The U.S. Customs Service has a diverse mission spanning a large geographic area. Customs’ responsibilities include (1) collecting revenue from imports and enforcing Customs and other U.S. laws and regulations, (2) preventing the smuggling of drugs into the United States, and (3) overseeing export compliance and money-laundering issues. At the close of fiscal year 2000, Customs had a permanent workforce of about 20,000 employees. These employees carry out Customs’ mission at its headquarters, 20 Customs Management Centers (CMC), 20 Special Agent- in-Charge (SAIC) offices, 301 U.S. ports of entry, 5 Strategic Trade Centers, and over 25 international offices. Customs processed over 23 million import entries, with a value of $1.17 trillion; 140 million conveyances; and 489 million land, sea, and air passengers in fiscal year 2000. Every manager and supervisor is responsible for conducting a self- inspection of the activities, such as entry processing, that they oversee, using uniform self-inspection worksheets. The worksheets are used to evaluate the key internal control points in a particular program or process, assess mission/program accomplishments, and better define priorities and identify areas needing improvement. Customs’ entities are to conduct self- inspections every 6 months, which are referred to as self-inspection cycles. At the time of our review, four self-inspection cycles had been completed, with the fifth cycle due to start in July 2001. Self-inspection results, including problems identified and potential corrective actions, are to be funneled up the chain of command. For example, worksheet results addressing port activities are to be certified by approving officials at the ports of entry. The officials are to send results to the CMC, which in turn sends the results to the cognizant assistant commissioner at Customs headquarters. The assistant commissioners are to report SIP results to MID after ensuring that self-inspection worksheets have been completed, are accurate, and have been analyzed; key issues have been identified; corrective actions have been determined; and timeframes for completing corrective actions have been established. MID is responsible for monitoring and directing SIP worksheet development and managing the program. In addition, MID is to conduct independent verification and validation inspections of the completed self- inspection worksheets to ensure that they are correct and accurate. MID’s inspections are more in-depth for certain areas than the local self- inspection reviews in order to verify that all problems in those areas have been found. MID performs its verification and validation inspections with a staff of 65 professionals, located at headquarters and at seven field offices around the country. MID also supplements its staff by detailing managers and supervisors from other entities to help conduct the inspections. In addition to managing SIP, MID’s staff devotes about 30 percent of their time to auditing funds involved in undercover operations. Figure 1 shows that MID has inspected or is scheduled to inspect, more than half of Customs’ entities by June 30, 2001. In particular, MID has inspected or is scheduled to inspect 19 of the 20 CMCs, 17 of the 20 SAICs, and several of its subordinate entities, including ports of entry, Resident Agent-in-Charge (RAIC) offices, and Resident Agent (RA) offices. To identify (1) SIP’s usefulness as a mechanism for oversight and accountability and (2) problems relating to SIP implementation, we interviewed officials from several Customs’ organizations, including MID, which oversees SIP and is within the Office of Internal Affairs. In addition to MID, during our review, we interviewed officials from the Office of Field Operations (OFO), which oversees CMCs and ports of entry, and the Office of Investigations (OI), which oversees SAICs, RAICs, and RAs, because these are geographically dispersed components with the responsibility for completing a large number of self-inspection worksheets. Also, we judgmentally selected seven ports of entry and one SAIC office from these components for field visits and accompanied MID on inspections of four of the entities. We also visited the CMCs affiliated with the two San Diego ports of entry and Los Angeles International Airport (LAX). At the ports of entry and SAIC office, we interviewed supervisors and managers responsible for implementing SIP at the local level. We also reviewed relevant agency documents, including nationwide results of several self-inspection cycles, self-inspection results at the field entities visited, and the results of MID verification and validation inspections. We reviewed MID verification and validation inspection reports for 144 Customs’ entities. We summarized the results of these reports using spreadsheets, detailing the number of areas MID reviewed, the number of documentation errors MID identified, the number of self-inspections with questions answered incorrectly, and MID’s assessments and observations of SIP implementation. Because we could not glean such specific information from reports for 17 of these entities, these reports were not included in our analysis. MID’s results from inspections of 127 entities and over 2,000 self-inspection worksheets were used in our analysis. Because the MID