Where Your Money Went - Funding Afghanistan's Reconstruction

Now that Washington has, at least temporarily, put another debt crisis behind it, I wanted to take a look at just how responsible the government really is with the funds that they have at their disposal.  To that end, let's look at one place where significant funds were spent and how careful the government was with their spending.

Relatively recently, it certainly appeared that Hamid Karzai and President Obama were not playing well together.  The United States is considering a "zero option" where all United States forces will be pulled out of Afghanistan by the end of 2014 after 13 years of battling to install democracy in a reluctant population.  With that in mind, let's take a quick look at a recent report released by the Special Inspector General for Afghanistan Reconstruction (SIGAR) that looks at the financial assistance given to Afghanistan by the United States Department of State.

Since 2002, the Department of State (State) has provided over $6 billion in appropriated funds to aid Afghanistan in nation building and reconstruction of its infrastructure that has been destroyed by three decades of war.  These funds are known as State Assistance Awards and are used to provide health and education services, pay for the construction of infrastructure and promote economic growth and governance.  Since U.S. taxpayers are the ultimate source of these funds, State is technically responsible for ensuring that the funds allocated are used both effectively and efficiently whether they are granted to non-profit groups or for-profit companies.  Federal law states that U.S. non-profit organizations that are spending $500,000 or more in federal funds must conduct an audit to ensure that federal funds are being spent in a responsible manner and that goals are being met.

Over a one year period ending in June 2013, SIGAR reviewed a total of 140 grants/assistance awards that were valued at $1 million or more that State awarded to 61 non-federal entities between 2002 and 2011.  The total estimated value of these assistance awards was  $315.4 million.  Here are SIGAR's findings in chart form:

You'll notice that of the $315.4 million in assistance awards, $191.6 million worth or 60.8 percent of the total were not audited.  Of the 140 assistance awards, audits were only completed for 41 awards or 29.3 percent of the total.  Note that the vast majority of the non-audited awards were given to foreign organizations followed by United States non-profit groups.

Looking through the listing, the biggest offending foreign organization was the Demining Agency for Afghanistan(DAFA).  This organization received 9 awards totalling $24.4 million; of that, only 1 award has been audited totalling $4 million or 16 percent of the total.  These awards were made prior to the creation of a Political-Military Bureau Office of Weapons Removal and Abatement audit requirement.  The biggest offending U.S. non-profit is the HALO Trust (Hazardous Areas Life Support Organization) which received 14 awards totalling $34.3 million; of that, only 4 awards have been audited totalling $12 million or 35 percent of the total.  Two audits are not yet due and the remaining eight were considered by State to be "minor programs" that did not require an audit.

One of the biggest problems is that State had no policy requiring audits of grants awarded to foreign organizations at the time that most of these funds were awarded.  Here is a chart showing how the lack of an audit requirement resulted in only 15 of the 65 assistance awards given to foreign organizations being audited:

Now, let's look at non-profit funding and the degree to which these funds have ben audited.  Over the period from 2002 to 2011, State gave 68 assistance awards of $1 million or more to 28 U.S. non-profit groups.  As shown in this chart, over half of the $136.4 million in assistance funds to non-profits have not undergone audits:

Unfortunately, the problem lies with State's less than clear policy of audit requirements for assistance awards; individual bureaus within the Department of State set their own policies which vary widely from bureau to bureau.  SIGAR recommends that the United States Secretary of State establish a department-wide policy that requires an audit for all organizations receiving assistance awards and to ensure that these requirements are both clear and consistent.  After all, it is American taxpayers that are ultimately funding these programs and, at the very least, they deserve to know if the funds  that are being sent overseas are meeting the goals set by both State and the recipient of the awards.