United Nations Educational, Scientific and Cultural Organization Executive Board

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1 ex United Nations Educational, Scientific and Cultural Organization Executive Board Hundred and fifty-sixth Session 156 EX/32 PARIS, 22 March 1999 Original: English Item 8.5 of the provisional agenda PROPOSALS OF STANDARD MODEL TEXTS FOR FINANCIAL REGULATIONS OF SPECIAL ACCOUNTS APPLICABLE TO INSTITUTES AND SIMILAR BODIES SUMMARY In accordance with 155 EX/Decision 5.3 (para. 10), the Director- General submits herewith for consideration by the Executive Board proposals of standard model texts for Financial Regulations of Special Accounts applicable to institutes and similar bodies. Decision required: paragraph Further to the discussions in the Executive Board on the draft guidelines for the rational implementation of decentralization (155 EX/19) including the creation of additional specialized institutes and similar bodies made in the framework of UNESCO, the Executive Board invited the Director-General to propose, for consideration at its 156th session, standard model texts of Financial Regulations applicable to the Special Accounts relating to such bodies. 2. The Director-General is authorized under Financial Regulation 6.6 to establish Special Accounts, which shall be reported to the Executive Board. Furthermore, Financial Regulation 6.7 states that: The purpose and limit of each Special Account shall be clearly defined by the appropriate authority. The Director-General may, when necessary in connection with the purposes of a Special Account, prepare special Financial Regulations to govern the operation of such Accounts, which shall be reported to the Executive Board; the Executive Board may make appropriate recommendations to the Director-General thereon. 3. Consequently, Directors-General of UNESCO have reported to various sessions of the Executive Board special Financial Regulations for the Special Accounts of institutes and

2 156 EX/32 - page 2 similar bodies that have been created or incorporated into UNESCO. From Annex I, in which are listed the principal UNESCO Institutes for which special Financial Regulations have been reported to the Executive Board, it will be noted that the International Institute for Educational Planning (IIEP) was the first Institute in 1964 to have special Financial Regulations. These Regulations (Annex II, column 1) were used as a model for those of the International Bureau of Education (IBE), which are very similar except for Article 6 where the Comptroller decides on the investment policy of funds and Article 10.1 relating to the External Audit, where IIEP s text that The report of the External Auditor of UNESCO shall be submitted to the Board of the Institute was replaced by: The audited accounts of the Bureau, which constitute an integral part of the statement of the financial position of UNESCO, and the report of the External Auditor of UNESCO on the Bureau, shall be submitted to the Council for approval. However, as the accounts of UNESCO are not audited on an annual basis, the Council may ask for the annual accounts of the IBE to be submitted for examination to the External Auditor of UNESCO. 4. Further to the preparation of the Financial Regulations by IIEP and the IBE, the Director-General prepared other such Regulations which broadly fall into two categories that depend on the degree of financial autonomy delegated to the body and which the Director- General proposes to use as standard model Financial Regulations applicable to institutes and similar bodies created in the framework of UNESCO. 5. The first type, with least financial autonomy, follows the Financial Regulations of the International Institute for Higher Education in Latin America and the Caribbean (IESALC), which were based on those of the IBE as modified. The Executive Board in 154 EX/Decision 4.5 requested the Director-General to revise these Regulations in the light of its discussions, and in 155 EX/Decision 6.3 took note of them. These Financial Regulations are reproduced in column 2 of Annex II. 6. IESALC s Financial Regulations have been used as a model for both the UNESCO Institute of Statistics and the Institute for Information Technologies in Education in Moscow, whose Financial Regulations are being submitted to the present session of the Executive Board. There is, however, one modification with respect to Article 3.2, which refers to any case that would involve additional financial liability. The Director-General considers that only the prior approval of the respective body s Governing Board should be obtained since to obtain additionally the approval of the Executive Board of UNESCO makes for a very heavy procedure within the context of decentralization. In this respect, it should be noted that Article 7.3 of the Financial Regulations of UNESCO would apply should any such additional financial liability go beyond the resources of the body and involve the Organization as a whole. This is underscored by Article 9 - General provisions of the Special Financial Regulations. 7. The IESALC-type model Financial Regulations give less authority to the director of an institute, with the responsibility for keeping the accounting records remaining with the Comptroller. The draft standard model text based upon the IESALC Financial Regulations for those institutes with least financial autonomy is reproduced in column 1 of Annex III. 8. The second type which has complete financial autonomy delegated by the Director- General concerns the International Centre for Theoretical Physics (ICTP) whose Financial Regulations are reproduced in column 3 of Annex II. ICTP maintains its own accounts, invests its own funds and has imposed upon it a biennial audit performed by the External Auditor of UNESCO. The role of Headquarters is to incorporate the Centre s accounts into

