United States Immigration and 

Customs Enforcement's 

Management Letter for DHS' 

FY 2014 Financial Statements 

Audit 

April 16, 2015 

OIG-15-71 
 

 

 

 

 

 

 

HIGHLIGHTS
 

United States Immigration and

Customs Enforcement’s Management Letter

for DHS’ FY 2014 Financial Statements Audit 

April 16, 2015 

Why We 

Did This 

The Federal Government 

has a fundamental 

responsibility to be an 

effective steward of 

taxpayers’ dollars. 

Sound financial 

practices and related 

management operations, 

reliable financial 

systems, and effective 

internal control are 

essential for reliable, 

timely financial 

information that 

supports management 

decision making needed 

to achieve the 

Department of Homeland 

Security’s (DHS) 

mission. 

For Further Information: 

Contact our Office of Public Affairs at 

(202) 254-4100, or email us at 

DHS-OIG.OfficePublicAffairs@oig.dhs.gov 

What We Found 

KPMG LLP reviewed the United States Immigration and 

Customs Enforcement’s (ICE) internal control over financial 

reporting. The management letter contains five observations 

related to internal control and other operational matters for 

management’s considerations. 

KPMG LLP noted deficiencies and the need for improvement in 

certain ICE processes. These deficiencies did not meet the 

criteria to be reported in the Independent Auditors’ Report on 

DHS’ FY 2014 Financial Statements and Internal Control over 

Financial Reporting, dated November 14, 2014, included in 

DHS’ fiscal year 2014 Agency Financial Report. These 

observations are intended to improve internal control or result 

in other operating efficiencies. 

www.oig.dhs.gov OIG-15-71 
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~~~' ~` OFFICE OF INSPECTOR GENERAL

Department of Homeland Security

Washington, DC 20528 / www.oig.dhs.gov

APR 16 2015

MEMORANDUM FOR: Johnathan Carver

Chief Financial Officer

United States Immigration and Customs Enforcement

FROM: Mark Bell

Assistant Inspector General for Audits

SUBJECT: United States Immigration and Customs Enforcement's

Management Letter for DHS' FY 2014 Financial

Statements Audit

Attached for your information is our final report, United States Immigration and

Customs Enforcement's Management Letter for DHS' FY 2014 Financial

Statements Audit. This report contains observations related to internal control

deficiencies that were not required to be reported in the Independent Auditors'

Report on DHS' FY 2014 Financial Statements and Internal Control over

Financial Reporting. Internal control deficiencies which are considered

significant deficiencies were reported, as required, in the Independent Auditors'

Report, dated November 14, 2014, which was included in the Department of

Homeland Security (DHS) fiscal year (FY) 2014 Agency Financial Report. We do

not require management's response to the recommendations.

The independent public accounting firm KPMG LLP conducted the audit of

DHS' FY 2014 financial statements and is responsible for the attached

management letter and the conclusions expressed in it.

Consistent with our responsibility under the Inspector General Act, we will

provide copies of our report to appropriate congressional committees with

oversight and appropriation responsibility over the Department of Homeland

Security. We will post the report on our website for public dissemination.

Please call me with any questions, or your staff may contact Paul Wood, Acting

Deputy Assistant Inspector General for Audits, at (202) 254-4100.

Attachment
 

KPMG LLP 

Suite 12000 

1801 K Street, NW 

Washington, DC 20006 

December 8, 2014 

Office of Inspector General 

U.S. Department of Homeland Security, and 

Chief Financial Officer 

U.S. Department of Homeland Security, U.S. Immigration and Customs Enforcement 

Washington, DC 

Ladies and Gentlemen: 

In planning and performing our audit of the consolidated financial statements of the U.S. 

Department of Homeland Security (DHS or Department), as of and for the year ended 

September 30, 2014, 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, we 

considered the Department’s internal control over financial reporting (internal control) as a basis for 

designing audit procedures that are appropriate in the circumstances for the purpose of expressing 

our opinion on the consolidated financial statements. In conjunction with our audit of the 

consolidated financial statements, we also performed an audit of internal control over financial 

reporting in accordance with attestation standards established by the American Institute of Certified 

Public Accountants. 

The U.S. Immigration and Customs Enforcement (ICE) is a component of DHS. During our audit 

we noted certain matters involving internal control and other operational matters, related to ICE, 

that are presented for your consideration. These comments and recommendations, all of which have 

been discussed with the appropriate members of management, are intended to improve internal 

control or result in other operating efficiencies. These matters are summarized in the Table of 

Financial Management Comments on the following pages. The disposition of each internal control 

deficiency identified during our FY 2014 audit – as either reported in our Independent Auditors’ 

Report, or herein as a financial management letter comment – is presented in Appendix A. Our 

findings related to information technology systems have been presented in a separate letter to the 

DHS Office of Inspector General, the ICE Chief Information Officer and Chief Financial Officer. 

