PracticeAuditOn the money with Damian Wild

On the money with Damian Wild

What do North Korea and Iraq have in common?

Put aside issues of politics, terrorist threats and military interventions –
real or prospective. All three highlight that where aid follows, audit is slow
to follow.

Last month the United Nations Development Programme announced an independent
audit of its multimillion-dollar projects in the Not-so Democratic Republic of
Korea. Reports had been circulating for the best part of a decade that aid money
had been misused – possibly to bolster weapons programmes. A defensive UNDP was
forced to respond.

Sound familiar? Two years ago the UN’s auditing and financial controls of
Iraq’s $64bn oil-for-food programme came under attack. The UN was told to
install financial controls to avoid ‘illicit, unethical and corrupt behaviour’
in the scheme.

There is nothing new in the notion that when it comes to aid, the size of the
sums handed over is more important than ensuring it has been used appropriately.
But with demands multiplying, crises escalating and calls for transparency
growing louder, there are signs that financial intervention is on the cards.

Earlier this month, a fresh audit of Iraq reconstruction aid revealed tens of
millions of dollars had gone missing, with insecurity, corruption among Iraqi
officials and weak US contract management the chief reasons. It made for bleak
reading, but at least provided answers to many of the financial questions that
dog the project.

There was more promise from the UNDP. It may have failed to deal with the
many concerns raised by internal auditors in the late 1990s about operations in
North Korea. But at least the UNDP said it was considering making internal
audits available to UN member states. Better late than never.

Damian Wild is editor in chief of Accountancy Age

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