axis;
Starting budget: $5,000,000
USAID provided documentation of pre-award assessment: USAID did not
provide documentation of an assessment memo.
Source: GAO analysis of USAID data.
[End of figure]
[End of section]
Appendix VIII: Comments from the Department of State:
United States Department of State:
Assistant Secretary and Chief Financial Officer:
Washington, D.C. 20520:
November 10, 2009:
Ms. Jacquelyn Williams-Bridgers:
Managing Director:
International Affairs and Trade:
Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548-0001:
Dear Ms. Williams-Bridgers:
We appreciate the opportunity to review your draft report, "United
Nations: UNOPS Management Reforms Proceeding but Effectiveness Has not
Been Assessed, and USAID' s Oversight of Grants with UNOPS Has
Weaknesses," GAO Job Code 320622.
The enclosed Department of State comments are provided for
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact
Brian Hackett, Program Analyst, Bureau of International Organization
Affairs at (202) 647-6419.
Sincerely,
Signed by:
James L. Millette:
cc:
GAO ” Phil Thomas:
I0 ” Ester Brimmer:
State/OIG ” Mark Duda:
[End of letter]
Department of State Comments on GAO Draft Report:
United Nations: UNOPS Management Reforms Proceeding but Effectiveness
Has not Been Assessed, and USAID's Oversight of Grants with UNOPS Has
Weaknesses (GAO-10-168, GAO Code 320622):
Thank you for the opportunity to comment on your draft report entitled
United Nations: UNOPS Management Reforms Proceeding but Effectiveness
Has not Been Assessed, and USAID's Oversight of Grants with UNOPS Has
Weaknesses. The Department of State has long been a strong supporter of
efforts to improve the management of the United Nations and welcomes
the GAO report on the UN Office of Project Services (UNOPS). The report
provides timely information on several aspects of the ongoing effort to
revitalize the administration of UNOPS. This review focuses on the
continuing efforts by member states and the UNOPS Secretariat to
strengthen ethics, oversight, and procurement systems, and improve the
operations of the Secretariat, issues that the U.S. has been at the
forefront of promoting.
The Department of State endorses the main findings and conclusions of
the GAO report. We believe that the GAO's assessment of progress is
both accurate and balanced. As the report notes, UNOPS has made more
substantial progress in some areas than in others related to management
reforms. To help move the reform process forward, the GAO recommends
that the Department of State support the continued efforts at UNOPS to
address the vulnerabilities identified by UN auditors and encourage
UNOPS management to assess progress in this regard.
The Department of State agrees fully with the need to support UNOPS in
its continued efforts to improve management practices, especially those
related to internal controls. In fact, we believe that an assessment of
the impact of the larger reform effort will be a particularly useful
measure of progress, and we will continue to encourage and monitor this
ongoing process. The GAO makes several observations concerning the
status of ethics systems at UNOPS. The report also notes that the
Executive Board Members lack full access to all UNOPS internal audit
reports. Better access to these reports could increase transparency and
provide further insight into UNOPS operations. The Department of State
considers reforms in this area particularly important to fostering
integrity, ethical conduct, and transparency. The Department also
believes that the U.S. must have the ability to best determine that
UNOPS and other international organizations alike can carry out their
work as effectively as possible and with appropriate management control
and oversight.
[End of section]
Appendix IX: Comments from the U.S. Agency for International
Development:
USAID:
U.S. Agency for International Development:
1300 Pennsylvania Avenue, NW:
Washington, DC 20523:
[hyperlink, http://www.usaid.gov]
November 10 2009:
Thomas Melito:
Director:
International Affairs and Trade:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548:
Dear Mr. Melito:
I am pleased to provide the U.S. Agency for International Development's
(USAID) formal response on the draft GAO report entitled, "UNOPS
Management Reforms Proceeding but Effectiveness Has not Been Assessed,
and USAID's Oversight of Grants with UNOPS Has Weaknesses"
(GAO-10-168).
USAID agrees that it needs to adopt improved procedures, stronger
guidance, training, and monitoring related to the use of Public
International Organizations (PIO) audit provisions. USAID has been and
will continue to actively review its policies and procedures to address
the inconsistencies in the application of existing PIO-related
policies. Through our review, we are defining the steps necessary to
strengthen our procedures and better define our policies, while
maintaining the flexibility to deliver successful development
assistance in difficult environments.
