Why We Did This Audit
Russia’s full-scale invasion of Ukraine in February 2022 and the ongoing war have had devastating economic consequences for Ukraine, such as a sharp decline in economic growth, higher inflation, and the inability to fund essential government functions. In addition, demand has increased for social assistance among the citizens of Ukraine, especially from those who were forced to leave their homes due to the war, or internally displaced persons (IDPs). As of April 2025, approximately 3.8 million Ukrainians had been internally displaced since the onset of the war.
In fiscal years 2022 to 2024, Congress appropriated and USAID obligated about $30.7 billion in direct budget support to the Government of Ukraine, the majority of which passed through World Bank trust funds of contributions from one or more countries. Eighty-four percent of USAID’s direct budget support went to the Public Expenditures for Administrative Capacity Endurance (PEACE) fund, a portion of which paid IDPs’ living expenses. PEACE fund contributions reimburse the Government of Ukraine for expenditures verified by the World Bank. USAID contracted with Deloitte and KPMG to provide additional oversight of its contributions and relied on the World Bank to manage the PEACE fund.
We conducted this audit to assess (1) USAID’s oversight of its contributions to the PEACE fund and (2) the extent to which USAID’s contributions to the PEACE fund supported eligible IDPs. This audit is one of a series of OIG engagements that have examined USAID’s direct budget support to the Government of Ukraine.
What We Found
USAID did not receive some contractor deliverables on time or at all, weakening its oversight of PEACE fund contributions. Challenges receiving deliverables on time or at all limited the reasonable assurance that USAID sought from the contractors that the Government of Ukraine had the capacity to receive the PEACE funds and use them as intended before releasing additional funds. Deloitte was required to provide monthly spot checks, gap analyses reports, and funding flowcharts to USAID. Deloitte submitted nearly one-third of the deliverables to USAID late. USAID also contracted KPMG to audit direct budget support funds. KPMG did not submit any of the six required audit reports on time or at all. USAID extended the timelines for the audit reports to accommodate KPMG’s difficulties obtaining accurate, timely information from the Government of Ukraine, but KPMG did not meet the extended due dates either. On July 1, 2025, the Department of State assumed responsibility for USAID’s remaining programming. It was still unclear when KPMG would submit the required reports.
USAID’s contributions to the PEACE fund supported some eligible IDPs but also supported duplicate payments and IDPs living abroad. USAID’s contributions to the PEACE fund supported a nongeneralizable sample of 26 out of 207,508 IDPs that we reviewed who were eligible for the social assistance payment when they applied and were approved for assistance. The Government of Ukraine confirmed that USAID reimbursed duplicate payments to four IDPs and did not fully verify payments to IDPs who had moved abroad. The Government of Ukraine took steps to strengthen criteria and verification processes but has not yet determined the full extent of duplicate payments to IDPs or payments made to IDPs living abroad. Continued U.S. oversight and reconciliation of ineligible payments would help ensure that U.S. contributions support eligible beneficiaries.
What We Recommend
We made three recommendations to responsible U.S. government officials to strengthen the oversight of direct budget support to the Government of Ukraine through the PEACE fund.