MEMORANDUM AUDIT REPORT NO. 1-518-81-19, SMALL BUSINESS AND EMPLOYMENT GENERATION, OPG NO. 518-0001-ECUADOR

Evaluation covers the period 8/1/78-5/31/81 and was based on site visits and discussions with project personnel. As of 5/31/81, 250 families were participating in the project, with expenditures totalling $218,522 ($256,200 was obligated). Many planned objectives have not been achieved: only 37 young men (of the 90 planned) completed training in welding/machine shop, basic carpentry, and basic auto-mechanics and found employment; only 8 girl"s (of a planned 150) received on-the-job training, and none were placed in jobs; only 69 mothers participated in vocational training (compared to the 100 planned for); and finally, only 10 men are currently employed by the Center, whereas employment for 30 was planned. Several factors are responsible for the shortfalls. First, the original training time-period was found to be too short and was increased from 50 weeks to 3 years. Socioeconomic obstacles prevented the girls vocational training program from succeeding, and many parents lacked even minimal education and had to attend daily classes before being considered for "pre-vocational" courses. Before the project is extended, project objectives should be carefully analyzed to assure that they are realistic. Because of discrepancies in property control inventories, USAID should require the Center to provide an updated inventory list. Also, a set of procedures should be developed to ensure that periodic physical counts are made and are reconciled with the inventory records. USAID should ensure that A.I.D. emblems are affixed to AID-financed commodities. The auditors also recommend that the Center"s accounting procedures be improved. For example, consolidated accounting statements prepared by the Center were inaccurate because some A.I.D. grant receipts and expenses were not entered in the records. Finally, USAID"s reimbursement of $1,715 in sales taxes levied on purchased commodities should be returned. The taxes should be regarded as part of the Center"s contribution to the project.