Financial Report of the Directorhist.library.paho.org/English/OD/47565.pdffinancial statements of the Pan American Health Organization for the financial year 1 January to 31 December

Official Documents

of the

Pan American Health Organization

No. 68

Financial Report of the Directorand

Report of the External Auditor

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1 January -31 December 1965

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PAN AMERICAN HEALTH ORGANIZATION

Pan American Sanitary Bureau, Regional Office of the

WORLD HEALTH ORGANIZATION

April 1966

, F --- i- -

Official Documents

of the

Pan American Health Organization

No. 68

Financial Report of the Directorand

Report of the External Auditor1 January-31 December 1965

TE N/o

s1NG.&4


Pan American Sanitary Bureau, Regional Office of the


525 Twenty-third Street, N.W.

Washington, D.C. 20037, U.S.A.

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CONTENTS

Page

REPORT OF THE DIRECTOR

Letter of Transmittal iiiIntroduction 1

PAHO Regular, Special and Trust Funds

Notes 10Exhibit I: Statement of Appropriations, Obligations and

Balances for the year 1965 14Exhibit II: Statement of Income and Expenditure for the

1965 Budget 17Exhibit III: Statement of Assets and Liabilities as of

31 December 1965 1BExhibit IV: Consolidated Statement of Income and Expenditure

for the Financial Year 1965 and Status of Fundsas of 31 December 1965 20

Schedule 1: Investments as of 31 December 1965 22Schedule 2: Statement of Quota Contributions due from Member

Governments and Participating Governments 23Schedule 3: Statement of Procurement Services Effected on

Behalf of Government Administrations, PublicInstitutions, etc. 25

Schedule 4: Emergency Procurement Revolving Fund Statementof Activity during 1965 26

Schedule 5: Special Malaria Fund - Statement of Income andExpenditure - Year ended 31 December 1965 27

Schedule 6: Community Water Supply Fund - Statement of Incomeand Expenditure - Year ended 31 December 1965 28

Schedule 7: Building Fund - Statement of Income andExpenditure - Year ended 31 December 1965 29

Schedule 8: Status of Trust Funds as of 31 December 1965 30

Institute of Nutrition of Central America and Panama

Exhibit. V: Statement of Appropriations, Obligations andBalances for the year 1965 32

Exhibit VI: Statement of Income and Expenditure for the1965 Budget 33

Exhibit VII: Statement of Assets and Liabilities as of31 December 1965 34

Schedule 9: Statement of Quota Contributions due fromMember Countries as of 31 December 1965 35

Schedule 10: Statement of Trust Funds as of 31 December 1965 36

ii

Page

Organization of American States-Program of Technical Cooperation

Exhibit VIII: Statement of Income and Expenditure for the yearended 31 December 1965 41

Exhibit IX: Statement of Assets and Liabilities as of31 December 1965 42

Schedule, 11: Status of Allocations as of 31 'December 1965 43

Informational Annex - Summary and Distribution of Expenditure

Summary of Expenditure by Source of Fund 47Summary by Object of Expenditure - All Funds-1965 48Summary by Object of Expenditure - 1965 PAHO Budget 49Statement of Expenditure by Budget Parts and I:dividual

Project - All Funds-1965 50

REPORT OF THE EXTERNAL AUDITOR

Letter of Transmittal 61Report of the External Auditor on the Audit of the Accounts of

the Pan American Health Organization for the Financial Year 1965 63

iii

LETTER OF TRANSMITTAL

In accordance with the provisions of Article XI of

the Financial Regulations, I have the honor to submit the

financial statements of the Pan American Health Organization

for the financial year 1 January to 31 December 1965.

The details of the presentation of the financial

statements will be found in the Introduction.

RDo. L

Directorican Sanitary Bureau

FINANCIAL REPORT OF THE DIRECTOR

Introduction

The Financial Report of the Director for the year 1 Januaryto 31 December 1965 is presented in the respective exhibits andschedules listed in the Table of Contents for the following activi-ties of the Pan American Health Organization:

PAHO Regular, Special and Trust FundsInstitute of Nutrition of Central America and PanamaOrganization of American States - Technical CooperationProgram

Following the Financial Report there is an Informational Annexcontaining a sulmmary and distribution of expenditure for PAHO and WHOpresented according to source of funds, object of expenditure andindividual project.

This document also contains the Report of the External Auditor.

Financial Situation

The Director is pleased to report that the Pan American HealthOrganization is in sound financial condition. The Working Capital Fundstands at the highest percentage level since the beginning of 1958.Reserves have been established to meet termination costs. The picturewith respect to quota contributions has improved considerably, so thatthe income in 1965 exceeded the authorized budget level. The improvedlevel of quota contributions is due in considerable measure to Article6B of the PAHO Constitution which became effective in 1965, as well asto improvement in the national economies of several countries.

The satisfactory financial condition is due to long term policieson expenditures, working capital fund and reserves. First was the policyadopted in 1959 to maintain expenditures within income, staying below theauthorized budget if necessary. The result, as shown in Table B on page7, has been a modest but steady annual growth in program, somewhat belowthe authorized budget level but within available resources. This wasaccomplished without depletion of the Working Capital Fund, since expen-ditures for the period 1958 - 1965 were lower than income by $414,279

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Working Capital Fund

The second main policy was to achieve a long term solution tothe problem of building and maintaining an adequate Working CapitalFund. The foundation was established when the Directing Council in1959 instructed the Director to include in the PAHO Regular Budgetfor 1961 and future years an amount for gradually increasing andmaintainirLg the Fund at its authorized level. A study of Table C onpage 8 will show the Working Capital Fund on 1 January 1966 at itahighest percentage level since 1958, thus confirming the wisdom ofthe policy adopted by the Directing Council. However, the amount nowbudgeted for the Working Capital Fund will barely maintain the currentlevel. Consequently, a study is being undertaken, with due regard forthe changing size and nature of the budget, to determine before prepa-ration of the provisional budget for 1969 the level required to assureadequate financing of operations pending receipt. of quotas.

Reserve for Termination Costs

The third policy, adopted in 1962 was to expand on a gradualbasis the partial reserves for repatriation entitlements and servicebenefita to include all termination costs. ThiE: was especially impor-tant to insure the Organization against risks arising out of the un-certainty of granta and voluntary contributions. This reserve is nowsubstantially complete for most of the voluntary funds. A reserve forINCAP funds was commenced in 1965.

In 1965 the reserve for PAHO Regular was further increased. Theresult is that the Organization has assured capicity to meet futurefinancial obligations which may arise from program terminations withoutdanger to the PAHO Regular Budget or the Working Capital Fund.

Financial Activities in 1965

To facilitate analysis of the combined activities of the PanAmerican Health Organization and the World Health Organization, Table Aon page 6 presents a comparison of estimated amounts shown in the budgetdocument (see Table 1 on page 6 of Official Doclments NQ 61), withamounts actually available during the year, and amounts obligated. Itwill be noted that for all PAHO funds the amount; available was 105 percent of t1he budget figure. For all WHO funds the amount availablerepresented 103 per cent of the budget figure shown in OD 61.

