USAID’s cash-based food assistance program started in 2008 under the management of its Office of Foreign Disaster Assistance. In June 2010, management of the program was transferred to FFP. In 2014, FFP provided funding for cash and voucher programs in 28 countries as shown on the map in figure 1. EFSP projects are implemented in some countries—for example, Somalia, Syria, and Yemen—with areas considered high risk based on security risk scores that the United Nations uses to assess the overall level of threat or danger. In fiscal years 2010 through 2014, USAID awarded EFSP grants totaling about $991 million for cash-based food assistance. The following observations are shown in figure 2: Obligations for cash-based EFSP projects grew from $75.8 million in fiscal year 2010 to $409.5 million in fiscal year 2014—an increase of 440 percent over the 5-year period, the majority of which was in response to a large and sustained humanitarian crisis in Syria. Of the $409.5 million awarded by EFSP in fiscal year 2014, $272.7 million (67 percent) was for the humanitarian crisis in Syria, including cash-based food assistance to Syrian refugees in the Syria region. WFP was the implementing partner for $331.6 million (81 percent) of total EFSP obligations in fiscal year 2014, while NGOs and others were implementing partners for the remaining $77.8 million (19 percent). Of the $991 million in total grant funding obligated in fiscal years 2010 to 2014, $330.6 million was for cash interventions and $660.3 million for voucher interventions. The majority of the funding—$621.7 million (or 63 percent)—was awarded to WFP, and $369.3 million (or 37 percent) was awarded to other implementing partners. Donors have recognized the potential benefits of cash-based assistance under certain conditions and have increased funding to support it. According to donor representatives, implementing partners, and academics, cash-based assistance can improve the food security of recipients in a more efficient manner than in-kind food aid. Targeted cash transfers or food vouchers can be distributed more quickly than food delivery, which requires procuring and shipping food commodities, a complex and lengthy process. The costs associated with cash-based assistance might also be less than the cost of shipping food commodities from the United States to recipient countries. Additionally, according to some donor representatives and implementing partners, cash-based assistance can have the benefit of providing recipients with flexibility and dignity to choose the type of food they want to eat (see fig. 3). Furthermore, by increasing demand for food commodities through cash or vouchers, cash-based assistance can stimulate the local economy and support local producers and merchants. WFP has seen its cash and voucher programs significantly increase from $139 million in 2010 to $1.37 billion in 2014—with the largest increases occurring between 2012 and 2014 owing primarily to the civil war in Syria. In 2014, funding for cash and voucher programs for the Syria regional emergency operation accounted for $836 million or about 61 percent of WFP’s overall funding for cash and voucher programs (see fig. 4). However, other cash and voucher programs, excluding those for Syria, also experienced substantial increases over the same years, from $139 million in 2010 to $531 million in 2014. To deliver cash-based food assistance, USAID’s implementing partners employ a variety of mechanisms ranging from direct distribution of cash in envelopes to the use of information technologies such as cell phones and smart cards to redeem electronic vouchers or access accounts established at banks or other financial institutions. These assistance delivery mechanisms can be grouped into four types—two cash transfer mechanisms that provide money to targeted households with no restrictions on how or where the money is to be used, and two voucher- based mechanisms that entitle the holder to buy goods or services up to the cash value written on the voucher, typically for the purchase of approved items from participating vendors (see fig. 5). The cash and voucher transfers can be either (1) conditional transfers, where certain requirements are imposed on beneficiaries such as their participation in community work programs or attending training or going to school; or (2) unconditional transfers, whereby no requirements on beneficiaries are made, and the assumption is that beneficiaries will use the cash or vouchers to obtain food based on a household assessment of food access and availability. The value of cash and voucher transfers is generally based on a formula that attempts to bridge the gap between people’s food needs and their capacity to cover them. Financial oversight in cash-based food assistance programs includes managing program funds to ensure they are spent in accordance with grant agreements by, among other things, assessing financial risks and implementing controls to mitigate those risks, including controls to prevent theft and diversion of cash, counterfeiting of vouchers, and losses. In recent years, for example, implementing partners have been increasingly piloting the use of technology that they deem to have the additional benefit of mitigating some potential risks by better tracking beneficiaries and their purchases (see fig. 6). Standards