ice of I’crsormel This document contains f%nctional rcquiremcnts fbr s&cd property and f&f&ted assets systems. This is part of a scrims of functional systems requirement documents published by the Joint Financial ~al~a~~~~~~~~t Improvcmtznt I’) on Federal financial management systems requirements. All of the JF II) I;‘edeyal &n~~cial stem Requi~emnents series of documents should bc considered together wh determining how best to USC information and supporting services to meet the financial m reqL~ircln~nt docLlIn~~lts address the goals of the Chief Financial remote the efficient management of assets, and to improve financial rnan~~~ern~llt systuns ~ov~rilrn~ll~i~~~ to e uscfiil financial iilformatioil on Federal government operntiorls. ncies arc to use this document on Seized P~opcq and Fovfeeited Assets System Regui~emexts in plamling rovements to these financial systems. Agencies may develop additional technical and functional requirements as necessary to support unique mission requirements. Agencies must also develop strategies for interfacing or integrating seized property and forfeited asset system with the agency’s core financial system. e wmt to take this opporm o thank the agency representatives who contributed to this docnment. e value eir assistance and support. continuing support such as theirs, we can confidently face rhe financial rna~a~e~i~nt challenges in the next century. Foreword Acronyms Introduction. ........................ . . . . . . . . . . . . 1 Federal Financinl anagemcnt Framework ......... . 3 System Overview ...................... . . 7 I~itr(~~iL~~ti~i~ to Funcriond R~~~Llir~lll~ilts .......... 14 Seizure Activities. ......... . 15 Cmtody Activities ......... 16 Forfeiture Activities ........ . t . . . 17 IJisposition Activities ....... I 18 Reporting rind Other R~~~Llirelll~nts . . . . . . . . . . . 19 Chxral Systems Kequireinents 20 Interhcing Systems ........ . . . . . . . . . . . . . . . . . 21 Systcnl A~Jlliilistl-~tioJl ....... . . . . . . . . . . . . . . . . . 22 Kccords Retention ......... 23 Other Genera1 System Issues .... . . . . . . . . . . . . . . . . . 24 Appendix A: References ...... 25 Appcndis R : Glossnry ....... . . . . . . . . . . . . . . . 26 Appcnciis C: Contributors ...... 28 1, t;innncial System Improvement Projects 4 2. Framework for the Integration of Fcdcral Agc~~cy Systems 4 3. Agency Systcn~s Architecture I 7 recomnend acco ent has been ex eal with seized a consequence of various laws. In The first, the seizing 1 agency or contractor. seizure activities of one or mor a related action ntent to forfeit the prope ay be destroyed after seizure to seized under many different ess e accosting and re teragency team consisting of m 1 A central fund is a kdcral entity specifically established to finance the costs ofseizure, ma~la~erne~~ and disposition of property seized for forfeiture, and to receive any proceeds from the sale or other dis that property. 2 Property subject to seizure is defined in the enabling statutes and regulations; however, for reporting purposes financial systems generally defined property as cash (including monetary instruments), real property, and tangible personal property as categories. ssets uir tits assets systems that wi agement, which rmatio~~ ~~ancial systems, re and systems requirements assist e a commoI1 framework so that outside vendors or ore ecom e standar~za~on e vision articulated by the nt systems to support ation for decision-rn~~g ante with Federai alysis, and governm~~ e reporting, including ail to facilitate au governmen~ide financi agement systems ata exchange, to support program catrons to easer recesses c are, . To be integrated, ~~~ci~ e following four characteristics: ons (de~nitio~s (2) co ilar kinds of ~~sactions; Seized Property and Forfeited Assets Systems e Standard Reporting Requirements * Additional - U.S. Government Standard Agency General Ledger Functional Requirements e Core Financial System - Procedures Requirements - Human Resources & - Additional Payroll Systems Agency Requirements . Training Technical Requirements I( Software o Travel System Selection Requirements . Documentation w-------m.. * Seized Property and . integration Forfeited Assets System Strategy Requirements ---m_/_mw . Conversion . Direct Loan System Requirements L Software/ Hardware e Guaranteed Loan System Evaluation I) Maintenance Requirements m inventory System Requirements . System Requirements for Managerial Cost Accounting - Other Standards Subject of I this