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• Audit and Investigations Gavi Programme Audit

  PAPUA NEW GUINEA

  GAVI Secretariat, Geneva, Switzerland

  Final Audit Report –December 2016

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  Table of Contents
  1. Executive Summary 4

  1.1 Audit rating 4
  1.2 Key issues 5
  2. Objectives and Scope of the Audit 7

  2.1. Objectives 7
  2.2. Scope 7
  2.3. Methodology & coverage 7
  2.4. Applicable rules and regulations 7
  2.5. Exchange rates applied in this report 8
  3. Background 9

  3.1. Introduction 9
  3.2. Good Practices 9
  3.3. Key challenges 10
  4. Vaccine Supply Management 11

  4.1. Stock Recording and forecasting 12
  4.2. Cold chain equipment 15
  4.3. Vaccine stock management 17
  4.4. Vaccine wastage due to human error 19
  4.5. Vaccine stock management in Eastern Highlands 21
  5. Budgeting and Financial Management 22

  5.1. HSS workplan and progress reporting 22
  5.2. Reporting inconsistencies and delays 24
  5.3. External audit requirements 25
  6. Expenditure and Disbursements 27

  6.1. Ineligible expenditure 27
  6.2. Outstanding travel advance 29
  6.3. Incomplete and untimely Provincial acquittals 30
  6.4. Payment of per diems in Eastern Highlands Province 32
  6.4.1 Lack of justification for payment 32
  6.4.2 Payment of allowances without proof of receipt 33

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  7. Procurement 34

  7.1. Non-compliance with the applicable procurement regulations 35
  7.1.1 Procurements were unplanned 35
  7.1.2 Consideration was not given to existing “Whole of Government” contracts 37
  7.1.3 No evidence of requests for quotation from tendering vendors 38
  7.1.4 Quotation register not maintained 39
  7.1.5 Procurement without Minor Contract Agreements 40
  7.1.6 Fixed assets registers were not maintained 41

  7.2. Weak internal controls over the EPI unit’s procurement activities 42
  7.2.1 Procurement undertaken outside of the designated procurement unit 42
  7.2.2 Budget overrun and unbudgeted procurement 43

  7.3. Inadequacies in procurement documentation and other irregularities 44
  7.3.1 Unsupported procurement 45
  7.3.2 Contracts awarded without demonstrating competition 46
  7.3.3 Inadequately supported delivery 47
  7.3.4 Payments not supported by a valid invoice and timing inconsistency 48

  Annex 1 – Expenditure related to non-Gavi activities but paid out of Gavi grants 49
  Annex 2 – Definitions of Ratings and Recommendation Priorities 56
  Annex 3 – Classification of expenditure 57
  Annex 4 – Audit Procedures and Reporting 58
  Annex 5 – Acronyms 59
  Annex 6 – Management comments and action plan 60

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  1. Executive Summary
  In February 2016, the Audit and Investigations team (the Audit Team) conducted a programme audit
  of Gavi funding that contributed towards the Government of the Independent State of Papua New
  Guinea’s (GoPNG) Expanded Programme of Immunisation (EPI).
  The audit covered the National Department of Health (NDoH) management of Health Systems
  Strengthening (HSS), Measles Rubella (MR) and Vaccine Introduction Grants (VIG) funds from 1
  January 2013 to 31 December 2015. During this period, the overall Gavi-related expenditure reported
  by the country totalled PGK 7,213,963 (USD 2,696,482).
  Table 1 below compares total expenditure reported by programme with expenditure reviewed by the
  Audit Team. The Programme Audit achieved a total overall coverage of 30% of the expenditure
  reported, as follows:
  Table 1: Summary of expenditure reviewed during the audit

  Programme Disbursed Actual Expenditure Actual Expenditure
  from Gavi expenditure Reviewed Expenditure Reviewed
  (USD) (USD) (USD) (PGK) (PGK)

  Health Systems Strengthening 1,103,854 441,472 393,919 1,072,488 981,000

  Measles Rubella 1,953,000 2,069,585 319,314 5,661,501 819,812

  Vaccine Introduction Grants 735,000 185,425 139,545 479,974 361,892

  Total 3,791,854 2,696,482 852,778 7,213,963 2,162,704

  1.1 Audit rating
  The Audit Team assessed the NDoH management of Gavi funds as unsatisfactory, which means that
  “Internal controls and risk management practices were either not established or not functioning well.
  The majority of issues identified were critical risk. Hence, the overall entity’s immunisation
  programme objectives are not likely to be achieved and risks were not appropriately mitigated or
  managed.” Table 2 below summarises ratings for each of the categories reviewed.
  Table 2: Summary of audit rating by programme audit classification:

  Category Audit Rating

  Vaccine Supply Management Unsatisfactory

  Budgeting and Financial Management Unsatisfactory

  Expenditure and disbursements Unsatisfactory

  Procurement Unsatisfactory

  Overall rating Unsatisfactory

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  1.2 Key issues

  The Audit Team raised 25 issues, which were mainly caused by non-compliance with the GoPNG’s
  own guidelines as well as Gavi’s Transparency and Accountability Policy. The rating for the various
  issues is summarised in Annex 2.
  To address these issues, the Audit Team made 25 recommendations, of which 12 (or 48%) were rated
  as being critical in priority, which means that “action is required to ensure that the programme is not
  exposed to significant or material incidents. Failure to take action could potentially result in major
  consequences, affecting the programme’s overall activities and output.” In particular, the Audit Team
  determined that reliance could not be placed upon the controls and systems in place administering
  procurement.
  Among the high priority issues noted in this report, the most significant are presented below:

  Vaccine Supply Stock records at the central vaccine warehouse were not timely updated, with
  Management the last entry being done in Oct 2015, four months prior to the audit. These
  records were adjusted without supporting documentation and unexplained
  differences were not investigated. Stock issuance at all stores visited did not
  follow “Early-Expiry-First-Out” principle, and vaccine records did not track expiry
  dates and batch numbers. Vaccine management errors and misunderstandings
  led to the expiry of closed-vial antigens (Refer to issues 4.1 through 4.5).

  Budgeting and Insufficient detail in the annual workplans directly resulted in significant
  Financial overspending on some budget lines. Management and financial reporting within
  Management the NDoH and to Gavi, respectively, was incomplete, inaccurate and untimely.
  Delays in the implementation of some programmes were not clearly reflected in
  revised workplans, and the balance of funds reported as being available for
  reprogramming was not correct. (Refer to issues 5.1 through 5.3).

  Expenditure The National EPI unit’s primary accounting records were not consistently
  and maintained in accordance with National financial guidelines and procedures.
  disbursements Provincial acquittals sent to the EPI unit were not transparent, with reports being
  on a pooled-fund basis. Examples of Gavi monies being utilised to fund activities
  unrelated to the programme were identified. (Refer to issues 6.1 through 6.4).

  Procurement Procurement did not comply with the applicable National regulations. Systemic
  internal control weaknesses in the procurement process were identified.
  Procurement was conducted outside of the NDoH’s Commercial Support Services
  Branch, which was responsible for procurement. Spending on printing and
  stationary materials by the EPI unit for the period 2013-2015 exceeded the
  approved budget. As a result, it was not possible to determine that good value
  was obtained on the use of Gavi’s funds for procurement. (Refer to issues 7.1
  through 7.3).

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  It was jointly determined by NDoH and the Audit Team that issues raised by the Programme Audit
  relating to procurement and expenditures required further work. As a result a subsequent review
  was undertaken by Gavi’s Investigation unit in May 2016. Findings from this additional assessment,
  including the determination of misuse, if any, will be reported upon separately.
  The following table summarises amounts questioned by the Audit Team because of inadequate
  documentation or the ineligibility of expenditures:
  Table 3: Summary of questioned amounts

  Report Amount Amount
  Description
  section (PGK) (US$)
  Expenditure related to non-Gavi activities but paid
  6.1 680,788 274,572
  out of Gavi grants
  6.2 Outstanding travel advances (2013 through 2015) 67,539 27,413
  6.4.1 Lack of justification for payment of per diems 5,200 1,880
  Unsupported Procurement
  7.3.1 (Excluding all other irregularities identified by the audit which 24,540 9,463
  will be investigated and reported separately)

  Total 778,068 313,326
  Determined in a separate
  Procurement and expenditure irregularities
  subsequent review

  The following table is a non-exhaustive summary of vaccines that had or were due to shelf or
  temperature expire at the time audit fieldwork was completed:
  Table 4: Summary of vaccines that had or were due to shelf or temperature expire

  Report
  Description Doses
  section
  Pneumococcal Conjugate Vaccine (PCV) scheduled to shelf-expire
  4.3 175,550
  in June-July 2016 at the national Area Medical Store
  Pentavalent vaccines temperature expired in consignment with the
  4.4 13,500
  national logistics and forwarding company
  Measles Rubella vaccines temperature expired pending collection
  4.4 29,000
  from Western Province’s airport cargo zone
  IPV vaccines temperature expired pending collection from Western
  4.4 280
  Province’s airport cargo zone
  VVM expiry of MR vaccines stored at room temperature in Eastern
  4.5 40,800
  Highlands’s provincial warehouse

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  2. Objectives and Scope of the Audit
  2.1. Objectives
  In line with the Programme legal agreements and Gavi’s Transparency and Accountability Policy, the
  main objective of a Programme Audit is to ensure that the funds are spent in accordance with the
  agreed terms and conditions and that resources are used for the intended purposes.
  In addition, the Audit Team also assessed the adequacy of the control processes regarding the
  reliability and integrity of financial, managerial and operational information, the effectiveness of
  operations, the safeguard of assets, and compliance with respective National policies and procedures.

  2.2. Scope
  The Programme Audit scope of review was from 1 January 2013 until 31 December 2015, and covered
  income, expenditure, procurement as well as elements of vaccine management at National and sub-
  National levels. However, the Audit Team identified expenditure in 2012 that was unrelated to Gavi
  programmes but nonetheless paid out of Gavi grants. As a result the Programme Audit scope was
  extended to 2012 exclusively in relation to this finding.
  The review was performed at central level and included visits to the Eastern Highlands and Madang
  Provinces.
  Table 5: Gavi cash grant disbursements to NDoH

  Gavi cash disbursements to the NDoH in USD
  Grant type: 2006-2012 2013 2014 2015 Total
  Health systems support – – 565,747 538,107 1,103,854
  Immunisation Services Support 434,000 – – – 434,000
  Measles Rubella operational costs – – 1,953,000 – 1,953,000
  Vaccine implementation grants – 200,000 188,000 375,000 172,000 935,000
  PCV and Injectable Polio Vaccine
  (IPV)
  Total disbursed 634,000 188,000 2,893,747 710,107 4,425,854

  2.3. Methodology & coverage
  Audit evidence was gathered through interviews, review of relevant documents and substantive
  testing. Interviews were conducted with personnel from NDoH including the EPI unit, the
  Procurement Office, the Australian Government Department of Foreign Affairs and Trade’s HHISP
  unit, UNICEF, WHO at National and regional levels, The World Bank, and the national logistics and
  forwarding company, among others.

  2.4. Applicable rules and regulations
  The Partnership Framework Agreement (PFA) signed between Gavi and the GoPNG on 29 November
  2013 required minimum criteria for procurement, accounting and reporting. Amongst these, the PFA
  stipulated that goods and services were to be procured in compliance with the Public Finances
  (Management) Act 1995. The Financial Management Manual, issued by Department of Finance in
  May 2013, also stated applicable thresholds and required review and approval procedures for
  procurement.

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  Other relevant policies and procedures including the Central Supply and Tender Board’s Good
  Procurement Manual, Public Services (Management) Act 1995 and the Health Sector Improvement
  Program (HSIP) Manual which provides guidance on the HSIP Trust Fund were reviewed.

  2.5. Exchange rates applied in this report
  Gavi funds were expended and accounted for in PNG Kina (PGK). For the purposes of this report,
  expenditure has been translated into US dollars (USD) according to the year in which it occurred using
  the rate of exchange prevailing at the time that Gavi disbursements in USD were converted into PGK,
  as follows:
  Year USD 1.00 = PGK

  2013 2.59336

  2014 2.41533

  2015 2.76625

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  3. Background
  3.1. Introduction
  The constitution of PNG established the overall political and administrative structure, consisting of
  four regions made up of 22 Provinces as well as the National Capital District. Political power and
  governance is devolved to these Provincial electorates under which 89 local-level government
  electorates are sited. Separate Provincial legislature and executives are established, but with respect
  to health at the Provincial-level, this is currently undergoing a progressive restructuring with the
  creation of Provincial health authorities.
  Health including Immunisation service delivery is a devolved function with the NDoH procuring
  vaccines and providing oversight for standards and quality through policy development. The EPI unit
  is currently supported technically and financially by several donors including the Australian
  Government Department of Foreign Affairs and Trade, World Bank, WHO, UNICEF, Rotary
  International as well as Gavi.
  The majority of routine immunisation services are provided by government as well as some church
  run facilities, which are primarily publicly funded. In addition a small number of private sector and
  non-governmental organisation providers exist.
  The National Health Plan 2011-2020 identifies improvement in vaccination of children and women as
  priority programs in Key Result Area #4 “Improve Child Survival” and Key Result Area #5 “Improve
  Maternal Health”. A country Multi Year Plan was developed for 2011-2015 which was fully costed and
  clearly outlined activities for that period. As at 10 February 2016, the subsequent country Multi Year
  Plan for 2016-2020 was being finalised.
  The GoPNG provides the majority of all traditional routine vaccinations, while Gavi assists with the
  procurement of Pentavalent and PCV as well as providing financial grants for HSS and ISS activities.
  Between 2006 and 2015, PNG received Gavi cash grants totalling USD 4,425,854 (see Table 5) to
  support nationwide health systems strengthening, operational costs for MR, and the introduction of
  new vaccines, namely PCV and IPV.
  A pilot programme to introduce the Human Papilloma Vaccine was recently funded by Rotary
  International.

