JMD: AFP: Appendix 1

USDOJ seal U.S. Department of Justice
 
  Washington, D.C. 20530
May 12, 2003  
   
MEMORANDUM FOR GLENN A. FINE
  Inspector General
   
FROM: Signature of Paul R. Corts
Paul R. Corts
Assistant Attorney General
for Administration
   
SUBJECT: Assets Forfeiture Fund and Seized Asset Deposit Fund
Annual Financial Statement Fiscal Year 2002

This memorandum transmits the Justice Management Division's (JMD) response to the recommendations contained in the subject referenced draft audit report. JMD agrees with the recommendations contained in the report and will implement corrective actions as outlined below.

Recommendation #1: The Director of the Asset Forfeiture Management Staff (AFMS) should continue to monitor and evaluate participating agencies' efforts to improve the Consolidated Assets Tracking System (CATS) data quality. This should include performing on-site monitoring, as needed, and reaffirming with the participating agencies the proper procedures for correcting errors found during physical inventory counts.

Corrective Action Plan: AFMS is taking the following actions to address these recommendations: (1) conducting 33 site reviews of participating agencies this fiscal year, focusing on high volume locations, (2) issuing detailed physical inventory and data verification instructions to the participating agencies, and (3) issuing monthly closing procedures to ensure outstanding data entry requirements are identified and addressed on a reoccurring basis. Attachment A contains a list of locations and dates where data quality reviews will be conducted this fiscal year. Attachment B contains the physical inventory and data verification instructions that were issued for this year's annual physical inventory. By the end of May 2003 the AFMS plans to issue a set of monthly closing procedures to each of the component agencies.

Recommendation #2: The Director of AFMS should ensure that all participating agencies that establish obligations for the Assets Forfeiture Fund/Seized Assets Deposit Fund monitor the status of obligations on an ongoing bases in accordance with the budgetary and accrual basis of accounting. Specifically, expenses should be recognized when goods and services are received, not when payments are processed.

Corrective Action Plan: Beginning in May 2003, an AFMS team of experiences financial analysts will review selected open obligation in FMIS2 to verify that the obligations valid and properly recorded in the FMIS2. The team will request samples of certain open obligations to verify that there is appropriate documentation support and that each obligation is valid and the delivery status in FMIS2 is correct. In addition, the team will make recommendation for improving the obligating office's practices and will provide training and/or reference materials as needed.

Should you have any questions regarding the information provided, please contact Michael A. Perez, Director, AFMS, on (202) 616-8000.


Attachment A

DQT Site Review Schedule
Review Dates Site
January 13 - 17 San Diego, CA
January 27 - 31 Los Angeles, CA
February 10 - 14 San Francisco, CA
March 3 - 7 Newark, NJ
March 10 - 14 Miami, FL
March 10 - 14 Tampa, FL
March 17 - 21 Baltimore, MD
March 17 - 21 Puerto Rico
March 24 - 28 Brooklyn, NY
March 24 - 28 Manhattan, NY
April 7 - 11 Detroit, MI
April 7 - 11 San Antonio, TX
April 21 - 25 Cleveland, OH
April 21 - 25 Pittsburgh, PA
May 5 - 9 Chicago, IL
May 5 - 9 Boston, MA
May 19 - 23 Pheonix / Tucson
May 19 - 23 Burlington, VT
June 2 - 6 Columbus, OH
June 16 - 20 Alexandria, VA
June 16 - 20 Philadelphia, PA
July 7 - 11 Houston, TX
July 7 - 11 East St. Louis, IL
July 21 - 25 New Haven, CT
July 21 - 25 Scranton, PA
August 4 - 8 Madison, WI
August 4 - 8 Washington, DC
August 18 - 22 Sacramento, CA
September 8 -12 St. Louis, MO
September 8 -12 Dallas, TX
September 22 - 26 Atlanta, GA
September 22 - 26 Portland, OR

Attachment B

USDOJ seal U.S. Department of Justice
 
  Washington, D.C. 20530
April 14, 2003  
   
TO: Distribution List
   
FROM: Initials of Michael A. PerezMichaeal A. Perez
Director
Asset Forfeiture Management Staff
Justice Management Division
   
