US embassy cable - 02ROME2387

FAO FINANCE COMMITTEE NOTES DETERIORATING UNCLASSIFIED

Identifier: 02ROME2387
Wikileaks: View 02ROME2387 at Wikileaks.org
Origin: Embassy Rome
Created: 2002-05-15 15:30:00
Classification: UNCLASSIFIED
Tags: AORC EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR WFPOAORC WFPOAORC WFPOAORC WFPO
Redacted: This cable was not redacted by Wikileaks.
This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 04 ROME 002387 
 
SIPDIS 
 
FROM U.S. MISSION TO UN AGENCIES IN ROME 
 
STATE FOR IO/EDA AND IO/S 
 
PARIS FOR UNESCO 
 
E.O. 12958:  N/A 
TAGS: AORC, EAGR, EAID, EFIN, KUNR, EAGR, EAID, EFIN, KUNR, EAGR, EAID, EFIN, KUNR, EAGR, EAID, EFIN, KUNR, WFPOAORC, WFPOAORC, WFPOAORC, WFPO 
SUBJECT: FAO FINANCE COMMITTEE NOTES DETERIORATING 
                       UNCLASSIFIED 
 
PAGE 02        ROME  02387  01 OF 04  151543Z 
FINANCES OF FAO; PROGRAMME COMMITTEE EVALUATES SPECIAL 
PROGRAM FOR FOOD SECURITY 
 
1.  SUMMARY: THE FAO FINANCE AND PROGRAM COMMITTEES MET 
AT FAO HEADQUARTERS IN ROME MAY 6-10.  THE DIRECTOR 
GENERAL EMPHASIZED THE LACK OF RESOURCES APPARENT IN THE 
DOCUMENTS BEFORE THE COMMITTEES, FORESHADOWING A CALL FOR 
MORE INVESTMENT IN AGRICULTURE AT THE UPCOMING WORLD FOOD 
SUMMIT; FIVE YEARS LATER. THE JOINT COMMITTEE CONSIDERED 
INEQUITIES IN THE EXPANDING FAO COUNTRY REPRESENTATIVE 
PROGRAM.  WE WILL REPORT SEPTEL ON THE PROGRAMME 
COMMITTEE MEETING. 
 
2.  THE FINANCE COMMITTEE, OF WHICH THE UNITED STATES IS 
A MEMBER, NOTED THE DETERIORATING FINANCIAL HEALTH OF THE 
ORGANIZATION DUE TO GROWING ARREARS, DECLINING INVESTMENT 
INCOME AND ACCOUNTING LOSSES DUE TO FOREIGN EXCHANGE RATE 
DEVELOPMENTS.  THE FAO SECRETARIAT ALSO REPORTED ON 
PROGRESS ON HUMAN RESOURCE MANAGEMENT, IMPLEMENTATION OF 
EXTERNAL AUDIT RECOMMENDATIONS AND THE NOW INFAMOUS 
ORACLE (INFORMATION TECHNOLOGY) PROJECT.  THE COMMITTEE 
AGREED TO REVIEW AUDITS OF THE NEW FAO PARTNERSHIP WITH 
THE GLOBAL ENVIRONMENT FUND (GEF), AND DISCUSSED WORLD 
FOOD PROGRAM REPORTS, INCLUDING ON INDIRECT SUPPORT COST 
(ISC) RATES. 
 
3.  THE SPECIALIZED COMMITTEES ARE TENTATIVELY SCHEDULED 
TO MEET SEPTEMBER 9-13, 2002.  END SUMMARY. 
 
4.  NEW COMMITTEE COMPOSITION WAS REGIONALLY BALANCED. 
 
                       UNCLASSIFIED 
 
PAGE 03        ROME  02387  01 OF 04  151543Z 
THE FINANCE AND PROGRAM COMMITTEES ARE COMPOSED OF 
REPRESENTATIVES OF EACH REGIONAL GROUP.  THE FINANCE 
COMMITTEE WAS CHAIRED BY CHILE AND INCLUDED, IN ADDITION 
TO THE UNITED STATES, REPRESENTATIVES OF JAPAN, KUWAIT, 
PAKISTAN, SENEGAL, SWITZERLAND, TANZANIA, AND THE UNITED 
KINGDOM.  THE PROGRAM COMMITTEE WAS CHAIRED BY THE DUTCH 
PERMREP AND INCLUDED REPRESENTATIVES OF AUSTRALIA, 
CAMEROON, CANADA, CHINA, COLOMBIA, LEBANON, MALAYSIA, 
MALI, PARAGUAY AND SUDAN.  MEMBERS ARE ELECTED BY THE 
CONFERENCE FOR TWO-YEAR TERMS AND THIS WAS THE FIRST 
MEETING FOR MOST PARTICIPANTS. 
 
