1 Executive Board Hundred and ninety-fourth session 194 EX/22 PARIS, 6 March 2014 Original: English Item 22 of the provisional agenda INTERNAL OVERSIGHT SERVICE (IOS): ANNUAL REPORT 2013 SUMMARY The annual report of the Internal Oversight Service (IOS) is submitted pursuant to a standing request by the Executive Board (160 EX/Decision 6.5 and 164 EX/Decision 6.10). It sets out the key achievements of IOS for the concerned year. Attached as annexes to the 2013 annual report are the audit and evaluation work plans for 2014 as well as a summary of the recently completed evaluation on the Standard-Setting Work of the Culture Sector. Also attached as an annex is the annual report of the Oversight Advisory Committee to the Director-General. The Committee s terms of reference call for the report to be shared with the Executive Board. All financial and administrative implications of the reported activities fall within the parameters of the current C/5 document. Action expected of the Executive Board: proposed decision in paragraph 19.
2 INTRODUCTION 1. The annual report informs the Executive Board of key activities of the Internal Oversight Service (IOS) for 2013 and its work programme for The report of the Oversight Advisory Committee to the Director-General whose terms of reference call for it to be shared with the Executive Board is attached as Annex I of this document. OVERVIEW 2. IOS provides a consolidated oversight mechanism covering the functions described below: Table 1: Main Functions of IOS Internal Audit Audits assess selected operations of Headquarters, field offices and information technology systems and make recommendations to improve the Organization s administration, management control and programme delivery. Evaluation Evaluations assess the relevance, efficiency, effectiveness, impact and sustainability of programmes, projects and operations. Investigation Investigation assesses allegations of misconduct and irregularities (e.g. fraud, abuse of assets, or harassment). It is the sole unit responsible for investigating misconduct. Advisory Role Advisory services are rendered to senior management upon request ranging from organizational advice to operational guidance. IOS assists the Deputy Director-General s office in the follow-up to the recommendations of the Independent External Evaluation. 3. IOS adheres to international professional standards 1 for the conduct of its internal audits, evaluations and investigations. This includes continued reinforcement of its quality assurance processes through the advice of the Oversight Advisory Committee, by commissioning external quality assurance reviews of the audit and evaluation functions, and requiring all staff to be professionally certified in their field, in addition to their academic credentials. 4. IOS is part of a broader oversight mechanism for UNESCO which includes the External Auditor, whose reports are presented directly to the Executive Board, and the Joint Inspection Unit (JIU) whose reports are available at Information on JIU recommendations is available on the IOS website at INTERNAL AUDIT 5. IOS audits assess the functioning of internal controls, the efficiency and effectiveness of operations and the reliability of management information. During the year, IOS performed audits covering a range of business processes and UNESCO entities. The principal audits are summarized in Table 2 and more information on the results of these audits is available on the IOS website. The audit work programme for 2014 is presented in Annex II. 6. With regard to internal controls, internal audits completed during 2013 and the follow up on recommendation from prior audits showed improvements in the overall control framework as well as emerging risks attributable to the current funding shortfall, none of which, in our opinion, comprise material weakness in the overall system of controls. The principal areas where internal controls have required close attention are outlined below: 1 Audits follow the International Standards for the Professional Practice of Internal Auditing; investigations, the Uniform Guidelines for Investigations; and evaluations, the Norms and Standards for Evaluation in the UN System.
3 page 2 Field Structure: The challenges of complex and unclear reporting lines between and among UNESCO field offices and Headquarters have been the subject of much study, and the recent decisions in this regard (DG/notes/14/2 and 14/3) simplify and clarify these respective roles and accountabilities. Nevertheless, the need to enhance programmatic and administrative capacity of the field network remains a continuing challenge requiring backstopping by Headquarters until more sustainable solutions are in place. Programme Management: The continued refinement of SISTER as a programming and reporting tool has improved transparency and coherence of the programme and the complimentary additional programme. SISTER has evolved substantially over the past several years by overcoming functional deficiencies and major data gaps to its current state of nearly universal data reporting. Further enhancements have been identified and are being progressively implemented. Implementation monitoring, as distinct from results monitoring, is an important function requiring greater emphasis at the various levels of the programme hierarchy. Financial Controls: The budget shortfall has continued to be a challenging catalyst for change within the Organization. Restructuring, efficiency and priority-setting exercises continued during While progress in this regard is a managed process, risk assessment and control monitoring are increasingly important in the changing environment. The Oversight Advisory Committee has noted that very positive progress had been made in further developing and enhancing the organization s risk management processes, and IOS is continuing to develop more efficient (i.e., automated and repeatable) control monitoring methodologies to identify emerging compliance and control risks. To reinforce financial controls, the segregation of duties in FABS was improved during 2013 and further work is planned for The ongoing initiatives to improve cost recovery for extrabudgetary projects and to progressively implement results-based budgeting are expected to strengthen prioritization and alignment between resources and activities. Information Technology: Notwithstanding the budget shortfall, the management and use of information technology has steadily improved in recent years. Long-outstanding audit recommendations have been implemented improving IT priority setting, project management methodology and access to information. Associated plans and procedures have also been introduced to institutionalize these advances. Control Self-Assessment: Each of the past three years UNESCO managers have participated in a formal self-assessment of the internal controls in their respective offices, sectors and services. Action plans are established when deficiencies are noted, and overall results are analysed to identify systemic control issues raised by the managers. IOS has, each year since inception of this initiative, validated a sample of the selfassessments in order to determine the rigor and substance of the results, noting a clear trend of improved alignment of the self-assessment results and the conclusions of independent auditors. This positive trend needs to continue, however it gives an early indication of the importance of this initiative in not only increasing managers awareness and understanding of their control responsibilities but also in identifying and correcting control weaknesses. IOS will continue with this validation process and coaching as a standard part of its internal audits. 7. In 2013, the Executive Board invited IOS to specifically include the use of the two working languages of UNESCO in the scope of its individual audits (191 EX/Decision 22, paragraph 5). IOS examined multilingualism in two audit engagements (i.e., audits of programme meetings and conferences and of the working methods of the cultural conventions) during the year, noting that policies and statutory requirements for multilingualism were in place and generally complied with. Nevertheless, the current budget shortfall led to a number of ad hoc cost-saving measures and IOS identified one such instance where a statutory meeting of an intergovernmental body was conducted only in English without formal interpretation services. IOS recommended that the role of
