IMPROVEMENTS NEEDED IN

THE BUREAU OF ALCOHOL, TOBACCO

AND FIREARMS EXPLOSIVES INSPECTION

PROGRAM

 OIG-00-086 May 26, 2000

Office of Inspector General

*******

United States Department of the Treasury

 
May 26, 2000

MEMORANDUM FOR BRADLEY A. BUCKLES, DIRECTOR

BUREAU OF ALCOHOL, TOBACCO AND FIREARMS

/S/

FROM: Dennis S. Schindel

Assistant Inspector General for Audit

SUBJECT: Improvements Needed in the Bureau of

Alcohol, Tobacco and Firearms’

Explosives Inspection Program

This memorandum presents the results of our audit of the

Bureau of Alcohol, Tobacco and Firearm’s (ATF) Explosives

Inspection Program. The report addresses ATF’s efforts to

resolve explosives violations. The objective of our audit was

to determine whether ATF ensured licensees and permittees

corrected the violations its inspectors identified and whether

employees accurately entered and tracked explosives violations

in ATF’s monitoring systems. We conducted this audit at ATF

Headquarters in Washington, D.C., and at the Lansdale, PA;

Dallas, TX; and Portland, OR, area offices.

We found no evidence in ATF’s inspection files the licensee or

permittee completed corrective action for 75, or 24 percent,

of the 311 violations we reviewed. Most of these violations

were significant because they represented a real or potential

threat to public safety.

We attribute the lack of corrective action evidence in part to

inspectors’ noncompliance with procedures for documenting

significant explosives violations on an ATF Form 5030.5,

Report of Violations. This form requires the inspector to

record the needed corrective action and date the action is to

be completed by the licensee or permittee. Of the 75

violations with no evidence of corrective action, we found

inspectors did not use the form for 40 violations, and for the

remaining 35 where they did use the form, recorded a specific

corrective action and date on only 4. Supervisory review of

the inspections failed to pick up these discrepancies. As a

result, ATF may have allowed serious risks to the public

safety to exist much longer than necessary.

We recommended the Director, ATF: (1) ensure inspectors

document all significant explosives violations on ATF Form

5030.5, Report of Violations in accordance with the Regulatory

Enforcement Inspector Handbook; (2) ensure inspectors specify
Page 2

the corrective action to be taken and the date corrective

action is to be completed on the ATF 5030.5; and (3) provide

training to area office supervisors to ensure they properly

review inspection reports.

ATF’s response to our draft report indicated that ATF plans to

improve documentation of explosive violations and related

corrective actions, and develop training for supervisors. We

believe ATF’s actions are responsive to our recommendations. 

We summarized the response and our comments after the

recommendations in the report.

We would like to extend our appreciation to ATF for the

cooperation and courtesies extended to our staff during the

review. If you have any questions, please contact me at

(202)927-5400, or a member of your staff may contact 

Donald Benson, Director for Program Audits, at (617) 223-8640.

Attachment
EXECUTIVE DIGEST

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EXPLOSIVES INSPECTION PROGRAM Page i

Overview

In its mission to protect the public safety, the Bureau of Alcohol,

Tobacco and Firearms (ATF) conducts compliance inspections of

explosives licensees and permittees. Between 1995 and 1998, the

number of compliance inspections ATF performed increased from

3,145 to 7,391, or 135 percent. Through these inspections, ATF

identified almost 5,000 violations in Fiscal Years (FY) 1997 and

1998. To be effective in ensuring the public safety, it is of the

utmost importance ATF not only identify the explosives violations,

but also ensure the licensees and permittees promptly complete the

corrective actions to bring them into compliance with Federal

explosives regulations.

Objectives, Scope and Methodology

The objectives of our audit were to determine whether ATF

ensured licensees and permittees corrected the violations

identified during inspections, and whether ATF employees

accurately entered and tracked explosives violations in ATF’s

monitoring systems.

