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000 SIGIR 

Special Inspector General for IRAQ Reconstruction 

Special Inspector General for Iraq Reconstruction 

For more information, contact SIGIR Public Affairs at 

(703) 428-1100 or PublicAffairs@sigir.mil

Summary of Report: SIGIR 10-017 

Why SIGIR Is Issuing this Report 

Public Law 108-106 requires the Special 

Inspector General for Iraq Reconstruction 

(SIGIR) to prepare a final forensic audit report 

on all funding appropriated for the reconstruction 

of Iraq, which to date totals more than $53 

billion. This interim report presents the results of 

our ongoing forensic auditing program, including 

an update on our efforts to identify questionable 

financial activity and an update on our review of 

agency expenditures. The report also presents 

information on our data mining methodology. 

We are reporting our results periodically, and a 

final cumulative report will eventually address 

all available reconstruction funds. 

In our first report, we summarized the results of a 

series of audits of major reconstruction contracts 

that were intended, in part, to identify internal 

control weaknesses. Because such weaknesses 

provide opportunities for fraud, waste, and 

abuse, we have used the results from these audits 

to develop targeted forensic auditing approaches 

to identify instances of possible wrongdoing. 

SIGIR continues its forensic review of 

Department of Defense (DoD), Department of 

State (DoS), and U.S. Agency for International 

Development (USAID) expenditures. These 

reviews systematically examine Iraq 

reconstruction program expenditures to identify 

anomalies in transactional data that may indicate 

fraud, waste, or abuse. SIGIR’s approach 

combines automated data mining with standard 

audit and investigative techniques to detect 

questionable transactions and develop relevant 

evidence for use in administrative actions or civil 

or criminal fraud prosecutions. 

SIGIR continues its review of Iraq reconstruction 

program areas known to have weaknesses in 

internal controls. Identified as the SIGIR audit 

and investigative initiative, this effort focuses on 

programs that afford easy access to cash with 

weak controls over expenditures. 

Management Comments 

Because this report is for information only, it 

does not contain findings or recommendations, 

and agencies were not required to comment. 

April 28, 2010 

IRAQ RECONSTRUCTION FUNDS: FORENSIC AUDITS IDENTIFYING 

FRAUD, WASTE, AND ABUSE – INTERIM REPORT #3

SIGIR’s Results to Date 

A major aspect of SIGIR’s forensic audit effort involves a joint audit and 

investigative initiative that was established in January 2009. This effort, staffed 

by SIGIR Audit and Investigative personnel, focuses on programs that afford 

easy access to cash with weak controls over expenditures. This initiative 

continues to identify instances of questionable activity. Since our last report in 

January 2010, an additional 13 criminal investigations involving 18 subjects 

have been opened. This brings the total number of criminal investigations 

resulting from the initiative to 45 involving a total of 60 subjects. 

Another major aspect of SIGIR’s forensic audit effort is the congressionally 

mandated forensic audit of DoD, DoS, and USAID expenditures. Since our last 

report, SIGIR has reviewed an additional 10,000 transactions valued at $4 

billion, bringing the total transactions reviewed to 83,000 transactions valued at 

$32 billion. In addition to testing for anomalous activity, this forensic effort 

provides critical information in support of on-going SIGIR audits, 

investigations, and the audit and investigative initiative. 

Among the issues that SIGIR examines in its forensic review are possible 

duplicate payments and possible fictitious contractors. SIGIR has largely 

completed its review of possible duplicate payments involving approximately 

$300 million in DoD Iraq Relief and Reconstruction Fund (IRRF) and Iraq 

Security Forces Fund (ISFF) program transactions. As noted in SIGIR Forensic 

Audit Interim Report #2 (SIGIR 10-011), we anticipated that many of the 

questionable transactions would prove to be valid when supporting 

documentation was reviewed, and this proved to be the case. We selected about 

1,000 transactions with the highest dollar value totaling about $150 million for 

detailed review. Other than approximately 20 transactions, with a value of 

approximately $300,000 that remain under investigation, the other selected 

transactions have been determined not to be duplicate payments. 

