(d) Assessing the adequacy and effectiveness of internal and external audit services

(viii) Identify appropriate key performance indicators for the performance management of external audit services

External audit

1.200 Common Services comprises Commissioner General's Office, Legal Services, Audit and Inspection, External Relations, Public Information, Policy Analysis, New York and Geneva Liaison Offices, Administration and Human Resources, and Financial Services.

The increase also relates to higher than estimated external audit costs ( 75,300) partially offset by decreased requirements under other contractual services ( 37,500), including Internet services, medical consultants and contractual security services.

The audit committee should play a role in establishing a policy on purchasing non audit services from the external auditor this policy should be disclosed along with an explanation or assessment of how this policy sufficiently ensures the independence of the external auditor (FEE, 2003a).

The amount of 1,657,900 covers the estimated requirements for external audit ( 462,400) as requested by the Board of Auditors, and for internal audit ( 1,195,500) as requested by the Office of Internal Oversight Services.

The provision under audit costs reflected a reduction in the costs of both external and internal audit, reflecting the resource levels recommended by the Board of Auditors and the Office of Internal Oversight Services.

Furthermore, in light of UNIDO's limited financial resources for external audit costs, the Philippines Commission of Audit was ready to modify its proposed audit fee, but without in any way compromising the quality of services Mr. Carague and his team intended to render.

The working group fully supported the resources requested for external audit ( 479,900) and internal audit ( 1,240,700).

A number of approaches regarding the external audit, such as the need for auditor partner rotation and the avoidance of possible conflicts of interest involved in providing non audit services, can be considered to ensure that external audits serve shareholder and other stakeholder interests in the intended manner.

(d) Enhancement of the external audit functions of the Fund and expansion of the Fund's internal audit coverage

Follow up of the recommendations made in prior external audit reports

The Audit Services Branch will update the checklist for the 2005 audit exercise.

(i) To consider the effectiveness and objectivity of the external audit process

UNICEF will issue guidance on the follow up of external audit recommendations.

This evaluation will also prepare the UNHCR Audit Service for the external audit envisaged by the United Nations Board of Auditors.

All publicly owned enterprises are subject to external audit and accounts are published.

The office of the Director also coordinates the reviews of the internal and external audit functions and ensures the implementation of audit recommendations.

This provides an overview of the tools and processes in place to analyse, track and manage external audit recommendations and corporate audit issues at UNDP.

External audit welcomes this initiative to modernise the procurement system, which should carry significant benefits.

The United States delegation wondered whether the lower estimated cost of external audits by the Board of Auditors reflected reduced audit coverage or better audit efficiency.

Programme B.2 Comptroller General, Internal Audit and Evaluation Services

In 2005, the UNFPA Audit Services Branch carried out an audit of the data transfer from IMIS to Atlas.

An external audit was something completely separate from and outside the management structures of an organization.

This recommendation is related to the recommendation of paragraph 195 of the 2004 External Audit Report.

At the present time, audit assignments are shared among the audit staff provided from the audit services of the members of the Board on an equal basis.

It is worth noting that even the organizations that do not have an institutionalized audit committee have set up mechanisms to review internal and external audit matters as well as progress made in implementing audit recommendations.

Table 1 shows the ratings used by their respective audit services.

Programme B.2 Comptroller General, Internal Audit and Evaluation Services 34

(ii) Audits facilitation of internal and external audits and follow up on the implementation of audit recommendations

Following previous external audit recommendations on this matter, UNHCR has introduced a new policy on audit certification for implementing partners which will affect projects as of 1 January 2004.

For 2004 the cost of audit services was approximately US 2.1 million.

The status of the implementation of external and internal audit recommendations was reported regularly to the Oversight Committee.

Under the cost sharing arrangements, it is estimated that approximately one half of external audit costs are expended on the audit of administrative operations and one half on investment operations.

The UNHCR Audit Service works in close cooperation with UNHCR's Inspector General's Office and liaises with the United Nations Board of Auditors to ensure coordination between external and internal audit.

(a) Reviewing the strategy and workplans of internal and, in some organizations, external audit and discussing the scope and content of their audits so as to identify audit priorities and suggesting potential audit areas within which to address the organization's risks

UNHCR planned to invite a representative of the Board of Auditors to attend the review of external audit reports.

Accordingly, most governance codes and guidelines define procedures for enhancing the independence, objectivity and professionalism of the external audit.

The Office of the Comptroller General has proved to be helpful in facilitating the implementation of external audit recommendations.

The reduction in the estimated costs of external audit reflects a reduced provision by the Board of Auditors ( 27,000).

In paragraph 389, the Board recommended that UNICEF issue an instruction on the follow up of external audit recommendations.

This guideline will be communicated by the Audit Services Branch to country offices.

Strengthened capacity of the Office of Internal Oversight Services in audit and investigation

The UNFPA Audit Services Branch sends reminders regularly and has enlisted the assistance of the UNFPA geographical divisions to obtain outstanding project audit reports.