United States 

Immigration and 

Customs Enforcement's 

Management Letter for 

DHS' Fiscal Year 2016 

Financial Statements 

Audit 

June 12, 2017 

OIG-17-71 
 

 

DHS OIG HIGHLIGHTS 

United States Immigration and Customs

Enforcement’s Management Letter for

DHS’ Fiscal Year 2016 Financial Statements Audit 

June 12, 2017 

Why We Did 

This Report 

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. 

During the fiscal year (FY) 

2016 audit of DHS’ 

consolidated financial 

statements and internal 

control over financial 

reporting, KPMG LLP noted 

certain matters involving the 

U.S. Immigration and 

Customs Enforcement’s 

internal control and other 

operational matters. 

For Further Information:



ȋʹͲʹȌʹͷͶǦͶͳͲͲǡ

Ǧ
Ǥ̷ǤǤ

What We Found

KPMG LLP, under contract with the DHS Office 

of Inspector General, audited the U.S. 

Immigration and Customs Enforcement’s 

financial statements and internal control over 

financial reporting for FY 2016. The resulting 

management letter contains nine observations 

related to internal controls and other 

operational matters which are presented in 

this report for management’s consideration. 

KPMG LLP noted internal control deficiencies 

in several processes including intragovernmental payment and collection expense 

approval; accounts payable analysis, payroll 

cash reconciliation; performance reviews; and 

financial disclosure reporting. These 

deficiencies are not considered significant and 

were not required to be reported in the 

Independent Auditors’ Report on DHS’ FY 2016 

Financial Statements and Internal Control over 

Financial Reporting, dated November 14, 2016, 

included in the DHS FY 2016 Agency Financial 

Report.

www.oig.dhs.gov OIG-17-71 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

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

June 12, 2017 

MEMORANDUM FOR: Stephen Roncone 

Acting Chief Financial Officer 

United States Immigration and Customs Enforcement 

FROM: 

./_. ~ (/ /f/? 

John V. Kelly 

Deputy Inspector General 

SUBJECT: United States Immigration and Customs Enforcement's 

Management Letterfor DHS' Fiscal Year 2016 

Financial Statements Audit 

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

Customs Enforcement's Management Letterfor DHS' Fiscal Year 2016 Financial 

Statements Audit. This report contains nine observations related to internal 

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

Auditors' Report on DHS' FY 2016 Financial Statements and Internal Control 

over Financial Reporting, dated November 14, 2016, which was included in the 

Department of Homeland Security's (DHS) fiscal year (FY) 2016 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 2016 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 8, 2016 

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: 

We planned and performed our audit of the consolidated financial statements (hereinafter referred to as the 

“financial statements”) of the U.S. Department of Homeland Security (DHS or Department), as of and for the 

year ended September 30, 2016, 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. 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 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 standards applicable to attestation engagements contained in Government 

Auditing Standards issued by the Comptroller General of the United States; and the internal control 

requirements included in OMB Bulletin No. 15-02. 

During our audits we noted certain matters involving the Immigration and Customs Enforcement’s (ICE) internal 

control and other operational matters 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 observations and 

recommendations are summarized in Exhibit I of this letter and are not considered significant deficiencies or 

material weaknesses in internal control over financial reporting. Significant deficiencies and material 

weaknesses in internal control over financial reporting have been previously communicated to the DHS Office 

of Inspector General (OIG) and management in our Independent Auditors’ Report, dated November 14, 2016, 

included in the fiscal year 2016 DHS Agency Financial Report. 

Deficiencies related to ICE information technology (IT) controls 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 should be useful to you. 

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

KPMG LLP is a Delaware limited liability partnership and the U.S. member 

firm of the KPMG network of independent member firms affiliated with 

KPMG International Cooperative (“KPMG International”), a Swiss entity. 
 

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, 
 

 

 

 

 

U.S. Immigration and Customs Enforcement 

Table of Financial Management Comments 

September 30, 2016 

TABLE OF FINANCIAL MANAGEMENT COMMENTS (FMC) 

Comment 

Reference Subject Page 

FMC 16-01 Untimely Deposit of Bond Cash Receipts 2 

Approval
 

Federal Financial Management System Reconciliation
 

FMC 16-02 Untimely Intra-governmental Payment and Collection Expense 2 

FMC 16-03 Insufficient Obligation Analysis 2 

FMC 16-04 Insufficient Payroll Cash Reconciliation 3 

FMC 16-05 Untimely Performance Reviews 3 

FMC 16-06 Non-Compliance with Financial Disclosure Filing Requirements 3 

FMC 16-07 Insufficient Procurement Information System for Management to 4 

FMC 16-08 Accounts Payable Lookback Analysis 4 

FMC 16-09 Out of Period Expenses 4 

APPENDIX 

Appendix	 Subject Page 

A Crosswalk – Financial Management Comments to Active Notices of 6 

Findings and Recommendations (NFRs)
 

