INTERNAL AUDIT REPORT

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Nov 18, 2013 (3 years and 8 months ago)

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    Internal Audit and Investigations Group (IAIG)
 
   

 


INTERNAL AUDIT REPORT







OF








ASSET MANAGEMENT IN UNOPS

AT

HEADQUARTERS, COPENHAGEN











Final Audit Report
No. IAIG/3104
Issue Date: 17 July 2013







    Internal Audit and Investigations Group (IAIG)
 
   

Audit report no. IAIG/3104: Asset Management in UNOPS 1

 

Contents

I. Executive summary ................................................................................................................. 2
II. Audit report .............................................................................................................................. 4
1.

Audit objective ................................................................................................................................. 4

2.

Audit scope ...................................................................................................................................... 4

3.

Audit methodology ........................................................................................................................... 4

4.

Overview of asset management in UNOPS .................................................................................... 4

III. Detailed assessment ............................................................................................................... 7
1. Control activities .............................................................................................................................. 7

2. Operational processes ..................................................................................................................... 9



Annex 1.

Definitions of audit terms – ratings and priorities .......................................................................... 13

Annex 2.

Asset management process flows ................................................................................................. 14

Annex 3.

Accounts Payable-Asset Management (AP-AM) interface clean-up process ............................... 15

Annex 4. Glossary ......................................................................................................................................... 16




    Internal Audit and Investigations Group (IAIG)
 
   

Audit report no. IAIG/3104: Asset Management in UNOPS 2

 
Report on the internal audit of
Asset Management in UNOPS
I. Executive summary
Introduction
As part of its annual work plan for 2013, the Internal Audit and Investigations Group (IAIG) conducted an
audit of Asset Management in UNOPS. The audit covered the period from 1 January 2012 to 28 February
2013.

On-going and planned developments of internal controls were taken into consideration.
The audit was carried out in accordance with the International Standards for the Professional Practice of
Internal Auditing. These standards require that IAIG plans and performs the audit to obtain reasonable
assurance on the adequacy and effectiveness of governance, risk management, and control processes.

Audit rating
In IAIG’s opinion, the overall level of internal control over Asset Management in UNOPS is Partially
Satisfactory.
1
This opinion is based on limited scope audit procedures which were performed on a sample
basis and the fact that Management plans to recognise assets in the UNOPS Statement of Financial Position
within five years from the date of first adoption of accrual accounting (1 January 2012).

Key audit issues and recommendations
The audit report contains 11 recommendations, four of which are high priority and seven of which are
medium priority.
The high priority recommendations include:
Function
Audit recommendation
Control
activities
The Director, Corporate Support Practice Group (CSPG), should update and issue asset
management instructions that specify the procedures to be performed by all UNOPS
offices during the preparatory period when International Public Sector Accounting
Standards (IPSAS) transitional provisions have been adopted, leading up to full adoption
of IPSAS. These should include but not be limited to:
a) Indicators of impairment and guidance as to what extent third party confirmations
would be required.
b) Recommended methods for disposal of different categories of assets, keeping in
view sustainability and impact on environment.
c) Treatment of assets at the time of project closure, where the project agreement
makes no mention of this.
d) Assessment of residual value of assets.
e) Recognition of leasehold improvements.
f) A checklist of documents to be maintained in support of the lifecycle of an asset.
 
The Director, CSPG, should provide guidance to UNOPS personnel responsible for
managing items with an acquisition value of less than USD 2,500.
   
                                                            
1

See definitions in Annex 1

    Internal Audit and Investigations Group (IAIG)
 
   

Audit report no. IAIG/3104: Asset Management in UNOPS 3

 
Function
Audit recommendation
Operational
processes

The Chief Financial Officer/Comptroller, Finance Practice Group (FPG) should ensure
that the asset details in the Asset Module are periodically reviewed and verified with
the General Ledger, to ensure they agree for financial reporting purposes.
Physical verification certification should be completed for all offices in a timely
manner, so as to identify gaps in the available asset data, and certify the asset
balances.