Please find our planned approaches to the following recommendations.
GAO Recommendation 1: Develop and document approach for assessing the
eligibility of PIOs deemed responsible for use by USAID.
USAID Management Response: USAID concurs with this recommendation. The
Agency will establish new guidance to be delivered to all procurement
staff. This guidance will identify available sources of information
that staff may use to conduct responsibility determinations to
facilitate awareness of existing performance and system problems with a
PIO prior to awarding an agreement to the PIO. Target completion date:
June 30, 2010.
GAO Recommendation 2: Define the terms and definitions in its existing
guidance on PIO audit provisions permitting USAID access to financial
records and documents.
USAID Management Response: USAID concurs with this recommendation.
USAID is reviewing policy stated in ADS 308 on PIO audit provisions to
further define existing terms and the definitions that are relevant to
determining when a particular audit provision must be included in an
award. The Agency will revise all relevant internal guidance. Target
completion date: May 31, 2010.
GAO Recommendation 3: Ensure cognizant contracting staffs are
sufficiently trained on the use of the PIO audit provisions.
USAID Management Response: USAID concurs with this recommendation.
USAID procurement staff will be trained on the appropriate use of USAID
PIO audit provisions by spring 2010. The Agency also will develop
additional training on PIO-related practices and policies. Target
completion date: May 31, 2010.
GAO Recommendation 4: Establish an approach to monitor whether the PIO
audit provisions are implemented as required.
USAID Management Response: USAID concurs with this recommendation.
USAID is working to establish and finalize an approach to monitor USAID
staff compliance with appropriate use and implementation of audit
provisions within our assistance awards to PIOs. Target completion
date: June 30, 2010.
Thank you for the opportunity to respond to this GAO draft report and
for the courtesies extended by your staff in the conduct of this
review.
Sincerely,
Signed by:
Drew W. Luten:
Acting Assistant Administrator:
Bureau of Management:
[End of section]
Appendix X: Comments from the UN Office for Project Services:
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
UNOPS:
Date: 9 November 2009:
To: Whom it may concern:
U.S. Government Accountability Office:
From: [Signed by] Jan Mattsson:
Executive Director:
UNOPS:
Subject: GAO draft report on UNOPS.
UNOPS would like to thank GAO for the opportunity to provide brief
comments on the draft report. Due to space limitations, this response
is confined to the following key areas:
1. While the full impact of any major reform should be assessed long-
term, there are incontrovertible indicators that the far-reaching
reforms undertaken by UNOPS in the last three years are bearing fruit.
In particular, after three consecutive biennia of qualified audit
reports. UNOPS received an unqualified audit opinion from external
auditors for the biennium 2006-2007. As a result of the much-improved
internal controls, in August 2008 the UN Comptroller removed all
limitations on working with UNOPS which had been in effect for over two
years. In 2008-2009 UNOPS was able to sign a number of framework
agreements with partners, including UN agencies, the European
Commission and the World Bank. Such agreements were signed after
thorough assessments by partners of UNOPS internal controls. According
to annual surveys, stakeholders' confidence in UNOPS improved to an all-
time-high. Against this background, UNOPS revenue and new business
almost doubled and operational reserves increased seven-fold since
2006. Furthermore, the audit reports and investigations with "negative
findings" mentioned by GAO relate to the period up to and including
2006.
2. UNOPS understands that the scope of the GAO review was limited, but
would like to point out that management reforms at UNOPS encompassed
many areas not covered by the GAO report, among others, human
resources, procurement, finance, general administration and project
management. There has also been a complete overhaul of the policy
framework of the organization, with 26 of the 29 organizational
directives currently in use at UNOPS developed in the last three years.
3. UNOPS wishes to emphasize that the alleged wrongdoing in Afghanistan
in the period 2002-2006 was identified internally following complaints
from whistleblowers and a comprehensive investigation launched by the
new UNOPS senior management team taking office in mid-2006. The
Procurement Task Force report highlights that: "It is important to note
that the current Administration of UNOPS was not in place during the
time period under examination. Throughout the investigation, UNOPS
senior management gave the Task Force wide latitude and the
independence which was required, and directed the complete cooperation
by all UNOPS staff members. These officials should be lauded for their
acts of transparency and the request for, and acceptance of, an
independent investigation".
