January 2001 Major Managem

Challenges and 

Program Risks

U.S. Agency for Interna

Development

GAO-01-256

Page 1 GAO-01-256 U

Letter 

Overview 

Major 

Performance 

and 

Accountability 

Challenges

Related GAO 

Products

Performance 

and 

Accountability 

Series
Page 2 GAO-01-256 USA
of th

Page 3 GAO-01-256 U

United States General Accounting Office

Washington, D.C. 20548

January 2001

The President of the Senate

The Speaker of the House of Representati

This report addresses the major performa

accountability challenges facing the U.S. A

International Development (USAID) as it 

support the people of developing and tran

countries in their efforts to achieve endur

and social progress and to participate mo

resolving the problems of their countries 

It includes a summary of actions that USA

and that are under way to address these c

also outlines further actions that GAO bel

needed. This analysis should help the new 

administration carry out their responsibil

improve government for the benefit of the 

people.

This report is part of a special series, first 

January 1999, entitled the Performance an

Accountability Series: Major Management 

and Program Risks. In that series, GAO ad

Congress that it planned to reassess the m

and criteria used to determine which fede

government operations and functions sho

highlighted and which should be designat

risk.” GAO completed the assessment, con

comments provided on a publicly availabl

draft, and published its guidance docume

Determining Performance and Accountab

Challenges and High Risks (GAO-01-159SP

November 2000.

The full 2001 Performance and Accountab

contains separate reports on 21 agencies—
Page 4 GAO-01-256 USA

each cabinet department, most major indepe

agencies, and the U.S. Postal Service. The se

includes a governmentwide perspective on p

and management challenges across the fede

government. As a companion volume to this 

is issuing an update on those government op

and programs that its work identified as “hig

because of either their greater vulnerabilitie

fraud, abuse, and mismanagement or major c

associated with their economy, efficiency, or 

effectiveness.

David M. Walker

Comptroller General 

of the United States
Page 5 GAO-01-256 U
Page 6 GAO-01-256 U

The U.S. Agency for International Develop

(USAID), which is an independent federal 

agency that receives overall foreign policy 

from the Secretary of State, implements U

economic and humanitarian assistance pr

recent years, USAID’s programs have been 

about $6 billion annually. The agency has 

about 125 countries promoting a wide ran

objectives related to economic growth an

development; population, health, and nutr

environment; democracy, governance, and 

law; education and training; and humanita

assistance. Its staff operates in often diffic

environments and under evolving program 

These present human capital managemen

performance measurement challenges tha

the efficiency and effectiveness of its prog

USAID’s ability to effectively carry out its 

assistance mission is directly affected by 

challenges. Since the early 1990s, we have 

USAID’s limited progress in addressing hu

• Human capital management issues impact 

strategic objectives

• Better performance data could help USAID 

programs and allocate resources

• Additional challenges to building a high-perf

organization
Page 7 GAO-01-256 U

reforms related to personnel administrati

management, training, and foreign service 

Moreover, severe budget cuts resulted in s

workforce reductions—29 percent from 1

More recently, USAID has reported that m

third of its foreign service staff is eligible 

that current attrition rates, if continued, c

agency’s ability to achieve its overseas mi

as 2002. 

Recognizing this problem, USAID has initi

of actions. The agency initially focused on 

number of its foreign service employees, e

recruitment program to replenish the serio

foreign service staff that it has experience

USAID also envisions that missions with c

management, accounting, and administrat

share those staff resources with neighbor

USAID is also studying ways to more effe

staff in response to emergency humanitar

and natural disasters—one of the agency’s 

strategic objectives. It is considering estab

“ready reserve” of employees and, possibl

with the administrative skills needed to ra

to natural disasters such as the hurricane

Central America and the Caribbean in 199

that USAID sustain its focus on these hum

issues if the agency is to effectively imple

U.S. foreign assistance programs. USAID’s 

capital problems can be seen as part of a 

pattern of human capital shortcomings tha

mission capabilities across the federal gov

our High-Risk Series: An Update (GAO-01

2001) for a discussion of human capital as 

designated governmentwide high-risk are

USAID is facing continuing difficulties in i

collecting data that would enable it to dev

performance measures and accurately rep

of its programs. This is especially true for 
Page 8 GAO-01-256 USA

governance, and rule of law programs becau

and social phenomena cannot be explained w

scientific precision. For example, in October 

reported that the United States provided ass

Haiti to improve its justice system generally 

establishing conditions such as specific goal

performance measures, and time frames; and 

recommended that future assistance be linke

performance-related conditions.1

 The urgent 

its humanitarian assistance programs and th

players involved in most emergency situation

complicate USAID’s attempts to establish ac

reliable performance data. 

