Performance and Accountability Report Fiscal Year 2013
Performance and Accountability Report Fiscal Year 2013
About This Report America’s Frontline We guard the boundaries of freedom and stand between the good citizens of our Nation and those who want to do us harm. About This Report U.S. Customs and Border Protection (CBP) Fiscal Year (FY) 2013 Performance and Accountability Report (PAR) presents a comprehensive report that combines CBP’s Annual Performance Report with its audited financial statements, assurances on internal control, accountability reporting and agency assessments. CBP’s PAR provides program, financial, and performance information that enables Congress and the public to assess the performance of the agency as it relates to the CBP mission. The CBP PAR discusses the agency’s strategic goals and objectives and provides a comparison of agency performance targets to actual performance results. The CBP PAR satisfies the reporting requirements of the Reports Consolidation Act of 2000 (Pub. L. No. 106-531), Government Performance and Results Modernization Act (GPRMA) of 2010, Chief Financial Officers Act of 1990 (Public Law No. 101-576), Office of Management and Budget (OMB) Circular No. A-136, Financial Reporting Requirements, dated October 21, 2013, and other financial management statutes and reports. The CBP PAR provides a summary of the agency’s major mission programs, including strategies. Additional information related to the specific programs, initiatives, tools, and resources used to achieve agency objectives can be found in the body of the Department of Homeland Security (DHS) Congressional Budget Justification for the President’s Budget, which details information by DHS component. For FY 2013, CBP will produce its Performance and Accountability Report and the Summary of Performance and Financial Information. When published, both reports will be located on our public website: www.cbp.gov For more information, contact: U.S. Customs and Border Protection Office of Administration 1331 Pennsylvania Avenue, NW, Suite 950 Washington, DC 20229-1103 U.S. Customs and Border Protection • Performance and Accountability Report iii
About This Report America   s Frontline We guard the boundaries of freedom and stand between the good citizens of our Nati...
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Table of Contents Acting Commissioner’s Message. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Management’s Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Core Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Fiscal Year 2013 Statistical Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Major Mission Programs and Strategies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Enhancing Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Enhancing Prosperity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Administrative Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 . . Looking Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 CBP Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 . . Headquarters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Component Organizations and Field Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 . . Performance Goals and Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Performance Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Fiscal Year 2013 Performance by Mission Set. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Management Assurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Federal Manager’s Financial Integrity Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 DHS Financial Accountability Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Federal Financial Management Improvement Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 . . Federal Information Security Management Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Systems and Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Management Inspections Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Self-Inspection Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Audit Management and Liaison. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Financial Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Overview of the Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73 Limitations of the Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Performance Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Performance Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Individual Performance Measure Results. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Financial Section. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Message from the Chief Financial Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 . . Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Required Supplementary Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 Auditors’ Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 Management’s Response to the Independent Auditors’ Report. . . . . . . . . . . . . . . . . . . . . . . . . . 152 Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 Summary of Financial Statement Audit and Management Assuarances. . . . . . . . . . . . . . . . . . . . . . . . 164 Office of Inspector General (OIG) Report on Major Management Challenges. . . . . . . . . . . . . . . . . 169 Acronyms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 Table of Contents 1
Table of Contents Acting Commissioner   s Message.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  ....
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Acting Commissioner’s Message I am pleased to present the Fiscal Year (FY) 2013 Performance Accountability Report (PAR) for U. S. Customs and Border Protection (CBP). This assessment details how CBP adds value to the Nation’s security and prosperity. As the Agency responsible for all Federal border administration activities, CBP manages and secures our Nation’s borders while facilitating the legitimate international travel and trade that is vital to our Nation’s economy. We ensure international cross-border traffic flows within the bounds of U.S. laws, rules, regulations, and treaties, an essential element of our Nation’s prosperity and security. During FY 2013, CBP’s dedicated employees played a leading role in making America a more secure and prosperous Nation. CBP continued to respond to illegal cross-border traffic through targeted operations, enhanced partnerships, and an effective deployment of personnel, technology and infrastructure along the border, while facilitating legitimate trade and travel. This year, CBP officers inspected 362 million travelers, processed 30.4 million trade entries, and apprehended 420,789 illegal aliens attempting to cross the border. CBP received an Unmodified Audit Opinion on the FY 2013 audit of its full set of financial statements for the eighth consecutive year. This outstanding accomplishment attests to the fiscal discipline and accountability of CBP, which collected more than $40.9 billion in revenue during FY 2013. The attached PAR identifies the success CBP has had in accounting for and reporting on financial activity, but also identifies areas upon which the Agency can improve. We continue to take action to address these areas. I would like to congratulate the entire CBP workforce for all of its achievements over the past year and the duties performed every day to protect our Nation. Our success would not have been possible without the tireless efforts and unyielding work ethic of the men and women of CBP. Our goal remains to provide timely, reliable, and useful financial information to Congress and the American public, and to enable managers across CBP to make sound business decisions, and illustrate the significance of CBP’s contributions to U.S. prosperity and security. Thomas S. Winkowski Acting Commissioner Commissioner’s Message 3
Acting Commissioner   s Message I am pleased to present the Fiscal Year  FY  2013 Performance Accountability Report  PAR  ...
