This is the accessible text file for Department of Defense Office of Inspector General 
Audit Report No. D-2007-030 entitled 'Management of the Iraq Security Forces Fund in Southwest 
Asia - Phase I,' December 8, 2006. 

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[Seal of the Department of Defense, United States of America]

DoD Inspector General Report

December 8, 2006

Report No. D-2007-030

Project No. D2006-D000LQ-0184.000

MEMORANDUM FOR UNDER SECRETARY OF DEFENSE
(COMPTROLLER/CHIEF FINANCIAL OFFICER)
ASSISTANT SECRETARY OF THE ARMY FOR
FINANCIAL MANAGEMENT AND COMPTROLLER

SUBJECT: Management of the Iraq Security Forces Fund in Southwest Asia - Phase I

Objectives. The overall objectives of the audit are to evaluate whether the $5.7 billion
provided in the FY 2005 supplemental appropriation for equipping, supplying, and
training the Iraq Security Forces and repairing, renovating, and constructing facilities and
infrastructure was used for the intended purposes and whether transfers to other DoD
appropriations followed congressional intent and applicable appropriation law.

Scope and Methodology. "Emergency Supplemental Appropriations Act for Defense, the
Global War on Terror, and Tsunami Relief, 2005" (Public Law 109-13), May 11, 2005,
provided $5.7 billion for the Iraq Security Forces Fund (1SFF).

We planned the audit in three phases. Specifically, in the first phase, we examined how the
Office of the Under Secretary of Defense (OUSD [Comptroller/Chief Financial Officer]) and
the Office of the Assistant Secretary of the Army for Financial Management and Comptroller
(OASA [FM&C]) distributed the $5.7 billion ISFF to determine whether the distribution
complied with the 14 provisions of Public Law 109-13 and applicable appropriation law.
The second and third phases of the audit will be performed in Iraq and subsequent reports
will be issued for those phases of the audit.

Results-In-Brief and Effect. The OUSD (Comptroller/Chief Financial Officer) and the
OASA (FM&C) distributed and transferred the $5.7 billion in the ISFF in compliance
with the 14 provisions of Public Law 109-13 and applicable appropriation law.


December 8, 2006
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Results and Effects on Operations

The Office of the Under Secretary of Defense (Comptroller/Chief Financial Officer)(the
Under Secretary), and the Office of the Assistant Secretary of the Army (Financial
Management and Comptroller)(the Army) distributed and transferred the $5.7 billion in
compliance with the 14 provisions of Public Law 109-13 and applicable appropriation
law.

Background

Public Law 109-13, specifically, "Section 3.; References.; Division A-Emergency
Supplemental Appropriations for Defense, the Global War on Terror, and Tsunami
Relief, 2005; Title I-Defense Related Appropriations," appropriated $5.7 billion to the
Secretary of Defense to allow the Commander, Multi-National Security Transition
Command-Iraq (MNSTC-I), to provide assistance, with the concurrence of the Secretary
of State, to the security forces of Iraq. The funds were to be used primarily by the
Commander, MNSTC-I although the U.S. Army Forces Command and the Defense
Security Cooperation Agency received funds from this appropriation. In addition, some
funds from the appropriation were transferred to the "Operations and Maintenance,
Army" appropriation account.

The funds were to be used to provide equipment, supplies, services, training, facility and
infrastructure repair, renovation, and construction, and were to remain available until
September 30, 2006. The law also provided that the Secretary of Defense may transfer the
funds to other DoD organizations and appropriations. The distribution of the funds within
the DoD is shown in the attachment.

Audit Results

We examined compliance with each of the 14 provisions in Public Law 109-13 as
necessary. We discuss the results below grouped by subject area.

General Provision. Public Law 109-13 states that the $5.7 billion for the Iraq Security
Forces Fund is to remain available until September 30, 2006.

The Office of Management and Budget apportioned $5.7 billion to the Department of the
Army, of which $5.49 billion was apportioned for the "Iraq Security Forces Fund, Army."

