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SIGIR 

Special Inspector General for IRAQ Reconstruction 

Special Inspector General for Iraq Reconstruction 

For more information, contact SIGIR Public Affairs at 

(703) 428-1100 or PublicAffairs@sigir.mil

Summary of Report: SIGIR 10-011 

Why SIGIR Is Issuing this Report 

Public Law 108-106 requires the Special 

Inspector General for Iraq Reconstruction 

(SIGIR) to prepare a final forensic audit report 

on all funding appropriated for the 

reconstruction of Iraq, which to date totals over 

$50 billion. This interim report presents the 

results of our ongoing forensic auditing 

program, including an update on our review of 

agency expenditures, and an update on our 

efforts to identify questionable financial 

activity. The report also presents information 

on our data mining methodology and discusses 

the metrics SIGIR is using to measure progress. 

We are reporting our results quarterly, and a 

final cumulative report will eventually address 

all available reconstruction funds. 

In our first report, we summarized the results of 

a series of audits of major reconstruction 

contracts that were intended, in part, to identify 

internal control weaknesses. Because such 

weaknesses provide opportunities for fraud, 

waste, and abuse, we have used the results from 

these audits to develop targeted forensic 

auditing approaches to identify instances of 

possible wrongdoing. 

SIGIR continues its forensic review of 

Department of Defense (DoD), Department of 

State (DoS), and U.S. Agency for International 

Development (USAID) expenditures. These 

reviews systematically examine Iraq 

reconstruction program expenditures to identify 

anomalies in transactional data that may indicate 

fraud, waste, or abuse. SIGIR’s approach 

combines automated data mining with standard 

audit and investigative techniques to detect 

questionable transactions and develop relevant 

evidence for use in administrative actions or 

civil or criminal fraud prosecutions. 

SIGIR has also initiated a review of Iraq 

reconstruction program areas known to have 

weaknesses in internal controls. This effort 

focuses on programs that afford easy access to 

cash with weak controls over expenditures. 

Management Comments 

Because this report is for information only, it 

does not contain findings or recommendations 

and agencies were not required to comment. 

We did not receive comments from the 

agencies. 

January 28, 2010 

IRAQ RECONSTRUCTION FUNDS: FORENSIC AUDITS IDENTIFYING 

FRAUD, WASTE, ABUSE – INTERIM REPORT # 2

SIGIR’s Results to Date 

Since our last report, SIGIR has reviewed an additional 51,000 transactions 

valued at $17.3 billion, bringing the total transactions reviewed to 73,000 

transactions valued at $28 billion. We continue to identify numerous 

anomalous transactions, including payments that may be duplicates, payments 

to possibly fictitious or generic vendors, notable variances in payment activity, 

payments occurring prior to or on the date of invoice, and oddly sequential 

contractor invoices. We also identified payments to firms with what appear to 

be fictitious addresses, and payments to possibly suspended or debarred 

contractors. 

To date, we have identified almost $340 million in anomalous transactions 

involving approximately 800 vendors that we are in the process of researching 

to determine if they are fraudulent or improper. To do this, we are examining 

the transactions and reviewing relevant contract file documentation. Due to 

the number of transactions that must be examined, we are prioritizing our work 

using risk factors such as transaction type and amount and whether there is a 

prior history of questionable activity. A SIGIR forensic audit team is currently 

focusing on possible duplicate payments associated with DoD expenditures. 

In addition, a SIGIR initiative that focuses on programs that afford easy access 

to cash associated with weak controls over expenditures continues to identify 

instances of questionable activity. As a result of this effort, to date SIGIR has 

opened 27 criminal investigations currently involving a total of 36 subjects. 

Detailed information regarding ongoing criminal investigations will not be 

presented in these reports. 

The results of SIGIR’s forensic audit efforts will generally be reported in the 

aggregate and specific findings will be included where appropriate and useful. 

