United Nations Educational, Scientific and Cultural Organization Executive Board ex

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1 United Nations Educational, Scientific and Cultural Organization Executive Board ex Item 8.3 of the provisional agenda Hundred and thirts-seventh Session 137 EX/21 PARIS, 23 August 1991 Original: English FINANCIAL REPORT AND INTERIM FINANCIAL STATEMENTS OF UNESCO AS AT 31 DECEMBER 1990 FOR THE FINANCIAL PERIOD ENDING 31 DECEMBER 1991 SUMMARY In accordance with Financial Regulation 12.10, the interim financial report of the Director-General and supporting unaudited financial statements of UNESCO as at 31 December 1990 for the financial period ending 31 December 1991 are hereby transmitted to the Executive Board. Decision required: paragraph This document incorporates document 26 C/53l annexed hereto containing the report of the Director-General and the unaudited interim financial statements of UNESCO as at 31 December 1990 for the financial period ending 31 December In accordance with Financial Regulation 12.10, the Executive Board is required to examine the interim financial report and supporting unaudited financial statements and to forward them to the General Conference with such comments as it deems appropriate. 3. The Executive Board may wish to adopt a decision along the following lines : The Executive Board, 1, Havinp examined document 137 EX/21, 2. Decides to transmit the financial report of the Director-General together with the interim financial statements of UNESCO as at 31 December 1990 for the financial period ending 31 December 1991 t0 the General Conference. 1. This document has been distributed to Member States.

2 igi General Conference - Twenty-sixth Session, Paris C. Item 9.3 of the provisional aaenda August 1991 Original: English FINANCIAL REPORT AND INTERIM FINANCIAL STATEMENTS OF UNESCO AS AT 31 DECEMBER 1990 FOR THE FINANCIAL PERIOD ENDING 31 DECEMBER 1991 SUMMARY In accordance with Financial Regulation 12.10, the interim financial report of the Director-GeneraluN~s~osupporting unaudited financial statements of as at 31 December 1990 for the financial period ending 31 December 1991 are hereby transmitted to the General Conference. Decision required: paragraph This document incorporates document BOG/107 annexed hereto containing the report of the Director-General and supporting unaudited financial statements of UNESCO as at 31 December 1990 for the financial period ending 31 December The document is also being submitted to the Executive Board at its 137th session and the decision and comments, if any, of the Board will be reported to the General Conference as an addendum to this document.. 3. The General Conference is invited to receive and accept this report and these financial statements. It may wish, therefore, to adopt a resolution along the following lines: The General Conference, Havinq examined document 26 C/53 and Add., B R ' the financial report of the Director-General togeker with the interim financial statements of UNESCO as at 31 December 1990 for the financial period ending 31 December 1991.

3 BOG/107 PARIS, 30 August 1991 Original: English UNITED NATIONS EDUCATIONAL, SCIENTIFIC AND CULTURAL ORGANIZATION FINANCIAL REPORT AND INTERIM FINANCIAL STATEMENTS OF UNESCO AS AT 31 DECEMBER 1990 FOR THE FINANCIAL PERIOD ENDING 31 DECEMBER 1991

4 BOC1107 CONTENTS Financial Report of the Director-General on the interim accounts of UNESCO as at 31 December 1990 for the financial period ending 31 December 1991 Significant accounting policies of UNESCO * Financial Statements as at 31 December 1990 together with supporting schedules as follows: Statement I UNESCO General Fund - Interim status of appropriations as at 31 December 1990 for the financial period ending 31 December 1991 Statement Statement Statement Statement Statement Statement Statement Statement Statement Statement II III IV V VI VII/A VII/B VIII IX X UNESCO General Fund - Interim income and expenditure account as at 31 December 1990 for the financial period ending 31 December 1991 UNESCO General Fund - Statement of assets and liabilities as at 31 December 1990 Working Capital Fund - Statement of assets and principal of the Fund as at 31 December 1990 Revenue Generating Activities - Income and expenditure account, Statement of assets and liabilities as at 31 December 1990 Welfare Funds - Income and expenditure account, Statement of assets and liabilities as at 31 December 1990 Special Accounts and Trust Funds - Balances as at 1 January 1990, Receipts and disbursements for the year 1990 and balances as at 31 December 1990 Special Accounts and Trust Funds - Summary statement of assets and liabilities as at 31 December 1990 Special Account for the International Institute for Educational Planning - Status of appropriations; Income and expenditure account; Statement of assets and liabilities as at 31 December 1990 United Nations Development Programme - Status of funds as at 31 December 1990 Programme Support Costs for Trust Funds and Special Accounts - Income and expenditure account, Statement of assets and liabilities as at 31 December 1990 Schedule 1 Cash in hand and at bank as at 31 December Working Capital Fund, UNESCO General Fund Annex 1.1 Bank current accounts as at 31 December 1990