report _Lm Illustrar-ion 1 Seized Property and Forfeited Assets Systems ~~C~lLlir~~~ilrs orting a consistently; and uplicati~n of ~ra~sa~tio~ entry. ue to i~laccL~~ate or ace with rapidly changing user ts for a single, i t system are outline ean having only one so in an integrated fashion, and linked nancial system support veiy through electronic means. ocated in the s xx- system following ~ess/t~ansact~on cycles such as er control accounts at payroll payments are made, may ers. In such cases, interface cial to automate ara (internai control). Seized Property and Forfeited Assets Systems ~~q~lirerne~~ts ~~anagelne~~t systems are ms that track financial events Agency financial ~aIla~e~eI~t systems fall into Illustration 2 four categories : ) core financial systems; (2) other financial and mixed systems, i~cl~ldi1~~ seized pro (3) shared systems, an art~clltal executive information systems (systems to or~at~on to all ievels of ~alla~e~ent). tans must be linked roget ency systems to central systems t rrnance illforn~ation on a gover 3 As shown in Illustration 3, seized proper rnaIlageI~lent system for those Federal forfeited assets systems su validate funds availability; be seized under the author various laws or regulations that are e e Federal goverl~~nt. ations aLlt~orizi~lg seizure of pro Is and accounting requ t the government maintains afi control of this property during the pendency of the legal proceeding that allowed the seizure to be made. may be simultaneously seized for more than one purpose, i.e., seized as evidence of criminal activity and s the enforcement of a tax levy. eizures may be inten to * restrain the involved in certain * remove certain contraband from the stream of commerce, Considering the sensitive nature of governnlental i~ia~~ag~il~~l~~ systems a a key program COmpOne help guard against mist es. Seizing ,and taking own~rsh governmeIlta1 activity at requires a careful bal~cing of rights of iildivid~als. Llire~ie~ts form a critical fo ithin is legal fr ortant to note that s 3 This Federal Financiul Management Sy.rtems Requirement for Seized Property and Forfeited Assets Systems is not intended to create or confer any rights, privileges, or benefits on any prospective or actual claimant, defendants, or petitioners. Likewise, it is not intended to have the force of law with respect to the conduct or prosecution of law enforcement activities. 4 Agencies that deal with non-valued seized and forfeited property must comply with specific accounting and reporting requirements for this activity. See SFFAS No. 3 and Accounting and Auditing Policy Committee’s Technical Release Number 4, Reporting on Non-valued Seized and Fo+ited Prope@. 5 Seizure is the act performed by an officer of the law, acting under authority, in taking into the custody of the law the property, real or personal, of a person against whom the judgment of a competent court has passed or the act of taking possession of property as a consequence of a violation of public law. 6 Forfeiture is to lose title to, or lose the right to, property by some error, fault, offense, or crime. Seized Property and t;orfcited Assets Systcrns Ile+rcments venue Service to levy (seize) and sell taxpayer ession of the taxpayer’s right, taxpayer’s equity in the prop , and offers it for public sale. The ear title; encumbrances senior to the federal tax lien(s) for the delinquent tax after sale. After seizure of the property, the solved in one of a I of ways: additions in full prior to sale, and the at the property be returned to the taxpayer any funds are received for the release of the to the taxpayer’s delinquent tax auction or sealed bid for an amount equal ds are applied first to the direct expenses of the taxpayer’s d~Iinquent tax liability with the funds being forwarded to the oceeds of the sale in excess of the total of the deli~queilt tax liability eemed advisable ay the established minimu emg released to the taxpa t of the established mi~limum gard to a rnillirnL~rn bid; es that result in payment of the delin uent tax liability, the co~ti~L~es to a 7 Title 26 of the United States Code. Levy (seizure) under Internal Revenue Code section 63 3 l(b) to collect delinquent taxes involves no legal proceeding. The seizure is an administrative act. Seized Property and Forkited Assets Systems Re+rements e clear its intent e sent to owrlers an re raises Issues 0 x 19 1J.S.C. 100X, 26 USC. 7325(3) stare or local agencies. t such seized property e law ~llforcex~lent ivil actions where