AFRO-NETS> Development information - accounting and accountability (2)

[Peter Burgess <Profitinafrica@aol.com>]

Development information - accounting and accountability (2)
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Dear Colleagues

I feel the need to respond to the remarks made by James Michael Hayes 
(JMH) from Boston, Massachusetts, USA. 

Maybe I am sensitive, but JMH seemed to be of the view that my con-
cerns made no sense and that a little bit of work on my part would 
have given me a lot of information.

But I think he misses the point entirely. 

Getting answers to the question "Where was the money spent?" is abso-
lutely vital to understanding why the official development assistance 
(ODA) community has spent so much over the years and achieved so lit-
tle. 

I think the phrase NORTH and SOUTH is now fairly widely used to refer 
to the rich developed industrialized countries and the poor develop-
ing countries. I accept it is not perfect in terms of geography but I 
use it all the time as an easy shorthand. If anybody has a better 
shorthand, let me know. I prefer SOUTH to poor, or developing country 
or LDC or third world country.........

As an illustration of development waste and value destruction I offer 
the following: 

>>>>>>>>>
I did some work in Lesotho some years ago. I was paid to study some 
studies and actually banned from going out and getting new informa-
tion, because there were already so many studies done on the subject. 
There were several hundred studies at an average cost of (say) 
$20,000 each (conservatively estimated) say or around $2 million dis-
bursed getting these studies written. 

I reckon one study would have cost $20,000 and have been worth about 
$100,000 if there had been implementation follow through.

With a second study the cost would have gone up to $40,000 and the 
combined value be more or less the same at $100,000, but maybe less 
because there was now an element of confusion creeping in, and much 
less difficult now to get implementation approval.

You get the idea...... costs keep going up. Value stays the same, 
pretty much.

After some time $2 million has been spent and there is virtually no 
value in the piles of reports that have been prepared.

Where is the $2 million? Almost all of it in the bank accounts of 
consultants from the NORTH. What was the value to Lesotho? Not very 
much. From the Lesotho perspective $2 million was spent on Lesotho 
and nothing was realized. Almost perfect economic value destruction.
>>>>>>>>>>>>>>>>>

JMH suggests that by looking at a web site you can get answers to the 
questions I keep asking. Sure. If you are looking for descriptive ma-
terial, the web site world is helping enormously, and the web presen-
tation is now an essential element of our NORTH view of things. But 
you will rarely find any financial information that answers any of 
the accounting and accountability questions. And I am sorry, but I 
don't quite understand the relationship JMH seems to see between how 
this "Sourcebook of HIV/AIDS Prevention Programs" cost to prepare.... 
and how it is being distributed..... and how value is arising among 
people affected directly by the AIDS pandemic. 

Unless I am much mistaken health and HIV-AIDS is becoming like my Le-
sotho experience. Report after report after report all costing good 
money and banked in the NORTH while the crisis of limited resources 
in the SOUTH gets ignored. If the money used to write the sourcebook 
had been sent directly to the programs JMH says were being written 
about..... would the value realized have been more or not?

I argue that because there is no "system" for accounting and account-
ability people like JMH are better served by getting another report 
written than doing some more work on the ground. The report goes into 
the public record and can be written about. The work done on the 
ground creates real value for real people in real need, but there is 
no accounting for it..... nor reporting of it.... and no appreciation 
that it ever happened.

Therefore it need not happen. Money need not be spent right to do 
some good. Just write another report and all will seem to be well.

JMH said "Perhaps the first place to start, when one wants financial 
information about a program, is to ask the program directly. Many 
programs are justifiably proud of the good work they have done and 
happy to share details about cost."

JMH is right. There are a lot of projects where good results are be-
ing achieved. There is a UNDP activity that has been going on since 
1978 called the Development Cooperation Report (DCR) and (in theory) 
produced for every country and every year since then. I have worked 
on this at various times during the last 25 years and it is not easy 
to get the information JMH talks about. Some programs are indeed jus-
tifiably proud of what they do and how little resource they do it 
with. That is not the problem. Some programs spend an enormous amount 
of money and do very little, and these programs are not particularly 
willing or interested in sharing their scandalous behavior with the 
public at large. Some countries (donors) very much want to keep their 
fund flows secret...... and the UNDP has had considerable difficulty 
over this in trying to prepare the DCR responsibly. 

In my view the UNDP DCR work is potential some of the most valuable 
information about development. The DCR was expanded at one time into 
a Development Cooperation Analysis System (DCAS)...... but was over-
taken by the UNDP Human Development Report as the flagship publica-
tion of UNDP. The HDR, unlike the DCR does not raise questions about 
the process of development. It merely shows how big the failure is... 
but leaves open the question of how it has failed.

JMH is right.... "In some jurisdictions, such as the USA, the law re-
quires that certain financial information must be made available to 
the public upon request (e.g. Internal Revenue Service Form 990 Fil-
ings for a nonprofit). The federal government and various states in 
the USA have 'freedom of information'; regulations that permit the 
public to request detailed information about government bureaus them-
selves, and government funding of nonprofit agencies, such as the 
scope of work promised in a contract, and the budget and expenditures 
for that project." 

