Financial Management:

Customs' Accountability for Seized Property and Special Operation Advances Was Weak

AIMD-94-6: Published: Nov 22, 1993. Publicly Released: Nov 22, 1993.

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Pursuant to a legislative requirement, GAO reviewed the U.S. Customs Service's accountability over currency, drugs, and property seized pursuant to its law enforcement program, focusing on: (1) financial data used to maintain accountability for this property; and (2) Customs' safeguards for controlling funds advanced to its agents for special law enforcement operations.

GAO found that: (1) Customs does not adequately safeguard seized property because of inconsistent and ineffective inventory control policies and procedures; (2) Customs does not ensure prompt transfer, deposit, or disposal of seized property, particularly drugs, that is no longer needed as evidence; (3) Customs' seized property inventory and financial records are incomplete and inaccurate; (4) Customs does not adequately control or account for the funds advanced to its agents for special operations or the sensitive documents related to these advances; (5) Customs has reduced its seized property and advanced fund account balances by $52 million and $18 million, respectively, because of its failure to accurately and timely record its inventory and cash transactions; and (6) although Customs has improved its management of seized property, it has not met all accountability requirements.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Customs stated that all seized property data, including currency, is now being captured in the SEACATS system. Further, as part of the SEACATS implementation, control procedures were implemented which emphasized the importance of inputting accurate and complete data, as well as reviewing to ensure quality and timeliness. According to Customs, other actions taken to increase accountability and control over Customs' seized assets include development of a comprehensive handbook that details the responsibilities of seizing officers, case adjudicators, and seizure custodians; conducting unannounced inspections of selected ports to assess compliance with national seized asset policies and procedures; and requiring self-inspections of vault controls, record keeping, and property management activities every six months as part of Customs' Self-Inspection Program. In its fiscal year 2000 audit report, Treasury's Office of the Inspector General noted that Customs made modifications to SEACATS that it considered to be responsive to its recommendations.

    Recommendation: The Commissioner of Customs should direct the Chief Financial Officer to improve Customs Property Tracking System information so that all seized property, especially cash and drugs, are timely and accurately reflected in Customs' inventory records and financial reports.

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

  2. Status: Closed - Implemented

    Comments: Customs implemented a policy requiring that at least two officers be present when accessing seized property. However, GAO noted that, in many districts, individual seizure custodians were still capable of accessing vaults without being detected. According to a seized property official, the Seized Property Task Force looked into the dual access issue and in some new or renovated facilities, controls are being implemented to ensure that the policy is followed. Customs is weighing the cost-effectiveness of implementing such controls at its other vault locations, especially those that typically do not hold significant amounts of narcotics. According to the Office of the Inspector General's fiscal year 1996 audit, Customs was complying with the policy at large locations and had compensating controls at other locations. In connection with the FY 1997 audit, the Office of the Inspector General did not report any weaknesses in controls relating to access to seized property in district vaults.

    Recommendation: The Commissioner of Customs should direct the Assistant Commissioner for Commercial Operations to require that at least two seizure custodians be present when accessing seized property in district vaults.

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

  3. Status: Closed - Implemented

    Comments: Customs policy requires seized currency to be photographed when inventoried. The Treasury Office of the Inspector General's 1994 audit indicated that this procedure is used. Customs organized a Seized Property Task Force in fiscal year 1994 to address the reduction of bulk narcotics being held. The Task Force proposed revised procedures on the pretrial destruction of narcotics, specifically that the Customs Special Agent in Charge position be the main contact with the U.S. Attorney. Justice issued guidelines that set threshold amounts and identify which articles/commodities need to be videotaped. According to the Office of the Inspector General's fiscal year 1996 audit results, drugs are being destroyed quickly at the locations it visited. However, because of environmental policies, one location with large quantities of drugs cannot destroy as quickly as desired. In this location, new incinerators are being built to adhere to the environmental restrictions and to accomplish more rapid destruction.

    Recommendation: The Commissioner of Customs should direct the district directors to work with the U.S. Attorneys in their districts to expand the use of videotaped evidence as an alternative to holding large quantities of seized cash and drugs at Customs' facilities.

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

  4. Status: Closed - Implemented

    Comments: The Commissioner of Customs, in a letter dated July 12, 1994, communicated to the Assistant Commissioner for Enforcement the need to monitor Customs' compliance with the Attorney General's Directive 87-1, "Guidelines on the Amount of Monetary Instruments to Be Held as Evidence." According to the Office of the Inspector General's fiscal year 1996 audit results, there was very little cash on hand and no cash exceptions at any of the locations it visited.

    Recommendation: The Commissioner of Customs should direct the Assistant Commissioner for Enforcement to work with the Office of the U.S. Attorney to develop guidelines on the amount of monetary instruments, particularly cash, to be held as evidence.

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

  5. Status: Closed - Implemented

    Comments: The Commissioner of Customs organized a Seized Property Task Force in fiscal year 1994 to address, among other things, the proper implementation of seized assets related policies and procedures. This task force completed its study and issued a report on July 1, 1994, to the Commissioner of Customs.

    Recommendation: The Commissioner of Customs should direct the Assistant Commissioners for the Offices of Enforcement, Inspection and Control, Commercial Operations, and Management (the Chief Financial Officer), in consultation with each other and other program officials, to report to the Commissioner on progress to enforce these policies and procedures.

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

  6. Status: Closed - Implemented

    Comments: Customs stated that all seized property data, including currency data, is now being captured in its Seized Asset and Case Tracking System (SEACATS). Customs stated that as part of the SEACATS implementation, control procedures were implemented which emphasized the importance of inputting accurate and complete data, as well as reviewing to ensure quality and timeliness. Other actions Customs reported as taking to increase accountability and control over Customs' seized assets included developing a comprehensive handbook that details the responsibilities of seizing officers, case adjudicators, and seizure custodians; conducting unannounced inspections of selected ports to assess compliance with national seized asset policies and procedures; and requiring self-inspections of vault controls, record keeping, and property management activities every six months as part of Customs Self-Inspection Program. In addition, Customs stated that it developed a PC-based accounting system called Quickbooks, to track undercover operation funds, which was fully implemented by the end of fiscal year 1996. According to Customs, training was provided on the system prior to implementation. A Customs official also stated that implementation of the Quickbooks system helps Customs minimize required paper documentation for this process, and all required supporting documents are appropriately maintained with the specific special operation involved. In its fiscal year 2000 audit report, the Treasury Office of the Inspector General noted that Customs took steps to resolve the issues of accountability controls over seized property inventory and recording currency transactions in SEACATS which it considered to be responsive to its recommendations.

    Recommendation: The Commissioner of Customs should direct the Assistant Commissioners for the Offices of Enforcement, Inspection and Control, Commercial Operations, and Management (the Chief Financial Officer), in consultation with each other and other program officials, to enforce existing policies and procedures for: (1) safeguarding seized property; (2) maintaining accurate financial data on seized property inventory; and (3) controlling special operations advances and safeguarding related documents.

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

  7. Status: Closed - Implemented

    Comments: Customs stated that it developed a PC-based accounting system to track undercover operation funds which was fully implemented by the end of FY1996. Customs also stated that training was provided on this system prior to implementation. However, the OIG's FY 1998 recommendation that Customs' accounting and covert operation personnel initiate a joint effort to determine the correct status and continued need for open investigative advances is still in progress. The Treasury Office of the Inspector General's fiscal year 2000 audit report did not note any recommendations with regard to this issue.

    Recommendation: The Commissioner of Customs should direct the Chief Financial Officer to require that the independent external auditor's recommendations to improve accounting and control over special operation advances be promptly and fully implemented.

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

 

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