~N -l~ Report of Audit I · 2018. 11. 8. · This report represents the results of our financial audit of funds received and costs incurred locally in Egypt by the International Irrigation

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p~ -f\~N -l~ l Report of Audit

Fin~ncial Audit of the International Irrigation Management Institute (USAID/Egypt Cooperative

Agreement No. 263 .. 0132 .. A .. OO-5036 .. 00)

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Regional Inspector General ro.· Audit Cairo, Egypt

Report No. 6 .. 26J..96-17-N August 27, 1996

FINANCIAL INFORMATION CONTAINED IN THIS UPORT MAt BE PRIVILEGED. THE aES'.1t'IUCTION OF 18 usc 1905 SHOULD BI CONSIDERED BEFORE ANY INFORMATION IS RELEASED TO THE PUBLIC.

OFFICE OF INSPECTOR GENERAL U~S .. AGENCY FOR INTERNATIONAL DEVELOPMENT

I I I I I I I I ,I

I I I I I I I ,I

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USAID

*******

CAIRO, EGYPT

UNITED STATES OF AMERICA AGENCY FOR INTERNATIONAL DEVELOPMENT

OFFICE OF mE REGIONAL INSPECTOR GENERAL/AUDIT

August 27, 1996

MEMORANDUl.\f

TO: DIRECTOR USAID/Egypt, Toni Christiansen-Wagner (Acting)

FROM: RIGI A/C, Lou Mundy .-gil\. SUBJECT: Financial Audit of the Internation rrigation Management Institute

(USAID/Egypt Cooperative Agreement No. 263-0132-A-00-5036-00)

The attached report, transmitted on July 7, 1996, by KPMG Hazem Hassan, presents the results of a financial audit of the International Irrigation Management Institute (Institute) as it pertains to USAID/Egypt Cooperative Agreement No. 263-0132-A-00-5036-00. This agreement is one of several associated with USAID/Egypt's Irrigation Management Systems Project No. 263-0132 (Project). The purpose of the agreement was to fund activities necessary for strengthening irrigation management in Egypt.

We engaged KPMG Hazem Hassan to perform a financial audit of the Institute's incurred expenditures of $370,710 (equivalent to LEl,260,414) for the period December 1, 1994 through December 31, 1995. The purpose of the audit was to evaluate the propriety. of costs incurred during this period. KPMG Hazem Hassan also evaluated the Institute's compliance with applicable laws, regulations and agreement terms as necessary in forming an opinion regarding the Fund Accountability Statement.

The audit report questions $10,758 (equivalent to LE36,577) in costs billed to USAID/Egypt by the Institute. The questioned costs related primarily to ineligible tax payments and travel expenditures in excess of the travel budget allowance. Additionally, the auditors noted one instance of noncompliance with applicable laws, regulations, and agreement terms which was not considered to be material.

During the pre-audit survey, the auditors noted that Institute management in Sri Lanka was responsible for controlling Project activities. Since local activities in Cairo had

u.S. Mailing Address USAID-RIGIA/C Unit 64902

APO AE 09839-4902

Tel. Country Code (202) 357-3909

Fax # (202), 355-4318

#106 Kasr El Aini St., Cairo Center Building,

Garden City, Cairo, Egypt ,

Mundy IChristiansen-Wagner Memorandum-Audit of the International Irrigation Management Institute Page 2

ceased and no additional funding is being provided to the recipient, KPMG Hazem Hassan did not issue a report on internal controls.

In response to the draft report, responsible Institute officials provided additional explanation to the questioned costs. KPMG Hazem Hassan reviewed the Institute's response to the fmdings and where applicable made adjustments to the report or provided further clarification of their position (see Appendices I and IT).

The following recommendation is included in the Office of the Inspector General's recommendation follow-up system.

Recommendation No.1: We recommend that USAID/Egypt make a final management decision on the questioned costs of $10,758 (ineligible costs of $10,500 and unsupported costs of $258) detailed on pages 11 through 13 of the KPMG Hazem Hassan audit report, and recover from the International Inigation Management Institute the amounts detennined to be unallowable.

In its response to the audit report, the Mission determined that $8,510 of the costs questioned are considered allowable. The remaining questioned costs of $2,248 are sustained and the Mission has collected $2, 143 from the Institute and deducted $105 from a voucher billed by the Institute to USAID/Egypt (see Appendix llI). Based on the Mission's fmal management actions, Recommendation No. 1 is resolved and closed.

Thank you for the cooperation and assistance extended to the audit staff on this engagement and your continued support of the fmancial audit program in Egypt.

Attachment: al s

~ . ."

I I I I I I I I I 'I I I I I I I ,I

J I

I I I I I I I I I I I I I I I I I I I

Financial Audit of the International Irrigation Management Institute

(IIMI) Cooperative Agreement No.263-0132-A-OO-5036-00

under USAID/Egypt's IMS Project No.263-0132 for the period from December 1. 1994 through

December 31, 1995.

KPMG Hazem Hassan

Financial Audit of the International Irrigation Management Institute

(IIMI) Cooperative Agreement No.263-0132-A-OO-5036-00

under USAID/Egypt's IMS Project No.263-0132 for the period from December 1. 1994 through

December 31, 1995.

