SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

400 Army Navy Drive • Arlington, Virginia 22202 

April 23, 2010 

LETTER FOR COMMANDING GENERAL, U.S. FORCES-IRAQ 

SUBJECT: Most Iraq Security Forces Fund Appropriations Have Been Obligated 

(SIGIR 10-016) 

This letter addresses the Special Inspector General for Iraq Reconstruction’s (SIGIR) review of 

Iraq Security Forces Fund (ISFF) appropriations. Since 2005, Congress has appropriated $18.04 

billion to the Department of Defense (DoD) for the ISFF to train and equip the Iraqi Security 

Forces, and U.S. Forces-Iraq (USF-I) has obligated 93% and liquidated 90% of these obligations. 

Background 

Between May 2005 and June 2009, Congress appropriated $18.04 billion for ISFF. ISFF is used 

to train, equip, and maintain all elements of the Iraqi Security Forces, including the Iraqi Army, 

Navy, Air Force, Special Operations Forces; Iraqi police forces; special task forces; the Iraqi 

Intelligence Agency; and border security forces. The Commanding General, USF-I, is the 

statutory custodian of the ISFF and is responsible for training and equipping the Iraqi Security 

Forces.1 

The ISFF was appropriated through supplemental funding acts and the Congress specified the 

period of time each appropriation can be used. In each case, Congress made the funds available 

for periods between 12 and 19 months, and funds must be obligated within the period for which 

Congress made them available. Any funds not obligated within their designated period of 

availability are considered expired. Expired funds cannot be used for new obligations; however, 

they can be used up to five years after they expire to pay for (i.e., liquidate) authorized increases 

to existing obligations made from the same appropriation. Any funds remaining in USF-I’s 

accounts after the five-year period must be returned to the U.S. Treasury. Table 1 summarizes 

ISFF appropriations between May 2005 and June 2009 and the periods in which the 

appropriations may be used. 

 

 

1

 Prior to USF-I’s establishment on January 1, 2010, the Multi-National Security Transition Command-Iraq 

managed and allocated the ISFF for the Multi-National Force-Iraq, which was the custodian of the ISFF. Both of 

these commands were subsumed into USF-I. 
2 

Table 1—ISFF Appropriations between May 2005 and December 2009 ($ millions) 

Appropriation 

For Use in 

Fiscal Years 

Appropriation 

Date(s) 

Public Law 

No. 

Amount 

Appropriatedb

 

Expiration 

Datec

Funds 

Available 

Throughd

2005-2006 5/11/2005 109-13 $5,490 9/30/2006 09/30/2011 

2006-2007 6/15/2006 109-234 $3,007 9/30/2007 09/30/2012 

2006-2008 9/29/2006 

5/25/2007 

109-289 

110-28 $5,542 9/30/2008 09/30/2013 

2008-2009 12/26/2007 

6/30/2008 

110-161 

110-252 $3,000 9/30/2009 09/30/2014 

2009-2010 6/24/2009 111-32a $1,000 9/30/2010 09/30/2015 

Total $18,039 

Notes 

a

 This appropriation rescinded $1 billion from Public Law 110-252 and made this amount available through September 30, 2010. b

 Appropriated funds must be obligated in the fiscal years(s) for which they were made available. c Appropriations expire on the date specified in the specific appropriation language. Funds cannot be used for new obligations 

after this date. 

d

 Expired funds can be used for up to five years to cover increases to existing obligations for the fiscal year(s) in which the funds 

were appropriated. 

Source: SIGIR analysis of DoD appropriation law and Financial Management Regulation as of Jun 24, 2009

Obligations are recorded when an authorized agent of the federal government enters into a 

legally binding agreement to purchase specific goods or services. As bills are received and 

payments made, the recorded obligation is reduced by the amount of the payments received, with 

the balance–that is, the money still owed–referred to as the unliquidated obligation balance. 

When all services or goods have been received and paid for, the obligation is considered 

“liquidated,” and any remaining unliquidated obligation balance not needed for payments should 

be de-obligated and reduced to zero. If at any time the unliquidated obligation balance is no 

longer needed, the unliquidated obligation should be de-obligated and the funds made available 

for other uses.2

Appropriated funds must be obligated in the fiscal year(s) for which they are made available. 

These obligated funds may be paid out as bills for services are received. If the goods and 

services are received and paid for during the contract period and the procurement is complete, 

any remaining unliquidated obligation balance can be de-obligated and used for other needs 

consistent with the source appropriation. Funds expire if they are not obligated in the fiscal 

year(s) for which they are appropriated. Expired funds can be used in the subsequent five years 

to liquidate obligations properly chargeable to the account prior to its expiration. The expired 

account balance also remains available to make legitimate obligation adjustments, that is, to both 

record previously unrecorded obligations and to make upward adjustments in previously underrecorded obligations. 

