Accounting for Haiti Aid Donations 2010

We conclude that the SHO accounts for the expenditure in accordance with the agreements laid down in the new management plan and that the quality and quantity of the substantive and financial accounts have accordingly improved in comparison with previous Giro 555 campaigns. We also conclude that the Ministry of Foreign Affairs' accounts of the €12 million it provided were in accordance with the agreements. The ministry's supervision of the SHO's expenditure is not yet complete. The ministry is still assessing the SHO's and the aid organisations' annual accounts and auditor's reports. In our opinion, the SHO's accounts can be further improved in the following areas: 

1. It is not sufficiently clear how the funds are channelled in Haiti and it therefore cannot be determined what part of the aid is received by which international umbrella organisations, fellow aid organisations and the organisations' own field offices. 
2. The audit protocol used by the SHO does not require the auditor to make substantive checks of the income and expenditure format specified for Haiti. 
3. The definition of programme management costs is ambiguous; each aid organisation determines for itself which costs it recognises. 
4. It is not always clear how the aid organisations link the results achieved to the funds spent. 
5. The ratio agreed by the participants to allocate the proceeds of the Giro 555 Haiti campaign differs from the actual financial allocation.

    

We recommend that the SHO: 

1. Prepare a systematic overview of the flow of funds from the aid organisations to international umbrella organisations, fellow aid organisations and field offices. The following links in the aid chain, where the funds become anonymous, should then be explained in so far as possible; 
2. Widen the scope of the external audit of the aid organisations to include the format of the annual accounts; 
3. Provide more insight into the project management costs and explain how they are determined; 
4. Provide more insight into the link between expenditure and results and explain what results are achieved on the basis of allocation and what results are the consequence of earmarked expenditure;
5. Explain the actual allocation of the €111.4 million among the 15 aid organisations in order to provide the greatest possible insight into the departure from the SHO allocation ratio.

Response of the SHO
The SHO attaches great value to this report and is pleased with the conclusion that it has accounted for the funds received from Giro 555 in accordance with the agreements and that the report has become clearer. The SHO stresses that its participants disburse the donations through their own channels (field offices, international umbrella organisations or local partners) as part of a broader aid programme. The funds are thus part of a larger international flow of funds. The Court of Audit notes that the funds flows must be auditable down to the level of the field offices and international umbrella organisations, after which the Dutch euros become part of an international flow of funds and cannot be followed to their final destination. The SHO considers the level to which the Dutch euros must be auditable to be feasible.

The SHO comments on certain sections of the report: 

• Regarding the use of the allocation ratio, the SHO took account of the participants' cash requirements in the latest transfer to them. This calculation was not included in the third public report but the SHO did inform the Ministry of Foreign Affairs, which subsequently approved the method.
• Regarding the recognition of programme management costs, the SHO notes that the organisation's working methods, via partners or an international umbrella organisation, determine the allocation of costs. 
  

The SHO agrees with four of the five recommendations and will consider them in subsequent reports. The SHO does not accept the recommendation to include the format of the annual accounts in the audit and has doubts about the added value of doing so. It refers to the additional administrative burden of auditing the format and thinks that the management methods and controls currently in place at the SHO participants provide sufficient assurances on the reliability of the financial information. 

Response of the State Secretary for Foreign Affairs
The state secretary thinks the Court of Audit's recommendations will make a useful contribution to the further improvement of the accounts. He will consider them in the regular policy meetings with the SHO and where appropriate take account of them when any future contribution is made to the SHO. The state secretary said that the Ministry of Foreign Affairs would stop supervising the contribution made to the SHO for the Haiti campaign at the end of 2011.