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 12-013 

Why SIGIR Did This Study 

The Coalition Provisional Authority (CPA) 

was established in May 2003 to provide for 

the temporary governance of Iraq. United 

Nations Security Council Resolution 1483 

created the Development Fund for Iraq (DFI) 

and assigned the CPA full responsibility for 

managing it. The DFI comprised revenues 

from Iraqi oil and gas sales, certain remaining 

Oil for Food deposits, and repatriated 

national assets. It was used, in part, for Iraq 

relief and reconstruction efforts. 

During its almost 14-month governance, the 

CPA had access to $20.7 billion in DFI funds 

and directed expenditures of about $14.1 

billion. The CPA Administrator had the 

authority to direct the Federal Reserve Bank 

of New York (FRBNY) to make Electronic 

Fund Transfer (EFT) payments for 

reconstruction activities out of the DFI main 

account. FRBNY records show that the 

Administrator directed about 1,100 EFT 

payments totaling $5.9 billion in DFI funds 

from July 2003 through June 2004. EFT 

payments were made for a variety of items 

and services such as petroleum products, 

firearms and ammunition, trucks and other 

vehicles, firefighting equipment, and Hajjrelated food, lodging, and transportation 

expenses. 

The Special Inspector General for Iraq 

Reconstruction (SIGIR) initiated this audit to 

determine whether the CPA properly 

accounted for its use of the $5.9 billion in 

EFT payments made with DFI funds. 

What SIGIR Recommends 

This report does not contain recommendations. 

Management Comments and Audit 

Response 

The Office of the Under Secretary of Defense 

(Comptroller) provided written comments on 

a draft of this report and, in general, agreed 

with the report. The comments are printed in 

their entirety in Appendix C. 

April 30, 2012 

DEVELOPMENT FUND FOR IRAQ: THE COALITION PROVISIONAL 

AUTHORITY’S FINANCIAL CONTROLS FOR ELECTRONIC FUND 

TRANSFER PAYMENTS DIMINISHED OVER TIME

What SIGIR Found 

SIGIR accounted for most of the required financial documents supporting 

EFT payments made in 2003, but many of the required documents 

supporting payments reviewed for 2004 were missing. Overall, we reviewed 

75 EFT payments totaling $1.3 billion—25 payments from 2003 and 50 

from 2004—and found substantially more financial documents missing in 

2004 than in 2003. For each payment file, we looked for three financial 

documents: public voucher, material inspection and receiving report, and 

vendor invoice. The material inspection and receiving report, which is key 

to ensuring that products or services paid for were received, was the most 

frequently missing document. Our review of files for the 25 EFT payments 

made in 2003 found that almost all contained the three documents 

supporting each payment. Overall, only three of the 75 required documents 

(4%) were missing from the 25 payments that we reviewed. However, 

because all three missing documents were material inspection and receiving 

reports, SIGIR cannot be certain that the items paid for were received. 

These items included turbine oil, hydraulic oil, and 10,000 hand-held 

weapons collectively valued at $4.7 million, or about 19.6% of the total 

value for the 2003 sampled payments. 

Our review of files for 29 EFT payments made in 2004 found many more 

documents missing than in the 2003 files. SIGIR reviewed four of the 10 

largest DFI payments—three payments to the World Food Program and one 

payment establishing a letter of credit—and all four had the documents 

necessary to support the payments. Overall, 11 of the 75 required 

documents (14.7%) were missing from the remaining 25 payments that we 

reviewed; 9 EFT payments were missing material inspection and receiving 

reports, and 2 were missing the vendor invoice. Additionally, SIGIR found 

that 24 of the 25 public vouchers (96%) were not properly signed and 

certified. The missing documents supported payments for farm chemicals 

and equipment, electrical equipment, construction materials, propane gas, 

vehicles, fuel products, and Hajj-related lodging that were valued at $11.2 

million, or about 19.5% of the total value for these 25 payments. 

Because of the percentage of critical documents missing from the 2004 

payments files, SIGIR expanded its review to cover an additional 21 

payments, 12 for Hajj-related activities and 9 for fertilizer and pesticides. 

Our expanded review found that 94.4% of the documents supporting 12 

Hajj-related payments totaling $40.4 million were missing, and 37% of the 

documents supporting 9 fertilizer and pesticide payments totaling $15.8 

million were missing. Altogether, 69.8% of the required documents were 

missing from this expanded sample. SIGIR has not concluded that fraud, 

waste, or abuse occurred as a result of the missing documents; but the 

absence of key financial documents supporting the payments raises serious 

accountability questions. 
SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

2530 Crystal Drive • Arlington, Virginia 22202 

April 30, 2012 

MEMORANDUM FOR U.S. SECRETARY OF DEFENSE 

U.S. SECRETARY OF STATE 

SUBJECT: Development Fund for Iraq: The Coalition Provisional Authority’s Financial 

Controls for Electronic Fund Transfer Payments Diminished over Time 

(SIGIR 12-013) 

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

related to the Coalition Provisional Authority’s accountability for electronic fund transfer 

payments made in 2003 and 2004 using Development Fund for Iraq funds. 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. The 

Special Inspector General for Iraq Reconstruction (SIGIR) conducted this audit as Project 1112c. 

