FIFTY-SEVENTH SESSION (Contd.)

APPENDIX C
LIST OF DOCUMENTS

APPENDIX D
STATEMENT BY THE DIRECTOR-GENERAL TO THE COUNCIL CONCERNING CHINA

Mr. Chairman, I should like to use this opportunity to mention to the Council a matter of great importance which is also a matter of common interest to all United Nations Agencies. As you know, the General Assembly of the United Nations adopted on 25 October 1971 a Resolution (A/Res./2758(XXVI)) restoring the lawful rights of the People's Republic of China in the United Nations. I should like to quote briefly the operative paragraph of this Resolution where it is stated that the General Assembly

“Decides to restore all its rights to the People's Republic of China and to recognize the representatives of its Government as the only legitimate representatives of China to the United Nations, and to expel forthwith the representatives of Chiang-Kai-shek from the place which they unlawfully occupy at the United Nations and in all the Organizations related to it”.

When informing me of this decision by telegram dated 26 October 1971, the Secretary-General, U Thant, also drew the attention of FAO to a General Assembly Resolution adopted in 1950 (Resolution 396(V)) which recommends, inter alia,

“that the attitude adopted by the General Assembly … concerning any such question [that is a controversial question of representation of a Member State] should be taken into account in other organs of the United Nations and in the Specialized Agencies”.

A further exchange of communications has since taken place between FAO and the United Nations and we have been informed that the Government of the People's Republic of China has now announced its intention to take its place in the United Nations and has informed the Secretary-General that it will send a delegation to attend the Twenty-Sixth Session, the present session of the General Assembly.

This development in the United Nations is, of course, a matter of great importance also for the Specialized Agencies, and the Secretary-General has in fact asked to be informed immediately of any action taken on the matter in each Organization. I understand that the Executive Heads of various agencies have submitted this question to their governing bodies or are about to do so in the near future. A conclusion has already been reached in Unesco where the Executive Board decided on 29 October 1971 “that from today onwards the Government of the People's Republic of China is the only legitimate representative of China in Unesco”. As regards ILO, it is expected that the matter will be considered by the Governing Body of ILO at its Session commencing 15 November 1971. Similar steps are being taken in other Agencies.

For FAO the problem poses itself differently and is in a way less acute than for other specialized agencies since, as you know, China is not at present a member of FAO. China - then represented by the Government of the “Republic of China” (Taiwan) - was an original member of the Organization but withdrew on 20 July 1951 with effect from 21 July 1952. ¹

I should also recall in this context that prior to this withdrawal the right of the Government of the “Republic of China” to represent China in FAO had been contested by the Government of the People's Republic of China in a telegram to the then Director-General dated 12 May 1950. After an interim reply the Director-General circulated this telegram to the Ninth Session of the Council ² which was taking place at the time and the Council came to the conclusion that this was a matter for consideration by the Conference ¹. However, shortly thereafter the “Republic of China” notified its intention to withdraw from the Organization and while some discussion on the point took place at the Special Session of the Conference held at Washington in November 1950, ² the necessity for a decision was obviated by the withdrawal.

¹ State Circular Letter G/8 of 2 August 1951.
² Document CL 9/WP 8a.

Question of Admission to Membership

The Council may wish to consider whether in view of the recent developments an approach should be made to ascertain whether the Government of the People's Republic of China may wish to seek readmission to FAO. In this connexion, it may be recalled that, on the basis of a wish expressed by the Council at its Forty-Ninth Session (in 1967), ³ I have made in the past similar approaches to invite Members of the United Nations to consider the desirability of joining or re-joining FAO.

The admission of the People's Republic of China to the Organization would of course raise a number of technical and financial questions - some of which have already been referred to by the Chairman in his opening statement ⁴ - and at the appropriate time I would seek the guidance of the Finance Committee and of the Council.

As you know an application by the People's Republic of China for admission to the Organization would, under Rule XIX-2 of the General Rules of the Organization, have to be received thirty days before the opening of the Conference, but this Rules could of course be suspended by the Conference. Precedents exist in fact for suspension of this Rule in cases in which applications for membership were received after the deadline ⁵.

