Global Fund Office of the Inspector General Operational Progress Report –the reality is brought home
The Office of the Inspector General (OIG) has just issued its progress report for the period January -September 2021. It makes for sobering reading. The opening statement of the executive summary says it all: COVID-19 is having a devastating impact on Global Fund programs and operations. The pandemic effects have led to (a) declines in HIV testing and in tuberculosis (TB) case notifications, and in rising malaria incidence; (b) decreasing fiscal space, and (c) rising opportunistic fraud. The report goes on to say that COVID-19 has not only disrupted grant activities across the three diseases, but its resurgence is also compromising efforts on programmatic catch-up and scale-up.
The source of information for this article is the documents for the Board meeting held on 8-10 November 2021, constituencies’ feedback, and Board discussions.
Absorption of COVID-19 Response Mechanism Funding
As of 31 August 2021, 81% ($2.6 billion) of the current COVID-19 Response Mechanism (C19RM) funding envelope had been awarded or recommended for Board Approval through the mechanism; however, there was demand in excess of available funds of $1.2 billion. These resources are helping to mitigate COVID’s impact on HIV, TB, and malaria (HTM) programs, reinforce national responses to the pandemic, and bolster health and community systems. While the mechanism has been materially adequate and effectual for an emergency response, it is the effective use of funds and their timely absorption that are critical. In some countries, the absorption of grant flexibilities and C19RM resources has been low, principally due to protracted country-level procurements.
Flow of commodities
The pandemic has generated substantial and complex challenges for both global procurement and in-country supply chains. COVID-19 disruptions have increased national health programs’ reliance on the Global Fund’s Pooled Procurement Mechanism (PPM) and on wambo.org, its online procurement platform. With approximately 65% of C19RM-awarded procurements to date expected to be channeled through wambo, the platform plays a key role in supporting timely procurement and in safeguarding against procurement risks. Overall, the number of countries supported by wambo.org increased by 16% from 69 in 2019 to 80 in 2020, placing an even greater demand on the Secretariat teams supporting these efforts. Although mostly effective for the current volume of transactions, the existing process setup and workflows for wambo.org require extensive use of manual controls which cannot be easily adapted to the expected increase in transaction volume. In such cases, associated costs could be high, as more staff may be required to execute manual controls, and the controls’ effectiveness could be compromised. The Secretariat will therefore need to integrate and automate existing controls to support any further significant scale-up of transactions through the platform.
Domestic health financing
COVID-19 has meant many countries face diminishing fiscal space, leading to increased debt and associated costs. The pandemic’s impact differs by country, but implementer government budgets will likely be severely constrained, with implications on health budgets, prioritization decisions, and expenditure over the next 10 years.
OIG considers that there are significant opportunities to enhance the Global Fund’s impact in domestic health financing by:
- Defining clear strategic approaches for domestic financing for health (DFH);
- Effectively supporting and leveraging civil society organizations;
- Enhancing technical support to Country Teams and implementers and embedding DFH into core organizational processes; and
- Strengthening financial management by setting more ambitious objectives and targets at the country level, which will need to be coordinated jointly with partners. The Global Fund should also increase the scale and scope of investment to improve health finance data and systems.
Preventing opportunistic fraud
Left unchecked, opportunistic fraud can become a systemic issue with material losses. In 2022, the OIG will perform an advisory review of how the Local Fund Agent model, a critical component of in-country assurance, can be enhanced. It will increase its outreach activities with in-country assurance providers to enable early identification and better disruption of opportunistic fraud.
OIG counter-fraud priorities for 2022 are to:
- Promote the concept of interrupting fraud/ wrongdoing;
- Encourage reporting of fraud and abuse through engaging implementers and civil society organizations;
- Analyze trends on a routine basis to inform our activities/products;
- Target implementers in high-impact but low-reporting countries;
- Produce fraud red-flag information for Local Fund Agents to encourage early reporting; and
- Update its counter-fraud platform, the www.ispeakoutnow.org website.
At the start of 2021, OIG radically reformulated its working practices, embracing a remote assurance model and techniques such as virtual platforms and remote interviewing. Such a fundamental shift necessarily brought a steep learning curve, resulting in delays to most deliverables and affecting OIG’s anticipated progress against ambitious key performance indicators (KPIs). However, it remains largely on track to deliver the approved 2021 workplan.
The report provides information on the audit work undertaken, the status of Audit Unit engagements as of 30 September 2021, and the proposed audit engagements for 2022. No concerns are reported from the audit work.
Under the work of the Professional Services Unit, the report notes that while the pandemic has created many challenges, remote working has brought into sharp focus the importance of engagement with in-country assurance partners such as Supreme Audit Institutions (SAIs). Benefiting both parties, the OIG has been actively engaging with SAIs and their umbrella bodies to support country audits. This has resulted in advanced negotiation in signing memoranda of understanding with two SAIs in 2021 – the Auditor General of the Federal Republic of Nigeria and Auditor General of South Africa. The OIG is also providing technical support to Aidspan in building the capacity of SAIs across Africa. In March 2021, it held a partnership session with GAVI, the World Bank, and the United States Government on the need to build SAI capacity.
