OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION

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SIGIR 

Special Inspector General for IRAQ Reconstruction 

For more information, contact SIGIR Public Affairs at 

(703) 428-1100 or PublicAffairs@sigir.mil Special Inspector General for Iraq Reconstruction 

Summary of Report: SIGIR 11-013 

Why SIGIR Did This Audit 

In November 2003, Public Law (P.L.) 108-106 

appropriated $18.65 billion in funds, referred to 

as the Iraq Relief and Reconstruction Fund 2 

(IRRF 2). However, the P.L. specified that 

$210 million of the amount was to be 

transferred to non-Iraq program accounts. Two 

later amendments directed the transfer of $10 

million into the IRRF 2 account. Accordingly, 

$18.45 billion was provided for security, relief, 

rehabilitation, and reconstruction in Iraq. These 

funds were allocated to ten specific areas of 

programs and activities, referred to as sectors. 

The Office of Management and Budget (OMB) 

apportioned these funds, for the most part, to the 

Department of Defense (DoD)/U.S. Army, U.S. 

Agency for International Development 

(USAID), and the Department of State (DoS). 

The funds were initially available for obligation 

through September 30, 2006, but amendments to 

the P.L. extended the period of availability for 

two additional years, until September 30, 2008, 

with unobligated funds to remain in expired 

accounts for five years, until September 30, 

2013. While in these expired accounts, the 

funds are only available to pay existing 

obligations or legitimate adjustments to 

obligations incurred during the unexpired 

period. On September 30, 2013, the last IRRF 2 

account will be closed, and remaining funds will 

not be available for any purpose. 

The Special Inspector General for Iraq 

Reconstruction (SIGIR) reports regularly on the 

status of the various funds used for Iraq relief 

and reconstruction. Our objective for this report 

is to address the status of IRRF 2, including the 

amounts apportioned to U.S. government 

organizations, obligated during the period of 

availability, adjusted while the funds were in 

expired accounts, and in accounts at the end of 

Fiscal Year (FY) 2010. 

Recommendations 

This report does not contain recommendations. 

Management Comments 

Because this report did not contain any 

recommendations, the responsible organizations 

were not required to, and did not, submit 

comments. 

April 22, 2011 

IRAQ RELIEF AND RECONSTRUCTION FUND 2: REPORT ON 

APPORTIONMENTS, EXPENDITURES, AND STATUS AT END OF FISCAL 

YEAR 2010 

What SIGIR Found

P.L. 108-106 and its amendments provided $18.45 billion for security, relief, 

rehabilitation, and reconstruction in Iraq. During FYs 2004 and 2005, OMB 

apportioned $17.86 billion of the funds from the IRRF 2 appropriation; in 

FY 2006, it apportioned the remaining $588 million. Most of the funds went 

to three organizations—DoD/U.S. Army received $13.52 billion; USAID 

received $3.04 billion; and DoS received $1.48 billion. Two other 

organizations received a total of $401 million. 

The five organizations obligated more than half of the funds by the end of 

FY 2004, and by the end of FY 2005 they had obligated more than threequarters of the apportioned funds. A critical point came at the end of FY 

2006, when unobligated funds would expire and no longer be available for 

new obligations. At that point, all but $389 million had been obligated—

about 2% of appropriated funds. 

In June 2006, three months before IRRF 2 unobligated balances would have 

expired, P.L 109-234 authorized the funds to remain available for one 

additional year. In May 2007, P.L. 110-28 amended the extension, adding 

another year. These amendments extended the period of availability for new 

IRRF 2 obligations through September 2008, with some funds remaining 

available for expenditure until September 30, 2013. To recognize these 

extended periods, OMB and the U.S. Treasury established separate Treasury 

accounts. During FY 2007, DoD/U.S. Army, USAID, and DoS returned 

$454.56 million of previously apportioned funds to OMB. OMB transferred 

the funds to a new account and apportioned $218.59 million back to the 

organizations in FY 2007—waiting until FY 2008 to apportion some 

available funds. During FY 2008, the organizations returned $243.40 

million. OMB transferred the funds to a new account and apportioned 

$412.43 million. 

As of the end of FY 2010, $17.26 billion had been expended from the IRRF 

2 accounts, and unliquidated obligations totaled about $145.25 million. The 

amount of the organizations’ unobligated funds totaled $402.46 million, and 

OMB’s unobligated funds totaled about $26.33 million—meaning that about 

$429 million could be canceled at the end of the next three fiscal years (FYs 

2011-2013). This is the amount that could be returned to the Treasury’s 

General Fund if all obligations are paid and upward and downward 

adjustments to unliquidated obligations net to zero. 
SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

400 Army Navy Drive • Arlington, Virginia 22202 

April 22, 2011 

MEMORANDUM FOR THE U.S. SECRETARY OF STATE 

U.S. SECRETARY OF DEFENSE 

U.S. SECRETARY OF THE TREASURY 

ADMINISTRATOR OF U.S. AGENCY FOR INTERNATIONAL 

DEVELOPMENT 

DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET 

SUBJECT: Iraq Relief and Reconstruction Fund 2: Report on Apportionments, Expenditures, 

and Status at End of Fiscal Year 2010 (SIGIR 11-013) 

We are providing this audit report for your information and use. The report discusses the status 

of funds provided under Public Law 108-106, referred to as Iraq Relief and Reconstruction Fund 

2. We performed this audit in accordance with our statutory responsibilities contained in Public 

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

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

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

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

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

waste, and abuse. This audit was conducted as Project 1014b. This report does not contain 

recommendations; accordingly, the addressees were not required to provide comments and 

elected not to do so. 

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 Jason Venner, Principal Deputy Assistant 

Inspector General for Audits (Washington, DC), (703) 607-1346/ jason.venner@sigir.mil. 

