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FIRST FINANCIAL PERIOD ENDING 30 JUNE 1946
Report of Committee on Financial Control
In conformity with Regulation XVIII of the Financial Regulations, the Committee on Financial Control has considered the following report submitted by the auditors regarding the funds, assets, and accounts of the Organization for the first Financial period, ending 30 June 1946.
1. The Committee notes that the auditors have called attention to the fact that the above accounts have been compiled on a cash basis, but it wishes to point out that: (a) during the first months of FAO, while the Organization had to meet requests for action in connection with urgent world food needs, it was not possible to establish regular Financial Services; and (b) steps have now been taken to provide for sound budgetary and accounting procedures in respect of future Financial periods.
2. The Committee recommends that an item be considered for inclusion in the 1948 budget to cover any unforeseen liabilities attributable to the preceding financial year.
3. The Committee notes that the unspent and uncommitted balance available at the end of the first Financial year amounted to $1,354,358.19 which will constitute the nucleus of a Working Capital Fund in accordance with Financial Regulation XI. It has agreed that arrears of contributions for the first Financial year received after 30 June 1946 should be added to the Working Capital Fund. The arrears thus received amounted to $107,245 on January 31, 1947.
4. The Committee has no further observation to make and recommends that the accounts of the first Financial period as audited be approved by the Conference in conformity with Financial Regulation XX.
Auditors' Report
American Security Building,
Washington 5, D.C.
February 10, 1947
The Executive Committee,
Food and Agriculture, Organization of the United Nations,
2000 Massachusetts Avenue, N. W,
Washington 6, D.C.
Dear Sirs:
Pursuant to instructions, we have made an examination of the cash receipt and disbursement records of Food and Agriculture, Organization of the United Nations for the first Financial year, 16 October 1945 to 30 June 1946, and submit herewith our report together with the following exhibits:
Summary statement of cash receipts and disbursements of the General Fund and the Staff Provident Fund . . . . . Exhibit I
Statement of disbursements and budget of the General Fund by classifications . . . . . Exhibit II
Statement of contributions . . . . . Exhibit III
The Food and Agriculture, Organization of the United Nations was created as at 16 October 1945 on the adoption of a Constitution by forty-two member countries. The functions and purposes of the Organization as stated, among other things, in its Constitution are to collect, analyze, interpret, and disseminate information relating to nutrition, food, and Agriculture; to recommends national and international action; and to furnish technical assistance to governments for the purposes of raising levels of nutrition and standards of living.
Preliminary work of the Organization was carried out by the United Nations Interim Commission on Food and Agriculture, during the period from 15 July 1943 to 30 November 1945. As at the latter date the Interim Commission discontinued operations and its assets were taken over by the Food and Agriculture, Organization of the United Nations, as follows:
Cash on deposit in McLachlen |
|
Banking Corporation | $23,696.42 |
Petty cash Fund | 43.59 |
$23,740.01 |
The accounts of the Organization have been maintained substantially on a cash basis.
Regulation XI, Part I of the Financial Regulations, provides for allocation to a Working
Capital Fund of "The unspent and uncommitted balance of the budget voted for the
first financial year..." and that similar allocations may be made in later years. No
such fund had been established at 30 June 1946, but this provision suggests that the
accounts should be maintained on an accrual basis in order that the amount available for
allocation to the Working Capital Fund can be readily ascertained from the books.
Our examination was directed to the recorded cash receipts and disbursements for the period from 16 October 1945 to 30 June 1946. We compared the amounts of recorded contributions with data in the published Report of the First Session of the Conference of the Food and Agriculture Organization of the United Nations but did not confirm the amounts of the contributions by direct correspondence with the contributors. The contributions recorded in the cash book were traced to deposits shown on bank statements.
The paid checks returned by the bank were compared with the entries in the cash disbursement record, and vouchers, expense reports, and relative data were examined by us in support of the disbursements. The bank accounts were reconciled and a certificate was obtained direct from the McLachlen Banking Corporation in verification of the balance on deposit at that bank on 30 June 1946. As at the close of our examination the requested certificate had not yet been received from the Westminster Bank in London. The petty cash fund was counted in the course of our examination.