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For the PAHO Regular program 99.99 per cent of the authorizedbudget level was available for obligation, and 99.99 per cent wasobligatedo Among the other PAHO funds the utilization is variable.In the case of Community Water Supply an effort was made to conservefunds for future years when reduced contributions are expected. Ap-proximately half of the funds were retained by absorbing part of the

water supply activities in the regular programs of PAHO and WHO.Amounts available for PAHO Grants and Other Contributions and forINCAP and Related Grants exceeded the budgeted amounts, but a portion

of these grant funds will remain available for expenditure in 19660

Further information for analysis of activities in 1965 isavailable in the Informational Annex.

Budget Income - PAHO Regular

Income for 1965 shown in Exhibit II is $7,255,434, which is100.9 per cent of the authorized budget, compared to an average of95 per cent for the period 1958 - 1965 (see Table B).

Current quota payments for 1965 were 78 per cent, compared toan average of 76.4 per cent for the period 1958 - 1964. Payment of

quota in arrears was 47.6 per cent of the amount due, compared to 40per cent in 1964 (excluding the late 1963 quota payment of $1,000,000received early January 1964).

On 1 January 1966 five countries were in arrears in excess oftwo years as compared to six on 1 January 1965.

Income during 1965 from sources other than quotas amounted to$255,320 compared to $184,752 in 1964. The increase is due largely tomore income from intereste

Obligations-PAHO Regular

Obligations for the year were $7,189,494, representing 99.99 percent of the authorized level. As shown in Table B, obligations averaged94 per cent for the period 1958 - 19650

To fulfill the agreement with the W. K. Kellogg Foundation anamount of $250,000 was contributed to the Special Fund for Health Promotionas shown in Exhibit IV. Of this an amount of $156,000 was expended,

-4-

leaving $94,000 available for program in future ;years in additionto the balance of $250,000 at the end of 1964. 'rhe obligationsunder PAHCO, as shown in Exhibit I, also include an amount of$300,000 budgeted for increasing the Working Capital Fund and$25,000 for increasing the Emergency .Revolving Fund as authorizedin the bud.get for 1965.

Expenditures - PAHO Other Funds

Special Malaria Fund expenditures were $1,577,466 in 1965,compared to $2,155,311 in 1964. The reduction is related to anincrease in the amount available under WHO-MESA and also to thefact that the Reserve for Termination Costs did not require anyallocation from the PAHO Special Malaria Fund in 1965.

Coumnunity Water Supply Fund expenditures were $177,000compared to $341,631 in 1964. Due to expectation of a reductionin voluntary contributions in future years and the consequent desireto retard depletion of the Fund, much of the water program wascarried out under the regular programs of WHO ar.d PAHO. This resultedin a balance of $174,085 which is available for water program in 1966and future years.

Expenditures for Grants and Other Contributions were $653,226in 1965 compared to $659,815 in 1964.

With respect to INCAP and Related Grants the expenditures were$1,134,161 in 1965 compared to $700,369 in 1964",

Expenditures - Other

In addition to the expenditures shown undler the respective sourcesof funds it should be mentioned that the Organi:sation disbursed an amountof $220,9D3 for supplies and equipment purchased on behalf of Governmentadministrations and public institutions in the Americas. Also on behalfof WHO Headquarters, other WHO Regional Offices and other agencies anamount of *ver $1,250,000 was disbursed, principally in connection withpayments for WHO fellows and procurement of supplies and equipmento Anamount of $1,199,744 was disbursed on behalf of the Organization ofAmerican States to support health services in the Dominican Republic°

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Emergency Revolving Fund

As mentioned earlier, $25,000 was appropriated in the 1965 budgetto increase the Emergency Revolving Fund to $75,000. Although Schedule 4shows a cash balance of $46,629, the available balance for new requests,after deducting obligations for orders in process, was only $19,501. Earlyin 1966 additional requests were received which exhausted the Fund° It isplanned to recommend to the Governing Bodies a further increase in theFund to meet the heavier demand for emergency purchases.

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Notes

These explanatory notes are given to facilitate the study ofvarious items in the Exhibits for which supporting schedules are notprovidedc or which may not be self-evident.

INCOME AND EXPENDITURE ( Exhibit II )

Sale of Equipment

The total of $ 18,149 represents proceeds from the sale ofobsolete office furniture and equipment.

Sundry Income

Consists of various refunds for items; expended in prior years:

Personal Services and AllowancesTravel and TransportationFellowship StipendsInsurance ClaimsOther

$ 1,0165,756

135170

1,170

$ 8,247

ASSETS ( Exhibit III)

Accounts Receivable and Deferred Charges

This is self explanatory except for s~undrybroken down as follows:

Emergency Procurement Revolving FPndMiscellaneous DebtorsPersonal Accounts:For Travel 101,746For Salaries 1,187For Medical Expenses 5,373For Pension 6,234Other 8,817

debtors, which is

$ 28,371 1/380,735-

123,357

$ 532,463

- 11 -

The major portion of this amount comprises the following:

a) payments to travel agencies fortransportation not yet accounted for 9,970

b) building services contractor:Solem Maintenance Company 10,000

c) for reimbursable expenditures:

Government of Mexico 2,000Government of Venezuela 8,403Interamerican Development Bank 9,695Instituto Oswaldo Cruz 529National Bank of the Republic

of Haiti 36,000National Institutes of Health 118,754UNICEF 65,253United States of America 45,081

d) advances for various projects pendingaccounting from:

Haytian Tractor and Equipment Co. 3,161Institute of Microbiology ofRio de Janeiro, Brazil 1,873

Ministerio de Salud Publica,Bogota, Colombia 50,476

Ministerio de Salud Publica yAsistencia Social, El Salvador 940

Hospital del Salvador- Referenceand Training Center, Chile 4,163

Capital Assets

Tie amount of $ 6,528,596 represents the recorded book value ofland and buildings of the Headquarters of the Pan American Health Organ-ization in Washington, D. C., Zone Office in Buenos Aires, Argentina andZone Office in Rio de Janeiro, Brazil.

LIABILITIES (Exhibit III)

Unliquidated Obligations

Unliquidated obligations amounting to $ 1,115,177 represent theestimated amount required to liquidate outstanding liabilities pertainingto 1965 Budget and Special Funds. Included in this amount is $ 342,181,the outstanding balance of 1965 fellowship awards. The other principalitems are personnel costs including travel and supplies and equipment.

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Accrued Service Benefit, Termination and Repatriation Entitlements

Under the Staff Rules terminating staff members are entitled tocertain payments, such as payment for unused leave, service benefit allow-ances, cost; of repatriation, etc.. For some years, the Bureau has followedthe policy of setting aside .funds in an undivided. reserve to cover thesecosts. Staff entitlement to Service Benefit having ended 31 December 1965,the remain-ing balance of this reserve will be transferred in 1966 to theundivided reserve for terminal costs.

