Note: This section deals with budget techniques other than arrangements to meet the budgetary impact of changes in exchange rates, which are handled in Section 16.4, and classifications of expenditure, which are dealt with in Section 16.5.
(1) At its 30th session (March 1969: CO-ORDINATION/R.733, paras. 92 and 93) CCAQ agreed that, having regard to the recommendation of the Ad Hoc Committee of Experts to Examine the Finances of the UN and the Specialized Agencies in its second report (A/6343) that budget estimates should be calculated in such a way that appropriations would not be exceeded, such estimates should include provision for all increases or decreases in prices and salaries which could be foreseen or which resulted from the projection of trends through the entire period covered by the estimates - "full budgeting".
(2) At the 33rd session (March 1971: CO-ORDINATION/R.864, paras. 31 and 32) CCAQ decided that the techniques to be used in drawing up estimates on the basis of full budgeting were best left to individual organizations.
(3) At the 37th session (March l973: CO-ORDINATION/R.985, paras. 19-22) CCAQ noted that ACABQ had pointed out that while UNESCO and WHO integrated all UNDP overhead costs in their regular budgets, UN and FAO dealt separately with the activities financed from such costs. It had been suggested that the agencies should try to recommend one of the two methods: consultation might show that a uniform procedure was not possible, but the matter required the attention of the agencies. CCAQ concluded that the advantages or disadvantages of separating or integrating overheads varied so widely that there was insufficient justification for uniformity at present. The problem referred to by ACABQ of comparing budgets on a "net" basis with those on a "gross" basis could be overcome by adjusting all the figures to "net" in future comparative tables.
(4) At the 40th session (September 1974: CO-ORDINATION/R.1054, para. 20) CCAQ noted that following a suggestion by ACABQ the UN Office at Geneva, ILO and WHO were collaborating for the purpose of exchanging information and, where possible, co-ordinating their basic budgeting assumptions as to certain important cost elements. Other Geneva organizations would be taking part in these periodic exchanges of information.
(5) At the 45th session (September 1976: CO-ORDINATION/R.1174, para. 12 and annex III), following examination of the report of a Working Party which it had established on a common methodology for estimating costs of inflation, the Committee:
(a) Invited ACC to reaffirm its position in favour of full budgeting;
(b) Recommended that the organizations should identify proposed budget increases that depend on decisions still to be taken by governing bodies;
(c) Recommended also that calculations of cost increases due to inflation should be based to the maximum extent possible on detailed cost projections for individual objects of expenditure and for the individual locations in which expenditures are to be incurred; where the available information was not sufficient to enable detailed projections to be made in this manner the calculations should be based on over-all forecasts of cost levels for the locations concerned;
(d) Endorsed arrangements proposed by the Working Party for the production by UN of common cost-of-living projections for particular duty stations and common post adjustment forecasts for each field duty station;
(e) Regarded the following as minimum requirements for the presentation of information on costs of inflation:
Increased costs due to inflation are stated;
These costs are broken down at least to the level of detail of appropriation lines or sections;
Net programme and other changes are distinguished from cost changes due to inflation and currency fluctuations; and
Relatively detailed information is provided in the manner in which costs of inflation are calculated.
(6) At the 46th session (March 1977: CO-ORD1NATION/R.1211, paras. 23-25) UN advised the Committee that it was not in a position to provide reliable post adjustment forecasts for individual countries (see para. 5(d) above). It was agreed, however, that UN would provide cost-of-living projections at CCAQ autumn sessions for duty stations where it had a large establishment.
(7) At the same session (CO-ORDINATION/R. 121 l, paras. 26 and 27) CCAQ agreed further guidelines for the presentation in budget documents of explanatory material on cost increases (see para. 5(e) above). These guidelines, which were subsequently endorsed by ACC (CO-ORDINATION/R. 1219, para. 111) were as follows:
(a) The documents should include in an introductory section a statement giving general considerations on the increases and showing their amount;
(b) The increases should be analyzed by categories and objects of expenditure as far as possible. Increases at main centres of operations should be dealt with separately, those relating to other localities being handled on an average basis;
(c) The assumptions made in calculating the increases, and where appropriate, the manner of calculation, should be explained.
