SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION

January 31, 2011

LETTER FOR THE U.S. SECRETARY OF DEFENSE

DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET

SUBJECT: Commander’s Emergency Response Program Obligations Are Uncertain

(SIGIR 11-012)

This letter addresses the Special Inspector General for Iraq Reconstruction’s review of the Department 

of Defense’s accounting for the obligation and expenditure of Commander’s Emergency Response 

Program (CERP) funds allocated for Iraq, and how those funds were used. Public Law (P.L.) 108-106, as 

amended, requires that the Special Inspector General for Iraq Reconstruction (SIGIR) report on the 

oversight and accounting of the obligation and expenditure of funds in Iraq. 

Since 2003, the Army Budget Office reports that it has allocated about $3.89 billion for CERP projectsin 

Iraq. According to Money as a Weapons System (MAAWS), the U.S. Forces–Iraq (USF-I) policy and 

procedures manual that directs program execution and establishes the goals for CERP funding, two 

information systems track CERP data: the CERP Project Tracker, which is a resource management tool

that identifies the status of each CERP project, and the Army Standard Financial System (STANFINS), 

which identifies CERP obligations and expenditures. The objective of this review is to determine the 

extent to which funds appropriated for CERP have been obligated and liquidated, and how those funds 

have been used.

Background

In May 2003, the Coalition Provisional Authority established the CERP in Iraq. The purpose of CERP is to 

enable U.S. military commanders to respond to urgent humanitarian relief and reconstruction 

requirements within their area of responsibility by carrying out programs that will immediately assist the 

indigenous population. According to the most recent version of Money as a Weapons System (MAAWS), 

the policies and procedures manual for CERP, CERP is intended for projects that cost less than $50,000 

and that the Iraqi government or local population can sustain. Commanders are instructed to design 

projects that focus on urgent humanitarian relief while providing significant employment opportunities 

for the Iraqi people, and to work directly with the Government of Iraq to ensure the project is wanted 

and that the government agrees to maintain and sustain it.
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Initial funding for CERP came from seized Iraqi assets and the Development Fund for Iraq.1

Roles and Responsibilities

 In November 

2003, the Congress passed the first appropriation for CERP as part of Public Law (P.L.) 108-106, the 

“Emergency Supplemental Appropriations Act for Defense and for the Reconstruction of Iraq and 

Afghanistan, 2004.” Generally, the Congress appropriates CERP funds in DoD annual and supplemental 

appropriations, and funds are available for obligation only until the end of the associated fiscal year. 

The Fiscal Year 2006 supplemental appropriation, however, allowed for the obligation of these funds 

until December 31, 2007. This allowed the supplemental to be used in Fiscal Year 2007 and the first 

quarter of Fiscal Year 2008. Generally, the Congress does not appropriate the CERP to a specific country 

but rather to a fund for both Iraq and Afghanistan. DoD then allocates the funds to the countries.

DoD regulations identify the roles and responsibilities of the various offices that manage CERP. The 

Under Secretary of Defense (Comptroller) establishes and provides oversight over the financial 

accounting for CERP. The U.S. Army is the executive agent for CERP and is responsible for ensuring that 

commanders carry out CERP projects in accordance with applicable laws, regulations, and guidance.

The U.S. Central Command oversees all military operations, programs, and funds in both Iraq and 

Afghanistan. U.S. Central Command is responsible for allocating CERP funds between Iraq and 

Afghanistan, and through its component command, the U.S. Army Central Command, is required to 

reconcile CERP every three months and report these results to the Army Budget Office. The Army 

Budget Office, under the Office of the Assistant Secretary of the Army for Financial Management and 

Comptroller, is responsible for producing the quarterly report to the Congress on the source, allocation, 

and use of CERP funds, pursuant to Public Law 109-148.

The USF-I

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The USF-I Resource Manager (J8) is the overall program coordinator for CERP. According to the MAAWS, 

USF-I J8 is responsible for developing the annual CERP funding requirement. Specifically, USF-I J8 

obtains annual authority from U. S. Central Command and obtains funds from the U.S. Army Central 

Command. USF-I requests funds on a quarterly basis or as needed. The USF-I J8 is responsible for 

Deputy Commanding General for Operations has theater oversight of CERP and publishes 

guidance identifying objectives and goals. Major Subordinate Command (MSC) Commanders identify 

and approve CERP projects and are required to verify that local, national, donor nation, nongovernmental organization or other aid or reconstruction resources are not reasonably available before 

using CERP funds. USF-I publishes Money as a Weapons System (MAAWS), a policies and procedures 

manual that directs program execution and establishes the goals for CERP funding. 

 1 The Development Fund for Iraq was established May 2003 by the UNSC Resolution 1483 as a means to channel 

revenue from Iraqi oil sales, unencumbered Oil for Food deposits, and repatriated Iraqi assets to the relief and 

reconstruction efforts for Iraq. 

