August 4, 2011
AUDIT OF USAID/IRAQ’S MICROFINANCE ACTIVITY UNDER ITS PROVINCIAL ECONOMIC GROWTH PROGRAM AUDIT REPORT NO. E-267-11-003-P
AUGUST 4, 2011
This memorandum transmits our final report on the subject audit. We have carefully considered your comments on the draft report and have included them in their entirety in Appendix II.
This report contains three recommendations to improve the implementation of USAID/Iraq’s microfinance activities. Management decisions have been reached on all three recommendations. Please provide the Audit Performance and Compliance Division (M/CFO/APC) with evidence of final action upon completion of the planned corrective actions.
I want to thank you and your staff for the cooperation and courtesies extended to us during this audit.
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MEMORANDUM UNCLASSIFIED
Director Office of Inspector General/Iraq
SUBJECT: Management Response to Draft Audit Report E-267-11-00x-P
REFERENCE: Office of Inspector General (OIG)/Iraq draft report entitled “Audit of USAID/Iraq’s Microfinance Activity Under its Provincial Economic Growth Program” transmitted to the Mission Director dated June 19, 2011
Thank you for the opportunity to comment on the referenced draft audit report of USAID’s Microfinance Activity Under its Provincial Economic Growth Program.
USAID/Iraq concurs with the audit findings and recommendations with the Management comments embedded in responses to the recommendations.
Specifically we have responded to the three recommendations outlined in the draft OIG audit report, addressing actions which are soon to be implemented.
Each of the findings and recommendations have been examined to determine 1) whether the Mission is in agreement, and 2) what actions should be undertaken in response to the audit.
USAID/Iraq recognizes the value of this audit as a management tool to further strengthen our programs. We extend our appreciation to OIG/Iraq for the cooperation exhibited throughout the production of this report.
Recommendation No. 1:
We recommend that USAID/Iraq revise its performance monitoring plan to include performance indicators and targets for reaching poor borrowers for the remaining 2 years of the Provincial Economic Growth Program, particularly for microfinance institutions that have attained performance targets for financial sustainability.
Appendix II 11
Recommendation No. 2:
We recommend that USAID/Iraq require the contractor to update its performance monitoring plan to specify data review mechanisms, identify any known data limitations, and clarify data sources.
Management Comments: USAID/Iraq agrees to the recommendations (No. 1 and No. 2)
Based on the recommendation, the contractor revised and submitted the Performance Monitoring Plan (PMP) to the Contracting Officer’s Technical Representative (COTR) on May 22, 2011 for review and approval. It now includes indicators and targets for reaching poor borrowers. The revised PMP covers the period February 2011-January 2013, or until the end of the project.
Further review is ongoing by the COTR.
In addition, the Performance Indicator Reference Sheets (PIRS) in the PMP clearly explains known data limitations and data sources. It also includes a description of the data management systems to ensure verification and continued quality assurance.
Target date for completion: September 30, 2011
Recommendation No. 3:
We recommend that USAID/Iraq perform a data quality assessment of the jobs performance indicator: number of jobs (new and existing) that are sustained at firms receiving microloans.
Management Comments: USAID/Iraq agrees with the recommendation.
A data quality assessment (DQA) will be conducted in October 2011. In the revised PMP, the contractor plans to introduce a rigorous data review mechanism to verify and validate the data on jobs created and sustained furnished by the partner microfinance institutions.
Consistency and reliability of the data submitted by the partner microfinance institutions will be ensured by visiting clients in the field.
The clients and loan officers will be primary sources of information. EGA will inspect these systems once operational and document this review in a formal DQA.
Target date for completion: December 30, 2011
http://www.usaid.gov/oig/public/fy11rpts/e-267-11-003-p.pdf
