Inter-American Organizations: U.S. Agencies Support Oversight Mechanisms but Could Enhance Their Monitoring of U.S. Assistance Agreements
Released: 2018-01-29T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: The United States is a member of the OAS, PAHO, IICA, and PAIGH, which promote democracy, health care, agricultural development, and scientific exchange.

GAO was asked to review U.S. assistance to these four organizations. In this report, GAO (1) assesses the extent to which the organizations' strategic goals align with those of U.S. agencies; (2) examines how the organizations oversee the use of their funds and the extent to which U.S. agencies have supported those efforts; (3) assesses the extent to which U.S. agencies included key monitoring provisions as part of assistance agreements; and (4) assesses the extent to which U.S. agencies had documentation of monitoring activities, including those called for by these provisions. GAO analyzed documents and interviewed officials from State, USAID, HHS, USDA, and the organizations. GAO also analyzed a nongeneralizable sample of 12 of the 60 assistance agreements that were awarded by State, USAID, HHS, and USDA to OAS, PAHO, and IICA and were active during calendar years 2014 through 2016. For each agency, GAO selected three agreements with the lowest, median, and highest dollar value.

section_title: What GAO Found
paragraphs: GAO found that strategic goals of the Organization of American States (OAS), the Pan American Health Organization (PAHO), the Inter-American Institute for Cooperation on Agriculture (IICA), and the Pan-American Institute of Geography and History (PAIGH) are predominantly aligned with the strategic goals of the Department of State (State), the U.S. Agency for International Development (USAID), the Department of Health and Human Services (HHS), and the U.S. Department of Agriculture (USDA). For example, IICA's strategic goals of a productive agricultural sector, enhancing agricultural development, and food security are aligned with USDA's foreign assistance goals. State, USAID, HHS, and USDA fund activities in the form of assistance agreements (e.g., grants and cooperative agreements) with OAS, PAHO, and IICA, which in 2016 totaled $32 million. According to agency officials, the agencies employ mechanisms to ensure that these agreements align with U.S. strategic goals.

OAS, PAHO, IICA, and PAIGH have established mechanisms for overseeing their use of funds, such as external auditors, internal audit boards, and anti-fraud and ethics policies. State and USDA have directly supported these mechanisms. For example, State engaged in the selection process for OAS's Inspector General.

GAO's review of 12 selected assistance agreements found that USDA included no financial or performance monitoring provisions in one of its agreements and that State did not include two key monitoring provisions in one of its agreements, called for by applicable guidance. GAO found that the remaining 10 agreements it reviewed contained all key monitoring provisions and that State has since taken corrective action.

GAO found that U.S. agencies did not have full documentation of 18 of the 42 monitoring activities required by the 12 assistance agreements GAO reviewed (see table). For example, USDA did not have full documentation, such as for financial reports, of any of its 10 required monitoring activities and USDA officials did not explain their lack of documentation. USAID officials explained that their lack of full documentation was due, in part, to grant officers not always following their document management policies. State and HHS have since taken corrective action. If an agency does not have full documentation of monitoring activities, it may lack information needed to make appropriate budgetary and programmatic decisions.

section_title: What GAO Recommends
paragraphs: GAO recommends that (1) USDA ensure inclusion of all monitoring provisions as part of agreements and (2) USAID and USDA ensure full documentation of monitoring activities. USDA and USAID concurred with GAO's recommendations.

section_title: Letter
paragraphs: The United States is a member of the Organization of American States  (OAS), the Pan American Health Organization (PAHO), the Inter- American Institute for Cooperation on Agriculture (IICA), and the Pan- American Institute of Geography and History (PAIGH). OAS, PAHO, IICA,  and PAIGH work to, among other things, promote democracy, security,  health care, agricultural development, and scientific exchange. The  United States engages with other countries in the region through its  membership in these inter-American organizations to promote U.S.  interests in the Western Hemisphere.

The Department of State (State) provides the United States’ assessed  contributions to these four organizations’ regular budgets. State, the U.S.  Agency for International Development (USAID), the Department of Health  and Human Services (HHS), and the U.S. Department of Agriculture  (USDA) also provide project-specific voluntary contributions to the OAS,  PAHO, and IICA through grants and cooperative agreements (referred to  hereafter as assistance agreements or simply agreements). For calendar  year 2016, the United States’ assessed contributions to these four  organizations totaled over $130 million, and voluntary contributions to the  OAS, PAHO, and IICA totaled $32 million. Together, the four  organizations oversaw over $358 million in total member-state  contributions for calendar year 2016.

