Financial Management: Customs Needs to Establish Adequate Accountability and Control Over Its Resources

Customs plans to develop and implement an integrated accounts receivable system as part of the Automated Commercial Environment (ACE). ACE, a comprehensive redesign of Customs' Automated Commercial System (ACS), requires a significant investment of planning and resources. Customs stated that it has been working with GAO and several contractors to ensure that the proposed system meets a wealth of new system requirements. However, according to Customs, ACE design and implementation have been delayed because a stable funding source, which is required before further steps are taken, has not yet been agreed upon. In its fiscal year 2000 audit report, Treasury's Office of the Inspector General (OIG) noted that ACS (1) could not provide summary information on the total unpaid assessments for duties, taxes, and fees by individual importer; (2) did not generate periodic managment information on outstanding receivables, such as the age of receivables; and (3) did not interface with Customs general ledger system which resulted in Customs determining the fiscal year end balances of its non-entity accounts receivable balance through the use of ad hoc reports and manual procedures. Because the Treasury OIG continues to report on a similar recommendation, we are closing our recommendation as action taken not fully responsive due to the lack of significant progress made by Customs over the years to address this recommendation.

Customs has been monitoring acquisitions using the central data entry process. During FY1992, Customs conducted four site quality assurance visits, trained 254 staff on the Property Information Management System (PIMS) or property inventory, and issued directives on personal property, physical inventory, government property, and a handbook on government furnished property.

Customs conducted a study to determine the feasibility and cost-effectiveness of utilizing audit resources in the field to serve this review function. Customs concluded that this review function will be phased out beginning in FY1994. Specifically, current, technological enhancements and current efforts to redesign the selectivity processes of the Automated Commercial System will replace the manual review process.

Customs designated the User Fee Task Force as the unit to manage the collection of user fees and to ensure fees due are collected. As a first step, the task force has contracted with an independent accounting firm to prepare a risk assessment on all user fees.

Based on Census Bureau data, Customs is matching shipment and payment data. The process will be on-going.

According to the Treasury OIG, the fines, penalties, and forfeitures, bonds, and protest modules, which support the timely collection of accounts receivable, have been implemented and are effectively operating in SEACATS.

Customs determined the feasibility of requiring, by regulation, that a separate protest be filed where unrelated categories of goods are contested on an entry summary document and concluded that the costs outweigh the benefits. In addition, according to Customs, for protested duties that are denied, the Customs Modernization Act requires that interest be calculated and charged on the protested amounts from the time the entry was initially filed. This removes incentives for frivolous protests to be filed. As such, the primary concern that the recommendation addressed is no longer applicable.

The National Finance Center Accounts Receivable Section is currently responsible for the collection of delinquent supplement duty, reimbursable services, and miscellaneous bills. Customs is examining the feasibility of moving all delinquent debt collection activities from field offices to this unit. The National Finance Center's Debt Collection Unit aggressively pursued collection of delinquent debt and as a result, as of January 1, 1994, collected $31.1 million (delinquent bills issued prior to October 1, 1990, totalled $165 million) and cancelled $67.7 million of mostly erroneously created bills. The Debt Collection Unit identified weaknesses in the debt collection process and initiated corrections including educating the field as to the negative impact on debt collection of their not adequately maintaining entry processing documents. This unit is to serve as the coordinator and focal point for all of Customs debt collection activities.

Systems limitations and time constraints to complete the necessary manual work impeded Customs' ability to report a gross receivable amount for fines and penalties in FY1992. Customs plans to report such a gross amount on the FY1993 statements. During FY1993, GAO assisted Customs in developing and implementing a methodology for defining receivables, determining when they are valid, determining the amount to record them in the financial records, and establishing an allowance account that is based in part on the debtors' ability to pay. This included receivables resulting from fines and penalties. During FY1993, Customs tested the validity and collectibility of its accounts receivables and reported a more reliable accounts receivable balance. Customs plans to continue to use this methodology for the FY 1994 financial statements.