Table of Contents

Introduction

Background Audit Objectives and Scope Results of Audit Management Comment

Fund Accountability Statement

Independent Auditor's Report Fund Accountability Statement and Notes Details of Questioned Costs

Compliance with Laws and Regulations

Independent Auditor's Report

Appendices

Appendix I Appendix II Appendix III

IIMI's Management Response Auditor's Comments Mission's Comments

Page

1 2 4 5

6 8

11

14



~~~~I}~!

KPMti Hazem Hassan

Mr. Lou Mundy

---Public Accountants & Consultants

72 Mohi Eldin Abul Ezz Street Mohandseen, Cairo Egypt

Telephone: (202) 3499588 - 3499677 Telefax: (202) 3497224 - 3487819 Telex : 20457 (hhco - un)

Regional Inspector General for Audit-Cairo united States Agency for International Development Cairo, Egypt.

July 7, 1996

Dear Mr. Mundy,

This report represents the results of our financial audit of funds received and costs incurred locally in Egypt by the International Irrigation Management Institute (IIMI) Cooperative -Agreement No.263-0132-A-00-5036-00 under USAID/Egypt's IMS Project No.263-0132 for the period from December 1, 1994 through December 31, 1995.

Background

The purpose of the cooperative Agreement between the International Irrigation Management Institute and USAID was to fund activities necessary for strengthening irrigation management in Egypt. This Cooperative Agreement is one of several associated with USAID's overall Irrigation Management System project. The principal activities funded under the IIMI agreement, related to the development of a plan for improved irrigation operations in Egypt, are the analysis and updating of cost recovery data for Egypt, the development of cost sharing mechanisms and phasing proposals for farmers' shares of operations, and the maintenance and repair of the systems.

On December 20, 1994, a Cooperative Agreement between USAID/Egypt and IIMI was initiated to approve a total budget of $1,325,000; the completion date was July 31, 1995. The Cooperative Agreement was amended twice. Amendment No. 1 was

Member Firm of Klynveld Peat Marwick Goerdeler

/ V

KPMG Hazem Hassan

initiated on May 29, 1995; this amendment increased the budget to $1,325,000 and changed the completion date to June 15, 1995. On August 10, 1995 amendment No. 2 was initiated to extend the completion date to December 31, 1995.

Audit Objectives and Scope

The objective 'of this engagement was to conduct a financial audit of USAID/Egypt' s resources, provided pursuant to the Cooperative Agreement No.263-0132-A-OO-5036-00 under USAID/Egypt's IMS Project No.263-0132. These resources were managed by IIMI. The audit covered the period from December 1, 1994 through December 31, 1995. The audit encompassed an examination of IIMI expenses, disbursed locally in Egypt, in order to determine whether they were in compliance with the terms of the Cooperative Agreement.

The specific objectives were ·to:

1.

2 .

3 .

express an opinion on whether the fund accountability statements for the USAID financed project of IIMI present fairly, in all material respects, proj ect revenues received and costs incurred for the periods under audit, in conformity with generally accepted accounting principles or other comprehensive bases of accounting, including the cash receipts and disbursements basis and modifications of the cash basis;

determine if the costs reported as incurred under the agreement are, in fact, allowabl~, allocable, and reasonable in accordance with the terms of the agreement;

perform tests to determine whether IIMI complied, in all material respects, with the agreement terms and applicable laws and regulations.

Preliminary planning and review procedures started in February 1996 and consisted of:

• discussions with RIG/A/C;

• a review of the Cooperative Agreement;

• interviews and discussions with the IIMI representatives concerning the status of the Cooperative Agreement, accomplishments during the period, the statutory reporting

2


I I I I-I I I I I I I I I I I I I I I

KPMG Hazem Hassan

requirements, the budget of the Cooperative Agreement, the procedures governing actual expenditures disbursed locally in Egypt by IIMI and the reimbursement of these expenditures .by USAIDi

• reviews of the IIMI organizational structure, the procurement and personnel manuals, the financial and accounting policies, and the procedures manual.

The field work was completed on March 21, 1996. The scope of our work was to audit costs incurred and disbursed locally in Egypt by IIMI and reimbursed by USAID/Egypt under Cooperative Agreement No.263-0132-A-00-5036-00. Within each budget line item, we selected amounts for testing on a judgmental basis in order to test the majority of the related amounts. We tested expenditures of $268,171 (LE911,781) out of total expenditures amounting to $370,710 (LE1,260,414).

Our tests of expenditures included, but were not limited to, the following:

1. Reconciling IIMI's accounting records to reports issued to IIMI Headquarters and testing costs for allowability, allocability, reasonableness, and appropriate supporti

2. Determining whether payroll costs were appropriate and conformed with the terms of the Cooperative Agreement and the relevant regulations;

3. Determining whether international travel, national travel, supplies, equipment, workshops and publication cha"rges were adequately supported and approved i

4. Checking the adequacy of IIMI I S control over proj ect equipment funded by USAID/Egypt.

Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the fund accountability statements are free of material misstatement.

We did not have an external quality control review by an unaffiliated audit organization, as required by paragraph 33 of Chapter 3 of Government Auditing Standards, because no such quality control review program is offered by professional organizations in Egypt. We believe that the effect of this departure from the financial audit requirements of Government

3

KPMG Hazem Hassan

Auditing Standards is not material because we have participated in the KPMG worldwide internal quality control program. This program requires our office to be subjected, every two ·years, to an extensive quality control review by partners and managers from other KPMG offices.

As part of our examination, we reviewed lIMIts compliance with applicable laws and regulations.

Results of Audit

Cooperative Agreement Fund Accountability Statement

Our audit identified questioned costs totalling $10,758 ( equivalent to LE3 6,577) which are divided into ineligible costs amounting to $10,500 (equivalent to LE35,700) and unsupported costs amounting to $258 (equivalent to LE877) .

Internal Control

During our pre-audit survey we noted that ultimate responsibility for controlling the Project activities including reviewing and approving locally disbursed Project funds billable to USAID rests with IIMI management in Sri Lanka. Additionally, the Cooperative Agreement we audited has ceased operation in Cairo and no additional funding has been provided to the project. Therefore, we were unable to issue a report on internal controls.

Compliance with Laws and Regulations

Our tests of compliance disclosed an instance of noncompliance with the terms of the Cooperative Agreement regarding the allowability, allocability and reasonableness of costs charged to USAID!Egypt. This instance is not considered to be a material instance of noncompliance.

Supplementary Information

The supplementary schedules of questioned costs including dates, numbers of vouchers and amounts were communicated to lIMIts management and are available upon request.

4



KPMG Hazem Hassan

Management Comment

We have reviewed IIMI' s response to the Questioned Costs incurred, which are included in Appendix I. where applicable, we have made adjustments in our report or provided furth~r clarification of our position in Appendix II. For those items not adjusted in the final report, the responses provided by IIMI's management have not changed our understanding of the fund accountability statement, or our finding in the Report on Compliance with Laws and Regulations.

This report is intended for the information of the United States Agency for International Development and IIMI's management and others within the organization. However, this report is a matter of public record, and its distribution is not limited.

