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SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

400 Army Navy Drive • Arlington, Virginia 22202

April 28, 2006 

MEMORANDUM FOR COMMANDING GENERAL, MULTI-NATIONAL 

 SECURITY TRANSITION COMMAND-IRAQ 

SUBJECT: Audit Report on Review of the Multi-National Security Transition 

Command-Iraq Reconciliation of the Iraqi Armed Forces Seized Assets 

Fund (SIGIR-06-010) 

We are providing this audit report for your information and use. We performed the audit 

in accordance with our statutory duties contained in Public Law 108-106, as amended, 

which requires that we provide for the independent and objective conduct of audits, as 

well as leadership and coordination of and recommendations on policies designed to 

promote economy, efficiency, and effectiveness in the administration of Iraq relief and 

reconstruction programs and operations and to prevent and detect waste, fraud, and 

abuse. 

We considered management comments from the Multi-National Security Transition 

Command-Iraq, on a draft of this report when preparing the final report. 

We appreciate the courtesies extended to the staff. For additional information on 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. For the report distribution, see Appendix E. 

 

Stuart W. Bowen, Jr. 

Inspector General 

cc: Distribution 
i 

Special Inspector General for Iraq Reconstruction 

SIGIR-06-010 April 28, 2006 

Review of the Multi-National Security Transition Command-Iraq 

 Reconciliation of the Iraqi Armed Forces Seized Assets Fund 

Executive Summary 

Introduction. In response to a U.S. Army Audit Agency recommendation, the MultiNational Security Transition Command-Iraq (MNSTC-I) requested that the Special 

Inspector General for Iraq Reconstruction (SIGIR) conduct an extended review of the 

MNSTC-I internal review and reconciliation of the Iraqi Armed Forces (IAF) Seized 

Assets Fund and associated financial disbursing documents to determine whether there 

were any issues warranting further investigation. SIGIR subsequently obtained custody 

of MNSTC-I’s internal review workpapers and IAF Seized Assets Fund financial 

disbursing documents. 

Objectives. The audit objectives were to determine whether (1) sufficient documentation 

existed to complete the MNSTC-I reconciliation of the IAF Seized Assets Fund, and (2) 

any acts by responsible internal and external certifying officials, pay agents, vendors and 

contractors could be identified that warranted further investigation. 

Results. Our review of the IAF Seized Assets Fund contract and financial documentation 

provided to SIGIR confirmed MNSTC-I’s internal review conclusion that the records 

were too incomplete and unreliable to be audited and that a valid reconciliation could not 

be achieved. Overall, there was little apparent oversight during the timeframe covered by 

the documents reviewed. As a result, we found official records that MNSTC-I did not 

provide the contracting office. As such, the Joint Contracting CommandIraq/Afghanistan (JCC-I/A) made contracting actions without the benefit of pertinent 

contract information contained in the records. We also reported separately on our review 

of the status of the documentation maintained by JCC-I/A.1

Indications of Potential Fraud. During this review, we also noted indications of 

potential fraud and referred those matters to the SIGIR Assistant Inspector General for 

Investigations for action. Related investigations are continuing. 

Management Actions. We noted during the course of our review that MNSTC-I had 

initiated training for its paying officers and developed standard operating procedures and 

other guidance that, if implemented and enforced, could address many of the problems 

discussed in this report. However, we did not address the effectiveness of these changes 

within the scope of this review. 

 

1 Iraqi Armed Forces Seized Assets Fund: Review of Contracts and Financial Documents, SIGIR-06-015, 

April 2006. 
ii 

Recommendation. We recommend the Commanding General, MNSTC-I, establish a 

plan and process and execute the handover of original and copied contract documents and 

files in so far as possible, in cooperation with the Commanding General, JCC-I/A, to 

meet the requirements for complete and accurate record keeping. 

Management Comments and Audit Response. MNSTC-I and JCC-I/A officials 

concurred with the finding and recommendation. Actions are underway to implement the 

recommendation. The comments received are fully responsive. 
Table of Contents 

Executive Summary i 

Introduction 

Background 1 

Objectives 2 

Finding 

Iraqi Armed Forces Seized Assets Fund Records 3

 

Appendices 

A. Scope and Methodology 6

B. MNSTC-I Reconciliation of Iraqi Armed Forces 

 Seized Assets Fund, July 31, 2003 – April 20, 2005 8

C. Iraqi Armed Forces Seized Assets Fund 

 Financial Disbursing Records 9 

D. Acronyms 17 

E. Report Distribution 18 

F. Audit Team Members 20 

Management Comments 

 Commanding General, Multi-National Security Transition Command-Iraq 21 

 
1 

Introduction 

Background 

A prior U.S. Army Audit Agency audit report, “Follow-up Audit of the Commanders’ 

Emergency Response Program and Quick Response Fund, Multi-National Security 

Transition Command-Iraq,” (A-2005-0332-ALE, dated September 30, 2005), recommended 

that the Multi-National Security Transition Command-Iraq (MNSTC-I) reconcile the 

Development Fund for Iraq (DFI), Commander’s Emergency Response Program fund, and 

Iraqi Armed Forces (IAF) Seized Assets Fund; and report any accounting discrepancies to 

the Special Inspector General for Iraq Reconstruction (SIGIR). In addition, the Army Audit 

Agency, with the permission of MNSTC-I, took possession of IAF Seized Assets Fund 

contracting, disbursing, and financial records from MNSTC-I Headquarters. These records 

were secured in the vault maintained by the Joint Area Support Group-Central (Comptroller), 

U.S. Embassy Baghdad. 