5 BOG/107 - page 2 Schedule 2 Schedule 3 Schedule 4 Schedule 5 Contributions receivable from Member States as at 31 December 1990 General Fund - Due from/to other funds as at 31 December 1990 Capital assets and investment in capital assets as at 31 December 1990 Budgetary surpluses as at 31 December 1990 Annex 5.1 Surpluses on budgets of previous financial periods as at 31 December 1990 Appendix 1 Appendix 2 UNDP expenditure by country and region for the year ended 31 December 1990 General Fund - Analysis of specific assets and liabilities headings as at 31 December 1990

6 BOC110'7 - page 3 FINANCIAL REPORT OF THE DIRECTOR-GENERAL ON THE INTERIM ACCOUNTS OF UNESCO AS AT 31 DECEMBER 1990 FOR THE FINANCIAL PERIOD ENDING 31 DECEMBER Introduction 1. In accordance with the provisions of Financial Regulation 11.2, the Director-General presents herewith his financial report on the unaudited interim accounts of UNESCO as at 31 December 1990 for the financial period ending 31 December 1991, which covers the regular programme and all extra-budgetary accounts including the United Nations Development Programme. Proqramme expenditure - all sources of funds 2. Programme expenditure for 1990, as shown on the following table, covers the sources of funds listed below: (a) Regular and Participation Programmes (Statement I); (b> United Nations Development Programme (project costs) (Statement IX); cc> Special Accounts and Trust Funds (Statement VII/A): (i) United Nations sources; (ii) Other extra-budgetary operational programmes. - Expenditures incurred on Revenue Generating Activities (Statement V>; Welfare Funds (Statement VI>; Non-Operational Special Accounts and Trust Funds (Statement VII/A); the International Institute for Educational Planning (Statement VIII>; and Programme Support Costs for Trust Funds and Special Accounts (Statement X1 are not included in this analysis. Distribution of 1990 prosramme expenditure by source of funds -. Programme Expenditure $ &rcentase % Regular and Participation Programmes (at current rates of exchange) 194,115,832 United Nations Development Programme 33,086,517 United Nations extra-budgetary sources other than UNDP 14,505,890 Other extra-budgetary operational programmes 32,831,181 Total 274,539, ~

7 BOG/107 - page 4 STATEMENT I UNESCO General Fund Interim status of appropriations as at 31 December 1990 for the financial period ending 31 December The appropriation of US $378,788,000 for adopted by the General Conference at its twenty-fifth session was increased by an amount of US $401,302 resulting from donations and special contributions, thereby increasing the total appropriation as at 31 December 1990 to US $379,189, At its 134th session the Executive Board approved a proposal for budget reductions submitted by the Director-General to balance the budget for These reductions required between-line transfers in order to absorb the following mandatory expenditure in for which provision had not been made in 25 C/5 Approved: Amortization of the Account for End-of- Service Grants and Indemnities 300,000 Repayment to the Working Capital Fund of unamortized construction costs 4,025,OOO Mandatory increases in the Organization's contribution to the Medical Benefits Fund 3,191,ooo 8 Total 7,516,OOO Further budget reductions of US $1,600,000 were still pending at 31 December 1990 to finance additional requirements to keep the Medical Benefits Fund operational in The Executive Board also authorized two withdrawals amounting to US $24,178,900 in 1990, out of the approved provision of US $25,928,200 under Part VII of the budget (Anticipated Cost Increases), for the purpose of: (i) financing statutory and inflation increases in staff salaries and allowances (ii) meeting increases in the costs of goods and services 8 21,606, Total 24,178,900 After taking into consideration these withdrawals, the balance remaining at 31 December 1990, of US $1,749,300 may be used by the Director-General with the approval of the Executive Board to meet additional costs due to inflation in 1991.

