SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

400 Army Navy Drive • Arlington, Virginia 22202

July 26, 2006 

MEMORANDUM FOR U.S. AMBASSADOR TO IRAQ 

 DIRECTOR, IRAQ RECONSTRUCTION MANAGEMENT 

OFFICE 

 COMMANDING GENERAL, MULTI-NATIONAL 

SECURITY TRANSITION COMMAND-IRAQ 

 COMMANDING GENERAL, CIVILIAN POLICE 

ASSISTANCE TRAINING TEAM 

SUBJECT: Joint Cash Count: Iraq National Weapons Card Program (SIGIR-06-024) 

The Director of the Iraq National Weapons Card Program (INWCP) requested assistance 

from the Treasury Attaché, U.S. Embassy-Iraq, for the transfer of INWCP funds that had 

been collected for weapons registration to the Iraqi Government. Consequently, the 

Treasury Attaché, U.S. Embassy-Iraq, requested the Special Inspector General for Iraq 

Reconstruction (SIGIR) to conduct a count of INWCP funds that were under the 

supervision of the INWCP Director. SIGIR was also asked to reconcile the funds to the 

extent possible, to weapons registration card records held by the INWCP Director. 

SIGIR was joined by a representative of the Multi-National Security Transition 

Command-Iraq (MNSTC-I) to conduct this review. This memorandum presents the 

results of our review. 

Iraq National Weapons Card Program. The INWCP was created in response to 

concerns by the Iraqi Interim Government and the Coalition Provisional Authority (CPA) 

about the large number of individuals carrying and possessing weapons in Iraq without 

obtaining appropriate registration and authorization through the Ministries of Interior and 

Trade. These concerns included the unregistered weapons carried by private security 

companies (PSCs) and their employees operating in Iraq. To address the problem, the 

Coalition Provisional Authority enacted a memorandum, CPA 17, governing the 

possession and carrying of weapons, which required weapons to be registered with and 

regulated by the Ministry of Interior.1

 

CPA Memorandum 17 provided a mechanism for PSCs to be registered, regulated, and 

vetted within Iraq. PSCs were to apply to the Ministry of Trade for a business license 

and to the Ministry of Interior for an operating license. With an approved operating 

license, the PSCs could then apply to the Ministry of Interior for weapons cards 

authorizing their employees to bear arms as part of their duties. 

 

1

 Under CPA Memorandum 17; “Registration Requirements for Private Security Companies,” dated Jun. 

26, 2004. 
2

Under the INWCP, the fee for registering an individual weapons card was 50,000 Iraqi 

dinar (ID). However, according to the INWCP Director, certain Interim Iraqi 

Government offices were provided with free or discounted weapons cards. For example, 

the Offices of the Iraqi President and Vice President, the Office of the Prime Minister, 

and each Iraqi Minister received 20 free weapons cards. Also, each Iraqi Deputy 

Minister received 10 free weapons cards. Iraqi Interim Government offices that exceeded 

the free allotment of weapons cards were charged 25,000 ID for each additional card. In 

January 2006, the responsibility for the program, including the issuance of the 

registration card and collection of fees, was transferred to the newly elected Iraqi 

government. No cash was collected by the INWCP Director after December 2005.

Records Reconciliation. We determined that the available records generally support the 

amount of INWCP funds in the Director’s possession as of May 19 and 20, 2006. 

According to INWCP records, 6,247 weapons card were issued, including cards that were 

discounted or issued for free. According to the INWCP Director, he was the collection 

point for the registration fees, but did not try to reconcile amounts received against the 

number of weapons cards issued. 

Our review of the available records found that an inventory of weapons cards was not 

kept as a numbered or controlled item. We also found that records were not maintained 

documenting the number of weapons cards printed or issued to each Iraqi ministry. 

Without documentation to support the number of cards printed and distributed to the 

various ministries, we could not determine whether the funds in the hands of the INWCP 

Director represented a complete accounting of all program activities. Therefore, we 

could not fully reconcile the funds to the available INWCP records. 

Cash Count. On May 19 and 20, 2006, under the supervision of the INWCP Director, 

SIGIR and MNSTC-I conducted a cash count of the INWCP funds that had been 

collected under the responsibility of the Director through the end of December 2005 for 

registration of weapons cards. We determined that the INWCP Director was in 

possession of 305,575,000 ID, or the equivalent of $207,882.67 in U.S. dollars2

. Table 1 

describes the difference between the projected amount for registering all 6,247 weapons 

cards at full cost and the records provided by the INWCP Director. Both values are then 

compared with the results of the count of the actual amount of cash that was in the 

possession of the INWCP Director. 

