Audit of Peace Corps/Budget Formulation Process

We recommend that the Director formally establish the budget review committee and its processes, in Peace Corps Manual section 702 and accompanying procedure, to enhance the process for advising the Director on Resource Allocation Requests and budget reductions. The policy and procedure should include the committee’s mission, membership, roles and responsibilities, and describe the process to: Coordinate budget information with office heads as discussed in recommendation 5; Evaluate budget requests using established criteria; Prioritize Resource Allocation Requests; and, Document and retain budgeting advice and rationale.

We recommend that the Director ensure that the Office of the Chief Financial Officer refer all properly formulated Resource Allocation Requests to the Director, and refrain from advising components to withdraw them prior to committee review so that all requests can be properly reviewed in accordance with agency wide priorities and needs.

We recommend that the chief finanical officer, in coordination with the performance improvement officer, develop a written policy and procedure for tracking the status of all approved Resource Allocation Requests that includes following up with requesting agency components, and taking appropriate corrective actions when it is determined that Resource Allocation Requests objectives are not being met or are significantly delayed.

We recommend that the chief financial officer ensure that the director of budget and analysis performs a comprehensive review that will result in identifying and documenting significant risks associated with the budget process and serve as a framework for drafting and implementing policy and procedures that will strengthen internal control

We recommend that the chief financial officer ensure that the director of budget and analysis develops a sufficiently detailed risk assessment tool that provides an explanation of how each risk that has been indentified is mitigated and documents the basis for each response related to risk mitigation. This tool should formally incorporate the Office of Budget and Analysis’ policy and procedures that includes written instructions for retention of documentation supporting budget-related transactions and lists key internal control activities, such as appropriate segregation of duties within the Office of Budget and Analysis and budget system