DHS Asset Forfeiture: Additional Actions Could Help Strengthen Controls over Equitable Sharing
Published: 2014-03-28T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Every year, DHS components seize millions of dollars in assets during investigations and other activities and contribute forfeited proceeds to the Treasury Forfeiture Fund. Treasury manages the fund, which held about $1.7 billion in assets in fiscal year 2013. DHS components use proceeds primarily to cover forfeiture activity costs, which include sharing proceeds with state and local agencies that participate in DHS investigations through Treasury's equitable sharing program. GAO was asked to review the management of the fund.
This report addresses (1) DHS revenues contributed to and obligations from the fund and (2) the extent to which DHS components have designed controls to help ensure compliance with Treasury's guidance when implementing the equitable sharing program. GAO analyzed financial data from fiscal years 2003 through 2013 on the forfeiture fund; Treasury's equitable sharing guidance; and a sample of 40 DHS equitable sharing packages, selected based on payment amounts and other factors; Sample results are not generalizable but provided information on DHS's compliance with guidance. GAO also interviewed DHS and Treasury officials.
section_title: What GAO Found
paragraphs: From fiscal years 2003 through 2013, Department of Homeland Security (DHS) components that participate in the Treasury Forfeiture Fund—U.S. Immigration and Customs Enforcement (ICE), the U.S. Secret Service (USSS), U.S. Customs and Border Protection (CBP), and the U.S. Coast Guard (USCG)—contributed approximately $3.6 billion in revenues to the fund and obligated about $2.6 billion from the fund for forfeiture-related activities. These obligations included, among other things, approximately $1.2 billion that DHS components shared with state, local, federal, and foreign law enforcement agencies that participated in forfeiture efforts. Also, during this period, DHS components used about $348 million from the fund to support various law enforcement activities and projects, such as the construction of Border Patrol facilities along the southwest border.
DHS components have designed controls to help ensure compliance with the Department of the Treasury's (Treasury) equitable sharing guidance, but controls could be enhanced though additional documentation and guidance.
Documentation: Treasury's guidance directs components to base equitable sharing determinations on the work hours that all participating agencies contributed to an investigation and then consider qualitative factors regarding agency contributions, such as originating the information that led to the seizure, to adjust percentages. However, 31 of the 40 DHS component equitable sharing packages—which contain sharing determinations and other documents—that GAO reviewed did not include key information, such as component work hours expended on a case and documentation of how qualitative factors were applied to make determinations, to support the basis for final sharing percentages, consistent with federal internal control standards. For example, in 1 package GAO reviewed, two police departments contributed the same number of work hours, but one received a 10 percent larger share than the other, resulting in a difference of about $48,000 in forfeiture proceeds. However, the package did not clearly document how qualitative factors were applied to adjust the percentages. Fully documenting the basis for DHS equitable sharing determinations could help enhance the transparency of decision making and better position DHS components and Treasury to ensure that equitable sharing decisions are made in compliance with Treasury's guidance.
Guidance: Treasury's guidance on qualitative factors includes three examples, but does not include three other factors listed on the equitable sharing application or provide specific information on how to apply factors to adjust sharing percentages. For example, incurring extraordinary expenses is listed as a factor on the application, but is not included as an example in the guidance. Providing guidance on qualitative factors that are listed on the application, including what they entail and how to apply them, could help participating agencies have a better and more consistent understanding of these factors. In addition, headquarters officials from the three DHS components that conduct equitable sharing stated that additional guidance could help ensure a more consistent understanding of these factors among headquarters and field offices. Developing additional guidance on qualitative factors could help better ensure consistency with which these factors are applied across cases.
section_title: What GAO Recommends
paragraphs: GAO recommends that Treasury ensure that the basis for DHS equitable sharing determinations is fully documented and develop additional guidance on qualitative factors used to make determinations. Treasury concurred with both recommendations and outlined steps it plans to take to address them.

section_title: Letter
paragraphs: Protecting the public from criminal organizations and enterprises through  the use of asset forfeiture is an essential part of the law enforcement  process for federal, state, and local law enforcement agencies. At the  federal level, the Department of the Treasury (Treasury) and Department  of Homeland Security (DHS) seize millions of dollars in assets every year  that are forfeited, liquidated, and then deposited into the Treasury  Forfeiture Fund (TFF), which over the course of fiscal year 2013 held  approximately $1.7 billion in assets. Forfeited assets can include, but are  not limited to, businesses, cash, bank accounts, automobiles, boats,  airplanes, jewelry, art objects, and real estate. Any revenues generated  from forfeitures are used to fund program-related expenses, including  payments to victims of crimes, the costs of storing and maintaining  forfeited assets, and certain law enforcement activities related to forfeiture  investigations (e.g., funds to compensate informants). After funds have  been obligated for program expenses, any unobligated funds that remain  in the TFF at the end of the fiscal year are then carried forward to the next  fiscal year.over funds to ensure it has resources to cover expenses at the start of the   Specifically, at the end of each fiscal year, Treasury carries  next fiscal year. Funds determined to be in excess of those requirements  (excess unobligated balances) may be declared as Super Surplus and,  after Office of Management and Budget (OMB) approval and  congressional notification, can be used at Treasury’s discretion for a  variety of law enforcement purposes.
IRS-CI is the only Treasury agency that produces revenue and that can initiate equitable  sharing on behalf of the TFF. Additional Treasury agencies that participate in the TFF  include the Financial Crimes Enforcement Network, the Federal Law Enforcement  Training Center, and the Tax and Trade Bureau. and assembling a working group that meets once every 2 weeks to  discuss coordinated efforts, but this action has not been fully  implemented. Agency officials anticipate completing the study by late  March 2014. You asked us to assess the contribution of DHS  components participating in the TFF, including their role in the equitable  sharing program. This report addresses the following questions:  1.  What have been DHS components’ revenues contributed to and  obligations from the TFF from fiscal years 2003 through 2013?  2.  To what extent have DHS components designed controls to help  ensure compliance with Treasury’s guidance when implementing the  equitable sharing program?  3.  To what extent do DHS components coordinate with Treasury in  overseeing the equitable sharing program?
To determine TFF revenues from and obligations by DHS components  from fiscal year 2003—the year in which DHS began operations—through  fiscal year 2013, we analyzed Treasury’s reported data on revenues and  obligations by fiscal year, using information contained in CBP’s National  Finance Center’s financial accounting systems. We interviewed officials  from the four DHS components that participate in the TFF, DHS’s Office  of the Chief Financial Officer, and the Treasury Executive Office for Asset  Forfeiture (TEOAF) to discuss trends and variations in the revenues and  obligations over this 11-year period.
Regarding DHS controls over the equitable sharing program, we analyzed  federal statutes and Treasury guidance on making equitable sharing  determinations and documentation of DHS component controls designed  to help ensure compliance with guidance. We analyzed nongeneralizable samples of 40 equitable sharing determination packages for forfeited  assets of less than $1 million and 5 packages for forfeited assets of $1  million or more to determine the extent to which the packages complied  with Treasury’s guidance. We selected these packages from payments  made and packages approved from October 2012 through June 2013  based on payment amounts and amounts forfeited, among other  factors. We also interviewed officials from TEOAF; ICE, USSS, and  CBP in headquarters; and selected field offices of these components in  California, New York, and Texas to identify and assess controls designed  to help ensure compliance with guidance. These three states received the  highest amounts of equitable sharing payments on average from fiscal  years 2010 through 2012. We selected field offices to include those that  processed high amounts and large numbers of equitable sharing  payments. We compared controls designed to help ensure compliance  with Treasury’s guidance with the overall framework for establishing and  maintaining internal control outlined in Standards for Internal Control in  the Federal Government. In addition, we interviewed officials from three  state or local law enforcement agencies in each of these three states,  which we selected based on such factors as the amount and number of  payments they received in fiscal year 2012.of packages and interviews are not generalizable to the universe of  packages and agencies, but they provided valuable information on the   The results of our analysis  equitable sharing determination process, designed controls, and extent to  which the selected packages adhered to guidance.
