Audit report NO.03/653

!t DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY WORLD HEALTH ORGAMZATION RECU 2 3 JU[{ 2003 AUDIT REPORT NO. 03/653 AFRICAN PROGRAMME FOR ONCHOCERCI,ASIS CONTROL (APOC), OUAGADOUGOU, BURKINA FASO June 2003 OFFICE OF INTERNAL AUDIT AND OVERSICHT APOC DI R DISTRIBUTION RESTRICTED _ FOR INTERNAL USE ONLY Table of Contents I. INTRODUCTION OBJECTTVE, SCOPE AND APPROACH OVERALL RESULTS OF THE AUDIT DETAILED RESULTS OF THE AUDIT APOC Action on Previous Audit Report Proj ect Sustainability Project Bank Signatories lnter-Offi ce Transactions Unliquidated Obligations Macrofil APOC / FIELD OFFICES lnstitutional Funding - Transfers - Transfer Requests - Transfers from AFRo to wR offrces and Attendant Delays Expenditures - Timely Submission of Imprest Returns by projects - Verification of Imprest Returns by ApOC - Results from Testing Imprest Returns - Guidelines for Veriffing project Expenditures Issues of Potential Concem Technical and Financial Reports Capital Equipment - lnventory Records - Motor Vehicle Utilization - Motor Vehicle Insurance PROJECTS IN NIGERIA Cash Counts Advances for Project Activities Zonal Office Support A]YNEXES: I. Inter-OfIice Transactions il. UnliquidatedObligations III. Transfer Requests IV. Results from Testing Imprest Retums Paragraph 7IL m. ry. t0 1l t4 t9 22 25 28 32 33 36 40 45 48 50 53 57 60 63 66 7t 73 75 77 DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY I. INTRODUCTION l. In accordance with the prograrnme of the Office of Internal Audit and Oversight (tAO), an audit of the financial and administrative functions of the African Programme for Onchocerciasis Control (APOC), Ouagadougou, Burkina Faso, was carried out in Iate March / early April 2003. The audit included a visit to the APOC-funded National Onchocerciasis Task Force (NOTF) secretariat project in Lagos and in Taraba State, Nigeria. 2. Launched in 1995, the objective of APOC is to establish within a period of l2 to l5 years effective and self-sustainable community-directed Ivermectin treatment (an effective drug against onchocerciasis) in l9 countries in Africa. It is based on a partnership between various fund donors; governments with endemic onchocerciasis; multi and bilateral agencies; foundations; non-governmental development organizations (NGDOs) and private sector donors of ivermectin. APOC is governed by the Joint Action Forum (JAF) consisting of partnership representatives. 3. The Memorandum for APOC establishes the Programme's framework and governs the financial :urangements, as well as the institutional and operational aspects. Identified as the Executing Agency in the Memorandum, WHO appoints the Programme Director and other personnel, provides technical and administrative assistance, and is responsible for the workplans, budgets and programme implementation. 4. APOC employs 54 staff members of which l0 are professionals and 44 are in the general service category. Included are five short-term professionals to whom apply the transitional staff contract measures introduced in July 2002. The measures involve a maximum of four I 1-month periods of employment after which the staff mernber may not be re-ernployed by WHO for at least l2 months. 5. The approved budgets for 2002 and 2003 were US$ 14.3 million and US$ 13.9 million, respectively. -2- DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY 6. Matters arising from the audit are set out in the following paragraphs. Issues arising during the audit at APOC headquarters were discussed with APOC senior officials. II. OBJECTIVE, SCOPE AND APPROACH 7. The objective of the audit was to evaluate APOC's risk management strategy and to determine whether efficient and effective controls had been applied over the administrative and financial functions. 8. The audit concentrated on APOC operations for 2002 and 2003. Further, in conjunction with a request from the Director of APOC, we audited the financial activities of the NOTF secretariat in Lagos and of a project in Taraba State, Nigeria. 9. We reviewed and tested the procedures and controls in place, and met with ke>Jstaffon related issues. More specifically, we reviewed programme and operational planning and rnonitoring controls, tested expenditures and followed up on the results of certain key meetings. III. OVERALL RESULTS OF THE AUDIT 10. In our opinion, certain programme-related and financial risks exist which result from a lack of adequate controls in specific areas. This was evident from our review of risk management processes and controls relating to institutional funding, expenditure verification and the direction provided to APOC field support staffat the WR offices. In this connection, the impact on project sustainability and the rate of implementation reported in the accounting records also need fuither consideration. -3 - DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY TV. DETAILED RESULTS OF THE AUDIT APOC Action on Previous Audit Report I l. Audit Report No. 0l/599 was issued in 2001 and the audit was closed after we considered the actions taken per the reply to be satisfactory. However, we noted that of the seven recommendations raised in the report, one was overtaken by events, two were fully implemented, three partially, and one was not implemented. 