4 page 3 MSS/CLD be strengthened to ensure effective planning and budgeting of programme meetings and conferences in line with requirements. Table 2: Summaries of key internal audits 2013 Sector for Management of Support Services This advisory engagement was undertaken to identify efficiencies in delivering support services during the 37 C/5. IOS concluded that MSS had met its sharply reduced budget through (i) staff attrition during the past biennium, (ii) moving encumbered posts from the Regular Programme budget to Other Proprietary Funds and (iii) increasing chargebacks to sectors and services for common costs. More needed to be done to improve services and achieve savings. Benchmarking showed that MSS still relied too heavily on in-house capacity rather than right-sourcing models. IOS recommended that MSS define service level standards and introduce more mixed-service models involving core staff supported by flexible and scalable external service providers. IOS also assessed various structural options for placement of the Chief Information Officer and the Bureau of Knowledge and Information Systems Management (BKI). World Heritage Centre Financial and administrative controls were in place and operating as intended; however, the Centre s financial sustainability was in question. The audit highlighted the growing disparity between the Centre s limited resources and increasing workload as well as the incomplete budgeting of and complex financial reporting on its activities. To better align resources, objectives and results, the audit recommended that the Centre (i) be an early adopter of UNESCO s results based budgeting initiative and (ii) recognizing the strong World Heritage brand, take a more systematic and proactive approach towards raising extrabudgetary funds. Performance Management of UNESCO Staff Supervisors compliance with UNESCO s performance management requirements is low. Two months before the end of the performance cycle, only two-thirds of staff had validated expected results for the biennium and onethird had been assessed through the required mid-term review. Problems were particularly persistent for Heads of Field Offices who are subject to overly complex reporting lines. IOS recommended specific actions to bring the current cycle back on track and to improve performance management in the coming biennium. Programme Meetings and Conferences The audit assessed UNESCO s efficiency in conducting the meetings as well as the associated workflows, procedural compliance and substantive alignment of meetings with the programme objectives. IOS concluded that a range of ad hoc efficiency measures had been adopted by various managers in response to the current budget shortfall, and these needed to be shared and institutionalized. The workflow for programme meetings is largely decentralized to the programme managers, and IOS recommended that the role of the central service be strengthened to provide better guidance and support, particularly during the planning phase. In terms of programme alignment, all of the meetings and conferences examined corresponded directly to programme objectives; however, there was little post-event assessment or participant feedback to determine whether intended value and results were achieved. Working Methods of Cultural Conventions The audit of UNESCO s six cultural conventions highlighted the point that each convention is supported by a separate secretariat provided by UNESCO, and these secretariats have not yet adopted common work approaches and a single consolidated administrative support platform. All secretariats are challenged by growing workloads and decreasing Regular Programme budgets. These resource challenges can be addressed by (i) better aligning workloads to available funding, (ii) establishing an integrated fundraising approach including all the conventions, (iii) reducing the duration and agendas of meetings of States Parties to the conventions and (iv) introducing cost-recovery mechanism such as charge-backs to nominating States. Information Technology An IOS analysis of FABS and DUO roles in the contracting validation chain identified the need for strengthened application controls, and an IOS risk assessment concluded that access to critical authorizations in STEPS is too broad and not actively managed. Action plans were agreed to address these conditions. Field Offices, Institutes and Projects Audits were completed for three field offices and two major projects during the year. IOS also completed an advisory engagement at one category 1 institute. 8. In addition to the above, internal audit also participated in a range of UNESCO initiatives and working groups on streamlining work processes, improving knowledge management and ICT, strengthening cost recovery tools and procedures, introducing results-based budgeting and formulating reporting lines in the new field structure.
5 page 4 EVALUATION 9. Key evaluation activities during 2013 have contributed to the improvement of, inter alia, the following reform efforts, strategies and policies in UNESCO: Implementation of UNESCO reform efforts (follow-up to the Independent External Evaluation; New operational strategy for Priority Africa and the Gender Equality Action Plan II (following the evaluations of Priority Africa and Priority Gender Equality); Processes of institutional and strategic reform (following the review of UNESCO s category 1 education institutes and the evaluation of UNESCO Prizes); and, Improvements in working methods, operational processes and policy guidelines for Culture Conventions and evaluation processes of extrabudgetary activities (following Phase I of the Evaluation of UNESCO s standard-setting work and the diagnostic study of UNESCO s extrabudgetary activities). 10. The Evaluation section also continued to provide backstopping to evaluations managed by Sectors, Offices and Bureaux, such as the current review of the Man and the Biosphere (MAB) Madrid Action Plan. Summaries of evaluations completed are provided below in Table 3 and the full reports are publicly available on the IOS website. The evaluation work programme for 2014 is presented in Annex II. Table 3: Summaries of evaluations completed in 2013 UNESCO s Standard-Setting Work of the Culture Sector (Parts I and II) See Annex III The purpose of the IOS evaluation of UNESCO s standard-setting work of the culture sector was to generate findings and recommendations regarding its relevance and effectiveness with a focus on its impact on legislation, policies, and strategies of Parties to UNESCO s culture conventions. To a lesser extent it also looked at the implementation of the conventions at the national level. IOS audit section complemented the evaluation with an assessment of the adequacy and efficiency of the working methods used in the standard-setting work. (See summary above.) The evaluation was conducted in two parts starting with the 2003 Convention and the audit of the working methods of all six main culture conventions. The two reports were presented to the Executive Board at its 192nd session. The former was also presented to the 2003 Convention s IGC and the latter to the GA of the 1972 Convention, and to the IGCs of the 2003 and 2005 Conventions in The second part of the evaluation looked at the standard-setting work related to the 1970, 1972 and 2005 Convention. These reports are currently being finalized and preliminary findings as well as cross-cutting conclusion are presented in the annex to the present paper. Formative Evaluation of UNESCO s Results-Reporting See document 194 EX/4 In response to internal and external demands to improve the Organization s statutory results-reporting (EX/4 and C/3), IOS and BSP, in collaboration with an external expert, have embarked upon a joint formative evaluation of resultsreporting in UNESCO. Notwithstanding a number of improvements in results-reporting practices, Member States have clearly expressed a need for more analytical and synthetic reporting of strategic challenges and achievement of results in different areas of UNESCO s work. The evaluation identified key challenges in the following dimensions of resultsreporting: the definition and number of results, the articulation of causal linkages between areas of work and results, the reliability of data and evidence on results, the efficiency of reporting, and the linkages between planning, selfreporting and evaluation. In response to these challenges and drawing on United Nations system-wide good practices, a number of key principles for future results-reporting have been identified: a clear distinction between reporting on activities and output delivery and reporting on outcomes (expected results); a change in the frequency of reporting allowing for more credible analysis and reporting; a recalibration of self-reported and evaluation information feeding into the results-reporting which, together with an adjusted schedule for reporting, would cover the entire UNESCO programme over a cycle of four years with credible RBB-compatible information.