5. DIRECTOR GENERAL CALLS FOR MORE RESOURCES FOR 
AGRICULTURE 
 
IN HIS REMARKS TO THE JOINT COMMITTEE, THE DIRECTOR 
GENERAL EMPHASIZED THE LACK OF RESOURCES APPARENT IN ALL 
EVALUATIONS OF PROGRAMS: STANDARDS SETTING TO INSURE FOOD 
SAFETY, PREVENTION OF THE SPREAD OF DISEASE, ETC.  HE 
EXPRESSED THE HOPE THAT THE FAO WOULD BE ABLE TO GROW 
WITH MORE INVESTMENT IN AGRICULTURE, POSSIBLY 
FORESHADOWING A CALL TO COME AT THE WORLD FOOD SUMMIT; 
FIVE YEARS LATER WHICH TAKES PLACE JUNE 10-13, 2002. 
 
6.  FAO FINANCES DETERIORATED 2000-01. 
 
MEMBERS OF THE FINANCE COMMITTEE WERE CONCERNED BY THE 
DETERIORATING FINANCIAL HEALTH OF THE FAO.  THE 
CUMULATIVE DEFICIT HAS WIDENED TO $75.4 MILLION AND THE 
BALANCES IN THE WORKING CAPITAL FUND AND SPECIAL RESERVE 
ACCOUNT HAVE REACHED PERILOUSLY LOW LEVELS, $15.5 MILLION 
                       UNCLASSIFIED 
 
PAGE 04        ROME  02387  01 OF 04  151543Z 
AND $0.5 MILLION RESPECTIVELY.  THE FAO MANAGED ITS CASH 
EXPENDITURES BY USING UNDISBURSED ALLOCATIONS FOR THE 
TECHNICAL COOPERATION PROGRAM (TCP).  HOWEVER, ACCORDING 
TO CASHFLOW PROJECTIONS PREPARED BY THE SECRETARIAT, IF 
THE FAO DRAMATICALLY ACCELERATES TCP EXPENDITURES (AS 
MANY MEMBERS WOULD LIKE) THE ORGANIZATION COULD BE FORCED 
TO BORROW EXTERNALLY.  AT THE CURRENT RATE OF EXPENDITURE 
THE CASH FLOW BECOMES TIGHT IN SEPTEMBER, BUT WOULD NOT 
REQUIRE BORROWING TO PAY THE FAO'S BILLS. 
 
7.  REASONS FOR DECLINE: ARREARS, INVESTMENT LOSSES, 
FOREIGN EXCHANGE RATE CHANGES 
 
ARREARS WERE CITED AS THE MAIN REASON FOR THE FAO'S 
FAILING FINANCES.  AS OF MAY 3, 2002 ONLY ONE THIRD OF 
ALL CONTRIBUTIONS HAD BEEN PAID, THE WORST RECORD IN FIVE 
YEARS.  ARREARS TOTALED $157 MILLION, NEARLY TWO THIRDS 
OF WHICH WERE OWED BY THE UNITED STATES.  OTHER MAJOR 
DEBTORS INCLUDE ARGENTINA ($13.9 MILLION), BRAZIL ($23.4 
MILLION) AND IRAQ ($5 MILLION).  FIFTY SIX MEMBERS HAVE 
ARREARS IN EXCESS OF TWO YEARS WORTH OF CONTRIBUTIONS 
WHICH, ACCORDING TO THE BASIC TEXTS, JEOPARDIZES THEIR 
VOTING RIGHTS. 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ9608 
 