USAID has taken some steps to correct the p

with the data it collects to measure its perfo

example, developing and disseminating lists 

indicators that can be used by field offices w

appropriate tools to measure performance. U

also working with the USAID Inspector Gene

assess its progress. While USAID has made a 

effort to develop improved performance mea

has not yet achieved the uniform, high-qualit

needed to permit cost-effective analysis of th

its programs.

In addition, USAID continues to face challen

implementing an integrated information man

system and improving its financial managem

that affect its ability to effectively manage it

as well as ensure that it has adequate interna

The agency has recognized that it needs to a

problems and has made some progress, but f

action is needed. For example, USAID needs 

implement a process for prioritizing informa

1

Foreign Assistance: Any Further Aid to Haitian Justice 

Be Linked to Performance-Related Conditions (GAO-01

2000).
Page 9 GAO-01-256 U

technology investments. Without such a p

is at risk of allocating resources for proje

represent the highest return on investmen

agency. USAID has also made progress to

correcting its long-standing internal contr

financial system deficiencies. Nevertheles

Inspector General was again unable to ex

opinion on the agency’s financial statemen

year 1999. Until USAID can fully resolve it

management problems, it will not be able 

provide agency managers with complete, 

timely financial information needed to ma

cost-effective decisions that promote effe

efficient use of federal funds. 
Page 10 GAO-01-256 U

y g

The U.S. Agency for International Develop

out U.S. foreign economic and humanitari

programs that in recent years have averag

$6 billion yearly. USAID operates in about 

with resident staff in 75 countries in 4 reg

world: sub-Saharan Africa, Asia and the N

America and the Caribbean, and Europe a

The agency supports strategic objectives 

economic growth and agricultural develop

population, health, and nutrition; the envi

democracy, governance, and the rule of la

and training; and humanitarian assistance

Human Capital 

Management 

Issues Impact 

USAID Strategic 

Objectives

Human capital management has been rais

in many major studies of the agency, inclu

report.1

 The report concluded that USAID

comprehensive workforce planning and m

capability was affecting its ability to deliv

efficiently at the mission level. USAID has 

acknowledged the problem but faces shift

as its program evolves and the size of its w

shrinks. The agency has taken improveme

particularly in its foreign service workfor

yet established and integrated a compreh

workforce planning and management syst

overall strategic objective framework. Hu

issues have also impacted USAID’s ability 

emergency humanitarian situations. In mo

USAID’s response to the Hurricane Mitch 

found that USAID had difficulty in fielding 

to plan and implement its assistance prog

The challenges the agency faces in attemp

establish an effective approach to human 

1

Foreign Assistance: AID Strategic Direction and Co

Management Improvements Needed (GAO/NSIAD-9

1993).
Page 11 GAO-01-256 U

management are reflected in the many ch

USAID has faced since it was established 

program emphasis has shifted from fundin

infrastructure projects to funding basic hu

projects addressing such areas as hunger, 

population pressures. As its program bega

the 1970s, USAID lost the contracting and 

capabilities of its infrastructure project m

recruited staff with technical skills in bas

needs activities. At about the same time, i

direct-hire workforce began to decrease s

Consequently, USAID had to refocus its U

service staff responsibilities from directly 

social sector projects to planning, financi

monitoring the projects implemented by h

contractors, and grantees. Further, as the n

direct-hire staff decreased, mission direct

increasingly reliant on other types of empl

foreign national direct-hire staff and perso

contractors, to manage mission projects b

implemented by third parties. 

Thus, by the 1990s USAID had come full c

returned to being a contract-management 

agency faced with the need to adapt its w

accordingly. Figure 1 shows that the numb

direct hire employees has decreased by ab

over the last 20 years. In addition, USAID 

noted that, similar to other government ag

number of USAID employees eligible to re

increasing.
Page 12 GAO-01-256 USA

Figure 1: USAID U.S. Direct Hire Staffing Since Fis

Source: U.S. Agency for International Development.

