United Nations

GA/AB/3505
14 May 2002

In Second Resumed Session, Fifth Committee Expected to Focus on Peacekeeping Financing

NEW YORK, 13 May (UN Headquarters) -- During its second resumed session, which begins on Monday, 13 May, the Fifth Committee (Administrative and Budgetary) is expected to focus mostly on in-depth consideration of various aspects of peacekeeping financing. For that purpose, the Committee is going to take up administrative and budgetary aspects of peacekeeping; performance reports and audited financial statements of individual missions for the period from 1 July 2000 to 30 June 2001; and their budget requirements for the next budget cycle -- from 1 July 2002 to 30 June 2003. Also before the Committee are final reports of several missions in liquidation, on which the General Assembly still has to take action.

The financial year of peacekeeping operations runs from 1 July to 30 June, and their costs are assessed among Member States on the basis of a special peacekeeping scale. Unlike the regular budget, the budgets of peacekeeping missions are less amenable to forward planning, because they are subject to decisions of the Security Council that may be taken at any time during the year, depending on the world situation. For the same reason, the total cost of United Nations peacekeeping is subject to considerable fluctuations from year to year.

The General Assembly has so far approved some $2.8 billion for peacekeeping operations for 2001/2002, including prorated provision of $7.9 million for the United Nations Logistics Base at Brindisi (UNLB); prorated provision of $91.9 million for the support account; and $56.8 million for the United Nations Organization Mission in the Democratic Republic of the Congo (MONUC).

During the preceding 2000/2001 budget cycle, with the exception of the UNLB and support account, the peacekeeping appropriations amounted to some $2.56 billion, reflecting an increase in total expenditures of $621.9 million or 35.4 per cent. That came mainly as a result of the start-up of the United Nations Mission in Ethiopia and Eritrea (UNMEE), expanded operations at the United Nations Mission in Sierra Leone (UNAMSIL) and MONUC, and a full year of operations at the United Nations Transitional Administration in East Timor (UNTAET). According to the financial performance reports of peacekeeping missions for the period ending on 30 June 2001, actual expenditures amounted to $2.31 billion, leaving an unencumbered balance of $258.1 million, or 10.1 per cent of the appropriations.

The Secretary-General's total estimated gross budgetary requirements proposed for United Nations peacekeeping for the next budget cycle (ending on 30 June 2003) amount to some $2.25 billion. This figure does not include estimates for the United Nations Mission for the Referendum in Western Sahara (MINURSO) and the follow-on mission in East Timor, the requirements for which are yet to be determined.

[On 30 April 2002, MINURSO's mandate was extended until 31 July, pending consideration by the Security Council of the Secretary-General's report on the situation in Western Sahara, which sets out several scenarios for the future of the peace process there. Following achievement of independence by East Timor, the United Nations role in that country is also bound to change. A new mission to Afghanistan -- the United Nations Mission in Afghanistan (UNAMA), which was approved by the Security Council on 28 March this year -- is going to be considered by the Fifth Committee under the regular budget of the Organization.]

The budgetary requirements for each peacekeeping operation are as follows (in thousands of United States dollars):

MONUC  603,911.0 

UNAMSIL  669,476.4 

UNDOF  38,991.8 

UNFICYP  44,973.9 

UNIFIL  112,376.0 

UNIKOM  54,340.6 

UNMEE  220,830.2 

UNMIBH  78,613.9 

UNMIK  391,076.2 

UNOMIG  35,535.3 

Total  2,249,125.3 

The first report before the Committee contains the missions' financial reports and the Board of Auditors' audited financial statements on the United Nations peacekeeping operations for the period from 1 July 2000 to 30 June 2001 (document A/56/5 (Vol. II)). According to the document, the Board of Auditors has audited the United Nations peacekeeping operations at Headquarters, as well as at six field missions funded from the regular budget, 13 missions funded from special assessed contributions, 11 missions in liquidation, and the United Nations Logistics Base. The Board also validated the financial statements for peacekeeping operations with special accounts for the financial period ending 30 June 2001 and conducted three special reviews at the request of the General Assembly.

The document notes serious cash shortages, which continued to affect the financial situation of peacekeeping missions and necessitated cross-borrowing among their funds, while substantial dues to Member States for troop costs and contingent-owned equipment remained unpaid. The Board recommends that the Administration enforce compliance with relevant rules and regulations, improve controls ensuring complete and accurate recording of non-expendable equipment, evaluate resource requirements and benchmark resources to discharge responsibilities under the contingent-owned equipment procedures, improve procurement planning, and liquidate missions in a timely manner.

The auditors have found, for instance, that opening balances of non-expendable equipment on inventory reports did not agree with the closing balances for the preceding year. As a result of various discrepancies regarding the value of non-expendable equipment, the Board was unable to confirm the value of non-expendable equipment of $695.7 million. During the period under review, write-offs in the amount of $780,535 were approved for various peacekeeping missions. Property losses on peacekeeping operations amounted to $12.2 million. Despite a certain decrease, the Board remains concerned over the amount of United Nations property losses, especially since all of them related to active peacekeeping missions, of which the United Nations Mission in Bosnia and Herzegovina (UNMIBH) and UNTAET accounted for approximately 86 per cent.

Approximately $8 million (22 per cent) of the total amount of verified claims received from troop-contributing countries was understated in respect of both expenditure and liabilities, the report further states. Also, long-outstanding amounts included in accounts payable remained unpaid at year's end; the memorandums of understanding (MOUs) in respect of contingent-owned equipment had not been signed prior to the deployment of troops to peacekeeping missions in all instances, while in other cases the MOUs had not been signed at all. Policies and procedures regarding the utilization of chartered aircraft by non-mission personnel were not always adhered to.

Regarding resident auditors, the Board of Auditors states that, while their function was generally found to be effective, there was space for improvement in the areas of training, risk assessment, audit coverage and quality assurance. As for the introduction of results-based budgeting, the Board notes it is a positive initiative in enhancing the responsibility and accountability in the implementation and monitoring of programmes and budgets. However, specific guidance and training would have to be provided to peacekeeping missions to ensure the successful implementation of the results-based budgeting process.

Also before the Committee was the Secretary-General's report on the implementation of the Board of Auditors' recommendations concerning United Nations peacekeeping operations for the financial period ending 30 June 2001 (document A/56/66/Add.2), which describes actions taken in response to the auditors' comments. Regarding the recommendation that the Administration follow up arrears payments in order to settle long-outstanding amounts, the report states that all appropriate steps have been taken to do that within the limits of available cash. As funding from the major contributor was only received in November, many of the accounts were settled in December 2001. Member States have been requested to settle their long-outstanding amounts.

