Performance and 

Accountability Report 

Fiscal Year 2008

U.S. Customs and Border Protection • Performance and Accountability Report i

This is the U.S. Customs and Border Protection (CBP) Fiscal Year 2008 Performance and Accountability 

Report (PAR). The PAR is a comprehensive report that combines CBP’s Annual Performance Report with 

its audited financial statements, assurances on internal control, accountability reporting, and agency 

assessments. CBP’s PAR provides financial and performance information that will enable Congress and 

the public to assess the performance of the agency as it relates to the CBP mission.

CBP is America’s frontline border agency. We guard the boundaries of freedom and stand between the 

good citizens of our nation and those who want to do us harm. The CBP PAR discusses the agency’s strategic goals and objectives and provides a comparison of agency performance targets to actual performance results. The CBP PAR satisfies the reporting requirements of the Reports Consolidation Act of 2000 

(Public Law No. 106-531), Government Performance and Results Act (Public Law No. 103-62), Chief Financial Officers Act of 1990 (Public Law No. 101-576), and other financial management statutes and 

reports. 

The CBP PAR provides a summary of the agency’s major mission programs including strategies. Additional 

information related to the specific programs, initiatives, tools, and resources to achieve objectives may be 

found in the body of the U.S. Department of Homeland Security (DHS) Congressional Budget Justification 

for the President’s budget, which detailed information by DHS component.

About This Report
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Table of Contents

Commissioner’s Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Management’s Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Overview of CBP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Mission. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Core Values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Fiscal Year 2008 Statistical Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Drug Seizure Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Major Mission Programs and Strategies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Budget by Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Budget Resource Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Looking Ahead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Headquarters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Component Organizations and Field Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Performance Goals and Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Performance Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Fiscal Year 2008 Performance by Strategic Goal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Management Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Federal Managers’ Financial Integrity Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

DHS Financial Accountability Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Federal Financial Management Improvement Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Federal Information Security Management Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Systems and Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Self-Inspection Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Financial Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

President’s Management Agenda. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Overview of the Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Limitations of the Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Performance Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Performance Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Individual Performance Measure Results. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Financial Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Message from the Chief Financial Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

Required Supplementary Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

Other Accompanying Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

Auditor Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134

Office of Inspector General (OIG) Report on Major Management Challenges. . . . . . . . . . . . . . . . . . 134

Independent Auditor’s Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

Management’s Response to the Independent Auditor’s Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . 163

Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

Table of Contents 1
 

 

 

 

 

 

 

Commissioner’s Message
 

I am delighted to present the Fiscal Year (FY) 2008 Performance and Accountability Report for U.S. Customs and Border Protection (CBP). Since CBP’s inception in 2003 as the Nation’s unified border agency, the mission has continued 

to grow dramatically. CBP is responsible for protecting the homeland from the 

entry of terrorists and dangerous weapons, in addition to our traditional missions of interdicting the flow of illegal aliens, drugs and illicit goods, while facilitating the flow of legitimate trade. 

In FY 2008, the men and women of CBP made tremendous progress toward 

meeting the President’s goals for improving border security. Every day, we process more than 70,000 containers and over a million people coming across 

our borders. In FY 2008, we apprehended over 948,000 people attempting to 

enter the U.S. illegally and seized more than 2.78 million pounds of illegal 

drugs. Additionally, we continued our robust enforcement of trade laws and collected over $34 billion in 

revenue. 

CBP also made tremendous progress in our effort to deploy approximately 670 miles of pedestrian and 

vehicle fencing in priority areas along the southern border to disrupt the flow of illegal immigrants and 

drugs into the country. While factors including rising commodity prices led to cost increases, CBP helped 

to protect taxpayers by locking in fixed steel prices through a pre-purchase agreement. Additionally, CBP 

began testing the design of the first Secure Border Initiative (SBInet) operational deployment projects in 

our Tucson Sector. Our SBInet technology demonstration prototype has already assisted Border Patrol in 

the apprehension of over 3,800 illegal aliens in FY 2008. 

To respond to the growing mission, we have also accelerated the recruitment, hiring, and training of Border 

Patrol agents. There are now approximately 18,000 agents in place, more than double the number of 

agents that existed when President Bush first took office in 2001. This represents the largest expansion 

of the Border Patrol in its long and distinguished history. CBP was able to dramatically grow the agent 

workforce without sacrificing the quality of training that the Border Patrol Academy prides itself on 

delivering. 

CBP is proving that the proper mix of personnel, infrastructure, and technology can improve border 

security. 

We’ve also made tremendous progress in protecting our economy by rigorously enforcing intellectual property rights and other trade laws. CBP has also enhanced efforts to protect our food supply and agriculture 

industry from pests and disease. 

Since 9/11, we have built a layered strategy based on sound risk management, believing that with advance 

information and sophisticated targeting methods, we can assess the risk of what, or who, is headed our 

way. CBP’s layered approach is one that can be applied to all modes of transportation—air, land, and sea, 

and it is through these efforts that we aim to make our physical borders the last line of defense, rather 

than the first. 

Our risk-based strategy is centered on the use of sophisticated technology. As part of the Secure Freight 

Initiative (SFI), we launched pilot efforts at ports in Pakistan, the United Kingdom, and Honduras that send 

real-time radiation spectra and container imaging to our national targeting center. This information is then 

analyzed and any concerns are addressed while the container is still overseas. After careful analysis of 

trial results and feedback from our pilot ports, CBP decided to focus on high-risk trade corridors to maxi2 U.S. Customs and Border Protection • Performance and Accountability Report 
Commissioner’s Message 3 

 

 

 

 

 

 

 

 

 

 

 

mize our efforts, given the limited resources available from governments and private organizations to 

continue implementing SFI. 

CBP has also taken steps to enhance international supply chain security by encouraging more privatesector organizations to become members of the Customs-Trade Partnership Against Terrorism (C-TPAT). 

C-TPAT is a voluntary government-business initiative to build cooperative relationships that strengthen and 

improve overall international supply chain and U.S. border security. There are now over 8,600 C-TPAT members, which covers half of all imports coming into the country. New C-TPAT offices were opened in Buffalo, 

New York and in Houston, Texas, bringing the total number of U.S. regional offices to seven. CBP also 

implemented the SAFE Port Act mandate to create a Third Party Verification Pilot Program for C-TPAT. 

Along our borders, we have also deployed over 1,100 radiation portal monitors. We are screening 98 percent of the maritime containers at our seaports, which is remarkable considering that just five years ago, 

no containers were being screened. We’ve made similar progress along our land borders. Today, we are 

screening 100 percent of cargo coming from Mexico and 95 percent coming from Canada. Together with 

the State Department, we are also in the process of implementing the Western Hemisphere Travel Initiative (WHTI), which takes effect in June 2009. This requires that all travelers—U.S. citizens and foreign 

nationals alike—present a passport or other WHTI-compliant document verifying identity and citizenship 

when they arrive. This process will provide another layer of security at our ports of entry, while continuing 

to facilitate the flow of legitimate trade and travel. 

Maintaining fiscal integrity and having sound management controls in place is especially vital to the work 

we do at CBP. In FY 2008, CBP received an unqualified audit opinion on its full set of financial statements 

for the third consecutive year. This outstanding accomplishment reflects our continued discipline, accountability and stewardship in executing CBP’s fiscal responsibilities. 

The CBP Fiscal Year 2008 Performance and Accountability Report includes financial and performance 

information that is reliable, complete, and addresses CBP’s compliance with financial management 

requirements. 

CBP evaluated our management controls and financial management systems in compliance with the Federal Managers’ Financial Integrity Act of 1982 and our internal controls over financial reporting as required 

by the Department of Homeland Security Financial Accountability Act. As a result of this self-assessment, 

CBP identified four material weaknesses for FY 2008, and three instances of nonconformance. Five of 

these issues are carryovers from previous years: 

• Core financial systems 

• Financial systems functionality and technology 

• Information technology general and application controls 

• Custodial revenue and drawback controls 

• Implementation of management controls for the Secure Border Initiative Program Executive Office 

While current CBP financial management systems do not substantially comply with Federal financial management systems requirements and the U.S. Government Standard General Ledger at the transaction 

level, CBP is in the process of modernizing its financial systems. CBP is now in its fifth year of using SAP 

as an integrated solution for its budget, procurement, asset management, finance, and business reporting 

processes. 
 

 

KPMG LLP conducted an independent audit of CBP’s Fiscal Year 2008 Financial Statements and material 

weaknesses, cited in the Financial Section of this report, support those identified through CBP’s selfassertion process, with three exceptions: 

•	 Material weakness on laptop computer security identified by the Department of Homeland Security 

(DHS) Office of Inspector General (OIG) audit in Fiscal Year 2006 

•	 Material weakness on the implementation of management controls for the Secure Border Initiative 

Program Executive Office, which was also identified by DHS OIG as a major management challenge in 

Fiscal Year 2006 

•	 Material weakness on US VISIT technical security issues that was identified by the Government 

Accountability Office in 2007 

While our FY 2008 accomplishments are impressive, CBP is a forward-looking organization and we have 

many important efforts currently underway to address various challenges. We have benefited in recent 

years from new resources, but we face many long-term challenges, including the need to modernize our 

land ports of entry, many of which are antiquated and undersized. 

We must also never forget that CBP employees are confronted with dangerous conditions every day in 

executing critical mission responsibilities. In FY 2008, two more Border Patrol agents, Luis Aguilar and 

Jarod Dittman, lost their lives in the line of duty. This serves as another stern reminder of the treacherous 

nature of the CBP mission. In our five-year history, 14 CBP employees have died in the line of duty. 

I would like to congratulate the entire CBP workforce for all of our achievements over the past year and the 

job performed every day to protect our Nation. I am proud of all we have accomplished and would like to 

thank all CBP employees for their dedicated public service. 

W. Ralph Basham 

Commissioner 

December 4, 2008 

4 U.S. Customs and Border Protection • Performance and Accountability Report 
Management’s Discussion 

and Analysis 
 

 

 

 

 

 

Overview of CBP
 

Mission 

U.S. Customs and Border Protection (CBP) is the frontline border security agency within the U.S. Department of Homeland Security (DHS) charged with the priority mission of preventing terrorists and terrorist 

weapons from entering the United States, while also facilitating the flow of legitimate trade and travel. CBP 

prevents narcotics, agricultural pests and smuggled goods from entering the country and also identifies 

and arrests individuals with outstanding criminal warrants. CBP leverages its enforcement and intelligencegathering capabilities to execute the mission of border and airspace security. More than 51,552 CBP 

employees manage, control, and protect the Nation’s borders at and between the official ports of entry. 

CBP is responsible for protecting more than 5,000 miles of border with Canada, 1,900 miles of border with 

Mexico, and 95,000 miles of shoreline. CBP’s mission is vitally important to the protection of the American 

people and the national economy. 

Core Values 

Vigilance is how we ensure the safety of all Americans. We are continuously watchful and alert to deter, 

detect, and prevent threats to our Nation. We demonstrate courage and valor in the protection of our 

Nation. 

Service to Country is embodied in the work we do. We are dedicated to defending and upholding the Constitution of the United States. The American people have entrusted us to protect the homeland and defend 

liberty. 

Integrity is our cornerstone. We are guided by the highest ethical and moral principles. Our actions bring 

honor to ourselves and to our agency. 

Fiscal Year 2008 Statistical Highlights 

•	 Ports of entry: 327 (includes 15 preclearance stations) 

•	 Border Patrol sectors: 20 (with 140 Border Patrol stations nationwide and 34 permanent checkpoints) 

•	 Air units: 43 (2 Training locations and 2 Radar/Communications locations) 

•	 Marine units: 31 (2 Training Locations) 

•	 Trade entries processed: 29 million 

•	 Total revenue collected: more than $34.5 billion (includes custodial and entity revenue) 

•	 Illegal narcotics seized: 3.1 million pounds (represents narcotics held by CBP until disposal or 

destruction) 

•	 Illegal alien apprehensions between the ports of entry: 723,825 

•	 Inadmissible aliens interdicted at the ports of entry: 224,804 

•	 Pedestrians and passengers processed: 409 million 

•	 Conveyances processed: 121 million 

•	 Aircraft passengers processed: 94 million 

6 U.S. Customs and Border Protection • Performance and Accountability Report 
 

 

 

 

 

 

 

 

 

 

 

Overview of CBP
 

Drug Seizure Statistics 

Note: The following amounts represent total CBP seizures, including 

amounts transferred to other government agencies for disposition. 

• Number of pounds of cocaine seized: 178,770 

• Number of pounds of heroin seized: 2,178 

• Number of pounds of marijuana seized: 2,471,931 

• Number of pounds of methamphetamine seized: 2,770 

Major Mission Programs and 

Strategies 

As America’s frontline border security agency, CBP has established 

programs and strategies designed to transform border security 

and other mission critical functions by operating as a fully integrated, 

intelligence-driven agency. CBP has built a layered strategy based on 

the concept of risk management using advance information and 

sophisticated targeting methods. 

Secure Border Initiative and SBInet 

CBP’s Secure Border Initiative (SBI) is best defined as a systems approach to meet the challenge of border 

security; its mission is to integrate and unify the systems, programs, and policies needed to secure the 

border and enforce customs and immigration laws. The challenge of securing America’s borders is multi 

faceted and complex and extends beyond controlling the legal entry and exit of people and goods across 

our borders. The SBI approach calls for a new culture among DHS component agencies that maximizes 

collaboration, capitalizes on the experience and talents of our employees, and fosters enhanced communication between headquarters and the field. SBI seeks to put the right tools in the hands of employees 

on the front lines, facilitate the reduction of administrative and diplomatic obstacles to accomplish border 

security missions, ensure that DHS resources are appropriately distributed, and institute systematic 

efficiencies. 

The CBP SBInet Program Office serves as the executive agent for the DHS SBInet program. SBInet’s strategic goals are to (1) ensure border security by providing resources and capabilities to gain and maintain 

control of the Nation’s borders at and between the ports of entry (POEs); (2) lead the development and 

deployment of a Common Operating Picture (COP); and (3) provide responsible acquisition management. 

In Fiscal Year (FY) 2008, SBInet began its initial development and deployment of the COP. The COP will 

provide uniform data to all DHS agencies and be interoperable with stakeholders external to DHS. The COP 

will enable users to make sound tactical, operational and strategic decisions; quickly inform CBP and other 

DHS components of strategic implications of mission success; rapidly exchange strategic, operational, 

and tactical information with supporting commands and interagency organizations; effectively plan, execute, and evaluate multiple mission events; and effectively interface with DHS partners to satisfy mission 

CBP Border Patrol K-9 drug seizure. 

Management’s Discussion and Analysis 7 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Overview of CBP
 

requirements. In the area of acquisition management, SBInet’s Tactical Infrastructure program is completing miles of fencing and vehicle barriers along the southwest border of the United States to provide physical infrastructure to mostly urban areas. Along with the building of infrastructure, SBInet is implementing 

technological and surveillance solutions. 

National Border Patrol Strategy 

CBP’s strategy to secure our Nation’s borders 

between the POEs is prescribed largely in the 

National Border Strategy. The area between the 

POEs consist of miles of open space, deserts, 

waterways, forests, and prairies making our Nation’s 

borders vulnerable to the threats of terrorism and to 

exploitation by human smugglers as well as smugglers of drugs and other illicit contraband. CBP’s 

Office of Border Patrol’s (OBP) strategic goal is to 

gain and maintain, and expand effective control of 

the borders of the United States between these 

POEs. To assist in achieving its goal, the Border 

Patrol implemented the National Border Patrol Strategy which articulates a clear, strategic mission and 

program purpose to establish and maintain border 

security. The five main objectives of the National Border Patrol Strategy are as follows: 

•	 Establish substantial probability of apprehending terrorists and their weapons as they attempt to enter 

illegally between the POEs 

•	 Deter illegal entries through improved enforcement 

•	 Detect, apprehend, and deter smugglers of humans, drugs, and other contraband 

•	 Leverage “Smart Border” technology to multiply the effect of enforcement personnel 

•	 Reduce crime in border communities and consequently improve the quality of life and economic 

vitality of these areas 

To accomplish these objectives, the strategy requires the deployment of the “right mix” of resources to 

gain and maintain border security. The primary goal of the National Border Patrol Strategy is effective control of the border. Effective control is achieved by deploying the right mix of resources based on threat 

potential, vulnerabilities, associated risk, and operational dynamics to reasonably ensure that CBP’s OBP 

is able to achieve the following: 

•	 Detect an illegal entry into the United States between the POEs 

•	 Identify and classify the threat level associated with that illegal entry 

•	 Respond to the area of the illegal entry 

•	 Bring the situation to a law enforcement resolution. 

These four elements must be accomplished to establish effective control of the borders. Effective control 

is achieved through the proper mix of technology, personnel, infrastructure (to include pedestrian and 

CBP Border Patrol agent canvasses a remote area of the 

U.S. border. 

8 U.S. Customs and Border Protection • Performance and Accountability Report 
Overview of CBP

Management’s Discussion and Analysis 9

vehicle fencing), checkpoint operations, and rapid response capabilities that will allow us to confront illegal 

cross-border activity. The appropriate mix of these components will vary depending on the challenges of 

the focus area and a dynamic border environment.

Focused Border Security Enforcement Initiatives

The appropriate mix for deployment of Border Patrol resources is determined through the OBP’s Operational Requirements Budget Based Program (ORBBP). ORBBP is a rigorous and comprehensive methodology that uses a risk-based approach to determine resource requirements, deployments, and operational 

tactics in a dynamic operational environment. ORBBP allows field commanders to examine and assess all 

factors, current and future, internal and external, affecting border security and ensure the engagement of 

the appropriate resources and tactics against current and projected threats and vulnerabilities. Using this 

methodology, OBP met or exceeded all of its performance targets for Miles of Effective Control for prior 

and current fiscal years. 

Through the deployment of the right mix of new resources and enforcement operations supported by intelligence activities, CBP increased the FY 2007 miles of border under effective control from 599 miles to 

757 miles at the end of FY 2008.

Intelligence Driven Operations 

Border Intelligence Centers

The mission of Border Intelligence Centers (BICs) is to prevent terrorists and terrorist weapons, smugglers 

and their contraband, and illegal aliens from entering the United States through real-time collection, analysis and dissemination of tactical intelligence. Originally developed as the Command and Control Intelligence Coordination Center in the San Diego Sector, BICs represent a significant enhancement to CBP’s 

ability to rapidly collect, analyze, and disseminate and share intelligence information. 

The BICs collect and analyze information through the use of databases, operational statistics, other 

agency intelligence reports and interviews with apprehended illegal aliens and smugglers, as well as 

through the use of geospatial decision support tools. The products produced by the BICs support the 

implementation of coordinated border enforcement operations which result in more effective and efficient 

deployment of resources to address evolving threats and vulnerabilities. Actionable intelligence is forwarded to decision makers at all levels within CBP, and is shared with DHS components and other law 

enforcement partners. These efforts support CBP’s commitment to become a fully integrated intelligencedriven organization.

Integrated Border Enforcement Teams

The Integrated Border Enforcement Teams (IBETs) operate as intelligence driven enforcement teams comprised of U.S and Canadian federal, state, provincial, and local law enforcement personnel. The IBETs incorporate an integrated mobile response capability (air, land, marine) to provide participating law enforcement 

agencies a force multiplier in order to maximize border enforcement efforts in support of CBPs National 

Strategy. IBET consists of five core agencies with law enforcement responsibilities along the international 

boundary that share information, intelligence and resources to maximize border enforcement efficiency and 
Overview of CBP

10 U.S. Customs and Border Protection • Performance and Accountability Report

effectiveness. The core agencies include CBP OBP, Immigration and Customs Enforcement (ICE), U.S. Coast 

Guard (USCG), the Royal Canadian Mounted Police (RCMP) and Canada Border Services Agency. 

Since its inception, IBET has enhanced border integrity and security on both sides of the border by identifying, investigating, and interdicting persons and criminal organizations that pose a threat to the national 

security of both Canada and the United States. There are 24 IBETs in 15 IBET Regions. Each of these 

IBETs actively share information and work bi-national joint enforcement operations aimed at securing the 

integrity of the United States-Canada border.

Threat-Based Surge Operations

OBP has continued to implement and fully utilize surge operations to maintain or gain operational control 

of the border through improved enforcement. The Border Patrol’s strategy for implementing surge operations across the southwest border is based on threats, risks, vulnerabilities and the resources of our 

partner agencies. These operations increase the probability of apprehending terrorists and the weapons 

they attempt to illegally move across the border from entering the United States between the POEs. These 

operations also help to reduce crime in border communities. Surge operations are implemented to proactively address intelligence, seasonal migration trends, and smuggling trends. 

Operation Arizona Denial

Operation Arizona (AZ) Denial commenced on March 9, 2008 and operated through the end of FY 2008. 

Operation AZ Denial was designed to provide incremental levels of deterrence to prioritized areas of the 

border within the Tucson Sector. The purpose of the operation was to augment the Tucson Sector in its 

continued expansion of increased levels of operational control and to support the antiterrorism mission. 

As expansion is achieved, each prioritized area serves as a base to further expand operational control. As 

priorities advance, resources, such as SBInet, tactical infrastructure enhancements, and Border Patrol 

agent enhancements, will be put in place to sustain achieved gains. Operation AZ Denial uses the following 

multi faceted enforcement strategies to gain operational control of prioritized areas of the border:

• Break the Smuggling Cycle: Separates illegal aliens granted voluntary return from the smuggling 

organizations waiting for them upon their return. These programs include the AZ Denial Prosecutions 

Initiative (ADPI), Alien Transfer and Exit Program (ATEP), and Interior Repatriation Program.

• Operational Coordination: Creates partnerships with law enforcement agencies and other stakeholders 

to coordinate enforcement efforts in support of sector operations.

• Intelligence Fusion: Brings CBP and partner agency intelligence personnel together in a single center in 

which information can be fused, analyzed, and used to create tactical and operational intelligencedriven operations.

• Focus Enhanced Enforcement Operations: Rather than being spread throughout the Sector, resource 

enhancements are focused in support of operations in a priority area. Each individual enforcement 

assignment, operation, and initiative is used to address one or more of six prioritized border areas of 

focus.
Overview of CBP

Management’s Discussion and Analysis 11

Operation AZ Denial 2008 provides the roadmap that establishes station and Sector priorities for operational execution.

Operation Streamline

Operation Streamline is an ongoing, progressive enforcement effort that combines intensive prosecution 

with expeditious removal. The effort is a collaboration between personnel and resources from DHS, to 

include CBP’s OBP and Office of the Chief Counsel, and, ICE’s Office of Detention and Removal; the 

Department of Justice (DOJ), to include the Executive Office for Immigration Review, the U.S. Marshals 

Service, and the U.S. Federal Courts. Based on threat levels and illegal entrant activity assessments in 

the border areas, the OBP focuses its resources on designated zones to ensure the probability of apprehension, detention, criminal prosecution, incarceration, and the ultimate removal of illegal entrants from 

the United States. All aliens in violation of law that are apprehended within the designated zones are 

charged and criminally prosecuted for violation of 8 U.S.C. 1325 (illegal entry), with a potential sentence 

of up to 180 days. The average sentence ranged from 15 to 90 days for illegal entrant aliens with no prior 

history.

Operation Streamline began on December 6, 2005, in Eagle Pass, TX, along approximately 5 miles of 

border within the Del Rio Sector. By the end of June 2006, Del Rio Sector expanded the operation to cover 

its entire area of operations. Since its inception, the operation has had a dramatic affect on reducing 

apprehensions within the sector, particularly “other than Mexican” (OTM) apprehensions which are down 

12 percent in FY 2008 as compared to FY 2007. More significantly, FY 2008 OTM apprehensions within 

the Del Rio sector are 52 percent less when compared to FY 2006. 

On December 12, 2006, a Streamline-like operation began in Yuma Sector, along 4 miles of border which 

was expanded on June 3, 2007, to its entire southern border with Sonora, Mexico for a total of 93 miles. 

Since inception in the Yuma Sector, the majority of the criminal complaints filed in the Yuma Sector were 

prosecuted. Border violence has decreased dramatically with a 56 percent reduction in the number of 

assaults against Border Patrol agents.

On October 31, 2007, Streamline was expanded into 60 miles of the Laredo Sector. The Sector has seen 

apprehensions decline 23 percent as compared to FY 2007. The Rio Grande Valley Sector also has 

adopted the Streamline program philosophy to include 4 miles of its operations in FY 2008 with plans to 

expand its Streamline program.

Caribbean Border Interagency Group 

The Caribbean Border Interagency Group (CBIG) was formed in July 2006 as a collaborative effort to focus 

and integrate DHS and DOJ assets and combat the illegal flow of Cuban migrants to Puerto Rico from the 

Dominican Republic. Members include the USCG; CBP Air and Marine (A&M), Office of Field Operations 

(OFO) and OBP; ICE and the U.S. Attorney’s Office, District of Puerto Rico. CBIG has expanded its joint 

operations to eastern Puerto Rico and the U.S. Virgin Islands. With this expansion, CBIG has become an 

all threats partnership protecting the borders of the U.S. Territories in the Caribbean Basin. 

This formal integration unified, at no cost, former independent and disparate operations creating a COP for 

the field commanders. Daily, available resources and tentative coordinated response plans are discussed 

between the CBIG operational planners. Through these briefings, duplication of effort between federal 
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12 U.S. Customs and Border Protection • Performance and Accountability Report

agencies has been eliminated, and integration of operations has been optimized. Since its inception in 

2006, CBIG has had numerous successes that include a 14 percent increase in operational control, a 593 

percent increase of criminal prosecutions, a 65 percent decrease in overall migrant flow through the Mona 

Passage, a small island 42 miles west of Puerto Rico, and USCG and CBP A&M interdictions of migrant 

vessels have decreased by 55 percent.

The CBIG operates by using employed standard operational procedures vetted by all members while following the fundamental pillars of operational integration, intelligence fusion, prosecution protocols, and joint 

training.

Expedited Removal Program

In August 2006, DHS announced the end of its practice of “catch and release”. Before this, some aliens, 

usually OTMs, were released after apprehension due to the lack of bed space. Upon release, they agreed 

to appear at an immigration court for a hearing at a specified time and date in the future. Often the illegal 

aliens would not appear for their hearings and therefore became part of the growing illegal alien population 

in the United States. This was the so-called catch and release practice. As releases increased, the rate of 

illegal entry attempts also increased in certain geographical areas, especially among illegal aliens from 

Brazil and Honduras. Migration patterns shifted among the sectors that had higher release rates.

A key element of CBP’s ongoing efforts to deter illegal entry is the implementation and expansion of the 

Expedited Removal (ER) program to all Border Patrol sectors. ER is a removal process that requires mandatory detention of select classes of illegal aliens who can be removed from the United States without an 

immigration hearing. The program was expanded to include illegal aliens apprehended by Border Patrol on 

the southwest border and later extended to include apprehensions on the northern border. This includes 

illegal aliens who are present in the United States without having been admitted or paroled following 

inspection by a CBP officer at a designated POE and within 100 miles of the U.S. border, including those 

who are unable to establish their physical presence in the United States for the two week period before 

the date of encounter. 

In the more than 2 years since the announcement of the end of catch and release, the ER program has 

become a routine way of doing business. As of September 30, 2008, 100 percent of aliens apprehended 

along the southwest and northern borders who are subject to detention pending removal and are otherwise 

ineligible for release from custody under U.S. immigration law are now being detained for removal. In FY 

2008, the Border Patrol apprehended 51,970 illegal OTM aliens at the southwest border and 3,681 OTMs 

along the Northern border. 

International Liaison Unit 

The mission of the International Liaison Unit (ILU) is to create and maintain positive working relationships 

and to foster alliances with foreign counterparts to increase border security. The alliances established by 

the ILU maintain open communications and mutual respect with foreign and domestic law enforcement 

counterparts. Previously named the Mexican Liaison Unit (MLU) that started in the El Centro Sector, the 

MLU was reorganized in FY 2008 as the ILU to standardize national policies and procedures for international liaison. Today, the ILU is operational in all Southwest Border Patrol sectors and has dedicated manpower resources of approximately 60 agents, with a coordinator in Washington, DC, and one coordinator 
Overview of CBP

Management’s Discussion and Analysis 13

in each of the sectors participating in the program. Their successes were a direct result of the relationships formed with Mexican authorities in Federal, State, and local law enforcement having the common 

goal of border safety and security. 

The ILU strategic goals are as follows:

• Establish, develop, and maintain effective relationships of trust and confidence with individuals 

representing their foreign government agencies

• Identify and develop common law enforcement objectives with foreign governments to combat border 

crime

• Cultivate and reinforce commitment with foreign and domestic law enforcement communities

• Develop and maintain information sharing with foreign and domestic law enforcement agencies

Agents serving under the ILU focus and engage in activities that complement and support current program 

operations as well as agency and department enforcement strategies. 

The ILU’s established partnerships have paved the way for programs like the Border Violence Protocols 

program, formed in an effort to reduce and provide a response to increased violence in the immediate 

border area along the Southwest border, and the Operation Against Smugglers Initiative on Safety and 

Security (OASISS). OASISS was a product of the U.S.-Mexican agreement to establish a bilateral, standardized prosecution program. The OASISS program was developed to address the increasing amount of alien 

smugglers across the southwest border. The program allows for alien smugglers apprehended in the 

United States to be prosecuted by the Government of Mexico. This program has been effective in areas 

along the southwest border that are affected by guidelines that make it difficult to prosecute certain alien 

smuggling cases. In FY 2008, 414 OASISS cases were generated, with 351 cases being accepted by the 

Government of Mexico. 

Forward Operating Bases 

Use of Forward Operating Bases (FOBs) began in the Tucson Sector to address remote crossing points that 

historically have been difficult for agents to patrol because of the vast distances and time involved to 

access these areas. FOBs have proven to be beneficial to the detection and deterrence of illegal entries 

in the areas in which they have been deployed and are now utilized in the Yuma and Del Rio Sectors.

The use of FOBs directly supports the Border Patrol’s mission of gaining, maintaining, and expanding 

operational control of our nation’s borders. As the Border Patrol continues to gain control of the border, 

illegal migration activities and smuggler tactics shift in an attempt to identify and exploit vulnerabilities in 

border security measures, particularly in the more remote areas of the U.S. border. Strategically placed 

FOBs provide a cost-effective, secure staging facility that allows agents to be forward deployed in proximity 

to the border, thus improving our capability to rapidly respond to and counter these shifts in illicit cross 

border traffic. 

Border Patrol Checkpoint Operations

The Border Patrol currently operates a combination of 34 permanent and 94 tactical traffic checkpoints 

nationwide as part of a three-tiered, defense-in-depth strategy to secure our Nation’s border between the 

POEs. This strategy involves the use of line-watch operations on the border, roving patrol operations near 
Overview of CBP

14 U.S. Customs and Border Protection • Performance and Accountability Report

the border, and traffic checkpoints away from the border. As the third layer in the OBP defense-in-depth 

strategy, traffic checkpoints have proven to be a critical component in the support of line-watch and roving 

patrol operations. Border Patrol traffic checkpoint operations play a significant strategic and tactical role 

in the support of the National Border Patrol Strategy beyond the immediate border area. The primary targets of an effective Border Patrol traffic checkpoint operation are immigration violators with an emphasis 

on terrorists and terrorist weapons, criminals, and smugglers of humans and narcotics who have successfully evaded detection at or between the POEs.

Traffic checkpoints are generally located within 100 miles of the border. Agents at traffic checkpoints are 

tasked with detecting and arresting the illegal aliens and contraband within vehicles or conveyances. 

Smugglers often resort to main arterial highways as an avenue to further the illegal entry of their smuggling 

operations into the interior of the United States and away from the immediate border area. As line-watch 

and roving patrol operations are conducted, traffic checkpoints seek to close off the routes for those illegal 

activities which if left unchecked, would pose a significant threat to national security. While inspecting 

persons and vehicles for immigration purposes, the OBP employs specialized resources that combat terrorism and drug-smuggling activities. The use of highly trained Border Patrol Agents, drug-sniffing dogs, 

radiation detection equipment, and Vehicle and Cargo Inspection Systems (VACIS), a nonintrusive inspection device, provides not only opportunities to deter illegal alien migration and drug smuggling, but also to 

stop other forms of potentially dangerous cargo from entering the interior of the United States.

The InterimInterstate19 (I-19) checkpoint is an effective example of the application of the checkpoint 

defense-in-depth strategy. I-19 is the major route of egress from the Nogales, Arizona area and, as a 

result, the majority of illegal traffic that enters through this corridor funnels into the I-19 checkpoint area 

providing the OBP an opportunity to identify and apprehend illegal aliens and smugglers as they attempt 

to transit through or circumvent the checkpoint. 

During FY 2008, the following border enforcement successes were attributed to Border Patrol traffic 

checkpoint operations nationwide:

• 17,007 individuals arrested

• 2,974 cases referred for prosecution

• 3,539 narcotic seizure events accounting for approximately 34 percent of the total Border Patrol 

narcotic seizures

Cooperative Enforcement Efforts – Operation Jumpstart 

From June 15, 2006 to July 15, 2008, the Border Patrol conducted a very successful joint effort called 

Operation Jumpstart (OJS), a joint effort between CBP and the Department of Defense (DOD) to deploy 

National Guard troops on the southwest border. The National Guard troops performed non law-enforcement surveillance and support operations which provided a “bridge” in personnel resources as CBP continues to conduct an extensive recruiting campaign to hire 6,000 additional Border Patrol agents by the 

end of calendar year 2008. As a result of coordination and cooperation between the OBP and the National 

Guard Bureau, OJS achieved its overall objective of enhancing border security. OJS stands out as an 

example of what can be accomplished through a cooperative and coordinated effort between law enforcement and military forces to protect our nation’s borders. 
Overview of CBP

Management’s Discussion and Analysis 15

The integration of National Guard troops into the border security mission provided valuable mission support enhancements that included entry identification teams; air assets providing aviation support; 

improvement of OBP’s vehicle fleet readiness rate; 

and support in building additional tactical border 

infrastructure and road maintenance and repair.

CBP Air and Marine 

CBP Air and Marine (A&M) secures the borders 

against terrorists, acts of terrorism, drug smuggling, 

and other illegal activity by operating air and marine 

branches at strategic locations along the borders. 

Multimission aircraft with advanced sensors and 

communication equipment provide powerful interdiction and mobility capabilities directly in support of detecting, identifying, and interdicting suspect conveyances, and apprehending suspect terrorists and smugglers. CBP A&M maximizes the capabilities of air 

and marine assets through a cohesive joint air operations model for centralized command and control and 

a responsive and integrated control system for decentralized execution.

CBP A&M works in partnership with numerous stakeholders while performing its missions throughout the 

continental United States and the Western Hemisphere. This includes domestic operations at the borders; 

source, transit, and arrival zone operations; interior law enforcement support; and support to other agencies. Truly crosscutting within DHS and the Federal Government as a whole, the unique capabilities of CBP 

A&M serve as both a standalone entity and as a force multiplier. In fulfilling the priority mission of CBP to 

protect the borders, our geographic disposition has shifted from a concentration on the southern border 

to include all of our nation’s borders. 

Container Security Initiative 

Maritime containerized shipping is a critical component of global trade because most of the world’s manufactured goods are transported in maritime cargo containers. In the United States, almost half of incoming 

trade (by value) arrives by containers onboard ships. More than 11 million cargo containers arrive on ships 

and are off-loaded at U.S. seaports each year.

Through the Container Security Initiative (CSI), sea cargo containers that pose a risk for terrorism are identified and examined at foreign ports before they are shipped to the United States. CBP receives the bill of lading 

and manifest data on sea containers 24 hours before the containers are loaded on vessels destined for the 

United States. Through partnerships with foreign governments, CSI deploys teams of CBP officials to work 

with their host nation counterparts to screen containers that pose a terrorism risk. CSI extends the U.S. zone 

of security outward so that America’s borders are the last line of defense, not the first. 

CSI is a reciprocal program that offers participating countries the opportunity to send their customs officers to major U.S. ports of entry (POEs) to target ocean-going containerized cargo being exported to their 

countries. Likewise, CBP shares information on a bilateral basis with its CSI partners.

CBP A&M on patrol along the U.S. coastal border.
Overview of CBP

16 U.S. Customs and Border Protection • Performance and Accountability Report

CSI consists of three core elements:

• Using intelligence and automated advance targeting information to identify and target containers that 

pose a risk for terrorism

• Prescreening those containers that pose a risk at the port of departure before they arrive at U.S. 

ports

• Using state-of-the-art detection technology to scan containers that pose a risk

In FY 2008 CBP officers conducted operations in 58 CSI ports overseas. These CSI ports account for 

approximately 86 percent of cargo containers destined for the United States. During the year, CSI continued to transition CSI Temporary Duty (TDY) personnel to permanent status and place resources at the 

National Targeting Center – Cargo to reduce the number of CBP officers deployed. CBP’s goal by the end 

of FY 2009 is for CSI to maintain operations in these 58 ports and cover approximately 86 percent of the 

sea containers coming to the United States.

As of September 30, 2008, 35 foreign administrations have joined or have committed to join the CSI program. Strong support from countries in Europe, Asia, the Middle East, Africa, North and South America, 

and the Caribbean ensures that CSI will continue to receive cooperation from foreign customs administrations in those areas.

Customs-Trade Partnership Against Terrorism 

Customs–Trade Partnership Against Terrorism (C-TPAT) and its focus on strengthening supply chain security is an important layer in CBP’s cargo enforcement strategy. C-TPAT asks its member partners to ensure 

the integrity of their security practices and communicate and verify the security guidelines of their business partners within the supply chain. 

C-TPAT requires trade community participants to document and validate their supply chain security procedures in relation to the program’s criteria. C-TPAT Supply Chain Security Specialists (SCSSs) and C-TPAT 

participants jointly conduct validations of the participants’ supply chain security procedures. The validation 

process is essential to verifying the company’s commitment to C-TPAT. 

In addition to conducting validations, C-TPAT’s cadre of SCSSs provide advice and guidance to trade community representatives on supply chain security issues, identify supply chain security vulnerabilities, and 

monitor company initiatives that address those vulnerabilities. Validations conducted by SCSSs determine 

the accuracy and effectiveness of companies’ security profiles as applied to their foreign and domestic 

supply chains. As of September 30, 2008, 7,631 companies have been validated by C-TPAT SCSS and 

1,725 companies have been revalidated. 

During calendar year 2007, C-TPAT established two new field offices located in Buffalo, NY, and Houston, 

TX, which are now fully operational. Additionally, C-TPAT initiated and concluded a third-party validation 

program in China in accordance with the Safety and Accountability for Every (SAFE) Port Act. 

NonIntrusive Inspection 

Using NonIntrusive Inspection (NII), CBP has developed a multilayered screening process to identify, target, and inspect high-risk shipments entering the U.S. The Automated Targeting System (ATS), a rulesbased computer system, is used to automatically review the electronic bill of lading and manifest data of 
Overview of CBP

Management’s Discussion and Analysis 17

more than 11 million containers before they arrive at U.S. POEs, allowing CBP to flag containers that are 

considered high risk. NII equipment is used to scan the contents of those containers identified as high risk 

or selected by CBP officers for further review.

CBP officers use large-scale NII equipment, such as gamma ray and X-ray imaging systems, to scan the 

contents of the entire containers. These units can scan the interior of a full-size, 40-foot container in less 

than 1 minute. Some of the currently deployed high-energy X-ray systems can penetrate more than a foot 

of steel. This equipment is effective at identifying a variety of illegal activity and contraband, including 

human smuggling, narcotics, weapons, and explosives. Large-scale NII equipment is deployed at nearly all 

U.S. land border crossings and seaports.

CBP uses radiation portal monitors (RPMs) to scan cargo containers for radioactive materials as they pass 

through vehicle-processing lanes at the land border ports, or as they are off-loaded from ships at the seaports. Officers also use personal radiation detectors to scan for signs of radioactive materials as they 

perform inspections on smaller vehicles and shipments. Special high-tech tools such as densitometers 

and fiber-optic scopes allow officers to peer inside suspicious containers. Finally, if necessary, containers 

are opened and unloaded for a more thorough carton-by-carton inspection by CBP Officers.

Canine Enforcement Teams

CBP has the largest and most diverse law enforcement canine program in the United States. CBP canine 

officers and border patrol agents use specially trained detector dogs to combat terrorist threats, identify 

explosive threats, and interdict concealed persons, currency, agriculture, narcotics, and other contraband 

at the POEs, at international mail facilities, and along the border between the POEs. CBP detector dogs 

also perform Border Patrol search, trauma, and rescue missions.

Canine teams are assigned to 79 POEs and 85 Border Patrol stations throughout the United States. To 

meet both new and growing threats, the CBP Canine Program has trained and deployed canine teams in 

an array of specialized detection capabilities. CBP has two canine enforcement training facilities, located 

in Front Royal, VA, and El Paso, TX. In FY 2008, 155 detector dog teams began training.

In FY 2008, the OBP Canine Program was responsible for 62 percent of nationwide Border Patrol Narcotic 

Seizures. To date, the OBP canine program has increased the number of certified canine teams to over 

600 and has deployed them in all 20 sectors of the Border Patrol. The program continues to expand the 

number of certified teams as well as training disciplines received by the canine teams to meet field operational requirements. Deployment of canines using all-terrain vehicles (ATVs), snowmobiles and horseback 

are being explored. In FY 2009, OBP will expand the number of cadaver, search and rescue, and track and 

trail canines to improve the Canine Program rapid response capabilities.

Advance Passenger Information System 

The Advance Passenger Information System (APIS) is the single-most critical element in our ability to identify dangerous individuals entering or departing the United States. This system receives biographical and 

travel document information on passengers arriving and departing by air, sea, and in some cases, the land 

environment (for commercial bus and rail operators). Queries look for matches with multiagency law 

enforcement alerts, immigrant visas, and historical databases before the passenger’s arrival in the United 

States or departure from the United States. CBP receives advance information on passengers and crew 
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18 U.S. Customs and Border Protection • Performance and Accountability Report

sufficient for basic law enforcement queries. In addition, CBP has issued the APIS Predeparture Final Rule 

requiring commercial carriers to provide APIS data in advance of a passenger boarding the intended aircraft or departing on a vessel. This rule allows CBP to check all travelers against government watch lists 

and provide a screening response to the carrier before a boarding pass can be issued to the traveler.

National Targeting Centers 

National Targeting Center–Passenger 

The National Targeting Center–Passenger’s (NTCP’s) mission is to provide tactical targeting and analytical 

research in support of all CBP antiterrorism efforts. NTCP develops tactical targets from raw intelligence 

to detect and prevent terrorists from entering the United States. NTCP provides support to the POEs with 

additional research to assist officers in performing passenger examinations by supplying relevant or law 

enforcement information. This support includes, but is not limited to the following: (1) the recommendation 

of admissibility for nonimmigrants with known ties to terrorism; (2) verification of terrorist-related visa revocation records and lost or stolen passports; (3) coordination with outside agencies for positive terrorist 

encounters and requests for information; (4) advance passenger research for Immigration Advisory Program (IAP) personnel working overseas to identify lookout record matches before boarding; and (5) providing assistance to the Centers for Disease Control and Prevention with public health risks relating to international travel. 

NTCP staff is composed of representatives from all CBP disciplines. This staff works closely with the onsite 

liaison staff from other organizations (including ICE, Federal Bureau of Investigation (FBI), Transportation 

Security Administration (TSA), Office of Intelligence, Federal Air Marshals, Department of State (DOS), and 

USCG to coordinate CBP’s response to information such as TSA “no-fly” matches, positive Terrorist Identities Datamart Environment (TIDE) matches, and wanted fugitives. The NTCP also has been instrumental in 

developing global partnerships to fight terrorism and is actively leading a Joint Targeting Initiative between 

CBP and our Canadian and United Kingdom (U.K.) counterparts. 

Additionally, NTCP is preparing for the launch of the new Electronic System for Travel Authorization (ESTA) 

for screening travelers from Visa Waiver Program (VWP) countries prior to traveling to the United States. 

NTCP is responsible for vetting all ESTA applicants with potential threats to national security and analyzing 

the application denials for ESTA.

National Targeting Center–Cargo 

The National Targeting Center–Cargo (NTCC) was established to support CBP cargo-related antiterrorism 

activities by proactively targeting and coordinating examinations of high-risk cargo in all modes of transportation and to provide high-quality research to the CSI, Secure Freight Initiative (SFI), domestic units, and 

other government agencies. NTCC employs a specialized permanent and TDY staff to provide 24/7 tactical 

and strategic cargo researches for all modes of transportation. The NTCC staff includes CBP officers, 

agriculture specialists, field analysis specialists, physical scientists, intelligence research specialists, and 

import specialists as well as personnel representing the Food and Drug Administration, the U.S. Department of Agriculture, and USCG.
Overview of CBP

Management’s Discussion and Analysis 19

The NTCC ascertains the nexus of identified terrorists to the cargo environment by identifying passengers 

entering the U.S. and looking for any tangible connectivity to cargo through in-depth research. The NTCC 

also creates Memoranda of Information Received documents and enters them into the Treasury Enforcement Communications System to provide relevant information to all CBP officers. In addition, the NTCC 

supports antiterrorism efforts via the utilization of ATS cargo targeting sweeps and conducts weapons of 

mass effect sweeps daily with subject matter experts analyzing the results. 

