ICAI encourages greater financial scrutiny of DFID’s delivery chain in Afghanistan

The Independent Commission for Aid Impact (ICAI), the organisation responsible for the scrutiny of UK aid, today published reports on Aid to Afghanistan and engagement with World Bank, including areas for improvement in transparency.

Its evaluation of the UK Department for International Development’s (DFID) Programme Controls and Assurance in Afghanistan shows that reporting of financial management processes are insufficient for this challenging environment. The report recommends that DFID needs to improve its financial grip on the delivery chain and reduce risk (pp.10-13).

DFID has greatly increased the reporting of its own financial information via the International Aid Transparency Initiative (IATI), and is now requiring that NGOs with PPA (funding) agreements do so too. Publish What You Fund would like to see the report recommend that the same accountability is required of commercial implementing partners in order to ensure greater financial oversight and accountability.

ICAI also highlights a lack of thorough risk assessment and documentation of leakage risks for programmes in Afghanistan:

“We found that DFID’s business cases do not provide sufficient detail on the risks of leakage. We also found that DFID does not sufficiently examine the risks of working with particular partners and through lengthy delivery chains in its processes. More detail on these risks will help DFID to balance the risk of leakage from programmes with their intended impact.”(p.6; para. 2.2).

The report highlights inconsistent financial data reported internally by DFID, poor access to financial systems by staff, and inconsistency and lack of clarity in programme reporting. Although there is a Finance Improvement Plan which focuses on preventing and monitoring leakage, IATI is not included in the list of actions.

Despite DFID’s leadership in IATI – an initiative with the potential to maximise financial accountability – the ICAI report omits any mention of IATI in its list of DFID’s “Measures to prevent fraud and corruption” (p.15; para. 4.7). DFID’s involvement in and implementation of IATI should be recognized, but the report’s findings are also a reminder that DFID must continue to make every effort to report its information to the IATI Standard to the fullest extent. In relation to “financial grip”, the report recommends greater consistency and quality in the format, and greater depth of content (p. 13; para. 3.17) which full implementation of IATI would in part address.

The ICAI’s evaluation of DFID’s engagement with the World Bank reported a lack of accountability in DFID’s oversight of World Bank trust fund management. However, it also acknowledges that oversight of the Bank has improved through the greater availability of information:

“The Aid Transparency Index 2011, from Publish What You Fund, scored IDA as the most transparent of 58 donors.  This is a considerable achievement on the Bank’s part” (14; para. 2.52).

In addition, the report highlights an increase in the World Bank’s transparency through implementation of IATI, hosted by DFID:

“Through its policy on Access to Information, launched in 2010 under the International Aid Transparency Initiative, the Bank has given the public much greater access to information on its activities through the Bank’s website. This data can be mined by DFID and other interested parties” (28; para. 32).

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