We were requested to review several issues related to U.S. support for  these four inter-American organizations. In this report, we (1) assess the  extent to which the organizations’ strategic goals align with those of U.S.  agencies; (2) examine how the organizations oversee the use of their  funds and the extent to which U.S. agencies have supported those  efforts; (3) assess the extent to which U.S. agencies included key  monitoring provisions as part of their assistance agreements; and (4)  assess the extent to which U.S. agencies had documentation of  monitoring activities, including those called for by these provisions.

To address our first objective, we compared the strategic goals articulated  by the four organizations against the U.S. strategic goals for foreign  assistance in the region. We also reviewed relevant U.S. agency  documentation of efforts to ensure goal alignment. To address our  second objective, we reviewed the organizations’ internal control  documentation and interviewed officials from State, USAID, HHS, and  USDA and from the four organizations. To address the third and fourth  objectives, we identified 60 active assistance agreements that these  agencies awarded to OAS, PAHO, and IICA during calendar years 2014  through 2016 and selected a nongeneralizable sample of 12 agreements,  three each from HHS, State, USAID, and USDA. We selected the three  agreements from each agency based on the lowest, median, and highest  dollar value. For the third objective, we then assessed whether the  agencies’ agreements included key monitoring provisions implementing  applicable agency guidance. We identified key monitoring provisions for  agencies to include as part of their agreements as provisions which  ensure oversight over the use of funds, such as financial and progress  reports. For the fourth objective, we assessed the extent to which the  agencies had documentation of required monitoring activities. We  examined documentation of activities called for by assistance  agreements. We also interviewed officials from the four U.S. agencies.  See appendix I for details on our scope and methodology.

We conducted this performance audit from July 2016 to December 2017  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Inter-American Organizations
paragraphs: The U.S. government engages with the governments of other countries in  the Western Hemisphere through various inter-American organizations  including the OAS, PAHO, IICA, and PAIGH. According to State, the OAS  is the primary inter-American political forum through which the United  States engages with other countries in the Western Hemisphere to  promote democracy, human rights, security, and development. PAHO  serves as the Regional Office for the Americas of the World Health  Organization, the United Nations agency on health. IICA supports  agricultural development and rural well-being through technical  cooperation and the execution of agricultural projects throughout the  hemisphere. PAIGH specializes in regional cartography, geography,  history, and geophysics and has facilitated the settlement of regional  border disputes. According to U.S. agency officials, the organizations’  regional knowledge and technical expertise make them effective  implementing partners for projects serving U.S. national interests and  priorities throughout the hemisphere.

section_title: U.S. Contributions to Inter- American Organizations
paragraphs: Member states collectively finance these organizations by providing  assessed and voluntary contributions (see table 1).

For each organization, its member states’ assessed contributions are  intended to finance the organization’s regular budgets, which generally  cover the organization’s day-to-day operating expenses, such as facilities  and salaries. Member states also finance certain OAS, PAHO, and IICA  activities and projects through voluntary contributions. According to U.S.  officials, the United States provides voluntary contributions to the OAS,  PAHO, and IICA primarily through assistance agreements for specific  projects from State, USAID, HHS, and USDA.

section_title: Organizations’ Oversight of Their Funds
paragraphs: The Institute of Internal Auditors (IIA) provides the framework for  international organizations to oversee funds such as the assessed  contributions provided by member states to OAS, PAHO, IICA, and  PAIGH. The institute’s authoritative guidance, International Standards for  the Professional Practice of Internal Auditing, includes mandatory  performance standards that describe the nature of internal audit activities  and provide criteria for evaluating these activities. Organizations are  required to subscribe to these IIA standards, according to PAIGH officials  and OAS, PAHO, and IICA documents.

section_title: U.S. Agencies Oversee the Execution of Their Assistance Agreements
paragraphs: Assistance agreements are a critical tool the U.S. government uses to  achieve important national objectives. As we have previously reported,  effective oversight and internal control are important to provide  reasonable assurance to federal managers and taxpayers that assistance  agreements are awarded properly, recipients are eligible, and federal  funds are used as intended and in accordance with applicable laws and  regulations. State, USAID, HHS, and USDA oversee funds provided to  OAS, PAHO, and IICA through assistance agreements using monitoring  activities such as financial and performance reports. Within each of these  agencies, various bureaus and offices are responsible for awarding and  managing assistance agreements to these inter-American organizations,  including State’s Office of Weapons Removal and Abatement in the  Bureau of Political-Military Affairs, USAID’s Office of U.S. Foreign  Disaster Assistance, HHS’s Centers for Disease Control and Prevention  and its Food and Drug Administration, and USDA’s Animal and Plant  Health Inspection Service. The documentation of these monitoring  activities as called for by federal standards for internal control enables the  agencies to determine the effectiveness of the agreement activity.

section_title: The Strategic Goals of the Four Inter- American Organizations Are Predominantly Aligned with U.S. Agencies’ Strategic Goals
paragraphs: We found that the strategic goals of the four inter-American organizations  are predominantly aligned with the high-level strategic goals for the  Western Hemisphere documented by State, USAID, HHS, and USDA.  According to officials, the agencies all consider U.S. strategic goals when  deciding which projects to fund at OAS, PAHO, and IICA. State, USAID,  HHS, and USDA have goals for foreign assistance to the Western  Hemisphere, as shown in table 2. For example, four of the five goals in  State and USAID’s Joint Strategy correspond with goals at the OAS, IICA,  and PAIGH. U.S. agencies, on an ongoing basis, evaluate each inter- American organization to ensure U.S. and organization goals are aligned.

