Financial Management:

Customs' Self-Assessment of Its Internal Control and Accounting Systems Is Inadequate

AIMD-94-8: Published: Oct 27, 1993. Publicly Released: Oct 27, 1993.

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Pursuant to a legislative requirement, GAO reviewed the U.S. Customs Services' efforts to identify, report, and correct its internal control and accounting system weaknesses.

GAO found that: (1) Customs' fiscal year (FY) 1992 assurance letter overstated the effectiveness of its internal control and accounting systems; (2) Customs did not disclose the full extent of its material weaknesses in its FY 1992 assurance letter; (3) Customs' inventory records were incomplete and inaccurate and included seizures and forfeitures that occurred in another fiscal year; (4) Customs made net adjustments to its FY 1992 seizures that amounted to about $281 million, but it did not provide support for these adjustments; (5) Customs does not have adequate controls to ensure that merchandise entering the United States is identified and the proper duties are assessed; (6) Customs does not properly account for the receipt of goods and services; (7) Customs' self-assessment process does not adequately identify internal control and accounting system weaknesses because staff do not have sufficient guidance and training, review tools are inadequate, and management oversight over the review process is ineffective; and (8) planned corrective actions will not likely eliminate material weaknesses because Customs has not addressed the fundamental causes of the weaknesses.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Customs has established a schedule to test or validate the effectiveness of corrective actions. This schedule will be updated each year with the goal of validating all available current and past closed weaknesses.

    Recommendation: To ensure accurate reporting to the Secretary of the Treasury on the effectiveness of Customs' internal control and accounting systems, the Commissioner of Customs should direct the Chief Financial Officer to promptly test the effectiveness of corrective actions implemented to ensure that the weaknesses are corrected before they are removed from Customs' FMFIA assurance letter.

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

  2. Status: Closed - Implemented

    Comments: Customs has put together a task team to review corrective action plans as well as the status of corrective actions for all material weaknesses. This task team's effectiveness will be evaluated by the Department of the Treasury's Office of Inspector General during the fiscal year 1994 audit.

    Recommendation: To ensure accurate reporting to the Secretary of the Treasury on the effectiveness of Customs' internal control and accounting systems, the Commissioner of Customs should direct the Chief Financial Officer to review corrective action plans to ensure that they address the underlying cause of the problem.

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

  3. Status: Closed - Implemented

    Comments: Customs has implemented a comprehensive FMFIA training program which is to be attended by all staff performing FMFIA reviews. This training provides managers with the proper guidance to help them identify and report material weaknesses as required by FMFIA.

    Recommendation: To ensure accurate reporting to the Secretary of the Treasury on the effectiveness of Customs' internal control and accounting systems, the Commissioner of Customs should direct the Chief Financial Officer to implement a comprehensive FMFIA training program to be attended by all staff involved in performing FMFIA reviews.

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

  4. Status: Closed - Implemented

    Comments: Customs implemented its FMFIA training course which provides tools to help managers review their programs. The effectiveness of these tools will be evaluated during the Department of the Treasury's Office of Inspector General fiscal year 1994 audit.

    Recommendation: To ensure accurate reporting to the Secretary of the Treasury on the effectiveness of Customs' internal control and accounting systems, the Commissioner of Customs should direct the Chief Financial Officer to develop adequate tools to perform Federal Managers' Financial Integrity Act (FMFIA) reviews.

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

  5. Status: Closed - Implemented

    Comments: Customs implemented a comprehensive FMFIA training course which provides guidance on assessing control risk. All program managers and other personnel conducting FMFIA-type reviews are required to attend this course.

    Recommendation: To ensure accurate reporting to the Secretary of the Treasury on the effectiveness of Customs' internal control and accounting systems, the Commissioner of Customs should direct the Chief Financial Officer to develop guidance for assessing control risk in Customs' operations.

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

  6. Status: Closed - Implemented

    Comments: Customs offices were directed to provide copies of all FMFIA-type reviews to the Management Controls Division for review. The Management Controls Division has received samples of completed management control reviews to inspect for accuracy and completeness.

    Recommendation: The Commissioner of Customs should direct the Chief Financial Officer to have the Management Controls Division obtain and systematically review the detailed results of Customs' self assessments for accuracy and completeness.

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

 

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