Audit of USAID/Dominican Republic Public Law 480 Title I program

480 Title I sales to the Government of the Dominican Republic (GODR). Audit covers FY 1984-86 and is based on document review and interviews with USAID/DR, GODR, and bank personnel and local importers. The Title I program generated the LC equivalent of U.S. $130.9 million during FY84-86, and 58 development projects, mostly in rural areas, were approved for LC financing. However, the management and operational controls established for the program were inadequate to ensure that LC proceeds were collected in sufficient time to implement these projects, and compliance with some program requirements was lacking. Prior to 9/87, the GODR"s Technical Secretariat of the Presidency, which is responsible for the procurement and sale of P.L. 480 commodities, as well as for the collection of the corresponding LC, vested virtually all responsibilities in one individual who coordinated proposed bid offers with U.S. suppliers, selected local importers, prepared invoices, and often received importers" payments. Such concentration of duties, whether for lack of funding or other reasons, leaves resources inadequately protected. The Mission has agreed with a recommendation to contract a local certified public accounting firm to review and analyze the present segregation of duties and to perform a financial review of the FY86 program. Second, while the Title I agreement for FY86 mandates that local importers pay full price for commodities and do so within 60 days, the TSP agreed to credit terms more lenient than these, allowing more than 9 months for repayment, and usually prepared invoices up to 5 months after commodities had been received and disbursed. USAID/DR was not fully aware of these problems and, as a result, of the equivalent of U.S. $40.8 million to be generated, only $7.9 million equivalent was paid by the importers within the required time period and was available on time for new projects. USAID/DR has agreed with a recommendation to establish clear monitoring and financial responsibilities and to include penalty charges in future agreements. Third, although A.I.D. Policy Determination No. 5 encourages the deposit of Title I proceeds in interest-bearing accounts, the proceeds in the Dominican Republic were deposited in a non-interest bearing account in the Central Bank. Extrapolating from the account balance as of 9/30/87, it appears that the equivalent of roughly U.S $500,000 per month in potential interest earnings was lost. USAID/DR stated that it is in complete compliance with applicable guidance and that it will submit a GODR letter on this matter.