(8) Also at the 46th session (CO-ORDINATION/R. 1211, paras 28 and 29) the Committee agreed that appropriations for the current financial period and expenditure estimates for the following financial period (i.e. the period covered by the proposed budget) should be presented in such a way that real growth could be readily discerned. It approved a draft of a revised ACC statement in favour of full budgeting (see para. 5(a) above). The statement was subsequently included in ACC's annual report for 1976-77 (E/5973).
(9) At its 48th session (March 1978) CCAQ considered the implications of a request by the General Assembly at its 32nd session for a report by the Secretary-General on estimating the costs of inflation in proposed programme budgets; it agreed that the work required might appropriately be undertaken at the next session of its Working Party on Programme Planning, Budgeting and Evaluation (CO-ORDINATION/R. 1279, paras. 14 ,and 15). The Committee also referred to the Working Party a request by ACC that consideration should be given to arrangements for achieving greater uniformity in the bases used for estimating cost increases, both at major duty stations and by major objects of expenditure (ibid., paras. 18 and 19). For organizational reasons, this matter was handled by CCAQ itself at the 49th session.
(10) The question of how to harmonize the organizations' methods of budgeting for cost increases and of presenting such increases in their budget documents was considered in some detail at the 49th session (September 1978: CO-ORDINATION/R. 1307, paras. 6-11). The Committee concentrated on certain specific issues:
Definition of cost increases: The Committee agreed that it would be useful to back up the agreed definitions of "cost increase/decrease" and "programme increase/decrease" with a list of the componants of those categories. In preparing a draft list the secretariat should consider adding a third category, "other increases/decreases" to cover, for example, changes in purely financial provisions or one-time additional expenses difficult to regard as either programme or cost increases;
Full vs. semi-full budgeting: Noting that ACC, in connection with its consideration of the effects of currency instability and inflation, had recently reaffirmed its position in favour of full budgeting (A/C.5/1622, para. 12), CCAQ expressed its continuing belief that this method was the most consistent with both biennial budgets and programme budgets;
Recosting methods: presentation of expected cost changes in budget documents: The Committee recalled the standard summary budget table presented by ACC in part 3 of its annual report for 1977-78 (E/1978/43/Add.2, para. 18 - see also Section 16.2), although some participants expressed reservations about aspects of the table;
Adjustments for expected cost changes: CCAQ reaffirmed its September 1976 recommendation on the calculation of cost increases due to inflation (see para. 5(c) above). Noting that inter-organization arrangements had been made to agree on common cost assumptions in budgeting, the Committee recommended a further step: where two or more organizations had relatively large offices at a duty station not covered by other arrangements, they should strengthen informal consultation on the likely evolution of local costs and prices.
(11) At the 50th session (Marcia 1979) the Committee considered a tentative listing of the components of programme, cost and other budgetary increases and decreases (see para. 10(a) above); it asked the secretariat to revise and expand the listing for consideration at its 51st session (ACC/1979/Rd 1, para. 22). At that session (September 1979) the Committee approved for illustrative purposes a listing of components of cost increases and decreases (ACC/1979/R.69, paras. 10 and 11 and annex IV). It also redrafted its definitions of "programme increase/decrease" and "cost increase/decrease". As for the third group of changes identified earlier, "special increases/decreases", it could be regarded, along with "programme increases/decreases" as a subdivision of a more general category, "real increases/decreases". However, the organizations could if they wished use "special increases/decreases" as a distinct category. All would use the term "cost increases/decreases" (ACC/1979/R.69, paras. 12 and 13).