~~~ ~,

Hazem Hassan & Co. Cairo, Egypt

5

I I I I I I

FUND ACCOUNTABILITY STATEMENT

I I I I, I I I I I I I I

~ I


Public Accountants & Consultants



. Report on the Fund Accountability Statement Independent Auditor'S Report

Mr. Lou Mundy Regional Inspector General for Audit-Cairo United States Agency for International Development Cairo, Egypt.

We have audited the accompanying fund accountability statement of funds received and costs incurred locally in Egypt by the International Irrigation Management Institute (IIMI) pursuant to Cooperative Agreement No.263-0132-A-00-5036-00 under USAID/Egypt's IMS Project NO.263-0132 for the period from December I, 1994 through December 31, 1995. This statement is the responsibility of IIMI's management. Our responsibility is to express an opinion on this statement based upon our audit.

Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards and Goyernment Auditing Standards, issued by the Comptroller General of the United States. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the fund accountability statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fund accountability statement. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the presentation of the overall fund accountability statement. We believe that our audit provides a reasonable basis for our opinion.

We did not have an external quality control review by an unaffiliated audit organization, as required by paragraph 33 of Chapter 3 of Government Auditing Standards, because no such quality control review program is offered by professional organizations in Egypt. We believe that the effect of this

6

Member Firm of Klynveld Peat Marwick Goerdeler \

\ \ \

.'''1<'" ''>'-

KPMG Hazem Hassan

departure from the financial audit requirements of Government Auditing Standards is not material because we have participated in the KPMG worldwide internal quality control program. This program requires our office to be subjected, every two years, to an extensive quality control review by partners and managers from other KPMG offices.

The aforementioned fund accountability statement does not include the cost of USAID/Egypt I s direct procurement of vehicles and equipment; neither does it include the technical assistance provided by USAID/Egypt directly to IIMI nor the total revenues and costs incurred by IIMI on an organizationwide basis.

As described in Note 1, the accompanying fund accountability statement has been prepared on the cash basis, which is a comprehensive basis of accounting other than the generally accepted accounting principles. Included in the fund accountability statement are questioned costs of $10,500 and $258 relating to Cooperative Agreement No.263-0132-A-00-5036-00. The basis for questioning these costs is more fully described in the "Details of Questioned Costs" section of this report.

In our opinion, except for the effects of the questioned costs as discussed in the preceding paragraph, the fund accountability statement referred to above presents fairly, in all material respects, the amounts received and the costs incurred locally in Egypt pursuant to the Cooperative Agreement No. 263-0132-A-00-5036-00 under USAID/Egypt 's IMS Project No.263-0132 for the period from December 1, 1994 through December 31, 1995 in conformity with the basis of accounting described in Note 1.

