Financial Management: Customs' Accounting for Budgetary Resources Was Inadequate

AIMD-94-23 Published: Dec 14, 1993. Publicly Released: Dec 14, 1993.
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Highlights

GAO reviewed the U.S. Customs Service's controls over unliquidated obligations and reimbursable funds from interagency agreements.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
United States Customs Service The Commissioner of Customs should direct the Chief Financial Officer (CFO) to revise Customs' accounting systems and procedures to properly account for the receipt of goods and services. Specifically, the CFO should: (1) modify the accounting systems for Automated Receiving Report System (ARRS) transactions to automatically liquidate obligations and post related entries in the proprietary accounts immediately upon receipt of goods and services; (2) develop and implement a mechanism for non-ARRS transactions to acknowledge and transmit receiving data and use such data to post appropriate budgetary and proprietary accounting entries; and (3) expand the use of the Report on Open Obligations, as a short-term measure, by instructing program office personnel to review the report and notify the National Finance Center when goods and services have been received.
Closed – Implemented
For fiscal year 2000, Treasury's Office of the Inspector General (OIG) reported that Customs was unable to record a liability in the general ledger system upon receipt of goods and services. Accordingly, accounts payable were not established and related obligations were not liquidated in the system in a timely manner. Customs used manual procedures after the fiscal year end to establish the accounts payable balances for both fiscal years 2000 and 1999 financial statements. Customs stated that its Quality Planning for Asset Management (QPAM) initiated plans to replace the FFS core system with a JFMIP-approved core financial system that will enable Customs to record transactions on an accrual basis. According to Customs, this initiative has been approved by Customs' Investment Review Board, and an "off-the-shelf" package (SAP/R3) has been obtained through competitive procurement, which is being implemented in phases over the next four years. Because the Treasury OIG continues to report on a similar recommendation, GAO is closing the recommendation as "action taken not fully responsive" due to the lack of significant progress made by Customs over the years to address the recommendation.
United States Customs Service The Commissioner of Customs should direct the CFO to clarify guidance on the coding of obligating documents for goods or services obtained for Customs' use under interagency agreements to require that they be classified by the types of goods or services ordered.
Closed – Implemented
In March 1993, Customs modified its object class code directive to include a class code for goods or services obtained for Customs use under interagency agreements. The directive provides guidance on using the new class code and classifies interagency agreements by type of good or service ordered.
United States Customs Service The Commissioner of Customs should direct the CFO to amend the recently approved procedures for processing interagency agreements for the Operations and Maintenance Fund to require that a budgetary receivable be recorded to offset related obligations. Also, these amended procedures should be applied to all interagency agreements to help ensure that they are properly recorded in the future.
Closed – Implemented
In July 1994, Customs modified its procedures to include recording a budgetary receivable to offset related obligations. Based on Treasury OIG's 1994 audit results, the amended procedures were correctly applied to interagency agreements.
United States Customs Service The Commissioner of Customs should direct the CFO to review all outstanding intragovernmental receivables as of September 30, 1992, in order to confirm that they are valid receivables and adjust the balances to correct any misstatements.
Closed – Implemented
During fiscal year 1993, Customs made some entries to correct for misstatements; however, as of September 30, 1993, it could not fully support amounts recorded as due from other agencies under interagency agreements. Based on Treasury OIG's 1994 audit results, the September 30, 1993, balances were corrected.
United States Customs Service The Commissioner of Customs should direct the CFO to review all interagency agreements in order to identify the unliquidated obligations amount for agreements in which no budgetary receivable has been recognized and then record a budgetary receivable equal to the amount of unliquidated obligations.
Closed – Implemented
In July 1994, Customs amended its procedures to require that a budgetary receivable be established for all unliquidated reimbursable obligations pertaining to interagency agreements. Based on Treasury OIG's 1994 audit results, the amended procedures were appropriately applied.
United States Customs Service The Commissioner of Customs should direct the CFO to review the documentation and accounts for all interagency agreements in order to identify recorded earned reimbursements which exceed amounts expended and adjust earned reimbursements to equal amounts expended.
Closed – Implemented
In July 1994, Customs amended its procedures to require that earned reimbursements be recorded for all interagency agreements and that these amounts agree with the expended amounts of the reimbursable obligations. Based on Treasury OIG's 1994 audit results, the amended procedures were appropriately applied.

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