12. APOC now maintains a database to record the amount and date of each agreernent and the fund transfer date. However, since the funds received date is not _{_e_c9r{1{1lssuelbe used to monitor that the transferee has received the money. We noted that good controls now exist over the submission of imprest returns, however, APOC still does not systematically track the resDonse to each field stafffinding. Also, project instalments are now used to fund currsnt project activities, however, there were several unliquidated obligations for which no further charges were expected and the balances could be liquidated. Finally, US$ 453 048 for 2002 ?ad US$ 77 962 for 2003 for temporary advisers were again incorrectly charged to the expenditure code for consultants. 13. It is recommended that action be taken to satisfactorily address the above-noted weaknesses in implementation of our previous audit recommendations. Proiect Sustainability 14. As an impetus to country prograrnmes and to enable projects to achieve their objectives, APOC provides initial capital equipment such as motor vehicles, motor cycles, bicycles and office equipment. APOC expects these assets to be well maintained and put to good use, to which end provision is made in the project budget. APOC provides support for the first five -4- DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY years of a project with the possibility to continue funding for a further three years. The project, however, should normally be self-sustaining after the fifth year. 15. The second meeting of the NorFs held in Abuja Nigeriq in the period 17'22 Jwe2002, emphasized the fact that none of the projects had made plans for the replacement of project vehicles and other equipment by the end of the project term. 16. The implications of sustainability in relation to capital equipment were apparent in Nigeria, where the national coordinator pointed out that after a visit to Taraba State, he first discovered that of the three vehicles, two had serious mechanical problems. When we visited the project site, we also noted that a desk jet printer and a laptop computer were not functional. The project is now entering its sixth yea5, and neither at the national nor at the state level did the respective coordinators indicate whether the government would provide funds to repair or replace the items. 17 - As a rule, projects in Nigeria <iid not report on the condition of assets in their custody, consequently, the secretariat was unaware of their state of repair. At APOC headquarters too, such information was not available from the asset records, since countries were not required to report the same. In the absence of such essential data for the capital component, prospects for maintaining the initial support were not encouraging. 18. It is recommended that, for all projects, APOC assess the adequacy of capital equipment yl's-ri-yis project sustainability. 1 Proiect Bank Sisnatories 19. At the time of the audit, APOC funded 79 projects in the countries covered by the onchocerciasis programme. Each project has its own bank account held jointly in the name of WHO/APOC and the respective NOTF. Reporting responsibilities appear in the letters of agreement (LOAs) and bank accounts are opened by the NOTFs. They designate signatories, -5- D]STRIBUTION RESTRICTED - FOR INTERNAL USE ONLY following criteria set by APOC which requires two bank signatories, one of whom is a representative of the Ministry of Health (normally, the national coordinator) and the chairperson of the NGDO's coalition in the NOTF. No criteria are set for bank signatories at the state level and this is left to the national secretariat. 20. We could not readily audit the signatory status since instructions to the bank were not available at the offices visited. In fact, APOC does not determine whether its signatory requirernents are met at the peripheral level (state, district). 21. It is recommended that APOC maintain a record of signatories operating on a project bank accounts both at the national and peripheral levels. tt 22. Inter-office vouchers (IOVs) record transactions between offices, and most come from AFRO. Accurate and timely document transmission enables the receiving office to update promptly its accounting records. 23. Our review indicated procedural shortcomings, due in large measure to delays in receiving vouchers, inadequate description and a delayed response to queries by AFRO (see @L-D. Consequently, there is a significant time gap in reflecting transactions and procedures at AFRO need to be strengthened to address properly this issue. For programme activity, APOC obligates correctly the full amount of the agreement and authorizes WR offices to disburse up to 50% of the amount. However, the amount paid by the WR office appears as a disbursement in APOC's records only after the IOV is received from AFRO. This timing gap misleads when interpreting the reported status of implementation, evident from a 2002 allotnent re,port printed in March 2003 which shows US$ 5 564 940 obligated for LOAs and only US$ 797 262 disbursed. Once again, this issue involves processing delays between the WR offices and the regional office and calls for urgent attention by AFRO. Inter-Office Transactions -6 - DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY 24. It is recommended that: (a) the issues surrounding IOVs and their impact on processing efficiency and recorded data be brought to the attention of the AFRO Budget and Finance Officer @F'O/AFRO); (b) BFO/AFRO review the inter-office voucher procedure so as to expedite processing. Unliquidated Oblieations 25. Obligations are raised for third party commitments, of which the largest dollar percentage pertains to agreements with prograrnme partners. Each time a payment is recorded in the accounts, the obligation is reduced to show the unliquidated amount. Unliquidated balances represent committed funds which cannot be used for other than the stated purpose. Manual IY.2.l l0 requires a monthly review of such balances to identiff that an expenditure has been incurred and release balances not actually encumbered for further activities. 26. We discussed the unliquidated obligations for all sources amounting to US$ 7 l7l 800. Since the BFO had assumed responsibilities in February 2003, he has yet to proceed with a methodical review of the balances. However, apart from the incidence of outstanding IOVs from field offices/AFRO, which when received and recorded would reduce the amount outstanding, there were also administrative expenditure balances which could be liquidated. Examples are provided in @-II. 27. It is recommended that a proactive approach be taken to reduce unliquidated obligations. /e. 7DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY Macrofil 28. The Macrofil project covers microfilaricides research and is financed by APOC and the Special Programme for Research and Training in Tropical Diseases (TDR). A Macrofil agreanent, which sets out the rights and duties of each party was established in2002 following recommendations contained in our Audit Report No. 99/551. 29. We noted the following from our review of arrangements and outcomes: (a) The agreement expired at the end of 2002 and a new one has not been established for 2003. (b) For 2002, APOC fulfilled a request from TDR to contribute US$ 570 000 to the project, but no budget was submitted by TDR. (c) Under the agreement, interim management reports on incomc and expenditure were required from TDR for 2001 and 2002 by 3 0 May 2002 and 3 I March 2003 , respectively, but no reports have been received. 30. There was no evidence that APOC had followed up on these issues. TDR also confirmed the accuracy of the above statements. 31. It is recommended that APOC renew the agreement with TDR and take the necessary action to redress non-compliance with the earlier agreement. -8- DISTRIBUTION RESTRICTED- FOR INTERNAL USE ONLY APOC / FIELD OFFICES Institutional Fundins Transfers 32. Project funding follows the terms of the LOA. To fund projects, APOC sends a fax to AFRO to transfer a stated amount in US dollars to the WR office bank account. A fax is sent also to the WR office to transfer to the counhy NOTF bank account the equivalent in local currency of the stated dollar amount. As focal point for all country projects, the NOTF is also advised and in turn transfers funds received to the respective project bank accounts. We reviewed the cycle to determine funding modalities and timeliness. Transfer Requests 33. The LOA provides that additional funding requests should be made by a project after 80% of a previous advance has been spent, however, projects are not required to demonstrate the case. The BFO explained that in the large majority of cases, remittances are made prior to a request, but only after being satisfied that imprest returns are up-to-date, and that at least 80% ofadvances have been spent. 34. While testing advances, we sighted some cases where APOC had requested WR offices to transfer funds, even though the project year was well advanced (Annex--[II). It was evident that APOC had not considered the project's cash flow requirements, attendant time delays involving the transfer and the activities remaining to be carried out. ApOC's partial justification was that unspent funds would be carried forward to the following year, thus leaving than exposed to currency fluctuations. 35. -9 - DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY It is recommended that APOC require projects to request additional funds and to justify them by linking them to cash flow requirements and when applicable, to remaining programme activities. Transfers from AFRO to WR Offices and Attendant Delays 36. Our comments are based on events in Nigeria, though it is likely that a similar situation occurs at other country offices. The WR Office in Nigeria is first made aware of an AFRO transfer when a credit entry appears in the on-line bank staternent. Since it receives a faxed advice from APOC, single items can more readily be identified; however, for composite transfers, the WR Office waits for a pouched payment advice from AFRO, which can take two to three weeks. In the meantime, the funds are not transfened to the project. For instance, US$ 75 000 from AFRO for two states was in the bank account on 12 Septernber2002, but thepouch arrived on25 September 2002. Similarly, US$ 57 421 for two states was in the bank on 3l January 2003 but was advised on l9 February 2003. 