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United Nations Office of Internal Oversight Services (UN OIOS) 29 Jun 2005 report titled "Audit of UNOG Rental Subsidy [AE2005-311-05]" relating to the United Nations Office at Geneva. The report runs to 8 printed pages.

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United Nations Office of Internal Oversight Services

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             United Nations
  Office of Internal Oversight Services
       Internal Audit Division II




       Audit Report
    Audit of UNOG Rental Subsidy
           (AE2005/311/05)
      Audit Report No. E05/R11




           Report date: 29 June 2005
Auditors: Doremieke Kruithof, Auditor-in-Charge
         Sylvia Deller, Assisting Auditor


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             UNITED NATIONS                                NATIONS UNIES


                              Office of Internal Oversight Services
                                   Internal Audit Division II

                      Audit of UNOG Rental Subsidy (AE20005/311/05)

                                   EXECUTIVE SUMMARY


In April 2005, OIOS conducted an audit of UNOG Rental Subsidy. The audit covered activities
with a total expenditure of US$ 1.36 million in the years 2003 and 2004.

�   OIOS assessed the systems and procedures relating to the administration of the rental subsidy
    entitlement as above average. Activities by the Human Resources Management Service
    (HRMS) and UNOG payroll were effective and adequately controlled.

                                  Audit Observations and Findings

�   ST/AI/2000/16 and ST/IC/2000/90 in relation with the rental subsidy scheme regarding
    reasonable maximum rent levels as set out in Geneva/OI/164/Amend.5 of 23 July 2002 provide
    UNOG staff members with clear information on the UN provisions. OIOS noted, however, that
    information of individual threshold percentage is not circulated in Geneva (as opposed to New
    York) and only available through the automatic computation in IMIS. It is therefore difficult for
    staff to establish what they are entitled to. OIOS suggests that HRMS inform UNOG staff on an
    annual basis, or at least when changes in the threshold percentages occur. HRMS agreed, and
    stated that an information circular will be issued when ICSC revises the rental thresholds.

�   OIOS is pleased to note that UNOG has discontinued, as recommended, the garage/parking
    deduction for calculating the net rent for staff members' entitlement.

�   The rental subsidy application (long) form is user friendly, and includes clear references to the
    supporting documents that are required for the application. However, it could be enhanced to
    include the staff members' nationality and place of recruitment under `general information' to
    mitigate the risk of erroneous payments to non-entitled staff members, as found in one case.

�   The rental subsidy reapplication (short) form presently reads that a "copy of lease/lease
    extension ... must be attached". OIOS found that such information was not systematically on
    file, and not requested by HRMS, as leases are normally for a period of more than one year.
    OIOS suggests therefore, in line with paragraph 5(a) of ST/IC/2000/90, the form be updated to
    state that such supporting documentation is only needed in case of a first time, or revised
    (re)application. HRMS agreed that re-submission of the lease was not necessary.

�   OIOS appreciates that it is the Office of Human Resource Management (OHRM) that initiates
    changes to procedures and instructions, but would suggest that when the opportunity arises,
    HRMS requests that the above enhancements be made. HRMS agreed to the suggestions made
    by OIOS.


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�   HRMS' personnel filing system was found in good order. It was not clear, however, what the
    procedure was for staff members of UN organizations that have their own personnel
    administration and/or staff on loan, but pay-rolled through UNOG. OIOS found that in some
    cases, although personnel files had been opened for these staff members in HRMS, the
    documentation filed was sporadic and often did not include details of rental subsidy. In other
    instances personnel files were not available. As the IMIS payroll function regarding rental
    subsidy was only implemented in January 2002, the payment history of staff members before
    that date is not available in IMIS. Therefore it would have been appropriate for some record to
    be kept in HRMS of the rental subsidy status of the staff members concerned. OIOS suggests
    that HRMS refine their policy on what documentation should be held in HRMS and make
    efforts to ensure Human Resource Officers/Assistants comply with this. HRMS is making
    efforts to streamline and rationalize its filing system on a continuous basis.

                                                                                     June 2005


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                          TABLE OF CONTENTS



CHAPTER                                       Paragraphs


I.     INTRODUCTION                           1-5

II.    AUDIT OBJECTIVES                       6

III.   AUDIT SCOPE AND METHODOLOGY            7-8

IV.    AUDIT FINDINGS AND RECOMMENDATIONS
       A. Rental Subsidy Guidance             9-14
       B. IMIS / payroll processing           15-16
       C. Personnel Files/Documentation       17

V.     ACKNOWLEDGEMENT                        18


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                                      I. INTRODUCTION

1.      In April 2005 OIOS conducted an audit of UNOG Rental Subsidy. The audit was
conducted in accordance with the International Standards for the Professional Practice of
Internal Auditing.

