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RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
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R 270656Z AUG 09
FM AMEMBASSY DAR ES SALAAM
TO RUEHC/SECSTATE WASHDC 8796
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHKM/AMEMBASSY KAMPALA 3477
RUEHLGB/AMEMBASSY KIGALI 1403
RUEHNR/AMEMBASSY NAIROBI 1349
RUEHGV/USMISSION GENEVA 0501
RUEAUSA/DEPT OF HHS WASHINGTON DC

UNCLAS SECTION 01 OF 02 DAR ES SALAAM 000560 
 
SIPDIS 
 
DEPARTMENT FOR AF/E JTREADWELL, S/GAC 
 
E.O. 12958: N/A 
TAGS: PGOV KHIV SOCI TZ
SUBJECT: GLOBAL FUND AUDIT: TANZANIA TAKING ACTION 
 
¶1. SUMMARY: A recent internal audit of the Global Fund to Fight 
AIDS, TB and Malaria's grants in Tanzania concluded that the grants 
face serious challenges, particularly in the areas of supply chain 
management and financial and programmatic reporting.  The GOT has 
committed to taking appropriate corrective measures, which will be 
necessary for signing of Round 8 Global Fund grants.  The USG has 
offered to provide technical assistance and capacity building, at 
GOT request.  In addition, key elements of the Partnership Framework 
will address system strengthening and capacity efforts directly 
related to audit recommendations.  While there have been several 
sensational articles on the audit report in the local press, the 
Global Fund Secretariat has emphasized publicly the routine nature 
of the report and that the report did not mention corruption. END 
SUMMARY. 
 
Background 
---------- 
¶2. Between December 2002 and February 2009, the Global Fund to Fight 
HIV/AIDS, Tuberculosis (TB) and Malaria (the Global Fund) committed 
a total of USD 820 million to Tanzania, of which USD 384 million had 
been disbursed as of February 23, 2009. The Global Fund has a 
portfolio of twelve grant agreements in Tanzania. 
 
¶3. The Global Fund's Office of Inspector General (OIG) conducted an 
audit of several Global Fund grants to Tanzania as part of its 2009 
work plan.  The field work for the audit was carried out from 
January 19 to February 20, 2009.  The Global Fund shared the audit 
report [TGF-OIG-09-001] with the GOT before its June 10 public 
release. 
 
Audit Objectives and Scope 
-------------------------- 
¶4. The audit's overall objective was to provide assurance that the 
procurement, supply chain management, service delivery and financial 
management of Global Fund grant programs for HIV/AIDS, 
HIV/Tuberculosis and Malaria were undertaken efficiently and 
effectively; that adequate controls existed to account for grant 
resources; and that there was effective program oversight of Global 
Fund grants both within Tanzania and by the Global Fund Secretariat. 
The OIG deployed a multi-skill team comprising a public health 
specialist, a procurement and supply management specialist, and 
audit specialists. 
 
¶5. The scope of the audit was limited to five Global Fund grant 
programs implemented by the following organizations: Ministry of 
Health and Social Welfare (MOHSW) and its national programs for 
HIV/AIDS, TB and Malaria; Prime Minister's Office-Regional 
Administration and Local Government (PMO-RALG); African Medical and 
Research Foundation (AMREF); and the Tanzanian Commission for AIDS 
(TACAIDS). In addition, the audit covered selected implementing 
partners of those entities. Audit tests and program visits were 
carried out in eight districts in Kilimanjaro, Tanga and Iringa 
regions. 
 
Findings and Recommendations 
---------------------------- 
¶6. The OIG concluded that there are serious issues facing the grants 
to Tanzania, particularly, in the area supply chain management and 
financial and programmatic reporting. 
 
¶7. For supply chain management, the OIG concluded that the Medical 
Stores Department's (MSD) management and its Board should ensure 
that controls needed to safeguard medicines and health products are 
established, effective, and working at all levels of the supply 
chain (i.e., from receipt of goods by MSD to storage and eventual 
distribution down the supply chain to district stores and health 
facilities). Drawing on the GOT Controller and Auditor General's 
report, the OIG indicated that unless corrective actions were taken 
to enhance the control environment and internal controls at key 
levels of the supply chain and at MSD in particular, grant resources 
would be at risk. Consequently, the audit recommended that Global 
Fund Round 8 grants to Tanzania should be conditioned on the GOT 
addressing the serious issues in supply chain management. 
 
¶8. In the area of financial and programmatic reporting, the OIG 
could not give assurance on the accuracy of the financial and 
programmatic reports prepared by TACAIDS and submitted to the Local 
Fund Agent (LFA).  The OIG found that there were no financial and 
programmatic reports available from implementing 
organizations/sub-recipients to confirm the figures reported. 
Further, there was no appropriate senior level management review 
before these reports were sent to the Ministry of Finance for 
signature. The OIG recommended that disbursement for Round 8 grants 
to Tanzania should also be conditioned on addressing the capacity 
gaps of TACAIDS as a substantive Principal Recipient, after its 
 
DAR ES SAL 00000560  002 OF 002 
 
 
capacity had been assessed. 
 
GOT Response and USG Support 
---------------------------- 
¶9. The GOT accepted most of the audit findings and stated that it 
would take appropriate corrective measures.  The USG has accepted a 
GOT request to strengthen the Ministry of Health and Social Welfare 
Procurement Management Unit (PMU).  The technical assistance will 
span an 18 to 24 month period.  In addition, the USG is providing 
increased technical assistance to MSD.  This support will continue 
under the Partnership Framework as well as through USAID's Health 
and Population Office. 
 
News Coverage 
------------- 
¶10.  In the last several weeks, local press has reported, often in 
sensational fashion, on the audit report and the shortcomings 
identified.  In response, the Global Fund Secretariat has emphasize 
that the audit was routine and that while "[T]he report raises 
significant issues over stock controls, internal systems and 
information systems,  there's no mention of corruption.  There were 
some gaps and some drugs were missing.  There's a long list of 
action points and we have had a constructive response from the 
Tanzanian government.  Our sense is that there will be an energetic 
follow-up by the government to remedy the shortcomings." (Comment: 
We agree with the Secretariat's assessment.) 
 
ANDRE