3 156 EX/32 - page 3 those of UNESCO that are submitted to UNESCO s governing bodies. In addition, the Director of ICTP has, in accordance with Article 8.1 of its Financial Regulations, established Financial Rules, which, inter alia, give the Inspector General of UNESCO access at all convenient times to all accounting records and information relevant thereto which he/she may require for purposes of internal audit and inspection missions. The draft standard model text based upon the ICTP Financial Regulations for those institutes with complete financial autonomy is reproduced in column 2 of Annex III. 9. In the light of the foregoing the Executive Board may wish to adopt a decision along the following lines: TheExecutiveBoard, 1. Having examined document 156 EX/32, 2. Approves the standard model texts for the Financial Regulations of Special Accounts applicable to institutes and similar bodies created in the framework of UNESCO as annexed to the present decision; 3. Recommends that the standard model texts be applied for any future institutes and similar bodies created in the framework of UNESCO.

4 ANNEX I PRINCIPAL UNESCO INSTITUTES AND SIMILAR BODIES Name Location Legal authority Date Special Financial Regulations International Bureau of Education (IBE) Geneva Established Became an international governmental organization Incorporated into UNESCO (15 C/Resolution 14.1) International Institute for Educational Planning (IIEP) Intergovernmental Oceanographic Commission (IOC) International Centre for Theoretical Physics (ICTP) EX/Decision (1994) Paris Established (12 C/Resolution 1.213) EX/Decision 7.3 (1964) Paris Established (11 C/Resolution 2.31) EX/Decision 5.1.III.A (1995) Trieste Established Transfer of administrative responsibility from IAEA (27 C/Resolution 2.2) EX/Decision (1996) World Heritage Fund (WHF) Paris Established (17 C/Resolution 29) EX/Decision (1977) International Institute for Higher Education in Latin America and the Caribbean (IESALC) Institute for Information Technologies in Education (IITE) Caracas Converted from the Regional Centre (CRESALC) into an international institute (29 C/5) EX/Decision 6.3 (1998) Moscow Established (29 C/Resolution 6) 1998 To be presented to the 156th session of the Executive Board under provisional agenda item (156 EX/6) (1999) UNESCO Institute for Statistics (UIS) Paris 29 C/Resolution To be presented with Statutes to the 156th session of the Executive Board under provisional agenda item 6.6 (156 EX/24) (1999)

5 ANNEX II FINANCIAL REGULATIONS FOR THE SPECIAL ACCOUNTS OF THREE UNESCO INSTITUTES AND SIMILAR BODIES International Institute for Educational Planning (IIEP) Article 1 - Creation of a Special Account 1.1 In accordance with Financial Regulation 6.6 there is hereby created a Special Account for the International Institute for Educational Planning. The following regulation shall govern the operation of this Special Account. Article 2 - Financial period 2.1 The financial period shall begin on the first day of January and end on the thirty-first day of December each year. 1 Article 3 - Income 3.1 The income of the Institute shall consist of: (a) such subventions, contributions, grants, gifts or bequests as may be allocated or International Institute for Higher Education in Latin America and the Caribbean (IESALC) Article 1 - Creation of a Special Account 1.1 In accordance with Article 6, paragraph 6, of the Financial Regulations of UNESCO, there is hereby created a Special Account for the UNESCO International Institute for Higher Education in Latin America and the Caribbean, hereafter referred to as the Institute. 1.2 The following regulations shall govern the operation of this Special Account. Article 2 - Financial period The financial period shall begin on the first day of January and end on the thirty-first day of December each year. Article 3 - Income 3.1 As provided for in its Statutes, the income of the Institute shall consist of: (a) a financial allocation determined by the General Conference to cover staff costs, as International Centre for Theoretical Physics (ICTP) Article 1 - Creation of a Special Account of UNESCO With reference to the tripartite agreement between UNESCO, IAEA and Italy, and in accordance with Financial Regulation 6.6 of UNESCO, there is hereby created a Special Account for the International Centre for Theoretical Physics. The following regulations shall govern the operation of this Special Account. Article 2 - Financial period 2.1 The financial period shall begin on the first day of January and end on the thirty-first day of December each year. Article 3 - Income 3.1 The income of the Centre shall consist of: (a) the financial allocations determined by the General Conference of UNESCO, the General Conference of IAEA, the 1. Transitional provision: the first financial period shall begin on 1 July 1963 and end on 31 March 1964, and the second financial period shall begin on 1 April 1964 and end on 31 December 1994.