  3.2. Good Practices
  A number of good practices were noted with regards to the EPI unit and its operating environment:

  The EPI unit was an established programme of the NDoH since 1977. The GoPNG considers the
  EPI unit as an important, cost effective intervention for reducing the morbidity and mortality of
  children from communicable diseases;
  Gavi Alliance partners focused on supporting immunisation and are proactive in this section. For
  example:
  o A dedicated WHO staff member was assigned to NDoH to advise on vaccine campaigns and
  country-wide implementation;
  o Similarly, UNICEF provided support in outreach and vaccine distribution, both strategically
  and operationally;

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  o The Australian Government Department of Foreign Affairs and Trade provided NDoH with
  its Health & HIV Implementation Services Provider (HHISP) services including a Finance and
  Accounting team, overseen by a Financial Controller, and a Finance and Audit Advisory
  unit.
  Established National PNG regulations were in place including the Public Finances Management Act
  (1995) (PFMA); and
  The HSIP Manual published by HHISP in November 2012 provided specific operational guidance in
  complement to the PFMA requirements. The HISP manual is currently under revision and will be
  updated during 2016.

  3.3. Key challenges
  Since early 2015, declining tax revenues following the fall of oil and natural gas market prices have
  had repercussions on government spending on public services. Recent articles in Australian and
  Guinean newspapers report of some health workers being forced to take pay reductions while others
  were laid off, notably in rural areas.
  These budgetary constraints have also impacted the government’s provision on National health
  services, while the 2017 health budget is potentially set to be reduced further. As a consequence, the
  country may have to rely further on non-governmental support for public healthcare and health
  infrastructure.
  The country’s diverse geography mean that the delivery of immunisation services is logistically
  challenging. 85% of the nation’s population is rural-based. A range of different transportation modes
  for vaccines and immunisation supplies applies along the supply chain, while the country’s tropical
  climate results in some vaccines being exposed to relatively elevated temperatures during the warmer
  seasons.
  For example, the poor management and maintenance of cold chain equipment at the Area Medical
  Stores (AMS), situated in Port Moresby’s Badili District, resulted in occasional heat-expired vaccines.
  Delays in distribution of vaccines also occurred due to constraints in cold chain facility capacity. The
  2011-2015 Comprehensive Multi-Year Plan for National Immunisation Programme includes a budget
  of USD 9.4 million to purchase and upgrade existing cold chain equipment
  A Joint International Review of the EPI unit which was carried out in September 2013 by immunisation
  partners including NDoH, WHO, UNICEF, CDC, Gavi and Oil Search Health Foundation. It concluded
  that “A lack of clarity around programme management roles and responsibilities at the Province,
  District and health centre level, as well as a lack of leadership at all levels, appears to be preventing
  (the achievement) of effective programme outcomes.”
  PNG is currently expected to transition out of Gavi financial support, forecast to be complete in 2021.
  Given implementation delays and poor absorption of the HSS grant, the Joint Appraisal carried out in
  March 2015 recommended that the country seek approval from Gavi’s Independent Review
  Committee to reprogram the near USD 2.5 million balance of its existing HSS grant, and proposed a
  transition grant of up to USD 6 million be considered.

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  4. Vaccine Supply Management
  Audit Rating

  Poor record-keeping, inadequate and infrequent verification procedures and
  weak oversight resulted in significant errors between the physical stock
  count and immunisation supply records at the National level. This was
  compounded by two successive inaccurate annual forecasts and the
  resultant over-ordering of supplies without due regard to requirements.
  Unsatisfactory
  “Earliest-Expired-First-Out” was not applied, and effective systems were not
  in place to comply with this principle.
  A significant surplus of 753,000 doses of short-life PCV was on-hand – some
  of which was excessive to requirements. Potentially a significant portion of
  this PCV is as risk of shelf-expiry by July 2016.

  Country Context
  The country has experienced recurring operational challenges in maintaining adequate supplies across
  the supply chain, due in part to a reported lack of clarity between the EPI unit at National level and
  the Provincial Health Authorities as to who was responsible for determining vaccine needs. These
  were further compounded by inadequate and inaccurate nationwide information on stock levels, as
  well as precarious cold storage facilities due to their age and neglect.
  In February 2016, the acting EPI National manager identified the following logistic and operational
  challenges as having considerably burdened programme resources and their ability to maintain an
  effective cold chain supply:

  There was not currently enough vaccine storage capacity at the National, Provincial, District and
  Health Facility Level for the volume of vaccine required to maintain the schedule of National
  routine immunisation;
  The Provinces and Districts ordered fewer vaccines and supplies than planned in their annual
  forecast due to limited storage capacity while handling the additional vaccines required for the
  MR National-wide campaign;
  Several incidents of communication breakdown between the National, Provincial and District
  levels affected the timeliness and reception of vaccine delivery handled by the freight forwarder;
  Vaccines were occasionally heat-damaged due to improper storage conditions or due to
  insufficient storage capacity; and
  Funding constraints for the immunisation programme resulting in protracted stock-outs of BCG
  vaccines across the country, requiring an urgent order to be placed with the Medical Supply and
  Procurement Branch to secure additional supplies.
  Most of the above difficulties were similarly reported in past annual EPI reviews (e.g. 2013, 2014 and
  2015).

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  Further, the September 2013 joint “International Review of the Expanded Programme on
  Immunisation in Papua New Guinea” identified the following main areas of concern: poor
  maintenance of cold chain equipment, lack of understanding of temperature monitoring processes, a
  lack of qualified maintenance personnel, and deficiencies in knowledge on vaccine management at
  Provincial, District and health centre level.
  In addition, the Audit Team noted that the overall resilience and sustainability of the vaccine
  distribution system was dependent upon commercial freight forwarding services to transport the
  vaccines and immunisation supplies by air. This forwarder currently supplies vaccines to 19 out of the
  country’s 22 Provinces.

  Effective Vaccine Management Assessment (EVM)

  EVMs constitute an integral and important element to strengthen the country’s vaccine supply chain
  management. An updated EVM is overdue as the last EVM for PNG was undertaken in June 2011, i.e.
  five years ago. An EVM was originally scheduled to take place in 2015, but has not yet been
  undertaken as at March 2016.

  This corroborates with the 2015 Joint Appraisal’s finding, which recommended to the NDoH that an
  EVM should be expedited and completed in Q1 2016 or Q2 2016.

  4.1. Stock Recording and forecasting
  The National Operational Guidelines for Special Integrated Routine Strengthening Program (SIREP) on
  the “recording of incoming and outgoing vaccines and ancillary products” states that the following
  procedures must be undertaken at points of reception:

  Always record all incoming and outgoing quantities of vaccines and ancillary items in a register
  (stock management record);
  Store all vaccines after Reception and Inspection (R&I) in the cold chain facility; and
  Regularly do physical stock counts and compare against findings against vaccine and ancillary
  products records.
  In addition the guidelines clarify the importance adequate operational and logistical planning to
  ensure that adequate resources are available for each level of the supply chain, and that the supply
  chain is efficient by bundling the distribution of vaccines and immunisation supplies where possible.
  However, from a review of the AMS, significant errors were noted in the stock management records.
  Per the February 2016 National records, stock balances on at least four items were significantly
  understated, with considerably more stock being on hand than the records identified:

  PCV was understated by at least 180,000 doses;
  Pentavalent was understated by approximately 300,000 doses;
  Auto-disabled syringes were understated by at least 700,000 units; and
  Safety boxes were equally understated.

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  Further examination of these records for the above four items identified recording errors, as follows:
  (a) Multiple large receipts (e.g. 100,000 units) of vaccines doses and supplies received into the
  country were never recorded in the stock register (including PCV, Pentavalent, safety boxes and
  syringes);
  (b) Formula errors were presented in the manual stock records resulting in errors in balances, overall
  leading these to be understated;
  (c) No stock movements were recorded for PCV for at least 6 weeks at the end of 2015;
  (d) Stock records were not routinely kept up to date (at least weekly) as stated;
  (e) Stock held under consignment with the national logistics and forwarding company were not
  adequately tracked, recorded and accounted for.
  Also, physical stock counts were not performed correctly. Although inventory counts were routinely
  carried out, the results of these counts were neither reconciled with nor reflected in the stock
  records. Dry goods such as syringes and supply boxes had never been physically counted.
  Further, there was evidence of tracking and recording batch numbers for any of the vaccines, apart
  from noting the batch number on initial receipt. As a result, neither the stock register, nor any of the
  medical stores issued vouchers recorded the vaccine batch number issued.
  At both National level and in the two Provinces visited, the store managers’ stock registers were
  neither reviewed nor checked by another staff member, and there was no segregation of duties
  between the National store manager receiving, managing and issuing vaccines and supplies
  In addition, the records of all orders placed by Provinces and Districts at the National level were not
  all kept on file, with the quality of documentation being sporadic and incomplete, and the date the
  order was received not always recorded. On fulfilling these orders, the weight and number of parcels
  despatched was similarly not consistently recorded.
  Approximately 18 months ago, the National medical supplies store introduced a stock management
  system – M-SUPPLY – to track and record both medical supplies, as well as immunisation vaccines and
  supplies. As validated by the warehouse staff, it was confirmed that although immunisation data was
  entered, all such data in the M-SUPPLY system was not accurate and was unreliable. This had no
  impact on the Audit Team’s observations.
  Finally, the EPI unit’s National supplies forecasts for PNG for both 2015 and 2016 sent to UNICEF
  Supply Division were incorrect and significantly under-reported the number of doses of PCV,
  Pentavalent and 0.5ml syringes in stock. This contributed to compounding the problem of the country
  overstocking on its vaccines and immunisation supplies by accelerating orders fulfilled by UNICEF. For
  example, at the time of Audit in February 2016, it was noted that more than 12 months of PCV was
  currently held in stock at National level. In practice, guidelines recommend that between six and nine
  months of a vaccine should be held throughout the supply chain pipeline.
  The Audit Team’s visits to two Provinces indicated that stock records at the sub-National levels were
  similarly incomplete and inadequate. For example, in one Province, there was an unexplained gap of
  6.5 months in 2015 when no vaccine records were maintained. Similarly, the same Province
  experienced a forced stock-out of all of its vaccines, due to its order submitted on 16 January 2016
  still not having been fulfilled by the National stores more than four weeks later.

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  The Audit Team’s observations highlighted the following weaknesses:

  Inadequate procedures for stock reporting, inadequate oversight, supervision and a general lack
  of awareness of existing procedure to be followed;
  Human error –staff do not display sufficient discipline and technical knowledge in record keeping;
  and
  Staffing in stores is limited.

  Risks / Effect
  A failure to comply with existing procedures for recording and keeping track of movements of
  vaccines and immunisation supplies resulted in the inability to accurately forecast future
  requirements. Vaccine oversupply potentially stress the country’s limited logistical ability and cold-
  storage capacity.
  Recommendation 1 (Critical)

  The EPI unit should:
  Undertake a 100% physical inventory of all vaccines and immunisation supplies so as to amend
  and correct current stock records. Vaccine stock records should be reconstituted for 2014 and
  2015. Any differences should be fully investigated and justified;
  Improve the quality and timeliness of stock recording, including recording batch numbers details
  for all receipts, issuances and when undertaking stock counts;
  Improve the accuracy and completeness of how National order fulfilments are documented,
  including placing all orders in a single consolidated folder, and recording both the date the order
  was received and shipped, as well as all details on the shipment including the total weight, for
  reconciliation with the freight-forwarder’s subsequent invoice;
  Conduct and document routine physical inventories and ensure that any differences identified
  from the count are investigated and promptly adjusted, as necessary;
  Ensure that appropriately qualified staff are put in place at the AMS;
  Assure that all staff handling vaccines and supplies are provided with sufficiently detailed
  Standard Operating Procedures with clear roles and responsibility;
  Re-evaluable the suitability of the M-SUPPLY system for managing immunisation inventory; and
  Ensure that adequate stock records are maintained for all stock held externally or under
  consignment, and ensure that regular physical inventories are also conducted and reported to the
  National/ Provincial stores manager(s).

