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June 2, 2008
The International Advisory and Monitoring Board (IAMB) of the Development Fund for Iraq (DFI) met in Kuwait on May 12-13, 2008 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 1790.
"The IAMB considered the results of the 2007 audit of the DFI. The audit highlights key issues of concern regarding weaknesses in controls over oil extraction and use of the resources, including: (i) slow progress in installing oil metering, (ii) incomplete accounting records of the DFI, (iii) direct deposit of oil revenue of $849 million in SOMO bank accounts instead of the DFI, and (iv) uncertainties about remaining contractual commitments entered by the former Coalition Provisional Authority. The IAMB also followed up with the auditors the unaccounted differences of 13.8 million barrels in 2007 in the analysis of oil production and consumption. The summary results of the Ernst & Young audits are available on the IAMB website (www.iamb.info) and detailed reports will be posted mid-June 2008. The IAMB also coordinated with the successor body—the Committee of Financial Experts (COFE)—the arrangements for the 2008 audit, including an interim audit to June 30, 2008.
"The representatives of the Government of Iraq and of the Iraqi Board of Supreme Audit (BSA) reported on actions taken to follow up on outstanding audit recommendations. The IAMB noted some progress but reiterated its concern at the continuing slow progress in implementing the earlier recommendations and in strengthening the system of internal controls. The IAMB urges the BSA, in conjunction with the COFE, to coordinate and actively monitor and follow up a concrete plan of the Government of Iraq to timely monitor and resolve the control weaknesses and build up the necessary capacity to carry out these responsibilities in the various government departments and ministries.
"The IAMB noted that some barter deals of crude oil were recorded in 2007 as in previous years. As no revenues are generated from such barter or other in-kind deals, they could be construed as a violation of the UN Security Council Resolution 1483 requirements that all Iraqi oil export sales be deposited into the DFI and the UN Compensation Fund. The IAMB continues to be concerned that barter transactions are not accounted for in the DFI as required by UNSCR 1483.
"With the expected expiration of the IAMB's mandate at the end of 2008, the IAMB is actively working alongside COFE. COFE is already meeting regularly, considers the audit reports and has embarked on a comprehensive follow-up of earlier recommendations together with the BSA. COFE is regularly submitting its reports and minutes of meetings to the Council of Ministers and publishing on COFE's website.
"The next meeting of the IAMB is scheduled for end-August 2008."