The scope of our audit pertained to explosives compliance

inspections ATF conducted in FYs 1997 and 1998. We reviewed

ATF licensee and permittee inspection files to determine whether

ATF accurately tracked, recorded, and resolved these violations.

Specifically, we reviewed all documentation associated with an

explosives compliance inspection, including the Assignment and

Report (ATF Form 5700.14), written narrative report (which is a

report of exception) if one was prepared, Report of Violations

(ATF Form 5030.5), and any other documentation in the file. 

We also interviewed inspectors from each of the three area offices

we visited to obtain general information related to how they

conducted various compliance inspections.

Audit Results

For 75 violations, or 24 percent, of the 311 violations we reviewed

in three area offices, we could not find any evidence of corrective

action in ATF’s inspection files. We noted these violations generally

involved corrective action that was to take place after the time of the

inspection. For example, these violations included storage

violations, where improvements were needed to the storage area or

the adjacent area. Another major category was record keeping,
EXECUTIVE DIGEST

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where records of explosives were inaccurate or incomplete. ATF has

identified both types of violations as significant.

Two factors contributed to the lack of evidence of corrective action. 

First, inspectors did not follow ATF guidance for documenting

significant explosives violations on ATF Form 5030.5, Report of

Violations. This form enables ATF personnel to set a date when

corrective action should be completed. We found the inspectors were

either not using the form, or were not completing it. Second, the

supervisory review of the inspection file failed to identify these

discrepancies.

Recommendations

We recommended that the Director, ATF, ensure all significant

explosives violations and corrective actions are properly documented,

and training is provided to area office supervisors.

Management Response and OIG Comment

ATF responded it will take action to ensure all significant violations

and corrective actions are appropriately documented. In addition

ATF will establish an inter-directorate group to develop training for

area supervisors on report content and review for all of ATF’s

regulated industries. We believe these actions are responsive to our

recommendations.
TABLE OF CONTENTS

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EXPLOSIVES INSPECTION PROGRAM Page iii

EXECUTIVE DIGEST ..............................................................................i

BACKGROUND ..................................................................................... 1

OBJECTIVES, SCOPE AND METHODOLOGY............................................. 5

AUDIT RESULTS

Finding 1. ATF Did Not Always Effectively Ensure Licensees/Permittees

Completed Corrective Actions.......................................... 7

APPENDICES

Appendix 1 Abbreviations ..................................................................15

Appendix 2. Management Response .......................................................16

Appendix 3. Major Contributors to this Report..........................................18

Appendix 4. Report Distribution............................................................19
BACKGROUND

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EXPLOSIVES INSPECTION PROGRAM Page 1

On October 15, 1970, Congress enacted the Organized Crime

Control Act of 1970 (the Act). Title XI of the Act contains the

Federal Explosives law. The Federal Explosives law affects all

persons who import, manufacture, deal in, purchase, use or store

explosive materials. It also affects those who ship, transport, or

receive explosive materials in interstate commerce.

ATF regulates the explosives industry through Title 27 of the Code

of Federal Regulations, Part 55, Commerce in Explosives. ATF

issues licenses to explosives manufacturers, importers, and dealers. 

Any individual or business entity intending to engage in these

activities must first obtain a license (licensee). A Federal users

permit is required when a non-licensee acquires or transports

explosives in interstate or foreign commerce (permittee). A permit

allows transactions for personal use only.

ATF, in its mission to protect the public safety, performs compliance

inspections of licensees and permittees in accordance with its Fiscal

Year Inspection Operating Plan1

. ATF conducts these inspections in

accordance with the procedures and techniques contained in the

Regulatory Enforcement Inspector Handbook (handbook), dated

September 9, 1996.

The handbook provides inspectors with a comprehensive guide to

inspection procedures and techniques. Chapter E, “Explosives

Compliance Inspections,” contains the guidelines and procedures

inspectors should use when conducting explosives compliance

inspections. Section 98, “Closing Actions,” provides the guidance

for closing out the explosives compliance inspection.

