Overview of OIG Audit Investigation Reports 2017 Office

Overview of OIG Audit & Investigation Reports 2017 Office of the Inspector General, May 2018

Content • Recapitulation of the IG’s presentation of April 5, 2018 • OIG Reporting Mandate • Summary of OIG Audit Reports Issued in 2017 • Summary of OIG Investigation Reports Issued in 2017

The plan to enhance OIG’s recommendations monitoring was implemented Action plan presented to the Working Group Status 1. Review audit approach 1. Introduction of agreed SMART actions in the audit reports. 2. Introduce criteria for audit observation’s rating. ü Implemented - Since Q 4/2017 audit reports include SMART concept - New criteria launched within the audit team 2. Re-assess existing open recommendations 1. Re-assess the rating using new criteria 2. Apply IIA’s recommendations for small internal audit activities in compliance with Standard 2500 – Monitoring Progress 3. Conduct follow - up audits ü Implemented - Inputs from Member States provided by the Working Group Chair, new rating criteria and IIA’s recommendation for small internal audit activities were applied - A follow-up audit of the Results Based Budget System will be scheduled. 3. Report recommendation status every 2 months to the Secretariats and quarterly to the CAAP. 1. Time for monitoring will be allocated in the OIG’s resource planning process. - ü Completed Q 1 monitoring - Monitoring has started and will be done quarterly within the GS. We propose presenting to the Working Group every 4 months LIST OF ACRONYMS USED: IIA = The Institute of Internal Auditors; SMART = Specific, Measurable, Achievable, Responsible person, Time; CAAP=Committee on Administrative and Budgetary Affairs 3

Board of External Auditor’s assessed OIG related recommendations closed in its Annual Report 2017, including review of recommendations 4

List of high risk/priority recommendations after re-assessment 5

Considerations for an Audit Committee • Typical functions of an Audit Committee – – – – Approves the IA charter. Approves the risk-based internal audit plan. Approves the IA budget and resource plan. Follow-ups on IA activities and recommendations. Approves decisions regarding the appointment and removal of the CAE. Approves the remuneration of the CAE. Makes appropriate inquiries of management and the CAE to determine whethere are inappropriate scope or resource limitations. • Composition of an Audit Committee: Include members who are not part of management and may include the top management (e. g. CEO and CFO), usually is lead by a Chairman of the Audit Committee who is not part of management and has audit experience. • If the OAS makes a decision of establishing an Audit Committee, it can be doing by stablishing a new body or by extending the role of the Board of External Auditors. In any case, it would require a review of the General Standards to Govern the Operations of the General 6 Secretariat. General Standards are finally approved by the General Assembly.

OFID (OPEC Fund for International Development) Internal Audit Staffing Survey The Survey was circulated to 68 Organizations. The total number of respondents was 32 representing a response rate of 47%. Contacted Responded Participation 7 OFID Internal Audit Staffing Survey

6. Governance structure 5. Audit Committee presence *Other – similar to an Audit Committee - include: - DFI: Audit Advisory Committee - IO: Committee on Budget, Finance and Administration; Advisory Group; Audit Advisory Board Other* Chart Title *Other include: - General Assembly and Secretary General - Governing Bodies – General Assembly & the Permanent Council - Executive Board No Other* 13% CEO / President 17% Governing Board or Commision 62% Yes 0 5 10 Development Finance Institutions 15 20 Elected Official(s) 8% 25 International Organizations Chart Title Other** 5% 88% of surveyed Development Finance Organizations and 80% of International Organizations had either an Audit Committee or a designated body with similar roles and responsibilities. 8 OFID Internal Audit Staffing Survey CEO / President 15% Elected Official(s) 15% Governing Board or Commision 65% **Other include: - Congress (meets every 4 years) and Executive Council (meets annually)

Audit and Investigations Reports Issued OIG matters completed by year 25 20 8 15 17 10 5 0 4 14 7 2014 2015 Audits & SR May 2018 6 5 6 2017 Investigations & SR 9

Content • Statistical Summary of OIG Audit and Investigations reports Issued • OIG Reporting Mandate • Summary of OIG Audit Reports Issued in 2017 • Summary of OIG Investigation Reports Issued in 2017

Regulations in the General Standards to Govern the Operations of the General Secretariat for the reports of the Office of the Inspector General • Article 122 of the General Standards indicates that: “The Inspector General shall present the Secretary General with reports on the audits, investigations, and inspections he conducts, with copies to the Permanent Council and the Board of External Auditors. In submitting his reports, the Inspector General shall recommend such measures as he deems necessary to safeguard their confidentiality. • Article 122 of the General Standards adds that: “The report of the Inspector General will be made available to the member states at Office of the Inspector General with clearly defined procedures and appropriate protection for sensitive information that could compromise pending legal action, expose sensitive organizational data of designated operators, endanger the safety and security of any entity, unit, or individual, or infringe on the privacy rights of any individual” • Article 124 of the General Standards states as follows: “Annual summary reports of the Inspector General will be made available to the public on the General Secretariat’s website. ” 11

Content • Statistical Summary of OIG Audit and Investigations reports Issued • OIG Reporting Mandate • Summary of OIG Audit Reports Issued in 2017 • Summary of OIG Investigation Reports Issued in 2017

