SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

400 Army Navy Drive • Arlington, Virginia 22202 

April 22, 2011 

LETTER FOR THE ADMINISTRATOR, U.S. AGENCY FOR INTERNATIONAL 

DEVELOPMENT 

SUBJECT: USAID Is Responsive to SIGIR Recommendations (SIGIR 11-017) 

The Inspector General Act of 1978, as amended, requires SIGIR to identify in its semiannual 

report each significant recommendation described in previous semiannual reports on which 

corrective action has not been completed. We conducted this review to follow up on those 

recommendations SIGIR made to the U.S. Agency for International Development (USAID) to 

determine the status of corrective actions. The objectives of this report are to determine whether 

USAID has a system to track and oversee the status of SIGIR recommendations, and has taken 

appropriate action. Our review found that USAID has an effective and well-managed audit 

follow-up process and has taken appropriate actions on all but two SIGIR recommendations to 

date. 

Background 

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

29, 1982, provides agency guidance for following up on and resolving audit findings and 

recommendations. The Circular 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 and the Inspector General Act also provide the guidance and requirements 

for agency responses and follow up to audit reports. The Circular states that responses to audit 

reports are 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 agency 

management 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 agency management 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 concludes no action is necessary, final action occurs when a 

management decision has been made.” 
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SIGIR defines open recommendations as those that the agency (1) agreed with in its response to 

the audit report and provided corrective action plans that need to be confirmed as having been 

taken, (2) did not indicate that it agreed or disagreed with in its response, or (3) did not respond 

to before the final report was issued. According to OMB Circular A-50, it is incumbent on both 

the Office of the Inspector General and agency management to work together to address open 

recommendations by tracking and coordinating their resolution. 

Actions Confirmed Taken On All but Two Open Recommendations 

SIGIR’s follow-up review found that USAID has taken appropriate final actions on all but two 

open SIGIR recommendations to date. Between October 2004 and January 2011, SIGIR made 

19 recommendations to USAID. At the start of this audit in January 2011, we had closed 13 

recommendations, but 6 remained open, which required additional research to determine their 

status. Our review has resulted in the closure of four of the six recommendations, and SIGIR is 

working with USAID officials to close the remaining two recommendations. Appendix B 

summarizes the results of our findings for four open recommendations with which the agency 

concurred and has taken action. 

Effective and Well-Managed Audit Follow-up Process 

We found that USAID has an effective and well-managed follow-up process and tracking system 

for SIGIR audit reports and recommendations. USAID’s audit follow-up policies and 

procedures are contained in its Automated Directives System 595, Audit Management Program, 

which incorporates OMB Circular A-50 audit follow-up requirements. Specifically, the 

Directives provide the procedures for managing the agency’s audit tracking system. Figure 1 

illustrates USAID’s current follow-up process for audit reports and recommendations. 

 
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Figure 1—USAID’s Audit Follow-up Process 

Source: SIGIR analysis of USAID audit follow-up process. 

According to the agency's directives, USAID's Management Control Review Committee, chaired 

by the Deputy Administrator, provides oversight for the identification, correction, and reporting 

of internal control and audit deficiencies. The Bureau for Management, Office of the Chief 

Financial Officer, Audit Performance and Compliance Division is responsible for monitoring 

agency responses and otherwise manages USAID’s automated follow-up tracking process called 

the Consolidated Audit and Compliance Tracking System. 
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USAID begins its audit recommendation follow-up process once SIGIR issues an audit report 

containing recommendations for agency action. Once a SIGIR report is issued, USAID’s Iraq 

Office, Bureau of Middle East, adds that report and recommendations to a master database in its 

audit tracking system. To monitor the status of USAID implementation of SIGIR 

recommendations, the Division requires that the Iraq Office provides periodic status reports. In 

SIGIR’s case, the Iraq Office is specifically responsible for ensuring timely and appropriate 

agency responses, audit resolutions, and audit follow up to SIGIR audit reports and 

recommendations. The Division then records this information into its tracking system. 

We compared SIGIR’s database on the status of recommendations to that prepared by USAID 

and found that USAID had generally followed its procedures. As previously discussed, we also 

found that we could have closed four of our six open recommendations had USAID provided us 

with follow-up action information contained in its audit tracking system. However at this time, 

the USAID has no process or procedures to coordinate or provide audit follow-up information to 

SIGIR, as required by OMB Circular A-50. 

Conclusions 

USAID has taken appropriate corrective actions on four of the six open SIGIR recommendations 

which we have closed and is working with SIGIR to resolve the remaining two. In addition, we 

found that the agency’s audit tracking system is effective and well-managed. Finally, USAID 

and SIGIR do not currently have a process to share audit follow-up information; therefore, audit 

recommendations are unnecessarily remaining open. We believe that it would be in the best 

interest of both agencies to coordinate and periodically share audit follow-up information in each 

other’s databases in order to reconcile any differences and close recommendations in a timely 

manner. 

Recommendations 

We recommend that the Administrator, U.S. Agency for International Development, direct the 

Assistant Administrator for Management to develop a process to periodically provide SIGIR 

information on the status of actions to implement SIGIR recommendations. 

Management Comments 

USAID management concurred with SIGIR’s recommendation. The USAID management 

response is printed in its entirety in Appendix E. 

 
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- - - - 

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: Mission Director, U.S. Agency for International Development 
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Appendix A—Scope and Methodology 

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

Project 1104 to review the status of significant audit recommendations made by SIGIR to the 

U.S. Agency for International Development (USAID). We conducted this review to follow up 

on those recommendations SIGIR made to the U.S. Agency for International Development 

(USAID) to determine the status of corrective actions, and to determine whether USAID has a 

system to track and oversee the status of SIGIR recommendations. 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 March 2011 in the United States and in Baghdad, Iraq. 

