Despite U.S. and Iraqi efforts to shift a greater share of the country’s defense to the Iraqi security forces, the security situation continues to deteriorate, impeding management of the more than $29 billion obligated for reconstruction and stabilization efforts. The desired end-state for U.S.- stabilization operations in Iraq is a peaceful, united, stable, and secure Iraq, well integrated into the international community, and a full partner in the global war on terrorism. To achieve this end-state, the United States is, among other things, (1) training and equipping Iraqi security forces that will be capable of leading counterinsurgency operations, and (2) transferring security responsibilities to Iraqi forces and the Iraqi government as capabilities improve. In October 2003, the multinational force outlined a multistep plan for transferring security missions to Iraqi security forces. The security transition plan had the objective of neutralizing Iraq’s insurgency while developing Iraqi forces capable of securing their country, allowing a gradual decrease in the number of coalition forces. From the fall of 2003 through April 2006, MNF-I revised its security transition plan several times because the Iraqi government and security forces proved incapable of assuming security responsibilities within the time frames envisioned by the plans. For example, in April 2004, Iraqi police and military units performed poorly during an escalation of insurgent attacks against the coalition. Many Iraqi security forces around the country collapsed, with some units abandoning their posts and responsibilities and in some cases assisting the insurgency. State and DOD have reported some progress in implementing the security transition plan. The State Department has reported that the number of army and police forces that have been trained and equipped increased from about 174,000 in July 2005 to about 323,000 in December 2006. DOD and State also have reported progress in transferring security responsibilities to Iraqi army units and provincial governments. The number of Iraqi army battalions in the lead for counterinsurgency operations increased from 21 in March 2005 to 89 in October 2006. In addition, 7 Iraqi army division headquarters and 30 brigade headquarters had assumed the lead by December 2006. Moreover, by mid-December 2006, three provincial governments—Muthanna, Dhi Qar, and Najaf—had taken over security responsibilities for their provinces. However, the reported progress in transferring securing responsibilities to Iraq has not led to improved security conditions (see fig.1). Since June 2003, overall security conditions in Iraq have deteriorated and grown more complex, as evidenced by the increased numbers of attacks and the Sunni- Shi’a sectarian strife that followed the February 2006 bombing of the Golden Mosque in Samarra. Enemy-initiated attacks against the coalition and its Iraqi partners continued to increase through October 2006 and remain high. The average total attacks per day has increased, rising from about 70 per day in January 2006 to a record high of about 180 per day in October 2006. These attacks have increased around major religious and political events, including Ramadan and the elections. Coalition forces are still the primary target of attacks, but the number of attacks on Iraqi security forces and civilians also has increased since 2003. In October 2006, the State Department reported that the recent increase in violence has hindered efforts to engage with Iraqi partners and illustrates the difficulty in making political and economic progress in the absence of adequate security conditions. Sectarian and militia influences in the Iraqi security forces contribute to the higher levels of violence. According to portions of the January 2007 National Intelligence Estimate on Iraq that were declassified, sectarian divisions have eroded the dependability of many Iraqi units, and a number of Iraqi units have refused to serve outside the areas where they were recruited. According to an August 2006 DOD report, sectarian lines among the Iraqi security forces are drawn geographically, with Sunni, Shi’a, or Kurdish soldiers serving primarily in units located in areas familiar to their group. Further, according to the report, commanders at the battalion level tend to command only soldiers of their own sectarian or regional background. Moreover, in November 2006, the State Department reported that corruption and infiltration by militias and others loyal to parties other than the Iraqi government have resulted in the Iraqi security forces being part of the problem in many areas instead of the solution. Because of the poor security conditions, the United States has not been able to draw down the number of U.S. forces in Iraq as early as planned. For example, after the increase in violence and collapse of the Iraqi security forces during the spring of 2004, DOD decided to maintain a force level of about 138,000 troops until at least the end of 2005, rather than reducing the number of troops to 105,000 by May 2004, as had been announced the prior fall. DOD reversed a decision to significantly reduce the U.S. force level during the spring of 2006 because Iraqi and coalition forces could not contain the rapidly escalating