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Audit (A-04-13-04010)

The University of Zambia School of Medicine Did Not Always Manage President's Emergency Plan for AIDS Relief Funds or Meet Program Goals in Accordance With Award Requirements

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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 in-country 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 $730,000 to the University of Zambia, School of Medicine (the University), to create a pool of highly trained public health professionals to perform public health evaluations and help sustain the PEPFAR program in Zambia for the budget period September 15, 2010, through September 14, 2011.

The University did not always manage PEPFAR funds or meet program goals in accordance with award requirements. With respect to financial management, specifically financial transaction testing, $132,000 of the $209,000 reviewed was allowable, but $77,000 was unallowable. Of the 48 financial transactions tested, 21 transactions totaling $132,000 were allowable, 25 transactions totaling $73,000 were unallowable because the funds were restricted or the expenditures were not supported by adequate documentation, and 2 transactions totaling $4,000 were partially unallowable because the expenditures were not fully supported by adequate documentation. Additionally, the University did not accurately report PEPFAR expenditures for this cooperative agreement on its financial status report (FSR) submitted to CDC, submitted its annual FSR 4 months late, used an undetermined amount of PEPFAR funds to pay potentially unallowable value-added taxes (VATs) on purchases, and 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, of the 34 accomplishments included in the University's annual progress report, 3 were not related to the goals of the cooperative agreement. Of the remaining 31 accomplishments, documentation supported 21, partially supported 8, and did not support 2. Also, the University submitted its annual progress report to CDC 9 months late.

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

We recommended that the University (1) refund to CDC $77,000 in unallowable expenditures,

(2) submit an amended FSR 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, (4) develop and implement improved policies and procedures, and

(5) submit its annual financial audit report in a timely manner to the applicable United States agency. University officials partially concurred with our first recommendation and fully concurred with our remaining recommendations.

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