To accomplish our audit objectives, we obtained and analyzed documentation provided by the 

USAID Management Control Review Committee and the Bureau for Management, Office of the 

Chief Financial Officer, Audit Performance and Compliance Division, who oversee the audit 

follow-up process and manage the agency’s audit tracking and follow-up system. This included 

policies and procedures for managing the audit follow-up process and also information on the 

status of SIGIR’s open recommendations. We also met with the USAID’s Iraq Office, Bureau of 

Middle East, that is specifically responsible for ensuring timely and appropriate agency 

responses, audit resolutions, and audit follow up to SIGIR audit reports and recommendations. 

Both the Management Control Review Committee and the Middle East Officer were able to 

provide explanations on actions taken and the necessary supporting documentation. In addition, 

the officials provided information on and from its audit tracking and follow-up system. 

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 objective. 

Internal Controls 

In conducting the audit, we assessed USAID’s policies and procedures for its audit follow-up 

process and found them to be adequate. The results of this review are presented in the body of 

the report. 

Use of Computer-processed Data 

We used computer-processed data from USAID’s audit tracking system and confirmed its 

reliability using USAID’s written responses and supporting documentation of corrective actions. 

Prior Coverage 

We reviewed the following SIGIR audit reports: 
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Special Inspector General for Iraq Reconstruction 

Plans To Preserve Iraq Reconstruction Program and Contract Records Need To Be Improved, 

SIGIR 10-021, 7/30/2010. 

Agencies Need Improved Financial Data Reporting for Private Security Contractors, SIGIR 09-

005, 10/30/2008. 

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

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

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

011, 10/23/2007. 

 
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Appendix B—Status of USAID Corrective Actions or 

Final Management Decisions on Open 

Recommendations 

Number Recommendation 

Agency Corrective Action or Final 

Management Decision 

07-011-2 

We recommend that USAID and DoS 

develop written procedures requiring 

finance offices to document their reviews 

of unliquidated obligations and the reasons 

for retaining an obligation including 

identifying a continuing need. 

USAID provided SIGIR documentation that 

showed that the agency issued Mission Order 

08-621-001, 1311 Review Procedures on 

December 15, 2008. 

09-003-1 

We recommend that USAID’s Mission 

Director–Iraq take the following actions: 

Direct USAID officials to establish a 

timeframe for completing the operations 

manual that provides guidance to activity 

managers overseeing contractor 

performance. 

USAID provided SIGIR documentation that 

showed that action had been taken by these 

means; I) the issuance of guidelines for the 

Provincial Reconstruction Team (PRT) 

representatives, 2) a comprehensive 

orientation program for new PRT 

representatives, and 3) recurring PRT 

coordination meetings with all representatives 

multiple times a year that cover roles and 

responsibilities of the PRT representatives. 

09-003-2 

We recommend that USAID’s Mission 

Director–Iraq take the following actions: 

Direct the CTO to review and approve RTI 

vouchers and invoices as required by the 

contract. Maintain documentation of the 

approvals in the contract file. 

USAID provided SIGIR documentation that 

showed that immediate action was taken as 

follows: "The CTO, Controller and 

Contracting Officer discussed the contract 

requirement for administrative review of 

expenditures. As required by the contract, the 

contractor will continue to submit an SF 1034 

on a monthly basis with accompanying 

expenditure details which will be 

administratively reviewed by the CTO. 

09-003-3 

We recommend that USAID’s Mission 

Director–Iraq take the following actions: 

Direct the contracting officer to take action 

to recover the General and Administrative 

fee and the fixed fee paid to RTI on the 

$185,000 in lost funds. 

USAID provided SIGIR documentation that 

showed that the contracting officer made a 

determination concerning the allowability of 

G&A and fee associated with the cash loss 

referenced in this finding, issued demand 

letter for the amount of $56,905.57 to RTI on 

October 22, 2008, and recovered that amount.

09-005-2 

SIGIR recommends that the Secretaries of 

Defense and State and the Administrator, 

USAID, direct program managers to 

consider the costs of security relative to 

the expected benefits for all new projects. 

SIGIR is working with USAID to resolve this 

recommendation. 

10-021-7 

SIGIR recommends that the Administrator, 

USAID, provide guidance to its Iraq 

Mission on the preservation of 

reconstruction records; and the Mission 

Director, USAID Iraq, develop plans for the 

SIGIR is working with USAID to resolve this 

recommendation. 
9 

Number Recommendation 

Agency Corrective Action or Final 

Management Decision 

preservation of reconstruction records in 

accordance with this guidance. 

Notes: 

a

 The first five digits of the recommendation number is the report number. 

Source: Recommendations to USAID from SIGIR reports issued in 2007, 2008, and 2010. 
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Appendix C—Acronyms 

Acronym Description 

OMB Office of Management and Budget 

SIGIR Special Inspector General for Iraq Reconstruction 

USAID United States Agency for International Development 

 
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Appendix D—Audit Team Members 

This report was prepared and the review 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 review and contributed to the report include: 

Bill Bedwell 

Allan Jones 

Robert Whiteley 

 
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Appendix E—Management Comments 
13 
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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 Deborah Horan 

Office of Public Affairs 

Mail: Office of the Special Inspector General for Iraq 

Reconstruction 

 400 Army Navy Drive 

 Arlington, VA 22202-4704 

Phone: 703-428-1217 

Fax: 703-428-0817 

Email: PublicAffairs@sigir.mil