On the issue of contingent-owned equipment, the Board recommended conducting an assessment of the impact on peacekeeping of using aged and obsolete equipment in need of constant repairs and maintenance. In that connection, the Secretary-General comments that, in general, the Department of Peacekeeping Operations ensures optimum performance of contingent-owned equipment deployed to missions. As reimbursement for such equipment is dependent on its declared operational status, the United Nations is not exposed to unnecessary financial obligation when the equipment is unserviceable. The Peacekeeping Department considers that stipulating the age of contingent-owned equipment in the manual would be inappropriate.

Regarding civilian police selection, the Secretary-General points out that the Civilian Police Division has standardized the training programme for civilian police deployed to peacekeeping operations, which Member States are encouraged to utilize. During 2001, 35 Member States requested 51 selection assistance team visits, and 13,150 officers were assessed. The cost for the repatriation of an officer deemed to be unqualified upon arrival in the mission is the responsibility of the Member State. The Civilian Police Division, in coordination with the missions, is developing targeted profiles of officers, which will be shared with the missions. The report also addresses the implementation of various other recommendations, including those concerning resident auditors and procurement.

Another document relating to United Nations peacekeeping, in general, is the report of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) on the matter (document A/56/887). Stressing the importance of timely submission of performance reports and budget estimates, the ACABQ reiterates the need to restore discipline in that respect and makes several recommendations about the format and quality of budget presentations. In the future, all budget presentations should include a full disclosure of all mission income and expenditure under voluntary contributions, trust funds and other sources. In addition, a further breakdown should be provided for "other income" by source of funds.

Regarding the $2.25 billion budget proposals for 2002/2003, the ACABQ states that, although the estimates are based on more realistic assumptions, more should be done to increase efficiency in procurement, transport, communications and air operations. In general, better budget monitoring, accounting and proper recording of expenditure are needed. The Advisory Committee encourages wider use of cost-benefit analysis to determine more effective means of achieving operational objectives, as well as long- and short-term achievable results under the column "expected accomplishments". Bearing in mind that each mission is different, emphasis should be placed on setting precise and specific objectives, and proceeding on the basis of what is practical and attainable.

Management of contingent-owned equipment arrangements requires priority attention to remedy serious flaws in the system, the report states. Particular emphasis should be placed upon pre-arrival and operational inspections, as well as improving arrangements for reimbursement, particularly with a view to assisting troop contributors from developing countries. As long as the United Nations is involved in operations where military contingents are deployed, there will always be a need for inspection and verification. For that reason, the Advisory Committee recommends establishing a core capacity within the Secretariat to provide required expertise.

The ACABQ further requests that mission factors that apply to monthly reimbursable rates be carefully reviewed and adjusted in accordance with changing conditions in each mission area. It trusts that the Office of Human Resources Management will closely monitor mission subsistence allowance rates, conducting frequent field surveys, and reviewing the methodology and factors used to establish those rates. Budget and performance reports should fully justify all travel plans and expenditures. More extensive use is recommended of modern communications techniques, including video conferencing, before additional travel expenditures are incurred.

On personnel matters, the ACABQ points out that there appears to be a view that only increased post requirements can take care of increased workloads. However, along with creating new posts and reclassifying them upwards, it is also important to consider post abolition, redeployment or downward classification. The Advisory Committee emphasizes the importance of setting time frames for completing specific tasks and full justification of post and non-post requirements in each case. As peacekeeping missions continue to experience high vacancy rates, also stressed is the need to review the number and improve the quality of mission personnel handling procurement, budget, contract and financial matters. Training programmes should concentrate on these areas, and more attention should be given to retaining only properly qualified staff.

Among the recommendations concerning resident auditors, the document contains suggestions regarding a system of rotation of such personnel and the need to carefully define their role and standard operating procedures. The Advisory Committee is not fully convinced of the need to establish dedicated investigation units in all missions, stating that investigations should be conducted when need arises, covered from Headquarters or on a regional basis. The ACABQ is also not convinced that public information programmes are always adequately justified in the budget estimates. More efforts should be made to produce radio and other information programmes directly by the missions, thereby reducing the need for contractual services. The division of responsibility for overall policy in this area between the Department of Peacekeeping Operations and the Department of Public Information (DPI) should be reviewed and clarified in order to develop a more professional, focused and consistent approach.

Missions' Performance Reports and Proposed Budgets

Another document before the Committee was the Secretary-General's financial performance report of the United Nations Disengagement Observer Force (UNDOF) for the 2000/2001 budget cycle (document A/56/813), according to which the Assembly appropriated an amount of $36.98 million for that period. Expenditures for the period totalled $36.40 million gross ($35.27 million net), resulting in an unencumbered balance of $575,100 gross ($655,300 net). The Secretary-General recommends that the Assembly decide on the treatment of the unencumbered balance and of other income for the period amounting to $2.26 million from interest income and $887,000 from other/miscellaneous income and savings.

The proposed budget of UNDOF for 2002/2003 (documents A/56/832 and Add.1) amounts to $38.99 million gross ($38.07 net). Of the total budget, some 51.3 per cent relates to military personnel costs; 31 per cent to operational requirements; 13 per cent to civilian personnel costs; and 2.4 per cent to staff assessment.

Addendum 1 was submitted in response to resolution 55/264 in which the Assembly requested the Secretary-General to continue improving the working conditions of UNDOF's local staff, including by making allowance for difficulties resulting from the relocation of the Force's headquarters from Damascus to Camp Faouar. The Secretary-General would be prepared to elaborate a separate salary scale for Camp Faouar, taking into account the absence of a local labour market in the close vicinity. The scale would recognize the increased amount of time spent on work-related activities. The financial implications for such a scale amount to approximately $83,000 per year.

The related ACABQ report (document A/56/887/Add.8) notes that a total of some $1.28 billion has been assessed on Member States for the maintenance of the mission since its inception in 1974, and that payments received totalled $1.26 billion, leaving a shortfall of $24.9 million. Regarding the unencumbered balance over the 2000/2001 period, the Advisory Committee recommends that Member States be credited their respective shares of the balance and other income in a manner to be determined by the Assembly.

Also recommended is the acceptance of a proposal to establish a post at the P-4 level for a Chief Civilian Engineer and two posts in the Field Service category. The ACABQ requests that information on the modernization programme and the benefits to be achieved, including efficiency gains, be included in the report on the budget estimates for 2003/2004. The Advisory Committee recommends approval of the Secretary-General's proposal regarding the financing of UNDOF as described above.