violence that occurred in the summer of 2006. Our work has identified weaknesses in the $15.4 billion program to develop Iraqi security forces. Although unit-level transition readiness assessments provide detailed information on Iraqi security force capabilities, the aggregate reports that DOD and State provide to Congress do not provide the information needed to determine the complete capabilities of the forces. Consequently, Congress will need additional information to assess the department’s supplemental request for $3.8 billion to train and equip Iraqi security forces. GAO has made repeated attempts, without success, to obtain U.S. assessments of Iraqi forces. These data are essential for Congress to make an independent assessment of Iraqi forces’ capabilities, needs, and results. Moreover, DOD may be unable to fully account for weapons received by the Iraqi security forces and has yet to clarify which accountability requirements it chose to apply to the program. MNF-I uses the TRA system to determine when units of the Iraqi security forces are capable of assuming the lead for counterinsurgency operations in specific geographic areas. The TRA is a joint assessment, prepared monthly by the unit’s coalition commander and Iraqi commander. According to MNF-I guidance, the purpose of the TRA system is to provide commanders with a method to consistently evaluate units; it also helps to identify factors hindering unit progress, determine resource shortfalls, and make resource allocation decisions. Iraqi army TRA reports contain capabilities ratings in the areas of personnel, command and control, equipment, sustainment/logistics, training, and leadership. Commanders use the TRA results and their professional judgment to determine a unit’s overall readiness level. Each Iraqi army unit is assigned a readiness level of 1 through 4, with 1 the highest level a unit can achieve. DOD and State reports provide some information on the development of Iraqi security forces, but they do not provide detailed information on the specific capabilities that affect the readiness levels of individual units. For example, DOD and State provide Congress with weekly and quarterly reports on the progress made in developing capable Iraqi security forces and transferring security responsibilities to the Iraqi army and the Iraqi government. This information is provided in two key areas: (1) the number of trained and equipped forces, and (2) the number of Iraqi army units and provincial governments that have assumed responsibility for security of specific geographic areas. The State Department reports that the number of trained and equipped Iraqi security forces has increased from about 174,000 in July 2005 to about 323,000 in December 2006. However, these numbers do not provide a complete picture of the Iraqi security forces’ capabilities in part because they may overstate the number of forces on duty. For example, Ministry of Interior data include police who are absent without leave, but Ministry of Defense data exclude absent personnel. In addition, poor reporting by the Ministry of Interior makes it difficult to determine how many of the coalition-trained police the ministry still employs or what percentage of the 180,000 police believed to be on the payroll are coalition trained and equipped. Moreover, the numbers do not give detailed information on the status of equipment, personnel, training, or leadership. We previously reported that we were working with DOD to obtain the unit- level TRA reports because they would be useful in more fully informing Congress about the capabilities and needs of Iraq’s security forces and in indicating how accurately DOD reports reflect the forces’ capabilities. According to MNF-I’s Deputy Chief of Staff for Strategic Effects, the best measure of the capabilities of Iraqi units and improvements in the security situation comes from commanders on the ground at the lowest level. Although unit-level TRA reports provide more detailed information on Iraqi security forces’ capabilities, DOD had not provided GAO with these unit-level reports as of February 2007. DOD routinely provides GAO access to the readiness levels of U.S. forces. Additionally, DOD and MNF-I may be unable to fully account for weapons issued to the Iraqi security forces, and DOD has not yet clarified what accountability requirements apply to the program. According to our preliminary analysis, as of January 2007, DOD and MNF-I may not be able to account for Iraqi security forces’ receipt of about 90,000 rifles and 80,000 pistols that were reported as issued before early October 2005. Additionally, it is unclear at this time what accountability measures DOD has chosen to apply to the train-and-equip program for Iraq. As part of our ongoing work, we have asked DOD to clarify whether MNF-I and Multi- National Security Transition Command-Iraq (MNSTC-I) must follow accountability measures specified in DOD regulations, or whether DOD has established other accountability measures. For example, DOD officials expressed differing opinions on whether the DOD regulation on the Small Arms Serialization Program, which requires the entry of small arms serial numbers into a DOD-maintained registry, applies to U.S.-funded equipment procured for Iraqi security forces.