Monitoring dollar and local currency resources under economic recovery and PL-480 Title I and III programs in Honduras

480 Title I and Title III programs to provide balance of payments support to the Government of Honduras (GOH). Audit report covers the respective periods 9/82-8/84 and 6/82-6/84; is based on document review and interviews with USAID/H, Central Bank (CB), and Ministry of Finance (MOF) personnel; and focuses on the monitoring of dollar resources and local currency generations (LCG"s). Although the GOH has established a number of central oversight systems, several weaknesses in controls over project resources exist. The Price Control Unit (PCU) established by USAID/H and the CB has not prepared an implementation plan for its price-checking operations, and the PCU staff needs to be enlarged. Also, the PCU"s location in the CB"s Department of Exterior Regulation does not allow the Unit to serve as an effective internal control over import/export transactions. TA in policies and procedures sorely needed by the PCU has not yet been planned. A high number of ineligible transactions and poor file maintenance by the CB has made the attribution of cash transfers to import transactions exceedingly time-consuming for USAID/H. In regard to LCG"s, some disbursements from the four special accounts were charged to the wrong account because USAID/H had failed to identify the proper account numbers. A single account has now been set up. Further, USAID/H"s active surveillance of the 109 LCG-financed projects may make a separate evaluation of the program unnecessary, and a USAID/H system to verify receipt of GOH reports on the program is imminent. As to LCG"s from Title I and Title III wheat sales, USAID/H has met with the MOF - which has taken over responsibility for the program from the Honduran Agricultural Marketing Institute - to begin setting up accounting controls to verify that millers are paying the required amounts into the account. Since USAID/H has either corrected or agreed to correct the above-noted problems, no formal recommendations are made.