Note 7. Deposit Fund

The SADF is a holding account established for the temporary deposit and control of nonevidentiary cash subject to forfeiture and includes seized cash, proceeds from preforfeiture sales of seized property, and income from property under seizure. The funds are held in the form of U.S. currency with the U.S. Treasury or as investments in U.S. Treasury securities until the U.S. Marshals Service receives a declaration of forfeiture or other court order directing the U.S. Marshals Service as to the disposition. The Deposit Fund liability account offsets the value of seized cash included in the SADF balance with the U.S. Treasury and in investments in U.S. Treasury securities.

Note 8. Net Position

Net Position is the equity of the U.S. Government in the Asset Forfeiture Program. The AFF, which is a Special Fund, accounts for all amounts presented within Net Position. The BCCI Investment Income (see Note 9) is subject to court order and may be used to pay claims of victims of the BCCI fraud. The income is recorded as revenue and the contingent liability is shown separately, for presentation purposes, within Net Position on the Statement of Financial Position. Of the $219.1 million in Net Position, $28.6 million represents undelivered orders. To the extent that services and/or supplies classified as undelivered orders are delivered during FY 1997, obligations pursuant to those orders will be expensed during FY 1997.

Note 9. Investment Income

The FY 1996 Investment Income was derived from investment of the AFF and SADF in U.S. Treasury securities. The earnings on BCCI funds held by the SADF and AFF are tracked separately due to special disposition requirements (see Note 8). Of the total BCCI investment income for 1996 (see below $15.5 million), U.S. Fund interest earned for FY 1996 totals $10.7 million and BCCI interest earned totals $4.8 million. Of the total interest earned in FY 1995, $21,082,041 was refunded to the Worldwide Victims Fund.

The following schedule presents the composition of Investment Income for FYs 1996 and 1995.

Note 10. Forfeited Cash

Forfeited Cash includes $173,539,291 in FY 1996 and $233,046,761 in FY 1995 from assets forfeited pursuant to the BCCI Plea Agreement. These amounts generally are not available because of special disposition requirements (i.e., court order).

Note 11. Forfeited Property Revenue

The Federal Accounting Standards Advisory Board's Statement of Federal Financial Accounting Standards Number 3, Accounting for Inventory and Related Property, requires that revenue associated with property not disposed of through sale be recognized upon approval of distribution. During FYs 1996 and 1995, the property was distributed pursuant to the Attorney General's authority to share forfeiture revenues with state and local law enforcement agencies that participated in the forfeiture that generated the property, and pursuant to the Department's authority to place forfeited property into official use by the Government. The amounts for the respective property distributions are as follows:

Note 12. Return of Forfeiture Income

Included in the line item "Return of Forfeiture Income" on the Statement of Operations and Changes in Net Position are the following amounts:

Note 13. Operating Expenses/Distribution of Revenues

Expenses incurred as shown in the Statement of Operations and Changes in Net Position are classified by major type of program versus object classification. Operating expenses, including distributions of revenue, by object classification are shown in the following schedule:

Note 14. Allocation of Prior Year Surplus

28 U.S.C. § 524(c)(9)(E), provides authority for the Attorney General to use excess end-of-year monies, without fiscal year limitation, in the AFF for Federal law enforcement, prosecution, correctional activities, and related training requirements. The following schedule includes unexpended allocations of Super Surplus funding totaling $6,807,758 in the FY 1995 column.

Note 15. Transfers

Transfers differ from expenses in that transfers are cash flows out of the AFF to another appropriation account of the Treasury. Such transfers of cash require statutory authority. From there, expenses are recorded by the recipient organization against its own appropriation. Expenses are outflows of funds recorded as obligations directly against the AFF. The AFF receives its transfer authority from Public Law No. 100-690, as amended. The transfer from the AFF to the DOJ Working Capital Fund will be reversed in FY 1997. During FYs 1996 and 1995, funds were transferred from the AFF as follows:

Note 16. Commitments and Contingencies

The AFF is committed under obligation for goods and/or services which have been ordered but not yet received (undelivered orders) at FY end. The total undelivered orders for all AFF activities amounted to $28.6 million and $9.3 million as of September 30, 1996 and 1995, respectively.

#####