Office of the Inspector General

Global Fund Grant Management in High Risk Environments

23 January 2017

An OIG audit found that the Global Fund has achieved considerable success in reducing the disease burden in some of the world's most challenging environments. It also concluded that significant improvements are needed in the design, the implementation and the monitoring of processes to ensure that grants achieve impact in high risk countries. The auditors noted that Global Fund has made significant progress with a series of innovative measures; however, the lack of an overall framework for managing grants in risky environments means that the Global Fund is not able to identify and prepare for emerging threats. Nor have the measures always addressed the risks for which they were instituted.

In its portfolio of over 100 countries, the Global Fund has classified 47 countries as high or very high risk. These countries, often prone to political instability, institutional weaknesses and low implementer capacity, represent a significant proportion of the global disease burden - 45% of the global burden for HIV, and 70% respectively for malaria and tuberculosis (TB). Success in these countries is critical if the Global Fund is to achieve its mission to end the three epidemics, yet the instability and weaknesses make it very difficult to do so in many cases.

Programs financed by the Global Fund have made some headway. HIV incidence in 13 high risk countries decreased by at least 50% from 2000 to 2015. Similarly, TB incidence in seven high risk countries went down by at least 50% between 2000 and 2015. Finally, malaria-related deaths also decreased by at least 50% in 14 high risk countries during this period.

The Global Fund Secretariat has designed a number of mechanisms to manage grants in challenging environments. These measures include triggering a policy, known as the Additional Safeguard Policy, that strengthens controls and oversight in 19 of the 47 countries. Tighter fiduciary arrangements through the use of fiscal agents have also been instituted in 23 countries, of which 15 are in high and very high risk countries. Some procedures have been made more flexible to ensure effective grant implementation in those countries; for example, by simplifying the processes and requirements for accessing new funding in selected countries; developing innovative approaches; for example, the launch of a Middle East Regional Initiative that streamlines implementation arrangements in Iraq, Jordan, Lebanon, Palestine, Syria and Yemen.

However, despite the progress above, the design limits of existing tools prevent the Secretariat from being able to proactively identify and assess emerging threats. Early warning mechanisms that would identify and monitor the level of risk to grants in these environments to allow for a more rapid response are inadequate. The absence of a defined risk appetite with minimum verifications has affected the ability of country teams to take measured risks.

The audit found that emergency preparedness, during conflicts or humanitarian emergencies, are not consistently incorporated in grant management in high risk environments. As a result, country teams will often have to plan a response from scratch during emergencies.

The auditors also identified that the existing measures have not always addressed the related risks for which they were instituted. For example, the OIG noted gaps in the quality of assurance services: although Fiscal Agents had already been present for a minimum of 12 months, 14 grants in seven high risk countries received a 'qualified' external audit rating due to ineligible and unsupported transactions.

In line with the Global Fund's country ownership principle, additional safeguards are required to be short term measures. However, a clear strategy with responsibilities and timelines to phase out the safeguards are not consistently agreed and implemented. The audit noted that 13 out of the 19 countries did not have exit strategies. Moreover, only two countries have transitioned out from the Additional Safeguard Policy since 2004. Monitoring mechanisms of measures were also found sub-optimal. The measures are not regularly monitored to ensure appropriate revisions where necessary. Eleven of the 19 high risk countries have been under Additional Safeguard Policy for at least five years without a reassessment of its effectiveness. Contrary to the policy, the Secretariat has never presented a report of the status of countries to the Audit and Finance Committee (or its predecessor committee). While Fiscal Agents are required to be assessed every year, the necessary tools and systems have not been developed, resulting in inconsistent reassessments by country teams.

To address the issues identified by the OIG audit, the Global Fund will put in place corrective management actions including clarifying the classification of countries and the flexibilities available; guidance for contingency planning for countries facing crisis and emergencies; a system to track countries under the Additional Safeguard Policy with more regular monitoring and similarly for Fiscal Agents; and further analysis of cost effectiveness in high risk environments.

  • Audit Report - Global Fund Grant Management in High Risk Environments (GF-OIG-17-002 - 23 January 2017)
    download [ download in English | Français ]

For more information:

Thomas Fitzsimons
Email:
Mobile: + 41 (0)79 412 1461

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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.

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