Foreign Assistance:

Continued Efforts Needed to Strengthen USAID's Oversight of U.S. Democracy Assistance for Cuba

GAO-09-165: Published: Nov 24, 2008. Publicly Released: Nov 24, 2008.

Additional Materials:

Contact:

David B. Gootnick
(202) 512-3149
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

The U.S. Agency for International Development's (USAID)Cuba Program provides assistance to support human rights and promote nonviolent democratic change in Cuba. From 1996 through 2008, the program awarded $83 million in grants to nongovernmental organizations and universities. In 2006, GAO found weaknesses in program oversight that increased the risk of grantees' improperly using grant funds and failing to comply with U.S. laws. In 2008, misuse of grant funds at organizations with the program's two largest grants was detected. GAO was asked to examine (1) actions that USAID has taken since 2006, or plans to take, to improve its award and oversight of the Cuba Program's grants and (2) actions that USAID has taken in response to the recently detected misuses of grant funds. GAO analyzed USAID and grantee records, conducted limited reviews at five grantees, and interviewed agency and grantee officials.

Since 2006, USAID has taken a number of steps to address identified problems with the Cuba Program's awards of democracy assistance and improve oversight of the assistance. For example, USAID has competitively awarded all Cuba Program grants since 2006, compared with 5 percent of grants awarded in 1995-2006; has hired more staff for the program office since January 2008; and contracted in April 2008 for financial services--such as reviews of grantee internal controls and procurement systems--to enhance oversight of grantees. USAID also has worked to strengthen program oversight by, for instance, ensuring preaward and follow-up reviews, improving grantee internal controls and implementation plans, and providing guidance and monitoring about permitted types of assistance and cost sharing. However, USAID has not staffed the Cuba Program at the level the agency has determined is needed for appropriate oversight; as of October 2008, the program office had five staff, compared with the 11 recommended in two USAID assessments. Further, because many of USAID's actions to improve oversight were initiated recently, their impact on the risk of the program grantees misusing grant funds or failing to comply with U.S. laws and regulations is not yet evident. In June 2008, for example, USAID's new financial services contractor found unsupported purchases at the organization with the program's largest grant. In response to the misuse of funds at organizations with the two largest Cuba Program grants, USAID suspended the two grantees in March and July 2008, respectively, pending the results of criminal investigations. To detect financial vulnerabilities at other grantees, USAID announced in mid-July 2008 that it would accelerate planned reviews of program grantees' procurement systems and initiate audits of their incurred cost, and it partially suspended two additional grantees pending the results of the procurement reviews. The program's other grants remained active pending the results of these reviews and audits. The procurement reviews--completed in August 2008 by the new financial services contractor--identified internal control, financial management, and procurement weaknesses at three grantees; USAID is working with the grantees to correct these weaknesses. The USAID Inspector General will oversee the incurred cost audits, which USAID expects to be completed by November 2008 under a separate contract with another firm.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To strengthen oversight of USAID's Cuba Program grants and the program's ability to ensure the appropriate use of grant funds, the Administrator for USAID should ensure that the Cuba Program office is staffed at the level that is needed to fully implement planned monitoring activities, such as the systematic analysis of grantee data to identify at-risk grantees, and that the agency has determined is necessary for effective oversight

    Agency Affected: United States Agency for International Development

    Status: Closed - Implemented

    Comments: As of November 2008, USAID's Bureau for Latin America and the Caribbean (LAC) Cuba Program office had 5 staff and planned to hire several additional staff by July of 2009. This level was below the level of 11 persons called for in 2007 USAID assessments, to ensure successful implementation of the program and appropriate monitoring and oversight of grantees and grant funds. We reported in January 2013 (GAO-13-285) that LAC's Office of Cuban Affairs had 7 full-time staff: a Director, 4 Program Managers, a Budget Analyst, and an Administrative Assistant. In February 2013, USAID provided an update to its 2007 staffing needs assessments to support that it views its current Cuba program staffing level as sufficient to ensure effective oversight and successful implementation of program activities. Specifically, USAID stated that the 2007 proposed staffing plan was based on a significantly higher funding level of approximately $45 million for program activities, and the plan assumed that funding levels would steadily increase along with an anticipated democratic opening in Cuba. However, the transfer of power in Cuba in 2008 did not bring about the expected opportunity for democracy change, and the program?s funding has since declined to below 50 percent of the levels envisioned in 2007. USAID added that for the next three years, funding is expected to remain at a level of between $15-20 million annually. In addition to citing the smaller program portfolio, USAID noted that it has put in place fortified oversight measures since 2007, and that programmatic risk has therefore declined, requiring a smaller team of personnel to manage the program. As a result, USAID views current staffing levels as adequate, given projected funding levels and recent improvements made in program oversight, including support provided by two external contractors for programmatic and financial monitoring. However, USAID added that it will continue to hire new staff in the future, as warranted.

    Recommendation: To strengthen oversight of USAID's Cuba Program grants and the program's ability to ensure the appropriate use of grant funds, the Administrator for USAID should periodically assess the Cuba Program's overall efforts to address and reduce grantee risks, particularly with regard to grantees' internal controls, procurement practices, expenditures, and compliance with laws and regulations.

    Agency Affected: United States Agency for International Development

    Status: Closed - Implemented

    Comments: USAID took several actions to address this recommendation. First, USAID hired an external auditor in April 2008, whose current contract has been extended through fiscal year 2013, to perform financial internal controls reviews of its partners, using a risk-based approach to determine coverage and frequency of reviews conducted. USAID officials told us in August 2012 that they consider these reviews to be a key internal program accountability mechanism. Among other things, the auditor assesses implementing partner risk, conducts fraud interviews, reviews accounting and procurement policies, and assesses the implementing partner's internal controls and procurement policies to ensure they are in compliance. The external auditor told us in June 2012 that it meets regularly with USAID officials, including the Program Director, to discuss audit progress any areas of concern or for potential follow-up. In our January 2013 report (GAO-13-285), we found that the auditor's 30 reviews of 13 of 16 partners USAID funded during fiscal years 2007 through 2010 identified financial management, procurement, and internal controls weaknesses that USAID subsequently took steps to address. In addition, USAID's Management Bureau and its Inspector General performed additional audits of awardees during this time period. USAID noted that it aims to review each of its program partners every 6 months. As a result of findings of USAID?s external auditor, USAID/LAC provided training to partners and, according to the external auditor, partners have made improvements. Also, in July 2011, USAID officials noted that officials from the Cuba Program Office and Office of Acquisition and Assistance continue to hold regular internal meetings to discuss issues identified in preaward reviews for the Cuba Program. USAID officials noted that at a broader level, program officials continue to meet on a quarterly basis with award recipients as a means of monitoring and coordinating program activities, and USAID also meets frequently with State officials to coordinate efforts and monitor any ongoing programmatic issues, such as issues that have come up in internal controls reviews.

    Jul 24, 2014

    Jul 21, 2014

    Jul 9, 2014

    Jul 8, 2014

    Jun 26, 2014

    Jun 25, 2014

    Looking for more? Browse all our products here