The balance in the General Fund as at 30 June 1946 shown in Exhibit I in the amount of $1,354,358.19 was made up as follows:
Cash in banks and on hand: |
|
McLachlen Banking Corporation, Washington, D. C | $1,357,373.28 |
Westminster Bank, Limited, Aldwych Branch, London, England | 253.90 |
$1,357,627.18 | |
Petty cash fund, Washington, D. C | 500.00 |
$1,358,127.18 |
Deposits: |
|
American Airlines, Inc. | $ 425.00 |
Deposit on keys | 3.00 |
428.00 | |
$1,358,555.18 |
Less: Unpaid representation allowances |
|
Sir John B. Orr | $ 2,015.99 |
S. L. LOUWES, | 630.00 |
F. L. McDougall | 1,551.00 |
4,196.99 | |
$1,354,358.19 |
Contributions for the first Financial year of the Organization (designated at First
Session of the Conference as the period from 16 October 1945 to 30 June 1945) amounting to
$2,228,750 for member nations and an additional provision of $271,250 for new members were
Included in the income budget approved at the first Conference of the Food and Agriculture
Organization. The above amounts include $325,625 collected by the Interim Commission prior
to the establishment of the permanent Organization. During the period from 16 October 1945
to 30 June 1946 contribution collections amounted to $1,707,113.38 including $7,363.38
applicable to the second Financial year. At 30 June 1946 contributions toward the first
Financial year, which were due and not yet received, amounted to $224,375 of which
$107,245 has since been received.
A comparison of actual disbursements with the approved revised budget is shown on Exhibit II. As previously mentioned, the accounts have been maintained substantially on a cash basis. Accordingly, the attached statements do not reflect the liability of the Organization for unpaid expenses as at 30 June 1946 or the liability with respect to reimbursement of individual federal income taxes to be paid in 1947 to employees engaged on a "net salary" basis, excepts that advances aggregating $5,313.75 against such reimbursements were made prior to 30 June 1946. These advances are shown separately under the salaries caption on the attached Exhibit II.
The Staff Provident Fund was set up pending the establishment of a permanent pension system. Contributions are deducted from the salary of full-time, permanent employees at a rate of seven and one-half percent of the monthly salary. An equal amount is contributed by the Organization. The cash balance of this fund at 30 June 1946, $14,256.78, was Included with the cash balance of the General Fund in one deposit account at the MeLachlen Banking Corporation. We suggest that a separate bank account be established for the Provident Fund.
As at the completion date of our examination the accounting department was in process of development and therefore it is not feasible for us to report on the effectiveness of internal accounting control or make recommendations with respect thereto. However, we are pleased to report that, insofar as our examination extended, the accounting records and supporting data were found in order.
Yours very truly,
PRICE WATERHOUSE & CO.
