January 1 to March 31, 1997

       At the end of January, the Office of the Inspector General concluded an audit on the General Secretariats Office and its projects in Guyana. This audit, which is included in the Inspector Generals plan of activities for 1997, was the first since the National Office in Guyana was opened in 1994, and was carried out to coincide with the end of services of its Director, who has been transferred to another position at headquarters, and has been replaced in Guyana by another staff member.

       The audit covered the period between January and December 1996 and its main objective was to evaluate the internal controls over the flow of funds, verifying compliance with the responsibilities of the Office in accordance with established regulations, and to put forward all necessary recommendations to increase operational efficiency.

       In general, internal controls in the National Office in Guyana are adequate for authorization of transactions and activities, to guarantee the use and access to assets and files, and to register transactions and amounts. As of the date of this audit, financial operations were the responsibility of a secretary/administrative technician, who should receive training in the General Secretariats financial procedures and in the use of computer applications that would facilitate these operations.

       The Secretary General approved the 21 recommendations contained in Audit Report SG/OIG/AUDIT-01/97.

       Immediately following the audit of the Office in Guyana, the OIG proceeded to carry out an audit of the National Office and projects in Suriname (SG/OIG/AUDIT-02/97). This audit had the same main objective of the previous one, and in addition, was a follow-up of the implementation of recommendations issued in the 1993 audit of this Office. Likewise, it covered 1996 operations and responded to the plan of activities of the Office of the Inspector General for 1997.

       This audit report revealed that the National Office in Suriname has not been following several procedures that govern activities and financial transactions, and that some recommendations issued in the 1993 audit report had not been implemented. Likewise, the audit detected a violation of the Personnel Rules in the payment of a special duties subsidy since it had been extended beyond the maximum time limit established by Rule 103.7, due to which the Inspector General recommended the termination of this payment.

       Similarly to the audit of the Office in Guyana, this report points out the need of improving communications between headquarters and the Offices in the Member States. The proposal that has been put forth by the Department of Information Systems of linking the National Offices to headquarters via the Internet and electronic mail, would contribute significantly to improving communications, and therefore, the efficiency of operations away from headquarters.

       The Secretary General approved the 23 recommendations issued in this report.

       During the quarter covered by this report the following audits were also carried out: system used on flow of funds and payment procedures, at headquarters; Office of the General Secretariat in Uruguay; Inter-American Children's Institute, in Montevideo; Office of the General Secretariat in Argentina, Inter-American Center on Taxation and Financial Management, and Inter-American Center on Social Development, both in Buenos Aires; and Inter-American Juridical Committee, in Rio de Janeiro. The reports on these audits were in the final stages of preparation as of the date of this quarterly report and will therefore be included in the report for the second quarter of 1997.

April 1 to June 30, 1997

       In October 1994, the Office of the Inspector General performed audit SG/OIG/AUDIT-09/94 to evaluate the flow of funds system and payments procedures. At that time, weaknesses were detected in eight main areas. Between the end of January and the beginning of March, 1997, the OIG carried out a second examination to determine if there had been any improvements since the last audit.

       In this second review, centered fundamentally on the year 1996, similar conclusions were reached as those in the 1994 audit. In general, there is still need to improve financial operations in areas such as personnel, control over fund advances, coordination between the Offices in the Member States and headquarters, and timely reprogramming of obligations, among others. Following is a summary of the main conclusions of Audit Report SG/OIG/AUDIT-03/97.

       The Department of Financial Services has experienced a considerable personnel reduction in the last year. During 1996/97, this department lost eight positions due to the retirement of staff and the elimination of positions. The Inspector General reserves his opinion on the reorganization of the Department of Financial Services to accommodate this situation, and will examine this matter again at mid-year.

       Although some improvement was noted in the flow of fund system, there still are some problems, among them the lack of adequate coordination and cooperation between headquarters and the Offices of the General Secretariat in the Member States.