Regarding the United Nations Interim Force in Lebanon (UNIFIL), the Committee has before it the mission's financial performance report for 2000/2001 (document A/56/822) stating that the Assembly had appropriated a total amount of $207.15 million gross for that period. During the budget cycle, expenditures totalled $183.81 million gross, excluding budgeted voluntary contributions in kind of $180,000, resulting in an unencumbered balance of $23.34 million gross, mainly due to the termination of the expansion programme of the Force. The Secretary-General recommends that the Assembly decide on the treatment of the unencumbered balance and on the treatment of other income over the period, amounting to $12.48 million.

The Committee also has before it the Secretary-General's budget proposal for UNIFIL for 2002/2003 (document A/56/893), which amounts to $112.38 million gross ($108.4 million net), inclusive of the budgeted voluntary contributions in kind amounting to $333,500. Some 49.1 per cent relates to military personnel costs, 27.7 per cent to civilian personnel costs, 18.8 per cent to operation requirements, and 3.2 per cent to staff assessment.

In a related report (document A/56/887/Add.7), the ACABQ recommends that the unencumbered balance for 2000/2001, as well as the interest and other income over the period, be credited to Member States in a manner to be determined by the Assembly. Regarding the Force's budget for the period of 1 July 2002 to 30 June 2003, the Advisory Committee recommends that the Assembly approve the appropriations mentioned in the Secretary-General's report on the matter.

The Secretary-General's report on the financial performance of the United Nations Interim Administration Mission in Kosovo (UNMIK) (document A/56/763) notes that the Assembly, by its resolution 55/227 A of 23 December 2000, had appropriated an amount of $450 million gross. Expenditures for the period totalled $383.46 million gross, resulting in an unencumbered balance of $66.54 million gross because of lower costs of international and local staff. The Secretary-General recommends that the Assembly decide on the treatment of the unencumbered balance, and on the treatment of other income for the period, amounting to $29.04 million from interest income, other/miscellaneous income and savings on or cancellation of prior period obligations.

The Secretary-General's report on the budget for UNMIK for the period 2002/2003 (document A/56/802) contains the proposed budget for the mission over the aforementioned period, which amounts to $391.08 million gross. Some 77 per cent of that budget relate to civilian personnel costs, 14 per cent to operational costs, 2 per cent to military personnel costs, and 7 per cent to staff assessment. Less than 1 per cent of the total resources are related to other programmes. The Secretary-General recommends that the Assembly appropriate the proposed amount for the maintenance of the Mission for the period, and to assess the amount among Member States.

In its related report (document A/56/887/Add.6), the ACABQ recommends that the Mission plan a downsizing strategy that would require reductions in personnel. Priority in retention of staff should be accorded to the police, the judiciary, the penal system, and services for minorities and returnees. More needs to be done to improve planning, prepare realistic estimates and increase productivity and efficiency in operational activities. Among the areas that need to be improved are also budget monitoring, accounting and proper recording of expenditure. For the 2000/2001 budget cycle, the Advisory Committee recommends that the unencumbered balance and other income, as mentioned in the Secretary-General's financial performance report A/56/763, be credited to Member States in a manner to be determined by the Assembly.

The Advisory Committee continues to be concerned about the large number of vehicles involved in accidents, resulting in an over-expenditure of $402,000, and an unwarranted over-expenditure in UNMIK training activities. The Advisory Committee is not convinced that the expense of procuring and maintaining the "Carlog" system, which provides computerized recording of vehicle trip data, is cost-effective. It cautions against an apparently growing tendency to procure sophisticated technology in excess of the actual needs.

Regarding cost estimates for 2002/2003, the Advisory Committee recommends that the Assembly appropriate $330 million, reflecting a reduction of $61.08 million from the proposed estimate of $391.08 million. It further recommends that after the municipal elections in Kosovo, the Secretary-General prepare a plan to downsize the Mission, with a view to implementing the recommendations of the Committee, if accepted by the Assembly.

The Advisory Committee requests that mission factors in UNMIK be carefully reviewed and, if warranted, adjusted in accordance with changes in the operational conditions in the Mission area. Regarding civilian personnel, vacancy factors for international and local posts should be increased, taking into account actual experience in the Mission area. In view of the large number of changes in the structure of the Mission, including the establishment of new units and large-scale redeployment of staff, a complete staffing table should have been included in the budget report.

Noting that the 2002/2003 proposal includes a doubling of the number of international judges and prosecutors, the Advisory Committee stresses the need to formulate a strategy to remedy the circumstances that lead to more cases being taken over by international judges. The Committee cautions against laying the ground for a situation in which UNMIK would be forced to continue to fund international judges, prosecutors and personnel for an indeterminate period and without an exit strategy.

As agreement has been reached on the appointment of the President and a Prime Minister for Kosovo, the Advisory Committee recommends establishing a timetable for reducing the number of posts allocated for the ministries and local administration. It agrees with the establishment of 92 posts for the four UNMIK Reserved Departments (Agriculture and Forestry, Civil Security and Emergency Management, Public Services, and Transport and Infrastructure). The Advisory Committee is of the view that the retention of a large number of posts for administrative and support services needs to be reviewed in the light of changes that are affecting the role of the Division and the activities funded from the UNMIK budget.

The Secretary-General's report on financing of UNTAET (document A/56/890) provides details on the final disposition of UNTAET's assets, which amounted to some $72.4 million as at 13 March 2002. Seventy-nine per cent of that amount has been transferred to other peacekeeping operations or to the United Nations Logistics Base at Brindisi for temporary storage. The Secretary-General recommends that the Assembly take note of the report and approve the donation of assets with total inventory value of some $8.15 million and corresponding residual value of $5.32 million to the Government of East Timor.

Submitted in response to the request by the Assembly for an updated report on the financing of several closed peacekeeping missions -- the United Nations Protection Force (UNPROFOR), the United Nations Confidence Restoration Operation in Croatia (UNCRO), the United Nations Preventive Deployment Force (UNPREDEP) and the United Nations Peace Forces (UNPF) headquarters -- the Secretary-General's report on the matter (document A/56/852) contains information on amounts owed to troop-contributing governments, expenditures, cash position and unpaid assessed contributions. According to the report, full reimbursement of troop costs has been made, as well as reimbursement for usage charges. An amount of some $18.3 million remains obligated in the accounts for the settlement of outstanding claims for losses.

Actions to be taken by the Assembly as presented by the report are: a decision that Member States shall waive their respective shares in the amount of $125.64 million from the balance of appropriations of some $196.48 million gross to be applied to the financing of the strategic deployment stocks; a decision to credit the remaining cash balance of some $8.29 million to Member States; and a decision to continue to suspend temporarily the provisions of financial regulations in respect of the remaining surplus of some $62.54 million gross in light of the cash shortage of the combined forces.