8 BOG/107 - page 5 STATEMENT II UNESCO General Fund Interim income and expenditure account as at 31 December 1990 for the financial period ending 31 December Statement II shows the full income anticipated for the two-year financial period and voluntary donations to the regular budget received in 1990 totalling US $401,302 reported to the Executive Board. As explained in a footnote to the statement, Member States are required to remit one half of their assessed contribution in each year of the biennium. Only part of the other income estimated is expected to be received in each of the two years. 7. Graphic Figure I on the following page shows the regular budget contributions brought to account each month during 1990, in respect of the one half of the contributions payable by Member States during the first year of the financial period. 8. As shown on Schedule 2, payment of contributions as at 31 December 1990 in respect of the year 1990 amounted to US $132.3 million against an assessed total of US $182.6 million which represents per cent of the total payable during the year. The comparative figures in respect of the year 1988 were US $148.9 million against an assessed total of US $168.0 million, which represents per cent of the total payable during the first year of the preceding biennium. 9. This serious reduction in the level of contributions received resulted in the need for both internal and external borrowing as at 31 December As in previous biennia, Statement II of the interim accounts of UNESCO incorporates miscellaneous income budgeted for the whole two-year financial.- period. A detailed breakdown of the miscellaneous income received during 1990 compared to the budget for the whole financial period is as follows: Estimated Actual Excess miscellaneous miscellaneous (receivable) income income in 1991 ( ) 1990 $ $ $ (i> Miscellaneous income refunds of previous years' expenditure 250, ,290 23,290 Transfer from the Public Information Liaison and Relations Fund 1,000 (1,000) Contributions from Associate Members 150, ,165 6,165 Interest on investments and exchange adjustments (net> 120,000 2,595,256 2,475,256 Other receipts 39,975 28,851 (11,124) Subtotal 560,975 3,053,562 2,492,587

9 BOG/107 - page 6 (ii) (iii) Contribution of new Member States for Contributions from the United Nations Development Programme for agency support costs for Estimated Actual Excess miscellaneous miscellaneous (receivable) income income in 1991 ( ) 1990 $ $ $ 17,066 17,066 9,100,000 4,205,711 (4,894,289) (iv) Amortization of the Account for End-of-Service Grants and Indemnities 4,025,OOO 4,025,OOO (VI Excess of other income over the estimates for , ,025 Total 13,935,ooo 11,550,364 (2,384,636) The entry under interest on investments and exchange adjustments (net) is principally in excess because of gains on exchange on holdings in French francs contributed under the split-level assessment system. Most of this excess recorded under this heading is attributable to fluctuation of the French franc and as such should in theory be largely eliminated by offset of the debit balance under Part VIII, currency fluctuation of the budget, at the time of the closure of accounts for the current biennium.

10 3c GRAPHIC FIGURE I / * REGULAR BUDGET CbdTRIBU I rdns BROUGHT TO ACCOUh I BY tuonth hring 1990 IN RESPECT OF THE AMOUNT TO BE REMITTED IN 1990 FOR THE FINANCIAL PERIOD 1990-l e = m i E!.- 0 = c 15.- : 5.G 5 IO s JAN FEE3 MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Months Note: Contributions received in French Francs have been translated at the approved budget rate of $ 1.oo = FFR 6.40

