Improper Obligations Using the Iraq Relief and Reconstruction Fund (IRRF 2)
SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION ARLINGTON VA
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Congress appropriated 18.4 billion for the rebuilding of Iraq in Public Law 108-106, the Emergency Supplemental Appropriations Act for Defense and for the Reconstruction of Iraq and Afghanistan. This money is known as the Iraq Relief and Reconstruction Fund 2 IRRF 2.1 On September 22, 2006, we issued an interim audit report on improper obligations using IRRF 2.2 As a result of our interim findings, and as agreed to with senior U.S. Army Corps of Engineers officials, we further report on the circumstances related to these questionable funds and subsequent actions taken or planned by GRD regarding the use of these funds. This is our final report. In our September 2006 interim report, we concluded that 362 million in obligations did not constitute proper obligations. These funds were recorded as obligations by the U.S. Army Corps of Engineers USACE Gulf Region Division GRD3 in USACEs financial records under a general contingency account used to enter data into a data field for vendors when no specific vendor entity existed. Because we concluded that the obligation of funds from IRRF 2 must be made for bona fide purposes prior to their expiration on September 30, 2006, we issued an interim audit report so timely action could be taken by USACE on the use of these funds. In providing official oral comments on our interim findings, the USACE Chief Financial Officer CFO agreed with our conclusion that the 362 million in IRRF 2 funds that were obligated to non-existent vendors were not proper obligations. He advised us that USACE was seeking a solution to meet its needs to fund future contingency and close-out costs in a manner that constitutes proper obligations. In further discussions with USACE s GRD staff in Iraq we were told that GRD had been previously advised that it could obligate IRRF 2 funds for contingencies to this general account.
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