| Financial performance report for the biennium 2006-2007 Submitted by the Director-General Contents Introduction In its conclusion 1987/19 , paragraph ( j ) , the Programme and Budget Committee requested the Director-General to submit each year to the Industrial Development Board through the Committee a clear and detailed financial performance report itemizing the utilization of financial resources . The present document presents a comparison of the budget estimates in terms of appropriations and income with actual expenditures and income for the biennium 2006-2007 . The information is provided for both the regular and operational budgets . Regular budget Budget estimates for the biennium The budget estimates for the biennium 2006-2007 approved by the General Conference in decision GC.11/Dec.18 consisted of gross expenditure of €154,009,900 to be financed from assessed contributions in the amount of €150,785,600 and other income of €3,224,300 . The present document thus presents the financial performance report on the basis of the programme and budgets for 2006-2007 , as contained in document GC.11/11 , approved in General Conference decision GC.11/Dec.18 and assessed on Member States . Assessed contribution income for 2006-2007 The financial implementation of the approved programme and budgets is dependent on the actual level of cash resources available during the biennium . The source of financing of the regular budget is the assessed contributions of Member States . Assessed contributions for the biennium 2006-2007 paid to the Organization as compared with the amounts originally assessed in accordance with General Conference decision GC.11/Dec.18 are as follows : a See document IDB.35/3-PBC.24/3 , schedule 1. C. Comparison of budget with actual expenditure and income for 2006-2007 A comparison of actual expenditure and income with the approved budget for the biennium is presented below : Comparisons of budget estimates with actual expenditure and income by major programme and major object of expenditure are presented in tables 1 and 2 respectively . Explanations of underutilization by major programme and major object of expenditure are provided in the following paragraphs . Utilization of the budget The net underutilization of the regular budget of €12.4 million ( 8.3 per cent ) comprised an under-expenditure of €14.5 million ( 9.5 per cent ) and a shortfall in income of €2.1 million ( 65.2 per cent ) . The single most important factor contributing to the underutilization was due to non- or late/uncertain payment of assessed contributions . Collection rates As seen from the table , the collection rate during the biennium developed slower than in the previous biennium . While the final collection rate was in fact higher , the rates in March , June and September were lower than in the same period in the previous biennium . The delayed collections had a negative impact on the expenditure planning . E. Financial implementation by major programme Most major programmes were affected by the overall underutilization of the regular budget for the reasons described in paragraph 7 above . Major Programme A ( Governing Bodies ) had an unutilized balance of €0.2 million ( 6 per cent ) out of the approved budget , mainly due to savings resulting from joint translation costs and delayed recruitment of staff . Major Programme B ( General Management ) had an unutilized balance of €1.1 million ( 8.7 per cent ) out of the approved budget estimate . Most of the savings occurred under personnel costs as a consequence of unoccupied posts . Major Programme C ( Energy and Environment ) had an unutilized balance of €1.2 million ( 6.4 per cent ) of the originally approved budget . This mostly occurred as a result of a programmatic shift in the Special Resources for Africa from Major Programme C to Major Programme D ( Trade Capacity-building ) . Major Programme D ( Trade Capacity-building ) had an unutilized balance of €0.2 million ( 1.2 per cent ) of the originally approved budget . Staff cost savings in the amount of €1.7 million have been partially offset by increased expenditure under consultancy ( €0.27 million ) as well as higher spending for the Special Resources for Africa ( €1.6 million ) as described above . Major Programme E ( Poverty Reduction through Productive Activities ) had spent €3.6 million ( 19.5 per cent ) less than budgeted . The Major Programme was subject to savings under personnel costs mainly from a high vacancy rate resulting in a saving of €2.0 million . There was also a saving in the Special Resources for Africa in the amount of €1.6 million due to a shift in the programmatic focus towards Major Programme F. Major Programme F ( Cross-Cutting Programmes ) had been implemented with a reduced expenditure of €4.09 million ( 13.2 per cent ) . The main contributing factor was staff cost savings in the amount of €4.0 million , followed by underexpenditure in field network operating costs ( €1.4 million ) mainly arising from the fluctuation of the dollar . These savings were partly offset by increased expenditure in the Special Resources for Africa amounting to €1.3 million , as mentioned in the previous paragraph . Major Programme G ( Administration ) had been implemented with a reduced expenditure of €1.3 million ( 4.9 per cent ) . The main contributing factor was underexpenditure in communication costs of €0.6 million , which was driven by lower communication service charges . This is followed by underexpenditure in operating costs of €0.3 million and staff cost savings in the amount of €0.3 million . Major Programme H ( Buildings Management ) had generated savings amounting to some €3.3 million under staff costs due