We have also reviewed possible fictitious contractors associated with DoD’s 

IRRF- and ISFF-funded programs. As with our duplicate payment work, we are 

performing detailed research to determine whether these contractors were 

legitimate or were engaged in a scheme to defraud the U.S. government. Again, 

we anticipate that many of these contractors will prove to be legitimate 

following our review. An examination of key documentation, such as state 

business licenses, contracts, invoices, receiving reports, and other pertinent 

payment information will be used to support conclusions concerning the 

validity of the questionable vendors. 

The results of SIGIR’s forensic audit efforts will generally be reported in the 

aggregate, and specific findings will be included where appropriate and useful. 

We are also providing lessons learned that can be applied to other contingency 

operations, such as in Afghanistan. Detailed information regarding ongoing 

criminal investigations will not be presented in these reports. 
SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION

April 28, 2010 

MEMORANDUM FOR U.S. SECRETARY OF STATE 

U.S. SECRETARY OF DEFENSE 

COMMANDING GENERAL, U.S. ARMY CORPS OF ENGINEERS 

DIRECTOR, DEFENSE FINANCE AND ACCOUNTING SERVICE 

ADMINISTRATOR, U.S. AGENCY FOR INTERNATIONAL 

DEVELOPMENT 

SUBJECT: Iraq Reconstruction Funds: Forensic Audits Identifying Fraud, Waste, and Abuse – 

Interim Report #3 (SIGIR 10-017) 

We are providing this report for your information and use. The report discusses the results to date 

of the Special Inspector General for Iraq Reconstruction’s (SIGIR) forensic audits of Department 

of Defense, Department of State, and U.S. Agency for International Development expenditures 

involving Iraq relief and reconstruction. 

We performed this review 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 waste, fraud, and abuse. These 

audits are being conducted as SIGIR Projects 9005, 9012, and 9013. 

We appreciate the courtesies extended to our staff. For additional information on the report, please 

contact David Warren, Assistant Inspector General for Audits, (703) 604-0982/ 

david.warren@sigir.mil or Glenn Furbish, Principal Deputy Assistant Inspector General for 

Audits, (703) 604-1388/ glenn.furbish@sigir.mil. 

Stuart W. Bowen, Jr. 

Inspector General 

cc: U.S. Ambassador to Iraq 

Commander, U.S. Central Command 

Commanding General, U.S. Forces-Iraq 
Table of Contents 

Introduction 1

Forensic Audits Identify Fraud, Waste, and Abuse through Systematic Examinations of 

Data 1

Objectives 3

SIGIR Effort Identifies Questionable Activity 4

Forensic Audits of Agency Expenditures Identify Anomalous and Possibly 

Fraudulent Transactions 5

Automated Data Mining To Identify Transactions That Require Additional Analysis 7

Management Comments and Audit Response 12

Appendix A—Scope and Methodology 13

Appendix B—Acronyms 16

Appendix C—Forensic Audit Team Members 17

Appendix D—SIGIR Mission and Contact Information 18
1 

Iraq Reconstruction Funds: Forensic Audits Identifying 

Fraud, Waste, and Abuse – Interim Report #3 

SIGIR 10-017 April 28, 2010

Introduction 

Public Law 108-106, as amended, requires that the Special Inspector General for Iraq 

Reconstruction (SIGIR) prepare a final forensic audit report on all funding appropriated for the 

reconstruction of Iraq, which to date totals more than $53 billion. To keep Congress apprised, this 

report, the third in a planned series of interim reports, describes the methodology and updates the 

results of our forensic audit efforts to date. Our first interim report discussed our analysis of 

Department of Defense (DoD) expenditures. Our second interim report included results of our 

analysis of expenditure data from the U.S. Agency for International Development (USAID). This 

report provides information on our analysis of expenditure data from the Department of State 

(DoS). The information is being reported cumulatively, and a final report will encompass total 

reconstruction funds. Table 1 identifies total appropriations by fund. 

Table 1—Total Appropriations by Fund as of April 2010 ($ in billions) 

Iraq Relief and Reconstruction Appropriations

Iraq Relief and Reconstruction Fund (IRRF 1 and 2) $20.86

Iraq Security Forces Fund (ISFF) 18.04

Economic Support Fund (ESF) 4.56

Commander’s Emergency Response Program (CERP) 3.74

Other Reconstruction Assistance Programs 3.77

TOTAL $50.97

Note: 

The table excludes appropriations totaling $2.3 billion related to various federal agency operating and oversight expenses, which are outside the 

scope of the forensic audits. 

