UN Office for Project Services:

Management Reforms Proceeding but Effectiveness Not Assessed, and USAID's Oversight of Grants Has Weaknesses

GAO-10-168: Published: Nov 19, 2009. Publicly Released: Dec 17, 2009.

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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.

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

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: For adequate accountability of grants made with PIO, the USAID Administrator should ensure that cognizant contracting staff are sufficiently tained on the use of the PIO audit provisions.

    Agency Affected: United States Agency for International Development

    Status: Open

    Comments: 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. GAO continues to monitor USAID efforts to implement the recommendation.

    Recommendation: For adequate accountability of grants made with PIO, the USAID Administrator should ensure that USAID defines the terms and definitions in its existing guidance on PIO audit provisions permitting USAID access to financial records and documents.

    Agency Affected: United States Agency for International Development

    Status: Open

    Comments: 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. GAO continues to monitor USAID efforts to implement the recommendation.

    Recommendation: For adequate accountability of grants made with PIO, the USAID Administrator should ensure that USAID develops and documents its approach for assessing the eligibility of PIO deemed responsible for use by USAID.

    Agency Affected: United States Agency for International Development

    Status: Open

    Comments: 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. GAO continues to monitor USAID efforts to implement the recommendation.

    Recommendation: The Secretary of State should work with other member states to encourage UNOPS management to assess the effectiveness of the reform effort.

    Agency Affected: Department of State

    Status: Open

    Comments: In commenting on the draft, Stat endorsed the main findings and conclusions of the draft report. Specifically, State concurred with the recommendation that it support United Nations (UN) Office for Project Services (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. GAO continues to monitor State's efforts to implement the recommendation.

    Recommendation: The Secretary of State should work with other member states to support UNOPS's continued management reforms as it addresses the areas of vulnerability that UN auditors have identified.

    Agency Affected: Department of State

    Status: Open

    Comments: 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 United Nations (UN) Office for Project Services (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. GAO continues to monitor State efforts to implement the recommendation.

    Recommendation: For adequate accountability of grants made with PIO, the USAID Administrator should establish an approach to monitor whether PIO audit provisions are implemented as required.

    Agency Affected: United States Agency for International Development

    Status: Open

    Comments: 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. GAO continues to monitor USAID efforts to implement the recommendation.

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