The NTCC supports the creation and refinement of new ATS rule sets and provides a sound foundation for 

the creation of Bio-Terrorism/Agro-Terrorism countermeasures. The NTCC coordinates with law enforcement agencies and the intelligence community to gather cargo targeting information, develops field expertise for domestic and overseas targeting units via a robust TDY program, and supports the International 

Fellowship Program, which is currently in a pilot program with officials from the Japanese Customs and 

Tariff Bureau.

Fraudulent Document Analysis Unit 

The mission of the Fraudulent Document Analysis Unit (FDAU) is to remove fraudulent travel documents 

from circulation and prevent the use of these documents by mala fide travelers attempting to enter the 

United States. FDAU program managers perform in-depth analysis of documents seized by CBP officers 

nationwide. These program managers also analyze intelligence from fraudulent documents seized overseas to uncover global patterns and trends. This information is shared within CBP and the DHS, and with 

other U.S. and foreign government agencies in the form of monthly intelligence bulletins. 

CBP purchased and distributed several Video Spectral Comparator (VSC) 5000 document examination workstations to POEs with the highest rates of adverse actions related to document fraud. The VSC 5000 is a 

comprehensive document examination instrument, created specifically to examine travel documents, especially passports. In conjunction, the FDAU has developed a training program on the use of this equipment for 

examining documents and creating intelligence bulletins and training materials. By the end of FY 2008, over 

129 fraud prevention officers have been designated nationwide to represent all POEs and CBP facilities. In 

addition to acting as subject matter experts (SMEs) for the VSC equipment, fraud prevention officers will 

work with the FDAU to disseminate timely tactical intelligence regarding fraudulent document use.

The FDAU is engaged in ongoing negotiations with Dutch law enforcement authorities regarding Edison TD, 

a global database used to verify travel and identity documents. The FDAU is the U.S. representative on the 

Edison TD steering committee. FDAU program managers have been trained on and are responsible for the 

input of numerous travel and identity documents into the Edison TD database. The FDAU is currently coordinating access to the online version of the database, which will be available for use by CBP officers at all 

POEs and facilities.

CBP has focused on providing in-depth and up-to-date fraudulent document detection training to its officers. The FDAU has worked with the CBP Academy and the Advanced Training Center to update their document training programs. Courses on identifying visa fraud were also added to the Virtual Learning Center. 

In addition, the FDAU provided training material and exemplars to other DHS entities such as TSA, and the 

Citizenship and Immigration Services (CIS). In coordination with upcoming issuances of state Enhanced 

Driver’s Licenses (EDLs), the FDAU will work with the states to provide document fraud training to Department of Motor Vehicle officials who will be issuing EDLs. 
 

 

 

 

 

 

 

 

 

 

 

 

 

Overview of CBP
 

The FDAU manages the CBP Carrier Liaison Program (CLP). The goal of the CLP is to reduce the number of 

inadmissible passengers traveling to the United States and the number of carrier fines and penalties 

through partnerships and compliance. Approximately 48 CBP officers currently are trained as CLP training 

officers. These CLP officers regularly conduct admissibility and document examination courses for carrier 

personnel. In FY 2008, CLP officers have provided training to 5,665 individuals on 122 missions in 29 

countries. 

The combination of more advanced training, better technology, increased information access, and expanded 

borders through cooperation with foreign governments and carriers has significantly strengthened CBP’s 

ability to detect and deter fraudulent document use. 

Immigration Advisory Program 

The Immigration Advisory Program (IAP) is a partnership with foreign governments and commercial airlines 

to identify and deny boarding to high-risk travelers using advanced targeting and passenger analysis information at foreign airports before boarding aircraft bound for the United States. IAP is located at nine 

locations in seven countries including Tokyo, London-Heathrow, Frankfurt, Seoul, Madrid, London-Gatwick, 

and Manchester. In addition, CBP is working to expand IAP to two additional sites. The goals of IAP are to 

protect air travel and improve national security. IAP has four major objectives: 

•	 Enhance border and air travel security by preventing terrorists and other high-risk passengers from 

boarding commercial aircraft destined for the United States 

•	 Disrupt alien smuggling and human trafficking air routes 

•	 Combat the proliferation of fraudulent travel documents used by terrorists and alien smuggling 

organizations 

• Prevent improperly documented passengers from traveling to the United States 

CBP deploys officers to key international hub airports to assist and train air carriers and host country 

authorities on how to screen and identify prospective passengers before they board flights to the United 

States. With this added security layer, CBP can respond to suspected overseas threats before flight departure and avoid delaying, canceling, or diverting flights destined to the United States. 

CBP measures IAP performance by tracking the number of IAP interceptions made and the associated cost 

savings. Air carriers realize savings by avoiding fines; CBP realizes savings by avoiding detention and 

removal costs. Since its inception in FY 2004, the program saved airlines $7.72 million in fines. It also 

saved the U.S. Government $7.2 million in avoided removal and processing costs. Finally, IAP has resulted 

in 4,778 no-board recommendations, 260 confirmed NTC targets, and 223 fraud cases referred to host 

government authorities and local law enforcement. 

CBP has identified the top 50 airports for possible expansion and will analyze the top 50 locations annually 

to ensure that IAP growth is properly directed. The Intelligence Reform and Terrorism Prevention Act of 

2004 requires CBP to identify 50 foreign airports for potential IAP expansion. CBP manages program 

growth and resource use by focusing on the highest-risk locations based on these 50 potential IAP locations. To continue expanding the program, CBP engages many governments simultaneously and will implement the program as opportunities emerge. 

20 U.S. Customs and Border Protection • Performance and Accountability Report 
Overview of CBP

Management’s Discussion and Analysis 21

CBP is currently in negotiations with several foreign governments regarding the expansion of IAP to their 

respective countries. Among others, these locations include Paris, Taiwan, and Hong Kong. Negotiations 

are also under way with governments in countries where IAP is currently deployed to expand IAP to additional airports in those countries. 

Admissibility Review Office 

CBP’s Admissibility Review Office (ARO) provides institutional knowledge and a consistent decision-making 

approach regarding the admissibility, inadmissibility, and exercise of discretion for inadmissible aliens 

under the Immigration and Nationality Act (INA). The ARO works extensively with DOS and other agencies 

to determine whether inadmissible aliens can legally travel as nonimmigrants with waivers. Each case 

requires an assessment of the risk of harm to society if CBP admits the alien, which the ARO balances 

with the alien’s reasons for wanting to travel. 

The ARO currently processes and adjudicates all waivers of inadmissibility that DOS consular officers recommend worldwide and decides all government non-immigrant waivers. It also processes and adjudicates 

all waiver applications submitted directly to CBP by individual international travelers.

Consolidated Trusted Traveler Program 

Several CBP trusted traveler programs have integrated the use of biometrics for the identification and validation of persons. The Consolidated Trusted Traveler Program (CTTP) is an umbrella of CBP’s Trusted 

Traveler Programs (NEXUS, the Secure Electronic Network for Travelers Rapid Inspection (SENTRI), the 

Free and Secure Trade program (FAST), and Global Entry) that uses a common automated system to register program enrollees and perform automated identification and validation. The goals of the program are 

to identify and expedite low-risk travelers, and to free CBP officers to increase security at the POEs by 

enabling them to concentrate on higher-risk travelers. 

NEXUS and SENTRI are land border management processes that provide expedited CBP processing for 

preapproved, low-risk travelers. In addition, NEXUS and Global Entry offer expedited CBP processing in 

selected Canadian preclearance and U.S. airports, respectively. Applicants must voluntarily undergo a 

thorough biographical background check against criminal, law enforcement, customs, immigration, and 

terrorist indexes. In addition, a personal interview with a CBP officer is required. Once an applicant is 

approved, they are issued a Radio Frequency Identification (RFID) card that will identify their record and 

status in the CBP database upon arrival at the U.S. POE. For SENTRI members only, an RFID transponder 

is also issued for the applicant’s vehicle. This allows users to have access to specific, dedicated primary 

lanes for processing into the United States. For NEXUS participants in the preclearance airports, the member’s iris is scanned, which allows users to have access to the self-service kiosks. 

The FAST commercial driver program is the result of the United States, Canada, and Mexico Border Partnership Action Plan (PAP). The FAST program provides expedited processing of participants’ qualifying 

merchandise in designated traffic lanes at select border sites. These designated FAST lanes allow FAST 

qualified shipments a nearly unencumbered approach up to and through the commercial facility.
 

 

 

 

 

 

 

 

 

 

 

 

 

Overview of CBP
 

In FY 2008, CBP began deployment of the U.S. Passenger Accelerated Service System (US PASS) trusted 

traveler program in the air environment. US PASS will use fingerprint-based vetting and validation for expedited clearance of members. 

Secure Freight Initiative 

Secure Freight Initiative (SFI) incorporates a threepronged approach to enhance supply chain security 

that includes the International Container Security 

(ICS) program, the development of a regulation to 

require additional data elements for improved highrisk targeting (known as Security Filing 10+2), and 

initiatives to identify and acquire technology 

enhancements to strengthen cargo scanning and 

cargo risk assessment capabilities. The Security Filing portion of SFI will be addressed in the “Looking 

Ahead” section. 

ICS uses an integrated scanning system, consisting 

of RPMs provided by the Department of Energy and 

NII imaging systems provided by CBP to scan containers as they move through foreign ports. Using optical 

character recognition technology, data from these systems are integrated and provided to CBP officers, 

who determine whether the container should be referred to the host nation for secondary examination 

before lading. For the CBP officers, SFI/ICS provides additional data points that are used in conjunction 

with advanced manifest data to assess the risk of each container coming to the United States. 

On October 12, 2007, CBP met the legislative requirement of the SAFE Port Act of 2006 to establish a pilot 

program in three foreign ports that couples NII and RPMs to scan all U.S.-bound containers laden in those 

ports for radioactive and nuclear material. The SFI’s ICS program is fully operational and is currently scanning all U.S. bound containers laden in: Port of Qasim (Pakistan), Puerto Cortes (Honduras), and Port of 

Southampton (UK). 

CBP has gone beyond the legislative mandate and is deploying SFI operations on a limited basis in three 

additional locations that will provide diverse environments with unique challenges, such as high volume 

and transshipment ports. These three additional SFI locations are as follows: 

•	 The Modern Terminal in Hong Kong, China (which became fully operational on January 2008) 

•	 The Port of Salalah, Oman (limited operational testing is scheduled to begin in December 2008) 

•	 The Gamman Terminal in Busan, the Republic of Korea (operational testing is ongoing for the RPM 

equipment and is expected to be fully operational by the end of November, 2008). 

On August 3, 2007, the President signed Public Law 110-53, the Implementing Recommendations of the 

9/11 Commission Act (9/11 Act), which requires 100 percent scanning of all U.S.-bound containers by July 

12, 2012. CBP will continue to work closely with the trade community, industry, and foreign partners to 

implement 100 percent scanning in a thoughtful, responsible and practical manner that integrates smoothly 

into the global trade supply chain with minimal if any disruption to the trade. 

CBP uses the mobile VACIS to inspect vehicle contents at 

the POEs. 

22 U.S. Customs and Border Protection • Performance and Accountability Report 
Overview of CBP

Management’s Discussion and Analysis 23

CBP has developed a strategic direction for the SFI program, focusing on identifying high-risk trade corridors where the implementation of SFI would mitigate the risk associated with the potential introduction of 

Weapons of Mass Effect (WME) into the United States by way of maritime containerized cargo. Future 

deployments of SFI at foreign seaports will focus on those trade corridors through which high-risk containerized cargo destined to the United States transits or originates. These deployments will provide additional 

data for risk targeting and strengthen the DHS layered, risk-based enforcement strategy in the maritime 

containerized cargo environment.

Western Hemisphere Travel Initiative 

The Intelligence Reform and Terrorism Prevention Act of 2004 requires DHS and DOS to develop and implement a plan to require all travelers (U.S. citizens and foreign nationals alike) to present a passport or other 

acceptable document that denotes identity and citizenship when entering the United States. Congress 

amended portions of the Act in 2006. The Western Hemisphere Travel Initiative (WHTI) is the joint DOS/

DHS plan to implement this 9/11 Commission recommendation and congressional mandate. The goal of 

WHTI is to strengthen border security and facilitate entry into the United States for citizens and legitimate 

international visitors.

WHTI was successfully implemented for air travel on January 23, 2007. Since then, compliance has been 

and continues to be extremely high (more than 99 percent). On January 31, 2008, CBP ended the practice 

of accepting oral declarations of citizenship alone for United States and Canadian citizens entering the 

U.S. across the land borders. In preparation for the implementation of WHTI at land and sea POEs on June 

1, 2009, travelers are now required to present acceptable documentation to support their citizenship 

claims. To date, compliance at the land border is more than 94 percent.

CBP collaborated with DOS to develop the passport card for U.S. citizens use at the land borders. This 

document will use advanced technology, including vicinity RFID technology, to facilitate the primary inspection process and will cost less than the standard U.S. passport book. Thus far, more than 422,000 passport cards have been issued. The DOS-issued Border Crossing Card (BCC) is modeled on the passport 

card and will have vicinity RFID capability. It will contain multiple layers of overt, covert, and forensic security features, making it as counterfeit and tamper resistant as the passport card. The vicinity RFID capability will provide for the same electronic verification of the document as the passport card, which is a significant security enhancement over physical features alone. 

RFID has been used successfully along U.S. land borders with Canada and Mexico since 1995. Through 

trusted traveler programs, such as NEXUS, SENTRI, and FAST, U.S. border officials are able to expedite 

legitimate cross-border travel and trade. Membership in these programs currently exceeds 511,000.

CBP has entered into an agreement with the State of Washington to produce enhanced driver’s licenses 

that would meet the requirements of WHTI for border crossing. Washington State has issued more than 

31,000 enhanced driver’s licenses (EDLs). British Columbia also issued a limited number of EDLs. New 

York began issuing EDLs in September 2008 and Vermont and Arizona have entered into agreements with 

CBP to begin issuing EDLs by the end of calendar year 2008. Discussions are underway with other states 

and Canadian provinces.

Integral to the successful implementation of WHTI is the deployment of vicinity RFID infrastructure to the 

POEs so that border officials can read these enhanced travel documents. Site surveys to identify construc-
 

 

 

 

 

 

 

 

 

 

 

 

Overview of CBP
 

tion requirements have been completed at the 38 highest-volume land border POEs. Construction has 

been completed at the Blaine and Nogales POEs and will be completed at the remaining ports by the end 

of November 2008. The actual installation of the integrated solution began in late summer 2008. 

CBP has initiated deployment of the new vehicle primary client software application to U.S. land border 

ports. This critical software quickly and effectively provides officers with vital information on border crossers. The training and deployment of the new software has begun and will be completed by the end of 

FY 2008. To support this new capability, CBP has increased its training efforts for CBP personnel at the 

POEs regarding the detection of fraudulent documents. 

Automated Commercial Environment 

Automated Commercial Environment (ACE), the modernized U.S. trade processing system, is designed to 

consolidate and automate cargo processing to significantly enhance border security and foster our Nation’s 

economic security through lawful international trade and travel. Among other capabilities, CBP personnel 

will have automated tools and better information to decide, before a shipment reaches U.S. borders, what 

cargo should be targeted because of the potential risk it poses, and what cargo should be expedited 

because it complies with U.S. laws. 

After September 11, 2001, it became evident that the Federal Government had to establish an interagency 

ability to ensure a central information clearinghouse with compatible databases of information on all 

aspects of border control. As a result, the scope of ACE was expanded to include all Federal agencies with 

missions tied to international trade and transportation, including related security, regulation, and analysis. 

The International Trade Data System (ITDS) will provide a secure, integrated, governmentwide system to 

meet the private and Federal requirements for the electronic collection and use of standard trade and 

transportation data by all Federal agencies. The decision was made to utilize the ITDS requirements, in 

delivering ACE functionality, to meet the needs of these agencies as well as CBP. The result is that ACE, 

using requirements from ITDS, will provide a “single window” for the electronic submission of all trade and 

transportation data. 

ACE supports the following major CBP business areas: release processing, entry processing, revenue collection, account relationships, legal and policy, enforcement, business intelligence, and risk. It is in direct 

alignment with the President’s Management Agenda (PMA). To maintain this alignment, ACE uses e-business technologies whenever possible and is governed by citizens needs. ACE also provides national 

account-based processing and periodic payment and monthly statement features that benefit both CBP 

and the trade community, as CBP moves away from transaction-by-transaction processing. 

U.S. Visitor and Immigrant Status Indicator Technology 

The U.S. Visitor and Immigrant Status Indicator Technology (US-VISIT) program launched in 2004 continues to be deployed at many of our land, sea, and air POEs. This system provides CBP officers at primary 

and secondary inspection stations with biometric identifiers such as fingerprints (using an inkless fingerprint scanner) and photographs (using a digital camera) to verify the identity of foreign nationals wishing 

to enter the United States. During FY 2008, CBP began deployment of 10-fingerprint scanners to primary 

POE. US-VISIT’s biometric information thwarts identity fraud by providing unalterable, unassailable identity 

information. It is an integral part of the entry-exit system that provides CBP with unique identity information 

to help determine whether someone has remained in the country longer than authorized. This system inter24 U.S. Customs and Border Protection • Performance and Accountability Report 
 

 

 

 

Overview of CBP
 

acts with existing criminal databases that identify people with criminal histories and those who may be 

linked to terrorist activities. 

World Customs Organization 

The World Customs Organization (WCO) unanimously adopted the SAFE Framework of Standards to Secure 

and Facilitate Global Trade (known as the “Framework”), to protect the global supply chain from the threat 

of terrorism and transnational crime while simultaneously facilitating legitimate trade. The WCO seeks to 

achieve the following: 

•	 Consolidate advance electronic cargo information requirements 

•	 Institute consistent risk management approaches to address security threats 

•	 Establish procedures so that the customs administration in the destination country of a shipment can 

request customs in the originating country to conduct an inspection on its behalf 

• Define benefits for businesses that meet supply chain security standards and best practices 

The WCO established a Data Model Project Team (WCO DMPT), consisting of members, observers, and the 

WCO Secretariat, to develop and maintain the WCO Data Model. The WCO Data Model is a major aspect 

of CBP’s global response to today’s challenges in managing supply chains. Version 3 of the WCO Data 

Model will include requirements for the single window domain, incorporate Other Government Agencies 

(OGA) data (agriculture, food safety, certain hazardous goods, maritime), increase the scope for transit 

and response messages, and consider the implications of the Extensible Markup Language (XML) schema. 

Implementation represents an extraordinary challenge for the customs administration of any country, particularly for one that may not have the resources or SMEs readily available to implement the practices 

identified in the Framework. 

Management’s Discussion and Analysis 25 
Budget by Program 

The charts below present a comparison of the fiscal year budgets by major program element for FY 2008 

and FY 2007. These charts are based on direct appropriations received of $8.1 billion in FY 2008 and 

$8.2 billion in FY 2007. Direct appropriations equal total entity appropriations of $7.9 billion during FY 

2008 and $6.7 billion during FY 2007 shown on the Consolidated Statement of Changes in Net Position, 

plus $1.5 billion and $1.5 billion in Merchandise Processing Fees transferred to and used for Salaries and 

Expenses during FY 2008 and FY 2007, respectively. 

FY 2008 Security

Between Ports 

ACE 

5% 

CSI 

1% 

Construction 

4% 

BSFIT 

14% Security at 

Ports of Entry 

27% 

C-TPAT/FAST 

1% 

NII 

1% 

of Entry 

41% 

Air & Marine 

Operations 

6% 

FY 2008

BSFIT

14%

CSI

1%

Security at 

Ports of Entry

27%

C-TPAT/FAST

1%

NII

1%

Security 

Between Ports

of Entry

41%

ACE

5%

Air & Marine

Operations

6%

Construction

4%

FY 2007

Other

3%

Border Security

Fencing, 

Infrastructure &

Technology

15%

Air & Marine

Operations

8%

ACE

6%

Security 

Between Ports

of Entry

36%

NII

3%

C-TPAT & 

FAST/NEXUS/

SENTRI

1%

Security at

Ports of Entry

26%

CSI

2%

 

 

Overview of CBP
 

26 U.S. Customs and Border Protection • Performance and Accountability Report 

FY 2007 Security 

Between Ports 

C-TPAT & NII of Entry 

ACE 

6% 

CSI 

2% 

8% 

Ports of Entry Border Security 

26% Fencing, 

Other 

3% 

Air & Marine 

Operations 

36% FAST/NEXUS/ 3%

SENTRI 

1% 

Security at 

Infrastructure & 

Technology 

15% 
Budget Resource Obligations 

The charts below present a comparison of the distribution of CBP budget resource obligations for FY 2008 

and FY 2007. These charts are based on current year entity obligations totaling $11.9 billion in FY 2008 

and $9.2 billion in FY 2007. These totals do not include non-entity obligations and obligations related to 

prior year appropriations totaling $2.7 billion during FY 2008 and $3.3 billion during FY 2007 included in 

the Consolidated Statement of Budgetary Resources obligations totals of $14.6 billion and $12.5 billion 

for FY 2008 and FY 2007, respectively. 

FY 2008 

Technology 

16% 

Facilities Other 

2% 1%

Operations & 

Maintenance 

6% 

Modernization 

4% 

Salaries & Expenses Salaries & Expenses 

Reimbursable Direct 

13% 58% 

FY 2007 

Border Security Fencing,
 

Infrastructure & 


Technology


Facilities 5% 

4% Other Operations & 1% Maintenance 

5% 

Modernization 

5% 

Salaries & Expenses

 Reimbursable Salaries & Expenses 

15% Direct 

65% 

FY 2007

Other

1%

Border Security Fencing,

Infrastructure & 

Technology

5% Facilities

4% Operations &

Maintenance

5% 

Modernization

5%

Salaries & Expenses

 Reimbursable

15%

Salaries & Expenses

Direct

65%

FY 2008

Other

1%

Technology

16% 

Facilities

2%

Operations & 

Maintenance

6%

Modernization

4%

Salaries & Expenses

 Reimbursable

13%

Salaries & Expenses

Direct

58%

Overview of CBP
 

Management’s Discussion and Analysis 27 
Overview of CBP

28 U.S. Customs and Border Protection • Performance and Accountability Report

Looking Ahead

CBP continues to expand and enhance mission effectiveness by its forward-looking approach to securing 

America’s borders and the vitality of our economy.

Security Filing (10+2)

The Security Filing (10+2) project, as mandated by Section 203 of the SAFE Port Act, requires DHS to 

develop regulations that ensure additional data elements for improved high-risk targeting, including appropriate security elements for entry data to be provided in advance of a vessel’s lading. 

This new requirement, known as the Importer Security Filing and Additional Carrier Requirements or simply 

10+2, will significantly increase the scope and accuracy of information gathered on the goods, conveyances, and entities involved in the shipment of cargo to the United States. When fully implemented, the 

importer will be responsible for supplying CBP with 10 trade data elements 24 hours before lading while 

the ocean carrier will be required to provide their vessel stow plans and container status messages.

On August 21, 2008, the 10+2 Final Rule was signed by DHS Secretary Michael Chertoff and formally 

submitted to the Office of Management and Budget (OMB) for review. Once OMB completes their review, 

the 10+2 Final Rule will be published in the Federal Register with a 60-day delayed effective date to allow 

the trade additional time to program and test their systems with CBP. Once the final rule goes into effect, 

CBP will implement a 1-year informed compliance program to allow an adequate amount of time for the 

filing community to adjust their operating systems and processes. 

Unmanned Aircraft System 

Beginning in November 2004, CBP conducted test 

programs using unmanned aircraft for surveillance 

missions along the U.S. Mexico border in Arizona. 

The test results were positive, and CBP initiated the 

Unmanned Aircraft System (UAS) in 2005. The UAS 

provides an efficient and reliable supplement to 

existing detection and intelligence gathering technologies. Unmanned aircraft have a significant 

advantage over manned aircraft, with the ability to 

fly for more than 30 hours without refueling. This 

technology has proven highly successful in supporting existing manned aircraft, maintaining current 

ground assets, and monitoring remote portions of 

the border that are often difficult to reach safely or that are unable to accommodate infrastructure devices. 

Since the start of operations in 2004, UASs have been instrumental in the apprehension of undocumented 

aliens, the seizure of drugs, and the recovery of stolen vehicles. UASs have proven effective in locating 

subjects during hours of darkness and in providing an unparalleled situational awareness and officer 

safety capability.

CBP uses UAS technology for intelligence gathering.
Overview of CBP

Management’s Discussion and Analysis 29

In March 2008, CBP A&M hosted a Joint Maritime UAS viewing at Tyndall Air Force Base (AFB), FL. The 

event was the culmination of more than a year’s work to deploy and demonstrate the integration of a variant of the Predator B UAS within CBP A&M and USCG maritime operations. The demonstration took place 

in the northern Gulf of Mexico and the Florida Straits and involved air and marine assets from CBP A&M 

and USCG. This Gulf Coast demonstration validated the usefulness of integrating a suite of sensors 

(radars, electro-optical, and automated identification system (AIS)) on a UAS and applying them in an 

operationally relevant environment. In July 2008 CBP A&M hosted a Joint Requirements summit to determine the required capabilities of sea search radar for the maritime variant.

UASs will continue to be used in securing the border of the United States by providing strategic intelligence, surveillance, and interdiction support. CBP was the first Federal law enforcement agency to fly 

unmanned aircraft on a sustained basis, outside of controlled airspace, within the United States. UAS 

operations will expand as additional systems are delivered to the southwest border, deployed for testing 

and evaluation to the northern border, and reoutfitted with maritime search radars for testing and evaluation in the southeast coastal area of responsibility. 

Marine Program Expansion

The FY 2008 consolidated appropriation provided CBP A&M funding to establish 11 additional marine 

sites consistent with the A&M Strategic Plan. Six of these sites are planned along the Great Lakes region, 

one in Maine and the remaining four in the central Caribbean approaches to the United States.

Electronic System for Travel Authorization 

The Electronic System for Travel Authorization (ESTA) will allow CBP to effectively address the new requirements imposed by the 9/11 Act. Section 711 of the 9/11 Act requires that DHS develop and implement a 

fully automated ESTA system to collect information from aliens wishing to travel by air or sea to the United 

States under the Visa Waiver Program (VWP). That information will be screened to determine whether the 

alien presents a security risk and is eligible to travel to the United States. 

In 2007, there were more than 20.9 million entries to the United States from the 27 VWP countries. Determining eligibility for VWP travel in advance of travel will reduce the number of instances in which a traveler who 

does not meet VWP criteria arrives in the United States and is subsequently denied admission. In such cases, 

the traveler and the carrier incur additional expense as immediate return to the country of origin is required. 

CBP will have an opportunity to screen travelers against lookout databases to identify potential threats to 

the security of the United States. Screening will be limited to the Terrorist Screening Database, TSA “no-fly” 

list, Visa Revocation, and Lost and Stolen Passports databases. Travelers determined to be inadmissible 

as a result of this screening may be denied approval via ESTA to travel to the United States without a visa, 

but they will be given the opportunity to go to the nearest U.S. Embassy or Consulate to apply for a visa.

On August 1, 2008, CBP implemented the ESTA web site in English in a limited capacity. On October 15, 

2008, CBP implemented the web-site in full capacity that includes multi-lingual capabilities for non-English speaking VWP travelers and continuous vetting. ESTA will become mandatory for all VWP travelers in 

January 2009.
Overview of CBP

30 U.S. Customs and Border Protection • Performance and Accountability Report

In addition to the ESTA web-based application, in FY 2009, CBP will acquire or develop the capability for 

the travel industry (travel agencies, and air and sea carriers) to create and submit ESTA applications on 

behalf of their customers. CBP will provide this capability with the expectation that the vast majority of VWP 

travelers will avail themselves of the ESTA application service offered by the travel industry.

Model Ports of Entry Program

In January 2006, the DOS and DHS Secretaries Rice and Chertoff announced the Rice-Chertoff Initiative 

(RCI). The RCI is a joint vision to enhance border security while streamlining security processes and facilitating travel for legitimate visitors. As part of RCI, the Model Ports of Entry program strives to create a 

more efficient international arrivals process to facilitate and promote travel to the United States while 

improving security. Program elements include queue management, assistance for foreign travelers once 

they are admitted, and instructional videos. 

The first two Model Ports were piloted at Dulles International Airport in Chantilly, VA, and George Bush 

Intercontinental Airport in Houston, TX, and became operational in April 2007. The 9/11 Act provides for 

the expansion of the Model Ports Program to the 20 U.S. international airports with the highest number of 

foreign visitors. In FY 2008 Congress appropriated $40 million and 200 additional CBP officers to the 

Model Ports program. 

CBP is developing an informational video that contains practical information about the entry process. The 

video will be played along with Walt Disney Parks and Resorts’ “Welcome: Portraits of America” video to 

greet visitors at Model Ports. CBP is revising its signage with pictograms and minimal wording to provide 

international travelers with information and guidance through the entry process. The new video and signage was completed in September 2008.

CBP, DHS, DOS, airlines, airports, and the travel industry continue to work together to analyze the entry 

process and improve customer service. Working groups are being formed at the 18 Model Ports expansion 

airports to analyze and set goals for wait times, and to formalize special queuing areas for diplomats and 

passengers who require special processing to ensure the most efficient use of facilities and available 

resources. Additional queuing alternatives will be examined and tested. CBP began collecting wait times 

from the 20 Model Ports in April 2008. Wait times for all of the Model Ports became available on the Wait 

Time page on CBP.gov in June 2008.

CBP designated Passenger Service Managers (PSM), the public’s point of contact for passenger service 

issues and complaints, at Model Ports locations in April 2008. A PSM Policy Directive was finalized and 

disseminated to the field. The PSMs attended their first training conference in June 2008.

The Global Entry Pilot, a benefit of Model Ports, allows for expedited CBP clearance of pre-approved lowrisk air travelers at Dulles, Houston, and New York’s JFK International Airport. DHS Secretary Chertoff 

announced the launch of Global Entry in Houston on June 6, 2008.

Enforcement Information Technology Advances

Remote Video Surveillance Systems. OBP deploys Remote Video Surveillance Systems (RVSS) along the 

southern and northern borders to provide accurate mechanisms for detecting and identifying unauthorized 

border crossings. OBP relies on advanced detection, identification, and information technology to allow 
Overview of CBP

Management’s Discussion and Analysis 31

agents to quickly, safely, and accurately observe and respond to unauthorized border crossings. These 

systems are deployed on diverse platforms and these platforms include, but are not limited to the following: Static Remote Video Systems that are located on towers, buildings, and in some areas, poles; Mobile 

Remote Video Systems (MRVS) that are located almost exclusively on scope trucks with the exception of 

the tripod types and the man portable systems; and, Trailer Remote Video Systems (TRVS) that are generally mounted on “Sky Watch” trailer systems. OBP is considering the benefits of standardizing the MRVS 

configuration to provide for a plug-and-play type system that can be easily moved from one platform to 

another.

Mobile Processing Center. An additional component in deploying cutting edge technology to the field is 

OBP’s Mobile Processing Center (MPC). The MPC is a 53-foot, reconfigured semitrailer that provides a 

mobile solution to mass migration, remote processing, and disaster-related incidents. The MPC, as currently configured, provides mobile solutions for processing and temporarily detaining illegal aliens. The 

MPC utilizes either satellite, land line (T-1), or Evolution-Data Optimized (EVDO) wireless connectivity to 

facilitate the processing of illegal aliens in remote locations. It may also be utilized as a support system 

to increase the assets of an existing station. There are also 11 Voice over Internet Protocol (VoIP) telephones provided that assist in communications. The Radio Interoperability System (RIOS) provides cuttingedge technology to facilitate communication between Federal, State, and local officials when the need 

arises. The MPC showed its worthiness in the field during the support of Operation Uniforce 08, which took 

place in Jackson, MS. The MPC is also a tested and capable command center. While on display at the 

2007 Border Patrol Chief’s Conference, held at the Federal Law Enforcement Training Center (FLETC) in 

Brunswick, Georgia the MPC was deployed to Americas, GA, for use by the U.S. Secret Service as a command and control center in support of President Bush’s visit to the area.

Progressive Program Evaluation and Program Performance Measure Development 

Determining the level of effective control over any given border area involves knowledge of the area of 

responsibility, defined analysis of operational data, available resources, and the experience and professional expertise of the Border Patrol’s senior field managers. The analysis of operational data is then 

supplemented with the analysis of local law enforcement activity, environmental, economic and other thirdparty indicators.

As the Border Patrol looks into the future with the SBInet solution, it is examining current and future performance indicators, metrics, and measures to build a common operating picture and interoperability with 

DHS components and external stakeholders. It will be necessary to continue to move the measure focus 

toward forecasting emerging trends and shifts in illegal traffic and activities to provide more descriptive 

performance measures that portray conditions, impacts and outcomes to border security. Current and 

forward thinking performance measure methodologies and standardized collection and reporting systems 

(i.e. Comparative Statistics (COMPSTAT)) will help identify operationally synergetic solutions to align with 

and complement the technological and infrastructure solutions of SBInet and measure Border Patrol’s successes in the border areas between the POEs.

The Border Patrol has implemented COMPSTAT; a system that supports the needs of Border Patrol field 

and headquarters personnel by providing enterprise-wide data in a flexible, robust, and user-friendly reporting tool. Comparative statistics have always been used throughout the Border Patrol and operations are 

continually adjusted based on the reporting of increased or decreased activity. COMPSTAT will assist in the 
Overview of CBP

32 U.S. Customs and Border Protection • Performance and Accountability Report

process of making operational adjustments by providing actual enforcement statistics to field commanders and headquarters staff in a usable format as well as in an on-demand fashion.

COMPSTAT can be accessed from the user’s desktop and provides statistical reports at the click of a button. The reports compile data from multiple systems used within the OBP, such as the Enforcement Case 

Tracking system (Enforce), the Border Security Evaluation Teams (BPETS), Intelligent Computer Assisted 

Detection system (ICAD), and others, and display the results in a usable and understandable format. During FY 2008, more than a dozen pre-formatted reports were created which currently are available in COMPSTAT. These reports allow users to enter a limited number of parameters and compile data for a specific 

sector or station as well as a specific date range. Comparisons can be viewed to see changes in activity 

levels for different time periods. Data generated by the COMPSTAT application will provide valuable operational and tactical information for field analysis. The Rio Grande Valley and Laredo sectors have been piloting COMPSTAT since October 2007. During FY 2008, several more sectors were brought online, including 

El Paso, Houlton, San Diego, Spokane, and Swanton. The Border Patrol intends to continue the expansion 

of COMPSTAT to all Border Patrol sectors and stations.

The Border Patrol is proactively looking internally at performance indicators in the area of workforce recruitment and retention. The Border Patrol is examining data collection and methodologies to measure employee 

satisfaction and retention for use in developing indicators that can guide efforts to ensure and maintain a 

productive and effective workforce.

Summary

CBP will continue to integrate state-of-the-art technologies and traditional security infrastructures at U.S. 

POEs and along our Nation’s borders and to work in collaboration and partnership with the trade community and foreign governments to secure the United States from terrorists and terrorist weapons while facilitating world commerce.
Overview of CBP

Management’s Discussion and Analysis 33

COMMISSIONER

________________

DEPUTY COMMISSIONER

INTERNAL AFFAIRS

POLICY & PLANNING

TRAINING &

DEVELOPMENT

PUBLIC AFFAIRS

INTERNATIONAL

AFFAIRS AND TRADE

RELATIONS

INFORMATION & 

TECHNOLOGY

CONGRESSIONAL

AFFAIRS

INTERNATIONAL

TRADE

U.S. CUSTOMS & BORDER PROTECTION

Chief of Staff

HUMAN RESOURCES

MANAGEMENT FINANCE

FIELD OPERATIONS

EQUAL EMPLOYMENT

OPPORTUNITY

Approved 03/01/2008

Executive Secretariat

BORDER PATROL

INTELLIGENCE &

OPERATIONS

COORDINATION

CHIEF COUNSEL

SECURE BORDER

INITIATIVE

AIR & MARINE

Organization
 

 

 

 

 

 

Overview of CBP
 

Headquarters 

Office of the Commissioner: W. Ralph Basham was sworn in by President George W. Bush on June 6, 2006, 

to serve as the second Commissioner of U.S. Customs and Border Protection (CBP), the agency of the U.S. 

Department of Homeland Security (DHS) responsible for managing, controlling, and securing our Nation’s 

borders. As Commissioner, Mr. Basham advances CBP’s priority mission of preventing terrorists and terrorist weapons from entering the United States while facilitating legitimate trade and travel. 

Office of the Deputy Commissioner: Jayson P. Ahern was appointed Deputy Commissioner, CBP, in August 

2007. As Deputy Commissioner, Mr. Ahern is responsible for providing leadership and executive-level direction to CBP’s day-to-day operations. This includes oversight of agency initiatives that facilitate the international movement of legitimate, low-risk goods and travelers while promoting effective border security. 

Office of the Chief of Staff (COS): Serves as the direct liaison to DHS for all agency issues. COS assists 

the Commissioner in formulating and implementing policies through coordination with other CBP office 

components, DHS, and other government agencies. COS provides advice and counsel to the Commissioner in defining priorities to accomplish CBP mission and goals. 

Office of Equal Opportunity (OEO): Ensures compliance with the civil rights statutes, regulations, and 

executive orders governing Federal employment without regard to race, color, religion, sex, age, national 

origin, sexual orientation, physical and mental disability, and/or reprisal. The OEO provides a framework 

for the formulation, implementation, and evaluation of CBP policies and programs. The OEO also formulates and implements policies and programs in the areas of diversity and cultural awareness, dispute resolution, equal employment opportunity (EEO) complaints processing, and EEO and civil liberties 

compliance. 

Office of the Executive Secretariat (OES): Coordinates agency decisions and tasks by serving as a liaison 

between the Office of the Commissioner and CBP program offices. OES ensures coordination and completion of congressional reporting, responds to congressional Questions for the Record (QFRs), and manages 

correspondence. OES develops, implements, and manages the business process for written communication to and from the CBP Office of the Commissioner and the DHS Office of the Secretary, strengthening 

CBP’s core management policy, and operational integration. 

Office of Policy and Planning (OPP): Advises the executive staff on policy development and implementation 

in the broad array of issues addressed by CBP, including national border security policy, immigration 

enforcement, cargo security and facilitation, agriculture protection, interagency coordination, and legislation. The office further coordinates with individual offices and programs inside and outside the agency to 

develop specific strategies and planning guidance that support the CBP’s mission. This includes managing 

the strategic planning process and performance measurement requirements related to the Government 

Performance and Results Act (GPRA), the Performance Assessment Rating Tool (PART), and the President’s Management Agenda (PMA). In addition to the policy and planning activities of the office, OPP 

serves as the central coordination point for congressional reporting and all matters under review or audit 

by the Government Accountability Office (GAO) and the DHS Office of the Inspector General (OIG). 

34 U.S. Customs and Border Protection • Performance and Accountability Report 
Overview of CBP

Management’s Discussion and Analysis 35

Component Organizations and Field Structure

CBP is organized into 15 separate offices, each of which reports directly to the Commissioner. The mission 

of each office is described briefly below:

Office of Intelligence and Operations Coordination (OIOC): Established on October 1, 2007, OIOC combines 

the previous Office of Anti-Terrorism and the Office of Intelligence along with targeting and analysis functions from the Office of Field Operations (OFO), the Office of Information and Technology (OIT), Office of 

International Trade (OT) and the Office of Border Patrol (OBP). OIOC is responsible for the entire intelligence cycle, including planning, collection, processing, production, and dissemination of all sources of 

information and intelligence in support of CBP’s mission. OIOC coordinates national incident response and 

intelligence driven special operations that require collaboration between CBP offices. OIOC is responsible 

for directly supporting the Commissioner and senior CBP leadership by obtaining, analyzing, and disseminating intelligence in a timely manner to help CBP carry out its primary mission of detecting, identifying, 

and preventing terrorists and terrorist weapons from entering the United States. OIOC directs and efficiently manages an integrated intelligence capability that ensures that frontline operators and senior leadership have the value-added intelligence required to drive operations and support policy. 

Office of International Trade (OT): Provides the unified strategic direction for trade policy and facilitation, 

program development, and enforcement response functions in CBP. Established in FY 2007, to consolidate 

trade policy and program development functions, OT directs national enforcement responses through 

effective targeting of goods crossing the border as well as strict, swift punitive actions against companies 

participating in predatory trade practices, including textile transshipment and intellectual property rights 

infringement. Through coordination with international partners and other U.S. Government agencies, OT 

directs CBP risk-based programs designed to detect and prevent the importation of contaminated agricultural products, goods that present health and safety risks, and products requiring protection from unfair 

trade practices. OT is an agency leader in promoting trade facilitation through partnership programs. OT 

streamlines the flow of legitimate shipments and fosters corporate self-governance to achieve compliance 

with trade laws, regulations, and international trade agreements. A risk-based audit program is used to 

respond to allegations of commercial fraud and to conduct corporate reviews of internal controls to ensure 

that importers comply with trade laws and regulations. Finally, OT provides the legal tools to promote facilitation and compliance with customs, trade, and border security requirements through the issuance of CBP 

regulations, binding rulings and decisions, informed compliance publications, and structured training and 

outreach on international trade laws and CBP regulations. 

Office of Secure Border Initiative (SBI): Is accountable for the development and oversight of the SBInet and 

transportation programs. Established in FY 2007, the SBI office provides CBP-wide coordination, analysis, 

and integration of SBI-related programs and activities. In addition, SBI serves as an integrator and a facilitator for border security programs and activities, particularly those that impact multiple CBP organizations 

or require strategic coordination and perspective. 
 

 

 

 

 

 

 

 

 

 

Overview of CBP
 

Office of CBP Air and Marine (A&M): Protects the American people and Nation’s critical infrastructure 

through the coordinated use of integrated air and marine forces to detect, interdict, and prevent acts of 

terrorism and the unlawful movement of people, illegal drugs, and other contraband toward or across the 

borders of the United States. CBP A&M’s core competencies include air and marine interdiction, air and 

marine law enforcement, and air and national border domain security. CBP A&M further supports DHS 

missions such as response and recovery to natural disasters and terrorism. 

Office of Border Patrol (OBP): Serves as the CBP law enforcement organization with the primary responsibility for preventing terrorists, weapons of terrorism, illegal aliens, drugs, and those who smuggle them 

from entering the United States between the POEs. The Border Patrol is organized into 20 sectors along 

the southwestern, northern, and coastal areas of the United States. 

Office of Chief Counsel (OCC): Serves as the chief legal officer of CBP and reports to the General Counsel 

of DHS. The Chief Counsel serves as the Ethics Officer for the organization and is the principal legal advisor to the Commissioner of CBP and its officers. The OCC provides legal advice to and legal representation 

of CBP officers in matters relating to the activities and functions of CBP. 

Office of Congressional Affairs (OCA): Advises CBP managers on legislative and congressional matters and 

assists members of Congress and their staffs in understanding current and proposed CBP programs. 

Office of Field Operations (OFO): Enforces customs, immigration, and agriculture laws and regulations at 

U.S. borders and has the primary responsibility for preventing terrorists and terrorist weapons from entering the United States at the POEs. OFO maintains programs at 20 field operation offices; 327 POEs, which 

include 15 preclearance stations in Canada, the Caribbean, and Ireland; and 58 CSI ports worldwide. A 

Director of Field Operations heads each field operations office. Port Directors oversee POEs in their operational areas, where virtually all conveyances, passengers, and goods legally enter and exit the United 

States. OFO oversees the enforcement of laws and regulations while ensuring the safe and efficient flow 

of goods and people through the POEs. 

Office of Finance (OF) and Chief Financial Officer (CFO): Oversees all financial operations, procurement, 

asset management, and budget activities within CBP. OF is responsible for administering $12 billion that 

is budgeted annually for law enforcement and trade operations and collecting more than $34 billion in 

custodial and entity revenue annually. This office is responsible for administering the broad range of financial management activities delineated under the CFO Act of 1990, including accounting, budgeting, procurement, asset management, financial systems, and financial management. 

