Regional Multilateral Development Banks

External Audit Reporting Could Be Expanded Gao ID: GAO-02-27 December 14, 2001

Multilateral Development Banks (MDBs) provide financial support to promote social and economic progress in developing countries and the countries of central and eastern Europe and the former Soviet Union. Under the Foreign Operations, Export Financing, and Related Programs Appropriations Act of 2001, the United States is providing $1.3 billion to support the MDBs, with $460 million going to the regional development banks and $840 million going to the World Bank Group. All of the MDBs GAO reviewed have received unqualified or "clean" opinions on their external audits. However, none of the MDBs GAO reviewed are required to report on their internal controls over financial reporting, lending operations, or compliance with their governing charters or policies. In addition, the regional MDBs' external financial statement audits are not intended to, and do not, provide assurances about internal controls over the MDBs' lending operations and whether funds are spent as intended. Most of the regional MDBs that GAO reviewed have developed anti-corruption strategies that recognize the importance of strong internal control systems. Each of the regional MDBs GAO studied has established internal audit functions as part of their controls.


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