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GB.270/PFA/6
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Programme, Financial and Administrative Committee |
PFA |
SIXTH ITEM ON THE AGENDA
Amendments to the Financial Rules
Accountability
1. The concept that officials should be held accountable for negligence or fraud having financial implications has up to now been mainly dealt with under the provisions of the Staff Regulations relating to unsatisfactory performance or disciplinary measures. The Financial Rules, apart from references to officials held responsible for irregular payments made by them and a requirement that cases of fraud must be reported to the Director-General, expressly mention accountability only in the context of loss of Office property or other assets. These Rules provide that officials may be required to reimburse such losses, partially or in full, and that a Property Survey Committee is to be appointed in appropriate cases to fix any responsibility for the losses and to authorize their writing off.
2. With the introduction of increased decentralization of financial and administrative authority both to the field and to departments at headquarters, it is essential that any shortcomings reported by the monitoring procedures currently in place are dealt with in a structured and systematic manner. In view of the limitations referred to in paragraph 1. above, and of the need to reinforce effective oversight and accountability in the management of resources, the Director-General has decided to establish a Committee on Accountability, which will report to him through the Treasurer and Financial Comptroller. It is intended that this Committee should take over the functions of the Property Survey Committee, but with a more comprehensive area of competence. Since the appointment of the Property Survey Committee is provided for in the Financial Rules, and also to remove any room for doubt as to the financial accountability of officials not just for the direct loss of property or assets but also for financial loss caused by their fraud or serious negligence, there is a need for the Financial Rules to be amended.
3. Article 40 of the Financial Regulations provides that "Rules made by the Director-General in order to carry out the provisions of these Regulations shall be communicated to the Governing Body for approval".
4. The Programme, Financial and Administrative Committee may therefore wish to recommend to the Governing Body that it approve the amendments to the Financial Rules set out in the Appendix to this paper.
Geneva, 26 September 1997.
Point for decision:
Paragraph 4.
Appendix
Amendments to the Financial Rules
(Additions are shown in bold type; deletions are indicated by [square brackets])
VIII. MANAGEMENT OF FUNDS
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8.40 Loss of cash or negotiable Instruments,
Cases of Fraud
Any loss of cash or negotiable instruments and any case of fraud, presumption of fraud or attempted fraud must be reported at once to the Treasurer who will ensure that appropriate follow-up action is taken and that full details are submitted to the External Auditor with the related accounts, in conformity with Rule [11.40] 13.10 .
XI. PROPERTY
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11.40 Treatment of Cases of Loss of Assets,
Fraud, or Unrecovered Debt
(See Rule 13)
[(a) The Chief of the Budget and Finance Branch may authorise losses of cash, stores, or other assets not exceeding the equivalent of US$400 in each case to be written off if in his judgement the cost of recuperating the loss would exceed the amount to be written off, or if it is very unlikely that action to recuperate the loss would be successful.
(b) The Treasurer may authorise the writing-off of losses exceeding the equivalent of $400. A statement of all losses over $400 which are written off shall be submitted to the External Auditor with the related accounts.
(c) For appropriate cases, the Director-General shall appoint a Property Survey Committee, which, after full investigation of each case, may authorise losses of cash, stores or other assets to be written off.
(d) The Treasurer or the Property Survey Committee, as the case may be, shall fix the responsibility for the loss, if any, attaching to any official of the ILO. Such official may be required to reimburse the loss either partially or in full, irrespective of whether the loss is covered by insurance or not.
(e) Any case of fraud, presumption of fraud or attempted fraud must be reported to the Director-General through the Treasurer.
(f) Amounts written off and subsequently recovered after the close of the financial period in which the writing-off occurred shall be treated as miscellaneous income.]
XIII. ACCOUNTABILITY
13.10 Any case of fraud, presumption of fraud or attempted fraud must be reported to the Director-General through the Treasurer. Full details of such cases shall be submitted to the External Auditor with the related accounts.
13.20 Officials who, as a result of fraud or other misconduct or serious negligence, cause any kind of financial or other loss to the ILO may, without prejudice to the application of the Staff Regulations, be required to reimburse such loss, either partially or in full, irrespective of whether the loss is covered by insurance or not.
13.30 The Director-General shall appoint a Committee on Accountability, which will report to him through the Treasurer and Financial Comptroller. The Treasurer shall refer to the Committee on Accountability appropriate cases of fraud, presumption of fraud and attempted fraud, as well as of dishonesty, negligence or disregard of established Office procedures or directives which resulted or could have resulted in financial or other loss to the Office or damage to its property. The Committee's function shall include establishing the facts; fixing the responsibility for the loss, if any; making, where applicable, recommendations relating to reimbursement; referral to the unit responsible for disciplinary matters; and authorising the writing-off of the loss concerned.
13.40 The Committee on Accountability shall also examine cases of persistent failure on the part of an official to respect the Office's financial rules and procedures or the recommendations of either the External or Internal Auditor, which have been accepted by the Office, establish the facts, where necessary, as under Rule 13.30 above, and refer such cases to the unit responsible for disciplinary matters.
13.50 Where a loss is estimated as US$400 or less, the writing-off may be authorised by the Director of the Financial Services Department. The Treasurer or the Committee on Accountability, in cases referred to it, may authorise the writing off of losses exceeding the equivalent of US$400. A statement of all losses over $400 which are written off shall be submitted to the External Auditor with the related accounts.
13.60 A loss may be written off if, in the judgement of the authorising official or the Committee on Accountability, the cost of recuperating the loss would exceed the amount to be written off, or if it is very unlikely that action to recuperate the loss would be successful.
13.70 Amounts written off and subsequently recovered after the close of the financial period in which the writing-off occurred shall be treated as miscellaneous income.
[XIII] XIV . INTERNAL AUDIT
Rules 13.10(a) and (b) are unchanged and become 14.10(a) and (b) respectively.