But this does not tell us much about the effectiveness of the work 
that is being done in the process of development. The worry I have is 
that because in the NORTH we can point at this "openness" we then as-
sume that we are getting useful information and getting answers to 
our questions. This assumption is not valid at all. And the bigger 
the organization, the more difficult it is to get useful information 
that helps with an understanding of development performance.

JMH is right again...... "Regarding funding detail, the Global Fund 
for AIDS is an example of an organization that is quite forthcoming 
at their web site: http://www.globalfundatm.org/ "

And another good website is <http://www.aidspan.org/> run by AIDSPAN 
/ Global Fund Observer that is serving to benchmark best practice and 
is getting GFATM to upgrade its own work in a professional and 
friendly competitive and collaborative way. AIDSPAN is independent 
and NOT part of the GFATM secretariat..... but as I see it wants 
GFATM to succeed simply because it is such an important job.... and 
in my view is helping by being objectively critical of things that do 
not make much sense and independently supportive of good things they 
are doing or need to be done.

But there are still information gaps that are huge. Yes. There is now 
public easy access to what has been proposed, what has been ap-
proved.... but there no information yet about the actual flow of 
funds to implementing entities.... and no feedback to the public 
about how well the funds have been used. The GFATM is addressing this 
issue through a concept of Local Fund Agent (LFA) that will serve as 
the eyes and ears of GFATM on the ground. The first contracts to do 
LFA work have been given to PriceWaterhouseCoopers, KPMG, Crown 
Agents and UNOPS. Not surprisingly I have criticised this on the 
grounds that these are big NORTH organizations with little or no con-
tact with the real "ground" and we are missing a big opportunity to 
create important value adding among local professionals all over the 
SOUTH where the GFATM needs to be operating. This dialog continues.

But again, with respect to information. More and more text. But still 
little that can be submitted to any form of financial analysis, even 
the most rudimentary. Yes.... Kenya got US$ 36,721,806...... and we 
know what the proposals were. But we don't know in a systemic way how 
these funds are flowing into valuable activities..... or indeed if 
the activities are valuable.

And again and again, stories about "going to" improve accounting and 
accountability..... but hardly ever any activity to practice account-
ing and accountability. Accounting is simple.... but it is not much 
talk. Just numbers logically organized. Accountability.... it gets to 
be obvious when the accounting is done right.

And stories of accounting and accountability could reasonably end up 
in the newspapers.... and should. But the accounting and accountabil-
ity is a "system" and not an activity of the media. The media is part 
of a larger system that one might call governance, and the media re-
porting on accounting and accountability is critical. But you do not 
get accounting and accountability through journalistic activities 
alone. There needs to be "system".

Last JMH referred to the Guidestar Database...... "For an example of 
financial information about hiv/aids non-governmental organizations 
in the USA that is open to the public, see the web site 
www.guidestar.org. At that site, one can enter the name of any aids 
organization in the search box (e.g. AIDS Project Los Angeles or San 
Francisco AIDS Foundation) and read detailed budget and expenditure 
information, salary information, names of members of the board of di-
rectors, USA government tax filings, etc."

The Guidestar Database is almost exactly what I am asking to get es-
tablished for global development activities. I have had conversations 
with the Guidestar staff about extending their reach to international 
works, but it is not planned. Their database architecture is driven 
by the US filings mandated for 501 (c)(3) organizations and the meta-
data I am looking for would be incompatible with this structure. But 
as far as I am concerned Guidestar validates the concept of a univer-
sally accessible database on accounting and accountability in devel-
opment.

But we can go further. The Guidestar Database is used to drive a lot 
of fund raising activities run by others. Because the information 
about good things is in the database, people can give to these or-
ganizations using Internet secure payment systems. Think what this 
might do for the thousands and thousands of small good things that 
are going on in Africa and presently do not get funded.

Think also about the potential for great scams. So in addition to the 
database, and the payment fund raising element, there also needs to 
be a "local fund agent" network to ensure that the database informa-
tion is valid and any moneys are used as intended.

I thought James Michael Hayes put me on the spot, and I hope I have 
responded constructively. I have audit experience, (surprisingly not 
recent) and one of the rules when I was doing audit work was simply 
not to trust any number until you had some way of validating it. This 
is deeply engrained in my approach to information and analysis. What 
I see in the modern information environment is a willingness to 
"spin" information to suit the giver of the information..... and a 
rather surprisingly willingness of users of information to accept 
rather weak information at its face value. And as an accountant would 
say, most of the information we get "just does not add up".

Sorry about the length. This is a big subject.

Peter Burgess
ATCnet in New York
Tel: +1-212-772-6918
Fax: +1-707-371-7805
mailto:peterb@iitc.safe-mail.net
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