3 March 2016

Uganda: OIG Audit Reveals Serious Weaknesses in Management of Grants in Uganda

analysis

For the second time in a month, the Office of the Inspector General has released a report of an audit into grants to a major recipient of Global Fund money that revealed serious deficiencies in the way the grants have been managed. First, it was Tanzania (see GFO article); this time, it is Uganda.

A theme common to both audits is that many of the problems revealed by the OIG had been identified previously and had not been addressed.

The report on the Uganda audit was released on 26 February. The OIG rated both (a) governance, oversight and management and (b) the management of health services and products as "ineffective," meaning that internal controls, governance and risk management processes were not adequate, appropriate, or effective - and there was no plan in place to address the issues. The OIG rated both (a) programmatic and performance management and (b) financial and fiduciary management as "partially effective."

Despite the problems, the OIG said, Uganda has made "great headway" in fighting the diseases. For example:

annual new HIV infections have declined from 140,000 in 2010 to less than 100,000 at the end of 2014;

the proportion of people living with HIV who were receiving antiretrovirals rose from 21% percent in 2010 to 50% in 2014; and

malaria prevalence in young children has decreased from 42% in 2009 to 19% in 2015.

The audit reviewed seven grants managed by two principal recipients: The Ministry of Finance Planning and Economic Development, and The AIDS Support Organization. The Ministry of Finance had delegated its implementation responsibilities to the Ministry of Health. The audit covered the period January 2013 to June 2015.

The audit included visits to four sub recipients and sub-SRs, field visits to 50 hospitals and health facilities, the National Medical Stores, the Joint Medical Store, and district medical offices. Of the 50 facilities, 40 were public and 10 private.

Approximately 90% of Global Fund grants to Uganda are spent on the procurement of medicines and health products. The Secretariat's pooled procurement mechanism acquires all health commodities with the exception of tuberculosis drugs which are procured by the Global Drug Facility. This means that the audit focused only on the 10% of expenditures under the control of the PRs. Most of the problems identified by the OIG appeared to relate to the grants for which the Ministry of Finance was PR.

The audit found that Uganda's supply chain system "remains" ineffective in distributing and accounting for medicines and other commodities. The audit identified stock-outs of at least one key medicine in 70% of 50 health facilities visited. In addition, more than 54% of the health facilities visited had some expired medicines. The OIG said that pervasive stockouts of important medicines will result in treatment disruptions if the situation is not addressed.

Uganda's decision to follow the latest World Health Organization guidelines for antiretroviral treatment has resulted in an increase of 260,000 in the number of people on ARVs by 2016. The OIG noted that it has also resulted in a marked increase in the funding gap to support the scale-up. At the time of the audit, the OIG said, the funding gap for Uganda's HIV program was $92 million. Because the additional funding is not readily available, the Global Fund has had to front-load the provision of antiretroviral medicines in order to cover treatment gaps (see GFO article).

The audit identified unexplained stock differences at various levels of the supply chain. For example, differences of $21.4 million were noted between book and actual stocks at the National Medical Stores for 15 commodity types procured by the government and the Global Fund. The audit could not apportion the variance between the government and the Global Fund since the stores' inventory system does not segregate physical stocks by source. The audit did not establish whether any misuse of funds occurred, but the case has been referred to the OIG's Investigations Unit for further review.

The PR attributed the accounting differences to errors in the inventory management system, but the audit team was unable to verify this.

The OIG said that issues identified in past reviews initiated by the Secretariat "still remained pervasive and persistent." For example, the installation of an accounting software has been pending since 2011. Also, management of advances was weak, with some remaining outstanding for over 20 months. Further, value added taxes amounting to $300,000 had not been refunded to the programs.

Although the Ministry of Health uses an integrated financial management system, transaction for the programs financed by the Global Fund were not reported through this system. Instead, the transactions were recorded using excel spread sheets which, the OIG said, are prone to human error and are not secure.

The audit identified expenditures of $3.9 million that were inadequately documented.

Among other findings:

16.5 million condoms that should have been distributed for free were sold through social marketing. The funds generated from the sales ($200,000) remain unaccounted for;

data quality "remains" a challenge due to the shortage of data collection tools, and inaccurate and incomplete data reported by health facilities;

only 32 of the 102 Gene-Xpert machines purchased were in use. The 32 machines had an average utilization rate of 5% in the third quarter of 2015;

12% of the 50 facilities visited were performing HIV tests with expired test kits;

14% of facilities visited did not perform confirmatory tests on clients diagnosed as HIV-positive;

43% of patients were treated for malaria without confirmed diagnosis and/or with negative results; and

only 46% of the funds disbursed to the Ministry of Finance between January 2013 and June 2015 had been spent at the time of the audit.

The OIG said that the issues in its report raise questions about the adequacy and effectiveness of the two PRs in overseeing their SRs, and about ensuring recommendations from the Secretariat are implemented on time. Recommendations made from numerous reviews were often repeated, the OIG said, because prior agreed management actions were not implemented by the Ministry of Health. In addition, the OIG said, known program implementation challenges, such as the delayed procurement and recruitment processes, have not been adequately addressed.

The OIG said that the recurring nature of the issues also raises questions about the level of oversight provided by senior management of the Ministry of Health in ensuring that activities are effectively implemented.

Actions agreed by the Secretariat

In response to the audit findings, the Secretariat agreed, among other things, to:

assist the government to identify treatment gaps as well as a mechanism for raising additional funding;

ask the Ministry of Health to develop an action plan that addresses the implementation issues identified in the audit report; and

work with the government and partner organizations to develop an operational plan to improve accountability throughout the supply chain.

Reaction

In a statement, civil society organizations in Uganda said that they are not convinced that the corrective actions being proposed "are substantial enough to trigger the changes that are urgently required."

"This is a crisis," said Joshua Wamboga, Executive Director of the Uganda Network of AIDS Service Organizations (UNASO). "In almost all cases, the problems that the audit found have been known to the Ministry of Health for years - but no effort has been made to resolve them. Meanwhile, Ugandans with HIV are suffering entirely preventable stockouts of medicines. These failures are completely untenable - there is no committed leadership, no action, no accountability, and no sign that government is taking these problems seriously."

"We are sick of unacceptable delays in the procurement of life saving interventions - such as food for people with drug-resistant TB or condoms - being delayed because those responsible for procurement are seeking kickbacks," said Rachel Nandelenga of the International Community of Women Living with HIV Eastern Africa (ICWEA). "This impunity must end today."

The CSOs recommended that the Ministry of Health be replaced as the main implementer of fund programs, and that the government double financing for HIV treatment to 200 billion shillings ($60 million) in the budget due in June.

In addition to UNASO and ICWEA, the statement is signed by the Coalition for Health Promotion and Social Development (HEPS Uganda); the Civil Society Inter Constituency Committee (CICC); and networks of AIDS service organisations in 17 districts.

Troubled history

Global Fund grants to Uganda have experienced problems in the past. All grants to that country were temporarily suspended in August 2005 due to serious mismanagement in the program management unit established in the MOH to coordinate implementation (see GFO article). The suspensions were lifted four months later (see GFO article).

In March 2007, two grants were terminated because of unsatisfactory performance (see GFO article). In December 2009, a review by the OIG concluded that The Global Fund should continue to use the Ministry of Finance as PR despite reservations about the performance of the MOF and its designated implementer, the MOH (see GFO article).

The statement by CSOs is on file with the author.

This article was revised on 5 March to incorporate additional information from the statement made by Ugandan CSOs. The previous version relied on a report about the statement in The Guardian newspaper.

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