Foreign Assistance:

African Development Foundation's Grant Funds Are Not Routinely Audited

NSIAD-92-25: Published: Oct 29, 1991. Publicly Released: Oct 29, 1991.

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Pursuant to a congressional request, GAO reviewed the African Development Foundation's (ADF) grant audit practices, focusing on whether ADF: (1) ensures that its grantees have the ability to keep track of grant funds; (2) performed required grant funds audits; and (3) has resolved problems found during grant fund audits.

GAO found that: (1) ADF generally did not conduct required bookkeeping reviews; (2) of the 25 grantees receiving a grant of $50,000 or more since May 1989, only 5 received a bookkeeping review; (3) only 2 of 25 active grants received the required initial audit; (4) 11 completed grants, totalling about $1.4 million, had not been audited at all; (5) ADF did not systematically document its follow-up and resolution of bookkeeping review and audit findings; and (6) ADF has plans underway to initiate an automated scheduling and tracking system that will show the status of outstanding findings.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: ADF has revised its audit guidelines and has replaced bookkeeping reviews with mandatory simplified checklists to evaluate applicant accounting and recordkeeping capability. A basic bookkeeping instruction has been developed for grantees. A standardized memo has been developed that must be signed by the regional managers stating that a bookkeeping review has been performed.

    Recommendation: To provide greater accountability over ADF grant funds, the President, ADF, should ensure that evidence of the grantee's accounting and recordkeeping capabilities are documented by bookkeeping reviews, written waivers for bookkeeping reviews, or assessments by ADF regional managers.

    Agency Affected: African Development Foundation

  2. Status: Closed - Implemented

    Comments: ADF has revised its audit guidelines. Only the President of the Foundation can waive a financial audit in response to a written recommendation by a regional manager.

    Recommendation: To provide greater accountability over ADF grant funds, the President, ADF, should ensure that waivers for financial audits are documented.

    Agency Affected: African Development Foundation

  3. Status: Closed - Implemented

    Comments: Budget constraints have limited ADF to one full-time auditor in the Office of Financial Audit. However, the auditor prepares a summary report based on his review of bookkeeping and financial audits. This report is used by regional managers in comparing action taken by the grantee and documenting the status of the findings.

    Recommendation: To provide greater accountability over ADF grant funds, the President, ADF, should ensure that followup and resolution of findings from bookkeeping reviews, regional manager assessments, and financial audits are documented in a systematic manner.

    Agency Affected: African Development Foundation

 

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