Audit of Pakistan"s agricultural commodities and equipment program

First audit report covers activities through 12/84 and is based on review of files, field visits and inspections, and interviews with USAID/P, GOP, and private sector officials. Although the project is generally successful, several problems hamper its effectiveness. Legislative requirements for joint GOP/USAID deposit and programming of local currency revenue generated from the sale of commodities are not being met. In response to this problem, USAID/P has proposed a methodology for participating in the GOP"s budgetary process; the A.I.D. General Counsel should review the proposal for compliance with Section 609 of the Foreign Assistance Act. Project commodities have not been effectively utilized. Underutilization of heavy equipment - due to lack of trained operators, inadequate security, and provision of inappropriate equipment - has especially impeded irrigation system rehabilitation. The project also supplied cotton in anticipation of a drastic weather-related shortfall in Pakistani cotton production; the shortfall did not occur, and the cotton sits unused in warehouses. Most project-supplied fertilizer has been utilized, but poor management by distributors has hampered sales and effective use. In addition, USAID/P was, in some cases, unable to account for fertilizer and cotton received in Pakistan because it failed to review GOP commodity arrival and disposition systems or to enforce compliance with A.I.D. commodity data regulations. USAID/P was also unable to verify that equipment arrived in the condition and amounts paid for because suppliers" invoices were not routinely sent to it. It is therefore recommended that USAID/P: (1) determine whether the GOP will accept its plan for Section 609 compliance and establish better procedures for special account reporting; (2) work with the GOP to eliminate impediments to effective use of project-funded equipment, determine that the GOP has promoted early sales of U.S.-funded cotton, and establish a provincial public sector fertilizer distribution monitoring program; and (3) assess GOP systems for ensuring the accountability of project-financed fertilizer and cotton, and revise its own equipment accounting system.