Office of Human Resources Management (HRM): Provides human resources support by filling positions, 

offering employee services and benefits, processing personnel actions, improving business processes, 

and facilitating workforce effectiveness. HRM promotes and enables mission accomplishment through 

human capital planning and utilization, strategic leadership, labor–management relations, training, and 

employee safety. 

36 U.S. Customs and Border Protection • Performance and Accountability Report 
 

 

 

 

 

 

 

 

 

 

 

Overview of CBP
 

Office of Information and Technology (OIT): Provides CBP with information, services, and technology solutions to secure the border, prevent the entry of terrorists or terrorist weapons, and facilitate legitimate 

trade and travel. In addition, OIT operates a worldwide, round-the-clock secure, stable, and high-performance Information Technology (IT) infrastructure and supports tactical communications, scientific solutions, and forensic services. OIT implements and supports CBP’s IT, automation, and technology strategies. OIT personnel manage all computers and related resources, including all operational aspects of the 

Computer Security Program. OIT establishes requirements for computer interfaces between CBP and various trade groups and government agencies, and manages matters related to automated import processing and systems development. 

Office of International Affairs and Trade Relations (INATR): Facilitates and supports all international programs, activities, and foreign initiatives for CBP. Re-organized in FY 2007, INATR conducts outreach to and 

serves as a resource for the international trade community on a range of CBP policy issues. INATR works 

with international partners to implement programs and initiatives to combat international terrorism and to 

extend the Nation’s borders. INATR achieves these objectives by developing and maintaining collaborative 

relations with foreign governments, devising international strategies, advocating CBP positions in international forums, delivering international technical assistance and training, and supporting the negotiation of 

international agreements. 

Office of Internal Affairs (IA): Exercises oversight authority for all aspects of CBP operations, personnel, 

and facilities. IA is responsible for ensuring compliance with all bureauwide programs and policies relating 

to corruption, misconduct, or mismanagement; investigating misconduct by CBP employees; and executing 

the internal security, integrity, and management self-inspection programs. IA conducts preemployment 

polygraph testing on a strategic selection of applicants, in support of CBP law enforcement hiring. In addition, IA conducts personnel security investigations; educates employees concerning integrity responsibilities; evaluates physical security threats to CBP facilities and sensitive information; and inspects CBP 

operations and processes for managerial effectiveness and improvements. 

Office of Public Affairs (OPA): Communicates CBP’s mission and operations to the agency’s chief stakeholders, which include the American public, foreign nationals who conduct business in the United States, 

international trade entities, and travelers who cross U.S. borders. Tools used in the national and international public communication process include media outreach and public information campaigns conducted 

via media events, video, photography, and informational brochures. In addition, CBP maintains a public 

web site (www.cbp.gov) and a national customer service call center to address public questions and complaints. OPA also keeps the CBP workforce informed through the CBPnet Intranet site, the weekly e-mailed 

news compilation “Frontline News,” and mass e-mails. A bimonthly newsletter, “CBP Today,” is distributed 

to CBP personnel and other stakeholders nationwide. 

Office of Training and Development (OTD): Leads and directs CBP’s training programs. OTD ensures that 

all training efforts support the CBP mission and strategic goals, meet the needs of a diverse and geographically dispersed workforce, and contribute to measurable outcomes and results. OTD establishes 

standards for designing, developing, delivering, and evaluating training. The office directly executes career 

development programs; basic and advanced training to all occupations; and supervisory, management, 

and executive development programs. 

Management’s Discussion and Analysis 37 
38 U.S. Customs and Border Protection • Performance and Accountability Report 

Overview of CBP
 
Overview of CBP
 

Management’s Discussion and Analysis 39 
 

 

 

Performance Goals and Results
 

In FY 2008, CBP made significant progress toward achieving the long-term goals set forth in the Strategic 

Plan for FYs 2005–2010. Agency progress is described in this PAR. The information is set forth in the 

context of the Government Performance and Results Act of 1993, which requires Federal agencies to 

develop and implement processes to plan for and measure mission performance. 

Performance Management 

The CBP comprehensive strategic planning process maintains its focus on improving program efficiency 

and effectiveness, maintaining a results-oriented focus, clearly describing the goals and objectives of programs, and developing a means to measure progress. CBP is continually refining and improving its performance measures and the data integrity of these measures. The CBP Strategic Plan is based on the priorities that were established and articulated by the Secretary of Homeland Security and the Commissioner 

of CBP. The Strategic Plan is prepared with input from senior managers to reflect these priorities and supports the CBP budget submission. The development process has considered the DHS Strategic Plan, the 

National Strategy for Homeland Security, the National Money Laundering Strategy, the National Drug Control Strategy, Presidential Directives on National Security, and Executive Orders. In addition, the PMA, 

budget justification materials, internal strategic planning initiatives, and the DHS Future Year Homeland 

Security Program (FYHSP), used to formulate, analyze, and report the DHS planning and budgeting process, were considered. Finally, evaluations conducted through the GAO, the DHS OIG, and the PART processes have also been assessed. 

The CBP strategic planning framework is organized as follows: 

• Strategic Goal: A high-level statement of what needs to be achieved 

• Objectives: Specific statements of what is to be accomplished within the goal 

• Strategies: Specific actions that are to be taken to reach an objective 

• Performance Measures: What will be accomplished by carrying out the strategies 

Each strategic goal is presented using the CBP strategic planning framework and has been determined on 

the basis of future assumptions, previous accomplishments, and the need to integrate diverse CBP responsibilities effectively. The goals are further linked to specific objectives and strategies, as well as performance measures that are used to evaluate progress toward achieving the goals. This strategic planning 

process has resulted in the formulation of six strategic goals and associated objectives and 

measurements. 

FY 2008 Performance by Strategic Goal 

This section presents a discussion of highlighted FY 2008 performance objectives and related key performance measures for each of CBP’s strategic goals. Additional performance measures and results can be 

found in the “Performance” section under “Performance Summary,” beginning on page 62. 

40 U.S. Customs and Border Protection • Performance and Accountability Report 
 

 

 

 

 

 

Performance Goals and Results
 

Strategic Goal 1. Preventing Terrorism at the Ports of Entry 

To achieve this strategic goal, CBP implements the strategic plans for preventing terrorists and terrorist 

weapons from entering the United States. Through improved targeting and intelligence, CBP targets and 

interdicts terrorists and their weapons at the POEs. Through various programs, CBP screens and examines 

passengers, cargo, and conveyances posing a potentially high risk for terrorism before departing foreign 

ports for the United States. To protect legitimate travel, trade, and the economy, CBP extends its zone of 

security beyond the physical borders of the United States by stationing its offices in foreign countries and 

by partnering with international entities and the trade community. 

Performance Objective—Improve identification and targeting of potential terrorists and terrorist weapons 

through risk management and automated advance and enhanced information. 

To improve targeting of cargo and passengers that pose a potential risk for terrorism, CBP will continue to 

use advance passenger and cargo information, as well as commercial and law enforcement databases, to 

prescreen, target, and identify potential terrorists and terrorist shipments and any related activity. To 

improve targeting and analysis, CBP will integrate existing databases and enhance its rules-based targeting system. 

Performance Measure—Number of foreign cargo examinations resolved in cooperation with the Container 

Security Initiative (CSI). 

Description: The number of container examinations processed or mitigated by foreign customs 

officials that were identified by CBP CSI as higher risk and accepted as meeting CBP 

examination standards and requirements. This measure provides an indicator of the 

benefit of locating CBP officers at foreign locations that are cooperating with CBP 

under CSI. 

Key Highlights

Fiscal Year: 

FY 2004 

Actual 

FY 2005

 Actual 

FY 2006

 Actual 

FY 2007 

Actual 

FY 2008 

Target

 FY 2008 

Results 

Target/Actual Indicator: 2,400 25,222 30,332 18,438 19,000 13,009 

Explanation of FY 2008 

Results: 

Target Not Met—The increased collaboration of foreign and co-located CSI customs 

personnel at foreign ports reflected by this proxy measure supports the goal of 

targeting, screening, and apprehending high-risk international cargo and travelers to 

prevent terrorist attacks, while providing processes to facilitate the flow of safe and 

legitimate trade and travel. CSI teams’ container targeting effectiveness improved in 

FY 2008 such that the number of containers that required assistance by host nation 

intelligence to mitigate high-risk shipments decreased significantly. 

Recommended Action: 

The reduction observed for this measure in FY 2008 was the result of further 

efficiency improvements to the Automated Targeting System (ATS) targeting 

algorithms and increased use of non-intrusive inspection (NII) or physical 

examinations to examine high-risk shipments. Because of these permanent 

improvements in effectiveness for this measure, CBP expects to maintain this level 

of activity on an on-going basis for the foreseeable future. 

Data Source: CBP Automated Targeting System 

Management’s Discussion and Analysis 41 
 

 

 

 

 

 

Performance Goals and Results
 

Performance Objective—Push the Nation’s zone of 

security outward beyond its physical borders through 

partnerships and extended border initiatives to deter 

and combat the threat of terrorism. 

Working with foreign attaché officers, foreign governments and the trade community, CBP prescreens and 

targets shipments and containers that pose a potential 

risk for terrorism, before they arrive at U.S. POEs, using 

advance manifest information. The CBP CSI establishes a physical presence at foreign ports, shares 

intelligence, and leverages technology to enhance the 

screening and examination of containers. 

CBP will continue to work with its foreign government counterparts to increase detection and interdiction 

capabilities of people, goods and materials from the points of origin through their transit areas to their final 

destination. 

The prescreening of cargo containers before they reach 

U.S. POEs deters and combats the threat of terrorism. 

Performance Measure—Percent of worldwide U.S. destined containers processed through CSI ports. 

Description: The percentage of worldwide U.S.-destined containers (tracked via their respective 

bills of lading) processed through CSI ports as a deterrence action to detect and 

prevent terrorist weapons of mass destruction/effects (WMD/WMEs) and other 

potentially harmful materials from leaving foreign ports bound for U.S. ports. 

Key Highlights

Fiscal Year: 

FY 2004 

Actual 

FY 2005

 Actual 

FY 2006 

Actual 

FY 2007

 Actual 

FY 2008 

Target 

FY 2008 

Results 

Target/Actual Indicator: 45% 73% 82% 86% 86% 86.1% 

Explanation of FY 2008 

Results: 

Target Met—During FY 2008, the CSI Program operated at 58 foreign ports, through 

which 86.1% of the worldwide total of U.S.-destined containers was processed. The 

CSI ports included constitute the 58 largest international shipping ports. 

Data Source: Shipping volume processed through the ports (bills of lading), Port Import Export Reporting Service (PIERS). 

42 U.S. Customs and Border Protection • Performance and Accountability Report
 

 

 

 

 

 

 

 

 

 

 

 

Performance Goals and Results
 

Strategic Goal 2. Preventing Terrorism Between Ports of Entry 

To achieve this strategic goal, CBP is implementing the National 

Border Patrol Strategy, with the goal of establishing and maintaining control of the borders. The CBP Border Patrol will employ a 

highly centralized and strengthened organizational model. Border 

security will be maximized with an appropriate balance of personnel, equipment, technology, communications capabilities, and tactical infrastructure. Further, CBP plans to expand the anti-terrorism 

mission of the Border Patrol through a national command structure, 

partnerships, intelligence sharing, training, technology, infrastructure support, and the use of specialized rapid-response teams. 

Performance Objective—Maximize border security along the northern, southern, and coastal borders 

through an appropriate balance of personnel, equipment, technology, communications capabilities, and 

tactical infrastructure. 

Differing threats result from the diversity of the borders and require CBP to maintain flexibility in its border 

security approach. To support border control efforts between the POEs, CBP will leverage technology, tactical infrastructure, and facilities to maximize the effectiveness of Border Patrol agents. CBP intends to add 

remote monitoring technology along the borders, which will improve our ability to assess threats and determine likely illegal border entry scenarios and locations. 

U.S./Mexican border. 

Performance Measure—Border miles under effective control (including certain coastal sectors). 

Description: The number of border miles under control where the appropriate mix of personnel, 

technology, and tactical infrastructure has been deployed to reasonably assure that 

when an attempted illegal alien is detected, identified, and classified, the Border 

Patrol has the ability to respond and the attempted illegal entry is brought to a 

satisfactory law enforcement resolution. As the Border Patrol continues to deploy 

additional resources based on risk, threat potential, and operational need, the 

number of miles under control will increase. 

Key Highlights 

Fiscal Year: 

FY 2004

 Actual 

FY 2005

 Actual 

FY 2006

 Actual 

FY 2007

 Actual 

FY 2008 

Target 

FY 2008 

Results 

Target/Actual Indicator: N/A 288 Miles 449 Miles 599 Miles 674 Miles 757 Miles 

Explanation of FY 2008 

Results: 

Target Met—The Border Patrol’s target of 674 for Miles of Effective Control in FY 

2008 was exceeded by 83 miles. Focusing on the right combination of personnel, 

technology, and infrastructure along with partnerships and special enforcement 

operations enabled positive results in preventing, deterring, or apprehending illicit 

cross-border traffic. The Border Patrol was able to bring the 599 Miles of Effective 

Control at the beginning of FY 2008 to 757 miles as of September 30, 2008, a 26 

percent increase which is significant progress towards securing our nation’s borders. 

Data Source: Operational Requirements Based Budget Program (ORBBP) database. 

Management’s Discussion and Analysis 43 
 

Performance Goals and Results
 

Performance Measure— Total number of cumulative miles of permanent tactical infrastructure constructed. 

Description: The total number of permanent cumulative miles of tactical infrastructure 

constructed. Tactical infrastructure consists of barriers built to deter or delay illegal 

entries into the United States. Tactical infrastructure includes pedestrian fencing, 

all-weather roads, vehicle fence and permanent lighting installed in the border areas 

to support border enforcement activities. 

Key Highlights 

Fiscal Year: 

FY 2004

 Actual 

FY 2005

 Actual 

FY 2006

 Actual 

FY 2007

 Actual 

FY 2008 

Target 

FY 2008 

Results 

Target/Actual Indicator: N/A N/A N/A 400.2 Miles 600 Miles 501.6 Miles 

Explanation of FY 2008 

Results: 

Target Not Met—In FY 2008, SBI programs completed construction of nearly 101.4 

miles of additional permanent tactical infrastructure. This includes an additional 

49.0 miles of primary fence (for a total of 203.7), another 5.2 miles of all-weather 

roads (for a total of 79.5) were constructed, an additional 44.2 miles of vehicle 

fence were added (for a total of 153.7), and 3.0 miles of lighting (for a total of 64.7) 

were installed on the border to support border enforcement activities. Providing for 

over 501.6 miles of tactical infrastructure. 

Recommended Action: 

The FY 2008 tactical infrastructure goal of 600 miles included an estimate for the 

combined miles of fence, roads, and lighting. However, DHS fence goals are aligned 

to calendar year 2008 timeframes, not FY 2008. CBP has experienced delays in 

building fence due to land/parcel acquisitions from land owners. DHS is engaged in 

litigation and court proceedings to resolve these issues. DHS remains committed 

to achieving the overall fence goal in the areas that the border patrol has identified 

as operational priorities. At the end of calendar year 2008, DHS believes it can get 

close to that goal, in terms of miles that are finished, or under construction, or in 

some cases under contract. In fact, over 100 miles of primary fence and vehicle 

fence are currently under construction. This delay should not impact FY 2009 

targets. 

Data Source: Permanent tactical infrastructure implementation plans and installation progress data in ORBBP, SAP, 

ENFORCE, and BPETS. 

44 U.S. Customs and Border Protection • Performance and Accountability Report
 

 

 

 

 

 

 

 

 

Performance Goals and Results
 

Strategic Goal 3. Unifying as One Border Agency 

Through Strategic Goal 3, CBP continues to create 

a uniformed law enforcement workforce that works 

together in a professional manner with courtesy and 

respect toward the public, and that is recognized 

worldwide. 

Performance Objective—Establish a unified primary 

inspection process for passenger processing at all 

POEs into the United States and fully integrate analysis and targeting units. 

Electronic targeting systems allow CBP the ability to 

accurately and efficiently identify a potential risk to 

border security in any conveyance entering the 

United States. This effort is improved by linking data 

sources from CBP automated systems and other government agencies, through the ACE, as a single 

source for border decision makers. 

CBP Officer processes individuals as they enter the United 

States. 

Performance Measure—Total number of linked electronic sources from CBP and other government agencies for 

targeting information. 

Description: The number of electronic sources to which CBP information technology systems 

are linked to share information for targeting purposes. The ability to accurately and 

efficiently identify a potential risk to border security in any conveyance entering the 

United States is improved by linking data sources from CBP automated systems 

and other government agencies, through ACE, as a single source for border decision 

makers. 

Key Highlights 

Fiscal Year: 

FY 2004

 Actual 

FY 2005

 Actual 

FY 2006 

Actual 

FY 2007

 Actual 

FY 2008 

Target 

FY 2008 

Results 

Target/Actual Indicator: N/A N/A 9 16 19 19 

Explanation of FY 2008 

Results: 

Target Met—CBP successfully met the FY 2008 target for this measure to increase 

the number of electronic sources to which CBP information technology systems are 

linked to share information for targeting purposes. These linkages are to databases 

both within and outside of DHS. In FY 2008, the addition of the SFI foreign port 

data sources have further enriched targeting information to DHS. Access to linked 

electronic data sources provides CBP with efficient use of more information for 

vetting security risk. 

Data Source: Targeting and Analysis Systems Program Office (TASPO). 

Management’s Discussion and Analysis 45 
 

 

 

 

 

 

Performance Goals and Results
 

Strategic Goal 4. Facilitating Legitimate Trade and Travel 

To achieve Strategic Goal 4 and improve risk assessment, CBP 

uses state-of-the-art modeling technologies that aid in identifying high risk for commercial enforcement. CBP will continue to 

deploy NII technology, including radiation detection equipment 

such as personal radiation detectors, radiation isotope identification devices, and RPMs, as well as other screening technologies that support a layered inspection process. These and other 

initiatives help identify risks while preventing unnecessary delays 

in processing cargo and people. 

Performance Objective—Modernize automated import, export, 


and passenger processing systems to improve risk assessment and enforcement decision making.
 

CBP is developing and improving systems that can provide advance manifest information for prescreening 

cargo containers, agricultural products, and passengers. Trade and passenger related intelligence will be 

analyzed and distributed in a fast, meaningful way. Systems capable of linking law enforcement and other 

agency databases into one integrated database are being developed. 

Biometric information such as digital 

photographs are captured on foreign travelers 

seeking entry into the United States. 

Performance Measure—Percent of CBP workforce using ACE functionality to manage trade information. 

Description: The number of CBP personnel using the ACE, compared with the targeted adoption 

rate shows that internal personnel have easier and quicker access to more 

complete, accurate, and sophisticated information than in the past. 

Key Highlights 

Fiscal Year: 

FY 2004

 Actual 

FY 2005 

Actual 

FY 2006

 Actual 

FY 2007

 Actual 

FY 2008 

Target

 FY 2008 

Results 

Target/Actual Indicator: N/A 8% 23% 30% 40% 38.3% 

Explanation of FY 2008 

Results: 

Recommended Action: 

No action required. Performance reflects a delay in ACE capability deployment. 

Planned releases that would have added to the universe of CBP employees using 

ACE were delayed but will be deployed in FY 2009. 

Data Source: ACE system-use metrics. 

46 U.S. Customs and Border Protection • Performance and Accountability Report

Target Not Met—ACE’s deployment strategy includes the introduction of system 

functionality performed by different CBP user groups over time. As the agency’s ACE 

user base expands, cargo information will be more widely available to a broader 

range of CBP personnel. Our estimate of the expected population of CBP will be 

reevaluated regularly to verify it represents the number of personnel that will use 

ACE to manage trade information. Almost 40% of the expected population of CBP 

ACE users (approximately 25,000) are now using ACE to perform their job duties. 

The number of CBP employees using ACE is a direct result of the timing of ACE 

releases to the field. The Cargo Systems Program Office (CSPO) is making process 

improvements that will help us stay on schedule in FY09 because they will focus 

more funding on system development and, as a result, help achieve our CBP user 

goals. Those initiatives include (1) Reduce CSPO overhead/project management 

costs; and (2) Eliminate contract support. 
 

 

 

 

 

Performance Goals and Results
 

Performance Measure—Number of trade accounts with access to ACE functionality to manage trade 

information. 

Description: The extent to which ACE is made available to and used by members of the trade 

community (importers, brokers, carriers, etc.) to process and manage trade-related 

information. 

Key Highlights 

Fiscal Year: 

FY 2004 

Actual 

FY 2005

 Actual 

FY 2006

 Actual 

FY 2007

 Actual 

FY 2008 

Target

 FY 2008 

Results 

Target/Actual Indicator: N/A 1%* 3,737** 11,950 14,000 15,465 

Explanation of FY 2008 

Results: 

Target Met—ACE and its secure data portal feature offers unprecedented 

information integration and centralization via a Web-based access point that 

connects CBP, the trade community and other participating government agencies. 

Over 15,000 ACE trade user accounts have now been established. The number 

of trade accounts is due in large part to the deployment of the Master Data and 

Enhanced Accounts capabilities in September 2007. This release expanded the 

number of ACE account types to include virtually every entity doing business with 

CBP, provided enhanced ACE Secure Data Portal account management features, and 

established the foundation for a more integrated, account-based capability in ACE. 

Note: 

*Performance measure was previously reported as percent of trade accounts with access to ACE 

functionality to manage trade information. 

**FY 2006 actual has been restated as a number. 

Data Source: Cargo Systems Program Office. 

Performance Objective—Promote industry and foreign government partnership programs. 

Through work with the World Customs Organization (WCO) and the G-8, CBP continues to lead the international customs community in developing and ensuring rapid implementation of global supply chain 

security standards. To increase maritime port security, the agency will work to internationalize C-TPAT 

through coordination with the international community. Supply chain security specialists will continue to be 

hired and trained to visit participant facilities to review security practices. CBP intends to build on cooperative Smart Border agreements and pursue criminal enterprises involved in internal conspiracies at the 

POEs. 

Management’s Discussion and Analysis 47 
 

 

 

 

 

 

 

 

 

 

 

Performance Measure—Compliance rate for C-TPAT members with established C-TPAT security guidelines. 

Description: A summary of the overall compliance rate achieved for all validations performed 

during the fiscal year. After acceptance into the C-TPAT program, all C-TPAT members 

must undergo a periodic validation to verify compliance with industry-specific CBP 

security standards and required security practices. 

Key Highlights 

Fiscal Year: 

FY 2004

 Actual 

FY 2005

 Actual 

FY 2006

 Actual 

FY 2007

 Actual 

FY 2008 

Target

 FY 2008 

Results 

Target/Actual Indicator: N/A 97% 98% 98% 95.5% 99.9% 

Explanation of FY 2008 

Results: 

Target Met—In FY 2008, CBP has continued to increase the number of validations 

performed on C-TPAT members. A validation is a thorough review by CBP that 

includes visits to all manufacturing and warehouse facilities by C-TPAT Specialists 

to verify that a C-TPAT member is in fact implementing the supply-chain security 

safeguards agreed to and required by C-TPAT. Over eighty percent of all C-TPAT 

members have been validated by CBP, with a total of 7,631 validations by the end 

of FY 2008. A high compliance rate indicates that a majority of C-TPAT members 

are committed to maintaining supply chain security standards. It indicates that 

they have the required level of supply chain security measures in place and are 

maintaining them on an on-going basis. 

Data Source: C-TPAT Validation Reports. 

Strategic Goal 5. Protecting America and Its Citizens 

CBP protects the American people and the national 

economy by prohibiting the introduction of contraband such as illegal drugs, counterfeit goods, and 

other harmful materials and organisms into the 

United States. CBP continues to develop technology 

to enhance targeting of high-risk cargo and individuals attempting entry into the country. 

Performance Objective—Reduce the importation of 

all prohibited or illegal drugs and other materials 

that are harmful to the public or may damage the 

American economy. 

CBP monitors connections between illegal drug trafficking and terrorism, and coordinates efforts to sever such connections while interdicting illegal narcotics. 

Canine resources are used to detect illegal aliens, explosives, and chemicals, and to interdict drugs and 

agricultural commodities. CBP works closely with other Government agencies, industry, and stakeholders 

to measure agricultural risk and develop mitigation strategies to prevent harmful organisms from entering 

the United States intentionally or by accident. 

CBP Agricultural Specialists inspecting produce for pests 

and diseases. 

48 U.S. Customs and Border Protection • Performance and Accountability Report

Performance Goals and Results
 

 

 

Performance Goals and Results
 

Performance Measure—International air passengers in compliance with agriculture quarantine regulations 

(percent compliant). 

Description: The degree of compliance with agriculture quarantine regulations and other 

mandatory agricultural product restrictions. CBP randomly samples international 

air passengers for compliance with all U.S. Department of Agriculture (USDA) laws, 

rules and regulations using USDA guidance on sampling procedures. 

Key Highlights 

Fiscal Year: 

FY 2004

 Actual 

FY 2005 

Actual 

FY 2006

 Actual 

FY 2007

 Actual 

FY 2008 

Target

 FY 2008 

Results 

Target/Actual Indicator: 97.0% 95.8% 95.5% 94.2% 97% 95.8% 

Explanation of FY 2008 

Results: 

Target Not Met—The air passenger agricultural compliance rate is determined by 

the rate of occurrence of all agriculture-related violations of arriving travelers. The 

large majority of these violations are minor infractions. Although still not reaching 

the target set for FY 2008, this measure showed a significant improvement over 

the rate observed for FY 2007. The improvement may in part reflect the expanded 

traveler education and outreach efforts undertaken in FY 2008 concurrent with the 

implementation of the WHTI. 

Recommended Action: 

CBP is continuing to take additional actions to further educate and inform the 

traveling public of all regulatory and procedural requirements. This includes 

expanded explanations of travel requirements on the CBP.gov web site, such 

as “Know Before You Go” and the WHTI Requirements page. CBP is working 

collaboratively with the carriers and airport authorities to improve instruction, 

signage, and on-board pre-processing. CBP is also working with industry to improve 

the traveler’s experience through the Rice-Chertoff Initiative, which will facilitate 

entry of air travelers into the US and include new approaches for improving traveler 

processing and educating incoming travelers on US laws, rules, and regulations. 

These efforts will improve passenger compliance in future years. 

Data Source: USDA Work Accomplishment Data System (WADS) Agricultural Quarantine Inspection monitoring activities. 

Performance Objective—Provide support to protect events and key assets of national interest and mitigate 

the risks of terrorism and other threats to critical government operations. 

CBP will continue to coordinate with other law enforcement partners to provide protection from airborne 

threats and to provide air and marine security for national efforts. 

Management’s Discussion and Analysis 49 
 

 

 

 

 

 

 

 

 

 

 

 

 

Performance Goals and Results
 

Performance Measure—Percent of air support launches accomplished to support border ground agents to 

secure the border. 

Description: The percentage of all requests made for air support to which CBP A&M was able 

to respond. The capability to launch an aircraft when a request is made for aerial 

support is a primary and important measure for CBP A&M. In FY 2006, all air assets 

of CBP were merged into CBP A&M creating the largest law enforcement air force in 

the world with enhanced mission support to CBP A&M’s primary customer, the Office 

of Border Patrol. 

Key Highlights 

Fiscal Year: 

FY 2004

 Actual 

FY 2005

 Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Target 

FY 2008 

Results 

Target/Actual Indicator: N/A N/A N/A 98% 95% 98.0% 

Explanation of FY 2008 

Results: 

Target Met—Ninety-eight percent of the requests for aerial support were met to 

provide assistance in securing the border. This level of support exceeds the industry 

standard launch rate of 95 percent. This level of support was achieved through 

realigning resources to highest needs, aggressive maintenance, and effective 

scheduling. 

Data Source: Air and Marine Operations Reporting System (AMOR). 

Strategic Goal 6. Modernizing and Managing 

To achieve the other five strategic goals, CBP must 

put forth a continuous effort to enhance and modernize its information technology systems and technical support services. Strategic Goal 6 will ensure 

that CBP can assist its customers and stakeholders 

in obtaining and managing the financial resources 

and assets needed to accomplish the mission. To 

provide customers and stakeholders with accurate, 

timely, and integrated data, CBP intends to maintain 

and improve financial and administrative systems, 

along with increasing the use of e-commerce. 

Performance Objective—Maintain a reliable, stable, 


and secure IT infrastructure and an array of technical support services, including laboratory and scientific services, tactical radio communication, field equipment maintenance/support, and round-the-clock customer assistance. 


CBP continues to support its antiterrorism mission and its widely dispersed field workforce by deploying a 

modern, robust, secure technology infrastructure that provides global systems integration and information 

warehousing for a completely automated trade, border security, and mission support environment. CBP 

intends to build and maintain a unified tactical communications capability that supports the needs of the 

agency and is coordinated within DHS. 

Global systems integration and information warehousing 

allows CBP to continue to modernize its IT systems. 

50 U.S. Customs and Border Protection • Performance and Accountability Report
 

Performance Goals and Results
 

Performance Measure—Percent of time the Traveler Enforcement Communication System (TECS) is available to 

end users. 

Description: A quantification, as a percentage, of the end-user experience in terms of TECS 

service availability. TECS is a CBP mission critical law enforcement application 

system designed to identify individuals and businesses suspected of or involved in 

violation of federal law. TECS is also a communications system permitting message 

transmittal between DHS law enforcement offices and other national, state, and 

local law enforcement agencies. TECS provides access to the FBI’s National Crime 

Information Center (NCIC) and the National Law Enforcement Telecommunication 

Systems (NLETS) with the capability of communicating directly with state and 

local enforcement agencies. NLETS provides direct access to state motor vehicle 

departments. 

Key Highlights 

Fiscal Year: 

FY 2004

 Actual 

FY 2005

 Actual 

FY 2006

 Actual 

FY 2007

 Actual 

FY 2008 

Target 

FY 2008 

Results 

Target/Actual Indicator: N/A 96.2% 98% 98.7% 97.5% 99.9% 

Explanation of FY 2008 

Results: 

Target Met—The TECS Prime Project and weekly TECS Passenger Systems Program 

Office (PSPO) Availability Meeting have increased systems availability. TECS Prime 

provides improved database up time by mirroring and synchronizing the database 

during maintenance time frames. Weekly TECS/PSPO availability meetings are held 

to discuss any and all issues and processes to improve systems availability. 

Data Source: Topaz, a Web-based application that enables users to track and analyze availability and system performance 

problems. 

Management’s Discussion and Analysis 51 
 

 

 

 

 

 

 

Management Assurances
 

Overview 

To comply with the provisions of the Federal Managers’ Financial Integrity Act of 1982 (FMFIA); the DHS 

Financial Accountability Act of 2004; the Reports Consolidation Act of 2000; the Federal Financial Management Improvement Act of 1996 (FFMIA); the Federal Information Security Management Act of 2002 

(FISMA); and the Office of Management and Budget (OMB) Circular A-123, “Management’s Responsibility 

for Internal Control,” revised December 2004, the Commissioner of CBP must provide annual assurance 

statements to DHS regarding CBP’s management and financial system controls, internal controls over 

financial reporting, and performance data reliability. Any material weaknesses or deficiencies are reported 

in the statements. Information for these statements is derived from GAO and DHS OIG reviews, independent audits, and self-assessments provided by CBP management. 

Federal Managers’ Financial Integrity Act 

In accordance with FMFIA and OMB Circular A-123, CBP has evaluated its management controls and financial management systems for the fiscal year ending September 30, 2008. Through its annual self-assessment process and GAO and OIG reviews for FY 2008, we are reporting 4 material weaknesses and 3 

instances of nonconformance. Because of corrective actions implemented by CBP, the material weakness 

in Financial Systems Security that was reported in previous years was reduced to a significant deficiency 

for FY 2008 reporting. 

Drawback involves the reimbursement of duties paid by an importer on materials or merchandise imported 

into the United States and subsequently exported. In 1993, deficiencies were reported in the controls to 

prevent excessive drawback claims. The ACS has inherent limitations in detecting and preventing excessive drawback claims; therefore, CBP relies on a risk-based approach to review drawback claims. Weaknesses relating to ACS include: deficiencies in controls to detect excessive drawback claims, deficiencies 

over the accumulation of claims against a drawback bond, limitation in the review of prior related drawback 

claims, and deficiencies in ACS selectivity for underlying consumption entries. CBP continues to work with 

ACE developers to design and implement an automated system to address these weaknesses and provide 

improved automated controls. In addition, strengthening drawback controls depends on legislation to simplify the drawback process and to revise the document retention period for documents that support drawback claims. CBP can recommend a change to the recordkeeping requirements; however, support from the 

Trade community is crucial to proposing a statutory change. 

During FY 2006, the DHS OIG noted weaknesses related to CBP’s inventory control, inventory review, and 

training of local property officers regarding laptop computer security. In addition, a security issue related 

to controls ensuring that laptop computers are cleared and sanitized before reissue or disposal was identified. New controls and training were implemented in FY 2007. Although significant progress has been 

made, additional controls and monitoring are still required given the number of laptops at CBP. 

52 U.S. Customs and Border Protection • Performance and Accountability Report 

Custodial Revenue and Drawback Controls 

Laptop Computer Security 
 

 

 

 

 

 

 

 

Management Assurances
 

The Secure Border Initiative Program Executive Office (SBI PEO) was established in FY 2007. SBI PEO is 

currently implementing management controls and is not in a position to state with reasonable assurance 

that adequate controls are in place. CBP anticipates that controls will be in place to provide full assurances for FY 2009. 

In 2007, GAO performed a Technical Security Assessment of US VISIT and determined that CBP needed to 

immediately address significant security weaknesses in systems supporting the US VISIT program. CBP 

has implemented 49 of 82 audit recommendations. Corrective actions are in process for all open recommendations, with completion expected by the end of FY 2009. 

Information Technology General and Application Controls 

The DHS OIG notes that there continues to be IT general and application control weaknesses at CBP. 

These weaknesses were identified in a set of 35 Notices of Finding and Recommendation (NFRs) in the IT 

area resulting from the FY 2008 Financial Statements Audit. Collectively, these weaknesses limit CBP’s 

ability to ensure that critical financial and operational data are maintained in such a manner to ensure 

confidentiality, integrity, and availability. CBP has completed corrective actions for 19 of the previous year’s 

NFRs. All corrective actions for the identified NFRs are expected to be completed by December 30, 

2009. 

This material weakness was first reported in 1993 when it was noted that agency core financial systems 

were not integrated and did not provide certain financial information for managing operations. The implementation of Systems, Applications, and Products (SAP) Release 3 in 2004 addressed a number of the 

issues under this weakness. The remaining open issue relates to the accounts receivable functionality 

that will be provided by ACE when it becomes the system of record for trade revenue activity and reporting. 

This functionality is scheduled for deployment in 2011. 

For FY 2008, CBP reported inadequate resources for business continuity testing of Chief Financial Officer 

designated financial systems. Continuity plans are tested to ensure that, in the event of a true emergency, 

resources are in place and individuals are trained to quickly and effectively continue business processes 

at an alternate location in the event that the CBP Data Center is made unavailable. However, during a 

scheduled test, CBP found that it was not possible to bring all systems online as required because hardware was not available at the recovery facility to fully and properly perform the continuity testing. CBP is 

currently studying options for correcting this weakness. 

Management’s Discussion and Analysis 53 

Secure Border Initiative Program Executive Office—Implementation of 

Management Controls 

US VISIT Technical Security Issues 

Core Financial Systems 

Business Continuity 
 

 

 

 

 

 

Management Assurances
 

DHS Financial Accountability Act 

The DHS Financial Accountability Act requires an assertion of internal controls over financial reporting. For 

FY 2008, the scope of CBP’s assessment of internal controls over financial reporting included performing 

tests of operational effectiveness throughout FY 2008 over the following financial management 

processes. 

• Budgetary Resources Management 

• Payment Management 

CBP’s assessment of internal control over financial reporting also included performing tests of design over 

the following financial management processes: 

• Human Resource Management and Payroll 

• Property Management 

• Revenue Management 

• Receivables Management 

• Information Technology General Controls 

Based on the scope of this assessment, CBP’s Internal Control Assurance Statement provides reasonable 

assurance that internal controls over financial reporting were designed and operating effectively and no 

material weaknesses were found. 

Federal Financial Management Improvement Act 

FFMIA instructs agencies to maintain an integrated financial management system that complies with Federal system requirements, Federal Accounting Standards Advisory Board standards, and the U.S. Standard 

General Ledger at the transaction level. Although CBP has made significant improvements toward compliance with the implementation of SAP financial software, it cannot claim full compliance because of the 

deficiencies previously discussed. 

Federal Information Security Management Act 

FISMA requires agencies to conduct an annual self-assessment review of their IT security programs and to 

develop and implement corrective actions for identified security weaknesses and vulnerabilities. CBP has 

completed a comprehensive self-assessment for FY 2008 and can state with reasonable assurance that 

the IT security controls are in compliance with FISMA, with the exception of the material weakness previously discussed. 

54 U.S. Customs and Border Protection • Performance and Accountability Report 
 

 

 

 

 

 

 

 

 

Systems and Controls 


Overview 

Data Integrity: CBP is dedicated to providing clear, concise, relevant, and reliable data for managerial decision making and program management. CBP strives to ensure that the data are both quantifiable and verifiable and provided in a timely manner. In place are internal management controls, including ongoing data 

reviews, annual self-inspections, audit trails, restricted access to sensitive data, and separation of duties, 

which are designed to safeguard the integrity and quality of CBP’s data resources. 

Data Systems and Controls: Performance data for the planned performance measures are generated by 

automated management information and workload measurement systems and reports as a byproduct of 

day-to-day operations. All levels of management routinely monitor the data systems and controls. CBP 

management has reviewed the performance measurement data for FY 2008 and has determined, with 

reasonable assurance, that the data are complete, accurate, and reliable. 

Audit of the FY 2008 CBP Consolidated Financial Statements: As directed by DHS to assist the Department 

in complying with the Chief Financial Officer’s Act of 1990, DHS’s independent auditors, KPMG LLP, audited 

CBP’s consolidated financial statements (Consolidated Balance Sheet, Consolidated Statement of Net 

Cost, Consolidated Statement of Changes in Net Position, Combined Statement of Budgetary Resources, 

and Consolidated Statement of Custodial Activity), hereinafter referred to as the “financial statements.” 

The objective of the audit was to determine whether the financial statements fairly present the financial 

position of CBP. Audit reviews evaluate assets, liabilities, net position, net costs of major CBP programs, 

availability of budgetary resources, finance activity, budgetary spending, and revenue from collections and 

refunds. An audit consists of examining, through various sampling methods, evidence supporting the 

amounts and disclosures in the financial statements. The Independent Auditor’s Report can be found on 

page 135. 

Self-Inspection Program 

The SIP was developed to emphasize managerial accountability and provide a mechanism for management 

oversight of CBP programs and processes. SIP, along with other methodologies, helps CBP meet Federal 

management control requirements established by FMFIA and OMB Circular A-123, revised. SIP provides a 

method by which CBP headquarters and field managers conduct internal assessments of their operations 

and report on those results by completing self-inspection worksheets developed by national program managers. In completing and certifying the results of their self-inspections, managers assess whether their 

area of responsibility is 

•	 Properly implementing established programs, policies, procedures, and strategies that support 

mission/program accomplishment 

•	 Ensuring the security of funds, property, and other agency resources 

• Complying with Federal laws and regulations 

For the current reporting cycle, the 15 offices of CBP completed more than 14,450 self-inspection worksheets. These worksheets require participants to answer questions resulting from testing about program 

administration and operation. 

Management’s Discussion and Analysis 55 
 

Systems and Controls
 

Results of the assessments are entered into the Self-Inspection Reporting System (SIRS). In addition, 

SIRS requires the completion of an audit trail section that documents the information reviewed before the 

completion of the worksheet , as well as a separate addendum giving a detailed description of the cause 

of any deficiencies and the corrective actions taken. Managers are responsible for implementing corrective 

action plans to resolve identified deficiencies. 

Every year, after the end of the SIP reporting cycle, the Management Inspection Division (MID) prepares a 

summary analysis report that identifies significant issues to help CBP management determine which 

administrative or operational areas require attention. Issues identified through this program may become 

the focus of MID internal inspection and review activities. 

Analysis of the self-inspection data allows executive managers and national program managers to gauge 

the level of compliance with critical program management controls, identify programmatic issues that 

require national attention, and address issues before they cause administrative burden or otherwise have 

a negative impact on the mission of CBP. 

56 U.S. Customs and Border Protection • Performance and Accountability Report 
Management’s Discussion and Analysis 57

Overview

CBP strives to be a leader in financial management by providing high-quality, cost-efficient services through 

customer involvement and modern, integrated financial systems. Its goal is to continuously develop and 

implement more effective and efficient methods to obtain, manage, and deliver the financial resources, 

capital assets, and financial services required to meet or exceed the needs of customers and stakeholders. Because CBP is also a revenue-collection agency, it is imperative that it accurately identify amounts 

owed to CBP and efficiently and effectively collect, report, and account for revenue.

Providing top-quality financial management services includes translating workloads and requirements into 

budget requests for needed resources; allocating and distributing funds after resources are made available; acquiring and distributing goods and services used to accomplish the CBP mission; managing and 

paying for those goods and services; and reporting on the costs and use of personnel, goods, and 

services.

For FY 2008, SAP financial software continues to be used by CBP. SAP is a modular, PC-based, integrated 

financial management and reporting system that provides full materials management, budgeting, and general and subsidiary ledger capabilities. The impact of SAP is far-reaching, as it has put into place new 

automated, integrated processes for core finance and accounting, budget execution, and reporting. 

President’s Management Agenda 

In 2001, the PMA was implemented as a management reform initiative established to identify deficiencies 

and improve performance within the Federal Government. For FY 2008, the PMA focused on six key management initiatives across the Federal Government: (1) Strategic Management of Human Capital, (2) Competitive Sourcing, (3) Improved Financial Performance, (4) Expanded Electronic Government, (5) Budget 

and Performance Integration, and (6) Asset Management (Real Property). Federal executive agencies are 

tracked, via a “scorecard,” on how well the departments and major agencies are executing the six government-wide management initiatives. In ongoing compliance and support of the PMA, CBP continues to efficiently and economically develop, implement, and track activities that improve its accomplishments and 

scorecards in the six areas of management weakness.

Overview of the Financial Statements 

The financial statements and footnotes appear in the “Financial Section” of this report on pages 73 

through 133. The financial statements have been audited by our independent auditor, KPMG LLP, and have 

been found to have no material misstatements as evidenced by the audit report.

Financial Management
Financial Management
 

 

 

Consolidated Balance Sheet 

The Consolidated Balance Sheet presents the property owned by CBP (assets), amounts owed by CBP 

(liabilities), and the amounts of the difference (net position). As of September 30, 2008, total assets were 

$14.1 billion, a 14 percent increase from FY 2007, which was primarily due to the construction of tactical 

infrastructure projects. 

2008 Assets 

Duties & Trade Other Fund Balance with 

Receivables 5% Treasury 

15% 55% 

Property, Plant

 & Equipment 

2007 Assets 

Duties & Trade Other Fund Balance with 

Receivables 5% Treasury 

16% 59% 

Property, Plant

& Equipment 

25% 20% 

As of September 30, 2008, total liabilities were $5.7 billion, an increase of 4 percent over FY 2007, which 

was primarily due to an increase in our accrued payroll and benefits, accounts payable, and due to the 

Treasury General Fund, which is also offset by a decrease in liabilities related to Antidumping/Countervailing duties. The charts below present a comparison of the major categories of assets and liabilities as a 

percentage of the totals for FY 2008 and FY 2007. 

2008 Liabilities 

Refunds Payable Injured Domestic Other Payroll & 2% Industries 8% Benefits 7% Accounts 21% Payable 

19% 

Due to the General Fund 

43% 

2007 Liabilities 

Refunds Injured Domestic

Other Payable Industries

2% Accounts 17% 7%

Payable

18% 

Payroll & 

Benefits 

19% Due to the General Fund 

37% 

58 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Management
 

 

 

Consolidated Statement of Net Cost 

The Consolidated Statement of Net Cost presents the net cost of the major CBP programs as they relate 

to the goals of the 2005–2010 Strategic Plan. The gross cost less any offsetting revenue for each program 

equals net cost of operations. Net cost of operations was $9.6 billion. 

2008 Net Program Costs 

Border Security 

& Control 

37% 

Air & Marine 

Operations 

4% 

Facilitation at the 

Ports of Entry 

59% 

2007 Net Program Costs 

Border Security 

& Control 

34% 

Air & Marine 

Operations 

4% 

Facilitation at the 

Ports of Entry 

62% 

Consolidated Statement of Changes in Net Position 

The Consolidated Statement of Changes in Net Position represents those accounting transactions that 

caused the net position of the balance sheet to change from the beginning to the end of the reporting 

period. CBP’s net cost of operations serves to reduce the net position. Appropriations used totaled $7.3 

billion, representing 69 percent of CBP’s total financing sources. CBP collected and retained $2.7 billion 

of non-exchange revenue, amounting to 25 percent, which was used to fund CBP operations. 

