Performance and 

Accountability Report 

Fiscal Year 2013 
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About This Report
 

America’s Frontline 

We guard the boundaries of freedom and stand between the good citizens of our Nation and those 

who want to do us harm. 

About This Report 

U.S. Customs and Border Protection (CBP) Fiscal Year (FY) 2013 Performance and Accountability Report (PAR) presents 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 program, financial, and performance information that enables 

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

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 (Pub. L. No. 106-531), Government Performance and Results Modernization Act (GPRMA) of 2010, Chief Financial Officers Act of 1990 (Public 

Law No. 101-576), Office of Management and Budget (OMB) Circular No. A-136, Financial Reporting 

Requirements, dated October 21, 2013, 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 used to 

achieve agency objectives can be found in the body of the Department of Homeland Security (DHS) 

Congressional Budget Justification for the President’s Budget, which details information by DHS 

component. 

For FY 2013, CBP will produce its Performance and Accountability Report and the Summary of Performance and Financial Information. 

When published, both reports will be located on our public website: www.cbp.gov 

For more information, contact: 

U.S. Customs and Border Protection 

Office of Administration 

1331 Pennsylvania Avenue, NW, Suite 950 

Washington, DC 20229-1103 

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Table of Contents
 

Acting Commissioner’s Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
 

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

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

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

Fiscal Year 2013 Statistical Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
 

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

Enhancing Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
 

Enhancing Prosperity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
 

Administrative Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
 

Looking Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
 

CBP Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
 

Headquarters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
 

Component Organizations and Field Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
 

Performance Goals and Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
 

Performance Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
 

Fiscal Year 2013 Performance by Mission Set . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
 

Management Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
 

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
 

Federal Manager’s Financial Integrity Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
 

DHS Financial Accountability Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
 

Federal Financial Management Improvement Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
 

Federal Information Security Management Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
 

Systems and Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
 

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
 

Management Inspections Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
 

Self-Inspection Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72
 

Audit Management and Liaison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72
 

Financial Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
 

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
 

Overview of the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
 

Limitations of the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
 

Performance Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
 

Performance Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
 

Individual Performance Measure Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
 

Financial Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
 

Message from the Chief Financial Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
 

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
 

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
 

Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
 

Required Supplementary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
 

Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
 

Management’s Response to the Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . .152
 

Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
 

Summary of Financial Statement Audit and Management Assuarances . . . . . . . . . . . . . . . . . . . . . . . .164
 

Office of Inspector General (OIG) Report on Major Management Challenges . . . . . . . . . . . . . . . . .169
 

Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
 

Table of Contents 1 
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2 U.S. Customs and Border Protection • Performance and Accountability Report 
 

Acting Commissioner’s Message
 

I am pleased to present the Fiscal Year (FY) 2013 Performance Accountability 

Report (PAR) for U. S. Customs and Border Protection (CBP). This assessment 

details how CBP adds value to the Nation’s security and prosperity. 

As the Agency responsible for all Federal border administration activities, 

CBP manages and secures our Nation’s borders while facilitating the legitimate international travel and trade that is vital to our Nation’s economy. We 

ensure international cross-border traffic flows within the bounds of U.S. 

laws, rules, regulations, and treaties, an essential element of our Nation’s 

prosperity and security. 

During FY 2013, CBP’s dedicated employees played a leading role in making America a more secure and prosperous Nation. CBP continued to 

respond to illegal cross-border traffic through targeted operations, enhanced partnerships, and an 

effective deployment of personnel, technology and infrastructure along the border, while facilitating 

legitimate trade and travel. This year, CBP officers inspected 362 million travelers, processed 30.4 

million trade entries, and apprehended 420,789 illegal aliens attempting to cross the border. 

CBP received an Unmodified Audit Opinion on the FY 2013 audit of its full set of financial statements 

for the eighth consecutive year. This outstanding accomplishment attests to the fiscal discipline and 

accountability of CBP, which collected more than $40.9 billion in revenue during FY 2013. 

The attached PAR identifies the success CBP has had in accounting for and reporting on financial 

activity, but also identifies areas upon which the Agency can improve. We continue to take action to 

address these areas. 

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

the duties performed every day to protect our Nation. Our success would not have been possible without the tireless efforts and unyielding work ethic of the men and women of CBP. 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, and illustrate the significance of 

CBP’s contributions to U.S. prosperity and security. 

Thomas S. Winkowski 

Acting Commissioner 

Commissioner’s Message 3 
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4 U.S. Customs and Border Protection • Performance and Accountability Report 
Management’s Discussion 

and Analysis 

This section explains CBP’s mission, organization structure, strategic direction, and summarizes program and financial performance. 
6 U.S. Customs and Border Protection • Performance and Accountability Report 

Overview of CBP
 

Mission 

We are the guardians of our Nation’s borders. We are America’s frontline. We safeguard the American homeland at and between our borders. We protect the American public against terrorists and the 

instruments of terror. We steadfastly enforce the laws of the United States while fostering our Nation’s 

economic security through lawful international trade and travel. We serve the American public with 

vigilance, integrity, and professionalism. 

CBP’s approximately 60,000 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. 

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 and the laws 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 our Agency. 

Fiscal Year 2013 Statistical Highlights 

• Ports of entry: 328 

• Pre-clearance locations: 15 

• Border Patrol sectors: 20 

• Air units: 43 

• Marine units: 71 

• Trade entries processed: 30.4 million 

• Total revenue: $40.9 billion (includes custodial and entity revenue) 

• Illegal narcotics seized: 2.8 million pounds (represents narcotics held by CBP until disposal or 

destruction) 

• Illegal alien apprehensions between the ports of entry: 420,789 

• Inadmissible aliens interdicted at the ports of entry: 204,905 

• Pedestrians and passengers processed: 362 million 

• Conveyances processed: over 110 million 
Overview of CBP 

• Aircraft passengers processed: over 102 million 

• Prohibited plant and animal materials seized at the ports of entry: 1,603,944 

• Agricultural plant and pest intercepted at the ports of entry: 161,050 

Major Mission Programs and Strategies 

Securing the Nation’s borders from illegal entry of aliens and contraband, including terrorist and 

weapons of mass destruction, while welcoming all legitimate travelers and trade continues to be a 

major challenge. 

As America’s frontline border security agency, CBP has established programs and strategies designed to enhance border security and other mission critical functions. CBP strives to maximize 

partnerships on the home front and abroad by promoting an effective management infrastructure 

that fosters the highest standards of integrity. CBP has built a layered strategy using risk-based approaches and performance management techniques that maximize CBP’s strengths. The following 

information provides explanation of the major mission programs and strategies that demonstrate 

CBP’s commitment to adding value to the Nation’s security and prosperity along with administrative 

efficiencies that facilitate mission performance. 

Enhancing Security 

Securing America’s borders is CBP’s top priority. As the nation’s unified border security agency, 

CBP deploys the government’s largest law enforcement work force to protect at and between 

ports of entry, supported by air and marine assets. CBP’s vigilant operations ensure secure border access for legitimate trade and travel, allowing U.S. trade and travel to thrive. 

Security Between Ports of Entry: U.S. Border Patrol 

CBP’s security mission between official ports of entry is the responsibility of the U.S. Border Patrol. 

The Border Patrol prevents the entry of terrorists, weapons, illegal immigrants and contraband 

along 6,900 miles of land borders with Mexico and Canada, along with 2,000 miles of coast around 

Florida and Puerto Rico. The Border Patrol employs more than 21,000 law enforcement agents and 

1,700 mission support personnel. 

The 2012-2016 Border Patrol Strategic Plan leverages information, integration and rapid response 

to meet all border security threats. The Border Patrol gathers information, coordinates operations 

with partners and stakeholders, and delivers a rapid response to threats based on risk. Operating in 

a dynamic operational environment, CBP and the Border Patrol team with law enforcement partners 

to address changing risks and threats. 

Management’s Discussion and Analysis 7 
Overview of CBP 

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

Integrated Strategies 

CBP mission success improves when operational strategies integrate with external partners, including federal, state, local, tribal, and foreign law enforcement organizations, businesses, and community organizations. Through strategic engagement with all partners, CBP becomes more effective. 

The following summarizes FY 2013 efforts to integrate strategies and how these efforts will continue in FY 2014: 

Campaign Planning 

In FY 2012, the Border Patrol introduced sector-level Operational Implementation Plans (OIPs) to 

identify threats and risk, quantify and qualify Border Patrol capabilities, develop measureable objectives, and reduce risk. The Border Patrol still uses OIPs to implement its 2012-2016 strategic plan. 

To facilitate corridor-level campaign planning, in FY 2013 the Border Patrol broadened the sector 

focus to group its sectors into corridors. Sectors that were not in a corridor were arranged into planning partnerships with fellow sectors. The map below outlines the corridors: 
Overview of CBP 

Management’s Discussion and Analysis 9 

South Texas Campaign 

The South Texas Campaign (STC) signifies a paradigm shift in information sharing and collaboration 

in border law enforcement practice. STC breaks down traditional barriers that prevent synergy in 

targeting transnational criminal organizations (TCOs) within the South Texas Corridor. The STC has 

successfully disrupted TCOs in five ways: 

1. Integrating intelligence, analysis, and targeting throughout the South Texas Corridor; 

2. Engaging communities of interest to degrade TCOs operating in the corridor; 

3. Working with the government of Mexico to degrade TCOs in the South Texas Corridor and adjoining 

Mexican states; 

4. Incorporating a flexible STC workforce to address emerging threats; and 

5. Disrupting established air, land, and sea smuggling routes. 

The many STC accomplishments in FY 2013 include: 

•	 Opening the South Texas Border Intelligence Center, an information clearinghouse for intelligence 

collection, analysis, and dissemination. By integrating CBP components and partners in the 

intelligence cycle, the STC more effectively targets TCO members and associates that pose the 

greatest threat to border security. 

•	 Implementing standardized targeting to ensure corridor-wide proficiency in targeting criminals. 

These intelligence and targeting capabilities resulted in the arrest of TCO members in South Texas, 

which dropped Laredo, Texas, from first place in the number of stolen cars per capita in the U.S. in 

2009 to 74th, in just three years. 

•	 The development of an Enforcement and Removal workgroup that worked with U.S. Citizenship and 

Immigration Services (USCIS) to speed the record creation process. The pilot program used CBP’s 

e3 portal in the Enforcement Integrated Database to automatically deliver subject information to 

USCIS for record creation in the Central Index System. The pilot program expanded nationwide to 

potentially save millions of dollars in staff hours and resources annually. 

New Mexico/ West Texas Alliance to Combat Transnational Threats Unified Command 

Formed in 2007, the New Mexico/West Texas Alliance to Combat Transnational Threats Unified 

Command followed the success of a similar collaboration in Arizona, a structural response to TCO 

threats within that corridor. The New Mexico/West Texas unified command includes state and federal agencies that address and respond to the risks in the corridor. The command directs DHS components and other law enforcement entities in intelligence-driven operations against TCO networks. 

•	 FY 2013 Successes 

◊		Supported the Joint Task Force-North deployment of Defense Department ground and air 

detection/monitoring gear in Big Bend and El Paso Sectors. 

◊ Became the first corridor to officially agree on the Bi-national Threat Assessment between U.S. 

federal agencies and Mexico. 
Overview of CBP 

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

 

 

 

 

◊ Improved communication and information sharing with Mexico, which has led to productive border 

operations including Operations Lifeguard and Iron Horse. 

◊ The Unified Command Intelligence Center identified five common threats: Mexican Drug Trafficking 

Organizations, Human Trafficking/Alien Smuggling, Public Corruption, Crimes Against Children, 

and Counter Intelligence. 

•	 FY 2014 Goals 

◊ Promote the Unified Command common lexicon and establish an intelligence fusion mechanism. 

◊		Implement a Corridor Campaign Plan for the alliance that demonstrates a sound whole-ofgovernment approach. 

◊ Establish a common threat mitigation strategy and execute multi-agency operations/investigations 

against identified multi-agency threats. 

Arizona Alliance to Combat Transnational Threats 

Operation Alliance to Combat Transnational Threats (ACTT) leverages resources among all law 

enforcement agencies operating in Arizona and the government of Mexico. ACTT targets individuals and criminal organizations posing a transnational threat. The ACTT strategy deters, denies, 

degrades, disrupts and applies consequences to illegal activity and dismantles criminal operations. 

The ACTT Unified Command directs operational activities and releases resources for participating 

law enforcement and public safety agencies. In coordination with Mexico, the ACTT is: 

•	 Focusing border enforcement operations at and between ports of entry; 

•	 Defending in depth, including checkpoints and other enforcement efforts along routes of egress; 

•	 Focusing investigative efforts in Tucson and Phoenix; 

•	 Dispatching Mobile Response Teams; 

•	 Deploying detection and surveillance technology; and 

•	 Deploying additional assets to bolster enforcement as needed. 

•	 FY 2013 Successes 

◊ Maintained significant enforcement gains in Tucson Sector while reducing the number of externally 

detailed resources. 

•	 FY 2014 Goals 

◊		Creating a hostile operating environment for TCOs that denies freedom of action throughout the Arizona 

Corridor utilizing the following objectives: 

■	 Disrupting TCOs throughout the corridor; 

■	 Enhancing response to and resolution of threats; 

■	 Enhancing integration among ACTT partners, including interagency participation, transparency, 

and information sharing; 

■	 Increasing unity of effort among all ACTT law enforcement partners, including Mexico; 
Overview of CBP 

Management’s Discussion and Analysis 11 

 

 

■	 Developing a common intelligence picture to enhance understanding of the operating 

environment; 

■	 Focusing partner agency intelligence efforts to give operational elements sufficient information 

to analyze, plan, and execute the mission; and 

■	 Jointly targeting TCO counterintelligence activities. 

Joint Field Command - Arizona 

In January 2011, CBP established the Joint Field Command in Arizona, an organizational realignment of assets that tied together field components under a single operational command structure. 

The Joint Field Command has integrated CBP’s border security, commercial enforcement, and trade 

facilitation missions to effectively meet Arizona’s unique border challenges. 

The command’s priorities are border management, expedited lawful trade and travel, risk management, and mission integration. The ACTT coordinates with all law enforcement partners to minimize 

risks and maximize capabilities. 

Bi-national Joint Operations 

Southern Border Bi-national Operations: 

Bi-national operations focus on expanding enforcement against the trafficking of narcotics, weapons, ammunition, humans, and currency. Improved information gathering and analysis among 

international partners increases efficiency so terrorist and transnational criminal threats can be 

interdicted outside of U.S. borders. During the past several years, bi-national border security operations have improved operational and situational awareness. These successes are a testament to 

the maturing partnership between the U.S. and the Government of Mexico. 

In July 2013, the Border Patrol began the Cross Border Coordination Initiative to conduct simultaneous operations with the Mexico Federal Police in mutually agreed-upon zones. The initiative degrades TCO activity on both sides of the border through: 

•	 The exchange of information and assessments, mapping and geo-referencing of criminal activity 

zones; 

•	 Physical officer presence on both sides of the border and coordinated response during peak 

periods of criminal activity; and 

•	 Increased officer training in both countries. 

International Liaison Units 

CBP established International Liaison Units (ILU) to foster partnerships, open communication, and 

coordinate law enforcement between CBP and its Mexican counterparts. The Border Patrol advises 

sector leadership on matters related to CBP-Mexico relationships. ILU agents facilitate coordinated 

measures to restrict smuggling and trafficking of narcotics, weapons, ammunition, humans and cur­
Overview of CBP 

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

rency. They serve as points of contact for local, state, federal, and foreign law enforcement agencies 

when preparing for and/or responding to border violence. 

Northern Border Bi-national Operations 

The Canadian border is a diverse environment unified by a common feature: the close cooperation 

between the U.S. and Canada. This partnership continues to expand as outlined in “Beyond the 

Border,” a 2011 agreement. 

The Beyond the Border Action Plan specifies joint initiatives to improve border management in: 

1. Addressing threats early; 

2. Facilitating trade, economic growth and jobs; 

3. Enforcing laws across the border; and 

4. Safeguarding critical infrastructure and cyber-security. 

The U.S. and Canada continue to implement the Beyond the Border Action Plan, laying the foundation for security and economic prosperity. 

Cross Border Crime Forum 

The Cross-Border Crime Forum, established in 1997, facilitates cooperative U.S.-Canada investigations of cross-border crime. Led by the U.S. attorney general, the secretary of Homeland Security, 

the minister of Public Safety Canada, and the minister and attorney general of the Department of 

Justice Canada, the forum focuses on cross-border issues, including narcotics trafficking. 

Integrated Border Enforcement Teams 

Canada and the U.S. have cooperated since 1997 through 15 Integrated Border Enforcement Team 

(IBET) regions. Intelligence-driven enforcement teams comprised of U.S. and Canadian federal, 

state/provincial, tribal and local law enforcement personnel cooperate along the Northern border. 

IBETs operate in an integrated environment and support the Beyond the Border Action Plan. The ShipRider program is the IBET 

maritime operational arm. 

Operation Stonegarden Grant Program 

Grants from Operation Stonegarden improve law enforcement synergies to secure U.S. borders. Stonegarden funds increase operational capabilities for multijurisdictional law enforcement entities, 

promoting a layered, coordinated approach to law enforcement. 

The Border Patrol and Federal Emergency Management Agency 

(FEMA) work together to determine allocations and analyze border 

security risk. Analysis of three factors—threat, vulnerability, and A Palm Beach County marine unit assists Coast Guard and Border 

Patrol with a search of an overturned vessel in June 2013 with 

suspected migrants in the water. 
Overview of CBP 

Management’s Discussion and Analysis 13 

consequence—involves determining probability, as well as 

the ability and intent, of a TCO to commit an act. Vulnerability is determined as a function of various factors, including 

environment, personnel, technology for detection capability 

and tactical infrastructure and access. Eligible Stonegarden grant applicants include local government units and 

federally recognized tribal governments in border states. 

Pima County, Arizona, Sheriff’s Border Crimes Unit 

Participating agencies have provided law enforcement 

coverage in Border Patrol areas of responsibility. Sectors 

have the ability to move resources to areas quickly and to 

respond to emerging or immediate threats. Stonegarden 

participants also provide deterrence in lower-risk areas 

resulting in increased seizures and illegal alien apprehensions. DHS, FEMA, and CBP work together in managing 

Operation Stonegarden. 

Border Patrol sectors have been integrating intelligence, 

analysis and targeting with Stonegarden partners to disrupt, degrade and dismantle TCOs. 

In January 2013, a Bisbee, Arizona, police department 

and Border Patrol joint Stonegarden operation resulted in 

a seizure of marijuana and a small arsenal of weapons. 

February 2013, Nueces County Deputies stopped a 

2009 Ford Expedition near Agua Dulce, Texas, which 

resulted in the seizure of marijuana. 

Border Community Liaison 

The Border Community Liaison Program enhances CBP 

interaction with communities and promotes agency understanding of community views, concerns, and issues. 

The liaison program designates a community point of contact at CBP offices and encourages communication between CBP and border communities. CBP’s local engagement provides opportunities 

for community feedback that is shared with DHS and other partners. The outreach strengthens 

relationships in the communities where we live and work. 

The State of the Border 

One of the key 2012—2016 Border Patrol Strategic Plan initiatives in FY 2014 will integrate CBP 

components to expand risk—based operations. This network approach will enable rapid, effective 

response to prioritized threats. CBP strategic objectives will guide 1) targeted; focused enforcement; 

2) operational discipline; and 3) unified and joint commands. CBP intends to maximize information 

and intelligence to prioritize threats, analyze risk, and anticipate emerging trends as TCOs adjust to 

CBP operations. 
Overview of CBP 

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

Evaluation of the following help gauge the extent to which our border is secure and at a condition of 

“low risk”: 

•	 Intelligence estimates regarding the intent and capability of terrorists and transnational criminal 

organizations and associated networks to exploit the border; 

•	 Assessment of the geography and topography of particular border areas and the likelihood of 

exploitation (Geospatial Intelligence); 

•	 Analysis of data to include unique subjects, recidivism, average apprehension per recidivist and 

drug weight-to-frequency rate; 

•	 Effectiveness ratios in corridors characterized by significant cross border entries; and 

•	 Traditional “third party indicators” (such as crime levels in border communities) that will assist as a 

“check and balance” against our own internal metrics. 

Situational Awareness 

To fully implement risk—informed, intelligence—driven operations that focus CBP’s capabilities 

against prioritized threats, CBP must consistently enhance and maintain situational awareness 

through a comprehensive understanding of the threat environment. Situational awareness provides 

an in-depth picture of current operating conditions within a specific region of the border and facilitates predictive analysis. 

Situational awareness requirements vary according to different areas of the border. Along the 

Southwest border, areas are categorized as either “Deployment Density” or “Geospatial Intelligence 

(GEOINT) areas.” 

Deployment Density areas are those where traditionally higher threats/higher activity require an 

enhanced enforcement posture and concentration of resources to mitigate risk. Categorization of 

areas as Deployment Density allows the Border Patrol to effectively “shrink” the areas of primary 

concern on the border, so that our principal concentration in terms of enforcement capability is on 

the highest risk areas, enabling us to better achieve our outcomes in these areas. In Density Deployment areas, leadership must continually assess the environment through situational awareness 

to ensure that deployment postures and tactics, techniques, and procedures are sufficiently employed to maintain superior capability over the adversary, including a capability to respond to and 

interdict illicit cross-border activity. 

GEOINT areas are those with historically lower threat/lower activity conditions. GEOINT areas thus 

require fewer resources, but still require an ability to continuously validate the lower assessed risk 

and detect any change that would require a response. This intelligence analyzes imagery and other 

geospatial information to detect changes on the border. GEOINT capabilities typically come from 

high altitude aerial platforms equipped with Intelligence, Surveillance, and Reconnaissance technology (ISR), such as the Office of Air and Marine’s (OAM) Unmanned Aircraft System (UAS). The use of 

these assets requires significant collaborative efforts with OAM and the Office of Intelligence and 

Investigative Liaison (OIIL). To prioritize the use of GEOINT in low activity areas, CBP has developed 

three FY 2014 milestones: 
Overview of CBP 

Management’s Discussion and Analysis 15 

• Establish requirements for GEOINT; 

• Develop interface with OIIL to transfer requirements and receive products; and 

• Develop uniform Standard Operating Procedures for field response to OIIL products. 

GEOINT products from OAM and OIIL are a key requirement for gaining and maintaining situational 

awareness along the U.S. border; they are also finite. CBP must be prepared to rely upon traditional 

tactics, techniques, and procedures to facilitate situational awareness in remote, low risk areas. 

These techniques include (but are not limited to) periodic reconnaissance patrols, sign-cutting operations, and the deployment of mobile detection, monitoring, and surveillance resources. 

Interdiction Effectiveness Rate 

The Border Patrol introduced a new performance measure in FY 2013: the Interdiction Effectiveness Rate (IER). IER is measured by: 

(Apprehensions + Turnbacks / Apprehensions + Turnbacks + Gotaways) 

The IER is being used along the Southwest border, with a goal to attain at least 90 percent IER by 

FY 2019. 

Post-Apprehension Measures 

After a Border Patrol apprehension, the operational focus shifts to applying effective consequences. 

Border security is enhanced by applying consistent, effective consequences to disrupt the smuggling cycle and dissuade illegal re-entry attempts. The Consequence Delivery System tracks the 

progress of each Border Patrol sector through several metrics, including: recidivism, average number of apprehensions per recidivist during a specified period, and displacement. 

The rate of recidivism is indicative of the agency’s ability to utilize more effective and efficient consequences, in an effort to influence a person’s desire and ability to attempt future illegal entries. 

By lowering recidivism, CBP reduces the number of people that may attempt multiple illegal entries, 

and decreases the level of risk posed to its resources and Border Security. Recidivism has continued to decrease for the third year in a row since the implementation of the Consequence Delivery 

System, throughout CBP operations, beginning in January FY 2011. Additionally, the consistent and 

systematic application of consequences to aliens that enter the United States illegally, over time, 

has contributed to the reduction of recidivism to 16 percent in FY 2013, significantly lower than 24 

percent in FY 2010, the year before implementation. 

The Average Number of Apprehensions per Recidivist provides CBP with a measure of the workload 

associated with each recidivist and the agency’s ability to reduce the number of illegal re-entry attempts through the application of effective and efficient consequences over time. Additionally, by 

measuring the specific activity of the recidivist population when combined with other indicators, 

CBP validates the achievement of reducing illegal cross border activity. The Average Number of 

Apprehensions per Recidivist has continued to decrease for the third year in a row since the imple­
Overview of CBP 

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

 

mentation of the Consequence Delivery System, throughout CBP operations, beginning in January 

of FY 2011. Additionally, the consistent and systematic application of consequences to aliens that 

enter the United States illegally, multiple times, has contributed to the reduction to an average of 

2.41 apprehensions per recidivist in FY 2013, significantly lower than 2.66 in FY 2010, the year 

before implementation. 

The following graphs show the changes from FY 2005 to FY 2013 in recidivism and average apprehensions per recidivist. 

Other Indicators: 

Drug Weight to Frequency Ratio: the average weight per seizure, or average seizure size, of marijuana on the Southwest border. 

• Increases or decreases in the average size of illegal drug loads can indicate an important 

behavioral change by smugglers, and can occur independently of increases or decreases in the 

overall levels of illegal activity at the border. 

• Increases in the average size of seized illegal drug loads may indicate: 

1. A temporary spike caused by external pressure, such as increased military or law enforcement 

activity by the government of Mexico; or 

2. An emerging trend. 

◊ Barring external influence, when TCOs are comfortable sending larger loads of illegal drugs 

across the border or through checkpoints, they do so because they perceive that CBP 

enforcement efforts have a lower likelihood of interdicting these loads or that the loss of 

these loads will be more than offset by profits on other loads. 

◊ When TCOs perceive that CBP has a greater likelihood of interdicting illegal drug loads or that 

the costs of losing large loads will be too great, the load size may be decreased to evade 

detection and reduce losses. Smaller shipments dilute profits by increasing risk, time, guides, 

“mules,” stash locations, drivers and vehicles needed to move more shipments. 
Overview of CBP 

Management’s Discussion and Analysis 17 

 

Border Security Readiness 

One goal of the 2012–2016 Border Patrol Strategic Plan is operationally focused—Secure America’s 

Borders —and the other is mission support focused, Strengthen the Border Patrol. The two goals 

are interdependent—mission support activities enable and sustain Border Patrol law enforcement. 

In implementing its strategic plan, the Border Patrol plans to measure how its many resources and 

programs affect Border Patrol mission readiness. 

Land Border Integration: Office of Field Operations 

CBP is expanding innovative technologies and processes to further security and facilitation at land borders. The key to land border integration is the Triangle Strategy, which authenticates travelers entering 

and leaving the U.S. and those inspected at checkpoints away from the land ports of entry. This focuses CBP investments in outbound enforcement operations, inbound processing (vehicle and pedestrian), and Border Patrol checkpoint processing. Strategies include automated/advanced information, 

active lane management, mobile technologies, traveler communication, and traffic flow optimizations. 

Automated/Advance Information 

Inbound Radio Frequency Identification (RFID) Saturation. Nearly 22.8 million enabled RFID 

travel documents have been issued since January 2008. RFID travel documents, when used in CBP 

Ready Lanes created only for RFID document holders, reduce processing time compared to general 

vehicle lanes. In addition, Ready Lanes leverage travelers’ investments in RFID-enabled documents 

by ensuring, through CBP’s Active Lane Management (ALM), that Ready Lane wait times are significantly reduced compared to general lanes. During FY 2013, the average vehicle processing time 

was 50.9 seconds. 

Pedestrian Reengineering. Along the Southwest border, CBP has deployed kiosks that query pedestrian travel documents and a transit-style gate system that queries their documents and verifies 

biometrics prior to inspection. In FY 2013, CBP completed the deployment to El Paso, Texas (Paso 

Del Norte Bridge) with nine kiosks and to Otay Mesa, California, with three kiosks. In addition, CBP 

deployed pedestrian kiosks at Brownsville, Texas (Gateway Bridge), Nogales, Arizona (DeConcini), 

Calexico West, California, and Laredo, Texas (Convent Street Bridge), and San Ysidro, California. At 

these locations, CBP has launched pedestrian Ready Lanes for travelers with RFID-enabled travel 

documents. Through active lane management, CBP ensures that Ready Lane wait times are less 

than half the wait times of general pedestrian lanes. 

Automation at Outbound and Checkpoints. CBP is infusing technologies for outbound vehicle and 

Border Patrol checkpoint processing on the Southwest border. During FY 2013, CBP upgraded outbound locations on the Southwest border to include fixed license plate readers and the Outbound 

Primary Client, an application similar to the Inbound Vehicle Primary Client and mobile handheld 

devices. CBP also deployed similar technology at Border Patrol checkpoints. In FY 2013, the new 

outbound technologies on the Southwest border facilitated the seizure of more than $22.3 in currency, 81 firearms, 35,692 rounds of ammunition, and the arrest of nearly 2,447 wanted fugitives 

or violators of export laws. 
Overview of CBP 

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

Active Lane Management. CBP’s traffic management policy established maximum wait time targets 

for inbound vehicle processing at all land border ports. Dedicated commuter lanes will always have 

the shortest wait time, followed by Ready Lanes, and lastly, the general lanes. When the dedicated 

commuter lane wait times are longer than 15 minutes, general lanes will be re-designated. If Ready 

Lane wait times are more than half as long as general lanes, additional lanes will be re-designated 

as Ready Lanes. CBP actively tracks violations of these targets. Active lane management’s existing 

initiatives, such as automated wait time measurement, Ready Lanes, Trusted Traveler Programs, and 

variable message signage, help port directors optimize resources to reduce wait times and encourage travelers to participate in dedicated commuter lanes and Ready Lanes. 

Mobile Technology Solutions. Handheld Devices augment operations by automatically capturing 

and querying license plate images, enabling document machine-readable zone swipes, and providing the results to officers or agents. CBP plans to expand this capability for inbound processing. 

CBP’s Enforcement Link Mobile Operations (ELMO) provides real-time tactical targeting data to field 

personnel via a smartphone or tablet device. The ELMO tool, for use by all CBP frontline personnel, 

has helped interdict undocumented aliens, narcotics, unreported currency, and weapons in the air, 

land, and sea environments. 

Variable Message Signage. CBP deployed variable message signs to nine ports of entry during 

FY 2013, raising the total to 33 ports nationwide. Variable message signage enables CBP to better 

manage traffic flow and provide information to travelers. The signs use Light-Emitting Diode (LED) 

technology and are positioned above each vehicle lane to inform travelers of processing mode 

(dedicated commuter lane, Ready Lane or general), lane status (open or closed), and processing 

procedures and policies. 

Border Security Deployment Program (BSDP). CBP continues to expand the BSDP integrated 

surveillance and intrusion detection system of more than 7,000 cameras and microphones, providing security, motion detection, and remote monitoring capabilities across every U.S. land port 

of entry. During FY 2013, CBP installed BSDP in the CBP commissioner’s situation room and the 

National Targeting Center, enabling CBP leadership to view, in real-time, events occurring at any U.S. 

land port of entry. Also in FY 2013, BSDP helped create an automated kiosk to manage pedestrian 

border crossings in Boquillas, Texas. 

Outbound. CBP ensures that travelers and commerce departing the U.S. comply with U.S. export 

laws and regulations. CBP’s outbound mission is to interdict the illegal export of unreported currency (including the proceeds from narcotics trafficking), firearms, ammunition, and stolen property; 

prevent international terrorist groups and rogue nations from obtaining sensitive and controlled 

commodities; arrest fugitives; and increase export compliance. 

CBP uses a risk-based strategy to inspect people, cargo, and conveyances departing the U.S. 

through all airports, seaports, land border crossings, and international mail/courier facilities. CBP 

conducts outbound enforcement actions while remaining unpredictable to smuggling organizations 

and facilitating the flow of legitimate trade and travel. 

CBP’s outbound layered enforcement strategy uses experienced CBP officers, currency/firearms 
Overview of CBP 

Management’s Discussion and Analysis 19 

canine teams; human and network intelligence, cooperation with foreign, U.S. federal, state, local 

and tribal law enforcement agencies, and various inspection tools. Enhancements to CBP license 

plate readers and outbound Automated Targeting Systems on the Southwest border will increase 

CBP’s capabilities to identify and interdict fugitives, persons of interests or contraband (such as 

illicit currency, firearms smuggling, or stolen vehicles) before they depart the U.S. In FY 2012, CBP 

deployed handheld wireless technology to detect and identify high-risk travelers at all Southwest 

border ports of entry. In FY 2014, CBP will deploy temporary outbound infrastructure at designated Southwest border crossings, including canopies for operations under inclement weather, 

improved lighting for night operations, traffic control devices for officer safety, and connectivity to 

CBP automated databases. 

Canine Enforcement Teams 

CBP has the largest and most diverse law enforcement canine program in the U.S. CBP 

canine officers and Border Patrol agents use 

specially trained canines to combat terrorist 

threats and interdict concealed persons, currency, firearms, agriculture products, narcotics, 

and other contraband at ports of entry, traffic 

checkpoints, at international mail facilities, commercial carrier hubs, and along the border between the ports of entry. Some CBP canines are 

trained to perform search and rescue missions. 

The Border Patrol Tactical Unit (BORTAC) Canine 

program has teams for use in tactical high-stress 

situations. The Border Patrol has a canine horse 

patrol unit that allows the canine to work alongside the handler riding on horseback. CBP has more 

than 1,500 canine teams deployed nationwide. In FY 2013, these CBP Canine Teams were responsible for apprehending 55,604 illegal aliens, and seizing 403,478 pounds of narcotics. 

CBP canines are trained to detect illegal immigrants and contraband. 

CBP has two canine training facilities, located in Front Royal, Virginia, and El Paso, Texas. In FY 2013, 

378 students graduated from these academies as Canine Handlers or Canine Instructors; of those, 

52 students were trained for the Government of Mexico and State/Local Law Enforcement Agencies. 

Non-Intrusive Inspection 

The Non-Intrusive Inspection (NII) and Radiation Detection Technology program allows CBP to scan 

a larger portion of inbound traffic for the presence of contraband in less time while facilitating 

legitimate trade and travel. At the end of FY 2013, CBP had 315 large-scale NII imaging systems deployed to air, land, and sea ports of entry and to Border Patrol checkpoints. These systems include 

large-scale X-ray and gamma-ray imaging systems, as well as small-scale, portable, and hand-held 

technologies. Through the end of FY 2013, CBP had deployed 1,397 radiation portal monitors, 

2,812 radiation isotope identification devices, and 29,373 personal radiation detectors nationwide. 
Overview of CBP 

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

CBP officers employ risk analysis, targeting information, and/or officer discretion to use NII to scan conveyances for contraband. When an anomaly is discovered, a more intensive inspection is conducted. 

Without NII systems, suspect cargo would require a more time-consuming manual examination that 

could negatively impact the flow of commerce. NII technology can make an image of a conveyance’s 

contents in minutes, while a manual inspection can take several hours. This equipment identifies a variety of illegal activity and contraband, including human smuggling, narcotics, weapons, and explosives. 

CBP scans cargo containers for radioactive materials as the containers pass through vehicleprocessing lanes at land border ports as well as when they are off-loaded from ships at seaports, 

at select airports, and all express consignment/mail courier facilities. Officers also use equipment 

to ensure personal safety and scan for identifying signs of radioactive materials as they inspect 

smaller vehicles, private aircraft, and shipments. Special tools, such as density meters and fiberoptic scopes, allow officers to peer inside suspicious containers. Finally, if necessary, containers are 

unloaded and opened for a more intensive manual inspection. 

Container Security Initiative 

Almost half of incoming U.S. trade (by value) arrives by containers onboard ships. In FY 2013, more 

than 11 million cargo containers arrived on ships and were off-loaded at U.S. seaports. 

Through the Container Security Initiative (CSI), CBP identifies and examines sea cargo that poses 

a risk for terrorism at foreign ports before they are shipped to the U.S. CSI operates at 58 foreign 

seaports, and the majority of the containerized maritime cargo destined for the U.S. originates in or 

transits through a CSI port. CBP receives the bill of lading and manifest data on sea cargo 24 hours 

before the containers are loaded on U.S.-bound vessels. Through partnerships with foreign governments, CSI deploys teams of CBP officials to work with their host nation counterparts to examine 

cargo that poses 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. 

In FY 2013, CBP officers reviewed 11,228,203 bills of lading and conducted 103,999 examinations 

of high-risk cargo in cooperation with host country counterparts. 

During the year, CSI continued to transition CSI temporary duty assignment personnel to permanent 

status and place resources at National Targeting Center-Cargo to reduce the number of CBP officers 

deployed. CSI will continue to evaluate and adjust personnel levels at CSI ports to achieve desired 

staffing levels. 

CBP’s intent for the CSI program in the next two fiscal years includes: 

• Becoming a hybrid of different operational models based upon individual ports and host 

governments; 

• Evaluating deployments and foreign footprint and aligning staff based upon the different 

operational models; 

• Continuing to work with host country counterparts that are willing to expand the scope of targeting 

to all threats to include narcotics, trade violations and transnational criminal activity; 

• Continuing to offer host counterparts both dual-use commodity training and targeting training. 
Overview of CBP 

Management’s Discussion and Analysis 21 

Advance Passenger Information System 

The Advance Passenger Information System (APIS) is the single most critical element in CBP’s ability to identify dangerous individuals entering or departing the U.S. Through this system, CBP receives 

biographical and travel document information on passengers and crew arriving in and departing 

from the U.S. by air, sea and, in some cases, land (from commercial bus and rail operators). 

APIS data is received in advance of a traveler: boarding commercial and private aircraft that are arriving into or departing from the U.S., and departing onboard a commercial vessel and in advance of 

arrival on a commercial vessel entering the U.S. APIS allows CBP to screen all travelers against government watch lists and send a screening response to commercial air carriers and private aircraft 

operators. CBP receives advance information on passengers and crew that is used for automated 

law enforcement queries that seek matches to multi-agency law enforcement alerts, immigrant 

visas, and historical databases. The APIS process has been modified to incorporate Electronic System for Travel Authorization (ESTA) screening, to allow carriers to use the existing APIS processes to 

meet ESTA requirements. 

The CBP APIS document validation program verifies that travelers possess a valid document before 

they board an aircraft. CBP is currently piloting this program with carriers to verify all individuals 

who need a visa have a valid visa prior to traveling to the U.S. This initiative will facilitate arrival and 

departure for legitimate travelers, while preventing travelers with fraudulent or invalid documents 

from boarding aircraft at the foreign airport, extending border security beyond U.S. ports of entry. 

Electronic System for Travel Authorization 

The ESTA allows CBP to screen the information provided by Visa Waiver Program (VWP) travelers 

effectively to determine whether an alien presents a security risk and is eligible to travel to the U.S. 

under the VWP. 

CBP screens travelers against appropriate databases to identify potential threats to U.S. security. 

Inadmissible travelers are denied a travel authorization via ESTA and are unable to travel to the U.S. 

under VWP. Those denied via ESTA are given the opportunity to apply for a visa to the U.S. at the 

nearest U.S. Embassy or Consulate. 

