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UNITED
NATIONS
A

        General Assembly
A/55/5/Add.3
12 July 2000

General Assembly
Official Records
Fifty-fifth session
Supplement No. 5C (A/55/5/Add.3)


Chapter
Page
Abbreviations
v
Letters of transmittal
vii
I.Financial report for the biennium ended 31 December 1999
1
A.Activities of the United Nations Relief and Works Agency for Palestine Refugees in the Near East
3
B.Financial results
8
II.Report of the Board of Auditors
11
A.Introduction
12
B.Financial issues
14
C.Management issues
16
D.Acknowledgement
21
Annex
Follow-up on action taken to implement the recommendations of the Board of Auditors in its report for the biennium ended 31 December 1997
22
I.Audit opinion and certification of the Financial Statements for the biennium ended 31 December 1999
28
II.Financial Statements for the biennium ended 31 December 1999
31
A.Financial Statements
32
Statement 1. Statement of income, expenditure and changes in working capital/fund balances
32
Statement 2. Assets and liabilities statement
33
Statement 3. Cash flow statement
34
Statement 4. Budget and expenditure
35
Statement 5. Working capital account
36
Statement 6. Assets and liabilities statement for other non-regular budget funds
37
Annex
Notes to the financial statements
38
B.Appendices to the financial statements
43
Appendix 1. Regular budget expenditure
43
Appendix 2. Statement of income, expenditure and fund balances by project
46
Appendix 3. Contributions received
74
Appendix 4. Income generation and poverty alleviation programme income and expenditure statement
77
Appendix 5. General Fund production units and canteen revenues
78
C.Provident Fund statements
79
Area Staff Provident Fund
79
    Statement of income and expenditure and income distribution accoun
79
    Statement of assets and liabilities
80
    Percentage breakdown of investment balances
81
    Percentage breakdown of investment by type
81
    Statement of investments and investment income
82
Post-employment fund
83
    Statement of investments and investment income
83
    Statement of assets and liabilities
83
Austrian Schilling Fund
84
    Statement of income and expenditure and income distribution account
84
    Statement of assets and liabilities
85
    Administration expenses
86
Annex
Notes to Provident Fund financial statement
87
v
Abbreviations
ACMHArab Council of Ministers of Health
AGFUNDArab Gulf Programme for United Nations Development Organizations
ATSAustrian schilling
BS/BTBachelor of Science/Baccalaureate technique
C&SPcapital and special projects
CIDACanadian International Development Agency
CRCcommunity rehabilitation centre
D/Fluc.Deutsche Stiftung für UNO-Flüchtlingshilfe
Dt. Stift.Deutsche Stiftung
ECEuropean Community
ECHOEuropean Community Humanitarian Office
EGHEuropean Gaza Hospital
EMLOTExtraordinary Measures for Lebanon and the Occupied Territory
EPAExpanded Programme of Assistance
FOAfunded ongoing activities
GFGeneral Fund
IECinformation, education and communication
IGPIncome Generation Programme
NECCNear East Council of Churches
NGOnon-governmental organization
NRCNorwegian Refugee Council
PAPalestinian Authority
PIPPeace Implementation Programme
SARSyrian Arab Republic
UNDOFUnited Nations Disengagement Observer Force
UNDPUnited Nations Development Programme
UNESCOUnited Nations Educational, Scientific and Cultural Organization
UNFPAUnited Nations Population Fund
UNICEFUnited Nations Children’s Fund
UNRWAUnited Nations Relief and Works Agency for Palestine Refugees in the Near East
USAIDUnited States Agency for International Development
USDUnited States dollar
VATvalue-added tax
WBWest Bank
WHOWorld Health Organization







Letters of transmittal

22 March 2000
Yours faithfully,



(Signed) Peter Hansen
Commissioner-General
United Nations Relief and Works Agency for Palestine
Refugees in the Near East Headquarters (Gaza)