 

2

 Conversion rate as of May 28, 2006 (305,575,000 ID X $0.0006803 U.S. dollar)
3

Table 1: Comparison of the Weapons Cards at Full Value, to 

 the INWCP Registration Records and Actual Cash on Hand 

as of May 19 and 20, 2006 (in Iraqi Dinar (ID)) 

Projected Full Value INWCP Records 

6,247 Weapons 

Cards Issued X 50,000 ID (full fee) 312,350,000 ID 

Registration Fees 

Received per 

INWCP Records 

 310,000,000 ID 

INWCP 

Expenditures3 (4,660,000) ID (4,660,000) ID 

Sub-total 307,690,000 ID 305,340,000 ID 

Results of 

Cash Count 305,575,000 ID 305,575,000 ID 

 

Difference 2,115,000 ID (235,000) ID 

Source: SIGIR 

We do not consider either of the differences identified in the cash count as material or 

unreasonable. This is because (1) both differences vary by less than one percent, and (2) 

some indeterminate amount of the 6,247 weapons cards were provided free or at a 

reduced rate. Table 2 describes the results of the cash count identified by denomination 

and quantity of Iraqi Dinar.

Table 2: Results of Cash Count Conducted on May 19 and 20, 2006 

of the INWCP Funds Held by the Director 

(in Iraqi Dinar (ID)) 

Denomination Quantity Amount 

250 4 Bills 1,000 ID 

1,000 174 Bills 174,000 ID 

5,000 10,397 Bills 51,985,000 ID 

10,000 7,664 Bills 76,640,000 ID 

Currency

25,000 7,071 Bills 176,775,000 ID 

TOTAL 305,575,000 ID 

Source: SIGIR 

 

3

 Expenditures were supplemental salaries to INWCP staff for June and July 2005, office supplies and 

shipping. 
4

On June 7, 2006, we held an exit conference with the Treasury Attaché at the U.S. 

Embassy Annex in Baghdad, Iraq, to present the results of the joint cash count and to 

discuss transfer of the monies to the Iraqi government. The Ministry of Finance 

requested the funds be transported to the Rasheed Bank Branch, located in the Rasheed 

Hotel, where the Bank Branch Manager would take custody and deposit the money, in 

Iraqi Dinar (ID) denomination, into the Ministry of Finance’s account at the Central Bank 

of Iraq. 

The transfer of funds occurred on June 19, 2006, at the Rasheed Bank Branch. During 

the transfer and count of funds, the Bank Branch Manager identified three counterfeit 

bills4

 amounting to 40,000 ID. The three bills were removed by the Bank Branch 

Manager from the funds being turned over to the Rasheed Bank and were returned to the 

custody of SIGIR. The total funds accepted and signed for by the Rasheed Bank Branch 

Manager was 305,535,000 ID. For the English and Arabic versions of the Transfer of 

Custody Document, see Appendix D. Disposition of the three counterfeit notes was 

discussed with the Special Agent in Charge-Baghdad of the SIGIR Investigations office. 

He recommended that the SIGIR audit team retain the counterfeit notes as part of the 

SIGIR files pertaining to this audit. 

This report contains no recommendations. This review was performed under generally 

accepted government auditing standards. For a description of our scope and 

methodology, see Appendix A. For the distribution of this report, see Appendix B. For a 

listing of the staff members who contributed to this report, see Appendix C. 

We appreciate the courtesies extended to the staff. For additional information about this 

report, please contact Mr. Joseph T. McDermott at (703) 343-7926, or by email at 

joseph.mcdermott@iraq.centcom.mil; or Mr. Clifton Spruill at (703) 343-9275, or by 

email at clifton.spruill@iraq.centcom.mil. 

Stuart W. Bowen, Jr. 

Inspector General 

cc: See Distribution 

 

4

 The three bills consisted of one 5,000 ID note, one 10,000 ID note, and one 25,000 ID note. 
5

Appendix A. Scope and Methodology 

On May 19 and 20, 2006, we conducted a cash count (Project No. 6022) of the Iraq 

National Weapons Card Program (INWCP) funds in the possession of the INWCP 

Director. We were given access to the funds immediately and we were observed by the 

INWCP Director and a Multi-National Force-Iraq representative during the entire cash 

count. The cash count was conducted jointly by the Assistant Inspector General for 

Audit, Office of the Special Inspector General for Iraq Reconstruction (SIGIR); the 

Command Auditor/Internal Control Officer for the Multi-National Security Transition 

Command-Iraq; and six SIGIR auditors. 

The cash count was done by two teams of three auditors over a two-day period. On the 

first day, the cash count began at the Adnon Palace conference room, Baghdad, Iraq. The 

cash was then transferred to the U.S. Embassy Annex, Baghdad, Iraq. On the second 

day, the cash count was completed at the S-121 A Conference Room, U.S. Embassy 

Annex, Baghdad, Iraq. After each cash bundle was counted it was given a control 

number (i.e. A-1, B-1) and recorded on a worksheet with the number of bills, the 

denomination, the denomination total, the number of weapon cards represented (if 

available), and the bundle total. If the bundle total could be matched with a line item on 

the spreadsheet provided by the INWCP Director, it was also noted. However, not all the 

bundles that were counted appeared on the Director’s spreadsheet. There were also a 

number of bundles that had come apart leaving loose cash with no identifying 

information. The loose cash was counted and annotated with a control number in the 

same manner as regular bundles. 

