Audit of rural productivity and support program

The audit examines program management and local currency use. The program failed in its objective of supporting rural development projects. The audit disclosed that the local currency equivalent of A.I.D."s 9/85 program grant ($47.5 million) was not provided by the GOP as promptly as intended, the funds were not managed as well as possible, and, more seriously, overall GOP support for the targeted rural development projects, instead of increasing, actually decreased. Pesos from the program were allowed to become fungible General Fund resources of the GOP, and as a result, there was no real assurance that the pesos deposited as counterpart to the $47.5 million ESF dollar transfer went to support the development projects as intended. The audit test of the reliability and accuracy of GOP financial reports disclosed that USAID/P should not have relied heavily on these for control and compliance purposes. Furthermore, the data provided by the GOP concerning how the funds were used were neither sufficient nor fully reliable. Lastly, the development projects which were to be accelerated by the A.I.D. grant may in fact have received less local currency support than other development projects. These situations occurred because USAID/P had neither closely monitored the GOP processes nor tested the reporting of the GOP. Consequently, the developmental objectives of the A.I.D. grant were not met. (Author abstract, modified)