Customs Automation:

Duties and Other Collections Vulnerable to Fraud and Abuse

IMTEC-90-29: Published: Feb 28, 1990. Publicly Released: Mar 27, 1990.

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Pursuant to a congressional request, GAO assessed the U.S. Customs Service's automated revenue collection and deposit processes, focusing on its internal control weaknesses.

GAO found that: (1) Customs could be losing millions of dollars in duties and other collections due to abuse and a breakdown of internal controls over its collection documents; (2) the 5 million unaccounted-for collection documents could allow the potential for theft or fraud; and (3) weaknesses in Customs' ability to perform its mission were grounds for disclosure and actions under the Federal Managers' Financial Integrity Act of 1982.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Customs has redesigned current pre-numbered collection documents, and replaced forms 5104 and 5119 with one form. New documents are to be issued by October 1, 1991.

    Recommendation: The Commissioner of Customs should discontinue immediately the use of the current pre-numbered collection documents and convert to a new pre-numbered format that would clearly be a recognizable change in document design or color scheme. Brokers, importers, and others likely to do business with Customs should be notified not to accept as a receipt for payment a collection document other than one in the new format.

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

  2. Status: Closed - Implemented

    Comments: Customs issued new directives and redesigned the Automated Collection System to track documents to individuals in July 1991. New documents were issued in May 1991.

    Recommendation: The Commissioner of Customs should enforce stringent internal controls over the assignment and use of the new pre-numbered documents. At a minimum, internal controls should be instituted so that documents can always be traced to the individual to whom assigned, all changes in the status of documents are properly justified, and error reports on missing documents are promptly resolved.

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

  3. Status: Closed - Implemented

    Comments: Customs has removed the Federal Managers' Financial Integrity Act deficiency.

    Recommendation: The Commissioner of Customs should report the lack of internal controls over pre-numbered collection documents as a material weakness under the Federal Managers' Financial Integrity Act, and report the status of corrective actions taken.

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

  4. Status: Closed - Implemented

    Comments: A feasibility review was done in April 1991 on hand-held devices to automate the collection process at locations with no cash registers.

    Recommendation: The Commissioner of Customs should direct that an analysis be made of the collection process with a view toward the possible use of modern information technology to eliminate the use of such documents, when feasible. The analysis should include a thorough risk assessment to determine the vulnerabilities of any such technology and the establishment of appropriate internal controls to mitigate the vulnerabilities.

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

 

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