 

2

 Appropriations Law, Volume II, Chapter 7, GAO 06-382SP 
3 

Since 2005, USF-I and its predecessor organizations planned to obligate ISFF funds in five 

categories: 

• equipment purchases and transportation of equipment, weapons, ammunition, vehicles, 

communication gear, and spare parts 

• infrastructure projects such as construction and improvements of police stations, military 

bases, training centers, maintenance facilities, and border enforcement facilities among 

other infrastructure projects 

• training and operations projects and programs such as training school and maintenance 

facilities, vehicles for training centers, and training of security forces 

• sustainment of security forces through maintenance programs, human resources, 

information management system support service, and medical services 

• other activities such as detainee operations and disarmament, demobilization, and 

reintegration 

Figure 1 summarizes the amounts planned for each category through December 31, 2009. 

Figure 1—Planned ISFF Obligations by Category ($ millions) 

Source: SIGIR Analysis of Department of Defense data as of December 31, 2009

Our objective for this report is to determine the status of the ISFF appropriations. 
4 

Most of the ISFF Appropriations Were Obligated and Liquidated, 

but Some Funds Remain 

Of the $18.04 billion appropriated for the ISFF, $16.746 billion (93%) has been obligated for 

contracts to train and equip the Iraqi Security Forces as of December 31, 2009. Only about $825 

million, all from the fiscal year 2009 appropriation, remains available for new obligation. At our 

exit conference on this review, USF-I officials told us that the amount remaining for new 

obligation as of March 31, 2010, is about $340 million. However, we did not have time to 

review this number prior to issuing this report. At the time of our exit conference, USF-I had six 

more months to obligate these funds. 

Of the $16.746 billion obligated as of December 31, 2009, $15.088 billion (90%) has been 

liquidated. An obligation is considered liquidated when all services or goods have been received 

and paid for. About $1.657 billion in outstanding obligations remains to be liquidated. As 

reported in 2007,3 SIGIR found that DoD was conducting its required tri-annual reviews of 

unliquidated obligations. However, SIGIR notes that some of these unliquidated obligations are 

approaching five years in age and may need to be reviewed to determine why they remain 

unpaid. According to USF-I officials, the balances for these years have not been liquidated, in 

part, because USF-I has limited resources available to track down contractors in order to 

request, approve, and process invoices. In written comments on a draft of our report, USF-I 

stated that other DoD components are working to address the unliquidated ISFF obligations. 

About $469 million (3%) of the funds appropriated were not obligated during the period in 

which they were authorized to be obligated and have, therefore, expired. Expired funds cannot 

be used for new obligations, but can be used to cover adjustments to other obligations recorded 

in fiscal years 2005 through 2008. DoD regulations do not specify the amount that USF-I should 

keep on hand to cover potential adjustments. If the funds are not needed to cover potential 

adjustments, the expired funds for each fiscal year will remain in USF-I’s accounts for five 

years. 

Table 2 shows the status of the ISFF funds for each fiscal year that funds were appropriated, as 

of December 31, 2009. 

 

 

3 Controls Over Unliquidated Obligations in the Iraq Relief and Reconstruction Fund, SIGIR 07-011, October 23, 

2007. 
5 

Table 2—Status of ISFF Funds by Fiscal Year as Reported by DoD ($ millions) 

Fiscal 

Year 

Amount 

Appropriated 

Amount 

Obligated 

Amount 

Liquidated 

Amount 

Remaining 

for New 

Obligation 

Amount 

Expired 

Unliquidated 

Obligations 

2005 $5,490 $5,367 $5,335 $0 $123 $32d

2006 $3,007 $2,807 $2,726 $0 $200 $80 

2007a $5,542 $5,493 $5,000 $0 $49 $493 

2008b $3,000 $2,904 $1,923 $0 $96 $980 

2009 $1,000 $175 $103 $825c $0 $72 

Total $18,039 $16,746 $15,088 $825 $469 $1,657 

Notes 

a

 Fiscal year 2007 includes ISFF funds appropriated under Public Laws 109-289 and 110-028 ($1,700 and $3,842 million, 

respectively) that could be obligated until 9/30/2008 b

 Fiscal year 2008 includes ISFF funds appropriated under Public Law 110-161 and 110-252 ($1,500 and $1,500, respectively) 

that could be obligated until 9/30/2009 c

 USF-I has until 9/30/2010 to obligate this amount d

 In commenting on a draft of this report, USF-I stated that it had reduced the amount of unliquidated obligations for fiscal year 

2005 by $4 million. However, we did not have time to verify this amount prior to issuing the report. 

Source: SIGIR Analysis of Department of Defense data and appropriations laws as of December 31, 2009 

Concluding Observation 

USF-I and its predecessors have obligated the majority of funds appropriated for the ISFF and 

USF-I is in the process of developing a spend plan for the remaining funds. 

