In 2007, UNOPS established an  internal oversight office, including an internal audit program modeled  after Institute for Internal Auditors standards. In 2007 UNOPS  management requested further investigation of misconduct in  Afghanistan. Reforms Have Strengthened Internal Controls, but the Extent of Their Effectiveness Has Not Been Assessed

			Project Tracking System Has Improved Documentation of Projects, but Weaknesses Remain

While changes to UNOPS’s project tracking system, Atlas, have improved  documentation of projects at UNOPS, the effectiveness of these  improvements is limited by the lack of systematic data reliability  assessments and other system implementation inadequacies. In 2007, when UNOPS management proposed the first  phase of the investigation, UNOPS had no investigative capacity of its own  and, thus, had to request and pay other investigators for their services. The UNOPS Director of internal  oversight and the Ethics Officer told us that there have been no audits or  assessments of UNOPS’s Ethics Office. UNOPS’s Executive Board Lacks Full Access to Internal Audit Reports that Could Provide Greater Insights into UNOPS’s Operations

While UNOPS’s Executive Board receives information from various  sources about the effectiveness of UNOPS’s financial and programmatic  operations, the board members—including the United States—do not have  full access to internal audit reports, which could increase transparency  and provide further insight into UNOPS’s operations. USAID Has Not Consistently Implemented Its Oversight Policies When Making Grant Awards with UNOPS and Has Been Vulnerable to Program Fraud and Abuse

While USAID’s general policies for making grants with PIOs require USAID  to evaluate grantees and to include provisions in some cases under which  the grantee agrees to give USAID access to oversight information, USAID  has not consistently implemented these policies when making grant  awards with UNOPS. We found that some of these omissions can be attributed to USAID’s lack  of clear guidance, training, and monitoring of its required audit provisions. USAID’s failure to adhere to its policies limited its oversight of grants that  were subsequently associated with alleged findings of criminal actions and  mismanaged funds. USAID could not provide official documentation of assessments for 7 of  the 11 grants it made to UNOPS from 2004 through 2008 (see app. USAID Did Not Acknowledge Information from UN Audits and Investigations of UNOPS while Continuing to Award Grants to UNOPS

None of USAID’s four official pre-award assessments of UNOPS from 2004  through 2008 acknowledged adverse findings from publicly available UN  audits and investigations. Appendix I: Scope and Methodology

To assess the extent to which United Nations (UN) Office of Project  Services (UNOPS) has addressed key concerns about its internal controls,  we reviewed key UN and UNOPS reports and documents outlining  changes UNOPS management made to the organization and its operations  from 2006 to 2009. From these  locations UNOPS oversees activities in more than 50 countries. 2. 3. 4. United Nations: Procurement Internal Controls Are Weak.
Why GAO Did This Study

The United Nations (UN) Office for Project Services (UNOPS) provides numerous services for its clients, including procurement and project management. Recent audits and investigations of UNOPS have revealed alleged violations of law, weak internal controls, and financial mismanagement. UNOPS officials misused some of the more than $400 million awarded to UNOPS by the U.S. Agency for International Development (USAID) from 2004 through 2008. GAO was asked to (1) assess the extent to which UNOPS has addressed key concerns about its internal controls, and (2) evaluate USAID's oversight of UNOPS-implemented projects. To address these objectives, GAO reviewed UNOPS and USAID policies and grant documentation.

What GAO Found

While UNOPS management continues to implement reforms that address key concerns raised by audits and investigations, the effectiveness of some implemented reforms has not been assessed. Management efforts to improve UNOPS include (1) development of UNOPS's project tracking system, Atlas; (2) establishment of an internal oversight office; and (3) establishment of an ethics office. While changes to Atlas have improved UNOPS's financial documentation, UNOPS does not systematically assess data reliability in Atlas. Although UNOPS's internal oversight has been strengthened by the creation of an oversight office, two phases of an investigation of activities in Afghanistan have not begun. UNOPS had no investigative capacity of its own and had to seek out external investigators for which it is still negotiating the scope and cost. In addition, while UNOPS's ethics office complies with most UN requirements, no one has assessed the effectiveness of the office's activities. Finally, UNOPS's Executive Board lacks full access to internal audit reports that could provide greater insights into UNOPS's operations. USAID has not consistently implemented its oversight policies when making grant awards with UNOPS and has been vulnerable to program fraud and abuse. While USAID has policies that require it to perform pre-award assessments of Public International Organizations (PIO), such as UNOPS, USAID could not provide official documentation of these assessments for 7 of its 11 awards made to UNOPS from 2004 through 2008. In the 4 assessments USAID provided, there were no statements acknowledging findings of weak internal controls from UN audits and investigations. In addition, USAID did not negotiate to include audit authority for 9 of these awards that would have allowed USAID access to UNOPS project financial records. We found that an absence of clear guidance, training, and monitoring contributed to these failures. USAID's noncompliance with its policies resulted in limited access to data on UNOPS grants that were associated with findings of possible criminal