UN to fully audit DPR Korea activities from 1998 to present, says Controller

An external audit of all United Nations activities in the Democratic People’s Republic of Korea (DPRK) – called for by Secretary-General Ban Ki-moon following press reports that funds from the UN Development Programme (UNDP) improperly went to the Government – will cover 1998 to the present and deal with issues ranging from staff hiring to hard currency payments, the world body’s senior budget official said today.

“The Secretary-General is determined to pursue the questions relating to North Korea very vigorously, and to ensure that this is done within a credible process that will satisfy the requirements of legitimacy and which will serve all Member States within the established framework that exists for dealing with audit questions,” UN Controller Warren Sach told reporters in New York.

He said this would involve “working with the financial regulations and rules” under which the Board of Auditors – an external body serving the UN – can act at the request of the General Assembly’s Advisory Committee on Administrative and Budgetary Questions (ACABQ).

In view of the matter’s urgency, the Chairman of the ACABQ has been asked to put before that panel the proposed Board of Auditors review, and this will be considered as soon as possible.

“The scope of this work will focus on past and current compliance with applicable financial regulations and rules and accountability frameworks and other directives as well as to ensure that money expended in DPRK went to intended recipients,” Mr. Sach said.

Among the areas to be reviewed are foreign currency transactions, staff hiring, access to reviewing local projects and their outputs, and direct payments for national execution projects. The review will cover the period from 1998 to present, and the Board of Auditors would be asked to conduct its activities within 90 days.

The investigation was announce following press reports that UNDP’s own audits showed its funds went to the Pyongyang Government, which has been under sanctions since last October because of its proclaimed nuclear test.

Mr. Sach said today that the audit of the DPRK does not preclude other studies in other locations, adding that the idea was to have early results on that country now.

“The Secretary-General is interested in undertaking similar reviews of like operations in countries with comparable risks in the future,” he said.

Asked about the cost of the investigation, he said it was too early to tell, but stressed the need to “bear in mind that audit resources like anything else in system are limited; one wants to focus on key issues, to work with risk-based auditing techniques because that’s the best way you get payback for your audit dollar.”

UNDP has already announced plans to end all payments in hard currency to government, national partners, local staff and local vendors and discontinue sub-contracting of national staff via government recruitment – all by March.

“We welcome the external audit, going back to 1998, as announced by the Secretary-General, which will enable us to take any additional management action as needed,” the agency said in a statement.

UNDP has also said that of its approximately $6.5 million in programme expenditure on the most recent country programme, which ran from 2005 to 2006, “only $337,000 was implemented exclusively by the North Korean authorities.”

Over the past decade, the agency’s programmes in DPRK have totalled roughly $29.1 million, or some $3 million per year.