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 2010-10-16 05:38 pm Back to NEWS
'Finance ministry not fit to manage Global Fund grants'
Finance minister Dr Situmbeko Musokotwane

The Ministry of Finance and National Planning (MOFNP) is not fit to manage grants, the Global Fund country audit report has disclosed.

The report revealed that the Office of the Inspector-General (OIG) identified a management gap in that the Program Management Unit (PMU) was placed in the National AIDS Council (NAC) and the reporting structure was not clearly defined.

"The Principal Recipient (PR) delegated its responsibilities to the NAC (an SR) without formal documentation which created uncertainty in implementation roles and responsibilities. Further, it was identified that the NAC did not institute appropriate grant management structures, policies and processes to safeguard Global Fund resources. In that regard, the OIG identified that since the start of the program there had been no functional oversight organ, and no internal or external audits had been undertaken on the program. SR supervision was also found to be deficient," the report stated.

"Further, the audit identified that the PMU lacked technical staff to oversee the technical aspects of the program i.e. in HIV, and there were no identified staff with clearly vested responsibilities for key functions such as grant management and procurement. These issues severely affected programme implementation and contributed significantly to episodes of expenditures that were unsupported, and ultimately deemed ineligible.

"Importantly, the audit noted instances of a lack of compliance with the grant agreement and work plans that resulted in the inappropriate use of program activity funds. In this regard, expenditures in the amount of ZMK 6.6 billion (US$1,443,447) made by the PR could not be supported and ZMK 6.9 billion (US$1,508,068) were spent on ineligible activities. The PR should refund these amounts."

The report stated that the PMU had made transfers to the MoH for these procurements and had not received any statements of accounts from the MoH for these funds.

"In some cases there had been no delivery of the items that were purportedly purchased, and also included purchases including ambulances costing ZMK2,654,246,000 (US$577,010), which did not meet specifications and were not being used despite the fact that the PMU had taken possession of them. All of these exercises constitute invalid procurements, and are included in the total above, noted for refund. The audit also found that a member of staff engaged in fraud with respect to program funds and expended further amounts that were not supported. The audit identified over ZMK 479 million (US$ 104,130), of expenditures that could not be accounted for in this account, which should be refunded," the report stated.

"The audit further identified that more than 70 per cent of the grant funds were managed by the SRs, yet there were no set procedures to manage the Sub-Recipients (SRs) or their use of the grant funds. Further, no selection procedures for SRs was identified, their capacity to implement the programs was not assessed, no guidance was given to the SRs on the allocation of funds and there was no formal written agreement between the PR and SRs detailing the SRs' responsibilities with respect to the program or the funds to be used. All of these circumstances lead to a significant risk of misappropriation of funds."

The report stated that the PR was also found to have significant management deficiencies.

"The audit identified weak controls over asset management; that there were no procedures in place to verify and oversee the assets, including expensive items such as motor vehicles and computers that were purchased by the SRs. Despite requests, the OIG was not provided with a record of all assets procured through the program, which is estimated at ZMK 4.2 billion (US$ 917,656). The exercise was made more difficult as the motor vehicles were registered with private number plates," the report stated.

"As a result of the foregoing, and as more specifically set forth in the body of this report, the OIG concludes that the MOFNP requires substantial capacity development in the areas of governance, financial management, grant management and procurement to be an effective PR, and is not fit to do so at the present time. As such, the Country Coordinating Mechanism (CCM) should consider identifying another institution with requisite capacity to manage the grants."


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