Executive Order No 95-05

GENERAL SECRETARIAT

EXECUTIVE ORDER 95-05

SUBJECT: THE INTERNAL AUDIT FUNCTION OF THE GENERAL
                    SECRETARIAT AND THE OFFICE OF THE INSPECTOR
                    GENERAL

THE SECRETARY GENERAL,

In exercise of the authority conferred on him by Articles 114 and 118 of the OAS Charter and in application of Article 100 of the General Standards to Govern the Operations of the General Secretariat of the Organization of American States; and

CONSIDERING the importance he places on the General Secretariat's internal auditing and on the strengthening and independence of the Office of the Inspector General as the area responsible for those functions,

RESOLVES:

First: Internal Audit Function.

1. It is the General Secretariat's policy to maintain an efficient and independent internal audit system to assist the Secretary General and the governing bodies in monitoring both proper fulfillment of the responsibilities of the various levels of management with respect to the General Secretariat's programs and resources and adherence to the legal system governing the General Secretariat.

2. The General Secretariat's internal audit policies and system are established in the document entitled Declaration of Responsibility, Purpose, and Authority with respect to Internal Audits, which is attached as an integral part of this Executive Order.

3. The internal audit function detailed in the Declaration shall be the responsibility of the Office of the Inspector General. The Office shall be composed of the Inspector General, who shall direct it; a Deputy Inspector General, responsible for assisting the Inspector General and replacing him in his absence; and professional staff qualified for specific areas. The Inspector General and the Deputy Inspector General shall be versed in one or more of the following professions: auditing, accounting, law, business administration, and public administration. All of the Office's professional staff shall perform their duties in accordance with the Standards for the Professional Practice of Internal Auditing approved by the Institute of Internal Auditors.

4. The Office of the Inspector General shall have full technical autonomy and the broadest possible managerial autonomy.

5. The Office of the Inspector General shall submit a quarterly progress report to the Secretary General, who shall transmit it to the Permanent Council. The General Secretariat shall also report to the Permanent Council on each report submitted to it by the Inspector General, and shall cover in its annual report to the General Assembly the activities carried out by the Office of the Inspector General during the year and any corresponding steps taken by the General Secretariat.

6. The Office of the Inspector General shall be subjected periodically to a comprehensive evaluation conducted by independent auditors from outside the OAS, who shall report on compliance with the accompanying Declaration and the Standards for the Professional Practice of Internal Auditing, as established in Chapter IV, Paragraph C, of the attached Declaration.

Second: Rescissions and Amendments. This Executive Order maintains in force the Secretary General's Directive SG/012/94; rescinds Executive Order No. 81-6; and amends Executive Order No. 82-1 and the Secretary General's Directive SG/148/82, inasmuch as it replaces the Audit Division with the Office of the Inspector General. In addition, it replaces all rules, regulations, and practices of the General Secretariat that may conflict with it.

Third: Effective Date. This Executive Order shall take effect on the date of its signature.

Date: May 8, 1995
Original: Spanish

APPENDIX TO
EXECUTIVE ORDER 95-05

GENERAL SECRETARIAT OF THE ORGANIZATION OF AMERICAN STATES DECLARATION OF RESPONSIBILITY, PURPOSE, AND AUTHORITY WITH RESPECT TO INTERNAL AUDITS

DECLARATION OF RESPONSIBILITY, PURPOSE, AND AUTHORITY WITH RESPECT TO INTERNAL AUDITS

CHAPTER I

RESPONSIBILITY OF THE SECRETARY GENERAL
WITH RESPECT TO INTERNAL AUDITS

The Secretary General is directly and ultimately responsible for the internal audit function established in Article 100 of the General Standards to Govern the Operations of the General Secretariat, so as to ensure that:

1. Audits are conducted, including systematic review of internal management and accounting controls and, when necessary, inspections and investigations of all offices, departments, programs, divisions, units, activities, and projects, both at General Secretariat headquarters and in all member states or other locations, to determine whether the functions of planning, organization, management, documentation, accounting, and custody and control of resources are carried out (1) in accordance with instructions, policies, standards, regulations, manuals, procedures, and other administrative provisions; (2) efficiently, effectively, and economically; and (3) in accordance with the Organization's overall aims and the highest standards of administrative practice.
    

