Audit of project cash advances by missions serviced by the Regional Financial Management Center, Nairobi, Kenya

efficiency audit covers outstanding advances to projects in 14 countries, totaling $9.2. million as of 9/87. The audit determined that inappropriate amounts of cash were being approved and provided to project cash advance recipients. In addition, RFMC cash advance accounting records and management reports were unreliable and inaccurate. During the audit, RFMC officials implemented various actions to improve management of project cash advances. These efforts contributed significantly to substantially reducing cash advances from about $9.2 million on September 11, 1987 to about $6.l million on March 15, 1988. However, the audit concluded that cash advance guidance was needed and that financial recordkeeping could be improved. Some Missions were giving cash advances in excessive amounts. This occurred because Mission officials did not fully understand cash advance criteria. As a result, unnecessary interest costs were incurred. This report recommends that RFMC officials issue guidance to all RFMC-serviced non-controller Missions clarifying the regulations on cash advances. The RFMC cash advance reports contained numerous inaccuracies because (1) some financial staff did not understand A.I.D."s financial management systems, (2) the supervisory review of voucher processing was ineffective, and (3) the reconciliation of accounting records was inadequate. As a result, considerable staff time was spent maintaining and reconciling duplicative systems, cash advance funds were unnecessarily exposed to loss, and unnecessary interest expenses were incurred. This report recommends that RFMC officials provide additional guidance to the staff accountants on the recording of cash advance transactions and establish a follow-up system to ensure that RFMC-serviced non-controller Missions periodically reconcile their records with the Center"s cash advance reports. (Author abstract)