## wpiea2025075-print-pdf ## Source details **Canonical URL:** [wpiea2025075-print-pdf](https://www.imf.org/-/media/files/publications/wp/2025/english/wpiea2025075-print-pdf.pdf) ## Other formats - [Markdown version](/-/media/files/publications/wp/2025/english/wpiea2025075-print-pdf.pdf.md) - [Structured JSON version](/-/media/files/publications/wp/2025/english/wpiea2025075-print-pdf.pdf.json) --- ### Executive summary — IMF context and audit commitments - IMF COVID emergency financing covered 88 countries. - The IMF COVID emergency financing totaled US$170 billion. - The majority of IMF emergency financing included commitments by members to put in place transparency and accountability measures. - In 56 member countries, Fund financing included commitments for SAIs to audit spending related to the response to COVID. - Of these 56, two countries did not take up the IMF emergency financing. - Of the remaining countries with SAI commitments that took up financing, 50 countries published the audit reports (a 92.5% of the countries with SAI audit commitments in their LoI and which took up IMF financing). - 4 countries have yet to publish (January 2024). - Audits have been widely used historically in IMF-supported programs: 773 structural benchmarks on audits covering 72 countries. - The package of safeguards including SAI audits was progressively rolled out and audits eventually became a standard feature in emergency lending. ### Data scope and classifications - The paper analyzes SAI audit reports published in 50 member countries. - Regional distribution of the 50 countries: - African region: 28 - Asia-Pacific region: 4 - European region: 3 - Middle East and Central Asia Region: 8 - Western Hemisphere region: 7 - Income/economic classification of the 50 countries: - 35 Low Income Countries (LICs) - 15 Emerging Markets and Developing Economies (EM/DE) - IMF support to Emerging Market Economies covered 35 countries out of 80 EMs. - The IMF approved 128 COVID19-related financial commitments by end-2021, of which 88 were Emergency Financing. ### Forms, timing, and publication patterns of SAI audits - Audit forms and typologies: - Almost all audits of emergency finance are performance audits; a minority are financial audits (noted: Bahamas, Jordan and Egypt as appearing financial audits). - Five broad audit formats: Short term (real-time), Narrow focus, Sequenced, Broad spectrum, Follow-through. - Timing and coverage: - Almost all SAI audit reports focus on fiscal year 2020. - Publication speed varied: some published within four months; others took 19, 26, 32, or 38 months (examples: The Gambia 19 months; Haiti 26 months; Solomon Islands 32 months; Cabo Verde 38 months). - Real-time audits examples: Kenya (four months), South Africa (five months), Sierra Leone (six months). - Publication commitments and outcomes: - Near-universal feature in LoIs: commitment to publish the audit report. - Of the 50 countries that published audit reports, 15 countries (30%) did not routinely publish audit reports previously. - For 13 countries (26%), publication was secured through conditionality in subsequent IMF-supported programs. - Publication was discontinued altogether by 14 countries of the group (28%) by the time of writing. ### Budget coverage, fungibility, and EBFs - In nearly all member countries the IMF emergency finance was subsumed into the domestic budget and became untraceable because of fungibility. - With only five exceptions, the SAI audit reports issued to date cover domestic emergency finance rather than IMF financing: Bahamas, Dominican Republic, Malawi, South Sudan and Tanzania. - The IMF is not mentioned in the majority of SAI audits on emergency finance. - Many governments used Extra Budgetary Funds (EBF) for emergency finance: - In none of the 50 countries did EBF operation formally exclude SAI oversight; SAIs generally confirmed oversight over EBFs. - Audit reports generally confirm that EBFs weaken budgetary safeguards. ### Substantive vulnerabilities identified across the expenditure process - Statutory framework vulnerabilities (four typical settings): - No legal framework for emergencies. - A framework exists but was suspended. - A framework exists but was misused or abused. - A framework exists but is inadequate for the COVID emergency. - Core PFM operation vulnerabilities: - Bypassing of PFM safeguards; management of emergency finance often involved bypassing approvals and controls. - Failures in internal budget and cash management, budget planning, oversight and control. - Examples: transfers bypassing Treasury/single treasury account; officers acting without mandate; absence of documentation and records. - Disbursement procedure vulnerabilities: - Misuse of imprest/petty-cash accounts (e.g., Solomon Islands almost 15% channeled through petty cash). - Unlawful disbursement mechanisms (e.g., private bank accounts used without Treasury authority in Kenya). - Widespread cash withdrawals that are hard to trace (Malawi — withdrawals “went missing without a trace”). - Delivery, record-keeping, and information management: - Weak or absent inventory controls; inability to confirm deliveries; goods “stuck in the warehouse” or “lost in transport”. - Examples of missing records: Jamaica files for 59% of beneficiaries could not be located; DRC out of US$ 8 million expended US$ 4.7 million is undocumented. - Procurement, conflict of interest and Beneficial Ownership (BO): - Pervasive violations of tender procedures, absence of proper contracts, awards made after performance, direct awards circumventing competition. - Relaxation or suspension of procurement rules often accompanied by relaxed conflict-of-interest rules and reduced BO transparency. - Quantified procurement-related figures in audits include: Failure to sign off on contracts: USD 2 million (Kenya); Mali violations of procurement rules: CFA 9.2 billion; Cameroon ledger inaccuracies and other figures reported in audits (examples: CFA 288 billion ledger inaccuracies, CFA 15.3 billion overbilling, conflict of interest cases CFA 700 million). - Social-economic support program vulnerabilities: - Large beneficiary programs exposed to eligibility, registration, and verification failures (examples: Kenya program targeted 97,000 persons but did not track IDs; South Africa identified more than 67,000 ineligible recipients and double dipping of more than 35,000). - Pakistan: subsidy system weaknesses with 1.32 million registered beneficiaries not receiving payments; audit flags fake biometrics and other irregularities. ### Interlinked and systemic nature of vulnerabilities - Audit reports show interlinkages where statutory gaps, PFM failures, procurement weaknesses, BO opacity, and poor record-keeping combine to produce broad opacity and major risks of fraud and corruption (illustrated by the Solomon Islands case chain of vulnerabilities). - The audit trail approach traces money-flows end-to-end and exposes cross-cutting budget process failures rather than siloed technical breaches. ### Fraud and corruption — typologies, prevalence, and quantification - Broad finding: almost all SAI audit reports identify budget seepages due to vulnerabilities to fraud and corruption. - Three typologies of treatment in SAI reports: - Explicit legal qualification using “fraud” or “corruption” sometimes naming officials (examples: Cameroon, Senegal, South Africa). - Avoiding explicit terms but referring cases to enforcement agencies (examples: Kenya, Malawi, Mali). - Presenting fact patterns suggestive of fraud/corruption without legal labels, using euphemisms (examples: Pakistan, Sierra Leone). - Quantification: - Not all audits quantify budget loss; where quantified, losses can be large; some SAIs consolidated losses reaching as high as 20-30% of the emergency finance. - Selected audit figures reported across audits (verbatim): - Pakistan audit: fraudulent transfers in income support program — Rs. 12.8 billion; other items: Rs. 77 million, 78.2 million (as reported). - Malawi audit: irregular use and overpayment of allowances — MWK 80 million; unaccounted cash withdrawals — MWK 83 million; PPE procurement — MWK 6 million. - Cameroon: ledger inaccuracies — CFA 288 billion; overbilling of text purchases — CFA 15.3 billion; conflict of interest cases — CFA 700 million. - The paper cautions “budget loss” alone is an inadequate proxy for structural vulnerabilities that enable fraud and corruption. ### SAI approaches to follow-up, enforcement, and public impact - SAI follow-through and enforcement referrals: - Some SAIs led to enforcement actions and suspensions (e.g., South Africa Special Investigating Unit actions). - Other SAIs referred cases for follow-up without legal qualification; enforcement follow-up varied by country. - Example enforcement activity: Mali audit transferred more than 50 specific cases to criminal enforcement authorities. - Role in public debate and institutional strengthening: - Audit reports were forthright in many countries, providing recommendations, referrals, and measures to strengthen public accountability. - The LoI audit commitments strengthened SAI visibility and publication practice in some countries; 15 of the 50 publishing countries did not routinely publish audits prior to the emergency. - Push-back: in some countries there has been push-back against enhanced SAI scrutiny affecting SAI mandate, resources, access to information, or targeting Auditors General personally. ### Third-party audits vs SAI audits - Of 75 LoIs with audit commitments, 9 committed to third-party audits; of these 9, 5 published third-party audit reports (55.5%). - Third-party audits tend to be narrow, shorter, and contract-limited (examples: Chad substantive section 4 pages; Nicaragua substantive section 5 pages; Gabon substantive section 7 pages). - Third-party audits often lack statutory mandate, operate outside formal accountability pathways, and are dependent on government-provided information; they are less suited to trace