Internal Controls:

AID Missions Overstate Effectiveness of Controls for Host Country Contracts

NSIAD-91-116: Published: Feb 11, 1991. Publicly Released: Feb 11, 1991.

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Joseph E. Kelley
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Pursuant to a congressional request, GAO reviewed the Agency for International Development's (AID) policies and procedures for host-country contracting, focusing on whether AID missions in Bangladesh, Egypt, Jordan, and Pakistan accurately reported the status of internal controls for host-country contracts.

GAO found that: (1) AID required each of the missions to test and rate selected controls as satisfactory, unsatisfactory, or not applicable at least once during a 3-year review cycle; (2) 45 percent of 47 controls missions rated as satisfactory or not applicable during 1988 and 1989 assessments should have been rated as unsatisfactory; (3) missions rated some controls as satisfactory or not applicable without sufficient justification or despite negative information that should have resulted in an unsatisfactory rating; and (4) such inaccurate reporting of the status of internal controls adversely affected AID headquarters' ability to monitor implementation of key oversight requirements for host country contracts and resulted in lost opportunities to correct mission-specific control weaknesses.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Host country contacts now constitute an insignificant portion of AID's total contracting workload and therefore the need to check on mission supplied information no longer exists.

    Recommendation: The Administrator, AID, should ensure that overseas missions provide complete and accurate reports on internal control weaknesses.

    Agency Affected: United States Agency for International Development


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