(12) At the 53rd session (September 1980) the Committee noted the conclusions reached at a meeting held in Geneva earlier in the month to consider rates &exchange and inflation to be used for Switzerland in proposed budgets coveting 1982 and 1983. UNDP was requested to circulate its forecasts of cost levels for other major duty stations. UN agreed to circulate cost-level projections for Geneva for the remainder of 1980 and 1981, and a provisional forecast of the movement of WAPA up to the end of 1983 (ACC/1980/32, para. 5). It Was agreed, at the 54th session (March 1981) that the arrangements between the Geneva organizations and the circulation of UNDP 'projections should be continued (ACC/1981/20, para. 9). It was later ascertained that the UNDP projections could not be made available in time for them to be of great use in the preparation of budget proposals of other organizations, which followed a different timetable.
(13) At the 55th session (September t981) the Committee considered possible follow-up action on matters arising out of the 1979 and 1980 reports of ACABQ on administrative and budgetary co-ordination and the related debate in the Fifth Committee. The participants noted that the recommendations made generally concerned subjects which had been under study in CCAQ(FB) for a number of years. They would continue to appear on its agenda whenever the formulation of further common positions appeared to be feasible and not to involve excessive cost, or where exchange of information on developments and practices seemed likely to benefit the organizations (ACC/1981/30, paras. 13 and 141.
(14) At the 56th session (March 1982), in the context of standing arrangements for the exchange of information on developments relating to currency instability and inflation, the Committee requested its secretariat to convene a meeting of Geneva-based organizations in the summer of 1982 to consider rates of exchange and inflation to be assumed for Switzerland in proposed budgets for I984 and 1984-1985 (ACC/1982/6, para. 5). The conclusions reached at this meeting were noted at the 57th session (September 1982: ACC/1982/25, para. 6).
(15) At the 60th session (March 1984), in the course of its regular discussions on the effects of currency instability and inflation, the Committee endorsed the principle of a meeting of Geneva organizations in late August 1984 to consider the rates of exchange and inflation to be assumed for Switzerland in proposed budgets for 1986 and 1986-1987. It also welcomed a suggestion that similar meetings be organized in Vienna to deal with the rates to be assumed for Austria (ACC/1984/10, para. 6). The conclusions reached at the Geneva meeting were noted at the 61st session (September 1984: ACC/1984/17, para. 5).
(16) At the 65th session (September 1986) the Committee noted the conclusions reached at a meeting held in Geneva in August 1986 to consider rates of exchange and inflation to be assumed for Switzerland in proposed budgets :for 1988 and 1988-1989 (ACC/1986/12, para. 7).
(17) At the 69th session (September 1988) CCAQ considered the conclusions of a meeting held the preceding month by organizations with their headquarters or major offices in Geneva, to consider the rates of exchange and inflation to be assumed for Switzerland in proposed budgets for 1990 or 1990-1991. It endorsed the conclusions, subject to modifications arising from the likelihood that net remuneration increases for Professional and higher level staff in New York would occur earlier than foreseen at the meeting (ACC/1988[13, para. 5).
(18) At the 70th session (March 1989) the Committee noted that ICAO would introduce programme budgeting with its triennium 1990-1992 (ACC/1989/7, para. 69; see also ACC/1989/15, para. 11).
(19) For changes in the financial regulations of IAEA to permit certain components of year-end unobligated balances to be carried forward for implementation of programme activities, see section 21.2.
(20) At the 72rid session (March 1990) the Committee reviewed the report of JIU on "Budgeting in organizations of the UN system - some comparisons" (JIU/REP/19/9), On the basis of comments by member organizations it approved a draft statement by ACC, subsequently endorsed in ACC decision 1990/14 ((ACC/1990/5, para. 7 and annex III). At the 74th session (March 1991) file Committee briefly reviewed follow-up action in individual organizations on the report (ACC/199 I/6, para. 24).
(21) At the 73rd session (September 1990) the Committee noted and endorsed conclusions reached at a meeting heId the previous month by organizations with their headquarters or major offices in Geneva, to consider rates of exchange and inflation to be assumed for Switzerland in proposed budgets for 1992 or 1992-1993. k noted, however, increases subsequently announced in air fares and air cargo rates and further possible increases in those charges, which would have to be borne in mind in the budgeting process. Expressing ils satisfaction at the consultation arrangements which had been in effect in Geneva for a number of years, the Committee again encouraged organizations in Vienna to institute parallel arrangements (of. para. (15) above) (ACC/1990/12, paras. 4, 5).
