oversight

Status of Reforms and Budgets of the United Nations Educational, Scientific, and Cultural Organization

Published by the Government Accountability Office on 2003-03-28.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

United States General Accounting Office
Washington, DC 20548




          March 28, 2003

          The Honorable Henry J. Hyde
          Chairman
          Committee on International Relations
          House of Representatives


          Subject: Status of Reforms and Budgets of the United Nations Educational,
          Scientific, and Cultural Organization

          Dear Mr. Chairman:

          In 1945, the United States helped establish the United Nations Educational, Scientific,
          and Cultural Organization (UNESCO) as a means to promote international peace.
          During the 1970s, UNESCO was criticized for becoming too politicized. In 1984, the
          United States left the organization, contending that it was poorly managed and had
          failed to restrain budget growth. At that time, the United States urged UNESCO to
          reform its management practices and adopt zero real growth budgets. In 2002, the
          United States announced that UNESCO had made progress in adopting reforms and
          that the United States would rejoin UNESCO to help advance the organization’s
          mission. The United States plans to rejoin UNESCO on October 1, 2003.

          To facilitate your committee’s oversight of U.S. reentry into UNESCO, you asked us
          to review the organization’s reform efforts and budget trends, as well as issues
          associated with the U.S. reentry. On February 26, 2003, we briefed your staff on our
          findings. Enclosure I documents the information we provided to your staff. UNESCO
          and the Department of State provided comments on a draft of our briefing, which we
          incorporated as appropriate. `

          Background
                                                      1
          UNESCO employs more than 2,200 staff at its headquarters in Paris, 48 field offices, 2
          liaison offices, and 10 affiliated institutes and centers. The 188 nations that are
          members of UNESCO comprise the General Conference, which is UNESCO’s
          governing body. The General Conference generally meets every 2 years to approve
          UNESCO’s program and budget. A 58-member executive board is responsible for the


          1
           This number does not include those staff working under limited duration contracts, special service
          agreements or contracts, and other additional staff.


                                                              GAO-03-565R UNESCO Reforms and Budgets
execution of conference decisions. The Director General implements policy and
manages the organization’s day-to-day operations.

UNESCO has five major programming areas: Education, Natural Sciences, Social and
Human Sciences, Culture, and Communication and Information. These programs
include efforts to provide basic education through the Education for All Initiative,
preserve 730 cultural and natural heritage sites worldwide, and promote policy
decisions for sustainable use of freshwater resources.

Summary

While UNESCO has launched several efforts to reform its management practices,
these reforms are in their early phases and will succeed only with the sustained
efforts of UNESCO’s Director General and member states. In the late 1990s,
UNESCO’s auditors and top officials identified numerous management problems,
including violations of personnel and hiring rules, and widespread weaknesses in
financial rules and procedures. Other problems included an insufficient focus on
program results, an over-extended network of field offices, and fragmented internal
oversight functions. In response, UNESCO began efforts to enforce and strengthen its
personnel rules, create new automated financial and program management systems,
close unnecessary field offices, and establish an integrated internal oversight and
evaluation office. While the Director General has made reform a high priority, these
efforts are not yet complete. According to UNESCO, the organization plans to
implement a new personnel appraisal system, train staff on new financial systems,
develop measures for evaluating program results, provide field staff with access to
the new systems, and close additional field offices.

Over the past 6 years, UNESCO’s biennial regular budget has remained at its current
                      2
level of $544 million. When adjusted for inflation, UNESCO’s 2000-2001 regular
budget is almost equivalent to its 1984-1985 budget. However, UNESCO’s total
resources grew significantly during this period due to an eight-fold increase in
                                   3
UNESCO’s extra-budgetary funds . Extra-budgetary funds constituted about one half
of the resources UNESCO had available for its 2000-2001 programs. While the
infusion of extra-budgetary funds has allowed UNESCO to fund more projects,
representatives of some member states that we interviewed stated that extra-
budgetary resources may not support the priorities set by the General Conference.

The United States faces several unresolved issues before it rejoins UNESCO in
October 2003. First, the United States must decide which UNESCO budget proposal it
will support for the 2004-2005 biennium. The Director General is considering two
proposals that will breach the zero nominal growth budget of $544 million and


2
The past two biennial budgets, 2000-2001 and 2002-2003, have been approved at zero nominal growth.
3
Extra-budgetary funds are voluntary contributions that other United Nations agencies, international
organizations, educational institutions, and member states provide to UNESCO. One member state—
Brazil—has provided much of UNESCO’s extra-budgetary resources in recent years for programs
conducted in that country.


