Need To Improve Accountability and Control Over U.S. Assistance

NSIAD-87-173: Published: Jul 16, 1987. Publicly Released: Jul 17, 1987.

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In response to a congressional request, GAO examined U.S. economic, food, and security assistance programs to Liberia since 1980 to determine whether controls over U.S. funds are adequate.

GAO found that: (1) the Economic Support Fund and Food for Peace Programs faced several control problems, including misuse of rice and counterpart funds and Liberia's noncompliance with established assistance agreements; (2) the programs' counterpart funds cannot meet critical development objectives if Liberia does not comply with the agreements; and (3) although there was no evidence of any abuse in the military housing construction program, there was little evidence of systematic controls over contract administration prior to 1985, when Liberia handled contract awards. GAO believes that an effective Agency for International Development (AID) strategy will require Liberia to: (1) improve its accountability; and (2) meet the funding needs of its budget to adequately support development projects.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: AID has negotiated tighter controls with Liberia. These include: (1) complete privatization of P.L. 480 program; (2) deposit of counterpart funds in a private bank; (3) FY 1989 program provisions for mission approval of local currency disbursements; and (4) an audit plan requiring advance approval by the mission.

    Recommendation: The Administrator, AID, should negotiate agreements with the government of Liberia to strengthen controls over the Public Law 480 program. The following provisions should be considered: (1) counterpart funds should be placed in a commercial bank not affiliated with Liberia; (2) the AID mission should be allowed to have prior approval authority for all checks written on the counterpart fund account; (3) project plans that include such things as project objectives, budget line items, and reporting requirements should be submitted to the AID mission prior to disbursing counterpart funds; and (4) independent verification of counterpart fund use should be made by a party acceptable to both Liberia and the United States.

    Agency Affected: United States Agency for International Development


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