UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT 

OFFICE OF INSPECTOR GENERAL


FOR THE


MILLENNIUM CHALLENGE CORPORATION


Annual Plan


2008

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 
OIG for MCC Fiscal Year 2008 Annual Plan 


CONTENTS 

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


Inspector General Authority, Responsibility and Challenges . . . . . . . . . . . . . . . . . . 1 


OIG Planned Activities for Fiscal Year 2008


Strategic Goal 1: Reduce vulnerabilities in high-risk MCC programs . . . . . . 3


Strategic Goal 2: Increase effectiveness of MCC programs in addressing


strategic goals and priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 


Strategic Goal 3: Help to ensure operational integrity in MCC


management systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 


Appendixes:


A - Planned OIG Activities by Goal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15


B - Planned OIG Activities by Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 


OIG for MCC Fiscal Year 2008 Annual Plan 


MESSAGE FROM THE INSPECTOR GENERAL


The mission of the Millennium Challenge Corporation (MCC) is to reduce global poverty through 

the promotion of sustainable, economic growth. In 

carrying out its mission, the corporation works with 

some of the poorest countries in the world, through 

agreements called “compacts,” to reinforce good 

governance, economic freedom, and investments in 

people. Countries with whom MCC has entered into 

compacts form entities, called Millennium Challenge 

Accounts, to implement the compacts. 

From the beginning--MCC was created in January 

2004--the corporation has focused primarily on 

establishing a sound corporate structure and system 

of governance.The Office of Inspector General (OIG) 

for the U.S.Agency for International Development, 

MCC’s legislatively designated Inspector General, 

assisted the corporation in its early stages of development by conducting compliance audits. 

Fiscal year 2008 (FY 2008) will be a transition year 

for MCC and OIG.As MCC developed, OIG gradually 

shifted its focus from compliance audits to conducting 

performance audits of activities carried out by the 

Millennium Challenge Accounts (MCAs). Now, MCC 

has compacts with 13 countries and major field 

activity is beginning.As a result, OIG will now focus its 

resources largely on performance oriented audits of 

MCA activities in the fi eld. 

Reorienting OIG’s focus to auditing the execution of 

the compacts will be challenging. By law, funding for 

audit and investigative coverage of MCC programs 

and operations is limited. Executing the audit plan, 

and increasing our fraud awareness training for MCC 

and MCA staffs and contractors, will put OIG at or 

near its funding ceiling.With limited resources, OIG 

must focus on the most vulnerable MCC and MCA 

activities. 

This FY 2008 audit plan is directly linked to three of 

OIG’s 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 

OIG will continue to work closely with MCC, as well 

as the MCAs, so that MCC can achieve success in the 

effective and prudent management of its programs 

and operations. 

The results of this plan will be reported in future 

semiannual reports to the Congress. 

Donald A. Gambatesa 

Inspector General 

v


OIG for MCC Fiscal Year 2008 Annual Plan 


IG AUTHORITY, RESPONSIBILITY AND CHALLENGES


Authority and Responsibility 

Public Law 108-199 established the Millennium 

Challenge Corporation (MCC) as a United States 

Government-owned corporation responsible 

for the stewardship of the Millennium Challenge 

Account (MCA) to promote, support, and ensure 

accountability for the innovative foreign aid strategies 

it administers.The law also established the USAID 

Inspector General as the Inspector General for MCC. 

MCC focuses specifically on promoting sustainable 

economic growth that reduces poverty through 

investments in areas such as agriculture, education, 

private sector development, and capacity building. 

MCC is focused on one specifi c long-term foreign 

policy mission—to reduce poverty through sustainable economic growth. The selection of countries 

is determined by the following established criteria: 

rule justly, invest in people, and encourage economic 

freedom. Compact recipients designate an implement­ 1

ing agency, called the Accountable Entity, to manage 

in-country activities.The country is responsible 

for fiscal accountability and performance results 

that reduce poverty. MCC has established a set of 

strategic goals in a working document for the period 2

fiscal years 2006–2011.

Working closely with MCC, countries that receive 

assistance are responsible for identifying the greatest 

barriers to their own development, ensuring civil 

society participation, and developing an MCA 

program. MCA participation requires a strong 

commitment from the host government. Each MCA 

country will enter into a public compact with MCC 

that includes a multiyear plan for achieving development objectives and identifies the responsibilities 

of each partner in achieving those objectives.This 

strategy of relying on the host country for design and 

implementation of the program is very different from 

the traditional foreign assistance model of the donor 

designing and implementing the program. 