Source: SIGIR Quarterly Report to the Congress, April 2010.

Forensic Audits Identify Fraud, Waste, and Abuse through 

Systematic Examinations of Data 

A forensic audit involves the systematic examination of a program’s internal controls over 

expenditures and financial data to identify anomalies in individual transactions that may indicate 

fraud, waste, or abuse. In our first report (SIGIR 10-004), we summarized the results of a series of 

audits of major reconstruction contracts that were intended, in part, to identify internal control 

weaknesses. Common or crosscutting internal control weaknesses identified include: 

• high turnover of contracting officials and inadequate staffing for oversight of contracts 
2 

• inadequate oversight of contractors and subcontractors 

• inadequate review of contractors’ invoices 

• missing invoices and other documents 

• excessive numbers of task and change orders 

• inadequate accounting for property or inventory 

The Department of the Army’s July 2009 Fiscal Year (FY) 2009 Statement of Assurance on 

Internal Controls as Required Under the Federal Managers' Financial Integrity Act of 1982 

recognized various SIGIR findings regarding weaknesses in the agency’s internal controls. For 

example, the Army reported that within the expeditionary contracting process, its: 

...acquisition workforce is not adequately staffed, trained, structured, or 

empowered to meet the Army needs of the 21st century deployed Warfighters. The 

contracting process (requirements definition, contract management, and contract 

closeout) is not treated as a core competency. Audit reports conclude that internal 

controls to mitigate risks in the contracting process are ineffective or nonexistent. 

Because such weaknesses provide opportunities for fraud, waste, and abuse, we have used the 

results from these audits to develop targeted forensic auditing approaches to identify instances of 

possible wrongdoing. 

SIGIR’s forensic audit approach combines automated data mining with standard audit and 

investigative techniques to identify questionable transactions for further examination and, if 

necessary, to develop relevant evidence for use in administrative actions or civil or criminal fraud 

prosecutions. 

Matters most appropriately addressed by administrative resolution, such as cost disallowance and 

recovery, will be referred through audit reports to agency contracting officials for action. Potential 

instances of civil or criminal fraud will be referred to SIGIR’s Investigations Directorate for 

further examination. Detailed information relating to ongoing criminal investigations will not be 

presented in these reports. Figure 1 illustrates SIGIR’s Forensic Audit Initiative.

 
3 

Figure 1—SIGIR’s Forensic Audit Initiative 

Source: SIGIR.

Objectives 

SIGIR’s objectives for this report were to present the results to date of our forensic auditing efforts 

to include identifying questionable activity and updating the results of our review of agency 

expenditures. The report also presents information on our data mining methodology. As 

discussed, SIGIR is required to prepare a final forensic audit report on all funding appropriated for 

the reconstruction of Iraq. To keep Congress apprised, SIGIR plans to periodically issue updated 

cumulative reports until all DoD, Department of State (DoS), and USAID Iraq reconstruction 

expenditures are reviewed. At that time, we will provide the final congressionally mandated 

forensic audit report on all funding for the reconstruction of Iraq. 

For a discussion of our audit scope and methodology, see Appendix A. For acronyms used, see 

Appendix B. For forensic audit team members, see Appendix C. For the SIGIR mission and 

contact information, see Appendix D. 
4 

SIGIR Effort Identifies Questionable Activity 

A major aspect of SIGIR’s forensic audit effort involves a joint audit and investigative initiative 

that was established in January 2009. This effort, staffed by SIGIR Audit and Investigative 

personnel, focuses on programs that afford easy access to cash with weak controls over 

expenditures. At this time the SIGIR audit and investigative initiative team is reviewing several 

programs with identified instances of questionable activity. One of the projects involves the 

handling of funds associated with the Development Fund for Iraq. At one time the Coalition 

Provisional Authority managed the Development Fund for Iraq, and SIGIR has reported that the 

Coalition Provisional Authority provided less than adequate control over its funds. A second 

program with identified control weaknesses is the Commander’s Emergency Response Program 

(CERP). SIGIR has issued seven reports on CERP that collectively identify weaknesses in 

program documentation. 