Regarding coordination, we analyzed guidance and other documents on  equitable sharing, including those in our samples of equitable sharing  packages, to determine the extent of coordination between DHS  components and TEOAF in overseeing equitable sharing. In addition, we  interviewed officials from ICE, USSS, and CBP in headquarters; selected  field offices of these components as discussed above; and TEOAF to  obtain information about, among other things, the extent to which DHS  and TEOAF coordinate on overseeing the equitable sharing program,  including making sharing determinations and developing guidance. We  compared DHS and TEOAF coordination mechanisms with leading  practices on interagency collaboration.
To assess the reliability of data for revenues and obligations, excess  unobligated balances, and equitable sharing payments used to select our  samples, we reviewed documentation, such as annual financial plans and  standard operating procedures related to reporting TFF data in the fund’s  financial accounting system, which is maintained by CBP. We also  conducted interviews with CBP and Treasury officials to determine how  they ensure the consistency, accuracy, and completeness of the data. We  determined that these data are sufficiently reliable for the purposes of our  report. See appendix I for more information on our scope and  methodology.
We conducted this performance audit from April 2013 to March 2014 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe the  evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Treasury Forfeiture Fund
paragraphs: The TFF is a multidepartmental fund and has four primary goals: to (1)  deprive criminals of assets used in or acquired through illegal activities;  (2) encourage joint operations among federal, state, and local law  enforcement agencies, as well as foreign countries; (3) protect the rights  of individuals; and (4) strengthen law enforcement. TEOAF is responsible  for providing management oversight of the TFF, which is the receipt  account for the deposit of nontax forfeitures made by Treasury and DHS  participating agencies. DHS components that participate in the TFF  contribute revenues through forfeitures made as a result of their  investigations and operations. They also receive payments and  reimbursements from the fund for expenses incurred during the seizure  and forfeiture process, such as investigative or transportation costs. Table  1 shows DHS component activities that contribute to the TFF.
section_title: Asset Forfeiture Process
paragraphs: The asset forfeiture process involves a number of steps, including  planning the seizure; seizing and taking custody of the asset; notifying  interested parties; and addressing any claims and petitions, to include  those from third parties. Within the asset forfeiture process, there are  two types of forfeiture: administrative and judicial. In administrative  forfeitures, a federal agency is permitted to commence forfeiture  proceedings on seized assets without judicial involvement. In judicial  forfeitures, both civil and criminal, assets may be forfeited to the United   In civil forfeitures,  States by filing a forfeiture action in a federal court.the action is against the assets and thus does not require that the owner  of the assets be charged with a federal offense. The federal government  must only prove a connection between the assets and the crime. In  contrast, criminal forfeiture requires a conviction of the defendant before  assets can be forfeited. According to TEOAF officials, it can take from  many months to several years to complete the forfeiture process,  depending on a variety of factors, including, among other things, the  types of assets seized; number of parties involved; and, if applicable, the  litigation process, with judicial forfeitures generally taking more time.
section_title: Equitable Sharing
paragraphs: DHS components that have forfeiture authority and are therefore revenue  producers—ICE, USSS, and CBP—can conduct equitable sharing on  behalf of the TFF with federal, state and local, and other law enforcement   State and local law enforcement agencies typically qualify for  entities.equitable sharing by participating directly with DHS components in joint  investigations leading to the seizure and forfeiture of assets. Although  such qualification is less common, state and local agencies can also  qualify for equitable sharing by requesting that DHS components adopt a  case initiated at the state or local level, provided that the assets in  question are forfeitable under federal law. According to TEOAF officials,  the equitable sharing of forfeiture proceeds from seizures has proved  invaluable in fostering enhanced cooperation among federal, state and  local, and other law enforcement entities.
As the management component of the TFF, TEOAF provides guidance  on the equitable sharing program, including setting forth policies,  procedures, and oversight of the program. Treasury’s most recent  guidance, which it issued in 2004, governs how state and local law  enforcement agencies should apply for equitable sharing and how DHS  components should make equitable sharing determinations. Treasury  also established guidance on decision-making authority for equitable  sharing. Specifically, the lead federal agency—in this case, the DHS  component—is responsible for making equitable sharing determinations  when forfeited assets are less than $1 million, which are designated as  low-value determinations.making determinations when forfeited assets are $1 million or more,  which are designated as high-value determinations. DHS components are  responsible for managing equitable sharing in joint investigations with  state and local law enforcement agencies and for following the equitable  sharing guidance, such as ensuring that sharing in joint investigations  reflects the degree of direct participation of the agency in the law  enforcement effort resulting in the forfeiture.
section_title: Since 2003, DHS Components Have Contributed about $3.6 Billion in Revenues to the TFF and Obligated about $2.6 Billion from the Fund
paragraphs: From fiscal years 2003 through 2013, Treasury reported that DHS  components contributed about $3.6 billion to the TFF and obligated about  $2.6 billion for costs associated with forfeiture activities. At the end of  each fiscal year, a balance of funds remains in the TFF to maintain  operations at the start of the next fiscal year, and, as available, to fund  additional expenditures including funding law enforcement activities by   For example, Treasury reported that from fiscal years  TFF members.2003 through 2013, about $348 million of the fund’s remaining balances  have been used to fund law enforcement activities and projects by DHS  components.
subsections: section_title: DHS Components Contributed about $3.6 Billion in Revenues to the TFF since 2003, Accounting for More than Half of All Revenues to the Fund
paragraphs: Treasury reported that from fiscal years 2003 through 2013, DHS  components contributed approximately $3.6 billion to the TFF’s  approximately $7 billion in total revenues, or 52 percent of total  revenues. Over this period, the DHS components’ contribution to the  TFF fluctuated annually, but generally remained above 50 percent or  more of total TFF revenues per year. Among DHS components—ICE,  USSS, and CBP—contributing to the TFF, ICE contributed the majority of  revenue.approximately $1.1 billion in revenues, of which ICE contributed  approximately $1 billion (91 percent) and USSS contributed $52 million  and CBP contributed $51 million (approximately 4.5 percent each), as  shown in figure 1.
section_title: DHS Components Have Obligated about $2.6 Billion from the TFF since 2003; Equitable Sharing Payments Were the Largest Obligation
paragraphs: Treasury reported that from fiscal years 2003 through 2013, DHS  component obligations from the TFF totaled approximately $2.6 billion, or  54 percent, of the TFF’s total obligations of approximately $4.8 billion. As  revenues have fluctuated annually there generally has been a concurrent  increase or decrease in obligations in support of asset forfeiture activities.  In fiscal year 2013, DHS component obligations were the highest during  this 11-year period, at $476 million, coinciding with an increase in  revenues that year. Prior to 2013, obligations by DHS components  generally ranged from $123 million to $287 million. As with revenues, ICE  is responsible for the majority of obligations among DHS components  contributing to the TFF. Figure 2 shows the obligations by each DHS  component, as well as by non-DHS members of the fund, from fiscal  years 2003 through 2013.
According to TEOAF officials, the TFF in its capacity as a  multidepartmental fund collects and uses revenues from forfeitures to  focus resources to enhance support of more law enforcement efforts,  including the quality of investigations. Accordingly, revenues resulting  from forfeitures are used to obligate funds for the forfeiture program’s  expenses in four major categories—equitable sharing payments,  remission and mitigation payments, seizure investigative costs and asset  management expenses, and other expenses.