PAGE 01        ROME  02387  02 OF 04  151544Z 
ACTION IO-00 
 
INFO  LOG-00   NP-00    AID-00   CEA-01   CIAE-00  COME-00  CTME-00 
      INL-00   DODE-00  ITCE-00  SRPP-00  EB-00    EXME-00  EUR-00 
      E-00     UTED-00  VC-00    FRB-00   H-01     TEDE-00  INR-00 
      ITC-01   L-00     AC-01    NSAE-00  NSCE-00  OES-01   OIC-02 
      OMB-01   OPIC-01  ACE-00   SP-00    SSO-00   STR-00   TEST-00 
      TRSE-00  USIE-00  FMP-00   EPAE-00  DRL-02   G-00     SAS-00 
        /011W 
                  ------------------AEE39D  151544Z /38 
R 151530Z MAY 02 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 3752 
INFO USMISSION GENEVA 
USMISSION USUN NEW YORK 
USMISSION UNVIE VIENNA 
AMEMBASSY PARIS 
USDA FAS WASHDC 2131 
 
UNCLAS SECTION 02 OF 04 ROME 002387 
 
SIPDIS 
 
FROM U.S. MISSION TO UN AGENCIES IN ROME 
 
STATE FOR IO/EDA AND IO/S 
 
PARIS FOR UNESCO 
 
E.O. 12958:  N/A 
TAGS: AORC, EAGR, EAID, EFIN, KUNR, WFPO 
SUBJECT: FAO FINANCE COMMITTEE NOTES DETERIORATING 
                       UNCLASSIFIED 
 
PAGE 02        ROME  02387  02 OF 04  151544Z 
FINANCES OF FAO; PROGRAMME COMMITTEE EVALUATES SPECIAL 
PROGRAM FOR FOOD SECURITY 
 
8. THE U.S. PERMANENT REPRESENTATIVE (PERMREP) STATED 
THAT IT REMAINED OUR GOAL TO PAY OUR ARREARS THIS YEAR 
AND THAT WE WERE WORKING ACTIVELY TO ACHIEVE THAT END. 
EFFORTS HAD BEEN DELAYED SOMEWHAT BY THE SEPTEMBER 11 
TERRORIST ATTACKS IN THE UNITED STATES.  OTHER MEMBERS, 
NOTABLY SENEGAL, WERE ENCOURAGED BY THE U.S. REMARKS. 
THERE WERE NO COMMENTS AS IN PREVIOUS YEARS CHIDING THE 
UNITED STATES FOR PLACING ADDITIONAL CONDITIONALITY ON 
PAYMENT OF ITS ASSESSMENTS. 
 
9. THE COMMITTEE DISCUSSED THREE METHODS OF ACCELERATING 
COLLECTIONS: INCENTIVE PAYMENTS, SANCTIONS AND 
EXHORTATION.  THE FINANCE COMMITTEE HAD RECOMMENDED THAT 
THE FINANCIAL INCENTIVE SCHEME, WHICH COSTS ABOUT 
$500,000 ANNUALLY, BE ABANDONED, BUT THE CONFERENCE 
REJECTED THE RECOMMENDATION LAST NOVEMBER AND ACTED TO 
RETAIN THE SCHEME. 
 
10.  SANCTIONS FOR NON-PAYMENT ALREADY EXIST IN THE FORM 
OF LOSS OF VOTING RIGHTS, BUT, AS NOTED BY THE U.S. 
PERMREP, ARE NOT ENFORCED.  THE GENERAL COMMITTEE OF THE 
CONFERENCE ROUTINELY APPROVES WAIVERS FOR THOSE MEMBERS 
WHO CLAIM INABILITY TO PAY ON GROUNDS OF CIRCUMSTANCES 
BEYOND THEIR CONTROL. 
11.  THE FINANCE COMMITTEE RECOMMENDED THAT COUNTRIES 
PARTICIPATING IN THE UPCOMING WORLD FOOD SUMMIT AGAIN BE 
EXHORTED TO PAY.  (LETTER DISTRIBUTED MAY 8 WILL BE 
FORWARDED TO IO/S VIA FACSIMILE.) 
                       UNCLASSIFIED 
 
PAGE 03        ROME  02387  02 OF 04  151544Z 
 
12.  INVESTMENT LOSSES - THE FAO LOST $16.45 MILLION ON 
ITS LONG-TERM INVESTMENT PORTFOLIO IN 2001.  THIS ABYSMAL 
RESULT, WHILE CONSISTENT WITH NEGATIVE DEVELOPMENTS IN 
FINANCIAL MARKETS OVERALL, WAS LESS THAN ITS BENCHMARK (A 
LOSS OF 16.8 PERCENT VERSUS EXPECTED LOSSES OF 10.5 
PERCENT) AND WORSE THAN LOSSES SUFFERED BY COMPARABLE 
INTERNATIONAL ORGANIZATIONS. 
 
