Audit of USAID/Ecuador PL-480 Title I local currency generations

480 Title I Program. Audit report covers the period 5/17/85-12/31/86 and is based on document review, site visits, and interviews with Mission and Government of Ecuador (GOE) officials. The financial and operational controls established for the Title I program are not fully adequate to ensure that LC funds are used for intended purposes. Lack of sufficient staff has prevented the Title I Implementation Secretariat, established in agreement with the Ministry of Agriculture (MOA), from fulfilling all of its monitoring responsibilities such as maintaining complete files and financial accounts, verifying the use of LC funds onsite, and reviewing vouchers. Also, due to the Secretariat"s failure to contract an outside auditor, approximately $6.4 million in LC disbursed to 31 Title I activities remain unaudited, and there is no assurance the funds were used as intended. USAID/E did not fully comply with program requirements. (1) The Mission used $10,325 in Program Development and Support Funds to pay the salaries of some Secretariat personnel because it had established the Title I LC trust fund account with the Mission Controller rather than with the U.S. Disbursing Officer in Mexico, as required by A.I.D. Handbook 19. Also, Mission accounting and disbursement controls over the local trust fund account were very weak. Ultimately, the account was closed on 7/10/86 and the remaining funds were returned to the GOE. (For a full account of this matter, see the abstract of PD-AAV-981.) (2) The Mission used $4,186 in A.I.D. Operating Expense funds to pay for accounting services to the Secretariat because it wanted to use an existing contract to provide the Secretariat with urgently needed services. (3) Finally, when it was unable to find a suitable full-time Executive Secretary for the Secretariat, the Mission assigned one of its foreign national contract employees to serve in this position on a part-time basis. Because this person, as a Mission contractor, had to be close to the Mission, the Secretariat was housed in one of the Mission offices at Mission expense, even though the program stipulated that the MOA would use LC funds to provide office space for the Secretariat. The Mission generally agreed with audit findings and the resultant recommendations. To date, the Mission has contracted a firm to monitor the use of Title I LC generations and to provide financial accounting and control services to the Secretariat; it has also reached an agreement in principle with the MOA to contract for audits of P.L. 480 program activities.