United States General AccountinPr Office
GAO Financial ‘.Management Series
December 1997 Seized/Forfeited Asset
System Checklist
Systems Reviewed Under the Federal
Financial Management Improvement Act of
1996
Exposure Draft
I
GAO/AIMD-9821.25
i
r
PREFACE
The, Feder+,~Finam&l Management Improvement Act (FFMIA) of 1996, requires, among
other things, that agencies implement and maintain m&agementgystems that comply
with federal financial management systems requirements. These requirements are
detailed in the Financial Management Systems Requirements series issued by the Joint
Financial Management Improvement Program (JFMIP) and in the Office of Management
and Budget (OMB) guidance referred to in those documents.
To help agencies review their financial management systems and assist auditors with their
responsibilities under FFMIA,’ we have developed eight checklists, which we are issuing
concurrently for comment as exposure drafts. Seven of the checklists reflect the system
requirements defined by JFMIP. The eighth checklist, based on the JFMIP framework
document, describes a single integrated financial management system and is primarily a
reference tool rather than a standard-setting document.
As more system requirements are issued, we intend to develop additional checklists.
When these checklists are issued in final form, they will be available on the Internet on
GAO’s Home Page (www.gao.gov).
”
Additional copies of the exposure draft of this checklist can be obtained from Room 1100,
700 4th St. NW, U.S. General Accounting Office, Washington, D.C. 20548, or by calling
(202) 512-6000. Please send comments by February 28, 1998 to Robert W. Gramling,
Director, Corporate Audits and Standards, Accounting and Information Management
Division, at
U.S. General Accounting Office
441 G Street NW, Room 5089
Washington, DC 20548
-3
&* ene L. Dodaro
Assistant Comptroller General
Accounting and Information Management Division
!l’he final form of this checklist will be included in GAO’s Financial Audit Manual.
Page 1 GAO/AIMD-98-21.2.5 - Proposed Seized/Forfeited Asset Checklist (E/97)
,.:
’
:
:.
-
Page 2 GAO/AIMD-98-21.2.5 - Proposed Seized/Forfeited Asset Checklist (X2/97) 1,
_. ~. ~_
___ . .“.._-----J
CONTENTS
Preface 1
Overview . 3
Authoritative Guidance 3
How to Use This Checklist 3
Agency System Architecture 5
Requirements Checklist 9
Seizure Activities 10
Asset Custody Activities 12
Asset Disposition Activities 16
Abbreviations
FFMLA Federal Financial Management Improvement Act of 1996
JFMIP Joint Financial Management Improvement Program
OMB Office of Management and Budget
Page 3 GAO/AIMD-98-21.2.5 - Proposed Seized/Forfeited Asset Checklist (Q/97)
,o) ,: ‘.
.’ ‘, ‘. i .?. ,;1.,
‘;-. .
.’ ..,/,,. .,
‘.’
.
.’
‘. j,: ‘,,
,.. ”
: ;
.
Page 4. GAO/AIMD-98-21.2.5 - Proposed Seized/Forfeited Asset Checklist (12/97)
: :
,
_;: _,
I
OVERVIEW
i
The Federal Financial Management Improvement Ait (FFMJA) of 1996; requires, among
other things, that agencies implement and maintain financial management systems that
comply with federal financial management systems requiremeats., These systen-i :-
requirements are detailed in the Financial Management Systems Requirements series
issued by the Joint ..$*rll.
Financial-Man
,Iur,& ~IzU~wl~.<l‘~~b, (JFMIP)~ and Office of
Management and- Budjget COMB)
,~~~*uas~~:~~~~~~~-~~~~~:,,,?,, anagement, Svsterns.. The
JFMIP’requirements documents ident@ (1) a ikxtiework fdr financial manag~mkmt :
systems, (2) core financial systems re&irem’ents, and (3):,16’oth’er’systerrrs, suppo.rting
agency opertitions: Figure 1 illustrates: how, these; elements fit together in ‘an ,agency
systems architecturk .’ .. a’ ” J ‘, (7, ..I‘
Figure 1: Agencv Svstem$ Architecture : I’ : ‘3
I, ,:. .’ i ,’ .;.’ .’ .J, ,’
:, ., ‘.
rstem ,
/ . .
-
i!z
Source: JFMIP Federal Financid Management System Requirements documerks.
.:i- , pige 5 ., .’