The Defense Finance and Accounting Service issued "The Army Management Structure
Fiscal Year 2006" showing the Army's appropriation account for the "Iraq Security Forces
Fund, Army" apportionment. The fund identifier 21 2005/2006 2092, where 21 (Treasury
Agency symbol for Department of the Army, General Funds), 2005/2006 (fiscal year when
the funds are to be used), and 2092 (Treasury Account for the ISFF Appropriation) was used
to distribute the $5.49 billion to the MNSTC-I, the U.S. Army Forces Command, and the
Defense Security Cooperation Agency. The fund identifier indicates that the funds were
available until September 30, 2006.

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The Office of Management and Budget transferred the remaining $.210 billion by
apportionment to the "Operations and Maintenance, Army" appropriation account using a
fund identifier of 21 2005 2020 to reimburse the Army for costs previously expended for
assistance to the Iraqi Security Forces. The fund identifier indicates that the funds
transferred reimbursed FY 2005 Army funds.

Distribution Provisions. Public Law 109-13 states:

Provided, That such funds shall be available to the Secretary of
Defense, notwithstanding any other provision of law, for the purpose of
allowing the Commander, Multi-National Security Transition
Command-Iraq, or the Secretary's designee to provide assistance, with
the concurrence of the Secretary of State, to the security forces of Iraq
including the provision of equipment, supplies, services, training,
facility and infrastructure repair, renovation, and construction, and
funding:

Provided further, That the authority to provide assistance under this
section is in addition to any other authority to provide assistance to
foreign nations:

"The Army Management Structure Fiscal Year 2006" showed that $5.49 billion was
available to the Commander, MNSTC-I, and 10 projects codes were established for the
management of the "Iraq Security Forces Fund, Army" funds. One of those project codes
was established for the U.S. Army Forces Command for a Quick Response Fund, another
project code was established for the Defense Security Cooperation Agency to provide
assistance to the Government of Jordan, and the remaining eight project codes were for
MNSTC-I. Of the $5.49 billion in this appropriation account, $5.246 billion was distributed
to the MNSTC-I, $.145 billion was distributed to the U.S. Army Forces Command, and
$.099 billion was distributed to the Defense Security Cooperation Agency. The Under
Secretary and the Army distributed the $5.246 billion in ISFF within the DoD in compliance
with the 14 provisions of Public Law 109-13 and applicable appropriation law.

Transfer Provisions. Public Law 109-13 states;

Provided further, That the Secretary of Defense may transfer the funds
provided herein to appropriations for military personnel; operation and
maintenance; Overseas Humanitarian, Disaster, and Civic Aid;
procurement; research, development, test and evaluation; and defense
working capital funds to accomplish the purpose provided herein:

Provided further, That this transfer authority is in addition to any other
transfer authority available to the Department of Defense:

Provided further, That upon a determination that all or part of the funds
so transferred from this appropriation are not necessary for the
purposes provided herein, such amounts may be transferred back to this
appropriation:

The Office of the Assistant Secretary of the Army (Financial Management and Comptroller)
stated that it did not transfer any funds from the ISFF.

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Contributions Provisions. Public Law 109-13 states:

Provided further, That contributions of funds for the purposes provided
herein from any person, foreign government, or international
organization may be credited to this Fund, and used for such purposes:

Provided further, That the Secretary shall notify the congressional
defense committees in writing upon the receipt and upon the transfer of
any contribution delineating the sources and amounts of the funds
received and the specific use of such contributions:

The Office of the Assistant Secretary of the Army (Financial Management and Comptroller)
stated that no contributions were made to the ISFF and no notifications were necessary or
were made by the DoD to the congressional defense committees.

Army Operations and Maintenance Transfer Provision. Public Law 109-13 states:

Provided further, That of the amounts provided under this heading,
$210,000,000 shall be transferred to "Operations and Maintenance,
Army" to reimburse the Department of the Army for costs incurred to
train, equip, and provide related assistance to Iraqi Security Forces:

The Office of Management and Budget issued an apportionment and reapportionment
schedule on August 3, 2004, designating that $.210 billion was transferred to "Operations
and Maintenance, Army" with the fund identifier as 21 2005 2092.

