UNITED NATIONS OFFICE FOR PROJECT SERVICES (UNOPS) IN CAMBODIA (PRINCIPAL RECIPIENT) INTERNAL AUDIT REPORT 14 July 2017 PROJECT NAME: REGIONAL ARTEMISININ RESISTANCE INITIATIVE (RAI) PROJECT NUMBER: 00089688 COUNTRY: CAMBODIA AUDITOR: MOORE STEPHENS LLP PERIOD SUBJECT TO AUDIT: 1 JANUARY TO 31 DECEMBER 2016
Cntents Acrnyms and abbreviatins... 3 Executive summary... 4 The engagement cntext... 4 Audit bjectives... 4 Audit scpe... 4 Audit rating... 4 Key issues and recmmendatins... 5 Operatinal verview... 7 Detailed assessment... 8 Annex I - Definitins... 10 1 January t 31 December 2016 2
Acrnyms and abbreviatins CNM GFATM IAIG INGO IPSAS KHOC LNGO PC PR PUDR RAI RO SR SSF TOR UNOPS USD Natinal Centre fr Parasitlgy, Entmlgy and Malaria Cntrl The Glbal Fund t fight AIDS, Tuberculsis and Malaria Internal Audit and Investigatins Grup Internatinal Nn-Gvernmental Organisatins Internatinal Public Sectr Accunting Standards Cambdia Operatins Centre Lcal Nn-Gvernmental Organisatins Prject Centre Principal Recipient Prgress Update and Disbursement Request Reginal Artemisinin Resistance Initiative Reginal Office Sub-recipient Single Stream f Funding Terms f Reference United Natins Office fr Prject Services United States Dllars 1 January t 31 December 2016 3
Executive summary The engagement cntext Frm 6 t 21 April 2016, Mre Stephens LLP ( the audit firm ), cnducted an audit f the Principal Recipient f the prject Reginal Artemisinin Resistance Initiative (OneUNOPS prject ID 00089688), ( the prject ), which is implemented and managed by the UNOPS Operatins Centre in Cambdia. The prject reprted PR expenditure amunting t USD 823,304.46 during the perid frm 1 January t 31 December 2016. Audit bjectives The verall bjective f the audit was t assess the management f the prject peratins t btain reasnable assurance twards the achievement f the prject bjectives. The areas f fcus included: a) Effective, efficient and ecnmical use f resurces; b) Reliability f reprting; c) Safeguarding f assets; and d) Cmpliance with applicable legislatin. The purpse f the audit was t prvide reasnable assurance that: a) Client/dnr cntributins and prject expenditure are prperly accunted fr; b) Prject expenditure was incurred in accrdance with the cntributin agreement, and is supprted by adequate dcumentatin; and c) The related financial statements prepared by UNOPS fr the year under review present a fair view f the peratins. In particular, we prvided an verall assessment f the peratinal and internal cntrl systems that are in place fr the management f the prject s that related transactins are prcessed in accrdance with UNOPS plicies and prcedures t achieve the prject s bjectives. Audit scpe We cnducted the audit in accrdance with Internatinal Standards n Auditing issued by the IASSB and UNOPS internal audit practices, and in cnsideratin f the requirements f Internatinal Public Sectr Accunting Standards (IPSAS). Audit rating Based n the audit reprt and crrespnding management letter we assessed the management f the prject as satisfactry which means Internal cntrls, gvernance and risk management prcesses were adequately established and functining well. N issues were identified that wuld significantly affect the achievement f the bjectives f the audited party. The details f the audit results are presented in Tables 1 and 2. 1 January t 31 December 2016 4
Table 1: Summary results f the financial audit Prject title Perid Prject n. Reginal Artemisinin Resistance Initiative 1 January 31 December 2016 00089688 Financial statement Statement f nn-expendable prperty Amunt USD Opinin Amunt USD Opinin 823,304.46 Unqualified 664.16 Unqualified Table 2: Internal cntrl rating summary fr prject Rating summary by functinal area Functinal area Prject management Finance Prcurement and supply chain Human resurces General administratin Overall rating f internal cntrl Rating Satisfactry Satisfactry Satisfactry Satisfactry Satisfactry Satisfactry Key issues and recmmendatins Belw is a list f the audit findings, further details f which can be fund in the detailed assessment sectin. N. Functinal area Audit finding title Pririty rating (high / medium) Financial impact (USD) 1 Prject management Delays in reprting Medium - Ttal - 1 January t 31 December 2016 5
Signed: Partner Mre Stephens LLP 14 July 2017 1 January t 31 December 2016 6