Exhibit I
FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS
Summary Statement of Cash Receipts and Disbursements of the General Fund for the First Financial Year, 16 October 1945 to 30 June 1946
Receipts: |
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Contributions for first Financial year | $1,699,750.00 |
Contributions for second Financial year | 7,363.38 |
Total contributions received, per Exhibit III | $1,707,113.38 |
Miscellaneous receipts | 40.82 |
$1,707,154.00 |
Disbursements (Exhibit II): |
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The Conference, committees, and technical, conferences | $ 139,633.03 |
Missions, investigations, and Special projects | 8,968.89 |
Salaries | 151,020.85 |
Official travel and removal expenses | 20,031.93 |
Staff Provident Fund | 7,321.79 |
Office and operational expenses | 41,909.10 |
Miscellaneous | 7,650.23 |
$ 376,535.82 |
Excess of receipts over disbursements for the period | $1,330,618.18 |
Funds acquired for Interim Commission, 30 November, 1945 | 23,740.01 |
Balance 30 June 1946, a under | $1,354,358.19 |
Cash in banks and on hand | $1,358,127.18 |
Deposits - Air travel, etc. | 428.00 |
$1,358,555.18 |
Less: |
|
Representation allowances unpaid 30 June 1946 | $ 4,196.99 |
Total, as above | $1,354,358.19 |
Statement of Cash Receipts and Disbursements of the Staff Provident Fund for the Period
from 16 October 1945 to 30 June 1946
Receipts: |
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Contributions from employees | $ 7,321.79 |
Contributions from Food and Agriculture, Organization | 7,321.79 |
$ 14,643.58 |
Disbursements: |
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Refunds to employees who left the organization | 386.80 |
balance 30 June 1946, represented by cash on deposit in the MeLachlen Banking Corporation, Washington, D. C. | 14,256.78 |
Exhibit II
FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS GENERAL FUND
Statement of Disbursements and Budget by Classifications for the Period from 16 October 1945 to 30 June 1946
Actual disbursements |
Revised budget |
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The Conference, committees, and technical conferences |
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The First Conference of Food and Agricultural Organization | $107,981.76 | $128,000.00 |
Executive committee meetings | 12,897.28 | 22,000.00 |
Ad Hoe committee. Meetings | 8,212.53 | 30,000.00 |
technical, conferences | 10,541.46 | 60,000.00 |
$139,633.03 | $ 240,000.00 | |
Missions investigations, and special projects |
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Asiatic Commission | $ 30,000.00 | |
Latin American Commission | 25,000.00 | |
European Commission | 20,000.00 | |
Other missions | $ 8,968.89 | 25,000.00 |
$ 8,968.89 | $ 100,000.00 | |
Salaries |
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Director General and two Special advisers (including representation allowances) | $ 38,733.28 | $ 40,000.00 |
Grade I | 8,777.10 | 20,000.00 |
Grades II to VI, inclusive | 62,709.26 | 140,000.00 |
Clerical staff | 35,487.46 | 75,000.00 |
Advances for payment of employees' income taxes | 5,313.75 | |
$ 151,020.85 | $ 275,000.00 | |
Official travel and removal expenses |
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Official travel | $ 19,181.96 | $ 60,000 00 |
Removal expenses | 849.97 | 40,000.00 |
$ 20,031.93 | $ 100,000.00 | |
Staff Provident Fund |
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Organization contributions to Fund | $ 7,321.79 | $ 20,625.00 |
Office and operational expanses |
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Rent, fuel, and utilities | $ 12,007.44 | $ 25,000 00 |
Furniture, equipment, and automobile | 6,567.01 | 25,000.00 |
Stationery and Office supplies | 6,502.30 | 20,000.00 |
Telephone, telegraph, and cable | 3,245.22 | 10,000.00 |
Postage | 2,474.02 | 10,000.00 |
Printing | 10,378.18 | 65,000.00 |
Library | 734.93 | 10,000.00 |
