Identifier
Created
Classification
Origin
09GENEVA598
2009-07-20 10:17:00
UNCLASSIFIED
Mission Geneva
Cable title:  

WMO FINANCIAL ADVISORY COMMITTEE REPORT

Tags:  EFIN WMO SENV ENRG UN 
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RR RUEHWEB

DE RUEHGV #0598/01 2011017
ZNR UUUUU ZZH
R 201017Z JUL 09
FM USMISSION GENEVA
TO RUEHC/SECSTATE WASHDC 8877
RUCPDC/NOAA WASHINGTON DC
RUEHDOI/DEPT OF INTERIOR WASHINGTON DC
INFO RUCNDT/USMISSION USUN NEW YORK 3082
UNCLAS GENEVA 000598 


SIPDIS

DEPT PASS TO IO FOR DISSELKOEN
DEPT PASS TO NOAA FOR DTHOMPSON

E.O. 12958: N/A

TAGS: EFIN WMO SENV ENRG UN
SUBJECT: WMO FINANCIAL ADVISORY COMMITTEE REPORT

UNCLAS GENEVA 000598


SIPDIS

DEPT PASS TO IO FOR DISSELKOEN
DEPT PASS TO NOAA FOR DTHOMPSON

E.O. 12958: N/A

TAGS: EFIN WMO SENV ENRG UN
SUBJECT: WMO FINANCIAL ADVISORY COMMITTEE REPORT


1. SUMMARY: The 28th Session of the World Meteorological
Organization's (WMO) Financial Advisory Committee (FINAC) met prior
to the June WMO Executive Council (EC) Meeting. FINAC-28 tracked
closely with the EC agenda. Significant discussion centered on the
need for a budget increase if the WMO is to continue to credibly
contribute to climate science and to enhance capabilities of
National Meteorological and Hydrological Services (NMHS). The
Secretary General (SG) stated that 13 years of zero nominal growth
(ZNG) were affecting the organization's ability to implement
programs. In general, the global economic crisis loomed over issues
such as an unlikely increase in the budget, any impact on the
Working Capital Fund, and payroll reserves. END SUMMARY.


2. Dr. Jack Hayes, the U.S. Permanent Representative to the WMO,
led the U.S. FINAC-28 delegation. Although FINAC is held on the
margins of the EC, it is a body of the WMO Congress and as such in
accordance with the WMO convention Dr. Hayes serves as a
representative of the U.S. government. This is in contrast to the
EC where Dr. Hayes serves in his individual capacity in accordance
with the relevant organizational rules. Major agenda items
included:
- the report from the Audit Committee,
- implementation of the International Public Sector Accounting
Standards (IPSAS),
- a proposal to increase the load on payroll reserves for
recruitment, termination costs, and after-service health insurance
benefits,
- a proposal to finance the increase in the capital of the WCF,
- the interim financial situation and status of Members'
contributions,
- a review of budget proposals for 2010-2011, including high
priority activities funded with surplus from 14th financial period,
and
- the preliminary discussion on the budget for the 16th financial
period (2011-15).


3. Overall, the WMO has made significant strides towards promoting
transparency and good governance practices within the organization.
The U.S. has worked with the WMO to ensure that various policies
have been instituted and structures put in place that can monitor
and evaluate the running of the WMO. For example, the EC in recent
past has approved policies concerning financial disclosure reports
for certain staff, as well as deciding to open the EC and its

relevant working group meetings to all WMO Members States.
Additionally, the WMO Secretariat has worked well with the WMO Audit
Committee (established previously as a result of U.S. efforts) to
ensure proper oversight of the organization. This has been a
successful model and resulted in the WMO, at least on paper, being
in the forefront of other UN organizations on matters such as the
establishment of an ethics officer and the drafting of annual
accountability reports, among other things. The WMO has also taken
significant measures to safeguard against fraud by reorganizing and
combining the internal oversight function into a strengthened
Internal Oversight Office or IOO. These are all very positive steps
toward instituting a culture of financial and managerial practices
that are sound, as well as efficient and effective.


Agenda Highlights
--------------

4. Audit Committee. Following the trend seen in the bi-annual
Audit Committee meetings, the WMO continues to make timely advances
on recommendations based on the results of the reports from both the
internal and external auditors. The external audit of WMO financial
statements "revealed no material errors to the validity of financial
statements." The external auditor further stated that "there is no
problem with the figures and that the Secretariat may rely on the
accounts presented today." He commended the WMO for reducing the
time taken to deliver the financial statements and stated that
quicker reporting reflects successful application of a more
stringent reporting process and provides for closer monitoring of
balances. He further stated that efficient reporting will also help
WMO as they proceed forward with the implementation of IPSAS. The
auditor noted that the WMO does not have a process in place to track
expenditures by expected result. During the EC, the U.S. proposal
was adopted, which requires that future recommendations of the Joint
Inspection Unit, Internal Oversight Office, and External Auditor
accepted by the Secretary General be assigned to a responsible party
within WMO Secretariat and an official timetable set for completion
of each recommendation. The proposal also calls the Secretary
General to continue to provide members of the Audit Committee with a
list of all recommendations made during the current and previous
years, along with the status of implementation for each
recommendation, and if rejected, justification for such action.