broad domestic emergency finance. ### Conclusions and lessons for future emergencies - The SAI audit LoI commitments were an IMF innovation applied at scale: 56 countries committed to SAIs (and 9 to third-party audits). - Implementation outcomes: - High publication rate among committed SAI-audit countries: 92.5% (50 of 54 that took up financing and had SAI commitments). - 18% of countries had multiple audits. - All 14 FCS countries in the 2023 FCS list published SAI audit reports (14 FCS countries published). - Structural effects and limitations: - LoI commitments enhanced transparency and accountability in emergency finance settings, but sustainability is mixed: of the 50 countries publishing audits, 14 ceased publication post-emergency. - Continued and more consistent IMF support for SAIs, aligned with domestic legislation and international standards, would help translate ad hoc engagement into structural reinforcement. - Policy-relevant lessons: - Emergencies are recurring; strengthen statutory regimes, PFM operations, procurement safeguards, BO transparency, information systems, and SAI resourcing/capacity. - Use of real-time and sequenced audits can support early remedial action. - Audit-driven prioritization of enforcement and reforms should focus on sectors producing the largest budgetary losses and on systemic vulnerabilities rather than only on measured losses. *IMF Working Paper — “Checking the Receipts” Audits of Emergency Finance — A preliminary analysis of 50 countries* ### EXECUTIVE SUMMARY _______________________________________________________________ 5 ### EXECUTIVE SUMMARY ### Introduction and IMF context - IMF COVID emergency financing covered 88 countries. - The majority of IMF emergency financing included commitments by members to put in place transparency and accountability measures. - In 56 member countries, Fund financing included commitments for SAIs to audit spending related to the response to COVID. - SAI audit reports were ultimately published in 50 member countries. - Audits have been much used in the history of the institution: 773 structural benchmarks on audits covering 72 countries. - Audits are identified in the 1997 Guidance Note on The Role of the IMF in Governance Issues as one of the designated instruments to address corruption challenges. - The package of safeguards that included SAI audits was progressively rolled out and audits eventually became a standard feature in emergency lending. ### SAI audit reports — overall features and coverage - Geographic and typology coverage: - The sample includes Low-Income Countries (LIC), Emerging Markets and Developing Economies (EM/DE), Fragile and Conflict-Affected States (FCS), and Advanced Economies (AE) as used in the paper’s analysis. - Considerable resilience of SAIs notably in LIC countries, with high compliance, often speedy publication and coverage. - Timing of publication: - Publication speed shows considerable bandwidth: some countries published very fast (within four months), others took much longer. - Budget coverage and tracing: - In almost all cases the audits covered domestic emergency finance: in nearly all member countries the IMF emergency finance was subsumed in the domestic budget and became untraceable because of fungibility. - Hardly any audit reports parcel out the IMF financing for auditing purposes; the majority of audit reports do not even mention the IMF. - Channeling emergency finance through Extra Budgetary Funds (EBF) did not materially impact the SAI audit process or its findings in a large number of countries. - Fiscal year focus and audit form: - The focus of the audits on emergency finance is on FY 2020, with only few countries conducting targeted audits on emergency finance beyond that FY. - Almost all audits of emergency finance are performance audits; typologies used by SAIs concern the audit ambit rather than audit form. - Audit typologies identified: - Short term audits (real time audits): rapid audits to help authorities set up mechanisms early (examples: Mongolia, Namibia, Sierra Leone, Jamaica and South Africa). - Narrow focus audits: focused audits on critical institutions or areas (examples: Pakistan, Solomon Islands and South Sudan). - Sequenced audits: SAI staggers audits on interrelated aspects in separate reports (examples: Kenya and Madagascar). - Broad spectrum audits: a single audit covers a broad range of public institutions and typically considers the budgetary process (examples: Mali and Sierra Leone). - Follow-through audits: SAI follows-through on its own prior report (examples: Jamaica and Madagascar). ### Substantive findings across audit reports - Vulnerabilities in the statutory framework: - Four typical settings identified: countries lack a statutory framework for emergencies; have a framework but suspend it; have a framework and abuse it; or have a framework inadequate for the COVID emergency. - Vulnerabilities in core PFM operations: - Management of emergency finance often involved bypassing PFM safeguards. - Weaknesses in internal budget and cash management, budget planning, oversight and control (e.g., issuing contracts without required approvals). - Vulnerabilities in disbursement procedures: - Misuse of imprest accounts, unlawful disbursement mechanisms, and widespread use of (disallowed) cash withdrawals. - Vulnerabilities in disbursement mechanisms and program channels: - Two core channels distinguished: economic-social support programs and purchase of goods and services programs. - Notable procurement weaknesses, Conflict of Interests & Beneficial Ownership (BO) issues. - Vulnerabilities in delivery and record keeping: - Weaknesses in delivery of goods and services and in information management and record keeping impeded accountability. - Utility of audits: - Audit reports served as diagnostic tools to identify weaknesses directly associated with undermining performance and to shape measures addressing those vulnerabilities. ### Fraud and corruption — coverage and typologies - Broad finding: almost all SAI audit reports identify budget seepages due to vulnerabilities to fraud and corruption. - Three typologies of how audit reports address fraud/corruption: - Explicit use of terms "fraud" or "corruption", sometimes naming individual public officials (examples: Cameroon, Senegal, South Africa). - Reports that avoid the explicit terms but present fact settings coupled to explicit referrals to criminal enforcement agencies (examples: Kenya, Malawi and Mali). - Reports that neither use the explicit terms nor include explicit referrals but present analyses or fact settings pointing to fraud/corruption, often using euphemisms (e.g., “fake”, “unauthentic”, “manipulation”, “ghost workers”) — examples include Pakistan and Sierra Leone. - Budget loss: - Not all audit reports quantify or pinpoint budget loss, or distinguish actual loss from potential loss. - Some SAIs consolidated losses in their reports, which can reach as high as 20-30% of the emergency finance. - The paper cautions that while quantifying budget loss is useful, "budget loss" is an inadequate proxy alone to identify structural weaknesses that create vulnerabilities to fraud or corruption. ### Impact, follow-through, and related audits - Compliance and strengthening of SAIs: - The compliance rate with LoI commitments for SAI audits was 90%. - Of the 50 countries that published audit reports, 7 had not published audit reports in the 3 years prior to the COVID-emergency. - Published audit reports were forthright about system and institutional vulnerabilities and provided forward-leaning recommendations, enforcement referrals, and measures to strengthen public accountability. - Third-party audits and differences: - LOI commitments on third party audits are considered; these audits differ substantially in nature from SAI audits (Supporting Note 1). - Follow-through and public debate: - The paper considers follow-through by enforcement agencies on audit findings (Supporting Note 2) and how SAI audit reports influenced public debate in selected countries (Supporting Note 3). ### Conclusions and lessons for future emergencies - Emergencies are recurring; emphasis is on systems and institutions to draw lessons for future crises. - COVID-19 served as a stress test of statutory regimes on emergency financing; many PFM laws provide special flexibility for emergencies but COVID showed these regimes can be strained or bypassed. - SAIs continued to examine emergency finance even where PFM rules were bypassed, often identifying significant increased vulnerabilities to budget loss through fraud and corruption. - The experience with audit commitments in IMF emergency financing was broadly positive: - SAI empowerment and bolstering of domestic transparency and accountability systems were important effects of LoI commitments. - IMF contributed to strengthening governance systems that address fraud and corruption resulting in budget loss. - Systemic nature of the challenge: - Budget loss through fraud and corruption in emergency finance is a systemic challenge across LICs, EMs, and Advanced Economies; SAI audits and inspection reports have been critical in identifying vulnerabilities, sometimes on a massive scale. - The challenge calls for a system approach and sustained engagement and support of transparency and accountability instruments such as SAI audits. - Post-emergency developments and risks: - Of the 50 countries which published audit reports on emergency finance, 14 ceased publication post emergency, weakening transparency and accountability systems. - In a number of countries there has been push-back against enhanced SAI scrutiny, impacting SAI mandate, resources, or access to information; in some cases push-back has been directed against Auditors General personally, translating into weakened anti-fraud and corruption regimes. *IMF Working Paper — “Checking the Receipts” Audits of Emergency Finance — A preliminary analysis of 50 countries* ### 1. Introduction ### 