UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT


OFFICE OF INSPECTOR GENERAL


FOR THE


MILLENNIUM CHALLENGE CORPORATION


SEMIANNUAL REPORT


TO THE CONGRESS


April 1, 2007 - September 30, 2007

Mission 

The mission of Office of Inspector General (OIG) is to contribute to and support integrity, 

efficiency, and effectiveness in all activities of the organizations for which it has oversight 

responsibilities. 

Values 

In accomplishing our mission, OIG is committed to the following: 

• Integrity 

• Excellence 

• Teamwork 

Strategic Goals 

• Reduce vulnerabilities in high-risk MCC programs 

• Increase effectiveness of MCC programs in addressing strategic goals and priorities 

• Help to ensure operational integrity in MCC management systems programs 
CONTENTS


Message from the Inspector General ................................................................................................v


Executive Summary ..............................................................................................................................1


Summary of Results .............................................................................................................................3


Strategic Goal 1: Reduce vulnerabilities in high-risk Millennium


Challenge Corporation programs ..........................................................................................3


Strategic Goal 2: Increase effectiveness of Millennium Challenge


Corporation programs in addressing strategic goals and priorities ..................................7


Strategic Goal 3: Help to ensure operational integrity in Millennium


Challenge Corporation management systems programs ...................................................9


Appendices - Reporting Requirements ...........................................................................................11


SEMIANNUAL REPORT TO THE CONGRESS iii 

MESSAGE FROM THE 

INSPECTOR GENERAL 

This Semiannual Report to the Congress (SARC) 

presents information about the work of 

the United States Agency for International 

Development, Office of Inspector General (USAID/ 

OIG) in providing oversight for the Millennium 

Challenge Corporation (MCC) during the six-month 

period ending on September 30, 2007. It is issued in 

accordance with the requirements of the Inspector 

General Act of 1978, as amended, and specifically 

addresses OIG responsibilities for MCC. 

The work reported was planned and executed in support 

of OIG’s three strategic goals for MCC: 

• 	 Reduce vulnerabilities in high-risk MCC 

programs 

• 	 Increase effectiveness of MCC programs in 

addressing strategic goals and priorities 

• 	 Help to ensure operational integrity in MCC 

management systems programs 

Significant OIG activity and achievements in support 

of these goals is described in this report, and 

comprehensive statistics and data regarding our efforts 

are also included. 

OIG continues to use a collaborative, proactive, and 

results-oriented approach in support of the integrity, 

efficiency, and effectiveness of MCC programs and 

operations. 

Donald A. Gambatesa


Inspector General


SEMIANNUAL REPORT TO THE CONGRESS v 

EXECUTIVE SUMMARY


This SARC presents information about the work 

of the United States Agency for International 

Development (USAID), Office of Inspector 

General (OIG) in providing oversight for the 

Millennium Challenge Corporation (MCC) during the 6­

month period ending on September 30, 2007. It is issued 

in accordance with the requirements of the Inspector 

General Act of 1978, as amended, and specifically 

addresses our responsibilities for MCC. 

The work reported was planned and executed in support 

of OIG’s three strategic goals for MCC as described 

below along with significant findings and actions related 

to each goal. 

Strategic Goal 1: Reduce vulnerabilities in highrisk programs 

• 	 A Fund Accountability Statement (FAS) audit 

found nonmaterial weaknesses and instances 

of noncompliance at Millennium Challenge 

Georgia Fund (MCG); 

• 	 A FAS audit found material weaknesses and 

instances of noncompliance at MCA-Honduras; 

• 	 A FAS audit found many improvements in 

accountability at MCA-Madagascar; 

• 	 Nineteen overseas audit firms were 

determined qualified to perform FAS audits; 

and 

• 	 Information briefings to increase fraud 

awareness and understanding of audit 

requirements were conducted for 129 attendees. 

Strategic Goal 2: Increase effectiveness of 

programs in addressing strategic goals and 

priorities 

• 	 MCC’s management of Conditions Precedent 

(CP) practices were sound; and 

• 	 Three process improvements were identified 

and recommended for MCC's management of 

CP. 

