Foreign Aid: Improving the Impact and Control of Economic Support Funds
NSIAD-88-182
Published: Jun 29, 1988. Publicly Released: Jun 29, 1988.
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Highlights
In response to a congressional request, GAO reviewed the Agency for International Development's (AID) efforts to: (1) promote economic policy reform through the Economic Support Fund (ESF) program; and (2) control ESF cash transfer funds.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| U.S. Agency for International Development | To improve the prospects for successful policy reform efforts and facilitate measuring progress, the Administrator, AID, should require that each internal AID program document justifying cash transfer programs seeking policy reform to: (1) clearly state the specific economic policy reforms that cash transfer is intended to encourage; (2) specify the anticipated time frames or milestones for achieving these reforms; and (3) state the anticipated impacts of the reforms on economic development. Wherever country circumstances render it practical, AID should also include such details in grant agreements. |
Closed – Implemented
AID intends to include the details GAO recommended in program assistance authorization documents wherever required.
|
| U.S. Agency for International Development | To ensure that AID implementation of separate accounting is consistent with congressional intent, the Administrator, AID, should describe how AID will maintain accountability in cash transfer programs when it cannot avoid commingling cash transfers with other foreign exchange. |
Closed – Implemented
AID believes it is currently complying with the intent of the applicable legislation and that existing ESF control systems provide assurance that funds in commingled accounts are used for appropriate transactions. AID plans no further action.
|
| U.S. Agency for International Development | To ensure that AID implementation of separate accounting is consistent with congressional intent, the Administrator, AID, should require recipients to maintain all ESF cash grants, not just those termed cash transfers, in separate accounts. |
Closed – Implemented
AID has sent out guidance for setting up separate accounts for all cash transfers, including sector grants, implementing legislative requirements.
|
| U.S. Agency for International Development | To ensure that AID implementation of separate accounting is consistent with congressional intent, the Administrator, AID, should ensure that all separate cash transfer accounts be independently audited once every 3 years. |
Closed – Implemented
AID agreed to audit all separate accounts, but it has not done so yet. AID intends to provide for periodic auditing of all ESF separate accounts and is negotiating for access to bank records and audit rights to be included in cash transfer grant agreements.
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Topics
Accounting proceduresBalance of paymentsCash managementEconomic policiesForeign aid programsForeign economic assistanceForeign policiesFunds managementInternal controlsProgram management