37. The practice is to be patient, since delays are expected between the time when APOC issues an instruction to AFRO and when the funds are received by the project, which under optimum circumstances takes some 25-30 days. However, the situation is exacerbated when the transfer takes place to the wrong account. Delays are first signalled to APOC by the WR office, the NOTF or the project, as there is no requirement for AFRO to advise APOC that a transfer has taken place. 38. We noted two cases where significant delays occurred involving extensive follow-up. On 16 January 2002, APOC requested AFRO to transfer US$ 65 000 to the NOTF secretariat in Lagos, Nigeria. The funds were transferred to the WR Office Nigeria main bank account. After complaints from the project, the error was discovered and the funds were transferred to the NOTF bank account on 16 May 2002. On 20 Decernber 2002, APOC requested AFRO to transfer US$ 70 993 to a project in Bauchi State, Nigeria. After reminders from the WR Office in Nigeria, APOC followed up the transfer with AFRO. On24 March 2003, \ I I I I -10- D]STRIBUTION RESTRICTED - FOR INTERNAL USE ONLY AFRO sent an e-mail message to APOC indicating that it could not trace the request and that, to the present, the funds remain to be hansferred. In the absence of funds, implementation would suffer. 39. It is recommended that AFRO be requested to fax or send by e-mail bank transfer details to APOC, which in turn will advise WR offices. APOC should improve its follow-up procedures with AFRO. Alternatively, and after discussion with AFRO, APOC may request WR offices themselves to effect the transfer. Expenditures Timely Submission of Imprest Retums bv Projects 40. Each month, NOTFs are normally required to submit imprest retums together with a bank statement, reconciliations and supporting documents. The procedure enables APOC to monitor the validity of project expenditures and assess the need to replenish funds. When received, retums are logged and then reviewed. The rule of APOC is that non-submission of returns for more than three months automatically entails the suspension of further replenishment. In addition, unsatisfactory returns may also jeopardize further replenishment. 41. To support the workload, APOC has field staffat its disposition, two in Nigeria and one each located at WR Offices in Cameroon, United Republic of Tanzania and Uganda. They veri& the returns and perform the requisite validity and quality checks before forwarding thern with comments to APOC. 42. We reviewed the list of logged returns and noted that despite APOC's follow-up and fund control procedure,3gyo of project retums were over three months in arrears. The effect is that projects are not promptly replenished, which could impact programme implementation. As to why delays occur was better understood during the field visit to Nigeria where we discussed procedures with the NOTF. All state returns are channelled through the national -11- DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY office where they are checked for accuracy and completeness. If there are queries, the returns are sent back to the states for correction. Next, they are serit to the country's WR office where they are reviewed by the staffmember employed in the finance section and attached to APOC activities. Once again, WR office queries cause the returns to be sent back to the state office, through the national office. During our visit to lagos and Taraba State, we sighted cases of poor supporting documentation which was a prime cause for delays. 43. The BFO and his staffhave periodically conducted training courses covering APOC's requirernents in all l3 of the countries where APOC funds projects, and the BFO assured us that a draft copy of some administrative and financial procedures prepared by him was given to a few national coordinators. 44. It is recommended that APOC continue to emphasize the importance of accurate and timely submission of imprest returns. Verification of Imprest Returns by APOC 45. After logging, APOC headquarters seek to verify the returns, including a brief test of returns from countries with an APOC presence. However, funds are often advanced without veriffing supporting documents. Once again, we noted very significant delays, with the last return from Malawi verified in March 2002, three projects in the Democratic Republic of the Congo last verified in February 2002, and seven projects in Nigeria last tested in 2001. The lack of attention to review undermines APOC headquarters'effectiveness to monitor and instruct- 46. The delays are even more significant when considering that 52 of the 79 monthly project retums are checked by four staffin the field as compared to the 27 retums processed by the three APOC headquarters staff. -tz- DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY 47. It is recommended that, y..y concerted effort be made to bring up to date the number of imprest returns checked. Results from Testing Imprest Rehrms 48. We reviewed one month's retum, submitted by one project each in Cameroon, lmo/Abia State, Nigeria, Southem Sudan and the United Republic of Tanzania. The findings concern signatory titles, prompt expenditure recording, competitive quotes, controls over travel and cash counts. Our findings are categorized as