The SIGIR audit and investigative initiative team has obtained information related to these and 

other programs and is analyzing it in an effort to identify questionable activity. One source of 

information for this initiative is the congressionally mandated forensic audit of DoD, DoS, and 

USAID expenditures. Pertinent information is reviewed by SIGIR auditors, analysts and 

investigators to determine whether further action is warranted. Since our last report in January 

2010, SIGIR has opened an additional 13 criminal investigations involving 18 subjects. This 

brings the total number of criminal investigations to 45 involving a total of 60 subjects. 

Detailed information regarding SIGIR’s ongoing audit and investigative initiative will not be 

presented in our reports. However, our results will generally be reported in the aggregate and 

specific findings will be included where appropriate and useful. We are also providing lessons 

learned that can be applied to other contingency operations, such as in Afghanistan. 

 
5 

Forensic Audits of Agency Expenditures Identify 

Anomalous and Possibly Fraudulent Transactions 

Another major aspect of SIGIR’s forensic audit effort is the congressionally mandated forensic 

audit of DoD, DoS, and USAID expenditures. Since our last report SIGIR has reviewed an 

additional 10,000 transactions valued at $4 billion; bringing the total number reviewed to 83,000 

transactions valued at $32 billion. The transactions include DoD expenditures as well as 

expenditures from USAID and DoS. This report presents the cumulative results to date of our 

forensic audit of fiscal years 2003-2008 and includes DoD expenditures from the Iraq Security 

Forces Fund (ISFF), Iraq Relief and Reconstruction Fund (IRRF), and CERP; USAID IRRF and 

Economic Support Fund (ESF) expenditures; and DoS IRRF expenditures.1

 

Of the $53 billion appropriated to date, approximately $35 billion has been expended through FY 

2008, and the 83,000 transactions valued at $32 billion represent about 91% of the expenditures for 

fiscal years 2003 through 2008. Figure 2 shows the expenditures by appropriation through fiscal 

year 2008. 

 

 

1

 ISFF was established in 2005; therefore, there were no expenditures in fiscal years 2003 or 2004. 
6 

Figure 2—Total Iraq Reconstruction Expenditures through Fiscal Year 2008 

($ billions) 

Notes 

1

 Total dollars expended on Iraq reconstruction through FY08 is $35.24 billion. The difference of $0.08 billion relates to funds other than the four 

listed above. 

Source: SIGIR analysis of agency data. 

Figure 3 identifies, by appropriation, the status of SIGIR’s work in collecting and testing 

transaction data for fiscal years 2003 through 2008 for each of the agencies and their respective 

financial systems. 

 
7 

Figure 3—Status of Anomaly Testing as of March 2010 ($ billions) 

Notes 

1

 Total expended amounts and collected amounts are in billions. The percentage listed is the total dollar amount analyzed out of the total expended. 

2

 Estimated amount 

3

 Computerized Accounts Payable System (CAPS) 

4

 Global Financial Management System (GFMS) 

5 Deployable Disbursing System (DDS) 

6

 Standard Army Finance System (STANFINS) 

Source: SIGIR analysis of agency data. 

Automated Data Mining To Identify Transactions That Require 

Additional Analysis 

SIGIR’s forensic audit of 83,000 transactions to date has identified transactions that require 

additional analysis. This includes payments that may be duplicates, payments to possibly fictitious 

or generic vendors such as “Vendor” and “Cash,” notable variances in payment activity, and 

payments that occurred before or on the date of the invoice. 

SIGIR primarily conducts performance audits that assess the economy, efficiency, and 

effectiveness of reconstruction programs, often with a focus on the adequacy of internal controls 

and the potential for fraud, waste, and abuse. These include the series of audits of major 

reconstruction contracts that identified common internal control weaknesses. Certain controls, 

such as the segregation of duties, are key to minimizing the risk of fraud, waste, and abuse. We 
8 

relied on SIGIR’s extensive body of work related to inadequate controls in Iraq reconstruction 

programs to develop transaction anomalies likely to be observed as a result of the failure or 

circumvention of these controls. We have incorporated 10 of these anomaly tests into our 

automated data mining effort. Table 2 lists the anomaly tests and their intended results. 

