SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

2530 Crystal Drive • Arlington, Virginia 22202 

October 27, 2011 

LETTER FOR SECRETARY OF DEFENSE 

COMMANDER, U.S. CENTRAL COMMAND 

COMMANDING GENERAL, U.S. FORCES–IRAQ 

COMMANDING GENERAL, U.S. ARMY CORPS OF ENGINEERS 

SUBJECT: Department of Defense Agencies Have Taken Action on Most Open Audit 

Recommendations (SIGIR 12-004) 

The Inspector General Act of 19781

, as amended, requires the Special Inspector General for Iraq 

Reconstruction (SIGIR) to identify in its semiannual reports each significant recommendation 

described in previous semiannual reports on which corrective action has not been completed. 

This report follows up on 26 audit recommendations SIGIR made to three Department of 

Defense (DoD) agencies─U.S. Central Command (CENTCOM), U.S. Forces–Iraq (USF-I), and 

the U.S. Army Corps of Engineers (USACE)─that were unresolved (i.e., open) as of July 31, 

2011.2

 The objective of this report is to determine whether the DoD agencies took appropriate 

action to address these recommendations. 

SIGIR also followed up on 19 open recommendations addressed to the Secretary of Defense and 

other DoD headquarters officials and worked with DoD to establish a system to track and 

oversee the status of open SIGIR recommendations. These efforts are ongoing, and we plan to 

report on them in January 2012. 

As a result of information received from the three DoD agencies, and information developed 

during other SIGIR reviews, SIGIR closed 24 of the 26 open recommendations. Two 

recommendations remain open because USACE could not determine their status. SIGIR will 

continue to follow up on the two open recommendations. 

Background 

The Office of Management and Budget (OMB) Circular A-50, Audit Followup, provides 

guidance to agencies for following up on and resolving audit findings and recommendations. 

Audit follow up is an integral part of good management and is a shared responsibility of agency 

management officials and auditors. Corrective action taken by management on resolved findings 

and recommendations improves the effectiveness and efficiency of government operations. 

Each agency is expected to establish systems that ensure the prompt and proper resolution and 

implementation of audit recommendations. These systems shall provide for a complete record of 

 

1

 ‘‘Inspector General Act of 1978’’ (Pub. L. 95–452, § 1, Oct. 12, 1978, 92 Stat. 1101). 

2

 Recommendations in SIGIR reports issued in late July 2011 are not included in the 26 open recommendations 

because the agencies were still responding to the recommendations. 
2 

action taken on both monetary and non-monetary findings and recommendations. OMB Circular 

A-50 requires agency heads to designate a top management official to oversee audit follow up. 

The Circular further states that the agency’s audit follow-up official has responsibility for 

ensuring that (1) systems of audit follow up, resolution, and corrective action are documented 

and in place, (2) timely responses are made to all audit reports, (3) disagreements are resolved, 

(4) corrective actions are actually taken, and (5) reporting requirements are met. 

OMB Circular A-50 also states that the proper response and follow up to an audit report is 

written comments by agency officials indicating agreement or disagreement on reported findings 

and recommendations. Comments indicating agreement on final reports shall include planned 

corrective actions and, where appropriate, dates for achieving actions. Comments indicating 

disagreement shall explain fully the reasons for disagreement. 

The Inspector General Act defines other terms and requirements used in the audit follow-up 

process. For example, the term "management decision" is defined as “the evaluation by the 

management of an establishment of the findings and recommendations included in an audit 

report and the issuance of a final decision by management concerning its response to such 

findings and recommendations, including actions concluded to be necessary.” The Act defines 

the term "final action" as “the completion of all actions that the management of an establishment 

has concluded, in its management decision, are necessary with respect to the findings and 

recommendations included in an audit report; and in the event that the management of an 

establishment concludes no action is necessary, final action occurs when a management decision 

has been made.” 

