USAID OIG finds KPMG failed to deliver six Ukraine DBS audit reports

KPMG did not submit any of the six required audit reports on direct budget support funds to Ukraine," the USAID Office of Inspector General reported, finding the firm missed original and extended deadlines for audits tied to roughly $30.7 billion in congressional appropriations and USAID obligations for fiscal years 2022 to 2024.

Eighty-four percent of that $30.7 billion - about $25.9 billion - flowed into the Public Expenditures for Administrative Capacity Endurance, or PEACE fund, which the World Bank managed and used to reimburse the Government of Ukraine for World Bank-verified expenditures, including some internally displaced persons living expenses. The OIG concluded that KPMG’s failure to deliver the six required reports weakened USAID’s oversight of those PEACE fund contributions.

Deloitte and KPMG were contracted to provide oversight of the direct budget support program. Deloitte was responsible for monthly spot checks, gap analyses, and funding flowcharts; the OIG found Deloitte submitted nearly one-third of those contractor deliverables late. USAID extended the timelines for the audit reports to accommodate KPMG’s difficulties obtaining accurate, timely information from the Government of Ukraine, but KPMG did not meet the extended due dates either, and the OIG reported it was unclear when the six audit reports would be submitted.

The OIG memorandum that framed these findings was written by Paul Martin, USAID’s inspector general since 2024, and was sent on Jan. 23 to then-Acting Administrator Jason Gray and chief of staff Matt Hopson. Devex reports the memo was sent three days after President Donald Trump ordered a 90-day pause in foreign aid disbursements and one day before a Jan. 24 stop-work order was issued for existing grants and contracts as the government reviewed programming alignment with the administration’s policy. Jason Gray has since been demoted and Matt Hopson has since resigned, according to that reporting.

Beyond KPMG and Deloitte’s timeliness problems, the OIG flagged program-level issues: duplicate payments, instances of internally displaced persons living abroad receiving support, lack of cooperation from United Nations agencies and foreign nongovernmental organizations in investigations, and limited vetting of partners for ties to terrorism or corruption. The OIG titled its work “Direct Budget Support: Oversight Mechanisms Provided Limited Assurance That U.S. Trust Fund Contributions Supported the Government of Ukraine as Intended,” and recommended strengthening oversight of government-to-government funding and ensuring contractor deliverables are received.

Separately, Treasury’s Office of Inspector General reviewed KPMG’s audit of the Federal Financing Bank’s financial statements as of Sept. 30, 2025; KPMG’s auditors’ report is dated Jan. 9, 2026. The Treasury OIG noted its review was not a GAO-style audit and did not express an opinion, and said its review disclosed no instances of concern; it also noted KPMG LLP is a Delaware limited liability partnership.

The OIG left unresolved when KPMG will submit the six required audit reports and recommended that USAID obtain those reports and strengthen oversight. The audit also raises open questions about what specific Ukrainian data access issues prevented timely completion, whether Deloitte’s late deliverables have been completed and accepted, and how duplicate payments and IDP eligibility issues will be remedied by KPMG, Deloitte, USAID, and the World Bank.