2. Audits are conducted, supervised, and controlled in accordance with the Standards for the Professional Practice of Internal Auditing approved by the Institute of Internal Auditors, the internationally recognized professional authority in the field of internal audits.
    

3. Timely reports are issued on the findings of audits, inspections, and investigations, including internal control evaluations conducted by the Office of the Inspector General and the corresponding conclusions, opinions, and recommendations, to the staff responsible for the areas examined and to those persons who are to adopt or ensure the adoption of appropriate measures.
    

4. Appropriate and timely action is taken on any significant audit findings.
    

5. Any plans or actions taken to correct or improve internal control weaknesses or other adverse conditions pointed out by the Office of the Inspector General are evaluated and, in the event the situation is not satisfactorily resolved, steps to achieve a satisfactory resolution are discussed.
    

6. Audit activities are directed toward operations with the highest degree of risk and/or those with the greatest potential for increasing efficiency, economy, and effectiveness.
    

7. The activities of the Office of the Inspector General are duly coordinated with those of the Board of External Auditors and any independent auditing firm the Board may designate to conduct audits.
    

8. Audit plans are suitable and the scope, staff, access, and authority of the Office of the Inspector General are appropriate, without any restrictions that might interfere with the accomplishment of its objectives and the execution of its plans.
    

9. Action is taken on any significant weakness found in internal accounting controls by the independent auditors in the course of the annual audit.

In the performance of his internal audit responsibilities, the Secretary General shall consider the Inspector General's report approved once 30 days from its presentation have elapsed and he has not commented thereon.

CHAPTER II

RESPONSIBILITY OF STAFF MEMBERS FOR TAKING
CORRECTIVE ACTION

1. Obligation to Take Action
   
   The administrator, director, chief, coordinator, supervisor, or other such officer (hereinafter referred to as "the supervisor") of the office, department, program, division, unit, activity, or project being audited is responsible for ensuring that appropriate corrective action is taken or planned with regard to the recommendations made or the deficiencies reported by the Inspector General within 30 days following receipt of any report transmitted by the Secretary General in which such recommendations are made or in which such conditions are pointed out. In addition, the supervisor is responsible for ensuring that a written report is submitted to the Inspector General on the actions taken or planned, with copies to his immediate supervisor and to the Secretary General. If a planned action is reported, a second report shall be submitted immediately after that action is carried out.
    

2. Failure to Act
   
   If the supervisor does not take the recommended corrective action within 60 days after receiving a report from the Office of the Inspector General transmitted by the Secretary General, or within 60 days after receiving a written report on the planned action, the Inspector General shall submit to the Secretary General a special report on the matter, so that he may take any action required. If there are indications that corrective action on significant matters is being delayed, evaded, or in any way avoided or ignored, the Inspector General may recommend to the Secretary General that such disciplinary measures as apply under the pertinent regulations be taken.
    

3. Prohibition of Interference with or Evasion of Internal Control Measures
    
   Supervisors are expressly prohibited from issuing orders or instructions that contradict or evade internal control measures or recommendations of the Office of the Inspector General. The Secretary General shall take appropriate action when informed of such cases by the Inspector General.
    

4. Responsibility for Losses Due to Failure to Act
   
   Supervisors who, within the 60 days referred to in paragraph B of this Chapter, do not take the recommended action on audit findings of which they have been duly informed shall be responsible for any loss of resources or other damage that their failure to act may cause, and the Secretary General may require appropriate compensation from them, pursuant to Rule 101.3 of the Staff Rules.

CHAPTER III

PURPOSE, AUTHORITY, AND RESPONSIBILITY OF THE
OFFICE OF THE INSPECTOR GENERAL

1. Purpose of the Office of the Inspector General
   
   The purpose of the Office of the Inspector General is to advise and assist the Secretary General and, through him, the executive secretaries, the assistant secretaries, and any other General Secretariat supervisory staff in the proper discharge of their responsibilities by providing them with appropriate analyses, evaluations, investigations, recommendations, and comments on the activities reviewed. Internal auditing is a management control that operates by measuring and evaluating the effectiveness of other management controls.
    

