Honduras Public Financial Management Risk Assessment Stage 2 -
Risk Assessment of the Millennium Challenge Account
Year Completed: 2013
IBI conducted a risk assessment of the MCA-H in order to help USAID, the Millennium Challenge Corporation and other United States Government Agencies evaluate whether to use MCA-H to receive US Government funds for development projects in Honduras.
Initially asked to conduct a risk assessment of MCA-H, IBI substantially expanded the scope and sharpened the analytical lens of the assessment.
Rather than merely focusing on the MCA-H as an isolated institution, IBI conducted its assessment in the context of the larger public financial management capacity of the Government of Honduras. IBI reviewed, revised, and ultimately improved an existing Public Expenditure and Financial Accountability (PEFA) assessment in order to better predict the reliability of MCA-H in relation to the public financial management systems of Honduras. IBI also conducted an analysis of the procurement systems of the MCA-H that included in-depth review of select procurement transactions.
IBI assessed the operational and financial management capacity of MCA-H by analyzing each of the key elements of its operations. IBI documented each of these key elements and flow-charted them, identifying all control elements while concurrently assessing their adequacy and effectiveness. IBI conducted comprehensive interviews and walk-through visits supplemented by testing and inspection of specific transactions that were selected randomly for the purpose of attesting to the effectiveness of controls. This process was documented using “Voyager,” a proprietary internal control application designed for flow-charting, testing, assessing and benchmarking internal controls and business processes.
IBI’s assessment was welcomed as a trail blazing tool for assisting USAID and other US Government agencies to make prudent and verifiable financial assistance decisions involving counterpart institutions.