6 page 5 UNESCO s Association with the Celebration of Anniversaries See document 194 EX/15 The Anniversaries programme is widely perceived as an important and valuable asset and a tool to provide visibility for Member States by attributing prestige to the celebration of an Anniversary through the recognition by UNESCO. At the same time it is thought to give visibility for the values of UNESCO and its programmes within Member States. UNESCO is considered to be an appropriate forum for sharing such values with other Member States. However, the Anniversaries programme is also facing several challenges. These include the need for encouraging a greater number of nominations from African and Arab regions and increasing nominations of female personalities. It was found that an accelerated growth in numbers of Anniversaries carries the risk of decreasing visibility of individual Anniversaries and consequently impacting the prestige and value of the programme. In the absence of a well-articulated results framework there is no evidence that the increasing amount of regular programme resources invested in the evaluation and selection process of the Anniversaries are warranted by the benefits. Diagnostic Study of UNESCO s Extrabudgetary Evaluations UNESCO more than ever relies on extrabudgetary funding for delivering upon its mandate. A diagnostic study of 570 recent (self-) evaluation reports found that most reports are meeting basic reporting requirements. However, many challenges remain, such as improving the quality of the causal analysis and the evidence on processes of change brought about by UNESCO s projects. IOS and BSP-CFS will continue to collaborate on communication, guidance and quality assurance of evaluations of UNESCO s extrabudgetary activities. Institute for Water Education UNESCO-IHE is one of the world s largest international postgraduate water education facilities. Overall, the Institute has been highly successful in delivering upon its mandate in education, research and capacity development. The Institute entirely relies on extrabudgetary funding and has effectively developed a diversified and stable funding base. UNESCO-IHE is one of the core pillars of the UNESCO Water Family and should continue to play a strong and more clearly defined role in the implementation of the future strategy underlying the eighth phase of the International Hydrological Programme. In order to avoid working at cross purposes and to take better advantage of the combined potential of capacities, resources and networks, UNESCO-IHE and UNESCO Headquarters should reinforce a spirit of collaboration and unity of purpose in their activities. RECOMMENDATION FOLLOW-UP 11. IOS formulates recommendations to inform strategic decisions and improve programme delivery, controls and efficiencies. IOS systematically follows up on the implementation of both internal audit and evaluation recommendations, as well as on recommendations of the JIU that are relevant to UNESCO. In 2013, IOS continued its emphasis on the implementation of recommendations by engaging in discussions and formulating action plans as reports are finalized and then periodically following up on the status and effectiveness of these action plans. As of 31 December 2013, there were 138 open recommendations by internal audit, a slight decrease from the 140 open recommendations at the beginning of the year. During 2013, 95 new audit recommendations were made and 97 recommendations were closed (of which 88 percent were fully implemented). With regard to evaluation, as of 31 December 2013, there were 43 open recommendations. During 2013, 51 new evaluation recommendations were made and 52 were closed. INVESTIGATION 12. IOS is responsible for investigating allegations of corruption, fraud, waste, abuse of authority and other misconduct by UNESCO staff or third parties including consultants. Allegations are subject to a preliminary assessment to establish whether they are credible, material and verifiable. In case of harassment, the Ethics Office undertakes this preliminary assessment. If there is prima facie evidence of misconduct, the matter is formally investigated by IOS. In cases where the investigation concludes that misconduct occurred, disciplinary measures are proposed by the Bureau of Human Resources Management to the Director-General. 13. In 2013, 36 new cases were opened. IOS completed and closed 48 cases, including 24 cases remaining from More than 30% of the cases closed in 2013 were at Headquarters and nearly 70% were in field operations.