specific, or common if they apply to all counhies and are summarized in Annex fV. 49. It is recommended thhg with a view to strengthening controls at all project offices, APOC take action on each issue raised. Guidelines for Verifuine Project Expenditures 50. A key,role of certain APOC staff at headquarters and in the field is to verifu monthly project expenditure retums (imprests) and for this, they have overall guidance through a document on administrative and financial procedures and a checklist prepared by the BFO. 51. The administrative and financial procedures, which are still in draft form, were prepared to assist national and state coordinators to complete their retums. The document makes a good attempt to address reporting procedures, but is not comprehensive enough. For instance, it does not cover additional issues such as salary top-ups to individuals not identified in the budget, the requirement to submit hotel receipts, mission and training reports, vehicle usage and fuel consumption reports, the capital equipment status and lnsurance cover. 52. It is recommended that the procedural guidelines be finalized and distributed to all relevant parties. ao -13 - DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY Issues of Potential Concern 53. During the audit, we noted the following important communications from the wR/t',ligeria to APoc or the NOTF, which were not adequately responded to: In a memorandurn of 2 July 2001 addressed to the Director of APOC, the WR referred to the "fraudulent nature of these observations" by the field staff member and strongly recornmended that NGN 329 000 (US$ 2 590) spent on training by the Kwara project in April 2001 be refunded. In a memorandum of l0 January 2002 addressed to the Director of APOC, the WR spoke of "serious concern" about an unexplained entry-of NGN 340 000 (US$ 2 677) and also referred to it as "gross financial recklessness" and recommended that APOC management send a warning letter to project officials. A mernorandum of 6 August2002 drew the attention of the Director of APOC to payments made for a printing contract for NGN 2 297 025 (US$ l8 086), when the lowest bid was for NGN 1 449 495 (US$ I I 413). Payment was made to the supplier before the job was completed. The administrative assistant attached to the WR sub-office was unable to obtain from the state coordinator written evidenc€ on product distribution. A further stationery purchase contract was for NGN 863 200 (US$ 6 796), whereas the lowestbid was forNGN 594 100 (US$ 4 677). On24 November 2002, a memorandum copied to the Director of APOC identified NGN 965 875 (US$ 7 605) spent by the project on fuel for two months and requested justification for the large quantity consumed. o 54. During the audit, the WR Office in Nigeria indicated that in each instance the response from the project and the NOTF was unsatisfactory. Since the national coordinator was away from Lagos at this stage of the audit, we discussed the issues with the NOTF deputy o -14- DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY coordinator, who said that he was unaware of the findings. A written response obtained frorn the national accountant conceming one other case - Bauchi State findings - did not address the issue. 55. We also confirmed with the budget and finance officer at APOC that there was no written response to the WRA.ligeria to any of the messages, which indicates a lack of supervisory review and follow through. 56. It is recommended that APOC ensure that correspondence is appropriately tracked and responded to. The particular cases noted above should be critically reviewed. Technical and Financial Reports 57. In addition to monthly expenditure refurns, each project is required under an LOA to submit reports covering technical and financial activities. The LOA states that they will serve as the basis for extending the agreement. However, in practice, this was not always the case. 58. We determined that LOAs did not speciff a calendar due date, which is much easier to monitor and takes into account the fact that some projects may operate using prior year unspent balances. Further, the status of reports due, received and outstanding was compiled on an ad hoc basis. The NOTF in Nigeria had yet to submit the2002 reports and Taraba State had not submitted financial reports for the calendar years 2001 and 2002. 59. It is recommended that LOA provisions be strengthened to include a calendar due date for reporting, and the procedure to monitor the ongoing submission status of technical and financial reports be improved. -15- DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY Capital Eouipment lnventorv Records 60. APOC maintains a computer record of the vehicles and equipment that it provides under the counEry programme. 61. While fulfilling a statutory requirement, inventory records account for purchased assets and serve to monitor their continued use for the prograrnme. We noted that the inventory records kept by APOC were not comprehensive. For instance, although the recipient country and asset tlpe were indicated, there was no purchase order number, date of receipt and vehicle registration number, all of which facilitate identification. Also, the asset record had not been confirrned with the country offices since April 2002. 