Communications and Invitations Based on UN Membership

In the meantime, that is pending receipt of any application from the Government of the People's Republic of China for membership in FAO, certain steps have to be taken with regard to communications, distribution of publications, invitations to meetings and eligibility for adherence to Conventions. Wherever the criterion is that of UN membership, the Organization will take into account the General Assembly Resolution recognizing the representatives of the Government of the People's Republic of China as the only legitimate representatives of China to the United Nations, and such communications and invitations will be sent to that Government. As a matter of administrative expediency, I have designated one office in this Organization as a central point for all correspondence with China.

Conventions and Agreements

The “Republic of China” is not a party to any of the Conventions and Agreements concluded under FAO auspices. To the extent that participation to these Conventions and Agreements is open to non-Member Nations of FAO that are members of the United Nations, accession by the People's Republic of China will be possible in the future.

¹ Summary Record of the 11th Meeting on 17 May 1950, CL 9/SR 11, page 3.
² Verbatim Record of the Plenary Meeting held on 8 November 1950, C 50/PV-4, pages 2–4.
³ Report at the Forty-Ninth Session of the Council (1967), paragraph 163.
⁴ CL 57/LIM/3, page 2.

⁵ Examples may be found in the reports of the following Conference Sessions: Second Session (p. 3); Third Session (p. 3); First Special Session (p. 2); Seventh Session (paras. 12–15); Eighth Session (para. 431); Tenth Session (para. 665); Eleventh Session (para. 555).

In 1969 the FAO Council approved a request from the “Republic of China” to be admitted to participate in an observer capacity in meetings of the Indo-Pacific Fisheries Council, a body established by an Agreement concluded under Article XIV of the Constitution ¹. Invitations to attend Sessions of Article XIV bodies may only be extended to non-members of FAO which are members of the United Nations. Since the “Republic of China” no longer meets this condition it will not be invited to future meetings of the IFPC.

Article VI Bodies

Membership in Article VI bodies is limited to Member Nations and Associate Members of FAO, except in the case of joint bodies with other intergovernmental organizations which are also open to Member States of such other organizations. The only intergovernmental bodies for which China is eligible are the Joint FAO/WHO Codex Alimentarius Commission and its subsidiary bodies. China is a member of that Commission on the basis of its WHO membership. Accordingly the future representation of China in the Codex Alimentarius Commission will depend on decisions made by the governing bodies of WHO.

Programme Activities

There are no programme activities in Taiwan under the FAO Regular Programme, under FFHC or under Trust Funds. Such activities, however, are being carried out with FAO participation in the fields of UNDP, UNICEF and WFP.

As regards UNDP and UNICEF activities, consultations are proceeding with the United Nations Secretariat and it may be expected that FAO will follow the lines of action adopted by UNDP and UNICEF upon completion of these consultations.

As regards WFP, which is a programme operated jointly by FAO and the United Nations, we are also consulting the United Nations Secretariat. It should be noted, however, that the Inter-Governmental Committee, whose members are elected one half by the FAO Council and one half by ECOSOC has, under the General Regulations of WFP, the responsibility of providing general guidance on the policy, administration and operation of the programme and, accordingly, the matter will have to be placed before the IGC at its next Session. In the meantime, I understand that no new project agreements or plans for operation providing for WFP assistance will be entered into in respect of projects in Taiwan that have been approved but that are not operational.

¹ Report of the Fifty-Second Session of the Council (1969), paras. 206–210, and document CL 52/33.

APPENDIX E
CONTRIBUTIONS DUE AS AT 2 NOVEMBER 1971

¹ Represents arrears instalment and current assessment due in 1971 under Conference Resolution 33/65. Excludes instalments to be paid in future years.

APPENDIX F

PART I
PROPOSED TEXT OF FINANCIAL REGULATION XII RELATING TO EXTERNAL AUDIT

Regulation XII

External Audit

Appointment

Regulation 12.1 An External Auditor, who shall be the Auditor-General (or person exercising an equivalent function) of a Member State, shall be appointed in the manner and for the period decided by the Council.

Tenure of Office

Regulation 12.2 If the External Auditor ceases to hold the office of Auditor-General (or equivalent function) in his own country, his tenure of office as External Auditor shall thereupon be terminated and he shall be succeeded as External Auditor by his successor as Auditor-General. The External Auditor may not otherwise be removed during his tenure of office except by the Council.