Officials from all four agencies provided examples of how they help to  ensure alignment of U.S. strategic goals when funding projects at OAS,  PAHO, and IICA.

State: According to State officials, State created an Annual Performance and Budget Review process in 2014 specifically to review entities, such as the OAS, that receive voluntary contributions funded through the International Organization and Programs account.  This process examines performance of State-funded activities relative  to those activities from the previous year and the extent to which the  activities advance U.S. priorities and objectives. State officials further  noted that the Annual Performance and Budget Review helps inform  State’s decision-making on what to include in the following year’s  budget request. For example, during the 2016 review for the OAS  Development Assistance Program, State reported the program’s  significant activities, funds expended, and achievements such as  training government officials on successful small business policies in  the United States.

USAID: According to USAID officials, USAID’s project design and  approval policies and procedures ensure that all USAID-funded  activities are linked to applicable U.S. and USAID strategies. USAID’s  agency guidance requires, at a minimum, that each project or activity  must be formally approved in writing by the relevant Mission Director  or Principal Officer for a given program. Officials stated that this  approval memo and supporting documentation address a number of  planning considerations, including how the proposed activity aligns  with broader strategies. Furthermore, officials stated that USAID’s  lawyers review project approval documentation prior to final approval  and verify that the activity complies with all applicable statutes,  regulations, and policies.

HHS: According to HHS officials, HHS engages with PAHO on its  Biennial Work Plans, which are operational planning instruments that  PAHO uses to identify activities that it can implement within each of its  member states. HHS officials noted that they use PAHO’s Biennial  Work Plan to strengthen U.S. approaches on issues of common  concern and to advance U.S. priorities within the region. According to  HHS officials, proposals for technical cooperation projects are  required to correspond to one of the technical priorities in PAHO’s  strategic plan for 2014–2019 and to be aligned with the HHS global  strategy and U.S. priorities.

USDA: USDA officials said that they compare the U.S. strategic goals  with IICA’s goals and objectives when they formulate project  proposals with IICA to ensure that the projects are aligned with U.S.  priorities for the region. Additionally, USDA officials told us that USDA  helped shape and influence IICA’s recent 10-year strategic plan,  ensuring that IICA’s strategic objectives were closely aligned with U.S.  strategic goals.

section_title: OAS, PAHO, IICA, and PAIGH Have Established Oversight Mechanisms
paragraphs: OAS, PAHO, IICA, and PAIGH have established mechanisms for  overseeing their use of assessed and voluntary contributions, such as  external auditors and internal audit boards as required by IIA standards.  State and USDA have directly supported these oversight mechanisms.
subsections: section_title: The Four Organizations Have Oversight Mechanisms as Required by the IIA
paragraphs: OAS, PAHO, IICA, and PAIGH have oversight mechanisms, as shown in  table 3. The four organizations follow the internal control standards of the  IIA, codified in the International Standards for the Professional Practice of  Internal Auditing, according to PAIGH officials and OAS, PAHO, and IICA  documents. All four organizations have internal and external auditors, as  required by these standards. Furthermore, OAS, PAHO, and IICA have  additional oversight mechanisms, such as anti-fraud policies and program  evaluation processes. The officials we interviewed from State, USAID,  HHS, and USDA expressed confidence in the four organizations’  management of their assessed and voluntary contributions.

All four organizations document the status of their financial and internal  control activities in audit reports posted on their public websites. For  example, the OAS Office of the Inspector General’s April 2017 Annual  Report included an update on its five ongoing audits and investigations.  The report also outlined progress made against prior recommendations.

section_title: U.S. Agencies Support Oversight Mechanisms at OAS, PAHO, and IICA
paragraphs: U.S. agency officials support budget and administrative subcommittees in  three of the four organizations and promote the participation of U.S.  experts on independent audit committees, as shown in table 4. For  example, according to officials, State plays a significant role in promoting  policies on oversight and accountability at the four organizations through  formal engagement in deliberations and decision-making of each  organization’s governing body and through informal engagement with  other member states and the secretariat by recommending best practices  in governance, management, and oversight. State and USDA are also  directly involved in implementing some of the additional oversight  mechanisms at the organizations. For example, a USDA official serves as  a member of IICA’s Audit Review Committee. Additionally, an IICA official  told us the United States was involved in defining IICA’s Convention and  Rules of Procedure for its governing bodies, which established the  requirement for internal and external auditing.

