Financial Management: Customs Lacks Adequate Accountability Over Its Property and Weapons

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.

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.

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.

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.

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.

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.

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.

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.