OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR AFGHANISTAN RECONSTRUCTION

Afghanistan’s Control and Audit Office Requires 

Operational and Budgetary Independence, Enhanced 

Authority, and Focused International Assistance to 

Effectively Prevent and Detect Corruption

April 9, 2010

SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page i

OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR AFGHANISTAN RECONSTRUCTION

April 9, 2010

The Honorable Hillary R. Clinton 

U.S. Secretary of State 

The Honorable Karl W. Eikenberry

U.S. Ambassador to Afghanistan 

Dr. Rajiv Shah

Administrator U.S. Agency for International Development 

William M. Frej 

USAID Mission Director to Afghanistan 

This report discusses the results of the Office of the Special Inspector General for Afghanistan 

Reconstruction’s review of U.S. and other donor efforts to strengthen the capability of Afghanistan’s 

Control and Audit Office (CAO) to deter and prevent corruption. It includes two recommendations to 

strengthen the CAO’s capability and capacity. This report is part of a series of audits of U.S. efforts to 

combat corruption and strengthen the rule of law in Afghanistan.

A summary of this report is on page ii. This performance audit was conducted by the Office of the 

Special Inspector General for Afghanistan Reconstruction under the authority of Public Law No. 110-181

and the Inspector General Act of 1978, as amended. When preparing the final report, we considered 

joint comments from the U.S. Embassy Kabul and the USAID Mission to Afghanistan. We also 

considered comments from the CAO. All comments indicated concurrence with the findings and 

recommendations contained in this report. Copies of the comments are included in appendices II and III 

of this report. Finally, we considered technical comments from the World Bank, the U.S. Government 

Accountability Office, and the USAID Office of Inspector General. 

John Brummet

Assistant Inspector General for Audits

Office of the Special Inspector General 

 for Afghanistan Reconstruction
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page ii

 Special inspector General for Afghanistan Reconstruction

i

.

`

 

What SIGAR Reviewed 

The strengthening of institutions that oversee and implement anti-corruption measures in Afghanistan is a key operational 

principle of the U.S. Government’s draft Anti-Corruption Strategy for Afghanistan. The United Nations Convention against 

Corruption requires Afghanistan to establish accounting and auditing standards, as well as related oversight. As 

Afghanistan’s Supreme Audit Institution, the Control and Audit Office (CAO) is responsible for auditing the financial 

matters of the government. It has audit authority over state entities within central and provincial governments as well as

public enterprises, and carries out audits of funds provided to the Afghan government by external donors. This report 

assesses: (1) the CAO’s current capability and performance in fulfilling its mandate, (2) the assistance provided by the 

international community to strengthen the internal capacity of the CAO, and (3) the assistance provided by the U. S. 

Government to strengthen the CAO’s internal capacity. This report is part of a series of audits SIGAR is conducting to 

address U.S. efforts to combat corruption and strengthen the rule of law in Afghanistan. SIGAR conducted this 

performance audit in Kabul, Afghanistan, and in Washington, D.C., from December 2009 to April 2010 in accordance with 

generally accepted government auditing standards.

 SIGAR Special Inspector General for Afghanistan Reconstruction

What SIGAR Found 

The CAO’s current legislative framework is weak, does not provide the CAO with sufficient independence or authority to 

serve effectively as Afghanistan’s Supreme Audit Institution, and results in conflicting responsibilities, particularly with 

regard to Afghanistan’s Ministry of Finance. The CAO’s current legislative framework does not provide the CAO with

budgetary or operational independence from the executive branch, and this lack of independence interferes with the CAO’s 

planning, reviewing, and reporting processes. In addition, the CAO’s enabling legislation does not provide the CAO with the 

authority to require audited entities to report on actions taken in response to CAO recommendations, or demand access to 

necessary documents, officials, and premises. Further, current legislation does not require the CAO to report to the 

National Assembly or to publicly release its audit reports. In late 2009, an international working group submitted revisions 

to a draft audit law to the Ministry of Justice (MoJ) that addressed many of these limitations. However, the MoJ’s February 

2010 version of the draft new law did not include many of the group’s substantive revisions.

Despite significant assistance from the international community—almost exclusively from the World Bank—the CAO 

continues to suffer from severe internal capacity constraints, including a lack of qualified auditors. In addition, while the 

CAO has formally adopted the standards of the International Organization of Supreme Audit Institutions, the CAO relies on 

international advisors and contracted auditors to ensure that some of its audits comply with those standards. Moreover, 

although the U.S. Agency for International Development has provided the CAO with a limited amount of assistance, that

assistance has been aimed at allowing a few, select CAO management and staff personnel to attend conferences. 

SIGAR Audit-10-8 April 2010

Afghanistan’s Control and Audit Office Requires Operational 

and Budgetary Independence, Enhanced Authority, and 

Focused International Assistance to Effectively Prevent and 

Detect Corruption

What SIGAR Recommends 

To strengthen the CAO’s capability and capacity, SIGAR recommends that the U.S. Ambassador to Afghanistan: (1) urge the 

Afghan government to enact legislation providing the CAO with sufficient independence and authority to fulfill its 

responsibilities in accordance with internationally recognized audit standards, and (2) develop and implement a capacity 

development plan for the CAO, in cooperation with the CAO and international stakeholders, as part of the U.S. 

Government’s Anti-Corruption Strategy for Afghanistan. In consideration of issues such as CAO’s independence and 

authority, such a plan should include the identification of funding sources and donor responsibilities for capacity 

development and training; use of existing training possibilities within the U.S. government; and the appointment of expert 

audit mentors and advisors.

In response to a draft of this audit report, the U.S. Embassy Kabul and the USAID Mission to Afghanistan concurred with 

SIGAR’s findings and recommendations, and outlined planned actions to address each of the recommendations.

For more information contact: SIGAR Public affairs at (703) 602-8742 or PublicAffairs@sigar.mil
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page iii

TABLE OF CONTENTS

Background 2

CAO’S Current Legislative Framework Does Not Provide CAO with Sufficient

Independence or Authority, and Results in Conflicting Responsibilities 5

Despite International Assistance, the CAO Has Severe Internal Capacity Constraints 10

U.S. Support to the CAO Has Been Limited 15

Conclusions 17

Recommendations 18

Comments 19

Appendix I: Scope and Methodology 20

Appendix II: Comments from the U.S. Embassy Kabul and USAID Mission to Afghanistan 21

Appendix III: Comments from Afghanistan’s Control and Audit Office 23

Appendix IV: CAO’s Budget Structure 25

FIGURES AND TABLES

Figure 1: Control and Audit Office Organization Chart 3

Figure 2: Afghanistan’s National Budget Structure 4

Table 1: International Assistance to the CAO, 2004 to 2010 14

Table 2: USAID Direct Assistance to the CAO, 2007 to 2010 15

ABBREVIATIONS 

ANDS Afghanistan National Development Strategy

ARTF Afghanistan Reconstruction Trust Fund 

CAO Control and Audit Office

CLRWG Criminal Law Reform Working Group

GAO United States Government Accountability Office

GIRoA Government of the Islamic Republic of Afghanistan

IARCSC Independent Administrative Reforms and Civil Service Commission 

INTOSAI International Organization of Supreme Audit Institutions

MoF Ministry of Finance 

MoJ Ministry of Justice

SAI Supreme Audit Institution

SIGAR Special Inspector General for Afghanistan Reconstruction

UNODC United Nations Office on Drugs and Crime

USAID United States Agency for International Development
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 1