Determining eligibility for VWP travel in advance of travel reduces the times that an VWP ineligible 

traveler arrives in the U.S. and is denied admission. In such cases, the traveler’s immediate return 

to the country of origin incurs additional expense for the carrier. 

Currently, the ESTA website appears in English and 23 other languages and has the full capacity to 

process the total volume of VWP travelers arriving to the U.S. ESTA became mandatory for all VWP 

travelers in January 2009. In January 2010, CBP began enforcing compliance by requiring airlines 

to verify ESTA status before boarding passengers. 

CBP is redesigning the ESTA website to make the application process easier and to facilitate payments on multiple applications at the same time. CBP is additionally, exploring new payment types. 
Overview of CBP 

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

Admissibility Review Office 

CBP’s Admissibility Review Office (ARO) provides a consistent decision-making approach to admissibility and exercises discretion for inadmissible aliens under the Immigration and Nationality Act. 

The ARO works extensively with the Department of State and other agencies to determine whether 

inadmissible aliens can legally travel as non-immigrants with waivers. The office balances each 

alien’s reason(s) for travel with the seriousness of his or her ineligibility, weighed against any benefit 

or potential risk of harm to society if CBP were to admit the alien. 

ARO currently processes and adjudicates all waivers of inadmissibility that the State Department 

consular officers recommend worldwide. The ARO decides all high profile “seat of government” nonimmigrant waivers. It also processes and adjudicates all waiver applications submitted directly to 

CBP by eligible individual international travelers. 

Fraudulent Document Analysis Unit 

The Fraudulent Document Analysis Unit (FDAU) collects and analyzes fraudulent travel documents 

seized by CBP officers nationwide. The unit’s mission is to remove fraudulent travel documents from 

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

U.S. Since its inception, the FDAU has received more than 12,692 fraudulent documents. 

The FDAU manages the CBP Fraud Prevention Program, which increases the detection of fraudulent 

documents. The program gives CBP officers standardized training, high quality document examination equipment, and current information on fraudulent document use. The FDAU collaborates with 

the Department of State, the Transportation Security Administration and other federal, state and 

local law enforcement agencies to conduct document examination training. 

The FDAU also manages the Carrier Liaison Program, which increases commercial carriers’ effectiveness in identifying improperly documented passengers destined for the U.S. Since its inception, 

the program has standardized training materials for the carrier industry and has developed carrier 

and vessel inspection guides. 

DHS partners with the Netherlands, Canada, Australia, United Arab Emirates and INTERPOL (International Criminal Police Organization), for Edison TD, a global database to verify travel and identity 

documents. The FDAU is responsible for the input of travel and identity documents into the Edison 

TD database. 

Immigration Advisory Program / Joint Security Program 

The Immigration Advisory Program (lAP) is part of CBP’s pre-departure strategy to prevent terrorists, high-risk, and improperly documented travelers from boarding U.S.-bound commercial flights. 

The Joint Security Program (JSP) is a component of the IAP that partners CBP officers with host 

country law enforcement to disrupt terrorist travel and interdict the smuggling of narcotics, bulk 

currency, illegal migrants and fugitives. IAP focuses on screening U.S.-bound passengers. JSP 

engages targeted travelers arriving into and departing from the host country (both U.S.-bound and 

foreign-to-foreign). 
Overview of CBP 

Management’s Discussion and Analysis 23 

lAP and JSP officers serve as on-site experts in U.S. entry requirements, provide document training 

to carriers, conduct onsite passenger assessment and are supported by advance targeting to identify potentially high-risk passengers without delaying, canceling or diverting flights. 

In FY 2013, IAP and JSP officers issued 3,501 “No board” recommendations to carriers and host 

governments regarding passengers bound for the U.S. IAP and JSP efforts to prevent terrorists, 

criminals, and inadmissible aliens from boarding aircraft have resulted in an estimated $8.75 million cost savings for CBP. 

National Agriculture Release Program 

The National Agriculture Release Program (NARP) is a national agricultural cargo release program 

developed by the U.S. Department of Agriculture Animal and Plant Health Inspection Service (APHIS), 

Plant Protection and Quarantine (PPQ) division, in cooperation with CBP. The NARP identifies high 

volume imports of regulated agricultural commodities that represent a low risk for exotic plant pest or 

pathogen introduction. APHIS-PPQ has determined that these high-volume, low-risk commodities can 

be inspected at reduced rates and would not compromise U.S. agricultural resources. 

Entry/Exit Transformation 

The Entry/Exit Transformation program (EXT) enhances immigration system integrity by assuring 

the identity of foreign nationals arriving and departing the U.S. EXT leverages innovative business 

process re-engineering and identifies capabilities to improve the entry/exit process. This enables 

CBP to process more travelers in less time with a higher degree of confidence in security and immigration integrity. Enhanced entry-exit matching will improve immigration enforcement operations for 

both CBP and Immigration and Customs Enforcement (ICE) and enable DHS to better manage the 

Visa Waiver Program. EXT will analyze the costs and benefits of new technology and business processes at selected ports of entry. It will enhance cost-effective biometric and biographic technologies at airports to inspect travelers entering the U.S. 

In 2013, working with the U.S. Office of Biometric Identity Management and Canadian governmental 

partners, EXT established electronic biographic traveler data sharing between the U.S. and Canada, 

allowing each to track the exit of foreign nationals. EXT and DHS Science and Technology established the Air Entry Exit Reengineering (AEER) project, which will identify and test cost-effective ways 

to use biometrics in the air entry/exit process. EXT began incorporating Mexican APIS biographic 

exit data into the Arrival and Departure Information System (ADIS). Other initiatives include an accuracy audit of the Air Passenger Information System exit manifest data and developing a Southwest 

border strategy for tracking the entry and exit of foreign travelers. 

National Targeting Center 

CBP created the National Targeting Center (NTC) to be the single point of reference for CBP anti-terrorism efforts. The NTC encompasses two facilities—the National Targeting Center-Passenger (NTCP) and the National Targeting Center-Cargo (NTC-C). 
Overview of CBP
 

National Targeting Center – Passenger 

NTC-P plays a vital role in identifying people who pose a national security concern overseas, at ports 

of entry and at Border Patrol checkpoints. While the vast majority of travelers are legitimate, NTC-P 

identifies and examines those who may be involved in terrorism or its attendant concerns (such as 

money laundering). NTC-P is staffed with permanent and temporary duty analysts, as well as interagency liaisons, to provide 24x7 tactical targeting and analytical research for CBP anti-terrorism 

efforts. NTC-P uses numerous automated enforcement data processing systems that detect and 

prevent terrorist access to the U.S., including the Automated Targeting System-Passenger (ATS-P) 

and the Targeting Framework. These systems allow NTC-P to screen passenger manifests and related information prior to U.S. arrival. 

The pre-departure targeting mission is to maximize the effectiveness of advanced technology, intelligence information, domestic and international partnerships, and well-trained human resources 

to effectively screen, review, identify, and prioritize passengers across all international modes of 

transportation, inbound and outbound. This includes: 

• Targeting ATS-P pre-departures; 

• Targeting outbound inspections; 

• Adjudicating of all Department of Defense biometric matches to derogatory information; 

• Supporting Immigration Advisory Program and Joint Security Program teams through targeting; 

• Enhancing ATS-P entity resolution and infrastructure and improving quality of commercial carrierprovided passenger name recognition data; 

• Improving the accuracy and integrity of the Terrorist Watch List in collaboration with the DHS 

National Counterterrorism Center; 

• Coordinating with Department of State and ICE to automate vetting of U.S. non-immigrant visa 

application information prior to the applicant’s interview or visa issuance; 

• Vetting of valid U.S. nonimmigrant and immigrant visas to identify changes in a traveler’s visa 

status in near real-time; 

• Screening and vetting of ESTA applications; 

• Implementing the National Targeting Strategy: 

◊ Create a unified NTC; establish a joint NTC facility; 

◊ Expand all-modes pre-departure targeting;

◊ National oversight of Passenger Analytical Unit policy. 

NTC-P collaborates with the Centers for Disease Control, Central Intelligence Agency, ICE, Federal 

Bureau of Investigations (FBI), Transportation Security Administration’s (TSA) Office of Intelligence, 

TSA Secure Flight, Federal Air Marshals, State Department Consular Affairs, Diplomatic Security 

Service, US Coast Guard, INTERPOL, and U.S. Citizenship and Immigration Services’ Fraud Detection and National Security unit. CBP and TSA have established a joint targeting workgroup to leverage CBP targeting capabilities with TSA authorities to screen high-risk passengers prior to boarding 

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

Management’s Discussion and Analysis 25 

a U.S.-bound conveyance. NTC-P has also instituted an International Targeting Center, with onsite 

representatives from the United Kingdom, Australia and Canada, to stop the smuggling of people, 

weapons, and contraband. 

National Targeting Center – Cargo 

NTC-C supports CBP’s anti-terrorism activities relating to cargo in all modes of transportation by 

targeting and coordinating examinations of high-risk shipments. NTC-C conducts continual strategic 

and operational analysis to identify and counter threats, such as narcotics smuggling, agricultural 

pests and diseases, trade-based money laundering, intellectual property rights violations, trafficking 

in illicit weapons, and other threats to U.S. physical and economic security. 

NTC-C operates 24x7, staffed by a cadre of highly experienced targeting analysts. NTC-C supports 

CBP’s ports of entry and field offices in the U.S. and at nearly 58 foreign locations. The NTC-C’s 

partnerships and liaisons with numerous federal agencies gains information to identify and examine cargo shipments that may threaten the U.S. The NTC-C also helps other countries to develop 

anti-terrorism security systems by hosting foreign customs officials under the International Fellowship Program. 

The NTC-C includes distinct operational units and activities to address specific threats and provide 

tailored support to CBP ports of entry, partner government agencies, and international partners. 

These include: 

•	 Air Cargo Advance Screening – A collaborative effort between CBP, TSA and the commercial 

aviation and air cargo carriers to prescreen inbound air cargo. 

•	 Container Security Initiative Targeting Support – An initiative that provides cargo targeting support 

for all 58 overseas CSI locations. 

•	 International Cargo Targeting Fellowship Program – A collaboration with international partners to 

identify, prevent, deter, disrupt and manage risks in the cargo environment through dynamic 

information and knowledge sharing, by hosting foreign customs officials at the NTC-C. 

•	 Field Support Unit (FSU) – The primary point of contact for ports of entry providing intake services 

to handle special research requests, high-risk commodity targeting, and screening of business and 

individual shippers who may have connections to terrorism or smuggling. 

•	 Outbound Program – The targeting of exports to support counter proliferation efforts. 

•	 Narcotics Unit – Conducting post-seizure analyses of all large-scale narcotics interdictions in the 

cargo environment and targets entities and addresses to identify potential air and sea narcotics 

shipments. 

•	 Tactical Trade Targeting Unit (T3U) – Coordination of CBP’s tactical trade assets and close 

collaboration with ICE/Homeland Security Investigations to support investigations and increase 

interdictions domestically and abroad. 

•	 Agricultural / Biological Terrorism Countermeasures – Targeting agricultural and biological 

shipments that have a nexus to terrorism or national security. 
26 U.S. Customs and Border Protection • Performance and Accountability Report 

Overview of CBP
 

• Rail Targeting Unit (RTU) – Collaboration between CBP and representatives of the rail freight 

industry to target and analyze rail shipments. 

Office of Air and Marine 

The Office of Air and Marine is the largest aviation 

and maritime law enforcement organization, and is 

a critical component of CBP’s layered enforcement 

strategy for border security. OAM uses its sophisticated fleets to detect, sort, intercept, track, and apprehend criminals in diverse environments at and 

beyond U.S. borders. 

Currently, 10 unmanned aircraft systems operate 

from three sites: Ft. Huachuca, Arizona; Corpus 

Christi, Texas.; and Grand Forks, North Dakota. Jacksonville, Florida, is slated to begin federated (nonlaunch and recovery) operations with other National 

Air Security Centers in FY 2014. As OAM’s unmanned 

aircraft capabilities have grown over time, it has 

achieved increasing annual UAS flight hours, culminating in 5,117.5 UAS flight hours in FY 2013. 

Unmanned Aircraft System 

OAM Transit Zone Initiatives 

OAM P-3 aircrafts have been an integral part of the successful counter-narcotic missions operating 

in Source and transit zones. Drug smugglers bound for Mexico and the U.S. with contraband from 

the source zone countries of South America pass through a 42 million-square mile cocaine transit 

zone. This includes independent nations, the Pacific Ocean, Caribbean Sea, Gulf of Mexico, and the 

seaboard approaches to the United States. 

In FY 2011, 88 percent of OAM-funded P-3 flight time was in direct support of the Joint Interagency 

Task Force–South, whose mission is to remove 40 percent of all documented cocaine movement 

through the transit zone by 2015. 

Air and Marine Operations Center 

The Air and Marine Operations Center (AMOC) is the nation’s only federal law enforcement center 

that coordinates interdiction operations in the Western Hemisphere. The AMOC was established in 

1988 to counter the airborne drug smuggling threat. OAM has expanded the AMOC’s role in air and 

marine interdiction. Today, AMOC provides detection, monitoring, sorting, tracking, and coordination 

of law enforcement response to suspect airborne and maritime activity at, beyond, and inside our 

nation’s borders. The center has conducted unmanned aircraft and airspace security operations; 

responded to natural disasters, covert and overt electronic target tracking; and determined general 

aviation aircraft threat. AMOC has acted as the clearinghouse for information and mission tasking 

during special events, such as the Super Bowl, and national disasters, such as Hurricane Katrina. 
Overview of CBP 

Management’s Discussion and Analysis 27 

The AMOC’s staff employs sophisticated systems and technology to identify existing and emerging 

homeland security threats. Detection specialists use live radar presentations overlaid on detailed 

topographical maps and aviation charts, extensive law enforcement databases, and tracking and 

communications networks to detect, identify, track, and coordinate interdiction of suspect targets. The Domain Awareness System combines Federal Aviation Administration (FAA) and Department of Defense radars, OAM airborne systems, and other sensors into a single facility, capable 

of the real-time tracking of more than 50,000 individual targets. Currently, AMOC accesses approximately 50 percent of FAA radars, and is awaiting FAA permission and authorization to share 

data from another recently upgraded FAA radar data distribution network. Out of approximately 

10,000 air tracks active at any given moment, AMOC investigates more than 25,000 domestic 

and foreign flights per month to separate legal air traffic from potential violators and terrorists. 

Staff is then able to precisely direct law enforcement personnel to suspect targets. In late 2011, 

the AMOC incorporated Canadian radar feeds into its surveillance network, allowing for situational awareness well beyond the U.S. land border and enhancing cooperation between the U.S. and 

Canadian governments. 

OAM Partnerships 

Overcoming transnational threats requires teamwork with a range of partners. When constructing integrated layers of security, each layer may be the responsibility of a different entity, including 

governments as well as various commercial, regulatory, intelligence, diplomatic, military, and law 

enforcement entities. Integrating these disparate security layers involves unity of effort, shared 

responsibility, partnership, and mutual support. OAM uses its unique capabilities to support the 

efforts of its international partners, the larger DHS community, and other federal agencies, joint 

interagency task forces and local law enforcement. 

OAM’s National Air Security Operations, in coordination with the Joint Interagency Task Force – 

South, deploy P-3 aircrews in the source and transit zone to support the National Drug Control Strategy. As delineated in the National Interdiction Command and Control Plan, the task force is tasked 

with supporting the detection, monitoring, and interdiction of illicit trafficking within the prescribed 

joint operating area. 

OAM also supports interior operations with U.S. Immigration and Customs Enforcement’s Homeland 

Security Investigations. This support enables OAM to provide investigative and surveillance support 

throughout the U.S. In FY 2012, OAM established the Chicago Air Unit, which supports investigations conducted in the Chicago metropolitan area. 

OAM’s partnerships extend to the AMOC, which hosts OAM personnel as well as operations personnel and staff officers from the U.S. Coast Guard, Department of Defense, FAA, and the Mexican government. OAM also supports other federal agencies, such as the FBI. 
Overview of CBP 

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

Enhancing Prosperity 

A secure U.S. border enhances American prosperity and adds value to our nation. When CBP expedites lawful trade, while preventing the transit of contraband, and facilitates legal travel, while impeding the illegal movement of people, we enable our economy to thrive. By managing risk, we can 

focus our law enforcement resources where they are most needed—on the goods and people who 

pose threats to our safety and prosperity—and thus strengthen security while facilitating legitimate 

commerce and travel. 

Trusted Traveler Program 

CBP operates four trusted traveler programs, Nothern Exchange with United States (NEXUS), 

Secure Electronic Network for Travelers Rapid Inspection (SENTRI), Fast and Secure Trade (FAST), 

and Global Entry. These programs provide dedicated inspection processes to expedite CBP processing for pre-approved, “low-risk” trusted travelers. The programs allow CBP to focus on unknown, potentially higher risk travelers. Applicants can apply online through CBP’s Global Online 

Enrollment System (GOES). All applicants are subject to background checks, collection of biometrics, and interview with a CBP officer. Participation in these fee-based programs is voluntary, and 

upon approval, membership is valid for five years. Once applicants are enrolled in the program, 

certain law enforcement checks are run every 24 hours. All trusted traveler members are issued 

Radio Frequency Identification (RFID) enabled cards for use at the land borders. 

NEXUS is a bi-national cooperative effort, partnering Canada Border Services Agency (CBSA) and 

CBP. The NEXUS program was implemented as a result of the Smart Border Declaration signed by 

Canada and the U.S. in December 2001. U.S. citizens and lawful permanent residents, as well as 

Canadian citizens and permanent residents, are eligible for NEXUS. Like all trusted traveler applicants, NEXUS applicants undergo a thorough background check. However, NEXUS members are 

interviewed by both CBP and CBSA officers. NEXUS offers expedited entry into both the U.S. and 

Canada in the land, air, and sea environments. Applicants who wish to take advantage of NEXUS Air 

must have their iris scan collected by CBSA. 

SENTRI is a land border management process that provides expedited CBP processing into the U.S. 

from Mexico through the use of dedicated commuter lanes. SENTRI is open to anyone who wants 

to apply; there is no citizenship requirement. SENTRI offers both a vehicle and pedestrian benefit. 

Members use their RFID-enabled card for identification and status validation upon arrival at the U.S. 

port of entry. 

The FAST program is a commercial clearance program for known low-risk shipments entering the 

U.S. from Canada and Mexico. This trusted traveler/trusted shipper program allows expedited 

processing for commercial carriers who have completed background checks and fulfill certain 

eligibility requirements. FAST vehicle lanes process cargo at land border ports of entry that serve 

commercial cargo. Participation in FAST requires that every link in the supply chain, from manufacturer to carrier to driver to importer, certified under the Customs-Trade Partnership Against 

Terrorism program. Among the key benefits of FAST enrollment are: access to dedicated lanes for 

greater speed and efficiency in processing transborder shipments; reduction in the number of 
Overview of CBP 

Management’s Discussion and Analysis 29 

 

inspections, resulting in reduced delays at the border; and priority, front-of-the-line processing for 

CBP inspections. 

Global Entry is a program operated by CBP to allow for the expedited clearance of pre-approved 

low-risk air travelers into the U.S. This program, while maintaining border security, allows members 

to use automated kiosks at designated airports to bypass the regular Passport Control queues, and 

enter the U.S. without routine CBP questioning (unless chosen for a selective or random secondary 

referral). U.S. citizens, U.S. lawful permanent residents, Mexican nationals, citizens of the Netherlands, and citizens of South Korea may apply for Global Entry. Fully reciprocal arrangements are in 

place with the Netherlands and South Korea. CBP is operating pilot programs with Germany, Qatar, 

and the United Kingdom, allowing limited numbers of their citizens to participate in Global Entry. 

CBP has signed joint statements with Australia, Israel, New Zealand, Panama and Saudi Arabia to 

develop programs with these countries. All NEXUS program members may use the Global Entry kiosks. U.S. citizens and U.S. lawful permanent residents enrolled in SENTRI may also use the Global 

Entry kiosks. The automated kiosks are located in the Federal Inspection Services area of each 

program airport. Through fingerprint biometrics and passport or lawful permanent resident card 

data, the Global Entry kiosk validates membership eligibility, performs real-time law enforcement 

database queries, and allows the traveler to complete CBP declaration questions via touchscreen. 

Global Entry operates at 44 U.S. ports, as well as all 10 Canadian preclearance sites, and both 

preclearance sites in Ireland. 

Trusted Trader Program 

The Customs-Trade Partnership Against Terrorism (C-TPAT) program is a vital component in CBP’s 

layered cargo enforcement strategy that safeguards global trade by strengthening supply chain security. C-TPAT members commit to ensuring that their supply chains meet or exceed C-TPAT’s minimum-security criteria and to verifying that their supply chain business partners also comply with the 

same security guidelines. In exchange, C-TPAT partners receive various types of incentives. 

Once a company becomes a certified partner in the program, C-TPAT’s security specialists validate 

the company’s supply-chain security procedures. Validation is required under the Security and 

Accountability For Every (SAFE) Port Act of 2006 and is essential to verify the company’s commitment to supply chain security. In FY 2013, C-TPAT completed the validation/revalidation of 2,325 

companies. 

C-TPAT continually looks for ways to expand the program. Some C-TPAT’s accomplishments in FY 

2013 include: 

•	 Improved efficiency and reduced redundancy with other government agencies through information 

sharing and foreign validation activities; 

◊		C-TPAT implemented the initial strategy for TSA and CBP to create a joint trusted shipper program 

for inbound international air cargo; 

■	 CBP and TSA completed six joint validations during 2013. The teams conducted side-by-side 

evaluations of the programs and developed solutions when gaps were evident. 
Overview of CBP 

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

 

■	 TSA and CBP plan to complete a memorandum of agreement in FY 2014 whereby TSA will 

complete all C-TPAT air carrier foreign validation site visits, resulting in a more efficient process. 

•	 Increased the number of C-TPAT participants over the next 5-7 years without compromising 

security standards; 

◊ As of Sept. 30, 2013, C-TPAT had 10,662 program participants. 

◊ Program expansion efforts: 

■	 Developing the eligibility requirements and security criteria for exporters. 

■	 Exploring the addition of new entities such as: Foreign Trade Zones, domestic transportation 

hubs, bonded warehouses, and bonded highway carriers. 

•	 Strengthened scrutiny of future and current members. During the validation process, C-TPAT tested 

company security procedures and gathered evidence of implementation; and 

•	 Linked various international industry partnership programs through mutual recognition and 

technical assistance training. 

◊		C-TPAT completed Phases 1 and 2 of the mutual recognition process with Israel’s authorized 

economic operator program. Phase 3, the signing of a mutual recognition arrangement, is 

tentatively scheduled for early FY 2014. 

◊ C-TPAT completed Phase 1 of the mutual recognition process with Mexico in May 2013, and is 

working towards completion of Phase 2 of the joint work plan. 

◊		C-TPAT completed Phase 1 of the mutual recognition process with China in August 2013. C-TPAT 

and China began joint validations in September 2013. 

◊		C-TPAT has begun the mutual recognition process with India by comparing each program’s security 

criteria. 

◊		C-TPAT is assisting in the establishment of Brazil’s authorized economic operator program with a 

goal of mutual recognition. 
Overview of CBP
 

Office of International Affairs 

CBP’s Office of International Affairs (INA) helps CBP to fulfill its international mission of securing 

the global supply chain and the global travel network. This requires CBP coordination with the 

private sector, foreign governments, and other federal agencies. Establishing relationships and 

building capacity at the international level allows CBP to identify, intercept, and neutralize threats 

to the U.S. before they reach the country’s borders. CBP implements these international programs 

through INA. 

The following flow chart illustrates how CBP’s international programs create and foster these 

relationships. 

International Partnership Programs 

INA administers several international partnership programs including, but not limited to, the AsiaPacific Economic Cooperation, the International Law Enforcement Academies, the Colombia-Andean 

Initiative, the Export Control and Border Security Program, Reconstruction and Stabilization Assistance, and the World Customs Organization. The key CBP objectives for these international partnership programs are to: 

•	 Develop, promote, and implement CBP’s international strategy; 

•	 Negotiate international agreements and other instruments, such as bilateral agreements and 

letters of intent for CBP; 

Management’s Discussion and Analysis 31 
Overview of CBP 

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

• Advance CBP’s international policy initiatives in international forums; and 

• Develop and maintain strategic international relationships. 

INA strives to extend U.S. borders by implementing programs and initiatives that promote anti-terrorism efforts, global border security, non-proliferation, export controls, legal immigration, capacity 

building, and facilitating legitimate trade. INA focuses on international cooperation and strengthening multi- and bi-lateral relationships to achieve international agreements and other joint efforts. 

Capacity Building 

Capacity building is a holistic process of training, mentoring, and providing resources to a partner 

administration that results in sustainable changes. It is a long-term, comprehensive, and repetitive 

process to improve the abilities of a CBP partner administration through the development or acquisition of skills, tools, processes and resources. 

These efforts improve international relationships and enhance border security by supporting best 

practices and infrastructure development that will allow foreign partners to keep pace with global 

changes and secure the safe flow of people and goods. 

Capacity building and technical assistance programs have equipped international customs administrations with the tools to control their own borders more effectively, especially in the Western 

Hemisphere (Mexico and Panama). Enlisting the support and participation of the trade industry has 

helped address trade violations, ushering in an era of expedited commerce and trusted shipper and 

traveler programs. CBP recognizes that wherever our engagement is strongest overseas, our programs are also markedly more effective and successful. The Customs Mutual Assistance Agreement 

(CMAA) is one of the key foundational milestones that further initiatives can be built upon, such as 

CBP trusted partner programs. 

CBP’s international capacity building efforts are focused on the following areas: international narcotics and crime control, non-proliferation, export control and related border security, commercial 

enforcement operations, and private sector partnership programs. Each program begins with a 

border security assessment designed to determine the type of training and/or equipment needed to 

improve operations within the host foreign country. Additionally, the assessments provide the host 

government with a better understanding of its border control vulnerabilities. 

During FY 2013, CBP provided 140 capacity building sessions for foreign partners including 28 

courses at the International Law Enforcement Academy, and provided capacity building support in 

more than 57 countries. 

Trade Transformation 

CBP is moving forward with Trade Transformation initiatives to enhance the Nation’s economic competitiveness by creating efficiencies that drive down costs for business and Government while also 

enhancing the efficacy of CBP’s enforcement protocols. Central to CBP’s work on Trade Transformation is the strength of partnerships with the private sector. The ability to co-create mutually benefi­
Overview of CBP 

Management’s Discussion and Analysis 33 

cial strategies with the trade community has proven to be a successful approach for CBP to develop 

key trade initiatives. Examples of Trade Transformation initiatives include Centers of Excellence and 

Expertise and Simplified Processes. 

The establishment of the Centers of Excellence and Expertise is a transformative effort to focus on 

maintaining a strong and competitive U.S. economy through innovative trade management techniques. Centers align CBP trade resources by industry and manage importers by account, rather 

than by individual transaction. By virtually linking trade personnel across the country into multidisciplinary teams that are industry based, CBP can more effectively facilitate trade and develop a 

deeper understanding of industry practices, risk areas, and enforcement issues. Ten Centers are 

now open and conducting entry summary activities for participating importers: 

• Agriculture & Prepared Products (Miami) 

• Apparel, Footwear & Textiles (San Francisco) 

• Automotive & Aerospace (Detroit) 

• Base Metals (Chicago) 

• Consumer Products & Mass Merchandising (Atlanta) 

• Electronics (Los Angeles) 

• Industrial & Manufacturing Materials (Buffalo) 

• Machinery (Laredo) 

• Petroleum, Natural Gas & Minerals (Houston) 

• Pharmaceuticals, Health & Chemicals (New York) 

The Simplified Process Joint Industry-CBP Workgroup was established in April 2011 with the goal 

of formulating viable solutions to diminish the administrative burden related to importing into the 

United States by reducing duplicative data elements required to obtain the release of products for 

cargo. The ultimate objective is to streamline the release of goods and enhance cargo security by 

segregating the filing of transportation information from the filing of entry information. The Automated Commercial Environment (ACE) Cargo Release (formerly also known as Simplified Entry) test 

pilot program for the air mode of transportation is operational at 16 airports for 20 filers. More than 

159,000 ACE Cargo Release entries have been filed for more than 1,100 importers, as of September 2013. 

CBP established the Broker Workgroup in January 2011, in partnership with the National Customs 

Brokers and Forwarders Association of America, to address the challenges of 21st century commerce. 

Importer Self-Assessment 

The Importer Self-Assessment program (ISA) allows qualified importers to assume the responsibility 

for self-monitoring their compliance in exchange for less intrusion by CBP. The program goal is for 

the importer to maintain a system of internal control that will mitigate risk while achieving a high 

level of trade compliance. CBP is exploring new initiatives to broaden the scope of the self-assessment program and provide additional benefits to its members. Some of these initiatives are: 
34 U.S. Customs and Border Protection • Performance and Accountability Report 

 

Overview of CBP
 

•	 The ISA-Product Safety test pilot, announced in October 2008, is a partnership of CBP, the 

Consumer Product Safety Commission (CPSC), and importers to maintain a high level of product 

safety compliance. Any importer who participates in the ISA program may apply for the pilot. 

•	 Under the Beyond the Border initiative, introduced in February 2012, the U.S. and Canada use a 

common framework for trusted trader programs. ISA and Canada Self-Assessment (CSA) have 

completed a side-by-side comparison of trusted trader programs. The study indicated similarities 

in vetting and evaluation, through differences in member benefits. ISA and CSA met jointly with 

stakeholders to identify more ways to expedite border processes. 

•	 On April 17, 2013, CBP announced in the Federal Register, a Broker ISA Pre-Certification pilot to 

certify and provide guidance for qualified brokers to conduct ISA evaluations and reports. The 

certified brokers perform a comprehensive review of an ISA applicant’s package and evaluate the 

importer’s system of internal controls before presenting the ISA candidate to CBP. 

•	 CBP published a Federal Register notice announcing ISA program changes. The program now 

allows importers, who have successfully completed a Focused Assessment audit and have been 

found to pose an acceptable risk to CBP, eligible to transition into the ISA program without further 

review, provided they agree to fulfill the program requirements. 

Enforcement of Anti-dumping and Countervailing Duty Laws 

CBP’s Re-Engineering Dumping (RED) team, which is composed of offices throughout CBP, actively 

develops ways to strengthen CBP’s Anti-dumping and Countervailing Duties (AD/CVD) enforcement. 

The group focuses on transshipment, under-collections, the role of shell companies, and other gaps, 

vulnerabilities, and challenges. The RED Team seeks to strengthen AD/CVD enforcement, reduce 

the AD/CVD administrative burden to free up resources for enforcement, and increase communication with the Department of Commerce, ICE Homeland Security Investigations (HSI), and the trade 

community. The accomplishments of the RED team include: 

•	 Creation of policy guidelines and factual scenarios for the CBP field to increase the use of Single 

Transaction Bonds (STB) to stop AD/CVD evasion and reduce the uncollectible amount of AD/CVD; 

•	 Development of and implementation of procedures to proactively enforce AD/CVD cases, and to 

prepare CBP to enforce new AD/CVD orders; 

•	 Establishment of trade intelligence groups with the steel and seafood industry to enhance CBP’s 

AD/CVD enforcement; 

•	 Conducted of the first joint CBP and Commerce training webinar to CBP field staff on an AD/CVD 

order, and planned other joint webinars; and 

•	 Updated an automated scripting program to complete no-change AD/CVD liquidations. 

Protection of Intellectual Property Rights 

Intellectual Property Rights (IPR) are a top enforcement priority. CBP launched the first ever joint IPR 

enforcement operation with China Customs, and also conducted operations with French Customs 

and with Asia-Pacific Economic Cooperation members. In addition, CBP handled forfeitures for web­
Overview of CBP 

Management’s Discussion and Analysis 35 

sites closed by ICE for trafficking in counterfeit goods. IPR seizures led to arrests, indictments, and 

prosecutions. 

Internet sales of IPR infringing merchandise have dramatically increased imports of small packages 

via mail and express carriers. IPR enforcement for these small packages requires substantial CBP 

resources because the same due process applies to these small seizures as to seizures of container loads of counterfeit goods. 

To enhance IPR enforcement capability at ports of entry, CBP conducted integrated IPR field training 

on legal authorities, targeting, and policy at high-risk ports. CBP also deployed new authentication 

tools to streamline IPR infringement determinations and facilitate the quick release of legitimate 

shipments. CBP launched IPR strike units, multi-discipline CBP and ICE IPR enforcement teams to 

deter IPR infringements through penalties and prosecutions. CBP is a partner in the National IPR 

Coordination Center and is the primary source of referrals of IPR violations to the IPR Center for 

criminal investigation by ICE. 

Advancing Import Safety 

CBP reinforces its commitment to import safety by working with other government agencies 

to prevent unsafe products from entering the 

U.S. CBP plays an essential role in interagency 

import safety by promoting risk management 

strategies and developing uniform enforcement strategies, such as detention, seizure, 

and destruction policies. 

Fostering interagency coordination, CBP chairs 

the Border Interagency Executive Council, 

which is the agencies’ foundation for enhancing 

import safety and trade enforcement. Participating agencies analyze operations, policy, and 

regulatory powers to identify efficiencies and 

synergies. 

CBP agriculture officers inspect flowers for dangerous exotic 

pests and diseases. 

CBP also works with other agencies to expand the Import Safety Commercial Targeting and Analysis 

Center (CTAC). Currently the center hosts eight partner agencies, including the Consumer Product 

Safety Commission, ICE, Food Safety Inspection Service (FSIS), Animal and Plant Health Inspection 

Service, Environmental Protection Agency (EPA), Pipeline and Hazardous Materials Safety Administration, and the National Highway Traffic Safety Administration (NHTSA), and CBP. All the agencies 

together target imports that should be examined for safety violations. 

CTAC has launched two national targeting programs to address import safety. The First-Time Manufacturer Program addresses the elevated risk associated with new foreign manufacturers. The Supply Chain Program addresses known risk with foreign manufacturers who have previously violated 
Overview of CBP 

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

import safety laws. Dozens of illicit and unsafe vehicles, including illegally imported vehicles, have 

been kept off American roads as a result of joint CTAC targeting. 

CTAC also met with international customs representatives to improve customs practices. Attachés 

from Canada, Germany and Turkey continue working to establish a unified approach to protect the 

health and safety of their citizens through coordinated customs enforcement. 

Trade Agreements Enforcement 

CBP is enforcing trade agreements that provide duty-free or reduced-duty access to the U.S. market. 

The U.S. currently has free trade agreement in force with 20 countries and several preferential trade 

programs. CBP has strengthened field expertise through focused training for import specialists, auditors, and employees of the Centers of Excellence and Expertise. The small investment in training 

resulted in 1,497 invalidated trade preference claims with a revenue recovery of $5.6 million during 

FY 2013. In FY 2013, CBP finalized its interim regulations in the Code of Federal Regulations (title 19) 

on the U.S. – Peru Free Trade Agreement as well as the U.S. – Korea Free Trade Agreement. 

Enforce Trade Law and Collect Revenue 

CBP collects duties, taxes, and fees tied to U.S. cargo imports. CBP deposits, reconciles and manages collections for more than a dozen government agencies, collecting $40.9 billion in 2013. CBP 

processes associated trade payments that relate to refunds of duty, drawback, and distribution of 

funds collected related to specific trade programs, such as payments to wool manufacturers and 

the Continued Dumping and Subsidy Offset Act of 2000. CBP also manages surety bond documents, helping to secure trade revenue. 

Mitigating Revenue Risk 

To stop the circumvention of U.S. trade laws, CBP identifies high-risk areas and acts to enforce U.S. 

trade laws and collect revenue. CBP uses automated systems to evaluate entry reviews, perform 

post audits and examine cargos. CBP’s divisions on Antidumping and Countervailing Duties and 

Revenue provide referrals to CBP’s Regulatory Audit Division for investigation of noncompliance. If 

criminal activities are suspected, cases are referred to Homeland Security Investigations. 

CBP coordinates internally and with other government agencies to apply enforcement actions 

consistently. Events are uniformly recorded, results are integrated, and trade information is shared 

among partners. CBP provides field personnel with the knowledge, tools, and training to identify 

and address violations related to priority trade issues, including AD/CVD, Import Safety, Intellectual 

Property Rights, Textiles and Wearing Apparel, and Trade Agreements. CBP’s fines, penalties, and 

forfeitures officers and seized property specialists take enforcement actions to punish non-compliant importers and deter future non-compliance. 
Overview of CBP 

Management’s Discussion and Analysis 37 

Implementation of the National Annual Audit Plan 

The Office of International Trade’s Regulatory Audit (RA) conducts post-entry compliance audits of 

large multinational companies and audits of various entities active in importing merchandise into 

the United States. RA examines the records, accounts and internal controls of entities to ascertain 

the accuracy and potential liability for duties, fees and/or taxes due to the U.S. government. Each 

year RA develops a National Annual Audit Plan (NAAP) to respond to DHS and CBP priorities and to 

provide critical information to stakeholders. In FY 2013, the NAAP was developed to provide audit 

support for trade fraud, facilitation, enforcement initiatives, import safety, and trade partnerships. 

The NAAP incorporated Priority Trade issues including Antidumping/Countervailing Duties, Intellectual Property Rights, Import Safety, Trade Agreements and Textiles/Wearing Apparel. The NAAP also 

supported user fee collections and Partner Government Agencies. 

In FY 2013: 

• The NAAP was comprised of 679 assignments. There were 424 assignments completed and 266 

assignments were in progress. 

• Recommended revenue recoveries totaled $132.8 million. 

• Action officials accepted revenue recoveries totaled $185.9 million (included penalties and 

interest). 

• Collections totaled $89.4 million (included duties, fees, interest, and penalties, paid to the Federal 

government for current and prior audits.) 

Regulations and Rulings 

The Office of International Trade’s Regulations and Rulings (RR) provides legal guidance for CBP’s 

trade operations and much of CBP’s border operations. Through its administrative decisions and 

rulings role, RR provides binding uniform guidance for the application of customs and trade laws. By 

issuing final administrative decisions and advice on major penalty and other civil enforcement matters, RR ensures impartial law enforcement while facilitating trade. Providing and enforcing uniform 

guidance adds value to national security by placing all stakeholders on a level playing field and 

punishing violators of the law. In its regulatory development role, RR provides the legal and administrative framework for CBP’s trade and border security operations and programs. These legal tools 

streamline trade and CBP’s ability to protect the homeland. 
Overview of CBP 

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

Definition of Form I-94 to include electronic format 

On March 27, 2013, CBP published an interim final rule titled “Definition of Form I-94 to Include 

Electronic Format.” CBP issues the Form I-94 to certain aliens and uses the Form I-94 for various purposes such as documenting status in the United States, approved length of stay, and 

departure. CBP generally issues the Form I-94 to aliens at the time they lawfully enter the United 

States. The rule amended the DHS regulations (at title 8 of the Code of Federal Regulations) to 

add a new definition of the term “Form I-94,” which includes the collection of arrival/departure 

and admission or parole information by DHS, whether in paper or electronic format. The definition 

also clarified various terms that are associated with the use of the Form I-94 to accommodate 

an electronic version of the Form I-94. The rule also added a valid, unexpired nonimmigrant DHS 

admission or parole stamp in a foreign passport to the list of documents designated as evidence 

of alien registration. These revisions to the regulations will enable CBP to transition to an automated process whereby CBP will create a Form I-94 in an electronic format based on passenger, 

passport and visa information CBP currently obtains electronically from air and sea carriers and 

the Department of State as well as through the inspection process. Due in part to the substantial 

costs savings that will result when this rule is implemented, this interim final rule was a very high 

priority for CBP. 