Combined Statement of Budgetary Resources 

The Combined Statement of Budgetary Resources illustrates how budgetary resources were made available, as well as their status at the end of FY 2008. CBP had $17.2 billion in budgetary resources, of which 

$2.5 billion were unobligated. CBP incurred obligations of $14.6 billion and recorded $12.8 billion in gross 

outlays by the end of the fiscal year. 

Management’s Discussion and Analysis 59 
Financial Management
 

 

 

 

Consolidated Statement of Custodial Activity 

The Consolidated Statement of Custodial Activity presents non-entity (financial activity conducted by CBP 

on behalf of others) revenue and refunds using a modified cash basis. This method reports revenue from 

cash collections separately from receivable accruals, and cash disbursements are reported separately 

from payable accruals. The custodial revenue, using the modified cash basis, for FY 2008 was $31.5 

billion. 

Excise Taxes 

User Fees 8%

5% 

Other 

<1% 

2008 Custodial Cash Collections 

Duties 

User Fees 

4% 

Other 

<1% 

Excise Taxes 

9% 

2007 Custodial Cash Collections 

Duties 

87% 87% 

Limitations of the Financial Statements 

The principal financial statements have been prepared to report the financial position and results of the 

operations of CBP, pursuant to the requirements of 31 U.S.C. 3515(b). While the financial statements have 

been prepared from the books and records of CBP in accordance with Generally Accepted Accounting Principles for Federal entities and the formats prescribed by OMB, the statements are in addition to the financial reports used to monitor and control budgetary resources, which are prepared from the same books 

and records. 

The financial statements should be read with the realization that they are a component of the U.S. Government, a sovereign entity. Liabilities not covered by budgetary resources cannot be liquidated without the 

enactment of an appropriation by Congress, and payment of liabilities, other than for contracts, can be 

abrogated by the sovereign entity. 

60 U.S. Customs and Border Protection • Performance and Accountability Report 
Performance Section 
 

 

 

 

Performance Summary
 

The chart below highlights CBP’s success in achieving FY 2008 performance goals. The performance measures are established as an integral part of the CBP Strategic Plan and the DHS FYHSP. The measurement 

data are collected through various systems and methods and then entered into the FYHSP system for 

tracking and compiling for management decision-making and year-end reporting. Security, threat, and risk 

analyses often necessitate changes in the agency’s focus. CBP performance measures continue to evolve 

to better reflect operational functions and alignment with critical missions. 

For FY 2008, CBP has 23 reportable performance measures that support the Strategic Plan. Of the 23 

performance measures, 16 were met and 7 were not met. The performance data presented in this 

report are in accordance with the guidance provided by OMB. The data integrity discussion in the 

“Systems and Controls” section of the “Management’s Discussion and Analysis” (page 55) describes 

CBP’s commitment to providing quality and timely performance information to increase its value to CBP 

management and interested parties. CBP managers routinely use these data to improve the quality of 

program management and demonstrate accountability of program results. 

62 U.S. Customs and Border Protection • Performance and Accountability Report 

FY 2008 Performance

Not Met

30%

Met

70%
Performance Summary
 

Performance Section 63 

 

 

 

Individual Performance Measure Results 

This section describes CBP’s FY 2008 results for each FYHSP performance measure by the strategic goal 

and performance objective they support. Although some of the performance measures may relate to more 

than one performance objective, each performance measure was aligned under the single objective considered most relevant or meaningful. Discussions of the key performance measures can be found in the 

“Management’s Discussion and Analysis” section under “Performance Goals and Results,” beginning on 

page 40. 

Strategic Goal #1—Preventing Terrorism at the Ports of Entry 

Performance Objective—Improve identification and targeting of potential terrorists and terrorist weapons, 

through risk management and automated advances and enhanced information. 

Performance Measure—Number of foreign cargo examinations resolved in cooperation with the Container 

Security Initiative (CSI). 

Key Highlights Target Not Met—See page 41 for results and detailed discussion 

Performance Objective—Push the nation’s zone of security outward beyond its physical borders through 

partnerships and extended border initiatives to deter and combat the threat of terrorism. 

Performance Measure—Percent of worldwide U.S. destined containers processed through CSI ports. 

Key Highlights Target Met—See page 42 for results and detailed discussion 

Strategic Goal #2—Preventing Terrorism Between Ports of Entry 

Performance Objective—Maximize border security along the northern, southern, and coastal borders 

through an appropriate balance of personnel, equipment, technology, communications capabilities, and 

infrastructure. 

Performance Measure—Border miles under effective control (including certain costal sectors). 

Key Highlights Target Met—See page 43 for results and detailed discussion 
Performance Summary
 

 

Performance Measure—Percent of apprehensions at Border Patrol checkpoints. 

Description: 

An examination of one checkpoint activity, apprehensions, compared to the 

number of Border Patrol apprehensions nationwide. Checkpoints are temporary 

and permanent facilities used by the Border Patrol to monitor traffic on routes of 

egress from border areas and are an integral part of the Border Patrol’s defensein-depth strategy. Activities that occur at checkpoints serve as a measure not only 

of checkpoint operational effectiveness, but as a barometer of the effectiveness 

of Border Patrol’s overall national border enforcement strategy to deny successful 

illegal entries into the U.S. This comparison measures checkpoint effectiveness in 

terms of apprehensions and provides insights into the overall effectiveness of the 

Border Patrol’s national strategy. 

Key Highlights 

Fiscal Year: FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Target

 FY 2008 

Results 

Target/Actual Indicator: N/A N/A 5.9% 5% 3%-8% 2% 

Explanation of FY 2008 

Results: 

Target Not Met—Apprehensions at the checkpoints fell slightly under the FY 2008 

target. Overall apprehensions by the Border Patrol decreased in FY 2008 due to the 

additional new agents, tactical infrastructure and effective partnerships with other 

law enforcement agencies. Concurrently, the apprehensions at the Border Patrol 

checkpoints decreased and remain proportionate to the overall apprehensions 

nationwide as a critical component of the 3 tier enforcement strategy. 

Recommended Action: 

As Border Patrol resources are increased and more border miles are brought under 

effective control, it is anticipated that overall apprehensions will decrease. FY 2009 

targets will be adjusted appropriately. 

Data Source: Summary records from Border Patrol’s Checkpoint Activity Report (CAR) and data maintained in two 

databases: ENFORCE and BPETS. 

Performance Measure—Total number of cumulative miles of permanent tactical infrastructure constructed. 

Key Highlights Target Not Met—See page 44 for results and detailed discussion 

64 U.S. Customs and Border Protection • Performance and Accountability Report 
Performance Summary
 

Performance Section 65 

 

Performance Measure—Percent of narcotic seizures at Border Patrol checkpoints compared to Border Patrol 

seizures nationwide. 

Description: 

The percentage of narcotic seizures at Border Patrol checkpoints compared to the 

percentage of narcotic seizures nationwide. The Border Patrol checkpoint operations 

are an integral part of the Border Patrol’s defense-in-depth strategy. As such, these 

activities serve as measures for both the checkpoint operational effectiveness and 

the value of the Border Patrol’s overall national border enforcement strategy to deny 

successful illegal entries into the U.S. 

Key Highlights 

Fiscal Year: FY 2004

 Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007

 Actual 

FY 2008 

Target

 FY 2008 

Results 

Target/Actual Indicator: N/A N/A N/A 34% 25%-40% 35% 

Explanation of FY 2008 

Results: 

Target Met—The overall narcotic seizures by OBP at checkpoints decreased 

proportionally with overall seizures by OBP nationwide as a result of an increased 

presence by OBP resulting from additional agents and tactical infrastructure. 

Data Source: The number of narcotic seizure events are obtained through CAR. The number of nationwide narcotic seizure 

events are obtained through ENFORCE and BPETS. 

Performance Measure—Percent of traffic checkpoint cases referred for prosecution to the U.S. Attorney’s Office. 

Description: 

The percentage of border related cases brought by the Border Patrol and originating 

from traffic checkpoint operations that are referred to one of the 92 U.S. Attorneys 

located throughout the U.S., Puerto Rico, and the Virgin Islands for prosecution 

compared to the total number of apprehensions at traffic checkpoints. This measure 

will depict the effectiveness of Border Patrol checkpoint operations in identifying 

and prosecuting dangerous criminals thus enhancing overall public safety. All 

apprehensions by OBP are considered arrests (administrative or criminal). The 

number of cases tracked in this measure represents criminal arrests only. 

Key Highlights 

Fiscal Year: FY 2004

 Actual 

FY 2005 

Actual 

FY 2006

 Actual 

FY 2007

 Actual 

FY 2008 

Target 

FY 2008 

Results 

Target/Actual Indicator: N/A N/A N/A 13% 8%-15% 18% 

Explanation of FY 2008 

Results: 

Target Met—Checkpoints serve as a component of the successful defense in depth 

strategy to deny major routes of egress to smugglers intent on delivering people and 

illegal contraband into the U.S. Criminal cases referred for prosecution support the 

strategic goals of preventing terrorism, achieving effective control of the border and 

reducing crime in border communities. The number of cases referred to prosecution 

related to checkpoint enforcement activity is compared to all apprehension activity 

at Border Patrol Checkpoints to determine the percentage of apprehensions referred 

for prosecution as criminal cases. Data are analyzed for compliance of established 

data protocols and accuracy and show the effectiveness of the Border Patrol 

layered enforcement strategy. Border Patrol exceeded it’s target for the percentage 

of cases referred for prosecution at checkpoints and increased its effectiveness 

in identifying, documenting and providing necessary evidence for prosecuting 

dangerous criminals. 

Data Source: Border Patrol’s Checkpoint Activity Report (CAR). 
Performance Summary
 

 

 

 

 

 

 

Performance Measure—Percent of network availability 

Description: 

The percentage of network availability to users. The CBP network provides the basis 

for linking all IT systems for communications and access to mission critical systems. 

High levels of system availability are needed to accomplish CBP’s mission. 

Key Highlights 

Fiscal Year: FY 2004

 Actual 

FY 2005

 Actual 

FY 2006

 Actual 

FY 2007

 Actual 

FY 2008 

Target

 FY 2008 

Results 

Target/Actual Indicator: N/A N/A 99.9% 99.4% 98% 99.7% 

Explanation of FY 2008 

Results: 

Target Met—CBP’s FY 2008 network availability exceeded posted targets due 

to continued organizational efforts to minimize unscheduled outages and reduce 

unscheduled downtime for CBP’s critical national security mission. 

Data Source: Simple Network Management Protocol (SNMP) data source is directly retrieved from managed device every 

five minutes. 

Performance Objective—Expand specialized teams and rapid-response capabilities to enhance control of 

the borders, with expansion to problematic areas as identified through continuing threat assessments. 

Performance Measure—Number of Border Patrol Agents trained in rescue and emergency medical procedures. 

Description: 

The number of agents trained and certified in rescue and emergency medical 

procedures. One of the Border Patrol’s Border Safety Initiative (BSI) objectives is 

to increase the number of agents trained and certified in rescue and emergency 

medical procedures at the field agent level to improve the Border Patrol’s 

capabilities to prevent and respond to humanitarian emergencies to create a safer 

and more secure border region. 

Key Highlights 

Fiscal Year: FY 2004

 Actual 

FY 2005

 Actual 

FY 2006

 Actual 

FY 2007

 Actual 

FY 2008 

Target

 FY 2008 

Results 

Target/Actual Indicator: N/A N/A N/A 796 690 1381 

Explanation of FY 2008 

Results: 

Target Met—The total number of first responders trained in FY 2008 exceeded the 

target by 691 due to an extensive training schedule in the 3rd and 4th quarters 

to accommodate the accelerated hiring initiatives for Border Patrol agents. This 

accelerated hiring initiative increased the number of interns returning from the 

academy to assigned stations for post academy training which includes first 

responder training. This number is expected to decrease as agent hiring goals are 

met. 

Data Source: Border Patrol Enforcement Tracking System (BPETS). 

Strategic Goal #3—Unifying as One Border Agency 

Performance Objective—Establish a unified primary inspection process for passenger processing at all 

ports of entry into the United States and fully integrate analysis and targeting units. 

Performance Measure—Total number of linked electronic sources from CBP and other government agencies for 

targeting information. 

Key Highlights Target Met—See page 45 for results and detailed discussion 

66 U.S. Customs and Border Protection • Performance and Accountability Report 
Performance Summary
 

Performance Section 67 

 

 

 

 

 

 

 

 

 

 

 

 

Strategic Goal #4—Facilitating Legitimate Trade and Travel 

Performance Objective—Modernize automated import, export, and passenger processing systems to 

improve risk assessment and enforcement decision-making. 

Performance Measure—Percent of CBP workforce using ACE functionality to manage trade information. 

Key Highlights Target Not Met—See page 46 for results and detailed discussion 

Performance Measure—Number of trade accounts with access to ACE functionality to manage trade 

information. 

Key Highlights Target Met—See page 47 for results and detailed discussion 

Performance Objective—Utilize state-of-the-art technologies and processes to leverage resources and to 

conduct examinations of all potential high-risk cargo, conveyances and passengers. 

Performance Measure—Percent of truck and rail containers screened for contraband and concealed people. 

Description: 

The percentage of truck and rail containers that were screened for contraband 

and concealed people using NII technology. This measure shows progress towards 

increasing security by measuring the percent of truck and rail containers that 

were screened for contraband and concealed people using NII technology. NII 

technology consists of x-ray imaging and electromagnetic imaging equipment that 

is very effective at inspecting trucks, containers, and packages for shapes, density, 

and hidden cargo. It is very effective at identifying weapons, narcotics, smuggled 

humans, and concealed cargo. 

Key Highlights 

Fiscal Year: FY 2004

 Actual 

FY 2005

 Actual 

FY 2006

 Actual 

FY 2007

 Actual 

FY 2008 

Target

 FY 2008 

Results 

Target/Actual Indicator: 26.6% 28.9% 32.80% 40% 42% 35.8% 

Explanation of FY 2008 

Results: 

Target Not Met—NII examinations are conducted to perform 100% examination of all 

targeted high-risk containers, identified through ATS manifest reviews, to have a higher 

risk profile and which may pose a threat to our security. The higher the percentage of 

high-risk cargo screened using NII, the greater the likelihood of detecting potentially 

hazardous materials and preventing them from entering the US. This technology 

provides a more efficient and effective alternative to 100 % physical inspection of all 

targeted high-risk containers. ATS targeting rules underwent refinement in FY 2008, 

resulting in an overall reduction in the number of mandatory examinations required. 

This “mandatory” decrease was not compensated for by a corresponding increase in 

discretionary (CBP Officer selected) exams, resulting in an overall decrease in the total 

number of NII exams completed for trucks. All major rail crossings now perform nearly 

100% examinations of rail containers. 

Recommended Action: 

CBP will work to increase the number of discretionary truck examinations to offset 

the decrease in mandatory exams that resulted from the improvements in the 

ATS targeting rules. Discretionary exams are conducted based on CBP Officer 

assessment and targeting. 

Data Source: Operations Management Reports (OMR) Data Warehouse. 
Performance Summary
 

 

Performance Measure—Percent of sea containers screened for contraband and concealed people. 

Description: 

The percentage of sea containers that were screened for contraband and concealed 

people using NII technology. The measure shows progress towards increasing 

security by measuring the percent of sea containers arriving at seaports that 

were screened for contraband and concealed people using NII technology. NII 

technology consists of x-ray imaging and electromagnetic imaging equipment that 

is very effective at inspecting trucks, containers, and packages for shapes, density, 

and hidden cargo. It is very effective at identifying weapons, narcotics, smuggled 

humans, and concealed cargo. 

Key Highlights 

Fiscal Year: FY 2004

 Actual 

FY 2005

 Actual 

FY 2006 

Actual 

FY 2007

 Actual 

FY 2008 

Target 

FY 2008 

Results 

Target/Actual Indicator: 5.2% 5.6% 5.25% 4.0% 5.75% 3.6% 

Explanation of FY 2008 

Results: 

Target Not Met—NII examinations are conducted to perform 100% examination 

of all targeted high-risk containers identified through ATS manifest reviews. These 

are containers that are identified to have a higher risk profile and which may pose 

a threat to our security. The higher the percentage of high-risk cargo screened 

using NII, the greater the likelihood of detecting potentially hazardous materials 

and preventing them from entering the United States. This technology provides a 

more efficient and effective alternative to 100 % physical inspection of all targeted 

high-risk containers. ATS targeting rules underwent refinement in FY 2008, resulting 

in an overall reduction in the number of mandatory examinations required. This 

“mandatory” decrease was not compensated for by a corresponding increase in 

discretionary (CBP Officer selected) exams, resulting in an overall decrease in the 

total number of NII exams completed. 

Recommended Action: 

CBP will work to increase the number of discretionary examinations to offset 

the decrease in mandatory exams that resulted from the improvements in the 

ATS targeting rules. Discretionary exams are conducted based on CBP Officer 

assessment and targeting. 

Data Source: Operations Management Reports (OMR) Data Warehouse. 

Performance Objective—Promote industry and foreign government partnership programs. 

Performance Measure—Compliance rate for C-TPAT members with established C-TPAT security guidelines. 

Key Highlights Target Met—See page 48 for results and detailed discussion 

68 U.S. Customs and Border Protection • Performance and Accountability Report 
Performance Summary
 

Performance Section 69 

 

Performance Objective—Enforce all U.S. trade, immigration, drug, consumer protection, intellectual property, and agricultural laws and regulations at the borders. 

Performance Measure—Air passengers compliant with laws, rules, and regulations (%). 

Description: 

The compliance rate of international air passengers with all of the laws, rules, and 

regulations that CBP enforces at the Ports of Entry, with the exception of agriculture 

laws and regulations. 

Key Highlights 

Fiscal Year: FY 2004 

Actual 

FY 2005 

Actual 

FY 2006

 Actual 

FY 2007

 Actual 

FY 2008 

Target 

FY 2008 

Results 

Target/Actual Indicator: 99.2% 99.0% 98.7% 98.7% 99.2% 99.5% 

Explanation of FY 2008 

Results: 

Target Met—The air passenger compliance rate is determined by the rate of 

occurrence of all violations of arriving travelers. CBP rolled-out implementation of the 

WHTI in the air environment during FY 2007. During FY 2008, CBP screened virtually 

all foreign nationals arriving in the air environment against the major electronic 

international law enforcement databases. 

Data Source: Traveler Enforcement Communication System (TECS), Categories I and II violations. 

Performance Measure—Land border passengers compliant with laws, rules, and regulations (%). 

Description: 

The compliance rate of land border vehicle passengers with all of the laws, rules, 

and regulations that CBP enforces at the Ports of Entry, with the exception of 

agriculture laws and regulations. 

Key Highlights 

Fiscal Year: FY 2004

 Actual 

FY 2005 

Actual 

FY 2006

 Actual 

FY 2007

 Actual 

FY 2008 

Target

 FY 2008 

Results 

Target/Actual Indicator: 99.9% 99.9% 99.9% 99.9% 99.9% 99.9% 

Explanation of FY 2008 

Results: 

Target Met—The land border vehicle passenger compliance rate is determined by 

the rate of occurrence of all violations of arriving travelers. The FY 2008 vehicle 

passenger compliance rate, maintained at the same rate as last year, is very high 

by historical standards largely due to an increased enforcement posture since 

September 11, 2001, expanded efforts at educating the traveling public on travel 

requirements, and continuing improvements in the use of technology at the ports 

of entry. This includes continuing installation of radiation portal monitors, expanded 

use of non-intrusive technology devices, and installation of electronic card readers. 

WHTI will be implemented for the land border in June 2009, substantially increasing 

the number of vehicle passengers screened against electronic international law 

enforcement databases. 

Data Source: Traveler Enforcement Communication System (TECS), Categories I and II violations. 
Performance Summary
 

 

 

 

 

Strategic Goal #5—Protecting America and Its Citizens 

Performance Objective—Reduce the importation of all prohibited or illegal drugs and other materials that 

are harmful to the public or may damage the American economy. 

Performance Measure—International air passengers in compliance with agricultural quarantine regulations 

(percent compliant). 

Key Highlights Target Not Met—See page 49 for results and detailed discussion 

Performance Measure—Border vehicle passengers in compliance with agricultural quarantine regulations 

(percent compliant). 

Description: 

The degree of compliance with U.S. Department of Agriculture (USDA) agricultural 

quarantine regulations and other mandatory agricultural product restrictions. CBP 

randomly samples border vehicle passengers for compliance with all USDA laws, 

rules and regulations using USDA guidance on sampling procedures. 

Key Highlights 

Fiscal Year: FY 2004

 Actual 

FY 2005

 Actual 

FY 2006

 Actual 

FY 2007

 Actual 

FY 2008 

Target 

FY 2008 

Results 

Target/Actual Indicator: 96.0% 93.7% 92.9% 95.7% 94.6% 97.7% 

Explanation of FY 2008 

Results: 

Target Met—The border vehicle agricultural compliance rate is determined by 

the rate of occurrence of all agriculture-related violations of arriving travelers. 

CBP has shown considerable success over the past two years in exceeding the 

historical target rate of 95% previously maintained by the USDA. CBP has been 

moving aggressively to fill open Agricultural Specialist positions and continued 

progress in reaching full staffing levels has resulted in improvements for FY 2008. 

Although high-risk land border ports are not yet fully staffed with trained Agricultural 

Specialists, CBP will attempt to fortify recent gains and make further improvements 

as the remaining positions are filled. 

Data Source: USDA Work Accomplishment Data System (WADS) Agricultural Quarantine Inspection monitoring activities. 

Performance Objective—Provide support to protect events and key assets of national interest, and mitigate the risks of terrorism and other threats to critical Government operations. 

Performance Measure—Percent of air support launches accomplished to support border ground agents to 

secure the border. 

Key Highlights Target Met—See page 50 for results and detailed discussion 

70 U.S. Customs and Border Protection • Performance and Accountability Report 
Performance Summary
 

Performance Section 71 

Performance Measure—Percent of at-risk miles under strategic air surveillance (strategic air coverage). 

Description: 

The percent of at risk miles under strategic air surveillance evaluated according to 

up-to-the-minute information and intelligence. This measure describes the area of 

the U.S. border determined to be under the span of control of CBP A&M assets. CBP 

A&M uses a multi-level layer to aerial response and support to accomplish this goal: 

1) strategic surveillance for the P-3 and UAS aircraft, 2) intelligence driven support 

for the rapid deployment of forces, and 3) strategic and tactical support to ground 

law enforcement such as the Office of Border Patrol and ICE. 

Key Highlights 

Fiscal Year: FY 2004

 Actual 

FY 2005

 Actual 

FY 2006

 Actual 

FY 2007

 Actual 

FY 2008 

Target

 FY 2008 

Results 

Target/Actual Indicator: N/A N/A 55% 60% 70% 84% 

Explanation of FY 2008 

Results: 

Target Met—The program exceeded the targeted level of performance due primarily 

to deploying four additional UAS and supporting resources to the suite of assets 

used for strategic air surveillance The UAS, in conjunction with other resources and 

assets provided key responders with surveillance information to assist in protecting 

our borders. 

Data Source: SAP, CARMAC, APATS, CAMITS generated reports and analyst spreadsheets. 

Performance Measure—Numbers of airspace incursions along the southern border (extending the physical zone 

of security beyond the borders). 

Description: 

The number of airspace incursions along the southern border. The measure monitors 

A&M efforts in reducing, with the intent of ultimately denying, the use of border air 

space for acts of terrorism or smuggling using intelligence and threat assessments. 

CBP A&M continues to gather and analyze intelligence on past and current threat 

patterns to forecast and disseminate information about potential and emerging 

threats. The targeted goals for this measure are to maintain this low level of 

border incursions at a minimum and reduce it if possible, until there are no border 

incursions. 

Key Highlights 

Fiscal Year: FY 2004

 Actual 

FY 2005

 Actual 

FY 2006

 Actual 

FY 2007

 Actual 

FY 2008 

Target 

FY 2008 

Results 

Target/Actual Indicator: N/A N/A 13 32 10 9 

Explanation of FY 2008 

Results: 

Target Met—There were only nine incursions of unknown aircraft into U.S. airspace 

that did not have proper clearance. These aircraft returned to their country of origin 

without landing in the U.S. Surveillance and interdiction efforts by the program 

continued to keep at a minimum unauthorized entry into U.S. airspace. 

Data Source: TECS, AMOR and validated real-time data. 
Performance Summary
 

 

 

 

Strategic Goal #6—Modernizing and Managing 

Performance Objective—Maintain a reliable, stable, and secure IT infrastructure and an array of technical 

support services, including laboratory and scientific services, tactical radio communication, field equipment maintenance/support, and round-the-clock customer assistance. 

Performance Measure—Percent of time the Traveler Enforcement Communication System (TECS) is available to 

end users. 

Key Highlights Target Met—See page 51 for results and detailed discussion 

72 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 
74 U.S. Customs and Border Protection • Performance and Accountability Report

Message from the Chief Financial Officer

U.S. Customs and Border Protection (CBP) is charged with the dual mission of 

protecting our Nation’s borders, while facilitating legitimate trade and travel. CBP 

promotes an effective management infrastructure that fosters the highest standards of integrity while maximizing our partnerships at home and abroad. The men 

and women of CBP work every day, all day, to protect our country from the threats 

of global terrorism, illegal immigration, and the trafficking of narcotics and other 

contraband. CBP personnel work to promote economic security and public safety 

by enforcing trade laws and intellectual property rights, collecting revenue on 

goods imported into the United States, and protecting our food supply and agricultural industries from pests and disease. The Office of Finance stands with other 

offices in CBP to help accomplish the agency’s mission by providing the resources and facilities necessary 

to ensure mission success.

For the third consecutive year, CBP has received an unqualified opinion on its full set of financial statements. This is a major accomplishment for our agency as we are the second largest revenue collector in 

the Federal Government and the largest in the U.S. Department of Homeland Security. In addition, CBP’s 

workforce has grown exponentially with the threats our nation faces. The financial stewardship responsibilities of CBP have also grown, as has our diligence in ensuring the effectiveness of that stewardship. Our 

modernized enterprise resource planning system, SAP, is now going into its fifth year of operation and 

maintains the financial continuity and internal control environment that allows CBP to demonstrate a sound 

financial management infrastructure. SAP’s modular integration provides all CBP employees and managers 

with up-to-the-minute financial information necessary to make immediate, front-line specific decisions.

The demand for OF’s critical mission support services continues to expand as CBP works to modernize its 

border security infrastructure and facilities to accommodate the growth in the number of border patrol 

agents, and the growing complexity of the border security mission.

In response to increasing business partner demands, OF reorganized its Asset Management function to 

allow for a stand-alone Facilities Management and Engineering (FM&E) organization. FM&E has assumed 

the leadership role in providing critical support to the border patrol agent hiring surge, and has instituted 

a Rapid Response Program to complete 73 concurrent facility projects along the Northern and Southern 

borders to ensure the establishment and maintenance of mission-ready facilities.

Additionally, to support the DHS Secure Border Initiative (SBI), which seeks to increase the number of 

border miles under effective operational control, the OF established the Investment Management Office 

(IMO) to ensure effective investment management practices, acquisition excellence, and the necessary 

business transformation processes and products. The IMO is responsible for improving CBP’s capital 

investment management program requirements and monitoring CBP investment management activities.

OF also continues to identify and correct issues that emerge from internal management evaluations in 

support of CBP’s Management Assurances, as well as auditor-identified weaknesses in internal controls. 

I can provide reasonable assurance that CBP has achieved the objectives of Section 2 (Management 
Financial Section

Controls) and Section 4 (Financial Management Systems) of the Federal Managers’ Financial Integrity Act. 

In addition, CBP maintains its commitment to addressing all of our financial management challenges by 

continuing to implement corrective measures that improve oversight and accountability.

In Fiscal Year 2009, CBP continues implementation of numerous efforts to increase border security and 

to facilitate legitimate trade. These efforts include completing the doubling of the border patrol agent 

workforce, constructing physical and virtual fences, and border facilities, as well as continuing the development and deployment of the Automated Commercial Environment (ACE).

I am proud to be a U.S. Customs and Border Protection employee, working alongside the men and women 

who make up this organization. CBP employees are dedicated to our agency mission and to the greater 

good of helping to secure our homeland and its citizens. Our goal remains to provide timely, reliable, and 

useful financial information to Congress and the American public, and to enable managers across CBP to 

make sound business decisions that further the critical agency mission.

Eugene H. Schied

Chief Financial Officer

Financial Section 75
Financial Statements
 

U.S. Customs and Border Protection 

Consolidated Balance Sheets 

As of September 30, 2008 and 2007 

(in Thousands) 

2008 2007 

ASSETS (Note 2) 

Intragovernmental: 

Fund Balance with Treasury (Note 3) $ 7,806,781 $ 7,196,406 

Accounts Receivable 17,856 30,553 

Receivables Due from Treasury – Refund and Drawback (Note 5) 151,177 175,870 

Advances and Prepayments (Note 11) 219,366 211,234 

7,614,063 

7,181
 

Total Intragovernmental 8,195,180 

Cash and Other Monetary Instruments (Note 4) 6,926 

Accounts Receivable, Net (Note 5) 177,644 151,402
 

Tax, Duties and Trade Receivables, Net (Note 6) 2,078,012 1,936,874
 

Inventory and Related Property, Net (Note 7) 102,725 76,817
 

General Property, Plant and Equipment, Net (Note 9) 3,508,097 2,513,855
 

Advances and Prepayments (Note 11) 329 417
 

TOTAL ASSETS $14,068,913 $12,300,609
 

Stewardship PP&E (Note 10) 

LIABILITIES (Note 12) 

Intragovernmental: 

Due to the Treasury General Fund $ 2,389,646 $ 2,078,305 

Accounts Payable 373,478 342,049 

Accrued FECA Liability (Note 12) 138,021 129,558 

Other 

Employee Benefits and Taxes (Note 15) 62,540 42,299 

Advances from Others (Note 15) 15,070 9,375 

2,601,586 

(Continued) 

Total Intragovernmental 2,978,755

The accompanying notes are an integral part of these financial statements. 

76 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 77 

Financial Statements
 

U.S. Customs and Border Protection 

Consolidated Balance Sheets (continued) 

As of September 30, 2008 and 2007 

(in Thousands) 

2008 2007 

Accounts Payable 741,144 635,306 

Accrued Payroll and Benefits (Note 13) 1,214,595 1,031,557 

Environmental & Disposal Liabilities (Note 12 and 14) 12,769 12,369 

Liabilities for Antidumping/Countervailing Duties 164,104 597,907 

Software License Agreements (Note 12 and 16) 32,737 47,680 

Legal Contingent Liabilities (Note 17) 59,592 83,463 

Other 

Refunds Payable (Note 15) 130,020 131,053 

Injured Domestic Industries (Note 15) 395,478 388,138 

TOTAL LIABILITIES $ 5,729,194 $ 5,529,059 

Commitments and Contingencies (Note 17) 

NET POSITION: 

Unexpended Appropriations 4,759,210 4,124,660 

Cumulative Results of Operations – Earmarked Funds (Note 18) 1,057,216 1,027,476 

Cumulative Results of Operations – Other Funds 2,523,293 1,619,414 

TOTAL NET POSITION 

TOTAL LIABILITIES AND NET POSITION 

$ 8,339,719 

$14,068,913 

$ 6,771,550 

$12,300,609 

The accompanying notes are an integral part of these financial statements. 
Financial Statements
 

2008 2007 

Office of Field Operations Border Security Inspections and Trade 

Facilitation at Ports of Entry 

Gross Cost $ 5,873,813 $ 5,140,275 

Less: Earned Revenue 204,201 203,479 

Net Program Costs 5,669,612 4,936,796 

Border Security and Control Between Ports of Entry 

Gross Cost 3,646,021 2,844,570 

Less: Earned Revenue 126,753 112,604 

Net Program Costs 3,519,268 2,731,966 

Air and Marine Operations 

Gross Cost 425,667 369,251 

Less: Earned Revenue 14,798 14,617 

354,634 

8,354,096 

Net Program Costs 410,869 

Total Gross Cost 9,945,501 

Less: Total Earned Revenue 

Net Cost of Operations (Note 19 and 20) 

345,752 

$ 9,599,749 

330,700 

$ 8,023,396

U.S. Customs and Border Protection 

Consolidated Statements of Net Cost 

For the Years Ended September 30, 2008 and 2007 

(in Thousands) 

The accompanying notes are an integral part of these financial statements. 

78 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 79 

Financial Statements
 

Earmarked 	

FY 2008 

All Other Consolidated 

Cumulative Results of Operations: 

Funds Funds Total 

Beginning Balances	 $ 1,027,476 $ 1,619,414 $ 2,646,890 

Budgetary Financing Sources: 

Appropriations Used — 7,254,124 7,254,124 

Non-Exchange Revenue (Note 21) 2,671,195 5,332 2,676,527 

Transfers In/Out Without Reimbursement (Note 21) (1,612,164) 1,808,747 196,583 

Other — (19,644) (19,644) 

Other Financing Sources (Non-Exchange): 

Donations and Forfeitures of Property — 14,002 14,002 

Transfers In/Out Without Reimbursement — 131,719 131,719 

Imputed Financing — 280,057 280,057 

Total Financing Sources	 1,059,031 9,474,337 10,533,368 

Net Cost of Operations	 (1,029,291) (8,570,458) (9,599,749) 

Net Change	 29,740 903,879 933,619 

Cumulative Results of Operations	 $ 1,057,216 $ 2,523,293 $ 3,580,509 

Unexpended Appropriations: 

Beginning Balance	 — 4,124,660 4,124,660 

Budgetary Financing Sources: 

Appropriations Received (Note 23) — 7,929,110 7,929,110 

Appropriations Transferred In/Out — 15,292 15,292 

Other Adjustments — (55,728) (55,728) 

Appropriations Used — (7,254,124) (7,254,124) 

634,550 

4,759,210 

$ 8,339,719 

Total Budgetary Financing Sources — 634,550 

Total Unexpended Appropriations	 

Net Position	 

— 

$ 1,057,216 

4,759,210 

$ 7,282,503 

The accompanying notes are an integral part of these financial statements. 

U.S. Customs and Border Protection
 

Consolidated Statement of Changes in Net Position
 

For the Year Ended September 30, 2008
 

(in Thousands) 
Financial Statements
 

Earmarked 

FY 2007 

All Other Consolidated 

Cumulative Results of Operations: 

U.S. Customs and Border Protection
 

Consolidated Statement of Changes in Net Position
 

For the Year Ended September 30, 2007
 

(in Thousands)
 

Funds Funds Total 

Beginning Balances $ 1,094,642 $ 1,055,968 $ 2,150,610 

Budgetary Financing Sources: 

Appropriations Used — 5,614,963 5,614,963 

Non-Exchange Revenue (Note 21) 2,421,788 5,332 2,427,120 

Transfers In/Out Without Reimbursement (Note 21) (1,551,659) 1,808,507 256,848 

Other — (92,140) (92,140) 

Other Financing Sources: 

Donations and Forfeitures of Property — 3,618 3,618 

Transfers In/Out Without Reimbursement (49) 3,558 3,509 

Imputed Financing — 305,758 305,758 

Total Financing Sources 870,080 7,649,596 8,519,676 

Net Cost of Operations (937,246) (7,086,150) (8,023,396) 

Net Change (67,166) 563,446 496,280 

Cumulative Results of Operations $ 1,027,476 $ 1,619,414 $ 2,646,890 

Unexpended Appropriations: 

Beginning Balance — 2,971,412 2,971,412 

Budgetary Financing Sources: 

Appropriations Received (Note 23) — 6,733,265 6,733,265 

Appropriations Transferred In/Out — 62,883 62,883 

Other Adjustments — (27,937) (27,937) 

Appropriations Used — (5,614,963) (5,614,963) 

1,153,248 

4,124,660 

$ 6,771,550 

Total Budgetary Financing Sources — 1,153,248 

Total Unexpended Appropriations 

Net Position 

— 

$ 1,027,476 

4,124,660 

$ 5,744,074 

The accompanying notes are an integral part of these financial statements. 

80 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 81 

Financial Statements
 

U.S. Customs and Border Protection 

Combined Statements of Budgetary Resources 

For the Years Ended September 30, 2008 and 2007 

(in Thousands) 

2008 2007 

Budgetary Resources: 

Unobligated Balance, Brought Forward, October 1: $ 2,894,905 $ 2,295,543 

Recoveries of Prior Year Unpaid Obligations 485,599 198,505 

Budget Authority 

Appropriation (Note 23) 11,972,974 11,190,407 

Spending Authority from Offsetting Collections 

Earned 

Collected 1,612,125 1,514,055 

Change in Receivables from Federal Sources (5,886) (33,960) 

Change in Unfilled Customer Orders 

Advance Received 125 (2,401) 

Without Advance from Federal Sources (34,201) (20,196) 

Expenditure Transfers from Trust Funds 3,093 3,026 

Subtotal 13,548,230 12,650,931 

Nonexpenditure Transfers from Trust Funds 336,663 373,904 

Actual Transfers, Budget Authority (3,000) — 

Permanently Not Available (86,880) (102,524) 

Total Budgetary Resources $17,175,517 $15,416,359 

Status of Budgetary Resources: 

Obligations Incurred (Note 22): 

Direct $12,862,976 $11,034,771 

Reimbursable 1,763,531 1,486,683 

Subtotal 14,626,507 12,521,454 

Unobligated Balance: 

Apportioned 7,892 16,641 

Exempt from Apportionment — — 

Subtotal 7,892 16,641 

Unobligated Balance Not Available 2,541,118 2,878,264 

Total Status of Budgetary Resources $17,175,517 $15,416,359 

(Continued) 

The accompanying notes are an integral part of these financial statements. 
Financial Statements
 

 

U.S. Customs and Border Protection 

Combined Statements of Budgetary Resources (continued) 

For the Years Ended September 30, 2008 and 2007 

(in Thousands) 

2008 2007 

Change in Obligated Balances: 

Obligated Balance, Net 

Unpaid Obligations, Brought Forward, October 1 $ 4,069,728 $ 3,067,174 

Uncollected Customer Payments from Federal Sources, 

Brought Forward, October 1 (320,785) (374,941) 

Total Unpaid Obligated Balance, Net 3,748,943 2,692,233 

Obligations Incurred, Net 14,626,507 12,521,454 

Gross Outlays (12,832,924) (11,354,401) 

Obligated Balance Transferred, Net 

Actual Transfers, Unpaid Obligations — 34,008 

Recoveries of Prior Year Unpaid Obligations, Actual (485,599) (198,505) 

Change in Uncollected Customer Payments from Federal Sources 40,087 54,156 

Obligated Balance, Net End of Period 

Unpaid Obligations 5,377,713 4,069,728 

Uncollected Customer Payments from Federal Sources (280,699) (320,785) 

Total, Unpaid Obligated Balance, Net, End of Period 5,097,014 3,748,943 

Net Outlays: 

Gross Outlays 12,832,924 11,354,401 

Offsetting Collections (1,615,343) (1,514,680) 

Distributed Offsetting Receipts (2,633,691) (2,360,600) 

Total Net Outlays $ 8,583,890 $ 7,479,121 

The accompanying notes are an integral part of these financial statements. 

82 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 83 

Financial Statements
 

 

 

U.S. Customs and Border Protection 

Consolidated Statements of Custodial Activity 

For the Years Ended September 30, 2008 and 2007 

(in Thousands) 

2008 2007 

Revenue Activity (Note 27): 

Sources of Cash Collections: 

Duties $ 27,319,994 $ 26,657,868 

User Fees 1,514,337 1,307,306 

Excise Taxes 2,457,352 2,626,443 

Fines and Penalties 70,770 56,321 

Interest 24,038 13,277 

Miscellaneous 9,537 2,548 

Total Cash Collections 31,396,028 30,663,763 

Accrual Adjustments (+/-) 128,194 5,727,469 

Total Custodial Revenue $ 31,524,222 $ 36,391,232 

Disposition of Collections: 

Transferred to Others: 

Treasury General Fund Accounts $ 20,947,673 $ 23,542,946 

U.S. Department of Agriculture 8,257,729 147,421 

Other Federal Agencies 22,980 21,214 

Government of Puerto Rico 12,089 14,158 

Government of the U.S. Virgin Islands 1,613 5,299 

Refunds and Drawbacks (Note 27) 1,295,705 6,922,034 

Non-Federal Other 856,938 13,229 

(Increase)/Decrease in Amounts Yet to be Transferred 129,495 5,724,931 

Total Disposition of Custodial Revenue 31,524,222 36,391,232 

Net Custodial Activity $ — $ — 

The accompanying notes are an integral part of these financial statements. 
84 U.S. Customs and Border Protection • Performance and Accountability Report

Notes to Financial Statements

Notes to Financial Statements

1. Significant Accounting Policies

Reporting Entity

U.S. Customs and Border Protection (CBP), was created on March 1, 2003, and is a component of the U.S. 

Department of Homeland Security (DHS). CBP is the unified border agency whose priority mission is the 

prevention of terrorist and terrorist weapons from entering the U.S. CBP is also responsible for administering the U.S. Trade Program and U.S. Narcotics Enforcement Program. CBP meets these responsibilities by: 

(1) enforcing the laws governing the flow of merchandise or commerce across the borders of the U.S.; (2) 

assessing and collecting duties, taxes, and fees on imported and other goods and services; and (3) 

enforcing drug-related and other laws and regulations of the U.S. on behalf of federal agencies and/or in 

conjunction with various state, local, and other federal agencies and foreign countries.

Substantially all of duty, tax, and fee revenues collected by CBP are remitted to various general fund 

accounts maintained by Treasury and U.S. Department of Agriculture. Treasury further distributes these 

revenues to other federal agencies in accordance with various laws and regulations. CBP transfers the 

remaining revenue (generally less than 1 percent of revenues collected) directly to other federal agencies, 

the Government of Puerto Rico, and the U.S. Virgin Islands. Refunds of revenues collected from import/

export activity are recorded in separate accounts established for this purpose and are funded through a 

permanent indefinite appropriation. These activities reflect the non-entity or custodial responsibilities that 

CBP, as an agency of the Federal Government, has been authorized by law to enforce.

Basis of Accounting and Presentation

These financial statements have been prepared from CBP accounting records in conformity with generally 

accepted accounting principles (GAAP). GAAP for federal entities are the standards prescribed by the Federal Accounting Standards Advisory Board, which was designated the official accounting standard-setting 

body of the Federal Government by the American Institute of Certified Public Accountants. The statements 

consist of the Consolidated Balance Sheet, the Consolidated Statement of Net Cost, the Consolidated 

Statement of Changes in Net Position, the Combined Statement of Budgetary Resources, and the Consolidated Statement of Custodial Activity.

These financial statements should be read with the understanding that CBP is a component of a sovereign 

entity; for which budgetary resources cannot be liquidated without the enactment of an appropriation, and 

that payment of liabilities other than for contracts can be abrogated by the sovereign entity.

These financial statements, with respect to the Consolidated Balance Sheet, the Consolidated Statement 

of Net Cost, and the Consolidated Statement of Changes in Net Position, are reported using the accrual 

basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and 

expenses are recognized when a liability is incurred without regard to receipt or payment of cash. The 

Combined Statement of Budgetary Resources is reported using the budgetary basis of accounting. Budgetary accounting facilitates compliance with legal constraints and controls over the use of federal funds. It 

generally differs from the accrual basis of accounting in that obligations are recognized when new orders 

are placed, contracts awarded, and services received that will require payments during the same or future 
Financial Section 85

Notes to Financial Statements

period. CBP non-entity revenue and refunds are reported on the Consolidated Statement of Custodial Activity using a modified cash basis. With this method, revenue from cash collections are reported separately 

from receivable accruals and cash disbursements are reported separately from payable accruals.

In accordance with OMB Circular A-136, intra-CBP transactions and balances have been eliminated from 

the Consolidated Balance Sheet, Consolidated Statement of Net Cost, and the Consolidated Statement of 

Changes in Net Position. As provided for by OMB Circular A-136, the Combined Statement of Budgetary 

Resources is presented on a combined basis; therefore, intra-CBP transactions and balances have not 

been eliminated from this statement. 

Earmarked Funds

The Statement of Federal Financial Accounting Standards (SFFAS) No. 27, Identifying and Reporting Earmarked Funds, requires CBP to separate dedicated collections into two categories, earmarked and fiduciary 

activity. See Note 18, Earmarked Funds, for specific required disclosures related to CBP’s earmarked funds.