We are also providing lessons learned that can be applied to other contingency 

operations, such as in Afghanistan. 
SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION

400 Army Navy Drive • Arlington, Virginia 22202 

January 28, 2010 

MEMORANDUM FOR U.S. SECRETARY OF STATE 

U.S. SECRETARY OF DEFENSE 

COMMANDING GENERAL, U.S. ARMY CORPS OF ENGINEERS 

DIRECTOR, DEFENSE FINANCE AND ACCOUNTING SERVICE 

ADMINISTRATOR, U.S. AGENCY FOR INTERNATIONAL 

DEVELOPMENT 

SUBJECT: Iraq Reconstruction Funds: Forensic Audits Identifying Fraud, Waste, and Abuse 

– Interim Report #2 (SIGIR 10-011) 

We are providing this report for your information and use. The report does not contain any 

recommendations for agency action. The report discusses the results to date of the Special 

Inspector General for Iraq Reconstruction’s (SIGIR) forensic audits of the Department of 

Defense and U.S. Agency for International Development expenditures involving Iraq relief and 

reconstruction. This effort was greatly facilitated by the excellent cooperation of the Defense 

Finance and Accounting Service, the U.S. Army Corps of Engineers, and the U.S. Agency for 

International Development. 

We performed this review in accordance with our statutory responsibilities contained in Public 

Law 108-106, as amended, which also incorporates the duties and responsibilities of inspectors 

general under the Inspector General Act of 1978. This law provides for independent and 

objective audits of programs and operations funded with amounts appropriated or otherwise 

made available for the reconstruction of Iraq, and for recommendations on related policies 

designed to promote economy, efficiency, and effectiveness and to prevent and detect waste, 

fraud, and abuse. These audits are being conducted as SIGIR Projects 9005, 9012, and 9013. 

We appreciate the courtesies extended to our staff. For additional information on the report, 

please contact David Warren, Assistant Inspector General for Audits, (703) 604-0982/ 

david.warren@sigir.mil or Glenn Furbish, Principal Deputy Assistant Inspector General for 

Audits, (703) 604-1388/ glenn.furbish@sigir.mil. 

Stuart W. Bowen, Jr. 

Inspector General 

cc: U.S. Ambassador to Iraq 

Commander, U.S. Central Command 

Commanding General, U.S. Forces-Iraq 
Table of Contents 

Introduction 1

Forensic Audits Identify Fraud, Waste, and Abuse through Systematic Examinations 

of Data 1

Reporting Objectives 2

Forensic Audits of Agency Expenditures Identify Anomalous and Possibly 

Fraudulent Transactions 4

Automated Data mining to Identify Transactions That Require Additional 

Analysis 6

Detailed Examinations of Contract Files to Validate Fraud 8

Review of Possible Duplicate Payments 9

USACE Has Developed and Is Using a New Data mining Tool 10

SIGIR Effort Identifies Questionable Activity 11

Forensic Audit Metrics 12

Management Comments and Audit Response 13

Appendix A—Scope and Methodology 14

Appendix B—Acronyms 17

Appendix C—Forensic Audit Team Members 18

Appendix D—SIGIR Mission and Contact Information 19
1 

Iraq Reconstruction Funds: Forensic Audits Identifying 

Fraud, Waste, and Abuse – Interim Report #2 

SIGIR 10-011 January 28, 2010

Introduction 

Public Law 108-106, as amended, requires that the Special Inspector General for Iraq 

Reconstruction (SIGIR) prepare a final forensic audit report on all funding appropriated for the 

reconstruction of Iraq, which to date totals about $50 billion. To keep Congress apprised, this 

report, the second in a planned series of interim reports, describes the methodology and updates 

the results of our forensic audit efforts to date. Our first interim report discussed our review of 

Department of Defense (DoD) expenditures. This report includes the results of our analysis of 

expenditure data from the U.S. Agency for International Development (USAID). The 

information is being reported cumulatively, and a final report will encompass total reconstruction 

funds.1 Table 1 shows total appropriations by program. 

Table 1—Total Appropriations by Fund as of October 2009 ($ in billions) 

Iraq Relief and Reconstruction Program Appropriations

Iraq Relief and Reconstruction Fund (IRRF 1) $2.48

Iraq Relief and Reconstruction Fund (IRRF 2) 18.39

Iraq Security Forces Fund (ISFF) 18.04

Economic Support Fund (ESF) 4.18

Commander’s Emergency Response Program (CERP) 3.65

Other Reconstruction Assistance Programs 3.26

TOTAL $50.00

Note: 

The table excludes various federal agency operating and oversight expenses totaling $2.21 billion, which are outside the scope of the forensic 

audits. 

Source: SIGIR Quarterly Report to the Congress, October 30, 2009.

