Assets Forfeiture Fund and Seized Assets Deposit Fund Annual Financial Statement, Fiscal Year 2006
Audit Report 07-15
Office of the Inspector General
The Assets Forfeiture Fund and Seized Asset Deposit Fund (AFF/SADF) is a reporting entity within the U.S. Department of Justice (DOJ). The AFF and SADF were created to serve as repositories for funds seized by participating agencies and the sale proceeds from forfeited property. The proceeds deposited in the AFF are used to cover certain operating costs of the DOJ Asset Forfeiture Program (AFP). These include equitable sharing payments to state, local, and foreign governments; joint law enforcement operations; contract services in support of the program; and satisfaction of innocent third party claims. Operational expenses do not include the salaries and administrative expenses of AFP participants incurred while conducting investigations leading to seizure and forfeiture, and these expenses are not reported in the AFF/SADF financial statements.
This audit report contains the financial statements of the AFF/SADF for the fiscal years (FY) ended September 30, 2006, and 2005. Under the direction of the Office of the Inspector General (OIG), the FY 2006 audit was performed by KPMG LLP (KPMG). The audit resulted in an unqualified opinion on the FY 2006 financial statements. An unqualified opinion means that the financial statements present fairly, in all material respects, the financial position and results of operations of the entity in conformity with accounting principles generally accepted in the United States. For FY 2005, the AFF/SADF, also received an unqualified opinion on its financial statements (OIG Report No. 06-07).
The Independent Auditors’ Report on Internal Control identified two reportable conditions in FY 2006. The first reportable condition concerns weaknesses in the seized and forfeited property management environment and was previously reported as a management letter comment but was elevated to a reportable condition this year. The second reportable condition concerns weaknesses in the information system controls environment, and is a repeat condition that was first reported in FY 2004. While this is a repeat condition, the previous underlying issues have been adequately addressed, but new issues were identified. The auditors reported no compliance issues for the AFF/SADF in FY 2006.
The OIG reviewed KPMG’s reports and related documentation and made necessary inquiries of its representatives. Our review, as differentiated from an audit in accordance with U.S. generally accepted government auditing standards, was not intended to enable us to express, and we do not express, an opinion on the AFF/SADF’s financial statements, conclusions about the effectiveness of internal control, conclusions on whether the AFF/SADF’s financial management systems substantially complied with the Federal Financial Management Improvement Act, or conclusions on compliance with laws and regulations. KPMG is responsible for the attached auditors’ reports dated October 27, 2006, and the conclusions expressed in the reports. However, our review disclosed no instances where KPMG did not comply, in all material respects, with generally accepted government auditing standards.
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