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

report, please contact James Shafer, Assistant Inspector General for Audits, (703) 604-0894/ 

fred.j.shafer.civ@mail.mil or Tinh Nguyen, Principal Deputy Assistant Inspector General for 

Audits, (703) 604-0545/ tinh.t.nguyen4.civ@mail.mil. 

Stuart W. Bowen, Jr. 

Inspector General 

cc: U.S. Ambassador to Iraq 

Office of the Secretary of Defense (Comptroller) 
Table of Contents 

Introduction 1

Background 1

Objective 3

Documentation Supporting EFT Payments Made Using DFI Funds Was 

Better in 2003 than in 2004 4

Few Documents Were Missing from 2003 EFT Payment Files 4

Substantially More Documents Were Missing from 2004 EFT Payment Files 4

Conclusions and Recommendations 8

Conclusions 8

Recommendations 8

Management Comments and Audit Response 9

Appendix A—Scope and Methodology 10

Appendix B—Results of SIGIR’s Documentation Review of Selected 

Electronic Fund Transfer Payments for 2003 and 2004 13

Appendix C—Department of Defense Comments 17

Appendix D—Acronyms 18

Appendix E—Audit Team Members 19

Appendix F—SIGIR Mission and Contact Information 20
1 

Development Fund for Iraq: The Coalition Provisional 

Authority’s Financial Controls for Electronic Fund 

Transfer Payments Diminished over Time 

SIGIR 12-013 April 30, 2012

Introduction 

The Coalition Provisional Authority (CPA) was established in May 2003 to provide for the 

temporary governance of Iraq following the conclusion of major combat operations in that 

country. United Nations Security Council Resolution 1483 established the Development Fund 

for Iraq (DFI) in May 2003 and assigned the CPA full responsibility for managing the fund. 

Resolution 1483 specified the DFI should be used in a transparent manner and for: (1) the 

humanitarian needs of the Iraqi people, (2) the economic reconstruction and repair of 

infrastructure, (3) the continued disarmament of Iraq, (4) the costs of civilian administration, and 

(5) other purposes benefiting the Iraqi people. 

The DFI comprised revenues from ongoing Iraqi oil sales, unencumbered Oil for Food deposits, 

and repatriated national assets. During its almost 14-month governance, the CPA had access to 

$20.7 billion in DFI funds and directed expenditures of about $14.1 billion. Federal Reserve 

Bank of New York (FRBNY) records show that $5.9 billion of the $14.1 billion in total 

expenditures were made using Electronic Fund Transfer (EFT) payments. SIGIR initiated this 

audit to determine whether the CPA properly accounted for its use of the $5.9 billion in EFT 

payments made with DFI funds. 

Background 

The CPA managed the DFI from May 2003 through June 2004 and had full responsibility for 

administering, using, and accounting for DFI funds. During that time period, funds were held in 

the DFI main account at the FRBNY until the CPA Administrator directed shipments of U.S. 

currency to Baghdad. SIGIR previously reported that there were 12 DFI currency shipments 

totaling about $10.2 billion to Iraq during the CPA’s governance.1

 In addition to directing the 

use of DFI funds that had been flown to Iraq, the CPA Administrator had the authority to direct 

the FRBNY to make EFT payments for reconstruction activities out of the DFI main account. 

The CPA Administrator designated the CPA Comptroller as the DFI funds manager. The 

Administrator also issued 12 Regulations which defined the institutions and authorities of the 

CPA. For example, Regulation Number 2, entitled the Development Fund for Iraq, described the 

responsibilities for the administration, use, accounting, and auditing of the DFI fund. The CPA 

also issued a DFI Policies and Procedures Manual which addressed the procedures to be 

followed when making payments by cash, check, or wire transfer. Some of the key supporting 

 

1 Development Fund for Iraq: The Coalition Provisional Authority Transferred Control over Most of the Remaining 

DFI Funds to the Central Bank of Iraq, SIGIR 12-001, 10/26/2011. 
2 

documentation associated with these transactions included contracts, purchase orders, public 

vouchers, material inspection and receiving reports, vendor invoices, and certificates of 

completion. 

The FRBNY provided us with an Excel spreadsheet showing that the CPA Administrator 

directed about 1,100 EFT payments totaling $5.9 billion in DFI funds from July 2003 through 

June 2004. These payments ranged in value from less than $100 to $450 million. EFT payments 

were made for a variety of items and services such as petroleum products, firearms and 

ammunition, trucks and other vehicles, firefighting equipment, radios and antennas, military 

uniforms, air transportation to deliver procured items, and Hajj-related expenses.2

 Overall, 

SIGIR reviewed 75 EFT payments, including 4 of the 10 largest dollar valued payments, to 

determine whether the CPA properly accounted for them. 