4. In the last three years 0105 conducted six investigations into UNOPS
activities. Only one of these is at present incomplete and UNOPS has
settled in full all the respective bills presented by 010S. During the
same period UNOPS' strengthened audit and investigations office
completed a number of internal investigations. The reference in the
report that "some" of the 5400 million of USAID funds had been misspent
is technically correct, however the estimated amount of
misappropriations alleged, while totally unacceptable, represents a
minor portion of this amount. As to the Afghanistan investigation, the
report was duly referred, in May 2009, to the US Permanent Mission to
the UN for its consideration and further action. Phases two and three
of this investigation will be completed following a determination by
010S as to the scope and nature of these reviews. [See comment 1]
5. UNOPS believes that a systematic assessment of the PeopleSoft-based
ERP does take place on an ongoing basis. In addition to internal
assessments, the data integrity in this software's environment was
reviewed by external audit as well as by one of the big four accounting
firms who assessed the software for performance and data security. [See
comment 2]
6. UNOPS has complied with, or exceeded, all UN requirements on ethics
training and financial disclosure. For example, UNOPS management
extended the coverage of the ethics training and financial disclosure
programme beyond staff members to other personnel, such as individual
contractors. [See comment 3]
7. The report does not explain the "single audit principle" which at
the behest of Member States is enshrined in the Financial Regulations
and Rules of UN entities. The UNDP/UNFPA/UNOPS Executive Board decided
in September 2008 on a specific procedure for the disclosure of
internal audits. Consequently, UNOPS is not permitted by its governance
and oversight bodies to agree to full access to audit by any party
outside of the UN Board of Auditors. The removal of certain proposed
questions in the PeopleSoft-based ERP survey was based on legal advice
with regard to the single audit principle. [See comment 4]
8. Despite a number of weaknesses identified at UNOPS prior to its
management reforms, there is no evidence in the report to demonstrate
that the implementation of USAID grants by UNOPS was anything other
than successful overall. For example, between 2002 and 2007 UNOPS built
almost 900 kilometers of rural access roads in Afghanistan in the most
challenging climatic and security conditions. UNOPS takes exception to
certain allegations made by the USAID Inspector-General. These were not
well substantiated, as suggested by a recent UNDP/UNOPS audit, and
refer to only four out of 108 sub-projects implemented under the Quick
PRT project.
Following are GAO's comments on the UNOPS letter dated November 9,
2009.
GAO Comments:
1. Regarding investigations, UNOPS noted that only one of six
investigations performed by OIOS is incomplete. Because investigators
recommended the remaining two phases of the Afghanistan investigation
after they found alleged criminal activity and mismanagement of funds
in the first phase of the investigation, we maintain that timely
investigation of these activities is essential for UNOPS to demonstrate
that it has provided sufficient resources for investigations.
Furthermore, the remaining phases include plans to investigate broader
management responsibility for the inappropriate activities identified
in the first phase.
2. UNOPS stated that systematic assessment of Atlas takes place on an
ongoing basis. However, according to some UNOPS officials we spoke
with, assessment of data reliability was not conducted in a systematic
manner. Moreover, based on our survey findings, data reliability
remains an ongoing problem.
3. Regarding ethics training, UNOPS reported that it has complied with,
or exceeded UN requirements. We modified our report to note that
UNOPS's policy exceeds UN requirements, but maintain that UNOPS is not
fully meeting its own requirement to provide ethics training for all
its personnel. Additionally, we reported that a technical glitch in the
system has kept UNOPS management and Ethics Officer from verifying who
has completed the course.
4. UNOPS said that our report does not explain the "single audit
principle" as it relates to external audits of UN entities. The United
States supports the "single audit principle" and we note that GAO has
successfully completed a body of work reviewing UN entities in which we
successfully gained the voluntary cooperation of UN entities to perform
our work. We had similar cooperation from UNOPS and had access to
sufficient information to complete this review.
