Note 1. Summary of Significant Accounting Policies
A. Reporting Entity
The Assets Forfeiture Fund (AFF or Fund) and Seized Asset Deposit Fund (SADF) together comprise a single financial reporting entity of the Department of Justice (DOJ or Department) which includes the specified funds, property seized for forfeiture, and the transactions and program activities of DOJ forfeiture program components and other participating agencies as described more fully herein.
The primary mission of the DOJ Asset Forfeiture Program (AFP) is to maximize the effectiveness of forfeiture as a deterrent to crime. This is accomplished by means of depriving drug traffickers, racketeers, and other criminal syndicates of their ill-gotten proceeds and instrumentalities of their trade. Components responsible for administration and financial management of the AFP are charged with lawfully, effectively and efficiently supporting law enforcement authorities in the application of specified forfeiture statutes.
The AFF was created by the Comprehensive Crime Control Act of 1984 to be a repository of proceeds from forfeitures under any law enforced and administered by the DOJ. AFF funds are managed by the Asset Forfeiture Management Staff (AFMS), Justice Management Division. The SADF was created administratively by the Department to ensure control over monies seized by agencies participating in the Department’s AFP.
The Bureau of Diplomatic Security, Department of State (DS), became a participant of the DOJ AFP effective October 1, 2004.
The AFF and SADF financial reporting entity of the DOJ is not an employer entity under SFFAS No. 5, “Accounting for Liabilities of the Federal Government.” All employment related expenses, liabilities and imputed financing costs of the DOJ AFP participants, including those pertaining to post-employment benefits, are reported in the financial statements of the DOJ’s other components. Salaries and employment related costs of administrative personnel of the AFMS and United States Marshals Service (USMS) are allocated to the AFF and SADF financial reporting entity as program operating costs either through reimbursement agreement or an allocation from DOJ’s Working Capital Fund. Such charges to the AFF and SADF do not include the costs of any participant salaries incurred while conducting investigations leading to seizure and forfeiture.
B. Basis of Presentation
Accounting principles generally accepted in the United States of America (GAAP) issued for Federal entities were followed in the preparation of these financial statements. GAAP for Federal entities are the standards prescribed by the Federal Accounting Standards Advisory Board, which is designated as the official accounting standards-setting body for the Federal Government by the American Institute of Certified Public Accountants. The statements were prepared from the books and records of the AFF and SADF and presented in accordance with Office of Management and Budget (OMB) Circular No. A-136, Financial Reporting Requirements, and the AFF and SADF accounting policies which are summarized in these notes. These statements are, therefore, different from the financial reports, also prepared by the AFF and SADF pursuant to OMB directives, used to monitor and control the program’s use of budgetary resources.
As provided for in OMB Circular No. A-136, to ensure that the AFF/SADF financial statements are more meaningful at the entity-level, and to enhance reporting consistency within the Department, other assets and other liabilities have been disaggregated on the balance sheet. Forfeited Property and Advances and Prepayments are considered Other Assets and Deferred Revenue, Seized Cash and Monetary Instruments, and Contingent Liabilities are considered Other Liabilities.
C. Basis of Accounting
Under GAAP, transactions are recorded on an accrual and a budgetary basis of accounting. Under the accrual basis, revenues are recorded when earned and expenses are recorded when incurred, regardless of when cash is exchanged. Under the budgetary basis, however, funds availability is recorded based upon legal considerations and constraints. As a result, certain line items on the proprietary financial statements may not equal similar line items on the budgetary financial statements. Examples include, but are not limited to, the following:
• Total Accounts Receivable on the Balance Sheet may not equal Accounts Receivable on the Statement of Budgetary Resources;
• Total Accounts Payable on the Balance Sheet may not equal Accounts Payable on the Statement of Budgetary Resources; and
• Appropriations Received on the Statement of Changes in Net Position may not equal Appropriations Received on the Statement of Budgetary Resources.
D. Revenues and Other Financing Sources
The funds in the AFF are derived primarily from financing sources and are presented on the Statement of Changes in Net Position as both Budgetary and Other Financing Sources. Financing sources consist of (1) interest earned on investments (i.e., nonexchange revenue) and (2) donations and forfeitures, which include forfeited cash, proceeds from the sale of forfeited property (or conversion of deferred revenue to realized revenue through sale), receipt of payments in lieu of property forfeiture, and recovery of asset management expenses. These financing sources are recognized when cash is forfeited, forfeited property is sold, or when forfeited property is placed into official use or transferred to another federal agency. The financing sources from judgments is not recognized until the judgment has been enforced and is collected.
Deferred revenue is recorded when the property is forfeited. When the property is sold or otherwise disposed, the deferred revenue becomes earned and a financing source is recognized.
The AFF recognizes exchange revenue, on a reimbursement basis, when the United States Attorneys Offices provide services in judicial forfeiture cases brought by agencies participating in the U.S. Department of the Treasury (Treasury), Treasury Forfeiture Fund (TFF). This revenue is presented on the Statement of Net Cost as earned revenue. In accordance with Title 28 USC 524 and AFMS Memorandums of Understanding, donations and forfeitures available for use by certain Federal agencies are treated as refunds of financing sources when disbursed.
The funds in the SADF are held in trust until a determination is made as to their disposition. These funds include seized cash, proceeds from preforfeiture sales of seized property, and income from property under seizure. No revenue recognition is given to cash deposited in the SADF.
E. Fund Balance with the U.S. Treasury and Cash
Generally, the U.S. Treasury processes cash receipts and disbursements for AFF and SADF. The funds in the AFF, a special fund receipt account, are entity assets and are used to finance the operations of the AFP (See Note 2). Seized cash is deposited and accounted for in the SADF, a deposit fund, until a determination has been made as to its disposition. If title passes to the U.S. Government, the forfeited cash is then transferred from the SADF to the AFF. The cash balance in the SADF is a non-entity asset and is not available to finance the AFP activities, but AFP does have statutory authority for the investment of idle cash.