Administrative Efficiency 

CBP meets the challenge of maximizing the agency’s resources, managing thousands of employees 

in hundreds of worldwide locations. The agency applies advanced technology and innovative processes to reduce costs and expand border security. These efficiencies add bottom-line value to U.S. 

prosperity and security. 

The Office of Administration 

The Office of Administration (OA) is responsible for all aspects of financial management including 

accounting, budget, financial systems, procurement, facilities and engineering, asset management, 

investment management, and oversight of all CBP financial operations. 

As the leader of stewardship for the agency’s resources, OA plays a critical role to ensure CBP 

is planning strategically and responsibly for the resources required to successfully execute the 

agency’s mission. This is especially imperative as the federal government continues to face relative 

austerity, requiring CBP to become more efficient and limit lower priority activities. 

OA partners with CBP mission support offices, the Department, and external public and private sector stakeholders to deliver sound, mission-enabling business solutions that ready CBP personnel to 

succeed at protecting the Homeland and fostering economic security. OA also administers processes, delivers services, and manages programs for: 
Overview of CBP 

Management’s Discussion and Analysis 39 

 

 

•	 CBP employee payroll payments, vendor payments, travel, and employee relocations; 

•	 Preparation and execution of the CBP budget, managerial cost accounting reports, and financial 

information and metrics; 

•	 Procurement of supplies, equipment, and services that enable CBP mission and oversight of all 

contractual agreements; 

•	 CBP’s core financial accounting and annual financial reporting programs; 

•	 CBP real property portfolio, vehicles, uniforms, and personal property assets; 

•	 Transportation services within the National Capital Region, a nationwide transportation incentive 

program, and parking; 

•	 National mail management, forms, and printing and graphics design; 

•	 CBP efficiency and business improvement initiatives; 

•	 Strategic alignment and performance of CBP mission operations and support programs and 

investments; and 

•	 Collection of $40.9 billion in revenue for the agency, Treasury, and other government agencies. 

Below are some examples of OA’s FY 2013 efforts to enhance mission performance: 

Achieved Financial Management Process Efficiencies 

•	 Designated a federal government shared service provider to DHS components for financial 

management services demonstrating CBP’s qualification as a center of excellence. 

•	 Improved the monitoring and management of a national overtime and premium pay by providing 

staff coverage at the ports to avoid increases in wait times. 

•	 Drove modernization of revenue systems and processes in support of Trade to enhance revenue 

collection internal controls. 

•	 Established a purchase request review process providing CBP with a strategic view and decision 

criteria for evaluating planned procurements resulting in cost savings. 

•	 Engaged in shifting to the use of contract types that are more advantageous to the government 

and posting summaries for key CBP procurements on CBP.gov. 

•	 Facilitated vendor outreach events to focus on small business opportunities, connecting industry 

with the government, and agile information technology. 

Strengthened Agency Planning, Performance, Risk and Accountability Practices 

• Integrated disparate resources plans to provide a deliberate and transparent linkage between 

payroll, spend, and budget plans, enabling CBP leaders to manage and report against a single, 

comprehensive view of their resource landscape, proactively target spending reductions and 

efficiencies, monitor payroll projections to avoid shortfalls to meet staffing mandates, and ensure 

strategic investment of resources to critical, high priority areas. 

•	 Developed a cost and performance model to evaluate frontline personnel hiring processes in a 

manner to inform resourcing decisions and investment prioritization. 
Overview of CBP 

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

•	 Developed a dashboard that allows for a comprehensive view of CBP’s financial statement audit 

findings and remediation performance to inform future corrective action planning and other risk 

management-related activities. 

•	 Received an ‘Achieves Excellence’ with special acknowledgement for contributions to the Chief 

Acquisition Officer Affordable Readiness iTeam, designed to allow DHS to do more with fewer 

taxpayer dollars through collaboration, integration, best practice adoption, innovation and 

leveraging successes. 

•	 Automated conference processing, approval and reporting processes for all of CBP through 

enhanced internal controls and policy development. 

Enhance Timeliness and Adaptability of Real and Personal Property Solutions 

•	 Achieved a space reduction in the CBP National Capital Region portfolio by implementing mobile 

work space, technology and policy that lowered energy and environmental resource usage, while 

reducing CBP operating costs. 

•	 Implemented innovative Land Port of Entry (LPOE) prototype designs allowing CBP to modernize 

more LPOEs than originally planned. 

•	 Redesigned the CBP Uniform Program, to increase quality, service and stewardship by 

strengthening internal controls, defining processes to perform data modeling and forecasting of 

uniform needs and establishing an inventory tracking system, uniform testing improvements, and 

a complete revision and streamlining of specifications. 

•	 Initiated the Personal Property Management Oversight Board (PPMOB) to adjudicate specific 

cases of high-risk asset losses to include root cause and trends analysis, and recommendation of 

corrective actions. 

The Office of Human Resources Management 

The Office of Human Resources Management (HRM) provides centralized human resources 

support to approximately 60,000 CBP employees nationwide and overseas. HRM services support 

leadership, the operational requirements of program offices, and the needs of CBP employees. 

HRM’s operational scope is broad and addresses challenges including: operating in a tight fiscal 

environment, competing for talent while maintaining congressionally mandated staffing levels, and 

delivering quality services with higher workloads. 

HRM delivers customer-centric support, services, and solutions responsive to changing mission 

requirements. HRM also delivers service by: 

•	 Recruiting, assessing, and hiring candidates to maintain a highly skilled, diverse, and missionready workforce; 

•	 Leveraging technology to improve human resources business processes and service delivery; 

•	 Providing medical, benefit, retirement, and work life advisory services; 

•	 Promoting a safe and healthy work environment; 
Overview of CBP 

Management’s Discussion and Analysis 41 

•	 Facilitating organizational effectiveness, including integration and reorganization efforts; 

•	 Administering and guiding implementation of human capital policies; and 

•	 Managing CBP’s labor and employee relations programs. 

Below are some examples of HRM’s FY 2013 efforts to enhance mission performance: 

•	 Modified the application and written test registration steps for frontline entry-level job 

announcements by introducing a pretest as part of the application process. Individuals gained a 

better understanding of the test content and difficulty before completing their application; CBP 

avoided testing costs for the large number of applicants who began but did not complete their 

application. 

•	 Partnered with the Offices of Internal Affairs and Chief Counsel to revise suitability questions in 

frontline entry-level job announcements. This allowed CBP to screen out unsuitable applicants 

early in the pre-employment process, reducing costs and focusing limited resources on the best 

applicants. 

•	 Implemented electronic collection and storage of applicant data, eliminating the need for paper 

systems. 

•	 Fully implemented USA Staffing Onboarding Manager at both hiring centers to benefit from OPM’s 

e-Gov initiative to reduce costs and improve services. 

•	 Expanded the use of popular technologies and social media, e.g., podcasts, webinars, LinkedIn, 

Facebook, Twitter and YouTube, to communicate information about CBP’s mission, career 

opportunities, and job openings. 

•	 Restructured the Workers Compensation Program to establish an overall strategic case 

management process to reduce chargeback costs and return CBP employees to work who are 

injured on duty. This included the adoption of Nurse Case Management services for cases 

beginning in FY 2014. 

HRM is improving customer service processes using Information Technology (IT) and Business 

Process Management, a flexible approach to design and implement process workflows. The Human 

Resources Business Engine (HRBE), a web-based workflow engine, supports HRM’s pre-employment 

processes in the Indianapolis and Minneapolis Hiring Centers. In FY 2013, HRM improved program 

efficiencies by implementing: 

•	 HRBE-Performance Management to automate the non-executive annual performance process; 

•	 HRBE-Voluntary Early Retirement Authority to project and track voluntary retirement eligibility; 

•	 HRBE-Internal Affairs Bi-Directional Feed to replace a mainframe system and gain efficiencies in 

the background investigation process; 

•	 HRBE-Employee Contact and Accountability Process for personnel notifications in case of 

disaster; and 

•	 HRBE-Personnel Action Request Tracking System, which replaces another mainframe system and 

will be deployed fully in FY 2014. 
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42 U.S. Customs and Border Protection • Performance and Accountability Report 

These enhancements offer cost savings and fully support CBP’s business transformation efforts for 

greater efficiency. 

Workforce Development 

The Office of Training and Development (OTD) is responsible for formal training and education 

programs for employees world-wide and for use of force, canine, and leadership development 

programs. With a training enterprise comprised of two training academies and three training centers, OTD delivers instructor-led classroom training as well as online training courses through CBP’s 

Virtual Learning Center. OTD ensures that all training efforts support the CBP mission and strategic 

goals and meets the needs of a diverse and dispersed workforce. OTD establishes standards and 

policies for designing, developing, delivering, and evaluating training. The Office directly executes 

career development programs, basic and advanced training to all occupations (e.g., anti-terrorism 

training to CBP Officers, Border Patrol Agents, and other occupations), and management and executive development programs. OTD develops and implements the annual training plan for the agency. 

OTD defines and implements evaluation measures, data collection processes, and inspection methods for ongoing assessment of all CBP training programs. OTD is responsible for the continuous 

improvement and expansion of CBP learning capabilities. 

Resource Optimization Strategy 

CBP’s integrated Resource Optimization Strategy for the Office of Field Operations has three main 

components (1) optimize current business processes, (2) accurately identify staffing requirements, 

and (3) explore alternative funding strategies to increase revenue sources supporting staffing. 

To ensure business process efficiency, the first component of the strategy contains a series of 

business transformation initiatives. These involve reassessing core processes, incorporating technology and business process enhancements, assessing law enforcement staffing, and developing 

automation. 

CBP’s Workload Staffing Model (WSM) is the tool at the core of the second component—accurately 

informing staffing decisions at air, land and seaports. The WSM uses a data-driven methodology 

to identify staffing requirements. The WSM accounts for all business processes required of CBP 

officers and the time required to complete those processes. The WSM identifies the personnel 

necessary to accomplish the CBP mission and estimates future staffing requirements for new or 

enhanced facilities, technology deployments, and growth in trade and travel. 

The final component of the strategy is exploring alternative funding to increase revenue to support staffing. DHS is pursuing several legislative proposals as alternative funding options for future 

staffing needs. These proposals include (1) increasing traveler fees, (2) maintaining authority to be 

reimbursed by stakeholders for new or expanded services and (3) investing in modernization initiatives such as mobile technology and kiosks for travelers at airports and land border ports of entry. 
Overview of CBP 

Management’s Discussion and Analysis 43 

Information and Technology 

CBP’s network infrastructure and data center capabilities are the information and technology backbone of CBP systems, which ensure delivery of critical information. The IT systems provide effective 

information sharing among trade and law enforcement agencies. CBP’s IT infrastructure serves a 

wide variety of government agencies focused on protecting the American people. 

The IT systems assist CBP frontline officers and agents in identifying potential threats, including terrorists, weapons of mass destruction and bioterrorism. IT also supports trade law enforcement and 

tax and tariff collection. The CBP IT infrastructure enables the agency to continually improve the 

movement of low-risk cargo, vehicles and people over the border. 

CBP’s IT systems process millions of international visitors to the U.S. every day. The processing of 

cargo and passengers, as well as the collection of fees, duties, and tariffs, results in high message 

and database traffic with partner agencies, passenger carriers, cargo brokers, trade representatives, and airlines. CBP’s rate of online database queries is among the highest in the world. Sustaining these capabilities requires a robust IT infrastructure and operations and maintenance strategy 

that responds to daily challenges. 

In addition, the Office of Information and Technology (OIT) is focusing on the future. Technology such 

as social media and cloud computing are rapidly changing the IT landscape. In response to the scope 

of threats and budget constraints, CBP is improving business processes and updating service delivery. 

To address the required technology changes, OIT has been reviewing technology capabilities and 

updating processes. OIT has started to simplify production applications and shift applications to 

DHS data centers. These efforts will continue through FY 2014, provided funding is made available 

from the DHS Chief Information Officer’s budget. 

Tactical Communications Modernization 

The Tactical Communications (TACCOM) is a modernization effort. TACCOM focuses on upgrading 

aging infrastructure from analog to digital, expanding coverage and capacity, and providing Advanced Encryption Standard protection to law enforcement sensitive communication in three areas: 

Houlton, Maine; Rio Grande Valley, along the Gulf Coast of Texas and El Paso, western Texas (both 

of which became operational in FY 2013), and New Mexico. 

TACCOM is conducting a Digital-in-Place as a capstone project. Its goal is to set the baseline configuration and to replace/upgrade existing land mobile radio analog equipment with Project 25/ 

Advanced Encryption Standard digital equipment. 

Next Generation TACCOM, known as TacNet, will analyze the potential for mission-grade broadband 

wireless service; leverage commercial or public safety networks; and provide broadband voice, 

video, and data at reduced per-user cost. The TACCOM Acquisition Program received Acquisition 

Decision Event 1 approval from DHS on March 31, 2011 to pursue this program. 
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44 U.S. Customs and Border Protection • Performance and Accountability Report 

Laboratories and Scientific Services 

Laboratories and Scientific Services (LSS), the scientific arm of the Office of Information and Technology, provides technical support on trade, weapons 

of mass destruction, and forensic issues. LSS field 

personnel support trade enforcement by analyzing 

samples of imported commodities for classification 

and admissibility, offering Intellectual Property Rights 

(IPR) evaluation and support, and providing scientific 

advice on anti-dumping and countervailing duties. 

Samples are analyzed both in the laboratory and at 

the ports of entry in mobile laboratories. The labs 

are equipped with high tech analytical scientific instrumentation. As a result of LSS trade enforcement 

analysis, CBP collects millions of dollars in additional 

duties and penalties. LSS IPR support gives the agency the legal basis to interdict and seize counterfeit merchandise, including counterfeit pharmaceuticals and electronics. 

CBP agriculture officer inspects pest. 

CBP forensics services support multiple law enforcement agencies with fingerprint identification, digital 

forensics, audio/video enhancement and duplication, crime scene processing, and controlled substances analysis. The forensics program supports prosecution of border violators, such as human traffickers. Through fingerprint analysis, new suspects may be linked to criminal events. The DNA program 

helps prosecutions related to the smuggling of endangered animal species and protected plant life. 

LSS operates a Tele-forensic Center that provides field personnel with scientific resources to resolve 

threats related to chemical, biological, radiological or nuclear materials. The center’s resources 

facilitate the smooth flow of container traffic over the border. Field scientists have also been trained 

to use sophisticated scientific instruments to detect weapons of mass destruction materials. These 

mobile laboratory instruments support the ports of entry. 

The general engineers, physical scientists, and project managers in the Interdiction Technology 

Branch ensure that field personnel have the best enforcement equipment and expertise available. 

As DHS and other organizations conduct multiple research and development projects for next generation equipment, this branch assesses the readiness of equipment proposed for field validation 

and deployment. It also tests factory acceptance, certifies installation of new enforcement equipment and tests tunnel detection equipment along the southern U.S. border. 

TECS Modernization 

TECS is a key border enforcement system supporting the inspection of travelers entering the U.S. 

and vetting inquiries of other federal agencies. The TECS modernization program primarily focuses 

on updating server infrastructure, databases, and user interfaces that sustain and improve current 

screening capabilities. 
Overview of CBP 

Management’s Discussion and Analysis 45 

The general TECS modernization objective is to establish a foundation that readily accepts new technology in response to new threats and mission requirements. This will transition TECS from mainframe 

technology to the CBP enterprise architecture. The modernization will improve search capability using 

linguistic searches and create a service-oriented architecture. Results include improved interoperability through user interfacing applications, standardized query processing, and transition system-tosystem interfaces with external data sources. The user interfaces will be Web based, user friendly and 

more intuitive, prepopulating data where possible to minimize reentry of information. 

Automated Commercial Environment 

CBP‘s Automated Commercial Environment (ACE) program has shifted to an Agile development 

methodology and is planning to complete core ACE processing capabilities by FY 2016. The core 

features will include full Cargo Release, Export, e-Manifest: Air, and Entry Summary, and will implement remaining system improvements. CBP tested Agile software development methodology during 

a pilot in FY 2013. 

In June 2013, DHS approved a revised program baseline for the completion of ACE by the end of 

calendar year 2016. 

International Trade Data System 

CBP’s International Trade Data System (ITDS) will provide all parties involved in trade and transport 

with a single entry point to fulfill all import, export, and transit-related regulatory requirements. ACE 

provides the single window to facilitate the exchange of information to improve business operations 

and trade. ITDS requirements are incorporated with ACE requirements. 

A cross-functional CBP team works with ITDS to integrate partner government agencies with ACE. 

The team will first address those ITDS agencies that impact the import/export process at the border. CBP is working with partner agencies to identify the technical solutions that best support their 

mission objectives. 

CBP is pursuing three projects as key deliverables in the Beyond the Border Action Plan Single Window Initiative: 

•	 Measure 1: In FY 2013 CBP developed the infrastructure to capture and store the partner 

government agencies’ specific trade data in conjunction with ACE Entry Summary or ACE Simplified 

Entry (SE). 

•	 Measure 2: The trade community can submit electronic image files of documents related to ACE 

Entry Summaries through the Digital Imaging System, including export manifests. The 

Environmental Protection Agency is piloting a program to test this capability. 

•	 Measure 3: CBP developed technical standards to allow other agencies to receive trade data 

automatically and implemented the new interface with CPSC and the FSIS. 
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46 U.S. Customs and Border Protection • Performance and Accountability Report 

CBP Achievements with ACE and ITDS Include: 

ACE e-Manifest: Rail and Sea 

•	 Decommissioned the old Automated Manifest System for rail and sea, making ACE the only CBPapproved electronic data interchange for transmitting rail and sea manifests and related 

Automated Broker Interface in-bonds. 

Cargo Release 

•	 Cargo Release pilot program streamlines the data required to release cargo, eliminating the 

current document (CBP Form 3461) for those transactions. 

•	 In October 2012, the Cargo Release/SE pilot was expanded to new trade participants. Phase 1, for 

the air mode of transportation is operational at 16 major airports. As of June 2013, more than 

159,000 Simplified Entries were filed for more than 1,100 importers. 

•	 CBP has completed the first stage for Cargo Release Entry Corrections/Cancellations, which 

automated the receipt, review and processing of entry correction/cancellation requests. This 

feature will expand the Cargo Release/SE pilot. 

•	 Agile developments will expand the capabilities of the Cargo Release/SE pilot by 1) connecting 

the partner government agency message set to SE to enhance automated data sharing and 2) 

implementing entry corrections/cancellations for Simplified Entries, which will allow CBP to 

electronically process corrections/cancellations transmitted by trade users. 

Exports 

CBP is developing a single processing platform for all export manifest and commodity transactions 

through ACE. This effort keeps with the President’s National Export Initiative and the Export Control 

Reform Initiative. Plans call for the development of an automated export manifest system for all 

transportation modes to be coordinated with the Census Bureau and other government agencies 

involved in export licensing and commodity transactions. 

CBP is using agile development methods to move the legacy Automated Export System from the 

mainframe and create a single automated export processing platform for export manifest, commodity and export control, and licensing transactions. 

Also underway is an interim export manifest pilot using the Digital Imaging System: 

•	 The pilot allows for emailed submission and automated processing of Export Manifests in the 

previously paper-based ocean mode of transportation; 

•	 CBP is receiving a near 100 percent success rate for export manifests submitted as part of this 

pilot, which is open to all seaports and ocean carriers. 
Overview of CBP 

Management’s Discussion and Analysis 47 

 

 

ITDS Initiatives 

These three key ITDS initiatives automate and enhance interaction between international trade 

partners, CBP and partner government agencies by facilitating electronic collection, processing, 

sharing, and review of required import and export trade data and documents. The initiatives will 

increase efficiency and reduce costs. 

•	 Partner Government Agency Message Set 

This capability introduces a harmonized set of data for electronic collection from international traders. 

It will replace the paper forms currently submitted by the trade community during cargo importation. 

The Message Set will be piloted with two agencies. The first phase of the pilot will include: 

•	 Meat, poultry, and egg product entry data for FSIS; and 

•	 Notice of arrival for ozone-depleting substances, vehicles and engines for EPA 

In May 2013, CBP integrated the message set with the Entry Summary. The next phase will integrate the message set with the ACE Entry Summary and EPA and FSIS requirements. 

•	 Interfaces/ Interoperability Web Services (IWS) 

IWS automates CBP’s sharing of information, documents, and events of interest with partner government agencies. It allows CBP’s and others’ systems to communicate, giving greater access to 

needed data and increasing interagency collaboration. 

•	 FSIS, Consumer Product Safety Commission, Agricultural Marketing Service, and the Coast Guard 

are receiving automated production manifest, entry, and/or entry summary data directly from CBP. 

In the third quarter of FY 2013, CBP transitioned 11 additional agencies into the interoperability 

environment. 

Document Image System 

Document Image System (DIS) allows trade members to electronically supply documentation needed during the cargo release and entry summary processes to CBP and other federal agencies. 

Entry Summary 

Nearly 99 percent of all entry summaries (formal, informal, and antidumping/countervailing duty) 

are eligible to be filed in ACE. In FY 2013, the number of eligible entry summaries filed in ACE continued to grow, from 18 to 26 percent. 

In May 2013, CBP developed the ability to check the quality of incoming entry summary data as 

part of the Agile pilot. Increment 1 work began with Harbor Maintenance Fee validations. CBP has 

developed a business rules engine that enables development teams to more easily capture, update, 

and maintain the business rules for validations. Developing the remaining system edits or checks 

that validate the accuracy of the data being submitted is critical. 
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48 U.S. Customs and Border Protection • Performance and Accountability Report 

As development progresses and CBP gains more experience with Agile development, increasingly 

complex validations will be added. The second development increment will focus on coding validations related to classification. 

Strategic Air and Marine Plan 

As the Strategic Air and Marine Plan enters its final two years, the progress to date remains remarkable. CBP has successfully merged the two independent legacy air and marine organizations into a 

single, highly-effective national service; redeployed its assets and resources to meet the challenges 

of its homeland security missions; replaced or recapitalized many of its aging aircraft and marine 

vessels; introduced high-end UAS that provide unparalleled air surveillance capabilities; and obtained new sensors that provide capabilities not imagined just four years ago. 

To date, CBP has purchased 20 EC-120 helicopters, which are used primarily in the Southwest 

border region to track ground signs, and AS-350 A-Stars, which are equipped with day/night infrared cameras. CBP has acquired seven DHC-8 medium-range patrol aircraft, and all are in operation. 

They are equipped with SeaVue maritime radars, day/night infrared cameras, and the capability to 

support eight-hour missions. Because this type of aircraft is no longer manufactured, CBP shifted to 

the Multi-role Enforcement Aircraft (MEA). The first four twin-engine MEAs, which were replacements 

for 26 aging C-12, PA-42, and B-200 type aircraft, have been delivered. 

From FY 2008 and into FY 2012, Congress provided funding for 11 new marine units, 197 new 

marine agents, and 101 new marine vessels, including 63 new interceptors of all types. In late FY 

2008, CBP acquired an Advanced Concept Technology Demonstration vessel, which enabled OAM 

to define its requirements for a highly capable replacement for the slower, aging Midnight Express 

Coastal Interceptor Vessels (CIVs), which are undergoing service life extension (see next section in 

Administrative Efficiency). 

OAM also acquired 172 new and used vessels (this number reflects the merging of Border Patrol 

and OAM assets), including 32 coastal and SAFE Boat interceptors, 12 coastal enforcement vessels, 12 airboats, and 114 riverine vessels of various types, mainly through the transfer of used 

SAFE Boat and other riverine craft from the Coast Guard. Over the same period, OAM retired 87 

aged and unserviceable vessels, mainly through the General Services Administration sales/exchange program that enabled the funds obtained to be reinvested in new boats and equipment, 

thus reducing the need for appropriated funds. As of this update, CBP has gained the equivalent of 

more than $22.7 million in acquisition cost avoidance through these efforts, and has returned 76 

used vessels to service. 

Only two marine vessel procurements remain to be completed for the marine program to achieve its 

original objectives. The new CIV contract was awarded in early FY 2012, and is currently funded to 

provide 17 new vessels, the first production prototypes were delivered in September 2012. The contract for the new Riverine Shallow Draft Vessel (RSDV) was awarded in late FY 2011, and is funded 

to provide up to 31 vessels. 
Overview of CBP 

Management’s Discussion and Analysis 49 

Service Life Extension Plan for Midnight Express Coastal Interceptor Vessels 

CBP is also pursuing a service life extension for its current fleet of Midnight Express CIVs to cover 

operational needs until the new class of CIVs is delivered. The upgrades include the replacement 

of the vessel transom and molded fuel tank, extending the life of each vessel by five to seven years. 

The work is conducted at the CBP National Marine Center in St. Augustine, Florida, and is funded 

through the General Services Administration sales/exchange program. As of September 30, 2013, 

work on 10 vessels has been completed and more vessels could be upgraded until the new interceptors are received and deployed. 

Black Hawk A to L Conversion Program 

Started in 2008, the Black Hawk A to L conversion program is also a service life extension effort to 

extend the lives of 16 helicopters another 15 to 18 years and to reduce annual maintenance costs 

by as much as 37 percent (U.S. Army projections). The overhaul of a Black Hawk involves completely 

breaking down the aircraft and rebuilding it as new. On average, rebuilds take nearly two years and 

cost between $16 million and $18 million per aircraft, depending on the condition of the helicopter 

and flight history. 

Two UH-60A model helicopters have been converted to “L” models. Two more UH-60A helicopters 

are currently undergoing “L” conversion at the Corpus Christi Army Depot. At current rates, all of the 

16 UH-60A helicopters should be upgraded to “L” models by FY 2025. 

P-3 Re-winging 

Despite the success of OAM P-3s in the Source and Transit Zones, every P-3 airframe in the fleet is 

more than 40 years old and experiencing fatigue. OAM initiated an innovative two-step Service Life 

Extension Program (SLEP), with the following objectives: 

• Extend P-3 airframe life by 15,000 hours (18 to 20 years of additional service) 

• Upgrade aircraft material condition 

• Improve aircraft safety, reliability, maintainability, and operational availability 

The P-3 SLEP is a 10-year, $420 million effort entering its eighth year of execution. Designed to be 

completed in two phases, it is on-cost and ahead of schedule. The first phase involved special structural inspections and repairs designed to keep some of the 16 aircraft flying while all new wing and 

tail assemblies were purchased to enable safe operations for another 18 to 20 years. 

This effort is expected to see 14 of the 16 aircraft returned to flight for an average cost of $28 million per aircraft, which is highly cost effective because a new aircraft with the same capabilities as 

the P-3 cannot now be purchased for under $279 million per copy. To date, approximately $369 

million has been invested in SLEP. Eight aircraft have been completed, with the 14th aircraft due for 

return to operations by the middle of FY 2016. 
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50 U.S. Customs and Border Protection • Performance and Accountability Report 

Radar and Sensor Upgrades 

OAM is working to install day/night infrared cameras and large screen monitors on C-206 single-engine patrol aircraft to expand their capability, to support ground interdiction missions at night. OAM 

is also considering a demonstration of new, compact electronic sensors that can provide broad area 

search capabilities to small single- and twin-engine aircraft, greatly increasing the area that can be 

covered by aircraft currently available on the borders. 

Coincident with the SLEP, OAM pursued two key sensor upgrades. The first upgrade involved installing SeaVue broad area maritime search radars on the long-range trackers, while the second upgrade installed electro-optical/infrared sensors on some of the P-3 aircraft. The combined result of 

the installations freed the two types of P-3 aircraft to operate independently, increasing the ocean 

area that can be covered by the combined P-3 wing. In addition, OAM is installing the OSI target 

sorting and collection software on the P-3 that already deployed on the Guardian UAS and DHC-8 

aircraft. This will enable faster target classification and sorting, as well as the hand-off of targeting 

information between aircraft arriving and leaving a patrol zone. OAM is also testing a Ku-Band satellite downlink capability as part of a long-term effort to link high-patrol assets. 

The most important enhancement to the UAS Program has been the introduction of the Vehicle and 

Dismounted Exploitation Radar (VADER). VADER is a strategic intelligence sensor that also provides 

comprehensive situational awareness for an expanded target area. Since VADER was made operational in February 2012, OAM has used the Predator B UAS as the persistent surveillance platform 

for VADER operations. VADER operations have focused on the West Desert area of the Arizona (AZ) 

Joint Field Command (JFC) Area of Responsibility (AOR). VADER provides detection, identification, 

classification and tracking capability to the JFC-AZ AOR to increase the likelihood of interdiction. The 

culmination of both a Wide Area Aerial Surveillance and operational capability enables CBP to better coordinate tactical operations, operational planning, and to identify and mitigate potential gaps 

in border security. 

OAM and the Office of Information and Technology have developed BigPipe, a cross-domain network, infrastructure, and system that distributes operational mission data to federal, state, and 

local law enforcement customers. This system allows stakeholders to view real-time mission data 

and to make critical decisions during the detection, tracking, and interdiction phases of operations. 

BigPipe offers situational awareness and fidelity in combating threats, capabilities previously unrealized from the command and control arena. The data BigPipe makes available consist of wide-area 

or narrow-focused electro-optical/infrared imaging of maritime and ground targets, along with mapping information of the target area. BigPipe allows registered users in any approved location with 

access to the Internet to display a mission or video file that they have been authorized to view. 

Safety and Standardization 

OAM has developed and instituted a Crew Resource Management (CRM) policy, which began in the 

third quarter of FY 2011, requiring all OAM pilots and aircrew members to attend eight hours of 

CRM training. CRM is the a dynamic decision-making process that continually optimizes all available 

resources—people, equipment, capabilities, and procedures—to safely, efficiently, and effectively 
Overview of CBP 

Management’s Discussion and Analysis 51 

 

complete OAM operations. It encourages input from all crewmembers to establish a logical conclusion to a particular event or circumstance. Follow-on training for the CRM program will be conducted 

on an annual basis via the Virtual Learning Center with practical application being evaluated. The 

CRM curriculum has been incorporated for all new OAM employees. 

Spanish Language Training Program 

Since its inception in 2005, OAM had been without a Spanish language training course that incorporated the specific vocabulary and scenarios to complement its mission set. The estimated cost to 

develop a Spanish course was $1.8 million. Due to lack of funding, the contract was not awarded. 

The Air and Marine Basic Spanish Training Program (AMBSTP) used the existing foundation and 

formalized syllabus that had undergone the scrutiny of accreditation. AMBSTP took an OFO fourweek Spanish training shell and combined it with the current OFO six-week course, exchanging OFO 

scenarios with applicable OAM scenarios and vocabulary. OAM ran its first AMBSTP pilot in March 

2012. After revisions to the curriculum, the second pilot was held in January 2013. After the successful completion of the second pilot, OTD certified AMBSTP in March 2013. The inaugural class 

completed the first certified Spanish program in July 2013. 

Tactical/Technical Command (TTC) Program 

The TTC program gives first-line OAM supervisors tools to better perform their job functions. The 

curriculum includes an in-depth look at situational leadership, supervisory duties, risk assessment, 

supervisory operational reporting requirements, and other agency specific supervisory tasks. OAM’s 

TTC course received high marks in participant course critiques. The first certified course was completed in December 2012, with an additional class completed in March 2013. With certification, the 

course is now funded under the National Training Plan. Future scheduling will allow OAM supervisors to complete supervisor leadership training and begin the TTC course the following week, saving 

travel costs. 

Improved Basic Training 

In cooperation with CBP’s Field Operations Academy, OAM streamlined delivery of all basic training 

requirements. Previous deficiencies and/or gaps in basic training required several additional postacademy courses. This created a large backlog of students for these mandatory courses. Additional 

scheduled trainings led to increased travel costs of approximately $58,000 per academy class, as 

well as generating breaks in a student’s operational deployment, as basic training was stopped and 

started over periods as long as four years. 

The streamlined delivery includes these additional courses in the basic class. All training was 

moved to the East Coast, using ground transportation to decrease travel costs. Academy graduates 

now return to their duty stations with all mandatory basic training satisfied, allowing local management to focus on advanced operational training without interruption. 
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52 U.S. Customs and Border Protection • Performance and Accountability Report 

Improved Accident Investigation Techniques 

In August 2012, the OAM Training, Safety, and Standards directorate provided Human Factors 

Analysis and Classification System (HFACS) training for all safety officers and accident investigators. 

The directorate continues to work with these field staff as accident and incident investigative procedures are fine tuned. 

Using the new model in FY 2013, OAM’s Safety Program is now reaching deeper into each humanfactor-related incident, moving from the operator up through the entire system/organization. HFACS 

provides a more systematic and objective approach to cataloging human-factor mishaps. The HFACS 

matrix goes beyond pilot/operator error to look at the entire system (to include technical, environmental, management, and organizational issues) to identify a more complete array of contributing 

factors that lead to the mishap by identifying latent conditions, before they lead to actual failures. 

Through incorporating the HFACS methodology and tracking its results, OAM is better equipped to 

transition from a reactive safety program to a proactive program. This approach to mishap investigations is part of a comprehensive safety program to identify potential hazards and countermeasures 

to prevent the recurrence of mishaps. 

Looking Ahead 

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

secure America’s borders and the vitality of the United States economy. 

CBP will continue to integrate state-of-the-art technologies and traditional security infrastructures 

at United States POEs and along the Nation’s borders and to work in collaboration and partnership 

with the trade community and foreign governments to secure the United States against terrorists 

and terrorist weapons while facilitating world commerce. 
CBP Organization

Overview of CBP

Overview of CBP
 

CBP Organization
 

Management’s Discussion and Analysis 53 
Overview of CBP 

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

Headquarters 

Office of the Commissioner: The Commissioner is responsible for securing, managing, and controlling the Nation’s borders by advancing CBP’s priority mission of preventing terrorists and terrorist 

weapons from entering the United States while facilitating legitimate trade and travel. 

Deputy Commissioner: The Deputy Commissioner is responsible for providing leadership and 

executive-level direction to CBP’s day-to-day operations, including oversight of agency initiatives that 

facilitate the international movement of legitimate, low-risk goods and travelers, while promoting 

effective border security. 

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

the Office of the Commissioner in formulating and implementing policies through coordination with 

other CBP office components, DHS, and Other Government Agencies (OGA). The COS provides advice and counsel to the Commissioner in defining priorities to accomplish CBP mission and goals. 

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 Agency and is the principal 

legal advisor to the Commissioner of CBP. OCC provides legal advice to and legal representation of 

CBP officers in matters relating to the activities and functions of CBP. 

Office of Program Development (OPD): Is responsible for transitioning CBP from a budget-centric 

process to a planning and programming process that is driven by goals and objectives. OPD was 

established in FY 2011 and is responsible for integrating and executing the Planning, Programming, 

Budgeting, and Accountability (PPBA) process within CBP. This includes: establishing repeatable 

processes and structures; establishing priorities and capabilities required to achieve a strategy; 

making informed; cross-cutting operational and resource decisions consistent with DHS and Commissioner priorities and goals; increasing transparency through more detailed; focused budget; and 

performing and monitoring the achievement of goals and the spending of plans. 

Office of Strategic Integration (OSI): Is responsible for facilitating the development of a mature 

strategic integration culture across CBP and all its stakeholders, both internal and external. OSI was 

established in FY 2011 and is responsible for managing the integration of the CBP portfolio of strategies, ensuring the maximization of value, balance in approach, alignment to business strategy, and 

balance in resource requirements. 

Privacy and Diversity Office (PDO): Is responsible for developing and administering all CBP programs and activities necessary to ensure compliance with the Federal anti-discrimination laws, 

regulations and policies, and civil rights and civil liberties requirements necessary to facilitate lawful individual travel and trade across the United States borders, while ensuring national security and 

economic prosperity. PDO implements initiatives that sustain, retain, and advance a highly qualified 

ethical workforce that attracts the most qualified candidates that America has to offer. In addition, 

PDO ensures that CBP is a progressive champion of diversity and inclusion by providing activities 

and programs that celebrate and honor all individuals. 
Overview of CBP 

Management’s Discussion and Analysis 55 

Office of State, Local, and Tribal Liaison (SLT): Advises the Commissioner, Deputy Commissioner, 

and program offices regarding the impact of CBP policies and initiatives on state and local stakeholders. SLT also acts as the primary conduit for information to, and guidance from, the DHS Office 

of Intergovernmental Affairs. SLT informs state and local stakeholders of current and proposed CBP 

programs, assists these stakeholders in addressing concerns with CBP programs, and assist in 

building and maintaining partnerships between CBP and state and local governments. 

Office of Policy and Planning (OPP): Directly supports the Commissioner and his principal staff 

officers through deliberate and rapid planning processes to fully inform and influence CBP policies, 

strategies, integrated planning, and decision support. OPP works closely with the Commissioner, 

CBP leadership, homeland security partners and stakeholders in defining and advancing the Agency 

priorities through the development, review, and implementation of key policy and planning initiatives. The OPP staff is responsible for facilitating and coordinating strategic, operational, and institutional planning functions of the Agency and for integrating processes in support of the CBP governance framework. OPP promotes analytic rigor, strategic foresight, and integrated risk management 

to empower CBP leadership to make the best informed decisions for safety, security, and prosperity. 

Office of Trade Relations (OTR): Is responsible for managing CBP’s outreach and communications with the international trade community. OTR ensures that the trade community and the public 

understand that trade is an integral part of CBP’s mission to make America safer, stronger, more 

prosperous, and economically competitive. OTR’s mission is to continually improve relations between CBP and the trade community, by enhancing collaboration, and cooperation and by informing 

decision-making at all levels including operational, legislative, and political. OTR is also responsible 

for organizing and presenting formal CBP outreach efforts to the trade community, including CBP’s 

annual Trade Symposiums, monthly trade day meetings, trade roundtable meetings, and webinars. 

OTR manages the Advisory Committee on Commercial Operations of U.S. Customs and Border Protection (COAC), a congressionally mandated trade advisory group. OTR is the designated regulatory 

fairness representative for the agency with responsibility for promoting compliance with the Small 

Business Regulatory Enforcement Fairness Act (SBREFA). 

