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Follow-up Audit of the Department of Justice Counterterrorism Fund

Report No. 03-33
September 2003
Office of the Inspector General


Appendix I
Audit Objectives, Scope, and Methodology

Objectives

We have completed a follow-up audit of the Department Counterterrorism Fund, which is administered by JMD. The objectives of the audit were to determine: 1) if the Fund expenditures were authorized, supported, and made in accordance with the intent of the law, and 2) if JMD has taken appropriate efforts to close RAs in an expeditious manner.

Scope and Methodology

We performed our audit in accordance with Government Auditing Standards issued by the Comptroller General of the United States, and accordingly included such tests of the records and procedures that we considered necessary. The audit covered the period between October 1, 1997, and September 10, 2002, and included funds provided to Department components as well as to other federal, state, and local agencies.

Department Components - The audit included a detailed review of RAs between Department components and JMD for FYs 1998 through 2002, amounting to $93,999,316.44 Audit work was performed at the following agencies:

  • Criminal Division
  • Executive Office for United States Attorneys
  • Federal Bureau of Investigation
  • Security and Emergency Planning Staff
  • United States Marshals Service

At each component, we performed tests of selected records and transactions and followed up with responsible personnel. Additionally, at JMD, we interviewed personnel regarding its oversight of the Fund and we reviewed the Fund legislation, the RAs, and billing documentation for our review period.

To determine if Fund expenditures were authorized, supported, and made in accordance with the intent of the law, we judgmentally selected and reviewed a sample of transactions. The transactions were selected from detailed listings of expenditures obtained from each of the agencies. As of the date of our fieldwork, the universe of expenditures amounted to $85,114,623. Generally, for each RA we reviewed 10 percent of the number of transactions in the universe of disbursements with a maximum of 100 transactions; half of our sample was chosen by random selection, while the other half consisted of high dollar transactions.45 In addition, we selected transactions that were greater than or equal to $100. However, we had to modify our sampling methodology for the Criminal Division, EOUSA, and the FBI. Following are the modifications that were necessary for these components:

  • Criminal Division: We selected a sample consisting of 10 percent of the number of transactions in the universe; however, we modified the way in which the items were selected. Since the Criminal Division provided a listing that separated the transactions into expense categories and we wanted to ensure that each category was represented in our sample, we selected at least one transaction from each category. The expense categories were comprised of salaries and benefits, consulting services, equipment, and overhead expenses. In order to keep our total sample at 10 percent of the entire universe of transactions, we had to reduce our selection of items from the overhead expenses category below 10 percent and select one equipment category item.
  • EOUSA: The listings for two of the three RAs had several salary-related transactions, which are recurring and primarily static payments. As a result, we limited the number of payroll transactions selected. In addition, one of the RAs had monthly payments for two separate contracts, which comprised most of the high-dollar items for sample selection. Therefore, we picked only two transactions related to each contract, eliminating the remaining contract transactions from the sample selection process because testing more of these recurring payments was unnecessary.
  • FBI: For each RA, we received individual listings that separated the transactions into different expense categories. The expense categories consisted of personnel compensation (overtime); travel and transportation; rent, utilities, and communications; other services; supplies; and equipment. We judgmentally selected a total of 52 high-dollar transactions from the combined listings. In order to ensure that each category was represented in our testing, we also selected a random sample from each category of each RA. We randomly selected 5 percent of transactions for each of the categories except travel and transportation, where we selected 2 percent of the transactions. We selected 5 percent (2 percent in the case of travel) instead of 10 percent because: 1) the selection of a higher percentage of transactions would have resulted in a significant amount of items to test, which would have been burdensome for the FBI, 2) we had good coverage of the dollar amount reimbursed from just the 52 high-dollar items selected, which amounted to 42 percent of the total universe, and 3) in the case of travel, we had a low error rate in this particular category during the prior audit.

For each transaction selected, we reviewed supporting documentation such as requisitions, invoices, travel vouchers, vendor receipts, reimbursable work authorizations, accounting and payment records, and purchase orders. Our sample amounted to $36,007,218, or 42 percent of the universe.

EXPENDITURE TESTING FOR DEPARTMENT COMPONENTS
UNIVERSE AND SAMPLE SIZE46
AGENCY UNIVERSE SAMPLE PERCENT
CRIMINAL DIVISION $944,351 $196,141 21
EOUSA 3,079,971 1,043,611 34
FBI 77,290,951 32,607,795 42
SEPS 1,158,134 656,251 57
USMS 2,641,216 1,503,420 57
TOTALS $85,114,623 $36,007,218 42
Source: JUMD Budget Staff and OIG analysis

In addition to the expenditure testing detailed above, we analyzed $7,987,480 in FBI overtime costs related to the World Trade Center and Pentagon attacks. These expenses are not included in the expenditure testing of the Department components discussed above due to differences in our methodology. While the expenditure testing included a detailed examination of source documents to determine if the expenses were authorized, supported, and used in accordance with the intent of the law, our review of these FBI overtime costs did not. The FBI did not have a tracking system from the onset that tagged overtime as being related to the September 11 attacks. As a result, the FBI was unable to determine the exact amount of overtime costs related to the bombings and instead calculated an estimate using historical data. We reviewed the FBI's computation of overtime costs and found that the amount charged to the Fund was reasonable.