Trust Funda

Trust Funds fall into two groups, namely Grants and Contributions,as shown on Schedule 8.

FINANCIAL STATEMENTS

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PAN AMERICAN HEALTH

STATEMENT OF APPROPRIATIONS, OBLIGATIONS

(Expressed in

Appropriations

Purpose of Appropriations

Original Transfers

REGULAR BUDGET FOR 1965

PART I PAN AMERICAN HEALTH ORGANIZATION 204,775 24,167

PART II PAN AMERICAN HEALTH ORGANIZATION -HEADQUARTERS 2,171,084 12,397

PART III PAN AMERICAN HEALTH ORGANIZATION -FIELD AND OTHER PROGRAMS 4,239,141 (36,564)

Sub-tota.l, Appropriations forParts I, II and III 6,615,000 -

PART IV SPECIAL FUND FOR HEALTH PROMOTION 250,000 -

PART V AMOUNT FOR WORKING CAPITAL FUND 300,000 -

AMOUNT FOR EMERGENCY PROCUREMIENTREVOLVING FUND 25,000 -

Total, Appropriations for 1965 Budget 7,190,000 -

- 15 -EXHIBIT I

ORGANIZATION

AND BALANCES FOR THE YEAR 1965

U.S. Dollars)

ObligationsBalance

Expired

Effective Liquidated Unliquidated Total

228,942 190,696 38,246 228,942 -

2,183,481 2,070,806 112,675 2,183,481 -

4,202,577 3,503,980 698,091 4,202,071 506

6,615,000 5,765,482 849,012 6,614,494 506

250,000 250,000 - 250,000 -

300,000 300,000 - 300,000 -

25,000 25,000 - 25,000 -

7,190,000 6,340,482 849,012 7,189,494 506

For the DirectorPan American Sanitary Bureau

Stuart PortnerChief of Administration

The above statement has been examinedin accordance with my directions. Ihave obtained all the information andexplanations that I have required, andI certify, as a result of the audit,that, in my opinion, the above statementis correct.

Uno BrunskogExternal Auditor

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STATEMENT OF INCOME AND EXPENDITURE FOR THE 1965 BUDGET

(Expressed in U.S. Dollars)

INCOME

Contributions from Member Governments andParticipating Governments: ( Schedule 2 )

Receipts in respect to 1965 assessmentsReceipta in respect to prior years' assesaments

Miscellaneous Income

Interest earnedService fees for procurements made for Governments

and InstitutionsSale of EquipmentSale of PublicationsSundry

Total Miscellaneous Income

Excess of Reserve for Unliquidated Obligations 1964

Total Income

EXPENDITURE

Personnel CostsDuty TravelFellowshipsSeminarsProject Supplies and EquipmentProject Grants and OtherNon-Project Supplies and EquipmentNon-Project Common Services and Other

Total Expenditure for Operations

Excess of Income over Expenditure

Less: Appropriations for Parte IV and V

Contribution to Special Fund for Health PromotionBudget Provision to increase Working Capital FundBudget Provision to increase Emergency Procurement

Revolving Fund

5,622,6251,377,489

175,962

6,03518,1492,8578,247

211,250

44,070

7,255,434

4,222,794279,476604,055113,954270,151372,8802,71,203479,981

6,614,494

640,940

SURPLUS - Transferred to Working Capital Fund


Us$ 65,940

The above statement has been examined inaccordance with my directions. I haveobtained all the information and explana-tions that I have required, and I certify,as a result of the audit, that, in myopinion, the above statement is correct.


Uno BrunskogExternal AuditSr

EXHIBIT II

7,000,114

250,000300,000

25,000 575,000

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PAN AMERICAN HEALTH

STATEMENT OF ASSETS AND LIABILITIES

(Expressed in

ASSETS

CASH

In Banks and on Hand:

US Dollar currencyOther currencies

INVESTMENTS

Securities at Cost ( Schedule 1 )

ACCOUNTS RECEIVABLE

Quota Contributions Receivable from MemberGovernments and Participating

Governmenta ( Schedule 2 )

Less: Reserves for Non-CollectedContributions

Governments and Institutiona forProcurements ( Schedule 3 )

Organization of American StatesTechnical Cooperation Program

for Reimbursable Expenditures

World Health Organization (Balancedue from WHO - Inter-Organization

'unding of Activities

Sundry Debtors and Deferred ChargesLess: Reserve for Doubtful Accounts

CAPITAL ASSETS

Land and Buildings

Leas: Contra-Land and Buildings

5,832,910

3,068,148

3,068,148

398

2,253

15,775

532,4631,224

PREPAID EXPENSE

USt 7,568,600

892,184289,693 1,181,877

531,239 549,665

6,528,596

6,528,596

4,148

Total

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EXHIBIT III

ORGANIZATION

AS OF 31 DECEMBER 1965

U. S. Dollars)

LIABILITIES

QUOTA CONTRIBUTIONS RECEIVED IN ADVANCE

Government of ColombiaGovernment of Dominican RepublicGovernment of Honduras

UNLIQUIDATED OBLIGATIONS

Appropriations for Budget 1965Special Fund for Health PromotionSpecial Malaria FundTrust Funds

ACCOUNTS PAYABLE

Institute of Nutrition of Central Americaand Panama (Cash and Investments held

in Trust for INCAP)

Advances from Governments and Institutionsfor Procurements ( Schedule 3 )

Other Accounts Payable

ACCRUED TERMINATION AND REPATRIATION ENTITLEMENTS

ACCRUED SERVICE BENEFITS

INSURANCE EQUALIZATION ACCOUNT

STAFF HEALTH INSURANCE FUND

SPECIAL FUNDS

Emergency Procurement Revolving Fund ( Schedule 4 )Building Fund ( Schedule 7 )Special Malaria Fund ( Schedule 5 )Community Water Supply Fund ( Schedule 6 )Health Promotion FundTrust Funds ( Schedule 8 )

WORKING CAPITAL FUND

Balance as of 1 January 1965Add: Budget Provision 1965

Excess of Income over Expenditure 1965

Total



2,473,480300,00065,940 2,839,420

USS 7,568,600

The above statement has been examined inaccordance with my directione. I haveobtained all the information and explana-tions that I have required, and I certify,as a result of the audit, that, in myopinion, the above statement is correct.


