 January 1 to
March 31, 1998
 Audit Reports
1. The Trade Unit and the
Foreign Trade Information System (SICE) were audited in January 1998 as programmed in the
Inspector General's work plan for this year. The Trade Unit was created in 1995 by
Executive Order 95-4; SICE, which began operations in 1983, while maintaining the autonomy
of its administrative unit, functions under the Trade Unit in substantive matters
according to that Executive Order. Consequently, both audits are contained in report SG/OIG/AUDIT-01/98.
The review covered the period
from 1 January 1996 to 31 October 1997, during which the Trade Unit and SICE expended $4.2
million and did a great deal of work towards the Free Trade Area of the Americas (FTAA)
process. The audit showed that both the Trade Unit and SICE are fulfilling their
objectives in a satisfactory manner and that their achievements to date have been
generally impressive. The Trade Unit has prepared between 40 and 50 complex studies in
support of mandates of 8 of the 12 working groups created by the Member States to further
the FTAA process. SICE, for its part, has marked-up all published studies and other
material and posted them on the Internet. Both SICE and the FTAA have their own Web sites
on the Internet. The records show a strong upward trend in the number of access operations
("hits") to the SICE Web site, from a monthly total of slightly more than 8,000
in 1995 to a current monthly estimate of 200,000. Although this unit of measurement may
not be a totally accurate indicator and does not define the use being made of the
information, our conclusion is that there is considerable demand for SICE information.
If the services of the Trade Unit and SICE are found to be necessary
until the FTAA process is concluded in 2005 -- and this depends on political decisions to
be taken shortly --manpower requirements, employment mechanisms and goals of their
activities will have to be reconciled for the upcoming seven years. The audit report
contains recommendations in this regard. All 13 recommendations in the report were
approved by the Secretary General; the one concerning the transfer of two staff members to
the budget areas for which they render services to allow the filling of the two positions
by SICE-related personnel had been implemented as of the date of this quarterly report.
2. As part of the Inspector General's audit plan for 1998, an
evaluation of the Inter-Sectoral Unit for Tourism was performed at Headquarters covering
the period June 1996 to December 1997. The examination indicated that the period under
audit was primarily a period of transition in the Unit, which was created on 28 June 1996
by Executive Order 96-7 as the principal entity within the General Secretariat responsible
for tourism and its development in the OAS Member States.
The audit showed that the
Tourism Unit complied with OAS rules and procedures in processing financial transactions,
with the exception of some performance contracts (CPRs) that were issued without following
those procedures. In the report -- SG/OIG/AUDIT-02/98 -- the need for an adequate
information center is pointed out, as well as for an improved Web site on the Internet, a
centralized filing system and better communications within the Unit. Improvement was noted
in communications between the Unit and CIDI.
The audit report also
addresses the need to attract external funding and promote effective partnerships with the
private sector, both of which are included in the new economic development strategy
adopted by the Member States. In our opinion, the Unit's ability to attract external
financing was hampered in the period under review by insufficient technical skills, lack
of proper facilities, and by failure to prepare systematic plans and to execute more
effective follow-up action. The audit, issued on 30 March 1998, contains 14
recommendations for improving the staff skills and physical facilities currently available
to the Unit, the preparation of systematic plans of activities and, in general, for
enhancement of the OAS image in order to demonstrate OAS expertise in the field of
tourism. Because the recommendations were presented to the Secretary General immediately
before issuing this quarterly report, they were under his review at this writing.
Investigation
In the course of a field audit
conducted in 1997, the auditor detected a situation which warranted a thorough examination
of the rent subsidy accorded to certain staff members serving away from Headquarters.
Therefore, the Inspector General decided to carry out an investigation covering the 15
staff members who were receiving this benefit at 31 December 1997.
Eleven staff members were found
to be in full compliance with the regulations that govern the rent subsidy benefit.
