10 Mar 2014
Report to Board also includes accounting of 2013 activities

In summarizing its activities for 2013, the Office of the Inspector General (OIG) informed the Board of the Global Fund at its 31st meeting of plans to conduct 14 country audits in 2014.

Audit Unit

Most of the 2013 audit work plan has been completed, with final reports expected by 31 March.The scope of a review of Global Fund governance has been expanded from looking only at cost to assessing “the economy, efficacy and efficiency of governance”. In the process, the nature of the engagement was changed from “assurance” to “advisory," which, under the revised disclosure policy adopted by the Board, means that it will not be made public (unless requested by the sponsor of the audit, in this case the Board leadership).

(“Assurance” engagements are undertaken by the OIG with the purpose ofproviding assurance to the Board, and include country audits as well as audits of Secretariat processes. “Advisory” engagements also employ an audit methodology but do not result in assurance to the Board; rather theyprovide advice to the sponsor of the engagement, who becomes the “owner” of the report.)

The OIG played an advisory role in 2013 as part of the finance step-up project overhauling the Fund’s financial systems. The OIG said that it observed no material errors in the migration of financial data to the new Oracle system.

The annual report lists assurance audits conducted in 2013 for which reports are being finalized: performance measurement systems; procurement and supply management (quantification and forecasting); strategic communication; advising theDeveloping Country NGO delegation on risk management; capacity building initiatives in the Grant Management Division; quality of services in Global Fund-supported programs; key controls in the new funding model; the results-based funding (RBF) pilot in Rwanda; and “testing the new risk model” in Pakistan, Haiti and the Democratic Republic of Congo. Under the revised disclosure policy, these reports should be made public.

The Audit Unit expects to conduct audits in 14 countries in 2014: Ecuador, Ghana, Guinea, Guinea-Bissau, Honduras, Kenya, Liberia, Myanmar, Nigeria, Rwanda, Sudan, Tanzania, Uganda and Ukraine.

Investigations Unit

Ninety-eight allegations of wrongdoing were submitted to the OIG's Investigations Unit in 2013. This near-doubling of allegations over figures from the last two years was attributed in part to greater visibility for the whistleblowing channel on the Fund's website since June 2013. Of the 98 allegations, 38 are under investigation, with the other 60 deemed outside the OIG’s mandate.

The Investigations Unit has 31 active “legacy” cases remaining since 2009. Of these, 21 will be completed in the first quarter of 2014, and the other 10 in the second quarter.

An annex to the report provides updateson eight key management actions recommended in past audits that are not yet fully implemented: the recoveries process; Secretariat-level oversight of grant implementation; the Secretariat's accountability framework; grant closures; procurement practices not in line with grant agreements; quality control over medicines; and quantification and forecasting of medicines.

The Secretariat has responded to OIG recommendations by revising core grant management processes, a project that should be completed by 30 June. The Secretariat has also adopted a differentiated and simplified approach to close the 248 grants due for closure by 31 December 2012. As of 12 December 2013, 38 of these grants were fully closed and a further 112 “financially closed.” The expected completion date for this project is 30 June. The Secretariat has explained to Aidspan that financial closure means that financial liability has been closed out and the remaining funds under the grant account have been decommitted.

The expected completion date for this project is 30 June.


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