.An Audit Sharply Criticizes Iraq’s Bookkeeping
BAGHDAD, Iraq, Aug. 11 — An audit by the international accounting firm Ernst & Young portrays Iraq as a country that cannot keep its books straight, where elementary accounting errors of up to a billion dollars are routine and where no one can say how much of the country’s oil revenues end up in government coffers.
An auditing board sponsored by the United Nations, which had hired Ernst & Young to carry out the work, posted a summary of the findings on its Web site late Thursday. The audit focused on the nearly $22 billion that Iraq generated in 2005 from oil revenues, which form the basis for virtually the entire national economy.
But in a country in need of every dollar it can generate to restore a crumbling infrastructure, pay government salaries and train its security forces, the auditors found enormous sums simply deposited in the wrong government account or counted differently by various official agencies. The actual oil exports could not be determined accurately because Iraq still does not have modern equipment for measuring what its pipelines pour into tankers.
The panel, the International Advisory and Monitoring Board of the Development Fund for Iraq, was created by the United Nations to supervise an account dominated by Iraqi oil revenues but also including interest payments and money seized from Saddam Hussein’s government.
Referring to the tracking of money from the development fund, sometimes called the D.F.I., the board said in statement that “overall control systems are ineffective,” and that the government’s financial institution suffered from a “lack of written policies and procedures” and “staff who are not properly trained to deal with the nature and complexity of D.F.I. transactions.”
Those transactions are largely overseen by the Central Bank of Iraq and the Ministry of Finance. Late Friday, the Muslim Sabbath, a spokesman for the ministry, said that he had no specific knowledge of the findings. An e-mail message to Sinan Alshabibi, the governor of the Central Bank, was not returned.
But Assim Jihad, a spokesman for the Ministry of Oil, raised the possibility that some of the discrepancies could go beyond simple accounting errors and instead be related to the official corruption that many investigators have found to be endemic in Iraq.
“Any amount that has been spent illegally by any side will be followed up and reviewed by Iraqi institutions,” he said, “and it will be brought back.”
When asked about the audit, Elizabeth Colton, a spokeswoman for the United States Embassy in Iraq, said in a written statement: “The embassy is working to support the government of Iraq’s continuing efforts to strengthen its financial institutions and controls.”
The audit found that in 2005, Iraq made nearly $22 billion by exporting 509,588,308 barrels of oil at an average price of $43 a barrel.
But even those basic figures were in dispute, the audit found. Files at the State Oil Marketing Organization, which oversees oil exports, indicated 845,534 fewer barrels exported than recorded by production companies in Basra, where the oil goes out to tankers in the Persian Gulf. The organization’s contracting and bidding procedures were also in disarray, the audit found.
Once the exports generated revenues, the money was improperly accounted for again and again, the audit found. In one case, $211 million was deposited straight into the government marketing group’s accounts rather than the approved United Nations account for all Iraqi oil revenues.
In another instance, over $1 billion in oil money ended up in an accounting netherworld at the Central Bank because payments to various Iraqi ministries were not recorded when they were made. Other instances of accounting errors involving hundreds of millions of dollars appeared to be common.
The findings echoed those of an earlier audit of the 2004 oil revenues, indicating that few reforms had been made in the interim. “The audit reports continue to be critical of the financial and accounting control systems in place,” the board said.
NYT
Damn at today's prices you would think that they would have the best meters available.
An auditing board sponsored by the United Nations, which had hired Ernst & Young to carry out the work, posted a summary of the findings on its Web site late Thursday. The audit focused on the nearly $22 billion that Iraq generated in 2005 from oil revenues, which form the basis for virtually the entire national economy.
But in a country in need of every dollar it can generate to restore a crumbling infrastructure, pay government salaries and train its security forces, the auditors found enormous sums simply deposited in the wrong government account or counted differently by various official agencies. The actual oil exports could not be determined accurately because Iraq still does not have modern equipment for measuring what its pipelines pour into tankers.
The panel, the International Advisory and Monitoring Board of the Development Fund for Iraq, was created by the United Nations to supervise an account dominated by Iraqi oil revenues but also including interest payments and money seized from Saddam Hussein’s government.
Referring to the tracking of money from the development fund, sometimes called the D.F.I., the board said in statement that “overall control systems are ineffective,” and that the government’s financial institution suffered from a “lack of written policies and procedures” and “staff who are not properly trained to deal with the nature and complexity of D.F.I. transactions.”
Those transactions are largely overseen by the Central Bank of Iraq and the Ministry of Finance. Late Friday, the Muslim Sabbath, a spokesman for the ministry, said that he had no specific knowledge of the findings. An e-mail message to Sinan Alshabibi, the governor of the Central Bank, was not returned.
But Assim Jihad, a spokesman for the Ministry of Oil, raised the possibility that some of the discrepancies could go beyond simple accounting errors and instead be related to the official corruption that many investigators have found to be endemic in Iraq.
“Any amount that has been spent illegally by any side will be followed up and reviewed by Iraqi institutions,” he said, “and it will be brought back.”
When asked about the audit, Elizabeth Colton, a spokeswoman for the United States Embassy in Iraq, said in a written statement: “The embassy is working to support the government of Iraq’s continuing efforts to strengthen its financial institutions and controls.”
The audit found that in 2005, Iraq made nearly $22 billion by exporting 509,588,308 barrels of oil at an average price of $43 a barrel.
But even those basic figures were in dispute, the audit found. Files at the State Oil Marketing Organization, which oversees oil exports, indicated 845,534 fewer barrels exported than recorded by production companies in Basra, where the oil goes out to tankers in the Persian Gulf. The organization’s contracting and bidding procedures were also in disarray, the audit found.
Once the exports generated revenues, the money was improperly accounted for again and again, the audit found. In one case, $211 million was deposited straight into the government marketing group’s accounts rather than the approved United Nations account for all Iraqi oil revenues.
In another instance, over $1 billion in oil money ended up in an accounting netherworld at the Central Bank because payments to various Iraqi ministries were not recorded when they were made. Other instances of accounting errors involving hundreds of millions of dollars appeared to be common.
The findings echoed those of an earlier audit of the 2004 oil revenues, indicating that few reforms had been made in the interim. “The audit reports continue to be critical of the financial and accounting control systems in place,” the board said.
NYT
Damn at today's prices you would think that they would have the best meters available.
posted by madtom at 12:29 PM
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