URU, Alm.del - 2013-14 - Bilag 42: Redegørelse vedr. Global Green Growth Institute

Status Report on the Government of Korea’s BAI Audit FindingsThe GGGI Secretariat under its new leadership has monitored continuously the Governmentof Korea’s Board of Audit and Inspection (BAI) audit findings of GGGI prior to conversionto an International Organisation. It has used the findings to strengthen the organisation andinstitutionalise internal control systems and procedures commensurate with those of otherinternational organisations.The findings of the BAI audit highlighted three areas of concern; these have now all beenaddressed as follows.First, various allowances and benefits were paid inappropriately for housing, education,seconded staff, meeting attendance, company vehicles and corporate credit cards. The rules,procedures and oversight of each of these allowances and benefits have been strengthened tobring them in line with international standards. The Council has approved regulations in theareas of human resources and financial management; each of which was developed inconsideration of the best practices of other international organizations. In recent monthshighly qualified and internationally experienced professionals have been recruited to theSecretariat and are now aligning and implementing the rules and procedures in these areas.Second, program expenses and consequent project supervision, particularly relating tooutsourcing contracts with external consulting firms were found to have been managedinadequately. Independently benchmarked procurement rules were adopted by the Council inJune 2013 and implemented by a newly recruited senior procurement manager withsubstantial international experience. The Organisation and Delivery Unit was established tostrengthen the supervision, monitoring, reporting and evaluation of the GGGI’s three workstreams. Five internationally experienced staff, with experience respectively in the AsianDevelopment Bank, EU, USAID, UNEP and SIDA have been recruited, and are quicklyestablishing the Unit’s activities.Third, in response to the finding that the previous organisation lacked sufficient internalcontrol systems, the Audit & Finance Sub-Committee of the Council (AFSC) and the Officeof Internal Audit and Integrity headed by the Chief Internal Auditor reporting directly to theChair of the AFSC and the Director General are now operational. Internal audits, as well asintegrity investigations have been undertaken, consistent with international auditingstandards.

Much progress has been accomplished in a very short time. Fifteen policies have beendeveloped and implemented since the last status report in May 2013. Nineteen furtherpolicies and guidelines are being developed and most are expected to be approved this year.These new policies and procedures will be integrated into the GGGI’s business process ineach GGGI location, including Headquarters, and other country presences. This will beachieved through the implementation of the Global Resource Efficiency ManagementSystem, an automation of the project, financial and administrative management systems.The BAI audit findings, the May 2013 status report and more recent progress are detailed inthe attached “Updates on Measures and Plans for the BAI Audit Findings on GGGI”.In September this year, a group of GGGI’s donors – a Joint Donor Review (JDR) team –conducted a review of its operations. The team found that GGGI continues to undergo adouble transition: to an international organisation and to new management processes. TheJDR team expected this transition to continue to influence GGGI for another year. They alsoconcluded that the Secretariat is responding to the urgent need to transform the organisation.They commended these efforts and noted early key achievements in partner countries. TheSecretariat sees its response to the BAI audit as consistent with this theme of achieving muchprogress in an ongoing process of transition.

Attachments:BAI Audit Findings and Management Response Update Table with AnnexesAnnex 1: Staff Regulations and Provisional Staff RulesAnnex 2: Policy on Opportunities for visiting persons to and from GGGIAnnex 3: GGGI Vehicle Use and Reservation PoliciesAnnex 4: GGGI Official Vehicle Usage Log (sample)Annex 5: GGGI Corporate Card Usage PolicyAnnex 6: Receipt of Official Individual CardAnnex 7: Procurement RulesAnnex 8: GGGI Standard Contract TemplatesAnnex 9: GGGI Core Operating ProcessAnnex 10: GGGI Charter for Office of Internal Audit and 2013 Plan and BudgetAnnex 11: GGGI Charter for Office of Internal Audit and Integrity

