Maravi

More fail to account for Global Fund money - report

More fail to account for Global Fund money - report
By George Chellah
Fri 15 Oct. 2010, 04:00 CAT

THE Global Fund's latest country audit report of grants to Zambia has cited the Maureen Mwanawasa Community Initiative (MMCI) as one of the entities that did not have proper financial management systems.

And the audit disclosed that a salary survey comparison with similar organisations revealed that salaries at the Zambia National AIDs Network (ZNAN) were in some cases more than 150 per cent higher than in like positions in other organisations in the sector, with ZNAN executive director Elizabeth Mataka raking a monthly package of K67.8 million.

The audit revealed that the Global Fund encouraged its Principal Recipients (PRs) and Sub Recipients (SRs) to maintain adequate financial records to ensure effective tracking and reporting of financial receipts and expenditures.

"However, funds from the Global Fund grant were commingled either between grants or with other donor Program funds at PR and SR level. For Family Health Trust, ZMK 249,865,070 (US $54,318) was transferred from the Global Fund account and used to run another Program funded by Christian Aid.

Maureen Mwanawasa Community Initiative (MMCI) combined funds for both Global Fund and the Joint Financing Arrangement (JFA) in the same account at Stanbic Bank. These entities did not have proper financial management systems in place that could record and provide balances by donor periodically," the report stated.

The report disclosed that there were instances noted where SRs received funds without having a grant agreement signed with ZNAN.

"For example, on 11 June 2009, NZP+ Secretariat was granted ZMK 37,630,000 (US $8,180) by ZNAN. There was no grant agreement for the amount. Without a grant agreement, ZNAN may not be able to enforce any agreed terms and conditions once funds are disbursed. There were several SRs that did not maintain proper financial records. In addition, many SRs did not have audited financial statements for periods covered by Global Fund grants," the report stated.

"Lead agencies such as Kara Counseling did not have any financial records i.e. cash books, payment vouchers and related invoices, bank statements and reconciliations for the period 2004 to 2006. International HIV/AIDS Alliance provided Group Accounts that provided insufficient information regarding their operation in Zambia. Maureen Mwanawasa Community Initiative had incomplete records that were incoherent.

"An example of the weak record keeping was MMCI which signed a grant agreement on 8 August 2006 for ZMK 370,311,600 (US $80,502) from the Joint Financing Arrangement [a basket fund for other donors). However, some funds were disbursed from Global Fund grants to finance this Program. The amount disbursed was ZMK 202,976,800 (US $44,125), which should be refunded to the Global Fund. Furthermore, in January 2009, MMCI obtained ZMK 118,553,500 (US$ 25,773) from ZNAN, which was spent on JFA activities."

The report stated that the OIG noted several cases of misappropriation or mismanagement of funds at SR level.

"...6 out of the 21 SRs visited had suffered frauds or had very weak financial management systems in place. The OIG team was unable to obtain supporting documents for some amounts that had been spent. In some cases, such as MMCI, there were no cashbooks for the team to review.

Others such as KARA Counseling did not have any records whatsoever for funds received between 2004 and 2006. Ineligible expenditure relates to funds spent on activities that were not included in the work plan. For NZP+ Lusaka, these funds were used to pay allowances for a board meeting and the purchase of groceries," the report stated.

And the report stated that in 2003, at the inception of Global Fund grants, ZNAN was appointed a PR, to implement the civil society and private sector efforts to combat HIV/AIDS.

"ZNAN has expanded over the years, and, in most cases, achieved the targets set out in the grant agreements. However, the audit identified three poor performance areas: 1) the number of patients with HIV/AIDS infections put on ARVs; 2) the number of patients with HIV/AIDS infections receiving nutritional supplements; and 3) the deficient number of persons being trained in Monitoring and Evaluation.

The audit identified several instances of fraud and/or misappropriation at the SR level in the approximate aggregate amount of US $1.6 million. Of the 21 SRs visited, 6 were identified to have suffered instances of fraud, or had themselves misused grant monies. These amounts should be recovered and returned to the Global
Fund," the report stated.

"A large number of SRs are funded in each round, and ZNAN has made over 900 disbursements since the commencement of funding in 2003. This equates to approximately 180 disbursements per year. While the organization has developed good selection criteria for the appointment of SRs, there were several instances of non-compliance with internal sub-granting requirements identified. And in other instances, grant funds were disbursed with no agreement between the PR and SR.

"In connection with the operations and management in the PR, the audit identified that governance and oversight is provided by the Liaison Committee, which was found to be ineffective. The Committee has met only 9 times since 2003, when it is required to meet every quarter. In addition, the bulk of the membership is made up of members from SRs, creating a conflict of interest as potential SR members stand to benefit or be disadvantaged from decisions by the same management they oversee.

Further, the Committee's work in the areas of setting policy for senior management, conflict of interest, and the approval of large financial commitments, the process for performance monitoring, and the approval process for SRs, was not readily identifiable."

The report stated that a salary survey comparison with similar organisations revealed that salaries at ZNAN were in some cases more than 150 per cent higher than in like positions in other organisations in the sector. The salary survey in the NGO sector revealed that Mataka earns K67.8 million, which is approximately K35 million more than her colleagues in similar positions in other organisations who earn K33 million.

"With such high salary levels offered to attract the very best staff the, OIG had not expected to find the management deficiencies noted above. Further, the OIG found that ZNAN's internal audit arrangements were in adequate. First, the internal audit function reports to the Executive Director of ZNAN thereby restricting its independence and potentially its objectivity. Several errors in the ZNAN audited financial statements from 2003-2008 were identified. Out of the 12 audits conducted during the period, only one management letter was issued, and this letter only identified one weakness," the report stated.

"As reflected herein, the OIG has identified a series of weaknesses that should have been identified and noted. Equally, the external audit of ZNAN was found to have shortcomings, and it is the OIG's view that the current auditors should be changed. In conclusion, the OIG is unable to provide assurance that the grant programs managed by ZNAN were operating effectively at the time of the audit. Implementation of the OIG's recommendations should help to considerably strengthen ZNAN's effectiveness. The total amount refundable by ZNAN (including the amounts misappropriated by SRs noted above) is US$ 1,795,321."

Labels: CORRUPTION, MMCI

posted by MrK @ 6:39 AM