11 BOG/107 - page 8 STATEMENT III UNESCO General Fund Statement of assets and liabilities as at 31 December Schedule 1 to these financial statements shows that of the US $14,875,138 of cash in hand and at banks, an amount of US $4,599,065 was held at Headquarters in current accounts and a further amount of US $6,060,529 was held on deposit. The amount placed on deposit is principally (95 per cent) in United States dollars. The external bank borrowings for regular budget requirements on the other hand were all in French francs. 12. As in the previous year, most UNESCO current accounts maintained at banks were pooled by currency irrespective of the source of funds, in order to reduce the overall number of bank accounts required. A breakdown of the currencies held in current accounts by UNESCO for all programmes and accounts appears on Annex 1.1 to this document. Funds in currencies other than United States dollars have been translated at the official operational exchange rates prevailing for the United Nations system at 31 December Canital assets (Schedule 4) 13. The construction costs of the Headquarters premises at place de Fontenoy are shown at US $15,960,192. The land on which the buildings are located is rented from the French Government at a nominal rent of FF 10 per annum and the land lease covers a period of 99 years starting with the year The balance of the loan due to the French Government as at 31 December 1990 for the construction of the place de Fontenoy premises amounting to FF 153,290 (equivalent to US $30,597) will be repaid in The cost of improvement and extension of conference facilities and extension of office accommodation at Headquarters are recorded at US $12,556,970. In accordance with 21 C/Resolution 34.21, the General Conference authorized the Director-General to make use of the Organization's own cash balances for the financing of these costs. However, due to the treasury situation of the Organization at 31 December 1990, no funds were available either from the General Fund or the Working Capital Fund to make any such advances and consequently the unamortized construction costs amounting to US $6,474,068 at 31 December 1990 that relate to this investment were financed from borrowed funds entailing interest costs. Such interest, amounting to US $49,834 at 31 December 1990, will be added to the capital asset cost of this project and amortized in the biennium Also included under the heading of capital assets are the construction costs of the Headquarters fifth building US $7,898,954 (1 rue Miollis). The land on which the fifth building is located is rented from the French Government at a nominal rent of FF 100 per annum and the land lease covers a period of 84 years starting from 1 January The Headquarters sixth building has been capitalized for an amount of US $30,425,340 represented by construction costs of US $22,966,238 and interest on loans of US $7,459, The construction costs of the industrialized building, situated at rue Francois Bonvin, have been capitalized at US $703,766, which represents the total expenditure of FF 4,627,092 incurred for that building, translated at variable rates of exchange. 18. The Chateau du Bois du Rocher has been valued at FF 10 million corresponding to the valuation reported to the 132nd session of the Executive Board.

12 BOG/107 - page 9 Interest set aside for the incentive scheme for prompt pavment of contributions 19. In accordance with 24 C/Resolution 35.2, an incentive scheme has been introduced effective 1 January 1988 for a trial period of four years, whereby interest earned on investments of the General Fund for each financial period, excluding investments of the Working Capital Fund, shall be dii stributed to Member States that had paid their contributions in full for each year of the financial period in question. The appropriate share of interest so calculated shall be distributed to each eligible Member State at the end of the first year of the two-year financial period following that in which such interest was brought to account. As at 31 December 1990, a total of US $,4,643,032 has been set aside under this incentive scheme of which an amount of US $3,732,651 relating to was deducted from contributions assessed on eligible Member States for The balance of US $910,381 together with interest earned on investments of the General Fund in 1991 shall be distributed to each eligible Member State at the end of Other assets and liabilities 20. Analyses of the following assets and liabilities headings may be found in the information Appendix 2 at the end of this financial report as follows: (i) Accounts receivable and other debit balances; (ii) Sundry credit balances; (iii) Deferred income. STATEMENT IV Working Capital Fund 21. At its twenty-fifth session, the General Conference decided to establish the level of the Working Capital Fund at US $15 million for the financial period (25 C/Resolution 34.1). 22. The cash position of the General Fund at the end of each month of the year 1990, net of advances for construction accounts, is shown on Graphic Figure II on the following page. The cash position of the Organization based on the total resources of the General Fund together with the Working Capital Fund (excluding extra-budgetary resources> is also shown on the same graph. STATEMENT V Revenue Generating Activities 23. Statement V groups, in tabular form, those special accounts which have been established over the years to identify certain activities that support themselves from the revenue they generate. The Organization retains residual rights of ownership in the accumulated surpluses of these accounts. The Special Accounts for Documents and Publications Services, for 'Interpretation Services and for Micrography have been included in this statement for the first time to provide greater visibility to accounts that are described as 'self-financing', in answer to a recommendation of the External Auditor.