After each day’s cash count was completed, the Assistant Inspector General for Audit and 

the INWCP Director would identify each bundle by the control number assigned to that 

particular bundle (i.e. A-1), and match each bundle control number to the worksheets. 

Upon completion of this validation, both would sign the worksheet. 

To determine the policies and procedures that initiated the INWCP, we reviewed the 

Memorandum 17, “Registration Requirements for Private Security Companies”, dated 

June 26, 2004, and the Coalition Provisional Authority Order 3, “Weapons Control,” 

dated December 31, 2003. 

To reconcile the amount of cash collected under the INWCP, we reviewed the weapons 

cards registration fee records provided by the INWCP Director. We reviewed receipts on 

the bundles of cash and matched them to the INWCP records to the extent possible. 

To assist with the facilitation of the transfer of cash to the Central Bank of Iraq, the audit 

team re-bundled the cash by denomination and conducted a recount on June 2, 2006. On 

June 19, 2006, the Treasury Attaché, SIGIR Audit, and the Command Auditor/Internal 

Control Officer for the Multi-National Security Transition Command-Iraq transferred the 

funds to the Rasheed Bank Branch where the money was deposited, in Iraqi Dinar (ID) 

denomination, into the Ministry of Finance’s account at the Central Bank of Iraq. 

We conducted this audit in May and June 2006, in accordance with generally accepted 

government auditing standards. 

Use of Computer-Processed Data. We did not use computer-processed data to perform 

this audit. 
6

Appendix B. Report Distribution 

Department of State 

Secretary of State 

Senior Advisor to the Secretary and Coordinator for Iraq 

U.S. Ambassador to Iraq 

Director, Iraq Reconstruction Management Office 

Mission Director-Iraq, U.S. Agency for International Development 

Inspector General, Department of State 

Department of Defense 

Secretary of Defense 

Deputy Secretary of Defense 

Director, Defense Reconstruction Support Office 

Under Secretary of Defense (Comptroller)/Chief Financial Officer 

 Deputy Chief Financial Officer 

 Deputy Comptroller (Program/Budget) 

Inspector General, Department of Defense 

Director, Defense Contract Audit Agency 

Director, Defense Finance and Accounting Service 

Director, Defense Contract Management Agency 

Department of the Army 

Assistant Secretary of the Army for Acquisition, Logistics, and Technology 

Principal Deputy to the Assistant Secretary of the Army for Acquisition, 

Logistics, and Technology 

Deputy Assistant Secretary of the Army (Policy and Procurement) 

Director, Project and Contracting Office 

Commanding General, Joint Contracting Command-Iraq/Afghanistan 

Assistant Secretary of the Army for Financial Management and Comptroller 

Chief of Engineers and Commander, U.S. Army Corps of Engineers 

 Commanding General, Gulf Region Division 

Auditor General of the Army 

U.S. Central Command

Commanding General, Multi-National Force-Iraq 

Commanding General, Multi-National Security Transition Command-Iraq 

Commander, Joint Area Support Group-Central 

Other Federal Government Organizations 

Director, Office of Management and Budget 

Comptroller General of the United States 

Inspector General, Department of the Treasury 

Inspector General, Department of Commerce 

Inspector General, Department of Health and Human Services 

Inspector General, U.S. Agency for International Development 

President, Overseas Private Investment Corporation 

President, U.S. Institute for Peace 
7

Congressional Committees and Subcommittees, Chairman and 

Ranking Minority Member 

U.S. Senate 

Senate Committee on Appropriations 

Subcommittee on Defense 

Subcommittee on State, Foreign Operations and Related Programs 

Senate Committee on Armed Services 

Senate Committee on Foreign Relations 

Subcommittee on International Operations and Terrorism 

Subcommittee on Near Eastern and South Asian Affairs 

Senate Committee on Homeland Security and Governmental Affairs 

Subcommittee on Federal Financial Management, Government Information and 

International Security 

Subcommittee on Oversight of Government Management, the Federal 

Workforce, and the District of Columbia 

U.S. House of Representatives 

House Committee on Appropriations 

Subcommittee on Defense 

Subcommittee on Foreign Operations, Export Financing and Related Programs 

Subcommittee on Science, State, Justice and Commerce and Related Agencies 

House Committee on Armed Services 

House Committee on Government Reform 

Subcommittee on Management, Finance and Accountability 

Subcommittee on National Security, Emerging Threats and International 

Relations 

House Committee on International Relations 

Subcommittee on Middle East and Central Asia 
8

Appendix C. Audit Team Members 

This report was prepared and the audit was conducted under the direction of Joseph T. 

McDermott, Assistant Inspector General for Audit, Office of the Special Inspector 

General for Iraq Reconstruction. The staff members who contributed to the report 

include: 

Robert Gabriel 

W. Dan Haigler, Jr. 

Diane Recio 

Ronald Rembold 

Frank Slayton 

Clifton Spruill 

Jack VanMeter 
9

Appendix D. Transfer of Custody Document for 

INWCP Funds (English and Arabic) 

English Version 
10

Arabic Version