Stuart W. Bowen, Jr. 

Inspector General

cc: U.S. Ambassador to Iraq 

U.S. Under Secretary of Defense (Comptroller) 

Commander, U.S. Central Command 

Commanding General, U.S. Forces–Iraq 

Commanding General, U.S. Army Corps of Engineers 

Mission Director, U.S. Agency for International Development 
Table of Contents 

Introduction 1

Background 1

Objective 3

IRRF 2 Apportioned, Obligated, and Expended 5

OMB Apportioned All IRRF 2 5

Organizations Obligated Most Funds with Few Expiring 7

IRRF 2 Availability Periods Extended and Funds Deobligated and Reobligated 7

Status of IRRF 2 at End of Fiscal Year 2010 9

Concluding Observation 13

Appendix A—Scope and Methodology 14

Appendix B—IRRF 2 Allocations and Expenditures by Sector 16

Appendix C—Acronyms 19

Appendix D—Audit Team Members 20

Appendix E—SIGIR Mission and Contact Information 21
1 

Iraq Relief and Reconstruction Fund 2: Report on 

Apportionments, Expenditures, and Status at End of 

Fiscal Year 2010 

SIGIR 11-013 April 22, 2011

Introduction 

Public Law (P.L.) 108-106, as amended, requires that the Special Inspector General for Iraq 

Reconstruction (SIGIR) report on the oversight and accounting of the obligation and expenditure 

of funds for Iraq relief and reconstruction efforts. As a part of this effort, SIGIR has reported on 

the status of appropriated funds, such as the Iraq Relief and Reconstruction Fund (IRRF) 11

, and 

other funds that have been used, such as the Development Fund for Iraq and the Seized and 

Vested Assets Fund.2

This report addresses the status of the second IRRF, which was enacted in November 2003, 

about six months after IRRF 1. The second fund (referred to as IRRF 2) was enacted under P.L. 

108-106 that appropriated to the President $18.65 billion for security, relief, rehabilitation, and 

reconstruction in Iraq. Although $18.65 billion was appropriated, only $18.44 billion was for 

Iraq programs—the P.L. specified and the Office of Management and Budget (OMB) transferred 

$210 million to 3 “non-Iraq” program accounts—2 at the U.S. Agency for International 

Development (USAID) and the other at the Department of State (DoS).3

 In Fiscal Year (FY) 

2006, $10 million was added to IRRF 2 by P.L. 109-102 and P.L. 109-234, which directed the 

transfer of funds from the Economic Support Fund. Accordingly, this report addresses the 

$18.45 billion of IRRF 2 available for Iraq programs. 

Background 

P.L. 108-106 specified the amount of funds for Iraq programs to be allocated to ten specific areas 

of programs and activities, referred to as sectors. The largest allocation was to the electric sector 

for $5.56 billion, followed by the water resources and sanitation sector with an allocation of 

$4.33 billion, and the security and law enforcement sector with an allocation of $3.24 billion. 

Seven other sectors were allocated funds. While funds were allocated to specific sectors, P.L. 

108-106 also stated that the President could reallocate these funds within certain bounds as long 

as the House and Senate Committees on Appropriations were notified of the changes. Numerous 

changes were made to the allocations over the next five years, including changes made by 

amendments to the P.L., and these changes were reported quarterly in accordance with Section 

 

1

Iraq Relief and Reconstruction Fund 1: Report on Apportionments, Expenditures, and Canceled Funds, SIGIR-11-

007, 1/25/2011. 

2 Development Fund for Iraq: Department of Defense Needs To Improve Financial and Management Controls, 

SIGIR 10-020, 7/7/2010, and Guidance Needed for Use of Residual Iraqi Vested and Seized Asset Funds, SIGIR 11-

002, 10/15/2010. 

3

In January 2004, OMB transferred $110 million to USAID for International Disaster and Famine Assistance—$100 

million for Liberia and $10 million for Sudan—and transferred $100 million to DoS for Economic Support Fund 

assistance to Jordan. 
2 

2207 of P.L. 108-106. The reports that were required are referred to as Section 2207 Reports to 

Congress and were provided from January 2004 until October 2008. Appendix B provides 

additional details on these sector allocations and changes that occurred as the funds were used. 

Organizations Receiving IRRF 2 

P.L. 108-106 specified that funds were to be apportioned to only the Coalition Provisional 

Authority in Iraq (in its capacity as an entity of the United States Government), the Department 

of Defense (DoD), USAID, DoS, the Department of the Treasury (Treasury), and the Department 

of Health and Human Services. 

 The Coalition Provisional Authority was established as a transitional government 

following the invasion of Iraq. It was created and funded as a division of DoD and, from 

May 2003 through June 2004, was responsible for overseeing, directing, and coordinating 

the relief and reconstruction effort in Iraq. On June 28, 2004, when power transferred to 

the sovereign Iraqi Interim Government, the Coalition Provisional Authority was 

officially dissolved. OMB did not directly apportion funds to the Coalition Provisional 

Authority. 

 DoD’s mission is to provide the military forces needed to deter war and to protect the 

security of our country. It created organizations to manage and support Iraq relief and 

reconstruction programs and activities. The Deputy Secretary of Defense designated the 

U.S. Army as the Executive Agent for the Iraq effort, providing administrative, logistics, 

and contracting support. Based on this designation, OMB apportioned all of IRRF 2 for 

DoD directly to the U.S. Army. 

 USAID, an independent federal government agency that receives overall foreign policy 

guidance from the Secretary of State, extends assistance to countries recovering from 

disaster, trying to escape poverty, and engaging in democratic reforms. USAID 

implemented Iraq programs in four strategic areas: restoring essential infrastructure, 

supporting essential health and education, expanding economic opportunity, and 

improving efficiency and accountability of government. To execute its mission in Iraq, 

the USAID Mission office was established in Iraq. 

