OFFICE OF INSPECTOR GENERAL AUDIT OF USAID/BURMA’S SHAE THOT (THE WAY FORWARD) PROGRAM AUDIT REPORT NO. 5-482-15-007-P SEPTEMBER 3, 2015 MANILA, PHILIPPINES Office of Inspector General September 3, 2015 MEMORANDUM TO: USAID/Burma Mission Director, Chris Milligan FROM: Regional Inspector General/Manila, Matthew Rathgeber /s/ SUBJECT: Audit of USAID/Burma’s Shae Thot (The Way Forward) Program (Report No. 5-482-15-007-P) This memorandum transmits our final report on the subject audit. In finalizing the audit report, we have considered carefully your comments on the draft report and included them in their entirety, excluding attachments, in Appendix II. The report includes three recommendations to help the mission address the issues identified in our audit. After reviewing information provided in response to the draft report, we determined that the mission made management decisions on all three recommendations and took final action on Recommendation 2. Please provide the necessary documentation to obtain final action on Recommendations 1 and 3 to the Audit Performance and Compliance Division in the Office of the Chief Financial Officer. I appreciate the cooperation and courtesy extended to my staff during the audit. U.S. Agency for International Development Annex 2 Building U.S. Embassy 1201 Roxas Boulevard 1000 Ermita, Manila, Philippines http://oig.usaid.gov CONTENTS Summary of Results .................................................................................................................1 Audit Findings ...........................................................................................................................5 Integrated Components Had Substantial Impact ................................................................... 5 Program Did Not Increase Access to Sufficient Quantities of Safe Water in Some Villages .......................................................................................................................8 Mission’s Approval of Medical Supply Requests Was Not Efficient ...................................... 10 Mission Did Not Conduct Enough Site Visits ....................................................................... 10 Evaluation of Management Comments .................................................................................. 12 Appendix I—Scope and Methodology ................................................................................... 13 Appendix II—Management Comments .................................................................................. 15 Abbreviations The following abbreviations appear in this report: ADS Automated Directives System AOR agreement officer’s representative MCH maternal and child health MSI Marie Stopes International RIG Regional Inspector General VDC village development committee WASH water, sanitation, and hygiene SUMMARY OF RESULTS When Cyclone Nargis struck Burma in 2008, the U.S. Government provided relief. The disaster led Congress to provide additional humanitarian assistance countrywide, not only in Nargis- affected areas. With the country’s transition to a civilian government in 2011 and greater openness to the outside world, immediate relief and rehabilitation have given way to help with problems brought about by decades of underinvestment in essential services, harsh environmental conditions, and limited access to resources. To provide this help, in 2012 USAID reopened its Burma mission, which had been closed since 1989. In September 2011, USAID/Regional Development Mission Asia awarded a 5-year, $55 million cooperative agreement to Pact, a U.S. nongovernmental organization, to implement the Shae Thot (Way Forward) Program. As of February 23, 2015, the program had obligations and expenditures of $43.4 million and $37.3 million, respectively.1 The program sought to: 1. Decrease maternal, newborn, and child mortality (improve maternal and child health, or MCH) 2. Improve household food security (improve livelihoods and raise household income) 3. Increase access to (safe) water, sanitation, and hygiene (WASH) 4. Strengthen community institutions Pact leads a consortium of partners with extensive experience in Burma and expertise in the above areas. The consortium partners are Cesvi Fondazione Onlus (Cesvi), an Italian organization that specializes in agricultural extension for food security; Marie Stopes International (MSI), based in London, which offers clinical outreach and maternal health services; Pact Global Microfinance Fund, a U.S.-based organization that has been implementing financial services in Burma since 1997; and UN-Habitat, known for its work in WASH. The Regional Inspector General (RIG)/Manila conducted this audit to determine if USAID/Burma's Shae Thot Program was achieving its planned results and whether they were sustainable. Overall, the program was achieving its objectives. As of September 2014, Shae Thot had assisted 2,177 villages in 19 townships in the center of country, Kayah State, and areas around Yangon City (as shown in the map on the next page).2 At that point, only 1,868 villages had ongoing activities since the program had phased out livelihood activities in Magway Township and MCH activities in four other townships. 1 These amounts come from the Agency’s financial systems. On November 17, 2014, OIG issued Audit of USAID’s Financial Statements for Fiscal Years 2014 and 2013, Report Number 0-000-15-001-C, disclaiming an opinion because of material unsupported adjustments USAID made to reconcile its general and subsidiary ledgers. We did not perform any additional tests during this audit to verify the accuracy of the reported amounts. In FY 2015, OIG anticipates testing USAID’s adjustments to determine if they were accurate and appropriate. USAID intends to provide explanations and other support to demonstrate the adjustments’ validity. 2 Shae Thot implements activities in approximately 19 percent of villages in the center of the country and Kayah State (more than 11,500 villages). For ease of understanding the administrative divisions mentioned in this report, a township includes urban wards, towns, and villages; the level above it is the district; above that is the state. 1 Source: Pact. 2 Moreover, the program’s achievement rates on 23 of 25 performance indicators were 95 percent or higher, as shown in the following table. Achievements as of September 30, 2014 (Audited) Achievement Rates Number of Indicators 80-84 percent 2 95-98 percent 5 Greater than 100 percent 16 Greater than 150 percent 2 Total 25 The two indicators with the lowest achievement rates pertained to (1) Number of family planning and MCH cases treated by mobile clinics and (2) Number of babies attending village baby- weighing days. The mobile clinics indicator did not achieve planned results for two reasons— demand decreased for tetanus toxoid injections to pregnant mothers, and more volunteers were treating diarrhea cases. The indicator on weigh-ins did not achieve planned results because there were fewer babies in the targeted villages than was anticipated. Most results likely will be sustainable because village development committees (VDCs) took charge of the activities. VDCs, started by the program, serves as the primary unit for building community institutions, leading villagers in realizing, maintaining, and sustaining meaningful improvements to their health and development. The report discusses strengths in program implementation, as well as three areas in which accomplishments have been delayed and improvements can be made: • Integrated components had substantial impact (page 5). Thirteen of the 18 villages that the audit team visited (the remaining 5 had only one implementing partner) had improved their primary health care, applied agricultural technology, and gained better access to safe water, leading to increased household incomes. • The program did not increase access to sufficient quantities of safe water in some villages (page 8). UN-Habitat, the implementing partner working on WASH, started late and rushed work and training. • The mission’s approval of medical supply requests was not efficient (page 10). During the third and fourth years, the mission took 6 months or more to grant requests. The delay stemmed from an e-mail glitch. • The mission did not conduct enough site visits (page 10). After 3.5 years of implementation, mission officials had made only about two site visits a year. They attributed the insufficient number to staffing shortages. To address the issues above, we recommend that USAID/Burma: 1. Prepare a written assessment of the sustainability and sufficiency of WASH activities in the first 2 years, and take corrective actions as necessary to increase access to safe water (page 9). 3 2. Issue written work-around procedures to mitigate risks from state.gov e-mail rejections (page 10). 3. Implement a plan to increase the number of sites visited and the frequency of site visits for the Shae Thot Program (page 11). Detailed findings appear in the following section. Appendix I contains information on the scope and methodology. OIG’s evaluation of management comments is on page 12, and the full text of them is in Appendix II. 4 AUDIT FINDINGS Integrated Components Had Substantial Impact The cooperative agreement stated that “health, livelihoods, food security, and water are inextricably linked” and are the things poorest households need most. Accordingly, program components were integrated—i.e., each of the program’s components featured activities that overlapped with and advanced the others.