AUDIT REPORT ON PL-480 TITLE II, SECTION 204 TRANSFER AGREEMENTS

Evaluation covers the period 1/1/74-5/16/79 and is based on standard audit procedures and interviews with CARE, USAID, and Indian officials. The auditors investigated CARE"s reimbursement by USAID of $1.05 million in expenditures after the project"s completion in 1977. The auditors noted that CARE kept inadequate records, especially of insurance claims and procurements, and recommended that CARE either justify unsupported expenditures of $36,900 or refund the sum to USAID. The project objective was to provide 190,000 primary school children with 100 grams of RTE food for a total of 180 days. It was determined that the 100 gram portions of food were too large, so each child"s portion was reduced to 60 grams and the number of beneficiaries was raised to 330,000. The Government of India"s (GOI) ineffective distribution system inhibited the plant from reaching its potential production level of 20 metric tons of RTE foods per day. In 1978-89, tonnage production was only 53% of the target; 291,000 children were fed for 129 days instead of the projected 330,000 for 180 days. The auditors recommend that the if the GOI cannot achieve full production capacity and improve distribution of RTE foods, the level of Title II commodities approved for the RTE program should be reduced. An onsite visit revealed that various items totalling $156,000 (e.g., plastic containers for packaging and an experimental extruder) were not in use. It is recommended that CARE either utilize the items for project purposes or sell them. The final two recommendations state that CARE should supply USAID with details of insurance claims -- especially the $50,580 settlement for the plant fire -- and refund any proceeds not used for project purposes.