Area office inspectors travel to a licensee’s or permittee’s place of

business to perform an explosives compliance inspection.

When inspectors find a violation, the handbook specifically states the

inspector should prepare an ATF 5030.5, Report of Violations, to

“document all significant violations disclosed during the inspection.”

Chapter I of the handbook defines significant violations as those that

pose a threat to the public safety. If the inspector prepares an ATF

5030.5, all violations should be documented in sufficient detail to

convey the specific problem areas to the licensee or permittee, and to

support any future administrative or criminal proceeding which may

 

1

 Prior to ATF’s Fiscal Year 1999 Inspection Operating Plan, the annual plan was called the ATF Regulatory

Field Operations Fiscal Year Operating Plan.
BACKGROUND

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result. If violations are detected, the inspector should make every

attempt to have the licensee or permittee correct significant violations

immediately in order to eliminate the need for a recall inspection.

Explosives inspection reports are normally written by exception. A

report by exception may be used in any explosives inspection except

for explosives application investigations, which require a full

narrative report. A report by exception details, in narrative form

only, that which is improper, irregular, or incorrect, in order to

establish the nature and extent of noncompliance. A report by

exception contains a recommendation based on the results of the

current inspection in conjunction with any previously cited or

continuing violations. This narrative and the accompanying

documents may serve as the sole basis for decisions relating to

adverse administrative action.

Accordingly, it is imperative for ATF inspectors to follow these

detailed instructions to implement any adverse actions against a

licensee or permittee.

At the end of the inspection, the inspector completes an Assignment

and Report, ATF Form 5700.14. This document contains vital

information on the results of the inspection such as:

• operating name and address of licensee/permittee;

• unique identifier number;

• permit/license number;

• ATF officer assigned;

• inspection results;

• time accounting data;

• ATF officer’s recommendation and signature; and

• supervisory review comments, recommendation, and signature.

Regarding inspection results, the ATF officer is to include, among

other things, the numbers of violations, Treasury Enforcement and

Communication System checks, referrals, and the ATF officer’s

recommendation.

The area office supervisor’s secretary or assistant uses the

ATF Form 5700.14 to input the inspection data into ATF’s

monitoring system called “R: Base.” Each area office received
BACKGROUND

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R: Base, a program designed in part to generate the required monthly

operating report, track assignments, and generate travel expense

reports.2

During FYs 1997 and 1998, ATF significantly increased the number

of explosives compliance inspections it conducted as compared with

prior years. The chart below shows the number of explosives

inspections ATF conducted during FYs 1995 to 1998 and the number

of related violations.

Chart 1. Explosives Compliance Inspections and Violations

 Fiscal Years 1995-1998

3145

1260

2813

1214

6733

2082

7391

2797

0

1000

2000

3000

4000

5000

6000

7000

8000

1995 1996 1997 1998

Fiscal Year

Number of

Inspections

Number of

Violations

 

2 The R: Base data is used by ATF Headquarters to publish the Regulatory Enforcement Field Operations

Fiscal Year Operating Final Report.
BACKGROUND

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EXPLOSIVES INSPECTION PROGRAM Page 4

As can be seen by the chart, ATF increased the number of

compliance inspections from 3,145 in FY 1995 to 7,391 in FY 1998,

or 135 percent. The number of violations detected similarly increased

during this period from 1,260 to 2,797, or 122 percent.
OBJECTIVES, SCOPE AND METHODOLOGY

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The audit objectives were to determine whether ATF ensured the

licensees and permittees corrected the violations ATF inspectors

identified during explosives compliance inspections, and whether

ATF employees accurately entered and tracked explosives violations

in ATF monitoring systems.

