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 11-007 

Why SIGIR Did This Audit 

In April 2003, Public Law (P.L.) 108-11 

appropriated $2.48 billion to the President for 

humanitarian assistance, rehabilitation, and 

reconstruction in Iraq, referred to as the Iraq 

Relief and Reconstruction Fund 1 (IRRF 1). 

The Office of Management and Budget (OMB) 

apportioned these funds, for the most part, to the 

U.S. Agency for International Development 

(USAID), the Department of Defense 

(DoD)/U.S. Army, the Department of State 

(DoS), and the U.S. Department of the Treasury 

(Treasury). The funds were available for new 

obligations through September 30, 2004, and 

were in expired accounts for the next five years 

until September 30, 2009. While in expired 

accounts, the funds were only available to pay 

existing obligations or legitimate adjustments to 

obligations incurred during the period. They 

were not available for new obligations. As of 

September 30, 2009, the account was closed, 

and remaining funds were not available for any 

purpose. 

The Special Inspector General for Iraq 

Reconstruction (SIGIR) is reporting 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 1, including the 

amounts apportioned to U.S. government 

organizations, obligated during the period of 

availability, adjusted during the five years the 

funds were in expired accounts, and canceled 

when the account was closed. 

Recommendations 

This report does not contain recommendations. 

Management Comments 

Because this report did not contain any 

recommendations, the responsible agencies were 

not required to, and did not, submit comments. 

January 25, 2011 

IRAQ RELIEF AND RECONSTRUCTION FUND 1: REPORT ON 

APPORTIONMENTS, EXPENDITURES, AND CANCELED FUNDS 

What SIGIR Found

During fiscal years (FYs) 2003 and 2004, OMB apportioned virtually all of 

the $2.48 billion appropriated for IRRF 1. OMB apportioned $2.25 billion 

for new obligations with most going to 3 organizations—USAID received 

$1.62 billion; DoD/U.S. Army received $518 million; and DoS received 

$101 million. P.L. 108-11 also specified that funds were to be used to fully 

reimburse accounts administered by DoS, Treasury, and USAID for related 

obligations incurred prior to enactment. OMB apportioned about $239 

million to meet these previously incurred obligations with $212 million 

going to USAID, which subsequently returned $10 million of the funds to 

OMB. DoS received about $25 million as reimbursement for its prior 

obligations. This report does not address the status of the funds that OMB 

provided for these previously incurred obligations. 

As of September 30, 2004, the organizations’ reports on budget execution 

and budgetary resources show that virtually all of the $2.25 billion had been 

obligated and only $257,000 was not obligated. In the first 2 years of the 5-

year expired-funds period, about $28 million was deobligated and 

reobligated, accounting for virtually all of the deobligations/reobligations 

during the expired funds period. DoD/U.S. Army deobligated/reobligated 

the most funds—deobligating $14.52 million in FY 2005 and reobligating 

$10.66 million in that same fiscal year and the remainder in FY 2006—but 

these funds still accounted for less than 3% of its $518.28 million in 

apportioned funds. 

The IRRF 1 account was closed, and funds were canceled as of September 

30, 2009, with $18.46 million being returned to Treasury’s general fund. 

Most of the funds were returned by USAID ($14.13 million) and DoS ($3.53 

million). As of that date, USAID had about $2.08 million of obligations 

incurred under IRRF 1 that will be paid from other available funds. 

Furthermore, USAID had a negative cash balance in its account as of 

September 30, 2009, and, as a result, its account was not closed but was 

adjusted in FY 2010. USAID officials said that the negative cash balance 

occurred because of an erroneous journal entry. They said that the need for 

adjustment started in FY 2006 and adjustments for the account will be 

finalized in early FY 2011. 

The organizations expended IRRF 1 under 14 relief and reconstruction 

programs. USAID had 7 programs, and its “Restore Economically Critical 

Infrastructure” program was the largest with expenditures of $1.12 billion. 

