These rules mirror the restrictive conditions set by the U.S. government on diplomats from North Korea who must stay within 25 miles of New York City.

The UNDP, whose mission is to help the country develop economically, was one of several UN agencies operating in North Korea, including UNICEF and the World Health Organization. The United Nations is one of few channels for foreign aid in the secretive, authoritarian country.

One of the UNDP projects, sources said, involved the purchase of 300 computers for Kim Il Sung University. The computers supposedly arrived in Pyongyang, but the international staff was not allowed to see the equipment it had donated.

Finally, after a month and a half of pressuring their North Korean handlers, staffers were led to a room in which two computers sat. They were told the others were packed in boxes, which they were not allowed to open.

And while the UNDP's programs — which have included projects such as "Human Resource Upgrading to Support Air Traffic Services" and "Strengthening of the Institute for Garment Technology" — cost anywhere from $3 million to $8 million a year total, the development program also acted as the administrative officer for all the UN agencies and wrote checks for tens of millions of dollars worth of programming every year.

The UNDP's financial officer and its treasurer in Pyongyang, who issued those checks, were both North Korean.

UN officials privately describe a vivid scene playing out at the agency's compound each day.

A driver in a UN-issued Toyota Corolla would pull out of the compound's gate, taking UN checks to the bank. A short time later the driver, a North Korean employed by UNDP, would return with manila envelopes stuffed with tens of thousands of dollars in hard currency.

Then the windbreaker-clad North Korean official would show up and take the cash away.

UNDP spokesman David Morrison said the use of hard currency and the hiring of staff through local governments was standard practice in authoritarian countries like North Korea. Morrison said his understanding was that the agency had never had problems with site visits, and that in 2005 its staff had visited 10 of its 11 monitorable projects.

The agency was complying with the audit, Morrison said, "in order to take away even the perception that anything was untoward."

But others believe the development program has no choice but to cooperate with the audit.

In January, a letter written to the head of UNDP by Mark Wallace, the U.S. ambassador to the UN for management and reform, was leaked to the U.S. media. The letter, which drew on Wallace's review of internal audits dating back to 1998, accused the program of having been "systematically perverted for the benefit of the Kim Jong Il regime."