Assets Forfeiture Fund and Seized Asset Deposit Fund
Annual Financial Statement
Fiscal Year 2002
Report No. 03-20
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 SADF and AFF were created to serve as repositories for seized funds 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 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 are not reported in the AFF/SADF financial statements. In FY 2002, the AFF/SADF reported $675.3 million in forfeited property and $553.6 million in seized property.
This audit report contains the financial statements of the AFF/SADF for the fiscal years ended September 30, 2002 and 2001. Under the direction of the Office of the Inspector General, the audit was performed by PricewaterhouseCoopers LLP, which resulted in an unqualified opinion on the FY 2002 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. For FY 2001, the AFF/SADF also received an unqualified opinion on its financial statements (OIG Report No. 02-22).
The Report of Independent Accountants on Internal Control identified one reportable condition for FY 2002, while none had been reported for FY 2001. Weaknesses were found in the processing of seized and forfeited transactions. Seizing, custodial, and litigating agencies are not identifying and correcting asset valuation and status errors and obligation status errors on an on-going basis. As a result, timely and accurate information is not available to management throughout the year, and the risk that AFF/SADF will not be able to timely prepare auditable financial statements is increased.
No instances of noncompliance with laws and regulations were reported for FY 2002 and FY 2001.
Management's continued attention and commitment is needed to correct the reported weakness. While this issue was not reported in FY 2001, it is a long-standing issue for this component, having been reported in prior years as either a material weakness or reportable condition. In addition, the accelerated year-end deadlines imposed by the Department and the Office of Management and Budget represent an area of significant risk that must be continually addressed. Interim financial reporting must be improved and become routine. Senior management must ensure that personnel outside the immediate program office, specifically at the seizing and custodial agencies, are involved in the process.