U.S. Customs Service:

Reasonableness of Costs for Processing Air and Sea Passengers Cannot Be Determined

AIMD/GGD-00-94R: Published: Feb 29, 2000. Publicly Released: Mar 10, 2000.

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Pursuant to a congressional request, GAO provided information on the reasonableness of the Customs Services' underlying costs supporting its merchandise and air and sea passenger processing user fee.

GAO noted that: (1) Customs' cost accounting systems use various allocation methods to assign costs to its various programs, subprograms, activities, and outputs; (2) one of its key allocation methods uses labor distribution percentages that measure the amount of time an inspector spends on a particular program, subprogram, or activity within a program; (3) Customs uses surveys to estimate its labor distribution percentages; (4) however, Customs could not provide adequate supporting documentation for its labor percentage estimates used to allocate Customs' costs to its passenger processing air and sea subprograms and activities; (5) without supporting documentation to substantiate Customs' estimated labor distribution percentages, GAO cannot determine the reasonableness of Customs' costs for air and sea passenger processing; (6) as such, Congress is hampered in making informed decisions on air and sea passenger processing user fee adjustments that Customs may request; (7) because Customs did not have a national system to collect and report inspectors' time spent by program, subprogram, and activity, it used surveys completed by its port managers to estimate labor distribution percentages; (8) while survey estimates are an acceptable means for allocating costs to programs, subprograms, and activities, Customs' surveys, according to the Department of the Treasury Office of Inspector General (OIG) and GAO's review of the OIG's workpapers, lacked adequate supporting documentation, and the methods used to determine labor distribution percentages were inconsistent among ports; (9) accurate workload data on the numbers of passengers processed is also a critical component in computing costs per air and sea passenger processed; (10) in the past, the lack of complete passenger volume data associated with the remittances of user fee collections by some air carriers has been a problem for Customs; (11) moreover, because of insufficient cost data, Customs has not conducted required biennial reviews of its user fees; (12) Customs is developing a system to capture labor data at the activity level through modifications to its Customs Overtime and Scheduling System that should improve the reliability of its labor distribution percentages; (13) Customs also initiated a new audit approach in conjunction with other federal agencies to increase the number of audits at air carriers; (14) these audits should improve the accuracy of Customs' air passenger volume data; and (15) Customs is also working with the Treasury OIG to comply with the requirements for biennial reviews of its user fees.

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