F. Investments
As authorized by 28 U.S.C. § 524(c), idle SADF and AFF cash may only be invested in U.S. Treasury securities. The earnings and principal on Bank of Credit and Commerce International (BCCI) funds held by the AFF are tracked separately due to special disposition requirements. Investments are reported on the Consolidated Balance Sheet at their net value (the face value plus or minus any unamortized premium or discount). Amortization is based on the straight-line method. Investments are held to maturity; therefore, no provision is made for unrealized gains or losses on these securities.
G. Accounts Receivable
Accounts receivable consist of amounts due from other Federal agencies for goods or services provided by the AFP. Receivables arising from services provided to other Federal agencies are considered fully collectible. Therefore, no allowance for uncollectible accounts is established.
H. General Property, Plant and Equipment
Property, plant and equipment consist of enhancements to the Consolidated Asset Tracking System (CATS), which meet the SFFAS No. 10 definition of “internal use software.” Internal use software is capitalized when developmental phase costs or enhancement costs are $500 or more and the asset has an estimated useful life of two or more years. Depreciation is calculated using the straight-line method over the useful life of the asset. Internal use software purchases with an acquisition cost of less than $500 are expensed when purchased.
I. Advances and Prepayments
Advances and prepayments include advances to other Federal agencies for any law enforcement, litigative/prosecutive, and correctional activity, or any other authorized purpose of the DOJ and travel advances issued to Federal employees for official travel. Travel advances are limited to meals and incidental expenses expected to be incurred by employees during official travel. Payments in advance of the receipt of goods and services are recorded as prepaid charges at the time of payment and are recognized as expenses when the goods and services are received. Advances and prepayments involving other Federal agencies are classified as other assets on the balance sheet.
J. Seized and Forfeited Property
Property is seized in consequence of a violation of public law. Seized property can include monetary instruments, real property, and tangible personal property of others in the actual or constructive possession of the custodial agency. The value of seized property is its estimated fair market value at the time it was seized. Most seized property is held by the U.S. Marshals Service from the point of seizure until its disposition. In certain cases, the investigative agency will keep seized property in its custody if the intention is to place the property into official use after forfeiture or to use the property as evidence in a court proceeding.
Forfeited property is property for which title has passed to the U.S. Government. This property is recorded at the estimated fair market value at the time of forfeiture. The value of the property is reduced by estimated liens of record. The amount ultimately realized from the forfeiture and disposition of these assets could differ from the amounts initially reported. Seized and forfeited property on hand with no legal market in the United States is disclosed in item number only with no value reported.
K. Non-Entity Assets
Non-entity assets consist of seized property and investments of seized cash and are not available to fund the operations of the AFP.
L. Liabilities
Except for contingent liabilities, budgetary resources cover all liabilities of the AFF, since the AFF has no other imputed or unfunded costs. AFF accounts payable represent liabilities to both federal and nonfederal entities. Deferred revenue represents the value of forfeited property not yet sold or placed into official use. Seized cash and monetary instruments represent liabilities for SADF amounts on deposit pending disposition.
M. Contingencies and Commitments
The AFF is involved in various administrative proceedings, legal actions, and claims that arise in the ordinary course of business. The SFFAS No. 5, Accounting for Liabilities of the Federal Government, states that a contingent liability should be recognized when a past event or exchange transaction has occurred; a future outflow or other sacrifice of resources is probable; and the future outflow or sacrifice of resources is reasonably measurable. The AFF’s management must determine whether it is probable that a legal claim or other contingency will result in a loss for the AFF, and whether the loss is reasonably estimable. If the loss is probable and estimable, the AFF recognizes an expense and unfunded liability for the estimated amount of the expected loss.
N. Interest on Late Payments
Pursuant to the Prompt Payment Act, 31 U.S.C. § 3901-3907, Federal agencies must pay interest on payments for goods or services made to concerns after the due date. The due date is generally 30 days after receipt of a proper invoice or acceptance of the goods or services, whichever is later.
O. Tax Exempt Status
As an agency of the Federal Government, AFF is exempt from all income taxes imposed by any governing body whether it be a Federal, state, commonwealth, local, or foreign government.
P. Use of Estimates
The preparation of financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Note 2. Fund Balance with U.S. Treasury
Fund Balance with U.S. Treasury at September 30, 2005 and 2004 is presented below.
| 2005 | 2004 | ||
|---|---|---|---|
| Fund Balances: | |||
| Other Fund Types | $49,299 | $8,870 | |
| Total Fund Balances with U.S. Treasury | $49,299 | $8,870 | |
| Status of Fund Balances: | |||
| Unobligated Balance - Available | $ 170,953 | $ 276,499 | |
| Unobligated Balance - Unavailable | 108,025 | 35,173 | |
| Obligated Balance not yet Disbursed | 166,912 | 175,765 | |
| Other Funds (With)/Without Budgetary Resources | (396,591) | (478,567) | |
| Total Status of Fund Balances | $49,299 | $8,870 |
Other Funds (With)/Without Budgetary Resources primarily represents the AFF investments in short-term securities less amounts Temporarily not Available Pursuant to Public Law.
