In the Right Direction

Recently, the United Nations General Assembly elected David Walker, the comptroller general of the United States, to be a member of the U.N.'s newly formed Independent Audit Advisory Committee. This is good news, as Mr. Walker is the "real McCoy" when it comes to insisting on proper accounting, oversight, and internal controls.

The creation of an independent committee to review the work of the internal and external audit function of the U.N. and make recommendations to strengthen the control environment is a strong, positive step.

The Independent Inquiry into the United Nations Oil-for-Food Program, as well as the U.N.'s own study of the control environment led by Deloitte Consulting, identified the complete absence of any meaningful controls at the United Nations.

It was only following these two reviews that substantial amounts of waste, fraud, and abuse were uncovered by the press and U.N. investigators. These discoveries led to several American indictments, convictions, and plea deals of U.N. officials and others engaged in illicit activities in the Oil-for-Food Program.

While this prosecutorial effort was brewing, former Secretary General Kofi Annan launched five initiatives: an ethics office and ethics training, stronger internal auditing, stronger external auditing, adoption of new accounting standards and the systems to support those standards, and a renewed focus on training. These are the five pillars of the control environment.

Today, the U.N. has set the "gold standard" of whistleblower protection policies, and has strengthened its financial disclosure requirements for its officials and senior staff. International Public Sector Accounting Standards have been adopted across all U.N. agencies, funds, and programs. Comprehensive financial and performance reporting has been introduced.

The test now is to assure full and effective implementation. The real work of David Walker and his fellow audit committee members will be to make sure that these new goals are met quickly.

New accounting standards will only be as good as the system and training that support them. This will take years, and many millions of dollars to implement. Recently, the Department of State completed the same effort, a monumental task that took six years.

One danger is that internal auditing at the U.N. lacks adequate resources, and suffers from the lack of cooperation by hostile managers who ignore or squash auditor findings. The well-qualified head of the U.N. Office of Internal Oversight Services, Inga-Britt Ahlenius, must be strongly supported.

External auditing is conducted by the U.N. Board of Auditors, made up of the auditor-generals from three member states. Board members and their small staff are well-trained and well-meaning, but overwhelmed by the task of auditing such a complex global organization. Limited resources and little time truncate the ability to dig into potential weaknesses.

We strongly recommend augmenting both internal and external audit work with private-sector audit firms. The vast majority of American government agencies use private-sector audit firms for external audit. To do so at the U.N. would immediately strengthen oversight, enable far more wide reaching audits of U.N. operations, and help build a stronger profession around the world of competent auditors in the developing world, a much needed resource for national and regional governments also seeking better governance.

Being able to do all of the above will require a strengthened system of justice. It also will require the will to hold senior officials accountable. If the U.N. is to foster a culture of "I will not lie, cheat, or steal, or tolerate those who do," it cannot allow the willful disregard of rules and regulations to be lightly penalized.

We are encouraged by recent steps the U.N. has taken. Much remains to be done, however, before the U.N. has a fully functioning and effective control environment. Member states and their citizens must demand no less if the organization is to rebuild its credibility and its capability to effectively respond to the challenges ahead.

Mr. Volcker was chairman of the Independent Inquiry into the United Nation's Oil-for-Food Program. Mr. Burnham, who served as under secretary-general of the United Nations for Management between 2005 and 2006, was the chief financial officer of the U.S. Department of State between 2002 and 2005.