5. International Public Sector Accounting Standards (IPSAS). IPSAS
is on target for implementation on January 1, 2010. WMO is expected
to be one of the first UN agencies to achieve this milestone as
originally scheduled. Under IPSAS, true assets and liabilities will
be more transparent and facilitate greater comparability over time
between agencies in the UN system. The Secretary General's
recommendations to facilitate IPSAS were approved and the U.S.
joined consensus.


6. Payroll. Once the WMO moves to IPSAS, health insurance liability
will be included as a liability on the balance sheet; currently it
is considered an extra-budgetary liability. There is currently an
estimated 79 million Swiss Francs (CHF) in liability; however it is
important to note, that this liability is paid out over time on an
as-needed basis and will not be due in full when IPSAS is adopted in

2010. In response to this shortfall the EC approved the
Secretary-General's proposals to increase the charges on payroll
costs for the funding of the reserve for after-service health
insurance benefits from 2 to 3 percent. Separately, the EC approved
the Secretary-General's proposals to increase the charges on payroll
costs for the funding of the reserve for recruitment and termination
benefits from 3 to 4 percent. The USDEL supported this position.


7. Financing the increase in the Working Capital Fund (WCF).
Discussion on the WCF began early in the session when the Secretary
General noted that the global financial crises necessitated shifting
funds into less volatile accounts, though no funds have been lost
through poor investments the resulting interest rates are lower.
Despite the global economic trends the USDEL was successful in
garnering support for option B, which states that the shortfall of
CHF 1.2 million in the capital of the WCF will be funded from
interest income of the WCF over the 3 year financial period that
began in 2008. There was strong support for Option B also by Japan,
Germany, and the UK. The point was also made that the WCF has not
been used in recent years.


8. Member contributions. The Secretary General reported that
member payments "are on track" and they "expect no problems." The
EC adopted a recommendation urging Members in whose contributions
are in arrears to settle their dues as early as possible so that the
approved programmes of WMO may be implemented according to the
established time frame and at the expected planned level.


9. Review of budget proposals for 2010-2011. The EC recommended
that the Council further review programmatic priorities before
adopting the Draft Resolution.


10. Preliminary discussion on the budget for the 16th financial
period (2011-2015). The Secretary General began discussions by
proposing a budget increase in real terms by 2% annually over the
previous budget. This would translate as an annual increase of
approximately 20 million CHF, from 245 million CHF to 265 million
CHF annually. The Secretary General stated that the "WMO must
overcome deterioration of resources, since they have been held at
zero nominal growth since 1996." He further stated that, "to
continue on this path would have drastic impact on programs of
members and render them incapable of following through on their
promised deliverables." The U.S. was unequivocal in stating that
all budgetary options should remain open for consideration by
Congress in 2012. The USDEL was successful in including the
following language, coordinated with DOS, in the EC report: "The
Council decides to develop three options for budget proposals for
consideration by Congress for the sixteenth financial period
(2012-2015). One should reflect ZNG, another ZRG, and a third to
include a 2% annual increase over the previous budget. Furthermore,
each budget proposal should include an analysis of the impacts on
the achievement of expected results."


11. There was a significant audit issue discovered in the report
from the External Auditor, the National Audit Office (NAO) of the
United Kingdom. The statement containing the report of expenditure
against appropriations (Statement IV),required by the financial
regulations, had to be recast in 2008 since the basis for
appropriations for the current financial period was changed from
"programs" to "Expected Results." For 2008, the statement by ER was
based on management estimates rather than a process with adequate
audit trail. This resulted in a qualified opinion from the External
Auditor (see EC-LXI/INF. 5, Appendix E, p.25, caption: budget
monitoring) with recommendations 11 and 12 urging corrective action.
The Secretariat issued an action plan for these particular
recommendations in EC-LXI/INF. 5 Appendix G, p. 3. If the matter is
not appropriately addressed it may lead to further qualified
opinions of the financial statements. It is critical that the
Council follow-up with the Secretariat confirming that the issues
raised by the NAO are addressed (see recommendation 11, in
particular) and the action plan offered by the Secretariat will
adequately address the concerns raised by the NAO.



12. One area of governance that State Department and NOAA will work
together is in improving the rules and regulations governing the
WMO's financial disclosure policies. Currently there is a provision
that an alternate mechanism will apply to staff at the Assistant
Secretary General (ASG) level. NOAA and DOS plan to work with WMO
to revisit this policy to ensure that senior members of the WMO
management team receive the same scrutiny as all staff required to
complete the disclosure forms. Moreover, DOS and NOAA plan to
inquire as to the number of staff who are required to divest
holdings or have their duties curtailed due to an identified
conflict of interest based on their financial disclosure form.

GRIFFITHS