1 
 

 

 

 

 

 

U.S. Immigration and Customs Enforcement 

Financial Management Comments and Recommendations 

September 30, 2016 

FMC 16-01 – Untimely Deposit of Bond Cash Receipts (NFR No. ICE 16-01) 

Controls were not operating effectively to ensure that bond receipts that the Enforcement and Removal 

field offices received were deposited timely. Specifically, during our testwork of open bonds as of June 

30, 2016, we noted that for one sample, the bond was issued and the obligator made the payment on 

November 30, 2015; however the field office did not make deposit until December 21, 2015. 

Recommendation: 

ICE should review and update, as necessary, its manual bond procedures and continue to train 

process owners on the proper handling of bonds. 

FMC 16-02 – Untimely Intra-Governmental Payment and Collections (IPAC) Expense Approval (NFR 

No. ICE 16-02) 

Controls were not operating effectively to ensure that IPACs were reviewed and posted to the general 

ledger timely. Specifically, we identified five instances of untimely posting of an IPAC expenditure to the 

general ledger. 

Recommendation: 

ICE should explore possible solutions to get improved responses from its programs on IPACs including 

the review of the current escalation procedures and changes to current processing goals. 

FMC 16-03 – Insufficient Obligation Analysis (NFR No. ICE 16-03) 

Controls were not fully effective to ensure that clear and concise documentation was readily available 

to support the status assigned to obligations on the Obligation Analysis template. Specifically, we 

identified the following: 

x Two contracts had an expired period of performance and no FY 2016 activity that were assigned a 

Status 1 (i.e., open, valid obligation). However, there was no clear and concise documentation 

available to support the status included in the Obligation Analysis. This contract was under 

Defense Contract Audit Agency (DCAA) audit and per the Components Requirement Guide, in this 

instance, strong supporting documentation was required. 

x One contract had an expired period of performance and no FY 2016 activity that was assigned a 

Status 1. However, the documentation provided indicated that the component did not complete the 

review of this obligation. 

x One contract had an expired period of performance and no FY 2016 activity that was assigned a 

Status 1. However, the documentation provided indicated a Status of 4 (i.e., obligation ready for 

closeout). The applicable program office communicated that the contract was ready to be 

deobligated, but the closeout had not yet been completed. 

Recommendation: 

ICE should update its standard operating procedures to include specific guidance on proper 

documentation support for obligations to ensure responses to undelivered order data calls are 

complete and accurate. 

2 
 

 

 

 

 

 

 

U.S. Immigration and Customs Enforcement 

Financial Management Comments and Recommendations
 

September 30, 2016
 

FMC 16-04 – Insufficient Payroll Cash Reconciliation (NFR No. ICE 16-04) 

Controls were not operating effectively to ensure that payroll differences for all Treasury account fund 

symbols were identified on the face of the payroll cash reconciliation. Specifically, during our review of 

the February 2016 payroll cash reconciliation that Financial Operations-Dallas performed for the 

Management Directorate, we noted that one Treasury account fund symbol had payroll activity during 

the reporting period but was not included on the face of the payroll cash reconciliation. 

Recommendation: 

ICE should consistently report all Treasury account fund symbols with activity on the payroll cash 

reconciliation cover page. 

FMC 16-05 – Untimely Performance Reviews (NFR No. ICE 16-07) 

Controls were not operating effectively to ensure initial and final Performance Appraisal Forms were 

reviewed and approved timely. 

Recommendation: 

ICE should: 

x Continue to issue communications, 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. 

x Remind each Headquarter 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 16-06 – Non-Compliance with Financial Disclosure Filing Requirements (NFR No. ICE 16-08) 

Controls were not fully effective to ensure all Office of Government Ethics (OGE)-450 forms were filed 

and certified timely. Specifically, out of 45 samples, we identified the following: 

x	 Although the reviewing supervisor was copied on the filer submission notices, one form was not 

certified timely due to a delay in supervisory review. Reminder and past due notifications were not 

timely sent to the supervisor. 

x	 One employee was identified as a new filer; however, a notification to file was not sent to the 

employee. Upon further review after the filing due date, it was determined that the filer did not meet 

the requirements to file. 

x	 One form in which the final certification was not completed timely. 

