Audits of Costs Incurred by Selected USAID Awardees Implementing Ukraine Activities From January 1, 2018, to December 31, 2022

Audit Report
Why We Did These Audits
  • On February 24, 2022, the day Russia invaded Ukraine, the USAID Mission in Kyiv managed 41 awards totaling roughly $1.1 billion for humanitarian assistance and aid development across the country. After the invasion, USAID worked quickly to adjust its portfolio of awards across Ukraine. On March 6, 2022, the USAID Administrator approved expedited acquisition and assistance actions for humanitarian aid in Ukraine, Belarus, and Moldova. That same year, Congress allocated first $4.6 billion and then an additional $13.1 billion to USAID in support of Ukraine’s humanitarian and development efforts—for a combined total of $18.8 billion.
  • Congress also provided OIG with $10 million to oversee USAID’s implementation of its Ukraine-related activities. OIG contracted with independent public accounting firm Premier Group Services, Inc. (Premier) to conduct 12 performance audits on incurred costs related to Ukraine activities under multiple awards USAID issued from January 1, 2018, to December 31, 2022. The objective was to determine whether specific costs incurred for Ukraine activities were allowable, allocable, and reasonable under regulatory requirements and award provisions. Premier conducted the audits in accordance with generally accepted government auditing standards.
What We Found
  • Of the $484,387,915 in total auditable costs for the 12 implementers, Premier found $186,899 in questioned direct costs that were potentially unallowable. The audit firm also identified 16 internal control deficiencies, including a lack of controls to prevent comingling of funds, the use of incorrect currency exchange rates, and a lack of detailed policies and procedures.
  • Premier had no findings for five of the audited implementers: Consortium for Elections and Political Process Strengthening, Global Communities, Management Systems International, Tetra Tech ES, and Ukraine Helsinki Human Rights Union. However, the audit firm identified findings for the other seven implementers.

1. 100% Life did not:

Have adequate and complete supporting documentation for allocated direct labor costs sampled, resulting in questioned costs of $82,661.

Implement a routine process for reviewing and reconciling transaction documentation with the general ledger, including periodic checks to promptly identify and resolve any discrepancies.

2. Chemonics International did not:

Have sufficient information for allocated allowances, travel and transportation, and sampled contractual and procurement costs, resulting in questioned direct costs of $53,983.

Establish clear guidelines to ensure that all supporting documents for transactions, such as invoices, receipts, and allocation details, are complete and readily accessible.

Conduct training sessions on proper documentation procedures, including the connection between adequate documentation and compliance with audit requirements.

Implement a routine process for reviewing and reconciling transaction documentation with the general ledger, including periodic checks for quickly identifying and resolving discrepancies.

3. DAI Global did not:

Have sufficient information to apply currency exchange rates to sampled direct labor costs, resulting in questioned direct costs of $17,816.

Implement policies and procedures to ensure that the exchange rate applied on bills to USAID matched the rate used to pay employees on the same date.

Monitor implementation of invoicing and exchange rate practices to ensure compliance with Federal regulations and billing accuracy.

4. Ednannia did not:

Develop and implement procedures to minimize variances between the general ledger and the incurred cost submission.

Implement a rigorous documented and reviewed reconciliation process between the general ledger and incurred cost submissions, ensuring that all discrepancies are promptly identified, investigated, and resolved.

Consider the use of automated financial systems or software to streamline the reconciliation process, reduce the risk of human error, and improve the accuracy of financial data entries.

5. Internews Network did not:

Have strong enforcement and monitoring mechanisms to ensure conflict-of-interest policies and procedures were effectively implemented.

Provide targeted training to relevant personnel on identifying and managing conflicts of interest in procurement processes.

Clearly communicate conflict-of-interest policies to all staff and contractors to ensure widespread understanding and adherence.

Exclude a vendor with an existing conflict of interest from participation in future procurement activities.

6. Internews Ukraine did not:

Adopt a policy that mandates compensation for services under U.S Federal awards that reflect actual hours worked.

7. PACT, Inc. did not:

Have adequate internal controls to prevent comingling of funds for sampled direct labor and travel costs, resulting in questioned direct costs of $32,439.

Update internal controls to mitigate the risk of assigning funds from one project to another.

Establish and implement policies and procedures that require a two-person review and signatures to indicate that funds are accurate and solely used for authorized purposes.

 

What We Recommend
  • As a result of Premier’s audit findings, OIG issued 20 recommendations to USAID for the seven implementers: 4 recommendations for questioned direct costs and 16 recommendations for internal control deficiencies.
What Happens Next
  • USAID will address the audit findings with its implementers and issue management decisions on the 20 OIG recommendations. OIG will ensure that the Agency closes recommendations in accordance with auditing procedures and timelines.

Click the links below to view the PDF documents for the 12 audit reports:

 

Recommendations