GAO/AIMD-98-21.2.5- Proposed Seized/Forfeited Asset Checldist (12/97)
To date, JFMIP has issued the framework and core’documents and 6 of the 16 systems
identified in the architecture.’ ’
>/I/. ,’
/
GAO is issuing this and seven other checklists that correspond to the JFMIP documents
as part of its Financial Management Series. GAO will issue other checklists as additional
systems requirements are defined; I_ :.’ ‘, ‘ ! .(
.’ ,i.‘. :).) ;
Authoritative Guidance, J: :‘.
> .. I, ,,‘-i.‘,, ‘I ,’ ‘,,‘, / ,, J,I .,,+:;
‘ON& Circular A-127and~~O~B’sImplemenmtion~ Guidance for. the ,Federal: Financial,
Management Improvement iAct (FFMLA) of 1996, issued September 9, 1997, provide .the
basisfor! assessing compliance ,tith; .the FFMIA requirement for agencies to implement
and. maintain financial management systems ,that comply, substantially. with federal
requirements.’ ,OMB!s September ‘1997 implementatioti ,guidance identifies various,criteria
that an agency must meet to be in substantial compliance with these requirements.
The source of all the questions in this checklistis the JointFinancial-Management b
Imnrovement Program Federal Financial Management Svstem Reauirements
, Seized/Forfeited Asset ,Svstem Reauirements (FFMRS-4, March 1993‘ (Reprinted January
1995)).
,. .’
Purpose of This G&e and H& to Use It
. ,.
,,. ‘,’ .., . ‘,,
The purpose”of this,,document’ is to provide a checklist to assist (1) agencies in
implementing and m’onitoring, their systems and (2) management and auditors in
reviewing the systems to,,deteniine if they’ are in substantial compliance with FFMIA.
The checklist, the JFMIP source ‘document, and ,the two previously mentioned OMB .
documents (Circular A-127 and the September 9,‘ 1997 implementation guidance) should
be used concurrently by experienced staff: :
I “
.x,;.:
OMB’s 1997 implementation guidance provides indicators’for chief financial officers and
inspector generals to assist them in determining whether the agency’s financial
management systems~subst$ntially comply with federal financial management systems
requirements, Filling out this checklist will allow agencies to systematically determine
whether specific systems requirements are being met. Agencies can assess the
significance, of any noncompliances in ‘determining substantial compliance by considering
the “indicators” in OMB’s 1997 implementation guidance. For example, the annual agency
,.,, I ,
’
2Thus far, the series includes the (1) Framework for Federal Financial Management
Svstems, (2) Core Financial Svstem Requirements, (3) Inventorv Svstem Reauirements, (4)
Seized/Forfeited Asset Svstem Reauirements, (5) Direct Loan Svstem Requirements, (6)
Guaranteed Loan Svstem Reauirements, (7) Travel Svstem:!: Reauirements, (8) and
Personnel-Pavroll Svstem Reauirements.
Page 6 GAO/AIMD-98:2L2.5 - Proposed Seized/Forfeited Asset Checklist (12/97)
assurance statement issued pursuant. to section 4 of the Federal Managers’ Financial
Integrity Act is one of those indicators. Agencies can use GAO’s checklists to help
determine annual compliance with the section 4 requirement. I
h.
The following Seized/Forfeited Asset System Requirements section contains a brief
narrative followed by the checklist, which is organized by functions contained in the
source JFMIP document.
In the checklist, two columns follow each question. Use the first column to answer each i
question “Yes, ” “No,” or “NA.” Use the sec,ond column to explain your answer. A “Yes” 1
answer should indicate that the agency’s system or systems provide for the capability
described in the question. For each “Yes” answer, briefly describe how the system(s)
contain the capability and refer to a source that explains or shows the capability.
A “No” answer indicates that the capability dqes not exist. For a “No” answer, the second
column should provide an explanation.and a reference to the supporting -documentation.
Such explanations could include the following: (1) The agency is working on modifying
or implementing its system(s) to have the capability available in subsequent years. (2)
Management believes the capability is not cost effective and will not enhance the systems’
ability to manage operations. Refer to any cost-benefit studies that support such
explanation. If there are none, provide a full explanation.
Not every guide may apply to an agency;‘. Further, while a guide may be applicable to an
agency, certain questions within. the guide may not be applicable. Answer such
nonapplicable question(s) with an “NA” and provide an appropriate explanation in the
second column.