Questions arose in the investigation regarding the other four. The matter was turned over
to the Director of the Department of Human Resources for action on the recommendations
contained in the report. The Director of Human Resources took very prompt action to
correct the anomalies detected by the auditor in the investigation.
Inspection
In March, the Inspector General
carried out in person an inspection of the "Programa de Cooperación Técnica para la
Consolidación de la Paz y la Reinserción en Nicaragua" (Technical Cooperation
Program for the Consolidation of Peace and Reinsertion [of former combatants into civilian
life] in Nicaragua). His report to the Secretary General was in preparation at this
writing, and will therefore be summarized in the Activity Report of the Office of the
Inspector General for the second quarter of 1998.
Other activities
Two auditors participated in a
two-day seminar organized by the Institute of Internal Auditors on security issues related
to the Oracle information system, within the ongoing training program in the Office of the
Inspector General.
A home page on the
Internet/Intranet for the Office of the Inspector General is in the process of being
designed and implemented. The home page will contain general information about OIG and its
mandate, and also reports that have been circulated as official Permanent Council
documents. The creation of a new data base for internal use by OIG, containing reports and
recommendations issued by the Inspector General, which will facilitate follow-up action on
implementation of recommendations, is also in process.
31
March 1998
Guillermo
A. Belt
Inspector General (a)
April 1 to June
30, 1998
Audit
Reports
1. As part of the 1998 work
plan, the Office of the Inspector General conducted an audit of the contracts between the
General Secretariat and Walton Thomas International, together with an evaluation of the
concept of outsourcing, as it is used in the General Secretariat.
The audit (SG/OIG/AUDIT-03/98)
covered the period from January 1, 1996, to February 15, 1998. It
examined 49 contracts and amendments, obligations for which amounted to
approximately $688,000 and expenses to slightly over $400,000. The
general conclusions of the audit are that Walton Thomas International
may be useful in implementing the outsourcing system (i.e., contracting
services from companies outside the General Secretariat, instead of the
General Secretariat’s hiring staff directly), as long as situations
arise where there is too much work or a need for short-term and
temporary staffing. However, the outsourcing mechanism should not be
used to fill long-term positions or when there is an ongoing need for
that type of position.
2. Following the inspection
conducted personally by the Inspector General, which is summarized later on in this
quarterly report, he decided to have a follow-up audit of the Technical Cooperation
Program for the Consolidation of Peace and Reinsertion in Nicaragua (PCT), which began its
activities in October 1997. That audit covered administrative, budgetary, and financial
aspects of the program, thus complementing the aforementioned inspection. In order to
maximize budgetary resources, the auditor was instructed, inasmuch as possible, to review
the mine-clearing program under way in Nicaragua, which had not yet been audited, and the
Office of the General Secretariat in that country, which had not been audited since 1992.
The audit of the PCT covered the
period from October 1, 1997, to April 24, 1998. The audit of the mine-clearing program
covered the period from January 1, 1998, to April 24, 1998, due to the absence of the
administrative coordinator of the program; and that of the Office of the General
Secretariat in Nicaragua covered the period January 1, 1997, to April 24, 1998.
This audit (SG/OIG/AUDIT-04/98)
concluded that the staff members and contract personnel working in the
Technical Cooperation Program for the Consolidation of Peace and
Reinsertion in Nicaragua, as well as in the Office of the General
Secretariat in that member state, were performing their functions with
due respect for the General Secretariat’s rules and regulations, and
that the shortcomings detected in the audit were mainly due to a lack of
training.
Since this report was issued
only on June 24, 1998, the 15 recommendations contained therein are being considered by
the Secretary General as of the date of this quarterly report.
3. On the same date, June 30,
1998, the Inspector General is presenting the Secretary General with the results of audit SG/OIG/AUDIT-05/98
on the mine-clearing program that the General Secretariat is executing in Central America
under the supervision of the Unit for the Promotion of Democracy. At the time this
quarterly report was drafted, the final version of the audit report was not ready.
