UNDP STATEMENT ON THE “Desk Review of UNDP Afghanistan Oversight of the Monitoring Agent of the Law and Order Trust Fund for Afghanistan”Nov 9, 2014
New York City, 9 November 2014 – The United Nations Development Programme (UNDP) released today a “Desk Review of UNDP Afghanistan Oversight of the Monitoring Agent of the Law and Order Trust Fund for Afghanistan (LOTFA).”
UNDP initiated this review as part of its continued commitment to improve LOTFA’s oversight, transparency and accountability. The review complements ongoing activities designed to ensure that salary payments are correctly and transparently processed and sent to legitimate end-users -- Afghan national police and prison guards.
The review was conducted from 24 March to 24 April 2014 by UNDP’s independent Office of Audit and Investigation (OAI), and covers the period from 1 January 2013 to 16 March 2014. It examined how UNDP oversaw the Monitoring Agent, a private company contracted by LOTFA to review the Afghan Government’s financial reports and verify that Afghan national police and prison guards are being paid.
The review concludes that UNDP oversight of the Monitoring Agent was unsatisfactory. It criticizes UNDP for inadequate supervision of the Agent, untimely follow up on reports from the Agent, and incomplete documentation for some financial reporting.
UNDP concurs with the review’s recommendations and is preparing a plan for their implementation. This will complement an ongoing process of assessment and reform of LOTFA that includes a two-month end-to-end review of the whole payroll process. UNDP expects to disclose the findings of the payroll review in January 2015.
As part of these efforts UNDP is working with international and Afghan partners to clarify the status of several thousand potentially invalid bank accounts in the payroll system that are used to identify payees. The accounts are not used to make payments.
As the top ranked development agency in the global 2014 Independent Aid Transparency Index, UNDP is committed to accelerating improvements in LOTFA’s operations.
Background on the “Desk Review of UNDP Afghanistan Oversight of the Monitoring Agent of the Law and Order Trust Fund for Afghanistan.”
The LOTFA was launched in 2002 to help build an Afghan National Police force capable of enforcing the rule of law, containing crime and protecting the Afghan population.
At the core of LOTFA is a payroll recording system that enables the Afghan Ministry of Finance and Ministry of Interior Affairs to provide regular payment of salaries to Afghan National Police and Central Prison Department personnel.
Every month LOTFA transfers to the Afghan Ministry of Finance funds for salaries of over 140,000 Afghan National Police and over 5,000 Central Prison Department staff. The Ministry of Finance distributes the funds to three categories of disbursing agents: commercial banks, M-PAISA (mobile-money) and Trusted Agents. The disbursing agents then pay the salaries to policemen, policewomen and prison guards throughout Afghanistan. The Afghan Ministry of Interior Affairs provides payroll records, and supporting documents (such as attendance sheets) to verify salary disbursements, to the Monitoring Agent. The Agent regularly reviews sample records and documents.
While LOTFA is a large project with a budget over US$ 500 million per year, its performance is dependent on human resources management, record keeping and accounting capabilities of the Afghan Government, including in inaccessible areas. UNDP has repeatedly highlighted these deficiencies as they impact LOTFA’s operations.
While identifying shortcomings in oversight of the Monitoring Agent, the OAI review also notes that the Agent, UNDP and the Afghan Ministry of Interior Affairs have jointly identified transactions for which the Afghan Government has not provided relevant documentation, or which were used to purchase items outside the LOTFA agreement.
In 2013 such transactions represented US$ 2.8 million of the US$ 524 million payroll budget, while the validity of a further US$ 10.3 million is still being determined. In 2012 such transactions represented US$ 5 million of the US$ 493 million payroll budget.
UNDP continues to work with the Afghan Government and international partners to reconcile outstanding issues and to recover ineligible funds. Since the completion of the desk review UNDP has recovered US$ 2.8 million of unqualified expenses.
In response to preceding internal and external audits of LOTFA, UNDP has already taken a series of measures to improve the project, including:
- Strengthening management and oversight capacity in Afghanistan and in the regional service center;
- Redesigning procurement procedures to ensure greater transparency and accountability;
- Revising the Monitoring Agent’s Terms of Reference;
- Conducting joint LOTFA - Afghan Government fact-finding missions in response to the Monitoring Agent’s reports;
- Updating on a weekly basis the Afghan Ministry of Interior Affairs and international partners on the review of expenses and deductions, through meetings of a payroll technical working group and the relevant Steering Committee;
- Improving coordination between the Monitoring Agent and the Afghan Ministry of Interior Affairs to minimize the time required to address the Monitoring Agent’s findings and recommendations.
UNDP will continue to keep partners and the public informed of progress in its intensified efforts to improve LOTFA’s oversight, transparency and accountability.Contact information
In New York City, Stanislav Saling, Communications Specialist, UNDP Regional Bureau for Asia and the Pacific, 212 906 6575 or firstname.lastname@example.org