Audit of economic support fund cash transfer assistance to Grenada and Dominica (regional development office for the Caribbean)

Financial and compliance audit covers the period 8/84-2/88, and is based on review of project documentation, interviews with project personnel and GOG and GOCD officials, and reviews of the A.I.D. Regional Development Office/Caribbean"s (RDO/C) financial controls. RDO/C administrative controls over the cash transfer programs were generally adequate, except that no model agreement or standard provisions for cash transfer programs existed. Accounting controls over receipt and disbursal of funds were adequate as well, although some controls were not consistently applied and some of the personnel responsible for managing trust funds were not familiar with A.I.D. guidance and certain generally accepted management practices. The programs were found to be in compliance with applicable A.I.D. regulations, although a grant agreement with the GOG (538-0141) did not include a terminal date for disbursal, as required by A.I.D. Handbook 19. Although the Grenada program was designed to encourage the GOG to make certain policy changes during 1987, disbursal of the second and third tranches (totaling $3.8 million) were never made since the GOG did not comply with the conditions precedent. Because there was no terminal date for disbursal, and because RDO/C believed that the GOG would eventually comply, the funds were not deobligated after the scheduled disbursal dates of August and November, 1987. While RDO/C felt that keeping the funds obligated would help encourage the GOG to comply, a firm deadline for compliance would have had the same effect. It is recommended that RDO/C set June 30, 1988 as the terminal disbursment date for the program, and that the Bureau for Program and Policy Coordination develop a model agreement for cash transfers that includes a terminal disbursment date. Other recommendations address the use of $9,000 of trust funds and appropriated funds to pay for residential gardening for USAID/G employees and the undocumented use of $20,000 to pay for oversea telephone calls, among other matters. Lengthy RDO/C comments (appended) center around the language of the draft audit and point out that a de facto terminal disbursment date was included in the Grenada grant agreement. RIG/A responses are included.