       In the Offices of the General Secretariat in the Member States there is a total of over $8.8 million of pending Obligations, out of which an estimated minimum of $400,000 could be de-obligated. The audit attributed this fact to the insufficient coordination between those Offices and headquarters, a conclusion which is based, in good measure, on the answers obtained by OIG to a questionnaire sent by fax to the Offices.

       According to the monthly reports of the Department of Financial Services, as of December 31, 1996 there was a balance in fund advances of $477,723. The audit reached the conclusion that the area of fund advances continues to be a weak point in the accounting system, among other reasons because the balances contained in the reports contain discrepancies, and because some of the advances made at headquarters remain outstanding for too long a period of time.

       It is necessary to update the operational manuals of the General Secretariat (among them, the Field Financial Manual), some of which are more than 20 years old.

       Deficiencies were observed regarding delegation of authority on bank accounts and on the list of the staff members authorized to certify the validity of Obligations and receipt of goods and services.

       In this Audit Report, 23 recommendations were issued, out of which the Inspector General resolved to leave 4 suspended, while the OIG examines the results of the temporary reorganization of the Department of Financial Services. As it was stated before, the OIG will examine this issue in the coming months.

       The Secretary General approved all recommendations contained in this Audit Report.

       Since 1994, the Office of the Inspector General has issued several audit reports that have pointed out different problems related to the procedures and computer systems in the General Secretariat. Taking in consideration that in February, 1997 the Commission of Administrative and Budgetary Matters published its evaluation report on the modernization project for the information systems, and taking into account the following approval by the Permanent Council of almost $9 million for that project, the Inspector General decided to carry out a review with four main objectives.

• evaluate the work done by American Management Systems (AMS), the company hired by the General Secretariat to do a technical study on the computer functions and system;
• ensure that the recommendations of AMS are compatible with the plan of execution for the modernization of the OAS information systems;
• examine the present system and current procedures used in the cycle going from the obligation of funds until their disbursement;
• determine if it would be convenient to extend the audit to cover computer systems more extensively.

       Audit Report SG/OIG/AUDIT-04/97, issued on April 4, 1997, allowed the OIG to reach the following conclusions:

       AMS did an excellent job in capturing and explaining the complex interrelationship of the information needs of the General Secretariat and its functions, procedures, material and human resources, dependencies and problems. AMS recommended the migration from the present system towards modern technology, instead of proposing simple corrections as an answer to the many deficiencies that exist in the current systems in the General Secretariat.

       The plan of execution is very well formulated.

       No serious problems were detected in the test conducted as part of the audit over a total of approximately $10 million in transactions.

       Notwithstanding these favorable conclusions, the audit pointed out some problems and, consequently, the Inspector General recommended that the Assistant Secretary for Management take the necessary measures to enable the contractor awarded the task of modernization to take into account the strengths and weaknesses indicated in the audit report.

       This recommendation was approved by the Secretary General and implemented by the Assistant Secretary for Management, who sent the audit report to the contractor selected for the first phase of the modernization plan.

       The Office of the General Secretariat in Uruguay had not been audited since 1992, so its audit was programmed as part of the work plan of the Office of the Inspector General for 1997. Audit Report SG/OIG/AUDIT-05/97, issued on April 15, 1997, covered the Office and the projects administered by it. The volume of funds administered by the Office in Uruguay during 1996 was $578,000. The audit verified that in general, the staff members in this Office are following the regulations of the General Secretariat. The audit did not detect any noncompliance with administrative procedures, nor in reference to the administration of funds.

       The audit report included recommendations to improve operational aspects in the Office in Uruguay, especially in reference to its present location in the property occupied by the Interamerican Children's Institute. Likewise, recommendations were made to improve communications with General Secretariat headquarters -- a recurrent problem that has been discussed in several audit reports, which was detected once more in this case.

       The Secretary General approved the 12 recommendations included in the report and several of these have already been implemented.