The FRBNY’s Excel spreadsheet provided a line-by-line listing of EFT payments made using 

DFI funds, but specifics regarding the transactions were limited. To make an EFT payment, the 

FRBNY needed only a letter from the CPA Administrator instructing it to make the payment. 

The CPA Comptroller was responsible for preparing the letter sent by the CPA Administrator to 

the FRBNY instructing it to make an EFT payment. These letters required, among other things, 

the signature of two CPA officials, the specified purpose of the transfer, and a recipient of the 

payment. The FRBNY executed EFT payments using Society for Worldwide Interbank 

Financial Telecommunications (SWIFT) messages. SWIFT messages provide a highly secure 

network to allow financial and non-financial institutions to exchange payment instructions and 

account information for EFT transactions. 

Three key documents were required to support each payment, and SIGIR’s evaluation focused on 

locating and reviewing these documents. The three documents are: 

 Public Voucher—we looked to see whether one authorized CPA official approved the 

voucher and another authorized CPA official certified the voucher for payment; 

 Material Inspection and Receiving Report—we looked to see whether there was 

documentation that a CPA official inspected and accepted the items or services procured; 

and 

 Vendor Invoice—we looked to see whether the invoice provided sufficient detail of the 

items (description, quantity, and unit price) or services procured so they could be 

compared to the material inspection and receiving report. 

According to a former CPA Comptroller, his office was responsible for obtaining the required 

financial documents to support a requested EFT payment. Once the Comptroller’s office had the 

documents, it prepared the letter whereby the CPA Administrator instructed the FRBNY to make 

an EFT payment for a specified amount of money from the DFI account to a specified recipient. 

 

2

 Hajj is a pilgrimage to Mecca in Saudi Arabia. One of a Muslim’s duties is to go on a Hajj, if in good health and 

with the means to do so, at least once during his or her lifetime. 
3 

Objective 

SIGIR’s objective for this report was to determine whether the CPA properly accounted for its 

use of the $5.9 billion in EFT payments made with DFI funds. 

SIGIR initially selected 81 EFT payments for review, including the 10 largest EFT payments. 

Six of the 10 largest payments were made to the U.S. Army Corps of Engineers. These six 

payments were eliminated from the original sample because SIGIR plans to perform a broader 

review of the U.S. Army Corps of Engineers’ controls over both EFT and cash payments. 

SIGIR’s final sample size was 75, and they accounted for $1.3 billion in payments. SIGIR 

evaluated 25 payments from 2003 and 50 payments from 2004. SIGIR originally selected 29 

payments for 2004. Four of these payments had different documentation requirements and are 

treated separately in the report. Of the remaining 25 payments, two of the three key documents 

were missing from two of the files. As a result, SIGIR expanded its original sample for 2004 to 

include an additional 21 related payments. Table 1 provides a breakdown of the 75 EFT sampled 

payments reviewed for 2003 and 2004. 

Table 1—Breakdown of the 75 EFT Sampled Payments Reviewed for 2003 and 

2004 

Year 

Number of 

Payments Sampled Dollar Value

2003 25 $24.0 million

2004 Initial 

Sample 

29 $1,250.5 million

2004 Expanded 

Sample 

21 $56.2 million

Totals 75 $1,330.7 million

Source: SIGIR analysis of CPA data.

For a discussion of the audit scope and methodology, see Appendix A. For the results of 

SIGIR’s documentation review of selected EFT payments for 2003 and 2004, see Appendix B. 

For the Department of Defense’s management comments, see Appendix C. For a list of 

acronyms used, see Appendix D. For the audit team members, see Appendix E. For the SIGIR 

mission and contact information, see Appendix F. 
4 

Documentation Supporting EFT Payments Made 

Using DFI Funds Was Better in 2003 than in 2004

SIGIR found 96% of the required documents supporting the 25 EFT payments made in 2003 in 

our sample. Our initial review of 29 EFT payments made in 2004 found many more documents 

missing than in 2003. We reviewed four of the 10 largest DFI payments—three payments to the 

World Food Program and one payment establishing a letter of credit—and found all of the 

documents necessary to support the payments. However, we found only 85.3% of the required 

documents supporting the remaining 25 payments that we initially reviewed in 2004. Due to the 

large number of documents missing in 2004, we expanded our sample to include another 21 EFT 

payments for that year and found only 30.2% of the required documents. 

Few Documents Were Missing from 2003 EFT Payment Files 

SIGIR found all but three of the required documents supporting 25 EFT payments made in 2003. 

