October 2003: Contract to Audit CPA’s Expenditures Awarded to Unqualified Firm

San Diego Business Address of North Star Consultants, Inc. [Source: NBC News]North Star Consultants, Inc. wins a $1.4 million contract to review the Coalition Provisional Authority’s internal controls for managing Iraq’s funds and provide the CPA with a written evaluation. The small firm is not a certified public accounting firm as is required by both UN Security Council Resolution 1483 (see May 22, 2003) and the CPA’s Regulation Number 2 (see June 10, 2003). [US Congress, 2/6/2007 ] The firm is so small that it operates out of a private home near San Diego. [MSNBC, 2/17/2005] A 2004 audit performed by the Special Inspector General for Iraq Reconstruction will find that “North Star Consultants did not perform a review of internal controls as required by the contract. Consequently, internal controls over DFI disbursements were not evaluated. In addition, the Comptroller verbally modified the contract and employed the contractor to primarily perform accounting tasks in the Comptroller’s officer.” [Special Inspector General for Iraq Reconstruction, 7/28/2006, pp. 7 ] A single Northstar employee will reportedly use spreadsheets, not accounting software, to track the $20 billion that the CPA will spend on Iraq’s behalf between April 2003 and June 28, 2004. Of that amount, $12 billion is in cash (see June 25, 2004). [MSNBC, 2/17/2005]