  Management comments
  See Annex 6 – Management comments and action plan as at 17 October 2016

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  4.2. Cold chain equipment
  The National Operational Guidelines for SIREP emphasise that good management of stocks is
  necessary to maintain the quality of the immunisation programme. Elements which are to be
  respected include that there be:

  Adequate storage facility (including cold storage and cold chain equipment) with sufficient
  capacity, secure storage and location, and free from humidity, pests, direct sunlight, etc.; and
  Quality storage facilities (including cold storage and cold chain equipment) with all cold chain
  equipment functioning.
  Various programmatic and cold chain reviews undertaken over the past three years identified the
  need to upgrade and update components of the National cold chain due to the difficulties in
  maintenance, a lack of equipment standardization, a lack of qualified maintenance personnel and
  difficulties in obtaining spare parts. Similarly, NDoH’s assessment of lessons learnt from SIREP
  acknowledged the insufficient and unreliable cold chain capacity in place at the Province and District
  level, as well as the impact this had on the inconsistency in demand for vaccines from Provinces and
  Districts.
  During 2015, the receipt of significant amounts of MR vaccine and some PCV in May 2015, followed
  by further receipts of PCV and Penta in July and August 2015, became a significant burden to the
  supply chain. The EPI unit commented that in October 2015, seven of its twelve walk-in cold rooms
  were no longer working. This resulted in emergency repairs having to be conducted, with the cold
  rooms being fixed in approximately five days.
  However, the Audit Team also noted that at least two reefers (refrigerated containers) had been hired
  on the premises of a nearby commercial company, using Gavi funds, at approximately the same time
  period so as to supplement cold chain capacity at the AMS. A third reefer, manufactured in 1994 and
  situated in direct sunlight in the AMS courtyard, had been procured around the same time, but
  neither the AMS nor EPI could provide an invoice or delivery note. The assistant store keeper
  commented that the reefer had never functioned properly and was not suitable for storage of
  vaccines due to a faulty thermostat that froze the reefer contents. The Audit Team questions
  whether value for money was obtained on the purchase of this equipment.
  Further, at the time of the audit, it was noted that there was not a proper fixed asset register in place
  at the National level to track and demonstrate the overall age, condition, status, and location of all of
  the National cold supply across PNG.
  Finally, no insurance was in place at the AMS, even though at the time of the Gavi audit in February
  2016, approximately $4.5 million worth of vaccines was held in stock.
  Cold chain capacity was deemed insufficient by the EPI unit at both National and sub-National levels in
  order to meet additional needs following the introduction of new antigens (IPV, PCV and MR).
  However, beyond the introduction of PCV in 2013, no formal assessment of cold chain capacity was
  done to date. In addition, it was not clear whether the purchase of additional refrigeration units was
  adequately planned in consideration of overall longer term requirements.

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  Risks / Effect
  Failure to ensure that sufficient and reliable storage capacity is available at every level of the cold
  chain in the country raises the risk of wastage due to improper storage, and requires additional
  operational resources to carry out extra incremental deliveries to compensate for insufficient capacity
  at subsidiary levels. In the absence of suitable insurance being in place, accidents – such as fire –
  could result in significant financial loss to immunisation products.
  Recommendation 2 (Essential)

  The Gavi Secretariat and Alliance partners should ensure that an adequate implementation plan, is
  promptly put in place following the imminent Q1/2016 Effective Vaccine Management (EVM)
  assessment, to strengthen the National cold chain system, while designing a supply chain which
  maximises sustainability, is technology appropriate and fit for purpose considering existing resource
  constraints (and overall maintenance capacity).
  The government should fulfil its commitment to ensuring that cold chain equipment is routinely
  maintained by qualified persons with a view to prolonging their lifespan.
  The EPI unit should ensure that National Operational Guidelines for SIREP are being adhered to.
  In accordance with section 10 of the PFA, the government is required to insure programme assets,
  including vaccines and vaccine-related supplies.

  Management comments
  See Annex 6 – Management comments and action plan as at 17 October 2016

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  4.3. Vaccine stock management
  The National Operational Guidelines for SIREP on the storage of vaccines states that:

  All vaccines must be clearly identifiable and accessible, and must be easily located and stored in
  Earliest-Expired-First-Out order, specifically vaccine vials with the closer expiry date must be
  distributed and administered first, however Vaccine Vial Monitoring (VVM) indicating greater heat
  exposure must be labelled for priority use;
  Temperatures must be monitored two times a day on a monitoring sheet.
  The Audit Team observed various non-compliance with these guidelines.
  The EEFO order principle was not systematically applied at National or Provincial levels (two Provincial
  stores were visited by the Audit Team). A stock count on 3 February 2016 at the AMS revealed that
  there were 175,550 doses of PCV which were due to expire by July 2016, i.e. in less than six months.
  The use of this PCV is a concern, given the country’s logistical challenges, the significant lead time in
  the cold chain and that only approximately half of the country had introduced PCV into its routine
  immunisation. There remains a risk that significant amounts of this soon-to-expire PCV will shelf-
  expire.
  The store manager confirmed that he had issued PCV not in compliance with the EEFO order principle,
  and from a review of the stock records it was demonstrated that at least 92,000 doses of PCV expiring
  2017 had been incorrectly issued from the National stores prior to using the PCV vaccine which was
  expiring in 2016.
  Furthermore, the necessary processes to issue vaccines according to EEFO were not in place, since
  there was no system in place to record, track and document the batch number for vaccine
  movements issued from the AMS. As such existing records did not indicate which Provinces had
  received PCV vaccine imminently expiring in 2016, undermining the EPI unit’s ability to determine
  how best to allocate and distribute the remaining short-lived PCV.
  In addition, although the AMS cold room temperature charts were up to date on 3 February 2016, on
  our subsequent visit on 8 February, the Audit Team noted that no entries had been made on the
  temperature charts for 5 consecutive days for all seven of the cold rooms. The team’s third visit on 10
  February revealed that temperature charts had been retroactively updated. It was explained that in
  the absence of the store manager, there was no additional individual to cover for the AMS
  temperature checks.
  Finally, from discussion and from the Audit Team’s observations at Provincial and health facilities, it
  was noted that the EPI unit had not distributed any thermometers or fridge tags to the sub-National
  levels since at least 2013. As a result, no temperature chart readings occurred at multiple points in
  the cold chain beneath National level, except where thermometers supplied prior to 2013 were still
  available. The acting EPI manager indicated that WHO purchased 2,600 vaccine thermometers in
  2015. Although these were insufficient in number for the entire cold chain system, the thermometers
  would begin to be distributed from March 2016.

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  Risks / Effect
  Unless measures are put in place to prioritise the despatch and usage of the PCV imminently expiring
  in July 2016, there is a risk that some of the vaccine will shelf-expire.
  A failure to adhere to good practices in storing and managing vaccine raises the risk of wastage due to
  expiration or improper storage.
  Recommendation 3 (Critical)
  The EPI unit needs to substantially and urgently improve the management of its vaccines:
  The EEFO principle should be systematically applied at all levels through the supply chain; and

  Vaccines should be properly stored, and records maintained so as to facilitate the tracking and
  identification of the various expiry dates of product, as well as the temperature in situ
  throughout the various points in the cold chain.

  Fridge tags or thermometers need to be made available at all levels in the vaccine supply
  chain, and temperature records maintained such that vaccine exposure to temperature
  variations may be tracked. Additionally, temperature monitoring provides information on
  faulty cold chain equipment.

  Every effort should be made to minimise the loss of PCV vaccine due to expire in July 2016.

  Management comments
  See Annex 6 – Management comments and action plan as at 17 October 2016

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  4.4. Vaccine wastage due to human error
  The National Operational Guidelines for SIREP prescribes that in order to reduce the wastage of
  vaccines:

  Assure adequate transport means and adequate transport boxes;
  Always keep the vaccines at the correct temperature;
  Never expose freeze sensitive vaccines to freezing; and
  Never expose heat sensitive vaccines to more than the accepted temperature limit.
  In addition, the guidelines discuss issues on how to minimise vaccine wastage and to plan supplies in
  consideration of the vaccine wastage factor. Practical suggestions promote to “use as much as
  possible all vaccine in a vial before opening a new vial.”
  The Audit Team were informed of the following recent cases of vaccine wastage due to human error:

  The national logistics and forwarding company held significant amounts of stock on consignment
  in response to cold storage capacity concerns at the AMS. During October 2015, 13,500 doses of
  Pentavalent, with an approximate value of USD 44’500, VVM expired. While the Audit Team was
  unable to obtain an exact recount of the cause for these expiries, the EPI stores manager at the
  AMS expressed concern over the national logistics and forwarding company’s standards which
  required only a single cold room temperature check per day;
  Due to a breakdown in communication between NDoH and the national logistics and forwarding
  company, 280 doses of IPV and 29,000 doses of MR were heat exposed at Western (South Fly)
  Province’s airport cargo zone between delivery by the said logistics company on 17 August 2015
  and collection seven days later by the local EPI logistician on 25 August 2015; and
  In at least two Provinces, an unquantified amount of IPV vaccines had been accidentally frozen
  due to the receiving store confusing handling requirements with those pertaining to OPV vaccines.
  Further, from discussions with the acting EPI manager and from the Audit Team’s visits to two
  Provinces, it was noted that there was no information system in place through all levels of the cold
  chain system to track and report vaccine loss.

  Risks / Effect
  Poor practice or inappropriate storage of vaccine raises the risk of vaccine wastage.
  Individuals handling vaccines may not have the necessary technical knowledge or discipline to ensure
  that vaccines are handled and stored appropriately.
  An absence of complete and reliable data on closed and open vial loss makes it impossible for the
  NDoH to take appropriate, targeted corrective action.

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  Recommendation 4 (Critical)
  The EPI unit should:
  Review and update its vaccine management guidelines and standard operating procedures in
  conjunction with the follow up resulting from the Q1/2016 EVM assessment, and suitable training
  should be shared and discussed with all individuals responsible for storing and handling the
  vaccine;
  Review and discuss its contractual arrangements with its national logistics and forwarding
  company to incorporate consignment services, including defining INCOTERMS and liability in the
  event of vaccine damage or loss. Compensation should be sought for the loss of 13,500 doses of
  Pentavalent while under the responsibility of the national logistics and forwarding company;
  Undertake an open vial wastage rate assessment to evaluate whether actual open vial wastage
  rates are in line with WHO benchmarked rates; and
  Adopt suitable procedures to ensure that open and closed-vial wastage are routinely recorded by
  District, Provincial and National levels and reported to the EPI unit, and that targeted corrective
  action is initiated by the EPI.

  Management comments
  See Annex 6 – Management comments and action plan as at 17 October 2016

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  4.5. Vaccine stock management in Eastern Highlands
  The Audit Team identified various weaknesses in the vaccine management at the provincial
  warehouse of Eastern Highlands and concluded that there was scope for significant improvement in
  the Province’s vaccine management processes.
  In 2015, a total of 40,800 doses of MR vaccine valued at approximately USD 23’00 shelf or VVM
  expired due to inadvertent storage at room temperature.
  Furthermore, the Audit Team’s physical observation of vaccine storage identified a handful of vials of
  MR vaccine being stored at -20°C in lieu of -2 to -8°C. Thus the antigen had frozen, rendering the
  vaccine useless.
  Temperature monitoring practices were found to be insufficient. Temperature monitoring charts
  were not always completed; there was no thermometer for one of the freezers; another freezer’s
  thermometer was broken; vaccines were stored randomly in cold chain equipment irrespective of
  expiry dates; and vaccines were not grouped by product type when this would have been possible and
  logical from a storage capacity perspective.
  The Audit Team also noted that National guidelines defined to prevent exposing freeze-sensitive
  vaccines to freezing were not being followed at the Provincial warehouse. In particular, vaccines were
  placed directly into isothermal boxes and surrounded by up to 16 frozen ice packs, rather than using
  liquefied ice packs as stipulated in the guidelines.
  The Cold Chain Logistic Officer did not maintain any stock records and made no entries in the
  available stock movements ledgers. No credible information on the current stock levels was available.

  Risks / Effect
  Inappropriate storage of vaccine has led to wastage due to expiration.
  Weak stock records may result in stock outs and/or excessive stock levels.

  Recommendation 5 (Critical)
  The EPI unit should ensure that:

  Individuals managing vaccines at Provincial levels are trained on vaccine management;
  An up-to-date standard operating procedure for vaccine management is made available and
  enforced at all levels of vaccine management;
  Stock records are adequately maintained and can be relied upon for vaccine forecasting and
  reordering purposes;
  Individuals handling the vaccines are sufficiently trained on temperature monitoring;
  Routine temperature monitoring is carried out and recorded; and
  Thermometers are verified to be accurate, in working condition and replaced where necessary.

  Management comments
  See Annex 6 – Management comments and action plan as at 17 October 2016

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  5. Budgeting and Financial Management
  Audit Rating

  Reporting inconsistencies and inaccuracies in the financial data collected on
  Gavi monies were identified which significantly undermined the reliance that
  could be placed on information provided by the NDoH on the activities and Unsatisfactory
  outcomes of EPI programmes. This also weakened the ability of budget owners
  to make accurate financial decisions thereon.

  Gavi’s financial support to the NDoH is made through the HSIP Trust Account, a government
  instrument governed by PNG law which forms part of the overall National public accounts, created in
  1996 by the Asia Development Bank. The financial statements of the HSIP Trust Account, into which
  multiple donors contribute financial support, were not disaggregated by funding source.