2 Prior to USF-I’s establishment on January 1, 2010, the Multi-National Corps–Iraq provided the overall program 

coordination for CERP in Iraq for the Multi-National Force–Iraq. Both of these commands were subsumed into 

USF-I.
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developing a recommended funds distribution plan which is approved by the USF-I Deputy Chief of Staff. 

USF-I J8 allocates funds and monitors MSC’s commitments, obligations, and disbursements.

CERP Management Information Systems

According to the MAAWS, the accuracy of CERP reporting is based on checks and balances. The two 

information systems set up to provide this accountability are the CERP Project Tracker and the Army 

Standard Financial System (STANFINS). STANFINS is the Army’s official accounting record and should 

contain all CERP obligations and expenditures. The CERP Project Tracker is the CERP program 

information system. Subordinate USF-I commands that implement CERP projects must enter the

projects into the CERP Project Tracker and keep that information current. The CERP Project Tracker 

must accurately reflect amounts committed, obligated, and disbursed for each project, as well as project 

status. The MAAWS requires that CERP Project Tracker data be reconciled monthly with CERP data in 

STANFINS. In addition, the MAAWS requires that all CERP funding be captured in the CERP Project 

Tracker and reconciled throughout the life of each project.

Army Budget Office Reported Status of Funds

Table 1 shows the status of CERP funds as of September 30, 2010, as reported by the Army Budget 

Office. As shown, $3,890,709,000 was allocated for CERP projects in Iraq. Of this amount, 

$3,675,323,152 (94.5%) has been obligated. Of the amount obligated $3,560,356,040 (96.9%) has been 

disbursed, and $114,967,222 (3%) remains unliquidated.
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Table 1—Status of CERP Funds by Fiscal Years (FY) 2004–2010 as Reported by Army 

Budget Office as of September 30, 2010

FY

(Appropriation)

Total Allocation 

for Iraq

Amount

Obligated Disbursements

Unliquidated 

Obligations

2004

(2142020135) $140,000,000 $133,590,139 $133,590,139 $0

2005

(214/52220136) $718,000,000 $667,100,044 $667,100,044 $ 0

2006*

(2162020136) $509,500,000 $458,275,777 $457,811,312 $464,575

2006 

Supplemental

(216/82320136)

$198,000,000 $188,055,744 $187,397,184 $658,560

2007

(2172020136) $750,400,000 $717,404,796 $716,207,777 $1,197,019

2008

(2182020136) $995,909,000 $939,317,976 $935,131,687 $4,186,289

2009

(2182020136) $339,050,000 $331,300,379 $326,947,504 $4,352,875

2010

(2102020136) $239,850,829 $240,278,297 $136,170,393 $104,107,904

Total $3,890,709,829 $3,675,323,152 $3,560,356,040 $114,967,222

Note:

Numbers are affected by rounding.

Source: Army Budget Office.

Army Budget Office Disbursement Data Agrees with USF-I Data

The disbursement data provided by the Army Budget Office agrees with the disbursement reported by 

USF-I. Further, SIGIR conducted a forensic review of DoD’s electronic disbursements of CERP funds 

looking for anomalies that were then given additional review. SIGIR’s anomaly testing focused on 

vouchers that have been paid. While SIGIR’s anomaly testing is underway, to date our testing has not 

disclosed significant issues.

Army Budget Office Allocation Data Does Not Agree with USF-I Data

The CERP fund allocations that USF-I reports it has received do not agree with the amount that the Army 

Budget Office reports it provided. According to USF-I, it has received CERP allocations totaling 

$4,558,000,000 while the Army Budget Office reports allocations of $3,890,709,829; a difference of 

approximately $667,290,171. The differences occurred in Fiscal Years 2008, 2009, and 2010. In FY 2008, 

USF-I reports it received allocations totaling $1,250,000,000, while the Army Budget Office reports 

allocations of $995,909,000. In FY 2009, USF-I reports it received allocations totaling $747,000,000,
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while the Army Budget Office reports allocations of $339,050,000. Finally, in 2010, the Army Budget 

Office report shows an allocation of $239,850,829, while USF-I reports about $245,000,000, a difference 

of about $5 million.

SIGIR requested supporting documentation from USF-I for its higher reported allocations, but USF-I was 

unable to provide the support. As shown in Table 1, however, despite USF-I’s assertion that it received 

more CERP funds than the Army Budget Office reports, its obligations for both FY 2008 and 2009 were 

less than the allocations reported by the Army Budget Office. An Army Budget Office Official informed 

us that they were working to resolve the differences. To date SIGIR has not received a response from 

them on the reconciliation of these many discrepancies. 