13.  REPRESENTATIVES OF FIDUCIARY TRUST COMPANY, FAO'S 
INVESTMENT FUND MANAGER, BRIEFED THE COMMITTEE ON REASONS 
FOR THIS POOR PERFORMANCE, NOTING THAT IT NEEDED TO BE 
SEEN IN LIGHT OF PREVIOUS POSITIVE PERFORMANCE FROM 1990 
TO 2001.  UNDERPERFORMANCE IN EQUITIES WAS ATTRIBUTED TO 
OVERWEIGHTING IN THE TECHNOLOGY SECTOR, POOR STOCK 
SELECTIONS AND THE CURRENCY IMPACT OF NON-USD INVESTMENTS 
THAT WERE SOLD. COMMENT: IT WAS EMBARRASSING, HOWEVER, 
WHEN THE EXTERNAL AUDITOR POINTED OUT THAT THE DATE OF 
SALE OF ENRON STOCK HAD NOT BEEN CORRECTLY REPORTED TO 
THE COMMITTEE.  FIDUCIARY IMMEDIATELY ACCEPTED 
RESPONSIBILITY AND COMPENSATED FAO FOR THE $194,684 
ERROR.  END COMMENT.  THE SECRETARIAT LATER EXPLAINED TO 
COMMITTEE MEMBERS THAT FIDUCIARY TRUST HAD LOST 87 
MEMBERS OF ITS STAFF IN THE SEPTEMBER 11 ATTACKS. 
 
14.  THE SECRETARIAT RECOUNTED THE HISTORY OF ITS 
INVESTMENT MANAGEMENT STRATEGY WHICH HAS BEEN HINDERED BY 
LACK OF SENIOR STAFF IN THE TREASURY OFFICE. THE FAO 
ADVISORY COMMITTEE ON INVESTMENTS (AIC) HAD STRONGLY 
ADVISED THE FAO AS RECENTLY AS 2001 TO SECURE ADEQUATE 
PERSONNEL TO MONITOR INVESTMENT STRATEGY.  NOW THAT A 
                       UNCLASSIFIED 
 
PAGE 04        ROME  02387  02 OF 04  151544Z 
SENIOR TREASURY OFFICER HAS BEEN IDENTIFIED FAO CAN 
PROCEED TO IMPLEMENT THIS STRATEGY.  THE EXTERNAL AUDITOR 
EMPHASIZED THE NEED TO REVIEW THE CONTRACT WITH FIDUCIARY 
TRUST, WHICH HAD BEEN AUTOMATICALLY RENEWED LAST JANUARY, 
AND TO REVIEW THE BENCHMARK 65/35 SPLIT BETWEEN EQUITIES 
AND BONDS IN THE INVESTMENT PORTFOLIO.  SHE ALSO 
SUGGESTED RESCHEDULING MEETINGS OF THE AIC IN ORDER TO 
PRECEDE MAY SESSIONS OF THE FINANCE COMMITTEE. 
 
15.  ACCOUNTING LOSSES ON FOREIGN EXCHANGE - WHILE THE 
PURCHASE OF A CONTRACT FOR FORWARD EXCHANGE HAD PROTECTED 
THE FAO BUDGET AGAINST FOREIGN EXCHANGE RATE MOVEMENTS, 
THE FALL IN THE VALUE OF THE EURO VIS--VIS THE U.S. 
DOLLAR CREATED AN ACCOUNTING LOSS ON FOREIGN EXCHANGE OF 
$23 MILLION.  THIS LOSS WAS CHARGED TO THE SPECIAL 
RESERVE ACCOUNT.  THE U.S. PERMREP POINTED OUT THAT THAT 
STRENGTH OF THE U.S. DOLLAR, THE CURRENCY IN WHICH 
CONTRIBUTIONS ARE DENOMINATED, HAD ALSO BENEFITED THE 
FAO.  THE POSSIBILITY OF MAKING CONTRIBUTIONS IN EITHER 
EUROS OR DOLLARS WILL BE EXAMINED AT THE SEPTEMBER 
SESSION. 
 