1. Introduction ### Context and motivating message - IMF management and staff in 2020 urged member countries to “do what it takes but keep the receipts”, a phrase that became central to the IMF and public discourse on COVID-19 emergency financing. - The catchphrase was cited across IMF reports, blogs, seminars, and external organizations including OSCE, ACCA, INTOSAI, academic articles, and media from multiple countries. - Concerns arose about IMF exposure in emergency financing, framed as whether the “lack of conditionality” made emergency financing “too much and too easy.” The Fund Managing Director could set Prior Actions when critical, and many recipients used emergency financing for the budget, raising concerns about potential misuse. - The Managing Director’s message translated into a progressive ramping up of governance transparency measures and safeguards as RCF/RFI resources were rolled out, with the IEO noting that such safeguards should be put in at the onset of future crises. ### Objective and focus of the paper - The paper explores implementation of Letters of Intent (LoI) commitments by member countries to conduct audits of COVID-19 emergency finance by Supreme Audit Institutions (SAIs). - It analyzes SAI audit reports published in 50 member countries that received IMF emergency financing. - Primary focus: vulnerabilities in emergency finance identified in these reports, with particular attention to fraud and corruption. - The paper traces vulnerabilities along the expenditure process: statutory framework; core PFM operations; disbursement mechanisms (social-economic support programs and purchase of goods and services programs); procurement and Conflict of Interests & Beneficial Ownership (BO); and delivery and record keeping. ### Rationale for using SAI audit reports - SAI audits are a direct way to verify whether “receipts were kept” and provide diagnostic insight into how emergency finance was designed, organized, and implemented. - Audits typically use risk-based approaches to identify compliance failures and value-for-money shortcomings, and they often examine causes of budget losses and the role of fraud or corruption. - The paper limits itself to what the audit reports reveal and treats them as windows into systemic vulnerabilities that emerged under the stress test of the COVID-19 pandemic. ### Key empirical and factual points from the introduction - The IMF COVID emergency financing covered 88 countries totaling US$170 billion. - This included new concessional lending to 53 of the 69 eligible Low-Income Countries (LICs). - IMF support to Emerging Market Economies (EMs) covered 35 countries out of 80 EMs. - The IMF approved 128 COVID19-related financial commitments by end-2021, of which 88 were Emergency Financing (IEO, 2023, Chapter 3). - By December 2020, nearly all Letters of Intent carried governance measures; audit commitments were used in 80% of the RCF cases and 75% of the RFI cases. - IDI Global Stocktaking Report shows 87% of SAIs out of 166 surveyed countries undertook audits on the use of COVID-19 emergency funding. - The paper reviews SAI audit reports from 50 member countries; budget losses were identified in nearly all 50 countries covered. ### Scope, limitations, and comparative approach - The paper confines itself to the content of SAI audit reports and does not assess whether reports complied with LoI commitments. - It does not cover institutional aspects of SAIs (mandate, capacity, access to information), which are outside this paper’s remit and are covered elsewhere. - The paper generally does not analyze country-specific accountability follow-up by Parliament or enforcement agencies. - It does not quantify or re-classify budget losses beyond what the audits report; compliance and performance audits may conflate actual loss and “funds at risk”. - The analysis is comparative: it identifies common vulnerabilities reported across countries but does not assert that every vulnerability occurred in every country. ### Structure and intended contribution - The paper is organized in two parts: - Part one: form and substance of audit reports — numbers, budget coverage, format, and audit approach to identify commonalities and limitations. - Part two: substance of audit reports — the most common vulnerabilities identified along the expenditure process. - The main objective is to explore vulnerabilities to fraud and corruption in systems and institutions that led to losses, with the aim of supporting structural reform and drawing lessons for future emergencies. *Source: IMF Working Paper — “Checking the Receipts” Audits of Emergency Finance — A preliminary analysis of 50 countries, 1. Introduction.* ### 3. Context: the IMF and audits ### 3. Context: the IMF and audits ### IMF use of audits prior to COVID - Audits are specifically mentioned in the 1997 Guidance Note on the Role of the IMF in Governance Issues as an instrument to address corruption. - Over the past two decades, IMF supported programs included 773 conditionality measures on audits (including 532 Structural Benchmarks), covering 72 program countries in all regions. - Audit conditionality addressed complicated budgetary issues and intricate processes (e.g., audits in arrears, SOEs, tax processes, the distribution of vaccines, allocation of subsidized business loans) and was used to address fraud or corruption cases (e.g., audits on ghost workers, off-budget purchases). ### COVID emergency finance and the expanded role of SAIs - The COVID IMF emergency finance increased emphasis on the role of Supreme Audit Institutions (SAIs) in conducting audits. - Before 2019, IMF engagement was largely focused on having an audit realized, without specifying the party responsible or on follow-up of audit reports through domestic institutional accountability frameworks. - Under COVID emergency finance, 56 member countries in their Letters of Intent (LoIs) committed to having their respective SAI conduct an audit of the emergency finance. - Rationale: emergency finance usually became a broad budget stream covering numerous sectors and Ministries, Departments and Agencies (MDAs); SAIs are uniquely positioned to audit broad budget streams and the expenditure process in its entirety, and are embedded in institutional accountability processes in member countries. ### The nature and advantages of SAI audits in emergencies - SAI audits can: - Cover the entirety of emergency finance (not just single elements as third-party audits often do). - Examine the expenditure process end-to-end, not only at transaction points. - Diagnose structural and implementational vulnerabilities (weaknesses in regulatory frameworks and institutions) that translate into budget losses. - Feed into institutional accountability processes that require processing of audit reports by state institutions. - The increased role of SAIs in addressing fraud and corruption in public finance further bolstered their relevance. - Identification of vulnerabilities in audit reports enables follow-up by authorities, with IMF support where needed. ### The SAI audit reports — overall data (December 2023 figures) - Out of 88 member countries which received IMF COVID emergency financing: - 75 signed LoIs carrying commitments on audits. - 56 member countries committed to SAI-conducted audits of the emergency finance. - Two of these 56 countries did not take up the IMF emergency financing. - Of the remaining countries with SAI commitments that took up financing, 50 countries published the audit reports (a 92.5% of the countries with SAI audit commitments in their LoI and which took up IMF financing). - 4 countries have yet to publish (January 2024). - For 13 countries in this group, the LoI commitments were later set by the IMF as Structural Benchmarks in a subsequent IMF supported program. - An additional 3 member countries which received IMF emergency finance without LoI commitments conducted SAI audits: Kosovo, Mali and Mongolia. (These reports are included for analytical purposes in the paper but do not figure in the compliance data.) - One country committed to doing a SAI audit but conducted a third-party audit instead (Nicaragua) and is not covered in this paper. ### Geographic and income classification of the 50 published SAI audits - Regional distribution of the 50 countries: - African region: 28 - Asia-Pacific region: 4 - European region: 3 - Middle East and Central Asia Region: 8 - Western Hemisphere region: 7 - Income/economic classification: - 35 Low Income Countries (LICs) - 15 Emerging Markets and Developing Economies (EM/DE) ### Implementation patterns and notable regional observations - Completion and publication of SAI audits do not appear strongly linked to developmental status: - Fragile and Conflict Affected States (FCS): 15 countries in the committed group; all published audits except one (Djibouti). - The countries that committed to publish a SAI audit and did not do so are nearly all EMs. - LIC audits are generally clear, transparent and forthright; some FCS SAIs had particularly notable performance (e.g., Sierra Leone published several audits, including a real-time audit). - MENA region audits (among LoI-committed countries) are generally weak: - Mostly summaries of financial statements rather than full audits (compliance or performance reports), reducing accountability value. - This region has the lowest levels of SAI independence and the highest statutory restrictions on publication of audit reports. ### Scope of SAI audits relative to IMF financing - The SAI audits in these 50 countries almost invariably cover domestic emergency finance, not IMF emergency financing. - LoI commitments referred to “COVID spending” or “COVID expenses” without specifying whether this refers to IMF emergency finance or broader domestic spending. - In nearly all countries the IMF RCF/RFI emergency finance was used for the budget and became subsumed therein; fungibility made the IMF financing untraceable. - With only five exceptions, the