6 International Institute for Educational Planning (IIEP) International Institute for Higher Education in Latin America and the Caribbean (IESALC) International Centre for Theoretical Physics (ICTP) (b) (c) offeredtoitbytheunitednations agencies, governments, public or private organizations, associations, foundations or individuals provided that the purposes for which they are made are consistent with the policies, aims and activities of the Institute; fees collected for special purposes; and miscellaneous revenue. (b) (c) (d) (e) well as direct and indirect programme costs; voluntary contributions from States, international agencies and organizations, as well as other entities; such subventions, endowments, gifts and bequests as are allocated to it consistent with the policies, programmes, or activities of UNESCO and the Institute; fees collected in respect of the execution of projects entrusted to the Institute, from the sale of publications, or from other particular activities; and miscellaneous income. (b) (c) contributions of the Italian Government, and such subventions, gifts and bequests as are allocated to it by other United Nations agencies, governments, public or private organizations, associations or individuals, provided the purpose for which they are made is consistent with the policies, aims and activities of the Centre; fees collected for special purposes; miscellaneous revenue. 3.2 The Director, acting under the authorization of the Director-General of UNESCO may accept income as set forth in Article 3.1 on behalf of the Institute, provided that, in any case which would involve the Institute in an additional liability, he shall obtain the prior approval of the Board or the Executive Committee. 3.3 The Director shall report periodically to the Board upon the subventions, contributions, grants, gifts or bequests accepted. 3.2 The Director, acting under the authorization of the Director-General granted hereto, may accept income as set forth in Article 3.1 on behalf of the Institute, provided that, in any case which would involve the Institute in an additional financial liability, the Director shall obtain the prior approval of the Institute s Governing Board (hereafter referred to as the Board ), as well as of the Executive Board of UNESCO. 3.3 The Director shall report to the Board on any subventions, contributions, grants, gifts or bequests accepted. 3.2 The Director of the Centre, acting on the authorization of the Director-General of UNESCO, may accept income as set forth in Article 3.1 on behalf of the Centre, provided that, in any case which would involve additional financial liability for the Centre, he/she obtains the prior approval of the Steering Committee and the consent of the Executive Board of UNESCO. 3.3 The Director shall report to the Centre s Steering Committee on any subventions, contributions, grants, gifts or bequests accepted.

7 International Institute for Educational Planning (IIEP) Article 4 - Budget 4.1 The Director shall prepare, in a form to be determined from time to time by the Board or the Executive Committee an annual budget and shall present it to the Board for approval. 4.2 The appropriations voted in the budget shall constitute an authorization to the Director to incur obligations and to make expenditures for the purposes for which the appropriations are voted and up to the amounts so voted. 4.3 Appropriations shall remain available for obligation during the financial period to which they relate. 4.4 Appropriations shall remain available for two years following the end of the financial period to which they relate to the extent that they are required to discharge obligations for goods supplied and services rendered in the financial period and to liquidate any other outstanding legal obligations of the financial period. International Institute for Higher Education in Latin America and the Caribbean (IESALC) Article 4 - Budget 4.1 The Director shall prepare, in a form to be determined from time to time by the Board, an annual programme and budget and shall submit it to the Board for approval. 4.2 The appropriations voted in the budget shall constitute an authorization to the Director to incur obligations and to make expenditures for the purposes for which the appropriations are voted and up to the amounts so voted. 4.3 The Director is authorized to transfer funds between activities under the same appropriation line, and may arrange transfers of amounts between appropriation lines within the limits established by the Appropriation Resolution voted by the Board and shall report to the Board on all such transfers. 4.4 The Director is required to maintain obligations and expenditures within the level of the actual resources that become available to the General Account mentioned in Article 5.1 below. International Centre for Theoretical Physics (ICTP) Article 4 - Budget 4.1 The Director shall prepare, in a form to be determined by the Steering Committee, the financial plans and budget proposals of the Centre and shall submit them to the Committee for approval. 4.2 The Director is authorized to increase or decrease the approved appropriations on the basis of the actual resources that become available from the income mentioned in Article 3.1 above, and shall report thereon in the accounts submitted to the Steering Committee. 4.3 Appropriations shall remain available for obligation during the financial period to which they relate. 4.4 Appropriations shall remain available for 12 months following the end of the financial period to which they relate to the extent that they are required to discharge obligations for goods supplied and services rendered in the financial period and to liquidate any outstanding legal obligations of the financial period.

8 International Institute for Educational Planning (IIEP) 4.5 The balance of the appropriations remaining unobligated at the close of a financial period shall revert to the General Account of the Institute. 4.6 At the end of the two-year period provided for in Regulation 4.4, the remaining unspent balance of appropriations retained shall revert to the General Account mentioned in Article 5.1 below. International Institute for Higher Education in Latin America and the Caribbean (IESALC) 4.5 Appropriations shall remain available for obligation during the financial period to which they relate. 4.6 The Director shall make allotments and any modifications thereon, within the limits of the Appropriation Resolution, which shall be communicated, in writing, to the officials authorized to incur obligations and make payments. 4.7 Appropriations shall remain available for 12 months following the end of the financial period to which they relate to the extent that they are required to discharge obligations for goods supplied and services rendered in the financial period and to liquidate any other outstanding legal obligations of the financial period. 4.8 At the end of the 12-month period provided for in Article 4.7 above, the then remaining unspent balance of obligations retained shall revert to the General Account mentioned in Article 5.1 below. International Centre for Theoretical Physics (ICTP) 4.5 The balance of the appropriations remaining unobligated at the close of a financial period shall revert to the General Account of the Centre. 4.6 At the end of the 12-month period provided for in Article 4.4, the then remaining unspent balance of appropriations shall revert to the General Account of the Centre. 4.7 The Director shall give information to the Steering Committee on the different amounts credited to the General Account under Articles 4.5 and 4.6 and on the reasons for their transfer thereto.