  Gavi’s relative financial contribution represented less than 1% of total receipts to the HSIP Trust
  Account in 2013, but increased in 2014 as a result of significant Gavi funds disbursed for the MR
  campaign.

  The GoPNG’s 2011-2020 National Health Plan was split into a country Multi Year Plan for 2011-2015
  and one for 2016-2020. The 2011-2015 country Multi Year Plan stated that the “majority of [the
  estimated total EPI] costs will be funded by Government of PNG through its PGK 14.17 billion budget
  allocation for health services in the country. And the overall funding gap of USD $18,492,028 (PGK
  52,175,529) is expected to be met by donor partners.” Gavi’s HSS grant for a total of USD 3,072,923
  helped fund part of this gap, however most of the activities set out in the GoPNG’s Detailed Workplan
  and Budget did not correspond to those in country Multi Year Plan.

  5.1. HSS workplan and progress reporting
  In April 2013, Gavi’s Independent Review Committee approved an HSS grant to the GoPNG totalling
  USD 3,072,923. As at the end of December 2015, USD 1,103,854 had been disbursed by Gavi, of
  which PGK 1,072,488 (USD 393,919) (see Table 1) had been spent. Based on the grant’s operational
  timetable, it was expected that the grant would fund immunisation activities through until mid-2018.
  However as at the end of 2015, and following the first disbursement, 87% of the HSS grant remained
  unspent.
  The EPI unit presented the Audit Team with a draft revised 5-year HSS workplan running from 2015 to
  2019. The amended timeline was not satisfactorily explained. Furthermore, the revised plan was a
  crude approximation, as it assumed that the entire grant balance was still available rather than
  deducting any expenditure incurred to date.

  The EPI unit was unable to demonstrate that it proactively reviewed and managed its programme
  budgets or that reference was made to the initial approved and current budgets as budgetary tools
  for the purpose of guiding and administering the programme against the approved activities and key
  milestones. In addition, there was no overall clarity on the remaining balance of Gavi funds.

  The Audit Team concluded that the EPI unit’s capacity and ability to proactively review and manage its
  budgetary and financial management commitments was inadequate.

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  Risks / Effect
  Lack of budgetary control over the periodicity and prioritisation of HSS activities.
  Sub-optimal management of the balance of HSS funds available for reprogramming.
  Recommendation 6 (Essential)

  Given the budgetary necessity to reprogram the balance of HSS funds, and to reprioritise unfulfilled
  workplan activities, the NDoH is requested to:

  Verify the relevance and accuracy of the 2014 Annual Progress Report and, if necessary, resubmit
  a corrected version to Gavi ;
  Timely complete and submit 2015 reports as per Gavi’s Financial management and audit
  requirements; and
  Submit a formal request to reprogram its remaining HSS grant funds in time for consideration by
  the next Independent Review Committee session.

  Management comments
  See Annex 6 – Management comments and action plan as at 17 October 2016

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  5.2. Reporting inconsistencies and delays
  In February 2016 and prior to submission to Gavi of the 2015 Annual Progress Report, the EPI unit
  shared its 2014 and 2015 Annual Reports. These Annual Reports are not part of the standard
  reporting to Gavi but were shared with the Audit Team as an overview of the unit’s performance. The
  2014 report contained select references to activities and events which did not occur in 2014.

  Similarly, the 2015 Annual Report was an exact copy of the 2014 Annual Report except in title and
  footer which had been relabelled 2015. The substantive reporting on pages 14 through 17 and
  recommendations on page 18 clearly related to 2014 and not 2015. The Audit Team concluded that
  the 2015 Annual Report was not updated to reflect actual 2015 activities and recommendations, and
  could not be relied upon.

  Annual Progress Report

  The EPI unit’s 2014 Annual Progress Report submitted to Gavi on 15 May 2015 reported no HSS
  activity. However, this was contradicted by the 2014 accounting records which indicated that 48% of
  the immunisation expenditure in 2014 related to HSS. No satisfactory explanation was provided for
  this discrepancy.

  The above inconsistencies were attributable to the preparation of financial reporting without
  involving finance personnel, and without review by personnel not involved in report preparation.
  Many financial reports from 2014 and 2015 had been prepared by an unaided, unsupervised EPI
  employee.

  Risks / Effect
  Reporting errors and inconsistencies occurred and went undetected.

  Unless reports are relevant, accurate and complete, decision making will be sub-optimal.

  Recommendation 7 (Essential)

  The EPI unit needs to strengthen its reporting processes by putting in place:

  A process which ensures a greater level of scrutiny and involvement of persons who are familiar
  with both the financial and non-financial programme performance; and
  A formal review and authorisation procedure. This should be done by persons not involved in the
  report preparation.
  All financial reporting which is relied upon for decision-making is to be submitted to HHISP Finance
  and Accounting team assigned to the NDoH for a due review and approval process.

  Management comments
  See Annex 6 – Management comments and action plan as at 17 October 2016

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  5.3. External audit requirements
  The PFA stipulates the requirement of an annual external audit, specifically: “38. The external audit
  shall cover all aspects of HSIP Trust Account activities implemented by the Government at central and
  Provincial and District levels. The audit shall include verification of expenditure eligibility,
  procurement files, programme performance and physical inspection of goods, works and services
  acquired at central and peripheral levels by all implementing entities. […]”

  The PFA goes on to stipulate: “39. The audit report and the Management Letter for each audited
  period shall be submitted to the Inter agency Coordinating Committee, Health Sector Finances
  Committee and the Gavi Secretariat not later than six months after the end of the Government fiscal
  year.”

  The latest HSIP Trust Account external audit report covered the 2013 fiscal year, and was belatedly
  issued in June 2015.

  Furthermore, the financial statements presented the total funds disbursed to Provinces but without
  indicating when or whether these funds had been spent at Provincial level. As such, the accounting
  treatment was to fully expense these disbursements, rather than to treat the amounts as advances
  yet to be justified. As a result, the annual financial reporting to Gavi did not present an accurate
  position of the actual substance for how funds disbursed to the Provinces were spent.

  As a consequence, the Annual Progress Reports for 2013 and 2014 presented a National level position
  only and did not reflect the actual substance of expenditure and activities implemented by the
  Provincial and District level public health instances. In effect, this was the same accounting treatment
  as presented in the 2013 HSIP Trust Account audited financial statements.

  On 08 February 2016, the Audit Team met and confirmed with the Auditor General’s Office that they
  were currently finalizing the selection of an HSIP Trust Account external auditor for 2014, 2015 and
  2016 financial statements. They also acknowledged that the 2014 HSIP Trust Account financial
  statement audit is overdue.

  Furthermore, the Auditor General’s Office acknowledged that the past 2013 external audit of the HSIP
  Trust Account had not addressed Gavi’s financial management requirements, but they indicated that
  it would be able to accommodate these requirements by including a donor-specific statement
  covering Gavi funds as an annex to the HSIP Trust Account financial statements. As such, this
  statement would present the actual expenditure on the activities implemented by the central,
  Provincial and District level public health instances – in substance the actual spending linked to the
  programme’s performance – and would be independently audited.

  Finally, the National accounting system did not track the actual expenditure by Provinces against
  respective donor funding sources. As a result, past financial reports – including the HSIP Trust
  Account financial statements – were unable to provide any donor specific reporting, or any Provincial
  level information other than the level disbursements from the National accounts.

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  Risks / Effect
  Inaccurate financial reporting to Gavi (by over-reporting expenditure) due to the basis and treatment
  of Provincial allotments.
  Financial numbers not reflective of programmatic progress enumerated in Annual Progress reports.
  The preparation basis of the HSIP Trust Account financial statements failed to meet Gavi’s financial
  management requirements.

  Recommendation 8 (Essential)
  In order to comply with Gavi’s financial management requirements it is recommended that the NDoH:

  Beginning 2014, the HSIP Trust Account audited financial statements should include an additional
  Gavi specific certificate of income and expenditure which identifies in substance the income,
  expenditure and closing balances for each Provincial advance. This certificate may be included as
  an additional annexed disclosure to the overall financial statements;

  Strengthen its Provinces’ capacity to continue to maintain donor-specific sub-ledgers and to
  monthly produce the “HSIP Trust Account funding source report” as required;

  Record all transfers of funds to Provinces as advances rather than as expenditure in accordance
  with paragraph 18 of the Financial Management Requirements of the PFA; and

  Complete external financial statement audits within six months of the GoPNG fiscal year-end in
  accordance with paragraph 39 of the Financial Management Requirements of the PFA.

  Management comments
  See Annex 6 – Management comments and action plan as at 17 October 2016

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  6. Expenditure and Disbursements
  Audit Rating

  Reporting by Provinces on acquittals fell short of adequately substantiating
  programmatic expenditure. Absence of budgetary control over the Gavi grants
  Unsatisfactory
  resulted in USD 411,233 of ineligible expenditure at National level which did not
  relate to Gavi supported programmes.

  This section elaborates on the:

  Use of Gavi funds for non-eligible activities by way of Gavi monies being loaned to cover other
  programme costs;
  Untimely retirement and justification of travel advances issued to NDoH staff; and
  Procedures and reporting relating to financial support for EPI programmes at Provincial level.

  6.1. Ineligible expenditure
  The Audit Team identified PGK 1,010,872 (USD 411,233) of expenditure that did not relate to Gavi
  supported programmes. According to the EPI unit and the HHISP Finance and Accounting team
  assigned to the NDoH, Gavi funds were used to implement non-Gavi activities pending receipt of
  funds from other EPI donors. This amounted to 32% (by value) of total EPI expenditure. When funds
  were received from the respective donors, they were insufficient to fully cover the costs incurred to
  date.
  Prior to commencement of the audit, PGK 330,083 (USD 136,662) had been reimbursed to the Gavi
  programme. As of 10 February 2016, PGK 680,788 (USD 274,572) was yet to be refunded.
  Table 6: Non-Gavi activities paid out of Gavi grants and status of refunds and balances (c.f. Annex 1)

  Activity Expenditure Refunded Balance Balance Audit Comment
  PGK PGK PGK USD
  Gas Supplies 247,244 – 247,244 97,363 Related to procurement of gas cylinders
  from 2012/2013, funded by other donor
  Gardasil Project 2012 3,792 – 3,792 1,462 Non-Gavi funded project. Gavi had not
  provided support for HPV in PNG
  Data Collection & 38,259 – 38,259 15,609 Non-Gavi activity, funded by GoPNG
  assessment1
  National EPI Surveillance 253,053 152,388 100,665 41,678 Non-Gavi activity, funded by other
  Meeting donor. Partially refunded.
  Hepatitis B Birth dose 151,124 151,124 – – Non-Gavi funded activity, fully refunded
  survey
  Measles Outbreak 87,069 – 87,069 34,099 Funded by GoPNG

  Newborn Care 40,335 26,571 13,764 5,699 Non-Gavi activity, partly refunded

  1
  Including Sentinel Site Surveillance
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  Table 6: Non-Gavi activities paid out of Gavi grants and status of refunds and balances (c.f. Annex 1):

  Activity Expenditure Refunded Balance Balance Audit Comment
  PGK PGK PGK USD
  Vaccine Management 189,995 – 189,995 78,662 Annual Implementation Plan of NDoH,
  forms & Frequently Asked indicated GoPNG as funding source for
  Questions (FAQ) booklets these activities. The expenses were paid
  for Routine Immunisation from the HSS grant but this did not
  Activities2 include an allocation for these activities.
  The total HSS budget for printing
  materials (posters) was USD 9,523 over
  five years. The FAQs were for Measles,
  Vitamin A, Tetanus Toxoid and Japanese
  Encephalitis, these programmes were
  not supported by Gavi in PNG.
  Total Balance not yet refunded 680,788 274,572

  Risks / Effect
  Use of Gavi grants for unapproved activities contradicts the PFA and relevant grant terms and
  conditions.
  Immunisation programme objectives funded by Gavi may be delayed due to lack of cash flow/
  liquidity.

  Recommendation 9 (Essential)
  NDoH should:

  Review the accounting records, from the inception of Gavi grants to date, identify and quantify all
  instances of ineligible expenditures, and promptly refund all outstanding balances to Gavi; and
  Adhere to the terms and conditions of PFA and relevant grant agreements in regards to its ability
  to use Gavi funds for unplanned activities, including emergency situations.

  Management comments
  See Annex 6 – Management comments and action plan as at 17 October 2016

  2
  Transactions related to use of Gavi grants for non-Gavi activities, in routine immunization, may be subject to further
  review in any separate Gavi investigation.
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  6.2. Outstanding travel advance
  The Audit Team identified poor controls over the acquittal of advances related to travel. These
  advances were either issued to NDoH staff or to hotels and venues where the activities were held. At
  the end of January 2016, the total amount yet to be acquitted, for period 2013-2015, was PGK 67,539
  (USD 27,413) of which PGK 55,489 (USD 22,974) was outstanding from 2014.
  GoPNG’s Financial Management Manual allows for temporary cash advances to Government Officers
  for approved purposes. The Manual requires that the “advances must be repaid in full as early as
  possible where no repayment date is specified…”
  Some of the advances had been issued to individuals who had not yet completed the submission and
  acquittal of prior advances. This practice was not in accordance with the Manual which states that no
  new advances should be provided while prior advances to the same staff member remained un-
  acquitted.
  Table 7: Aging of acquittals for the period 2013-2015

  Advances Un-acquitted Un-acquitted
  Year
  issued PGK advance PGK advance USD
  2013 51,755 3,409 1,315
  2014 461,694 55,489 22,974
  2015 660,441 8,641 3,124
  Total 1,173,890 67,539 27,413

  Risks / Effect
  Loss of Gavi funds due to non-recovery of advance payments or advances being used for a purpose
  other than intended.