Note 3. Cash and Monetary Assets
Cash consists of seized cash deposited in the SADF. Monetary assets include seized monetary instruments deposited in the SADF, seized cash in DOJ custody but not yet deposited in the SADF, and certain seized cash in the custody of the Treasury Forfeiture Fund (TFF) pending transfer to the DOJ SADF (in connection with the Homeland Security Act provisions which established Alcohol, Tobacco, Firearms, and Explosives (ATF) as a DOJ law enforcement participant in the AFP).
| 2005 | 2004 | ||
|---|---|---|---|
| Cash: | |||
| Seized Cash Deposited | $47,381 | $31,550 | |
| Other Monetary Assets: | |||
| Seized Monetary Instruments | 40,575 | 31,433 | |
| Total Cash and Monetary Assets | $87,956 | $62,983 |
Note 4. Investments, Net
Investments are short-term non-marketable Federal debt securities issued by the Bureau of the Public Debt and purchased exclusively through Treasury’s Financial Management Service. Investments are reported on the Consolidated Balance Sheet at their net value (the face value plus or minus any unamortized premium or discount). Premiums and/or discounts are amortized by the straight-line method over the life of the investment.
| Unamortized | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Face Value |
Premium | Discount | Investments Net |
Market Value |
|||||
| Intragovernmental | |||||||||
| Non-marketable Federal Securities: | |||||||||
| Market-Based | |||||||||
| AFF | $508,137 | $- | $(3,985) | $504,152 | $493,512 | ||||
| SADF | 630,759 | - | (7,523) | 623,236 | 654,175 | ||||
| Subtotal | $1,138,896 | $- | $(11,508) | $1,127,388 | 1,147,687 | ||||
| Accrued Interest | - | - | |||||||
| Total | $1,138,896 | $1,147,687 | |||||||
| Unamortized | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Face Value |
Premium | Discount | Investments Net |
Market Value |
|||||
| Intragovernmental | |||||||||
| Non-marketable Federal Securities: | |||||||||
| Market-Based | |||||||||
| AFF | $540,980 | $- | $(581) | $540,399 | $540,416 | ||||
| SADF | 562,500 | - | (633) | 561,867 | 561,885 | ||||
| Subtotal | $1,103,480 | $- | $(1,214) | $1,102,266 | 1,102,301 | ||||
| Accrued Interest | - | - | |||||||
| Total | $1,103,480 | $1,102,301 | |||||||
Note 5. Accounts Receivable, Net
Accounts receivable consist of amounts owed to the AFF for services provided to the U.S. Treasury. There is no allowance for uncollectible accounts since accounts receivable from business with Federal entities is considered fully collectible.
| 2005 | 2004 | ||
|---|---|---|---|
| Intragovernmental | |||
| Accounts Receivable | $10,864 | $4,099 | |
| Total Intragovernmental | 10,864 | 4,099 | |
| Total Accounts Receivable, Net | $10,864 | $4,099 | |
Note 6. Forfeited and Seized Property
Property seized for any purpose other than forfeiture and held by the seizing agency or a custodial agency is disclosed by the seizing or custodial agency. All property seized for forfeiture, including property with evidentiary value, is reported in the statements of the AFF/SADF. Federal Financial Accounting and Auditing Technical Release 4, “Reporting Non-Valued Seized and Forfeited Property,” requires disclosure of property that does not have a legal market in the United States or does not have a value to the Federal government. The non-valued property category includes: alcohol, chemicals, drug paraphernalia, gambling devices, pornography, and weapons.
| A. Forfeited Property | |
| The following tables show the analysis of changes in and methods of disposition of forfeited property, excluding cash, during the fiscal years ended September 30, 2005 and 2004, respectively. | |
| Forfeited Property Category | Beginning Balance | Adjustments (1) | Forfeited | Disposed (2) | Ending Balance | Liens and Claims | Ending Balance Net of Liens |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Financial Instruments | Number | 39 | 46 | 373 | (247) | 211 | - | 211 | ||||||||
| Value | $1,983 | ($291) | $10,009 | ($9,306) | $2,395 | ($41) | $2,354 | |||||||||
| Real Property | Number | 288 | 136 | 321 | (416) | 329 | - | 329 | ||||||||
| Value | $40,993 | $15,057 | $67,928 | ($65,363) | $58,615 | ($2,450) | $56,165 | |||||||||
| Personal Property | Number | 2,141 | 36 | 4,752 | (4,027) | 2,902 | - | 2,902 | ||||||||
| Value | $23,940 | ($1,735) | $180,627 | ($170,870) | $31,962 | ($883) | $31,079 | |||||||||
| Non-Valued | Number | 16,789 | (1,165) | 23,823 | (13,159) | 26,288 | - | 26,288 | ||||||||
| Total | Number | 19,257 | (947) | 29,269 | (17,849) | 29,730 | - | 29,730 | ||||||||
| Value | $66,916 | $13,031 | $258,564 | ($245,539) | $92,972 | ($3,374) | $89,598 | |||||||||
(1) Adjustments represent changes in the valuation or status of property as a result of fair market appraisals and court orders.
(2) Disposals in the Analysis of Changes table may not agree with disposals on the Method of Disposition table as a result of partial dispositions.
| Forfeited Property Category | Beginning Balance | Ajustments (1) | Forfeited | Disposed (2) | Ending Balance | Liens and Claims | Ending Balance Net of Liens | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Financial Instruments | Number | 98 | (23) | 119 | (155) | 39 | - | 39 | ||||||||
| Value | $2,695 | $537 | $24,200 | ($25,449) | $1,983 | (7) | $1,976 | |||||||||
| Real Property | Number | 338 | 31 | 313 | (394) | 288 | - | 288 | ||||||||
| Value | $51,294 | $5,296 | $51,221 | ($66,818) | $40,993 | ($345) | $40,468 | |||||||||
| Personal Property | Number | 3,824 | (82) | 8,001 | (9,602) | 2,141 | - | 2,141 | ||||||||
| Value | $28,161 | ($3,792) | $54,683 | ($55,112) | $23,940 | ($932) | $23,008 | |||||||||
| Non-Valued | Number | 19,652 | (4,265) | 16,199 | (14,797) | 16,789 | - | 16,789 | ||||||||
| Total | Number | 23,912 | (4,339) | 24,632 | (24,948) | 19,257 | - | 19,257 | ||||||||
| Value | $82,150 | $2,041 | $130,104 | ($147,379) | $66,916 | ($1,284) | $65,632 | |||||||||
(1) Adjustments represent changes in the valuation or status of property as a result of fair market appraisals and court orders.