SIGIR defines open recommendations as those that the DoD (1) agreed with in its response to the 

audit report and provided corrective actions that need to be confirmed as having been taken; (2) 

did not indicate in its response that it either agreed or disagreed, or (3) did not respond before the 

final report was issued. Additionally, SIGIR considers the recommendation open if the DoD 

component under review disagreed with the recommendation, but DoD has not issued a final 

management decision. According to OMB Circular A-50, it is incumbent on both the DoD and 

the audit agency management to work together to address open recommendations by tracking 

and coordinating their resolution. Under the Inspector General Act, SIGIR has the authority to 

obtain information from DoD on the status of corrective actions. This information must be 

sufficient and appropriate to provide a reasonable basis for the closure decision.3

Additionally, Public Law 97-255 Federal Managers’ Financial Integrity Act of 19824

 and OMB 

Circular A-123 Revised, Management’s Responsibility for Internal Control, which implements

the Act, are at the center of the existing Federal requirements to improve internal control. The 

Federal Managers’ Financial Integrity Act states that the standards prescribed by the Comptroller 

General include standards to ensure the prompt resolution of all audit findings. OMB Circular 

A-123 states that deficiencies identified by an audit should be evaluated and corrected and that a 

systematic process be in place for addressing deficiencies. The Circular requires agency 

managers to follow up on audit recommendations to identify and correct problems resulting from 

 

3 Government Auditing Standards: July 2007 Revision, GAO-07-731G. 4

“Federal Managers' Financial Integrity Act of 1982,” Public Law 97-255 (31 U.S.C. § 3512). 
3 

inadequate or poorly designed management controls, and to build appropriate controls into new 

programs. It also requires agency managers to report any deficiencies in management controls to 

the agency official responsible for implementing the Federal Managers’ Financial Integrity Act. 

SIGIR Closed Most Recommendations to DoD Agencies 

As a result of information received from USF-I, CENTCOM, and USACE, and information 

developed during other SIGIR reviews, SIGIR was able to close 24 of the 26 open 

recommendations addressed to the three agencies. The details for each agency are described 

below. 

 As of July 31, 2011, there were 15 open recommendations addressed to USF-I. On 

September 11, 2011, USF-I responded to SIGIR that it had taken actions to address the open 

recommendations. Based on the USF-I response and documentation provided, SIGIR closed 

all 15 recommendations; eight because they had been implemented and seven because they 

became obsolete due to changes in the operational environment. 

 As of July 31, 2011, there were two open recommendations addressed to CENTCOM. On 

September 15, 2011, CENTCOM provided responses to the two open recommendations, and 

SIGIR closed them both as implemented. 

 As of July 31, 2011, there were nine open recommendations addressed to USACE. On 

September 16, 2011, USACE provided a report on the status of the nine recommendations. 

Based on the report and documentation provided by USACE, SIGIR closed seven of the 

recommendations. Two remain open because USACE could not determine the status of the 

recommendations. In its response to SIGIR’s draft report, USACE stated that two other DoD 

organizations are responsible for the recommendations. 

SIGIR will continue to follow up on the two open USACE recommendations. Table 1 in 

Appendix B lists the two recommendations that remain open because additional information is 

required to close them. Documentation of the actions taken to implement audit 

recommendations is necessary to provide a reasonable assurance that the intended improvement 

to DoD’s operations is occurring. 

The primary intent of SIGIR’s audit recommendations is to prevent fraud, waste, and abuse. 

Additionally, SIGIR’s recommendations are intended to improve DoD management of its 

contracts and grants associated with Iraq reconstruction, and the economy, efficiency, and 

effectiveness of its Iraq reconstruction programs, operations, and activities. A recommendation 

may address more than one of these goals. Implementation of the outstanding recommendations 

would improve DoD management as required by OMB A-123. 

