Major Management Challenges at the U.S. Agency for International Development
Overall, the U.S. Agency for International Development (USAID) has made some progress in addressing the management challenges GAO identified in January 2003. Since that time, GAO has issued two reports and testified twice regarding USAID's challenges in improving its workforce planning and financial management systems and notes that challenges remain in these areas.
GAO has not issued any products related to USAID's performance measurement efforts or information technology initiatives.
GAO reported in August 2003 that USAID, in response to the President's Management Agenda, had taken steps toward developing a workforce planning and human capital management system that should enable it to meet its challenges and achieve its mission, but that it needed to do more. For example, USAID had begun its workforce analysis, but it had not yet conducted a comprehensive assessment of the skills and competencies of its current workforce and had not yet included its civil service and contracted employees in its workforce planning efforts. Because USAID has not adopted a strategic approach to workforce planning, it cannot ensure that it has addressed its workforce challenges appropriately and identified the right skill mix to carry out its overseas assistance programs.
According to its 2004 report on business transformation, USAID completed a 5-year human capital strategic plan to address three objectives: (1) achieving a high-performing, more diverse, and more flexible workforce; (2) aligning staff with agency priorities; and (3) increasing its human resources support capacity. The report notes progress such as increased recruitment and training and the development of an overseas staffing template. However, USAID has not yet completed the comprehensive workforce analysis needed to determine required staffing levels, identify skill and staffing gaps, and create a plan to address those gaps, as GAO recommended in August 2003. USAID plans to implement its workforce planning system in the second quarter of fiscal year 2005.
In the area of performance measurement , in September 2003, USAID's Office of the Inspector General found that USAID was implementing the Government Performance and Results Act of 1993 except for some reporting requirements. For example, USAID had not issued an annual performance plan for fiscal year 2002, established performance targets for the majority of indicators in its fiscal year 2003 performance plan, or included results data for 2002 performance goals in its fiscal year 2002 performance and accountability report. The report recommended actions to improve current-year results reporting and incorporate annual output indicators into the performance reporting system. In its 2004 business transformation report, USAID pointed out several completed and ongoing efforts, including the first joint Department of State/USAID strategic plan and the development of a strategic budgeting model to help decide how to allocate assistance based on development need, country commitment, foreign policy importance, and program performance. The agency also developed a “Program Assessment Rating Tool” for assessing its assistance programs and management services. USAID expected to have assessed 60 percent of its programs by the end of fiscal year 2004.
USAID's business transformation report noted a number of initiatives and accomplishments in information technology and business systems modernization. These include deploying the Phoenix financial management system at its headquarters in Washington, D.C.; coordinating with the State Department on a new procurement system and taking steps to integrate this system with the Phoenix accounting system; and participating in eight governmentwide information technology initiatives. By the first quarter of fiscal year 2006, USAID expects to complete the deployment of the integrated procurement system and the Phoenix accounting system, including the integration of Phoenix with the State Department's Financial Services Center and the deployment of Phoenix at all overseas missions and accounting centers. USAID is also developing an Executive Information System—an agencywide automated reporting system that will integrate program performance, budget, accounting, and procurement information—to enable managers to make informed decisions, track program performance and facilitate reporting to internal and external customers. USAID began developing the prototype for this system in 2004 and expects to have it linked to information sources by 2006.
GAO testified in September 2003 that USAID had made some progress in improving financial management , primarily in achieving audit opinions on its financial statements. However, GAO also noted that pervasive internal control weaknesses prevented USAID management from achieving the objectives of the Chief Financial Officers Act of 1990 for timely and accurate information for decision making. USAID acknowledged the challenges it faces in reforming its financial management problems and has several initiatives under way to improve its systems, processes, and internal controls.
In November 2003 and November 2004, USAID's Office of the Inspector General issued unqualified opinions on all five principal financial statements for fiscal years 2003 and 2004. The 2004 report noted one material internal control weakness in USAID's process for reviewing and reporting on its quarterly accrued expenditures and accounts payable. The report further noted that USAID needed to (1) improve its certification process for mapping strategic objectives to performance goals, (2) reconcile its fund balance with the U.S. Treasury, (3) improve recognition and reporting over its accounts receivable, (4) perform regular intragovernmental reconciliations, (5) analyze and deobligate unliquidated obligations, and (6) improve its system for preparing the management's discussion and analysis section of the performance and accountability report. The 2004 audit report contained five recommendations to improve internal controls over financial management, annual financial statement preparation, and compliance with laws and regulations.
Related GAO Products
Human Capital Management
Foreign Assistance: USAID's Operating Expense Account Does Not Fully Reflect the Cost of Delivering Foreign Assistance. GAO-03-1152R . Washington, D.C.: September 30, 2003.
Foreign Assistance: USAID Needs to Improve Its Workforce Planning and Operating Expense Accounting. GAO-03-1171T . Washington, D.C.: September 23, 2003.
Foreign Assistance: Strategic Workforce Planning Can Help USAID Address Current and Future Challenges. GAO-03-946 . Washington, D.C.: August 22, 2003.
Financial Management: Sustained Effort Needed to Resolve Long-Standing Problems at U.S. Agency for International Development . GAO-03-1170T . Washington, D.C.: September 24, 2003.