CDTI project in Malawi: internal audit conducted, 12-22 April 2003

DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY AFRTCAN PROGRAMME FOR ONCHOCERCTASIS CONTROL (APOC) CDTI Project in Malawi Blantyre (MALAWI) Internal Audit Conducted April 12 - April22,2003 Audit Performed by Mr. Fortune A. Agboton, APOC - Ouagadougou Mr. Kyalo Kibua, The World Bank - Washington D.C. Ms. Eva Muro, WHO/APOC - Tanzania Mr. Peter Kamowa, Internal Audit/MOH - Malawi r;r( TABLE OF CONTENTS Abbreviations and Acronyms PAGE I. II. III. IV. v. Introduction Objective and Scope Approach Findings and Detailed Audit Results A. Partnership . Top Management . Contributions of the Partners B. The Letter of Agreement . Awareness . Submission of Timely Reports and Returns . Implementation of Activities C. Capital Equipment . Status of Capital Equipment . Vehicles . Computers D. Receipts Cycle E. Disbursement Cycle F. Monitoring of Budget . Staff Salaries . Duty Allowances (Top-Up) . Travel . Perdiems . Accommodation . Stationery . Fuel . Spare Parts . Telephone G. Field Visits . MectizanDistribution Annexes Annex I - Letter to DPHS Annex II - NOTF APOC Inventory Annex III - Petty-cash Verification Annex IV - Budget Analysis Form for March 2002 Annex V Approval of IEF Salaries Annex VI - Equipment Collected from Malamulo Annex VII - NOTF Top-up Formulae Annex VIII - Proposal for CDD Training Annex IX - Extra Budget Allocation Proposal AnnexX - RepossessedSpare-parts Annex XI - Justification for Missing Telephone 3 4 5 6 7 7 11 t2 15 t6 t7 24 Z APOC CDD CDTI CHAM CHSU DEHO DHO DNOC DOC DPC DPHS HAS IEF JAF LOA MK MOH NGDO NOTF TCC TOT w.H.o Abb reviatio ns/Ac ronyms African Programme for Onchocerciasis Control Community Directed Distributor (of Ivermectin) Community Directed Treatment with lvermectin Christian Hospital Association of Malawi Community Health Services Unit District Environmental Health Officer District Health Officer Deputy National Onchocerciasis Coordinator District Onchocerciasis Coordinator Disease Prevention and Control Officer Director of Preventive Health Services Health Surveillance Assistants International Eye Foundation Joint Action Forum Letter of Agreement Malawian Kwacha Ministry of Health Non-Governmental Development Organization National Onchocerciasis Task Force Technical Consultative Committee Trainers-Of-Trainers World Health Organization 3 WR World Health Organization Representative in the Country I. INTRODUCTION 1. The Community-Directed Treatment with Ivermectin (CDTD project was launched in January 1997 in Malawi originally in two districts in the southern part of the country namely Thyolo and Mwanza. The objective of the project is essentially to establish sustainable community-directed Ivermectin distribution systems in Malawi. Later, in 1999, a request from the National Onchocerciasis Task Force of Malawi (NOTF/Malawi) was made to extend the activities of the CDTI to five additional districts, which are Mulanje, Phalombe, Blantyre, Chikwawa, and Chiradzulu. The request was approved. Therefore, more funds and additional Capital Equipment were released as requested by the National Onchocerciasis Task Force of Malawi (NOTF/Malawi) to enable the implementation of the activities of all seven districts. 2 After funding of the Community-Directed Treatment with Ivermectin (CDTI) project in Malawi for five years, the National Onchocerciasis Task Force of Malawi (NOTFAvIalawi) has received from the African Programme for Onchocerciasis Control (APOC), a total amount of US$ 575,998 (five hundred and seventy five thousand nine hundred and ninety eight US dollars) in cash and US$ 113,028 (one hundred and thirteen thousand twenty eight US dollars) in Capital Equipment provided for the implementation of the project activities in the seven onchocerciasis endemic districts. 3. [n accordance with section 2.2 of the Letters of Agreement signed between the Ministry of Health of Malawi and the African Programme for Onchocerciasis Control (APOC), an audit of the financial position of the APOC CDTI Project in Malawi was carried out in Malawi from April 12 to April 22,2003. The audit examination covered a period of two years from April 1, 2001 to March 31, 2003. This period represents the year 4 and the year 5 funding for the APOC CDTI project in Malawi (Second and third year funding for the extension districts) as stated in the Letters of Agreement numbers 08/181/550/(iv)/00 MW 4EZ and 08/1 8l I 6041 (v)102 MW5E3. 4. As indicated in the Letters of Agreement, the total investment in the Malawi CDTI project for the two-year period under review and mentioned above amounts to US$ 704,879 representing a joint contribution from the Malawi Ministry of Health (MOH), the International Eye Foundation (IEF), the Christian Health Association of Malawi (CHAM), the Malawi Tea Estates, and the African Programme for Onchocerciasis Control (APOC). 6. Matters arising from the audit are set out in this report. All issues contained in this report were fully discussed with NOTF in Malawi. 4 5. The purpose of this report is to make known the audit observations arising from the final investigations conducted by a joint APOC/World Bank internal audit team made of one representative from the MOH/IMalawi, one representative from the World Bank and two representatives from APOC Management. This report will serve as a basis for comments and corrective measures. 7II. OBJECTIVE AND SCOPE The purpose of the audit was: a) to determine whether the whole internal system of controls at the NOTF Secretariat is satisfactory and is effectively applied in administering the funds received from the African Programme for Onchocerciasis Control (APOC), b) to ascertain the contributions from other partners to APOC activities, namely the Ministry of Health of Malawi (MOH/IvIalawi), the International Eye Foundation (IEF)/Ndalawi, the Christian Health Association of Malawi (CHAM), and the Malawi Tea Estates, c) to review the operational activities associated with the costs as indicated in the returns submitted to the Management of APOC by the National Onchocerciasis Task Force (NOTF) of Malawi. During the course of the investigations, the audit team organized two meetings with the secretariat of the NOTF, had a tele-conference call with the former NGDO representative Dr. Christine Witte and met twice with the current NGDO Country Director, Dr. Geoffrey Ezepue. The team also visited six districts (Blantyre, Chikwawa,Mwanza, Thyolo, Phalombe and Mulanje) where the project has been implemented and nine communities in four districts namely Mwanza, Mulanje, Chikwawa and Blantyre. The details are as follows: a) At the NOTF level, the team had a discussion session with the Director of Preventive Health Services (DPHS) at the Ministry of Health in Lilongwe. Many sessions were held with the National Onchocerciasis Coordinator, the Deputy National Coordinator, the Accountant of the NOTF, the Secretary of the NOTF and the two drivers. b) At the district level, the team met with four District Health Officers (DHOs) and two District Environmental Health Officers (DEHOs) acting on behalf of their DHOs. The team also met with all six District Onchocerciasis Coordinators (DOCs) accompanied by their respective CDTI Supervisors and the Trainers-of- Trainers (TOT). c) At the community level, the team met with three Health Surveillance Assistants (HSA), nine Community-directed Distributors (CDD) and a village headman. d) The team visited the Malamulo hospital twice in the district of Thyolo where the APOC salaried IEF employees are based. 