Foreign Assistance: Continued Efforts Needed to Strengthen USAID's Oversight of U.S. Democracy Assistance for Cuba

As of November 2008, USAID's Bureau for Latin America and the Caribbean (LAC) Cuba Program office had 5 staff and planned to hire several additional staff by July of 2009. This level was below the level of 11 persons called for in 2007 USAID assessments, to ensure successful implementation of the program and appropriate monitoring and oversight of grantees and grant funds. We reported in January 2013 (GAO-13-285) that LAC's Office of Cuban Affairs had 7 full-time staff: a Director, 4 Program Managers, a Budget Analyst, and an Administrative Assistant. In February 2013, USAID provided an update to its 2007 staffing needs assessments to support that it views its current Cuba program staffing level as sufficient to ensure effective oversight and successful implementation of program activities. Specifically, USAID stated that the 2007 proposed staffing plan was based on a significantly higher funding level of approximately $45 million for program activities, and the plan assumed that funding levels would steadily increase along with an anticipated democratic opening in Cuba. However, the transfer of power in Cuba in 2008 did not bring about the expected opportunity for democracy change, and the program?s funding has since declined to below 50 percent of the levels envisioned in 2007. USAID added that for the next three years, funding is expected to remain at a level of between $15-20 million annually. In addition to citing the smaller program portfolio, USAID noted that it has put in place fortified oversight measures since 2007, and that programmatic risk has therefore declined, requiring a smaller team of personnel to manage the program. As a result, USAID views current staffing levels as adequate, given projected funding levels and recent improvements made in program oversight, including support provided by two external contractors for programmatic and financial monitoring. However, USAID added that it will continue to hire new staff in the future, as warranted.

USAID took several actions to address this recommendation. First, USAID hired an external auditor in April 2008, whose current contract has been extended through fiscal year 2013, to perform financial internal controls reviews of its partners, using a risk-based approach to determine coverage and frequency of reviews conducted. USAID officials told us in August 2012 that they consider these reviews to be a key internal program accountability mechanism. Among other things, the auditor assesses implementing partner risk, conducts fraud interviews, reviews accounting and procurement policies, and assesses the implementing partner's internal controls and procurement policies to ensure they are in compliance. The external auditor told us in June 2012 that it meets regularly with USAID officials, including the Program Director, to discuss audit progress any areas of concern or for potential follow-up. In our January 2013 report (GAO-13-285), we found that the auditor's 30 reviews of 13 of 16 partners USAID funded during fiscal years 2007 through 2010 identified financial management, procurement, and internal controls weaknesses that USAID subsequently took steps to address. In addition, USAID's Management Bureau and its Inspector General performed additional audits of awardees during this time period. USAID noted that it aims to review each of its program partners every 6 months. As a result of findings of USAID?s external auditor, USAID/LAC provided training to partners and, according to the external auditor, partners have made improvements. Also, in July 2011, USAID officials noted that officials from the Cuba Program Office and Office of Acquisition and Assistance continue to hold regular internal meetings to discuss issues identified in preaward reviews for the Cuba Program. USAID officials noted that at a broader level, program officials continue to meet on a quarterly basis with award recipients as a means of monitoring and coordinating program activities, and USAID also meets frequently with State officials to coordinate efforts and monitor any ongoing programmatic issues, such as issues that have come up in internal controls reviews.