According to State officials, the United States led efforts to strengthen  oversight at several of the organizations under review in recent years,  such as advocating for the creation of an ethics officer position at PAHO,  proposing language to strengthen the authority and independence of the  OAS’s Office of the Inspector General, and encouraging the creation of  audit committees at both organizations. In addition, State has played a  lead role in supporting the ongoing reform of the OAS administration,  which includes improved oversight and accountability, according to  officials from the OAS and the U.S. Mission to the OAS.

section_title: Two of Four U.S. Agencies Did Not Include All Key Monitoring Provisions in the Agreements We Reviewed
paragraphs: We reviewed 12 selected assistance agreements that the four U.S.  agencies awarded to OAS, PAHO, and IICA that were active during  calendar years 2014 through 2016, and found that two agencies did not  consistently include all key monitoring provisions in their agreements.  While HHS and USAID implemented applicable guidance by including all  key monitoring provisions in their agreements, USDA and State did not  do so. USDA and State agency officials did not explain why USDA and  State did not include these monitoring provisions in their agreements.  However, State has since taken corrective action to ensure that they are  included in future agreements, according to State officials.
subsections: section_title: Agency Guidance Calls for Agencies to Conduct Monitoring Activities; Internal Control Standards State That Agencies Should Document These Requirements with Provisions in the Agreements
paragraphs: Applicable agency guidance calls for agencies to conduct monitoring  activities as part of their oversight of their agreements. Each of the four  agencies has established agency-specific guidance that outlines the  monitoring activities for assistance agreements. In some cases, the  agency-specific guidance may mandate additional monitoring activities  beyond those called for in applicable federal regulations, such as risk  assessments. For example, State’s guidance calls for the creation of a  monitoring plan. Federal standards for internal control require that  agencies include in agreements all key provisions delineating the parties’  responsibilities. For the 12 agreements we reviewed, the number of total  key monitoring provisions per agreement varied—including within one  agency—depending on when the agency issued and updated its  guidance relative to when the agreements were approved.

Federal standards for internal control call for agencies to document  internal controls, transactions, and significant events. Specifically,  internal control standards state that agency management should include  internal control activities (e.g., monitoring activities) in policies or  directives for transactions such as assistance agreements.

section_title: HHS and USAID Included All Key Monitoring Provisions in Their Assistance Agreements, but USDA and State Did Not
paragraphs: For the 12 assistance agreements we reviewed, USDA and State did not  include provisions implementing 6 of the 55 total (11 percent) applicable  monitoring activities required by applicable guidance to carry out required  monitoring activities (see table 5). State took corrective action in 2015 by  issuing a standard operating procedure.

USDA: USDA did not include 4 of the 13 key monitoring provisions  implementing the applicable guidance for the three USDA agreements  we reviewed (see table 6). Two of the agreements and supporting  documentation each included all four key applicable monitoring  provisions. However, Agreement 2 in the table did not include 4 of the  5 monitoring provisions in the agreement or work plan, which  documents the monitoring provisions. The agreement partially  included performance goals, because it included objectives for the  agreement’s activities, but did not include time frames to complete all  of the activities. The USDA grant official did not explain why the work  plan did not adhere to applicable federal regulations when it was  drafted and approved.

State: State did not include 2 of the 21 key monitoring provisions  implementing the applicable guidance for the three State agreements  we reviewed (see table 7). Two of the agreements and supporting  documentation we reviewed included the 7 monitoring provisions  implementing the requirements in the applicable agency guidance.  However, one agreement awarded in 2012 did not include 2 of the  provisions: a risk assessment and a monitoring plan. That office that  awarded this agreement took corrective action in 2015 by issuing a  standard operating procedure requiring that risk assessments and  monitoring plans accompany its grants and cooperative agreements.

USAID: USAID included both key monitoring provisions implementing  the applicable guidance for the three USAID agreements we reviewed  (see table 8). USAID’s Automated Directives System 308, Standard  Provisions for Cost-Type Awards to Public International Organizations  contains two key monitoring provisions for agreements. USAID  incorporated the monitoring provisions nearly verbatim into the  agreements we reviewed, using templates from this guidance for  required terms and conditions.