 DoS’ mission is to create a more secure, democratic, and prosperous world for the 

American people and the international community. The Secretary of State, DoS’ chief 

executive officer, answers directly to the President. The Ambassador to Iraq, on behalf 

of the President and under the guidance of the Secretary of State, is responsible for the 

direction, coordination, and supervision of all U.S. government employees, policies, and 

activities in Iraq, except those under the command of a U.S. military commander and 

employees seconded to international organizations. Five DoS bureaus provided support 

to the U.S. Mission–Iraq and were involved in IRRF 2 programs. 

 Treasury’s responsibilities include advising the President on economic and financial 

issues, encouraging sustainable economic growth, and fostering improved governance in 

financial institutions. Its Office of Technical Assistance provided advisory services to 

the Government of Iraq that focused on establishing central bank functions and a 

nationwide payment system among local banks and the central bank. The Office awarded 

contracts and conducted activities in Iraq under six major functions: budget policy and 
3 

management; finance enforcement; banking and financial services; government debt 

issuance and management; tax policy and administration; and operations. 

 The Department of Health and Human Services, although identified in the P.L. as a 

possible recipient of IRRF 2, was not apportioned monies by OMB. 

In addition, P.L. 108-106 specified that $10 million was to be made available to the U.S. Institute 

of Peace for activities supporting peace enforcement, peacekeeping, and post-conflict 

peacebuilding. The Institute is an independent and federally-funded institution established by 

Congress. Its goals are to help prevent and resolve violent international conflicts, promote postconflict stability and democratic transformations, and increase peacebuilding capacity, tools, and 

intellectual capital worldwide. It provides on-the-ground operational support in zones of 

conflict, such as Iraq. 

Following an appropriation act, the Office of Management and Budget (OMB), in accordance 

with its Circular A-114, approves apportionments that establish the amount of obligations that 

can be incurred for a specific time period or activity. OMB apportions funds using Treasury 

Appropriation Fund Symbols (TAFS) that designate the organization, the period of availability to 

incur new obligations, and the Treasury account symbol. For the IRRF accounts, the symbol was 

11-1096, and the initial period of availability for new obligations for IRRF 2 was through the end 

of FY 2006. Hence, the first TAFS for IRRF 2 was 11-1096-04/06. A portion of IRRF 2 was 

transferred from the 11-1096 account to other TAFS. 

After receiving an apportionment, U.S. government organizations continue with the process of 

spending funds by incurring obligations, which are the dollar amounts of orders placed, contracts 

awarded, or services received that require future payment. An obligation is recorded when an 

authorized agent enters into a legally binding agreement to purchase specific goods or services. 

The recorded obligation is reduced by the amount of payments—expenditures—made on bills 

received, and unpaid obligations are referred to as unliquidated obligations. When all goods and 

services have been received and paid for, the obligation is considered liquidated, and any 

remaining balance should be deobligated to make the funds available for other uses. If some of 

the apportioned funds are not obligated at the end of the account’s period of availability, the 

budget authority for these funds expires, and the funds remain available for five additional fiscal 

years to adjust obligations chargeable within the scope of the original contract. At the end of the 

fifth fiscal year, the account is considered closed, and any remaining funds are canceled. 

Objective 

Our objective for this report is to address the status of IRRF 2 including amounts apportioned to 

U.S. government organizations, obligated during the periods of availability, adjusted while the 

funds were in expired accounts, and in accounts at the end of FY 2010. 

For a discussion of the audit scope and methodology, see Appendix A. For IRRF 2 allocations 

and expenditures by sector, see Appendix B. For a list of acronyms, see Appendix C. For the 

 

4

 This Circular, in part, provides instruction on budget execution including apportionments and budget execution 

reports. 
4 

audit team members, see Appendix D. For the SIGIR mission and contact information, see 

Appendix E. 

 
5 

IRRF 2 Apportioned, Obligated, and Expended 

During FYs 2004 and 2005, OMB apportioned $17.86 billion from the IRRF 2 appropriation—

almost 97% of the $18.45 billion available. In FY 2006, OMB apportioned the remaining $588 

million. Most of the funds went to three organizations—the DoD/U.S. Army received $13.52 

billion; USAID received $3.04 billion; and DoS received $1.48 billion. Treasury and USIP also 

received funds. 

The organizations obligated more than half of the funds apportioned by OMB during FY 2004, 

and by the end of FY 2005, they had obligated more than three-quarters of the apportioned funds. 

By the end of FY 2006, when unobligated funds would expire and no longer be available for new 

obligations, all but $389 million—about 2% of apportioned funds—had been obligated with 

DoD/U.S. Army accounting for almost all of these expired funds. The October 2006 Section 

2207 Report to Congress noted that the funds were intentionally left to expire. 

Two amendments to P.L. 108-106 extended the IRRF 2 availability period beyond FY 2006, and 

OMB and the organizations used this extended period to deobligate and reobligate funds. As a 

result, the IRRF 2 period of availability for obligations was extended through September 2008, 

allowing some funds to remain available for expenditure until September 30, 2013. To recognize 

these extended periods, OMB and Treasury established separate Treasury accounts. During FY 

2007, $454.56 million of previously apportioned funds were returned to OMB. OMB transferred 

the funds to a new account and apportioned $218.59 million to the organizations. In FY 2008, 

$243.40 million was returned, and $412.43 million was apportioned. Also, in June 2008, $50 

million was rescinded and transferred out of IRRF 2. 