The scope of our audit was explosives compliance inspections ATF

conducted during FYs 1997 and 1998. ATF’s FYs 1997 and 1998

Regulatory Field Operations Fiscal Year Operating Plan(s) contained

different inspection categories broken down into “Special Project

Codes” (referred to as SPC Codes). Four of these SPC Codes--EB,

ED, EE, and EG--represented about 81 percent of the total number

of explosives inspections ATF conducted during these 2 fiscal years.

The four SPC codes were defined as follows:

• SPC Code EB - Inspections of importers, manufacturers, dealers,

and users of high explosives. 

• SPC Code ED - Compliance inspections not covered by any other

SPC category, such as licensees and permittees with serious

storage or other violations in either of the two previous

inspections, and all black powder distributors and storers of more

than 50 pounds.

• SPC Code EE - Inspections of permittees (and licensees, if any)

that indicated no storage on their application. 

• SPC Code EG - Inspections to determine whether applicants were

eligible for a license or permit (i.e., Were they adequately

informed of explosives laws and regulations and did they have

suitable storage facilities?).

During FYs 1997 and 1998, ATF conducted 6,733 and 7,391

explosives compliance inspections, respectively, exclusive of

application inspections3

. We limited our scope to SPC Codes EB and

ED because these two codes represented a majority of the explosives

inspections ATF performed (7,664 of the 14,124 explosives

compliance inspections, or 54 percent) and the most violations ATF

detected (3,537 of the 4,879 explosives compliance violations, or

about 72 percent) during FYs 1997 and 1998.

In determining whether ATF accurately tracked, recorded, and

resolved violations, the auditors reviewed ATF licensee/permittee

inspection files. Specifically, we reviewed all of the documentation

in the inspection files, including the (1) Assignment and Report (ATF

 

3 ATF conducted 2,708 application inspections in FYs 1997 and 1998. ATF categorizes them separately from

compliance inspections because they are conducted to ensure whether applicants are eligible for an explosives

license or permit as opposed to compliance with explosives laws and regulations.
OBJECTIVES, SCOPE AND METHODOLOGY

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Form 5700.14); (2) a written narrative report (which is a report of

exception) if the inspector prepared one; (3) Report of Violations

(ATF Form 5030.5); and (4) any other documents or correspondence

in the inspection file.

In addition to a conveniently located office, we selected two area

offices with a high number4 of SPC Code EB and ED inspections

performed during FY 1998 and with a substantial number5 of related

violations reported during the same time period. Accordingly, we

visited the Portland, OR; Dallas, TX; and Landsdale, PA offices. 

For each location we visited, we asked the area office superrvisor to

provide us with a listing of the explosives inspections performed in

the EB and ED inspection categories during FYs 1998 and 1997. We

were provided 2-year listings of 368 compliance inpsections in

Portland, 423 in Dallas, and 242 in Lansdale. From these listings,

we selected for review 271 inspection files from Portland, 210 from

Dallas, and 223 from Lansdale, for a total of 704 inspection files.

We interviewed inspectors from each location to obtain general

information related to how they conducted various compliance

inspections. For example, we asked whether the inspectors received

any guidance on what constituted a public safety violation, or when

an ATF Form 5030.5, Report of Violations, was called for. We also

wanted to know what types of evidence were accepted as proof the

licensee/permittee completed corrective action.

We performed our audit between October 1998 and May 1999 at

ATF Headquarters in Washington, D.C., and at ATF area offices

located in Lansdale, PA; Dallas, TX; and Portland, OR. 

We conducted our audit in accordance with Government Auditing

Standards issued by the Comptroller General of the United States and

included such audit tests as we determined necessary. We

documented and reviewed management controls associated with

ATF’s operations and did limited testing for possible fraud. We did

not find any indications of fraud.

 

4

Among all areas office, the Dallas Area Office ranked first (270) and the Portland Area Office fourth (220)

in the number of compliance inspections conducted in FY 1998.