HHS: HHS included the 15 monitoring provisions implementing the  applicable guidance for the three HHS agreements we reviewed (see  table 9).

section_title: None of the U.S. Agencies Had Full Documentation of Monitoring Activities Called for by All of Their Assistance Agreements That We Reviewed
paragraphs: None of the agencies provided us with full documentation to demonstrate  their adherence to the required monitoring activities called for in all of  their agreements that we reviewed, including the previously mentioned  key monitoring provisions that we reviewed. State and HHS have taken  corrective actions to address the gaps we found in documentation for the  agreements we reviewed. Agency officials told us that they use these  monitoring documents, such as financial and progress reports, to inform  future budgetary and programmatic decisions. Therefore, they may lack  information needed to make such decisions if they do not have access to  complete monitoring documentation.
subsections: section_title: Assistance Agreements Include Requirements for Monitoring Activities; Internal Control Standards Say Agencies Should Document These Activities
paragraphs: According to federal standards for internal control, each agency is to  include key monitoring provisions as part of its agreements. In the  individual assistance agreements, the agencies specify the requirements  to fulfill these activities, such as requiring financial reports on a quarterly  basis or including specific information in performance reports. Grants  officers at times, if they deem it necessary or appropriate, include  additional monitoring provisions requiring activities beyond those required  by the applicable guidance, such as site visits.

Federal standards for internal control call for agency management to  design monitoring activities, such as financial and performance reporting,  so that all transactions are completely and accurately recorded.

Recording these activities maintains their relevance and value to  management in controlling operations and making decisions. Without  access to complete monitoring documentation, the agencies risk  weakening the effectiveness of these controls.

section_title: U.S. Agencies Did Not Have Full Documentation of Monitoring Activities for Most of the Agreements We Reviewed
paragraphs: None of the four U.S. agencies had full documentation of all of the  monitoring activities required by their agreements we reviewed (see table  10). The agencies did not have full documentation of monitoring activities  for 9 of the 12 agreements we reviewed. For the 42 monitoring activities  identified across all of the individual agreements, the four agencies did  not have full documentation of 18 of the activities (43 percent). However,  State took corrective action in May 2017 to address its gaps in  documentation, and according to HHS officials, the Food and Drug  Administration addressed its gap in documentation by implementing its  agreement monitoring program in fiscal year 2018.

USDA did not have full documentation of any of the 10 monitoring  activities we identified (see table 11). USDA demonstrated that it had  partially documented 2 of the 10 monitoring activities (20 percent) by  providing us with some, but not all, quarterly performance reports. For  one of the agreements, USDA had no documentation of the monitoring  activities for that agreement. For its other two agreements, USDA did not  have full documentation of the required monitoring activities. USDA  officials did not explain why they did not have full documentation. Without  full documentation of the required monitoring activities, USDA may not  have the information it needs to make appropriate budgetary and  programmatic decisions.

USAID did not have full documentation of 2 of the 11 total monitoring  activities (18 percent) we identified across the three agreements we  reviewed (see table 12). USAID had partial documentation of those 2  monitoring activities. For example, USAID provided us with some, but not  all, records such as financial reports required by the terms of the  monitoring activities in the agreements.

According to USAID officials, the agencies’ lack of complete monitoring  documentation was in part due to agency officials not following some of  their agency’s requirements for managing agreement documents, such as  placing all documents in a shared document management system. For  example, for one of the agreements we reviewed, USAID officials stated  that they stored some agreement documentation electronically—such as  modifications, correspondence with the agreement recipient, and  quarterly financial reports—but primarily maintained paper files.

USAID officials told us they use the monitoring documents of these  agreements, such as financial and progress reports, to inform future  budgetary and programmatic decisions. For example, according to USAID  officials, USAID uses monitoring documents to identify and address  potential project delays or other “red flags.” For one of the agreements we  reviewed, USAID officials stated these monitoring reports also assist  them in determining whether to award additional funds and establish new  indicators in subsequent agreements. Without full documentation of the  required monitoring activities, USAID may not have the information it  needs to make appropriate budgetary and programmatic decisions.
subsections: section_title: State
paragraphs: State did not have full documentation for 5 of the 16 monitoring activities  (31 percent) we identified across the three agreements we reviewed (see  table 13). However, State had partial documentation of 4 of those 5  monitoring activities. For example, State had some, but not all, records  such as standard reporting metrics, required by the terms of the  monitoring activities in one of the agreements. State did not have  documentation of one of the monitoring activities (site visits).

According to State officials, the agency’s lack of complete monitoring  documentation was in part due to agency officials not following some of  the agency’s requirements for managing agreement documents, such as  placing all documents in a shared document management system. For  example, according to State officials, for one of the agreements we  reviewed, the grants officer mistakenly had saved site visit reports and  similar documents to personal folders because the officer did not know  how to use State’s grant document storage system. As a result, neither  the current grants officer nor other State officials could retrieve these  documents.