USAID primarily used IRRF 1 to help in (1) rebuilding Iraq’s roads and 

ports, (2) facilitating transportation of humanitarian assistance, and (3) 

restoring the power supply to health, educational, and water supply facilities. 

DoD/U.S. Army had 3 programs: the 2 largest used $464.96 million to help 

restore Iraq’s electricity and oil sectors. 

IRRF 1 was quickly apportioned by OMB, and the organizations receiving 

funds also acted quickly to obligate the funds. As the funds moved from 

available for obligation, to expired funds, and then to canceled funds and 

closed account, no significant issues related to IRRF 1 apportionment, 

obligation, expenditure, and cancellation were identified.
SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

400 Army Navy Drive • Arlington, Virginia 22202 

January 25, 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 1: Report on Apportionments, Expenditures, 

and Canceled Funds (SIGIR 11-007) 

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

of funds provided under Public Law 108-11, referred to as Iraq Relief and Reconstruction Fund 

1. 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 1014a. 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 1 Apportioned, Obligated, and Expended 4

OMB Apportioned IRRF 1 4

Most Funds Obligated in the First Year and Few Funds Expired 5

Funds Deobligated and Reobligated during Expired Funds Period 7

Small Amount Canceled at End of FY 2009 and Some Obligations Remain 7

Concluding Observation 10

Appendix A—Scope and Methodology 11

Appendix B—IRRF 1 Expenditures by Organization and Program 13

Appendix C—Acronyms 16

Appendix D—Audit Team Members 17

Appendix E—SIGIR Mission and Contact Information 18
1 

Iraq Relief and Reconstruction Fund 1: Report on 

Apportionments, Expenditures, and Canceled Funds 

SIGIR 11-007 January 25, 2011

Introduction 

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

Reconstruction (SIGIR) conduct audits of the management and expenditure of funds for Iraq 

reconstruction activities, including the transfer of such funds between and among U.S. 

government organizations. As a part of this effort, SIGIR is reporting on the status of the 

appropriated funds and other funds, such as the Development Fund for Iraq and Vested and 

Seized Funds1, that have been used in Iraq relief and reconstruction efforts.

This report addresses Iraq Relief and Reconstruction Fund 1 (IRRF 1), the initial U.S. 

appropriated funds for Iraq relief and reconstruction. In April 2003, P.L. 108-11 appropriated to 

the President $2.475 billion for necessary expenses for humanitarian assistance in and around 

Iraq, and to carry out the purposes of the Foreign Assistance Act of 1961 for rehabilitation and 

reconstruction in Iraq. 

Background 

The funds provided by P.L. 108-11, known as IRRF 1, were available for obligation until 

September 30, 2004, to pay costs including: (1) water/sanitation infrastructure; (2) feeding and 

food distribution; (3) relief efforts related to refugees and others; (4) electricity; (5) healthcare; 

(6) telecommunications; (7) economic and financial policy; (8) education; (9) transportation; 

(10) rule of law and governance; (11) humanitarian demining; and (12) agriculture. The P.L. 

also directed that these funds were to be used to reimburse three U.S. government organizations 

for Iraq relief and reconstruction obligations incurred prior to the law’s enactment. 

After an appropriation act, the Office of Management and Budget (OMB), in accordance with its 

Circular A-112

, 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 1 account, the symbol 

was 11-1096, and the period of availability for new obligations was FYs 2003 and 2004. OMB 

made apportionments in both FY 2003 and FY 2004. 

The P.L. specified that funds were to be apportioned to only the Department of State (DoS), 

United States Agency for International Development (USAID), the Department of Treasury 

 

1 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. 

2

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

reports. 
2 

(Treasury), the Department of Defense (DoD), and the Department of Health and Human 

Services. 

 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 1 programs. 

 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. 

 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 

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

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

 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 virtually all of 

IRRF 1 for DoD directly to the U.S. Army. 

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

possible recipient of IRRF 1, was not apportioned monies by OMB. 

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 
3 

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. 