7 page 6 Table 4: Caseload of the Investigation Section Year New cases Cases closed including disciplinary actions including separations Caseload as of 31 Dec Most of the cases opened in 2013 involved alleged misuse of assets and/or resources, moral harassment and abuse of position and/or authority. More information on recent cases is presented in the table below. Table 5: Nature of Investigation Cases (Opened in 2013) Type of misconduct No. of cases Misrepresentation or forgery 1 Misuse of assets/resources including theft and embezzlement Conflict of interest or nepotism including corruption Harassment including sexual harassment Abuse of position or authority including abuse of privileges/immunities Total 36 ADVISORY ROLE AND REFORM FOLLOW-UP 15. The role of IOS includes providing advisory services where appropriate to assist management upon request. IOS advisory work during the year included studies of the Sector for the Management of Support Services and the International Institute for Educational Planning to identify efficiencies in delivering the 37 C/5. IOS also engaged in collaborative efforts for improving results-reporting and developing guidelines for the evaluation of extra-budgetary projects and continues to provide backstopping and quality assurance to selected evaluations managed by sectors. 16. IOS has continued to assist the Deputy Director-General with the follow-up to the Independent External Evaluation and ensured reporting on reform issues in a more integrated format as suggested in 191 EX/Decision 16 and 192 EX/Decision 4 (III). The Secretariat reported to the Executive Board in April (191 EX/16) and in October (192 EX/4 Part III) on progress achieved to date. The most recent report on progress achieved to date is presented in document 194 EX/4 Part III. It proposes to cease reporting on the IEE follow-up in the current format as the remaining open and ongoing issues will be reported via the regular EX/4 reports on progress of specific matters. OVERSIGHT ADVISORY COMMITTEE 17. The Oversight Advisory Committee (OAC) was established as a standing committee at the 35th session of the General Conference. Its main purpose is to advise the Director-General on the proper functioning of oversight, risk management and control and to inform the Executive Board through the submission of its annual report which is annexed to this document. The OAC is
8 page 7 comprised of four external independent members who are appointed for two-year non-remunerated terms. So far, the OAC has met seven times: in September 2010, February and October 2011, June and November 2012, June 2013, and February The OAC made useful observations and comments to improve the oversight function and its overall conclusion was that UNESCO s internal audit, evaluation and investigation [ ] continued to be performed to a high standard. LOOKING FORWARD 18. The IOS work programme for 2014 focuses on effective programme design and monitoring of results. Joint audit-evaluation activities will continue in this area where possible. Evaluation will focus on assessing the recent implementation of UNESCO s field reform as well as on a number of strategically significant thematic evaluations, and internal audit will put emphasis on programme management. The audit and evaluation plans for 2014 are presented in Annex II. ACTION TO BE TAKEN BY THE EXECUTIVE BOARD 19. The Executive Board may wish to adopt a decision along the following lines: The Executive Board, 1. Recalling 160 EX/Decision 6.5 and 164 EX/Decision 6.10, 2. Having examined document 194 EX/22, 3. Welcomes the role of the Internal Oversight Service in the functioning of the Organization and with respect to the follow-up to the Independent External Evaluation; 4. Welcomes the recommendations contained in the report of the Oversight Advisory Committee, and requests the Director-General to ensure their full implementation; 5. Welcomes the recently completed evaluation of the standard-setting work of the culture sector and invites the Director-General to facilitate the development of actions plans addressing the evaluation recommendations and, if necessary, organize a working group of States Parties to address those recommendations of relevance across the conventions; 6. Requests the Director-General to continue her efforts to ensure that all Internal Oversight Service recommendations are fully implemented within a reasonable time frame; 7. Requests the Director-General to continue to maintain an effective oversight function and to report annually on Internal Oversight Service strategies and activities, significant oversight recommendations and their impact, as well as actions taken by the Director- General to address and implement these recommendations.
9 ANNEX I 194 EX/22 Annex I OVERSIGHT ADVISORY COMMITTEE: SUMMARY REPORT FEBRUARY INTRODUCTION In the last quarter of 2009 the Oversight Advisory Committee (the Committee) was reconstituted as an initiative of the Director-General, with its Terms of Reference (TOR) approved by the 183rd Executive Board session and adopted by the General Conference at its 35th session (35 C/Resolution 101). Since that time, the Committee has met on a six monthly basis per annum. In accordance with its Terms of Reference, the Committee submits this Summary Report to the Director-General of its observations arising from the two most recent meetings of the Committee which were held from 10 to 12 June 2013, and on 3 and 4 February SUMMARY OBSERVATIONS In accordance with the Terms of Reference, the Committee has considered the Standards and Practices applied in respect of UNESCO s internal audit, evaluations, investigations, risk management, ethics and financial control functions. The Committee provides the following overarching observations: UNESCO s internal audit, evaluations, investigations, risk management, ethics and financial control systems and processes continued to be performed to a high standard. The Standards applied by these oversight systems and processes are consistent with currently accepted Standards of good practice. However, the Committee considers that UNESCO s governance and assurance processes would benefit from coordinated periodic reporting to UNESCO senior management of the status of implementation of assurance provider recommendations (recommendations included in reports from internal audit, external audit, evaluations, and financial control systems and processes). The Committee further recommends that consideration be given to the positioning of the evaluation function within UNESCO in 2014 and beyond. The Committee noted the current resourcing of the Internal Oversight Service (IOS) and considered that the current number of staff and the mix of skills and experience was the minimum that UNESCO requires to maintain an effective oversight service. The Committee suggests that there be a focus on the recruitment to fill current approved vacant positions with resources with the appropriate skills and experience necessary for those roles. In addition, the Committee suggests that there be succession/contingency planning for members of senior management of the IOS team and the monitoring of the number of staff and the mix of skills and experience required to maintain the effectiveness of the IOS function. The Committee noted that much progress has been achieved in the implementation of the recommendations adopted by the Executive Board in 2011 arising from the Independent External Evaluation (IEE) of UNESCO. However, the Committee noted that the recommendations in the IEE relating to Governance had yet to be implemented. The Committee considers that the implementation of these recommendations is very important for UNESCO and would be concerned if the recommendations are not addressed in 2014 and The Committee noted that the external auditor has been engaged to undertake a review of the governance processes of UNESCO and supports such an initiative, and
