Audit of AID compliance with section 121 (D) of the Foreign Assistance Act

Audit report covers the period 12/81-9/85 and is based on document review and audit tests of 21 of 47 projects having local currency funds. A.I.D. has substantially complied with the legislation. The Africa Bureau effectively implemented Inspector General audit report recommendations, established accountability standards for A.I.D. projects, and increased A.I.D. monitoring. Sahelian Missions and the Sahel Regional Financial Management Project (6250950) - an integral part of the Bureau"s strategy - spent considerable time and effort designing, installing, and reviewing accounting systems, developing training materials, and training host government accountants. As a result of these efforts, 43 of 47 projects with local currency funds met A.I.D. accountability standards as of 3/85. More needs to be done, however. Accountability standards have not been established for procurement and inventories, contributing to inadequacies in these categories in 10 of the 21 projects reviewed. Inadequate criteria for suspending funding when projects had accountability problems often caused the Mission to take inconsistent and sometimes inappropriate action to avoid suspension. Bureau requirements for reporting on results of Mission accountability reviews were not comprehensive enough to allow effective Bureau oversight. Further, Missions spent an inordinate amount of scarce resources to implement Section 121(d) because they had not considered more efficient procedures. Project 6250950 helped resolve major accounting problems for A.I.D. projects, but except in The Gambia and to a lesser extent in Mali made little progress in strengthening financial management and accounting practices in host countries. It is recommended that the Africa Bureau: (1) expand accountability and reporting standards, provide Missions with clearer guidance on resolving accountability problems, and ensure efficient oversight efforts; and (2) focus further effort on long-term strengthening of host country accounting and financial management. (Author abstract, modified)