Summary: GAO discussed the Agency for International Development's (AID) potential for misuse of foreign economic and military aid funds. GAO found that: (1) past AID reviews identified many management and internal control problems; (2) questions of accountability and control remained because the AID policy for Economic Support Fund (ESF) cash transfers lacked agencywide standards for verifying and auditing dollar accounts; (3) the Commodity Import Program (CIP) and food assistance program showed that AID could not determine whether local currency generated from the assistance was deposited or used as required; (4) AID lacked accountable monitoring and auditing coverage of accounts, and suffered from poor host-country reporting and managing of account activities; (5) AID officials debated whether AID, or the host government should maintain accountability and control over local currencies; and (6) the AID overseas contracting system lacked accountability for certain property in the possession of contractors, inadequate contract close-out procedures and final audit coverage, and poor procurement planning by AID overseas missions. GAO also found that: (1) the AID malaria vaccine research project's inadequate monitoring, lack of financial auditing, and other management weaknesses directly contributed to the misuse of economic assistance funds; (2) many AID problems seemed systemic; and (3) U.S. military foreign aid also had many accountability and management problems.