~&Co. Cairo, Egypt

March 21, 1996·

7


- - - - -

USAID/Egypt funds received

Expenditures

Salaries & Benefits

International Travel

National Travel

Supplies & Services

Equipment

Workshops

publications

Total Expenditures

USAID Fund Balance

Less:

Outstanding Advances

Bank Balance as of December 31, 1995

- - - - - -. - - -The International Irrigation Management Institute (IIMI)

Fund Accountability statement

(Funds Received and Costs Locally Incurred in Egypt)

Under the USAID/Egypt's IMS Project No. 263-0132

- - - --For the Period from December 1, 1994 through December 31, 1995

Budget

~

144,500

177,750

42,000

34,200

28,500

50,000

10,000

~ 380,676

Actual

~

117,051

102,044

50,510

28,903

25,192

43,613

3,397

370,710

9,966

(300)

9,666

Ouestioned Costs

Ineligible

.s.

1,990

8,510

10,500

10,758

Unsupported

.s.

105

153

258

Finding No. & Pg.

a) Pg. 11

a) through f) Pg. 11 & 12

a) through c) Pg. 12 & 13

a) Pg. 13

* The accompanying notes are an integral part of the fund accountability statement.

\ 8

--&

International Irrigation Manaaement Institute (IIMI)

Fund Accountability Statement Cooperative Agreement No.263-0132-A-OO-S036-00

Notes to the Fund Accountability Statement

Note 1: Accounting Basis

The fund accountability statement has been prepared on the basis of cash receipts and disbursements. Consequently, revenues are recognized when they are actually received and expenditures are recognized when they are actually paid.

Note 2: Translation Rate

The expenditures relating to Cooperative Agreement No.263-0132-A-OO-5036-00, which were paid in Egyptian Pounds (LE), have been translated into us Dollars ($). The period average exchange rate method was used. This rate ranged from LE3.1 to LE3.4 per $1 during the period covered by our audit.

Note 3: Basis of Presentation

The fund accountability statement is the representation of IIMI I S management and is the responsibility of the said management. The "Questioned Costs" columns represent audit findings and are included in the fund accountability statement for presentation purposes only.

Note 4: Questioned Costs

Questioned Costs are presented in two separate categories ineligible and unsupported and consist of audit findings made on the basis of the terms of the Cooperative Agreement and related regulations, which prescribe the nature and treatment of reimbursable costs. Costs in the column

9

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J I ,~


labeled "Ineligible" are supported by vouchers or other documentation but are ineligible for reimbursement because they are either unreasonable, not program related, or are prohibited by the Coopertive Agreement or applicable laws and regulations.

Costs in the column labeled "Unsupported" are also included in the classification of "Questioned Costs" and are related to costs that are not supported by adequate documentation. All questioned costs are detailed in. the "Details of Questioned Costs" section of this report.

Note 4: USAID/Egypt funds received

USAID/Egypt's funds received represent those amounts transfered from IIMI Headquarters in Sri Lanka to IIMI Egypt for the audited period from December 1, 1994 through December 31, 1995.

Note 5: Budget

The budget column represents the amounts allocated by IIMI H.Q. to be locally disbursed in Egypt within the auqited period. It includes the total budget for the period from December 1, 1994 through December 31, 1995.

Note 6: Outstanding Advances

Outstanding advances represent. advances that were not settled with some of IIMI' s consultants and staff until the date of issue of this report.

10 / \'-'

KPMG Hazem Hassan

Details of Questioned Costs Cooperative Agreement No.263-0132-A-OO-S036-00

Fund Accountability Statement

Item Desc~iption

1. Salaries &; Benefits

a) Based upon the retroactive approval provided to us subsequent to the issue of the draft report, this finding was removed.

Total line item

2 . International Travel

a) Based upon documents and clarifications provided to us, subsequent to the issue of the draft report, this finding was removed.

b) Based upon documents and clarifications provided to us, subsequent to the issue of the draft report, this finding was removed.

c) Based upon documents and clarifications provided to us, subsequent to the issue of the draft report, this finding was removed.

11

Questioned Costs Ineligible Unsupported

.s.. .s..

-- --


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KPMG Hazem Hassan

Questioned Costs Item Description Ineligible Unsupported

.t .t

d) This amount represents taxes paid to a hotel. Article 46, Attachment B of OMB Circular No. A-122 staies that taxes are not allowable. Therefore, this amount is considered to be unallowable. 1,952

e) This amount represents payment of tennis fees for the consultants during their stay in Egypt. Article 12 Attachment B of OMB Circular No.122 states that entertainment costs are unallowable. Therefore, we consider this amount to be unallowable. 38

f) This amount represents travel expenses incurred by one of the consultants in Dubai and India. We were unable to determine the relation (benefit) of this trip to the project activities. Therefore, we consider this amount as unsupported.

Total Line Item

3. National Travel

a) Based upon documents and clarifications provided to us, subsequent to the issue of the draft report, this finding was removed.

12

1,990

105

105

:- ,.v.", '!-"'-

KPMG Hazem Hassan

Item Description

b) Based upon clarifications subsequent. to draft report, removed.

documents provided to

the issue of this finding

and us, the was

c) This amount represents national travel costs in excess of the approved budget. The Cooperative Agreement stated the exact amount to be disbursed for national travel. Therefore, we consider this amount to be unallowable.