9. The accountability documents examined during audit covered the returns submitted by the CDTI project in Malawi during Year 4 and Year 5 of the project and a review of all records including: a) The Cashbooks, the vouchers, the receipts, the logbooks and different types of ledgers such as inventory records at the NOTF secretariat. b) The Logbooks, Ivermectin storage records, treatment records and training records at the districts level. 8 5 III. APPROACH 10. Based on the findings and recommendations made by the evaluation team, which conducted the "Assessment of the Self-Sustainability'' of the Malawi CDTI project in May 2002, the audit team started the audit activities by meeting with the key directors in the MOH. The aim was to investigate the progress made by APOC with regards to the high priority recommendation made i.e. "immediate sensitization of all directors in the MOH should be made before August 31, 2002. Therefore, the team met with the Director of Preventive Health Services (DPHS) who is also the Chairman of the NOTF. 11. Based on the findings of the meeting with the DPHS, it became necessary to conduct an investigation on the functioning of the NOTF which is the decision making body for the successful implementation of sustainable onchocerciasis activities in the country. The audit team also investigated the collaboration of the NOTF with the lnternational Eye Foundation, the NGDO which is partner to the implementation of the project and which is a contributor to the cost of the project. The audit team also met with the Districts Health Officers who oversee the implementation of the project in their districts, particularly in the endemic communities. The findings are included in the section titled "Top Management". The team also investigated the top management attitude, decision-making process, planning, awareness, internal control procedures, approval for disbursements of funds and follow-up actions after implementations. 12. Additionally, the audit team also made the investigations on the detailed schedule of the equipment received since the inception of the project versus the available "Capital Equipment" and its status. 13. The section "Receipts Cycle" includes a Bank Reconciliation Statement review and a Petty Cash Statement comparison with the cashbook. Under the same section, the receipts and recording of funds from APOC and other donors has been investigated. 14. The findings included in the "Disbursement Cycle" section are: The review of the intemal control procedures, the authoizatron and approval of expenditures, the invoices and receipts compared to the costs in the market, the payment to the suppliers versus the cost, the record keeping in the cashbook, the establishment and the statement of expenditures for each donor of the proj ect to control possible double funding, the review of detailed schedule of the vehicles expenditures (Fuel and maintenance), the travel expenses and the training and advocacy costs. 15. The 'Monitoring of Budget" process was also reviewed to investigate the compliance with the statement under the section 2.1 of the Letter of Agreement concerning the maximum obligation of APOC for any budget line item in the approved budget. 6 IV. FINDINGS AND DETAILED AUDIT RESULTS A. Pa.RTNERSHIP IN THE COUNTRY Top Management Partnership for decision making and planning The Ministry of Health 16. The audit team held a discussion session with Dr. Somanje, who is the Director of Preventive Health Services (DPHS) within the Ministry of Health in Malawi and is also the chairperson of the NOTF/lvlalawi. The team came up with the following findings: a) The DPHS was aware of the existence of the APOC project in the country but was not aware APOCs operational and financial procedures. b) The DPHS believes that the Minister of Health is aware of the CDTI project because he was present when one APOC donated vehicle was released last year. However, nobody updated him on the projects achievements in the field. c) He admitted that he was also not aware of the amounts in the budget proposals submitted to APOC and was not officially informed of the amounts approved by APOC to the project during the past five years. However, he has admitted that he was aware that funds were sent directly from APOC to the project bank account in Blantyre. d) The DPHS had knowledge of the self-sustainability assessment conducted in May 2002 by APOC because the evaluators met with him at the beginning of the exercise but he was not debriefed before the departure of the team (See Annex I). e) He has also indicated that it was possible that the officer in charge of the Community Health Services Unit (CHSU) is aware of the outcome of the sustainability evaluation. 0 The DPHS, to whom the National Coordinator should report, admitted that he has not received a copy of the findings and recommendations of the self-sustainability assessment team. He has also never received any technical and financial reports of the project from the National Coordinator. He concluded that the attitude of the National Coordinator has reduced the visibility of the project within the MOH and that this could not guarantee any support from the Ministry of Health. g) The DPHS, who is also chairperson of the NOTF, had not chaired any NOTF meeting for the last 2 years. In this regard, he was not aware that APOC funding amounts to the amount indicated to him by the audit team and to this extent was not aware that the Management of APOC has suspended funding the project since November 2002. The NGDO - International Eyes Foundation/Malawi (IEF) 17. In mid-February 2003, the IEF appointed a new Country Director, Dr. Geoffrey Ezepue, after his predecessor, Dr Christine Witte, left in October 2002. This created an information gap because the succeeding NGDO Director had incomplete information regarding the CDTI project and the NOTF operations. He also did not know about any fund 7 contributions to be made by the NGDO, but was aware that he was signatory to the NOTF- WHO/APOC bank account. He was briefed on the suspension of funding by APOC being an outcome of the self-sustainability mid-term evaluation of the activities in the five districts. He however did not have the chance to read the reports. 