United States Immigration and 

Customs Enforcement's 

Management Letter for DHS' 

FY 2015 Financial Statements 

Audit 

May 3, 2016 

OIG-16-80 
 

 

DHS OIG HIGHLIGHTS
 

United States Immigration and Customs

Enforcement’s Management Letter for

DHS’ FY 2015 Financial Statements Audit 

May 3, 2016

Why We Did 

This Audit 

The Chief Financial Officers 

Act of 1990 (Public Law 101-

576) and the Department Of 

Homeland Security Financial 

Accountability Act (Public 

Law 108-330) require us to 

conduct an annual audit of 

the Department of Homeland 

Security’s (DHS) 

consolidated financial 

statements and internal 

control over financial 

reporting. 

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, under contract with the DHS Office 

of Inspector General, audited the United States 

Immigration and Customs Enforcement’s 

financial statements and internal control over 

financial reporting for fiscal year (FY) 2015. The 

resulting management letter contains eight 

observations related to internal controls and 

other operational matters for management’s 

consideration. KPMG LLP noted internal control 

deficiencies and the need for improvement in 

several processes, including monitoring of 

certain account balances; accounts payable 

analysis; undelivered order analysis; and the 

recording and liquidation of operating expenses. 

These deficiencies are not considered significant 

and were not required to be reported in the 

Independent Auditors’ Report on DHS’ FY 2015 

Financial Statements and Internal Control over 

Financial Reporting, dated November 13, 2015, 

included in the DHS FY 2015 Agency Financial 

Report. These observations are intended to 

improve internal control or result in other 

operating efficiencies.

www.oig.dhs.gov OIG-16-80 
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~a~~~ OFFICE OF INSPECTOR GENERAL

Department of Homeland Security

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

MAY 3 2016

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MEMORANDUM FOR: Jonathan Carver

Chief Financial Officer

United States Immigration and Customs Enforcement

FROM: Mark Bell ~ ~ ~~z,Q--x--'Q

Assistant Inspector General for Audits

SUBJECT: United States Immigration and Customs Enforcement's

Management Letter for DHS' FY 2015

Financial Statements Audit

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

Customs Enforcement's Management Letter for DHS' FY 2015 Financial

Statements Audit. This report contains eight observations related to internal

control deficiencies that were not required to be reported in our Independent

Auditors' Report on DHS' FY 2015 Financial Statements and Internal Control

over Financial Reporting, dated November 13, 2015, which was included in the

Department of Homeland Security's (DHS) fiscal year (FY) 2015 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 2015 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 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 Maureen Duddy,

Deputy Assistant Inspector General for Audits, at (617) 565-8723.

Attachment
 

 

 

KPMG LLP 

Suite 12000 

1801 K Street, NW 

Washington, DC 20006 

December 18, 2015 

Office of Inspector General, 

U.S. Department of Homeland Security, and 

Chief Financial Officer 

U.S. Department of Homeland Security, 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, 2015, in accordance 

with auditing standards generally accepted in the United States of America and Government Auditing 

Standards issued by the Comptroller General of the United States; and Office of Management and Budget 

(OMB) Bulletin No. 15-02, 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 

financial statements. In conjunction with our audit of the general purpose 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 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. The 

disposition of each internal control deficiency identified during our FY 2015 audits – 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, ICE Chief Information Officer and ICE 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. 
Immigration and Customs Enforcement 

Table of Financial Management Comments 

September 30, 2015 

TABLE OF FINANCIAL MANAGEMENT COMMENTS (FMC) 

Comment 

Reference Subject Page 

FMC 15-01 Non-GAAP (Generally Accepted Accounting Principles) Analysis 2
 

FMC 15-02 Apportioned and Unapportioned Balances 2
 

FMC 15-03 Accounts Payable Look-Back Analysis 2
 

FMC 15-04 Entity-Level Controls – OGE-450 Form: Confidential Financial Disclosure Report 2
 

FMC 15-05 Entity-Level Controls – Performance Reviews 3
 

FMC 15-06 Real Property Management System Information Produced by the Entity 3
 

FMC 15-07 Undelivered Order Analysis 4
 

FMC 15-08 Operating Expenses 4
 

APPENDIX 

Appendix	 Subject Page 

A	 Crosswalk – Financial Management Comments to Active Notices of Findings and 5
 

Recommendations (NFRs)
 

1
 
 

 

 

 

Immigration and Customs Enforcement
 

Financial Management Comments
 

September 30, 2015
 

FMC 15-01 – Non-GAAP (Generally Accepted Accounting Principles) Analysis (NFR No. ICE 

15-02) 

Controls were not designed to verify the completeness of ICE’s non-GAAP analysis prior to submission to 

DHS Office of Financial Management. Specifically, we noted that there was one non-GAAP policy that 

was not included on the March 31, 2015 ICE non-GAAP analysis. This policy was identified by 

management as a result of a request from the auditors. 

