War Child has gained the trust of individuals, companies and other organisations that donate money, which involves a large responsibility to ensure the money is spent properly. Despite the fact that War Child considers this very important, there is always a risk of fraud diverting the funds from their proper destination. This has implications for the implementation of projects as well as for War Child's reputation and credibility.
War Child reduces the risk of fraud by ensuring that employees receive adequate training. Prior to departure, Country Directors and administrators receive a financial briefing and an introduction to the organisation's systems. Every War Child programme and partner organisation also receives a handbook containing guidelines on financial administration and reporting.
In addition to training and procedures, the monitoring of compliance and implementation are extremely important. These auditing activities can be broken down into four components:
- A thorough annual audit of the financial statements by external auditor PricewaterhouseCoopers (PwC);
- Programmes are also continuously monitored by the project administrator, who works at headquarters. Furthermore, the project administrator conducts internal audits from his/her base in the project countries (in 2007 in Colombia and Uganda);
- A minimum of one audit per year in a project country by PwC in the Netherlands;
- A minimum of one detailed monitoring of internal procedures and financial administration in a large project country by a certified local accountancy firm (in 2007 in Sudan and Uganda).
War Child also requires large partner organisations to appoint auditors approved by War Child for an annual audit.
Audits in DR Congo, Sudan, Uganda, Sierra Leone and Afghanistan
In 2007, PricewaterhouseCoopers in the Netherlands conducted an audit of the programme in DR Congo. The auditors examined the financial administration of both the office in Amsterdam and in the DR Congo. They checked, for instance, whether the procedures met the required standards: is there an adequate segregation of roles, are correct tender procedures followed when purchasing local materials, et cetera. This audit revealed that the projects were up to standard on both a financial and procedural basis. A recommendation was made, however, to add a chapter on small projects to the general guidelines for partners. PwC also conducted a mini audit in Afghanistan in connection with a cash discrepancy.
Based on this investigation the local administrator in Afghanistan was dismissed and procedures tightened. At the beginning of 2008, an extensive audit will be conducted in Afghanistan regarding the figures for 2007. External audits were also conducted in Sierra Leone, Uganda and Sudan by local accountancy firms at the beginning of 2007. These also revealed that the projects are up to standard on both a financial and procedural basis.
When War Child selects new partner organisations, extensive research is conducted following the guidelines for partner selection. If War Child decides to support an organisation, improvement of the weaker aspects of that organisation are included in the project's objective. In Israel and the Occupied Palestinian Territory, among others, War Child has consciously chosen to collaborate with four smaller partner organisations, where, alongside the project activities with young people, attention is also paid to strengthening their capacity in the areas of fundraising, personnel management and running campaigns.
The Country Director or regional Representative (in areas where War Child exclusively work with partners) plays a key role in this process because he or she supports the partners in the areas of development of strategy, programmes and organisation. Due to a thorough selection procedure and close co-operation with the partner organisations, the programme quality has improved and the risk of fraud has been reduced considerably. This also enables partner organisations to indicate where possible difficulties lie.
If the irregularities are too serious to maintain confidence in the people or partners involved, financing will be suspended or those involved will be dismissed. Where individuals are concerned, replacements will be looked for. In the case of partners, War Child will try to find new partners. The aim is to fulfil the agreements made with both local people and the authorities as much as possible and to achieve the objective - support for children in the area in question - as much as possible in alternative ways.