Jordan Transfer Provisions. Public Law 109-13 states:

Provided further, That, notwithstanding any other provision of law,
from funds made available under this heading, $99,000,000 shall be
used to provide assistance to the Government of Jordan to establish a
regional training center designed to provide comprehensive training
programs for regional military and security forces and military and
civilian officials, to enhance the capability of such forces and officials
to respond to existing and emerging security threats in the region:

Provided further, That assistance authorized by the preceding proviso
may include the provision of facilities, equipment, supplies, services
and training, and the Secretary of Defense may transfer funds to any
Federal agency for the purpose of providing such assistance:

An Under Secretary memorandum, "Release of Fiscal Year (FY) 2005/2006 Obligation
Authority for the Iraq Security Force Fund (ISFF) (No. 6)," April 10, 2006, was issued to the
Army to provide for the release of the full $.099 billion in obligation authority to provide
assistance to the Government of Jordan to establish a regional training center.

Reporting Transfers Provisions. Public Law 109-13 states:

Provided further, That the Secretary of Defense shall, not fewer than
5 days prior to making transfers from this appropriation, notify the

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congressional defense committees in writing of the details of any such
transfer:

Provided further, That the Secretary shall submit a report no later than
30 days after the end of each fiscal quarter to the congressional defense
committees summarizing the details of the transfer of funds from this
appropriation:

In a memorandum dated June 27, 2005, the Deputy Secretary of Defense (then Acting),
notified the Senate and House Appropriations and Armed Services committees that he had
decided to execute funds directly from the funds appropriated for the ISFF rather than use the
transfer provisions provided for in Public Law 109-13. Officials with the Under Secretary
and the Army stated that the chairmen of those committees did not object to this decision. As
a result, the DoD did not believe that the congressional reporting requirement on transfers
found in two provisions of Public Law 109-13 any longer applied. The Under Secretary and
the Army stated that no notifications or reports were necessary, therefore, DoD sent none to
the congressional defense committees. We agree.

Emergency Requirement Provision. Public Law 109-13 states:

Provided further, That the amount provided under this heading is
designated as an emergency requirement pursuant to section 402 of the
conference report to accompany S. Con. Res. 95 (108th Congress).

This provision did not require a specific action, therefore, we did not further examine it
for our audit.

Conclusion

The $5.7 billion in ISFF were distributed and transferred in compliance with the
14 provisions of Public Law 109-13 and applicable appropriation law.

We are providing this report for information and use. We considered management
comments on a draft of this report in preparing the final report.

Management Comments

Although not required to comment, the Offices of the Under Secretary of Defense
(Comptroller/Chief Financial Officer) and the Assistant Secretary of the Army (Financial
Management and Comptroller) concurred with the report as written. The respective
offices were not held to the usual standard of DoD Directive 7650.3 for formatting and
submitting comments because there were no recommendations for their offices.

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December 8, 2006
Report No. D-2007-030
Project No. D2006-D000LQ-0184.000

We appreciate the courtesies extended to the staff. Questions should be directed to
Mr. Timothy M. Wimette at (703) 604-8876 (DSN 664-9068) or Mr. Robert Murrell at
(703) 604-9074 (DSN 664-9074).

By direction of the Deputy Inspector General for Auditing:

Wanda A. Scott
Assistant Inspector General
Readiness and Operations Support Directorate

cc:
Commander, U.S. Central Command
Auditor General, Department of the Army

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December 8, 2006					Attachment
Report No. D-2007-030
Project No. D2006-D000LQ-0184.000

[Note:  The following table has been reformatted for easier reading in text-only format.]

Funds Distribution for the Iraq Security Forces Fund Appropriation

Office of Management and Budget
$5,700,000,000

[Arrow to] 

Department of the Army
Assistant Secretary of the Army
for Financial Management
and Comptroller
$5,490,000,000 [Arrow to] $ 210,000,000

[and to]

Defense Security Cooperation Agency
$ 99,000,000

Multi-National Security Transition
Command-Iraq
$5,246,000,000

U.S. Forces Command
$ 145,000,000