18. Thanks to Dr. Ezepue, the audit team organized a telephone conference with the Program Director, Mr. John Barrows and former Country Director Dr Christine Witte. The findings were as follows: a) Dr Christine Witte had been chairing the NOTF meetings in the absence of the Chairperson and admitted that the NGDO had worked in good partnership with the NOTF Secretariat. b) She indicated that the NOTF had never been the decision making body as a Task force. The decisions were more or less made by the National Coordinator. However, she had been the signatory to the NOTF-WHO/APOC bank account in Blantyre. The District Health Officers (DHO) 19. The audit team visited all the districts covered by the project except the district of Chiradzulu where no activity has been implemented. The findings are as follows: a) All the DHOs are aware of the onchocerciasis control project in their respective districts but have never been fully involved in APOC activities. b) The DHOs believe that the project is working in isolation despite the fact that they had nominated the DOCs involved in the implementation of the CDTI. c) They have no information concerning the funding of the project and had never received copies of the Letters of Agreement signed between WHO/APOC and the MOH. d) The DHOs in the districts of Thyolo and Mwanza have indicated that they were approached by the National Coordinator after the recent Self-Sustainability Assessment and were requested to include in their District Health Plans the implementation of the CDTI. e) They found that the implementation of the CDTI was very expensive and that they still needed additional external funds for approximately two more years to ensure maximum integration. Recommendations 20. The team believes that there is a problem that needs to be resolved at the Ministry of Health level and at all other levels because the sustainability of the CDTI depends on how much the sensitization exercise is carried out. The audit team reinforces the recommendation of the Self-Sustainability Assessment team by recommending that a three-day REAL NOTF meeting be held immediately, before any funding is resumed by APOC. The meeting should be funded and chaired by APOC. The key attendants should include the DPHS as Chairperson, the CHSU, the seven DHOS, the NGDO, WHO/Malawi (DPC) and the Management of APOC. B This meeting should address all the issues raised above by all stakeholders including all programmatic and financing issues. 21. The chairperson of the NOTF should be more involved in the operational and financial aspects of the project. The Chairperson should participate and chair all planned meetings.. This will help solve the non-visibility of the program at the National level by the involvement of the MOH and help guarantee the sustainabitity of the project. The audit team recommends that the Chairperson of this NOTF be exceptionally the only signatory of the Letters of Agreement. Involvement of WHO/Malawi 22. The audit team noted that the WHO involvement in this program at the country level is very weak. After a discussion session with Mr. Ben Chandiyamba, the Disease Prevention and Control Officer (DPC) in the WHO Representative's office, the team came up wilh the following: a) The DPC has participated in the NOTF meeting in the past, b) The DPC mentioned that the WHO offices at the country level function more like a post-office, and admitted that this weakness was an oversight, c) The DPC does not know much about the operations of APOC, as he has never received any technical or financial reports from the NOTF coordinator. d) He has also never been invited by APOC to attend any meeting on the strategies or invited to attend training on issues like Rapid Epidemiological Monitoring, Sustainability Evaluations so as to have the same background knowledge in order to coordinate the implementation of any activity concerning the APOC project at the WHO level. Recommendations 23. All DPCs at WHO offices in APOC Countries should be more involved in all matters concerning the APOC activities in their country. This would be made possible if special letters are sent to them through the WRs inviting them to participate in APOC activities. These activities would include the trainings on aspects like sustainability assessment, trainings on REMO/REA and meetings to discuss strategies to ensure more impact. Contributions from the partners 24. According to the Letters of Agreement for the two years under review, the contributions from the partners were meant to be as follows: Amounts in US$ APOC MOH CHAM Tea Est. IEF TOTAL Year 4 173,948 123,630 13,275 23,946 334,799 Year 5 16l,5l7 165,968 15,203 27,392 370,080 TOTAL 335,465 289,598 28,478 51,338 704,879 o The audit team conducted investigations to ascertain the contributions of each of the partners to the CDTI project in Malawi. The findings are as follows. The Ministry of Health 25. During the discussion with the audit team, the DPHS admitted that the Ministry of Health had not made any direct cash contribution to the project because the project was located in Blantyre, which is outside the premises of the MOH in Lilongwe. This meant that the NOTF was seen as an NGDO having the needed funds for its activities and was therefore operating in an isolated manner. 26. The DPHS has also indicated that if any cash contribution should be made by the MOH to the CDTI project, this should be made through his office and that this has not been the case since his appointment. 27 . It is however noted that the Ministry of Health has made available six staff members under its payroll including the National Coordinator, the Deputy National Coordinator, the accountant, the secretary and two drivers. However, our assessment revealed that the MOH staff salaries indicated in the budget proposals submitted to APOC were unrealistic and should be scaled down drastically (See Annex VII). The NGDO: International Eyes Foundation (IEF) 28. The audit team found that the NGDO has never made any cash contribution to the APOC project since the inception of the CDTI project. 29. The NOTF Coordinator confirmed that the NGDO's in-kind contributions were limited to the office space and utilities (water and electricity) and a very limited in-kind contribution in terms of the staff time of the IEF country director herself. 