for Internal Control in the Federal Government provides the overall framework for establishing and maintaining internal control in federal programs. In addition, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) has issued an internal control framework that, according to COSO, has gained broad acceptance and is widely used around the world. Both frameworks include the five components of internal control: control environment, risk assessment, control activities, information and communication, and monitoring. Internal control generally serves as a first In line of defense in safeguarding assets, such as cash and vouchers.implementing internal control standards, management is responsible for developing the detailed policies, procedures, and practices to fit the entity’s operations and to ensure they are built into and are an integral part of operations. USAID has developed processes for awarding cash-based food assistance grants; however, it lacks formal internal guidance for its process to approve award modifications and provides no guidance for partners on responding to changing market conditions that might warrant an award modification. USAID awards new cash-based food assistance grants through either a competitive proposal review or an expedited noncompetitive process. We reviewed 22 proposals for new cash-based food assistance projects that were awarded and active as of June 1, 2014; we found that USAID made 13 of these awards through its competitive process, 7 through an abbreviated noncompetitive review, and 2 under authorities allowing an expedited emergency response. According to USAID officials, USAID follows a similar process in reviewing requests to modify ongoing awards, which implementing partners may propose for a variety of reasons, such as an increase in the number of beneficiaries within areas covered by an award or a delay in completing cash distributions. For our four case study countries, we reviewed 13 grant agreements made from January 2012 to June 2014 that had 41 modifications during that period, including 20 cost modifications that resulted in the total funding amount for the 13 grants increasing from about $91 million to about $626 million, which is about a 591 percent increase. According to USAID, its draft internal guidance for modifying awards is under review and will be incorporated into formal guidance in the future, but it could not provide a time frame for completing that process. In the absence of formal guidance on that process, USAID cannot hold its staff and its partners accountable for taking all necessary steps to justify and document the modification of awards. Additionally, we found that although USAID requires that partners implementing cash- based food assistance monitor market conditions, USAID does not provide clear guidance about how to respond when market conditions change—for example, when and how partners might adjust levels of assistance that beneficiaries receive. Without such guidance, USAID runs the risk of beneficiaries’ benefits being eroded by price increases or, if prices decrease, of partners’ using scarce project funding inefficiently. USAID outlines its process for reviewing and deciding to fund proposals for cash-based food assistance projects in the Annual Program Statement (APS) for International Emergency Food Assistance (see fig. 7). According to USAID, the APS functions as guidance on cash-based programming by describing design and evaluation criteria for selecting project proposals and explaining the basic steps in the proposal review process. The APS also serves as a primary source of information for prospective applicants that apply for emergency food assistance awards using EFSP resources. While Title II in-kind food aid resources represent the majority of USAID’s emergency food assistance funding, USAID’s policy is that EFSP resources may be used when one or more of the following conditions apply: 1. Local and regional procurement, cash-based food assistance, or both are deemed more appropriate than in-kind food aid because of market conditions. 2. Title II in-kind food aid cannot arrive in a sufficiently timely manner through the regular ordering process or through the use of prepositioned stocks. 3. Significantly more beneficiaries can be served through the programming of local and regional procurement or cash-based food assistance. The competitive proposal review process outlined in the APS includes at least three documented steps intended to ensure that the proposal is aligned with U.S. foreign assistance objectives and is technically sound: 1. Partners submit a brief concept paper. Partners initiate the review process by submitting a brief concept paper that describes the chosen program approach, and the relevant justification. Generally, an official at USAID headquarters and an FFP officer from the field review the concept paper to determine if the project is aligned with FFP’s objectives and if the needed resources are available. Partners may change the proposed scope, assistance delivery mechanism—cash, vouchers, or commodities—or funding level based on FFP’s feedback. 2. Partners submit a full proposal addressing APS design criteria. If FFP decides to move forward with a proposed concept paper, it will invite partners to submit a proposal that addresses the design criteria outlined in the APS. 3.