13 BOG/l 07 - page The following are the results of the operation of these funds for the year 1990 and compared to 1989 (deficits are shown between brackets): Public Information Liaison and Relations Fund 334, ,799 Publications and Auditory and Visual Materials Fund (803,506) (302,959) Utilization of Headquarters Fund 246,546 70,736 Special Account for Documents and Publications Services (65,745) 144,808 Special Account for Interpretation Services (36,455) (24,648) Special Account for Micrography (487) (23,446) Total (325,505) 70,586 The deficit on the operations of the Publications and Auditory and Visual Materials Fund has increased from US $303,000 in 1989 to US $804,000 in This deficit has been absorbed by the accumulated surplus brought forward from prior financial periods. This situation, which principally relates to the Courier sub-account of the Fund, has led the Director-General to take a set of measures to redress its financial situation. Special attention is being paid to improving the management and administration of the Courier sub-account with the objective that the deficit trend is eliminated as from The operational deficits incurred on other revenue generating activities have been absorbed by surpluses brought forward from previous biennia.

14 30 / GRAPHIC FIGURE II 1 CASH POSITION OF THE REGULAR BUDGET BY MONTH DURING if.- 0 = (45.5) -50 J I I I I I I I I I I i JAN F/33 MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Months

15 BOG/107 - page 12 STATEMENT VI Welfare Funds 25. This statement groups, in tabular form, accounts that have been established in connection with staff welfare activities. A further subgrouping has been made to differentiate between the Medical Benefits Fund, Staff Comoensation Fund and Staff Housinq Loan Fund, which are funded bv the Organization (50 per cent only for the Medical Benefits Fund since members contribute on an equal basis with the Organization), and staff funds which support themselves from the revenue they generate, namely the UNESCO Staff Savings and Loan Service, UNESCO Commissary Fund and UNESCO Restaurant Services. 26. The operational results of the 1990 compared to 1989 are as follows UNESCO Funds Medical Benefits Fund Staff Compensation Fund Staff Housing Loan Fund (interest paid to General Fund) funds shown on Statement VI for the year (deficits are shown between brackets): 1990 $ 1,226,233 (673,423) 19,713 41,247 86,289 73,263 Staff Funds UNESCO Staff Savings and Loan Service 25,022,794 19,197,174 UNESCO Commissary UNESCO Restaurant Fund Services 102,604 (63,968) 207, ,028 Total 26,664,652 18,784,321 The Medical Benefits Fund has recorded an operating surplus of US $1,226,233 at the end of 1990 as against a deficit of US $673,423 shown in This improvement mainly results from cost containment measures taken by the Board of Management and from increases in contributions to the Fund (25 C/Resolution 42). The operating results of the Commissary show a surplus of US $102,604 for 1990, which is the first annual surplus realized by the Commissary since With the implementation of its recovery plan, the Management Committee of the Commissary is confident that this improvement will continue. The results of the operation of the Restaurant also continue along the improved trend of STATEMENT VII/A Special Accounts and Trust Funds 27. This statement presents the balances at the beginning of the year, the receipts and disbursements effected during 1990 and the balances at 31 December 1990 in respect of special accounts (mainly financed from assessed or voluntary government contributions) and trust funds administered by the Organization.