[End of section]
Appendix XI: GAO Contact and Staff Acknowledgments:
GAO Contact:
Thomas Melito, (202) 512-9601 or melitot@gao.gov:
Staff Acknowledgments:
In addition to the person named above, Phillip Thomas (Assistant
Director), Jeffrey Baldwin-Bott, Erin Carson, Debbie Chung, Leah
DeWolf, Etana Finkler, and McKenzie Lawyer Davies made key
contributions to this report. Joel Grossman, Jackson Hufnagle, Grace
Lui, and Jena Sinkfield also provided technical assistance.
[End of section]
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2008.
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2006.
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[End of section]
Footnotes:
[1] Unless we specify otherwise, the term "management" refers only to
UNOPS's senior management officials.
[2] Internal oversight and ethics are among the key areas identified in
UNOPS's accountability framework.
[3] UNOPS also spent an additional $97.8 million of U.S. funds
indirectly as a subcontractor on U.S. government projects.
[4] In addition to USAID, the Departments of Defense, State, and
Agriculture have funded small grants to UNOPS in Afghanistan, Iraq, and
the Occupied Palestinian Territories. USAID categorizes UNOPS as a
Public International Organization (PIO), which means that it is an
organization established by international agreement and whose governing
body is composed principally of foreign governments or other PIOs.
[5] UNOPS adopted the IIA's International Professional Practices
Framework, which also includes a Code of Ethics.
[6] Atlas is a corporate Web-based Enterprise Resource Planning system,
that includes functions other than project management, such as human
resources management. Atlas is used by UNOPS, UNDP, and the UN
Population Fund. We refer throughout this report to specific functions
of the Atlas system.
[7] UNDP originally named UNOPS the Office for Projects Execution in
1974 but renamed it the Office for Project Services in 1988.
[8] The Secretary-General had proposed to separate the Office for
Project Services from UNDP largely because of the perception of a
potential conflict of interest at UNDP. The UN Advisory Committee on
Administrative and Budgetary Questions also expressed concerns about
the compatibility of the global service provision and project
implementation function of OPS with UNDP's primary role as a central
coordinating and funding agency.
[9] UNOPS, UNDP, and United Nations Population Fund share an Executive
Board. The Board comprises representatives from 36 countries who serve
on a rotating basis. The members for 2009 are Angola, Antigua and
Barbuda, Austria, Azerbaijan, Bhutan, Central African Republic, China,
Columbia, Cuba, Denmark, Finland, France, Germany, Haiti, India,
Islamic Republic of Iran, Lao People's Democratic Republic, Malawi,
Mauritania, Mexico, Netherlands, New Zealand, Norway, Republic of
Korea, Russian Federation, Senegal, Serbia, Sierra Leone, Slovakia,
Somalia, Sweden, Turkey, United Kingdom, United Republic of Tanzania,
the United States, and Yemen.
[10] UNOPS officials said that while the UN Convention on the
Immunities and Privileges of the United Nations specifies the
privileges and immunities that are common to UN activities, personnel,
assets, and property, the application of these privileges and
immunities vary by country. For example, financial exemptions depend on
the exemptions each government extends to the UN agency.
[11] UN common services include negotiating and administering contracts
for shared UN services and designing, contracting, and supervising
construction of shared UN buildings and facilities.
[12] According to UNOPS's management and some of UNOPS's clients, many
other UN service providers do not or will not work in some of the
difficult environments where UNOPS does.
[13] The Board of Auditors (BOA) produces reports on a two-year cycle
that cover the preceding two years. For example, the BOA issued its
report in 2002 for the biennium 2000 to 2001, and its report in 2003
for the biennium 2001 to 2002. The BOA issued a report in 2007 for the
biennium 2004 to 2005 because UNOPS did not provide certified financial
statements for the biennium in accordance with Financial Regulations
and Rules and the audit was temporarily suspended. The BOA 2008 report
covered the biennium 2006 to 2007.
