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 GENERAL STANDARDS TO GOVERN THE OPERATIONS OF THE GENERAL SECRETARIAT

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GENERAL STANDARDS TO GOVERN THE OPERATIONS OF THE GENERAL SECRETARIAT[1]

CHAPTER IX

ADVISORY SERVICES, AUDITING, AND FISCAL CONTROL

SUBCHAPTER A: THE AUDIT COMMITTEE

               Article 123. Audit Committee. The Audit Committee is an OAS subsidiary organ established to support the Permanent Council in fulfilling its oversight responsibilities by reviewing the Organization’s governance and management framework, internal controls, risk management and compliance with financial legislation, policies and other requirements. In doing so, and in accordance with the Rules of Procedure of the Audit Committee, the Audit Committee shall:

a. Review the systems and practices the Secretary General establishes to promote and sustain high ethical standards;

b. Review applicable governance initiatives established by the Secretary General;

c. Review systems and practices related to the establishment, implementation, maintenance and effectiveness of risk assessment, management and reporting processes;

d. Review systems and practices related to the establishment, implementation, maintenance and effectiveness of the OASs performance framework, including the setting up, measuring and monitoring of key performance indicators;

e. Review of system for monitoring and ensuring compliance with laws, regulations, codes of conduct and ethical policies;

f. Review of system for counter fraud and whistle-blowing processes;

g. Recommend appointment, retention, and termination of the External Auditor;

h. Establish a direct reporting relationship with the selected External Auditor and direct communication with the Office of the Inspector General;

i. Approve the selection criteria, remuneration and terms of engagement of the External Auditor;

j. Recommend the hiring of the Inspector General in accordance with the provisions of Article 130 of these General Standards;

k. Issue opinion before the approval and amendment of the Internal Audit Charter of the Office of the Inspector General;

l. Review the Office of the Inspector General’s annual risk-based Internal Audit Plan and significant changes to that plan;

m. Issue opinion regarding the Office of the Inspector General’s Internal Audit budget and resources necessary to achieve annual audit plan objectives for CAAP’s consideration;

n. Make appropriate inquiries of the Secretary General and the Inspector General to determine whether there are inappropriate scope or resource limitations; and

o. Review the results of internal and external quality assurance reviews of the Office of the Inspector General.

The Audit Committee shall consist of three members designated by the General Assembly, in accordance with CP/RES. 124 (164/75), adopted by the Permanent Council on June 30, 1975.

               Article 124. Access. The Secretary General shall grant the Audit Committee access to any financial and non-financial records that it may request, cooperating with it as needed, so that the Audit Committee may make its oversight in a timely and effective way.


               Article 125. Submission of the report of the Audit Committee. The Audit Committee shall submit its report to the Permanent Council within the first four months of the year. The report shall include the preliminary comments of the General Secretariat. Additional formal comments on the plans for adopting measures relating to the recommendations of the report shall be furnished by the General Secretariat and the Office of the Inspector General. The Permanent Council shall make such observations and recommendations as it sees fit. The report shall be subsequently submitted to the General Assembly at its next regular session, together with the observations from the Permanent Council, the General Secretariat, and the Office of the Inspector General.

SUBCHAPTER B: THE INSPECTOR GENERAL

            Article 126. Internal audit and the Internal Audit Charter. The Office of the Inspector General is the dependency responsible for exercising the functions of financial, administrative, and operational auditing, for the purpose of determining the level to which the General Secretariat achieves the objectives of diverse programs and the efficiency, economy, and transparency with which resources are used, as well as issuing recommendations to improve management of the General Secretariat.

To achieve the aforementioned purpose, the Inspector General shall establish appropriate internal auditing procedures that reflect international best practices, to verify compliance with the standards and regulations in force, through critical, systematic, and impartial examination of official transactions and operational procedures related to the resources administered by the General Secretariat. To that end, after consultation with the Audit Committee, the Secretary General shall issue an Internal Audit Charter through an Executive Order regulating such activities, in accordance with these General Standards, with the Permanent Council duly apprised.