Forensic Audits Identify Fraud, Waste, and Abuse through 

Systematic Examinations of Data 

A forensic audit involves the systematic examination of a program’s internal controls over 

expenditures and financial data to identify anomalies in individual transactions that may indicate 

fraud, waste, or abuse. SIGIR’s approach combines automated data mining with standard audit 

and investigative techniques to identify questionable transactions for further examination and, if 

 

1

 Detailed information relating to ongoing criminal investigations will not be presented in these reports. However, 

summaries of the results will be reported, such as the number of opened investigations, arrests, indictments, and 

convictions. 
2 

necessary, to develop relevant evidence for use in administrative actions or civil or criminal 

fraud prosecutions. Figure 1 illustrates SIGIR’s forensic audit initiative. 

Matters most appropriately addressed by administrative resolution, such as cost disallowance and 

recovery, will be referred through audit reports to agency contracting officials for action. 

Potential instances of civil or criminal fraud will be referred to SIGIR’s Investigations 

Directorate for further examination. 

Figure 1—SIGIR’s Forensic Audit Initiative 

Source: SIGIR

Reporting Objectives 

SIGIR’s objectives for this report were to present the results to date of our forensic auditing 

efforts to include updating the results of our review of agency expenditures; and updating our 

efforts to identify questionable activity. The report also presents information on our data mining 

methodology and discusses the metrics SIGIR plans to use to measure progress. As discussed, 

SIGIR is required to prepare a final forensic audit report on all funding appropriated for the 

reconstruction of Iraq. To keep Congress apprised, SIGIR plans to issue updated cumulative 

reports until all DoD, Department of State (DoS), and USAID Iraq reconstruction expenditures 

are reviewed. At that time, we will provide the final congressionally-mandated forensic audit 

report on all funding for the reconstruction of Iraq. 
3 

For a discussion of our audit scope and methodology, see Appendix A. For acronyms used, see 

Appendix B. For forensic audit team members, see Appendix C. For the SIGIR mission and 

contact information, see Appendix D. 

 
4 

Forensic Audits of Agency Expenditures Identify 

Anomalous and Possibly Fraudulent Transactions 

Since our last report, SIGIR has reviewed an additional 51,000 transactions valued at $17.3 

billion; bringing the total number reviewed to 73,000 transactions valued at $28 billion. The 

transactions include DoD expenditures from the U.S. Army Corps of Engineers (USACE) and a 

portion from USAID. We are in the process of obtaining State Department expenditures and 

anticipate that this information will be included in our next interim report. 

This report presents the cumulative results to date of our forensic audit of DoD expenditures 

from the Iraq Security Forces Fund (ISFF) and Iraq Relief and Reconstruction Fund (IRRF), and 

USAID IRRF expenditures. Our review covered fiscal years 2003-2008.2

 

Of the $50 billion appropriated to date, approximately $35.2 billion has been expended, and the 

73,000 transactions valued at $28 billion represent about 80% of the expenditures for fiscal years 

2003 through 2008. Figure 2 shows the expenditures by appropriation through fiscal year 2008. 

Figure 2—Total Iraq Reconstruction Expenditures through Fiscal Year 2008 

($ billions) 

Source: SIGIR Quarterly Report to the Congress, October 30, 2009. 

Figure 3 identifies, by appropriation, the status of SIGIR’s work in collecting and testing 

transaction data for fiscal years 2003 through 2008 for each of the agencies and their respective 

financial systems. As shown, we have collected about $32 billion, or 91%, of the total 

transactions through fiscal year 2008 and, as previously noted, we have analyzed $28 billion of 

those transactions. 

 

2

 ISFF was established in 2005; therefore, there were no expenditures in fiscal years 2003 or 2004. 

ISFF

$11.0

IRRF

$19.5

CERP

$2.7

ESF

$1.9

Others

$0.1

Dollars Expended 

as of 9/30/08

Total: $35.2

($ Billions)
5 

Figure 3—Status of Anomaly Testing as of December 2009 ($ billions) 

Notes: 

1

 Total expended amounts and collected amounts are in billions. The percentage listed is the total dollar amount analyzed out of the total 

expended 2

 Estimated amount 

3

 Computerized Accounts Payable System (CAPS) 

4

 Deployable Disbursing System (DDS) 

5

 To Be Determined (TBD) 

Source: SIGIR 

 
6 

Automated Data mining to Identify Transactions That 

Require Additional Analysis 

SIGIR’s forensic audit of 73,000 transactions to date has identified transactions that require 

additional analysis. This includes payments that may be duplicates, payments to possibly 

fictitious or generic vendors such as “vendor” and “cash,” notable variances in payment activity, 

payments that occurred before or on the date of the invoice, and sequentially-numbered 

contractor invoices. 

