Summary: GAO discussed the adequacy of the Department of State's procedures and controls for ensuring that the $27 million in humanitarian funds are being used for intended purposes. GAO found that: (1) State does not have the necessary controls to ensure that the funds are spent for the purposes intended because those charged with administering the program are unable to verify the expenditures made or observe the end use of the procured items; (2) the Nicaraguan Humanitarian Assistance Office (NHAO) intended to set up operations in Nicaragua, but diplomatic sensitivities prevented it from doing so; (3) the control over NHAO funds varied significantly depending on whether purchases were made in the United States or in the region; (4) NHAO has established procedures for administering procurements and making payments for purchases from U.S. suppliers, which allow it to control and oversee the types of goods and services being purchased and the prices paid; and (5) NHAO receives invoices and receipts to support almost all purchases made outside of the United States, but it has difficulty establishing the reasonableness of prices and cannot verify actual delivery or receipt of the procured items. GAO also found that: (1) despite the deficient controls over expenditures outside the United States, an increasing proportion of the assistance funds is being spent in the region; (2) due to the diplomatic sensitivities of the countries involved, deliveries of goods purchased in the United States could not take place; (3) if delivery problems continue, most funds are likely to be spent in the region; and (4) State has intensified its efforts to reverse the problems of delivering U.S. goods to Nicaragua.