9 International Institute for Educational Planning (IIEP) Article 5 - The General Account 5.1 There shall be established a General Account, to which shall be credited the income of the Institute as described in Article 3 above of these Regulations and which will be used to finance the approved budget of the Institute. 5.2 The balance remaining in this General Account shall be carried forward from year to year. 5.3 The uses to which this balance may be put shall be determined by the Board. Article 6 - Custody and investment of funds 6.1 All funds of the Institute shall be deposited from time to time with such banks or other depositories as the Board may select or approve or as may be selected by any officer or agent of the Institute to whom such power is delegated by the Board. 6.2 The Director may make such investments of monies not needed for immediate requirements as he considers necessary. International Institute for Higher Education in Latin America and the Caribbean (IESALC) Article 5 - The General Account 5.1 There shall be established a General Account, to which shall be credited the income of the Institute as described in Article 3 above and which will be used to finance the approved budget of the Institute. 5.2 The balance remaining in this General Account shall be carried forward from one financial period to the next. 5.3 The uses to which this balance may be put shall be determined by the Board. International Centre for Theoretical Physics (ICTP) Article 5 - The General Account 5.1 There shall be established a General Account to which shall be credited the income of the Centre as described in Article 3 and which shall be used to finance the approved budget of the Centre. 5.2 The balance remaining in this General Account shall be carried forward from year to year. 5.3 The uses to which this balance may be put shall be determined by the Steering Committee. Article 6 - Custody and investment of funds 6.1 All the funds of the Centre shall be deposited without delay with banks or other depositories selected by the Director or other officer of the Centre to whom such power is delegated by the Director in accordance with the financial rules and banking procedures of UNESCO. 6.2 The Director may make such investments of moneys not needed for immediate requirements as he considers appropriate, in accordance with the investment policies of UNESCO.

10 International Institute for Educational Planning (IIEP) 6.3 Income earned on such investments shall be credited to the Miscellaneous Revenue. Article 7 - Trust Funds, Reserve and Subsidiary Special Accounts 7.1 Trust Funds, Reserves and Special Accounts may be established by the Director and shall be reported to the Board. 7.2 The Director may, when necessary, in connection with the purpose of a Trust Fund, Reserve or Special Account, prepare special financial regulations to govern the operations of these funds or accounts and shall report thereon to the Board. Unless otherwise provided these funds and accounts shall be administered in accordance with these Regulations. International Institute for Higher Education in Latin America and the Caribbean (IESALC) Article 6 - Trust Funds, Reserve and Subsidiary Special Accounts 6.1 The Director shall establish a Reserve Fund to cover, inter alia, the working capital and end-of-service indemnities and other related liabilities, including currency fluctuations and inflation costs; the fund shall be reviewed annually by the Board at the time of the yearly budget approval. 6.2 Trust Funds, Subsidiary Special Accounts and any other Reserve Accounts may be established by the Director, who shall report thereon to the Board. 6.3 The Director may, when necessary, in connection with the purpose of a Trust Fund, Reserve or Subsidiary Special Account, prepare special financial rules to govern the operations of these funds or accounts and shall report thereon to the Board. Unless otherwise provided International Centre for Theoretical Physics (ICTP) 6.3 Income earned on such investments shall be credited to the Miscellaneous Income of the Centre. Article 7 - Trust Funds, Reserve Accounts and Subsidiary Special Accounts 7.1 The Director shall establish a Reserve Fund to cover, inter alia, the working capital and end-of-service indemnities and other related liabilities which shall be reviewed annually by the Steering Committee at the time of budget approval. 7.2 Trust Funds, Subsidiary Special Accounts and any other Reserve Accounts may be established by the Director, who shall report thereon to the Steering Committee. 7.3 The Director may when necessary, in connection with the purpose of a Trust Fund, Reserve Account or Subsidiary Special Account, prepare special financial regulations to govern the operations of these funds or accounts and shall report thereon to the Steering Committee.