Equitable sharing payments: Treasury reported that from fiscal years  2003 through 2013, equitable sharing payments constituted the largest  TFF obligation by DHS components. During this period, DHS components  shared approximately $1.2 billion, or 45 percent of total DHS obligations,  with a range of state and local law enforcement agencies across the  country—as well as other federal agencies and foreign entities—that  participated in law enforcement efforts resulting in forfeitures. Specifically,  from fiscal years 2003 through 2012, DHS components’ obligations for  equitable sharing payments ranged from $48 million to $136 million per  year. However, in fiscal year 2013, DHS components shared  approximately $355 million, the highest amount of obligations for  equitable sharing payments by DHS components during this 11-year  period. Among the three DHS components making equitable sharing  payments, ICE made up over 90 percent of total DHS obligations for   State and local agencies accounted for the  equitable sharing payments.majority of sharing recipients, and accounted for an average of 96 percent  of total obligations for equitable sharing payments from fiscal years 2010  through 2012. According to officials at all nine state and local law  enforcement agencies we met with, the equitable sharing program has  improved the relationship between federal agencies and their offices.  Moreover, officials stated that under the current fiscal constraints, these  funds are needed by their agencies and have allowed them to purchase  equipment such as bulletproof vests, weapons, mobile computers, and  police station security cameras. See figure 3 for equitable sharing  payments made by DHS components to state and local law enforcement  agencies within each state in fiscal year 2013.
Payments for remission and mitigation: According to TEOAF officials,  a priority of all TFF members is to return assets to victims of crime, and  accordingly, remission and mitigation payments are another major cost  category across all DHS components. No funds are shared with state  and local law enforcement partners until remission and mitigation  payments have been made to address compensating victims or other  third parties for their financial losses. Treasury reported that from fiscal  years 2003 through 2013, total obligations for DHS remissions and  mitigation payments were approximately $477 million, or about 19 percent  of total DHS obligations, and varied from 2 to 45 percent of DHS  obligations each year. For example, in fiscal year 2008, DHS components  made $128 million in obligations for remission and mitigation payments,  or 45 percent of total obligations. In contrast, in fiscal year 2013, DHS  components made $30 million in obligations for remission and mitigation  payments, accounting for 6 percent of total obligations. Moreover, among  DHS components, USSS made up between 60 and 90 percent of total  DHS obligations for remission and mitigation payments from fiscal years  2010 through 2013. TEOAF officials attribute the variation in total  obligations for remission and mitigation payments each year to the  different types of investigations that lead to forfeiture from 1 year to the  next. According to these officials, higher remission and mitigation  payments in a fiscal year may be in part due to high-impact forfeitures  resulting from fraud investigations with significant numbers of victims.
Seizure investigative costs and asset management expenses: In  addition to carrying out equitable sharing and making payments to  victims, DHS components use funds to pay for the costs associated with  the seizure of assets. Treasury reported that over this 11-year period,  total obligations for seizure investigative costs and asset management  expenses were $450 million, or approximately 18 percent of total DHS  obligations. These costs included investigative and asset management  expenses (e.g., salaries for positions supporting the asset forfeiture  program, travel for oversight activities, overtime worked by specialists  involved in securing seized merchandise, and equipment and supplies).
For example, one of CBP’s primary responsibilities is to secure the border  at and between points of entry. Accordingly, CBP is generally responding  to reports and seizures of illegal narcotics and other contraband  smuggling, including firearms and ammunition. These seizures result in  additional costs, including the storage of assets and disposal or  destruction expenses.
Other expenses: All DHS components have a variety of other program  operations expenses, including compensation to informants and  reimbursement for the cost of training. Treasury reported that from fiscal  years 2003 through 2013, DHS components had a total of $483 million in  other expenses, or approximately 19 percent of total DHS component  obligations, in other program operations expenses. These other expenses  include a total of seven expense categories, such as asset-related  contract services, funds to compensate the services of experts and  consultants, reimbursement to state and local law enforcement agencies  for overtime costs incurred during joint special operations, and training.
section_title: The TFF Contained Balances of $888 Million in 2013; Excess Balances Have Supported DHS Law Enforcement Activities and Covered Rescissions, among Other Things
paragraphs: At the end of each fiscal year, the TFF maintains a balance from revenue  contributions into the fund that exceeds obligations incurred throughout  the year. TFF balances at the end of each fiscal year have progressively  increased since fiscal year 2003. Treasury reported that TFF balances  totaled $75 million in fiscal year 2003 and $888 million in fiscal year 2013.  TEOAF carries over funds at the end of each fiscal year to maintain  operations including the anticipated costs associated with continuing  forfeiture activities at the start of the next fiscal year, before revenue from   TEOAF reported that from fiscal years 2003  forfeitures starts coming in.through 2008, it had carried over between $50 million to $70 million at the  end of each fiscal year to maintain operations at the start of the next year.  Since the end of fiscal year 2009, Treasury reported that a set amount of  $100 million has been carried over to fund operations at the start of the  next fiscal year.
TEOAF uses balances in excess of this amount—excess unobligated  balances—to cover additional obligations. include funding for law enforcement activities by TFF members,  rescissions, and other uses. According to TEOAF officials, the balances  available to cover these obligations vary each year, as they are  determined by a variety of factors including the enacted budgets,  negotiations with Congress, and ultimately the enacted rescissions.  Figure 4 shows the carryover funds retained in the TFF at the end of each  fiscal year to maintain operations, as well as the amounts set aside for  additional obligations.
TEOAF officials referred to these balances as Super Surplus, which represents the  remaining unobligated balance at the close of the fiscal year after an amount is reserved  to fund operations in the next fiscal year. Super Surplus can be used for any federal law  enforcement purpose. For the purposes of this review, we refer to Super Surplus funds as  excess unobligated balances. 31 U.S.C. § 9703(g)(4)(B).
subsections: section_title: Balances to Support Law Enforcement Activities
paragraphs: Treasury reported that from fiscal years 2003 through 2013, about $348  million of the excess unobligated balances has been obligated to fund  DHS component law enforcement activities and projects. Figure 5 shows  the funds received from fiscal years 2003 through 2013 by DHS  components—ICE, USSS, CBP, and USCG—as well as the total funds  received by other agencies—such as Treasury’s Financial Crimes and  Enforcement Network—for law enforcement activities.
DHS, per Treasury’s reported data, has submitted and received approval  from Treasury to fund a variety of projects across all four DHS  components that participate in the TFF. For example,
CBP received $29.6 million in fiscal year 2010, of which $15 million  was obligated to support the construction of Border Patrol facilities in  southwest border locations and the purchase of equipment for these  facilities; $6.8 million was used for the purchase and installation of  Non-Intrusive Inspection equipment; and, the remainder was spread out for smaller purchases such as field and intelligence equipment.ICE received $21.3 million in fiscal year 2011 for a range of activities,  including $6 million to defray the costs of Title III court-ordered  intercepts, which support investigations related to the southwest  border, among other things; $2 million to cover costs of investigative  activities with ICE’s HSI, such as translation, transcription, and  duplication services; $2 million to support Border Enforcement  Security Taskforces; and $2.5 million to purchase a system to conduct  multiple undercover operations online, simultaneously. The remainder  was spread among other projects and needs such as replacement of  an undercover operations database.
USSS received about $27 million in fiscal year 2012, and obligated  $11 million for the purchase of equipment and tools to enhance  USSS’s protection capabilities, including metal detector equipment  and X-ray equipment replacement, and $6 million to acquire desktop  and laptop computers to replace the aging inventory of computers for  USSS task forces. The remainder was spread among other projects  and needs such as investigative software.
USCG received $1.5 million in fiscal year 2013 to fund the upgrade  and purchase of fingerprint biometric kits for patrol boats, cutters, and  the Deployable Operations Group, allowing USCG to run fingerprints  against other federal law enforcement databases.