16 BOG/107 - page A comparison of the contributions and other amounts received, disbursements made and the account balances at 31 December 1990 over the last three years is provided below: y3j.b (in thousands of US dollars) Opening balance 87,343 75,264 69,171 Receipts (including interest) 61,890 54,999 46, , , ,470 Disbursements 51,262 42,920 40,206 Closing balance 97,971 87,343 75,264 STATEMENT IX United Nations Development Programme 29. Statement IX presents the status of funds of the United Nations Development Programme (UNDP) activities executed by UNESCO flor 1990 and Appendix 1 gives the breakdown of expenditure by country In 1990 expenditure for UNESCO-executed UNDP projects was US $33,086,517 which is an increase of 4.1 per cent over A comparison of.the breakdown of project delivery over the last three years is: (in thousands of us dollars) % -w Project personnel 13, Training 8, Equipment 6, Subcontracts 3, Miscellaneous 1, Total 33, (in thousands of us dollars) % 12, , , , , , ~ ~ (in thousands of us dollars) % 12, , , , , ~ 30,

17 BOC page 15 SIGNIFICANT ACCOUNTING POLICIES OF UNESCO 1. ALL FUNDS (Statements I to IX) (a> UNESCO accounts are maintained in accordance with the Financial Regulations of UNESCO as adopted by the General Conference, the rules formulated by the Director-General as required under the regulations, special regulations for Trust Funds, Reserve or Special Accounts established by the Director-General, procedures issued in the UNESCO Manual, and administrative instructions issued by the Comptroller. (b) The financial period of the Organization is a biennium and consists of two consecutive calendar years, beginning with an even-numbered year. (c) UNESCO does not present a consolidated statement of income and expenditure or assets and liabilities but a note to the statement of assets and liabilities of the General Fund records that UNESCO has residual rights of ownership in all self-financing funds and those welfare funds not held in a trustee capacity. (d) Translation of currencies. The accounts of the Organization are presented in United States dollars. Accounts maintained in other currencies are converted into United States dollars at the time of the transactions at operational rates of exchange established for United Nations programmes as applied by UNESCO. At year-end, accoulnts expressed in currencies other than United States dollars are translated at the applicable rates of exchange then prevailing. Unliquidated obligations of not less than $2,000 incurred in currencies other than United States dollars are revalued at rates of exchange prevailing at the closure of the accounts. 2. GENERAL FUND INCLUDING REGULAR BUDGET (Statements I to III) (a) The income and expenditure and assets and liabilities are recorded and reported on the accrual basis of accounting. -- (b) No provision is made for accrued annual leave, repatriation grant entitlements or for the Organization's share of after-service contributions of associate participants to the Medical 13enefits Fund since such costs are charged to the budget of the financial period when paid. (c) Disbursements in French francs are translated at the standard rate of FF 6.45 to one US $1 and the difference between the translation at standard and operational rates of exchange is transferred to a separate appropriation line of the budget; unliquidated obligations are similarly brought to account at the closure of each year. (d) Contributions to the budget are assessed in French francs and United States dollars. Any difference between the equivalent in United States dollars of the contributions payable in French francs converted at the approved budget rate and the equivalent in United States dollars of these contributions converted at the United Nations operational rate of exchange applicable at the time when these contributions are credited to a bank account of the Organization is debited or credited to Part VIII of the regular budget. Contributions assessed in French francs for a financial period that remain unpaid at the time of assessment of contributions for the subsequent financial period are considered as due and payable in United States dollars thereafter.