Table 2—Anomaly Tests and Intended Results 

Anomaly Test Intent of Test

Duplicate payments Identify instances where it appears a contractor may have been paid two or

more times for the same invoice, work performed, and/or product delivered

Questionable vendors Identify vendor names that are generic (e.g., Cash, Vendor) and vendor 

names that do not appear to align with the program goals 

Notable variances in payment 

activity 

Identify payments outside of the “norm” for a vendor 

Invoice date analysis Identify payments occurring prior to or on the date of invoice and 

sequentially-numbered contractor invoices 

Payments to debarred/ 

suspended contractors 

Identify payments to debarred/suspended contractors identified in the 

Excluded Parties List System 

Segregation of duties Identify breakdowns in segregation of duties whereby the same 

government contracting official originates the request for payment, 

approves the request, and is the payee 

Fictitious addresses/high risk 

locations 

Identify payments to possibly fictitious addresses and/or high risk locations 

or known high-risk banking centers such as Cyprus and Beirut 

Payee Validation Identify payments to debarred/suspended contractors who are also an 

Approver or Originator 

Fictitious contractors Identify payments to contractors with no associated D-U-N-S1/CAGE2

number 

Application of Benford’s Law3 Identify nonrandom transaction amounts to identify instances a contractor 

submitted false invoices using false invoice totals 

Notes:

1

 The Data Universal Numbering System or D-U-N-S® Number is Dunn and Bradstreet's (D&B) copyrighted, proprietary means of 

identifying business entities on a location-specific basis. Assigned and maintained solely by D&B, this unique nine-digit 

identification number has been assigned to over 100 million businesses worldwide. The D-U-N-S® Number is widely used by 

both commercial and federal entities and was adopted as the standard business identifier for federal electronic commerce in 

October 1994. The D-U-N-S Number® was also incorporated into the Federal Acquisition Regulation in April 1998 as the 

Federal Government's contractor identification code for all procurement-related activities. 2

 A Commercial and Government Entity (CAGE) Code is a five-character code that identifies companies doing or wishing to do 

business with the Federal Government. 

3

 Benford's law states that the leading digit in lists of numbers from many real-life sources of data is distributed in a non-uniform 

way. Accordingly, the first digit is 1 almost one third of the time, and subsequent digits occur as the first digit in descending 

frequency, where 9 is the leading digit less than one time in twenty.

Source: SIGIR analysis 

Detailed Examinations of Contract Files to Validate Fraud 

When a transaction anomaly is identified, SIGIR examines the details to determine whether it is 

fraudulent or improper. To accomplish this, teams of SIGIR personnel perform additional 

electronic testing; conduct detailed examinations of relevant contract documentation such as 

solicitation actions, award selection materials, invoices, and payment files; interview contracting 
9 

officials as well as vendor management and other staff; and coordinate with other audit and law 

enforcement agencies. These validation efforts are designed to support determinations about the 

legitimacy of a transaction and to determine whether improper expenditures are attributable to 

administrative error or fraud. Transactions are prioritized for review by their risk of fraud and 

dollar value with high-risk/high-dollar transactions receiving priority. To date, these examinations 

have provided information related to five SIGIR audits and eleven SIGIR investigations. As 

discussed in detail in the following section, SIGIR is currently focusing on DoD expenditures that 

may be duplicate payments as well as possible fictitious contractors associated with DoD 

expenditures. 

Review of Possible Duplicate Payments 

Our forensic audit of DoD expenditures for Iraq Relief and Reconstruction Fund (IRRF) and Iraq 

Security Forces Fund (ISFF) programs initially identified approximately $300 million in possible 

duplicate payments. The purpose of this particular review was to determine the validity of 

payments. We reviewed transactions that were identified by data mining as possible duplicate 

payments (e.g., situations where a contractor may have been paid two or more times on the same 

date, for the same item, work performed, and/or product delivered). If we determine that a 

payment was made in error, SIGIR will: (1) seek reimbursement to the U.S. Treasury, (2) 

determine how the error occurred, and (3) make recommendations to strengthen internal controls 

and financial management practices to reduce the risk of similar errors in the future. If a payment 

appears to be the result of fraudulent or other improper activity, pertinent information will be 

provided to our Investigations Directorate for review and appropriate action. The aforementioned 

questionable transactions involved about 800 vendors associated with DoD IRRF- and 

ISFF-funded programs. While these questionable transactions were revealed during the course of 

our testing procedures, as noted in SIGIR Forensic Audit Interim Report #2 (SIGIR 10-011), we 

expected that most of these transactions would prove to be proper. Further review determined that 

most of these payments were explainable. 