(22) At the 75th session (September 1991) the Committee reviewed practice in the organizations in four aspects of budgeting methods. It noted that full budgeting was established ACC policy and was practised by most of the organizations. On the other hand, tile application of adjustments for staff turnover and delays in recruitment (lapse factors) varied according to organizations' circumstances. The Committee agreed that one aspect of arrangements for the approval of adjustment of estimates for extra-budgetary activities - transparency in respect of revenue-producing activities - could usefully be taken into account in the work being planned on accounting standards (see section 17.2). On budgetary/cash surpluses and deficits under regular budgets the Committee decided to gather information from organizations on their practices, including the ways they defined budgetary income and expenditure, the means by which cash surpluses and deficits were measured, and special arrangements for financing cash deficits (ACC/1991/18, para. 4).
(23) Following a review at the 76th session (March 1992) of the information on surpluses and deficits referred to in paragraph (22) above, the Committee decided to re-circulate it so that organizations might attempt to improve its compatibility; a revised presentation would then be included in the documentation for the next round of work on accounting standards (see section 17.2) (ACC/I992/1 I, paras. 4, 5).
(24) At the 77th sessi~n (August-September ~ 992) the Committee endorsed on behalf of ACC concensus reached on 17 August by organizations with headquarters or major offices in Geneva on rates of exchange and inflation to be assessed for Switzerland in proposed budgets for 1994 and 1995 (ACC/1992/25, para. 4).
(25) At its 81st session (August - September 1994), CCAQ(FB) requested its secretariat to take steps to produce an updated version of Volulne II of the JIU study entitled "Budgeting in Organizations of the United Nations System" (ACC/1994/15, para. 10). It also decided that, in view of the largely unchanging nature of the information provided, the published review of incentive and penalty schemes could usefully be incorporated in the update of the study on budgeting methods (ACC/1994/15, para. 30).
(26) At its 82nd session (February 1995), CCAQ(FB) endorsed on behalf of ACC conclusions reached at a meeting held on 16 September 1994 by organizations having their headquarters or major offices in Geneva to consider the rates of exchange and inflation to be assumed for Switzerland in 1995, 1997 and 1997 for proposed budgets for 1996 and 1997 (ACC/1995/6, para. 12).
(27) At its 84th Session, Document: ACC/1995/FB/R.49, the Committee was briefed by UNDP on the progress made by the consultant employed by UNICEF, UNFPA and UNDP to review the differences in budget formats and to suggest possible harmonization. As the work was still ongoing, the Committee decided to revisit the matter at its next session when further details would be available. WFP expressed interest in participating in future harmonization.
(28) In 1989, the JIU issued a study entitled "Budgeting in Organizations of the United Nations system". As the JIU had indicated that it did not intend to update this study but had no objections to CCAQ doing so, an update of the Comparative Tables in Volume II had been prepared by the secretariat. The Committee agreed that the updated report continued extremely useful information and decided upon additional topics to be included.
(29) At its 85th session the Committee noted information (Document: ACC/1996/FB/R.26) provided on the progress made by UNICEF, UNFPA and UNDP in reviewing the differences in their budget formats and developing suggested possible harmonization. The Committee agreed to revert to this subject at its next session, when it would be informed about the outcome of consideration of this subject by the Executive Boards of these bodies.
(30) At its 86th Session, (Document: ACC/1997/FB/86/CRP.11) UNICEF and UNFPA briefed the Committee on the progress made by UNDP, UNICEF and UNFPA on the Harmonization of Budgets as approved by their Executive Boards. The Committee requested the three organizations to keep it informed on the implementation of their Budget Harmonization.