Updates on Measures and Plans for the BAI Audit Findings on GGGIGGGI management response(Focal Point: CFO)Corrective Action as of May 24, 2013Status of Action: Completed.Basis: Staff Regulations & Staff RulesEffective Date: April 1, 2013Comments:GGGI Staff Regulations approved at 2ndCouncil in Abu Dhabi and the Staff Rulespromulgated by the Director General.Housing Allowances are provided toexpatriate staff who are not serving intheir home country and country of theirnationality.Status of Action: Completed.Basis: Staff Regulations & Staff RulesEffective Date: April 1, 2013Comments:GGGI Staff Regulations approved at 2ndCouncil in Abu Dhabi and the Staff Rulespromulgated by the Director General.Housing Allowances are provided toexpatriate staff who are not serving intheir home country and country of theirnationality.Corrective Action as of May 24, 2013Status of Action: Completed.Basis: Staff Regulations & Staff RulesEffective Date: April 1, 2013Comments:No allowance for meeting participationby GGGI staff.Update as of October 24Status of Action: Completed.Basis: Staff Regulations & Staff RulesEffective Date: April 1, 2013Comments:There has been an adjustment toaccommodate a new staff classificationand cost of living.Link: See Annex 1 (Staff regulations andprovisional staff rules)

2. Tightening of Rules on Payment of ChildEducation Expenses□ Rules on Payment of Employees’ ChildEducation ExpensesAmong the existing GGGI CompensationRegulations, child education expense paymentrules for employees should be adjusted tomatch the situation by considering the area ofresidence, position and the employmentagreements.II. Reinforcement of Various AllowancePayment Standards1. Tightening of Rules on Allowances for theparticipation of Meeting□ Rules on Allowances for the participation ofMeeting- To fill the insufficient manpower during theinitial period of establishment, GGGI paidallowances to the temporarily hired employees(temporary staff) for their meeting expensesand etc. However, currently, GGGI does notmake any payment unless it is based on GGGIRules and Regulations.2. Tightening of Rules on Secondee Allowances□ Rules on Secondee Allowances- Pursuant to Article 3 and 14 of the GGGICompensation Rules/Regulations, GGGI paysallowance within the amount of 1.5 millionwon to the secondees who work at least onemonth or more at GGGI.- Currently, no secondment is made without asecondee agreement and GGGI plans tocomply with the regulation on secondmentallowance in the future. The secondeeallowance is made by reference to ICSCsecondee allowance standards chart bycountry which regulates the working andemployment conditions of the organizationswithin the UN

Updates on Measures and Plans for the BAI Audit Findings on GGGIGGGI management response(Focal Point: CFO)Status of Action: Completed.Basis: Staff Regulations & Staff RulesEffective Date: April 1, 2013Comments:There is one remaining staff memberwhose employment contract is K-GGGIbased by his choise but is not entiled tohousing or education grant allowance.Status of Action: Completed.Basis: Staff Regulations & Staff RulesEffective Date: April 1, 2013Comments: No changeLink: See Annex 1 (Staff regulations andprovisional staff rules)

III. Formulation of the Corporate VehicleManagement Regulation and Reinforcementof ControlFormulation of an internal regulation oncorporate vehicle management underwaycurrently for its submission to theManagement Committee for approval:- Corporate vehicles to be subject to public useonly by GGGI employees including theExecutive Director;- Vehicle manager to be designated forefficient vehicle management, operation, andmaintenance;- Details of vehicle use to be managedtransparently (to be reflected in the IT system).IV. Formulation of the Corporate Credit CardRegulation and Reinforcement of ControlThe GGGI Corporate Credit Card Regulation hasbeen developed and formulated with theinclusion of following issues. It will beimplemented after going through the internalprocedures:- Only GGGI employees to become regularholders of GGGI corporate credit cards;- Payments to be made only for paymentdecisions to which evidentiary materials clearlyspecifying the use of a credit card are attached;- To insert an explicit provision that theresponsible credit card user shall reimbursethe GGGI for any amount of corporate creditcard use that is in violation of the Regulation.-The draft has been presented to theManagement Committee and they haveendorsed it.V. Reinforcement of the GGGI ProcurementRegulation and Its More Rigorous Application1. Develop and consistently upgrade guidelinesto meet the standards of an internationalorganization.

Updates on Measures and Plans for the BAI Audit Findings on GGGIGGGI management response(Focal Point: CFO)Status of Action: In-ProgressBasis: Interim Procurement RulesEffective Date: Q2, 2013Comments:The draft procurement rules wereadopted as interim at the Council inJanuary 2013. The draft rules will bebenchmarked for final review andapproval at the next Council in June2013.Status of Action: In-ProgressBasis: Interim Procurement RulesEffective Date: Q2, 2013Comments:The draft procurement rules wereadopted as interim at the Council inJanuary 2013. The draft rules will bebenchmarked for final review andapproval at the next Council in June2013.Status of Action: Completed.Basis: GGGI Procurement RulesEffective Date: June 8, 2013Comments:Procurement handbook will be preparedto facilitate the implementation of theRules.Link: See Annex 7 (Procurement Rules)

