New Audit Questions USAID Financial Regulations in Afghanistan

An Afghan man wears a vest by the U.S. Agency for International Development. U.S. assistance for Afghanistan remains vulnerable to fraud and diversion, according to a new government audit. Photo by: USAID Afghanistan

U.S. assistance for Afghanistan remains vulnerable to fraud and diversion, according to a new government audit that may reinforce calls to cut aid to the country.

The Office of Special Inspector General for Afghanistan Reconstruction found a number of challenges in the oversight of funds by U.S. agencies in Afghanistan, including the U.S. Agency for International Development. For instance, it noted that control over USAID funds should be improved by requiring the agency’s contractors to transact solely through electronic fund transfers or through a licensed hawala, a traditional informal remittance network.

USAID, however, disagreed with this recommendation, saying that EFT-capable banks are not always present in the areas where it operates.

U.S. funds enter the Afghan economy primarily through disbursements to contractors and salary payments to Afghan civil servants. To pay for these, U.S. agencies typically use two mechanisms: EFTs or cash payments, either in U.S. dollars or Afghanis.

SIGAR also recommended improving interagency coordination and strengthening oversight over the flow of U.S. funds through the Afghan economy. The recommendations were forwarded to the U.S. ambassador to Afghanistan and the secretaries of state and defense.

The U.S. Congress has lately been penny-pinching and pushing to cut aid to Afghanistan. Unflattering findings of previous audits on the country have bolstered such moves. The latest SIGAR audit is thus expected to be closely scrutinized by U.S. lawmakers.

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About the author

  • Che de los Reyes

    As a senior staff writer, Che focuses on international development breaking news coverage as well as interviews and features. Prior to joining Devex, Che handled communications for local and international development NGOs and government institutions in the Philippines.