SIGIR primarily conducts performance audits that assess the economy, efficiency, and 

effectiveness of reconstruction programs, often with a focus on the adequacy of internal controls 

and the potential for fraud, waste, and abuse. These include the series of audits of major 

reconstruction contracts that identified common internal control weaknesses. Certain controls, 

such as the segregation of duties, are key to minimizing the risk of fraud, waste, and abuse. We 

relied on SIGIR’s extensive body of work related to inadequate controls in Iraq reconstruction 

programs to develop transaction anomalies likely to be observed as a result of the failure or 

circumvention of these controls. We have incorporated 10 of these anomaly tests into our 

automated data mining effort. Table 2 lists the anomaly tests and their intended results. 
7 

Table 2—Anomaly Tests and Intended Results 

Anomaly Test Intent of Test 

Duplicate payments Identify instances where it appears a contractor may have been paid 

two or more times for the same invoice, work performed, and/or 

product delivered 

Questionable vendors Identify vendor names that are generic (e.g., cash, vendor) and vendor 

names that do not appear to align with the program goals 

Notable variances in 

payment activity 

Identify payments outside of the “norm” for a vendor 

Invoice analysis Identify payments occurring prior to or on the date of invoice and 

sequentially-numbered contractor invoices 

Payments to 

debarred/suspended 

contractors 

Identify payments to debarred/suspended contractors identified in the 

Excluded Parties List System 

Segregation of duties Identify breakdowns in segregation of duties whereby the same 

government contracting official originates the request for payment, 

approves the request, and is the payee 

Fictitious addresses/high risk 

locations 

Identify payments to possibly fictitious addresses and/or high risk 

locations or known high-risk banking centers such as Cyprus and 

Beirut 

Payee validation Identify payments to debarred/suspended contractors who are also an 

Approver or Originator. 

Fictitious contractors Identify payments to contractors with no associated D-U-N-S1/CAGE2

number 

Application of Benford’s Law3 Identify nonrandom transaction amounts to identify instances a 

contractor submitted false invoices using false invoice totals 

Notes:

1

 The Data Universal Numbering System or D-U-N-S® Number is Dunn and Bradstreet's (D&B) copyrighted, proprietary means 

of identifying business entities on a location-specific basis. Assigned and maintained solely by D&B, this unique nine-digit 

identification number has been assigned to over 100 million businesses worldwide. The D-U-N-S® Number is widely used by 

both commercial and federal entities and was adopted as the standard business identifier for federal electronic commerce in 

October 1994. The D-U-N-S Number® was also incorporated into the Federal Acquisition Regulation in April 1998 as the 

Federal Government's contractor identification code for all procurement-related activities. 2

 A CAGE (Commercial and Government Entity) Code is a five-character code that identifies companies doing or wishing to do 

business with the Federal Government. 3

 Benford's law states that the leading digit in lists of numbers from many real-life sources of data is distributed in a non-uniform 

way. Accordingly, the first digit is 1 almost one third of the time, and subsequent digits occur as the first digit in descending 

frequency, where 9 is the leading digit less than one time in twenty.

Source: SIGIR analysis 

 
8 

Detailed Examinations of Contract Files to Validate Fraud 

When a transaction anomaly is identified, SIGIR examines the details to determine whether it is 

fraudulent or improper. To accomplish this, teams of SIGIR personnel perform additional 

electronic testing; conduct detailed examinations of relevant contract documentation such as 

solicitation actions, award selection materials, invoices, and payment files; interview contracting 

officials as well as vendor management and other staff; and coordinate with other audit and law 

enforcement agencies. These validation efforts are designed to support determinations about the 

legitimacy of a transaction and to determine whether improper expenditures are attributable to 

administrative error or fraud. Transactions are prioritized for review by their risk of fraud and 

dollar value with high risk/high dollar transactions receiving priority. To date, SIGIR’s 

transaction anomaly examinations have provided critical information to four investigations and 

four audits. As discussed in detail in the following section, SIGIR is currently focusing on 

approximately $340 million in DoD expenditures that may be duplicate payments. An analysis 

of each transaction is needed to determine whether, in fact, the transactions are improper. 

