JAKARTA, Nov 7 (Reuters) - An Indonesian agency tasked with rebuilding tsunami-hit Aceh province agreed on Tuesday to allow an external corruption watchdog to monitor its operations after allegations of financial irregularities.

BRR, the state agency handling reconstruction efforts after the Dec. 26, 2004 tsunami, signed an agreement with Transparency International Indonesia, the two sides said in a statement.

BRR chief Kuntor Mangkusubroto said in September that corruption and bureaucracy remained obstacles to economic development in Aceh.

International agencies and countries have already put $4.6 billion into the reconstruction of Aceh -- on the northern tip of Sumatra some 1,700 km (1,000 miles) northwest of Jakarta -- after huge waves from the tsunami left up to 232,000 people dead or missing in a dozen Indian Ocean nations, including nearly 170,000 in Aceh.

A graft watchdog, Indonesia Corruption Watch, said in August that there were financial irregularities in five BRR projects worth 23.9 billion rupiah ($2.6 million).

BRR officials said the report was inaccurate and could affect disbursement of funds from foreign donors.

Corruption is endemic in Indonesia although the BRR has taken a number of steps to try to minimise or eliminate it in the recovery effort.

A graft index issued on Monday by Transparency International rated Indonesia as one of the most corrupt countries of the 163 surveyed.