MATTERS ARISING FROM THE GENERAL PROCEDURES GOVERNING THE OPERATION OF THE FUND OF THE UNITED NATIONS ENVIRONMENT PROGRAMME
326. Agenda item 10 was allocated to Sessional Committee II for consideration. The Committee had before it the following documents: general guidelines for the execution of projects (UNEP/GC/37); amendments to the general procedures governing the operations of the Fund of UNEP and to the Financial Rules of UNEP (UFEP/GC/38); review of the level of the Fund programme reserve (UNEP/GC/39); review of the level of the financial reserve (UNEP/GC/45) and Fund of the United Nations Environment Programme: financial report and accounts and report of the Board of Auditors (UNEP/GC/52).
A. General Guidelines for the execution of projects
327. During the debate on the general guidelines, a number of representatives expressed a desire for the development of a mechanism for evaluating Fund-supported projects. One delegation urged that the mechanism, once established, be reviewed at a future date when more specific evaluative proposals could be made. Another stressed the importance of devising criteria for the selection of projects, and another felt that effectiveness, more than cost, of projects was an important element of evaluation. It was also suggested that a paragraph regarding the evaluation carried out during the year should be included in future reports on the implementation of the Fund programme. Some delegations expressed concern that agencies were authorized to overspend by 5 per cent on the total cost of a project. It was thought that overuse of that provision might result in significant overspending in the programme as a whole. One delegation asked that, before UNEP supported any project in a country, the Government of that country be informed. Another suggested that the Executive Director should give consideration to the submission to the Governing Council, for its approval, of some projects, as provided for in article VI, paragraph 5, of the general procedures governing the operations of the Fund of UNEP. One delegation pointed out that it could be useful to incorporate a provision into the general guidelines stating that the beneficiary of a project should be indicated in the project document.
328. One delegation suggested that the secretariat should give thought to increasing the number of projects financed by the Fund for implementation by co-operating agencies and supporting organizations and reducing the number of projects implemented through direct contracting. The same delegation also observed that, in its activity, the secretariat should comply carefully with the terms of General Assembly resolution 2997 (XXVII), which stated that the Environment Fund was to be "directed to the need for effective co-ordination in the implementation of international environmental programmes of the organizations in the United Nations system end other international organizations".
329. The Assistant Executive Director (Fund and Management) indicated that, in respect of criteria for the selection of projects, the introduction to the report on proposed Fund programme activities outlined the direction of the Executive Director's thinking. Completed and ongoing projects had, of course, been evaluated, ',)lit on an ad hoc basis. The Executive Director was conscious of the importance of systematic evaluation and would give it increased attention, on a practical rather than a theoretical basis, as there was no need to contribute further to the literature existing within the United Nations system on project evaluation. It was co-operating agencies that had requested expenditure flexibility, to facilitate various adjustments in projects, and the Executive Director was confident that over-expenditure on some projects would be balanced by under-expenditure on others, and that the over-all effect of the provision would not create any difficulty. The Executive Director would in any case monitor the extent to which the provision was being used.
330. In reply to a question, the Assistant Executive Director described the process of joint programming which had been applied on an experimental basis with two agencies, and expressed the hope that that approach to identifying the best means of committing the resources of the Fund could be generalized. The paramount objective of the joint programming exercise would be to further the aims and objectives of UNEP, and agencies would be expected to show sufficient flexibility to reflect those aims and objectives in their environmental activities. Because the objective of UNEP was to influence the activities of other agencies,, a major segment of its actions would be directed at the over-all programmes of those agencies and, as such, would be classified as global in character ' However, if UNEP were successful in adding an environmental dimension to the agency programmes, there would be secondary effects at the regional and local levels which could be ascribed to UNEP's programme activities.
331. The Sessional Committee recommended for adoption by the Governing Council a draft decision on general guidelines for the execution of projects.
Action by the Governing Council
332. At its 39th meeting, the Council adopted by consensus the draft decision recommended by Sessional Committee II (decision 40 (III) , sect. I) . 29/
B. Amendments to the general procedures governing the operations of the Fund of UNEP and to the financial rules of the Fund of LTITEP
333, Delegations noted that Governing Council decision 10 (II) had necessitated amendments to the general procedures governing the operation of the Fund of UNEP which, together with additional amendments reflecting certain changes in the proposed format of the budget, were now submitted for consideration.
334. Two delegations suggested that an article referring specifically to those paragraphs of General Assembly resolution 2997 (XXVII)outlining the purpose Introduction, of the Fund could appropriately be included in due time in chapter of the general procedures governing the operations of the Fund.
335. The Committee recommended for adoption by the Governing Council a draft decision amending the general procedures and the financial rules.