5

Portland detected the second most (155) and Dallas the third most (148) violations.
AUDIT RESULTS

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Finding 1. ATF Did Not Always Effectively Ensure

Licensees/Permittees Completed Corrective Actions

ATF did not always effectively ensure licensees/permittees completed

the corrective actions required to close out explosives violations. 

ATF inspectors identified these violations during explosives

compliance inspections. Specifically, at the three area offices we

reviewed, the licensee/permittee inspection files did not contain any

documentation to support whether the licensee/permittee completed

corrective action on 75 of 311, or about 24 percent, of the violations.

ATF inspectors told us area offices cover a wide geographic area and

perform a variety of compliance inspections. As a result, they often

rely on the following year’s inspection to determine whether the

licensee/permittees completed the recommended corrective action. 

Our review of the following year’s inspection reports generally

revealed no mention of the prior year’s violations. Accordingly, we

could not determine if the violations were ever corrected.

There are two reasons why these problems exist. First, ATF’s

inspectors were not following procedures requiring them to issue

ATF Form 5030.5, Report of Violations, for all significant

violations. ATF inspectors also did not record specific corrective

action and completion dates on the 5030.5. Second, supervisors

failed to identify discrepancies when reviewing the Assignment and

Report, ATF 5700.14. Most of the 75 violations were significant in

that they posed a threat or potential threat to the public safety. As a

result of these deficiencies, ATF may have allowed serious risks to

the public safety to exist much longer than necessary.

Recommendations

We recommend the Director, ATF:

1. Ensure inspectors document all significant explosives violations

on ATF Form 5030.5, Report of Violations, in accordance with

the Regulatory Enforcement Inspector Handbook, Chapter E,

Section 98.

2. Ensure inspectors specify the corrective action to be taken and the

date corrective action is to be completed on the ATF 5030.5.

3. Provide training to area office supervisors to ensure they properly

review inspection reports.
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Management Response and OIG Comment

ATF responded it will document all significant violations in

accordance with ATF directives and guidance. ATF will forward a

memorandum to all field offices containing guidance on procedures

for proper completion of ATF Form 5030.5, as well as reference to

the Inspector's Handbook. ATF is also tasking an inter-directorate

group with developing training for area supervisors on report content

and review for all of ATF’s regulated industries.

We believe these actions are responsive to our recommendations.

Details

No Evidence of Completed Corrective Action in the Inspection Files

We reviewed inspection files for evidence indicating whether the

licensee or permittee completed the corrective action requested by the

inspector. We accepted certain evidence as support for whether the

licensee/permittee completed the corrective action. We accepted:

(1) the inspectors’ written statements “corrected immediately” or

“corrected during inspection” contained either on the

ATF 5030.5, in the inspection report narrative, or on the

ATF 5700.14;

(2) the licensee/permittee’s certification on the returned suspense

copy of ATF 5030.5;

(3) a “corrective action letter” from the licensee/permittee;

(4) the inspector’s written notation of a phone conversation with the

licensee/permittee or re-inspection of the licensee/permittee; and

(5) the inspector’s written statements on the ATF 5030.5, the ATF

5700.14, or in the narrative, that he or she was unable to either

correct or reconstruct the records during the inspection, and the

inspector’s indication the licensee agreed to comply with the

regulations in the future.

In many inspection files we reviewed, the inspector simply wrote

“immediately” or “ASAP” (as soon as possible) in the “date

corrections to be made column” on the ATF 5030.5, the ATF

5700.14, or in the narrative. Without any other supporting

statements or documents in the file, we could not accept this as

evidence of corrective action. Also, for non-record keeping

violations, we did not accept cases where the ATF inspector wrote

the licensee agreed to do something, such as buy appropriate locks,
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have brush removed, or repair magazine, but failed to record

completion dates.

Our review of inspection files at the three locations disclosed 311

violations. Table 1 shows the results of our review of the files for

evidence of corrective action at the three area offices we visited.