In accordance with the Army Audit Agency recommendation, MNSTC-I performed a 

reconciliation of the IAF Seized Assets Funds, including the records of the Program Review 

Board.2

 MNSTC-I concluded the available records were too incomplete and unreliable to be 

auditable and that a valid reconciliation could not be achieved. 

MNSTC-I identified 

• six (6) projects approved by the Program Review Board and funded for $6,434,199 

which had errors on the financial documents (funds were also inappropriately 

commingled between DFI, Seized, and Vested Assets funds); 

• unresolved documentation to support transactions estimated at $32,641,723 in US 

dollars and 1,320,493,541 in Iraqi Dinars (converted @ 1461 to $1 = $903,829 in US 

dollars); and 

• unreconciled funds showing a potential shortage of approximately $920,477. 

MNSTC-I also identified discrepancies associated with approved Program Review Board 

projects, including 

• erroneous Program Review Board numbers identified on disbursements documents; 

• payments not posted in Coalition Military Army Training Team /MNSTC-I expense 

reports; 

• missing signatures on DD Form 2665, Daily Agency Accountability Record; 

• payments without supporting documents and/or contract numbers; and 

• Program Review Board project numbers that could not be identified (i.e., not matched 

to a specific contract or funds type.) 

 

2 Coalition Provisional Authority Regulation Number 3, “Program Review Board,” June 18, 2003, was established as part of the Coalition 

Provisional Authority entity for recommending disbursements of the DFI, Seized and Vested funds assets to assist the Iraqi people and 

assist in the reconstruction of Iraq. 
2

In April 2005, the MNSTC-I Comptroller turned in the remaining cash balance of $4,371,383 

to the Defense Finance and Accounting Service and the 3153rd Finance Detachment in 

Baghdad, Iraq. The Defense Finance and Accounting Service and the 3153rd Finance 

Detachment established a plan to return funds to the Program Review Board for other uses. 

This allowed a cash turn in of the residual cash balance. 

Also, in accordance with the Army Audit Agency recommendation, MNSTC-I requested that 

SIGIR conduct a further review to determine whether there were issues in its report that 

required further investigation. SIGIR subsequently obtained custody of the audit workpapers 

used for MTSTC-I’s reconciliation and the IAF Seized Assets Fund financial disbursing 

documents. 

Objectives 

The overall audit objectives were to determine whether (1) sufficient documentation existed 

to complete the MNSTC-I reconciliation of the IAF Seized Assets Fund, and (2) acts by 

responsible internal and external certifying officials, pay agents, vendors and contractors 

could be identified that warranted further investigation. 

For a discussion of the audit scope, methodology, and a summary of prior coverage, see 

Appendix A. For definitions of the acronyms used in this report, see Appendix D. For a list 

of the audit team members, see Appendix F. 
3 

Iraqi Armed Forces Seized Assets Fund Records 

We began this review in January 2006 after obtaining MNSTC-I draft Audit Report on the 

Iraqi Armed Forces (IAF) Seized Assets Fund, (Project IA-2005-01, dated November 14, 

2005), and supporting workpapers; at which time we conducted an independent crossreference to the supporting documentation. We reviewed MNSTC-I’s internal audit report 

and workpapers on the reconciliation of the IAF Seized Assets Fund for the period of July 

31, 2003 – April 20, 2005. We also reviewed contract records, disbursement documents, and 

financial accountability documents that were related to the IAF Seized Assets Fund and 

covered the time period of July 2003 - April 2005. We identified numerous weaknesses in 

management and financial controls. 

Spreadsheets Rather Than Bank Statements. MNSTC-I did not maintain bank account 

number(s) or bank statements to validate deposits and withdrawals of the IAF Seized Assets 

Fund. All checkbooks and checkbook records were turned over in August 2004 to the Iraqi 

Ministry of Defense. The only documents available were spreadsheets showing transactions 

of deposits and withdrawals from July 2003 – June 2004, and the fund estimated value of 

$117,873,387. These spreadsheets were not reliable source documents but were the only 

documents available for the attempted fund reconciliation. 

