Audit of interest earned on outstanding project cash advances

Financial and compliance audit is based on a survey of advance recipients, detailed review of 10 advance balances totalling $9.3 million, interviews with USAID/E financial management officials, and review of relevant documentation. Six advances were found to be kept in interest bearing accounts, and had earned interest totalling at least $1,034,022, not all of which had been remitted to USAID/E as required. This occurred because USAID/E did not keep information on the types of accounts being maintained by recipients of advances, nor did it monitor accounts. For example, under the Major Cereals Improvement project (2630070), the Consortium for International Development earned interest on cash advances from USAID/E totaling $963,167 from 1980-86. Although this money was eventually remitted to USAID/E and AID/W, the Mission had no knowledge of the interest until 1985. In addition, in this case and many of the other five cases, A.I.D. cash advances were commingled with other funds, in violation of A.I.D. regulations. It is recommended that USAID/E establish a system and procedures for identifying and collecting the interest earned on cash advances to A.I.D. grantees, and keep appropriate records of interest bearing accounts. The Mission agreed with the recommendation.