Audit of USAID/Jamaica"s special development activity fund, project 532-0029

Audit covers FY86-8/87 and is based on document review and interviews. The financial and operational controls established for the SDAF were in general adequate and the Fund has been successful in meeting its objective of providing critical assistance to small, community-based self-help projects. However, USAID/J did not always adhere to its own guidelines for the SDAF, and undue influence in the utilization of funds was noted in one case. Most of the problems with noncompliance centered around the Tuesday Group (TG), a group of U.S. Mission women, including the spouses of the Ambassador and the Mission Director. The TG made subgrants to a number of worthwhile causes, using funds from private U.S. donors as well as from A.I.D. However: (1) most TG subgrants were used for social welfare rather than for development assistance purposes; (2) in general, TG did not acknowledge A.I.D. as the source of funds (some subgrants gave the appearance of being personal contributions of the Ambassador or his spouse); (3) TG"s budgetary and administrative controls over its subgrants were inadequate, as was supporting documentation; (4) not all TG expenses were allowable; and (5) TG deposited A.I.D. funds in an interest-bearing account. In addition, two recipients (TG and another organization) received grants for more than the $10,000 allowed under the Mission"s Standard Operating Procedures (SOP), and two recipients (TG and a third organization) had not been established for two years as required by the SOP. Further, USAID/J had earmarked a second grant for TG - in contradiction of its long-standing policy of not making repeat grants to previous years" recipients. Finally, USAID/J was not always able to exercise adequate oversight over SDAF programming. The Ambassador expressed strong interest in participating in programming decisions and once eliminated eight recommended projects and replaced them with eight others during a period when the Mission Director was absent from post. The Ambassador also requested $23,000 of the $100,000 available for FY87 be used for not-yet-identified projects; this $23,000 had not been programmed by 8/87 - although the fiscal year would end only one month later. It was recommended that (1) USAID/J adhere to its SOP and established practices for SDAF grants and (2) TG refund all SDAF funds which had not been used in accordance with criteria, submit supporting documentation for some expenses, and refund interest generated from A.I.D. funds. Both recommendations have been closed. Also, USAID/J has provided documentation showing the allocation of the entire FY87 SDAF of $100,000 to 23 projects islandwide, none of which had received funding in prior years.