Internal study shows UN's payroll system adds to dysfunction that defines Ban Ki-Moon tenure

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Published January 30, 2012

| FoxNews.com

Add another morass to the administrative swamps at the United Nations: its vast, disorganized and dysfunctional payroll system, which handles much of the money that passes through the nearly $18 billion New York-based Secretariat, and much more besides.

According to a confidential study by the U.N.’s own internal watchdogs, known as the Office of Internal Oversight Services, how the U.N. Secretariat keeps track of its employees and its payroll is a chaotic exception to the normal world of accounting, where books balance, who works where is known, and big, inexplicable variations in payroll records get fast attention -- or else.

But not, apparently, at the U.N., where, among other things, the watchdogs’ report:

• U.N. personnel records include thousands of employees who are listed at the New York Secretariat but are paid elsewhere;

• About 1,000 employees from other U.N. organizations are on the Secretariat payroll even though they do not appear in the Secretariat system as personnel. The discrepancy in the accounts is papered over as a monthly “receivable”;

• Consequently, the report relates, “It was not possible to match” the number of U.N. workers on the organizations staffing rolls with the number being paid on a roster that tallied earnings and deductions, and no attempt has been made to do it -- partially, the report implies, because neither the payroll nor human resources departments had been specifically made responsible for doing it;

• When the watchdogs themselves tried to perform that matching function they turned up differences worth hundreds of thousands of dollars in a single month, or nearly $5 million on an annualized basis;

• New employees who work on the antiquated personnel system have not been given training at their positions for at least the past five years, while a spate of retirements has gnawed away at the number of veterans who actually know how the system works, meaning a growing risk that the staff will be less able to avoid errors or spot them when they occur;

• Help desk procedures in the personnel department have not been updated since 1996 -- several lifetimes ago in computer software terms. An executive summary attached to the report, and presumably intended to be the main thing read by top managers, amended that date to 2002; Even though many payroll reports available to top management were no longer used in the payroll processing system, they were still going to top U.N. managers where, the watchdogs delicately put it, “users in the Executive Offices could make incorrect assumptions on the basis of this information."

One possible implication: budget projections and other reports to the nations that pay the U.N.’s bills and oversee its operations could potentially be off-base.

CLICK HERE FOR THE FULL OIOS REPORT, PRECEDED BY THE EXECUTIVE SUMMARY

All in all, said a forensic accounting expert asked by Fox News to examine the OIOS report, "all of the things identified point to a situation ripe for error and potentially for fraud. How do you get any assurance that your calculations are correct?"

"You would not think a multibillion-dollar organization would have this level of discrepancy" in its bookkeeping, he added.

According to the U.N. itself, however, the issues raised in the watchdog report no longer exist.

Queried by Fox News about the report's diplomatically phrased recommendations that the Secretariat "update its help desk procedures" and "ensure that all personnel assigned to payroll-related activities receive adequate training," Secretary General Ban Ki-moon’s spokesman, Martin Nesirky, declared on behalf of the U.N.’s Department of Management that the concerns had been taken care of.

"The project to update help desk procedures was actually finished by Dec. 31, 2011," he declared. Likewise, he said, "the reports used to assess the accuracy of the payroll results were found to be accurate by OIOS. The minor variances identified during the audit process were related to minor bugs in a very limited number of accounting reports."

"The fixing of those bugs," he added, "will be done no later than the second semester of 2012." In other words, five months from now.

In fact, the management response contained in the audit report itself says something different. Due to budget constraints, that section of the report says, only one human resources professional and two administrative helpers had been assigned the training task, and were working only on the areas where the most mistakes were made. They had only been given funding for six months to complete the assignment (which was only slated to begin on Dec. 31, the report says.) 

"Additional updates to desk procedures and further training would not be feasible unless the project is extended or more resources are made available," the report says.

The outside accounting expert who examined the OIOS report at Fox News’ request found the management rejoinder "very lackadaisical." Simply put, he said, "they are not going to invest in people doing it right."

The OIOS report notes that the five-year neglect of payroll training came about because the U.N.’s staffing managers expected their old and wheezing payroll system to be replaced by something new: a sophisticated, computer and software platform known as Umoja, and consequently decided they didn't have to spend money on keeping people updated on how to run the old system.

The problem is that it didn't work out that way.

Umoja was supposed to "renew completely the way the United Nations manages human, financial and material resources, bringing the Organization up to accepted common standards commensurate with the size and nature of its operations,” Secretary General Ban declared in a 2009 report. It was supposed to be completed by the end of this year, at a cost of $312 million.

Instead, Umoja has become a high-tech symbol of Ban’s inability to sweep aside the U.N.’s bureaucratic sclerosis during his first, five-year term. Umoja is now slated for completion in 2015, three years behind its original schedule, and its $312 million price tag is based on some questionable assumptions, notably a lack of provision for unforeseen contingencies.

Ban himself was slammed by a U.N. oversight committee last month for his slack management of the Umoja project, failure to act decisively in the face of the growing fiasco, and overall bad planning for the entire exercise.

Moreover, it is not yet clear that the U.N. can hire enough highly trained technicians to complete the project even on its new schedule. 

And even when the revolutionary new "enterprise planning" system is completed, it will still be connected to at least 300 old systems that Ban himself has characterized in a report as “at the breaking point, and woefully inadequate for carrying out the increasingly complex, far-reaching operations of the Organization.”

Ban’s dramatic characterization of the mess raises another important question. If the technology at the U.N.’s disposal is in such dire shape -- including, it now appears, the high-tech solution to all the previous problems of age and neglect -- how can anyone be sure that the payroll chaos outlined in the U.N.’s latest watchdog report has been cleaned up anywhere near as well as the U.N.’s top managers now claim? 

George Russell is executive editor of Fox News and can be found at Twitter@GeorgeRussell

Click here for more stories by George Russell.

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