Foreign Aid:

Accountability and Control Over U.S. Assistance to Indonesia

NSIAD-87-187: Published: Aug 19, 1987. Publicly Released: Aug 19, 1987.

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In response to a congressional request, GAO reviewed the accountability and controls over U.S. assistance to Indonesia.

GAO found that: (1) the Agency for International Development (AID) mission did not provide adequate oversight over the Food for Peace Program; (2) Indonesia did not submit audited reports of commodity sales receipts and expenditures; (3) self-help measure progress reports were generally late, incomplete, and did not cover all projects; (4) Indonesia spent an average of 75 percent of the agreed-upon amounts for self-help projects from 1982 through 1985, leaving $26 million unaccounted for in the equivalent local currency; (5) the mission did not include the food programs in its assessments under the Federal Managers' Financial Integrity Act; (7) the mission did not monitor most self-help projects and incorrectly calculated their required funding levels, resulting in a shortfall of about $700,000 in equivalent local currency; (8) the mission performed limited oversight of the internal controls of the two voluntary organizations that operated the title II program; and (9) although there was no evidence of major misuse or diversions of development assistance funds, the mission did not inventory or monitor other AID-financed development assistance items.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: AID has complied with this recommendation.

    Recommendation: The Administrator, AID, should direct the mission director to: (1) negotiate specific and measurable P.L. 83-480 title I requirements with Indonesia, to include quantifiable baseline information, specific time frames, and detailed budget information; (2) implement the terms of U.S.-Indonesian agreements by requiring Indonesia to submit the required audited reports on sales proceeds and receipts and to improve the content and timely submissions of its progress reports; (3) reconcile discrepancies in title I expenditures for 1982 through 1985 with the Indonesian government and ensure that agreed-upon local currency amounts are spent as intended; (4) consider requiring the Indonesian government to establish a separate P.L. 83-480 local currency account for future agreements; (5) evaluate the adequacy of private voluntary organizations' control under title II programs; and (6) develop procedures with specific criteria for monitoring major AID-financed development assistance items.

    Agency Affected: United States Agency for International Development


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