Audit report on PL-480 Title II program in the Philippines

480 Title II assistance to the Philippines. Audit report covers the period 1979-4/83 and is based on document review, site visits, and interviews with project officials. The program is generally fulfilling its mission. In FY83, commodities were programmed for 709,300 Maternal Child Health (MCH) and 980,000 School Feeding (SF) recipients, an 18% reduction from FY82. (Phase out is planned for 1987.) However, USAID/P needs to better supervise the PVO"s, both of which have deducted inland transport and storage fees properly chargeable to the Philippines Government (GOP) from the sales proceeds of unfit commodities. CRS has also incorrectly deducted employee salaries and travel and other expenses from sales proceeds, has allowed its marine survey firm to handle these sales - resulting in excessive costs - and has been unreasonably late in remitting proceeds. As of 4/83, CARE and CRS had 355 outstanding inland claims, some dating back to 1978. With the rapid devaluation of the Philippine peso relative to the U.S. dollar, these claims are quickly depreciating. The current financial squeeze in the Philippines has made it difficult to settle claims against TRANSCON, a GOP-owned carrier. Onsite USAID/P monitoring has revealed several discrepancies between reported and actual commodity deliveries and distribution; many more were found during the audit. Inventory recording is weak, both at TRANSCON"s main warehouse and by consignees. CRS has been very late in submitting quarterly Commodities and Recipient Status Reports. Finally, targeting of recipients needs improvement, especially since program reductions mean that A.I.D. is assisting a smaller number of those eligible. In an MCH program operated by CARE and the Ministry of Health, often each municipality in a province is targeted for the identical number of recipients, despite differences in population and numbers of malnourished children. Except for a few isolated instances, targeting has not been a problem in CARE"s SF program or in the CRS programs. Eight recommendations are made.