As of the end of FY 2010, $17.26 billion had been expended from the three IRRF 2 accounts, 

with unliquidated obligations totaling $145.25 million. The organizations’ unobligated funds 

totaled about $402.46 million, and OMB’s unobligated funds totaled about $26.33 million—

resulting in about $429 million that could be canceled at the end of the next three fiscal years 

(FYs 2011-2013). This is the amount that could be returned to the Treasury’s General Fund if all 

obligations are paid and upward adjustments and downward adjustments to unliquidated 

obligations net to zero. If a net upward adjustment is needed, then the amount to be canceled 

will be less. If a net downward adjustment results as the obligations are liquidated or if 

unliquidated obligations remain at the end, then a larger amount of funds will be canceled. 

OMB Apportioned All IRRF 2 

In December 2003, one month after P.L. 108-106 was enacted, OMB began apportioning IRRF 2 

funds. Over the first three months, OMB apportioned $7.96 billion, approximately 43% of 

available funds, and almost all to DoD, USAID, and DoS. By the end of FY 2004, OMB had 

apportioned $13.75 billion (75%), and by the end of FY 2005, $17.86 billion (97%) had been 

apportioned. The remaining $588 million was apportioned in FY 2006. Table 1 shows OMB 

apportionments to each organization for these three FYs. 
6 

Table 1—OMB Apportionments of IRRF 2 in FYs 2004, 2005, and 2006 ($ in 

millions) 

Amounts Apportioned 

Organization FY 2004 FY 2005 FY 2006 Total

DoD/U.S. Army $10,201.36 $2,866.54 $453.16 $13,521.06

USAID 2,361.23 666.05 16.29 3,043.57

DoS 1,132.44 231.90 118.97 1,483.31

U.S. Treasury 40.00 351.38 0 391.38

U.S. Institute of Peace 10.00 0 0 10.00

Total $13,745.03 $4,115.87 $588.43 $18,449.32a

Notes: 

Numbers are affected by rounding. 

a

The SF 133s show that $372,000 more than the $18,448,950,000 available was apportioned. This difference had no significant affect on the 

account. 

Source: SIGIR analysis of data from Standard Form 133s, Reports on Budget Execution and Budgetary Resources and other 

OMB and Treasury data. 

OMB apportioned all of the $18,449 million available for Iraq programs, with $17,887 million to 

the organizations’11-1096-04/06 accounts and $562 million to other accounts, including a net of 

$352.28 million to Treasury’s Debt Restructuring account, $184 million to DoS’ Diplomatic and 

Consular Program account, and $25.90 million to USAID’s Development Assistance account. 

 Treasury’s Debt Restructuring: OMB transferred funds to this account as a result of an 

agreement between the United States and other countries to provide debt reduction relief 

to the new Iraqi government of the country’s debt burden inherited from Saddam 

Hussein. As part of this commitment, and as provided for in P.L. 108-309, in December 

2004, OMB transferred $360 million from its IRRF 2 (11-1096-04/06) account to the 

Treasury’s Debt Restructuring account (11-0091-04/06) established expressly for Iraq 

debt relief. About six weeks later, $7.72 million of unused funds were returned to OMB. 

 DoS’ Diplomatic and Consular Program: OMB transferred $184 million to this account 

to meet the expenses included in DoS’ FYs 2005-2006 Iraq spending plan. P.L. 108-106 

provided that up to 1% of IRRF 2 could be used for the operating expenses of the 

Coalition Provisional Authority. After the Authority was officially dissolved in June 

2004, the funds provided for its operating expenses were transferred to DoS’ Diplomatic 

and Consular Program. 

 USAID's Development Assistance: OMB transferred funds to this account in July 2004 

to comply with USAID’s agreement with the Overseas Private Insurance Corporation to 

provide about $25 million to establish a facility that would lend funds to credit-worthy 

middle-market Iraqi businesses. To make the transfer, USAID returned $25 million from 

its IRRF 2 (11-1096-04/06) account to OMB, which transferred the funds to USAID's 

Development Assistance account (72-1021-04/06) for further transfer to the Corporation. 

In December 2004, an additional $900,000 of IRRF 2 was transferred to the Corporation 

via USAID’s Development Assistance account. 
7 

Organizations Obligated Most Funds with Few Expiring 

In FY 2004, more than half of the funds apportioned by OMB were obligated during that year. 

By the end of FY 2005, the organizations had obligated more than three-quarters of apportioned 

funds. However, the critical point was at the end of FY 2006 when unobligated funds would 

expire and no longer be available for new obligations. As shown in Table 2, all but about 2% of 

the apportioned funds had been obligated by each organization by the end FY 2006. Only the 

DoD/U.S. Army had significant expired funds. 

Table 2—IRRF 2 Apportionments, Obligations, and Expired Funds at the End of 

FY 2006 ($ in millions) 

Amounts Apportioned and Obligated by End of FY 2006 

Organization Apportioned Obligated Expired 

Percent

Obligated

DoD/U.S. Army $13,521.06 $13,135.83 $385.23 97.2

USAID 3,043.57 3,042.18a 1.39 99.9

DoS 1,483.31 1,480.90b 2.41 99.8

U.S. Treasury 391.38 391.38c 0 100.0

U.S. Institute of Peace 10.00 9.90 0.10 99.0

Total $18,449.32 $18,060.19 $389.13 97.9%

Notes: 

Numbers are affected by rounding. 

a Obligated amount includes the $25.90 million transferred to USAID’s Development Assistance account. b Obligated amount includes the $184.00 million transferred to DoS’ Diplomatic and Consular Program account. c Obligated amount includes the $352.28 million transferred to Treasury’s Debt Restructuring account.

Source: SIGIR analysis of data from Standard Form 133s, Reports on Budget Execution and Budgetary Resource and other 

OMB and Treasury data. 

