The U.S. Department of Justice (DOJ), Office of the Inspector General, Audit Division has completed an audit of the use of DOJ equitable sharing revenues by the Fayette County, Georgia, Sheriff’s Office (Sheriff’s Office). Equitable sharing revenues represent a share of the proceeds from the forfeiture of assets seized in the course of certain criminal investigations.1
The audit covered equitable sharing activities from July 1, 2004, through March 19, 2007. During that period, the DOJ shared $2,646,363 in cash and $63,367 in property with the Sheriff’s Office, and the U.S. Department of the Treasury (Treasury) shared $209,416 in cash with the Sheriff’s Office. Also during that period, the Sheriff’s Office expended $2,355,153 of DOJ equitable sharing funds and $110,514 of Treasury equitable sharing funds. We tested $1,957,328 (83 percent) of the $2,355,153 expended from DOJ funds and $108,078 (98 percent) of the $110,514 expended from Treasury funds.
We reviewed the Sheriff’s Office’s compliance with six essential equitable sharing guidelines. Generally, the Sheriff’s Office complied with the guidelines, but we found weaknesses in three areas as identified below.
Federal Sharing Agreements and Annual Certification Reports. Recipients of equitable shares must submit to the DOJ Federal Sharing Agreements and Annual Certification Reports. The Sheriff’s Office properly submitted agreements and reports, except that one agreement and three reports were not signed by a county official as required. The Sheriff’s Office and Fayette County have taken appropriate action to provide the required signature for future agreements and reports.
Accounting for Equitable Sharing Receipts. Recipients of equitable shares should maintain a log of all shares requested. The Sheriff’s Office maintained the log but did not document on it the method of receipt and receipt date for the cash shares. Consequently, we could not determine whether the Sheriff’s Office timely deposited eight receipts during or prior to February 2005 in the form of paper checks. Since February 2005, all receipts have been provided through electronic funds transfer and, because such transfers are deposited directly, the timeliness of deposit is not a concern.
Use of Equitable Sharing Funds. The DOJ and Treasury expenditures we tested were allowable, adequately supported, and used for law enforcement purposes with one material exception. In July 2006, the Sheriff’s Office advanced a staff member $1,500 in Treasury equitable sharing funds for expenses related to security at an out-of-town baseball tournament. The expenditure apparently related to protecting a local team while in another state and not to the ongoing law enforcement activities of the Sheriff’s Office. On July 24, 2006, the Sheriff’s Office deposited $672.50 of the $1,500 not used by the staff member and on August 11, 2006, a Sheriff’s Office employee repaid $827.50. The Sheriff’s Office deposited both amounts, totaling $1,500, into the equitable sharing account. We identified no other transactions of this type. In response to this matter and to ensure appropriate use of equitable sharing funds, in August 2006 the Sheriff’s Office implemented new procedures for staff members requesting the use of such funds. These procedures appear sufficient to ensure that equitable sharing funds are appropriately used.
Recipients should implement standard accounting procedures and internal controls, which include separation of duties. The Sheriff’s Office did not separate duties for maintaining the blank check stock, signing checks, and performing the monthly bank account reconciliations. Consolidation of these duties creates the possibility that a staff member could write, sign, and reconcile to the bank statement an improper check without detection. The Sheriff’s Office compensates for this possibility by using an informal compensating control involving a second staff member’s review of the bank reconciliation results, but that control is not established in the Sheriff’s Office procedures. Our extensive testing of disbursements from equitable sharing funds identified no instances of improperly written checks, but these duties should be separated to minimize the possibility that such checks can be written or the compensating control should be formally established in the Sheriff’s Office procedures.
The Sheriff’s Office purchased $540,760 in equipment using DOJ and Treasury equitable sharing funds. Of this, $255,237 in equipment was not recorded in inventory records maintained by the Sheriff’s Office or Fayette County. We conducted a physical inventory that identified no missing equipment, but all equipment purchased with equitable sharing funds should be recorded in the inventory records. Other equipment was purchased by a federal task force using equitable sharing funds transferred by the Sheriff’s Office. The Sheriff’s Office did not maintain inventory records for the task force equipment, but should clarify ownership of that equipment and, if the Sheriff’s Office retains ownership, it should record that equipment in its inventory records.
The results of our work are discussed in detail in the Findings and Recommendations section of the report. The audit objectives, scope, and methodology appear in Appendix I.
The DOJ asset forfeiture program has three primary goals to: (1) punish and deter criminal activity by depriving criminals of property used or acquired through illegal activities; (2) enhance cooperation among federal, state, and local law enforcement agencies through equitable sharing of assets recovered through this program and, as a by-product; (3) produce revenues to enhance forfeitures and strengthen law enforcement.