Challenges for FY 2008 

MCC’s innovative approach is not without risk. Risk 

factors create challenges for the Office of Inspector 

General (OIG) and MCC, and this plan is intended to 

address the risks inherent in MCC’s new programs 

and operations. 

MCC anticipates a considerable increase in program 

and financial activity as signed compacts are 

implemented.As of August 2007, MCC has signed 

13 compact agreements and identified 12 additional 

countries as eligible to receive future Compact grants. 

Subject to the FY 2008 funding level, MCC could have 

compacts with more than 20 countries by the end of 3

FY 2008. MCC anticipates it will receive less funding 

from Congress for FY 2008 than requested. MCC 

anticipates that based on the expected shortfall in 

expected funding, some proposals will not be signed. 

The average size of a new compact has reached 

$400–$500 million. 

OIG’s financial audit program contributes to the 

overall financial integrity of MCC program. For 

FY 2008, OIG is building on its past results. OIG’s 

financial audit program will continue to stress the 

legislatively required audits, which have a very large 

impact on MCC operations in the assurances that 

they provide. In the field, there will be a significant 

increase in the impact of the financial audit program 

as countries with compacts increase program funding 

disbursements.The impact of these audits is twofold: 

they provide some assurance that MCC funds are 

1.	 MCC refers to individual accountable entities by combining “Millennium Challenge Account” (MCA) and the country’s name, for example,

 “MCA-Madagascar.” 

2.	 As of March 2007, MCC has not issued a final strategic plan. MCC has shared an internal working document that it plans to release later in the calendar year that covers FY 2006–2011. 

3.	 Testimony of the Chief Executive Officer of MCC,Ambassador John Danilovich before the House of Representatives,Appropriations Committee, 

Subcommittee on State, Foreign Operations, and Related Programs, March 13, 2007. 

1 
OIG for MCC Fiscal Year 2008 Annual Plan 


indeed reaching the intended projects, and they 

provide reasonable assurance that the recipients are 

properly accounting for the U.S. taxpayer dollars.

 OIG’s Performance Audit program will identify 

results and impacts that MCC-funded activity is having 

across a range of activities.The independence of 

OIG in reviewing MCC performance is an assurance 

of unbiased information regarding the results of 

MCC’s activities.The plan presents specifi c audits 

for FY 2008 that reflect the implementation of 

MCC’s programs. For FY 2008, performance auditing 

will be largely focused on the field operations of 

the compact countries. MCC will have substantial 

program resources invested in the field, and OIG 

plans to direct substantial efforts reviewing program 

operations and results. 

2 
OIG for MCC Fiscal Year 2008 Annual Plan 


Strategic Goal 1: 

Reduce vulnerabilities in high-risk MCC programs 

Fraud Awareness and Prevention Outreach 

OIG will promote awareness of fraud and/or cost 

principles by providing training that alerts individuals to fraudulent schemes and practices. OIG will 

continue developing and distributing fraud-awareness 

literature, audiovisual aids, and other material. In 

furtherance of these fraud-prevention efforts, OIG 

will offer advice and support to MCC and their 

partners on antifraud strategies through briefings, 

meetings, conferences, and other fora. 

Beginning in the first quarter of FY 2008, OIG will 

conduct site visits in the following locales: Armenia/ 

Georgia; Honduras/Nicaragua; Benin/Cape Verde; 

Ghana/Mali; Madagascar/Vanuatu; and El Salvador. 

The purpose of these site visits is to provide fraud 

awareness training and establish liaison with local law 

enforcement and prosecutor’s offices. Establishing 

these relationships is critical to OIG efforts to 

combat potential fraud committed against MCC 

programs by creating awareness of and thereby 

reducing vulnerabilities in contracts and disbursements of funds. 

OIG will continue its proactive activities to identify 

vulnerabilities in multimillion-dollar and high-risk 

MCC programs involving U.S. contractors and 

grantees, which could lead to criminal, civil or 

administrative actions. 

OIG will make recommendations for systemic 

improvements if weaknesses are uncovered in MCC 

programs or operations, and will work with MCC to 

correct the problems. 