SAI audit reports issued to date cover domestic emergency finance rather than IMF financing. The five exceptions are: Bahamas, Dominican Republic, Malawi, South Sudan and Tanzania. - The IMF is not mentioned in the majority of SAI audits on emergency finance. ### Extra-budgetary funds (EBF), PFM rules, and SAI oversight - Many countries managed domestic emergency finance through special purpose vehicles (extrabudgetary funds — EBF). - Audit reports show some governments used EBFs operating outside normal public financial management (PFM) processes. Nevertheless: - In none of the 50 countries did EBF operation exclude SAI oversight; SAIs generally confirmed oversight over EBFs. - Audit reports generally confirm that EBFs weaken budgetary safeguards. - In some countries authorities suspended PFM rules citing the pandemic emergency despite existing PFM emergency regimes; SAIs still examined such constructs and often found them unlawful and flagged vulnerabilities to transparency, accountability, fraud and corruption. - The COVID pandemic tested statutory regimes on emergency financing; most member countries give PFM laws flexibility to respond to emergencies, but implementation was strained in some cases. - Despite attempts in some countries to bypass or suspend PFM rules, SAIs in the 50-country sample were not formally denied jurisdiction over emergency finance in any case examined; SAIs sometimes struggled with access but maintained oversight. *Source: IMF Working Paper — “Checking the Receipts” Audits of Emergency Finance — A preliminary analysis of 50 countries (chapter 3).* ### 5. The audit reports – general features ### 5. The audit reports – general features ### Overview - Almost all audits are distinct reports specifically targeting emergency finance; only in four member countries (out of 50) was the emergency finance covered as part of the annual audit. Even in those four, the emergency finance was covered in an extensive and clearly distinct section. - The LoI commitments do not specify the precise nature of the SAI audit beyond that it should cover COVID emergency finance and (for most countries) be published. Consequently, audit reports vary considerably in period covered, sector/topic addressed, timing of issuance and publication, and audit nature (financial, compliance, performance, forensic). - Given the general wording of the LoI commitment, all these reports fall within its ambit regardless of these differences. ### Coverage and timing - Almost all SAI audit reports focus on the fiscal year 2020, or parts thereof; almost all countries reviewed issued a targeted audit report of COVID emergency finance for the fiscal year 2020. - Some SAIs cover the entire fiscal year in a single report; others stagger the fiscal year with several consecutive reports; others are limited to shorter periods within the fiscal year. Examples of narrow time coverage within the fiscal year include: Haiti March 2020-January 2021; Honduras February-June 2020; Kenya March 13-July 31, 2020; Sierra Leone first real time audit March-June 2020; South Sudan June-July 2020. - Rare examples of audits extending beyond fiscal year 2020: Kenya, Cameroon, and Jamaica. Kenya conducted a nationwide audit of the vaccine roll-out over 2021-2022, resulting in 48 county audits and a consolidated report in 2022. - Some pandemic-related expenditure programs spilled over into subsequent fiscal years; advanced economies’ SAIs continued to track COVID expenditures and program implementation well beyond 2020, with continued challenges identified after 2020. ### Formats, scope, and presentation - Audit reports differ widely in coverage, format and presentation: some reports are 15 pages, others 250 pages; some are highly technical with extensive appendices, others standardized/formulaic, others discursive. - Some SAIs invested in accessibility (summaries, infographics, press releases) to reach broader audiences and Parliament. Examples: South Africa real-time audit with press release; Nigeria (Summary Report); The Gambia’s 21-page infographics summary accompanying a 156-page technical report. - Broadly five audit formats can be distinguished: - (i) Short term audits (real-time audits) - Published at an early stage of emergency finance programs with subsequent audits later. - Fast turn-around; can be conducted before the end of the fiscal year. - Examples: Mongolia, Namibia, Sierra Leone, Jamaica, South Africa. - Sierra Leone issued its first audit within six months of commencement of emergency finance. - (ii) Narrow focus audits - Focus on single agency, narrow program or limited transactions to enable timely remedial action. - Examples: Solomon Islands and The Gambia focusing on procurement; Kenya audit of KEMSA; South Sudan audit focusing solely on IMF financing or salary arrears. - (iii) Sequenced audits - Several related audits covering interrelated aspects to be read in conjunction. - Examples: Cameroon (three reports covering special appropriations account and 20 MDAs); Madagascar (four sequenced audits plus a follow-up verifying implementation of recommendations); Mongolia (real-time audit followed by a broader audit); Kenya (three audits covering KEMSA, national government departments, and county governments); South Africa (real-time audit plus procurement/contract management deep dive and municipal audit). - (iv) Broad spectrum audits - Cover a broad range of departments and trace financing to beneficiaries; may start with Extra Budgetary Funds vehicles and extend to multiple agencies. - Examples: Sierra Leone (at least 10 government agencies), Madagascar (7 agencies), Mali (125 government entities). - (v) Follow-through audits - Engage government on follow-through of prior audit reports; can respond to government push-back or audit compliance with prior recommendations. - Examples: Jamaica (three consecutive audits and subsequent compliance audit generating government push-back and an addendum confirming prior findings); Madagascar (audit of compliance with SAI recommendations). ### Speed of issuance and publication - Real-time audits were issued and published very fast: Kenya (four months lag), South Africa (five months), Sierra Leone (six months). - Regular audits often had substantially longer lags: The Gambia (19 months), Haiti (26 months), Solomon Islands (32 months), Cabo Verde (38 months). - Speedy publication is critical to address vulnerabilities in budgetary procedures and for accountability, including individual cases of fraud and corruption. - Publication timing can be constrained by domestic legal or institutional requirements (e.g., some publications require parliamentary clearance). ### Publication commitments and impact - The near-universal feature in all 56 LoI commitments on SAI audits of emergency finance is the commitment to publish the audit report. - Only for two countries does the LoI not call for publication: Ethiopia and Nicaragua; both countries published their audit reports regardless. The Nicaraguan commitment was for a SAI audit, but the country effected a third-party audit instead. - Of the 50 member countries whose SAIs published audits of emergency finance: - 15 countries (30%) did not until then routinely publish audit reports, or did not publish any audit report at all; for these countries IMF arrangements strengthened domestic transparency and accountability of pandemic-related emergency finance. - For 13 countries (26%), publication of the SAI reports was secured not on the basis of their LoI commitments, but through conditionality in new IMF-supported programs. - Publication was discontinued altogether by 14 countries of the group (28%) by the time of writing. - The structural impact of the publication commitment in IMF LoIs remains an open question; in countries resistant to publication the LoI commitments did not translate into a more systematic approach to publication. ### Audit types and efficacy - SAIs use a range of audit instruments: financial audits (verify financial statements), compliance audits (verify institutional compliance with regulations), performance audits (efficiency and effectiveness or “value-for-money”). - Compliance and performance audits are particularly effective in identifying fraud and corruption. - Only the Bahamas, Jordan and Egypt audits appear to be financial audits. *IMF Working Paper — “Checking the Receipts” Audits of Emergency Finance — A preliminary analysis of 50 countries (Chapter 5).* ### Box 1 ### Box 1 — The publication of SAI audit reports ### Publication context - IMF WORKING PAPERS “Checking the Receipts” Audits of Emergency Finance — A preliminary analysis of 50 countries - INTERNATIONAL MONETARY FUND - 26 *Source: wpiea2025075-print-pdf - Box 1* ### 6. The SAI audit reports – substantive findings ### 6. The SAI audit reports – substantive findings ### A. Vulnerabilities in the statutory framework - Structural statutory gaps or deficiencies underpin downstream budget losses through fraud and corruption; five typologies identified. - (i) No legal framework on emergency finance - Example: Cameroon — absence of adequate regulation on disbursement of emergency funds, allowing broad interpretation and “involves significant risks of misappropriation of public funds”. - Example: Madagascar — law used predated the current constitution; implementing regulations could not be traced; operated effectively by executive decree; audit flags “absence of clear responsibilities, internal controls, authorized payments system, delegation rules”. - Similar findings in Malawi; effects included increased vulnerability to misuse and serious underspend as Treasury was reluctant to release funds. - (ii) A legal framework on emergency finance but suspending it - Example: Senegal — procurement rules were exempted though budget laws already contained a special procurement regime for emergencies; audit found the exemption lacked grounds. - Example: Sierra Leone — PFM and procurement acts suspended without an applicable