10 Annex I page 2 recommends that the external auditor review include a consideration of relevant recommendations in the IEE. The Committee noted that following the 36th General Conference, UNESCO has implemented a number of changes in response to the decline in the Organization s budgetary funding, and that the Executive Board has considered how UNESCO s priorities will be addressed as a result. These circumstances will require the UNESCO Secretariat to embark upon a period of change and accordingly effective project management and change management will be critical to the Organization. The Committee suggests that UNESCO senior management consider whether the Change Management Committee composition and functions will be able to provide the necessary support and oversight for the changes likely to be required within the Organization. The Committee further suggests that there may be benefit in the Change Management Committee accessing more advanced change management skills. The SISTER system is an important tool to support the project management, reporting and monitoring of UNESCO activities and initiatives. The Committee supports the ongoing internal audit of programme and project monitoring and notes that, whilst the Committee has observed progress in how SISTER is utilized by UNESCO, there is a risk that it remains primarily a tool utilized to report activities rather than as a key project and risk management system. The Committee was pleased to observe positive progress in the development of UNESCO s risk management processes. 3.0 DETAILED COMMENTS 3.1 Evaluation Function Accomplishments Since the OAC s first report in February 2011, the Committee has noted the progress in UNESCO s evaluation culture and an increasing positive perception of the value of the work of the evaluation function, due partly to the quality of its reports and partly to its involvement in the IEE and subsequent IEE follow-up. Annual plans prepared by the evaluation function have been sound and in line with UNESCO s risks and priorities. Over the last couple of years, a number of strategically significant evaluations have been undertaken, such as the evaluations of UNESCO s Priority Africa, of UNESCO Priority Gender Equality, of UNESCO s standard-setting work of the Culture Sector (jointly with the Audit Section), and the evaluation of Category I Education Institutes. In line with the current UNESCO policy results-based management, an evaluation of result-based reporting is also under way. This indicates that the evaluation function addresses most important UNESCO activities in terms of scope, taking into account the priorities and risks of the organization, while remaining very active despite the fiscal challenges that UNESCO is currently facing. Moreover the impact of the evaluation section on UNESCO s efforts to improve its strategies and policies in the sectors and domains evaluated is significant, having contributed to new strategies and reform efforts. Future challenges and recommendations With regard to the issue of monitoring and reporting of management responses and the implementation of evaluation recommendations, the Committee had recommended that regular sector reports from ADGs to the Director-General include comments on the status of implementation of evaluation recommendations. The Evaluation Section is in the
11 Annex I page 3 process of defining a new evaluation policy with specific attention to be paid to follow-up on evaluation recommendations, which will be finalized by fall The new evaluation policy will at the same time serve as a basis for an update of the 2007 Evaluation Handbook, as was required by the Committee. The Committee also recommends that the revised evaluation policy include guidelines to strengthen self-evaluation throughout the organization, and that it be reviewed by the OAC. The Committee notes that steps are being taken to integrate results and recommendations of evaluations in the SISTER system, thanks to the SISTER Change Advisory Board of which IOS is a member. Such steps represent progress towards enhancing the use and knowledge of the evaluation function. The Evaluation Performance Matrix (a self-assessment tool for the evaluation function) drafted in 2011 has not yet been fully developed and tested because of resource constraints. However thanks to external short term assistance (secondment), the Evaluation Performance Matrix will be completed during In recent years, the evaluation function has operated well in terms of its independence, the quality and volume of its activities and its visibility within UNESCO. Yet to be in line with evaluation principles and with best practices as applied by a large majority of international organizations where evaluation sections are structurally independent, consideration should be given to the separation of level of the evaluation division. The Committee therefore recommends that a feasibility study be carried out in order to assess advantages and disadvantages of the establishment of a separate evaluation function with its own management being distinct from IOS. Following the governance structure of similar organizations, such an independent and separate evaluation function would continue to report directly to the Executive Board or sub-committee of the Board. 3.2 Internal Audit Accomplishments At least every five years, a quality assessment of the internal audit function is undertaken, comparing the function against the Standards promulgated by the Institute of Internal Auditors. The most recent self-assessment (2011) was independently validated which concluded that IAS generally conforms to the International Standards for the Professional Practice of Internal Auditing. This is the highest available rating as per the IIA methodology. The Committee observed that all of the recommendations arising from the Independent Validation had either been completed or in progress. The Committee has been pleased to observe that the biennial internal audit plan continues to be risk based, including consultations with key stakeholders and systematic identification of organizational risks, and focused to provide broad assurance on the functioning of operational, financial and programmatic controls. The Committee also noted that a number of audits have been coordinated and, in some instances, jointly resourced by internal audit, evaluation function and external audit. Such an approach, in the opinion of the Committee, can positively contribute to the efficiency and effectiveness of UNESCO s assurance activities. The Committee has also been pleased to observe that internal audits have increasingly focused on the efficiency of areas/functions reviewed as well as effectiveness, and that the function is aiming to provide the organization with an overall assessment/opinion of the control environment in the future. In this regard, internal audits have covered a balanced range of business processes and entities as well as specific programmes,
12 Annex I page 4 partnerships and projects. Internal audit also intends on providing a comment on the 2013 Statement on Internal Controls coordinated by the Bureau of Financial Management. The Committee viewed positively the quantity and quality of reviews undertaken during the 2013 year in the context of the fiscally constrained environment. The Committee observed, though, that the internal audit function has a reduced capacity under the current budget constraints to respond to ad hoc management requests and is concerned that the internal audit function is currently operating with the minimum number of resources (number, skills and experience) to provide UNESCO with the most appropriate level of assurance. The Committee noted, and congratulated internal audit, on continuing to receive high client survey scores, which reflects confidence and trust in the function. The Committee recognizes IOS systematic follow-up of open audit recommendations and endorses the initiative of periodically communicating high priority recommendations to the Risk Management Committee to strengthen the process and monitoring of managing key operational, financial and compliance risks. Future challenges and recommendations The Committee suggests that, to further promote a strong control environment, the internal audit function could issue periodic newsletters which include internal audit s observations of lessons learned, better practices, etc. The Committee recommends that the Bureau of Financial Management, which has the responsibility for the coordination of a Statement on Internal Controls, would benefit from ongoing involvement/assistance from internal audit to further enhance and promote this important aspect of UNESCO s control environment. The Committee recommends that given the current budget constraints that the draft 2014 internal audit plan include an analysis of what audits are proposed to be undertaken within the current resourcing availability of the internal audit function, together with what additional audits would be beneficial should internal audit resourcing return to levels similar to previous years. 3.3 Investigations Unit Accomplishments The Committee noted the change in resourcing of the investigations unit in 2013 (the change being that the sole officer within the investigations unit, an experienced investigator, was replaced by two officers with less experience in investigations. In late 2013, one of the replacements transferred out of the investigations unit) and concurred with the then Director of IOS taking a greater role in the oversight of the work performed by that unit in the context of the current resourcing of this function. The investigations unit applies internationally recognized investigation principles and engages internal and external resources where appropriate. Future challenges and recommendations: The Committee recommends that the resourcing of the investigations unit be considered by the incoming Director of IOS, specifically whether the Director will continue to have a more extensive role in the oversight of work performed by the unit.
