The Federal Democratic Republic of Ethiopia, Ministry of Health, Did Not Always Manage President's Emergency Plan for AIDS Relief Funds or Meet Program Goals in Accordance With Award Requirements

Through its Global HIV/AIDS Program, the Centers for Disease Control and Prevention (CDC) implemented the President's Emergency Plan for AIDS Relief (PEPFAR), working with ministries of health and other public health partners to combat HIV/AIDS by strengthening health systems and building sustainable HIV/AIDS programs in more than 75 countries. Through a 5-year cooperative agreement, CDC awarded PEPFAR funds totaling $4.4 million to the Federal Democratic Republic of Ethiopia, Ministry of Health (the Ministry) for the budget period September 30, 2011, through September 29, 2012.

The Ministry did not always manage PEPFAR funds or meet program goals in accordance with award requirements. With respect to financial management, specifically financial transaction testing, $423,000 of the $718,000 reviewed was allowable, but $295,000 was unallowable. Of the 30 financial transactions tested, 1 transaction totaling $1,300 was allowable, 21 transactions totaling $88,000 were unallowable, and 8 transactions totaling $629,000 were partially unallowable.

Additionally, the Ministry (1) did not accurately report PEPFAR expenditures and cash disbursements for this cooperative agreement on its Federal financial report (FFR) submitted to CDC, (2) withdrew $1.9 million in restricted funds from the Payment Management System, (3) advanced funds to government entities for activities that were not related to the PEPFAR cooperative agreement or were restricted by CDC in the Notice of Award, (4) used an undetermined amount of PEPFAR funds to pay potentially unallowable value-added taxes (VATs) on purchases, and (5) did not submit its annual financial audit report to the National External Audit Review Center in accordance with the award requirements.

Our program management review showed that the 20 accomplishments included in the Ministry's annual progress report were all related to the goals of the cooperative agreement. Of these 20 accomplishments, documentation supported 9, partially supported 8, and did not support 3.

These errors occurred because the Ministry did not have adequate policies and procedures.

We recommended that the Ministry (1) refund to CDC $295,000 in unallowable expenditures, (2) submit an amended FFR for the budget period of the cooperative agreement that we reviewed, (3) work with CDC to resolve whether VAT was an allowable expenditure under the cooperative agreement; and (4) develop and implement adequate policies and procedures. Ministry officials did not concur with our first recommendation, partially concurred with our last recommendation, and fully concurred with our remaining recommendations. They also described actions they had taken.