  Recommendation 10 (Critical)
  NDoH should:

  Clarify the timeline for submission, review, approval and acquittal of staff advances; and
  Ensure the provisions of Financial Management Manual are adhered to, specifically “A new
  advance will not be made for any purpose while the previous one to the same person is
  unacquitted except where evidence is produced that payment is still continuing and repayment
  action on the first advance is not deliberately delayed.”
  Management comments
  See Annex 6 – Management comments and action plan as at 17 October 2016

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  6.3. Incomplete and untimely Provincial acquittals
  Per Financial Management Manual Section 16-4, those responsible for the maintenance of the HSIP
  Trust Accounts should ensure that: “a cash account is submitted to the Public Account of the
  Department of Finance for each month, not later than seven days after the end of the month (unless a
  different period is allowed under the trust instrument). The receipts and payments during the period
  and the closing balance should be accompanied by a bank reconciliation statement. This is necessary
  for incorporation of the trust transactions in the monthly and quarterly Statement of Public Accounts
  by the Department of Finance.”
  Per the November 2012 HSIP Manual of Procedures “accurate financial reporting is depending on the
  relevant Provincial coding details (in the expense code fields) being entered in the cashbooks. At
  issue is that the allocation of costs to programs […] is accurately identified and reported. Separate
  vote coding (Chart of Accounts) is necessary to facilitate this requirement.”
  The HSIP Manual also states that “Accurate coding of expenditure will allow the NDoH and NDoH
  Financial Management Service Branch compliance function to effectively monitor progress against
  Medium Term Expenditure Framework priority areas.”
  The Audit Team’s review of a sample of HSIP acquittals received from the Provinces for the period
  June to November 2015 revealed the following weaknesses:

  Acquittals were often received late – for example as at 10 February 2016 more than 50% of the
  November and more than 75% of the December acquittals had not yet been received by the
  National HHISP Finance and Accounting team assigned to the NDoH;
  The quality of the acquittals was weak as more than half of the submissions over the six month
  period did not adhere to the vote number structure (the Provincial chart of accounts);
  Acquittals frequently attributed Gavi funds to other donors or failed to code Gavi-funded activities
  correctly to the programme “Family Health Services/ Immunisation”;
  There was a lack of transparency as to what Gavi was funding since the Provincial accounts
  comingled funds from all three principal immunisation sources under the category “Other donor”;
  Acquittals were often incomplete as only 25% of the Provinces submitted the required “HSIP Trust
  Account funding source report” and, of those Provinces which did submit a report, at least a third
  did not complete this report correctly;
  More than half of the Provinces did not maintain a sub-ledger for each funding source as required;
  Without these required sub-ledgers, the Provinces’ ability to track the balance of funds was
  undermined, and they were not able to accurately prepare a funding source report, as required;
  Because there was no overall aggregation of the financial information from each Province, NDoH
  management with overall responsibility for the budgets did not have the necessary information
  and insights into the rate at which Provincial funds were used; and
  The HHISP Finance and Accounting team assigned to the NDoH responsible for visiting Provinces
  to validate their underlying supporting documents undertook such visits infrequently. Moreover,
  these visits were often only triggered by Provincial requests rather than following a routine
  programme. As a result, each Province was being visited on average once every two years.

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  One of the key purposes of the “HSIP Trust Account funding source report” was to ensure that,
  whatever HSIP funds were comingled and disbursed to Provinces, these funds could still be tracked by
  funding source. Further, the existence of such a report validated that suitable mechanisms were in
  place to compute the cumulative year-to-date expenditure for each funding source, as well as
  remaining funding source balances.
  The current configuration of the Provincial Government Accounting System only contained details on
  disbursements made to the Provinces, and was unable to consolidate and provide any donor specific
  reporting other than the total funds disbursed from the National to the Provinces.

  Risks / Effect
  Without any aggregate year-to-date information on expenditure against the various HSIP funding
  sources, the EPI unit and the Financial Management Service Branch were unable to:
  Effectively monitor progress against immunisation priorities areas; and

  Fulfil their fiduciary and oversight responsibilities on the use of EPI funds disbursed to the
  Provinces.

  Furthermore, the level of detail in the budget and workplan undermined EPI management’s ability to
  monitor and make decision on the use of Gavi’s funds at Provincial levels.

  Recommendation 11 (Critical)
  HHISP Finance and Accounting team in conjunction with the NDoH should:
  Update the funding source segment of its Provincial chart of accounts by creating a Gavi-specific
  segment, so as to enable the tracking of Gavi’s funding independent from other sources also
  funding immunisation;

  Ensure that relevant sub-National personnel are knowledgeable with the accounting structure of
  Provincial Government to properly classify receipts and payments, with particular focus on
  accounts fields Program/Activity (fields #10/#11) and Donor Identification (field #15);

  Follow up with all Provinces and confirm that they comply with financial regulations and
  instructions, maintain funding source specific sub-ledgers, and timely submit complete acquittals
  including the “HSIP Trust Account funding source report”;

  Ensure all relevant personnel are briefed and trained on the above changes; and

  Improve the “funding source report” by inserting a balance brought forward column into the
  template.

  Management comments
  See Annex 6 – Management comments and action plan as at 17 October 2016

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  6.4. Payment of per diems in Eastern Highlands Province
  The Audit Team noted the following inconsistencies in the payment of per diems in Eastern Highlands
  Province.

  6.4.1 Lack of justification for payment
  Per diems and allowances may be paid to staff while on duty travel to cover their subsistence and
  incidental expenses.
  The Audit Team noted that the Eastern Highlands Province was paying incidentals from Gavi funds to
  personnel who had not travelled to carry out their work. Specifically, daily payments of PGK 40 were
  disbursed to 13 staff over the 10 day period between 7 and 16 September 2015 for the SIREP
  campaign which took place in their home town duty station in Goroka. Total expenditure was
  PGK 5,200. No justification for these claims was provided.
  Risks / Effect
  The validity of payments of per diems and incidentals could not be confirmed without adequate
  supporting documentation to validate the entitlement.

  Recommendation 12 (Essential)
  Per Diem allowances should only be paid to staff who qualify for the allowance. Such payments
  should only be made where there is a valid approval on file; and
  The HHISP Finance and Accounting team assigned to the NDoH should follow up on and quantify
  any per diem payments paid over the entire grant duration (including a review of the Goroka
  hospital case) where entitlement cannot be justified.
  Any and all unjustified payments identified over the entire grant duration should be reimbursed to
  the grant.

  Management comments

  See Annex 6 – Management comments and action plan as at 17 October 2016

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  6.4.2 Payment of allowances without proof of receipt
  In both the SIREP campaign and multiple other cases where staff were required to attend training
  away from their duty station, allowances for multiple staff members were paid to a single person for
  onward distribution to their colleagues. This was described to the Audit Team as common practice
  whenever it is not possible to pay personnel individually. In the case of Goroka, no documentation
  was on file to evidence the fact that these onward payments were effected, or that the claimants had
  received their entitlement.
  Risks / Effect
  Without evidence of receipt of allowances, it is not possible to confirm that amounts were distributed
  appropriately to individual.
  Absence of such evidence increases the risk of theft or fraudulent claims going undetected, while also
  offering no protection to individuals responsible for redistribution of cash allowances.

  Recommendation 13 (Essential)
  HHISP Finance and Accounting team in concert with the NDoH should ensure that the transfer of
  all cash payments, including allowances, are supported by a receipt signed by the recipient,
  documenting the amount of funds received, their identity card and their contact details; and
  Shortly after campaigns, training and other events resulting in entitlements to allowances, HHISP
  Finance and Accounting team should randomly contact staff members and volunteers to confirm
  attendance and amounts received.

  Management comments

  See Annex 6 – Management comments and action plan as at 17 October 2016

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  7. Procurement
  Audit Rating

  Procurement processes did not comply with the requirements of National
  regulations or the PFA. Systemic internal control weaknesses were identified
  across multiple stages of the procurement process, with errors not being timely
  addressed, as a result of ineffective oversight by NDoH management. The
  Unsatisfactory
  Commercial Support Services Branch of NDoH, designated as responsible for
  National-level procurement, was not involved. Instead, procurement was
  carried out autonomously by the EPI unit which resulted in inadequate
  segregation of duties.

  Background
  Procurement files were examined to provide assurance that procurement was carried out in
  compliance with the PFA and National regulations; and included complete documentation to support
  budgeting and planning, tendering, contracting, delivery and receipts of goods, payments, and assets
  management.
  The procuring entity within the Population and Family Health Services Branch of NDoH was the EPI
  unit. GoPNG’s Public Finances (Management) Act 1995 (PFMA) specifies that departmental heads are
  responsible for ensuring that the provisions of PFMA, including for the procurement, are complied
  with.
  Total expenditure reported by NDoH during the period 2013-2015 was PGK 7,213,963
  (USD 2,696,482), of which procurement related expenditure totalled PGK 2,447,111 (USD 967,106).
  Of this, the Audit Team sampled and audited 80% of total procurement expenditure for the period
  2013-2015, totalling PGK 1,954,167 (USD 771,067).
  Table 8: Coverage of procurement and expenditure for the period 2013-2015

  Description % Amount PGK Amount USD
  Total expenditure, procurement
  ___ 7,213,963 2,696,482
  & non-procurement
  34%
  Of which total procurement 2,447,111 967,106
  of total expenditure 2013-2015
  80%
  Of which total audited 1,954,167 771,067
  of total procurement 2013-2015

  The Audit Team identified systemic weaknesses across all procurement transactions reviewed
  (sections 7.1 & 7.2). In addition, 64% of procurement items audited were inadequately supported
  (section 7.3).

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  Table 9: Summary of procurement transactions reviewed by the Audit Team for the period 2013-2015

  Description Amount PGK Amount USD

  Printing & Stationary 910,019 364,772

  Accommodation 416,153 156,491

  Supply & Utility 295,232 114,710

  Service- Catering/Car hire/Repair 155,436 62,957

  Air Fare 114,327 46,054

  Equipment 63,000 26,083

  Total 1,954,167 771,067

  7.1. Non-compliance with the applicable procurement regulations
  The Audit Team found that the procurement processes did not comply with the National procurement
  regulations. Non-compliance occurred during the various stages of the procurement process, with
  key instances being identified as follows:

  7.1.1 Procurements were unplanned
  The PFA requires the NDoH to prepare an Annual Procurement Plan and submit it to the Inter-agency
  Coordinating Committee and Central Supply and Tenders Board for their review and approval. Prior
  to the implementation of the plan, the NDoH was required to communicate the approved Plan to the
  Gavi Secretariat.
  In addition, the Financial Management Manual, 2006 issued by the Department of Finance of GoPNG,
  and the Good Procurement Manual, January 2008 issued by Central Supply and Tenders Board,
  required the procuring entity to develop a procurement plan before commencement of procurement.
  The Audit Team found instances of procurement that were carried in an ad-hoc and piecemeal
  manner without identifying the programmatic needs. For frequently purchased consumables such as
  stationery and printed materials, a costed Annual Procurement Plan would have achieved better
  value for money by identifying potential economies of scale, and by enabling the procuring entity to
  negotiate more favourable pricing.
  An Annual Procurement Plan would have enabled the EPI unit to consider different options such as
  entering into a Long Term Agreement for the repeat purchase of consumables.
  In addition, Annual Procurement Plans also facilitate the measurement of progress against
  procurement targets.

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  Risks / Effect
  Opportunities for economies of scale and price negotiations with vendors were potentially foregone
  through failing to adequately plan for procurement.
  The practice of initiating piecemeal procurement instances carries the risk of procurement being
  subdivided to avoid competitive bidding processes.
  The EPI unit’s administrative and transaction costs were potentially higher than necessary.
  Recommendation 14 (Essential)

  The EPI unit, in consultation with its technical partners, should prepare a credible Annual
  Procurement Plan and submit for approval as defined by the PFA and National regulations. The
  Plan should similarly be shared with NDoH’s procurement unit prior to commencement of
  programme activities.

  Management comments

  See Annex 6 – Management comments and action plan as at 17 October 2016

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  7.1.2 Consideration was not given to existing “Whole of Government” contracts
  The PFA and GoPNG’s procurement regulations required, for procurement up to an aggregate value of
  PGK 300,000, that priority should be given to “Whole of Government” (WoG) contracts insofar as they
  exist for the goods or services that are being procured.
  The Audit Team noted from its sample review of procurement instances above this threshold, that
  there was no evidence to demonstrate that WoG contracts had been considered prior to self-
  procuring.

  Risks / Effect
  Opportunities for value for money with existing WoG contracts were missed by not considering these
  during the procurement process.
  The administrative burden on the EPI unit was unnecessarily increased by self-procurement on
  occasions when WoG contracts existed.

  Recommendation 15 (Essential)
  NDoH, in compliance with National procurement regulations, should ensure that all instances of
  procurement up to an aggregate value of PGK 300,000:

  Duly incorporate a consultation step of existing WoG contracts;
  Formally document that the consultation of WoG contracts has been carried out;
  Formally document the respective decision-taking thereon; and
  Select WoG contracts whenever these provide better value for money than self-procurement.

  Management comments

  See Annex 6 – Management comments and action plan as at 17 October 2016

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  7.1.3 No evidence of requests for quotation from tendering vendors
  The Financial Management Manual, 2006 issued by the GoPNG’s Department of Finance required that
  quotations be requested from tendering vendors in writing. This was applicable for all procurement
  with an aggregate value of between PGK 5,000 and PGK 300,000.
  The procuring entity is to provide the potential vendors with a complete “Description of
  Requirement”, including, but not limited to, quantity, description, delivery requirement, timings,
  specifications, standards, drawings, and special conditions etc.
  The Audit Team noted that there was no evidence of any form of communication with the vendors
  prior to submission of the quotations. There was no documentation on how the vendors had been
  shortlisted and requests for quotation undertaken. Furthermore, there was no documented evidence
  of due process to review and evaluate vendor quotations.

  Risks / Effect
  The absence of documented communication with tendering vendors does not provide assurance that
  requests for quotation were public, fair and transparent.
  Similarly the undocumented nature of vendor quotation ratings and short-listing tendering vendors
  did not demonstrate due process and fair, unbiased decision-taking.

  Recommendation 16 (Essential)
  For procurement between PGK 5,000 and PGK 300,000, NDoH should ensure that the EPI unit
  complies with the provisions of the Financial Management Manual, 2006 issued by the Department of
  Finance of GoPNG, specifically documenting and placing on file:

  End-to-end communication with the tendering vendors; and
  Short-listing and vendor selection procedures.

  Management comments

  See Annex 6 – Management comments and action plan as at 17 October 2016

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  7.1.4 Quotation register not maintained
  The Financial Management Manual, 2006 issued by the Department of Finance of GoPNG required the
  procuring entity to maintain a quotation register to capture pertinent information on supplier quotes
  including: quote date, description of goods/service, price quoted, bidder name, name of
  departmental officer obtaining the quotation, quote selected to supply goods/services, reason for
  selection of the successful quote, and all three quotations received. This requirement applies for
  cases of procurement up to an aggregate value of PGK 500,000.
  A quotation register provides transparency over how supplier quotes are managed, and it helps to
  identify cases of direct procurement or single-sourced supplies.
  However, the EPI unit did not maintain a quotation register as required during the period 2013-2015.

  Risks / Effect
  The absence of a quotation register undermines assurance that the most competitive quotes were
  selected for each procurement incident.

  Recommendation 17 (Essential)
  NDoH should put in place and maintain a quotation register to transparently manage and track all
  respective supplier quotes, in compliance with National regulations.

  Management comments

  See Annex 6 – Management comments and action plan as at 17 October 2016

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  7.1.5 Procurement without Minor Contract Agreements
  Section 5.2 of Financial Instruction 2-2013, issued by the Department of Finance in May 2013 as an
  amendment to the Public Finances (Management) Act to increase the threshold for major
  procurement, states that a Minor Contract Agreement should be executed between the procuring
  entity and the vendor(s) for procurement between PGK 50,000 and PGK 500,000. Section 5.1 of the
  Financial Instruction required that such contracts be “…executed by the Head of the procuring
  Agency”.
  The Audit Team reviewed a sample of 41 procurement transactions, totalling PGK 2.5 million (USD
  0.97 million) carried out by the EPI unit between 2013 and 2015. However, none of the transactions
  qualifying for a Minor Contract Agreement, had been executed with a contract.
  Such written contracts were necessary for locking into an agreed price, quantity and quality, and for
  stipulating terms and conditions for delivery, cancellation, and payment terms.

  Risks / Effect
  In the absence of a suitable contract or credible purchase order, the procuring entity is at substantial
  risk of financial loss and/or sub-standard performance without recourse.

  Recommendation 18 (Critical)
  In compliance with National regulations, the NDoH should ensure that the EPI unit puts in place valid
  Minor Contract Agreements for all procurement instances which meet the stated thresholds.

  Management comments

  See Annex 6 – Management comments and action plan as at 17 October 2016

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  7.1.6 Fixed assets registers were not maintained
  The Financial Management Manual, 2006 issued by the Department of Finance of GoPNG required
  entities at all levels to maintain fixed assets registers to duly record acquisitions and disposals. The
  Manual also defined the criteria for what constituted a fixed asset and the requirement for annual
  physical inspections of these assets.
  The Audit Team noted that no fixed assets registers were maintained for assets acquired with Gavi
  funds. Similarly, the EPI unit was unable to substantiate that annual physical inspections had been
  carried out. Finally there was no documentation on file evidencing the physical existence, location,
  working condition, ownership or usage of assets, as required in the PFA between the NDoH and Gavi.
  As a consequence, the EPI unit did not plan and budget for maintenance, repairs and replacement of
  its fixed assets.

  Risks / Effect
  Failure to track and manage fixed assets may result in the unplanned use, loss or theft of items being
  undetected.
  Not conducting routine physical inspections could contribute to the lack of maintenance and poor
  working state of fixed assets.
  No information is readily available for the EPI unit to plan and budget for maintenance, repairs and
  replacement of its fixed assets across the country.

  Recommendation 19 (Critical)
  The NDoH should strengthen its management and oversight over fixed assets by:

  Carrying out a full physical inventory of existing assets, including verifying the working condition of
  items, on a regular basis. Where remediation is necessary, it should ensure that necessary
  maintenance is performed and documented;
  Recording all assets in a suitable fixed assets register that can be consolidated by funding source
  at National level.

  Management comments

  See Annex 6 – Management comments and action plan as at 17 October 2016

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  7.2. Weak internal controls over the EPI unit’s procurement activities
  The Audit Team identified systematic internal control weaknesses in procurement handled by the EPI
  unit. Ineffective oversight by NDoH over the EPI unit’s purchases resulted in significant shortcomings
  in how procurement was conducted.
  Specific gaps identified in the procurement processes as reviewed by the Audit Team were as follows:

  7.2.1 Procurement undertaken outside of the designated procurement unit
  The Audit Team noted that the EPI unit duly procured immunisation items and services without
  engaging Commercial Support Services as required. Commercial Support Services was intended as the
  unit responsible for procurement within the NDoH.
  There was no segregation of duties in procurement carried out by the EPI unit over the period 2013-
  2015. Roles and responsibilities of the individuals involved in procurement were undefined and
  unclear. The person receiving and evaluating the quotation was also found to have received the
  goods or services, and to have prepared the request for payment. No suitable controls were in place
  to compensate for these incompatible duties.
  The principle of segregation of duties is necessary to ensure that no one individual maintains
  excessive control over an entire procurement process. This principle significantly mitigates the risk of
  mismanagement and the inappropriate awarding of contracts.

  Risks / Effect
  Failing to engage with NDoH’s designated procurement unit:

  Undermined the principle of segregation of duties by failing to separate key responsibilities; and
  Burdened the EPI unit with procurement related tasks that could and should have been delegated
  to the Commercial Support Services unit.

  Recommendation 20 (Critical)
  Future procurement involving Gavi funds should be carried out with the appropriate involvement
  of NDoH’s Commercial Support Services unit;
  There should be a clear segregation of duties between procurement, ordering, receiving goods or
  services, preparing requests for payment, approving supplier invoices and executing payments to
  suppliers; and
  This segregation of duties should be reviewed regularly to ensure it remains appropriate and
  relevant.

  Management comments

  See Annex 6 – Management comments and action plan as at 17 October 2016

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  7.2.2 Budget overrun and unbudgeted procurement
  The absence of planning, budget monitoring and linking of procurement expenses to budgeted
  activities resulted in a significant proportion of Gavi funds being spent on activities that were not in
  the grant proposal, nor approved in subsequent workplans.
  In 2014, expenditure on printing and stationeries totalled PGK 290,995 (USD 112,208). This
  contrasted adversely with the respective HSS budget allocation for the 5-year grant which totalled
  USD 9,523. As such, in 2014 alone, the EPI unit exceeded the entire 5-year budget by more than
  thirty-fold without any formal budget reallocation and without the necessary due approval and
  documentation justifying this overspend.

  Risks / Effect
  Overspend on individual budget lines went unchecked, without any due oversight.
  Insufficient funds remained for other budgeted activities, potentially taking away from the
  achievement of programme outcomes.

  Recommendation 21 (Critical)
  Budgetary amendments, variations and reallocation of funds should be formally justified and
  approved according to the provisions of the PFA;
  Procurement should be carried out as per the workplan and with appropriate involvement from
  NDoH’s Commercial Support Services unit; and
  Supplier payments should be released only by the HHISP Financial Controller assigned to the
  NDoH after confirming both the appropriateness of the budget line and the availability of funds.

  Management comments

  See Annex 6 – Management comments and action plan as at 17 October 2016

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  7.3. Inadequacies in procurement documentation and other irregularities
  The Audit Team selected a sample of 41 procurement transactions and reviewed associated
  documentation relating to vendor selection, delivery of goods and services, supplier invoices and
  supplier payments.
  Of these 41 transactions:

  11 were not related to the Gavi programme but had been paid out of Gavi grants;
  17 were inadequately supported and contained multiple irregularities; and
  13 contained major inconsistencies including timing discrepancies (e.g. purchase preceded
  requisition), irregular supplier documentation, disproportionate costs, potential duplicate
  funding and other matters. The Audit Team was unable to conclude that procurement had
  been conducted correctly.
  Consequently, the overview summarised in the table below is preliminary, for information purposes
  only, and will be subject to change during a further investigation by review. Final details will be
  provided in a separate report.
  Table 10: Overview of procurement transactions reviewed by the Audit Team (indicative figures only)

  Number of
  Description transactions PGK USD
  Procurement transactions audited A 41 1,954,167 771,067
  Procurement unrelated to Gavi programme
  B 11 699,602 284,649
  funded by Gavi grants3
  Procurement related to Gavi and funded by
  C 30 1,254,564 486,419
  Gavi grants (A minus B)
  Procurements inadequately supported and with
  irregularities 17 638,179 245,944
  (see sections 7.3.1, 7.3.2, 7.3.3 & 7.3.4)
  Procurement with major inconsistencies, not
  13 616,385 240,475
  concluded at the time of audit

  Key observations made by the Audit Team are reported in the following sub-sections.

  3
  Expenditure relating to non-Gavi activities included both procurement and non-procurement expenditure. Therefore the
  overall status of the refunds and balances is reported under budgeting and financial management section of this audit
  report (refer to section 6.1).
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  7.3.1 Unsupported procurement
  No supporting documentation could be provided to the Audit Team for one transaction amounting to
  PGK 24,540 (USD 9,463).
  Section 20.1, paragraph (c) of the PFA requires that “…all expenses relating to the use or application
  of funds are properly evidenced with supporting documentation sufficient to permit Gavi to verify
  such expenses.”

  Risks / Effect
  Inadequate assurance on the appropriate use of Gavi’s financial support.
  Risk of Gavi’s financial support being utilised for purposes other than those intended.

  Recommendation 22 (Essential)
  NDoH is required to:

  Ensure that all transactions and contracts entered into are supported with adequate and complete
  supporting documentation; and
  Put on file all necessary supporting documentation adequately cross-referenced to the relevant
  accounting records.

  Management comments

  See Annex 6 – Management comments and action plan as at 17 October 2016

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  7.3.2 Contracts awarded without demonstrating competition
  Out of a total of 6 transactions, vendors had been selected without obtaining the necessary three
  quotations in 5 instances.
  For the remaining transaction, documentation on file demonstrated that three quotations had been
  obtained. However, the decision for selecting a more expensive supplier quotation had not been
  documented, and no satisfactory explanation could be given to the Audit Team.
  The supporting documentation for each instance of procurement must be able to demonstrate that
  open, transparent competition was applied and value for money was obtained.

  Risks / Effect
  Where the selection of vendors is not duly documented and justified, there is an increased risk of
  contracting with unqualified or non-competitive vendors.

  Recommendation 23 (Critical)
  In conformity with National regulations, NDoH should ensure that:

  Vendor selection for Gavi-supported activities is competitive and duly documented;
  Only quotations from qualifying suppliers are short-listed and selected; and
  Vendor selection be made on the principle of considering best value for money, and any exception
  should be duly documented and authorised by an executive function independent of the vendor
  selection process.

  Management comments

  See Annex 6 – Management comments and action plan as at 17 October 2016

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  7.3.3 Inadequately supported delivery
  9 transactions were identified where delivery or receipt of goods were not adequately supported. Key
  observations were:

  Air travel for EPI employees for which hand-written or incoherent quotations were on file.
  However, neither supplier invoices nor evidence of travel, such as boarding pass stubs, was placed
  on file; and
  The delivery of goods to the National NDoH office (Waigani) and to the AMS (Badili) could not be
  observed on either site, had not been recorded in any stock or supply registers, and were not
  supported by delivery notes or bills of lading. Personnel from EPI and the AMS explained that
  most of these goods were destined for nationwide distribution, however there was no record of
  such distribution in the AMS dispatch books, and no trace of delivery in either of the two
  Provinces visited by the Audit Team.

