Audit of the Global Fund’s Methodology for Fund Allocation
08 July 2015
Auditors from the Office of the Inspector General (OIG) concluded that the Global Fund’s methodology of allocating funds was generally effective in ensuring that it invests strategically to end AIDS, tuberculosis and malaria. However, the OIG also noted there were areas for improvement, notably the Board’s oversight of the way its committees and the Secretariat manage the risks inherent in the allocation methodology. Corrective actions are being put in place.
In 2014, the Global Fund launched a new funding model using an allocation methodology which earmarks and caps funds for eligible countries. In March of the same year, the Global Fund announced the allocation of US$ 14.82 billion, over a three-year period, distributed between the 125 countries most affected by the three diseases and with lowest income levels in the world.
In its audit, the OIG assessed the internal controls, risk management and governance processes behind the allocation methodology. The auditors found that, generally, internal controls were adequate and effective, with clear safeguards in place throughout and sensitive decisions referred up to a higher executive-level forum when necessary. They found the approach supported the Global Fund’s strategic objective of investing for impact in the fight against the three diseases.
Nevertheless, the OIG suggests that the Board, working with its committees and the Secretariat, improves its oversight over the share of investments between the three diseases, and the maximum and minimum amounts available to eligible countries.
In terms of data accuracy and relevance, the OIG found that the underlying systems used had been reviewed and that the data had undergone multiple rounds of validation before the launch of the new methodology. However, while the Board committee, the Strategy, Investment and Impact Committee (SIIC), had approved the choice of parameters used in the initial allocation formula, there were no discussions either by the Board or the SIIC, on the risks inherent to the choice of data used in the formula. This suggests a gap in oversight of the risk-tolerance framework of the Global Fund, a core function of the Board. For example, the malaria burden was evaluated using fourteen-year old data. The risks stemming from the choice of using this data was not considered by the Board or the SIIC.
To address the issues raised by the OIG audit, the Secretariat will present to the SIIC, for consideration, options to refine the allocation methodology in time for the next funding period, drawing from its own ‘lesson learned’ experience from the first allocation as well as the OIG’s findings.
- Audit Report The Global Fund’s Methodology for the Allocation of Funds Internal Controls, Risk Management, and Governance Processes
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The Office of the Inspector General works to ensure that the Global Fund invests the world's money in the most effective way possible in the fight against AIDS, tuberculosis and malaria. Through audits, investigations, oversight and consultancy work, it makes objective and transparent recommendations to promote good practice, reduce risk and condemn abuse.
Established in 2005, the Office of the Inspector General is an independent yet integral part of the Global Fund. It is accountable to the Board through its Audit and Ethics Committee and serves the interests of all Global Fund stakeholders. Its work conforms to the International Standards for the Professional Practice of Internal Auditing and the Uniform Guidelines for Investigations of the Conference of International Investigators.
The Office of the Inspector General believes that every dollar counts and has zero tolerance for fraud, corruption and waste. Through its whistle-blowing channels, the Office of the Inspector General encourages all to come forward to point out any irregularities that prevent Global Fund resources from reaching those who need them.