Afghanistan’s Control and Audit Office Requires Operational and Budgetary 

Independence, Enhanced Authority, and Focused International Assistance to 

Effectively Prevent and Detect Corruption

Corruption in Afghanistan is widely considered to be a systemic, entrenched, and pervasive problem 

that threatens public finances, legal order, social and economic prosperity, and national security. For 

example, in Transparency International’s 2009 Corruption Perception Index, Afghanistan was ranked 

179th out of 180 countries, making it—by that standard—the second most corrupt country in the world.1

In addition, a recent survey of 12 Afghan provinces by the United Nations Office on Drugs and Crime 

(UNODC) found that the average Afghan is more concerned about corruption (59 percent) than 

insecurity (54 percent) or unemployment (52 percent).2

 Thirty years of conflict have weakened state 

institutions, while the sheer size of international security and development assistance has increased 

Afghanistan’s vulnerability to corruption. This presents a risk that could negate the efforts of the 

international community and the Government of the Islamic Republic of Afghanistan (GIRoA) to 

establish a sound institutional basis for good governance in Afghanistan. 

Strengthening the capacity of GIRoA to develop and implement expressed commitments to combat 

corruption is an operational principle of the U.S. Government’s draft Anti-Corruption Strategy for 

Afghanistan, and GIRoA has several ministerial level departments and offices with a direct, prescribed 

role in combating corruption. The Control and Audit Office (CAO), a central agency that reports directly 

to the President, should serve an important role in preventing and detecting corruption. As 

Afghanistan’s Supreme Audit Institution (SAI), the CAO is uniquely positioned to fight corruption across 

GIRoA due to its purview over the whole of GIRoA operations and funds; SAIs play a vital role in holding 

governments to account for the stewardship of public funds and in helping to ensure the transparency 

of government operations. 

This report is part of a series of audits by the Office of the Special Inspector General for Afghanistan 

Reconstruction (SIGAR) to address U.S. efforts to combat corruption and strengthen the rule of law in 

Afghanistan. It (1) examines the capabilities and performance of the CAO, (2) assesses the assistance 

provided by the international community to strengthen the internal capacity of the CAO, and (3) 

assesses the assistance provided by the U. S. Government to strengthen the CAO’s internal capacity. To 

accomplish these objectives, we reviewed relevant U.S., Afghan, and international laws, conventions, 

standards, and development strategies. We also interviewed CAO leadership, advisors, and department 

 1 The Corruption Perceptions Index is based on 13 independent surveys given to countries throughout the world, 

and indicates the perceived level of public-sector corruption in a country/territory. However, not all surveys 

include all countries. The index’s stated confidence range indicates the reliability of the scores, and that—allowing 

for a margin of error—we can be 90 percent confident that the true score for Afghanistan lies within this range. 

According to the index, the most corrupt country in the world is Somalia.

2 UNODC, Corruption in Afghanistan: Bribery as Reported by the Victims, January 2010. 
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 2

heads, as well as representatives of U.S. agencies and international organizations. We conducted our 

work in Kabul, Afghanistan, and Washington, D.C., from December 2009 to April 2010 in accordance 

with generally accepted government auditing standards. A discussion of our scope and methodology is 

included in appendix I.

BACKGROUND

The 1981 Control and Audit Law directs for the CAO to organize the audit and control affairs of public 

properties. Today, the CAO has audit authority over state entities within the central and provincial 

governments as well as public enterprises, and has a core budget of approximately $1.35 million. 3 Key 

objectives of the CAO are:

• to protect public funds and take action against errors, irregularities, and misuse of public 

property; 

• to prevent illegal expenditures; 

• to review the systems of control over government receipts and payments; 

• to identify fraud and ensure that accused individuals are brought to justice; 

• to identify shortfalls in the government budget; and

• to guarantee the accuracy of aid and grants provided by donor countries. Appendix IV provides 

information on the basic structure of the CAO’s budget.

As of March 2010, the CAO has a total staff of 313 employees. The CAO is authorized 315 positions; 258 

are considered to be professional staff, 54 are classified as administrative or general support staff, and 

three are military personnel. Figure 1 depicts the organizational structure of the CAO. 

 3 CAO’s core budget refers to that part of the CAO’s budget that is derived exclusively from domestic resources.
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 3

Source: SIGAR analysis of CAO information.
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 4

External auditing is the primary responsibility of the CAO. Currently, the CAO focuses on assessing the 

financial reporting of GIRoA ministries and compliance with laws and regulations.4 The CAO certifies the 

financial statements of the government and is responsible for carrying out the audit of GIRoA’s national 

budget, including the Afghanistan Reconstruction Trust Fund (ARTF).

5

Figure 2: Afghanistan’s National Budget Structure

 The CAO has auditing authority 

over virtually all GIRoA monies, although the standard to which it is required to conduct audits varies. 

For example, the CAO is required to audit GIRoA’s core development budget—which is 100 percent

donor-funded—in accordance with international standards, whereas audits of GIRoA’s core operating 

budget may be conducted in accordance with less demanding, historically accepted Afghan standards.

Figure 2 depicts the basic structure of GIRoA’s total budget.

Source: U.S. Department of Treasury.

In addition, the CAO provides a degree of scrutiny to the internal audit function of GIRoA ministries. For 

example, 42 of GIRoA’s line ministries and agencies currently have internal audit departments, 40 of 

 4 Due to capacity constraints, the CAO is not able to conduct performance audits. Performance auditing—also 

known as value for money auditing—is considered to be a critical activity in identifying corruption in government 

spending.

5 The ARTF is a coordinated financing mechanism administered by the World Bank. It was set up in May 2002 to 

help meet Afghanistan’s priority expenditures such as physical reconstruction projects and salaries for civil 

servants.

15%

10%

75%

Domestic 

revenues, 9%

External 

finance, 91%

Core operating

Core development

External

Data covers 2002 - 2009. 

Total size of the national budget was $35 billion, over this period.
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 5

which are registered with, and ultimately responsible to, the CAO.6

Since 2002, GIRoA and the CAO have made progress in establishing a functioning public accountability 

system. The external audit function of the CAO has emerged as an important link in the overall public 

accountability framework, particularly with its reports on donor funds and its annual audit of the 

government’s financial statement (the Qatia). CAO’s work is having some direct, positive effects on 

GIRoA operations. For example, as a result of the audits conducted during Solar Year 1388, the Director 

of the Public Enterprise Audit Department stated that his department alone has identified 

approximately 830 million Afghanis (approximately $17.5 million) that should be returned to GIRoA from 

various public enterprises.

Those internal audit departments 

that are registered with the CAO must submit their annual audit plans to the CAO for approval, and send 

audit reports to the CAO for comment and quality check at the same time reports are sent to the 

associated minister for review. The CAO also provides ministerial internal audit departments with audit 

guidelines and invites staff from these departments to attend training events whenever available. 