IRRF 1 was available for new obligations during FY 2003 and FY 2004. After September 30, 

2004, any unobligated balance was considered expired and remained available only to cover 

legitimate obligation adjustments for five years, through September 30, 2009. At that time, the 

IRRF 1 account was closed, and any remaining funds were canceled—no longer available for 

obligation or expenditure for any purpose. Any outstanding obligations at that time would have 

to be paid from a current appropriation established for the same general purpose. 

Objective 

Our objective for this report is to address the status of IRRF 1, including the amounts 

apportioned to U.S. government organizations, obligated during the period of availability, 

adjusted during the five years the funds were in expired accounts, and canceled when the account 

was closed. 

For a discussion of the audit scope and methodology, see Appendix A. For IRRF 1 expenditures 

by organization and program, see Appendix B. For a list of acronyms, see Appendix C. For the 

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

Appendix E. 
4 

IRRF 1 Apportioned, Obligated, and Expended 

During FYs 2003 and 2004, OMB apportioned virtually all of the $2.48 billion IRRF 1 

appropriation. For new obligations, OMB apportioned $2.25 billion, with most funds going to 3 

organizations—USAID received $1.62 billion; the DoD/U.S. Army received $518 million; and 

DoS received $101 million. Because P.L. 108-11 specified that funds were also to be used to 

fully reimburse accounts administered by DoS, Treasury, and USAID for related obligations 

incurred prior to the Act, OMB apportioned a net of about $229 million to meet these previously 

incurred obligations, including $202 million to USAID. 

The organizations acted quickly to obligate the apportioned funds for new obligations. As of 

September 30, 2004, after which any unobligated funds would expire, all but $257,000 had been 

obligated. Even though DoD/U.S. Army was apportioned over $52 million in the last 2 weeks of 

FY 2004, it obligated all but a small amount. In FYs 2005 and 2006, the first 2 years of the 5-

year expired funds period, about $28 million of funds were deobligated and reobligated, 

accounting for virtually all of the deobligations/reobligations during the expired funds period. 

DoD/U.S. Army had the most funds deobligated/reobligated—$14.52 million deobligated in FY 

2005 and then reobligated in FYs 2005 and 2006—but these funds still accounted for less than 

3% of its $518.28 million in apportioned funds. 

As of September 30, 2009, the IRRF 1 account was closed, and $18.46 million in unexpended 

funds were canceled. These funds were returned to the U.S. Treasury’s general fund, including 

$14.13 million from USAID and $3.53 million from DoS. However, USAID had $2.08 million 

in obligations remaining at that time and recorded these obligations against other available funds. 

OMB Apportioned IRRF 1 

Shortly after P.L. 108-11 was enacted in April 2003, OMB began apportioning IRRF 1. The first 

apportionments for new obligations were made in May and June 2003 to USAID, for about $315 

million. During July and August 2003, OMB apportioned additional funds to USAID and also 

apportioned smaller amount to DoS and Treasury. In September 2003, DoD/U.S. Army was 

apportioned $466 million. By the end of FY 2003, OMB had apportioned about $2.04 billion—

more than 90% of the funds available for new obligations—to 4 organizations. Table 1 shows 

the total funds apportioned for new obligations by OMB in FYs 2003 and 2004 and the 

organizations receiving the funds. 

 
5 

Table 1—OMB Apportionments of IRRF 1 for New Obligations during FYs 2003 

and 2004 ($ in thousands) 

Amounts Apportioned 

Organization FY 2003 FY 2004 Total

USAID $1,526,109 $97,200 $1,623,309

DoD/U.S. Army 466,000 52,279 518,279

DoS 39,269 61,482 100,751

U.S. Treasury 3,750 -21 3,729

DoD/Office of the Secretary of Defense 0 60 60

Total $2,035,128 $211,000 $2,246,128

Source: SIGIR analysis of OMB and Treasury data. 