Audits of the Millennium Challenge Corporation’s Programs in Five Compact Countries: 

Cape Verde, Georgia, Ghana, Honduras, and 

Nicaragua 

Program Summary: 

Audits of the following five MCC programs will be 

conducted: 

• 	Cape Verde: On July 4, 2005, MCC signed a $110 

million, five-year Compact with the Government 

of Cape Verde that entered into force in October 2005.The program supports economic activity in agriculture and watershed management, 

infrastructure rehabilitation, and private sector 

led growth. 

• 	Georgia: On September 12, 2005, MCC signed 

a $295.3 million, five-year Compact with the 

Government of Georgia that entered into 

force on April 7, 2006.The program supports 

road rehabilitation, energy sector rehabilitation, 

agribusiness development, regional infrastructure 

improvements, and the regional development 

fund of Georgia. 

• 	Ghana: On August 1, 2006, MCC signed a $547 

million, five-year Compact with the Government 

of Ghana that entered into force on February 

16, 2007.The program supports development 

activities in agriculture, transportation, and rural 

service sectors that include education, water, 

sanitation, and electrical power projects. 

• 	Honduras: On June 13, 2005, MCC signed a $215 

million, five-year Compact with the Government 

of Honduras that entered into force on September 29, 2005.The program supports development activities in the transportation and rural 

development sectors. 

3

OIG for MCC Fiscal Year 2008 Annual Plan 


• 	Nicaragua: On July 14, 2005, MCC signed a $175 

million, five-year compact with the government 

of Nicaragua that entered into force on May 

26, 2006.The program supports transportation 

development projects, property regularization 

and rural business development. 

Audit Objectives: 

The audits will determine whether (1) MCC had 

reasonable assurance that the Compact recipients 

established proper milestones and targets for its 

MCC-funded programs; (2) Compact recipients are 

achieving performance milestones and targets; and 

(3) MCC is providing its stakeholders (i.e., the local 

government, the U.S. Congress, the farming industry 

and non-governmental organizations in the program 

zones, and other stakeholders identified during the 

audit) with complete and accurate information on the 

progress of the program’s results. 

Verifying management, monitoring, and evaluation 

will assist MCC’s efforts to assess performance. OIG 

will be able to identify weaknesses that may exist in 

the recipient data-gathering systems and in MCC’s 

data-verification processes.Assessing progress toward 

achieving intended outputs will identify potential 

problem areas while MCC can still help these 

Compact recipients shift resources to overcome 

them, enhancing the ultimate success of the program 

and contributing to the economy, efficiency, and 

effectiveness of MCC. 

Oversight of Contracted Financial Audits 

of the Millennium Challenge Corporation’s 

Program Implementing Entities – Fund 

Accountability Statement Audits and Covered 

Provider Audits 

Requirement: 

OIG conducts reviews of audits performed by third 

parties under the Contracted Audit Program. Under 

the terms of MCC’s Compact agreements during 

initial Compact implementation, semiannual audits are 

required of MCA Accountable Entities.These audits 

are required in accordance with U.S. Government 

Auditing Standards and MCA Accountable Entities will 

engage nonfederal auditors to perform these audits. 

OIG will perform approximately 8 quality control 

reviews of the supporting audit documentation at 

the field offices of the contract audit firms that 

performed selected financial audits. 

Reviews of financial audit reports will be performed 

in compliance with the OIG Guidelines for Financial 

Audits Contracted by MCA issued by OIG/MCC. 

Reviews of the reports that are submitted by the 

audit firms will be conducted on approximately 30 

Accountable Entities and 15 Covered Providers. 

Review Objective: 

The objective of the OIG review is to establish 

reasonable assurance that standards are met for the 

audit work including the independence of nonfederal 

auditors and whether nonfederal auditors accurately 

assessed expenditures, internal controls, and 

compliance with the agreement terms. 

Audit of the Millennium Challenge 

Corporation’s Monitoring of the Country’s 

Procurement Process 

Program Summary: 

Most of the projects implemented by MCC Compacts 

with 14 countries are performed by companies 

that either the MCA-country procures or MCC 

procures.To select companies, MCC must follow U.S. 

Government procurement laws and regulations, such 

as the Federal Acquisition Regulation. However, MCC 

requires compact countries to follow the World Bank 

Procurement Guidelines, which MCC has modifi ed to 

fit its organization.Although the World Bank procurement guidelines are the most widely used in overseas 

countries, not all countries have prior experience in 

using World Bank procurement procedures. 