16.  FAO TAKES MORE PROACTIVE APPROACH TO HUMAN RESOURCE 
MANAGEMENT ISSUES 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ9610 
 
PAGE 01        ROME  02387  03 OF 04  151544Z 
ACTION IO-00 
 
INFO  LOG-00   NP-00    AID-00   CEA-01   CIAE-00  COME-00  CTME-00 
      INL-00   DODE-00  ITCE-00  SRPP-00  EB-00    EXME-00  EUR-00 
      E-00     UTED-00  VC-00    FRB-00   H-01     TEDE-00  INR-00 
      ITC-01   L-00     AC-01    NSAE-00  NSCE-00  OES-01   OIC-02 
      OMB-01   OPIC-01  ACE-00   SP-00    SSO-00   STR-00   TEST-00 
      TRSE-00  USIE-00  FMP-00   EPAE-00  DRL-02   G-00     SAS-00 
        /011W 
                  ------------------AEE3B2  151544Z /38 
R 151530Z MAY 02 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 3753 
INFO USMISSION GENEVA 
USMISSION USUN NEW YORK 
USMISSION UNVIE VIENNA 
AMEMBASSY PARIS 
USDA FAS WASHDC 2132 
 
UNCLAS SECTION 03 OF 04 ROME 002387 
 
SIPDIS 
 
FROM U.S. MISSION TO UN AGENCIES IN ROME 
 
STATE FOR IO/EDA AND IO/S 
 
PARIS FOR UNESCO 
 
E.O. 12958:  N/A 
TAGS: AORC, EAGR, EAID, EFIN, KUNR, WFPO 
SUBJECT: FAO FINANCE COMMITTEE NOTES DETERIORATING 
                       UNCLASSIFIED 
 
PAGE 02        ROME  02387  03 OF 04  151544Z 
FINANCES OF FAO; PROGRAMME COMMITTEE EVALUATES SPECIAL 
PROGRAM FOR FOOD SECURITY 
 
THIS SESSION WAS ATTENDED BY THE DEPUTY DIRECTOR OF THE 
FAO, A SIGN THAT HRM ISSUES NOW RECEIVE MORE ATTENTION 
FROM HIGH LEVEL MANAGEMENT.  THE U.S. PERMREP SPOKE OUT 
ON THE NEED FOR IMPROVED GENDER BALANCE AND EQUITABLE 
GEOGRAPHIC REPRESENTATION.  SHE SAID THESE ORGANIZATIONAL 
GOALS HAD TO BE INCORPORATED INTO INDIVIDUAL PERFORMANCE 
MANAGEMENT.  MANY COMMENTED ON THE NEED TO RESPOND TO 
INQUIRIES REGARDING EMPLOYMENT AND TO REDUCE THE TIME 
NEEDED FOR RECRUITMENT.  IT WAS SUGGESTED THAT 
INFORMATION TECHNOLOGY COULD BE BETTER USED TO ACCOMPLISH 
THESE GOALS AND TO REACH OUT TO YOUNGER PEOPLE INTERESTED 
IN EMPLOYMENT AT THE FAO. 
 
17.  THE MOST CONTROVERSIAL ISSUE, HOWEVER, WAS SPOUSAL 
EMPLOYMENT.  SOME DELEGATES WERE CONCERNED THAT CHANGES 
IN THE REGULATIONS GOVERNING EMPLOYMENT OF SPOUSES COULD 
LEAD TO NEPOTISM.  THE ISSUE WILL BE REEXAMINED AT THE 
SEPTEMBER SESSION. 
 
18.  PROGRESS REPORT ON THE ORACLE PROJECT 
 
THE SECRETARIAT WAS PLEASED TO REPORT THAT THE ORACLE 
PROJECT, WHICH HAD REQUIRED SUPPLEMENTAL FUNDS TO BE 
TAKEN FROM PROGRAM ALLOCATIONS, WAS ON TRACK.  THE 
EQUIPMENT WILL HAVE TO BE UPGRADED SINCE ORACLE HAS 
ANNOUNCED IT WILL WITHDRAW SUPPORT OF THE CURRENT 
VERSION.  HOWEVER, MANY ORACLE CLIENTS, NOT ONLY THE FAO, 
                       UNCLASSIFIED 
 
PAGE 03        ROME  02387  03 OF 04  151544Z 
HAVE FOUND THIS PROSPECT EXPENSIVE AND TIME-CONSUMING SO 
THE DEADLINE FOR WITHDRAWAL OF SUPPORT HAD BEEN 
REPEATEDLY EXTENDED. 
 