The IRRF 1 appropriation of $2.475 billion was intended primarily to fund humanitarian and 

reconstruction programs in and around Iraq; however, P.L. 108-11 specified that DoS, Treasury, 

and USAID were to be fully reimbursed for obligations incurred for the law’s purposes prior to 

enactment. These prior obligations had been recorded against funds appropriated for foreign 

operations, export financing, and related operations. Accordingly, in addition to funds for new 

obligations, OMB apportioned $238.85 million of IRRF 1 to meet those previously incurred 

obligations. Again, USAID received the bulk of these funds, including $100 million to 

reimburse its Development Assistance Program (USAID subsequently returned $10 million of 

these funds to OMB); $100 million for its Economic Support Fund; and $12 million for its 

Transition Initiatives Program. DoS received about $24.60 million to reimburse its International 

Narcotics and Law Enforcement Program, and Treasury received $2.25 million for its 

International Affairs Technical Assistance Program. This report does not address the status of 

those funds that OMB provided for these previously incurred obligations. Accordingly, the 

amounts of expenditures and obligations in this report do not include those funds apportioned by 

OMB for prior obligations. 

Most Funds Obligated in the First Year and Few Funds Expired 

Although initial IRRF 1 apportionments were not made until May and June 2003—with about 4 

months remaining in FY 2003—most of these funds were obligated by the end of FY 2003. 

Table 2 shows that apportionments in FY 2003 totaled $2.04 billion. The organizations 

obligated $1.96 billion (or 96% of the funds), with only $74 million remaining unobligated at the 

end of the FY 2003. 

 
6 

Table 2—IRRF 1 Apportionments and Obligations at the End of FY 2003 

($ in thousands) 

Organization 

Apportioned

in FY 2003

Obligated 

in FY 2003 

Unobligated at

 end of FY 2003 

USAID $1,526,109 $1,477,089 $49,020

DoD/U.S. Army 466,000 454,765 11,235

DoS 39,269 28,267 11,002

U.S. Treasury 3,750 520 3,230

Total $2,035,128 $1,960,641 $74,487

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

As shown in Table 2, the Treasury is the only organization that that did not obligate the vast 

majority of it funds during FY 2003. At the end of the year, it had obligated only about 14% of 

its apportioned IRRF 1 funds. 

Moreover, by the end of FY 2004, after which the IRRF 1 account was expired, virtually all 

apportioned funds had been obligated. Table 3 shows the amounts apportioned, obligated, and 

expired. 

Table 3—IRRF 1 Apportionments, Obligations, and Expired Funds at the End of 

FY 2004 ($ in thousands) 

Organization Apportioned Obligated Expired

USAID $1,623,309 $1,623,146a

 $163

DoD/U.S. Army 518,279 518,246 33

DoS 100,751 100,691 60

U.S. Treasury 3,729 3,728 1

DoD/Office of the Secretary of Defense 60 60 0

Total $2,246,128 $2,245,871 $257

Note: 

a USAID’s obligated amount includes (1) a $5 million grant to the U.S. Trade and Development Agency, and (2) a $461 thousand reduction to 

adjust for a previously reported improper obligation.

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

As shown, the organizations obligated almost all available funds before the funds expired. We 

noted that DoD/U.S. Army was apportioned $52.28 million by OMB with about 2 weeks 

remaining in FY 2004 and was able to obligate all except $33,000 by the end of September. If 

DoD/U.S. Army had not obligated these funds by the end of FY 2004, they would have expired 

and therefore would not have been available for new obligations. 
7 

Funds Deobligated and Reobligated during Expired Funds Period 

The organizations’ reports for IRRF 1 show that about $28 million of funds were deobligated 

and reobligated during FYs 2005 and 2006, the first 2 years of the 5-year expired funds period. 

Virtually all of the deobligations/reobligations occurred during these two years. Deobligations 

and reobligations are permissible during the expired funds period as long as the available funds 

are used for adjustments to or payments of valid existing obligations and not for new obligations. 