The USAID personnel system has long been c

complex, costly, and unsuited to accomplish

agency’s mission. For example, the 1993 Nat

Performance Review report2

 recommended t

overhaul its personnel system. In December 

2

From Red Tape to Results: Creating a Government Tha

and Costs Less (Washington, D.C.: National Performanc

Sept. 7, 1993).

0

 500

000

500

000

500

000

500

000

500

1980 1985 1990 1995 2000

Number of direct hire staff

Fiscal years
Page 13 GAO-01-256 U

USAID began developing a human resour

area analysis to identify reforms and outli

for implementing improvements. By Augu

USAID had identified several areas for ref

personnel administration, career managem

and foreign service assignment. However, 

September 1996 review of the status of US

reforms,3

 we found that the agency had m

progress. USAID officials said that their re

were delayed in fiscal year 1996 because i

office devoted much of its resources to im

the reduction-in-force and two furloughs. 

indicated that they planned to accelerate 

personnel reform in 1997. 

USAID’s current human capital reform eff

on recommendations the agency’s Workfo

Task Force made in a November 1997 rep

force stated that USAID needs to improve 

capital management if it is to meet its obj

maintaining its bilateral assistance leader

its comparative advantage of supporting a 

overseas presence. Its recommendations 

broad categories: (1) establish a workforc

process based on human capital priorities

the workforce between Washington, D.C., 

to reflect priorities; (3) make the workfor

flexible to allow greater movement betwe

and foreign services; and (4) maintain the 

staff through continuing professional dev

USAID focused initially on realigning its w

between Washington and the field. The ta

found that if the current foreign service at

3

Foreign Assistance: Status of USAID’s Reforms

(GAO/NSIAD-96-241BR, Sept. 24, 1996).

4

Workforce Planning Task Force: Report to the Stee

(Washington, D.C.: USAID, Nov. 26, 1997).
Page 14 GAO-01-256 USA

continued, USAID’s overseas presence woul

year 2002, be reduced to the point that it wo

the agency’s ability to achieve its mission. As 

figure 2, the percent of USAID’s foreign serv

eligible to retire will increase from about 34 p

year to almost 57 percent in fiscal year 2005. 

has since established a foreign service recru

that aims to recruit between 80 and 90 perso

year. Fiscal year 2001 will mark the third yea

USAID will hire staff under the plan. In addit

increasing its overseas staff, USAID is also e

greater sharing of staff among missions. 

While a mission needs people with a certain 

to operate effectively, where those skilled em

located is less important than having ready a

those skills when needed. For example, staff 

certain management, accounting, and admin

skills are to serve more than one mission und

plan. The task force envisioned that such “m

missions” would share staff resources with n

missions, both receiving assistance from and 

assistance to neighboring missions.
Page 15 GAO-01-256 U

Figure 2: Percent of USAID Staff Eligible to Retire as of September 30, 2000, and 

2005

Source: U.S. Agency for International Development

USAID is also studying ways to improve it

emergency humanitarian situations such a

large refugee flows that occurred in the B

the 1990s and natural disasters such as th

hurricanes in Central America and the Ca

example, we found that USAID faced dela

and fielding contract and other officers ne

implement the recovery program. 

Eligibility date

As of 9/30/00

As of 9/30/05

0 10 20 30 40 50 

Percent of staff eligible to retire

Total

Civil Service

Foreign Service
Page 16 GAO-01-256 USA

USAID’s Office of Foreign Disaster Assistanc

the first on the scene, as it was in the afterm

Hurricane Mitch in Honduras and Nicaragua 

1998. USAID assessed its immediate assistan

in a July 2000 report and is now also attempt

with human capital issues that have surfaced 

longer-term reconstruction assistance USAID 

providing to these countries. For example, s

missions had to increase staff to meet the de

large recovery program. In some cases, this 

setting up programs in sectors in which the m

no existing activities. The missions also had 

other U.S. agencies with little or no overseas 

establish their programs as well as put in pla

and accountability measures for the assistan

USAID has also had difficulty filling some of 

technical staff needs. For example, in our m

the recovery assistance effort in Nicaragua, w

that, while project implementation had begu

2000, as of November 2000, 4 of 29 positions 

support the recovery program had not been 

also found that both the Nicaragua and Hond

missions had difficulty carrying out their init

procurement activities because a single cont

had to cover both missions until a second co

officer, assigned to Honduras, arrived in Oct

more than a year after Hurricane Mitch hit H

These problems affected USAID’s effectiven

responding to one of the largest hurricanes e

Central America. This was evident in the del

experienced in awarding contracts to replac

and implement public works repair projects. 