Overall, the total funds received by DHS components for law enforcement  activities varied from year to year. According to TEOAF officials,  because of the current fiscally constrained environment, the TFF excess  unobligated balances available each year are important, as they help to  fund innovative initiatives such as the purchase of equipment, training,  and other programs that the fund’s members may otherwise not be able  to fund. Additionally, the Deputy Assistant Director of DHS’s Budget  Division, Office of the Chief Financial Officer, stated that DHS encourages  components to request these funds, particularly to support innovative  activities that develop new capabilities or provide proof of concept for new  technologies or processes.
section_title: Balances to Cover Rescissions
paragraphs: Since 2009, TEOAF has retained excess unobligated balances to cover  yearly proposed rescissions. In fiscal year 2009—the first year a TFF  rescission was proposed and enacted—$30 million was rescinded from  the TFF, which since increased to a $950 million rescission in 2013. The  effect of these rescissions has been a reduction in TEOAF’s budgetary  resources, thereby decreasing the amount of money TEOAF has  available to obligate for allowable purposes. A rescission could potentially  decrease the size of the federal deficit, provided the decreased spending  from the rescission is not offset by increased spending elsewhere. For  annual appropriations, rescinded funds are generally taken from an  agency and returned to the Treasury before they are obligated. However, per OMB guidance, from fiscal years 2009 through 2013,  rescinded funds from the TFF were not returned to the Treasury.
Rescinded funds are generally permanent and deposited into the General Fund of the  Treasury, which is not the same fund as the TFF. result, TEOAF treated the funds as unavailable for obligation for the  remainder of the fiscal year for which the rescission was enacted. With  the enactment of a new rescission for the subsequent fiscal year, TEOAF  continued to treat the rescinded funds as unavailable for obligation and  applied the amounts to the rescission in the next fiscal year. For example,  the $30 million that was rescinded from the TFF in fiscal year 2009 was  treated as unavailable for obligation in fiscal year 2009, and was then  obligated again to cover part of the enacted $90 million rescission in fiscal  year 2010. To make up the difference needed to meet the $90 million  rescission in fiscal year 2010, TEOAF used excess unobligated balances  in the amount of $60 million. According to TEOAF officials, one effect of  these rescissions is that a larger portion of the balances available for  additional obligations is being reserved to cover rescissions and is  unavailable to fund other obligations such as law enforcement activities.
In fiscal year 2014, Congress passed two rescissions of TFF funds  totaling approximately $1.7 billion. First, the Bipartisan Budget Act of  2013 permanently canceled $867 million of the TFF’s unobligated  balances and TEOAF returned the total to the General Fund of the  Treasury. Accordingly, unlike in previous years, these funds will not be  available for any purpose, including applying to any subsequent  rescission. In addition, the Consolidated Appropriations Act of 2014  rescinded $836 million of the TFF’s unobligated balances. As in  previous fiscal years, TEOAF did not return these rescinded funds from  the TFF to the Treasury, and they are unavailable for obligation in fiscal  year 2014. According to TEOAF officials, the TFF received revenues from  several large forfeiture cases in the first quarter of fiscal year 2014 that  helped enable the fund to operate with these rescissions under its current  financial plan.
section_title: Additional Controls Could Help Improve the Transparency and Consistency of Equitable Sharing Determinations
paragraphs: DHS components have designed controls to help ensure compliance with  Treasury’s equitable sharing guidance, such as designing multiple levels  of review for equitable sharing determinations. However, added  controls—specifically, full documentation of the basis for determinations  and additional guidance on the factors to consider when making  determinations—could further enhance transparency and consistency  across determinations, among other things. DHS components have taken  steps to help ensure the equitable sharing process complies with required  time frames.
subsections: section_title: DHS Components Have Designed Controls to Help Ensure Compliance with Treasury’s Equitable Sharing Guidance
paragraphs: DHS components that conduct equitable sharing—ICE, USSS, and  CBP—have designed controls to help ensure compliance with Treasury’s  guidance. The guidance requires that sharing in joint investigations  reflect the degree of direct participation of the agency in the law  enforcement effort resulting in the forfeiture, in accordance with federal   Specifically, it directs responsible officials to base equitable sharing  law.determinations on the work hours that all participating agencies expended  on the investigation and then, if applicable, consider qualitative factors  regarding additional contributions that agencies may have made, such as  providing unique and indispensable assistance, to adjust percentages.
Equitable Sharing Determination Example  HSI initiated a task force investigation of a suspected money-laundering organization,  which was identified as being involved in the laundering and transportation of narcotics  proceeds from the United States into Colombia. As a result, the organization was found  guilty of conspiracy to defraud the government and directed to forfeit $1,000,000. Three  police departments and two county sheriffs’ offices participated in the task force and  provided assistance in executing the search warrant, conducting interviews, and  cataloguing evidence, among other support. Agencies received a share of the forfeiture  proceeds based on the percentage of work hours that they contributed to the  investigation. TEOAF increased one agency’s share because it provided a Special  Assistant United States Attorney to handle the forfeiture, which was considered unique  and indispensable assistance. The attorney had expertise in asset forfeiture cases,  negotiated the terms of the forfeiture payments to help ensure recovery of the entire  forfeited amount, and provided a range of other legal support.
DHS components have designed controls to help ensure that equitable  sharing packages contain required information and are reviewed and  approved by appropriate component authorities to help ensure  compliance with Treasury’s guidance. According to the guidance, state  and local law enforcement agencies are to submit an application for  equitable sharing in which they outline the asset that was seized, the  number of work hours they expended on the investigation, and other  contributions. One control to help ensure DHS components comply with  guidance is the requirement to prepare and submit an equitable sharing  decision form when making determinations. The decision form is to  include estimated work hours, recommended and approved sharing  percentages, and a narrative section for providing an overview of the  case and describing specific agency contributions. Another control  involves required signatures on the form documenting submission by field  office officials and approval by component headquarters officials.
Moreover, all three DHS components have designed multiple levels of  review for equitable sharing packages. First, component field office  officials—including the agents leading the investigation, asset forfeiture  specialists, and supervisory agents or sector chiefs, among others—are  to review equitable sharing applications and provide recommended  sharing percentages on the equitable sharing decision form. HSI officials  stated that HSI has an asset forfeiture specialist in each special agent in  charge field office, and Border Patrol officials stated that Border Patrol  has an asset forfeiture officer in each sector. According to USSS’s  Asset Forfeiture Liaison, USSS does not have asset forfeiture specialists  in its field offices, with the exception of New York, and instead has  designated staff that review and process equitable sharing requests as  collateral duties. Officials from all nine of the DHS component field  offices with whom we spoke said that they review applications to ensure  that they are complete and accurate. These officials noted that they work  closely with state and local agencies requesting equitable sharing and as  a result are knowledgeable about their work hours and other  contributions. Officials from all nine of the state and local agencies we  interviewed said that component field offices can contact them if they  need clarification or additional information regarding their participation.
After field office review, the equitable sharing package—which is to  include the decision form, state and local equitable sharing applications,  and other relevant documents, such as the forfeiture order—is submitted  to component headquarters for approval. Each component has a full-time  asset forfeiture liaison who is responsible for reviewing packages and  overseeing all interactions with TEOAF on forfeitures and equitable  sharing. The review process at the headquarters level varies across  components. HSI headquarters officials stated that within the Asset  Forfeiture Unit, an asset forfeiture specialist, program manager, section  chief, and unit chief review all equitable sharing packages. According to  Border Patrol officials, the Assistant Chief of the Asset Forfeiture  Program, who is the asset forfeiture liaison to TEOAF, reviews all  packages. USSS officials said that the asset forfeiture liaison and an  administrative staff person review packages. Component headquarters  officials told us that they review packages to ensure that they are  complete, include the necessary forms and information, and reflect the  degree of agency participation in the seizure. Components then are to  submit the packages to TEOAF for payment authorization. DHS asset  forfeiture liaisons are to be available to address any questions that  TEOAF may have regarding their packages or obtain additional  information about sharing determinations from the field offices if needed.  Figure 6 shows the steps involved in making equitable sharing  determinations.