Total Line Item

4. Supplies and Services

a) Based upon documents and clarifications provided to us subsequent to the issue of the draft report, this finding was removed.

b) This amount represents the costs of photocopying and purchasing of supplies. There were no cash receipts for these amounts. Additionally, there was no stamp "paid" on the vouchers. Therefore, we consider this amount to be unsupported.

Total Line Item

Total Questioned Costs

13

Questioned Costs Ineligible Unsupported

1. 1.

8,510

8,510

153

153

10,500 258

10,758


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I I I I I· I I I I I I I I I I I I I I

COMPLIANCE WITH LAWS AND REGULATIONS

w~~~~~~1~

KPMG Hazem Hassan

Report

Public Accountants & Consultants



on Compliance with Laws and Regulations Independent Auditor's Report

Mr. Lou Mundy Regional Inspector General for Audit-Cairo United States Agency for International Development Cairo, Egypt.

We have audited the accompanying fund accountability statement of funds received and costs incurred locally in Egypt by the International Irrigation Management Institute (IIMI) cooperative Agreement NO.263-0132-A-OO-5036-00 under USAID/Egypt's IMS Project No.263-0132 for the period from December 1, 1994 through December 31, 1995, and have issued our report thereon on March 21, 1996.

Except a~ discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards and Goyernment Auditing Standards, issued by the Comptroller General of the United States. These standar.ds require that we plan and perform the audit to obtain reasonable assurance about whether the fund accountability statement is free of material misstatement.

We did not have an external quality control review by an unaffiliated audit organization, as required by paragraph 33 of Chapter 3 of Government Auditing Standards, because no such quality control review program is offered by professional organizations in Egypt. We believe that the effect of this departure from the financial audit requirements of Goyernment Auditing Standards is not material because we have participated in the KPMG worldwide internal quality control program. This program requires our office to be subjected, every two years, to an extensive quality control review by partners and managers from other KPMG offices.

14

Member Firm of Klynveld Peat Marwick Goerdeler


<}O I


KPMG Hazem Hassan

Compliance wi th laws, regulations, contracts, and grants applicable to IIMI is the responsibility of IIMI's management. As part of obtaining reasonable assurance about whether the fund accountability statement is free of material misstatement, we performed tests of IIMI's compliance with certain provisions - of laws, regulations, contracts, and grants. However, the obj ective of our audit of the fund accountability statement was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion.

The results of our tests disclosed one instance of noncompliance that is required to be reported herein under Government Auditing Standards. This instance is as follows:

1. Instance of non-compliance with the provisions of the Cooperative Agreement.

During our audit we noted that IIMI paid and charged USAID/Egypt "National Travel" costs in excess of the approved budget set forth in the Cooperative Agreement. The Cooperative Agreement listed the authorized amounts and types of costs which should have been charged to USAID/Egypt. Such costs in excess of the budget were incurred without obtaining prior approval from USAID/Egypt.

IIMI's management believed that these costs were essential to carry out its activites, and, therefore, charged them to USAID/Egypt. We recommend that IIMI obtain USAID/Egypt approval for the amounts exceeding the approved budget. If such approval is not obtained, we recommend that IIMI refund to USAID/Egypt the costs incurred in excess of the approved budget.

*************************

·We noted certain immaterial instances of non-compliance that have been reported to IIMI's management in a separate letter dated March 21, 1996.

We considered this instance of non-compliance in forming our opinion on whether IIMI' s fund accountability statement pursuant to the Cooperative Agreement No.263-0132-A-00-5036-00 under USAID/Egypt' sIMS Proj ect No.2 63 - 013 2 for the period from December 1, 1994 through December 31, 1995, is presented fairly, in all material respects, in conformity with the cash basis of accounting. This report does not affect our report dated March 21, 1996 on the fund accountability statement.

15

KPMG Hazem Hassan

This report is intended for the information of IIMI's management and others within the organization and the United States Agency for International Development. However, this report is a matter of public record, and its distribution is not limited.

~~~ '~HaSSan&

Cairo, Egypt

March 21, 1996

Co.

16 -,,1/



APPENDIX I IIMI'S MANAGEMENT RESPONSE

I ====b==j6==.~.1 ~~==ag== ... W==. '==8b====lloJ==1 =lj1Sl==' l:u.c==' .. :;=ljjJ=:1 0=:" ~:=' :=uJ:=g:=:1l==1 .f6===J-ol:=' === I

~~~~ International Center for Agricultural Research in the Dry Areas I ICARDA

Location

MEMORANDUM

ATTN: Mr. Thomas Malone DATE: 27 June, 1996

FROM:

COPY:

Senior Manager, Hazem Hassan & Co.

(J/~¥/<-l--Khaled Genena, Associate Finance Officer""",?~.I(({/ ~ ICARDA Cairo Office

Dr. Wadie Fahim, US-AID Mr. Laksiri Abeysekera, Deputy Director 1 IIMI Finance and Administration Dr. Chris Perry, Team Leader Dr. M.B. Solh, NVRSRP/ICARDA Regional Coordinator

SURJ.: lIMI Responsc on Audit Findings, Cooperative Agreement No. 263-0132-A-00-5036 undcr the Irrigation Management Systems Pmject, USAID/Egypt Project No. 263-0132

Dear Mr. Malone,

With reference to the above mentioned subject, please find below our response concerning audit findings:

- Finding LA Amounted US$ 736:

Please rind enclosed USAID n.:troactivc approval.