Office of Executive Secretariat (OES): Is responsible for ensuring appropriate and expeditious action on all requests for information, executive correspondence, and official memoranda addressed 

to the Commissioner and other CBP and DHS senior officials. OES provides direct support to the 

Commissioner and Deputy Commissioner, as well as related support to leadership and management across the agency. 
Overview of CBP 

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

Component Organizations and Field Structure 

CBP is organized into 14 separate offices, each of which report directly to the Commissioner. The 

mission of each office is described briefly below: 

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 their weapons 

from entering the United States at the Ports of Entry (POE). OFO maintains programs at 20 field 

operation offices; 328 POEs; 15 pre-clearance stations in Canada, the Caribbean, and Ireland; and 

58 CSI ports worldwide. A Director of Field Operations heads each field office, and 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 Border Patrol (OBP): Serves as the CBP law enforcement organization with the primary 

responsibility of 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 Air and Marine (OAM): Protects the American people and critical infrastructure through 

the coordinated use of integrated air and marine forces. These forces 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. OAM’s core competencies include air and marine interdiction, air and marine law enforcement, and national border domain security. OAM further supports DHS missions such as the response and recovery to natural disasters and terrorism. 

Office of Intelligence and Investigative Liaison (OIIL): Develops, coordinates, and implements 

intelligence capabilities to support the execution of CBP’s mission to secure America’s borders 

while facilitating legitimate trade and travel. OIIL serves as a coordinating facilitator that integrates 

CBP’s diverse intelligence capabilities into a single cohesive intelligence enterprise. OIIL supports 

CBP’s mission through a multi-layered approach, which includes collection and analysis of advance 

traveler and cargo information, use of enhanced law enforcement technical collection capabilities, 

delivery of timely analysis of intelligence and information, and establishment of intelligence-sharing 

relationships with Federal, state, local, and tribal agencies and intelligence agencies. 

Office of International Affairs (INA): Coordinates and supports CBP’s foreign initiatives, programs, 

and activities. To support CBP’s mission, INA establishes essential partnerships with US government 

agencies, foreign administrations, and international organizations. Through its 22 Attaché and 5 Advisory office locations, INA coordinates CBP’s international engagement efforts by implementing programs and initiatives that promote border enforcement best practices and capacity building globally. 

Office of International Trade (OT): Provides unified strategic direction for trade policy and program development. OT directs national enforcement responses and takes punitive actions against 

companies participating in predatory trade practices, including textile transshipment and intellectual property rights infringement. OT directs CBP risk-based investigation detection and prevention 
Overview of CBP 

Management’s Discussion and Analysis 57 

programs designed to identify the importation of contaminated agricultural products and goods 

that present health or safety risk, and products requiring protection from unfair trade practices. OT 

streamlines the flow of legitimate shipments and fosters corporate self-governance to achieve compliance with trade laws, regulations, and international trade agreements. Finally, OT provides the 

legal tools to promote facilitation and compliance with customs, trade, and border security requirements by issuing CBP regulations, binding rulings and decisions, compliance publications, and by 

offering training and outreach on trade laws and regulations. 

Office of Congressional Affairs (OCA): Coordinates all CBP congressional and legislative activities 

to ensure that the full range of policy, operational, technical, and programmatic aspects are appropriately considered. These functions and activities include work performed in the congressional 

arena, relationships with Members of Congress and their staffs, and requests for information, briefings, meetings, hearings, tours, or other forms of assistance received from Congress. 

Office of Administration (OA) and Chief Financial Officer (CFO): Oversees all financial operations, procurement, asset management, and budget activities within CBP. OA is responsible for administering $12.9 billion, that is budgeted annually for law enforcement and trade operations, and 

processing collections of $40.9 billion in custodial and entity revenue annually. OA 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): Manages a centralized human resources 

program for all CBP employees nationwide and overseas. HRM supervises all matters involving human resources, including organizational structure, staffing, compensation administration, benefits, 

workplace safety, personnel actions, labor relations, and employee relations. HRM also assists 

employees by providing recruitment services, retention support, benefits information, and employee 

health and wellness programs. 

Office of Information and Technology (OIT) and Chief Information Officer (CIO): Provides CBP 

with information, services, and technology solutions to secure the border; prevents the entry of terrorists or terrorist weapons; and facilitates legitimate trade and travel. In addition, OIT operates a 

worldwide, round-the-clock secure, stable, and high-performance IT infrastructure, while supporting 

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 IT Security (cyber security) Program. OIT establishes the technical requirements for system interfaces between CBP and various trade groups and 

Government agencies and manages matters related to automated import processing and systems 

development. 

Office of Internal Affairs (IA): Serves as the designated Office of Security for CBP and manages a 

wide range of investigative and security functions and programs, including applicant and employee 

background investigations and clearances; employee integrity and misconduct investigations; credibility assessments including polygraph examination; operational field testing; integrity awareness 

and corruption detection; deterrence and prevention of internal corruption; physical, informational, 
58 U.S. Customs and Border Protection • Performance and Accountability Report 

Overview of CBP
 

operational, industrial and internal security; management inspections; audit liaison; and cyber security counter intelligence policies, instructions, procedures, control systems, networks and methods. 

IA’s mission promotes the integrity and security of the CBP workforce. 

Office of Public Affairs (OPA): Communicates CBP’s mission and operations to the agency’s chief 

stakeholders, which includes 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. 

CBP maintains a public website at (www.cbp.gov) and a national customer service call center, CBP 

INFO 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 Technology Innovation and Acquisition (OTIA): Ensures that all of CBP’s applied technology efforts are properly focused on the mission and are well integrated across the agency. In 

addition, OTIA is charged with strengthening CBP’s expertise and effectiveness in acquisition and 

program management of contractor-delivered products and services. This office is headed by an Assistant Commissioner, who also serves as CBP’s Component Acquisition Executive (CAE), providing 

oversight to all CBP acquisition programs to ensure they are managed in compliance with DHS and 

CBP regulations and policies. 

Office of Training and Development (OTD): Provides centralized leadership and direction to all 

CBP training programs for the entire workforce. OTD ensures that all training supports the CBP mission and strategic goals and that the workforce is prepared to meet the challenges faced in the performance of mission critical operations by establishing CBP training standards and policies; leading 

the development, delivery and evaluation of training; and procuring the necessary tools. 
Overview of CBP 

Management’s Discussion and Analysis 59 

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Overview of CBP
 

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

Management’s Discussion and Analysis 61 
In FY 2011, the Commissioner issued CBP’s Missions, Goals, and Priorities, FY 2011–2013, a document that articulates the missions, goals, objectives, and priority initiatives for the Agency. The document was designed to shape 

planning and policy development for CBP’s offices, to guide resource allocation, and to direct the focus and efforts 

of senior executives.

CBP’s Performance Management Framework (PMF) provides CBP with performance management and oversight 

capabilities that improve the efficiency and effectiveness of CBP programs, initiatives, and operations through 

improved measurement, analysis, and reporting. The PMF was designed to meet statutory reporting and budgeting 

requirements established by the Office of Management and Budget, the Government Performance and Results Act 

(GPRA) of 1993, and the GPRA Modernization Act of 2010. The PMF also supports management decision-making 

processes associated with Agency-wide strategic planning, requirements determination, and resource allocation 

through the use of performance information in the execution of the annual budget.

The associated CBP Performance Measurement Hierarchy contains five levels of performance measures: long-term, 

strategic, management, operational, and investment measures. The Hierarchy sets the foundation for performance 

measure presentation and reporting through a variety of formats and methods tailored to the decision-making 

processes that the Hierarchy is intended to serve.

Long-term level measures are those that cross multiple fiscal years and are not tied to an annual budget. Strategic 

level measures are used to manage and report accomplishments of CBP strategic goals and objectives, thus demon

Performance Goals and Results

Performance Goals and Results
 

In FY 2011, the Commissioner issued CBP’s Missions, Goals, and Priorities, FY 2011–2013, a 

document that articulates the missions, goals, objectives, and priority initiatives for the Agency. 

The document was designed to shape planning and policy development for CBP’s offices, to guide 

resource allocation, and to direct the focus and efforts of senior executives. 

CBP’s Performance Management Framework (PMF) provides CBP with performance management 

and oversight capabilities that improve the efficiency and effectiveness of CBP programs, initiatives, 

and operations through improved measurement, analysis, and reporting. The PMF meets reporting 

and budgeting requirements established by the Office of Management and Budget, the Government 

Performance and Results Act (GPRA) of 1993, and the GPRA Modernization Act of 2010. The PMF 

also supports management decision-making processes associated with agency-wide strategic planning, requirements determination, and resource allocation using performance information in the 

execution of the annual budget. 

The associated CBP Performance Measurement Hierarchy contains five levels of performance measures: long-term, strategic, management, operational, and investment measures. The hierarchy sets 

the foundation for performance measure presentation and reporting. 

Long-term level measures are those that cross multiple fiscal years and are not tied to an annual 

budget. Strategic level measures are used to manage and report accomplishments of DHS strategic goals and objectives, thus demonstrating the value that CBP programs provide to the American 

people. Management level measures inform internal CBP decision-making processes to determine 

program priorities, allocate resources, and monitor progress and performance. Operational level 

measures inform management of the effectiveness and efficiency of individual program operations. 

Investment level measures are associated with CBP’s major capital investments and map to the 

Federal Enterprise Architecture Performance Reference Model. 

62 U.S. Customs and Border Protection • Performance and Accountability Report 
Performance Goals and Results
 

Performance Management 

Two key pieces of legislation provide the framework for government-wide performance improvement 

and guide CBP’s performance management efforts. The GPRA of 1993 established a foundation 

for results-oriented planning, measurement, and reporting in the Federal Government. The GPRA 

Modernization Act of 2010 promoted the consistent use of performance measurement and reporting outcomes to drive management decision-making and resource use. 

CBP uses performance measures to assess outputs and outcomes in comparison with desired 

results, thereby indicating the agency’s accomplishments. CBP is dedicated to continuously refining 

and improving its performance measures. The goal is to ensure that the data it reports internally 

and externally is useful to senior executives who make programming and funding decisions. 

FY 2013 Performance by Mission Set 

This section highlights FY 2013 performance objectives and related key performance measures for 

each of CBP’s Mission Sets. Additional performance measures and results are located in the “Performance Section” under “Performance Summary,” beginning on page 78. 

Mission Set 1: Securing America’s Borders 

As a frontline border security agency, CBP has a multifaceted and complex mission of protecting the 

Nation against cross-border violations of various types. All CBP efforts to secure the border, including the mission of enforcing the immigration, customs, trade, agriculture, and other laws of the 

United States contribute to the mission of thwarting terrorism. 

Performance Objective–Secure the U.S. border in areas deemed as high priority for terrorist threat 

potential or other national security objectives. 

CBP will continue its efforts to improve security at and between the POEs by using information and 

intelligence to focus resources in a more effective, risk-based manner. Providing security along our 

northern, southern, and coastal borders requires collaboration with CBP international, Federal, 

state, local, and tribal partners in order to leverage and focus joint resources. 

Management’s Discussion and Analysis 63 
Performance Goals and Results
 

Measure: Percent of people apprehended multiple times along the Southwest border 

Description of Measure: This measure examines the percent of deportable individuals who have 

been apprehended multiple times by the U.S. Border Patrol. This measure calculates the number 

of people apprehended multiple times divided by the total number of apprehensions of people 

during a fiscal year. Effective and efficient application of consequences for illegal border crossers 

will, over time, reduce overall recidivism. 

Fiscal Year: FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 

Target: N/A N/A N/A N/A ≤18.00% 

Actual: N/A N/A N/A N/A 16.00% 

Explanation of FY 2013 Results 

Target Met—Recidivism has decreased since implementation of 

the Consequence Delivery System, which guides the consistent 

and systematic application of consequences to aliens that enter 

the United States illegally. Recidivism fell to 15.80%, exceeding 

the target of less than or equal to 18%. 

Contributing factors to the reduction included 1) reducing the 

percent of apprehensions resulting in a Voluntary Return—the 

least effective and efficient consequence—from 59 percent in FY 

2010 to 12 percent in FY 2013 2) applying more effective and 

efficient consequences to illegal aliens with a higher probability 

of making subsequent illegally entries and 3) an increase in the 

number of Other than Mexicans attempting to cross the border illegally. This increase in a population that historically has a lower 

opportunity and capability to attempt multiple illegal entries 

resulted in lower overall recidivism rate. 

Recommended Action N/A 

64 U.S. Customs and Border Protection • Performance and Accountability Report 
Performance Goals and Results
 

Measure: Number of smuggled outbound weapons seized at the ports of entry 

Description of Measure: This measure provides the total number of illegal weapons seized 

during outbound inspection of exiting passengers and vehicles, both privately-owned and commercial. Weapons are defined as pistols, rifle-shotgun combinations, rifles, revolvers, shotguns, 

disguised weapons, machine guns, submachine guns, or machine pistols. This includes assembled weapons as well as major pieces of weapons. Seizing weapons being smuggled for criminal 

purposes strengthens our border security by preventing the movement of assault weapons and 

ammunition. 

Fiscal Year: FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 

Target: N/A N/A N/A N/A 400 

Actual: N/A N/A N/A N/A 731 

Explanation of FY 2013 Results 

Target Met—This is a cumulative national-level measure with the 

target specified as the number of weapons to be seized by the 

end of the year. CBP conducts risk-based outbound enforcement 

activities on an ongoing basis. 

Recommended Action N/A 

Mission Set 2: Securing and Expediting the Movement of People 

and the Flow of Goods 

In order to meet the dual goals of security and facilitation, CBP develops and implements programs 

that expedite the processing of people and goods at land border ports, airports, and seaports, while 

at the same time securing the global trade environment and strengthening supply chain security. 

CBP focuses its resources on identifying and responding to high-risk travelers and conveyances. 

CBP employs a risk-based, layered enforcement approach using accurate advance information; the 

most advanced inspection, screening, and scanning technology available; modernized systems for 

Management’s Discussion and Analysis 65 
Performance Summary
 

cargo processing; and international and trade compliance partnership programs. Modern trade 

practices make it essential for CBP to provide risk-based, predictable, transparent, and efficient 

procedures for the clearance of goods, while simultaneously addressing increasingly complex trade 

compliance requirements and evolving security challenges. 

Performance Objective–Improve the targeting, screening, and apprehension or seizure of high-risk 

international travelers and cargo away from the physical border in order to prevent terrorist attacks 

and criminal activity while expediting the processing of legitimate travelers and cargo. 

CBP’s ability to process people, products, and conveyances expeditiously is dependent on its ability 

to identify high-risk travelers and goods for inspection. High-risk targeting allows law-abiding travelers and commerce to move without unnecessary delay. CBP applies its targeting methods against 

data to identify which passengers or shipments need to be segregated for closer inspections. CBP 

uses the Automated Targeting System and associated databases to provide CBP officers (including 

those stationed overseas) with advance notice of travelers and goods arriving at U.S. POEs, allowing 

the officers to crosscheck the passenger and cargo manifests against databases such as TECS and 

the National Crime Information Center. 

Measure: Percent of cargo by value imported to the U.S. by participants in CBP trade 

partnership programs 

Description of Measure: This measure describes the percent of all cargo that is imported from 

CBP trade partnership programs based on the value compared to total value of all imports. Partnership programs include both Customs–Trade Partnership Against Terrorism and Importer SelfAssessment. CBP works with the trade community through these voluntary public private partnership programs, wherein some members of the trade community adopt tighter security measures 

throughout their international supply chain and in return are afforded benefits. A variety of trade 

actors are included in these partnership programs, such as importers, carriers, brokers, consolidators/third-party logistic providers, Marine Port Authority and Terminal Operators, and foreign 

manufacturers. 

Fiscal Year: FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 

Target: N/A N/A 45.00% 45.00% 57.00% 

Actual: N/A N/A 55.07% 54.66% 55.20% 

Explanation of FY 2013 Results 

Target Not Met—Although outreach efforts have surpassed expectations, FY 2013 total import value and total entry count are 

down 0.85 percent and 0.43 percent, respectively from FY 2012, 

offsetting gains in the number of actual trade partners. 

Recommended Action CBP will continue to engage with trade partners to increase participation in approved shipper programs. 

66 U.S. Customs and Border Protection • Performance and Accountability Report 
Performance Summary
 

Measure: Percent of inbound cargo identified by CBP as potentially high-risk that is assessed or 

scanned prior to departure or at arrival at a U.S. port of entry 

Description of Measure: This measure gauges the percent of international cargo coming to the 

United States via air, land, and sea identified as potentially high-risk using the Automated Targeting System that is assessed or scanned prior to lading or at arrival at a U.S. port of entry. Assessing, resolving, and, when necessary, scanning potentially high-risk cargo prior to lading or at 

arrival at the ports of entry ensures the safety of the U.S. public and minimizes the impact to the 

trade, through the effective use of risk-focused targeting. 

Fiscal Year: FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 

Target: N/A N/A FOUO FOUO FOUO 

Actual: N/A N/A FOUO FOUO FOUO 

Explanation of FY 2013 Results 

Target Not Met—This measure gauges the overall percent of 

inbound cargo in the air and sea environments identified as 

potentially high risk by the Automated Targeting System that 

is reviewed, scanned, or otherwise examined prior to lading or 

at arrival at a U.S. ports of entry. A small percentage of cargo 

is not reviewed due to status changes en route, information 

processing and data entry errors, or logistical and scheduling 

anomalies. The results are For Official Use Only (FOUO). 

Recommended Action 

The Office of Field Operations will continue to work with the 

Targeting & Analysis System Program Office, shippers, and 

carriers to resolve identified issues and implement permanent 

process improvements. 

Performance Section 67 
68 U.S. Customs and Border Protection • Performance and Accountability Report 

Performance Summary
 

Mission Set 3: Sustaining Investment in People and Capabilities 

In order for CBP to remain a successful law enforcement organization, it will invest in its people. 

This investment includes providing training for CBP agents, officers, and mission support personnel 

to ensure they are proficient in their job-related skills and are prepared for future leadership opportunities. This investment also includes addressing any integrity issues that may arise. 

Performance Objective–Improve mission effectiveness and efficiency by integrating, unifying, and 

leveraging resources to support CBP’s operational offices. 

While the activities that fall under this mission set are important to CBP’s success, CBP does not 

have GPRA or Strategic measures that align to this mission set due to the mission support nature of 

its activities. Operational measures exist within this Mission Set and are used in internal decisionmaking processes. 
Management’s Discussion and Analysis 69 

Management Assurances
 

Overview 

CBP management is responsible for establishing, maintaining, and assessing internal control to 

provide reasonable assurance that the objectives of the Federal Managers’ Financial Integrity Act, 

Sections 2 and 4, and the Federal Financial Management Improvement Act are met. CBP also supports DHS compliance with the DHS Financial Accountability Act. Both require an annual assurance 

statement regarding CBP’s management and financial system controls, internal controls over financial reporting, and performance data and its impact on DHS operations. Any reportable conditions, 

deficiencies, or instances of non-conformance are reported in the statements. Information for this 

statement is derived from Government Accountability Office (GAO) and DHS Office Inspector General 

(OIG) audits, independent reviews, and self-assessments conducted by CBP management. 

Federal Managers’ Financial Integrity Act (FMFIA) 

In accordance with FMFIA and Office of Management and Budget Circular A-123, CBP evaluated its 

management controls and financial management systems for the fiscal year ending September 30, 

2013. As a result of this evaluation, CBP is reporting 1 material weakness and 3 instances of nonconformance. 

Drawback Controls 

CBP’s Automated Commercial System (ACS) has inherent limitations in detecting and preventing 

excessive drawback claims. The strengthening of drawback controls is dependent upon legislation 

to simplify the drawback process and to revise documentation retention requirements for the trade, 

and enhancing systems to implement the legislative changes. Until the legislative changes and system improvements are realized, CBP expects Drawback Controls to remain a material weakness. 

Financial Systems Security 

The DHS OIG continues to identify IT general and application control weaknesses at CBP. A number 

of issues were resolved during FY 2013 and remediation will continue into FY 2014. 

Core Financial Systems 

An Accounts Receivable module and data associated with inventory items held for use are not integrated with the CBP general ledger at the transaction level. 

Information Technology Infrastructure 

A technical assessment to identify issues and analyze associated mission risks of CBP’s data center 

and network technology infrastructure was performed in FY 2012. Remediation efforts initiated in 

FY 2012 continued during FY 2013. 
70 U.S. Customs and Border Protection • Performance and Accountability Report 

Management Assurances 

DHS Financial Accountability Act 

The DHS Financial Accountability Act requires an assertion of internal controls over financial reporting. CBP’s assessment of internal control over financial reporting included performing tests of 

operational effectiveness throughout FY 2013 and verification and validation of corrective action 

effectiveness as of September 30, 2013. 

Federal Financial Management Improvement Act (FFMIA) 

FFMIA instructs agencies to maintain an integrated financial management system that complies 

with Federal system requirements, Federal Accounting Standards Advisory Board standards (FASAB), and the U.S. Standard General Ledger at the transaction level. Although CBP has made significant improvements toward compliance we cannot claim full compliance because of the deficiencies 

previously discussed. 

Federal Information Security Management Act (FISMA) 

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 2013 and can state with reasonable assurance that the IT security controls are compliant with FISMA, with the exception of the 

items previously discussed. 
71 

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 2013 and 

has determined, with reasonable assurance, that the data is complete, accurate, and reliable. 

Audit of the FY 2013 CBP Consolidated Financial Statements: To assist the Department in 

complying with the DHS Financial Accountability Act of 2002, the DHS OIG engaged independent 

auditors, KPMG LLP, to audit CBP’s consolidated financial statements (Consolidated Balance 

Sheets, Consolidated Statements of Net Cost, Consolidated Statements of Changes in Net Position, 

Combined Statements of Budgetary Resources, and Consolidated Statements of Custodial Activity), 

hereinafter referred to as the “financial statements.” The objective of the audit was to determine 

whether CBP’s financial statements are fairly presented in accordance with Generally Accepted Accounting Principles (GAAP) in the United States. The Independent Auditors’ Report can be found on 

page 135. 

Management Inspections Program 

As part of its oversight role to promote the integrity, effectiveness, and efficiency of CBP programs 

and operations, the Office of Internal Affairs, Management Inspections Division (MID), performs 

management inspections that complement operational monitoring activities performed by CBP 

component offices; assists leadership in strengthening operations and management; and provides 

timely, objective, and reliable information and analysis concerning the effectiveness, integrity, 

and performance of CBP programs, operations, and offices. As part of an integrated inspections 

program, MID performs office inspections, program evaluations in the areas of core management 

responsibilities and control activities susceptible to financial, technological, and/or physical vulnerabilities and other analytical assessments of operational or management issues. 

MID’s work reflects a proactive approach to identifying areas of potential vulnerability or conditions 

that could hinder the successful accomplishment of CBP operational goals and objectives. During 

FY 2013, MID issued a total of 58 reports, presenting CBP executive managers with 722 recommendations to address operational, financial or administrative deficiencies identified during inspection activity. 

Financial Section 
72 U.S. Customs and Border Protection • Performance and Accountability Report 

Systems and Controls
 

Self-Inspection Program 

The Self-Inspection Program (SIP), administered by the Office of Internal Affairs, MID, is one of the 

mechanisms through which CBP monitors agency performance, the adherence to established operational requirements, and the accomplishment of strategic goals and program objectives. The SIP 

promotes management accountability and strengthens the oversight of programs and operations. 

SIP also helps CBP meet Federal internal controls requirements established by the Federal Managers’ Financial Integrity Act, OMB Circular A-123, and the Department of Homeland Security Financial Accountability Act. 

Under SIP, CBP managers and supervisors annually conduct self-assessment activities, requiring them 

to verify that agency programs and operations have been implemented properly and effectively. In 

conducting the self-assessments, CBP managers’ report on the implementation of policies and procedures applicable to the operational, financial, and administrative functions reviewed through SIP. 

During the SIP cycle, CBP managers complete, certify, and approve the self-inspection worksheets 

related to the functions and activities under their control. Responses indicating compliance and 

non-compliance with the requirements, along with information supporting the responses, are recorded in the web-based Self-Inspection Reporting System. Managers reporting non-compliance 

with, or inconsistent implementation of, policies and procedures are required to implement corrective action to resolve each deficient condition in a timely manner. 

On a national level, the analysis of self-inspection results 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 provide appropriate guidance to 

CBP offices and managers. For the current reporting cycle, nearly 1,800 managers in approximately 

700 CBP Headquarters and Field Offices performed self-assessment activities researching, certifying, and /or approving the results of office self-inspections. CBP managers completed 13,791 selfinspection worksheets by answering a total of 86,379 questions. 

Audit Management and Liaison 

The MID Audit Management and Liaison team serves as the agency liaison to the GAO and the DHS 

OIG providing oversight concerning audits and reviews of CBP programs and operations. The Audit 

Management and Liaison team facilitates meetings between external auditors and CBP personnel, ensures timely responses to auditor requests for documents and interviews, coordinates CBP 

responses to audit findings and reports, tracks the status of required corrective actions, provides 

agency-wide audit training, and keeps senior leadership informed of high-profile audits and reviews. 

In FY 2013, CBP had 197 ongoing GAO and OIG audits. Of these audits, GAO initiated 41 new audits 

(73 audits were carried over from previous years) and issued 36 reports containing 30 recommendations. DHS OIG initiated 33 new audits (50 audits were carried over from previous years) and 

issued 21 reports containing 23 recommendations. As of the end of FY 2013, CBP has 131 open 

recommendations. 
Management’s Discussion and Analysis 73 

Financial Management
 

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. CBP is positioning to 

become a shared accounting service provider to other DHS components. CBP’s 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 2013, CBP continues to use SAP as its financial software. SAP is an Enterprise Resource 

Planning (ERP) solution that integrates budget formulation, budget execution, acquisition through 

the disposal of assets, requisition through payment, billing to collection of receivables, and business intelligence. SAP integrates business processes and reporting within one system, thereby 

eliminating unnecessary data entry, ensuring data accuracy, and enabling single system reporting 

and analytical reporting. SAP ensures that CBP complies with Federal Government standards and 

regulations for financial management systems. This single integrated solution supports program 

types eliminating data redundancy and inefficiencies. 

Overview of the Financial Statements 

The financial statements and footnotes appear in the “Financial Section” of this report on pages 89 

through 128. The financial statements have been audited by the independent auditor engaged by 

the DHS OIG, KPMG LLP, who determined that the financial statements are fairly presented in accordance with GAAP. 

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, 2013, total 

assets were $15.5 billion, a 2 percent decrease from FY 2012. As of September 30, 2013, total liabilities were 6 billion, a decrease of 1 percent over FY 2012. The assets and liabilities charts present a comparison of the major categories as a percentage of the totals for FY 2013 and FY 2012. 
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 2009–2014 Strategic Plan. The gross cost less any offsetting revenue for 

each program equals net cost of operations. Net cost of operations was $12.6 billion. In FY 2013, 

CBP changed the program structure for reporting costs and revenue associated with accomplishing 

CBP’s mission goals. The FY 2012 presentation was not restated in the FY 2013 format because 

the FY 2013 programs are not applicable for FY 2012 reporting; therefore, the FY 2012 chart 

below is presented following the FY 2012 programs. For further information, see the Notes to the 

Financial Statements. 

74 U.S. Customs and Border Protection • Performance and Accountability Report 
Financial Management
 

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 $8.0 billion, representing 63 percent of CBP’s total financing sources. CBP collected and 

retained $3.8 billion of non-exchange revenue, amounting to 30 percent of total financing sources, 

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 2013. CBP had $16.2 billion in budgetary resources, of which $1.3 billion were unobligated. CBP incurred obligations of $14.9 billion and recorded 

$15.1 billion in gross outlays by the end of the Fiscal Year. 

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 2013 was $36.8 billion. 

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 GAAP 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. 

Management’s Discussion and Analysis 75 
76 U.S. Customs and Border Protection • Performance and Accountability Report 

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Performance Summary 

Performance Section 77 

Performance Section 

This section provides information on CBP’s progress in achieving performance goals and objectives. 
Performance Summary
 

The charts below highlight CBP’s success in achieving FY 2013 performance goals. The performance measures are established as an integral part of CBP’s Missions, Goals, and Priorities, FY 

2011-2013 document, the Quadrennial Homeland Security Review, and the DHS Future Years 

Homeland Security Program (FYHSP). The measurement data is 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. 

FY 2013 Performance Summary 

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 2013, CBP has 9 GPRA performance measures that support CBP’s Missions, Goals, and 

Priorities, FY 2011-2013 document. Of the 9 performance measures, 4 were met and 5 were not 

met. The performance data presented in this report is 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 71) 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 this data to improve the quality of program management and demonstrate 

accountability of program results. 

78 U.S. Customs and Border Protection • Performance and Accountability Report 
Performance Summary
 

Individual Performance Measure Results 

This section describes CBP’s FY 2013 results for each GPRA performance measure by the CBP Mission Set 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 62. 

Mission Set 1: Securing America’s Borders 

Performance Objective–Secure the U.S. border in areas deemed as high priority for terrorist threat 

potential or other national security objectives. 

The measures aligned to this Mission Set show CBP’s effectiveness in securing the border and 

achieving the Mission Set’s performance objective. For example, there is a correlation between the 

“Number of apprehensions on the Southwest Border between the ports of entry” and the number of 

unlawful migrants attempting to cross the Southwest Border. By effectively utilizing a combination of 

additional personnel, technology, and infrastructure; delivering appropriate consequences to repeat offenders; and leveraging partnerships, CBP can decrease the “Number of apprehensions on 

the Southwest Border between the ports of entry” and ultimately decrease the number of unlawful 

migrants attempting to cross the Southwest Border as a result of deterrence. CBP is also screening 

southbound vehicle traffic for the illegal weapons and cash that are helping fuel the cartel violence 

in Mexico. The “Amount of currency seized on exit from the United States” and the “Number of 

weapons seized on exit from the United States” show the results of CBP’s efforts in this area. 

Measure: Percent of people apprehended multiple times along the Southwest border 

Explanation of FY 2013 Results Target Met—See page 64 for results and detailed discussion 

Measure: Number of smuggled outbound weapons seized at the ports of entry. 

Explanation of FY 2013 Results Target Met—See page 65 for results and detailed discussion 

Performance Section 79 
Performance Summary
 

Measure: Number of apprehensions on the Southwest Border between the ports of entry 

Description of Measure: Protection of our Southwest border against threats from illicit crossborder activity is a key element needed to secure our country. In recent years, the Border Patrol 

has worked to reduce the level of threat along the border by strategically positioning personnel, 

technology, and defensive infrastructure; developing strong partnerships with law enforcement 

partners on both sides of the border; and providing a deterrent by increasing consequences to repeat offenders. One noted change to the border environment, credited in part to improved border 

enforcement, is a reduction in apprehensions made by Border Patrol agents along the border. Our 

efforts for the coming years will focus on maintaining improvements made, while striving to gradually reduce apprehensions even more. Unforeseen changes in migration patterns to the United 

States—influenced by events such as dramatic economic impacts to a country or region or natural 

disasters—could alter our projections of apprehensions. 

Fiscal Year: FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 

Target: N/A N/A ≤ 390,000 ≤ 371,000 ≤391,000 

Actual: N/A N/A 327,577 356,873 414,397 

Explanation of FY 2013 Results 

Target Not Met—CBP’s U.S. Border Patrol made 414,397 apprehensions on the Southwest border between ports of entry in FY 

2013. This remains low historically, but represents an increase 

of 16 percent over FY 2012. A combination of factors influenced 

the rise, including improvement in the U.S. economy, an increase in attempts by persons from countries other than Mexico 

due to U.S./foreign economic factors and emigration/immigration dynamics from sending/transit countries, and possible 

change in attempts due to perceptions surrounding immigration 

reform legislation. 

Recommended Action 

This measure was originally introduced to gauge short-term 

impacts of enforcement improvements along the Southwest 

Border, where apprehensions have historically been high. 

Due to its short-term focus, this measure will be retired and 

replaced with an Interdiction Effectiveness Rate measure, 

which better evaluates U.S. Border Patrol’s ability to apprehend 

or turn back would-be illegal entrants. 

80 U.S. Customs and Border Protection • Performance and Accountability Report 
Performance Summary
 

Measure: Percent of detected conventional aircraft incursions resolved along all borders of the 

United States 

Description of Measure: The measure represents the percent of conventional aircraft, once 

detected visually or by radar, that are suspected of illegal cross border activity and are brought 

to a successful law enforcement resolution. In some cases, Office of Air and Marine assets are 

launched to interdict the aircraft. In most cases, resolution of the aircraft identity is made by the 

Air and Marine Operations Center working with interagency partners, such as the Federal Aviation 

Administration. If the incursion is deemed legal, OAM considers the incursion resolved. If AMOC 

could not identify that target in working with our partners, including OAM assets, the incursion is 

deemed unresolved and is thus considered illegal. 

Fiscal Year: FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 

Target: N/A N/A 100.00% 100.00% 100.00% 

Actual: N/A N/A 95.30% 96.04% 99.30% 

Explanation of FY 2013 Results 

Target Not Met—FY 2013 totals were 286 of 288 border 

incursions resolved. The two unresolved aircraft (down from 

12 in FY 2012) were visually spotted by Border Patrol/Office of 

Field Operations agents on the northern border and reported to 

Air Marine Operations Center who did not have radar data and 

could not identify the targets. 

Recommended Action 

The Air and Marine program will continue to evaluate and 

improve tactics, techniques, and procedures to track and 

resolve visually detected incursions in order to bring individuals 

that commit illegal incursions to a successful law enforcement 

resolution. With these limiting factors in consideration, AMOC 

continuously improves processes and partnerships and ingests 

new technologies that can mitigate our vulnerabilities and gaps 

thus reducing the number of “unresolved” aircraft incursions. 

Performance Section 81 
Performance Summary
 

Mission Set 2: Securing and Expediting the Movement of People 

and the Flow of Goods 

Performance Objective–Improve the targeting, screening, and apprehension or seizure of high-risk 

international travelers and cargo away from the physical border in order to prevent terrorist attacks 

and criminal activity while expediting the processing of legitimate travelers and cargo. 

The measures aligned to this Mission Set are focused on showing CBP’s effectiveness in preventing terrorist attacks and criminal activity while expediting the flow of people and goods. In order to 

achieve the performance objective, CBP has established several programs and initiatives. In 2001, 

CBP established the Customs-Trade Partnership Against Terrorism (C-TPAT) program as a voluntary 

government-business initiative to build cooperative relationships that strengthen and improve overall international supply chain and U.S. border security. By C-TPAT members complying with established security standards, CBP can expedite members’ shipments and focus on screening high-risk 

cargo. The “Compliance rate for C-TPAT members with the established C-TPAT security guidelines” 

shows the percent of C-TPAT members that were in compliance with the established security standards during their periodic validation. 

In addition, CBP has established revenue collection as a Priority Trade Issue (PTI). To avoid the full 

payment of lawfully owed duties and fees to the U.S. Government, importers are prone to use a variety of circumvention schemes. The “Percent of import revenue successfully collected” shows how 

effective CBP was in the past year in collecting the revenue that was due to the U.S. 

82 U.S. Customs and Border Protection • Performance and Accountability Report 
Performance Summary
 

Measure: Compliance rate for Customs - Trade Partnership Against Terrorism (C - TPAT) members 

with the established C - TPAT security guidelines 

Description of Measure: This measure provides the overall compliance rate achieved for 

all validations performed during the Fiscal Year. After acceptance into the Customs - Trade 

Partnership Against Terrorism program, all C - TPAT members must undergo a periodic validation 

in which U.S. Customs and Border Protection examiners visit company locations and verify 

compliance with an industry - specific set of CBP security standards and required security 

practices. These validations are prepared using a weighted scoring system that is used to develop 

an overall compliance rate for each company. Compliance with security guidelines enhances the 

security of cargo shipped to the U.S. 

Fiscal Year: FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 

Target: 99.00% 95.00% 100.00% 100.00% 94.00% 

Actual: 97.50% 97.80% 95.10% 94.50% 96.89% 

Explanation of FY 2013 Results 

Target Met—C-TPAT worked with partner companies to 

successfully explain the enhanced security criteria implemented 

over the past few years and ensure they understood the 

validation requirements applicable to their organization. 

Recommended Action N/A 

Performance Section 83 
 

Performance Summary
 

Measure: Percent of Import Revenue Successfully Collected 

Description of Measure: This measure estimates the collected duties, taxes, and fees (called 

net under-collection of revenue) expressed as a percent of all collectable revenue due from 

commercial imports to the United States directed by trade laws, regulations, and agreements. The 

total collectable revenue is total collected revenue plus the estimated net under-collected revenue 

based on trade violations. The revenue gap is a calculation of uncollected duties (the difference 

between estimated under-collection and overpayment) based on statistical sampling. 

Fiscal Year: FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 

Target: N/A N/A 100.00% 100.00% 100.00% 

Actual: N/A N/A 99.12% 98.88% 98.73% 

Explanation of FY 2013 Results 

Target Not Met—The number of major transactional classification 

discrepancies identified during the random sampling process 

increased resulting in a decrease in revenue collected. 

Recommended Action 

CBP will target importers to resolve classification errors and 

apply various enforcement techniques to collect the owed 

revenue. 

84 U.S. Customs and Border Protection • Performance and Accountability Report 
Performance Summary
 

Measure: Percent of imports compliant with applicable U.S. trade laws 

Description of Measure: This measure reports the percent of imports that are compliant with 

U.S. trade laws including customs revenue laws. Ensuring that all imports are compliant and free 

of major discrepancies allows for lawful trade into the U.S. 

Fiscal Year: FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 

Target: N/A 98.00% 98.00% 98.00% 97.50% 

Actual: N/A 98.89% 97.67% 96.46% 97.66% 

Explanation of FY 2013 Results 

Target Met—CBP through ISA/CTPAT programs and Centers 

for Excellence and Expertise instituted this FY 2013 - closely 

monitored importers to reduce the non-compliance rates. 

Recommended Action N/A 

Measure: Percent of cargo by value imported to the U.S. by participants in CBP trade 

partnership programs 

Explanation of FY 2013 Results Target Not Met—See page 66 for results and detailed 

discussion 

Measure: Percent of inbound cargo identified by CBP as potentially high-risk that is assessed or 

scanned prior to departure or at arrival at a U.S. port of entry. 

Explanation of FY 2013 Results Target Not Met—See page 67 for results and detailed 

discussion 

Performance Section 85 
86 U.S. Customs and Border Protection • Performance and Accountability Report 

Performance Summary
 

Mission Set 3: Sustaining Investment in People and Capabilities 

Performance Objective–Improve mission effectiveness and efficiency by integrating, unifying, and 

leveraging resources to support CBP’s operational offices. 

While the activities that fall under this Mission Set are important to CBP’s success, CBP does not 

have GPRA or Strategic measures that align to this Mission Set, due to the mission support nature 

of its activities. Operational measures exist within this Mission Set and are used in internal decision-making processes. 
87 

Financial Section
 

This section presents CBP’s audited comparative financial statements, related note disclosures, 

and Independent Auditors’ Report. 

Performance Section 
Message from the Chief Financial Officer
 

Each and every day, U.S. Customs and Border Protection (CBP) works assiduously to secure our Nation’s borders and facilitate lawful international 

trade and travel while enforcing U.S. laws and regulations. In challenging 

times, such as this past fiscal year, CBP continued to focus on the mission priorities while promoting efficiencies across the Agency and making 

optimal use of CBP’s resources. CBP’s ability to efficiently and effectively 

manage resources in support of this mission includes providing citizens 

with timely, reliable, and useful financial and performance information. 