According to the final performance report on the United Nations Mission in Haiti (UNMIH) (document A/56/851), as at 31 December 2001, the UNMIH special account had an operating deficit of $9.1 million, owing primarily to some $61.4 million outstanding loans to MINURSO, United Nations Operation in Somalia (UNOSOM II) and the United Nations Mission in the Central African Republic (MINURCA). Following repayment of $34.4 million of that debt, there is currently a cash balance of some $25.27 million in the UNMIH special account. The Assembly appropriated for the operation of UNMIH a total of some $357.54 million gross, and expenditures amounting to some $313.06 million gross were accounted for in several performance reports, resulting in an unencumbered balance of some $44.48 million gross. Additional unencumbered balances totalling some $39.52 million gross resulted from the cancellation of obligations, offset by additional requirements in respect of prior period adjustments.

The Assembly took decisions on the treatment of all reported unencumbered balances, with the exception of some $38,100 gross, for the period from 1 to 31 July 1996. The decision regarding that amount was deferred pending the submission of the final performance report of the Mission. The report recommends crediting some $25.27 million out of the unencumbered balance to Member States and temporarily suspending the provisions of several financial regulations in respect of the remaining surplus of some $14.3 million gross in light of the cash shortage of the Mission.

According to the final performance report of the United Nations Transitional Administration for Eastern Slavonia, Baranja and Western Sirmium (UNTAES) and Civilian Police Support Group (document A/56/844), a total of some $517.55 million gross was appropriated for the operation of the mission. Most of the expenditures have been accounted for in previous performance reports, and the Assembly has taken decisions on the treatment of all reported unencumbered balances. Setting out actions to be taken by the Assembly, the report recommends that Member States waive their respective shares of the cash balance of some $35.8 million to be applied to the resources required for the financing of the strategic deployment stocks.

The Secretary-General's financial performance report of the United Nations Mission in Ethiopia and Eritrea (UNMEE) for 2000/2001 (document A/56/840) states the expenditures for the period totalled $164.11 million gross ($162.2 million net), resulting in an unencumbered balance of $25.08 million gross ($24.4 net). The unencumbered balance was mainly due to lower actual costs for military and civilian personnel owing to delayed deployment, as well as reduced operational and other programme requirements.

The Secretary-General recommends that the Assembly decide on the treatment of the unencumbered balance, as well as of other income in the period amounting to $858,000 from interest income and other/miscellaneous income. He further recommends that the special arrangements as regards article IV of the financial regulations of the United Nations be applied to UNMEE, regarding any unliquidated obligations of the financial period in question relating to goods supplied and services rendered by governments for which claims have been received, or which are covered by established reimbursement rates, or have not yet been verified.

In his report on the budget for UNMEE for 2002/2003 (document A/56/862), the Secretary-General proposes $220.83 million gross ($216.81 million net) for the maintenance of the Mission. Thirteen per cent of the budget relates to civilian personnel costs, 28 per cent to operational costs, 55 per cent to military personnel costs, and 2 per cent to staff assessment.

[The ACABQ report on this item (document A/56/7/Add.9) was not yet available at the time of this press release.]

According to the Secretary-General's report containing final performance report of the United Nations Support Mission in Haiti (UNSMIH), the United Nations Transition Mission in Haiti (UNTMIH) and the United Nations Civilian Police Mission in Haiti (MIPONUH) (document A/56/841), liquidation activities, including disposal of assets, were carried out during the period from 16 March to 30 September 2000. A total of $133.03 million gross was appropriated by the Assembly for the operation of the three Missions. Expenditures amounting to some $118.74 million gross, excluding budgeted voluntary contributions in kind in the amount of $4,765,400, were accounted for in previous performance reports, resulting in an unencumbered balance of some $14.29 million gross ($13.25 million net). Decisions were taken by the Assembly on the treatment of all reported unencumbered balances, including the retention of $164,200 gross ($142,900 net) from the resources provided for the period ending 30 June 2000, in order to meet the cost of completing the liquidation tasks at Headquarters.

Additional unencumbered balances totalling $3.84 million resulted from the cancellation of obligations, offset by additional requirements in respect of prior period adjustments and expenditures for the liquidation period ending 30 June 2000. All cash resources that were recorded in the special account, however, including interest income, miscellaneous income and voluntary contributions in cash, have been utilized to meet the operational requirements of the missions. In view of the shortage of cash resources in the UNSMIH/UNTMIH/MIPONUH special account, the concurrence of the General Assembly is sought to suspend temporarily the provisions of financial regulations in respect of the remaining surplus of $4 million gross ($3.98 million net).

Regarding missions in liquidation, the ACABQ, in its report on Administrative and budgetary aspects of the financing of the United Nations peacekeeping operations (document A/56/887), expresses concern about persistent weaknesses in the capacity of the Secretariat to handle liquidation in a timely manner. The Advisory Committee has stressed the need to retain experienced personnel and to maintain up-to-date inventory, accounting, and bank reconciliation systems through the mission so that those dealing with liquidation will be working with an accurate base of information. The Advisory Committee recommends that a roster be maintained of personnel who are properly qualified and experienced in mission liquidation.

Summarizing its findings in connection with performance reports of closed missions, the ACABQ notes the long period between the end of mandates of closed missions and the dates of final performance reports. For example, it took more than five years in the case of UNMIH, four years with respect of UNPF, UNTAES/Civilian Police Support Group and UNPREDEP, and two years in the case of UNSMIH/UNTMIH/MIPONUH.

With regard to actions to be taken by the Assembly, the Advisory Committee recommends acceptance of the proposals of the Secretary-General contained in relevant reports, commenting only on the recommendation to apply balances of $125.64 million in the UNPF; $35.8 million in UNTAES and the Civilian Police Support Group; and $18.21 million in UNPREDEP to the resources required for the financing of the strategic deployment stocks. In the view of the Advisory Committee, the Assembly may wish to take into account the arrangements relating to the establishment of the Peacekeeping Reserve Fund, which are contained in General Assembly resolution 47/217 of 23 December 1992.

Regarding the cash position of the United Nations Peace Forces (document A/56/852), the Advisory Committee was informed that, as a result of payment of arrears by some Member States and the decrease in liabilities due to cancellation of some obligations, the cash position changed from a deficit of $305 million at the end of 2000, to a surplus of $133 million as at 31 December 2001. However, the cash surplus is less than the unencumbered balance of appropriations, which amounts to $196.4 million.