2. General Objectives of the Office
    
   1. Conduct, supervise, and coordinate audits, evaluations, inspections, and investigations of operations and programs.
    
   2. Promote economy, efficiency, and effectiveness in General Secretariat operations and all OAS programs and projects.
    
   3. Assist all levels of management in the prevention or detection of fraud and abuse and the risk thereof in programs or operations by way of review, monitoring, evaluation, and recommendation of improvements in management and accounting controls and by way of investigation of suspected or alleged weaknesses or irregularities.
    
   4. Keep the Secretary General informed by advising him on opportunities to improve operations and reduce the risk of loss due to inefficiency or actual or potential irregularities.
    

3. Authority of the Inspector General
    
   1. Authority and Coverage of Audits
    
   The Inspector General plans, organizes, directs, and controls a comprehensive program of internal auditing, inspection, and evaluation in the General Secretariat. He examines, reviews, and evaluates the suitability and effectiveness of the internal management and accounting control systems employed by the General Secretariat in directing its activities toward the accomplishment of its objectives, in accordance with OAS policies and plans. He also examines and evaluates the performance of assigned responsibilities and, when necessary, conducts investigations.
   
   Accordingly, when the Inspector General considers it appropriate, he shall review any and all operations and activities of the General Secretariat to evaluate:
   
   a. The reliability and integrity of financial and operational information.
   
   b. Compliance with any policies, standards, regulations, manuals, procedures, and plans in effect that might have a significant impact on operations.
   
   c. Measures taken to safeguard assets, including checks to verify their existence and ownership when appropriate.
   
   d. Economy and efficiency in the use of human, material, and financial resources.
   
   e. Effectiveness in achieving objectives and goals established for programs, activities, and projects.
   
   2. Direct Communication with the Secretary General
   
   The Inspector General shall report to the General Secretariat both orally and in writing on the results of audits, inspections, evaluations, and investigations conducted, when they contain findings and recommendations of importance. When, in his view, they deal with matters and suggestions of lesser importance, he shall communicate his findings directly to the supervisors concerned. The Inspector General shall sign each report, and shall include in it the name of the auditor responsible for the audit, inspection, evaluation, or investigation. Any reports the Inspector General considers confidential shall be identified as such, and their distribution shall be limited as he sees fit.
   
   3. Unlimited Access
   
   In the performance of their activities, the Inspector General, the Deputy Inspector General, and the auditors the Inspector General designates in writing for specific purposes shall have full, free, and unrestricted access to all functions, activities, operations, records, properties, and staff of the General Secretariat, both at headquarters and in other places, as may be considered necessary for effective performance of their audits. The Inspector General, when he approves the audit programs, may also authorize specific contacts with third parties outside the General Secretariat. When confidential matters are involved, the Inspector General may limit access to himself only or to a senior auditor designated by him, depending on the nature of the situation.
   
   4. Budget
   
   The Inspector General shall prepare the proposed budget for his Office and shall submit it directly to the Secretary General for consideration and inclusion in the proposed program-budget of the General Secretariat that is submitted to the General Assembly for approval.
    

4. Responsibility of the Inspector General
   
   The Inspector General is responsible for proper administration of his Office, so that the audits performed and the reports issued shall comply with the purposes and responsibilities set forth herein, that resources shall be utilized efficiently and effectively, and that audits shall be performed in accordance with the Standards for the Professional Practice of Internal Auditing. He is specifically responsible for:
   
   1. Establishing policies, standards, and procedures for the activities of the Office of the Inspector General and for directing its technical and administrative functions.
   
   2. Developing and executing comprehensive plans for carrying out audit responsibilities, including review, monitoring, and evaluation of the internal management and accounting controls established for all activities of the Organization.
   
   3. Establishing a program for selecting and developing the human resources of the Office, including comprehensive evaluation of the audit work carried out by each auditor on the staff and periodic rotation of audit responsibilities.
   
   4. Reviewing the effectiveness of all management levels in safeguarding and using resources and in complying with established policies, standards, rules, and procedures.
   
   5. Conducting systematic and selective audits of all operations, in accordance with a long-term cyclical plan that ensures complete auditing within an appropriate time period.
   