It also includes the information and analytics that facilitates informed 

decision-making by Departmental leadership and key stakeholders. 

The purpose of this report is to provide a comprehensive assessment of 

our Agency’s financial performance and report on our stewardship of CBP’s resources in support of 

our mission of securing the United States and facilitating our Nation’s prosperity during Fiscal Year 

(FY) 2013. 

CBP received an Unmodified Audit Opinion on its FY 2013 Financial Statements. This is CBP’s eighth 

Unmodified Audit Opinion, a track record that the Agency is very proud of and dedicated to preserving. The FY 2013 Financial Statement audit results identified financial management improvements, 

such as enhanced controls over and improved management and accountability of property, plant, and 

equipment, and a reduction in the number of information technology control issues. 

I can provide reasonable assurance that CBP achieved the objectives of Section 2 (Management Controls) and Section 4 (Financial Management Systems) of the Federal Managers’ Financial Integrity Act 

with certain exceptions identified as part of CBP’s Management Assurance. CBP is committed to addressing all of our financial management challenges by continuing to implement corrective measures 

designed to improve our oversight and accountability. CBP is implementing an enhanced risk management framework that prioritizes and addresses financial risks and business process weaknesses. The 

risk management framework will compel a more strategic view of business risk management and will 

result in improved coordination over distributed business processes, targeted corrective action planning, and more effective utilization of resources devoted to addressing internal controls. 

CBP will continue to be challenged by the issues relating to custodial revenue and drawback. The 

control issues associated with drawback cannot be fully resolved without legislative changes and 

costly system enhancements; however, we continue to identify and implement management improvements in the custodial revenue areas where these limitations exist. 

The diligent work of employees across CBP allows us to maintain our high standards of financial 

stewardship. Specifically, the Office of Administration is focused on mission first and stewardship 

always. A key component of these efforts is to provide timely, reliable, and useful financial management information to the U.S. Congress and the American public, and enable the managers across 

CBP to make smart business decisions. 

Deborah J. Schilling 

88 U.S. Customs and Border Protection • Performance and Accountability Report 
89 

Financial Statements
 

Introduction 

The financial statements have been audited by the independent auditor engaged by the DHS OIG, 

KPMG LLP, who determined that the financial statements are fairly presented in accordance with 

GAAP. 

•	 The Consolidated Balance Sheets present the property owned by CBP (assets), amounts owed 

by CBP (liabilities), and the amounts of the difference (net position). 

•	 The Consolidated Statements of Net Cost present the net cost of the major CBP programs as 

they relate to the goals of the 2009–2014 Strategic Plan. 

•	 The Consolidated Statements of Changes in Net Position represent 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. 

•	 The Combined Statements of Budgetary Resources illustrate how and in what amounts 

budgetary resources were made available, as well as their status at the end of FY 2013. 

•	 The Consolidated Statements of Custodial Activity present non-entity (financial activity 

conducted by CBP on behalf of others) revenue and refunds using a modified cash basis. 

Financial Section 
90 U.S. Customs and Border Protection • Performance and Accountability Report 

(Note 7)

,, ,,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Statements
 

Customs and Border Protection 

Consolidated Balance Sheets 

As of September 30, 2013 and 2012 

(in Thousands) 

2013 2012 

ASSETS (Note 2) 

Intra-governmental: 

Fund Balance with Treasury (Note 3) $ 5,922,817 $ 6,248,505 

Accounts Receivable 26,584 17,788 

Advances and Prepayments (Note 11) 133,918 175,601 

Total Intra-governmental $ 6,083,319 $ 6,441,894 

Cash and Other Monetary Assets (Note 4) 4,966 3,632 

Accounts Receivable, Net (Note 5) 363,444 202,180 

Taxes, Duties and Trade Receivables, Net (Note 6) 2,682,007 2,700,465 

Inventory and Related Property, Net (Note 7) 198,365 190,712 

General Property, Plant and Equipment, Net (Note 9) 6,198,917 6,337,045 

Other Assets (Note 11) 429 233 

TOTAL ASSETS $15,531,447 $15,876,161 

Stewardship Property, Plant and Equipment (Note 10) 

LIABILITIES (Note 12) 

Intra-governmental: 

Accounts Payable $ 201,859 $ 238,091 

Other 

Due to the Treasury General Fund 2,758,418 2,783,682 

Accrued Federal Employees’ Compensation Act Liability (Note 12) 165,071 153,378 

Other Employment Liabilities (Note 12) 322 674 

Employee Benefits and Taxes 131,955 119,128 

Advances From Others 1,519 2,024 

Total Intra-governmental $ 3,259,144 $ 3,296,977 

Accounts Payable 347,919 241,941 

Environmental and Disposal Liabilities (Notes 12 and 14) 17,524 17,610 

Other 

Accrued Payroll and Benefits (Note 13) 1,475,399 1,638,595 

Refunds Payable (Note 15) 167,524 176,910 

Deferred Revenue 45,124 --

Injured Domestic Industries (Note 15) 105,052 140,374 

Liabilities for Deposit Accounts 250,328 203,369 

Legal Contingent Liabilities (Note 17) 381,572 374,452 

TOTAL LIABILITIES $ 6,049,586 $ 6,090,228 

Commitments and Contingencies (Note 17) 

NET POSITION: 

Unexpended Appropriations 3,340,275 3,809,738 

Cumulative Results of Operations – Funds from Dedicated 641,492 434,672 

Collections (Note 18) 

Cumulative Results of Operations – Other Funds 5,500,094 5,541,523 

TOTAL NET POSITION $ 9,481,861 $ 9,785,933 

TOTAL LIABILITIES AND NET POSITION $15,531,447 $15,876,161 

The accompanying notes are an integral part of these financial statements. 

Financial Section 
91 

Customs and Border Protection
 

Consolidated Statement of Net Cost
 

For the Year Ended September 30, 2013
 

(in Thousands)
 

2013 

Securing America’s Borders 

 Gross Cost $ 5,142,124

 Less: Earned Revenue 9,251 

 Net Program Costs $ 5,132,873 

Securing and Expediting Trade 

 Gross Cost 3,101,084 

 Less: Earned Revenue 137,613 

 Net Program Costs $ 2,963,471 

Securing and Expediting Travel 

 Gross Cost 3,973,194 

 Less: Earned Revenue 90,662 

 Net Program Costs $ 3,882,532

Intelligence and Targeting 

 Gross Cost 574,881 

 Less: Earned Revenue 2,656 

 Net Program Costs $ 572,225 

Total Gross Cost 12,791,283 

Less: Total Earned Revenue 240,182 

Net Cost of Operations (Notes 19 and 20) $12,551,101 

 

Financial Statements
 

The accompanying notes are an integral part of these financial statements. 

Financial Section 
92 U.S. Customs and Border Protection • Performance and Accountability Report 

Financial Statements 

Customs and Border Protection
 

Consolidated Statement of Net Cost
 

For the Year Ended September 30, 2012 

(in Thousands)
 

2012 

Border Security Inspections and Trade Facilitation at
 

Ports of Entry 

 Gross Cost $ 6,609,914 

 Less: Earned Revenue 161,474 

 Net Program Costs $ 6,448,440 

Border Security and Control Between Ports of Entry 

 Gross Cost 4,634,941 

 Less: Earned Revenue 110,197 

 Net Program Costs $ 4,524,744 

Border Security Fencing, Infrastructure and Technology 

 Gross Cost 362,052 

 Less: Earned Revenue 167 

 Net Program Costs $ 361,885 

Automation Modernization 

 Gross Cost 315,615 

 Less: Earned Revenue (1) 

 Net Program Costs $ 315,616 

Air and Marine Operations 

 Gross Cost 700,205 

 Less: Earned Revenue 6,296 

 Net Program Costs $ 693,909 

Total Gross Cost 12,622,727 

Less: Total Earned Revenue 278,133 

Net Cost of Operations (Notes 19 and 20) $12,344,594 

The accompanying notes are an integral part of these financial statements. 
Customs and Border Protection
 

Consolidated Statement of Changes In Net Position
 

For the Year Ended September 30, 2013
 

(in Thousands)
 

FY 2013 

Funds from 

Dedicated 

Collections 

All Other 

Funds 

Consolidated 

Total 

Cumulative Results of Operations: 

 Beginning Balances $ 434,672 $ 5,541,523 $ 5,976,195 

Budgetary Financing Sources: 

 Appropriations Used -- 8,015,477 8,015,477 

 Non-exchange Revenue (Note 21) 605,005 7,754 612,759 

 Transfers In/Out Without Reimbursement (Note 21) (2,284,561) 2,527,939 243,378 

Other Financing Sources (Non-exchange): 

 Transfers In/Out Without Reimbursement -- 36,425 36,425 

 Imputed Financing -- 598,159 598,159 

 Other (Note 21) 3,046,620 163,674 3,210,294 

Total Financing Sources $ 1,367,064 $ 11,349,428 $ 12,716,492 

Net Cost of Operations (1,160,244) (11,390,857) (12,551,101) 

Net Change $ 206,820 $ (41,429) $ 165,391 

Cumulative Results of Operations $ 641 492 $ 5,500,094 $ 6,141,586 

Unexpended Appropriations: 

 Beginning Balance $ -- $ 3,809,738 $ 3,809,738 

Budgetary Financing Sources: 

 Appropriations Received (Note 24) -- 8,200,559 8,200,559 

 Appropriations Transferred In/Out -- 28,767 28,767 

 Other Adjustments -- (683,312) (683,312) 

 Appropriations Used -- (8,015,477) (8,015,477) 

Total Budgetary Financing Sources $ -- $ ( 469,463) $ (469,463) 

Total Unexpended Appropriations $ -- $ 3,340,275 $ 3,340,275 

)

Net Position $ 641,492 $ 8,840,369 $ 9,481,861 

The accompanying notes are an integral part of these financial statements.

Financial Statements
 

The accompanying notes are an integral part of these financial statements. 

Financial Section 93 
 

The accompanying notes are an integral part of these financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Statements 

Customs and Border Protection
 

Consolidated Statement of Changes In Net Position
 

For the Year Ended September 30, 2012
 

(in Thousands)
 

FY 2012 

Funds from 

Dedicated 

Collections 

All Other 

Funds 

Consolidated 

Total 

Cumulative Results of Operations: 

Beginning Balances $ 1,000,085 $ 4,513,712 $ 5,513,797 

Adjustment: 

Change in Accounting Principle (Note 22) (639,940) 639,940 --

Beginning Balances, as adjusted 360,145 5,153,652 5,513,797 

Budgetary Financing Sources: 

Appropriations Used -- 8,390,572 8,390,572 

Non-exchange Revenue (Note 21) 573,856 8,340 582,196 

Transfers In/Out Without Reimbursement (Note 21) (2,218,859) 2,459,986 241,127 

Other Financing Sources (Non-exchange): 

Transfers In/Out Without Reimbursement -- 60,926 60,926 

Imputed Financing -- 645,076 645,076 

Other (Note 21) 2,851,583 35,512 2,887,095 

Total Financing Sources $ 1,206,580 $11,600,412 $12,806,992 

Net Cost of Operations (1,132,053) (11,212,541) (12,344,594) 

Net Change $ 74,527 $ 387,871 $ 462,398 

Cumulative Results of Operations $ 434,672 $ 5,541,523 $ 5,976,195 

Unexpended Appropriations: 

Beginning Balance $ -- $ 4,253,612 $ 4,253,612 

Budgetary Financing Sources: 

Appropriations Received (Note 24) -- 8,051,909 8,051,909 

Appropriations Transferred In/Out -- 5,770 5,770 

Other Adjustments -- (110,981) (110,981) 

Appropriations Used -- (8,390,572) (8,390,572) 

) Total Budgetary Financing Sources $ -- $ (443,874) $ (443,874) 

Total Unexpended Appropriations $ -- $ 3,809,738 $ 3,809,738 

Net Position $ 434,672 $ 9,351,261 $ 9,785,933 

The accompanying notes are an integral part of these financial statements. 

94 U.S. Customs and Border Protection • Performance and Accountability Report 
95 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Statements
 

Customs and Border Protection 

Combined Statements of Budgetary Resources 

For the Years Ended September 30, 2013 and 2012 

(in Thousands) 

2013 2012 

Budgetary Resources: 

Unobligated balance brought forward, October 1 $ 1,310,864 $ 2,268,372 

Adjustment to unobligated balance brought forward, October 1 (Note 22) -- (639,940) 

Unobligated balance brought forward, October 1, as adjusted $ 1,310,864 $ 1,628,432 

Recoveries of prior year unpaid obligations 389,321 351,236 

Other changes in unobligated balance (95,947) (93,385) 

Unobligated balance from prior year budget authority, net $ 1,604,238 $ 1,886,283 

Appropriations (Note 24) 12,953,010 13,719,063 

Spending authority from offsetting collections 1,597,568 1,618,346 

Total Budgetary Resources $ 16,154,816 $ 17,223,692 

Status of Budgetary Resources: 

Obligations incurred (Note 23) $ 14,862,504 $ 15,912,828 

Unobligated balance, end of year: 

Apportioned 717,874 638,510 

Unapportioned 574,438 672,354 

Total unobligated balance, end of year $ 1,292,312 $ 1,310,864 

Total Budgetary Resources $ 16,154,816 $ 17,223,692 

Change in Obligated Balance: 

Unpaid Obligations: 

Unpaid obligations, brought forward, October 1 (gross) $ 4,157,480 $ 4,713,167 

Obligations incurred (Note 23) 14,862,504 15,912,828 

Outlays (gross) (15,109,658) (16,117,279) 

Recoveries of prior year unpaid obligations (389,321) (351,236) 

Unpaid obligations, end of year (gross) 3,521,005 4,157,480 

Uncollected Payments: 

 Uncollected customer payments from Federal sources, brought 

 forward, October 1 (162,620) (163,896) 

Change in uncollected customer payments from Federal sources 10,861 1,276 

Uncollected customer payments from Federal sources, end of year (151,759) (162,620) 

Obligated Balance, Start of Year $ 3,994,860 $ 4,549,271 

Obligated Balance, End of Year $ 3,369,246 $ 3,994,860 

Budget Authority and Outlays, Net: 

Budget authority, gross $ 14,550,578 $ 15,337,409 

Actual offsetting collections (1,608,429) (1,619,622) 

Change in uncollected customer payments from Federal sources 10,861 1,276 

Budget Authority, Net $ 12,953,010 $ 13,719,063 

The accompanying notes are an integral part of these financial statements. 

Financial Section 
The accompanying notes are an integral part of these financial statements.

 

 

 

Financial Statements
 

Customs and Border Protection 

Combined Statements of Budgetary Resources 

For the Years Ended September 30, 2013 and 2012 

(in Thousands) 

2013 2012 

Outlays, gross $15,109,658 $16,117,279 

Actual offsetting collections (1,608,429) (1,619,622) 

Outlays, net $13,501,229 $14,497,657 

Distributed offsetting receipts (3,776,910) (3,499,993) 

Agency Outlays, Net $ 9,724,319 $10,997,664 

The accompanying notes are an integral part of these financial statements. 

96 U.S. Customs and Border Protection • Performance and Accountability Report 
97 The accompanying notes are an integral part of these financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Statements
 

Customs and Border Protection 

Consolidated Statements of Custodial Activity 

For the Years Ended September 30, 2013 and 2012 

(in Thousands) 

2013 2012 

Revenue Activity (Note 28): 

Sources of Cash Collections: 

Duties $31,709,053 $30,532,909 

User Fees 1,567,987 1,583,511 

Excise Taxes 3,162,638 3,104,632 

Fines and Penalties 61,265 61,597 

Interest (41,456) 58,422 

Miscellaneous 144,392 137,582 

Total Cash Collections $36,603,879 $35,478,653 

Accrual Adjustments (+/-) 221,931 149,686 

Total Custodial Revenue $36,825,810 $35,628,339 

Disposition of Collections: 

Transferred to Others: 

Treasury General Fund Accounts $23,662,443 $22,114,679 

U.S. Department of Agriculture 9,694,052 9,344,681 

U.S. Army Corps of Engineers 1,523,171 1,539,799 

Other Federal Agencies 97,560 87,683 

Government of Puerto Rico 6,094 14,615 

Non-Federal Other 72,036 119,976 

(Increase)/Decrease in Amounts Yet to be Transferred 271,543 156,437 

Refunds and Drawbacks (Note 28) 1,498,911 2,250,469 

Total Disposition of Collections $36,825,810 $35,628,339 

Net Custodial Activity $ -- $ --

The accompanying notes are an integral part of these financial statements. 

Financial Section 
98 U.S. Customs and Border Protection • Performance and Accountability Report 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements
 

Customs and Border Protection
 

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 terrorists and terrorists’ weapons from entering the U.S. In addition to its priority mission, CBP works to protect 

America and its citizens by carrying out its traditional missions more effectively using innovative approaches. These 

traditional missions include enforcing United States trade, immigration and other laws at the borders. Trade-related 

mission activities include protecting American businesses from theft of their intellectual property and unfair trade 

practices; regulating and facilitating international trade; collecting import duties; enforcing trade laws related to 

admissibility; regulating trade practices to collect the appropriate revenue; and maintaining export controls. Other 

traditional missions include controlling the borders by apprehending individuals attempting to enter the United States 

illegally; stemming the flow of illegal drugs and other contraband; protecting agriculture and economic interests from 

harmful pests and diseases; processing all people, vehicles and cargo entering the United States; and coordinating 

with the Department of Defense and others to protect the National Capital Region. 

Substantially all duty, tax, and fee revenues collected by CBP are remitted to various general fund accounts 

maintained by the U.S. Department of the Treasury (Treasury), U.S. Department of Agriculture, and U.S. Army Corps 

of Engineers. 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’s accounting records in conformity with generally 

accepted accounting principles (GAAP). The Federal Accounting Standards Advisory Board (FASAB), which was 

designated the official accounting standard-setting body of the Federal Government by the American Institute of 

Certified Public Accountants, is responsible for identifying the GAAP hierarchy for Federal reporting entities. FASAB 

has identified the hierarchy to be used in Statement of Federal Financial Accounting Standards (SFFAS) 34, “The 

Hierarchy of Generally Accepted Accounting Principles, including the Application of Standards Issued by the 

Financial Accounting Standards Board.” 

The statements consist of the Consolidated Balance Sheets, Consolidated Statements of Net Cost, Consolidated 

Statements of Changes In Net Position, Combined Statements of Budgetary Resources, and Consolidated 

Statements of Custodial Activity. All statements are prepared in accordance with Office of Management and Budget 

(OMB) Circular A-136. In FY 2013 the presentation of the Statement of Net Cost changed to better reflect how CBP 

does business. See Note 19, Intra-governmental Costs and Exchange Revenue, for additional information. 

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 Sheets, Consolidated Statements of Net Cost 

and Consolidated Statements 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 Statements of Budgetary Resources are 

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 period. CBP non-entity revenue and refunds are reported on the Consolidated Statements 
99 

 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements
 

Customs and Border Protection 

Notes to Financial Statements 

of Custodial Activity using a modified cash basis. With this method, revenue from cash collections is 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 Sheets, Consolidated Statements of Net Cost, and the Consolidated Statements of Changes 

In Net Position. As provided for by OMB Circular A-136, the Combined Statements of Budgetary Resources is 

presented on a combined basis; therefore, intra-CBP transactions and balances have not been eliminated from this 

statement. 

Funds from Dedicated Collections 

SFFAS No. 27, Identifying and Reporting Earmarked Funds as amended by SFFAS No. 43, Funds from Dedicated 

Collections, requires CBP to identify and report separately funds from dedicated collections. See Note 18, Funds 

from Dedicated Collections, for specific required disclosures related to CBP’s funds from dedicated collections. 

CBP has program management responsibility for the following funds from dedicated collections: 

Appropriation Title 

70X4363 Enhanced Inspectional Services 

70X5087 CBP - Immigration User Fees 

70X5089 Land Border Inspection Fees 

70X5451 Enforcement Fines Account 

70X5543 International Registered Traveler 

70X5569 APEC Business Travel Card Fee 

70X5595 Electronic Systems for Travel Authorization Fees 

70X5694 Small Airports User Fees 

70X5695 Customs User Fees Account 

70X8870 Harbor Maintenance Fee Collections 

Assets and Liabilities 

Intra-governmental 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 represents funds remaining 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 drawbacks 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. 

Advances and Prepayments 

Intra-governmental 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 travel and salary advances and 

prepaid rent. 

Accounts Receivable 

Intra-governmental 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 

Financial Section 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements
 

Customs and Border Protection
 

Notes to Financial Statements
 

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, 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 collections. 

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). 

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. 

Each quarterly payment shall include any collection made in the preceding quarter that was not remitted with the 

previous payment. Railroad car fees accrue on a monthly basis and the payments are due to CBP on or before the 

date that is 60 days after the applicable month. 

Due to the Treasury General Fund 

Due to the Treasury General Fund is the offsetting liability to non-entity collections and non-entity receivables. 

Taxes, Duties and Trade Receivables 

Taxes, Duties and Trade Receivables consist of duties, user fees, fines and penalties, refunds and drawbacks 

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 ability 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, Taxes, Duties and Trade Receivables, 

Net. 

Inventory and Related Property 

Inventory and Related Property consists of aircraft parts, vessel parts, Office of Technology Innovation and 

Acquisition (OTIA) parts, and CBP uniforms classified as operating materials and supplies to be used in CBP’s 

operations. Aircraft and OTIA parts and materials are recorded at average unit cost, and vessel parts and uniforms 

are recorded using the First-In-First-Out valuation method. Both methods approximate actual acquisition costs. CBP 

records an operating expense when inventory is ultimately used in operations. 

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 is determined. Nonprohibited 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 Sheets 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, non-prohibited 

forfeited property or currency become assets of the Treasury Forfeiture Fund. However, prohibited forfeited items, 

such as narcotics and firearms, are held by CBP until disposed or destroyed. In accordance with SFFAS No. 3, 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements
 

Customs and Border Protection
 

Notes to Financial Statements
 

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 capitalizes property, plant and equipment, excluding land, with an acquisition value of $50 thousand or greater, 

and a useful life of two years or greater. CBP capitalizes all land. 

Expenditures for normal repairs and maintenance are charged to expense as incurred. When expenditures greater 

than $50 thousand extend an asset’s useful life they are capitalized. 

Depreciation and amortization are computed using the straight line method over the estimated useful lives of the 

assets ranging from 4 to 30 years for equipment and software, 2 to 30 years for leasehold improvements, and 5 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. 

Accounts Payable 

A portion of the accounts payable balance related to commercial vendors and travel activities is estimated and 

recorded through an accrual. This estimate is created using a historical ratio of subsequent disbursements to 

undelivered orders. The ratio is then applied to the year-end undelivered order balance to arrive at estimated 

accounts payable. 

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 Sheets and is adjusted for changes in 

compensation rates and reduced for annual leave taken. Sick leave is expensed when used. 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 employees’ matching share for Social Security. 

For the FERS basic benefit for employees hired before January 1, 2013, CBP contributes 11.9 percent of base pay 

for regular employees and 26.3 percent for law enforcement agents. For the FERS basic benefit for employees hired 

after December 31, 2012, CBP contributes 9.6 percent of base pay for regular employees and 24 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 $17.5 thousand in certain overtime earnings for FY 2013 and 

2012. CBP recognizes the full costs of its employees’ pension benefits including the portion paid by the Office of 

Personnel Management (OPM) as required by law; however, the liability associated with these costs is recognized by 

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. 

Financial Section 101 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements 

Customs and Border Protection 

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 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 two years 

subsequent to the actual disbursement. Budgetary resources for this intra-governmental liability are made available 

to CBP as part of its annual appropriation from Congress in the year in which the reimbursement takes place. The 

liability under which unemployment compensation is recorded is entitled Other Employment Liabilities; the liability 

under which unfunded FECA is recorded is entitled Accrued FECA Liability and actuarial FECA is recorded in 

Accrued Payroll and Benefits in the accompanying Consolidated Balance Sheets. 

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. For additional information see Note 13, Accrued 

Payroll and Benefits. 

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 

represents the net investment in Property, Plant and Equipment, Inventory and Related Property, 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 dedicated collections is 

shown separately on both the Consolidated Balance Sheets and the Consolidated Statements of Changes in Net 

Position. For additional information see Note 18, Funds from Dedicated Collections. 

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 intra-governmental reimbursable activity are recognized as 

earned when the goods or services are provided and reflect the full cost of the goods or services provided. Nonexchange revenue from user fees is recognized as earned in accordance with 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. CBP 

records deferred revenue for payments received from duties collected in Puerto Rico for which goods or services 

have not been fully provided to the Government of Puerto Rico. Deferred revenue is reported as a liability on the 

Consolidated Balance Sheets until earned in a future year. 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. 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements
 

Customs and Border Protection
 

Notes to Financial Statements
 

The FY 2013 and 2012 activities reported on the Consolidated Statement of Net Cost contain all resource costs 

assigned from CBP cost centers. An activity-based costing system derives an estimate of the agency’s cost by 

activity performed. The key driver behind CBP’s allocation of cost to activity is labor hours. Each pay period, all CBP 

personnel log their time to one or more of several hundred distinct activities. Time recorded by operational cost 

center is also used to assign mission support and overhead costs to field operational cost center activities. The time 

and attendance system used to record personnel labor hours is COSS (Customs Overtime Scheduling System). 

Non-entity Revenue is recognized when the cash CBP is entitled to collect on behalf of the Federal Government is 

earned. 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. 

•	 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 Drawbacks 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 six or eight years from the date of importation to file for drawback. 

A financing source for refunds and drawbacks 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. 

A transfer to the Treasury General Fund is recognized when the non-entity revenue, collected on behalf of the 

Federal Government, is deposited into various Treasury receipt accounts designated for the particular type of 

revenue collected. 

An accrual adjustment is included to adjust cash collections and refund disbursements with the net increase or 

decrease of accrued Non-entity Accounts Receivable, net of uncollectible amounts and refunds payable. 

Use of Estimates 

Management has made certain estimates and assumptions in the reporting of assets, liabilities and note disclosures 

in the Consolidated Balance Sheets, Consolidated Statements of Net Cost, Consolidated Statements of Changes in 

Net Position, Combined Statements of Budgetary Resources, Consolidated Statements 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, allowance for doubtful taxes, duties and trade receivables, accruals for 

construction projects, retirement and post-retirement benefits assumptions, and certain non-entity receivables and 

payables related to custodial activities. 

Financial Section 103 
Notes to Financial Statements 

Customs and Border Protection 

Notes to Financial Statements 

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. 

2. Non-entity Assets 

Non-entity assets as of September 30, 2013 and 2012, consist of the following (in thousands): 

2013 2012 

Intra-governmental: 

Fund Balance with Treasury (Note 3) $ 595,684 $ 593,749 

Public 

Cash and Other Monetary Assets (Note 4) 4,580 3,272 

Accounts Receivable, Net 588 493 

Taxes, Duties and Trade Receivables, Net (Note 6) 2,682,007 2,700,465 

Total Public $ 2,687,175 $ 2,704,230 

 

Total Non-entity Assets 3,282,859 3,297,979 

Total Entity Assets 12,248,588 12,578,182 

Total Assets $15,531,447 $15,876,161 

Non-entity Fund Balance with Treasury as of September 30, 2013 and 2012 includes approximately $238.6 million 

and $191.5 million (deposit funds) in duties collected by CBP for U.S. Virgin Islands, U.S. Department of Agriculture 

and antidumping/countervailing duties and $181.4 million and $220.0 million (special funds) for Injured Domestic 

Industries as of September 30, 2013 and 2012, respectively. These assets are directly offset with liabilities as of 

September 30, 2013 and 2012. 

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. Taxes, 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 intra-governmental liability Due to the Treasury General Fund, which 

equaled $2.8 billion as of September 30, 2013 and 2012. 

3. Fund Balance with Treasury 

Fund Balance with Treasury as of September 30, 2013 and 2012 consists of the following (in thousands): 

 

 

 

 

 

 

 

 

 

 

2013 Entity Non-entity Total 

Trust Funds $ 184 $ -- $ 184 

Special Funds 475,305 181,398 656,703 

General Funds 3,882,869 175,731 4,058,600 

Other Funds 958,302 -- 958,302 

Deposit Funds 10,473 238,555 249,028 

Total $5,327,133 $595,684 $5,922,817 

104 U.S. Customs and Border Protection • Performance and Accountability Report 
2012 Entity Non-entity Total 

Unobligated Balance 

 Available $ 638,350 $ -- $ 638,350 

 Unavailable 452,325 220,029 672,354 

Obligated Balance not yet Disbursed 3,812,597 182,263 3,994,860 

Non-budgetary FBWT 

Total 

751,484 

$5,654,756 

191,457 

$593,749 

942,941 

$6,248,505 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013 Entity Non-entity Total 

Unobligated Balance 

 Available $ 717,720 $ -- $ 717,720 

 Unavailable 426,518 181,398 607,916 

Obligated Balance not yet Disbursed 3,193,516 175,731 3,369,247 

Non-budgetary FBWT 

Total 

989,379 

$5,327,133 

238,555 

$595,684 

1,227,934 

$5,922,817 

 

 

Notes to Financial Statements
 

Customs and Border Protection 

Notes to Financial Statements 

2012 Entity Non-entity Total 

Trust Funds $ 236 $ -- $ 236 

Special Funds 295,915 220,029 515,944 

General Funds 4,625,073 182,263 4,807,336 

Other Funds 722,940 -- 722,940 

Deposit Funds 10,592 191,457 202,049 

Total $5,654,756 $593,749 $6,248,505 

Trust funds are both receipt accounts and expenditure accounts that are designated by law as trust funds. 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, 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’s authority to assess and collect passenger and conveyance-related user fees, CBP’s authority to 

assess and collect fees associated with services performed at certain small airports or other facilities, and CBP’s 

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, 2013 and 2012, Customs User Fees Account includes 

approximately $110.9 million and $67.3 million, respectively; Small Airports User Fees account contained 

approximately $17.3 million and $17.6 million, respectively; Refunds, Transfers and Expenses of Operation of Puerto 

Rico account contained approximately $207.0 million and $37.7 million, respectively; and Immigration User Fees 

contained $8.6 million and $84.5 million, respectively. Non-entity fund balance represents amounts collected in 

connection with antidumping and countervailing duties of $180.6 million and $220.0 million as of September 30, 2013 

and 2012, respectively. Of this balance, $105.1 million and $140.4 million are eligible for payment to qualifying 

Injured Domestic Industries as of September 30, 2013 and 2012, respectively. The remaining amount is Due to the 

Treasury General Fund. 

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 drawbacks 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. 

The entity deposit fund balance represents amounts received as advances that are not accompanied by orders. 

Once the order is received, the deposit fund balance is decreased. 

Status of Fund Balance with Treasury as of September 30, 2013 and 2012 consists of the following (in thousands): 

Financial Section 105 
Notes to Financial Statements
 

Customs and Border Protection
 

Notes to Financial Statements
 

Portions of the Unobligated Balance Unavailable include amounts appropriated in prior fiscal years that are not 

available to fund new obligations. However, the amounts 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. 

The Non-budgetary Fund Balance with Treasury includes $639.9 million in user fees that are restricted by law for use 

until made available as provided in Appropriation Acts. See additional information in Adjustment to Unobligated 

Balance, Brought Forward, October 1, Note 22. 

CBP returned to Treasury $13.8 million and $213.4 million for indefinite no-year authority and retained $175.7 million 

and $182.3 million in authority for obligations pursuant to public law during the years ending September 30, 2013 and 

2012, respectively. 

In accordance with Public Law 101-510, CBP is required to automatically cancel obligated and unobligated balances 

of appropriated funds five 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, 2013, CBP canceled $102.8 million from FY 2008 annual appropriations. As of 

September 30, 2012, CBP canceled $94.0 million from FY 2007 annual appropriations. 

4. Cash and Other Monetary Assets 

Cash and Other Monetary Assets as of September 30, 2013 and 2012, consist of the following (in thousands): 

2013 Entity Non-entity Total 

Imprest Funds $154 $ -- $ 154 

Undeposited Collections 232 4,580 4,812 

Total $386 $4,580 $4,966 

2012 Entity Non-entity Total 

Imprest Funds $160 $ -- $ 160 

Undeposited Collections 200 3,272 3,472 

Total $360 $3,272 $3,632 

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, other governments, or returned to the importer/broker. 

5. Accounts Receivable, Net 

Receivables with the public as of September 30, 2013 and 2012 are as follows (in thousands): 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013 

Receivable Category 

Gross 

Receivable 

Amounts 

Uncollectible 

Total Net 

Receivables 

Reimbursable Services $ 6,542 $(1,425) $ 5,117 

Customs User Fees 294,069 (2,288) 291,781 

Immigration User Fees 75,062 (8,516) 66,546 

Total $375,673 $(12,229) $363,444 

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

 

 

 

Notes to Financial Statements 

Customs and Border Protection 

Notes to Financial Statements 

2012 

Receivable Category 

Gross 

Receivable 

Amounts 

Uncollectible 

Total Net 

Receivables 

Reimbursable Services $ 4,204 $ -- $ 4,204 

Customs User Fees 139,032 (3,751) 135,281 

Immigration User Fees 78,429 (15,734) 62,695 

Total $221,665 $(19,485) $202,180 

In FY 2013 CBP began reporting Small Airports User Fees and Merchandise Processing Fees receivables as 

Accounts Receivable, Net. Historically these receivables were reported as Taxes Receivable, with an offsetting 

custodial liability. However, the collections for these fees are considered entity transactions, deposited into 

unavailable receipt accounts and ultimately transferred to CBP instead of being transferred to the Treasury General 

Fund. CBP determined it would be more appropriate to report these receivables as Accounts Receivable, Net. 

6. Taxes, Duties and Trade Receivables, Net 

Receivables as of September 30, 2013 and 2012 are as follows (in thousands): 

 

 

 

 

 

2013 

Receivable Category 

Gross 

Receivable 

Amounts 

Uncollectible 

Total Net 

Receivables 

Duties $2,474,559 $ (130,583) $2,343,976 

Excise Taxes 149,281 (8,761) 140,520 

User Fees 68,224 (524) 67,700 

Fines/Penalties 458,174 (408,786) 49,388 

Interest 566,208 (537,546) 28,662 

Antidumping/ 

 Countervailing Duties 1,232,570 (1,181,555) 51,015 

Refunds and Drawback 3,032 (2,286) 746 

Total $4,952,048 $(2,270,041) $2,682,007 

 

2012 

Receivable Category 

Gross 

Receivable 

Amounts 

Uncollectible 

Total Net 

Receivables 

Duties $2,284,738 $ (131,347) $2,153,391 

Excise Taxes 142,685 (8,021) 134,664 

User Fees 197,613 (9,025) 188,588 

Fines/Penalties 445,238 (394,396) 50,842 

Interest 541,130 (478,438) 62,692 

Antidumping/ 

 Countervailing Duties 1,169,953 (1,060,247) 109,706 

Refunds and Drawback 1,461 (879) 582 

Total $4,782,818 $(2,082,353) $2,700,465 

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. CBP allows 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 $2.6 billion was recorded for 1,090,865 entries and $2.4 billion for 1,061,495 

entries for merchandise released into commerce on or before September 30, 2013 and 2012, respectively. It is 

Financial Section 107 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CBP’s 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. As stated in 

Note 5, in FY 2013 CBP began reporting Small Airports User Fees and Merchandise Processing Fees receivables as 

Accounts Receivable, Net rather than as Taxes 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 89.5 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 consist of parts and materials to repair and maintain CBP aircraft, vessels, and 

OTIA projects used for enforcement activities. In addition, CBP holds a stock of uniforms to be issued for the CBP 

academies and as needed by officers and agents until a long-term uniform contract is awarded. OTIA operating 

materials and supplies as of September 30, 2013 and 2012 includes $24.0 million and $25.1 million, respectively, for 

steel used to repair Border Patrol tactical infrastructure and $19.4 million and $26.4 million, respectively, in spare 

parts used to repair systems maintained by OTIA. CBP defines operating materials and supplies categorized as 

“Held for Repair” as items that are useable by CBP after repair. CBP defines operating materials and supplies 

categorized as “Excess, Obsolete, and Unserviceable” to consist of items that are no longer useable by 

CBP. Beginning in FY 2013, CBP estimates the net realizable value of Excess, Obsolete, and Unserviceable 

operating materials and supplies to be zero. CBP recorded a loss of $16.2 million in FY 2013 for revaluing that 

inventory to zero. 

Operating Materials and Supplies as of September 30, 2013 and 2012 consist of the following (in thousands): 

2013 2012 

Aircraft Parts 

Items Held for Use $107,394 $105,732 

Items Held for Repair 23,676 15,114 

Excess, Obsolete and Unserviceable items -- 5,535 

Total Aircraft Parts $131,070 $126,381 

Vessel Parts 

Items Held for Use $ 7,367 $ 6,585 

Items Held for Repair 103 129 

Excess, Obsolete and Unserviceable items -- 35 

Total Vessel Parts $ 7,470 $ 6,749 

OTIA Parts 

Items Held for Use $ 43,041 $40,938 

Items Held for Repair 317 10,516 

Excess, Obsolete and Unserviceable items -- 8 

Total OTIA Parts $ 43,358 $ 51,462 

Uniforms 

Items Held for Use $ 16,467 $ 6,120 

Total Uniforms $ 16,467 $ 6,120 

Total $198,365 $190,712 

Notes to Financial Statements
 

Customs and Border Protection
 

Notes to Financial Statements
 

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

 

 

 

 

 

Notes to Financial Statements
 

Customs and Border Protection
 

Notes to Financial Statements
 

8. Seized and Forfeited Property 

This schedule is presented for material categories of 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 the 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 are presented in number of cases. Methamphetamine seizures have 

increased in recent years and are therefore included in the list of illegal drugs seized and forfeited in both FY 2013 

and 2012. 

Analysis of Changes in Prohibited (Non-valued) Seized Property, September 30, 2013 

Category 

Unit of 

Measurement 

Balance 

October 1 

New 

Seizures Remissions 

New 

Forfeitures Adjustments1 

Balance 

September 30 

Illegal Drugs 

 Cannabis 

 (marijuana) Kilograms 2,051 1,224,988 0 (1,231,308) 7,373 3,104 

 Cocaine Kilograms 83 20,528 0 (20,373) (27) 211 

 Heroin Kilograms 4 2,396 0 (2,392) 1 9 

 Ecstasy Kilograms 18 720 0 (724) 3 17 

 Methamphetamine Kilograms 5 11,035 0 (11,054) 25 11 

 Steroids Kilograms 147 734 0 (613) (4) 264 

Firearms Number of 

Cases 3,112 4,600 (564) (3,290) (190) 3,668 

(1) Adjustments are the result of changes due to inventory counts, changes in legal status or property type, and/or discontinuance of cases. 