[14] According to USAID policy, a cooperative agreement is used when
the principal purpose of the relationship is the transfer of money,
property, services, or anything of value to the recipient in order to
accomplish a public purpose of support or stimulation authorized by
federal statute; and substantial involvement is anticipated between
USAID and the recipient during the performance of the proposed
activity. Grants are also used when the principal purpose of the
relationship is the transfer of money, property, services, or anything
of value to the recipient in order to accomplish a public purpose of
support or stimulation authorized by federal statute; however, the
recipient is to have substantial freedom to pursue its stated program,
and substantial involvement is not anticipated between USAID and the
recipient during the performance of the proposed activity. According to
USAID, PIOs normally receive grants from USAID, not cooperative
agreements. USAID's policy uses "grants" to refer to both grants and
cooperative agreements. Accordingly, we use the term "grant" in this
report when referring to USAID policy.
[15] USAID's policy documents are in ADS. ADS 302 is the policy
document for issuing contracts, and ADS 303 is the policy document for
issuing grants and cooperative agreements to NGOs. In addition, for
contracts, USAID applies policies and preaward procedures outlined in
the Federal Acquisition Regulations and in the USAID Acquisition
Regulations. For grants with NGOs, USAID uses policies outlined in the
Office of Management and Budget Circular A-110 and in the Code of
Federal Regulations 22 CFR 226.
[16] UNOPS requested the investigation from OIOS, which referred the
case to the Procurement Task Force. The first phase investigated the
activities of the Country Coordinator for UNOPS's operations in
Afghanistan and Dubai, while the second and third phases were to
investigate a UNOPS vendor and other lapses relating to management of
funds in Afghanistan.
[17] The UN General Assembly document establishing the UN Secretariat
Ethics Office, ST/SGB/2005/22, was issued in December 2005, but entered
into effect on January 1, 2006.
[18] For example, a "financial dashboard"--a tool on Atlas that
summarizes organization and project finances--makes Atlas more
accessible to UNOPS managers by allowing them a quick view of budget,
project expenditure, project income, and administrative expenditure
data. Staff do not have unlimited access to global project data and
other data in Atlas. UNOPS management assign each staff member a level
of access on a case-by-base basis.
[19] "Imprest" refers to a use of cash for business transactions.
Generally, the purpose of an imprest fund is to make small payments
when the ordering of checks is not practical and where the interests of
the U.S. government are best served by making payments in cash.
Business in Afghanistan required large imprest accounts, because
Afghanistan lacked the established banking system that is necessary for
making noncash payments.
[20] Although it took about 3 years to implement the requirement in all
field offices because of the extensive effort required to reconcile the
accounts, the Executive Director said he required the documentation of
all imprest transactions in Atlas in Afghanistan first, because of the
extensive use of an imprest account there and because of his concerns
about financial mismanagement and fraud.
[21] Between 9 and 11 of the offices we surveyed responded that each of
these conditions made Atlas at least "somewhat difficult" to use.
[22] Generally compliant means that there is evidence of a series of
actions that indicate the organization has generally complied with the
standard.
[23] According to UNOPS officials, many of the investigators that OIOS
had hired from the Procurement Task Force (PTF) for phase one of the
investigation have left OIOS, resulting in a loss of institutional
memory regarding the work performed by the PTF.
[24] UNOPS management proposed in 2006 that UNDP investigate UNOPS's
activities in Afghanistan, but decided to use OIOS's services in 2007
after UNDP's investigation was challenged by the subject of the
investigation.
[25] OIOS's lack of financial independence means that high-risk areas
could be excluded from adequate examination. See GAO, United Nations:
Funding Arrangements Impede Independence of Internal Auditors,
[hyperlink, http://www.gao.gov/products/GAO-06-575] (Washington, D.C.:
April 2006).
[26] The PTF disbanded in December 2008. OIOS officials told us that
their decisions on whether and how to investigate the PTF cases took
several months after they were transferred to OIOS's Investigations
Division.
[27] The PTF proposed the remaining phases of the Afghanistan
investigation in its report on the first phase of the investigation in
December 2008.
[28] The current UNOPS Ethics Officer formerly served simultaneously as
the UNOPS Ethics Officer and the UNOPS General Counsel.
[29] The UN Secretariat Ethics Officer said audits or assessments of
the UN Secretariat Ethics Office have been conducted by the Independent
Audit Advisory Committee, the UN Joint Inspection Unit, and the BOA.