Strategic Goal 3: Help to ensure operational 

integrity in management systems programs 

• 	 MCC's information security program does 

not meet all Federal Information Security 

Management Act of 2002 (FISMA) 

requirements and recommendations to remedy 

the deficiencies were provided by OIG; and 

• 	 A follow-up audit of MCC’s process for 

managing audit recommendation closure was 

found to be sound. 

SEMIANNUAL REPORT TO THE CONGRESS 1 

SUMMARY OF RESULTS


Strategic Goal 1: 

Reduce vulnerabilities in high-risk programs 

As MCC increases the pace of its program 

implementation, OIG is revising its approach 

to meet the changing needs of MCC. OIG is 

increasing oversight and assessments of field operations 

to address the high risk that new and innovative 

programs present. MCC is unlike other foreign aid 

efforts of the U.S. Government in that it operates as an 

independent U.S. Government corporation that works 

only with countries that have already shown that they 

perform better than their peers on the policies that 

support growth and poverty reduction. As a result, OIG 

defines MCC’s high-risk programs as the Compact,1 

Threshold,2 and 609(g)3 programs because they are 

field operations that are evolving quickly, in foreign 

environments, and are disbursing funds under the 

direction of local recipient organizations that have little 

or no experience managing funds in compliance with 

U.S. Government standards. 

OIG’s specific activities during this reporting period 

concerned three areas: 

• 	 Overseeing the Millennium Challenge Account 

(MCA) audit process, including the FAS audits 

contracted for by the accountable entities 

implementing MCC compacts; 

• 	 Auditing the Madagascar Compact program; and 

• 	 Providing OIG informational briefings. 

FAS Audit Activity 

OIG performs technical oversight of the audits of the 

accountable entities’ fund statements. These audits, 

called FAS audits, are performed by independent 

auditors contracted by the recipient countries. OIG 

works with the auditors during the audit process 

to ensure that significant findings are reported as 

recommendations. For the period ending December 

31, 2006, FAS audits were issued for Benin, Georgia, 

Honduras, Nicaragua, and Madagascar. In addition, 

significant work continued with FAS audits in Cape 

Verde, Ghana, Armenia, and Vanuatu. 

Qualification of Audit Firms 

As part of its quality assurance program, OIG identifies 

and approves overseas audit firms that are qualified 

to perform financial audits. Qualification requires 

compliance with elements of professional auditing 

standards. In all cases, OIG staff travel to the country 

to conduct the assessments. In addition, OIG reviews 

the statements of work and resulting audit work 

performed under these contracts. These audits review 

the entity’s FAS, internal controls, and compliance with 

material provisions, and OIG issues the audit with 

recommendations to MCC for overseeing the resolution 

of identified weaknesses and questioned costs. 

During this period, OIG traveled to Lesotho, 

Mozambique, Namibia, and Tanzania and qualified 19 

audit firms, bringing the total number of firms qualified 

to perform FAS audits to 41. OIG continues to build 

1.	 A Compact is a multi-year agreement between the MCC and an eligible country to fund specific programs targeted at reducing poverty and 

stimulating economic growth. 

2.	 The Threshold Program is designed to assist countries that are on the “threshold,” meaning they have not yet qualified for MCA Compact 

funding, but have demonstrated a significant commitment to improve their performance on the eligibility criteria for MCA Compact funding. 

3.	 The Millennium Challenge Act of 2003, Section 609 (g) authorizes assistance for the purpose of facilitating the development and implementation of a Compact between the United States and the recipient country.A country may receive both a Compact and additional funding under 

the “Compact Assistance -609 (g) program.” 

SEMIANNUAL REPORT TO THE CONGRESS 3 
relationships with organizations that have experience 

or interest in international auditing of development 

projects. 