       In the program-budget of the Organization funds are allocated for the payment of two types of pensions: those payable to those persons who occupied the positions of Secretary General and Assistant Secretary General, or their widows; and those pensions granted by the Permanent Council to former staff members, after the fixed term pensions they received from the Retirement and Pension Fund lapsed, or in one case, to a staff member who retired because of illness.

       In view of the advanced age of some of the beneficiaries, the Inspector General decided to verify if the people with a right to these pensions were effectively receiving them. It was verified that they do. At the same time, two irregularities were detected:the budgetary account for 1997 includes the names of two former staff members that passed away several years ago, and who have not received a pension after their death; and on the other hand, that account does not include the name of a former staff member, who retired because of illness, that is actually receiving a pension.

       Consequently, in Audit Report SG/OIG/AUDIT-06/97, it was recommended, inter alia, that the department of Financial Services verify twice yearly the current situation of the persons entitled to these pensions and that the information regarding the beneficiaries be maintained up-to-date.

       The General Secretary approved this recommendation and others contained in the audit report.

       The mission to Uruguay for the audit of the Office of the General Secretariat in that Member State, included also an audit of the Interamerican Children's Institute (IACI), also located in the city of Montevideo.In 1996, the IACI administered transactions for an amount of approximately $500,000. Out of this total, a significant amount is accounted for by the projects the IACI implements with donor countries, among which it is worth mentioning the contribution of about $400,000 by the Government of Spain, and the contributions of the United States, Norway, the Netherlands and Denmark.

       In general, the staff members of the IACI follow the norms and regulations of the General Secretariat. Nonetheless, the audit detected some exceptions to this general rule, that led to recommendations to take appropriate corrective action. Among these recommendations is reinforcing the administrative capacity of the IACI, that as of the date of this report did not have the services of a full-time Direct Services Support Officer. It was also recommended to urgently carry out the needed repairs to the library and the printing area of the IACI and to study different alternatives to accommodate the Office of the General Secretariat in Uruguay, presently located in the site occupied by the IACI.

       The General Secretary approved the 19 recommendations included in Audit Report SG/OIG/AUDIT-07/97. Several of these have been implemented as of the date of this quarterly report.

       The Department of Public Information had never been audited before, and therefore, the Inspector General scheduled this audit as part of its work plan for 1997. The department is directed by an Executive Order of the Secretary General, and, in addition, by the Program of Action for the Strengthening of the OAS in the Field of Public Information, which was approved by the General Assembly in 1991.

       The audit verified that the Department of Public Information is satisfactorily fulfilling its responsibilities, even in the face of difficulties in the budgetary and personnel areas. In the twenty-seventh ordinary meeting of the General Assembly , several delegations, when considering the department=s annual report of activities, recognized the importance of the work and the efficiency with which it is being carried out. Through a general disposition included in the resolution for the program-budget of the Organization for 1998, the General Assembly requested the Permanent Council to continue its support of the Model Assembly program of that department, and that the General Secretariat assist the department in the area of information systems. In Audit Report SG/OIG/AUDIT-08/97, issued on June 27, 1997, recommendations were made for the prompt implementation of that decision of the General Assembly. In addition, there are recommendations directed at improving administrative and financial aspects of the department. As of the date of this quarterly report, the 20 recommendations of the audit were under consideration by the Secretary General.

       Likewise, as part of the work plan of the Office of the Inspector General for 1997, the OIG conducted an audit of the Interamerican Juridical Committee (IJC), located in Rio de Janeiro, and of the Interamerican Center for Commerce (CICOM), located in the same city, were also conducted. Both the IJC and CICOM had not been audited since 1986.

       During 1996, the period covered by the audit, the IJC and CICOM carried out transactions in the order of $370,000. Most of the expenditures are accounted for travel and performance contracts related to the meetings of the IJC and the courses organized both by the IJC and CICOM.

       In general, both organizations are following the rules and regulations of the General Secretariat. The audit revealed operational aspects in relation to CICOM that represent a significant annual cost and recommended the appropriate corrective measures. Likewise, the audit identified a possibility of reducing operational expenses by the IJC, related to its location, and a pertinent recommendation was made.