Consequently, more detailed information thereon will be provided in the next quarterly
report.
Inspection
In view of the scope and
importance of the Technical Cooperation Program for the Consolidation of Peace and
Reinsertion in Nicaragua, the Inspector General included an inspection of the program in
the 1998 work plan. The Inspector General personally conducted that inspection in March
1998.
The inspection
found that this high-priority program was starting out with good
prospects of reaching the proposed objectives with regard to promoting
the human rights networks, strengthening the state at the mayoral level,
and caring for civilian victims of land mines who have nowhere to turn.
The program is confronting early difficulties with the component on
strengthening the judiciary, although it has the support of the Supreme
Court, with which the General Secretariat of the OAS has signed a
technical cooperation agreement. This program is based on a philosophy
consistent with the level of progress made in strengthening peace and
democracy in Nicaragua, which consists in placing in the hands of
national authorities, at the local and central level, the execution of
the program’s activities.
The Secretary General approved
the four recommendations in the Inspection Report on the Technical Cooperation Program for
the Consolidation of Peace and Reinsertion in Nicaragua (SG/OIG/INSP-01/98).
Other Activities
Representatives of the Office of
the Inspector General and the Inspector General himself continued participating in General
Secretariat committees and working groups on matters of particular interest to their
office.
30
June 1998
Guillermo
A. Belt
Inspector General
July
1 to September 30, 1998
The Inspector
General is required to submit quarterly reports on the activities of the
Office. This report covers the period which began with the Acting
Inspector’s appointment on July 1, 1998, and ended on September 30,
1998.
AUDIT REPORTS
- Current Period
1. OAS Staff Rules provide for reimbursement of
taxes to staff members who pay income taxes in relation to their income from the General
Secretariat to a member state, or a state or local government within a member state,
provided that the member State where the taxes are paid funds the full amount of the
reimbursement. In this respect the General Secretariat has signed agreements with four
Member States.
As part of the 1998 work plan,
the office of the Inspector General conducted an internal audit of the Tax Reimbursement
Program which is administered by the Department of Financial Services. The audit,
SG/OIG/Audit-06/98, covered the period from January 1997 to December 1997. During our
examination we became aware of significant errors in the calculation of tax reimbursements
to staff members in 1996 and consequently extended our audit scope to include selected
1996 transactions. The general conclusions of the audit are, that significant errors were
made in the calculation of amounts paid to staff members who received tax reimbursements
on quarterly advances and on lump sum distributions from the Retirement and Pension fund
in 1996 and 1997. The nine recommendations which were provided in that audit report for
improved efficiency and effectiveness in the performance of the operations of the Tax
reimbursement Program, have been approved by te secretary General and are in the process
of implementation.
2. As part
of the Inspector General’s audit plan for 1998, a field audit was
conducted of the office of the General Secretariat in Costa Rica (OAS
Costa Rica). This audit covered the period January 1, 1997, through
July 31, 1998. Its main objective was to evaluate the internal
controls over the operations of that office, verify compliance with
its responsibilities in accordance with established regulations and
where necessary, make recommendations to increase operational
efficiency. The audit (SG/OIG/Audit-07/98) found that there is need
for compliance with OAS Rules and procedures regarding authorized
signatures for the local bank account, and in recording obligations
prior to expenditures. In addition, there is room for improvement in
complying with OAS procedures regarding fixed inventory control and
the use of the official vehicle. Weaknesses in communication between
OAS offices in the Member States and headquarters have been identified
not only in the audit of OAS Costa Rica, but also in prior audits of
OAS National offices. In our opinion, the General Secretariat’s
plans to provide Internet connections to all field offices will
improve communication between the National Offices and Headquarters.
