16 May 2017
The Global Fund has zero tolerance for corruption or fraud. When any misspent funds are identified, the Global Fund pursues recovery, so that no donor money is lost to fraud or ineligible expenses. The Office of the Inspector General (OIG) is an integral and important part of risk management and controls, conducting independent audits and investigations to complement the active risk management and controls put in place by the Secretariat with oversight by the Board of the Global Fund. This update specifies that the Global Fund did not suffer any financial loss on its investments in Tanzania.
The Audit of Global Fund Grants to the United Republic of Tanzania, published 8 February 2016, identified challenges with the supply chain management system, lapses in key financial controls, and weaknesses in the governance, oversight and management of grant implementation arrangements. The Global Fund Secretariat immediately implemented a series of agreed actions to address the weaknesses identified in the audit report. It also provided the OIG with verification by the Local Fund Agent in May 2016 on documentation provided by the Principal Recipient.
The OIG’s follow-up investigation clarified the queries and concerns raised in the audit report and provided updated information since the audit was published; it also concluded there was no evidence that the significant process failures identified by the audit had been exploited for fraudulent gain by the Medical Stores Department (MSD). Poor documentation at the time of an audit that requires further review is a symptom of weaknesses in controls, compliance and assurance. The Global Fund takes such documentation weaknesses seriously and acts to correct the problems.
It is not unusual for the final recoverable amount that is determined after additional work by Investigations Department to differ from the findings of an audit. Auditors can only review the information that is available to them at the time of the audit. Guided by their findings, additional work often has to be undertaken by a Local Fund Agent or by the Investigation Department to help determine the recoverable amounts. This work entails significant additional review of records that can take months and cover several countries and continents, depending on the location of relevant documents. Even when the final amounts are significantly lower, the lack of readily available documentation can indicate sub-optimal compliance and controls that requires attention.
The following represent actions being implemented by the Global Fund and partners to address weaknesses identified in the audit report, and findings from the OIG investigation: