Interesting Facts and Figures from the Performance Audit of the Charities and Societies Agency

In a performance audit conducted on the Charities and Societies Agency by the Office of the Federal Auditor General, auditors found numerous issues related to institutional capacity, structural efficiency and enforcement of rules and regulations. These issues seem to have contributed to the rather poor performance of the Agency as a body entrusted with the task of overseeing the operations of NGOs in Ethiopia. Excerpts from the 34-page auditors’ report:

  • The audit covers the performance of the Agency for fiscal years 2010-2013. The report was published in January 2014
  • The audit reviewed the files of 40 charities kept at the Charities and Societies Agency (ChSA) head office, conducting an onsite visits to the Harari and Dire Dawa regional offices of 10 of these charities and conducting interviews with officials of these organizations. Auditors also conducted interviews with officials of 5 federal sector administrators and 12 regional sector coordinators.
  • The audit finds that the Agency has not been able to conduct sufficient field and desk based monitoring of  registered Charities and Societies:
    • In fiscal year 2011 the Agency was able to conduct field and desk based monitoring of only 118 charities and societies out the planned 300 for the fiscal year. That is 39.3%
    • In fiscal year 2012 the Agency was able to conduct field and desk based monitoring of 176 charities and societies out of the planned 600 for the fiscal year. That is 29.3%
    • In fiscal year 2013 the Agency was able to conduct field and desk based monitoring of 176 charities and societies out of the planned 300 for the fiscal year. That is 59%
    • The auditors however state that, despite their request, Agency officials were not able to provide copies of the field monitoring reports they claimed to have conducted on the charities and societies.
    • Out of the 2060 charities and societies that the Agency conducted desk based review on in fiscal year 2012, 839(54%) were found to have not submitted audit reports and 833 (53.8%) did not submit annual performance reports to the Agency.
    • The auditors also stated that out of the 10 sample charities and societies the auditors selected for onsite visits, 8 of them were never monitored by Agency officials over the past three fiscal years.
    • Agency officials told the auditors that the reasons for the poor performance were, among other things, a high staff turnover and the time it takes to train and deploy new recruits.
    • Out of 1549 charities and societies that the Agency reviewed in the fiscal year 2012, 1250 (81%) had used more than 30% of their annual budget on administrative expenses, in violation of the 70/30 directive.
    • The auditors noted that the Agency had not enforced the 5,000-100,000 ETB fine against charities and societies that were found to be in violation of the 70/30 directive. ‘It rather went ahead and renewed their registrations without addressing the issues.’
    • The 10 sample charities and societies selected by the auditors told the auditors that there have been uncertainties on the distinction between administrative and program expenses, the directive was not clear, it did not take into account the peculiar nature of their activities and also the Agency did not consult with charities and societies before issuing the directive.
    • Agency officials admitted there were no prior consultations with the charities on the directive, but feedback obtained from the organizations were used to amend some provisions in the directive. Officials also told auditors that they did not opt for a strict application of the directive as they found that to be not feasible; they rather chose to write letters to the organizations asking them to rectify the violations and take responsibility for that.
    • The auditors suggested that the Agency needs to prepare a clear implementation guideline to the 70/30 directive that provides a better clarification on which expenses are administrative and which are program. They also recommended that the Agency should make charities and societies aware of such implementation guidelines and monitor implementation of same.
    • The auditors noted that the Agency failed to take any measures on 59 ‘Ethiopian’ charities in fiscal year 2012 and 60 ‘Ethiopian’ charities in fiscal year 2013 that were found to have received more than 10% of their income from foreign sources. Agency officials responded to this by saying that instead of imposing penalties, they had chosen to advise the violating organizations to comply with the provisions of law.
    • The auditors also found that the Agency was not able to find the addresses of 2259 non-governmental organizations that did not show up for re-registration as per the requirement of the 2009 Charities and Societies Proclamation. As a result, the Agency was not able to liquidate their assets, revoke their licenses or take any legal measures.
    • The auditors also noted that there is little to no coordination between the Agency and the sector administrators (government ministries entrusted with sectoral oversight and evaluation of projects of charities and societies).
    • The auditors noted that record keeping at the Agency is very poor; information synthesized based on scope of activity, project size and duration, geographic spread, number of beneficiaries etc. of charities and societies under the Agency’s oversight is not available.

( For more details please read the full Amharic report attached)

Auditor Generals Report on ChSA 2006 (1) (1) (1)

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