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. While PAHO, IICA, and PAIGH are independent organizations, the Charter of the Organization of American States directs them to take into account the recommendations of the OAS General Assembly and Councils. PAHO, a specialized international health agency for the Americas, works with member countries throughout the region to improve and protect people’s health and serves as the Regional Office for the Americas of the World Health Organization, the United Nations agency on health. IICA, among other things, supports its member states’ efforts to achieve agricultural development and rural well-being through consultation and the administration of agricultural projects through agreements with the OAS and other entities. PAIGH specializes in regional cartography, geography, history, and geophysics and has facilitated the settlement of regional border disputes. Member states collectively finance these organizations by providing assessed contributions in accordance with the organizations’ regulations. The member states’ assessed contributions are intended to finance the organizations’ regular budgets, which generally cover the organizations’ day-to-day operating expenses, such as facilities and salaries. The budgets are based on each organization’s total approved quota assessment and other projected income. Member states of each organization meet to review and approve the organizations’ budgets. The exact dollar amount each member state is responsible for providing corresponds to its assessed percentage of the total approved quota assessment for any given year. In October 2013, the United States enacted the Organization of American States Revitalization and Reform Act of 2013 (Reform Act). The Reform Act directed the Secretary of State to, among other things, submit “a multiyear strategy that…identifies a path toward the adoption of necessary reforms that would lead to an assessed fee structure in which no member state would pay more than 50 percent of the OAS’s assessed yearly fees.” According to the Reform Act, it is the sense of Congress that, among other things, it is in the interest of the United States, OAS member states, and a modernized OAS that the OAS move toward an assessed quota structure that (1) assures the financial sustainability of the organization and (2) establishes, by October 2018, that no member state pays more than 50 percent of the organization’s assessed fees. In June 2017, we reported that the United States’ assessed contributions constituted over 57 percent of total assessed contributions by member states to four inter-American organizations from 2014 through 2016 (see table 1). During this time, the annual U.S. percentages (or quotas) of these organizations’ assessed contributions have remained about the same. Therefore, the actual amounts assessed to the United States generally remained the same. All four organizations apply a similar assessed quota structure that uses the relative size of member states’ economies, among other things, to help determine each member state’s assessed contributions. The OAS determines the assessed quota for each member state based on the United Nations’ methodology, as adapted for the OAS, using criteria that include gross national income, debt burden, and per capita income. The other three organizations use OAS’s system for determining member states’ quotas to calculate their member states’ assessed contributions. Thus, any change in the OAS’s assessed quota structure should be reflected at PAHO, IICA, and PAIGH, according to their respective processes regarding the determination of assessed contributions. The U.S. share of assessed contributions may be reduced in the future. The Reform Act required State to submit a strategy identifying, among other things, a path toward the adoption of necessary reforms to the OAS’s assessed quota structure that would lead to a structure in which no member state would pay more than 50 percent of OAS assessed contributions. In response to that requirement, State told us that they submitted to Congress a strategy that included working with OAS member states toward ensuring that the OAS would not assess any single member state a quota of more than 50 percent of all OAS assessed contributions. State officials informed us that they worked with other OAS member states, including Canada and Mexico, to explore assessed quota reform options. For example, State officials consulted with their counterparts from Mexico to review the OAS’s assessed quota structure and to consult on alternatives that would adjust all member states’ quotas so that no member state’s quota exceeds 50 percent of the OAS’s assessed contributions. Subsequent to our June 2017 report, at the OAS General Assembly in June 2017, OAS member states voted to draft a proposal to modify the quota structure to potentially reduce the maximum assessed quota to below 50 percent. According to State officials, the modification to the quota structure, if approved, would be gradual and would not be implemented until 2019. State, HHS, USAID, and USDA fund activities at OAS, PAHO, and IICA in the form of assistance agreements. In our December 2017 report, we reviewed 12 such agreements across the four agencies and found that State and USDA did not include all key monitoring provisions in their agreements as called for by applicable guidance. State has taken corrective action since the grants were awarded. We also found that all four agencies did not have full documentation of 18 of the 42 monitoring activities required by the 12 assistance agreements we reviewed. State and HHS both initiated corrective action prior to our review of the grants. The United States provided voluntary contributions to OAS, PAHO, and IICA through project-specific assistance agreements, such as grants and cooperative agreements. 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. From calendar years 2014 through 2016, the United States provided voluntary contributions totaling about $105 million to the OAS, PAHO, and IICA, as shown in table 2. In 2016, for example, the United States contributed $32 million, or approximately 22 percent of the total of $143 million from all member states. According to U.S. officials, levels of U.S. voluntary contributions vary year-to-year due to factors that include the schedule of multiyear agreement disbursements, sudden crises, and member states’ priorities. For example, in 2016, USAID approved an assistance agreement for $2 million to OAS to support international observation of government elections in Haiti. In our review of 12 selected assistance agreements from State, HHS, USAID, and USDA (out of a total of 60 active agreements during calendar years 2014 through 2016), we found that none of the agencies had both consistently included all the key monitoring provisions for their agreements and fully documented the monitoring activities required by those provisions. For example, USDA did not have full documentation, such as financial reports, of any of its 10 required monitoring activities, and USAID did not have full documentation of 2 of its 11 required monitoring activities (financial and performance reports). U.S. agencies could have greater assurance that the organizations are using these funds as intended if they enhanced their monitoring of their assistance agreements. Each of the four agencies has established applicable guidance that calls for agencies to conduct monitoring activities as part of