An audit is an examination of the activities of an organization or a component of an organization. An audit informs the organization how well it has been operating, usually pointing out strengths and weaknesses as well as making recommendations for improvement.
Food audits can be performed by U.S. Government representatives (for USG required audits), independent audit firms hired by CARE or the donor, CARE-USA’s Internal Audit Department, or CARE’s external auditors.
U.S. Government Audits
The U.S. Government's Office of Management and Budget (OMB) CircularA-133 establishes audit requirements for certain non-profit organizations like CARE that receive USG support. The annual A-133 audit is conducted by CARE USA's external auditors and Internal Audit Department (IAD) on a worldwide basis. The audit opinion pertains to CARE USA's U.S. Government operations in their entirety, not to a specific region, country office, or program. The U.S. Government does not require individual country offices to submit audits. CARE’s external auditors currently audit about four country offices annually. The annual, worldwide A-133 audits are intended to reduce the number of U.S. Government-required audits. Grant-specific audits, however, can still be required.
The A-133 audit typically examines controls for reducing losses and maintaining accountability as food is moved from the port to the beneficiaries. The focus is on the material aspects of the programs-- warehousing, accounting, end-use monitoring, and reporting.
In addition, the IAD audits approximately ten country offices each year. These audits cover all U.S. Government assistance, encompassing both food and funds, including monetization proceeds. Findings and recommendations from these audits can be used as support material for A-133 audits.
Currently, no donors other than the U.S. Government have anything equivalent to an A-133 audit. Instead, an audit of a specific grant or project may be required in the grant agreement. This audit is usually conducted by a local external audit firm on behalf of the donor. The donor may allow CARE USA's Internal Audit Department to conduct the audit, since the IAD is sufficiently independent of the grant or project. The substantial advantage in having the IAD conduct the audit is that it will take much less country office staff time and will not result in unreasonable findings stemming from ignorance or inexperience. Many times external auditors have little knowledge and experience in auditing food programs. Regardless of who conducts the audit, the country office should obtain a copy of all contracts with donors.
Internal Audits and Management Reviews
The IAD audits programs that receive food aid from both U.S. and non-U.S. donors.
Specifically, the goals of IAD are to:
The specific objectives of food audits are to review the:
IAD submits an annual schedule of proposed internal audits to country offices for their concurrence and makes a reasonable effort to reschedule audit dates when the country office has a schedule conflict. The scope and objectives of the audit are submitted to the country office approximately one month before the scheduled beginning of the audit. The country office is asked to complete an Internal Control Questionnaire, which provides IAD with important planning information. Most of the information required is easily prepared from existing reports or documents.
Internal audits of food programs are usually combined with internal audits of funds and property. These audits take about four to six weeks to complete.
Internal auditors meet with staff at the principal office, review documents and systems, visit sub-offices, warehouses and distribution sites where material amounts of food are handled, and meet with local donors, if applicable. The IAD also will incorporate reasonable requests by the country office into the scope of the audit.
All audit observations and recommendations are documented in writing and discussed with the country director and other staff before the auditors leave. Before issuing a final audit report, IAD provides the country office with a draft report and an opportunity to comment.
The country office, with concurrence from the RMU, may explicitly disagree with and choose not to implement any recommendation. The RMU and the country director must accept the risks of not implementing the recommendations.
CARE USA expects all accepted recommendations to be implemented within three months of the issue date of the audit report, unless an extension is granted. The final audit report is distributed to the executive staff at CARE USA, the Director of the RMG, FSU, BGA, and the appropriate RMU.
Senior management of each country office staff must be actively involved in monitoring its own food activities. Some country offices have created internal audit positions within the management structure of the country office.
A senior manager can easily make a surprise physical count of food in a warehouse when visiting a sub-office or examine a sample of warehouse inventory records and stock cards and trace some of the entries to the source documents, verifying that the source documents have been properly authorized. Whether or not any discrepancies are discovered, this shows that senior management takes an active role in insuring that systems are in place and are properly operated to minimize the risk of loss and to promote effective food programs.
Given the high value of food assets and responsibilities for safeguarding them, country offices should carry out an internal management review at least annually.The nature and extent of these reviews should be coordinated with regional managers at CARE USA Headquarters. Results of reviews can be used to support responses to the Program Division’s Management Assessment for Country Offices (MACO).
The following checklist may be helpful in carrying out the reviews. The checklist is adapted from Attachment 14A, AID’s Suggested Checklist for Internal Reviews of PL 480 Title II Programs of Voluntary Agencies, Handbook Nine, January 1981. How extensively country offices will follow the checklist depends on the program’s operational environment, numbers of experienced staff, relationships with counterparts and known weaknesses of systems.
Senior managers of country offices will be responsible for reviewing their own operations each year and submitting findings and recommendations to regional managers and internal audit at CAREUSA Headquarters. The review may be conducted by members of the country office staff or experienced outside consultants.
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Food Resources Manual Tutorial
Programming Food Resources
Assessments: Cost And Logistics
Agreements And Contracts
Call Forward And Procurement
Storage And Handling
Food Receipt And Dispatch
Losses And Claims
Inventory Accounting And Reporting
Food Distribution To Sites
Monitoring Project Sites
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