pictures below show Hurricane Mitch, typica

caused by the hurricane, and a USAID housi

assistance project in Honduras.
Page 17 GAO-01-256 U

Figure 3: Hurricane Mitch Strikes Central America in Late October 1998 

Source: NASA.
Page 18 GAO-01-256 USA

Figure 4: Hurricane Mitch Property Damage in Central America

Source: U.N. Hurricane Mitch Center.
Page 19 GAO-01-256 U

Figure 5: USAID-Assisted Construction Project to Build Permanent Housing in R

Honduras

Source: GAO.

USAID officials acknowledge that the age

addressed the need for a “surge capacity” 

respond to emergency situations and to d

implement any new programs resulting fr

emergency assistance. However, USAID h

the need to have an effective means of rap

staff in post-disaster situations. One recom

USAID’s Workforce Planning Task Force m

USAID to establish a reserve capability fo

inherently governmental functions, such a

officer functions, during emergencies. Mo

the agency is considering the following st

mobilizing individuals currently working f

other U.S. government agencies.
Page 20 GAO-01-256 USA

• Identify the range of competencies likely 

required in responding to predictable pos

situations.

• Develop standard position descriptions/s

of work for quick reaction team members 

competencies and predictable post-disast

situations.

• Develop standard travel authorizations fo

reaction teams, including direct and nond

and foreign service nationals, and prepos

funds.

• Develop and maintain an inventory of ava

agencywide with the required competenc

• Develop and maintain an inventory of ext

expert resources, such as other U.S. gove

agencies, and negotiate advance understa

• Develop standard operating procedures t

call up and send staff to the field.

These steps would provide a base of experie

who could be moved quickly in response to e

or unexpected program changes. However, U

officials noted that, to implement the plan, th

may need to increase slightly its recruitment 

those skills that are most often required for e

responses, with particular emphasis on cont

officers.

In responding to emergencies, USAID recogn

need to have a database of potential human 

resources. USAID has had difficulty in estab

effective management information system (s

discussion), and the agency does not current

system capability. However, the Office of Hu

Resources has identified a software applicat

provide an integrated human resources syste

these needs and has purchased a subscriptio

software under an existing USAID contract w

General Services Administration.
Page 21 GAO-01-256 U

Better Performance 

Data Could Help 

USAID Assess 

Programs and 

Allocate Resources 

USAID faces challenges in developing reli

performance measures and accurately rep

results of its programs. Our work and that 

Inspector General has identified a numbe

with the annual results data that USAID’s o

have been reporting. Moreover, measuring 

performance of USAID activities such as d

governance (including rule of law program

humanitarian assistance programs is inhe

because of the problems in identifying app

assessment tools and the complexity of th

some instances, lack of reliable performan

limits USAID’s ability to use results data t

resources and to determine if its activities 

strategic goals. For example, in our Octob

on U.S. assistance to improve the Haitian j

we recommended that future assistance b

obtaining such data.5

 USAID has acknowl

problems and has undertaken a number o

address them. For example, the agency ha

series of long-term evaluations to examin

effectiveness of activities in achieving res

country settings and goal areas. 

The Government Performance and Result

(the Results Act) (P.L. 103-62) requires fed

to prepare performance plans that (1) est

performance indicators to be used in mea

assessing the relevant outputs and outcom

activity, (2) provide a basis for comparing 

program results with established perform

and (3) describe the means to be used to v

validate measured values. Our observatio

performance report for fiscal year 1999 an

5

Foreign Assistance: Any Further Aid to Haitian Just

Be Linked to Performance-Related Conditions (GAO

2000).
Page 22 GAO-01-256 USA

2001 performance plans cited problems with 

performance data. For example, in comment

USAID’s fiscal year 2000 performance plan, w

that the plan provided limited confidence tha

agency had the capacity to obtain credible, r

oriented, program performance information

reported that USAID needed continued data 

improvements to achieve a uniform, high-qu

database permitting cost-effective analysis o

overall development assistance program.6

 US

Inspector General has also questioned the re

accuracy, validity, and completeness of the r

the agency’s missions have reported annually

review of data prepared by 18 missions for 1

problems with the results reported for 83 pe

252, of the 302 indicators that the Inspector 

reviewed.7

 According to the report, 77 indica

not sufficiently supported. For example, at o

mission, an indicator was “the number of loc

government units having completed training 

However, the number of government units th

reported as having completed the training on

local communes and, according to USAID of

actually underestimated program success be

not reflect the other types of government un

country that should have been included in th

the project. 