2.      The rental subsidy scheme operates as part of the UN post adjustment system. The
aim of the scheme is to facilitate the settlement of new staff members and to encourage
mobility within the common system by subsidizing the rental costs of eligible staff members
whose rental accommodations are of reasonable standard but cost significantly more than the
average for the duty station.

3.      The relevant UN provisions governing the rental subsidy entitlement are:

�    Staff Rule 103.7 (e);
�    ST/AI/2000/16, 5 December 2000; "Rental subsidies and deductions" (Last amended by
     ST/AI/2004/4, 17 December 2004, effective 1 January 2005);
�    ST/IC/2000/90, 5 December 2000; "Rental subsidies and deductions", and
�    Geneva/OI/164/Amend.5 of 23 July 2002 and Amend.6 of 4 January 2005; "Rental
     subsidy scheme in Geneva".

4.      OIOS previously reviewed UNOG's administration of rental subsidy in 1998 when it
was found that the system was adequately administered, but annual re-applications were not
always on file, IMIS data was not always reliable and spouse annual income information was
not recorded on the rental subsidy form.

5.   A draft of this report was shared with the UNOG Division of Administration. Their
comments are reflected, as appropriate, in this report.

                              II.      AUDIT OBJECTIVES

6.      The main objective of the audit was to assess the administration of the rental subsidy
entitlement at UNOG, and more specifically to:

�    Evaluate the adequacy, effectiveness and efficiency of internal controls;
�    Evaluate whether adequate guidance and procedures are in place;
�    Determine the reliability and integrity of the data available from IMIS;
�    Ensure compliance with UN regulations, rules, policies and procedures.

                   III.      AUDIT SCOPE AND METHODOLOGY

7.      The review focused on UNOG rental subsidy payments covering the period of 1
January 2003 to 31 December 2004. The total number of staff that received rental subsidy in
2003 and/or 2004 was 233, with total expenditure of US$ 1.36 million. OIOS selected 46
personnel files for an in-depth review and analysed all payments made to staff. OIOS
followed-up on unusual or unexpected trends in payments that were identified with regard to
52 staff members.


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                                              2

8.      The audit activities included a review and assessment of internal control systems,
interviews with staff, analysis of applicable data and a review of the available documents and
other relevant records.

               IV.   AUDIT FINDINGS AND RECOMMENDATIONS

                                 A. Rental Subsidy Guidance

(a)    Individual thresholds and deductions for garage/parking

9.      ST/AI/2000/16 and ST/IC/2000/90 in relation with the rental subsidy scheme
regarding reasonable maximum rent levels as set out in Geneva/OI/164/Amend.5 of 23 July
2002 provide UNOG staff members with clear information on the UN provisions on the rental
subsidy entitlement. However, the information with regard to individual threshold percentages
is not circulated in Geneva (as opposed to New York) and is only available through the
automatic computation in IMIS. It is therefore difficult for staff to establish what they are
entitled to. To improve the information service to staff, OIOS suggests that UNOG circulate
the individual threshold percentages on an annual basis, or whenever changes in these
percentages occur. HRMS agreed, and stated that an information circular will be issued
when ICSC revises the rental thresholds applicable to staff with and without dependents.
HRMS will continue to provide, upon request, trial calculations to all eligible staff so as to
ensure that they are aware of their entitlements.

10.     In its report of 6 May 2003, concerning the OIOS audit of UNHCR rental subsidy
(AR2003/601/03), OIOS recommended UNOG to reconsider the garage/parking fee deduction
in calculating the net rent in order to ensure a consistent application of the rental subsidy
scheme among duty stations and among staff living in Switzerland and France. OIOS is
pleased to note that the application of the garage/parking deduction for the purpose of
calculating net rent � when the relevant amount is not mentioned in the lease or in a separate
contract � has been discontinued by Geneva/OI/164/Amend.6 of 4 January 2005.

(b)    Rental Subsidy Application Forms

11.    The rental subsidy application (long) form is user friendly and includes clear
references to the supporting documentation that needs to be submitted. It furthermore
provides a good basis for Human Resource Officers to verify the accuracy of the information
provided by staff members.

12.     OIOS noted in one of the personnel files reviewed, that a staff member whose
nationality was Swiss and whose place of recruitment was Geneva, erroneously received
rental subsidy. The error was detected, the rental subsidy payments were discontinued and
action was taken to recover the previously paid amounts. Nonetheless, OIOS suggests that
HRMS request OHRM to create a field in the rental subsidy application form under `general
information' for staff members' nationality and place of recruitment. This should mitigate the
risk of such erroneous payments in the future. HRMS agrees to include staff members'
nationality and place of recruitment on the form.