Page 7 GAO/AIMD-9%2L2.5 - Proposed Seized/Forfeited Asset Checklist (B/97)
‘,
Page 8 GAO/AIMD-98-21.2.5 - Proposed Seized/Forfeited Asset Ch&list (12/97)
L-
!--
I
SEIZED/FORFEITED. ASSET. SYSTEM:r,RE&UIREMENTS ,:,: ;: I
The seized/forfeited asset systern’requirements helps agencies’ track the’~status’~of a seized
asset from’ the time of seizure through%arious processing steps, Which ~mayir-iclude
forfeiture,
;,_.: until
I final disposition ,(,of ‘<’
the asset.
; .:: ,I,.
, ,” : ; ,, .’ ,. _ .:.,
The three components of the seized/forfeited&set system are ‘discussed ‘b&o&. :
1. Seizure Activities - When certain civil and crimmalla~s, are v@lated~, certain
enforcement agencies have the authori?, to, seize the possessions,, of .the violator.
(The checklist questions for this area are dra$ri f?om’page:.I3 of”lthe source,
: :. . I ,, .I.
document.) i .‘// ,,,.
8, :
2. Asset Custodv Activities .- .Organizations that have. custody of seized..and forfeited
assets must have adequate policies and procedures to..make sure all assets are
properly received, recorded, valued, maintamed, and, controlled. throughout the
seizure and forfeiture process. (The che&list,,questions for this area are drawn
from pp. 13-14 of the source document.) j !,: ;.: ‘;
.. /.‘, ;b “: :,’ ‘,‘,
3. Asset Disnosition ‘Activities - A. ‘key .component of an effective asset seizure ‘and
forfeiture process is the orderly disposition of the assets in. accordance with the
law applicable to those assets. (The checklist questions for, this area are drawn
from pp.’ 14-15’ of’ tk$.$o$ce db&m&t.)’ ” ‘- ; -. .
.’ ,j. Ii,, i ,‘.I .
The checklist questions follow the JF’MIP source document: It shoul’d be noted that not
all questions will apply in all situations and, as with the “use ,bf any checklist; professional
judgement should be exercised. tUsing the JI?MIP source. document along with the two
previously mentioned OMB documents will help ensure that the user is cog.nizant of the
background information and definitions necessary to fully ,tiderstand’ the questions.
,“’ ,1
I
3.. “, *’ GAO/AIMD-98-2’1.2.5 h Proposed Seized/Forfeited Asset Checklist (12/97)
SeizedLFotifbite’d ‘As&et’ Syst,“&~ R;eq&etie&+’ : ‘..I,A , !, ‘, l ::,::,:‘.
:i :,,.- . ” I I ;,: >i., ._/. .,,
2. :Timely recording of the .date ‘.
of seizure; the type of asset; ’ - : .;*
‘1 the locatibfi wh&& ‘seized, ,t& :’ : t ‘. i. ’
physical condition, the ... ‘I” .,/ ‘f; ,,
physical location, owner(s) if
known, arid’ entities, involvedj\ ,..;:.
,I I I
in the seizure?,) “, ‘.. ,, ,. 1.0
:. I,,. 1‘( ‘.: L ,, : ;
i ‘,, >li’ii : .’
3. Timely and accurate recording
of* the; originally assigned., i
value and the ba;si.s,’for :the: 1’ I’ : ,. . i /
initiaJ vaJue .placed on each ., ‘. , ‘,. ‘i(,.’ : ‘: .’
seized.assetandthe. ,, .’ I. ..s, I ‘.
identification of vvho assigned,
the asset value?
4. Timely recording of any
mortgage and claim liabilities
against each seized asset?
5. Capability to query the current
information on processing
status of any seized asset
captured in the database?
Page 10 GAO/AIMD-9841.25 - Proposed Seized/Forfeited Asset Checklist (E/97)
Seized/Forfeited Asset .System, Requireinents j i’ ‘. ‘.
Seizure activities cotiponent Yesho
NA
6. Information necessary to
enable verification that seizure
authorization exists and that
the seizure/forfeiture criteria
established by management
have been observed?
7. Provide for the correction,
amendment;. m&cmcellat~on .~
of the seizure authorization,
with appropriate controls and
reports to responsible
program officials and other
affected parties?
8. Prompt payment of properly
authorized and billed services?
This system ,must interact _
with the core financial system
to accomplish this task.
,,Page 11 GAO/AIMD-98-21.2.5 - Proposed Seized/Forfeited Asset Checklist (12/97)
Seized/Forfeited Ass,et &stem, Requirements : ,. : ,,..:4:I ,’ ;’ ;,..:,: .,;.