7

 Of this amount, 330 million Afghanis (approximately $6.9 million) have

already been returned to GIRoA as of January 6, 2010. However, these achievements have been 

obtained with a high degree of direct donor assistance, including the use of contracted auditors, and 

significant systemic weaknesses remain in the comprehensiveness of the government audit function. 

The Afghanistan National Development Strategy (ANDS) has identified improving the performance of 

financial management services—public accountability—and capacity building as core to sound 

government operations.

CAO’S CURRENT LEGISLATIVE FRAMEWORK DOES NOT PROVIDE CAO WITH SUFFICIENT 

INDEPENDENCE OR AUTHORITY, AND RESULTS IN CONFLICTING RESPONSIBILITIES

The CAO’s original legislative framework is weak, does not provide the CAO with sufficient 

independence or authority, and results in conflicting responsibilities.

8

• Ensures independence and accountability;

The CAO believes that legislative 

reform and effective implementation is critical, and for the past several years it has been assisting the 

Afghan Legislature in drafting a new National Audit Law. The adequacies of the laws that govern any SAI 

are crucial to ensuring that the SAI has the powers and independence to fulfill its role and mandate. 

According to the International Organization of Supreme Audit Institutions (INTOSAI), a strong statutory 

framework for an SAI is one that:

• Clearly identifies its role, mandate, and approach;

• Allows comprehensive access rights;

 6 The Attorney General Office’s Internal Audit Department and the Supreme Court’s Internal Audit Department are 

the two internal audit departments not registered with the CAO. 

7 Solar Year 1388 equates to March 21, 2009, to March 20, 2010, in the Western Gregorian calendar.

8 This is similar to what we found in our recent report on the capabilities and performance of Afghanistan’s High 

Office of Oversight, SIGAR Audit-10-2, Afghanistan’s High Office of Oversight Needs Significantly Strengthened 

Authority, Independence, and Donor Support to Become an Effective Anti-Corruption Institution, December 16, 

2009.
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 6

• Defines reporting requirements; 

• Defines responsibilities towards employees; and

• Places duties of collaboration with other relevant organizations.

In late 2009, the CAO—with significant assistance from the international community—drafted a new 

audit law, which is now under review by the Ministry of Justice (MoJ).9 According to several 

international stakeholders, the draft of the new audit law submitted to the MoJ contained revisions 

that, if passed, would provide the CAO with the independence, authority, mandate, and requirements to 

enable the CAO to serve effectively as Afghanistan’s SAI. However, a copy of MoJ’s draft of the new

audit law obtained by SIGAR in February 2010 may not provide the CAO with sufficient independence or 

authority, as it did not include many of these important, substantive revisions.

The CAO Lacks Budgetary and Operational Independence from the Executive Branch

The CAO lacks both budgetary and operational independence from GIRoA’s executive branch. In 

February 2009, the United Nations and the INTOSAI recognized the importance of independent and 

professional SAIs as a fundamental prerequisite for effective government audit and the prevention of 

fraud, corruption, and mismanagement. Moreover, only an SAI that is independent of the executive 

branch can deliver added value in helping to solve major challenges such as corruption. However, the 

CAO’s current authorizing legislation does not provide the CAO with the requisite independence to be an 

effective SAI. According to the World Bank, all of the core principles of SAI independence—established 

by INTOSAI—are only partially, if at all, met by the CAO’s current legislative and administrative 

framework. With regard to organizational independence, the U.S. Government Accountability Office’s 

(GAO) Generally Accepted Government Auditing Standards stipulate that government oversight 

organizations are generally presumed to be organizationally independent if—among other things—the 

head of the organization is elected or directly appointed or confirmed by a legislative body, is subject to 

removal by a legislative body, reports to a legislative body, and is accountable to a legislative body.10

CAO’s reviews are subject to executive interference due to its lack of independence. This lack of 

independence presents opportunities for the executive branch to limit reviews, scale back findings, and 

 

While it is clear that both international standards and established best practices—as recognized by 

INTOSAI and GAO, respectively—highlight the importance of an SAI’s organizational independence, the 

CAO’s current legislative framework allowed the Afghan President to appoint the current Auditor 

General by Presidential Decree in 2002, and the Auditor General now serves at the leisure of the 

President. 

 9 International stakeholders assisting the CAO in providing the MoJ with revisions to the draft National Audit Law 

include the United Nations’ Assistance Mission in Afghanistan, UNODC, the European Police Mission in 

Afghanistan, the Afghanistan Justice Sector Support Program, the United States Department of Justice, the 

International Trade Administration, and the British Embassy in Afghanistan. Afghan stakeholders assisting the CAO 

in providing the MoJ with revisions to the draft National Audit Law, include the Attorney General’s Office, Ministry 

of Interior, and Afghan Independent Human Rights Commission. 

10 The U.S. GAO is the SAI of the United States and a member of INTOSAI. GAO’s Generally Accepted Government

Auditing Standards are widely recognized as best practices for the field of government auditing.
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 7

reduce candor in reporting. For example, according to recent interviews with CAO officials and similarly 

noted in a March 2009 United States Agency for International Development (USAID) funded assessment 

of corruption in Afghanistan, there has been ongoing interference by the executive branch in setting 

audit schedules.11

Additionally, the Ministry of Finance (MoF) directly approves, administers, and executes the CAO’s 

budget on a quarterly basis. The current budgeting process has hindered the CAO’s ability to conduct 

long-term planning because the CAO cannot be assured of its funding levels from quarter to quarter. 

 Furthermore, Afghanistan’s Auditor General stated that the CAO has been unwilling 

to take on audits that could be politically sensitive or may be turned down by the Office of the 

President. The USAID-funded assessment adds that issues resulting from CAO’s lack of independence 

have been a factor in international donors choosing not to provide the level of support needed to 

professionalize and modernize CAO operations. 

The CAO Lacks the Authority Necessary to Effectively Carry Out Its Mandate

CAO’s enabling legislation does not provide the CAO with the authority to (1) require audited entities to 

report on actions taken in response to CAO recommendations, (2) demand access to necessary 

documents, officials, and premises, or (3) require the CAO to report to the National Assembly or to 

publicly release its audit reports. The environment for an effective SAI requires willingness on the part 

of the executive branch to accept and respond to external scrutiny, and to ensure that corrective action 

is taken. According to Afghanistan’s Auditor General, there is no real determination across GIRoA 

leadership to fight corruption, and CAO’s reports often go unimplemented and unenforced. He also 

stated that the CAO does not have the authority to require GIRoA line ministries or the Attorney 

General’s Office to reply or take action on report recommendations or corruption referrals.12 As a 

result, members of CAO management staff asserted that the Afghan Attorney General’s Office has 

reported back on the progress of only a small percentage of cases CAO has referred to that office. 

According to the Director of the CAO’s Public Enterprises Audit Department, his department alone has 

referred 40 cases of corruption, fraud, and/or theft to the Attorney General’s Office, but the Attorney 

General has only acted on 5 of those cases. The Director added that several of these “pending” 35 

referrals involve high-ranking government officials and may involve the Afghan equivalent of millions of 

dollars. According to figures provided to SIGAR by the CAO, during a period covering the Afghan Solar 

Years 1382 to part of 1388, out of 160 cases referred to the Attorney General, 96 of the cases have been 

put on hold by that office. 13

Officials from the Afghan Attorney General‘s Office refuted the CAO’s claim that their office does not act 

on or report back to the CAO on the progress of cases. One official from the Attorney General’s office 

asserted to SIGAR that every development in every case referred by the CAO is communicated to the 

CAO, whether the case is followed up or set aside for insufficient evidence. He added that his office 

 11 USAID, Assessment of Corruption in Afghanistan, March 2009.

12 When a CAO audit uncovers instances of corruption, fraud, or theft, they report these cases to the Attorney 

General’s Office for review.