Numerous SIGIR reports have discussed scope changes and cost increases on Iraq relief and 

reconstruction projects; and with scope changes and cost increases on projects, deobligations and 

reobligations would be expected. Highlights on deobligations/reobligations are: 

 DoD/U.S. Army deobligated/reobligated the most funds, but these still accounted for less 

than 3% of its $518.28 million in apportioned funds. It deobligated $14.5 million in FY 

2005 and reobligated $10.7 million in that same fiscal year and the remainder in FY 

2006. 

 DoS deobligated $7.57 million in FY 2005 and reobligated all of the funds in the same 

fiscal year. 

 USAID’s deobligations/reobligations of expired funds were minimal relative to its total 

apportionment of $1.62 billion; in FY 2005 it deobligated $3.15 million and reobligated 

$2.57 million. 

 Treasury deobligated and reobligated about $3.46 million in FYs 2005 and 2006, about 

93% of its total $3.73 million apportionment. Because this involved such a large 

percentage of Treasury’s funds, we requested details about these transactions. However, 

a Treasury official stated that the Treasury’s central accounting system had only three 

years of transaction history and, therefore, details were not available. 

Small Amount Canceled at End of FY 2009, and Some Obligations 

Remain 

As of September 30, 2009, the IRRF 1 account had $18.46 million that had not been expended. 

These funds were canceled and returned to Treasury’s general fund. Table 4 shows that USAID, 

which returned $14.13 million, accounted for most of the canceled funds. DoS accounted for 

another $3.53 million of the canceled funds. 

 
8 

Table 4—Amount of IRRF 1 Received, Expended, and Canceled at the End of FY 

2009 by Organization ($ in thousands) 

Organization 

Amount 

Received

Amount 

Expended

Amount 

Canceled 

Percentage 

Expended 

USAID $1,623,309 $1,609,175 $14,134 99

DoD/U.S. Army 518,279 518,037 242 100

DoS 100,751 97,219 3,532 97

U.S. Treasury 3,729 3,205 524 86

DoD/Office of the Secretary of Defense 60 28 32 47

Total $2,246,128 $2,227,664 $18,464 99

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

The organizations expended IRRF 1 under 14 relief and reconstruction programs. USAID had 7 

programs, and its “Restore Economically Critical Infrastructure” program was the largest with 

expenditures of $1.12 billion. USAID primarily used IRRF 1 to help in (1) rebuilding the 

country’s roads and ports, (2) facilitating transportation of humanitarian assistance, and (3) 

restoring the power supply to health, educational, and water supply facilities. DoD/U.S. Army 

had 3 programs: the 2 largest used $464.96 million to help restore Iraq’s electricity and oil 

sectors. Additional details on the amounts expended under the relief and reconstruction 

programs are in Appendix B. The IRRF 1 program categories and expenditure amounts shown 

in Appendix B are based on data reported by the organizations, and SIGIR has neither audited 

nor verified this data. 

IRRF 1 was closed as of September 30, 2009, and unexpended funds were returned to Treasury’s 

general fund. However, organizations that had received the funds continue to be responsible for 

paying any remaining obligations that existed when the funds were canceled. To pay these 

obligations, the organizations can use only other currently available funds for similar purposes. 

For IRRF 1, USAID was the only organization reporting significant obligations as of September 

30, 2009. USAID officials stated that $2.08 million in obligations remained after the closure of 

IRRF 1 and that these obligations were with 3 different contractors, with $1.20 million in 

obligations with 1 contractor. They said that the amounts were reobligated in FY 2010 using 

USAID’s Economic Support Funds. USAID officials stated that by December 2010, $375,000 

had been disbursed, and an unliquidated balance of $1.71 million remains, pending contract 

closeouts. 

USAID also had an “abnormal (negative) cash balance” in its IRRF 1 account as of September 

30, 2009. As a result of this negative cash balance, its account was adjusted in FY 2010. 

According to USAID officials, the negative cash balance occurred because of an erroneous 

journal entry. They said that the need for adjustments started in FY 2006 and is expected to be 

completed in early 2011 when adjustments for the account are finalized. 