- Finding 2,,-\ Amounted US.$. 649:

Full names were idemitied from the initials on the expenses statements (copies attached) .

- Finding 213 Amounted US.$. 5,495:

Please find enclosed herewith the response off IIMI-HQ to Mr. Donnie Harrington, AGRI ACE together with the supporting documents.

- Finding 2C Amounted US.$. 598:

Please note that according to IIMI's Policy, consultants are not entitled to a daily substances allowance, reimbursement of actual expenses are due to them upon submission of statement of expenses. Accordingly, the amount of US$ 598 is representing cost of meals for consultants as per the following details:

Tele - Commullicatiolls 15 G Radwan Ibn EI Tabib Sl Giza - Egypt

M ail Address P.O. Box 2416 Cairo. Egypt

Tel.: 5724358 - 5725785 - 5735829 Fax.: (202) 5728099 Tlx.: 21741 ICARD UN E-Mail: [email protected]~ {

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VOUCHER NO.

163

163

184

184

363

389

389

393

397

397

542

582

583

587

DATE

3/14/95

3/14/95

3/20/95

3/20/95

5117/95

5/28/95

5/28195

5/29195

5/31/95

5/31/95

7111195

7/24/95

7/24/95

7126/95

DESCRIPTION & ANALYSIS AMOUNT L.E.

Or. R. Cesui Meals on 3/6/95 50.00

Dr.R. Cestti Breakfast on 3/10/95 15.00

Or.R. Ceslti Lunch on 3/10/95 30.00

Or.R. Cestti dinner on 3/10/95 40.00

TOTAL 135.0()

0r.1.0. Brewer Food on 2115/95 12.00

0r.1.0. Brewer Food on 2118/95 9.00

Computer electrical parts 48.00

TOTAL 69.00

Or.R. Vissia food & misc. expo from 387.00 4129/95 to 5/16/95 (15 days)

Or.1.D. Brewer food on 5/12/95 7.00

0r.1.0. Brewer food on 5114/95 5.00

0r.1.0. Brewer food on 5/18/95 35.00

0r.1.0. Brewer food on 5/20/95 12.00

TOTAL 59.00

Or.R. Vissia food & misc. expo from 322.00 5117/95 to 5/27/95 (8 days)

01'.0. Merry & Or.C. Perry lunch on 25.00 511511995

0r.0. Merry & Or.C. Perry lunch on 25.00 . 5/16/95

TOTAL 50.00

O1'.R. Vissia Food & Misc. Exp. from 469.00 6/25 to 7/10/95 (15 days)

Or.R. Vissia food & misc. expo from 106.00 7111 to 7/17/95 (6 days)

Or.c. Perry meals & misc. expo from 281.00 7 III to 7121195 (9 days)

Or.R. Sakthivadivel lunch on 6/12/95 25.00

Or.R. Salthivadivel lunch on 6/27/95 15.00

Dr.R. Sakthivadovel lunch on 7/1195 15.00

VOUCHER DATE DESCRIPTION & ANALrSIS AMOUNT NO. L.E.

Dr.R. Sakthivadivel lunch on 7/6/95 25.00

Dr.R. Sakthivadivel dinner on 7/15/95 50.00

Dr.R. Saklhivadivel lunch on 7/16/95 24.00

587 7/26/95 TOTAL 154.00 --

Copies of all the above expenses ::1 e attached.

- Finding 2D Amonnted US.S. 1,952:

This amount represents taxes paid to Piramisa Hotel. Copies of invoices are being sent to lJSAID for reimbursement.

- Finding 2£ Amounted US.$. 38:

P.e. Voucher no.583 amounled LE. 130 represents fees for playing Tennis which is justified according 10 IHvlI's Policy.

- Finding 21' Amollnted US.$. 105:

Response sent by lIMI HQ to Mr. Donnie Harrington, AGR/ACE is enclosed.

- Finding 3A Amounted US.$. 344:

Response sent hy IIMI IlQ to Mr. Donnie Harrington, AGR/ ACE is enclosed.

- Finding 3B Amollnted US.$. 6,404:

In a meeting with Mr.EL Rakhawy, Dr.A.F.Metawie and myself, names, relationship and the output were identified (list of names, titles, workplan and report cover are attached).

- Finding 3C Amollnted US.$. 8,510:

This amount represents the over budget amount on National Travel Line Item before the amendment made to extend the budget till December 31, 1995 instead of September 30, 1995 (copy of the revised budget and supporting correspondents are attached).

- Finding 4A Amounted US.$. 147:

P.C. No. 190 Amounted LE. 500 paid La Ms. Samira Ragheb, cost of translation and typing of report (copy of receipt is attached).