Our audit procedures are designed primarily to enable us to form an opinion on the financial 

statements and on the effectiveness of internal control over financial reporting, and therefore may 

not bring to light all weaknesses in policies or procedures that may exist. We aim, however, to use 

our knowledge of ICE’s organization gained during our work to make comments and suggestions 

that we hope will be useful to you. 

We would be pleased to discuss these comments and recommendations with you at any time. 

The purpose of this letter is solely to describe comments and recommendations intended to improve 

internal control or result in other operating efficiencies. Accordingly, this letter is not suitable for 

any other purpose. 

Very truly yours, 

KPMG LLP is a Delaware limited liability partnership, 

the U.S. member firm of KPMG International Cooperative 

(“KPMG International”), a Swiss entity. 
U.S. Immigration and Customs Enforcement 

Table of Financial Management Comments
 

September 30, 2014
 

TABLE OF FINANCIAL MANAGEMENT COMMENTS (FMC) 

Comment 

Reference Subject Page 

FMC 14-01 

FMC 14-02 

FMC 14-03 

FMC 14-04 

FMC 14-05 

General Property, Plant, and Equipment Additions and Deletions 

Approval of Personnel Actions – Administrative Uncontrolled Overtime 

Office of Government Ethics (OGE)-450 Form: Confidential Financial Disclosure 

Report and OGE-278 Form: Public Financial Disclosure Report 

Apportionments 

Completeness of the Lease Footnote Disclosure and Timely Capitalization of Leasehold 

Improvements 

2 

2 

2 

3 

3 

APPENDIX 

Appendix Subject Page 

A Crosswalk – Financial Management Comments to Active Notices of Finding and 

Recommendation (NFRs) 

5 

1
 
U.S. Immigration and Customs Enforcement
 

Financial Management Comments
 

September 30, 2014
 

FMC 14-01 – General Property, Plant, and Equipment Additions and Deletions (Notice of 

Finding and Recommendation (NFR) No. U.S. Immigration and Customs Enforcement (ICE) 

14-03) 

Controls were not operating effectively to ensure that capitalized assets were timely and 

accurately recorded in the Sunflower Asset Management System and the general ledger. 

Specifically we noted three of the additions selected for testwork related to assets that 

should not have been recorded in Sunflower Asset Management System as they were 

already recorded in another property subledger. Additionally, we noted a disposal 

related to the theft of property was not removed from the general ledger timely. Both of 

these resulted in an overstatement of the property, plant, and equipment general ledger 

balance. 

Recommendation: 

We recommend that ICE implement procedures for a review of all capitalized assets 

prior to recording to the general ledger. 

FMC 14-02 – Approval of Personnel Actions – Administrative Uncontrolled Overtime 

(NFR No. ICE 14-09) 

The Summary of Administrative Uncontrollable Overtime forms to support 

administrative uncontrolled overtime payments to employees could not be provided 

timely. 

Recommendation: 

We recommend that ICE continue to enhance policies and procedures regarding the 

approval and changes related to Administrative Uncontrolled Overtime, including 

document retention. 

FMC 14-03 – Office of Government Ethics (OGE)-450 Form: Confidential Financial 

Disclosure Report and OGE-278 Form: Public Financial Disclosure Report (NFR No. ICE 

14-13) 

OGE-450 Reports:
 

Based on our walkthrough conducted in the current fiscal year we note the following
 

control weaknesses:
 

x Existing controls were not fully effective to track all Confidential Financial 

Disclosure reports (OGE 450). 

x Existing controls are not operating effectively to ensure all forms are certified by the 

Ethics Office within 60 days. 

2
 
U.S. Immigration and Customs Enforcement
 

Financial Management Comments
 

September 30, 2014
 

OGE-278 Reports: 

x	 Existing controls are not operating effectively to ensure all Public Financial 

Disclosure reports (OGE 278) are certified by the Ethics Office within 60 days. We 

selected a sample of 15 OGE 278 reports for testwork, noting one form was not 

certified within 60 days of filing. The filer disclosed several transactions which 

required additional review and research. 

Recommendation: 

We recommend that the ICE Ethics Office continue implementing the e-filing system 

acquired in FY 2014. 

