Office of the Inspector General

© UNDP Guinea-Bissau / Gwenn Dubourthoumieu

Audit of Global Fund Grants to Indonesia

01 December 2015

Office of the Inspector General (OIG) auditors found risk management of financial and programmatic data to be 'generally effective' in Indonesia. However, the auditors call for a more tailored approach to Global Fund investments given the size and diversity of disease burden in a highly decentralized environment. The Global Fund Secretariat is working with country partners to address these problems.

From 2003 to 2015, the Global Fund has signed 24 grants with Indonesia totalling USD 729 million to fight AIDS, tuberculosis (TB) and malaria. Indonesia commits significant domestic funds, including fully financing first line HIV and TB drugs, and malaria medications.

The OIG audit in Indonesia aimed to assess the risks to the impact of Global Fund grants in a large country of 255 million people with significant regional variations. The audit teams visited a representative sample of 60 program sites in five of Indonesia's highly populated provinces.

Overall financial and fiduciary risk management was found to be generally effective. Most health products follow the Global Fund's pooled procurement mechanism, and local procurements over USD 15,000 are reviewed by a Local Fund Agent.

The OIG found program data collection and reporting processes were well designed and effective in most of the health facilities visited. However, weak forecasting and inventory controls were observed in 87% of the warehouses and 40% of the health facilities visited, leading to drug stock-outs. Also noted was limited HIV and TB collaboration (in 86% of TB facilities visited), and gaps in the follow-up of HIV patients (in 48% of HIV facilities visited). This could lead to low detection of HIV infection in TB patients and drug resistance due to interrupted treatment. The Ministry of Health is developing central mechanisms to address these weaknesses through its TB/HIV National Action Plan 2015-2019.

Significant regional differences in the HIV, TB and malaria disease burden, and related Global Fund investments were observed. With program implementation largely decentralized to provinces, there is varying quality in program, data, supply management and financial management, including the implementation of Global Fund or Principal Recipient recommendations. Although the Global Fund Secretariat has effective mechanisms to identify and assess material risks, a more structured framework is needed, including a more tailored approach towards risk and grant management.

The OIG found significant gaps in drug quantification and forecasting, distribution planning and inventory controls, mainly at the provincial sub-recipient level. Stock-outs of at least one essential drug were found in 53% of warehouses and 33% of facilities visited, exposing the programs to treatment disruption risks. Expired drugs were found in 63% of warehouses and 33% of facilities visited, leading to financial losses. The OIG found that 56% of warehouses and 69% of facilities visited did not follow good storage practices, leading to risks of damage to drugs and their effectiveness.

The issues are being addressed by the Global Fund's Indonesia Country Team, which has worked with technical partners to align technical assistance plans, including supporting the Ministry of Health in implementing its drug management policy.

Audit of Global Fund Grants to Indonesia (GF-OIG-15-021 - 1 December 2015)

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The Office of the Inspector General safeguards the assets, investments, reputation and sustainability of the Global Fund by ensuring that it takes the right action to defeat AIDS, tuberculosis and malaria. Through audits, investigations and consultancy work, it promotes good practice, reduces risk and reports fully and transparently on 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 Global Fund 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 speak out to report fraud, abuse and human rights violations that prevent Global Fund resources from reaching those who need them.