CBP has program management responsibility for the following earmarked funds:

Appropriation Title

70X5087 CBP — Immigration User Fees

70X5695 Customs User Fees Account

70X5089 Land Border Inspection Fees

70X5451 Enforcement Fines Account

70X5543 International Registered Traveler

70X5694 Small Airport User Fees

70X8870 Harbor Maintenance Fee Collections

Assets and Liabilities

Intragovernmental assets and liabilities result from activity with other federal agencies. All other assets 

and liabilities result from activity with parties outside the Federal Government, such as domestic and foreign persons, organizations, or governments.

Fund Balance with Treasury, Cash, and Other Monetary Assets

Entity Fund Balance with Treasury are the amounts remaining as of September 30, 2008 and 2007 from 

which CBP is authorized to make expenditures and pay liabilities resulting from operational activity, except 

as restricted by law. Non-entity Fund Balance with Treasury represents funds available to pay refunds and 

drawback claims of duties, taxes, fees, and other non-entity amounts to be distributed to the Treasury 

General Fund and other federal accounts in a future period.

A timing difference occurs when cash is received and applied to a specific revenue type in one period, and 

the deposit occurs in a future period. Monetary instruments are held by CBP in lieu of an importer/broker 

filing a surety bond. Corresponding liabilities are recorded for amounts expected to be allocated in future 

periods to federal agencies.
 

 

 

 

 

Notes to Financial Statements
 

Advances and Prepayments 

Intragovernmental advances and prepayments consist of amounts paid to federal agencies prior to CBP 

receipt of goods and services. Advances and prepayments to the public consist primarily of prepaid rent. 

Accounts Receivable 

Intragovernmental accounts receivable represent amounts due from federal agencies. These receivables 

are expected to be fully collected. Accounts receivable from reimbursable services and user fees represent 

amounts due from non-federal sources for services performed. By law, collections of these receivables 

can be credited to the appropriation accounts from which the related costs were paid. These receivables 

are net of amounts deemed uncollectible which are determined by considering the debtor’s current ability 

to pay, payment record and/or as well as the probable recovery of amounts from secondary sources, such 

as sureties, and an analysis of aged receivable activity. The user fee receivable is based on a calculated 

estimate using historical user fee receivables. 

Title 19 of the United States Code, chapter 1, section 58c, authorizes CBP, formerly known as the United 

States Customs Service, to collect user fees for services provided in connection with the processing of 

commercial air and commercial vessel passengers, loaded or partially loaded railroad cars carrying passengers, or commercial flights arriving into the customs territory as defined in general note 2 of the Harmonized Tariff Schedule of the United States (some exceptions apply). 

Receivables accrue for commercial airline and commercial vessel fees on a quarterly basis and the payments are due to CBP within thirty-one days after the close of the calendar quarter in which the fees are 

collected. Railroad car fees accrue on a monthly basis and the payments are due to CBP on or before the 

date that is sixty days after the applicable month. 

Title 8 of the United States Code, chapter 12, subchapter II, part IX, section 1356, authorizes CBP to collect immigration user fees for inspection or pre-inspection of passengers arriving at a port of entry in the 

United States (as defined in Title 8, chapter 12, subchapter I, section 1101) aboard a commercial aircraft 

and commercial vessel (some exceptions apply). Receivables accrue for commercial airline and commercial vessel user fees on a quarterly basis. Payment is due any time within thirty-one days after the quarter 

in which the fees are collected, except the July and August fees collected from airline passengers shall be 

made ten days before the end of the fiscal year. The first quarter payment shall include any collections 

made in the preceding quarter that were not remitted with the previous payment. 

Receivable Due from Treasury and Due to the Treasury General Fund 

The Receivable Due from Treasury represents amounts to be provided by Treasury to fund accrued liabilities of duty, tax, and/or fee refunds and drawbacks. Due to the Treasury General Fund is the offsetting 

liability to non-entity collections and non-entity receivables. 

Tax, Duties, and Trade Receivables 

Accounts receivable consist of duties, user fees, fines and penalties, refunds and drawback overpayments, and interest associated with import/export activity, which have been established as a specifically 

identifiable, legally enforceable claim which remain uncollected as of year-end. These receivables are net 

of amounts deemed uncollectible which were determined by considering the debtor’s payment record and 

86 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 87 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements
 

willingness to pay, the probable recovery of amounts from secondary sources, such as sureties, and an 

analysis of aged receivable activity. CBP’s non-entity receivables are described in more detail in Note 6, 

Tax, Duties, and Trade Receivables, Net. 

Inventory and Related Property 

Inventory and Related Property consist of aircraft and marine parts and materials to be used in CBP’s 

operations. Aircraft parts and materials are recorded at average unit cost, and marine parts and materials 

are recorded using the First-In-First-Out valuation method. Both methods approximate actual acquisition 

costs. When ultimately used in CBP operations, an operating expense is recorded. 

Seized and Forfeited Property 

Prohibited seized and forfeited property results primarily from CBP criminal investigations and passenger/ 

cargo processing. Seized property is not considered an asset of CBP and is not reported as such in CBP’s 

financial statements; however, CBP has a stewardship responsibility until disposition of the seized items 

are determined. Non-prohibited seized property, including monetary instruments, real property, and tangible personal property of others in the actual or constructive possession of CBP will be transferred to the 

Treasury Forfeiture Fund and is not presented in the accompanying CBP Consolidated Balance Sheet or 

Note 8, Seized and Forfeited Property. 

Forfeited property is property for which the title has passed to the U.S. Government. As noted above, nonprohibited forfeited property or currency becomes assets of the Treasury Forfeiture Fund. However, prohibited forfeited items, such as counterfeit goods, narcotics, or firearms, are held by CBP until disposed or 

destroyed. In accordance with Statement of Federal Financial Accounting Standards (SFFAS) No. 3, Accounting for Inventory and Related Property, analysis of changes in seized and forfeited property of prohibited 

items are disclosed in Note 8, Seized and Forfeited Property. 

General Property, Plant, and Equipment 

CBP capitalized property, plant, and equipment with an acquisition value of $5,000 or greater and a useful 

life of 2 years or greater if acquired prior to October 1, 1995. Beginning October 1, 1995, CBP capitalizes 

property, plant, and equipment with an acquisition value of $50,000 or greater, and a useful life of 2 years 

or greater. The property, plant, and equipment assets acquired by CBP from the former Immigration and 

Naturalization Service as part of the formation of the Department of Homeland Security were capitalized if 

the acquisition value was $25,000 or greater. As of October 1, 2000, CBP implemented SFFAS No. 10, 

Accounting for Internal Use Software. SFFAS No. 10 requires the capitalization of all internal use software, 

including commercial off-the-shelf, contractor developed, and internally developed software. As a result, 

CBP began capitalizing costs associated with the development of internal use software. In addition, CBP 

implemented the SFFAS No. 10 recommendation to apply capital lease accounting concepts to software 

license fee agreements that give CBP the “right to use” the software. Prior to October 1, 2000, costs relating to the development of internal use software and “right to use” license agreements were expensed. 

Expenditures for normal repairs and maintenance are charged to expense as incurred. Expenditures greater 

than $50,000 for improving or rebuilding an asset and increases an asset’s useful life are capitalized. 

Prior to October 1, 1995, expenditures greater than $5,000 for improving or rebuilding an asset and that 

increased an asset’s useful life were capitalized. 
 

 

 

 

 

 

 

 

Notes to Financial Statements
 

Depreciation and amortization are computed using the straight line method over the estimated useful lives 

of the assets ranging from 2 to 30 years for equipment and software, 2 to 30 years for leasehold improvements, and 6 to 40 years for buildings, structures, and land improvements. Amortization of capitalized 

software begins on the date of acquisition if purchased or when the module or component has been successfully tested if contractor or internally developed. 

Commercial/Travel Payable 

A liability is recorded for an accounts payable accrual from commercial/travel activities. A portion of this 

liability is determined using a calculated estimate. This estimate is based on a ratio developed using historical subsequent disbursements and undelivered orders and applying the ratio to the undelivered orders 

as of September 30, 2008 and 2007. 

Other Non-Entity Items in CBP Custody 

CBP has the authority, in accordance with provisions of the Federal Crime Code and Federal Rules of Criminal Procedures, to retain property within its custody for evidentiary purposes. Because this property is not 

seized under seizure and forfeiture laws, it cannot become property of the U.S. Government and is intended 

to be returned to the owner at some future date. This evidence is not disclosed in the financial statements 

or a related note as the amount is not significant, but does represent a fiduciary responsibility of CBP. 

Accrued Annual, Sick, and Other Leave and Compensatory Time 

Annual leave, compensatory time, and other leave time are accrued when earned. The accrual is presented 

as a component of the payroll and benefits liability in the Consolidated Balance Sheet and is adjusted for 

changes in compensation rates and reduced for annual leave taken. Sick leave is not accrued when 

earned, but is expensed when taken. For additional information see Note 13, Accrued Payroll and 

Benefits. 

Pension Costs, Other Retirement Benefits, and Other Post-Employment Benefits 

Most CBP employees hired prior to January 1, 1984, participate in the Civil Service Retirement System 

(CSRS). CBP contributes 7 percent of base pay for regular employees, and 7.5 percent for law enforcement 

agents. Employees hired after December 31, 1983, are automatically covered by the Federal Employees’ 

Retirement System (FERS) and Social Security. A primary feature of FERS is that it offers a savings plan to 

which CBP automatically contributes 1 percent of base pay and matches any employee contributions up to 

an additional 4 percent of base pay. For most employees hired after December 31, 1983, CBP also contributes the employee’s matching share for Social Security. For the FERS basic benefit CBP contributes 

11.2 percent of base pay for regular employees and 24.9 percent for law enforcement agents. The pay 

base for determining CBP contributions to CSRS and FERS for inspectors and canine officers includes regular pay and up to a maximum of $17,500 in certain overtime earnings for FY 2008 and 2007. CBP recognizes the full costs of its employees’ pension benefits; however, the liability associated with these costs 

is recognized by the Office of Personnel Management (OPM). 

Similar to Federal retirement plans, OPM, rather than CBP, reports the liability for future payments to 

retired employees who participate in the Federal Employees Health Benefits Program and the Federal 

Employees Group Life Insurance Program. 

88 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 89 

 

 

 

 

 

 

 

 

Notes to Financial Statements
 

A liability for other post-employment benefits, which includes all types of benefits to former or inactive (but 

not retired) employees, their beneficiaries, and covered dependents, is also recognized. For additional 

information see Note 13, Accrued Payroll and Benefits. 

Workers’ Compensation 

A liability is recorded for actual and estimated future payments to be made for workers’ compensation 

pursuant to the Federal Employees’ Compensation Act (FECA). The actual liability is presented as a component of intragovernmental other liabilities and the actuarial liability is presented as Federal Employee 

and Veterans Benefits in the accompanying Consolidated Balance Sheet. The FECA program is administered by the U.S. Department of Labor (DOL), which initially pays valid claims and subsequently seeks 

reimbursement from federal agencies employing the claimants. Reimbursement to DOL on payments 

made usually occurs approximately 2 years subsequent to the actual disbursement. Budgetary resources 

for this intragovernmental liability are made available to CBP as part of its annual appropriation from Congress in the year in which the reimbursement takes place. 

Additionally, the actuarial liability due to the public includes the expected liability for death, disability, medical, and miscellaneous costs for approved compensation cases. The liability is determined using a method 

that utilizes historical benefit payment patterns related to a specific incurred period to predict the ultimate 

payments related to that period. Based on information provided by DOL, DHS allocates the actuarial liability 

to its components and department offices based on the payment history for the components and department offices. The accrued liability is not covered by budgetary resources and will require future funding. 

Unexpended Appropriations 

Unexpended appropriations represent the amount of CBP unexpended appropriated spending authority as 

of fiscal year-end that is unliquidated or is unobligated and has not lapsed, been rescinded, or withdrawn. 

Cumulative Results of Operations 

Cumulative Results of Operations primarily represent the excess of user fee revenues over related expenses. 

It also reflects the net investment in Property, Plant and Equipment, Inventory and Related Property held 

for use, and transfers in of equipment, materials, and supplies from other federal agencies without reimbursement. Also, included as a reduction in Cumulative Results of Operations, are liabilities incurred, 

which will require funding from future appropriations, such as accumulated annual and other leave earned 

but not taken, accrued workers’ compensation, and contingent liabilities. The portion of Cumulative Results 

of Operations attributable to earmarked funds is shown separately on both the Consolidated Statement of 

Changes in Net Position and the Consolidated Balance Sheet. For additional information see Note 18, 

Earmarked Funds. 

Revenue, Financing Sources, and Expense Recognition 

CBP entity activities are financed principally through appropriations, exchange revenue, and non-exchange 

revenue. Appropriations used are recognized as a financing source when expenses are incurred or assets 

are purchased. Exchange revenues from reimbursable services and intragovernmental reimbursable activity are recognized as earned when the goods or services are provided and reflect the full cost of the goods 

or services provided. Non-exchange revenue from user fees is recognized as earned in accordance with 
	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

 

 

 

 

 

 

Notes to Financial Statements
 

the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended. CBP may retain the user fee 

revenues and expend them as authorized by law for CBP inspector overtime and other activities directly 

related to the services to which the fees relate. An imputed financing source is also recognized to offset 

costs incurred by CBP but funded by another federal source, generally in the period in which the cost was 

incurred. Expenses are recognized when goods or services are received, when inventory is used, or assets 

are depreciated or amortized. 

The FY 2008 and 2007 activities reported on the Consolidated Statement of Net Cost contain all resource 

costs assigned from CBP cost centers. All field operational cost centers were surveyed for time spent in 

the Passenger Processing, Trade Compliance, Outbound Operations, and field Mission Support activities. 

For enforcement operational cost centers, the time spent in the activities was extracted from the Customs 

Electronic Data Warehouse. Time reported by the field and enforcement operational cost centers is also 

used to assign mission support and overhead costs to “front-line” activities. 

Non-entity Revenue is recognized when the cash CBP is entitled to collect on behalf of the Federal Government is received. Primarily, these revenue collections result from current fiscal year activities. The significant types of revenues collected and related disbursements are described below: 

•	 Duties: amounts collected on imported goods.

•	 User fees: amounts collected for certain services as provided by law.

•	 Excise taxes: amounts collected on imported distilled spirits, wines and tobacco products, and other

miscellaneous taxes collected on behalf of the Federal Government. 

•	 Fines and penalties: amounts collected for violations of laws and regulations.

•	 Refunds: payments made to importers/exporters are primarily identified when the import entries are

liquidated, a process in which CBP makes final determination of duties, taxes, fees, and interest owed 

on each entry and compares it to the estimated amount previously determined and paid by the importer/ 

broker. Interest is included in the refund generally for the period of time between when the estimated 

amounts were received from the importer/broker and the time the entry is liquidated. When a refund is 

identified prior to liquidation, the refund from this remittance is funded from the duty, tax, or fee 

collections rather than from the Refunds and Drawback Account. 

•	 Drawback: a remittance, in whole or in part, of duties, taxes, or fees. Drawback typically occurs when 

the imported goods on which duties, taxes, or fees have been previously paid are subsequently 

exported from the United States or destroyed prior to entering the commerce of the United States. 

Depending on the type of claim, the claimant has up to 6 or 8 years from the date of importation to 

file for drawback. 

A financing source for refunds and drawback is recognized when payment is made. The financing source, 

representing the permanent, indefinite appropriation account used to fund the disbursement, is recorded 

as a decrease in the amount transferred to Treasury General Fund Accounts reported on the Statement of 

Custodial Activity. 

An accrual adjustment is included to adjust cash collections and refund disbursements with the net 

increase or decrease of accrued Non-entity Accounts Receivables, net of uncollectible amounts, and 

refunds payable. CBP will also take into custody, without risk or expense, merchandise termed “general 

order property” which for various reasons cannot legally enter into the commerce of the United States. 

90 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 91 

 

 

 

 

Notes to Financial Statements
 

CBP’s sole responsibility for the general order property is to ensure the property does not enter into U.S. 

commerce. If general order property remains in CBP custody for a prescribed period of time, without payment of all estimated duties, storage, and other charges, the property is considered unclaimed and abandoned and can be sold by CBP at public auction. Auction sales revenue in excess of charges associated 

with the sale or storage of the item is remitted to the Treasury General Fund. In some cases, CBP incurs 

charges prior to the sale and funds these costs from entity appropriations. Regulations permit CBP to 

offset these costs of sale before returning excess amounts to Treasury. Proceeds from the sale of general 

order property totaled $4.5 million and $5.6 million for the years ended September 30, 2008 and 2007, 

respectively. Excess amounts returned to the Treasury General Fund totaled $372,000 and $478,000 for 

the years ended September 30, 2008 and 2007, respectively. 

Use of Estimates 

Management has made certain estimates and assumptions in the reporting of assets, liabilities, and note 

disclosures in the Consolidated Balance Sheet, the Consolidated Statement of Net Cost, the Consolidated 

Statement of Changes in Net Position, the Combined Statement of Budgetary Resources, the Consolidated Statement of Custodial Activity, and accompanying notes. Actual results could differ from these 

estimates. Significant estimates include: year-end accruals of accounts payable, contingent legal and environmental liabilities, accrued workers’ compensation, allowance for doubtful accounts receivable, retirement and post-retirement benefits assumptions, and certain non-entity receivables and payables related 

to custodial activities. 

Taxes 

CBP, as a federal component, is not subject to federal, state, or local income taxes, and accordingly, no 

provision for income taxes has been recorded in the accompanying financial statements. 
2008
 2007
 

Intragovernmental: 

Fund Balance with Treasury (Note 3) $ 858,130 $ 1,123,689 

Receivables Due from Treasury (Note 5) 151,177 175,870 

Total Intragovernmental 1,009,307 1,299,559 

Public:

Accounts Receivable, Net
 1,237 2,538 

Cash and Other Monetary Instruments (Note 4)
 6,336 5,207 

Tax, Duties, and Trade Receivables, Net (Note 6)
 2,078,012 1,936,874 

Property, Plant, and Equipment, Net
 2,097 2,423 

Total Public 2,087,682
 1,947,042
 

Total Non-Entity Assets 3,096,989 3,246,601 

Total Entity Assets 

Total Assets 

10,971,924

$ 14,068,913 

9,054,008 

$ 12,300,609 

 

Notes to Financial Statements
 

2. Non-Entity Assets 

Non-entity assets as of September 30, 2008 and 2007, consist of the following (in thousands): 

Non-entity Fund Balance with Treasury as of September 30, 2008 and 2007 includes approximately $144.7 

million and $465 million (in deposit fund) in duties collected by CBP for unliquidated anti-dumping/countervailing duties and $705.3 million and $573.7 million for Injured Domestic Industries as of September 

30, 2008 and 2007, respectively. These assets offset accrued liabilities as of September 30, 2008 and 

2007. 

Non-entity Fund Balance with Treasury consists of special and deposit funds, permanent appropriations, 

and miscellaneous receipts that are available to pay non-entity liabilities. Non-entity Receivables Due from 

Treasury represent an estimate of duty, tax, and/or fee refunds and drawbacks that will be reimbursed by 

a permanent and indefinite appropriation account. Tax, Duties, and Trade receivables from the public represent amounts due from importers for goods and merchandise imported to the United States and, upon 

collection, will be available to pay the accrued intragovernmental liability Due to the Treasury General Fund, 

which equaled $2.4 billion and $2.1 billion as of September 30, 2008 and 2007. 

92 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 93 

 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements
 

3. Fund Balance with Treasury 

Fund Balance with Treasury as of September 30, 2008 and 2007 consists of the following (in thousands): 

2008 Entity Non-Entity Totals 

Trust Funds $ 4,987 $ — $ 4,987 

Special Funds 950,817 705,263 1,656,080 

General Funds 5,990,578 8,210 5,998,788 

Deposit Funds 2,269 144,657 146,926 

Totals $ 6,948,651 $ 858,130 $ 7,806,781 

2007 Entity Non-Entity Totals 

Trust Funds $ 5,902 $ — $ 5,902 

Special Funds 934,181 573,703 1,507,884 

General Funds 5,128,074 84,774 5,212,848 

Deposit Funds 4,560 465,212 469,772 

Totals $ 6,072,717 $ 1,123,689 $ 7,196,406 

Trust funds are both receipt accounts and expenditure accounts that are designated by law as a trust fund. 

The entity trust fund balances result from CBP authority to use the proceeds from general order items sold 

at auction to offset specific costs incurred by CBP relating to their sale, and to use available funds from the 

Harbor Maintenance Fee Trust Fund to offset administrative expenses related to the collection of the Harbor 

Maintenance Fee. 

Special funds are receipt funds used for specific purposes. Entity amounts comprising the special fund balances result from CBP authority to assess and collect passenger- and conveyance-related user fees, CBP 

authority to assess and collect fees associated with services performed at certain small airports or other 

facilities, and CBP authority to retain amounts needed to offset costs associated with collecting duties, 

taxes, and fees for the Government of Puerto Rico. As of September 30, 2008 and 2007, CBP User Fees 

Account contained approximately $767.7 million and $729.9 million, respectively; CBP Services at Small 

Airports account contained approximately $12.8 million and $10.4 million, respectively; and the Refunds, 

Transfers, and Expenses of Operation of Puerto Rico account contained approximately $39.3 million and 

$32.9 million, respectively. CBP also has entity special funds for immigration user fees of $128.5 million 

and $159.1 million, land border inspection fees of $2.3 million and $1.5 million, and immigration enforcement account of $.2 million and $.3 million as of September 30, 2008 and 2007, respectively. Non-entity 

fund balance includes monies received in connection with antidumping and countervailing duty orders and 

findings to qualifying Injured Domestic Industries of $705.3 million and $573.7 million as of September 30, 

2008 and 2007, respectively. 

General funds consist of amounts appropriated annually by Congress to fund the operations of CBP. The 

non-entity general fund balance represents permanent, indefinite appropriations to pay refunds and drawback claims of duties, taxes, or fees. The balance is presented as a non-entity balance because the refund 

and drawback payments are associated with CBP custodial activity of collecting revenue on behalf of the 

Federal Government. 
 

2008 Entity Non-Entity Totals 

Unobligated Balance 

Available $ 7,892 $ 858,130 $ 866,022 

Unavailable 1,116,847 — 1,116,847 

Obligated Balance not yet Disbursed 5,104,904 — 5,104,904 

Restricted Unobligated Funds 

Totals 

719,008 

$ 6,948,651 

— 

$ 858,130 

719,008 

$ 7,806,781 

2007 Entity Non-Entity Totals 

Unobligated Balance 

Available $ 16,641 $ 1,123,689 $ 1,140,330 

Unavailable 1,624,298 — 1,624,298 

Obligated Balance not yet Disbursed 3,751,514 — 3,751,514 

Restricted Unobligated Funds

Totals 

 680,264 

$ 6,072,717 

— 

$ 1,123,689 

680,264 

$ 7,196,406 

 

 

 

 

 

 

 

Notes to Financial Statements
 

The entity deposit fund balance represents amounts received as an advance that are not accompanied by 

an order. Once the order is received, the deposit fund balance is decreased. Deposit funds represent 

amounts received as an advance that are not accompanied by an order and include non-entity collections. 

Status of Fund Balance with Treasury as of September 30, 2008 and 2007 consists of the following (in 

thousands): 

Amounts reported as Unobligated Balance Unavailable and Obligated Balance not yet Disbursed will not 

match amounts reported on the Combined Statement of Budgetary Resources due to CBP reporting all 

Non-Entity Fund Balance with Treasury amounts as Unobligated Balance Available. 

Portions of the Unobligated Balance Unavailable include amounts appropriated in prior fiscal years that are 

not available to fund new obligations. However, it can be used for upward and downward adjustments for 

existing obligations in future years. 

The Obligated Balance not yet Disbursed represents amounts designated for payment of goods or services 

ordered, but not received, or goods and services received but for which payment has not yet been made. 

CBP returned to Treasury $31.2 million and $73.5 million for indefinite no-year authority and retained $1.7 

million and $1.9 million in authority for obligations pursuant to public law during both the years ending 

September 30, 2008 and 2007. 

In accordance with Public Law 101-510, CBP is required to automatically cancel obligated and unobligated 

balances of appropriated funds 5 years after a fund expires. Obligations that have not been paid at the 

time an appropriation is canceled may be paid from an unexpired appropriation that is available for the 

same general purpose. As of September 30, 2008, CBP canceled $28.1 million from FY 2003 annual 

appropriations, of which $31.4 million was deobligated. As of September 30, 2007, CBP canceled $29 

million from FY 2002 annual appropriations, of which $23.8 million was deobligated. Based on historical 

94 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 95 

2008 Entity Non-Entity Totals 

Imprest Funds $ 147 $ — $ 147 

Undeposited Collections 443 5,636 6,079 

Monetary Instruments 

Totals 

— 700 700 

$ 590 $ 6,336 $ 6,926 

2007 Entity Non-Entity Totals 

Imprest Funds $ 147 $ — $ 147 

Undeposited Collections 1,827 4,957 6,784 

Monetary Instruments 

Totals 

— 250 250 

$ 1,974 $ 5,207 $ 7,181 

 

 

 

 

Notes to Financial Statements
 

activity, CBP estimates obligations related to canceled appropriations that will be paid from future appropriations would not exceed $1 million in any fiscal year. 

4. Cash and Other Monetary Instruments 

Cash and Other Monetary Instruments as of September 30, 2008 and 2007, consist of the following (in 

thousands): 

Undeposited collection balances represent timing differences between when cash relating to duties, taxes, 

fees, and other trade-related collections are received and the deposit occurs in a future period. Cash can 

either be distributed to the General Fund, other federal agencies, or other governments, or returned to the 

importer/broker. The monetary instruments represent instruments importers/brokers provide to CBP in 

lieu of obtaining surety bonds. 

5. Accounts Receivable, Net 

Receivables Due from Treasury — Refund and Drawback 

Non-entity Receivables Due from Treasury represent an estimate of duty, tax, and/or fee refunds and 

drawbacks that will be reimbursed by a permanent and indefinite appropriation account and will be used 

to pay estimated duty refunds and drawbacks of $151.2 million and $175.9 million, as of September 30, 

2008 and 2007, respectively. 

Accounts Receivable with Public, Net 

As of September 30, 2008 and 2007, Accounts receivable with the public consists of reimbursable service 

receivables totaling $5.6 million and $6 million respectively, and are considered fully collectible; Customs 

user fee receivables total $103.4 million and $76 million, and are net of uncollectible amounts totaling 

$2.8 million and $3 million, respectively; Immigration user fee receivables total $68.6 million and $69 

million, and are net of uncollectible amounts totaling $23.1 million and $19 million, respectively. 
Notes to Financial Statements
 

6. Tax, Duties, and Trade Receivables, Net 

Receivables as of September 30, 2008 and 2007 are as follows (in thousands): 

2008 

Gross Amounts Total Net 

Receivable Category Receivable Uncollectible Receivables 

Duties $1,841,687 $ (127,777) $1,713,910 

Excise Taxes 98,978 (5,830) 93,148 

User Fees 144,799 (4,416) 140,383 

Fines/Penalties 773,692 (732,576) 41,116 

Interest 222,699 (198,717) 23,982 

Anti-Dumping/ 

Countervailing Duties 310,097 (244,700) 65,397 

Refunds and Drawback 453 (377) 76 

Totals $3,392,405 $(1,314,393) $2,078,012 

2007 

Gross Amounts Total Net 

Receivable Category Receivable Uncollectible Receivables 

Duties $1,648,851 $ (115,903) $1,532,948 

Excise Taxes 126,752 (5,652) 121,100 

User Fees 132,452 (5,164) 127,288 

Fines/Penalties 1,115,645 (1,051,246) 64,399 

Interest 190,338 (175,458) 14,880 

Anti-Dumping/ 

Countervailing Duties 311,135 (235,041) 76,094 

Refunds and Drawback 2,062 (1,897) 165 

Totals $3,527,235 $(1,590,361) $1,936,874 

CBP assesses duties, taxes, and fees on goods and merchandise brought into the United States from 

foreign countries. At the time importers bring merchandise into the United States, they are required to file 

CBP entry documents. Generally, within 10 working days after CBP releases the merchandise into the U.S. 

commerce, the importer is to submit an entry document with payment of estimated duties, taxes, and 

fees. In FY 2004, CBP began implementing periodic monthly payment that requires payment of estimated 

duties, taxes, and fees on the 15th work day of the month following release. A receivable of $1.9 billion 

and $1.7 billion was recorded for 923,774 entries and 887,574 entries for merchandise released into commerce on or before September 30, 2008 and 2007, respectively, of which $1.2 billion and $967 million 

related to importers using the periodic monthly payment. There were an additional 3,900 entries and 

4,829 entries for merchandise released into commerce on or before September 30, 2008 and 2007, 

respectively, for which a receivable amount could not be determined because the entry summary documentation describing the type, quantity, and value of the merchandise had not been received from the 

96 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 97 

 

 

 

2008 2007 

Aircraft 

Items Held for Use $ 86,167 $ 73,290 

Excess, Obsolete, and Unserviceable items 8,305 — 

Total Aircraft 94,472 73,290 

Vessels 

Totals 

8,253 

$ 102,725 

3,527 

$ 76,817 

 

 

Notes to Financial Statements
 

importers. It is CBP policy to track and demand payment of unpaid estimated duties, taxes, and fees 

receivable amounts by establishing a liquidated damage case, which generally results in a fine and penalty 

type receivable. 

A fine or penalty is established when a violation of import/export law is discovered. CBP assesses a liquidated damage or penalty for these cases to the maximum extent of the law. After receiving the notice of 

assessment the importer or surety has 60 days to either file a petition requesting a review of the assessment or make payment of the assessed amount. Until this process has been completed, CBP records an 

allowance on fines and penalties of approximately 95.75 percent of the total assessment based on historical experience of fines and penalties mitigation and collection. Duties and taxes receivable are non-entity 

assets for which there is an offsetting liability due to the Treasury General Fund. 

7. Inventory and Related Property, Net 

Operating Materials and Supplies 

Operating Materials and Supplies (OM&S) consist of parts and materials to repair and maintain CBP aircraft and vessels used in enforcement activities. CBP defines operating materials and supplies categorized as “Excess, Obsolete, and Unserviceable” to consist of items that are obsolete and no longer useable on CBP aircraft as well as items that are useable on CBP aircraft after repair. CBP does not currently 

hold operating materials and supplies in reserve for future use. OM&S items that are obsolete and no 

longer useable were included in the $73.3 million Aircraft total in 2007. Items that are useable on CBP 

aircraft after repair were not reported in FY 2007. 

Operating Materials and Supplies as of September 30, 2008 and 2007 consist of the following (in 

thousands): 

8. Seized and Forfeited Property 

This schedule is presented for material prohibited (non-valued) seized and forfeited property only. These 

items are retained and ultimately destroyed by CBP and are not transferred to the Department of Treasury 

Forfeiture Fund or other federal agencies. The ending balance for firearms includes only those seized items 

that can actually be used as firearms. Illegal drugs are presented in kilograms and a portion of the weight 

includes packaging, which often cannot be reasonably separated from the weight of the drugs since the 

packaging must be maintained for evidentiary purposes. Firearms and pornography are presented in number of cases. 
Balance 

Unit of October 1 New New Adjustments Balance 

Category Measurement (1) Seizures Remissions Forfeitures (2) September 30 

Illegal Drugs 

Cannabis 

(marijuana) Kilograms 737 774,841 0 (772,729) 405 3,254 

Cocaine Kilograms 353 22,985 0 (23,075) (77) 186 

Heroin Kilograms 20 5,459 0 (5,463) 4 20 

Ecstasy Kilograms 0 1,426 0 (1,393) 0 33 

Steroids Kilograms 0 514 (65) (305) (8) 136 

Firearms Number of

cases
 

864 1,970 (886) (675) (143) 1,130

Pornography Number of
 101 173 (3) (140) (55) 76 

Notes to Financial Statements
 

Analysis of Changes in Prohibited (Non-Valued) Seized Property, September 30, 2008 

Unit of Balance New New Adjustments Balance 

Category Measurement October 1 Seizures Remissions Forfeitures (1) September 30 

Illegal Drugs 

Cannabis 

(marijuana) Kilograms 3,254 691,151 0 (694,570) 1,202 1,037 

Cocaine Kilograms 186 19,924 0 (19,876) (19) 215 

Heroin Kilograms 20 5,866 0 (5,878) 0 8 

Ecstasy Kilograms 33 1,114 0 (1,145) 31 33 

Steroids Kilograms 136 393 (10) (378) 4 145 

Firearms Number of 

cases 1,130 1,444 (870) (742) (89) 873 

Pornography Number of 

cases 

76 96 (5) (87) (37) 43 

(1) Adjustments are caused by changes during the year to the beginning balances of cases. An example includes changes in 

the quantity from the amount reported in the beginning balance. Also, a prior year case can change legal status or property 

type. For example, a case considered forfeited could be re-opened and changed to seized status or a drug property type may 

change on a case. 

Analysis of Changes in Prohibited (Non-Valued) Seized Property, September 30, 2007 

cases 

(1) Beginning balances for ecstasy and steroids are not reported in this column since this is the first year for reporting these 

categories. The beginning balances for ecstasy and steroids are reported in the adjustments column. 

(2) Adjustments are caused by changes during the year to the beginning balances of cases. An example includes changes in 

the quantity from the amount reported in the beginning balance. Also, a prior year case can change legal status or property 

type. For example, a case considered forfeited could be re-opened and changed to seized status or a drug property type may 

change on a case. Beginning balances for ecstasy and steroids are reported in the adjustment column since FY 07 is the first 

year for reporting these categories. 

98 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 99 

Unit of Balance New Adjustments Balance 

Category Measurement October 1 Forfeitures Transfers Destroyed (1) September 30 

Illegal Drugs 

Cannabis 

(marijuana) Kilograms 172,395 694,570 (1,943) (508,918) (239,504) 116,600 

Cocaine Kilograms 21,564 19,876 (281) (20,803) 15,018 35,374 

Heroin Kilograms 6,592 5,878 (11) (1,790) (3,603) 7,066 

Ecstasy Kilograms 1,867 1,145 (100) (1,231) (106) 1,575 

Steroids Kilograms 13 378 0 (355) 6 42 

Firearms Number of

cases
 

348 742 (732) (8) 58 408 

Pornography Number of


cases 

29 87 0 (112) 23 27 

Balance 

Unit of October 1 New Adjustments Balance 

Category Measurement (1) Forfeitures Transfers Destroyed (2) September 30 

Illegal Drugs 

Cannabis 

(marijuana) Kilograms 97,304 772,729 (234,858) (459,151) (3,629) 172,395 

Cocaine Kilograms 19,584 23,075 (156) (20,545) (394) 21,564 

Heroin Kilograms 2,221 5,463 (4) (1,045) (43) 6,592 

Ecstasy Kilograms 0 1,393 (9) (1,060) 1,543 1,867 

Steroids Kilograms 0 305 0 (314) 22 13 

Firearms Number of

cases
 

253 675 (607) (2) 29 348 

Pornography Number of


cases 

32 140 (1) (195) 53 29 

Notes to Financial Statements
 

Analysis of Changes in Prohibited (Non-Valued) Forfeited Property, September 30, 2008 

(1) Adjustments are caused by changes during the year to the beginning balances of cases. An example includes changes in 

the quantity from the amount reported in the beginning balance. Also, a prior year case can change legal status or property 

type. For example, a case considered forfeited could be re-opened and changed to seized status or a drug property type may 

change on a case. 

Analysis of Changes in Prohibited (Non-Valued) Forfeited Property, September 30, 2007 

(1) Beginning balances for ecstasy and steroids are not reported in this column since this is the first year for reporting these 

categories. The beginning balances for ecstasy and steroids are reported in the adjustments column. 

(2) Adjustments are caused by changes during the year to the beginning balances of cases. An example includes changes in 

the quantity from the amount reported in the beginning balance. Also, a prior year case can change legal status or property 

type. For example, a case considered forfeited could be re-opened and changed to seized status or a drug property type may 

change on a case. Beginning balances for ecstasy and steroids are reported in the adjustment column since FY 07 is the first 

year for reporting these categories. 
 

Notes to Financial Statements
 

9. General Property, Plant and Equipment, Net
 

Property, Plant and Equipment as of September 30, 2008 and 2007 consist of the following (in 

thousands): 

2008 

Accumulated 

Useful Life Acquisition Depreciation/ Net 

Categories (in years) Cost Amortization Book Value 

Land and Land Rights N/A $ 82,687 $ — $ 82,687 

Improvements to Land 6–40 379,500 (70,715) 308,785 

Construction in Progress (a) N/A 999,957 — 999,957 

Buildings, Other Structures, 

and Facilities (b) 6–40 837,013 (137,872) 699,141 

Equipment: 

ADP Equipment 5 329,937 (206,702) 123,235 

Aircraft 12–20 890,104 (526,562) 363,542 

Vessels 5–30 22,727 (13,965) 8,762 

Vehicles 3–8 383,477 (285,091) 98,386 

Other Equipment 5–15 863,518 (499,428) 364,090 

Assets Under Capital Lease 2–10 9,568 (9,568) — 

Leasehold Improvements 2–30 216,964 (61,385) 155,579 

Internal Use Software 5 694,877 (543,889) 150,988 

Internal Use Software-in 

Development N/A 152,945 — 152,945 

Totals $ 5,863,274 $ (2,355,177) $ 3,508,097 

100 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 101 

2007 


Accumulated 

Useful Life Acquisition Depreciation/ Net 

Categories (in years) Cost Amortization Book Value 

Land and Land Rights N/A $ 41,493 $ — $ 41,493 

Improvements to Land 6–40 78,449 (35,397) 43,052 

Construction in Progress N/A 735,203 — 735,203 

Buildings, Other Structures, 

and Facilities (b) 6–40 612,572 (109,968) 502,604 

Equipment: 

ADP Equipment 5 286,896 (167,347) 119,549 

Aircraft 12–20 825,749 (483,296) 342,453 

Vessels 5–30 22,484 (13,661) 8,823 

Vehicles 3–8 355,776 (282,165) 73,611 

Other Equipment 5–15 629,136 (372,560) 256,576 

Assets Under Capital Lease 2–10 10,157 (10,157) — 

Leasehold Improvements 2–30 189,563 (50,893) 138,670 

Internal Use Software 5 581,559 (440,634) 140,925 

Internal Use Software-in 

Development N/A 110,896 — 110,896 

Totals $4,479,933 $(1,966,078) $2,513,855 

Notes to Financial Statements
 

(a) Includes $697.3 million related to construction of fence on the U.S. southern border. 

(b) Includes four multi-use heritage assets located in Puerto Rico with an acquisition value of $534,000. 

10. Stewardship PP&E 

As of September 30, 2008 and 2007, CBP maintains four multi-use heritage assets located in Puerto Rico 

valued at $534,000 and are fully depreciated. Heritage assets are property, plant, and equipment that 

have historical or national significance; cultural, educational, or artistic importance; or significant architectural characteristics. Heritage assets are generally expected to be preserved indefinitely. All multi-use heritage assets are reflected on the Consolidated Balance Sheet. Additional information for heritage assets 

and general PP&E is presented in the required supplementary information. 

11. Advances and Prepayments 

Intragovernmental advances and prepayments as of September 30, 2008 and 2007, totaling $219.4 million and $211.2 million respectively, consist of advances to UNICOR for vehicle purchases. 

Advances and prepayments with the public as of September 30, 2008 and 2007, totaling $329,000 and 

$417,000 respectively, consist of employee travel and salary advances and prepaid rent. 
 

 

2008 2007 

Accrued Funded Payroll and Benefits $ 237,551 $ 163,004 

Accrued Unfunded Leave 295,380 249,584 

Actuarial FECA Liability 

Total 

681,664 618,969 

$ 1,214,595 $ 1,031,557 

Notes to Financial Statements
 

12. Liabilities Not Covered by Budgetary Resources 

Liabilities Not Covered by Budgetary Resources as of September 30, 2008 and 2007, consist of the following (in thousands): 

2008 2007 

Intragovernmental: 

Accrued FECA Liability $ 138,021 $ 129,558 

Total Intragovernmental 138,021 129,558 

Public: 

Accrued Payroll and Benefits: 

Accrued Leave (Note 13) 295,380 249,584 

Actuarial FECA Liability (Note 13) 681,664 618,969 

Environmental and Disposal Liabilities (Note 14) 12,769 12,369 

Legal Contingent Liabilities 46,559 38,463 

Software License Agreements (Note 16) 32,737 47,680 

Total Public 1,069,109 967,065 

Total Liabilities not Covered by Budgetary Resources 1,207,130 1,096,623 

Total Liabilities Covered by Budgetary Resources or 

Non-Entity Assets 4,522,064 4,432,436 

Total Liabilities $ 5,729,194 $ 5,529,059 

Liabilities not covered by budgetary or other resources represent amounts owed in excess of available 

appropriated or other amounts. The liquidation of liabilities not covered by budgetary or other resources is 

dependent on future congressional appropriations. 

13. Accrued Payroll and Benefits 

The payroll and benefits liability as of September 30, 2008 and 2007 consists of the following (in 

thousands): 

Actuarial workers compensation liability claims incurred for the benefit of CBP employees under FECA are 

administered by DOL and are ultimately paid by CBP. Future workers’ compensation estimates are generated from an application of actuarial procedures developed by the DOL. 

102 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 103 

 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

 

 

 

Notes to Financial Statements
 

14. Environmental & Disposal Liabilities 

CBP is required to remediate contamination in accordance with Federal laws in order to protect human 

health and the environment. These laws include the Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act, the Oil Pollution Act, the Clean Water 

Act, the Toxic Substances Control Act, and the Clean Air Act. 

Estimated environmental liabilities include expected future cleanup costs and those associated with site 

characterization, sampling, risk assessment, removal of contamination sources, treatment, containment, 

and monitoring. These costs are recognized and disclosed in accordance with SFFAS No. 5, SFFAS No. 6, 

and Technical Release No. 2. CBP records the estimated cost of environmental liabilities that are probable 

and measurable to the current operating period. For those probable sites where future liability is unknown 

or no reasonable estimate of the cost to clean up a particular site could be made, the cost of studies 

necessary to evaluate response or remediation requirements is reported. 

CBP’s environmental cleanup liability as of September 30, 2008 and 2007 was $12.8 million and $12.4 

million, respectively. There were no material changes in total estimated cleanup costs due to changes in 

law or technology. Notable changes in estimated liabilities include: 

•	 Estimates of liability are presented in FY08 dollars and have been appropriately escalated to account

for inflation. 

• CBP is in the process of implementing the accounting requirements of Federal Accounting Standards

Advisory Board, Technical Bulletin 2006-1: Recognition and Measurement of Asbestos-Related Cleanup 

Costs (September 28, 2006). This reference requires estimating asbestos-related cleanup costs for 

both non-friable and friable asbestos-containing materials. 

•	 Small arms firing ranges are no longer included in the total estimate of financial liability. It is reasonably

possible that ranges constitute a future liability and will be managed to ensure an accurate statement 

of any probably liabilities is included when appropriate. 

•	 An estimate of the future cleanup costs for removal of CBP-owned underground storage tanks has been

included in the total estimate of financial liability. 

• •	 CBP has determined probable cleanup costs associated with lead-based paint are not reasonably

measurable due to insufficient information on the nature or extent of lead-based paint. Further, using 

a cost to perform the necessary studies as the minimum amount of the liability, total costs for the 

lead-based paint cleanup are not considered material and are not included in CBP’s total 

environmental financial liability. 

15. Other Liabilities 

CBP considers all Other Liabilities as current. 

Other Intragovernmental Liabilities consist of Employee Benefits and Taxes of $62.5 million and $42.3 

million, and Advances from Others of $15.1 million and $9.4 million as of September 30, 2008 and 2007, 

respectively. 
 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements
 

Other Public Liabilities consist of the following: 

Refunds Payable 

Refunds Payable consists of amounts owed for refunds of duty and other trade-related activity and drawback claims. These liabilities, all considered current year liabilities, are principally funded from the Refunds 

and Drawback account. 

CBP accrues a liability for refunds and drawback claims approved at year-end, but paid subsequent to yearend. Payments made to importers/exporters are primarily identified when the import entry is liquidated, a 

process in which CBP makes a final determination of duties, taxes, and fees owed on the entry. Due to 

non-liquidation of the entries, the amount to be refunded is undetermined. Therefore, a historical calculated average was used to determine a ratio for estimating the payable to be recorded. Using this average, 

CBP has estimated $39.9 million and $32.4 million as of September 30, 2008 and 2007, respectively, as 

a payable. 