30. He informed the audit team that all other services provided by the NGDO was charged to APOC including facsimile and the international phone calls. When APOC funds were exhausted, the NGDO advanced the NOTF money. He concluded that the IEFs in-kind contributions were "very very" minimal. The contribution from the Districts funds 31. The contributions from the districts, while not indicated in the budget proposals, should be mentioned. All the District Onchocerciasis Coordinators (DOCs), who are district staff members, had office space provided to them. The district had at times paid for the maintenance and the fueling of the motorcycles provided to the districts by APOC. Other Partners to the Project 32. Based on the Letter of Agreement, the Christian Health Association in Malawi (CHAM) and the Tea Estates Association were supposed to contribute financially to the CDTI program. 10 33. These two NGDOs have never made any financial contribution to the CDTI project. However, the health workers under the payroll of the CHAM and the Tea Estates were involved in the distribution of the Ivermectin in the communities surrounding the CHAM where all staff members are living and to the Tea pluckers living in the same communities. 34. The National Coordinator has confirmed to not receiving any financial support from these organizations and that the amounts indicated in the APOC budget proposals for the Malawi CDTI project were mere figures. He has also confirmed that the strategies for the distribution of the Ivermectin in those communities are Community-Based or Tea Estate- Directed treatment with Ivermectine. He has also indicated that all training involved the Health workers of CHAM and Tea Estate. Recommendation 35. When submitting a budget proposal to APOC for funding, the NOTF should avoid inserting wrong contribution figures to inflate the real cost of the project. By implementing the recommendation, the cost per person treated should show an affordable figure for any donor willing to support the project. Thereforer rtry subsequent budget to be submitted to APOC for approval should demonstrate a more realistic figure. The Partners not contributing should no longer appear in the budget proposal thus entailing no payment of the Overheads by APOC. The contribution from WHO 36. The audit team was informed during a meeting with Mr. Ben Chandiyamba, the DPC in the WRs office, that WHO had contributed to the program in various ways including; providing funding for travel expenses for the Coordinator or other MOH representatives for participation in key international meetings on APOC. B. LETTER OF AcnnTuENT Awareness 37. The team found that the DPHS, the DHOs and the DOCs, and the implementers at the planning and decision making level, were not aware of the Letter of Agreement or of its contents. In this regard, they were unaware of the APOC budget provision for the past five years. The Letters of Agreement was treated as a confidential document. It was accessible by very few people in the country, including the National Coordinator and the former Country Director of IEFAvIalawi Submission of timelv reports and returns 38. The team investigated whether all the NOTF secretariat staff members, including the National Coordinator, the Deputy National Coordinator and the NOTF accountant were fully aware of the types of reports and the number of reports and the due time for submission to the APOC headquarters as detailed in the Letter of Agreement. The audit team has noted with satisfaction that the types of reports and the due dates were well known by the NOTF Secretariat's high-level staff members. However, they have admitted that they were only 1l- experiencing delays with the monthly expenditures returns due to the failure of the Bank to provide the end of month bank statements on a timely basis. Implementation of activities 39. As per the Mid-term Assessment of the Sustainability of the Malawi Extension CDTI Project - November 2002, it was noted that the activities had not been implemented in the district of Chirazulu and in part of the district of Blantyre district as it was expected in the Letter of Agreement (LOA). The audit team has noted with appreciation that all the communities in the district of Blantyre have received at least one treatment. However, no activity has been implemented in the district of Chirazulu despite the payment of US$ 346,332 (three hundred and forty six thousand three hundred and thirty two US dollars) from the Trust funds by APOC and received by the NOTF/\4alawi, to cover all the seven endemic districts in the country. 40. The audit team has noted that a meeting was held at the NOTF secretariat to decide how to immediately spend down any fund balance left at the end of year 3 prior to the period covered by the Letter of Agreement of year 4 to avoid reimbursement of the balance to APOC. The balance amounting to more than US$ 31,000 was used to pay for unplanned and unbudgeted items including trainings, advocacy materials, stationeries, Capital Equipment (13 bicycles), motorcycle spare parts, office supplies, fuel coupons. This attitude is not in line with point 5.5 of the Letters of Agreement (See Annex IX). Recommendations 41. The Letter of Agreement should be made available to all members of the NOTF so as to enable them to be aware of the statements of the Letter of Agreement and to create transparency in the use of the funds approved by APOC. 42. The NOTF should abide with the statements of the Letters of Agreement and should obtain an interim bank statement to expedite submission of their returns to the APOC headquarters and later submit the final statement when received. 43. It should be noted that the fund released by APOC is an estimated amount for the implementation of the CDTI activities as planned and approved. Therefore, as indicated under point 5.5 of the Letter of Agreement any unliquidated balance at the end of the period should be paid back to WHO/APOC in the circumstance of planned activities totally implemented or not implemented. C. ClprrAL EqunuENT Status of Capital Equipment 44. The audit team developed a detailed inventory of capital equipment received since the inception of the project (as listed in the table below) and evaluated the status of the equipment. t2 Item Total Location PresentY/N Condition Good/ Bad o/, of time used for the proiect Vehicle 2 NOTF Y Good NA Motorcycle 13 (1 was stolen from Malamulo) 8 to 6 districts 3 to Malamulo 1 for IEFA{OTF Y Good 1 motorcycle in Malamulo was not functioning NA Motorcycle helmets 4 2 NOTF l Thyolo I Phalombe Y Good NA Computers 7 Desktops& 1 Laptop 3 NOTF (2 not functioning) 1 NOTF Laptop l Thyolo 1 Mulamulo l Blantyre, 1 Mulanie Y Good NA LaserJet Printer 5 2-NOTF 1-Blantyre 1-Thyolo l Mulanje Y 50%functioning r00% UPS 6 1-NOTF 1 Thyolo 1 Mulamulo 1 Blantyre l Mulanje 1 being serviced Y Good r00% Photocopier 1 NOTF Y Good r00% Surge Protector I NOTF Y Good t00% Case Safe 1 NOTF Y Good r00% 2 filing cabinets 2 NOTF Y Good r00% Cell Phones 2 (One