The medium priority recommendations include: ensuring that materiality analysis is performed on UNOPS
assets in light of the UNOPS adoption of IPSAS; coordinating with UNOPS offices to obtain missing
information, and correct the asset tag numbers, serial numbers, and updating the Atlas Asset module;
ensuring close coordination between the UNDP Office of Information Systems and Technology (OIST) and
the UNOPS Atlas Team taking into account all the necessary requirements for IPSAS compliance; ensuring
that project budget asset data from before 1 January 2012 is uploaded into the Atlas Asset module; carrying
out a data based analysis to inform a decision whether to acquire a comprehensive asset management
system; reconciling physically verified assets to the Atlas Asset record and excel spread sheets; and
initiating a survey to assist in understanding the training needs of UNOPS offices related to asset
management.

    Internal Audit and Investigations Group (IAIG)
 
   

Audit report no. IAIG/3104: Asset Management in UNOPS 4

 
II. Audit report
1. Audit objective
The objective of the audit was to assess the adequacy and effectiveness of the internal controls over the
management of administrative and project budget assets. This includes those items that are below USD
2,500 in value and are therefore, as per Administrative Instruction (AI) AI/EO/2011/02, not classified as
assets.

2. Audit scope
The audit was carried out as per the approved audit planning memorandum, taking into account the findings
of the risk assessment exercise carried out prior to the audit.
The scope covered the management of assets in UNOPS for the period from 1 January 2012 to 28 February
2013. On-going and planned developments of internal controls were taken into consideration.

3. Audit methodology
a) IAIG reviewed UNOPS asset management policies, procedures, and documentation including asset
reports from the Atlas Asset module and those maintained on excel spread sheets, as well as project
assets reported in the Accounts Payable financial report.
b) Discussions were held with key stakeholders at Headquarters and UNOPS field units.
c) A survey was conducted, using judgemental sampling, to ascertain the current status of asset
management in the following UNOPS offices: the Afghanistan Operations Centre, which has over 60
percent of UNOPS administrative budget assets; the Mine Action Cluster, which has over 60 percent of
UNOPS project budget assets (as of 1 January 2012); and both the Argentina Operational Hub and the
Iraq Operational Hub.

4. Overview of asset management in UNOPS
The terms ‘property, plant and equipment’ and ‘assets’ are used interchangeably to represent the same
group of assets. These include those administrative budget assets and project budget assets that meet the
following criteria:
a) They were acquired using administrative and project funded budgets;
b) They have an acquisition value of USD 2,500 and above; and
c) They are expected to be used for more than one reporting period.
Financial regulation 21.02 (a) of UNOPS Financial Regulations and Rules (FRR) defines asset management
as the proper receipt, custody, maintenance, transfer and disposal of assets.

A. UNOPS Administrative Instructions
The following UNOPS Administrative Instructions provide guidance as described below:
a) AI/E0/2011/02 – Management of assets. The purpose of this AI is to provide instructions and establish
the processes for the management of assets in UNOPS, and to specify the authorities that may be
delegated in asset management and the conditions applicable to the exercise of such authorities.
b) AI/FPG/2011/01 - IPSAS compliant accounting policies. The purpose of this AI is to establish new
UNOPS accounting policies, under International Public Sector Accounting Standards (IPSAS), for
corporate financial statements. The scope of this AI provides specific guidance on each accounting
policy based on IPSAS, including disclosure by UNOPS with respect to each recognized class of
property, plant and equipment.
    Internal Audit and Investigations Group (IAIG)
 
   