reports did not follow a consistent format and it was often difficult to extract the appropriate information, we used the reports only to validate overall assessments given by MID. Because the entities inspected were judgmentally selected by MID, the findings from these reports and our analysis of these reports may not be representative of the entire Customs Service. To identify improvements and refinements that could enhance the value of the program, we worked closely with directors, managers, and supervisors at selected Customs sites. We also interviewed MID, OFO, and OI officials to obtain their views and plans for improving and refining the program. In addition, we reviewed MID documentation concerning changes and refinements to the program. We performed our work between June 2000 and April 2001 in accordance with generally accepted government auditing standards. We provided the Customs Service with a draft of this report. Customs’ written comments are discussed in our agency comments section and are included as appendix I to this report. Our visits to eight Customs’ entities and review of 127 MID verification and validation inspection reports found SIP to be a useful mechanism for managers and supervisors to identify and correct problems at the local level and to obtain more control over activities they oversee. During self- inspections, the entities uncovered areas of vulnerability and identified numerous areas needing improvement in their local operations. The MID also identified areas needing improvement through their verification and validation inspections. The managers and supervisors we talked with said that SIP had made a positive contribution to oversight and accountability and to improving their operations. SIP has been a useful mechanism for identifying and correcting problems. The Customs’ entities that we visited had uncovered numerous areas of vulnerability in their local operations as a result of self-inspections. For example, all eight entities had identified weak controls over seized property and were implementing corrective actions. Corrective actions included developing evidence and sign-in logs for property rooms and vaults and improving processes for transferring seized property to secure vaults in a timely manner. In addition, at one port of entry we visited, Customs officials discovered problems in the imprest fund as a result of a self-inspection. According to the port director, the self-inspection raised questions about a cashier’s handling of the fund, which led to a determination that the cashier had embezzled $1,000 from the fund. According to an OFO report, CMCs and ports of entry identified approximately 3,000 items needing improvement with corresponding corrective actions nationwide during the second SIP cycle. The OFO SIP Program Coordinator tracks the status of the corrective actions for issues that occur at many ports. Financial management, trade programs, passenger processing (including personal searches), and fines, penalties, and forfeitures (including seized property) were the areas identified most frequently as needing improvement. In addition, all the entities we visited had identified numerous areas needing improvement and had implemented a number of corrective actions. For example, one port of entry identified 37 areas needing improvement out of 54 they inspected during the second SIP cycle. Of the 37 areas, corrective actions for 31 had been completed at the time of our visit; the rest were in process. During the third SIP cycle, the port identified 27 different areas needing improvement out of 64 inspected. Of the 27 areas, corrective actions for 23 had been completed by the time of our visit; the rest were in process. In addition to problems uncovered through local level self-inspections, MID verification and validation inspections identified additional areas needing improvement. For example, at one port of entry, MID inspectors found late filing of travel vouchers, security checks not being conducted, and personal search facilities having privacy and safety shortcomings. In response, MID made numerous recommendations to port management for corrective actions. MID officials explained that the recommendations were based on problems identified during their inspection that the port should have found during its self-inspection or MID found in areas it reviews but are not addressed by the self-inspection worksheets. MID officials further explained that while on-site at a port of entry or other entity, they conduct more in-depth reviews that go beyond the scope of the worksheet questions. These in-depth reviews have been targeted toward higher-risk areas, such as airport security programs, and may lead to worksheet revisions where warranted. MID also conducts follow-up activities to ensure that its recommendations have been completed. MID generally sends a follow-up memorandum to the applicable entity about 6 months after the inspection to determine the status of the corrective actions taken in response to the recommendations. The entity then provides MID with a letter stating the status of the corrective action(s) and provides supporting documentation. After receiving this letter, MID may close out the recommendation, require more documentation, or visit the entity to obtain more documentation.