In May 2017, after awarding the agreements we reviewed, State took  corrective action by issuing the Federal Assistance Directive to establish  internal guidance, policies, and procedures for all domestic and overseas  grant-making bureaus, offices, and posts within the department when  administering federal financial assistance. The directive notes that State  implemented a grant management system for domestic and overseas  grants to resolve its “significant deficiency in the management of Federal  financial assistance.” In addition, the directive indicates that officials from  State’s Bureau of Administration, Office of the Procurement Executive,  Federal Assistance Division will evaluate compliance with risk  assessment requirements and review documentation for selected  agreements each fiscal year. One of the stated purposes of these reviews  is to mitigate risk by strengthening management and oversight of awards,  including grants. According to a State Office of Inspector General report,  State should complete the full deployment of this system for overseas  grants in fiscal year 2019.

HHS did not have full documentation of 1 of the 5 applicable monitoring  activities (20 percent) we identified across the three agreements we  reviewed (see table 14). HHS had partial documentation of the  semiannual progress report activity for one of its agreements, required by  the terms of its agreement. HHS officials did not explain why they did not  have full documentation for this monitoring activity. HHS had full  documentation of all applicable monitoring activities for the other two  agreements we reviewed.

According to agency officials, the Food and Drug Administration, which  administered one of the HHS agreements we reviewed, has taken  corrective action to evaluate its agreement documentation and address  deficiencies. According to HHS officials, the Food and Drug  Administration developed a pilot program intended to provide an  additional layer of oversight to ensure adherence to the terms of each  agreement. Under the pilot, officials said, a grant monitoring specialist  reviews the agreement documentation and monitoring reports to identify  agreements that need additional assistance. According to HHS officials,  the Food and Drug Administration implemented this program in fiscal year  2018 and will eventually include all Food and Drug Administration  agreements.

section_title: Conclusions
paragraphs: U.S. assistance agreements for projects with inter-American  organizations further U.S. strategic goals in the Western Hemisphere, but  State, HHS, USAID, and USDA did not consistently include all key  monitoring provisions as part of their assistance agreements or  demonstrate that they had full documentation of monitoring activities for  the agreements we reviewed. Of these four agencies, USAID and USDA  have not taken corrective actions. Monitoring the implementation of U.S.  assistance agreements and fully documenting the results of such  monitoring are key management controls to help ensure that U.S.  agreement recipients use federal funds appropriately and effectively. The  agencies risk weakening the effectiveness of these controls by not  including all key monitoring provisions called for by applicable agency  guidance. Further, if the agencies do not have full documentation of the  agreements’ required monitoring activities, they may not be able to  effectively manage federally funded projects that support U.S. strategic  goals. In addition, agencies may not have all the information they need to  make budgetary and programmatic decisions.

section_title: Recommendations for Executive Action
paragraphs: We are making a total of three recommendations: one to USAID and two  to USDA.

The USAID Administrator should ensure that USAID officials have full  documentation of required monitoring activities in agreements with inter- American organizations. (Recommendation 1)

The Secretary of Agriculture should ensure that USDA includes all key  monitoring provisions specified by applicable guidance as part of  agreements with inter-American organizations. (Recommendation 2)

The Secretary of Agriculture should ensure that USDA officials have full  documentation of required monitoring activities in agreements with inter- American organizations. (Recommendation 3)

section_title: Agency Comments
paragraphs: We provided a draft of this report for comment to State, USAID, HHS, and  USDA. USDA concurred with our recommendations in an e-mail. In its  written comments, reproduced in appendix IV, USAID stated that it has  policies, procedures, and training in place for the officials who manage  these agreements. In response to our recommendations, USAID stated  that it will issue an agency notice to remind all such officials of these  responsibilities, including the requirement to maintain complete files for  each agreement.

State and HHS did not provide formal comments. They did provide  technical comments, which we incorporated as appropriate.

As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to the  appropriate congressional committees, the Secretary of State, the  Administrator of the U.S. Agency for International Development, the  Secretary of Health and Human Services, and the Secretary of  Agriculture. In addition, the report is available at no charge on the GAO  website at http://www.gao.gov.

If you or your staff have questions about this report, please contact me at  (202) 512-9601, or melitot@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made key contributions to this report are  listed in appendix V.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Congressional requesters asked us to review several issues related to the  Organization of American States (OAS), the Pan American Health  Organization (PAHO), the Inter-American Institute for Cooperation on  Agriculture (IICA), and the Pan-American Institute of Geography and  History (PAIGH). In this report, we (1) assess the extent to which the  organizations’ strategic goals align with those of U.S. agencies; (2)  examine how the organizations oversee the use of their funds and the  extent to which U.S. agencies have supported those efforts; (3) assess  the extent to which U.S. agencies included key monitoring provisions as  part of their assistance agreements; and (4) assess the extent to which  U.S. agencies had documentation of monitoring activities, including those  called for by these provisions.