Concluding Observations 

SIGIR commends USF-I, CENTCOM, and USACE for the actions they took to close out 

SIGIR’s recommendations. Their prompt and thorough responses to SIGIR documented the 

actions taken to improve management of, and controls over, contracts, grants, and other Iraq 

reconstruction programs and activities. 
4 

Management Comments and Audit Response 

In response to our draft report, USACE stated that the two recommendations assigned to USACE 

for action should be referred to other DoD components; one to the Army Material Command and 

the other to the Defense Contract Management Agency. SIGIR will follow up with the two 

organizations. 

- - - - 

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

report, please contact Glenn D. Furbish, Assistant Inspector General for Audits (Washington, 

DC), (703) 604-1388/ glenn.furbish@sigir.mil, or Jim Shafer, Principal Deputy Assistant 

Inspector General for Audits (Washington, DC), (703) 604-0894/ james.shafer@sigir.mil. 

Stuart W. Bowen, Jr. 

Inspector General 
5 

Appendix A—Scope and Methodology

In January 2011, the Special Inspector General for Iraq Reconstruction (SIGIR) announced Project 

1102 to review the status of open audit recommendations made by SIGIR to the Department of 

Defense (DoD). Because DoD does not have a central focal point for all SIGIR recommendations, 

SIGIR worked with individual agencies to determine the status of recommendations addressed to 

the agencies. The objective of this report is to determine whether DoD agencies─U.S. Central 

Command (CENTCOM), U.S. Forces–Iraq (USF-I), and the U.S. Army Corps of Engineers 

(USACE)─ took appropriate actions to address their open recommendations. SIGIR also followed 

up on open recommendations addressed to the Secretary of Defense and other DoD headquarters 

officials and worked with DoD officials to establish a system to track and oversee open SIGIR audit 

recommendations. These efforts are ongoing and we plan to report on them in January 2012. 

SIGIR performed this audit 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 from July to October 2011 in Washington, D.C. and in Baghdad, 

Iraq. 

To determine whether DoD took action to address open audit recommendations, SIGIR reviewed 78 

open recommendations. SIGIR administratively closed 16 recommendations because DoD had 

implemented the recommendations and 17 because DoD did not implement them in a timely 

manner, and they were overtaken by events. The remaining 45 recommendations were then 

reviewed to determine the DoD agency to which the recommended action was directed. On August 

23, 2011, SIGIR provided USACE a list of nine open audit recommendations that were directed to 

USACE for action. On August 25, 2011, SIGIR provided USF-I with a list of 15 open 

recommendations and CENTCOM with a list of 2 recommendations that had been directed to their 

respective organizations. Each organization was asked to provide SIGIR with a report on the status 

of the open recommendations. The remaining 19 open recommendations were directed to the 

Office of the Secretary of Defense. 

USF-I, CENTCOM, and USACE each responded to SIGIR’s request. In determining whether the 

responses were sufficient to close recommendations; we evaluated the explanations and considered 

if there were any mitigating circumstances affecting the ability to implement the recommendations. 

For example, we considered the impact of changes in Iraq and the U.S. Embassy–Baghdad 

operational environment, changes in the organizational makeup of U.S. agencies in Iraq, and the 

availability of documentation to substantiate corrective action taken. As a result of our evaluations, 

we were able to close out 24 of the 26 open recommendations. 

We conducted this audit 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 objectives. 
6 

Use of Computer-processed Data 

We did not use computer-processed data in this project. 

Internal Controls 

An assessment of internal controls related to DoD policies and procedures for its audit follow-up 

process will be conducted in the above referenced follow-up audit addressing recommendations 

directed to the Secretary of Defense and other DoD headquarters officials. 

Prior Coverage 

We reviewed the following SIGIR audit reports: 

Iraqi Government Support for the Iraq International Academy, SIGIR 11-009, 1/26/2011. 

Iraq Security Forces: Police Training Program Developed Sizeable Force, but Capabilities Are 

Unknown, SIGIR 11-003, 10/25/2010. 

Commander’s Emergency Response Program: Projects at Baghdad Airport Provided Some 

Benefits, but Waste and Management Problems Occurred, SIGIR 10-014, 4/27/2010. 