  Risks / Effect

  Satisfactory delivery of goods and services cannot be demonstrated or reconstituted without
  adequate substantiation for performance.
  Inadequate assurance on the appropriate use of Gavi’s financial support.

  Recommendation 24 (Critical)
  NDoH should ensure that the EPI unit:

  Obtains and maintains in its records adequate proof of delivery from all suppliers; and
  Develops and maintains a dry goods inventory incorporating a record of delivery and distribution
  of any such goods procured with Gavi’s financial support.

  Management comments

  See Annex 6 – Management comments and action plan as at 17 October 2016

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  7.3.4 Payments not supported by a valid invoice and timing inconsistency
  3 payments had been made to vendors solely on the basis of their quotations rather than original
  supplier invoices. In one instance, payment had been made prior to the date of delivery and without
  any written instruction or justification.

  Risks / Effect
  Control over incomplete or non-delivery of goods and performance of services is undermined when
  advance payment is made.
  Non-compliance with the Public Finances (Management) Act 1995.

  Recommendation 25 (Essential)
  Payment for goods and services should only be made on the basis of:

  Original supplier invoices; and
  On credible confirmation of satisfactory delivery of goods or performance of services in
  accordance with agreed terms and conditions.

  Management comments

  See Annex 6 – Management comments and action plan as at 17 October 2016

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  Annex 1 – Expenditure related to non-Gavi activities but paid out of Gavi grants
  Amount Amount
  Reference Payee Description of Goods/Services Date
  PGK USD
  Origin Energy (PNG)
  210306 Ltd Gas Cylin SIA SHP 2012:GAVI 21/11/2013 6,693 2,580.67
  Origin Energy (PNG)
  210306 Ltd Gas Cylin SIA WHP 2012:GAVI 21/11/2013 13,961 5,383.27
  Origin Energy (PNG)
  210306 Ltd Gas Cylin SIA Enga 2012:GAVI 21/11/2013 24,125 9,302.64
  Origin Energy (PNG)
  210306 Ltd Gas Cylin SIA ESP 2012:GAVI 21/11/2013 42,483 16,381.49
  Origin Energy (PNG)
  210306 Ltd Gas Cylin SIA Vanimo 2012:GAVI 21/11/2013 43,828 16,899.90
  Origin Energy (PNG)
  210306 Ltd Gas Cylin SIA Madang 2012:GAVI 21/11/2013 44,896 17,311.78
  Origin Energy (PNG)
  212606 Ltd Gas CylindersX4Prov:GAVI 15/08/2014 71,260 29,503.09

  Gas Supplies BALANCE 247,244 97,363

  212718 Air Niugini Gardasil Proj WNBP H/Train:GAVI 30/08/2012 1,283 495

  212719 Kimbe Bay Hotel Gardasil Projct WNBP H/Train:GAVI 30/08/2012 1,531 590

  212720 Gerard Sui Gardasil Projct WNBP Sch H/Train:GAVI 30/08/2012 978 377

  Gardasil Project 2012 BALANCE 3,792 1,462

  212645 Air Niugini Data Quality Assess Vst MBP:GAVI 25/08/2014 1,075 445

  212647 Masurina Lodge Data Quality Assess Vt Alotau:GAVI 25/08/2014 1,520 629

  212649 Vienna Nonwo Data Quality Assess Vt MBP Aug14:GAVI 25/08/2014 1,121 464

  212775 Air Niugini Data Quality AssessLaex2Dist:GAVI 19/09/2014 1,882 779

  212776 Robin Misiel Data QualityAssessLaex2Districts:GAVI 19/09/2014 1,321 547

  212777 Huon Gulf Hotel Data QualityAssess Laex2Distr:GAVI 19/09/2014 4,146 1,716

  212828 Paik Tade Data Assess Morobe Oct 2014:GAVI 30/09/2014 921 381

  212841 Air Niugini CollectDataSelctSntinalEHP:GAVI 09/10/2014 1,133 469

  212846 Edilson Yano CollectDataSelctSentinalSitesGka:GAVI 09/10/2014 1,156 479

  212848 AB Lodge Collect Data SelectedSitesEHP:GAVI 09/10/2014 800 331

  212970 Air Niugini Collct Data Sentinental Ste:GAVI 28/10/2014 1,107 458

  212976 Madang Resort Hotel Collct Data Sentinal Ste Mdg:GAVI 28/10/2014 2,136 885

  212978 Edilson Yano Collect Data Sentinal Ste MDG:GAVI 28/10/2014 921 381

  213071 Air Niugini CollectData SentinalSitesLae:GAVI 31/10/2014 911 377

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  Amount Amount
  Reference Payee Description of Goods/Services Date
  PGK USD

  213074 Edilson Yano CollectDataSentinalSiteNov14Lae:GAVI 31/10/2014 921 381

  213078 Phils Hotel CollectDataSentinalSitesLae:GAVI 31/10/2014 945 391

  213241 Air Niugini Data Collect Nov&Dec14 Hgu:GAVI 25/11/2014 1,125 466

  213242 Hotel Kimininga Data Collect Nov14&Dec14 WHP:GAVI 25/11/2014 1,364 565

  213247 Edilson Yano Data Collect Nov14&Dec14 WHP:GAVI 25/11/2014 1,156 479

  213425 Masurina Lodge Data Collect Dec14 MBP:GAVI 12/12/2014 1,520 629

  213430 Edilson Yano Data CollectMeningitis&Survei:GAVI 12/12/2014 1,121 464

  213446 Air Niugini Data Collect Dec14 MBP:GAVI 12/12/2014 773 320

  213470 Air Niugini CollectData Dec14-Jan15ENBP:GAVI 16/12/2014 1,455 602

  213471 Kokopo Village Resort Collect Data Dec2014-2ndJan15:GAVI 16/12/2014 900 373

  213473 Edilson Yano Collect Data Dec14-2ndJan15 ENBP:GAVI 16/12/2014 1,156 479

  213494 Paik Tade Data Collect Lae Huon Dis Dec14:GAVI 18/12/2014 1,264 523

  213734 Edilson Yano Collect Data Sent Site NIP Feb15:GAVI 30/01/2015 1,086 393

  213736 Kavieng Guest House Collect Data Sent Site NIP:GAVI 30/01/2015 1,750 633

  213738 Air Niugini Collect Data Sent Site NIP:GAVI 30/01/2015 1,575 569

  Sentinal Site Data Collection BALANCE 38,259 15,609

  213245 JACOB YAKOPO Nat.EPI&Surveil Meet Dec14 NCD:GAVI 25/11/2014 816 338

  213252 Julie Liviko Nat EPI&Surveil Meet Dec14 NCD:GAVI 25/11/2014 851 352

  213253 Air Niugini NatEPI&SurveilMeet Dec14 NCD:GAVI 26/11/2014 28,113 11,639

  213290 Judy Minape Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 1,016 421

  213301 Granvile Motel Nat&EPI Surveil Meet Dec14 NCD:GAVI 28/11/2014 46,455 19,233

  213345 LINNAH ALE EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 838 347

  213347 Ernest Giton EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 851 352

  213348 Gekso Dawa EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 838 347

  213349 Margaret Malaisa EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 851 352

  213350 Reuben Maiwax EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 838 347

  213351 Elvis Pyrikah EPI&Survil Meet Dec14 NCD:GAVI 28/11/2014 851 352

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  Amount Amount
  Reference Payee Description of Goods/Services Date
  PGK USD

  213352 Casper Amin EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 851 352

  213353 Narua Kaparu EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 981 406

  213354 Alice Honjepari EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 816 338

  213355 Ben Bal EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 686 284

  213363 Lina Laki EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 838 347

  213364 Jack Seimoni EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 851 352

  213365 Lucy Morris EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 981 406

  213366 Maupua Toraea EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 981 406

  213367 Patricia Mitiel EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 816 338

  213368 Morfa Aruko Incid EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 258 107

  213369 Wenani Bokung EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 838 347

  213370 Joshua William EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 816 338

  213371 Ridley Mwaisiga EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 816 338

  213372 Anthony Mala EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 816 338

  213373 Esley Tabagani EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 816 338

  213374 Moses Mimat EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 851 352

  213375 Dickson Kungkene EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 851 352

  213408 Bethseba Peni Nat EPI&Surveil Meet Dec14 NCD:GAVI 10/12/2014 851 352

  213431 Conrad Kambi Nat EPI&Surveil Meet Dec14 NCD:GAVI 12/12/2014 838 347

  213447 Likas Lakain Nat EPI&Surveil Meet Dec14 NCD:GAVI 12/12/2014 816 338

  213448 ALOIS PUKIENEI Nat EPI&Survei Meet Dec14 NCD:GAVI 12/12/2014 981 406

  213476 Edwin Benny Nat EPI&Surveil MeetDec14 NCD:GAVI 16/12/2014 816 338

  213492 Max Manape Nat EPI&Surveil Meet Dec14 NCD:GAVI 18/12/2014 851 352

  213493 Julie Wialu Nat EPI&Surveil Meet Dec14 NCD:GAVI 18/12/2014 816 338

  213235 Air Niugini Nat EPI Surveil Meet NCD Dec14:WHO 24/11/2014 53,144 22,003

  213243 Philip Wanua Nat EPI&Surveil Meet Dec 14 NCD:GAVI 25/11/2014 851 352

  213244 Jackson Appo Nat EPI&Survey Meet Dec14 NCD:GAVI 25/11/2014 851 352

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  Amount Amount
  Reference Payee Description of Goods/Services Date
  PGK USD

  213248 Albert Paliago Nat.EPI&Surveil Meet Dec14 NCD:GAVI 25/11/2014 816 338

  213251 Lina Kua Nat EPI&Survey Meet Dec14 NCD:GAVI 25/11/2014 851 352

  213254 Roselyn Gatana Nat EPI&Surveil Meet Dec14 NCD:GAVI 26/11/2014 981 406

  213255 Nicholas Larme Nat EPI&Surveil Meet Dec14 NCD:GAVI 26/11/2014 873 361

  213256 August Mann Nat EPI&Surveil Meet Dec14 NCD:GAVI 26/11/2014 816 338

  213257 Samuel Disin Nat EPI&Surveil Meet Dec14 NCD:GAVI 26/11/2014 981 406

  213258 Helen Lale Nat EPI&Surveil Meet Dec14 NCD:GAVI 26/11/2014 816 338

  213259 Fred Mondo Nat.EPI&Surviel Meet Dec14 NCD:GAVI 26/11/2014 816 338

  213260 Obert Abel Nat EPI&Surveil Meet Dec14 NCD:GAVI 26/11/2014 873 361

  213261 Peter Robin Nat EPI&Surveil Dec14 NCD:GAVI 26/11/2014 873 361

  213262 Jinga Haine Nat DPI&Surveil Meet Dec14 NCD:GAVI 26/11/2014 851 352

  213263 Pana Rim Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 258 107

  213264 Copland Ihove Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 686 284

  213265 John Pokam Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 816 338

  213266 David Lapun Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 816 338

  213267 Jerry Kubu Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 851 352

  213268 Steven Show Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 851 352

  213269 Micah Zilu Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 851 352

  213270 Michael Mombu Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 816 338

  213271 Mark Dupi Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 851 352

  213272 Robin Yakomb Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 851 352

  213273 Matilda Soagai Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 981 406

  213274 Henry Yapen Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 851 352

  213281 Granvile Motel Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 68,765 28,470

  213285 Joachim Taulo Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 838 347

  213286 Jeffery Langi Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 851 352

  213287 Jenny Walete Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 851 352

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  Amount Amount
  Reference Payee Description of Goods/Services Date
  PGK USD

  213288 Johannes Kundal Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 816 338

  213289 Dr Hamiya Hewali Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 1,016 421

  213291 Julianne Hayara Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 1,016 421

  213292 Norman Vakore Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 851 352

  213293 Edward Maika Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 838 347

  213294 Gedjolly Aaron Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 838 347

  213295 Rebecca Thoridoe Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 851 352

  213296 Singut Bieb Nat EPI&Surveil Meet Dec14 NCD:GAVI 27/11/2014 258 107

  213346 Micah Yawing EPI&Surveil Meet Dec14 NCD:GAVI 28/11/2014 651 270

  213362 Micheal Uaiz Incid Nat EPI&Surveil Dec14 NCD:GAVI 28/11/2014 258 107
  – –
  75 Chq#213228,245,252,330&443 24/12/2014 1,667 690
  – –
  53 Hepatitis B Birth Dose 27/10/2015 152,388 63,092

  National EPI Surveillance Meeting BALANCE 100,665 41,678
  – –
  22 Hepatitis B Birth EPI 21/05/2015 151,124 62,569

  213170 Bayviews Apartments Veh HepatitisB Birth DoseM/Bay:GAVI 19/11/2014 8,150 3,374

  213171 Air Niugini Hepatitis B Birth Dose Surv:GAVI 19/11/2014 15,111 6,256

  213172 Kimbe Bay Hotel Hepatitis B Birth Dose Survey:GAVI 19/11/2014 5,760 2,385
  Birdwing Butterfly
  213173 Lodge Hepatitis B Birth Dose Survy:GAVI 19/11/2014 5,950 2,463