Questionable Payments. Disbursed payment vouchers to contractors and vendors were not 

always supported by required documents, such as invoices, receipts, or receiving reports to 

identity the purpose of payments. Payments to contractors did not always reference a 

contract number on the payment vouchers. We also identified payments against DD-250 

receiving reports that did not have the required signatures to authorize payments.3

 Disbursing 

Officer’s signed DD-1081’s for advance payments issued to pay agents without support 

documents to indicate the purpose of the assigned funds or when remaining funds were 

returned.4 We also identified SF-44’s paid to vendors that exceeded the $2,500 - $5,000 

limit.5 Table 1 summarizes the potential overpayment, de-obligations, erroneous payments, 

and other problems we found during the course of our review. For additional details, see 

Appendix C. 6

 

3

 A DD Form 250 is a Material Inspection and Receiving Report. 4

 A DD Form 1081 is a Statement of Agent Officer’s Account. 5

 An SF-44 is a Purchase Order-Invoice-Voucher. SF-44s were initially limited to $2,500, but the limit was 

later increased to $5,000. 

6

 De-obligation is a redistribution of either unobligated balances of budget authority provided in a previous year 

or budget authority provided in the current year between appropriations or funds for the benefit of the gaining 

appropriation or fund. 
4

Table 1. Summary Findings 

 Contract Files and Financial Supporting Documentation 

(Years 2003 and 2004)

 2003 Contracts 2004 Contracts 

Contract Issues Number Amount Number Amount

Potential Overpayment Actions 10 $3,343,847 7 $3,910,236

Potential De-obligations 18 $96,876,208 19 $169,196,520

No Contract/Contract Number 21* $3,358,512 75** $12,919,802

Payments to Wrong Contractor 2 $584,192 5 $1,723,254

DD-250s without SF-1034 51 $30,226,132 27 $13,875,150

SF-44s payments over $2,500 6 $34,303 57 $751,695

 *19 contract numbers with no contract found, 2 transactions with no contract number. 

**28 contract numbers with no contract found, 47 transactions with no contract number. 

Missing Contracting Documents. We determined that numerous contracts, modifications, 

invoices, receipts and receiving reports needed to support or justify making payments were 

missing. Our comparisons of contract numbers against the JCC-I/A database identified 

inconsistencies such as missing contract numbers or annotations by JCC-I/A stating, for 

example, that no record of a contract award existed even though we found documentation 

showing payments. Our analysis to validate costs of some contracts, including modifications 

that increased or decreased the value of the contract, resulted in finding potential 

overpayments or funds that could be de-obligated and put to other uses. JCC-I/A appears to 

have followed its established procedures in attempting to validate the completion of contracts 

and contract payments with the individual contractors. For additional details, see 

Appendix C. 

Conclusion

Our review of the IAF Seized Assets Fund contract and financial documentation confirmed 

MNSTC-I’s internal review conclusion that the records were incomplete and too unreliable to 

be audited and that a valid reconciliation could not be achieved. Overall, there was little 

apparent oversight during the timeframe covered by this review. We identified numerous 

weaknesses in management and financial controls, including: (1) spreadsheets used in lieu of 

bank statements, which were not available to confirm deposits; (2) questionable payments 

made without supporting documentation; and (3) numerous shortcomings in financial record 

keeping and accountability in the IAF Seized Assets Fund financial records. We found, for 

example, that the JCC-I/A was not aware of the numerous contracting documents among the 

IAF Seized Assets Fund financial records. As such, the JCC-I/A made contracting actions 

without the benefit of pertinent contract information contained in the records. We also 

reported separately on our review of the status of the documentation maintained by JCC-I/A.7

 

 

7 Iraqi Armed Forces Seized Assets Fund: Review of Contracts and Financial Documents, SIGIR-06-015, April 

2006. 
5

Indications of Potential Fraud. During this review we noted indications of potential fraud 

and referred those matters to the SIGIR Assistant Inspector General for Investigations for 

action. Related investigations are continuing. 

Management Actions. We noted during the course of our review that MNSTC-I had 

initiated training for its paying officers and developed standard operating procedures and 

other guidance that, if implemented and enforced, could address many of the problems 

discussed in this report. However, we did not address the effectiveness of these changes 

within the scope of this report. 

Recommendation, Management Comments and Audit Response

We recommend the Commanding General, Multi-National Security Transition CommandIraq, establish a plan and process and execute the handover of original and copied contract 

documents and files in so far as possible, in cooperation with the Commanding General, Joint 

Contracting Command-Iraq/Afghanistan, to meet the requirements for complete and accurate 

record keeping. 

