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Development Fund of Iraq and the Successor Account Letter of Observations of the Current Year Ministries of Iraq and Entities N

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Development Fund of Iraq and the Successor Account Letter of Observations of the Current Year Ministries of Iraq and Entities N Development fund of Iraq and the successor account Letter of observations of the current year Ministries of Iraq and entities not associated to ministries financed from the Fund December 31, 2016 1 KPMG القواسمي وشركاه تلفون: -7090 565 6 966+ عمان- اﻷردن فاكس: -8598 568 6 966+ To the government of Iraq Development find of Iraq and successor account (CBI 2) The republic of Iraq No. 2017-01-156 Date : October 27, 2017 Dear Sirs We are pleased to submit to you our Management Letter containing our observations and recommendations concerning the internal control structure and other matters resulting from our audit of the Development Fund for Iraq and Successor Account (DFI) for the year ended 31 December 2016. Our audit uncovered certain conditions that, although not considered by us to be material weaknesses, are matters for which corrective act ion should be considered. In planning and performing our audit of the financial statements of the Development Fund for Iraq and Successor Account ( " DFI" ), we considered internal control relevant to the preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances. but not for the purpose of expressing an opinion on the effectiveness of internal control. According ly our audit may not have identified all weaknesses within your systems. The observations and recommendations as listed in this report may not be a comprehensive record of all weaknesses that may exist . This report is intended solely for the information and use of the COFE and the Government of Iraq and is not intended to be and should not be used by anyone other than these specified par ties. Because others may seek to use it for different purposes, this report should not be quoted. referred to or shown to any other parties (except the addressee's professional advisers acting in that capacity provided that they accept that we assume no responsibility or liability whatsoever to them in respect of the contents) unless so requi red by court order or a regulatory authority, without our prior consent in writing. We assume no responsibility whatsoever in respect of or arising out of or in connection with the contents of this presentation to parties other than the addressees. If others choose to rely in any way on the con tents of this presentation they do so entirely at their own risk. We have discussed the content of our report. including our recommendations, with the members of your staff directly involved and where relevant we have incorporated their comments. Degree of Risk Note Page No. Ministry of education 13 High 1- Construction of Basra Sports City project 14 Ministry of youth 15 High 1- Construction of Basra Sports City project 16 High 1- Contracts not resolved by the Ministry 17 High 2- Contracts not resolved by the Ministry- Cont. 18 High 2- Contracts not resolved by the Ministry- cont. 19 High 3- Local projects, not subjected to the decision No. 347 20 High 3- Local projects, not subjected to decision No. 347- Cont. 21 Moderate 4- Suspended advances 22 High 1- Application of decisions Nos. (347 & 432) of 2015 24 High 2- Suspended projects (Work withdrawal) 25 High 3- Suspended advances 26 Ministry of commerce 27 High 1- Suspended advances from previous years 28 High 2- Staff files/ lack of staff files 29 High 3- Staff files/ lack of patent and application and letter of appointment 30 High 4- Interim deposits 31 Ministry of commerce The general company of goods trade 32 High 2- Acceptance of the letter of guarantees from the banks 33 High 3- Suspended Suppling Produces 34 High 4- Reconciliations with the banks 35 Degree of Risk Note Page No. High 5- The existence of suspended instruments in the settlement of banks from previous years 36 Moderate 6- Refraining from signing the contract and then re-activation 37 Moderate 7- Renewal of letter of credit for long periods 38 Moderate 8- Delay in preparation 39 Moderate 9- Lack of daily reports with the received quantities 40 Moderate 10- Disputed and properties owned by third party 41 Moderate 11- Properties overridden by third party 42 Moderate 12- Investment Project 43 Ministry of commerce The general grain Company 44 High 1- Suspended advances from previous years/ General Company for Foodstuff Trading 45 High 2- Suspended advances from previous years 46 Moderate 3- Direct Contracting 47 Moderate 4- A subsidiary company of the Iraqi-Vietnamese Rice Trading Company 48 Ministry of health 49 High 2- Contracts for importing incinerators, not identical to the country of origin 51 High 3- Materials failed by examination- purchase of anaesthetic materials 52 High 4- The existence of suspended instruments in the bank settlements since previous years 53 5- Failure to resolve projects for the establishment of multi-capacity hospitals in accordance Moderate 54 with the Council of Ministers Decision No. (347) - Ministry. 