reported stolen & report filed) 2 NOTF Y Good NA Bicycles 13 N/A N/A N/A N/A Punching Machine 1 NOTF Y Good r00% Table Calculator J NOTF Y Good t00% 45. A physical check of all capital equipment revealed discrepancies between inventory provided by the NOTF and the team's findings (See Annex II). One printer provided to 13 Malamulo Hospital was missing, several motorcycle helmets were unaccounted for and one motorcycle was stolen from the NOTF in January 2003 and no police report was filed. Both WHO/IvIalawi and APOC had not been notified of this incident. In the absence of a police report for the stolen motorcycle the audit team was informed that the police were claiming MKl, 000 (US$ 1l) in order to release a report and the NOTF could not pay for this amount, since funding was suspended from APOC. It is worth mentioning that a new standby APOC motorcycle has replaced the stolen motorcycle. Recommendations 46. Better monitoring of the Capital Equipment should be implemented to secure these items, which are very expensive and are made available to simplify the implementation of the CDTI project. The NOTF should provide the users with motorcycle chains to ensure that they are properly secured. 47. If Capital Equipment is stolen, a report and evidence of actions taken to retrieve the missing Equipment should be sent to the Management of APOC. The stolen item should not be replaced to the individual who had mishandled the item until enough evidence is obtained. 48. The National Coordinator should contact the Malamulo Hospital to retrieve the missing printer and update the audit team on the progress made. A police survey report on the stolen motorcycle should also be provided to the Management of APOC. Vehicles 49. Following this assessment the team evaluated the documentation associated with the vehicles, such as logbooks for motor vehicle and motorcycles. It was noted that: a) All the vehicles and motorcycles had logbooks, b) The logbooks are poorly maintained with lack of intemal controls of vehicle usage. Users of the vehicles approved and authorized their own travel with no element of supervision, c) The logbooks had no indication of the purpose of each trip making it difficult to assess whether the vehicles were used for the purpose intended, d) There was no way to track vehicle usage or manage fuel consumption for one of the NOTF vehicles, because the odometer of the vehicles was not working. 50. The teams investigations concluded that the vehicles were not used for APOC project purposes only. An analysis of the logbooks revealed the following variances in distances recorded from a sample of travel from Blantyre to Machinjiri, whose official distance is 30 kilometres (to and from): Date Origin andDestination Mileage Recorded Calculated Distance in kilometres 20/tt/02 Blantyre to Machinjiri 96720 - 9675s 35 2Uty02 Blantwe to Machiniiri 96859 - 969t9 60 22lrU02 Blantyre to Machiniiri 970t4 - 97t07 93 L4 51. The team noted that there were no repair and maintenance records for the capital equipment making it difficult to monitor repair and maintenance costs. 52. One DHO mentioned that he was not aware that there were 2 NOTF vehicles that could be accessible to them to enable them to implement/supervise the activities. 53. All insurance documents for all vehicles were provided. Recommendation 54. It has been noted, with satisfaction, that all vehicles including the two vehicles at the secretariat level and the motorcycles at the district level have poorly maintained logbooks. The following is recommended: a) The logbook should be maintained and all trips should be recorded. The purpose of the trip should also be indicated. b) The trip and the purpose of the trip should be authorized by a senior officer other than the user, except in the case of the National Coordinator. c) The quantity of fuel utilized should be recorded in the logbook. d) Maintenance dates and the nature of maintenance should be recorded in the logbook to help track maintenance costs. Computers 55. It was observed that once computer software was outdated, the computers were discarded while still functional. There are two computers at the NOTF that are no longer in use because they have older software installed. 56. With the exception of the National Coordinator, none of the NOTF staff members are computer literate. Recommendations 57. The NOTF should seek to upgrade the computer software and make more use of the computers by providing them to districts like Chikwawa and Mwanza which have no computers. 58. The National Coordinator should request financial support from APOC for software training sessions in Microsoft Word and Excel for the secretariat staff members. The functional computers with outdated software at the Secretariat level should be used for training sessions. D. RnCEIPTS CYCLE 59. The cashbook was closed as at April 16th 2003. The audit team accompanied by the deputy national onchocerciasis coordinator (DNOC) conducted a verification of the petty cash and the bank account. A spot check revealed that the petty cash was MK100 less than expected (See Annex III). l-5 60. The Deputy National Onchocerciasis Coordinator (DNOC) informed the team that he was not aware if any previous ad hoc spot-check exercises had been conducted in the past. 61. On the same day, the audit team requested the bank to provide a statement of the WHO/APOC bank account. It was discovered that the balance of MK 4,000 in the imprest cashbook reconciled with the bank statement. 62. Based on the above mentioned spot-check, the audit team has noted with disappointment the balance of MK 4,100 (US$ 45) available to the NOTF. The activities which required NOTF funds are suspended and this may jeopardize the treatment of this year particularly in the extension districts where the first round of distribution has been conducted only in 2002. Recommendation 63. Spot-checks of the petty cash should be conducted at the end of each month by the NOTF coordinator and his deputy, to verify and ascertain the balance indicated in the cashbook. In addition, ad hoc spot checks should be conducted from time to time. 64. The audit team recommends that funds be released to the project to safeguard the investment already made in the Malawi CDTI project for the past five years. However, the recommendation made under point 20 above, should be implemented first. E. DISNURSEMENTS CYCLE 65. The team observed with satisfaction that disbursements take place when an inter office proposal incorporating the needs is sent to the National Coordinator for approval and for authorizing the withdrawal of the funds. This fund request includes all the needs of the project such as training, stationery and travel. 