  213174 Nortons Rent A Car Veh Hepatitis B BirthDose Surv:GAVI 19/11/2014 10,100 4,182
  Westoil Transport
  213175 Services VehHepatitis B BirthDoseSurvey:GAVI 19/11/2014 7,700 3,188

  213176 Bayviews Apartments Hepatitis B Birth Dose Survey:GAVI 19/11/2014 4,650 1,925

  213178 Catholic Guest House Hepatitis B Birth Dose Survey:GAVI 19/11/2014 3,500 1,449
  Newton
  Pacific&Associates
  213179 PNG Veh Hepatitis B BirthDose Surv:GAVI 19/11/2014 8,701 3,602

  213277 Johnnie Arava Hepatitis B Survey Hela&Enga:GAVI 27/11/2014 1,756 727

  213278 Dr Edward Waramin Hepatitis B Survey ARoB Dec14:GAVI 27/11/2014 2,556 1,058

  213279 Gerard Sui Hepatitis B Survey WNB Nov-Dec14:GAVI 27/11/2014 2,521 1,044

  213282 Magaru Maluo HepatitisB Survey Hela Nov-Dec14:GAVI 27/11/2014 2,521 1,044

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  Amount Amount
  Reference Payee Description of Goods/Services Date
  PGK USD

  213283 Louis Samiak Hepatitis Survey Oro Prov Dec14:GAVI 27/11/2014 1,143 473

  213284 Philip Vagi Hepatitis Survey ENBP Nov-Dec14:GAVI 27/11/2014 2,556 1,058

  213299 Kokopo Village Resort HepatitisBBirthDoseSurv11Prov:GAVI 28/11/2014 3,300 1,366

  213300 Johnnie Arava Hepatitis BBirthDose Surv11Prov:GAVI 28/11/2014 1,172 485

  213304 Martha Pogo Hepatitis BBirthDoseSurvey10Prov:GAVI 28/11/2014 2,172 899

  213305 Louis Samiak HepatitisBBirthDoseSurvey10Prov:GAVI 28/11/2014 721 299

  213306 Sebastian Robert HepatitisBBirthDoseSurvDec14WNBP:GAVI 28/11/2014 2,486 1,029

  213307 Nelson Mek HepatitisBBirthDoseSurv11Prov:GAVI 28/11/2014 2,521 1,044

  213308 Joseph Wasam HepatitisBBirthDoseSurvey11Prov:GAVI 28/11/2014 2,556 1,058

  213309 Emily John HepatitisBBirthDoseSurvey11Prov:GAVI 28/11/2014 2,743 1,136

  213336 Freda Walai Sui AcomHepatitusBBirthDoseSurv:GAVI 28/11/2014 600 248
  OnePine Vehicle Hire
  213337 Service Veh Hepatitis B BirthDosesCP:GAVI 28/11/2014 9,273 3,839

  213338 Nortons Rent A Car VhHepatitisBBirthDoseSurveEnga:GAVI 28/11/2014 4,150 1,718

  213339 Freda Walai Sui Hepatitis B Birth Dose Survey CP:GAVI 28/11/2014 810 335
  OnePine Vehicle Hire
  213340 Service VehHepatitisBBirthDoseSurvGulf:GAVI 28/11/2014 9,273 3,839

  213342 Hani’s Inn HepatitisBBirth Dose SurvARoB:GAVI 28/11/2014 4,318 1,788
  Yakam Resort Co-op
  213343 Society Ltd Hepatitis B BirtDose SurvEnga:GAVI 28/11/2014 3,864 1,600

  213344 West Winds Hire Cars VehHepatitisBBirthDoseSurvARoB:GAVI 28/11/2014 10,800 4,471
  Island Mobile Hire
  213410 Cars Ltd VehHepatitisBBirthDoseSurvOro:GAVI 10/12/2014 7,691 3,184

  Hepatitis B Birth dose survey BALANCE – –

  210240 Maho Media Measles O/Break B/Lets Hosp:GAVI 11/10/2013 11,051 4,261

  210241 Maho Media Measles O/Break G/Lin B/Lets:GAVI 11/10/2013 14,300 5,514

  210165 Air Niugini Outbreak Measles Nov13 ESP:GAVI 31/10/2013 1,473 568

  210166 Sea View Hotel Measles Outbreak Nov13 ESP:GAVI 31/10/2013 1,700 656

  210167 Gerard Sui Measles Outbreak Nov13 ESP:GAVI 31/10/2013 1,286 496

  210242 Maho Media Measles O/Break G/Line B/Lets:GAVI 11/11/2013 11,051 4,261

  210243 Maho Media Measles O/Break G/Line B/Lets:GAVI 11/11/2013 14,300 5,514

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  Amount Amount
  Reference Payee Description of Goods/Services Date
  PGK USD
  Stephens Printing &
  210262 Stationary Measle O/B Guidlne B/Let Hosp:GAVI 12/11/2013 13,440 5,182

  211308 Air Niugini O/S TT Rpt&Monitor Measles:GAVI 17/06/2014 1,127 466

  211309 Madang Resort Hotel O/S TT Rprt&Monitor Measles:GAVI 17/06/2014 1,591 659

  211311 No.1 Hire Car Veh O/S TT Rpt&Monitor Measles:GAVI 17/06/2014 3,546 1,468

  211312 Vienna Nonwo O/S TT Rprt&Monitor Measles MDG:GAVI 17/06/2014 1,156 479

  212917 Rael Limited Veh Measles O/Break Jul14 NCD:GAVI 22/10/2014 11,050 4,575

  Measles Outbreak BALANCE 87,069 34,099
  Travel Planners (PNG)
  212593 Limited New Born CarePom 18-22/8/14:GAVI 15/08/2014 8,710 3,606

  212595 Stella Jimmy NewBorn Care TOT 18-22/8/14 Pom:GAVI 15/08/2014 1,346 557

  212597 Belinda Yamkeok NewBorn Care TOT 18-22/8/14 Pom:GAVI 15/08/2014 1,346 557

  212598 Paul Wari NewBorn Care TOT 18-22/8/14 Pom:GAVI 15/08/2014 1,181 489

  212599 Karen Sanga NewBorn Care TOT 18-22/8/14 Pom:GAVI 15/08/2014 1,181 489
  – –
  44 Chq#211051,600,675,676,680&etc 30/09/2014 1,181 489

  212594 Hotel Hodava Confer Room&Accom NewBorn Care:GAVI 15/08/2014 25,225 10,444

  212596 Angela Seginami NewBorn Care TOT Pom 18-22/8/14:GAVI 15/08/2014 1,346 557

  212600 Julie Liviko NewBorn Care TOT 18-22/8/14 Pom:GAVI 15/08/2014 1,181 489
  – –
  53 Hepatitis B Birth Dose 27/10/2015 26,571 11,001

  Newborn Care BALANCE 13,764 5,699
  Countrywide Business
  212708 S&Distrib Vaccine Routine Mgmnt Forms:GAVI 30/08/2014 142,995 59,203

  212969 MAF & PRINTZ FAQs Routine Immuniz Measles:GAVI 28/10/2014 47,000 19,459

  Routine Immunization Activities BALANCE 189,995 78,662

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  Annex 2 – Definitions of Ratings and Recommendation Priorities

  A. AUDIT RATINGS
  The Gavi Programme Audit Team’s assessment is limited to the specific audit areas under the purview
  and control of the primary implementing partner administrating and directing the programme of
  immunisation. The three audit ratings are as follows:
  Satisfactory – Internal controls and risk management practices were adequately established
  and functioning well. No high-risk areas were identified. Overall, the entity’s objectives are
  likely to be achieved.

  Partially Satisfactory – Internal controls and risk management practices were generally
  established and functioning, but needed improvement. One or more high- and medium-risk
  areas were identified that may impact on the achievement of the entity’s objectives.

  Unsatisfactory – Internal controls and risk management practices were either not established
  or not functioning well. The majority of issues identified were high risk. Hence, the overall
  entity’s objectives are not likely to be achieved.

  B. CATEGORIES OF PRIORITISATION RATING
  The prioritisation of the recommendations included in this report includes proposed deadlines for
  completion as discussed with the National Department of Health, and an indication of how soon the
  recommendation should implemented. The urgency and priority for addressing recommendations is
  rated using the following three-point scale, as follows: Critical – Essential – Desirable.

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  Annex 3 – Classification of expenditure

  Adequately supported – Expenditures validated on the basis of convincing evidence (evidence which is
  sufficient, adequate, relevant and reliable) obtained by the auditors during the carrying out of their
  mission on the ground.

  Inadequately supported – This covers two sub-categories of expenditure:

  a) Purchases: This is expenditure for which one or more of the essential items of documentary evidence
  required by the country’s regulations on procurement are missing such as procurement plan, tender
  committee review, request for quotation, invoice, contract, purchase order, delivery note for goods
  and equipment, pro-forma invoice, the final invoice, etc.

  b) Programme activity: This is expenditure where essential documentation justifying the payment is
  missing. This includes but is not limited to travel without a travel authorisation, lack of a technical
  report or an activity report showing completion of the task, signed list by participants. Lack of the same
  documents to support liquidation of advances/floats given for meetings/trainings/workshops etc.

  Irregular Expenditure – This includes any deliberate or unintentional act of commission or omission
  relating to:

  a) The use or presentation of documents which are inaccurate, incomplete/falsified/inconsistent
  resulting in the undue use or payment of Gavi funds for activities, or the undue, withholding of monies
  from funds granted by Gavi,

  b) The embezzlement or misappropriation of funds to purposes other than those for which they were
  granted.

  Ineligible expenditure – Expenditure which does not comply with the country’s programme/grant
  proposal approved by Gavi or with the intended purpose and relevant approved work plans and
  budgets.

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  Annex 4 – Audit Procedures and Reporting

  Audit procedures
  Using risk-based audit procedures, the audit included an analysis of reported expenditure (in the
  Annual Progress Reports or any other periodical financial reports), inquiry/ discussions, computation,
  accuracy checks, reconciliation and inspection of records/ accounting documents and the physical
  inspection of assets purchased and works performed using grant funds.
  The following procedures were carried out:

  Review of the Financial Management arrangements for the programmes, focusing on the
  control procedures e.g. appropriation and approval, segregation of duties, roles and
  responsibilities, reconciliation, verification of delivery of goods and services, invoice
  verification, retirement of advances controls and imprest;
  Review of the arrangements for managing the bank accounts, including tracing withdrawals
  and transfers from the programme and designated accounts to determine that they are for
  eligible expenditure for the programmes;
  Verification, on a sample basis, of procurement undertaken to ensure that the applicable
  policies and procedures are strictly adhered to and that transparency and value for money is
  maintained;
  Review of the mechanism for channelling cash advances from the NDoH to the various budget
  management centres at the various levels (regional and District) to ensure that there are
  adequate internal controls in place to timely liquidated such advances;
  Undertaking field visits to regions and Districts to review flow of funds and to determine
  whether principal activities took place according to the work plan/ schedule of cash advances;
  Visit to the central, regional and District stores to ensure that stock management procedures
  are being well implemented;
  Physical verifications, on a sample basis, to check the actual delivery of goods, works and
  services purchased as per the source documents;
  Review of expenditure and identifying expenditure which are not eligible for funding from Gavi
  programme funds.

  Reporting

  At the end of the audit, key findings were discussed with the senior management team of PNGs NDoH
  on 16 February 2016, and to a broader audience of EPI and core partner representatives on
  17 February 2016 comprising a presentation summarising these findings.

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  Annex 5 – Acronyms

  AMS Area Medical Stores
  CDC Centers for Disease Control, Department of Health and Human Services, U.S.A.
  DoF Department of Finance
  EPI Expanded Programme on Immunisation
  EVM Effective Vaccine Management
  GoPNG Government of the Independent State of Papua New Guinea
  HSS Health Systems Strengthening
  HSIP Health Sector Improvement Program
  HHISP Health & HIV Implementation Services Provider
  IPV Injectable Polio Vaccines
  ISS Immunisation Services Support
  KRA Key Result Area
  MR Measles Rubella
  NDoH National Department of Health
  NGO Non-governmental organisation
  PCV Pneumococcal Conjugate Vaccine
  PFA Partnership Framework Agreement
  PFMA Public Finances (Management) Act 1995
  PGK Papua New Guinean Kina
  PNG Independent State of Papua New Guinea
  R&I Reception and Inspection
  SIREP Special Integrated Routine EPI Strengthening Program
  TAP Transparency and Accountability Policy
  USD United States dollars
  VIG Vaccine Introduction Grant
  VVM Vaccine Vial Monitoring

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  Annex 6 – Management comments and action plan as at 17 October 2016 – Vaccine Supply Management (1/3)
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  Annex 6 – Management comments and action plan as at 17 October 2016 – Budgeting and Financial Management (2/2)
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  Annex 6 – Management comments and action plan as at 17 October 2016 – Procurement (1/2)
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  Annex 6 – Management comments and action plan as at 17 October 2016 – Procurement (2/2)
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