13 Covering the period March 21, 2003, through August 2009 in the Western Gregorian calendar.
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 8

strives to complete action on every case within 2 months. According to figures provided by the Attorney 

General’s Office, in the period from Afghan Solar Years 1384 to 1387, the Attorney General received 109 

cases from the CAO. 14

Additionally, SAIs can fulfill their roles objectively and independently only if certain operational 

conditions are met, including transparency of process and results and full, unrestricted access to 

necessary information. The CAO indicated that ministries suffer from a lack of technical capacity, and 

further cited numerous occasions when ministries could not locate requested documents or refused to 

provide CAO auditors with requested documents or access. CAO management informed SIGAR that 

departments and ministries under audit are often non-responsive and do not take action on CAO’s 

recommendations, largely because the CAO does not have the legislative authority to compel them to 

do so. For example, one audit conducted by CAO (with international technical assistance) of 31 

development projects administered and financed by the World Bank reported issues such as significant 

delays in the delivery of financial statements, non-submission of Financial Monitoring Reports,

deficiencies in internal controls for identifying and controlling all valid transactions, and inadequate 

follow-up action by line ministries on previous audit observations and recommendations.

 Of these, 102 cases were completed through legal procedures while 7 are still 

under investigation. 

15

Finally, upon the completion of an audit, the CAO is only required to release its reports to the Office of 

the President and the Ministry of Parliamentary Affairs; the CAO is not required by law to provide its 

audit reports to the public or National Assembly.

 

16 Once the Office of the President has received an 

audit report, it is the President’s prerogative whether to disclose the report to the National Assembly. It 

is widely accepted that the timely public release of audit reports—usually on a webpage for convenience 

of access and low distribution costs—helps to strengthen accountability and is a key component to the 

effective functioning of an SAI.

The Ministry of Finance and CAO Have Conflicting Responsibilities

According to INTOSAI, a strong statutory framework for an effective SAI is one that clearly identifies its 

role, mandate, and approach. According to USAID and the CAO, there is a lack of clarity in existing laws 

on the specific roles, responsibilities, and authorities of the CAO and the MOF with respect to internal 

auditing. Specifically, in 2005, the Afghan National Assembly passed the Public Finance and 

Expenditures Management Law, which complicated the CAO’s statutory framework and created a direct 

conflict between the responsibilities of the CAO and the MoF. Article 61 of the Public Finance and 

Expenditures Management Law created a fundamental conflict between the responsibilities of the CAO 

and the MoF, by giving the MoF’s Internal Audit Department the authority to conduct audits of the 

finances of all GIRoA ministries. The CAO has maintained that the MoF does not have oversight 

responsibility over other ministries’ internal audit departments. The MoF Internal Audit Department has 

 14 Covering the period March 21, 2005, through March 20, 2009, in the Western Gregorian calendar.

15 This audit was conducted in accordance with the standards prescribed by INTOSAI and International Standards 

of Auditing of the International Federation of Accountants.

16 While not required by law, the Auditor General does—on occasion, and at his discretion—provide reports to the 

National Assembly.
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 9

argued that the CAO is responsible for external audits only and that the MoF is responsible for internal 

audits. 

Following the passage of the Public Finance and Expenditures Management Law , the CAO 

recommended to the President that the conflict be addressed and remedied. President Karzai agreed 

and established a commission under the chairmanship of the MoJ to address the conflict; the 

commission contained representatives from the CAO, MoF, the High Office of Oversight, the Supreme 

Court, and the Independent Administrative Reform and Civil Service Commission (IARCSC). After two 

meetings, the Commission decided that Article 61 should be changed or removed and that external 

audit and internal audit oversight is the exclusive purview of the CAO. MoJ was subsequently charged 

with taking the action required to remedy the legislative conflict. However, in 2009 the MoJ ruled in 

favor of the MoF because Article 61 was never amended or superseded by another law. Therefore, the 

Internal Audit Department of the MoF has jurisdiction over financial audits of all the ministries. 17 

Nevertheless, legal experts stated that any new National Audit Law must explicitly address the conflict. 

As a result of this and other political conflicts, the MoF has refused to allow CAO auditors to conduct 

work in the ministry. In mid-December 2009, the President decreed that the CAO has the right to audit 

the MoF, although the CAO has not yet assigned an audit team to do so due to capacity constraints. 

According to the CAO, it intends to re-start audit work at the MoF in 2 to 3 months. 

MoJ’s Latest Version of Draft National Audit Law Does Not Include Significant Revisions 

Recommended by an International Working Group

In December 2009, the MoJ requested the Criminal Law Reform Working Group (CLRWG), chaired by the 

UNODC, to review Afghanistan’s draft National Audit Law. To date, however, the MoJ has not accepted 

many of the group’s important, substantive revisions that resulted from CLRWG’s review. The CLRWG 

proposed significant revisions to the draft that, in its unanimous opinion, would provide the CAO with 

the independence and authority required to function as Afghanistan’s SAI. For example, the CLRWG 

proposed provisions that, in accordance with international standards for organizational independence, 

the Auditor General submit audit reports to the National Assembly and that the Auditor General may be 

subject to dismissal by the majority of two-thirds votes of present and voting members of both Houses 

of the National Assembly. In addition, according to legal experts from one international organization 

involved in the CLRWG, the CLRWG’s recommended revisions more forcefully codify the right of the CAO 

to require action and access on the part of line ministries. 

However, in February 2010, SIGAR obtained a copy of MoJ’s current draft of the National Audit Law, 

which removed many of the CLRWG’s suggested provisions, including those calling for the submission of 

audit reports to the National Assembly and making the Auditor General subject to joint dismissal by the 

National Assembly. Although MoJ has not issued a final draft of the law for National Assembly or 

 17 Parliament recently instructed MoF to recommend changes to Article 61; however, MoF did not submit any of 

the requested recommendations.
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 10

Presidential consideration, UNODC legal experts expressed their opinion to SIGAR that the MoJ version 

of the draft law will not provide the CAO with sufficient independence and authority.18

DESPITE INTERNATIONAL ASSISTANCE, THE CAO HAS SEVERE INTERNAL CAPACITY 

CONSTRAINTS

The CAO has severe internal capacity constraints and relies heavily on support from foreign consultants 

and advisors. The CAO’s staff lack specialization and training—particularly in the areas of professional 

standards, English language, and computer skills—resulting in CAO’s inability to independently conduct 

audits that meet international standards.19

The CAO Has Significant Human Resource Challenges

CAO’s difficulty in building internal capacity begins with the overall absence of qualified accountants and 

auditors among Afghan nationals; there simply is not a tradition in Afghanistan of public accounting or 

auditing. Recruits with modern accounting and auditing educational backgrounds are generally 

unavailable within the CAO.20 There are ongoing efforts on the part of some international organizations 

to enhance Afghanistan’s accounting and auditing capacity by providing basic education and training to 

Afghans—including CAO staff—thereby providing a more robust applicant pool from which the CAO may 

draw talent. For example, the Association of Chartered Certified Accountants is working with Afghan 

partners to train and certify Afghans as Certified Accounting Technicians-1; Certified Accounting 

Technicians-1 is the lowest certification offered by the association. In July 2008, the association certified 

its first group of Afghans.21

 18 As with any legislation, the draft is unimportant if the final draft is substantively different or if the legislation is 

never introduced or signed.