Georgia 

During this reporting period, OIG issued the second 

FAS audit for Georgia. The audit found nonmaterial 

weaknesses in the internal control structure and 

instances of noncompliance with rules, regulations, 

and laws. MCG took final action on all but one of the 

findings from the previous period. 

The audit was contracted by the MCG and covered 

incurred costs totaling $4,026,798 for the period 

from July 1 to December 31, 2006, under the 5-year 

compact of approximately $295.3 million. The purpose 

of the compact is to reduce poverty and stimulate 

economic growth by focusing on the areas of regional 

infrastructure rehabilitation and enterprise development. 

No questioned costs were identified, and the 

accountability statement presented fairly and in all 

material respects the program revenues and costs 

incurred for the period audited. 

OIG recommended that MCC request and verify that 

MCG correct the internal control deficiencies identified. 

(Audit Report No. M-000-07-009-N, September 27, 2007) 

Honduras 

During this reporting period, OIG issued the second 

FAS audit for Honduras. The audit found material 

weaknesses in the internal control structure and 

instances of noncompliance with rules, regulations, and 

laws. However, MCA-Honduras did take final action 

on 6 of the 10 internal control findings prior to report 

issuance. 

The audit was contracted by MCA-Honduras and 

covered incurred costs totaling $3,247,978 for the period 

from July 1 to December 31, 2006, under the 4-year 

compact of approximately $215 million. The purpose 

of the compact is to reduce poverty and stimulate 

economic growth with projects in rural development and 

transportation sector support. No questioned costs were 

identified, and the accountability statement presented 

fairly and in all material respects the program revenues 

and costs incurred for the period audited. 

OIG recommended that MCC request and verify 

that MCA-Honduras (1) corrects the internal control 

deficiencies and (2) corrects the material instances of 

noncompliance identified. 

(Audit Report No. M-000-07-008-N, September 10, 2007) 

Madagascar 

During this reporting period, OIG issued the second 

FAS audit for Madagascar. The results show many 

improvements in accountability since the last audit 

report. 

Photograph of onion 

farmers supported 

by MCA-Madagascar 

Agricultural Business 

Center (ABC) in Antsirabe, 

Madagascar. An ABC 

contractor is teaching 

farmers how to use 

fertilizers, pesticides, and 

other techniques to ensure 

that the onions meet the 

European Union’s produce 

standards. 

 4 SEMIANNUAL REPORT TO THE CONGRESS 
Photograph of farmers 

supported by the MCAMadagascar Agricultural 

Business Center in 

Vatomandry, Madagascar. 

The farmers refined litchi 

to produce essential oils. 

The audit of the FAS for Madagascar found that MCAMadagascar corrected all internal control and compliance 

findings and recommendations listed in the report 

of December 21, 2006 (M-000-07-001-N) with the 

exception of the internal control item addressing the use 

of software to produce the financial statements. 

However, like the audit from the prior period, the audit 

issued this period found that certain disbursements of 

the accountable entity were questionable (i.e., questioned 

costs). 

The audit was contracted by MCA-Madagascar and 

covered incurred costs totaling $5,401,214 for the 

period from July 1 to December 31, 2006, under the 

4-year compact of approximately $110 million. The 

Government of the Republic of Madagascar established 

MCA-Madagascar to implement and manage the 

compact. The purpose of the compact is to reduce 

poverty and stimulate economic growth in Madagascar 

by focusing on three areas: property rights, the financial 

sector, and agricultural business investment. 

The auditors reported that, except for ineligible 

questioned costs of $10,702, the fund accountability 

statement presented fairly and in all material respects 

the program revenues and costs incurred for the period 

audited. In addition, the auditors identified an instance 

of noncompliance pertaining to the costs of workshops 

associated with activities not provided for in the compact 

budget or clauses. 

Based on its review of the audit report, OIG made two 

recommendations: that MCC (1) make a management 

decision regarding the allowability of the $10,702 in 

ineligible questioned costs and (2) request and verify that 

MCA-Madagascar correct a compliance deficiency. 

