DFID: Programme Controls and Assurance in Afghanistan

This review is to assess DFID’s systems of control and assurance over its expenditure in Afghanistan. These systems are important because they help to minimise the risk of theft, fraud and corruption.

DFID’s planned expenditure on bilateral aid to Afghanistan is £178 million in 2011-12 and in each of the next three financial years. In Afghanistan, DFID spends its money in four areas: governance and security, education, wealth creation and humanitarian assistance. The purpose of this review is to assess DFID’s systems of control and assurance over its expenditure in Afghanistan. These systems are important because they help to minimise the risk of theft, fraud and corruption (collectively known as leakage). This report covers DFID’s systems and controls of assessment but not the value for money or effectiveness of the programmes themselves.

DFID manages its programmes in Afghanistan in exceptionally difficult circumstances. It has a highly committed, respected and experienced senior team and a professional reputation amongst other organisations working in Afghanistan. We found, however, that DFID’s financial management processes are insufficiently robust and that DFID does not give sufficient importance to identifying and managing risks in the design and delivery of its programmes.

As a result of our findings this review has been rated Amber-Red.

Recommendations

Recommendation 1: DFID should make explicit in its funding decisions how it is assessing and taking into account the risk of leakage and balancing that risk against the benefits the programmes are designed to deliver.

Recommendation 2: DFID needs to deploy people with more financial and procurement skills to improve its financial grip and reduce risk. It should focus its financial resources on improving its understanding and reporting of cost throughout the delivery chain.

Recommendation 3: DFID should strengthen its managing agent agreements by specifying the levels of controls and assurance that it expects to be in place and monitoring whether or not these standards are met.

Recommendation 4: DFID should ensure that its office in Afghanistan implements outstanding NAO and PAC recommendations regarding fraud and corruption.