Operatinal verview In December 2012, UNOPS was selected by the Cambdia Cuntry Crdinating Mechanism fr The Glbal Fund t Fight AIDS, Tuberculsis and Malaria (GFATM) t becme the Principal Recipient (PR) fr the Single Stream f Funding (SSF) Malaria grant fr Cambdia. The management respnsibility fr this grant was handed ver t UNOPS n 1 April 2013. As the designated Principal Recipient fr the Glbal Fund SSF Malaria grant, UNOPS is respnsible fr the quality financial management, timely prcurement f supplies and service delivery as well as efficient mnitring and evaluatin f grant implementatin activities. The Glbal Fund s Reginal Artemisinin Initiative is a grant in the ttal amunt f US$100 millin which aims t supprt varius Prgram activities in the Greater Mekng Sub-regin in five cuntries: Kingdm f Cambdia, La Peple s Demcratic Republic, Republic f the Unin f Myanmar, Kingdm f Thailand and Scialist Republic f Vietnam. The verall gal f The Reginal Artemisinin Initiative is t maximize the cntributin t the eliminatin f falciparum malaria frm the GMS, and t prevent the emergence r spread f Artemisinin resistance t new areas. In mid-2013, UNOPS was awarded the rle f Principal Recipient fr the Reginal Artemisinin Initiative (RAI) grant and this reginal rle will be managed frm UNOPS Myanmar. The RAI grant will cver Cambdia, Myanmar, Vietnam, Las and Thailand. UNOPS Cambdia is respnsible t ensure the implementatin f the Cambdia cmpnent f this reginal grant frm January 2014 t December 2016. The prgramme is implemented thrugh different types f SRs 1, including Ministry, its departments, Internatinal NGO (INGO), multilateral rganizatins and Lcal Nn-Gvernment Organizatins (LNGO). Each SR has different levels f experience and capacity in handling prgrammes f this size and magnitude. While develping systems fr implementing this prgramme, it is necessary t incrprate certain standard prcedures n financial accunting and funds flw management, s that all thse dealing with the prgramme and with UNOPS are at the same level f understanding. Each SR is a distinct legal entity and has its wn rganizatinal set-up and has develped its wn prcedures. Understanding and fllwing established and clear prcedures will result in achievement f the bjectives f the prgramme and will als ensure accuntability in funds management, accunting and reprting t varius levels. 1 SRs include The Natinal Centre fr Malaria Cntrl, Parasitlgy and Entmlgy f the Ministry f Health (CNM), which is therwise referred t as a Principal Implementatin Partner (PIP). 1 January t 31 December 2016 7
Detailed assessment # Observatin Recmmendatin Functinal Area: Prject Management 1 Title Delays in reprting Cmparisn criteria Part D f Annex A t the Prgramme Agreement with Glbal Fund. Articles n Reprting bligatins as set ut in the individual Subrecipient Agreements. Facts / bservatin The Sub-recipient Agreements set ut the reprting bligatins f the SRs which require submissin f quarterly reprts t the PR within 15 days after the end f the quarter (20 days in the case f CNM). The Prgramme Agreement with Glbal Fund requires the submissin f the PUDR t the Glbal Fund n a biannual basis within 45 days fllwing the end f the semester. The SRs did nt cnsistently reprt n time with delays nted fr reprting perid as set ut belw: The UNOPS Cambdia Operatins Centre (KHOC) shuld cntinue t remind the SRs f their respnsibility t submit the reprts by the due date. Such reminders shuld be sent well in advance f the submissin date s as t allw time fr the reprts t be prepared. It is als imprtant fr KHOC t cmply with the requirements f the agreement with Glbal Fund and Management shuld make every effrt t meet the reprting deadlines set ut in the agreement. Management cmment and Actin Plan PR UNOPS is cntinuing t encurage SRs t submit the reprts. There are tw reminders sent ut; the first by the prgramme team and the secnd by the finance team. Agreed. PR UNOPS has prgressed well in the recent past with regards t the reprting deadlines. Meeting the deadline fr reprting has been incrprated in the perfrmance framewrk fr the Prgramme and finance supprt fficer. Respnsible Manager / Due Date / Pririty Respnsible manager Financial Management Officer Due date Immediate - nging Pririty Medium 1 January t 31 December 2016 8