41,64240

646

868,20120,720225,535

721

183,915

342,586

41,310

75,000593,120

174,085344,000428,173

42,328

1,115,177

567,811

1,103,158

107,113

36,887

142,328

1,614,378

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PAN AMERICAN HEALTH

CONSOLIDATED STATEMENT OF INCOME AND

AND STATUS OF FUNDS AS

(Expressed in

~~Budget WorkiEmergencyBudget Working195 Capital YProcurementfor Capital

1965 Fund RevolvingFund

BALANCES AS OF 1 JANUARY 1965 - 2,473,480 50,000

INCOME

Contributions from Member Governmentsand Participating Governments 7,000,114

Voluntary Contributions

Grants

Miscellaneous Income 211,250

Sale of former Headquarters Buildings

Advanced by Pan American Health Organization

Excess of Reserve for UnliquidatedObligations 196,4 44,070

7,255,434 2,473,480 50,000

EXPENDITURE (6,614,494)

Contribution to Special Fundfor Health Promotion (250,000)

Budget Provision to IncreaseWorking Capital Fund (300,000) 300,000

Budget Provision to Increase EmergencyProcurement Revolving Fund (25,000) 25,000

1965 SURPLUS TO WORKING CAPITAL FUND (65,940) 65,940

BALANCES AS OF 31 DECEMBER 1965 - 2,839,420 75,000

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EXHIBIT IV

ORGANIZATION

EXPENDITURE FOR THE FINANCIAL YEAR 1965

OF 31 DECEMBER 1965

U. S. Dollars)



The above statement has been examined inaccordance with my directions. I haveobtained all the information and explanationsthat I have required, and I certify, as aresult of the audit, that, in my opinion, theabove statement is correct.

Uno BrunskoExternal Auditor

iSpecal Community SpecialBuilding Maaria Water Fund TrustFund Fund Supply for Health Funds

Fund Promotion

3,060,523 474,861 17,032 250,000 452,676 6,778,572

7,000,114

1,003,050 325,971 1,329,021

401,700 401,700

46,371 44,623 5,931 308,175

1,125,000 1,125,000

45,081 227,023 272,104

9,851 2,151 56,072

4,231,894 1,577,466 351,085 250,000 1,081,399 17,270,758(3,638,774) (1,577,466) (177,000) (156,000) (653,226) (12,816,960)

250,000

593,120 - 174,085 344,000 428,173 4,453,798

- 22 -

SCHEDULE 1


INVESTMENTS AS OF 31 DECEMBER 1965


Market ValueDescription Par Value Cost as of

31 December 1965

MEXICAN TELEPHONE STOCK

Mexican Pesos 32,000 at 12.50 2,560 2,562 2,739

U.S. OF AMERICA TREASURY BILLS

Maturing 13 January 1966 1,000,000 998,483 998,411Maturing 27 January 1966 500,000 496,530 498,350Maturing 17 February 1966 1,000,000 992,598 994,053Maturing 10 March 1966 1,000,000 980,333 991,375Maturing 22 June 1966 1,200,000 1,166,560 1,172,781

THE RIGGS NATIONAL BANKTime Deposits

Maturing 14 April 1966 1,000,000 1,000,000 1,000,000

U.S. OF AMERICA TREASURY BONDS

3% Maturing 15 February 1995 100,000 97,500 83,0633 1/4% Series of 1978-1983 100,000 98,344 84,688

Total Investments 5,902,560 5,832, 910 5,825,460

- 23 -SCHEDULE 2


STATEMENT OF QUOTA CONTRIBUTIONS DUE FROM MHMBER GOVERMENTSAND PARTICIPATING GOVERNMENTS

1965 BUDGET AND PRIOR YEARS


TotalMember Governments Balance Collected Bal

and Year due During dueParticipating Governments 1 January 1965 1965 31 ece31 December 1965

Argentina

Bolivia

Brazil

Chile

Colombia

Costa Rica

Cuba

Dominican Republic

Ecuador

El Salvador

France

Guatemala

Haiti

19651964196319621961

1965196419631962196119601959

1952-1958

19651964

19651964

1965

196519641963

19651964

1965

19651964

19651964

1965

1965

196519641963196219611960

521,824483,208417,601390,640229,859

21,27019,38018,25914,90614,10012,00011,90049,244

543,803494,836

137,546116,033

137,546

21,27019,380

822

116,276105,293

26,233

31,19610,270

21,27019,380

11,373

26,233

21,27019,38018,25914,90614,10012,000

151,506390,640229,859

31,421

187,500

21,513116,033

137,546

9,19119,380

822

2,507105,293

26,233

6,90010,270

19,380

11,373

26,233

9,27012,000

1,271,127

129,638

851,139

116,033

12,079

113,769

24,296

21,270

78,645

SCHEDULE 2 (continued)

Member Governmenta Balance Collected TotalBalanceand Year due DuringParticipating Governments 1 January 1965 1965 due

31 December 1965

Honduras

Jamaica

Mexico

Netherlands, Kingdom of The

Nicaragua

Panama

Paraguay

Peru

Trinidad and Tobago

United Kingdom

United States of America

Uruguay

Venezuela

Total-'

Amount consisted of:

Current Year

Prior Years

1965

1965

1965

1965

1965

1965196419631962

19651964196319621961

196519641963

1965

19651964

1965

196519641963196219611960

1965

21,270

21,270

390,659

8,538

21,270

21,27019,38018,2593,290

21,27019,38018,25914,90611, 100

52,46647,8041,715

21,270

21,27011,041

4,679,400

58,13852,97248,88745,23241,36035,200

198,520

21,270

21,270

390,659

8,538

21,270

5,31719,38018,2593,290

11,100

29,3301,715

21,270

13,61511,041

4,679,400

198,520

15,953

73,815

70,940

7,655

281,789

10,068,262 7,000,114 3,068,148

7,173,721 5,622,625 1,551,096

2,894,541 1,377,489 1,517,052

10,068,262 7,000,114 3,068,148

- 24 -

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- 26 - SCHEDULE 4


EMERGENCY PROCUREMENT REVOLVING FUND

STATEMENT OF ACTIVITY DURING ].965

(Expressed in U.S. Dollarsa

Balance due Expenditure Reimbursement Balance due1 January 1965 during 1965 during 1965 31 December 1965

Brazil 6,750 -- 6,750

Chile 18,399 - 9,100 9,299

Cuba 102 - 102 -

Dominican Republic - 200 _ 200

El Salvador - 467 467 -

Mexico - 14,240 10,000 4,240

Nicaragua 3,133 14,010 17,143 -

Panama - 888 - 888 ¡

Uruguay 6,860 - - 6,860

Venezuela 134 134

Total 35,378 29,805 36,812 28,371

: . _~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

STATUS OF FUND

AS OF 31 DECEMBER 1965

Cash in Bank

Accounts Receivable

46,629

28,371

Authorized Amount 75,000

SCHEDULE 5- 27 -


SPECIAL MALARIA FUND

STATEMENT OF INCOME AND EXPENDITURE

YEAR ENDED 31 DECEMBER 1965

(Expressed in UoS. Dollars)

BALANCE AS OF 1 JANUARY 1965

INCOME


Government of St. Kitts-Nevis-AnguillaGovernment of St. VincentGovernment of Trinidad and TobagoGovernment of the United States of America

7558

2,917 2/1,000,000 -


Interest earnedSundry


Excess of Reserve for Unliquidated Obligations 1964

Total

EXPENDITURE

Personnel CostsDuty TravelFellowshipsSeminarsProject Supplies and EquipmentProject Grants and Other

Total Expenditure

DEFICIT - Excess of Expenditure over Income

Covered by Portion of 1965 Pledge Receivable fromthe Government of the United States

BALANCE AS OF 31 DECEMBER 1965

1/ Amount consisted of:

Disbursements

1,096,833173,30813,23144,784

246,5272,783

1,577,466 1/

(45,081)

45,081 Z/

-0-

1,351,931

Unliquidated Obligations 225,535

US$ 1,577,466

2/ Balance of 1965 Pledge from Government of the UnitedStates amounting to $ 800,000 received on 10 January

1966.

