Audit Report The Global Fund’s Key Performance Indicator Framework Follow-up Audit GF-OIG-19-008 27 March 2019 Geneva, Switzerland What is the Office of the Inspector General? The Office of the Inspector General (OIG) safeguards the assets, investments, reputation and sustainability of the Global Fund by ensuring that it takes the right action to end the epidemics of AIDS, tuberculosis and malaria. Through audits, investigations and advisory work, it promotes good practice, reduces risk and reports fully and transparently on abuse. Established in 2005, the OIG is an independent yet integral part of the Global Fund. It is accountable to the Board through its Audit and Finance Committee and serves the interests of all Global Fund stakeholders. Its work conforms to the International Standards for the Professional Practice of Internal Auditing and the Uniform Guidelines for Investigations of the Conference of International Investigators. Contact us The Global Fund believes that every dollar counts and has zero tolerance for fraud, corruption and waste that prevent resources from reaching the people who need them. If you suspect irregularities or wrongdoing in the programs financed by the Global Fund, you should report to the OIG using the contact details below. The following are some examples of wrongdoing that you should report: stealing money or medicine; using Global Fund money or other assets for personal use; fake invoicing; staging of fake training events; counterfeiting drugs; irregularities in tender processes; bribery and kickbacks; conflicts of interest; and human rights violations… Online Form > Email: Available in English, French, Russian and Spanish [email protected] Letter: Free Telephone Reporting Service: The Office of the Inspector General +1 704 541 6918 The Global Fund Global Health Campus Telephone voicemail: Chemin du Pommier 40 +41 22 341 5258 1218 Grand-Saconnex Geneva, Switzerland More information about the OIG www.theglobalfund.org/oig Audit Report Advisory Report Investigations Report OIG audits look at systems and processes, both OIG advisory reports aim to further the Global OIG investigations examine either allegations at the Global Fund and in country, to identify the Fund’s mission and objectives through value- received of actual wrongdoing or follow up on risks that could compromise the organization’s added engagements, using the professional skills intelligence of fraud or abuse that could mission to end the three epidemics. The OIG of the OIG’s auditors and investigators. The compromise the Global Fund’s mission to end generally audits three main areas: risk Global Fund Board, committees or Secretariat the three epidemics. The OIG conducts management, governance and oversight. may request a specific OIG advisory administrative, not criminal, investigations. Its Overall, the objective of the audit is to improve engagement at any time. The report can be findings are based on facts and related analysis, the effectiveness of the Global Fund to ensure published at the discretion of the Inspector which may include drawing reasonable that it has the greatest impact using the funds General in consultation with the stakeholder who inferences based upon established facts. with which it is entrusted. made the request. 27 March 2019 Geneva, Switzerland Page 2 Table of Contents 1. Executive Summary .................................................................................................................. 4 1.1. Opinion .................................................................................................................................. 4 1.2. Key Achievements and Good Practices ................................................................................. 4 1.3. Key Issues and Risks ............................................................................................................. 5 1.4. Rating .................................................................................................................................... 5 1.5. Summary of Agreed Management Actions ........................................................................... 6 2. Background and Context .......................................................................................................... 7 2.1. Key Performance Indicator Framework 2017 – 2022 .......................................................... 7 2.2. Key changes in the management of the Global Fund’s Key Performance Indicator Framework processes ....................................................................................................................... 8 3. The Audit at a Glance ................................................................................................................ 9 3.1. Objectives .............................................................................................................................. 9 3.2. Scope ..................................................................................................................................... 9 3.3. Progress on Previously Identified Issues .............................................................................. 9 4. Findings ......................................................................................................................................... 10 4.1 Significant improvements have been made in KPI data collection, aggregation and reporting processes. Control weaknesses were noted which caused immaterial inaccuracies for some KPIs reported. ....................................................................................................................... 10 4.2 Limitations in some KPIs’ design have led to their poor utilization in daily operations .... 13 5 Table of Agreed Actions .......................................................................................................... 16 Annex A: General Audit Rating Classification ................................................................................... 17 Annex B: Methodology ....................................................................................................................... 18 27 March 2019 Geneva, Switzerland Page 3 1. Executive Summary 1.1. Opinion Since 2004, when the Global Fund’s first Key Performance Indicator Framework was established, the organization’s measurement focus has shifted away from project-level goals, towards mission and impact: building a sustainable response to ending the epidemics. In June 2016, the Global Fund Board approved a KPI Framework to measure progress against the 2017 – 2022 Strategy. Developed in consultation with key stakeholders, its design incorporated recommendations from Board- appointed advisory groups, the Technical Evaluation Reference Group (TERG), and relevant audits of the Office of Inspector General (OIG).1 Overall, improvements have been noted in the development and approval process for the KPI framework. KPI reporting has improved, with the majority of the KPIs being reported in 2018, enabling oversight of KPI results by the Board and its Committees. The governance and oversight arrangements in place over the KPI Framework are therefore rated as effective. The Secretariat has enhanced its processes for collecting data, calculating KPIs and reporting results. These include the use of process maps to formalize data sources, methodologies for calculating KPIs, and the automated collection of data for certain KPIs. Isolated control weaknesses exist however in data collection and in aggregation processes for some KPIs, resulting in inaccurate results. These inaccuracies were immaterial and mainly self-identified by the KPI team or KPI focal point, and corrected in subsequent reports; as a result, the KPI results reported to the Board under the 2017 – 2022 framework are materially aligned with the Secretariat’s underlying performance data. The processes, controls over data collection, methodology, calculation and reporting of the KPI are therefore rated as effective. Despite improvements in the process to develop KPIs, there are limitations in the design of some of the Board-approved indicators. This has led to varying degrees of maturity in how KPIs are used in the organisation to assess performance, course correct on a timely basis, and drive accountability to the individual level. The use of KPI data for performance-based decision-making by the Global Fund Board and the Secretariat is rated as partially effective. 1.2. Key Achievements and Good Practices The organisation has taken several measures to enhance the KPI Framework for 2017–2022, notably: Enhanced performance reporting framework - A new KPI reporting structure has been put in place to allow for better understanding of KPI results, and better monitoring of performance management. This new structure allocates the KPIs across four thematic areas (i) funding, (ii) program design, (iii) implementation, and (iv) impact and results. It enables decision-makers to view KPI information at a strategic level, and includes narrative analysis, with management information to explain results and contextual information where needed. Where data limitations exist, these are disclosed at all levels (e.g. Committees, Board, and Management Executive Committee). Board members have recently acknowledged the improvement in KPI results reporting. Implementation of KPI Accountability Framework - A KPI accountability framework has been implemented, which assigns clear accountability over KPI achievement as well as the collection and validation