CAO officials stated that, to date, no CAO employee has completed the 

program and only two auditors have participated in it, one of whom has already left the CAO for a more 

lucrative position with another organization. One major obstacle to participation in the association’s

program is that—while it is free for CAO employees—participation requires excellent English language 

skills because the classes and all associated materials are presented in English. 

19 By capacity, we mean the skills, knowledge, and ways of working that make an organization or entity effective. 

According to INTOSAI, capacity constraints may include scarce resources, low staff skills, lack of independence, and 

underdeveloped public financial management systems within the country—for example, inadequate accounting 

systems, limited financial statements, and a lack of familiarity with international accounting and auditing 

standards.

20 Approximately 60 percent of CAO’s professional staff currently have a bachelor’s degree; the majority have

degrees in law or economics.

21 The Association of Chartered Certified Accountants program meets international standards and normally takes 3

years to complete.
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 11

Additional external training opportunities for current CAO staff include those offered by INTOSAI and 

the World Bank. The CAO has participated in some of these opportunities. For example, in 2008, the 

World Bank instituted an Audit Training Program in Afghanistan to train audit organizations in 

techniques and methods that are in accordance with international standards; however, the CAO only 

sent 12 of its staff to the training, which disappointed the World Bank sponsors, who had hoped for 

greater participation. In addition, according to CAO management, many of these external training 

programs require individual SAIs to pay costs associated with attendance, and the CAO is not sufficiently 

funded to send staff. In addition to external training, the CAO itself is implementing a departmental and 

staff strengthening program, and staff training is a component of CAO’s Strategic Plan. Nevertheless, 

according to a World Bank assessment on vulnerabilities to corruption, substantial progress especially in 

training and competency development is still needed to more closely align the CAO with international 

practices.22

Internal capacity building is also complicated by the fact that the CAO is required to use the Afghan

IARCSC, and associated salary scales, to fill vacancies. This process hampers the CAO’s ability to 

independently determine those candidates with the highest cumulative qualifications because the 

IARCSC uses a standardized test of candidates—who are deemed to be qualified—to determine the best 

qualified candidate. The IARCSC selects the applicant with the highest score for appointment. Once an 

appointment is recommended, the CAO develops three screening sheets: a “health” sheet, a security 

screening sheet, and a qualification verification sheet. Based on the outcome of these sheets, the CAO 

may accept or reject the appointee. According to the CAO, the IARCSC appointee, who received the 

highest score on a standardized test and passed CAO’s screening, may not be the best overall candidate 

because of the combination of skills required to be a successful auditor. 

USAID, CAO, and international organizations have all recognized that the current GIRoA/IARCSC civil 

service pay scale is unrealistic for attracting and retaining skilled professional employees. CAO staff 

salaries are subject to IARCSC’s guidelines, and the IARCSC’s salary scales are too low to attract new 

recruits who possess the requisite qualifications and experience. As a result, entry-level auditors 

typically lack education, experience, English language, or technical/professional training. Accounting and 

auditing specialists need significant and relevant academic training and practical experience, and 

candidates for employment—who meet CAO’s employment criteria—generally receive offers with

higher salaries from other employers. For example, the auditors contracted by CAO to conduct audits of 

Afghanistan’s development budget earn between $6,000-$10,000 per month, whereas the highest paid 

audit staff within the CAO earn $200 per month. Such salary concerns also result in high attrition rates; 

qualified and trained auditors often leave the CAO to pursue more lucrative careers in nongovernmental organizations.

CAO Relies on International Advisors and Contracted Auditors to Conduct Its Audit Work and 

Ensure Compliance with INTOSAI Standards

Adoption of international standards for accounting and auditing provides the basis for competent 

financial reporting and transparency. While the CAO has formally adopted INTOSAI standards, the CAO 

lacks the capacity necessary to conduct audits in accordance with these standards and relies on 

 22 World Bank, Summaries of Vulnerabilities Corruption Assessment, May 2009.
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 12

international advisors and contracted auditors to ensure that some of its audits comply with those

standards. In addition, it is widely recognized that INTOSAI standards are too general to provide 

adequate guidance and need the support of more robust and detailed standards, such as the 

International Federation of Accountants’ International Audit and Assurance Standards Board’s

International Standards on Auditing. The International Federation of Accountants’ standards are needed 

to provide effective guidance and improve the audit work of staff. Furthermore, the application of 

international standards requires significant capacities, particularly in terms of professional competence, 

organizational independence, and adequate resources and systems. The CAO and international 

stakeholders note that CAO’s current staff requires professional, English language, and computer 

training; the CAO lacks organizational and budgetary independence; the CAO’s current staffing 

authorization does not provide sufficient staff to meet demand; and the CAO lacks modernized systems. 

The CAO is unable to independently conduct audits in accordance with international standards and is 

wholly reliant on international consultants and advisors to conduct audits that meet such standards.

Because the CAO’s capacity is weak (with its focus limited to basic financial and compliance audits), the 

CAO has had to contract with international auditing firms—currently PKF International—using World 

Bank funds provided under the Public Financial Management Reform Project to conduct required audits 

of donor funds in accordance with international standards.23

The CAO is required to audit all of the funds associated with Afghanistan’s development budget, and 

these audits must be of a high quality and in compliance with international standards. To conduct audits 

of donor funds in accordance with international standards—particularly those provided by the World 

Bank through the ARTF—the CAO depends on the assistance, direction, advice, and technological and 

operational support provided by international stakeholders, particularly the World Bank. At the present 

time, the World Bank supports a team of five international advisors to the CAO plus an additional team 

of six international auditors contracted by PKF International. Without these consultants, the CAO would 

not be able to effectively audit development budget monies or mitigate the risk of corrupt practices 

related to their disbursement and execution. International stakeholders have noted repeatedly that 

there is an urgent need for these consultants and advisors to work with Afghan counterparts, and build 

the CAO’s internal capacity to, eventually, take over these functions. However, capacity development 

within the CAO has been limited and has not been the focus of assistance.

In the opinion of the World Bank, reforms 

are most urgently required in the areas of merit-based recruitment, technical and professional training, 

English language, computer skills, and performance evaluation. Unless Afghanistan and its international 

partners are able to create a program to ensure a sustainable and capable internal capacity in public 

accountability, the CAO will continue to depend on foreign expertise and assistance. This dependency 

renders the CAO, and Afghanistan, vulnerable to reductions in aid that could cripple the CAO, hamper 

external auditing and public accountability within GIRoA, and weaken the government’s ability to 

combat corruption.