In connection with UNSMIH, UNTMIH and MIPONUH, the ACABQ was informed that the amount of some $4 million gross shown in the performance report (document A/56/841) is not a cash balance, but the difference between the total amount appropriated over the life of those three missions, less total expenditures, and the unencumbered balances that have already been credited to Member States. The same report shows that, as at 31 December 2001, the Missions' outstanding liabilities exceeded the cash holdings by some $8.7 million. Therefore, there are no cash resources available to credit Member States of the amount of some $4 million gross.

Regarding the United Nations Iraq-Kuwait Observation Mission (UNIKOM), the Committee has before it the Mission's financial performance report for the period from 1 July 2000 to 30 June 2001 (document A/56/869), according to which the Assembly, by its resolution 54/18 B of 15 June 2000, appropriated the amount of some $52.71 million gross ($50.29 million net). Expenditures for the period totalled some $50.07 million gross ($47.87 million net), resulting in an unencumbered balance of some $2.64 million gross ($2.42 million net). The unencumbered balance resulted primarily from lower costs of rotation and repatriation travel for military personnel, a higher vacancy rate for international staff, and lower requirements for vehicle spare parts, repairs and maintenance, naval operations, commercial communications and miscellaneous supplies and services.

The action to be taken by the General Assembly in connection with the financing of UNIKOM is as follows: to decide on the treatment of the unencumbered balance of some $2.64 million gross, and on the treatment of other income amounting to some $3.95 million from interest income, $182,000 in other/miscellaneous income, and savings of $563,000 from cancellation of prior period obligations.

Also before the Committee is UNIKOM's proposed budget for 2002/2003 (document A/56/820), which amounts to some $53.34 million gross ($51.11 million net), inclusive of budgeted voluntary contributions in-kind amounting to some $2.77 million. Of the total budget, some 27 per cent of resources relate to civilian personnel costs. Operational costs account for 28 per cent of the budget, military personnel costs amount to 41 per cent, and staff assessment comprises 4 per cent of the total. Less than 1 per cent of the total resources are related to other programmes.

The estimated requirements for the period ending on 30 June 2003 represent a 1.7 per cent decrease ($889,300) in total gross resources compared with the apportionment for the period from 1 July 2001 to 30 June 2002. The proposed decrease reflects a 12 per cent decrease in military personnel costs and a 5.2 per cent decrease in civilian personnel costs. This decrease is partially offset by a 25.6 per cent increase in operational costs, a 52.7 per cent increase in other programmes, and a 4.6 per cent increase in staff assessment.

The Secretary-General recommends appropriation of the amount of $50.57 million gross ($48.35 million net) for the period, including some $32.23 million net (two thirds of the cost), to be funded through voluntary contributions from the Government of Kuwait. Also recommended is assessment of the amount of some $18.34 million gross ($16.12 million net), representing the balance net of voluntary contributions, at a monthly rate of some $1.53 million gross ($1.34 million net), subject to a decision by the Security Council with regard to the termination or continuation of UNIKOM.

In a related report (document A/56/887/Add.5) the ACABQ recommends approval of the Secretary-General's proposed budget for the Mission and agrees with the proposed staffing changes, which reflect an increase of four international posts and a reduction of six local posts, for a net reduction of two posts. The proposed changes in staffing are related to the restructuring of the Administrative Division. The General Services Section has been abolished, and two new sections have been established: the Supply and Property Management Section and the Safety and Security Section.

Expressing concern regarding the persistence of high vacancy rates in the Mission, it also requests that future reports include information on measures taken to address this problem, including whether posts that have been vacant for a long duration are actually needed. The Advisory Committee recommends that the unencumbered balance of some $2.64 million gross for the period from 1 July 2000 to 30 June 2001, as well as the interest and other income in the amount of some $3.95 million, be credited to Member States, it being understood that two thirds of the amount would first be refunded to the Government of Kuwait.

Regarding financing of the United Nations Mission in Sierra Leone (UNAMSIL), the Committee had before it the Secretary-General's financial performance report for the period for 2000/2001 (document A/56/833) which states that the total resources provided by the Assembly for operation and maintenance of UNAMSIL over the period amounted to $577.67 million gross ($570.33 net), exclusive of voluntary contributions in kind of $1.35 million. Expenditures for the period totalled $520.73 million gross ($513.2 net), resulting in an unencumbered balance of $56.94. million gross ($57.13 million net), mainly due to delayed deployment of personnel and the repatriation of the contingents from two troop-contributing countries.

The Secretary-General recommends that the Assembly: decide on a reduction in the appropriation provided in its resolutions 54/241 B and 55/251 A from $577.67 million gross ($570.33 million net) to $541.04 million gross ($533.44 million net), corresponding to the amount actually assessed on Member States, inclusive of the amount for the support account for peacekeeping operations and for the UNLB; decide on the treatment of the unutilized balance of $20.3 million gross, based on the recommended reduced appropriation; and decide on the treatment of other income for the period, amounting to $14.65 million from interest income, other/miscellaneous income and savings on or cancellation of prior period obligations.

The Secretary-General's proposed budget for the Sierra Leone Mission for 2002/2003 (document A/56/855) amounts to $660.48 million gross ($662.78 million net), exclusive of budgeted voluntary contributions in-kind amounting to $1.34 million. The budget is based on the Mission's currently authorized force strength of 17,500 military personnel. Seventy-three per cent reflect military personnel costs, 17 per cent operational costs, 9 per cent civilian personnel costs, and 1 per cent staff assessment. The Secretary-General recommends that the Assembly appropriate $669.48 million gross ($662.78 million net) for the maintenance of the Mission for the period, should the Security Council decide to continue the mandate of the Mission.

In a related report, the ACABQ (document A/56/887/Add.3) observes that the major contributing factor to the unencumbered balance under other equipment of $0.245 million was the non-acquisition of equipment, notes that only one person in UNAMSIL participated in the procurement workshop training during the reporting period, and requests that the administration increase procurement training for UNAMSIL staff. Also, measures should be taken to improve monitoring and recording of expenditure at UNAMSIL through, among other things, training.

The Advisory Committee further recommends that the Assembly adopt the Secretary-General's recommendations mentioned in his financial performance report. It also recommends that the unutilized balance and other income mentioned in that report be credited to Member States in a manner to be determined by the Assembly.

Regarding cost estimates for the period from 1 July 2002 to 30 June 2003, the Advisory Committee is of the view that the assumption of full deployment of United Nations Volunteers, the assumption of a 5 per cent delayed factor for civilian police, and the assumption of 10 per cent vacancy factors for international and local staff appear to be overly optimistic. Regarding military personnel costs, the Advisory Committee trusts that, should the trend of improved operational conditions continue, the applicability of mission factors needs to be reviewed and the results of the review reflected in the next budget submission. It requests that the necessary measures be taken to limit the use of "special case" major equipment in peacekeeping operations.

