Annex to the Financial : Additional Terms of Reference Governing the Audit
|Adopted by the General Conference at its 17th session (17 C/Resolution 19.2) and amended at its 22nd (22 C/Resolution 32.1) and 23rd (23 C/Resolution 36.1) sessions (*)
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1. The External Auditor shall perform such audit of the accounts of the Organization, including all Trust Funds and Special Accounts, as he deems necessary in order to satisfy himself:
(a) That the financial statements are in accordance with the books and records of the Organization;
(b) That the financial transactions reflected in the statements have been in accordance with the rules and regulations, the budgetary provisions and other applicable directives;
(c) That the securities and moneys on deposit and on hand have been verified by certificate received direct from the Organization’s depositories or by actual count;
(d) That the internal controls, including the internal audit, are adequate in the light of the extent of reliance placed thereon;
(e) That procedures satisfactory to the External Auditor have been applied to the recording of all assets, liabilities, surpluses and deficits.
2. The External Auditor shall be the sole judge as to the acceptance in whole or in part of certifications and representations by the Director-General and may proceed to such detailed examination and verification as he chooses of all financial records including those relating to supplies and equipment.
3. The External Auditor and his staff shall have free access at all convenient times to all books, records and other documentation which are, in the opinion of the External Auditor, necessary for the performance of the audit. Information classified as privileged and which the Director-General (or his designated senior official) agrees is required by the External Auditor for the purposes of the audit and information classified confidential shall be made available on application. The External Auditor and his staff shall respect the privileged and confidential nature of any information so classified which has been made available and shall not make use of it except in direct connection with the performance of the audit. The External Auditor may draw the attention of the General Conference to any denial of information classified as privileged which in his opinion was required for the purpose of the audit.
4. The External Auditor shall have no power to disallow items in the accounts but shall draw to the attention of the Director-General for appropriate action any transaction concerning which he entertains doubt as to legality or propriety. Audit objections to these or any other transactions arising during the examination of the accounts shall be immediately communicated to the Director-General.
5. The External Auditor shall express and sign an opinion on the financial statements of the Organization. The opinion shall include the following basic elements:
(a) The identification of the financial statements audited;
(b) A reference to the responsibility of the Director-General and the responsibility of the External Auditor;
(c) A reference to the audit standards followed;
(d) A description of the work performed;
(e) An expression of opinion on the financial statements as to whether:
(i) the financial statements present fairly the financial position as at the end of the period and the results of the operations for the period;
(ii) the financial statements were prepared in accordance with the stated accounting policies;
(iii) the accounting policies were applied on a basis consistent with that of the preceding financial period;
(f) An expression of opinion on the compliance of transactions with the Financial Regulations and legislative authority;
(g) The date of the opinion;
(h) The name and position of the External Auditor;
(i) Should it be necessary, a reference to the report of the External Auditor on the financial statements.
6. The report of the External Auditor to the General Conference on the financial operations of the period should mention:
(a) The type and scope of his examination;
(b) Matters affecting the completeness or accuracy of the accounts, including where appropriate:
(i) Information necessary to the correct interpretation of the accounts;
(ii) Any amounts which ought to have been received but which have not been brought to account;
(iii) Any amounts for which a legal or contingent obligation exists and which have not been recorded or reflected in the financial statements;
(iv) Expenditures not properly substantiated;
(v) Whether proper books of accounts have been kept.
Where in the presentation of statements there are deviations of material nature from the generally accepted accounting principles applied on a consistent basis, these should be disclosed;
(c) Other matters which should be brought to the notice of the General Conference such as:
(i) Cases of fraud or presumptive fraud;
(ii) Wasteful or improper expenditure of the Organization’s money or other assets (notwithstanding that the accounting for the transaction may be correct);
(iii) Expenditure likely to commit the Organization to further outlay on a large scale;
(iv) Any defect in the general system or detailed regulations governing the control of receipts and disbursements or of supplies and equipment;
(v) Expenditure not in accordance with the intention of the General Conference after making allowance for duly authorized transfers within the budget;
(vi) Expenditure in excess of appropriations as amended by duly authorized transfers within the budget;
(vii) Expenditure not in conformity with the authority which governs it;
(d) The accuracy or otherwise of the supplies and equipment records as determined by stocktaking and examination of the records.
In addition, the reports may contain reference to:
(e) Transactions accounted for in a previous financial period concerning which further information has been obtained or transactions in a later financial period concerning which it seems desirable that the General Conference should have early knowledge.
7. The External Auditor may make such observations with respect to his findings resulting from the audit and such comments on the Director-General’s financial report as he deems appropriate to the General Conference or to the Executive Board or to the Director-General. Additionally, the External Auditor may at any time present reports to the Executive Board and the Director-General if in the External Auditor’s opinion there are significant, urgent or pressing matters that need to be reported.
8. Whenever the External Auditor’s scope of audit is restricted, or whenever he is unable to obtain sufficient evidence, he shall refer to the matter in his opinion and report, making clear in the report the reasons for his comments, and the effect on the financial position and the financial transactions as recorded.
9. In no case shall the External Auditor include criticism in his report without first affording the Director-General an adequate opportunity of explanation on the matter under observation.
10. The External Auditor is not required to mention any matter referred to in the foregoing which, in his opinion, is insignificant in all respects.
(*) These Additional Terms of Reference replace the “Principles to Govern Audit Procedures” adopted by the General Conference at its 6th session.