The CAO is receiving considerable assistance from international stakeholders, most notably the World 

Bank, whose assistance now accounts for approximately 66 percent of CAO’s total budget and 80 

percent of the CAO’s development budget. Since 2004, the World Bank has provided approximately 

$13.3 million to the CAO. The World Bank is currently providing assistance through the Afghanistan 

 23 PKF International is an international group of independent, autonomous firms of auditors, accountants, and 

business advisors. The particular group contracted by the CAO is PKF-London.
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 13

Public Financial Management Reform Project, which is scheduled to run from May 2007 through

December 2010. This program is expected to provide approximately $7.3 million—of the $13.3 

million—over this period. Since 2004, World Bank assistance has nearly doubled the CAO’s core 

budget.24

The two primary development objectives of the Public Financial Management Reform Project are to

develop an efficient and effective public financial management system and to develop the human 

resource capacity of the Ministry of Finance and the CAO to ensure better operation of public financial 

management. Nevertheless, internal capacity development has not been the focus of World Bank 

assistance. The World Bank and the CAO have used the vast majority of these funds to support a 

contractual arrangement with PKF International. Under this arrangement, PKF conducts the audits of 

Afghanistan’s development budget. While PKF is contractually obligated to conduct its development 

budget audits jointly with CAO staff, the current practice does not develop the internal capacity within 

the CAO to conduct these audits independently. For example, PKF auditors have allowed CAO auditors 

to collaborate with them and observe their methodologies. However, CAO auditors only participate in 

the fieldwork/data collection portion of the audits and they are not exposed to either the planning or 

writing phases. According to World Bank and CAO officials, the major focus of World Bank assistance to 

the CAO has been to ensure that these mandated audits are conducted in accordance with international 

standards, not on building the capacity of the CAO to conduct them independently.

To a great extent, the World Bank is providing the CAO with this funding to ensure that the 

CAO can conduct the required audits of Afghanistan’s development budget and all donor funds provided 

to GIRoA through the ARTF in accordance with international standards. 

25

In addition to the assistance provided by the World Bank, the United Nations, through the United 

Nations’ Development Program, has also provided the CAO with limited direct assistance to support the 

CAO’s efforts to build internal capacity. For example, the United Nations’ Development Program has 

provided some coaching, advisory services, and training. Nonetheless, the current degree of direct 

donor assistance is not considered to be a sustainable situation in the long term and the Auditor General 

of Afghanistan has noted that building the internal capacity of the CAO is vital to ensuring the political 

stability of GIRoA and strengthening GIRoA’s legitimacy. Table 1 provides a description of the type, 

amount, duration, and objectives of international assistance to the CAO over recent years.

 24 The CAO’s core budget is roughly $1.35 million annually, while the World Bank has provided approximately $2 

million annually. Under the World Bank’s current assistance program, the Afghanistan Public Financial 

Management Project, the World Bank plans to provide $7.3 million in direct assistance to the CAO; the project’s 

total budget is $33.4 million.

25 Moving ahead—for the period December 2010 through 2013—the World Bank is planning to implement a 

follow-on Public Financial Management Reform Project to continue to provide technical assistance. This project 

will be included in the ARTF (SY) 1389 investment window. The project components are expected to include—

among others—provincial public financial management, internal audit capacity building, and a CAO capacity 

building plan. Nonetheless, given the current level and focus of international assistance to the CAO, there is a 

belief within the CAO that—without U.S. and international support focused at internal capacity development—the 

status quo will remain for the foreseeable future. 
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 14

Table 1: International Assistance to the CAO, 2004 to 2010

Donor Type of Assistance Cost and Duration of 

Assistancea

Overall Objective(s) of 

Assistance

The World Bank Direct Operational 

Support

$13.3 million since 2004; 

$7.3 million of which is 

provided under the current 

Afghanistan Public Financial 

Management Reform 

Project, scheduled to run 

from 29 May 2007 through

31 December 2010.

Primary objective: To ensure that all 

donor funding—provided through 

either IDA Grants or ARTF—is

audited to a high standard. 

Secondary objective: To provide 

audit advisors and experts. (Under 

the current project, roughly $4

million is used for direct audit 

support to fund the contractual 

arrangement with PKF 

International, $2 million is used to 

provide the CAO with operational 

advisors, and $1 million for 

infrastructure and technological 

upgrades.

United Nations 

Development 

Program

Accountability and 

Transparency 

Program

Provision of a Fraud 

and Corruption 

Detection Technical 

Specialist

Approximately $276,157 per 

year (the position was filled 

between 20 December 2009 

and 6 January 2010 and is a 

12-month appointment with 

a possible extension up to 18 

months.

To provide policy advice to CAO’s 

senior management, develop the 

capacity of CAO staff to prevent and 

detect fraud and corruption, and 

manage and coordinate interactions 

between the program and CAO.

United Nations’ 

Development 

Program Capacity 

for Afghan Public 

Service Project

Coaching, Advisory 

Services, Training

Cost of support is unknown, 

between January 2007 and 

June 2009.b

Coaching on INTOSAI auditing 

standards and performance 

auditing; advisory services in 

preparation of Strategic 

Development Plan and training 

needs assessments; performance 

audit training for some staff in 

India.

Source: SIGAR analysis of information and data from various international stakeholders.

Notes: On March 8, 2010, SIGAR learned that Afghanistan’s Auditor General signed a Memorandum of 

Understanding with India’s Supreme Audit Institution; the Auditor General signed this Memorandum of 

Understanding during a visit to India in the first week of March 2010. According to the Auditor General, this 

Memorandum of Understanding stipulates that the Indian SAI will provide assistance for training both within 

Afghanistan and at the Indian SAI.

 

a

Assistance amounts are approximated. bUnited Nations’ Development Program Capacity for Afghan Public Service Project total budget for the duration of 

its existence was approximately $7.7 million.
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 15

US SUPPORT TO THE CAO HAS BEEN LIMITED 

USAID is the only U.S. agency that has provided any direct support to the CAO, and, to date, such 

support has been modest and has funded conference and training attendance for a limited number of 

CAO staff. Table 2 provides a description of the type, amount, duration, and purpose of USAID 

assistance to the CAO over recent years:

Table 2: USAID Direct Assistance to the CAO, 2007 to 2010

Type of 

Assistance

Host Organization Cost and 

Duration of 

Assistance a

Purpose of Assistance

Conference 

Attendance

Economic Cooperation 

Organization of Supreme Audit 

Institutions Conference in Turkey

$3,562, October 22 

– October 28, 2009 

Allow CAO AG and one staff member 

to attend a conference in Turkey

Training 

Attendance 

India’s Supreme Audit Institution $85,247, February 

15 – March 1, 2009 

Allow CAO AG and seven professional 

staff to attend training related to 

strengthening the capacity of the CAO

Conference 

Attendance

INTOSAI Meeting in Qatar $13,127, January 23 

– January 29, 2009 

Allow CAO AG and two auditors to 

attend the INTOSAI conference in 

Qatar

Conference 

Attendance

International Congress of 

Supreme Audit Institutions 

Conference in Mexico City

$10,536, November 

3 – November 12, 

2007 

Allow CAO AG and one advisor to 

attend a conference in Mexico City

Source: SIGAR analysis of USAID data.