CERP Obligations Are Uncertain

As of September 30, 2010, both the Army Budget Office and USF-I report CERP obligations of 

$3,675,323,152. However, both obtained their obligation data from STANFINS. Several prior SIGIR 

reports have raised questions about whether STANFINS contains all CERP obligations.

In October 2010, SIGIR issued a report on the forensic methodologies we used to collect and analyze 

electronic disbursements of Iraq reconstruction funds.3

A second reason we believe that the CERP obligation data may not be complete stems from a finding in 

our ongoing audit of Department of Defense (DoD) appropriation, obligation, and expenditure data to 

meet our mandate to forensically audit all Iraq reconstruction funds. We are reporting this month that 

in collecting the records, we found that about $2.5 billion in transactions, primarily CERP transactions, 

were recorded in the Deployable Disbursing System (DDS). During our data collection process, we 

attempted to reconcile the DDS data we were provided with Congressional appropriations and other 

DoD financial system data and found that some DDS data was missing. According to an Army Financial 

Management Command official, the missing data is from two sites in Iraq: Camp Speicher, Tikrit, for the 

period October 2005 through March 2007; and Camp Liberty, Baghdad, for the period October 2005 

through August 2006. The total amount of information that is missing cannot be determined without 

reconstructing the activity through a review of each voucher. In an effort to evaluate the scope of the 

missing data, SIGIR collected DDS data associated with the Camp Liberty disbursing site for September 

2006 through May 2007. We found that the average monthly payment activity for this period was 

approximately $75 million, and 96% of the transactions were in cash for CERP projects. While this 

 In that report, we stated that we could not 

reconcile and validate CERP transactions for Iraq because the CERP transaction data that we received 

from DoD included other funds and/or CERP funds used in Afghanistan. This was caused by 

discrepancies in how some transactions were coded in DoD’s financial systems. As a result, the amount 

of CERP transactions that we analyzed ($4.0 billion) was greater than the amount DoD reported as 

allocated for Iraq. The difference was about $180,000,000.

 3 Forensic Audit Methodologies Used To Collect and Analyze Electronic Disbursements of Iraq Reconstruction Funds, 

SIGIR 11-006, 10/28/2010.
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average cannot be directly related to the missing DDS data, it suggests that the missing data contains a 

substantial amount of payment activity.

Finally, we note that USF-I has been unable to reconcile the CERP obligation data it maintains in its CERP 

Project Tracker system with STANFINS each month as required by MAAWS. According to USF-I J8 

officials, until recently it could only make adjustments to data in the CERP Project Tracker for the current 

fiscal year. Data on CERP projects that were still ongoing at the end of a fiscal year was not carried 

forward into the new fiscal year, and obligation data for open projects was no longer kept current. 

According to USF-I J8 officials, this problem has been corrected, and starting in FY 2011 the CERP Project 

Tracker will contain data for all new projects for FY2011, in addition to FY 2010 projects that were not 

closed. 

Incomplete Data on Use of CERP

For the reasons discussed above we were unable to develop reliable data on how much USF-I spent for 

specific categories of CERP projects. Table 2 provides USF-I’s most complete information on how it has 

used its CERP funding. Note that the largest category is “No Category Listed.” According to USF-I 

officials, this category is used when units do not identify a category for their CERP projects. It accounts 

for 21% of all CERP funding.

Table 2—Use of CERP Funds for Iraq by Category; Fiscal Years 2004–2010, as Reported 

in the CERP Project Tracking System ($ in millions)

CERP Category Expenditures Total Projects

Agriculture/Irrigation $164.0 977

Battle Damage Repair $16.0 734

Civic Clean-up Activities $202.0 2,484

Civic Infrastructure Activities $44.0 292

Civic Support Vehicles $46.0 245

Condolence Payments $36.0 1,622

Econ, Financial & Management $172.0 16,981

Education $350.0 3,493

Electricity $316.0 1,599

Food Production & Distribution $20.0 115

Former Detainee Payments $1.0 201

CERP Category Expenditures Total Projects

Healthcare $111.0 1,220
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Iraqi Hero Payments $0.7 87

Humanitarian/Reconstruction $150.0 2,828

No Category Listed (According to USF-I 

during review of prior year files, several 

projects from Fiscal Years 2004-2006 

had no category)

$767.0 7,737

Protective Measures $521.0 3,949

Repair of Civic & Cultural Facilities $53.0 560

Rule of Law & Governance $67.0 794

Telecommunications $17.0 195

Temporary Contract Guards $36.0 637

Transportation $261.0 1,720

Water & Sanitation $446.0 3,006

Total $3,700 51,474

Source: USF-I data from CERP Project Tracker system, as of September 10, 2010.

Concluding Observations

Army Budget Office officials recognize that there are inconsistencies between ABO and USF-I CERP data. 

These officials are taking steps to determine the causes of the discrepancies and take corrective actions.