The September 30, 2008 and 2007, accrued liability consists of the following (in thousands): 

2008 2007 

Refunds $ 72,921 $ 91,167 

Drawback claims 57,099 39,886 

Total $ 130,020 $ 131,053 

Injured Domestic Industries 

The Continued Dumping and Subsidy Offset Act of 2000, P.L. 106-387, Title X, enacted in FY 2001 calls 

for CBP to disburse monies received in connection with antidumping and countervailing (AD/CV) duty 

orders and findings to qualifying injured domestic industries. During FY 2008 and 2007, CBP liquidated 

$395.5 million and $388.1 million, respectively in AD/CV duty and recorded the liability. 

16. Leases 

Software License Agreements 

CBP has a software license fee agreement for a mainframe software license. The liability associated with 

this software license agreement is reflected on the accompanying Consolidated Balance Sheet based 

upon the present value of the future minimum license agreement payments. As of September 30, 2008 

and 2007, the aggregate capitalized cost of the agreement still subject to lease is $152.2 million. This 

agreement is included in capitalized software. 

104 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 105 

Fiscal Year 2008 

2009 $ 17,981 

2010 17,981 

2011 — 

2012 — 

2013 — 

Beyond 2013 — 

Total Future Minimum License 35,962 

Less: Imputed Interest 

Total Net Present Value of Software License Agreements 

(3,225) 

$ 32,737 

 

 

 

Notes to Financial Statements
 

As of September 30, 2008 (in thousands:) 2008 

Summary of Assets Acquired through Acquisition Accumulated Net 

Capital Lease: Cost Depreciation Book Value 

Personal Property (Software & Equipment) $ 161,814 $ (122,560) $ 39,254 

As of September 30, 2007 (in thousands:) 2007 

Summary of Assets Acquired through Acquisition Accumulated Net 

Capital Lease: Cost Depreciation Book Value 

Personal Property (Software & Equipment) $ 162,403 $ (108,020) $ 54,383 

Future minimum payments for cancelable commercial off-the-shelf license agreement and the present 

value of the minimum license agreement payments as of September 30, 2008, are as follows (in 

thousands): 

The net present value of the cancelable software license agreement is expected to be funded from future 

sources. 

Operating Leases 

CBP leases various facilities and equipment under leases accounted for as operating leases. The leased 

items consist of offices, warehouses, vehicles, and other equipment. Much of the office space occupied 

by CBP is either owned by the Federal Government or is leased by the General Services Administration 

(GSA) from commercial sources. CBP is not committed to continue to pay rent to GSA beyond the period 

occupied providing proper advance notice to GSA unless the rental agreement is non-cancelable. It is 

expected that CBP will continue to occupy and lease office space from GSA in future years. 

The following schedule, by years, shows the future minimum rental payments required under operating 

leases that have initial or remaining non-cancelable lease terms in excess of 1 year, as of September 30, 

2008 (in thousands): 
Fiscal Year Facilities 

2009 $ 53,167 

2010 53,167 

2011 53,167 

2012 53,167 

2013 41,378 

Beyond 2013 206,499 

Total Future Lease Payments $ 460,545 

 

 

 

 

Notes to Financial Statements
 

17. Commitments and Contingencies 

Legal Contingent Liabilities 

CBP is party to various administrative proceedings, legal actions, and claims brought by or against it. Any 

financially unfavorable administrative or court decision will normally be funded from: (1) CBP appropriation 

for refunds and drawback for trade litigation issues; (2) various claims and judgment funds maintained by 

Treasury; or (3) CBP salary and expense appropriation. 

The range of estimated contingent liabilities for all probable and estimable litigation related claims as of 

September 30, 2008 and 2007 were $59.6 million to $148.9 million and $83.5 million to $170.3 million, 

respectively. Of these amounts, $13 million and $45 million as of September 30, 2008 and 2007, respectively, were funded from appropriations for the Refund and Drawback Account. Asserted and pending legal 

claims for which loss is reasonably possible range from an estimated at $517.7 million to $658.6 million 

and $34.5 million to $373.8 million as of September 30, 2008 and 2007 respectively. As of September 

30, 2008, CBP had nine cases considered reasonably possible and two cases considered probable for 

which no estimate could be made. 

Duty and Trade Refunds 

There are various other trade issues resolved by other federal agencies, such as the Department of Commerce, which may result in refunds of duties, taxes, and fees from the Refunds and Drawback Account. 

Until such time as a decision is reached by the other federal agencies, CBP does not have sufficient information to estimate a contingent liability amount. All known refunds as of September 30, 2008 and 2007 

have been recorded. 

Loaned Aircraft 

CBP is generally liable to the Department of Defense for damage or loss to aircraft on loan. CBP had 16 

aircraft loaned from Department of Defense with an acquisition value of $94.4 million, as of September 

30, 2008 and 2007. 

106 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 107 

 

 

 

 

 

 

 

Notes to Financial Statements
 

18. Earmarked Funds 

Consolidated Omnibus Budget Reconciliation Act (COBRA) 

In April 1986, the President signed the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985, 

which authorized the Customs and Border Protection (CBP) to collect user fees for certain services. The 

law initially established processing fees for air and sea passengers, commercial trucks, rail cars, private 

vessels and aircraft, commercial vessels, dutiable mail packages, and CBP broker permits. An additional 

fee category, contained in tax reform legislation, for processing barges and bulk carriers for Canada and 

Mexico, was added later that year. The collection of the COBRA fees for CBP services began on July 7, 

1986. 

In addition to the collection of user fees, other changes in CBP procedures were enacted due to the COBRA 

statute. Most importantly, provisions were included for providing non-reimbursable inspectional overtime 

services and paying for excess pre-clearance costs from the COBRA user fee collections. 

The Customs and Trade Act of 1990 amended the COBRA legislation to provide for the hiring of inspectional personnel, the purchasing of equipment, and the covering of related expenses with any surplus 

monies available, after overtime and excess pre-clearance costs are satisfied. Expenditures from the surplus can only be used to enhance the service provided to those functions for which fees are collected. This 

legislation took effect on October 1, 1990. 

19 USC Section 58c contains the Fees for certain Customs services. The authority to use these funds is 

contained in the annual Department of Homeland Security Appropriations Act. 

Immigration User Fees (IUF) 

Joint Resolution (H.J. Res. 738), making continuing appropriations for FY 1987 (the “1987 Act”) (Public 

Laws 99-500 and 99-591), established the Immigration User Fee Account (IUFA) [requiring] the [collection] 

of a $5.00 fee charged to each passenger arriving in the United States from foreign locations aboard commercial aircraft and commercial vessels except passengers whose journeys originated in the United States, 

Canada, Mexico, a territory or possession of the United States, or an adjacent island. The 1987 Act 

directed the [INS] Service, beginning in FY 1987, to collect an immigration user fee for each passenger 

arriving in the United States by commercial air or sea conveyance (with limited exceptions). This law was 

codified in 8 U.S.C. 1103, 1356, section 286, the Immigration and Nationality Act (INA). 

In 1993, Congress amended section 286 of the INA by raising the immigration user fee from the original 

$5 to $6 with the passage of Public Law 103-121. In 2002, in Public Law 107-77, Congress increased the 

immigration user fee from $6 to $7. 

Also in Public Law 107-77, Congress amended section 286(e) of the INA to authorize the Attorney General 

to charge and collect a user fee from certain previously exempt commercial vessel passengers. Prior to the 

enactment of this law, commercial vessel passengers whose journeys originated in Canada; Mexico; a 

State, territory, or possession of the United States; or an adjacent island, were statutorily exempt from 

paying the Immigration User Fee prescribed by section 286(d) of the INA. While these vessel passengers 

were exempt from paying the fee, the [INS] Service was still required to provide inspection services. 
108 U.S. Customs and Border Protection • Performance and Accountability Report 

 

Balance Sheet 

2008 

COBRA IUF All Others Total 

Assets 

Fund Balance with Treasury $ 767,723 $ 128,248 $ 15,585 $ 911,556 

Tax, Duties, & Trade Receivables, Net 75,530 — 31 75,561 

Other Assets 103,964 68,615 719 173,298 

Total Assets $ 947,217 $ 196,863 $ 16,335 $ 1,160,415 

Liabilities and Net Position 

Liabilities $ 99,980 $ — $ 3,219 $ 103,199 

Cumulative Results of Operations 847,237 196,863 13,116 

$ 

1,057,216 

Total Liabilities and Net Position $ 947,217 $ 196,863 $ 16,335 1,160,415 

Statement of Net Cost 

Gross Cost $ 375,535 $ 615,007 $ 41,340 $ 1,031,882 

Less: Earned Revenue 57 — 2,534 2,591 

Net Cost of Operations $ 375,478 $ 615,007 $ 38,806 $ 1,029,291 

Statement of Change in Net Position 

Net Position Beginning of Period $ 787,717 $ 229,670 $ 10,089 $ 1,027,476 

Net Costs of Operations (375,478) (615,007) (38,806) (1,029,291) 

Non Exchange Revenue 1,925,373 703,988 41,834 2,671,195 

Net Transfers In/Out (1,490,376) (121,788) — (1,612,164) 

Change in Net Position 29,740 

Net Position End of Period 

59,519 

$ 847,236 $ 

(32,807) 3,028 

196,863 $ 13,117 1,057,216 

Notes to Financial Statements
 

The IUFA was also established as a repository for fines imposed to prevent unauthorized landing and 

unlawful bringing of aliens in to the United States, penalties for document fraud, 31 Act overtime, and 

liquidated damages and expenses collected. All deposits into the IUFA are available until expended. 

In FY 2003 with the formation of the DHS, CBP collects and shares the revenue from the immigration user 

fees with Immigration and Customs Enforcement (ICE). CBP maintains approximately 83% of the user fee, 

while the other 17% is turned over to ICE. 

The following tables present condensed data relating to CBP earmarked funds (disclosed in note 1) as of 

and for the years ended September 30, 2008 and 2007 (in thousands): 
Financial Section 109 

Balance Sheet as of September 30 COBRA 

2007
 

IUF All Others Total 

Assets 

Fund Balance with Treasury $ 729,957 $ 159,119 $ 12,193 $ 901,269 

Tax, Duties, and Trade Receivables, Net 68,452 — 28 68,480 

Other Assets 76,394 70,565 202 147,161 

Total Assets $ 874,803 $ 229,684 $ 12,423 $ 1,116,910 

Liabilities and Net Position for the 

Period Ended September 30 

Liabilities $ 87,086 $ 14 $ 2,334 $ 89,434 

Cumulative Results of Operations 787,717 229,670 10,089 1,027,476 

Total Liabilities and Net Position $ 874,803 $ 229,684 $ 12,423 $ 1,116,910 

Statement of Net Cost for the Period 

Ended September 30 

Gross Cost $ 369,300 $ 524,361 $ 45,521 $ 939,182 

Less Earned Revenue — — (1,936) (1,936) 

Net Cost of Operations $ 369,300 $ 524,361 $ 43,585 $ 937,246 

Statement of Change in Net Position 

for the Period Ended September 30 

Net Position Beginning of Period $ 798,750 $ 280,437 $ 15,455 $ 1,094,642 

Net Costs of Operations (369,300) (524,361) (43,585) (937,246) 

Non Exchange Revenue 1,808,332 575,188 38,268 2,421,788 

Net Transfers In/Out (1,450,065) (101,594) (49) (1,551,708) 

(67,166) 

$ 1,027,476 

Change in Net Position 

Net Position End of Period 

(11,033) 

$ 787,717 

(50,767) (5,366) 

$ 229,670 $ 10,089 

Notes to Financial Statements
 

19. Intragovernmental Costs and Exchange Revenue 

Intragovernmental costs represent exchange transactions made between two reporting entities within the 

Federal Government and are presented separately from costs with the public (exchange transactions made 

between the reporting entity and a non-federal entity). Intragovernmental exchange revenue is disclosed 

separately from exchange revenue with the public. The criteria used for this classification requires that the 

intragovernmental expenses relate to the source of goods and services purchased by the reporting entity 

and not to the classification of related revenue. With intragovernmental costs, the buyer and seller are both 

federal entities. If a federal entity purchases goods or services from another federal entity and sells them 

109
 

 

Notes to Financial Statements
 

to the public, the exchange revenue would be classified as “with the public,” but the related costs would 

be classified as intragovernmental. The purpose of this classification is to enable the Federal Government 

to provide consolidated financial statements, and not to match public and intragovernmental revenue with 

costs that are incurred to produce public and intragovernmental revenue. 

The Consolidated Statement of Net Cost reflects intragovernmental and public cost and exchange revenue 

as summarized below for the years ended September 30, 2008 and 2007 (in thousands): 

2008 2007 

Border Security Inspections and Trade Facilitation at Ports of Entry 

Intragovernmental Costs $ 1,550,794 $ 1,381,449 

Public Costs 4,323,019 3,758,826 

Total Border Security Inspections and Trade Facilitation at Ports 

of Entry Costs 5,873,813 5,140,275 

Less: Intragovernmental Earned Revenue 142,013 135,051 

Less: Public Earned Revenue 62,188 68,428 

Total Border Security Inspections and Trade Facilitation at Ports 

of Entry Revenue 204,201 203,479 

Border Security and Control Between Ports of Entry 

Intragovernmental Costs 962,616 764,479 

Public Costs 2,683,405 2,080,091 

Total Border Security and Control Between Ports of Entry Costs 3,646,021 2,844,570 

Less: Intragovernmental Earned Revenue 88,151 74,736 

Less: Public Earned Revenue 38,602 37,868 

Total Border Security and Control Between Ports of Entry Revenue 126,753 112,604 

Air and Marine Operations 

Intragovernmental Costs 112,384 99,236 

Public Costs 313,283 270,015 

Total Air and Marine Operations Costs 425,667 369,251 

Less: Intragovernmental Earned Revenue 10,291 9,701 

Less: Public Earned Revenue 4,507 4,916 

Total Air and Marine Operations Revenue 14,798 14,617 

Net Cost of Operations $ 9,599,749 $ 8,023,396 

110 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 111 

 

 

 

 

2008 

Protect Our Nation Schedule of Net Cost by Program and from Dangerous Intra-Entity Responsibility Segment People Eliminations 

Border Security Inspections and Trade Facilitation at Ports of Entry 

Consolidated 

Total 

Gross Costs: 

Passenger Processing $ 3,425,181 $ 405,727 $ 3,019,454 

Trade Compliance 2,432,375 288,125 2,144,250 

Outbound 111,691 13,230 98,461 

Anti-Terrorism 693,836 82,188 

Total Gross Costs 6,663,083 789,270 

611,648 

5,873,813 

Less: Earned Revenue 993,471 789,270 

Net Program Costs $ 5,669,612 $ — 

Border Security and Control Between Ports of Entry 

204,201 

$ 5,669,612 

Gross Costs $ 4,135,940 $ 489,919 $ 3,646,021 

Less: Earned Revenue 616,672 489,919 

Net Program Costs $ 3,519,268 $ — 

Air and Marine Operations 

126,753 

$ 3,519,268 

Gross Costs $ 482,865 $ 57,198 $ 425,667 

Less: Earned Revenue 71,996 57,198 

Net Program Costs 410,869 — 

Net Cost of Operations $ 9,599,749 $ — 

14,798 

410,869 

$ 9,599,749 

Notes to Financial Statements
 

20. Sub-organization Program Costs/Program Costs by Segment 

CBP is the unified border agency whose priority mission is the prevention of terrorism and terrorist weapons from entering the U.S. CBP meets these responsibilities by (1) enforcing the laws governing the flow 

of merchandise or commerce across the borders of the U.S.; (2) assessing and collecting duties, taxes, 

and fees on imported and other goods and services; and (3) enforcing drug-related and other laws and 

regulations of the U.S. on behalf of federal agencies and/or in conjunction with various state, local agencies, and foreign countries. 

Operating costs are summarized in the Consolidated Statement of Net Cost by mission or major line of 

activity, as applicable to the reporting period. The net cost of operations is the gross (i.e., total) cost 

incurred by CBP, less any exchange (i.e., earned) revenue. 

For the year ended September 30, 2008 (in thousands): 
2007 

Protect Our Nation 

from Dangerous 

People 

Schedule of Net Cost by Program and 

Responsibility Segment 

Intra-Entity 

Eliminations 

Consolidated 

Total 

Border Security Inspections and Trade Facilitation at Ports of Entry 

Gross Costs: 

Passenger Processing $ 3,012,224 $ 385,696 $ 2,626,528 

Trade Compliance 2,162,401 276,882 1,885,519 

Outbound 94,851 12,145 82,706 

Anti-Terrorism 625,630 80,108 545,522 

Total Gross Costs 5,895,106 754,831 5,140,275
 

Less: Earned Revenue 958,310 754,831 203,479
 

Net Program Costs $ 4,936,796 $ — $ 4,936,796 

Border Security and Control Between Ports of Entry 

Gross Costs $ 3,262,284 $ 417,714 $ 2,844,570
 

Less: Earned Revenue 530,318 417,714 112,604
 

Net Program Costs $ 2,731,966 $ — $ 2,731,966 

Air and Marine Operations 

Gross Costs $ 423,474 $ 54,223 $ 369,251 

Less: Earned Revenue 68,840 54,223 14,617 

Net Program Costs 354,634 — 

Net Cost of Operations $ 8,023,396 $ — $ 

354,634 

 8,023,396 

 

 

 

Notes to Financial Statements
 

For the year ended September 30, 2007 (in thousands): 

21. Non-Exchange Revenues and Transfers In/Out Without Reimbursement 

Non-exchange Revenue represents amounts collected from user fees that CBP may retain and expend as 

authorized by law. Transfers In/Out Without Reimbursement are amounts of funds collected and transferred from CBP receipt accounts to expenditure accounts within CBP and to other federal agencies. 

22. Apportionment Categories of Obligations Incurred: Direct vs. Reimbursable 

Obligations 

Apportionment categories are determined in accordance with the guidance provided in OMB Circular A-11, 

Preparation, Submission and Execution of the Budget. Category A represents resources apportioned for 

calendar quarters. Category B represents resources apportioned for other time periods; for activities, projects, or objectives; or for any combination thereof (in thousands). 

112 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 113 

 

 

Apportionment Apportionment Exempt from 

FY Ended September 30, 2007 Category A Category B Apportionment Total 

Obligations Incurred—Direct $ 6,008,329 $ 3,482,777 $ 1,543,665 $ 11,034,771 

Obligations Incurred— 

Reimbursable 

Total Obligations Incurred 

1,384,488 

$ 7,392,817 

102,195 

$ 3,584,972 

— 

$ 1,543,665 

1,486,683 

$ 12,521,454 

Notes to Financial Statements
 

Apportionment Apportionment Exempt from 

FY Ended September 30, 2008 Category A Category B Apportionment Total 

Obligations Incurred—Direct $ 6,532,724 $ 5,357,264 $ 972,988 $ 12,862,976 

Obligations Incurred— 

Reimbursable 1,622,088 141,443 — 1,763,531 

Total Obligations Incurred $ 8,154,812 $ 5,498,707 $ 972,988 $ 14,626,507 

23. Appropriations 

As of September 30, 2008 and 2007, the Combined Statements of Budgetary Resources consist of appropriations totaling $12 billion and $11.2 billion, respectively. This differs from the Consolidated Statements 

of Changes in Net Position as of September 30, 2008 and 2007, which consist of appropriations received 

totaling $7.9 billion and $6.7 billion, respectively. This difference is due to CBP’s non-entity activity, which 

as of September 30, 2008 and 2007 consists of $1.4 billion and $2 billion, respectively, for Refund and 

Drawback activity as well as $2.7 billion and $2.5 billion, respectively, for user/inspection fees and subsidy activity, which are not reported on the Consolidated Statements of Changes in Net Position. 

Permanent indefinite appropriations refer to the appropriations that result from permanent public laws, 

which authorize CBP to retain certain receipts. The amount appropriated depends upon the amount of the 

receipts rather than on a specific amount. CBP has a permanent and indefinite appropriation, which is 

used to disburse tax and duty refunds and duty drawbacks. Although funded through an appropriation, 

refund and drawback activity is, in most instances, reported as a custodial activity. Refunds are custodial 

revenue-related activity in that refunds are a direct result of importer overpayments of duties, taxes, and 

fees. Federal tax revenue received from taxpayers is not available for use in the operation of CBP and is 

not reported on the Consolidated Statements of Net Cost. Likewise, the refunds of overpayments are not 

available for use by CBP in its operations. Refunds and drawback disbursements totaled $1.3 billion and 

$6.9 billion for fiscal year ended September 30, 2008 and 2007, and are presented as a use of custodial 

revenue on the Consolidated Statements of Custodial Activity. This appropriation is not subject to budgetary ceilings established by Congress. CBP’s refund payable at year-end is not subject to funding restrictions. Refund payment funding is recognized as appropriations are used. 

24. Legal Arrangements Affecting the Use of Unobligated Balances 

Unobligated balances, whose period of availability has expired, are not available to fund new obligations. 

Expired unobligated balances are available to pay for current period adjustments to obligations incurred 

prior to expiration. For a fixed appropriation account, the balance can be carried forward for 5 fiscal years 

after the period of availability ends. For a no-year account, the unobligated balance is carried forward 
 

 

 

 

 

Notes to Financial Statements
 

indefinitely until (1) specifically rescinded by law; or (2) the head of the agency concerned or the President 

determines that the purposes for which the appropriation was made have been carried out and disbursements have not been made against the appropriation for two consecutive years. 

Included in the cumulative results of operations for special funds is $1.1 billion at September 30, 2008, 

that represents CBP’s authority to assess and collect user fees relating to merchandise and passenger 

processing, to assess and collect fees associated with the services performed at certain small airports or 

other facilities, retain amounts needed to offset costs associated with collecting duties, and taxes, and 

fees for the government of Puerto Rico. These special fund balances are restricted by law and in their use 

to offset specific costs incurred by CBP. Part of the passenger fees in the COBRA User Fee Account, totaling approximately $734 million, as of September 30, 2008, is restricted by law in its use to offset specific 

costs incurred by CBP and are available to the extent provided in Department Appropriations Acts. 

The entity trust fund balances result from CBP’s authority to use the proceeds from general order items 

sold at auction to offset specific costs incurred by CBP relating to their sale, to use available funds in the 

Salaries and Expense Fund to offset specific costs for expanding border and port enforcement activities, 

and to use available funds from the Harbor Maintenance Trust Fund to offset administrative expenses 

related to the collection of the Harbor Maintenance Fee. 

25. Explanation of Differences Between the SBR and the Budget of the U.S. 

Government 

The table below documents the material differences between the FY 2007 Combined Statement of Budgetary Resources and the actual amounts reported for FY 2007 in the Budget of the United States Government. Since the FY 2008 financial statements are reported prior to the Budget of the United States Government, CBP is reporting for FY 2007 only. Typically, the Budget of the United States Government with the 

FY 2008 actual data is published in February of the subsequent year. Once published, the FY 2008 actual 

data will be available at OMB website, www.whitehouse.gov/omb (in thousands): 

114 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 115 

Distributed 

Budgetary Obligations Offsetting 

2007 

Combined Statement of Budgetary 

Resources 

Resources Incurred Receipts Net Outlays 

$ 15,416,359 $ 12,521,454 $ 2,360,600 $ 7,479,121

Differences: 

Expired Appropriation not Included in 

President’s Budget (99,136) (35,204) — — 

Refunds & Drawbacks not Included in 

President’s Budget (1,537,975) (1,537,975) — (1,537,980) 

Injured Domestic Industries not Included 

in President’s Budget (20X5688) (954,266) (380,563) — (380,563) 

Offsetting Receipts Included in Treasury 

Annual Report but not in Column C 

Above — — 24,754 2,360,600 

Miscellaneous (31,342) — — — 

(2,622,719) (1,953,742) 24,754 442,057 

$ 12,793,640 $ 10,567,712 $ 2,385,354 $ 7,921,178 

Total Differences 

Budget of the U.S. Government 

Notes to Financial Statements
 

26. Undelivered Orders at the End of Period 

An undelivered order exists when a valid obligation has occurred and funds have been reserved, but the 

goods or services have not been delivered and have not been prepaid. Undelivered orders for the period 

ended September 30, 2008 and 2007 (in thousands): 

2008 2007 

Unpaid $ 4,364,976 $ 3,012,252 

Upward/Downward Adjustment of Prior Period (426,722) (176,264) 

Total Undelivered Orders at the End of Period $ 3,938,254 $ 2,835,988 

27. Custodial Revenues 

Custodial Revenue consists of duties, user fees, fines and penalties, refunds and drawback overpayments, 

and interest associated with import/export activity that have been established as a specifically identifiable, legally enforceable claim and remain uncollected as of year-end. These receivables are net of amounts 

deemed uncollectible, which were determined by considering the debtor’s payment record and willingness 

to pay, the probable recovery of amounts from secondary sources, such as sureties and an analysis of 

aged receivable activity. Primarily, revenue collections result from current fiscal year activity. 
2008 2007 

Refunds $ 620,407 $ 6,296,311 

Drawback 

Total 

675,298 

$ 1,295,705 

625,723 

$ 6,922,034 

Entry Year 2008 

2008 $ 815,098 

2007 162,254 

2006 54,267 

2005 26,350 

Prior Years 

Total 

237,736 

$ 1,295,705 

Entry Year 2007 

2007 $ 5,531,472 

2006 221,733 

2005 326,968 

2004 363,025 

Prior Years 

Total 

478,836 

$ 6,922,034 

2008 2007 

Antidumping and Countervailing Duty Refunds $ 16,122 $ 5,033,930 

Interest 

Total $ 

775 

16,897 

654,672 

$ 5,688,602 

Notes to Financial Statements
 

Disbursements from the Refunds and Drawback account for the fiscal year ended September 30, 2008 

and 2007 (in thousands): 

Amounts refunded during FY 2008 and 2007 identified by entry year consist of the following (in 

thousands): 

The total amounts of antidumping and countervailing duties vary from year to year, depending on decisions 

from Department of Commerce. Antidumping and countervailing duty refunds (included in total refunds 

presented above) and associated interest refunded for the fiscal years ended September 30, 2008 and 

2007, consisted of the following (in thousands): 

116 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 117 

2008 2007 

Resources Used to Finance Activities: 

Budgetary Resources Obligated 

Obligations Incurred $ 14,626,507 $ 12,521,454 

Less: Spending Authority from Offsetting Collections and Recoveries 2,060,855 1,659,029 

Obligations Net of Offsetting Collections and Recoveries 12,565,652 10,862,425 

Less: Offsetting Receipts 2,633,691 2,360,600 

Net Obligations 9,931,961 8,501,825 

Other Resources 

Donations and Forfeiture of Property
 14,002 3,618 

Transfers In/Out Without Reimbursement
 131,719 3,509 

Imputed Financing from Costs Absorbed by Others
 280,057 305,758 

312,885 

$ 8,814,710 

Net Other Resources Used to Finance Activities
 

Total Resources Used to Finance Activities 

425,778 

$ 10,357,739 

Resources Used to Finance Items not Part of the Net Cost of Operations 

Change in Budgetary Resources Obligated for Goods, Services, and 

Benefits Ordered, but not yet Provided $ 1,109,123 $ 526,996 

Resources that Fund Expenses Recognized in Prior Periods 38,813 1,503 

Budgetary Offsetting Collections and Receipts that do not Affect Net 

Cost of Operations 

Other (2,631,100) (2,358,664) 

Resources that Finance the Acquisition of Assets or Liquidation of 

Liabilities 1,409,249 1,049,537 

Other Resources or Adjustments to Net Obligated Resources that do 

not Affect Net Cost of Operations 1,420,212 2,028,173 

Total Resources Used to Finance Items not Part of the Net Cost of 

Operations $ 1,346,297 $ 1,247,545 

Total Resources Used to Finance the Net Cost of Operations $ 9,011,442 $ 7,567,165 

(Continued) 

Notes to Financial Statements
 

28. Reconciliation of Net Cost of Operations to Budget 

The following table presents CBP’s reconciliation of net cost of operations to budgetary accounts for the 

years ended September 30, 2008 and 2007 (in thousands): 
2008 2007 

Components of the Net Cost of Operations that will not Require 

or Generate Resources in the Current Period: 

Components Requiring or Generating Resources in Future Periods 

Increase in Annual Leave Liability and Environmental Liability $ 46,196 $ 21,892 

Change in Actuarial FECA Liability and Other 78,034 73,556 

Total Components of Net Cost of Operations that will Require or 

Generate Resources in Future Periods $ 124,230 $ 95,448 

Components not Requiring or Generating Resources 

Depreciation and Amortization $ 457,452 $ 344,639 

Revaluation of Assets or Liabilities 9,595 12,035 

Other (2,970) 4,109 

Total Components of Net Cost of Operations that will not Require or 

Generate Resources $ 464,077 $ 360,783 

Total Components of Net Cost of Operations that will not Require or 

Generate Resources in the Current Period 

Net Cost of Operations 

$ 588,307 $ 456,231 

$ 9,599,749 $ 8,023,396 

Notes to Financial Statements
 

118 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 119 

 

 

Required Supplementary Information
 

U.S. Customs and Border Protection 

Required Supplementary Information 

(Unaudited) 

Deferred Maintenance 

Deferred maintenance is maintenance that was not performed when it should have been or was scheduled 

to be performed, and has been delayed until a future period. Maintenance includes preventive maintenance, normal repairs, replacement of parts and structural components, and other activities needed to 

preserve the asset so that it will continue to provide acceptable service and achieve its useful life. 

An assessment of “fair” means the facility/equipment condition meets minimum standards but requires 

additional maintenance or repair to prevent further deterioration, increase operating efficiency, and to 

achieve normal life expectancy. An assessment of “good” means the facility/equipment condition is above 

minimum standards, but requires preventative maintenance or normal repairs to maintain the design 

intent of the building or equipment so that it continues to provide acceptable service and achieves the 

expected useful life. Deferred maintenance on property, plant, and equipment as measured by condition 

assessment survey, is composed of (in thousands): 

2008 

Condition 

Assessment 

Deferred 

Maintenance

Building and Structures Poor to Good $87,134 

Vehicles Good 13 

Stewardship/Heritage Assets (multi-use) 

Totals 

Poor to Good 2,179 

$89,326 

2007 

Condition 

Assessment 

Deferred 

Maintenance 

Building and Structures Poor $4,395 

Vehicles — — 

Stewardship/Heritage Assets (multi-use) 

Totals 

— — 

$4,395 

Statement of Budgetary Resources (SBR) 

The total Budgetary Resources of $17.2 billion for FY 2008 includes new budget authority, unobligated 

balances at the beginning of the year and transferred in/out, spending authority from offsetting 

collections, recoveries of prior year obligations, and adjustments. 
Appropriated 

Funds 

Trust 

Funds 

Other 

Funds 

Budgetary Resources 

Totals 

Unobligated Balances Brought Forward, 

October 1 $ 1,465,499 $ 413 $ 1,428,993 $ 2,894,905

Recoveries of Prior Year Obligations 470,178 3,913 11,508 485,599 

Budget Authority: 

Appropriations 7,929,110 4,136 4,039,728 11,972,974 

Spending Authority from Offsetting 

Collections: 

Earned 

Collected 1,592,357 — 19,768 1,612,125 

Change in Receivable from Federal 

Sources (5,553) — (333) (5,886) 

Change in Unfilled Customer Orders: 

Advance Received 125 — — 125 

Without Advance from Federal Sources (33,249) (87) (865) (34,201) 

Expenditure Transfers from Trust Funds 3,093 — — 3,093 

Subtotal 9,485,883 4,049 4,058,298 13,548,230 

Non-Expenditure Transfers from Trust Funds 1,829,278 3,093 (1,495,708) 336,663 

Actual Transfers, Budget Authority (3,000) — — (3,000) 

Permanently not Available (55,729) — (31,151) (86,880) 

Total Budgetary Resources $ 13,192,109 $ 11,468 $ 3,971,940 $ 17,175,517

Status of Budgetary Resources 

Obligations Incurred: 

Direct $ 10,468,629 $ 7,665 $ 2,386,682 $ 12,862,976 

Reimbursable 1,744,980 — 18,551 1,763,531 

Total Obligations Incurred 12,213,609 7,665 2,405,233 14,626,507 

Unobligated Balance:

 Apportioned 7,892 — — 7,892 

Exempt from Apportionment — — — — 

Subtotal 7,892 — — 7,892 

Unobligated Balance not Available 

Total Status of Budgetary Resources 

970,608 3,803 1,566,707 2,541,118 

$ 13,192,109 $ 11,468 $ 3,971,940 $ 17,175,517 

Required Supplementary Information
 

U.S. Customs and Border Protection
 

Required Supplementary Information (continued)
 

(Unaudited)
 

Schedule of Budgetary Resources by Major Fund Type 

As of September 30, 2008 (in thousands): 

120 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 121 

Appropriated Trust Other 

Change in Obligated Balances 

Funds Funds Funds Totals 

Obligated Balance, Net 

Unpaid Obligations Brought Forward, 

October 1 $ 3,982,203 $ 5,577 $ 81,948 $ 4,069,728 

Uncollected Customer Payments from 

Federal Sources Brought Forward from 

October 1 (319,481) (88) (1,216) (320,785) 

Total Unpaid Obligated Balance, Net 3,662,722 5,489 80,732 3,748,943 

Obligations Incurred, Net 12,213,609 7,665 2,405,233 14,626,507 

Gross Outlays (10,440,205) (8,144) (2,384,575) (12,832,924) 

Obligated Balance Transferred, Net 

Actual Transfers, Unpaid Obligations — — — — 

Recoveries of Prior Year Unpaid Obligations (470,178) (3,913) (11,508) (485,599) 

Change In Uncollected Customer Pymts from 

Federal Sources 38,802 87 1,198 40,087 

Obligated Balance, Net End of Period 

Unpaid Obligations 5,285,430 1,184 91,099 5,377,713 

Less: Uncollected Customer Pymts from 

Federal Sources (280,680) (—) (19) (280,699) 

Total, Unpaid Obligated Balance, Net, End of 

Period 5,004,750 1,184 91,080 5,097,014 

Net Outlays

 Gross Outlays 10,440,205 8,144 2,384,575 12,832,924

 Less: Offsetting Collections (1,595,575) — (19,768) (1,615,343)

 Less: Distributed Offsetting Receipts 

 Total Net Outlays 

— — (2,633,691) (2,633,691)

$ 8,844,630 $ 8,144 $ (268,884) $ 8,583,890 

Required Supplementary Information
 

U.S. Customs and Border Protection 

Required Supplementary Information (continued) 

(Unaudited) 
122 U.S. Customs and Border Protection • Performance and Accountability Report 

Appropriated Trust Other 

Funds Funds Funds Totals 

Budgetary Resources 

Unobligated Balances Brought Forward, 

October 1 $ 822,285 $ 255 $ 1,473,003 $ 2,295,543 

Recoveries of Prior Year Obligations 189,493 1,631 7,381 198,505 

Budget Authority: 

Appropriations 6,733,265 4,222 4,452,920 11,190,407 

Spending Authority from Offsetting Collections: 

Earned 

Collected 1,495,566 10 18,479 1,514,055 

Change in Receivable from Federal 

Sources (33,527) (10) (423) (33,960) 

Change in Unfilled Customer Orders: 

Advance Received (2,401) — — (2,401) 

Without Advance from Federal Sources (19,990) — (206) (20,196)

Expenditure Transfers from Trust Funds 3,026 — — 3,026 

Subtotal 8,175,939 4,222 4,470,770 12,650,931 

Non-Expenditure Transfers from Trust Funds 1,826,274 3,026 (1,455,396) 373,904 

Permanently not Available (29,075) — (73,449) (102,524) 

Total Budgetary Resources $ 10,984,916 $ 9,134 $ 4,422,309 $ 15,416,359 

Status of Budgetary Resources 

Obligations Incurred:

 Direct $ 8,052,517 $ 8,721 $ 2,973,533 $ 11,034,771

Reimbursable 1,466,900 — 19,783 1,486,683 

Total Obligations Incurred 9,519,417 8,721 2,993,316 12,521,454 

Unobligated Balance:

 Apportioned 14,930 242 1,469 16,641

Exempt from Apportionment — — — —

Subtotal 14,930 242 1,469 16,641 

Unobligated Balance not Available 1,450,569 171 1,427,524 2,878,264 

Total Status of Budgetary Resources $ 10,984,916 $ 9,134 $ 4,422,309 $ 15,416,359 

(Continued) 

Required Supplementary Information
 

U.S. Customs and Border Protection
 

Required Supplementary Information (continued)
 

(Unaudited)
 

Schedule of Budgetary Resources by Major Fund Type 

As of September 30, 2007 (in thousands): 
Financial Section 123 

Appropriated 

Funds 

Trust 

Funds 

Other 

Funds 

Change in Obligated Balances 

Totals 

Obligated Balance, Net

 Unpaid Obligations Brought Forward, 

October 1 $ 2,960,284 $ 8,406 $ 98,484 $ 3,067,174

 Less: Uncollected Customer Payments 

from Federal Sources, Brought Forward 

from October 1 (372,998) (97) (1,846) (374,941) 

Total Unpaid Obligated Balance, Net 2,587,286 8,309 96,638 2,692,233 

Obligations Incurred, Net 9,519,417 8,721 2,993,316 12,521,454

Gross Outlays (8,342,015) (9,918) (3,002,468) (11,354,401) 

Obligated Balance Transferred, Net 

Actual Transfers, Unpaid Obligations 34,008 — — 34,008 

Recoveries of Prior Year Unpaid Obligations (189,493) (1,631) (7,381) (198,505) 

Change in Uncollected Customer Pymts from 

Federal Sources 53,517 10 629 54,156 

Obligated Balance, Net End of Period 

Unpaid Obligations 3,982,781 4,998 81,949 4,069,728 

Less: Uncollected Customer Pymts from 

Federal Sources (319,481) (88) (1,216) (320,785) 

Total, Unpaid Obligated Balance, Net, End of 

Period 3,663,300 4,910 80,733 3,748,943 

Net Outlays 

Gross Outlays 8,342,015 9,918 3,002,468 11,354,401 

Less: Offsetting Collections (1,496,191) (10) (18,479) (1,514,680) 

Less: Distributed Offsetting Receipts 

Total Net Outlays 

— — (2,360,600) (2,360,600) 

$ 6,845,824 $ 9,908 $ 623,389 $ 7,479,121 

Required Supplementary Information
 

U.S. Customs and Border Protection 

Required Supplementary Information (continued) 

(Unaudited) 
124 U.S. Customs and Border Protection • Performance and Accountability Report 

 

 

 

 

Required Supplementary Information
 

U.S. Customs and Border Protection
 

Required Supplementary Information (continued)
 

(Unaudited)
 

Custodial Activity 

Substantially all duty, tax, and fee revenues collected by CBP are remitted to various General Fund accounts 

maintained by Treasury and U.S. Department of Agriculture. Treasury further distributes these revenues to 

other federal agencies in accordance with various laws and regulations. CBP transfers the remaining revenue (less than 1 percent of revenues collected) directly to other federal agencies, the Governments of 

Puerto Rico, and the U.S. Virgin Islands. Refunds of revenues collected from import/export activities are 

recorded in separate accounts established for this purpose and are funded through permanent indefinite 

appropriations. These activities reflect the non-entity, or custodial, responsibilities that CBP, as an agency 

of the Federal Government, has been authorized by law to enforce. 

CBP reviews selected documents to ensure all duties, taxes, and fees owed to the Federal Government 

are paid and to ensure regulations are followed. If CBP determines that duties, taxes, fees, fines, or penalties are due in addition to estimated amounts previously paid by the importer/violator, the importer/violator is notified of the additional amount due. CBP regulations allow the importer/violator to file a protest on 

the additional amount due for review by the Port Director. A protest allows the importer/violator the opportunity to submit additional documentation supporting their claim of a lower amount due or to cancel the 

additional amount due in its entirety. During the protest period, CBP does not have a legal right to importer/ 

violator’s assets, and consequently CBP recognizes accounts receivable only when the protest period has 

expired or an agreement is reached. For FY 2008 and 2007 CBP had the legal right to collect $2.1 billion 

and $1.94 billion of receivables. In addition, there were $2 billion and $2.7 billion representing records still 

in the protest phase for FY 2008 and 2007, respectively. CBP recognized as write-offs $311 million and 

$184 million of assessments that the Department has statutory authority to collect at September 30, 

2008 and 2007, but has no future collection potential. Most of this amount represents fines, penalties, 

and interest. 
Financial Section 125 

 

Other Accompanying Information
 

U.S. Customs and Border Protection 

Other Accompanying Information 

(Unaudited) 

Revenue Gap 

The Compliance Measurement Program collects objective statistical data to determine the compliance 

level of commercial imports with U.S. trade laws, regulations, and agreements, and is used to estimate 

the revenue gap. The revenue gap is a calculated estimate that measures potential loss of revenue owing 

to noncompliance with trade laws, regulations, and agreements using a statistically valid sample of the 

revenue losses and overpayments detected during Compliance Measurement entry summary reviews conducted throughout the year. For FY 2007 and 2006, the estimated revenue gap was $412 million and $450 

million, respectively. The preliminary estimated revenue gap for FY 2008 is $347 million. The preliminary 

estimated over-collection and under-collection amounts due to noncompliance for FY 2008 were $70.2 million and $417 million, respectively. The preliminary estimated over-collection and under-collection amounts 

due to noncompliance for FY 2007 were $90 million and $502 million, respectively. The preliminary overall 

trade compliance rate for FY 2008 and 2007 is 98 percent and 98.1 percent, respectively. With overall 

compliance at a high level, CBP has been able to emphasize matters of significant trade risk. 

The final overall trade compliance rate and estimated revenue gap for FY 2008 will be issued in February 

2009. 
126 U.S. Customs and Border Protection • Performance and Accountability Report 

2008 

Protest 

in Favor 

of Debtor 

Net Reduction 

Balance 

October 1 

Additional 

Assessments 

Administrative Additional 

Receivable 

Balance 

Process September 30 

Duties $ 220,610 $ 229,995 $ (10,149) $ (103,110) $ (90,191) $ 247,155 

Taxes 48 744 (8) (414) (70) 300 

Fees 3,778 2,799 (102) (5,601) (182) 692 

Fines/Penalties 2,076,989 818,467 (905,125) (47) (768,141) 1,222,143 

Interest 123,108 135,453 (8,276) (23,524) (52,758) 174,003 

Antidumping/ 

Countervailing 

Duty 302,130 299,785 (36,594) (60,090) (138,831) 366,400 

Refunds & 

Drawback 

Totals 

10,669 

$ 2,737,332 

9,429 

$ 1,496,672 

(660) (12,064) 

$ (960,914) $ (204,850) 

(1,652) 5,722 

$(1,051,825) $ 2,016,415 

2007 

Protest 

in Favor 

of Debtor 

Net Reduction 

Administrative 

Process 

Balance 

October 1 

Additional 

Assessments 

Additional 

Receivable 

Balance 

September 30 

Duties $ 62,743 $ 245,224 $ (7,449) $ (62,638) $ (17,270) $ 220,610 

Taxes 523 1,087 (31) (1,048) (483) 48 

Fees 374 4,637 (98) (1,019) (116) 3,778 

Fines/Penalties 1,970,379 1,614,214 (1,792,179) (92) 284,667 2,076,989 

Interest 99,252 124,867 (2,582) (44,662) (53,767) 123,108 

Antidumping/ 

Countervailing 

Duty 256,311 509,125 (15,920) (153,146) (294,240) 302,130 

Refunds & 

Drawback 

Totals 

10,687 

$2,400,269 

22,537 

$ 2,521,691 

(1,629) (20,140) 

$(1,819,888) $ (282,745) 

(786) 

$ (81,995) 

10,669 

$2,737,332 

 

Other Accompanying Information
 

U.S. Customs and Border Protection
 

Other Accompanying Information (continued)
 

(Unaudited)
 

Petitioned and Protested Schedule 

An analysis of the changes in petitioned and protested assessed amounts during FY 2008 and 2007 is as 

follows (in thousands): 

CBP reviews selected entry documentation to determine whether importer payment estimates of duties, 

taxes, and fees were accurate or whether additional supplemental amounts are owed and should be billed. 
Financial Section 127 

 

 

 

2008 

Aged Period 

<=90 days 91 days–1 year 1–2 years 2–3 years 3+ years Total 

Reimbursable Services $ 433 $ 3,245 $ 1,465 $ 77 $ 345 $ 5,565 

User Fees 145,237 31,401 3,770 1,421 16,112 197,941 

Gross Receivables 145,670 34,646 5,235 1,498 16,457 203,506 

Less Uncollectible 

Amounts (—) (10,308) (1,862) (783) (12,909) (25,862) 

Net Receivables $145,670 $24,338 $ 3,373 $ 715 $ 3,548 $177,644 

2007 

Aged Period 

<=90 days 91 days–1 year 1–2 years 2–3 years 3+ years Total 

Reimbursable Services $ 528 $ 4,265 $ 723 $ 696 $ 58 $ 6,270 

User Fees 139,297 7,650 2,115 3,371 14,661 167,094 

Gross Receivables 139,825 11,915 2,838 4,067 14,719 173,364 

Less Uncollectible 

Amounts 

Net Receivables 

(1,751) 

$138,074 

(1,326) 

$10,589 

(2,533) 

$ 305 

(3,179) 

$ 888 

(13,173) 

$ 1,546 

(21,962) 

$151,402 

Other Accompanying Information
 

U.S. Customs and Border Protection
 

Other Accompanying Information (continued)
 

(Unaudited)
 

CBP regulations allow the importer 90 days (or 180 days for entries on or after 12/18/04) from the bill 

date in which to file a protest to be reviewed by the Port Director and an application requesting further 

review of the protest by CBP Office of Regulations and Rulings challenging the assessment of supplemental duties, taxes, and fees. If the Port Director denies the protest and application for further review, the 

protestor has an additional 60 days from the denial date for a review of the application by the Commissioner of CBP. Consequently, CBP recognizes accounts receivables only when the protested period has 

elapsed or when a protest decision has been rendered in CBP favor. 