66. The team also observed that the NOTF had implemented the WHO imprest system for accountability and maintained good record of expenditure invoices. The budget analysis form and the bank reconciliation records are also well maintained. Also commendable was the purchasing of training supplies using a competitive quotation process, though there is confusion concerning charging the appropriate budget line item when fund is disbursed. 67. Following extensive interviews at the NOTF secretariat level and the district level, it was noted that all disbursements were made directly by the NOTF secretariat. Only in rare cases did the NOTF send funds to low-level staff members to pay the cost of the activities. Recommendation 68. For transparency in the management of the fund approved by the Programme APOC and on the basis that the sustainability plan would be monitored directly at the district level, the National Coordinator should: 76 a) Reinforce the capacity of the district staff to manage donor funds. A training section should be organized to train staff on the imprest bookkeeping system. The opportunity will be used to introduce the amount of the approved budget and the details of the approved budget line items to the principal stakeholders that are the DHOs. b) The NOTF should therefore delegate to the DHOs the responsibility of preparing their plans of action for the CDTI activities to be implemented in their respective districts. On the basis of approval of the plans of action and the related cost, the cash should be released to them and follow-up should be made to ascertain submission of timely returns. F. MONIToRING oF BUDGET Budget analysis form 69. The audit team has noted that at the end of year 4, four budget line items have been overspent. These include Supplies, Travel, Operating Expenditures and Other Expenses. The amount of the over expenditure is US$ 5,914.75 (five thousand nine hundred and fourteen dollars seventy five cents). However, this has not created an over expenditure of the total budget but should be avoided in future. This kind of over expenditure of the approved budget lines items has been observed in many occasions. Recommendations 70. The NOTF should strictly abide by the rules in the Letter of Agreement and not overspend the budget line items (Ref. Point2.l of the Letters of Agreement). In case the need is there to spend more than the amount approved on a specific budget line item, a formal request should be sent to the Management of APOC accompanied by a revision to the budget and justification on the change to be made on the budget lines to be revised. 71. We further recommend that the accountant should receive additional training to ensure that he is current on the WHO imprest accounting system and to better understand the budget line items. Staff Salaries 72. The approved budget includes a salary component to be paid to some of the project staff. In order to assess exactly what APOC was paylng for in terms of salaries, the team investigated on the number of staff employed on the project's fund and evaluated whether they are active in the project work. The findings were as follows: a) Three former IEF staff were transferred from the IEFAvlalamulo Hospital payroll to the APOC payroll as they were supposed to dedicate 100% of their time to the CDTI activities. This has never been a fact and it has not been possible to confirm the percentage of time these staff members were involved in APOC because they are not located in the NOTF secretariat office. They were located in the Mulamulo hospital in L1 Thyolo District where they had been transferred to the payroll of the CDTI project. One of the incumbents, the senior of the three recognized during our investigation that he has managed to maintain some of his responsibilities with the Malamulo Hospital. In addition, the National Coordinator has declared that he did not ask the three staff members to report to the Secretariat to safeguard the collaboration with the NGDO partner. However, he mentioned that the staff members always make themselves available when the activities of the CDTI are planned. b) The salary component includes 12 months salaries, a Christmas bonus (13th month salaries), one more month terminal benefits per year and 100% health care for the staff members and for their dependants (See Annex V). These staff members are paid the salaries directly every month and an additional reimbursement is made to the Malamulo Hospital on a monthly basis constituting a double payment to each staff member. This double payment could not be explained and/or justified to the audit team by the National Coordinator, by the current Director of IEF/Malawi and by any of the staff member. c) As soon as APOC funds were suspended these three staff members were re-absorbed by the Malamulo Hospital. This has reinforced the conviction of the audit team that despite APOC paylng their full salaries, these three individuals were partially employed by the Malamulo hospital. 73. The National Coordinator admitted that these staff members were dedicating 100% of their time to the implementation of the CDTI activities but have refused to be converted to civil servants as planned in the proposal which means that APOC has been paying their salaries during the past five years. 74. The audit team has collected all the Capital Equipment at the disposal of these staff members including the 3 motorcycles, their helmets, and a computer. Recommendation 75. The salaries and all other benefits provided by APOC to these three IEF staff should not be renewed in any subsequent APOC projects in Malawi. The reason being that this staffs are already employees of the hospital where they have been located during the last five years and the initial objective, which was to convert them to civil servants to reinforce the staff at the secretariat level for the sustainability purpose could no longer be achieved. 76. All equipment collected by the audit team from the Malamulo Hospital staff should be reassigned to more needy districts. Dutv Allowance (Top-Up) 77. Six civil servants seconded to the project on a full time basis by the MOH are paid duty allowances on a monthly basis amounting to $1,021.70. See Annex VII. These allowances have been approved by APOC under the budget line item "Other Expenses". The payment distribution of the duty allowances is as follows: 18 Position Percentage of Total Approved by APOC Top Up Paid in US$ Per month National Coordinator 40.8% $ 417.4s Deputy Coordinator 18.2% $ 186.7s Accountant 16.3% $ 167 Secretary 8.1% $ 83.s Drivers 1 8.1% $ 83.s Drivers 2 8.1% $ 83.s TOTAL 1000h $ 1,021.70 78. The duty allowances paid to the civil servants are fixed in US$ instead or being fixed in local currency. Therefore, the amount paid out varies when the dollar rate to the Malawi Kwacha changes. 