I didn't read it that way.
Almost all of the money spent by the Coalition Provisional Authority, which ran Iraq until late June, came from Iraqi sources, mainly oil revenues.
SNIP
After Saddam's fall, the U.N. gave the U.S. the right to disburse Iraqi oil-for-food revenues, but only on the condition that this be accompanied by international auditing and oversight.
A digression: yes, oil-for-food is the U.N.-administered program from which Saddam undoubtedly siphoned off billions. But we expect America to be held to a higher standard.
Krugman is complaining about inadequate accounting. But the article indicates the money spent was UN Oil-For-Food money, authorized by the UN.