1Jp I

I I I. I I I I I I I I I I I I I I I I

- Finding 4B Amollnted US.$. R83: l

Please find enclosed copies or the receipts for payments no. 677, 706, 826, 612 and 616.

P.c. NO. 673 Amounled LE. 220 represents DHL extra charges on prepaid voucher sinee the wight was exceeded by one kilo more (copy of" payment voucher is attached).

P.c. NO. 649 Amounted LE. 300 represents: @ LE. 40 taxi charges @ LE. 20 charges paid to porter and LE. 240 postal stamps (copy of payment voucher is attached).

h"G Jg

1I.11I/won F.·IX

....J. ,/t

17 June 1996 Mr. Donnie Harring(On. :\GR/ACE USAID 106 K'1sr El :\ini Street G,lrden Citv Cairo Egypt

Dear I'vIr. H,lrrinton:

Financial Audit on the Cooperative Agreement No.263-0132-A-OO-S036 under the Irrigation Management Svstems Project

USAID/Egypt Project No.263-0132

Your f.lx of 23 May (0 Dr. Chris Perry refers. Following are our responses for findings 2B. 2F and 3.-\:

Finding 2B

The Jmount paid by cheque No.71005 dated 3/19/95 was $865.39. This represents the balance payment th.lt was due (0 Dr. Mark Svendsen and Mrs. Dian Svendsen (consultants). Following is .1 summary of the transactions that led to the final payment of SS6j.39:

Expenses incurred by the t\\·o consultants: Travel . Air tickets Air tickets Expense claim - travel Expense claim - travel Supplies and Services

Total

Less: Advance given (telegraphic transfer) Sudanese Pounds 1C::;0 @ 3.+

(Annex 1) (Annex 1)

- (Annex 1) (Annex 2) (Annex 2) (Annex 3)

5.200.:0 294.12

Balance due (0 l'vhlrk ,1I1d Di,ln paid by cheque No.71C05

US$

107.20 3,470.00 1,135.60

230.59 282.87

1, 133.24

6,359.50

5.494.12

865.39

contd ... 2

I I I I I I I I I I I I I I I I

Mailing: P. O. Box 2075. Colombo, Sri Lanka

Location: 127, Sunil Mawatha. Battaramulla. Srj Lanka I Telephone: 94-1-867404. 869080. 869081 Telex: 2231811MIHQ CE Facsimile: 94-1-866854 E-Mail: [email protected] -~."l


Photocopies of invoices;' receipts to subst.lntiate the expenses incurred are attached as Annexes 1. '2 ,md 3 ~llong ~'ith ,1 summary page of the final accounting submitted by Mark ,md Di,m (Document 1).

Finding 2F

JV 587 j,lted 7/26/95 for 5105 (LE .358). The auditors' observation is correct. Expenditure of $105 should not have been charged against the above project, since these expenses relate to Dr. R. S,lkthiv.ldivel's visit to India. We will give credit to the project when the final ,lCcounting is submitted.

Finding 3A

JV 3.21 d,ned 4/30/95 for S3H (LEl,170). This voucher does not have supporting documents since the p,lyment of LE 1, 170 to Dr. Mohamed Mahmoud Mohieddin is specified in Dr. lvlohieddin's consultancy contract (copy of consulting contract attached - Document 2).

r trust by now you have received the responses from Mr. Khalied in respect of the other observations made by the auditors.

cc:

Ends.

Should ~'ou require any further information, please do not hesitate to contact e.

Yours sincerely,

Director, ce and Administration

Mr. Khalied, Financial Officer. ICARDA (Fax:{20-2) 572-8099) Mr. D.lvid Governey Dr. Chris Perry

L\/\'w

I I I I I

APPENDIX II I AQDITQR'~ QQMMENTa

I I I I I I

-I I I I I I

3D I


KPMG Hazem Hassan

AUDITOR'S COMMENTS

cooperative Agreement No.263-0132-A-OO-5036

I. Fund ACCQutability Statement:

Finding No. la

Based upon the retroactive approval provided to us subsequent to the issue of the draft report, this finding was removed.

Finding No. 2a

Based upon documents and clarifications provided to us, subsequent to the issue of the draft report, this finding has been removed.

Finding No. 2b

Based upon documents and clarifications provided to us, subsequent to the issue of the draft report, this finding has been removed.

Finding No. 2c

Based upon documents and clari f ications provided to us, subsequent to the issue of the draft report, this finding has been removed.

Finding No. 2d

IIMI's management agreed with this finding, therefore, this finding will remain the same.

Finding No. 2e

IIMI's management stated that this expense was incurred according to its policies. However, USAID regulations do not allow any entertainment costs to be charged to USAID. Therefore, this finding will remain the same.

Finding No. 2f

IIMI's management agree with this finding, therefore, this finding will remain the same.

KPMG Hazem Hassan

Finding No. 3a

Based upon documents and clarifications provided to us, subsequent, to the issue of the draft report, this finding has been removed.

Finding No. 3b

Based upon documents and' clarifications provided to u,S, subsequent to the issue of the draft report, this finding has been removed.