   6. Making arrangements to perform audits of operations and activities carried out away from General Secretariat headquarters, contracting, when he considers it desirable in the interest of the Organization, the services of qualified auditors or professional auditing firms; drawing up and approving guides or programs for audits that are to be conducted; and reviewing and supervising the work of any auditors contracted.
   
   7. Recommending that agreements be concluded between the General Secretariat and top auditing institutions or other recognized professional auditing organizations of the member states under which they will conduct audits of the Organization's programs and projects in the member states, utilizing their own professional staff, in keeping with the audit policies, standards, guides, or programs issued or approved by the Inspector General; and reviewing and supervising the quality of audit work sheets and reports submitted and reporting on this to the Secretary General.
   
   8. Evaluating the specific objectives of controls in the areas reviewed, identifying areas of significant or high risk, and defining alternative approaches to rectify weaknesses.
   
   9. Recommending improvements in internal management and accounting controls designed to safeguard the Organization's resources, to promote its development and the achievement of its objectives, and to ensure compliance with applicable regulatory provisions.
   
   10. Reviewing procedures, records, and resources to determine whether they are suitable for effective accomplishment of the desired objectives, and evaluating policies and plans relating to audited activities or functions.
   
   11. Reviewing internal controls of any electronic data processing systems proposed, as well as modifications of existing systems; making recommendations for strengthening such controls; expressing his agreement with such controls before their application; and monitoring and testing them periodically.
   
   12. Issuing a timely individual report on the findings of each audit examination, including recommendations for improvements and the disclosure of weaknesses in internal controls or other deficiencies, after appropriate supervisory review and final editing of the content of draft reports submitted by auditors or auditing firms.
   
   13. Issuing a quarterly report summarizing audit activities and actions taken by management.
   
   14. Evaluating the appropriateness of the action taken by management to correct any weaknesses observed, both in internal control and in other areas, accepting the corrective action taken when it is adequate and, when it is considered inadequate, insisting on review and direct communication with the staff members involved until the matter is satisfactorily resolved.
   
   15. Performing risk and cost-benefit analyses based on the simplest possible calculations to help management with significant decisions on whether action should be taken on specific weaknesses in internal controls or the risks involved in a lack of action should be accepted.
   
   16. Conducting special reviews on possible or alleged violations of the Policies with respect to Ethics of Conduct and Conflicts of Interest at the request of the Secretary General, on his own initiative, or when audit findings reveal the possibility of significant violations, and presenting confidential reports on these matters to the Secretary General.
   
   17. Advising the Secretary General regarding the overall effectiveness of the total system of internal management and accounting controls.
   
   18. Ensuring that the findings of any audit, inspection, evaluation, or investigation made are documented properly in professionally prepared work sheets that are appropriately reviewed both during and after the work, either by the Inspector General or by a senior auditor designated for that purpose.
   
   19. Conducting special examinations, evaluations, and investigations at the Secretary General's request or on his own initiative, and reviewing statements or declarations made by persons and bodies outside the Organization, when he regards it as necessary.
   
   20. Coordinating internal and external audit work, in order to reduce duplication to a minimum, provide adequate coverage, and ensure the conformity of existing internal accounting controls with management's statements to external auditors concerning significant transactions and assets.
   
   21. Establishing and maintaining a quality control program to evaluate the operations of the Office of the Inspector General.
   
   22. Submitting special reports to the Secretary General orally and/or in writing, when planned corrective actions have not been taken as indicated in
   Chapter II, paragraph B.
   
   23. Communicating directly with the Secretary General at any time on any matter that, in his opinion, merits the Secretary General's attention.
   
   24. Reporting to the Board of External Auditors on the issuance of all audit reports as they are submitted to the Secretary General.
    

5. Responsibility of the Staff of the Office
   
   The Inspector General, the Deputy Inspector General, the staff of the Office, and, where appropriate, the auditors contracted shall act in accordance with the purposes and responsibilities established herein and with the Standards for the Professional Practice of Internal Auditing. Staff members and contracted personnel are expressly responsible for:
   
   1. Preparing, in cooperation with the Inspector General or an auditor designated by him, and under appropriate supervision, comprehensive audit programs designed to accomplish the objectives authorized.
   
