A/79/5/Add.

11

United Nations

United Nations Office for Project Services

Financial report and audited

financial statements
for the year ended 31 December 2023
and

Report of the Board of Auditors

General Assembly
Official Records
Seventy-ninth Session
Supplement No. 5K
A/79/5/Add.11
General Assembly A/79/5/Add.11
Official Records
Seventy-ninth Session
Supplement No. 5K

United Nations Office for Project Services

Financial report and audited

financial statements
for the year ended 31 December 2023

and

Report of the Board of Auditors

United Nations • New York, 2024

Note

Symbols of United Nations documents are composed of letters combined with

figures. Mention of such a symbol indicates a reference to a United Nations document.

ISSN 1020-718X
 [24 July 2024]

Contents
Chapter Page

Letters of transmittal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
I. Report of the Board of Auditors on the financial statements: audit opinion . . . . . . . . . . . . . . . . 7
II. Long-form report of the Board of Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
A. Mandate, scope and methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
B. Findings and recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1. Follow-up of recommendations from previous years . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2. Financial overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3. Financial management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4. Budget management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5. Investment management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6. Project management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7. Procurement management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8. Human resources management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9. Information and communications technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
C. Transmissions of information by management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
1. Write-off of losses of cash, receivables and property . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2. Ex gratia payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3. Cases of fraud and presumptive fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
D. Acknowledgement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Annex
Status of implementation of recommendations up to the financial year ended
31 December 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
III. Financial report for the year ended 31 December 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
B. Highlights of results in 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
C. People excellence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
D. Accountability and transparency as a core value of the United Nations Office for
Project Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
E. System of internal controls and its effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

24-13155 3/146
 F. Looking ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
IV. Financial statements for the year ended 31 December 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
I. Statement of financial position as at 31 December 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
II. Statement of financial performance for the year ended 31 December 2023 . . . . . . . . . . . . 68
III. Statement of changes in net assets/equity for the year ended 31 December 2023 . . . . . . . 69
IV. Statement of cash flows for the year ended 31 December 2023 . . . . . . . . . . . . . . . . . . . . . 70
V. Statement of comparison of budget and actual amounts for the year ended
31 December 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Notes to the 2023 financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Annex
United Nations Office for Project Services individual contractors provident fund summary
for the period ended 31 December 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

4/146 24-13155
Letters of transmittal
Letter dated 22 May 2024 from the Executive Director and the
Chief Financial Officer and Director of Administration of the
United Nations Office for Project Services addressed to the Chair
of the Board of Auditors

The United Nations Office for Project Services (UNOPS) hereby submits its
annual financial statements for the year ended 31 December 2023.
We acknowledge that:
Management is responsible for the integrity and objectivity of the financial
information included in these financial statements.
The financial statements have been prepared in accordance with International
Public Sector Accounting Standards (IPSAS) and include certain amounts that are
based on the management’s best estimates and judgments.
Accounting procedures and related systems of internal control provide
reasonable assurance that assets are safeguarded, that the books and records properly
reflect all transactions and that, overall, policies and procedures are implemented with
an appropriate segregation of duties. UNOPS internal auditors continually review the
accounting and control systems. Further improvements are being implemented in
specific areas.
Management provided the Board of Auditors and UNOPS internal auditors with
full and free access to all accounting and financial records.
The recommendations of the Board of Auditors and UNOPS internal auditors
are reviewed by the management. Control procedures have been revised or are in the
process of being revised, as appropriate, in response to those recommendations.
We certify that, to the best of our knowledge, information and belief, all material
transactions have been properly charged in the accounting records and are properly
reflected in the appended financial statements.

(Signed) Jorge Moreira da Silva

Executive Director
(Signed) Lilian Aluoch Nyangaya
Chief Financial Officer a.i

24-13155 5/146
 Letter dated 24 July 2024 from the Chair of the Board of Auditors
addressed to the President of the General Assembly

I have the honour to transmit to you the report of the Board of Auditors, together
with the financial report and the audited financial statements of the United Nations
Office for Project Services for the year ended 31 December 2023.

(Signed) Hou Kai

Auditor General of the People’s Republic of China
Chair of the Board of Auditors

6/146 24-13155
 A/79/5/Add.11

Chapter I
Report of the Board of Auditors on the financial statements:
audit opinion
Opinion

We have audited the financial statements of the United Nations Office for
Project Services (UNOPS), which comprise the statement of financial position
(statement I) as at 31 December 2023 and the statement of financial performance
(statement II), the statement of changes in net assets (statement III), the statement of
cash flows (statement IV) and the statement of comparison of budget and actual
amounts (statement V) for the year then ended, as well as the notes to the financial
statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all
material respects, the financial position of UNOPS as at 31 December 2023 and its
financial performance and cash flows for the year then ended, in accordance with the
International Public Sector Accounting Standards (IPSAS).

Basis for opinion

We conducted our audit in accordance with the International Standards on

Auditing and the International Standards of Supreme Audit Institutions. Our
responsibilities under those standards are described in the section below entitled
“Auditor’s responsibilities for the audit of the financial statements”. We are
independent of UNOPS, in accordance with the ethical requirements relevant to our
audit of the financial statements, and we have fulfilled our other ethical
responsibilities in accordance with those requirements. We believe that the audit
evidence that we have obtained is sufficient and appropriate to provide a basis for our
opinion.

Information other than the financial statements and the auditor’s

report thereon

The Executive Director of UNOPS is responsible for the other information,

which comprises the financial report for the year ended 31 December 2023, contained
in chapter III below, but does not include the financial statements and our auditor’s
report thereon.
Our opinion on the financial statements does not cover the other information,
and we do not express any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to
read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in th e
audit, or otherwise appears to be materially misstated. If, on the basis of the work that
we have performed, we conclude that there is a material misstatement in the other
information, we are required to report that fact. We have nothing to report in thi s
regard.

24-13155 7/146
A/79/5/Add.11

Responsibilities of management and those charged with

governance for the financial statements

The Executive Director is responsible for the preparation and fair presentation
of the financial statements in accordance with IPSAS and for such internal control as
the Executive Director determines to be necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the Executive Director is responsible for
assessing the ability of UNOPS to continue as a going concern, disclosing, as
applicable, matters related to the going concern and using the going -concern basis of
accounting unless management intends either to liquidate UNOPS or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the financial
reporting process of UNOPS.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance as to whether the financial

statements as a whole are free from material misstatements, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit conducted in
accordance with the International Standards on Auditing will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these
financial statements.
As part of an audit in accordance with the International Standards on Auditing,
we exercise professional judgment and maintain professional scepticism throughout
the audit. We also:
(a) Identify and assess the risks of material misstatement in the financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than the risk of not detecting one resulting from error,
as fraud may involve collusion, forgery, intentional omission, misrepresentation or
the overriding of internal control;
(b) Obtain an understanding of internal control relevant to the audit in order
to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the internal control of
UNOPS;
(c) Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by management;
(d) Draw conclusions as to the appropriateness of management’s use of the
going-concern basis of accounting and, on the basis of the audit evidence obtained,
whether a material uncertainty exists in relation to events or conditions that may cast
significant doubt on the ability of UNOPS to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the

8/146 24-13155
 A/79/5/Add.11

audit evidence obtained up to the date of our auditor’s report. However, future events
or conditions may cause UNOPS to cease to continue as a going concern;
(e) Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements represent
the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our
audit.

Report on other legal and regulatory requirements

Furthermore, in our opinion, the transactions of UNOPS that have come to our
notice or that we have tested as part of our audit have, in all significant respects, been
in accordance with the financial regulations and rules of UNOPS and legislative
authority.
In accordance with article VII of the Financial Regulations and Rules of the
United Nations, we have also issued a long-form report on our audit of UNOPS.

(Signed) Hou Kai

Auditor General of the People’s Republic of China
Chair of the Board of Auditors
(Lead Auditor)
(Signed) Dorothy Pérez Gutiérrez
Acting Comptroller General of the Republic of Chile
(Signed) Pierre Moscovici
First President of the French Cour des comptes

24 July 2024

24-13155 9/146
A/79/5/Add.11

Chapter II
Long-form report of the Board of Auditors

Summary
The Board of Auditors has audited the financial statements of the United Nations
Office for Project Services (UNOPS) for the financial year ended 31 December 2023
in accordance with General Assembly resolution 74 (I) of 1946. The Board also
examined the financial transactions and operations executed at UNOPS. The interim
audit of UNOPS headquarters in Copenhagen, the Asia regional office and the
Bangkok Shared Service Centre in Bangkok, and the office of the General Counsel
and the New York Portfolios Office in New York was conducted on site. The Board
conducted the final audit at UNOPS headquarters in Copenhagen.

Audit opinion
In the Board’s opinion, the financial statements present fairly, in all material
respects, the financial position of UNOPS as at 31 December 2023 and its financial
performance and cash flows for the year then ended, in accordance with the
International Public Sector Accounting Standards (IPSAS).

Overall conclusion
In 2023, UNOPS incurred a deficit of $21.80 million from operations for the first
time since it began to implement the IPSAS accounting framework in 2012. Despite the
operational deficit, the overall financial position of UNOPS remained sound, with an
overall surplus of $41.33 million, attributable to a net finance income of $63.13 million.
The Board did not identify significant errors, omissions or misstatements from
the review of financial records of UNOPS for the year ended 31 December 2023.
However, the Board identified scope for improvement, particularly in the areas of
financial and budget management, investment management and project management,
the lessons of which could enhance UNOPS management capabilities in these areas.

Key findings
Ambiguity and deficiency in the management of shared services costs
The shared services cost of UNOPS remained an overrecovery balance in the
period 2021–2023, amounting to $29.06 million as at 31 December 2023, representing
28 per cent of annual average expenditure for the past three years. As part of the direct
costs, UNOPS did not trace shared services costs to specific projec ts, and some shared
services costs did not directly benefit specific projects providing the cost, leading to
a lack of project-level financial clarity and the risk of using surpluses from previous
projects to cover deficits in new ones. The communication b etween UNOPS and its
clients regarding recovery of shared services costs lacked sufficient transparency.
Overrecovery would exacerbate the financial burden on clients.

Deficiencies in the management of project classification, affecting revenue recognition

In accordance with IPSAS 9: Revenue from exchange transactions, UNOPS
classified its role as either principal or agent at the beginning of each project, based
on the level of responsibility and risk assumed. Due to the lack of a clear definition
regarding the significance of the risks and responsibilities of projects, inconsistencies
arose in the criteria used by different departments within UNOPS to determine the
classification of a project and in the implementation of the classificati on. Such

10/146 24-13155
 A/79/5/Add.11

inconsistencies had a potential impact on the accuracy of the classification, which in

turn affected revenue recognition.

Inappropriate financial derivative transactions with unqualified hedging instruments

and insufficient internal control, leading to a net financial loss of $15.23 million
Deviating from the non-speculative hedging strategy, inappropriate financial
derivative transactions with unqualified instruments were noted in UNOPS’ hedging
portfolio. These transactions, primarily for premium -based profits rather than
reducing risk exposure, were ineffective to offset the fluctuation of foreign exchange
revaluation. Without sufficient internal control, the option transactions in UNOPS
made a net financial loss of $15.23 million during the period 2021 –2023.

Need for continued involvement and targeted efforts to recover Sustainable

Investments in Infrastructure and Innovation funds
UNOPS had spent $6.33 million and allocated an additional $3.32 million for
the Sustainable Investments in Infrastructure and Innovation initiative’s legal
recovery actions as at the end of April 2024. However, the timeline, performance
indicators and objectives for these activities were not clearly defined. The due date
for the action has been extended from late 2023, with fund recovery efforts expected
to continue into 2025. UNOPS stated that information regarding the likelihood of
recovery, the latest progress and budget performance of the fund recovery could not
be shared with the Board due to the highly confidential nature of the recovery.

Delivery delay and underperformance in output quality of infrastructure projects,

posing a risk of financial losses and reputation impact
As a service provider for infrastructure, UNOPS implemented 228 active
infrastructure projects with a contract value of $4.483 billion as at 31 December 2023.
However, 45 projects, valued at $767 million, were not delivered on time.
Furthermore, UNOPS made provision with amount of $12.66 million for
infrastructure projects, representing 73 per cent of the total provision in the financial
statements for the year ended 31 December 2023. A case review revealed that, due to
underperformance in output quality, four projects faced risks of financial loss and
reputation impact, amounting to a total potential loss of $7.45 million.

Main recommendations
While further detailed recommendations are set out in the present report, in
summary, the Board recommends that UNOPS:

Ambiguity and deficiency in the management of shared services costs

(a) Establish clear guidance for carrying forward and usage of balances
from shared services to improve the recovery of shared services costs;
(b) Report the nature of shared services to the Executive Board in
compliance with the United Nations harmonized cost recovery guidance during
the budget estimate process for 2026–2027;
(c) Include a reference in the standard legal agreement about the UNOPS cost
recovery policy related to shared services to strengthen transparency in the future;

Deficiencies in the management of project classification affecting revenue recognition

(d) Conduct an assessment of projects with internal discrepancies arising
during project classification, and conduct relevant training to promote the
effective execution of the project classification process;

24-13155 11/146
A/79/5/Add.11

(e) Enhance the guidance provided in the project classification guidance

note in conjunction with the impending implementation of IPSAS 47;

Inappropriate financial derivative transactions with unqualified hedging instruments

and insufficient internal control, leading to a net financial loss of $15.23 million
(f) Conduct a comprehensive review of the nature, strategy, internal
control, and potential gains or losses of derivatives, to ensure that the use and
disclosure of financial derivatives transactions by UNOPS comply with the
IPSAS requirements;

Need for continued involvement and targeted efforts in the Sustainable Investments in
Infrastructure and Innovation funds recovery
(g) Maintain its involvement and continue targeted efforts in the recovery
of funds from the Sustainable Investments in Infrastructure and Innovation
investments in collaboration with the Office of Legal Affairs;

Delivery delay and underperformance in output quality of infrastructure projects

posing a risk of financial losses and reputation impact
(h) Effectively manage infrastructure projects as per contract agreements
to ensure monitoring of timelines and costs and timely action for issues raised;
(i) Strengthen training on infrastructure project management to enhance
technical review and regular supervision of infrastructure projects.

Follow-up of previous recommendations

As at 31 December 2023, of the 31 outstanding recommendations up to the
financial year ended 31 December 2022, 18 (58 per cent) had been implemented, 12
(39 per cent) were under implementation and 1 (3 per cent) had been overtaken by
events.

12/146 24-13155
 A/79/5/Add.11

Key facts

$1,216.96 million Total revenue

$1,238.76 million Total expenses

$63.13 million Net finance income

$41.33 million Surplus

$165.32 million Minimum operational reserve

$3,796.07 million Total assets

$3,502.26 million Total liabilities

$293.81 million Net assets/equity

A. Mandate, scope and methodology

1. The United Nations Office for Project Services (UNOPS) helps people to build
better lives and countries to achieve sustainable development. UNOPS is a demand -
driven and self-financing organization without any contributions from Member States
that relies on the revenue that it earns from the implementation of projects and the
provision of transactional and advisory services. It provides services that contribute
to peace and security, humanitarian and development operations of the United Nations
system. UNOPS revenue is dependent entirely on fees generated by the provision of
project services through advisory, implementation and transactional services in its
five core areas of expertise, namely, infrastructure, procurement, project
management, financial management and human resources.
2. The Board of Auditors has audited the financial statements of UNOPS for the
financial year ended 31 December 2023 in accordance with General Assembly
resolution 74 (I) of 1946. The audit was conducted in conformity with the financial
regulations and rules of UNOPS, as well as the International Standards on Auditing
and the International Standards of Supreme Audit Institutions for the financial audit
of public sector entities. Those standards require that the Board comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance as to
whether the financial statements are free from material misstatement.
3. The audit was conducted primarily to enable the Board to form an opinion as to
whether the financial statements presented fairly the financial position of UNOPS as
at 31 December 2023 and its financial performance and cash flows for the year then
ended, in accordance with the International Public Sector Accounting Standards
(IPSAS). This included an assessment as to whether the expenses recorded in the
financial statements had been incurred for purposes approved by the UNOPS
governing body and whether they had been properly classified and recorded in
accordance with the UNOPS financial regulations and rules.
4. The audit included a general review of financial systems and internal controls
and a test examination of the accounting records and other supporting evidence to the
extent that the Board considered it necessary to form an opinion on the financial
statements.
5. The Board reviewed UNOPS operations under regulation 7.5 of the Financial
Regulations and Rules of the United Nations. The Board conducted an on -site interim
audit of UNOPS headquarters in Copenhagen, the Asia regional office and Bangkok

24-13155 13/146
A/79/5/Add.11

Shared Service Centre in Bangkok, and General Counsel and New York Portfolios
Office in New York from 14 October to 16 November 2023. The Board conducted the
final audit from 4 April to 10 May 2024 at UNOPS headquarters in Copenhagen.
6. The present report covers matters that, in the opinion of the Board, should be
brought to the attention of the General Assembly. The report was discussed with
UNOPS management, whose views have been appropriately reflected.

B. Findings and recommendations

1. Follow-up of recommendations from previous years

7. There were 31 outstanding recommendations up to the year ended 31 December
2022. At the time of the audit of the Board, 18 (58 per cent) had been implemented,
12 (39 per cent) were under implementation and 1 (3 per cent) had been overtaken by
events, as shown in table II.1. The rate of implementation of recommendations was
higher than that achieved in the previous year (56 per cent).

Table II.1
Status of implementation of recommendations

Report of the Board of Auditors

Status A/74/5/Add.11 A/75/5/Add.11 A/76/5/Add.11 A/77/5/Add.11 A/78/5/Add.11 Total

Financial year 2018 2019 2020 2021 2022

Open recommendations as at
31 December 2022 2 1 2 7 19 31
Status of implementation in 2023
(a) Implemented 2 1 1 4 10 18
(b) Under implementation – – – 3 9 12
(c) Not implemented – – – – – –
(d) Overtaken by events – – 1 – – 1
Open recommendations as at
31 December 2023 – – – 3 9 12

Source: Analysis by the Board of Auditors.

8. The Board further carried out an analysis of the 12 open recommendations as at

31 December 2023 and noted that:
(a) Five (42 per cent) related to financial and budget management, three
(25 per cent) related to project management, two (17 per cent) referred to procurement
management, one (8 per cent) referred to human resources management and one
(8 per cent) referred to investment management;
(b) With regard to the aging of the recommendations, nine (75 per cent) were
issued one year ago and three (25 per cent) were issued two years ago;
(c) As for the recommended corrective measures, four (33 per cent) indicated a
need for the development of regulations, two (17 per cent) involved regulation
improvement and six (50 per cent) required corrections in compliance with regulations.
9. The Board acknowledged that UNOPS had progressed towards implementation
of the pending recommendations and noted that preliminary action had been initiated
for a number of cases, but that further efforts were required for actual implementation.
Details are set out in the annex to the present chapter.

14/146 24-13155
 A/79/5/Add.11

2. Financial overview
Financial results
10. The General Assembly, in its decision 48/501, established UNOPS as a separate,
self-financing entity to provide capacity-building services, including project
management, procurement and the management of financial resources. To cover its
expenses, UNOPS charges its clients fees for services rendered. UNOPS has incurred
a deficit of $21.80 million from operations for the first time since it implemented the
IPSAS accounting framework in 2012, mainly due to changes in the composition of
delivery volume on principal project expenditure and the implementation of the
comprehensive response plan. It reported an overall surplus of $41.33 million in 2023
against the deficit of $28.78 million in 2022, resulting from a net finance income of
$63.13 million during the period.
11. The net revenue that UNOPS generates from its project activities is used to
cover its central management costs. As shown in table II.2, since 2019 UNOPS has
generated net revenue from its project activities, ranging from $99.25 million in 2019
to $113.60 million in 2023. The net surplus/deficit UNOPS reported each year
contained net finance income.

Table II.2
Analysis of surpluses reported by the United Nations Office for Project Services
(Thousands of United States dollars)

2023 2022 2021 2020 2019

Net revenue from project activities a 113 602 127 326 139 703 109 046 99 247
Miscellaneous and non-exchange revenue 949 2 883 9 766 8 591 4 461
Non-project expenses b (136 352) (128 660) (85 933) (89 168) (82 202)

Surplus/(deficit) from operations (21 801) 1 549 63 536 28 469 21 506

Net finance income/(expense) 63 126 (30 329) 26 845 11 031 25 631

Reported surplus/(deficit) 41 325 (28 780) 90 381 39 500 47 137

Source: UNOPS financial statements.

a
Direct project revenue less direct project expenditure.
b
Total expenditure less direct project expenditure.

Net assets and equity

12. In 2021, the new minimum operational reserve requirement was established by
the Executive Board (DP/2022/2, decision 2021/21) to provide improved protection to
UNOPS as a self-financing United Nations entity, in line with the risks faced by the
organization. The Executive Board approved the change in the minimum requirement
for the operational reserves of UNOPS to be set at 25 per cent of the infrastructure
service line expenses, 5 per cent of expenses for other service lines and 33 per cent of
administrative costs, with a weight of 50 per cent for the current year, 30 per cent for
the previous year and 20 per cent for the year prior. On the basis of this formula, for
the period ended 31 December 2023 the minimum operational reserve requirement was
$165.3 million, an increase of $18.1 million compared with 2022.
13. In 2019, a growth and innovation reserve was established, the value of which
was set at 50 per cent of the excess of the operational reserves. In February 2022, the
Executive Board approved the establishment of the Sustainable Investments in
Infrastructure and Innovation reserve at an initial level of $105 million, with future

24-13155 15/146
A/79/5/Add.11

changes subject to the Executive Board’s approval (DP/2022/14, decision 2022/5).

However, in June 2022 the Executive Board requested UNOPS to transfer into the
operational reserves the balance not committed to projects from the growth and
innovation reserve, the Sustainable Investments in Infrastructure and Innovation
reserve and accumulated surpluses. In August 2023, the Executive Board approved
the release of committed funds from the Sustainable Investments in Infrastructure and
Innovation initiative to the operational reserve ( DP/2024/2, decision 2023/22). As at
31 December 2023, the Sustainable Investments in Infrastructure and Innovation
reserve decreased to zero (2022: $63.05 million).
14. In February 2023, the Executive Board requested that UNOPS distribute without
delay its excess reserves (defined as total accumulated reserves minus the minimum
operational reserve) accumulated as at 31 December 2021, minus $35.4 million (for
the comprehensive response plan), to each paying entity (DP/2023/11, decision
2023/4). The Board of Auditors was informed that the total excess reserve to be
refunded was set at $123.8 million. With the refund approved and in progress, the
approved distribution to paying entities was transferred out from the net assets.
15. As a result of the surplus recognized in 2023 and the approved distribution, the
net assets as at 31 December 2023 decreased to $293.81 million (2022:
$324.04 million). Details are shown in the figure below.

Figure II.I
Net assets and equity as at 31 December 2023
(Millions of United States dollars)

Source: UNOPS financial statements.

Ratio analysis
16. The Board analysed the financial health of UNOPS using a range of key ratios,
as set out in table II.3.

16/146 24-13155
 A/79/5/Add.11

Table II.3
Financial ratios as at 31 December

Financial ratios 2023 2022 2021 2020 2019

Cash ratio a
Cash + short-term investments: current liabilities 0.94 0.82 0.80 0.85 0.81
Quick ratio b
Cash + short-term investments + accounts
receivable: current liabilities 1.05 0.86 0.82 0.87 0.84
Current ratio c
Current assets: current liabilities 1.05 0.87 0.83 0.88 0.85
Solvency ratio d
Total assets: total liabilities 1.08 1.10 1.07 1.08 1.12
Project surplus e (margin percentage f ) $113.6 million $127.3 million $139.7 million $109 million $99.2 million
Direct project revenue – direct project expenses (9.3 per cent) (10.4 per cent) (11.7 per cent) (9.4 per cent) (8.2 per cent)
Net surplus (margin percentage f ) $41.33 million -$28.78 million $90.38 million $39.5 million $47.14 million
Revenue – expenses (3.4 per cent) (-2.4 per cent) (7.5 per cent) (3.4 per cent) (3.9 per cent)

Source: UNOPS financial statements.

a
The cash ratio serves as an indicator of an entity’s liquidity by measuring the amount of cash, cash equivalents or invested
funds there are in current assets to cover current liabilities.
b
The quick ratio is more conservative than the current ratio because it excludes inventory and other current assets, which are
more difficult to turn into cash. A higher ratio means a more liquid current position.
c
A high ratio indicates an entity’s ability to pay off its short-term liabilities.
d
A high ratio is a good indicator of solvency.
e
Direct project revenue and expenses relate to the project revenue/expenses reported in note 20 to the financial statements.
f
Margin percentage refers to project revenue/total revenue.

17. As at 31 December 2023, UNOPS had total assets of $3.8 billion (2022:
$3.68 billion), consisting mainly of investments of $2.7 billion (2022: $2.89 billion)
and cash and cash equivalents of $702.59 million (2022: $ 604.61 million). The total
liabilities of UNOPS stood at $3.5 billion as at 31 December 2023 (2022: $3.35 billion),
with liabilities relating to project cash advances received at $2.8 billion (2022:
$2.75 billion), representing 80 per cent (2022: 82 per cent) of the total liabilities. Both
total assets and total liabilities as at 31 December 2023 increased modestly.
18. The Board noted that, in 2023, there was a significant increase in the cash ratio,
quick ratio and current ratio compared with 2022, due to a higher increase in cash
holdings and short-term investments compared with current liabilities. The solvency
ratio decreased slightly compared with 2022, from 1.1 to 1.08, approximately the
same level as in 2020 and 2021. The overall gross margin on project services declined
for the second consecutive year from 11.7 per cent in 2021 and 10.4 per cent in 2022
to 9.3 per cent in 2023. Due to substantial growth in finance income, the net surplus
and net margin percentage increased considerably from the negative result in 2022,
reaching $41.33 million and 3.4 per cent, respectively, in 2023. The overall financial
position of UNOPS remained sound, given that the solvency ratio was above one.

Growth trend in management expenses and shared services costs

19. As a demand-driven and self-financing organization, UNOPS operates on the
basis of full cost recovery. Specifically, each engagement agreement between UNOPS
and a partner includes provisions to ensure that UNOPS recovers all direct costs,
including shared services costs, and indirect costs incurred during the implementation
of the engagement.

24-13155 17/146
A/79/5/Add.11

20. Although the fees charged to clients decreased from approximately

$141.43 million in 2021 to $117.53 million in 2023, the actual management expenses
increased significantly. In 2021, 2022 and 2023, the expenditures of indirect costs,
referred to as management expenses, were $67.72 million, $94.30 million and
$117.04 million, respectively, while the delivery amount of projects by UNOPS was
$3,433.18 million, $3,480.96 million and $2,681.28 million, respectively. Both the
expenditure of management expenses and the ratio of management expenses to
delivery amount showed a growth trend from 2021 to 2023.
21. In 2021, 2022 and 2023, the expenditure of shared services costs were
$100.99 million, $94.27 million and $112.29 million, respectively, showing a slight
decrease from 2021 to 2022, followed by rapid growth from 2022 to 2023, both in the
shared services costs expenditure and the ratio of shared services costs to delivery amount.
22. A comparison of the expenditure of management expenses and shared services
costs, along with their respective ratios to delivery amount, for the period from 2021
to 2023 is shown in figure II.II.

Figure II.II
Expenditure of management expenses and shared services costs, and ratios of
management expenses and shared services costs to delivery amount, 2021 to 2023
(Millions of United States dollars)

Source: UNOPS corporate performance report.

3. Financial management
Ambiguity and deficiency in the management of shared services costs
23. According to UNOPS financial regulations and rules, direct costs are costs
incurred for the benefit of a particular project or client(s). Such costs are clearly
identifiable as having a direct benefit for a particular project or client(s) and can be
clearly documented. Rule 2.2 of the UNOPS operational instruction on engagement
pricing and costing (OI.FG.2018.07) states that direct costs include costs incurred for
engagement-related activities, such as shared support services on a local, regional or
corporate level.
24. Paragraphs 2.4, 2.5 and 2.6 of the UNOPS operational instruction on budgeting
and internal investment management (OI.FG.2018.01) state that the recovery of
shared services costs is expected to break even on an annual basis, and that the carry -
over of any cost recovery balances between budget periods is subject to review and
approval by the Chief Financial Officer.

18/146 24-13155
 A/79/5/Add.11

25. UNOPS shared services costs constitute a component of direct costs and are
categorized into locally managed direct costs (renamed “local shared services”),
regionally managed direct costs (renamed “regional shared services”) and centrally
managed direct costs (renamed “global shared services”). According to the
operational instruction on engagement pricing and costing, costs for shared services
shall be first recorded in a “pool” of relevant activities and then allocated at regular
intervals between the different engagements and UNOPS management activities that
have benefited from the shared services in a reasonable, measurable and practical
manner in accordance with pre-defined distribution keys. Any balances (surplus and
deficit) of shared services are closed to deferred revenue.
26. The Board reviewed the financial data provided by UNOPS and noted that
during the period 2021–2023, the total recovery of shared services costs was
$324.37 million, with expenditures amounting to $307.58 million, resulting in an
overrecovery balance of $29.06 million (accounting for 28 per cent of annual average
expenditure of 2021–2023) as at 31 December 2023. In 2023, the excess recovery
amounts in the balances of global shared services and regional shared services have
shown a declining trend. However, local shared services experienced a slight growth
in 2023, with a surplus of $3.33 million. Details of the shared services costs during
the period 2021–2023 are shown in table II.4.

Table II.4
Details of shared services costs, 2021 to 2023
(Thousands of United States dollars)

2021 2022 2023

Opening balance of global shared services 8 679 12 456 7 795

Global shared services recovery 35 509 31 936 31 664
Global shared services expenses 31 732 36 597 37 999
Global shared services surplus/(deficit) 3 777 -4 661 -6 335

Ending balance of global shared services 12 456 7 795 1 460

Opening balance of local shared services 1 795 10 808 21 726

Local shared services recovery 73 668 64 821 73 060
Local shared services expenses 64 655 53 903 69 726
Local shared services surplus/(deficit) 9 013 10 918 3 334

Ending balance of local shared services 10 808 21 726 25 060

Opening balance of regional shared services 1 797 1 993 2 647

Regional shared services recovery 4 836 4 424 4 453
Regional shared services expenses 4 640 3 770 4 559
Regional shared services surplus/(deficit) 196 654 -106

Ending balance of regional shared services 1 993 2 647 2 541

Accumulated balance of shared services costs 25 257 32 168 29 061

Source: Data provided by UNOPS.

27. The Board reviewed the recovery of the shared services costs in the 2022 –2023
biennium and noted deficiencies in the management of shared services costs,
including the observations set out below:

24-13155 19/146
A/79/5/Add.11

(i) Inability to trace the cost of shared services back to the project
28. The United Nations harmonized cost recovery guidance states that direct costs
are the necessary and reasonable costs incurred in delivering a specific programme or
project. These costs are 100 per cent directly charged, allocated or apportioned to the
funding arrangement for that programme or project.
29. The Board observed that, in 2021, UNOPS had collected shared services costs
totalling $109 million from 1,673 projects, of which 1,036 projects had ended as of
December 2023. In 2022, UNOPS had collected shared services costs totalling
$96.76 million from 1,533 projects, of which 626 projects had ended as of December 2023.
30. The Board noted that the shared services costs, which were consolidated in a
“pool”, were not recorded as revenue on the basis of expenditures incurred, and could
not be allocated to specific projects, resulting in surplus or deficit being unable to be
broken down at project level.
31. The Board further noted that there was a risk that UNOPS might utilize surplus
from prior projects to cover shared service deficits in subsequent projects, with the
costs not allocated to the project providing the funds. For instance, the UNOPS
project finance deck for the fourth quarter in 2023 revealed that the Middle East office
incurred a deficit of $0.10 million for local shared services in 2023, implying possible
subsidization for 2023 project costs from prior years’ projects overrecovery, with
transactions lacking project-specific clarity. In another instance, in order to reduce
the accumulated surplus for global shared services, UNOPS allocated $5.04 million
from the global shared services budget to support 12 internal projects in 2022,
incurring $2.95 million from 2022 to 2023. These overrecoveries for global shared
services were not directly incurred by the activities required to implement the project
for which they were provided, and could not be attributed to a specific project.
32. Management explained that UNOPS is implementing a benchmarking and
improvement process to ensure the cost recovery for shared services is budgeted at
adequate levels for each partner and project, and is consistent with best practices of
similar entities.
33. The Board is of the view that the inability to attribute shared services costs at
project level may exacerbate the financial burden on individual projects and the
corresponding clients. If a surplus exists in shared services costs, there is no
mechanism in place to refund clients on a project basis, similar to the direct costs that
were recovered based on actual expenditures.

(ii) Insufficient transparency in communication with clients

34. The Board sampled several project agreements and noted that UNOPS did not
proactively specify the methodology for recovering and utilizing shared services costs
in agreements with clients, nor were potential refunds of surplus embodied in the
clauses. Upon project completion, UNOPS did not provide a detailed breakdown of
actual expenditures of shared services costs due to the inability to attribute them at
the project level.
35. Although management explained that such clauses and financial details were
provided upon request if clients had specific requirements, the Board perceives
ambiguity between the direct cost of the project and the mixed use of recovery funds,
and room for improvement in transparency to clients. Considering decision 2022/21
of the Executive Board and the results of the 2022 partner survey, more transparency
was requested in pricing and costing of UNOPS.
36. The Board recommends that UNOPS establish clear guidance for carrying
forward and usage of balances from shared services to improve the recovery of
shared services costs.

20/146 24-13155
 A/79/5/Add.11

37. The Board also recommends that UNOPS report the nature of shared
services to the Executive Board in compliance with the United Nations harmonized
cost recovery guidance during the budget estimate process for 2026 –2027.
38. The Board further recommends that UNOPS include a reference in the
standard legal agreement about the UNOPS cost recovery policy related to
shared services to strengthen transparency in the future.
39. UNOPS accepted the recommendations.

Deficiencies in the management of project classification affecting revenue recognition

40. In the UNOPS guidance on the management of project classification, it is stated
that each project is to be classified as principal or agent at the time of project approval
within the OneUNOPS system, based on the project classification guidance developed
by UNOPS, and that project classification is contingent upon the roles,
responsibilities and service lines of UNOPS for each project output.
41. In its financial report for the year ended 31 December 2023, UNOPS states that
“IPSAS distinguishes between contracts where UNOPS acts as a principal and contracts
where it acts as an agent. In other words, where UNOPS delivered services while
retaining the significant risk of ownership, that is, by acting as a principal, the revenue
is recognized in full on the statement of financial performance. Where UNOPS
delivered services on behalf of its partners, bearing insignificant risk of ownership, that
is, by acting as an agent, only the net revenue is reported on the statement.”
42. As per the Process and Quality Management System, the project classification
process mandates that after project creation, project managers ascertain whether
UNOPS assumes the role of principal or agent based on its responsibilities in the
project. The outcome is then recorded in the project classification template, which is
subsequently submitted to the Integrated Practice Advice and Support Unit for review
and approval, thereby finalizing the classification.

(i) Deficiencies and disputes in the project classification process

43. The Board noted that in 2023, the UNOPS Internal Audit and Investigations
Group raised concerns regarding the classification methods and standards used by
UNOPS, particularly in the case of three projects amounting to $1.1 billion for which
UNOPS was classified as agent by the Myanmar country office. The Internal Audit
and Investigations Group determined that UNOPS assumed significant
responsibilities and risks in these projects and thus should be classified as principal
rather than agent. Meanwhile, the Finance Group held the opposite opinion that
UNOPS assumed limited risks in the three projects and should maintain its original
classification as an agent. Discrepancies also existed during the Integrated Practice
Advice and Support unit’s project classification review process regarding the
determination of the significance of UNOPS responsibilities in projects and its role
assignment compared with the perspectives held by the Finance Group, such as
disputes regarding the logistics aspect of a procurement pro ject.
44. The Board reviewed over 400 ongoing projects in 2023, and noted that 122
projects, valued at $2.5 billion, were classified as agent, due to fewer perceived
responsibilities and risk, but observed that there was a lack of clear criteria for
assessing the magnitude of responsibilities and risks.
45. Management explained that project classification was applied on a case -by-case
basis, often leading to differing departmental views and ambiguity, due to the absence
of a detailed matrix of responsibilities aligned with IPSAS requirements. In addition,
some project managers lacked comprehensive understanding of IPSAS project

24-13155 21/146
A/79/5/Add.11

classification. With the impending implementation of IPSAS 47 in 2026, UNOPS has

already made significant preparations and will transit to output classification.
46. Noting that project classification is critical due to its impact on revenue
recognition, the Board is concerned that divergent interpretations of relevant policies
among different departments within UNOPS leads to significant discrepancies in
understanding among project teams, which is detrimental to project classification
management and the accuracy of revenue recognition.

