DHS OIG Report on CBP FY 2009 Internal Controls (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 2009 internal controls over financial reporting.
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(KPMG audited the consolidated balance sheets of CBP; they also considered CBP's internal controls over financial reporting 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.)
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 Material Weaknesses in Drawback, Financial Reporting, Etc.
The auditor's review of CBP's internal controls over financial reporting resulted in the following being identified as material weaknesses 1:
Drawback of Duties, Taxes, and Fees
Financial Reporting
Property, Plant, and Equipment (PP&E)
- Secure Border Initiative
- Improper Settlement of Assets from Construction in Progress
- Management Oversight of PP&E and Transactions
Audit Finds Significant Deficiencies in Entry Process, Info Technology, Etc.
The auditor's review of CBP's internal controls over financial reporting resulted in the following being identified as significant deficiencies2:
Entry Process
- In-Bond Program
- Entry Summary Compliance Management
- Bonded Warehouse and Foreign Trade Zones
Information Technology
Inactive Obligations (Not de-obligating or closing out obligations in a timely manner)
Audit Provides Examples of Weaknesses/Deficiencies Their Cause and Effect, Remedies, Etc.
For the material weaknesses and significant deficiencies listed above, the report contains exhibits which provide a variety of information, including background on the issue, details/examples of the material weaknesses and significant deficiencies found, a description of their cause and effect, and recommendations for remedy.
1A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.
2A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
DHS OIG report (OIG-10-51, dated February 2010) available at http://www.dhs.gov/xoig/assets/mgmtrpts/OIG_10-51_Feb10.pdf