The contracting/procurement area is highly susceptible to fraud, waste and abuse. MCC is still a relatively 

new organization, which has not fully tested its 

modified procurement guidelines and is implementing 

compact programs in countries with varying degrees 

of accountability standards.Therefore, it is extremely 

important that MCC’s monitoring process is effective 

in verifying that its compact countries are complying 

with MCC’s procurement requirements. 

OIG will conduct audits of the procurement process 

used by selected Compact Recipients to include: 

4

OIG for MCC Fiscal Year 2008 Annual Plan 


• 	Armenia. On March 27, 2006, MCC signed a 

$235.7 million compact with the Government of 

Armenia that entered into force on September 29, 

2006.The program supports rural road rehabilitation, infrastructure development and irrigation 

improvements. 

• 	Benin: On February 22, 2006, MCC signed a $307.3 

million compact with the Government of Benin 

that entered into force on October 6, 2006.The 

program supports land tenure activities, judicial 

reform, financial services improvements and port 

infrastructure development projects. 

• 	Vanuatu: On March 2, 2006, MCC signed a $65.7 

million compact with the Government of Vanuatu that entered into force on April 28, 2006.The 

program supports transportation infrastructure 

development activities and institutional strengthening of Vanuatu’s Public Works Department. 

Audit Objective: 

OIG will audit this activity to evaluate MCC’s 

monitoring process and, as appropriate, make 

recommendations to MCC to correct any noted 

contracting/procurement monitoring problems with 

the objective of making sure that MCC is effectively 

monitoring its MCA countries’ adherence to MCC’s 

procurement requirements. The audit will address 

MCC’s monitoring of the MCA Entity procurement 

procedures to establish reasonable assurance of 

compliance. 

5


OIG for MCC Fiscal Year 2008 Annual Plan 


Strategic Goal 2: 

Increase effectiveness of MCC programs in addressing strategic goals 

and priorities 

Audit of the Millennium Challenge Corporation’s Management of the Threshold Program 

Program Summary: 

MCC’s Threshold Program is directed toward 

selected countries that have not yet qualifi ed 

for compact assistance but have demonstrated a 

significant commitment to meeting the eligibility 

criteria.Application to the program is via a concept 

paper that explains how a country intends to address 

identified weaknesses. If MCC approves the concept 

paper, it will request a Threshold Country Plan. 

The Threshold Country Plan establishes a program 

schedule, the means to measure progress, financing 

require-ments, and other related considerations.The 

Millennium Challenge Act of 2003 requires MCC to 

(1) coordinate with USAID and (2) permits assistance 

to candidate countries be provided through USAID. 

MCC has agreements with USAID to implement the 

Threshold Program.While USAID and MCC jointly 

manage the Threshold funding program, USAID is the 

primary agency overseeing its implementation. 

From FY 2004 through FY 2006, MCC selected 18 

countries that would qualify for assistance under the 

Threshold Program. Including the 7 percent administrative fee charged by USAID, MCC has approved 

$39 million in FY 2004, $120 million for FY 2005, and 

$160 million in FY 2006 in support of this program. 

Audit Objective: 

The objective of the audit is to determine whether: 

(1) MCC managed its Threshold Program Agreements 

to verify that intended results were achieved, and (2) 

Threshold Program reports provide stakeholders with 

complete and accurate information on the progress of 

the program and the results achieved. 

The audit will review MCC’s policies and procedures 

for implementing the Threshold Program, including 

assessing how MCC monitors and manages USAID’s

4 

efforts to select implementing partners, monitor 

outputs, and adjust performance.Auditors will test 

whether anticipated progress towards those intended 

results is being achieved, and for completed projects, 

whether intended results were achieved. 

Evaluating the effectiveness of MCC’s coordination 

and management of USAID’s efforts is critical for 

certifying that funds shared between these two 

organizations are properly managed by MCC at a time 

when the relationship and essential internal controls 

may not be well defined. 

Audit of the Millennium Challenge Corporation’s Use of Purchase Cards 

Program Summary: 

Purchase cards are credit cards used by the U.S. 

Government to buy goods and services. However, 

given the nature and increasing use of purchase cards, 

it is important for agencies to have adequate internal 

controls in place to help prevent improper use of 

purchase cards. 

