USAID UKRAINE SOERA TASK ORDER 1 Final Report

The analysis aimed to identify areas of relative strength and weakness in the GOU's processes and distill relevant gaps. The report highlights several opportunities to improve the safeguard mechanisms related to transparency and accountability. These include strengthening internal controls and audit capacity, streamlining payroll processes and data quality, and establishing a legal framework to strengthen the review and analysis of public expenditure. The report also recommends that USAID consider providing additional technical support to the GOU to enhance transparency and accountability mechanisms. The analysis was conducted based on a desk-level review of available documentation and interviews with select GOU personnel. The review enabled Deloitte to gain an understanding of how the GOU applies the principles and practices outlined in the 2013 COSO internal control framework, the USAID Public Financial Management Risk Assessment Framework (PFMRAF), and The World Bank's Public Expenditure and Financial Accountability (PEFA) assessment. The report identifies several areas where the GOU's processes and controls are not transparent or accountable. For example, the reporting on cash expenditures related to payroll is not always easily traceable, and the percentage of salary add-ons such as bonuses is high relative to European Union (EU) standards. Additionally, the controls and methodology used by Ukrainian Healthcare Organizations (HCO) to calculate and submit the portion of payroll financed from the Program of Medical Guarantees (PMG) are unclear. The report also notes that the GOU has demonstrated its willingness to continue evolving and enhancing existing accountability mechanisms. However, the lack of overall transparency is having an adverse impact on the GOU's overall accountability assessment. The report recommends that the GOU establish clear methodologies for completing internal control assessments and improve accountability for executive leaders of budget institutions. The analysis evaluated the extent to which there are documented accountability mechanisms over the use of USG funds by the GOU. Based on the analysis, the GOU accountability could be improved to better align with international standards. The report also notes that the Accounting Chamber of Ukraine (ACU) is entrusted with providing assurance on the compliance of government expenditure with applicable laws, regulations, and rules. Overall, the report provides an overview and analysis of the strengths and weaknesses of the GOU's processes for monitoring, verifying, reporting on, and providing safeguards related to transparency and accountability. The report highlights several opportunities for improvement and recommends that USAID consider providing additional technical support to the GOU to enhance transparency and accountability mechanisms.