(ii) Insufficient implementation of Process and Quality Management System standards

47. UNOPS classified projects into five types based on the provided products and
services: implementation, infrastructure, procurement, fund management, and human
resources management, with mixed types for projects involving multiple service lines.
The Process and Quality Management System states that service lines constituting
more than 10 per cent of the total project value should be considered for classification .
48. The Board noted that in practice, UNOPS sometimes considered the absolute
monetary value, rather than the 10 per cent threshold. The Board reviewed 70 ongoing
projects in 2023, and noted that in 4 projects, service lines that constituted less than
10 per cent of the total project value were considered during project classification,
contrary to the provisions outlined in the Process and Quality Management System.
Those four projects had a collective engagement value of $2.1 million.
49. The Board is of the view that there are inconsistencies on the materiality of
service lines provision between the execution standards and provision in the Process
and Quality Management System during the project classification process.
50. Management explained that it is critical to use manual judgement for each
project, especially for components under 10 per cent. In certain cases, due to the
budget amount of the project, smaller components under 10 per cent were included
for a more granular consideration.
51. The Board is of the view that corresponding guidance and sufficient justification
should be in place to control the outcome, thus avoiding deviations resulting from
subjective interpretation differences.
52. The Board recommends that UNOPS conduct an assessment of projects with
internal discrepancies arising during project classification, and conduct relevant
training to promote the effective execution of the project classification process.
53. The Board further recommends that UNOPS enhance the guidance
provided in the project classification guidance note in conjunction with the
impending implementation of IPSAS 47.
54. UNOPS accepted the recommendations.

Not reflecting all relevant transactions in the calculation of the refund amount from
the excess reserves
55. In its decision 2023/4, the Executive Board decided that UNOPS should
distribute its excess reserves to paying entities, defining excess reserves as “total
accumulated reserves minus the minimum operational reserve, as established by the
Executive Board in its decision 2021/21”.
56. The Board noted that UNOPS reported to the Executive Board that, based on
the financial statements as at 31 December 2021, its excess reserves amounted to
$123.8 million, calculated as the total accumulated reserves minus the minimum
operational reserve and funds committed Sustainable Investments in Infrastructure
and Innovation, which UNOPS maintained at $63 million.

22/146 24-13155
 A/79/5/Add.11

57. The Board recalled that as at 31 December 2021, the $63 million allocated to
the Sustainable Investments in Infrastructure and Innovation investments had
incurred an accumulated impairment loss of $39.02 million, which was diminishing
the total accumulated reserves. However, the impact of the impairment loss on the
total accumulated reserves was not sufficiently considered during the calculation
process of the excess reserves, leading to an underestimation of $39.02 million in the
refund amount.
58. Management stated that the Sustainable Investments in Infrastructure and
Innovation reserve was created at the request of the Executive Board, and changes to
the reserve could only be made by the Executive Board. The investments and
associated impairment were mutually exclusive from the Sustainable Investments in
Infrastructure and Innovation reserve.
59. The Board further noted that UNOPS, in its submission to the Executive Board
on the proposal for the establishment of the Sustainable Investments in Infrastructure
and Innovation reserve (DP/OPS/2022/2), stated that the separation of the Sustainable
Investments in Infrastructure and Innovation reserve from the growth and innovation
reserve would enhance transparency and oversight of the Sustainable Investments in
Infrastructure and Innovation programme by consolidating all financial impacts into
one designated reserve. UNOPS stated that the purpose of the designated reserve was
to fund all investments up to the maximum level of the reserve and to record the
valuation of existing investments, and said that any losses would be debited to the
reserve. Therefore, the Sustainable Investments in Infrastructure and Innovation reserve
was expected to reflect the fair value of Sustainable Investments in Infrastructure and
Innovation investments, according to the initial purpose of the reserve.
60. The Board is of the view that the impact of the Sustainable Investments in
Infrastructure and Innovation impairment loss should be considered in the calculation
of the excess reserves, considering that losses would be debited to the Sustainable
Investments in Infrastructure and Innovation reserve, which would result in excess
reserves amounting to $162.82 million. Not incorporating Sustainable Investments in
Infrastructure and Innovation impairment losses in the calculation process would lead
to an underestimation of the excess reserve amount.
61. Management explained that the impact of Sustainable Investments in
Infrastructure and Innovation impairments was accounted for and included in net
assets and equity.
62. In its decision 2023/22, the Executive Board approved the release of committed
funds from the Sustainable Investments in Infrastructure and Innovation reserve to
the operational reserve and endorsed the proposed methodology and time frame for
distributing, within 12 months following receipt of the Board’s report for the financial
period of 2023, any excess reserves accumulated in the 2022 –2023 budget cycle to
paying entities.
63. Considering that the released Sustainable Investments in Infrastructure and
Innovation reserve of $63 million was accumulated from surpluses generated from
client projects and UNOPS finance income prior to 2021, the Board is of the view
that it is of paramount importance that full consideration be given to the source of the
excess reserve, especially the clients that contributed to the reserve, to ensure the
fairness and transparency of subsequent refunds of excess reserves.
64. The Board recommends that UNOPS present to the Executive Board a
revised calculation methodology for calculating accurate levels of excess reserves
that is in line with the Executive Board’s request to ensure that there is no
accumulation of liquid excess reserves in UNOPS operations.
65. UNOPS accepted the recommendation.

24-13155 23/146
A/79/5/Add.11

Delays in meeting expectations regarding excess reserves refunds

66. In its decision 2023/18, the Executive Board recalled its decision 2023/4 and
requested UNOPS to make a good faith effort over a maximum of 12 months to
distribute all excess reserves to paying entities, after which UNOPS would propose
to the Executive Board at the first regular session of 2024 an alternative use for
undisbursed funds, within the United Nations system and/or to replenish the UNOPS
minimum operational reserve.
67. Mandated by the Executive Board, UNOPS was required to refund the excess
reserves as at 31 December 2021, amounting to $123.8 million, by the first session
scheduled for end of January or beginning of February 2024.
68. The Board noted that, as at 31 December 2023, 60 entities have not been
refunded, totalling $28.82 million, constituting 24 per cent of the total amount of
excess reserves. Nine official letters, which were used to inform the entity of the exact
refund amount and seek for guidance on credit options, were sent to the paying
entities between October and December 2023, with three dispatched in late December,
very close to the refund deadline.
69. Management attributed the delay primarily to the unfamiliarity of both UNOPS
and the paying entities with the refund process. The formal refund process has been
prolonged owing to various issues, with delays on the part of both UNOPS and partners.
70. As a result of the challenges encountered in completing the refunds on time,
UNOPS proposed a further extension of the refund deadline from 31 December 2023
to 31 December 2024, which the Executive Board approved in decision 2024/6 in
January 2024.
71. Considering that the Executive Board has requested UNOPS to propose a refund
of excess reserves every biennial budget period, starting in 2023, and that the
distribution should occur within 12 months following the receipt of the Board’s report,
this indicates that the refund process is set to become routine, with a clear time frame.
The Board believes that with the lessons learned and experience built with paying
entities, along with best practices, integrated into a policy, the process might be more
streamlined for refunds of excess reserves in the future. It would facilitate smoother
communication and instruction exchange between paying entities and UNOPS.
72. The Board recommends that UNOPS establish operational guidelines to
ensure timely completion of excess reserves refunds.
73. UNOPS accepted the recommendation.

4. Budget management
74. The original management budget for UNOPS in 2023 was $90.6 million, while
the actual amount was $126 million, exceeding the original management budget by
$35.4 million. The main factors were the implementation of the 2023 comprehensive
response plan and an increase in the internal investment budget implementation rate.
The Board focused on sample reviews of the preparation and implementation of the
comprehensive response plan, as well as the utilization and performance of internal
investment funds.

Defective budget formulation and ineffective performance of the comprehensive

response plan
75. In accordance with the request and decision of the Executive Board, UNOPS
developed the comprehensive response plan in February 2023 to address third -party
recommendations on the Sustainable Investments in Infrastructure and Innovation,

24/146 24-13155
 A/79/5/Add.11

the UNOPS internal control systems, risk management and overall governance
structures, with a maximum allocation of $35.4 million. With the establishment of a
budget for the comprehensive response plan, the excess reserves returned to paying
entities decreased by $35.4 million.

(i) Absence of supplementary management budget proposals to the Advisory Committee

on Administrative and Budgetary Questions
76. As provided in regulation 14.08 and rule 114.05 of the UNOPS financial
regulations and rules, the Executive Director may prepare supplementary proposals
to amend the management budget in a form consistent with the approved management
budget, and submit such proposals to the Executive Board. They shall also be
submitted to the Advisory Committee on Administrative and Budgetary Questions,
which shall be requested to review them and report thereon to the Executive Board.
Supplementary proposals to amend the management budget may be submitted if
inflation estimates, currency fluctuations or other cost factors are likely to have a
significant effect on approved appropriations.
77. The Board noted that the comprehensive response plan was presented to the
Executive Board and the first tranche of $11.8 million was released in 2023. However,
UNOPS did not submit a supplementary proposal to the Advisory Committee on
Administrative and Budgetary Questions for review.
78. Management explained that the transfer from the reserve approved under
Executive Board decision 2023/4 was executed under regulation 22.02. Therefore, the
regulation related to the supplementary budget proposal was not applicable.
79. The Board is of the view that the proposed budget for the comprehensive
response plan has significant implications for the UNOPS initial management budget
of $100 million; the first tranche of $11.8 million released exceeded 10 per cent of
the annual management budget.
80. The Board further noted the absence of a clear definition detailing the
circumstances under which supplementary proposals to amend the management
budget should be submitted, particularly regarding “other cost factors” likely to have
a significant effect on approved budget appropriations.
81. The Board is concerned that lack of clarity regarding this provision might lead
to subjective interpretations and affect the consistency of reviews and approvals for
supplementary proposals to amend the management budget.

(ii) Low implementation rate for comprehensive response plan budget due to lack of
detailed project planning and insufficient budgeting basis
82. The Board noted that by the end of 2023, the actual expenditure for the
comprehensive response plan was $8.7 million and that the first tranche of
$11.8 million had not been fully utilized. As of the end of March 2024, five of the
seven activities in the comprehensive response plan, with an original completion date
of December 2023, had been postponed: two to the end of 2027, with a budget of
$21.1 million, and three to the end of 2024, with a budget of $12.1 million.
83. The Executive Board approved the carry forward of the balance of the allocated
sum of $35.4 million to the budget period 2024–2025, and the release of a second
tranche of $11.8 million to continue implementation of the comprehensive response
plan.
84. Management explained that UNOPS made significant progress in implementing
the comprehensive response plan in 2023, despite encountering challenges. As part of

24-13155 25/146
A/79/5/Add.11

the 2024 budget planning process, UNOPS engaged in detailed budget planning for
the carry-over amount in the revised budget.
85. In response to the low implementation rate of the comprehensive response plan
budget, the Board further reviewed the budget formulation and implementation of the
process innovation and digitalization programme, the project with the highest budget
in the comprehensive response plan, at $21.1 million, which is intended to enhance
the UNOPS enterprise resource planning system. The Board noted that, as of the end
of 2023, only $2.6 million had been spent, with the remaining $18.5 million of the
budget funds carried forward to future years.
86. Management explained that UNOPS had estimated the budget required for the
process innovation and digitalization programme in 2023 based on the third party’s
evaluation report, which had calculated a total estimated cost of $63 million over
three years; the 2023 budget of $21.1 million represented one third of the total
estimated amount. At the time of the determination of the budget needed for 2023,
the digital transformation effort was at its very early stages, and after more
consultation and planning, the overall programme timeline was extended to five years.
87. The Board is of the view that the budget formulation for the comprehensive
response plan in 2023 lacked detailed project planning and sufficient basis about
future events, which resulted in a low budget implementation rate.

(ⅲ) Underutilization of Salesforce system licences for the process innovation and
digitalization programme
88. In its report on the UNOPS budget estimates for the biennium 2024 –2025
(DP/OPS/2023/8), the Advisory Committee on Administrative and Budgetary
Questions said that it trusted that more detailed information regarding the benefits of
the digital transformation programme (renamed the process innovation and
digitalization programme) would be provided to the Executive Board during its
consideration of the report of the Advisory Committee and would be included in
future budget estimates.
89. In its previous audit report (A/78/5/Add.11, chap. II, para. 168), the Board noted
that UNOPS had purchased 6,300 Salesforce system licences for the process
innovation and digitalization programme at the end of 2022, amortized over three
years, with $1.57 million amortized in 2023. These licences are set to expire by the
end of 2025, but as of the end of 2023, 3,944 licenses had been assigned and only 314
had been used, accounting for 4 per cent of the 6,300 licences purchased, indicating
underutilization.
90. Management explained that procuring 6,300 licences for three years presented
cost savings compared with one-year or half-quantity procurement.
91. The Board is of the view that an informed assessment of licensing requirements
in advance could have avoided unnecessary expenditures of funds and assets.
92. The Board noted that although UNOPS had completed a road map for the
process innovation and digitalization programme in March 2024, it had not yet been
submitted to the Executive Board for review.
93. The Board is concerned that lack of detailed planning for the comprehensive
response plan could result in an inadequate response to the concerns of the Advisory
Committee on Administrative and Budgetary Questions regarding the need for a more
detailed budget breakdown of UNOPS budget increases.
94. The Board recommends that UNOPS report to the Executive Board and the
Advisory Committee on Administrative and Budgetary Questions, as part of its
review of the financial regulations and rules, on the need for further clarification

26/146 24-13155
 A/79/5/Add.11

of the circumstances requiring the submission of supplementary proposals to the

management budget.
95. The Board also recommends that UNOPS improve the budget formulation
for the multi-year process innovation and digitalization programme based on
actual project implementation schedules and optimize the expenditure plan to
effectively utilize the resources allocated.
96. UNOPS accepted the recommendations.

5. Investment management
Inappropriate financial derivative transactions with unqualified hedging instruments
and insufficient internal control, leading to a net financial loss of $15.23 million
(i) Unqualified hedging instruments
97. It is stated in IPSAS 41: Financial instruments that “A written option does not
qualify as a hedging instrument unless it is designated as an offset to a purchased
option, including one that is embedded in another financial instrument”. Hence, while
it is appropriate not to undertake the hedge accounting, IPSAS provides a conclusion
on the written option as an ineligible hedging instrument.
98. It is stated in IPSAS 29: Recognition and Measurement that “The potential loss
on an option that an entity writes could be significantly greater than the potential gain
in value of a related hedged item. In other words, a written option is not effectiv e in
reducing the surplus or deficit exposure of a hedged item.” It is also stated that “Two
or more derivatives, or proportions of them, … may be viewed in combination and
jointly designated as the hedging instrument, including when the risk(s) arising fr om
some derivatives offset(s) those arising from others. However, an interest rate collar
or other derivative instrument that combines a written option and a purchased option
does not qualify as a hedging instrument if it is, in effect, a net written optio n (for
which a net premium is received). Similarly, two or more instruments … may be
designated as the hedging instrument only if none of them is a written option or a net
written option.”
99. During the interim audit of the financial year 2023, the Board observed that as
at 30 September 2023, UNOPS held net written put options with an underlying
currency (euro) amounting to €200 million, which were written to hedge against the
revaluation gain/loss of a euro liability at the corporate level. These written options,
as part of a portfolio of derivatives, were not intended for forecasted cash flows or
specific projects.
100. The Board is of the view that the written options UNOPS held are not a qualified
hedging instrument under IPSAS.

(ii) Deficiencies in trading options

101. The Board observed 203 instances of options on euro/dollar currency pairs
during the period 2021–2023. An analysis in respect of currency pair euro/dollar
revealed that the outcomes of portfolio hedging activities failed to offset the
fluctuations arising from revaluation of euro liabilities.
102. During the period 2021–2023, quarterly gain/loss data of option trade and
revaluation of euro liabilities indicated that, out of 12 quarters, seven quarters failed
to set off the fluctuations of revaluation of euro liabilities due to moving in the sam e
direction. In the remaining five quarters, none of the hedging ratios fell within the
range of 50 to 100 per cent, as stipulated in the UNOPS operational instructions.
Furthermore, annual gain/loss data for the same period indicated that all three years

24-13155 27/146
A/79/5/Add.11

failed to set off the fluctuation of revaluation of euro liability due to moving in the
same direction.
103. The Board further reviewed the hedging practice of UNOPS and noted several
deficiencies in trading options.

a. Irrational trading direction in some transactions

104. The Board sampled some transactions and noted that UNOPS had initially
written call options that were short the euro, which were then funded by forwards and
exercised approximately five months later. The fluctuation of the fair value of these
concerned options moved in the same direction with euro liability (euro liability is
always short euro). The Board was not convinced that the purpose of these written
call options was to hedge the revaluation of euro liability rather than option premium.
105. The Board is of the view that the hedging was groundless, given that the hedging
instrument’s impact on gain or loss for foreign exchange was in the same direction as
the impact of hedged items. In other words, carrying the foreign asset/liability was
not considered an adequate justification for recognizing hedging.

b. Inappropriate option products

106. The Board noted that exotic options were adopted by UNOPS, such as barrier
options (knock-in and knock-out options), risk reversal, and call spreads and put
spreads, which accounted for nearly half of the aggregated quantity of total option
transactions.
107. The Board is of the view that the risk profile of these exotic options, such as
complicated structure and high volatility, was not appropriate for hedging.

c. Inappropriate dynamic hedging ratio

108. It is stipulated in the UNOPS operational instruction on treasury and cash
management (OI.FG.2022.01) that option strategies can be used to manage net delta
exposure, where the hedging ratio (hedging delta amount divided by underlying
amount) should be between 50 per cent and 100 per cent.
109. The Board reviewed the figure of euro liability balance for revaluation and the
delta 1 amount, and verified the hedging ratio of the existing foreign exchange
derivatives managed during the period 2021–2023.
110. The Board employed two methods to calculate the hedging ratio, including at
the end of the period and the average during the period, and noted that the ratio fell
within the range of 50–100 per cent stipulated by UNOPS in only 2 and 1 of the 12
quarters, respectively. In particular, the direction of the derivatives’ positions was
negative in the fourth quarter of 2021 and the third and fourth quarter s of 2022,
representing a short position in the euro. These positions not only failed to hedge
against fluctuations in the euro/dollar exchange rate, but also exacerbated the
fluctuation exposure of UNOPS. The consistent negative position in 2022 indicated
that the requirements outlined in the UNOPS operational instruction on treasury and
cash management were not given sufficient attention, and the due restructuring or
rebalancing were not performed in a timely manner.
111. The Board is of the view that the hedge ratio, as a key indicator, was not
compliant with the requirements of the operational instruction on treasury and cash
management in the long term.
__________________
1
Delta is a risk metric that theoretically estimates the change in the price of a derivative, such as
an options contract, given a $1 change in its underlying security.

28/146 24-13155
 A/79/5/Add.11

(iii) Consequence as net financial loss

112. It is stipulated in annex V to the statement of investment principles of UNOPS
that the objective of the treasury cash management portfolio is to provide liquidity
while preserving nominal capital value over a one-year rolling period.
113. The Board analysed the accounting result of trading options during the period
2021–2023 and noted that UNOPS made a net loss of $15.23 million, including the
premium income. In contrast, the revaluation loss of euro liability in the same period
was only $4.73 million. It is emphasized that the loss of option was mainly realized
loss, while the loss of revaluation was unrealized loss.
114. The Board is of the view that the pattern of implemented option is uneconomical
and ineffective, contrary to the objective of the treasury cash management portfolio.
115. Management explained that foreign exchange options were used for foreign
exchange risk management, so the practice of trading options and their economic
impact were not subject to the objectives of the treasury cash management portfolio.
116. The Board insisted that annex V, on the treasury cash management portfolio,
governs all the cash managed by the treasury, in which UNOPS and its Investment
Advisory Committee clearly expressed the approach and requirements regarding
foreign exchange options. Meanwhile annexes I, II, III and IV govern cash managed
by external asset managers and custodians. The treasury, as executive trader, received
in or paid out option premium from liquid cash managed by the treasury, and took
gain or loss on the treasury’s account. Therefore, the practice of foreign exchange
options should fall in the scope of cash management and comply with the investment
principles stipulated by UNOPS.

(iv) Deficiencies in internal control

117. The Board reviewed the internal control of derivatives transactions and noted
the following deficiencies:

a. Lack of risk control

118. The Board noted that the same team executed both trading and risk control, and
that the transaction serial numbers were not sequential in the treasury management
system, which could lead to operational risks such as deletion of transaction records.
The Board further identified one case that demonstrated the lack of segregation of
duties, in which incorrect parameters of an option were input by UNOPS, but were
ultimately detected by the risk control function of the counterparty.
119. Management explained that it was a bug in the treasury management system and
said that the current system did not have the ability to provide competent risk control,
such as recognizing complicated options and monitoring the risk exposure of options.
120. The Board is of the view that duty segregation, completed records and
competent system capabilities are key points of risk control in options trading.

b. Absence of real time foreign exchange rate applied with the United Nations
operational rate of exchange
121. The Board was informed that UNOPS applied the United Nations operational
rate of exchange, which was updated twice a month and re-evaluated quarterly, as the
accounting rate, as stipulated in the financial regulations and rules of UNOPS.
122. In practice, the market spot rate involved in options trading varies frequently
and sometimes sharply in local currency. Due to the effects of scale and leverage, the
trade of options is normally measured in basis points.

24-13155 29/146
A/79/5/Add.11

123. The Board is concerned that as a non-financial institution, it is difficult for

UNOPS to evaluate the performance of options trades given the current frequency of
updates to the United Nations operational rate of exchange.

c. Insufficient reporting to management

124. The Board reviewed the reports prepared for management and the Investment
Advisory Committee, and noted that there was no content on risk exposure arising
from options, the actual delta hedging status of the derivatives, risk control, or
compliance with the investment principles.
125. The Board is concerned that management may not be able to follow the ongoing
situation in respect of hedging through option derivatives.
126. The Board recommends that UNOPS conduct a comprehensive review of
the nature, strategy, internal control, and potential gains or losses of derivatives,
to ensure that the use and disclosure of financial derivatives transactions by
UNOPS comply with the IPSAS requirements.
127. UNOPS accepted the recommendation.

Need for continued involvement and targeted efforts in recovery of funds from
Sustainable Investments in Infrastructure and Innovation investments
128. The UNOPS operational directive on finance and asset management
(OD.FG.2018.01) states that all UNOPS budgets are to be managed on the basis of
full cost recovery, and linked to clear objectives.
129. In a previous report (A/76/5/Add.11, chap. II, paras. 33–59), the Board noted
that, from 2018 to 2020, UNOPS had invested $58.80 million in seven projects under
its Sustainable Investments in Infrastructure and Innovation initiative. In 2022,
UNOPS had failed to recover the investment in the seven projects, and $58.8 million
had been fully impaired.
130. During the period 2022–2023, the Executive Board had urged UNOPS several
times to take all possible measures to recover the funds associated with the
Sustainable Investments in Infrastructure and Innovation projects and ensure full
accountability, including individual accountability, in accordance with the Staff
Regulations and Rules of the United Nations. In 2022, the Office of Legal Affairs had
been requested by the General Counsel of UNOPS to take over and provide legal
support in connection with legal efforts to recover funds from the Sustainable
Investments in Infrastructure and Innovation projects.
131. The Board was informed by UNOPS that, regarding the division of
responsibilities, UNOPS was responsible for liaising with the Office of Legal Affairs
in relation to the initial handover of documents, the subsequent review of
documentation, following up requests for further information, and funding the costs
associated with the fund recovery efforts. The Office of Legal Affairs was responsible
for leading the efforts to recover the funds from the Sustainable Investments in
Infrastructure and Innovation investments, and working closely with external counsel
to assess possible avenues for recovery. In 2022, UNOPS incurred legal fees and
related costs totalling $1.26 million in its efforts to recover funds from the Sustainable
Investments in Infrastructure and Innovation investments.
132. In its financial outlook for 2023 (DP/OPS/2023/CRP.4), UNOPS proposed to
the Executive Board a transfer of up to $35.4 million from the operational reserve
into the 2023 budget to implement the comprehensive response plan. Of the total
amount, $8 million was earmarked for the recovery of funds from the Sustainabl e
Investments in Infrastructure and Innovation investments. Concerning the rationale

30/146 24-13155
 A/79/5/Add.11

for the budget of $8 million, the Board was informed that the estimated cost of
recovering the funds had been communicated verbally to UNOPS by the Office of
Legal Affairs, based on the Office’s extensive experience with fund recovery cases
on behalf of the United Nations.
133. As of the end of 2023, the actual expenditure was $4.02 million, representing
50 per cent of the original budget, which mainly comprised the cost incurred for
external counsel, specialized services, and Office of Legal Affairs staff. Furthermore,
$4.37 million was budgeted for fund recovery in 2024, of which $1.05 million was
expended by the end of April 2024. In summary, UNOPS has spent a total of
$6.33 million and plans to allocate an additional $3.32 million in 2024 for fund
recovery activities.
134. Meanwhile, the Board noted that the due date for the recovery of the funds had
been further extended. In its comprehensive response plan ( DP/OPS/2023/CRP.3),
UNOPS reported that the due date was the end of 2023. However, in the
comprehensive response plan dashboard, the due date has been extended to the end
of 2024. According to the latest monthly report submitted by UNOPS to the Executive
Board, efforts to recover the funds are ongoing and expected to continue into 2025.
135. Upon querying the latest progress regarding the recovery of the funds and the
corresponding budget performance, the Board was informed that due to the privileged
and highly confidential nature of the recovery process, and to avoid prejudicing
ongoing fund recovery efforts, no further detail could be provided during the audit to
show substantial progress in the recovery of the funds.
136. The Board noted that the timeline, performance indicator and objective of the
fund recovery activities and the corresponding budget were not clear. Furthermore,
the division of responsibilities between UNOPS and the Office of Legal Affairs did
not clarify which entity would be accountable for the results related to fund recovery
and how they would be held accountable.
137. Management stated that UNOPS assumed the primary responsibility for the
recovery of funds and that the lines of responsibility between UNOPS and the Office
of Legal Affairs were clear. UNOPS liaised with the Office of Legal Affairs, and the
Office kept the General Counsel abreast of relevant developments and details in a
transparent manner. The Executive Director and General Counsel of UNOPS received
reports and updates from the Office of Legal Affairs about the progress as needed,
and the General Counsel participated in joint meetings with the Office of Legal
Affairs and external counsel as and when required.
138. Management said that the overall objective was to recover the highest amount
of funds possible and that it was not meaningful to establish performance indicators
for the associated process steps. The fund recovery efforts are expected to continue
beyond 2024 owing to the protracted nature of legal proceedings.
139. The Board is of the view that the investments under the Sustainable Investments
in Infrastructure and Innovation initiative remain the assets of UNOPS, despite full
impairment. Although the Office of Legal Affairs is responsible for leading the efforts
to recover the funds, UNOPS is still the primary responsible party for the fund
recovery.
140. The Board recommends that UNOPS maintain its involvement and
continue targeted efforts in the recovery of funds from the Sustainable
Investments in Infrastructure and Innovation investments in collaboration with
the Office of Legal Affairs.
141. UNOPS accepted the recommendation.

24-13155 31/146
A/79/5/Add.11

6. Project management
Delivery delays and underperformance in output quality of infrastructure projects,
posing risk of financial losses and reputational impact
142. The UNOPS operational instruction on project management (OI.IPS.2022.04)
states that all UNOPS engagements “shall meet the highest standards of principled
performance for delivering projects with consistency and integrity and removing
uncertainties through well-defined standards and best practices”.
143. The UNOPS operational instruction on quality management (OI.IPS.2021.02)
states that in order to effectively manage challenges and deliver on the UNOPS
mission to help people to build better lives and countries to achieve peace and
sustainable development, “UNOPS must enable project teams to operate efficiently,
while fulfilling its commitment to quality and excellence”.
144. The Board conducted an analysis of the execution of infrastructure projects and
noted that as at 31 December 2023, UNOPS implemented 228 active infrastructure
projects, with a contract value of $4.483 billion. Of the 228 active projects,
45 projects, with a contract value of $767 million, scheduled for delivery before
31 December 2023, as per contractual agreements, had not been delivered on time.
The actual expenditure for the 45 projects totalled $622 million, with an average
budget implementation rate of 81 per cent, which generally reflected the progress
delay.
145. The Board reviewed the detailed information on the delayed projects and noted
that 35 projects, with a contract value of $247 million, had been delayed by less than
one year; 6 projects, with a contract value of $168 million, had been delayed by more
than one year but less than three years; and 4 projects, with a contract value of
$352 million, had been delayed by more than three years. The main reasons for the
delays include deficiencies in design review and management of suppliers by
UNOPS.
146. Management explained that the designer maintained the primary responsibility
for the completeness and competency of the design, and a variation process of
management allowed change in the time for completion and the cost of the work.
147. The Board also noted that UNOPS made provision in the amount of
$17.33 million in the financial statements for the year ended 31 December 2023, of
which a total of $12.66 million (73 per cent) was for infrastructure projects. Upon
conducting case reviews of projects with significant provisions, the Board noted that
because of underperformance in output quality, four projects faced risks of financial
losses totalling $7.45 million and reputational impact. The details were as follows:

(i) Defects in management of design and construction for a dam project in Member State S
148. The original engagement agreement for the dam, with a contract value of
$1.92 million, expired in June 2012, and was extended to November 2014. UNOPS
was responsible for the design and construction. Due to technical defects in the design
and insufficient supervision on the part of UNOPS, the dam was damaged by flooding
in July 2014. After the destruction of the dam, UNOPS underestimated the project
costs and the significant funding gap for repairing the dam, and has not taken
substantive measures to repair the damaged dam. As a result, the project’s
humanitarian objectives could not be achieved. As of the end of 2023, UNOPS has
made a provision for financial losses amounting to $2.5 million.

32/146 24-13155
 A/79/5/Add.11

(ii) Deficiencies in management of design review and construction for a hospital project
in Member State M
149. The hospital project commenced in September 2015 with a budget of
$83 million and was delivered in July 2021. UNOPS was responsible for project
initiation planning, design review, hospital construction and equipment procurement.
Due to deficiencies in design review by UNOPS, certain design defects were not
corrected before construction, including defects in the municipal drainage system. I n
addition, inadequate monitoring of construction quality by UNOPS during the
construction process allowed the subcontractor to alter the altitude of the hospital
without authorization, exacerbating the aforementioned defects in the municipal
drainage system, leading to flooding during project implementation. The
subcontractor incurred additional costs to rectify the design defects and subsequently
filed litigation against UNOPS. Based on the amount awarded by the tribunal and the
negotiations between the two parties, UNOPS made a provision of $1.95 million in
litigation losses.
150. Furthermore, the Board noted that project expenditures exceeded the budget,
and as of April 2024, UNOPS had not reached an agreement on compensating the
partner for the budget overrun, posing further risks of financial losses.

(iii) Deficiencies in management of technical assistance and construction for a museum

project in Member State P
151. The project commenced on 14 April 2015 with a budget of $145 million and
was conditionally delivered in July 2021. UNOPS was responsible for technical
assistance and construction. Due to oversights during the design review stage,
deficiencies in the design of the building’s structure, fire detection system and
building automation system were not identified, leading to safety risks to the building.
The partner explicitly demanded rectification of these issues in the delivery report. In
addition, UNOPS made some variations in the construction without the partner’s
approval, and subsequently failed to obtain the partner’s consent. The above two
reasons have put UNOPS at risk of a financial loss of $1.94 million.
152. Management explained that lack of clarity regarding the operational
requirements of the building prevented UNOPS from completing the design, and that
the deficiency was not driven by technical oversight.

(iv) Deficiencies in management of design for restructuring 10 dams in Member State Z

153. The project, with a contract value of $1.33 million, commenced on 21 April
2020 and was delivered on 31 January 2023. UNOPS was responsible for the design.
Due to the underestimation by UNOPS of the complexity and cost of dam
restructuring, as well as the lack of technical experts in the field, some tasks had to
be outsourced to external agencies at a higher cost. This resulted in severe budget
overruns, and the partner refused to compensate, resulting in a loss of $1.06 million
for the project. Due to slow progress of the design work by UNOPS, the partner
further terminated cooperation with UNOPS for the subsequent construction phase of
the 10 dams.
154. The Board further noted that the 2022 UNOPS partner survey revealed a low
satisfaction rate of 58 per cent in terms of perception of value for money, with
dissatisfied respondents noting project timeliness and quality outputs as key issues.
155. The Board is of the view that delivering within the contractually required time
and providing quality outputs is an obligation for UNOPS, and is also the path for
UNOPS to achieve its goal of providing cost-effective project services. In addition,
delivering on time and providing quality outputs is the most basic and fundamental

24-13155 33/146
A/79/5/Add.11

requirement of the partner; therefore, successful delivery could promote the

realization of the project’s objectives.
156. Considering that UNOPS, as a service provider for infrastructure, looks for ways
to deliver quality results in a timely manner, and that the infrastructure projects
undertaken by UNOPS involve essential and critical sectors such as livelihoods,
public health and education, the Board is concerned that delayed delivery and
underperformance in output quality could affect the attainment of partners’ objectives
and have a negative impact on the reputation of UNOPS.
157. The Board recommends that UNOPS effectively manage infrastructure
projects as per contract agreements to ensure monitoring of timelines and costs
and timely action for issues raised.
158. The Board recommends that UNOPS strengthen training on infrastructure
project management to enhance technical review and regular supervision of
infrastructure projects.
159. UNOPS accepted the recommendations.

Weaknesses in mandatory review by the Integrated Practice Advice and Support Unit
and implementation and control of its recommendations
160. It is stated in paragraph 4.4 of the UNOPS operational instruction on acceptance
of engagement agreements (OI.IPS.2020.01) that all engagements are subject to
mandatory reviews by the Integrated Practice Advice and Support Unit’s legal and
finance teams and that all engagements with category 3 outputs shall be subject to
mandatory review by the Unit’s project management and infrastructure teams.

(ⅰ) Bypassing of mandatory review by the Integrated Practice Advice and Support Unit
161. The Board analysed a total of 15,150 Integrated Practice Advice and Support
Unit mandatory review records for 8,258 engagement agreements signed between
January 2020 and October 2023, and noted that 2,503 engagement agreements had
not been reviewed by the Integrated Practice Advice and Support Unit. Of those,
6 engagements totalling $112.23 million were later made provisions or contingent
liabilities of $4.43 million.
162. The Board also noted that 769 records for 396 engagements were post facto,
with engagement agreements signed prior to review by the Integrated Practice Advice
and Support Unit. Of the 769 post facto cases, 36 records for 15 engagements were
marked as “not recommended”, while 70 records for 41 engagements were marked as
“recommended with reservation”, although those recommendations were not able to
be implemented during the engagement acceptance process since the agreements had
already been signed. A further 32 review records clearly indicated that the legal
agreements had been signed before being reviewed by the Unit. For post facto cases
marked “not recommended”, remedial measures recommended by the Unit were not
implemented.

(ⅱ) Inadequate tracking and accountability mechanism for implementation of the

recommendations of the Integrated Practice Advice and Support Unit
163. Noting the above deficiencies, the Board did not observe the existence of a
mature mechanism to follow up on the implementation of those recommendations or
to ensure that any divergence from the recommendations was justified.
164. Management explained that the review recommendations of the Integrated
Practice Advice and Support Unit were provided in an advisory capacity to support
the decision-making of the relevant delegation of authority holder regarding

34/146 24-13155
 A/79/5/Add.11

engagement acceptance. The relevant delegation of authority holder was responsible

for ensuring that residual risks were mitigated and managed effectively.
165. The Board is of the view that the review by the Integrated Practice Advice and
Support Unit plays a very important role in securing the best interests of UNOPS and
helping UNOPS to build trust and create value with partners. Accountability is a
central pillar of effective management that requires attention and strong commitment
at all levels, and a mechanism for follow-up of recommendations is essential to move
towards a strong culture of accountability throughout UNOPS, which will help to
rebuild internal and external trust in UNOPS.
166. The Board recommends that UNOPS avoid bypassing mandatory review by
the Integrated Practice Advice and Support Unit and reinforce the tracking of
residual risks identified during the review.
167. UNOPS accepted the recommendation.