These payments had a combined value of about $24 million. The results of our review are 

shown in Table 2. Data for each individual payment is presented in Appendix B. 

Table 2—Results of SIGIR Review of 25 Selected EFT Payments Made in 2003 

Document 

Documents 

required

Documents 

missing

Percent 

missing 

Public Voucher 25 0 0 

Material Inspection and 

Receiving Report 

25 3 12 

Invoice 25 0 0 

Totals 75 3 4% 

Source: SIGIR Analysis of CPA data. 

As shown in Table 2, three of the 75 required documents (4%) were missing from the 25 

payments that we reviewed. All three missing documents involved material inspection and 

receiving reports. Due to the absence of these reports, SIGIR cannot be certain that the items or 

services paid for using DFI funds were received. The items included 55-gallon drums of turbine 

oil, 55-gallon drums of hydraulic oil, and 10,000 hand-held weapons. Together, the three 

payments missing material inspection and receiving reports totaled $4.7 million or about 19.6% 

of the total value for the 25 sampled payments in 2003.

Substantially More Documents Were Missing from 2004 EFT 

Payment Files 

SIGIR found more documents missing in 2004 than in 2003. From our review of financial 

documents supporting SIGIR’s original sample of 29 EFT payments made in 2004, 11 key 

documents could not be found. For two payments, SIGIR could not locate two of the three key 
5 

financial documents, which resulted in SIGIR expanding its sample to include 21 additional 

payments. All documentation was found for the three payments to the World Food Program and 

the one payment establishing a letter of credit. The results of our review for the remaining 25 

payments totaling $57.5 million are shown in Table 3. Data for each individual payment is 

presented in Appendix B. 

Table 3—Results of SIGIR Review of 25 Selected EFT Payments Made in 2004 

Document 

Documents 

required

Documents 

missing

Percent 

missing 

Public Voucher 25 0 0 

Material Inspection and 

Receiving Report 

25 9 36 

Invoice 25 2 8 

Totals 75 11 14.7% 

Source: SIGIR Analysis of CPA data. 

As shown in Table 3, of the 75 required documents, 11 were missing—9 material inspection and 

receiving reports, and 2 invoices (14.7%). Without material inspection and receiving reports, 

SIGIR cannot be certain that the items or services paid for were received. The missing material 

inspection and receiving reports were for farm chemicals, electrical equipment, construction 

materials, propane gas, gasoline, farm equipment, vehicles, fuel products, and lodging for the 

2004 Hajj. Together, the missing reports totaled $11.2 million or about 19.5% of the total value 

of our sample. 

SIGIR’s sample also found that, although all 25 payments had a signed public voucher approving 

payment, a CPA official had not signed and certified as correct 24 of the 25 public vouchers 

(96%). 

SIGIR Expanded Its Sample of 2004 Payments 

Because of the value of the missing 2004 documentation in our original sample, SIGIR expanded 

its sample to include an additional 21 payments. The additional payments included 12 payments 

to support the 2004 Hajj and 9 payments to a fertilizer and pesticide distribution company. 

Hajj Payments 

SIGIR found that 34 of the 36 documents required to support the 12 Hajj-payments were 

missing. These 12 payments totaled $40.4 million and ranged in value from $200,000 to $13.9 

million. The results of our review are shown in Table 4. Data for each of the 12 additional Hajjrelated payments is presented in Appendix B. 
6 

Table 4—Results of SIGIR Review of 12 Additional 2004 Hajj-Related Payments 

Document 

Documents 

required

Documents 

missing

Percent 

missing 

Public Voucher 12 10 83.3 

Material Inspection and 

Receiving Report 

12 12 100 

Invoice 12 12 100 

Totals 36 34 94.4% 

Source: SIGIR Analysis of CPA data. 

SIGIR found only two payments, both advance payments, that had a signed public voucher 

approving payment—one for $900,000 to an individual for Hajj air transportation and the other 

for $5 million to an individual for Hajj lodging. We could not find any other financial 

documents supporting the other 10 payments. A former CPA official told us that he constantly 

asked the Iraqis for contracts and receipts to support Hajj-related payments but rarely got them. 

He said that on one occasion he was provided a document that was identified as a contract but he 

was not certain because it was in Arabic. 

There is also a question about one of the two payments supported by a public voucher. SIGIR 

found documents showing that two days after the $900,000 payment for air transportation was 

made, the contract was terminated because the contractor was unable to provide proof of 

certification and insurance for five planes as stipulated in the contract. However, we could not 

find any documents indicating that the money was recovered. 

An FRBNY Excel spreadsheet listing EFT payments, states that the Hajj-related payments were 

for food, lodging, and transportation for Iraqis making the 2004 pilgrimage to Saudi Arabia. For 

example, the spreadsheet identifies a $9 million payment to an individual for “lodging, 

transportation, and other fees for 30,000 pilgrims in Saudi Arabia.” However, SIGIR could not 

find any documents showing how the funds were spent. 