(31) Separately, WHO suggested that consideration be given to the closer identification of administrative costs with the programmes they support in budget formulation and financial reporting. The Committee agreed that it will be useful to have further discussion, particularly on the methodology and terminology to be used for administrative and programme support. An informal discussion group of organizations with assessed budgets would be hosted by WHO, acting as lead agency. The Committee agreed to revert to the subject at its next session, taking into account the preliminary discussions of the informal group.
(32) At its 87th Session, the Committee considered a report (Document: ACC/1997/FB/87/CRP.5)of an informal discussion group of organizations with assessed budgets which was hosted by WHO, acting as lead agency. The group had reviewed current practices with respect to the classification and identification of administrative costs with the programmes they support in budget formulation and financial reporting. Representatives of UNICEF, UNDP and UNFPA briefed the Committee on progress with the budget harmonization process with respect to the budgets proposed for 1998-1999. Taking into account the work already done by the above-mentioned organizations, the Committee agreed that it would be useful to undertake further work on the definition of management, administrative and programme support costs. It requested the secretariat to update the document on budgeting methods, paying special attention to Table 14 on Administrative and Support Services, which should in future incorporate information on voluntary-funded organizations. Organizations were requested to make available to the secretariat copies of their proposed or approved budgets for 1998-1999 as soon as they were available. Information was exchanged on the pros and cons of a move from annual to biennial budgeting.
(34) At its 88th Session, the Committee was briefed by the United Nations on the current status of the proposal to introduce Results-Based Budgeting for the biennium 2000-2001.(ACC/1998/FB/88/CRP.7) It also discussed the experience of WIPO in introducing a Results-Based Budget for 1998-1999 and the issues involved in establishing appropriate Performance Indicators and systems for monitoring and measurement of results. UNICEF briefed (ACC/1998/FB/88/CRP.6) the Committee on the experience in applying harmonized formats for 1998-1999 and the process of developing revised formats for harmonized budgets for 2000-2001.
(35) Participants discussed the apparent wide divergence of various new approaches to budgeting by several organizations. In addition to differences in methodology, new terminology had been introduced in some cases; in other cases the same terms were used but with apparently different definitions. The budget harmonization efforts of UNICEF, UNDP and UNFPA had incorporated agreed definition of key terms. While agreement on common terminology for these organizations had been the result of extensive consultation, this was an essential item in any harmonization process. It was noted that the Committee had in the past agreed a glossary of finance and budget terms, but that this had not been updated for many years. The Secretary was requested to add such an update to the work programme of the secretariat and to report to the next session on what terms and definitions are currently being used by organizations, with special emphasis on the terms used in the budget area.
(36) At its 89th session (February 1999: ACC/1999/6, paras. 26-27) the Committee was informed of revisions to the glossary of financial terms being prepared to reflect the addition of key terms used in the United Nations Accounting Standards and some proposed changes reflecting current usage by some organizations. In the area of budgeting terms, the situation was far more complicated in that several organizations had initiated new budget methodology and introduced new terminology. These initiatives had been undertaken in full consultation with governing bodies, in some cases over a period of several years and it might not be appropriate to go back to governing bodies to propose major changes to the terminology already agreed by them. In addition, some organizations considered that they were already undertaking results-based budgeting but were not using the specific terminology used by the United Nations and some other organizations introducing 'Results-Based Budgeting.' It would, therefore, be more appropriate at this stage to prepare a Thesaurus of budgeting terms which would set out the principle terms used by each organization with an attempt to indicate which different terms covered the same basic concepts. After discussion, the Committee agreed to revert to the issue at its next session at which time it would consider a draft Thesaurus of terms to be prepared by the secretariat. Further work in this area is dealt with in section 21.1.
(37) At the same session (ibid., para. 27) the Committee noted, and endorsed on behalf of ACC, the conclusions reached at a meeting held in 1998 by organizations having their headquarters or major offices in Geneva to consider the rates of exchange and inflation to be assumed for Switzerland in 1999 and for proposed budgets for 2000-2001.