The Inspector General shall propose to the Secretary General amendments to the Internal Audit Charter as he/she considers appropriate. Any amendment to the Internal Audit Charter shall be approved by the Secretary General once reviewed by the Audit Committee, with the Permanent Council duly apprised.

               Article 127. Internal Audit Plan. In accordance with these General Standards and the approved program-budget, the Inspector General shall present to the Audit Committee, a risk-based Internal Audit Plan for its review. The risk-based Internal Audit Plan shall consider the audit of the programs, services, and activities of the General Secretariat for the next two years and shall be updated annually. Once reviewed by the Audit Committee, the Inspector General shall present the Internal Audit Plan to the Permanent Council for approval. The Permanent Council may request the inclusion of specific investigations or audits to the Plan.

The Inspector General shall report to the Audit Committee on the progress on the Internal Audit Plan or other relevant issues on a quarterly basis.

               Article 128. Independence of the Inspector General. The Inspector General shall enjoy the functional independence needed to initiate, perform, and report to the Permanent Council, the CAAP, the Audit Committee and to the Secretary General on the audits, investigations, and inspections required to ensure the correct use and administration of the Organization's resources and to safeguard its assets, as well as on the overall efficacy of the functions of the Office of the Inspector General and on the qualifications and performance of the staff and independent contractors providing services in said office.

To carry out his/her functions, including matters of audit selection, scope, procedures, frequency, timing, or report content, the Inspector General shall remain free from interference by any element in the General Secretariat, to permit maintenance of the necessary independence and objectivity.

In accordance with these General Standards, the Audit Committee and the Inspector General shall make recommendations directly to the Secretary General on the need to hire or terminate the services of staff and independent contractors providing services in the Office of the Inspector General.

               Article 129. Qualifications of the Inspector General and the Professional Staff of the Office of the Inspector General. The Inspector General and the professional staff of the Office of the Inspector General must have the suitable skills, training, and experience necessary to fulfill these functions, based on integrity and proven ability in one or more of the following disciplines: accounting, auditing, financial analysis, law, management analysis, public administration, or investigations. The Inspector General shall have held a position with similar functions for a minimum period of fifteen years.

               Article 130. Appointment, length of appointment, and removal of the Inspector General.

a. The Secretary General, in consultation with the Permanent Council and the advice and assistance of the Audit Committee, shall appoint the Inspector General from a list of three candidates selected according to the following process:

i. The candidates for Inspector General shall be selected in an open competition publicized broadly throughout the member states.

ii. The process of selecting the candidates for Inspector General shall be conducted by an internationally prestigious company specializing in human resources and executive recruitment, selected by the General Secretariat for this specific purpose, with the Permanent Council and the Audit Committee duly apprised.

iii. The terms of reference for the selection of the company charged with the selection of the candidates for Inspector General shall be approved in advance by the CAAP, after appropriate consultation with the Audit Committee.

iv. The terms of reference for the selection of candidates for Inspector General shall be approved in advance by the CAAP, after appropriate consultation with the Audit Committee. These terms of reference shall reflect the requirements provided in Article 129 of these General Standards.

v. In selecting the candidates, paramount consideration shall be given to competence and integrity, with due regard for the principles of rotation and equitable geographical representation that are priorities in the Organization.

vi. The company chosen shall submit the qualifications of those candidates to the Audit Committee for certification and interview.

vii. The Audit Committee shall submit a list of three candidates for the post of Inspector General.

b. In the event the Inspector General’s post becomes vacant, the Secretary General may appoint an Interim Inspector General, who shall be certified by the Audit Committee in advance, and shall perform these functions until such time as the new Inspector General assumes the post. No more than 12 months shall elapse between the time the post becomes vacant and the time the new Inspector General assumes it.

c. The Inspector General shall be appointed to a single term of six years.

d. The Inspector General may not be terminated without just cause. In order for the Secretary General to terminate the Inspector General, or to apply any other disciplinary measure, he/she shall consult with the Permanent Council on his/her decision and inform it of the reasons for it. Before consulting with the Permanent Council, the Secretary General shall offer the Inspector General a special hearing to hear his/her statement on the decision the Secretary General intends to make. The Chair of the Permanent Council shall also be present at that hearing and, for purposes of the consultation, the file on the special hearing shall be made available to the Permanent Council, which shall take such measures of confidentiality as it deems necessary. The articles of these General Standards and of the Staff Rules pertaining to disciplinary measures do not apply to the Inspector General.

e. A person who has been appointed Inspector General may not work for the General Secretariat, whether as a staff member, as an independent contractor, or as an employee of or consultant to an independent contractor of the General Secretariat after leaving the post.