Recommendation: 

We recommend that ICE review its policies, procedures and surveys around non-GAAP to ensure 

completeness in capturing non-compliant processes. 

FMC 15-02 – Apportioned and Unapportioned Balances (NFR No. ICE 15-03) 

ICE did not fully implement controls to monitor balances as apportioned and unapportioned in the 

financial statements and to ensure adjustments were identified and recorded timely. 

Recommendation: 

We recommend the ICE Office of Budget and Program Performance and Office of Financial Management 

finalize and document the new apportionment process implemented in the third quarter of FY 2015, and 

include monitoring and escalation procedures to ensure all funds that should be apportioned are 

apportioned timely. 

FMC 15-03 – Accounts Payable Look-Back Analysis (NFR No. ICE 15-05) 

Controls were not properly designed to ensure items identified as outliers and anomalies when performing 

the look-back analysis were contemplated and incorporated into the calculation of the subsequent period’s 

accrual. Specifically, we noted that management identified two large payments in April and May which 

were related to one-time payments made for services received from the Department of Veterans affairs. 

ICE conducted further research and determined that these payments were related to IPACs that covered 

the entire fiscal year; however no adjustment was made to the accrual methodology for the calculation of 

the future period’s accounts payable methodology based on the identification of these payments. 

Additionally we noted that management had not identified and tested controls to ensure the completeness 

of the information included in the system generated report used in the performance of this control. 

Recommendation: 

We recommend that ICE implement further controls in the process to validate the completeness of the 

information produced and further document the actions required for anomalies of payments. 

FMC 15-04 – Entity-Level Controls – OGE-450 Form: Confidential Financial Disclosure 

Report (NFR No. ICE 15-08) 

Controls were not fully effective to ensure all individuals required to file a confidential financial 

disclosure report (Office of Government Ethics (OGE) Form 450 or OGE-450) were transitioned to the 

new automated system upon implementation. Specifically, out of 45 samples, we noted one instance 

2
 
 

 

Immigration and Customs Enforcement 

Financial Management Comments
 

September 30, 2015
 

where the Ethics Office did not include one filer’s office during its initial data collection process, which 

resulted in the individual filing after February 15, 2015. 

Policies, procedures and controls were not fully implemented to ensure all OGE-450 forms for new 

employees were initially filed no later than 30 days. Specifically, out of 45 sampled annual and new 

entrant OGE-450 filers: 

x One new entrant report did not file within 30 days due to administrative error. 

x One report was not certified within 60 days due to delay in supervisory review. 

Recommendations: 

The ICE Ethics Office should continue to commit to provide equal focus on annual and new entrant filers 

by using the notification process included in the ICE Ethics Office OGE-450 standard operating 

procedures. 

The ICE Ethics Office should also continue to provide reminder notifications in response to delayed 

supervisory review and escalate delinquent reviewing supervisors to chiefs of staff for assistance as 

required by the ICE Ethics Office OGE-450 standard operating procedures. 

FMC 15-05 – Entity-Level Controls – Performance Reviews (NFR No. ICE 15-09) 

Controls were not operating effectively to ensure Performance Appraisal Forms were reviewed and 

approved. Specifically, in our review of the Performance Appraisal Forms for 15 employees, we identified 

three instances in which the final Performance Appraisal Forms were not reviewed and approved by the 

reviewing official. 

Recommendations: 

ICE should issue communication, via a broadcast message, outlining the performance appraisal review 

process to all supervisors and managers at the end of every performance cycle as a reminder of the correct 

steps in the final rating process. In addition, the Office of Human Capital should remind each headquarters 

Program Office Performance point of contact to emphasize the correct final rating process with their 

respective supervisors and managers during the final rating process. 

FMC 15-06 – Real Property Management System (RPMS) Information Produced by the Entity 

(NFR No. ICE 15-10) 

Due to RPMS account management general information technology control weaknesses, we were unable 

to conclude on the operating effectiveness of RPMS general information technology controls. 

Management utilizes two reports from this system in the performance of manual controls. 