SUBJECT: Inventory, Data Verification and Document Submission Requirements for
Asset Forfeiture Program FY 2003 Financial Statement Audit

During fiscal year 2003, there are several important changes that influence the nature and timing of the Asset Forfeiture Program financial statement compilation, as well as the audit examination itself. Throughout this year we are required to file quarterly financial statements and, as in each of the past two years, the date for submitting annual audited financial statements has been further accelerated in order to meet Office of Management and Budget (OMB) requirements. As we plan the steps to meet these tighter time frames, we must also address the fiscal year 2002 audit recommendations and redefine certain basic closing processes to ensure that our financial and property data are both timely and accurate.

The entire schedule for completion of the Asset Forfeiture Program Fiscal Year 2003 Financial Statement Audit has been revised and accelerated to comply with tighter OMB reporting deadlines. Within the next few weeks I will be transmitting to you a set of detailed monthly closing procedures designed to ensure all components are updating the information systems that support the Asset Forfeiture Program on a continual basis. In addition, we have scheduled an audit kick-off meeting for Friday, April 25, 2003 at 1:30pm, 20 Massachusetts Ave., NW, Suite 6400. We will be providing additional information at this meeting on time frames for data pull requirements associated with the physical inventory and real estate disposition testing, as well as obligation, disbursement and revenue testing.

The remainder of this memorandum details the physical inventory procedures that must be completed by May 31, 2003, in preparation for interim audit testing during the months of June and July.

Physical Inventory Requirements

As of May 31, 2003, units responsible for seized or forfeited property under the Department's forfeiture program must complete a physical inventory, complete the processing of any necessary documents and property transfers, and update the appropriate records in the property system and financial system as applicable. The Consolidated Asset Tracking System (CATS) and FASTRACK (specific to ATF) are the property systems for purposes of these updates and the financial systems to update are either FMS, FFS, or FMIS depending on your organization.

During this inventory process, it is essential that three types of information in the respective property systems be verified as accurate and, if not up-to-date, be corrected. These three are: (1) a validation that the asset actually exists in federal custody; (2) a verification that the underlying information for the asset is accurately reflected as to standard seizure versus FIRE, seized versus forfeited, and claim/petition information; and, (3) a review of the value of the property to assure that it is based on a rational and current valuation supported by appropriate documentation.

It is important that all property seized for forfeiture in your custody or area of responsibility, be accurately reflected in the property system with the appropriate supporting documentation. To accomplish that goal, the physical inventory and associated closing processes must be conducted during the month of May 2003, based on the property system inventory of assets on hand. Please pay particular attention to ensure that all property is inspected and counted, including those stored under substitute custodial arrangements. Investigative agencies should inventory all property not yet transferred to U.S. Marshals Service custody. Investigative agencies and U.S. Attorney's Offices should review the status of all cases, updating the property system for the correct seized, forfeited and petition status as warranted.

There will be significant emphasis placed on the results of the May 31, 2003, closing and document submission in formulating the amount of additional testing performed by the auditors for their year-end work. If the error rate is outside an acceptable tolerance range, it will result in additional work and could ultimately jeopardize our ability to achieve a clean opinion. Due to accelerated closing schedule at year-end, there will be precious little time to overcome poor interim test results. Therefore, it is imperative that a concerted effort be made to ensure the accuracy of the property and financial systems data relative to each property and the availability of related documentation for each property.

The protocol for completing the inventory review is essentially the same protocol that was issued last year. The attached protocol should be closely followed and all due dates strictly followed. We appreciate your continuing cooperation and efforts in strengthening the Program's overall internal controls. Please let me know as early as possible if you need assistance from this office to accomplish these goals.

If you have any questions, or need additional information, contact either me or Tim Virtue on (202) 616-8000. Members of the Data Quality Team are available to assist you or your staff in running or interpreting CATS reports.


Attachment C

Physical Inventory Protocol
in Support of the Financial Statement Audit
of the Assets Forfeiture Fund and Seized Asset Deposit Fund
for Fiscal Year 2003

May 2003

  • The physical inventory must be conducted during the month of May and the CATS records must be updated to reflect the physical inventory, appropriate status of each property and the current value (based on your agency valuation policy guidelines) as of May 31, 2003. Be particularly attentive to assets with the following characteristics:

    • Assets with a minimal appraised value (i.e., $100 or less) to assure that any low value placeholders are identified, resolved and corrected in CATS.