Preventive Outreach 

Preventing fraud through education and training is 

a high priority for OIG. As MCC programs expand 

operations and expend more funds overseas, OIG will 

increase fraud prevention efforts. OIG’s early briefings 

are provided in connection with qualifying audit firms 

in recipient countries. For example, fraud awareness 

training given to employees, contractors, grantees, and 

others alerts them to fraudulent practices and schemes 

and advises them on how to report fraud. When 

requested, the training is tailored to specific groups. 

Furthermore, investigations resulting in criminal 

and/or civil prosecution are publicized on USAID’s 

internet site and in other publications to call attention 

to prosecutorial action taken against individuals or 

organizations whose illegal activities have targeted MCC 

programs. OIG hotline posters, flyers, and cards have 

been distributed worldwide. In an effort to expand 

OIG’s outreach efforts, the materials are produced in 

English, Spanish, French, and Arabic. 

SEMIANNUAL REPORT TO THE CONGRESS 5 
Recipient Contracted Audit Briefings are an essential provided under compacts. These briefings are conducted 

component of OIG’s outreach program in the field. in each country that receives compacts and are part 

These briefings serve to educate and train potential of the process OIG uses to identify firms as potential 

audit firms, local government officials, and others in contractors for MCA audit business opportunities. 

the U.S. Government standards for auditing monies 

FRAUD AWARENESS (FA) AND RECIPIENT CONTRACTED AUDIT (RCA) BRIEFINGS


AS OF SEPTEMBER 30, 2007


Month Location Sessions Attendees Professional Affiliation 

APR NOTHING TO REPORT 

MAY NOTHING TO REPORT 

JUN NOTHING TO REPORT 

JUL Washington, DC 

Maputo, Mozambique 

Dar es Salaam,Tanzania 

1 

1 

1 

35 

15 

15 

MCC Ethics Training (FA) 

Local Accounting Firms (FA, RCA) 

MCC Personnel (FA, RCA) 

MCA-Mozambique Personnel (FA, RCA) 

Ministry of Finance Personnel (FA, RCA) 

Local Accounting Firms (FA, RCA) 

MCC Personnel (FA, RCA) 

MCA-Tanzania Personnel (FA, RCA) 

Ministry of Finance Personnel (FA, RCA) 

AUG Washington, DC 

Maseru, Lesotho 

Windhoek, Namibia 

1 

1 

1 

34 

15 

15 

MCC Personnel (FA) 

Local Accounting Firms (RCA) 

Auditor General Office (RCA) 

Interim Director of MCA-Lesotho (RCA) 

Professional Accounting Licensing Body (RCA) 

U.S. Department of State’s Deputy Chief of 

Mission (RCA) 

Local Accounting Firms (RCA) 

Auditor General Office (RCA) 

Interim Director of MCA-Lesotho (RCA) 

Professional Accounting Licensing Body (RCA) 

USAID Assistant Mission Director and 

Financial Analyst (RCA) 

SEP NOTHING TO REPORT 

TOTAL 6 129 

 6 SEMIANNUAL REPORT TO THE CONGRESS 
Strategic Goal 2: 

Increase effectiveness of programs in addressing MCC’s strategic goals and 

priorities 

MCC is attempting to provide foreign aid 

targeted toward economic growth through 

large grants to projects where the recipient 

has the major responsibility for project implementation. 

MCC has set the following four goals to direct its 

activities: 

• 	Transformative development; 

• 	 Support of good policy; 

• 	 Improvement of MCC operational 


effectiveness; and


• 	 MCC capability building. 

OIG’s support of MCC’s goals is evident in all of OIG’s 

work related to MCC compacts, its chief assistance 

instrument. Recent OIG audits focused on the CPs of 

MCC’s compact management. Reviews were conducted 

across several countries. OIG’s recommendations 

identified areas to improve operational effectiveness and 

strengthen delivery mechanisms. 

