An audit of the Global Fund’s grant portfolio in Pakistan found weak financial management resulting in USD 2.4 million in transactions that could not be accounted for. The auditors from the Office of the Inspector General (OIG) also noted that, despite recent efforts, grant implementation, procurement and stock management arrangements are deficient. The Global Fund is putting in place corrective actions including strengthening significantly financial controls. The case has also been referred to the OIG Investigations Unit for further review.
The Islamic Republic of Pakistan is a difficult environment for programs supported by the Global Fund. The country is the sixth most populous in the world with a large disease burden of HIV, tuberculosis (TB) and AIDS. The health system has limited human resources and weak infrastructure. Furthermore, there are security challenges in the FATA, Khyber Pakhtunkhwa and North-East Balochistan regions.
Despite this, Global Fund programs in Pakistan have made progress with over 5,200 people on antiretroviral therapy, 3.8 million nets distributed to protect families from malaria, and over 756,000 people tested and treated for TB.
In an extensive audit that covered 33 health and storage facilities and 88% of Global Fund investments in the country, the OIG found the following problems:
- Inadequate financial controls, weak oversight and delays in recruiting key positions resulted in USD 0.7 million of expenditures which could not be justified. A further USD 1.7 million of unsupported transactions was identified in the form of unreconciled cash advances. The auditors also noted a general lack of financial discipline at the grant recipient level.
- Program implementation was not effective. The health sector has been devolved to the provincial governments but the Global Fund disease programs remain centralized. As a result, there are parallel and vertical systems leading to inefficiencies. The disease programs do not coordinate the storage and distribution of health products and their logistics information systems are not integrated. Little communication exists between the TB and HIV programs for detecting, diagnosing and treating patients.
- The OIG also found inefficiencies and ineffectiveness in procurement. For example, the auditors identified instances of non-compliance with procurement policies concerning USD 3 million of transactions. Grant recipients did not always select suppliers competitively, sign contracts with clear implementation plans and monitor the planned contractual activities.
- Stock management at the storage facilities visited by the OIG had varying standards with some health products stored and transported in unfavorable conditions, comprising their quality.
The Global Fund is currently assessing a number of actions to improve grant implementation in Pakistan. These include developing a strategic plan with its partners in country to better align and integrate grant implementation, a robust financial control plan to strengthen the management of Global Fund investments, and a full analysis of non-compliant procurements to determine an appropriate recoverable amount.