How a Financial Verification Became the Catalyst for System-Wide Reform
Published on: Mon Jul 29 2019 by Ivar Strand
Case Study: How a Financial Verification Became the Catalyst for System-Wide Reform
The objective of independent monitoring is often narrowly defined: to provide fiduciary assurance through the verification of past expenditures. While this is an essential function, it represents only a fraction of the potential value that a data-driven, diagnostic approach can deliver. A successful engagement should not only identify problems but should also serve as a catalyst for sustainable, partner-led improvements.
This case study, based on an engagement with a large national organization implementing a multi-donor health program, illustrates how a routine financial verification can evolve into a system-wide institutional strengthening exercise.
The Initial Mandate: A Standard Fiduciary Review
Our initial mandate was conventional. We were contracted by the program’s primary donor to conduct a third-party verification of project expenditures. The objective was to provide assurance that funds were being managed in compliance with the grant agreement and the implementing partner’s own financial policies. This was, at the outset, a standard, ex-post review of historical transactions.
The Initial Finding: A Symptom of a Deeper Issue
Our first step was to ingest and analyze 100% of the transactional data from the partner’s financial system. While our initial forensic tests for fraud or major compliance breaches did not raise significant alarms, the analysis immediately highlighted a critical operational anomaly.
The data showed that the average time elapsed between the receipt of a valid invoice from a local supplier and the final disbursement of payment was 72 days. This was a clear violation of the 30-day payment term stipulated in the partner’s own procurement manual and was creating significant friction with local vendors, jeopardizing the program’s supply chain. A traditional audit might simply have reported this as a non-compliance finding. Our diagnostic approach, however, treated it as a symptom of a deeper, systemic issue.
A Collaborative Diagnostic and Root Cause Analysis
We presented this data-driven finding to the partner’s senior management not as an accusation of failure, but as an operational puzzle to be investigated collaboratively. The question was not “Why did you pay these late?” but “What is the underlying process that is resulting in this systemic delay?”
To answer this, we facilitated a half-day workshop with the partner’s finance, procurement, and program teams. Using the techniques of logic mapping, we worked with the staff to visually reconstruct the entire, end-to-end procure-to-pay workflow, from initial request to final payment.
The data-driven process map was illuminating. It revealed that the primary bottleneck was not, as many had assumed, in the finance department. Our analysis of system timestamps showed that the finance team was remarkably efficient, processing fully approved payment requests in an average of just under three days.
The source of the delay was a cumbersome, paper-based approval process. The de jure policy required the physical signature of up to five different managers, many of whom were frequently traveling to remote field sites. This manual, sequential workflow was the root cause of the 70+ day payment cycle.
Outcomes: From Verification to Sustainable Improvement
Our role in this process was not to prescribe a solution. It was to provide the objective, empirical evidence and the clear process visualization that empowered the implementing partner’s own management team to take ownership of the problem.
Armed with this unambiguous diagnosis, the organization’s leadership initiated their own internal process re-engineering project. They streamlined the approval matrix, reducing the number of required signatories for most transactions, and implemented a simple, secure digital approval system that could be used by managers from their mobile devices in the field.
A follow-up data analysis conducted by our team six months later confirmed the impact of their reform. The average payment processing time had been reduced from 72 days to 24 days. The relationship with local suppliers had improved, and the finance team was spending less time responding to inquiries about late payments.
This case is a clear illustration of our core philosophy. The goal of monitoring is not simply to find fault. It is to provide the actionable, data-driven insights that empower our partners to build their own, more resilient systems. The initial verification exercise became a catalyst for a sustainable, internally-led reform that strengthened the organization long after our engagement was complete.