Audit of the MCC’s Management of Its CPs in 

Its Compact Agreements 

MCC requires that the compact country meet a series of 

CPs before a compact is entered into force4

 and before 

funds are disbursed for compact implementation. CPs 

are established in conjunction with the compact country 

by MCC’s legal and sector experts during compact 

negotiations and are outlined in the compact and related 

disbursement agreements. The purpose of a CP is to 

ensure that (1) the compact countries establish certain 

legal, budgetary, and program actions and (2) the various 

programs being funded by MCC are implemented and 

carried out with proper controls. 

OIG conducted the audit to determine whether 

MCC ensured that all required CPs were met before 

compacts went into effect and disbursements were 

made to compact countries. This audit was designed to 

have a broad scope and included compact agreement 

management in Armenia, Cape Verde, Georgia, 

Honduras, Madagascar, and Nicaragua. 

The audit concluded that MCC had a process in place 

to provide reasonable assurance that all CPs were 

successfully met and properly implemented before the 

compact was entered into force and before initial and 

subsequent funding. 

The audit identified three improvement areas for MCC’s 

CP process and provided recommendations to address 

them as follows: 

• 	 MCC needs to develop a more formalized and 

consistent approach to guide compact countries 

in revising and reporting on CPs. 

-	 Recommendation: Develop and issue 

specific guidelines that describe how CPs 

will be established, defined, revised, and 

reported. 

• 	 MCC’s clearance timeframes for approval of 

country requests, which include the CP report, 

could be clarified. 

-	 Recommendation: Issue guidance that 

describes the clearance timeframe for 

approving country requests and related 

documents, such as the CP Report. 

• 	 Additional documentation is needed to justify a 

procurement action. 

-	 Recommendation: Develop and issue 

a policy requiring written justifications 

for deviations from the guidelines when 

rejecting all bids and when using singlesource selection. 

4. According to MCC officials, entry-into-force is the point at which a binding commitment is recognized and the compact funds are obligated. 

SEMIANNUAL REPORT TO THE CONGRESS 7 
MCC agreed with the recommendations and explained 

its plan for implementing the recommendations, and 

OIG considers that a management decision had been 

reached on the recommendations. 

(Audit Report No. M-000-07-002-P, July 26, 2007) 

 8 SEMIANNUAL REPORT TO THE CONGRESS 
Strategic Goal 3: 

Help to ensure operational integrity in management systems programs 

Congressional legislation and Office of 

Management and Budget (OMB) regulation 

require certain audits be performed to help 

resolve high-risk governmentwide problems and ensure 

operational integrity in systems and operations. During 

this reporting period, OIG conducted a FISMA audit, 

as well as an audit to determine MCC’s effectiveness in 

responding to audit recommendations. 

OIG also performed substantial work on audits required 

by the Government Management Results Act. 

Audit of the Millennium Challenge 

Corporation’s Compliance with the Provisions 

of the Federal Information Security 

Management Act of 2002 for Fiscal Year 2007 

An audit was conducted to determine if MCC’s 

information security program meets FISMA 

requirements for an agencywide information security 

program that protects MCC’s information and assets. 

OIG found that MCC’s information security program 

does not meet all the FISMA requirements, and OIG 

made 3 recommendations to address the deficiencies. 

MCC’s action in response to these recommendations will 

be reviewed in the FISMA audit for fiscal year 2008. 

(Audit Report M-000-07-004-P, September 28, 2007) 

Follow-up Audit of the Millennium Challenge 

Corporation’s Contract Award Process 

In accordance with OMB Circular A-50, follow-up 

audits assess whether management’s response to audit 

recommendations was effective in correcting identified 

problems to ensure that audit recommendations lead to 

results. This follow-up audit looked at MCC’s response 

to the nine recommendations OIG made in October 

2005 in Audit of the Millennium Challenge Corporation’s 

Contract Award Process. 

To carry out its mission, MCC’s operations include a 

contracting function at its headquarters in Washington, 

DC, which was the subject of the prior audit conducted 

by OIG. The prior audit found that MCC had complied 

with certain requirements of the Federal Acquisition 

Regulation (FAR) but identified areas for further 

improvements, including affirming the applicability of 

FAR to MCC procurements, establishing requirements 

for the use of sole-source procurements, and developing 

a program for small business procurements. 