(38) At the February 2004 meeting (CEB/2004/HLCM/12/Rev.1, paras. 20-21) of the FB Network, following a presentation by UNDP on the progress of the Working Group on Results-Based Budgeting (RBB), several organizations shared information on their own experiences of RBB and, in particular, their attempts to sell a more strategic budget model to Member States and governing bodies. There existed a need for change and trust-building both inside and outside the system to be able to demonstrate, to stakeholders, the value added of individual organizations. In this respect, reporting was key and performance indicators should be frank and self-critical; format and integrity of data and conclusions were crucial. The Network requested UNDP to lead the preparation, during March-April of 2004, of a concept paper with a practical framework for the introduction and implementation of RBB. The objective being the development of a common framework that could be adapted by each organization in line with its own business and related requirements. The paper would specifically focus around the following issues: linking planning and budgeting (including Results-Based Management and RBB), performance measurement and reporting, terminology and definitions, methodologies for RBB as well as RBB in a multi-funded environment and the related implications.
(39) At its September 2004 video-conference (CEB/2004/HLCM/28, paras. 19-20) the FB Network considered a concept paper circulated by UNDP, the lead agency, to all organizations for comment, which contained a common framework for RBB to be used across the UN system. The JIU had subsequently published its report entitled "Managing for Results in the UN System" which contained nine benchmarks for Results Based Management. The Network agreed that (a) the JIU report would serve as a good chapeau for the UNDP paper and asked organizations both to respond positively to the JIU report and to provide comments on the concept paper by the end of October and (b) FB Network members attending the Montreux meeting on RBB hosted by the Swedish government in early October should remain mindful of the content of the concept paper in the discussions.
(40) At its March 2005 video-conference (CEB/2005/HLCM/8, paras. 26-27) the FB Network was presented by UNDP with the conceptual paper on RBB in the organizations of the UN System (CEB/2005/HLCM/R.6), as finalized by the working group on RBB in December 2004. The paper’s main conclusions were the as follows: (a) Activity based costing was not required to do RBB. The RBB working group should follow up with the Task Force on Accounting Standards and integrate any recommendation that would address the costing issue. (b) The proposed flexible approach, once cleared by the FB Network, should be submitted to HLCM for endorsement as the common framework for RBB for the organizations of the UN system.
(41) At its 9th session (April 2005: CEB/2005/3, paras. 46-48) HLCM considered the study produced by the FB Network working group on RBB. The main conclusions showed that agencies were at different levels of readiness in terms of existing internal RBB frameworks, information systems, budget management, internal accountability frameworks, internal leadership, etc. This would be reflected in implementation strategies for RBB, which would represent the means for presenting both to donor partners and recipient countries the competing priorities that agencies were confronting, the resource requirements to achieve the mandated outcomes or results, the decisions on strategic allocation of resources and accountability for success or failure. RBB entailed a complex and lengthy change in the management and organizational culture of each organization, and there were no shortcuts. Moreover, RBB was not a purely financial concept, but rather a management approach that had to be shared and owned throughout the organization, in particular by line managers. ERP systems introduced by organizations also had to take in due consideration the requirements of RBB methodologies and procedures. The Committee: (a) took note of the study and endorsed it as a common framework for RBB, which could be adapted by each organization of the UN system in line with its own requirements; (b) recommended that a one-day retreat with the combined participation of HLCM and HLCP be organized, facilitated by UNDP and with the organizational support of the CEB secretariat (see also para. 26 (a)).
(42) At the ninth session of the FB Network (CEB/2008/HLCM/FB/18, paras. 14-26), A working group would be established within the FB Network with the objective of developing Terms of Reference for the analysis and proposal of options for capital budgeting solutions for UN system organizations, as a specific priority undertaking during a preparatory phase of the “budgeting practices” project included in the HLCM Plan of Action for the Harmonization of Business Practices. The ToR would also cover common principles for the homogenization of budgeting practices, such as carry forwards, surpluses, required changes to Financial Regulations and Rules, etc. The following organizations agreed to be part of the working group: IAEA, UNDP, FAO, IFAD, UNIDO, UNESCO (to be confirmed), UNHCR.