13 Annex I page 5 The Committee recommends that IOS (whether via the investigations unit or the internal audit function) consider undertaking an Organizational-wide Fraud Risk Assessment/Review in the future. 3.4 Risk Management The Committee considered the functioning and accomplishments of the Risk Management Committee which was re-established in 2011, as well as the number and level of risks that have been addressed/not addressed. The Committee also considered the integration of Risk Management principles into the organization s processes. The Committee noted that very positive progress had been made in further developing and enhancing the organization s risk management processes, including the requirement for specific consideration of risk in project proposals, and the introduction of risk management processes to field offices. The Committee considered that risk is increasingly incorporated into UNESCO s business processes, and noted that the Risk Management Committee is undertaking a detailed review of one key risk area each meeting. The Committee noted that the Executive Board is not provided with the Secretariat s risk profile. This may be worth considering in the future. While the Committee primarily focuses on UNESCO s processes to identify and manage risks, the Committee has noted that one of the key financial risks for the Organization is how to address the funding of long-term employee obligations. 3.5 Bureau of Financial Management and Statement on Internal Controls An unqualified opinion has been issued by the external auditor on UNESCO s most recent IPSAS-compliant financial statements. The Committee commends UNESCO in achieving this very positive outcome. The Committee noted the progress made in further developing the process for the Statement on Internal Controls (control self-assessment process) including the progress to simplify, automate and utilize the process to further promote and embed a culture of control consciousness. However, the Committee also observed that the self-assessed ratings assigned may, in some cases, be optimistic. The Committee recommends that the Statement on Internal Controls process would significantly benefit from the interaction between BFM and internal audit. The Committee noted that there has been some progress in this regard in 2013 but recommends that there be more interaction in the future. The Committee noted that there are currently a significant number of outstanding recommendations arising from the external audit process and that focus would be required to review the status of these. The Committee met with the incumbent External Auditor and welcomed the comments made by the auditor in respect of the UNESCO internal control environment.
14 Annex I page OTHER OAC ACTIVITIES In accordance with Article 7 of the Committee s Terms of Reference, the Committee considered its effectiveness in discharging its duties. The Committee considered that for the preceding year it had been reasonably effective in discharging its duties. Prior to the June 2013 Committee meeting, a member of the OAC, Ms Elizabeth Folsom, resigned from the Committee. The Committee expressed its gratitude for the contribution that Ms Folsom has made to UNESCO since her appointment as an OAC member in UNESCO has recently appointed a replacement for Ms Folsom to the Committee. The Committee notes that, apart from the replacement for Ms Folsom, the remainder of the Committee members will retire from the Committee in mid The Committee notes that its current TOR has been in place for four years. The Committee considers that it would be appropriate for the TOR to be reviewed in 2014 to consider whether the TOR continues to meet the needs of UNESCO as well as recent trends in United Nations governance frameworks. This may include consideration of the role of the Committee in respect of the external audit function, communication with the Director of IOS in respect of investigations, frequency of meetings, etc. The Committee notes its TOR states that the Committee is appointed by, and reports to, the Director-General, and that reports of the Committee s activities are provided by the Director-General to the Executive Board. It is common for Committees with roles similar to the OAC to have a more direct line of communication to the relevant governing body. In 2014, the Committee proposes to provide the Director-General with observations and suggestions regarding the ongoing role of the OAC and this, and other suggestions, will be provided for the consideration of the Director-General and Executive Board. 5.0 CONCLUSION The Committee was pleased to note the progress achieved in the development of UNESCO s internal audit, evaluations, investigations, risk management, ethics and financial control systems and processes and looks forward to assisting the Director-General in fulfilling her governance responsibilities into The Committee thanks the Internal Oversight Service and senior management including the Deputy Director-General, for the briefings, active participation and cooperation during the meeting to support the Committee in discharging its responsibilities. The Committee resolved to hold its next meeting in June Mr Kwame AKUFFO-AKOTO (signed) Mr Mitchell C. PETRIE, Chairman of the Committee (signed) Ms Claudine VOYADZIS (signed)
15 ANNEX II 194 EX/22 Annex II INDICATIVE WORK PROGRAMMES AUDIT PLAN 2014 Audit Universe Audits to be performed Status Headquarters Audits Programme & Project Management: Monitoring & Reporting Science Sector SHS Sector In progress Subject to resources Partnerships: Resource Mobilization Compliance with Donor Agreements Administration & Services: Contracting & Procurement Management Committees Communication & Outreach Risk Management Framework In progress Subject to resources IT Audits Benchmarking of RBM Applications In progress Advisory Work Data Analytics & Control Monitoring HR Applications Access & Authorizations Authentication, Communication and Access of Sensitive Information Field Structure Delegations & Accountabilities Subject to resources Field Audits Three Field Offices Two Additional Field Offices Subject to resources Other Activities Internal audit also participates in a range of UNESCO initiatives, committees and working groups on streamlining work processes, improving knowledge management and ICT, strengthening cost recovery tools and procedures, introducing results based budgeting, contracting and investment oversight.