(2) Disposals in the Analysis of Changes table may not agree with disposals on the Method of Disposition table as a result of partial dispositions.
| Forfeited Property Category | Converted Financial Instrument/Property and Deposit/Transfer |
Destroyed/ Donated/ Transferred/ and Other | Sold/ Liquidated (1) | Official Use/ Transfer for Equitable Sharing | Returned Asset | Variance (2) | Total (3) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Financial Instruments | Number | 235 | 6 | - | - | 6 | - | 247 | ||||||||
| Value | $8,994 | $278 | - | - | $34 | - | $9,306 | |||||||||
| Real Property | Number | 9 | 5 | 389 | - | 13 | - | 416 | ||||||||
| Value | $158 | $447 | $63,259 | - | $1,499 | - | $65,363 | |||||||||
| Personal Property | Number | 1 | 478 | 2,361 | 973 | 214 | - | 4,027 | ||||||||
| Value | $1 | $130,020 | $24,031 | $11,971 | $4,847 | - | $170,870 | |||||||||
| Non-Valued | Number | 4 | 12,192 | 1 | 635 | 327 | - | 13,159 | ||||||||
| Total | Number | 249 | 12,681 | 2,751 | 1,608 | 560 | - | 17,849 | ||||||||
| Value | $9,153 | $130,745 | $87,290 | $11,971 | $6,380 | - | $245,539 | |||||||||
(1) The sold/liquidated total dollar value does not agree to Donations and Forfeitures of Property on the Statement of Changes in Net Position and the Statement of Financing because the sold/liquidated amount above represents the assets at their appraised values at forfeiture, and the Donations and Forfeitures of Property on the Statement of Changes in Net Position and the Statement of Financing represents the proceeds realized upon disposition.
(2) Variances can result from differences between the value of the property when seized and the value of the property when disposed.
(3) Disposals on the Analysis of Changes table may not agree with disposals on the Method of Disposition table as a result of partial dispositions.
| Forfeited Property Category | Converted Financial Instrument/Property and Deposit/Transfer |
Destroyed/ Donated/ Transferred/ and Other | Sold/ Liquidated (1) | Official Use/ Transfer for Equitable Sharing | Returned Asset | Variance (2) | Total (3) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Financial Instruments | Number | 132 | 8 | 2 | - | 19 | - | 161 | ||||||||
| Value | $20,125 | $78 | $316 | - | $4,930 | - | $25,449 | |||||||||
| Real Property | Number | 3 | 6 | 372 | 3 | 10 | - | 394 | ||||||||
| Value | $126 | $454 | $63,704 | $33 | $2,501 | - | $66,818 | |||||||||
| Personal Property | Number | 4 | 705 | 6,777 | 1,072 | 1,143 | - | 9,701 | ||||||||
| Value | $16 | $1,498 | $31,227 | $10,944 | $11,430 | ($3) | $55,112 | |||||||||
| Non-Valued | Number | 31 | 13,664 | 2 | 786 | 371 | - | 14,854 | ||||||||
| Total | Number | 170 | 14,383 | 7,153 | 1,861 | 1,543 | - | 25,110 | ||||||||
| Value | $20,267 | $2,030 | $95,247 | $10,977 | $18,861 | ($3) | $147,379 | |||||||||
(1) The sold/liquidated total dollar value does not agree to Donations and Forfeitures of Property on the Statement of Changes in Net Position and the Statement of Financing because the sold/liquidated amount above represents the assets at their appraised values at forfeiture, and the Donations and Forfeitures of Property on the Statement of Changes in Net Position and the Statement of Financing represents the proceeds realized upon disposition.
(2) Variances can result from differences between the value of the property when seized and the value of the property when disposed.
(3) Disposals on the Analysis of Changes table may not agree with disposals on the Method of Disposition table as a result of partial dispositions.
| B. Seized Property | |
| The following tables show the analysis of changes in and methods of disposition of property seized for forfeiture during the fiscal years ended September 30, 2005 and 2004, respectively. In the following tables Seized Cash and Monetary Instruments includes seized cash in transit as well as pre-forfeiture deposits into the SADF of monetary instruments and depository account balances, proceeds from pre-forfeiture sales, and cash received in lieu of seized property. Financial Instruments include negotiable instruments and restricted depository accounts. | |
| Seized Property Category | Beginning Balance | Adjustments (1) | Seized | Disposed (2) | Ending Balance | Liens and Claims | Ending Balance Net of Liens | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Seized Cash and Monetary Instruments | Number | 9,140 | 734 | 10,024 | (10,942) | 8,956 | - | 8,956 | ||||||||
| Value | $624,850 | $6,018 | $627,494 | ($547,170) | $711,192 | ($38,862) | $672,330 | |||||||||
| Financial Instruments | Number | 266 | (81) | 165 | (116) | 234 | - | 234 | ||||||||
| Value | $22,668 | ($2,425) | $11,419 | ($7,203) | $24,459 | ($296) | $24,163 | |||||||||
| Real Property | Number | 413 | (61) | 229 | (287) | 294 | - | 294 | ||||||||
| Value | $63,277 | $9,455 | $66,771 | ($58,292) | $81,211 | ($20,969) | $60,242 | |||||||||
| Personal Property | Number | 5,639 | 169 | 6,557 | (6,221) | 6,144 | - | 6,144 | ||||||||
| Value | $94,527 | ($9,186) | $126,709 | ($88,631) | $123,419 | ($13,673) | $109,746 | |||||||||
| Non-Valued | Number | 43,225 | 52 | 30,475 | (25,050) | 48,702 | - | 48,702 | ||||||||
| Total | Number | 58,683 | 813 | 47,450 | (42,616) | 64,330 | - | 64,330 | ||||||||
| Value | $805,322 | $3,862 | $832,393 | ($701,296) | $940,281 | ($73,800) | $866,481 | |||||||||
(1) Adjustments represent changes in the valuation or status of property as a result of fair market appraisals and court orders.