SIGIR also found conflicting information regarding how many Iraqis attended the 2004 Hajj 

which further confuses the issue of how much was likely to have been spent and for what 

purposes. Program Review Board minutes dated December 29, 2003, stated that the Minister of 

Finance’s 2004 Hajj budget ($37.5 million) was based on Saudi Arabia authorizing 25,000 Iraqis 

to attend the Hajj.3

 The Board minutes also noted that the Minister was requesting $5.5 million 

in supplemental funding for 10,000 additional Iraqis that Saudi Arabia approved for Hajj travel. 

Further, an e-mail among CPA officials, dated January 5, 2004, and the $9 million EFT payment 

noted above that was made on January 13, 2004, references 30,000 Iraqis traveling for the Hajj. 

Lastly, a former CPA official informed us he calculated that the number of Iraqis attending the 

Hajj was closer to 40,000. 

 

3

 The Program Review Board, established by the CPA Administrator, was responsible for reviewing and making 

recommendations on which DFI contracts should be awarded. 
7 

Fertilizer and Pesticide Distribution Payments 

Of the nine payments for fertilizer and pesticide distribution, SIGIR found that 10 of the 27 

required supporting documents were missing (37%). The nine payments totaled $15.8 million in 

DFI funds and ranged in value from $101,016 to $4.15 million. The results of our review are 

presented in Table 5. Data for each individual payment is presented in Appendix B. 

Table 5—Results of SIGIR Review of Nine Additional Agricultural-related EFT 

Payments Made in 2004 

Document 

Documents 

required

Documents 

missing

Percent 

missing 

Public Voucher 9 0 0 

Material Inspection and 

Receiving Report 

9 8 88.9 

Invoice 9 2 22.2 

Totals 27 10 37% 

Source: SIGIR Analysis of CPA data. 

As shown in Table 5, eight payments were missing material inspection and receiving reports and 

two were missing the vendor invoice. Without the material inspection and receiving reports, 

there is no evidence that the items or services were received. The items paid for included 

fertilizer, pesticides, and agricultural materials and equipment. Together, the eight payments 

totaled $11.6 million or about 73.4% of the total value for the nine additional payments that we 

reviewed. 

World Food Program and Letter of Credit 

The final four payments reviewed for 2004 included three payments to the World Food Program 

and one payment to establish a letter of credit. These four payments were selected because they 

were among the 10 largest EFT payments. The World Food Program payments were covered in 

a Memorandum of Understanding between the United Nations World Food Program, the 

Ministry of Trade of Iraq, and the CPA. The Memorandum of Understanding stipulated that the 

CPA was responsible for making installment payments to the World Food Program based on a 

mutually agreed-upon schedule. For example, the first of three installments was for $110 million 

and was due within seven days of signing the Memorandum of Understanding. The 

Memorandum of Understanding also stated that the World Food Program would contract with 

suppliers using its rules and regulations to ensure procurement of commodities. As a result, the 

CPA only provided the money, and the World Food Program did the contracting. 

Lastly, throughout the CPA’s governance, multiple letters of credit were established between the 

Trade Bank of Iraq, a financial institution, and the CPA, that served to guarantee payment for 

future products or services. The $283 million payment, which was the third largest EFT 

payment, served only to establish the letter of credit and, as such, there were no products or 

services involved with the transaction for review during this audit. However, SIGIR reviewed 

CPA as well as FRBNY records to verify that this payment and the three payments made to the 

United Nations World Food Program mentioned above were properly made. 
8 

Conclusions and Recommendations 

Conclusions

The CPA did a better job of documenting EFT payments in the first half of its governance of Iraq 

than it did in the last half. The material inspection and receiving report was the most frequently 

missing financial document among those that we looked for in our original as well as our 

expanded sample of payments, particularly for 2004. In the absence of these reports there are no 

assurances that the products or services paid for were received. The almost complete absence of 

financial documents for more than $44 million in 2004 Hajj-related payments using DFI funds 

also provides no assurances that products or services paid for were actually received or that the 

funds were not lost or stolen. SIGIR has not concluded that fraud, waste, or abuse occurred with 

these Hajj-related or other 2004 payments, but the absence of key financial documentation and 

the corresponding lack of transparency for the amount of funds expended or how the funds were 

spent raises the overall risk that these problems could have occurred. 

Recommendations

This report does not contain recommendations. 

 
9 

Management Comments and Audit Response 

The Office of the Under Secretary of Defense (Comptroller) provided written comments on a 

draft of this report and, in general, agreed with the report. The comments are printed in their 

entirety in Appendix C. 
10 

Appendix A—Scope and Methodology 

Scope and Methodology 

In January 2012, the Special Inspector General for Iraq Reconstruction (SIGIR) initiated Project 

1112c to review the extent to which the Coalition Provisional Authority (CPA) retained records 

documenting Electronic Fund Transfer (EFT) payments made through the Federal Reserve Bank 

of New York (FRBNY) using Development Fund for Iraq (DFI) funds. SIGIR’s objective for 

this report was to determine whether the CPA properly accounted for its use of the $5.9 billion in 

EFT payments made with DFI funds. 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, as amended. SIGIR conducted its review from 

January through April 2012, in Arlington, Virginia. 