474,861

1,003,050

41,8852,738

44,623

9,851

1,532,385

SCHEDULE 6- 28 -


COMMUNITY WATER SUPPLY FUND

STATEMENT OF INCOME AND EXPENDITURE

YEAR ENDED 31 DECEMBER 1965



INCOME


Government of HondurasGovernment of JamaicaGovernment of NicaraguaGovernment of PeruGovernment of the United States of America

Miscellaneous :Income

Interest earnedSundry


Excess of Rese:rve for Unliquidated Obligations 1964

Total

EXPENDITURE

Personnel CostsDuty TravelProject Supplies and EquipmentProject Grants and Other

Total Expenditure


17,032

10,0005,040

10,000931

300,000 325,971

5,366565

5,931

2,151

351,085

159,70016,0411,083

176

177,000

usa 174,085

SCHEDULE 7- 29 -


BUILDING FUND

STATEMENT OF INCOME AND EXPENDITUREYEAR ENDED 31 DECEMBER 1965


BALANCE AS OF 1 JANUARY 1965 3,060,523

INCOME

Interest earned 46,371

Proceeds from Sale of formerHeadquarters Buildings 1,125,000

4,231,894Total

EXPENDITURE

Personnel Costs

Building Construction Costs

Architect's Fees

Furniture, Carpeting and InterpretingEquipment

Legal Fees, Insurance and MiscellaneousCosts

32,720

2,845,536

42,774

672,615

45,129

Total Expenditure


3,638,774

US$ 593,120

- 3D -SCHEDULE 8


STATUS OF TRUST FUNDS AS OF 31 DECEMBER 19615


Unobligated Re:eived or Total UnobligatedParticulars Balance Receivable Balance

1 January 1965 Du:ring 1965 31 December 1965

GRANTS AND CONTRIBUTIONS FOR HEALTH PROJECTS

Agency for International Development (3 Grante) 70,387 21,851 41,894 50,344

American Cyanamid Company (1 Grant) 54,394 - 6,296 48,098

American Dental Association (1 Grant) - 10,000 10,000 -

Government of Argentina (3 Grants) 77,008 132,505 90,312 89,201

Gordon H. Dalsemer (1 Grant) 4,865 - 4,865 -

Foundation for International Child Health,Inc.(2 Grants) - 8,775 3,600 5,175

Foundation for International MedicalServices, Inc. (1 Grant) 376 - - 376

Foundation for Research in Psychiatry (1 Grant) 5,000 7,500 6,100 6,400

Inter-American Development Bank (2 Grants) - 9,694 9,694 -

W. K. Kellogg Foundation (6 Grants) 3,128 38,107 8,298 32,937

Robert H. Levi (1 Grant) 5,000 - 5,000 -

Milbank Memorial Fund (2 Grante) 10,926 104,204 60,648 54,482

National Bank of the Republic of Haiti (1 Grant) - 76,000 76,000 -

National Academy of SciencesNational Research Council (1 Grant) 592 - - 592

National Council of Research (1 Grant) - 6,093 5,868 225

Research Corporation, Williams-Waterman Fund (11 Grants) 66,041 33,028 44,377 54,692

Rockefeller Foundation (1 Grant) - 15,000 - 15,000

UNICEF (5 Grants) - 65,247 65,247 -

Unitarian Universaliet Service, Inc. (1 Grant) - 5,500 - 5,500

The Wellcome Foundation Ltd. (1 Grant) 5,725 - 60 5,665

National Institutes of Health (9 Grants) 149,234 111,503 201,251 59,486

GRANTS AND CONTRIBUTIONS FOR OTHER PURPOSES

Government of Venezuela

Contribution Towards Operation of Zone I Office - 12,712 12,712 -

National Health Planning _ 1,004 1,004

Total Grants and Contributions

INSTITUTE OF NUTRITION OF CENTRAL AMERICA

AND PANAMA

- 32 -

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- 33 -

INSTITUTE OF NUTRITION OF CENTRAL AMERICA AND PANAMA

ADMINISTERED BY PAN AMERICAN SANITARY BUREAU

STATEMENT OF INCOME AND EXPENDITURE FOR THE 1965 BUDGET


INCOME

Quota Contributions Received: ( Schedule 9 )

137,50020,000

In Respect to 1965 AssessmentsIn Respect to Prior Year's Assessments


INCAPARINA ServicesSale of Publications, Film, etc.Sale of EquipmentSale of Laboratory Animals and Farm ProduceTuition Fees Received - Nutrition CoursesSundry

Total Income

3,7982,106786

4,31613,7481,529

EXPENDITURE

Personnel Costs - Excluding Cost CentersDuty TravelSpace and Equipment ServicesOther ServicesSuppliesEquipmentCost Centers:

Transportation - VehiclesStatistical ServicesBuilding ServicesReading RoomClerical ServicesEditorial ServicesReproduction and Visual Aids

Gross Total Expenditure

Less: Amount Provided by( Schedule 10 )

56,54712,849

5317,6709,246

19,392

2,9782,1708,1648,183

17,6766,405

10,600

162,411

Trust Funda

Net Total Expenditure

Leas: Reserve for Accrued Annual Leave

54,581

107,830

75,95336,767

SURPLUS:

Excess of Income over Expenditure (Transferred to Working Capital Fund)


USS 39,186

The above statement has been examined inaccordance with ay directions. I haveobtained all the information and explana-tions that I have required, and I certify,as a result of the audit, that, in myopinion, the above statement is correct.