(2) Disposals in the Analysis of Changes table may not agree with disposals on the Method of Disposition table as a result of partial dispositions.
| Seized Property Category | Beginning Balance | Adjustments (1) | Seized | Disposed (2) | Ending Balance | Liens and Claims | Ending Balance Net of Liens | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Seized Cash and Monetary Instruments | Number | 8,736 | - | 10,941 | (10,537) | 9,140 | - | 9,140 | ||||||||
| Value | $580,573 | - | $494,058 | ($449,781) | $624,850 | ($19,167) | $605,683 | |||||||||
| Financial Instruments | Number | 379 | 500 | 396 | (1,009) | 266 | - | 266 | ||||||||
| Value | $42,044 | ($14,052) | $31,703 | ($37,027) | $22,668 | ($270) | $22,398 | |||||||||
| Real Property | Number | 323 | 4 | 358 | (272) | 413 | - | 413 | ||||||||
| Value | $49,625 | $5,731 | $53,819 | ($45,898) | $63,277 | ($12,360) | $50,917 | |||||||||
| Personal Property | Number | 8,991 | 656 | 6,188 | (10,196) | 5,639 | - | 5,639 | ||||||||
| Value | $96,493 | ($12,848) | $93,117 | ($82,235) | $94,527 | ($9,721) | $84,806 | |||||||||
| Non-Valued | Number | 39,946 | 1,286 | 19,997 | (18,004) | 43,225 | - | 43,225 | ||||||||
| Total | Number | 58,375 | 2,446 | 37,880 | (40,018) | 58,683 | - | 58,683 | ||||||||
| Value | $768,735 | ($21,169) | $672,697 | ($614,941) | $805,322 | ($41,518) | $763,804 | |||||||||
(1) Adjustments represent changes in the valuation or status of property as a result of fair market appraisals and court orders.
(2) Disposals in the Analysis of Changes table may not agree with disposals on the Method of Disposition table as a result of partial dispositions.
| Seized Property Category | Converted Financial Instrument/Property and Deposit/Transfers |
Destroyed/ Donated/ Transferred and Other |
Sold/ Liquidated | Returned Asset | Forfeited (1) | Variance (2) | Total | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Seized Cash and Monetary Instruments | Number | 29 | 90 | - | 668 | 10,155 | - | 10,942 | ||||||||
| Value | $2,100 | $5,023 | - | $69,759 | $470,288 | - | $547,170 | |||||||||
| Financial Instruments | Number | - | 1 | - | 15 | 100 | - | 116 | ||||||||
| Value | - | - | - | $696 | $6,507 | - | $7,203 | |||||||||
| Real Property | Number | - | - | 1 | 28 | 258 | - | 287 | ||||||||
| Value | - | - | $140 | $2,337 | $55,815 | - | $58,292 | |||||||||
| Personal Property | Number | - | 41 | 1 | 1,454 | 4,725 | - | 6,221 | ||||||||
| Value | - | $5,097 | $8 | $32,535 | $50,991 | - | $88,631 | |||||||||
| Non-Valued | Number | - | 30 | - | 1,197 | 23,823 | - | 25,050 | ||||||||
| Total | Number | 29 | 162 | 2 | 3,362 | 39,061 | - | 42,616 | ||||||||
| Value | $2,100 | $10,120 | $148 | $105,327 | $583,601 | - | $701,296 | |||||||||
(1) Forfeitures reported on the Analysis of Change in Forfeited Property may be greater because some assets are not seized until after they are declared forfeited.
(2) Variances can result from differences between the value of the property when seized and the value of the property when disposed.
| Seized Property Category | Converted Financial Instrument/Property and Deposit/Transfers |
Destroyed/ Donated/ Transferred/ and Other | Sold/ Liquidated | Returned Asset | Forfeited (1) | Variance (2) | Total | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Seized Cash and Monetary Instruments | Number | 655 | - | - | 24 | 9,858 | - | 10,537 | ||||||||
| Value | $2,941 | - | - | $24,198 | $422,642 | - | $449,781 | |||||||||
| Financial Instruments | Number | 831 | 6 | - | 49 | 123 | - | 1,009 | ||||||||
| Value | $12,372 | $23 | - | $13,304 | $11,328 | - | $37,027 | |||||||||
| Real Property | Number | - | 3 | - | 15 | 254 | - | 272 | ||||||||
| Value | - | $565 | - | $2,137 | $43,196 | - | $45,898 | |||||||||
| Personal Property | Number | - | 33 | 514 | 1,707 | 7,951 | - | 10,205 | ||||||||
| Value | - | $1,669 | $2,152 | $24,040 | $54,374 | - | $82,235 | |||||||||
| Non-Valued | Number | - | 24 | - | 1,806 | 16,176 | - | 18,006 | ||||||||
| Total | Number | 1,486 | 66 | 514 | 3,601 | 34,362 | - | 40,029 | ||||||||
| Value | $15,313 | $2,257 | $2,152 | $63,679 | $531,540 | - | $614,941 | |||||||||
(1) Forfeitures reported on the Analysis of Change in Forfeited Property may be greater because some assets are not seized until after they are declared forfeited.