To determine whether the CPA properly accounted for EFT payments made using DFI funds, we 

reviewed CPA policies, procedures, and regulations for making wire transfer payments and 

accounting for DFI funds. We also reviewed FRBNY and Department of Defense EFT payment 

records for May 2003 through June 2004. These records consisted of Excel spreadsheets 

containing EFT payment information as well as hard copy and electronic data files containing 

financial information associated with EFT payments made using DFI funds. In addition, we met 

with Office of the Under Secretary of Defense (Comptroller) officials and a former CPA official 

in Washington, D.C. We also had a telephone discussion with another former CPA official 

affiliated with the Iraqi Ministry of Finance. 

To evaluate the adequacy of the CPA’s internal controls, we selected 75 EFT payments for 

review. Six additional EFT payments made to the U.S. Army Corps of Engineers were part of an 

original sample of 81 payments but SIGIR eliminated them from the sample because they will be 

reviewed as part of a broader review of U.S. Army Corps of Engineers’ controls over both EFT 

and cash payments. These payments were among the 10 largest made by the FRBNY. 

The 75 sampled payments fell into three categories: (1) four of the 10 largest dollar-valued EFT 

payments, (2) 50 additional EFT payments that were judgmentally selected from remaining 2003 

and 2004 payments, and (3) 21 payments that were associated with two of the 25 payments we 

reviewed for 2004 that were missing multiple financial documents. 

For each payment, we looked for three key financial supporting documents—a public voucher, a 

material inspection and receiving report, and a vendor invoice. Once we determined whether 

these documents were contained in the sampled project files, we then looked for several specifics 

associated with each document. For example, for the public voucher we determined whether one 

authorized CPA official approved it for payment and another authorized CPA official certified it 

as correct and proper for payment. 

To evaluate internal controls, we initially selected the 10 largest dollar valued EFT payments 

made using DFI funds which totaled $2.4 billion or more than 40% of the total value of CPAdirected EFT payments made using DFI funds. Three of these payments were made to a United 

Nations food organization based on a Memorandum of Understanding which did not require the 
11 

CPA to obtain financial supporting documentation. Six of the seven remaining 10 largest 

payments will be the subject of a follow-on audit on which SIGIR plans to report later this year. 

The last of the 10 largest payments served only to establish a letter of credit and, as such, there 

were no products or services involved with the transaction for review during this audit. 

However, SIGIR verified that this payment and the three payments to the United Nations food 

organization were made. 

To further evaluate internal controls, we judgmentally selected 50 additional payments from two 

time periods—25 payments each from 2003 and 2004. For each time period, we selected a cross 

section of vendors, products and services, and payment amounts, and looked for and evaluated 

the adequacy of the public vouchers, material inspection and receiving reports, and the vendor 

invoices. If we could not find one of these documents in the CPA’s electronic database of 

payment files or available hard-copy contract files, we recorded the document as missing. The 

results for all 50 payments reviewed are presented in Appendix B. 

Questions about the absence of supporting documentation for two of the first 25 sampled 

payments for 2004 that were missing material inspection and receiving reports and vendor 

invoices led us to review other payments related to them but outside of the original sampled 

payments. We found 21 additional payments made in 2004 associated with the two payments 

that were missing two of the three key financial documents that we looked for. In the expanded 

review, we looked for the same three financial documents—public vouchers, material inspection 

and receiving reports, and vendor invoices—and used the same sources in searching for the 

documents as we did in the 25 sampled payments. The results of the 21 additional payments 

reviewed are presented in Appendix B. 

This 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 objectives. 

Use of Computer-processed Data 

In performing this audit, SIGIR obtained FRBNY computer-generated data but did not assess the 

system’s general controls because this was a basic FRBNY accounting system that is reviewed as 

part of the agency’s annual financial statements audit. Moreover, our substantive testing of the 

75 transactions revealed no material errors. Therefore, we concluded that the computerprocessed information was sufficiently reliable and the best available for purposes of our audit. 

Internal Controls 

In performing this audit, we reviewed the CPA’s internal controls for administering DFI 

payments. As a key part of this work, we reviewed the CPA’s project and payment files as well 

as FRBNY accounting records. We also held discussions with FRBNY and former CPA 

officials to gain an understanding of the internal controls governing EFT payments. We 

concluded that controls governing the payment of DFI funds were sufficiently reliable for use in 
12 

this audit. We presented the results of our review of internal controls in this report, as 

appropriate. 