Analysis of Changes in Prohibited (Non-valued) Seized Property, September 30, 2012 

Category 

Unit of 

Measurement 

Balance 

October 1 

New 

Seizures Remissions 

New 

Forfeitures Adjustments1 

Balance 

September 30 

Illegal Drugs 

 Cannabis 

 (marijuana) Kilograms 2,086 1,242,474 0 (1,244,141) 1,632 2,051 

Cocaine Kilograms 74 19,186 0 (19,206) 29 83 

 Heroin Kilograms 3 1,900 0 (1,897) (2) 4 

Ecstasy Kilograms 1 152 0 (151) 16 18 

 Methamphetamine Kilograms 11 6,579 0 (6,595) 10 5 

 Steroids Kilograms 165 546 0 (605) 41 147 

Firearms Number of 

Cases 2,989 1,814 (427) (1,124) (140) 3,112 

(1) Adjustments are the result of changes due to inventory counts, changes in legal status or property type, and/or discontinuance of cases. 

Financial Section 109 
Analysis of Changes in Prohibited (Non-Valued) Forfeited Property, September 30, 2013 

Category 

Unit of 

Measurement 

Balance 

October 1 

New 

Forfeitures Transfers Destroyed Adjustments1 

Balance 

September 30 

Illegal Drugs 

 Cannabis 

 (marijuana) Kilograms 141,235 1,231,308 (152) (395,939) (833,133) 143,319 

 Cocaine Kilograms 24,821 20,373 (193) (22,924) (2,227) 19,850 

 Heroin Kilograms 2,768 2,392 (38) (1,818) (57) 3,247 

 Ecstasy Kilograms 921 724 (40) (496) (32) 1,077 

 Methamphetamine Kilograms 7,039 11,054 (77) (6,210) (326) 11,480 

 Steroids Kilograms 340 613 (1) (596) (21) 335 

Firearms Number of 

Cases 1,025 3,290 (3,285) (3) 133 1,160 

(1) Adjustments are the result of changes due to inventory counts, changes in legal status or property type, and/or discontinuance of cases. 

Analysis of Changes in Prohibited (Non-valued) Forfeited Property, September 30, 2012 

 

 

Category 

Unit of 

Measurement 

Balance 

October 1 

New 

Forfeitures Transfers Destroyed Adjustments1 

Balance 

September 30 

Illegal Drugs 

Cannabis 

 (marijuana) Kilograms 120,467 1,244,141 (912) (428,978) (793,483) 141,235 

 Cocaine Kilograms 23,931 19,206 (386) (19,899) 1,969 24,821 

 Heroin Kilograms 2,368 1,897 (2) (1,518) 23 2,768 

 Ecstasy Kilograms 1,058 151 (1) (308) 21 921 

 Methamphetamine Kilograms 5,198 6,595 0 (4,474) (280) 7,039 

Steroids Kilograms 293 605 0 (558) 0 340 

Firearms Number of 

Cases 1,011 1,124 (1,196) (5) 91 1,025 

Notes to Financial Statements
 

Customs and Border Protection 

Notes to Financial Statements 

(1) Adjustments are the result of changes due to inventory counts, changes in legal status or property type, and/or discontinuance of cases. 

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

 

 

 

9. General Property, Plant and Equipment, Net 

Property, Plant and Equipment as of September 30, 2013 and 2012 consists of the following (in thousands): 

 2013 

Categories

Useful 

Life 

(in years) 

Acquisition 

Cost 

Accumulated 

Depreciation/ 

Amortization 

Net 

Book Value 

Land and Land Rights N/A $ 176,690 $ -- $ 176,690 

Improvements to Land 5 - 40 2,186,940 (471,149) 1,715,791 

Construction in Progress N/A 710,029 -- 710,029 

Buildings, Other Structures 

 and Facilities* 6 - 40 1,911,635 (318,340) 1,593,295 

Equipment: 

 ADP Equipment 5 452,727 (391,518) 61,209 

 Aircraft 12 - 20 1,499,276 (770,374) 728,902 

 Vessels 5 - 30 43,228 (20,325) 22,903 

 Vehicles 3 - 8 406,045 (339,625) 66,420 

 Other Equipment 5 - 15 1,848,904 (1,216,555) 632,349 

Leasehold Improvements 2 – 30 426,269 (218,428) 207,841 

Internal Use Software 5 1,103,744 (872,991) 230,753 

Internal Use Software-in 

 Development N/A 52,735 -- 52,735 

Total $10,818,222 $(4,619,305) $6,198,917 

 2012 

Categories 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements 

Customs and Border Protection 

Notes to Financial Statements 

Useful 

Life 

(in years) 

Acquisition 

Cost 

Accumulated 

Depreciation/ 

Amortization 

Net 

Book Value 

Land and Land Rights N/A $ 167,863 $ -- $ 167,863 

Improvements to Land 5 - 40 2,056,320 (360,213) 1,696,107 

Construction in Progress N/A 1,173,411 -- 1,173,411 

Buildings, Other Structures 

and Facilities* 6 - 40 1,498,697 (262,844) 1,235,853 

Equipment: 

ADP Equipment 5 468,506 (371,101) 97,405 

Aircraft 12 - 20 1,329,544 (711,036) 618,508 

Vessels 5 - 30 42,800 (18,875) 23,925 

Vehicles 4 - 8 400,462 (311,633) 88,829 

Other Equipment 5 - 15 1,772,657 (1,077,729) 694,928 

Leasehold Improvements 2 – 30 381,040 (185,468) 195,572 

Internal Use Software 5 1,021,115 (774,811) 246,304 

Internal Use Software-in 

Development N/A 98,340 -- 98,340 

Total $10,410,755 $(4,073,710) $6,337,045 

*Includes four multi-use heritage assets located in Puerto Rico with an acquisition value of $534 thousand. 

Financial Section 111 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements 

Customs and Border Protection 

Notes to Financial Statements 

10. Stewardship PP&E 

CBP’s Stewardship PP&E is comprised of heritage assets located in the United States, including the Commonwealth 

of Puerto Rico. CBP aggregates its personal property heritage assets as collections of documents and artifacts and 

reflects its multi-use heritage assets as number of physical units. Information related to heritage assets at 

September 30, 2013 and 2012 consists of the following: 

2013 

Categories 

Beginning 

Balance Additions Withdrawals Adjustments Total 

Collection-type Assets 

Documents 1 -- -- -- 1 

Artifacts 1 -- -- -- 1 

Multi-use Heritage Assets 4 -- -- -- 4 

Total Stewardship PP&E 6 -- -- -- 6 

2012 

Categories 

Beginning 

Balance Additions Withdrawals Adjustments Total 

Collection-type Assets 

Documents 1 -- -- -- 1 

Artifacts 1 -- -- -- 1 

Multi-use Heritage Assets 4 -- -- -- 4 

Total Stewardship PP&E 6 -- -- -- 6 

CBP possesses a wide range of documents and artifacts which are unique due to historical, cultural, artistic, or 

architectural significance. These assets are used to preserve and to provide education on CBP’s history and 

tradition. Documents consist of dated tariff classifications, CBP regulations, ledgers of Collectors of Customs, and 

Customs pamphlets. Artifacts include antique scales, dated pictures of Customs Inspectors, aged tools used to 

sample imported commodities such as wood bales and bulk grain, and dated Customs uniforms, badges, and 

stamps. 

As of September 30, 2013 and 2012, CBP maintained four Customs houses, designated as multi-use heritage 

assets, located in Puerto Rico and valued at $534 thousand, which are fully depreciated. All multi-use heritage 

assets are reflected on the Consolidated Balance Sheets. Deferred maintenance and repairs and condition 

information for heritage assets are presented in the Required Supplementary Information. 

11. Other Assets 

Advances and Prepayments 

Intra-governmental advances and prepayments as of September 30, 2013 and 2012, totaling $133.9 million and 

$175.6 million, respectively, consist primarily of advances to the Departments of Transportation and Defense for 

support of border security and to Department of Justice, UNICOR, for vehicle purchases. 

Other 

Other assets consists of capital assets no longer in service, pending disposal, employee travel and salary advances, 

and prepaid rent as of September 30, 2013 and 2012, totaling $429 thousand and $233 thousand, respectively. 

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

 

 

 

 

 

 

 

 

 

 

 

 

2013 2012 

Accrued Funded Payroll and Benefits $ 65,225 $ 360,940 

Accrued Unfunded Leave 405,063 395,363 

Actuarial FECA Liability 

Total 

1,005,111 

$1,475,399 

882,292 

$1,638,595 

 

 

 

 

 

 

Notes to Financial Statements
 

Customs and Border Protection
 

Notes to Financial Statements
 

12. Liabilities Not Covered by Budgetary Resources 

Liabilities Not Covered by Budgetary Resources as of September 30, 2013 and 2012, consist of the following (in 

thousands): 

2013 2012 

Intra-governmental: 

Accrued FECA Liability $ 165,071 $ 153,378 

Other Employment Liabilities 322 674 

Due to the Treasury General Fund 2,757,534 2,782,953 

Total Intra-governmental $2,922,927 $2,937,005 

Public: 

Accrued Payroll and Benefits: 

Accrued Unfunded Leave (Note 13) 405,063 $ 395,363 

Actuarial FECA Liability (Note 13) 1,005,111 882,292 

Environmental and Disposal Liabilities (Note 14) 17,524 17,610 

Legal Contingent Liabilities 381,572 374,452 

Total Public $1,809,270 $1,669,717 

Total Liabilities Not Covered by Budgetary Resources 4,732,197 4,606,722 

Total Liabilities Covered by Budgetary Resources 1,317,389 1,483,506 

Total Liabilities $6,049,586 $6,090,228 

Liabilities not covered by new budget authority or other budgetary resources represent amounts owed in excess of 

available appropriated or other amounts. Available budgetary resources include new budget authority, unobligated 

balances of budgetary resources at the beginning of the year or net transfers of prior year balances during the year, 

spending authority from offsetting collections, and recoveries of unexpired budget authority through downward 

adjustments of prior year obligations. 

13. Accrued Payroll and Benefits 

The payroll and benefits liability as of September 30, 2013 and 2012 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 DOL. 

14. Environmental and 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. 

Financial Section 113 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013	 2012 

Refunds $106,062 $131,980 

Drawback Claims 

Total 

61,462 

$167,524 

44,930 

$176,910 

 

 

 

 

 

 

Notes to Financial Statements 

Customs and Border Protection 

Notes to Financial Statements 

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. The estimated liabilities include both friable and non-friable asbestos-related costs. Costs are 

recognized and disclosed in accordance with SFFAS No. 5; SFFAS No. 6; Technical Releases No. 2, 10, and 11, 

and DHS policy directives and memoranda. 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, 2013 and 2012 was $17.5 million and $17.6 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 FY 2013 dollars and have been appropriately escalated to account for 

inflation. 

•	 Inventory of liabilities modified due to Due Care Review process. 

15. Other Liabilities 

CBP considers $94.1 million and $87.3 million of the accrued FECA Liability, $1.0 billion and $882.3 million of the 

actuarial FECA Liability, and $356.5 and $353.0 million of the Legal Contingent Liabilities as non-current as of 

September 30, 2013 and 2012, respectively. CBP considers all remaining Other Liabilities as current. 

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 Drawbacks 

Account. 

CBP accrues a liability for refunds and drawbacks claims approved at year-end, but paid subsequent to year-end. 

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 $64.7 million and $46.6 million as 

of September 30, 2013 and 2012, respectively, as a payable. 

The September 30, 2013 and 2012, accrued liability consists of the following (in thousands): 

Injured Domestic Industries 

The Continued Dumping and Subsidy Offset Act (CDSOA) of 2000 (P.L. 106-387, Title X), enacted in FY 2001, calls 

for CBP to collect and disburse monies received in connection with antidumping and countervailing duty orders and 

findings to qualifying Injured Domestic Industries (IDI). Antidumping duties are collected when it is determined that a 

class or kind of foreign merchandise is being released into the U.S. economy at less than its fair value to the 

detriment of a U.S. industry. Countervailing duties are collected when it is determined that a foreign government is 

providing a subsidy to its local industries to manufacture, produce, or export a class or kind of merchandise for import 

into the U.S. commerce to the detriment of a U.S. industry. Due to the repeal of the CDSOA in the Deficit Reduction 

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

 

 

 

 

 

 

Facilities, 

Vehicles, and 

Fiscal Year Equipment 

2014 $ 200,856 

2015 198,571 

2016 186,243 

2017 175,025 

2018 150,215 

Beyond 2018 

Total Future Lease Payments 

1,002,180 

$1,913,090 

 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements
 

Customs and Border Protection
 

Notes to Financial Statements
 

Omnibus Reconciliation Act of 2005, only duties on entries filed prior to October 1, 2007 will eventually be distributed 

to affected U.S. companies pursuant to rulings by the U.S. Department of Commerce. As of September 30, 2013 

and 2012, CBP recorded a liability of $105.1 million and $140.4 million, respectively. CBP makes annual payments 

of antidumping/countervailing duties to qualifying Injured Domestic Industries. 

16. Leases 

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 is given 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 one year, as of September 30, 2013 (in thousands): 

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 either: (1) CBP appropriation for refunds 

and drawbacks 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, 2013 and 2012 were $381.6 million to $1.0 billion and $374.5 million to $616.5 million, respectively. Asserted 

and pending legal claims for which loss is reasonably possible range from an estimated $389.7 million to $526.4 

million and $473.5 million to $575.6 million as of September 30, 2013 and 2012, respectively. As of September 30, 

2013, CBP had four cases considered reasonably possible for which no estimate could be made. 

As disclosed in the Other Liabilities note, $356.5 million and $353.0 million of the Legal Contingent Liabilities is 

considered non-current as of September 30, 2013 and 2012, respectively. 

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 Drawbacks Account. Until such time as 

Financial Section 115 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements
 

Customs and Border Protection
 

Notes to Financial Statements
 

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, 2013 and 2012 have been recorded. 

Loaned Aircraft 

CBP is liable to the Department of Defense for damage or loss to aircraft on loan. CBP had 16 aircraft loaned from 

the Department of Defense with an acquisition value of $94.4 million, as of September 30, 2013 and 2012, 

respectively. 

18. Funds from Dedicated Collections 

Funds from dedicated collections are financed by specifically identified revenues, provided to the government by 

non-federal sources, often supplemented by other financing sources, which remain available over time. These 

specifically identified revenues and other financing sources are required by statute to be used for designated 

activities, benefits or purposes and must be accounted for separately from the Federal Government’s General Fund. 

Effective in FY 2013, SFFAS No. 43, Funds from Dedicated Collections: Amending Statement of Federal Financial 

Accounting Standards 27, changed the term “Earmarked Funds” to “Funds from Dedicated Collections.” 

Consolidated Omnibus Budget Reconciliation Act (COBRA) 

In April 1986, the President signed the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985, which 

authorized 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 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 Immigration and Naturalization 

Service (INS), 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. 

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

 

 

 

 

 

 

 

 

 

 

 2013 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements
 

Customs and Border Protection
 

Notes to Financial Statements
 

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 was still 

required to provide inspection services. 

The IUFA was also established as a repository for fines imposed to prevent unauthorized landing and unlawful 

transport of aliens into 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. 

Beginning 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 82.6 percent of the user 

fee, while the other 17.4 percent is turned over to ICE. 

The following tables present condensed data relating to CBP funds from dedicated collections (disclosed in Note 1) 

as of and for the years ended September 30, 2013 and 2012 (in thousands). 

Balance Sheet COBRA IUF All Others Total 

Assets 

Fund Balance with Treasury $ 110,919 $ 44,815 $ 149,150 $ 304,884 

Taxes, Duties & Trade Receivables, Net -- -- -- --

Other Assets 292,012 66,546 2,552 361,110 

Total Assets $ 402,931 $ 111,361 $ 151,702 $ 665,994 

Liabilities and Net Position 

Liabilities $ 22,811 $ -- $ 1,691 $ 24,502 

Cumulative Results of Operations 380,120 111,361 150,011 641,492 

Total Liabilities and Net Position $ 402,931 $ 111,361 $ 151,702 $ 665,994 

Statement of Net Cost 

Gross Cost $ 406,464 $ 632,041 $ 124,515 $ 1,163,020 

Less: Earned Revenue -- -- 2,776 2,776 

Net Cost of Operations $ 406,464 $ 632,041 $ 121,739 $ 1,160,244 

Statement of Changes In Net Position 

Net Position Beginning of Period $ 181,369 $ 147,217 $ 106,086 $ 434,672 

Net Costs of Operations (406,464) (632,040) (121,740) (1,160,244) 

Non-exchange Revenue 448,683 -- 156,322 605,005 

Net Transfers In/Out (2,167,719)

) 

(116,842)

) 

--

) 

(2,284,561)

) Other (Note 21) 2,324,251 713,026 9,343 3,046,620 

Change in Net Position $ 198,751 $(35,856) $ 43,925 $ 206,820 

Net Position End of Period $ 380,120 $111,361 $ 150,011 $ 641,492 

Financial Section 117 
$$

 2012 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements 

Customs and Border Protection 

Notes to Financial Statements 

Balance Sheet COBRA IUF All Others Total 

Assets 

Fund Balance with Treasury $ 67,342 $ 84,521 $106,333 $ 258,196 

Taxes, Duties & Trade Receivables, Net 122,869 -- 1 122,870 

Other Assets 135,481 62,696 442 198,619 

Total Assets $ 325,692 $ 147,217 $106,776 $ 579,685 

Liabilities and Net Position 

Liabilities $ 144,323 $ -- $ 690 $ 145,013 

Cumulative Results of Operations 181,369 147,217 106,086 434,672 

Total Liabilities and Net Position $ 325,692 $ 147,217 $106,776 $ 579,685 

Statement of Net Cost 

Gross Cost $ 472,024 $ 577,384 $ 84,330 $ 1,133,738 

Less Earned Revenues -- -- 1,685 1,685 

Net Cost of Operations $ 472,024 $ 577,384 $ 82,645 $ 1,132,053 

Statement of Changes In Net Position 

Net Position Beginning of Period $ 796,302 $ 134,256 $ 69,527 $ 1,000,085 

Adjustments (639,940) -- -- (639,940) 

Net Position Beginning Balances, 

Adjusted 156,362 134,256 69,527 360,145 

Net Costs of Operations (472,024) (577,384) (82,645) (1,132,053) 

Non-exchange Revenue 463,107 -- 110,749 573,856 

Net Transfers In/Out (2,099,772)

) 

(119,087)

) 

--

) 

(2,218,859)

) Other (Note 21) 2,133,696 709,432 8,455 2,851,583 

Change in Net Position $ 25,007 $ 12,961 $ 36,559 $ 74,527

Net Position End of Period $ 181,369 $ 147,217 $106,086 $ 434,672 

19. Intra-governmental Costs and Exchange Revenue 

Intra-governmental 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). Intra-governmental exchange revenue is disclosed separately from 

exchange revenue with the public. The criteria used for this classification requires that the intra-governmental 

expenses relate to the source of goods and services purchased by the reporting entity and not to the classification of 

related revenue. With intra-governmental costs, the buyer and seller are both Federal entities. If a Federal entity 

purchases goods or services from another Federal entity and sells them to the public, the exchange revenue would 

be classified as “with the public,” but the related costs would be classified as intra-governmental. The purpose of this 

classification is to enable the Federal Government to provide consolidated financial statements, and not to match 

public and intra-governmental revenue with costs that are incurred to produce public and intra-governmental 

revenue. 

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

 

 

 

 

 

Notes to Financial Statements
 

Customs and Border Protection
 

Notes to Financial Statements
 

In FY 2013 CBP established a new structure for developing the budget, moving from an appropriations-centered 

process to a planning and programming process that is driven by CBP’s goals and objectives. The programs 

presented in the FY 2013 Statement of Net Cost align with the new Future Years Homeland Security Program 

structure and reflect the transition from reporting costs and revenue by major appropriation to reporting costs and 

revenue associated with accomplishing CBP’s missions and goals. The FY 2012 presentation was not restated in the 

FY 2013 format because the FY 2013 programs are not applicable for FY 2012 reporting. The table below presents 

how the FY 2012 program costs and revenues relate to the new FY 2013 programs structure. The costs and revenues 

associated with Intelligence and Targeting in FY 2013 were considered overhead in FY 2012 and were allocated in FY 

2012 to Border Security Inspections and Trade Facilitation at Ports of Entry, Border Security and Control Between 

Ports of Entry, and Air and Marine Operations programs. 

FY 2012 Programs Reported Primarily in FY 2013 Programs 

Border Security Inspections and Trade Facilitation at 

Ports of Entry 

Securing and Expediting Trade and Securing 

and Expediting Travel 

Border Security and Control Between Ports of Entry Securing America’s Borders 

Border Security Fencing, Infrastructure and 

Technology Securing America’s Borders 

Automation Modernization Securing and Expediting Trade and Securing 

and Expediting Travel 

Air and Marine Operations Securing America’s Borders 

The Consolidated Statement of Net Cost reflects intra-governmental and public cost and exchange revenue as 

summarized below for the years ended September 30, 2013 and 2012 (in thousands): 

Financial Section 119 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements
 

Customs and Border Protection 

Notes to Financial Statements 

For the year ended September 30, 2013: 

2013 

Securing America’s Borders 

Intra-governmental Costs $ 1,470,571 

Public Costs 3,671,553 

Total Securing America’s Borders Costs $ 5,142,124 

Less: Intra-governmental Earned Revenue 1,604 

Less: Public Earned Revenue 7,647 

Total Securing America’s Borders Revenue $ 9,251 

Securing and Expediting Trade 

Intra-governmental Costs 1,040,394 

Public Costs 2,060,690 

Total Securing and Expediting Trade Costs $ 3,101,084 

Less: Intra-governmental Earned Revenue 65,666 

Less: Public Earned Revenue 71,947 

Total Securing and Expediting Trade Revenue $ 137,613 

Securing and Expediting Travel 

Intra-governmental Costs 1,282,933 

Public Costs 2,690,261 

Total Securing and Expediting Travel Costs $ 3,973,194 

Less: Intra-governmental Earned Revenue 35,007 

Less: Public Earned Revenue 55,655 

Total Securing and Expediting Travel Revenue $ 90,662 

Intelligence and Targeting 

Intra-governmental Costs 136,107 

Public Costs 438,774 

Total Intelligence and Targeting Costs $ 574,881 

Less: Intra-governmental Earned Revenue 24 

Less: Public Earned Revenue 2,632 

Total Intelligence and Targeting Revenue $ 2,656 

Net Cost of Operations $12,551,101 

120 U.S. Customs and Border Protection • Performance and Accountability Report 
Border Security Inspections and Trade Facilitation at Ports of Entry 

2012 

 Intra-governmental Costs $ 2,138,553 

 Public Costs 4,471,361 

 Total Border Security Inspections and Trade Facilitation at Ports 

 of Entry Costs $ 6,609,914 

 Less: Intra-governmental Earned Revenue 66,508 

 Less: Public Earned Revenue 

 Total Border Security Inspections and Trade Facilitation at Ports 

 of Entry Revenue 

Border Security and Control Between Ports of Entry 

 Intra-governmental Costs

 Public Costs

 Total Border Security and Control Between Ports of Entry Costs 

94,966 

$ 161,474 

1,506,562 

3,128,379 

$ 4,634,941 

 Less: Intra-governmental Earned Revenue 56,732 

 Less: Public Earned Revenue

 Total Border Security and Control Between Ports of Entry Revenue 

53,465 

$ 110,197 

Border Security Fencing, Infrastructure and Technology 

 Intra-governmental Costs 85,315 

 Public Costs 

 Total Border Security Fencing, Infrastructure and 

 Technology Costs 

 

276,737 

 $ 362,052 

 Less: Intra-governmental Earned Revenue 167 

 Less: Public Earned Revenue 

 Total Border Security Fencing, Infrastructure and 

 Technology Revenue 

--

 $ 167 

Automation Modernization 

 Intra-governmental Costs 14,455 

 Public Costs 

 Total Automation Modernization Costs 

301,160 

$ 315,615 

 Less: Intra-governmental Earned Revenue --

 Less: Public Earned Revenue 

 Total Automation Modernization Revenue 

(1) 

$ (1) 

(xx)

Air and Marine Operations 

 Intra-governmental Costs 191,259 

 Public Costs

 Total Air and Marine Operations Costs 

508,946 

$ 700,205 

 Less: Intra-governmental Earned Revenue 2,698 

 Less: Public Earned Revenue 

 Total Air and Marine Operations Revenue
 

3,598 

$ 6,296 

Net Cost of Operations
 $12,344,594 

Notes to Financial Statements
 

Customs and Border Protection 

Notes to Financial Statements 

For the year ended September 30, 2012: 

Financial Section 121 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net Program Costs $ 3,882,532

 

 

 

 

Notes to Financial Statements 

Customs and Border Protection 

Notes to Financial Statements 

20. Sub-organization Program Costs/Program Costs by Strategic Goal 

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 states, 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. 

The strategic goals identified in the following tables align with the “DHS Strategic Plan for Fiscal Years (FY) 2012 – 

2016.” The DHS Strategic Plan is the result of the DHS Quadrennial Homeland Security Review (QHSR), which 

established a unified, strategic framework for homeland security missions and goals. As stated in Note 19, in FY 

2013 CBP changed the program structure for reporting costs and revenue associated with accomplishing CBP’s 

mission goals, which support the DHS Strategic Plan. The FY 2012 presentation was not restated in the FY 2013 

format because the FY 2013 programs are not applicable for FY 2012 reporting. 

For the year ended September 30, 2013 (in thousands): 

2013 

Enforcing & 

Administering 

Our Immigration 

Laws 

Providing Essential 

Support to National, 

Economic and 

Homeland Security 

Fostering a Safe 

& Secure 

Homeland 

Schedule of Net Cost by Program 

and Responsibility Segment 

Intra-Entity 

Eliminations 

Consolidated 

Total 

Securing America’s Borders 

Gross Costs $ 5,138,348 $ 50,825 -- $ 47,049 $ 5,142,124 

Less: Earned Revenue 62,630 - -- 53,379 9,251 

Net Program Costs $ 5,075,718 $ 50,825 -- $ ( 6,330) $ 5,132,873 

Securing and Expediting Trade 

Gross Costs $ 2,947,167 -- $947,345 $ 793,428 $ 3,101,084 

Less: Earned Revenue 471,742 -- 148,699 482,828 137,613 

Net Program Costs $ 2,475,425 -- $798,646 $ 310,600 $ 2,963,471 

Securing and Expediting Travel 

Gross Costs $ 2,545,840 $1,912,060 $ 221 $ 484,927 $ 3,973,194 

Less: Earned Revenue 541,463 433,872 1 884,674 90,662 

$ 2,004,377 $1,478,188 $ 220 $(399,747) 

Intelligence and Targeting 

Gross Costs $ 682,215 -- -- $ 107,334 $ 574,881 

Less: Earned Revenue 14,513 -- -- 11,857 2,656 

Net Program Costs $ 667,702 -- -- $ 95,477 $ 572,225 

Net Cost of Operations $10,223,222 $1,529,013 $798,866 $ -- $12,551,101 

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

 

 

 Border Security Inspections 

 And Trade Facilitation at Ports 

 Of Entry 

 

 

 Trade Compliance

 

 

 

 

 

 

 

 

 

 

 

 

 Gross Costs 

 Less: Earned Revenue (1)

 Net Program Costs 

 Gross Costs 

 Less: Earned Revenue 

 Net Program Costs 

Notes to Financial Statements
 

Customs and Border Protection 

Notes to Financial Statements 

For the year ended September 30, 2012 (in thousands): 

2012 

Providing 

Essential 

Support to 

National, 

Economic and 

Homeland 

Security 

Enforcing & 

Administering 

Our Immigration 

Laws 

Fostering a Safe 

& Secure 

Homeland 

Ensuring 

Resilience to 

Disasters 

Schedule of Net Cost by Program 

and Responsibility Segment 

Intra-Entity 

Eliminations 

Consolidated 

Total 

Gross Costs: 

Passenger Processing $ 2,553,008 $ 1,802,565 $ -- $ -- $ 543,065 $ 3,812,508 

Outbound 

2,181,611 

242,459 

--

--

--

--

764,588 

--

360,738 

30,514 

2,585,461 

211,945 

Total Gross Costs $ 4,977,078 $ 1,802,565 -- $764,588 $ 934,317 $ 6,609,914 

Less: Earned Revenue 1,004,037 408,924 -- 139,287 1,390,774 161,474 

Net Program Costs $ 3,973,041 $ 1,393,641 $ -- $625,301 $ (456,457) $ 6,448,440 

Border Security and Control 

 Between Ports of Entry 

Gross Costs $ 5,109,073 -- -- -- $ 474,132 $ 4,634,941 

Less: Earned Revenue 147,833 -- -- -- 37,636 110,197 

Net Program Costs $ 4,961,240 -- -- -- $ 436,496 $ 4,524,744 

Border Security Fencing, 

Infrastructure and Technology 

Gross Costs $ 315,932 $ 32,919 $ 2 $ 13,199 -- $ 362,052 

Less: Earned Revenue 137 22 -- 8 -- 167 

Net Program Costs $ 315,795 $ 32,897 $ 2 $ 13,191 -- $ 361,885 

Automation Modernization 

$ 205,639 

$ 205,640 

(1) 

$ 80,028 

$ 80,028 

--

$ 8 

$ 8 

--

$ 29,940 

$ 29,940 

--

--

--

-- 

$ 315,615 

$ 315,616 

Air and Marine Operations 

$ 722,285 

$ 713,671 

8,614 

--

--

--

$229 

30 

$199 

--

-- 

--

$ 22,309 

$ 19,961 

2,348 

$ 700,205 

$ 693,909 

6,296 

Net Cost of Operations $10,169,387 $1,506,566 $209 $668,432 $ -- $12,344,594 

Financial Section 123 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements 

Customs and Border Protection 

Notes to Financial Statements 

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, and is identified in Non-exchange Revenue and Other. 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. 

Non-exchange Revenue reported under Budgetary Financing Sources includes Land Border Inspection Fees, 

Immigration Enforcement Fees, International Registered Traveler Program Fees, Electronic Systems for Travel 

Authorization Fees, Customs User Fees, and amounts from Abandoned and Seized Goods. These amounts are 

identified as Budgetary Financing Sources because CBP recognizes budget authority related to the 

collections. Non-exchange Revenue reported under Other Financing Sources as Other, includes Immigration User 

Fees, Small Airports User Fees, and Merchandise Processing Fees, which represent revenue reported in receipt 

accounts for which CBP does not have available budgetary authority. Also reported under Other Financing Sources 

as Other, is the accounts receivable related portion of Customs User Fees. 

22. Adjustment to Unobligated Balance, Brought Forward, October 1 

The adjustment to unobligated balance, brought forward, October 1, 2011 consisted of $639.9 million in COBRA 

User Fees that resulted from a temporary fee increase and elimination of the North American Free Trade Agreement 

(NAFTA) country exemptions from 1994 to 1997. The fees are restricted by law for use until made available as 

provided in Appropriation Acts. The FY 2012 reporting change resulted from new guidance received from OMB in 

August 2012, which included creating a new unavailable receipt account for CBP to report these additional fees and 

reducing budgetary resources rather than reporting as an unapportioned balance. 

CBP will report the $639.9 million in user fees as “Non-budgetary” Fund Balance with Treasury until the collections 

are either withdrawn by Treasury from CBP’s account or made available to CBP by law. 

23. 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, activities, projects, objectives or any 

combination thereof (in thousands). In FY 2013 CBP changed the reporting of current year reimbursable funds’ 

apportionment from category A to category B to better reflect management of these funds by project rather than by 

quarters. 

Apportionment 

Category A 

Apportionment 

Category B 

Exempt from 

2013 Apportionment Total 

Obligations Incurred – Direct $ 9,648,928 $2,338,559 $1,300,623 $13,288,110 

Obligations Incurred - Reimbursable (1,283) 1,575,677 -- 1,574,394 

Total Obligations Incurred $ 9,647,645 $3,914,236 $1,300,623 $14,862,504 

Apportionment 

Category A 

Apportionment 

Category B 

Exempt from 

2012 Apportionment Total 

Obligations Incurred – Direct $ 8,761,186 $3,714,385 $1,820,615 $14,296,186 

Obligations Incurred - Reimbursable 1,536,596 80,046 -- 1,616,642 

Total Obligations Incurred $10,297,782 $3,794,431 $1,820,615 $15,912,828 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to Financial Statements
 

Customs and Border Protection
 

Notes to Financial Statements
 

24. Appropriations 

As of September 30, 2013 and 2012, the Combined Statements of Budgetary Resources consist of appropriations 

totaling $12.9 billion and $13.7 billion, respectively. This differs from the Consolidated Statements of Changes in Net 

Position as of September 30, 2013 and 2012, which consist of appropriations received totaling $8.2 billion and $8.0 

billion, respectively. This difference is due to CBP’s non-entity activity, which as of September 30, 2013 and 2012 

consists of $1.3 billion and $1.8 billion, respectively, for Refund and Drawback activity, $3.7 billion and $3.5 billion, 

respectively, for user/inspection fees and subsidy activity, which are not reported on the Consolidated Statements of 

Changes in Net Position, $597.3 million and $17.0 million, respectively, in rescissions, which are reported separately 

on the Consolidated Statements of Changes in Net Position, and $382.9 million and $362.1 million, respectively, in 

non-expenditure transfers, which are reported separately 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, Refunds and Drawbacks, 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. 

This appropriation is not subject to budgetary ceilings established by Congress. Refunds and drawbacks payable at 

year-end are not subject to funding restrictions. Refund payment funding is recognized as appropriations are used. 

25. 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 five fiscal years after the period of 

availability ends. For a no-year account, the unobligated balance is carried forward 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 $548.6 billion at September 30, 2013, 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. 

The passenger fees in the COBRA User Fee Account, totaling approximately $135.5 million, as of September 30, 

2013 are restricted by law in its use to offset specific costs incurred by CBP. 

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. 

Financial Section 125 
 

 

 

 

 

 

Notes to Financial Statements
 

Customs and Border Protection
 

Notes to Financial Statements
 

26. Explanation of Differences Between the SBR and the Budget of the U.S. Government 

The table below documents the material differences between the FY 2012 Combined Statement of Budgetary 

Resources and the actual amounts reported for FY 2012 in the Budget of the United States Government. Since the 

FY 2013 financial statements are reported prior to the Budget of the United States Government, CBP is reporting for 

FY 2012 only. Typically, the Budget of the United States Government with the FY 2013 actual data is published in 

February of the subsequent year. Once published, the FY 2013 actual data will be available at OMB website, 

www.whitehouse.gov/omb. 

Differences between the SBR and the Budget of the US Government (in thousands): 

2012 

Budgetary 

Resources 

Obligations 

Incurred 

Distributed 

Offsetting 

Receipts 

Net 

Outlays 

Combined Statement of Budgetary Resources $17,223,692 $15,912,828 $(3,499,993) $10,997,664 

Differences: 

 Expired Appropriation not Included in 

 President’s Budget (376,421) (91,398) -- --

 Refunds & Drawbacks not Included in 

 President’s Budget (70X0505) (1,817,610) (1,817,610) -- (1,773,341) 

 Injured Domestic Industries n ot Included in 

 President’s Budget (20X5688) (638,123) (418,094) -- (418,094) 

 Offsetting Receipts not Included in 

 the Treasury Annual Report -- -- (44,634) 3,499,993 

 Miscellaneous (2,000) (1,000) 1,000 

Total Differences (2,834,154) (2,327,102) (45,634) 1,309,558 

Budget of the US Government $14,389,538 $13,585,726 $(3,545,627) $12,307,222 

 

 

 

 

 

Expired authority represents funding for which CBP no longer has budget authority. Refund and Drawback and the 

Injured Domestic Industries activity is exempt from apportionment per OMB Circular A-11 and therefore is not 

included in the President’s Budget. 

27. 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, 2013 and 2012 (in thousands): 

2013 2012 

Unpaid $2,954,472 $3,314,498 

Upward/Downward Adjustment of Prior Period (364,759) (314,629) 

Total Undelivered Orders at the End of Period $2,589,713 $2,999,869 

28. Custodial Revenues 

Custodial Revenue consists of duties, user fees, excise taxes, fines and penalties, refunds and drawbacks 

overpayments and interest associated with import/export activity which 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. 

Interest collections on the Consolidated Statements of Custodial Activity reflect a negative balance in FY 2013 due to 

the current year amount including the entire change in the allowance for loss on interest receivable. The estimated 

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

 

 

 

 

2013 2012 

Refunds $ 625,790 $1,511,468 

Drawbacks 

Total

873,121 739,001 

 $1,498,911 $2,250,469 

 

Entry Year 2013 

2013 $ 824,708 

2012 288,515 

2011 95,876 

2010 33,975 

Prior Years 

Total 

255,837 

$1,498,911 

Entry Year 2012 

2012 $ 951,810 

2011 707,087 

2010 89,277 

2009 37,503 

Prior Years 

Total 

464,792 

$2,250,469 

 

 

2013 2012 

Antidumping and Countervailing Duty Refunds $92,976 $133,994 

Interest 

Total 

4,551 7,036 

$97,527 $141,030

Notes to Financial Statements
 

Customs and Border Protection
 

Notes to Financial Statements
 

uncollectible amount increased in FY 2013 more than the increase in the interest collected and accrued. Primarily, 

revenue collections result from current fiscal year activity. 

Refunds were increased in FY 2012 due to the October 21, 2011 enactment of the Trade Adjustment Assistance 

Extension Act of 2011 (HR2832) and the United States-Colombia Trade Promotion Agreement Implementation Act 

(HR 3078) which were retroactive to January 1, 2011. Refunds paid in FY 2013 are similar to amounts paid in years 

prior to FY 2012. Disbursements from the Refunds and Drawbacks Account for the fiscal years ended September 

30, 2013 and 2012 (in thousands): 

Amounts refunded during FY 2013 and 2012 identified by entry year consist of the following (in thousands): 

The total amount of antidumping and countervailing duties varies 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, 2013 and 2012, consisted of the following 

(in thousands): 

Financial Section 127 
 

2013 2012 

 Obligations Incurred 

 Less: Spending Authority from Offsetting Collections and Recoveries
 

 Obligations Net of Offsetting Collections and Recoveries
 

 Less: Offsetting Receipts 

 Net Obligations

 Other Resources 

 Transfers In/Out Without Reimbursement 

 Imputed Financing from Costs Absorbed by Others
 

 Other (Note 21)

 Net Other Resources Used to Finance Activities

 Change in Budgetary Resources Obligated for Goods, Services and Benefits 

 Ordered, but not yet Provided
 

 Resources that Fund Expenses Recognized in Prior Periods
 

 Budgetary Offsetting Collections and Receipts that do not Affect Net Cost of
 

 Operations Resources that Finance the Acquisition of Assets or Liquidation of Liabilities 

 

 

 

 Components Requiring or Generating Resources in Future Periods 

 Increase in Annual Leave Liability and Environmental Liability 

 

 

 Change in Actuarial FECA Liability, Legal Contingent Liabilities and Other 141,633 66,718 

 Total Components of Net Cost of Operations that will Require or Generate 

 Resources in Future Periods 

 Components not Requiring or Generating Resources 

 Depreciation and Amortization
 

 Revaluation of Assets or Liabilities
 

 Other Non-budgetary Resources
 

 Total Components of Net Cost of Operations that will Not Require or Generate 

 Resources 

Notes to Financial Statements 

Customs and Border Protection
 

Notes to Financial Statements
 

29. 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, 2013 and 2012 (in thousands). 