(2) Variances can result from differences between the value of the property when seized and the value of the property when disposed.
| C. Anticipated Equitable Sharing in Future Periods | |
| The statute governing the use of the AFF (28 U.S.C. §524(c)) permits the payment of equitable shares of forfeiture proceeds to participating foreign governments and state and local law enforcement agencies. The statute does not require such sharing and permits the Attorney General wide discretion in determining those transfers. Actual sharing is difficult to predict because many factors influence both the amount and time of disbursement of equitable sharing payments, such as the length of time required to move an asset through the forfeiture process to disposition, the amount of net proceeds available for sharing, the lapse of time for Departmental approval of equitable sharing requests for cases with asset values exceeding $1 million, and appeal of forfeiture judgments. Because of uncertainties surrounding the timing and amount of any equitable sharing payment, an obligation and expense are recorded only when the actual disbursement of the equitable sharing payment is imminent. The anticipated equitable sharing allocation level for FY 2006 is $273 million | |
Note 7. General Property, Plant and Equipment (PP&E), Net
| Acquisition Cost | Accumulated Depreciation | Net Book Value | Useful Life | ||||
|---|---|---|---|---|---|---|---|
| Internal Use Software in Development | $4,577 | $- | $4,577 | N/A | |||
| Total | $4,577 | $- | $4,577 |
| Acquisition Cost | Accumulated Depreciation | Net Book Value | Useful Life | ||||
|---|---|---|---|---|---|---|---|
| Internal Use Software in Development | $3,600 | $- | $3,600 | N/A | |||
| Total | $3,600 | $- | $3,600 |
The AFF purchased $977 and $1,192 of Internal Use Software in Development during FYs 2005 and 2004, respectively. Federal purchases during FYs 2005 and 2004 were $101 and $86, respectively. Public purchases during FYs 2005 and 2004 were $876 and $1,106, respectively.
Note 8. Other Assets
| 2005 | 2004 | ||
|---|---|---|---|
| Intragovernmental | |||
| Advances to Others | $693 | $1,310 | |
| Total Other Assets | $693 | $1,310 |
Note 9. Non-Entity Assets
Non-entity assets are assets held by the AFP that are not available for use by the AFP.
| 2005 | 2004 | ||
|---|---|---|---|
| Intragovernmental | |||
| Investments, Net (Note 4) | $623,236 | $561,867 | |
| Total Intragovernmental | 623,236 | 561,867 | |
| With the Public | |||
| Cash and Monetary Assets | 87,956 | 62,983 | |
| Total With the Public | 87,956 | 62,983 | |
| Total Non-Entity Assets | 711,192 | 624,850 | |
| Total Entity Assets | 659,187 | 623,914 | |
| Total Assets | $1,370,379 | $1,248,764 |
Note 10. Seized Cash and Monetary Instruments
| 2005 | 2004 | ||
|---|---|---|---|
| Investments, Net (Note 4) | $623,236 | $561,867 | |
| Seized Cash Deposited (Note 3) | 47,381 | 31,550 | |
| Seized Monetary Instruments (Note 3) | 40,575 | 31,433 | |
| Total Seized Cash and Monetary Instruments | $711,192 | $624,850 |
Note 11. Liabilities Not Covered by Budgetary Resources
| 2005 | 2004 | ||
|---|---|---|---|
| With the Public | |||
| Contingent Liabilities (Note 12) | $35,000 | $30,100 | |
| Total With the Public | 35,000 | 30,100 | |
| Total Liabilities Not Covered by Budgetary Resources | 35,000 | 30,100 | |
| Total Liabilities Covered by Budgetary Resources | 887,336 | 790,734 | |
| Total Liabilities | $922,336 | $820,834 |
Note 12. Contingencies and Commitments
The AFF and SADF are defendants in various pending legal actions. The balance sheet includes an estimated liability for those legal actions where the Legal Counsel considers adverse decisions “probable”. Management has determined that it is probable that some of these proceedings and actions will result in the incurrence of liabilities, and the amounts are reasonably estimable. The estimated liabilities for these cases at September 30, 2005 and 2004 were $35,000 and $30,100, respectively, and are reported in the financial statements.
There are also legal actions pending where adverse decisions are considered to be “reasonably possible”. As of September 30, 2005, there were no legal actions reported as reasonably possible. As of September 30, 2004, three legal actions were reported as reasonably possible. Of the three legal actions, two reported a potential loss of $632. For the remaining legal action, an estimate of potential loss could not be determined.
Note 13. Relationship Between Liabilities Not Covered by Budgetary Resources and Components Requiring or Generating Resources in Future Periods
Liabilities that are not covered by realized budgetary resources and for which there is no certainty that budgetary authority will be realized, such as the enactment of an appropriation, are considered liabilities not covered by budgetary resources. Decreases in these liabilities result from current year budgetary resources that were used to fund expenses recognized in prior periods. Increases in these liabilities represent unfunded expenses that were recognized in the current period. The changes in liabilities not covered by budgetary resources are comprised of the following:
| Components of Net Cost of Operations Requiring or Generating Resources in Future Periods: | |||
| 2005 | 2004 | ||
| Other Increase in Contingent Liabilities |
$4,900 | $30,100 | |
Total Components
of Net Cost of Operations Requiring or Generating |
$4,900 | $30,100 |
Note 14. Gross Cost and Earned Revenue by Budget Functional Classification
| Budget Functional Classification | Gross Cost | Earned Revenue |
Net Cost | |||
|---|---|---|---|---|---|---|
| Fiscal Year Ended September 30, 2005: | ||||||
| 750 - Administration of Justice | ||||||
| AFP Expenses: | ||||||
| Payment to Third Parties | $85,326 | $- | $85,326 | |||
| Asset Management Expenses | 34,194 | - | 34,194 | |||
| Special Contract Services | 46,788 | (2,281) | 44,507 | |||
| ADP Equipment | 17,142 | - | 17,142 | |||
| Forfeiture Case Prosecution | 23,603 | - | 23,603 | |||
| Forfeiture Training and Printing | 7,480 | - | 7,480 | |||
