The organization’s budget for calendar year 2002 is about $54 million. In early 2002, the United States and other member states to the convention  raised concerns that the organization was not fulfilling its mandate because  of a number of management weaknesses. The budgets also include inaccurate expense projections. OPCW’s inaccurate income and expense estimates contributed to a budget  deficit in 2000, and a potential deficit for 2002, despite plans to achieve  balanced budgets in those years. As of June 2002, those states  possessing chemical weapons–related facilities, including the United  States, owed OPCW more than $2 million in reimbursable inspection  expenses from the previous 2 years. However, the  budgets underestimated this increase. Unless the organization can obtain additional funding, it will  have to further reduce its inspections in 2002. The Secretariat plans to reduce the number  of inspections for 2002 to compensate for the potential deficit of $5.2  million. OPCW and State Department Have Taken Steps to Improve Budget Practices, but Problems Remain

The organization has taken some preliminary steps to address its budgeting  problems, but it lacks a comprehensive strategy to overcome the inherent  weaknesses in its budgeting process. Also, limited oversight resources have  affected the organization’s efforts to improve its budgeting process. Conclusions

The OPCW has consistently overestimated its income and underestimated  its expenses, and thus has planned more inspections than it is financially  able to conduct. Recommendations for Executive Action

To improve the current budget problems of the Organization for the  Prohibition of Chemical Weapons, we recommend that the Secretary of  State work with the representatives of other member states and the new  Director-General to develop a comprehensive plan to improve the  organization’s budgetary practices. Member States in Arrears of Contributions to the Organization for the Prohibition of Chemical Weapons (as of August 31, 2002)

$60,127 $163,958 $253,143 $71,155 The Preparatory Commission for the Organization for the Prohibition of Chemical Weapons preceded  the OPCW and carried out the initial implementation of the Chemical Weapons Convention. GAO Comments

1. We reported that weak budgeting practices and  budget deficits have affected the organization’s ability to perform its  primary inspection and international cooperation activities, as outlined  in the Chemical Weapons Convention. 8.
Why GAO Did This Study

The Organization for the Prohibition of Chemical Weapons is responsible for implementing the Chemical Weapons Convention, which bans the use of chemical weapons and requires their elimination. The United States and other member states have raised concerns that a number of management weaknesses may prevent the organization from fulfilling its mandate. As requested, GAO assessed the accuracy of the organization's budget and the impact of budget shortfalls on program activities. GAO also reviewed efforts to improve the organization's budget planning.

What GAO Found

Since its establishment in 1997, the ability of the Organization for the Prohibition of Chemical Weapons (OPCW) to carry out key inspection functions has been hindered by inaccurate budget projections and, more recently, budget deficits. The organization has consistently overestimated its income and underestimated its expenses. Its budgets have recorded as income nearly $1 million in unpaid assessments owed by 30 member states. The budgets have also overestimated reimbursement payments for inspections conducted in member states with chemical weapons-related facilities. As of June, 2002, these states owed the organization more than $2 million. Furthermore, the budgets for 2000 through 2002 underestimated personnel expenses. The organization's inaccurate income and spending estimates contributed to a $2.8 million deficit in 2000 and a potential deficit of $5.2 million in 2002. Weak budgeting practices and budget deficits have affected the organization's ability to perform inspection activities as mandated by the Chemical Weapons Convention. The organization had to reduce the number of inspections it conducted in 2001 and plans to reduce the number it conducts in 2002. Although the organization and the State Department have taken some steps to address the budget problems, the organization has not developed a comprehensive plan to overcome its inherent weaknesses. Unless the organization improves its planning, budget shortfalls will continue to affect its ability to conduct inspections.