       The Secretary General approved the eight recommendations of Audit Report SG/OIG/AUDIT-09/97.

Other Activities

       The Office of the Inspector General participated, as an observer, in the bidding process for the modernization of the information systems of the Organization. The OIG also participated, as is customary, on the Committee on Sales (COVENT).

       Regarding the mandate of the General Assembly to the Office of the Inspector General, included in resolutive paragraph 7 of the resolution for the Offices of the General Secretariat in the Member States, adopted during the twenty-seventh ordinary meeting, the Inspector General participated in the meetings of the working group in charge of the task mandated to the General Secretariat in that resolution.

       As part of the continuing program of training for the auditors of the OIG, two auditors participated in a week-long training seminar on statistical techniques for auditing conducted by the Inspector General of USAID. This seminar was offered without cost to the Office of the Inspector General of the OAS as part of an informal agreement with its counterpart in USAID. Another auditor participated in a seminar on computer-based auditing techniques offered by the Institute of Internal Auditors; and one auditor participated in a training course offered by Oracle Education on the new financial database that will be implemented in the Organization as part of the systems modernization program. This is the first course in a series in which the OIG will participate in order to be properly prepared for the implementation of the financial system modernization program in the Organization.

July 8, 1997

Guillermo A. Belt
Inspector General (a)

       Official travel costs represent a very significant cost element for the Organization. In 1995 headquarters travel amounted to $4.2 million, $3.6 million in 1996, and amounts to $2.5 million in the first nine months of 1997. For this reason and taking into account the interest expressed by the Committee on Administrative and Budgetary Affairs in this matter, the Office of the Inspector General made a review of official headquarters travel in 1996, covering the period 1 January 1995 through 31 August 1996. The report on that audit (SG/OIG/AUDIT-11/96) contained seven recommendations, all of which were approved by the Secretary General.

       In compliance with those recommendations, the Assistant Secretary for Management issued Administrative Memorandum No. 79, dated 16 January 1997. In order to determine if provisions of this issuance are practical and are being followed, and also to test a representative number of travel transactions to ensure propriety of costs, the Inspector General decided to carry out an audit covering the revised policy and costs of official headquarters travel. The report on this audit (SG/OIG/AUDIT-10/97), issued on 1 July 1997, contains 13 recommendations, all of which were approved by the Secretary General.

       The report concluded that while some of the instructions contained in Administrative Memorandum 79 are working well -- including preparation of official travel plans, quarterly reports on official travel, procedure for approval of unplanned trips, and (with minor modifications) the arrangements with the OAS Credit Union for providing travel advances -- others require modification or a reevaluation of the concept. For example, errors detected in the sample of official travel point to defects in the decentralization concept, as a result of which the Department of Financial Services may have to reassume the review functions which were recently decentralized to other departments and offices throughout the General Secretariat.

       Another conclusion of this audit is that uniform instructions must be provided, among others, on travel expense claims, accounting for costs, and obligation procedures. Therefore a revision of Administrative Memorandum 79 is called for and, upon this issuance, training sessions are recommended to provide staff with clear guidance on the scope and intent of these regulations.

       To date the actions taken to comply with the recommendations in SG/OIG/AUDIT-10/97 are as follows:

1. Ten recommendations have been implemented and a revised Administrative Memorandum 79 has been reissued.
2. The remaining three recommendations are in process of implementation.

       The Office of the General Secretariat in Argentina had not been audited since 1992, and the Inter-American Center on Taxation and Financial Administration (CITAF), as well as the Inter-American Center on Social Development (CIDES), both located in Buenos Aires, had not been audited since 1988. Therefore, all three were included in the work plan of the Office of the Inspector General for 1997, and the audits were performed on the same trip since both centers work through the General Secretariat Office.