79. The total amount paid as duty allowances is more than the amount approved by APOC entailing the utilization of other budget line item as duty allowances. Recommendation 80. If the payment of this duty allowance will still be approved by APOC in any subsequent budgets, we recommend a revision of the current duty allowance allocations to be in line of the approved budget and the distribution should reflect fairness, as there is a large disproportion. 81. If the payment of this duty allowance will still be approved by APOC in any subsequent budgets, we recommend that the NOTF take the opportunity of a meeting to state the amount to be paid to each in local currency based on the proposal to be submitted by the National Coordinator. Travel 82- The audit team noted that there is a high frequency of travel that could not be justified in the plan of action. It was therefore clear that travel was not well planned. On average, over US$ 1,000 was used on travel each month. The team also noted that large expenditures such as payments for meals, allowances, bus refunds associated with meetings, hire of premises and payment of customs and warehousing charges were fully charged to the travel budget line item instead of being charged to other operating expenses or training as indicated in the Letter of Agreement. This has frequently led to overspending on the travel budget line item. 83. Examples of charges mis-posted to budget line item: Voucher Number Date Budget line item charged Details Amount in MK 069/June 200t 4/6/0r Travel Being payment for allowances, fuel, hire of classroom during has meeting in Thyolo 12,363.25 088/June 2y610r Travel Palmrent for per diems, bus refunds, fuel, 31,634.60 T9 2001 drinks, hire of hall and accommodation during the manual development meeting 403lMarch 2002 06103/02 Travel Payment for handling. customs. Drocessing, clearing. delivery. postage and warehousing charges. 67,243.60 Recommendation 84. The team suggested that there should be correct posting of both travel and training expenditure items as indicated in the budget. The accountant should be willing to write separate vouchers when charging expenses to different budget line items. Payment of Per diems and Accommodation during trips 85. It was noted from the records that on occasion, the NOTF members made double perdiem payments to themselves for attending different meetings on the same day. Per voucher No. 353 of February 6'h 2002, a perdiem amount of MK 1,100 was paid to each NOTF member for attending training in Mulanje, while on the same day as per voucher No. 364 a perdiem amount of MK 1,800 was paid to the same people for attending training in Chikwawa. 86. Following is a table showing the amount of training conducted and the number of times perdiem was paid to the NOTF staff during the month of February 2002: Meeting No. Date of Meeting Voucher No. Training implemented Perdiem Paid to NOTF staff (Malawi Kwacha) No. Of NOTF Secretariat staff members present 1 04102102 05102102 Voucher No. 353 Mulanje - Estate HSA review meeting 4,000 4 (Coordinator, Accountant,2 drivers) ,, 06102102 10102102 Voucher No.353 Mulanje - Estate medical personnel review 4,000 4 (Coordinator, Accountantr 2 drivers) 3 06t02102 10102102 Voucher No.364 Chikwawa - TOT Initial Traininq 10,800 5 (All staff except secretary) 4 tU02/02 & t2/02/02 Voucher No 359 Blantyre - CDD Training Various 0 0 5 r5102102 Voucher No. 372 Mulanje - TOT Review meeting 5,400 6 (All NOTF staff) 6 17l02l02to t9102102 Voucher No 368 Mulanje - Estate Review Meeting 5,400 2 (Nc, Driver) 7 25102/02 Voucher No 39s Mulanje - HSA Review Meeting 8,100 6 (All NOTF staff) 8 28102/02 Voucher No. 401 Phalombe - HSA Review Meeting 5,400 6 (An NOTF staff) 20 87. There was no clear evidence or documentation concerning the NOTF perdiem policy. It was noted in some instances perdiems were paid to some staff members per day and to other staff per night on the same voucher. The NOTF usually varied their perdiem policy. It was therefore clear that there was irregular payment of perdiem. We also observed that sometimes staff received their perdiems without signing the acquaintance roll. 88. The coordinator informed the team that a NOTF subcommittee had normally determined the perdiem policy of the NOTF but there was no evidence of any meeting held to discuss this issue. 89. The team noted that there was no clear documentation of accommodation records and it was not clear who stayed in the accommodation paid for during the APOC training sessions. We discovered that accommodation was paid for 4 NOTF staff in Mulanje while for the same night accommodation was also paid for the same 4 NOTF individuals in Chikwawa which is in a different geographical location. Recommendations 90. The team recommends that the NOTF clearly document their perdiem policy and the payment of accommodation to staff members. 91. When hotel rooms are paid to staff on duty travel, the name of the travelers should be clearly indicated on the invoice. 92. The perdiem policy should be strictly implemented to avoid double payment of perdiem to participants of meetings and training sessions. 93. We further recommended that all perdiem recipients should sign on the acquaintance roll upon receiving their dues. Stationery Training Stationery 94. It was commendable that the purchasing of training supplies was done using a competitive quotation process and that an inventory book was kept for training supplies. The requests from the district do not have specific indication of the types and quantities required for training and this is determined subjectively at the NOTF secretariat (See Annex VIIf. However delivery notes were not attached to show whether the goods were supplied. Office Stationery 95. We discovered that there is no requisition process for office stationery at the NOTF. Stationery is bought on an ad hoc basis without any system of inventory control. We were unable to identify the amount of stock left at the NOTF. The NOTF coordinator admitted that they did not have a tracking system for office stationery and did not know how 27 Tmuch stationery was available for the office. The NOTF could not ascertain their usage needs therefore there were no controls on stationery costs. Recommendation 96. The current system of purchasing supplies using a competitive quotation system should be maintained. However, the NOTF should maintain, for office stationery, an inventory record similar to the system currently in place for tracking training stationery. Fuel 97. A visit to the field revealed that the DOCs claimed that they were receiving little assistance on fuel from the NOTF. At the same time, the DHOs are claiming not to have been informed about the quantity of fuel delivered to the DOCs for Onchocerciasis activities and they were sometimes forced to pay fuel for