to high vacancy rates during the biennium . At the same time , the Buildings Management Services ( BMS ) special account recorded a surplus of €4.3 million , which brought the closing balance to a level of €19.9 million , out of which €9.3 million is still receivable . The accumulated funds on the BMS special account are fully programmed in connection with the ongoing refurbishment activities in the VIC , including that of the present conference building C. Major Programme I ( Indirect Costs ) had recorded savings in the amount of €2.6 million ( 13.4 per cent ) . The savings were partly attributable to UNIDO 's share of the reduced staff costs in BMS ( €0.9 million ) as reported above , but also to reduced expenditures under the various joint and common services , for example the security and safety services of €0.75 million . Financial implementation by major object of expenditure The underutilization of budgeted costs of €9.2 million ( 8.8 per cent ) under personnel costs comprises : As it is apparent from the above table , the underutilization of budgeted salary and common staff costs was mainly due to the higher than budgeted vacancy factors for Professional and General Service posts . Given that the largest component of the Organization 's regular budget is staff costs , it was necessary to make the most significant savings under this item in order to compensate for the expected non- or late/uncertain payment of assessed contributions . As the payment pattern became clearer in the second year of the biennium , some of the staff shortages were alleviated by an increased usage of temporary assistance and consultancy funds . Underutilization of funds for official travel of €0.03 million ( 1.4 per cent ) represented an almost full utilization . Savings in operating cost items in the amount of €4.3 million ( 16.2 per cent ) were the result of reduced requirements for document production and translation of €1.4 million , savings under the contribution to the security and safety services of €0.8 million and on UNIDO 's share of the overall reduced costs in BMS of €1.2 million and €0.9 million in total field network operating costs mainly arising from the fluctuation of the United States dollar . The underutilization of €0.9 million ( 15.2 per cent ) of information and communication technology resources was due to the reduction in communication service charges of €0.71 million and a reduction in IT consultancy costs of €0.37 million , partially offset by increases in other IT expenses . Regular Programme of Technical Cooperation resources were administered under the special account created for the purpose to which the full appropriation has been transferred . A marginal underutilization of €0.16 million was recognized under the Special Resources for Africa . Income The deficit of income over the budget estimates comprises : The deficit in cost reimbursement income of €0.8 million was directly related to the lower than anticipated contributions of Governments to the costs of UNIDO field offices . Miscellaneous income as contained in the budget estimates approved in decision GC.11/Dec.18 of €1.5 million was not fully achieved as illustrated below . Of the €1.7 million net currency exchange adjustment , €1.2 million represents the mandatory transfer to the exchange reserve account in line with the terms of decision GC.8/Dec.16 , to protect the Organization from exchange rate fluctuations . The remaining €0.5 million represent a net revaluation loss of book balances . Operational budget The operational budget is funded mainly from support cost reimbursement income earned on technical cooperation project delivery and from technical services provided by the Organization . Expenditure estimates to be financed during the biennium from support cost income were presented in the programme and budget document GC.11/11 and approved by the General Conference in decision GC.11/Dec.18 . The financial results for the biennium are as follows : A comparison of actual expenditure with the budget estimates is presented in tables 3 and 4 by major programme and major object of expenditure , respectively . While actual technical cooperation delivery and income did not reach the budgeted level , expenditure control resulted in the further increase of the operating reserve . Accordingly , the net reserve of €5.1 million brought forward from 2005 , increased to €6.5 million as at 31 December 2007 resulting in a surplus for the biennium 2006-2007 of €1.4 million , after taking into account cancellation of prior biennium obligations and prior biennium adjustments . Action required of the Committee The Committee may wish to take note of the information provided in the present document . Table 1 Regular budget Financial performance report for 2006-2007 by major programme ( In thousands of euros ) a Approved in decision GC.11/Dec.18 . b The balance of the appropriation reported above is attributed to the special account of BMS and is not subject to the financial regulations 4.2 ( b ) and 4.2 ( c ) . * Itemized separately below . Table 2 Regular budget Financial performance report for 2006-2007 by major object of expenditure ( In thousands of euros ) a Approved in decision GC.11/Dec.18 . Table 3 Operational budget Financial performance report for 2006-2007 by major programme ( In thousands of euros ) a Approved in decision GC.11/Dec.18 . Table 4 Operational budget Financial performance report for 2006-2007 by major object of expenditure ( In thousands of euros ) a Approved in decision GC.11/Dec.18 . For reasons of economy , this document has been printed in a limited number . Delegates are kindly requested to bring their copies of documents to meetings . |