Due to the number of questioned transactions we prioritized our work using risk factors such as 

transaction type and amount. We selected about 1,000 transactions, totaling approximately $150 

million, for detailed review. We focused on transactions with the highest dollar value that 

appeared to indicate that a contractor may have been paid two or more times for the same invoice, 

work performed, and/or product delivered. We requested pertinent contract documentation from 

the United States Army Corps of Engineers Finance Center (Finance Center). Documentation 

provided by Finance Center personnel included contracts, invoices, receiving reports, and other 

pertinent payment information. 

Based upon a detailed review of the documentation associated with the subject transactions, we 

determined that nearly all of the questioned transactions were not duplicate payments. For 

example, our review revealed that some payments were for different products, services, or 

locations. We also noted separate shipping dates for similar transactions. In still other instances 

we discovered that two or more potential duplicate payments were actually part of one payment. 

While additional review of invoices and other documents would be required to ensure that these 

transactions were proper, we believe that the information reviewed was sufficient to conclude that 

they were not duplicate payments. At this time, we are continuing to review DoD IRRF- and 

ISFF-funded transactions, including about 20 possible duplicate payments for a total of about 

$300,000. We are working with Finance Center officials in an effort to obtain additional 

supporting documentation regarding these transactions. 
10 

USACE’s Improper Payment Reviews and Data Mining Efforts 

Congress has enacted several provisions of law aimed at improving the integrity of the government 

payment process and the efficiency of its programs and activities, including the Improper 

Payments Information Act of 2002 (Pub. L. No. 107-300), and Section 831 of the Defense 

Authorization Act for Fiscal Year 2002, also known as the Recovery Auditing Act (Pub. L. No. 

107-107, codified at 31 U.S.C. §§ 3561-3567). SIGIR will use this information as a guide during 

our improper payment audit work, as well as Office of Management and Budget (OMB) Circular 

A-123, Appendix C, which implements them. 

The Improper Payments Information Act requires federal agencies to review and report improper 

payment information, which would include duplicate payments. Specifically, the Act requires that 

all executive branch agencies on an annual basis: (1) identify programs and activities that are 

susceptible to significant improper payments, (2) estimate the amounts improperly paid under 

those programs and activities, and (3) report on the amounts improperly paid and their actions to 

reduce improper payments. In addition, executive branch agencies are required to report on their 

efforts to recover overpayments made to contractors under the Recovery Auditing Act. Since 

fiscal year 2004, executive branch agencies have been required by OMB to report on the Improper 

Payments Information Act and recovery auditing efforts in their Performance and Accountability 

Report. 

In May 2009, the Finance Center implemented a new data mining tool designed to identify 

possible erroneous or improper payments. The Finance Center is testing transactions from May 

2009 forward. Similar to our results, the Army Corps of Engineers’ efforts have revealed few 

duplicate payments. SIGIR will continue to coordinate with Finance Center officials to avoid 

duplication of effort as we begin collecting and analyzing fiscal year 2009 transaction data. 

Review of Possible Fictitious Contractors 

We have also initiated a forensic audit of possible fictitious contractors associated with DoD 

IRRF- and ISFF-funded programs. As with our duplicate payment work, we are performing 

detailed research to determine whether these contractors were legitimate or were engaged in a 

scheme to defraud the U. S. government. An examination of key documentation, such as state 

business licenses, contracts, invoices, receiving reports, and other pertinent payment information 

will be used to support conclusions concerning the validity of the questionable vendors. Our initial 

anomaly testing identified over 400 possible fictitious contractors. 

