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MEMORANDUM |
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TO: |
Glenn A. Fine Inspector
Inspector General |
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FROM: |
Paul R. Corts (original signed)
Assistant Attorney General
for Administration |
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SUBJECT: |
Follow-up Audit of the Department of Justice Counterterrorism Fund |
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The following is the Justice Management Division's (JMD) response to the Counterterrorism Fund (CTF) Draft Audit Report, dated August 15, 2003. We appreciate the effort that was involved in your extensive audit of the CTF, which began in September 2002. It involved a comprehensive review that encompassed all aspects of the CTF, from administration by the Justice Management Division (JMD) to management by the Department of Justice (DO)) components of funds distributed to them.
Presented below are the Office of the Inspector General's (OIG) findings and recommendations. and JMD's responses.
Finding 1: Reimbursements to Department Components
Our review of over $36 million in component expenditures disclosed $2.6 million in questioned costs, which resulted from expenditures that were either improper or were not adequately supported. These deficiencies represent a combined component error rate of 7 percent. Although this reflects that improvement has been made since our last audit, during which we identified a 16 percent error rate for Department component expenditures, our findings show that Department components need to improve further, their management of Fund monies. |
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Recommendation 1: |
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In consultation with EOUSA, remedy the $17,491 in questioned costs. |
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Response 1: |
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Recommendation accepted. We will work with the EOUSA to make a final determination on how to remedy the issues identified in this recommendation. This may or may not involve the return of funds to the CT Fund. |
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Recommendation 2: |
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In consultation with the FBI, remedy the $1,319,691 in questioned costs. |
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Response 2: |
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Recommendation accepted. The FBI has returned $454,638.38 to the CTF and has provided additional documentation for the remaining items questioned. We will work with the FBI to make a final determination on how to remedy the remaining questionable items identified by this recommendation. This may or may not involve the return of funds to the CTF. |
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Recommendation 3: |
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In consultation with USMS, remedy the $1,284,453 in questioned costs. |
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Response 3: |
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Recommendation accepted. The USMS has returned $225,000 to the CTF. We will work with the USMS to make a final determination on how to remedy the remaining issues identified in this recommendation. This may or may not involve the return of funds to the CTF. |
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Recommendation 4: |
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Remedy the $ 19,504 in questioned SEPS expenditures that have been reversed but have not been deobligated. |
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Response 4: |
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Recommendation accepted The funds will be deobligated. |
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Recommendation 5: |
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Ensure that the FBI and USMS improve their controls over CTF monies to reduce the likelihood that reimbursements are requested for inappropriate items, particularly those that were not authorized by the JMD in the reimbursement agreement (RA) approval process. |
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Response 5: |
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Recommendation accepted. The information in the RA will be improved to incorporate the decision making process, illustrating what specific requests were either authorized or not authorized. We will also work with the FBI and USMS to ensure future requests for reimbursement are appropriate. |
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Finding 2: Reimbursements to Non-DOJ Components |
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Between FYs 1998 and 2002, a total of $2.7 million in CTF monIes was passed through the FBI and JMD to other federal, state, and local agencies. Our audit revealed that these finds were not adequately monitored by these two components, putting the funds at a greater risk of misuse. We identified over $430,000 in questionable costs, representing 19 percent of the $2.3 million we tested. Our prior audit disclosed similar findings, and it appears that little improvement has been made in the management of these pass-through funds. |
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Recommendation 6: |
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In consultation with the city of Ogden, Utah, remedy the $187,922 in questioned costs. |
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Response 6: |
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Recommendation accepted. We will work to make a final determination on how to remedy the issues identified in this recommendation. This may or may not involve the return of funds to the CTF. |
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Recommendation 7: |
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In consultation with the FBI, remedy the $108,290 in questioned costs attributable to the Denver Police Department. |
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Response 7: |
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Recommendation accepted. We will work with the FBI to make a final determination on how to remedy the issues identified in this recommendation. This may or may not involve the return of funds to the CTF. |
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Recommendation 8: |
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In consultation with the FBI, remedy the $17,367 in questioned costs attributable to the Georgia Bureau of Corrections. |
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Response 8: |
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Recommendation accepted. We will work with the FBI to make a final determination on how to remedy the issues identified in this recommendation. This may or may not involve the return of funds to the CTF. |
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Recommendation 9: |
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In consultation with the FBI, remedy the $116,553 in questioned costs attributable to the USDA Forest Service. |
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Response 9: |
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Recommendation accepted. We will work with the FBI to make a final determination on how to remedy the issues identified in this recommendation. This may or may not involve the return of funds to the CTF. |
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Finding 3: JMD Oversight of the Fund |
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As the Funds administrator, JMD needs to carefully monitor CTF expenditures to ensure its availability during times of extreme need. Our prior audit disclosed that JMD needed to take a more proactive approach in monitoring CTF expenditures, as indicated by our identification of $4.1 million in dollar-related findings, or 17 percent of the total funds reviewed. In comparison, our current audit has revealed a total of $3.1 million in dollar-related findings, or 8 percent of the overall funds reviewed, resulting from expenditures that were either improper or were not adequately supported. The current results illustrate that JMD has made some improvement in its controls over the use of CTF monies, but it needs to further strengthen controls. Funds continue to be at risk of misuse and fewer resources could be available to the Department for responding rapidly and effectively to unanticipated terrorist acts. |
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Recommendation 10: |
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Develop anti implement a plan to increase the JMD Budget Staff's oversight of the Department components' management of CTF monies, including more detailed reviews of component billings and periodic monitoring of actual expenditures. |
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Response 10: |
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Recommendation accepted. As stated during the last audit, our plan to increase oversight is to continue to emphasize the concept of holding components accountable, which reflects the same expectations of the components for all other funds that they are entrustcd to manage.
