USAID countered that it had identified the risks and taken steps to mitigate them, but that SIGAR had not taken that into account because it was not within the scope of the audit.
“SIGAR’s audit describes risks which USAID itself identified as a first step in our process of due diligence; but SIGAR chose not to examine in this audit the mitigating measures USAID implemented in response to these identified risks. It’s important to note that SIGAR’s audit did not identify any fraud, waste or abuse in our direct assistance program,” said Larry Sampler, assistant to the administrator for Afghanistan and Pakistan.
In its report, SIGAR said USAID hired auditing firms Ernst & Young and KPMG to assess if 16 Afghan ministries were able to manage and account for funds. The contractors reported back that none of the ministries — from the Ministry of Finance to the Ministry of Public Health and beyond — could do so, and they made hundreds of recommendations on how to mitigate the risks.
Instead of requiring the ministries to make all or even most of the fixes, USAID waived its own requirements and signed off on direct assistance to those ministries anyway, according to SIGAR.
While SIGAR acknowledged that USAID had taken steps to improve accountability, it said that identifying risks and coming up with ways to mitigate them is “of little use if minimal action is taken to implement them.”
It indicated that USAID had only required ministries to implement 24 of 333 recommended “risk mitigation” measures before getting funds.
“USAID’s reluctance to make direct assistance to ministries contingent upon them fixing many of the underlying problems identified through the risk reviews does little to support the development of an Afghan government capable of functioning independently and sustaining the programs it manages,” SIGAR said.
SIGAR added that USAID’s required reports to Congress in 2011 and 2012 on direct assistance were “inaccurate or, at least, incomplete,” compromising congressional oversight of the funds.
USAID did not fully disclose how none of the ministries it had assessed was capable of managing direct assistance funding, or reveal that only a fraction of the recommendations were adopted as conditions to disburse the money, according to SIGAR.
“We believe it was and is incumbent upon USAID to share this information with Congress,” the report stated.