In its October 2006 Section 2207 Report to Congress, DoS reported that about $385 million5 in 

the account was intentionally left to expire but that these funds would be used for upward-scope 

adjustments and limited in-scope changes to complete existing contracts. The report also noted 

that a thorough review of obligation data had been made as of the September 30, 2006, close-out 

date. 

IRRF 2 Availability Periods Extended and Funds Deobligated and 

Reobligated 

In June 2006, three months before IRRF 2 unobligated balances would have expired, P.L 109-

234, Section 1302(a), authorized that IRRF 2 “shall remain available for one additional year 

from the date on which the availability of funds would otherwise have expired...” Accordingly, 

this extended IRRF 2’s period of availability and allowed OMB to use funds for new obligations 

 

5

A difference of about $4 million exists between this Section 2207 Report amount of expired funds and the amount 

shown on the SF 133s; however, we did not attempt to reconcile this difference because it has no significant effect 

on the account. 
8 

through September 2007. To recognize the extended period of availability, OMB and Treasury 

established a separate TAFS for the extension provided by the amendment—the new TAFS was 

11-1096-04/07. 

In FY 2007, the organizations began to deobligate funds in the 11-1096-04/06 account and return 

them to OMB. OMB then “transferred” these funds to the 11-1096-04/07 account, allowing the 

funds to be used for new obligations during FY 2007. OMB apportioned these funds to the 

organizations with DOD/Army returning and receiving the most funds. Figure 1 shows the 

amount of 11-1096-04/06 funds each organization deobligated and returned to OMB, and the 

amount of funds that OMB apportioned to each organizations’ 1096-04/07 account in FY 2007. 

Figure 1—Account 11-1096-04/06 Funds Returned to OMB and Apportioned to 

Organizations in FY 2007 ($ in millions) 

Source: SIGIR analysis of data from Standard Form 133s, Reports on Budget Execution and Budgetary Resources and other 

OMB and Treasury data. 

In May 2007, P.L. 110-28, Section 3811, amended the first extension by striking “one additional 

year” and inserting “two additional years.” This amendment extended the period of availability 

for IRRF 2 obligations through September 2008 allowing some funds to remain available for 

expenditure until September 30, 2013. To recognize this second extended period of availability 

for IRRF 2, OMB and Treasury established another separate TAFS—11-1096-04/08. 

As previously discussed, the organizations deobligated funds (from obligations incurred with 

funds in the 11-1096-04/06 and 11-1096-04/07 accounts) and returned them to OMB where they 

were transferred to the new 11-1096-04/08 account. These deobligated funds were then 

apportioned to the organizations where the funds could be used for new obligations during FY 
9 

2008. Again, DoD/U.S. Army returned and received the most funds. Figure 2 shows the amount 

of funds each organization deobligated and returned to OMB and the amount of funds that OMB 

apportioned to the organizations in FY 2008. As seen in Figures 1 and 2, OMB did not apportion 

in FY 2007 all funds returned that year but waited until FY 2008 to apportion available funds. 

Figure 2—Funds Returned to OMB and Apportioned to Organizations in FY 2008 

($ in millions) 

Source: SIGIR analysis of data from Standard Form 133s, Reports on Budget Execution and Budgetary Resources and other 

OMB and Treasury data. 

In June 2008, P.L. 110-252 rescinded $50 million of the amount that had been provided for IRRF 

2. OMB had this amount available from funds deobligated and returned by the organizations, 

and it processed the transfer from the 11-1096-04/08 account in August 2008. 

Status of IRRF 2 at End of Fiscal Year 2010 

As previously noted, IRRF 2 in account 11-1096-04/06 was initially available for obligations 

through September 30, 2006, at which time any unobligated balances would have expired and 

remained available only to cover legitimate obligation adjustments for the next five years, 

through September 30, 2011. At that time, the account will be closed and any remaining funds 

will be canceled—no longer available for obligation or expenditure for any purpose. Any 

outstanding obligations at that time will have to be paid from a current appropriation established 

for the same general purpose. However, for the new account created to recognize the first 

extension of availability (11-1096-04/07), the funds were available for new obligations until 

September 30, 2007, and will remain as expired funds until September 30, 2012, when the 
10 

account will close. For the account created for the second extension (11-1096-04/08), the funds 

were available for new obligations until September 30, 2008, and remain as expired funds until 

September 30, 2013. By putting funds in these different accounts, the periods of availability and 

the dates when the funds will be canceled are different. 

Tables 3, 4, and 5 show OMB apportionments to the organizations for the three accounts 

established for IRRF 2, and the status of each organization’s account at the end of FY 2010. 

Table 3 shows the unobligated balance for the 11-1096-04/06 account at the end of FY 2010 was 

$351.99 million. In addition to the unobligated balance in the organizations’ accounts, OMB had 

an unobligated balance in its 11-1096-04/06 account resulting from DoS returning $2.29 million 

to the account in FY 2010. Adding this amount to the balance shown in Table 3 results in a total 

unobligated balance of $354.28 million. This amount could be canceled at the end of FY 2011 if 

all obligations are paid and if upward and downward adjustments to unliquidated obligations net 

to zero. If a net upward adjustment is needed, then the amount to be canceled will be less. If a 

net downward adjustment results as the obligations are liquidated, or if unliquidated obligations 

remain at the end of FY 2011, then a larger amount of funds will be canceled. 

Table 3—Account 11-1096-04/06: Status of Funds at End of FY 2010 by 

Organization ($ in millions) 

Organization Apportioned Expended

Unliquidated 

Obligations

Unobligated 

Balance

DoD/U.S. Army $12,926.17 $12,560.71 $89.65 $275.81

USAID 2,941.05 2,901.25 11.24 28.56

DoS 1,270.59 1,204.65 18.54 47.40

U.S. Treasury 39.10 38.33 0.73 0.04

U.S. Institute of Peace 10.00 9.76 0.06 0.18

Total $17,186.91 $16,714.70 $120.22 $351.99

Note: 

Numbers are affected by rounding. 