       The audit report (SG/OIG/AUDIT-11/97) contains ten recommendations concerning the Office in Argentina, and one on proper disposal of the assets of the two inter-American centers once the decision is made to nationalize or close them. All recommendations were approved by the Secretary General.

       The main conclusion of the audit was that as a rule the staff of the Office in Argentina and that of the two centers are following General Secretariat regulations and practices. An exception was found in the case of certain payments made by the Office in Argentina to a local contract employee which the auditors identified as additional compensation not defined in the contract between the Office and a local firm. The matter was resolved in the course of the audit and the procedure has been discontinued.

       A number of recommendations and observations in the report are directed to improving operational aspects of the Office in Argentina. A general recommendation, to be applied in all OAS Offices in Member States, is for the Secretary General to issue policy directives on the use of duty-free importation privileges accorded by Member States to staff members of the General Secretariat who serve away from headquarters, to ensure that these privileges are invoked only in the best interests of the Organization. A draft Administrative Memorandum on this matter was recently reviewed and commented upon by the Inspector General, and it should be issued shortly. The remaining recommendations are being complied with as follows:

1. Of the eleven recommendations issued, eight have been implemented; among these the sale of one of the official vehicles identified as unnecessary in the audit, and the drafting of a new Administrative Memorandum regulating the use of the import duties exemption the host countries offer the General Secretariat.
2. The remaining three recommendations are in process of implementation.

       At the request of the Executive Secretary for Integral Development, the Inspector General decided to update an earlier audit concerning a field project and at the same time to assess the follow-on project scheduled for completion by 31 December 1997. All five recommendations of SG/OIG/AUDIT-12/97 were duly approved and as of the date of this quarterly report were in process of implementation by the Executive Secretary of CIDI, to whom they are addressed.

       At the request of the outgoing President of the OAS Staff Association and with the concurrence of the new President elected in June 1997, an audit of the Association was conducted. Originally conceived as a financial audit, the scope of the work was increased to include an operational review of the Staff Association so that the report might have the most impact in the long run on the way the Association conducts its administrative and financial affairs.

       The 28 recommendations of report SG/OIG/AUDIT-13/97 are all addressed to the President of the Staff Association and concern matters entirely within the purview of the Association. The report was presented to the President of the Staff Association on 29 September.

Evaluation

       The Inspector General conducted in person an evaluation of the administrative independence of the Inter-American Court of Human Rights. After examining relevant documents at headquarters and interviewing officers of the General Secretariat who have been involved in conversations with the Secretariat to the Court regarding this topic, the Inspector General met with the Secretary of the Court and discussed the draft of agreements prepared by the Department of Legal Services with a view to giving the Court the degree of administrative autonomy required by the independent nature of the inter-American tribunal.

       At the invitation of the Court, the Inspector General met with its President and members at the Court's see in San Jose and responded to questions related to the matter under review. Subsequently the Court wrote to the Secretary General and expressed its wish to sign the agreements at an early date, suggesting modifications that it considered minor.

       In report SG/OIG/EVALUACION-1/97 of 30 September 1997, the Inspector General recommended that the agreements be signed as soon as possible.

Other activities

       The Inspector General participated in several meetings on the modernization of the information systems of the Organization; in regular meetings of the COVENT; and also participated in meetings of the General Secretariat working group established to comply with AG/RES.1530 (XXVII-O/97), on the Offices of the General Secretariat in Member States.

       Auditors in this office have continued participating in training seminars to keep abreast of new developments in the field of Internal Audit and to strengthen their knowledge of auditing and related fields. Two of these seminars were conducted by the American Institute of Internal Auditors and one by the U.S. Department of the Treasury's Inspector General Auditor Training Institute. In addition, our auditors also participated in two training sessions organized by the Oracle Corporation on the operation of the new financial system, and an internal control system of special interest to the OIG, which will be installed in the General Secretariat as part of the modernization program of the information systems of the Organization.