Prior Coverage 

We reviewed the following SIGIR reports: 

Development Fund for Iraq: Department of Defense Cannot Fully Account for the Funds It 

Used after the Coalition Provisional Authority Dissolved, SIGIR 12-008, 1/27/2012. 

Development Funds for Iraq Returned to the Central Bank of Iraq, SIGIR 12-012, 1/13/2012. 

Development Fund for Iraq: The Coalition Provisional Authority Transferred Control over Most 

of the Remaining DFI Funds to the Central Bank of Iraq, SIGIR 12-001, 10/26/2011. 

Process for Continuing Invoice Payment for the Development Fund for Iraq Needs Attention, 

SIGIR 10-014, 4/27/2010. 

Development Fund for Iraq: Policy Guidance Needed To Enhance Accountability of USACEManaged Funds, SIGIR 10-006, 10/29/2009. 

 
13 

Appendix B—Results of SIGIR’s Documentation 

Review of Selected Electronic Fund Transfer 

Payments for 2003 and 2004 

For each payment in the following four tables, we looked for three financial documents: public 

voucher, material inspection and receiving report, and vendor invoice. If we found the document 

in the files, we recorded it with an X, and if it was not found in the files, we recorded it with a 

dash (-). Table 1 shows the results of SIGIR’s documentation review of 25 electronic fund 

transfer payments the CPA authorized from July through December 2003. 

Table 1—Documentation Check List for 2003 Electronic Fund Transfer Payments 

Payment Description 

Payment 

Amount 

Payment 

Date

Public 

Voucher 

Material 

Inspection 

and Receiving 

Report 

Vendor 

Invoice 

Assault Rifles $2,832,000 08/23/2003 X X X 

Power Station 

Reconstruction $1,952,637 09/24/2003 X X X 

Electrical Equipment $79,265 09/28/2003 X X X 

Telecommunications 

Equipment $217,800 10/14/2003 X X X 

Gas Generators $113,850 10/14/2003 X X X 

Firearms and Ammunition $4,569,670 10/15/2003 X - X 

Gas Generators $60,076 10/23/2003 X X X 

Chartered Aircraft $616,680 10/23/2003 X X X 

Gas Turbine $2,005,377 10/29/2003 X X X 

Imported Electricity $1,652,365 10/27/2003 X X X 

Turbine Motors $21,564 10/29/2003 X X X 

Hydraulic Oil $60,480 11/03/2003 X - X 

Technical Services for 

Turbines $64,200 11/07/2003 X X X 

Copying Services $195,000 11/10/2003 X X X 

Fire Fighting Equipment $85,520 11/14/2003 X X X 

Fire Fighting Equipment $483,800 11/14/2003 X X X 

Electrical Products $211,503 11/14/2003 X X X 

Logistics Support $3,759,312 12/03/2003 X X X 

Specialized Vehicles $3,746,000 12/03/2003 X X X 

War Insurance $172,580 12/08/2003 X X X 

Vehicle Supply and Delivery $748,800 12/15/2003 X X X 

Advertising Fees $14,954 12/15/2003 X X X 
14 

Legal Fees $36,095 12/15/2003 X X X 

Turbine Oil $84,000 12/22/2003 X - X 

Hand-held Radios $186,000 12/30/2003 X X X 

Totals $23,969,528 25 22 25 

Documents Required 75 

Documents in File 72 

Documents Missing 3 

Percentage of Documents Missing 4% 

Source: SIGIR analysis of CPA data. 

Table 2 shows the results of SIGIR’s documentation review of 25 electronic fund transfer 

payments the CPA authorized from January through June 2004. 