Source: SIGIR analysis of data from Standard Form 133s, Reports on Budget Execution and Budgetary Resources. 

Table 4 shows that the organizations have about $3.25 million in unobligated funds in the 11-

1096-04/07 account that could be canceled at the end of FY 2012. OMB’s reporting shows no 

unobligated funds in this account. Again, the final amount to be canceled could change, 

depending on adjustments to unliquidated obligations and whether all obligations are liquidated 

before the end of FY 2012. 
11 

Table 4—Account 11-1096-04/07: Status of Funds at End of FY 2010 by 

Organization ($ in millions) 

Organization Apportioned Expended

Unliquidated 

Obligations 

Unobligated 

Balance

DoD/U.S. Army $173.67 $166.39 $4.13 $3.15

USAID 19.90 19.90 0 0

DoS 19.71 19.63 (0.02)a 0.10a

Total $213.28 $205.92 $4.11 $3.25

Notes: 

Numbers are affected by rounding. 

a A DoS finance official stated that in FY 2009 an entry incorrectly reduced the unliquidated obligation amount instead of the unobligated 

balance. The corrected amounts at the end of FY 2010 are unliquidated obligations of about $61,000 and unobligated balance of about 

$23,000.

Source: SIGIR analysis of data from Standard Form 133s, Reports on Budget Execution and Budgetary Resources. 

As shown in Table 5, the organizations’ unobligated balance in the 11-1096-04/08 account at the 

end of FY 2010 was $47.22 million. In addition, OMB has an unobligated balance in the 

account of $24.04 million at the end of FY 2010—DoS returned $23.99 million to OMB’s 11-

1096-04/08 account in FY 2009, and OMB did not apportion $56,000 to the organizations. 

Adding this $24.04 million to the $47.22 million shown in Table 5 results in an unobligated 

balance of $71.26 million that could be canceled at the end of FY 2013 if all obligations are paid 

and upward adjustments and downward adjustments to unliquidated obligations net to zero. If a 

net upward adjustment is needed, then the amount to be canceled will be less. If a net downward 

adjustment results as the obligations are liquidated or if unliquidated obligations remain at the 

end of FY 2013, then a larger amount of funds will be canceled. 

Table 5—Account 11-1096-04/08: Status of Funds at End of FY 2010 by 

Organization ($ in millions) 

Organization Apportioned Expended

Unliquidated 

Obligations 

Unobligated 

Balance

DoD/U.S. Army $177.96 $141.45 $4.46 $32.04

USAID 115.96 119.24a (3.62)a 0.34

DoS 116.72 81.80 20.08 14.84

Total $410.64 $342.49 $20.92 $47.22

Notes: 

Numbers are affected by rounding. 

a

 USAID officials stated that $3.62 million of grant payments were incorrectly charged against this account in FY 2009. For the 11-1096-04/08 

account at the end of FY 2010, this error resulted in expended funds exceeding apportioned funds and a negative unliquidated obligation 

balance. In the first quarter of FY 2011, USAID corrected the error by moving the disbursements to the appropriate account.

Source: SIGIR analysis of data from Standard Form 133s, Reports on Budget Execution and Budgetary Resources. 

Table 6 summarizes the status of the three accounts as of the end of FY 2010 and shows that 

about $429 million was unobligated at that time. This includes the organizations’ unobligated 

balance of about $402.46 million and OMB’s unobligated balance in its 11-1096-04/06 and 11-

1096-04/08 accounts totaling about $26.33 million. This is the total amount of funds that could 
12 

be canceled at the end of the next three fiscal years and returned to the Treasury’s General Fund. 

Again, the amount to be canceled could change, depending on adjustments to unliquidated 

obligations and whether all obligations are liquidated before the end of the respective FYs. 

Table 6—Summary of IRRF 2 Expended, Unliquidated Obligations, and 

Unobligated Balance at the End of FY 2010 ($ in millions) 

Account 

Organizations OMB 

Unobligated 

Balance 

Total 

Unobligated

Expended Balance

Unliquidated

Obligations

Unobligated

Balance

11-1096-04/06 $16,714.70 $120.22 $351.99 $2.29 $354.28

11-1096-04/07 205.92 4.11 3.25 0 3.25

11-1096-04/08 342.49 20.92 47.22 24.04 71.26

Total $17,263.11 $145.25 $402.46 $26.33 $428.79

Note: 

Numbers are affected by rounding. 

Source: SIGIR analysis of data from Standard Form 133s, Reports on Budget Execution and Budgetary Resources. 
13 

Concluding Observation 

OMB quickly apportioned IRRF 2, and the organizations receiving these funds also acted 

quickly to obligate the funds. However, the extension of the availability of funds, first for one 

year and then for an additional year, complicated the allocation, obligation, deobligation, 

reallocation, and reobligation processes. Despite this added complexity, we believe that OMB’s 

and Treasury’s established procedures for allocating and reporting on funds proceeded without 

significant issues. Also, as IRRF 2 moved from available for obligation to expired funds, no 

significant issues were identified. While we noted minor errors in the reporting on the IRRF 2 

allocations, obligations, and expenditures, the closing of the IRRF 2 accounts—with the first one 

being closed at the end of FY 2011—should not encounter significant issues, and about $429 

million could be returned to the Treasury’s General Fund. 

