Audit of neighborhood urban services : USAID/Egypt activity no. 263-161.05

Audit report covers the period 8/81-3/86 and is based on document review, site visits, and interviews with project personnel. In general, the project has been managed and monitored well and is on target, both in the number of subprojects (SPs) implemented and in the number of Egyptians trained. Approximately 9 million beneficiaries in 23 urban districts in 4 governorates have been reached through some 2,000 SP"s. The contractor has instituted a reliable, computerized system for tracking these SP"s. Positive results notwithstanding, implementation problems exist. Funds for numerous district SP"s and for a special governorate maintenance garage program (a total of about $14 million) were unused for over a year and were kept during that period in non interest-bearing accounts, at an imputed loss to the U.S. Government of $1.3 million per annum. Although more than 50% of FY84 SP funds were not yet spent as of 8/31/85, USAID/E, operating on the assumption that all SP"s would be completed within one year, disbursed additional funds for FY85. Regarding the garage facilities, construction has been particularly difficult in Alexandria because the Government of Egypt (GOE) had not yet obtained a land title, issued an invitation for bid, prepared a bill of materials, or provided counterpart funds. Similar conditions exist in other governorates. USAID/E did not require that GOE contributions to the project be recorded and reported. Therefore, while the GOE has provided project funding, the actual level of that funding is unknown and it is impossible to know if it meets required levels. Other problems include: (1) the GOE did not document disbursement of emergency fund advances and thus project expenditures were underestimated by about $808,000; (2) Cairo governorate officials purchased 184 typewriters which were produced in a non-eligible country (East Germany); (3) 7 vehicles were licensed in the contractor"s name rather than the GOE"s; and (4) reconciliations were not made to ensure that all USAID/E disbursements to the GOE were deposited in GOE bank accounts for project purposes.