Since 2003, DHS Components Have Contributed about $3.6 Billion in Revenues to the TFF and Obligated about $2.6 Billion from the Fund

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. 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 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. 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. 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. 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. 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. The guidance does not provide specific information on how to apply these  examples to adjust sharing percentages. 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. 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. 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. 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. Treasury concurred with both recommendations in this report in an e-mail  provided on March 20, 2014. 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? 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? 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. Assessing DHS Controls

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.
Why GAO Did This Study

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.

What GAO Found

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.

What GAO Recommends

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.