Regulation 12.3 (Applicable to the UN only. The numbering of the Regulations has been maintained to bring it in line with the UN numbering. The final version will be renumbered so that all numbers are used, i.e. 12.1 through 12.10).

Scope of Audit

Regulation 12.4 The audit shall be conducted in conformity with generally accepted common auditing standards and, subject to any special directions of the Finance Committee, in accordance with the Additional Terms of Reference set out in Annex I to these Regulations.

Regulation 12.5 The External Auditor may make observations with respect to the efficiency of the Financial procedures, the accounting system, the internal financial controls and, in general, the administration and management of the Organization.

Regulation 12.6 The External Auditor shall be completely independent and solely responsible for the conduct of the audit.

Regulation 12.7 The Finance Committee may request the External Auditor to perform certain specific examinations and issue separate reports on the results.

Facilities

Regulation 12.8 The Director-General shall provide the External Auditor with the facilities he may require in the performance of the audit.

Regulation 12.9 For the purpose of making a local or special examination or of effecting economies of audit cost, the External Auditor may engage the services of any national Auditor-General (or person exercising an equivalent function) or commercial public auditors of known repute or any other person or firm who, in the opinion of the External Auditor, is technically qualified.

Reporting

Regulation 12.10 The External Auditor shall issue a Report on the audit of the financial statements and relevant schedules, which shall include such information as he deems necessary in regard to matters referred to in Financial Regulation 12.5 and in the Additional Terms of Reference.

Regulation 12.11 The External Auditor's Reports shall be trasmitted through the Finance Committee, together with the audited financial statements, to the Council in accordance with any directions given by the Finance Committee. The Council shall examine the financial statements and the audit reports and shall forward them to the Conference with such comments as it deems advisable. The Report on the interim accounts shall be submitted to the Finance Committee.

Additional Terms of Reference Governing External Audit
(Annex I to Financial Regulation XII)

1. The External Auditor shall perform such audit of the accounts of the Organization, including all trust funds and special accounts, as he deems necessary in order to satisfy himself:

1. that the financial statements are in accord with the books and records of the Organization;

2. that the financial transactions reflected in the statements have been in accordance with the rules and regulations, the budgetary provisions and other applicable directives;

3. that the securities and monies on deposit and on hand have been verified by certificate received direct from the Organization's depositaries or by actual count;

4. that the internal controls, including the internal audit, are adequate in the light of the extent of reliance placed thereon;

5. that procedures satisfactory to the External Auditor have been applied to the recording of all assets, liabilities, surpluses and deficits.

2. The External Auditor shall be the sole judge as to the acceptance in whole or in part of certifications and representations by the Director-General and may proceed to such detailed examination and verification as he chooses of all financial records including those relating to supplies and equipment.

3. The External Auditor and his staff shall have free access at all convenient times to all books, records and other documentation which are, in the opinion of the External Auditor, necessary for the performance of the audit. Information classified as privileged and which the Director-General (or his designated senior official) agrees is required by the External Auditor for the purposes of the audit and information classified confidential shall be made available on application. The External Auditor and his staff shall respect the privileged and confidential nature of any information so classified which has been made available and shall not make use of it except in direct connexion with the performance of the audit. The External Auditor may draw the attention of the Finance Committee to any denial of information classified as privileged which, in his opinion, was required for the purpose of the audit.

4. The External Auditor shall have no power to disallow items in the accounts but shall draw to the attention of the Director-General for appropriate action any transaction concerning which he entertains doubt as to legality or propriety. Audit objections to these or any other transactions arising during the examination of the accounts shall be immediately communicated to the Director-General.

5. The External Auditor shall certify the financial statements in the following terms: “I have examined the financial statements of the Organization for the year ended 31 December … I have obtained all the information and explanations that I have required, and I certify, as a result of the audit, that, in my opinion, the financial statements are correct”; adding, should it be necessary, “subject to the observations in my Report”.