According to the Inspector General, USAID’s 

problems existed because operating units did 

follow, or were not successful in following, p

USAID policies and procedures for measurin

6

Observations on the U.S. Agency for International Dev

Fiscal Year 2000 Performance Plan (GAO/NSIAD-99-188

1999).

7

Audit of the Quality of Results Reported in USAID Ope

Results Review and Resources Request Reports Prepar

(Report No 9-000-99-006-P, Mar. 5, 1999).
Page 23 GAO-01-256 U

reporting on program performance. The I

General also attributed many of the proble

the operating units to insufficient support, 

oversight by USAID/Washington bureaus t

operating units followed and effectively im

prescribed USAID policies and procedure

noted in our observations on USAID’s fisc

performance plan that because USAID is 

international organizations and thousands 

institutions for data, it does not have full c

how data are collected, reported, or verifi

many information sources have different 

periods, and the data are often not availab

more afterwards.

Without accurate and reliable performanc

has little empirically verifiable assurance 

programs achieve their program objective

targets. These problems also impair USAI

use performance information in making b

allocation decisions. For example, in Octo

reported that the United States provided a

Haiti to improve its justice system genera

specific conditions, such as specific goals

measures, and time frames.8

 We recomme

further U.S. assistance to the Haitian polic

sector should be tied to specific, performa

conditions.

Developing performance indicators and a

results is inherently difficult for some act

democracy and governance, and humanita

assistance programs, for example. In the p

did not spend much effort on assessing th

democracy programs. The purpose of the

8

Foreign Assistance: Any Further Aid to Haitian Just

be Linked to Performance-Related Conditions (GAO

2000).
Page 24 GAO-01-256 USA

to strengthen democratic practices and instit

reason for the lack of performance data on d

and governance programs was the difficulty 

identifying appropriate assessment criteria a

Also, according to USAID officials, USAID’s 

programs are sometimes developed as a dire

to foreign policy interests identified by the U

Department of State, with the mere presence 

assistance as the desired foreign policy outc

reporting was based on gathering two types o

on actual events in the countries where USA

assistance and generally anecdotal evidence 

the impact of individual program activities. T

necessary, though missing, element required 

the results of USAID’s democracy and gover

programs was data that provided direct linka

between USAID’s programs and the events w

countries assisted.

Obtaining agreement on the appropriate perf

indicators to use to assess the performance 

humanitarian assistance objectives is also a 

for USAID because of the complexity of the g

number of organizational units, agencies, an

implementing partners involved. For exampl

goal in providing humanitarian assistance is 

suffering associated with natural or man-ma

reduced, and conditions necessary for politic

economic development reestablished. One o

under this goal is to meet urgent needs in tim

Extensive consultation was required with a n

technical agencies, including the U.S. Center

Disease Control and Prevention, the World H

Organization, and individuals with emergenc

and nutrition expertise, before USAID adopte

mortality rate (calculation of death rates to d

sudden changes) and the prevalence of acut

malnutrition in children under 5 years of age 

experimental set of benchmarks against whi

monitor the performance of its objectives. H
Page 25 GAO-01-256 U

USAID noted that while the crude mortali

important indicator, there were questions 

methodology for collecting the informatio

crude mortality rate has been collected m

European nongovernmental organizations 

U.S. organizations undertaking USAID-fun

in humanitarian assistance.