alternative; audit links numerous vulnerabilities (opaque single sourcing, unexplained use of middlemen, price inflation, unjustified payment, overpayments) to this structural flaw. - (iii) A legal framework on emergency finance but misusing it - Appropriation caps for emergency funds were exceeded in some countries, placing expenditures outside emergency regulatory framework and making them unauthorized and technically unlawful. - Example: Central African Republic (CAR) — emergency provisions intended for procurement of items “immediately pertinent for the emergency” were used to sidestep regular procurement for unrelated contracts (e.g., road construction); audit flags vulnerability to possible corruption. - Example: Mauritania — special fund permitted but state budget contribution capped at 10%; audit found state contribution was 32%, flagged frequent violations of budget and expenditure rules and absence of coordination. - (iv) An inadequate legal framework on emergency finance - Example: Malawi — regulatory framework lacked provisions on how funds were to be released; implementing circulars conflicted with each other; some implementing regulations breached superior laws, underpinning “massive abuse”. ### B. Vulnerabilities in core PFM operations - Core PFM weaknesses created direct fraud and corruption risks within central transactions and inter-agency flows. - (i) Core PFM processes - Jamaica — internal transfers bypassed mandatory approvals and were partly channeled to an NGO for non-pandemic matters. - DRC — more than 60% of the emergency finance was released by-passing PFM controls, without clearance and controls, handled by officers without authority or mandate. - Sierra Leone — start-up phase managed by a team under direct executive control effecting significant expenditures without clear legal mandate or controls. - Audits consistently flag absence of adequate documentation and records. - (ii) Internal budget and cash management - Budget (and cash) management: Cameroon — financing transfers failed to use the single treasury account; auditor found “an abnormally negative balance” between funds exiting various accounts and those deposited within the emergency finance account. - Budget planning: Haiti — social support program (2.3 billion Gourdes) consisted of just five pages, of which two were graphs; MDAs’ proposals lacked coherent strategy, assigned responsibilities, implementation schedule, risk assessment, cost analysis. - PFM weaknesses in subnational government: South Africa — “fraud risks are prevalent at municipalities and control environments are not strong enough to prevent them from materializing”; Mali — systematic misuse by at least 20 hospitals; Kenya — more than twenty counties had neither approved budgets nor work & procurement plans. - (iii) Oversight and control - Jamaica — contracts not reported to the National Contracts Commission as required. - Mauritania — same officer deciding on awarding contracts also tasked with disbursement. - Madagascar — near complete collapse of internal controls; same person put out the contract, received the bids, awarded the contract, and signed off on payment; audits found gamut of statutory violations (unlawful payment in kind, payment without legal mandate, exchange rate violations, absence of receipts, unjustified payments). ### C. Vulnerabilities in disbursement procedures - (iv) Misuse of imprest accounts - Solomon Islands — almost 15% of the entire emergency finance was channeled through petty cash/imprest accounts, violating basic budget rules. - Sierra Leone — widespread use of imprest accounts; Imprest account at the Presidency raised as an area of particular concern. - The Gambia — audit cannot determine whether Imprest accounts are utilized for the intended purpose. - (v) Unlawful disbursement mechanisms - Kenya — part of emergency finance was channeled through a private bank account without a (Treasury) administrator and without evidence of Treasury approval; board that established the account had no authority to do so; arrangement violated budgetary laws and emergency legislation; audit called on Ethics and Anti-Corruption Commission and Directorate of Criminal Investigations to investigate. - (vi) Cash withdrawals - Cash withdrawals prevalent and generally disallowed under PFM systems; often lack documentation and are hard to trace (Malawi — withdrawals “went missing without a trace”); sometimes shared among officials without justification. ### D. Vulnerabilities in economic-social support programs - Large-scale social-economic programs to support households, employees or small businesses were major exposure points for seepages. - Examples and findings: - Kenya — social support program targeted 97,000 persons but did not track IDs of recipients; deep dives found strong indications of fraud. - South Africa — identified more than 67,000 social grant recipients who were not eligible and an additional double dipping of more than 35,000. - Pakistan — subsidy system lacked financial infrastructure for transparent expenditure; 1.32 million registered beneficiaries did not receive payments; significant numbers of ineligible recipients did receive payments; audit flags suspicious withdrawal patterns and evidence of fake biometrics used to secure fraudulent disbursements. - Audits note the administration and verification challenges inherent to programs with large numbers of beneficiaries. ### E. Vulnerabilities in the purchase of goods and services (procurement) - Procurement vulnerabilities divide into improper application of procurement when formally applicable, and broader vulnerabilities when procurement is suspended or restricted. - (v) Vulnerabilities within the procurement process - Pervasive violations of tender procedures: direct tendering rather than open bidding, failure to submit required bid information (Pakistan), falsified bids (Malawi), failure to show evaluations and unsigned procurements (Kenya). - Absence of proper contracting form: DRC flags total absence of contracts despite public moneys processed; Jamaica — Ministry of Health issued $337 million to seven hotels for quarantine accommodations but had written contract with only one; absence of contracts for eight suppliers of infrastructure works to the value of $124 million. - Kenya — instances where goods/services were provided before tender process opened and awards were made after performance, rendering procurement a cover for a fait accompli. - (vi) Vulnerabilities in suspended procurement settings - Madagascar — suspension of procurement laws deemed unlawful; audit questioned legality of contracts issued under that regime. - When procurement suspension extended beyond tender procedures to broader public contracting (payment terms, performance terms, reporting), audits find massive room for abuse (examples: Solomon Islands, The Gambia, Senegal). - Senegal — suspension led officials to suspend the entirety of public contracting, opening the door to arbitrariness and massive abuse. - (vii) Conflict of interest settings and Beneficial Ownership (BO) - Solomon Islands — departments treated conflict-of-interest rules as part of procurement rules; when procurement rules relaxed officials considered conflict-of-interest rules relaxed as well; consequently, no conflict-of-interest declaration required in significant COVID-related contracts. - Audits emphasize that relaxing procurement rules increases fraud and corruption risks, and that conflict-of-interest rules should be firmly upheld or tightened. - BO transparency relaxed alongside procurement in some cases, enabling contracts to unregistered or newly established businesses, channeling of funds through unauthorized accounts, and absence of documentation. - Cameroon — audit identifies possible criminal liability from conflicts of interest between ultimate beneficial owners and state officials; flags use of fictitious names, multiple companies with same beneficial owners, and companies impersonating other companies, classified as potential criminal offenses. - Quantified procurement-related losses and breaches cited in audits: - Failure to sign off on contracts: USD 2 million (Kenya). - Mali violations of procurement rules: CFA 9.2 billion. - Pakistan procurement violations: run into billions of Rupiahs (audit text). ### F. Vulnerabilities in delivery of goods and services - Delivery and implementation challenges compound procurement and BO/conflict-of-interest vulnerabilities; issues extend beyond overpayment and underperformance to actual receipt and inventory management. - Recurrent audit observations (verbatim or near-verbatim wording from audits): - “we have no evidence the goods were actually delivered” (Sierra Leone). - “97% of the COVID related procured goods remain stuck in the warehouse” (Kenya). - Goods “got ‘lost in transport’” (Mali). - “the authorities cannot provide information on stocks of procured medicines or the whereabout of those stocks” (Cameroon). - “storage, storage administration and ledger system on procured goods are absent” (Mali). - “significant differences between what the Government paid for and what was reported to have reached medical …” (Cameroon audit context). - Audits document substantial discrepancies between payments and reported deliveries, weak or absent inventory controls, and missing traceability for procured items. *IMF Working Paper — “Checking the Receipts” Audits of Emergency Finance — A preliminary analysis of 50 countries (Section 6).