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The Reformed Financial Mechanism IISection II. Independent Oversight

Benito Müller, Luis Gomez-Echeverri, Saleemul Huq, and Achala Chandani

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Outreach and Independent Oversight:

General Architecture and Responsibilities

• Oversight of the RFM will be carried out both internally and externally.

• Oversight includes (i) Financial Auditing, (ii) Compliance Auditing, (iii) Performance Auditing (Evaluations), and (iv) Complaints Procedures.

• The Board will be responsible for the internal oversight of the FM, to be carried out (if possible) through the UN Office of Internal Oversight Services.

• The COP will be responsible for external oversight, to be carried out through a Board of Auditors (modelled after the UN Board of Auditors). (OR the UN Board of Auditors itself)

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Independent Oversight: Remits

INTERNAL OVERSIGHT

The Internal Oversight needs to cover financial, compliance and performance monitoring and evaluation of the internal activities (Board,

Assessment Units, Secretariat, Expert Panels) which could be carried out by the UN Office for Internal Oversight Services (OIOS,

www.un.org/depts/oios/) and by more technical monitoring and evaluation dedicated services. The internal oversight is also meant to cover a complaints

procedure covering malpractice at the level of the internal or contracted external institutions of the RFM

EXTERNAL AUDITING

The external auditing needs to cover the same types of audits (on a spot check basis). The institutional scope needs to go beyond the internal bodies to include contracted institutions, such as the RFM Trustee and the in-country Climate Change Funds (following accepted practices).

Institutionally, the external auditing could be carried out by the UN Board of Auditors (BOA), or – given the size of the task – perhaps – and to be explored - by a newly dedicated Board of Auditors for the FM, based on the model of the UN BOA.

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Climate Trust Funds: The Funding Hubs

DESIGN REQUIREMENTS

•Governance. The governance of CCFs must be transparent and inclusive, with representation of all the relevant stakeholder interests, with decision-making based on the principle of subsidiarity.

•Functions. Apart from assessing, monitoring, and evaluating in-country funding activities, the CTFs are to be in charge of the relevant national MRV Registries.

•Oversight. The external oversight is principally to be carried out by the relevant national Supreme Audit Institutions (‘National Audit Offices’), following guidance by the Board of Auditors (approved by the COP). (e.g UNDP practice with Nationally Executed Projects)

•Outreach: CCFs are to have regular opportunity to exchange experiences at least at the regional level. This is to be facilitated through the RFM Consultative Forum

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Knowledge and Resources on Best Audit Practices

Immense Resources• National Audit System Practices

• Audit Arrangements in International Institutions : International Organization of Supreme Audit Institutions (INTOSAI)

• World Bank Group and IFIs

• UN family of organizations: Standards established and applied across the board

• Global Funds and Programs

• International and National NGOs

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Principles for Best Audit Arrangements (INTOSAI)To be effective, audit arrangements for international institutions should

ensure that

• All international Institutions financed with or supported by public money should be subject to audit by supreme audit institutions, to promote better governance, transparency and accountability

and that the external auditor:

• is fully independent in the conduct of the audit;

• has sufficient authority to carry out the audit in a manner that meets best practices in the audit of public money;

• has adequate resources to carry out the audit;

• has the right and obligation to report on the results of the audit to the member states concerned through the governing body;

• meets relevant professional and ethical standards; and

• is appointed in an open, fair and transparent manner

(INTOSAI) – International Organization of Supreme Audit Institutions

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Knowledge and Resources on Best Monitoring and Evaluation Practices • Standards for Evaluation in the UN System (United Nations

Evaluation Group network)

• OECD DAC Expert Group on Evaluation

• World Bank Group and IFIs

• GEF Monitoring and Evaluation Office

• Other Global Funds and Programs (example of Global Fund for Malaria Tuberculosis and AIDs Medicines Transparency Alliance (META) in Uganda

• NGOs (their M and E practices and review of practices of NGO participation in oversight of funds and programs)