Deficiencies in monitoring and reporting on UNOPS contributions to the Sustainable

Development Goals
168. The Secretary-General has noted that quality, accessible, timely and reliable
disaggregated data will be needed to help with the measurement of progress and to
ensure that no one is left behind. Such data are key to decision -making. These shifts
must be supported by strengthened national institutions, greater accountability,
effective regulatory frameworks and stronger digital infrastructure and data capacity.
169. The UNOPS strategic plan for the period 2022–2025 highlighted its
commitment to expanding partners’ implementation capacity across the Sustainable
Development Goals and to responding to the needs of people in countries facing
different challenges.
170. The Board noted that the contribution indicators adopted by UNOPS in its
expanded results framework for the period 2022–2025 did not fully correspond to the
focus of projects, and contributions to the Sustainable Development Goals were
tracked by Goal rather than target, which had a negative impact on monitoring
accuracy. It was also noted that the preparation of the composite indicator for
reporting on the application of sustainable implementation approaches was not yet
complete.
171. The Board further noted that the outputs set up and monitored for each
engagement in the oneUNOPS system were for organizational management purposes,
rather than corresponding to the outputs contained in the legal agreements. Therefore,
the current information system in UNOPS could not provide strong support for the
design and future implementation of country-level Sustainable Development Goals
output reporting.
172. The Board was informed that UNOPS was undergoing a digital transformation
and that the system would provide more support in the future.
173. While acknowledging the efforts made by UNOPS at the initial stage, the Board
is of the view that swift actions are vitally important for commitment to the
Sustainable Development Goals. The shifts and ambitions in the UNOPS strategic
plan need to be supported by greater accountability, stronger digital infrastructure and
data capacity.
174. The Board recommends that UNOPS consider the project/programme focus
as it develops and resources capacity for outcome-based reporting during the
next indicator review, and finalize the country-level reporting indicators for its
contribution goals.

24-13155 35/146
A/79/5/Add.11

175. UNOPS accepted the recommendation.

Deficiency in management of peace and security projects by the UNOPS New York
Portfolio Office
176. It is stated in paragraph 4.8.7 of the UNOPS Project Management Manual that
value for money and quality-related aspects are key points in discussions with
partners, as well as obvious indicators of effective project output.
177. Article 5.1.2 of the UNOPS management control guidelines for projects
stipulates that “Monitoring the progress of project activities allows for the
management and control of the schedule baseline. This process continues throughout
the project to ensure that the timing of project activities is in line with the schedule.”
178. The Board sampled and analysed documentation for 22 peace and security
projects implemented by the New York Portfolios Office, including 16 active projects
totalling $192 million, and 6 closed projects totalling $9.8 million, and identified the
following issues:

(i) Some indicators and targets were not well designed

179. The Board noted that five indicators for two active projects were not relevant or
applicable to the projects and were later deleted or under revision during the
amendment process, which had a negative impact on the effectiveness of monitoring
and reporting for projects. The measurable targets for 15 indicators were not included
in the financial agreement for one project, so it was impossible to evaluate whether
the results had been achieved. Furthermore, six indicators for four active projects
were set without a clear baseline, which diminished the effectiveness of the indicators.
180. The Board was informed that certain vague indicators were required by the
partner in a specific format, which was out of UNOPS control.

(ii) Progress and achievements not reported accurately against the targets set in
financial agreements or amendments
181. The Board compared the reported achievements with the targets set in financial
agreement or amendments, and noted that three targets for three projects were
adjusted without official endorsement in financial agreements or amendments. For
example, the output target for one project was set as “1,000 items and 100 per cent of
items neutralized”, while in the final report, the actual achievement was reported as
“811 items have been rendered safe and destroyed during the reporting period”, with
a note stating that “The quantitative value in the target is indicative only”. However,
the Board did not see this note in the financial agreement and the interpretation by
UNOPS was not officially endorsed by legal agreements.

(iii) Progress delayed and targets partially achieved

182. The Board reviewed the progress reports for 22 projects and found that of
207 targets planned for 16 active projects, 53 were delayed or off -track, equivalent to
26 per cent. Of 58 targets planned for five closed projects, 11 were partially achieved,
equivalent to 19 per cent.
183. Management replied that in the logical framework set in financial agreements,
assumptions were used to indicate risks that affected the achievement of targets.
184. The Board further noted that for the above-mentioned delayed or partially
achieved targets, only five were provided with comments stating the impacts of
assumptions on the achievement of targets. For others, sufficient justifications were
not provided.

36/146 24-13155
 A/79/5/Add.11

185. The Board is of the view that clear and comprehensive reporting against targets
and indicators set forth in legal agreements are important for stakeholders to evaluate
the achievement of projects that contribute to their strategic peace and security g oals.
186. The Board recommends that UNOPS, collaborating with partners, actively
play its role in the design of peace and security projects and improve the quality
of the indicators and targets set forth in legal agreements to comprehensively
reflect actual progress and achievement of projects.
187. UNOPS accepted the recommendation.

7. Procurement management
Inappropriate application of emergency procurement procedures in UNOPS
188. In clause 15.4 of the UNOPS procurement manual, it is stated that emergency
procurement procedures allow UNOPS to use simplified processes to facilitate rapid
response during an emergency situation without compromising compliance with
UNOPS procurement principles. It is further stated in clause 15.4.1 that emergencies
are defined as urgent situations in which there is clear evidence that an event has
occurred which imminently threatens human lives or livelihoods, and where the event
produces disruption in the life of a community on an exceptional scale.
189. During the period 2021–2023, UNOPS conducted procurement totalling
$6,602 million, of which $1,836 million was procured using emergency procurement
procedures, equivalent to 28 per cent. The most common category procured using
emergency procurement procedures was engineering works, accounting for 24 per
cent of the total value of emergency procurement procedures. Of 1,805 projects during
the period 2021–2023, 435 involved emergency procurement procedures, with
171 projects exceeding 80 per cent of total procurement through emergency
procurement procedures and 47 projects relying exclusively on emergency
procurement procedures.
190. The Board reviewed an engagement initiated by the UNOPS Asia regional office
in 2021 and noted that from 15 February 2021 to 30 June 2022, procurement totalling
$3.27 million took place, of which 81 per cent ($2.82 million) was done through
emergency procurement procedures in response to the coronavirus disease
(COVID-19) pandemic. However, the purpose of the engagement was part of the
ongoing daily work of the client, and the contents of the engagement were of very
limited correlation to the response to the pandemic.
191. Management explained that the purpose of the engagement was to support the
specific programme of the client, which was indeed initiated during the COVID -19
pandemic, with a specific emphasis on responding to maritime challenges heightened
by the pandemic.
192. The Board is of the view that the aforementioned engagement and its
procurement activities do not fall within the scope of emergency procurement
procedures as stipulated in the procurement manual of UNOPS, as well as the
intended purpose of responding to the COVID-19 pandemic.
193. The Board also conducted a case review of a project initiated by the UNOPS
Austria multi-country office in October 2022 and noted that the objective of the
project was to strengthen critical oncological diagnostic and care services in Member
State U for populations in the capital regions. The project had a budget of
$70.78 million, and emergency procurement procedures were utilized for the whole
project, including office rental and procurement of office stationery, tables and chairs.
194. Management explained that the use of emergency procurement procedures was
necessitated by the project’s strategic urgency, complex equipment requirements,

24-13155 37/146
A/79/5/Add.11

specific market conditions, absence of reliable suppliers, suppliers’ lack of

procurement procedure knowledge, and demanding beneficiary specifications, all of
which required flexibility and agility in procurement processes.
195. Considering that the urgency of the aforementioned project did not fully adhere
to the relevant definitions outlined in the procurement manual, the Board is of the
view that the justification for adopting emergency procurement procedures for the
entire project was insufficient.
196. The Board is concerned that in situations where the project’s strategic urgency
and procurement rationale may not align, it is crucial to emphasize scrutiny to prevent
the misuse of emergency procurement procedures for non-urgent procurement
activities.
197. The Board recommends that UNOPS ensure prudent application of
emergency procurement procedures in future procurement activities.
198. UNOPS accepted the recommendation and stated that UNOPS was taking action
to review and update emergency procurement policies and procedures to enhance the
emergency procurement process and ensure readiness to respond effectively to
evolving operational needs and challenges.

8. Human resources management

Inadequacy of personnel performance evaluation
199. In paragraph 7.4 of the UNOPS operational instruction on the personnel
management framework (OI.PCG.2023.01), it is stated that “Personnel shall have
their performance assessed periodically in order to promote the most effective use of
their expertise, to determine the quality of their outputs, to recognize their
achievements, and to identify learning and development needs.”
200. The Board reviewed the performance evaluation data for the previous three
years in the personnel evaluation and performance review appraisal system, and noted
that in 2021, 2022 and 2023, 2,350 personnel (48 per cent), 2,396 personnel (50 per
cent) and 2,431 personnel (48 per cent), respectively, received ratings of “exceeded
expectations” or “far exceeded expectations”, while 47 personnel (1 per cent), 43
personnel (1 per cent) and 57 personnel (1 per cent), respectively, received ratings of
“partly met expectations” or “unsatisfactory”.
201. The Board conducted spot checks on personnel whose performance was rated as
“exceeded expectations” and “far exceeded expectations”, and noted that in 2023, two
project managers who reported provisions for projects due to overspending and
unreasonable expenses had received performance ratings of “exceeds expectations”.
202. Management explained that UNOPS did not require managers to enforce the
rating distribution in their teams and organizational units. Supervisors did not
consistently consider the external circumstances that might impede individual
performance.
203. The Board is of the view that performance assessment should adequately
differentiate performance outcomes and fairly reflect the quality of individual outputs
and achievements.
204. The Board recommends that UNOPS take a proactive approach and
supervision measures in overseeing performance management, to ensure the
appropriateness of individual performance evaluation.
205. UNOPS accepted the recommendation.

38/146 24-13155
 A/79/5/Add.11

9. Information and communications technology

Deficiencies in management of computing devices
206. It is stated in paragraph 7.2 of the UNOPS operational directive on information
technology and digital systems management (OD.ITG.2021.01) that the UNOPS
Information Technology Group “strives to ensure the confidentiality, integrity and
availability of UNOPS information assets, in alignment with UNOPS internal control
frameworks, data classification and access policies”.
207. During the period 2021–2023, UNOPS purchased 4,098 computing devices
(desktops and laptops), with a total value of $2.89 million. Of those, 478 computing
devices, with a total value of $583,303.37, were procured by UNOPS headquarters.
208. The Board noted that UNOPS did not have a centralized inventory of computing
devices across the organization, while computing devices in regional and country
offices were managed separately, resulting in limited visibility for headquarters
regarding their management status.
209. The Board conducted a sample inspection of the computing devices at UNOPS
headquarters and noted that 677 computing devices were currently registered, with a
total value of $822,600. Of those 677 computing devices, 56 devices were in stock,
165 devices were awaiting disposal, and the remaining 456 devices were in use.
210. Upon inquiry, the Board was informed that relevant information, including asset
custodianship, could not be traced in the oneUNOPS system. Details of the
custodianship at headquarters and in regional and country offices were recorded
manually (i.e. on paper), without a centralized, comprehensive database. During the
period 2020–2023, UNOPS did not conduct any physical verification of computing
devices. Of the 456 computing devices in use at headquarters, 116 devices, with a
total value of $151,400, did not have a custodian.
211. The Board also reviewed the disposal process for computing devices and noted
that UNOPS did not have a standard procedure for disposal. Computing devices at
headquarters that were ready to be disposed of were stored centrally, not classified
and awaiting processing, with the data on the devices remaining uncleared.
212. Management explained that guidelines for management of computing devices
were currently being formulated. A physical verification was planned, and a
professional company would be hired to dispose of the computing devices.
213. The Board is of the view that the lack of clear inventory management,
inadequate policies and guidelines, and deficiencies in disposal procedures may result
in inefficiencies, security risks and a lack of accountability in the management of
computing devices.
214. The Board recommends that UNOPS establish regulations or procedural
guidelines on the management of computing devices and enhance the oversight
of registration, disposal and data security at headquarters and in the regional
and country offices, respectively.
215. UNOPS accepted the recommendation.

C. Transmissions of information by management

1. Write-off of losses of cash, receivables and property

216. Management informed the Board that, in 2023, it formally wrote off assets in
the amount of $1,861,228, including overspending of $427,155 and client rejected
expenditure of $547,585.

24-13155 39/146
A/79/5/Add.11

217. As at 31 December 2023, management had also reported provisions of

$17.33 million for bad and doubtful debts.

2. Ex gratia payments
218. UNOPS informed the Board that an amount of $197,967.82 had been paid as an
ex gratia payment during the year ended 31 December 2023.

3. Cases of fraud and presumptive fraud

219. In accordance with the International Standards on Auditing (ISA 240), the Board
plans its audits of the financial statements in such a way that it has a reasonable
expectation of identifying material misstatements and irregularities (including those
resulting from fraud). The audit, however, should not be relied upon to identify all
misstatements or irregularities. The primary responsibility for prev enting and
detecting fraud rests with management.
220. During the audit, the Board makes enquiries of management regarding its
oversight responsibility for assessing the risks of material fraud and the processes in
place for identifying and responding to the risks of fraud, including any specific risks
of fraud that management has identified or that have been brought to its attention. The
Board also enquires as to whether management has any knowledge of actual,
suspected or alleged fraud.
221. UNOPS informed the Board that there were 62 substantiated fraud cases in
2023, up from 50 cases in 2022. That increase was due to the strengthening of
reporting mechanisms. In addition, UNOPS informed the Board that 6 of those
62 cases had a monetary impact of $978,786 (2022: $971,293) on UNOPS, a 1 per
cent increase in value compared with 2022.

D. Acknowledgement
222. The Board wishes to express its appreciation for the cooperation and assistance
extended to its staff by the Executive Director of UNOPS and the members of their
staff.

(Signed) Hou Kai

Auditor General of the People’s Republic of China
Chair of the Board of Auditors
(Lead Auditor)
(Signed) Dorothy Pérez Gutiérrez
Comptroller General of the Republic of Chile
(Signed) Pierre Moscovici
First President of the French Cour des comptes

24 July 2024

40/146 24-13155
 Annex
24-13155

Status of implementation of recommendations up to the financial year ended 31 December 2022

Status after verification

Audit
report Under Not Overtaken
No. year Report reference Board’s recommendation UNOPS response Board’s assessment Implemented implementation implemented by events

1. 2018 A/74/5/Add.11, The Board recommends that The automation of the UNOPS It is noted that UNOPS finalized X
chap. II, para. 23 UNOPS take steps to corporate financial statements the automation process for the
generate the financial has been completed in two corporate financial statements in
statements from the phases. Phase 1 focused on two phases. This involved
oneUNOPS enterprise automating the corporate automating the primary tables
resource planning system so financial statements ledger, within the financial statements
as to minimize the need for resulting in streamlined ledger, as well as all statements
manual adjustments and preparation processes and and key tables within the note
interventions. reduced manual tasks. It also disclosures. Meanwhile, the
automated the generation of automated generation of financial
statements I and II. Phase 2 statements can now be produced
automated the remaining directly from oneUNOPS reports.
statements and key tables in This recommendation is
note disclosures. This considered implemented.
comprehensive effort allows
for the automated generation of
financial statements from
oneUNOPS reports, enhancing
operational efficiency and
financial reporting reliability.
2. 2018 A/74/5/Add.11, The Board recommends that The automation of the UNOPS It is noted that UNOPS finalized X
chap. II, UNOPS automate corporate financial statements the automation process for the
para. 174 preparation of financial has been completed in two corporate financial statements in
statements to ensure the phases. Phase 1 focused on two phases. This involved
credibility of financial automating the corporate automating the primary tables
information. UNOPS also financial statements ledger, within the financial statements
prioritize implementation of resulting in streamlined ledger, as well as all statements
treasury management and preparation processes and and key tables within the note
inventory valuation and reduced manual tasks. It also disclosures. Meanwhile, the
management in oneUNOPS. automated the generation of automated generation of financial
statements I and II. Phase 2 statements can now be produced
automated the remaining directly from oneUNOPS reports.
statements and key tables in This recommendation is

A/79/5/Add.11
note disclosures. This considered implemented.
comprehensive effort allows
for the automated generation of
41/146

financial statements from

 A/79/5/Add.11
42/146

Status after verification

Audit
report Under Not Overtaken
No. year Report reference Board’s recommendation UNOPS response Board’s assessment Implemented implementation implemented by events

oneUNOPS reports, enhancing

operational efficiency and
financial reporting reliability.
3. 2019 A/75/5/Add.11, The Board recommends that UNOPS concluded, after It is noted that UNOPS has X
chap. II, UNOPS assess its approach carrying out an evaluation, that already finished the guidance
para. 123 to the inclusion of the the current liquidated damages document on liquidated damages.
provision of liquidated provisions remain effective. The recommendation is
damages, in particular for However, it decided to considered implemented.
high-value contracts, in order establish a task force to
to mitigate the risk of develop operational guidance
potential late performance on liquidated/delay damages
leading to financial loss to provision in procurement. This
UNOPS and its partners. operational guidance was
approved by the Director of the
Procurement Group and
subsequently launched in
November 2023.
4. 2020 A/76/5/Add.11, The Board recommends that UNOPS has terminated the S3i Considering the termination of X
chap. II, para. 47 UNOPS establish necessary initiative and is in the process the S3i initiative, this
procedures to strengthen the of closing down the Helsinki recommendation is considered to
risk assessment and ongoing office (previously known as have been overtaken by events.
monitoring of its S3i the S3i office). As such, there
initiative investments to is no ground for ongoing
ensure the safety of the monitoring of the S3i
investments. investments.
5. 2020 A/76/5/Add.11, The Board recommends that Risk increment as a fee-setting Given that risk increment as a X
chap. II, para. 73 UNOPS update its guidelines element has been discontinued fee-setting element has been
to complement the necessary and will be reviewed once the discontinued and will be
documentation on strategic plan for the period reviewed once the strategic plan
justification for the risk 2026–2029 and the new budget for the period 2026–2029 and the
increment calculation as part estimates for the period new budget estimates for the
of the management fee and 2026-2027 have been approved period 2026–2027 have been
devise an appropriate review by the Executive Board and the approved by the Executive Board
mechanism on such organizational needs to and the organizational needs to
justification to provide implement that strategic plan implement that strategy have
assurance with respect to the have been determined. UNOPS been determined, this
applicability of the pricing therefore considers this recommendation is considered
model during the engagement recommendation closed. implemented.
acceptance process.
24-13155
 24-13155

Status after verification

Audit
report Under Not Overtaken
No. year Report reference Board’s recommendation UNOPS response Board’s assessment Implemented implementation implemented by events

6. 2021 A/77/5/Add.11, The Board recommends that UNOPS has been It is noted that in 2024, work will X
chap. II, para. 72 UNOPS conduct a implementing the continue in enhancing
comprehensive, in-depth and recommendation. Some work compliance risk identification,
adequate evaluation or has been undertaken, and work assessment/mitigation and
review of the decision- will continue in the course of reporting. This recommendation
making, management and 2024 to enhance compliance is considered to be under
internal control of the risk identification, assessment/ implementation.
WATO and Ocean mitigation and reporting.
Generation projects, and
establish a compliance and
accountability mechanism to
avoid the recurrence of such
issues.
7. 2021 A/77/5/Add.11, The Board recommends that Quarterly control effectiveness Given that quarterly control X
chap. II, para. 99 UNOPS take measures to testing has continued for core effectiveness testing has
finalize the key controls to processes (focusing on five key continued for the core processes
ensure that quarterly processes). New quarterly (focusing on five key processes)
reporting is conducted on the internal control reporting and that new quarterly internal
effectiveness of internal meetings were introduced in control reporting meetings were
control. the first quarter of 2024 to introduced in the first quarter of
discuss the outcomes and 2024 to discuss the outcomes and
themes of the testing with the themes of the testing with the
responsible process Director. responsible process Director, this
recommendation is considered
implemented.
8. 2021 A/77/5/Add.11, The Board recommends that UNOPS finds it not feasible to It is noted that a new framework X
chap. II, UNOPS review the human serve as a compliance memorandum of understanding
para. 115 resources services it provides department for its United has been signed. UNOPS needs
to United Nations partners Nations partners regarding to make more progress in
and try its best to align its human resources services reviewing and aligning its
services involving individual matters in the short and mid- services with partners’ applicable
contractors with partners’ term. UNOPS plans to engage rules and memorandums of
applicable rules on the with the human resources understanding on the
management of individual directors of major United management of individual
contractors. Nations partners, to propose contractors. This
that the existing memorandums recommendation is considered to

A/79/5/Add.11
of understanding governing be under implementation.
service provision outline the
specific rules each partner
43/146

organization requires UNOPS

to oversee when engaging
 A/79/5/Add.11
44/146

Status after verification

Audit
report Under Not Overtaken
No. year Report reference Board’s recommendation UNOPS response Board’s assessment Implemented implementation implemented by events

individual contractors. The

new framework memorandum
of understanding has been duly
signed by UNOPS and the
Secretariat.
9. 2021 A/77/5/Add.11, The Board recommends that UNOPS has revised its It is noted that UNOPS has X
chap. II, UNOPS review the Mine standard operating procedure established a mechanism to check
para. 128 Action Service project asset and established a mechanism data consistency between WASP
data in oneUNOPS and to check data consistency and oneUNOPS. This mechanism
WASP and establish a between WASP and is enforced across all field
mechanism to check the oneUNOPS project asset programmes. Regular cross-
consistency between the records. The mechanism is checking and quality assurance
Mine Action Service project fully established and occur during biannual asset
assets and their records in implemented by each field verification processes conducted
oneUNOPS. programme. The cross- within the oneUNOPS project
checking and quality assurance management system. This
of data is done on a periodic recommendation is considered
basis during each biannual implemented.
asset verification process
conducted in the oneUNOPS
system.
10. 2021 A/77/5/Add.11, The Board recommends that UNOPS is collaborating with It is noted that the new X
chap. II, UNOPS expedite the its counterparts in the United memorandum of understanding
para. 141 negotiation with the United Nations Secretariat to expedite was signed on 30 April 2024 and
Nations Secretariat to resolve negotiations aimed at agreeing asset-related requirements
the long-standing project to a new memorandum of (reporting and management) were
asset management issue, in understanding. Taking into introduced in the memorandum,
order to avoid any off- consideration the progress as well as in the report template.
balance sheet items and made to date as well as the This recommendation is
associated risks. complexity of the considered implemented.
memorandum of understanding
and related negotiations, every
effort is being made to
conclude the negotiations and
have a final memorandum of
understanding by the end of
the second quarter of 2024 at
the latest.
24-13155
 24-13155

Status after verification

Audit
report Under Not Overtaken
No. year Report reference Board’s recommendation UNOPS response Board’s assessment Implemented implementation implemented by events

11. 2021 A/77/5/Add.11, The Board recommends that UNOPS has revised its It is noted that physical X
chap. II, UNOPS strengthen the standard operating procedure verification and reporting of
para. 147 physical verification on Mine and aligned it with the Mine assets for the fourth quarter of
Action Service project assets. Action Service standard 2023 has been fully implemented
operating procedure on asset at country level. This
management and disposal; recommendation is considered
amended its internal asset implemented.
reporting template;
implemented a biannual
verification and reporting task
tracking sheet; and created a
physical verification template.
UNOPS introduced a joint
UNOPS/Mine Action Service
monthly asset meeting.
Training for all Mine Action
Service offices has been
conducted, guiding notes for
individual processes have been
shared, and the processes are
fully implemented.
12. 2021 A/77/5/Add.11, The Board recommends that UNOPS indicates that in 2022, It is noted that the additional plan X
chap. II, UNOPS list clearly in its the People and Culture Group regarding fixed-term
para. 206 rules the positions that entail established a dedicated project appointments was cancelled,
“inherently UN activities” team to ensure the appropriate which differentiated from the
and must be filled by staff usage of fixed term (staff) and original plan. A further review of
members to ensure that staff individual contractors (individual the staff position setting process
members remain the core contractor agreements) across the will be done in the upcoming
human resources of the organization, aligning with the audit. This recommendation is
organization. standards set forth in the considered to be under
comprehensive review of implementation.
contract modalities across
UNOPS. In 2023, vacancies for
United Nations staff positions
were advertised through
recruitment websites, and a clear
transition approach was

A/79/5/Add.11
implemented for converting
individual contractor agreements,
which takes the inherently
45/146

United Nations functions to staff.

 A/79/5/Add.11
46/146

Status after verification

Audit
report Under Not Overtaken
No. year Report reference Board’s recommendation UNOPS response Board’s assessment Implemented implementation implemented by events

As of March 2024, UNOPS has

completed 107 fixed-term
appointment employee contracts.
The conversion of an additional
60 fixed-term appointment posts
targeted for 2024/2025 has been
cancelled due to the net zero
revenue targets set for the
organization. Moving forward,
the annual business planning
process will be used to monitor
contract usage across the
organization.
13. 2022 A/78/5/Add.11, The Board recommends that The UNOPS budget estimates Considering that the UNOPS X
chap. II, para. 26 UNOPS review its budget- for the biennium 2024–2025 budget estimates for the
and price-setting practices (DP/OPS/2023/7) were biennium 2024–2025 align
and take measures to ensure approved by the Executive budgeting with pricing and
that the cost-recovery/fee- Board after review by the outline the full cost-recovery
setting algorithm is based on Advisory Committee on model, including the management
the needs of UNOPS in order Administrative and Budgetary fee-setting algorithm, this
to fund its management Questions in 2023. Section II recommendation is considered
expenses for the budget outlines the full cost-recovery implemented.
period. model, while annex II sets out
the management fee-setting
algorithm. As of October 2023,
the revised fee-setting model
has been implemented. All
engagements created since then
adhere to this model.
14. 2022 A/78/5/Add.11, The Board recommends that UNOPS has, in the budget Given that UNOPS is still in the X
chap. II, para. 35 UNOPS conduct a thorough estimates for the biennium process of exploring methods to
review of its revenue and 2024–2025 (DP/OPS/2023/7, integrate financial income into
make reasonable revenue para. 41), committed to the next budget estimation
forecasts to ensure the presenting an approach that process, this recommendation is
integrity of revenue estimates will integrate its finance considered to be under
in the budget preparation income into its planning implementation.
process in accordance with processes for the next budget
its financial regulations and estimates. UNOPS will seek to
rules. identify a solution at the
24-13155

earliest opportunity.
 24-13155

Status after verification

Audit
report Under Not Overtaken
No. year Report reference Board’s recommendation UNOPS response Board’s assessment Implemented implementation implemented by events

15. 2022 A/78/5/Add.11, The Board recommends that The budget estimates for the Given that UNOPS has made X
chap. II, para. 47 UNOPS adhere to the biennium 2024–2025 corresponding corrections to
provisions of IPSAS 24 and (DP/OPS/2023/7) have been write-offs and provisions in the
assess the appropriateness of endorsed by the Executive Board. budget, this recommendation is
including write-offs and The resource plan (table 3) does considered implemented.
provisions in the budget to not include budget allocations for
ensure budgeting accuracy provisions, liabilities, and
and reliability. contingencies, in contrast with
the previous two fiscal years.
16. 2022 A/78/5/Add.11, The Board recommends that The UNOPS Internal It is noted that the Internal X
chap. II, para. 58 UNOPS conduct a Investment Committee Investment Committee conducted
comprehensive assessment of reviewed the root causes, as per a review of the root causes, and
the causes behind delays in the recommendation of the the Chief Financial Officer
internal investment projects Board, and the Chief Financial shared the results with
and take measures to Officer presented the findings management in June 2023. The
improve the budget to management in June 2023. full year implementation rate
performance. Monthly monitoring by the ranged from 62 per cent to 94 per
Internal Investment Committee cent, with an average of 76 per
led to budget implementation cent. This recommendation is
rates ranging from 62 per cent considered implemented.
to 94 per cent, with an average
of 76 per cent. The 2024 budget
approval does not include funds
for internal investment projects,
and therefore the process is
currently not active.
17. 2022 A/78/5/Add.11, The Board recommends that The Office of Legal Affairs It is noted that the recovery of X
chap. II, para. 68 UNOPS take all measures leads fund recovery efforts for funds associated with the
necessary within its remit to Sustainable Investments in Sustainable Investments in
recover the funds associated Infrastructure and Innovation Infrastructure and Innovation
with Sustainable Investments investments, collaborating with investments is still ongoing. This
in Infrastructure and UNOPS on document recommendation is considered to
Innovation investment losses. handover, review and follow- be under implementation.
up. External counsel assists the
Office of Legal Affairs in
exploring recovery options.
UNOPS covers associated

A/79/5/Add.11
costs, and due to
confidentiality, no further
report is available to avoid
47/146

prejudicing ongoing efforts.

 A/79/5/Add.11
48/146

Status after verification

Audit
report Under Not Overtaken
No. year Report reference Board’s recommendation UNOPS response Board’s assessment Implemented implementation implemented by events

18. 2022 A/78/5/Add.11, The Board recommends UNOPS has performed a root Given that UNOPS has X
chap. II, para. 80 UNOPS conduct a review to cause analysis of the top performed a root cause analysis
identify the root causes of offices that have accumulated a of the top offices that have
the overrecovery of locally surplus over the years. accumulated a surplus over the
managed direct costs and years, this recommendation is
regional managed direct considered implemented.
costs at the project level and
to integrate any learnings
into its shared services
management processes.
19. 2022 A/78/5/Add.11, The Board also recommends UNOPS has embarked on the Given that the review is still in X
chap. II, para. 81 UNOPS establish a global cost recovery benchmarking progress, this recommendation is
budgeting and recovery review through a consultancy considered to be under
approach of locally managed company. UNOPS has finalized implementation.
direct costs for client the terms of reference and
projects to keep the recovery started the procurement process.
at a reasonable level. Through this review, UNOPS
will address all the
recommendations of the Board
concerning shared services, and
plans to integrate the results in
the next biennial budget
estimate.
20. 2022 A/78/5/Add.11, The Board recommends that At a meeting of the Investment Given that UNOPS only recorded X
chap. II, para. 93 UNOPS conduct a thorough Advisory Committee on in the meeting minutes the impact
identification and assessment 22 March 2024, UNOPS of distributing excess reserves to
of the potential risks of the completed the final in-depth the after-service health insurance
portfolios to ensure that risks review of the risks of the after- investment portfolio, without
are mitigated. service health insurance providing a comprehensive
portfolio, which completes the review of the risk and
review of all UNOPS performance of the existing
investment portfolios by the investment portfolio, this
Investment Advisory recommendation is considered to
Committee. be under implementation.
21. 2022 A/78/5/Add.11, The Board recommends that UNOPS has included a It is noted that UNOPS has X
chap. II, UNOPS include a detailed standard clause on interest as included a standard clause on
para. 104 reference to the treatment of part of the engagement interest as part of the engagement
interest collected on checklist so that it can be checklist. This recommendation
prepayments made by partners included in any legal is considered to be under
24-13155

and a clear reference to agreements that are not implementation.

 24-13155

Status after verification

Audit
report Under Not Overtaken
No. year Report reference Board’s recommendation UNOPS response Board’s assessment Implemented implementation implemented by events

UNOPS investment principles predetermined by donors.

in all legal agreements with
partners, to ensure that
partners are fully informed of
the use by UNOPS of
prepayments for investment.
22. 2022 A/78/5/Add.11, The Board recommends that The UNOPS Finance and Given that UNOPS has drafted a X
chap. II, UNOPS assess the Administration Group, new process for the selection of
para. 115 procurement procedures of Procurement Group and Risk asset managers, this
the asset manager selection and Compliance Group have recommendation is considered
process to ensure a robust drafted a new process for the implemented.
management structure with selection of asset managers.
clear reporting lines and a
sufficient division of
procurement duties.
23. 2022 A/78/5/Add.11, The Board recommends that The UNOPS Internal Audit and Given that the Internal Audit and X
chap. II, UNOPS conduct a Investigations Group has Investigations Group has
para. 126 comprehensive review and completed the review of finalized the review of potential
analysis of the consolidated potential causes and contributing causes and contributing factors
purchase of medicines and factors leading to the early leading to the early termination
medical supplies, with a termination of the PharmaMX of the PharmaMX project in
focus on identifying the project in 2023 (IAIG/13104), 2023, this recommendation is
causes of early termination, with the report issued in the considered implemented.
to improve project fourth quarter of 2023 and
management. shared with key stakeholders.
24. 2022 A/78/5/Add.11, The Board recommends that As of March 2024, UNOPS has It is noted that UNOPS is X
chap. II, UNOPS establish a initiated system development currently working with an
para. 136 centralized management with the Information Technology information technology
mechanism for grant Group, focusing on prototyping. consulting firm. This
projects, including a digital Their solution for the grant recommendation is considered to
system, to conduct effective management system meets most be under implementation.
monitoring at the requirements, but custom
organizational level. integration and further
prototyping are needed for
certain critical features. In
addition, UNOPS joined the

A/79/5/Add.11
United Nations Partner Portal in
November 2023 to streamline
assessments and collaboration
with implementing partners,
49/146

with plans to integrate it into the

 A/79/5/Add.11
50/146

Status after verification

Audit
report Under Not Overtaken
No. year Report reference Board’s recommendation UNOPS response Board’s assessment Implemented implementation implemented by events

grant management system.

25. 2022 A/78/5/Add.11, The Board recommends UNOPS will release It is noted that UNOPS is X
chap. II, UNOPS develop guidelines requirements for additional developing policies and updating
para. 145 to improve the timeliness, guidelines to strengthen the system. This recommendation
completeness and accuracy routine monitoring of is considered to be under
of grantee reporting and implementing partners in June implementation.
integrate it with the 2024. Meanwhile, UNOPS is
upcoming digitization system developing a prototype for a
for more effective grantee reporting module in the grant
reporting management. management system, which
will enhance the capacity of
UNOPS to monitor and report
on the timeliness and quality of
implementing partner reports.
26. 2022 A/78/5/Add.11, The Board recommends that In line with another It is noted that the write-offs X
chap. II, UNOPS conduct a detailed recommendation of the Board analysis report has been
para. 150 analysis of the reasons for (A/78/5/Add.11, para. 145), the developed, providing an
the write-offs and produce a primary objective of the write- overview of the root cause
report with recommendations offs analysis report is to provide analysis conducted for write-offs
as part of its continuous an overview of the root cause that occurred during the
improvement and lessons analysis conducted for write- 2021-2023 period. This
learned management. offs that occurred during the recommendation is considered
2021–2023 period. The report implemented.
will provide action items to the
organisation, support the
learning journey and inform
better decision-making to
prevent the recurrence of
similar situations.
27. 2022 A/78/5/Add.11, The Board recommends that UNOPS submitted 57 per cent Given that UNOPS submitted X
chap. II, UNOPS take effective of financial client reports on 57 per cent of financial client
para. 157 measures to appropriately time. It is anticipated that with reports on time and the
record all financial reports to advancements in process enhancement of financial client
clients in the UNOPS financial innovation, anticipated reporting remains in progress,
reporting monitoring automation, and digitization, this recommendation is
dashboard to ensure effective client reporting will improve. considered to be under
and timely internal oversight. UNOPS has proposed implementation.
developing a tool and
collaborating with field offices
24-13155

to streamline processes and

enhance efficiency and
 24-13155

Status after verification

Audit
report Under Not Overtaken
No. year Report reference Board’s recommendation UNOPS response Board’s assessment Implemented implementation implemented by events

accuracy.
28. 2022 A/78/5/Add.11, The Board recommends that Significant progress has been Given that of 613 total projects, X
chap. II, UNOPS meet all the needs of made in project closure efforts. 94 per cent were successfully
para. 163 the close-out to ensure all In 2023, out of 613 total closed in 2023, and that UNOPS
financial closure activities projects, 94 per cent were demonstrated proactive
are implemented in a timely successfully closed. Moreover, management by closing 62 per
manner. UNOPS demonstrated cent of projects slated for closure
proactive management by in 2024 well ahead of schedule,
closing 62 per cent of projects and that UNOPS revised financial
slated for closure in 2024 well closure guidance, enabling it to
ahead of schedule. In addition, promptly close projects pending
UNOPS revised financial partner confirmation for over
closure guidance to enable it to three months, this
promptly close projects recommendation is considered
pending partner confirmation implemented.
for over three months.
29. 2022 A/78/5/Add.11, The Board recommends that The process innovation and Given that UNOPS has developed X
chap. II, UNOPS prepare an digitalization programme has a comprehensive road map for
para. 171 overarching plan for the developed a comprehensive the process innovation and
digital transformation road map, which was approved digitalization programme, which
programme, including a by UNOPS senior management, includes various aspects and has
robust forecast of costs and a that articulates the programme’s been approved by senior
timetable. scope, key performance management, this
indicators, approach to process recommendation is considered
improvement and digitalization, implemented.
budget estimate, governance
framework, change and risk
management strategy and
summary of progress to date.
30. 2022 A/78/5/Add.11, The Board recommends that UNOPS is currently working It is noted that UNOPS is X
chap. II, UNOPS strengthen the on enhancing the approval working on enhancing the
para. 181 approval process of process of pre-selection approval process of pre-selection
pre-selection requests from requests from United Nations requests from United Nations
United Nations funding funding sources and assessing funding sources and assessing the
sources and assess the the feasibility of obtaining feasibility of obtaining
feasibility of obtaining endorsement from their endorsement from their

A/79/5/Add.11
endorsement from their headquarters offices. headquarters offices. This
headquarters office so as to recommendation is considered to
better implement the principle be under implementation.
51/146

of mutual recognition of best

practices in the United
 A/79/5/Add.11
52/146

Status after verification

Audit
report Under Not Overtaken
No. year Report reference Board’s recommendation UNOPS response Board’s assessment Implemented implementation implemented by events

Nations development system.