Resources Used to Finance Activities: 

Budgetary Resources Obligated 


 


 

Total Resources Used to Finance Activities

Resources Used to Finance Items Not Part of the Net Cost of Operations 

Tax Revenue Refunds and Other Resources or Adjustments to Net Obligated 

 Resources that do not Affect Net Cost of Operations 

Total Resources Used to Finance Items Not Part of the Net Cost of Operations 

Total Resources Used to Finance the Net Cost of Operations 

Components of the Net Cost of Operations that will not Require or 

Generate Resources in the Current Period: 

Total Components of Net Cost of Operations that will Not Require or

Generate Resources in the Current Period 

Net Cost of Operations 

$14,862,504 

1,986,889 

$12,875,615 

3,776,910

$ 9,098,705

$15,912,828 

1,969,582 

$13,943,246 

3,499,993

$10,443,253 

36,425 

598,159 

3,210,294 

$ 3,844,878 

$12,943,583 

60,926 

645,076 

2,887,095 

$ 3,593,097 

$14,036,350 

$ (429,869) 

439 

$ (403,627)

33,171 

(515,626) 

609,154 

(570,282) 

983,638 

1,431,626 

$ 1,095,724 

2,204,916 

$ 2,247,816 

$11,847,859 $11,788,534

$ 9,700 $ 1,138 

$ 151,333 $ 67,856 

$ 676,571 

(20,552) 

(104,110) 

$ 629,967 

(18,760) 

(123,003) 

$ 551,909 $ 488,204 

$ 703,242 

$12,551,101 

$ 556,060 

$12,344,594 

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

 

 

 

 

 

2012 

Deferred 

Maintenance 

and Repairs 

Condition 

Assessment 

Building and Structures Poor to Good $97,802 

Vehicles Good --

Equipment Good --

Multi-Use Heritage Assets Good --

Collections (documents and artifacts) 

Total 

Poor to Good --

$97,802

Required Supplementary Information
 

Customs and Border Protection 

Required Supplementary Information 

(Unaudited) 

Deferred Maintenance and Repairs 

Deferred maintenance and repairs are maintenance and repairs that were not performed when they should have been 

or were scheduled to be performed, and were delayed until a future period. Maintenance and repairs include 

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 preventive 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. An assessment of “poor” means the 

facility/equipment does not meet most maintenance standards and requires frequent repairs to prevent accelerated 

deterioration and to provide a minimal level of operating function. In some cases, this includes condemned or failed 

facilities. Deferred maintenance on property, plant and equipment as measured by condition assessment survey, is 

comprised of (in thousands): 

2013 

Deferred 

Maintenance 

and Repairs 

Condition 

Assessment 

Building and Structures Poor to Good $181,484 

Vehicles Good --

Equipment Good --

Multi-Use Heritage Assets Poor to Good 987 

Collections (documents and artifacts) Poor to Good --

Total $182,471 

Financial Section 129 
 

 

 

 

 

 

 

 

 

 

 

Required Supplementary Information 

Customs and Border Protection 

Required Supplementary Information 

(Unaudited) 

Statement of Budgetary Resources (SBR) 

The total Budgetary Resources of $16.1 billion for FY 2013 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. 

Schedule of Budgetary Resources by Major Budget Accounts: 

2013 

Salaries & 

As of September 30, 2013 (in thousands): Expense Air & Marine BSFIT Construction Automation Other Total 

Budgetary Resources 

Unobligated balance brought forward, October 1 $ 268,273 $ 69,777 $407,160 $ 41,502 $ 99,244 $ 424,908 $ 1,310,864 

Adjustment to unobligated balance brought 

forward, October 1 -- -- -- -- -- -- --

Unobligated balance brought forward, 

October 1, as adjusted $ 268,273 $ 69,777 $407,160 $ 41,502 $ 99,244 $ 424,908 $ 1,310,864 

Recoveries of prior year unpaid obligations 137,200 68,493 90,289 60,366 27,051 5,922 389,321 

Other changes in unobligated balance (92,421) (1,375) (9,031) -- 6,880 -- (95,947) 

Unobligated balance from prior year budget 

authority, net 313,052 136,895 488,418 101,868 133,175 430,830 1,604,238 

Appropriations 8,234,379 758,262 234,256 209,527 722,847 2,793,739 12,953,010 

Spending authority from offsetting collections 1,569,333 2,734 50 -- -- 25,451 1,597,568 

Total Budgetary Resources $10,116,764 $897,891 $722,724 $311,395 $856,022 $3,250,020 $16,154,816 

Status of Budgetary Resources 

Obligations incurred (Note 23) $ 9,871,168 $825,224 $302,033 $ 233,564 $771,907 $2,858,608 $14,862,504 

Unobligated balance, end of year: 

Apportioned 26,360 66,842 402,412 30,065 75,084 117,111 717,874 

Unapportioned 219,236 5,825 18,279 47,766 9,031 274,301 574,438 

Total unobligated balance, end of year 245,596 72,667 420,691 77,831 84,115 391,412 1,292,312 

Total Budgetary Resources $10,116,764 $897,891 $722,724 $311,395 $856,022 $3,250,020 $16,154,816 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 801,900 

--

 

Required Supplementary Information 

Customs and Border Protection 

Required Supplementary Information 

(Unaudited) 

2013 

Salaries & 

Expense Air & Marine BSFIT Construction Automation Other Total 

Change in Obligated Balance: 

Unpaid Obligations: 

Unpaid obligations brought forward, 

October 1 (gross) $ 1,761,724 $ 604,631 $ 644,865 $ 694,687 $ 177,004 $ 274,569 $ 4,157,480 

Obligations incurred (Note 23) 9,871,168 825,224 302,033 233,564 771,907 2,858,608 14,862,504 

Outlay (gross) (10,316,900) (801,900) (343,888) (348,883) (579,645) (2,718,442) (15,109,658) 

Recoveries of prior year unpaid obligations (137,200) (68,493) (90,289) (60,366) (27,051) (5,922) (389,321) 

Unpaid obligations, end of year (gross) 1,178,792 559,462 512,721 519,002 342,215 408,813 3,521,005 

Uncollected Payments: 

Uncollected customer payments from Federal 

sources brought forward from October 1 (161,057) (363) (167) -- -- (1,033) (162,620) 

Change in uncollected customer payments 

from federal sources 10,974 (228) 167 -- -- (52) 10,861 

Uncollected customer payments from 

federal sources, end of year (150,083) (591) -- -- -- (1,085) (151,759) 

Obligated Balance, Start of Year $ 1,600,667 $ 604,268 $ 644,698 $ 694,687 $ 177,004 $ 273,536 $ 3,994,860

Obligated Balance, End of Year $ 1,028,709 $ 558,871 $ 512,721 $ 519,002 $ 342,215 $ 407,728 $ 3,369,246 

Budget Authority and Outlays, Net: 

Budget authority, gross $ 9,803,712 $ 760,996 $ 234,306 $ 209,527 $ 722,847 $ 2,819,190 $ 14,550,578 

Actual offsetting collections (1,580,307) (2,506) (217) -- -- (25,399) (1,608,429) 

Change in uncollected customer payment from 

Federal sources 10,974 (228) 167 -- -- (52) 10,861 

Budget Authority, Net $ 8,234,379 $ 758,262 $ 234,256 $ 209,527 $ 722,847 $ 2,793,739 $ 12,953,010 

Outlays, gross 

Actual offsetting collections 

$10,316,900 

(1,580,307) (2,506) 

$343,888

(217)

$ 348,883 

--

$ 579,645 $ 2,718,442

(25,399) 

$ 15,109,658 

(1,608,429) 

Outlays, net 

Distributed offsetting receipts 

8,736,593

--

799,394

--

343,671

--

348,883 

--

579,645 

--

2,693,043 

(3,776,910) 

13,501,229 

(3,776,910) 

Agency Outlays, Net $ 8,736,593 $ 799,394 $ 343,671 $ 348,883 $ 579,645 $(1,083,867) $ 9,724,319 

Financial Section 131 
 

 

 

 

 

 

 

 

Required Supplementary Information
 

Customs and Border Protection 

Required Supplementary Information 

(Unaudited) 

Schedule of Budgetary Resources by Major Budget Accounts: 

2012

Salaries & 

As of September 30, 2012 (in thousands): Expense Air & Marine BSFIT Construction Automation Other Total 

Budgetary Resources 

Unobligated balance brought forward, October 1 $ 295,328 $ 79,856 $403,880 $ 52,217 $ 90,036 $1,347,055 $ 2,268,372 

Adjustment to unobligated balance brought 

forward, October 1 -- -- -- -- -- (639,940) (639,940) 

Unobligated balance brought forward, 

October 1, as adjusted $ 295,328 $ 79,856 $403,880 $ 52,217 $ 90,036 $ 707,115 $ 1,628,432 

Recoveries of prior year unpaid obligations 138,966 25,950 71,894 83,846 21,331 9,249 351,236 

Other changes in unobligated balance (90,371) (1,613) -- (1,401) -- -- (93,385) 

Unobligated balance from prior year budget 

authority, net 343,923 104,193 475,774 134,662 111,367 716,364 1,886,283 

Appropriations 9,054,230 503,966 378,100 236,596 329,275 3,216,896 13,719,063 

Spending authority from offsetting collections 1,583,428 4,905 372 -- -- 29,641 1,618,346 

Total Budgetary Resources $10,981,581 $613,064 $854,246 $371,258 $440,642 $3,962,901 $17,223,692 

Status of Budgetary Resources 

Obligations incurred (Note 23) $10,713,308 $543,287 $447,086 $329,756 $341,398 $3,537,993 $15,912,828 

Unobligated balance, end of year: 

Apportioned 26,551 68,239 404,624 91 99,173 39,832 638,510 

Unapportioned 241,722 1,538 2,536 41,411 71 385,076 672,354 

Total unobligated balance, end of year 268,273 69,777 407,160 41,502 99,244 424,908 1,310,864 

Total Budgetary Resources $10,981,581 $613,064 $854,246 $371,258 $440,642 $3,962,901 $17,223,692 

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

Unpaid Obligations: 

 

 

 

 

 

 

 

 

 

 

 

 

 

Required Supplementary Information 

Customs and Border Protection 

Required Supplementary Information 

(Unaudited) 

2012 

Salaries & 

Expense Air & Marine BSFIT Construction Automation Other Total 

Change in Obligated Balances 

Unpaid obligations brought forward, 

October 1 (gross) $ 1,851,440 $615,779 $688,048 $1,075,435 $244,740 $ 237,725 $ 4,713,167 

Obligations incurred (Note 23) 10,713,308 543,287 447,086 329,756 341,398 3,537,993 15,912,828 

Outlay (gross) (10,664,058) (528,485) (418,374) (626,659) (387,803) (3,491,900) (16,117,279) 

Recoveries of prior year unpaid obligations (138,966) (25,950) (71,894) (83,846) (21,331) (9,249) (351,236) 

Unpaid obligations, end of year (gross) 1,761,724 604,631 644,866 694,686 177,004 274,569 4,157,480 

Uncollected Payments: 

Uncollected customer payments from Federal 

sources brought forward from October 1 (162,650) (301) -- -- -- (945) (163,896) 

Change in uncollected customer payments 

from federal sources 1,593 (62) (167) -- -- (88) 1,276 

Uncollected customer payments from 

federal sources, end of year (161,057) (363) (167) -- -- (1,033) (162,620) 

Obligated Balance, Start of Year $ 1,688,790 $615,478 $688,048 $1,075,435 $244,740 $ 236,780 $ 4,549,271 

Obligated Balance, End of Year $ 1,600,667 $604,268 $644,699 $ 694,686 $177,004 $ 273,536 $ 3,994,860 

Budget Authority and Outlays, Net: 

Budget authority, gross $10,637,658 $508,871 $378,472 $ 236,596 $329,275 $3,246,537 $15,337,409 

Actual offsetting collections (1,585,021) (4,843) (205) -- -- (29,553) (1,619,622) 

Change in uncollected customer payment from 

Federal sources 1,593 (62) (167) -- -- (88) 1,276 

Budget Authority, Net $ 9,054,230 $503,966 $378,100 $ 236,596 $329,275 $3,216,896 $13,719,063 

Outlays, gross $10,664,058 $528,485 $418,374 $ 626,659 $387,803 $3,491,900 $16,117,279 

Actual offsetting collections (1,585,021) (4,843) (205) -- -- (29,553) (1,619,622) 

Outlays, net 9,079,037 523,642 418,169 626,659 387,803 3,462,347 14,497,657 

Distributed offsetting receipts -- -- -- -- -- (3,499,993) (3,499,993) 

Agency Outlays, Net $ 9,079,037 $523,642 $418,169 $ 626,659 $387,803 $ (37,646) $10,997,664 

Financial Section 133 
 

 

 

 

 

 

 

 

 

 

Required Supplementary Information
 

Customs and Border Protection 

Required Supplementary Information 

(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 

one 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 2013 and 2012, CBP had the legal right to collect 

$2.7 billion of receivables. In addition, there were $2.3 billion and $2.6 billion representing records still in the protest 

phase for FY 2013 and 2012, respectively. CBP recognized as write-offs $288 million and $78 million of assessments 

that the Department has statutory authority to collect at September 30, 2013 and 2012, respectively, but has no future 

collection potential. Most of this amount represents trade receivables. 

134 U.S. Customs and Border Protection • Performance and Accountability Report 
Auditors’ Report
 

Independent Auditors’ Report 

The independent audit of CBP’s consolidated financial statements was conducted by KPMG LLP, 

and follows in its entirety. 

Financial Section 135 
Auditors’ Report 

This page intentionally left blank. 

136 U.S. Customs and Border Protection • Performance and Accountability Report 
Auditors’ Report
 

OIG-14-59 

Independent Auditors’ Report on U.S. Customs and 

Border Protection’s FY 2013 Financial Statement 

March 2014 

Financial Section 137 
 

 

 

 

 

 

 

 

Anne L. Richards 

 

 

 

 

 

 

-

Auditors’ Report
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Washington, DC 20528 / www.oig.dhs.gov 

MAR 27 2014 

MEMORANDUM FOR:	 Deborah J. Schilling 

Chief Financial Officer 

U.S. Customs and Border Protection 

Assistant Inspector General for Audits 

FROM: 

SUBJECT:	 Independent Auditors’ Report on U.S. Customs and Border 

Protection’s FY 2013 Financial Statements 

Attached for your action is our final report, Independent Auditors’ Report on U.S. 

Customs and Border Protection’s FY 2013 Financial Statements. We have incorporated 

the formal comments from U.S. Customs and Border Protection (CBP) in the final report. 

The report presents the results of CBP’s consolidated financial statement audits for 

fiscal years (FY) 2013 and 2012. We contracted with the independent public accounting 

firm KPMG LLP to perform the audits. KPMG LLP concluded that CBP’s consolidated 

financial statements as of and for the years ended September 30, 2013, and September 

30, 2012, are presented fairly, in all material respects, in conformity with U.S. generally 

accepted accounting principles. 

The FY 2013 independent auditors’ report also contains observations and 13 

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. Your office 

concurred with the one material weakness and three other significant deficiencies 

presented below: 

Significant Deficiencies in Internal Control 

A. Drawback of Duties, Taxes, and Fees 

B. Property, Plant, and Equipment 

C. Entry Process 

1. In Bond Program 

2. Bonded Warehouse and Foreign Trade Zones 

3. Entry Reports 

D. Information Technology 

138 U.S. Customs and Border Protection • Performance and Accountability Report 
www.oig.dhs.gov 2 OIG-14-59

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Auditors’ Report 

 

 

 

Financial Section 139 

KPMG LLP is responsible for the attached independent auditors’ report dated 

January 30, 2014, 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 for public dissemination.

 

Please call me with any questions, or your staff may contact Mark Bell, Deputy Assistant 

Inspector General for Audits, at (202) 254-4100. 

Attachment
 

 

 

 

 

 

“ ”

Auditors’ Report
 

KPMG LLP 

Suite 12000 

1801 K Street, NW 

Washington, DC 20006 

Independent Auditors’ Report 

Inspector General

U.S. Department of Homeland Security: 

Commissioner 

U.S. Customs and Border Protection: 

Report on the Financial Statements 

We have audited the accompanying consolidated financial statements of the U.S. Customs and Border

Protection (CBP), which comprise the consolidated balance sheets as of September 30, 2013 and 2012, and

the related consolidated statements of net cost, changes in net position, and custodial activity, and 

combined statements of budgetary resources for the years then ended, and the related notes to the

consolidated financial statements. 

Management’s Responsibility for the Financial Statements 

Management is responsible for the preparation and fair presentation of these consolidated financial

statements in accordance with U.S. generally accepted accounting principles; this includes the design,

implementation, and maintenance of internal control relevant to the preparation and fair presentation of

consolidated financial statements that are free from material misstatement, whether due to fraud or error. 

Auditors’ Responsibility 

Our responsibility is to express an opinion on these consolidated financial statements 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 Office of Management and Budget (OMB) Bulletin

No. 14-02, Audit Requirements for Federal Financial Statements. Those standards and OMB Bulletin No. 

14-02 require that we plan and perform the audit to obtain reasonable assurance about whether the

consolidated financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the

assessment of the risks of material misstatement of the consolidated financial statements, whether due to

fraud or error. In making those risk assessments, the auditor considers internal control relevant to the 

entity’s preparation and fair presentation of the consolidated financial statements in order to

design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an 

opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An 

audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of

significant accounting estimates made by management, as well as evaluating the overall presentation of the

consolidated financial statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion. 

KPMG LLP is a Delaware limited liability partnership, 

the U.S. member firm of KPMG International Cooperative 

( KPMG International ), a Swiss entity. 

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

 

 

 

Auditors’ Report
 

Opinion on the Financial Statements 

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, 2013 and 2012, and its net costs, changes in net

position, budgetary resources, and custodial activity for the years then ended in accordance with U.S. 

generally accepted accounting principles. 

Emphasis of Matter 

As discussed in Notes 19 and 20 to the consolidated financial statements, CBP changed its presentation for

reporting the consolidated statement of net cost in order to better align its costs with its strategic objectives.

The consolidated statement of net cost for fiscal year 2012 has not been restated in the fiscal year 2013

format since the new programs are not applicable to fiscal year 2012 reporting. Our opinion is not modified 

with respect to this matter. 

Other Matters 

Required Supplementary Information 

U.S. generally accepted accounting principles require that the information in the Management’s Discussion 

and Analysis and Required Supplementary Information sections be presented to supplement the basic 

consolidated financial statements. Such information, although not a part of the basic consolidated financial

statements, is required by the Federal Accounting Standards Advisory Board who considers it to be an 

essential part of financial reporting for placing the basic consolidated financial statements in an appropriate 

operational, economic, or historical context. We have applied certain limited procedures to the required 

supplementary information in accordance with auditing standards generally accepted in the United States 

of America, which consisted of inquiries of management about the methods of preparing the information 

and comparing the information for consistency with management’s responses to our inquiries, the basic

consolidated financial statements, and other knowledge we obtained during our audits of the basic

consolidated financial statements. We do not express an opinion or provide any assurance on the

information because the limited procedures do not provide us with sufficient evidence to express an

opinion or provide any assurance. 

Other Information 

Our audits were conducted for the purpose of forming an opinion on the basic consolidated financial

statements as a whole. The information in the Acting Commissioner’s Message, Performance Section,

Message from the Chief Financial Officer, Other Information, and Acronyms as reflected in CBP’s Fiscal 

Year 2013 Performance and Accountability Report is presented for purposes of additional analysis and is 

not a required part of the basic consolidated financial statements. Such information has not been subjected 

to the auditing procedures applied in the audits of the basic consolidated financial statements, and

accordingly, we do not express an opinion or provide any assurance on it. 

Other Reporting Required by Government Auditing Standards 

Internal Control Over Financial Reporting 

In planning and performing our audit of the consolidated financial statements, we considered CBP’s

internal control over financial reporting (internal control) to determine the audit procedures that are

appropriate in the circumstances for the purpose of expressing our opinion on the consolidated financial

statements, but not for the purpose of expressing an opinion on the effectiveness of CBP’s internal control. 

Accordingly, we do not express an opinion on the effectiveness of CBP’s internal control. We did not test

all internal controls relevant to operating objectives as broadly defined by the Federal Managers’ 

Financial Integrity Act of 1982. 

Financial Section 141 
Auditors’ Report
 

Our consideration of internal control was for the limited purpose described in the preceding paragraph and 

was not designed to identify all deficiencies in internal control that might be material weaknesses or

significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have 

not been identified. However, as described in the accompanying exhibits, we identified certain deficiencies 

in internal control that we consider to be a material weakness and significant deficiencies. 

A deficiency in internal control 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 and correct,

misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in

internal control such that there is a reasonable possibility that a material misstatement of the entity’s 

financial statements will not be prevented, or detected and corrected on a timely basis. We consider the 

deficiencies described in Exhibit I to be a material weakness. 

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less 

severe than a material weakness, yet important enough to merit attention by those charged with governance.

We consider the deficiencies described in Exhibit II to be significant deficiencies. 

Compliance and Other Matters 

As part of obtaining reasonable assurance about whether CBP’s consolidated financial statements are free 

from material misstatement, we performed tests of its compliance with certain provisions of laws,

regulations, contracts, and grant agreements, noncompliance with which could have a direct and material

effect on the determination of financial statement amounts, and certain provisions of other laws and

regulations specified in OMB Bulletin No. 14-02. However, providing an opinion on compliance with 

those provisions was not an objective of our audit, and accordingly, we do not express such an opinion.

The results of our tests of compliance disclosed no instances of noncompliance or other matters that are 

required to be reported herein under Government Auditing Standards or OMB Bulletin No. 14-02. 

CBP’s Responses to Findings 

CBP’s responses to the findings identified in our audit are described in Management’s Response to the 

Independent Auditors’ Report. CBP’s responses were not subjected to the auditing procedures applied in 

the audit of the consolidated financial statements and, accordingly, we express no opinion on the responses. 

Purpose of the Other Reporting Required by Government Auditing Standards 

The purpose of the communication described in the Other Reporting Required by Government Auditing 

Standards section is solely to describe the scope of our testing of internal control and compliance and the

result of that testing, and not to provide an opinion on the effectiveness of CBP’s internal control or

compliance. Accordingly, this communication is not suitable for any other purpose. 

Washington, D.C.

January 30, 2014 

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

 

 

 

Auditors’ Report
 

EXHIBIT I 

Material Weakness 

A. Drawback of Duties, Taxes, and Fees 

Background: 

U.S. Customs and Border Protection (CBP) performs an important revenue collection function for the U.S.

Department of the Treasury. In fiscal year (FY) 2013, CBP collected approximately $36.6 billion in import 

duties, taxes, and fees on merchandise arriving in the U.S. from foreign countries. Receipts of import duties

and related refunds are presented in the statement of custodial activity in CBP’s consolidated financial

statements. 

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. 

The conditions cited below have existed for several years; however, CBP’s planned remediation for these 

conditions is dependent upon funding for IT systems modernization and new system implementation. In FY

2013, CBP continued its efforts to review and reassess the drawback process as a whole. 

Conditions: 

The following weaknesses in internal control over drawback of duties, taxes, and fees paid by the importer 

were identified: 

•	 CBP is unable to prevent, or detect and correct excessive drawback claims against an entry

summary due to the inherent limitations of CBP’s current entry/collections system and lack of

controls therein. An entry summary may comprise numerous line items; however, the system does 

not have the capability to compare, verify, and track essential information on drawback claims to 

the related underlying consumption entry sheets and their individual line items, or export 

documentation upon which the drawback claim is based. 

•	 The drawback module within CBP’s current entry/collections system provides information at the 

entry summary level to prevent the total amount of a drawback claim against a given import entry 

from exceeding 100 percent of the total amount of duties, taxes, and fees collected. By law, the

amount paid for drawback claims against a given import entry are not to exceed 99 percent of the

duties, taxes, and fees collected at the individual line item level and the entry summary level. In

addition, export information is not linked to the drawback module and therefore, electronic 

comparisons of export data cannot be performed within the system to ensure that overpayments of

drawback claims are not made. 

•	 Drawback review policies do not require Drawback Specialists to review prior drawback claims 

against a selected import entry to determine whether an excessive amount has been claimed against

the underlying consumption entry sheets. Due to system limitations, this review of prior drawback

claims against a consumption entry sheet cannot be automated. CBP utilizes a validity control

review process to select and trace the highest dollar invoice item on the highest dollar consumption

entry sheet for claims over $50,000; however, this approach is not statistical. In addition, drawback

review policy and procedures allow Drawback Specialists, with supervisory approval, to 

judgmentally decrease the number of consumption entry sheets reviewed for certain claims. Further, 

I.1
 

Financial Section 143 
I.2

 

 

 

 

 

 

Auditors’ Report
 

EXHIBIT I 

CBP’s sampling methodology for selecting underlying consumption entry sheets is not considered 

statistically valid for projecting errors. 

•	 The statutory period for document retention of a drawback claim is three years from the date of

payment; however, there are several situations that could extend the life of the drawback claim well

beyond three years. Therefore, documentation retention periods are not adequate to ensure that

support for drawback transactions is maintained for the full lifecycle of the claim. 

Cause/Effect: 

Due to system limitations, the drawback process is mostly manual. This places an additional burden on 

limited resources. CBP uses a compensating manual process to sample, verify, and match consumption 

entry and export documentation to drawback claims from importers. However, CBP’s sampling 

methodology is not considered statistically valid for projecting errors over the population of drawback

claims. 

There is a high inherent risk of fraudulent claims or claims made in error, which increases the risk for

erroneous payments. Since all, or a statistically valid sample, of drawback claims are not reviewed against

the corresponding import entry, it is possible that drawback claims, in aggregate, could exceed the amount

of duty and tax collected on the underlying consumption entry sheet at the individual line item level. 

The length of the drawback claim lifecycle often extends beyond the statutorily mandated document

retention period. 

Criteria: 

Presented in Index of Financial Reporting and Internal Control Criteria following Exhibit II. 

Recommendations: 

We recommend that CBP: 

1.	 Continue to pursue alternative compensating controls that may ultimately identify the potential

revenue loss exposure to CBP. These alternative internal controls over drawback claims may

enhance CBP’s ability to compare, verify, and track information on drawback claims to the

corresponding underlying consumption entry sheet and export documentation, and identify duplicate

or excessive drawback claims; 

2.	 Develop and implement automated controls to prevent overpayment of a drawback claim; and 

3.	 Continue to refine the drawback review process so that valid results and meaningful analysis of data 

can be provided and utilized by management. 

144 U.S. Customs and Border Protection • Performance and Accountability Report 
II.1

 

Auditors’ Report 

EXHIBIT II 

Other Significant Deficiencies 

B. Property, Plant, and Equipment 

Background: 

U.S. Customs and Border Protection (CBP) acquired new equipment, facilities, and other assets through

purchase and construction in FY 2013. The increase in assets is primarily due to construction of new 

facilities and the purchase of inspection equipment at ports of entry. 

Condition: 

CBP has invested resources to address weaknesses in its processes for tracking and reporting property,

plant, and equipment (PP&E) balances. CBP made improvements in its internal control over PP&E in FY 

2013; however, several weaknesses remained. Specifically, CBP: 

•	 Did not timely and accurately record certain construction-in-progress (CIP) settlement

transactions, resulting in misclassification of assets between CIP and “in-use”.
 

•	 Recorded certain asset additions prior to the completion of a construction project, without proper

supporting documentation.
 

•	 Did not detect and correct for errors when certain assets recorded in the general ledger no longer

existed.
 

•	 Did not timely record certain asset retirements. Additionally, some assets were retired without

approval and/or sufficient supporting documentation.
 

Criteria: 

Presented in Index of Financial Reporting and Internal Control Criteria following Exhibit II. 

Cause/Effect: 

CBP personnel did not consistently adhere to established policies and procedures for recording PP&E

costs, and did not have sufficient oversight, including monitoring controls over ongoing CIP projects, to 

ensure that all PP&E transactions were recorded timely and accurately in the general ledger. 

CBP’s PP&E and related depreciation balances may be misstated at certain points during the fiscal year

due to untimely or inaccurate PP&E entries. 

Recommendations: 

We recommend that CBP: 

1.	 Reinforce existing policies and procedures for recording asset additions, retirements, and 

settlements; and
 

2.	 Continue to enhance supervisory review and monitoring controls to review PP&E transactions in a

timely manner.
 

Financial Section 145 
II.2

 

 

Auditors’ Report
 

EXHIBIT II 

C. Entry Process 

1. In-Bond Program 

Background: 

An in-bond entry allows for the movement of cargo through the United States without payment of duty or 

appraisement prior to entry into either domestic commerce or exportation to a foreign country. The cargo

may enter U.S. commerce after it arrives at the destination port and an entry is filed, may be entered into a 

bonded warehouse for storage, or may be admitted into a Foreign Trade Zone. 

To assist with in-bond oversight functions, CBP implemented the In-Bond Compliance Module in 

September 2012. CBP conducts audits and examinations to assist in protecting custodial revenues related

to in-bond entries of goods. CBP performs audits by reviewing entry documents or documents that show

proof of subsequent export to ensure proper accounting of all merchandise has occurred. Examinations

are conducted by physical inspection of the merchandise to ensure the commodity matches the entry

documentation. At the end of each audit or examination, the findings, conclusions, and corrective actions 

recommended or taken are documented. These results assist CBP in assessing the risk of bonded carriers. 

Condition: 

The following weaknesses in internal control over compliance exams and audits were identified: 

•	 Guidance was insufficient for port personnel to implement the new in-bond compliance program.

While CBP established a policy that required port personnel to perform examinations as they are 

assigned, CBP did not establish specific requirements for how often port personnel should query

the compliance module for required examinations. 

•	 CBP personnel lacked sufficient training and understanding of the functionality of the new in-bond 

compliance module. 

•	 The in-bond compliance module reports did not track the number of overdue audits and

examinations. The module did not have sufficient capability to generate reports that displayed inbonds selected for audit and/or examination. 

Criteria: 

Presented in Index of Financial Reporting and Internal Control Criteria following Exhibit II. 

Cause/Effect: 

CBP did not establish and distribute clear guidance, policies, and procedures for the new in-bond 

compliance module. Also, personnel were not adequately trained on the new requirements and use of the

system tools. Finally, the system lacked sufficient reporting capability to support the program. 

The in-bond monitoring process supports CBP’s efforts to protect custodial revenues. The inability to

effectively monitor the in-bond process could result in missed opportunities for CBP to assess fines and

penalties and collect the associated revenues. 

146 U.S. Customs and Border Protection • Performance and Accountability Report 
II.3

 

 

Auditors’ Report 

EXHIBIT II 

Recommendations: 

We recommend that CBP: 

1.	 Identify and implement a robust audit process for ensuring in-bond shipments reach the intended 

destination;
 

2.	 Continue to enhance the in-bond compliance module including the related systems tools; and 

3.	 Provide additional training and guidance to personnel for the in-bond process 

2. Bonded Warehouse and Foreign Trade Zones 

Background: 

Bonded Warehouses (BWs) are facilities under CBP’s supervision used to store merchandise that has not

made entry into U.S. commerce. The merchandise stored in such warehouses is secured by the bond on

the warehouse. Merchandise is entered into the BW by the submission of the CBP Form 7501, Entry 

Summary with Continuation Sheets, and can be stored in the bonded facility for up to five years. 

Foreign Trade Zones (FTZs) are secure areas under CBP supervision that are legally considered to be 

outside the commerce of the United States. Authority for establishing these facilities is granted by the 

Foreign Trade Zones Board under the Foreign Trade Zones Act of 1934, as amended (19 U.S.C. 81a

through 81u). Foreign and domestic merchandise may be admitted into zones for operations not otherwise

prohibited by law, including storage, exhibition, assembly, manufacturing, and processing. Merchandise

is admitted into a FTZ using CBP Form 214, Application for Foreign-Trade Zone Admission and/or 

Status Designation. 

The monitoring of BW and FTZ operations is based on the performance of risk assessments and 

compliance reviews by CBP officers in the field. CBP conducts a quarterly survey of ports that have BWs 

and FTZs, the results of which are submitted to CBP Headquarters for compilation and analysis.

Headquarters uses the survey results to assist in CBP’s determination on the effectiveness of the BW and

FTZ programs. CBP developed national databases in order to maintain a centralized repository of profiles 

of bonded facilities including BW and FTZ sites. 

Condition: 

The following weaknesses in internal control over the BW and FTZ programs were identified: 

•	 The national databases of bonded facilities are currently not designed to document (1) the assessed

risk of each BW or FTZ, (2) scheduled compliance reviews, or (3) the results of compliance 

reviews.
 

•	 CBP has not established requirements to ensure that all compliance reviews are performed; and 

•	 For several FTZs and BWs, CBP was unable to provide evidence that risk assessments were 

performed at the time of the FY 2013 compliance review of the facilities.
 

Criteria: 

Presented in Index of Financial Reporting and Internal Control Criteria following Exhibit II. 

Financial Section 147 
II.4

 

 

Auditors’ Report
 

EXHIBIT II 

Cause/Effect: 

CBP personnel did not consistently adhere to BW and FTZ policies and procedures. CBP has not

established updated, formal guidance related to monitoring of the BW and FTZ programs, including

procedures to assess whether all necessary compliance reviews are scheduled and completed. 

There is a risk that proper monitoring of BWs or FTZs will not occur if risk assessments and compliance 

reviews are not conducted within the guidelines. 

Recommendations: 

We recommend that CBP: 

1.	 Continue to monitor the compliance review results and establish updated, formal guidance for

monitoring and benchmarking performance; 

2.	 Continue to enhance procedures to determine whether all BW and FTZ facilities are subject to

review and monitoring processes; and 

3.	 Develop additional training and information-sharing processes as needed. 

3. Entry Reports 

Background: 

CBP personnel process and review certain entry edit/exception reports, including the following: 

•	 The B06, Weekly List of Rejected/Cancelled Entries Report, lists entries that were either cancelled 

or placed in rejected status. 

•	 The B07, Weekly List of Unpaid/Rejected Entries, lists entries in rejected status and entries for

which duty, taxes, and fees have not been collected, or if collected, not properly posted to the

entry. 

•	 The B08, Weekly Late Report: Entry Releases with No Follow-Up Summaries, is a cumulative 

listing of entry releases with no processing errors or follow-up entry summary on file. 

•	 The B84, Weekly Budget Clearing Account (BCA) and Suspense Item Report, is a cumulative

listing of collections that are an intentional posting to a suspense account or collections in an error

condition. 

•	 The S21, Cargo Selectivity Weekly Selectivity Delete Report, lists all entries that have been deleted 

by port personnel during the previous week. 

•	 The Q07, Monthly Unreported Quota Report, is a cumulative listing of quota entries that have not

been processed through the quota module or remain in quota rejected status where processing was

attempted. 

Condition: 

CBP personnel did not consistently complete and review reports in accordance with the requirements of

CBP directives. Specifically, a lack of segregation of duties was identified over the review process for

certain reports, some reports were untimely generated and reviewed, while other reports were not

reviewed. 

148 U.S. Customs and Border Protection • Performance and Accountability Report 
II.5

 

 

 

Auditors’ Report
 

EXHIBIT II 

Criteria: 

Presented in Index of Financial Reporting and Internal Control Criteria following Exhibit II. 

Cause/Effect: 

CBP port personnel did not consistently follow the policies in place to ensure entry edit/exception reports

were generated and reviewed in a timely manner. CBP does not have adequate controls in place to enforce

the segregation of duties over the processing, review, and verification of entry edit/exception reports at

the ports. 

Non-performance or inadequate processing, review and verification of entry edit/exception reports may

cause CBP to fail to collect all revenue to which it is entitled. Specifically, there is a risk that entries may

be improperly cancelled, deleted, or that the related duties would go unpaid or remain in suspense 

accounts. 

Recommendation: 

We recommend that CBP update its policies and procedures to establish the timeframes in which reports

must be generated and reviewed. Additionally, CBP should continue to monitor the entry edit/exception 

reports through the Self Inspection Process and enforce adherence to policy. 

D. Information Technology 

Background: 

Controls over information technology (IT) and related financial systems are essential elements of

financial reporting integrity. Effective IT controls in an IT financial systems environment can be defined 

in five key general control areas (security management, access control, configuration management,

segregation of duties, and contingency planning) and four key application control areas (application level

general controls, business process controls, interface controls, and data management system controls) . In

addition to reliable general and application 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 FY 2013, CBP took corrective actions to address and close twenty-three prior year IT control

deficiencies. For example, CBP made improvements to various security agreements for connections with

external systems, patching software products in a timely manner, system accreditation documentation, 

and controlling remote access. 

However, during FY 2013, new and continuing general IT control weaknesses were identified that could 

potentially impact CBP’s financial data. The most significant weaknesses from a financial statement audit

perspective related to controls over system functionality, access, segregation of duties, and configuration

management. Collectively, the general IT control weaknesses limit CBP’s ability to support assertions 

that critical financial and operational data confidentiality, integrity, and availability are maintained.

CBP’s current system of record for entries imported into the U.S. does not fully support CBP’s custodial

revenue and drawback processes. 

Due to the sensitive nature of these issues, we will issue a separate, restricted distribution report that 

discusses the general IT control and functionality deficiencies in greater detail. 

Financial Section 149 
II.6

 

 

Auditors’ Report
 

EXHIBIT II 

Criteria: 

Presented in Index of Financial Reporting and Internal Control Criteria behind Exhibit II. 

Cause/Effect: 

Funding for IT development and implementation, as well as for IT support staff has been reduced in

recent years. This has prolonged implementation of systems that would replace or enhance current

systems, and has had an impact on providing IT support resources. In addition, because of the presence of

IT control and financial system functionality weaknesses, there is additional pressure on the manual,

mitigating processes and controls. 

Recommendation: 

We recommend that CBP improve the general and application controls over its financial systems to

ensure adequate security, protection, and functionality of the information systems. 