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                                               3

(c)    Annual Reapplication

13.     Section 4 of ST/AI/2000/16 requires staff members to reapply annually for rental
subsidy, indicating all changes that may affect their individual situation and the amount of the
rental subsidy to which they are entitled. OIOS noted that although the annual reapplication
(short) form was submitted, in most of the cases staff members were usually late with their
submission, which caused in some instances a significant delay in the rental subsidy payment
process. While there is a good control built into IMIS, which automatically stops payment if
the annual reapplication form has not been received, the delay of submission in the claims by
staff members resulted in large retroactive payments, which require manual intervention and
are thus more prone to error. OIOS was pleased to note, however, that since late 2004, as a
default setting in IMIS, two reminders for rental subsidy re-application are included in the
email covering the monthly payslips of the staff members concerned.

14.     The rental subsidy reapplication (short) form reads under paragraph 7, heading II
`Income and rent information' that a "copy of lease/lease extension and evidence of recent
rent payment must be attached". OIOS found that such information was not systematically on
file. We understand that this was not requested by HRMS for staff members under their
administration, but in the reapplication reference was made instead to the previous lease.
OIOS appreciates that in many cases rental leases have duration of more than one year or are
automatically extended, and in these cases it seems unnecessary to attach the same lease
again. Moreover, paragraph 5(a) of ST/IC/2000/90 indicates that such supporting
documentation is only needed in case of a first time, or revised (re) application. While OIOS
agrees that evidence of recent rent payment should be submitted with the re-application, it
does not see a need to re-submit the lease document with each re-application, unless there is a
change or revision. OIOS therefore suggests that the reapplication (short) form be up-dated
accordingly, stating that a copy of the lease/lease extension ... must be attached `in case of
change/revision of the lease agreement'. HRMS agreed that a copy of the lease is not
necessary, if the situation of the staff member remained unchanged.

                                  B. IMIS/ payroll processing

15.     As noted above, IMIS automatically calculates the rental subsidies payable and IMIS
and payroll are linked in such a way that rental subsidy payments automatically stop after one
year, when the reapplication has not been received and/or processed, and after seven years, at
the end of the entitlement. It also automatically reduces the payment after five years (60 per
cent), six years (40 per cent) and seven years (20 per cent) � with regard to cases related to
force majeure, 60, 40 and 20 per cent respectively as of the third year.

16.     It is noteworthy to mention that as `IMIS release 4; payroll (including rental subsidy)'
was only implemented at UNOG in January 2002, specific information relating to the staff
members' payroll history (before that date) is not available in IMIS. This is especially
important as OIOS found that personnel files of staff posted outside Europe and North
America were not always available and/or that their files did not always contain
documentation relating to rental subsidy. Therefore, follow-up and control in these cases are
difficult.


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                                               4

                          C.        Personnel Files/Documentation

17.      HRMS' personnel filing system was found to be in good order. It was not clear,
however, what the procedure was for staff members of UN organizations that have their own
personnel officers and/or staff on loan but pay-rolled through UNOG. OIOS found that in
some cases, although personnel files had been opened for these staff members in HRMS, the
documentation filed was sporadic and often did not include details of rental subsidy. In other
instances personnel files were not available. For example, OIOS was not able to find
personnel files for staff members in receipt of rental subsidy working for UNFCCC,
UNITAR, OCHA and ECE. Most of the staff members concerned were serving at a duty
station outside Europe and North America. While appreciating that HRMS does not
administer UNFCCC and UNITAR staff, they are responsible for OCHA and ECE. Therefore
it was reasonable to assume that appropriate personnel information including rental subsidy
should be available in HRMS. On further follow-up with HRMS, we were informed that
OCHA files were eventually found (but have not yet been presented to us for our review). No
explanation was forthcoming as to the unavailability of the personnel file of an ECE staff
member. For the ECE case in response to the draft report we were informed that the staff
member had been transferred to New York. In OIOS' view, there is a need for HRMS to
refine its policy on what files/documents should be maintained within HRMS, and once
established make efforts to ensure Human Resource Officers/Assistants comply with it.
HRMS indicated that it is making efforts to streamline and rationalize its filing system on a
continuous basis.

                               V.   ACKNOWLEDGEMENT

18.    I wish to express my appreciation for the assistance and cooperation extended to the
auditors by the staff of Human Resource Management Service and UNOG payroll.




                                                                 Egbert C. Kaltenbach, Director
                                                                       Internal Audit Division II
                                                           Office of Internal Oversight Services


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