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

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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