31. 2022 A/78/5/Add.11, The Board recommends that The Director of the Internal It is noted that a number of X
chap. II, UNOPS continuously Audit and Investigations Group governance changes have been
para. 187 improve the functioning of has proactively organized two made at UNOPS to ensure the
the Internal Audit and closed meetings of the independence of the Internal
Investigations Group and Executive Board, where Audit and Investigations Group,
ensure its independence for confidential matters and the which has the independent
improved risk management. annual work plans have been authority to report to the
discussed. This forum will be Executive Board on any matter it
maintained. In addition, and on deems relevant. This
demand, the Director has one- recommendation is considered
on-one meetings with some implemented.
Executive Board members.

Total number of recommendations 31 18 12 – 1

Percentage of the total number of recommendations 100 58 39 – 3

24-13155
 A/79/5/Add.11

Chapter III
Financial report for the year ended 31 December 2023
A. Introduction

1. In accordance with the financial regulations and rules of the United Nations
Office for Project Services (UNOPS), the Executive Director of UNOPS has certified
the 2023 financial statements of the organization and is pleased to submit them to the
Executive Board and the General Assembly, and to make them publicly available. The
financial statements have been audited by the Board of Auditors, and its unqualified
audit opinion and report are attached. Overall, UNOPS is financially robust. It can
continue to resource its organizational structures and other statutory requirements
through the recovery of the indirect costs needed for the implementation of its restated
strategic plan for the period 2022–2025, as endorsed by the Executive Board in its
decision 2023/16 at the 2023 annual session.
2. The restated UNOPS strategic plan for the period 2022 –2025 was requested by
the Executive Board in its decisions 2022/24 and 2023/4. It was presented together
with a fast-tracked midterm review requested by the Executive Board to provide
situational analysis as a basis for rebuilding internal and external trust. The review
and restated plan were part of the actions set out in the comp rehensive response plan
developed to address recommendations of third-party reviews pursuant to the failures
of the social impact investing initiative initiated by the prior executive management
of UNOPS.
3. As of the first quarter of 2024, the implementation of the comprehensive
response plan has seen significant progress. Most actions are on track for
implementation by the end of 2024.
4. At the 2024 annual session of the Executive Board, UNOPS will present its
report on the implementation of the restated strategic plan for the period 2022 –2025.
The plan will emphasize continued commitment to enabling partners, helping people
in need and supporting countries in their efforts to realize the ambitious targets of the
2030 Agenda for Sustainable Development. The report will be presented in
accordance with the analytical approach requested by the Executive Board in decision
2022/13, including outcome-based reporting responding to the request by the Board
for systematic analysis and reporting on contributions in decisions 2021/20 and
2023/16.

B. Highlights of results in 2023

5. UNOPS shares a mission to help people to build better lives and countries to
achieve peace and sustainable development. As a self-financing organization, without
any voluntary or assessed contributions from Member States, UNOPS relies on
exchange revenue from the implementation of flexible and modular project services,
spanning infrastructure, procurement and project management, including human
resources and financial management.
6. By the end of 2023, UNOPS employed 5,226 personnel implementing a
portfolio of about 1,100 projects across more than 80 countries. In 2023, it expanded
the implementation capacity of some 180 partners from the United Nations and
beyond, providing project services amounting to $2.7 billion.
7. UNOPS procured about $1.6 billion of goods and services from more than 5,500
suppliers, managed over $510 million in grants for more than 2,300 implementing

24-13155 53/146
A/79/5/Add.11

partners and recruited 3,726 personnel to work for UNOPS and its partners. It signed
more than $3 billion in agreements with partners, including 300 new engagements.
8. More than 23 million days of paid work for local people were created through
UNOPS projects in 2023, primarily due to a major cash-for-work project in
Afghanistan. Outputs completed on behalf of partners included work on 7 hospitals,
49 health clinics, 55 schools, 4 police stations and 187 kilometres of road.

Partners and project services

9. As an operational resource for Member States and the Secretary -General,
UNOPS partners with Governments of programme and donor countries, entities of
the United Nations system and other partners, including intergovernmental
institutions, international and regional financial institutions, foundations,
non-governmental organizations and the private sector.
10. UNOPS delivery was around $2.7 billion in 2023, with international financial
institutions accounting for $605 million (23 per cent) and United Nations entities
accounting for $555 million (21 per cent). Vertical funds and multi -partner initiatives
followed with $515 million (19 per cent), donor countries with $409 million (15 per
cent) and programme countries with $394 million (14 per cent).
11. UNOPS functional services are determined at the output level. In 2023,
expenses associated with functional services were mainly procurement at
$945 million (35 per cent) and infrastructure at $576 million (21 per cent). Financial
management services accounted for $516 million (19 per cent), with project
management and human resources services accounting for the remaining part.

Financial performance and results

12. The financial performance of UNOPS in 2023 can be summarized as follows:
(a) UNOPS decreased the value of the net services delivered to $2.7 billion.
The amount comprised $1.1 billion in respect of projects delivered on behalf of
UNOPS and $1.6 billion in respect of projects delivered on behalf of other
organizations;
(b) The net surplus for the year was $41.3 million, which includes a deficit
from operations of $21.8 million and a net finance gain of $63.1 million. The deficit
from operations includes expenses related to the implementation of the
comprehensive response plan;
(c) The net assets at year end stood at $293.8 million. This figure takes into
account the impact of actuarial gains on post-employment benefits amounting to
$43.3 million recognized in the statement of changes in net assets. Net assets are
further described later in the present report.

Financial statements prepared in accordance with the International Public

Sector Accounting Standards
13. In accordance with the International Public Sector Accounting Standards
(IPSAS), a complete set of financial statements has been prepared, as follows:
(a) Statement of financial position. This statement shows the financial status
of UNOPS as at 31 December 2023 by reporting the overall value of its assets and
liabilities. It provides information about the extent to which resources are available
for UNOPS to continue delivering partner services in the future;
(b) Statement of financial performance. This statement measures the net
surplus or deficit as the difference between revenues and the corresponding expenses

54/146 24-13155
 A/79/5/Add.11

incurred. The net surplus or deficit is a useful measure of the overall financial
performance of UNOPS and indicates whether the organization achieved its self -
financing objective for the period;
(c) Statement of changes in net assets. This statement reports all changes in
the value of assets and liabilities, including those excluded from the statement of
financial performance, for example, actuarial adjustments to employee liabilities and
fair value adjustment on available-for-sale financial instruments;
(d) Statement of cash flows. This statement reflects the changes in the cash
position of UNOPS by reporting the net movement of cash, classified by operating
and investing activities. The ability of UNOPS to generate cash liquidity is an
important aspect in assessing its financial resilience. For a more complete picture of
the organization’s ability to draw upon its cash balances, investments also need to be
taken into account;
(e) Statement of comparison of budget and actual amounts. This statement
compares the actual operational result with the main budget previously approved by
the Executive Board.
14. The financial statements are supported by notes that assist users in
understanding and comparing UNOPS with other entities. The notes include UNOPS
accounting policies and other additional information and explanations.
15. In 2023, the total expenses of UNOPS amounted to $2.8 billion, comprising the
implementation of project services on behalf of its partners and costs for UNOPS
institutional support at the country, regional and headquarters levels. This reflects the
total volume of resources handled by UNOPS during the period and represents a
decrease compared with 2022, in which total expenses of $3.6 billion were recorded.
16. In 2023, total revenue as reported in the statement of financial performance,
which represents the actual income attributable to UNOPS, amounted to $1.21 billion,
a decrease of 0.6 per cent compared with 2022 ($1.22 billion). The decrease is due
mainly to changes in the composition of delivery volume on principal project
expenditure.
17. IPSAS distinguishes between contracts where UNOPS acts as a principal and
contracts where it acts as an agent. In other words, where UNOPS delivered services
while retaining the significant risk of ownership, that is, by acting as a principal, the
revenue is recognized in full on the statement of financial performance. Where
UNOPS delivered services on behalf of its partners, bearing insignificant risk of
ownership, that is, by acting as an agent, only the net revenue is reported on the
statement.
18. The difference between gross delivery and IPSAS revenue figures consists of
$1.6 billion in agency transactions. Table III.1 provides a summary of revenue and
expenses against the five core services of UNOPS: infrastructure, procurement,
project management, human resources and financial management. The figures are
derived from the financial statements that report the same IPSAS figures against the
five principal activities (see note 20).
19. After deducting annual expenses and long-term employee liabilities charges, the
net surplus for 2023 was $41.3 million, compared with the net deficit for 2022 of
$28.8 million.

24-13155 55/146
A/79/5/Add.11

Table III.1
Revenue and expenses
(Millions of United States dollars)

IPSAS revenue/ Add agency Total gross

(expenses) transactions delivery

Revenue
Construction contracts (infrastructure) 445.3 2.9 448.2
Procurement 107.4 713.2 820.6
Financial management 103.3 574.5 677.8
Human resources administration 27.3 258.7 286.0
Other project management 532.8 40.6 573.4
Miscellaneous revenue 0.9 – 0.9
Non-exchange revenue – – –

Total revenue 1 217.0 1 589.9 2 806.9

Expenses
Construction contracts (infrastructure) (426.1) (2.9) (429.0)
Procurement (75.7) (713.2) (788.9)
Financial management (84.4) (574.5) (658.9)
Human resources administration (15.4) (258.7) (274.1)
Other project management (500.8) (40.6) (541.4)

Total project expenses (1 102.4) (1 589.9) (2 692.3)

Less: UNOPS administrative costs (136.4) – (136.4)

Total expenses (1 238.8) (1 589.9) (2 828.7)

Surplus from services (21.8) – (21.8)

Add: net financial income 63.1 – 63.1

UNOPS 2023 surplus 41.3 – 41.3

Assets and liabilities

20. The statement of financial position is a comprehensive summary of UNOPS
assets and liabilities. All UNOPS liabilities and assets are included.

Financial position at the end of 2023

21. As at 31 December 2023, the liability to fund after-service health care and end-
of-service benefits for qualifying staff members stood at $84.8 million. This liability
was independently estimated by an actuarial firm. The details of the calculations ar e
contained in note 15. While this amount represents the best estimate of the liability
of UNOPS, it remains subject to a degree of uncertainty, which is reported in the
sensitivity analysis. In recognition of this uncertainty, the actuarial assumptions wi ll
be kept under review and the estimate of the liability will be updated on an annual
basis.
22. As at 31 December 2023, UNOPS had assets of $3.8 billion, which more than
covered liabilities of $3.5 billion, leaving net assets of $293.8 million.
23. The most significant assets were short-term investments, which amounted to
$2.5 billion at the end of 2023, compared with $2.1 billion at the end of 2022.

56/146 24-13155
 A/79/5/Add.11

24. Approximately 82 per cent of UNOPS cash and investments reflect

contributions that have been received in advance from partners towards the cost of
the implementation of the projects. The strong cash position of UNOPS demonstrates
that it can continue to fund a similar portfolio of future programmes of work with its
partners.

Net assets
25. As at 31 December 2023, after an allowance had been made for all known
liabilities, the net assets held by UNOPS stood at $293.8 million. A $43.3 million
actuarial gain pertaining to the valuation of employee benefits at year end was
recognized and has had an impact on the total reserves.
26. On the basis of the minimum operational reserve requirement calculation
approved by the Executive Board in September 2021 (see DP/OPS/2021/6), UNOPS
was required to maintain $165.3 million in minimum operational reserves as at
31 December 2023. This is based on the requirement to maintain 25 per cent of the
infrastructure service line expenses, 5 per cent of expenses for other service lines and
33 per cent of administrative costs, with a weight of 50 per cent for the current year,
30 per cent for the previous year and 20 per cent for the year prior.
27. In February 2022, the UNOPS Executive Board established the Sustainable
Investments in Infrastructure and Innovation reserve. Subsequently in June 2022, the
Board requested UNOPS to freeze all further Sustainable Investments in
Infrastructure and Innovation-related investment not already contractually committed
by UNOPS. As at that date, the total committed Sustainable Investments in
Infrastructure and Innovation investments amounted to $63.0 million.
28. In its decision 2023/22, the Executive Board approved the release of committed
Sustainable Investments in Infrastructure and Innovation initiative funds to the
UNOPS operational reserve. Consequently, the total committed Sustainable
Investments in Infrastructure and Innovation investments, which amounted to
$63.0 million in 2022, were released into the operational reserves in 2023.
29. In its decision 2023/4, the Executive Board requested that UNOPS distribute
without delay its excess reserves accumulated as at 31 December 2021, minus
$35.4 million, to each paying entity, including those of the United Nations system,
based on the management fees generated from each paying entity as a proportional
share of total management fees received by UNOPS from 1 January 2018 through
31 December 2021 (four calendar years). UNOPS has implemented this decision. The
effect is visible in the reduction of UNOPS net assets of $123.8 million for approved
distribution to UNOPS donors. With regard to its net assets, apart from the minimum
operational reserves of $165.3 million, UNOPS is also reporting other operational
reserves of $84.9 million for 2023. This includes the impact of the adoption of IPSAS
41: Financial instruments, on UNOPS net assets, which is disclosed in paragraphs 113
and 114 of the notes to the financial statements; these are unrealized results and as
such are non-distributable. In line with the methodology adopted by the Executive
Board in paragraph 17 of its decision 2023/22, this means that at the end of 2023,
UNOPS has no liquid excess reserves that can be considered for refund.

Liquidity
30. The statement of cash flows shows that cash and cash equivalents held by
UNOPS increased by $98.0 million during 2023. UNOPS continues to retain a strong
working capital position.

24-13155 57/146
A/79/5/Add.11

Budget outcome
31. IPSAS requires the preparation of a statement of comparison of budget and
actual amounts. The statement reports actual revenue and expenses against the
Executive Board-approved management budget covering UNOPS administrative
costs for the biennium 2022–2023.
32. For 2023, the overall budgetary outcome was negative, with UNOPS reaching a
net revenue of -$3.3 million on a budget basis from its delivery of services, driven by
a shortfall in revenue. The UNOPS revenue from management fees, reimbursable
services and advisory income totalled $115.1 million in 2023, compared with
$124.2 million in 2022, 8 per cent below the final budget of $125.1 million. In 2023,
the Executive Board released $11.8 million from the reserves towards the
implementation of the comprehensive response plan, and the total expense against
this first tranche of the maximum total of $35.4 million amounted to $8.7 million as
reported in the 2023 financial statements under the statement of comparison of budget
and actual amounts (statement V). The remaining balance of $26.7 million will be
covered by the administrative budget in the subsequent related years.

C. People excellence

33. At the end of 2023, UNOPS personnel totalled 5,226, down from 5,309 in 2022.
In addition to UNOPS personnel, contracts were administered on behalf of a range of
partners. At the end of 2023, the number of staff and contracts on UNOPS contracts
stood at 13,223, an increase from 12,927 in 2022 (see table III.2).

Table III.2
Number of personnel, by category, as at 31 December 2023

Contract modality Staff Contractors Total

UNOPS personnel 659 a 4 567 5 226

Partner personnel 25 7 972 7 997

Combined personnel 684 12 539 13 223

a
Includes staff in organizations where UNOPS is providing hosted initiative secretariat
services, who are subject to the same policies and procedures as UNOPS staff.

Status and deployment of individuals on UNOPS contracts

34. In 2023, UNOPS took a more dynamic approach to engagement surveys, as part
of the response plan to address the findings of the reviews of the multinational audit
firm KPMG in 2022, and conducted shorter and more frequent pulse surveys on key
thematic areas, using the same methodology as before by way of the contracted
external provider. The 2023 pulse surveys were designed to “take the pulse” of
personnel by seeking feedback on crucial themes such as communication,
empowerment, engagement, ethics and leadership. In addition to familiar questions
from previous surveys, UNOPS asked personnel to share their ideas for a progressive
and positive UNOPS culture. In this way, UNOPS empowered personnel to share their
vision, aspirations and thoughts, contributing to the future UNOPS culture. UNOPS
will continue the personnel pulse survey programme in 2024, with a focused approach
on the new organizational cultural transformation elements.
35. In 2023, UNOPS continued its commitment to advancing diversity, equity and
inclusion through the implementation of its strategy for the period 2022 –2025 on

58/146 24-13155
 A/79/5/Add.11

gender, diversity and inclusion in the workforce, launched in 2022. The organization
is actively working towards creating a more inclusive and diverse environment by
enhancing its culture, leadership, policies and processes. In late 2022, UNOPS
embarked on a process to initiate the restructuring of its advisory panel on gender,
diversity and inclusion, which was met with a delay in 2023. The restructuring process
of the advisory panel was therefore not finalized. No meetings of the advisory panel
were held in 2023 and this may have led to some setbacks in the implementation of
activities projected in the action plan on diversity, equity and inclusion. UNOPS
hopes to reinstate the advisory panel in 2024 or to consider adding an alternate senior -
level mechanism.
36. In 2023, the reporting lines for the Diversity, Equity and Inclusion Unit were
changed. The Unit is now incorporated into the Culture and Engagement Team of the
People and Culture Group, and directly reports to the Director of the People and
Culture Group, thereby increasing the visibility and accountability of this field of
work.
37. UNOPS has strengthened its efforts in disability inclusion by establishing a
centralized corporate fund for reasonable accommodation to support colleagues and
candidates with disabilities. UNOPS is currently developing the accompanying
reasonable accommodation guidelines for the workplace.
38. In 2023, UNOPS maintained its efforts to ensure equal representation of diverse
groups. Among other initiatives, senior leaders in UNOPS committed to a recruitment
target for women of 60 per cent to achieve gender parity across all business units,
regions and levels. This, together with the continued implementation of the special
temporary gender parity measures to accelerate the progress towards gender parity in
business units that have not yet met parity, has allowed UNOPS to continue sustaining
overall gender parity in the workplace. Efforts will continue until the organization
meets its goals. Regular performance management training also emphasizes the role
of UNOPS leaders in fostering a culture of high performance and feedback and
promoting an enabling and inclusive work environment. In 2023, $253,000 was
approved (for 2024) for the continued implementation of diversity, equity and
inclusion activities as well as an accompanying $150,000 for efforts to provide
reasonable accommodations for people with disabilities.
39. UNOPS also introduced an additional employee resource group for youth in the
organization. Employee resource groups are spaces where personnel who share
similar identities or experiences can come together as a community, and advocate to
the organization in relation to the identity-related barriers they face. The employee
resource group for youth is therefore a space where young professionals can meet
with peers and talk about their shared experiences.
40. In 2023, UNOPS ensured the inclusion of self-identification questions in
engagement surveys and analysed engagement along identity groups (e.g. age, gender,
disability, race, sexual orientation, etc.). The surveys themselves are only a starting
point; the critical next steps are to address the areas of priority using global and local
action planning processes.
41. In countries where UNOPS maintains physical offices, 80 members of senior
management were nationals of the relevant country, representing 13 per cent of the
total number of 640 UNOPS personnel at the senior management level. In 2023, 105
of 640 senior managers were nationals of the duty station country, representing 16 per
cent of the total number (“senior management” is defined as personnel employed at
grade ICS-11 and above). At the end of 2023, more than 2,575 UNOPS personnel
were based at hardship duty stations (locations rated “B” to “E” on the International
Civil Service Commission hardship scale).

24-13155 59/146
A/79/5/Add.11

42. Overall, in 2023, 5,033 personnel benefited from learning opportunities at

UNOPS and invested 114,060 hours in learning activities. This represents an increase
of 32 per cent in the total learning hours versus the previous year. In addition, the
average hours invested in learning per person increased from 19 in 2022 to 23 in 2023.
Some 94 per cent of learning remained virtual. However, in local contexts, face -to-
face training reached over 1,000 participants, highlighting the importance of physical
presence. This increase is the result of the launch of new programmes and learning
initiatives, and of enabling learning in regional locations by decentralizing part of the
total learning budget envelope. One of the main highlights of 2023 was the significant
increase in participation of colleagues in various learning initiatives. In 2023, 591
UNOPS personnel participated in leadership development programmes (up from 58
in 2022). In addition, UNOPS continued to strengthen the connection between
UNOPS and the United Nations system through partnership with the United Nations
System Staff College. A total of 2,134 courses were completed on the Blue Line
platform and 198 senior leaders participated in the Sustainable Development Goal
leadership programme. In addition, over 1,300 colleagues were actively learning and/
or improving a new language with instructor-led language training. Procurement,
well-being and ethics training, both virtually and in-person, were among the most
attended courses across the organization.
43. In 2023, the learning budget increased from $3.4 million in 2022 to $4.0 million
in 2023. This increase is the result of a three-year learning investment strategy that
was approved in 2022. Of the total budget envelope, 77.5 percent was spent on a rang e
of global and strategic learning priorities, including UNOPS core operations
(infrastructure, project management and procurement), administration and support
topics, people and leadership topics and learning technologies and tools. In addition,
22.5 percent of the total budget envelope was spent on initiatives that responded to
the learning needs identified in the regions and country offices.
44. In 2023, UNOPS embarked on a journey of cultural transformation to reinforce
the alignment of the organization’s culture with United Nations values and ensure its
resilience for the future. An organizational culture review identified five key areas for
improvement that the leadership has committed to work on in 2024. Through its
commitment to invest in people, change the tone from the top, create a future -proof
culture and enhance transparent communication, UNOPS is on a mission to review
and adapt human resources policies and processes and enhance accountability. The
goal is to reinforce expected behaviours from leaders at all levels and simplify
operations by placing decision-making authority and accountability closer to where
decisions are implemented.
45. In parallel, UNOPS established a new Organizational Culture and Engagement
Team within the People and Culture Group to spearhead dedicated efforts on
strengthening its protection from sexual exploitation, abuse and sexual harassment
role; victim support; and diversity, equity and inclusion and well-being initiatives.
Moreover, ongoing recruitment efforts are under way for a new Head of
Organizational Culture and Engagement, further underlining the organization’s
commitment to building the desired culture within UNOPS and having a dedicated
leader focused on driving positive cultural change.
46. Through its senior leaders induction programme, UNOPS equipped newly hired
senior leaders in head-of-office roles to understand the organization’s value
proposition and culture and to better represent UNOPS and achieve impact in their
roles. In addition, UNOPS continued its efforts to strengthen an organizational culture
fully aligned with the United Nations system by providing access to all personnel to
the Blue Line platform, which includes hundreds of e-learning courses that expand
and reinforce knowledge of core United Nations values, leadership and management
concepts. Furthermore, 198 personnel participated in the Sustainable Development

60/146 24-13155
 A/79/5/Add.11

Goal leadership programme, which equips leaders to lead with purpose and high
impact and achieve the goals of the 2030 Agenda.
47. UNOPS has committed to following and supporting the United Nations System
Mental Health and Well-being Strategy for 2024 and beyond, which was launched
within the organization in March 2024, by prioritizing the mental health and well -
being of all personnel and creating a culture of care where no one is left behind. To
promote and protect the mental health and well-being of its personnel, UNOPS
continues to make available psychosocial support and stress management to all
personnel through its external psychosocial counselling service provider for crisis
counselling and counsellors from the regional Critical Incident Stress Management
Unit of the Secretariat, whenever present on the ground.
48. Prevention requires an organizational approach to assessing and mitigating
psychosocial risks. Actions can be taken to account for workplace factors that can
lead to poor mental health. In 2023, the UNOPS People and Culture Group partnered
with the Health, Safety, Social and Environmental Management Department to
regularly hold global webinars on psychosocial hazards, including mental health
promotion and mitigation strategies. The global webinars are part of a series of
targeted webinars on mental health and well-being literacy which include topics such
as preparation for deployment, dealing with potentially traumatic events and, in the
future, coping strategies, psychosocial first aid, depression and anxiety. The webinars
are directed at all personnel and are intended to create awareness regarding
psychosocial hazards in the workplace (any aspects of the work environment that can
cause psychological harm), and of prevention strategies that can be proactively put in
place to continuously look after one’s mental health.
49. In February 2023, UNOPS held two pilot sessions for UNOPS supervisors on
the topic “Supporting your own mental health and that of others in the workplace”.
The training sessions aimed at equipping UNOPS supervisors at any level with the
tools and knowledge to spot signs of poor mental health, initiate effective
conversations on well-being in a team, practice self-care as a leader and refer team
members to the well-being resources available in UNOPS. The training sessions have
reached 586 personnel with a supervisory role. Targeted sessions were held
specifically for regional offices, upon request.
50. In addition, since 2020, UNOPS has been partnering with Peace on Purpose, an
initiative of the United Nations Foundation, to offer well-being programmes to its
personnel (exploration series and champions programmes are offered twice a year).
The programmes teach personnel the skills to focus attention, calm stress,
communicate skilfully, prevent burnout and build resilience.
51. Furthermore, to contribute to a healthy workplace culture and to address the
mental health needs of United Nations personnel across the United Nations system,
as well as improve organizational capacities in this regard, as of 2023 UNOPS is an
active member of the Mental Health and Well-being Strategy Implementation Board.

D. Accountability and transparency as a core value of the

United Nations Office for Project Services

52. Achievements during 2023 included:

(a) Following its establishment in 2019, the UNOPS Client Board convened
for its fifth annual meeting in March 2023. The purpose of the Client Board is to serve
as an advisory body to the UNOPS Executive Director, providing a forum for the
deepening of focused collaborative strategic partnerships;

24-13155 61/146
A/79/5/Add.11

(b) In its decision 2022/24, the UNOPS Executive Board requested a

comprehensive response plan that included the recommendations of the two KPMG
reviews. This was operationalized in a comprehensive response plan that included a
timeline for implementation, organizational ownership and a publicly accessible
online monitoring platform where progress can be monitored in near real time. Of the
43 recommendations received from KPMG, 33 have been completed, 2 are not
operationalized, as they are outdated, and 1 will be led by the Office of Legal Affairs.
Of the outstanding recommendations, six will be completed by the end of 2024 and
one will continue until 2027;
(c) In 2023, UNOPS enhanced its health and safety risk assessment and
incident management processes through the use of a digitized health and safety
management system. Improvements noted included enhanced data accuracy,
improved response times when addressing identified hazards and better engagement
of line management. Furthermore, UNOPS also enhanced its external e -learning
platform by incorporating specially curated courses aimed at addressing UNOPS fatal
risk standards. This initiative in capacity-building led to the training of 1,630
contractors;
(d) Several steps were taken to increase business capabilities in UNOPS.
Following the approval by the Executive Board of the allocation of funds, UNOPS
initiated a process innovation and digitalization programme aimed at strengthening
the organization’s delivery for partners and beneficiaries through the optimization of
UNOPS processes and by adopting the most appropriate digital systems. One notable
milestone achieved through the programme was the development of a digital platform
to match emergency support needs with available personnel on the Salesforce
platform. This pioneering application enables the rapid mobilization and deployment
of highly skilled personnel and specialized experts, particularly in exigent situations,
thereby facilitating mandate delivery during crises and urgent requests for support.
Moreover, UNOPS successfully launched the partnership management system pilot,
the first phase of its integrated partnerships and project development platform. The
partnership management system is designed to enhance partner relationship
management, thereby augmenting efficiency, consistency and partner satisfaction. In
its pursuit of operational excellence, UNOPS leveraged the MuleSoft platform to
seamlessly integrate data across systems, reducing data entry efforts and enhancing
data accuracy. This integration benefits both the organization’s internal processes and
also facilitates the integration of external parties, including hosted entities, into
UNOPS systems. Finally, UNOPS implemented the means f or a systematic recording
of Sustainable Development Goals for all engagements and projects, ensuring that
colleagues across the organization have access to crucial information for analysing
and understanding its contributions, thereby facilitating impactf ul decision-making;
(e) By the end of 2023, the implementation rate of internal audit
recommendations stood at 95 per cent, compared with 98 percent as at 31 December
2022. There was one long-outstanding audit recommendation issued more than 18
months before 31 December 2022 (on or before 30 June 2021), which was the same
long-outstanding audit recommendation as of the end of 2022. Details of UNOPS
audit and investigations findings in 2023 are available in a dedicated report
(DP/OPS/2024/4).

E. System of internal controls and its effectiveness

53. The Executive Director is responsible and accountable to the Executive Board
for establishing and maintaining an effective system of internal controls. This
conforms to and complies with the regulations and rules of the United Nations and
UNOPS.

62/146 24-13155
 A/79/5/Add.11

Main elements of the system of internal controls

54. The main elements of the UNOPS internal control system are policies,
procedures, standards and activities designed to provide reasonable assurance that
operations are conducted in an economical, efficient and effective manner. They
include the documentation of processes, instructions and guidance and operational
directives promulgated by the Executive Director or his/her delegates; delegation of
authority assignments with system-enabled approval workflows aligned with the
organizational structure; the system of personnel performance management; key
controls throughout the UNOPS value chain to address key risks to core processes;
and the monitoring and communication of results by both management and the
Executive Board.
55. UNOPS has continued to focus on further strengthening the system of internal
controls throughout the financial year. This has led to:
(a) Implementation of quarterly core control testing to evaluate control design
and operational effectiveness. The report is shared with the core process owners for
continued improvement;
(b) Continued strengthening of the delegation of authority and accountability
framework;
(c) Annual senior leadership self-assessment on the effectiveness of the
system of internal controls and the implementation of its key principles;
(d) Annual regional director internal control certification, which is a formal
sign-off on a self-assessment on key controls within regions.
56. UNOPS enterprise risk management is a holistic approach for managing key
risks across various organizational levels. The approach is implemented through
standard rules (promulgated organizational directive and operational instruction),
integrated processes (process quality management system guidance), common tools
(oneUNOPS Projects) and taxonomies (e.g. risk categories and risk evaluation scale).
More specifically, enterprise risk management comprises three interconnected levels:
(a) Operational risk management, which relates to managing risks online
across the lifespan of UNOPS projects and engagements in order to facilitate
informed decision-making and the successful delivery of UNOPS operations;
(b) Organizational risk management, which relates to managing risks at the
geographical entity level, such as those affecting the entity’s reputation, financial
plans and overall objectives;
(c) Corporate risk management, which relates to managing risks for UNOPS
as a global entity, such as those affecting the reputation and financial viability of
UNOPS.

Effectiveness of the system of internal controls

57. The UNOPS system of internal controls is a continuous process designed to
monitor, support and improve UNOPS core activities. As a result, the system provides
reasonable assurance that UNOPS will achieve its expected results and objectives.
Internal controls help reduce UNOPS risk exposure to an acceptable level through the
implementation of control and oversight activities across core UNOPS operational
processes. UNOPS has established governance and reporting structures that have
enabled the evaluation of the effectiveness of the internal control system throughout
the year. The Executive Director held regular meetings with the major elements of the
UNOPS governance structure, including the Executive Board, the Audit Advisory
Committee, the Director of the Internal Audit and Investigations Group, the Director

24-13155 63/146
A/79/5/Add.11

of the Ethics Office and the Board of Auditors. Internal controls and risk management
processes are reinforced during these sessions with recommendations for risks that
are at an unacceptable level. The Executive Director also took into account feedback
from the management team and external reviews by independent third parties on the
operational effectiveness of the internal control system. On the basis of these
activities, the Executive Director has provided a reasonable, not absolute, assurance
of the effectiveness of the internal control system and confirmed that significant
issues were being monitored and addressed by the policy owners.
58. UNOPS adopts the Committee of Sponsoring Organizations of the Treadway
Commission framework in establishing the internal control framework. The
framework provides reasonable assurance that UNOPS will achieve the following
objectives: (a) efficiency and effectiveness of operations; (b) reliability and accuracy
of reporting; and (c) compliance with UNOPS and United Nations rules and
regulations. UNOPS continues to operationalize the internal control framework
across its five core processes and will align with the recommendations in the Joint
Inspection Unit’s review of the accountability frameworks in the United Nations
system organizations (JIU/REP/2023/3).

F. Looking ahead

Restated strategic plan, 2022–2025

59. In accordance with the request of the Executive Board, UNOPS presented its
restated strategic plan for the period 2022–2025 at the 2023 annual session. The plan
reoriented UNOPS towards pursuing its original mandate, by setting direction for the
organization to perform the implementation role as set out in General Assembly
resolution 65/176. In that resolution, the Assembly reaffirmed the role of UNOPS as
a central resource for the United Nations system in procurement and contracts
management, as well as in civil works and physical infrastructure development,
including the related capacity development activities. It also recognized the potential
for value-added contributions through the provision of efficient, cost -effective
services to partners in the areas of project management, human resources, financial
management and common/shared services.
60. The restated strategic plan emphasizes the collaborative advantage of UNOPS
to expand partners’ implementation capacity to help people in need and support
countries in accelerating the achievement of the Sustainable Development Goals.
UNOPS can be a resource that expands implementation capacity for all the Goals and
the capacity of partners working across peace and security, humanitarian and
development efforts. Owing to its self-financing and demand-driven operating model,
the UNOPS substantive focus and country presence is a factor in partner demand and
its ability to respond.
61. The restated strategic plan was accompanied by an expanded results framework,
with a focus on impact, and indicators for contributions and management results.
Three contribution goals provide operational focus to reinforce impact ambitions:
(a) Enable partners through cost-effective project services;
(b) Help people in need through sustainable implementation;
(c) Support countries in accelerating the achievement of the Sustainable
Development Goals.
62. Four management goals reinforce the realization of the contribution goals,
including the closed-loop implementation of the forward-looking recommendations

64/146 24-13155
 A/79/5/Add.11

of the independent third-party reviews. The goals focus on: (a) people culture;
(b) partner trust; (c) process excellence; and (d) financial stewardship.
63. In addition, through activities focused on the expanded results framework, the
organization will, in implementing the strategic plan, pursue four main areas of
strategic improvement:
(a) Reinforce management structures and capacities;
(b) Rebuild trust and organizational culture;
(c) Implement a digital transformation programme;
(d) Apply transparent cost-recovery for net-zero revenue.

United Nations Office for Project Services financial viability

64. UNOPS has assessed its capability and resilience to continue to operate at its
current level of activity, and is committed to net-zero revenue. Accordingly, the 2023
financial statements have been prepared on a going-concern basis.
65. In its decision 2023/22, the Executive Board approved the net-zero revenue
target for the biennium 2024–2025. The Executive Board endorsed the approach for
setting indirect cost-recovery rates based on required revenue needs and underlined
the need for full cost recovery to fully fund the investments needed to restore the
operational and organizational capacity of UNOPS.