Corrective Actions 

Underway

USAID has taken a number of steps to cor

problems with its reporting of performanc

some of these efforts are being assessed b

Inspector General. In June 2000, we repor

USAID had made progress in establishing 

oriented goals and developing indicators a

that help measure overall results.9

 Correc

included (1) developing and disseminatin

indicators that can be used by field offices 

appropriate tools to measure performanc

annual reporting guidance cables to opera

the types of data needed and the documen

required, (3) expanding the publication of 

supplementary guidance to missions on ho

be managed to maximize their quality and 

(4) holding training seminars on managing 

field officers. Also, in September 2000, US

automated directive system performance 

and reporting policies to incorporate wha

learned from the first several years of imp

the Results Act. Moreover, at USAID’s req

Inspector General is performing a series o

internal controls at various operating unit

credibility of the performance data that th

9

Observations on the U.S. Agency for International D

Fiscal Year 1999 Performance Report and Fiscal Yea

Performance Plans (GAO/NSIAD-00-195R, June 30, 2
Page 26 GAO-01-256 USA

USAID has also initiated a long-term effort to 

agencywide evaluations of selected program

its democracy and governance programs, to 

specific management questions about agenc

and operational performance. This effort inc

performing case studies to determine the im

democracy and governance programs on pol

change and making assessments of subsecto

rule of law programs, to determine what typ

programs stand the best chance of meeting t

objectives. 

USAID also reports that it has made conside

progress in assessing its humanitarian activit

adoption of crude mortality rates and the pre

malnutrition in children as indicators, accord

official of USAID’s Bureau for Humanitarian 

Assessments of humanitarian efforts at sever

are underway using these indicators, and a p

showed that the methodology for collecting t

feasible. However, USAID still faces the chal

ensuring that other agencies and implementi

adopt the use of the indicators across the bo

Additional 

Challenges to 

Building a 

High-performing 

Organization

USAID faces long-standing challenges in imp

an integrated information management syste

began developing an automated new manage

system in 1994. The system was designed to 

all of USAID’s accounting, budget, personne

procurement, and program operations into a 

integrated network with worldwide access. I

USAID deployed the system worldwide befo

fully operational or adequately tested. Subse

difficulties forced USAID to suspend its use 

system at its overseas missions. Since that ti

has undertaken a number of initiatives to co

deficiencies, including the acquisition of com

off-the-shelf software for some management 

requirements.
Page 27 GAO-01-256 U

USAID has made progress in addressing th

of the management information system, b

remain. For example, it has developed an 

information technology architecture10 tha

of the Office of Management and Budget’s 

requirements. However, USAID needs to c

develop and complete the target architect

sufficient level of detail that meets OMB’s 

Moreover, although USAID has developed 

list of financial management system inves

not devise its list in accordance with 1995 

guidance.11 In particular, USAID has not fo

guidelines because it has not fully implem

process for selecting information technol

investments. OMB’s guidelines require age

prioritize their planned investments by re

projects for relevance and feasibility; anal

benefits, and costs; prioritizing projects b

expected return on investment; and then 

the right mix of projects to fund. Without s

USAID is at risk of allocating resources fo

do not represent the highest return on inv

the agency. 

Key Contact

Jess T. Ford, Director

International Affairs and Trade

(202) 512-4128

fordj@gao.gov

10A “system architecture” is a blueprint or high-level 

how the systems will interact to accomplish agency 

requirements in a cost-effective manner. It focuses o

relationships among business functions, work proce

flows, and technology. It also describes standards to 

ensure that systems will interoperate, provide secur

implemented in a disciplined manner.

11Evaluating Information Technology Investments: A 

(Washington, D.C.: Office of Management and Budge
Page 28 GAO-01-256 USA

USAID has also had long-standing financial m

weaknesses, although recently it has made st

correcting deficiencies. Nevertheless, the Ins

General was again unable to express an opin

USAID’s financial statements for fiscal year 

because USAID’s financial management syst

not produce accurate, complete, reliable, tim

consistent financial statements and perform

information. USAID’s inadequate accounting 

makes it difficult for the agency to account a

for activity costs and measure its program re

The Inspector General has continued to repo

USAID’s financial management system does 

the federal financial systems requirements. C

USAID uses a variety of nonintegrated system

require data reentry, supplementary account

and lengthy and burdensome reconciliation p

To resolve this long-standing problem, at the 

fiscal year 1999 USAID entered into a contrac

the current financial management system. U

to complete the system replacement during f

year 2003.