62. It is recommended that the records be expanded to include the additional data in time for the next inventory verification. Motor Utilization 63. Motor vehicles are provided for project purposes and to date, APOC has provided 94 vehicles to l5 counkies. The Director of APOC emphasized that vehicles remained APOC's property until transferred at the end of the project term to the NOTF and expressed some concern over their proper use. 64. Returns showed that project payment vouchers were supported by invoices for vehicle-related expenses, authorized by the coordinator. However, in two out of four country projects tested, travel authorizations were not sighted, and since there was no requirement to do so, none of the projects submitted vehicle utilization, fuel consumption and mission reports. During our site visit to Nigeria (for which US$ 130 000 was budgeted for fuel in 2002), we found no site records to justiff vehicle utilization and fuel consumption. In this -l 6- DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY context, the second meeting of the NOTF held in Abuja, Nigeria in the period 17-22 June 2002 noted that there was very little control over the use of vehicles, that logbooks were not kept and that authorization procedures were absent. 65. It is recommended that comprehensive procedures for vehicle utilization and fuel consumption be developed and implemented to ensure rational use of this important programme component. Motor Vehicle Insurance 66. Of the total94 vehicles provided to all countries, APOC has provided to date 39 vehicles to Nigeria for which the budgeted cost was estimated at over US$ I million. 67. We noted that in the LOA, there is no insurance clause, and although APOC includes a budget component to enable projects to effect comprehensive insurance cover, it does not ascertain whether the vehicles are in fact insured. 68. The WR Offrce in Nigeria explained that vehicles are insured up to delivery at the port and rernain uninsured until the project effects cover. At the NOTF secretariat, 19 vehicles were handled for insurance purposes, of which six were not insured, either due to a lack of funds, or renewal was overlooked. Seven vehicles were to be handled by the NGDO and I I by the states. However, the secretariat was not certain whether these 18 were covered, and in fact the three vehicles in Taraba State were not insured. To date, three vehicles have been stolen, the latest as recently as l6 March 2003. Two of them, including the most recently stolen, were fortunately insured. 69. During discussions, the WR Office in Nigeria offered its support to handle insurance cover for all project vehicles. -t7 - DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY 70. It is recommended that APOC review vehicle insurance arrangements in all countries and consider requesting the respective WR offices to arrange the necessary cover. PROJECTS IN NIGERIA 71. After the audit at APOC headquarters, we visited APOC-funded projects in Lagos and in Taraba State, Nigeria during 7-11 April 2003. Nigeria was selected on the basis that the counhy has the largest number of current projects, 28 in all administered by the APOC coun0y progrirmme partner, the NOTF in Lagos. We also visited the WR Office in Nigeria and met with key staff involved in the APOC country prograrnme. The agreements covered by the visit were: NOTF Headquarters Laeos. Niseria l2 months to 3l December 2001 - US$ I 56 280 l2 monthsto 31December2002 -US$ 125 580 Taraba State. Nigeria l2 rnonths to 3l December 2001 - US$ 75 088. l2 months to 3l December 2002 - US$ 49 288. 72. At NOTF headquarters, we held discussions, reviewed the accounting records and supporting documents with the national coordinator, the deputy coordinator and the NOTF national accountant. At the Taraba State office, similar review procedures were followed with the state coordinator, the state accountant, and principal representatives from interested NGDOs. Included here are findings specific to the location. Findings common to those noted during the audit of imprest returns at APOC headquarters are summarized under the heading "Results from Testing Imprest Retums". -l 8- DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY Cash Counts 73. During our visit, the cash in hand at NOTF in Lagos was NGN 218 230, compared to an adjusted book balance of NGN 180 599, a difference of NGN 37 631 (US$ 296) which could not be explained. At Taraba State, the cash in hand was NGN 8 000, compared to an adjusted cash book balance of NGN 7 175, a difference of NGN 825 (US$ 6) athibuted to rounding off when settling expenses. 