[30] The Executive Board is UNOPS's governing body and, among other
duties, approves UNOPS's budget and recommends improvements.
[31] Domestic Working Group Grant Accountability Project, Guide to
Opportunities for Improving Grant Accountability (Washington, D.C,
October 2005).
[32] USAID updated this policy in 2003 with minor wording changes that
did not change the substance of the requirement. A USAID official said
the revisions in the 2003 provisions were to update the provision with
plain English, i.e., to delete the word "shall" and replace it with "is
required to."
[33] While the grantee is not required to provide USAID access to its
documents, under the UN grant provision, the grantee agrees to give the
U.S. government a final report, including accounting for grant funds in
sufficient detail to enable USAID to liquidate the grant.
[34] For example, USAID uses criteria listed in the OMB Circular A-110
for special award conditions, including performance history, financial
stability, and management systems. In addition to the criteria listed
in the Circular A-110 for grants with NGOs, USAID also conducts pre-
award surveys to ensure compliance with federal financial, procurement,
personnel, and management system standards.
[35] For example, in October 2009 USAID sent a team of professionals to
UNOPS headquarters at the invitation of UNOPS management. USAID
officials told us they planned to assess how USAID could develop a
standard operating procedure to apply assessment criteria to PIOs.
[36] Two of the memos USAID provided were unofficial documents. The pre-
award memos for both the Afghanistan Rehabilitation of Secondary Roads
grant and the Women's Dormitory grant were unsigned, undated documents
that restated the award criteria without providing an assessment.
[37] GAO, Grants Management: EPA Has Made Progress in Grant Reforms but
Needs to Address Weaknesses in Implementation and Accountability.
[hyperlink, http://www.gao.gov/products/GAO-06-625] (Washington, D.C.:
May 12, 2006).
[38] The four BOA reports issued from 2002 through 2008 are publicly
available on the BOA Web site: [hyperlink,
http://www.un.org/auditors/board/reports.shtml]. The two UNDP Office of
Audit and Performance Review reports issued during this time are
publicly available on the UNDP Executive Board Web site: [hyperlink,
http://www.undp.org/execbrd/]. The OIOS Procurement Task Force reports
are available through the U.S. Mission to the United Nations.
[39] In addition, USAID made more than 30 administrative modifications
to UNOPS grants. At the time of each of these modifications, USAID
could have assessed UNOPS but was not required to do so.
[40] USAID reported their data according to funds obligated to UNOPS,
not funds expended by UNOPS.
[41] According to a senior UNOPS official, USAID was the sole
contributor to these projects because there were no other donors listed
in their general ledger for transactions made in each of the projects.
[42] The UNOPS official asked that the UNOPS rules and regulations for
procurement be applied to the grant. These rules and regulations apply
when the UN grants audit provision is used.
[43] The 2007 USAID Program Project Management Training Workbook has
one page of information on PIO Grants that does not include guidance on
applying audit provisions to PIO grant awards. The workbook also does
not include guidance on performing pre-award assessments of PIOs.
[44] GAO, Standards for Internal Control in the Federal Government,
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]
(Washington, D.C.: November 1999).
[45] USAID's Mission Compliance Checklist includes a requirement to
confirm that a PIO award includes the appropriate provision
implementing E.O. 13224 Executive Order on Terrorism Financing from ADS
308 (UN and non-UN organizations).
[46] USAID provided obligation data, not expenditure data for its
grants made with UNOPS.
[47] As of September 2009 UNOPS officials reported that the New York
District Attorney's Office had requested the cooperation of the UN and
wrote to the UN Office of Legal Affairs asking for all documents
relating to the case. The officials said the office plans to transmit
the files to the District Attorney so the case can be pursued.
[48] USAID did include the sole contributor audit provision in its most
recent grant award with UNOPS in Afghanistan, a 2007 award to design
and construct boys and girls high schools.
[49] USAID issued a bill for collection for $40,053 and deobligated the
unexpended balance of $50,000 from the 2004 Emergency Drought Relief
grant; issued a bill for collection for $22,392 and deobligated the
remaining balance of $500,000 from the 2005 Rehabilitation of
Afghanistan Geologic Survey and Ministry of Mines and Industry Complex
grant; moved to close out the award and de-obligate the remaining
balance from the 2004 Schools and Clinics grant; and secured a
different implementer for follow-on work for the 2004 Rehabilitation of
the Women's Dormitory grant.