The ACABQ observes that the budget proposal does not contain an adequate explanation for increases or decreases in operational requirement and recommends that major factors affecting a significant change in resource requirements (10 per cent and more) be fully explained and justified in budget submissions. It once again requests the Secretary-General to reassess the composition of the air assets maintained by UNAMSIL with a view to achieving optimum efficiency. It further requests that information on the fleet of vehicles be included in the next proposed budget for UNAMSIL.

Taking into account its comments and observations, the Advisory Committee recommends that the Assembly approve the Secretary-General's proposed appropriation for 2002/2003 and assess $502.11 million for that period, should the Security Council continue the mandate of UNAMSIL. It further recommends that the question of the balance of the assessment of $166.4 million be considered in connection with possible adjustments to the Mission's components because of an improved security situation.

According to the Secretary-General's final performance report of the United Nations Preventive Deployment Force (UNPREDEP) (document A/56/842), a total of $166.39 million gross ($161.82 million net) was appropriated for the operation of UNPREDEP. Following the termination of the Force in 1999, an additional amount of $183,730 gross ($166,330 net) was appropriated for its liquidation for the period from 1 July to 15 October 1999, but has not yet been apportioned among Member States. While decisions have been taken by the General Assembly on the treatment of all reported unencumbered balances, additional unencumbered balances totalling some $6.16 million gross ($5.98 million net) resulted from cancellation of obligations and variances between actual and projected expenditures.

Action to be taken by the Assembly, as recommended by the report, is to reduce the appropriation provided in its resolution 53/20 B of 8 June 1999 of $183,730 gross ($166,330 net) for the liquidation of the Force for the period from 1 July to 15 October 1999 to the amount of $172,000 gross ($76,000 net); to apportion the amount of $172,000 gross ($76,000 net) for the period from 1 July to 15 October 1999; to offset that apportionment against the unencumbered balance of $7,059,600 gross ($6,885,500 net); and to decide that Member States waive their respective shares in the cash balance of some $18.21 million to be applied to the resources required for the financing of the strategic deployment stocks.

According to the financial performance report of the United Nations Peacekeeping Force in Cyprus (UNFICYP) for the period from 1 July 2000 to 30 June 2001 (document A/56/782), the General Assembly, by its resolution 54/270 of 15 June 2000, appropriated some $43.42 million gross ($41.40 million net) for the maintenance of UNFICYP, including $2.06 million gross ($1.74 million net) for the support account for peacekeeping operations and $322,085 gross ($286,584 net) for the UNLB. Expenditures for the period totalled some $42.36 million gross ($40.45 million net), resulting in an unencumbered balance of $1.06 million gross ($958,400 net), which resulted mainly from lower ration costs for troops, a reduction in the number of local UNFICYP staff posts, and lower commercial communications charges, offset by higher expenditures under non-staff operational requirements.

The General Assembly needs to decide on the treatment of that unencumbered balance and on the treatment of other income for the period from 1 July 2000 to 30 June 2001 amounting in total to some $1.68 million, comprising interest income ($804,000), other/miscellaneous income ($62,000), and savings on or cancellation of prior period obligations including prior period adjustments ($814,000).

Another Secretary-General's report contains UNFICYP's proposed budget for the period from 1 July 2002 to 30 June 2003 (document A/56/838), which amounts to some $44.97 million gross ($43.34 million net), inclusive of budgeted voluntary contributions in kind amounting to some $1.32 million. These estimated requirements represent a 6.1 per cent increase ($2.58 million) in total resources (gross) in relation to the apportionment for the period from 1 July 2001 to

30 June 2002. Of the total budget, some 18.9 per cent of resources relate to civilian personnel costs. Operational costs account for 24.2 per cent of the budget, military personnel costs reflect 53 per cent, while staff assessment comprises 3.8 per cent of the total. Less than 0.1 per cent of the total resources are related to other programmes.

The report recommends to appropriate the amount of some $43.65 million gross ($42.02 million net), for the maintenance of the Force for the period ending on 30 June 2003, including $20.51 million to be funded through voluntary contributions from the Government of Cyprus ($14.01 million) and the Government of Greece ($6.50 million) and assess some $23.15 million gross ($21.51 million net), representing the balance net of voluntary contributions for the maintenance of the Force, should the Security Council decide to continue its mandate beyond 15 June 2002.

In a related report (document A/56/887/Add.4), the Advisory Committee states that over-expenditure on such items as additional data equipment, observation equipment and Carlog devices could have been foreseen when the budget was proposed. The Committee trusts that improvements in planning will lead to more effective budgetary control. With regard to Carlog devices, future purchases should be weighed against their cost-effectiveness. The ACABQ welcomes the fact that as a result of the outsourcing of janitorial and catering services, there was a reduction of a total of 110 local level posts and a savings of $890,500 for the period from April 1999 to April 2001.

On training, the Advisory Committee reiterates its view that there should be better planning for training of personnel in the mission area and that, in the future, the subjects covered in the training programmes and their costs be more clearly stated in the performance and budget reports. The Committee also believes that training should be tailored towards fulfilling the mandate of the mission.

In connection with the financing of UNFICYP for the period from 1 July 2000 to 30 June 2001, it recommends that the unencumbered balance of some $1.06 million gross ($958,400 net), as well as the interest and other income in the amount of $1.68 million, be credited to Member States in a manner to be decided by the General Assembly. For the period ending on 30 June 2003, the Advisory Committee agrees with the Secretary-General's recommendations.

The Secretary-General's Financial performance report of the United Nations Observer Mission in Georgia (UNIMOG) (documents A/56/721 and Corr.1) notes that the Assembly appropriated $30.05 million gross ($28.3 million net) for that Mission for the period from 1 July 2000 to 30 June 2001. Expenditures for the period totalled $26 million gross ($24.25 million net), resulting in an unencumbered balance of $4.05 million gross ($4.05 million net).

The Secretary-General recommends that the Assembly decide on the treatment of the unencumbered balance, as well as on the treatment of $1.72 million from interest income, other/miscellaneous income and savings on or cancellation of prior period obligations.

The Secretary-General's report on the Budget for UNIMOG for the period from 1 July 2002 to 30 June 2003 (document A/56/815) proposes $35.54 million gross ($33.74 million net) for the maintenance of the Mission over the period. Operational costs account for 45 per cent of the budget, civilian personnel costs for 39 per cent, military personnel costs 10 per cent, and staff assessment 5 per cent. The Secretary-General recommends that the Assembly appropriate the amount mentioned above, and to assess the amount at a monthly rate of $2.96 million gross ($2.81 million net), should the Security Council decide to continue the mandate of the Mission.