The follow-up audit concluded that MCC’s process for 

managing audit recommendation closure was sound. 

MCC took appropriate actions to justify closure on all 

nine recommendations in the Audit of the Millennium 

Challenge Corporations Contract Award Process. 

(Audit Report No. M-000-07-003-P, September 6, 2007) 

Audit of MCC’s Consolidated Financial 

Statements, Internal Controls, and Compliance 

for the Period Ending September 30, 2007 

During this reporting period, OIG initiated the contract 

for the financial statement audit. Auditors have reviewed 

MCC’s automated accounting systems, and internal 

control and payroll testing was completed. The audit 

report is expected to be issued in mid-November 2007. 

SEMIANNUAL REPORT TO THE CONGRESS 9 

A


P


P


REPORTING E 

REQUIREMENTS N 

D 

I 

C 

E 

S 

11 

FINANCIAL AUDIT REPORTS ISSUED


April 1, 2007 through September 30, 2007


Report Number Date of Report Report Title 

Amount of 

Findings 

Type of 

Findings 

NOTHING TO REPORT


Appendix A SEMIANNUAL REPORT TO THE CONGRESS 13 
PERFORMANCE AUDIT REPORTS ISSUED 


April 1, 2007 through September 30, 2007


Report Number Date of Report Report Title 

Amount of 

Findings 

Type of 

Findings 

M-000-07-002-P 07/26/07 Audit of the MCC’s Management of Its Conditions Precedent 

in Its Compact Agreements 

M-000-07-003-P 09/06/07 Audit of the MCC’s Contract Award Process 

M-000-07-004-P 09/28/07 Audit of the Millennium Challenge Corporation’s Compliance 

With the Provisions of the Federal Information Security 

Management Act for Fiscal Year 2007 

BU--Better Use of Funds


QC--Questioned Costs


UN--Unsupported Costs


Note: UN is part of QC


 14 SEMIANNUAL REPORT TO THE CONGRESS Appendix A 
MISCELLANEOUS AUDIT REPORTS ISSUED 

April 1, 2007 through September 30, 2007 

Fund Accountability Statement audit reports covering the agreement period of July 1 to December 31, 2006* 

Report Number 

Date of 

Report Report Title 

Amount of 

Findings 

Type of 

Findings 

M-000-07-005-N 08/10/07 Audit of the MCC Resources Managed by Millennium 

Challenge Account-Madagascar under the Compact 

Agreement between the MCC and the Government of the 

Republic of Madagascar from July 1, 2006 to December 31, 

2006 

$10,702 QC 

UN 

M-000-07-006-N 08/23/07 Audit of the MCC Resources Managed by MCA-Nicaragua 

under the Compact Agreement between the MCC and the 

Government of Nicaragua from July 1, 2006 to December 

31, 2006 

M-000-07-007-N 08/31/07 Audit of the Fund Accountability Statement of the 

Millennium Challenge Corporation (MCC) Resources 

Managed by the MCA-Benin Under the Compact 

Agreement dated February 22, 2006, between MCC and the 

Government of Benin for the period from July 1, 2006, to 

December 31, 2006 

$150 QC 

UN 

M-000-07-008-N 09/10/07 Audit of the Millennium Challenge Corporation (MCC) 

Resources Managed by Millennium Challenge AccountHonduras (MCA-Honduras) Under the Compact 

Agreement Between the MCC and the Government of 

Honduras from July 1, 2006 to December 31, 2006 

M-000-07-009-N 09/27/07 Audit of the MCC Resources managed by the Millennium 

Challenge Georgia Fund, Under the Compact Agreement 

Between the MCC and the Government of Georgia for the 

period from July 1, 2006 to December 31, 2006 

*Note: Questioned costs outstanding at this time from the previous reporting period include an additional $6,617.24 for MCA Madagascar. 

