Summary: GAO discussed the Department of State's Nicaraguan Humanitarian Assistance Office's (NHAO) procedures for ensuring that funds authorized for humanitarian assistance to the Nicaraguan democratic resistance were used as intended. GAO found that NHAO: (1) generally exercised adequate control over the disposition of funds to U.S. suppliers; (2) could not assess the validity of receipts totalling $13.3 million; (3) was unable to check on many suppliers; (4) had difficulty establishing the reasonableness of prices; and (5) could not verify the actual delivery or receipt of items. GAO also found that NHAO did not have any documentation of brokers' payments to suppliers because: (1) there was no bank account exclusively for the receipt of NHAO payments; (2) payments were not mirror images of NHAO payments to brokers; and (3) NHAO makes block fund transfers to Central America, where they are disaggregated and individual suppliers are paid, often in cash. NHAO is continuing its efforts to obtain statements from suppliers when they receive payments. GAO recommended that NHAO ensure that brokers maintain separate accounts for humanitarian assistance program funds.