We also identified concerns with DoS’ reporting on IRRF 1 for FYs 2006, 2007, and 2008. 

Because the reporting showed unusual entries (including negative expenditures and negative 

obligations), we requested documentation that would provide the basis for the entries. A senior 

DoS official acknowledged that (1) the organization does not have a good explanation for the 
9 

entries and (2) errors were probably made. After we receive and review the requested 

documentation, we will consider whether further reporting is warranted. 
10 

Concluding Observation 

IRRF 1 was quickly apportioned by OMB, and the organizations receiving funds also acted 

quickly to obligate the funds. As the funds moved from available for obligation, to expired 

funds, and then to canceled funds and closed account, no significant issues related to IRRF 1 

apportionment, obligation, expenditure, and cancellation were identified. 

 
11 

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 

first IRRF appropriation, known as IRRF 1, and is designated as Project 1014a. Our objective 

for this report is to address the status of IRRF 1 including the amounts apportioned to U.S. 

government organizations, obligated during the period of availability, adjusted during the five 

years the funds were in expired accounts, and canceled when the account was closed. This audit 

was performed by SIGIR under the authority of Public Law 108-106, as amended, which also 

incorporates the duties and responsibilities of inspectors general under the Inspector General Act 

of 1978. SIGIR conducted its work from July through November 2010, 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 (DoS); U.S. Department of the 

Treasury (Treasury); U.S. Agency for International Development (USAID); Office of the 

Secretary of Defense; two Department of Defense (DoD) organizations—U.S. Army and 

Defense Finance and Accounting Service—and U.S. Trade and Development Agency. We were 

unable to meet with Office of Management and Budget officials. However, we provided OMB 

with a copy of the report for review. 

Key documents used in our audit were the Governmentwide Accounting System’s 

Nonexpenditure Transfer Authorizations by which the U.S. Treasury adjusted the amounts of 

IRRF 1 that was apportioned to the organizations. Other key documents were the Standard Form 

133s, Reports on Budget Execution and Budgetary Resources. 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 is 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 2003–2009. 

Furthermore, we reviewed other reports and documents supporting obligations and expenditures 

of funds by each organization. 

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 
12 

the Treasury’s governmentwide 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 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 1. 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 1. We 

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

 
13 

Appendix B—IRRF 1 Expenditures by Organization 

and Program 

Beginning in 2004, SIGIR’s Quarterly Reports to the Congress have provided data on IRRF 1 

expenditures by organization and by relief and reconstruction program. USAID reported 

expenditures in seven programs (not including administrative expenses), and its “Restore 

Economically Critical Infrastructure” program was the largest with expenditures of $1.12 billion. 

DoD/U.S Army reported expenditures in 3 programs, and the “Restore Iraq Electricity” program 

was its largest with $299.9 million in expenditures. DoS reported three smaller programs, and 

Treasury had one program. 

U.S. Agency for International Development 

USAID was apportioned $1.62 billion. When the account was closed as of September 30, 2009, 

USAID had expended $1.61 billion of these funds, and the unexpended balance of $14.13 

million was returned to the Treasury’s general fund. Figure 1 shows USAID’s reported 

expenditures by program. 

Figure 1—USAID IRRF 1 Expenditures by Program ($ in millions) 

Note: 

a This program includes expenditures of $5 million under a USAID grant to the U.S. Trade and Development 

Agency. 

b This includes three programs—Office of Transition Initiatives, Office of Foreign Disaster Assistance, and Program 

Support and Development of Gulf Region—and administrative expenses of $15 million.

Source: SIGIR July 30, 2010 Quarterly Report, Appendix C.3. 

USAID used IRRF 1 primarily to help restore Iraq’s economically critical infrastructure, 

including rebuilding the country’s roads and ports. It also awarded contracts to facilitate 

transportation of humanitarian assistance, and to restore the power supply to health and 

educational facilities, and water supply facilities. Furthermore, it strived to improve the 

efficiency and accountability of the Iraqi government by providing technical assistance to local 
14 

administrations in managing and delivering critical services such as potable water, education, 

and healthcare. 