$ 41,909.10 | $165,000.00 | |
Miscellaneous and unforeseen |
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Office maintenance | $ 3,924.49 | |
Local transportation | 1,369.71 | |
Translations | 1,151.65 | |
insurance | 437.48 | |
Official entertainment | 414.20 | |
Miscellaneous expense | 352.70 | |
$ 7,650.23 | $ 100,000.00 | |
TOTAL | $376,535.82 | $1,000,625.00 |
Exhibit III
FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS
Statement of Contributions for the Period from 16 October 1945 to 30 June 1946
Amounts allocated for contributions for first financial year |
Contributions Collected |
Amounts allocated for prospective members' contributions |
Contributions receivable at 30 June 1946 |
Contributions applicable to second financial year |
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By Interim Commission |
By Food and Agriculture Organization |
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Member Nations |
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Australia | $ 83,250.00 | $ 10,000.00 | $ 73,250.00 | |||||
Belgium | 32,000.00 | 10,000.00 | 22,000.00 | |||||
Bolivia | 7,250.00 | 3,000.00 | $ 4,250.00 | |||||
Brazil | 86,500.00 | 10,000.00 | 76,500.00 | |||||
Canada | 126,500.00 | 20,000.00 | 1107,863.38 | $1,363.38 | ||||
Chile | 28,750.00 | 28,750.00 | ||||||
China | 162,500.00 | 20,000.00 | 142,500.00 | |||||
Colombia | 17,750.00 | 3,000.00 | 14,750.00 | |||||
Cuba | 17,750.00 | 17,750.00 | ||||||
Czechoslovakia | 35,000.00 | 5,000.00 | 30,000.00 | |||||
Denmark | 15,500.00 | 10,000.00 | 5,500.00 | |||||
Dominican Republic | 1,250.00 | 2,000.00 | 750.00 | |||||
Ecuador | 1,250.00 | 1,250.00 | ||||||
Egypt | 43,250.00 | 5,000.00 | 38,250.00 | |||||
France | 142,250.00 | 10,000.00 | 132,250.00 | |||||
Greece | 9,500.00 | 9,500.00 | ||||||
Guatemala | 1,250.00 | 1,000.00 | 250.00 | |||||
Haiti | l,250.00 | 1,000.00 | 250.00 | |||||
Honduras | 1,250.00 | 625.00 | 625.00 | |||||
Iceland | 1,250.00 | 3,000.00 | 1,750.00 | |||||
India | 106,20.00 | 20,000.00 | 86,250.00 | |||||
Iraq | 11,000.00 | 3,000.00 | 8,000.00 | |||||
Lebanon | 1,250 00 | 1,250.00 | ||||||
Liberia | 1,250.00 | 3,000.00 | 1,750.00 | |||||
Luxembourg | 1,250.00 | 3,000.00 | 1,750.00 | |||||
Mexico | 46,750.00 | 6,125.00 | 40,625.00 | |||||
Netherlands | 34,500.00 | 10,000.00 | 24,500.00 | |||||
New Zealand | 28,750.00 | 10,000.00 | 18,750.00 | |||||
Nicaragua | 1,250.00 | 500.00 | 750.00 | |||||
Norway | 15,500.00 | 10,000.00 | 5,500.00 | |||||
Panama | 1,250.00 | 1,000.00 | 250.00 | |||||
Paraguay | 1,250.00 | 1,250.00 | ||||||
Peru | 17,750.00 | 3,000.00 | 14,750.00 | |||||
Philippine Commonwealth | 6,250.00 | 5,000.00 | 1,250.00 | |||||
Poland | 29,750.00 | 5,000.00 | 24,750 00 | |||||
Syria | 5,000.00 | 5,000.00 | ||||||
Union Of South Africa | 57,750.00 | 10,000.00 | 47,750.00 | |||||
United Kingdom | 376,000.00 | 55,000.00 | 320,000.00 | |||||
United Sates | 625,000.00 | 47,500.00 | 577,500.00 | |||||
Uruguay | 14,500.00 | 2,000.00 | 12,500.00 | |||||
Venezuela | 14,500.00 | 2,000.00 | 12,500.00 | |||||
Yugoslavia | 17,750.00 | 1,000.00 | 16,750.00 | |||||
$ 2,228,750.00 | $ 304,625.00 | $ 1,707,113.38 | $ 224,375.00 | $ 7,363.38 | ||||
Provision for new member-Former members of the Interim Commission |
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Costa Rica | $ 1,250.00 | $ 1,250.00 | ||||||
El Salvador | 1,250.00 | $ 1,000.00 | 250.00 | |||||
Ethiopia | 7,250.00 | 7,250.00 | ||||||
Iran | 17,750.00 | 17,750.00 | ||||||
U.S.S.R. | 200,000.00 | 20,000.00 | 180,000.00 | |||||
$ 227,500.00 | $ 21,000.00 | $ 206,500.00 | ||||||
Provision for other new members | $ 43,750.00 | $ 43,750.00 | ||||||
TOTAL | $ 2,500,000.00 | $ 325,625.00 | 2$ 1,707,113.38 | $ 250,Z50.00 | $ 224,375.00 | $7,363.38 |
1 Canada's payment of expenses relating to the First Session of the Conference
was credited to the contribution account.
2 Exhibit I.
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