Investigations work is also described and a table shows the progress against the workplan as of 30 September 2021. Compared to 48 predicted, OIG carried over 62 assessments/investigations into 2021, of which 30 have been closed. 49 new assessments were opened compared to a predicted total of 45 for 2021.
Cases investigated by OIG in 2021 identified $114,221,055 of non-compliant expenditure (although it is noted that $106 million of this relates to one case) and a further $4,715,400 identified and recommended in potential recoveries, and three suppliers have been referred to the Global Fund’s Sanction Panel. As a result of OIG investigations, the Secretariat has:
- Developed a framework related to harassment, including sexual harassment, bullying, and abuse of power in the context of Global Fund programs. Roles and responsibilities have been defined and clarified, as have the relevant sections relating to funding agreements and codes of conduct.
- Committed to improving quality control practices for Long-Lasting Insecticidal Nets, including formalizing guidance for pre-shipment inspection, sampling, and testing, post-market surveillance, and internal verifications of quality control practices by Principal Recipients (PRs) and the PPM procurement agents.
- Agreed to establish an interim framework that provides guidance on assurances and necessary oversight of identified strategic logistic providers/prime contractors used by the Global Fund, enabling detailed analysis of contract performance against signed budgets.
- Committed to ensuring all Global Fund implementers strengthen their controls on sub-implementers’ financial reporting, using direct annual bank confirmations for verification of periodic cash positions and in preparation of annual audits.
Cases investigated by implementers overseen by OIG identified $2,216,600 of non-compliant expenditure and $149,132 in recoveries.
Based on past data and taking into account the increased fraud risk environment due to COVID-19, in 2022 OIG expects to receive and assess in excess of 220 reports
Surprisingly, OIG expects to deal with an increased workload in 2022 with exactly the same total budget as for 2021.
The delegations welcomed the report from the OIG and the steps taken to detail the ongoing impact of COVID-19 on Global Fund programs at the country level. However, they noted missing detail on the increase in human rights violations faced by key and vulnerable populations (KVPs) since the onset of the COVID-19 emergency. As a key strategic objective of the Global Fund’s current and in-coming Strategy, they requested greater focus in the Secretariat’s reporting to the Board and Committees on the progress, persistent challenges, risk and opportunities to achieve targets on protecting and promoting the health and human rights of the communities and people impacted by HTM.
Regarding the increased use of the Global Fund Market Shaping Strategy PPM and requests originating from wambo.org, stakeholders noted the OIG concerns about increased usage of these mechanisms since the onset of the Covid-19 pandemic. While they acknowledged that current process configurations and processes for wambo.org rely heavily on manual controls that are difficult to modify, (as mentioned on page 5 of the report), they advised the Secretariat to "automate current controls to enable the platform to scale up transactions."
Further, stakeholders urged the Board, Strategy Committee, and Secretariat to consider the following questions in their respective deliberations on these issues:
- How are these constraints related to the risk mitigation measures proposed by the Secretariat to direct further use of PPM/wambo.org for C19RM grants?
- How will the Global Fund assess alternatives for countries to ensure both fiduciary and programmatic risks (e.g., risk of delays)?
Other constituents appreciated the Global Fund’s ambition to enhance DFH and in this regard urged the timely development/implementation of an approach to leverage critical civil society support in advocating for DHF.
In view of the increased risk of opportunistic fraud, the constituencies urged the Global Fund to resume and extend in-country monitoring. They also noted and welcomed the OIG work plan inclusion of increased country audits.
Constituencies thanked the OIG for developing its new Strategy 2022-2027 and welcomed engagement with the SAIs at the country level. However, they are concerned that in 2021 investigators had to rely on third parties to obtain required documentation and data. They therefore asked the Global Fund what assurances they can offer regarding the closure of ongoing cases and for information on challenges to close earlier cases? They are also concerned that the use of fraud awareness initiatives such as the ispeakoutnow.org platform and virtual webinars may be insufficient to interrupt or report wrongdoing and they asked if the Global Fund has plans to assess the impact of these mechanisms.
Other stakeholders noted that a framework related to harassment, including sexual harassment, bullying, and abuse of power in the context of Global Fund programs, had been developed. The roles and responsibilities have been defined and clarified, as have the relevant sections relating to funding agreements and codes of conduct. The constituencies noted that it will be important to keep a track of the effectiveness of these measures put in place.
Stakeholders noted that the Philippines was one of the countries where a remote audit took place, and they shared the following thoughts on the process:
- Give adequate time to announce the audit so national calendars are considered and organizing meetings are appropriately done in phase.
- The national context must be considered in looking at the grant performance, like how local bureaucracy impacts project outcomes
The stakeholders were pleased to see that the OIG will evaluate the Country Coordinating Mechanism (CCM) model and approach as this has been an issue that they have been keen to see addressed and have raised on several occasions this year. They believe the time is right to evaluate whether the CCM model is fit for purpose.
The Board Document GF/B46/06, OIG 2021 Operational Progress Report, should be available shortly at https://www.theglobalfund.org/en/board/meetings/46