Table 1. Number and Percentages of Violations Not

Corrected by Area Office Location

Area Office

Number of

Violations

No

Evidence Violations

Corrected

Percentage

No Evidence

Violations

 Corrected

Dallas 80 25 31

Lansdale 76 19 25

Portland 155 31 20

Totals 311 75 24

ATF Inspectors Did Not Follow Guidance on ATF Form 5030.5

ATF inspectors did not follow guidance for documenting explosives

violations on ATF 5030.5. At the three area offices we reviewed,

ATF inspectors either did not (1) document significant violations on

an ATF 5030.5, or (2) fill out the ATF 5030.5 completely. 

Chapter E, Section 98, of the handbook states the inspector should

prepare an ATF 5030.5 to document all significant explosives

violations disclosed during the inspection. Chapter I, Section 197

b.(1) of the handbook further defines significant violations as those

that pose a potential threat to the public safety. The form should be

prepared and distributed in accordance with the instructions on the

reverse side of the form.

ATF’s procedures to issue an ATF 5030.5 serve a specific purpose. 

It places the licensee/permittee on notice that a violation (noncompliance with explosives regulations) has occurred and specifies

what corrective action is to take place and when. Failure to

document these violations may allow violations to go uncorrected. 

The ATF 5030.5 may also be used to support any future

administrative or criminal proceeding, if warranted.
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EXPLOSIVES INSPECTION PROGRAM Page 10

On the ATF 5030.5, under the section, “Inspection Results,” the

inspector must record the United States Code or Code of Federal

Regulations citation, nature of the violation, and the corrective action

to be taken, with the date corrections are to be made (if not corrected

immediately). The last two items are the most important because

they specify the action the proprietor needs to take to be in

compliance, and hold the proprietor to a specified completion date.

When corrective action can not be taken during an inspection,

proprietors are supposed to return the suspense copy of the ATF

Form 5030.56 to the area supervisor as soon as the corrections have

been made.

ATF 5030.5 Not Issued

Of the 75 violations with no support for corrective action, we found

that inspectors did not issue an ATF 5030.5 for 40 of them, or 53

percent. Thus for these 40, ATF did not document the corrective

action the proprietor needed to take, or specify a corrective action

deadline.

To determine whether ATF documented all significant explosives

violations, we reviewed the documentation contained in the

licensee/permittee inspection files. These documents included the

ATF 5700.14, a written narrative report (if the inspector prepared

one), other documents and correspondence in the inspection file. If

any of these documents indicated the inspector detected a violation,

we then determined whether the inspector documented the violation

on an ATF 5030.5.

We discussed this issue with some inspectors at the Portland area

office to find out why this was happening. One inspector said his

office tends to be less formal than other offices with issuance of the

ATF 5030.5. In Portland, for example, instead of documenting

violations on the ATF 5030.5, the inspectors allowed the

licensee/permittee to mail a corrective action letter to the area office

detailing the actions the licensee/permitee took to correct violations

identified during the inspection.

Another Portland inspector said the region Portland covers is home to a

number of anti-government groups. According to the inspector, these

groups are very apprehensive about government intervention. The

 

6

 Inspectors prepare ATF Form 5030.5 in quadruplicate. Part IV is the suspense copy.
AUDIT RESULTS

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inspector believed it was easier to get the licensees/permittees to comply

with less “government formality” (i.e., without issuing an ATF 5030.5).

ATF 5030.5 Not Completed

We also found even when ATF did issue an ATF 5030.5, it was not

always completed. When corrective action is not completed at the

time of inspection, the inspector should record the corrective action

to be taken, and the date the corrective action is to be completed, on

the form. We found the inspectors were generally not doing this.

Specifically, for the 35 violations where there was no support of

corrective action and where ATF issued an ATF 5030.5, the

inspector included a specific corrective action and completion date

only four times. Table 2 summarizes the data recorded on the ATF

5030.5 for the 35 violations with no evidence supporting corrective

action.

