We visit a different country office of the same international NGO we met . This office receives a grant directly from a donor agency in the amount of 15 million US dollars. The project team starts work based on an approved work plan and budget. They quickly find that there are activities they did not plan for in the work and budget, which clearly enhance the project. The Ministry of Health also requests that these additional activities be added. The project manager agrees and soon, additional unplanned activities are incorporated into the work plan but the original project budget is not adjusted. In the meantime, the team feels they are doing excellent work, above and beyond what was expected. 

In the third quarter, however, after invoices have come back to the organization for the various costs of activities (both planned and unplanned), the organization discovers that it is overspent by one million US dollars or approximately 7% of its original budget.

Referencing the Plan, Do, Review cycle, explain how this situation happened.

Tip Think back to the Plan, Do, Review cycle we learned about earlier in this unit; this will assist you in your response.

Presented with these exciting "additional" opportunities, what could the program manager and budget manager have done instead of simply adding these new activities and expenses to their work?

Based on the information in this case study, which building blocks of Financial Control is lacking in this example? 

What are the ramifications of this mismanagement of funds?