HSI and Border Patrol have also issued additional guidance to their field  offices to help ensure compliance with Treasury’s guidance for making  equitable sharing determinations. Specifically, HSI issued a memorandum  in January 2013 to remind all offices on the proper procedures to follow  when dealing with equitable sharing requests. HSI officials stated that the  memorandum was intended to underscore and clarify Treasury’s  guidance as it pertained to HSI cases. For example, it outlines time  frames for submitting equitable sharing packages to the Asset Forfeiture  Unit in HSI headquarters. It also reiterates Treasury’s guidance on how  equitable sharing determinations should be made based on investigative  work hours and qualitative factors, if applicable. In addition, the  memorandum provides additional guidance on what should be considered  unique and indispensable assistance. Specifically, it lists an additional  example of such assistance—an undercover officer with a special skill or  language ability not readily available elsewhere. Border Patrol issued  additional guidance in 2006 that outlines the equitable sharing process in  detail. The guidance lists the steps that the requesting agency, sector  asset forfeiture office, headquarters asset forfeiture office, and TEOAF  perform in the process. It also reiterates Treasury’s guidance on factors to  consider when making equitable sharing determinations, among other  things. USSS has not issued additional guidance because, according to  the component’s asset forfeiture liaison, field office staff use Treasury’s  guidance and can contact headquarters if they need assistance in making  sharing determinations.
HSI and USSS have also provided training to headquarters and field  office staff responsible for equitable sharing. HSI headquarters officials  said that they began providing training to field office staff in August 2012  and asset forfeiture officials from all 26 field offices have received  training. Training sessions addressed the process for equitable sharing,  factors to consider when making equitable sharing determinations, and  what to include in packages submitted to HSI headquarters, among other  things. USSS officials stated that since fiscal year 2011, USSS has  provided 37 field office trainings for operational personnel—including a  nationwide asset forfeiture training in February 2013—and has conducted  19 training sessions and seminars for field office senior management  personnel. According to DHS component and TEOAF officials, both HSI  and USSS training were funded by and provided in coordination with  TEOAF. Officials from all six HSI and USSS field offices we contacted  stated that the training provided useful information on equitable sharing  requirements and processes. According to Border Patrol headquarters  officials, Border Patrol has not provided training to its sectors because of  the limited number of equitable sharing requests they process.
section_title: Additional Controls Could Help Improve the Transparency and Consistency of Equitable Sharing Determinations
subsections: section_title: Documenting the Basis for Equitable Sharing Determinations
paragraphs: According to TEOAF officials, equitable sharing determinations should be  clearly supported by the information in the package. TEOAF requires  high-value packages (forfeitures of $1 million or more) to include DHS  component work hours and justifications for material deviations from work  hour calculated percentages due to qualitative factors. This is not,  however, required of low-value packages (forfeitures under $1 million).  Accordingly, 31 of the 40 low-value equitable sharing packages that we  reviewed were missing key information to support the basis for final  sharing percentages. Specifically, these 31 packages did not include one  or more of the following: DHS component work hours, support for how  qualitative factors were applied to make determinations, and the rationale  for changes made to sharing percentages recommended by the field  offices.value packages that we reviewed were fully supported by the information  in the package.
In contrast, the equitable sharing determinations in the 5 high- Component work hours: Treasury’s guidance states that equitable  sharing determinations are normally determined by comparing the  number of investigative hours expended by state, local, and other  requesting agencies and the lead component through the completion of  the forfeiture. According to TEOAF officials, work hours should be the  primary indicator of agency participation in a case.
Example of How Work Hours Are Used to Determine Equitable Sharing   In an HSI-led drug smuggling case, a state police department assisted an HSI field office  in executing search warrants and conducting background checks and surveillance on  drug-trafficking suspects, among other things, resulting in a seizure and forfeiture of  $95,138 in currency. According to documents in the equitable sharing determination  package, the state police expended an estimated 671 work hours on the case and HSI  expended 670, resulting in a 50 percent share of forfeiture proceeds for the state police.
State and local agency work hours were included in all 40 low-value  equitable sharing packages that we reviewed. HSI included its own work  hours in all 26 low-value HSI packages that we reviewed, but USSS and  Border Patrol did not include this information in any of their packages.  Specifically, all 10 USSS and 4 Border Patrol packages that we reviewed  did not include lead component work hours or the total work hours  contributed by all agencies involved in the case. USSS’s asset forfeiture  liaison stated that this information was not included because the lead  USSS component does not receive equitable sharing funds and the  information is not explicitly required on the equitable sharing decision  form. This official said, however, that he has directed field offices to  include component work hours in equitable sharing decision forms  starting in fiscal year 2014. We reviewed an additional USSS equitable  sharing package that was approved by headquarters in fiscal year 2014  and found that the USSS field office included its work hours. Border  Patrol’s Asset Forfeiture Liaison said that because most of the  component’s seizures occur at checkpoints or while agents are on  patrols—unlike HSI and USSS seizures, which result primarily from  investigations—work hours can be difficult to measure and are not always  used to make equitable sharing determinations. However, state and  local agency work hours were included in all 4 Border Patrol equitable  sharing packages that we reviewed. Border Patrol’s Asset Forfeiture  Liaison stated that it would be useful to include Border Patrol work hours  when possible if they are measured consistently across all participating  agencies. In the absence of documented component work hours, we  could not determine what proportion of total work hours components  contributed to the case and how deciding authorities verified whether  equitable sharing determinations were calculated in accordance with  Treasury’s guidance.
Application of qualitative factors: All 31 low-value packages we  reviewed that did not include full support for sharing determinations did  not contain clear documentation of how qualitative factors were used to  adjust sharing determinations. Treasury’s guidance directs deciding  officials to consider additional factors when the work hours do not  adequately reflect the degree of agency participation in the investigation.  These factors could include, for example, originating the information  leading to the seizure or providing unique and indispensable assistance.  The decision forms in the packages that we reviewed generally contained  narratives that summarized what each agency contributed to the case,  which included interviewing suspects, executing search warrants,  conducting surveillance, providing a drug-sniffing canine, and a range of  other investigative support. However, the forms did not identify which  specific agency contributions were used to adjust percentages and what  adjustments were made. For example, in 1 HSI equitable sharing  package we reviewed, two police departments contributed the same  number of work hours, but one received a 10 percent larger share than  the other, resulting in a difference of about $48,000 in forfeiture proceeds.  Both departments indicated on their application forms that they provided  unique or indispensable assistance and originated the information leading  to the seizure. HSI’s equitable sharing decision form for this package  includes a summary of how each police department participated in the  investigation, such as assisting in undercover operations, interviews, and  search and surveillance, but does not explicitly state which specific  contribution or contributions were used to adjust percentages or why one  agency’s contribution was valued more than the other’s.
