The financial management systems at the National AIDS Authority and the Ministry of Education’s School Health Department are unfit to handle a $22 million grant from Britain, according to an assessment by a private financial consultancy firm.
KPMG Cambodia Ltd awarded “C” grades to the authority and the School Health Department, the lowest grade that the firm could allocate, according to Heang Hang Visal, senior accountant at the National Center for HIV/AIDS, Dermatology and STDs, which was also assessed.
The authority controls the government’s response to the HIV/AIDS epidemic. The School Health Department educates children about HIV/AIDS, said department Director Pen Saroeun.
Both government bodies need an “excessive” amount of reinforcement to their financial systems before they can be entrusted with a $22 million HIV/AIDS grant from Britain, KPMG Cambodia wrote. The firm is a member of KPMG International, a Swiss consultancy association.
Money from the grant should not be given to the two bodies “until key areas of [their] financial management system[s] have been put in place or strengthened,” KPMG Cambodia recommended.
The two agencies will receive no grant money until serious improvements are made, said Elizabeth Smith, health and population adviser to Britain’s Department for International Development Fund, the the project’s funder.
A large proportion of the funds will be handled by the center, which received a glowing KPMG report and an “A” grade.
“We recommend that advances can be disbursed immediately,” to the center, wrote KPMG Cambodia.
David King, KPMG director, would not discuss the results in a recent telephone interview. “We don’t comment on client matters,” he said.
National AIDS Authority Secretary-General Tia Phalla confirmed in a recent interview that the NAA received a “C” grade. He and Ly Po, authority deputy director, could not be reached by telephone Wednesday.
Ministry of Education Secretary of State Pok Than distanced himself from the ministry’s School Health Department in a telephone interview Wednesday. “We give different people different responsibilities,” he said.
The School Health Department’s “C” grade was due to inexperience in financial management, not corruption, Pen Saroeun said. The department has “no skills or background,” in financial management, he said. “Most officials in my department have no background in corruption,” he added.
“I don’t know yet how much money we will get,” he said. “We had hoped to get funds in July this year, but they have been held up until now.”
The UN Development Program has sent a consultant to discuss the grant project with the department, he said. The Education Ministry is planning to train department officials in computer science and development policy, he said.
NCHADS’ grade “A” is partly due to international support, said Dr Mean Chhi Vun, the center’s director, on Tuesday.
Its partners include, the Asian Development Bank, the World Bank and the European Union. “If they are not satisfied, they ask [NCHADS] to improve,” he said.
The center has strengthened its financial management since 2001, he said, training accountants and developing an accounting database. NCHADS have begun receiving installments of the grant.
The KPMG assessment was commissioned in June by DFID, in preparation for the grant—to be directed through the three organizations over five years, Smith said.
He stressed that the two organizations will not receive any funds from the project until their financial systems have improved.
DFID is searching for two long-term technical advisers to try and to improve the financial management of the two organizations. Interviews will not take place until mid-November, Smith said.
“We will work with them to ensure the financial mechanisms are in place,” said John Mitchell, the British Embassy’s deputy head of mission.
The assessment “is not a criticism…. It just highlights the problems,” he said.
The center will handle the majority of the $22 million grant, Smith and Mitchell said.