Asset ,Ctistody Activities; ” ,Yes/No ; ,,’ Explanation ”
Component : NAi I
I.
Does the system component have .: ‘. ,’ I r.., ,i. .’
the capability to: . ; .,j. :,.J,,;~ ,‘,. : j:
,,
.i.. ,. ,, :_ : .’ ‘(.. : :
1. Capture, record, and maintain : ., c, !I ,’ :;. I:, j’
accurate information on the ; “i, ‘,A. ., ‘..i ‘:(
current physical condition,’ 1: 1;
: ‘
legal status, geographic
,I.,.., . ._.
location, responsible i .,; : ‘, ‘,, :,:.<:, .* :I
custodian,..andth~-._c~~~~.~~..._.. _ _ ..~~~..
. ._ __. _ _._. _..._~1 .._ _ ..
,’
recorded value of each seized I, .~ :
! .,
asset in custody? \
,’ ,.
‘!
,, i.
2. Provide a record that :.
” : advertising and the issuance ,.
of notice of property seized
have been accomplished, if ,.’ ..,
required?
3. Provide information to enable .
seized cash to be deposited ‘.
promptly into cash holding
:. ,‘.
“acco’unts? ’
4. Track and promptly record
the deposit of income
generated by seized
businesses on an asset-by-
asset basis?
5. Segregate forfeited assets
from those in seized status?
Page 12 GAO/AIMD-9S-21.2.5 - Proposed Seized/Forfeited Asset Checklist (12/97)
Seized/Forfeited &set ..System~ Requi~~ments:.~~ Y .$J ‘:
‘: “. !
Asset Crqtody Activities~ ‘: ;yeS/NO Explanation :
Component :, 1 NA
_
6. Allocate and record all : :/
maintenance and overhead, ,,. I/I
costs on an asset by asset :
basis?
_. ..,.. ..,
,I., i
7. Record and account .for all :
theft, loss, and damage ! :
expenses on an asset by asset
basis? ., :
8. Provide accurate and timely. .,
reconciliations between : .;:, ‘.
agency seized-asset records .’ ‘,
and records of contractors.
i
being used to maintain, store,
and dispose of seized assets?
‘, ,
9. Provide information to allow
the independent verification
that each asset exists and that
the recorded physical
condition, legal status,
geographic location, and asset
value are accurate? .
,;,
10. Provide information to allow ,, ” .
an independent verification
that all billed contractor/
vendor services were actually
performed?
11. Record and track cost bonds?
Page: ‘13 GAO/AIMD-98-21.2.5 - Proposed Seized/Forfeited Asset Checklist (12/97)
Seized/Forfeited Asset System’liiequiretients : .l,. .: * i
.,
Asset Ctistody Activities YidNo ’ ,Eqjlanation
Component NA ‘,
.._.
12. Obtain collateral coverage ) ‘.2:,> .!
from financial institutions as i _, ; :
needed? : > :,,I
: ,’‘,
13. Accumulate performance : ./
histories on all vendors and ‘: ,, .,”
contractors (both private and _‘, ‘.. ,* ,’
government) that perform , ‘.’ :_, ,,._
asset custodial/maintenance
services? . I
., ,:
14. Pay promptly all contractors/ :
vendors performing asset ‘I ,, ,: ,
maintenance/management ‘. , ‘, c,
services? The system must :
interact with the core ‘. ,. ! :
financial system to accomplish .
‘this task. ,+
,, :’
., ..
15. Inform system users regarding 2
compliance with established
asset ,custody controls?
.,
16. Retrieve quickly detailed
information on the current
location, value, and condition ..
of individual assets?
17. Record accurately and timely
the forfeiture action for each
‘asset?
Page 14 GAO/AIMD-98i21.2.5 - Proposed Seized/Forfeited Asset Checklist (12/97)
I
Seized/Forfeited Asset System ,Requirements. ‘. y
Asset. Custody Activities Yes/No ‘_ Explanation
Component I’ 1.NA. .~ ./
18. Produce exception reports?: - .
: .’
,: ‘,
,.
4’
,I
:.
Page 15 GAO/AIIviD-98-21.2.5 - Proposed Seized/Forfeited Asset Checklist (12/97)
..,
&set &spo&ion activities ! ~y&/ir;o ‘:’ 1; : Explanation’ 2 !;
; :,I NA: /,’., ,,,,r, :,.
,. component .’
,:
Does the system component have ..! ” ‘,‘Y.’ :.’ I’S
the capability to: c ./’
,.
