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Cablegate: Iraq Budget Execution to Improve with New Accounting

VZCZCXRO3921
PP RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #3783 3371550
ZNR UUUUU ZZH
P 021550Z DEC 08
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC PRIORITY 0653
INFO RUCNRAQ/IRAQ COLLECTIVE

UNCLAS BAGHDAD 003783

SIPDIS

E.O.12958:N/A
TAGS: EFIN ECON PGOV IZ
SUBJECT: IRAQ BUDGET EXECUTION TO IMPROVE WITH NEW ACCOUNTING
MANUAL

1. Summary: The GOI will soon release a new accounting manual that
will establish uniform accounting practices at all levels of public
administration. The manual is the work of experienced Iraqi civil
servants, supported by U.S. Treasury advisors and experts from the
UK and World Bank. Making official accounting practices become more
uniform and transparent will reinforce other reforms undertaken by
the GOI. End summary.

2. A team of 13 senior GOI civil servants completed the accounting
manual during a workshop held in Amman, Jordan, from November 4
through 14. Advisors from the U.S. Treasury Department's Office of
Technical Assistance (OTA) facilitated the workshop, with additional
support from the UK and the World Bank. The 200-page manual will be
published in both Arabic and English once it is formally approved by
the Minister of Finance. Ministry officials expect that to happen
by the end of this year.

3. The results of the workshop are the culmination of nearly a year
of preparatory work by GOI officials located across Iraq. Those
present at the workshop represented the Ministries of Finance and
Education, the Council of Ministers, the Board of Supreme Audit, and
the finance ministry of the Kurdish Regional Government. The manual
records largely undocumented accounting practices understood by only
the most experienced Iraqi civil servants. Just three of the
Ministry of Finance officials attending the workshop had combined
work experience of over 120 years.

4. Once the manual is widely available, it will be possible for the
GOI to follow uniform accounting practices at all levels of
government. While it could take up to five years to achieve that
goal, completion of the manual was an essential first step. "You
can't have budget execution without this," said one of the OTA
advisors at the workshop.

5. In 2006, as one of the reforms required under Iraq's program
with the International Monetary Fund, the Ministry of Finance
established a new accounting classification to guide GOI
record-keeping. But the GOI was not able to apply the new chart of
accounts consistently across all ministries or at all levels of
government. The resulting inconsistencies added unnecessary
friction to the budget process, made it difficult to measure the
results of GOI spending, and impeded budget execution.

6. The spread of uniform government accounting standards should
reinforce other reforms the GOI is undertaking. In addition to more
efficient execution of budgets, the process of preparing budgets
will become simpler. Consistent classification and coding of
expenditure will also increase transparency, improve the quality of
audits, and help to curb corruption.
CROCKER

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