Recommendation: 

The ICE Ethics Office should:
 

x	 Continue to commit to provide equal focus to new entrant filers in accordance with its current 

written procedures. 

3 
 

 

 

 

 

 

 

 

x

U.S. Immigration and Customs Enforcement 

Financial Management Comments and Recommendations 

September 30, 2016 

Continue to provide reminder and past due notifications to delayed supervisory review in 

accordance with its current written procedures. 

FMC 16-07 – Insufficient Procurement Information System for Management (PRISM) to Federal 

Financial Management System (FFMS) Reconciliation (NFR No. ICE 16-09) 

ICE did not fully implement controls to ensure that all obligations awarded in ICE’s procurement writing 

system, PRISM, were posted timely to its financial system of record, FFMS. Specifically, we noted that 

one Title III procurement contract identified as a variance through the reconciliation process did not 

have evidence of research and resolution. 

Recommendation: 

ICE Office of Financial Management should update the PRISM to FFMS reconciliation process to 

ensure validation and resolution of any differences identified. 

FMC 16-08 – Accounts Payable Lookback Analysis (NFR No. ICE 16-10) 

The Accounts Payable lookback analysis was not properly designed and operating effectively to assess 

the historical accuracy of the Accounts Payable accrual. Specifically, we identified the following: 

x The percentage variance per the lookback analysis was calculated as (dollar variance/accrual 

amount). However, we noted that the percentage variance should have been calculated as (dollar 

variance/actual amount). 

x The accrual amount per the lookback analysis for the second quarter did not agree to the accrual 

amount per the financial statements. We noted a difference of $340,604. 

Recommendation: 

ICE should review key controls in the review process for the Accounts Payable lookback analysis, and 

ensure that additional oversight is included in the management review process. 

FMC 16-09 – Out of Period Expenses (NFR No. ICE 16-11) 

Controls were not operating effectively to ensure that operating expenses related to contracts were 

posted to the general ledger in the appropriate accounting period. Specifically, we identified that 

expenses incurred for the period of performance of September 15, 2016, through September 14, 2017, 

were expensed entirely in FY 2016. This resulted in an overstatement of expenses and understatement 

of prepaid assets at year end. 

4 
 

 

 

Department of Homeland Security 

Financial Management Comments and Recommendations
 

September 30, 2016
 

Recommendation: 

ICE should: 

x Develop guidance on how to identify and report on prepaid assets on a periodic basis. 

x Provide training to Contracting Officer Representatives and Program Office Point of Contacts on 

contracts in which payments are required in advance. 

5 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix A 

U.S. Immigration and Customs Enforcement 

Crosswalk – Financial Management Comments to Active NFRs 

September 30, 2016 

Disposition1 

IAR FMC 

NFR No. Description MW SD NC No. 

16-01 Untimely Deposit of Bond Cash Receipts 16-01 

16-02 Untimely Intra-governmental Payment and Collection 

Expense Approval 

16-02 

16-03 Insufficient Obligation Analysis 16-03 

16-04 Insufficient Payroll Cash Reconciliation 16-04 

16-05 Impact of General Information Technology Control 

Failures on Application Controls and System Generated 

Information Produced by the Entity 

B 

16-06 Ineffective Funds Management B 

16-07 Untimely Performance Reviews 16-05 

16-08 Non-Compliance with Financial Disclosure Filing 

Requirements 

16-06 

16-09 Insufficient Procurement Information System for 

Management to Federal Financial Management System 

Reconciliation 

16-07 

16-10 Accounts Payable Lookback Analysis 16-08 

16-11 Out of Period Expenses 16-09 

1Disposition Legend: 

IAR Independent Auditors’ Report dated November 14, 2016 

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 Information Technology Controls and Financial System Functionality 

B Financial Reporting 

C Property, Plant, and Equipment 

D Entity-Level Controls 

E Grants Management 

F Custodial Revenue and Refunds and Drawback 

G Federal Managers’ Financial Integrity Act of 1982 

H Single Audit Act Amendments of 1996 

I Antideficiency Act, as amended 

J Federal Financial Management Improvement Act of 1996 

6 
 

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 

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-17-71 
 

 

 

 

 

 

 

ADDITIONAL INFORMATION AND COPIES 

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 Public Affairs 

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

OIG HOTLINE 

To report fraud, waste, or abuse, visit our website at www.oig.dhs.gov and click on the red 

"Hotline" tab. If you cannot access our website, call our hotline at (800) 323-8603, fax our 

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

Department of Homeland Security 

Office of Inspector General, Mail Stop 0305 

Attention: Hotline 

245 Murray Drive, SW 

Washington, DC 20528-0305