In a related report (document A/56/887/Add.1), the Advisory Committee recommends that $31.71 million gross ($29.93 million net) be approved for the maintenance of the Mission for the 12-month period. The unencumbered balance and other income mentioned in A/56/721 should be credited to Member States in a manner to be determined by the Assembly.

Regarding the presentation of the budget, the Advisory Committee holds the view that attempts should be made to link objectives with resources and to demonstrate how resources provided for administration, management, security and other areas contributed to achieving the administrative and managerial objectives of the missions. Noting that travel requirements show significant growth, the Advisory Committee is of the opinion that the Mission should review its travel requirements to achieve economies. The Advisory Committee has no objection to a proposed additional helicopter. As to the proposed replacement of the current fixed-wing aircraft with a faster jet aircraft, the Committee does not recommend that change in view of the significant cost of the aircraft replacement and the availability of commercial air carriers operating in Georgia.

The Secretary-General's Financial performance report of the United Nations Mission in Bosnia and Herzegovina (UNMIBH) (document A/56/698) notes that the Assembly has appropriated $158.71 million gross ($149.38 million net) and that expenditures totalled $146.22 million gross ($135 million net), resulting in an unencumbered balance of $12.49 million gross ($13.38 million net).

The Secretary-General recommends in connection with the financing of UNMIBH, including the United Nations Mission of Observers in Prevlaka (UNMOP), that the Assembly decide on the treatment of the above-mentioned unencumbered balance and on the treatment of other income amounting to $5.58 million from interest, other/miscellaneous income and savings on or cancellation of prior period obligations.

The Secretary-General's proposal for UNMIBH for 2002/2003 (document A/56/773) contains a budget for the maintenance of the Mission for the period 1 July to 31 December 2002 and for the Mission's liquidation from 1 January to 30 June 2003, amounting to some $78.61 million gross ($72.76 million net), inclusive of budgeted voluntary contributions in kind amounting to $70,000. This amount also provides for the maintenance of UNMOP and the United Nations liaison offices in Belgrade, Zagreb and Sarajevo for the period from 1 July 2002 to 30 June 2003. Sixty-eight per cent of the budget relate to civilian personnel costs, 23 per cent for operational costs, 7 per cent for staff assessment, and 1 per cent for military personnel costs.

In a related report (document A/56/887/Add.2), the Advisory Committee recommends that the Assembly appropriate the amount mentioned in A/56/773, subject to the extension of the mandate of the force by the Security Council beyond 31 July 2002. Noting savings of $12,100 under public information programmes in the performance report (A/56/698), it expresses hope such practice would be emulated in other missions.

Administrative and Budgetary Aspects of Peacekeeping

The Committee also had before it a report of the Secretary-General on the concept of strategic deployment stocks and its implementation (document A/56/870), which states that in response to the Panel on United Nations Peace Operations' recommendation to establish a rapid deployment capability, the Secretary-General proposed a strategic reserve with four major components: standby arrangements for troops and police; roster of key civilian staff; material stocks at the UNLB; and pre-mandate financial commitment authority.

The report states that the budgetary requirements for the implementation of the strategic deployment stocks concept include non-recurrent costs amounting to $179.66 million. Other costs, such as those relating to staff and maintenance, estimated at $6 million per year, will be met through the United Nations Logistics Base in Brindisi budget.

The Secretary-General recommends that the Assembly endorse the concept of strategy deployment stocks and approve the cost estimates for those stocks, amounting to $179.66 for the period from 1 July 2002 to 30 June 2003. The Assembly should also decide that Member States waive their respective shares in the credits, amounting to $179.66 million, arising from previous budgets of several United Nations missions, to be applied to financing of the strategic deployment stocks for the period. The Secretary-General further recommends that he be authorized to enter into commitments not to exceed $50 million when a new peacekeeping operation requiring rapid deployment is imminent, it being understood that the cumulative total of outstanding commitment authority shall not at any one time exceed $150 million.

In connection with the revised concept of the operations of the United Nations Logistics Base at Brindisi, Italy, the Secretary-General's proposed budget for the UNLB (document A/56/871), amounting to some $16.18 million gross ($14.80 million net), represents an 80.1 per cent increase in total resources in relation to the current year, and an increase of 33 core posts. A total of 47 posts are proposed for support of strategic deployment stocks budgeted for six months.

Initially designed to carry out the functions of storing surplus assets from closing or downsizing missions; keeping start-up equipment kits; and acting as a rear logistics base for the United Nations Peace Force, the Base has been in operation since late 1994 under a rent-free arrangement with the Government of Italy. It now supports both voice and data information networks from all United Nations peacekeeping missions worldwide. It has also become a trans-shipment and technical training centre for peacekeeping personnel. It is planned that, in the future, it will play a key role in operating strategic deployment stocks and provide administrative and operational support to transiting aircraft.

In a related report (document A/56/887/Add.10), the ACABQ recommends acceptance of the Secretary-General's proposal to apply the unencumbered balance of some $1.56 million, interest and other income and savings on prior obligations to the resources required for 2002/2003. On the proposed budget, rather than approve the total amount of $16.18 million gross ($14.80 million net), requested by the Secretary-General, the Advisory Committee recommends approval of the cost estimates for the UNLB in the amount of some $14.29 million gross ($13.22 million net) for the period from 1 July 2002 to 30 June 2003.

The Advisory Committee points out that there is no fundamental change in the concept of the Base's responsibility. What is happening is an expansion of the scope of operations to accommodate strategic deployment stocks. Although the Secretary-General proposes to set strategic deployment stocks activities at the Logistics Base as a separate programme, the ACABQ believes that additional functions in that respect should be integrated into UNLB's existing programmes.

With regard to 47 additional posts proposed for the strategic deployment stocks, the Advisory Committee points out that the Secretariat based its estimates on the assumption that they would be established for one complex and one traditional mission. The ACABQ recommends that the Assembly endorse the concept of strategic deployment stocks for one complex mission only. As a result, its staffing recommendations are for 20 new posts.

Informed that the feasibility of using the Logistics Base for other air support services, including troop emplacement, troop rotation and medical evacuation, is being considered, the Advisory Committee welcomes this development and requests that the next budget performance report contain information on the funding and management of air support services at UNLB. The ACABQ also urges the Secretariat to explore opportunities for closer collaboration with United Nations funds and programmes in using air assets to mutual benefit.

