I. Audit Reports
 

Eight audits, one Inspection and one Investigation were completed during the year ended December 31, 2003 and eighty-seven recommendations were provided to correct identified internal control weaknesses.  All reports and recommendations submitted to the Secretary General were approved.  The OIG continues to monitor efforts made by the General Secretariat to address audit findings and to implement recommendations. The Inspector General is satisfied that every effort is being made by the General Secretariat to implement OIG recommendations within the constraints of available resources. 

Audit SG/OIG/AUDIT-01/03 was undertaken to verify whether long distance telephone costs incurred at Headquarters were reasonable and whether expenditures were disbursed in accordance with OAS policies and procedures.  The audit was undertaken primarily as a follow up to the implementation of the recommendations provided in the 1999 examination of telephone costs (SG/OIG/INVEST/02/99). The audit period was January 2002 through March 2003.  The audit determined that from December 2002 the GS/OAS realized a saving of 68% per minute on long distance calls as a result of its participation with other international organizations for better negotiating power with long distance providers.  The audit identified a need to update existing GS/OAS directives regarding monthly certifications, collect calls, personal long distance calls, as well as payment of project related calls from project funds instead of the Regular Fund.  Other weaknesses identified were the need to effectively manage the use of access codes granted to individuals for authorization to incur long distance costs and to obligate funds for timely payment of monthly invoices.  The audit recommended that teleconferencing and video conferencing methods be considered by GS/OAS in an effort at reducing long distance and travel costs.

Audit SG/OIG/AUDIT-02/03 was undertaken as a follow-up to the 2000 audit of the Department of Financial Services and covered the period January 2001 through March 2003. The main objective was to evaluate the internal controls within DFS, including the controls related to the processing of cash receipts and receivables, payables and disbursements, petty cash and bank reconciliations.  The audit noted a number of new procedural arrangements undertaken by DFS, including the issuance of policies and procedures for the various accounting functions of the Department and the signing of an agreement with the Leo S. Rowe Fund Committee for outsourcing the maintenance of the individual loan accounts. The audit noted that the OAS Staff Federal Credit Union was selected to develop a financial infrastructure to disburse and receive Rowe Fund loan repayments, as well as to maintain individual loan balances on behalf of the DFS.  With effect from January 1, 2003, the IACD signed another agreement with the Secretariat for Management (SM) that provides for DFS to assume responsibility for all financial record keeping of the IACD, except for the Specific Funded projects in Central America.  The audit determined that there has been marked improvement in the internal controls of DFS since the 2000 audit, but there is need for compliance with GS/OAS directives regarding the obligation of funds prior to incurring expenses, CPR contract extensions, maintenance and replenishment of Petty Cash Funds and timely processing of accounting transactions.

Audit SG/OIG/AUDIT-03/03 was undertaken to identify and evaluate internal controls in the Columbus Memorial Library (CML) and verify whether the CML is executing its responsibilities in accordance with GS/OAS policies and procedures. The audit covered the period January 2002 through August 2003.  The audit determined that, for the most part, internal controls within the CML are satisfactory and that despite its limited resources, the CML is making every effort to fulfill its mandate.  The main weaknesses identified were the need to correct leave balances for staff members, ensure compliance with the CPR rules in awarding performance contracts and ensure that Statements of Conduct of Ethics and Conflict of Interest are filed at the Department of Human Resource Services.  The audit also determined that there was need for updated procedures regarding the receipt of funds from library related services and maintaining a Petty Cash Fund for minor disbursements.

SG/OIG/AUDIT-04/03 was performed to evaluate the internal controls within the Executive Secretariat of the Inter-American Drug Abuse Control Commission (CICAD) and covered the period January 2001 through May 2003.  The audit noted that during 2001 through 2003, in addition to Regular Fund allocations, the CICAD Secretariat received funds in the amount of almost US$23 Million from external sources for carrying out its programs.  The audit determined that the CICAD Secretariat has effectively complied with its mandate and objectives were achieved. The main audit finding is that there is need to effectively centralize and manage all project financial transactions in order to ensure that meaningful and reliable reports are available for decision making. Other audit findings related to the need to comply with GS/OAS directives regarding (1) completion and submission of Performance Evaluations, as well as annual Statements of Ethics of Conduct and Conflicts of Interest (2) timely submission of monthly leave reports (3) obligation of funds prior to disbursement and (4) timely recording of obligations, fund transfers and other project transactions.  There was also a need for a physical inspection of assets as well as for staff training in the OASES system for improved efficiency and effectiveness.  OIG review of the following six projects indicated that disbursements were authorized, properly documented and project objectives were achieved: (1) Ibero-American On-Line Master’s Degree in Drug Addition Studies, (2) Schools of Nursing, (3) Multilateral Evaluation Mechanism (MEM), (4) Generalized Land-Use Evaluation and Management Tool (GLEAM), (5) Andean Regional Counter Drug Intelligence School and (6) Model Regulations for the Control of the International Movement of Firearms Implementation.