* ### 1.9 billion), use of fictitious names (Ministry of Health questionable contracts to the value of CFA 199 million), numer ### wpiea2025075-print-pdf - 1.9 billion), use of fictitious names (Ministry of Health questionable contracts to the value of CFA 199 million), numer ### Interlinkages of vulnerabilities: the Solomon Islands - Audit reports identify multiple, interlinked vulnerabilities across the expenditure process of emergency finance that can be mutually reinforcing and generate broader opacity in public finance. - Specific chain of vulnerabilities identified: - (v) A significant share of the emergency finance was channeled through Imprest accounts (which violated financial safeguards and the budget cap); - (vi) To then be used for public contracts which were directly awarded (violating procurement rules); - (vii) Disregarding additional transparency safeguards (such as on conflicts of interest declarations); - (viii) And without adequate documentation. - Overall effect: blanket opacity and increased vulnerabilities to fraud. ### Vulnerabilities in information management and record keeping - Most audit reports flag major deficiencies in information management, record-keeping and proper accounting, including ledger management and stock management. - Examples and findings from country audits: - South Sudan: pervasive absence of nominal rolls, absence of pay sheets (as evidence of salary payments), absence of accounting for unpaid budget. - Jamaica: files for 59% of the beneficiaries could not be located; subsequent audit finds near-total absence of contracts for expenditures in excess of $550 million and could not find basic records of stock inventory; 98% of the care packages issued were without formal requisition and must have been based on “verbal communications”. - Mali: absent registration of stock flow and unavailability of stock data. - Cameroon: absent documentation for 50 contracts on the procurement of medical goods and services. - Kenya: various unaccounted expenditures (including to local hospitals). - DRC: out of US$ 8 million expended by the Ministry of Health US$ 4.7 million is undocumented. - Burkina Faso: 5 Ministries failed to submit adequate evidences of payment for expenditures. - Madagascar: wide array of undocumented payments, impossibility to document eligibility of recipients, payments to medical staff without documentation with indications of fraud. - Main problem flagged: absence of adequate record-keeping, including on receipts; possible that in some cases the SAI was not given access to records. ### Vulnerabilities in accounting: Excerpts from The Gambia Audit Report (Box 3) - Selected audit excerpts: - “In many cases the institutions responsible for the different sectors of the COVID response failed to provide valid, accurate and verified documents to us; other times no documents were provided at all. This indicates poor internal control measures, underreporting of quantities purchased, poor record keeping of public expenditure, and risk of fraud because there is no document trail for us to verify the information provided to us.” (Summarized Report p.9) - “The Ministry of Health bought hand sanitizers and plastic buckets costing over D3.2 million to supply to the National Assembly for Hygiene mechanisms. We could not confirm that the items from MoH were received by the NA or Constituents, and there were no delivery notes to show that they were supplied by the MoH.” (p.122-123) - “A cash payment of more than D2 million was made to the supplier of just 3 boxes of the unproven COVID-19 organic medicine. This method of payment is highly irregular for an international supplier. We could not verify that they had received the payment, which was delivered to the President of Guinea Bissau at the Banjul Airport, without evidence that they had been authorized as an agent of the supplier.” (p.99-103) ### Fraud and corruption: prevalence and SAI role - Almost all SAI audit reports identify vulnerabilities to fraud and corruption and highlight SAI’s role in identifying systemic vulnerabilities in public finance. - Three SAI approaches to addressing fraud and corruption are identified: - Some SAIs explicitly qualify findings as “fraud” or “corruption”. - Some SAIs refer findings to anti-corruption or legal enforcement agencies without using the legal qualifiers. - Some SAIs build a compelling audit case for wrongdoing without legal qualification or referrals. - Institutional context: - According to INTOSAI only 53% of SAIs have the mandate to investigate fraud and corruption, while 86% can refer results to other legal power for follow-up. - The choice of approach by SAIs appears influenced by country conditions and mandate constraints. ### The explicit model (examples and outcomes) - Characteristics: - Audit reports openly use legal qualifications such as “fraud”, “corruption”, “crime”, “theft”, “criminal offenses” to describe settings and specific transactions. - Intention is to raise red flags for legal enforcement agencies to follow up. - Country examples and illustrative findings: - South Africa: audits openly use legal qualifications, report widespread fraud risk; led to Special Investigating Unit investigations and suspensions including the entire board of the Unemployment Insurance Fund. - Senegal: audit uses “infractions penales” and specifically requests criminal investigations in at least 12 broader settings. - Cameroon: some findings qualified as “criminal offenses”, including companies operating under fictitious names, companies impersonating other companies, and issues in building health posts. - Examples from Cameroon audit: Ministry of Health issued 9 contracts to 4 companies with the same ultimate beneficial owners contract value CFA 3 billion; 14 contracts issued to three companies with the same UBO contract value CFA 3.7 billion; Ministry of Health 19 contracts effected by another company contract value CFA 674 million, which other company also effected 20 other contracts contract value CFA 2.2 billion; use of fictitious names (Ministry of Health questionable contracts to the value of CFA 199 million). - In these countries the criminal enforcement agencies followed up on the audits; senior officials were summoned or suspended. ### The referral model - Characteristics: - Audit reports do not use “fraud” or “corruption” explicitly but refer findings to anti-corruption or legal enforcement agencies. - Recognizes distinct roles of audit and legal enforcement processes. - Country examples: - Kenya: central government audit identifies major vulnerabilities across PFM operations (e.g. use of private bank accounts), social support programs (no ID cards of beneficiaries, shared IDs), procurement challenges (contracts issued to newly established companies, chronic overpricing); media described “plunder of COVID-19 Funds”. - Mali: raises numerous red flags without legal qualifiers. - Malawi: follows similar referral approach. ### Word Search Audit Reports (Box 4) — term frequencies in selected country audit reports - Burkina Faso: Fraude (2), Risque (17), Perte (2) - The Gambia: Corruption (2), Fraud (4), Risk (76), Loss (14) - Haiti: Corruption (3), Risque (17), Perte (8) - Jamaica: Fraud (2), Risk (12), Loss (2) - Madagascar: Corruption (6), Fraude (2), Risque (23), Perte (27), Nepotisme (3) - Sierra Leone: - (1st report) Corruption (3), Fraud (2), Theft (1), Risk (52) - (2nd report) Corruption (14), Fraud (16), Theft (7), Risk (82), Loss (104), Crime (9) - South Africa: - (1st report) Corruption (5), Fraud (106), Abuse (15), Risk (212), Manipulation (5), Loss (25) - (2nd report) Corruption (3), Fraud (72), Abuse (13), Risk (157), Loss (41), Crime (5) - (3rd report) Corruption (5), Fraud (129), Abuse (7), Loss (15) - Ukraine: Corruption (1), Fraud (1), Abuse (2), Crime/Criminal (55) *IMF WORKING PAPERS “Checking the Receipts” Audits of Emergency Finance — A preliminary analysis of 50 countries* ### references to significant vulnerabilities to fraud and corruption throughout, including “procurement ### wpiea2025075-print-pdf - references to significant vulnerabilities to fraud and corruption throughout, including “procurement ### Evidence of widespread misuse and red flags - Audit reports and media references document terms and fact patterns including “procurement at exorbitant prices”, “diversion of funds for personal use”, “dubious payments”, “unaccounted cash withdrawals”, funds gone “missing without a trace”, “money shared amongst officers without justification”, and “ghost officers”. - Mali audit: corruption cases transferred to enforcement agencies include two former Ministers, the Managers of the Private Sector Guarantee Fund and the Social Support Fund, 10 Directors General, 4 Regional Directors of Hospital, 4 Directors of Central Hospitals, 18 Chief Doctors and 7 Accounting Officer; the report transferred to criminal enforcement authorities more than 50 specific cases for follow up enforcement action. - Public and enforcement responses: media described findings as “massive abuse” of emergency finance; anti-corruption agencies in some countries pursued investigations and arrests following audit reports. ### Audit approaches to legal qualification and referrals - Explicit referral model: Some SAIs refer findings to legal enforcement agencies to make legal qualifications (examples: Kenya, Mali, Malawi). - Kenya audit (p.48): recommends Ethics and Anti-Corruption Commission and Directorate of Criminal Investigations conduct further investigations to establish acts of criminality in all irregularities identified. - Mali audit (p.72): transfers more than 50 specific cases for follow up enforcement action. - Malawi audit (p.xiii): recommends that “malpractices [identified in the audit] that are criminal in nature should be handed over to the law enforcement agencies for further attention and action”. - Implicit model: Other SAIs avoid using the terms “fraud” or “corruption”, instead documenting facts and evidence (euphemisms such as “fake”, “unauthentic”, “ghost workers”, “manipulation”) and leaving legal qualification to enforcement agencies. Examples include Pakistan and Sierra Leone (real time audit). - Pakistan audit: finds up to Rs.40 billion of irregularities, covering about 21% of the emergency financing according to reports; media alleged “massive corruption”. - Pakistan audit findings include “unauthentic”, “fake” entries; misprocurement; payments to ineligible beneficiaries; cash withdrawal through fake