6- The failure to confirm the processing of the ongoing contracts, under the control of the 55 government under the council of ministers decision No. 347 with the ministry of planning as Moderate the final phase 7- Non-approval of the processing of the projects, not subjected to the control of the 56 Moderate government according to the council of ministers decision No. 347 Moderate 8- The existence of contracts for the purchase of delayed medical supplies- Kimadia Co. 57 Ministry of agriculture 58 Ministry of agriculture Ministry center 59 High 1- suspended receivables from previous years 60 Degree of Risk Note Page No. High 2- The lack of preparation of regular banking settlements 61 Moderate 3- Failure to complete all the procedures of decision No. 124 62 Moderate 4- The failure to resolve the projects according to the council of ministers decision No. (347) 63 Moderate 5- Delay in Proportion 64 Ministry of agriculture The general Company for agriculture preparation 65 High 1- Outstanding and uncollectible debts 66 High 2- Delay in Proportion 67 Ministry of electricity 68 High 1- Non compliance to the terms of the contract 69 Ministry of electricity Ministry center 70 High 2- Delay in the procedures of opening the letters of credit 71 High 3- Delay in the procedures for closing the letters of credit 72 High 4- Suspended advances account «interim and advances of working individuals 73 5- Failure to prepare updated reports for the energy distribution department for some Moderate 74 investment plan projects / ministry center Moderate 6- Shortcoming in the documentary credits 75 Moderate 7- Financial planning missions 76 Ministry of electricity / the directorate of Karkh 77 1- The failure to finalize the contracts, subjected to the government’s control under the 78 High council of ministries decision No. 347 with the ministry of planning as the final phase. High 2- Delay in preparation (projects with governmental authorities) 79 High 3- Non compliance with the terms of contract 80 High 3- Non compliance with the terms of contract 81 4- Payment of the contracts amounts with the government authorities in advance and 82 High entirely with the contractual value despite the delay in preparation. High 5- Calculation of fines for delayed contracts 83 Moderate 6- Contracting with intermediate companies 84 Ministry of electricity / of the general directorate of the gas production projects 85 High 1- Direct Contracting 86 Degree of Risk Note Page No. High 2- Non calculation of delay fines for the delayed contracts 87 3- The failure to finance the contracts, subjected to the government’s control under the Moderate 88 council of ministries decision No. 347 with the ministry of planning as the final phase. Ministry of oil Ministry of oil Oil projects Company 90 High 1- The failure to resolve the projects according to the council of ministers decision No. (347) 91 High 2- Delay in issuing the decision of the Tender Analysis Committee 92 High 3- Minutes of opening the tenders 93 High 4- The project of strategic tube line Topic(26) 94 High 5-Delay in signing the contract 95 Moderate 6- Non-ratification of the final financial statements 96 Moderate 7- Contract Language 97 Moderate 8- Completion of the tenders opening committee members 98 Ministry of oil Piplines oil Compnay 99 High 1- Delay in signing the contact 100 High 2- Suspended instrument in the banking reconciliation 101 Moderate 3- Non-inclusion of the dispatch clause to the contract 102 Ministry of oil Middle Refineries Company 103 High 1- Delay in signing the contact 104 High 2- customs clearance 105 Moderate 3- Development of Doura refinery units 106 Oil Marketing Company 107 High 1-Sale of Oil Products 108 High 2- Outstanding differences and amounts with one of the customers 109 High 3- Credit Notes 110 Moderate 4- Delay fines 111 Degree of Risk Note Page No. Moderate 5- Non-ratification of the final financial statements 112 Moderate 6- Employees files 113 Ministry of communication 114 Ministry of communication Ministry center 115 Moderate 1- Failure to approve financial records and final statements for previous years 116 Moderate 2- Reconciliations with the banks 117 Ministry of communication The general Company for communication and postal 118 High 1- Failure to keep consolidation records for the years 2003-2012 119 High 2- Delay in the procedures of transfer into the governmental system for the years 2003-2012 120 3- The failure to resolve at the projects, not subjected to the control of the central 121 Moderate Government according to decision No. 347 Ministry of Communication The general Company for international information network 122 1- Delay in completing the construction project of the General Company for the services of 123 High the International Information Network in the governorate of Babylon Ministry of manufacturing and minerals 124 High 1- Advances for the purposes of the activity suspended from previous years 125 High 2.
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