Financial Audit

Examination of Customs' Fiscal Year 1993 Financial Statements Gao ID: AIMD-94-119 June 15, 1994

An audit of the U.S. Customs Service reveals that the agency cannot fully account for tons of illegal drugs and millions of dollars seized from drug dealers, adequately control the use of its operating funds, and ensure that importers are complying with laws to ensure fair trade. During fiscal year 1993, the U.S. Customs Service took several meaningful steps toward addressing recommendations resulting from GAO's audit of the fiscal year 1992 statements. Most importantly, Customs began a program to reliably measure compliance with trade laws; developed a methodology for accurately reporting its $900 million in accounts receivable; and, for the first time, did a nationwide inventory of its seized assets. More substantial improvements, however, will be needed to develop meaningful and reliable financial management information and establish a sound internal control structure. Consequently, GAO is unable to express an opinion on Customs' fiscal year 1993 Principal Financial Statements. This report highlights Customs' serious financial management and control problems and describes the harmful effect of these problems on Customs' ability to carry out its trade and enforcement missions. GAO also describes Customs' efforts to correct the problems and makes recommendations to help Customs resolve these problems and strengthen its financial management operations.

GAO found that: (1) Customs was unable to resolve all the critical problems that were identified in its FY 1992 financial statement audit; (2) Customs had unreliable financial information, inadequate financial systems and processes, and an ineffective internal control structure; (3) Customs' internal controls were not properly designed and implemented to safeguard assets, determine material compliance with relevant laws and regulations, and ensure that there were no material misstatements in the financial statements; and (4) there were no material instances of noncompliance with selected laws and regulations.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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