MNSTC-I and JCC-I/A officials concurred with the finding and recommendation. Actions 

are underway to implement the recommendation. The comments received are fully 

responsive. 
6

Appendix A. Scope and Methodology 

We began this review in January 2006 (SIGIR Project No. 6001) after obtaining MNSTC-I 

draft Audit Report on the Iraqi Armed Forces (IAF) Seized Assets Fund, (Project IA-2005-

01, dated November 14, 2005), and supporting workpapers, at which time we conducted an 

independent cross-reference to the supporting documentation. We reviewed MNSTC-I’s 

internal audit report and workpapers on the reconciliation of the IAF Seized Assets Fund for 

the period of July 31, 2003 – April 20, 2005. We developed multiple automated spreadsheets 

to evaluate MNSTC-I’s reconciliation results for this period, enabling easier checking and 

cross-referencing of the numbers. We also reviewed contract records, disbursement 

documents, and financial accountability documents that were related to the IAF Seized 

Assets Fund and covered the time period of July 2003 - April 2005. See Appendix B for the 

MNSTC-I reconciliation. 

To determine the extent to which the IAF Seized Assets Fund deposits and withdrawals could 

be verified, we examined all available files. We also requested official bank slips to 

determine initial deposits made by the Ministry of Finance. MNSTC-I provided some check 

stubs from Rafidain Bank which proved essentially useless due to lack of account numbers; 

however, we scanned the bank stubs for possible comparison to account and check numbers 

we identified during our review. MNSTC- I provided two spreadsheets (1) New Iraqi Army 

Account Status – US Funds, and (2) New Iraqi Army Bank Account Status – Iraqi Funds, 

prepared by a former Coalition Military Assistance Training Team/MNSTC-I Budget 

Analyst that listed deposits and withdrawal of funds. We determined the spreadsheets were 

not reliable documents without actual bank statements to support the numbers, but were the 

only documents MNSTC-I had to attempt a reconciliation of the IAF Seized Assets Fund. 

To determine the extent IAF Seized Assets Fund final contract values and payments could be 

reconciled; we obtained financial reports and contract records from the (1) Joint Contracting 

Command-Iraq/Afghanistan contracting database, and (2) the Iraq Reconstruction 

Management System database. This data was compared to MNSTC-I financial 

documentation and analyzed to validate and determine contractors, contract numbers, 

contract awards, modifications, and payments. Our analysis discovered inconsistencies, such 

as documentation on hand not posted or identified in the databases and databases not having 

similar information to adequately determine final value of contracts and payments. 

To determine the extent IAF Seized Assets Fund contract payments were valid based on 

appropriate and complete documentation, we evaluated DA 3953,8

 contracts, contractors’ 

records, contract numbers and Contracting Officer Representatives’ records. We reviewed 

check and cash payments in US dollars and Iraqi Dinars issued by SF-1034’s9 and SF-44’s,10

validated signatures of approving, certifying, and disbursing officials. We analyzed record 

files of daily transactions for years 2003 and 2004, which included DD-1081’s, DD-250’s, 

invoices, receipts and memorandums and email validating receipt of purchases, deliveries 

and payments. As a result of our analysis we identified deficiencies so significant we are 

unable to determine whether payments were properly executed. In addition, disbursing 

documents indicated payments were made from both the IAF Seized Assets Fund and the 

DFI. 

 

 

8

 Department of the Army 3953, Purchase Request and Commitment 

9

 Standard Form 1034 Public Voucher For Purchases and Services Other Than Personal 

10 Standard Form 44 Purchase Order Invoice Voucher 
7

To determine the extent IAF Seized Assets Fund expenditures for various contracts were 

approved at the appropriate level of decision making, we obtained minutes of the Coalition 

Provisional Authority Program Review Board meetings to determine project programs 

approved by the board for the period of June 2003 to June 2004 funded with the IAF Seized 

Assets Fund. During our review of contracts and payment vouchers we were unable to 

determine contracts related to particular projects approved by the Program Review Board 

because documentation did not identify Program Review Board project numbers. 

For perspectives on early problems documented with contracting in Iraq, we analyzed prior 

audits which identified similar problems, to include SIGIR Audit Report Number 04-009, 

“Management Controls over the Development Fund for Iraq”, dated July 28, 2004; and Audit 

Report Number 05-006, “Control of Cash Provided to South-Central Iraq” dated April 30, 

2005. 

We compared the process used for managing financial documentation to statutory, Coalition 

Provisional Authority, Defense Finance and Accounting Service, and Department of Defense 

Financial Management Regulation guidance to determine compliance and ascertain if seized 

funds were properly executed. We held discussions with MNSTC-I internal auditors and 

SIGIR investigators to obtain knowledge and documentation relative to the seized funds. 

We conducted this review from January 2006 through March 2006, in accordance with 

generally accepted government auditing standards. 

Use of Computer-Processed Data. We used computer-processed data from the JCCI/A contracting database, and the Iraq Reconstruction Management System to perform 

this audit. We did not assess the general or application controls of any database or 

system. 

Prior Coverage. We reviewed the following reports: 

Special Inspector General for Iraq Reconstruction. Reports can be accessed on its website 

http://www.sigir.mil. 