 
14 

Appendix A—Scope and Methodology 

In May 2010, the Special Inspector General for Iraq Reconstruction (SIGIR) announced Project 

1014 with an objective to determine the extent to which funds appropriated for the Iraq Relief 

and Reconstruction Fund (IRRF) have been obligated and liquidated. This report focuses on the 

second IRRF appropriation, known as IRRF 2, and is designated as Project 1014b. Our objective 

for this report is to address the status of IRRF 2 including amounts apportioned to U.S. 

government organizations, obligated during the periods of availability, adjusted while the funds 

were in expired accounts, and in accounts at the end of FY 2010. This audit was performed by 

SIGIR under the authority of Public Law (P.L.) 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 2010 through March 2011, primarily in the Washington 

D.C. metropolitan area. 

To accomplish our objectives we held discussions with and/or analyzed documents provided by 

officials from the following organizations: Department of State; U.S. Department of the 

Treasury (Treasury); U.S. Agency for International Development; Defense Finance and 

Accounting Service; and U.S. Institute of Peace. The Office of Management and Budget (OMB) 

responded to written questions on IRRF. 

Key documents used in our audit were the Standard Form 133s, Reports on Budget Execution 

and Budgetary Resources and the Governmentwide Accounting System’s Nonexpenditure 

Transfer Authorizations by which the Treasury adjusted the amounts of IRRF 2 that were 

apportioned to the organizations. The SF 133s provide data on the organizations’ budgetary 

resources, the amounts obligated, changes in obligation balances, and the amounts of 

expenditures. Data for SF 133s are submitted electronically each quarter by all Executive 

Branch agencies on the status of each appropriation account. The fourth quarter (fiscal year end) 

submission of SF 133 data are certified by each organization’s Chief Financial Officer in that 

obligation balances in each account reflect proper existing obligations and that expenditures from 

each account are proper. We also utilized data from the Combined Statement of Receipts, 

Outlays, and Balances of the United States Government for FYs 2004-2010. Our audit did not 

include a review of documents supporting obligations and expenditures of funds by the 

organizations. 

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 and appropriate 

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

objective. 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 

In performing this audit, SIGIR obtained computer generated reports and data from a number of 

different systems including the Treasury’s Governmentwide Accounting System. In addition to 

the Treasury’s system, each of the organizations involved in our audit had their own accounting 

system(s) that generated data on obligations and expenditures. Accordingly, we did not 
15 

independently verify the detailed computer-generated information, but because these are basic 

accounting systems of the U.S. government and the involved organizations, we concluded that 

the computer-processed information was sufficiently reliable and the best available for purposes 

of our audit. 

Internal Controls 

In conducting this audit, we reviewed internal management and financial controls for 

administering and reporting on IRRF 2. As a key part of these controls, we reviewed Treasury’s 

Financial Manual addressing the requirement to establish accounts and the OMB Circular A-11 

requirements for preparing the SF 133s. We concluded that controls governing the process for 

regular and routine reporting on apportioned funds, obligations, and expenditures were 

sufficiently reliable to provide a sound basis for overall reporting on the status of IRRF 2. We 

presented the results of our review on internal controls in the body of this report as appropriate. 

Prior Coverage 

We reviewed the following audit reports by SIGIR. 

Changes in Iraq Relief and Reconstruction Fund Program Activities January through March 

2006, SIGIR 06-023, 7/28/2006.

Changes in Iraq Relief and Reconstruction Fund Program Activities October through December 

2005, SIGIR 06-004, 4/28/2006.

Challenges Faced in Carrying Out Iraq Relief and Reconstruction Fund Activities, SIGIR 05-

029, 1/26/2006.

Coalition Provisional Authority Control of Appropriated Funds, Coalition Provisional Authority 

Inspector General 05-001, 10/22/2004. (The Coalition Provisional Authority Inspector General 

was the predecessor organization of SIGIR.) 

 
16 

Appendix B—IRRF 2 Allocations and Expenditures 

by Sector 

P.L. 108-106 specified the amount of funds for Iraq to be allocated to specific areas of programs 

and activities, referred to as sectors. While funds were allocated to specific sectors, P.L. 108-106 

also stated that the President could reallocate these funds within certain bounds as long as the 

House and Senate Committees on Appropriations were notified of the changes. Numerous 

changes were made to the allocations, including changes made by amendments to the P.L., and 

these changes were reported quarterly as required by Section 2207 of P.L. 108-106. These 

required reports, referred to as Section 2207 Reports to Congress, were provided from January 

2004 until October 2008. 

Table 7 lists the ten sectors and shows changes between the original November 2003 allocations 

and the final allocations at September 2008. The P.L. also specified that not less than $35 

million of the amounts allocated to these sectors was to be made available for organizations’ 

administrative expenses. Accordingly, the Administrative expenses sector is included in the final 

allocations; however, administrative expenses beyond this allocation were incurred and were 

spread across the various sectors. Finally, the September 2008 total allocation is $10 million 

more than the original total because $10 million was transferred into IRRF 2 from the Economic 

Support Fund. 

Table 7—IRRF 2 Sector Allocation Changes from November 2003 to September 

2008 ($ in millions) 

Sector 

Allocation 

November 2003

Allocation 

September 2008 Difference

Electric $5,560 $4,202 $(1,358)

Water resources and sanitation 4,332 2,051 (2,281)

Security and law enforcement 3,243 4,962 1,719

Oil infrastructure 1,890 1,728 (162)

Justice, public safety infrastructure, and civil society 1,318 2,300 982

Health care facilities 793 812 19

Transportation and telecommunications 500 462 (38)

Roads, bridges, and construction 370 305 (65)

Education, refugees, human rights, and governance 280 539 259

Private sector development 153 868 715

Administrative expenses 0 220 220

Total $18,439 $18,449 $10

Note: 

Numbers are affected by rounding. 