HSI’s January 2013 guidance memorandum states that when work hours  do not adequately reflect the degree of agency participation, it is critical  that the narratives contained in the documents submitted to the Asset  Forfeiture Unit in headquarters specifically detail the participation of all  agencies involved. This helps to ensure that agency contributions  outside of work hours are documented in the equitable sharing packages,  but does not require field offices to identify which qualitative factors or  contributions were used to adjust percentages and how these factors  were applied. Moreover, in USSS and Border Patrol equitable sharing  packages where component work hours were not documented, it was not  possible to determine if adjustments were made to sharing percentages  based on qualitative factors. Border Patrol’s Asset Forfeiture Liaison  stated that Border Patrol could document this information if required.  USSS’s Asset Forfeiture Liaison said that it would be administratively  burdensome to specify which, if any, qualitative factors were used to  adjust percentages and how they were applied because USSS primarily  relies on field office staff to process equitable sharing requests as  collateral duties, in addition to their other responsibilities. However,  agency contributions are generally already included in the decision form  narratives and specifying which contribution was used to adjust  percentages could be done by including a short sentence or annotation.  For example, in a USSS high-value package that we reviewed, TEOAF  documented that a state agency’s percentages were adjusted upward  because the agency conducted all key interviews in the investigation.  Components could document the same kind of information for low-value  packages with minimal additional narrative. Documenting the rationale for  making adjustments to sharing percentages based on qualitative factors  could improve transparency for approving authorities and officials  overseeing equitable sharing regarding how and why adjustments are  made when work hours alone do not fully reflect the degree of agency  participation in the investigation. Such documentation could also help  these officials better assess the extent to which qualitative factors were  applied appropriately and consistently in determinations.
Component headquarters changes to sharing percentages: USSS  and HSI headquarters made changes to sharing percentages in 8 of the  31 low-value packages we reviewed that did not include full support for  determinations, and in all 8 of these instances, the reasons for the  changes were not documented. USSS and HSI officials noted that they  contact field office staff to discuss any changes, but that the reasons for  the changes are generally not included in the packages submitted to  TEOAF. USSS headquarters made changes to sharing percentages  recommended by field offices in 6 of the 10 USSS packages that we  reviewed. For example, in 1 package, USSS headquarters decreased a  state agency’s share from 60 to 40 percent—resulting in a difference of  about $28,400—but the decision form did not note why the change was  made. USSS’s Asset Forfeiture Liaison stated that these changes are  primarily due to headquarters taking into account additional work that  USSS agents perform to identify victims of financial crimes after the field  offices submit the decision forms to headquarters. The liaison said that  these additional work hours and resources are not reflected in the field  office’s recommended sharing percentages or on the decision forms.  According to the USSS liaison, headquarters has only one other official  who reviews and approves equitable sharing determinations, and  documenting the rationale for changes to sharing percentages would  require additional work. However, he noted that including a short  annotation would be feasible. HSI officials stated that the reasons for  headquarters’ changes to field office sharing percentages are generally  documented in HSI review forms and e-mail correspondence with the field  and provided examples of such documentation. However, this support is  not included in the packages that HSI submits to TEOAF for review and  payment authorization. HSI officials said that they could include this   Documenting the rationale for  information if requested by TEOAF.changes to sharing percentages recommended by the field—by, for  example, including a short sentence or annotation—could help enhance  transparency regarding why changes were made and how final sharing  percentages were determined.
Standards for Internal Control in the Federal Government states that  controls are to provide reasonable assurance for compliance with laws  and regulations and help ensure that management’s directives are carried  out, among other things. To achieve these objectives, it states that  transactions should be promptly recorded to maintain their relevance and  value to management in controlling operations and making decisions.  This applies to the entire process or life cycle of a transaction or event  from the initiation and authorization through its final classification in  summary records. In addition, internal control standards state that all  transactions and other significant events need to be clearly documented,  and the documentation should be readily available for examination. In the  absence of consistently documenting component work hours, how  qualitative factors are applied to adjust sharing percentages, and the  reasons for headquarters’ changes to percentages, it is unclear how  equitable sharing deciding authorities evaluated the nature and value of  the contributions of each of the agencies involved in the investigation.  TEOAF officials said that clearly documenting the basis for equitable  sharing determinations in low-value packages would be helpful for  approving officials. This is important because, according to TEOAF  officials, equitable sharing determinations have grown more complex in  recent years as a result of the increase in large investigations that involve  multiple agencies. These officials said that it would be feasible for  TEOAF—as the manager of the TFF and the equitable sharing program— to issue a memorandum to DHS components to include additional  information in equitable sharing packages and work with components as  needed to implement it. Establishing a mechanism to ensure that the  basis for low-value equitable sharing determinations is fully documented  by all DHS components responsible for making determinations could  enhance the transparency of decision making and help DHS components  and TEOAF better ensure that equitable sharing decisions are made in  compliance with Treasury’s guidance.
section_title: Guidance on Qualitative Factors
paragraphs: Treasury has established general guidance on the qualitative factors to  consider if work hours do not adequately reflect the degree of agency  participation in the investigation. The guidance includes three examples  of these factors—whether the agency originated all of the information  leading to the seizure, provided unique and indispensable assistance, or  could have achieved forfeiture under state law—and a short narrative  describing each of them. For example, the guidance states that unique  and indispensable assistance entails an agency providing support only it  can provide, such as seizing assets in a jurisdiction hundreds of miles  from where the investigation is being conducted or providing an informant  who has access to documents that are essential to securing a conviction.  The guidance does not provide specific information on how to apply these  examples to adjust sharing percentages. Treasury is in the process of  revising its guidance, and as of January 2014, the draft guidance  contained a more abbreviated discussion of qualitative factors, with two  examples and less detail regarding the contributions to consider. For  example, the draft guidance does not provide examples of contributions  that could be considered unique or indispensable assistance. TEOAF  officials stated that the revised guidance is being finalized and indicated  that they do not plan to include more information on qualitative factors in  the guidance. The office expects to issue the guidance in 2014, but did  not have a more specific time frame, in part because the guidance was  undergoing an interagency review. HSI’s January 2013 memorandum  includes additional guidance on qualitative factors, such as clarifying what  types of activities are considered unique and indispensable assistance.  USSS and Border Patrol have not issued similar guidance.
TEOAF and DHS component officials stated that guidance on qualitative  factors is general because equitable sharing determinations are made on  a case-by-case basis and the facts and circumstances of each case must  be considered in totality when making adjustments to sharing  percentages. Accordingly, DHS component field office and headquarters  officials said that they use their judgment and experience when  determining if and how qualitative factors should be applied in making  equitable sharing decisions. However, officials from six of the nine field  offices we interviewed across all DHS components that conduct equitable  sharing stated that additional guidance on qualitative factors would be  useful. Specifically, these officials said that additional examples of factors,  such as what constitutes extraordinary expenses; clarification of what is  considered unique and indispensible assistance; guidance on how to  apply factors, including more information on how to adjust percentages  based on the type and significance of agency contributions; or illustrations  of how factors were applied in real-world cases would be helpful for  making equitable sharing determinations. Officials from the remaining  three field offices said that additional guidance was not needed because  sharing recommendations are made in consultation with requesting  agencies or they can contact component headquarters to discuss any  questions about qualitative factors. Nonetheless, headquarters officials  from all three DHS components that conduct equitable sharing stated that  additional guidance could help ensure a more consistent understanding of  these factors among headquarters and field offices. For example, HSI  officials said that adjustments related to qualitative factors are one of the  reasons for headquarters changes to sharing percentages recommended  by field offices. These officials noted that any additional guidance should  continue to allow for determinations to be based on the facts and  circumstances of each case.
Officials from all nine state and local law enforcement agencies with  whom we spoke were generally satisfied with the equitable shares that  they received. These officials noted that they typically do not have  visibility over the equitable sharing process after they have submitted  their applications. In addition, the equitable sharing determinations we  reviewed indicate that state and local agencies may not have a clear  understanding of how some qualitative factors are defined and  considered. For example, in 12 of the 15 low-value packages we  reviewed where an agency indicated on its application form that it  incurred extraordinary expenses during the investigation, the expenses  were not clearly described in the narrative. In 1 equitable sharing package  we reviewed for a currency-smuggling case, a police department checked  that it had incurred extraordinary expenses and stated that its officer had  conducted surveillance, assisted in a search of a suspect’s house, and  participated in the interview of two individuals who were detained as part  of the investigation. However, we could not determine how these activities  constituted extraordinary expenses. Treasury’s guidance does not include  incurring extraordinary expenses as an example of a qualitative factor,  despite this factor being included in the equitable sharing application. In  addition, the application includes two other factors to consider when  assessing agency contributions that are not included in Treasury’s  guidance. Providing guidance on qualitative factors that are listed on the  application form, including what they entail and how to apply them, could  help officials from state and local agencies, as well as DHS components,  have a better and more consistent understanding of these factors.