               Article 131. Reports of the Inspector General and the General Secretariat's obligation to act.

a. The Inspector General shall present the Secretary General with reports on the audits, investigations, and inspections he/she conducts, with copies to the Audit Committee. The Inspector General’s reports will also be made available to the member states upon their request. In such cases the Inspector General will keep the Secretary General duly apprised. In submitting his/her reports, the Inspector General shall recommend such measures as he/she deems necessary to safeguard their confidentiality.

b. The Secretary General shall have thirty days in which to respond to the Inspector General’s reports or to take steps to ensure compliance with his/her recommendations. If no observations are put forward within that period of time, it shall be deemed that the Inspector General’s report has been accepted and the Inspector General shall proceed to request implementation of his/her recommendations.

c. The Secretary General may make observations and comments on the reports of the Inspector General and, if he/she deems it appropriate, may present said observations and comments to the Permanent Council and the Audit Committee.

d. The Inspector General shall present quarterly and annual reports to the Permanent Council through CAAP with copies to the Audit Committee on the observations and recommendations emanating from the audits conducted, as well as on measures taken by the General Secretariat to implement them. Said reports are to pay particular attention to proposals made by the Audit Committee and to the adequacy of the resources allocated to auditing and inspection functions. Furthermore, 60 days prior to the election of a new Secretary General, the Inspector General shall present to the Permanent Council through CAAP with copies to the Audit Committee a report that is to reflect the level of implementation of the recommendations made to improve management of the General Secretariat, pursuant to the first paragraph of Article 126 of these General Standards.

e. The reports of the Inspector General will be made available to member states upon request by the OAS permanent missions. In submitting his/her reports, the Inspector General shall take the measures that he/she deems necessary to protect sensitive information that could compromise pending legal action, expose sensitive organizational data of designated operators, endanger the safety and security of any entity, unit, or individual, or infringe on the privacy rights of any individual.

               Article 132. Publication of documents. The Internal Audit Charter, the Annual and Semi-annual Summary Reports of the Inspector General will be made available to the public on the General Secretariat’s website.

               Article 133. Meetings. The Inspector General shall meet as necessary with the CAAP and with CIDI, in order to exchange information and views on matters that fall within its purview.

               Article 134. Unrestricted access. The Inspector General has full freedom to interview the personnel and other human resources of the General Secretariat, as well as full, free, and unrestricted access to any accounting, financial, movable and immovable property, and personnel records of the General Secretariat that he/she may need to perform his/her functions under these General Standards. In all cases, the Inspector General shall adopt the necessary measures to avoid compromising pending legal action, exposing sensitive organizational data, endangering the safety of any entity, unit, or individual, or infringing on the privacy rights of any individual.

               Article 135. Budget of the Office of the Inspector General. Any decision that would involve a reduction in the budget appropriated to the Office of the Inspector General in accordance with the program-budget approved by the General Assembly shall be consulted upon in advance with the Permanent Council and the Audit Committee.

               Article 136. Evaluation of the Audit Function. The Permanent Council may every three years request an external audit firm certified by the Audit Committee to evaluate the activities of the Office of the Inspector General, in order to maintain conformance with international standards for the professional practice of internal auditing. The review should assess the efficiency and effectiveness of the internal audit activity and identify opportunities for improvement. Results of the assessment will be presented to the Permanent Council, the Audit Committee, and the Secretary General for review and action as needed.

SUBCHAPTER C: THE EXTERNAL AUDITOR

               Article 137. External Auditor. The examination of the accounts of the General Secretariat shall be performed by an external audit firm in accordance with international standards of external auditing.

