It was the latest in a series of reports from the special inspector general for Iraq reconstruction, Stuart W. Bowen Jr., that detailed slow progress on some projects and waste and chaos in the management of another.
In the new report, Bowen recommended that no more money be spent on the system until someone figures out exactly what Iraq's ministries can use and sets out plans for developing such a program.
At issue are several contracts awarded in 2003, 2004 and 2006 for a broad range of work related to economic and financial reforms in Iraq. One of the tasks was to develop and implement a computerized Iraq Financial Management System, or IFMIS, to replace a Saddam-era computerized system.
The new program was undertaken only months after the invasion of Iraq "without the fundamental planning and analysis that should properly precede the whole change" of a country's system and to ensure that it would be "based on Iraqi" ministry requirements, Bowen's report said. Thus, it has turned out that Iraq's government has a distinctive accounting system that is "not easily adapted" into the new system.
"There has not been true (government of Iraq) ownership of the project," he said.
Although some progress has been reported on it, "it is difficult to tell specifically what has been developed and implemented" and how much has been spent for it, the report said, estimating costs at more than $38 million.
"According to U.S. Embassy officials, the Ministry of Finance continues to use its legacy system for overall budget and accounting, 'nobody noticed' when IFMIS was down for a month and no one relies on IFMIS to produce reports," Bowen said.
Other ministries, such as interior and defense, have developed their own financial management information systems, and they are not compatible with the new one and cannot transfer financial data from one system to another.
"The embassy asked us to tell them whether it was worth proceeding with," Bowen spokeswoman Kristine Belisle said Wednesday. "We recommended to stop and only consider going forward once they've done an assessment of what they have and they're sure the government of Iraq is on board."
In addition to other the other issues, work on two of the contracts - one for a module for budgeting and another for purchasing - was halted after the May kidnapping of a contractor working on it from the Ministry of Finance building. The project leader and four of his security guards have not been found.
A report Monday found that the State Department so badly managed a $1.2 billion contract for Iraqi police training that it can't tell what it got for the money spent.
In a report last week, Bowen partly blamed security for limited progress by provincial reconstruction teams, groups sent to mentor Iraqis in towns and provinces to help them learn how to govern and provide citizens with services.