Department of Homeland Security
 

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U.S. Immigration and Customs Enforcement’s 


Management Letter for FY 2013 DHS 


Financial Statements Audit 


OIG-14-66 April 2014
 
 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

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

 APR 21 2014 

MEMORANDUM FOR: Radha Sekar 

Chief Financial Officer 

U.S. Immigration and Customs Enforcement 

FROM: s

ctor General for Audits 

Anne L. Richard

Assistant Inspe

SUBJECT: U.S. Immigration and Customs Enforcement’s 

Management Letter for FY 2013 DHS Financial Statements 

Audit

 

Attached for your information is our final report, U.S. Immigration and Customs 

Enforcement’s Management Letter for FY 2013 DHS Financial Statements Audit. This 

report contains five comments and five recommendations related to internal control 

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

on DHS’ FY 2013 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 December 11, 2013, which was 

included in the Department of Homeland Security’s (DHS) fiscal year (FY) 2013 Agency 

Financial Report. We do not require management’s response to the recommendations. 

We contracted with the independent public accounting firm KPMG LLP (KPMG) to 

conduct the audit of the DHS’ FY 2013 financial statements and internal control over 

financial reporting. The contract required that KPMG perform its audit according to 

generally accepted government auditing standards and guidance from the Office of 

Management and Budget and the Government Accountability Office. KPMG is 

responsible for the attached management letter dated January 15, 2014, and the 

conclusions expressed in it. 

Please call me with any questions, or your staff may contact Mark Bell, Deputy Assistant 

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

Attachment 

 
 

KPMG LLP 

Suite 12000 

1801 K Street, NW 

Washington, DC 20006 

January 15, 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: 

We have audited the financial statements of the U.S. Department of Homeland Security (DHS or 

Department) for the year ended September 30, 2013 (referred to herein as the “fiscal year (FY) 2013 

financial statements”), and have issued our report thereon dated December 11, 2013. In planning and 

performing our audit of the financial statements of DHS, in accordance with auditing standards generally 

accepted in the United States of America and Government Auditing Standards, we considered internal 

control over financial reporting (internal control) as a basis for designing our auditing procedures for the 

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

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. 

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 2013 audit – 

as either reported in our Independent Auditors’ Report, or herein – 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. 
TABLE OF FINANCIAL MANAGEMENT COMMENTS (FMC) 

Comment 

Reference Subject Page 

FMC 13-01 Unfunded Leave 2 

FMC 13-02 Imputed Costs – General Journal Entry 2 

FMC 13-03 Payroll Accrual 2 

FMC 13-04 Untimely Review of Form Office of Government Ethics (OGE)-278 and OGE-450 2 

FMC 13-05 Approval of Personnel Actions 3 

APPENDIX
 

Appendix Subject Page 

A Crosswalk – Financial Management Comments to Active Notices of Finding and 4 

Recommendation (NFRs) 

U.S. Immigration and Customs Enforcement 

Table of Financial Management Comments
 

September 30, 2013
 

1
 
U.S. Immigration and Customs Enforcement 

Financial Management Comments
 

September 30, 2013
 

FMC 13-01 – Unfunded Leave (Notice of Finding and Recommendation (NFR) No. U.S. Immigration 

and Customs Enforcement (ICE) 13-02) 

ICE lacked adequate policies and procedures to validate the National Finance Center data used to 

generate the unfunded leave accrual prior to posting the accrual in the Federal Financial 

Management System. 

Recommendation: 

We recommend that ICE develop policies and procedures, including supervisory reviews over 

underlying data used to record the unfunded leave accrual to ensure the accuracy of the accrual. 

FMC 13-02 – Imputed Costs – General Journal Entry (NFR No. ICE 13-03) 

Controls were not operating effectively to accurately calculate the imputed costs for pension 

benefits based on the approved cost factors for calculating imputed costs as determined by the 

Office of Personnel Management. 

Recommendation: 

We recommend that ICE enhance controls and procedures to accurately calculate imputed costs 

for pension benefits based on updated and approved cost factors prior to posting adjustments into 

the financial system. 

FMC 13-03 – Payroll Accrual (NFR No. ICE 13-04) 

Controls were not fully effective to ensure the accuracy of the payroll accrual as of March 31, 

2013. Specifically, we noted that the Continuing Resolution impacted the end of month 

accounting due to the timing of authorization and apportionment. 