74. It is recommended that APOC request the NOTF to explain the differences and ensure that the records are in agreement. Advances for Proiect Activities 75. NOTF headquarters make payments for project-related activities. Often, such payrnents are advances to staff to service project activities, recorded as such and adjusted when a final expenditure report is submitted. We noted that there was no expenditure budget to support the advance, and in some cases, the final expenditure report was well overdue. Some advances were tested from February 2003 and the following discrepancies noted: Voucher Number / Description / Amount Comments Voucher No. 2 Sustainability plan workshop at state and local government levels NGN 1 6t6 820 (US$ 1273t) Voucher No. 8 Servicing of workshops on evaluation of state projects NGN 1022 000 (us$ 8 047) No budgets to support the advances. -l 9- DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY 76. It is recommended that funds be advanced liy national and peripheral offices based on detailed budgets, and expenditure reports be submitted on a timely basis. Zonal Office Support 77. The LOA signed with the NOTF in Nigeria includes funds for the headquarters' secretariat in Lagos and four zones in Nigeria. Each zone reports to the secretariat, but covers several state projects and has its own bank account. The NOTF advances funds by cheque to the zone and records the advance in the petty cash receipt column of the cash book, which acts as a receivable. When the zone submits receipts, the expenditures are recorded in the petty cash payments column. 78. The national accountant explained that the zones do not maintain cash books. lnstead, he controls cash balances held by each zone by summarizing movements of receipts and payments taken from the petty cash columns and adjusted for opening and closing balances. The national accountant does not sight the bank statement nor the zone's bank reconciliation and in fact has not atternpted to verifu his version of cash balances with the zones. At the time of our visit, according to the record maintained by the national accountant, Voucher Number / Description / Amount Comments Voucher No. 3 Advocacy visits to review implementation in four states NGN 960 407 (US$ 7 s62) Voucher No. 9 Evaluation of Bauchi State project NGN 534 600 (US$ 4 20e) VoucherNo. 10 Evaluation of Gombe State project NGN 492600 (US$ 3 878) No budgets to support the advances and expenditure reports not yet submitted. -20- DISTRIBUTION RESTRICTED - FOR INTERNAL USE ONLY NGN 280 l5l (US$ 2 205) was held by the zones. In the absence of a bank statement and returns from the zones, this balance could not be verified. 79, It is recommended that the NOTF be instructed to establish conventional accounting records for zonal financial transactions. 'i{<tt'}*** We would like to express our thanks to the Director of APOC and his stafffor the assistance and cooperation afforded to the auditor. Geneva, 16 June 2003 I R. Langford Director Office of lntemal Audit and Oversight T, Annex fV Page I Audit Report No. 03/653 - African Programme for Onchocerciasis Control (APOC) Results from Testing Imprest Returns Pr*1J ,t-/. *Vr-i a o-cJ L",^ Description Comments Cameroon (Novanber 2002) In the absence of a title, not evident who authorized the payment voucher. PV No. l8 - XAF 367 305 (US$ 602) - for telephone calls, however, international calls not identified. Imo/Abia States, Nigeria Salary supplunents for February - May 2002 - NGN 298 800 (US$ 2 3s2) paid in August 2002. PN No. 12 -NGN 50 000 (US$ 393) - supplier quote 8 August 2002, invoice dated 5 August 2002. a O a a (August 2002) o The signatory's title should be printed on the payment voucher. o Details of intemational calls and their purpose should be indicated. o Payments should be posted when expenditures incurred. . Should be followed up with the State Office. Three payments made for: - printing NGN 105 000 (US$ 826) - printing NGN 350 000 (US$ 2 755) - tyresNGN 175 000 (US$ I 377). Competitive quotes not at project site. NGDO explained kept at their office. NGN 5 000 (US$ 39) - Fuel quantity not indicated on invoice. Tel4lqState, Nigeria (July 2002) a a (December 2002) o Project to submit quotes to APOC. o Project to be notified to pay attention to this detail. Annex I Audit Report No. 03/653 - African Programme for Onchocerciasis Control (APOC) Inter-Offi ce Transactions Description AFRO IOY: 24 Septernber to 2 October 2002 received 29 October 2002; l0 Decernber2}02 to I I February2}O3 received 5 March 2003; and 18-25 February 2003 received 20 March 2003. Inter-Offi ce Transaction Submission Delap IOVs submitted without reference to an obligation number, inaccurate obligation numbers or no payee name. Sometimes, 0re charge was duplicated from one IOV to another, or the obligation did not relate to APOC. Inadequate Description Several queries in the IOV for I 0 Decemb er 20f.2 to I l. February 2003 . Most resolved early April 2003, in the meantime the IOV was not posted to the APOC accounts. Slow Response APOC obligation Oul02l0ll554 for the IOV period 10 Decernber 2002 to I I February 2003 authorized the WR Office in Uganda to advance US$ 16 775 to a project. Some six payments totalling US$ 120 435 appeared on the IOV and were imputed to this obligation number, whereas at least three other obligation numbers were involved. APOC Management is in the process of resolving this issue. Uganda WR Office ect 1 . OU/01/014249 - US$ 22 015 authorized by APOC for payment by the WR Office in the Dernocratic Republic of Congo on 15 January 2002. IOV not yet received. ln all, US$ 150 000 was authorized during 2002 whereas US$ 66 997 was recorded as disbursernents. 2. Oul01l0l4799 - US$ 22 457 authorized by APOC for payment by the WR Office in Uganda on 10 August 2002. IOV not yet received to record disbursements. 