   2. Implementing approved or standardized audit programs and applying their professional judgment during such implementation, especially when planned field work must be modified or prolonged.
   
   3. Drawing up in a professional manner audit work sheets that fully document and explain the findings of the work performed and include the procedures followed, the specific operations or transactions tested, and the conclusions reached.
   
   4. Drafting and promptly submitting for review, when they are charged with conducting audits, reports that fully and objectively set forth the findings of the work done and, in the course of that work, verbally communicating nonconfidential findings to the staff members responsible.
   
   5. Complying with the standard requirements prescribed by the Inspector General for the preparation of programs, work sheets, and audit reports.
   
   6. Complying with the technical and managerial policies, standards, procedures, guides, and practices specified herein and by the Inspector General.
   
   7. Exercising a high level of self-discipline in complying with the content and spirit of all policies, standards, regulations, procedures, or other provisions of general application to General Secretariat staff members, so that, by setting an example of conduct and professional performance, they encourage the acceptance of audit findings by other staff members. The auditors shall demonstrate professional conduct equivalent to that required of the staff of an independent auditing firm.
   
   8. Pursuing programs of continuing education and professional development both during and outside regular working hours.
   
   9. Performing audits or other assignments as authorized by the Inspector General.
   
   10. Maintaining proper discretion regarding matters reviewed and any confidential information, ensuring professional responsibility commensurate with the authority for unlimited access mentioned in Chapter III, Section C, paragraph 3.
   
   11. Observing the Code of Ethics of the Internal Auditor approved by the Institute of Internal Auditors and, where applicable, the Code of Ethics of the Certified Internal Auditor, as well as any other codes or rules of conduct specifically established.
   
   12. Following up on actions taken in response to audit findings, when the Inspector General so directs.
   
   13. Supervising and evaluating the work of other members of the Office and the work sheets prepared by them, when the Inspector General so directs.
   
   14. Working with auditors assigned or contracted by the Board of External Auditors or by the Organization, when so assigned by the Inspector General.
   
   15. Working with other staff auditors in general and especially when serving as members of audit teams or special groups, settling in a professional manner any difference of opinion and, when such settlements are made, subordinating any differing personal opinions or views to those established by the group or team leader and/or by the Inspector General, in order to ensure uniformity of views regarding the audits conducted and the reports issued.
   
   16. Maintaining a completely independent and objective mental attitude in all activities and contacts with OAS staff members, during or after working hours; refraining from any personal or official activity that might cause actual, potential, or presumed bias or prejudice; and notifying the Inspector General of any situation where there may be conflicts of interest or prejudices or where such conflicts might reasonably be inferred, so that a different auditor may be assigned to prevent such a situation.

CHAPTER IV

OTHER PROVISIONS

1. Limitation of Authority and Responsibility
   
   In performing their functions, the Inspector General, the Deputy Inspector General, and the staff members of the Office have no direct authority over or responsibility for any of the operations or activities reviewed.
   
   Accordingly, they shall not develop or establish procedures, prepare records, take management decisions, or participate in any other activity that might reasonably be construed to compromise their independence. Therefore, review and evaluation by the Office of the Inspector General does not relieve other General Secretariat staff members of the responsibilities assigned to them or substitute for those functions.
    

2. Ensuring Objectivity
   
   To ensure objective analysis of facts and impartiality of judgment, the staff of the Office of the Inspector General shall not take part in operating procedures except with regard to their review and evaluation. Review and evaluation of systems, programs, procedures, manuals, etc. shall be confined to suggestions for improving the related internal controls. No staff member of the Office of the Inspector General who has previously performed other work in the General Secretariat may conduct audits in the area in which he was previously employed until five years have elapsed.
    

3. Evaluations
   
   The Office of the Secretary General shall provide, at least every three years, for a comprehensive evaluation of the internal audit function of the Organization, conducted by a professionally qualified auditor or auditors totally independent of the Organization, who shall issue a written report thereon, including recommendations for future additional improvements and an opinion as to compliance by the Office of the Inspector General with this declaration and with the Standards for the Professional Practice of Internal Auditing.

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