Control measures and quality in aid management

Zero tolerance of corruption and other types of financial irregularities is a general principle within Norwegian development aid. The spending of development aid funding on anything other than the agreed purpose will reduce the hoped-for progress and undermine our joint efforts to achieve the Sustainable Development Goals. Norad endeavours to mitigate risk and prevent financial irregularities in all of its development aid.

Norwegian development aid is primarily managed by Norad and the Ministry of Foreign Affairs, in line with the priorities established by the sitting government. Development aid funding is channelled through partners that have collaborations in the various poor countries that Norway supports through the provision of development aid. Stakeholders who receive development aid funding are largely civil society organisations, educational institutions, businesses or multilateral organisations, such as the United Nations.

The procedures for ensuring that funding goes towards its intended purpose vary somewhat between different types of agreements and partners, but the quality and control principles set out below apply to the majority of the agreements and projects that Norway supports.

Initial quality and risk assessments

Before a partner receives development aid funding, we carry out a comprehensive assessment of both the partner and the specific project concerned. Norad assesses the organisation's thematic and geographical expertise, its capacity, financial management and controls, and how it works with partners. We assess the completeness and thoroughness of the applicant’s risk assessment, the measures that will be needed to limit the risk, or whether the risk is considered to be too high. In cases where elevated risk is identified, we will assess whether this higher risk should be reflected in stricter requirements in the agreement. Applicants must also have ethical guidelines in place in accordance with Norad's standards.  

Ongoing follow-up and reporting obligations

Once a partner has received development aid funding, the agreement requires them to submit reports on outcomes, risk and consumption on an ongoing basis. The agreement also gives Norad the right to claim the money back in the event of material breaches of the agreement. Projects are followed up through an ongoing dialogue between Norad's employees and the agreement partner, so that any challenges and issues can be identified at an early stage and mitigation measures implemented. An audit of the total amount of support is always required for projects which receive significant support. Depending on size and complexity, formal meetings, evaluations and project visits will be conducted.

Sampling with real testing of the control measures along the entire chain of development aid recipients is an important preventive and revealing tool that Norad is increasingly making use of. Through investigations into how the written presentation of internal controls works in practice, we can identify any signs of shortcomings or errors.  

Reporting and evaluation at the end of an agreement

At the end of an agreement, final reports must be prepared and, in most cases, an evaluation carried out. Strengths and weaknesses of projects are used for learning and improvement purposes.  

It is important to stress that there will always be some risk associated with Norwegian development aid funding. The aid goes to the world’s poorest countries, where the need for support is greatest. This means that our partners often operate in demanding contexts, and the prerequisites for a project can change or be unpredictable over the agreement period.

The aid is most often used to support countries with weak institutions, many of which face major challenges linked to corruption.

How do we detect the misuse of funds?

All recipients of state aid have a duty to report any suspected cases of financial irregularities. Suspected cases of sexual assault, exploitation or harassment must also be reported. Multinational organisations, such as the UN, of which Norway is a member, are themselves responsible for following up on the suspicions.  

Follow-up or sampling sometimes leads the Norwegian authorities to suspect that something is amiss.  On other occasions, Norad or the Ministry of Foreign Affairs will be notified of instances of financial misconduct or ethical violations.

Norad's Internal Audit and Investigations Unit handles all reports that are received via varsling@norad.no or the external whistleblowing channel. The unit will assess where there is any suspicion of financial irregularities involving Norad funds. In many cases, separate investigations are conducted to clarify the case and the extent of the irregularities.

What happens when development aid funding does not go towards its intended purpose?

When a whistleblowing case is created, we always consider whether it is necessary to suspend further transfers to ensure that no more funding is lost.

Funds that are not used in accordance with the terms and conditions set out in the agreement must always be repaid. Other forms of response in the event of breaches of agreements vary from termination of the agreement to the remediation of weaknesses as a prerequisite for further support.