The U.S. Agency for International Development plans to publish within the next six months new guidelines to ensure the aid it funnels through partner country systems is spent effectively.
The announcement is contained in the latest report by USAID’s inspector general, which reviewed several of the agency’s programs and found some poor oversight and ineffective procedures in assessing the financial management capacity of partner countries.
Since last month, the agency’s chief financial office has been circulating with its missions a draft revision of its partner-country system policy, called ADS 220 or “Use of Reliable Partner Country Systems for Direct Management and Implementation of Assistance,” that calls for more oversight in assessing a partner country’s capacity to roll out projects.
“The finalized ADS 220 is anticipated for August 2013,” USAID said in a reply to its inspector general.
Aid effectiveness reform
USAID Forward, an ambitious reform agenda, is meant, among other things, to boost collaboration with country governments. By 2015, the agency wants to channel up to 30 percent of its program funds through partner countries.
To determine which partner countries should manage ODA, USAID evaluates their financial management capacity through its Public Financial Risk Assessment Framework, a tool that examines fiduciary risks and proposes mitigation measures.
However, according to the inspector general’s review of how the tool is being used, the agency “did not sufficiently establish oversight roles for assessments.”
Quality control was put into question as assessments were done by mission staff or contractors with varying expertise and experience. In one instance, the Ghana mission mission tapped a local contractor to do the job, but the assessments “lacked rigor.”
The inspector general also concluded that some of the assessment procedures were ineffective: The policy failed to spell out how the assessment tool would guide project design, how missions should consider technical capacity of partner countries to implement projects, and what testing should be done to support the assessment.
To evaluate the capacity of partner countries to handle the influx of aid dollars, USAID’s financial office currently requires pre-clearance of assessment reports, statement of work and other documents integral to the Public Financial Management Risk Assessment Framework. The agency’s revised guidelines, which were circulated with its country missions May 6, will push for more quality assurance, a major focus of the newly released inspector general: Missions would be required to communicate progress of the PFMRAF process and define timelines for completing deliverables.
Risk assessments will factor into the planning process at a much earlier stage, according to the agency: They would coincide with the preparation and release of country development strategies. Project approval documents would include risk mitigation plans suggested by the risk assessment tool.
USAID also wants to integrate the assessment of the technical capacity of partner country institutions as a core part of project design.
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