DPRK

UNDP management response to the Special Audit of the United Nations Operations in the DPRK

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Introduction

UNDP has implemented the Democratic People's Republic of Korea (DPRK) programme in accordance with the decisions of the Executive Board and UNDP Financial Regulations and Rules. The conditions under which UNDP has had to operate in DPRK were unusual and in the last 27 years a variety of practices were adopted to meet the expectations of the Government without which the Programme would not have been delivered.

UNDP wishes to emphasize that the flow/exchange of hard currency made available for the DPRK Programme as mandated by the Board for implementation and cooperation with the Government of DPRK is inevitable. This reality has to be seen in the context of the modest UNDP Programme in DPRK.

In this respect, the UNBOA has confirmed, in the Report of the Board of Auditors on the Special Audit of DPRK, that UNDP, from 2002-2006, had an average Programme expenditure per annum of $2.6M.

For many years UNDP took the lead in requesting the DPRK Government to conform to international practices, however the DPRK Government was not willing to comply with these practices. In January 2007 the Executive Board imposed a number of conditionalities on the DPRK Programme which were not accepted by the Government of DPRK resulting in the suspension of the Programme on 1 March 2007.

UNDP has taken full note of the Report of the Board of Auditors on the Special Audit of DPRK and its findings. UNDP will continue to improve and strengthen its controls and management practices and hence will undertake the following management actions:

As part of the ongoing harmonization of the Financial Regulations and Rules of the UN Secretariat and the Ex-Com Agencies, UNDP will propose strengthening the Financial Regulations and Rules regarding the utilization of currencies.

In respect of the services arrangement with the Government for provision of personnel, UNDP has stopped this practice globally.

In late 2006 the current management changed the practice of making local payments in hard currency.