Audit of USAID/Guatemala Public Law Title I program

480 Title I program in Guatemala. Audit covers sales agreements for FY84-86 and is based on record review, a site visit, and interviews with officials of USAID/G, the U.S. Embassy, the U.S. Department of Agriculture, various Government of Guatemala (GOG) agencies, and the Bank of Guatemala, and with importers. The audit found two major deficiences in Title I local currency management. (1) Local currencies were not being generated in compliance with the program"s governing agreements. Some imported commodities were not sold, and some proceeds from commodity sales were not deposited at the highest lawful exchange rates. As a result, approximately $8 million in proceeds were not available for U.S. Embassy operations and self-help activities. (2) Sales proceeds were not effectively utilized for self-help measures to improve the living conditions of the rural poor and increase agricultural production. USAID/G had not taken actions to: develop self-help activities with specific measurable indicators; ensure that funds were used in a timely manner; or use funds for the purposes originally planned. The Mission"s ineffective management of the programming and monitoring of sales proceeds meant that it was not able to identify the extent to which the rural poor benefited from the program and that it had ineffectively managed some $9 million in sales proceeds for self-help activities. These deficiencies were due in part to the fact that the Title I program in Guatemala was being implemented by a committee on which USAID/G held only one seat, and which had been increasingly influenced during recent years by the U.S. Embassy and its Agricultural Attache. As a result, the Mission had withdrawn from its normally deep involvement in the program. The committee had not, however, assumed responsibility for monitoring the use of local currency for self-help purposes, which was always USAID/G"s responsibility. Although USAID/G did issue a Mission Order in 4/87 providing its staff with specific guidance on programming and monitoring local currency, it was slow to put this guidance into effect. Recommendations address the above problems. USAID/G did not agree with the recommendations addressing finding No. 1, stating that the program has been effectively managed, but it generally agreed with the recommendations concerning finding No. 2. The Mission also took exception to the audit"s conclusions on the committee approach to Title I implementation. Its comments are attached.