11 International Institute for Educational Planning (IIEP) Article 8 - Internal control 8.1 The Director shall: (a) establish detailed financial rules and procedures in order to ensure effective financial administration and economy; (b) (c) (d) cause all payments to be made on the basis of supporting vouchers and other documents which ensure that the services or goods have been received, and that payment has not previously been made; designate the officers who may receive monies, incur obligations and make payments on behalf of the Institute; maintain internal financial control which shall provide for an effective current examination and for review of financial transactions in order to ensure: (i) the regularity of the receipt, custody and disposal of all funds and other financial resources of the Institute; International Institute for Higher Education in Latin America and the Caribbean (IESALC) these funds and accounts shall be administered in accordance with these Financial Regulations. International Centre for Theoretical Physics (ICTP) Unless otherwise provided these funds and accounts shall be administered in accordance with these regulations. Article 8 - Internal control 8.1 The Director shall: (a) establish financial rules in order to ensure effective financial and economic administration. These rules and any changes thereto shall be submitted for approval to the Steering Committee at its meeting following their establishment or amendment; (b) cause all payments to be made on the basis of supporting vouchers and other documents which ensure that the services or goods have been received, and that payment has not previously been made; (c) designate the officers who may receive moneys, incur obligations and make payments on behalf of the Centre; (d) maintain internal financial control which shall provide for regular and effective examination and for review of financial transactions in order to ensure: (i) the regularity of the receipt, custody and disposal of all funds and other financial resources of the Centre;

12 International Institute for Educational Planning (IIEP) International Institute for Higher Education in Latin America and the Caribbean (IESALC) International Centre for Theoretical Physics (ICTP) (ii) (iii) the conformity of obligations and expenditures which may be determined from time to time by the Board, or with the purposes and rules relating to Trust Funds and Special Accounts; the economic use of the resources of the Institute. (ii) (iii) the conformity of obligations and expenditures with the appropriations or other financial provisions which may be determined by the Steering Committee, or with the purposes of Trust Funds, Reserve Accounts and Subsidiary Special Accounts and the rules relating thereto; the economic use of the resources of the Centre. 8.2 No obligations shall be incurred until allotments or other appropriate authorizations have been made in writing under the authority of the Director. 8.3 The Director may make such ex gratia payments as he deems to be necessary in the interest of the Organization, provided that a statement of such payments is submitted to the Board with the annual accounts. 8.4 The Director may, after full investigation, authorize the writing-off of losses of cash, stores and other assets, provided that a statement of all such amounts written off is submitted to the Auditors with the annual accounts. 8.2 No obligations shall be incurred until allotments have been made in writing under the authority of the Director. 8.3 The Director may make such ex gratia payments as he deems to be necessary in the interest of the Centre, provided that a statement of such payments is submitted to the Steering Committee with the annual accounts. 8.4 The Director may, after full investigation, authorize the writing-off of losses of cash, stores and other assets, provided that a statement of all such amounts written off is submitted to the External Auditor with the annual accounts.

13 International Institute for Educational Planning (IIEP) Article 9 - The accounts 9.1 The Director shall maintain such accounting records as are necessary and shall submit annual accounts showing, for the financial period to which they relate: (a) (b) (c) the income and expenditure of all funds; the budgetary situation including: (i) original appropriations; (ii) the appropriations as modified by any transfers or additional appropriations; (iii) the amounts charged against these appropriations; the assets and liabilities of the Institute. He shall also give such other information as may be appropriate to indicate the current financial position of the Institute. 9.2 The annual accounts of the Institute shall be presented in dollars of the United States of America. Accounting records may, however, be kept in such currency or currencies as the Director may deem necessary. International Institute for Higher Education in Latin America and the Caribbean (IESALC) Article 7 - The accounts 7.1 The UNESCO Comptroller shall maintain such accounting records as are necessary and shall prepare for submission to the Board annual accounts showing, for the financial period to which they relate: (a) the income and expenditure of all funds; (b) the budgetary situation including: (i) original appropriations; (ii) the appropriations as modified by any transfers or additional appropriations; (iii) the amounts charged against these appropriations; (c) the assets and liabilities of the Institute. 7.2 The Director shall also give such other information as may be appropriate to indicate the current financial position of the Institute. 7.3 The annual accounts of the Institute shall be presented in dollars of the United States of America. Accounting records may, however, be kept in such currency or currencies as the Director may deem necessary. International Centre for Theoretical Physics (ICTP) Article 9 - Accounts 9.1 The Director shall maintain such accounting records as are necessary and shall submit to the Steering Committee annual accounts showing, for the financial period to which they relate: (a) income and expenditure of all funds; (b) the budgetary situation including: (i) original appropriations; (ii) appropriations as modified by any transfers or additional appropriations; (iii) the amounts charged against these appropriations; (c) the assets and liabilities of the Centre. The Director shall also give such other information as may be appropriate to indicate the current financial position of the Centre. 9.2 The annual accounts of the Centre shall be presented in United States dollars. Accounting records may, however, be kept in such currency or currencies as the Director may deem necessary.