 
6 

Management Comments and Audit Response 

In written comments on a draft of this report, the USF-I stated that it generally concurred with 

the information presented in this report. USF-I also provided additional information on the 

status of ISFF funds, including a $4 million reduction to the total amount of unliquidated 

obligations for fiscal year 2005, and DoD processes to oversee unliquidated obligations. We 

made revisions to the report based on these technical comments, as appropriate. 

- - - - 

We appreciate the courtesies extended to the SIGIR staff. For additional information on the 

audit 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. Secretary of State 

U.S. Ambassador to Iraq 

U.S. Secretary of Defense 

Under Secretary of Defense (Comptroller) 

Commander, U.S. Central Command 
7 

Appendix A—Scope and Methodology

In November 2009, the Special Inspector General for Iraq Reconstruction (SIGIR) announced 

Project 1003 to audit the status of the Iraq Security Forces Fund (ISFF). Our objective for this 

report is to determine the status of the ISFF appropriations. 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. SIGIR conducted 

its work during December 2009 through March 2010 in the United States and in Baghdad, Iraq. 

To accomplish our audit objective, we obtained and analyzed documents and data provided by 

officials from the Department of Defense (DoD) and U.S. Forces-Iraq (USF-I) on processes and 

procedures used to track and account for obligations and expenditures made from appropriations 

for the Iraqi Security Forces Fund (ISFF). The data provided by these offices originated from 

the U.S. Army Corps of Engineers’ Financial Management System, which is the financial 

management system of record for the ISFF. We discussed this information with those officials 

and also queried them about the project and activity planning for the latest ISFF-appropriated 

funds such as spending plans or project metrics. Further, we obtained and reviewed relevant 

portions of the laws and regulations governing the appropriation and use of the ISFF. 

The audit was conducted 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. We believe that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objective. 

Use of Computer-processed Data 

We used computer processed data in this report from the Corps of Engineers’ Financial 

Management System. We did not verify the data, but we determined that the controls used by 

DoD for tracking the status of the ISFF appropriations ensured us that the data from this system 

was sufficiently reliable for purposes of the audit. 

Internal Controls 

In conducting the audit, we reviewed the internal controls used by DoD and USF-I to track the 

status of funds appropriated for the ISFF. In addition, we examined documents and held 

discussions with key officials to gain an understanding of the internal controls governing the use 

of ISFF. We determined that DoD and USF-I’s internal controls were sufficiently reliable for 

tracking the status of ISFF appropriations, obligations, and expenditures for the purpose of the 

audit. The results of our review in terms of the status of ISFF appropriations are discussed in the 

report. 

 
8 

Prior Coverage 

We reviewed the following reports by SIGIR for this audit: 

• Government of Iraq Increasingly Funding Iraqi Security Forces Infrastructure Development, 

but Substantial U.S. Support Remains, SIGIR 08-022, 7/26/2008. 

• Agency Management of the Closeout Process for Iraq Relief and Reconstruction Fund 

Contracts, SIGIR 07-010, 10/24/2007. 

• Controls Over Unliquidated Obligations in the Iraq Relief And Reconstruction Fund, 

SIGIR 07-011, 10/23/2007. 

 
9 

Appendix B—Definitions of Terms 

The following terms were used in the report. 

Appropriation An appropriation is a statute that generally provides legal authority 

for federal agencies to incur obligations and to make payments out 

of the Treasury for specified purposes. 

Availability of Funds After an appropriation expires, unobligated balances remain 

available for five years to process expenditures, collections, and 

increases to existing obligations due to adjustments to the scope of 

work on contracts. 

Expenditures The actual spending of money; an outlay of funds is an expenditure.

Expired Funds Funds expire if they are not obligated within the time period 

specified in its appropriation for incurring obligations. 

Liquidated Funds Funds are considered liquidated when all services or goods have 

been received and paid for. 

Obligation A definite commitment that creates a legal liability for the payment 

of goods and services ordered or received. 

Unliquidated Obligation The amount of an obligation that has yet to be expended. 

 
10 

Appendix C—Acronyms 

Acronym Description 

DoD U.S. Department of Defense 

ISFF Iraq Security Forces Fund 

SIGIR Special Inspector General for Iraq Reconstruction 

USF-I United States Forces-Iraq 

 
11 

Appendix D—Audit Team Members 

This report was prepared and the review conducted under the direction of David R. Warren, 

Assistant Inspector General for Audits, Office of the Special Inspector General for Iraq 

Reconstruction. 

The staff members who conducted the review and contributed to the report include: 

Mohamed K. Abdou 

Ziad M. Buhaissi 

Nancee K. Needham 

Jason G. Venner 
12 

Appendix E—Management Comments 
13 
14 

Appendix F—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 Daniel Kopp 

Director for 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