Audit of USAID/Jordan's Fiscal Reform Project - US Agency For ...

Management ControlsShould Be StrengthenedSummary: Automated Directives System 596, “Management’s Responsibility for InternalControl,” provides policy directives and required procedures to improve accountabilityand effectiveness of USAID programs. At USAID/Jordan, in one specific instance, fiscalreform activities included specific project deliverables that were rejected by Jordan’sMinistry of Finance. The Ministry rejected the project deliverables because thecontractor did not coordinate its work with the Ministry staff to determine specific needsor notify mission staff about communication difficulties. As USAID’s technicalrepresentative, the cognizant technical officer shares responsibility in effective projectcommunication. Because of the lack of open and constant communication amongstakeholders, USAID/Jordan did not maximize its use of project funds to ensure that itsfiscal reform activities were effective and efficient to achieve desired results.Automated Directives System 596.3.1c requires USAID managers to, among otherthings, develop internal controls activities that would reasonably ensure that activitiesare effective and efficient. Such activities include establishment, and reviews ofperformance measures and indicators, and the proper execution of events.In July 2004, a joint World Bank/International Monetary Fund mission identified thefunctions of commitment control and cash management as being major deficiencieswhich needed to be addressed on a priority basis. In addition, the World Bankemphasized that management and control of expenditure commitments was essential forefficient and effective resource management; for monitoring of budgetary performance ofministries and departments; and for aggregate cash management by the Ministry ofFinance.USAID/Jordan incorporated the commitment control and cash management functionsinto the BearingPoint contract’s statement of work in May 2006. In part, the contractorwas to (1) perform assessments of and make recommendations to Jordan’s Ministry ofFinance’s regarding its commitment control and cash management functions, and (2)develop a public awareness campaign that would help to inform the public aboutimpending changes in the tax system to increase compliance rates.During 2006, after the Ministry requested the assessments of its cash management andcommitment control activities, BearingPoint hired a team of two advisors for about threeweeks to perform the required assessments. Although the contractor performedassessments and submitted recommendations to the Ministry of Finance, the Ministryrejected the work products because the resulting work did not expand on previouslyconducted analyses on the cash management and commitment control functions.Although the Ministry rejected the work products, USAID/Jordan paid the contractor$57,538 for these efforts because BearingPoint completed its assigned work andproduced an assessment with recommendations, as required.According to the cognizant technical officer, before the contractor began its work, theMinistry of Finance had conducted and nearly completed assessments of these twofunctions, but needed technical assistance from BearingPoint. Despite BearingPoint’sunsuccessful attempts to contact Ministry officials for guidance and input, the contractordid not contact the mission staff to report any difficulties with communicating with9