OIG will review MCC’s purchase card policies to 

make sure they comply with government-wide 

standards.A sample of the purchase card transactions made during the previous 12 months will be 

reviewed to determine if the purchases were properly 

approved, ordered, received, and recorded. 

Audit Objective: 

The objective of the audit is to determine whether 

MCC established controls and properly managed the 

use of its purchase cards. 

It is important to verify that MCC has established 

adequate internal controls to help prevent improper 

use of purchase cards and thus to protect the 

Government from waste, fraud, and abuse. 

4.	 In addition to USAID, the audit may also look at other U.S. agencies, such as the Department of Justice, that could be selected by MCC to help implement a program. 

7 

OIG for MCC Fiscal Year 2008 Annual Plan 


Strategic Goal 3: 

Help to ensure operational integrity in MCC management systems 

programs 

Integrity Enhancement 

OIG will continue to prioritize program integrity 

investigations involving high risk and major fraud in 

MCC programs and operations. Major fraud and high 

risk investigations are potential investigations involving 

large dollar losses by MCC. 

OIG will investigate allegations of employee 

misconduct received from MCC employees, contractors, grantees, the hotline, and other sources. 

OIG will refer investigative results to the Department 

of Justice and MCC for criminal, civil or administrative 

action. 

Audit of the Millennium Challenge Corporation’s Progress in Meeting the Requirements of 

the Government Performance and Results Act 

Program Summary: 

The Government Performance and Results Act of 

1993 (GPRA) established minimum standards for 

planning, budgeting, program evaluation, and fiscal 

accountability of federally funded programs.The intent 

of the act is to improve public confidence in Federal 

agencies’ performance by holding agencies accountable for achieving program results, and to improve 

congressional decisionmaking by clarifying and stating 

program performance goals, measures, and costs.As 

a Government corporation, MCC is considered a 

Federal agency under Section 105,Title 5 of the U.S. 

Code and is therefore obligated to meet the requirements of the GPRA as follows: 

Strategic Plans – MCC must develop a 5-year 

strategic plan with a comprehensive mission 

statement, a set of outcome-related strategic goals, 

and a description of how MCC intends to achieve 

those goals. 

Annual Performance Plans – MCC must have an 

annual performance plan covering each program 

activity set forth in its budget.The annual plan must 

be consistent with MCC’s strategic plan, establish 

quantifiable performance goals, define the level of 

performance to be achieved during the fiscal year, and 

describe the operational processes and resources 

required to meet the performance goals. 

Annual Performance Reports – By March 31 of 

each year, Federal agencies are required to issue to 

the President and the Congress a performance report 

for the previous fiscal year.This report assesses 

performance in relation to the goals established for 

that year, analyzes progress toward strategic goals, 

and explains deviations from the goals and how 

impediments will be overcome in the future. 

Audit Objective: 

The objective of this audit is to determine whether 

MCC complied with these requirements of the GPRA. 

The audit will bring to MCC’s attention, early in its 

developmental process, any deficiencies related to 

GPRA that could become challenges if not addressed. 

OIG adds value by providing an assessment of MCC’s 

efforts based on independence and experience. 

Audit of the Millennium Challenge Corporation’s FY 2007 Financial Statements 

Program Summary: 

In accordance with the Government Corporation 

Control Act, 31 U.S.C. Section 9101, MCC is required 

to have its consolidated financial statements audited 

by OIG or an independent external auditor. OIG will 

contract with an independent external auditor to 

audit MCC’s FY 2007 fi nancial statements. 

Audit Objective: 

The objective of the audit is to determine whether 

MCC’s principal financial statements present fairly in 

all material respects the financial condition of MCC 

and whether the financial statements conform to 

generally accepted accounting principles. 

The external auditors will perform tests of MCC’s 

internal controls structure and compliance with laws 

9

OIG for MCC Fiscal Year 2008 Annual Plan 


and regulations that could have a material effect on 

the principal financial statements. OIG will supervise 

the audit work, brief MCC on the audit findings, and 

provide recommendations to MCC for correcting 

identified weaknesses.The outcome will provide 

stakeholders with an evaluation of the integrity of the 

accounting systems used by MCC. 

Audit of the Millennium Challenge Corporation’s Compliance With the Provisions of the 

Federal Information Security Management Act 

for FY 2008 

Program Summary: 

The Federal Information Security Management Act 

of 2002 (FISMA), Public Law 107-347, requires each 

agency to develop, document, and implement an 

agencywide information security program. 

