U.S. Department of State Fiscal Year 2019 Agency Financial Report

Overseeing Grants and Foreign Assistance Programs In FY 2019, OIG observed some improvements in the Department’s oversight of grants and foreign assistance program. For example, a recent audit in Iraq found substantial compliance with Federal requirements, Department guidance, and award terms and conditions in monitoring cooperative agreements supporting internally displaced persons in Iraq. 21 In another report, OIG found that the Department halted security assistance to units of the Somali National Army because the Government of Somalia failed to ensure proper monitoring and control of those units. The Department told the Somali Government that assistance could not resume until transparency, accountability, and oversight of U.S. assistance improved. The mission’s use of third-party contracts to monitor foreign assistance programs also improved oversight in Somalia’s operating environment where the movement of Department personnel is limited because of security concerns. 22 Even with these improvements, we continued to find deficiencies related to monitoring, site visits, program evaluation, and sustainability in our FY 2019 work. For example, in the inspection of the U.S. Mission to Somalia, we reported that several public diplomacy grants we reviewed contained no evidence of monitoring or any other correspondence after most of the award amounts had been dispersed to the grantees. 23 That same inspection found that, despite the oversight improvements noted above, neither Mission Somalia nor the Department had fully assessed the risk that foreign assistance funding could benefit terrorists or their supporters. 24 Similarly, among the issues cited in our inspection of Embassy Bogota, we determined that four of six INL grants totaling $50.2 million did not have initial monitoring plans or evidence of monitoring, and five of the grants did not contain all of the required reports needed to document recipient performance and financial expenditures. 25 21 OIG, Audit of Humanitarian Assistance Cooperative Agreements Supporting Internally Displaced Persons in Iraq (AUD-MERO-19-20, March 2019). 22 OIG, Inspection of U.S. Mission to Somalia (ISP-I-19-09, October 2018). 23 Ibid . 24 Ibid . 25 OIG, Inspection of Embassy Bogota, Colombia (ISP-I-19-14, April 2019). 26 OIG, Inspection of the Bureau of Democracy, Human Rights, and Labor’s Foreign Assistance Program Management (ISP-I-19-12, October 2018). 27 ISP-I-19-18, June 2019. 28 OIG, Audit of the Department of State Implementation of Policies Intended to Counter Violent Extremism (AUD-MERO-19-27, June 2019). Additionally, we found the Bureau of Democracy, Human Rights, and Labor (DRL) failed to conduct and document site visits systematically in accordance with monitoring plans. Grants Officer’s Representatives (GORs) did not conduct all of the site visits set out in the monitoring plans for most of the grants that OIG reviewed, and most award files lacked any documentation of site visits, making it difficult to determine if a site visit actually took place and what was found. 26 Furthermore, our work finds that INL continues to face challenges overseeing its large portfolio of grants. For example, in Haiti, the bureau did not conduct formal evaluation efforts to analyze the impact of its five key projects and to verify and measure performance in achieving goals. 27 INL’s reports focused on the achievement of quantitative metrics, such as the number of new national police recruits and the completion of construction projects. While useful in tracking short-term outputs, the lack of formal project and program evaluations impeded INL’s ability to improve program design and implementation. We also highlighted concerns related to the sustainability of foreign assistance program investments. For example, also in Haiti, we found the completion of a $100 million hospital was at risk because the government had yet to contribute its $11 million share of the costs. Related to foreign assistance programs, we continue to urge the Department to focus on planning and designing programs that meet policy goals and achieve intended objectives. In one of our FY 2019 audits, we could not affirm whether grants and cooperative agreements awarded to counter violent extremism were achieving desired results because the Bureau of Counterterrorism and Countering Violent Extremism (CT) had not ensured that the strategic plans and activities of Department bureaus aligned with the overall Department goals. 28 The lack of alignment hinders the Department’s ability to measure the results of these awards, identify best practices that could be replicated, or 116 | U nited S tates D epartment of S tate 2019 A gency F inancial R eport OTHER INFORMATION | INSPECTOR GENERAL’S STATEMENT ON THE DEPARTMENT’S MAJOR MANAGEMENT AND PERFORMANCE CHALLENGES