Audit report no. IAIG/3104: Asset Management in UNOPS 5

 
B. IPSAS guidance on assets
As a means to achieve best practices in the areas of accounting and financial reporting, UNOPS adopted
IPSAS with effect from 1 January 2012. Amongst other things, this has an impact on the way UNOPS
manages its assets. The IPSAS standards compel UNOPS to have detailed guidelines on how to acquire,
maintain, transfer and retire assets.
In accordance with IPSAS, the UN Board of Auditors reviewed UNOPS opening balances as of 1 January
2012. It was recognized that key business changes had taken place, with UNOPS now acting as principal or
agent for project activities. This led to a significant change in corporate policy on the management of assets
in December 2012. For financial reporting purposes, UNOPS adopted a transitional arrangement, as
permitted under IPSAS 17.95. Under this arrangement, UNOPS will not recognize in its Statement of
Financial Position any property, plant and equipment for a period not exceeding five years from the date of
first adoption of accruals accounting (1 January 2012). Management plans to recognize assets for the first
time in its Statement of Financial Position in 2015, beginning with land and buildings. IAIG’s audit will
provide support to management in preparing for this transition.
An IPSAS policy guide has been developed, which will serve as a reference guide on IPSAS and provide
insights on the key operational issues that UNOPS has to address, including those relating to property, plant
and equipment. It covers the recognition, measurement, presentation and disclosure of property, plant and
equipment under IPSAS 17, including general purpose administrative budget assets used to support UNOPS
business, and assets acquired for specific projects, and the transitional provisions.

C. Structure of the Asset Management Team and ERP Support Team
The Asset Management Team at UNOPS Headquarters consists of the following: the Administrative Team
Lead, an Asset Management Specialist, an IPSAS Technical Advisor, an Asset Management Assistant and
an IPSAS Assistant.
Support on the Atlas Asset module is obtained from the Atlas Support Specialist, who is assisted by the Atlas
Coordination Associate and Atlas Support Associate.

The responsibilities of the Asset Management Team include but are not limited to: improvement of business
processes to support overall management of UNOPS assets; advising on UNOPS IPSAS compliant asset
management processes; ensuring that assets acquired through the procurement process are interfaced in
the Atlas Asset module correctly and accurately; policy guidance, materials and process documentation for
the management and coordination of policies and processes on asset management; and designing of a
training strategy on IPSAS-related processes and procedures.
Coordination amongst UNOPS regional offices and the operation centres in different countries is through the
Regional Directors, who have the delegated authority to manage assets. Each Regional Director assigns
Asset Focal Point(s) and/or Asset Manager(s) for the Regional Office, and for each of the Operations
Centres or Operational Hubs, and other Project Centres under him/her.

Director CSPG
Administrative 
Team Lead 
Asset 
Management 
Specialist
Asset  
Management 
Assistant
IPSAS 
Assistant
IPSAS 
Technical 
Advisor
Atlas Support 
Specialist
Atlas 
Coordination 
Associate
Atlas Support 
Associate
    Internal Audit and Investigations Group (IAIG)
 
   

Audit report no. IAIG/3104: Asset Management in UNOPS 6

 
D. Process flow in Asset Management
The Asset Management process defines work flows, processes and methods for the management of assets
in support of UNOPS business objectives in compliance with the Financial Regulations and Rules applicable
to UNOPS.
It involves managing all the stages in the life cycle of an asset: acquiring the asset, receiving the asset,
maintaining the asset (including tagging and physical inventory count), and disposal of the asset.



The Asset Management process is initiated by the acquisition of an asset by buyers and/or asset focal
points. Assets which are procured are recorded through the creation of an entry in the Atlas Asset module,
either as ‘procurement catalogue 1’ for administrative budget assets, or as ‘procurement catalogue 2’ for
project budget assets. The recording of any assets acquired through alternative methods, such as donations,
is achieved by manually adding the item to the Atlas Asset module through an online request made to the
Asset Management Specialist. The process is explained in more detail in Annex 2.
The receiving, maintenance, adjustment, and transfer of assets involves the following: the clean-up process
which occurs at the Accounts Payable-Asset Management (AP-AM) interface; the updating of asset records
in the Atlas Asset module to record changes in custodians, locations, and transfers to other projects, and
finally the disposing of the assets. The asset clean-up process is explained in more detail in Annex 3.