The Rent Bill Verification and Validation relies on the General Services Administration Rent Projections 

Report from RPMS as a source for the reconciliation. If this report is not complete and accurate, items 

requiring reconciliation may not be identified. 

3
 
 

 

 

Immigration and Customs Enforcement 

Financial Management Comments
 

September 30, 2015
 

The leasehold improvement sub-ledger to general ledger reconciliation uses the Leasehold Improvement 

Report from RPMS as the source document for the leasehold improvement sub-ledger and the source 

document for recording additions and deletions in the general ledger. If all the information contained in 

RPMS is not captured and reflected on the system generated report then information presented in the 

general ledger may not be complete and items requiring reconciliation may not be identified. 

Recommendations: 

ICE should improve controls for granting access to RPMS users and implement an annual recertification 

to ensure the operating effectiveness of general information technology controls. ICE should also assess 

the completeness of the reports provided from RPMS. 

FMC 15-07 – Undelivered Orders Analysis (NFR No. ICE 15-14) 

Controls were not fully effective to ensure that there is clear documentation readily available to support 

the status assigned to obligations on the undelivered orders analysis template. Specifically, we noted a 

contract that had an expired period of performance and no fiscal year 2015 activity that was assigned a 

status 1; however, there was no clear and concise documentation available to support the status included in 

the undelivered orders analysis. Additionally, upon further inquiry it was determined that this contract was 

currently under Defense Contract Audit Agency audit and per the DHS Component Requirements Guide, 

in this instance, strong supporting documentation is required. 

Recommendation: 

ICE should work closely with the programs to ensure proper documentation is available to support open 

obligation balances. 

FMC 15-08 – Operating Expenses (NFR No. ICE 15-16) 

Controls were not operating effectively to ensure advances were recorded and liquidated in the proper 

period. Specifically, we noted one instance in which an advance should have been recorded in previous 

fiscal years and was incorrectly liquidated in FY 2015 resulting in an overstatement to operating expenses. 

Controls were not operating effectively to ensure that prepaid assets were properly recorded in the general 

ledger. Specifically, we noted one instance in which vehicles that had been purchased but not received 

were recorded as operating expenses instead of prepaid assets resulting in an overstatement to operating 

expenses and an understatement to prepaid assets. 

Recommendation: 

ICE should take steps to ensure that advances are processed correctly and enforce proper procedures for 

receipt of vehicles in the financial system. 

4
 
 

Appendix A 

Immigration and Customs Enforcement 

Crosswalk – Financial Management Comments to Active NFRs 

September 30, 2015 

Disposition 

IAR FMC 

Component NFR 

No. Description MW SD NC No. 

ICE 15-01 Intra-Departmental Reconciliation A 

ICE 15-02 Non-GAAP Analysis 15-01 

ICE 15-03 Apportioned and Unapportioned Balances 15-02 

ICE 15-04 Fund Balance with Treasury Cash Adjustments A 

ICE 15-05 Accounts Payable Look-Back Analysis 15-03 

ICE 15-06 Miscellaneous Non-Contract Undelivered Orders D 

ICE 15-07 Intra-Governmental Payment and Collection 

Expense Approval A 

ICE 15-08 Entity-Level Controls – OGE-450 Form: 

Confidential Financial Disclosure Report 15-04 

ICE 15-09 Entity-Level Controls – Performance Reviews 15-05 

ICE 15-10 Real Property Management System Information 

Produced by the Entity 15-06 

ICE 15-11 PRISM Information Produced by the Entity D 

ICE 15-12 Journal Entry Review and Approval A 

ICE 15-13 Antideficiency Act J 

ICE 15-14 Undelivered Orders Analysis 15-07 

ICE 15-15 Funds Management and Untimely Recording of 

obligation activity to the general ledger D 

ICE 15-16 Operating Expenses 15-08 

1Disposition Legend: 

IAR	 Independent Auditors’ Report dated November 13, 2015 

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 System Functionality 

C Property, Plant, and Equipment 

D Budgetary Accounting 

E Entity-Level Controls 

F Grants Management 

G Custodial Revenue and Refunds 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) 

5
 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix B 

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 

Chief Financial Officer 

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-16-80 
 

 

 

 

 

 

 

ADDITIONAL INFORMATION AND COPIES 

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For further information or questions, please contact Office of Inspector General Public Affairs 

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

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hotline at (202) 254-4297, or write to us at: 

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245 Murray Drive, SW 

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