6. The Report of the External Auditor on the financial statements should mention:

1. The type and scope of his examination;

2. Matters affecting the completeness or accuracy of the accounts, including where appropriate:

   1. Information necessary to the correct interpretation of the accounts;

   2. Any amounts which ought to have been received but which have not been brought to account;

   3. Any amounts for which a legal or contingent obligation exists and which have not been recorded or reflected in the financial statements;

   4. Expenditures not properly substantiated;

   5. Whether proper books of accounts have been kept. Where in the presentation of statements there are deviations of material nature from the generally accepted accounting principles applied on a consistent basis, these should be disclosed;

3. Other matters which should be brought to the notice of the Finance Committee, such as:

   1. Cases of fraud or presumptive fraud;

   2. Wasteful or improper expenditure of the Organization's money or other assets (notwithstanding that the accounting for the transaction may be correct);

   3. Expenditure likely to commit the Organization to further outlay on a large scale;

   4. Any defect in the general system of detailed regulations governing the control of receipts and disbursements or of supplies and equipment;

   5. Expenditure not in accordance with the intention of the Conference after making allowance for duly authorized transfers within the budget;

   6. Expenditure in excess of appropriations as amended by duly authorized transfers within the budget;

   7. Expenditure not in conformity with the authority which governs it.

4. The accuracy or otherwise of the supplies and equipment records as determined by stock-taking and examination of the records.

In addition, the reports may contain reference to:

5. Transactions accounted for in a previous year concerning which further information has been obtained or transactions in a later year concerning which it seems desirable that the Finance Committee should have early knowledge.

7. The External Auditor may make such observations with respect to his findings resulting from the audit and such comments on the Director-General's financial report as he deems appropriate to the Finance Committee or to the Council or to the Director-General.

8. Whenever the External Auditor's scope of audit is restricted, or he is unable to obtain sufficient evidence, the External Auditor shall refer to the matter in his report, making clear the reasons for his comments and the effect on the financial position and the financial transactions as recorded.

9. In no case shall the External Auditor include criticism in his Report without first affording the Director-General an adequate opportunity of explanation on the matter under observation.

PART II
EXISTING TEXT OF FINANCIAL REGULATION XII RELATING TO EXTERNAL AUDIT

Regulation XII

External Audit

12.1 Having regard to the joint system for external audit of the United Nations and specialized agencies (Annex II), the Council

1. may, upon the recommendation of the Finance Committee, appoint or employ a qualified person, agency, authority or firm in no way connected with the Organization, to make annually and at such time as may be necessary for special purposes, an independent audit of the Organization;

2. may alternatively, with or without recommendation of the Finance Committee, appoint one or more members of the audit panel set up by the United Nations and/or specialized agencies to perform such audit.

12.2 After consultation with the Finance Committee relative to the scope of the audit, the external auditor shall perform such an audit as he deems necessary to certify:

1. that the financial statements are in accord with the books and records of the Organization;

2. that the financial transactions reflected in the statements have been in accordance with the rules and regulations, the budgetary provisions, and other applicable directives;

3. that the securities and moneys on deposit and on hand have been verified by certificate received direct from the Organization's depositaries or by actual count.

12.3 Subject to the directions of the Finance Committee, the auditor shall be the sole judge as to the acceptance in whole or in part of the certifications by the officials of the Organization and may proceed to such detailed examination and verifications as he chooses of all financial records including those relating to supplies and equipment. The auditor may engage commercial auditors of international repute.

12.4 The auditor may affirm by test the reliability of the internal audit and may make such reports with respect thereto, as he may deem necessary, to the Finance Committee, the Council, the Conference or to the Director-General.

12.5 The auditor and his staff shall have free access at all convenient times to all account books and records which are, in the opinion of the auditor, necessary for the performance of the audit. Information classified in the records of the Organization as confidential, and which is required for the purpose of the audit, shall be made available on application to the Director of Administration.

12.6 The auditor, in addition to certifying the accounts, may make such observations as he deems necessary with respect to the efficiency of the financial procedures, the accounting system, the internal financial controls and, in general, the financial consequences of administrative practices. In no case, however, shall the auditor include criticism in his audit report without first affording the officials of the Organization an opportunity of explanation to the auditor of the matter under observation. Audit objections to any item in the accounts shall be immediately communicated to the Director of Administration.

12.7 The auditor shall have no power to disallow items in the accounts, but shall draw to the attention of the Director-General for appropriate action any transaction concerning which doubts are entertained as to legality or propriety.