• “Control of Cash Provided to South-Central Iraq,” (SIGIR 05-006, April 30, 2005) 

• “Coalition Provisional Authority Comptroller Cash Management Controls Over the 

Development Fund for Iraq,” (SIGIR 04-009, July 28, 2004) 

U.S. Army Audit Agency. 

• “Followup Audit of the Commanders’ Emergency Response Program and Quick 

Response Fund, Multi-National Security Transition Command-Iraq”, (A-2005-0332-

ALE, September 30, 2005) 
8

Appendix B. MNSTC-I Reconciliation of Iraqi Armed 

Forces Seized Assets Fund, July 31, 2003 – April 20, 2005
9

Appendix C. Iraqi Armed Forces Seized Assets Fund 

Financial Disbursing Records

Our analysis of the secured financial documents revealed several potential issues addressed 

below: 

Summary Findings of 2003 and 2004 Contract Files and 

Financial Supporting Documentation 

2003 Contracts 2004 Contracts 

Contract Issues Number Amount Number Amount

Potential Overpayments 10 $3,343,847 7 $3,910,236

Potential De-obligation Actions 18 $96,876,208 19 $169,196,520

No Contract/Contract Number 21* $3,358,512 75** $12,919,802

Payments to Wrong Contractor 2 $584,192 5 $1,723,254

DD-250s(2) without SF-1034(6) 51 $30,226,132 27 $13,875,150

SF-44s(7) payments over $2,500 6 $34,303 57 $751,695

 *19 contract numbers with no contract found, 2 transactions with no contract number. 

**28 contract numbers with no contract found, 47 transactions with no contract number. 

Potential Overpayments 

Our analysis disclosed that potential overpayments may have resulted for several reasons to 

include 

• personnel lacking knowledge of the existence of contract and financial 

documentation; 

• payments made with unstated or incorrect contract numbers; and 

• reliance on contractor affirmation where adequate information was not available. 

As a result, we found potential overpayments for years 2003 and 2004. We identified 10 

contracts from 2003 with potential over payments, estimated at $3,343,847 and 7 contracts 

from 2004 with potential over payments estimated at $3,910,236. A summary of these 

overpayments is in Exhibit 1. Additionally, we have included excerpts from the JCC-I/A 

database captured during our review. 
10

Exhibit 1. Potential Over Payments 

2003 2004

Contract Number Amount Contract Number Amount

DABV01-03-A-0005 $10,295 APFCRP40420001 $81,000

DABV01-03-C-0034 $173,246 DABV01-04-D-0001 $710,251

DABV01-03-D-0002 $806,333 DABV01-04-A-0013 $645,046

DABV01-03-M-0003 $290,230 DABV01-04-C-3075 $2,403,399

DABV01-03-M-0004 $28,392 DABV01-04-M-0016 $8,500

DABV01-03-M-0006 $83,453 W914NS-04-C-9005 $42,000

DABV01-03-M-0007 $66,500 W914NS-04-M-9040 $20,040

DABV01-03-M-0034 $1,880,728 Total $3,910,236

DABV01-03-M-0043 $3,670 

DABV01-03-M-0072 $1,000 

Total $3,343,847 

Year 2003 Contracts by number:

(1) DABV01-03-A-0005: SF-1449 and multiple SF-30s indicated contract awards totaling 

$361,140; while SF-1034s/DD-250s showed payments of $371,435 resulting in potential 

overpayments of $10,295. The JCC-I/A database indicated funding totals of $360,000 

but no records of any payments made or electronic copies of any contract files were in the 

database. 

(2) DABV01-03-C-0034: SF-1449 and two SF-30s showed a contract award of $8,789,274; 

while SF-1034s showed supporting payments of $8,962,520. The difference of $173,246 

is a possible overpayment. Funding included the $173,246 amount and showed one 

single payment of $8,940,921. The JCC-I/A indicated the contract was paid in full and 

closed. 

(3) DABV01-03-D-0002: SF-1449 validated a contract award of $213,500. SF1034/Coalition Provisional Authority Form-1034/DD-250s support payments of 

$1,019,833, with a potential overpayment of $806,333. The JCC-I/A database contains a 

statement from the contractor that he has been paid in full for this contract. Our review 

indicates that the contractor did not bill for the entire shipping costs amount on the 

contract; thus leaving a remaining balance of $2,200.00 in excess funds. 

(4) DABV01-03-M-0003: SF-1449 and multiple SF-30s totaled $271,200 in contract 

awards. Payments totaling $561,430 were supported by SF-1034s and DD-250s with a 

potential overpayment of $290,230. The JCC-I/A database indicated no record of 

services provided, invoices, receiving documents, nor payment vouchers/receipts. There 

is a potential excess of DFI payments of $551,038. 
11 

(5) DABV01-03-M-0004: SF-1449 and multiple SF-30s show total awards of $130,508. 