er in controversy is between e, and a foreign state as plain arshal to seize certain s tion or seizure 0 rovisiorls for notice to e seizure will er. ositio~ will s officer who has reasonable cause to believe that en violated, makin safety, or ~(~~se~a~l(~~. rtarion or entry of whit revisions fo tice to i sition shoed in acco 9 See 2X U.S.C. 1332. See also Supplemental Rules for Certain Admiralty and Maritime Claims Seized Propmy and Forfeir-ed Assets Systems l~cqui~~rn~~~ts aincd or seized to enforce ant cxecLltivc agc11cy ~e~L~la~~~lls. P termination of an authori ject to actual or co stmctive seizure because there is obable cause to believe at the seizure of roperty is ~arrallt~~i. The legal process for resolving the underlying rationale for detention 01 seizure, in& to ~I~divid~lals or public adve~isel~ents of the seizure, is re ~~~s~ositioll must be in actor ante with the a~lt~~)r~~iilg The Federal goverIlm~nt has unique law enf~~rcerneilt and social missi amities of items that often have no resale value (e.g. , illegal d ov~rll~ient agencies have a significant responsibili~ co safegua rrhey are carried at zero value in its financial records. would frustrate the exprcs from r-he summary dest roperty rights of the owner are Certain laws authorize the “fotieiture” of certGn ty s of seized property “sum ut notice an iture hearing). Under 21 U 6. 88 1 (f,, schedule I and antes tha sold, or offered for sale illegally, as well as dangerous, toxic, or hazardous raw materials, products, equipment, or containers that are used in connection with drug ofSenses “shall be deemed contraband and seized and summarily forfeited to the United States.“‘0 Personal property may be abandoned or destroyed by an executive agency when an authorized o writtell ~~eterrniI~atioI1 that the opcrty has no commercial value or the esti haIldling would exceed the esti ted proceeds from its sale, provided that made in a manner that is not detrimental or dangerous to ublic he&h or that o ealty may be abandoned, destroyed, or donated to certain public bo ny Federal agency havin realty that has no conlmercial value or whose estimated cost ~~fc~~]~tiilLled care would exceed the estimat from its sale is authorized to abandon or destroy the goveril~nenr-ow~e property or to donate the governIne~lt’s interests t or donated by a Federal agency unless an authoriz c~~mmercial value or that the estimated costs of co 10 21 U.S.C. 881(f)(l). See also 1X U.S.C. 924(d). 11 41 C.F.R. 101-47.5 erty, real or personal is transferred to the United States. at will facilitate tracking through sei ing, and disposition. re it was seized, e storage value and any s~lbs~q~l~n~ updates to the valuation. cized for forfeiture. sing status of any abandoned roperty or forfeited legal aLltilori~ for the seizure. This information forfeiture criteria have been observed. services, and interact with the ocess on a basis consistent with Seized Property and Forfeited Ascts Systems Requirements key component of effective property seizure and asset forfcinrre processes is disposing of the properry in an orderly fashion after d~t~rInixlin~ that dis~~ositioil is appropriate. If asset disposition is perceived to ur&ir or i~~f~~i~l~t, the cffectivencss of the entire process could be calfcd into question. In some casts, the p erty may be returned to an entity outside of the Federal ~ov~rIlrncn~ as a result of the law enfor~em~Rt nction. It is partic~ll~rly i ortant to account for a11cosrs, revenues, and proceeds from disposition. effective asset disp~siri[)Il system corn oncnt must have the capability to do the following: cIL]~iiIl~ the unique i r of the pro set, type of ty or asset, viduals ~~s~~onsibl~ orizing and the actions, he at time of gross proceeds gencrarcd from the disposition, a to whom the asset or property was Accurately record a partial distrib~ltion of an asset. riate costs and revenues on a basis consistent wi ~Ll~l~~)ri~ati[~Il exists fbr all dis d acco~int accuratciy for all ~iistri~Llti~)ns of excess revenues over ex l?rovide ;t complete accounting f& both the ~~plic~bl~ central fund balances and any related deposit limd b&mCC Provide an audit trail for assets distribLlt~ to other entities. ccord the deposit into the applicable account of all proceeds from the sale of forfcitcd or ab~don~d assets. transfers of cash from the applicable dc osit ftind to the ap licable central fund account. ort the payment of contractors, innocent ners, or approved claimants. ~alLl~-ad~~~d features are as follows: Flag low value and til~l~-s~l~sitiv~ assets to assure their tiI~~ly re I’~ri~~di~~Ily test asset dis osition trarls~cti(~~ls to ensure that the recess is not being victimized rra~lsacti~l~s. contractor services were actually perfor ation on internal conrrols, systems ar~bit~c~ir~, sofmarc docun tion, and other matters relate development, o~~rari(~ns, an nlaint~~allce. Thro~l~~l~)L~t the forkited assets system, su ocLlrn~nt~~~i0~ must be mainta nd forfeited assets system se be able to accept, or-t on traIlsactioI~s with other external systems. The systc must record and tra i~formarioI1 in or to provide the basis for control. The req~lir~l~~Ilts for sofcuare doc~lmentatio~ are listed in the Core Fzkzncial System ~~q~~~e~e~ts. The information provided is meant to identify the scope and intent of the docLlrn~~~atio requirements rather than to state them definitively. The software and doc~lmcntatioll will be I~aiIltained under co~~~~~ration management in order to maintain system integrity and assure internal controls. After the seized prope Agency Anacin ~lanagement systems track financial events and summarize information to support the mission of hese systems provide for adequate manage~~~nt reporting, su rt agency level policy decisions to carry out fiduciary responsibilities, and support the preparatio auditable financial statements. anagement systems fall into four categories: core financial systems, other and mixed systems (including inventory systems), shared systems, and d~partrn~~ltal executive infornlation systems (systems to provide manage ent in~~rl~ation to all levels of managers). These systems must be linked together electronically to be efEctive and efficient. Summa~ data transfers must be provided from agency systems to central systems to permit summaries of management inforInatiol1 and agency financial performance information on a government-wide basis. ubject to government-bide hysical co~l~~ration of ~n~lcial rn~a~ern~nt systems, including issues f centralized o ocessing routines, data, and organizations, is best left to the e~~rminati~)n o ptimal rnaIl~er in which to sup art the agency mission. The physical design of the system, however, should consider the agency’s organizational philosophy, the technical capabilities available, and the most appropriate manner to achieve the necessary single, integrated financial erty and forfeited ass system should be able to process transactions from other external systems and rack such transactions a related info~ation to provide the basis for central control. This may require a fy and fo~at the transactions. The system should: 0 rovide e fl~~bili~ to accept data input from multiple media that recognize user agencies’ unique data input r~qLlirem~nts. rovide the capability to customize data input, processing rules, and edit criteria and to give agencies flexibility in defining internal operational procedures and supporting agency requirements. bility, if necessary, to identify and rocms transactions from other systems that enter and seized property and forfeited assets system. from illtc~aciIlg systems to the standard seized property and or-correction procedures. * e capability to u I rovide InLlltiple-~~~edia out ut reports and recognize user agencies’ unique outhit ~eqLlircments. * customize output for reporting and providing interfaces to other systems necessary t program results and meet agency requirements for external processing sting, budget reconciliation and execution, cost acc~lmLllatioI1). II on the results of seizure tr~llsact~oils and forfeiture ents itemized in the Cove Financial System ~~e~~~~e~ent~ fbr es as ~e~erati~l~ requests for dis the standard general ledger, generating obligatio~~ records, generating requests for funds transfer, and u ating funds control. Seized Property and Forfeited Assets Systems hquirerncnts A variety of general system requirements, including data stew int thers arc contained in the F~aamewwo&fur FF 95). The Framewor found nt vvww.