The Chairman of the Board of Auditors
United Nations


30 June 2000

.
(Signed) Sir John Bourn
Comptroller and Auditor General of the United Kingdom
of Great Britain and Northern Ireland and
Chairman United Nations Board of Auditors
The President of the General Assembly of the United Nations
New York, N.Y




Chapter I
Financial report for the biennium ended 31 December 1999
Summary
          The budget of the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) for the biennium 1998-1999 was $759.5 million. Against that the Agency received a total income of $586.1 million during the biennium and spent $584.0 million, resulting in an excess of income over expenditure of $2.1 million for the period.
          The closing balance in the Agency’s working capital was $10.4 million. This was due mainly to the working capital of earmarked funding of $14.5 million for basic commodities at the end of the biennium. Considering this, the working capital of the Agency reflected a negative balance of $4.1 million for the biennium. The combined balance of working capital and other funds reflected an amount of $24.5 million, a reduction of $6.1 million from the end of the previous biennium (see statement 1).
          The consolidated cash balance, which was $24.6 million at the beginning of the biennium, increased by $6.4 million to $31.0 million at 31 December 1999 (see statement 3). Of the $31.0 million, $9.6 million was committed for the Income Generation Programme and $14.5 million was earmarked for the purchase of basic commodities, leaving a balance of $6.9 million available for operations and projects.
          As in the past, the education programme represented the major part of expenditure under the regular budget, with 57.4 per cent of total expenditure. The health programme was next with 18.7 per cent, followed by relief and social services, with 10.9 per cent, and operational and common services, with 13.0 per cent.
          The overall reduction in expenditures of 21.6 per cent against budget was attributable to the Agency’s austerity measures. The educational expenditures consisted mostly of salaries of teachers, the total number of which could not be reduced because of the increasing number of schoolchildren. For health and relief and social services, the reduction was mainly due to a decrease in the consumption of supplies. The reduction of expenditure under operational and common services was due to decreases in both staff and overhead costs.
          Expenditure against non-regular funds during the biennium totalled $56.8 million. Projects under the Peace Implementation Programme and the Lebanon Appeal absorbed a large portion of this expenditure, $41.8 million and $7.3 million respectively.
          The net assets of the Area Staff Provident Fund increased to $856.6 million, and the market value of the investments at the end of the biennium was $913.1 million. Income available for distribution among the members of the Provident Fund during 2000 totalled $20.9 million.
A. Activities of the United Nations Relief and Works Agency for Palestine Refugees in the Near East 1. Education programme 2. Health programme
3. Relief and social services programme 4. Operational and common services programme 5. Special programmes Peace Implementation Programme Lebanon Appeal Capital and special projects Expanded Programme of Assistance European Gaza Hospital 6. Headquarters move to Gaza and Amman B. Financial results Chapter II
Report of the Board of Auditors Summary

The Board of Auditors has audited the operations of the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA). The Board has also validated the financial statements of UNRWA for the biennium ended 31 December 1999.

The Board’s main findings are as follows:

(a) The United Nations Relief and Works Agency for Palestine Refugees in the Near East declared a surplus of $2.08 million of income over expenditure for the biennium 1998-1999, as against a deficit of $21.2 million for the biennium 1996-1997;

(b) The value of land and buildings of $298.7 million was not capitalized and included in the statement of assets, liabilities and fund balances as at 31 December 1999, resulting in the understatement of total assets, recorded at $68.7 million, by $298.7 million. The Board has decided not to qualify its audit opinion on this matter pending the outcome of the revision of the UNRWA Financial Regulations;

(c) A total of $24.2 million from regular budget funds that had been applied to specific-purpose projects prior to the receipt of funds from donors was outstanding as at 31 December 1999;

(d) Two Governments subjected the Agency to direct taxes and customs duties totalling $24.58 million, which is contrary to the Convention on the Privileges and Immunities of the United Nations;

(e) Out of the overpayment of extended monthly evacuation allowance and educational grants totalling $299,142.99 made to 14 staff members, an amount of $37,959.25 had been recovered by the Administration, leaving a balance of $261,183.74 outstanding as at 31 March 2000;

(f) The Agency could not physically locate some 500 non-expendable property items on its inventory listing. The inventory listing had not been updated since 1996, and it showed incorrect locations of non-expendable property items.

