KPMG report on Iraq criticises CPA

p> KPMG's often critical report 'spoke for itself', the IAMB said. But it added that it highlighted concerns with the Coalition Provisional Authority, which directed payments made by the DFI. It said that the CPA suffered from 'control weaknesses' including 'inadequate accounting systems' and also accused it of 'uneven application' and inadequate record keeping in its contracting procedures.

Despite the criticisms, KPMG found no evidence of fraud by the CPA and said that there was proper and transparent accounting for all known oil proceeds, reported frozen assets and transfers from the Oil for Food Program. But the firm qualified its audit of the DFI's statement of cash receipts and payments over concerns that controls over the oil extraction were insufficient.

It is thought an 'unknown amount' of oil is unaccounted for. Mystery also surrounded what became of much of the money paid out by the DFI.

Part of KPMG's brief by the IAMB was to scrutinise sole-sourced contracting procedures. Ironcially, in May, KPMG lost the contract it had been handed to investigate the UN oil-for-food programme to Ernst & Young after Paul Bremer, the coalition's chief administrator in Iraq, decided it must be put to a public tender.

The IAMB said it plans to pursue a special audit of sole-sourced contracts that were funded from the DFI.