Uno Brunskog _External Auditor

EXHIBIT VI

157,500

26,283

183,783

-34

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ORGANIZATION OF AMERICAN STATES

PROGRAM OF TECHNICAL COOPERATION

EXHIBIT VIII- 41 -

ORGANIZATION OF AHERICAN STATES

PROGRAM OF TECHNICAL COOPERATION

ADMINISTERED BY PAN AMERICAN HEALTH ORGANIZATION

STATEMENT OF INCOME AND EXPENDITURE FOR THE YEAR ENDED 31 DECEHBER 1965



Less: Recalls in respect to:

Project AMRO-77, 1963 AllocationProject AMRO-77, 1964 AllocationProject 210, 1963 AllocationProject 210, 1964 Allocation

INCOME

Allocation of funds byOrganization of American States,

Program of Technical Cooperation, for

Continuation of Project AMRO-77 forPan American Foot and Mouth Disease Center


Excess of Reserves for Unliquidated Obligations 1964

Total Income

35,071

15,62118,107

405938 35,071

EXPENDITURE

Personnel Costs.Duty TravelFellowshipsProject Supplies and EquipmentProject Grants and Other

Total Expenditure


Amount consisting of:

Account Receivable from Organization ofAmerican States - Program of Technical

Cooperation

Excess of Reserves for Unliquidated Obligations 191




480,88619,96416,45298,94123,221

639,464

USS (46,637) 1/

56,557

64 (2,804)

(7,116)

USS 46,637

The above statement has been examined inaccordance with my directiona. I haveobtained all the information and explana-tions that I have required, and I certify,as a result of the audit, that, in myopinion, the above statement is correct.


582,907

7,116

2,804

592,827

- 42 -

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INFORMATIONAL ANNEX

SUMMARY AND DISTRIBUTION OF EXPENDITURE

- 47 -

SUMMARY OF EXPENDITURE BY SOURCE OF FUND


PAHO - Regular

PAHO - Special Fund for Health Promotion

PAHO - Special Malaria

PAHO - Community Water Supply

PAHO - Grants and Other Contributions

INCAP and Related Grants

OAS - Technical Cooperation Program

Sub-Total PAHO

PAHO - Building Fund

Total PAHO

$ 6,614,494

156,000

1,577,466

177,000

653,226

1,134,161

639,464

$ 10,951,811

3,638,774

$ 14,590,585


WHO - Regular

WHO - MESA

WHO - Technical Assisti

WHO - United Nations S8

WHO - Other

Total WHO

ance

pecial Fund

TOTAL PAHO/WHO

$ 3,316,424

527,653

1,144,215

235,447

71,954

$ 5,295,693

$ 19,886,278

1/ Does not include $ 300,000 budget provision for WorkingCapital Fund, $ 250,000 budget provision for Special Fundfor Health Promotion nor $ 25,000 budget provision forincrease to Emergency Procurement Revolving Fund.

1/

- 48 -

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REPORT OF THE EXTERNAL AUDITOR

- 61 -

Washington, D. C.30 March 1966

Sir:

I have the honour to transmit the financialstatements of the Pan American Health Organizationin respect of the year 1 January to 31 December 1965,which were submitted by the Director, Pan AmericanSanitary Bureau.

In accordance with the Financial Regulations,I have the honour to present my report with regardto the above-mentioned period.

I have the honour to be, Sir,

Your obedient servant,


The Chairman of thePan American Sanitary Conference,Pan American Health Organization

- 63 -

REPORT OF THE EXTERNAL AUDITORON THE AUDIT OF THE ACCOUNTS OF THEPAN AMERICAN HEALTH ORGANIZATIONFOR THE FINANCIAL YEAR 1965

1o Introduction

1.1 The audit of the accounts of the Pan American HealthOrganization for the financial year 1965 was carriedout in accordance with the terms of my appointment asthe External Auditor and Article XII of the FinancialRegulations of the Organization.

1.2 There has been no material change in either the scopeof the character of the audit compared with those ofearlier years. Transactions and accounts were examinedto the extent necessary to satisfy myself as to thecorrectness of the accounts. I have also examined thereports of the internal auditors and have been able toreview their work which has given me complete satisfaction.

103 With regard to the audit of the 1965 accounts and itsresult, I wish to state specifically that to my knowledgethere have been no cases of fraud or presumptive fraud.The financial transactions were carried out in conformitywith the rules, regulations and policies of the Organization.I consider that the management of the different funds ofthe Organization was good.

1.4 I have certified the correctness of the following financialstatements relating to the Pan American Health Organizationwhich have been transmitted to me by the Director:

Statement of Appropriations, Obligations and Balancesfor the year 1965 (Exhibit I);

Statement of Income and Expenditure for the 1965Budget (Exhibit II);

- 64 -

Statement of Assets and Liabilities as at31 December 1965 (Exhibit III);

Consolidated Statement of Income, and Expenditurefor the financial year 1965 and. Status of Fundsas at 31 December 1965 (Exhibi.t IV);

and the following statements relating; to the Instituteof Nutrition of Central America and E'anama which isadministered by the Pan American Heal.th Organization,viz:

Statement of Appropriations, Ob].igations and Balancesfor the year 1965 (Exhibit V);

Statement of Income and Expenditure for the 1965Budget (Exhibit VI);

Statement of Assets and Liabilil;ies as at31 December 1965 (Exhibit VIIi;

and the following statements concerni.ng the Organization ofAmerican States Program of Technical Cooperation which isadministered by the Pan American Hea:.th Organization;

Statement of Income and Expenditure for the yearended 31 December 1965 (Exhib-lt VIII);

Statement of Assets and Liabilities as at31 December 1965 (Exhibit IX),,

2. Budgetary Expenditure

2.1 An amount of $7,189,494 has been obligated against the totalappropriated budget of $7,190,000o

- 65 -

2.2 The budgetary expenditure for 1965 compared with those ofthe two preceding years was as follows:

1963 1964 1965

Thousands Thousands Thousands$ % % $ %

Authorized Budget 5,990 - 6,560 - 7,190

Obligations by Part

I Pan American HealthOrganization

II Pan American HealthOrganization -Headquarters

III Pan American HealthOrganization -Field and OtherPrograms

IV Special Fund forHealth Promotion

284

1,827

2,792

187

V Amount for Increasingthe Working CapitalFund

5 244

36 2,096

55 3,361

4 250

- 300

4 229

33 2,183

54 4,202

4 250

5 300

Amount for EmergencyProcurementRevolving Fund

Percentage of authorizedbudget obligated

25 0

5,090 100 6,251 100 7,189 100

84.98% 95.29%

3

30

59

4

4

100%

- 66 -

2.3 The total budgetary expenditure incurired during 1965 increasedby some $938,000 as compared with 19164, mainly due to anincrease in Part III, Field and Other Programs amountingto $841,000.

There was an unobligated balance of only $506. For 1964 the

unobligated balance amounted to $309,000 or 4.71 per cent.of the authorized budget.

3. Budgetary Income

3.1 Revenues during 1965 compared with those in 1964 and 1963, areshown below:

1963 1964 19651T -S- -

Authorized Budget 5,990,000 6,560,000 7,190,000

Contributions collected fromMember States and Partici-pating Governments relatingto:

the current year 3,806,269 5,096,445 5,622,625previous years 932,118 1,971,828 1,377,489

Miscellaneous Income 60,018 149,386 211,250

Excess of Reserve forUnliquidated Obligations 19,851 26,821 44,070

Excess of Accrued ServiceBenefit 25,016 8,545 -

Total Budgetary Income 4,843,272 7,253,025 7,255,434

Percentage of theauthorized budget 80.86% 110.56% 100.91%

This increase in 1964 of collections relating to previous years waslargely due to the fact that the largest contributor was unable, forreasons of unusual legislative delay, to complete payment of itstotal contribution in 1963. The unpaid ba:Lance of $1,000,000 wasreceived early in January 1964. Arrears were collected in 1965totalling $1,377,489 against $1,971,828 in 1964.

