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SIGAR OVERSIGHT ACTIVITIES Special Purpose Financial Statement: a financial statement that includes all revenues received, costs incurred, and any remaining balance for a given award during a given period. COMPLETED FINANCIAL AUDITS • Financial Audit 17-20-FA: USAID Contract with Black & Veatch Special projects Corporation for the Kandahar- Helmand Power Program • Financial Audit 17-23-FA: State Grant with Aga Khan Foundation USA for the Strengthening Afghan Governance and Alternative Livelihoods (SAGAL) Program • Financial Audit 17-24-FA: State Grant with Sayara Media and Communications for Afghanistan Counternarcotic Program recommendations. As a result, final disallowed cost determinations remain to be made for several of SIGAR’s issued financial audits. SIGAR’s financial audits have also identified and communicated 325 compliance findings and 347 internal-control findings to the auditees and funding agencies. SIGAR’s financial audits have four specific objectives: • Express an opinion on whether the Special Purpose Financial Statement for the award presents fairly, in all material respects, revenues received, costs incurred, items directly procured by the U.S. government, and balance for the period audited in conformity with the terms of the award and generally accepted accounting principles or other comprehensive basis of accounting. • Evaluate and obtain a sufficient understanding of the audited entity’s internal control related to the award; assess control risk; and identify and report on significant deficiencies, including material internalcontrol weaknesses. • Perform tests to determine whether the audited entity complied, in all material respects, with the award requirements and applicable laws and regulations; and identify and report on instances of material noncompliance with terms of the award and applicable laws and regulations. • Determine and report on whether the audited entity has taken adequate corrective action to address findings and recommendations from previous engagements. A list of completed and ongoing financial audits can be found in Appendix C of this quarterly report. Financial Audits Published This quarter, SIGAR completed three financial audits of U.S.-funded contracts, grants, and cooperative agreements to rebuild Afghanistan. These financial audits identified $2,417,088 in questioned costs as a result of internal control deficiencies and noncompliance issues and $109 in unremitted interest on advanced federal funds or other revenue amounts payable to the government. These deficiencies and noncompliance issues included receiving reimbursement for subcontractor costs that were never incurred, failing to meet a grant’s cost-sharing requirements, charging unallowable laundry expenses to a grant, employing a foreign currency conversion process that did not follow U.S. generally accepted accounting principles, failing to adjust indirect cost rates to reflect actual costs, and neglecting to complete a cost or price analysis for a mobile phone service procurement. 26 SPECIAL INSPECTOR GENERAL I AFGHANISTAN RECONSTRUCTION
SIGAR OVERSIGHT ACTIVITIES Financial Audit 17-20-FA: USAID’s Kandahar Helmand Power Project Audit of Costs Incurred by Black & Veatch Special Projects Corporation On December 9, 2010, USAID awarded a $266 million, 34-month contract to Black & Veatch Special Projects Corporation (BVSPC) to fund the Kandahar Power Initiative. As a critical component of the U.S. government’s counterinsurgency strategy in southern Afghanistan, the initiative was part of a national program to improve the Southeast Power System and connect it with other electrical grids in Afghanistan. Over the course of 18 modifications, the program was renamed the Kandahar Helmand Power Project (KHPP), the budget was reduced to $229 million, and the period of performance was extended to November 30, 2015. USAID authorized BVSPC to conduct contract closeout activities through December 31, 2015. SIGAR’s financial audit, performed by Crowe Horwath LLP (Crowe), reviewed $227,372,464 charged to the contract from December 9, 2010, through December 31, 2015. Crowe identified four material weaknesses and four significant deficiencies in BVSPC’s internal controls and 10 instances of noncompliance with the terms and conditions of the KHPP contract. Of note, Crowe found that BVSPC was reimbursed for more than $1.3 million in subcontractor costs that were not reimbursable. Another $34,473 was called into question because BVSPC did not complete cost and price analysis for a procurement for mobile phone service. Crowe also reported several findings arising from deficiencies in BVSPC’s property and inventory records. As a result of these internal-control weaknesses and instances of noncompliance, Crowe identified $1,350,382 in total questioned costs, consisting of $1,313,191 in ineligible cost and $37,191 in unsupported costs. Crowe reviewed five prior audit reports applicable to the KHPP and conducted follow-up procedures on seven matters that could have a direct and material effect on the Special Purpose Financial Statement (SPFS) or other financial information significant to the audit objectives. Crowe concluded that BVSPC had not taken adequate corrective action on three of the items. Crowe issued an unmodified opinion on BVSPC’s SPFS, noting that it presents fairly, in all material respects, revenues received, costs incurred, and the balance for the period audited. Based on the results of the audit, SIGAR recommends that the responsible contract officer at USAID: 1. Determine the allowability of and recover, as appropriate, $1,350,382 in questioned costs identified in the report. 2. Advise BVSPC to address the report’s eight internal-control findings. 3. Advise BVSPC to address the report’s 10 noncompliance findings. Unsupported costs: costs not supported with adequate documentation or that did not have required prior approval. Ineligible costs: costs prohibited by the award, applicable laws, or regulations. REPORT TO THE UNITED STATES CONGRESS I JANUARY 30, 2017 27
Page 1 and 2: SIGAR JAN Special Inspector General
Page 3 and 4: JOWZJAN BALKH KUNDUZ TAKHAR BADAKHS
Page 5 and 6: This quarter, SIGAR issued 13 audit
Page 7 and 8: EXECUTIVE SUMMARY • the abandonme
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Page 79 and 80: STATUS OF FUNDS STATUS OF FUNDS To
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STATUS OF FUNDS USAID INCLE State A
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DOD STATUS OF FUNDS CERP DOD DOD DR
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DOD STATUS OF FUNDS ESF USAID INTER
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STATUS OF FUNDS the United Kingdom
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SECURITY SECURITY KEY ISSUES AND EV
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SECURITY FIGURE 3.26 AVERAGE NUMBER
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SECURITY investigation concluded th
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SECURITY USFOR-A determined that
