Presentation by the Chairperson of the Audit Committee

Presentation by the Chairperson of the Audit Committee at its 13 th Meeting (11 and 12 February 2019) WCO Audit Committee 2018/2019 Armenia Bangladesh Vice Chair) Gabon Guatemala Indonesia Lesotho Morocco Norway (Chair) Peru South Africa Togo Tunisia

Presentation by the Chairperson of the Audit Committee at its 1 th Meeting (11 and 12 February 2019) REVIEW OF MID TERM RESULTS OF THE WCO OPERATIONAL PLAN 2018/2019 (New task for the Audit Committee) • • • Most of the goals (“KPI´s” / “Deliverables”) will be reached by the end of Financial Year 2018/2019. Regarding some goals, additional action is needed to achieve them. Need for improvement of methodology identified (Prognosis, indicating where Corrective measures is needed )

Presentation by the Chairperson of the Audit Committee at its 12 th Meeting (11 and 12 February 2019) DRAFT WCO OPERATIONAL PLAN 2019/2020 INCLUDING PERFORMANCE INDICATORS AND PRIORITIZATION METHOD (Based upon the redesigned, more high level, more process oriented draft WCO Strategic Plan for 2019/2020, containing fewer specific goals (30 contra 102) and 7 Strategic Priorities ) • The Audit Committee recommends the Performance Indicators for approval and adoption by the Policy Commission and Council. • The Audit Committee considers the new Strategic Plan concept interesting, worth trying out practically. • The Audit Committee considers “Integrity” (meaning not only risk of Corruption and Fraud, but also Governance and Transparency more generally) a vital issue for the WCO, and invites the Policy Commission and Council to discuss and decide whether “Integrity” be included in the S. P. as Strategic Priority No. 8).

Presentation by the Chairperson of the Audit Committee at its 12 th Meeting (12 and 13 February 2018) STATUS OF IMPLEMENTATION OF PENDING RECOMMENDATIONS (Recommendations based on Internal- or External Audits, accepted, endorsed and adopted by the A. C. , P. C. and Council) • 13 Recommendations are pending, most of them will be implemented in 2020 • The Secretariats proposed model for conclusion of future MOU´s between WCO and International Partners: • The Audit Committee believes the following issues should be added to the principles ( to be discussed and concluded by the P. C): - Who should have the authority to sign new MOU´s? Should the relevant WCO Committees be informed before or after signing a new MOU? If authority to sign is placed with the S. G; can his/hers authority be delegated to the Deputy S. G. and/or Directors? Indicate which of the signatories be accountable in case the MOU leads to increased costs

Presentation by the Chairperson of the Audit Committee at its 13 th Meeting (11 and 12 February 2019) REPORT ON THE 2018/2019 INTERNET BASED RISK SURVEY • Most critical risk themes: “Financing of the WCO” and “Expertise and knowledge” • “Integrity”, “e-commerce” and “high employee-turnover” frequently mentioned as vital risk factors. • The Risk Survey gives valuable information on risks pertaining to the WCO. • A risk survey should be carried out also next year.

Presentation by the Chairperson of the Audit Committee at its 12 th Meeting (11 and 12 February 2019) EXTERNAL AUDIT (ERNST & YOUNG) ON THE EFFECTIVENESS OF CERTAIN WCOFUNDED CAPACITY BUILDING PROJECTS • Purpose: On regular intervals check out the effectiveness of representative projects with a view to learn lessons • Projects and sites analyzed: - Projects: ESA Project II, Mercator Programme, Container Control Programm - Sites: Kenya, Azerbaijan, Panama, Malawi, (Ethiopia) • Audit Method: Compare project results to expected outputs • Results of projects compared to expected outputs ( E. Y´s views. ) Achieved: 17% Largely achieved 12% Partially achieved 55% Non achieved 16% Total 100%

Presentation by the Chairperson of the Audit Committee at its 13 th Meeting (11 and 12 February 2019) EXTERNAL AUDIT (ERNST & YOUNG) ON THE EFFECTIVENESS OF CERTAIN WCO-FUNDED CAPACITY BUILDING PROJECTS (cont. ) • - ”Areas” of Lessons learnt: Analysis and Selection Planning and execution Sustainability Evaluation Project management • Recommendations In total 23 spesific Recommendations directed at WCO Project Managers and the Secretariat, all of them accepted or partially accepted by the Secretariat and endorsed by the Audit Committee (16 already partially implemented)

Presentation by the Chairperson of the Audit Committee at its 13 th Meeting (11 and 12 February 2019) INTERNAL AUDIT ON MISSIONS MANAGEMENT PROCEDURES (Efficiency of travel procedures within the WCO) • Background Travel costs are rapidly increasing, close to 20% of available budget is spent on travel • Methodology Information and views collected by questionnaires and interviews (159 respondents) • Goal Analyse Travel Procedures with a view to improving them

Presentation by the Chairperson of the Audit Committee at its 13 th Meeting (11 and 12 February 2019) INTERNAL AUDIT ON MISSIONS MANAGEMENT PROCEDURES (Efficiency of travel procedures within the WCO) (cont. ) Recommendations 18 specific Recommendations accepted by the Secretariat and endorsed by the Audit Committee, covering 4 themes: - Implement a Corporate Travel Management (CTM) approach (establish a new WCO Travel Unit) Modifying and updating the WCO Travel Policy Completing the documentation for the Travel Request Application Improving the functionality of processes and workflows

Presentation by the Chairperson of the Audit Committee at its 13 th Meeting (11 and 12 February 2019) APPROVAL OF THE 2019/2020 WCO AUDIT PLAN The Audit Committee recommends: • To carry out a new electronic Risk Survey • To carry out a renewed, thorough risk mapping in the form of an External Audit • To carry out an Internal Audit on “Financial Statement Closure Process with a special focus on the WCO liquidity

Presentation by the Chairperson of the Audit Committee at its 13 th Meeting (11 and 12 February 2019) “OTHER BUSINESS” • Independence of the Internal Auditor: Background Also the new Internal Auditor of the WCO (as from Feb. 2019) holds the post of I. A. on a part time basis, in a combination with other responsibilities within the WCO-secretariat. Independence, objectivity and potential conflict of interest (Re. Recommendations No. 1112 and 1120 of the Institute of Internal Auditor; I. I. A. ) The part time I. A. arrangement is a cost effective and legitimate solution, but gives ground for emphasizing the need for the Internal Auditor, the Secretariat and the Audit Committee to safeguard the independence and objectivity of the post of Internal Auditor, and to avoid conflict of interest between Audit tasks and other tasks of the Internal Auditor.

Presentation by the Chairperson of the Audit Committee at its 13 th Meeting (11 and 12 February 2019) Designation of Chairperson and Vice-Chairperson of the Audit Committee for 2019/2020 The committee recommends to the Council in June that Norway and Bangladesh continue to serve as Chair and Vice Chair respectively.