- 67 -

3.2 The following table shows the collection of contributionsfor the last five years:

Current yearquota

collections

Percentageof assessed

contributions

$

7,173,721

6,534,182

5,949,828

5,140,0001/

4,700,000 1 /

5,622,625

5,096,445

3,806,269

3,940,234

3,971,013

The largest contributor pays 66 per cent. of the quotas ofMember States. The quotas assessed to the other Membersamounted to $2,494,321 of which $943,225 were collected,representing 37.81 per cent. of their assessments, or13.15 per cent. of the total collected quotas. For 1964the percentage was 37 per cent. The collection of thecurrent year quotas from the other Members of the Organizationis still too low.

_/ The figures for 1961 and 1962 do not include contributions fromParticipating Governments.

1/

Year Assessed

$

1965

1964

1963

1962

1961

78.38

78.00

63097

76.66

84.49

- 68 -

3.3 The increase in the arrears since 1961 amounted to some$1,717,000 as can be seen from the following table:

Unpaid balance ofarrears of contri-butions as at1 January

Arrears collectedduring the year

Balance of arrearsfrom prior years

Add: Uncollectedquotas forcurrent year

Unpaid balance ofcontributions forcurrent and prioryears as at31 December

The unpaid balancequotas for 1965

1964prior years

Thousanlds of dollars

1961 1962 L963 1964 1965

1,458 1,351 2,217 3,429 1/ 2,895

836 349 932 1,972 1/ 1,378

622 1,002 1,285 1,457 1,517

729 1,215 2,144 1/1,438 1,551

1,351 2,217 3,429 2,895 3,068 2/

consists of$1,551,096

920,130596,922

._/ Concerning the increase of uncollected quotas and the large unpaidbalance for the year 1963, and the subsequent increase in the amountof arrears collected in 1964, reference is made to paragraph 3.1 forexplanation.

2_/ At the time this report was issued receipts of $748,596 had reducedarrears to $2,319,552.

- 69 -

3.4 In the following table are listed those Member States whichas of 31 December 1965, had not paid their contributiona infull for more than two years. For comparison the year-endamounts due are shown for 1964 and 19650

1964 1965

Argentina - an amount of $1,521,307

Bolivia - an amount of $ 139,789

Haiti - an amount of $ 78,645

Paraguay - an amount of $ 63,645

Uruguay - an amount of $ 223,651

$1,271,127

$ 129,635

$ 78,645

$ 73,815

$ 281,789

It should be noted that the arrears must first be paid beforecollections of contributions for the current year are creditedto the income budget, and it is obvious that unless the col-lection situation improves the only way for the Organizationto operate on a sound financial basis is to reduce the programactivities.

3.5 The increase in the miscellaneous income from 1964 to 1965 of$61,864 is mainly due to an increase of 860,114 in the amountof interest earned.

3.6 The following table shows the purchases on behalf of Governmentadministrations and public institutions during the last threeyears:

Purchases on behalf ofGovernment administrationsand public institutions

Shipment, freight andinsurance costs, etc.

3% Procurement charges

1963

$1964

$1965

$

178,133 241,334 201,153

15,143 13,126 13,715

5,344 7,240 6,035

198,620 261,700 220,903Total

- 70 -

Deposits held by PASB amount to $342,5F6 at 31 December 1965as compared to $267,414 held at 31 December 1964.

3.7 Procurement charges are made only on puLrchases for Governmentadministrations and public institutiorLs and only on the netpurchase price, excluding freight, loading, insurance cost,etc. Procurement in connection with 1;he field activities orof the Organization itself, or on behalf of the World HealthOrganization are not included in the preceding table.

4. Surplus

In 1965 there was a surplus (i.e. the difference between thebudgetary income in cash and the obligations incurred)amounting to $65,940 as can be seen from Exhibit II. In 1964there was a surplus of $1,001,828. The surplus in 1964 wasmainly due to the payment of $1,000,0[00 early in January, asmentioned in paragraph 3.1 above. As the Director stated inthe Introduction to his Financial Report for 1963 this amountwas considered, for purposes of finani-ial management, to belongto the year 1963. He is therefore to be commended for hisfinancial integrity in holding this amount outside the expendi-ture plan for 1964, thus assuring that as "surplus" it would goto build up the Working Capital Fund.

5. Working Capital Fund

The Working Capital Fund has increased to about 35% of the 1966budget level. This is considered adequate as long as thelargest contributor pays the current year quota in mid-year orshortly thereafter. This favorable situation is due mainly tothe provision in annual budgets of an amount for increasing theWorking Capital Fund. This policy was presqnted in my reportfor 1958 (O.D. NQ 29) and was adopted in 1959 by the XI Meetingof the Directing Council to become effective with the budgetfor 1961. As in any forward looking organization the budgetlevel does not remain static, I therefore recommend that thebudgetary provision be continued, and adjusted as necessary,to assure that the Fund is maintained at an adequate level.

6. Emergency Procurement Revolving Fund

6.1 The Directing Council created at its III Meeting an EmergencyProcurement Revolving Fund in the amcunt of $50,000 in order

- 71 -

to provide immediate relief to Member States in cases ofunforseen emergency health problems. In 1965 the Fund wasincreased by $25,000 to $75,000.

6.2 In 1965 procurement totalled $29,805. At 31 December 1965the cash balance was $46,629 and claims on Member Statestotalled $28.371.

6.3 The following claims on the Member States have been outstanding;

since 1962:

since 1964:

Brazil

ChileUruguay

$6,750

$9,299$6,860

7. New Headquarters Building

7.1 The cost of the new Headquartersto 31 December 1965 is shown infollowing table:

building and installations upgeneral outlines, in the

INCOME

Appropriations from budgetsW. K. Kellogg Foundation 5,000,000Government of the UnitedStates of America (land) 1,092,150

Sale proceeds of formerHeadquarters building

Interest earnedFire insurance claim proceeds

Total Gross Income

EXPENDITURE

LandBuilding construction costsArchitect's fees andcompetition awards

Furniture, carpeting andinterpretation equipmentPersonnel costsLegal fees and insuranceMiscellaneous costs

Balance as at

1,092,1504,927,274

314,262

672,61561,78336,35930,516

31 December 1965

$223,524

6,092,150

1,125,000244,71942,686

7,728,079

7,134,959

593,120-

- 72 -

7.2 Concerning the contribution from the W. K. KelloggFoundation, it is noted that this contribution willbe amortized over a period of 20 years. Under theagreement with the W. K. Kellogg Foundation, repay-ment will be made in the form of annual allocationsof $250,000 to a Special Fund for Health Promotionto finance expanded program activities.