    • Property descriptions that denote multiple items under a single CATS asset ID (e.g., misc. jewelry or multiple savings bonds), the individual items must be itemized using the items list.
    • Assets in custody for 3 years or more or assets where you have been unsuccessful in entering either the disposition information or the equitable sharing memorandums (contact Wanda Bossa, if assistance is needed in updating the record to accurately reflect current status).
    • Assets with outstanding liens, to ensure that the lien amount is accurately recorded in CATS.
  • While the U.S. Marshals Service (USMS) has a substantial majority of the program's property in its custody or control, investigative agencies will likely have assets pending transfer to the USMS, assets held for evidence, property held pending approval for official use, and other miscellaneous personal property. Typical errors reported in the past have involved FIRE assets being entered as a standard seizure, physical counts that differed from CATS, and $1 placeholders in the value field. The inventory, status verification, and CATS updating process at each of the investigative agencies and U.S. Attorney's Offices also must be completed as of May 31, 2003.
  • As an important part of the inventory process, all applicable cash seizures must be deposited to the holding account as soon as practical. The CATS Seized Cash Not on Deposit Report (CATS Report SZRP800) must be generated during the month of May 2003, and all appropriate amounts transferred for deposit to the holding account prior to May 31, 2003. For any amount not transferred prior to May 31, 2003, a clear explanation as to the reason the funds have not been transferred for deposit must be recorded in CATS. Any record that needs updating, but which cannot be updated by your organization, should be reported to Wanda Bossa.
  • Investigative agencies and U.S. Attorney's Offices must assure that all administrative declarations of forfeiture, judicial forfeiture orders and any claims or petitions appealing such actions have been entered as these occur. Running an Assets Pending Forfeiture Decision Report in CATS will provide you a mechanism to verify records in CATS against your hardcopy files to ensure that all assets on this report are still pending forfeiture. If a declaration or order of forfeiture exists, the forfeiture information in CATS should be appropriately updated by May 31, 2003. Delays in recording the forfeiture status of properties in CATS will create audit exceptions as well as misclassifications, including misclassification of cash balances.
  • The USMS must run the CATS Forfeited Assets Pending Disposal Report for all Cash Assets on deposit in the Seized Asset Deposit Fund (CATS Report CSRP631) and ensure that all forfeited currency not subject to appeal is transferred and the transfers must be reflected in both CATS and FMS as of May 31, 2003.

June 13, 2002

  • A certified copy of the Assets On Hand Report (CATS report CSRP620) from each organization maintaining property as of May 31, 2003, must be transmitted to the Asset Forfeiture Management Staff (AFMS). As necessary, annotations should be made on the Assets On Hand Report indicating the nature and specifics, by CATS ID number, of each discrepancy or reconciling item, including any actions required by other Asset Forfeiture Program Participants. In addition, for the USMS district offices only, transmit to AFMS documentation that supports the May 31, 2003, month end reconciliation of the cash balances in the Seized Asset Deposit Fund and CATS. At a minimum, this documentation should include the CATS/FMS reconciliation worksheet used last year, the last page of the USMS-286 report from FMS, showing the total dollar amount of funds on deposit in the SADF, and the last page of the Assets On Hand Report (preferably run by vendor location) used to reconcile FMS to CATS. If any additional documentation is needed to detail reconciling items that require action from an external agency, please include that as well.

  • For all properties in your agency's custody or control as of May 13, 2003, with an appraised value of $500,000 or more, please submit the following documentation:
    • Cash and Financial Instruments

      • Copy of the signed Chain of Custody Document (e.g., DEA 48A, USM-102)
      • Copy of the Bank/Financial Statement, receipt, or copy of check or financial instrument
      • Forfeiture Order (if applicable)
    • Businesses, Real Estate, and Personal Property
      • Copy of the signed Chain of Custody Document
      • Document(s) supporting appraised value in CATS as of May 31, 2003
      • Forfeiture Order (if applicable)
Updated March 9, 2015