 
9 

Review of Possible Duplicate Payments 

SIGIR’s forensic audit of Iraq reconstruction financial transactions has, to date, identified 

approximately $340 million in possible duplicate payments. These transactions involve about 

800 vendors associated with IRRF and ISFF-funded programs. While these anomalies were 

revealed during the course of our testing procedures, we expect that many of the transactions will 

prove to be proper. For example, multiple purchases of an item may have legitimately occurred 

on the same date. An examination of key documentation, such as invoices, receiving documents, 

and payment documentation will support conclusions on the validity of these transactions. 

Table 3 identifies the number of vendors, transactions, and total dollars identified as possible 

improper payments. 

Table 3—Status of Anomaly Testing as of December 2009 

Fund 

Number of 

Vendors 

Number of 

Questionable 

Transactions 

Dollar Value of 

Questionable 

Transactions 

ISFF 198 1,802 $149,204,518 

IRRF 647 5,196 $189,968,893 

Total 767a 6,998 $339,173,411 

Note:

a Difference in sum due to vendors having both ISFF and IRRF transactions. 

Source: SIGIR Data mining Results 

Due to the number of transactions that must be examined, we are prioritizing our work using risk 

factors such as transaction type and amount and whether there is a prior history of questionable 

activity. The purpose of these audits will be to review transactions identified as possible 

duplicate payments or overpayments (e.g., situations where a contractor may have been paid two 

or more times for the same invoice, work performed, and/or product delivered) in an effort to 

validate payment activity. If it is determined that a payment was made in error, SIGIR will: (1) 

seek reimbursement to the U.S. Treasury, (2) determine how the error occurred, and (3) make 

recommendations to strengthen internal controls and financial management practices to reduce 

the risk of similar errors in the future. If a payment appears to be the result of fraudulent or other 

improper activity, pertinent information will be provided to our Investigations Directorate for 

review and appropriate action. At this time SIGIR is conducting a review of five vendors 

associated with possible duplicate payments totaling approximately $74 million, or about 22%, 

of the approximately $340 million identified by our analysis. 

Congress has enacted several provisions of law aimed at improving the integrity of the 

government payment process and the efficiency of its programs and activities, including the 

Improper Payments Information Act of 2002 (Pub. L. No. 107-300), and Section 831 of the 

Defense Authorization Act for Fiscal Year 2002, also known as the Recovery Auditing Act (Pub. 

L. No. 107-107, codified at 31 U.S.C. §§ 3561-3567). SIGIR will use this information as a guide 
10 

during our improper payment audit work, as well as Office of Management and Budget Circular 

A-123, Appendix C, which implements them. 

USACE Has Developed and Is Using a New Data mining Tool 

Soon after SIGIR announced our data mining efforts, the USACE Finance Center implemented a 

new data mining tool for use by its Disbursing and Accounts Payable Division. According to the 

USACE official whose division developed the tool, it is designed to identify possible erroneous 

or improper payments for further research. Since USACE began using the data mining tool in 

May 2009, it has researched and cleared thousands of transactions with no funds needing to be 

recouped. This USACE official said the agency is testing transactions from May 2009 forward. 

SIGIR will coordinate with USACE in order to avoid a duplication of effort as we begin 

collecting and analyzing fiscal year 2009 transaction data. 

USACE is to be commended for initiating this effort as it will help ensure that the Army is 

compliant with the Improper Payments Information Act and the Recovery Auditing Act. The 

Improper Payments Information Act requires federal agencies to review and report improper 

payment information. The Act requires that all executive branch agencies on an annual basis: (1) 

identify programs and activities that are susceptible to significant improper payments, (2) 

estimate the amounts improperly paid under those programs and activities, and (3) report on the 

amounts improperly paid and their actions to reduce improper payments. In addition, executive 

branch agencies are required to report on their efforts to recover overpayments made to 

contractors under the Recovery Auditing Act. This Act requires that all executive branch 

agencies entering into contracts that exceed $500 million during a fiscal year have cost-effective 

programs for identifying errors in paying contractors and for recovering amounts erroneously 

paid. It is noted that, since fiscal year 2004, executive branch agencies have been required by the 

Office of Management and Budget to report on the Improper Payments Information Act and 

recovery auditing efforts in their Performance and Accountability Report. 