24-13155 65/146
A/79/5/Add.11

Chapter IV
Financial statements for the year ended 31 December 2023
United Nations Office for Project Services
I. Statement of financial position as at 31 December 2023
(Thousands of United States dollars)

Reference 31 December 2023 31 December 2022

Assets
Non-current assets
Property, plant and equipment Note 6 17 629 18 393
Intangible assets Note 7 4 672 5 299
Long-term investments Note 10 187 464 806 387
Other financial assets Note 11 – –

Total non-current assets 209 765 830 079

Current assets
Inventories Note 8 9 811 11 723
Other assets Note 12 1 247 5 340
Accounts receivable Note 13
Project accounts receivable 94 786 69 519
Prepayments 47 028 14 893
Other accounts receivable 213 984 61 386
Short-term investments Note 10 2 516 861 2 079 129
Cash and cash equivalents Note 14 702 587 604 609

Total current assets 3 586 304 2 846 599

Total assets 3 796 069 3 676 678

Liabilities
Non-current liabilities
Employee benefits, long-term Note 15 84 902 75 186
Provisions Note 23 172 2 178

Total non-current liabilities 85 074 77 364

Current liabilities
Employee benefits, short-term Note 15 37 463 35 955
Accounts payable and accruals Note 16 563 607 453 888
Project cash advances received Note 17
Deferred revenue 1 805 022 1 311 308
Cash held on agency projects 995 020 1 441 813
Other liabilities Note 18 7 787 20 708
Provisions Note 23 8 286 11 605

Total current liabilities 3 417 185 3 275 277

Total liabilities 3 502 259 3 352 641

Net assets/equity 293 810 324 037

66/146 24-13155
 A/79/5/Add.11

United Nations Office for Project Services

I. Statement of financial position as at 31 December 2023 (continued)
(Thousands of United States dollars)

Reference 31 December 2023 31 December 2022

Net assets/equity
After-service health insurance reserve Note 19
Actuarial gains/(losses) 43 259 48 897
Changes in fair value of after-service health
insurance financial assets recognized in net
assets/equity (3 345) –
Other after-service health insurance investment
returns recognized in surplus/deficit 228 –
Post-employment funding gap 3 413 –
Changes in fair value of non-after-service health
insurance financial assets Note 19 – (57 083)
Operational reserves Note 19
Minimum operational reserve 165 319 147 252
Other operational reserves 84 936 121 924
Sustainable Investment in Infrastructure and Innovation
reserve – 63 047
Accumulated surpluses Note 19 – –

Total net assets/equity 293 810 324 037

Total liabilities and net assets/equity 3 796 069 3 676 678

The accompanying notes form an integral part of these financial statements.

24-13155 67/146
A/79/5/Add.11

United Nations Office for Project Services

II. Statement of financial performance for the year ended 31 December 2023
(Thousands of United States dollars)

Reference 31 December 2023 31 December 2022

Revenue
Revenue from project activities Note 20 1 216 013 1 221 541
Miscellaneous revenue 949 2 883
Non-exchange revenue Note 20 – –

Total revenue 1 216 962 1 224 424

Expenses
Contractual services Note 20 450 504 366 509
Other personnel costs – other personnel Note 21 343 883 321 146
Salaries and employee benefits – staff Note 21 130 770 121 940
Operational costs Note 20 127 366 118 441
Supplies and consumables 135 524 222 658
Travel 47 033 34 996
Other expenses Note 20 (1 388) 32 620
Depreciation on property, plant and equipment Note 6 3 596 3 474
Amortization of intangible assets Note 7 1 475 1 091

Total expenses 1 238 763 1 222 875

Surplus/(deficit) from operations (21 801) 1 549

Finance income Note 22 63 672 (54 808)

Exchange rate gain/(loss) Note 22 (546) 24 479

Net finance income/(expense) 63 126 (30 329)

Surplus/(deficit) for the period 41 325 (28 780)

The accompanying notes form an integral part of these financial statements.

68/146 24-13155
 A/79/5/Add.11

United Nations Office for Project Services

III. Statement of changes in net assets/equity for the year ended 31 December 2023
(Thousands of United States dollars)

Reference

Opening balance as at 1 January 2022 Note 19 360 368

Actuarial gains/(losses) for the period 39 198
Change in fair value of financial assets (46 749)
Surplus/(deficit) for the period (28 780)

Opening balance as at 1 January 2023 Note 19 324 037

Impact on adoption of IPSAS 41 Note 3.1 51 996

Opening balance as at 1 January 2023 Note 19 376 033

Actuarial gains/(losses) for the period (5 638)

Change in fair value of after-service health insurance
financial assets 5 882
Change in fair value of non-after-service health
insurance financial assets –
Approved distribution to UNOPS donors (123 792)
Surplus/(deficit) for the period 41 325

Closing balance on 31 December 2023 Note 19 293 810

The accompanying notes form an integral part of these financial statements.

24-13155 69/146
A/79/5/Add.11

United Nations Office for Project Services

IV. Statement of cash flows for the year ended 31 December 2023
(Thousands of United States dollars)

Reference 31 December 2023 31 December 2022

Cash flows from operating activities

Surplus/(deficit) for the period 41 325 (28 780)
Non-cash movements
Amortization Note 7 1 475 1 091
Depreciation Note 6 3 596 3 474
Impairments/provision of other financial assets Note 11 – 24 021
Finance income Note 22 (63 672) 54 808
(Gain)/loss on the disposal of property, plant and equipment Note 6 345 912
Increase/(decrease) in provisions Note 23 (5 325) 5 111

Net surplus before changes in working capital (22 256) 60 637

Changes in working capital

(Increase)/decrease in inventories Note 8 1 912 3 598
(Increase)/decrease in other assets Note 12 4 093 19 236
Increase/(decrease) in other liabilities Note 18 (12 921) 3 864
(Increase)/decrease in accounts receivable Note 13 (19 159) (37 491)
(Increase)/decrease in prepayments Note 13 (32 135) (592)
Increase/(decrease) in employee benefits (net of actuarial gains) Note 15 5 587 3 982
Increase/(decrease) in accounts payable and accruals Note 16 (63 653) (435 992)
Increase/(decrease) in deferred revenue Note 17 493 714 (91 436)
Increase/(decrease) in project cash advances received Note 17 (446 793) (927 970)

Cash flow impact on changes in working capital (69 355) (1 462 801)

Finance income received on cash and cash equivalents Note 22 1 396 434

Net cash flows from/(used in) operating activities (90 215) (1 401 730)

The accompanying notes form an integral part of these financial statements.

70/146 24-13155
 A/79/5/Add.11

United Nations Office for Project Services

IV. Statement of cash flows for the year ended 31 December 2023 (continued)
(Thousands of United States dollars)

Reference 31 December 2023 31 December 2022

Cash flows from investing activities

Acquisitions of intangible assets Note 7 (848) (1 204)
Acquisitions of property, plant and equipment Note 6 (3 137) (3 209)
Proceeds from sale of property, plant and equipment Note 6 79 3
Purchase of investments (5 771 083) (5 933 434)
Proceeds from the maturity of investments 6 071 521 7 212 913
Proceeds from the sale of other financial assets Note 11 – 4 255
Interest income received on investments 42 362 (45 741)
Finance income/(cost) allocated to projects Note 22 (26 343) (10 632)
(Gain)/loss from disposal of other financial assets Note 11 – (8)

Net cash flows from investing activities 312 551 1 222 943

Cash flows from financing activities

Approved distribution to UNOPS donors (123 792) –

Net cash flows from financing activities (123 792) –

Adjustment for fair value on cash equivalents (566) 562

Net increase/(decrease) in cash and cash equivalents a 97 978 (178 225)

Cash and cash equivalents at the beginning of the period 604 609 782 834

Cash and cash equivalents at the end of the period b Note 14 702 587 604 609

a
There is no difference between cash and cash equivalents on the statement of cash flows and the statement of
financial position.
b
The components of cash and cash equivalents as at 31 December 2023 are disclosed in note 14.

The accompanying notes form an integral part of these financial statements.

24-13155 71/146
A/79/5/Add.11

United Nations Office for Project Services

V. Statement of comparison of budget and actual amounts for the year ended
31 December 2023
(Thousands of United States dollars)

Biennial
2022–2023 2023 2023 2023
management management management actual Difference
budget a budget budget amounts between
final budget
Reference Original Original Final Actuals and actuals

Revenue on budget basis 200 511 100 255 125 087 115 076 (10 011)
Response plan-related investments from
reserves – – 11 800 8 742 (3 058)

Total revenue for the period Note 26 200 511 100 255 136 887 123 818 (13 069)

Management resources
Posts 31 259 15 629 25 107 20 364 (4 743)
Common staff costs 23 087 11 544 18 181 15 740 (2 441)
Travel 8 724 4 362 5 782 6 310 528
Consultants 100 999 50 499 61 070 59 130 (1 940)
Operating expenses 12 987 6 494 7 513 8 011 498
Furniture and equipment 1 410 705 2 234 1 901 (333)
Reimbursements 2 800 1 400 5 200 5 774 574
Response plan-related investments from
reserves – – 11 800 8 742 (3 058)

Total use of management resources 181 266 90 633 136 887 125 972 (10 915)

Write-offs, provisions and contingency

surplus 19 245 9 622 – 1 124 1 124

Total use of resources 200 511 100 255 136 887 127 096 (9 791)

Net revenue on budget basis – – – (3 278) (3 278)

a
DP/OPS/2021/6.

The accompanying notes form an integral part of these financial statements.

72/146 24-13155
 A/79/5/Add.11

United Nations Office for Project Services

Notes to the 2023 financial statements
Note 1
Reporting entity
1. The mission of UNOPS is to help people to build better lives and countries to
achieve peace and sustainable development. UNOPS is a self-financing organization,
without any voluntary or assessed contributions from Member States, and relies on
the revenue that it earns from project implementation and other services. UNOPS was
established as an independent entity on 1 January 1995; its headquarters is located in
Copenhagen.
2. UNOPS activities and its management budget are set by its Executive Board.
UNOPS enables its partners to expand implementation capacity across peace and
security, humanitarian and development efforts, including through capacity
development activities. Through its project services, it supports the United Nation
system, Governments, and other partners in accelerating national achievement of the
Sustainable Development Goals. 2
3. Pursuant to General Assembly resolution 65/176 and subsequent Executive
Board decisions, 3 UNOPS can act as a service provider for various actors in the
development, humanitarian and peacekeeping arenas, including the United Nations,
the agencies, funds and programmes of the United Nations system, donor and
recipient Governments, intergovernmental organizations, international and regional
financial institutions, non-governmental organizations, foundations and the private
sector.
4. UNOPS has a role as a central resource for the United Nations system in
procurement and contract management, as well as in civil works and physical
infrastructure development, including the relevant capacity development activities.
UNOPS can make value-added contributions by providing efficient, cost-effective
services to partners in the areas of project management, human resources and
financial management.
5. UNOPS follows a results-oriented approach to the services that it provides. It
launches and implements new project operations quickly, transparently and in a fully
accountable manner. UNOPS expands partners’ implementation capacity through
three service models: support services, technical advice and integrated solutions. Its
functional service lines include:
(a) Infrastructure: UNOPS uses its expertise and experience to construct
emergency and permanent infrastructure. It remains responsible for the construction
works and therefore accounts for these projects as principal;
(b) Procurement: UNOPS uses its procurement network to purchase
equipment and supplies on behalf of and on the basis of the specifications of its
customers. It does not take ownership of the procured items, given that they are
delivered directly to the end customer;
(c) Project management: UNOPS is responsible for the delivery of one or
more outcomes of projects, where it coordinates all aspects of implementation of the
project as principal;
(d) Other services: human resources management services include
recruitment, appointment and the administration of personnel contracts undertaken by
UNOPS on behalf of its partners. The appointed individuals do not work under the
__________________
2
See DP/OPS/2017/5 and General Assembly resolution 66/288, annex.
3
Executive Board decisions 2009/25, 2010/21, 2013/23, 2015/12, 2016/12, 2016/19 and 2017/16.

24-13155 73/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

direction of UNOPS. Another service offered is financial management or

administration, whereby UNOPS acts as an agent pursuant to a mandate set by the
partner.
6. The accounting for agent and principal transactions is further described in the
accounting policy in note 3.

Note 2
Basis for preparation
7. UNOPS financial regulation 23.01 requires the preparation of annual financial
statements on an accrual accounting basis in accordance with IPSAS, using the
historical cost convention. Where IPSAS does not address a specific issue, the
appropriate International Financial Reporting Standard is adopted. The accounting
policies have been applied consistently in the preparation and presentation of these
financial statements.
8. These financial statements are prepared on the basis that UNOPS is a going
concern and will continue in operation and meet its mandate for at least a 12 -month
period after the financial statements have been approved.
9. The financial statements are prepared in accordance with IPSAS and on an
accrual basis and cover the period from 1 January 2023 to 31 December 2023. The
financial statements comply with IPSAS as issued by the IPSAS Board.

Note 3
Summary of significant accounting policies
10. The principal accounting policies applied in the preparation of these financial
statements are set out below.

Project accounting
11. IPSAS 9: Revenue from exchange transactions, distinguishes between a contract
where UNOPS acts as a principal and a contract where UNOPS acts as an agent.
Therefore, revenue from a project in which UNOPS acts as a principal is recognized
in full on the statement of financial performance, while in the case of projects in
which UNOPS operates as an agent on behalf of its partners, only the net revenue is
reported on the statement of financial performance. Additional information on these
agency transactions is provided in note 20. Regardless of the status of UNOPS as
principal or agent, all project-related receivables and payables are recognized in the
statement of financial position at period end and reflected in the statement of cash
flows. In particular, where UNOPS receives amounts in advance from partners, the
excess of cash received over costs and expenses incurred is treated as project cash
advances received and reported as a liability; for projects in which the costs incurred
exceed the cash received from the client, the balance is reported as a receivable.

Functional and presentation currency

12. The United States dollar is the functional currency of UNOPS and is the
currency of these financial statements. The amounts in the financial statements,
schedules and notes are rounded to the nearest thousand United States dollars unless
otherwise stated. Calculations in the tables are made based on unrounded figures; as
a result, rounding differences can occur. Transactions, including non -monetary items,
in currencies other than dollars are translated into dollars at the United Nations
operational rate of exchange on the date of the transaction. Foreign exchange gains
and losses resulting from the settlement of such transactions and unrealized exchange

74/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

differences (gains and losses) from the translation at period -end are recognized in the
statement of financial performance.

Financial instruments
13. A financial instrument is any contract that gives rise to a financial asset of one
entity and a financial liability or equity instrument of another entity.

Initial recognition
14. All financial assets and financial liabilities are initially recognized when
UNOPS becomes a party to the contractual provisions of the instrument. Cash
equivalents are recognized when the cash is deposited in a financial institution.
15. A financial asset or financial liability is initially measured at fair value plus or
minus transaction costs that are directly attributable to its acquisition or issue, except
when such instrument is designated at fair value through surplus or deficit: then
transaction costs are expenses in the statement of financial performance.
16. The fair value of a financial asset on initial recognition is normally the
transaction price unless the transaction is not at arm’s length (i.e. at no or at nominal
consideration for public policy purposes). In this case, the fair value of a financial
asset is derived from current market transactions for a directly equivalent instrument
and the difference between the fair value of the financial instrument and the
transaction price is a non-exchange component recognized as an expense in the
statement of financial performance. If there is no active market for the instrument,
the fair value is derived from a valuation technique that uses available data from
observable markets.

Classification and measurement

17. UNOPS uses a principles-based approach to the classification of financial assets
which requires the use of two criteria to determine how financial assets should be
classified and measured:
(a) The entity’s management model for financial assets;
(b) The contractual cash flow characteristics of the financial asset.
18. Depending on the criteria, financial assets are subsequently measured at
amortized cost, fair value through net assets or equity, or fair value through surplus
or deficit.
19. UNOPS financial assets are classified as current assets if the financial assets
mature, are realized, or management intends to dispose of them within 12 months of
the end of the reporting period.

Subsequent measurement
20. The following table summarizes the organization’s policies for subsequent
measurement and recognition of subsequent gains and losses on its financial assets.

Table IV.1
Subsequent measurement and recognition of financial assets

Financial asset Subsequent measurement and recognition

Financial assets at fair value through These assets are subsequently measured at
surplus/deficit fair value. Net gains/losses, including any

24-13155 75/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

Financial asset Subsequent measurement and recognition

interest or dividend revenue, are recognized

in surplus/deficit.

Financial assets at amortized cost These assets are subsequently measured at

amortized cost using the effective interest
method. The amortized cost is reduced by
impairment losses. Interest revenue, foreign
exchange gains and losses and impairment
are recognized in surplus/deficit. Any gain/
loss on derecognition is recognized in
surplus/deficit.

Debt instruments at fair value through These assets are subsequently measured at
net assets/equity fair value. Interest income calculated using
the effective interest method, foreign
exchange gains/losses and impairment are
recognized in surplus/deficit. Other net
gains/losses are recognized in net assets/
equity. On derecognition, gains/losses
accumulated in net assets/equity are
reclassified to surplus/deficit.

Equity instruments at fair value These assets are subsequently measured at

through net assets/equity fair value. Dividends are recognized as
revenue in surplus/deficit unless the
dividend clearly represents a recovery of
part of the cost of the investment. Other net
gains/losses are recognized in net assets/
equity and, if irretrievably classified at fair
value through net assets/equity, are never
reclassified to surplus/deficit.

Financial assets at amortized cost

21. Financial assets with contractual cash flows that represent solely the repayment
of principal and payment of interest are classified depending on the UNOPS
management model. If the management model is solely to hold the financial assets in
order to collect contractual cash flows and the contractual terms give rise on specified
dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding, the financial assets are classified at amortized cost.
22. UNOPS has classified in this category cash and cash equivalents; money market
funds; term deposits with original maturity of more than three months; bonds held in
its operational reserve and working capital portfolios; and exchange receivables.
23. Financial assets with contractual cash flows that do not represent only principal
and interest, but introduce exposure to risks and volatility other than those present in
a basic lending arrangement (for example, changes in equity prices), are classifi ed as
fair value through surplus or deficit, regardless of the management model.

Financial assets at fair value through net assets/equity

24. These non-derivative financial assets have contractual cash flows that represent
only principal and interest on the outstanding principal. In addition, the management

76/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

model is to hold the financial assets both to collect contractual cash flows and to sell
the financial assets.
25. Included in this category are bonds and equity instruments held in the after-
service health insurance portfolio, which may be sold in order to meet minimum
investment income requirements.

Financial assets at fair value through surplus or deficit

26. Financial assets at fair value through surplus or deficit are designated on initial
recognition or are held for trading. They are initially recorded at fair value and any
transaction costs are expensed. The assets are measured at fair value at each reporting
date, and any resultant fair value gains or losses are recognized through surplus or
deficit. Derivatives are used for economic hedging purposes and not as speculative
investments. UNOPS classifies derivatives as financial assets at fair value through
surplus or deficit in the statement of financial performance. UNOPS does not apply
hedge accounting treatment for derivatives.
27. UNOPS classifies in this category derivatives; investments in pooled portfolio
funds; and other equity-type investments, including real estate investment trusts, as
part of the investment portfolios.

Fair value at subsequent measurement

28. The fair values of quoted investments in active markets are based on current bid
prices. If the market for a financial asset is not active (for example, for unlisted
securities and over-the-counter derivatives), UNOPS establishes a fair value by using
valuation techniques. These include the use of recent arm’s-length transactions,
reference to other instruments that are substantially the same, discounted cashflow
analysis, option pricing models and other valuation techniques commonly used by
market participants.
29. Investments in venture capital funds which do not have a quoted market price
in an active market are valued at the attributable net asset value, which is considered
an equivalent of their fair value.

Impairment of non-derivative financial assets

30. UNOPS recognizes and measures an impairment loss for expected credit losses
on financial assets that are measured at amortized cost and at fair value through net
assets/equity. The expected credit loss is the present value of the difference between
the contractual cash flows and the cash flows that UNOPS expects to receive. The
expected credit loss incorporates reasonable and supportable information that is
available without undue cost or effort as at the reporting date.
31. The expected credit loss is measured with a three-stage model that takes into
account probability-weighted default events during the lifetime of the financial asset
and the evolution of credit risk since the origination of the financial asset. S&P
Global’s global probability of default rating is utilized for this purpose. If there is no
significant increase in credit risk since origination (stage 1), the impairment loss is
the expected credit loss from possible default events in the next 12 months from the
reporting date (“12 months expected credit loss”). If there is a significant increase in
credit risk since origination (stage 2), or if there is objective evidence of a credit
impairment (stage 3), the impairment loss equals the expected credit loss fr om
possible default events over the whole lifetime of the financial asset (“lifetime
expected credit loss”).
32. To meet operational requirements, UNOPS holds cash and deposits in certain
currencies in banking institutions with lower credit ratings or in banking institutions

24-13155 77/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

that are unrated. For these accounts, a review was made using S&P Global’s global
probability of default ratings for rated banks, and the sovereign rating of the country
in which the banking institution is located for non-rated banks. The review resulted
in a determination that no expected credit loss is required to be recognized in the
financial statements, and no impairment allowance has been recognized for the cash
and cash equivalents held in these banks.
33. UNOPS measures the impairment loss at the amount of lifetime expected credit
loss, using practical expedients (for example, provision).
34. For project accounts receivable from Member States of the United Nations,
UNOPS has not previously incurred impairment losses, nor faced any defaults on
payments. Therefore, UNOPS considers the expected credit losses of project
receivables to be negligible, and a statistical approach to calculate expected credit
losses to be inappropriate. Therefore, no expected credit losses are recognized in the
statement of financial performance for the project receivables. However, contracts
covering project accounts receivable may contain clauses providing for the
withholding of reimbursement in connection with expenditures determined to be
ineligible. For these disallowances a provision has been established (see details in
note 13).
35. For receivables of accrued interest on cash equivalents, term deposits and other
investments, a review was made using S&P Global’s global probability of default
ratings for the bank, entity or institution from which the accrued interest was to be
paid. The review resulted in a determination that no expected credit loss is required
to be recognized, and no impairment allowance has been recognized for these
receivables.
36. For assets at amortized cost, the asset’s carrying amount is reduced by the
amount of the impairment loss, which is recognized in the statement of financial
performance. For assets at fair value through net assets/equity, the loss allowance is
recognized in net assets/equity and does not reduce the carrying amount of the
financial asset in the statement of financial position. If, in a subsequent period, the
amount of the impairment loss decreases, the previously recognized impairment loss
is reversed through the statement of financial performance.

Derecognition of financial assets

37. UNOPS derecognizes a financial asset when the contractual rights to the cash
flows from the financial asset expire, or when it transfers the rights to receive the
contractual cash flows in a transaction in which substantially all of the risks and
rewards of ownership of the financial asset are transferred or in which UNOPS neither
transfers nor retains substantially all of the risks and rewards of ownership, and it
does not retain control of the financial asset.

Write-offs
38. The gross carrying amount of a financial asset is written off when UNOPS has
no reasonable expectation of recovering a financial asset in its entirety or a portion
thereof. For individual receivables, UNOPS has a policy of writing off the gross
carrying amount when the financial asset is deemed to be non-recoverable and all
efforts for recovery have been exhausted, based on the historical experience of
recoveries of similar assets.

Financial assets – management model assessment

39. UNOPS makes an assessment of the objective of the management model in
which its financial assets are held at a portfolio level because this best reflects the

78/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

way in which the operations are managed, and information is provided to

management. UNOPS categorizes each of its portfolios in one of the following
management models: hold to collect cash flows that are solely payments of principal
and interest on the amount outstanding; and hold to collect cash flows and sell.
Financial assets that are held for trading or are managed and whose performance is
evaluated on a fair value basis are measured at fair value through surplus or deficit.

Investment portfolios
40. Initial recognition of assets is measured at amortized costs, at fair value through
net assets/equity or at fair value through surplus or deficit depending on the
management model for the portfolio. UNOPS holds its investments in three different
portfolios, and the types of securities held in them vary, as shown below:
(a) Working capital (relates to contributions received against projects):
government securities, government agency, other official entity and multilateral
organization securities (limited to 50 per cent of the investment account assets), bank
obligations, exchange-traded futures and covered bonds (limited to 20 per cent of the
investment account assets);
(b) Reserves (relates to UNOPS operational reserves): government securities;
government agency, other official entity and multilateral organization securities
(limited to 50 per cent of the investment account assets); bank obligations; exchange -
traded futures; and covered bonds (limited to 20 per cent of the investment account
assets);
(c) After-service health insurance (relates to post-employment benefits):
United States dollar investment-grade corporate bonds, developed market equities,
emerging market equities and real estate investment trusts.
41. The interest income earned on investments is recognized in the statement of
financial performance during the period earned.

Other assets and liabilities

42. Other assets and liabilities consist of derivatives that are used for economic
hedging purposes and not as speculative investments. Derivatives do not meet the
hedge accounting criteria and are classified as held for trading and accounted for at
fair value through surplus or deficit.
43. UNOPS does not apply hedge accounting to its derivative instruments. If they
are not closed out at the reporting date, derivatives with a positive fair value are
reported as other assets (current), while derivatives with a negative fair value are
reported as other liabilities (current) in the statement of financial position. Gains and
losses from changes in the fair value of derivatives are recognized in net finance
income in the statement of financial performance.

Cash and cash equivalents

44. Cash and cash equivalents comprise cash on hand, cash at banks, time deposits
and money market instruments held with financial institutions that have very high
credit ratings. The initial term is less than 90 days, therefore the instruments are
readily convertible to known amounts of cash and are subject to an insignificant risk
of change in value. Given the short duration and low default probabilities, the
expected credit losses from cash and cash equivalents are negligible. As a result, no
impairment allowance is recognized. for these cash and cash equivalents. They are
held at nominal value less an allowance for any anticipated losses.

24-13155 79/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

Accounts receivable
45. Accounts receivable consist of project receivables and other accounts
receivable. Project receivables and other accounts receivable are initially measured
at fair value and subsequently at amortized cost using the effective interest method
less an allowance for uncollectable amounts. This calculation includes amounts
relating to retentions for work performed but not yet paid for by the client.
46. Receivables are included in current assets, except for those with maturities
greater than 12 months after the end of the reporting period. Such receivables are
classified as non-current assets.

Financial liabilities
Table IV.2
Classification and subsequent measurement

IPSAS classification Types of financial liabilities

Amortized cost Accounts payable and accruals, and

other liabilities

Fair value through surplus or deficit Derivative liabilities

47. Financial liabilities are classified as measured at amortized cost or fair value
through surplus or deficit. A financial liability is classified as at fair value through
surplus or deficit if it is classified as held-for-trading, it is a derivative or it is
designated as such on initial recognition.
48. Fair value through surplus or deficit financial liabilities are those held for
trading or those that are so designated on initial recognition. They are initially
recorded at fair value and any transaction costs are expensed. The liabilities are
measured at fair value at each reporting date, and any resultant fair value gains or
losses are recognized through surplus or deficit. UNOPS classifies derivatives as
financial liabilities at fair value through surplus or deficit in the statement of financial
performance. Liabilities in this category are classified as current liabilities if they are
expected to be settled within 12 months of the reporting date.
49. All non-derivative financial liabilities are recognized initially at fair value, and
subsequently measured at amortized cost using the effective interest method.

Accounts payable and accruals

50. Accounts payable are financial liabilities in respect of either goods or services
that have been acquired and received by UNOPS and for which the invoices have
been received from the suppliers, or payments due to implementing partners against
agreements with those partners. Accruals are liabilities for goods and services that
have been received or provided to UNOPS during the year and have not been invoiced
by suppliers as at the reporting date.
51. Given that the accounts payable of UNOPS generally fall due within 12 months,
the impact of discounting is immaterial, and nominal values are applied to initial
recognition and subsequent measurement. Payables and accruals are initially
measured at fair value, that is, the amount expected to be paid to discharge the
liability, and subsequently measured at amortized cost using the effective interest
method.

80/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

Other liabilities
52. Other liabilities consist of derivatives that are used for economic hedging
purposes and not as speculative investments. Derivatives do not meet the hedge
accounting criteria and are accounted for at fair value through surplus or deficit.

Derecognition of financial liabilities

53. UNOPS derecognizes a financial liability when its contractual obligations are
discharged, cancelled or expire. UNOPS also derecognizes a financial liability when
its terms are modified and the cash flows of the modified liability are substantially
different, in which case a new financial liability based on the modified terms are
recognized at fair value.
54. Upon the derecognition of a financial liability, the difference between the
carrying amount is extinguished and the consideration paid (including any non -cash
assets transferred or liabilities assumed) is recognized in surplus or deficit.

Offsetting of financial instruments

55. Financial assets and financial liabilities are offset, and the net amount presented
in the statement of financial position when, and only when, UNOPS has a legally
enforceable right to set off the amounts and it intends either to settle them on a net
basis or to realize the asset and settle the liability simultaneously.

Property, plant and equipment

56. UNOPS recognizes property, plant and equipment at their historical cost less
depreciation and impairment losses in line with IPSAS 17: Property, plant and
equipment. For any item of property, plant and equipment received as a contribution
in kind, the fair value at the date of acquisition is deemed to be its cost, in line with
IPSAS 23: Revenue from non-exchange transactions.
57. UNOPS depreciates its property, plant and equipment on a straight -line basis
over their estimated useful life with the exception of land and assets under
construction, which are not depreciated. Property, plant and equipment are also
subject to a systematic annual review to confirm the remaining useful life and to
identify any impairment.
58. Individual items of property, plant and equipment are capitalized when their
original acquisition value is equal to or greater than the threshold of $2,500 for asset
classes except for leasehold improvements, where the applicable threshold is $10,000.
59. UNOPS performs an annual review of the useful economic lives of property,
plant and equipment in line with the requirements of IPSAS 17. There were no
extensions to useful economic lives during the year under review. The estimated
useful life ranges and capitalization thresholds for the various classes of property,
plant and equipment are as follows:

Table IV.3
Depreciation of property, plant and equipment

Estimated useful life Capitalization

(years) as at threshold (United
Property, plant and equipment class 31 December 2023 States dollars)

Buildings 10–40 2 500

Vehicles 5–20 2 500
Leasehold improvements 10 10 000

24-13155 81/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

Estimated useful life Capitalization

(years) as at threshold (United
Property, plant and equipment class 31 December 2023 States dollars)

Plant and equipment 3–10 2 500

Communications and information technology equipment 3–10 2 500

60. Property, plant and equipment are reviewed for impairment at each reporting
date, taking into consideration various impairment indicators. Any impairment loss is
recognized in other expenses within the statement of financial performance when the
carrying amount of an asset exceeds its recoverable service amount.

Intangible assets
61. UNOPS intangible assets comprise purchased software packages, internally
developed software and intangible assets under construction. Intangible assets are
recognized at cost less accumulated amortization and impairment losses in line with
IPSAS 31: Intangible assets. Annual software licences are expensed and adjusted as
necessary for any element of prepayment.
62. Assets under construction are not amortized. Amortization of other intangible
assets is calculated over the estimated useful life of the asset using the straight -line
method. During the current financial year, the assessment of the useful economic life
of UNOPS intangible asset classes was undertaken in line with the requirements of
IPSAS 31. The assessment did not result in changes to any of the asset classes. The
estimated useful lives for intangible asset classes are as follows:

Table IV.4
Amortization of intangible assets

Capitalization
Estimated useful threshold (United
Intangible asset class life, in years States dollars)

Internally developed software 10 100 000

Software acquired 5 2 500

63. Intangible assets are subject to an annual review to confirm the remaining useful
life and to identify any impairment.

Inventories
64. Bulk raw materials purchased in advance for the implementation of projects and
supplies on hand at the end of the financial period are recorded as inventories. The
inventories are valued at the lower of cost and net realizable value. Cost is estimated
using the “first in, first out” method.
65. The cost of inventory includes costs incurred in acquiring the inventory and
other costs incurred in bringing it to its existing location and condition (e.g. freight
costs).

Leases
66. UNOPS has reviewed the property and equipment that it leases, and in no
instance does it have a significant portion of the risks and rewards of ownership.
Accordingly, all leases are recognized as operating leases.

82/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

67. Payments made under operating leases are charged to the statement of financial
performance on a straight-line basis over the period of the lease. A provision is
established to cover the cost of making good dilapidations on leasehold properties
where required to do so under the terms of the lease.

Employee benefits
68. UNOPS recognizes the following categories of employee benefits:
(a) Short-term employee benefits due to be settled within 12 months after the
end of the accounting period in which employees render the related service;
(b) Post-employment benefits;
(c) Other long-term employee benefits;
(d) Termination indemnity.

Short-term employee benefits

69. Short-term employee benefits comprise salaries, the current portion of home
leave, annual leave and those elements of other employee benefits (including
assignment grant, education grant and rental subsidy) payable within one year of
period-end and measured at their nominal values.

Post-employment benefits
70. UNOPS is a member organization participating in the United Nations Joint Staff
Pension Fund, which was established by the General Assembly to provide retirement,
death, disability and related benefits to employees. The Pension Fund is a funded,
multi-employer defined benefit plan. As specified in article 3 (b) of the Regulations
of the Fund, membership in the Fund shall be open to the specialized agencies and to
any other international, intergovernmental organization that participates in the
common system of salaries, allowances and other conditions of service of the United
Nations and the specialized agencies.
71. The plan exposes participating organizations to actuarial risks associated with
the current and former employees of other organizations participating in the Pension
Fund, with the result that there is no consistent and reliable basis for allocating the
obligation, plan assets and costs to individual organizations participating in the plan.
UNOPS and the Pension Fund, in line with the other organizations participating in
the Fund, are not in a position to identify the proportionate share of UNOPS of the
defined benefit obligation, the plan assets and the costs associated with the plan with
sufficient reliability for accounting purposes. Hence, UNOPS has treated this plan as
if it were a defined contribution plan in line with the requirements of IPSAS 39:
Employee benefits. The actuarial valuations are carried out using the projected unit
credit method. UNOPS recognizes actuarial gains and losses in the period in which
they occur directly in net assets/equity.
72. UNOPS contributions to the plan during the financial period are recognized as
expenses in the statement of financial performance.

Other long-term employee benefits

73. Other long-term employee benefits comprise the non-current portion of home
leave entitlements.

24-13155 83/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

Termination indemnity
74. Termination indemnity is recognized as an expense only when UNOPS is
demonstrably committed, without realistic possibility of withdrawal, to a formal
detailed plan either to terminate the employment of a staff member before the normal
retirement date or to provide termination benefits as a result of an offer made in order
to encourage voluntary redundancy. Termination benefits settled within 12 months
are reported at the amount expected to be paid. Where termination benefits fall due
more than 12 months after the reporting date, they are discounted.

Provisions and contingencies

75. Provisions are made for future liabilities and charges where UNOPS has a
present legal or constructive obligation as a result of past events and it is probable
that UNOPS will be required to settle the obligation. This, for example, includes those
cases where the anticipated cost of completing a construction project is likely to
exceed the recoverable amount.
76. A contingent liability is a possible obligation that arises as a result of past events
whose existence will be confirmed only by the occurrence or non -occurrence of one
or more uncertain future events that are not wholly within the control of UNOPS.
Contingent liabilities are disclosed in the notes to the financial statements unless the
possibility that they will be realized is remote.

Revenue
77. UNOPS recognizes revenue under exchange transactions, including but not
limited to construction projects, implementation projects and service projects, and
non-exchange transactions.
78. Where the outcome of a project can be reliably measured, revenue from
construction projects (IPSAS 11: Construction contracts) and other exchange
transactions (IPSAS 9: Revenue from exchange transactions) is recognized by
reference to the stage of completion of the project at period end, as measured by the
proportion of costs incurred for work to date to the estimated total project costs.
Where the outcome of the project cannot be estimated reliably, revenue is recognized
to the extent that it is probable for the incurred costs to be recovered.
79. Although UNOPS does not receive any voluntary or assessed contributions from
Member States, occasional non-exchange revenue arises, most often in relation to
donations and services in kind (IPSAS 23: Revenue from non-exchange transactions).
Non-exchange revenue (donations) is measured at fair value and is included within
non-exchange revenue in the statement of financial performance. UNOPS has elected
not to recognize services in kind in the statement of financial performance but to
disclose the most significant in-kind services in the notes to these financial
statements.

Expenses
80. UNOPS expenses are accounted for on an accrual basis. Expenses are recognized
on the basis of the delivery principle, that is, the fulfilment of a contractual obligation
by the supplier when the goods are received or when a service is rendered. The
recognition of the expense is therefore not linked to when cash or its equivalent is paid.

84/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

Taxation
81. UNOPS enjoys privileged tax exemption, and its assets, income and other
property are exempt from all direct taxation. Accordingly, no provision is made for
any tax liability.

Net assets/equity
82. “Net assets/equity” is the standard term used in IPSAS to refer to the residual
financial position (assets less liabilities) at period -end, comprising contributed
capital, accumulated surpluses and deficits, and reserves. Net assets/equity may be
positive or negative.
83. In the absence of any capital contributions, UNOPS net assets/equity comprise
reserves as detailed in note 19.

Project cash advance

84. Project cash advance represents funds received from donors, United Nations
agencies and other third parties for project activities yet to be utilized. These funds
are recognized at fair value when received.

Segment reporting
85. A segment is a distinguishable activity or group of activities for which it is
appropriate to report financial information separately. At UNOPS, segment
information is based on the principal activities relating to its separate operational
centres and its headquarters. This is also the manner in which UNOPS measures its
activities and how its financial information is reported to the Executive Director.