14 International Institute for Educational Planning (IIEP) 9.3 Appropriate separate accounts shall be maintained for all Trust Funds, Reserve and Special Accounts. Article 10 - External audit 10.1 The report of the External Auditor of UNESCO shall be submitted to the Board of the Institute. International Institute for Higher Education in Latin America and the Caribbean (IESALC) 7.4 Appropriate separate accounts shall be maintained for all Trust Funds, Reserve and Subsidiary Special Accounts. Article 8 - External audit The audited accounts of the Institute, which constitute an integral part of the statement of the financial position of UNESCO, and the report of the External Auditor of UNESCO on the Institute, shall be submitted to the Board for approval. However, as the accounts of UNESCO are not audited on an annual basis, the Board may ask for the annual accounts of the Institute to be submitted for examination to the External Auditor of UNESCO. Article 9 - General provisions Unless otherwise provided in these Regulations this Special Account shall be administered in accordance with the Financial Regulations of UNESCO. International Centre for Theoretical Physics (ICTP) 9.3 Appropriate separate accounts shall be maintained for all Trust Funds, Reserve Accounts and Subsidiary Special Accounts. Article 10 - External audit 10.1 The accounts of the Centre for the biennial financial period of UNESCO shall be submitted for audit to the External Auditor of UNESCO no later than 31 March following the financial period of UNESCO to which they relate, and the opinion of the External Auditor relating to the accounts shall be submitted to the Steering Committee. These accounts shall be incorporated into the audited final accounts of UNESCO submitted for acceptance through the Executive Board to the General Conference.

15 ANNEX III STANDARD MODEL FINANCIAL REGULATIONS OF SPECIAL ACCOUNTS APPLICABLE TO INSTITUTES AND SIMILAR BODIES CREATED IN THE FRAMEWORK OF UNESCO Model A for institutes with budgetary but least financial autonomy (based on IESALC) Article 1 - Creation of a Special Account of UNESCO 1.1 In accordance with Article 6, paragraph 6, of the Financial Regulations of UNESCO, there is hereby created a Special Account for [name of Institute], hereafter referred to as the Institute. 1.2 The following regulations shall govern the operation of this Special Account. Article 2 - Financial period 2.1 The financial period shall begin on the first day of January and end on the thirty-first day of December each year. Article 3 - Income 3.1 As provided for in its Statutes, the income of the Institute shall consist of: (a) a financial allocation determined by the General Conference to cover staff costs, as well as direct and indirect programme costs; (b) voluntary contributions from States, international agencies and organizations, as well as other entities; (c) such subventions, endowments, gifts and bequests as are allocated to it consistent with the policies, programmes, or activities of UNESCO and the Institute; Model B for institutes with complete financial autonomy (based on ICTP) Article 1 - Creation of a Special Account of UNESCO 1.1 In accordance with Article 6, paragraph 6, of the Financial Regulations of UNESCO, there is hereby created a Special Account for [name of Institute], hereafter referred to as the Institute. 1.2 The following regulations shall govern the operation of this Special Account. Article 2 - Financial period 2.1 The financial period shall begin on the first day of January and end on the thirty-first day of December each year. Article 3 - Income 3.1 As provided for in its Statutes, the income of the Institute shall consist of: (a) a financial allocation determined by the General Conference to cover staff costs, as well as direct and indirect programme costs; (b) voluntary contributions from States, international agencies and organizations, as well as other entities; (c) such subventions, endowments, gifts and bequests as are allocated to it consistent with the policies, programmes, or activities of UNESCO and the Institute;

16 Model A for institutes with budgetary but least financial autonomy (based on IESALC) Model B for institutes with complete financial autonomy (based on ICTP) (d) fees collected in respect of the execution of projects entrusted to the Institute, from the sale of publications, or from other particular activities; and (e) miscellaneous income. (e) miscellaneous income. (d) fees collected in respect of the execution of projects entrusted to the Institute, from the sale of publications, or from other particular activities; and 3.2 The Director, acting under the authorization of the Director-General granted hereto, may accept income as set forth in Article 3.1 on behalf of the Institute, provided that, in any case which would involve the Institute in an additional financial liability, the Director shall obtain the prior approval of the Institute s Governing Board (hereafter referred to as the Board ), and report to the Executive Board of UNESCO. 3.3 The Director shall report to the Board on any subventions, contributions, grants, gifts or bequests accepted. Article 4 - Budget 4.1 The Director shall prepare, in a form to be determined from time to time by the Board, an annual programme and budget and shall submit it to the Board for approval. 4.2 The appropriations voted in the budget shall constitute an authorization to the Director to incur obligations and to make expenditures for the purposes for which the appropriations are voted and up to the amounts so voted. 3.2 The Director, acting under the authorization of the Director-General granted hereto, may accept income as set forth in Article 3.1 on behalf of the Institute, provided that, in any case which would involve the Institute in an additional financial liability, the Director shall obtain the prior approval of the Institute s Governing Board (hereafter referred to as the Board ), and report to the Executive Board of UNESCO. 3.3 The Director shall report to the Board on any subventions, contributions, grants, gifts or bequests accepted. Article 4 - Budget 4.1 The Director shall prepare, in a form to be determined from time to time by the Board, an annual programme and budget and shall submit it to the Board for approval. 4.2 The appropriations voted in the budget shall constitute an authorization to the Director to incur obligations and to make expenditures for the purposes for which the appropriations are voted.