SF-1034s and DD-250s indicate payments to the contractor of $158,900, with a potential 

overpayment of $28,392. The JCC-I/A database noted no record of services provided, 

invoices, receiving documents, nor payment vouchers/receipts. There is a potential excess 

of DFI payments of $183,428.

(6) DABV01-03-M-0006: Contract awards totaling $917,690 are supported by SF-1449 and 

multiple modifications on SF-30s. Payments of $1,001,143, supported by SF-1034s and 

DD-250s, indicate a potential overpayment of $83,453. JCC-I/A database revealed the 

contractor was paid a partial award amount based on deliveries made services 

performed. The contract is closed in accordance with JCC-I/A’s close-out policy with 

DFI excess payments of $935,262. Based on the Program Review Board information, the 

DFI excess has been changed to $867,762. 

(7) DABV01-03-M-0007: SF-1449, multiple SF-30s, and DA-3953 supported contract 

awards of $192,350. SF-1034s and DD-250s verified payments of $258,850 with a 

potential overpayment of $66,500. JCC-I/A records show that the contractor was paid 

$60,350 and attempts to contact the contractor were unsuccessful. The contract is closed 

in accordance with JCC-I/A’s close-out policy with DFI excess payments of $135,850. 

Based on the Program Review Board information, the DFI excess has been changed to 

$101,350. 

(8) DABV01-03-M-0034: Our analysis of MNSTC-I records shows a contract award for 

$4,302,337 supported by SF- 1449 and multiple SF-30s, and payments of $6,183,065 

based on SF-1034s and DD-250s. This indicates a potential overpayment of $1,880,728. 

A note in the JCC-I/A database stated that the contractor was overpaid but returned the 

overpayment. However, we could not reconcile the numbers in JCC-I/A’s database. 

(9) DABV01-03-M-0043: SF-1449 and two SF-30s verified the contract award at $125,630 

while SF-1034s and DD-250s supported payments of $129,300, with a potential 

overpayment of $3,670. The JCC-I/A database noted the contractor was paid the full 

amount according to the contractor’s email. 

(10) DABV01-03-M-0072: The contract award of $39,475 is supported by a SF-1449 and a 

SF-30. The payments of $40,475 are supported by SF-1034s and DD-250s. The 

difference and potential overpayment totaled $1,000. There are records of invoices and 

payment vouchers/receipts for $23,249. There is a potential excess of DFI payments of 

$16,226. 

Year 2004 Contracts by number:

(1) APFCRP40420001: We validated a DA-3953 funding $500,000 and a payment on SF44 for $500,000. In addition another payment was identified on an SF-1034 for $81,000 

in cash; thus indicating a potential overpayment of $81,000. No record was identified in 

the JCC-I/A database. 

(2) DABV01-04-D-0001: Multiple SF-1449’s and SF-30’s funded the contract about 

$1,642,084 and multiple payments of SF-1034’s and DD-250’s totaled $2,352,335, 

resulting in possible overpayments of $710,251. The JCC-I/A database noted problems 

of missing invoices, vouchers and DD-250’s. JCC-I/A coordinated with the Defense 

Finance Accounting Service, Millington TN and determined the contract was closed. 

Also, payment files on hand did not match JCC-I/A payment records. The contract was 
12

funded by DFI. This contract is posted in JCC-I/A with incorrect contract number). (See 

Payments to Wrong Contractor #1 and DD-250’s paid without SF-1034’s.) 

(3) DABV01-04-A-0013: SF-1449 for $316,000 with a payment on SF-1034 for $17,500 

and a disbursing memo indicating a wire transfer of $179,887, leaving a balance of 

$118,613. However, according to the JCC-I/A database, JCC-I/A informed the contractor 

of overpayments in the amount of $463,940. The contractor agreed and was to wire back 

the overpayment, but the overpayment was never received. Based on the Program 

Review Board Operational Security Control, the contractor was overpaid by $645,046. 

A formal letter was issued stating that the contract would be closed if no response was 

received within one week. 

(4) DABV01-04-C3075: The incomplete contract has an estimated value of $2,355,008 with 

multiple payments totaling about $4,758,407, resulting in possible overpayment of 

$2,403,399. Per the JCC-I/A database, the contractor confirmed the contract was paid 

in full. The JCC-I/A database showed award of $4,214,731 and payments of 

$3,061,339. 

(5) DABV01-04-M-0016: No contract was on file or in the JCC-I/A database. SF-1034/DD250 paid $3,000 on 10 Apr 04. Another payment with SF-1034 and no DD-250 paid 

$3,000 on May 2, 2004. A cash payment SF-1034 and no DD-250 paid $2,500 on July 6, 

2004 resulting in a possible overpayment of $8,500. JCC-I/A indicated no contract or 

documentation could be found. JCC-I/A made attempts to contact the contractor but was 

unsuccessful. The contract was closed in accordance with a memo from JCC-I/A PARC 

dated March 8, 2005 regarding close out of old contracts. The contract closed with DFI 

excess of $16,400, no record of a contract. 