Acknowledgement
IAIG wishes to extend its appreciation to the management and personnel of Corporate Support Practice
Group, Finance Practice Group and all those who were involved in the audit, for their full cooperation.
The detailed audit observations and recommendations are provided in Part III of the report.
Acquiring an
asset
Receiving,
maintaining (and
transfer of) an
asset
Disposing of
an asset
    Internal Audit and Investigations Group (IAIG)
 
   

Audit report no. IAIG/3104: Asset Management in UNOPS 7

 
III. Detailed assessment

1. Control activities

Control activities are policies, procedures, and practices that ensure management objectives are achieved
and risk mitigation strategies are carried out.
2


Observation 1 Asset management policies and procedures
AI/EO/2011/02 provides for the management of assets in UNOPS. During the review, IAIG noted that there
is limited guidance on the following aspects:
a) Paragraph 2.9.2 of AI/E0/2011/02 does not stipulate the kind of evidence required where there is
impairment of an asset, in the case, for example, of a motor vehicle accident. There is also no guidance
given on the extent to which third party confirmations would be required to support such a claim, nor as
to when an assessment of impairment will be carried out.
b) Regarding recommended methods for disposal of specific categories of asset, for example security
sensitive communications equipment, there is no guidance with respect to the impact on the environment
of any disposal, nor as to who bears the cost of such disposal.
 

c) Regarding the treatment of assets at project closure, there is no guidance on the action to be taken in
cases where a project agreement is silent on such treatment, as to whether, for example, the assets
should be donated or retained.
d) There is no guidance on how to assess the residual value of property, plant and equipment.
e) There is no guidance on how to recognize improvements to buildings by leaseholders in determining the
overall value of the asset.
f) There is no list of documents required to be maintained by each office in support of each asset acquired,
e.g. purchase contracts, title deeds for land and buildings, or invoices on cost, insurance and freight.

Recommendation: IAIG/3104/01
Priority: High
The Director, Corporate Support Practice Group (CSPG), should update and issue asset management
instructions that specify the procedures to be performed by all UNOPS offices during the preparatory
period when International Public Sector Accounting Standards (IPSAS) transitional provisions have been
adopted, leading up to full adoption of IPSAS. These should include but not be limited to:
a) Indicators of impairment and guidance as to what extent third party confirmations would be required.
b) Recommended methods for disposal of different categories of assets, keeping in view sustainability
and impact on environment.
c) Treatment of assets at the time of project closure, where the project agreement makes no mention of
this.
d) Assessment of residual value of assets.
e) Recognition of leasehold improvements.
f) A checklist of documents to be maintained in support of the lifecycle of an asset.
Management Comments:
CPSG fully agrees and will launch the first round of instructions later in 2013 as per the work plan for the
transitional provision period, as shared with IAIG.
                                                            
2
Defined by the Committee of Sponsoring Organizations of the Treadway Commission

    Internal Audit and Investigations Group (IAIG)
 
   

Audit report no. IAIG/3104: Asset Management in UNOPS 8

 
Observation 2 Policies and procedures relating to items with acquisition values below USD 2,500
In accordance with UNOPS FRR, Financial Rule 121.01, (a) ‘The head of operations at Headquarters shall
determine the types of property, plant and equipment and intangible assets for which records shall be
maintained, and shall establish the nature and extent of those records in keeping with the purpose of these
Financial Regulations and Rules, (b) Records shall be maintained for each item of property, plant and
equipment valued at the time of purchase at USD 2,500 (the capitalization threshold) or more and meeting
the useful life criteria. The capitalization threshold of USD 2,500 may be adjusted by the Executive Director
to achieve an acceptable coverage of all material transactions in the UNOPS account.’
IAIG noted the following:
a) There is a lack of consistency in the approach regarding management and recording of items whose
acquisition values are less than USD 2,500. The total value of these items could not be quantified as
these are tracked differently by each UNOPS office, as shown below:
i. The Mine Action Cluster implemented its own ‘Asset’ Tracking System. This system allows all
Mine Action projects to track, maintain and depreciate their ‘assets’
3
and print a variety of ‘asset’
tags to label the equipment for items valued at USD 1,000 and above.
ii. The Afghanistan Operations Centre maintains data on items with acquisition values below USD
2,500, acquired through the administrative budget, on excel spreadsheets. This data includes
security sensitive information and telecommunications equipment, as well as mine clearance
equipment.
iii. The Information and Communications Technology (ICT) unit at Headquarters maintains details
of ICT equipment on excel spreadsheets. This includes laptops and computers with a purchase
price of less than USD 2,500. Details such as acquisition date and value are not captured.
b) A materiality analysis was carried out for UNOPS assets in 2011, prior to promulgation of Financial
Rules and Regulations, Organizational Directive 3 (revision 1) incorporating the threshold value of
assets at USD 2,500. This has not been reviewed in light of the UNOPS adoption of IPSAS, and the
significant change of corporate policy on the management of assets in December 2012.

