Non-federal audit report Catholic Relief Services PL-480 Title II program in India, Madras and Bombay zones

480 Title II program in India implemented by Catholic Relief Services (CRS). The audit covers FY87-88 operations in the Madras and Bombay Zones. Significant abuse in program management is evident. Measurement containers used to distribute food were short by an estimated 15%-20%, distributions were often improper and contrary to requirements, losses were seldom reported, internal controls were inadequate, and official reports were not reliable and included information that was apparently generated to reconcile distribution records with receipts. Through these means, an estimated $3-$4 million (of an estimated total value of $21.8 million) in food commodities was misappropriated during the two- year period. At two distribution sites, beneficiaries received standard rations only 3-4 times a year as opposed to the recorded bi- weekly distribution. At three other sites, beneficiaries received cash in lieu of the food recorded as distributed. Apparently the commodities were sold, contrary to regulations. Inventories of food stocks could not be performed at several sites due to improper stacking. Of the remaining locations, several had large discrepancies between actual stocks and records, including one site where an attempt was made to cover up $37,000 in missing commodities by stacking bags around a hollow center. Additional warehouse problems are that damaged packages were not always repaired, commodities were not adequately tested for infestation, dunnage was not used, commodities were not properly segregated, stock was not rotated properly, and storage facilities were not always adequate. As a result, commodities were exposed to unnecessary deterioration. It was not possible to determine what exactly happened to the commodities that were not distributed. However, one distributing agency in the Bombay Zone reported that it itself had used the food. Although CRS had been repeatedly informed of these problems in previous audits and evaluations, it had not taken adequate actions to correct them. CRS officials also disagreed with the audit"s findings of improper reporting and distribution, claiming that auditors used incorrect conversion factors, used findings from the current year to form conclusions about prior years, interviewed too few people, and portrayed a few sites as representative of the entire program. However, upon receiving the results of the audit, CRS responded by closing two locations, providing accurate measuring equipment, improving the reliability of records, and requiring changes in warehousing operations.