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SECURITY System for the ANA’s Nat
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SECURITY FIGURE 3.27 RS TRAIN, ADVI
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SECURITY DOD reported the ASSF in b
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SECURITY TABLE 3.8 ANDSF ASSIGNED F
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SECURITY function without Coalition
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SECURITY international scholarships
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SECURITY TABLE 3.10 COST OF U.S.-FU
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SECURITY Utility in Kabul ($314,325
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SECURITY An AAF specialist adjusts
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SECURITY According to USFOR-A, the
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SECURITY A Women’s Participation
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SECURITY announcement has provoked
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SECURITY as well as for civilians a
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GOVERNANCE GOVERNANCE KEY ISSUES AN
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GOVERNANCE U.S. RECONSTRUCTION FUND
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GOVERNANCE TABLE 3.14 USAID ON-BUDG
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GOVERNANCE the ARTF is the largest
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GOVERNANCE Of 59 conditions defined
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GOVERNANCE TABLE 3.15 USAID CAPACIT
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GOVERNANCE independent news and pub
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GOVERNANCE ministry of municipal af
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GOVERNANCE In January, the Wall Str
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GOVERNANCE TABLE 3.17 RULE OF LAW A
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GOVERNANCE ADALAT found in the cour
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GOVERNANCE without proper vetting o
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GOVERNANCE to the absence of design
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GOVERNANCE TABLE 3.18 USAID GENDER
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GOVERNANCE service is organized on
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ECONOMIC AND SOCIAL DEVELOPMENT ECO
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ECONOMIC AND SOCIAL DEVELOPMENT Agr
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ECONOMIC AND SOCIAL DEVELOPMENT TAB
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ECONOMIC AND SOCIAL DEVELOPMENT $7.
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ECONOMIC AND SOCIAL DEVELOPMENT reg
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ECONOMIC AND SOCIAL DEVELOPMENT FIG
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ECONOMIC AND SOCIAL DEVELOPMENT qua
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ECONOMIC AND SOCIAL DEVELOPMENT ins
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ECONOMIC AND SOCIAL DEVELOPMENT are
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ECONOMIC AND SOCIAL DEVELOPMENT dis
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ECONOMIC AND SOCIAL DEVELOPMENT Pow
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ECONOMIC AND SOCIAL DEVELOPMENT Cit
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ECONOMIC AND SOCIAL DEVELOPMENT Wor
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ECONOMIC AND SOCIAL DEVELOPMENT A s
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ECONOMIC AND SOCIAL DEVELOPMENT to
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ECONOMIC AND SOCIAL DEVELOPMENT wit
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COUNTERNARCOTICS COUNTERNARCOTICS K
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COUNTERNARCOTICS opium-poppy cultiv
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COUNTERNARCOTICS UNODC estimates th
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COUNTERNARCOTICS The program pays a
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COUNTERNARCOTICS remained the top o
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COUNTERNARCOTICS Community Based Ag
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COUNTERNARCOTICS activities include
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COUNTERNARCOTICS in 2016 at an addi
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COUNTERNARCOTICS TABLE 3.6 INTERDIC
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OTHER AGENCY OVERSIGHT CONTENTS OTH
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OTHER AGENCY OVERSIGHT COMPLETED OV
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OTHER AGENCY OVERSIGHT U.S. Departm
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OTHER AGENCY OVERSIGHT Audit of Afg
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OTHER AGENCY OVERSIGHT equipment su
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APPENDICES AND ENDNOTES CONTENTS Ap
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APPENDICES APPENDIX A CROSS-REFEREN
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APPENDICES TABLE A.1 (CONTINUED) CR
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APPENDICES TABLE A.2 CROSS-REFERENC
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APPENDICES APPENDIX B U.S. FUNDS FO
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APPENDICES APPENDIX C SIGAR WRITTEN
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APPENDICES Ongoing Financial Audits
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APPENDICES APPENDIX D SIGAR INVESTI
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APPENDICES TABLE D.1 SPECIAL ENTITY
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APPENDICES TABLE D.1 (CONTINUED) SP
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APPENDICES TABLE D.1 (CONTINUED) SP
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APPENDICES ACRONYM OR ABBREVIATION
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ENDNOTES 1. Transparency Internatio
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ENDNOTES 100. General John Nicholso
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ENDNOTES 226. RS, email to SIGAR, 1
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ENDNOTES 380. UNMAS, Afghan Civilia
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ENDNOTES 483. Voice of America, “
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ENDNOTES 596. SIGAR, analysis of MO
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ENDNOTES 698. USAID, OI, response t
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ENDNOTES 794. UN, Report of the Sec
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A worker looks down on an Afghan va
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