Food and Cooking Fuel for Refugees from Burma, Thailand

Background:
TBBC is a consortium of ten NGOs from eight countries which work together to provide food, shelter, non food items and capacity-building support to Burmese refugees and displaced persons living in refugee camps in Thailand. It also engages in research into the root causes of displacement and refugee outflows and lobbies on various strategic levels.

The organisation receives support from 40 resource partners (donors) and has a current annual budget of around USD 33 million.

Purpose/ Objective:
The main objective of the audit is to provide assurance to the European Commission as represented by DG ECHO that the funds are safeguarded as used for the purposes intended and that the activities are carried out in accordance with the grant agreement by undertaking audit work in the country in which the grant agreement is being implemented.

The audit must ascertain whether, for expenses incurred at the time of the audit:

• The system is of internal control governing activities is satisfactory;
• Expenses at the time of the audit fit into one of the categories of the contractual budget agreed and budget chapters/total have either not been exceeded, or have not been exceeded by more than the permitted percentage;
• Expenses are adequately supported by original supporting documentation have been incurred during the eligibility period and has not been accounted for;
• For assets, stocks, leftovers, declared as used, there is proof of the existence of the assets;
• The procurement practices implemented are adequately documented and are in line with the FPA and the grant agreement;
• The physical activities of the operation were implemented as set out in the DG ECHO grant agreement.

Methodology:
The audit approach is system based. It involves a review of systems, structures and controls to identify the level of audit risk associated with the field operations of TBBC and then substantive testing of transactions by reference to underlying documents taking into account the risk level identified. To implement this approach a Risk Evaluation Questionnaire (REQ) is used. The completed REQ gives an indication of the control environment, low, medium or high risk. The REQ covers eleven areas, namely:

• Organisation
• Compliance
• Accounting systems and IT
• Cash and Bank
• Personnel
• Fixed Assets
• Procurement
• Stocks
• Fraud and Corruption Policies
• Field Operational Practices
• Visibility

The responses given to the REC, together with the supporting evidence received from TBBC, have been reviewed and evaluated.

Key Findings:
• TBBC is a well established organization and the structure and various forms of oversight that are in place are considered appropriate for the task of implementing the DG ECHO funded activities.
• TBBC has a well established accounting system that is able to account for and report on funds used under the DG ECHO grant agreement.
• TBBC's procurement procedures respect the requirement of the Annex V of the FPA. TBBC's files are well organized and provide adequate evidence of the need to procure though competition.
• Elements of fraud and corruption policy are in place, but further work is required to introduce training in identification and assessment of fraud and corruption risk for staff, and to formalize procedures to be adopted in the event of fraud being discovered.
• The majority of food and fuel is being delivered and distributed to eligible beneficiaries within the camps. Within the supply chain, there is a good system of documentation of quantities ordered, delivered and distributed. However, the population feeding figures are compromised by the lack of base line figures and the fact that the eligibility criteria specifying who is entitled to receive assistance are unclear.
• Monitoring is well structured, periodic and provides an effective system of feedback to activities in the camp. It also serves to highlight those areas where corrective action may be necessary.

Recommendations:
• An application should be made to the RTG for exemption from VAT.
• TBBC should seek to retain a sufficient cash reserve to ensure adequate liquidity and to enable continuation of activities in the event of delayed contributions from partners.
• The Financial Procedures Manual should include exchange rate procedures.
• Tender evaluation committee members should sign a declaration of impartiality and confidentiality.
• All evaluation of tenders/awards should clearly state the reasons for selection and rejections, and be signed by all evaluation committee members. The frequency of tenders can be reviewed. Firms whose offers are rejected should be informed by notice.
• Procedures for investigation of suspected fraud should be formalized and staff awareness of fraud and corruption risk should be heightened.
• Donors such as DG ECHO office and EC Delegation in Bangkok should approach the RTG requesting greater flexibility to enable new arrivals to the camps to register as refugees and to permit measures to increase self reliance of refugees in the camps.
• Measures should be taken to verify the accuracy if the feeding population figures.
• Procedures governing the ration cards should be enhanced.
• Monitoring procedures should be enhanced to include verification of the population feeding figures and ensuring quantities of rations delivered and reconciled through the supply chain.

Comments from Norwegian Church Aid (if any):