Summary of OIG Audit Reports Issued in 2017 Audit AUD-15/03 –Disbursement Process for Specific Funds: – – May 2018 At the time of the audit, approximately USD 4. 1 million of unspent Specific Funds remained in the accounting system long after the projects closed. Awards with unspent funds and negative balances of USD 468, 796 Transactions recorded to expired awards and projects Manual process of data consolidation and aggregation relating to financial reports on Specific Funds 13

Summary of OIG Audit Reports Issued in 2017 Audit AUD-16/07 –Management and Use of the GS/OAS Travel Mileage Program: – – – May 2018 Lack of clarity and understanding of the methods by which the Organization earns travel miles and points through corporate agreements with major airlines Missing data from the report of tickets purchased with corporate benefits (points) Incomplete report related to home leave travels Inadequate review of the information received from OMEGA, the travel agency contracted by GS/OAS Lack of DP’s involvement and segregation of duties in the reconciliation and approval process of purchased tickets 14

Summary of OIG Audit Reports Issued in 2017 Audit AUD-16/03 Travel Expenses Not Currently Managed Through the TEC System: The Travel Expense Claim (TEC) system is used at the GS/OAS to manage, document and control the travel expenses of staff members. The system is a good internal control mechanism; however only around 33% of the travel disbursements of the Organization is managed through it. Individuals contracted under the following types of contract mechanism are not managed through the TEC System: Performance Contracts (CPRs); Special Observer Contracts; Local Professionals; Temporary Support Personnel; and Associates. This also includes: Human Rights Commissioners; Meeting Participants; Fellowships; Guests; and every person that travels on behalf of the GS/OAS and/or with GS/OAS funds. – – May 2018 Insufficient control over cash advances made to travelers: which are paid in advance to travelers based on airplane ticket reservations but are not later on reconciled against actual travel records. Lack of control over consultants (CPRs) traveling on behalf of the Organization: instances were noted of CPRs traveling without a valid contract. 15

Summary of OIG Audit Reports Issued in 2017 Audit AUD-17/01 GS/OAS Credit Card Corporate Programs: – – May 2018 Limited segregation of duties in the oversight of the corporate membership rewards: internal requirements for the oversight of the corporate membership rewards (i. e. Administrative Memorandum 129) were not observed by management prior to the performance of the audit. Compliance with these requirements will help to enhance transparency and oversight over the Organization’s corporate membership rewards program. Notwithstanding this lapse of control, our audit noted that the entire rewards obtained in the audit period were properly redeemed and credited to the Organization. Lack of formal procedures regulating the usage of the AMEX P-card: At the time of the audit those procedures were in draft phase. Our analysis determined that the drafts were not being used consistently. 16

Summary of OIG Audit Reports Issued in 2017 Audit AUD-17/05 Cultural Heritage Phase II Project: – – – May 2018 Delays in the delivery of progress reports to the Department of Planning and Evaluation (DPE) by the technical area (the Department of Economic Development). Approximately 26% of the activities planned for the project were not completed on time. For the period under review, it did not appear that the project’s indicators at the purpose level were achieved. 17

Summary of OIG Audit Reports Issued in 2017 Special Review REV-17/03 Judicial Facilitators Review: – – May 2018 Accountable Advances: USD 34, 528 from cash advances made in 2014 and 2015 were pending of reconciliation as of the date of the audit report. Consultants’ Contracts: lack of consistency in the way consultants are contracted – individuals may be awarded different types of contracts during the same calendar year. Consultants’ Per-Diems: inconsistencies in the payments of per-diems to the Program’s consultants. Purchase of Air Tickets: only approximately 3% of a total of USD 132, 657 of air tickets purchased by the Program during the scope period were made through the OAS’ preferred travel agency. This may lead to inefficiency and an increase of travel costs as the Program may not be taking advantage of the benefits of corporates offered by the Organization’s official/preferred travel service provider. 18

Content • Statistical Summary of OIG Audit and Investigations reports Issued • OIG Reporting Mandate • Summary of OIG Audit Reports Issued in 2017 • Summary of OIG Investigation Reports Issued in 2017

Summary of Investigation Activities Completed Id Description Classsification INV-14/11 Spain Partnership Fraud & Criminal History Due Diligence Follow-Up INV-17/06 Spain Partnership Fraud - Mo. U Due Diligence Follow-Up Rev-16/01 INV-17/04 INV-17/10 Due Diligence Review of Contracts with Third Party US Tax Reimbursement Fraud/Misappropriation MACCIH Alleged Workplace Harassment II DLS Misconduct Complaints Secretary General Special Request Fraud/Misappropriation Workplace harassment complaint Misconduct complaint Rev-17/02 Rev-17/01 401 (m) Plan Contracts Review – Due Diligence 2016 PR-16 -06 Criminal History Follow Up Secretary General Special Request INV-13/14 Tuition Reimbursement Benefits Alleged bribery/collusion INV-15/06 Nonprofit Work in Haiti Alleged bribery/collusion INV-16/04 INV-17/02 Costa Rica NGO / Allegations of Wrongdoing OAS Scholarship Debt Collection Practices Alleged bribery/collusion INV-17/03 INV-17/05 MACCIH Alleged Workplace Harassment I IACHR Complaints Workplace harassment complaint Alleged bribery/collusion INV-17/07 Whistleblower Protection/Retaliation INV-17/08 INV-17/09 MAPP Issues Complaint DFS Workplace Harassment Whistle-blower complaint/retaliation Anonymous complaint - Alleged Workplace harassment complaint OIG Conclusion Findings Noted Recommendations Provided Substantiated To be revisited Inconclusive Unsubstantiated