Accounting for Haiti Aid Funds 2012

Conlusions

A large proportion of the Haiti Aid Funds (86%) had been spent by the end of 2012. Five organisations had completed their activities financed from the Haiti aid funds. Most of the money, as in previous years, had been spent on the provision of shelter and on water and sanitary facilities.

Improvements in SHO's annual accounts

• The SHO provides more insight in its annual accounts for 2012 into the funding flows between the SHO and the international umbrella organisations, other aid organisations and field offices. It can now be seen, for example, how much money is disbursed through the international umbrella organisations and other aid organisations to the field offices and partner organisations in Haiti. 
• The SHO report also provides a better insight into the relationship between planned and actual outcomes and explains the discrepancies. The SHO explains the causes of most of the discrepancies between planned and actual outcomes. At times, however, the explanations are very brief.
• The SHO also discloses the programme management costs per organisation in its 2012 accounts. Unfortunately, the costs incurred by the organisations cannot be compared because of differences in the definitions used.

Undertakings by the SHO

The SHO will oversee the use of a financial template in the annual accounts of its guest and permanent members in future aid operations. The SHO has not undertaken to follow up the recommendation we made in 2012 that the information disclosed in the financial template be audited.

Oversight by the Ministry of BZ

The Ministry of Foreign Affairs (BZ) approved the annual accounts for 2011. It has not yet completed its review of the accounts for 2012; we will consider it in our report for 2013. If necessary, the Ministry of BZ will also have a final audit carried out to provide sufficient assurance for it to adopt its grant decision.

Recommendations

We welcome the improvements in the transparency of the progress reports on the use of Haiti aid funds and the oversight exercised by the Ministry of Foreign Affairs (BZ). We would make the following suggestions to the SHO and the ministry: 

• Discrepancies between planned and actual outcomes – The SHO should ensure that substantial discrepancies between the planned and actual outcomes of the Haiti operation are adequately explained.
• Early evaluation – The SHO should have organisations that complete their activities before the end of the operation evaluate their activities in the year after completion. The SHO could then review differences between specific planned and actual outcomes. The Ministry of BZ should adapt the grant decision so that it provides for the early evaluation and assessment of activities completed before the end of a long-term operation.
• Uniform definition of programme management costs – The SHO should encourage its members that are not subject to the working methods of an international umbrella organisation to use a uniform definition of programme management costs in future aid operations. The Ministry of BZ should work internationally on the introduction of a uniform definition of programme management costs.
• Financial template –The SHO should ensure that its guest and permanent members not only use the financial template but also have it audited as to its reliability by their house auditors. The Ministry of BZ should impress on the SHO the desirability of having the templates audited.

Response

Response of the Minister for BHOS

In response to our recommendations, the Minister for Foreign Trade and Development Cooperation (BHOS) wrote:

• Financial template - The minister will ensure that the prescribed template is used in the accounts. She will not approve accounts that do not include the template until they have been adapted. Where it is not possible to use the template, the minister will consider alternatives that provide a comparable level of assurance. 
• Evaluation of planned and actual outcomes – The minister will discuss the recommendation to explain discrepancies between planned and actual outcomes in the regular policy consultations with the SHO. She will advise the SHO to use the margins customary in aid programmes. 
• Programme management costs – Where possible, the minister will work internationally on the introduction of a uniform definition of programme management costs. She noted that many implementing organisations were members of international networks that often used definitions that were the result of difficult negotiation and would not be easy to change. 
• Early closure – The minister welcomed our recommendation to provide for early closure and evaluation of activities completed before the end of the operation. She will study how this can be legally cast.

Response of the SHO

In response to our recommendations, the SHO wrote:

• Audit scope and financial template – The SHO has (as noted before) drawn up an audit protocol and asks its members to use it in full. The protocol requires all members to use the financial template in their annual accounts. The SHO will continue to encourage guest members to use the template. In future operations, it will require potential guest members to include the financial template in their annual accounts. The SHO did not respond to our recommendation that the information disclosed in the template also be audited as to its reliability by the house auditor. 
• Early evaluation and assessment – The SHO will carry out our recommendation to have members evaluate their completed activities and submit the evaluation to the SHO in the year after the activities are completed. The SHO agrees that substantial discrepancies between planned and actual outcomes should be adequately explained and will direct its members accordingly.
• Programme management costs – The SHO considered in the past whether it was possible to have members that were not part of an international umbrella organisation use a uniform definition of programme management costs. Since nearly all its members were part of a larger umbrella organisation, the SHO thought the added value would be minimal. The SHO proposed that the Court of Audit, the Ministry of BZ and the SHO itself work in their own spheres of influence on the introduction of a uniform definition.
• Insight into funding flows – The SHO noted that the figure on funding flows would provide less insight if it disclosed which partner organisations were carrying out which aid activities in Haiti and the proportion of SHO funds involved. The SHO is open to our suggestion that its members provide this information themselves in their annual reports or on their websites and will encourage them to do so.

Court of Audit's afterword

We appreciate the constructive collaboration with the SHO and the Ministry of BZ to improve the accounts for the Haiti aid funds. We expect the advances made by the collaboration to improve the accounts kept for new SHO operations, such as the one launched in 2012 for Syrian refugees and the recent aid action for the victims of the Philippine typhoon.

We do not wish to miss this opportunity to point out the importance and potential benefit of open data, geo information and modern communication techniques to development cooperation. They can not only provide applications to make international aid more efficient and effective but can also be used to account for the aid donations. We have introduced the Integrated Financial Accountability Framework (IFAF) in a web dossier on www.rekenkamer.nl to increase the transparency of funding flows for humanitarian aid. In early 2014, we will consult the SHO to discuss ways to enhance the transparency of the use of aid funds and to reduce the accounting burden by means of new techniques and insights. It goes without saying that we will consult our international contacts on how the accounts kept for aid funds can be further improved.