Audit report on Mahaweli Basin development I project in Sri Lanka

Audit report covers the period 6/80-6/83 and is based on review of financial and project records at the contractor"s offices in the United States and Sri Lanka, at USAID/SL, and at Government of Sri Lanka (GSL) offices and bureaus. Of $3.3 million claimed under the host country contract with the Association of Louis Berger International and the International Engineering Company, some $64,000 (2%) were not allowable. Specifically: (1) Salary overcharges, including overhead and profit and relating mostly to charges billed in excess of time worked, amounted to $37,000. (2) There were numerous billings and reimbursements for employee travel and freight transportation that did not comply wth contract provisions, e.g., use of better than economy class service, indirect routings, and ineligible carriers. More than $11,000 in transportation costs has been questioned and some $69,000 in reimbursed costs have been suspended. (3) Workman"s compensation insurance totaling $14,700 was billed for 11 employees who did not qualify. While equipment was procured satisfactorily and, with a few exceptions, used as intended, no physical inventory was conducted, $65,000 worth of equipment was stored and forgotten, and about $27,000 worth of water and pesticide analysis equipment was given to the University of Sri Lanka without USAID/SL"s knowledge. Additionally, of $297,000 of direct A.I.D. reimbursements from the project environmental fund, a sum of $8,721 was unsupportable as it was paid to an individual for an unidentifiable purpose. It is recommended that USAID/SL: (1) work with the GSL to resolve questioned and suspended costs; (2) ensure through the GSL that contracting procedures and internal contractor controls are revised to improve accountability and that billings reimbursed after invoice 33 are reviewed for compliance with the contract; (3) recover funds provided to the GSL for equipment that went unused or transfer the equipment to an appropriate GSL organization; and (4) determine if $27,218 for water and pesticide analysis equipment was properly used, and if not, recover the funds.