3. Americas
Magazine (Americas) had not been audited since 1987 and the
audit of its activities was undertaken as part of the 1998 audit plan
of the Inspector General. The audit covered the period January 1,
1997, to June 30, 1998. The main objective was to determine whether Americas
is carrying out its mandate, to evaluate the internal controls over
its operations, to verify its compliance with established regulations
as well as follow up on recommendations from prior audits of other
areas (SG/OIG/AUDIT – 16/97 AND SG/OIG/AUDIT – 11/95) regarding
procurement of goods and services by Americas. We determined
that revenues generated from the sale of the magazine are used to
finance its operating expenses to the extent possible and, according
to resolutions from the General Assembly, those operating expenses not
financed by these revenues are paid through the Regular Fund. The
audit determined that transactions were processed for the purpose of
publishing Americas
and that in 1998, Americas followed OAS procedures for
procurement of fulfillment and printing services. However, we found
that there is room for improvement in inventory control, maintenance
of valid subscribers’ lists, compliance with financial procedures
and OAS directives for the submission of time and attendance reports.
We also found that contracts awarded to an individual violated OAS
Staff Rules and procedures for performance contracts, and that the
balance of a 1995 overpayment to a maintenance supplier was still
outstanding. That overpayment was identified in Audit SG/OIG//AUDIT
– 11/95 which recommended recovery from the staff members concerned,
if the General Secretariat was unable to collect the balance due to
the OAS.
Both Audit
Report SG/OIG AUDIT – 07/98 and its nine recommendations as well as
Audit Report SG/OIG/AUDIT – 08/98 with fourteen recommendations
contained therein, were issued on September 30, 1998, and are being
considered by the Secretary General as of the date of this quarterly
report.
Audit
– 05/98
The Activity
Report for the period ended June 30,1998, made mention of the audit of
the Assistance Program for Demining in Central America and advised that
detailed information regarding that report would be provided in this
Activity Report. The audit covered the period January 1, 1996, to June
15, 1998, and the report (SG/OIG/AUDIT – 05/98) was submitted by the
last Inspector General on June 30, 1998. The objective of the audit was
to review the financial transactions and operations of the program,
determine the degree of compliance with regulatory requirements,
evaluate program operations and achievements and, where necessary,
recommend actions for improvement. We found that there was need for
improved coordination between Headquarters and the field, but that
generally the program has achieved excellent results. The Secretary
General approved the nine recommendations presented in the report and
they are in the process of being implemented.
Other Activities
Representatives of the office of
the Inspector General and the Inspector General herself continued to participate as
observers in General Secretariat committees on matters of particular interest to the
Office.
September
30, 1998
Linda
Pearl Fealing
Acting Inspector General
October
1 to December 31, 1998
Audit
Reports
The General Secretariat is now required to participate as a promoter
rather than an executor of technical cooperation projects. An audit of the second phase of
CIDI's project for Strengthening Scientific and Technological Development in Central
America (CTCAP) was programmed to review the processes of the new operational framework
established by CIDI for a partnership for integral development and to determine whether
project objectives have been achieved in an efficient and cost effective manner.
In general, we found that there is lack of compliance with the terms of
the Execution Agreement by both the Secretariat for Integral Development (SEDI) and the
Executing Agency. We found that consultant services account for about 87% of project
funds, that the process of awarding contracts in excess of $35,000 and a contract to a
government employee did not comply with the terms of the Execution Agreement. We also
found that funds were transferred between activities without appropriate approval and
counterpart funds were not kept separate from CIDI's contribution account. We also noted
during our field visit, that the procurement of project equipment was delayed because of a
requirement to pay approximately 30% of project funds for import duties and/or local taxes
and that there is need for timely financial reporting. According to the terms of the
Execution Agreement, SEDI is required to conduct effective evaluations of project results.
We were unable to ascertain if activities are effectively contributing towards the
achievement of project objectives because of the lack of the required evaluations. At the
time of the audit we felt that noncompliance with the terms of the agreement delayed the
pace of project implementation and presented a risk of jeopardizing its successful
implementation by the December 31, 1998 deadline. The twelve recommendations in report
SG/OIG/Audit-09/98 were approved by the Secretary General.
