USAID Fiscal Year 2013 Agency Financial Report

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USAID Fiscal Year 2013 Agency Financial Report AGENCY FINANCIAL REPORT FISCAL YEAR 2013 A NEW MODEL FOR DEVELOPMENT ABOUT THIS REPORT he Reports Consolidation Act of 2000 autho- • Improper Payments Elimination and Recovery Act rizes federal agencies to consolidate various (IPERA) of 2010 – requires agencies to improve agency Treports in order to provide performance, efforts to reduce and recover improper payments; financial, and related information in a more meaningful and useful format. This report, along with the Annual • Improper Payments Elimination and Recovery Performance Report, satisfies the reporting requirements Improvement Act (IPERIA) of 2012 – requires federal of the following legislation: agencies to expand their efforts to identify, recover, and prevent improper payments. • Inspector General Act of 1978 [Amended] – requires information on management actions in response to Since FY 2007, the U.S. Agency for International the Office of Inspector General (OIG) audits; Development (USAID) has elected to continue the production of three separate reports in lieu of a • Federal Managers’ Financial Integrity Act (FMFIA) of consolidated Performance and Accountability 1982 – requires ongoing evaluations of, and reports Report (PAR). on, the adequacy of internal accounting systems and administrative controls, not just controls over financial • Agency Financial Report (AFR) – provides complete reporting but also controls over program areas; details on relevant financial results; • Chief Financial Officers (CFO) Act of 1990 – requires • Annual Performance Report (APR) – provides better financial accounting and reporting; complete details on performance results [to be submitted in conjunction with the Congressional • Government Management Reform Act (GMRA) of Budget Justification in February 2014]; 1994 – requires annual audited agency-level financial statements as well as an annual audit of government- • Joint Department of State and USAID Summary of wide consolidated financial statements; Performance and Financial Information Report – summarizes the AFR and APR in a brief, user-friendly • Federal Financial Management Improvement format [available February 2014]. Act (FFMIA) of 1996 – requires an assessment of the agency’s financial management systems for All three reports will be available at http://www.usaid.gov/ adherence to government-wide requirements to results-and-data/progress-data. ensure accurate, reliable, and timely financial There are three major sections to this report. The management information; first section, Management’s Discussion and Analysis (MD&A), provides an overview of financial results, a • Accountability of Tax Dollars Act (ATDA) of 2002 high-level discussion of program performance, manage- – requires executive heads of government agencies ment assurances on internal control and financial (Cover) In Kalangala, to submit reports detailing the financial status and a town on Uganda’s management systems compliance; and other management practices of their agencies; Bugala Island, information, initiatives, and issues. The second section, residents like this boy benefit from a • American Recovery and Reinvestment Act (Recovery Financial Section, provides the financial details, including USAID program that Act) of 2009 – requires reporting on agency allocation the independent auditor’s report, audited financial state- guarantees local bank ments, and a message from the CFO. The third section, loans to spark private of Recovery Act funds to each state through investment, which in individual programs; Other Information, includes the schedule of spending; turn helps improve a statement prepared by the OIG summarizing what access to clean water, • Government Performance and Results Act (GPRA) the OIG considers to be the most serious management better health care, Modernization Act (GPRAMA) of 2010 – requires and performance challenges facing the Agency; tables and a more robust island economy. quarterly performance reviews of federal policy and summarizing the financial statement audit and manage- PHOTO: BOBBY NEPTUNE / USAID management priorities; ment assurances; and a detailed report on Agency efforts to reduce and recover improper payments. This report is available at: http://www.usaid.gov/results-and-data/progress-data/agency-financial-report TABLE OF CONTENTS ii A Message from 47 Financial the Administrator Section 49 A Message from the Acting Chief Financial Officer Management’s 51 Independent Auditor’s Report 1 Discussion and Analysis 75 Financial Statements and Notes 3 Mission and Organizational Structure 121 Required Supplementary Information 6 Program Performance Overview 26 Analysis of Financial Statements 127 Other Information 30 Limitations of the Financial Statements 129 Schedule