BU--Better Use of Funds


QC--Questioned Costs


UN--Unsupported Costs


Note: UN is part of QC


Appendix A SEMIANNUAL REPORT TO THE CONGRESS 15 

AUDIT REPORTS OVER SIX MONTHS OLD


WITH NO MANAGEMENT DECISION


As of September 30, 2007 


Report 

Number Report Title 

Date of 

Report 

Current 

Recommendation 

Status 

Desired 

Decision 

Target 

Date 

M-000-07-001-N Audit of the Fund Accountability Statement of the MCC 

Resources Managed by MCA-Madagascar under the Compact 

Agreement dated April 18, 2005 between MCC and the 

Government of the Republic of Madagascar for the period 

from July 27, 2005 to June 30, 2006 

12/21/06 1 

2 

3 

12/07 

12/07 

12/07 

M-000-07-002-N Audit of the Fund Accountability Statement of the MCC 

Resources Managed by MCA-Cape Verde under the Compact 

Agreement dated July 4, 2005, between MCC and the 

Government of the Republic of Cape Verde for the period 

from October 17, 2005 to June 30, 2006 

01/11/07 1 

2 

01/08 

01/08 

M-000-07-003-N Independent Auditor’s Report on the Financial Audit of the 

MCC Resources Managed by Millennium Account-Honduras 

(MCA-Honduras), Under the Compact Agreement Between 

the MCC and MCA-Honduras from Feb 22, 2006 - June 30, 

2006 

02/07/07 1 

2 

02/08 

02/08 

M-000-07-004-N Audit of the Fund Accountability Statement of the MCC 

Resources Managed by Millennium Challenge Georgia Fund 

(MCG), Under the Compact Agreement dated September 12, 

2005, Between the MCC and the Government of Georgia for 

the Period from April 7, 2006, to June 30, 2006 

02/27/07 1 02/08 

Appendix B SEMIANNUAL REPORT TO THE CONGRESS 17 

SIGNIFICANT AUDIT RECOMMENDATIONS


DESCRIBED IN PREVIOUS SEMIANNUAL


REPORTS WITHOUT FINAL ACTION 


As of September 30, 2007 


Final 

Action 

Report Rec. Issue Management Target 

Number Subject of Report No. Date Decision Date Date 

M-000-05-003-P Audit of the Millennium Challenge Corporation’s 8 06/20/05 04/07 04/07* 

Compliance with Provisions of the Federal 

Information Security Management Act of 2002 

M-000-06-001-C Audit of the Millennium Challenge Corporation’s 

Financial Statements, Internal Controls, and 

5.2 12/06/05 12/06/05 04/07* 

Compliance for the Period Ending September 30, 

2005 and the Nine Month Period Ending September 

30, 2004 

M-000-06-001-S Review of the Millennium Challenge Corporation’s 3 05/16/06 05/16/06 05/07* 

Progress in Achieving Its Planned Organizational 

Structure and Beginning Its Assistance Programs 

4 05/16/06 05/07* 

M-000-06-003-P Audit of the MCC’s Compliance with the Provisions 1 09/29/06 09/29/06 09/07* 

of the Federal Information Security Management Act 

of 2002 for Fiscal Year 2006 

M-000-007-001-F Audit of the MCC’s Financial Statements, Internal 3 11/14/06 01/18/07 01/08 

