The Defense Department failed to properly account for 96 percent of the Iraqi reconstruction funds it received, according to an audit.
The Special Inspector General for Iraq Reconstruction found that DOD did not establish accounts for USD8.7 billion of the USD9.1 billion from the Development Fund for Iraq in a timely manner despite guidance from the Treasury Department calling for such action.
“DoD cannot readily and completely account for its obligations, expenditures, and remaining balances associated with the DFI,” the SIGIR report said. “The breakdown in controls left the funds vulnerable to inappropriate uses and undetected loss.”
DFI was created in May 2003 by the administrator of the Coalition Provisional Authority, with the support of the United Nations Security Council. In 2004, the U.S. government took over the management of the fund, which channels revenues from Iraq’s oil exports to key humanitarian, reconstruction and disarmament activities in the country.
SIGIR called on DOD to improve its procedures for accounting and reporting all non-U.S. government funds that are made available to organizations and agencies under its jurisdiction. It added that service secretaries and the commander of the U.S. Central Command should also determine the total amount of DFI money their organizations received as well as how much of the funds they are still holding.