BAI Audit Findings□ Downward Adjustment of Optional ContractLimit- To expand open competitive bidding byensuring that the revised ProcurementRegulation lowers the allowable limits for anoptional agreement;- To prevent abuse of an optional agreementby requesting that a specific cause be providedeven in the case of conclusion of an optionalagreement.□ More Rigorous Review of the Details ofAgreement- To divide the existing Bidding AssessmentCommittee into the Contract ReviewCommittee, Technical Committee, and theFinancial Committee; to maintainindependence of the Technical Committee andFinancial Committee to prevent meetingresults of the Technical Committee fromaffecting decisions by the Financial Committee;and to cause the Contract Review Committeeto monitor and supervise the overall biddingprocess;- To conduct flawless evaluation by tighteningassessor selection rules.2. Recruitment and Management of Staff inCharge of Procurement and Contracts- To employ a procurement and contractmanager who will monitor and supervise theentire procurement process, from bidding,supplier selection, contract negotiation, tocontract conclusion, in addition to tighteningapplicable rules.3. Tightening the Details and Use of StandardContract□ Tightening of the Details of StandardContract- Adopted more rigorous details of a standardcontract to ensure that it specifically providesfor the contractual period, scope of services,deliverables, obligation of contractualperformance, compliance with contractualprocess, supervision including periodicreporting and monitoring of contractperformance at each stage, details ofcontractual amount and costs, and expensesettlement and submission of evidentiarydocuments.VI. Reinforcement of Business ManagementMethod and Establishment of Quality ControlSystemTo adopt a more stringent review of the GGGI’sapplication of the COP (Core OperatingProcess) and formulate a corresponding

Updates on Measures and Plans for the BAI Audit Findings on GGGIGGGI management response(Focal Point: CFO)Comments:The COP is applied to all GGP&I projects.The Portfolio Management Unit (PMU)was created to oversee the managementof the project cycle and to update thesenior management on GGP&I projectportfolio status.Link: See Annex 9 (GGGI Core OperatingProcess)Comments:The ODU has been created with 4 stafffor more rigorous review of GGP&Iproject management cycle.Link:http://gggi.org/about-gggi/organizational/organization/

BAI Audit Findingsbusiness management and supervisionmethod; and to tighten transient examinationof the scope of planned services for eachproject and the actual scope of contractregarding an outsourcing contract in particular,assessment of the level of deliverablesutilization, and review of the effectiveness ofprojects themselves.□ Confirmation of Matters Requested by theCorresponding Government in ExecutingNational Projects- To strengthen the procedures to receive arequest for service or a memorandum ofunderstanding from the (central or local)government of a corresponding country whenmigrating from ‘Scoping’, the first stage in theCOP, to ‘Management and Monitoring’, itssecond stage;- Receiving documents related to all nationalprojects in the ‘Management and Monitoring’stage as of December 17, 2012.□ Establishment of Procedures to Confirm theDetails of Proposal and Contract- To review the reasonableness of the scope ofservices and of the contractual amount inconcluding a contract, based on comparisonwith the details of an invitation for bidding andthe details of a proposal (procurement andcontract officer);- To confirm whether said review was carriedout through an ordinary audit.□ Establishment of Quality Control System- To develop evaluation guidelines in order toassess performance of national projects; and toconduct such assessment by formulatingevaluation indices encompassing society,economy, environment, and other areas;- To establish a Monitoring and Evaluationsystem- It will be conducted under the leadership ofnew incoming deputy Director-Generalresponsible for GGP&I

Status of Action: CompletedBasis: Contract Review Committee (CRC)Effective Date: Q2, 2013Comments:The CRC was established to oversee allstages of the procurement andcontracting process for all GGP&Iprojects (please see Rules 4.3 and 4.4 ofthe Procurement Rules for moreinformation).Status of Action: CompletedBasis: Core Operating Processes (COP)Effective Date: Q2, 2013Comments:The COP is applied to all GGP&I projects.The Portfolio Management Unit (PMU)was created to oversee the managementof the project cycle and to update thesenior management on GGP&I projectportfolio status.