Table 2. Summary of Information Inspectors Recorded on the

ATF 5030.5 for the 35 Unsupported Corrective Actions 

Number of Violations With

No Support of Correction

Corrective Action

Specified?

Corrective Action

Date Given?

4 YES YES

21 YES NO

7 NO NO

3 NO YES

As can be seen in the table above, the inspectors did not always

include a specific corrective action date in 28 of the 35, or 80

percent, of the violations. Of this 28, 10 had no date at all, 17

merely had either the word “immediately” or “ASAP,” and one had

“when obtained.” For 7 of these 28 violations, the inspector did not

write either the corrective action to be taken or the date the

correction was to be made. 

Supervisors Not Ensuring Inspectors Fill Out Proper Paperwork

Ensuring inspection file documentation is complete and all

outstanding violations are resolved should be the responsibility of the

area office supervisor or other supervisory inspectors who sign the

ATF 5700.14. In these 75 violations, the supervisors signed the
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form ATF 5700.14 without any evidence of corrective action. 

Area office supervisors are apparently either not fully aware of the

specific documentation that should be in each inspection file or are

not concerned with ensuring its presence. We believe it is important

for supervisors to ensure inspection file documentation is complete,

including evidence documenting the licensee/permittee completed

corrective actions.

Supervisory assurance that inspection file documentation is complete

increases the probability that the licensee/permittee will correct

reported violations more timely.

Significance of the 75 Unsupported Corrective Actions

Most of the 75 violations in which the completion of corrective

action was unsupported were also significant in nature, in that they

constituted a threat to the public safety. ATF has defined public

safety violations as all storage violations and record keeping

violations which either hinder the ability to trace explosives or do not

accurately reflect explosives inventories. Table 3 shows a

breakdown of the unsupported corrective actions by type of violation:

Table 3: Categories of Unsupported Corrective Action

by Type of Violation

Type of Violation Portland Dallas Lansdale Total Percentage

Administrative 0 1 0 1 1

Conduct of Business 1 2 0 3 4

Record keeping 11 12 9 32 43

Storage 19 10 10 39 52

Total 31 25 19 75 100

At least 39 of the 75 were significant because they were storage

violations. Of the 32 record keeping violations, 18, or 56 percent,

were significant, as they represented violations of 27 CFR 55.127,

failure to adequately maintain a Daily Summary of Magazine

Transactions (DSMT).4 Failure to maintain a DSMT could prevent

the inspector from determining whether other serious violations

 

7 The Daily Summary of Magazine Transactions is a record keeping requirement of 27 CFR 55.127. This

summary records all quantities of explosives received in and removed from, and the total on hand at the end of

the day, for each explosives magazine. A magazine is any building or structure, other than an explosives

manufacturing building, used for storage of explosives materials.
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occurred, such as whether the licensee violated the Table of Distances5

at any time during the year, or whether any explosives were stolen. 

While the licensee may be in compliance with the Table of Distances at

the time of inspection, the inspector relies on the licensee’s records to

determine whether the licensee exceeded the limits at any period

covered by the inspection.

Thus, failure to have adequate explosives records hinders ATF’s

ability to effectively ensure the public’s safety.

Potential for Risks to Public Safety Continuing Longer than Necessary

Regarding corrective actions not completed at the time of inspection,

several ATF inspectors told us they lacked the time to do follow-up.

ATF’s area offices are responsible for conducting annual inspections at

a large number of licensees/permittees which are spread out over a wide

geographic area. High-volume, multi-faceted inspection workloads,

coupled with remotely located licensees/permittees, contributes to

inspectors inability to follow-up on corrective activity. In fact,

inspectors admitted they often relied on the next year’s inspection to

perform the follow-up.

Of the 75 violations with no evidence of corrective action, ATF

detected 36 in 1997 and 39 in 1998. For those licensees and

permittees who had violations in 1997, we examined 1998 inspection

reports to determine whether the violation continued to exist. We

noted the licensees and permittees associated with 19 of 36 violations

in 1997 were not inspected in 1998. 