Page 2                                          GAO-03-565R UNESCO Reforms and Budgets
increase UNESCO’s budget to as high as $610 million. The executive branch’s fiscal
year 2004 budget request for UNESCO assumes that the UNESCO budget will remain
at $544 million. At this level, the U.S. contribution of $60 million will essentially
decrease the assessments of other member states by an equivalent amount. Second,
since the United States has announced that it will stand for election to UNESCO’s
executive board, it will need to campaign for support from other member states.
Membership on the Executive Board would allow the United States to contribute to
the reform efforts. Third, the United States will have to determine if it wants to target
its assessment for the last quarter of 2003 to support U.S. priorities. UNESCO officials
stated that they would support the establishment of a special account for the initial
U.S. payment of $15 million, subject to the approval of the Executive Board and the
General Conference. Without a special account, the $15 million could be refunded to
other member states. Fourth, until an ambassador to UNESCO is appointed, the
United States must decide how best to convey U.S. interests and priorities. The
current observer to UNESCO does not have the authority of an ambassador to help
shape and convey U.S. priorities.

Scope and Methodology

To review UNESCO’s reform efforts, we assessed reports prepared by UNESCO and
United Nations audit groups. We also traveled to UNESCO headquarters in Paris,
France, in January 2003, where we met with UNESCO’s Director General and the
directors of UNESCO’s internal audit, strategic planning, and human resource offices.
We also met with the assistant director generals for UNESCO’s five major
programming areas of Education, Natural Sciences, Social and Human Sciences,
Culture, and Communication and Information. To examine UNESCO budget trends,
we met with the directors of budget and comptroller offices. We also reviewed
budget data from these officials. We converted UNESCO budget data into constant
dollars by using a weighted average gross domestic product deflator. We constructed
the deflator using U.S. and French inflation rates (representing the currencies in
which dues were assessed). To identify issues associated with U.S. reentry, we
reviewed UNESCO documents pertaining to the return of former member states and
met with U.S. and UNESCO officials. We also met with representatives from nine
member states. During the course of our review, we met with U.S. State Department
and National Security Council officials in Washington, D.C.

We performed our work from December 2002 through March 2003 in accordance with
generally accepted government auditing standards.

We obtained comments on a draft of this letter and its enclosure from the Acting
Director, International Organization Systems Administration, and the Director of
UNESCO Affairs; Bureau of International Organization Affairs, Department of State;
and UNESCO’s Director of Strategic Planning, Director of the Bureau of the Budget,
the Comptroller, and the Director of Internal Oversight. In general, they concurred
with our findings and provided technical comments that we incorporated where
appropriate. In addition, Department of State officials stated that the United States
has begun to actively campaign for Executive Board membership.



Page 3                                    GAO-03-565R UNESCO Reforms and Budgets
                                            ---------------

We are sending copies of this report to the Honorable Colin Powell, Secretary of
State, and to interested congressional committees. Copies will be made available to
others upon request. In addition, this report will be available at no charge on our
Web site at http://www.gao.gov.

If you or your staff have any further questions regarding this assessment, please
contact me at (202) 512-8979. Phyllis Anderson, Beth Anne Hoffman León, Hynek
Kalkus, Pierre Toureille, and Lynn Cothern also made key contributions to this
report.

Sincerely yours,




Joseph Christoff
Director, International Affairs and Trade


Enclosure




Page 4                                      GAO-03-565R UNESCO Reforms and Budgets
Enclosure




             United Nations Educational,
         Scientific, and Cultural Organization
          (UNESCO): Reforms and Budgets


                 Briefing to the Staff of the
                    House International
                   Relations Committee
                        February 26, 2003



                                                                     1




Page 5                      GAO-03-565R UNESCO Reforms and Budgets
Enclosure




         Status and Objectives

         • Status of work

         • Describe UNESCO reform efforts
               • Personnel management
               • Financial management
               • Program management
               • Field structure
               • Internal Oversight
         • Provide overview of UNESCO budget
         • Identify issues to be addressed by the United States


                                                                             2




Page 6                              GAO-03-565R UNESCO Reforms and Budgets
Enclosure




         Results in Brief

         • Lasting reform at UNESCO will require sustained effort

         • UNESCO’s regular budget has remained constant over the
           past 6 years, but a significant increase in extra-budgetary
           funds has resulted in overall budget growth

