Auditors find Customs, Border agency violated financial rules

U.S. Customs and Border Protection broke three laws and regulations related to financial management during fiscal 2006, according to an audit report released earlier this week.

Auditor KPMG found that CBP did not comply with the 2002 Federal Information Security Management Act, the 1996 Federal Financial Management Improvement Act and the 2002 Improper Payments Information Act, the Homeland Security Department's inspector general stated.

The IG criticized CBP's financial reporting and said the agency's problems "could have a direct and material effect" on future financial statements.

The report, which covered September 2005 through September 2006, called for multiple management improvements.

Some were in the area of information technology. The IG included a brief description of the problems by KPMG, which issued "a separate restricted distribution report to address those issues in detail" due to their sensitive nature.

"The most significant weaknesses from a financial statement audit perspective relate to information security," KPMG stated. "Collectively, the IT control weaknesses limit CBP's ability to ensure that critical financial and operational data is maintained in such a manner to ensure confidentiality, integrity and availability."

The report said that despite improvements, CBP's systems access, service continuity and system software change management remain weak. Auditors called for additional training in IT for CBP workers at some types of warehouses and foreign trade zones.

The IG recommended that CBP ensure it is fully compliant with FISMA by maintaining security and control policies over its IT systems, training employees adequately and ensuring senior CBP officials are aware of their security responsibilities.

To comply with the improper payments law, CBP must derive estimates for all programs where erroneous payments might have occurred and report them to the White House and Congress, along with plans to reduce such incidents, the report stated. And to be compliant with FFMIA, the agency must ensure it follows "federal financial management systems requirements, applicable federal accounting standards, and the United States Government Standard General Ledger at the transaction level."

In a response to the report, CBP Chief Financial Officer Eugene Schied said "some of these conditions may take several years to correct." He said he agreed with the assessment that laws and regulations were violated through "noncompliance."