biometrics; procurements of substandard goods; suspect transactions; payments to ineligible beneficiaries like government servants, pensioners and their spouses; missing cash. - Audit recommendations in implicit-model reports include: matters “be probed at administrative level”; “the amount shall be recovered from the firm at the earliest”; matters “may be probed for fixing the responsibility on the person(s) at fault”; “immediate recovery of Government money besides fixing of responsibility against the person(s) at fault”. - Sierra Leone audit: identified critical findings pointing to serious misuse but did not use the terms “fraud” or “corruption”; anti-corruption agencies nevertheless acted (e.g., ACC actions and prosecutions reported). ### Quantification and distribution of budget losses - Conceptual notes: - “Losses” can refer to actual or potential loss to the budget; different audit types (compliance, performance, forensic) treat these distinctions differently. - Suspension of legal frameworks during emergencies creates structural vulnerabilities to fraud and corruption not fully captured by measured budget losses. - Reported magnitudes and sectoral breakdowns: - SAI reports sometimes find losses up to 20-30% of the emergency finance. - Malawi audit: losses in irregular use and overpayment of allowances — MWK 80 million; unaccounted cash withdrawals — MWK 83 million; PPE procurement — MWK 6 million. - Cameroon audit: ledger inaccuracies with high risk of diversion to private individuals — CFA 288 billion; overbilling of text purchases — CFA 15.3 billion; conflict of interest cases — CFA 700 million. - Pakistan audit: fraudulent transfers in incomes support program — Rs. 12.8 billion; contracting black-listed companies (loss Rs. 77 million); overcharging for sub-par products (loss 78.2 million). - Analytical value of disaggregation: - Many audit reports disaggregate losses by topic/sector and sometimes individual transactions, which helps pinpoint where system vulnerabilities generate the largest budgetary losses and where recovery or reform could be targeted. - Prioritization of legal enforcement and reforms can be informed by the relative budget impact across public entities and sectors. ### Role of legal enforcement and sanctions - Legal enforcement objectives: - Maximize recovery of losses to minimize taxpayer cost. - Shape future market and public-sector behavior via effective sanctions. - Practical considerations: - Enforcement decisions should consider institutional capacity, complexity of cases, and where recovery prospects are highest. - Effective sanctions matter for deterrence; mere repayment may not sufficiently disincentivize repeat behavior (illustrated by contrast between US enforcement efforts and Sierra Leone’s repayment-plan settlements). - Strategic use of audit outputs: - Audit evidence can be used to map losses, prioritize sectors or cases for enforcement, and focus reforms on the most damaging vulnerabilities rather than only framing responses as statutory or implementation weaknesses. *Source: https://www.imf.org/-/media/files/publications/wp/2025/english/wpiea2025075-print-pdf.pdf* ### 8. Conclusions ### 8. Conclusions ### A. The commitment - The commitment to conduct an audit by the Supreme Audit Institution of the emergency finance sits in the Letters of Intent of 56 countries. (Another 9 countries committed to conduct third party audits.) - Commitments vary in drafting; attention is merited for future common approaches on: - Recognizing the agility of audits and their role at very early stages of expenditure programs (examples mentioned: Sierra Leone and South Africa). - Publication and timeliness of audits for accountability, where wording and implementation show considerable variety. - In all member countries the commitment covers emergency finance without further specification. - For all but four countries the IMF emergency finance became subsumed into domestic emergency finance and hence could not be audited separately. - This changes the audit from an ad hoc accounting for specific IMF financing to an instrument of public accountability for domestic emergency finance. - Third-party audits are better suited to narrow IMF-administered envelopes, and less well suited for broad domestic emergency budget streams in most member countries. ### B. The implementation - Publication and audit outcomes: - Of the 56 countries with LOI SAI-audit commitments, the overwhelming majority published SAI audits: 92.5%. - In many countries (18%) these were multiple audits. - All 14 FCS countries (of the 2023 FCS list) published the SAI audit reports. - Modes of publication: - Publication was part of the national accountability system in the majority of countries. - In a sizeable minority, publication was realized through new program conditionality: 26%. - Push-back and institutional pressure: - Push-back from authorities against transparency translated into steps undertaken against the SAI or against auditors in some countries. - Audit types and timing: - The majority of audits are compliance and performance audits, focusing on compliance with regulations and whether intended policy objectives were achieved efficiently and effectively. - Several countries effected “real time audits” at very early stages (examples: Kenya within 4 months and Sierra Leone in 6 months) to support establishment of management and accountability systems early in emergency finance. ### C. Key findings - The paper identifies vulnerabilities to fraud and corruption by typology from the audit reports; not focused on any single country. - Vulnerabilities are often mutually reinforcing; common configurations include: - Weak statutory framework combined with core PFM vulnerabilities. - Significant challenges in disbursement, delivery, and record-keeping. - Resulting wide-ranging discretion and opacity that open the door to major misallocations, fraud, and corruption. - Audit reports identify vulnerabilities across the budgetary process: - Statutory framework weaknesses or suspension during the emergency (excessive discretion, bundling incompatible functions). - Core PFM operation vulnerabilities (administration of financial streams, disbursement methods). - Disbursement mechanism vulnerabilities, notably in social-economic support programs and procurement/purchase of goods and services. - Budget-execution, delivery, administration, and record-keeping failures — including that not all receipts were kept. - The audit trail approach focuses on money-flows and cross-cutting budget process challenges rather than legal-technical silos. - SAI audit reports can bolster other IMF transparency and safeguard measures (e.g., beneficial ownership, procurement) since registers and audit inputs are mutually reinforcing. ### D. Coverage of fraud and corruption - SAI audits almost without exception identify vulnerabilities to fraud and corruption; SAIs have embraced a role addressing fraud and corruption to bridge the “expectation gap.” - Fraud and corruption are addressed in audit reports in three broad ways: - Direct identification of fraud or corruption, sometimes naming main perpetrators. - Explicit referral of audit findings to law enforcement agencies. - Implicit identification using qualifying terms (“fake”, “unauthentic”, “ghost workers”, “manipulation”), leaving leads for enforcement agencies to follow. - Enforcement follow-up varies by country; in many countries enforcement agencies followed up, while in others there was reluctance or push-back from authorities. ### E. The structural effect - The Letters of Intent strengthened the role of SAIs in transparency and accountability on emergency finance: - Of the 50 countries which published SAI audits on emergency finance, 15 did not routinely publish audit reports previously, or did not publish them at all. - The LOI commitments enhanced transparency and accountability systems in the specific setting of emergency finance. - Structural limitations remain: - Of the group of 50 member countries that published audits, the SAI in 14 countries have not published an audit report since. - This indicates IMF engagement on emergency finance has not consistently translated into structural strengthening of SAIs. - More consistent IMF support for SAIs, aligned with domestic legislation and international standards, would help translate ad hoc engagement into structural system enhancement. - Future risks and relevance: - International crises are likely to become more frequent (as commented by the IMF Managing Director). - Audit reports showed not all receipts were kept; SAI audits have been useful and successful in identifying why and informing structural reform approaches, including in the most fragile countries. - Existing institutions and accountability processes remain relevant for future IMF engagement, including new areas such as climate financing. - The LOI commitments on SAI audits were an IMF innovation, engaging SAIs on an extensive scale: - This engagement should be seen as a broad-based effort to structurally strengthen transparency in public finance, with emergency finance serving as an entry point. - The experience merits drawing broader lessons and building on it. ### Appendix summary figures (current status) - Number of RCF/RFI recipient countries of the IMF COVID‐19 emergency finance: 88, of which - Number of countries which carry LOI commitments on conducting SAI audits of the emergency finance: 56, of which Number of countries which did not take up the IMF emergency financing: 2 (remaining: 54) - Number of countries with SAI LOI commitments which issued/published audits of the emergency finance: 50 (92.5%) - Number of countries with SAI LOI commitments which did not issue/published audits of the emergency finance: 4 - Number of countries without SAI LOI commitments which published SAI audits of the emergency finance: 3 *Source: wpiea2025075-print-pdf - 8. Conclusions* ### 39. Sao Tome & ### 39. Sao Tome & Principe ### SAI audit publication