Non-DOJ Components - Our audit also included a detailed review of funds provided to non-DOJ components related to RAs executed between FYs 1998 through 2002, amounting to $3,966,550.47

For the funds provided to the city of Ogden, Utah, we: 1) interviewed responsible personnel about requests for reimbursement, Fund expenditures, tracking systems, and billing practices; and 2) performed tests of selected records and transactions. Further, we obtained necessary documents (e.g., the grant agreement, billing documents, memoranda) from the JMD Finance Staff.

For the other non-DOJ components that were responsible for reporting to the FBI, we attempted to perform tests of selected records and transactions. However, as reported in Finding 2, the FBI did not always obtain complete supporting documentation from the end-users and attempts to obtain the information from the end-users were ineffective.

To determine if the Fund expenditures of the non-DOJ agencies were authorized, supported, and used in accordance with the intent of the law, we judgmentally selected and reviewed a sample of transactions. The transactions were selected from the available detailed listings of expenditures. As of the date of our fieldwork, the universe of expenditures amounted to $2,832,946. Generally, we utilized the same sampling methodology as we did for the Department components, which amounted to 10 percent of the number of transactions in the universe. However, we could not select any transactions from the Denver Police Department because that agency was unresponsive to the FBI's request for information. Further, we had to modify our sampling methodology for the city of Ogden and the USDA Forest Service, as follows:

  • City of Ogden: The city of Ogden had the original supporting documentation for the transactions that were reimbursed from the Fund stored at another location. However, it had photocopies of the original documents on hand for our review. Since there were only fifty items and the data was readily available, we reviewed 100 percent of the transactions using the photocopies. In order to perform a comparison of the photocopied support to the original documents, we requested original documents for 20 percent of the fifty transactions. For the 20 percent selected, half were chosen by random selection, while the other half consisted of high dollar transactions. We also selected two additional items to ensure that at least one transaction was chosen from each expense category. We found no differences between the photocopied support and the original documentation. Thus, we relied on the photocopies for the remaining items reviewed.
  • USDA Forest Service: Since the listing separated the transactions into expense categories, we selected 10 percent of the transactions from each category, choosing the high dollar items from each. We also made sure to select at least one transaction from each category.

Our sample of pass-through funding amounted to $2,324,541, or 82 percent of the universe.

EXPENDITURE TESTING FOR NON-DOJ COMPONENTS
UNIVERSE AND SAMPLE SIZE48
AGENCY UNIVERSE SAMPLE PERCENT
City of Ogden, Utah $2,082,331 $2,082,331 100
Denver Police Department 108,290 108,290 100
Georgia Bureau of Corrections 525,772 17,367 3
USDA Forest Service 116,553 116,553 100
TOTALS $2,832,946 $2,324,541 82
Source: FBI Budget Execution Unit, JMD Budget Staff, and OIG analysis

For each transaction selected, we attempted to review supporting documentation such as requisitions, invoices, vendor receipts, reimbursable work authorizations, accounting and payment records, and purchase orders. For the instances in which neither the pass-through agency nor the end-user could provide the necessary transaction listings or detailed support we requested, our sample size reflected 100 percent of the universe because we questioned the entire amount reimbursed as unsupported.

In the aggregate, we reviewed expenditures totaling $46,319,239 and consisting of: 1) $36,007,218 in Department component expenditures; 2) $7,987,480 in FBI overtime costs related to the World Trade Center and Pentagon attacks; and 3) $2,324,541 in funds provided to non-DOJ components.


Footnotes

  1. As mentioned in the table and related footnotes on page 8, some RAs were excluded from our review.
  2. Our sampling methodology generally was the same as the methodology employed in our prior audit.
  3. The universe for each component does not necessarily correspond to either the RA or the amount billed as of September 10, 2002. Instead, it reflects expenditures reported as of the beginning of our fieldwork at each component.
  4. The non-DOJ components that were included in our review were the city of Ogden, Utah; the Denver, Colorado Police Department; the Georgia Department of Corrections; and the USDA Forest Service.
  5. The universe for each end-user does not necessarily correspond to either the agreement amount or the amount billed as of September 10, 2002. Instead, it reflects expenditures reported as of the beginning of our fieldwork related to each agreement.