 
11 

SIGIR Effort Identifies Questionable Activity 

Considering the climate of vulnerability in Iraq and concerns raised by SIGIR regarding a lack of 

accountability over programs such as the Commander’s Emergency Response Program (CERP), 

SIGIR initiated a review of Iraq relief and reconstruction program areas known to have 

questionable internal controls. This effort, identified as the SIGIR Audit/Investigative Initiative, 

focuses on programs that afford easy access to cash with weak controls over expenditures. 

Pertinent information is reviewed by a team of investigators, analysts, and auditors to determine 

whether further action is warranted. 

At this time the SIGIR Forensics Team is managing several of these projects and has identified a 

number of instances of questionable activity. One of the projects involves the handling of funds 

associated with the Development Fund for Iraq. At one time the Coalition Provisional Authority 

managed the Development Fund for Iraq, and SIGIR has reported that the Coalition Provisional 

Authority provided less than adequate control over its funds. The SIGIR Forensics Team has 

obtained information related to this issue and is analyzing it in an effort to identify questionable 

activity. 
12 

Forensic Audit Metrics 

SIGIR is measuring the results of the forensic audit effort in a number of ways. Some of the 

metrics will include: 

• Criminal investigations opened 

• Number of arrests 

• Number of indictments 

• Number of convictions 

• Funds recovered 

• Questioned costs3

 referred to contracting officers for audit 

Table 4 identifies progress to date. As shown in the table, SIGIR is just beginning this initiative 

and has not yet achieved results for all metrics. Future reports will include updates on these 

metrics: 

Table 4—SIGIR Forensic Audit Accomplishments as of December 2009 

Metric 

Results – Interim 

Report No. 1 

Results – Interim 

Report No. 2 

Total Results 

to Date 

Criminal investigations opened 6 investigations 21 investigations 27 investigations 

Note: 

To date, the 27 investigations opened as a result of SIGIR’s forensic audit effort encompass 36 individual suspects. 

Source: SIGIR 

 

 

3 Questioned Cost: As defined by the Inspector General Act (Pub. L. No. 95-452, as amended), is a cost questioned 

by SIGIR because of (1) an alleged violation of a provision of law, regulation, contract, grant, cooperative 

agreement, or other agreement or document governing the expenditure of funds; (2) a finding that, at the time of the 

audit, such cost is not supported by adequate documentation; or (3) a finding that an expenditure of funds for the 

intended purpose is unnecessary or unreasonable. 
13 

Management Comments and Audit Response 

Because this report is for information only, it does not contain findings or recommendations and 

agencies were not required to comment. We did not receive comments from agencies. 

 
14 

Appendix A—Scope and Methodology 

In December 2008, the Special Inspector General for Iraq Reconstruction (SIGIR) initiated its 

forensic effort as Projects 9005, 9012, and 9013 to examine Iraq relief and reconstruction 

expenditures by Department of Defense (DoD), Department of State (DoS), and the U.S. Agency 

for International Development (USAID). SIGIR’s objectives for this report were to present the 

results to date of our forensic auditing efforts to include updating the results of our review of 

agency expenditures; and updating our efforts to identify questionable activity. The report also 

presents information on our data mining methodology and discusses the metrics SIGIR plans to 

use to measure progress. 

This quarterly report presents newly acquired expenditure data from the USAID for Iraq relief 

and reconstruction for fiscal years 2003-2008. The results of the reports will generally be 

discussed in the aggregate, with specific findings included where appropriate and useful. 

Cumulative questioned costs will be reported as defined and required by the Inspector General 

Act of 1978, as amended. This audit was performed under the authority of Public Law 108-106, 

as amended, which also incorporates the duties and responsibilities of inspectors general under 

the Inspector General Act of 1978. The audit work for this report covers the period December 

2008 through December 2009 and was conducted in Arlington, Virginia. 