To address the first objective, we gathered documentation and  interviewed officials from the four U.S. agencies and the four  organizations to determine the U.S. strategic goals for foreign assistance  to the Western Hemisphere and the goals of the four organizations.  According to Department of State (State) and U.S. Agency for  International Development (USAID) officials, the strategic document that  underpins their foreign assistance priorities for the region is The  Department of State’s Bureau of Western Hemisphere Affairs’ and  USAID’s Bureau for Latin American and Caribbean Affairs’ Joint Regional  Strategy. Department of Health and Human Services (HHS) officials said  that HHS’s relevant strategic document is The Global Strategy of the U.S.  Department of Health and Human Services. U.S. Department of  Agriculture’s (USDA) strategic goals for foreign assistance, according to  officials, are outlined in the United States Department of Agriculture  Strategic Plan FY2015–2018. The OAS outlined its strategic goals in the  Comprehensive Strategic Plan of the Organization, adopted on October  31, 2016. PAHO’s goals are laid out in Strategic Plan of the Pan  American Health Organization 2014–2019. IICA’s strategic document is  the IICA 2010–2020 Strategic Plan, which took effect in October 2010.  PAIGH’s strategic document is the Declaration and Guide for the Pan  American Agenda 2010-2020. We compared the strategic goals  articulated by the four organizations against U.S. strategic goals to  assess the extent to which the organizations’ goals contribute to U.S.  interests in the region. We then interviewed officials from the four  agencies and reviewed relevant documentation on efforts they undertake  to ensure that U.S.-funded activities align with U.S. strategic goals.

To address the second objective, we reviewed documentation of the  organizations’ internal control mechanisms and confirmed our findings  with the organizations. We identified mechanisms to include policies,  directives, rules, practices, and organizational structures that can have an  oversight role in the use of the organizations’ funds. We also interviewed  officials from State, USAID, HHS, and USDA to discuss their support of  these mechanisms.

To address the third objective, we identified 60 active assistance  agreements that these agencies oversaw with OAS, PAHO, and IICA  during calendar years 2014 through 2016 and selected a  nongeneralizable sample of 12 agreements, three each from State,  USAID, HHS, and USDA. To determine which agreements we would  review for each agency, we selected the three agreements with the  lowest, median, and highest dollar value. If any of an agency’s  agreements supported the same country or activity or were for one-time  projects such as seminars, we selected the next appropriate agreement  based on dollar value.

For these selected agreements, we then identified the applicable agency  guidance for monitoring activities in the agreements, which we define as  all documents related to each agreement provided to us by the agencies,  such as monitoring reports. The number of key monitoring provisions  varied—even within each agency—depending on when agency guidance  was issued and updated relative to when the agreements were approved.  USDA did not have applicable internal agency-specific guidance for  monitoring of assistance agreements at the time it awarded the  agreements we reviewed; thus, with USDA’s input, we used the  applicable sections of the Code of Federal Regulations, which together  have five key monitoring provisions for agreements. However, USDA  approved two of the agreements in 2012 and the third agreement in 2016,  and this third agreement was subject to an amended version of the Code  of Federal Regulations, which added an additional provision for  performance goals. State’s four applicable grants policy directives have seven key monitoring provisions for agreements that were applicable at  the time the agreements we reviewed were approved. USAID’s Standard  Provisions for Cost-Type Awards to Public International Organizations  (PIOs): A Mandatory Reference to ADS Chapter 308 has two key  monitoring provisions for agreements: audits and records, and the  organization’s adherence to their rules. HHS’s grants policy has five key  monitoring provisions for grant documentation.

We identified key monitoring provisions for agencies to include as part of  agreements to ensure oversight of the use of funds, such as financial and  progress reports. For the 12 agreements in our sample, we analyzed the  assistance agreements from the four agencies, and then determined the  extent to which the agencies’ agreements included key monitoring  provisions implementing monitoring activities called for by applicable  agency guidance. We did not include subsequent amendments to these  12 agreements in our review of key monitoring provisions. We interviewed  officials from State, USAID, HHS, and USDA (1) to confirm we were  applying the appropriate federal or agency guidance and (2) to discuss  instances in which the agreements did not include key monitoring  provisions.