Additionally, importers and their sureties also have the option to petition for relief after receipt of CBP 

notice that a fine or penalty has been assessed when a violation of law or regulation is discovered. The 

importer or surety has 60 days to file a petition for relief or make payment of the assessed amount. If a 

petition is received and CBP finds there are extenuating circumstances such as an incorrect assessment, 

which warrants mitigation, relief is granted as prescribed by CBP mitigation guidelines and directives. Consequently, CBP recognizes accounts receivables only when the petition period has elapsed or when a petition decision has been rendered. 

Accounts Receivable with Public, Net 

An aging of Accounts Receivables with the Public as of September 30, 2008 and 2007 is as follows (in 

thousands): 
2008 

Receivable 

Category 

Balance 

October 1 

Receivables 

Recorded 

During the 

Fiscal Year Collections Write-offs Adjustments 

Balance 

September 30 

Duties 

Excise Taxes 

Fees 

Fines/Penalties 

Interest 

Antidumping/ 

Countervailing Duty 

Refunds/Drawback 

$ 1,648,851 

126,752 

132,452

1,115,645 

190,338 

311,135 

2,062 

$13,706,210 

1,814,198 

1,816,214

1,540,038 

97,651 

379,391 

10,566 

$(12,708,037) 

(1,773,158) 

(1,779,521) 

(72,596)

(12,257)

(257,010) 

(10,076) 

$ (2,996) 

(7) 

(11) 

(276,929) 

(16,524) 

(14,515) 

(—) 

$ (802,341) 

(68,807) 

(24,335) 

(1,532,466) 

(36,509) 

(108,904) 

(2,099) 

$ 1,841,687 

98,978 

144,799 

773,692 

222,699 

310,097 

453 

Totals $ 3,527,235 $19,364,268 $(16,612,655) $(310,982) $ (2,575,461) $ 3,392,405 

1,314,393 

$ 2,078,012 

Less Uncollectible 

Amounts 

Net Receivables 

1,590,361 

$ 1,936,874 

2007 

Receivable 

Category 

Balance 

October 1 

Receivables 

Recorded 

During the 

Fiscal Year Collections Write-offs Adjustments 

Balance 

September 30 

Duties 

Excise Taxes 99,178 2,653,498 (2,669,793) (95) 43,964 126,752 

Fees 

Fines/Penalties 

Interest 

Antidumping/ 

Countervailing Duty 

Refunds/Drawback 

$ 1,553,714 

120,041 

1,120,769 

164,589 

260,929 

2,077 

$23,419,661

2,246,723 

11,851,765 

139,307 

911,307 

27,399 

$(22,831,012) 

(2,235,523) 

(60,139) 

(38,855) 

(532,320) 

(25,301) 

$ (2,349) 

(8) 

(174,345) 

(2,013) 

(4,951) 

(3) 

$ (491,163) 

1,219 

(11,622,405) 

(72,690) 

(323,830) 

(2,110) 

$ 1,648,851 

132,452 

1,115,645 

190,338 

311,135 

2,062 

Totals $3,321,297 $41,249,660 $(28,392,943) $(183,764) $(12,467,015) $ 3,527,235 

1,590,361 

$ 1,936,874 

Less Uncollectible 

Amounts 

Net Receivables 

1,566,675 

$ 1,754,622 

Other Accompanying Information
 

U.S. Customs and Border Protection
 

Other Accompanying Information (continued)
 

(Unaudited)
 

Tax, Duties, and Trade Receivables, Net 

An analysis of the changes in accounts receivable during FY 2008 and 2007 is as follows (in thousands): 

128 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 129 

2008 

Aged Period 

<=90 days 91 days–1 year 1–2 years 2–3 years 3+ years Total 

Duties $1,701,888 $ 17,175 $ 13,103 $ 13,604 $ 95,917 $ 1,841,687 

Excise Taxes 92,916 23 11 20 6,008 98,978 

User Fees 134,865 298 49 9,304 283 144,799 

Fines/Penalties 52,740 79,570 123,987 104,600 412,795 773,692 

Interest 6 19,040 6,789 23,307 173,557 222,699 

Antidumping/ 

Countervailing 

Duty 12,704 63,644 16,600 43,646 173,503 310,097 

Refunds and 

Drawback — 24 181 21 227 453 

Gross Receivables 1,995,119 179,774 160,720 194,502 862,290 3,392,405 

Less Uncollectible 

Amounts 

Net Receivables 

(53,735) 

$ 1,941,384 

(139,127) 

$ 40,647 

(142,466) 

$ 18,254 

(156,989) 

$ 37,513 

(822,076) (1,314,393) 

$ 40,214 $ 2,078,012 

 

Other Accompanying Information
 

U.S. Customs and Border Protection
 

Other Accompanying Information (continued)
 

(Unaudited)
 

An aging of Intragovernmental receivables as of September 30, 2008 and 2007 is as follows (in 

thousands): 

Aged Period 

2007 <=90 days 91 days–1 year 1–2 years 2–3 years 3+ years Total 

Duties $1,527,733 $ 7,043 $ 13,996 $ 17,639 $ 82,440 $ 1,648,851 

Excise Taxes 120,865 28 39 5 5,815 126,752 

User Fees 117,524 82 14,578 23 245 132,452 

Fines/Penalties 170,851 77,604 189,619 319,264 358,307 1,115,645 

Interest 1 1,854 30,516 4,968 152,999 190,338 

Antidumping/ 

Countervailing 

Duty 46,589 28,642 48,917 37,980 149,007 311,135 

Refunds and 

Drawback 2 368 21 138 1,533 2,062 

Gross Receivables 1,983,565 115,621 297,686 380,017 750,346 3,527,235 

Less Uncollectible 

Amounts (167,657) (103,733) (256,898) (352,490) (709,583) (1,590,361) 

Net Receivables $1,815,908 $ 11,888 $ 40,788 $ 27,527 $ 40,763 $ 1,936,874 
Other Accompanying Information
 

U.S. Customs and Border Protection
 

Other Accompanying Information (continued)
 

(Unaudited)
 

CBP Collections by Category 

(Dollars in thousands) 

Duties 2004 2005 2006 2007 2008 

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 

Consumption Entries $21,012,275 $23,213,476 $24,787,051 $26,477,180 $27,543,807 

Warehouse Withdrawals 115,512 107,477 90,832 80,858 76,910 

Mail Entries 3,175 2,687 2,696 4,015 4,223 

Passenger Baggage Entries 4,551 3,985 4,386 4,528 3,888 

Crew Baggage Entries 17 11 9 9 8 

Military Baggage Entries 4 2 2 1 1 

Informal Entries 53,612 55,680 57,415 56,026 54,537 

Vessel Repair Entries 36,033 38,687 15,742 22,938 43,315 

Other Duties 54,433 44,552 37,853 57,122 41,277 

Total Duties 21,279,612 23,466,557 24,995,986 26,702,677 27,767,966 

Miscellaneous 

Violations Of CBP Law 52,159 54,227 49,797 56,434 69,993 

Testing, Inspecting & 

Grading 54 56 46 34 5,114 

Miscellaneous Taxes 17,391 18,659 19,803 19,726 20,082 

USDA Collections 77,410 91,070 94,359 115,168 112,319 

Harbor Maintenance Fee 869,522 1,047,843 1,206,414 1,261,681 1,467,405 

Fees 5,195 5,419 7,107 6,695 8,134 

User Fee Account 1,464,138 1,600,365 1,702,043 2,436,087 2,633,600 

Unclaimed Funds 1,081 1,124 991 479 372 

Recoveries 53 3 2 2 9 

Interest 9,892 9,760 8,604 13,229 23,987 

Other CBP Receipts 8,663 9,645 17,246 17,382 15,325 

Total Miscellaneous 2,505,558 2,838,171 3,106,412 3,926,917 4,356,340 

Internal Revenue Taxes 2,205,744 2,255,482 2,345,992 2,537,098 $2,372,762 

Total Collections $25,990,914 $28,560,210 $30,448,390 $33,166,692 $34,497,068 

These schedules will not equal amounts reported on the Consolidated Statement of Custodial Activity due 

to certain deposit fund collections, which are not considered custodial collections, being reported on the 

Consolidated Balance Sheet, and other adjustments. 

130 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 131 

2004 2005 2006 2007 2008 

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 

Boston $ 440,158 $ 457,696 $ 478,550 $ 490,841 $ 473,272 

Buffalo-Niagara Falls 181,876 201,428 210,888 211,699 219,508 

Ogdensburg 102,490 120,864 141,628 155,739 150,884 

Portland, Maine 54,311 59,397 57,673 59,000 62,549 

Providence 67,787 74,624 83,238 92,454 80,518 

St. Albans 41,129 47,311 44,687 42,897 32,817 

Baltimore 548,892 584,537 584,719 586,224 637,952 

Philadelphia 549,459 586,956 639,201 650,157 588,607 

Newark 3,961,215 4,179,939 4,362,201 4,552,031 4,642,846 

JFK Airport 1,274,989 1,300,376 1,220,472 1,234,035 1,216,836 

Charleston 906,318 1,145,999 1,175,442 1,030,435 1,002,353 

Miami 844,143 798,307 752,711 733,596 634,894 

San Juan 98,709 15,381 123,132 110,913 108,981 

St. Thomas 11,949 113,244 14,819 16,074 17,145 

Savannah 958,250 1,108,911 1,265,007 1,438,061 1,550,580 

Tampa 390,533 409,229 473,650 506,870 516,533 

Wilmington 272,646 267,769 290,312 314,993 328,933 

Norfolk 563,558 629,274 674,041 685,494 709,807 

NFC Indianapolis/ 

Washington 702,528 703,182 914,086 1,518,378 1,941,618 

Mobile 108,809 125,715 157,920 142,869 196,619 

New Orleans 855,041 885,110 936,744 1,055,211 1,145,196 

Dallas/Ft. Worth 335,763 378,052 418,128 444,678 460,147 

El Paso 112,521 126,113 146,472 196,930 173,202 

Houston 497,180 611,527 773,047 805,245 909,631 

Laredo 307,842 337,921 370,216 395,215 411,218 

Port Arthur 32,613 35,092 28,144 32,604 33,725 

Nogales 92,216 82,636 77,832 82,999 82,410 

Los Angeles 5,982,568 6,788,238 7,258,249 8,138,181 8,387,589 

San Diego 230,158 237,419 259,000 303,717 294,529 

Anchorage 101,446 84,913 103,998 110,296 116,518 

Honolulu 45,898 42,089 39,670 39,955 43,013 

Other Accompanying Information
 

U.S. Customs and Border Protection
 

Other Accompanying Information (continued)
 

(Unaudited)
 

CBP Collections by Major Processing Port Locations 

(Dollars in thousands) 
 

 

 

 

 

 

Other Accompanying Information
 

U.S. Customs and Border Protection
 

Other Accompanying Information (continued)
 

(Unaudited)
 

CBP Collections by Major Processing Port Locations (continued) 

2004 2005 2006 2007 2008 

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 

Portland 341,904 369,471 395,707 454,523 443,190 

San Francisco 774,722 800,687 945,986 1,084,934 1,161,110 

Seattle 816,870 1,143,720 1,157,762 1,274,972 1,264,836 

Chicago 1,299,606 1,412,668 1,436,691 1,560,159 1,664,181 

Cleveland 1,009,197 1,114,677 1,245,447 1,385,583 1,528,043 

Detroit 487,286 552,711 546,870 538,879 563,036 

Milwaukee 32,437 32,630 33,230 36,056 37,766 

Minneapolis 123,082 132,869 168,568 180,724 198,610 

Pembina 14,256 16,434 17,631 18,982 23,635 

St. Louis 293,594 304,816 271,647 287,356 282,539 

Great Falls 124,965 140,278 152,974 166,733 159,692 

Total Revenues 

Collected $25,990,914 $28,560,210 $30,448,390 $33,166,692 $34,497,068 

These schedules will not equal amounts reported on the Consolidated Statement of Custodial Activity due 

to certain deposit fund collections, which are not considered custodial collections, being reported on the 

Consolidated Balance Sheet, and other adjustments. 

Improper Payments Information Act of 2002 (IPIA) 

CBP Improper Payment Act (IPIA) efforts included the completion of a risk assessment of all CBP programs 

and the identification of two custodial programs that were determined to be susceptible to significant erroneous payments. The two programs, Custodial Refund and Drawback and Custodial Continued Dumping 

and Subsidy Offset Act (CDSOA) and Payment to Wool and Cotton Manufacturers, both relate to duty, tax, 

and fee trade-related activity. 

CBP performed sample payment testing on these programs. The Custodial Refund and Drawback payment 

testing yielded an estimated improper payment amount of $1.7 million of the $6.7 billion, or 0.03 percent, 

disbursed during fiscal year 2007. The Custodial CDSOA and Payment to Wool and Cotton Manufacturers 

payment testing yielded an estimated improper payment amount of $0 of the $408 million, disbursed during fiscal year 2007. 

132 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 133 

 

Amounts Identified 

as Improper Amounts Identified Amounts 

Payments for Recovery Recovered 

Custodial Refund and Drawback $ 1,540 $ 1,002 $ 1,002 

Custodial CDSOA, Cotton and Wool 

Totals 

— 

1,540 

— 

1,002 

— 

1,002 

Other Accompanying Information
 

U.S. Customs and Border Protection
 

Other Accompanying Information (continued)
 

(Unaudited)
 

Recovery Auditing 

CBP contracted the audit recovery work for disbursements made during fiscal year 2007. The results of the 

recovery audit efforts continue to identify negligible recovery amounts. The recovery audit results are 

reported below: 

Amount Subject 

to Review for 

CY Reporting 

Actual Amount 

Reviewed and 

Reported CY 

Amounts 

Identified 

for 

Recovery 

CY 

Amounts 

Recovered 

CY 

Amounts 

Identified 

for 

Recovery 

PY 

Amounts 

Recovered 

PY 

Cumulative 

Amounts 

Identified for 

Recovery 

(CY + PY) 

Cumulative 

Amounts 

Recovered 

(CY + PY) 

$1,764,855,973 $1,764,855,973 $ 90,368 $ 6,905 $ 179,476 $ 124,124 $ 269,844 $ 131,029 

In addition, CBP identified amounts for recovery during the Improper Payment Information Act (IPIA) review 

of FY 2007 Custodial Program disbursements. The IPIA results are as follows (dollars in thousands): 

Recoveries for Custodial Refund and Drawback Program payments are restricted by regulations governing 

collections of duty, taxes, and fees associated with trade-related activity. 
134 U.S. Customs and Border Protection • Performance and Accountability Report

Office of Inspector General (OIG)

Report on Major Management Challenges

The DHS OIG’s report on Major Management Challenges Facing the Department of Homeland Security 

dated November 12, 2008, and the agency’s progress addressing these challenges are addressed at the 

DHS consolidated level and are incorporated into the DHS Fiscal Year 2008 Annual Financial Report

Independent Auditor’s Report

The independent audit of CBP’s consolidated financial statements was conducted by KPMG LLP, and follows in its entirety.

Auditor Reports
Financial Section 135

Independent Auditor’s Report

Office of Inspector General 

U.S. Department of Homeland Security 

Washington, DC 20528

 January 8, 2009 

MEMORANDUM FOR: The Honorable W. Ralph Basham 

 Commissioner 

 United States Customs and Border Protection 

FROM: Richard L. Skinner 

 Inspector General 

SUBJECT: Independent Auditors’ Report on U.S. Customs and Border 

Protection’s FY 2008 Consolidated Financial Statements 

The attached report presents the results of the U.S. Customs and Border Protection’s (CBP) 

consolidated financial statement audits for fiscal years (FY) 2008 and 2007. We contracted with the 

independent public accounting firm KPMG LLP (KPMG) to perform the audits. KPMG concluded 

that CBP’s consolidated financial statements as of and for the years ended September 30, 2008, and 

September 30, 2007, are presented fairly, in all material respects, in conformity with U.S. generally 

accepted accounting principles. 

The FY 2008 independent auditors’ report also contains observations and recommendations related 

to internal control weaknesses that were considered significant deficiencies and were required to be 

reported in the financial statement audit report. The four significant deficiencies in internal controls 

are presented below; the first significant deficiency is considered to be a material weakness. 

Significant Deficiencies 

1. Drawback of Duties, Taxes, and Fees 

2. Financial Reporting 

a. Property, plant, and equipment 

b. Inactive obligations 

3. Entry Process 

a. In-Bond Program 

b. Compliance Measurement 

c. Bonded Warehouse and Foreign Trade Zones 

4. Information Technology
 

 

Independent Auditor’s Report
 

Further, two instances of noncompliance with laws and regulations were noted in the following 

areas. 

Noncompliance with Laws and Regulations 

1.	 Federal Information Security Management Act (FISMA) – Electronic Government Act of 

2002 

2.	 Federal Financial Management Improvement Act of 1996 (FFMIA) 

KPMG is responsible for the attached independent auditors’ report dated December 4, 2008 and the 

conclusions expressed in the report. We do not express opinions on financial statements or internal

control or conclusions on compliance with laws and regulations. 

Consistent with our responsibility under the Inspector General Act, we are providing copies of our

report to appropriate congressional committees with oversight and appropriation responsibility over 

the Department of Homeland Security. In addition, we will post a copy of the report on our website. 

We extend our appreciation to CBP’s Office of the Chief Financial Officer and field offices for the

cooperation and courtesies extended to our and KPMG’s staff during the audit. Should you have any

questions, please call me, or your staff may contact Anne L. Richards, Assistant Inspector General 

for Audits, at 202-254-4100. 

Attachment 

136 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 137

Independent Auditor’s Report

Department of Homeland Security

Office of Inspector General

Independent Auditors' Report on 

U.S. Customs and Border Protection's 

FY 2008 Consolidated Financial Statements 

OIG-09-14 January 2009
 

 

 

 

 

 

 

 

Independent Auditor’s Report
 

Office of Inspector General 

U.S. Department of Homeland Security

Washington, DC 20528 

January 8, 2009 

Preface 

The Department of Homeland Security (DHS) Office of Inspector General (OIG) was established by 

the Homeland Security Act of 2002 (Public Law 107-296) by amendment to the Inspector General 

Act of 1978. This is one of a series of audit, inspection, and special reports prepared as part of our 

oversight responsibilities to promote economy, efficiency, and effectiveness within the department. 

The attached report presents the results of U.S Customs and Border Protection’s consolidated 

financial statement audits for fiscal years (FY) 2008 and 2007. We contracted with the independent 

public accounting firm KPMG LLP (KPMG) to perform the audits. The contract required that 

KPMG perform its audits according to generally accepted government auditing standards and 

guidance from the Office of Management and Budget and the Government Accountability Office. 

KPMG concluded that CBP’s consolidated financial statements as of and for the years ended 

September 30, 2008 and 2007, are presented fairly, in all material respects, in conformity with U.S. 

generally accepted accounting principles. The FY 2008 auditors’ report discusses one material 

weakness, three significant deficiencies in internal controls, and two instances of noncompliance 

with laws and regulations. KPMG is responsible for the attached draft auditor’s report and the 

conclusions expressed in the report. We do not express opinions on CBP’s financial statements or 

provide conclusions on compliance with laws and regulations. 

The recommendations herein have been discussed in draft with those responsible for 

implementation. It is our hope that this report will result in more effective, efficient, and economical 

operations. We express our appreciation to all of those who contributed to the preparation of this 

report. 

Richard L. Skinner
 

Inspector General
 

138 U.S. Customs and Border Protection • Performance and Accountability Report 
KPMG LLP 

2001 M Street, NW

Washington, DC 20036 

KPMG LLPa USlimited liability partnershipis the US

KPMG LLP, a U.S. limited liability partnership, is the U.S. 

member firm of KPMG International, a Swiss cooperative. 

Independent Auditors’ Report 

Inspector General 

U.S. Department of Homeland Security:

Commissioner

U.S. Customs and Border Protection: 

We have audited the accompanying consolidated balance sheets of the U.S. Department of Homeland

Security’s (DHS) Customs and Border Protection (CBP) as of September 30, 2008 and 2007, and the 

related consolidated statements of net cost, changes in net position, and custodial activity, and combined 

statements of budgetary resources (hereinafter referred to as “consolidated financial statements”) for the

years then ended. The objective of our audits was to express an opinion on the fair presentation of these

consolidated financial statements. In connection with our fiscal year 2008 audit, we also considered 

CBP’s internal controls over financial reporting and tested CBP’s compliance with certain provisions of 

applicable laws, regulations, and contracts that could have a direct and material effect on these 

consolidated financial statements.

Summary 

As stated in our opinion on the consolidated financial statements, we concluded that CBP’s consolidated

financial statements as of and for the years ended September 30, 2008 and 2007, are presented fairly, in

all material respects, in conformity with U.S. generally accepted accounting principles. 

Our consideration of internal control over financial reporting resulted in the following conditions being 

identified as significant deficiencies:

1. Drawback of Duties, Taxes, and Fees 

2. Financial Reporting 

a. Property, plant, and equipment 

b. Inactive obligations 

3. Entry Process 

a. In-Bond Program

b. Compliance Measurement

c. Bonded Warehouse and Foreign Trade Zones 

4. Information Technology

We consider the first significant deficiency, above, to be a material weakness.

The results of our tests of compliance with certain provisions of laws, regulations, and contracts disclosed

the following instances of noncompliance or other matters that are required to be reported under

Government Auditing Standards, issued by the Comptroller General of the United States, and Office of 

Management and Budget (OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial 

Statements:

1. Federal Information Security Management Act (FISMA) – Electronic Government Act of 

2002

2. Federal Financial Management Improvement Act of 1996 (FFMIA)

Financial Section 139 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Independent Auditor’s Report
 

KPMG LLP 

2001 M Street, NW
 

Washington, DC 20036
 

Independent Auditors’ Report 

Inspector General 

U.S. Department of Homeland Security: 

Commissioner 

U.S. Customs and Border Protection: 

We have audited the accompanying consolidated balance sheets of the U.S. Department of Homeland 

Security’s (DHS) Customs and Border Protection (CBP) as of September 30, 2008 and 2007, and the 

related consolidated statements of net cost, changes in net position, and custodial activity, and combined 

statements of budgetary resources (hereinafter referred to as “consolidated financial statements”) for the 

years then ended. The objective of our audits was to express an opinion on the fair presentation of these 

consolidated financial statements. In connection with our fiscal year 2008 audit, we also considered 

CBP’s internal controls over financial reporting and tested CBP’s compliance with certain provisions of 

applicable laws, regulations, and contracts that could have a direct and material effect on these 

consolidated financial statements. 

Summary 

As stated in our opinion on the consolidated financial statements, we concluded that CBP’s consolidated 

financial statements as of and for the years ended September 30, 2008 and 2007, are presented fairly, in 

all material respects, in conformity with U.S. generally accepted accounting principles. 

Our consideration of internal control over financial reporting resulted in the following conditions being 

identified as significant deficiencies: 

1.	 Drawback of Duties, Taxes, and Fees 

2.	 Financial Reporting 

a.	 Property, plant, and equipment 

b.	 Inactive obligations 

3.	 Entry Process 

a.	 In-Bond Program 

b.	 Compliance Measurement 

c.	 Bonded Warehouse and Foreign Trade Zones 

4.	 Information Technology 

We consider the first significant deficiency, above, to be a material weakness. 

The results of our tests of compliance with certain provisions of laws, regulations, and contracts disclosed 

the following instances of noncompliance or other matters that are required to be reported under 

Government Auditing Standards, issued by the Comptroller General of the United States, and Office of 

Management and Budget (OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial 

Statements: 

1.	 Federal Information Security Management Act (FISMA) – Electronic Government Act of 

2002 

2.	 Federal Financial Management Improvement Act of 1996 (FFMIA) 
KPMG LLP 

2001 M Street, NW

Washington, DC 20036 

KPMG LLP, a U.S. limited liability partnership, is the U.S.

member firm of KPMG International, a Swiss cooperative.

Independent Auditors’ Report 

Inspector General 

U.S. Department of Homeland Security:

Commissioner

U.S. Customs and Border Protection:

We have audited the accompanying consolidated balance sheets of the U.S. Department of Homeland

Security’s (DHS) Customs and Border Protection (CBP) as of September 30, 2008 and 2007, and the 

related consolidated statements of net cost, changes in net position, and custodial activity, and combined 

statements of budgetary resources (hereinafter referred to as “consolidated financial statements”) for the

years then ended. The objective of our audits was to express an opinion on the fair presentation of these

consolidated financial statements. In connection with our fiscal year 2008 audit, we also considered 

CBP’s internal controls over financial reporting and tested CBP’s compliance with certain provisions of 

applicable laws, regulations, and contracts that could have a direct and material effect on these 

consolidated financial statements.

Summary 

As stated in our opinion on the consolidated financial statements, we concluded that CBP’s consolidated

financial statements as of and for the years ended September 30, 2008 and 2007, are presented fairly, in

all material respects, in conformity with U.S. generally accepted accounting principles.

Our consideration of internal control over financial reporting resulted in the following conditions being

identified as significant deficiencies:

1. Drawback of Duties, Taxes, and Fees 

2. Financial Reporting

a. Property, plant, and equipment 

b. Inactive obligations 

3. Entry Process

a. In-Bond Program

b. Compliance Measurement

c. Bonded Warehouse and Foreign Trade Zones 

4. Information Technology

We consider the first significant deficiency, above, to be a material weakness.

The results of our tests of compliance with certain provisions of laws, regulations, and contracts disclosed

the following instances of noncompliance or other matters that are required to be reported under 

Government Auditing Standards, issued by the Comptroller General of the United States, and Office of 

Management and Budget (OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial 

Statements:

1. Federal Information Security Management Act (FISMA) – Electronic Government Act of 

2002

2. Federal Financial Management Improvement Act of 1996 (FFMIA)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Independent Auditor’s Report
 

The following sections discuss our opinion on CBP’s consolidated financial statements; our consideration 

of CBP’s internal controls over financial reporting; our tests of CBP’s compliance with certain provisions 

of applicable laws, regulations, and contracts; and management’s and our responsibilities. 

Opinion on the Financial Statements 

We have audited the accompanying consolidated balance sheets of the U.S. Department of Homeland 

Security’s (DHS) Customs and Border Protection (CBP) as of September 30, 2008 and 2007, and the 

related consolidated statements of net cost, changes in net position, and custodial activity, and the 

combined statements of budgetary resources for the years then ended. 

In our opinion, the consolidated financial statements referred to above present fairly, in all material 

respects, the financial position of CBP as of September 30, 2008 and 2007, and its net costs, changes in 

net position, budgetary resources, and custodial activity for the years then ended, in conformity with U.S. 

generally accepted accounting principles. 

The information in the Management’s Discussion and Analysis and Required Supplementary Information 

is not a required part of the consolidated financial statements, but is supplementary information required 

by U.S. generally accepted accounting principles. We have applied certain limited procedures, which 

consisted principally of inquiries of management regarding the methods of measurement and presentation 

of this information. However, we did not audit this information and, accordingly, we express no opinion 

on it. 

Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements 

taken as a whole. The information in the Performance Results Section and Other Accompanying 

Information section are presented for purposes of additional analysis and are not required as part of the 

consolidated financial statements. This information has not been subjected to auditing procedures and, 

accordingly, we express no opinion on it. 

Internal Control Over Financial Reporting 

Our consideration of the internal control over financial reporting was for the limited purpose described in 

the Responsibilities section of this report and would not necessarily identify all deficiencies in the internal 

control over financial reporting that might be significant deficiencies or material weaknesses. 

A control deficiency exists when the design or operation of a control does not allow management or 

employees, in the normal course of performing their assigned functions, to prevent or detect 

misstatements on a timely basis. A 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. A 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. 

In our fiscal year 2008 audit, we consider the deficiencies, described in Exhibits I and II, to be significant 

deficiencies in internal control over financial reporting. However, of the significant deficiencies described 

in Exhibits I and II, we believe that the significant deficiency presented in Exhibit I is a material 

weakness. Exhibit IV presents the status of prior year significant deficiencies. 

140 U.S. Customs and Border Protection • Performance and Accountability Report 
KPMG LLP 

2001 M Street, NW

Washington, DC 20036 

KPMG LLP, a U.S. limited liability partnership, is the U.S.

member firm of KPMG International, a Swiss cooperative.

Independent Auditors’ Report 

Inspector General 

U.S. Department of Homeland Security:

Commissioner

U.S. Customs and Border Protection:

We have audited the accompanying consolidated balance sheets of the U.S. Department of Homeland

Security’s (DHS) Customs and Border Protection (CBP) as of September 30, 2008 and 2007, and the 

related consolidated statements of net cost, changes in net position, and custodial activity, and combined 

statements of budgetary resources (hereinafter referred to as “consolidated financial statements”) for the

years then ended. The objective of our audits was to express an opinion on the fair presentation of these

consolidated financial statements. In connection with our fiscal year 2008 audit, we also considered 

CBP’s internal controls over financial reporting and tested CBP’s compliance with certain provisions of 

applicable laws, regulations, and contracts that could have a direct and material effect on these 

consolidated financial statements.

Summary 

As stated in our opinion on the consolidated financial statements, we concluded that CBP’s consolidated

financial statements as of and for the years ended September 30, 2008 and 2007, are presented fairly, in

all material respects, in conformity with U.S. generally accepted accounting principles.

Our consideration of internal control over financial reporting resulted in the following conditions being

identified as significant deficiencies:

1. Drawback of Duties, Taxes, and Fees 

2. Financial Reporting

a. Property, plant, and equipment 

b. Inactive obligations 

3. Entry Process

a. In-Bond Program

b. Compliance Measurement

c. Bonded Warehouse and Foreign Trade Zones 

4. Information Technology

We consider the first significant deficiency, above, to be a material weakness.

The results of our tests of compliance with certain provisions of laws, regulations, and contracts disclosed

the following instances of noncompliance or other matters that are required to be reported under

Government Auditing Standards, issued by the Comptroller General of the United States, and Office of 

Management and Budget (OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial 

Statements:

1. Federal Information Security Management Act (FISMA) – Electronic Government Act of 

2002

2. Federal Financial Management Improvement Act of 1996 (FFMIA)

Financial Section 141 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Independent Auditor’s Report
 

Compliance and Other Matters 

The results of certain of our tests of compliance as described in the Responsibilities section of this report, 

exclusive of those referred to in the Federal Financial Management Improvement Act of 1996 (FFMIA), 

disclosed one instance of noncompliance or other matters that are required to be reported herein under 

Government Auditing Standards or OMB Bulletin No. 07-04, and is described in Exhibit III. 

The results of our other tests of compliance as described in the Responsibilities section of this report, 

exclusive of those referred to in FFMIA, disclosed no instances of noncompliance or other matters that are 

required to be reported herein under Government Auditing Standards or OMB Bulletin No. 07-04. 

The results of our tests of FFMIA disclosed instances, described in Exhibit III, in which CBP’s financial 

systems did not substantially comply with Federal financial management systems requirements and were 

not compliant with the United States Government Standard General Ledger at the transaction level. 

The results of our tests of FFMIA disclosed no instances in which CBP’s financial management systems 

did not substantially comply with Federal accounting standards. 

* * * * * * * 

Responsibilities 

Management’s Responsibilities. Management is responsible for the consolidated financial statements; 

establishing and maintaining effective internal control; and complying with laws, regulations, and 

contracts applicable to CBP. 

Auditors’ Responsibilities. Our responsibility is to express an opinion on the fiscal year 2008 and 2007 

consolidated financial statements of CBP based on our audits. We conducted our audits in accordance 

with auditing standards generally accepted in the United States of America; the standards applicable to 

financial audits contained in Government Auditing Standards, issued by the Comptroller General of the 

United States; and OMB Bulletin No. 07-04. Those standards and OMB Bulletin No. 07-04 require that 

we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial 

statements are free of material misstatement. An audit includes consideration of internal control over 

financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but 

not for the purpose of expressing an opinion on the effectiveness of CBP’s internal control over financial 

reporting. Accordingly, we express no such opinion. 

An audit also includes: 

	 Examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated 

financial statements; 

Assessing the accounting principles used and significant estimates made by management; and 

	 Evaluating the overall consolidated financial statement presentation. 

We believe that our audits provide a reasonable basis for our opinion. 

In planning and performing our fiscal year 2008 audit, we considered CBP’s internal control over 

financial reporting by obtaining an understanding of CBP’s internal control, determining whether internal 

controls had been placed in operation, assessing control risk, and performing tests of controls as a basis 

for designing our auditing procedures for the purpose of expressing our opinion on the consolidated 

financial statements. We did not test all internal controls relevant to operating objectives as broadly 

defined by the Federal Managers’ Financial Integrity Act of 1982. The objective of our audit was not to 
KPMG LLP 

2001 M Street, NW

Washington, DC 20036 

KPMG LLP, a U.S. limited liability partnership, is the U.S.

member firm of KPMG International, a Swiss cooperative.

Independent Auditors’ Report 

Inspector General 

U.S. Department of Homeland Security:

Commissioner

U.S. Customs and Border Protection:

We have audited the accompanying consolidated balance sheets of the U.S. Department of Homeland

Security’s (DHS) Customs and Border Protection (CBP) as of September 30, 2008 and 2007, and the 

related consolidated statements of net cost, changes in net position, and custodial activity, and combined 

statements of budgetary resources (hereinafter referred to as “consolidated financial statements”) for the

years then ended. The objective of our audits was to express an opinion on the fair presentation of these

consolidated financial statements. In connection with our fiscal year 2008 audit, we also considered 

CBP’s internal controls over financial reporting and tested CBP’s compliance with certain provisions of 

applicable laws, regulations, and contracts that could have a direct and material effect on these 

consolidated financial statements.

Summary 

As stated in our opinion on the consolidated financial statements, we concluded that CBP’s consolidated

financial statements as of and for the years ended September 30, 2008 and 2007, are presented fairly, in

all material respects, in conformity with U.S. generally accepted accounting principles.

Our consideration of internal control over financial reporting resulted in the following conditions being

identified as significant deficiencies:

1. Drawback of Duties, Taxes, and Fees 

2. Financial Reporting

a. Property, plant, and equipment 

b. Inactive obligations 

3. Entry Process

a. In-Bond Program

b. Compliance Measurement

c. Bonded Warehouse and Foreign Trade Zones 

4. Information Technology

We consider the first significant deficiency, above, to be a material weakness.

The results of our tests of compliance with certain provisions of laws, regulations, and contracts disclosed

the following instances of noncompliance or other matters that are required to be reported under 

Government Auditing Standards, issued by the Comptroller General of the United States, and Office of 

Management and Budget (OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial 

Statements:

1. Federal Information Security Management Act (FISMA) – Electronic Government Act of 

2002

2. Federal Financial Management Improvement Act of 1996 (FFMIA)

______________________________ 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Independent Auditor’s Report
 

express an opinion on the effectiveness of CBP’s internal control over financial reporting. Accordingly, 

we do not express an opinion on the effectiveness of CBP’s internal control over financial reporting. 

As part of obtaining reasonable assurance about whether CBP’s fiscal year 2008 consolidated financial 

statements are free of material misstatement, we performed tests of CBP’s compliance with certain 

provisions of laws, regulations, and contracts, noncompliance with which could have a direct and material 

effect on the determination of the consolidated financial statement amounts, and certain provisions of 

other laws and regulations specified in OMB Bulletin No. 07-04, including the provisions referred to in 

Section 803(a) of FFMIA. We limited our tests of compliance to the provisions described in the 

preceding sentence, and we did not test compliance with all laws, regulations, and contract agreements 

applicable to CBP. However, providing an opinion on compliance with laws, regulations, and contract 

agreements was not an objective of our audit and, accordingly, we do not express such an opinion. 

CBP’s response to the findings identified in our audit are presented in Exhibits I, II, and III. We did not 

audit CBP’s response and, accordingly, we express no opinion on it. 

This report is intended solely for the information and use of CBP’s management, DHS management, the 

DHS Office of Inspector General, OMB, the U.S. Government Accountability Office, and the U.S. 

Congress and is not intended to be and should not be used by anyone other than these specified parties. 

December 4, 2008 

142 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 143 

 

 

 

 

 

 

 

 

 

Independent Auditor’s Report
 

EXHIBIT I 

Material Weaknesses 

A.	 Drawback of Duties, Taxes and Fees 

Background: 

CBP, as a component of DHS, continued to perform an important revenue collection function for the U.S. 

Treasury. CBP collects approximately $31.4 billion in import duties, taxes and fees annually on 

merchandise arriving in the United States from foreign countries. 

Drawback is a remittance in whole or in part, of duties, taxes, or fees previously paid by an importer. 

Drawback typically occurs when the imported goods on which duties, taxes, or fees have been previously 

paid are subsequently exported from the United States or destroyed prior to entering the commerce of the 

United States. Depending on the type of drawback claim, the claimant has up to eight years from the date 

of importation to file for drawback. During fiscal year 2005, the U.S. Congress enacted the 

Miscellaneous Trade and Technical Corrections Act of 2004 (Public Law 108-429) that created a limited 

timeframe for liquidating claims; the new process is known as deemed-liquidation by CBP. As a result of 

the new timeframe for liquidation of drawback claims, CBP implemented policies and procedures during 

fiscal year 2006 that require the payment of claims in an accelerated timeframe. 

Condition: 

We noted the following weaknesses related to internal controls over drawback of duties, taxes, and fees 

paid by the importer: 

The Automated Commercial System (ACS) lacked automated controls to detect and prevent 

excessive drawback claims and payments, necessitating inefficient manual processes that do 

not effectively compensate for the lack of automated controls. ACS did not have the 

capability to compare, verify, and track essential information on drawback claims to the 

related underlying consumption entries or export documentation upon which the drawback 

claim was based. For example, ACS did not contain electronic edit checks that would identify 

duplicate claims for export of the same merchandise; 

ACS lacked controls to prevent the overpayment of drawback claims at the summary line 

level. Specifically, we noted approximately $3 thousand of overpayments; 

Drawback review policies did not require drawback specialists to review all or a statistically 

valid sample of prior drawback claims against the underlying consumption entries (UCE) to 

determine whether, in the aggregate, an excessive amount was claimed. CBP does not have 

absolute assurance that a selected import entry is not being over claimed by different 

drawback claims; 

Drawback review policy and procedures allow drawback specialists, with supervisory 

approval, to judgmentally decrease the number of ACS selected UCEs randomly selected for 

review, thus decreasing the review’s effectiveness. Further, CBP’s sampling methodology for 

selecting UCEs is not considered to be statistically valid; and 
 

 

 

 

 

 

 

 

Independent Auditor’s Report
 

EXHIBIT I 

Per CBP’s “Drawback Handbook,” the initial period for document retention related to a 

drawback claim is only 3 years from the date of payment. However, there are several 

situations that could extend the life of the drawback claim well beyond 3 years. 

Cause/Effect: 

Much of the drawback process is manual, placing an added burden on limited resources. CBP uses a 

sampling approach to compare, verify, and match consumption entry and export documentation to 

drawback claims submitted by importers. However, system and procedural limitations decrease the 

effectiveness of this approach. The inherent risk of fraudulent claims or claims made in error is high, 

which increase the risk of erroneous payments. 

Criteria: 

Under the Federal Managers Financial Integrity Act (FMFIA), management must implement costeffective controls to safeguard assets and ensure reliable financial reporting. Office of Management and 

Budget (OMB)’s Revised Implementation Guidance for the Federal Financial Management Improvement 

Act states that financial systems should “routinely provide reliable financial information consistently, 

accurately, and reported uniformly” to support management of current operations. The Federal Systems 

Integration Office (FISO) publications and OMB Circular A-127, Financial Management Systems, outline 

the requirements for Federal systems. FISO’s Core Financial System Requirements states that the core 

financial system must maintain detailed information by account sufficient to provide audit trails and to 

support billing and research activities. OMB Circular A-127 requires that the design of financial systems 

should eliminate unnecessary duplication of a transaction entry. Whenever appropriate, data needed by 

the systems to support financial functions should be entered only once and other parts of the system 

should be updated through electronic means consistent with the timing requirements of normal 

business/transaction cycles. 

The Improper Payments Information Act of 2002 requires agencies to annually review programs and 

activities and identify any that may be susceptible to significant improper payment. Whenever an agency 

estimates that improper payments may exceed $10 million, it must also provide a report on what actions 

are being taken to reduce such payments. In addition to the regulatory requirements stated above, CBP’s 

Drawback Handbook, dated March 2007, states that management reviews are necessary to maintain a 

uniform national policy of supervisory review. 

Recommendations: 

We recommend that CBP: 

1.	 Implement effective internal controls over drawback claims as part of any new system 

initiatives, including the ability to compare, verify, and track essential information on drawback 

claims to the related underlying consumption entries and export documentation for which the 

drawback claim is based, and identify duplicate or excessive drawback claims; 

2.	 Implement automated controls within ACS and ACE to prevent overpayment of a drawback 

claim; 

3.	 While the Automated Commercial Environment (ACE) is in development, we recommend that 

CBP collaborate with ACE developers/engineers to ensure that the new system eliminates the 

144 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 145 

 

Independent Auditor’s Report
 

EXHIBIT I 

need for statistically sampling of UCE and prior related drawback claims as drawback claims. 

In addition, until ACE is implemented, we recommend that CBP explore other statistical 

approaches for selecting UCEs and prior related drawback claims under the current ACS 

environment; 

4.	 Continue to work with the U.S. Congress to lengthen the required document retention period 

for all supporting documentation so that it corresponds with the drawback claim life cycle. 

CBP Response: 

See managements’ response included in the attached letter. 
 

 

 

 

 

 

 

 

 

Independent Auditor’s Report
 

EXHIBIT II 


Other Significant Deficiencies 

B. Financial Reporting 

1. Property, Plant, and Equipment 

a. Secure Border Initiative – Tactical Infrastructure 

Background: 

The Secure Border Initiative – Tactical Infrastructure (SBI-TI) is a comprehensive multi-year 

plan to secure America’s borders and reduce illegal immigration. The primary step in 

fulfilling this plan is the construction of a border fence between the U.S. and Mexico. The 

border fence will take many forms (fence, vehicle barriers, etc.) depending on the terrain of 

the land. Much of the physical fence construction includes large quantities of steel. As a 

result, CBP purchased steel in bulk during fiscal year 2008 to be used in the construction of 

the border fence. 

Condition: 

During fiscal year 2008, CBP purchased a total of $276 million in steel. We noted that these 

purchases were initiated during the second and third quarter of the fiscal year, with the 

majority purchased and received during August and September. Through August 2008, $224 

million of bulk steel was purchased and received; however, CBP did not have procedures in 

place to capitalize the costs into the financial accounting system (SAP) until September 2008. 

We noted that all bulk steel purchases received as of September 30, 2008 were properly 

capitalized by year-end. 

We also performed testwork over CBP’s percentage of completion accrual related to SBI-TI 

fence and vehicle barriers and noted that CBP did not have sufficient support for the 

percentage of completion for these projects. As a result, we noted a potential overstatement 

of approximately $41.3 million in construction in progress (CIP) as of September 30, 2008. 

