Summary

The core mission of the United Nations Development Program is to help countries achieve sustainable human development. The program, which is the central financing and coordinating mechanism for development assistance within the U.N. system, provides advisory services, training, and equipment across various sectors, including agriculture and international trade, to developing nations. In 1990, GAO reported on several program weaknesses. (See GAO/NSIAD-90-64.) This report analyzes (1) actions taken in response to recommendations made in the 1990 report to improve coordination, project evaluation, and the allocation of resources; (2) the amounts and the sources of program budget support; (3) the cost of administering the program's headquarters and overseas operations and the extent to which the program has reduced these expenses; (4) the system of audit and internal controls that the program uses to oversee its operations; (5) the criteria that the program uses to graduate recipient countries from assistance; and (6) the extent to which program projects coincide with U.S. national security and foreign policy objectives.

GAO noted that: (1) since the publication of GAO's 1990 report, UNDP has strengthened its coordination of U.N. programs and activities, begun to improve its project evaluation system, and increased funding to the world's least developed countries; (2) among other things, UNDP has been assigned new coordination responsibilities, has strengthened the role of the U.N. resident coordinator in country offices, and has begun to enforce requirements to conduct project evaluations; (3) however, these efforts have not fully addressed all problems in the areas of coordination and evaluation; (4) UNDP's total budget was approximately $1.9 billion in 1995 and was funded primarily by donor nations' voluntary contributions; (5) although contributions to UNDP's budget have grown since 1966, the U.S. contribution to UNDP has declined as a percentage of the total budget; (6) GAO also noted that since 1992, UNDP has decreased its administrative expenses, primarily through reductions in staff; (7) GAO found the relative differences in UNDP and AID compensation expenditures varied by location and grade level, but UNDP's expenditures were generally greater than AID's for comparable grade levels, except at the higher grade levels; (8) UNDP's operations and programs are audited by its internal Division for Audit and Management Review and biennially by the U.N. Board of Auditors; (9) although UNDP has increased the size of its internal audit staff, the number of internal audits conducted annually, and has sought to improve its internal controls, the U.N. Board of Auditors has continued to raise concerns over audit coverage; (10) the board has reported that the internal audit staff is still too small to provide adequate audit coverage, strategic audit planning is insufficient, and not enough projects executed by recipient governments are being audited; (11) UNDP's single criterion for graduating countries from being a net recipient of assistance is based on per capita gross national product (GNP); (12) according to UNDP documents, this basis is problematic because per capita GNP assumes an exactitude that does not actually exist; (13) UNDP's mission is consistent with U.S. national security and foreign policy objectives, and its projects promote many of the same goals in developing countries that the U.S. government tries to advance; (14) however, UNDP does fund projects in countries that are covered by U.S. statutory funding restrictions; and (15) in accordance with these restrictions, the State Department withholds from the U.S. contribution to UNDP the U.S.' proportionate share for projects in these countries.