USAID OIG Afghanistan and Pakistan Oversight Report, April-June ...

interest earned on bank balances that had not been refunded to USAID. The audit firm did notidentify any material weakness in internal control, but identified two material instances ofnoncompliance—one associated with the questioned costs, and the other related to therecipient’s not fully complying with the requirement to vet vendors to deter terrorismfinancing. The report made two recommendations.Financial Audit of the Monitoring and Evaluation Project, USAID/Pakistan ContractNo. 391-C-00-10-01138-00, and Assessment and Strengthening Program,USAID/Pakistan Cooperative Agreement No. 391-C-00-10-01203-00, Managed byAssociates in Development (Private) Limited, for the Period January 1, 2010, to June 30,2011 (Report No. G-391-12-009-R, April 17, 2012). The audit covered total revenues of$2,564,077 and costs of $2,560,600. Of this total, OIG questioned $316,937. OIG also identifiedten significant deficiencies in internal control—including the failure to perform conflict-ofinterestchecks and the use of unreasonable rates in compensating personnel—and a numberof material instances of noncompliance. The report made three recommendations to addressthese matters.Financial Audit of the Pakistan Children’s Television Project, USAID/Pakistan AgreementNo. 391-A-00-10-01161-00, Managed by the Rafi Peer Theatre Workshop, for the PeriodMay 7, 2010, to June 30, 2011 (Report No. G-391-12-010-R, April 17, 2012). This auditcovered total revenues of $2,630,336 and costs of $906,523. Auditors concluded that, with theexception of the effects of unsupported costs of $15,629, the fund accountability statementpresented fairly, in all material respects, program revenues and costs incurred under theagreement for the period audited. These unsupported costs pertained to equipment and otherdirect program expenses for which the auditee did not provide bills, invoices, or otheradequate documentation. OIG questioned an additional $595,394 in personnel costs because ofa lack of personnel activity reports and the cumulative effect of associated weaknesses anddeficiencies in internal controls. Auditors also questioned $121,523 in costs claimed as part ofthe cost-sharing arrangement with USAID. Some of these costs were ineligible forreimbursement by USAID, and others lacked any supporting documentation.Auditors also identified numerous internal control weaknesses and several instances ofnoncompliance. OIG concluded that 15 internal control weaknesses found by auditors werematerial. These weaknesses included issues with the recruitment, hiring, and payment ofpersonnel; integrity of financial records; and improper classification of costs. OIG determinedthat 11 instances of noncompliance identified by auditors were also material, including theauditee’s lack of a conflict-of-interest policy, omission of mandatory contract clauses, andfailure to broadcast television productions within prescribed time frames. The report madefive recommendations.Financial Audit of Projects Managed by Lahore University of Management Sciences:Foreign Recipient-Contracted Audit of the Assessment and Strengthening ProgramUSAID OIG Afghanistan and Pakistan Oversight Report 21