17 Model A for institutes with budgetary but least financial autonomy (based on IESALC) 4.3 The Director is authorized to transfer funds between activities under the same appropriation line, and may arrange transfers of amounts between appropriation lines within the limits established by the Appropriation Resolution voted by the Board and shall report to the Board on all such transfers. 4.4 The Director is required to maintain obligations and expenditures within the level of the actual resources that become available to the General Account mentioned in Article 5.1 below. 4.5 Appropriations shall remain available for obligation during the financial period to which they relate. 4.6 The Director shall make allotments and any modifications thereon, within the limits of the Appropriation Resolution, which shall be communicated, in writing, to the officials authorized to incur obligations and make payments. 4.7 Appropriations shall remain available for 12 months following the end of the financial period to which they relate to the extent that they are required to discharge obligations for goods supplied and services rendered in the financial period and to liquidate any other outstanding legal obligations of the financial period. 4.8 At the end of the 12-month period provided for in Article 4.7 above, the then remaining unspent balance of obligations retained shall revert to the General Account mentioned in Article 5.1 below. Model B for institutes with complete financial autonomy (based on ICTP) 4.3 The Director is authorized to increase or decrease the approved appropriations on the basis of the actual resources that become available from the income mentioned in Article 3.1 above, and shall report thereon in the accounts submitted to the Board. 4.4 The Director is required to maintain obligations and expenditures within the level of the actual resources that become available to the General Account mentioned in Article 5.1 below. 4.5 Appropriations shall remain available for obligation during the financial period to which they relate. 4.6 The Director shall make allotments and any modifications thereon, within the limits of the Appropriation Resolution, which shall be communicated, in writing, to the officials authorized to incur obligations and make payments. 4.7 Appropriations shall remain available for 12 months following the end of the financial period to which they relate to the extent that they are required to discharge obligations for goods supplied and services rendered in the financial period and to liquidate any other outstanding legal obligations of the financial period. 4.8 At the end of the 12-month period provided for in Article 4.7 above, the then remaining unspent balance of obligations retained shall revert to the General Account mentioned in Article 5.1 below.

18 Model A for institutes with budgetary but least financial autonomy (based on IESALC) Article 5 - The General Account 5.1 There shall be established a General Account, to which shall be credited the income of the Institute as described in Article 3 above and which will be used to finance the approved budget of the Institute. 5.2 The balance remaining in this General Account shall be carried forward from one financial period to the next. 5.3 The uses to which this balance may be put shall be determined by the Board. Model B for institutes with complete financial autonomy (based on ICTP) Article 5 - The General Account 5.1 There shall be established a General Account, to which shall be credited the income of the Institute as described in Article 3 above and which will be used to finance the approved budget of the Institute. 5.2 The balance remaining in this General Account shall be carried forward from one financial period to the next. 5.3 The uses to which this balance may be put shall be determined by the Board. Article 6 - Custody and investment of funds 6.1 All the funds of the Institute shall be deposited without delay with banks or other depositories selected by the Director or other officer of the Institute to whom such power is delegated by the Director in accordance with the financial rules and banking procedures of UNESCO. 6.2 The Director may make such investments of moneys not needed for immediate requirements as he considers appropriate, in accordance with the investment policies of UNESCO. 6.3 Income earned on such investments shall be credited to the Miscellaneous Income of the Institute.

19 Model A for institutes with budgetary but least financial autonomy (based on IESALC) Article 6 - Trust Funds, Reserve and Subsidiary Special Accounts 6.1 The Director shall establish a Reserve Fund to cover, inter alia, the working capital and end-of-service indemnities and other related liabilities, including currency fluctuations and inflation costs; the fund shall be reviewed annually by the Board at the time of the yearly budget approval. 6.2 Trust Funds, Subsidiary Special Accounts and any other Reserve Accounts may be established by the Director, who shall report thereon to the Board. 6.3 The Director may, when necessary, in connection with the purpose of a Trust Fund, Reserve or Subsidiary Special Account, prepare special financial regulations to govern the operations of these funds or accounts and shall report thereon to the Board. Unless otherwise provided these funds and accounts shall be administered in accordance with these Financial Regulations. Model B for institutes with complete financial autonomy (based on ICTP) Article 7 - Trust Funds, Reserve Accounts and Subsidiary Special Accounts 7.1 The Director shall establish a Reserve Fund to cover, inter alia, the working capital and end-of-service indemnities and other related liabilities, including currency fluctuations and inflation costs; the fund shall be reviewed annually by the Board at the time of the yearly budget approval. 7.2 Trust Funds, Subsidiary Special Accounts and any other Reserve Accounts may be established by the Director, who shall report thereon to the Board. 7.3 The Director may, when necessary, in connection with the purpose of a Trust Fund, Reserve or Subsidiary Special Account, prepare special financial regulations to govern the operations of these funds or accounts and shall report thereon to the Board. Unless otherwise provided these funds and accounts shall be administered in accordance with these Financial Regulations. Article 8 - Internal control 8.1 The Director shall: (a) establish financial rules in order to ensure effective financial and economic administration. These rules and any changes thereto shall be submitted for approval to the Board at its meeting following their establishment or amendment; (b) cause all payments to be made on the basis of supporting vouchers and other documents which ensure that the services or goods have been received, and that payment has not previously been made;