Audit Objective: 

The objective of the audit is to determine whether 

MCC’s information system security program meets 

FISMA requirements for program management and 

information security controls. 

The audit is designed to comply with the requirements of FISMA and to test areas of repeated 

weakness in MCC management of its information 

security.The audit will enhance the protection of 

data files, computer equipment, and resources from 

unauthorized activity. 

Audit of the Millennium Challenge Corporation’s Management of Interagency Agreements 

Program Summary: 

Interagency agreements (the transfer of funds for the 

performance of a special service) offer the benefits 

of improved efficiency and timeliness in the procurement process. MCC has entered into agreements 

to execute various program and administrative 

operations with the U.S.Army Corps of Engineers; the 

U.S.Agency for International Development; and the 

departments of the Treasury, Interior, and Agriculture. 

The use of these types of agreements can also pose 

risks. Ultimately, they create a more complex procurement environment requiring clearly documented 

accountability. 

Audit Objective: 

The objective of the audit is to determine whether 

MCC (1) established adequate management controls 

for deciding on the use of interagency agreements, 

and (2) properly monitored and managed interagency 

agreements to verify that the agreements achieved 

their intended results. 

The audit will determine if MCC established 

management controls on the use of interagency 

agreements and if it properly monitored and managed 

the agreements.The General Accountability Office 

(GAO) identified management of interagency 

agreements as a governmentwide high-risk area.5 

Because MCC is a relatively new agency, the risks are 

significant. Moreover, because of the limitations placed 

on MCC’s total staffing levels, MCC will likely remain 

heavily dependent on interagency agreements for 

the foreseeable future. Identifying potential areas of 

concern regarding MCC’s management of interagency 

agreements will help determine if such services are 

established and managed in an efficient and effective 

manner. 

Audit of the Millennium Challenge 

Corporation’s Internal Controls for Preventing 

Transactions With Individuals and Organizations Associated With Terrorism 

Program Summary: 

6

Executive Order 13224 sets forth procedures 

to disrupt the financial-support network used by 

terrorists and terrorist organizations. Order 13224 

created a list (periodically revised) that identifies 

individuals and entities associated with terrorists. 

The order gives the U.S. Government the authority 

to block the assets of foreign individuals and entities 

on that list that commit or pose a significant risk of 

committing acts of terrorism.The order also prohibits 

all transactions with and provision of support for 

these individuals and entities. 

5.	 GAO High-Risk Series, Update, January 2007, Report No. GAO-07-310, page 77. 

6.	 Executive Order 13224, Blocking Property and Prohibiting Transactions With Persons Who Commit,Threaten to Commit, or Support Terrorism, dated 

of September 23, 2001. 

10 
OIG for MCC Fiscal Year 2008 Annual Plan 


To date, the U.S. Government has not issued clarifications explaining how to comply with the rule, making 

it difficult to meet the terms of the Executive order 

with absolute certainty. However, in September 2006, 

the Treasury Department’s Office of Foreign Asset 

Control issued “Treasury Department Antiterrorist 

Financing Guidelines:Voluntary Best Practices for U.S.­

based Charities,” which serves as an industry standard 

for U.S. charities, many of which work in international 

development. 

Audit Objective: 

The objective of the audit is to determine whether 

MCC established adequate internal controls to 

prevent contracts from being awarded to individuals 

and entities that support terrorist activities. 

As MCC expands operations, particularly in countries 

such as Indonesia and Yemen, it increases the risks 

that Federal funds could be awarded to individuals or 

organizations connected with international terrorism. 

Some programs are implemented by nationals who 

are responsible for selecting and managing contractors who are unfamiliar with U.S. antiterrorism 

requirements. In these cases, MCC must be able to 

provide reasonable assurance that the procurement 

systems used to implement the compacts comply 

with Executive Order 13224. 

Two Follow-up Audits of Recommendations 

from Two Previous Audits 

Program Summary: 

OMB Circular A-50,“Audit Followup,” requires 

followup on past audit recommendations. OIG 

will perform two audits to assess whether MCC 

management’s responses to audit recommendations 

were effective in correcting identified problems. 

Audit Objective: 

The objective of the audit is to address whether 

management decisions for recommendations tested 

were implemented and are working to resolve the 

findings of the initial recommendations. 