16 Annex II page 2 EVALUATION PLAN 2014 Evaluation Universe Evaluations to be performed Status Follow-up to the Independent External Evaluation Systematic Programme Evaluation and Review (Thematic and Sector Specific) Quality assurance and backstopping of evaluations in the UNESCO system Statutory activities Review of UNESCO s programming and RBM framework and practices Assessment of implementation of field reforms in Africa (IEE follow-up under Strategic Direction 2) Areas to be evaluated in education 1 include: Technical vocational education and training; Education for girls and women; and Mobile learning. Areas to be evaluated in science include: Man in the Biosphere Programme; and World Water Assessment Programme. Areas to be evaluated in culture include: Culture and development in post-2015; 1954 Convention for the Protection of Cultural Property in the Event of Armed Conflict; and 2001 Convention on the Protection of the Underwater Cultural Heritage. Monitoring the quality of evaluation of UNESCO s extrabudgetary activities Responding to requests from Sectors, Field Offices, partners and donors Revision of the Evaluation Policy Validation of C/3 In progress Subject to obtaining additional resources Subject to obtaining additional resources In progress In progress 1 Funding for education related evaluations is secured from Norway
17 ANNEX III 194 EX/22 Annex III RECENTLY COMPLETED EVALUATION Evaluation of UNESCO s standard-setting work of the Culture Sector Background and purpose Through its standard-setting work UNESCO aims to serve as a central forum for coordinating ethical, normative, developmental and intellectual issues of our time, and to work towards universal agreements on them, defining benchmarks and mobilizing international opinion. The standardsetting function is key for UNESCO and sets it apart from many other United Nations organizations. A large number of standard-setting instruments, including conventions, recommendations and declarations, have been adopted under the Organization s auspices, including six main culture conventions. Significant time and resources are spent on activities related to these instruments and even though the visibility of some of this work is high, no comprehensive evaluation has ever been conducted of the standard-setting work of UNESCO. It is in this context that an evaluation of UNESCO s standard-setting work was included in IOS workplan for the previous biennium. The evaluation was made possible thanks to the generous contribution of Flanders through its FiT for culture. The purpose of the evaluation was two-fold: I. To generate findings and recommendations regarding the relevance and the effectiveness of standard-setting work of the culture sector with a focus on its impact on legislation, policies, and strategies of Parties to the conventions; and II. To assess the adequacy and efficiency of the working methods of UNESCO s standard-setting work. The evaluation focused on a sample of the Culture Sector s standard-setting work, specifically related to the following four conventions: (1) The 1970 Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property; (2) The 1972 Convention concerning the Protection of the World Cultural and Natural Heritage; (3) The 2003 Convention for the Safeguarding of the Intangible Cultural Heritage; and (4) The 2005 Convention on the Protection and Promotion of the Diversity of Cultural Expressions. The standard-setting work on all four conventions was examined with regard to its impact at the level of policy and legislation. For the 1970 and 2003 Conventions data was also collected on the implementation of the Conventions at the national level. The four evaluations built on previous evaluations, audits and other relevant studies. The audit of the working methods related to UNESCO s standard-setting work focused on all six culture conventions. The overall exercise was conducted in two parts. The first part included the 2003 Convention and the audit of the working methods and was presented to the Executive Board at its 192nd session. The second part looked at the standard-setting work related to the 1970, 1972 and 2005 Conventions. All reports are accessible on IOS website:
18 Annex III page 2 Methodology The evaluation looked at the three key levels of standard-setting work: I. Ratification; II. Integration of the provisions of the conventions in national/regional legislation, policy and strategy (policy development level); and III. Implementation of the legislation, policies and strategies at national level (policy implementation level); and at the causal linkages between the various levels of results. The evaluators reconstructed intervention logics on the basis of different inputs, such as documents and interviews, as they had not yet been clearly articulated. Data collection methods included desk study, interviews, surveys, observation of statutory and other relevant international meetings and conferences, and field visits. More detailed information on the methodology used for each evaluation and for the audit of the working methods is included in the respective individual reports. The evaluation was conducted between March 2013 and February It was managed and conducted by IOS with the assistance of international consultants to provide specialized legal expertise. Preliminary cross-cutting findings and conclusions related to the standard-setting work of the culture sector 1. State Parties consider the 1970, 1972, 2003 and 2005 Conventions to be highly relevant international legal instruments. This is, inter alia, demonstrated by the high numbers of ratifications for most of them, especially the 1972 and the 2003 Conventions. Ratification levels of the 2005 Convention are lower, but can still be considered positively given the young age of the Convention. This is not the case for the 1970 Convention, though, which also has a relatively low level of ratifications. This points to the challenges related to the implementation of this Convention both at the policy / legislation and implementation levels. The 1970 Convention has, however, seen a steady stream of new ratifications to the present day and a renewed interest over the past decade, which culminated in the creation in 2012 of a new governing system composed of a Meeting of State Parties and a Subsidiary Committee. Efforts should be continued to encourage ratification of the 1970 and 2005 Conventions in those regions where ratification levels are low. For the 1970 Convention, focus should be put on art-importing states which are not yet a party. 2. Due to its standard-setting work UNESCO is widely recognized as a leader in the field of culture and cultural heritage. The international discourse around the definition and meaning of cultural heritage has evolved over the years. Important contributors to these developments were the adoption of a holistic approach to culture and nature and the introduction of the World Heritage concept by the 1972 Convention. This has spurred the evolution from the narrow concept of cultural property, which had its origins already much earlier, towards the more complex notion of heritage, which continued to evolve over the years. Today, it captures both the tangible and the intangible; the cultural and the natural, public and private dimensions; local, national and international dimensions; and the intergenerational aspects associated with it. The 2003 Convention is both an expression of and a contributor to these developments. 3. Increasingly, UNESCO is also valued by Member States and other United Nations agencies for its efforts in demonstrating the links between culture and development. UNESCO s standard-setting work has significantly contributed to this. Bringing culture and nature together in the 1972 Convention has facilitated the subsequent development of the principles underlying the notion of sustainable development and its formulation in the Rio Declaration of 1992 and in other contemporary treaties dealing with environmental governance. Today the link between culture and development has been demonstrated at site level for the 1972 Convention. It is also evident in the work related to the 2003 and 2005 Conventions. Overall, this is an area where more work is needed, both in terms of demonstrating this link and of putting the mechanisms in place that facilitate the required intersectoral work including at the level of policy and legislation. 4. Through UNESCO s standard-setting work in culture the Organization has created spaces for dialogue, including on issues that are sometimes emotionally and politically