(6) W914NS-04-C-9005: This file does not have an original contract. An SF-30 for 

$265,000 and two DD-250’s with record of payments of $307,000 resulting in a possible 

overpayment of $42,000. Per the JCC-I/A database, the contract was awarded for 

$983,982 with a modification of $265,000 and payments of $1,220,200. 

(7) W914NS-04-M-9040: SF-1449 show a contract value of $64,000. DD-250’s with 

invoices totaled $84,040, resulting in a potential overpayment of about $20,040. Per the 

JCC-I/A database, payments equaled the contract amount and will be closed out by ACO. 
13

Potential De-obligation Actions 

We identified 37 contracts with potential for de-obligation in the JCC-I/A Contracting 

database, including 18 contracts with potential de-obligations for 2003, estimated at 

$96,876,208 and 19 contracts for 2004, with potential de-obligations estimated at 

$169,196,520. Exhibit 2 identifies the potential de-obligation actions. 

Exhibit 2. Potential De-Obligation Actions 

2003 2004

Contract Number Amount Contract Number Amount

DABV01-03-C-0002 $66,886,587 DABV01-04-A-0013 $118,613

DABV01-03-C-0018 $1,312,935 DABV01-04-C-0005 $956,488

DABV01-03-C-0021 $18,890,092 DABV01-04-C-3023 $34,800

DABV01-03-C-0033 $1,206,892 DABV01-04-C-3069 $3,177

DABV01-03-M-0005 $1,186,700 DABV01-04-M-0020 $1,142,880

DABV01-03-M-0009 $4,900 DABV01-04-M-0022 $19,110

DABV01-03-M-0011 $57,795 DABV01-04-M-0049 $495,600

DABV01-03-M-0015 $277,560 DABV01-04-M-0106 $260,480

DABV01-03-M-0021 $2,300 DABV01-04-M-J003 $27,705

DABV01-03-M-0022 $24,320 DABV01-04-M-J007 $8,688

DABV01-03-M-0027 $178,339 DABV01-04-M-J011 $3,500

DABV01-03-M-0029 $1,441,759 DABV01-04-M-J010 $107,100

DABV01-03-M-0032 $1,191 FY5866-04-C-0002 $6,157,850

DABV01-03-M-0036 $4,473,369 FY5866-04-C-0003 $6,459,300

DABV01-03-M-0093 $900,000 W56HZV-04-D-0181 $117,434,509

DABV01-03-M-0094 $1,325 W914NS-04-C-9001 $21,237,903

DABV01-03-M-0100 $23,594 W914NS-04-D-0107 $1,293,887

DABV01-03-M-5048 $6,550 W914NS-04-D-0116 $13,025,430

Total $96,876,208 W914NS-04-M-9193 $409,500

 Total $169,196,520

Below are examples for year 2003 and year 2004: 

(1) DABV01-03-M-0029: The JCC-I/A database indicated the contract award was 

$2,472,031 with no documented payments. We located documentation (SF-1034s and 

DD-250) to support $1,030,272 in payments to the contractor, leaving a balance of 

$1,441,759 for potential de-obligation. 

(2) W914NS-04-D-0116: The JCC-I/A database indicated the contract award was 

$14,014,139 with no payments documented. We located documentation (DD-250) to 

support $988,709 in payments to the contractor, leaving a balance of $13,025,430 for 

potential de-obligation. 
14

(3) W56HZV-04-D-0181: The JCC-I/A database showed no contract or payments for this 

contract number. Our records indicated a contract award of $120,125,151 and possible 

payments totaling $2,690,642, leaving about $117,434,509 for potential de-obligation. 

(4) DABV01-03-C-0002: The JCC-I/A database showed the contract award was for 

$101,386,373 with payments totaling $34,499,786, leaving a potential de-obligation of 

$66,886,587. 

Missing Contracts/Contract Numbers 

We identified 96 contracts with potential issues with missing contract and/or contract 

numbers. These include 21 contracts with payments totaling about $3,358,512 for 2003, and 

75 contracts with payments totaling $12,919,802 for 2004. One contractor received multiple 

payments estimated about $93,474 with no contract or contract number to support the 

expenditures. For example: 

(1) DABV01-03-C-0102: Cash payment on SF-1034 dated January 24, 2004, paid a 

corporation $810,248. The contract is not listed in JCC-I/A and PCO contracting 

databases. 

(2) Missing Contract Number: Payment in cash was made to a corporation on SF-1034 

dated December 24, 2003, for $182,810. 

(3) DABV01-04-M-0007: This contract number could not be identified to a specific 

contract. We located an SF-1034 with Iraqi receipts totaling 79,095,000 Iraqi Dinars 

(converted @1500 to $1 = $52,730). According to the JCC-I/A database there is no 

record of services provided, invoices, receiving documents, or payment voucher receipts. 