Table 2—Documentation Check List for 2004 Electronic Fund Transfer Payments 

Payment Description 

Payment 

Amount 

Payment 

Date

Public 

Voucher 

Material 

Inspection 

and Receiving 

Report 

Vendor 

Invoice 

Hajj Lodging $4,250,237 01/05/2004 X - - 

Legal Services $266,500 02/02/2004 X X X 

Electrical Sub-Stations $2,400,000 03/12/2004 X X X 

Pipeline Repair Equipment $5,996,508 03/16/2004 X X X 

Farm Chemicals $100,747 03/18/2004 X - - 

Legal Services $275,488 08/05/2004 X X X 

Telecommunications 

System $5,637,072 04/07/2004 X X X 

Electrical Equipment $133,029 04/21/2004 X - X 

Imported Electricity $3,899,817 04/28/2004 X X X 

Construction Materials $213,450 04/29/2004 X - X 

Plant and Equipment $12,078,570 05/06/2004 X X X 

Advertising Equipment $1,145,400 05/10/2004 X X X 

Propane Gas $823,486 05/10/2004 X - X 

Pipe Fittings $221,262 05/10/2004 X X X 

Gasoline $95,504 05/10/2004 X - X 

Media Network Fees $6,761,064 05/11/2004 X X X 

Security Services $5,634,571 05/11/2004 X X X 

Farm Equipment $1,211,640 05/11/2004 X - X 

Equipment, Tools, and 

Spare Parts $1,085,399 05/11/2004 X X X 

Street Lighting $377,205 05/11/2004 X X X 
15 

Power Transformer $328,000 05/11/2004 X X X 

Condenser Tube $124,860 05/11/2004 X X X 

Education Materials $70,720 05/11/2004 X X X 

Vehicles $3,917,529 06/07/2004 X - X 

Fuel Products $420,497 06/28/2004 X - X 

Totals $57,468,555 25 16 23 

Documents Required 75 

Documents in File 64 

Documents Missing 11 

Percentage of Documents Missing 14.7% 

Source: SIGIR analysis of CPA data. 

Table 3 shows the results of SIGIR’s expanded documentation review of 12 electronic fund 

transfer payments associated with the 2004 Hajj. 

Table 3—Documentation Check List for Expanded Review of 2004 Hajj-Related 

Electronic Fund Transfer Payments 

Payment Description 

Payment 

Amount 

Payment 

Date

Public 

Voucher 

Material 

Inspection 

and Receiving 

Report 

Vendor 

Invoice 

Advance Payment to 

Individual for Yearly Hajj 

Event 

$5,000,000 12/24/2003 X - - 

Payment to Individual for 

Lodging, Transportation and 

Other Fees for 30,000 

Pilgrims in Saudi Arabia 

$9,000,000 01/13/2004 X - - 

Payment to Individual for Air 

Transportation $900,000 01/14/2004 - - - 

Advance Payment to Airline 

for Transportation $2,072,280 01/16/2004 - - - 

Advance Payment to Airline 

for Transportation $1,795,500 01/16/2004 - - - 

Advance Payment to Airline 

for Transportation $1,165,000 01/16/2004 - - - 

Advance Payment to Airline 

for Transportation $942,400 01/26/2004 - - - 

Payment to Airline for 

Transportation $2,483,880 1/26/2004 - - - 

Payment to Airline for 

Transportation $1,795,500 01/26/2004 - - - 

 
16 

Payment to Airline for 

Transportation $1,178,000 01/26/2004 - - - 

Payment to Individual for 

Administrative Expenses $200,000 01/29/2004 - - - 

Payment to Individual for 

Hajj $13,900,000 02/02/2004 - - - 

Totals $40,432,560 2 0 0 

Documents Required 36 

Documents in File 2 

Documents Missing 34 

Percentage of Documents Missing 94.4% 

Source: SIGIR analysis of CPA data. 

Table 4 shows the results of SIGIR’s documentation review of nine electronic fund transfer 

payments associated with a Lebanese fertilizer and pesticide distribution company. 

Table 4—Documentation Check List for Expanded Review of Electronic Fund 

Transfer Payments Made to a Lebanese Fertilizer and Pesticide Distribution 

Company 

Payment Description 

Payment 

Amount 

Payment 

Date

Public 

Voucher 

Material 

Inspection 

and Receiving 

Report 

Vendor 

Invoice 

Fertilizer $2,739,395 02/02/2004 X - X 

Fertilizer $2,473,880 03/02/2004 X - X 

Fertilizer $629,330 03/18/2004 X - - 

Fertilizer $405,140 03/18/2004 X - - 

Agricultural Pipes $101,016 03/18/2004 X - X 

Fertilizer $4,076,470 04/14/2004 X - X 

Pesticides $445,422 04/21/2004 X - X 

Agricultural Materials $762,904 04/29/2004 X - X 

Fertilizer $4,152,150 06/25/2004 X X X 

Totals $15,785,707 9 1 7 

Documents Required 27 

Documents in File 17 

Documents Missing 10 

Percentage of Documents Missing 37% 

Source: SIGIR analysis of CPA data. 
17 

Appendix C—Department of Defense Comments 
18 

Appendix D—Acronyms 

Acronym Description 

CPA Coalition Provisional Authority 

DFI Development Fund for Iraq 

EFT Electronic Fund Transfer 

FRBNY Federal Reserve Bank of New York 

SIGIR Special Inspector General for Iraq Reconstruction 

SWIFT Society for Worldwide Interbank Financial Telecommunications 
19 

Appendix E—Audit Team Members 

This report was prepared and the audit conducted under the direction of James Shafer, 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: 

Benjamin H. Comfort 

L. Michael Welsh 
20 

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.civ@mail.mil 

Public Affairs Christopher Griffith 

Director of Public Affairs 

Mail: Office of the Special Inspector General 

for Iraq Reconstruction 

 2530 Crystal Drive 

 Arlington, VA 22202-3940 

Phone: 703-604-0693 

Fax: 703-428-0818 

Email: PublicAffairs@sigir.mil