Recommendation: IAIG/3104/02
Priority: High
The Director, CSPG, should provide guidance to UNOPS personnel responsible for managing items with
an acquisition value of less than USD 2,500, to ensure consistency in the management of these items
across the organization.
Management Comments:
CSPG agrees with the recommendation and will issue guidance to the personnel responsible.
Recommendation: IAIG/3104/03
Priority: Medium
The Director, CSPG, should ensure that materiality analysis is performed on the threshold applied by
UNOPS on assets in light of its adoption of IPSAS and the significant change of corporate policy on the
management of assets in December 2012.

Management Comments:
CSPG agrees with the recommendation as this is done regularly as materiality analysis is an integrated
part of all thresholds setting in UNOPS asset management.






                                                            
3
Although described here as ‘assets’, such items (of value below USD 2,500) are not formally classified as assets.
    Internal Audit and Investigations Group (IAIG)
 
   

Audit report no. IAIG/3104: Asset Management in UNOPS 9

 
2. Operational processes
 


Observation 3 Incomplete records in the Atlas Asset module
According to paragraph 2.3 of AI/EO/2011/02, ‘Headquarters, Regional Offices, Operations Centres and
other UNOPS locations worldwide are responsible for maintaining complete and accurate records of all
acquisitions of assets, which may be acquired through the following modalities: (a) Purchase; (b) Transfer;
and (c) Donation.’
IAIG noted the following from a review of asset reports from the Atlas Asset module:
a) The details including asset tag numbers for some administrative assets did not follow the UNOPS
numbering system prescribed in paragraph 3.1 of AI/EO/2011/02, which states that 12 alphanumeric
characters must be used. This was found to apply to 26 out of 292 motor vehicles, 155 out of 302 items
of ICT equipment, 8 out of 9 items of furniture, and 14 out of 31 items of heavy machinery and
equipment.
b) A project budget assets report from Atlas for the period 1 January to 31 December 2012 shows missing
information. 674 out of 740 project budget assets do not have tag numbers, while 666 out of 740 project
budget assets have no serial numbers. According to management, this is because there was an error in
the initial AP-AM interface run by the UNDP Office of Information Systems and Technology (OIST).

Recommendation: IAIG/3104/04
Priority: Medium
The Director, CSPG, should ensure that the Asset Management Team coordinates with UNOPS offices to
obtain missing information, and correct the asset tag numbers and serial numbers, and ensure that these
are updated in the Atlas Asset module.
Management Comments:
CSPG agrees and this is happening as a part of the annual verification, which has been conducted since
2010 for administrative budget assets and which was extended for the year of 2013 to include project
budget assets, as of the policy change of December 2012.

