DHS Reports on Audit Finding of Weak CBP Financial Controls Affecting Drawback, Info Technology, Etc. (Part I - Overview)
The Department of Homeland Security's Office of Inspector General has issued a report containing an independent audit conducted by KPMG LLP that addresses the strengths and weaknesses of U.S. Customs and Border Protection's fiscal year 2007 internal controls.
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(KPMG audited the consolidated balance sheets of CBP; they also considered CBP's internal controls over financial reporting and performance measures, and tested CBP's compliance with certain provisions of applicable laws, regulations, and contracts agreements that could have a direct and material effect on these consolidated financial statements.)
The OIG notes that the report is based on interviews with employees and officials of relevant agencies and institutions, direct observations, and a review of applicable documents.
This is Part I of a multi-part series of summaries of this report and provides an overview of the report's findings, etc. See future issues of ITT for additional summaries.
Audit Finds Significant Deficiencies in CBP's Drawback, Info Technology and Other Programs
The auditor's review of CBP's internal controls over financial reporting resulted in the following being identified as significant deficiencies1:
- Drawback of duties, taxes, and fees
- Information technology
- Entry Process
- Compliance Measurement (CM) program
- Bonded warehouse and foreign trade zones (FTZs)
- In-Bond program
- Continued Dumping and Subsidy Offset Act of 2000 (CDSOA, aka Byrd Amendment) results
The audit notes that the significant deficiencies in drawback and information technology (1. and 2.) are also considered to be material weaknesses.2
Audit Provides Examples of Deficiencies, Their Cause and Effect, Remedies, Etc.
For the significant deficiencies listed above, the report contains exhibits which provide a variety of information, including background on the issue, details/examples of the significant deficiencies and material weaknesses found, a description of their cause and effect, and recommendations for remedy.
Most of FY 2007 Significant Deficiencies Were Also Present in FY 2006
The report also provides an exhibit which lists CBP's FY 2006 significant deficiencies, along with a report on their status as of September 30, 2007. Subscribers should note that all but one (CDSOA results) of the FY 2007 significant deficiencies listed above, were previously reported as significant deficiencies in the FY 2006 report.
1a significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects CBP's ability to initiate, authorize, record, process, or report financial data reliably in accordance with U.S. generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of CBP's consolidated financial statements that is more than inconsequential will not be prevented or detected by CBP's internal control over financial reporting.
2a material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by CBP's internal control.
DHS OIG report entitled "CBP's FY 2007 Internal Controls" (OIG-08-15, dated November 2007) available at http://www.dhs.gov/xoig/assets/mgmtrpts/OIG_08-15_Nov07.pdf.