of Spending 31 Analysis of Systems, Controls, and Legal Compliance 131 Inspector General’s Statement of Most Serious Management and Performance 31 Management Assurances Challenges for USAID 38 Goals and Supporting Financial 147 Summary of Financial Statement Audit System Strategies and Management Assurances 40 Other Management Information, 149 Improper Payments Elimination and Initiatives, and Issues Recovery Act Reporting Details 159 Appendices 161 Appendix A. Performance Indicators Data Notes 168 Appendix B. Abbreviations and Acronyms A MESSAGE FROM THE ADMINISTRATOR ver four years ago, President Barack Obama set forth a new vision of a robust and results-oriented U.S. OAgency for International Development (USAID) that would lead the world in development. In the years since, we have seized upon this challenge, advancing an ambitious reform effort that is not only transforming the way we work around the world, but also the kind of results we can deliver. Rajiv Shah Under the leadership of President Obama, we A NEW MODEL FOR helped launch new global partnerships to dramati- DEVELOPMENT: PARTNERSHIPS, cally accelerate and scale up efforts in food security, INNOVATION, AND RESULTS child survival, and access to energy. Taken together, these high-impact efforts formed the foundation After more than two years, the USAID Forward for a new model of development that brings new reform agenda has touched upon every part of public-private partnerships, a greater emphasis our Agency—from budget to talent management. on innovation, and a relentless focus on results. In each area of reform, we set aspirational targets It is a model that recognizes that the problems we that have established a common language for face—from ending extreme poverty to mitigating success, challenged our partners, and encouraged climate change—are solvable. But solving them us to step out of our comfort zone. requires a meaningful commitment from all parts of our society. We re-established our policy bureau and budget capabilities from scratch, giving us greater control Although most of us work far from home, our over how, when, and where we spend our resources. work remains first and foremost for our home: These decisions allowed us to better focus our for the markets we open to American businesses, efforts where the needs and potential impact the skills of our young people we help build, and are greatest. Since 2010, regional bureaus have the threats to our shores that we help prevent. reduced program areas by 29 percent; Feed the By advancing broad-based economic growth, Future agriculture programs have been phased out democracy, and human progress around the world, of 22 countries; and USAID global health program we help create new jobs today and better position areas have been phased out of 23 countries. American companies for the markets of the future. Most important, we never stop working toward the day when our efforts will no longer be needed. ii USAID FY 2013 AGENCY FINANCIAL REPORT | A MESSAGE FROM THE ADMINISTRATOR Since the launch of our evaluation policy, 186 serious management and performance challenges high-quality evaluations were completed for both across the Agency. As the Statement by the Office ongoing and completed programs, and they are of Inspector General reports, we face challenges available on our Web site or through a mobile app. in six areas, including work in non-permissive Half of these evaluations have led to mid-course environments, sustainability, local solutions, corrections to increase the development impact and performance management and reporting. and one-third has led to budget changes. For example, we face daunting challenges A new emphasis on supporting and strengthening in implementing programs in countries like local solutions has enabled us to shift $1.4 billion Afghanistan, Pakistan, Iraq, and Somalia, and in funding to local institutions, firms, and we have focused intensely over the past several organizations in 2012 alone—helping strengthen years on improving our ability to work in these self-sufficiency. When we partner with developing non-permissive environments. As a result, country institutions, we use sophisticated tools to we are launching a new Working Group on access their financial management capacity and non-permissive environments to help us manage safeguard U.S. resources. risk effectively. Three sub-groups will focus on compiling a compendium of best practices, We continue to mobilize a new generation of developing a monitoring toolkit, and preparing innovators and scientists through our Develop- training that focuses on our human capital. ment Innovation Ventures Fund and the Higher We look forward to delivering these new tools— Education Solutions Network. In the last three which are contingent on funding—to our team in years, we have
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