the motorcycles on the basis that the motorcycles are integrated in the District vehicles. Recommendation 98. At the field level, the DHO should be informed of the fuel being provided directly to the DOCs. This will ensure there is accountability and that controls will avoid double payment of fuel to the DOCs. Spare Parts 99. In a bid to spend down the budget towards the end of the year, APOC funds were used to purchase unjustifiable spare parts for Malamulo hospital motorcycles as per voucher no. 427 of March 2002 amounting to I|l4K203,493.58 (US$ 2,661). The same action was taken for the district of Phalombe. A large purchase of motorcycle spare parts was made but no stock records have been maintained of this purchase. The NOTF coordinator mentioned that the spare parts stock purchased was for both immediate and future use. However, he was unable to ascertain whether the parts could be tracked. He admitted that it was a weakness in the NOTFs internal control. Recommendation 100. There is need for regular follow-up from time to time at the district level to ascertain the status of Capital Equipment delivered to the district and the status of the remaining spare parts in the field (See Annex X). Telephone 101. It was noted that the NOTF had been paylng for three cell phones, which are 08- 835612 (The National Coordinator, Mr. Tambala), 08-835982 (The Deputy National Coordinator, Mr. Sitima) and 08-8390104 (Stolen from the Malamulo Hospital staff member under APOC fund payroll, Mr. Nkhoma) (See Annex XI). Additionally, there are 3 landline 22 I , telephone bills currently paid by APOC fund with one landline at the National Coordinator's residence, one landline for the NOTF secretariat and one landline at the Malamulo Hospital. 102. The team also discovered that a 24-month telephone bill was paid with APOC fund for the national coordinators residential line at MK 25,196.20. The National Coordinator stated that the bills had not been forthcoming and that was the cause of the delays for not payrng regularly. He has also indicated that the NGDO representative approved the landline at Malamulo Hospital and APOC fund was used to pay the full bill with no control on the numbers called. 103. The team noticed that telephone usage has never been regulated. The employees were provided unlimited calling privileges with no tracking of calls. It was not possible to tell the percentage of time the telephones were used for APOC work. Recommendation 104. There should be a system in place to monitor telephone usage. Private use of the telephone should be charged to the staff member and the NOTF secretariat should obtain the itemized bills to track calls. 105. The landlines at the National Coordinator's residence and at Malamulo hospital should be suspended and APOC funds should no longer pay for these bills since the justification for maintaining these two landlines has not been provided. Mismanasemen of APOC funds 106. The audit team discovered that in a bid to spend down the budget towards the end of the year, the NOTF utilized an average of US$ 31,000 received three weeks before the end of the period covered by the Letter of Agreement of year 3. lO7. An ad hoc NOTF meeting was held on the Sth March 2001 to strategize spending down the APOC funds received. The funds were used to purchase unjustifiable stationery, motorcycle spare parts (US$4,500), 13 bicycles (US$ 750), 500 wall calendars at almost US$ 5 each, 5,000 badges for CDD (US$ 3,500) and organize training sessions.. (See Annex Ix). 108. The audit team discovered that the same mismanagement of APOC funds occurred during the month of February 2002, before the closing of the period covered by the Letter of Agreement of the fourth year. The project received a last instalment due amounting to US$ 71,303 of which US$ 3,500 was used immediately to purchase stationery in bulk without any justification (Voucher no 351 for February 1't 2002). This included 1,100 notebooks and 100 masking tapes. Three days later voucher no.352 dated February 4th indicates that additional masking tape and notebooks were purchases while only 40 participants made it for the meetings. The NOTF admitted that this was a logistical mistake that needed to be addressed. Recommendation 109. The NOTF should strictly abide by the rules in the Letter of Agreement and consider that the amount approved by APOC in the Letters of Agreement is an 23 I estimated amount (Ref. Point 5.1 of the Letters of Agreement). This should not be considered as a full grant. 110. The NOTF should strictly abide by the rules in the Letter of Agreement and consider that Equipment not approved in the Plan of Action and Budget should not be purchased without approval from the Management of APOC. In addition, any unliquidated balance at the end of the period covered by the agreement shall be paid back to WHO/APOC (Ref. Point 5.5 of the Letters of Agreement). G. FIBID VISITS 1 1 1. On the first day of the field audit, the team visited 3 districts namely: Blantyre, Chikwawa and Thyolo and the Malamulo hospital where the IEF officers were based. On the second day, the team visited three additional districts namely: Mulanje, Phalombe and Mwanza. The only district not visited during the audit mission was Chirazulu because no activities had begun. ll2. The team was able to interview 4 District Health Officers (DHO) from Phalombe, Thyolo, Mulanje and Mwanza representing the MOH at the district level. In total 9 communities were visited in Mwanza, Mulanje, Chikwawa and Blantyre districts. The team visited 8 CDDs, 3 health surveillance assistants and 1 village headman. 113. During the field visits, we observed that the CDDs stored the village treatment registers poorly. The NOTF stated that in the past carrier bags had been proposed for the CDDs (over 3,000) but no action had been taken. Recommendation ll4. The team asked the NOTF to revisit the issue of carrier bags as soon as possible and make sure that the CDDs use the bags to store the treatment hard cover books. 115. The audit team also conducted spot checks of Mectizan storage locations in all the districts except Chirazulu. Mectizan stock was found only in Mulanje district while all other districts claimed that all Mectizam stock had been sent back to the NOTF. One village headman claimed that the Mectizan supply was usually not enough and that more needed to be provided. 116. The team was satisfied with the Mectizan storage records maintained at the district level except for the storage of the drug. Recommendation ll7. The audit team recommends that drugs should be stored in the DHOs pharmacy instead of being stored in the DOCs office filing cabinet. The team further recommended that there should be a constant supply of Mectizan at the district level. 24 Mectizan Distribution