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Audit (A-06-11-00056)

Potentia Namibia Recruitment Consultancy Generally Managed the President's Emergency Plan for AIDS Relief Funds and Met Program Goals in Accordance With Award Requirements

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Through its Global HIV/AIDS Program, 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 $14.5 million to Potentia Namibia Recruitment Consultancy (Potentia) for the budget period April 1, 2009, through March 31, 2010.

Potentia generally managed PEPFAR funds and met program goals in accordance with award requirements. With respect to financial management, specifically financial transaction testing, we found that $249,100 of $250,700 was allowable, but $1,600 was not. Of the 30 financial transactions tested, 26 transactions totaling $185,000 were allowable. However, for two transactions recorded at $37,000, Potentia overstated costs by $3,000, and for two transactions recorded at $28,000, Potentia understated costs by $1,000. In addition, Potentia used $173,000 of PEPFAR funds to pay potentially unallowable value-added taxes (VAT) on earnings from recruitment services and retainer fees. Furthermore, although Potentia had adequate support for 35 sample items from its interim progress report, it did not submit an annual progress report.

These errors occurred because Potentia did not have adequate policies and procedures to ensure that all expenditures were allowable and it filed an annual progress report.

We recommended that Potentia (1) refund $1,600 in net unallowable expenditures, (2) work with CDC to resolve whether the $173,000 of VAT was an allowable expenditure under the cooperative agreement, and (3) develop and implement policies and procedures for ensuring that all expenditures are allowable and annual progress reports are submitted in a timely manner. Potentia concurred with our recommendations.

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