To obtain the expenditure data from the DoD, we interviewed officials from the Army Budget 

Office, the Defense Finance and Accounting Service, and the U.S. Army Corps of Engineers and 

obtained pertinent appropriation and transactional data, as well as supporting documentation, to 

include data dictionaries, look-up tables, contract details, and vendor data. To obtain 

expenditure data from USAID, we interviewed officials from the Middle East Bureau and Chief 

Financial Officer’s office and obtained pertinent appropriation and transactional data, as well as 

supporting documentation, to include data dictionaries, look-up tables, and vendor data. 

To develop our list of anomalies, we used information from discussions with SIGIR auditors and 

investigators; key agency stakeholders and systems owners; live financial system 

demonstrations; SIGIR and other agency audit reports; and industry established tests for 

fraudulent activities. 

We conducted this review in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and conclusions based on our audit 

objectives. However, this is an information report, which has no findings or conclusions. 

Use of Computer-processed Data 

To achieve the assignment’s objectives, we relied extensively on computer-processed data from 

the Defense Finance and Accounting Service, the U.S. Army Corps of Engineers accounting 

systems, and the USAID Phoenix system. We performed reconciliations of disbursement data 

received from the various accounting systems to determine that it was complete and reliable. 

The reconciliation process included a comparison of the detailed disbursement totals to other 

sources of information, including summary-level data. This reconciliation process yielded a 
15 

variance of tolerable amounts. Therefore, we found the data to be adequate and sufficiently 

reliable to be used in meeting our forensic audit objectives. 

We will also be relying extensively on computer-processed data from DoS and, as shown in 

Figure 3, we are in the process of verifying and validating that data before it is used. 

Internal Controls 

As discussed in the body of the report, SIGIR has conducted audits of major reconstruction 

contracts that were intended in part to identify internal control weaknesses. We reported on 

those weaknesses in each report, which also contained relevant conclusions and 

recommendations. Because such weaknesses provide opportunities for fraud, waste, and abuse, 

we used the results of those audits to develop targeted forensic auditing approaches to identify 

instances of wrongdoing. However, this is an information report and, as such, we draw no 

conclusions and make no recommendations. 

Prior Coverage 

We reviewed the following reports for this audit: 

SIGIR 

Developing a Depot Maintenance Capability at Taji Hampered by Numerous Problems, SIGIR 

09-027, 7/30/2009. 

Tikrit Location Command Project Achieving Contract Goals by Using Sound Management 

Practices, SIGIR 09-024, 7/30/2009. 

Commander’s Emergency Response Program: Muhalla 312 Electrical Distribution Project 

Largely Successful, SIGIR 09-025, 7/26/2009. 

Commander’s Emergency Response Program: Hotel Construction Completed, But Project 

Management Issues Remain, SIGIR 09-026, 7/26/2009.

Joint Audit of Blackwater Contract and Task Orders for Worldwide Personal Protective Services 

in Iraq, AUD/IQO-09-16 and SIGIR 09-021, June 2009. 

Security Forces Logistics Contract Experienced Certain Cost, Outcome, and Oversight Problems 

SIGIR 09-014, 4/26/2009. 

Need To Enhance Oversight of Theater-Wide Internal Security Services Contracts, SIGIR 09-

017, 4/24/2009. 

Oversight of Aegis’s Performance on Security Services Contracts in Iraq with the Department of 

Defense, SIGIR 09-010, 1/14/2009. 

Cost, Outcome, and Oversight of Iraq Oil Reconstruction Contract with Kellogg 

Brown & Root Services, Inc., SIGIR 09-008, 1/13/2009.
16 

Review of Cost, Outcome, and Oversight of Local Governance Program Contracts with Research 

Triangle Institute, SIGIR 09-003, 10/21/2008. 

Outcome, Cost, and Oversight of the Security and Justice Contract with Parsons Delaware, Inc., 

SIGIR 08-019, 7/28/2008. 

Review of Outcome, Cost, and Oversight of Water Sector Reconstruction Contract with 

FluorAMEC, LLC, SIGIR 08-018, 7/15/2008. 

Review of Outcome, Cost, and Oversight of Electricity-Sector Reconstruction Contract with 

Perini Corporation, SIGIR 08-011, 4/29/2008. 

Report on Review of Outcome, Cost, and Oversight of Iraq Reconstruction Contract W914NS04-D-0006, SIGIR 08-010, 1/28/2008. 

