Summary: As part of our audit of the activities authorized by the Mutual Security Act of 1954, as amended (22 U.S.C. 1751), we have examined the United States economic and technical assistance program for Cambodia, as administered by the International Cooperation Administration (ICA) of the Department of State and its predecessor, the Foreign Operations Administration (FOA). Our examination included a review of pertinent records and procedures at the Washington office of ICA and a brief visit in October 1956 to the agency's operations mission in Phnom Penh (Mission). The principal objective of our examination was to determine, by reference to major activities and projects within the over-all country program, the adequacy of financial and related procedures in the use of mutual security funds appropriated for fiscal years 1955 and 1956. Our report gives effect to transactions and procedures in fiscal year 1957 which are pertinent to the matters covered in our examination. The scope of this report does not include the military assistance program for Cambodia which is under the administration of the Department of Defense and the subject of separate audit and reporting by the General Accounting Office.
The assistance program for Cambodia--its objectives, nature, and administration--was influenced to a large extent by what was, in the opinion of the responsible United States agencies (ICA, State, and Defense), the political necessity of making a strong and immediate impact. Cambodia was spared the extreme dislocations suffered by the neighboring country of Vietnam as a result of open warfare, dismemberment, and attendant refugee problems. However, the requirements for assistance were deemed of such urgency that ICA undertook this program on an emergency basis without proper planning, adequate staffing, and a desirable degree of cooperation by the recipient government. The agency also considered it advisable to relax certain of its usual controls, made use of broad cash grants, and liberalized its import program. An important consideration in making prompt commitments and seeking speedy action, despite administrative handicaps, was that Cambodia has taken an independent and "neutral" position in world affairs and received outside aid, or offers of aid, from several other sources in addition to the United States. Cambodia has been receiving assistance from France, the nations participating in the Colombo Plan, the specialized agencies of the United Nations, and Communist China. The country also has received offers of aid from Czechoslovakia, Poland, Russia, and Japan. The agency has pointed to progress in the strengthening of internal security and the stabilization of the economy as a result of its assistance activities in 1955 and 1956. Following the initial emergency period, the need for greater administrative efficiency has been generally recognized by the agency. We observed subsequent improvements in administrative procedures, but believe that the agency faces the continuing task of reaching a better understanding with the recipient country in matters of program planning and execution and of bringing the scope of assistance activities into harmony with technical and administrative capabilities in Cambodia. An internal audit of the overseas mission in Cambodia, undertaken by the Audit Division of ICA in June-July 1956, made various recommendations to strengthen administrative and financial procedures. The internal audit findings were confirmed by our observations for the matters covered by our examination.