19 Annex III page 3 sensitive and difficult to deal with. In fact, UNESCO is the only truly international forum where all aspects and dimensions of cultural heritage can be discussed, experiences and knowledge can be exchanged, and cooperation can be initiated at the global level. This is very important, especially with regard to those areas of work where views can diverge and priorities among State Parties differ, such as for instance on certain aspects of the 1970 Convention. In such cases, the importance of the role of the Subsidiary Committee in terms of facilitating this dialogue and of connecting stakeholders cannot be overemphasized. 5. A large number of State Parties have integrated the provisions of the Conventions in national cultural policies, strategies and legislation following ratification. The picture, however, is very uneven both across Conventions, across regions and even within regions. For the 1970 Convention, for instance, a lot more needs to be done by many State Parties to ensure that all their obligations under the Convention are adequately covered by national legislation, and to harmonize legislation between State Parties, which is a prerequisite for effective international cooperation. The 1970 Convention overall has had a positive effect not only on the protection and conservation of heritage of outstanding universal value, but also on national systems of heritage protection and conservation as suggested by the 1972 Recommendation. For the 2005 Convention, cultural policies and legislation have been strengthened in several countries in Africa, Latin America and Asia. Here again, excellent examples exist, while other State Parties have so far failed to take significant steps in this area. For both the 2003 and the 2005 Conventions, significant challenges also exist with regard to establishing the link with policy areas other than culture. Overall, diversity also exists with the establishment of dedicated institutional frameworks for the implementation of the Conventions. These are certainly areas where technical support and capacity development are required. 6. The 1972 Convention has had an influence on the interpretation and application of international norms in areas aside from cultural and natural heritage. For instance, a number of cases exist where the Convention was given pre-eminence among the applicable norms of international law, such as international investment agreements. With regard to the development of international criminal law, the Convention has provided the standard of reference for the determination of the international public interest in the protection of cultural sites attacked during armed conflicts and for the consequent criminalization of the perpetrators of the attack under international law. In some cases the Convention has played an ex post role in recognizing outstanding universal value at cultural sites which were previously attacked or destroyed by criminal acts. 7. In many countries government institutions lack the financial and human resources and/or the political will to fulfill all their obligations under the Conventions. Understanding the concepts of the Conventions also often remains a challenge, both at the government and community levels. This particularly applies to the 2003 and 2005 Conventions. For the 2003 Convention this is especially evident when it comes to inventorying, design and implementation of safeguarding measures, cooperation with other State Parties, preparation of nomination files, civil society consultation and participation in all of these areas, intersectoral cooperation, etc. For the 2005 Convention misunderstandings and different interpretation of the concepts of the Convention also exist and have an impact on ratification and implementation of the Convention. 8. For several Conventions engagement of non-state actors in the implementation of the Conventions at the national level also remains a challenge and needs to be strengthened in many ways. For the 1970 Convention, for instance, this could involve strengthening relationships with the art market and cooperating with religious institutions; for the 2003 Convention it could include strengthening community involvement in inventorying, programme implementation and preparation of nomination files; and for the 2005 Convention it could entail facilitating civil society involvement in dialogue with government institutions among other issues. The reasons for modest involvement of civil society are manifold and include the lack of political will, of adequate mechanisms, and weak capacities.
20 Annex III page 4 9. UNESCO has put in place worldwide capacity-building initiatives for all the Conventions. Overall, these activities are relevant and appreciated by partners and other stakeholders. Most stakeholders consider UNESCO s function as a capacity-builder to be very important. Significant differences exist between the various modalities of capacity-building used by the Convention secretariats, reflecting the diverse needs and circumstances in which these initiatives are conducted, as well as the availability (or scarcity) of human and financial resources. The trend is towards developing a more comprehensive, long-term engagement with State Parties and the utilization of a variety of training tools. This trend should be further enhanced in the future. Overall, more efforts are also needed to ensure the sustainability of the benefits generated through the programmes, better follow-up and systematic assessment of results achieved. 10. For the 1972 and 2003 Conventions tensions exist between the current focus on nominations of sites/elements to the main respective lists and the use of other important, but less popular, mechanisms. While the lists certainly contribute to raising awareness of the issues at stake, attention should not be diverted from larger protection, conservation or safeguarding challenges, implementation issues, sharing of good practices and international cooperation. A better balance needs to be found between these mechanisms. 11. Linkages exist between all four Conventions included in the present evaluation (1970, 1972, 2003, and 2005), as well as with other UNESCO legal instruments that were not covered (1954 and its two Protocols; 2001). This is usually acknowledged by stakeholders. Where feasible and useful possibilities for strengthening policy and implementation connections should be seized. UNESCO created a Culture Conventions Liaison Group to enhance coordination and cooperation between the Convention secretariats. The newly established Common Services Unit will further contribute to this. Between the governing bodies of the Conventions no institutional mechanism for interaction exists that would allow the discussion of synergies and delineation between the Conventions as well as emerging issues that might affect the standard-setting work of UNESCO. 12. Overall, the Conventions lack clear result-oriented logic of the relationship between standard-setting work and effective impact on the ground. Most also do not have results frameworks (developed on the basis of such intervention logics) with objectives, indicators and benchmarks; therefore making it difficult to measure and demonstrate results. Periodic reports provide a valuable source of information on the implementation of the Conventions. The system of periodic reporting should be strengthened for some of the Conventions and complemented by other sources, so that a more complete data set on results achieved and lessons to be learned can be established. This is very important also in light of the fact that UNESCO, contrary to some other international organizations, generally does not have any built-in mechanism for validating State Parties compliance with their obligations under the Conventions. 13. The Convention secretariats face increasing demands for their services, while at the same time lacking financial and human resources, which has put constraints on the quantity and quality of the services offered to State Parties. This applies to all the Convention secretariats and is currently aggravated by the present financial situation of the Organization. For the secretariat of the 1970 Convention which, while facing increasing demands for its services, only disposes of very limited human resources, the current situation is absolutely untenable. State Parties long term commitment is needed to strengthen this secretariat with the level of expertise and stability required to perform its functions. 14. Overall, for all six Convention secretariats, the current situation is unsustainable as support from the regular programme budget decreases and the workload of the Convention secretariats increases. There is thus a need to review the amount of secretariat work that can be executed. As a basis for this, State Parties should clearly indicate the areas of work that they want the secretariats to prioritize in line with available resources. Furthermore, cost saving, cost recovery and fundraising measures ought to be considered. A number of such measures are currently already being prepared. They include the creation of a Conventions Common Services Unit, which will cover all aspects common to the culture conventions including