20 Model A for institutes with budgetary but least financial autonomy (based on IESALC) Model B for institutes with complete financial autonomy (based on ICTP) (c) (d) designate the officers who may receive moneys, incur obligations and make payments on behalf of the Institute; maintain internal financial control which shall provide for regular and effective examination and for review of financial transactions in order to ensure: (i) the regularity of the receipt, custody and disposal of all funds and other financial resources of the Institute; (ii) the conformity of obligations and expenditures with the appropriations or other financial provisions which may be determined by the Board, or with the purposes of Trust Funds, Reserve Accounts and Subsidiary Special Accounts and the rules relating thereto; (iii) the economic use of the resources of the Institute. 8.2 No obligation shall be incurred until allotments have been made in writing under the authority of the Director. 8.3 The Director may make such ex gratia payments as he deems to be necessary in the interest of the Institute, provided that a statement of such payments is submitted to the Board with the annual accounts. 8.4 The Director may, after full investigation, authorize the writing-off of losses of cash, stores and other assets, provided that a statement of all such amounts written off is submitted to the External Auditor with the annual accounts.

21 Model A for institutes with budgetary but least financial autonomy (based on IESALC) Model B for institutes with complete financial autonomy (based on ICTP) Article 7 - Accounts Article 9 - Accounts 7.1 The UNESCO Comptroller shall maintain such accounting records 9.1 The Director shall maintain such accounting records as are necessary as are necessary and shall prepare for submission to the Board annual accounts showing, for the financial period to which they relate: and shall submit to the Board annual accounts showing, for the financial period to which they relate: (a) the income and expenditure of all funds; (a) income and expenditure of all funds; (b) the budgetary situation including: (b) the budgetary situation including: (i) original appropriations; (i) original appropriations; (ii) the appropriations as modified by any transfers or additional appropriations; (ii) appropriations as modified by any transfers or additional appropriations; (iii) the amounts charged against these appropriations; (iii) the amounts charged against these appropriations; (c) the assets and liabilities of the Institute. (c) the assets and liabilities of the Institute. 7.2 The Director shall also give such other information as may be appropriate to indicate the current financial position of the Institute. 7.3 The annual accounts of the Institute shall be presented in dollars of the United States of America. Accounting records may, however, be kept in such currency or currencies as the Director may deem necessary. 7.4 Appropriate separate accounts shall be maintained for all Trust Funds, Reserve and Subsidiary Special Accounts. The Director shall also give such other information as may be appropriate to indicate the current financial position of the Institute. 9.2 The annual accounts of the Institute shall be presented in dollars of the United States of America. Accounting records may, however, be kept in such currency or currencies as the Director may deem necessary. 9.3 Appropriate separate accounts shall be maintained for all Trust Funds, Reserve Accounts and Subsidiary Special Accounts.

22 Model A for institutes with budgetary but least financial autonomy (based on IESALC) Article 8 - External audit The audited accounts of the Institute, which constitute an integral part of the statement of the financial position of UNESCO, and the report of the External Auditor of UNESCO on the Institute, shall be submitted to the Board for approval. However, as the accounts of UNESCO are not audited on an annual basis, the Board may ask for the annual accounts of the Institute to be submitted for examination to the External Auditor of UNESCO. Article 9 - General provisions Unless otherwise provided in these Regulations this Special Account shall be administered in accordance with the Financial Regulations of UNESCO. Model B for institutes with complete financial autonomy (based on ICTP) Article 10 - External audit 10.1 The accounts of the Institute for the biennial financial period of UNESCO shall be submitted for audit to the External Auditor of UNESCO no later than 31 March following the financial period of UNESCO to which they relate, and the opinion of the External Auditor relating to the accounts shall be submitted to the Institute. These accounts shall be incorporated into the audited final accounts of UNESCO submitted for acceptance through the Executive Board to the General Conference. Article 11 - General provisions Unless otherwise provided in these Regulations this Special Account shall be administered in accordance with the Financial Regulations of UNESCO.