Improving internal controls – a guide for humanitarian aid organizations
London and New York, 22 February 2011 – The latest release of Ernst & Young’s comprehensive toolkit for humanitarian aid organizations is now available for non-governmental organizations (NGOs) to download at www.ey.com/disasterresponse.
Improving internal controls: the Ernst & Young guide for humanitarian aid organizations addresses many of the challenges faced by NGOs both when responding to natural disasters and during the rebuilding and rehabilitation periods that follow. This easy-to-use guide provides detailed process models to assist NGO leaders in strengthening internal controls at every stage of the humanitarian aid resourcing and delivery cycle:
· Receipt: establishing agreements between donors and the NGO
· Expenditure: procuring, delivering, disbursing, accounting and reporting of aid delivery
· Requisition: acknowledging the receipt of aid already given and informing donors of future needs
Philippe Peuch-Lestrade, Global Director of the Government and Public Sector at Ernst & Young says, “Natural disasters are scenes of widespread dislocation and suffering. However, they are also scenes of incredible humanity as relief organizations mobilize to deliver food, shelter, water and medical care. At Ernst & Young, we want to help NGOs carry out this remarkable and important work by providing them with a valuable resource as they look to establish the right internal controls.”
Without good internal controls, NGOs may not be as effective as they could be in saving lives and rebuilding communities. Desperately needed supplies and equipment can be lost to mismanagement or corruption. There may be tragic mismatches between the needs of disaster victims and the assistance offered to them. Donors, aid recipients and other stakeholders have to be able to trust that all funds allocated to relief efforts are used as wisely as possible. It’s not just the reputation of a relief organization that is at stake, but the very ability to advance its mission.
“Humanitarian aid organizations excel at saving lives and alleviating suffering. Working under the most challenging of circumstances, the organizations that can combine compassion with effective internal controls will be in the best position to stamp out corruption and deliver on their important mission,” says Cobus De Swardt, Managing Director, Transparency International. In its comprehensive handbook of good practices: Preventing Corruption in Humanitarian Operations identifies the following possible consequences of corruption in humanitarian aid organizations:
· Damage to the reputation of the agency and staff morale
· Damage to the quality of programs and the ability to achieve the humanitarian mission of the agency
Because Improving internal controls is modular, NGOs are able to focus on the specific components of the humanitarian aid and resource delivery framework – receipt, expenditure or requisition – that are most essential given its size and mission. For each module, essential control points are identified and described, and “what can go wrong” scenarios point out possible weaknesses to be avoided. These modules allow NGOs to build an internal control structure that reduces the risk of fraud and inefficiency –no matter what their information technology capabilities or size.
Yakkum Emergency Unit (YEU), a humanitarian organization in Yogyakarta, Indonesia and member of ACT Alliance and Humanitarian Accountability (HAP) International was one of first organizations to receive the EYe Toolkit (predecessor to the current Guide) in the aftermath of the Tsunami in 2005. “The toolkit helped educate our organizations about the importance of internal controls and accountability in finance management,” says Ibu Arshinta, YEU Director. “Since then, we’ve put in place improved processes to address many aspects of aid resourcing and delivery. Furthermore, engaging in HAP International motivates us to be accountable in our works towards the disaster affected people. By these two elements we believe we are on our way to achieve high quality in our humanitarian works as our highest commitment in being part of the ACT alliance."
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