~nancenet.gov/~nancencr/ Seized Property and Forfci~cd Assets Systems Requirements era1 Financial era1 Financial eral anagers’ -123, Internal Control B Circular A-I 27, Financial anagement Systems ccounting ~riilci~l~s an ting Standard No. 3, Accoulltiilg for Statement of Federal Financial co~lntillg Standard No. 4, anagerial Cost Accounting Concepts and tandards for the Federal ~overnIn~llt orting on on-Valued Seized and Forfeited I’roperty, Technical elease Number 4 II? Framework for Federal Financial ~ageIn~nt Systems (~~~SR-0) II? Core Fi~lanci~ System equirements (JF -99-4) and other System Requirement documents IP website: www.finatlcenet.gov/fina~~ce~~et/f~d/jfmip. Scizcd Property and F&cited Assets Systems l<equirements Abnwdoned &opeq I’roperty of any type over which the rightfill owncr has relinquished possession and nny claim of an ownership interest, without assertion Of an adverse right to possession and control by the Federal government. This would include property left at a government facility and unclaimed by the righ&l owner foliowing notice of intent to dispose. This property is 2 type of seized propert)l. AAIY1 \ias established in anagcment and Budget, Gencrnl Accounting Oftice, the CFO Council, ml Integrity xnd EfEcicncy, as a body to rcsenrch accounting and auditing issues requiring guidance. It serves as a pcrmancnt committee sponsored by the !+deral Accounting Standards Advisory Board. Physical possession and control of property by government personnel. Any dcpnrtmcnt, agency, commission, authority, administration, board, or other independent cstnblishment in the Esecutivc branch of the government, including any corporation whollv or partly owned by the United States that is ~1 independent inst .S., not including the municipal government of the District of Columbia. (0 A federal entity established to firlnnce the costs of seizure, manngcment and disposition of property seized for forfeiture, and to receive any proceeds from the salt or other disposition of that property. Legal possession of property by Federal government personnel through a non-federal agent, such as a commcrciai contractor or state or local official, under a legal agreement or court order that the agent maintains physical possession and control of the property on behalf of, and subject to the orders of, the Federal gov&ment personnel. The Fcdcral agency rhat has actual possession of seized or forfeited propcrty, or constructive possession of property through a non-federal agent. The custodial agency would be responsible for reporting material quantities of non-valued items. Property taken into custody tcmpomrily for purposes of preserving the status quo (items in or around a crime scene) or to protect &e government from liability for loss (luggage of a11 arrested traveler, vehicle of ~1 arrest4 drunk driver), or determining Customs admissibility, with the intent to release the property as soon as it is no longer necessary to prcscrve the status quo or the owner can assume responsible custody. This riction is not a seizure under the law and thus detained property is not considered seized property. Propa-ty that may bc legal to possess or own in the U.S., but whose import/export is prohibited (e.g., Iranian carpets, Cuban cigars). The financial systems and the financial portions of mixed systems necessary to support financial IllmlgeIllCIlt. An it~~)rI~l~tiorl system, comprised of one or more application, that is used for collecting, processing, maintaining, tr~~lsInittill~, and reporting data about financial events; s~~pp~~tii~~ financial planning or budgeting activities; accumulating and reporting cost inf~rnl~lti~I1; or supporting the preparation of financifll statements. Property of any type (currency, monetary interests, realty, intangible propern ,i, and tangible personal property) for which title has vested in the Federal govcrnmcnt, over any other asset-ted legal interest in the property, by exercise of a legal forfeiture process. An in&)rmation system that supports both financial and norci-finnncinl functions of the Federal government or components thereof. Seized Property and Forfeit-cd Assets Systems Kcquiremcnts pendix tossary Property for which no private right of ownership is recognized under tJ.S. law, or of which mere private pctsscssionis prohibited under U.S. law. Examples include certain controlled substances,counterfeit currency, counterfeit monetary and financial ii~str-~~~~lei~ts, and certain firearms. This property is a type of seized property. JFMII’ systemsre~l~lire~lielltsare either mandatory or value-added. The definitions of these two categories are: Mandatorv Ke~lLlirernelltsdescribe what the system must do and consists of the minimum acceptable ftmctionaljty, necessaryto establish a sy~stem, or are basedon Federal laws and regulations. 