Observation 4 Discrepancy in figures reported from the Atlas Asset module
As per rule 121.1 (c) of UNOPS FRR, the head of operations at headquarters shall be responsible for the
maintenance of records of property, plant and equipment records and such records shall be maintained for
headquarters, regional offices, operations centres and other locations worldwide, and shall show separately
property, plant and equipment belonging to UNOPS and/or entrusted to the charge of UNOPS.
IAIG noted from a review of asset reports from the Atlas Asset module that the total value of administrative
budget assets in the asset management summary report differs by USD 4,519,617 from that given in the
asset management detailed report. This shows an inconsistency in reporting on the same assets from the
Atlas Asset module as of 31 December 2012, as shown in the table below:


Total value of administrative budget
assets as at 31 December 2012
Asset management detailed report USD 15,198,689
Asset management summary report USD 10,679,072
Difference USD 4,519,617



    Internal Audit and Investigations Group (IAIG)
 
   

Audit report no. IAIG/3104: Asset Management in UNOPS 10

 
Recommendation: IAIG/3104/05
Priority: Medium
The Director, CSPG, should ensure that the relevant ATLAS Team and Asset Management Team
members prioritize close coordination between UNDP OIST and the UNOPS Atlas team so that any
updates to the Atlas Asset module take into account all the necessary requirements for the assets
management process to be IPSAS compliant, facilitating reporting which meets the needs of the UNOPS
business model.
Management Comments:
CSPG agrees and this is already happening today where both the ATLAS Team and the Asset
Management Team are working together to meet all deadlines for coordination in a timely manner.

Observation 5 Difference between the General Ledger and Atlas Asset module
Administrative Instruction AI/FPG/2011/01 ‘IPSAS compliant Accounting Policies’ subheading ‘IPSAS 17.
Property, plant and equipment (PP&E)’ states that ‘for each class of property, plant and equipment
recognized reconciliation at the beginning and end of the period must be shown with specified postings.’
For General Ledger account heads 72210, 72215, 72216, 72370, 72405 and 72805, IAIG compared the total
value of purchase orders (of USD 2,500 and above) as given in the project budget asset accounts in the
General Ledger with the total project budget assets registered in the Atlas Module as of 31 December 2012.
A difference of USD 7,606,473 was found between the two totals, as shown below:

1 January to 31 December 2012
Project budget assets of USD 2,500 and above as
per the above General Ledger accounts
USD 8,723,781
Project budget assets of USD 2,500 and above as
per the Atlas Asset module
USD 1,117,308
Difference USD 7,606,473
Although project budget assets were vouchered and procured through the project asset procurement
catalogue, the asset records were not created in the Atlas Asset module. There is no systematic process for
reconciling asset data between the General Ledger and the Atlas Asset module.

Recommendation: IAIG/3104/06
Priority: High
The Chief Financial Officer/Comptroller, Finance Practice Group (FPG) should ensure that the asset
details in the Asset module are periodically reviewed and verified with the General Ledger, to ensure they
agree for financial reporting purposes.
Management Comments:
The Chief Financial Officer/Comptroller, FPG, agrees and will coordinate with CSPG to put procedures in
place.

Observation 6 Comprehensive asset management system
Regulation 21.02 (a) of UNOPS FRR states that the management of inventories, property, plant and
equipment includes actions necessary for proper receipt, custody, maintenance, transfer and disposal.
IAIG noted the following from a review of the asset management system and from responses received from
the surveyed asset focal points:
a) Asset data relating to assets of UNOPS projects acquired prior to 1 January 2012 is not maintained in
the Atlas Asset module, but rather on excel spreadsheets, which are prone to manipulation and errors,
    Internal Audit and Investigations Group (IAIG)
 
   

