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[e-drug] Global Fund Audit Analysis

E-DRUG: Global Fund Audit Analysis

Dear All

The Global Fund has released a press statement (below) analysing past audits 
and  investigations. It found that less than 5% of money had been misspent  and 
only 0.5% involved fraud. I wonder how other donor programs would measure up 
against this. 



Douglas Ball
Pharmaceutical consultant
Public Health and Development
E-mail: douglasball[AT]yahoo.co.uk
Global Fund Releases an Analysis of Audits and Investigations - 2012

Date : 10 July 2012

GENEVA: The Global Fund to Fight AIDS, Tuberculosis and Malaria 
reported today that an analysis of audits and investigations by the 
Office of the Inspector General showed that 3.0 percent of funding 
audited or investigated between 2005 and 2012 had been misspent, 
fraudulently misappropriated or inadequately accounted for.

As part of the Global Fund's efforts to effectively prevent and treat 
disease, serious efforts are made to ensure that all funding is properly 
handled, disbursed and managed. Wherever impropriety is discovered, it 
is reported. When funds are misappropriated or improperly spent, they 
are recovered as fully as possible.

"We do not tolerate any misuse of funds, no matter how minor,"� said Cees 
Klumper, Chief Risk Officer at the Global Fund, who conducted the 
analysis. "Although some of these funds were misspent, and are just 
ineligible expenses, a small percentage of funds are misappropriated 
through fraud. We actively pursue and expose all such cases."

The Office of the Inspector General, which is fully independent and 
reports directly to the Board, plays an indispensable role in helping 
achieve the mission of the Global Fund by diligently pursuing audits and 
investigations. Since it was established in 2005, the Office of the 
Inspector General has compiled 28 reports on audits and investigations 
that it has carried out in 27 countries, where a total of $3.8 billion 
has been disbursed, approximately 23 percent of all disbursements that 
the Global Fund has made to date.

The analysis of the Inspector General's findings shows that, 
cumulatively, 3 percent of the funding that was investigated was not 
spent in compliance with the grant agreements, as follows:

1. Ineligible expenses - or activities not covered by the grant 
agreements - 1.1 percent
2. Inadequately substantiated due to poor or missing documentation - 
1.1 percent
3. Fraud - 0.5 percent
4. Failed to report funds as required - 0.3 percent

Mr. Klumper cautioned that his analysis did not represent a 
comprehensive accounting of all misspent funds. Instead, the analysis is 
a factual rendering of the percentages of funding that had been 
determined by Global Fund audits and investigations to be ineligible, 
fraudulently misappropriated or inadequately accounted for.

John Parsons, the Inspector General, further cautioned that audits and 
investigations conducted by his office tend to focus on high-risk areas 
and on grants where specific risks have been identified.

"It is not possible to extrapolate to say that this reflects an accurate 
picture of misused funds,"� said Mr. Parsons. "Our audits and 
investigations are not a representative sampling of all Global Fund grants."

Mr. Klumper added that as the Office of the Inspector General completes 
further audits and investigations, the above percentages are likely to 

"We are in the process of strengthening preventive measures,"� added Mr. 
Klumper, whose position was created this year to better manage risk at 
the Global Fund. "Our aim is to further reduce the percentages."�

Mr. Klumper's analysis includes an investigative report on a 
sub-recipient in Bangladesh and audit reports of grants in Lao and Papua 
New Guinea, which were made public today.

Mr. Klumper's analysis was prompted by concerns that when specific 
audits and investigations report misused funds, the sharp contrast 
between an individual problematic case and the broader reality of 
well-managed grants could lead to misinterpretations or misimpressions. 
The policy of the Global Fund is to be highly transparent and to report 
all cases of misused funds.

All audit and investigation reports are publicly available on the Global 
Fund website.

The Global Fund Secretariat is constantly improving its oversight of 
grants. At the beginning of every grant application, a country applying 
for funds must demonstrate the effectiveness of programs and the real 
need for additional funding. Global Fund staff and independent technical 
experts review every application carefully, and award grants to those 
that demonstrate serious purpose and effective impact.

The Global Fund is currently refining and strengthening the overall 
model of grant management to implement the Global Fund's new strategy. 
The redesign is applying an improved approach to risk management, which 
itself is built on findings made by audits and investigative reports by 
the Office of the Inspector General.

Mr. Klumper said that every financial institution is obliged to ensure 
the safe handling of its funds. At the Global Fund, most funding comes 
from taxpayers in donor countries, and the organization is acutely aware 
of its responsibility to donors and the importance of ensuring that all 
monies are properly accounted for.
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