3. OU/01/0 16025 - US$ 40 730 authorized by APOC for payment by the WR Office in the Central African Republic. IOV not yet received to record disbursements. 4. Cameroon - US$ 345 790 authorized during 2002 whereas US 2l 883 was recorded as disbursements. 5. United Republic of Tarzania - US$ 178 731authorized during 2002 whereas US$ 88 874 was recorded as disbursements. I Annex II Audit Report No. 03/ 653 - African Programme for Onchocerciasis Control (APOC) Unliquidated Obligations Obligation No. Description out0u0M607 US$ 20 224 - Some capital equipment purchased, charges yet to be received through IOV. Project terminated 28 February 2002. ou/ou014249 US$ 42 438, of which US$ 22015 payment authorization issued on 15 January 2002 and IOV not yet received. Project terminated 3l March 2002 and US$ 20 423 c,anbe liquidated. outot/014344 Project terminated 30 June 2002 and US$ 33 942 canbe liquidated. ou/01/0145s6 Project terminated 31 May 2002 and US$ 40 606 can be liquidated. ou/01/016406 Project terminated 3l August 2002 and US$ 86 6l I can be liquidated a- Annex I Audit Report No. 03/653 - African Prosramme for Onchocerciasis Control (APOC) Inter-Offi ce Transactions Description AFRO IOY: 24 September to 2 October 2002 rec*ived 29 October 2002; l0 Decernber2002 to I I February 2003 received 5 March 2003; and 18-25 February2003 received 20 March 2003. Inter-Offi ce Transaction Submission Delap IOVs subrnitted without reference to an obligation number, inaccurate obligation numbers or no payee name. Sometimes, the charge was duplicated from one IOV to another, or the obligation did not relate to APOC. lnadequate Description Several queries in the IOV for l0 December2002 to I l.February 2003. Most resolved early April 2O03, in the meantime the IOV was not posted to the APOC accounts. Slow Response APOC obligation Oul}zl}ll554 for the IOV period l0 Decernber 2002 to 1l February 2003 authorized the WR Office in Uganda to advance US$ 16 775 to a project. Some six payments totalling US$ 120 435 appeued on the IOV and were imputed to this obligation number, whereas at least three other obligation numbers were involved. Uganda WR OEqg APOC Management is in the process of resolving this issue. I . OU/0 I /0 14249 - US$ 22 015 authorized by APOC for payment by the WR Office in the Dernocratic Republic of Congo on 15 January 2002. IOV not yet received. In all, US$ 150 000 was authorized during 2002 whereas US$ 66 997 was recorded as disbursernents. 2. OU/O11014799 - US$ 22 457 authorized by APOC for payment by the WR Office in Uganda on 10 August 2002. IOV not yet received to record disbursements. 3. OU/O I /0 16025 - US$ 40 730 authorized by APOC for payment by the WR Office in the Central African Republic. IOV not yet received to record disbursements. 4. Cameroon - US$ 345 790 authorized during 2002 whereas US 21 883 was recorded as disbursernents. 5. United Republic of Tarzania - US$ 178 731 authorized during 2002 whereas US$ 88 874 was recorded as disbursements. ect I I I I Annex [V Page2 Audit Report No. 03/653 - African Prograrnme for Onchocerciasis Control (APOC) Results from Retums til, P h'l u 5.! Yt'n -Natr W 5! [mr,i,,r o-ui ttu,-1 CommentsDescription Competitive quotes should be submitted for sizeable printing and procurement ,\ rhe nature of this should be reviewed )f I Project be rerninded to submit culrency \ exchange certificates ) Details of intemational calls ar,a tneir \ t* purpose should be indicated. / t ( lmprest holder should be requested to a o a contracts. a o P l*lexplain. Christmas bonus US$ 1015 - No budget provision. Currency exchange certificates not attached (PV No. 14 - US$ 5 000 and PV No. 37 - US$ 4 000). Southern Sudan KES 64 750 (US$ 840) and KES 87 750 (US$ I 139) - No quotes attached. Uniled Rspublic of Tanzania PV No. 2 -TZS 329 921(US$ 318) for telephone calls, however, international o.7 -TZS 300 800 (US$ 290) paid to holder on 30 September 2002, invoice dated 9 October 2002 o a a o PV Southern Sudan (December 2002) t (September 2002) not identified. i a Annex IV Page 3 Audit Report No.03/653 - 4fr&4q Programme for Onchocerciasis Control (APOC) Results from Testing Imprest Returns Common Issues The approved budget lists the functional title of ttre project staffmember, whereas salary top up payment support refers onlyto the staff mernbe/s name and the connection is not evident. The payment voucher should also record the staff mernber's functional title. Trips cover taining, advocacy and monitoring and some country projects for Cameroon, and Nigeria issue authorizations. Mission reports not sighted as evidence of travel and outcome. Each trip must be preceded by a requisition and authorization by the Coordinator, with purpose and period indicated. After the traveller's retum, there must be a mission repor,t. Hotel receipts not attached. Not evident whether the staffmember tavelled. Evidence of lodging should be attached. None of the projects submitted completed cash count forms. In fact, both at the NOTF and Taraba State offices the cash in hand was not verified by the respective coordinators. Cash count forms should be submitted by all projects, which is also a requirement appearing in APOC's draft financial and administrative procedures and essential given the several cash transactions. I