status - SAI website: http://www.tcontas.st/ - Did the SAI publish an audit report 3 years before 2020 IMF Staff verification: Yes - Did the SAI publish an audit report 3 years after 2020 IMF Staff verification: Yes ### Context from the sample of 50 countries - Of the 50 member countries whose SAIs published audits of emergency finance: - 7 countries (14%) do not routinely publish audit reports, or do not publish any audit report at all. - Publication of audit reports was discontinued by 14 countries of the group (28%) after publication of the audit report under the LOI commitment. ### LOI and program conditionality (selected findings relevant to SAI publication) - The near-universal feature in all 56 LOI commitments on SAI audits of emergency finance is the commitment to publish the audit report. - For two countries the LOI did not call for publication: Ethiopia and Nicaragua. Both countries published their audit reports regardless. The Nicaraguan commitment was for a SAI audit, but the country effected a third‐party audit instead. ### Third-party audits (aggregate findings relevant to audit practice) - Of the 75 Letters of Intent (LoI) which carried commitments to conduct audits, in 9 LoI member countries the LoI committed to conduct and publish a Third-Party audit of emergency finance. - Of those 9, 5 countries published the third-party audit report (55.5%). - Of the remaining countries that did not publish a third-party report: - 3 countries conducted a SAI audit instead. - 1 country did not publish a report (Comoros). - Character of third-party audits: third-party audits tended to be very limited in substantive length: - Chad third-party audit substantive section: 4 pages (excluding introductory paragraphs and annexes). - Gabon third-party audit substantive section: 7 pages. - Nicaragua third-party audit substantive section: 5 pages. - Third-party audits often had narrow ambit (e.g., audit of a single agency or fund) or restricted nature (principally financial or compliance). *International Monetary Fund — IMF WORKING PAPERS “Checking the Receipts” Audits of Emergency Finance — A preliminary analysis of 50 countries* ### 9. Nicaragua ### 9. Nicaragua ### Overview of third-party audits in IMF LOI commitments - Of the 75 Letters of Intent (LoI) which carried commitments to conduct audits, in 9 LoI member countries committed to conduct and publish a Third-Party audits of emergency finance. - Of this number, 5 countries published the third-party audit report (55.5%). - Of the remaining countries, 3 countries conduct a SAI audit instead. - One country did not publish a report (Comoros). - Third-party audits sit outside the formal accountability framework of member countries and there is no established procedure for processing these reports through Parliament or legal enforcement agencies. ### Contractual and mandate limitations observed (general and Nicaragua-specific) - Third-party audits lack the statutory mandate that SAIs typically have; they are privately contracted and the terms of the contract determine the ambit of the audit. - Common contractual constraints observed across countries (relevant to Nicaragua): - (i) Auditors could only audit narrowly defined financial-institutional sectors or institutions and not the entire emergency finance; typically no upstream or downstream assessment along the expenditure process. - (ii) Auditors were often restricted to narrowly defined compliance audits and did not have mandate to pursue issues they identified as most at risk (risk-based approach constrained). - (iii) Auditors generally remained dependent on the government for information access and could not follow-through with information requests to MDAs; material in the public domain often could not be included without authorities’ agreement. - The substantive sections of third-party audits tend to be modest in length; for Nicaragua the substantive section (excluding standard introductory paragraphs and annexes) is noted as 5 pages. ### Nicaragua — terms of the audit contract - The contract limited the audit ambit to verification of compliance with procurement rules and did not extend to the entire emergency finance. - The auditor was dependent on the government for the information provided; the auditor explicitly characterized the engagement as a “limited assurance attestation engagement.” - Because of these constraints, the audit could conclude on compliance within the narrow contractual terms while broader vulnerabilities that a risk-based approach would probe remained unexplored. ### Nicaragua — key audit findings and limitations - Procurement finding: the audit reported that the government acquired anti-viral medications in 7 successive contracts concluded within the span of two weeks. - Six of the 7 contracts were issued to the same contractor. - Each contract was to the average value of 497,000 $Cordoba, just under the statutory threshold which mandated public procurement. - The audit did not cover procurement contracts which the authorities did not share with the auditor, even if those contracts were listed in the government procurement portal. - The auditor’s qualified expression (reflecting limits of available evidence) was translated as: “Based on the applied procedures and the obtained results, nothing caught our attention that would lead us to believe that the procurement processes (detailed in Annex I) related to the COVID-19 emergency response expenses in Nicaragua, executed during the period from April 1, 2020, to May 31, 2021, were not: * Carried out in accordance with the current procurement regulations of the Ministry of Finance, as well as international best practices, achieving a good quality and price relationship (...) * Acquired the contracted goods and that they were not used for COVID-19 emergency response purposes, in accordance with COVID-19 expenses.” ### Implications for accountability and audit utility in Nicaragua - The narrow contractual scope and dependence on government-provided information limited the auditor’s ability to: - Apply a risk-based approach to pursue higher-risk sectors, leads, or upstream/downstream expenditure assessments. - Explore procurement vulnerabilities such as conflicts of interest or contractor qualification beyond literal regulatory compliance. - Include or corroborate information publicly available on government portals if not formally agreed by authorities. - The limited assurance attestation engagement and constrained coverage reduce the extent to which the third-party audit can materially generate the transparency and institutional accountability the LOI commitment intended to secure. ### Broader comparative observations (contextualizing Nicaragua) - Third-party audits in several countries produced short substantive sections (examples given: Chad 4 pages, Nicaragua 5 pages, Gabon 7 pages). - Coverage of fraud and corruption challenges is effectively missing altogether in many third-party audits, in sharp contrast with the majority of SAI audit reports that pursue risk-based and forensic lines of inquiry. - Where contractual constraints were severe, auditors either issued qualified reports or stated that no audit opinion could be issued (example: Gabon). *International Monetary Fund — IMF WORKING PAPERS “Checking the Receipts” Audits of Emergency Finance -A preliminary analysis of 50 countries* ### 1. Cameroon ### 1. Cameroon ### Summary of audit findings and allegations - State audit questions ministries' use of COVID-19 funds (Reuters May 21, 2021). - Allegations and reporting point to mismanagement and misappropriation of COVID-19 resources under the label "Covidgate" (the AfricaReport May 26, 2021; Business in Cameroon January 3, 2022). - External audits and oversight actions referenced include an Audit of Global Fund Grants in Cameroon (The Global Fund December 3, 2021). - Reporting and civil-society investigations highlight specific irregularities and suspected malfeasance: - Public reporting on alleged misappropriation linked to part of a $382 million IMF COVID-19 loan (Zenger June 4, 2021). - Audit bench reportedly confirms "overbilling, conflicts of interest misappropriations suspicions" (Business in Cameroon January 3, 2022). - Data Cameroon reported losses and inflated expenditures: - "CovidGate : L’Etat perd plus de 14 milliards dans l’achat des tests de dépistage" (Data Cameroon May 24, 2021). - "CovidGate : Le MINRESI engloutit plus de 4 milliards FCFA dans la production fictive des médicaments" (Data Cameroon May 21, 2021). - Civil-society analysis calls for reforms "Towards More Transparency and Accountability" (SPARC August 26, 2021). ### Patterns and accountability actions reported - Multiple sources document demands for independent audits and heightened scrutiny (the AfricaReport May 26, 2021; The Global Fund December 3, 2021). - Media and watchdog reporting indicate strong public anger and calls for accountability related to IMF emergency financing (Zenger June 4, 2021; SPARC August 26, 2021). - Investigative and audit outputs cite specific monetary figures and procurement failures (see above "plus de 14 milliards" and "plus de 4 milliards FCFA"). ### Implications highlighted in source material - Allegations of overbilling, conflicts of interest, and suspected misappropriations suggest weaknesses in procurement and expenditure oversight during emergency spending. - Reported losses and inflated procurement spending point to fiscal risks associated with emergency disbursements of external financing, including IMF resources. - Calls for audits and reforms emphasize the need for greater transparency, accountability, and stronger controls over COVID-19 related expenditures. *Source: wpiea2025075-print-pdf - 1. Cameroon (excerpt from IMF Working Paper “Checking the Receipts” Audits of Emergency Finance -A preliminary analysis of 50 countries, Working Paper No. WP/2025/075)* --- _Source: https://www.imf.org/-/media/files/publications/wp/2025/english/wpiea2025075-print-pdf.pdf_