1PIandatory reqLlirerne~ltsare those against which agency headsevaluate their systemsto determine substantial compliance with systemsrequirements under the FF IA. These requirements apply to existing systems in operation and new systemsplanned or under development. Value-added requirements describe features or characteristics and may consist of any combination of the following: (1) using state of the art technology, (2) employing the preferred or best businesspractices, or (3) meeting the specialmanagement needsof an individual agency. Value-added, optional, and other similar terminology may be used to describe this category of requrrements. Agencies should consider value-added features when judging systemsoptions. The need fi,r thcsc value-added fcaturcs in agency systemsis left to the discretion of each agency head. S&in. bzqency The Federal agency that seizesproperty aspart of its law enfkxmcnt activities. Seized propeq Property of any type (currency, monetary interests, realty, intangible property, and tangible personal property) Over which the federal go\~ernment has exercised its power under law to assertpossessionand control in opposition to any other party asserting a legal interest in the property. Seizedjb evidence Property the Federal government has seized for the sole purpose of preserving and protecting the property f&- possible use in civil or criminal judicial proceeding. The expectation is that the property will be returned to its rightful owners upon conclusion of the judicial proceedings. However, circumstances can allow rhe status of property seized fi)r evidence to change to property seized f?)r ti)rfeiture. Property the Fcdcral government hasseized for the purpose of transferring titie to the Federal government through exercise of a legal fi-i,rfeiture process. This includes property seized for forfeiture that also may be used in an evidentiary proceeding. Se&edfiy tmpu~oses Property the Federal government hasseized f&- the p~pse of satisyn, (I 2 L tax liability to the Federal government through exercise of-a legal tax c&&-cement process. This includes property seized for tax purposesthat also may be used in an evidcntiary proceeding. Seized for other purposes Property the Federal government hasseized f?)r purposes other than For evidence, ii,r forfeiture, or for tax purposes. Examples of property in this category include seizuresfor satisfaction of debts owed the government, for protection of public safety or navigation (adrift vessel), and fi)r preservation of environnierital conditions (sinking vessel). This includes property seized for these other governmental purposes that also may be used in an evidentiary proceeding. Sensitive items Items that could be a hazard or threat to public safety or the economy in federal custody that would cause discredit or embarrassment to the Federal government ifit lost accountability over those items. 0te: ost of the terms and ~e~~l~i~ioilsare from the Acco~~iltiIl~ and uditing Polic\r ~[)tllnlirt~e (A docLlment on eporting on Non-Valued Seized and Forfeited Property, Technical Kelease Number 4. rope~ty and Forfeited Steehg Cam~~ittee Donald Hammctnd (Chair, Steering Committee) Denise S. Wood (l’roject Sponsor) Department of the Treasury Executive fficc of Asset Forfeiture (E Karen Clenry Alderman Clayton Ryers CXlice of Inspector General ( illinm Early E Pl Gcnernl Services A~iminis~rati~~~ Jeffrey Steinhoff Maria Freedman General Accounting Office OIG Sheila Conley Joan Holland anagement and Budger Internal Revenue Service (IRS) Richard Huether IRS Jack oziner IRS Michael Perez (Project Sponsor) Justice ~alla~~1~1~11~ Division (JMD) Asset Forfeiture nnagcment Staff Stuart Sporn IRS Robert Weeks JMD Gail Donaldson IRS Edna Decker Customs Service Katie Drew JMD-Finance Staff Tim Raeck Customs Service JamesCole Federal Bureau of Investigations Diane Frazier Secret Service Ken Lee Secret Service lyn Kcssinger fice of Inspector General ( Yvone artisan Secret Service Melissa Loughan OIG Sandi Nini Secret Service Swan Franklin Immigration and ~a~irali~lti~il Service Nora Kelly Waldren Criminal Division ro~erty and Forfeited Federal Accountin. Standards Admsmy Board endy Comes Kick Wascak Gent& Accountin Ofice Gary Engel Robert Gramiing Casey Keplinger J. Chris artin JFMP St@- Doris Chew Patricia Clark Janet McBride Dennis Mitchell Thane Thompson anagemcnt Intern-Department of Labor) Seized property and forfeited Joi ram I Bulk Rate I Postage & Fees Paid Penalty for Private Use $300
Seized Property and Forfeited Assets Systems Requirements
Published by the Government Accountability Office on 1999-12-01.
Below is a raw (and likely hideous) rendition of the original report. (PDF)