18 BOCl107 - page 16 (e> Income other than assessed contributions or donations to the budget: (i) Interest earned on investments of the General Fund, excluding investments of the Working Capital Fund, is distributed to eligible Member States under an incentive scheme for prompt payment of contributions. Interest on investments of the resources of the Working Capital Fund is reported as miscellaneous income; on the closing of the accounts at the end of each financial period, the balance of the exchange variation account, is added to or deducted from such interest. (ii) Refunds of expenditure which had been charged in the same financial period against the budgetary accounts are credited against the same accounts, but refunds of expenditure relating to prior financial periods are credited to miscellaneous income. (iii) All moneys accepted for purposes specified by the donor have been treated as Trust Funds or Special Accounts. However, moneys accepted in respect of which no purpose is specified have been treated as miscellaneous income. (iv> The proceeds from the sale of surplus property are credited to miscellaneous income. (VI Contributions from the United Nations Development Programme to UNESCO for Agency Support Costs of the current financial period are treated as other income because related support costs expenditure is integrated with that of the regular budget. (vi> Any excess or deficit in miscellaneous income as compared with that estimated is carried forward and adjusted against miscellaneous income of the first available future financial period. (f) Fixed assets - furniture, equipment and motor vehicles are not included in the assets of the Organization. Acquisitions are charged against budgetary accounts in the year of purchase. However, the total cost price of all fixed assets held by UNESCO is shown as a footnote to Statement III. (g> Capital assets - buildings are reported under the historical cost convention except for donated properties where land is shown at nominal valuation and structures at a valuation. No provision is made for depreciation of buildings. Major construction in progress is capitalized when a project is completed. Maintenance and repairs are charged against the appropriate budgetary accounts. 3. SPECIAL ACCOUNTS AND TRUST FUNDS (Statement VII> (a> These are reported on the receipts and payments basis of accounting, except for interest receivable on pooled bank deposit accounts which is reported on the accrual basis. (b) Provision for repatriation grant entitlements is established in a terminal payments fund by appropriate transfers from Special Accounts and Trust Funds. (c> A Funds-in-Trust Overhead Costs Account has been established to permit central administration of support costs charged to Trust Funds and Special Accounts in accordance with relevant agreements and/or financial regulations. A separate support costs account is maintained, however, for the United Nations Fund for Population Activities.

19 BOCl page UNITED NATIONS DEVELOPMENT PROGRAMME (Statement IX> (a) The accounts for the programme are presented in accordance with UNDP accounting policies and in the form prescribed by UNDP. Expenditure is reflected on an accrual basis and income on the basis of cash drawn to finance project and support cost expenditure. (b> The following criteria are applied for the recording of expenditure and unliquidated obligations by components in project accounts at year-end: Expert project and other personnel: Costs relating to the period of contractual service between 1 January and 31 December of the current year. Travel on official business: Subcontracts: Fellowships: Cost of travel taking place in the current year; as well as cost of travel which commences8 before the end of the current year but extends i17to the next year. Payments falling due in the current year according to the terms of the contract or payment schedule. Cost of the fellowship from the anticipated date of commencement of study to completion of study or 31 December of the current year, whichever is earlier. Group training: The full cost of any training activity which was held in the current year. In the case of meetings beginning in the current year and ending1 in the next year, the full cost is charged to the current year. Equipment: Miscellaneous: The full cost of purchase orders and contracts entered into prior to the end of the current year, based upon a signed contractual agreement or a firm irrevocable order placed with the supplier whether or not delivery and/or payment have taken place, or been scheduled to take place in the current year. Cost of events occurred (e.g. hospitality), goods or services delivered or firm orders placed for delivery in current year. cc> Unliquidated obligations remain available for 12 months following the end of the year they are established to meet payments for related liabilities. At the end of that 12-month period savings or over-expenditure resulting from the liquidation of prior year's obligations are credited or debited to the specific project which had originally been charged when the obligation was established. In those cases where it is known that a liability to pay still exists, the amount required for payment is retained in a budgetary-controlled account. cd> Commitments for future years are not included in the financial statements, but are controlled through separate project accounting records.

20 BOG/107 - page 18 (e> No provision is made for accrued annual leave or repatriation grant entitlements since such costs are charged to the programme when paid. (f) Equipment purchased for projects is charged as current expenditure, which includes purchase costs, shipping and insurance. For control purposes, inventory records are kept, at purchase costs, outside the accounts: these. records cover all equipment classified as items of equipment that have a serviceable life of at ieirs and in respect of which the cost per item exceeds US $400, non-expendable, least five 5. OTHER FUNDS (Statements V, VI, VII and X1 (a> The income and expenditure and assets and liabilities of these funds are recorded and reported on the accrual basis of accounting. (b> No provision is made for accrued annual leave or repatriation grant entitlement since such costs are charged to the budget of the financial period when paid.

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