03 November 2017
Grant monitoring is the process by which the Global Fund reviews and measures the programmatic and financial performance of approximately 400 grants that it finances in over 100 countries. Grant monitoring assesses progress against objectives, identifies risks as well as corresponding mitigating measures, ensures that funds are used as intended, and that Global Fund programs achieve maximum impact. In line with recommendations from various assurance, oversight and governance bodies, the Global Fund has continuously improved, over the past few years, its grant management structures, processes, controls and systems to enhance efficiency and effectiveness.
However, in this audit, the OIG found a number of control gaps in core grant implementation and monitoring processes. For example, the auditors identified several weaknesses in the Annual Funding Decision, a critical milestone that reviews overall grant performance. They also concluded that ongoing grant performance assessment and monitoring need significant improvement. Several of the issues identified relate to legacy systems and processes that are currently being replaced by the Secretariat. Other issues relate to gaps in policies and procedures, guidelines to support operationalization of the policies, delineation of roles and responsibilities, or quality assurance processes.
The timing of the OIG audit coincided with a period when grant management systems are undergoing major change thanks a number of initiatives at the Secretariat. The Accelerated Integration Management project, started in 2015, aims to improve grant management processes. As part of the project, a new platform called the Grant Operating System is being implemented. The Secretariat expects many of the issues identified by the OIG to be addressed once the new platform is in place. The Differentiation for Impact Project, launched in 2016, adapts management processes and staff resources according to the size of the grants, disease burden and impact on the Global Fund’s mission. As a result, countries are now divided into three categories: High Impact, Core and Focused.
Notwithstanding the changes above, the OIG found the following issues:
Regarding the Annual Funding Decision, weaknesses in the current performance review process of grants include: unclear policies and procedures, gaps in preventive and detective controls over the review and approval of the funding decision, and insufficient delineation of roles and responsibilities.
There is limited alignment between grant performance indicators and the budgeted allocation of resources in the grant budget. For the sample of grants reviewed in the audit, the OIG noted that, on average, a significant proportion of total grant budget was allocated to activities for which there were no related performance indicators.
The auditors also found limited correlation between programmatic and financial performance of the grants. For example, several grants received the highest performance rating despite a low absorption of funds. Whilst there may be legitimate reasons for this, there is currently no review of these cases to validate whether the weak correlation between absorption and performance is reasonable or not.
Compliance with complex and sometimes duplicative grant monitoring reporting requirements has become increasingly challenging for the Secretariat and implementers, resulting in significant delays in the submission of routine progress updates from the Principal Recipient.
Although the Secretariat has improved grant revision policy and processes, effective mechanisms are needed to track grant revisions. This limits the ability of the Secretariat to monitor the revisions and to ensure consistent application of the policy with the right levels of approval obtained.
The OIG auditors called for more systematic monitoring of overall portfolio performance at the senior management level. Although grant management is the core business of the Global Fund, an effective oversight body at the executive management level does not yet exist to monitor the high level performance of the grant portfolio.
In addition to the implementation of the new grant management platform, which will address several of the limitations in the legacy systems, the Secretariat will review grant implementation processes and controls in the new Grant Operating System towards the end of next year. Depending on the review outcomes, the Secretariat will update controls and revise guidelines. To address the lack of oversight, the Secretariat will put in place a Portfolio Review Committee to monitor grant performance regularly. It will also review the Differentiation for Impact Project looking particularly at the Focused category of countries.
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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.
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