Notes: USAID’s Capacity Development Program also contracted with several advisors between 2007 and 2009 (the 

end of fiscal year 2009) at a rate of $518 to $638 per day to provide internal audit support to ten GIRoA agencies 

and ministries, one of which was the CAO; no advisor was directly assigned to the CAO. 

a The total cost of direct assistance to the CAO was $112,472 from November 2007 – January 2010.

In addition to the efforts described above, USAID has engaged in informal discussions with the GAO 

regarding possible assistance in training CAO staff on professional and technical standards, and 

international requirements.

26 To date, no such assistance has been provided. In December 2009, GAO

officials stated that participation in its International Auditor Fellowship Program is the primary way in 

which GAO could provide support to the CAO because GAO does not have the dedicated funding or 

available staff necessary to provide in-country mentors to the CAO.

27

 26 USAID has often helped fund training and capacity development for international SAIs.

 

27 GAO’s International Fellowship Program is its primary capacity-building program. While there is no cost for 

participation in the program, participating countries are expected to pay travel and living expenses for the duration 

of the 41⁄2-month program that are estimated to be more than $28,000 per participant.
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 16

USAID Afghanistan’s 2009 assessment of the CAO stated that the CAO lacks the capacity to perform 

audits of USAID funds in accordance with international and USAID requirements. International 

stakeholders have made similar findings. According to USAID, international stakeholders, and CAO 

management, the CAO lacks the technical and professional capabilities (as discussed in previous 

sections) to effectively perform this critical function. USAID has indicated that it would be willing to 

provide funding for CAO staff to attend training events in other countries to expand their technical and 

professional capabilities. The GAO’s International Auditor Fellowship Program is one such training 

opportunity in which USAID and CAO have expressed interest in sending CAO staff. GAO’s program, 

however, requires participants to have a certain proficiency in English, and the CAO has not yet 

nominated any candidates who meet this requirement. 28

In addition, USAID’s Office of Inspector General works with SAIs in many developing countries to expand 

their capabilities and provides training in cost principles and fraud awareness. Before an SAI can 

conduct audits of USAID monies, it must have both professional capability and independence. As 

resources permit, USAID’s Office of Inspector General provides training to SAIs in conducting financial 

audits of USAID funds in accordance with USAID guidelines and U.S. government auditing standards. 

This training helps build capacity within SAIs to enhance their ability to audit all public funds. USAID’s 

Office of Inspector General currently has agreements to provide this training in 21 countries. However,

USAID’s Office of Inspector General has not conducted such training in Afghanistan, citing the need for 

more resident auditors to conduct the training.29

The majority (over 82 percent) of USAID mission in Afghanistan’s projects and programs are currently 

implemented through USAID direct contracts and grants. Thus, funds provided under these instruments 

do not flow through GIRoA’s financial management system. However, USAID intends to significantly 

increase the amount of aid provided directly to, and implemented by, GIRoA. USAID’s Office of Financial 

Management recently noted the necessity of providing technical assistance to the CAO to allow GIRoA 

to meet USAID requirements and properly discharge its financial oversight responsibilities, stating, the

CAO needs more than the limited support previously provided under USAID’s Capacity Development 

Project.

 CAO’s lack of independence is also an issue that may 

need addressed before the USAID Office of Inspector General provides the CAO with training; although,

according to USAID’s Office of Inspector General, the possibility of providing future training to the CAO 

has not been ruled out.

30

 

The U.S. government’s draft Anti-Corruption Strategy for Afghanistan, the Final Declaration of 

the Paris Conference, and the UN Convention against Corruption all state the commitment of GIRoA and 

the international community to undertake professional audits, including joint audits, of programs 

28 GIRoA has nominated one candidate, from the Ministry of Defense’s Inspector General’s Office, to participate in 

GAO’s program; however, that individual was unable to meet the program’s English language requirement. 

29 On October 26, 2008, USAID’s Office of Inspector General conducted a half-day training exercise in Kabul for 35 

employees of various GIRoA ministries and departments, including the Ministries of Finance, Public Health, Rural 

Rehabilitation and Development, Education, Communication and Information Technology, and the Control and 

Audit Office. The training provided an overview of USAID’s Office of Inspector General’s recipient-contracted audit 

program. 

30 USAID Afghanistan, HC-306-09-02, Report on the Assessment of the Capability of the Ministry of Finance, Da 

Afghanistan Bank, and the Control and Audit Office in Regard to Managing Direct Donor Assistance, July 27, 2009.
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 17

financed through Afghanistan’s core and external budgets, and to strengthen government capacity for 

audit and financial accountability. The U.S. government has also committed to assist the Afghan 

government in implementing programs designed to improve the transparency and accountability of 

Afghan government institutions, reduce corrupt practices, and improve financial oversight, all of which 

fall directly under the responsibility of the CAO. In addition, USAID’s Economic Growth and Governance 

Initiative directly links Afghanistan’s weak audit capacity with governmental corruption. Nevertheless, 

USAID officials stated that USAID has not yet developed concrete plans for any direct, sustained 

assistance to the CAO. While USAID’s Office of Financial Management is presently drafting a 

Management Control Strategy for the oversight of USAID direct funding to GIRoA, the extent to which 

this strategy will address assistance to the CAO is unclear.

CONCLUSIONS

At the January 2010 London Conference on Afghanistan, the United States and other donors pledged to 

increase the proportion of development aid delivered through the Afghan government to 50 percent in 

the next 2 years. This support depends on the Afghan government making progress in several areas, 

including strengthening its public financial systems, improving budget execution, and reducing 

corruption. As a result of the funds and assistance provided to GIRoA, the U.S. government has a vested 

interested in supporting Afghan institutions that can provide the checks and balances necessary to 

ensure the accountability and responsiveness of the government to its people. Key anti-corruption 

bodies such as the CAO need to be reinforced to hold GIRoA accountable to the people of Afghanistan. 

Strengthening the CAO’s capability and capacity would contribute to enhanced transparency and 

reduced corruption in Afghanistan. However, building capability and capacity within the CAO depends 

largely on the CAO operating under a legislative framework that provides independence and appropriate 

powers. In conjunction with legislative reforms, the international community must provide sustainable 

assistance that is focused on the capacity development of Afghanistan’s audit professionals. Supporting 

an independent and capable CAO will increase public visibility into the operations of GIRoA, promote 

transparency and accountability, and empower citizens to demand real change. Further, a strong 

demand for good public sector auditing is necessary if the CAO is to make a meaningful impact; 

however, this requires willingness on the part of GIRoA’s executive branch to accept, support, and 

respond to external scrutiny over its management of public funds and to ensure that corrective 

actions—recommended by the CAO—are taken, where appropriate. Further, for the CAO to make an 

impact and to secure public support and a belief in the government’s dedication to take effective action 

in GIRoA’s fight against corruption, audit reports not deemed law enforcement or national security 

sensitive, need to be made available to the public. 
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 18

RECOMMENDATIONS

To strengthen the CAO’s capability and capacity, SIGAR is making the following two recommendations:

1. To help enable the CAO to become an effective supreme auditing institution, SIGAR 

recommends that the U.S. Ambassador to Afghanistan urge the Afghan government to enact 

legislation providing the CAO with sufficient independence and authority to fulfill its 

responsibilities in accordance with internationally recognized audit standards.

2. To help build the sustainable internal capacity of the CAO, SIGAR recommends that the U.S. 

Ambassador to Afghanistan oversee the development and implementation of a capacity 

development plan for the CAO, in cooperation with the CAO and international stakeholders, as 

part of the U.S. government’s Anti-Corruption Strategy for Afghanistan. In consideration of the 

issues concerning CAO independence and authority, such a plan should include the

identification of funding sources and donor responsibilities for capacity development and 

training; utilization of existing training possibilities within the U.S. government; and the 

appointment of expert audit mentors and advisors. 
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 19

COMMENTS

The U.S. Embassy Kabul and the USAID Mission in Afghanistan provided written comments on a draft of 

this report. Those comments are included in Appendix II. The Embassy’s Coordinating Director for 

Development and Economic Affairs and the USAID Mission Director concurred with the report’s findings 

and recommendations, and noted that an independent and well-functioning Supreme Audit Institution 

in Afghanistan is in the best interest of GIRoA and the U.S. Government. In their comments, they 

outlined actions they would take to address the report’s recommendations, including:

• Addressing the need for legislation that would provide the CAO with the necessary 

independence and authority to fulfill its responsibilities by including this issue in at least one 

meeting with the international community by April 30, 2010; and

• Working with the CAO, GIRoA stakeholders, and international donors to formulate and 

implement a capacity development plan for the CAO by June 30, 2010. 

The CAO also provided written comments on a draft of this report. These comments are included in 

Appendix III. The CAO concurred with the report’s findings and recommendations, emphasizing the need 

for legislative reform, functional and operational independence, and capacity development, so it can

better enhance the accountability and transparency of GIRoA through unbiased and credible reporting.

SIGAR also provided a draft of this report to the World Bank and shared relevant sections of the report 

with both the USAID Office of Inspector General and the U.S. Government Accountability Office. SIGAR 

incorporated their technical comments as appropriate.
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 20

APPENDIX I: SCOPE AND METHODOLOGY

To assess the capabilities and performance of the CAO in fulfilling its mandate, we reviewed relevant 

U.S., Afghan, and international laws, conventions, standards, and development strategies, as well as 

relevant reports, guidance, and standards issued by U.S. government agencies, international 

organizations, and the CAO. We interviewed CAO leadership, advisors and department heads, as well 

as officials at the Afghan Ministry of Education and Afghan Attorney General’s Office. 

To identify assistance provided by the United States and other donors to strengthen the CAO’s 

institutional development, we interviewed and received documentation from officials at U.S. 

government agencies and international organizations, including USAID; the Government Accountability 

Office; the World Bank; UNODC; the European Police Mission to Afghanistan; the United Nations 

Development Program; the Embassy of the United Kingdom in Afghanistan; INTOSAI; and the Asian 

Organization of Supreme Audit Institutions.

To assess the effectiveness of U.S. assistance to the CAO, we used information obtained through the 

documents and interviews described above and developed conclusions based on that evidence. After 

identifying gaps in the CAO legislative framework and operational shortcomings, we compared those 

findings with the provision of U.S. assistance to determine whether that assistance might effectively 

assist the CAO in filling those gaps and overcoming the shortcomings. 

This report is part of a series of SIGAR audits addressing U.S. efforts to combat corruption and 

strengthen the rule of law. We conducted work in Kabul, Afghanistan and Washington, D.C. from 

December 2009 to April 2010 in accordance with generally accepted government auditing standards. 

These 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. We believe 

the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit 

objectives. The audit was conducted by the Office of the Special Inspector General for Afghanistan 

Reconstruction under the authority of Public Law No. 110-181, and the Inspector General Act of 1978, as 

amended. 
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 21

APPENDIX II: COMMENTS FROM THE U.S. EMBASSY KABUL AND USAID MISSION IN 

AFGHANISTAN 
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 22
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 23

APPENDIX III: COMMENTS FROM AFGHANISTAN’S CONTROL AND AUDIT OFFICE
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 24
SIGAR Audit-10-8 Anti-Corruption/Control and Audit Office Page 25

APPENDIX IV: CAO’S BUDGET STRUCTURE

Figure 1 provides information on the basic structure of the CAO’s budget. Specifically, the CAO’s total 

budget is divided into two categories, CAO’s core (regular) budget and the CAO’s development budget. 

While the CAO’s core budget is funded by GIRoA, the preponderance of CAO’s development budget is 

funded by the World Bank, aimed at direct operational support, and supports the CAO’s contractual 

arrangement with PKF International.

Figure 1: CAO’s Budget Structure

(This report was conducted under the project code SIGAR-019A).

CAO’s Total Budget

Development Budget 

Funded by GIRoA and Donors (82% of 

CAO’s Total Budget)

Core (Regular) Budget 

Funded by GIROA (17% of CAO’s Total 

Budget)

Buildings/Infrastructure

Maintenance and 

Construction

Funded by GIRoA (23% of 

CAO’s Dev. Budget)

Assistance to the 

Parliamentary Budget 

Committees

Funded by World Bank (4% 

of CAO’s Dev. Budget)

Direct Operational Support

Funded by World Bank (75% of 

CAO’s Dev. Budget)

Source: SIGAR analysis of CAO data.

Note: The percentages depicted in Figure 1 are approximations based on figures provided by the CAO. Currency 

conversions and rounding may result in percentages that do not add to 100 percent.
_________________________________________________________________________________

SIGAR’s Mission The mission of the Special Inspector General for Afghanistan

Reconstruction is to enhance oversight of programs for the 

reconstruction of Afghanistan by conducting independent and 

objective audits, inspections, and investigations on the use of 

taxpayer dollars and related funds. SIGAR works to provide 

accurate and balanced information, evaluations, analysis, and 

recommendations to help the U.S. Congress, U.S. agencies, and 

other decision-makers to make informed oversight, policy, and 

funding decisions to:

• improve effectiveness of the overall reconstruction strategy 

and its component programs;

• improve management and accountability over funds 

administered by U.S. and Afghan agencies and their 

contractors;

• improve contracting and contract management processes;

• prevent fraud, waste, and abuse; and

• advance U.S. interests in reconstructing Afghanistan.

Obtaining Copies of SIGAR To obtain copies of SIGAR documents at no cost, go to 

Reports and Testimonies SIGAR’s Web site (www.sigar.mil). SIGAR posts all released 

reports, testimonies, and correspondence on its Web site.

To Report Fraud, Waste, and To help prevent fraud, waste, and abuse by reporting 

Abuse in Afghanistan allegations of fraud, waste, abuse, mismanagement, and

Reconstruction Programs reprisal contact SIGAR’s hotline:

• Web: www.sigar.mil/fraud

• Email: hotline@sigar.mil

• Phone Afghanistan: +93 (0) 700-10-7300

• Phone DSN Afghanistan 318-237-2575

• Phone International: +1-866-329-8893

• Phone DSN International: 312-664-0378

• U.S. fax: +1-703-604-0983

Public Affairs Public Affairs Officer

• Phone: 703-602-8742

• Email: PublicAffairs@sigar.mil

• Mail: SIGAR Public Affairs

400 Army Navy Drive

Arlington, VA 22202