The appointment and retention of an External Auditor of proven reputation shall be recommended by the Audit Committee as a result of a competitive selection process. The General Secretariat will manage the competitive process, following its prescribed practices, on behalf of the Audit Committee. The Audit Committee will identify the selection criteria of the External Auditor; and, in accordance with best auditing practices of the industry, determine the required frequency of the competitive selection process. The contract renewal for the examination of the accounts cannot be awarded to the incumbent External Auditor unless such External Auditor proposes a different lead auditor. The Audit Committee shall oversee the services of the External Auditor and recommend its termination in accordance with Article 123 of these General Standards.

               Article 138. Access to books and records. The selected External Auditor shall have access to any financial records that it may request, that, in their opinion, are necessary to complete the audit.

               Article 139. Verification of the Efficacy of Internal Accounting Control. The External Auditor may check the efficacy of internal accounting control and shall present the reports that they consider pertinent with respect to that control.
The External Auditor, after satisfying themselves that the books, records, documents, and vouchers have been examined and certified as correct by General Secretariat staff, may, at their discretion, and bearing in mind the nature of the examination, accept such certification in whole or in part.

               Article 140. Observations on Accounts, Deficiencies, and Irregularities. The External Auditor shall not be empowered to change items in the accounts, but they shall call to the attention of the Secretary General, for appropriate action, any transaction about whose legality or correctness they have any doubt.
The External Auditor may call attention in their report to any deficiency or irregularity that they have noted in performing their work, but first they shall inform the Secretary General thereof in order to give him an opportunity to explain or correct it.

               Article 141. Observations on Financial Management. In addition to certifying the financial statements, the selected External Auditor may make any observations they believe necessary as to the internal financial and budgetary regulations, the accounting system, the efficiency of the internal auditing, control procedures, management activities and programs, and, in general, the financial consequences of the administrative actions of the General Secretariat.

               Article 142. Certification of the examination of accounts. The selected External Auditor shall examine the accounts and certify to the following:

a. That the annual accounts presented by the Secretary General agree with the books, records, documents, and vouchers of the General Secretariat;

b. That the transactions reflected in the financial statements are in accord with these General Standards, the Budgetary and Financial Rules, and other applicable provisions; and

c. That the securities and cash on deposit have been checked by means of certifications from the depositories of the General Secretariat, and that the cash on hand has been checked by physically counting it to the extent the selected External Auditor deemappropriate, applying generally accepted standards of auditing.

               Article 143. Content and scope of the Report. The selected External Auditor shall refer in their report to the extent and nature of the examination of the financial statements certified, the exactness and correctness thereof, as well as any other matter of which the General Assembly should be informed, including but not limited to:

a. Wasteful or improper expenditure of funds, notwithstanding the correctness of the accounting;

b. Cases of fraud or presumptive fraud;

c. Expenditures likely to lead to further outlays on a large scale;

d. Expenditures that are not in accord with the provisions authorizing them, or excessive expenditures;

e. Expenditures that exceed the amount of appropriations, taking into account the changes resulting from transfers duly authorized in the General Assembly resolution approving the program-budget; and

f. Any deficiency in the general system governing the handling of income and expenditures or of supplies and equipment, or in the corresponding administrative services.

               Article 144. Submission of the Report of the External Auditor. Upon delivery of the final report of the External Auditor it shall be immediately submitted to the Permanent Council.

SUBCHAPTER D: BUDGETARY AND FINANCIAL REPORTS


               Article 145. Budgetary and Financial Statements and Reports. The Secretary General shall present to the General Assembly at each regular session, together with the corresponding report of the selected External Auditor and the report of the Audit Committee, a final financial report on the preceding fiscal year.

The Secretary General shall also present a quarterly report to the Preparatory Committee of the General Assembly and to all the organs of the OAS that have responsibility in administrative and budgetary matters, on:

a. Compliance with the decisions regarding the program-budget taken by the General Assembly and the Permanent Council;

b. The progress made in carrying out programs and providing services in implementing the program-budget, with the corresponding explanations;

c. The situation as regards the collection of quotas and contributions, miscellaneous income, and any other resources received from public or private sources, especially those referred to in Articles 80, 81, and 88; and

d. The financial condition of each of the funds, with an indication of their income, expenditures, and balances.