To address the fourth objective, we reviewed the 12 selected assistance  agreements and guidance to identify specific required monitoring  activities, such as financial and program reports, site visits, and other  forms of oversight. The agreements specify the requirements for these  activities such as requiring financial reports on a quarterly basis. For  these 12 agreements, we reviewed all the documentation provided to us  by the agencies, then determined the extent to which the agencies had  full documentation of key monitoring activities as specified in the  assistance agreements, including those called for by key monitoring  provisions, as well as those called for by guidance when the monitoring  provisions were absent. We did not include subsequent amendments to  these 12 agreements in our review of monitoring activities. We  interviewed officials from State, USAID, HHS, and USDA to discuss  instances in which the agency did not have full documentation of key  monitoring activities. We also discussed how State, USAID, and HHS  agency officials manage their agreement documentation and use the  information in the agreements’ required monitoring documentation.

We conducted this performance audit from July 2016 to December 2017  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

section_title: Appendix II: Financial Oversight Mechanisms of Four Inter-American Organizations
paragraphs: The Organization of American States (OAS), Pan American Health  Organization (PAHO), the Inter-American Institute for Cooperation on  Agriculture (IICA), and the Pan-American Institute on Geography and  History (PAIGH) have established mechanisms for overseeing their use of  funds. Tables 15–18 show the mechanisms (oversight policies and  oversight committees and organizations) for each of these inter-American  organizations, as confirmed by the organizations’ officials.

section_title: Appendix III: Key Monitoring Provisions Implementing Federal Regulations or Agency Guidance
paragraphs: To oversee the execution of their agreements, the Department of State  (State), the U.S. Agency for International Development (USAID), the  Department of Health and Human Services (HHS), and U.S. Department  of Agriculture (USDA) are to conduct monitoring activities called for by  applicable federal regulations or agency guidance and document these  provisions in assistance agreements as called for by federal standards for  internal control. We identified key monitoring provisions implementing the  applicable agency guidance for State, USAID, HHS, and the applicable  regulations for USDA, as shown in table 19. For both the agency  guidance and the federal regulations, those listed are the ones that were  in effect when the agreements in our sample were approved. Some of the  agency guidance and regulations have since been amended or  superseded.

section_title: Appendix IV: Comments from the U.S. Agency for International Development

section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Pierre Toureille (Assistant  Director), Julia Jebo Grant (Analyst-in-Charge), Leslie Stubbs, and Paul  Sturm, Alana Miller, and Shirley Min made key contributions to this report.  In addition, David Dayton, Martin de Alteriis, Neil Doherty, Jeff Isaacs,  and Alex Welsh provided technical assistance.

Fast facts: The United States belongs to several organizations that promote health care, democracy, and other causes in the Americas. For example, the Organization of American States is investigating actions of the Venezuelan government against its citizens, and the Pan American Health Organization is fighting malaria in Haiti and elsewhere. U.S. assessed and voluntary contributions to four of these organizations totaled over $160 million in 2016.

We found that agencies' agreements with the organizations further U.S. strategic goals. However, we made recommendations for agencies to improve their oversight of financial and performance monitoring.

Question-summary annotations: questions: question: What did GAO find regarding the alignment of strategic goals among agencies?
answer: GAO found that strategic goals of the Organization of American States (OAS), the Pan American Health Organization (PAHO), the Inter-American Institute for Cooperation on Agriculture (IICA), and the Pan-American Institute of Geography and History (PAIGH) are predominantly aligned with the strategic goals of the Department of State (State), the U.S. Agency for International Development (USAID), the Department of Health and Human Services (HHS), and the U.S. Department of Agriculture (USDA).
child_questions: question: How do the IICA and USDA demonstrate this?
answer: For example, IICA's strategic goals of a productive agricultural sector, enhancing agricultural development, and food security are aligned with USDA's foreign assistance goals.

question: How do such agencies cooperate with each other?
answer: State, USAID, HHS, and USDA fund activities in the form of assistance agreements (e.g., grants and cooperative agreements) with OAS, PAHO, and IICA, which in 2016 totaled $32 million.

question: How do agencies align with U.S. strategic goals?
answer: According to agency officials, the agencies employ mechanisms to ensure that these agreements align with U.S. strategic goals.

questions: question: What did GAO find?
answer: GAO found that U.S. agencies did not have full documentation of 18 of the 42 monitoring activities required by the 12 assistance agreements GAO reviewed (see table).
child_questions: question: How was this demonstrated by the USDA?
answer: For example, USDA did not have full documentation, such as for financial reports, of any of its 10 required monitoring activities and USDA officials did not explain their lack of documentation.

question: How was this justified by USAID?
answer: USAID officials explained that their lack of full documentation was due, in part, to grant officers not always following their document management policies.

question: How did State and HHS respond to this discovery?
answer: State and HHS have since taken corrective action.

question: How may lack of documentation negatively affect an agency's operations?
answer: If an agency does not have full documentation of monitoring activities, it may lack information needed to make appropriate budgetary and programmatic decisions.