Interim Report on Projects to Develop the Iraqi Special Operations Forces, SIGIR 10-009, 

3/25/2010. 

Developing a Depot Maintenance Capability at Taji Hampered by Numerous Problems, SIGIR 09-

027, 7/30/2009. 

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

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

Opportunities to Improve Processes for Reporting, Investigating, and Remediating Serious 

Incidents Involving Private Security Contractors in Iraq, SIGIR 09-019, 4/30/2009. 

The U.S. Has Reduced Its Funding for the Iraqi Security Forces, but Continued Support Will Likely 

Be Necessary, SIGIR 09-012, 1/26/2009. 

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

SIGIR 09-010, 1/14/2009. 

Iraq Reconstruction Project Terminations Represent a Range of Actions, SIGIR 09-004, 

10/27/2008. 

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

SIGIR 08-019, 7/28/2008. 

Outcome, Cost, and Oversight of Water Sector Reconstruction Contract with FluorAMEC, LLC, 

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

Controls Over Unliquidated Obligations in the Iraq Relief and Reconstruction Fund, SIGIR 07-

011, 10/23/2007. 

Logistics Civil Augmentation Program Task Order 130: Requirements Validation, Government 

Oversight, and Contractor Performance, SIGIR 07-001, 6/22/2007. 

Status of Ministerial Capacity Development in Iraq, SIGIR 06-045, 1/30/2007. 

 
8 

Appendix B—Open Recommendations

Table 1 lists the two audit recommendations made to the U.S. Army Corps of Engineers (USACE) 

that remain open. The audit report is identified by the first five digits of the sequence of numbers 

listed in the Number column. The fifth digit represents the recommendation in the report that 

remains open. For example, 08-019-3 refers to the third recommendation contained in SIGIR 

Report 08-019, Outcome, Cost and Oversight of the Security and Justice Contract with Parsons 

Delaware, Inc. 

Table 1—Open Audit Recommendations, as of July 31, 2011 

Number Recommendation 

08-019-3 

(USACE) 

“We recommend that the Commanding General, [Gulf Region Division] and the 

Commander, [Joint Contracting Command–Iraq/Afghanistan]...(3) locate the contract 

award file and ensure it is made part of the master contract file.” 

9-010-2 

(USACE) 

“SIGIR recommends that the Commanding General of the Gulf Regional Division, the 

Director of Defense Contract Management Agency, and the Commander of the Joint 

Contracting Command–Iraq/Afghanistan direct that the following actions be taken as it 

relates to their respective responsibilities under the contract: (2) Specify in writing the 

audit role it wants the U.K. Ministry of Defence, Office of Defence Equipment and 

Support, to perform; the U.S. government organizations that should receive its reports; 

and which U.S. government organization is responsible for maintaining contact with 

[Defence Equipment and Support]” 

Source: Recommendations to DoD from SIGIR reports issued from 2004 through July 2011. 

 
9 

Appendix C—Acronyms 

Acronym Description 

CENTCOM U. S. Central Command 

DoD Department of Defense 

OMB Office of Management and Budget 

SIGIR Special Inspector General for Iraq Reconstruction 

USACE U.S. Army Corps of Engineers 

USF-I United States Forces–Iraq 

 
10 

Appendix D—Audit Team Members 

This report was prepared and the review conducted under the direction of Glenn D. Furbish, 

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: 

Allan J. Jones 

Robert Pelletier 

Robert Whiteley 

 
11 

Appendix E—Management Comments 

 
12 
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 

 2530 Crystal Drive 

 Arlington, VA 22202-3940 

Phone 703-428-1059 

Email hillel.weinberg@sigir.mil

Public Affairs Deborah Horan 

Office of Public Affairs 

Mail: Office of the Special Inspector General 

for Iraq Reconstruction 

 2530 Crystal Drive 

 Arlington, VA 22202-3940 

Phone: 703-428-1217 

Fax: 703-428-0817 

Email: PublicAffairs@sigir.mil