Skip to main content

Millennium Challenge Corporation: Progress Made on Key Challenges in First Year of Operations

GAO-05-455T Published: Apr 26, 2005. Publicly Released: Apr 26, 2005.
Jump To:
Skip to Highlights

Highlights

In January 2004, Congress established the Millennium Challenge Corporation (MCC) to administer the Millennium Challenge Account. MCC's mission is to promote economic growth and reduce extreme poverty in developing countries. The act requires MCC to rely to the maximum extent possible on quantitative criteria in determining countries' eligibility for assistance. MCC will provide assistance primarily through compacts--agreements with country governments. MCC aims to be one of the top donors in countries with which it signs compacts. For fiscal years 2004 and 2005, Congress appropriated nearly $2.5 billion for the Millennium Challenge Corporation; for fiscal year 2006, the President is requesting $3 billion. GAO was asked to monitor MCC's (1) process for determining country eligibility, (2) progress in developing compacts, (3) coordination with key stakeholders, and (4) establishment of management structures and accountability mechanisms.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Millennium Challenge Corporation The Chief Executive Officer of the Millennium Challenge Corporation should complete the development and implementation of overall plans and related time frames for actions needed to establish corporatewide accountability, including implementing a strategic plan, establishing annual performance plans and goals, using performance measures to monitor progress in meeting both strategic and annual performance goals, and reporting internally and externally on its progress in meeting its strategic and annual performance goals.
Closed – Implemented
In April 2005, we recommended (MILLENNIUM CHALLENGE CORPORATION: Progress Made on Key Challenges in First Year of Operations, 04/26/05) that the Chief Executive Officer of the Millennium Challenge Corporation should complete the development and implementation of overall plans and related time frames for actions needed to establish corporate-wide accountability, including implementing a strategic plan, establishing annual performance plans and goals, using performance measures to monitor progress in meeting both strategic and annual performance goals, and reporting internally and externally on its progress in meeting its strategic and annual performance goals. In July 2006, in Millennium Challenge Corporation: Compact Implementation Structures are Being Established; Framework for Measuring Results Needs Improvement (GAO-06-805) we reported that MCC had taken a number of steps to implement this recommendation. MCC steps included completing a strategic plan, establishing an annual performance plan and goals, and using performance measures to monitor progress. In addition, the completed annual performance plan provided benchmarks against which to measure future performance.
Millennium Challenge Corporation The Chief Executive Officer of the Millennium Challenge Corporation should complete the development and implementation of overall plans and related time frames for actions needed to establish effective internal control over MCC's program and administrative operations, including establishing a positive and supportive internal control environment; a process for ongoing risk assessment; control activities and procedures for reducing risk, such as measures to mitigate risk associated with contracted operational and administrative services; ongoing monitoring and periodic testing of control activities; and a process for assessing and reporting on the effectiveness of internal controls and addressing any weaknesses identified.
Closed – Implemented
In April 2005, we recommended (MILLENNIUM CHALLENGE CORPORATION: Progress Made on Key Challenges in First Year of Operations, 04/26/05) that the Chief Executive Officer of the Millennium Challenge Corporation should complete the development and implementation of overall plans and related time frames for actions needed to establish effective internal control over MCC's program and administrative operations, including establishing a positive and supportive internal control environment; a process for ongoing risk assessment; control activities and procedures for reducing risk, such as measures to mitigate risk associated with contracted operational and administrative services; ongoing monitoring and periodic testing of control activities; and a process for assessing and reporting on the effectiveness of internal controls and addressing any weaknesses identified. In July 2006 (report GAO-06-805), we followed up on this recommendation and found that MCC had taken a number of steps to improve its internal controls, including: documenting the organization's structure and strategy, implementing a procedure for addressing audit findings, conducting required audits, establishing an ethics program, identifying priority areas for internal control, and establishing formal review panels and a board-level audit committee.
Millennium Challenge Corporation The Chief Executive Officer of the Millennium Challenge Corporation should complete the development and implementation of overall plans and related time frames for actions needed to establish an effective human capital infrastructure, including a thorough and systematic assessment of the staffing requirements and critical skills needed to carry out MCC's mission; a plan to acquire, develop, and retain talent that is aligned with the corporation's strategic goals; and a performance management system linking compensation to employee contributions toward the achievement of MCC's mission and goals.
Closed – Implemented
In April 2005, GAO recommended (MILLENNIUM CHALLENGE CORPORATION: Progress Made on Key Challenges in First Year of Operation, 04/26/05) that the Chief Executive Officer of the Millennium Challenge Corporation complete the development and implementation of overall plans and related time frames for actions needed to establish an effective human capital infrastructure, including a thorough and systematic assessment of the staffing requirements and critical skills needed to carry out MCC's mission; a plan to acquire, develop, and retain talent that is aligned with the corporation's strategic goals; and a performance management system linking compensation to employee contributions toward the achievement of MCC's mission and goals. In July 2006, in GAO-06-805, we reported that MCC had made improvements to its human capital systems, including re-assessing its staff needs, updating its human capital model, identified hiring priorities, developed training procedures, and established a performance framework linking compensation to employee expectations and performance reviews to MCC goals.
Department of State The Secretary of State, in her capacity as Chair of the MCC Board of Directors, should ensure that the board considers and defines the scope of its responsibilities with respect to corporate governance and oversight of MCC and develop an overall plan or strategy, with related time frames, for carrying out these responsibilities. In doing so, the board should consider, in addition to its statutory responsibilities, other corporate governance and oversight responsibilities commonly associated with sound and effective corporate governance practices, including oversight of executive management, the formulation and execution of corporate strategies, risk management and audit and assurance processes, and communication and coordination with corporate stakeholders.
Closed – Implemented
In April 2005, GAO recommended (MILLENNIUM CHALLENGE CORPORTATION: Progress Made on Key Challenges in First Year Operations, 04/26/05) that the Secretary of State, in her capacity as Chair of the MCC Board of Directors, should ensure that the board considers and defines the scope of its responsibilities with respect to corporate governance and oversight of MCC and develop an overall plan or strategy, with related time frames, for carrying out these responsibilities. In doing so, the board should consider, in addition to its statutory responsibilities, other corporate governance and oversight responsibilities commonly associated with sound and effective corporate governance practices, including oversight of executive management, the formulation and execution of corporate strategies, risk management and audit and assurance processes, and communication and coordination with corporate stakeholders. In July 2006 (report GAO-06-805), we found that the MCC board had accomplished a number of these steps, including approving a corporate governance policy, participating in strategic planning, forming an audit committee, publishing guidance documents, and developing an outreach program to facilitate communication.

Full Report

GAO Contacts

Office of Public Affairs

Topics

AccountabilityAgency missionsAppropriated fundsAppropriationsDeveloping countriesEconomic developmentEconomic growthEligibility criteriaEligibility determinationsForeign economic assistanceForeign governmentsGrantsInternal controlsInternational agreementsPerformance measuresStrategic planningStakeholder consultationsGovernment agency oversight