Audit Report SG/OIG/Audit-10/98 provided an assessment of the Year 2000
(Y2K) issue at the General Secretariat. Based on our review it is expected that OAS
information systems at Headquarters will be Y2K compliant when the new ORACLE database
system is fully installed and tested. The actual testing to assess the impact of Y2K on
operating information systems is the responsibility of the Office of Management Systems,
but Y2K impact on other operational activities, including the effect that other suppliers'
noncompliant systems may have on OAS operating and information systems, needs to be
considered. It is our opinion that with proper planning and timely action by management,
problems associated with the Y2K issue may be mitigated or avoided. The main
recommendation was for the appointment of a Coordinator to provide leadership to the
General Secretariat in defining and documenting Y2K efforts and information. That
individual needs to focus on the importance of achieving Y2K compliance through formal and
informal contingency planning, effective monitoring and testing. The individual must
select the overall approach to structure the Y2K program for assessing the adequacy of
existing information, support the Y2K efforts, mobilize needed resources and provide
required information on the Y2K issue to the Secretary General for his quarterly reports
to the Permanent Council.
An audit of the new administrative support for the
proposed Oracle Government Financials™ systems was carried out to
analyze the risk of the new system and investigate the organizational
impact of its implementation. We found overall enthusiasm of the user
management for the implementation of the new system and that they all
appeared ready to participate in its implementation. It is our opinion
that the choice of Oracle Financials as the base software platform is a
good one, since this is a proven system and is being successfully used
in several private and public organizations. The major findings of audit
SG/OIG/AUDIT-11/98 relate to the project implementation schedule, legacy
MIS system risks, and a lack of a consistent top down security policy.
The relative risk to OAS of temporary system unavailability was low at
the time of the audit because of sufficient user experience with manual
procedures. However, extended unavailability would cause greater
hardship and could cause some critical failures such as delayed payroll
payments. The risk of unauthorized modifications to system data, whether
intentional or unintentional, can be minimized with careful attention to
the assignment of responsibilities within the Oracle Financials system
and corresponding procedural controls. The key recommendations are that
(a) an implementation contingency plan and an OAS Security Policy should
be developed as quickly as possible, (b) technical procedures should be
in place to adequately protect the production database from unauthorized
access, (c) in the long run arrangements must be made for separate
Oracle Applications test and production environments by having a
separate platform(s) for each, (d) there is need to ensure that
resources are available to evaluate, obtain, install and use additional
database monitoring tools,(e) a Disaster/Recovery Plan to include both
Technical and Organizational Business Continuity should be established,
(f) a Technical Standard on the use of interface and report writing
software for Oracle Applications which impacts both technical and user
interfaces should be published, (g) appropriate job descriptions and
titles, as well as Program Change Control procedures should be
developed, and (h) there is need for more involvement of the Director
and employees of the Department of Management Systems and Technology for
long term management of information technology resources and services.
The eight recommendations of Audit SG/OIG 10/98 and the sixteen
recommendations of Audit SG/OIG-11/98 have been approved by the Secretary General. In
accordance with the audit recommendations, the Assistant Secretary for Management has
established an Information Systems Security Policy by issuing Administrative Memorandum
No.90/98. Other recommendations in these two reports are in the process of implementation.