October 2, 1997

Guillermo A. Belt
Inspector General (a)

       The Inter-American Drug Abuse Control Commission (CICAD) was audited for the first time in 1993 and had not been reviewed since. Therefore, the Inspector General scheduled an audit of CICAD in the work plan of his office for 1997, with the main objective of examining the degree of compliance with the norms and regulations of the General Secretariat by CICAD staff and to follow up on the recommendations made in audit report SG/OIG/AUDIT-02/93. Additionally, the audit sought to identify possibilities for improvement in operational mechanisms in order to ensure optimum use of the resources administered by CICAD.

       The audit (SG/OIG/AUDIT-14/97), which was carried out in August and September, 1997, showed that in general terms staff members of CICAD are complying with General Secretariat rules and regulations. The main finding was that CICAD continues to operate without an Executive Order, although a draft of one has been in existence since 1991. Because executive orders are the basic internal documents of the General Secretariat which establish the mandate, objectives and structure of its major areas, the Inspector General believes that the Executive Order of CICAD should be issued without further delay, and made a recommendation in this regard in his audit report.

      The seven recommendations in this report were approved by the Secretary General, and several of them have been implemented as of this writing. All of the Inspector General's recommendations in the 1993 audit have been fully implemented.

      The Office of the General Secretariat in Venezuela was last audited in 1990 and therefore this audit -- SG/OIG/AUDIT-15/97) -- was scheduled for 1997. The audit found a lack of adequate and timely information from headquarters to the Office in Venezuela on a number of matters of which this office needs to be aware for the efficient discharge of its responsibilities. Similar findings have been made in other field audits, which indicates the existence of a systemic problem.

       The General Secretariat Office in Venezuela handled financial transactions for a total of approximately $847,600 from 1 January 1996 to 30 September 1997, which was the period covered by this audit. A major portion of these transactions was for the execution of General Secretariat projects in this Member State. Through a general review of deposits and disbursements and the use of sampling techniques, the audit verified that in general terms the staff of the Office in Venezuela is in compliance with General Secretariat policies, rules and regulations, including the General Standards for the Operations of the General Secretariat, the Field Financial Manual and the agreement between the Government of Venezuela and the General Secretariat for the functioning of this Office. However, irregularities were noted and recommendations to correct them were presented, as well as suggestions for the improvement of operational procedures. A total of nine recommendations contained in this audit report were approved by the Secretary General.

       In November an internal audit report was issued on the procurement of computer equipment and supplies through the Department of Material Resources (SG/OIG/AUDIT-16/97). The main purpose of the audit was to follow up on recommendations for correcting the internal control weaknesses which were noted in audit report SG/OIG/AUDIT-11/95 issued in September, 1995.

       The audit, which covered the period June 1996 to July 1997, showed general improvement since the 1995 audit in the procurement operations within the Department of Material Resources (DMR), particularly in regard to organizational and personnel changes, selection of companies, and authorizations for purchase order amendments. Considering the high volume of transactions processed by the Procurement Division, the audit permits the Inspector General to state that, for the most part, DMR complies with General Secretariat procurement procedures. However, some weaknesses noted in the 1995 report still exist, and we found that generally there is need for more effective supervision and improvement in DMR's control of procurement activities including printing services, purchase of paper supplies, and monitoring the delivery of goods and services.

      The Secretary General approved the 26 recommendations presented in this report and they are in the process of being implemented.

Evaluation

       In the previous activity report (CP/doc.2978/97) reference was made to the evaluation carried out by the Inspector General in person of the administrative independence of the Inter-American Court of Human Rights, as a result of which he recommended that the Secretary General sign as soon as possible an agreement prepared by the Department of Legal Services with a view to giving the Court the degree of administrative autonomy required by the nature of this inter-American tribunal.

       The Inspector General is pleased to report that the agreement was signed by the parties in December 1997 and has entered into force.

Other activities

       Representatives of the Office of the Inspector General continued participating in committees and working groups of the General Secretariat dealing with matters which are of particular interest to OIG.

January 16, 1998

Guillermo A. Belt
Inspector General (a)