OIOS Reports

Also before the Committee were several reports of the Office of Internal Oversight Services on various aspects of peacekeeping activities.

One of them is the Secretary-General's note transmitting an update on the status of the recommendations of the OIOS on mission liquidation activities (document A/56/896), which were made following an internal audit by the OIOS at the end of 2000. The document contains the text of the Oversight Office's 13 recommendations to the Department of Peacekeeping Operations and the United Nations Controller aimed at improving the mission liquidation activities at United Nations Headquarters and comments on their implementation status, as reported by the Department of Peacekeeping Operations and the Office of Programme Planning, Budget and Accounts.

According to the document, the audit showed that a number of improvements had been made in the liquidation of peacekeeping missions, particularly at recently closed missions, including MIPONUH, UNTAES and UNPREDEP in the former Yugoslav Republic of Macedonia. However, the planning and execution of residual tasks at United Nations Headquarters needed to be improved and more closely monitored in order to speed up the liquidation process. Monitoring of liquidation activities at United Nations Headquarters by the Field Administration and Logistics Division of the Department of Peacekeeping Operations also required strengthening, since residual liquidation tasks were still continuing several years after the closing of the missions.

To ensure better implementation of its recommendations, the OIOS has decided to undertake a follow-up review of mission liquidation activities, with particular attention to write-offs, as part of its audit of the Finance Management and Support Service of the Field Administration and Logistics Division of the Peacekeeping Department. This review will commence in the second quarter of 2002, and the results will be reported to the General Assembly at its fifty-seventh session.

By his note contained in document A/56/202, the Secretary-General transmits to the Assembly the results of the OIOS audit of the policies and procedures of the Department of Peacekeeping Operations for the recruitment of international civilian staff for peacekeeping and other special missions for the period between January 1999 and October 2000. Approximately 4,000 appointments for posts in 45 field missions/offices were processed during that time. Rapid growth of peacekeeping placed additional demands on the capacity of the Personnel Management and Support Service to respond to the staffing needs of field missions.

According to the report, among the shortcomings identified by the OIOS in the audit were the absence of benchmarks and proper analysis of workload, which affected the Service's ability to realistically assess its resource requirements. The functionality of the candidate roster was limited, and standard job descriptions for mission posts were yet to be fully developed. Also noted were the lack of competitive selection; inconsistencies in determining the salary levels of selected candidates; and failure to conduct reference checks in most cases.

The OIOS concludes that the recruitment practices and procedures of the Peacekeeping Department need to be substantially improved to enhance transparency and to more effectively meet the staffing needs of field missions. Partly due to the Personnel Management and Support Service's limited ability to respond to the staffing needs of large field missions, the Panel on United Nations Peace Operations had recommended the delegation of recruitment authority to field missions. The Oversight Office fully supports this proposal. However, full delegation of recruitment authority should be preceded by the establishment of recruitment standards, the deployment of qualified recruitment specialists to the affected missions and implementation of appropriate monitoring mechanisms at Headquarters. The OIOS made a number of recommendations to that effect, with which the Department of Peacekeeping Operations and the Office of Human Resources Management agreed. Work is under way to strengthen the policies and procedures for recruiting international civilian staff for field missions.

Another report before the Committee is the OIOS report on the audit of the establishment and management of mission subsistence allowance rates, conveyed by a note of the Secretary-General (document A/56/648). Mission subsistence allowance (MSA) is a daily allowance paid to United Nations international civilian staff, military observers and civilian police in special peacekeeping mission to cover subsistence costs. MSA payments constitute a significant portion of overall peacekeeping costs, and for the 1 July 2000 to 30 June 2001 made up 17 per cent, $350 million, of the total expenditure budgets of the 10 special peacekeeping missions reviewed.

According to the OIOS, MSA rates should generally be lower than -- or at least not exceed -- the daily subsistence allowance (DSA) rates established by the International Civil Service Commission (ICSC) for short-term travel to the same locations. An audit of the establishment of MSA rates, conducted at Headquarters during August to October 2000, revealed that MSA rates in seven missions (MINURSO, UNAMSIL, UNOMIG, MONUC, UNMEE, UNMIK and UNIKOM) were found to be excessive and should be reduced. The reviews by the Office of Human Resources Management have reduced the MSA rates payable in UNMEE, UNOMIG, MINURSO, MONUC, UNAMSIL and UNIKOM, resulting in projected savings of approximately $33.7 million per year.

The MSA rate in UNMIBH appeared unduly low. The MSA rates in UNMOP and UNTAET were also audited.

The report states that there is a need for a regular review of MSA rates by the Office of Human Resources Management to ensure their continued reasonableness in comparison with actual subsistence costs. This will also serve to mitigate the inherent conflict of interest that exists in the collection of relevant data on those costs, which is mainly based on questionnaires filled out by mission personnel.

The OIOS recommends, among other things, that the Office of Human Resources Management should consider, in consultation with the Department of Peacekeeping Operations, the feasibility of establishing MSA rates using the DSA rates for the same locations as a standard or benchmark. It further recommends that MSA rates in those missions indicated above should be adjusted to reflect actual subsistence costs as indicated by the DSA rates in effect in the mission area.

Another OIOS report concerns the update of oversight activities concerning the "oil-for-food" programme and the United Nations Compensation Commission, conveyed by a note of the Secretary-General (document A/56/903). It provides an update of oversight activities discussed in the two most recent annual reports of the OIOS (documents A/55/436 and A/56/381), as well as additional information on audits of the oil-for-food programme and the United Nations Compensation Commission. According to the report, OIOS audit coverage of the oil-for-food programme had increased substantially since the establishment of the Iraq Programme Section in 2000. An essential element of the audit strategy involves coordinating activities with the internal audit bodies of the nine United Nations agencies and programmes involved in implementing the programme in northern Iraq.

In the view of the OIOS, the Office of the Iraq Programme and the United Nations Office of the Humanitarian Coordinator in Iraq have been responsive to audit recommendations, and have made serious efforts to implement them. A number of issues need to be further addressed by the management of the Office of the Iraq Programme, including improved management of major contracts in Iraq, and enhanced coordination and monitoring of United Nations system project activities in northern Iraq.

According to the report, the United Nations Compensation Commission has satisfactorily addressed OIOS recommendations resulting from the management audit of the Commission's phase-out activities. However, the Commission's governing Council did not agree with the OIOS recommendation that governments and other organizations provide audit certificates as part of the claims payment process. The Commission also did not agree with certain recommendations concerning adherence to the prescribed claims processing methodology for individual claims for damages exceeding $100,000.

* *** *