Audit of controls over equipment utilization in Sri Lanka

Thee audit was hampered by the lack of verifiable listings of equipment purchased under two of the three closed projects and of formal inventory records for purchased equipment. Due to the Mission"s failure to establish an adequate commodity monitoring system, during the last 2-4 years at least $1.6 million worth of A.I.D.-funded equipment has been ineffectively used, poorly maintained, and in some cases severely cannibalized. For the same reason, the Mission was unaware of this underutilization and did not consider corrective actions such as disposing of unneeded items or transferring them to other projects or obtaining spare parts for deadlined equipment. (1) In the Water Management Project, 29 of the 60 items procured were out of service; two dump trucks were used only 19 out of a possible 102 days; and a vibrating compactor and a $625,000 stone crusher were never used at all; the latter was eventually sold for $8,000. The reasons for underutilization were budgetary constraints, the difficulty of obtaining parts for certain makes of equipment, and low priority needs for the equipment. (2) Although most of the equipment acquired under the Agriculture Base Mapping (ABM) Project was functioning properly and being used for project-related purposes, there were notable exceptions. A fliptop printer proved too small and was never used; a large and complex film developer required 8 gallons of costly developing fluid, which made its use uneconomical because of the small amount of film to be developed at any one time; a special camera costing $53,455 was out of service for 2 years because one of its two small motors burned out and two of its three flood lamps were out of service (because replacement bulbs were too costly to procure locally and there was no contact point to obtain bulbs from the United States). (3) The Mahaweli Engineering and Construction Authority has 20 levels and 7 theodolites (surveying instruments) deadlined for lack of parts. One of the theodolites and 5 of the levels have been in the repair shop since 1984. (4) Due to a lack of spare parts or funds to purchase them, some equipment has been severely cannibalized - e.g., two graders from the completed Mahaweli Ganga Irrigation Project, several jeeps under the ABM project, and, under the Reforestation Project, a jeep that had been driven only 4,970 miles. More generally, the jeeps procured for the two latter projects were not used effectively. To improve utilization, the audit recommends establishing a commodity monitoring system and taking corrective action on specific equipment items listed in the report.