Financial Audit: Examination of Customs' Fiscal Year 1993 Financial Statements

Customs stated that it concurred with the recommendations of Treasury's Office of the Inspector General (OIG) and has taken several measures to address the issues related to this recommendation. However, according to the Treasury OIG's fiscal year 2000 and 1999 audit results, Customs' controls over open bills of lading and in-bond shipments continued to need improvement during fiscal years 2000 and 1999. The OIG's tests for fiscal year 2000 again revealed that ACS could not match open transactions to events. Additionally, the OIG again noted in its fiscal year 2000 report that Customs is still unable to ensure that goods moving in-bond were not substituted or diverted without proper assessment. Because the Treasury OIG continues to report on a similar recommendation, GAO is closing this recommendation as "action taken not fully responsive" due to the lack of significant progress made by Customs over the years to address GAO's recommendation.

Customs implemented the Customs Undercover Fundamental Financial System (CUFFS) for covert operations. CUFFS is a system of recordkeeping which was developed to meet the operational needs of the field, the oversight needs of headquarters, the advance tracking needs of the NFC, and the accounting requirements of the CFO Act. The OIG noted that its testing indicated that the system functioned effectively.

On June 1, 1994, Customs' Director, National Finance Center (NFC), sent a memorandum to all of Customs District Directors outlining procedures for analyzing the budget clearing accounts. In addition, the Director, NFC, issued a memorandum dated May 16, 1994, that outlined the proper use of the budget clearing accounts in an effort to reduce the amount of incorrect postings to these accounts. Field offices and NFC are working together to clear old revenue fund items from the accounts. A system modification to enhance the process was being implemented. The OIG's fiscal year 1996 audit report indicates that all action is completed on this recommendation.

Customs' Office of Procurement held a "workout" session to eliminate unnecessary procurement reviews for solicitations and contracts. The Director, Office of Procurement, issued Procurement Instruction Memorandum No. 94-06, which revises portions of the Treasury Acquisition/Procurement Regulation (TAPR) regarding contracting officer warrant authority, internal review systems, cost or pricing data waivers, and Departmental and legal review of solicitations, contracts, and other types of procurement actions. The changes streamline the process by eliminating layers of review.

Customs has initiated a centralized management plan which calls for the establishment of maximum stock levels based on prior usage, and preparing lists of suspected overstocked items to determine if retention is justified. The plan is administered by a contractor with oversight executed by Customs. To date, the contractor has established interim maximum stock levels and modified the computer system that accounts for inventory to prevent the ordering of materials in excess of program needs. The maximum stock levels will be adjusted quarterly based on actual usage. Additionally, the contractor has prepared initial lists of suspected overstocked items and these are currently being reviewed by Customs.

Customs has developed Standard Operating Procedures for its contractor to account for the annual changes in aircraft materials and parts inventory. As a result, edits have been incorporated into the computer system that accounts for inventory, and Customs will require the contractor to reconcile inventory activity on a quarterly basis and submit the results.

Customs developed a proposal to delegate responsibility for property with an acquisition value of less than $5,000 to field offices. The proposal was forwarded to Treasury on August 22, 1995. In addition, X-Press, a subsystem of PIMS, was implemented in fiscal year 1995 and it distinguishes between assets purchased and those expensed. X-Press will assist ports in tracking, managing, and controlling non-capitalized personal property items.

Customs completed the study of the vehicle utilization and distribution. Vehicle-to-employee ratios have been approved by the Commissioner and have been distributed to the Acting Associate Commissioner, the Assistant and Regional Commissioners, and the Chief Counsel in a July 25, 1994, memo from the Commissioner. The Commissioner stressed that the ratios are to be viewed as a maximum, rather than a minimum. In addition, Customs is already working with GSA on the disposal of excess vehicles, and vehicle disposals have been running at a high rate throughout fiscal year 1994.

During fiscal year 1995, the Law Enforcement Availability Pay Act of 1994 became effective. This law applies to most employees previously eligible for administratively uncontrollable overtime (AUO). For employees still covered by AUO, Customs has taken actions to ensure that ongoing payments are justified. For example, Customs' Office of Enforcement distributed a memorandum reminding certifying officials that they should review the eligibility and rate of AUO pay for all covered employees at the beginning of each quarter and advise the Office of Enforcement (Administration) in writing, at the beginning, of each calendar year whether all personnel continue to meet the requirements for AUO pay. In addition, the Office of Enforcement is also maintaining a central file of all changes in AUO percentages and certifications for eligible employees.

As announced in a March 9, 1993, memorandum from the Director, Office of Human Resources, to the Directors, Personnel Operations Divisions, Branch Chiefs, and Executive Services Staff, the Office of Human Resources is conducting a one-time review of every official personnel folder to ensure that the documents and papers retained in the files comply with federal regulations, including ensuring that documentation supporting personnel pay rates and deductions is maintained. The results of the OIG's fiscal year 1996 audit showed that personnel files were updated and current.

Customs' Chief Financial Officer initiated a task force evaluating financial management in Customs and the appropriate organization required to fulfill financial management responsibilities. In fiscal year 1994, Customs evaluated staffing needs for the CFO team responsible for financial statement preparation, and approved new positions. Customs reorganized its Office of Finance, upgraded positions in its CFO group at the Accounting Services Division, and appointed a GS-15 to oversee its financial statement preparation process.