OIG Says Current Application Process Impairs Board Decision-Making

5. NEWS
24 Jun 2010

The current grant applicationsprocess constrains the Board's ability to set policy and strategy, and to makefunding decisions that meet Global Fund objectives. This is one of the observationsin an audit report issued by the Office of the Inspector General, "TheOIG Review of the Global Fund Grant Application Process." (This is thethird of three articles in this GFO issue on the OIG report.)

The OIG report identified fourfactors that constrain the Board:

1. Thereis no in-built review mechanism to readily allow the Board to ensure thatmaximum funding is directed to fight the three diseases where most needed.

2. Thereis no structured forum for a full, systematic dialogue between the Board andthe TRP, especially on policy issues.

3. Thereis little scope for the Board to provide assurance on the financial soundnessof the proposals it approves for funding, since budgets are fully consideredonly after Board approval.

4. Thereis no single Board forum for discussion of the results and impact of GlobalFund activities, including the impact of policy recommendations made by theBoard itself.

Fundingdirected where most needed

TheGlobal Fund's framework document says that the Fund will give priority tocountries with the heaviest disease burden. In its report, the OIG said thatthe current arrangements and the practice of approving TRP recommendations "enbloc" reduces the Board's ability to put policy into practice. A goodproposal is likely to be approved, whatever its country of origin or thedisease burden in that country.

Systematicdialogue

The TRP reports to the Boardthrough the Board's Portfolio and Implementation Committee (PIC). The OIG saidthat "given the importance of the TRP to the Board and to the Global Fundas a whole, there is scope for regular substantive discussion of the TRP's workby the Board in plenary, or as a 'committee of the whole,' rather than solelyby delegation to the PIC, which represents little more than half the Boardmembers."

The OIG pointed out that although the Board's own policy andstrategy decisions on behalf of the Global Fund tend to be formulated firstwithin its Policy and Strategy Committee (PSC), this committee has no formallink with the TRP, despite the impact that the PSC's work has on all areas ofGlobal Fund activity, including proposal management and review. According tothe OIG, the absence of a consultative forum involving the TRP and the PSCdisadvantages both entities.

Financialsoundness

The OIG said that proposals reach the Board without havingbeen subjected to full financial scrutiny. Proposal budgets, logistics(including procurement) and financial management arrangements are only fullyconsidered during the grant negotiation period, after Board approval. The OIGsaid that these are all crucial issues, often presenting problems during Phase1 of grant implementation.

TheOIG said that it is debatable "whether this is a sound or efficientpractice, on the basis of which the Board makes funding decisions on proposals,given that key elements of due diligence have yet to be carried out. Thisreinforces the case for budget scrutiny to be conducted before proposals reachthe TRP."

[Editor'snote: In Round 9, financial analysis support was provided routinely for the TRP'sreview of proposals whose lifetime budgets exceeded $100 million. The TRP hasrecommended that, in future, financial analysis support be provided for allproposals. See "TRP Observations Concerning Round 9," in GFO #112, atwww.aidspan.org/gfo.]

Boardforum for discussion

Accordingto the OIG, good financial governance practices require that the success ofprevious activities be taken into account when considering whether to providenew money, but this does not happen in the rounds-based application process.The OIG said that TRP recommendations are approved for funding by the Board onthe understanding that previous performance has been taken into account by theTRP, but, in practice, the TRP does not have time for more than the briefestassessment of previous performance when reviewing rounds-based grantapplications.

Therefore,the OIG said, the Board currently lacks a sound basis on which to engage in astock-taking exercise of its own on the relationship of funding decisions toperformance. As well, the OIG noted, the Board has not had an opportunity toevaluate many of its own policies, including those that have a direct impact onthe grant application process.

Seealso the two previous articles in this issue. "The OIG Review of theGlobal Fund Grant Application Process," April 2010, is available at

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