Criteria: 

Statement of Federal Financial Accounting Standards (SFFAS) No. 6, Accounting for 

Property, Plant, and Equipment, requires that: 

- PP&E shall be recorded at cost, which shall include all costs incurred to bring the asset 

to a form and location suitable for its intended use; 

- Costs of acquiring property, plant, and equipment may include: labor and other direct 

or indirect production costs (for assets produced or constructed), an appropriate share 

of the cost of the equipment and facilities used in construction work (CIP assets), and 

direct costs of inspection, supervision, and administration of construction work; and 

- PP&E shall be recorded as construction work in process until it is placed in service, at 

which time the balance shall be transferred to general PP&E. 

146 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 147 

 

 

 

 

 

 

Independent Auditor’s Report
 

EXHIBIT II 

Office of Management and Budget (OMB) Circular No. A-123, Management’s 

Responsibility for Internal Control, defines management’s responsibility for internal 

control and provides guidance to Federal managers on improving the accountability and 

effectiveness of Federal programs and operations by establishing, assessing, correcting, and 

reporting on internal control. 

Cause/Effect: 

The construction of the SBI-TI border fence was a new process for CBP during fiscal year 

2008 and as a result processes and procedures did not exist to properly account for all 

related transactions in a timely manner. The untimely capitalization of assets (steel) 

purchased and received for the SBI-TI fence construction could result in misstatements of 

CBP’s financial statements. For example, we noted a potential overstatement of 

approximately $41.3 million in CIP as of September 30, 2008. 

Recommendations: 

We recommend that CBP: 

1.	 Establish a process for properly and accurately accounting for all assets purchased in a 

timely manner for the purposes of SBI-TI fence construction projects; and 

2.	 Ensure the records in SAP are accurate and complete with documentation available 

supporting the transactions that are readily available for examination. 

b.	 Untimely Transfers of Construction in Progress to Fixed Assets 

Background: 

During the fiscal years 2006 and 2007 financial statement audits, we noted untimely transfers 

of construction in progress (CIP) assets to fixed assets, in which a majority related to 

software in development. In fiscal year 2008, we continued to identify assets included in the 

CIP listing that were completed, but not transferred to fixed assets in a timely manner. As a 

result, CIP assets were overstated and fixed assets as well as the related accumulated 

depreciation and depreciation expense were understated. 

Condition: 

During fiscal year 2008, we continued to note weaknesses related to the untimely transfers of 

completed CIP assets to fixed assets. Specifically, we noted 28 instances in which assets 

were transferred untimely from CIP to fixed assets. These 28 errors resulted in $10.8 million 

of unrecognized accumulated depreciation and related depreciation expense. As a result, 

CBP performed an analysis of additions to fixed assets to identify the overall impact of 

untimely transfers from CIP to fixed assets as of September 30, 2008. Based on this analysis, 

CBP identified and corrected a total of $49 million of unrecorded accumulated depreciation 

and related depreciation expense as of September 30, 2008. Furthermore, $42 million of the 

$49 million, related to prior year depreciation thereby causing current year depreciation 

expense to be overstated by $42 million. 
 

 

 

 

 

 

 

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Criteria: 

Statement of Federal Financial Accounting Standards (SFFAS) No. 6, Accounting for 

Property, Plant, and Equipment, requires that: 

- PP&E shall be recorded at cost, which shall include all costs incurred to bring the 

asset to a form and location suitable for its intended use; 

- Costs of acquiring property, plant, and equipment may include: labor and other 

direct or indirect production costs (for assets produced or constructed), an appropriate 

share of the cost of the equipment and facilities used in construction work (CIP 

assets), and direct costs of inspection, supervision, and administration of construction 

work; and 

- PP&E shall be recorded as construction work in process until it is placed in service, 

at which time the balance shall be transferred to general PP&E. 

Office of Management and Budget (OMB) Circular No. A-123, Management’s 

Responsibility for Internal Control, defines management’s responsibility for internal 

control and provides guidance to Federal managers on improving the accountability and 

effectiveness of Federal programs and operations by establishing, assessing, correcting, and 

reporting on internal control. 

Cause/Effect: 

Completed CIP assets are not transferred from CIP to fixed assets in a timely manner. As a 

result, CIP, PP&E, and the related financial statement balances may be misstated at any point 

during the fiscal year. For example, we noted an overstatement of approximately $42 million 

in depreciation expense as of September 30, 2008. 

Recommendation: 

We recommend that CBP: 

1.	 Implement policies and procedures to ensure proper coordination between the Field 

Project Managers and the National Finance Center related to CIP project monitoring; 

2.	 Establish periodic communication between the CIP Project Managers and the 

National Finance Center to ensure that when projects are complete, the assets are 

appropriately transferred from CIP to fixed assets in SAP; and 

3.	 Implement policies and procedures that require the National Finance Center to 

perform periodic reviews over CIP assets to ensure that all CIP assets are regularly 

monitored and properly classified. 

CBP Response: 

See managements’ response included in the attached letter. 

148 U.S. Customs and Border Protection • Performance and Accountability Report 
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2. Inactive Obligations 

Background: 

CBP issued Directive 1220-011B during fiscal year 2006, which requires each Office under CBP to 

review their obligations quarterly in order to properly identify those amounts that require deobligation. 

The review must be reported to CBP’s National Finance Center (NFC) each quarter. 

Condition: 

We noted weaknesses in CBP’s policies and procedures related to timely deobligation of inactive 

obligations. During fiscal year 2008, we obtained the population of inactive obligations that CBP 

prepared and submitted to the Department. We noted that CBP’s quarterly analysis of inactive 

obligations reported the amount of “old” inactive obligations to the Department, but did not include 

evidence of further review and deobligation. We noted at March 31, 2008, $449 million of inactive 

obligations and conducted a review to determine if the obligations were valid. We identified $275 million 

of inactive obligations potentially requiring deobligation. CBP performed an in-depth review of 

obligations during fiscal year 2008 from which invalid obligations were identified for deobligation. CBP 

was unable to process all deobligations at the detail level prior to September 30, 2008 and therefore, 

recorded an on-top adjustment for inactive obligations in the amount of $84.8 million. 

Through additional testing of undelivered orders (UDOs) as of September 30, 2008, we noted 9 

exceptions whereby the UDO balance was determined invalid. As a result of these exceptions, CBP 

analyzed and adjusted the September 30, 2008 UDO balance by approximately $76.5 million. 

Criteria: 

US Code Title 31 Section 1501 states that “an amount shall be recorded as an obligation of the United 

States Government only when supported by documentary evidence of (1) a binding agreement between an 

agency and another person (including an agency) that is (a) in writing, in a way and form and for a 

purpose authorized by law; and (b) executed before the end of the period of availability.” Section 1554, 

Audit, control and reporting states, "The head of each agency shall establish internal controls to assure 

that an adequate review of obligated balances is performed to support the certification required by section 

1108(c) of this title." 

CBP Directive 1220-011B, Quarterly Review of Unliquidated Obligations, states that “Financial Plan 

Holder will review the following Systems, Applications, and Products (SAP) reports each fiscal quarter to 

reconcile their obligations to supporting records.” This directive also requires that “Each Assistant 

Commissioner will prepare a certification letter to the Director, National Finance Center, stating that 

he/she has reviewed all open obligations. The certification letter will be prepared at the end of each fiscal 

year quarterly review, and is due no later than 30 days after the end of the quarter. For the fourth quarter, 

year-end deadlines are to be followed.” 

Cause/Effect: 

CBP is not properly monitoring all open obligations on a periodic basis to determine if amounts require 

deobligation. As a result, undelivered orders and related account balances may be overstated at any point 

during the fiscal year. For example, we noted a potential overstatement of approximately $76.5 million in 

the UDO balance as of September 30, 2008. 
 

 

 

 

 

 

 

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Recommendations: 

We recommend that CBP: 

1.	 Develop and implement policies and procedures to ensure compliance with Directive No. 1220­

011B to ensure that obligations are being reviewed (and deobligated, if necessary) on a quarterly 

basis; 

2.	 Develop and implement policies and procedures to ensure compliance with 31 USC 1501 and 31 

USC 1554 and all other applicable laws and regulations; and 

3.	 Develop and implement procedures in order to deobligate invalid obligations in a timely manner, 

which may include periodic validation of inactive obligations. 

CBP Response: 

See managements’ response included in the attached letter. 

C. Entry Process 

1. In-Bond Program 

Background: 

In-bond entries occur when merchandise is transported through one port; however, the merchandise does 

not officially enter U.S. commerce until it reaches the intended port of destination. An in-bond also 

allows foreign merchandise arriving at one U.S. port to be transported through the U.S. and be exported 

from another U.S. port without appraisement or the payment of duty. In 1998, CBP implemented a 

tracking and audit system within the Automated Commercial System (ACS). It was designed to provide “real 

time” tracking of in-bond shipments from origin to destination, including entry and exportation. This 

tracking and audit system also serves as a compliance measurement system through random examinations 

and port audit reviews to ensure compliance. The tracking and audit system was designed to prevent 

diversion of In-bond shipments being imported and exported. The tracking and audit system calls for 

randomly selected ports to perform physical examinations at the time of arrival and departure as well as 

for post audit reviews of carrier activity. The In-Bond Shipments Overdue for Export (M02) Report is a 

monthly list of in-bond shipments overdue for export. Items on this report are in-bond movements 

transmitted by importers or brokers via Air Manifest System (AMS), Automated Broker Interface (ABI), 

or paper not yet exported in the required time limit. Review of the M02 report is designed to identify 

cargo that has not been exported and therefore may have physically, but not formally, entered into U.S. 

commerce thus circumventing the assessment and payment of duties and fees. 

Condition: 

We noted the following internal control weaknesses related to the in-bond process: 

Inconsistent procedures followed by the ports for completing compliance reviews/audits of 

in-bond entries and no formal requirement for ports to maintain documentation evidencing 

reviews/audits or the overall lack of the completion of such reviews/audits; 

150 U.S. Customs and Border Protection • Performance and Accountability Report 
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Inconsistent review of required monthly reports related to in-bond activity at the ports and 

significant system limitations of the monthly reports, which limit the overall usefulness; 

CBP does not have the ability to run an oversight report to determine if ports have completed 

all required audits; 

Formal procedures have not been established that require ports to review the overdue 

immediate transportation in-bonds (M07 report). In addition, the report to track air in-bonds 

(M19) has not been implemented; 

CBP is unable to determine the status of the in-bond shipments with the information available 

within ACS; 

National policies or procedures do not exist to monitor the results of in-Bond audits; and 

CBP does not perform an analysis to determine the potential loss of revenue through the inbond process as a result of goods entering the commerce of the U.S. without formal entry. 

Criteria: 

Under the Code of Federal Regulations (CFR) Title 19, Section 18.2(d), carriers are responsible for 

delivering in-bond manifests to CBP within two days of arrival, and CBP is responsible for assigning 

penalties to any non-arrivals. The CFR states, “Failure to surrender the in-bond manifest or report the 

arrival of bonded merchandise within the prescribed period shall constitute an irregular delivery and the 

initial bonded carrier shall be subject to applicable penalties.” 

Under FMFIA, management must implement cost-effective controls to safeguard assets and ensure 

reliable financial reporting. OMB’s Revised Implementation Guidance for FFMIA, states that financial 

systems should “routinely provide reliable financial information consistently, accurately, and reported 

uniformly” to support management of current operations. 

Cause/Effect: 

In recent years, several new directives and new handbooks have been implemented for the In-Bond 

program to address the performance of the program at the port level; however, currently, procedures are 

not in place to address CBP’s oversight of the program on a national level. 

The lack of an automatic compilation and analysis of audit results at the national level, results in the 

inability to determine the overall effectiveness of the in-bond audits and weaknesses in the overall Inbond program will not be known or identified at the national level. 

The inability to effectively monitor the in-bond process and verify the arrival of in-bond merchandise at 

the port level leads to a potential loss in revenue. This potential loss in revenue is due to uncollected 

duties and fees on in-bond merchandise that has physically entered U.S. commerce without formal entry. 
 

 

 

 

 

 

 

 

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Recommendations: 

We recommend that CBP: 

1.	 Increase oversight by communicating to the ports the requirements for the in-bond program and 

provide increased training for appropriate personnel to ensure that the requirements are carried 

out accurately; 

2.	 Ensure all ports perform TinMan audits (physical examinations and post-audits) weekly and 

resolve items on the M02 report (in-bond shipments overdue for export) monthly; 

3.	 Develop policies and procedures for all ports to: 

a.	 Maintain documentation evidencing the resolution of items on the in-bond shipments 

overdue for export report (M02); 

b.	 Maintain documentation evidencing the performance of and results from post audits and 

physical examinations; 

c.	 Require review of overdue immediate transportation in-bonds (M07 report) and maintain 

documentation evidencing review; and 

d.	 Require review of the report to track air in-bonds (M19) and maintain documentation 

evidencing review, once the report is implemented. 

4.	 Update system functionality to provide consistent information between cumulative and weekly 

reports used to track the status of TinMan audits, to compile the results of TinMan audits 

performed during the year, and to evaluate importers’ compliance with regulations and overall 

effectiveness of the in-bond program; 

5.	 Implement standard procedures to periodically analyze the compiled results of all in-bond 

audits performed during the year to ensure the integrity of the data received. Once the results 

are complied, perform an analysis to evaluate importers’ compliance with regulations as well as 

the overall effectiveness of the in-bond audits at a national level; and 

6.	 Analyze the in-bond program annually to determine the potential loss of revenue relating to inbonds. 

2. Compliance Measurement 

Background: 

Compliance Measurement (CM) is the primary method by which CBP measures risk in the areas of cargo 

security, trade compliance, and revenue collection. CBP utilizes the CM program to measure the 

effectiveness of its control mechanisms deployed and its execution in collecting revenues rightfully due 

the U.S. Department of the Treasury. The CM program is a key performance indicator used to determine 

if CBP’s internal controls are operating effectively as they pertain to ensuring compliance with laws and 

regulations. The Compliance Measurement program is also used to determine the revenue gap that is 

reported in the “Other Accompanying Information” in the financial statements. 

152 U.S. Customs and Border Protection • Performance and Accountability Report 
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Condition: 

We noted the following weaknesses related to CBP’s CM Program: 

CM oversight guidelines do not provide complete coverage over the CM program. CBP 

issued a memorandum to the field explaining the responsibilities of ports in terms of oversight 

required of CM programs at the ports. The memorandum rescinded requirements to use other 

data queries and established CMATS as the single tool for monitoring Compliance 

Measurement at the ports. According to the memo, CMATS was expected to be used on a 

monthly basis to review errors and anomalies at the ports. Through our discussions with CM 

Coordinators at eleven ports as well as our review of the CMATS standard operating 

procedures, we learned that CMATS does not provide timely monitoring of Import Specialist 

Discrepancy Add (ISDA) remarks. In addition, further guidance from the Commercial 

Targeting and Enforcement Directorate of the Office of International Trade (OT) indicated 

that errors and anomalies identified by CMATS did not have to be resolved until January 

2009. Guidance from the Commercial Targeting and Enforcement Directorate also suspended 

the requirement for CM Coordinators at the ports to perform random reviews of nonanomalous lines due to an error in the programming of the CMATS tool. The suspension of 

review using the CMATS tool was not replaced by any other data query or tool. 

Weaknesses in headquarters’ (HQ) oversight of the CM program. CBP performs little review 

or analysis over the CM data input remarks at the HQ level to ensure that they are input 

accurately and correctly. Until fiscal year 2006, the National Targeting and Control Branch 

(NTCB), formally known as the National Analysis Specialist Division (NASD), performed 

port audits to identify errors during the performance of a CM review. Since fiscal year 2006, 

CBP-HQ has relied on the Self-Inspection Program (SIP) to determine how the ports are 

performing the CM examinations. We noted in fiscal years 2006, 2007, and again in 2008 

that the SIP worksheets do not provide the equivalent information that was provided by the 

twenty-five point audit report utilized in the NTCB port audits. 

Untimely results of CM exams. The Compliance Measurement for FY 2008, Appendix B 

mandates that final ISDA remarks and a determination of compliance for CM examinations 

be input within 120 days of the date of entry. Furthermore, ACS cannot provide a detailed 

history of changes made to the ISDA remarks lines. 

We noted that portions of the conditions cited above have been addressed by CBP in response to the CM 

findings from fiscal years 2005, 2006, and 2007 financial statement audits. We noted that based on 

Mission Action Plan (MAP) CBP-MAP-07-17 1.5 that CBP is in the process of developing a query to 

generate a statistically valid random sample of entry summary reviews for the CM coordinator to review 

each month (CBP-MAP-07-17 1.5). In addition to the standardized queries being developed at the port 

level, a series of queries will be run by the CM coordinator at HQ each month, which will randomly select 

CM reviews performed nation wide to ensure that ports are in compliance with CM guidelines and 

requirements. We noted from our inquiry that the elements indicated above, as described in CBP-MAP07-17, were not implemented as of September 2008. As such, these conditions are still applicable for all 

of fiscal year 2008. 
 

 

 

 

 

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Criteria: 

Under the Statement of Federal Financial Accounting Standards No. 7, Accounting for Revenue and Other 

Financial Sources, section 69.2, available information on the size of the tax gap states, “Collecting 

entities should provide any relevant estimates of the annual tax gap that become available as a result of 

federal government surveys or studies. The tax gap is defined as taxes or duties due from non-compliant 

taxpayers or importers. Amounts reported should be specifically defined, e.g., whether the tax gap 

includes or excludes estimates of taxes due on illegally earned revenue.” 

Under the OMB A-136 Financial Reporting Requirements, Section 12.3, Tax Burden/Tax Gap states, 

“Preparers of statements of entities that collect taxes may consider presenting the information described 

below, if the information is readily available and the preparers believe the information will enhance the 

usefulness of the statements. Refer to SFFAS No. 7 for further guidance.” Specifically, we noted the 

following guidance: 

A perspective on the income tax burden. This could take the form of a summary of the latest available 

information on the income tax and on related income, deductions, exemptions, and credits for 

individuals by income level and for corporations by value of assets. 

	 Available information on the size of the tax gap. Collecting entities should provide any relevant 

estimates of the annual tax gap that become available as a result of Federal surveys or studies. 

Under FMFIA, management must implement cost-effective controls to safeguard assets and ensure 

reliable financial reporting. OMB’s Revised Implementation Guidance for FFMIA, states that financial 

systems should “routinely provide reliable financial information consistently, accurately, and reported 

uniformly” to support management of current operations. 

Cause/Effect: 

CBP has been challenged to balance its commitment of limited resources to two important mission 

objectives – trade compliance, including the collection of taxes, duties and fees owed to the Federal 

government, and securing the U.S. borders from potential terrorist entry. While these mission objectives 

do overlap somewhat, there are differences in how resources are deployed. 

The weaknesses in the CM program could result in CBP incorrectly evaluating the effectiveness of its 

control environment over the collections of duties, taxes, and fees. In addition, errors within the CM 

program could result in a misstatement of the “revenue gap” disclosure in the Management Discussion 

and Analysis section of CBP’s Performance and Accountability Report. 

Recommendations: 

We recommend that CBP implement the following to improve the CM program: 

1.	 Provide additional detail in the guidelines, specifying the use of the CMATS tool in addition to 

any other data query or tool to provide complete coverage over the CM program. The guidance 

should also re-address the timing requirements for the monitoring reports or data queries and 

documentation retention; 

154 U.S. Customs and Border Protection • Performance and Accountability Report 
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2.	 Re-formalize and implement effective procedures for the port audit process performed by 

NTCB, or re-address the self-inspection program to provide a more comprehensive and indepth review of port activity (similar to what was accomplished under the previously performed 

port audits), including ensuring that the port is performing the reviews accurately; and 

3.	 Periodically conduct training to ensure that all port personnel have a comprehensive knowledge 

of the CM program requirements. 

3. Bonded Warehouse and Foreign Trade Zones 

Background: 

Bonded Warehouses (BWH) are facilities under the joint supervision of CBP and the BWH proprietor 

used to store merchandise that has not made entry into U.S. commerce. 

Foreign Trade Zones (FTZ) are secured areas under the joint supervision of CBP and the FTZ operator 

that are considered outside of the U.S. commerce for duty collection. Authority for establishing these 

facilities is granted by the U.S. Department of Commerce’s Foreign Trade Zones Board under the 

Foreign Trade Zones Act of 1934, as amended (19 U.S.C. 81a-81u). Foreign and domestic merchandise 

may be admitted into zones for operations not otherwise prohibited by law, including storage, exhibition, 

assembly, manufacturing, and processing. 

Condition: 

We noted the following internal control weaknesses related to the BWH and FTZ processes: 

	 CBP does not maintain one centrally managed list of all BWHs and FTZs; 

Current BWH and FTZ Compliance Review Manuals lack specific guidance for ports to 

determine the appropriate risk assessment of a BWH or FTZ; and 

	 Annual compliance review schedules are completed by the ports and provided to 

Headquarters once a year. The HQ retrieval and review of the surveys can take up to 6 

months to compile and analyze. In addition, the monitoring tool used is ineffective as it 

contains no data on the effectiveness of compliance reviews, common discrepancies 

identified in those reviews, risks presented by those discrepancies, or techniques for 

mitigating those risks. 

Criteria: 

Under the Code of Federal Regulations, CBP’s supervisory authority over bonded warehouses and 

foreign trade zones is outlined in Title 19, Section 19.4(a), “...the port director may authorize a Customs 

officer to supervise any transaction or procedure at the bonded warehouse facility. Such supervision may 

be performed through periodic audits of the warehouse proprietor's records, quantity counts of goods in 

warehouse inventories, spot checks of selected warehouse transactions or procedures or reviews of 

conditions of recordkeeping, storage, security, or safety in a warehouse facility.” Title 19, Section 146.3 

states, (a), “Customs officers will be assigned or detailed to a zone as necessary to maintain appropriate 

Customs supervision of merchandise and records pertaining thereto in the zone, and to protect the 

revenue.” (b), “Supervision may be performed through a periodic audit of the operator’s records, quantity 
 

 

 

 

 

 

 

 

Independent Auditor’s Report
 

EXHIBIT II 

count of goods in a zone inventory, spot check of selected transactions or procedures, or review of 

recordkeeping, security, or conditions of storage in a zone.” 

Under FMFIA, management must implement cost-effective controls to safeguard assets and ensure 

reliable financial reporting. OMB’s Revised Implementation Guidance for FFMIA, states that financial 

systems should “routinely provide reliable financial information consistently, accurately, and reported 

uniformly” to support management of current operations. 

Cause/Effect: 

ACS, CBP’s current system, does not maintain a complete listing of BWHs and FTZs. 

Annual training is not provided to BWH/FTZ port personnel for updates, changes, and reinforcement of 

requirements over the program. 

Processes do not exist for the ports to provide on a timely basis the results of the BWH/FTZ compliance 

review schedules and risk assessments to CBP-HQ for review. As a result, CBP-HQ cannot determine 

the effectiveness of the BWH/FTZ program without the ability to track the results on a consistent timely 

basis from the ports. 

It is possible that BWH/FTZ operators and users may be able to operate BWHs and FTZs that contain 

merchandise about which CBP has no knowledge. 

Recommendations: 

We recommend that CBP: 

1.	 Develop standardized procedures for HQ or field office oversight to ensure compliance review 

schedules are being reviewed and provide effective timely training to ensure that all ports are 

aware of updates and changes to the program and can consistently execute all requirements 

presented in the compliance review manuals and handbooks; 

2.	 Continue the current implementation of national databases of all BWHs and FTZs within ACE 

and develop procedures to ensure their completeness. Develop functionality for these databases 

to document the results of risk assessments and compliance reviews; 

3.	 Develop standard procedures for conducting risk assessments for all BWHs and FTZs. The 

standard procedures should include a questionnaire or checklist, which lists the areas of risk to 

evaluate, the relative importance of each area, and examples of possible high risk indicators; 

4.	 Implement a standard format for compliance review schedules to be utilized by all ports for 

transmission to CBP-HQ. Ensure timely response and review by HQ personnel; 

5.	 Develop and implement a more comprehensive electronic port survey system to provide 

additional detailed and timely information on the BWH and FTZ programs; 

6.	 Using the information received from a more detailed port survey system or through other means, 

prepare an analysis of common discrepancies identified in compliance reviews, risks presented by 

those discrepancies, and techniques for mitigating those risks; 

156 U.S. Customs and Border Protection • Performance and Accountability Report 
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7.	 Increase HQ and field office oversight to ensure that compliance reviews are being conducted 

properly and timely in accordance with the Compliance Review Handbooks; and 

8.	 Require ports to monitor the bond status of BWHs to ensure each BWH has a valid bond. 

CBP Response: 

See managements’ response included in the attached letter. 

D. 	Information Technology 

Background: 

Controls over information technology (IT) and related financial systems are essential elements of 

financial reporting integrity. Effective general controls in an IT and financial systems environment are 

typically defined in six key control areas: entity-wide security program planning and management, access 

control, application software development and change control, system software, segregation of duties, and 

service continuity. In addition to reliable controls, financial management system functionality is important 

to program monitoring, increasing accountability of financial and program managers, providing better 

information for decision-making, and increasing the efficiency and effectiveness of services provided by 

the Federal government. 

Condition: 

During fiscal year 2008, CBP took corrective actions to address prior year IT control weaknesses. 

However, during fiscal year 2008, we continued to find significant deficiencies related to IT general and 

application controls at CBP. The most significant deficiency from a financial statement audit perspective 

relate to information security. Collectively, the IT control deficiencies limit CBP’s ability to ensure that 

critical financial and operational data is maintained in such a manner to ensure confidentiality, integrity, 

and availability. Because of the sensitive nature of the issues identified, we will issue a separate restricted 

distribution report to address those issues in detail. 

Criteria: 

The Federal Information Security Management Act (FISMA), passed as part of the E-Government Act of 

2002, mandates that Federal entities maintain IT security programs in accordance with OMB and National 

Institute of Standards and Technology (NIST) guidance. OMB Circular A-130, Management of Federal 

Information Resources, and various NIST guidelines describe specific essential criteria for maintaining 

effective general IT controls. In addition, OMB Circular A-127 prescribes policies and standards for 

executive departments and agencies to follow in developing, operating, evaluating, and reporting on 

financial management systems. 

Recommendation: 

Due to the sensitive nature of these findings, our separate report will recommend that CBP management 

implement and enforce certain procedures to address the general and application control vulnerability of 

its financial systems. 
Independent Auditor’s Report
 

EXHIBIT II 

CBP Response: 

See managements’ response included in the attached letter. 

158 U.S. Customs and Border Protection • Performance and Accountability Report 
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Exhibit III 

Compliance with Laws and Regulations
 

(Findings A and B - D are presented in Exhibits I and II, respectively)
 

E. Federal Information Security Management Act (E-Government Act of 2002) 

CBP is required to comply with the FISMA, which was enacted as part of the E-Government Act of 2002. 

FISMA requires the head of each agency to be responsible for 1) providing information security 

protections commensurate with the risk and magnitude of the harm resulting from unauthorized access, 

use, disclosure, disruption, modification, or destruction of (i) information collected or maintained and (ii) 

information systems used or operated; 2) complying with the requirements of the Act and related policies, 

procedures, standards, and guidelines, including (i) information security standards under the United States 

Code, Title 40, Section 11331 and (ii) information security standards and guidelines for national security 

systems; and 3) ensuring that information security management processes are integrated with agency 

strategic and operational planning processes. We noted instances of non-compliance with FISMA that 

have been reported by us in Exhibit II within Comment D – Information Technology. 

Recommendations: 

We recommend that CBP fully implement the requirements of FISMA in fiscal year 2009. 

CBP Response: 

See managements’ response included in the attached letter. 

F. Federal Financial Management Improvement Act of 1996 (FFMIA) 

CBP is required to comply with FFMIA, which requires that an agency’s financial management systems 

substantially comply with Federal financial management systems requirements, applicable Federal 

accounting standards, and the United States Government Standard General Ledger at the transaction level. 

We noted instances of non-compliance with FFMIA in relation to Federal financial management systems 

requirements and the United States Government Standard General Ledger at the transaction level. 

Specifically, we noted the following weaknesses: 

1.	 With respect to Federal financial management system requirements, CBP’s inventory 

transactions do not interface between the inventory systems and the financial system (SAP) and 

non-entity accounts receivable do not interface between ACS and SAP; and 

2.	 With respect to the United States Government Standard General Ledger at the transaction level, 

inventory activity (usage, turn-ins, interagency transfers) and non-entity accounts receivable are 

not recorded at the transaction level in SAP. Non-entity accounts receivable information is 

maintained in ACS, SAP, and on manually prepared schedules. ACS is made up of several 

financial modules that track receivables through entry or case number. Year-end balances are 

posted through the ACS/SAP interface and through manual calculations for receivables not 

recorded through the ACS/SAP interface. 
 

Independent Auditor’s Report
 

Exhibit III 

Recommendation: 

We recommend that CBP improve its processes to ensure compliance with the FFMIA in fiscal year 

2009. 

CBP Response: 

See managements’ response included in the attached letter. 

160 U.S. Customs and Border Protection • Performance and Accountability Report 
Prior Year Condition As Reported at 

September 30, 2007 Status as of September 30, 2008 

Drawback of Duties, Taxes

and Fees 

Material weakness: ACS lacked controls 

to detect and prevent excessive drawback 

claims and payments, requiring inefficient 

manual processes to compensate and the 

drawback review policies did not require

drawback specialists to review all related 

drawback claims. 

Continue as a material

weakness: Weaknesses continue

to exist related to the drawback 

process in fiscal year 2008. See 

control finding letter A. 

Entry Process – In Bond Significant deficiency: Several

weaknesses existed related to in-bond, such 

as the lack of official guidance and training 

to address the monitoring of in-bond 

shipments at the port level, lack of CBPHQ review of the in-bond program, and the 

overall inability to determine the 

effectiveness of the in-bond program for

CBP in its entirety. 

Continue as a significant 

deficiency: Although

improvements were made, 

weaknesses still remain during 

fiscal year 2008. See control 

finding letter C.

Entry Process – 

Compliance Measurement 

Program

Significant deficiency: Several

weaknesses existed related to CMP, such as 

inconsistent procedures followed at the 

ports, reduced CMP sample size, lack of 

NTCB (formally NASD) port audits, and 

little review or analysis on the CM data to 

ensure that it was inputted correctly. 

Continue as a significant 

deficiency: Although

improvements were made, 

weaknesses still remain during 

fiscal year 2008. See control 

finding letter C.

Entry Process – Bonded 

Warehouse and Foreign 

Trade Zones 

Significant deficiency: Several

weaknesses existed related to BWH/FTZ, 

such as the lack of official guidance and 

training to address the monitoring of 

BWH/FTZ, and lack of management 

review of the BWH/FTZ surveys. 

Continue as a significant 

deficiency: Weaknesses continue

to exist related to the bonded 

warehouse and foreign trade zone

process during fiscal year 2008. 

See control finding letter C.

Information Technology Material weakness: Weaknesses 

were noted in entity-wide security, 

system access, segregation of duties, 

service continuity, and system software 

change management. 

Reduced to a significant 

deficiency: Improvements were 

made to correct the material 

weakness; however, significant 

deficiencies remain in all areas 

noted during fiscal year 2008. 

See control finding letter D.

Continued Dumping and 

Subsidy Offset Act of 2000 

(CDSOA) Refunds 

Significant deficiency: Weaknesses 

existed related to CDSOA such as the lack 

of a process to validate and verify CDSOA 

disbursements.

No longer considered a 

significant deficiency.

Non-compliance with the 

Federal Information 

Instance of non-compliance: CBP was not 

in substantial compliance with FISMA. 

FISMA requires the head of each agency to

Continue reporting as an 

instance of non-compliance:

Although improvements were

EXHIBIT IV 

STATUS OF PRIOR YEAR SIGNIFICANT DEFICIENCIES AND NON-COMPLIANCE WITH 

SIGNIFICANT LAWS AND REGULATIONS 

Financial Section 161 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Independent Auditor’s Report
 

EXHIBIT IV 

STATUS OF PRIOR YEAR SIGNIFICANT DEFICIENCIES AND NON-COMPLIANCE WITH 

SIGNIFICANT LAWS AND REGULATIONS 

Prior Year Condition As Reported at 

September 30, 2007 Status as of September 30, 2008 

Drawback of Duties, Taxes Material weakness: ACS lacked controls Continue as a material 

and Fees to detect and prevent excessive drawback 

claims and payments, requiring inefficient 

manual processes to compensate and the 

drawback review policies did not require 

drawback specialists to review all related 

drawback claims. 

weakness: Weaknesses continue 

to exist related to the drawback 

process in fiscal year 2008. See 

control finding letter A. 

Entry Process – In Bond Significant deficiency: Several 

weaknesses existed related to in-bond, such 

as the lack of official guidance and training 

to address the monitoring of in-bond 

shipments at the port level, lack of CBPHQ review of the in-bond program, and the 

overall inability to determine the 

effectiveness of the in-bond program for 

CBP in its entirety. 

Continue as a significant 

deficiency: Although 

improvements were made, 

weaknesses still remain during 

fiscal year 2008. See control 

finding letter C. 

Entry Process – 

Compliance Measurement 

Program 

Significant deficiency: Several 

weaknesses existed related to CMP, such as 

inconsistent procedures followed at the 

ports, reduced CMP sample size, lack of 

NTCB (formally NASD) port audits, and 

little review or analysis on the CM data to 

ensure that it was inputted correctly. 

Continue as a significant 

deficiency: Although 

improvements were made, 

weaknesses still remain during 

fiscal year 2008. See control 

finding letter C. 

Entry Process – Bonded 

Warehouse and Foreign 

Trade Zones 

Significant deficiency: Several 

weaknesses existed related to BWH/FTZ, 

such as the lack of official guidance and 

training to address the monitoring of 

BWH/FTZ, and lack of management 

review of the BWH/FTZ surveys. 

Continue as a significant 

deficiency: Weaknesses continue 

to exist related to the bonded 

warehouse and foreign trade zone 

process during fiscal year 2008. 

See control finding letter C. 

Information Technology Material weakness: Weaknesses 

were noted in entity-wide security, 

system access, segregation of duties, 

service continuity, and system software 

change management. 

Reduced to a significant 

deficiency: Improvements were 

made to correct the material 

weakness; however, significant 

deficiencies remain in all areas 

noted during fiscal year 2008. 

See control finding letter D. 

Continued Dumping and Significant deficiency: Weaknesses No longer considered a 

Subsidy Offset Act of 2000 existed related to CDSOA such as the lack significant deficiency. 

(CDSOA) Refunds of a process to validate and verify CDSOA 

disbursements. 

Non-compliance with the 

Federal Information 

Instance of non-compliance: CBP was not 

in substantial compliance with FISMA. 

FISMA requires the head of each agency to 

Continue reporting as an 

instance of non-compliance: 

Although improvements were 
 

 

 

 

 

Independent Auditor’s Report
 

Exhibit IV 

STATUS OF PRIOR YEAR SIGNIFICANT DEFICIENCIES AND NON-COMPLIANCE WITH 

SIGNIFICANT LAWS AND REGULATIONS 

Prior Year Condition As Reported at 

September 30, 2007 Status as of September 30, 2008 

Security Management Act be responsible for 1) providing information 

security protections commensurate with the 

risk and magnitude of the harm resulting 

from unauthorized access, use, disclosure, 

disruption, modification, or destruction of 

(i) information collected or maintained and 

(ii) information systems used or operated; 

2) complying with the requirements of the 

Act and related policies, procedures, 

standards, and guidelines, including (i) 

information security standards under the 

United States Code, Title 40, Section 11331 

and (ii) information security standards and 

guidelines for national security systems; 

and 3) ensuring that information security 

management processes are integrated with 

agency strategic and operational planning 

processes. 

made, CBP did not substantially 

comply with all categories of 

FISMA during fiscal year 2008. 

See compliance finding letter E. 

Non-compliance with the 

Federal Financial 

Management Improvement 

Act of 1996 

Instance of non-compliance: CBP was 

not in substantial compliance with FFMIA, 

which requires that an agency’s financial 

management systems substantially comply 

with Federal financial management systems 

requirements, applicable Federal 

accounting standards, and the United States 

Government Standard General Ledger at 

the transaction level. We noted instances of 

non-compliance with FFMIA in relation to 

Federal financial management systems 

requirements, the United States 

Government Standard General Ledger at 

the transaction level, and Federal 

accounting standards 

Continue reporting as an 

instance of non-compliance: 

Although improvements were 

made, CBP did not substantially 

comply with all categories of 

FFMIA during fiscal year 2008. 

See compliance finding letter F. 

162 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 163

Management’s Response to the Independent Auditor’s Report
 

 

 

 

 

 

 

Independent Auditor’s Report
 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff 

General Counsel 

Executive Secretary 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Policy 

Assistant Secretary for Public Affairs 

Assistant Secretary for Legislative Affairs 

Under Secretary, Management 

Chief Financial Officer 

Deputy Chief Financial Officer 

Acting Director Office of Financial Management 

Chief Information Officer 

Chief Security Officer 

Chief Privacy Officer 

Customs and Border Protection 

Commissioner, Customs and Border Protection 

Chief Financial Officer 

Chief Information Officer 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Program Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as appropriate 

164 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Section 165

Independent Auditor’s Report

ADDITIONAL INFORMATION AND COPIES 

To obtain additional copies of this report, please call the Office of Inspector General (OIG) at (202) 254-4199, 

fax your request to (202) 254-4305, or visit the OIG web site at www.dhs.gov/oig. 

OIG HOTLINE 

To report alleged fraud, waste, abuse or mismanagement, or any other kind of criminal or noncriminal 

misconduct relative to department programs or operations: 

• Call our Hotline at 1-800-323-8603; 

• Fax the complaint directly to us at (202) 254-4292; 

• Email us at DHSOIGHOTLINE@dhs.gov; or 

• Write to us at: 

 DHS Office of Inspector General/MAIL STOP 2600, 

 Attention: Office of Investigations - Hotline, 

 245 Murray Drive, SW, Building 410, 

 Washington, DC 20528. 

The OIG seeks to protect the identity of each writer and caller.
166 U.S. Customs and Border Protection • Performance and Accountability Report

A&M Air and Marine

ACE Automated Commercial Environment

ACS Automated Commercial System

ADPI AZ Denial Prosecution Initiative

AFB Air Force Base

AIS Automated Identification System

AMOR Air and Marine Operations Reporting System

APATS Air Program Administration Tracking System

APIS Advance Passenger Information System

ARO Admissibility Review Office

ATEP Alien Transfer and Exit Program

ATS Automated Targeting System

ATV All-Terrain Vehicles

AZ Operation Arizona Denial

BCC Border Crossing Card

BICs Border Intelligence Centers

BPETS Border Patrol Enforcement Tracking System

BSETs Border Security Evaluation Teams

BSI Border Security Initiative

BWH Bonded Warehouse

CAMITS Customs Automated Maintenance Inventory 

System

CAR Checkpoint Activity Report

CARMAC Computerized Aircraft Reporting and 

Material Control System

CBP U.S. Customs and Border Protection

CBPO CBP Border Patrol Officer

CDSOA Continued Dumping and Subsidy Offset Act 

of 2000

CFO Chief Financial Officer

CFR Code of Federal Regulations

CIP Construction in Process

CIS Citizenship and Immigration Services

CLP Carrier Liaison Program

CMATS Compliance Measurement Accuracy and 

Tracking System

COMPSTAT Comparative Statistics

COP Common Operating Picture

COS Chief of Staff

CSI Container Security Initiative

CSPO Cargo Systems Program Office

C-TPAT Customs Trade Partnership Against 

Terrorism

CTTP Consolidated Trusted Traveler Program

DHS Department of Homeland Security

DOD Department of Defense

DOS Department of State

EDL Enhanced Driver Licenses

EEO Equal Employment Opportunity

EITs Entry Identification Teams

ENFORCE Enforcement Case Tracking

ER Expedited Removal

ESTA Electronic System for Travel Authorization

EVDO Evolution Data Optimized

FAST Free and Secure Trade

FBI Federal Bureau of Investigation

FDAU Fraudulent Document Analysis Unit

FFMIA Federal Financial Management Improvement 

Act

FISMA Federal Information Security Management 

Act of 2002

FLETC Federal Law Enforcement Training Center

FMFIA Federal Managers’ Financial Integrity Act

FOB Forwarding Operating Bases

FRAMEWORK Standards to Secure and Facilitate Global 

Trade

FSIA Federal Systems Integration Office

Acronyms
Acronyms 167

Acronyms

FY Fiscal Year

FYHSP Future Year Homeland Security Program

GAO Government Accountability Office

GPRA Government Performance and Results Act

HRM Human Resources Management

HQ Headquarters

I-19 Interstate 19

IA Internal Affairs

IAP Immigration Advisory Program

IBET Integrated Border Enforcement Teams

ICAD Intelligence Computer Assisted Detection

ICE Immigration and Customs Enforcement

ICS International Container Security

ILU International Liaison Unit

INA Immigration and Nationality Act

INATR Office of International Affairs and Trade 

Relations

ITDS International Trade Data System

IT Information Technology

MAP Mission Action Plan

MID Management Inspection Division

MLU Mexican Liaison Units

MPC Mobile Processing Center

MRVS Mobile Remote Video Systems

NCIC National Crime Information Center

NEXUS Expedited Processing for Low Risk Trusted 

Travelers

NFC National Finance Center

NFR Notice of Finding and Recommendation

NII Non-Intrusive Inspection

NIST National Institute of Standards and 

Technology

NLETS National Law Enforcement 

Telecommunication System

NTC National Targeting Center

NTCC National Targeting Center-Cargo

NTCP National Targeting Center-Passenger

OASISS Operation Against Smugglers Initiative on 

Safety and Security

OBP Office of Border Patrol

OCA Office of Congressional Affairs

OCC Office of Chief Counsel

OEO Office of Equal Opportunity

OES Office of Executive Secretariat

OF Office of Finance

OFO Office of Field Operations

OGA Other Government Agencies

OIG Office of Inspector General

OIOC Office of Intelligence and Operations 

Coordination

OIT Office of Information and Technology

OJS Operation Jump Start

OMB Office of Management and Budget

OMR Operations Management Reports

OPA Office of Public Affairs

OPP Office of Policy and Planning

ORBBP Operational Requirements Based Budget 

Program

OT Office of International Trade

OTD Office of Training and Development

OTM Other Than Mexican

PAP Partnership Action Plan

PAR Performance and Accountability Report

PART Performance Assessment Rating Tool

PIERS Port Import Export Reporting Service
168 U.S. Customs and Border Protection • Performance and Accountability Report

Acronyms

PMA President’s Management Agenda

POE Port of Entry

POEs Ports of Entry

PP&E Property Plant and Equipment

PSPO Passenger System Program Office

PSM Passenger Service Managers

QFR Question for Record

RCI Rice-Chertoff Initiative

RCMP Royal Canadian Mounted Police

RFID Radio Frequency Identification Device

RIOS Radio Interoperability System Monitor

RPM Radiation Portal Monitor

RVSS Remote Video Surveillance

SAFE Safety and Accountability for Every Port Act 

legislation

SCSSs Supply Chain Security Specialists

SAP Systems, Applications, and Products

SBI Secure Border Initiative 

SBI PEO Secure Border Initiative Program Executive 

Office

SENTRI Secure Electronic Network for Traveler Rapid 

Inspection

SFFAS Statement of Federal Financial Accounting 

Standards

SFI Secure Freight Initiative

SIP Self-Inspection Program

SIRS Self-Inspection Reporting System

SME Subject Matter Expert

SNMP Simple Network Management Protocol

TASPO Targeting and Analysis Systems Program 

Office

TDY Temporary Duty

TECS Traveler Enforcement Communication 

System

TI Tactical Infrastructure

TIDE Terrorist Identifies Datamart Environment

TRVS Trailer Remote Video System

TSA Transportation Security Agency

UAS Unmanned Aircraft System

UCE Underlying Consumption Entry

UDO Undelivered Orders

U.K. United Kingdom

U.S. United States

USCG U.S. Coast Guard

USDA U.S. Department of Agriculture

US PASS U.S. Passenger Accelerated Service System

US-VISIT U.S. Visitor and Immigrant Status Indicator 

Technology

VACIS Vehicle and Cargo Inspection Systems

VoIP Voice Over Internet Protocol

VSC Video Spectral Comparator

VWP Visa Waiver Program

WADS Work Accomplishment Data System

WCO World Customs Organization

WCO DMPT WCO Data Model Project Team

WHTI Western Hemisphere Travel Initiative

WMD Weapons of Mass Destruction

WME Weapons of Mass Effects

XLM Extensible Markup Language

9/11 Act 9/11 Commission Act

10 + 2 Security Filing
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- -

Office of Finance
 

1331 Pennsylvania Avenue
 

Room 950, National Place 


Washington, DC 20229
 

Please visit the U.S. Customs and Border Protection Web site at 

www.cbp.gov

To report suspicious activity, call 

1 800 BE ALERT 

December 2008