19.  THE FUTURE PROBLEM AS FORESEEN BY THE SECRETARIAT, 
IS THAT FUNDING FOR PHASE II OF THE ORACLE PROJECT, WHICH 
COVERS HUMAN RESOURCES AND PAYROLL, IS DEPENDENT ON THE 
PAYMENT OF ARREARS FROM THE "MAJOR CONTRIBUTOR," I.E. THE 
UNITED STATES.  PHASE II IS ESTIMATED TO COST $25 MILLION 
WHICH COULD BE MORE IF IMPLEMENTATION IS DELAYED BEYOND 
DECEMBER 2002. 
 
20.  MEMORANDUM OF UNDERSTANDING (MOU) BETWEEN FAO AND 
THE GLOBAL ENVIRONMENT FACILITY (GEF) 
 
THE FINANCE COMMITTEE EXAMINED AN EXCITING NEW PROJECT 
FOR FAO, PARTNERSHIP WITH THE GLOBAL ENVIRONMENT 
FACILITY. THE GEF IS THE FINANCING MECHANISM FOR THE 
CONVENTIONS OF BIODIVERSITY, CLIMATE CHANGE AND THE 
STOCKHOLM CONVENTION ON PERSISTENT ORGANIC POLLUTANTS. AT 
A TIME OF SHRINKING RESOURCES THE GEF OFFERS A 
SIGNIFICANT POTENTIAL SOURCE OF ADDITIONAL INCOME 
(POSSIBLY $40-60 MILLION ANNUALLY) FOR FAO PROJECTS.  THE 
GEF COUNCIL ASKED THAT THE FAO EXTERNAL AUDITOR EXAMINE 
ITS ACCOUNTS BIANNUALLY, AND AUDIT COSTS WOULD BE PAID 
FROM PROJECT FUNDS.  THE AUDIT REPORT WOULD BE REVIEWED 
BY THE FINANCE COMMITTEE.  DESPITE THE ADDITIONAL WORK 
GENERATED, THE COMMITTEE ENDORSED THIS NEW DIRECTION FOR 
THE FAO. 
 
21.  WFP REPORTS ON "CONTRIBUTIONS AND WAIVERS OF COSTS" 
                       UNCLASSIFIED 
 
PAGE 04        ROME  02387  03 OF 04  151544Z 
AND THE INDIRECT SUPPORT COST RATE. 
 
AT PRESENT WFP USES A SINGLE RATE OF 7.8 PERCENT FOR ALL 
CONTRIBUTIONS TO COVER ADMINISTRATIVE COSTS.  LAST YEAR 
THE ACABQ RECOMMENDED THAT THE EXTERNAL AUDITOR REVIEW 
ACTUAL COSTS TO DETERMINE WHETHER THE 7.8 PERCENT RATE IS 
REALISTIC.  THE EXECUTIVE BOARD ENDORSED THAT 
RECOMMENDATION.  ACCORDING TO A PRELIMINARY REVIEW, 7.8 
PERCENT IS CLOSE TO ACTUAL EXPENDITURES, BUT THE 
EXECUTIVE BOARD WILL BE ASKED TO APPROVE USING THE 
CURRENT RATE UNTIL THE REVIEW IS COMPLETE, POSSIBLY FOR 
THE REST OF THE BIENNIAL BUDGET PERIOD. 
 
22.  THE UNITED STATES EXPRESSED THE OPINION THAT ISC 
"INCOME" SHOULD BE RECOGNIZED WHEN CONTRIBUTIONS ARE 
ACTUALLY RECEIVED, BUT THE EXTERNAL AUDITOR DISAGREED. 
SHE RECOMMENDED THAT THE SAME METHOD, CASH OR ACCRUAL, BE 
USED TO TRACK BOTH INCOME AND EXPENSES.  USUALLY IN THE 
UN SYSTEM THE ACCRUAL BASIS FOR ACCOUNTING IS PREFERRED. 
IN THE CASE OF WFP, WHICH DEPENDS ON VOLUNTARY 
CONTRIBUTIONS RATHER THAN ASSESSMENTS, FOR "REASONS OF 
PRUDENCE" ISC INCOME IS RECOGNIZED WHEN RECEIVED.  IF THE 
ACCRUAL BASIS WERE EMPLOYED, INCOME WOULD BE ACCOUNTED 
FOR WHEN EARNED.  (DETAILS WILL BE PROVIDED TO USAID 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ9612 
 