This contract was likely not awarded or cancelled after the award. Attempts to contact 

the contractor were unsuccessful. There is a potential excess of DFI payments of 

$24,000. 
15

Payments to Wrong Contractors 

We identified 7 payments that went to the wrong contractors. These disbursement and 

payment actions totaled $548,192 and $1,735,254 for years 2003 and 2004, respectively. 

The payments to wrong contractors are shown in exhibit 3. 

Exhibit 3. Payments to Wrong Contractor 

2003 2004

Contract Number Amount Contract Number Amount

DABV01-03-D-0001 $514,894 DABV01-04-C-0002 $1,665,863

DABV01-03-M-0094 $69,298 DABV01-04-M-0021 $2,750

Total $584,192 DABV01-04-M-0129 $28,074

 DABV01-04-M-3005 $12,700

 DABV01-04-M-3006 $13,867

 Total $1,723,254

Below are examples for year 2003 and year 2004: 

 

(1) DABV01-03-D-0001 and DABV01-03-M-0094: We identified four payments totaling 

$584,192 under these two contract numbers improperly paid to other contractors. 

(2) DABV01-04-C-0002: A payment of $1,665,863 was paid to one corporation. We 

obtained copies of the contract and all related documents from the PCO/JCC-I/A 

database and verified the contractor under this contractor number was a different 

company. In addition, we identified five (5) improper contract payments totaling 

$57,391 possibly paid to wrong contractors. 

DD-250 - Receiving Reports without SF-1034 - Public Vouchers 

We identified 51 payments made against DD-250’s, Material Inspection and Receiving 

Reports, valued at approximately $30,226,132 for 2003, and 27 payments valued at 

approximately $13,875,150 for 2004. Payments were made without supporting SF-1034’s 

vouchers, required receipts, and the signatures required to validate the receipt of services or 

products. For example: 

(1) DABV01-03-M-0005: Of the eight payments paid against DD-250’s totaling $706,000, 

one that authorized a payment of $32,140 had no signature on the corresponding DD-250. 

(2) DABV01-04-D-0001: Multiple DD-250’s totaling potential payments for $1,760,698. 

without supporting SF-1034’s. Payment files on hand did not match JCC-I/A payments. 

The contract was funded by DFI. Also, this contract is posted in the JCC-I/A database 

with an incorrect contractor. (See Potential Overpayments and Payments to Wrong 

Contractor #1). 
16

Standard Form 44 - Purchase Order Invoice Vouchers Exceeded 

Limits 

During our review we identified numerous SF-44 payments that exceeded the limit of 

$2,500 - $5,000.11 Payments were made in cash to vendors with either US dollars or Iraqi 

Dinars. SF-44’s had documented contract numbers that we were unable to locate in either 

the JCC-I/A or PCO databases. We were unable to determine the origin of the contract 

numbers. Some examples of SF-44’s paid in cash that exceeded the threshold limit follow 

below: 

(1) DABV01-03-P-4023: SF-44 dated October 14, 2003 cash payment for $8,298. 

(2) DABV01-03-P-4027: SF-44 dated November 19, 2003 cash payment for $7,950. 

(3) Order Number: 926(B)-0801: SF-44 dated February 25, 2004, from 336th Finance 

Command paid $500,000 cash to Tel’Afar Castle in Mosul. The attached DA-3953 

indicates that the payment is from the 926th Engineer Group to the 9th Finance Command 

for Tel’Afar Castle in Mosul and for the New Iraqi Army. Further, the funds are labeled 

as Commander’s Emergency Response Program funds, indicating a possible 

commingling of funds. 

(4) DABV01-04-M-3006: SF-44 dated January 4, 2004 Paid cash of 20,800,000 Iraqi 

Dinars (converted @1500 to $1 = $13,867). 

We also found during our review of the financial documents 9 additional projects referenced 

in Program Review Board meeting minutes as approved for the expenditure of seized funds. 

The records were not complete and we were not able to match the Program Review Board 

project numbers to specific contracts and financial disbursing documents. However, 6 of the 

9 Program Review Board projects totaled $2,838,522. No amounts were available for the 

other 3 projects. 

 

 

11 SF-44s were initially limited to $2,500, but the limit was later increased to $5,000. 
17

Appendix D. Acronyms 

DFI Development Fund for Iraq 

IAF Iraqi Armed Forces 

JCC-I/A Joint Contracting Command-Iraq/Afghanistan 

MNSTC-I Multi-National Security Transition Command-Iraq 

PCO Project and Contracting Office 

SIGIR Special Inspector General for Iraq Reconstruction 

USAAA U.S. Army Audit Agency 
18

Appendix E. 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 
19

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 
20 

Appendix F. Audit Team Members 

This report was prepared and the review 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: 

Clifton Spruill 

Diane N. Recio 

Nancy Soderlund 
21

Management Comments 

Commanding General, Multi-National Security Transition 

Command-Iraq 
22