Report of the Board of Auditors on the Special audit requested by the ACABQ into activities of UNDP, UNFPA, UNOPS and UNICEF in the DPRK


1. Background

1. On 9 February 2007, pursuant to Article VII of the Financial Regulations and Rules of the United Nations, the Advisory Committee on Administrative and Budgetary Questions (ACABQ) requested the Board of Auditors (letter attached as annex I) to carry out a special audit of the operations of the United Nations organisations in the Democratic People's Republic of Korea (DPRK), including the United Nations funds and programmes which fall within the Board's mandate and to report its findings to the ACABQ.

2. In the ACABQ's request to the Board of Auditors, it drew the Board's attention to a letter dated 25 January 2007 (refer annex II) from the Controller of the United Nations, on behalf of the Secretary-General on the same topic, wherein the Controller indicated that the scope of the specific examination focus on past and current compliance with the applicable Financial Regulations and Rules, accountability frameworks and other directives as well as to ensure that money expended in DPRK went to intended recipients. The Controller's letter futher explained that the three focus areas to be reviewed should include foreign currency transactions, staff hiring, access to reviewing local projects and their outputs, including direct payment for National Execution (NEX) projects.

3. In the confirmation of the Chairman of the Board of Auditors addressed to the ACABQ dated 22 February 2007 (English translation attached as Annex III), the Board wrote that the audit will include a preliminary review in New York of the operations of UNDP, UNFPA, UNOPS and UNICEF, and that the purpose of the preliminary review, the outcome of which will be addressed to the ACABQ for further consideration, will be the drafting of a detailed audit scope.

4. In further correspondence from the Audit Operations Committee (AOC) addressed to the ACABQ dated 2 March 2007 (Annex IV), the Chairman of the AOC stated that the scope of this audit covers the United Nations Development Programme (UNDP), the United Nations Population Fund (UNFPA), the United Nations Office for Project Services (UNOPS) and the United Nations Children's Fund (UNICEF), and the Board will report to the ACABQ and management any preliminary findings, the Board's detailed audit plan and any procedures for the on-site phase for ACABQ consideration. This letter further requested a note verbale to be issued to the DPRK authorities for assistance with travel arrangements.

5. This report constitutes the result of our work in terms of the above work-plan.