We tested for three anomalies in DoD transaction data that could be indicative of a fictitious 

contractor: 

• payments to contractors with no associated D-U-N-S/CAGE number 

• payments to possibly fictitious addresses and/or high risk locations or known high-risk 

banking centers such as Cyprus and Beirut 

• payments to vendor names that are generic (e.g., cash, vendor) and vendor names that do 

not appear to align with program goals 

While these anomalies were revealed during the course of our testing procedures, as with our 

possible duplicate payment review, we expect that many of the vendors will prove to be legitimate. 

An examination of key documentation, such as state business licenses, web sites, invoices, 
11 

receiving documents, and payment records, will be used to support conclusions on the validity of 

the vendors. 

 
12 

Management Comments and Audit Response 

Because this report is for information only, it does not contain findings or recommendations and 

agencies were not required to comment. 
13 

Appendix A—Scope and Methodology 

In December 2008, the Special Inspector General for Iraq Reconstruction (SIGIR) initiated its 

forensic effort as Projects 9005, 9012, and 9013 to examine Iraq relief and reconstruction 

expenditures by Department of Defense (DoD), Department of State (DoS), and the U.S. Agency 

for International Development (USAID). SIGIR’s objectives for this report were to present the 

results to date of our forensic auditing efforts to include identifying questionable activity and 

updating the results of our review of agency expenditures. The report also presents information on 

our data mining methodology. 

This interim report presents newly acquired expenditure data from the USAID and DoS for Iraq 

relief and reconstruction for fiscal years 2003-2008. The results of these reports will generally be 

discussed in the aggregate, with specific findings included where appropriate and useful. 

Cumulative questioned costs will be reported as defined and required by the Inspector General Act 

of 1978, as amended. 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. The audit work for this report covers the period December 2008 

through March 2010 and was conducted in Arlington, VA; Indianapolis, IN; Millington, TN; 

Rome, NY; and Washington, DC. 

To obtain the expenditure data from the DoD, we interviewed officials from the Army Budget 

Office, the Defense Finance and Accounting Service, and the U.S. Army Corps of Engineers. To 

obtain expenditure data from USAID, we interviewed officials from the Middle East Bureau and 

Chief Financial Officer’s office. To obtain expenditure data from DoS, we interviewed officials 

from the Deputy Chief Financial Officer’s Office. From these offices, we obtained pertinent 

appropriation and transactional data, as well as supporting documentation, to include contract 

details and vendor data. 

To develop our list of anomalies, we used information from discussions with SIGIR auditors and 

investigators; key agency stakeholders and systems owners; live financial system demonstrations; 

SIGIR and other agency audit reports; and industry-established tests for fraudulent activities. 

We conducted this review 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. However, this is an information report, which has no findings or conclusions. 

Use of Computer-processed Data 

To achieve the assignment’s objectives, we relied extensively on computer-processed data from 

the Defense Finance and Accounting Service, the U.S. Army Corps of Engineers accounting 

systems, the USAID Phoenix System, and the DoS Global Financial Management System. We 

performed reconciliations of disbursement data received from the various accounting systems to 

determine that it was complete and reliable. The reconciliation process included a comparison of 

the detailed disbursement totals to other sources of information, including summary-level data. 

This reconciliation process yielded a variance of tolerable amounts. Therefore, we found the data 

to be adequate and sufficiently reliable to be used in meeting our forensic audit objectives. 
14 

Internal Controls 

As discussed in the body of the report, SIGIR has conducted audits of major reconstruction 

contracts that were intended in part to identify internal control weaknesses. We reported on those 

weaknesses in each report, which also contained relevant conclusions and recommendations. 

Because such weaknesses provide opportunities for fraud, waste, and abuse, we used the results of 

those audits to develop targeted forensic auditing approaches to identify instances of wrongdoing. 

However, this is an information report and, as such, we draw no conclusions and make no 

recommendations. 

Prior Coverage 

We reviewed the following reports for this audit: 

SIGIR 

Developing a Depot Maintenance Capability at Taji Hampered by Numerous Problems, SIGIR 

09-027, 7/30/2009. 

Tikrit Location Command Project Achieving Contract Goals by Using Sound Management 

Practices, SIGIR 09-024, 7/30/2009. 

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

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

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

Management Issues Remain, SIGIR 09-026, 7/26/2009.

Joint Audit of Blackwater Contract and Task Orders for Worldwide Personal Protective Services 

in Iraq, AUD/IQO-09-16 and SIGIR 09-021, June 2009. 