Standards for Internal Control in the Federal Government calls for  significant events to be clearly documented in directives, policies, or  manuals to help ensure operations are carried out as intended. While  we recognize the subjective nature of evaluating agency contributions  based on the facts and circumstances of each case, additional guidance  on qualitative factors could help better ensure consistency with which  these factors are applied across cases. Such guidance could also help  DHS components better assess agency contributions when making  equitable sharing determinations.
section_title: Component Actions to Address Equitable Sharing Requirements
paragraphs: TEOAF performs an administrative review of low-value packages to  ensure that the required applications and decision forms are included,  among other things. TEOAF officials said that because DHS components  have decision-making authority for low-value determinations, they  primarily rely on the components to ensure that these packages comply  with equitable sharing requirements.
The low-value packages that we reviewed did not always comply with  certain requirements in Treasury’s guidance. However, HSI and USSS  officials have taken steps to address the deficiencies we found in our  analysis of these packages. Specifically, the guidance requires that state  and local law enforcement agencies submit equitable sharing applications  within 60 days after the seizure, and if this deadline is not met, agencies  need to submit a written request stating the reasons for the late  submission in order for components to waive the requirement. TEOAF  officials said that this requirement is in place to ensure that components  receive all sharing requests in a timely manner and are aware of all  agency contributions before determining equitable shares. HSI and USSS  headquarters officials stated that if a state or local agency submitted a  request for a waiver, they would include it in the package provided to  TEOAF. However, requests for waivers were not included in 8 of the 9  HSI and USSS packages we reviewed where an agency did not meet the  60-day deadline. HSI headquarters officials stated that they began  enforcing the waiver requirement in January 2013. The officials said that  this requirement may take some time to fully implement. Specifically,  because of the potential lengthy forfeiture process, equitable sharing  determinations processed after January 2013 may be from applications  that were submitted to field offices over a year earlier. USSS’s Asset  Forfeiture Liaison stated that in fiscal year 2013, USSS’s asset forfeiture  system was programmed to automatically notify field offices when  equitable sharing applications are due to meet the 60-day requirement  and provided an example of such a notice.
In addition, Treasury’s guidance specifies that final determination of  sharing percentages cannot be made until after assets have been  forfeited. TEOAF officials said that this requirement is in place so that  state and local agencies do not expect equitable shares before forfeitures  are finalized, because in some cases, funds may not be available for  sharing. However, USSS headquarters officials approved sharing  determinations in 5 of the 10 low-value USSS equitable sharing packages  we reviewed before assets were forfeited. These 5 packages were all  approved by headquarters in 2011. USSS’s Asset Forfeiture Liaison said  that with the assignment of a new asset forfeiture specialist in 2012,  USSS changed its review process and no longer approves determinations  before forfeiture. The 5 packages we reviewed that USSS headquarters  approved after 2011 complied with this requirement. We also reviewed 3  additional packages that USSS approved in September 2013 and these  complied as well.
section_title: DHS Components and TEOAF Coordinate on Many Equitable Sharing Oversight Activities
paragraphs: DHS components and TEOAF coordinate in a variety of ways to oversee  the equitable sharing program. For example, DHS and TEOAF have  established roles and responsibilities for the processing, review, and  approval of equitable sharing determinations, consistent with leading  practices on interagency coordination. In addition, each DHS  component has an asset forfeiture liaison who is responsible for  overseeing interactions with TEOAF on forfeitures and equitable sharing.  These liaisons are the primary points of contact between TEOAF and  DHS field offices and help facilitate the processing of equitable sharing  determinations. Further, according to TEOAF and DHS component  officials, TEOAF holds meetings with component asset forfeiture liaisons  once every 2 weeks to discuss TFF issues, including equitable sharing  and any major forfeiture cases that are expected, among other things.  HSI also coordinated with TEOAF to provide equitable sharing training to  field office staff. For example, TEOAF officials stated that TEOAF staff  worked with HSI to develop an agenda of the areas that needed to be  covered during the training sessions. Officials from both HSI and TEOAF   USSS and TEOAF officials  provided presentations during the training.stated that they coordinated to provide training to USSS field office staff  as well.
In addition, TEOAF has collaborated with DHS components to develop  equitable sharing guidance. Specifically, as part of the ongoing  development of updated Treasury guidance, TEOAF provided a draft of  the guidance to DHS components for their review and, according to  TEOAF and DHS officials, held meetings with components to discuss  revisions. Border Patrol also collaborated with TEOAF to develop  additional equitable sharing guidance for its sectors, according to Border  Patrol and TEOAF officials. Such actions are consistent with leading  practices on interagency coordination that call for agencies to address the  compatibility of standards, policies, and procedures that will be used in  the collaborative effort through effective communication, among other  things. However, HSI did not inform TEOAF that it was planning on  issuing additional equitable sharing guidance in January 2013 or provide  a draft of the guidance for TEOAF to review before issuance. According  to HSI officials, HSI did not take these steps because HSI’s additional  guidance was based on Treasury’s guidance and prior discussions in  which TEOAF directed HSI to address concerns about HSI allocating  large shares of forfeiture proceeds to state and local agencies that were  disproportionate to their contributions in investigations and did not retain  sufficient revenues to support TFF expenses.
HSI officials stated that this includes overhead-related expenses that HSI incurs, such  as administrative and storage costs. The officials said that the 30 percent minimum was  based on an analysis of HSI investigative expenses and is intended to help ensure that  HSI’s expenses do not exceed its forfeiture revenues. contributions and include required information in the packages they  submit.
section_title: Conclusions
paragraphs: The authorization to share federal forfeiture proceeds with participating  state and local law enforcement agencies is an important component of  federal asset forfeiture activities and critical in fostering enhanced  cooperation with these agencies. In fiscal year 2013, DHS components  obligated about $355 million in equitable sharing payments to state and  local agencies—the highest annual amount over the past decade. In  addition, equitable sharing determinations have grown more complex in  recent years because of the increase in large investigations that involve  multiple agencies, according to TEOAF officials. Such developments  underscore the need for controls to help ensure compliance with  established equitable sharing guidance and federal statutes.
DHS components have designed controls to help ensure compliance with  Treasury’s guidance when making equitable sharing determinations.  However, there are gaps in the documentation of key information that  serves as the basis for making sharing decisions. Without a mechanism  to ensure documentation of the number of work hours expended by lead  components, how qualitative factors were used to adjust sharing  percentages, and the reasons for headquarters’ changes to equitable  sharing percentages in low-value packages, it is unclear how equitable  sharing deciding authorities could fully evaluate the nature and value of  the contributions of each of the agencies involved in an investigation.  Further, additional guidance on the qualitative factors to consider when  making equitable sharing determinations could help better ensure that  they are consistently applied over time and across cases.
section_title: Recommendations for Executive Action
paragraphs: As the manager of the TFF and equitable sharing program, TEOAF is  best positioned to help ensure that DHS components consistently comply  with Treasury’s equitable sharing guidance. To help improve  management controls over the equitable sharing program, we  recommend that the Director of TEOAF take the following two actions:
Establish a mechanism to ensure that the basis for DHS’s low-value  equitable sharing determinations—including component work hours,  how qualitative factors are applied to adjust percentages, and the  rationale for component headquarters’ changes to percentages—is  documented in equitable sharing packages.