Outcome, Cost, and Oversight of Reconstruction of Taji Military Base and Baghdad Recruiting 

Center, SIGIR 08-004, 1/15/2008. 

Interim Review of DynCorp International, LLC, Spending Under Its Contract for the Iraqi Police 

Training Program, SIGIR 07-016, 10/23/2007. 

Review of Bechtel’s Spending under Its Phase II Iraq Reconstruction Contract, SIGIR 07-009, 

7/25/2007. 

Iraq Reconstruction: Lessons in Program and Project Management, March 2007.

Coalition Provisional Authority Comptroller Cash Management Controls Over the Development 

Fund for Iraq, SIGIR 04-009, 7/28/2004. 

Department of Defense, Office of the Inspector General 

Internal Controls Over Payments Made in Iraq, Kuwait and Egypt – (Report No. D-2008-098), 

May 22, 2008. 

Government Accountability Office 

Excluded Parties List System: Suspended and Debarred Businesses and Individuals Improperly 

Receive Federal Funds, GAO-09-174, 2/25/2009. 

Improper Payments: Significant Improvements Needed in DoD’s Efforts to Address Improper 

Payment and Recovery Auditing Requirements, GAO-09-442, 7/29/2009. 

Defense Contracting Integrity: Opportunities Exist to Improve DOD’s Oversight of Contractor 

Ethics Programs, GAO-09-591, 9/22/2009. 
17 

Appendix B—Acronyms 

Acronym Description 

CERP Commander’s Emergency Response Program 

DoD Department of Defense 

DoS Department of State 

ESF Economic Support Fund 

IRRF Iraq Relief and Reconstruction Fund 

ISFF Iraq Security Forces Fund 

SIGIR Special Inspector General for Iraq Reconstruction 

USACE U.S. Army Corps of Engineers 

USAID U. S. Agency for International Development 
18 

Appendix C—Forensic Audit Team Members 

This report was prepared and the forensic audit conducted under the direction of David R. 

Warren, Assistant Inspector General for Audit, Office of the Special Inspector General for Iraq 

Reconstruction. 

The SIGIR staff members who are participating in this forensic audit and contributed to the 

report include: 

Richard C. Newbold 

Adam T. Hatton 

William F. Bedwell 

Thomas J. Bonnar 

Robin L. Rowan 

David Childress 

George S. Salvatierra 

Robert A. Whiteley 

Benjamin H. Comfort 

Donald V. McNamara 

Mark D. Lehner 

 
19 

Appendix D—SIGIR Mission and Contact Information 

SIGIR’s Mission Regarding the U.S. reconstruction plans, programs, and 

operations in Iraq, the Special Inspector General for Iraq 

Reconstruction provides independent and objective: 

• oversight and review through comprehensive audits, 

inspections, and investigations 

• advice and recommendations on policies to promote 

economy, efficiency, and effectiveness 

• deterrence of malfeasance through the prevention and 

detection of fraud, waste, and abuse 

• information and analysis to the Secretary of State, the 

Secretary of Defense, the Congress, and the American 

people through Quarterly Reports 

Obtaining Copies of SIGIR 

Reports and Testimonies 

To obtain copies of SIGIR documents at no cost, go to 

SIGIR’s Web site (www.sigir.mil). 

To Report Fraud, Waste, and 

Abuse in Iraq Relief and 

Reconstruction Programs 

Help prevent fraud, waste, and abuse by reporting 

suspicious or illegal activities to the SIGIR Hotline: 

• Web: www.sigir.mil/submit_fraud.html 

• Phone: 703-602-4063 

• Toll Free: 866-301-2003 

Congressional Affairs Hillel Weinberg 

Assistant Inspector General for Congressional 

 Affairs 

Mail: Office of the Special Inspector General 

 for Iraq Reconstruction 

 400 Army Navy Drive 

 Arlington, VA 22202-4704 

Phone: 703-428-1059 

Email: hillel.weinberg@sigir.mil 

Public Affairs Danny Kopp 

Office of Public Affairs 

Mail: Office of the Special Inspector General 

 for Iraq Reconstruction 

 400 Army Navy Drive 

 Arlington, VA 22202-4704 

Phone: 703-428-1217 

Fax: 703-428-0818 

Email: PublicAffairs@sigir.mil