In addition, we found inspectors generally did not make any

reference to prior year violations. Specifically, for the licensees or

permittees who were inspected in 1998, we found the inspector had

mentioned a prior year’s violation only once. In this instance, the

inspector noted the violation still existed. Because of this, and since

the 1998 inspection reports failed to contain any evidence the licensee

or permittee corrected the 1997 violations, we were generally unable

to determine whether the licensees corrected the violations or if the

inspector thought the problems no longer continued to be significant.

We were also unable to determine whether the violations the

inspectors detected in 1998 continued in 1999 because, at the time of

 

8

 The Table of Distances, documented in 27 CFR 55.218, is a table showing the amount of explosives that

may be stored in a magazine relative to distances from inhabited buildings, public highways, passenger

railways, as well as, separation between magazines.
AUDIT RESULTS

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our field work, the 1999 compliance inspections were either not

completed or were yet to be filed in the licensee/permittee inspection

files.

We recognize ATF may, in some circumstances, have to rely on the

following year’s inspections to determine whether licensees and

permittees completed corrective actions. However, when this occurs,

ATF should ensure the licensee or permittee returns the suspense copy

of the ATF 5030.5 or provides other evidence that correction has taken

place. When ATF conducts the next inspection, the inspector should

then certify whether the licensee or permittee corrected the prior year’s

violation.

As an example of how important this is, in the narrative of one

inspection we reviewed, the inspector noted the licensee had stored

explosives in the same magazine as detonators. This is a violation of

27 CFR 55.213. The licensee said he put the explosives in the cap

magazine because the magazine had excess space. Further, he

“meant to get those out of the cap magazine before you got here.”

This licensee’s statement insinuates a licensee may only take

corrective action when it is known that ATF is coming. Thus, if a

licensee believes ATF will not be back for at least 6 months to a year

later, he or she might not make corrective action a top priority.

We question the effectiveness of ATF’s explosives compliance

inspections when there is no evidence of corrective action. One of

ATF’s missions is to ensure public safety and protect the public. 

Timely resolution of violations is significant. Unresolved storage

and other explosives violations which remain uncorrected for any

prolonged period of time significantly increases the threat to public

safety.
 Appendix 1

ABBREVIATIONS

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EXPLOSIVES INSPECTION PROGRAM Page 15

ATF Bureau of Alcohol, Tobacco and Firearms

DSMT Daily Summary of Magazine Transactions

FY Fiscal Year

SPC Special Project Codes
Appendix 2

Page 1 of 2

MANAGEMENT RESPONSE

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EXPLOSIVES INSPECTION PROGRAM Page 16
Appendix 2

Page 2 of 2

MANAGEMENT RESPONSE

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EXPLOSIVES INSPECTION PROGRAM Page 17
Appendix 3

MAJOR CONTRIBUTORS TO THIS REPORT

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Northeastern Region

Donald P. Benson, Director, Program Audits

Dennis F. Deely, Audit Manager

Robert E. Ferrara, Auditor

Leonard Ollison, Auditor

N. Randy Gettmann, Auditor
Appendix 4

REPORT DISTRIBUTION

OIG-00-086 IMPROVEMENTS NEEDED IN ATF’S 

EXPLOSIVES INSPECTION PROGRAM Page 19

U.S. Department of the Treasury

Office of the Under Secretary for Enforcement

Office of Strategic Planning, Departmental

Director, Office of Organizational Improvement

Desk Officer, Office of Accounting and Internal Control

Bureau of Alcohol, Tobacco and Firearms

Assistant Director, Firearms, Explosives, and Arson

Deputy Assistant Director, Firearms, Explosives, and Arson

Chief, Arson and Explosives Programs Division

Assistant Director (Inspection)

Office of Management and Budget

Budget Examiner