External auditor’s report for the financial year 2006-2007 showed that Pan Amrican Helath Organization’s funds increased by 24.3 percent, from $786.3 million to $ 977.3 million (NAO, 2008). Such an increase sets positive prospects for the future of the organization. However, expenditures also increased significantly by $ 191.4 million in the reported fiscal period (NAO, 2008). The increased expenditures consisted mainly of the World Organization Funds, Trust Funds and Procurement Funds and amounted to $ 184.3 million (NAO, 2008). Despite the increase in expenditures, the fiscal health of the organization was not endangered since there was an increase of $209.2 on its total fund balances (NAO, 2008). Overall, increase in expenditures is not significant given the significant increase in the organization’s total income. In addition, the organization’s term deposits and net cash reflected a higher income yield due to a positive change of $177.5 million (NAO, 2008).
According to the organization’s 2010 audited financial report, total assets of Pan American Health Organization amounted to $ 823,479,000 (PAHO, 2011). Big accounts within total assets were cash on hand and accounts receivable, which amounted to $167,574,000 and $ 171,363,000 respectively (PAHO, 2011). PAHO’s consolidated statement of financial performance indicates that the organization is dependent on both government grants and public donations. Pan American Health Organization receives most of its funding as voluntary contributions that go for certain projects. Such voluntary and specifically geared funds for certain projects are known as trust funds. On the other hand, the government has been actively engaged in funding internal projects. In terms of debts, the organization has $332,943,000 in the short term liabilities, its long term liabilities amount to $367,761,000 (PAHO, 2011). The net assets for the organization amount to $122,775,000, of which $ 79,162,000 are in reserves (PAHO, 2011).
The financial analysis of Pan American Health Organization report presents some significant fiscal concerns for consideration. For instance, external audit report that there was a lack of proper accounting records revealed in the 2010 audit report (PAHO, 2011). In addition, the fiscal report lacked some information and detailed explanations. The audit report also revealed that some information, which the directors gave concerning the financial statements for the 2010 financial year, were inconsistent with the prepared financial statements. Furthermore, the internal control statement failed to reflect the internal control systems, which were reviewed by the auditors (PAHO, 2011). Such issues can make donors and project financiers consider pulling out their funds from the programs.
According to the statement of financial position, PAHO’s accounts receivable are not equal to the deferred revenue balances. Some donors give funds for projects in advance, but the organization has, to some extent, failed to meet donor’s expectations since the money has not been used for the intended projects within the agreed timeframes. Namely for the reason of failing to use the funds for projects PAHO had to return $1.4 million of unused funds to the donors in 2010 (PAHO, 2011). Indeed, there were some cases when the staffing and financial resources requirements for certain projects were not properly understood at the start.
The financial strength of PAHO can be identified by the manner in which the organization has acquired sufficient funds to implement its projects. PAHO’s operating cash flow shows a positive balance at the end of 2010 financial year. The organization’s projects were not merely restricted to the key members of the finance team, but also required that all fundamental principles were communicated to all the staff members. It is due to such practices that created transparency and openness the financial reporting has been improved. In fact, there was no way that it could be seen as an isolated finance project.