| Other Program Management | 17,411 | - | 17,411 | |||
| Distributions of Revenue: | ||||||
| Equitable Sharing | 281,036 | - | 281,036 | |||
| Awards for Information | 19,051 | - | 19,051 | |||
| Purchase of Evidence | 6,836 | - | 6,836 | |||
| Equipping Conveyances | 575 | - | 575 | |||
| Joint Law Enforcement Operations | 48,002 | - | 48,002 | |||
| Contracts to Identify Assets | 4,965 | - | 4,965 | |||
| Investigative Cost Leading to Seizure | 4,223 | - | 4,223 | |||
| Net Cost of Operations | $596,632 | $(2,281) | $594,351 |
| Budget Functional Classification | Gross Cost | Earned Revenue |
Net Cost | |||
|---|---|---|---|---|---|---|
| Fiscal Year Ended September 30, 2004: | ||||||
| 750 - Administration of Justice | ||||||
| AFP Expenses: | ||||||
| Payment to Third Parties | $54,271 | $- | $54,271 | |||
| Asset Management Expenses | 19,602 | - | 19,602 | |||
| Special Contract Services | 48,161 | (2,104) | 46,057 | |||
| ADP Equipment | 16,683 | - | 16,683 | |||
| Forfeiture Case Prosecution | 17,679 | - | 17,679 | |||
| Forfeiture Training and Printing | 5,854 | - | 5,854 | |||
| Other Program Management | 16,650 | - | 16,650 | |||
| Distributions of Revenue: | ||||||
| Equitable Sharing | 313,428 | - | 313,428 | |||
| Awards for Information | 19,389 | - | 19,389 | |||
| Purchase of Evidence | 7,243 | - | 7,243 | |||
| Equipping Conveyances | 559 | - | 559 | |||
| Joint Law Enforcement Operations | 34,335 | - | 34,335 | |||
| Contracts to Identify Assets | 3,362 | - | 3,362 | |||
| Investigative Cost Leading to Seizure | - | - | - | |||
| Net Cost of Operations | $557,216 | $(2,104) | $555,112 |
| Budget Functional Classification | Gross Cost | Earned Revenue |
Net Cost | |||
|---|---|---|---|---|---|---|
| Fiscal Year Ended September 30, 2005: | ||||||
| 750 - Administration of Justice | ||||||
| AFP Expenses: | ||||||
| Payment to Third Parties | $22,624 | $- | $22,624 | |||
| Asset Management Expenses | 13,455 | - | 13,455 | |||
| Special Contract Services | 21,998 | (2,281) | 19,717 | |||
| ADP Equipment | 5,092 | - | 5,092 | |||
| Forfeiture Case Prosecution | 8,973 | - | 8,973 | |||
| Forfeiture Training and Printing | 4,778 | - | 4,778 | |||
| Other Program Management | 11,937 | - | 11,937 | |||
| Distributions of Revenue: | ||||||
| Awards for Information | 14,933 | - | 14,933 | |||
| Purchase of Evidence | 5,359 | - | 5,359 | |||
| Joint Law Enforcement Operations | 30,623 | - | 30,623 | |||
| Contracts to Identify Assets | 3,891 | - | 3,891 | |||
| Investigative Cost Leading to Seizure | 3,310 | - | 3,310 | |||
| Net Cost of Operations | $146,973 | $(2,281) | $144,692 |
| Budget Functional Classification | Gross Cost | Earned Revenue |
Net Cost | |||
|---|---|---|---|---|---|---|
| Fiscal Year Ended September 30, 2004: | ||||||
| 750 - Administration of Justice | ||||||
| AFP Expenses: | ||||||
| Payment to Third Parties | $263 | $- | $263 | |||
| Asset Management Expenses | 4,223 | - | 4,223 | |||
| Special Contract Services | 26,490 | (2,104) | 24,386 | |||
| ADP Equipment | 6,610 | - | 6,610 | |||
| Forfeiture Case Prosecution | 7,952 | - | 7,952 | |||
| Forfeiture Training and Printing | 4,682 | - | 4,682 | |||
| Other Program Management | 13,946 | - | 13,946 | |||
| Distributions of Revenue: | ||||||
| Awards for Information | 19,803 | - | 19,803 | |||
| Purchase of Evidence | 7,397 | - | 7,397 | |||
| Joint Law Enforcement Operations | 28,134 | - | 28,134 | |||
| Contracts to Identify Assets | 3,433 | - | 3,433 | |||
| Investigative Cost Leading to Seizure | - | - | - | |||
| Net Cost of Operations | $122,933 | $(2,104) | $120,829 |
On the Consolidated Statements of Net Cost, costs classified as “Intragovernmental” represent the cost of goods or services obtained from federal entities. Costs classified as “With the Public” represent the cost of goods or services obtained from non-federal entities.
Note 15. Permanent Indefinite Appropriations
28 U.S.C. § 524(c)(1) authorized the Attorney General to use AFF receipts to pay program operations expenses, equitable sharing to state and local law enforcement agencies who assist in forfeiture cases, and lien holders. This permanent indefinite authority is open-ended in its period of availability and amount.
Note 16. Statement of Budgetary Resources vs Budget of the United States Government
The reconciliation as of September 30, 2004 is presented below, rounded to the nearest million for comparison purposes. The reconciliation as of September 30, 2005 is not presented, because the submission of the FY 2007 Budget of the United States, which presents the execution of the FY 2005 Budget, occurs after publication of these financial statements. The Department of Justice Budget Appendix can be found on the OMB website (http://www.whitehouse.gov/omb/budget) and will be available in early February 2006.
| Budgetary Resources |
Obligations Incurred |
Net Outlays |
|||
|---|---|---|---|---|---|
| Fiscal Year Ended September 30, 2004 | |||||
| Statement of Budgetary Resources (SBR) | $970,000 | $658,000 | $605,000 | ||
| Funds not Reported in Budget of the U.S.: | |||||
| Forfeiture Activity | (44,000) | (29,000) | (4,000) | ||
| Other | 2,000 | - | - | ||
| Budget of the United States | $928,000 | $629,000 | $601,000 |
Differences for Funds not Reported in Budget of the U.S. - Forfeiture Activity, represent real estate sales; the sale of forfeited property maintained by the Treasury Executive Office for Asset Forfeiture for the Bureau of Alcohol, Tobacco, Firearms, and Explosives pending transfer to AFF; BCCI; and accrued revenue, which are unavailable until the authority is granted in the subsequent year. Other differences represent financial statement adjustments, timing differences, and other immaterial differences between amounts reported in the AFF’s SBR and the Budget of the United States. An additional reconciliation with the SF-133, “Report on Budget Execution and Budgetary Resources”, was also performed and confirmed that differences between the AFF’s SBR and the SF-133 are also the result of the adjustments identified above.
