US officials who ran Iraq until last month used a system open to fraud and error to track about $20 billion in Iraqi funds spent during the occupation, accounting firm KPMG said in a report made public late on Friday.
The US-led Coalition Provisional Authority's underlying record-keeping "greatly diminishes the transparency of the expenditures made," the interim study said.
It also left the Development Fund for Iraq, a United Nations-established means of shepherding Iraqi oil revenues during the US occupation, "open to fraudulent acts," the report said.
KPMG said it had been unable to get information about Halliburton and other firms that received non-competitive contracts from President George W. Bush's administration funded by Iraqi oil proceeds.
Halliburton, the Texas oil services firm headed by Dick Cheney from 1995 to 2000 before he became vice president, has been awarded about $1.5 billion from the development fund, the single largest payout to date, according to the US Army Corps of Engineers.
"To date, KPMG has not been given access to special audit reports by the CPA that have been undertaken on these contracts," said the report released by Rep. Henry Waxman, a California Democrat seeking to subpoena records of what he called possible US mismanagement of the fund.
The audit was carried out at the request of the International Advisory and Monitoring Board, a UN-mandated watchdog.
One reason for delays in handing over information, the US Defence Department said in reply, was confidential contractor financial information, including pricing data, the government is barred from releasing without permission of the companies involved.
"And to date, the companies have declined to permit release," said Marine Lieutenant Colonel Rose-Ann Lynch, a Pentagon spokeswoman. Halliburton did not immediately return a call seeking comment.
Although the Coalition Provisional Authority disbanded last month, the US government was making sure auditors had access to its records, she added.
The accounting framework at issue was maintained by a single accountant, KPMG said, without entry of credits and debits that makes tracing transactions easier.
A final KPMG audit is due to be made public at the oversight board's next meeting on Wednesday and Thursday in Washington.
The UN Security Council set up the monitoring board in May 2003 to make sure Iraq's funds were spent properly.
Since the US-led invasion in March 2003 that ousted President Saddam Hussein, $10.8 billion in Iraqi oil money has been deposited in the development fund, more than half of the total deposits of $20.2 billion for the period.
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