“Checking the Receipts” Audits of Emergency Finance

“Checking the Receipts” Audits ofEmergency Finance—A preliminaryanalysis of the implementation of theLetter of Intent commitment on auditsin 50 countries Prepared by Sebastiaan Pompe and Alice French (LEG) Martin Aldcroft andCamilla Fredriksen (INTOSAI Development Initiative) With the assistance of Prof. T.O. Kizyma, Vyacheslav Panasiuk and Jaison Vega Laiton WP/25/75 IMF Working Papersdescribe research inprogress by the author(s) and are published toelicit comments and to encourage debate.The views expressed in IMF Working Papers arethose of the author(s) and do not necessarilyrepresent the views of the IMF, its Executive Board,or IMF management. 2025APR IMF Working PaperLegal Department “Checking the Receipts” Audits of Emergency Finance—A preliminary analysis of 50 countriesPrepared by Sebastiaan Pompe and Alice French (LEG) Martin Aldcroft and Camilla Fredriksen(INTOSAI Development Initiative) Authorized for distribution by Luis UrrutiaApril 2025 IMF Working Papersdescribe research in progress by the author(s) and are published to elicitcomments and to encourage debate.The views expressed in IMF Working Papers are those of theauthor(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMFmanagement. ABSTRACT:This paper explores one dimension of the IMF’s COVID response –support for conducting andpublishing independent audits of COVID-related spending. The economic impact of COVID was felt across theglobe and created stresses on the balance of payments of member countries. Many members turned to theIMF for emergency financing . The member countries were urgedto “do what it takes but keep the receipts.” Inline with this guidance, the majority of IMF emergency financing included commitments by members to put inplace transparency and accountability measures. These measures took shape progressively as the IMFemergency finance was being rolled out with audit commitments being the most prevalent, being used in 80%of the RCF and 75% of the RFI cases. In 56 member countries, Fund financing included commitments for SAIsto audit spending related to the response to COVID. SAI audit reports were ultimately published in 50 membercountries. This paper examines how these commitments were implemented, and the broader lessons whichcan be derived. “Checking the Receipts” Audits ofEmergency Finance—A preliminaryanalysis ofthe implementation of theLetter of Intent commitment on auditsin50 countries By Sebastiaan Pompe and Alice French (LEG),Martin Aldcroft andCamilla Fredriksen (INTOSAI Development Initiative) With the assistance of Prof. T.O. Kizyma, Vyacheslav Panasiuk and Jaison Vega Laiton Contents _________________________________________________________________________4 INTRODUCTION_______________________________________________________10 BACKGROUND_______________________________________________________14 CONTEXT:THEIMFANDAUDITS________________________________________16 THESAIAUDITREPORTS–OVERALLDATA______________________________17 THEAUDITREPORTS–GENERALFEATURES_____________________________20 THESAIAUDITREPORTS–SUBSTANTIVEFINDINGS______________________26 A.Vulnerabilitiesinthestatutoryframework____________________________________26B.VulnerabilitiesincorePFMoperations______________________________________29C.Vulnerabilitiesindisbursementprocedures___________________________________31D.Vulnerabilitiesineconomic-socialsupportprograms___________________________32E.Vulnerabilities in the purchase of goods and services.__________________________32F.Vulnerabilitiesindeliveryofgoodsandservices_______________________________35G.Vulnerabilitiesininformationmanagementandrecordkeeping.___________________37 A.Fraudandcorruption____________________________________________________39B.Budgetloss___________________________________________________________43 A.Thecommitment_______________________________________________________45B.Theimplementation____________________________________________________45C.Keyfindings__________________________________________________________46D.Coverageoffraudandcorruption__________________________________________47E.Thestructuraleffect_____________________________________________________47 APPENDIX 1. IMF EMERGENCY FINANCE COVID-19 LIST ON PUBLISHED SAI AUDITS OFEMERGENCY FINANCE______________________________________________________________49 APPENDIX2. IMF EMERGENCY FINANCE COVID-19 PROGRAM CONDITIONALITY ON SAI AUDITSOF COVID-19 EMERGENCY FINANCE IN RCF/RFI RECIPIENT COUNTRIES 2020-2023__________57 APPENDIX 3. IMF EMERGENCY FINANCE COVID-19 IMPACT LOI COMMITMENT ONSAI PUBLICATION OF AUDIT REPORTS________________________________________________60 APPENDIX4.THIRDPARTYAUDITSOFIMFCOVID‐19EMERGENCYFINANCE_______________63 Supporting Note 1___________________________________________________________________65SupportingNote2____________________________________________________________________69SupportingNote3_______________________________________________