Report of Committee on Financial Control
The Council has had before it the Report of the Committee on Financial Control (CL 7/2) covering the work of its Eighth Session.
Financial Statement as at 31 August 1949
The Council notes the statement presented by the Director-General and appreciates that it does not necessarily represent a pro rata statement of income and expenditure for the whole year since disproportionately heavy liabilities will accrue for payment in the latter part of the year and since certain costs in respect of the current financial year will call for payment in 1950 prior to the closing of the books for 1949.
Transfers in the 1949 Budget
The Council recommends to the Conference for approval the following additional paragraph to Regulation XIV:
Any savings which the Director-General achieves during the operations of the fiscal year may be transferred to the Contingency Reserve Fund at any time; however, the transfer of such savings from the Contingency Reserve Fund shall be subject to the provisions of paragraph 3 of this Regulation.
The Council considered the proposal of the Director-General to transfers of:
$40,000 from accrued savings in salaries to Chapters III, IV, V, and VI, to meet an estimated increase in the liability for the reimbursement to staff members of income tax; and
$20,000 from the same savings to Chapters III, IV, V, and VI, to meet increased costs in staff allowances.
The Council approves of transfers Nos. 3 and 4, as detailed in the Report of the Committee on Financial Control (Annex II, Schedule B, p. 10) of an amount of $64,000 from savings on salaries to the contingency reserve, and authorizes the Director-General to utilize from this amount a sum of $60,000 to meet the increased liabilities in respect of reimbursement of income tax and costs of staff allowances. The Director-General should report to the Committee on Financial Control on the distribution in detail of this allocation.
Staff Assessment Plan
The Council transmits to the Conference the recommendation of the Committee on Financial Control that the Staff Assessment Plan, as originally prepared by the Director-General and submitted to the Sixth Session of the Council, shall be adopted.
The Council notes that the Director-General proposes to submit to the Conference some detailed amendments of the plan clearing up the position of children's allowances and to institute it retroactively to 1 January 1949.
Delegations of certain of the countries expressed some doubt on the advisability of adopting the Director-General's staff assessment proposal in the light of proposed legislation on tax exemption which is being considered by their national legislative bodies.
Staff Pension Fund
The Council has examined the Staff Pension Fund approved by the Committee on Financial Control. It transmits to the Conference the resolution drafted by the Committee on Financial Control proposing the adoption of the Pension Fund, which complies with the financial requirements laid down by the Conference. In forwarding the resolution to the Conference, the Council notes that the delegations of certain countries feel that further consideration should be given to participation in the United Nations' pension plan because of the benefits and contributions under that plan. The Council is, however, unanimously of the opinion that a final decision on this matter should be taken by the forthcoming session of the Conference, so that a Pension Fund for the staff of FAO can be introduced with effect from 1 January 1950.
The Council notes certain minor amendments of the Pension Fund regulations which the Director-General proposes to submit to the Conference in order to qualify the plan as a Pension Trust under U.S. law for tax purposes.
Accounts for 1948
The Council notes the supplementary Accounts for 1948 submitted with the Report of the Committee on Financial Control.
Unpaid Contributions
The Council transmits to the Conference the statement of the Committee on Financial Control on the position regarding unpaid contributions, but notes that certain arrears have since been paid.
The Council also suggests that the Organization should consult with the United Nations and other Specialized Agencies on the methods adopted by these bodies in collecting arrears of contributions.
Depositories for Safekeeping of Funds
The Council approves the arrangements made by the Director-General as to the banks designated by him as depositories for the safekeeping of the Organization's funds.
Investments
The Council notes the action taken by the Director-General in the investment of funds. It was assured that the long-term investments could be readily liquidated if necessary.
Draft Budget for 1950
The Council notes certain amendments to the budget as submitted to the Sixth Session of the Council, which the Director-General proposes for the transfer of the Document Sales Unit from Chapter V to Chapter VI (Information Division) of the budget. The Council approves this change and submits the budget, as amended, to the Conference for approval.
The Council repeats the recommendation of its Sixth Session to the effect that more detailed information should be supplied in future budgets on proposing technical activities and their financial implications. It appreciates that when budgets are prepared many months in advance of the year to which they relate, detailed estimates are difficult. It trusts, however, that every opportunity will be taken in Commissions II and III of the Conference to discuss with the Directors of the Technical and Administrative Divisions the desirability of achieving more detailed budgeting.
Working Capital Fund
The Council concurs with the recommendation of the Committee on Financial Control that the proposals of the Australian Government for a revision of the Financial Regulations governing the Working Capital Fund call for full consideration by the Conference. It may be possible that a Special Committee of Commission III could consider these suggestions in conjunction with the related matters of the Scale of Contributions and Currency Problems, bearing in mind the desirability of avoiding in future years unbalanced budgets requiring deficit financing. The Council feels, however, that if the Conference itself is unable to reach a decision on the Australian proposals, it might wish to appoint a special working party of experts to consider the whole question of the Working Capital Fund of the Organization, and to report to the next session of the Council.
External Auditors
The Council endorses the view of the Committee on Financial Control that a decision regarding the use by the Organization of the United Nations Audit Panel could not be taken until further information regarding that body is available. The Council recommends that all the latest relevant information, available since the Committee on Financial Control reported, be placed before the Conference.
Report of Committee on Scale of Contributions and Currency Problems
The Council has considered the Report of the Special Committee on Scale of Contributions and Currency Problems (C49/21), and presents it to the Conference, calling attention to the following considerations:
the desirability of ensuring that contributions for member countries represent 100 percent of the contributions scale and not as is at present the case, 92.28 percent;
the feasibility of devising provisions enabling the adherence of additional members without altering the contributions of all other members for a particular year; and
the relation of the problem of contributions to the site of the permanent headquarters of the Organization.
The Council draws attention to the recommendation of Committee 2 of the Assembly of the United Nations that the United Nations Committee on Contributions should be made available to Specialized Agencies for consultation and advice on the scale of contributions of their respective organizations, and suggests, if the recommendation is adopted by the United Nations General Assembly, that this should be borne in mind in the subsequent preparation of a permanent scale of contributions for FAO.
Certain delegations have recommended that whatever action the Conference may take on the adoption of a revised percentage scale of contributions, the Conference should determine to what over-all level of contributions it should be applied for the purpose of determining the Program of Work and the Budget of Expenditure of the Organization; and also should indicate to the member governments the actual contributions they would be called upon to make.
Note on Administrative Tribunal and Appeals Procedure
The Council commends to the Conference the proposals of the Director-General (CL 7/4) that no further steps should be taken to establish a separate administrative tribunal for FAO until full information is available concerning the proposed UN Administrative Tribunal which would also be available for the Specialized Agencies. It understands that the draft statute for the UN Administrative Tribunal (circulated to the Council) has been substantially revised at the present session of the General Assembly. It trusts that the revised statute, as approved by the General Assembly, will be available for examination by the FAO Conference.
The Council notes with satisfaction the proposal of the Director-General to continue the FAO Staff Appeals Committee after the establishment of an Administrative Tribunal either by the UN or by FAO itself. It trusts that this Committee will be able to resolve any staff problems within FAO without recourse to an outside tribunal.
The Council suggests that the FAO Conference would be assisted in its consideration of the question of appeals procedure if the Director-General or the chairman of the FAO Appeals Committee could make a full report to the appropriate commission of the Conference on the procedures and experience of the present Appeals Committee which was established in accordance with the decision of the Fourth Session of the Conference.