Finding No. 3c

IIMI's management provided us with a request for a time and cost extension for the last three months of the Proj ect. However, this request was not approved by the Contract Officer. Additionally, the national travel budget line-item was not increased in this request. Therefore, this finding will remain the same.

Finding No, 4a

Based upon documents and clarifications provided to us subsequent to the issue of the draft report, this finding was removed.

Finding No. 4b

Based upon documents and clarifications provided to us, subsequent to the issue of the draft report, an amount of $730 has been removed. However, for the other amount of $153, the supporting documents provided to us did not change our position for this finding. Therefore, an amount of $153 will remain as unsupported costs. -

I I. Compliance with Laws and Regulations

IIMI's management response (see management response to Finding No. 3c) did not address our finding noted in our Report on Compliance with Laws and Regulations. Therefore, our position remains the same.


I I I I I I APPENDIX III

MISSION'S COMMENTS

I I I-I I I I I I I I I I

11&1;'''' UNITED STATES AGENCY for INTERNATIONAL DEVELOPMENT

tttttW '111··' CAIRO, EGYPT August 25, 1996

MEMORANDUM

To

From

Subject

Lou Mundy, RIG/A/C

Shirley Hunter,OD/FM/FA

Financial Audit of the International Irrigation Management Institute (USAID/Egypt Cooperative Agreement No. 263-0132-A-00-5036-00) - Draft Report dated July 25, 1996

Following are the actions taken by the Mission to resolve and close audit Recommendation No. 1 under the subject audit.

Recommendation No.1.:

We recommend that USAID/Egypt make a final management decision on the questioned costs of $10,758 (ineligible costs of $10,500 and unsupported costs $258) detailed on pages 11 through 13 of the KPMG Hazem Hassan audit report, and recover from the International Irrigation Management Institute the amounts determined to be unallowable.

Mission response

Based on Mission review, of the $10,758 (LE 36,590) questioned, $8,510 (LE 28,934) is considered allowable, -and $2,248 (LE 7,656)is sustained. The $2,248 (LE 7,656) was refunded to

USAID as follows:

- $2·,143 has been refunded by check No. 4931 dated Aug. 14, 1996, General Receipt No A000113 dated August 18, 1996 (attachment a) and;

- $105 has been offset from May 1996 voucher (attachment b) .

Following are the details of Mission determination and a summary table of amounts allowed and amounts sustained.

Findings 1.a., 2.a, 2.b, 2.c, 3.a, 3.b and 4.a were removed by the auditors subsequent to the issuance of the draft report, (see pages 11-13 of the audit report) .

106 Kasr EI Aini Street Garden City Cairo, Egypt

I I I I I I I I I I I I I I I I I


2

2.d The ineligible amount of $~,952 (LE 6,648) - page 12.

* This amount represents taxes paid to a hotel.

* IIMI has refunded this amount to USAlD (attachment a) .

Therefore, this amount is sustained.

2.e. The ineligible amount of $38 (LE ;30) - page 12

* This amount represents payments of tennis fees for the consultants during their stay in Egypt.

* lIMI has refunded this amount to USAlD (attachment a).


2.f. The unsupported amount of $105 (LE 358)- page 12

*

*

This amount represents travel expenses incurred by one of the consultants in Dab and India. Relation of this trip to the project activities cannot be determined by the auditors.

IIMI has agreed with the finding and has reduced their billing for May ~996 by $~05 (attachment b) .


3.e. The ineligible amount of $8,510 (LE 28,934)- page 13

* This.amount represents national travel costs in excess of the approved budget.

* In accordance with the Agreement Officer's determination (copy of E-Mail attachment c), this amount is allowed in accordance with Cooperative Agreement terms. lIMI is authorized to adjust the approved budget line item amounts as may be reasonably necessary for the attainment of the program activities, provided that the total approved budget is not exceeded.

Therefore this amount is allowed.

4.h. The unsupported amount of $153 (LE 520)- page 13

* This amount represents the costs of photocopying and

3

purchasing of supplies with no cash receipts nor stamp paid on the vouchers.

* IIMI has refunded the amount to USAID (attachment a) .

Therefore this amount is sustained.

Based on the above, Mission requests resolution and closure Recommendation No. 1 under the subject audit report.

Att: a/so

of

~ p I


- - - -.---------Draft Report on International Irrigation Management Institute

Dated July 25, ~996

(Amount in U.S. Dollars)

-(IIMI) - -Amount

Sustained

-Audit Rep \Finding Page No. No.

Amount Questioned

Ineliqible 1unsupPOrted--r

12 2.d 1,952 I I 0 1,952

12 2.a 38 38

12 2.f

13 3.e ·~I •• 510 I l'r{Tr io 105

13 4.b 153 153

- -

Total

1,952

38

.... 105

0

153 I

Total -] 1___ 10'75~ [ __ -8,n5~I 0 r7~c~~;@ I 1,990 r--- 258'·. 2~2481

doc: fmfam\123data\Audit\iimi

\.J~,. ..::"""--$

~ .l-

Documents

~N -l~ Report of Audit I · 2018. 11. 8. · This report represents the results of our financial audit of funds received and costs incurred locally in Egypt by the International Irrigation