GLOBAL FUND AUDIT: TANZANIA TAKING ACTION

UNCLAS SECTION 01 OF 02 DAR ES SALAAM 000560 SIPDIS DEPARTMENT FOR AF/E JTREADWELL, S/GAC E.O. 12958: N/A TAGS: PGOV KHIV SOCI TZ SUBJECT: GLOBAL FUND AUDIT: TANZANIA TAKING ACTION ¶1. SUMMARY: A recent internal audit of the Global Fund to Fight AIDS, TB and Malaria's grants in Tanzania concluded that the grants face serious challenges, particularly in the areas of supply chain management and financial and programmatic reporting. The GOT has committed to taking appropriate corrective measures, which will be necessary for signing of Round 8 Global Fund grants. The USG has offered to provide technical assistance and capacity building, at GOT request. In addition, key elements of the Partnership Framework will address system strengthening and capacity efforts directly related to audit recommendations. While there have been several sensational articles on the audit report in the local press, the Global Fund Secretariat has emphasized publicly the routine nature of the report and that the report did not mention corruption. END SUMMARY. Background -------------- ¶2. Between December 2002 and February 2009, the Global Fund to Fight HIV/AIDS, Tuberculosis (TB) and Malaria (the Global Fund) committed a total of USD 820 million to Tanzania, of which USD 384 million had been disbursed as of February 23, 2009. The Global Fund has a portfolio of twelve grant agreements in Tanzania. ¶3. The Global Fund's Office of Inspector General (OIG) conducted an audit of several Global Fund grants to Tanzania as part of its 2009 work plan. The field work for the audit was carried out from January 19 to February 20, 2009. The Global Fund shared the audit report [TGF-OIG-09-001] with the GOT before its June 10 public release. Audit Objectives and Scope -------------- ¶4. The audit's overall objective was to provide assurance that the procurement, supply chain management, service delivery and financial management of Global Fund grant programs for HIV/AIDS, HIV/Tuberculosis and Malaria were undertaken efficiently and effectively; that adequate controls existed to account for grant resources; and that there was effective program oversight of Global Fund grants both within Tanzania and by the Global Fund Secretariat. The OIG deployed a multi-skill team comprising a public health specialist, a procurement and supply management specialist, and audit specialists. ¶5. The scope of the audit was limited to five Global Fund grant programs implemented by the following organizations: Ministry of Health and Social Welfare (MOHSW) and its national programs for HIV/AIDS, TB and Malaria; Prime Minister's Office-Regional Administration and Local Government (PMO-RALG); African Medical and Research Foundation (AMREF); and the Tanzanian Commission for AIDS (TACAIDS). In addition, the audit covered selected implementing partners of those entities. Audit tests and program visits were carried out in eight districts in Kilimanjaro, Tanga and Iringa regions. Findings and Recommendations -------------- ¶6. The OIG concluded that there are serious issues facing the grants to Tanzania, particularly, in the area supply chain management and financial and programmatic reporting. ¶7. For supply chain management, the OIG concluded that the Medical Stores Department's (MSD) management and its Board should ensure that controls needed to safeguard medicines and health products are established, effective, and working at all levels of the supply chain (i.e., from receipt of goods by MSD to storage and eventual distribution down the supply chain to district stores and health facilities). Drawing on the GOT Controller and Auditor General's report, the OIG indicated that unless corrective actions were taken to enhance the control environment and internal controls at key levels of the supply chain and at MSD in particular, grant resources would be at risk. Consequently, the audit recommended that Global Fund Round 8 grants to Tanzania should be conditioned on the GOT addressing the serious issues in supply chain management. ¶8. In the area of financial and programmatic reporting, the OIG could not give assurance on the accuracy of the financial and programmatic reports prepared by TACAIDS and submitted to the Local Fund Agent (LFA). The OIG found that there were no financial and programmatic reports available from implementing organizations/sub-recipients to confirm the figures reported. Further, there was no appropriate senior level management review before these reports were sent to the Ministry of Finance for signature. The OIG recommended that disbursement for Round 8 grants to Tanzania should also be conditioned on addressing the capacity gaps of TACAIDS as a substantive Principal Recipient, after its DAR ES SAL 00000560 002 OF 002 capacity had been assessed. GOT Response and USG Support -------------- ¶9. The GOT accepted most of the audit findings and stated that it would take appropriate corrective measures. The USG has accepted a GOT request to strengthen the Ministry of Health and Social Welfare Procurement Management Unit (PMU). The technical assistance will span an 18 to 24 month period. In addition, the USG is providing increased technical assistance to MSD. This support will continue under the Partnership Framework as well as through USAID's Health and Population Office. News Coverage -------------- ¶10. In the last several weeks, local press has reported, often in sensational fashion, on the audit report and the shortcomings identified. In response, the Global Fund Secretariat has emphasize that the audit was routine and that while "[T]he report raises significant issues over stock controls, internal systems and information systems, there's no mention of corruption. There were some gaps and some drugs were missing. There's a long list of action points and we have had a constructive response from the Tanzanian government. Our sense is that there will be an energetic follow-up by the government to remedy the shortcomings." (Comment: We agree with the Secretariat's assessment.) ANDRE