UNESCO INTERNAL AUDITOR ON EDUCATION SECTOR REFORM

C O N F I D E N T I A L SECTION 01 OF 02 PARIS 001192

SIPDIS

FROM USMISSION UNESCO PARIS

E.O. 12958: DECL: 3/26/17
TAGS: AORC UNESCO
SUBJECT: UNESCO INTERNAL AUDITOR ON EDUCATION SECTOR REFORM
CONTROVERSY

Classified by USUNESCO Ambassador Louise Oliver, for reasons 1.4
(b) and (d).


1. (C) Summary. In an off-the-record conversation (please
protect),UNESCO's Director of Internal Oversight Services
(IOS): (i) offered a harsh professional view of the overall
quality of the External Auditor's recent report on contracting
procedures used to carry out UNESCO Education Sector reforms, in
effect labeling the report unprofessional and biased; (ii) said
he is urging follow-up work by UNESCO's in-house auditor (vice
the External Auditor) to strengthen internal controls on
derogations from contract procurement rules; and (iii) cast
doubt over the quality of Navigant Consulting's work product
(deliverables). End Summary.


2. (C) On March 16, US Mission UNESCO Legal Adviser met
discreetly over coffee with the Director of UNESCO's Internal
Oversight Services Office, John Parsons, as the Mission has done
periodically over the past year. Parsons is a trusted and
well-informed interlocutor whom we regard as genuinely committed
to holding UNESCO to high standards of accountability and
transparency.


3. (C) The Mission had primarily requested the meeting to obtain
his views on the current status of the still-festering issue of
the Brasilia Field Office, including UNESCO's follow-up to the
External auditor's 2006 audit of that Office, and rumors of new
charges involving serious violations of Brazilian law by that
Office. (See septel for report on discussion of that issue.)
Mission had also timed this meeting to solicit the IOS
Director's views about the recent controversy surrounding the
External Auditor's report on contracting procedures used to
carry out reforms in UNESCO's Education Sector and the
consequent resignation of Peter Smith as the head of that Sector
after 21 months.


4. (C) The IOS Director chose to begin with the latter issue.
He noted his agreement with the External Auditor that procedures
relating to "derogations" in procurement contracting at UNESCO
were seriously flawed, needed clarification and strengthening
for all levels within the Organization. He stressed that the
follow-up work to examine procurement derogation rules and
practices within UNESCO should focus not just on one sector but
rather be done on a cross-sectoral, institutional-wide basis.
He counseled against turning once again to the External
Auditor's Office to conduct this work, saying instead that the
Director General (DG) would be wise to assign that task to the
internal auditor, IOS) which is capable of doing so in a
professionally sound manner. Using IOS, he said, would also
help depoliticize this issue, in contract to the approach taken
in the External Auditor's report.


5. (C) Commenting on Navigant Consulting (the U.S. contractor
used by Smith to carry out his Education Sector reforms),the
IOS Director expressed "serious concerns about the quality of
its (Navigant's) work product" (the deliverables).


6. (C) In response to Mission Legal Adviser's query as to his
opinion of the overall quality of the External Auditor's report,
the IOS Director termed it "disgraceful" in an emphatic tone of
voice, speaking from a professional standards viewpoint. He
added that, in his professional opinion, the report failed to
meet minimum standards of objectivity and impartiality. (Note:
His comportment while discussing this issue clearly suggested a
serious degree of professional discomfort about what he termed
the appearance of a lack of impartiality reflected in the
report.) He shared (please protect) that his concerns about the
overall quality of the External Auditor's report have been
sufficiently strong to prompt him to solicit discreetly an
off-the-record opinion from an internationally renowned academic
in the accounting/auditing field, who is also a trusted
colleague. At the time we spoke, that opinion had not yet been
provided, but the IOS Director said he hopes to be able to share
it with a very senior member of the UNESCO DG's front office
inner staff.


7. (C) Comment: The degree of the IOS Director's low
professional regard for the overall quality of the External
Auditor's report is surprising and serves to highlight two
divergent schools of thought within the UN's system of
international audit professionals. In one school are those who
firmly believe that audit reports should produce high quality
substantive findings and recommendations but also reflect a high
degree of professional objectivity, impartiality, and fairness.
In the other school are those who seem less motivated to meet
the high standards of professional objectivity in their work
product that would withstand peer review. These differing
optics could very well suggest that, when deciding in future for
whom to vote to fill External Auditor positions at various UN
agencies, the U.S. Government may want to consider supporting
candidates who subscribe to both professional ideals of the
first school of thought mentioned. We will endeavor to obtain,
and will report on, any noteworthy developments resulting from
the IOS Director's external consultation regarding the
professional rigor of the External Auditor's report. End
comment.
Oliver