150 U.S. Customs and Border Protection • Performance and Accountability Report 
Criteria Reference Report Exhibit 

2013 Code of Federal Regulations (CFR) 

Title 19 CFR § 19.4 (a) and 19 CFR §146.3 (a) II-C-2 

Title 19 Section 18.2(d), Section 18.6 (b), and 

Section 18.8(b) II-C-1 

Title 19, Volume 1, Section 111.23 

I-A 

Title 19, Volume 1, Section 111.25 

Title 19, Volume 2, Part 191.38 

Title 19, Volume 2, Section 163.4 (a)-(b) 

Title 19, Volume 2, Section 191.15 

The Federal Manager’s Financial Integrity

Act (FMFIA) of 1982 Section 2 I-A, II-B 

Federal Accounting Standards Advisory

Board (FASAB) Statement of Federal 

Financial Accounting Standards (SFFAS)

No. 6, Accounting for Property, Plant, and 

Equipment 

Chapter 2, Paragraph 34 II-B 

Chapter 2, Paragraphs 38-39 II-B 

Section I II-C-3 

Office of Management and Budget (OMB)

Circular No. A-123, Management’s 

Responsibility for Internal Control 

Section I, paragraph 2; Section IV, paragraph 1 I-A 

Section II. Standards I-A, II-B 

GAO Standards for Internal Control in the 

Federal Government (Standards) Segregation of Duties II-C-3 

Auditors’ Report
 

Index of Financial Reporting and Internal Control Criteria

(Listed Alphabetically by Criteria Source) 

Index 

Index.1 

Financial Section 151 
Auditors’ Report
 

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

 

Auditors’ Report

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Financial Section 153 

Appendix A��

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�Office�of�Policy�

Assistant�Secretary�for�Office�of�Public�Affairs�

Assistant�Secretary�for�Office�of�Legislative�Affairs�

Chief�Privacy�Officer�

Chief�Financial�Officer�

Chief�Information�Officer�

U.S.�Customs�and�Border�Protection�

Commissioner�� �

Chief�Financial�Officer�

Chief�Information�Officer�

Office�of�Management�and�Budget

Chief,�Homeland�Security�Branch�

DHS�OIG�Budget�Examiner�

Congress

Congressional�Oversight�and�Appropriations�Committees,�as�appropriate�
 

 

Auditors’ Report
 

ADDITIONAL INFORMATION 

To view this and any of our other reports, please visit our website at: www.oig.dhs.gov. 

For further information or questions, please contact Office of Inspector General (OIG) 

Office of Public Affairs at: DHS-OIG.OfficePublicAffairs@oig.dhs.gov, or follow us on 

Twitter at: @dhsoig.” 

OIG HOTLINE 

To expedite the reporting of alleged fraud, waste, abuse or mismanagement, or any 

other kinds of criminal or noncriminal misconduct relative to Department of Homeland 

Security (DHS) programs and operations, please visit our website at www.oig.dhs.gov 

and click on the red tab titled "Hotline" to report. You will be directed to complete and 

submit an automated DHS OIG Investigative Referral Submission Form. Submission 

through our website ensures that your complaint will be promptly received and 

reviewed by DHS OIG. 

Should you be unable to access our website, you may submit your complaint in writing 

to: 

Department of Homeland Security 

Office of Inspector General, Mail Stop 0305 

Attention: Office of Investigations Hotline 

245 Murray Drive, SW 

Washington, DC 20528-0305 

You may also call 1(800) 323-8603 or fax the complaint directly to us at 

(202) 254-4297. 

The OIG seeks to protect the identity of each writer and caller. 

154 U.S. Customs and Border Protection • Performance and Accountability Report 
Auditors’ Report 

Financial Section 155

Other Information

This section includes CBP’s Schedule of Spending and information on CBP’s Revenue Gap, 

Revenue Collections, Improper Payments Information, and Summary of Financial Statement Audit 

Management Assurances. This section is unaudited. 
 

 

 

Other Information
 

Customs and Border Protection 

Other Information 

(Unaudited) 

Schedule of Spending 

For the Year Ended September 30, 2013 (in thousands) 

What Money is Available to Spend? 2013 

Total Resources $16,154,816 

Less: Amount Available but Not Agreed to be Spent 717,874 

Less: Amount Not Available to be Spent 574,438 

Total Amounts Agreed to be Spent $14,862,504 

How was the Money Spent/Issued? 

Salaries & Expenses 

Personnel Compensation and Benefits $ 8,055,942 

Contractual Services and Supplies 1,644,432 

Acquisition of Assets 168,050 

Refunds 2,276 

Other 468 

Automation Modernization 

Personnel Compensation and Benefits 167,843 

Contractual Services and Supplies 379,291 

Acquisition of Assets 224,773 

Construction 

Personnel Compensation and Benefits 29,921 

Contractual Services and Supplies 160,387 

Acquisition of Assets 43,256 

BSFIT 

Personnel Compensation and Benefits 1,330 

Contractual Services and Supplies 243,467 

Acquisition of Assets 57,236 

Air & Marine 

Personnel Compensation and Benefits 269,675 

Contractual Services and Supplies 479,498 

Acquisition of Assets 76,051 

Other 

Personnel Compensation and Benefits 1,136,220 

Contractual Services and Supplies 266,297 

Acquisition of Assets 22,242 

Refunds 1,433,849 

Total Amounts Agreed to be Spent $14,862,504 

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

 

 

 

 

 

 

 

 $73.5 mil $70.5 mil

 $603.9 mil $706.1 mil

 

Other Information
 

Customs and Border Protection 

Other Information 

(Unaudited) 

Who did the Money go to? 

Individuals $ 6,247,205 

Government 4,935,832 

For Profit 3,636,481 

Higher Education 34,616 

Other 8,370 

Total Amounts Agreed to be Spent $14,862,504 

Who did the Money go to? 

Federal $ 4,947,085 

Non-Federal 9,915,419 

Total Amounts Agreed to be Spent $14,862,504 

Much of what is reported on this schedule, primarily personnel expenses and payments to other federal agencies, is 

excluded from the USASpending.gov reporting. USASpending.gov reports primarily payments made on commercial 

contracts. CBP’s financial reporting is within 5% of the spending reported on the USASpending.gov website. 

Revenue Gap 

The Entry Summary of Trade Compliance Measurement (TCM) program collects objective statistical data to estimate 

the compliance level of commercial imports with U.S. trade laws, regulations and agreements, and is used to produce 

a dollar amount for Estimated Net Under-collections, and a percent of Revenue Gap. The Revenue Gap is a 

calculated estimate that measures potential loss of revenue owing to noncompliance with trade laws, regulations, and 

trade agreements using a statistically valid sample of the revenue losses and overpayments detected during TCM 

entry summary reviews conducted throughout the year. 

FY 2013 (Preliminary) FY 2012 (Final)

Estimated Revenue Gap $530.4 mil $635.6 mil

Estimated Revenue Gap of all 

collectable revenue for year (%) 1.27% 1.59%

Estimated Over-Collection

Estimated Under-Collection

Estimated Overall Trade

Compliance Rate (%) 97.7% 95.9%

The preliminary overall compliance rate for FY 2013 is 97.7 percent. The final overall trade compliance rate and 

estimated revenue gap for FY 2013 will be issued in February 2014. 

Financial Section 157 
 

 

 

 

 

 

 

Other Information
 

Customs and Border Protection
 

Other Information
 

(Unaudited)
 

Petitioned and Protested Schedule 

An analysis of the changes in petitioned and protested assessed amounts during FY 2013 and 2012 is as follows (in 

thousands): 

2013 

Net Reduction 

Administrative 

Process 

Balance 

October 1 

Additional 

Assessments 

Protest in Favor 

of Debtor 

Additional 

Receivable 

Balance 

September 30 

Duties $ 319,525 $ 253,822 $ (7,092) $(174,037) $ -- $ 392,218 

Taxes 313 1,862 (8) (800) -- 1,367 

Fees 8,287 3,339 (71) (10,189) -- 1,366 

Fines/Penalties 1,926,647 454,961 (776,023) (122) (263,225) 1,342,238 

Interest 172,404 51,436 (3,389) (20,176) -- 200,275 

Antidumping/ 

Countervailing Duty 204,116 173,784 (4,595) (60,188) -- 313,117 

Refunds & Drawbacks 4,626 10,692 (1,027) (5,563) -- 8,728 

Total $2,635,918 $949,896 $(792,205) $(271,075) $(263,225) $2,259,309 

2012 

Net Reduction 

Administrative 

Process 

Balance 

October 1 

Additional 

Assessments 

Protest in Favor 

of Debtor 

Additional 

Receivable 

Balance 

September 30 

Duties $ 212,000 $ 189,374 $ (4,685) $ (77,164) $ -- $ 319,525 

Taxes 688 1,049 -- (1,424) -- 313 

Fees 1,167 9,822 (67) (2,635) -- 8,287 

Fines/Penalties 1,583,741 901,794 (181,751) (112) (377,025) 1,926,647 

Interest 185,336 3,883 (2,889) (13,926) -- 172,404 

Antidumping/ 

Countervailing Duty 293,242 (29,518) (5,125) (54,483) -- 204,116 

Refunds & Drawbacks 6,810 3,565 (431) (5,318) -- 4,626 

Total $2,282,984 $1,079,969 $(194,948) $(155,062) $(377,025) $2,635,918 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information
 

Customs and Border Protection
 

Other Information
 

(Unaudited)
 

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. CBP regulations allow the 

importer 180 days (or 90 days for entries before December 18, 2004) from the bill date to file a protest and application 

with the Port Director challenging the assessment of supplemental duties, taxes and fees and requesting further review 

of the protest by CBP Office of Regulations and Rulings. 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’s favor. 

Additionally, importers and their sureties also have the option to petition for relief after receipt of CBP’s 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’s 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 Receivable with the Public as of September 30, 2013 and 2012 is as follows (in thousands): 

Aged Period 

2013 <=90 days 91 days–1 year 1-2 years 2-3 years 3+ years Total 

Reimbursable Services $ 2,639 $1,716 $ 775 $ 399 $ 1,013 $ 6,542 

User Fees 355,617 3,144 686 106 9,578 369,131 

Gross Receivables $358,256 $4,860 $1,461 $ 505 $10,591 $375,673 

Less: Uncollectible 

Amounts 1,863 36 685 104 9,541 12,229 

Net Receivables $356,393 $4,824 $ 776 $ 401 $ 1,050 $363,444 

Aged Period 

2012 <=90 days 91 days–1 year 1-2 years 2-3 years 3+ years Total 

Reimbursable Services $ 532 $1,595 $914 $ 110 $ 1,053 $ 4,204 

User Fees 196,201 755 80 1,447 18,978 217,461 

Gross Receivables $196,733 $2,350 $994 $1,557 $20,031 $221,665 

Less: Uncollectible 

Amounts -- -- 77 601 18,807 19,485 

Net Receivables $196,733 $2,350 $917 $ 956 $ 1,224 $202,180 

Financial Section 159 
 

 

Duties $2,284,738 $27,522,198 $(16,823,348) $ (20,727) $(10,488,302) $2,474,559 

Excise Taxes 142,685 2,505,738 (764,567) -- (1,734,575) 149,281 

Fees 197,613 2,978,414 (1,850,234) -- (1,257,569) 68,224 

Fines/Penalties 445,238 603,051 (57,740) (93,643) (438,732) 458,174 

Interest 541,130 81,298 (10,987) (71,917) 26,684 566,208 

Antidumping/ 

 Countervailing Duty1,169,953 130,578 (30,989) (101,531) 64,559 1,232,570 

Refunds/Drawbacks 1,461 5,705 (868) -- (3,266) 3,032 

Total $4,782,818 $33,826,982 $(19,538,733) $(287,818) $(13,831,201) $4,952,048 

Less: Uncollectible 

 Amounts 2,082,353 2,270,041 

Net Receivables $2,700,465 $2,682,007 

 

 

Duties $2,352,720 $18,362,637 $(16,723,972) $ (6,629) $(1,700,018) $2,284,738 

Excise Taxes 164,325 869,796 (793,251) -- (98,185) 142,685 

Fees 148,479 2,066,555 (1,937,872) -- (79,549) 197,613 

Fines/Penalties 437,141 795,557 (57,804) (52,184) (677,472) 445,238 

Interest 453,070 120,385 (17,499) (6,139) (8,687) 541,130 

Antidumping/ 

 Countervailing Duty885,087 328,855 (59,160) (7,806) 22,977 1,169,953 

Refunds/Drawbacks 657 2,808 (1,960) -- (44) 1,461 

Total $4,441,479 $22,546,593 $(19,591,518) $(72,758) $(2,540,978) $4,782,818 

Less: Uncollectible 

 Amounts 1,709,714 2,082,353 

Net Receivables $2,731,765 $2,700,465 

 

 

 

 

Other Information 

Customs and Border Protection
 

Other Information
 

(Unaudited)
 

Taxes, Duties and Trade Receivables, Net 

An analysis of the changes in Taxes, Duties, and Trade Receivables during FY 2013 and 2012 is as follows (in thousands): 

2013 

Receivable Category 

Receivable Category 

Balance 

October 1 

Balance 

October 1 

Receivables 

Recorded 

During the 

Fiscal Year 

Receivables 

Recorded 

During the 

Fiscal Year 

Collections 

2012 

Collections 

Write-offs 

Write-offs 

Adjustments 

Adjustments 

Balance 

September 30 

Balance 

September 30 

The beginning and ending balances for the “Antidumping/Countervailing Duty” Receivable Category represent only 

receivables resulting from Supplemental Duty Bills. The FY 2012 information has been reclassified in order to reflect only 

Supplemental Duty Bill activity in the “Antidumping/Countervailing Duty” Receivable Category. 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information
 

Customs and Border Protection
 

Other Information
 

(Unaudited)
 

An aging of Taxes, Duties, and Trade Receivables as of September 30, 2013 and 2012 is as follows (in thousands): 

Aged Period 

2013 <=90 days 91 days–1 year 1-2 years 2-3 years 3+ years Total 

Duties $2,317,496 $ 28,703 $ 15,877 $ 6,699 $ 105,784 $2,474,559 

Excise Taxes 140,021 234 83 16 8,927 149,281 

User Fees 67,626 17 7 54 520 68,224 

Fines/Penalties 91,022 97,066 81,483 50,834 137,769 458,174 

Interest 134 8,060 41,331 62,899 453,784 566,208 

Antidumping/ 

Countervailing Duty 110 66,466 231,568 210,231 724,195 1,232,570 

Refunds and Drawbacks 2,161 106 -- 78 687 3,032 

Gross Receivables $2,618,570 $200,652 $370,349 $330,811 $1,431,666 $4,952,048 

Less: Uncollectible 

Amounts 84,857 180,813 348,866 317,595 1,337,910 2,270,041 

Net Receivables $2,533,713 $ 19,839 $ 21,483 $ 13,216 $ 93,756 $2,682,007 

Aged Period 

2012 <=90 days 91 days–1 year 1-2 years 2-3 years 3+ years Total 

Duties $2,132,980 $ 10,990 $ 8,370 $ 44,184 $ 88,214 $2,284,738 

Excise Taxes 133,617 83 45 2,009 6,931 142,685 

User Fees 187,877 8,743 129 255 609 197,613 

Fines/Penalties 81,914 73,239 66,057 42,535 181,493 445,238 

Interest 87 25,870 55,890 68,606 390,677 541,130 

Antidumping/ 

Countervailing Duty -- 179,314 211,519 245,164 533,956 1,169,953 

Refunds and Drawbacks -- 476 78 -- 907 1,461 

Gross Receivables $2,536,475 $298,715 $342,088 $402,753 $1,202,787 $4,782,818 

Less: Uncollectible 

Amounts 75,837 271,812 315,225 376,021 1,043,458 2,082,353 

Net Receivables $2,460,638 $ 26,903 $ 26,863 $ 26,732 $ 159,329 $2,700,465 

Financial Section 161 
 

 

 

 

 

 

 

 

 

 

Other Information 

Customs and Border Protection 

Other Information 

(Unaudited) 

CBP Collections by Category 

(in thousands) 

2009 2010 2011 2012 2013 

Duties (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 

Consumption Entries $22,759,054 $25,312,699 $29,522,341 $30,860,080 $32,246,586 

Warehouse Withdrawals 61,638 54,214 41,907 38,676 58,065 

Mail Entries 3,132 3,354 3,159 2,028 2,721 

Passenger Baggage Entries 3,217 3,616 3,652 4,085 4,738 

Crew Baggage Entries 5 9 6 5 60 

Military Baggage Entries 2 2 3 5 2 

Informal Entries 47,596 56,200 63,689 65,543 138,076 

Vessel Repair Entries 39,240 21,521 30,381 16,710 11,613 

Other Duties 33,237 9,747 8,359 18,868 24,904 

Total Duties $22,947,121 $25,461,362 $29,673,497 $31,006,000 $32,486,765 

Miscellaneous 

Violations of CBP Law 59,709 60,380 61,532 52,451 51,846 

Testing, Inspecting & Grading 39 58 64 4,157 3,394 

Miscellaneous Taxes 19,413 20,382 21,845 21,745 21,752 

USDA Collections 110,425 120,637 120,704 131,680 146,016 

Harbor Maintenance Fee 1,125,008 1,221,712 1,469,109 1,539,799 1,523,171 

Fees 8,397 7,817 5,904 7,392 8,730 

User Fee Account 2,258,027 2,440,275 2,779,483 3,439,523 3,680,658 

Unclaimed Funds 276 188 164 469 240 

Recoveries 7 -- -- -- 3 

Interest 30,623 13,555 35,577 40,173 1,050 

Other CBP Receipts 22,331 15,329 13,838 22,412 22,142 

Total Miscellaneous $ 3,634,255 $ 3,900,333 $ 4,508,220 $ 5,259,801 $ 5,459,002 

Internal Revenue Taxes 2,468,617 2,782,240 2,796,788 2,995,140 3,039,640 

Total Collections $29,049,993 $32,143,935 $36,978,505 $39,260,941 $40,985,407 

These schedules will not equal amounts reported on the Consolidated Statement of Custodial Activity due to timing 

adjustments and entity collections which are not reported on the Consolidated Statement of Custodial Activity but are 

included in this schedule. 

162 U.S. Customs and Border Protection • Performance and Accountability Report 
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 

Boston $ 399,974 $ 352,710 $ 345,490 $ 363,497 $ 364,986 

Buffalo-Niagara Falls 242,514 342,659 294,659 317,012 322,727 

Ogdensburg 119,537 132,890 132,567 147,013 143,957 

Portland, Maine 55,795 54,993 60,124 62,517 55,223 

Providence 75,706 82,532 112,008 126,627 146,914 

St. Albans 43,030 46,778 46,145 50,206 51,063 

Baltimore 544,222 615,025 629,569 654,950 701,463 

Philadelphia 456,252 422,253 448,508 461,559 511,088 

Newark 4,036,961 4,347,759 5,025,814 5,219,277 5,113,482 

JFK Airport 863,404 961,149 1,017,668 981,040 1,056,601 

Charleston 820,601 858,098 1,043,719 1,184,188 1,123,350 

Miami 520,283 600,506 771,770 803,266 836,692 

San Juan 106,167 101,368 117,235 125,899 279,092 

St. Thomas 15,301 16,720 14,948 12,550 12,110 

Savannah 1,408,693 1,643,027 1,985,424 2,047,913 2,073,771 

Tampa 358,532 425,038 447,629 492,541 488,510 

Wilmington 267,905 294,996 304,612 266,326 280,096 

Norfolk 634,642 604,357 704,551 736,196 808,177 

NFC Indianapolis/Washington 1,107,891 1,418,106 1,650,976 1,870,288 2,328,877 

Mobile 157,615 168,661 180,997 185,049 204,101 

New Orleans 942,917 1,011,820 1,232,590 1,303,706 1,351,597 

Dallas/Ft Worth 409,354 428,898 527,570 574,583 625,293 

El Paso 140,143 139,378 144,829 152,491 200,830 

Houston 764,115 735,314 919,704 1,116,282 1,121,159 

Laredo 371,492 424,299 583,472 656,435 674,221 

Port Arthur 33,665 28,584 30,079 20,869 17,125 

Nogales 73,703 84,353 96,259 94,566 110,129 

Los Angeles 7,468,426 8,565,244 9,715,689 10,268,894 10,858,809 

San Diego 218,071 216,275 221,490 252,688 268,872 

Anchorage 106,594 124,792 134,253 118,389 94,208 

Honolulu 32,732 32,816 36,089 37,192 36,037 

Portland 318,839 303,922 312,337 365,043 338,674 

San Francisco 1,035,916 1,115,329 1,301,094 1,405,650 1,449,926 

Seattle 1,122,774 1,145,325 1,307,307 1,354,234 1,300,806 

Chicago 1,407,416 1,602,089 1,916,811 2,009,737 2,013,849 

Cleveland 1,293,102 1,490,599 1,710,571 1,810,848 1,938,792 

Detroit 446,972 528,280 625,148 677,489 696,579 

Milwaukee 24,687 24,786 23,183 31,130 23,548 

Minneapolis 170,645 187,866 244,880 265,195 262,182 

Pembina 23,254 23,483 25,078 31,373 36,254 

St. Louis 273,758 304,941 364,369 426,942 486,737 

Great Falls 

Total Revenues Collected 

136,393 

$29,049,993 

135,917 

$32,143,935 

171,290 

$36,978,505

179,291 

$39,260,941 

177,500 

$40,985,407 

 

Other Information
 

Customs and Border Protection
 

Other Information
 

(Unaudited)
 

CBP Collections by Major Processing Port Locations 

(in thousands) 

2009 2010 2011 2012 2013 

These schedules will not equal amounts reported on the Consolidated Statements of Custodial Activity due to timing 

adjustments and entity collections which are not reported on the Consolidated Statements of Custodial Activity but are 

included in these schedules. 

Financial Section 163
Other Information 

Summary of Financial Statement Audit 

and Management Assurances 

Table 1 and Table 2 below provide a summary of the financial statement and management assurances for FY 2013. 

Table I. FY 2013 Summary of the Financial Statement Audit 

AUDIT OPINION UNMODIFIED 

Restatement No 

Material 

Weakness 

Beginning 

Balance New Resolved Consolidated Ending Balance 

Drawback 

Controls 1 0 0 0 1 

Total Material 

Weaknesses 1 0 0 0 1 

In FY 2013, the Independent Auditors’ consolidated financial statement report identified one 

material weakness, Drawback Controls, for CBP. 

164 U.S. Customs and Border Protection • Performance and Accountability Report 
Other Information
 

Table 2. FY 2013 Summary of Management Assurances
 

Effectiveness of Internal Control over Financial Reporting (FMFIA Section 2) 

Statement of Assurance Qualified 

Material Weakness Beginning 

Balance New Resolved Consolidated Reassessed Ending Balance 

Drawback Controls 1 0 0 0 0 1 

Total Material Weaknesses 1 0 0 0 0 1 

Effectiveness of Internal Controls over Operations (FMFIA Section 2) 

Statement of Assurance Unqualified 

Material Weaknesses Beginning 

Balance New Resolved Consolidated Reassessed Ending Balance 

Total Material Weaknesses 0 0 0 0 0 0 

Conformance With Financial Management System Requirements (FMFIA Section 4) 

Statement of Assurance Systems conform except for the below non-conformance(s) 

Non-Conformances Beginning 

Balance 

New Resolved Consolidated Reassessed Ending 

Balance 

Financial Systems Security 1 0 0 0 0 1 

Core Financial Systems 1 0 0 0 0 1 

Information Technology 

Infrastructure 

1 0 0 0 0 1 

Total Non-Conformances 3 0 0 0 0 3 

Compliance with Federal Financial Management Improvement Act (FFMIA) CBP 

Overall Substantial Compliance No 

1. System Requirements No 

2. Accounting Standards Yes 

3. US Standard General Ledger at Transaction Level No 

Financial Section 165 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information
 

Customs and Border Protection
 

Other Information
 

(Unaudited)
 

Improper Payments Information Act of 2002 (IPIA) 

The Improper Payments Information Act (IPIA) of 2002 was amended by the Improper Payments Elimination and 

Recovery Act (IPERA) of 2010 and the Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA). 

CBP identified and performed a risk assessment on all ten programs, one of which, Custodial Refund and Drawback, was 

identified as high risk. Border Security Fencing (BSF) was deemed low risk according to the FY 2012 risk assessment. 

However, the Office of Inspector General (OIG) mandated the disbursements be independently tested for FY 2012 to 

ensure compliance with adequate segregation of duties. Congress requires funds allocated to agencies under the 

American Recovery and Reinvestment Act (ARRA) be tested regardless of risk assessment outcome. Per OMB guidance, 

if an agency has documented a minimum of two consecutive years of improper payments that are less than 1.5 percent, 

the agency may request relief from the annual reporting requirements for this program or activity. CBP’s total 

extrapolated error rate was less than 0.1 percent for the past two years. The DHS Chief Financial Officer (CFO) signed a 

memorandum dated April 11, 2013 approving cessation of segregated testing for ARRA FY 2012 disbursements due to 

the consistent low error rate. 

The Custodial Refund and Drawback payment testing yielded an estimated improper payment amount of $7 million of the 

$1.9 billion, or 0.37 percent, disbursed during FY 2012. The BSF payment testing yielded an estimated improper payment 

amount of $4 thousand of the $173 million testing population, or <.01 percent, disbursed during FY 2012. 

Overpayments Recaptured Outside of Payment Recapture Audits 

Agency 

Source 

Amount 

Identified CY 

Amount 

Recovered CY 

Amount 

Identified PY 

Amount 

Recovered PY 

Cumulative Amount 

Identified (CY+PYs) 

Cumulative Amount 

Recovered (CY+PYs) 

IPIA 

Sampling $100,049 $104,871(1) $ 13,214 $ 8,392 $ 359,018 $ 359,018 

SelfReporting $499,503 $539,607(2) $205,854 $165,750 $ 879,802 $ 879,802 

Public 

Reporting $148,023 $148,023 $ 88,425 $ 88,425 $1,492,954 $1,492,954 

(1) $ 4,822 recovered from PY Identified 

(2)	 $40,104 recovered from PY Identified 

Disposition of Recaptured Funds 

Program or 

Activity 

Type of 

Payment 

(contract, 

grant, benefit, 

loan other) 

Agency 

Expenses to 

Administer the 

Program 

Payment 

Recapture 

Auditor Fees 

Financial 

Management 

Improvement 

Activities 

Original 

Purpose 

Office of 

Inspector 

General 

Returned to 

Treasury 

CBP Mission Contract $0 $25,012 $0 $75,037 $0 $0 

Payment Recapture Audit Targets 

Program or 

Activity 

Type of 

Payment 

(contract, 

grant, benefit, 

loan other) 

CY Amount 

Identified 

CY Amount 

Recovered 

CY Recovery 

Rate (Amount 

Recovered / 

Amount 

Identified) 

CY + 1 

Recovery 

Rate Target 

CY + 2 

Recovery 

Rate Target 

CY + 3 

Recovery 

Rate Target 

CBP Mission Contract $100,049 $100,049 100% 100% 100% 100% 

Aging of Outstanding Overpayments 

Program or Activity Type of Payment 

(contract, grant, benefit, 

loan other) 

CY Amount Outstanding 

(0 – 6 months) 

CY Amount Outstanding 

(6 months to 1 year) 

CY Amount Outstanding 

(over 1 year) 

CBP Mission Contract $0.00 $0.00 $0.00 

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

 

 

 

 

Other Information 

Customs and Border Protection
 

Other Information
 

(Unaudited)
 

CBP also identified amounts for recovery during the Improper Payment Information Act (IPIA) review of FY 2012 

disbursements. The IPIA results are as follows (dollars in thousands): 

Amounts Identified as 

Improper Payments 

Amounts Identified for 

Recovery 

Amounts Recovered 

Custodial Refunds and 

Drawbacks 

$10 $0 $0 

Border Security Fencing $ 2 $2 $2 

Total $12 $2 $2 

Recoveries for Custodial Refunds and Drawbacks Program payments are restricted by regulations governing collections 

of duty, taxes, and fees associated with trade-related activity. Amounts identified as recovery of improper payments for 

BSF were for Prompt Payment Interest that was paid but not earned in the amount of $2,151. This amount was recovered 

October 2, 2012. 

Improper Payment Reduction Outlook ($ in millions) 

Source of 

Recovery 

Amount 

Identified (CY) 

($000) 

Amount 

Recovered 

(CY) ($000) 

Amount 

Identified (PY) 

($000) 

Amount 

Recovered 

(PY) ($000) 

Cumulative 

Amount 

Identified 

(CY+PYs) 

($000) 

Cumulative 

Amount 

Recovered 

(CY+PYs) 

($000) 

High-Dollar 

Overpayments 

Reporting 

$0.6 $0.6 $0.3 $0.3 $2.4 $2.4 

IPIA High-Risk 

Program 

Testing 

$0.0 $0.0 $0.0 $0.0 $0.0 $0.0 

Post Payment 

Reviews 

$0.1 $0.1 $>.1 $>.1 $0.3 $0.3 

CBP Totals $0.7 $0.7 $0.3 $0.3 $2.7 $2.7 

Financial Section 167 
 

 

 

 

 

 

 

 

 

Other Information 

Customs and Border Protection
 

Other Information
 

(Unaudited)
 

Payment Recapture Audit Reporting
 

CBP contracted the audit recovery work for disbursements made during FY 2012. The results of the recovery audit efforts continue to 

identify negligible recovery amounts. The recovery audit results are reported below: 

Program 

or 

Activity 

Type of 

Payment 

(contract, 

grant, 

benefit, 

loan, or 

other) 

Amount 

Subject to 

Review for 

CY Reporting 

Actual Amount 

Reviewed 

and 

Reported 

CY 

Amounts 

Identified 

for 

Recovery 

CY 

Amounts 

Recovered 

CY 

% of Amount 

Recovered 

out of 

Amount 

Identified CY 

Amount 

Outstanding 

CY 

% of 

Amount 

Outstanding 

out of 

Amount 

Identified 

CY 

Amount 

Determined 

Not to be 

Collectable 

CY 

CBP 

Mission Contract $1,549,336,346 $1,549,336,346 $100,049 $104,871 100% $0 0% $0 

Program 

or 

Activity 

Type of 

Payment 

(contract, 

grant, 

benefit, 

loan, or 

other) 

% of Amount 

Determined 

Not to be 

Collectable 

out of Amount 

Identified CY 

Amounts 

Identified for 

Recovery PY 

Amounts 

Recover 

ed PY 

Cumulative 

Amounts 

Identified 

for 

Recovery 

(CY+PY) 

Cumulative 

Amounts 

Recovered 

(CY+PY) 

Cumulative 

Amounts 

Outstanding 

(CY+PY) 

Cumulative 

Amounts 

Determined 

Not to be 

Collectable 

(CY+PY) 

CBP 

Mission Contract 0% $13,214 $8,392 $359,018 $359,018 $0 $0 

Improper Payment Reduction Outlook 

(in millions) 2012 2012 2012 2013 2013 2013 2013 2013 2014 2014 2014 2015 2015 2015 2016 2016 2016 

Program PY 

Outlays PY % PY $ CY Outlays 

CY IP 

% 

CY IP 

$ 

CY Overpayment $ CY Underpayment $ 

CY + 1 

est. 

Outlays 

CY + 1 

IP % 

CY + 

1 IP $ 

CY + 2 

est. 

Outlays 

CY + 

2 IP 

% 

CY + 

2 IP $ 

CY + 3 

est. 

Outlays 

CY + 

3 IP 

% 

CY + 

3 IP $ 

Refunds & 

Drawbacks $1,937 .36 $7 $1,300 .02 $2 $0 $0 $1,300 .02 $2 $1,300 .02 $2 $1,300 .02 $2 

Border 

Security 

Fencing 

$173 <.01 $0 $159 <.01 $0 $0 $0 $157 <.01 $0 Unavailable 

Unavailable 

The forecast of activity related to Refunds and Drawbacks depends on indeterminable factors including the volume of trade activity and 

various trade related issues addressed and ruled on by the Department of Commerce. 

168 U.S. Customs and Border Protection • Performance and Accountability Report 
Other Information 

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, OIG-14-17, dated December 11, 2013, and the agency’s progress addressing these challenges 

are addressed at the DHS consolidated level and are incorporated into the DHS Fiscal Year 2013 

Agency Financial Report. 

Financial Section 169 
Acronyms
 

Acronyms 

ACE Automated Commercial Environment 

ACS Automated Commercial System 

ACTT Alliance to Combat Transnational 

Threats 

AD/CVD Antidumping and Countervailing 

Duties 

ADIS Arrival and Departure Information 

System 

AEER Air Entry Exit Reengineering 

ALM Active Lane Management 

AMBSTP Air and Marine Basic Training 

Program 

AMOC Air Marine Operations Center 

APHIS Animal and Plant Health Inspection 

Service 

APIS Advance Passenger Information 

System 

ARO Admissibility Review Office 

ATS Automated Targeting System 

ATSP Automated Targeting SystemPassenger 

AZ Arizona 

BORTAC Border Patrol Tactical Unit 

BSDP Border Security Deployment Program 

BW Bonded Warehouse 

CAE Component Acquisition Executive 

CBP U.S. Customs and Border Protection 

CBSA Canadian Border Services Agency 

CDS Consequence Delivery System 

CDSOA Continued Dumping and Subsidy Act 

CEE Centers of Excellence and Expertise 

CFO Chief Financial Officer 

CIO Chief Information Officer 

CIV Coastal Interceptor Vessels 

CMAA Customs Mutual Assistance 

Agreement 

COAC Commercial Operations Advisory 

Committee 

COBRA Consolidated Omnibus Budget 

Reconciliation 

COS Chief of Staff 

COSS Customs Overtime Scheduling 

System 

CPSC Consumer Product Safety 

Commission 

CRM Crew Resource Management 

CSA Canada Self-Assessment 

CSI Container Security Initiative 

CSRS Civil Service Retirement System 

CTAC Commercial Targeting and Analysis 

Center 

C-TPAT Customs Trade Partnership Against 

Terrorism 

DHS Department of Homeland Security 

DIS Digital Imaging System

DOC Department of Commerce 

DOD Department of Defense 

DOL Department of Labor 

ECC Equipment Control Classes 

ELMO Enforcement Link Mobile Operations 

EPA Environmental Protection Agency 

ERP Enterprise Resource Planning 

ESTA Electronic System for Travel 

Authorization 

EXT Entry/Exit Transformation Program 

FAA Federal Aviation Administration 

FASAB Federal Accounting Standards 

Advisory Board 

FAST Free and Secure Trade 

FBI Federal Bureau of Investigation 

FDAU Fraudulent Document Analysis Unit 

FEA Federal Electronic Assets 

FECA Federal Employees’ 

Compensation Act 

FEMA Federal Emergency Management 

Agency 

FERS Federal Employees’ Retirement 

System 

FFMIA Federal Financial Management 

Improvement Act 

FISMA Federal Information Security 

Management Act of 2002 

170 U.S. Customs and Border Protection • Performance and Accountability Report 
Acronyms
 

FMFIA Federal Managers’ Financial 

Integrity Act 

IUF Immigration User Fees 

IUFA Immigration User Fees Accounts 

FOUO For Official Use Only IWS Interoperability Web Service 

FSIS Food Safety Inspection Service JFC Joint Field Command 

FSU Field Support Unit JOD Office of Joint Operations Directorate 

FTZ Foreign Trade Zone JSP Joint Security Program 

FY Fiscal Year LED Light-Emitting Diode 

FYHSP Future Year Homeland Security 

Program 

LPO Local Property Officer

LPOE Land Port of Entry 

GAAP Generally Accepted Accounting 

Principles 

LSS Laboratories and Scientific Services 

MEA Multi-role Enforcement Aircraft 

GAO Government Accountability Office MID Management Inspection Division 

GEOINT Geospatial Intelligence NAAP National Audit Plan 

GOES Global Online Enrollment System NARP National Agriculture Release 

GPRA Government Performance and Program 

Results Act NEXUS Northern Exchange with United 

GPRMA Government Performance and States 

Results Modernization Act NHTSA National Highway Traffic Safety 

GSA General Services Administration Administration 

HFACS Human Factors Analysis and 

Classification System 

NII Non-Intrusive Inspection 

NTCC National Targeting Center-Cargo 

HRBE Human Resources Business Engine NTCP National Targeting Center-Passenger 

HRM Human Resources Management OA Office of Administration 

HR/S High/Risk Sensitive OAM Office of Air and Marine 

HSI Homeland Security Investigations OBP Office of Border Patrol 

IA Internal Affairs OCA Office of Congressional Affairs 

IAP Immigration Advisory Program OCC Office of Chief Counsel 

IBET Integrated Border Enforcement 

Teams 

OES Office of Executive Secretariat 

OFO Office of Field Operations 

ICE Immigration and Customs 

Enforcement 

OGA Other Government Agencies 

OIG Office of Inspector General 

ICS International Container Security OIIL Office of Intelligence and 

IDI Injured Domestic Industries Investigative Liaison 

IER Interdiction Effectiveness Rate OIP Operational Implementation Plan 

ILU International Liaison Unit OIT Office of Information and Technology 

INA Immigration and Nationality Act OMB Office of Management and Budget 

INTERPOL International Criminal Police 

Organization 

OPA Office of Public Affairs 

OPD Office of Program Development 

IPR Intellectual Property Rights OPM Office of Personnel Management 

ISA Importer Self-Assessment OPP Office of Policy and Planning 

ISR Intelligence, Surveillance, 

Reconnaissance 

OSI Office of Strategic Integration 

OT Office of International Trade 

IT Information Technology OTIA Office of Technology Innovation and 

ITDS International Trade Data System Acquisition 

Acronyms 171 
Acronyms
 

OTD Office of Training and Development 

OTM Other Than Mexican 

OTR Office of Trade Relations 

PAR Performance and Accountability 

Report 

PC Property Coordinator 

PDO		 Privacy and Diversity Office 

PMF	 Performance Management 

Framework 

POE Port of Entry
	

PPBA Planning, Programming, Budgeting, 

and Accounting 

PPMOB		 Personal Property Management 

Oversight Board 

PPQ Plant Protection and Quarantine 

PTI Priority Trade Issues 

QHSR Quadrennial Homeland Security 

Review 

RA Regulatory Audit 

RED Re-Engineering Team 

RFID		 Radio Frequency Identification 

RR Regulations and Rulings 

RSDV Riverine Shallow Draft Vessel 

RTU Rail Targeting Unit 

SAFE Security and Accountability For Every 

SAP		 Systems, Applications, and Products 

SBREFA Small Business Regulatory 

Enforcement Fairness Act 

SE Simplified Entry 

SENTRI Secure Electronic Network for 

Traveler Rapid Inspection 

SFFAS Statement of Federal Financial 

Accounting Standards 

SIP Self-Inspection Program 

SLEP Service Life Extension Program 

SLT Office of State, Local, and Tribal 

Liaison 

SOP Standard Operating Procedures 

StAMP Strategic Air and Marine Plan 

STB Single Transaction Bond 

STC South Texas Campaign 

T3U Tactical Trade Targeting Unit 

TACCOM Tactical Communication 

Modernization Program 

TCO Transnational Criminal Organization 

TSA Transportation Security Agency 

TTC Tactical/Technical Command 

UAS Unmanned Aircraft System 

US United States 

USCIS United States Citizenship and 

Immigration Services 

VADER Vehicle and Dismounted Exploitation 

Radar 

VWP Visa Waiver Program 

WSM Workload Staffing Model 

172 U.S. Customs and Border Protection • Performance and Accountability Report 
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Acronyms 173 
Office of Administration 

1331 Pennsylvania Avenue 

Room 950, National Place 

Washington, DC 20229 

Please visit the U.S. Customs and Border Protection website at 

www.cbp.gov 

To report suspicious activity, call 

1-800-BE ALERT