their oversight of their assistance agreements. The agencies implement their guidance by including key provisions to carry out required monitoring activities as part of their agreements. Federal standards for internal control call for agencies to include in agreements all key provisions delineating the parties’ responsibilities. For the 12 agreements we reviewed, the number of key monitoring provisions per agreement varied 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. For the 12 assistance agreements we reviewed, USDA and State did not include provisions implementing 6 of the 55 total (11 percent) monitoring activities required by applicable guidance (see table 3). For example, State did not include two of the key monitoring provisions (a risk assessment and a monitoring plan) in one of its agreements. State took corrective action in 2015 by issuing a standard operating procedure. The agencies specify the requirements to fulfill the key monitoring provisions in the individual assistance agreements, such as by requiring financial reports on a quarterly basis or including specific information in performance reports. Grants officers, 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. None of the four U.S. agencies had full documentation of all of the monitoring activities required by their agreements we reviewed (see table 4). 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. In our December 2017 report, 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, as shown in table 5. For example, four of the five goals in State and USAID’s Joint Strategy correspond with goals at the OAS, IICA, and PAIGH. According to officials, the agencies all consider U.S. strategic goals when deciding which projects to fund at OAS, PAHO, and IICA. U.S. agencies, on an ongoing basis, evaluate each inter-American organization to ensure U.S. and organization goals are aligned. For example, according to USAID officials, USAID’s assistance project design and approval policies and procedures ensure that all USAID-funded activities are linked to applicable U.S. and USAID strategies. In conclusion, 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 in their assistance agreements all the 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. In our December 2017 report, we recommended that (1) USDA ensure inclusion of all monitoring provisions as part of agreements and (2) USAID and USDA ensure full documentation of monitoring activities. The agencies concurred with these recommendations and indicated that they will take actions to address them. For example, USAID said it would issue an agency notice to remind all agreement officers to maintain complete files for each agreement. Chairman Cook, Ranking Member Sires, and Members of the Subcommittee, this concludes my prepared statement. I would be pleased to answer any questions that you may have at this time. If you or your staff have any questions about this testimony, please contact Thomas Melito, Director, International Affairs and Trade 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 statement. GAO staff who made key contributions to this testimony include Pierre Toureille (Assistant Director), Julia Jebo Grant (Analyst-in- Charge), Leslie Stubbs, Paul Sturm, Alana Miller, Shirley Min, Kira Self, and Rhonda Horried. In addition, David Dayton, Martin de Alteriis, Neil Doherty, Jeff Isaacs, and Alex Welsh provided technical assistance. This is a work of the U.S. government and is not subject to copyright protection in the United States. 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Summary: The United States belongs to several inter-American organizations, including the OAS, PAHO, IICA, and PAIGH, which promote democracy, security, health care, agricultural development, and scientific exchange in the Western Hemisphere. The United States helps finance these organizations' operating expenses through assessed contributions. The United States also provides voluntary contributions through the federal funding of assistance agreements to OAS, PAHO, and IICA. This testimony is based on GAO's June and December 2017 reports that, among other things, (1) determined the amounts and percentages of U.S. assessed contributions to the four organizations, (2) assessed the extent to which U.S. agencies included and documented key monitoring provisions as part of their assistance agreements, and (3) assessed the extent to which the organizations' strategic goals align with those of U.S. agencies. GAO analyzed documents and interviewed officials from State, HHS, USAID, USDA, and the four organizations. GAO analyzed the four organizations' audited financial reports and a nongeneralizable sample of 12 assistance agreements awarded by State, USAID, HHS, and USDA active in calendar years 2014 through 2016. While the United States' assessed contributions constituted over 57 percent of total assessed contributions by member states to four inter-American organizations from 2014 to 2016, the U.S. share may be reduced in the near future (see table). In response to a statutory requirement, the U.S. Department of State (State) said it submitted to Congress a strategy that included working with the Organization of American States (OAS) member states toward ensuring that the OAS would not assess any single member state a contribution amounting to more than 50 percent of all OAS assessed contributions. At the OAS General Assembly in June 2017, OAS member states voted to draft a proposal to modify its system for determining member states' assessed contributions to potentially reduce the maximum assessed contribution to below 50 percent. The other three organizations use OAS's system for setting assessed contributions. Hence, any change in contributions at OAS should also be reflected at Pan American Health Organization (PAHO), Inter-American Institute for Cooperation on Agriculture (IICA), and the Pan-American Institute of Geography and History (PAIGH). State, the Department of Health and Human Services (HHS), the U.S. Agency for International Development (USAID), and the U.S. Department of Agriculture (USDA) provide voluntary contributions to OAS, PAHO, and IICA in the form of assistance agreements (e.g., grants and cooperative agreements). In December 2017, GAO reported that its review of 12 such agreements across the four agencies found that State and USDA did not include all key monitoring provisions in their agreements as called for by applicable guidance. State has since taken corrective action. GAO also found that all four U.S. agencies did not have full documentation of 18 of the 42 monitoring activities required by the 12 assistance agreements GAO reviewed. For example, USDA did not have full documentation, such as financial reports, of any of its 10 required monitoring activities, and USAID did not have full documentation of 2 of its 11 required activities. State and HHS said they initiated corrective action before our review. If an agency does not have full documentation of monitoring activities, it may lack information needed to make appropriate budgetary and programmatic decisions. GAO found that the strategic goals of the OAS, PAHO, IICA, and PAIGH are predominantly aligned with the strategic goals of State, USAID, HHS, and USDA. According to agency officials, the agencies employ mechanisms to ensure that assistance agreements with these organizations align with U.S. goals. In its December 2017 report, GAO recommended 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.