The Secretariat of the Leo S. Rowe Fund was last audited in 1993. The
main purpose of this audit, which was included in the work plan of the Inspector General,
was to determine whether the Rowe Fund Secretariat complies with the relevant Statutes and
Regulations and to study its internal controls. The report (SG/OIG-Audit-12/98) identified
several weaknesses in internal control concerning the collection of delinquent loans, the
need for enforcement of contractual terms of borrowers, the deduction of an amount from
student loan proceeds for a premium of a life insurance policy which does not exist,
payment terms of student loan were reduced without Committee approval, extensions for
first installment payments were granted on student loans without notification to the
Committee, uncollectible loans should be written off, the need for repayments of principal
by OAS staff members and lack of follow up action on students' progress/activities and
loan guarantors, including staff members. During our final meeting with the Technical
Secretary, we recommended that action should be taken to write off uncollectible loans as
directed by the Committee and recommended by the Board of External Auditors. On December
27, 1998, the Department of Financial Services wrote off the 113 uncollectible loans
amounting to $116,437.77 which had been requested by the Technical Secretary.
We selected three projects funded by CIDI (Heritage Dance in Dominica,
Cuahutémoc Fellowships in Mexico and CENPAPEL in Columbia) for evaluation of internal
controls under the new mechanism for technical support, to determine SEDI's effectiveness
and efficiency and the level of compliance with the terms of Execution Agreements. Our
review was restricted to examination of documentation at headquarters and did not include
field visits. We found that in general, there is need for more effective monitoring,
management and evaluation of project activities and results by SEDI which was addressed
earlier in Audit Report No. 09/98. In this audit (SG/OIG-Audit 13/98) we noted that the
Executing Agency reported that demand for the project was lower than expected and, we
found that although a sum of $94,468 was advanced by the General Secretariat for the
project, the only documented expenditure was $13,615 as of September 30, 1998. The main
recommendation in respect of that project was that SEDI should verify whether total
advances were spent and ensure that any remaining funds which were not spent by December
31, 1998 are returned to the General Secretariat. In another project, we found that, in
providing services as Executive Director of the Executing Agency for the project, a
previous staff member violated the terms of a 1996 Early Separation agreement with the
General Secretariat.
At the time of writing this report the six recommendations of that
report as well as the twenty-two recommendations of the Leo Rowe Fund report are awaiting
the Secretary General's approval.
Investigations
As part of our routine examination of travel allowances, we
investigated the payment of travel allowances including per diem amounts to the Chairman
of the Inter-American Commission of Human Rights. The decision for a "Resident
Chairman at Headquarters was first made by the Commission in February 1998 and the 1999
Special Session of the General Assembly approved the payment of per diem to a ?Resident
President at Headquarters." Report SG/OIG/INVEST-03/98 was approved by the Secretary
General and all corrective measures were taken.
The Office of the Inspector General investigated the expenditures
incurred by a National Office Director against obligations registered in the FETCIDI
account which had expired on December 31, 1997. We found that these expenditures related
to three projects and that some expenditures were incurred after the deadline date. Report
SG/OIG/INVEST-04/98 addresses the lack of effective management and monitoring by SEDI, the
lack of timely recording of financial transactions by the Department of Financial
Services, as well as the General Secretariat's failure to comply with CEPCIDI's
resolutions regarding the deadline for expenditures from FETCIDI funds. The eight
recommendations provided have been approved by the Secretary General.
Inspections
The senior auditor visited the General Secretariat office in Nicaragua
to evaluate internal controls in that office regarding the implementation of the new six
month Housing Construction project which is funded by the Government of Nicaragua.
Discussions were held with the Director of OAS Nicaragua and other project officials. We
found that internal controls are in place for ensuring compliance with GS/OAS regulations
and we have scheduled a follow up visit prior to the May 31, 1999 termination of the
project.
Other Activities
The Inspector General and representatives of the Office of the
Inspector General continued to participate in General Secretariat committees and working
groups on matters of particular interest to the office. As part of the ongoing training
program in the Office of the Inspector General, two auditors attended a training course on
Writing Successful Audit Reports sponsored by the Inspectors General Auditor Training
Institute and the Inspector General herself attended a seminar on Control, Audit and
Security of Information Systems organized jointly by the Institute of Internal Auditors
and the MIS Training Institute.
February
01, 1999
Linda P. Fealing
Inspector General
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