Develop additional guidance on qualitative factors to be used when  making adjustments to equitable sharing percentages.
section_title: Agency Comments
paragraphs: We provided a draft of this report to Treasury and DHS for their review  and comment. Treasury provided written comments, which are reprinted  in appendix II. Treasury and DHS also provided technical comments,  which we incorporated in this report as appropriate.
Treasury concurred with both recommendations in this report in an e-mail  provided on March 20, 2014. In its written comments, the department  outlined steps that it plans to take to implement them. Specifically,  Treasury stated that it plans to  implement changes in its equitable sharing forms, policy guidance,  and processes to address our recommendation that the basis for  DHS’s low-value equitable sharing determinations is documented in  equitable sharing packages. For example, Treasury noted that it is to  require all equitable sharing packages to include component work  hours and emphasize that upward adjustments to a local law  enforcement agency’s sharing percentage must include a coherent  and compelling explanation of the unique or indispensable assistance  provided. Treasury also plans to redesign the equitable sharing  decision form to accommodate these and other changes. discuss changes made to the equitable sharing program, including  those related to qualitative factors, with components over the next 6  months to address our recommendation that Treasury develop  additional guidance on qualitative factors to be used when making  adjustments to equitable sharing percentages.
We are sending copies of this report to the Secretary of the Treasury, the  Secretary of Homeland Security, selected congressional committees, and  other interested parties. In addition, this report is available at no charge  on GAO’s website at http://www.gao.gov.
If you or your staff have any further questions about this report, please  contact me at (202) 512- 9627 or maurerd@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. Key contributors to this report are listed in  appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report addresses the following objectives:  1.  What have been Department of Homeland Security (DHS)  components’ revenues contributed to and obligations from the  Treasury Forfeiture Fund (TFF) from fiscal years 2003 through 2013?  2.  To what extent have DHS components designed controls to help  ensure compliance with the Department of the Treasury’s (Treasury)  guidance when implementing the equitable sharing program?  3.  To what extent do DHS components coordinate with Treasury in  overseeing the equitable sharing program?
subsections: section_title: Assessing Revenues and Obligations
paragraphs: To determine TFF revenues from and obligations by DHS components  from fiscal year 2003—the year in which DHS began operations—through  fiscal year 2013, we analyzed Treasury’s reported data on revenues and  obligations by fiscal year, by the four participating DHS members of the  TFF—U.S. Immigration and Customs Enforcement (ICE), the U.S. Secret  Service (USSS), U.S. Customs and Border Protection (CBP), and the  U.S. Coast Guard (USCG)—and for the fund as a whole. We used  information on revenues and obligations contained in CBP’s National  Finance Center’s financial accounting systems. We interviewed officials  from the four DHS participating components, DHS’s Office of the Chief  Financial Officer, and the Treasury Executive Office for Asset Forfeiture  (TEOAF) to discuss trends and variations in the revenues and obligations  over this 11-year period. We also reviewed information on unobligated  and excess unobligated balances contained in the TFF’s financial  accounting systems. We interviewed TEOAF officials who are responsible  for oversight of the TFF regarding processes for carrying over funds at  the end of the fiscal year. Further, we analyzed Treasury’s reported data  on the TFF’s excess unobligated balances from fiscal years 2003 through  2013, and interviewed DHS officials from the four participating  components, DHS’s Office of the Chief Financial Officer, and TEOAF  officials about how excess unobligated balances have been used since  2003.
section_title: Assessing DHS Controls
paragraphs: To determine the extent to which DHS components that conduct equitable  sharing—ICE, USSS, and CBP—have designed controls to help ensure  compliance with Treasury’s guidance when implementing the equitable  sharing program, we analyzed federal statutes and Treasury guidance on  making equitable sharing determinations and DHS controls designed to  help ensure compliance with guidance. We compared these controls with  the overall framework for establishing and maintaining internal control outlined in Standards for Internal Control in the Federal Government.
We
We selected the 40 packages from equitable sharing payments made  to state and local agencies from October 1, 2012, to June 30, 2013, to  obtain the most recent payments given our timeframes. We selected  this sample based on payment amounts and to reflect a range of DHS  components and field offices that conduct equitable sharing. We  reviewed 26 ICE, 10 USSS, and 4 CBP low-value packages from a  range of each component’s field offices across the nation. Within our  sample time frame, ICE accounted for 1,902 payments to state and  local agencies, USSS accounted for 347, and CBP accounted for 4.  Because multiple payments can result from 1 equitable sharing  package, we could not determine the number of packages processed  during a given time period.
We selected the 5 packages from a list of those approved by TEOAF  from October 1, 2012, to June 30, 2013, based on such factors as  amounts forfeited and the number of seizures involved.packages approved during this time period, we reviewed 3 from ICE  and 2 from USSS investigations.
The results of our analysis of equitable sharing packages are not  generalizable to the universe of packages paid or approved within the  same time frames. However, they provided information on the extent to  which the selected packages adhered to guidance and included  documentation of controls, among other things.
We also interviewed officials from TEOAF; ICE, USSS, and CBP in  headquarters; and selected field offices of these components in  California, New York, and Texas to assess controls established to help  ensure compliance with guidance. These three states received the  highest amounts of equitable sharing payments on average from fiscal  years 2010 through 2012 and composed about 50 percent of total  payments nationwide. We selected ICE, USSS, and CBP field offices to  interview in each state to include those that processed high amounts and  large numbers of equitable sharing payments. In addition, we  interviewed officials from three state or local law enforcement agencies in  each of these states to obtain their perspectives on the equitable sharing  process. We selected these agencies based on the amount and number  of payments they received in fiscal year 2012 and to cover a range of  government agencies (e.g., state, county, or city). While the results of  these interviews are not generalizable to all DHS component field offices  and agencies, they provided valuable information and perspectives on the  equitable sharing determination process and controls.
section_title: Assessing DHS Coordination with Treasury
paragraphs: To determine the extent to which DHS components coordinate with  Treasury in overseeing the equitable sharing program, we analyzed  guidance and other documents. For example, as part of our review of  selected equitable sharing determination packages, we assessed  documentation of how DHS components and TEOAF coordinate and  communicate when making equitable sharing decisions. In addition, we  interviewed officials from ICE, USSS, and CBP in headquarters; selected  field offices of these components as discussed above; and TEOAF to  obtain information about, among other things, the extent to which DHS  and TEOAF coordinate on overseeing the equitable sharing program,  including making sharing determinations and developing guidance. We  compared DHS and TEOAF coordination mechanisms with leading  practices on interagency collaboration.
To assess the reliability of data for revenues and obligations and excess  unobligated balances for the first objective and equitable sharing  payments used to select our samples of packages to review for the  second and third objectives, we reviewed relevant documentation, such  as annual financial plans and standard operating procedures related to  reporting TFF data in the fund’s financial accounting system, which is  maintained by CBP. We also conducted interviews with CBP officials  responsible for managing data, as well as Treasury officials who review  and work with the data to understand how CBP and Treasury collect,  categorize, and tabulate the information and the actions they take to  ensure its consistency, accuracy, and completeness. We determined  information on the financial accounting system provided by CBP to be  sufficiently reliable for presenting Treasury’s reported data on total  revenues, obligations such as equitable sharing payment data, and  excess unobligated balances by DHS components and as a proportion of  the TFF for fiscal years 2003 through 2013.
We conducted this performance audit from April 2013 through March  2014 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Department of the Treasury
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Eric Erdman, Assistant Director;  Sylvia Bascope; Kelly Krinn; and Johanna Wong made key contributions  to this report. Also contributing to this report were Phyllis Anderson,  Christine Broderick, Susan Hsu, Eric Hauswirth, Cynthia Saunders, and  Janet Temko.