The United Nations has said it will "swiftly" restore the "integrity and honour" of its besieged procurement system after an independent inquiry by an accounting firm identified several flaws in oversight and safeguard deficiencies, which it said leaves the system open to fraud.

In an apparent effort at early damage control, Under-Secretary-General for Management Christopher Burnham told reporters shortly after the report was made public Tuesday that he intends to "peel this onion down to its core" and set right the system.

• Volcker Report

The United Nations had commissioned Deloitte Consulting, the150-year-old global accounting and consulting firm, to inquire into the procurement practices after the Volcker Committee probing Iraqi oil-for-food programme found that the procedures followed were open to abuse.

At least one employee is facing the charges of taking bribes and sources say several employees might be under investigation.

The increase in the peace keeping operations has led to massive rise in procurement of products and services and the consulting firm found that the required checks and balances have not been put in place.

As a result of the Volcker and Deloitte reports, the United Nations has initiated new financial disclosure rules for the employees joining the world body or already serving in it so that the areas of conflict of interest could be identified at an early stage.

The consulting firm found that UN Procurement Service employees effectively constitute the controls that are in place.

"Such a significant reliance on people leaves the UN extremely vulnerable to potential fraudulent or corrupt activity, and limits the organisation's means to either prevent or detect such actions," it concludes.

The assessment also found weaknesses in ethics and integrity training, which were not supported by management, along with a "lack of urgency in response to adverse audit findings, and unclear lines of authority and accountability".

The report recommends remedies for each of the adverse conditions existing in procurement, including updated procedures and guidelines, improved professional development of management and staff, an enhanced ethics programme, and a rotation of staff.

Burnham stressed the comprehensiveness and clarity of the findings, and their significance in relation to reform measures being implemented by Annan.

The new report did not seek to pinpoint incidents of fraud, abuse or incompetence. That will have to await the results of "forensic audits," or investigative reports due in June 2006.

The UN management chief stressed that the seriousness of the Deloitte report underscores the importance of reform proposals that Annan has pushed on his own authority or presented to the General Assembly in cases when its approval is required.

But major reforms suggested by Annan are still under discussion by the member states, several of whom feel that they are intended to erode further the authority of the General Assembly and shift control from the assembly to Annan whose arm the United States and other major powers could "twist".