Financial Management:

Customs Lacks Adequate Accountability Over Its Property and Weapons

AIMD-94-1: Published: Oct 18, 1993. Publicly Released: Oct 18, 1993.

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Pursuant to a legislative requirement, GAO reviewed the U.S. Customs Service's accountability over property and weapons, focusing on whether: (1) Customs' property and weapons records are complete and accurate; (2) property items are valued according to Customs' policy; and (3) Customs' property and weapons are safeguarded from theft and misappropriation.

GAO found that Customs: (1) does not have reliable property and accounting records because it has not instituted internal controls necessary to ensure that information is accurate and complete; (2) is unable to reconcile its accounting and property subsidiary records to ensure that all property items are accounted for properly; (3) does not perform physical inventories of nonequipment items; (4) did not effectively perform equipment inventories at 17 of the 40 locations visited; (5) is unable to support the values assigned to millions of dollars of property because appropriate procurement documents are not available, and in some instances, it uses unrealistic estimates; and (6) does not maintain adequate accountability and control over property and weapons, which makes these items vulnerable to theft and misappropriation.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In a June 27, 1994, memorandum to all Customs Office of Information Management (OIM) employees, the Assistant Commissioner for OIM reported that to comply with the CFO Act, OIM must begin to capture and report all costs related to in-house software development. Using the labor distribution capabilities of the payroll system, Customs developed a project reporting system designed to capture such costs. Based on the OIG's fiscal year 1995 audit results, Customs properly accounted for ADP software costs in its fiscal year 1995 financial statements. As such, Customs' implementation of this recommendation is considered complete.

    Recommendation: The Commissioner of Customs should direct the Chief Financial Officer to oversee Customs efforts for ensuring that the costs of ongoing automatic data processing software development efforts are properly recorded and are complete and accurate.

    Agency Affected: Department of the Treasury: United States Customs Service

  2. Status: Closed - Implemented

    Comments: Parts 1 and 3 of the recommendation have been implemented. Procedures for requiring appropriate references to source documents in each property file in PIMS and for properly identifying property items not in use or damaged have been developed. Based on the Treasury OIG's 1994 audit results, Part 2 of the recommendation is also considered completed. A "Methodology for Valuation of Personal Property" has been developed to establish and implement the methodology to be used to determine the value of personal property items. Specifically, the document addresses the methodology to determine the values of personal property items where procurement and financial documentation is not available and of property items recorded in PIMS with unsupported values.

    Recommendation: The Commissioner of Customs should direct the Chief Financial Officer to develop procedures for accurately and adequately documenting equipment values recorded in the Property Information Management System (PIMS) by: (1) requiring appropriate references to source documents in each property file in PIMS; (2) reviewing procurement documents for those items with estimated values and entering corrections; and (3) properly identifying property items not in use or damaged.

    Agency Affected: Department of the Treasury: United States Customs Service

  3. Status: Closed - Implemented

    Comments: In connection with the fiscal year 1993 physical inventory of property, the responsibilities and duties of the Local Property Officers were revised to provide for more adequate separation of duties. Customs plans to also utilize these revised procedures in future inventories.

    Recommendation: The Commissioner of Customs should direct the Chief Financial Officer to revise the responsibilities and duties of local property officers to provide adequate separation of duties.

    Agency Affected: Department of the Treasury: United States Customs Service

  4. Status: Closed - Implemented

    Comments: Customs provided inventory training to over 250 property coordinators and local property officers in fiscal year 1992. In preparing for the fiscal year 1993 inventory, logistics personnel travelled to Customs regions and trained over 200 Property Coordinators and Local Property Officers and an additional 150 inventory takers were trained in August 1993. In 1994, Customs provided all inventory training through television satellite, broadcasting two 2-hour sessions which provided more coverage than would have been achieved through onsite classes. In addition, over 350 copies of the training session were provided on videotape to Customs offices throughout the country.

    Recommendation: The Commissioner of Customs should direct the Chief Financial Officer to train local property officers and other employees involved in the physical inventory process.

    Agency Affected: Department of the Treasury: United States Customs Service

  5. Status: Closed - Implemented

    Comments: Customs revised its fiscal year 1993 inventory procedures to provide for the counting of all capitalized equipment and it plans to incorporate such procedures in future inventories.

    Recommendation: The Commissioner of Customs should direct the Chief Financial Officer to modify the procedures for periodic inventories of equipment to require that all capitalized equipment is counted.

    Agency Affected: Department of the Treasury: United States Customs Service

  6. Status: Closed - Implemented

    Comments: A real property inventory was taken for FY 1994. Real property procedures were developed and implemented. Physical inventory of all capitalized items and 10 percent of non-capitalized items was completed in FY 1994. According to Treasury OIG's 1994 audit results, the recommendation was fully implemented.

    Recommendation: The Commissioner of Customs should direct the Chief Financial Officer to conduct physical inventories of capitalized property items other than equipment every 3 years as required.

    Agency Affected: Department of the Treasury: United States Customs Service

  7. Status: Closed - Implemented

    Comments: Customs has instituted controls to ensure that information maintained in its property record is accurate and complete by implementing reconciliation procedures, monitoring procedures and various modifications to the property system. An annual assessment is performed by Customs and the Treasury OIG to determine the level of risk associated with Customs ability to produce auditable financial statements. Customs ability to compile the property, plant and equipment balance and related footnotes has received a risk assessment of low by the OIG for the past 2 years due to implemented controls over purchases, the monthly reconciliation, accepted property procedures, and the minimal number of discrepancies resulting from the physical inventory. Requirements for a standardized property system that will be used by all Treasury bureaus and integrated with each bureau's core accounting system have been identified and are in the planning stage.

    Recommendation: The Commissioner of Customs should direct the Chief Financial Officer to complete the integration of property and accounting systems as planned.

    Agency Affected: Department of the Treasury: United States Customs Service

  8. Status: Closed - Implemented

    Comments: Customs formed the Firearms Task Force to monitor corrective actions taken in response to the OIG report. In addition, the Firearms Information Tracking System was implemented in fiscal year 1995 to replace the old Weapons Inventory Control System. New procedures for effectively performing annual physical inventories of weapons at field locations, properly resolving discrepancies, and appropriately adjusting inventory records were developed. According to the Treasury OIG's fiscal year 1995 audit results, the replacement system and associated procedures satisfy the intent of its 1993 report recommendations. In addition, OIG noted that when Customs implemented the replacement system, a complete firearms inventory was conducted. Customs also established an annual physical inventory process and plans to perform quarterly random verification of selected data. Further, the OIG test of the inventory system data during its fiscal year 1995 audit did not identify any reportable weaknesses.

    Recommendation: The Commissioner of Customs should direct the Associate Commissioner for Law Enforcement to: (1) monitor steps being taken in response to the Inspector General's report, including the design of the new Weapons Inventory Control System, for addressing identified system deficiencies; and (2) develop and implement procedures for effectively performing annual physical inventories of weapons at field locations, properly resolving discrepancies, and appropriately adjusting inventory records.

    Agency Affected: Department of the Treasury: United States Customs Service

 

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