The value of the audit function rests on the actions of 

management.The audits will determine whether MCC 

management has implemented corrective actions and 

whether the desired outcomes have been achieved. 

11


Appendix: OIG for MCC Audit Activities 


APPENDIX A:


OIG AUDIT ACTIVITIES


BY STRATEGIC GOAL


Appendix: OIG for MCC Audit Activities 


PLANNED OIG ACTIVITIES BY STRATEGIC GOAL 

October 1, 2007 – September 30, 2008 

Following is a table of planned OIG audit activities by strategic goal for MCC during fiscal year 2008. 

PROGRAM / AUDIT TITLE 

Strategic Goal 1: 

Reduce vulnerabilities in high-risk MCC programs 

Fraud Prevention and Awareness Outreach 

Audits of Millennium Challenge Corporation’s Programs in Five Compact Countries: Cape 

Verde, Georgia, Ghana, Honduras, and Nicaragua 

Oversight of Contracted Financial Audits of Millennium Challenge Corporation’s Program 

Implementing Entities—Fund Accountability Statement Audits and Covered Provider Audits 

Audit of Millennium Challenge Corporation’s Monitoring of the Country’s Procurement 

Process 

Strategic Goal 2: 

Increase effectiveness of MCC programs in addressing strategic goals and priorities 

Audit of Millennium Challenge Corporation’s Management of the Threshold Program 

Audit of Millennium Challenge Corporation’s Use of Purchase Cards 

Strategic Goal 3: 

Help to ensure operational integrity in MCC management systems programs 

Integrity Enhancement 

Audit of the Millennium Challenge Corporation’s Progress in Meeting the Requirements of 

the Government Performance and Results Act 

Audit of Millennium Challenge Corporation’s FY 2007 Financial Statements 

Audit of Millennium Challenge Corporation’s Compliance With the Provisions of the Federal 

Information Security Management Act for FY 2008 

Audit of Millennium Challenge Corporation’s Management of Its Interagency Agreements 

Audit of the Millennium Challenge Corporation’s Internal Controls for Preventing 

Transactions With Individuals and Organizations Associated With Terrorism 

Two Follow-up Audits of Recommendations From Two Previous Audits 

15


Appendix: OIG for MCC Audit Activities 


APPENDIX B:


OIG AUDIT ACTIVITIES


BY ORGANIZATION


17


Appendix: OIG for MCC Audit Activities 


PLANNED OIG ACTIVITIES BY ORGANIZATION 

October 1, 2007 – September 30, 2008 

Following is a table of planned OIG audit activities by organization for MCC during fiscal year 2008. 

ORGANIZATION PROGRAM / AUDIT TITLE 

MCC Fraud Awareness and Prevention Outreach 

Integrity Enhancement 

Accountability and 

Operations 

Audits of the Millennium Challenge Corporation’s Programs in Five Compact 

Countries: 

Cape Verde, Georgia, Ghana, Honduras, and Nicaragua 

Audit of the Millennium Challenge Corporation’s Monitoring of the 

Country’s Procurement Process 

Audit of the Millennium Challenge Corporation’s Internal Controls for 

Preventing Transactions With Individuals and Organizations Associated With 

Terrorism 

Follow-up of Two Audit Recommendation From a Previous Audit 

Administration and 

Finance 

Oversight of Contracted Financial Audits of the Millennium Challenge 

Corporation’s Program Implementing Entities—Fund Accountability 

Statement Audits and Covered Provider Audits 

Audit of the Millennium Challenge Corporation’s Management of Threshold 

Program 

Audit of the Millennium Challenge Corporation’s Use of Purchase Cards 

Audit of the Millennium Challenge Corporation’s Progress in Meeting the 

Requirements of the Government Performance and Results Act 

Audit of Millennium Challenge Corporation’s FY 2007 Financial Statements 

Audit of Millennium Challenge Corporation’s Compliance With the 

Provisions of the Federal Information Security Management Act for FY 2008 

Audit of the Millennium Challenge Corporation’s Management of Its 

Interagency Agreements 

Follow-up of Two Audit Recommendations From Two Previous Audits 

19


Inspector General 

HOTLINE 

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

waste, abuse, mismanagement, or misconduct in programs 

and operations of 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 OIG Annual Plan for MCC is available on the Internet at 


www.usaid.gov/oig/public/mcc/mcc_ann_report.htm