Cash and Vouchers - Risks and Mitigation Measures John Lamm, Food - - PowerPoint PPT Presentation

Cash and Vouchers - Risks and Mitigation Measures

John Lamm, Food Security and Markets Advisor, Office of Food for Peace

SENSITIVE BUT UNCLASSIFIED

SENSITIVE BUT UNCLASSIFIED

Context of FFP Programming

• In 2016, the Office of Management and Budget (OMB) updated

Circular A-123 to introduce a new requirement that federal agencies integrate Enterprise Risk Management (ERM) with their internal control systems.

• “Governance Charter for Enterprise Risk Management and

Internal Control at USAID: A Mandatory Reference for ADS Chapter 596” updated 8/24/2017

Changes in USAID’s Approach to Risk

ERM GOVERNANCE STRUCTURE

Management Councils on Risk & Internal Control (MCRCs) ERM/Internal Control

Assessable Unit (AU) Risk Profiles

Management Councils on Risk & Internal Control (MCRCs) ERM/Internal Control Executive Management Council for Risk & Internal Control (EMCRIC) ERM/Internal Control Administrator Senior Assessment Team (SAT) Internal Control

AGENCY RISK PROFILE

that provides insight into all areas of enterprise risk

Bureau- level AU- level Agency- level

(+ FMFIA Internal Control Certification) (+ FMFIA Internal Control Assessments)

Risk Management Council (RMC) ERM

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2 Major Premises Behind Concept of Risk Appetite

PREMISE #1: Risk refers to “uncertainty” and is not necessarily positive or negative. PREMISE #2: We accept a certain level of risk every time we intervene or engage.

Per OMB Circular A-123, risk is defined as “the effect of uncertainty on [an Agency’s] objectives.”

RISK CATEGORY OVERALL RISK APPETITE Programmatic HIGH Fiduciary LOW Reputational MEDIUM Legal LOW Security LOW Human Capital MEDIUM Information Technology MEDIUM

USAID RISK APPETITE STATEMENT

We have a HIGH risk appetite with regard to:

USAID RISK APPETITE STATEMENT

PROGRAMMATIC

Harnessing new technologies and innovations. Promoting sustainability through local ownership and resource- mobilization. Partnering with the private sector. Embracing flexible, iterative design and implementation. Innovative modalities for acquisition and assistance.

REPUTATIONAL

Empowering our employees to represent the Agency. Sharing and increasing the transparency of technical and programmatic information. Promoting a culture of learning.

SECURITY

Exploring, testing, or using new security methods or technologies. Supporting partners’ development of their security plans.

HUMAN CAPITAL

Adopting innovative best practices.

INFORMATON TECHNOLOLGY

Adoption of new technologies

• r platforms.

• FFP remains committed to working in conflict and hard-to-

reach areas to go wherever the vulnerability is greatest. We program CTP in Nigeria, Somalia, Syria, Yemen, etc.

• FFP has no explicit preference between vouchers and cash at

a global level (but may in specific country contexts).

• Risk doesn’t end the moment the transfer changes hands.

FFP Points of Emphasis on CTP

For voucher programs, vendor conduct must be monitored: – Especially if program participants have few options in their geographic area. – Especially if participants share PIN numbers with vendors, leave their card at the store, or otherwise trade control over their transfer for convenience.

FFP Points of Emphasis on Vouchers

• Where possible, FFP

encourages partners to adopt electronic systems for CTP to mitigate risk.

• For systems that minimize

the handling of physical cash (e.g., vouchers, e- payments), strong internal controls are critical, especially around segregation of duties and systems access.

FFP Points of Emphasis on Digital Cash Transfers

• Records on chain of custody

are critical;

– The closer to delivery an implementer can take possession (physically and chronologically), the better

• Risk is elevated when using

a sub-grantee for one-off transfers.

• Advanced financing for FSPs

should be implemented only with strong accountability controls.

FFP Points of Emphasis on Direct Cash Distribution

Risks and Vulnerabilities

• Key Question:

– Are the right people receiving the right resources?

• Key Points of Vulnerability:

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