Audit of Jordan commodity import program, program no. 278-K-643

However, local currency funds were not generated to the maximum extent possible, special account receipts and expenditures were not properly monitored, and stated exchange rate requirements were not enforced. Also, some Program requirements and A.I.D. regulations were not complied with. Therefore, there was a need to fine-tune overall Program management from a Program results basis, but substantial corrective actions were needed in local currency fiscal accountability. On the positive side, $155 million worth of commodities, involving 621 transactions totaling 94% of the $165.5 million CIP I Program, had been ordered as of May 1989. Of this amount, commodities valued at about $121 million had been received. Most of the commodities had been purchased from the U.S. and only $3 million worth (2%) were of both non-U.S. source and origin. Also, nine USAID, eight World Bank, and two Government of Jordan local currency projects, together totaling JD 20 million ($52 million) through 1988 had been funded from the CIP Program. These projects were providing schools, sewers, hospitals and agricultural stations to the Jordanian people. Further, the special account did not have large unused balances, averaging JD 2.5 million ($6.8 million) for the period January 1986 to February 1989. However, the audit identified five problems: (l) local currency generated funds were deposited in non-interest bearing accounts; (2) incentives given to the private sector, which reduced local currency generations, may no longer be required; (3) special accounts were not properly reconciled by the Mission; (4) expenditure reporting by the Government was not satisfactory; and (5) the Government of Jordan did not comply with the exchange rate requirements for public sector deposits. Correcting these problems would provide up to JD 12.1 million ($27.8 million) in additional future local currency generations and increased compliance with A.I.D. regulations and Program requirements. The report recommends that: (l) local currency generations be deposited in interest bearing accounts; (2) incentives to the private sector be re-evaluated under the next Commodity Import Program; (3) reconciliations of the special accounts be done; (4) a review of 1988 expenditure over-runs be done to determine if they should be retroactively approved; and (5) additional local currency be deposited into the special account to correct the inaccuracies related to exchange rate conversions or the confusion created by conflicting signed documents be cleared up. (Author abstract)