::: _,.. ,. ,: ’ ‘.
1. Record accurately and timely
each asset disposition,
including the unique identifier ‘.
of specific asset, type of asset,
type of disposition, location of
disposition, responsible
official, and current asset
value at time of disposition?
2. Flag low-value and time-
sensitive assets to ensure
their timely recording and
liquidation?
3. Record and account
accurately for all revenues
and asset specific expenses
generated from asset
disposition activities (sale,
quick release, settlement,
remission, or dismissal) on an
asset-by-asset basis?
4. Verify that proper
authorization exists for all
seized asset dispositions?
Page 16 GAO/AIMD-98-21.2.5 1 Proposed Seized/Forfeited Asset Checklist (E/97)’
Seized/Forfeited Asset .Sys.tem:.Require~en~~ ;, t .” , I: ‘: :. ;.
.I
Asset dispqsition activities Yes/no’ Explanation
component : NA. ; /,.
. ,,
5. Record detailed information \ i -; ,:” 1 ‘: ‘,, :;:.I,,;, I;,
on each specific asset
disposition transaction, .‘, I’,. ,,
including the name, Social ;;1< ,:, ‘,.‘,, ,;I,,
Security number or tax : ,. j r, -.
identification number, address 1
,,. ‘, ,. .“’ ”
and employment affiliations of :
the person(s) receiving the.
asset? ‘.
6. Record and account ’
accurately for all distributions
of excess revenues over
expenses?
7. Provide a complete
accounting for both the :
applicable asset forfeiture
fund balances and the seized
asset deposit fund balance?
8. Record deposits of funds
associated viith the asset
seizure and forfeiture program
made into other law
enforcement related accounts?
9. Provide an audit trail for
assets distributed to other.
.’
entities?
Page’l7, GAO/AI&ID-98-21.2.5 - Proposed Seized/Forfeited Asset Checklist (E/97)
--
Seized/Forfeited Asset System Requirements : :L z
Asset dispositian activities Yes/no Explanation ’
component NA
10. Record promptly the deposit .., +
of all proceeds from the sale ,.,‘.
of forfeited assets into the ;
applicable Asset Forfeiture (8 .’
Fundaccount? ‘t: ,. ,.’ ‘,
,* ,: .i ,,
11. Record promptly transfers of
cash from the applicable
Seized Asset Deposit Account
to the applicable Forfeiture:
Fund account?
12. Test periodically asset
disposition transactions to
ensure that the process is not
being victimized by insider
transactions?
13. Verify independently that all
billed contractor services
were actually performed?
14. Pay promptly innocent owners
or approved petitions for
mitigation? The system must.
interact with the core
financial system to
accomplish this task.
Page 18 GAO/AIMD-98-21.2.5 - Proposed Seized/Forfeited Asset Checklist (12/97)
_, .,j’ ., y ‘,
>
;.
. .-
1 ,/
:,
Ordering Information
The first copy of each GAO report and testimony is free.
Additional copies are $2 each. Orders should be sent to the
following address, accompanied by a check or money order
made out to the Superintendent of Documents, when
necessary. VISA and Mastercard credit cards are accepted, also.
Orders for 100 or more copies to be mailed to a single address
are discounted 26 percent.
Orders by maib
U.S. General Accounting Office
P.O. Box 37050
Washington, DC 20013
or visit:
Room 1100
i
700 4th St. NW (corner of 4th and G Sts. NW)
U.S. General Accounting Office
Washington, DC
Orders may also be placed by calling (202) 512-6000
or by using fax number (202) 512-6061, or TDD (202) 512-2637.
Each day, GAO issues a list of newly available reports and
testimony. To receive facsimile copies of the daily list or any
list from the past 30 days, please call (202) 512-6000 using a
touchtone phone. A recorded menu will provide information on
how to obtain these lists.
For information on how to access GAO reports on the INTERNET,
send an e-mail message with “info” in the body to:
infoOwww.gao.gov
or visit GAO’s World Wide Web Home Page at:
httpY/www.gao.gov
PRINTED ON ff$ RECYCLED PAPER
United States
General Accounting Office
Washington, D.C. 20548-0001
Official Business I Permit No. GlOO
Penalty for Private Use $300
Address Correction Requested
- .
Seized/Forfeited Asset System Checklist: Systems Reviewed Under the Federal Financial Management Improvement Act of 1996 (Exposure Draft)
Published by the Government Accountability Office on 1997-12-01.
Below is a raw (and likely hideous) rendition of the original report. (PDF)