The Inspector General also reported that wh

had made significant improvements in its pro

procedures, it still has several material weak

internal controls that impair the integrity of 

information. Specifically, the Inspector Gene

the following:

• USAID’s financial systems do not meet fe

financial system requirements, applicable 

accounting standards, and the standard g

ledger at the transaction level.

• Computer security deficiencies expose U

risk that resources and data will not be a

protected from loss, theft, alterations, or 
Page 29 GAO-01-256 U

• While USAID has made significant imp

its processes and procedures in place 

the Credit Receivables Program, probl

For example, USAID loan information 

a private bank had not been reconciled 

accounting systems; USAID had not pr

most updated information to the bank 

rescheduled loans; and USAID did not 

promptly resolve unapplied loan collec

borrower countries.

• USAID had not implemented adequate 

controls to permit accurate and reliabl

Fund Balance with Treasury accounts.

• USAID did not properly calculate and r

expenses and accounts payable.

• Advances to grantees were not proper

Effective financial systems and controls a

to ensure that USAID management has tim

reliable information to make effective, inf

decisions and that assets are safeguarded

made progress in correcting some of its sy

internal control deficiencies and is in the 

revising its plan to remedy financial mana

weaknesses as required by the Federal Fin

Management Improvement Act of 1996 (P.

obtain its goal, however, USAID needs to 

efforts to resolve its internal control weak

ensure that its replacement financial syste

compliance with federal financial system 

Key Contact

Gregory D. Kutz

Director, Financial Management and Assu

(202) 512-9095

Kutzg@gao.gov
Page 30 GAO-01-256 U

Foreign Assistance: Any Further Aid to Ha

System Should be Linked to Performance

Conditions (GAO-01-24, Oct. 17, 2000).

Observations on the U.S. Agency for Inter

Development's Fiscal Year 1999 Performa

and Fiscal Years 2000 and 2001 Performan

(GAO/NSIAD-00-195R, June 30, 2000).

Observations on the U.S. Agency for Inter

Development's Fiscal Year 2000 Performa

(GAO/NSIAD-99-188R, July 20, 1999).

Foreign Assistance: Rule of Law Funding 

Fiscal Years 1993-98 (GAO/NSIAD-99-158, 

1999).

Major Management Challenges and Progr

(GAO/OGC-99-16, Jan. 1999).

Foreign Assistance: Status of USAID's Ref

(GAO/NSIAD-96-241BR, Sept. 24, 1996).

Foreign Assistance: AID Strategic Directio

Continued Management Improvements Ne

(GAO/NSIAD-93-106, June 11, 1993).
Page 31 GAO-01-256 U

Major Management Challenges and Progr

Governmentwide Perspective (GAO-01-24

Major Management Challenges and Progr

Department of Agriculture (GAO-01-242)

Major Management Challenges and Progr

Department of Commerce (GAO-01-243)

Major Management Challenges and Progr

Department of Defense (GAO-01-244)

Major Management Challenges and Progr

Department of Education (GAO-01-245)

Major Management Challenges and Progr

Department of Energy (GAO-01-246)

Major Management Challenges and Progr

Department of Health and Human Service

(GAO-01-247)

Major Management Challenges and Progr

Department of Housing and Urban Develo

(GAO-01-248)

Major Management Challenges and Progr

Department of the Interior (GAO-01-249)

Major Management Challenges and Progr

Department of Justice (GAO-01-250)

Major Management Challenges and Progr

Department of Labor (GAO-01-251)

Major Management Challenges and Progr

Department of State (GAO-01-252)
Page 32 GAO-01-256 USA

Major Management Challenges and Program 

Department of Transportation (GAO-01-253)

Major Management Challenges and Program 

Department of the Treasury (GAO-01-254)

Major Management Challenges and Program 

Department of Veterans Affairs (GAO-01-255

Major Management Challenges and Program 

Agency for International Development (GAO

Major Management Challenges and Program 

Environmental Protection Agency (GAO-01-2

Major Management Challenges and Program 

National Aeronautics and Space Administrat

(GAO-01-258)

Major Management Challenges and Program 

Nuclear Regulatory Commission (GAO-01-25

Major Management Challenges and Program 

Small Business Administration (GAO-01-260

Major Management Challenges and Program 

Social Security Administration (GAO-01-261)

Major Management Challenges and Program 

U.S. Postal Service (GAO-01-262)

High-Risk Series: An Update (GAO-01-263)
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