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1 UNCLASSIFIED UNCLASSIFIED Management A
UNCLASSIFIED UNCLASSIFIED Management Assistance Report: ancialMonitoring of Foreign Assistance Grantsand Cooperative Agreements in SomaNeeds ImprovementAUDMERO35, July 2021Summary of Review The Department of State (Department) provides foreign assistance to Somalia to promote through FY 2019, the Bureau of African Affairs (AF) and the Bureau of Counterterrorism (CT providedalmost65.4million throughfour Federal financial assistanceawards to support the Department’s mission in Somalia. In September 2020, the Office of Inspector General (OIG completed an audit of the Department’s risk assessment and mitigation processes for its foreign assistance to Somalia. In that report, OIG notedthat risk assessments, risk mitigation improvement. 1 This Management Assistance Report serves as companion to thatreport and focuses on deficiencies identified withthe Bureau of Administration, Office of the Procurement Executive(OPEand CT financial monitoring procedures for the four selected awards. OIG reviewed four awardsgrantedto Bancroft Global Development (Bancroft), the United Organization. OIG found that theaward recipientsdid not always submit financial reports by required deadlinesalsofound that Department did not always review the reports once they were submittedithout timelysubmissions and reviewsof required financial reports, the Departmenthas limited insight into whetherFederal funds are spent as intended OIG also reviewed award expenditures incurred underhree of the four awards. 2 For the two awards implemented by Valar and the International Development Law Organization and overseen by CT, OIG found that expenditures were generally made within the parameters of the terms and conditions of the award. However, for theaward implemented by Bancroft and overseenAF, OIG identified21,599in unsupportedexpenditures relatedtravel, lodging, prepaid calling cards 3 fuel, interpreter fees, and meals, among other categoriesOIG determined that these expensesshould not have been paid, in part, because the rants Officer and the Grants Officer Representative GORdid not conduct a site visit until 2 years and 8 months after issuing the awardand did no despite having noted

2 potential concerns with Bancroft ’s
potential concerns with Bancroft ’s financial activities in the pre - award OIG, Audit of Department of State Foreign Assistance Grants and Cooperative Agreements in Somalia(AUDMERO45, September 2020). UNCLASSIFIED UNCLASSIFIED risk assessment . By not conducting timely site visits or obtaining and reviewing supporting documentation,theGrants Officerand GORfailed to comply with Department requirements to ensure award expenditures were used for theintended purpose. In addition to these questionedcosts, OIG also found that the Department permitted Bancroft to keep $3.7million that the organization paidits employeesas incentive compensationthat wasnot authorized in the terms and conditionsof the awardThis was permitted even afterthe Office of Federal Assistance Financial Management (FAFM) in the Bureau of the Comptroller and Global Financial Services havingreviewBancroft’s expendituresandconcludedthatBancroft’s incentive compensation payments were not authorized under the award. OIG reviewed Bancroft’s submitted budget and did notfind reference incentive compensation. Moreover, OIG did not find referenceincentive compensation in the majority of the affected employees’ contractsconcludes that FAFM’s determination that the compensation was not authorized is correct and should not have been paidto BancroftTherefore, OIG is questioning the unauthorized $3.7million paid to Bancroft for incentive compensation. OIG madeeightrecommendationsto address the deficienciesidentified in this reportand to recover any nallowable, unsupported,or unauthorized expendituremade to BancroftIn response to a draft of this report, the Bureau of Administrationconcurred with the recommendations offered. On the basis ofthe bureau’s concurrence with the recommendations and actions plannedOIG considers all eight recommendations resolved, pending further action. A synopsis of the Bureau of Administration’sresponse to the recommendations offered and OIG’s reply follow each recommendation in the Results section of this report. The Bureau of Administration’sresponse to a draft of this report is reprinted in its entirety in Appendix B.