Budget comparison
86. The Executive Board approves the biennial budget estimates and, in particular,
the net revenue target calculated on an accrual basis. Budgets may be subsequently
amended by the Executive Board or through the exercise of delegated authority by
the Executive Director to redeploy funds within the approved biennial administrative
budget, as well as to increase or reduce funds, provided that the net revenue target for
the biennium as established by the Board remains unchanged.
87. The budget of UNOPS is prepared on a modified accrual basis, whereas the
financial statements of UNOPS are prepared on an accrual basis. In the statement of
financial performance, expenses are classified according to their nature. In the
approved management budget, expenses are classified by cost components or the
source of funding against which the expenses will be charged. As required under
IPSAS 24: Presentation of budget information in financial statements, the totals
presented in the statement of budget and actual comparison are reconciled with net
cash flows from operating activities, net cash flows from investing activities and net
cash flows from financing activities as presented in the cash flow statement.

Critical accounting estimates and judgments

88. The preparation of financial statements in accordance with IPSAS necessarily
includes the use of accounting estimates, management assumptions and judgment.
The areas in which estimates, assumptions or judgment are significant to UNOPS
financial statements include but are not limited to post-employment benefit
obligations; provisions; and revenue recognition. Actual results could differ from the
amounts estimated in these financial statements.

24-13155 85/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

89. Estimates, assumptions and judgments are based on historical experience and
other factors, including expectations of future events that are believed to be
reasonable under the circumstances. They are subject to continual review.
90. When the fair values of financial assets and financial liabilities recorded in the
statement of financial position cannot be measured based on quoted prices in active
markets, UNOPS uses its judgment to select a variety of methods and make
assumptions that are based mainly on market conditions existing at the end of each
reporting period. Judgments include considerations of inputs such as liquidity risk,
credit risk and volatility. Changes in assumptions about these factors could affect the
reported fair value of financial instruments.
91. The classification and measurement of financial assets under IPSAS 41:
Financial instruments, depends on the characteristics of the contractual cashflows and
the management model of UNOPS for a particular financial asset.
92. UNOPS determines the management model at a level that reflects how financial
assets are managed together to achieve a particular management objective. This
assessment includes judgment reflecting all relevant evidence as well as how the
performance of the assets is evaluated and measured, the risks that affect the
performance of the assets and how these are managed and how the managers of the
assets are compensated. UNOPS constantly monitors its financial assets that are
derecognized prior to their maturity, if any, to understand the reason for their disposal
and whether the reasons are consistent with the objective of the management for
which the asset was held. Monitoring is part of the organization’s continuous
assessment of whether the management model for which the financial assets are held
continues to be appropriate. For further details on the management model assessment
policy see note 3.
93. The measurement of impairment losses in accordance with expected credit
losses under IPSAS 41 for the financial assets of UNOPS requires judgment, in
particular the estimation of the default instances, the amount and timing of future cash
flows that are expected to be recovered after default and the assessment of a
significant increase in credit risk. These estimates are driven by a number of factors,
which can result in different levels of allowances. The organization’s expected credit
loss calculations are outputs of statistical estimation models that include a number of
underlying assumptions regarding the choice of variable inputs and their
interdependencies. The elements of the expected credit loss models that are
considered for the judgments and estimates include:
(a) Qualitative and quantitative factors considered for the organization’s
judgment of the credit risk assessment of the issuer of the respective debt instrument;
(b) The segmentation of the organization’s financial assets, when the expected
credit loss of a segment is assessed on a collective basis;
(c) The development of expected credit loss models, including the various
formulas and the choice of inputs and statistical models used;
(d) The determination of associations between macroeconomic scenarios and
economic inputs, and their effect on the probability of default, the loss given a default
and the exposure at default;
(e) The selection of forward-looking macroeconomic variables and scenarios
and their probability weightages, to derive the economic inputs needed for the
expected credit loss models.

86/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

Post-employment benefits and other long-term employee benefits

94. The present value of the employee benefit obligations depends on a number of
factors that are determined on an actuarial basis using a number of assumptions.
Actuarial assumptions are established to anticipate future events and are used in
calculating post-employment benefits and other long-term employee benefits. Note
15 records the assumptions made during the calculation and a sensitivity analysis of
the assumptions.

Provisions
95. Significant judgment is required in the estimation of present obligations that
arise from past events, including legal claims and onerous contracts. These judgments
are based on prior UNOPS experience with such issues and are the best current
estimate of the liability. Management believes that the total provisions for legal
matters are adequate, on the basis of currently available information. Additional
information is disclosed in notes 23 and 24.

Provision for write-off of disallowed costs

96. UNOPS has provisions for the write-off of disallowed costs, which are detailed
in note 13. Such estimates are based on analysis of historical trends and UNOPS
experience, taking into account economic conditions. Management believes that the
impairment allowances for provisions for the write-off of disallowed costs are
adequate, on the basis of currently available information. Given that these allowances
are based on management estimates, they may be subject to change as better
information becomes available.

Revenue recognition
97. Revenue from exchange transactions is measured according to the stage of
completion of the contract. The measurement requires an estimate of costs incurred
but not yet paid for, and total project costs. The estimates are prepared by technically
qualified staff and advisers, which reduces, but does not eliminate, uncertainty.

Fair valuation of assets

98. The fair value of available-for-sale financial assets is based on several valuation
techniques dependent on the market that those instruments are traded, as detailed in
note 10. Where the financial instruments are traded on a quoted market, the valuati on
is based on the quoted market prices or dealer quotes for similar instruments. For
financial instruments that are not traded on a quoted market, UNOPS uses its
judgment to select a variety of methods and make assumptions that are based mainly
on market conditions existing at the end of each reporting period.

IPSAS standards issued but not yet effective

99. IPSAS 3: Accounting policies, changes in accounting estimates and errors,
requires the disclosure of new IPSAS standards that have been issued but not yet
effective. The following standards have been issued by the IPSAS Board:

IPSAS 43: Leases

100. In January 2022, the IPSAS Board issued IPSAS 43: Leases, to replace IPSAS
13: Leases. IPSAS 43 is based on International Financial Reporting Standard 16:
Leases, developed by the International Accounting Standards Board. For lessees,
IPSAS 43 introduces a right-of-use model that replaces the risks and rewards
incidental to ownership model in IPSAS 13. For lessors, IPSAS 43 substantially

24-13155 87/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

carries forward the risks and rewards incidental to ownership model in IPSAS 13. The
effective date of IPSAS 43 is 1 January 2025.

IPSAS 44: Non-current assets held for sale and discontinued operations
101. In May 2022, the IPSAS Board issued IPSAS 44: Non-current assets held for
sale and discontinued operations. IPSAS 44 is based on International Financial
Reporting Standard 5: Non-current assets held for sale and discontinued operations,
developed by the International Accounting Standards Board. IPSAS 44 specifies the
accounting for assets held for sale and the presentation and disclosure of discontinued
operations. It requires assets that meet the criteria as held for sale to be:
(a) Measured at the lower of carrying amount and fair value less costs to sell
and depreciation on such assets to cease;
(b) Presented separately in the statement of financial position and the results
of discontinued operations to be presented separately in the statement of financial
performance.
102. The effective date for IPSAS 44 is 1 January 2025. This standard is not expected
to have a material impact on the organization in the current or future reporting periods
and on foreseeable future transactions.

IPSAS 45: Property, plant, and equipment

103. In May 2023, the IPSAS Board issued IPSAS 45: Property, plant and equipment,
to replace IPSAS 17: Property, plant and equipment. IPSAS 45 removes the scope
exclusion for heritage property, plant and equipment, provides application and
implementation guidance on infrastructure assets, and captures property, plant and
equipment-related measurement impacts from IPSAS 46: Measurement. The effective
date for IPSAS 45 is 1 January 2025.

IPSAS 46: Measurement

104. In May 2023, the IPSAS Board issued IPSAS 46: Measurement. It is the Board’s
first measurement-dedicated standard, and draws upon International Financial
Reporting Standard 13: Fair value measurement, with the addition of public sector -
specific elements, including the current operational value measurement basis. The
effective date for IPSAS 46 is 1 January 2025.

IPSAS 47: Revenue

105. In May 2023, the IPSAS Board issued IPSAS 47: Revenue, to replace IPSAS 9:
Revenue from exchange transactions, IPSAS 11: Construction contracts, and IPSAS
23: Revenue from non-exchange transactions (taxes and transfers). IPSAS 47 is based
on International Financial Reporting Standard 15: Revenue from contracts with
customers, developed by the International Accounting Standards Board. IPSAS 47
includes the application of the accounting model for revenue with binding
arrangements, which is primarily aligned with International Financial Reporting
Standard 15: Revenue from contracts with customers, but has been adapted and
expanded for operability in the public sector, with binding arrangements and
compliance obligations being the key adapted aspects. The effective date of IPSAS
47 is 1 January 2026.

IPSAS 48: Transfer expenses

106. In May 2023, the IPSAS Board issued IPSAS 48: Transfer expenses. It provides
guidance on accounting for transfer expenses. The transfer expense model aligns with
the Conceptual Framework for General Purpose Financial Reporting by Public Sector

88/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

Entities and presents two accounting models based on the existence of a binding
arrangement. The effective date of IPSAS 48 is 1 January 2026.

IPSAS 49: Retirement benefit plans

107. In November 2023, the IPSAS Board issued IPSAS 49: Retirement benefit
plans. It is aligned with International Accounting Standard 26: Accounting and
reporting by retirement benefit plans, and prescribes the accounting and reporting
requirements for public sector retirement benefit plans, which primarily provide
benefits to retired public sector employees. IPSAS 49 will apply to a retirement benefit
plan that prepares and presents financial statements under the accrual basis of
accounting. It does not deal with other forms of employment benefits such as
employment termination benefits or health and welfare plans. The effective date of
IPSAS 49 is 1 January 2026.

Note 3.1
Impact of adoption of IPSAS 41: Financial instruments
108. IPSAS 41: Financial instruments, replaces parts of IPSAS 29: Financial
instruments – recognition and measurement, bringing together all three aspects of
accounting for financial instruments: classification and measurement; impairment;
and hedge accounting.
109. UNOPS has applied IPSAS 41 retroactively, with an initial application date of
1 January 2023. UNOPS has not restated the comparative information, which continues
to be reported under IPSAS 29. 4 Differences arising from the adoption of IPSAS 41
have been recognized in the opening balance of each affected component of net assets/
equity at the date of initial application.
110. Previously, investments in equity instruments were classified as available -for-
sale financial assets according to IPSAS 29 and measured at fair value through net
assets/equity. Upon the adoption of IPSAS 41, UNOPS has elected to make an
irrevocable election to represent equity instruments at fair value through net assets/
equity. 5
111. As a result of the above changes in classification of the financial instruments,
the following adjustments were recognized in the net assets/equity, and the effect of
adopting IPSAS 41 as at 1 January 2023 was as follows:

__________________
4
See https://www.ipsasb.org/_flysystem/azure-private/publications/files/IPSAS-41-Financial-
Instruments.pdf, para. 173.
5
Ibid., para. 106.

24-13155 89/146
 A/79/5/Add.11
90/146

Table IV.5
Impact of adoption of IPSAS 41
(Thousands of United States dollars)

Carrying value
adjustment under
IPSAS 29 for balances Adjusted
as at 1 January 2023 Balance as Adjustments balance as
New measurement (adjustments not due at 1 January on initial at 1 January
Measurement category category according to reclassification 2023 (under application 2023 (under
Financial statement line item Financial instrument according to IPSAS 29 to IPSAS 41 under IPSAS 41) IPSAS 29) of IPSAS 41 IPSAS 41)

Assets
Cash Loans and receivables Amortized cost – 238 897 – 238 897
Cash equivalents Money market funds Available for sale Amortized cost 566 365 712 (566) 365 146
Short-term investments
Bonds held in operational reserves Fixed income, treasury notes, Available for sale Amortized cost
and working capital portfolios index-linked bonds (15 829) 1 920 452 18 757 1 939 209
Pooled investments held in after- Funds common stock, corporate Available for sale FVSD
service health insurance portfolio bonds, real estate ETF (6 449) 65 283 894 66 177
Time deposits Time deposits Loans and receivables Amortized cost – 39 987 – 39 987
Equities Common stock Available for sale FVNAE 820 53 407 – 53 407
Accounts receivable
Project accounts receivable Loans and receivables Amortized cost – 69 519 – 69 519
Other accounts receivable Loans and receivables Amortized cost – 27 580 – 27 580
Other financial assets Derivatives FVSD FVSD – 5 340 – 5 340
Long-term investments

Notes to the 2023 financial statements (continued)

Bonds held in operational reserves Fixed income, treasury notes, Available for sale Amortized cost
and working capital portfolios index-linked bonds (31 699) 794 697 32 911 827 608

United Nations Office for Project Services

Bonds held in after-service health Fixed income, treasury notes Available for sale FVNAE
insurance portfolio (4 492) 11 690 – 11 690
Equity instruments Common stock Available for sale FVNAE – – – –
Liabilities
Accounts payable and accruals Amortized cost Amortized cost – (29 691) – (29 691)
Other liabilities – derivatives Derivatives FVSD FVSD – (20 708) – (20 708)

Total effect of adopting IPSAS 41 – – 51 996 –

24-13155

Abbreviations: ETF, exchange-traded fund; FVNAE, fair value through net assets and equity; FVSD, fair value through surplus and deficit.
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

112. The financial assets and financial liabilities of UNOPS are categorized as
follows:

Table IV.6
Financial assets and financial liabilities
(Thousands of United States dollars)

Fair value Fair value

through net assets through surplus Amortized 31 December 2023 31 December 2022
and equity and deficit cost book value book value

Assets
Cash and cash equivalents – – 702 587 702 587 604 609
Short-term investments
Bonds held in operational reserves and
working capital portfolios – – 2 429 927 2 429 927 1 939 209
Pooled investments held in after-service
health insurance portfolio – 61 934 – 61 706 66 177
Time deposits – – 25 000 25 000 39 987
Accounts receivable
Project accounts receivable – – 94 786 94 786 69 519
Other accounts receivable – – 186 219 186 219 27 580
Other assets – derivative assets – 1 247 – 43 678 74 100
Long-term investments
Bonds held in operational reserves and
working capital portfolios – – 175 525 175 525 827 608
Bonds held in after-service health
insurance portfolio 11 939 – – 15 284 11 690

Total financial assets 11 939 63 181 3 614 044 3 734 712 3 660 479

Liabilities
Accounts payable – – (202 942) (202 942) (29 691)
Other liabilities – derivatives – (7 787) – (193 706) (135 147)

Total financial liabilities – (7 787) (202 942) (396 648) (164 838)

113. The following table presents the net impact of the adoption of IPSAS 41 to net
assets/equity:

24-13155 91/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

Table IV.7
Net impact of adoption of IPSAS 41 to net assets/equity
(Thousands of United States dollars)

Change in accumulated surplus

as at 31 December 2023

Reclassification of fair value changes from accumulated surplus for

financial assets classified as available-for-sale under IPSAS 29 47 856
Opening balance adjustment financial assets measured at amortized
cost under IPSAS 41 4 140

Impact of adoption of IPSAS 41 to net assets/equity 51 996

Gain/loss on financial assets measured at amortized cost under

IPSAS 41 (recognized in surplus/deficit) 45 962

Impact of adoption of IPSAS 41 97 958

114. The gain/loss on financial assets measured at amortized cost under IPSAS 41
represents the total cumulative amortization on financial assets since the actual
purchase in order to present the effective interest. The reclassification of fair value
changes represents the difference between the fair value and the amortized cost value
of the financial instruments as at 1 January 2023. The total impact of $98.0 million
represents an unrealized result. It is therefore classified as a non -distributable amount
in the other operational reserves.
115. UNOPS has reclassified its portfolios as at the date of the initial adoption of
IPSAS 41 in accordance with the new classification and measurement categories
under the new standard, as compared to IPSAS 29: Financial instruments –
recognition and measurement
116. As at 1 January 2023, UNOPS adopted IPSAS 41, which includes changes in
the way unrealized gains and losses on investments are recognized in the UNOPS
financial statements. The major change is that unrealized gains and losses on most of
the assets held in the after-service health insurance portfolio will be recognized
directly in net assets/equity rather than on the statement of financial performance.
The other change is that for most financial assets held in the operational reserve and
in working capital portfolios, unrealized gains and losses will no longer be
recognized. Had IPSAS 41 not been implemented in the financial statements as at 1
January 2023, UNOPS would have been required to recognize an unrealized gain on
these investments of $48.0 million as at 31 December 2023, compared with a loss of
$47.8 million as at 31 December 2022.
117. The following qualitative factors have been considered when reclassifying the
financial instruments in accordance with the measurement categories under IPSAS 41:
(a) The objective of the management model under which the respective
financial instrument is held by UNOPS;
(b) The characteristics of the cash flows generated from the respective
financial instruments, their periodicity, and whether they are solely payments of
principal and interest on the principal amount outstanding;
(c) The nature of the financial instrument as equity, debt or a derivative
instrument.

92/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

Note 4
Capital management
118. UNOPS defines the capital that it manages as the aggregate of its net assets/
equity, which consist of accumulated surplus and reserves as detailed in note 19.
119. In 2023, the Executive Board took decisions related to UNOPS reserves, which
have been reflected in the 2023 financial statements.
120. The minimum requirement for the operational reserves of UNOPS was adapted
to provide better protection to UNOPS as a self-financing United Nations entity, in
line with the risks faced by the organization. The new minimum operational reserve
requirement was established in 2021 by the Executive Board of UNOPS in
paragraph 5 of its decision 2021/21. The Executive Board approved the change in the
minimum requirement for the operational reserves of UNOPS to be set at 25 per cent
of the infrastructure service line expenses, 5 per cent of expenses for other service
lines, and 33 per cent of administrative cost, with a weight of 50 per cent for the
current year, 30 per cent for previous year and 20 per cent for the year prior.
121. In June 2022, the Executive Board requested that UNOPS transfer into the
operational reserves any balance not committed to projects from the growth and
innovation reserve and accumulated surpluses reserve.
122. The objectives of UNOPS in managing capital are to:
(a) Support the long-term operations of UNOPS in order to guarantee the
financial viability and integrity of UNOPS as a going concern;
(b) Fulfil its mission and objectives, as established in its strategic plan;
(c) Provide security in adverse circumstances and liquidity to meet its
operating cash requirements;
(d) Preserve capital.
123. To meet its objectives in managing capital, UNOPS has a four-year strategic
plan that is proposed by the Executive Director and endorsed by the Executive Board.
In addition, its biennial management budgets are proposed by UNOPS together with
the Advisory Committee on Administrative and Budgetary Questions and approved
by the Executive Board. The strategic plan and budget set out the workplan of the
organization. In accordance with regulation 13.01 of the UNOPS financial regulations
and rules, the Executive Director is responsible and accountable for planning the use
of resources administered by UNOPS and issuing allocations and allotments effectively
and efficiently in furtherance of the policies, aims and activities of UNOPS.
124. In addition, to effectively manage its assets and financial resources, UNOPS has
formulated a statement of investment principles that is reviewed regularly by the
Investment Advisory Committee in collaboration with the Executive Director and the
Chief Financial Officer.
125. UNOPS is not subject to externally imposed capital requirements, but the
strategic plan and budgets are reviewed and approved by the Executive Board.

Note 5
Financial instruments and risk management
126. UNOPS has instituted prudent risk management policies and procedures in
accordance with its financial regulations and rules. UNOPS is exposed to a variety of
financial management risks, including but not limited to market risk (currency risk
and interest rate risk), credit risk and liquidity risk. The UNOPS approach to risk

24-13155 93/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

management is summarized in the section on internal controls of the Executive

Director’s statement accompanying these financial statements.
127. UNOPS has outsourced both investment management and custodianship to
professional entities selected through its procurement process. Some of the
investments with the custodian are managed internally by the UNOPS treasury.
Investments in marketable securities are registered in the name of UNOPS and
investments in any pooled funds are in the name of the fund manager. In both
scenarios, the marketable securities and the units in pooled funds are held by the
custodian appointed by UNOPS.
128. The principal objectives of the investment guidelines are:
(a) Working capital: preserve the nominal value of project-related funds to
ensure the funding of UNOPS projects;
(b) Reserves: provide security and liquidity in adverse circumstances and
support the long-term operations of UNOPS;
(c) Health care: provide for the after-service health-care benefits of the
employees of UNOPS by managing assets in relation to relevant liabilities.
129. The allocation of UNOPS portfolios between asset classes, currencies or
geographies shall comply with the following guiding principles:
(a) Preservation of capital in nominal terms is the primary objective of the
UNOPS working capital portfolio, capital preservation in nominal terms is the
primary objective of the UNOPS reserves portfolio and generating a return sufficient
to meet future mutations in the net obligation of after-service health insurance
liabilities is the primary objective of the after-service health insurance portfolio;
(b) Liquidity is a key consideration in the management of the UNOPS
portfolios and a requirement of the financial regulations and rules, more specifically
rules 22.02 and 22.06. Liquidity is less important than returns for the after-service
health insurance portfolio owing to the longer-term investment horizon of the
portfolio;
(c) The return obtained in the portfolios is less important than capital
preservation and liquidity considerations, with the exception of the UNOPS after -
service health insurance investment portfolio, which has a primary focus on
generating returns;
(d) Diversification (across asset classes, strategies, geographies, currencies,
financial instruments) reduces risk;
(e) Risks should be taken only when there is an expected return
(i.e. unrewarded risks are to be avoided);
(f) Fixed income instruments are a core asset class for UNOPS, given the
mission and objectives of the portfolios for which it is responsible.
130. The UNOPS Investment Advisory Committee is the independent investment
advisory body assisting the UNOPS Executive Director in the management and
oversight of UNOPS assets, including in the selection and review of asset managers
and custodians.

Currency risk
131. UNOPS receives contributions from funding sources and clients in currencies
other than the United States dollar and is therefore exposed to foreign currency
exchange risk arising from fluctuations in currency exchange rates. UNOPS also
makes payments in currencies other than the United States dollar.

94/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

132. The currency risk is monitored closely by management, for example, through
the close monitoring of the level of cash balance in local currency bank accounts and
the maintenance of bank balances in the same currency as that of the payments to be
made to vendors.
133. Management’s upper estimate of possible movements in the exchange rates
against the United States dollar is 10 per cent. The table below shows the potential
impact of monetary revaluation of major currencies as at the reporting date and the
increase or decrease in net assets/equity and surplus by the amounts shown.

Table IV.8
Currency risk sensitivity analysis as at 31 December 2023
(Thousands of United States dollars)

MXN CHF EUR ARS UAH GBP LBP JPY SSP MMK

+10 per cent 947 804 751 718 251 186 112 62 59 46
-10 per cent (947) (804) (751) (718) (251) (186) (112) (62) (59) (46)

Abbreviations: MXN, Mexican peso; CHF, Swiss franc; EUR, euro; ARS, Argentine peso; UAH, Ukraine hryvnia;
GBP, British pound; LBP, Lebanese pound; JPY, Japanese yen; SSP, South Sudanese pound; MMK, Myanmar
kyat.

Table IV.9
Currency risk sensitivity analysis – comparative, as at 31 December 2022
(Thousands of United States dollars)

JPY ARS GBP ILS UAH EUR MXN JOD GTQ LBP

+10 per cent 787 583 581 292 (250) 246 201 153 127 112
-10 per cent (787) (583) (581) (292) 250 (246) (201) (153) (127) (112)

Abbreviations: JPY, Japanese yen; ARS, Argentine peso; GBP, British pound; ILS, new Israeli shekel; UAH,
Ukraine hryvnia; EUR, euro; MXN, Mexican peso; JOD, Jordanian dinar; GTQ, Guatemalan quetzal; LBP,
Lebanese pound.

134. The foregoing sensitivities are calculated with reference to a single moment in
time and are subject to change owing to a number of factors, including fluctuating
trade receivable and trade payable balances and fluctuating cash balances.
135. Given that the sensitivities are limited to period-end financial instrument
balances, they do not take into account sales and operating costs, which are highly
sensitive to changes in commodity prices and exchange rates. In addition, each of the
sensitivities is calculated in isolation, while in reality commodity prices, interest rates
and foreign currencies do not move independently.
136. The following assumptions are made in calculating the sensitivity: all statement
of financial performance sensitivities also affect net assets/equity; and the sensitivity
analysis disclosure relates to monetary items (as defined in IPSAS 4: The effect s of
changes in foreign exchange rates) at year end.

Credit risk
137. Credit risk is the risk that one party to a financial instrument will fail to
discharge an obligation and cause the other party to incur a financial loss. UNOPS is
exposed to credit risks on its bank balances, investments, receivables, other financial
assets and other assets. UNOPS applies IPSAS 41: Financial instruments, when

24-13155 95/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

measuring expected credit losses (see note 13 for details). The table below shows the
maximum exposure of UNOPS to credit risk, by class of financial instrument.

Table IV.10
Credit risk, by financial instrument
(Thousands of United States dollars)

31 December 2023 31 December 2022

Investments 2 704 325 2 885 516

Receivable items factored into expected credit loss 281 005 97 099
Other assets 1 247 5 340
Cash and cash equivalents 702 587 604 609

Total 3 689 164 3 592 564

138. UNOPS has considerable cash reserves, given that project funding is received
in advance of project execution. The resulting cash reserves are invested in an
investment portfolio, which is essentially composed of high-quality government,
supranational and agency-issued bonds and highly rated bank obligations. The
majority of the UNOPS investment portfolio is outsourced to external investment
managers.
139. UNOPS investment guidelines limit the amount of credit exposure to any one
counterparty and include minimum credit quality requirements. The credit risk
mitigation strategies stated in the guidelines include conservative minimum credit
criteria of investment grade for all issuers with maturity and counterparty limits by
credit rating. The investment guidelines require continuing monitoring of issuer and
counterparty credit ratings. Permissible investments are limited to fixed -income
instruments of sovereign, supranational, governmental or federal agencies and banks.
140. UNOPS implements projects worldwide and in post-conflict and rural areas.
Considering the conditions and areas in which these projects are implemented, some
banks are not rated by reference to external credit ratings.

Market risk
141. UNOPS uses various financial instruments to minimize the risks associated with
losses on its investments and fluctuations in foreign exchange. Financial instruments
used by the UNOPS treasury to minimize these risks include foreign exchange
derivatives (FX spot, FX forwards, non-deliverable forwards and FX options),
interest rate derivatives (interest rate/bond futures, interest rate swaps and cross -
currency swaps), credit derivatives (credit default swaps), equity derivatives (equity
futures) and inflation swaps.
142. The organization operates internationally and is exposed to foreign exchange
risk arising from its operations, primarily with respect to project -related transactions
in foreign currencies (defined as all other currencies other than the United States
dollar). This includes both payments and receipt of project contributions.
Furthermore, UNOPS investment portfolios are allowed to diversify investments into
non-United States dollar assets if the foreign exchange risk associated with that
investment strategy is fully hedged to the United States dollar. In connection with
this, derivatives are therefore allowed for hedging and risk management purposes.
143. Similarly, the organization manages investments in multiple different asset
classes, including government bonds, agency mortgage-backed securities, covered
bonds, investment grade corporate debt, equities, cash/cash equivalents, money

96/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

market instruments and real estate funds. UNOPS is exposed to interest rate risks on
its fixed-income investment assets, in which an increase in market-based interest rates
leads to a change (negative) in the fair value of fixed-income securities. This is known
as duration risk, which is set up at a specific level by the UNOPS Executive Director
and mandated in the investment portfolios. UNOPS invests in both floating and fixed
rates assets and hedge instruments, but also occasionally swaps floating rates t o fixed
rates, and vice versa. UNOPS uses interest rate derivatives predominantly to maintain
the correct level of duration (i.e. interest rate risk) in its investment portfolios,
ensuring that this is in line at all times with the UNOPS risk appetite.
144. Derivatives and other financial instruments used by UNOPS do not qualify as
“highly probable” forecast transactions and, hence, do not satisfy the requirements
for hedge accounting (economic hedges). These instruments are accounted for as held
for trading with gains/losses recognized in the statement of financial performance and
included under “Finance income” and “Exchange rate gain/loss”.
145. UNOPS investment guidelines allow the organization to invest in non -United
States dollar government securities once fully hedged back to the United States dollar,
given that this can sometimes increase the yield on investments for little or no
additional credit risk. In these instances, realized gains or losses on associated
financial assets are recognized in “Finance income”, while the corresponding gain/
loss on the associated financial liabilities are recognized in “Exchange rate gain/loss”.
The net effect is seen in “Net finance income”, but this approach can also lead to
volatility in the two sub-lines of this part of the UNOPS corporate financial
statements. The total impact on “Net finance income” in the statement of financial
performance from returns on investments and associated financial instruments is
shown in the table below.

Table IV.11
Impact of returns on investment on finance income
(Thousands of United States dollars)

31 December 2023 31 December 2022

Realized gains/(losses) from investments 12 409 (78 163)

Gains/(losses) from derivatives (1 364) 12 124
Gains/(losses) from foreign exchange deals 2 927 56 021

Total 13 972 (10 018)

Liquidity risk
146. Liquidity risk is the risk that UNOPS will not be able to meet its financial
obligations as they fall due. Investments are made with due consideration to UNOPS
cash requirements for operating purposes based on cash flow forecasting. The
investment approach includes a consideration for investment maturity structuring that
takes into account the timing of future funding needs of the organization. UNOPS
maintains an adequate portion of its investments in cash equivalents and short -term
investments sufficient to cover its commitments as and when they fall due.

Note 6
Property, plant and equipment
147. As at 31 December 2023, the net book value of UNOPS property, plant and
equipment was $17.6 million ($18.4 million in 2022). UNOPS also held assets with
an acquisition value of $143.3 million and net book value of $15.3 million

24-13155 97/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

($17.7 million in 2022) as a custodian under service concession arrangements with

the Mine Action Service. These assets are not included in property, plant and equipment.
148. The table below summarizes property, plant and equipment held by UNOPS as
at 31 December 2023 under each of the classes mentioned in note 3.

Table IV.12
Property, plant and equipment by class
(Thousands of United States dollars)

Administration Project Total

Vehicles 3 878 6 508 10 386

Plant and equipment 462 985 1 447
Land and buildings 2 871 1 103 3 974
Communications and information technology equipment 779 374 1 153
Leasehold improvements 530 44 574
Assets under construction 95 – 95

Net carrying amounts as at 31 December 2023 8 615 9 014 17 629

Table IV.13
Property, plant and equipment by class – 2022 comparatives
(Thousands of United States dollars)

Administration Project Total

Vehicles 2 392 8 604 10 996

Plant and equipment 434 1 106 1 540
Land and buildings 3 166 1 180 4 346
Communications and information technology equipment 358 469 827
Leasehold improvements 464 220 684
Assets under construction – – –

Net carrying amounts as at 31 December 2022 6 814 11 579 18 393

149. The table below shows the movement in property, plant and equipment held by
UNOPS during the period.

98/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

Table IV.14
Movement in property, plant and equipment
(Thousands of United States dollars)

Communications
and information
Plant and Land and technology Leasehold Assets under
Vehicles equipment buildings equipment improvements construction Total

Cost as at 1 January 2023 28 279 3 373 8 878 6 435 1 266 – 48 231

Additions 2 163 202 100 684 12 95 3 256
Disposals (916) (225) (119) (226) – – (1 486)
Other changes/ reclassification – 28 (34) 6 – – –

Cost as at 31 December 2023 29 526 3 378 8 825 6 899 1 278 95 50 001

Accumulated depreciation and impairment

as at 1 January 2023 (17 283) (1 833) (4 532) (5 608) (582) – (29 838)
Depreciation (2 480) (268) (397) (329) (122) – (3 596)
Release of accumulated depreciation on
asset disposal 623 169 78 192 – – 1 062
Reclassification of depreciation – 1 – (1) – – –

Accumulated depreciation and

impairment as at 31 December 2023 (19 140) (1 931) (4 851) (5 746) (704) – (32 372)

Net carrying amount as at

31 December 2023 10 386 1 447 3 974 1 153 574 95 17 629

Table IV.15
Movement in property, plant and equipment – 2022 comparatives
(Thousands of United States dollars)

Communications
and information
Plant and Land and technology Leasehold Assets under
Vehicles equipment buildings equipment improvements construction Total

Cost as at 1 January 2022 26 996 3 304 9 372 6 290 1 179 108 47 249
Additions 2 372 301 57 380 99 – 3 209
Disposals (1 089) (232) (551) (235) (12) (108) (2 227)

Cost as at 31 December 2022 28 279 3 373 8 878 6 435 1 266 – 48 231

Accumulated depreciation and impairment

as at 1 January 2022 (15 706) (1 727) (4 282) (5 502) (459) – (27 676)
Depreciation (2 307) (285) (475) (281) (126) – (3 474)
Release of accumulated depreciation on
asset disposal 730 179 225 175 3 – 1 312

Accumulated depreciation and

impairment as at 31 December 2022 (17 283) (1 833) (4 532) (5 608) (582) – (29 838)

Net carrying amount as at

31 December 2022 10 996 1 540 4 346 827 684 – 18 393

150. The table below shows the profit made on disposal of property, plant and
equipment by UNOPS through sales or donations.

24-13155 99/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

Table IV.16
Profit/loss on the disposal of property, plant and equipment
(Thousands of United States dollars)

31 December 2023 31 December 2022

Net book amount of disposed assets 424 915

Proceeds from disposal (79) (3)

Total (profit)/loss on disposal 345 912

Note 7
Intangible assets
151. The net carrying value of intangible assets amounted to $4.7 million as at
31 December 2023 ($5.3 million as at 31 December 2022), which includes internally
developed software and other computer software (acquired).
152. A total of $0.1 million of development costs incurred by UNOPS during 2022
was capitalized in 2023 in line with the requirement of IPSAS 31. No development
costs from 2021 were capitalized during 2022.
153. The remainder of internally developed software relates to the development costs
of UNOPS management systems, which creates a unified reporting platform for all
business areas (including finance, human resources, procurement, project
management, and results and performance management).

Table IV.17
Intangible assets
(Thousands of United States dollars)

Internally Intangible
generated Other computer assets under
computer software software construction Total

Cost as at 1 January 2023 10 418 241 141 10 800

Additions 773 – 75 848
Completed assets under
construction 141 – (141) –
Disposals – (34) – (34)

Cost as at 31 December 2023 11 332 207 75 11 614

Accumulated amortization and

impairment as at 1 January 2022 (5 293) (208) – (5 501)
Amortization (1 465) (10) – (1 475)
Less removal of amortization on
asset disposal – 34 – 34

Accumulated amortization
and impairment as at
31 December 2023 (6 758) (184) – (6 942)

Net carrying amount as at

31 December 2023 4 574 23 75 4 672

100/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

Table IV.18
Intangible assets – 2022 comparatives
(Thousands of United States dollars)

Internally Intangible
generated Other computer assets under
computer software software construction Total

Cost as at 1 January 2022 9 355 241 – 9 596

Additions 1 063 – 141 1 204

Cost as at 31 December 2022 10 418 241 141 10 800

Accumulated amortization and

impairment as at 1 January 2022 (4 215) (195) – (4 410)
Amortization (1 078) (13) – (1 091)
Impairment – – – –

Accumulated amortization
and impairment as at
31 December 2022 (5 293) (208) – (5 501)

Net carrying amount as at

31 December 2022 5 125 33 141 5 299

Note 8
Inventories
154. Inventories consist mainly of bulk raw materials purchased in advance in
relation to projects and supplies on hand. The table below shows the total value of
inventories, as presented in the statement of financial position. The carrying amount
of inventories is shown by UNOPS operations centre.
155. A total of $4.5 million of inventory was recognized as an expense during 2023
($5.2 million in 2022), and $1.1 million of inventory was written down during 2023
($1.2 million in 2022).