The Board recommended that UNRWA review its policy on the pre-financing of donor-specified projects and strengthen its efforts to recover outstanding tax reimbursement and all overpayments relating to extended monthly evacuation allowances and education grants. Also, the Administration should improve its asset management system and the presentation of its financial statements.

A list of the Board’s main recommendations is included in paragraph 10.


A. Introduction

Main recommendations B. Financial issues 1. Accounts and financial reporting Operational results United Nations accounting standards Cash flow statement Contingent liabilities Land and buildings Valuation of non-expendable property Prior years’ adjustments 2. Write-offs of losses of cash, receivables and property 3. Ex gratia payments C. Management issues 1. Programme management Programme implementation Reduction in approved budget Direct taxes and customs duties Overpayment of extended monthly evacuation allowance Management of non-expendable property 2. Cases of fraud and presumptive fraud D. Acknowledgement
(Signed) Sir John Bourn
Comptroller and Auditor General of the
United Kingdom of Great Britain and Northern Ireland

(Signed) Osei Tutu Prempeh
Auditor-General of Ghana

(Signed) Celso D. Gangan
Chairman, Philippine Commission on Audit
Notes

Annex Follow-up on action taken to implement the recommendations
of the Board of Auditors in its report for the biennium ended
31 December 1997 Recommendation 8 (a) Measures taken by the Administration Comments of the Board Recommendation 8 (b) Measures taken by the Administration Comments of the Board Recommendation 8 (c) Measures taken by the Administration Comments of the Board Recommendation 8 (d) Measures taken by the Administration Comments of the Board Recommendation 8 (e) Measures taken by the Administration Comments of the Board Recommendation 8 (f) Measures taken by the Administration Comments of the Board Recommendation 8 (g) Measures taken by the Administration Comments of the Board Recommendation in paragraph 22 Measures taken by the Administration Comments of the Board Recommendation in paragraph 41 Measures taken by the Administration Comments of the Board Recommendation in paragraph 57 Measures taken by the Administration Comments of the Board Recommendation in paragraph 61 Measures taken by the Administration Comments of the Board Recommendation in paragraph 63 Measures taken by the Administration Comments of the Board Recommendation in paragraph 66 Measures taken by the Administration Comments of the Board Chapter III
Audit opinion and certification of the financial statements for the biennium ended 31 December 1999 Audit opinion
(Signed) Sir John Bourn
Comptroller and Auditor General
of the United Kingdom of Great Britain
and Northern Ireland

(Signed) Osei Tutu Prempeh
Auditor-General of Ghana

(Signed) Celso D. Gangan
Chairman, Philippine Commission on Audit



Certification of the financial statements for the biennium
1998-1999
22 March 2000
(Signed) Subhash K. Gupta

Comptroller

United Nations Relief and Works Agency for Palestine

Refugees in the Near East Headquarters (Gaza)


Chapter IV
Financial statements for the biennium ended 31 December 1999 A. Financial statements




Annex Notes to the financial statements Note 1
The Agency’s objectives Note 2
Summary of significant accounting policies Notes applicable to the regular budget Note 3
Income from other sources Note 4
Miscellaneous income Note 5
Accounts receivable Note 6
Production units inventory Note 7
Due from Area Staff Provident Fund Note 8
Fixed assets Note 9
Accounts payable Note 10
Provision for unliquidated obligations/goods in transit Note 11
Provision for carry-forwards Note 12
Contingent liabilities Note 13
Reclassifications B. Appendices to the financial statements




C. Provident Fund statements



Annex Notes to Provident Fund financial statements Note 1
The Fund Note 2
Investment management and investments Note 3
Investment income Note 4
Foreign currency transaction Note 5
Administration costs Note 6
Prior year adjustments Note 7
Reserve for loan administration expenditure Note 8
Contributions and fund balances Note 9
Post-Employment Fund

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