Coalition Provisional Authority

The Coalition Provisional Authority (CPA) was established as a transitional government in Iraq following the invasion by the United States and the other members of the multinational coalition which was formed to oust the government of Saddam Hussein in 2003. Citing UN Security Council Resolution 1483 (2003), and the laws of war, the CPA vested itself with executive, legislative, and judicial authority over the Iraqi government from the period of the CPA's inception on April 21, 2003, until its dissolution on June 28, 2004.

Criticism of Financial Management

In May of 2003 the CPA took over the responsibility for administering the Development Fund for Iraq (DFI). Established from the earlier UN oil-for-food program, the CPA was authorized to manage the DFI, which took in approximately $20 billion in the year after the invasion. The CPA also administered 18.4 billion dollars which the U.S. Congress allocated for Iraqi reconstruction in November 2003, known as the Iraq Relief and Reconstruction Fund (IRRF).

Related Topics:
Development Fund for Iraq - Congress - Iraq Relief and Reconstruction Fund

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By June of 2004, the CPA had spent, or allocated, 19.1 billion dollars of the DFI funds -- while spending only 400 million dollars from the IRRF. Critics suggest that Bremer selectively spent from the DFI because it was more free from accounting oversight by the GAO.

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However, others contend that the IIRF was not intended to finance the Iraqi government ministries or the Public Distribution System (state food rations from the Oil-for-food program), as the DFI did. The $18.4 billion dollars authorized by the U.S. congress was intended to finance large reconstruction projects such as power and sewage plants, not to provide the day-to-day operating expenses of the Iraqi government. These projects were then in their planning and early site preparation stages so it is not surprising that little money had been disbursed at that point, or that much of the Development Fund for Iraq, which remains virtually the only source of revenue for the Iraqi governmenthttp://news.yahoo.com/news?tmpl=story&u=/nm/20050605/wl_nm/iraq_economy_dc_1, had.

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Audits of the CPA's expenditures of Iraqi funds

When authority to manage the revenue from Iraq's oil on behalf of the Iraqi people through United Nations resolution 1483, that authority was transferred under certain conditions.

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• The funds were to be managed in an open, transparent fashion.
• The CPA was to submit to oversight from the International Advisory and Monitoring Board, a blue ribbon panel of senior international banking experts.

The IAMB tried to insist on certain financial controls, with limited success.

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With input from the IAMB accounting firm KPMG was appointed to audit the CPA's expenditures from the DFI. KPMG's audit notes (.pdf) of July 15, 2004 include over a dozen causes for concern.

Related Topics:
KPMG - Audit the CPA's expenditures from the DFI

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On June 20, 2005 the staff of the Committee on Government Reform prepared a report for Congressman Henry Waxman on the CPA's expenditures from the DFI that raised additional causes for concern http://www.democrats.reform.house.gov/story.asp?ID=873&Issue=Iraq+Reconstruction.

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