Table IV.19
Inventories
(Thousands of United States dollars)

31 December 2023 31 December 2022

Inventories 9 811 11 723

24-13155 101/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

Table IV.20
United Nations Office for Project Services offices holding inventories
(Thousands of United States dollars)

31 December 2023 31 December 2022

Central African Republic 3 34

Democratic Republic of the Congo 2 4
Haiti 237 1 534
Libya 3 181 2 383
Myanmar 5 7
Peace and Security Cluster 6 336 7 595
Pakistan 1 30
Serbia 14 21
South Sudan 32 49
Zimbabwe – 66

Total 9 811 11 723

102/146 24-13155
 United Nations Office for Project Services
Notes to the 2023 financial statements (continued)
24-13155

Note 9
Financial instruments
Table IV.21
Assets according to the statement of financial position
(Thousands of United States dollars)

31 December 2023 31 December 2022

Financial Financial
assets at fair Financial assets at fair
Financial value assets at fair value
assets at through value Cash and Available- through
amortized surplus or through net cash Loans and for-sale surplus or
cost deficit assets/equity Total equivalents receivables investments deficit Total

Investments (note 10) 25 000 – 2 679 325 2 704 325 – – 2 885 516 – 2 885 516
Other financial assets (note 11) – – – – – – – – –
Other assets (note 12) – 1 247 – 1 247 – – – 5 340 5 340
Accounts receivable excluding prepayments (note 13) 308 770 – – 308 770 – 130 905 – – 130 905
Cash and cash equivalents (note 14) 702 587 – – 702 587 604 609 – – – 604 609

Total 1 036 357 1 247 2 679 325 3 716 929 604 609 130 905 2 885 516 5 340 3 626 370

Table IV.22
Liabilities according to the statement of financial position
(Thousands of United States dollars)

31 December 2023 31 December 2022

Financial
Financial liabilities at fair Financial liabilities at
liabilities at value through Financial liabilities at fair value through
amortized cost surplus or deficit Total amortized cost surplus or deficit Total

Accounts payable and accruals (note 16) 563 607 – 563 607 453 888 – 453 888
Cash held by UNOPS as agent (note 17) 995 020 – 995 020 1 441 813 – 1 441 813
Other liabilities (note 18) – 7 787 7 787 – 20 708 20 708

Total 1 558 627 7 787 1 566 414 1 895 701 20 708 1 916 409

A/79/5/Add.11
103/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

Note 10
Investments
156. The majority of the UNOPS investment portfolio is outsourced to external
investment managers and is measured at fair value. UNOPS has three investment
portfolios, namely, the working capital portfolio, the after-service health insurance
portfolio and the operational reserve portfolio. The working capital portfolio of
$2,894.2 million is managed by the World Bank ($220.4 million) and Allianz
($2,170.5 million), and the remaining $503.2 million (17 per cent) is managed
internally by the UNOPS treasury. The operational reserve portfolio of $222.6 million
is managed by DWS. BNP Paribas manages $81.3 million f or the after-service health
insurance portfolio. The growth and innovation reserve portfolio, which was operated
by UNOPS in the previous periods, was closed in September 2022 based on a decision
taken by the Executive Board.

Table IV.23
Financial assets held in investment portfolios
(Thousands of United States dollars)

31 December 2023

After-service health insurance 81 349

Operational reserve portfolio 222 579
Working capital portfolio 2 894 210

Total investments and cash and cash equivalents 3 198 138

157. The investment portfolio is classified as follows:

Table IV.24
Classification of investment portfolio
(Thousands of United States dollars)

31 December 2023 31 December 2022

Long-term investments 187 464 806 387

Short-term investments 2 516 861 2 079 129
Less: allowance for expected credit losses on assets
classified at amortized cost – –

Subtotal 2 704 325 2 885 516

Investments classified as cash and cash equivalents 493 813 365 712
Less: allowance for expected credit losses – –

Total investments 3 198 138 3 251 228

158. Investments amounting to $493.8 million in 2023 ($365.7 million in 2022),

which consist of money market instruments with less than three months to maturity
and time deposits, have been classified as cash and cash equivalents in accordance
with IPSAS 2: Cash flow statements.
159. The UNOPS working capital portfolio remains safe, in line with its investment
policy on working capital, given that it holds high-quality assets aimed at preserving

104/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

principal over the investment horizon. Adverse impacts on the global bond markets
were the main driver for the decrease in investment revenue.
160. UNOPS investment income has increased overall with an investment income of
$88.6 million in 2023 (expense of $44.6 million in 2022). Starting from 2023, besides
derivatives, other assets measured at fair value through surplus or deficit will also be
reported as part of the finance income.
161. There have been no impairments of investment assets held during this period in
any of the pooled cash resources invested. The UNOPS working capital portfolio asset
allocation is invested in highly rated sovereigns, supranational and agency debt and
highly rated bank obligations, in line with the principal investment objective of the
preservation of capital over the investment horizon.
162. UNOPS actively monitors all ratings for the investment holdings and investment
counterparties and actively divests any marketable securities that fall below its
minimum rating requirements. There were no material downgrades of UNOPS
banking partners in 2023.
163. The operational reserve portfolio and the after-service health insurance portfolio
include allocations to developed and emerging market equity and to developed market
fixed income.

Table IV.25
Movements in investments
(Thousands of United States dollars)

31 December 2023 31 December 2022

Opening balance as at 1 January 2 885 516 4 208 465

Impact of IPSAS 41 adoption on short- and long-term
investments 52 562 –

Restated opening balance as at 1 January 2 938 078 4 208 465

Additions (purchases of investments) 5 944 335 5 955 128

Disposals (6 230 160) (7 232 493)
Recognition of amortized costs 45 962 –
Fair value adjustment 6 110 (45 584)
Less: allowance for expected credit losses – –

Closing balance as at 31 December 2 704 325 2 885 516

Of which:
Current portion (short-term investments) 2 516 861 2 079 129
Non-current portion (long-term investments) 187 464 806 387

164. The impact of the adoption of IPSAS 41 on short- and long-term investments of
$52.6 million is included in the total effect of the adoption of IPSAS 41 in table IV.5,
which also comprises the effect of the adoption of IPSAS 41 on cash equivalents.
165. Accrued interest receivables of $7.6 million ($7.6 million in 2022) have been
included in the statement of financial position within “other accounts receivable” (see
note 13).
166. As at 31 December 2023, additions to investments amounting to $173.3 million
($21.7 million in 2022) had not been paid for and were included as part of payables.

24-13155 105/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

167. As at 31 December 2023, proceeds for the sale of financial assets amounting to
$186.2 million ($27.6 million in 2022) were yet to be received.

Short-term investments
168. Short-term investments are those investments with final maturities at purchase
of between 3 and 12 months. They consist of corporate bonds, unit trust bonds, time
deposits and unit trust equity maturing within one year of the reporting date.

Table IV.26
Short-term investments
(Thousands of United States dollars)

31 December 2023 31 December 2022

Time deposits 25 000 39 987

Bonds 2 491 861 2 039 142
Less: allowance for expected credit losses – –

Total short-term investments 2 516 861 2 079 129

Long-term investments
169. Long-term investments comprise bonds that mature beyond one year.

Table IV.27
Long-term investments
(Thousands of United States dollars)

31 December 2023 31 December 2022

Bonds 187 464 806 387

Less: allowance for expected credit losses – –

Total long-term investments 187 464 806 387

170. The investment portfolio of UNOPS consists of high-quality debt and equity
instruments (corporate bonds and index-linked government bonds). In the table
below, the entire portfolio is presented following its credit rating distribution.

Table IV.28
Credit rating distribution of investments
(Thousands of United States dollars)

31 December 2023 31 December 2022

AAA 2 443 988 2 406 746

AA+ 50 867 133 990
AA 77 801 104 799
AA- 24 992 2 106
A+ 11 358 15 027
A 62 018 35 005
A- – 20 022
BBB+ – 49 210

106/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

31 December 2023 31 December 2022

BBB – 21 327
BBB- – 8 447
a
Unrated 33 301 88 837

Total 2 704 325 2 885 516

a
Pertains to equity instruments, listed derivatives and recoverable taxes which, by their
nature, do not have a credit exposure, and are therefore unrated.

Note 11
Other financial assets
171. There were no other financial assets in 2023. In 2022, all other financial assets
related to the Sustainable Investments in Infrastructure and Innovation initiative were
fully impaired. Furthermore, in 2023, the Executive Board approved the release of
committed Sustainable Investments in Infrastructure and Innovation initiative funds
to the UNOPS operational reserve. Details are included in note 19.

Note 12
Other assets
172. Other assets comprise forward exchange contracts and futures contracts gains at
year end.

Table IV.29
Other assets
(Thousands of United States dollars)

31 December 2023 31 December 2022

Derivative assets 1 247 5 340

Note 13
Accounts receivable

173. The accounts receivable of UNOPS are divided into the following categories:
(a) Project accounts receivable: a project receivable is recognized in
connection with projects that have incurred expenditure and are awaiting further
funding from partners;
(b) Prepayments: payments made in advance of the receipt of goods or
services from vendors;
(c) Other accounts receivable: this category includes staff receivables,
accrued interest income on investments and other miscellaneous receivables.
174. An overview of these categories can be found in the table below.

24-13155 107/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

Table IV.30
Accounts receivable
(Thousands of United States dollars)

31 December 2023 31 December 2022

Project accounts receivable (gross) 101 389 73 423

Less: provision for write-off of disallowed costs (6 603) (3 904)

Project accounts receivable (net) 94 786 69 519

Other accounts receivable (gross) 215 083 61 958

Less: provision for write-off of disallowed costs (1 099) (572)

Other accounts receivable (net) 213 984 61 386

Total accounts receivable (net) excluding prepayments 308 770 130 905

Prepayments 47 028 14 893

Total accounts receivable (net) including prepayments 355 798 145 798

Of which:
Current portion of accounts receivable 355 798 145 798

175. Prepayments relate to payments made in advance of the receipt of goods or

services from a vendor.
176. Given that the fair value of the current receivables approximates their carrying
amount and the impact of discounting is not significant, no fair value disclosure has
been added.
177. As at 31 December 2023, receivables of $7.7 million ($4.5 million in 2022) were
impaired and provisions were made against them (see table IV.36 for details). There
was no provision relating to Sustainable Investments in Infrastructure and Innovation
projects in 2023 or 2022.
178. As at 31 December 2023, receivables of $18.4 million ($20.4 million in 2022)
were past due but not impaired, given that there is no recent history of default
regarding those receivables. The ageing of those receivables exceeds three months.

Table IV.31
Ageing of receivables
(Thousands of United States dollars)

Current 0–3 Overdue 3–6 Overdue 6–12 Over 12

months months months months Total

Accounts receivables 290 357 2 921 1 614 13 878 308 770

Project accounts receivable

179. The project accounts receivable are reflected in the table below.

108/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

Table IV.32
Project accounts receivable
(Thousands of United States dollars)

31 December 2023 31 December 2022

Project implementation-related receivables 57 975 51 132

Accounts receivable – United Nations Development Programme 35 601 17 250
Accounts receivable – other United Nations agencies 1 210 1 137

Total project accounts receivable 94 786 69 519

180. Project implementation-related receivables arise in connection with projects

that have incurred expenditure and are awaiting further funding from partners. The
nature of some agreements requires UNOPS to perform services prior to invoicing
the client and receiving cash/payment.
181. Of the balance of project receivables of $94.8 million ($69.5 million in 2022),
$5.8 million ($8.3 million in 2022) relates to cash advances due from customers for
construction contracts for the period ended 31 December 2023, as detailed in note 20.
182. The accounts receivable from other United Nations entities include amounts due
from the United Nations Secretariat. The amounts relate mainly to project expenditure
incurred by UNOPS when implementing projects on behalf of the agency, as well as
in connection with staff on secondment.
183. For project accounts receivable from Member States of the United Nations,
UNOPS has not previously incurred impairment losses, nor faced any defaults on
payments. Therefore, UNOPS considers the expected credit losses of project
receivables to be negligible, and a statistical approach to calculate expected credit
losses as inappropriate.
184. Accounts receivable from the United Nations Development Programme
(UNDP) arise mainly in connection with advances made for payments that will be
made on behalf of UNOPS.

Table IV.33
Accounts receivable – United Nations Development Programme
(Thousands of United States dollars)

31 December 2023 31 December 2022

Cumulative project expenses and fees due to UNOPS 35 527 17 684

Less: provision for write-off of disallowed costs (710) (721)

Net receivable/(project advances) from UNDP 34 817 16 963

Cumulative advances/(payables) to UNDP to disburse

payments on behalf of UNOPS 784 287

Total balance with UNDP 35 601 17 250

Of which:
Receivable from UNDP 35 601 17 250
Payable to UNDP (excluding project advances) – –
Project advances from UNDP – –

24-13155 109/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

185. As at 31 December 2023, UNOPS had an amount due from UNDP of

$35.6 million ($17.3 million in 2022).

Other accounts receivable

186. The other accounts receivable are composed of the following:

Table IV.34
Other accounts receivable
(Thousands of United States dollars)

31 December 2023 31 December 2022

Staff receivables 1 037 1 431

Accrued interest receivable on investments 7 620 7 554
Miscellaneous receivables 205 327 52 401

Total other accounts receivable 213 984 61 386

187. The staff receivables relate to salary advances, education grants, rental subsidies
and other entitlements.
188. The composition of miscellaneous receivables as at 31 December 2023 is as
follows:

Table IV.35
Breakdown of miscellaneous receivables
(Thousands of United States dollars)

31 December 2023 31 December 2022

Provident fund for personnel 10 802 9 195

Investment settlements receivable 186 219 27 580
Refundable taxes: value added tax/sales tax 5 656 5 813
Rent deposits 1 039 865
Other staff-related receivables 538 527
Other miscellaneous receivables 1 073 8 421

Total miscellaneous receivable 205 327 52 401

189. The other miscellaneous receivables relate to receivables from other United
Nations agencies for shared costs and doubtful receivables net of any bad debt
allowance.
190. For the purposes of IPSAS 41, the investment settlements receivable is the only
item factored into the expected credit loss. The review resulted in a determination that
no expected credit loss is required to be recognized in the financial statements, and
no impairment allowance has been recognized for these receivables.

Provision for write-off of disallowed costs

191. The movement in provision for write-off of disallowed costs is as follows:

110/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

Table IV.36
Movement in provision for write-off of disallowed costs
(Thousands of United States dollars)

31 December 2023 31 December 2022

Opening balance
Project-related 3 904 4 033
Other accounts receivable 572 23 882

Opening balance 4 476 27 915

Net increase/(decrease) in provision for receivables impairment

Increase 3 794 2 940
Receivables written off during the year as uncollectible (844) (98)
Unused amounts reversed or reclassified 276 (26 281)

Net increase/(decrease) 3 226 (23 439)

Closing balance
Project-related 6 603 3 904
Other accounts receivable 1 099 572

Closing balance 7 702 4 476

192. The maximum exposure to credit risk at the reporting date is the carrying value
of each class of receivable mentioned above.

Note 14
Cash and cash equivalents

193. As at 31 December 2023, UNOPS held $702.6 million of cash and cash
equivalents, as follows:

Table IV.37
Cash and cash equivalents
(Thousands of United States dollars)

31 December 2023 31 December 2022

Cash at banks 208 541 238 662

Cash equivalents 493 813 365 712
Cash on hand 233 235
Less: allowance for expected credit losses – –

Total cash and cash equivalents 702 587 604 609

194. Cash at banks includes project funds received from clients for the
implementation of project activities. Cash advances received from clients for project
activities and other UNOPS cash balances are commingled and are not held in
separate bank accounts.
195. The cash on hand is the cash held in field offices for the purpose of meeting
financial needs at field locations.

24-13155 111/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

196. Cash and cash equivalents comprise cash on hand, cash at banks, time deposits
and money market instruments held with financial institutions where the initial term
was less than 90 days. They are held at nominal value less any expected credit losses.
197. Cash at banks is denominated in the following currencies:

Table IV.38
Cash at banks
(Thousands of United States dollars)

31 December 2023 31 December 2022

United States dollar 180 568 192 810

Japanese yen 8 165 8 705
Israeli shekel 5 540 3 387
Guatemalan quetzal 2 798 1 237
Danish krone 2 155 313
Euro 1 977 7 462
Jordanian dinar 1 818 1 552
Other currencies 5 520 23 196

Total 208 541 238 662

198. The credit quality of the cash at banks, by reference to external credit ratings, is
summarized below.

Table IV.39
Credit rating distribution of cash at banks
(Thousands of United States dollars)

31 December 2023 31 December 2022

AAA 1 437 –
AA+ 329 4 433
AA 105 1 941
AA- 157 106 221
A+ 10 142 11 001
A 5 785 87 235
A- 732 –
BBB+ 213 849
BBB 330 –
BBB- 617 –
BB+ 3 596 4 871
BB 247 –
BB- 285 –
B+ 3 198 168
B 637 1 351
B- 1 435 4 171
CCC+ 388 –
CCC- 44 843 –

112/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

31 December 2023 31 December 2022

CC 72 639 –
Unrated 61 426 16 421

Total 208 541 238 662

199. UNOPS implements projects worldwide and in post-conflict and rural areas.
Considering the conditions and areas in which these projects are implemented, some
banks are not rated by reference to external credit ratings.
200. The credit quality of cash equivalents was as follows:

Table IV.40
Credit rating distribution of cash equivalents
(Thousands of United States dollars)

31 December 2023 31 December 2022

AAA 261 188 333 430

AA 51 916 5 000
AA- 130 503 9 706
A+ 25 000 3 032
A 10 000 –
A- 13 800 –
BBB+ – –
Unrated 1 406 14 544

Total 493 813 365 712

201. To meet operational requirements, UNOPS holds cash and deposits in certain
currencies in banking institutions with lower credit ratings or in banking institutions
that are unrated. For these accounts, a review was made using S&P Global’s global
probability of default ratings (for rated banks) and using the sovereign rating of the
country in which the banking institution is located for unrated banks. The review
resulted in a determination that no expected credit loss is required to be recognized
in the financial statements, and no impairment allowance has been recognized for the
cash and cash equivalents held in these banks.

Note 15
Employee benefits
202. The employee benefits liabilities of UNOPS are composed of:
(a) Short-term employee benefits: accrued annual leave, current portion of
home leave;
(b) Long-term employee benefits: non-current portion of home leave;
(c) Post-employment benefits: all benefits relating to after-service health
insurance and repatriation grant;
(d) Termination benefits: benefits related to termination of contract.

24-13155 113/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

Table IV.41
Employee benefits liabilities
(Thousands of United States dollars)

31 December 2023 31 December 2022

Short-term employee benefits 34 413 33 342

Long-term employee benefits 3 190 2 987
Post-employment benefits 84 762 74 812

Total employee benefits liabilities 122 365 111 141

Of which:
Current portion 37 463 35 955
Non-current portion 84 902 75 186

Short-term benefits liabilities

203. Short-term employee benefits are composed of:

Table IV.42
Short-term employee benefits
(Thousands of United States dollars)

31 December 2023 31 December 2022

Annual leave entitlements 32 091 31 197

Home leave entitlements (current portion) 2 213 2 100
Assignment grant on first appointment or reassignment 109 45

Total short-term employee benefits liabilities 34 413 33 342

204. Home leave allows eligible internationally recruited staff members to visit their
home country periodically to renew and strengthen cultural and family ties.

Long-term benefits liabilities

205. Long-term employee benefits consist of the non-current portion of the home
leave entitlement. Rights vested that can be used in the next 12 months are presented
as short-term employee benefits, while rights to be used beyond the 12 -month period
are presented as long-term employee benefits.

Post-employment benefits liabilities

206. The post-employment benefits liabilities are composed of:

114/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

Table IV.43
Post-employment benefits liabilities
(Thousands of United States dollars)

31 December 2023 31 December 2022

After-service health insurance

Current portion 1 303 1 402
Non-current portion 68 606 62 028

Subtotal 69 909 63 430

Repatriation grant
Current portion 1 711 1 179
Non-current portion 12 800 9 879

Subtotal 14 511 11 058

Death benefit
Current portion 36 32
Non-current portion 306 292

Subtotal 342 324

Total post-employment benefits 84 762 74 812

Of which:
Current 3 050 2 613
Non-current 81 712 72 199

207. Post-employment benefits consist of after-service health insurance, repatriation

grants, the death benefit and pension plans. After-service health insurance is a plan
that allows eligible retirees and their eligible family members to participate in the full
medical insurance plan. A repatriation grant is an entitlement payable to Professional
staff on separation, together with related costs in travel and the shipment of household
effects. The actuarial valuation of liabilities regarding after-service health insurance,
the repatriation grant and the death benefit was undertaken by an independent
professional actuary. At the end of 2023, total post-employment benefits liabilities
amounted to $84.8 million ($74.8 million in 2022). They are established in
accordance with the Staff Regulations and Rules of the United Nations for staff
members in the Professional and General Service categories.

After-service health insurance

208. The year-end liabilities for after-service health insurance are derived from the
actuarial valuation conducted at year end 2023. The net present value of the UNOPS
accrued liability as at 31 December 2023, net of contributions from plan participants,
was estimated by actuaries at $69.9 million ($63.4 million in 2022).
209. Upon end of service, staff members and their dependants may elect to participate
in a defined benefit health insurance plan of the United Nations, provided they have
met specific eligibility requirements. These requirements include 10 years of
participation in a United Nations health plan, for those who were recruited after 1 July
2007, and 5 years of participation, for those who were recruited prior to that date.

24-13155 115/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

Repatriation grant
210. Upon end of service, staff members who meet specific eligibility requirements,
including residency outside their country of nationality at the time of separation, are
entitled to a repatriation grant based on length of service, and travel and removal
expenses. These benefits are collectively referred to as repatriation benefits.
211. The net present value of the UNOPS accrued liability as at 31 December 2023
was estimated by actuaries at $14.5 million ($11.1 million in 2022).

Death benefit
212. The death benefit is a post-employment defined benefit plan, for which payment
is made upon the death of an eligible employee who leaves behind a surviving spouse
or dependent child.
213. The net present value of the UNOPS accrued liability as at 31 December 2023
was estimated by actuaries at $0.3 million ($0.3 million in 2022).

Accounting for post-employment benefits

214. Defined benefit obligations are measured using an actuarial valuation method.
The movement in the present value of the defined benefit obligations over the year is
as follows:

Table IV.44
Post-employment benefits liabilities
(Thousands of United States dollars)

After-service Repatriation Death

health insurance grant benefit Total 2023 Total 2022

Liability as at 1 January 63 430 11 058 324 74 812 107 068

Current service cost 2 555 1 092 11 3 658 6 217
Interest cost 3 237 518 16 3 771 3 356
Benefits paid (1 363) (1 754) – (3 117) (2 631)
Actuarial losses/(gains) 2 050 3 597 (9) 5 638 (39 198)

Liability as at 31 December 69 909 14 511 342 84 762 74 812

Table IV.45
Post-employment benefits liabilities: active and retired staff
(Thousands of United States dollars)

After-service Repatriation Death Total Total

health insurance grant benefit 2023 2022

Current retirees 33 509 – – 33 509 33 004

Active employees – fully eligible 12 705 6 817 342 19 864 15 271
Active employees – not yet fully eligible 23 695 7 694 – 31 389 26 537

Liabilities as at 31 December 69 909 14 511 342 84 762 74 812

215. The amounts recognized in the statement of financial performance are as

follows:

116/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

Table IV.46
Impact of post-employment benefits on financial performance
(Thousands of United States dollars)

After-service Repatriation Death Total Total

health insurance grant benefit 2023 2022

Current service cost 2 555 1 092 11 3 658 6 217

Interest cost 3 237 518 16 3 771 3 356

Total 5 792 1 610 27 7 429 9 573

216. The total expense has been included under “salaries and employee benefits” in
the statement of financial performance.

Actuarial gains/losses
217. Actuarial gains/losses are recognized directly in net assets and reflect changes
in financial and demographic assumptions and experience adjustments.

Table IV.47
Actuarial gains/losses
(Thousands of United States dollars)

After-service Repatriation Death

health insurance grant benefit Total 2023 Total 2022

Changes in financial assumptions (11 874) (158) (6) (12 038) 27 656
Changes in demographic assumptions 870 17 (8) 879 –
Experience adjustments 8 954 (3 456) 23 5 521 11 542

Total actuarial gains/(losses) (2 050) (3 597) 9 (5 638) 39 198

Actuarial assumptions
218. The key actuarial assumption used by the actuary to determine defined benefit
liabilities is the discount rate. For the after-service health insurance liability, this also
includes the health-care cost trend rate.
219. The principal actuarial assumptions for 2023 were as follows:

Table IV.48
Principal actuarial assumptions
(Thousands of United States dollars)

After-service health
insurance Repatriation grant Death benefit

Discount rate as at 5.16 5.09 5.06

1 January 2023

Discount rate as at 4.74 4.91 4.86

31 December 2023

Future salary increases United Nations United Nations United Nations

(on top of inflation) Salary scale Salary scale Salary scale

24-13155 117/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

After-service health
insurance Repatriation grant Death benefit

Mortality rate United Nations United Nations United Nations

Joint Staff Pension Joint Staff Pension Joint Staff Pension
Fund scales Fund scales Fund scales

Turnover rate United Nations United Nations United Nations

Joint Staff Pension Joint Staff Pension Joint Staff Pension
Fund scales Fund scales Fund scales

Sensitivity analysis
220. Sensitivity analysis outlines the potential impact of changes in some key
assumptions used in measuring post-employment benefits. If the assumptions about
the discount rate and the health-care cost trends were to change, then this would have
an impact on the measurement of the post-employment benefits, as shown below.

Table IV.49
Potential impact of changes in discount rates on post-employment benefits
(Thousands of United States dollars)

After-service health insurance Repatriation Death benefit

Increase of 0.5 per cent (6 671) (484) (10)

Decrease of 0.5 per cent 7 732 515 11

Table IV.50
Potential impact of changes in health-care cost trend rates on after-service
health insurance liabilities
(Thousands of United States dollars)

After-service health Service cost and

insurance obligation interest cost

Increase of 0.5 per cent 7 525 955

Decrease of 0.5 per cent (6 560) (790)

United Nations Joint Staff Pension Fund

221. UNOPS is a member organization participating in the United Nations Joint Staff
Pension Fund, which was established by the General Assembly to provide retirement,
death, disability and related benefits to employees. The Fund is a funded, multi -
employer defined benefit plan. As specified in article 3 (b) of the Regulations of the
Fund, membership in the Fund shall be open to the specialized agencies and to any
other international, intergovernmental organization that participates in the common
system of salaries, allowances and other conditions of service of the United Nations
and the specialized agencies.
222. The Fund exposes participating organizations to actuarial risks associated with
the current and former employees of other organizations participating in the Fund,
with the result that there is no consistent and reliable basis for allocating the
obligation, plan assets and costs to individual organizations participating in the Fund.
UNOPS and the Fund, in line with the other organizations participating in the Fund,
are not in a position to identify the UNOPS proportionate share of the defined benefit
obligation, the plan assets and the costs associated with the plan with sufficient

118/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

reliability for accounting purposes. Hence, UNOPS has treated this plan as if it were
a defined contribution plan in line with the requirements of IPSAS 39. The UNOPS
contributions to the Fund during the financial period are recognized as expenses in
the statement of financial performance.
223. The Fund’s Regulations state that the Pension Board shall have an actuarial
valuation made of the Fund at least once every three years by the consulting actuary.
The practice of the Pension Board has been to carry out an actuarial valuation every
two years. The primary purpose of the actuarial valuation is to determine whether the
current and estimated future assets of the Fund will be sufficient to meet its liabilities.
224. The UNOPS financial obligation to the Fund consists of its mandated
contribution, at the rate established by the General Assembly (currently at 7.9 per cent
for participants and 15.8 per cent for member organizations) together with any share
of any actuarial deficiency payments under article 26 of the Regulations of the Fund.
Such deficiency payments are payable only if and when the Assembly has invoked
the provision of article 26, following determination that there is a requirement for
deficiency payments based on an assessment of the actuarial sufficiency of the Fund
as of the valuation date. Each member organization shall contribute to this deficiency
an amount proportionate to the total contributions that each paid during the three years
preceding the valuation date.
225. The most recent actuarial valuation for the Fund was completed as at
31 December 2021, and the valuation as at 31 December 2023 is currently being
performed. A roll forward of the participation data as at 31 December 2022 to
31 December 2023 was used by the Fund for its 2022 financial statements.
226. The actuarial valuation as at 31 December 2021 resulted in a funded ratio of
actuarial assets to actuarial liabilities of 117.0 per cent. The funded ratio was 158.2
per cent when the current system of pension adjustments was not taken into account.
227. After assessing the actuarial sufficiency of the Fund, the consulting actuary
concluded that there was no requirement, as at 31 December 2021, for deficiency
payments under article 26 of the Regulations of the Fund because the actuarial value
of assets exceeded the actuarial value of all accrued liabilities under the plan. In
addition, the market value of assets also exceeded the actuarial value of all accrued
liabilities as of the valuation date. At the time of the writing of the present report, the
General Assembly had not invoked the provision of article 26.
228. Should article 26 be invoked owing to an actuarial deficiency, either during the
ongoing operation or as a result of the termination of the Fund, deficiency payments
required from each member organization would be based upon the proportion of that
member organization’s contributions to the total contributions paid to the Fund during
the three years preceding the valuation date. Total contributions paid to the Fund
during the preceding three years (2020, 2021 and 2022) amounted to $8,937.68
million, of which 0.6 per cent was contributed by UNOPS.
229. During 2023, contributions paid to the Fund by UNOPS amounted to
$17.7 million ($16.8 million in 2022). There is no material change to the expected
contributions in 2024.
230. Membership in the Fund may be terminated by a decision of the General
Assembly upon the affirmative recommendation of the Pension Board. A
proportionate share of the total assets of the Fund on the date of termination shall be
paid to the former member organization for the exclusive benefit of its staff who were
participants in the Fund at that date, pursuant to an arrangement mutually agreed
between the organization and the Fund. The amount is determined by the Pension
Board on the basis of an actuarial valuation of the assets and liabilities of the Fund

24-13155 119/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

on the date of termination; no part of the assets that are in excess of the liabilities is
included in the amount.
231. The Board of Auditors carries out an annual audit of the Fund and reports to the
Pension Board and to the General Assembly on the audit every year. The Fund
publishes quarterly reports on its investments, and these can be viewed by visiting the
Fund’s website at www.unjspf.org.

Termination benefits
232. As at 31 December 2023, UNOPS had no termination entitlement liabilities (nil
as at 31 December 2022).

Note 16
Accounts payable
Table IV.51
Accounts payable and accruals
(Thousands of United States dollars)

31 December 2023 31 December 2022

Accounts payable 408 024 190 508

Accruals 155 583 263 380

Total 563 607 453 888

233. Balances of accounts payable as at 31 December 2023 are shown below.

Table IV.52
Accounts payable
(Thousands of United States dollars)

31 December 2023 31 December 2022

Accounts payable – UNDP – –

Accounts payable – other United Nations agencies 3 928 4 192
Accounts payable – other 404 096 186 316

Total accounts payable 408 024 190 508

234. Accounts payable relate to transactions in which invoices from vendors were
received and approved for payment but not yet paid. The accounts payable include
the refund of the balance of the grant from Finland of $7.1 million.

Accruals
235. The accrued charges amounting to $155.6 million ($263.4 million in 2022) are
financial liabilities in respect of goods or services that were received or provided to
UNOPS during the reporting period but not yet invoiced.

Note 17
Project cash advances received
236. The project cash advances received represent deferred revenue, which is the
excess of cash received over the total of project revenue recognized on projects, and

120/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

of cash held by UNOPS for projects in which UNOPS serves as a disbursement

authority.

Table IV.53
Project cash advances received
(Thousands of United States dollars)

31 December 2023 31 December 2022

Deferred revenue 1 805 022 1 311 308

Cash held by UNOPS as agent 995 020 1 441 813

Total 2 800 042 2 753 121

237. Of the balance in deferred revenue of $1,805.0 million ($1,311.3 million in

2022), $1,230.7 million relates to cash advances on construction contracts for the
period ended 31 December 2023, as detailed in note 20.

Note 18
Other liabilities
238. Other liabilities comprise forward exchange contracts and futures contracts in
loss at year end.

Table IV.54
Other liabilities
(Thousands of United States dollars)

31 December 2023 31 December 2022

Derivative liabilities 7 787 20 708

Note 19
Net assets/equity
239. UNOPS net assets/equity are as follows:

24-13155 121/146
 A/79/5/Add.11
122/146

Table IV.55
Net assets/equity
(Thousands of United States dollars)

After-service health insurance reserve Operational reserves

Changes in
Changes in fair Other after- fair value of
value of after- service health non-after- Sustainable
service health insurance service health Investments in
insurance financial investment returns Post- insurance Minimum Other Infrastructure Growth and
Actuarial assets recognized recognized in employment financial operational operational and Innovation innovation Accumulated
gains/(losses) in net assets/equity surplus/deficit funding gap assets reserves reserves reserve reserve surpluses Total

Balance as at 1 January 2022 9 699 – – – (10 334) 138 764 – – 111 119 111 120 360 368
Surplus/(deficit) for the period – – – – – – – – – (28 780) (28 780)
Actuarial gains/(losses) 39 198 – – – – – – – – – 39 198
Change in fair value of
financial assets – – – – (46 749) – – – – – (46 749)
Transfers to/from other
reserves – – – – – 8 488 121 924 63 047 (111 119) (82 340) –

Opening balance as at
1 January 2023 48 897 – – – (57 083) 147 252 121 924 63 047 – – 324 037

Impact of IPSAS 41 adoption – – – – 47 856 – – – – 4 140 51 996

Opening balance as at
1 January 2023 48 897 – – – (9 227) 147 252 121 924 63 047 – 4 140 376 033

Surplus/(deficit) for the period – – – – – – – – – 41 325 41 325

Reclassification of change in

Notes to the 2023 financial statements (continued)

fair value – (9 227) 228 – 9 227 – – – – (228) –
Actuarial gains/(losses) (5 638) – – – – – – – – – (5 638)

United Nations Office for Project Services

Change in fair value of after-
service health insurance
financial assets – 5 882 – – – – – – – – 5 882
Approved distribution to
UNOPS donors – – – – – – (123 792) – – – (123 792)
Transfers to/from other
reserves – – – 3 413 – 18 067 86 804 (63 047) – (45 237) –

Balance as at
31 December 2023 43 259 (3 345) 228 3 413 – 165 319 84 936 – – – 293 810
24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

After-service health insurance reserve

240. As UNOPS operates with a net-zero revenue commitment and requires the
distribution of any excess to paying entities, the after-service health insurance reserve
has been created with the purpose of ring fencing the gains and losses arising from
the after-service health insurance investment portfolio and the actuarial gains and
losses of the defined benefit obligations of the after-service health insurance,
repatriation grant and death benefit post-employment defined benefit plans. The
purpose of this reserve is to mitigate the risk of not having sufficient funds to meet
the UNOPS post-employment defined benefit obligations in the future. Therefore, the
after-service health insurance reserve is excluded from the calculations of the excess
reserves to be distributed to paying entities.

Actuarial gains/losses
241. Actuarial gains or losses reflect the changes in the present value of the defined
benefit obligation of the defined benefit plans resulting from experience adjustments
and the effects of changes in actuarial assumptions, as required by IPSAS 39. See
note 3 on accounting policies on employee benefits liabilities.

Changes in fair value of after-service health insurance financial assets recognized in

net assets/equity
242. Fair value movements of certain after-service health insurance financial assets
are recognized directly in net assets/equity, in line with IPSAS 41, and are part of the
after-service health insurance reserve for ring-fencing purposes.

Other after-service health insurance investment returns recognized in surplus/deficit

243. Realized and unrealized gains and losses arising from after-service health
insurance financial assets recognized in surplus and deficit, in line with IPSAS 41,
are transferred from the accumulated surpluses to the after-service health insurance
reserve. Those gains are not considered part of the excess reserves available for
distribution to paying entities.

Post-employment funding gap

244. UNOPS fully funds the post-employment benefit obligation. The results of the
after-service health insurance assets and liabilities are presented below to reflect the
current funding deficit/surplus. Given past experience, it is expected that the post -
employment benefits obligation will continue to increase over the years.

Table IV.56
Post-employment funding gap
(Thousands of United States dollars)

31 December 2023

Assets
Book cost value 84 466
Fair value of assets through net assets/equity (3 345)
Fair value of assets through surplus/deficit 228

Market value 81 349

Liabilities
Post-employment benefit obligation (84 762)

Total funding gap 3 413

24-13155 123/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

Fair value of non-after-service health insurance financial assets

245. Fair value movements of certain financial assets not part of the after-service
health insurance financial assets are recognized directly in net assets/equity, in line
with IPSAS 41.

Minimum operational reserves

246. New minimum operational reserves were established in 2021 by the Executive
Board of UNOPS (see DP/OPS/2021/6) to guarantee the financial viability and
integrity of UNOPS as a going concern. In accordance with financial regulation 22.02,
the operational reserves shall be fully funded and limited to:
(a) Downward fluctuations or shortfalls in revenue;
(b) Uneven cash flows;
(c) Increases in actual costs above planning estimates or fluctuations in
project costs;
(d) Other contingencies that result in a loss of resources for which UNOPS
has made commitments.
247. The requirement for the minimum operational reserves of UNOPS is set at
25 per cent of the infrastructure service line expenses, 5 per cent of expenses for other
service lines and 33 per cent of administrative costs, with a weight of 50 per cent for
the current year, 30 per cent for previous year and 20 per cent for the year prior. On
the basis of this formula, for the period ended 31 December 2023, the minimum
operational reserves requirement was $165.3 million, an increase of $18.0 million
compared to 2022.