PAGE 01        ROME  02387  04 OF 04  151544Z 
ACTION IO-00 
 
INFO  LOG-00   NP-00    AID-00   CEA-01   CIAE-00  COME-00  CTME-00 
      INL-00   DODE-00  ITCE-00  SRPP-00  EB-00    EXME-00  EUR-00 
      E-00     UTED-00  VC-00    FRB-00   H-01     TEDE-00  INR-00 
      ITC-01   L-00     AC-01    NSAE-00  NSCE-00  OES-01   OIC-02 
      OMB-01   OPIC-01  ACE-00   SP-00    SSO-00   STR-00   TEST-00 
      TRSE-00  USIE-00  FMP-00   EPAE-00  DRL-02   G-00     SAS-00 
        /011W 
                  ------------------AEE3B6  151544Z /38 
R 151530Z MAY 02 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 3754 
INFO USMISSION GENEVA 
USMISSION USUN NEW YORK 
USMISSION UNVIE VIENNA 
AMEMBASSY PARIS 
USDA FAS WASHDC 2133 
 
UNCLAS SECTION 04 OF 04 ROME 002387 
 
SIPDIS 
 
FROM U.S. MISSION TO UN AGENCIES IN ROME 
 
STATE FOR IO/EDA AND IO/S 
 
PARIS FOR UNESCO 
 
E.O. 12958:  N/A 
TAGS: AORC, EAGR, EAID, EFIN, KUNR, WFPO 
SUBJECT: FAO FINANCE COMMITTEE NOTES DETERIORATING 
                       UNCLASSIFIED 
 
PAGE 02        ROME  02387  04 OF 04  151544Z 
FINANCES OF FAO; PROGRAMME COMMITTEE EVALUATES SPECIAL 
PROGRAM FOR FOOD SECURITY 
 
SEPARATELY.) 
 
23. JOINT COMMITTEE DISCUSSION REVEALS INEQUITIES IN FAO 
COUNTRY REPRESENTATIVE PROGRAM 
 
THE SECRETARIAT CALLED ATTENTION TO THE GROWING INEQUITY 
IN THE FAOR PROGRAM.  SINCE THE LIMITATION (78) ON THE 
NUMBER OF COUNTRY OFFICES WAS REACHED FAO HAS STARTED 
SENDING SENIOR TECHNICAL OFFICERS TO THE FIELD TO MEET 
GROWING DEMAND.  PARTICIPATING MEMBER COUNTRIES MUST 
COVER ALL COSTS FOR SUCH REPRESENTATIVES ALTHOUGH IN THE 
REGULAR PROGRAM REPRESENTATIVES ARE FULLY FUNDED.  THE 
U.S. PERMREP COMMENTED THAT THE CRITERIA FOR 
PARTICIPATION WAS BUDGET DRIVEN AND THEREFORE DID NOT 
BENEFIT MEMBERS MOST IN NEED.  THE COMMITTEE ASKED FOR 
MORE INFORMATION OF THE COSTS AND CONTRIBUTIONS TO THIS 
PROGRAM. 
 
24 PROGRAMME COMMITTEE MEETS 
 
THE MOST SIGNIFICANT AGENDA ITEM FOR THE PROGRAM 
COMMITTEE WAS THE SPECIAL PROGRAM FOR FOOD SECURITY 
(SPFS) CLOSELY FOLLOWED BY THE TERMS OF REFERENCE FOR AN 
EVALUATION OF CODEX ALIMENTARIUS. U.S. POSITIONS WERE 
PRESENTED BY CANADA AS REPRESENTATIVE OF THE NORTH 
AMERICA REGIONAL GROUP.  REPORT WILL BE SENT SEPTEL. 
 
25.  NEXT MEETING AND MAJOR AGENDA ITEMS 
                       UNCLASSIFIED 
 
PAGE 03        ROME  02387  04 OF 04  151544Z 
 
THE FINANCE AND PROGRAM COMMITTEES ARE TENTATIVELY 
SCHEDULED TO MEET AGAIN SEPTEMBER 9-13, 2002.  IN 
ADDITION TO SEVERAL PROGRESS REPORTS ON ISSUES DISCUSSED 
IN MAY, THE FINANCE COMMITTEE WILL TAKE UP THE PROGRAMME 
IMPLEMENTATION REPORT AND THE MEDIUM TERM PLAN. 
 
HEILEMAN 
 
                       UNCLASSIFIED 
 
> 
 2002ROME02387 - Classification: UNCLASSIFIED 


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