The Secretary General shall submit to the Permanent Council a semi-annual report in January and June of each year on all the performance contracts (CPRs) funded by any source for the preceding semester. This report shall include for each CPR in force during the reporting period: (a) the source of funds used; (b) the name of the independent contractor, by legal persons (entities) first, followed by natural persons (individuals); (c) the duration of the contract, including beginning and ending date; (d) the contract amount; (e) the number of CPRs the independent contractor has had since January 2000; (f) the number of times the present contract has been renewed or extended; (g) the total duration, including renewals and extensions, of all the CPRs with the particular contractor since January 2000; (h) a detailed justification of the need for the contract; and (i) an explanation as to why the functions or work product assigned cannot be performed or produced by current staff member(s). This information should be organized by department or office of the General Secretariat, or other entity, as appropriate, and applies to the Offices of the General Secretariat in the Member States and all operations away from headquarters.[3]



[1].  Adopted by the General Assembly through resolution AG/RES. 123 (III-O/73) and amended through resolutions AG/RES. 248 (VI-O/76), AG/RES. 256 (VI-O/76), AG/RES. 257 (VI-O/76), AG/RES. 301 (VII-O/77), AG/RES. 359 (VIII-O/78), AG/RES. 404 (IX-O/79), AG/RES. 438 (IX-O/79), AG/RES. 479 (X-O/80), AG/RES. 671 (XIII-O/83), AG/RES. 672 (XIII-O/83), AG/RES. 731 (XIV-O/84), AG/RES. 791 (XV-O/85), AG/RES. 842 (XVI-O/86), AG/RES. 981 (XIX-O/89), AG/RES. 1036 (XX-O/90), AG/RES. 1137 (XXI-O/91), AG/RES. 1321 (XXV-O/95), AG/RES. 1322 (XXV-O/95), AG/RES. 1. (XXV-E/98), AG/RES. 3 (XXVI-E/99), AG/RES. 1725 (XXX-O/00), AG/RES. 1839 (XXXI-O/01), AG/RES. 1873 (XXXII-O/02), AG/RES. 1909 (XXXII-O/02), AG/RES. 2059 (XXXIV-O/04), AG/RES. 2156 (XXXV-O/05), AG/RES. 2157 (XXXV-O/05), AG/RES. 2302 (XXXVII-O/07), AG/RES. 2353 (XXXVII-O/07), AG/RES. 2754 (XLII-O/12), AG/RES. 2755 (XLII-O/12), AG/RES. 2756 (XLII-O/12), AG/RES. 2778 (XLIII-O/13), AG/RES. 2817 (XLIV-O/14), AG/RES. 1 (XLVIII-E/14), AG/RES. 2889 (XLVI-O/16), AG/RES. 1 (LII-E/17), AG/RES. 2923 (XLVIII-O/18), AG/RES. 1 (LIII-E/18), AG/RES. 2940 (XLIX-O/19), AG/RES. 2942 (XLIX-O/19), AG/RES. 2971 (LI-O/21) and by the Permanent Council through resolutions CP/RES. 652 (1033/95), CP/RES. 703 (1122/97), CP/RES. 761 (1217/99), CP/RES. 910 (1568/06), CP/RES. 919 (1597/07) and CP/RES. 1062 (2069/16) pursuant to the authority conferred by the General Assembly in resolutions AG/RES. 1319 (XXV-O/95), AG/RES. 1382 (XXVI-O/96), AG/RES. 1603 (XXVIII-O/98), AG/RES. 2257 (XXXVI-O/06) and AG/RES. 1 (L-E/15), respectively.

[2].  Chapter amended through resolution AG/RES. 2754 (XLII-O/12), AG/RES. 2889 (XLVI-O/16) and AG/RES. 2971 (LI-O/21).

[3].  Paragraph added by resolution AG/RES. 2157 (XXXV-O/05) of the General Assembly at its thirty-fifth regular session in June 2005.