Controls, and Compliance for the period ending 

September 30, 2006, and 2005 

7.1 01/18/07 01/08 

M-000-07-001-P Audit of the MCC’s Due Diligence Review Process 

Leading to Compact Awards 

1 03/02/07 03/02/07 03/08 

M-000-07-001-N Audit of the Fund Accountability Statement of the 

MCC Resources Managed by MCA-Madagascar 

under the Compact Agreement Dated April 18, 2005 

Between MCC and the Government of the Republic 

of Madagascar for the Period from July 27, 2005 to 

June 30, 2006 

1A 

1 B 

2 

3 

12/21/06 12/21/07 

12/21/07 

12/21/07 

12/21/07 

M-000-07-002-N Audit of the Fund Accountability Statement of the 

MCC Resources Managed by MCA-Cape Verde under 

the Compact Agreement dated July 4, 2005, between 

MCC and the Government of the Republic of Cape 

Verde for the period from October 17, 2005 to June 

30, 2006 

1A 

1B 

2 

01/11/07 01/08 

01/08 

01/08 

M-000-07-003-N Independent Auditor’s Report on the Financial Audit 

of the MCC Resources Managed by Millennium 

Account-Honduras (MCA-Honduras), Under the 

Compact Agreement Between the MCC and MCAHonduras from Feb 22, 2006 - June 30, 2006 

1 

2 

02/07/07 02/08 

02/08 

M-000-07-004-N Audit of the Fund Accountability Statement of the 

MCC Resources Managed by Millennium Challenge 

Georgia Fund (MCG), Under the Compact Agreement 

dated September 12, 2005, Between the MCC and the 

Government of Georgia for the Period from April 7, 

2006, to June 30, 2006 

1 02/27/2007 02/08 

* As of September 30, 2007, MCC has not provided OIG a revised target date. 

Appendix C SEMIANNUAL REPORT TO THE CONGRESS 19 

REPORTS ISSUED WITH QUESTIONED


AND UNSUPPORTED COSTS


April 1, 2007 through September 30, 2007 


Reports 

Number 

of Audit 

Reports 

Questioned 

Costs 

Unsupported 

Costs* 

A. For which no management decision had been made as of 

April 1, 2007 

2 $10,983 $7,083 

B. Add: Reports issued April 1, 2007 through September 30, 

2007 

2 $10,852** $0 

Subtotal 2 $21,835 $7,083 

C. Less: Reports with a management decision made 

April 1, 2007 through September 30, 2007 

0 $0 $0 

i. Value of recommendations disallowed by agency officials 0 $0 $0 

ii. Value of recommendations allowed by agency officials 0 $0 $0 

D. For which no management decision had been made as of 

September 30, 2007 

0 $21,835 $7,083 

* 	 Unsupported costs are included in questioned costs, but are provided as additional information as required by the Inspector General Act 

Amendments of 1988 (P.L. 100-504). 

** Questioned costs from Fund Accountability Statement Audits issued this period as follows: 

• 	 Madagascar – $10,702 in ineligible questioned costs 

• 	 Benin – $150 in ineligible questioned costs 

Appendix D	 SEMIANNUAL REPORT TO THE CONGRESS 21 
REPORTS ISSUED WITH RECOMMENDATIONS


THAT FUNDS BE PUT TO BETTER USE


April 1, 2007 through September 30, 2007 


Reports 

Number 

of Audit 

Reports Dollar Value 

NOTHING TO REPORT


 22 SEMIANNUAL REPORT TO THE CONGRESS Appendix D 


Inspector General 

HOTLINE 

OIG’s Hotline makes it easy to report allegations of fraud, 

waste, abuse, mismanagement or misconduct in programs 

and operations of the USAID, USADF, IAF, and MCC. 

Employees, contractors, program participants and the 

general public may report allegations directly by e-mail, 

telephone, or mail to: 

Phone 	1-202-712-1023

 1-800-230-6539 

E-mail 	 ig.hotline@usaid.gov


Mail 	USAID OIG HOTLINE

 P.O. Box 657

 Washington, DC 20044-0657 

U.S. Agency for International Development 

1300 Pennsylvania Avenue, N.W. 

Washington, D.C. 20523 

www.usaid.gov 
U.S.Agency for International Development 


Office of Inspector General


for the


Millennium Challenge Corporation 


1300 Pennsylvania Avenue, NW


Room 6.6D 


Washington, DC 20523


www.usaid.gov/oig 

The Semiannual Report to the Congress is available on the Internet at 


www.usaid.gov/oig/public/semiann/mcc1.htm