Action by the Governing Council
336. At its 39th meeting, the Council adopted by consensus the draft decision recommended by Sessional Committee II (decision 40 (III)), sect. II). g9/
C. Review of the level of the Fund -programme reserve
337. During the discussion of the Fund programme reserve, one delegation asked whether the financing of pre-programming activities for the development of the programme, and of the support for data-gathering related to the preparation of the Level One report, might not more properly be charged to Fund programme activities or to programme and programme support costs than to the Fund programme reserve, as suggested in the Executive Director's note. Another delegation pointed out that those activities could not be deemed unforeseen, and thus should be costed.
338. After further consideration of the matter, it was agreed that pre-programming activities for the development of the programme would either be undertaken in areas which were foreseen in the section ?'Development of the programme" in the proposed Fund programme activities, or would be unforeseen; in the latter case, the Executive Director could finance them from the Fund programme reserve without requesting an additional authority from the Governing Council.
339. Regarding the support for data-gathering related to the preparation of the Level One report, the Chairman suggested that it could be financed either from the Fund programme reserve up to a yearly maximum of $250,000 - a figure suggested by the Executive Director - or from Fund programme activities. The Committee generally preferred the second alternative, and requested the Chairman to so inform the President of the Governing Council with a view to having the matter referred to Sessional Committee I for consideration in the context of the proposed Fund programme activities. While some delegations indicated that it would then be logical to decrease the level of the Fund programme reserve by a corresponding figure of $250,000 per year, the Committee thought that $1 million was an appropriate order of magnitude for the Fund programme reserve.
340. Some delegations commented on the inclusion of provisions which would explicitly endorse future increases in the level of the Fund programme reserve. It was agreed that sections (d) and (e) of the suggested decision in the Executive Director's note should merely be noted.
341. The Committee recommended a draft decision on the level of the Fund programme reserve for adoption by the Governing Council.
Action by the Governing Council
342. At its 39th meeting, the Council adopted by consensus the draft decision recommended by Sessional Committee II (decision 42 ( III) , sect. II). 29/
D. Review of the level of the financial reserve
343. There was general agreement on the Executive Director's proposal that the level of the financial reserve be set at a percentage of estimated expenditures, rather than of estimated resources, and that the figure be approximately 8 per cent. However, several delegations asked for clarification regarding the suggested approximates nature of the percentage of expenditures. Queries were also made on the investment policy and custodianship of UNEP funds. The representative of Italy announced his Government's pledge of $2 million for the five-year period 1974-1978.
344. The Assistant Executive Director explained that the level of the financial reserve was given "approximately" because the Executive Director thought that it should be expressed in rounded figures. While the Secretary-General of the United Nations was the custodian of UNEP funds and thus managed their investment, the Executive Director had responsibility for the Fund account. In the view of the Executive Director, the arrangement had proved satisfactory.
345. The Committee recommended for adoption by the Governing Council a draft decision concerning the level of the financial reserve.
Action by the Governing Council
346. At its 39th meeting, the Governing Council adopted by consensus the draft
decision recommended by Sessional Committee II (decision 42 sect. I). 29/
E. Fund of the United Nations Environment Programme: financial report and accounts and report of the Board of Auditors
347. In the course of the debate, delegations asked whether it was proper for the governing, Council to note or accept the accounts for the year ended 3l December 1973, in view of the fact that the General Assembly had already accepted the accounts. The Assistant Executive Director pointed out that the Executive Director had met the formal requirements of financial rule 214.1 by transmitting the accounts with audit opinion and report from the United Nations Board of Auditors to the Advisory Committee on Administrative and Budgetary Questions, the Governing Council and the General Assembly, but noted that the rule was silent on what those bodies should do with the accounts. Pending legal advice, he was unable to state whether or not the Governing Council could appropriately accept the accounts subsequent to that having been done by the General Assembly.
348. Some representatives felt it would be desirable to seek a method whereby the Governing Council could examine audited accounts prior to their submission to the General Assembly. It was agreed that the whole question of the application of rule 214.1 with respect to the action required of the Governing Council should be studied by the Executive Director, and considered by the Governing Council at its fourth session.
349. With reference to the observations made by the Advisory Committee on Administrative and Budgetary Questions and the Executive Director's comments thereon (UNEP/GC/52), some delegations expressed concern about the level of use of consultants; one delegation advanced the view that the Executive Director seemed to have taken somewhat lightly the comments of the Board of Auditors on the subject. The Chief of the Division of Administration recalled that the large over-expenditure in 1973 on consultants, which had occurred during the period in which the Executive Director was attempting to assemble his staff at Nairobi, had been explained to the Governing Council at its second session. Over-expenditures on consultants had been offset by non-utilization of staff posts in that early period.
350. The Committee recommended for adoption by the Governing Council a draft decision concerning the financial report and accounts.
Action by the Governing Council
351. At its 39th meeting, the Council adopted by consensus the draft decision
recommended by Sessional Committee II (decision 41 (III), sect. 11). 29/