Growth and innovation reserve

248. In 2019, the UNOPS Executive Director established a growth and innovation
reserve on the basis of her authority under UNOPS financial regulations and rules.
The purpose of the growth and innovation reserve is to invest in the future revenue -
generating ability of UNOPS. The value of this reserve was set at 50 per cent of the
excess operational reserves. The reserve funded Sustainable Inve stments in
Infrastructure and Innovation activities to catalyse investment in socially inclusive
large-scale infrastructure projects until 2022.
249. In June 2022 (see DP/2022/27), the Executive Board requested UNOPS to
transfer into the operational reserves the balance not committed to projects from the
growth and innovation reserve, the Sustainable Investments in Infrastructure and
Innovation reserve and accumulated surpluses. As a result, a total of $111.1 million
of the growth and innovation reserve was transferred into the operational reserves in
2022. As at 31 December 2023, the balance of this reserve was nil.

Other operational reserves

250. In February 2023 (see DP/2023/11), the Executive Board established the level
of reserves that UNOPS should hold. As a result, all reserves beyond that level should
be distributed to the partners that have worked with UNOPS within the past four
years. UNOPS enlisted an independent external party, Deloitte, to review and ensure
the accuracy and appropriateness of the process for determining, calculating and
distributing the excess reserves. As a result, the Executive Board approved the
allocation of $123.8 million to be distributed to paying entities from the UNOPS
operational reserves.

124/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

251. In its decision 2023/18, the Executive Board requested that UNOPS propose for
approval, at every second regular session at which the UNOPS biennial budget is
considered, starting in 2023, a fair and transparent methodology and time frame for
distributing any excess reserves accumulated in the relevant budget cycle to paying
entities, including those within the United Nations system. The proposal should be
presented to the Executive Board in an informal session prior to those second regular
sessions, with the aim of distributing the reserves within 12 months of receiving the
report of the Board of Auditors.

Sustainable Investments in Infrastructure and Innovation reserve

252. In February 2022, the UNOPS Executive Board established the Sustainable
Investments in Infrastructure and Innovation reserve. Subsequently in June 2022, the
Board requested UNOPS to freeze all further Sustainable Investments in
Infrastructure and Innovation-related investments not already contractually
committed by UNOPS. As at that date, the total committed Sustainable Investments
in Infrastructure and Innovation-related investments amounted to $63.0 million.
253. In its decision 2023/22, the Executive Board approved the release of committed
Sustainable Investments in Infrastructure and Innovation initiative funds to the
UNOPS operational reserves. Consequently, the total committed Sustainable
Investments in Infrastructure and Innovation investments that amounted to
$63.0 million in 2022 were released to the operational reserves in 2023.

Accumulated surpluses
254. Accumulated surpluses represent the accumulated surpluses and deficits from
UNOPS operations over the years, net of those transferred to other reserves, as
detailed above. During 2023, a total of $45.2 million of accumulated surplus was
transferred into the operational reserves.

Note 20
Revenue and expenses
Non-exchange revenue
255. During the year 2023 UNOPS did not generate any non -exchange revenue, nor
did it generate any non-exchange revenue in 2022.
256. Services in kind for the period amounted to $4.2 million ($4.1 million in 2022),
$3.7 million of which is attributed to the estimated market rental value of office space
provided by the Government of Denmark to accommodate the UNOPS headquarters
in Copenhagen.

Exchange revenue
257. The exchange revenue of UNOPS comprised $1,216.0 million ($1,221.5 million
in 2022) in revenue from project activities and $0.9 million ($2.9 million in 2022)
from miscellaneous revenue. The revenue and expenses from UNOPS project
activities were as follows:

24-13155 125/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

Table IV.57
Revenue and expenses from project activities
(Thousands of United States dollars)

31 December 2023 31 December 2022

Construction contracts (infrastructure) 445 251 308 811

Procurement 107 449 161 942
Financial management 103 267 78 243
Human resources administration 27 285 27 562
Other project management 532 761 644 983

Total project-related revenue 1 216 013 1 221 541

Less: project expenses

Construction contracts 426 056 293 911
Procurement 75 720 116 600
Financial management 84 433 61 655
Human resources 15 423 11 797
Other project management 500 779 610 252

Total project-related expenses 1 102 411 1 094 215

Net revenue from project activities 113 602 127 326

258. During the period, UNOPS revenue was reported using the categories in the
table above. For operational reasons and as described in the annual report, UNOPS
analyses its revenue according to the following three core service categories:
infrastructure; procurement; and project management. These categories are detailed
in note 1.

Construction contracts
259. The amount of revenue and expenses relating to the construction contracts
recognized in the statement of financial performance was as follows:

Table IV.58
Construction contracts – revenue and expenses
(Thousands of United States dollars)

Cumulative to 2023 Cumulative in prior years Recognized in current year

Revenue 1 796 884 1 351 633 445 251

Expense (1 669 010) (1 242 954) (426 056)

Surplus 127 874 108 679 19 195

260. Amounts due to and from customers for construction contract works were as
follows:

126/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

Table IV.59
Construction contracts – amounts due to/from customers
(Thousands of United States dollars)

Projects with net deferred Projects with a net

revenue balance receivables balance Total

Cash advances received, including accrued

interest (2 875 010) (205 557) (3 080 567)
Revenue recognized over the life of the
contract 1 644 285 211 380 1 855 665

Amount due (to)/from customers

included in deferred revenue and
project receivables, respectively (1 230 725) 5 823 (1 224 902)

Retentions 19 316

261. Cash advances received comprise cash received over the life of both
construction contracts and contracts that contain construction and an agency service
element (e.g. procurement services) where the cash advances were not specifically
designated for use on the agency service.

Operational costs and other expenses

262. Operational costs of $127.4 million ($118.4 million in 2022) relate to expenses
incurred by UNOPS for a range of activities, which included payments for:
(a) Rental of office space and leases: $22.6 million;
(b) Maintenance of buildings and equipment: $37.5 million;
(c) Management and reporting services: $8.8 million;
(d) Utilities: $0.9 million.
263. Other expenses of -$1.4 million ($32.6 million in 2022) comprise:
(a) Movements in provisions and impairments: -$2.2 million;
(b) Other expenses: $0.8 million.
264. Contractual services of $450.5 million ($366.5 million in 2022) relate to
expenses incurred for a range of UNOPS activities, some of which included payments
for:
(a) Construction and engineering services: $272.1 million;
(b) Humanitarian aid and relief services: $45.8 million;
(c) Trade and business services: $34.2 million;
(d) Security services: $27.4 million.

24-13155 127/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

Note 21
Employee benefits expenses
Table IV.60
Employee benefits expenses
(Thousands of United States dollars)

31 December 2023 31 December 2022

Salaries 78 433 73 697

After-service health insurance 5 792 7 752
Annual leave 1 721 (10)
Home leave 671 717
Defined contribution plan 17 720 16 767
Repatriation grants 1 705 1 881
Other short-term employee benefit expenses 24 728 21 136

Expense related to staff 130 770 121 940

Other personnel expenses 343 883 321 146

Total employee benefits expenses 474 653 443 086

265. Other personnel expenses relate to the remuneration paid to UNOPS individual
contractors for salaries, the provident fund and accrued annual leave.
266. In October 2014, UNOPS implemented a provident fund scheme for all UNOPS
local individual contractors. The provident fund is a defined contribution plan. The
employer contributions of 15 per cent of local individual contractors’ agreement fees
are fixed and are recognized as an expense. The contractors contribute 7.5 per cent of
their fee on a monthly basis. The UNOPS responsibility is to establish arrangements
to provide a provident fund facility and monitor and cover administrative costs related
to these arrangements. The balance of funds held for the benefit of UNOPS local
individual contractors by the provident fund as at 31 December 2023 was
$129.0 million ($106.3 million in 2022). Further details on the provident fund are
disclosed in the annex to the financial statements.
267. In accordance with the contract with UNOPS, the provident fund is administered
and held by Zurich International on behalf of the local individual contractors.

Note 22
Finance income
Table IV.61
Finance income/(expense)
(Thousands of United States dollars)

31 December 2023 31 December 2022

Total finance income on investments 42 429 (44 610)

Recognition of amortized cost (note 10) 45 962 –
Gain/(loss) on financial assets at fair value through surplus/(deficit) 228 –

Total finance income/(expense) on investments and other

financial assets 88 619 (44 610)

128/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

31 December 2023 31 December 2022

Less: finance income/(expense) allocated to projects (26 343) (10 632)

Net finance income/(expense) retained by UNOPS 62 276 (55 242)

Finance income on UNOPS bank balances 1 396 434

Charge/(reversal) for expected credit loss impairment losses – –

Total finance income/(expense) 63 672 (54 808)

268. The component of total finance income/expense that relates to returns on

investment is detailed in table IV.11.
269. In accordance with IPSAS 1: Presentation of financial statements, revenue and
expenses are required to be presented separately and not to be offset against each
other unless they relate to similar transactions or it is required in line with another
IPSAS. There was no interest earned on other financial assets during the year ended
31 December 2023 and, accordingly, impairment on other financial assets has been
included as part of other expenses in 2023 and not finance income/expense.

Table IV.62
Exchange rate gain/loss
(Thousands of United States dollars)

31 December 2023 31 December 2022

Net foreign exchange gain/(loss) (546) 24 479

270. The exchange losses are due to the revaluation of non-United States dollar bank
balances, assets and liabilities at the end of the period.
271. Net unrealized losses of $6.5 million of derivative instruments are included
within the UNOPS net foreign exchange gain/loss.

Note 23
Provisions
Table IV.63
Provisions
(Thousands of United States dollars)

1 January Additional Unused amounts 31 December

2023 provisions reversed Utilized 2023

Claims 1 950 1 101 – – 3 051

Leasehold restoration provisions 247 – (30) – 217
Other provisions 11 586 1 577 (4 429) (3 544) 5 190

Total 13 783 2 677 (4 459) (3 544) 8 458

Of which:
Current portion 8 286
Non-current portion 172

24-13155 129/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

Table IV.64
Provisions – 2022 comparatives
(Thousands of United States dollars)

1 January Additional Unused amounts 31 December

2022 provisions reversed Utilized 2022

Claims 1 970 – – (20) 1 950

Leasehold restoration provisions 262 – (15) – 247
Other provisions 6 440 7 311 (5) (2 160) 11 586

Total 8 672 7 311 (20) (2 180) 13 783

Of which:
Current portion 11 605
Non-current portion 2 178

272. Leasehold restoration provisions reflect an estimate of requirements to return

leased properties to the lessors at the end of the lease term in a specified condition.
They concern various lease agreements in which UNOPS has the obligation to remove
installed assets. Claims refer to legal cases in which outflow of resources is probable
and can be reliably estimated. Other provisions relate mostly to the estimated cost of
remedial work required on projects being implemented by UNOPS.

Note 24
Contingent liabilities
273. UNOPS is subject to claims in the ordinary course of operations, categorized as
project-related or staff-related claims. The UNOPS assessment of the financial effect
of claims that remain open at year-end is reflected in the table below. The outcome of
the open claims is inherently unpredictable and the timing of any outflow is therefore
difficult to ascertain.

Table IV.65
Contingent liabilities
(Thousands of United States dollars)

31 December 2023 31 December 2022

Project related claims from clients – 3 804

Staff related claims – –

Total contingent liabilities – 3 804

274. There were four staff-related claims, with the probability of a liability exposure
being low.

Contingent assets
275. UNOPS had no contingent assets as at 31 December 2023 (nil as at 31 December
2022).

130/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

Note 25
Commitments
276. UNOPS leases office premises in field locations under non-cancellable and
cancellable operating lease agreements. When cancellable, UNOPS is required to give
a 1- to 12-month notice of termination of the lease agreements. The lease terms are
between a few months and 28 years. Some of these operating lease agreements contain
renewal clauses that enable UNOPS to extend the terms of the leases at the end of the
original lease terms and escalation clauses that may increase annual rent payments on
the basis of increases in the relevant market price indexes in the countries where the
field offices are located.
277. The operating expenses include lease payments for an amount of $9.3 million
($7.9 million in 2022) recognized as operating lease expenses during the year in the
statement of financial performance under “operational costs”.
278. The future minimum lease payments include the amounts that would need to be
paid up to the earliest possible termination dates under the relevant agreements. The
total of future minimum lease payments under non-cancellable operating leases is as
follows:

Table IV.66
Lease commitments
(Thousands of United States dollars)

31 December 2023 31 December 2022

Within 1 year 9 046 9 770

Later than 1 year and not later than 5 years 14 090 13 909
Later than 5 years 2 102 3 778

Total operating lease commitments 25 238 27 457

279. UNOPS subleases office premises under cancellable operating lease

agreements, in general to other United Nations entities. In most cases, the lessee is
required to give 30 days’ notice for the termination of the sublease agreement.
280. As at 31 December 2023, the total future minimum lease payments under
sublease agreements that UNOPS expects to receive on such agreements that cannot
be cancelled was $0.5 million ($1.0 million in 2022), owing mainly to the expiration
of several sublease agreements during 2023.

Open commitments
281. UNOPS commitments included purchase orders and service contracts
contracted but not delivered as at year end. The table below shows the total UNOPS
open commitments as at 31 December 2023:

24-13155 131/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

Table IV.67
Open commitments
(Thousands of United States dollars)

31 December 2023 31 December 2022

Management budget 6 465 5 133

Project-related commitments 851 363 1 099 249

Total open commitments 857 828 1 104 382

Of which:
Commitments for property, plant and equipment 1 017 867
Commitments for intangible assets – 17

132/146 24-13155
 United Nations Office for Project Services
Notes to the 2023 financial statements (continued)
24-13155

Note 26
Reconciliation of the statement of comparison of budget and actual amounts
Table IV.68
Statement of comparison of original and final budget amounts
(Thousands of United States dollars)

Biennial
2022–2023 2023 2023 Variance
management management management between
budget budget budget original and
final 2023
Original Original Final budget Percentage Explanation

Revenue on budget basis 200 511 100 255 125 087 24 832 25 Management fee projections changed following the budget
estimates formulation
Response plan-related investments from – – 11 800 11 800 100 Executive Board decision 2023/4 related to the comprehensive
reserves response plan

Total revenue for the period 200 511 100 255 136 887 36 632 37

Management resources
Posts 31 259 15 629 25 107 9 478 61 Increase reflects the implementation of Board of Auditors’
Common staff costs 23 087 11 544 18 181 6 637 58 recommendation related to ensuring that the core structures are
resourced with appointments under United Nations staff regulations
and rules
Travel 8 724 4 362 5 782 1 420 33 Anticipation of increased travel plans in 2023
Consultants 100 999 50 499 61 070 10 571 21 Harmonization with the wider United Nations guidance on cost-
recovery
Operating expenses 12 987 6 494 7 513 1 019 16 Overall increase in estimation of office operation costs at
headquarters and regions
Furniture and equipment 1 410 705 2 234 1 529 217 Budget increase to ensure improved funding for the enhancement of
UNOPS enterprise resource planning and associated assets
Reimbursements 2 800 1 400 5 200 3 800 271 Harmonization with the wider United Nations guidance on cost
recovery
Response plan-related investments from – – 11 800 11 800 100 Executive Board decision 2023/4 related to the comprehensive
reserves response plan

Total use of management resources 181 266 90 633 136 887 46 254 51

A/79/5/Add.11
Write-offs, provisions and contingency surplus 19 245 9 622 – (9 622) (100)

Total use of resources 200 511 100 255 136 887 36 632 37
133/146
 A/79/5/Add.11
134/146

Table IV.69
Statement of comparison of budget and actual amounts
(Thousands of United States dollars)

Biennial
2022–2023 2023 2023 2023
management management management actual Difference
budget budget budget amounts between
final budget
Original Original Final Actuals and actuals Percentage Explanation

Revenue on budget basis 200 511 100 255 125 087 115 076 (10 011) (8)
Response plan-related investments from – – 11 800 8 742 (3 058) (26) Reflects actual use against the first tranche approved under
reserves the Executive Board decision 2023/4 related to the
comprehensive response plan

Total revenue for the period 200 511 100 255 136 887 123 818 (13 069) (10)

Management resources
Posts 31 259 15 629 25 107 20 364 (4 743) (19)
Common staff costs 23 087 11 544 18 181 15 740 (2 441) (13)
Travel 8 724 4 362 5 782 6 310 528 9
Consultants 100 999 50 499 61 070 59 130 (1 940) (3)
Operating expenses 12 987 6 494 7 513 8 011 498 7
Furniture and equipment 1 410 705 2 234 1 901 (333) (15)
Reimbursements 2 800 1 400 5 200 5 774 574 11
Response plan-related investments from – – 11 800 8 742 (3 058) (26) Reflects actual use against the first tranche approved under
reserves the Executive Board decision 2023/4 related to the

Notes to the 2023 financial statements (continued)

comprehensive response plan

Total use of management resources 181 266 90 633 136 887 125 972 (10 915) (8)

United Nations Office for Project Services

Write-offs, provisions and contingency surplus 19 245 9 622 – 1 124 1 124 100 UNOPS does not budget internally for write-offs, provisions
or contingency surplus

Total use of resources 200 511 100 255 136 887 127 096 (9 791) (7)

Net revenue on budget basis – – – (3 278) (3 278) (100)

24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

Table IV.70
Statement of comparison of response plan budget and actual amounts
(Thousands of United States dollars)

2023 2023
management actual Difference
budget amounts between final
budget and
Final Actuals actuals Percentage

Response plan-related investments

from reserves 11 800 8 742 (3 058) (26)
Management resources
Posts 676 305 (371) (55)
Common staff costs 489 355 (134) (27)
Travel 388 251 (137) (35)
Consultants 10 088 5 358 (4 730) (47)
Operating expenses 159 873 714 449
Furniture and equipment – 1 600 1 600 100
Reimbursements – – – –

Total use of resources 11 800 8 742 (3 058) (26)

Net revenue on budget basis – – – –

282. The UNOPS budget and accounting bases are different. The statement of
financial performance (statement II) is prepared on an accrual basis, whereas the
statement of comparison of budget and actual amounts (statement V) is restricted to
the management budget, including the net surplus earned on projects. It does not
include the revenue and expenses incurred on projects, nor does it include finance
income or exchange gains/losses.
283. The cost classifications presented in statement V reflect those that are approved
by the Executive Board of UNOPS. The differences between expenditure in statement
II and statement V are as follows:

Table IV.71
Differences between statements II and V

Treatment in statement V

Acquisition of property, plant and equipment Cash basis

Acquisition of intangible assets Cash basis

Depreciation and impairment of property, plant Excluded from UNOPS budget

and equipment

Amortization and impairment of intangible assets Excluded from UNOPS budget

Donated assets Excluded from UNOPS budget

Finance income Excluded from UNOPS budget

Exchange rate gains/losses Excluded from UNOPS budget

24-13155 135/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

284. The approved budget covers the biennium 2022–2023. The annual budget for
2023 was included in statement V.
285. The UNOPS financial regulations and rules specify that the Executive Director
has the authority to redeploy resources within the approved management budget and
to increase or reduce the total approved management budget allotment, provided that
the net revenue target established by the Executive Board for the budget period
remains unchanged. As a result, there are some line item differences between the
original and final budgets.

Reconciliation of actual amounts from budgetary basis to financial

statement basis
286. As required under IPSAS 24: Presentation of budget information, actual
amounts from statement V must be reconciled to net cash flows from operating
activities, investing activities and financing activities (as presented in statement IV,
statement of cash flows), separately identifying basis, timing and entity differences.
287. Basis differences occur when the approved budget is prepared on a basis other
than the accrual basis, as is the case for UNOPS.
288. Timing differences occur when the budget period differs from the reporting
period reflected in the financial statements. There are no timing differences for
UNOPS for purposes of comparison of budget and actual amounts.
289. Entity differences occur when the budget omits programmes or entities that are
part of the entity for which the financial statements are prepared.

Table IV.72
Reconciliation with the statement of cash flows
(Thousands of United States dollars)

Operating Investing Financing Total

Actual amount on comparable basis as

presented in the budget and actual
comparative statement (2 081) (1 197) – (3 278)
Basis differences (acquisition and disposal of
intangibles and property, plant and equipment) – – – –
Entity differences (18 779) (2 709) – (21 488)
Changes in working capital (69 355) – – (69 355)
Movement in investments – 300 438 – 300 438
Movement in interest received – 16 019 – 16 019
Distribution to donors – – (123 792) (123 792)

Subtotal (90 215) 312 551 (123 792) 98 544

Net foreign exchange gains/(losses) – – – –

Adjustment for fair value on cash equivalents – – – (566)

Actual amount in the statement of

cash flows (90 215) 312 551 (123 792) 97 978

136/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

Note 27
Segment reporting
290. Management has determined its reporting segments geographically, which is the
basis as in the statements of budget reporting provided to the UNOPS Executive
Director.
291. The UNOPS structure consists of six regions and headquarters, located in
Denmark. Headquarters as a segment is made up of four units: corporate functions;
delivery and partnerships; independent functions; and management and policy.
292. Segment revenue and expenses are those that are directly attributable to the
segment or can reasonably be allocated to the segment.
293. Segment assets and liabilities are those that can reasonably be allocated to the
segments. Any others are included under unallocable, in line with IPSAS 18: Segment
reporting.
294. UNOPS revenue, expenses, assets and liabilities are segmented as follows:

24-13155 137/146
 A/79/5/Add.11
138/146

Table IV.73
Segment revenue and expenses
(Thousands of United States dollars)

Europe and Central Latin America and Middle East New York
Africa region Asia region Asia region Headquarters Caribbean region region Portfolios Office Total

Revenue
Revenue from project activities 245 820 168 878 137 270 41 851 205 172 188 378 228 644 1 216 013
Miscellaneous revenue 3 470 3 572 – (7 065) 204 768 – 949
Non-exchange revenue – – – – – – – –

Total revenue 249 290 172 450 137 270 34 786 205 376 189 146 228 644 1 216 962

Expenses
Contractual services 97 287 56 988 19 662 16 560 83 402 86 997 89 608 450 504
Other personnel costs 60 790 54 049 52 318 53 443 50 806 18 438 54 039 343 883
Salaries and employee benefits 5 075 6 021 33 011 22 322 4 249 8 923 51 169 130 770
Operational costs 25 481 24 844 9 459 17 239 11 283 30 445 8 615 127 366
Supplies and consumables 35 176 11 596 3 877 4 933 38 257 31 999 9 686 135 524
Travel 11 987 12 319 7 009 4 069 3 447 1 105 7 097 47 033
Other expenses 1 080 (726) 156 185 (2 503) 4 416 (1 388)

Total expenses 236 876 165 091 125 492 118 751 188 941 177 911 220 630 1 233 692

Finance income – – – 63 672 – – – 63 672

Exchange rate gain/(loss) – – – (546) – – – (546)

Notes to the 2023 financial statements (continued)

Net finance income/(expense) – – – 63 126 – – – 63 126

United Nations Office for Project Services

Surplus before unallocated
expenses 12 414 7 359 11 778 (20 839) 16 435 11 235 8 014 46 396

Unallocated segment expenses

Depreciation of property, plant and
equipment – – – – – – – (3 596)
Amortization of intangible assets – – – – – – – (1 475)

Surplus/(deficit) for the period 12 414 7 359 11 778 (20 839) 16 435 11 235 8 014 41 325
24-13155
 United Nations Office for Project Services
Notes to the 2023 financial statements (continued)
24-13155

Table IV.74
Segment revenue and expenses – 2022 comparatives
(Thousands of United States dollars)

Latin America
Europe and Central and Caribbean Middle East New York
Africa region Asia region Asia region Headquarters region region service cluster Total

Revenue
Revenue from project activities 210 537 86 051 129 325 38 375 397 285 100 595 259 373 1 221 541
Miscellaneous revenue 159 1 789 5 583 107 240 – 2 883
Non-exchange revenue – – – – – – – –

Total revenue 210 696 87 840 129 330 38 958 397 392 100 835 259 373 1 224 424

Expenses
Contractual services 76 230 14 183 11 204 10 936 113 650 30 334 109 972 366 509
Other personnel costs 59 225 43 675 42 154 48 782 53 884 18 430 54 996 321 146
Salaries and employee benefits 4 784 5 019 28 928 18 036 3 320 8 303 53 550 121 940
Operational costs 27 792 10 428 18 265 15 252 16 233 18 424 12 047 118 441
Supplies and consumables 18 571 4 672 12 432 2 200 163 330 12 061 9 392 222 658
Travel 11 119 5 809 4 541 2 325 2 853 768 7 581 34 996
Other expenses 1 931 434 156 24 322 4 509 399 869 32 620

Total expenses 199 652 84 220 117 680 121 853 357 779 88 719 248 407 1 218 310

Finance income – – – (54 808) – – – (54 808)

Exchange rate gain/(loss) – – – 24 479 – – – 24 479

Net finance income/(expense) – – – (30 329) – – – (30 329)

Surplus before unallocated expenses 11 044 3 620 11 650 (113 224) 39 613 12 116 10 966 (24 215)

Unallocated segment expenses

Depreciation of property, plant and equipment – – – – – – – (3 474)
Amortization of intangible assets – – – – – – – (1 091)

Surplus/(deficit) for the period 11 044 3 620 11 650 (113 224) 39 613 12 116 10 966 (28 780)

A/79/5/Add.11
139/146
 A/79/5/Add.11
140/146

Table IV.75
Segment assets and liabilities
(Thousands of United States dollars)

Europe and Latin America New York Total for

Central Asia and Caribbean Middle East Portfolios allocated assets
Africa region Asia region region Headquarters region region Office and liabilities Unallocable Grand total

Assets
Non-current assets
Property, plant and equipment – – – – – – – – 17 629 17 629
Intangible assets – – – – – – – – 4 672 4 672
Long-term investments – – – 187 464 – – – 187 464 – 187 464
Other financial assets – – – – – – – – – –
Non-current accounts receivable – – – – – – – – – –

Total non-current assets – – – 187 464 – – – 187 464 22 301 209 765

Current assets
Inventories 3 218 6 14 – 237 – 6 336 9 811 – 9 811
Other assets – – – 1 247 – – – 1 247 – 1 247
Accounts receivable
Project accounts receivable – – – – – – – – 94 786 94 786
Prepayments 3 674 22 071 6 194 4 839 7 429 2 632 189 47 028 – 47 028
Other accounts receivable – – – – – – – – 213 984 213 984
Short-term investments – – – 2 516 861 – – – 2 516 861 – 2 516 861

Notes to the 2023 financial statements (continued)

Cash and cash equivalents – – – – – – – – 702 587 702 587

United Nations Office for Project Services

Total current assets 6 892 22 077 6 208 2 522 947 7 666 2 632 6 525 2 574 947 1 011 357 3 586 304

Total assets 6 892 22 077 6 208 2 710 411 7 666 2 632 6 525 2 762 411 1 033 658 3 796 069

Liabilities
Non-current liabilities
Employee benefits, long-term – – – – – – – – 84 902 84 902
Provisions – – – 172 – – – 172 – 172

Total non-current liabilities – – – 172 – – – 172 84 902 85 074

24-13155
 United Nations Office for Project Services
Notes to the 2023 financial statements (continued)
24-13155

Table IV.75
Segment assets and liabilities (continued)
(Thousands of United States dollars)

Latin America Total for

Europe and and New York allocated
Central Asia Caribbean Middle East Portfolios assets and
Africa region Asia region region Headquarters region region Office liabilities Unallocable Grand total

Current liabilities
Employee benefits, short-term – – – – – – – – 37 463 37 463
Accounts payable – – – – – – – – 563 607 563 607
Project cash advances received
Deferred revenue 370 112 323 844 284 930 34 275 344 206 384 133 63 522 1 805 022 – 1 805 022
Cash held on agency projects 282 103 169 462 281 262 37 609 183 267 31 328 9 989 995 020 – 995 020
Other liabilities – – – 7 787 – – – 7 787 – 7 787
Provisions 3 611 2 090 – 196 1 950 439 – 8 286 – 8 286

Total current liabilities 655 826 495 396 566 192 79 867 529 423 415 900 73 511 2 816 115 601 070 3 417 185

Total liabilities 655 826 495 396 566 192 80 039 529 423 415 900 73 511 2 816 287 685 972 3 502 259

A/79/5/Add.11
141/146
 A/79/5/Add.11
142/146

Table IV.76
Segment assets and liabilities – 2022 comparatives
(Thousands of United States dollars)

Europe and Latin America New York Total for

Central Asia and Caribbean Middle East service allocated assets
Africa region Asia region region Headquarters region region cluster and liabilities Unallocable Grand total

Assets
Non-current assets
Property, plant and equipment – – – – – – – – 18 393 18 393
Intangible assets – – – – – – – – 5 299 5 299
Long-term investments – – – 806 387 – – – 806 387 – 806 387
Other financial assets – – – – – – – – – –
Non-current accounts receivable – – – – – – – – – –

Total non-current assets – – – 806 387 – – – 806 387 23 692 830 079

Current assets
Inventories 2 535 37 21 – 1 535 – 7 595 11 723 – 11 723
Other assets – – – 5 340 – – – 5 340 – 5 340
Accounts receivable
Project accounts receivable – – – – – – – – 69 519 69 519
Prepayments 2 188 1 042 75 5 401 4 748 1 338 101 14 893 – 14 893
Other accounts receivable – – – – – – – – 61 386 61 386
Short-term investments – – – 2 079 129 – – – 2 079 129 – 2 079 129

Notes to the 2023 financial statements (continued)

Cash and cash equivalents – – – – – – – – 604 609 604 609

United Nations Office for Project Services

Total current assets 4 723 1 079 96 2 089 870 6 283 1 338 7 696 2 111 085 735 514 2 846 599

Total assets 4 723 1 079 96 2 896 257 6 283 1 338 7 696 2 917 472 759 206 3 676 678

Liabilities
Non-current liabilities
Employee benefits, long-term – – – – – – – – 75 186 75 186
Provisions 230 1 772 – 176 – – – 2 178 – 2 178

Total non-current liabilities 230 1 772 – 176 – – – 2 178 75 186 77 364

24-13155
 United Nations Office for Project Services
Notes to the 2023 financial statements (continued)
24-13155

Table IV.76
Segment assets and liabilities – 2022 comparatives (continued)
(Thousands of United States dollars)

Europe and Latin America New York Total for

Central Asia and Caribbean Middle East service allocated assets
Africa region Asia region region Headquarters region region cluster and liabilities Unallocable Grand total

Current liabilities
Employee benefits, short-term – – – – – – – – 35 955 35 955
Accounts payable – – – – – – – – 453 888 453 888
Project cash advances received
Deferred revenue 233 732 197 676 112 270 73 013 346 384 277 136 71 097 1 311 308 – 1 311 308
Cash held on agency projects 218 030 264 011 299 000 9 910 596 742 44 797 9 323 1 441 813 – 1 441 813
Other liabilities – – – 20 708 – – – 20 708 – 20 708
Provisions 2 960 1 337 – 222 6 647 439 – 11 605 – 11 605

Total current liabilities 454 722 463 024 411 270 103 853 949 773 322 372 80 420 2 785 434 489 843 3 275 277

Total liabilities 454 952 464 796 411 270 104 029 949 773 322 372 80 420 2 787 612 565 029 3 352 641

A/79/5/Add.11
143/146
 United Nations Office for Project Services
A/79/5/Add.11 Notes to the 2023 financial statements (continued)

Note 28
Related parties
295. UNOPS is governed by an Executive Board, mandated by the General Assembly,
which is responsible for overseeing the work of UNOPS, UNDP and the United
Nations Population Fund (UNFPA). The Executive Board is a related party, given that
it exercises significant influence over UNOPS as governing body.
296. The activities of UNOPS are overseen by the Executive Board and UNOPS
reimburses part of the travel costs, subsistence allowances and office expenses
incurred by members of the Board in discharging their official duties, as well as a
share of the cost of the secretariat of the Board. There were no travel-related costs in
relation to the Executive Board during 2023. Members of the Executive Board are
elected each year by the Economic and Social Council in accordance with the rules
of procedure on membership. Executive Board members are not considered key
management personnel of UNOPS as defined under IPSAS.
297. UNOPS considers UNDP and UNFPA to be related parties, given that all three
organizations are subject to common control by the Executive Board. UNOPS has a
range of working relationships with UNDP and UNFPA. All of the transactions
between UNOPS and the other two organizations are conducted at arm’s length. The
inter-agency transactions were consistent with normal operating relationships
between the organizations and were undertaken on terms and conditions that are
normal for such transactions.

Key management personnel

298. The table below provides information on the aggregate remuneration of the
executive management personnel.

Table IV.77
Key management personnel
(Thousands of United States dollars)

31 December 2023 31 December 2022

Number of individuals 16 11
Aggregate remuneration:
Base compensation and post adjustments 2 985 1 941
Other entitlements 599 302
Post-employment benefits 1 000 656

Total remuneration 4 584 2 899

Outstanding advances against entitlements 80 89

Outstanding loans – –
After-service health insurance, repatriation grant and
leave liability a 2 686 1 301
a
The after-service health insurance, repatriation grant and death benefit liability disclosed here
include values for both the Executive Director and the former Deputy Executive Director.

299. For the purpose of this disclosure, key management personnel include the
Executive Director and staff members of the management team. The Executive
Director has the overall authority and responsibility to plan, lead, direct and control
the activities of the organization. The management team is an internal coordination
forum that supports the Executive Director in the strategic positioning of UNOPS.

144/146 24-13155
United Nations Office for Project Services
Notes to the 2023 financial statements (continued) A/79/5/Add.11

300. The aggregate remuneration of the key management personnel is based on a full-
time equivalent basis and includes net salaries, post adjustment, entitlements such as
representation allowance, rental subsidy, relocation grant and the costs of pension,
after-service health insurance and repatriation grant in accordance with the Staff
Regulations and Rules of the United Nations.
301. These financial statements disclose key management personnel remuneration
and post-employment liabilities directly attributable to the individuals.
302. In 2023, there were no known instances of executive management personnel
facing conflicts of interest that could potentially influence decision -making, either
stemming from the ordinary course of business or with regard to business
relationships with family members, other related individuals or vendors.
303. The appointed UNOPS Executive Director assumed duties in 2023. In addition,
the position of Deputy Executive Director, which had been vacant since March 2020,
was filled in 2023. In September 2022, the UNOPS Executive Board approved the
creation of a position for a second Deputy Executive Director. This position is still
vacant.

Note 29
Events after reporting date
304. The financial statements were approved for issue on the date on which the Board
of Auditors signed the audit opinion. None other than UNOPS has the authority to
amend these financial statements.
305. As at the date of signature of the UNOPS financial statements and related notes
for the period ended 31 December 2023, no other material events, favourable or
unfavourable, have occurred between the balance sheet date and the date on which
the financial statements were authorized for issue that would have affected the
statements.

24-13155 145/146
A/79/5/Add.11

Annex
United Nations Office for Project Services individual contractors
provident fund summary for the period ended 31 December 2023

(Thousands of United States dollars)

2023 2022

Opening balance as at 1 January 106 329 100 818

Contribution/premium 33 104 29 527
Payouts (20 240) (16 644)
Funds not earmarked for the fund 940 1 475
Earnings/(losses) 8 915 (8 847)

Closing balance as at 31 December 129 048 106 329

Non-earmarked contributions of the UNOPS provident fund consist of

UNOPS/project contributions and related positive/negative interest that the member
has not been able to withdraw upon separation owing to vesting rules set forth in the
UNOPS provident fund policy. The non-earmarked contributions are fully directed
into the default fund of the UNOPS provident fund, but, like all financial assets of the
UNOPS provident fund, are kept separate from the other financial assets of UNOPS.
In line with the UNOPS provident fund principles, UNOPS may charge justified
administrative or similar costs to non-earmarked contributions of the UNOPS
provident fund. The table below provides details on the non-earmarked contributions
for the period.

(Thousands of United States dollars)

2023 2022

Opening balance of the non-earmarked contributions 7 362 7 082

Change in non-earmarked contributions within the period 1 607 774
Total expenses against non-earmarked contributions, following provident
fund principles
Payment attributed to UNOPS personnel – (38)
Payment attributed to provident fund administrator or investment adviser (393) (392)
Payment attributed to services benefiting all members (269) (64)

Total expenses against non-earmarked contributions (662) (494)

Closing balance as at 31 December 8 307 7 362

24-13155 (E) 120924

*2413155*

146/146 24-13155