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April 13, 2009
The International Advisory and Monitoring Board (IAMB) of the Development Fund for Iraq (DFI) met in Amman, Jordan on April 2-3, 2009 and issued the following statement:
“The IAMB met to continue its oversight role over the use of resources of the DFI, which is the principal repository for Iraq's oil-export receipts, and oversee audits of the DFI in line with its mandate under UN Security Council Resolution 1859.
“The IAMB’s mandate under UN Security Council Resolution 1790 was due to expire on December 31, 2008. The UN Security Council Resolution 1859 dated December 22, 2008, extended the IAMB mandate through December 2009, subject to review by the Government of Iraq by June 15, 2009. The UN Security Council recognized the significant role of the IAMB in helping the Government of Iraq to ensure that Iraq’s resources are being used transparently and accountably for the benefit of the people of Iraq. The IAMB discussed the draft report of the Representative of the UN Secretary General to the UN Security Council in line with paragraph 3 of UNSCR 1859.
“The IAMB noted that UNSCR 1859 recognized the need during 2009 to transition to successor arrangements, involving the Committee of Financial Experts (COFE) (www.cofe-iq.net). The IAMB believes that the COFE is ready and capable to succeed the IAMB and conduct competent and independent oversight of the DFI. Since its inception in 2006 COFE has been working closely with the IAMB and attending all its meetings. COFE itself meets regularly and has acquired increasing roles in the follow-up and implementation of recommendations contained in the IAMB commissioned independent audit reports . Recognizing the competence and capabilities of the COFE, aided by the Board of Supreme Audit (BSA), the IAMB has now entrusted much of the detailed follow up and investigations of audit findings to COFE. The IAMB will write again to the Government of Iraq noting that the IAMB believes that COFE is ready to assume the oversight responsibilities for the DFI.
“In 2009 the IAMB will place increasing reliance upon the work of COFE and take active steps to transition full responsibility for DFI oversight by the end of 2009. In particular, the IAMB endorsed COFE’s action plan for 2009 to (i) initiate the appointment process for the 2009 auditor, (ii) review and address KPMG’s audit findings, (iii) continue to press for the early passing through parliament of laws and regulations concerning organization structures, job descriptions and internal control systems, (iv) consult and advise the Government of Iraq on strengthening controls over public funds and implementation of the state budget, and (v) active monitoring of progress with implementation of the comprehensive oil measuring system.
“The IAMB considered the preliminary results of the 2008 audit of the DFI. The audit continues to highlight key issues of concern regarding weaknesses in controls over oil extraction and use of the resources. Access to some ministries and regions has been delayed, and fieldwork is not yet complete. The summary of the preliminary results of the KPMG audits are available on the IAMB website (www.iamb.info). Detailed reports will be posted on the website once finalized.
“The representatives of the Government of Iraq, the COFE and the Iraqi Board of Supreme Audit (BSA) reported on actions taken to follow up on outstanding audit recommendations. The IAMB noted progress but reiterated its concern that more work still needs to be done to implement the earlier recommendations and in strengthening the system of internal controls. The IAMB also urged the Government of Iraq to intensify efforts to follow up on frozen Iraqi assets held abroad, including through considering the need for a separate entity to handle these efforts.
“Oil experts from the Iraqi Ministry of Oil briefed the Board on oil metering. Some progress has been made, including in commencing implementation of a code for fiscal and custody measurements for hydrocarbon fuels by the Ministry of Oil. However, much remains to be done before a fully operational control and measurement system over the oil production, distribution and export sales, can be comprehensively implemented. The IAMB remains concerned that one of its earliest recommendations from 2004 concerning oil metering remains incomplete. Indications from the Ministry of Oil point to implementation by 2011 at the earliest. The IAMB strongly encourages the Government of Iraq to develop a time-bound action plan, endorsed by the Council of Ministers, that ensures completion of this project.
“Representatives of the US Department of State briefed the IAMB on internal controls and capacity building in Iraq. All parties, including the Government of Iraq and the Iraqi Board of Supreme Audit, acknowledge that there are many challenges to overcome to address corruption. The IAMB commends the Government of Iraq for embarking on the changes underway and recognizes that much remains to be done before a sound financial management system is operating effectively in Iraq.
“The next meeting of the IAMB, together with COFE, is tentatively scheduled for June 2009. COFE will also be meeting separately in the interim.”