Audit report no. IAIG/3104: Asset Management in UNOPS 11

 
with no trail maintained on updates relating to, for example, transfers and disposals. Wherever projects
are audited, a certificate on non-expendable property is provided by the auditors.
b) The total value of an asset under IPSAS includes the cost, plus any freight, insurance, installation and
custom clearance charges. The latter charges cannot be directly linked to the cost, as payments in Atlas
are linked to vendors, and the additional charges will usually go to different vendors. This means that the
only way to obtain the full value of an asset is to manually collect all the relevant purchase orders and
add up the totals. This process is prone to errors and omissions.
c) The Atlas asset management system does not support management reporting and decision making on
the effective and efficient use of assets. For example, the monitoring of fuel consumption of motor
vehicles and mileage travelled would inform management decisions regarding whether to retain or
dispose of a vehicle, and regarding the scheduled maintenance and insurance of assets.
d) The Atlas Asset module does not facilitate user-friendly tracking or adjustments of the asset data. In
addition, the Atlas Asset module does not provide for the recording of any actions taken between the
raising of a receipt and the disposal of the asset. The Afghanistan Operations Centre is currently
maintaining two sets of assets records, one in Atlas and one on excel spreadsheets to facilitate tracking.

Recommendation: IAIG/3104/07
Priority: Medium
The Director, CSPG, should ensure that project budget assets acquired prior to 1 January 2012 which will
continue to exist when assets are recognised in the Statement of Financial Position, are uploaded into the
Atlas Asset module.
Management Comments:
CPSG fully agrees and this is planned for implementation as per the work plan for the transitional period,
as shared with IAIG.
Recommendation: IAIG/3104/08
Priority: Medium
The Director, CSPG, should consider whether to acquire a comprehensive asset management system that
will provide both financial and non-financial performance management data and facilitate tracking of
assets from acquisition to disposal, including system computation of total asset value.
Management Comments:
CSPG agrees. The analysis is envisioned to be part of the implementation of a new Enterprise Resource
Planning (ERP) solution.

Observation 7 Asset physical verification certification
According to AI/E0/2011/02 paragraph 4.1.1, ‘Physical verification is the process of taking stock of items that
are currently being used, maintained, or owned by UNOPS. The purpose is to ensure that the inventory
report is complete and correct.’
IAIG reviewed the asset physical verification certification reports (as of 30 April 2013) and noted the
following:
a) Nineteen out of the 35 UNOPS offices which had administrative budget assets, had not completed the
certification process for these assets held as of 31 December 2012. The amount uncertified was USD
13,311,646 (88 percent of the total administrative budget assets held).
b) Twenty-one out of the 31 offices, which also had project budget assets, had not completed the
certification process for the project budget assets. The amount uncertified was USD 38,833,927 (91
percent of the total project budget assets held). In the absence of certifications, the actual total value of
administrative and project budget assets as at 31 December 2012 cannot be fully ascertained.
c) In six of those offices whose certification process was complete, the project budget asset stock taking
sheets were lacking data in at least one of the following fields: asset ID, acquisition date, and asset
condition. In addition, the asset tag numbers did not conform to the UNOPS numbering sequence.
    Internal Audit and Investigations Group (IAIG)
 
   

Audit report no. IAIG/3104: Asset Management in UNOPS 12

 
d) Project budget asset lists prepared by the Asset Management Team in preparation for the physical
verification exercise did not include totals, making it difficult to match the closing balance as per the
certification report to the closing balance on the stock taking sheet for each office.
e) On completion of the certification exercise, details relating to project budget assets are to be uploaded to
the Atlas Asset module, after making adjustments for transfers and disposals. This process had not
commenced by 30 April 2013. These details are therefore not complete, which will impact on the quality
of data uploaded into the Asset module.

Recommendation: IAIG/3104/09
Priority: High
Physical verification certification should be completed for all offices in a timely manner, so as to identify
gaps in the available asset data, and certify the asset balances.
Management Comments:
CPSG agrees and this will happen when all data is in the system from January 2014.
Recommendation: IAIG/3104/10
Priority: Medium
The physically verified assets should be reconciled to the Atlas Asset record as well as the asset record
maintained on excel spread sheets, and any necessary adjustments made for obsolete or disposed assets
on a timely basis.
Management Comments:
CSPG agrees and this will be extended to the project budget assets as per the new policy change.