The main objectives for performing SG/OIG/AUDIT-05/03 were to determine whether the Permanent Secretariat of the Inter-American Commission of Women (CIM Secretariat) fulfills its mandates and to evaluate the internal controls in effect over operational activities.  The audit covered the period January 2002 through June 2003 and determined that for the most part, internal controls in the CIM are satisfactory and that the CIM Secretariat has effectively complied with its mandate and achieved its objectives.  Main weaknesses were the need to comply with GS/OAS directives regarding (1) updated job descriptions, (2) recording obligations before making commitments prior to incurring expenditures for conferences and meetings,(3) Travel Expense Claims, (4) Performance Contracts, (5) monthly leave reports and (6) Performance Evaluations.  OIG review of two projects (1) Gender Mainstreaming and (2) Study of the Trafficking of Women and Children for Sexual Exploitation in the Americas indicated that objectives were achieved according to project agreements and the final reports submitted.

SG/OIG/AUDIT-06/03 examined the operational activities in the Messengers, Mail and Transportation Services Unit of the Department of Technology and Facility Services and covered the period January through November 2003.  The audit determined that there was the need for written operational procedures and guidelines, as well as supervision of assigned responsibilities and improved management of the unit. Other weaknesses identified the need for a physical inspection of fixed assets assigned to the unit as well as compliance with GS/OAS directives regarding Performance Evaluations, monthly leave reports and the maintenance of appropriate documentation for credit card usage.

SG/OIG/AUDIT-07/03 examined the operational activities in the GS/OAS Office of the Dominican Republic for the period January 2002 through September 2003.  The audit determined that internal controls are satisfactory, but that there was a need to (1) complete Performance Evaluations, (2) maintain the official Registry of Long Distance Calls and the mileage log for the use of the official vehicle and (3) submit quarterly reports of goods imported duty free. The OIG also noted that the generator acquired in 1992 was malfunctioning and should be replaced.  Subsequent to the completion of the audit the GS/OAS Dominican Republic received contributions from a Member State to purchase a new generator that has significantly contributed to the operational efficiency and effectiveness of that office. 

SG/OIG/AUDIT-08/03 was performed as a follow up to the 2000 audit and to evaluate the internal controls within the Department of Procurement Management Services (DPMS).  The audit covered the period January 2002 to August 2003 and noted that there has been a marked improvement in the internal controls of the procurement processes since the 2000 internal audit.  However it was noted that there was need for (1) a procedural manual to document the procurement processes, (2) updated job descriptions for staff members (3) audit trails for changes and cancellations made to purchase orders and requisitions (4) systematic and effective monitoring of the closing process for open purchase orders particularly at month end and year end and (5) adequate internal controls regarding the delegation of responsibility for procurement contracts for meetings and conferences granted to the Director of  the Secretariat for Meetings and Conferences. 

The OIG investigated allegations of irregularities made against the Director and the Administrative Technician of GS/OAS El Salvador.  Investigation (SG/OIG/INV-01/03) concluded that internal controls were less than satisfactory and that those staff members had violated GS/OAS directives, including the General Standards, Executive Orders, Staff Rules, Administrative Memoranda, the Budgetary and Financial Rules of the GS/OAS and the Budgetary and Financial Manual for the Offices of the General Secretariat in the Member States.  The Secretary General accepted the resignations of the two staff members (Staff Member EO2008 and Staff Member EO5309) as well as the monetary offer made by the Administrative Technician “en calidad de restitution”.

SG/OIG/INSP-01/03 examined documentation to verify whether GS/OAS Paraguay was executing its responsibilities in accordance with GS/OAS policies and procedures. The inspection was performed at Headquarters and reviewed financial activities for the period January 2002 through April 2003.  OIG also reviewed financial transactions of four projects executed in that Member State: (1) Organizational Development of the National Drug Commission, (2) Inter-American Commission on Human Rights, (3) Modernization of the Civil Register (MORECIV) and (4) the Modernization of Electoral institutions.  OIG review indicated that three of the four projects were executed in accordance with their respective project agreements and that project objectives were achieved.  However, the audit noted that the MORECIV project, financed with a loan from the Inter-American Development Bank, was terminated in December 2003 at the request of the contributor because of problems encountered during its execution.

II. STAFFING

Three auditor positions are assigned to the Office of the Inspector General in the Program-Budget of the Regular Fund.  The Inspector General continues to utilize performance contractors for auditing services to supplement the staffing resources provided by the Regular Fund for auditing services.  In 2003 in addition to Regular Fund allocations, the OIG received US$10,000 from the Specific Funds of the IACD to assist in auditing activities.  The lack of sufficient resources continues to adversely affect the OIG ability to ensure coverage of high risk areas and to perform timely follow-up action regarding outstanding OIG recommendations.  The need to give favorable consideration to the OIG request for additional resources has been addressed by both the Inspector General and the Board of External Auditors.

III. OTHER
 
The OIG observed GS/OAS meetings particularly related to CAAP, OASES, the GSB Renovations, Contract and Awards Committee, and the Publications Board Committee. The Inspector General continues to meet with managers of the General Secretariat to discuss the implementation of audit recommendations, as well as other issues related to maintaining an effective internal control environment.

May, 2004

Linda P. Fealing
Inspector General