Source: P.L. 108-106 and Section 2207 Report to Congress, October 2008. 
17 

As shown in Table 7, the amount of funds allocated to the sectors changed significantly in the 

years after the P.L. was enacted. Both the Section 2207 Reports to Congress required by the 

P.L., and SIGIR’s Audit Reports and Quarterly Reports to the Congress have reported on the 

changing allocations. The following data on the allocations are taken from these reports. The 

data has not been audited as part of this audit. 

In January 2006, SIGIR reported on the significant changes that had occurred in the sector 

allocations from the initial allocations in November 2003 and the allocations as of October 

2005.6

 The report, which contains descriptions of the sectors and major projects in each sector, 

discussed the major causes of funding shifts. It noted that strategy changes had resulted in the 

reallocation of $5.6 billion from their originally planned purposes; unbudgeted administrative 

costs of the implementing organizations had resulted in $401 million in project changes; and 

unbudgeted sustainment costs had resulted in about $425 million in project changes, with another 

$350 million budgeted for additional sustainment activities. Other factors, such as unforeseen 

security costs and unexpected conditions at many planned job sites, affected the projects. As a 

result of these changes, the Security and law enforcement and the Justice, public safety 

infrastructure, and civil society sectors received large increases of funds. 

As shown in Table 7, the Water resources and sanitation sector and the Electric sector incurred 

the largest reduction of funds. Because broad sector goals were established that did not link to 

individual projects, identifying the specific effects of funding reductions on the sectors’ original 

plans was not possible. Moreover, detailed and accurate data on the status of some sectors was 

lacking before the start of reconstruction activity. For the two sectors with the largest changes, 

Water and Electric, SIGIR identified the following changes as of October 2005: 

 Water resources and sanitation: About 60% of the originally planned Water Resources 

and sanitation sector projects were not implemented. Potable water projects and water 

pumping stations and generators retained the largest number of projects, while the 

sewerage sub-sector; the irrigation and drainage sub-sector; the major irrigation subsector; and the dams sub-sector had most of their projects terminated. 

 Electric: The Coalition Provisional Authority originally planned for about 425 projects in 

the Electric sector and will complete approximately 300. The largest change will occur 

in the power generation sub-sector, which will add only about 2,109 megawatts of 

additional power rather than the originally planned 3,400 megawatts. 

While the major changes in sector allocations took place before the end of 2005, changes 

continued until September 30, 2008, when the final IRRF 2 sector allocations were completed. 

At that time, the funds were expired and could not be used for new obligations. The funds could 

only be used to pay existing obligations or legitimate adjustments to obligations incurred prior to 

September 30, 2008. 

Table 8 compares the final September 2008 sector allocations with obligations as of September 

30, 2010, as included in SIGIR’s October 30, 2010 Quarterly Report. In most sectors the 

 

6 Challenges Faced in Carrying Out Iraq Relief and Reconstruction Fund Activities, SIGIR-05-029, 1/26/2006. 
18 

obligations are less than the allocations, but in three sectors, obligations slightly exceed the 

allocations: 

 Justice, public safety infrastructure, and civil society 

 Health care facilities 

 Transportation and telecommunications 

Table 8—Comparison of Final Sector Allocation with Obligations as of End of FY 

2010 ($ in millions) 

Sector 

Allocation 

September 2008

Obligations 

September 2010 Difference

Electric $4,202 $4,103 $99

Water resources and sanitation 2,051 1,968 83

Security and law enforcement 4,962 4,929 33

Oil infrastructure 1,728 1,604 124

Justice, public safety infrastructure, and civil society 2,300 2,313 (13)

Health care facilities 812 817 (5)

Transportation and telecommunications 462 467 (5)

Roads, bridges, and construction 305 279 26

Education, refugees, human rights, and governance 539 520 19

Private sector development 868 860 8

Administrative expenses 220 220 0

Total $18,449 $18,080 $369

Note: 

Numbers are affected by rounding. 

Source: Section 2207 Report to Congress, October 2008, and SIGIR October 30, 2010, Quarterly Report. 

In addition to the above sector obligations, the April 2010 SIGIR Quarterly Report listing of 

sector obligations included $49 million for capacity building by Iraq Transition Assistance 

Office, which had coordination, oversight, and reporting responsibilities for IRRF 2 projects. 

This office was replaced by the Iraq Strategic Partnership Office, and the October 2010 SIGIR 

Quarterly Report shows that obligations were reduced to $45 million. Accordingly, total 

obligations at the end of FY 2010 was reported at about $18,125 million. However, this 

obligation data is unaudited and is based on organizations’ responses to SIGIR data calls at 

several different points in time. Based on our audit and the data reported by the organizations in 

their SF 133s as of September 30, 2010, this obligation amount appears to be overstated by about 

$155 million. 

 
19 

Appendix C—Acronyms 

Acronym Description 

DoD Department of Defense 

DoS Department of State 

IRRF Iraq Relief and Reconstruction Fund 

FY Fiscal year 

OMB Office of Management and Budget 

SIGIR Special Inspector General for Iraq Reconstruction 

TAFS Treasury Appropriation Fund Symbol 

USAID United States Agency for International Development 
20 

Appendix D—Audit Team Members 

This report was prepared and the audit conducted under the direction of Glenn Furbish, Assistant 

Inspector General for Audits, Office of the Special Inspector General for Iraq Reconstruction. 

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

David Childress 

George Salvatierra 

 
21 

Appendix E—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: 703-604-0368 

Email: hillel.weinberg@sigir.mil 

Public Affairs Deborah Horan 

Director of Public Affairs 

Mail: Office of the Special Inspector General 

for Iraq Reconstruction 

 400 Army Navy Drive 

 Arlington, VA 22202-4704 

Phone: 703-428-1217 

Fax: 703-428-0817 

Email: PublicAffairs@sigir.mil