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Audit Finds US Agency Hid Cost Overruns in Iraq Reconstruction Projects

A federal audit has found that the U.S. agency that administers reconstruction money for Iraq has hidden cost overruns on projects linked to its $1.4 billion fund.

A special investigator says the U.S. Agency for International Development used questionable accounting measures to conceal the expenses, and failed to report problems to Congress.

The report says officials were granted $50 million for a children's hospital in the southern Iraqi city of Basra, but the budget has now expanded to about $150 million.

It says USAID officials tried to hide the extra spending by classifying it as "administrative costs."

The report noted similar problems on a electrical project in Baghdad.

Last month, a top USAID official, James Kunder, assistant administrator for Asia and the Near East, told Congress that 22 percent of reconstruction funds have gone to security needs in Iraq.

Some information for this report was provided by Reuters.