U.S can not account for spending $2.6 billion in Iraqi fund

Because of poor record-keeping and lax oversight, the Department of Defense cannot account for how it spent $2.6 billion that belonged to the Iraqi government, according to the inspector general for Iraq reconstruction.

An audit of a $9.1 billion fund of Iraqi oil proceeds showed that most American military agencies entrusted with spending the money on reconstruction projects failed to adhere to U.S. rules on how such money must be tracked and spent, the inspector general found.

U.S. officials failed to create bank accounts for $8.7 billion in the Development Fund for Iraq, as mandated by the Department of Treasury, creating "breakdowns in controls [that] left the funds vulnerable to inappropriate uses and undetected loss," according to the report, which is scheduled to be released Tuesday.

The audit is the latest probe to fault the U.S. government for mismanagement of Iraqi funds in the years following the U.S.-led invasion in March 2003, which led to an insurgency and a years-long occupation.