WIPO Working Group Recommends Consideration Of Audit Committee

Editor’s Note: This article was modified on 6 June, 2005.

A working group at the World Intellectual Property Organisation on Wednesday agreed to recommend the consideration of a new committee to conduct independent audits of the U.N. body.

The effort in some ways reflects a wider trend across the United Nations toward greater financial accountability. WIPO has come under greater scrutiny in recent weeks as a U.N. inspection team issued a report critical of WIPO’s budget management, and a senior WIPO official was linked in press reports to a broader U.N. financial accountability investigation.

The working group was designated by the WIPO Program and Budget Committee last month, and the recommendation will go the WIPO General Assembly in the fall. The closed working group meeting was said by government participants during and afterward to be relatively non-controversial, but there were disagreements to be worked out. The meeting was scheduled for Monday and Tuesday but negotiators required half of Wednesday to finish their work.

The meeting started with a general discussion on Monday, asking whether an audit committee is needed, and if so what should be its mandate, composition and period of operation, according to sources. A “discussion paper on best practice guidelines” from the United Kingdom was circulated during the meeting. Also distributed at the meeting was the October 2004 resolution to establish an audit committee at the World Meteorological Organization, and the September 2004 terms of reference of the oversight committee of the U.N. High Commission for Refugees.

Officials from several developed and large developing countries said up front that they strongly favored the creation of the committee. The sense of agreement between the nations differed from the acrimony that followed the April Program and Budget Committee meeting that ordered this meeting. Some developing countries charged there was procedural wrong-doing in the conclusion of the April meeting.

On Tuesday, Dirk Kranen, the German chair of the working group, introduced a draft proposal he said was a summing up on the outcome of the discussion of the first day. This draft was accepted by delegates as the basis for the comprehensive drafting discussion, sources said.

The final version of the audit committee proposal includes terms of reference for promoting internal control, focusing resources, and monitoring audit performance that strongly reflect the U.K. proposal. These include calls for systematic appraisal of management’s actions, reviewing financial regulations, reviewing management’s risk assessments, and overseeing WIPO’s proposed large-scale construction of a new building.

The African Group got agreement in the meeting on the inclusion of several points, according to sources. African nations, coordinated by Morocco, stressed that the working group’s report recommend the “consideration” by the General Assembly of the establishment of an audit committee, rather than a recommendation outright.

The African nations also established that if the General Assembly does decide to form an audit committee, then the committee should take into account geographical distribution in addition to skills and qualifications. The committee would consist of nine members, seven elected by the Program and Budget Committee as well as one senior oversight manager from within the U.N. system and one from outside the U.N.

This is a shift from the original chair’s proposal which called for membership to consist of the Program and Budget Committee chair and two vice-chairs, as well as one senior oversight manager from within the U.N. system and one from outside the U.N.

The U.K. proposal, meanwhile, had loosely suggested a five-member committee of “independent non-executive” members holding the right to close the meeting to any other representation including from WIPO senior management. In the final version, it states that appropriate WIPO officials or other people may attend if required by the committee.

In addition, the African countries inserted a provision in the proposal recognizing the existing mechanisms for control and oversight in WIPO, but acknowledged that further control and oversight mechanisms to complement the existing ones might be necessary. This was a change from the original chair’s proposal which stated, “Convinced that WIPO needs effective control and oversight mechanisms.”

In one other area, the African Group did not want any reference to pre-established notions about WIPO’s financial practices so as to avoid pre-judgment. The U.K. proposal had included as a committee task to “encourage the development of an anti-fraud culture through its scrutiny function.”

Some countries raised concern that this might suggest that wrongdoing has taken place at WIPO, which has not been proven. This reference was substituted by a clause calling for the committee to contribute “to the maintenance of the highest possible standards of financial management and the handling of any irregularities.”

Some countries said they were upset at the outset of the meeting because, they said, the chairman suggested starting with his proposal rather than the U.K. proposal, using the latter only as a reference. The chair’s was seen by those countries as less stringent and they argued it had not been agreed to procedurally.

However, most countries were satisfied that the working group was able to agree within only one session on a concrete proposal for an audit committee which will be discussed by the General Assembly in September.