Reprting perid N. f delayed reprts 30 June 2016 3 ut f 8 SRs 31 December 2016 3 ut f 8 SRs The delays in the SR reprting have resulted in delayed submissin f the PUDR t the Glbal Fund fr each f the reprting perids within ur audited perid as fllws: Reprting perid Due date Submissin date 30 June 2016 14 August 2016 9 September 2016 31 December 2016 14 February 2017 4 April 2017 Impact Delays in the submissin f SR reprts t the PR impact n the ability f the PR t reprt t the Glbal Fund by the deadlines set ut in the Prgramme Agreement. Delays in submitting the PUDR t the Glbal Fund is an issue f nncmpliance with the requirements f the Prgramme Agreement and may damage the reputatin f UNOPS as PR with the Glbal Fund. Cause Lack f r inadequate guidance r supervisin at the OC level Lack f r insufficient resurces (financial, human, r technical resurces) 1 January t 31 December 2016 9
Annex I - Definitins Standard audit ratings fr verall perfrmance f internal cntrl system Effective 1 January 2017, the internal audit services f UNDP, UNFPA, UNICEF, UNOPS and WFP adpted harmnized audit rating definitins, as described belw. IAIG assesses the entity under review as a whle as well as the specific audit areas within the audited entity: Standard rating Satisfactry Partially satisfactry (Sme imprvement needed) Partially satisfactry (Majr imprvement needed) Unsatisfactry Definitin The assessed gvernance arrangements, risk management practices and cntrls were adequately established and functining well. Issues identified by the audit, if any, are unlikely t affect the achievement f the bjectives f the audited entity/area. Internal cntrls, gvernance and risk management prcesses were generally established and functining, but needed imprvement. One r several issues were identified that may negatively affect the achievement f the bjectives f the audited entity. The assessed gvernance arrangements, risk management practices and cntrls were established and functining, but need majr imprvement. Issues identified by the audit culd significantly affect the achievement f the bjectives f the audited entity/area. The assessed gvernance arrangements, risk management practices and cntrls were either nt adequately established r nt functining well. Issues identified by the audit culd seriusly cmprmise the achievement f the bjectives f the audited entity. Categries fr pririties f audit recmmendatins The audit bservatins are categrized accrding t the pririty f the audit recmmendatins and the pssible causes f the issues. The categrized audit bservatin prvides a basis by which the UNOPS cuntry ffice management is t address the issues. The fllwing categries f pririties are used: Categries High Medium Lw Definitin Prmpt actin is required t ensure that UNOPS is nt expsed t high risks. Failure t take actin culd result in majr negative cnsequences fr UNOPS. Actin required t ensure that UNOPS is nt expsed t risks. Failure t take actin culd result in negative cnsequences fr UNOPS. Actin is desirable and shuld result in enhanced cntrl r better value fr mney. Lw Pririty recmmendatins, if any, are dealt with by the audit team directly with the Office management, either during the exit meeting r thrugh a separate mem subsequent t the fieldwrk. Therefre, lw pririty recmmendatins are nt included in this reprt. 1 January t 31 December 2016 10
Pssible causes The fllwing categries f pssible causes are used: Guidelines: absence f written prcedures t guide staff in perfrming their functins; Lack f r inadequate crprate plicies r prcedures Lack f r inadequate RO/OC/PC plicies r prcedures Inadequate planning Inadequate risk management prcesses Inadequate management structure Guidance: inadequate r lack f supervisin by supervisrs; Lack f r inadequate guidance r supervisin at the RO/OC/PC level Inadequate versight by Headquarters Resurces: insufficient resurces (funds, skill, staff) t carry ut an activity r functin; Lack f r insufficient resurces (financial, human, r technical resurces) Inadequate training Human errr: Un-intentinal mistakes cmmitted by staff entrusted t perfrm assigned functins; Intentinal: intentinal verriding f internal cntrls; Other: Factrs beynd the cntrl f UNOPS. List f functinal areas The fllwing categries f functinal areas are used: Prject management Finance Human resurces Prcurement and supply chain General administratin (which includes asset management) Infrmatin and cmmunicatins technlgy 1 January t 31 December 2016 11