         • U.S. decisions needed regarding UNESCO budget, UNESCO
           executive board, establishment of special account, and U.S.
           priorities




                                                                              3




Page 7                               GAO-03-565R UNESCO Reforms and Budgets
Enclosure




         UNESCO Personnel Management

            In 1998-1999, UNESCO and its External Auditor identified
            the following human resource concerns:

             • Failure to follow personnel rules and regulations led to
               excessive number of director-level managers

             • Personnel policies, rules, and regulations did not reflect
               shift to results-based management




                                                                              4




Page 8                               GAO-03-565R UNESCO Reforms and Budgets
Enclosure




         UNESCO Personnel Management
         Reforms
         In response, UNESCO:

             • Reduced director-level management staff by almost half since
               1999 and resumed competitive promotions to follow
               established personnel practices
             • Developed human resource policies in 2001 to address impact
               of results-based management on personnel

            Continuing challenges:

             • Implement new competency-based rating system
             • Develop an automated human resource system that would link
               to the financial and results-based management systems
             • Address more than 80 open auditor recommendations

                                                                               5




Page 9                                GAO-03-565R UNESCO Reforms and Budgets
Enclosure




          UNESCO Financial Management

            UNESCO and its External Auditor have identified the
            following financial control weaknesses:

             • Failure to follow financial rules and procedures

             • Fragmented financial management responsibilities
               among budget office, comptroller, program sectors, and
               field offices

             • Outdated financial management system




                                                                               6




Page 10                               GAO-03-565R UNESCO Reforms and Budgets
Enclosure




          UNESCO Financial Management
          Reforms
            To address these problems, UNESCO has:
             • Initiated field training on rules and procedures
             • Established committee in July 2002 to coordinate financial
               activities among budget office, comptroller, program sectors,
               and field offices
             • Launched Finance and Budget System (FABS) in January 2002
               to improve and harmonize all financial procedures
             Continuing challenges:
             • Update financial rules and train additional staff
             • Complete FABS implementation (link to all field offices, train all
               users)
             • Address more than 150 open auditor recommendations to
               improve financial controls
                                                                                    7




Page 11                                  GAO-03-565R UNESCO Reforms and Budgets
Enclosure




          UNESCO Program Management

          In late 1990s, UNESCO management expressed concerns that:

          • UNESCO programming identified activities (meetings,
            studies, publications) to be carried out rather than results to
            be achieved

          • UNESCO resources were distributed among program
            activities that had not been sufficiently prioritized




                                                                                8




Page 12                                GAO-03-565R UNESCO Reforms and Budgets
Enclosure




          UNESCO Program Management Reforms

          In response, UNESCO:

             • Adopted results-based policy and developed automated
               management tool (System of Information, Strategies, Tasks,
               and Evaluation of Results—SISTER)
             • Identified priority objectives to receive additional resources

          Continuing challenges:

             • Train staff in applying all aspects of managing by results
             • Better articulate expected results and performance
               indicators
             • Incorporate all extra budgetary activities into SISTER
             • Define priority areas that are not sufficiently specific

                                                                                9




Page 13                                GAO-03-565R UNESCO Reforms and Budgets
Enclosure




          UNESCO Field Structure

            In 2000, UNESCO management and United Nations Joint
            Inspection Unit expressed concerns regarding UNESCO’s
            field locations:

             • UNESCO’s 70 field locations—including 38 established
               since 1990—were too many for resources available

             • Many small, overlapping, or ineffective field offices

             • Field offices linked to program sectors rather than to a
               central organization, leading to management problems



                                                                           10




Page 14                               GAO-03-565R UNESCO Reforms and Budgets
Enclosure




          UNESCO Field Structure Reforms

          In response, UNESCO:
              • Closed 22 field offices and made plans to eliminate 7
                more
              • Established plan to revamp field structure—cluster,
                regional, national—and plans to review field structure
                (now scheduled for 2004)
              • Created a central office to manage all field offices for
                sectors

          Continuing challenges:
             • Provide appropriate mix of expertise to offices
             • Ensure field offices have access to FABS and SISTER

                                                                            11




Page 15                                GAO-03-565R UNESCO Reforms and Budgets
Enclosure




          UNESCO Internal Oversight Reforms

            In 2000, United Nations Joint Inspection Unit reported that
            UNESCO’s internal oversight functions suffered from:

             •   Ineffective coordination
             •   Inadequate staffing levels
             •   Lack of management attention