Recommendation: 

We recommend that ICE reinforce existing policies and procedures over the payroll accrual 

process to ensure consistent application of policies and accuracy of the payroll accrual during 

continuing resolution periods. 

FMC 13-04 – Untimely Review of Form Office of Government Ethics (OGE)-278 and OGE-450 

(NFR No. ICE 13-05) 

Controls over the confidential disclosure (OGE–450) forms were not fully effective: 

•	 We found that one individual selected for testwork separated from the agency prior to the 

filing period; however, that employee was included on the listing of individuals required to 

file the OGE-450 form. 

•	 One individual selected for testwork had not completed the form until the time of 

testwork. Additionally, we note as of the date of our testwork not all forms had been received 

by the Office of Ethics. 

2
 
U.S. Immigration and Customs Enforcement 

Table of Financial Management Comments
 

September 30, 2013
 

•	 One sample item was filed by the individual after the February 15, 2013 deadline. 

•	 For all employees selected for testwork, the supervisor review was completed within the 60 

day requirement; however, we noted for 11 employees selected for testwork, the certification 

by the Office of Ethics was not completed until August 2013. Additionally, at the time of 

testwork the certification process had not been completed for all fiscal year 2013 forms. 

Controls were not effective to ensure review by the Office of Ethics was completed within 30 

days of filing by the individual for OGE-278s. Specifically, for two sample items selected we 

note the certification by the Office of Ethics was not completed within 60 days. 

Recommendation: 

We recommend that ICE implement a centralized system to identify individuals required to file 

financial disclosure forms, monitor progress and review of the forms from the filer to the 

supervisor, and track receipt of the forms in the Office of Ethics. 

FMC 13-05 – Approval of Personnel Actions (NFR No. ICE 13-07) 

Controls were not implemented for the entire fiscal year to ensure that proper documentation is 

maintained to support approval of Career Ladder Promotion personnel actions, prior to the action 

being processed. 

Recommendation: 

We recommend that ICE develop and implement controls to ensure proper documentation is 

maintained supporting approval of each personnel Career Ladder Promotion action. 

3
 
Appendix A 

U.S. Immigration and Customs Enforcement 

Crosswalk – Financial Management Comments to Active NFRs 

September 30, 2013 

Disposition1 

IAR FMC 

Component NFR 

No. Description MW SD NC No. 

ICE 13-01 General Property, Plant, and Equipment Controls A 

ICE 13-02 Unfunded Leave 13-01 

ICE 13-03 Imputed Costs – General Journal Entry 13-02 

ICE 13-04 Payroll Accrual 13-03 

ICE 13-05 Untimely Review of Form Office of Government Ethics 

(OGE)-278 and OGE-450 13-04 

ICE 13-06 General Property, Plant, and Equipment Additions and 

Deletions A 

ICE 13-07 Approval of Personnel Actions 13-05 

ICE 13-08 Internal Use Software A 

ICE 13-09 Invoice Approval A 

ICE 13-10 Undelivered Order Analysis D 

ICE 13-11 Federal Financial Management System to Prism 

Reconciliation D 

ICE 13-12 Funds Management and Untimely Recording of Obligation 

Activity to the General Ledger D 

ICE 13-13 Financial Reporting A 

ICE 13-14 U.S. Government Accountability Office Checklist A 

ICE 13-15 Invoice Receipt A 

ICE 13-16 Entity Level Controls E 

ICE 13-17 Federal Financial Management Improvement Act of 1996 A J 

ICE 13-18 Completeness of the Lease Footnote Disclosure and Timely 

Capitalization of Leasehold Improvements A 

1

Disposition Legend: 

IAR Independent Auditors’ Report dated December 11, 2013 

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 

D Budgetary Accounting 

E Entity-Level Controls 

F Liabilities 

4
 

C 
U.S. Immigration and Customs Enforcement 

Table of Financial Management Comments 

September 30, 2013 

G Grants Management 

H Custodial Revenue and Drawback 

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

J Federal Financial Management Improvement Act of 1996 (FFMIA) 

K Single Audit Act Amendments of 1996 

L Antideficiency Act, as amended (ADA) 

5
 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A 

Report Distribution 

Department of Homeland Security

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff

General Counsel 

Executive Secretary 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs

Assistant Secretary for Office of Legislative Affairs 

Chief Privacy Officer 

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, as appropriate 

www.oig.dhs.gov OIG-14-66 
 

 

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