FMC 14-04 – Apportionments (NFR No. ICE 14-16) 

Controls were not operating effectively to ensure funds were appropriately presented as 

either available or unavailable in the financial statements. Specifically, we noted: 

x Balances recorded in the unapportioned balance as of September 30, 2014 should 

have been recorded as Apportioned in the General Ledger. 

x	 The Apportionment and Reapportionment Schedule (Standard Form (SF)-132) to the 

Report on Budget Execution and Budgetary Resource (SF-133) reconciliation 

was not performed appropriately

Recommendations: 

We recommend that ICE: 

x	 Review and enhance existing policies and procedures for recording budget authority 

and performing the SF-132 to SF-133 reconciliation. 

x	 Review and revise year-end closing processes and procedures to address erroneous 

impact on apportioned and unapportioned balances. 

FMC 14-05 – Completeness of the Lease Footnote Disclosure and Timely Capitalization of 

Leasehold Improvements (NFR No. ICE 14-17) 

Controls were not operating effectively to ensure the lease footnote disclosure was
 

complete and accurate and that executed occupancy agreements were recorded timely.
 

Specifically, we noted: 

x Five instances in which non-cancellable occupancy agreements future minimum
 

lease payments were recorded based on incorrect versions of the occupancy 

agreements as of September 30, 2014. 

x One instance of future minimum lease payments that were incomplete based on 

costs reported to ICE through the Real Property Management System. 

x One instance of future minimum lease payments, recorded on the footnote that were 

recorded in the wrong year. 

3
 
U.S. Immigration and Customs Enforcement 

Financial Management Comments 

September 30, 2014 

Recommendation: 

We recommend that ICE perform a review of all occupancy agreements, and Real 

Property Management System data, to ensure completeness and accuracy of reported 

future minimum lease payments prior to update in the financial system. 

4
 
 

 

Appendix A 

U.S. Immigration and Customs Enforcement 

Crosswalk – Financial Management Comments to Active NFRs 

September 30, 2014 

Disposition1 

IAR FMC 

Component NFR 

No. Description MW SD NC No. 

ICE 14-01 Funds Management and Untimely Recording of 

Obligation Activity to the General Ledger D 

ICE 14-02 Untimely Posting of De-obligations D 

ICE 14-03 General Property, Plant, and Equipment Additions and 

Deletions 14-01 

ICE 14-04 Undelivered Orders Analysis D 

ICE 14-05 Imputed Costs General Journal Entry A K 

ICE 14-06 IPAC Expense Approval A 

ICE 14-07 Invoice Receipt B,D 

ICE 14-08 Anti-Deficiency Act J 

ICE 14-09 Approval of Personnel Actions – Administrative 

Uncontrolled Overtime 14-02 

ICE 14-10 Travel Expense Authorization and Approval A 

ICE 14-11 Financial Reporting – General Journal Entry A 

ICE 14-12 Financial Reporting A,B E K 

ICE 14-13 

OGE-450 Form: Confidential Financial Disclosure 

Report and OGE-278 Form: Public Financial Disclosure 

Report 

14-03 

ICE 14-14 Non-Contract Undelivered Orders A,D 

ICE 14-15 Rent Bill Expense Approval A 

ICE 14-16 Apportionments 14-04 

ICE 14-17 Completeness of the Lease Footnote Disclosure and 

Timely Capitalization of Leasehold Improvements 14-05 

1Disposition Legend: 

IAR	 Independent Auditors’ Report dated November 13, 2014 

FMC	 Financial Management Comment 

MW	 Contributed to a Material Weakness at the Department level when combined with the results of all other 

components 

SD	 Contributed to a Significant Deficiency at the Department level when combined with the results of all other 

components 

NC	 Contributed to Non-Compliance with laws, regulations, contracts, and grant agreements at the Department 

level when combined with the results of all other components 

NFR	 Notice of Finding and Recommendation 

Cross-reference to the applicable sections of the IAR: 

A	 Financial Reporting 

B	 Information Technology Controls and Financial Systems Functionality 

Property, Plant, and Equipment 

5
 

C 
Appendix A 

U.S. Immigration and Customs Enforcement 

Crosswalk – Financial Management Comments to Active NFRs
 

September 30, 2014
 

6
 

D Budgetary Accounting 

E Entity-Level Controls 

F Grants Management 

G Custodial Revenue and Drawback 

H Federal Managers’ Financial Integrity Act of 1982 (FMFIA) 

I Single Audit Act Amendments of 1996 

J Antideficiency Act, as amended (ADA) 

K Federal Financial Management Improvement Act of 1996 (FFMIA) 
 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

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 

U.S. Immigration and Customs Enforcement 

Director 

Chief Financial Officer 

Audit Liaison 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees 

www.oig.dhs.gov OIG-15-71 
 

 

 

 

 

 

 

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at: DHS-OIG.OfficePublicAffairs@oig.dhs.gov. Follow us on Twitter at: @dhsoig. 

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