Note 17. Apportionment Categories of Obligations Incurred
Apportionment categories are determined in accordance with the guidance provided in OMB Circular No. A-11, “Preparation, Submission, and Execution of the Budget”. Category A represents resources apportioned for calendar quarters. Category B represents resources apportioned for program operations expenses, equitable sharing payments, and prior year surplus allocations.
| Direct Obligations | Reimbursable Obligations | Total Obligations Incurred | |||
|---|---|---|---|---|---|
| Fiscal Year Ended September 30, 2005: | |||||
| Obligations Apportioned Under: | |||||
| Category A | $21,371 | $- | $21,371 | ||
| Category B | 604,531 | 2,281 | 606,812 | Total | $625,902 | $2,281 | $628,183 |
| Direct Obligations | Reimbursable Obligations | Total Obligations Incurred | |||
| Fiscal Year Ended September 30, 2004: | |||||
| Obligations Apportioned Under: | |||||
| Category A | $19,870 | $- | $19,870 | ||
| Category B | 636,454 | 2,104 | 638,558 | Total | $656,324 | $2,104 | $658,428 |
Note 18. Transfers
Allocation transfers by the AFF include transfers of Super Surplus Allocations and transfers of forfeited property to participating agencies for official use:
Fiscal Years Ended September 30, 2005 and 2004:
| Cumulative Results of Operation | |||
|---|---|---|---|
| 2005 | 2004 | ||
| Other Financing Sources (OFS): | |||
Department of Justice Components: |
|||
| Bureau of Alcohol, Tobacco, Firearms, and Explosives | $(219) | $(99) | |
| Drug Enforcement Administration | (3,701) | (3,362) | |
| Federal Bureau of Investigation | (1,745) | (1,354) | |
| Offices, Boards and Divisions | - | (77,755) | |
| Office of Justice Programs | (3,343) | (15,247) | |
| U.S. Marshals Service | (871) | (1,713) | |
| Total DOJ Components | (9,879) | (99,530) | |
| Federal Agencies: | |||
| Department of the Interior | - | (8) | |
| U.S. Postal Service | (47) | (24) | |
| Department of the Treasury | (15) | (37) | |
| Department of Homeland Security | (83) | (299) | |
| U.S. Department of Agriculture | (30) | (7) | |
| Total Federal Agencies | (175) | (375) | |
| Total OFS Transfers on SCNP | $(10,054) | $(99,905) | |
| 2005 | 2004 | ||
|---|---|---|---|
| Office of the Justice Programs | $54 | $1,103 | |
| Office of Federal Detention Trustee | - | 77,700 | |
| Total Allocations | $54 | $78,803 | |
| 1999 Super Surplus | $54 | $1,103 | |
| 2003 Super Surplus | - | 77,700 | |
| Total Allocations | $54 | $78,803 |
As of September 30, 2005, $3,738 in prior years’ surpluses were transferred out to participating agencies, $6,262 was owed and $693 was advanced to these agencies for super surplus allocations in the current and prior years. As of September 30, 2004, $94,050 was transferred out, $3,153 was owed, and $1,310 was advanced.
Nonexchange revenue consists of income from the investment of the AFF and SADF in U.S. Treasury securities. The investment accrual revenue represents the amortization of the discount on marketable bills using the straight-line basis. For the fiscal year ended September 30, 2004, all marketable bills invested for the AFF/SADF matured on September 30, 2004. Therefore, an investment accrual for the amortization of the discount on marketable bills was not established. The earnings of BCCI funds held by the AFF and SADF are tracked separately due to special disposition requirements. The earnings of TFF funds are pending transfer from TFF to the DOJ SADF.
| 2005 | 2004 | |||
|---|---|---|---|---|
| Income from AFF investments | $9,055 | $5,665 | ||
| Income from SADF investments | 13,672 | 5,663 | ||
| Income from BCCI investments | 38 | 40 | ||
| Income from AFF/SADF investments | 5,811 | - | ||
| Income from TFF investments | 502 | 100 | ||
| Total Investment Income | $29,078 | $11,468 |
Note 20. Donations and Forfeitures
Forfeiture income includes forfeited cash, sales of forfeited property, penalties
in lieu of forfeiture, recovery of returned asset management costs, judgment
collections, and other miscellaneous income. As of September 30, 2005 and 2004,
net forfeiture income attributable to the Department of Justice AFF totaled
$595,440 and $543,068, respectively, after the following payments and returns
to agencies participating in seizures that led to forfeiture.
| 2005 | 2004 | |||
|---|---|---|---|---|
| Payments to individuals or organizations for proceeds
from assets forfeited and deposited into the AFF and subsequently returned to them through a settlement agreement or by court order. |
$135,992 | $4,242 | ||
| Return of forfeiture income to the TFF for its participation in seizures that led to forfeiture. | 21,595 | 22,534 | ||
| Return to the Federal Deposit Insurance Corporation (FDIC) or other Federal financial institutions or regulatory agency for monies recovered under Federal Institutions Reform, Recovery and Enforcement Act. | - | 660 | ||
| Return of forfeiture income to the U.S. Postal Service for its paricipation in seizure that led to forfeiture. | 4,131 | 2,467 | ||
| Return of forfeiture income to other Federal agencies
for their participation in seizures that led to forfeiture. |
1,182 | 16 | ||
| BCCI distributions to victims and other permanent court-ordered distributions. | 2,120 | 3,144 | ||
| Refunds for Food Stamp Fraud | - | 131 | ||
| Return to the FDIC and other regulatory agencies for reasonable costs of investigation, and civil and administrative proceedings. | - | 750 | ||
| Total Return of Forfeiture Income | $165,020 | $33,944 |