Management Comments 

DoD informed us that they wanted to provide comments but were unable to do so in the time allotted. 

Should they do so at a later date, we will incorporate them in this report at that time.
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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: U.S. Secretary of State

U.S. Secretary of Defense 

Commander, U.S. Central Command

Commanding General, U.S. Forces–Iraq
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Appendix A—Scope and Methodology

In April 2009, the Special Inspector General for Iraq Reconstruction (SIGIR) announced Project 1012 to 

audit the status of Appropriations for Commander’s Emergency Response Program for Iraq (CERP). Our 

objective for this report is to determine the status of the CERP appropriations. 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 July 2010 through November 2010 in the United States and in Baghdad, Iraq.

To accomplish our audit objective, we obtained and analyzed documents and data provided by USF-I

officials on processes and procedures used to track and account for obligations and expenditures made 

from appropriations of the Commander’s Emergency Response Program (CERP). USF-I was able to 

provide supporting documentation only for Fiscal Year 2010, such as the Operational Data Store pull 

from the Army Standard Financial Systems (STANFINS), which is the financial management system of 

records for CERP. Further, we obtained and reviewed relevant laws and regulations governing the 

appropriation of CERP. We then compared the allocation and obligation data in the two systems to 

assess whether the data in each system appeared complete, and whether the data in the two systems 

were consistent and could therefore provide reasonable assurances that the data were accurate. We 

also assessed whether the USF-I data on uses of CERP appeared complete. 

We conducted this audit in accordance with the 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.

Use of Computer-processed Data

We used computer-processed data from the STANFINS Operational Data Store for Fiscal Year 2010 for 

our assessment of obligations and expenditures, and from the USF-I Project Tracker for the status and 

uses of CERP funds. We did not verify the data and discussed our concerns with these databases in this 

report.
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Internal Controls

In conducting the audit, we attempted to assess the internal controls used by USF-I to track the status of 

funds appropriated for the CERP. We were not able to make a determination regarding the internal 

control system as a result of USF-I’s inability to provide the necessary supporting documentation 

regarding the CERP funding. 

Prior Coverage 

We reviewed the following audit reports issued by SIGIR and the Department of Defense:

Special Inspector General for Iraq Reconstruction

• Forensic Audit Methodologies Used To Collect and Analyze Electronic Disbursements of Iraq 

Reconstruction Funds, SIGIR 11-006, 10/28/2010.

• Iraq Commander’s Emergency Response Program Generally Managed Well, but Project 

Documentation and Oversight Can Be Improved, SIGIR 10-003, 10/27/2009.

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

Management Issues Remain, SIGIR 09-026, 7/26/2008.

• Commander’s Emergency Response Program: Muhalla 312 Electrical Distribution Project Largely 

Successful, SIGIR 09-025, 7/26/2009.

• Commander’s Emergency Response Program in Iraq Funds Many Large-Scale Projects, SIGIR 08-006, 

1/25/2008.

• Management of the Commander’s Emergency Response Program in Iraq for Fiscal Year 2006, SIGIR 

07-006, 4/26/2007.

• Fact Sheet on Sources and Uses of U.S. Funding Provided in Fiscal Year 2006 for Iraq Relief and 

Reconstruction, SIGIR 07-005, 7/27/2007.

Department of Defense, Office of the Inspector General

• Internal Controls Over Payments Made in Iraq, Kuwait and Egypt (Report No. D-2008-098), May 22, 

2008.
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Appendix B—Definitions of Terms

The following terms were used in the report.

Term Definition

Appropriation A statute that generally provides legal authority for federal agencies 

to incur obligations and to make payments out of the Treasury for 

specified purposes. 

Availability of Funds Funds remain available for de-obligation and subsequent 

re-obligation for a period of four years after the appropriation 

expires.

Expenditures The actual spending of money; an outlay.

Expired Funds Funds expire if they are not obligated within the time period 

specified in its appropriation for incurring obligations.

Liquidated Funds Funds are considered liquidated when all services or goods have 

been received and paid for.

Obligation A definite commitment that creates a legal liability for the payment 

of goods and services ordered or received.

Unliquidated Obligation The amount of an obligation that has yet to be expended. 
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Appendix C—Acronyms

Acronym Description

CERP Commander’s Emergency Response Program

DoD Department of Defense

DFAS Defense Finance Accounting System

IRMS Iraq Reconstruction Management System

MAAWS Money as a Weapons System

MSC Major Subordinate Command

ODS Operational Data Storage

SIGIR Special Inspector General for Iraq Reconstruction

STANFINS Standard Financial System

USF-I United States Forces–Iraq
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Appendix D—Audit Team Members

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

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

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

Arthur Granger

Wilson D. Haigler

Nancee K. Needham
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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 703-428-1059

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
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