Financial Crime World

Risk Assessment Report: El Salvador’s Ministry of Agriculture and Rural Development (MARN)

Executive Summary

A recent risk assessment conducted by a team of experts has identified several areas where MARN, the Ministry of Agriculture and Rural Development in El Salvador, is vulnerable to financial risks. The report highlights potential weaknesses in the ministry’s internal controls, procedures, and systems, which could lead to inaccurate recording and reporting, misappropriation of funds, and inefficient use of assets.

Area 1: Cash Management

The risk rating for cash management is low, with a probability of remote and potential impact negligible. However, there are vulnerabilities in the recording and reporting of bank activity, including the lack of segregation of duties over bank accounts and accounting systems.

  • Recommendations
    • MARN should ensure proper segregation of duties in procurement roles.
    • USAID should help MARN implement measures to strengthen its Public Financial Management (PFM) system.

Area 2: Procurement

The risk rating for procurement is moderate, with a probability of occasional and potential impact negligible. However, there are vulnerabilities in the recording and tracking of disbursements, including the lack of integration between systems and manual controls over the procurement cycle.

  • Recommendations
    • MARN should use the purchasing system for all purchase requisitions.
    • USAID should help MARN implement measures to strengthen its PFM system.

Area 3: Asset Management

The risk rating for asset management is high, with a probability of occasional and potential impact significant. However, there are vulnerabilities in the management and monitoring of assets, including the lack of physical controls over assets and insurance coverage.

  • Recommendations
    • MARN should conduct annual physical inventories of all assets, including those in remote locations.
    • USAID should help MARN implement measures to strengthen its PFM system.

Conclusion

The risk assessment report highlights several areas where MARN is vulnerable to financial risks. It is essential for the ministry to address these vulnerabilities by implementing measures to strengthen its internal controls, procedures, and systems. USAID’s support will be crucial in helping MARN achieve this goal.

  • Recommendations
    • MARN should implement measures to strengthen its PFM system.
    • USAID should provide technical assistance to help MARN implement these measures.
    • The Government of El Salvador should also provide institutional strengthening actions to support MARN’s efforts.