The US government has failed to implement a western accounting system in Iraq and root out the previous regime’s corrupt infrastructure, an insider who worked in Iraq has said.

A system that was designed to cover up the flow of oil money to corrupt officials and third parties has not been rooted out and the country’s fledgling government is being left open to fraud as a result.

The extraordinary claims are only just emerging from the war-torn country, where the accounting failures have mirrored the US government’s broader failure to plan for the post-invasion scenarios.

So says Vance Jochim, an American accountant who served 23 months in Iraq as chief auditor for the Centre for Public Integrity.

Jochim, a former internal auditor, whose experience includes stints for Nissan in the US and for the Los Angeles County, told Accountancy Age that the accounting system used by the new administration in Iraq today is just a ‘budgeting’ system.

‘They had lots of advisers from the coalition of countries, but nobody to review and improve accounting systems and government.’

As US congress turns its attention to the issue, Jochim contends that the millions spent have failed to get rid of decades-old accounting structures and that the occupying authorities know too little about accounting, or don’t see it as a priority.

‘[The system in place] was, in fact, a communist-based, 30-year-old accounting system which did not follow any of the transparency and visual analysis of western accounting systems,’ he said.

Jochim says it was a struggle to bring this to the attention of the coalition ­ largely led by UK and US senior figures.

‘A few of us tried. I was there 23 months and wrote white papers and policy documents about this, but trying to get anyone [in the coalition] to get the Iraqi government to adopt accounting standards was very difficult. They didn’t understand accounting issues and there were just so many levels of people to go through to get to this. State diplomats are not technical people. They didn’t have subject matter expertise and didn’t understand the problems enough to fix them,’ said Jochim.

He added that the US state department did not see the significance of the lack of a robust accounting system.

‘They didn’t see it as a priority and therefore didn’t make it an issue to carry forward to the Iraqi State Department,’ he said.

The problems are particularly acute since the amount of money being channelled to Iraq are so huge.

According to a recent US Government Accountability Report, $300m (£143.5m) has been spent in the past two years to improve Iraq’s ministries, with a further £225m being sought for next year.

‘But still, there isn’t a system in place to account for how this is spent ­ it’s going to get worse,’ Jochim said.