12.8 The auditor shall prepare a report on the interim and on the final accounts certified and on any matters on which the Finance Committee, the Council or the Conference may from time to time give specific instructions.

12.9 The auditor shall submit his report on the interim accounts to the Finance Committee not later than 1 May following the end of the calendar year to which the accounts relate. The Finance Committee shall examine the accounts and the auditor's report thereon and, if deemed advisable by the Committee, shall forward them to the Council with their comments.

12.10 The auditor shall submit his report on the final accounts to the Conference, to be made available to the Finance Committee not later than 1 May following the end of the financial period to which the accounts relate. The Finance Committee shall consider and approve the final report, except for matters involving policy issues, which it shall refer to the Council.

12.11 If deemed advisable, the auditor may be present when his report is considered.

Annex I

Principles governing audit procedures

Recommended by the Economic and Social Council at its Ninth Session to the General Assembly of the United Nations at its Fourth Session.

1. The external auditor shall be appointed by the Assembly ¹ of each Organization and may not be removed except by the Assembly.

2. The external auditor shall report to the Assembly, and shall be present when his report is being considered by the Assembly.

3. The external auditor shall perform such an audit as he deems necessary to certify:

1. that the statements of financial positions are in accord with the books and records of the Organization;

2. that the financial transactions reflected in the statements have been in accordance with the rules and regulations, the budgetary provisions, and other applicable directives of the Assembly;

3. that the cash on deposit and on hand has been verified by certificates received direct from the Organization's bankers and by actual count.

4. The external auditor shall not be restricted in any way in carrying out the audit.

¹ Where “Assembly” is used in this text, it is interpreted to mean the supreme legislative Conference of the Organization or a body to which the Conference has delegated appropriate authority.

5. The external auditor shall be free to see any of the books and records of the Organization necessary for the performance of his audit. Confidential information required by him for the purposes of his audit shall be made available to him on application to the official designated by the administrative head of the Organization. He shall use discretion in his treatment of confidential information.

6. In the performance of the audit, the external auditor shall be the sole judge as to the acceptance in whole or in part of certifications by the administration and may proceed to such detailed examination and verification as he chooses, including the physical verification of stocks.

7. The external auditor may affirm by test the reliability of the internal audit, and he may report to the administrative head of the Organization and the Assembly on the efficiency of the internal audit.

8. Notwithstanding that the accounts as such may be correct, the external auditor shall be entitled to report on the efficiency and economy of operations of the Organization but not including general policy matters. He may comment upon financial procedure, the accounting system, internal financial control, and the financial consequences of administrative procedure.

9. In no case, however, shall the auditor include criticism in his audit report without first affording the administration an opportunity of explaining to him the matter under observation. Audit objections to any item arising during the examination of the accounts shall be immediately communicated to the administration.

Annex II

Joint system of external audit

Approved by the Fourth Session of the General Assembly of the United Nations.

1. In principle, there should be a panel of external auditors of the United Nations and the specialized agencies, composed of persons having the rank of auditor-general (or its equivalent in the various Member States).

2. Such a panel should consist of the auditors appointed by the United Nations and the specialized agencies, chosen by common consent for a period of three years, in such a manner that the members of the panel would not exceed six in number, and bearing in mind the location of the specialized agencies, the ability of the governmental audit staffs to undertake the total audit load within the appropriate time limits, and the desirability of securing continuity of audit.

3. Each organization should select one or more members of the panel to perform its audit. Payments of salaries, fees, or honoraria should be a matter for settlement between the parties directly concerned.

4. Each auditor (or the auditors) performing an audit should sign his (or their) own report or reports.

5. Members of the panel selected to perform the audit should be requested to take appropriate steps, in particular by meeting together annually, to coordinate their audits and to exchange information on methods and findings. The panel of auditors should be invited to submit from time to time any observations or recommendations which it might wish to make on the coordination and standardization of the accounts and financial procedures of the United Nations and the specialized agencies.

6. The cost of annual meetings of active members of the panel should be borne by the participating organizations.

APPENDIX G
PART I
UNSCHEDULED SESSIONS APPROVED SINCE 27 MAY 1971

INTERNATIONAL AGENCY LIAISON DIVISION
(Codex Alimentarius Commission)

PART II

CANCELLATION OF APPROVED SESSIONS SINCE 27 MAY 1971