Audit of USAID/Indonesia"s democracy and governance program

Three of the Mission"s seven strategic objectives concern its DG program. USAID/Indonesia has generally expended funds on its DG program and monitored expenditures in accordance with U.S. Government, agency, and program objectives and guidelines. However, three areas require Mission attention. First, USAID/Indonesia needs to sign a new Special Objective Agreement (SOAG) with the Government of Indonesia (GOI) in order to help set and meet its DG program strategic objectives. The lack of a new agreement has in some cases contributed to operational problems, and to at least $233,000 in additional costs to implement the program. Mission officials are aware of the need to enter into a new agreement with the GOI and stated that they have been exploring ways to do so. It is recommended that the Mission develop a strategy, with target dates, for contacting the appropriate parties within the host government to develop a new SOAG. The Mission should also attempt to recover tax and duties paid to the GOI. Second, USAID/Indonesia does not include reference to Section 116(e) of the Foreign Assistance Act of 1961, as amended, in its DG agreements. Section 116(e) prohibits USAID funding from being used to influence the outcome of any election in any country. USAID/Indonesia has not widely disseminated information on this requirement because most Mission officials were not aware of it. It is recommended that the Mission include this statutory requirement in applicable agreements. Third, USAID/Indonesia has, as part of its DG program, attempted to help resolve conflicts and crises in high-risk areas ("hot spots") because Indonesia"s capacity in the area of conflict resolution is limited. However, in certain instances security concerns have prevented responsible organizations from monitoring program activities in such areas. While no formal recommendation is being made at this time, it is suggested that the Mission and its partners develop contingency plans for monitoring in difficult situations. (Author abstract, modified)