Observation 8 Asset management training
Paragraph 1 of Organizational Directive (OD) 29 states that ‘UNOPS is committed to the development of its
human resources in order to achieve its mandate and to continuously adapt to new challenges in a changing
environment.’
The review revealed that, at the time of audit, the Asset Management Team had no written plan to identify
training needs of asset focal points in UNOPS offices.
In 2012, the Asset Management Team organized training on IPSAS-related changes to asset management,
for asset focal points in only two Regional Offices and one Operations Centre. Responses from the
surveyed asset focal points revealed needs which were not met by the training provided, e.g. on the Atlas
Asset module and fleet management.

Recommendation: IAIG/3104/11
Priority: Medium
The Director, CSPG, should ensure that the Asset Management Team initiates a survey to assist in
understanding the training needs of UNOPS offices related to the asset management process and
structure training programmes to address the skills needed.
Management Comments:
CPSG fully agrees and this is planned by end-2013 as per the work plan for the transitional period, as
shared with IAIG.


    Internal Audit and Investigations Group (IAIG)
 
   

Audit report no. IAIG/3104: Asset Management in UNOPS 13

 
Annex 1. Definitions of audit terms – ratings and priorities
 
A. Audit ratings
Effective 1 January 2010, the internal audit services of UNDP, UNFPA, UNICEF, UNOPS and WFP adopted
harmonized audit rating definitions, as described below. IAIG assesses the entity under review as a whole as
well as the specific audit areas within the audited entity:

Satisfactory Internal controls, governance and risk management processes were adequately
established and functioning well. No issues were identified that would significantly affect the
achievement of the objectives of the audited entity.

Partially Satisfactory Internal controls, governance and risk management processes were generally
established and functioning, but needed improvement. One or several issues were identified that
may negatively affect the achievement of the objectives of the audited entity.

Unsatisfactory Internal controls, governance and risk management processes were either not
established or not functioning well. The issues were such that the achievement of the overall
objectives of the audited entity could be seriously compromised.

B. Priorities of audit recommendations
The audit recommendations are categorized according to priority, as a further guide to management in
addressing the issues in a timely manner. The following categories of priorities are used:
 High: Prompt action is considered imperative to ensure that UNOPS is not exposed to high risks
(that is, where failure to take action could result in critical or major consequences for the
organization).
 Medium: Action is considered necessary to avoid exposure to significant risks (that is, where failure
to take action could result in significant consequences).
 Low: Action is desirable and should result in enhanced control or better value for money.
Low priority recommendations, if any, are dealt with by the audit team directly with the management of the
entity under review, either during the exit meeting or through a separate memo subsequent to the fieldwork.
Therefore, low priority recommendations are not included in this Report.


    Internal Audit and Investigations Group (IAIG)
 
   

Audit report no. IAIG/3104: Asset Management in UNOPS 14

 
Annex 2. Asset management process flows

A. Recording administrative budget assets
 
B. Recording project budget assets
 
(Source: information provided by CSPG)
 
    Internal Audit and Investigations Group (IAIG)
 
   

Audit report no. IAIG/3104: Asset Management in UNOPS 15

 
Annex 3. Accounts Payable-Asset Management (AP-AM) interface clean-up process



(Source: information provided by CSPG)














    Internal Audit and Investigations Group (IAIG)
 
   

Audit report no. IAIG/3104: Asset Management in UNOPS 16

 
Annex 4. Glossary


AI Administrative Instruction
ATLAS UNOPS ERP system, jointly with other agencies
AP-AM Accounts Payable-Asset Management
CSPG Corporate Support Practice Group
ERP Enterprise Resource Planning
FPG Finance Practice Group
FRR UNOPS Financial Regulations and Rules
HQ Headquarters
IAIG Internal Audit and Investigations Group
ICT Information and Communications Technology
IPSAS International Public Sector Accounting Standards
OD Organizational Directive
OIST Office of Information Systems and Technology, UNDP
PP&E Property, Plant and Equipment
UNDP United Nations Development Programme
UNFPA United Nations Population Fund
UNICEF United Nations Children's Fund
UNOPS United Nations Office for Project Services
USD United States Dollars
WFP World Food Programme