Security Forces Logistics Contract Experienced Certain Cost, Outcome, and Oversight Problems 

SIGIR 09-014, 4/26/2009. 

Need To Enhance Oversight of Theater-Wide Internal Security Services Contracts, SIGIR 09-017, 

4/24/2009. 

Oversight of Aegis’s Performance on Security Services Contracts in Iraq with the Department of 

Defense, SIGIR 09-010, 1/14/2009. 

Cost, Outcome, and Oversight of Iraq Oil Reconstruction Contract with Kellogg Brown & Root 

Services, Inc., SIGIR 09-008, 1/13/2009.

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

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

Outcome, Cost, and Oversight of the Security and Justice Contract with Parsons Delaware, Inc., 

SIGIR 08-019, 7/28/2008. 
15 

Review of Outcome, Cost, and Oversight of Water Sector Reconstruction Contract with Fluor 

AMEC, LLC, SIGIR 08-018, 7/15/2008. 

Review of Outcome, Cost, and Oversight of Electricity-Sector Reconstruction Contract with Perini 

Corporation, SIGIR 08-011, 4/29/2008. 

Report on Review of Outcome, Cost, and Oversight of Iraq Reconstruction Contract 

W914NS-04-D-0006, SIGIR 08-010, 1/28/2008. 

Outcome, Cost, and Oversight of Reconstruction of Taji Military Base and Baghdad Recruiting 

Center, SIGIR 08-004, 1/15/2008. 

Interim Review of DynCorp International, LLC, Spending Under Its Contract for the Iraqi Police 

Training Program, SIGIR 07-016, 10/23/2007. 

Review of Bechtel’s Spending under Its Phase II Iraq Reconstruction Contract, SIGIR 07-009, 

7/25/2007. 

Iraq Reconstruction: Lessons in Program and Project Management, March 2007.

Coalition Provisional Authority Comptroller Cash Management Controls Over the Development 

Fund for Iraq, SIGIR 04-009, 7/28/2004. 

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. 

Internal Controls Over United States Marine Corps Commercial and Miscellaneous Payments 

Processed Through the Deployable Disbursing System – (Report No. D-2010-037), January 25, 

2010. 

Government Accountability Office 

Excluded Parties List System: Suspended and Debarred Businesses and Individuals Improperly 

Receive Federal Funds, GAO-09-174, 2/25/2009. 

Improper Payments: Significant Improvements Needed in DoD’s Efforts to Address Improper 

Payment and Recovery Auditing Requirements, GAO-09-442, 7/29/2009. 

Defense Contracting Integrity: Opportunities Exist to Improve DOD’s Oversight of Contractor 

Ethics Programs, GAO-09-591, 9/22/2009. 
16 

Appendix B—Acronyms 

Acronym Description 

CAGE Commercial and Government Entity Code 

CAPS Computerized Accounts Payable System 

CERP Commander’s Emergency Response Program 

DDS Deployable Disbursing System 

DoD Department of Defense 

DoS Department of State 

DUNS Data Universal Numbering System 

ESF Economic Support Fund 

FY Fiscal Year 

GFMS Global Financial Management System 

IRRF Iraq Relief and Reconstruction Fund 

ISFF Iraq Security Forces Fund 

OMB Office of Management and Budget 

SIGIR Special Inspector General for Iraq Reconstruction 

STANFINS Standard Army Finance System 

USACE U.S. Army Corps of Engineers 

USAID U.S. Agency for International Development 
17 

Appendix C—Forensic Audit Team Members 

This report was prepared and the forensic audit conducted under the direction of David R. Warren, 

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

Reconstruction. 

The following SIGIR staff members are participating in the forensic audit effort, which includes 

the audit and investigative initiative, and contributed to this report: 

Richard C. Newbold 

Adam T. Hatton 

William F. Bedwell 

Thomas J. Bonnar 

Dennis W. Rader 

Robin L. Rowan 

David Childress 

George S. Salvatierra 

Robert A. Whiteley 

Benjamin H. Comfort 

Donald V. McNamara 

Mark D. Lehner 

 
18 

Appendix D—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 Danny Kopp 

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: 703-428-0818 

Email: PublicAffairs@sigir.mil