The RA that each component signs currently contains the following statement: "The Chief Financial Officer for your organization must certify that all amounts billed under this agreement have been expended only for the specified purposes, anti will retain all supporting documents associated with billings under this agreement." This holds the component Chief Financial Officer responsible for management of the CT funds and ensuring that the billings are for only the purposes specified in the RAs. However, we will also consider performing more detailed reviews of component billings and periodic monitoring of actual expenditures to ensure compliance. |
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Recommendation 11: |
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Develop and issue guidance on the retention of records for CTF expenditures. |
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Response 9: |
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Recommendation accepted. We will work with the FBI to make a final determination on how to remedy the issues identified in this recommendation. This may or may not involve the return of funds to the CTF. |
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Finding 3: JMD Oversight of the Fund |
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As the Funds administrator, JMD needs to carefully monitor CTF expenditures to ensure its availability during times of extreme need. Our prior audit disclosed that JMD needed to take a more proactive approach in monitoring CTF expenditures, as indicated by our identification of $4.1 million in dollar-related findings, or 17 percent of the total funds reviewed. In comparison, our current audit has revealed a total of $3.1 million in dollar-related findings, or 8 percent of the overall funds reviewed, resulting from expenditures that were either improper or were not adequately supported. The current results illustrate that JMD has made some improvement in its controls over the use of CTF monies, but it needs to further strengthen controls. Funds continue to be at risk of misuse and fewer resources could be available to the Department for responding rapidly and effectively to unanticipated terrorist acts. |
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Recommendation 10: |
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Develop and implement a plan to increase the JMD Budget Staff's oversight of the Department components' management of CTP monies, including more detailed reviews of component billings and periodic monitoring of actual expenditures. |
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Response 10: |
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Recommendation accepted. As stated during the last audit, our plan to increase oversight is to continue to emphasize the concept of holding components accountable, which reflects the same expectations of the components for all other funds that they are entrusted to manage.
The RA that each component signs currently contains the following statement: "The Chief Financial Officer for your organization must certify that all amounts billed under this agreement have been expended only for the specified purposes, and will retain all supporting documents associated with billings under this agreement." This holds the component Chief Financial Officer responsible for management of the CT funds and ensuring that the billings are for only the purposes specified in the RAs. However, we will also consider performing more detailed reviews of component billings and periodic monitoring of actual expenditures to ensure compliance.
Recommendation 11: |
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Response 11: |
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Recommendation accepted. Guidance will be issued that is consistent with
Governmentwide regulations contained in the National Archives and Records Administration's General Records Schedule. |
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Recommendation 12: |
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Review the USMS's system for tracking CTF expenditures prior to providing the agency with any additional funding. In addition, the JMD Budget Staff should clearly monitor any future payments of the USMS. |
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Response 12: |
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Recommendation accepted. USMS now has a better financial system and process in place than it did in 1998. The sample selected from FY 2001 was error free, demonstrating that the new process is working. We will work with the USMS to ensure future payments meet all financial requirements. |
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Recommendation 13: |
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Establish a process to use in the event that CTF monies are to be passed through to non-DOJ agencies. The process should provide guidance for the pass-through agencies, including mandating the use of written agreements, reviewing the actual expenditures of the end-users, and maintaining appropriated documentation. |
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Response 13: |
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Recommendation accepted. We will establish a process for pass-through funds which will include written guidance on component responsibilities. We agree that monitoring the use of Fund monies with non-DOJ users is important. Our major emphasis, as far as this area of responsibility is concerned, is placed with the components who receive the funding and their management of those CT funds as agreed to when the RA is signed. |
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Thank you for the opportunity to comment on the draft report. We continue to believe that the crucial element to assuring that the CTF is used properly is to require greater accountability from the participating components. We will work with the components to resolve the issues you have highlighted.
If you have any questions concerning this response, please contact me on (202) 514-3101 or Scott Snell, of the Budget Staff on (202) 616-3774. |
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