[50] UNOPS officials told us that they have submitted all the
appropriate paperwork to USAID, but that USAID Mission officials have
been unwilling to meet with them or discuss the requested
reimbursement. USAID officials said they have been discussing the
matter for several months with UNOPS officials.
[51] See GAO, USAID Acquisition and Assistance: Actions Needed to
Develop and Implement a Strategic Workforce Plan, [hyperlink,
http://www.gao.gov/products/GAO-08-1059] (Washington, D.C.: September
2008).
[52] USAID, Office of Inspector General, U.S. Agency for International
Development's (USAID) Most Serious Management and Performance
Challenges (Washington, D.C., October 23, 2008).
[53] See GAO, Standards for Internal Control in the Federal Government,
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]
(Washington, D.C.: November 1999).
[54] United Nations General Assembly Report of the Board of Auditors,
United Nations Office for Project Services Financial Report and Audited
Financial Statements for the Biennium ended 31 December 2001, A/57/5/
Add.10, (New York, New York; July 2002); United Nations General
Assembly Report of the Board of Auditors, United Nations Office for
Project Services Financial Reports and Audited Financial Statements for
the Biennium ended 31 December 2003, A/59/5/Add.10, (New York, New
York; July 2004); United Nations General Assembly Report of the Board
of Auditors, United Nations Office for Project Services Financial
Reports and Audited Financial Statements for the Biennium ended 31
December 2005, A/61/5/Add.10, (New York, New York; June 2007); and
United Nations General Assembly, Financial Reports and Audited
Financial Statements and Reports of the Board of Auditors for the
period ended 31 December 2007, A/63/474 (New York, New York; June
2008).
[55] United Nations Executive Board of the United Nations Development
Programme and of the United Nations Population Fund, UNOPS: Report of
the UNDP Office of Audit and Performance Review to the UNOPS Executive
Director on Internal Audit Services in 2005, DP/2006/32 (New York, New
York; May 2006); and United Nations Executive Board of the United
Nations Development Programme and of the United Nations Population
Fund, Report of the UNDP Office of Audit and Performance Review to the
UNOPS Executive Director on Internal Audit Services in 2006, DP/2007/38
(New York, New York; May 2007).
[56] United Nations Office of Internal Oversight Services Procurement
Task Force, Final Report on a Concerned United Nations Staff Member and
UNOPS Procurement, PTF-R012/07 (New York, New York; August 2007); and
United Nations Office of Internal Oversight Services Procurement Task
Force, Report on UNOPS Afghanistan and Former United Nations Staff
Member, PTF-R010-08 (New York, New York; December 2008).
[57] Office of Inspector General, U.S. Agency for International
Development, Report of Investigation, United Nations Development
Program (UNDP), (Manila, Philippines; 2008).
[58] For the purposes of our report, we use the term "field offices" to
refer to all offices other than headquarters.
[59] According to UNOPS management, reasons for moving UNOPS
headquarters from New York to Copenhagen included rent in UNOPS's
offices in the Chrysler Building being too high and the offer of rent-
free space in Copenhagen by the Danish government.
[60] The list is maintained by the Office of Personnel Management under
the Federal Employees International Organizations Service Act. The list
includes any organization that the Department of State has designated
as an international organization approved for detail and transfer of
federal employees and can be accessed on Department of State (State)
Web site: [hyperlink, http://www.state.gov/p/io/empl/126305.htm].
According to State, because the United Nations (UN) qualifies as an
international organization in which the U.S. government participates,
special programs of the UN usually qualify under the statute as well.
The list of UN organizations, therefore, is meant to be illustrative,
not exhaustive.
[61] USAID officials told us they filtered archived information from
different UNOPS database sources, including the Electronic Procurement
Information Collection System, the New Management System, and the
Global Acquisition and Assistance System to generate a report listing
PIOs that received USAID grants or cooperative agreements since January
2004. However, the report contained several data reliability concerns.
[End of section]
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