Audit report on the enterprise development project with the Micro Industries Development Assistance Society in Bangladesh

During this period, USAID/B had obligated $5.5 million under a Cooperative Agreement with MIDAS, of which $1.2 had been expended. The audit was conducted by Coopers and Lybrand at the request of USAID/B. The audit concluded that the fund accountability statements were presented fairly and internal controls were generally adequate. However, there were $150,000 in questioned costs related to purchases from countries outside the authorized geographic code and a few material instances of non-compliance with agreement terms. In addition to the nine recommendations made by Coopers and Lybrand, RIG/A/Singapore made three recommendations which will be included in the Inspector General recommendation follow-up system. (1) Require MIDAS to implement procedures for identifying loans to related parties and report such loans separately to board members in the loan approval process. Disclosure of all related party loans should be made to USAID/B review. (2) Require MIDAS to implement procedures to ensure that loan fund requests are linked to actual loan disbursements. To facilitate mission monitoring of undisbursed loan funds, the procedures should include a monthly report to USAID/B showing all funded but undisbursed loans and scheduled loan disbursement dates. (3) Resolve the $149,787 ($127,000 and $22,787) in costs questioned in the audit report and determine the amounts to be recovered, if any, for any unauthorized purchases from sources outside geographic code 941. The above recommendations were discussed with USAID/B officials, who indicated general agreement. Recommendation No. 1 and 2 are resolved. Recommendation No. 3 is unresolved and can be resolved once the dollar amount of questioned costs are determined. All recommendations will be closed upon completion of the corrective actions. (Author abstract, modified)