DoD/U.S. Army 

DoD/U.S. Army was apportioned $518.28 million. When the account was closed as of 

September 30, 2009, DoD/U.S. Army had expended $518.04 million, and the unexpended 

balance of $242,000 was returned to the Treasury’s general fund. Figure 2 shows DoD/U.S. 

Army reported expenditures by program. 

Figure 2—DoD/U.S. Army IRRF 1 Expenditures by Program ($ in millions) 

 

Source: SIGIR July 30, 2010 Quarterly Report, Appendix C.3. 

DoD/U.S. Army used IRRF 1 primarily to help restore Iraq’s electricity and oil sectors. The 

effort to restore Iraq electricity focused on adding capacity to the Iraq power grid by 

constructing, replacing, and expanding hundreds of transmission towers and transmission lines; 

replacing or restoring turbines; and replacing or rehabilitating power substations. The effort to 

restore Iraq oil focused on restoring the country’s oil production, oil refining, and gas processing 

capacity to pre-war levels. Contracts were awarded to respond to oil spills, assess conditions of 

oil facilities throughout the country, and to restore and repair the country’s system of oil and gas 

wells, pump stations, refineries, processing plants, and pipelines. 

Within DoD, the Office of the Secretary of Defense also was apportioned $60,000 of IRRF 1 in 

FY 2004 and obligated the full amount by the end of the fiscal year. In FY 2009, the Office had 

expended $28,000 and returned the $32,000 balance to Treasury’s general fund. These funds 

were used by the Defense Institute of International Legal Studies to support trials to prosecute 

members of the former Iraq regime for crimes. The support involved a three-week training 

course for Iraqi judges and prosecutors. 
15 

Department of State 

DoS was apportioned $100.75 million. When the account was closed as of September 30, 2009, 

DoS had expended $97.22 million, and the unexpended balance of $3.53 million was returned to 

the Treasury’s general fund. Figure 3 shows DoS’ reported expenditures by program. 

Figure 3—DoS IRRF 1 Expenditures by Program ($ in millions) 

 

Note: 

a These amounts and the total expenditures are less than the amounts reported in SIGIR July 30, 2010 Quarterly Report, Appendix C.3 because 

the Quarterly Report amounts include IRRF 1 apportionments that reimbursed DoS for obligations incurred prior to Public Law 108-11. 

Source: Schedule provided by DoS Financial Management Official. 

Most of DoS IRRF 1 was used to help the Iraqi government professionalize its civil law 

enforcement institutions and the Iraqi Police Service by providing police advisors and experts. 

In addition, DoS funded corrections advisors and trainers to help Iraq develop its capacity to 

operate its prison system, and funded the construction and expansion of prisons throughout the 

country. 

Department of the Treasury 

Treasury was apportioned $3.73 million. When the account was closed as of September 30, 

2009, Treasury had expended $3.21 million, and the unexpended balance of $524,000 was 

returned to the Treasury’s general fund. Treasury’s Office of Technical Assistance used the 

funds to provide experts on financial issues to the Government of Iraq, to re-establish the Iraqi 

banking system, and to help the Ministry of Finance and other ministries prepare their first 

budgets. The Office also provided the Iraqi government technical assistance on economic 

reforms, tax and tariff policy, and other banking issues. 

 
16 

Appendix C—Acronyms 

Acronym Description 

DoD Department of Defense 

DoS Department of State 

FY Fiscal Year 

IRRF Iraq Relief and Reconstruction Fund 

OMB Office of Management and Budget 

SIGIR Special Inspector General for Iraq Reconstruction 

USAID United States Agency for International Development 
17 

Appendix D—Audit Team Members 

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

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

Reconstruction. 

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

David Childress 

George Salvatierra 
18 

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