7.3 As can be seen from Exhibit II proceeds of sale ofold furniture and equipment amounted to $18,149.The cost of the new furniture, interpretation equip-ment and other installations in the new Headquartersbuilding amounted to $672,615. At the date of thisreport a full physical inventory is being undertakenand any discrepancies which may come to lightresulting from the move to the new building, will bereported by me next year. The balance of theBuilding Fund as at 31 December 1965 was $593,120.

7.4 The commitments outstanding, including changes to theairconditioning system, amount to some $330,000 whichwill be well covered by the cash balance.

7.5 The Architect's fees at 6 per cent. of the cost of theconstruction of the building mentioned in the precedingtable is in accordance with the contract and is fullypaid.

7.6 The land and the cost of the construction of the newbuilding are shown in Exhibit ::II in the amount of$6,528,596 and offset by a contra account since thecosts have been charged off.

8. Special Malaria Fund

8.1 Starting from 1 January 1957 voluntary contributions tothe Special Malaria Fund reached the amount of $17,512,450

- 73 -

as at 31 December 1965, received from the following

Government of Colombia $ 5,000

Government of the DominicanRepublic 200,000

Government of Haiti 5,000

Government ofStoKitts-Nevis-Anguilla 75

Government of Trinidad andTobago 2,917

Government of St. Vincent 58

Government of the United Statesof America 17,000,000

Government of Venezuela 299,400

countries:

8.2 The analysis of income and expenditure of the Fund since itwas established in 1957 is as follows:

Voluntary contributions in cash $17,512,450

Interest earned 583,104

Miscellaneous 43,326 618,138

Expenditure 18,193,812

Less: Excess of Reserve overunliquidated obligationsfor 1964 9,851 18,183

Deficit as at 31 December 1965 $ 45

This deficit was covered temporarily by an advanceWorking Capital Fund.

from the PASB

,880

,961

,081

- 74 -

9. Community Water Supply Fund

9.1 The total voluntary contributions to the Community WaterSupply Fund from 1 January 1960 to .31 December 1965 amountto $1,616,211 received from the following countries:

Government of

Government of

Government of

Government of

Government of

Government ofTobago

Government ofof America

Government of

Colombia

Honduras

Jamaica

Nicaragua

Peru

Trinidad and

the United States

Venezuela

$ 10,411

10,000

5,040

10,000

9,314

5,000

1,525,000

41,446

9.2 The income, expenditure and statusinception are shown below:

Voluntary contributionsin cash

Interest earned

Miscellaneous

Total Income

Expenditure

Less: Excess of Reserve forunliquidated obliga-tions for 1964

of the Fund as from its

$1,616,211

28,760

2,513

$1,647,484

1,475,550

2,151

Net Expenditure

Balance as at 31 December 1965

1,473,399

$ 174,085

- 75 -

10. Supply Services

I have noted that the current workload in Supply Serviceshas increased substantially. Consideration is being givento two possibilities for handling the increase of work,suggested in a survey which was carried out by the Organization.The possibilities are for increasing the professional staffin the purchasing unit or by the introduction of electronicdata processing applications. A further possibility is ofcourse, for WHO in Geneva to undertake purchasing in the USAby direct access to suppliers, thereby relieving a certainamount of workload from Supply Services in Washington.

11. Trust Funds

11.1 In the Statement of Assets and Liabilities is shown AccruedTermination and Repatriation Entitlements of $1,103,158. Ofthis amount $651,940 covers the accrued termination entitle-ments of staff members financed from grants and voluntarycontributions and I consider this amount substantiallysufficient.

11.2 It is the Director's prudent financial policy to build up byallocations from annual budgets a reserve eventually adequateto meet the estimated Accrued Termination and RepatriationEntitlements of staff members financed from PASB Regular fundsoThis accrual as at December 31, 1965 is estimated at $1,091,500against which reserves have been built up to a total of $451,218per the following table:

Estimated requirementsas at 31 December 1965 $1,091,500

Established reserves -Balance from previousyear after adjustmentsfor charges theretoduring 1965 $361,218

Ad:

Amount set aside in1965 90,000 $ 451,218

The estimated requirements are based on maximum potentialliabilities where these are determinable and on arbitraryaverages in other cases.

- 76 -

12. Organization of American States

12.1 At 31 December 1965 the Accrued Termination and RepatriationEntitlements of staff members financed from O.A.S. sourcesamounted to $74,707. There was a gross deficit of $56,557arising from excess of expenditure over income for 1965 anda net deficit of $46,637. The difference between those twofigures was made up by Miscellaneous Income and Excess ofReserves of 1964 unliquidated obligations totalling $9,920.

12.2 The reason for this deficit was that local staff salarieswere substantially increased during June 1965 retroactiveto 1 January 1965. As the dollar/cruzeiros rate did not,as expected, keep pace with the salary increase, thisresulted in personnel costs being underobligated by some$56,000. In the meantime an account receivable has beenestablished showing $56,557 as due from O.AoS. I havenoted that the Organization of American States, Programof Technical Cooperation, has approved a payment of $30,000in part settlement of the amount due.

12.3 In relation to the Termination Entitlement Reserve it isnecessary to build this up over a number of years to meetthe estimated liability of some $156,000, includingindemnities.

13. Institute of Nutrition of Central America arid Panama

13.1 Generally, the sources of funds to finance the activities ofINCAP have not materially altered during the year underreview. However, due to certain del.ays in the billing ofexpenditures for reimbursable contracts, which were laterall billed, PASB provided working capital to INCAP amountingto some $250,000 in the course of the year.

13.2 Resulting from the 1965 operations, I noted that there was asurplus of income over expenditure unounting to $75,953 there-by increasing the Working Capital Fimd to $242,659, from which$36,767 was applied to the Reserve for Accrued Annual Leave,leaving $205,892 in the Working Cap:tal Fundo In accordancewith my recommendations last year, [ was pleased to see thatin 1965 a total amount of $40,989 was set up as a Reserve forAccrued Annual Leave. The combined Working Capital Fund andthe Reserve established at 31 December 1965 amounting to$246,881 substantially covers the total estimated liability for

- 77 -

all termination entitlements, including indemnitiesamounting to $250,000. However, it will be financiallyprudent to continue to build up accrued terminal enti-tlements to the amount required.

14. Financial Situation

During 1965, the financial situation improved considerablybecause of the increased level of the Working Capital Fundand the reserves for termination costs. However, the out-standing arrears, particularly those for more than twoyears, if unpaid will continue to inhibit the financialability of the Organization to carry out its full programo

15. The audit was facilitated by the officers of the Organization, andI am pleased to state that the necessary help was given me in themost obliging manner, for which I express my appreciation.

'/ -l4


Washington, D. C.30 March 1966