Audit of USAID/Zimbabwe"s management of cash advances to recipient organizations

Audit report covers the period 10/92-12/93. The audit showed that USAID/Zimbabwe did not limit cash advances to the immediate cash needs of recipient organizations. This occurred because the Mission did not give sufficient priority to the need to account for and monitor the status of outstanding cash advances. As a result, at least $7.2 million in excessive advances were given grant recipients at an estimated interest cost to the U.S. Government of $99,222 ($92,588 of which was related to a single grant recipient -- World Food Program). Among other actions, it is recommended that USAID/Zimbabwe recover any unexpended advances in excess of recipients" immediate disbursement needs and provide new cash advances in compliance with Agency policy which limits advances to 30-day disbursement needs. Also, USAID/Zimbabwe did not obtain a waiver to finance a U.S. nonprofit organization through cash advances, resulting in their noncompliance with U.S. Treasury and USAID regulations. We recommend USAID/Zimbabwe request a waiver from the U.S. Treasury to finance the Academy for Educational Development (AED) using cash advances instead of the preferred letter-of-credit. USAID/Zimbabwe did not always ensure that its recipients maintained cash advances in interest-bearing accounts. Also, in cases where cash advances were deposited in interest-bearing accounts, USAID/Zimbabwe did not adequately monitor the recipients" interest earnings to ensure they were remitted on time and in full. This occurred because the grant agreements were not specific regarding interest-bearing accounts/earnings and USAID/Zimbabwe did not give cash management sufficient priority. As a result, USAID/Zimbabwe lost an opportunity to earn interest amounting to $94,178, of which $92,588 related to a single grant recipient. Also, at least $31,459 in interest earnings was not remitted to USAID/Zimbabwe. We recommend USAID/Zimbabwe require its recipients to remit at least $31,459 in interest earned on cash advances. (Author abstract, modified)