                                                                           12




Page 16                               GAO-03-565R UNESCO Reforms and Budgets
Enclosure




          UNESCO Internal Oversight Reforms

            In 2001, UNESCO established the Internal Oversight Service
            (IOS) to conduct internal audits, evaluations, and
            investigations.
              • Increased positions from 12 to 18
              • Audited 25 field locations
              • Has issued more than 1200 recommendations to date

            Continuing challenges:
             • Fill six vacant IOS positions with qualified personnel
             • Improve quality of program evaluations
             • Ensure closure of more than 900 open recommendations,
               including 300 open for more than one year

                                                                         13




Page 17                             GAO-03-565R UNESCO Reforms and Budgets
Enclosure




          UNESCO’s Regular Budget, Extra-Budgetary, and
          Brazil Funding in Constant 2000-2001 Dollars
               1200 Constant U.S. Dollars in Millions


               1000


                800


                600


                400


                200


                   0
                                                                                                                           b
                   84-85     86-87     88-89     90-91     92-93     94-95      96-97     98-99      00-0 1        02-03

                               Regular budget       E xtra-Budgetary fun ds a    Brazil self-benefi ting funds a
           a
            Extra-budgetary and Brazil self-benefiting funds represent actual donations provided during the biennium, and
             not budgeted figures.
           bEstimate based upon doubling the Brazil and extra-budgetary funds received in 2002.


          Source: GAO analysis of UNESCO data.                                                                                 14




Page 18                                                     GAO-03-565R UNESCO Reforms and Budgets
Enclosure




          2002-2003 Biennium Budget
          Distribution of UNESCO Funding
                350 Dollars in millions
                                                       306     314
                300

                250
                                                                                 202
                200

                150

                100

                 50           32
                                                                                          19                14
                                      1
                  0
                            Governance                 Programs                Administration           Anticipated cost
                                                                                                           increases
                                   Regular Budget                                   Extra-Budgetary
          Regular budget items and anticipated cost increases total about $555 million; however, UNESCO plans to reduce by about
          $11million of planned spending in these areas so that spending remains within the approved regular budget level of $544
          million. Totals may not add due to rounding.

          Source: GAO analysis of UNESCO data.                                                                                      15




Page 19                                                         GAO-03-565R UNESCO Reforms and Budgets
Enclosure




          Extra-Budgetary Funding and Regular Budget
          Funding for 2002-2003 Biennium by Program Sectors

                   Regular Budget of
                         $252 million

             Extra-Budgetary Funds
                     of $302 million

                                              0         50       100        150        200       250        300        350

                                                                      Extra-Budgetary                       Regular Budget
                                                                       of $302 million                       of $252 million
            Communication and Information                                              35                                    33
            Culture                                                                    56                                    44
            Social and Human Sciences                                                  25                                    29
            Natural Sciences                                                           56                                    52
            Education                                                                 130                                    94
          Amounts are not included for the Participation Program, Institute for Statistics, and program related services which
          totaled about $12 million for extra-budgetary funding and $54 million for the regular budget.


          Source: GAO analysis of UNESCO data.                                                                                   16




Page 20                                                      GAO-03-565R UNESCO Reforms and Budgets
Enclosure




          Budget Options Affect U.S. Share and Reduction
          in Other Member States’ Assessments
                                                                                        Reduction in
                                                                        Annual U.S.         Others’
          Budget Option                                                Assessmenta     Assessments

          $544 million/$272 million annually                             $60 million      $60 million
             •zero nominal growth
          $576 million/$288 million annually                             $63 million      $47 million
             •between zero nominal growth
             and real growth

          $610 million/$305 million annually                             $67 million      $34 million
             •real growth
          aU.S.   assessment based on exchange rates used by UNESCO.

                                                                                                   17




Page 21                                                 GAO-03-565R UNESCO Reforms and Budgets
Enclosure




          U.S. Decisions Needed

          • Position on size of next UNESCO budget

          • Executive Board membership
             • Membership terms for France, Greece, Italy, The Netherlands, and
               Spain expire in 2003
             • Countries standing for election: United States, France, Greece, Italy,
               Monaco, Luxembourg, Portugal, Canada, and Switzerland

          • Potential special account for U.S priorities
             • Subject to approval by UNESCO membership
             • Would use $15 million U.S. assessment for October 1-December 31,
               2003

          • U.S. priorities – voice at UNESCO

                                                                                        18




(320173)


Page 22                                    GAO-03-565R UNESCO Reforms and Budgets