Status of Action: Completed (on-going)Basis: Organization & Delivery Unit (ODU)Effective Date: Q3, 2013Comments:The ODU is created and supervised bythe Management and AdministrationDepartment. ODU is responsible for theimplementation of the Monitoring &Evaluations (M&E) framework to allprojects within the three GGGI’s workstreams (GGGP&I, PPC and KD&M). ODUis improving the M&E framework on thebasis of the Joint Donor Review and theCouncil reccomendations. It willcoordinate management aspects of theexternal evaluation, and is currentlyrefining the project cycle managementguidelines and the respective CoreOperating Processes (COPs). Animproved M&E framework will be inplace by December 2013.Link:http://gggi.org/about-gggi/organizational/organization/

BAI Audit Findings2-VII. Reinforcement of Internal ControlSystem1. Organization and Operation of the Audit andFinance Sub-CommitteeIn a meeting of the Transition Committeeconvened on November 20, 2012 to pursueconversion of the GGGI into an internationalorganization as delegated by the Council, itwas decided to propose, to the Council, a planto form the Audit and Finance Subcommitteeas an entity subordinate to the Council. Aresolution on the issues including financematters will be adopted in a Council meetingscheduled for January 2013.2. Development of Policies and ProceduresThe internal control system will bestrengthened by proper documentation andimplementation of financial, HR and otheradministrative policies and procedures. Morefocused budget planning, results-basedmanagement methodologies and tools, andsystematic monitoring and evaluation practiceswill be rolled out to build fully- fledged internalcontrol system. In this context, talents will behired for key positions including a procurementmanager, an ERP expert and an internalauditor. In parallel, the business process andrelated delegation of authorities are currentlyreviewed and will be rationalized in line withinternational benchmarks and best practices.This prepares for the implementation of ERP toconsolidate the administrative management ofall financial, human and physical resourcesunder a single integrated system for the entireorganization.

Status of Action: In-ProgressBasis: Various policies and proceduresEffective Date: Q4, 2013Comments:The following policies have beendeveloped and in place:1. Staff Regulations and ProvisionalStaff Rules2. Procurement Regulations3. Financial Regulations4. HR Directive Amendments to GGGIProvisional Staff Rules5. Learning and Development Policy6. Individual Consultants Policies &Procedures7. Policy on Use of GGGI Allocated CarParking Facilities8. Conference Attendance Policy9. Policy for Assembly, Council and Sub-Committee Document Clearance10. Policy on Representation Expenses11. Policy on Use of GGGI Logo andSponsorship12. Policy on English Language Contracts13. Policy on Opportunities for VisitingPersons to and from GGGI14. Travel Policy for Members of theGovernance Organs of the GGGI15. Guidance Note on DG ApprovalProcessIn addition, there are 19 policies andguidelines currently being reviewed,developed or pending approval.

Updates on Measures and Plans for the BAI Audit Findings on GGGIGGGI management response(Focal Point: CFO)Status of Action: CompletedBasis: Charter for Office of Internal AuditEffective Date: Q2, 2013Comments:GGGI established Office of Internal Audit(OIA) in April 2013 to support the Councilin fulfilling its oversight responsibilities.The OIA performs independent objectivemonitoring and evaluation of GGGI’soperations.Links: See Annex 10 (GGGI Charter forOffice of Internal Audit and 2013 InternalAudit Plan & Budget)Status of Action: CompletedBasis: Charter for Office of Internal Auditand IntegrityEffective Date: Q3, 2013Comments:The OIA changed its name to Office ofInternal Audit and Integrity (OIAI) andupdated its charter to better reflect andcustomize the monitoring and evaluationof “integrity” into the role of the office.The Charter for OIAI that details its rolesand responsibilities can be found inAnnex 11OIAI conducts audit projects inaccordance with a risk-based annualinternal audit plan approved by the AFSC.Upon completion of each audit, OIAIissues a report including observations,recommendations, and Management’sresponses with action plan to the AFSC.OIAI periodically updates its activities tothe Director-General and the Chair of theAFSC.

BAI Audit Findings3. Installation and Operation of a DedicatedInternal Audit System□ Internal Audit System, Report andAssessment- To set up a dedicated internal audit functioncomprising at least one internal auditprofessional and formulate an audit plan for itsexecution after review and approval by theAudit and Finance Sub-Committee;- To report the findings of ordinary/regularaudits to the Council through the Audit andFinance Sub-Committee after notifying theGGGI management of related items andcollecting related opinions and improvementplans;- To put the Audit and Finance Sub-Committeeunder the control of the Council to evaluatethe effectiveness and reasonableness ofinternal audit affairs;- To commission outside experts to perform anaudit in the case of an internal audit requiringexpertise according to the Audit and FinanceSub-Committee’s decision.