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Management’s Discussion and Analysis This section explains CBP’s mission, organization structure, strategic direction, and summarizes program and financial performance.
Management   s Discussion and Analysis  This section explains CBP   s mission, organization structure, strategic direction...
Overview of CBP Mission We are the guardians of our Nation’s borders. We are America’s frontline. We safeguard the American homeland at and between our borders. We protect the American public against terrorists and the instruments of terror. We steadfastly enforce the laws of the United States while fostering our Nation’s economic security through lawful international trade and travel. We serve the American public with vigilance, integrity, and professionalism. CBP’s approximately 60,000 employees manage, control, and protect the Nation’s borders at and between the official ports of entry. CBP is responsible for protecting more than 5,000 miles of border with Canada, 1,900 miles of border with Mexico, and 95,000 miles of shoreline. Core Values Vigilance is how we ensure the safety of all Americans. We are continuously watchful and alert to deter, detect, and prevent threats to our Nation. We demonstrate courage and valor in the protection of our Nation. Service to Country is embodied in the work we do. We are dedicated to defending and upholding the Constitution and the laws of the United States. The American people have entrusted us to protect the homeland and defend liberty. Integrity is our cornerstone. We are guided by the highest ethical and moral principles. Our actions bring honor to ourselves and our Agency. Fiscal Year 2013 Statistical Highlights •• Ports of entry: 328 •• Pre-clearance locations: 15 •• Border Patrol sectors: 20 •• Air units: 43 •• Marine units: 71 •• Trade entries processed: 30.4 million •• Total revenue: $40.9 billion (includes custodial and entity revenue) •• Illegal narcotics seized: 2.8 million pounds (represents narcotics held by CBP until disposal or destruction) •• Illegal alien apprehensions between the ports of entry: 420,789 •• Inadmissible aliens interdicted at the ports of entry: 204,905 •• Pedestrians and passengers processed: 362 million •• Conveyances processed: over 110 million 6 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP Mission We are the guardians of our Nation   s borders. We are America   s frontline. We safeguard the Ame...
Overview of CBP •• Aircraft passengers processed: over 102 million •• Prohibited plant and animal materials seized at the ports of entry: 1,603,944 •• Agricultural plant and pest intercepted at the ports of entry: 161,050 Major Mission Programs and Strategies Securing the Nation’s borders from illegal entry of aliens and contraband, including terrorist and weapons of mass destruction, while welcoming all legitimate travelers and trade continues to be a major challenge. As America’s frontline border security agency, CBP has established programs and strategies designed to enhance border security and other mission critical functions. CBP strives to maximize partnerships on the home front and abroad by promoting an effective management infrastructure that fosters the highest standards of integrity. CBP has built a layered strategy using risk-based approaches and performance management techniques that maximize CBP’s strengths. The following information provides explanation of the major mission programs and strategies that demonstrate CBP’s commitment to adding value to the Nation’s security and prosperity along with administrative efficiencies that facilitate mission performance. Enhancing Security Securing America’s borders is CBP’s top priority. As the nation’s unified border security agency, CBP deploys the government’s largest law enforcement work force to protect at and between ports of entry, supported by air and marine assets. CBP’s vigilant operations ensure secure border access for legitimate trade and travel, allowing U.S. trade and travel to thrive. Security Between Ports of Entry: U.S. Border Patrol CBP’s security mission between official ports of entry is the responsibility of the U.S. Border Patrol. The Border Patrol prevents the entry of terrorists, weapons, illegal immigrants and contraband along 6,900 miles of land borders with Mexico and Canada, along with 2,000 miles of coast around Florida and Puerto Rico. The Border Patrol employs more than 21,000 law enforcement agents and 1,700 mission support personnel. The 2012-2016 Border Patrol Strategic Plan leverages information, integration and rapid response to meet all border security threats. The Border Patrol gathers information, coordinates operations with partners and stakeholders, and delivers a rapid response to threats based on risk. Operating in a dynamic operational environment, CBP and the Border Patrol team with law enforcement partners to address changing risks and threats. Management’s Discussion and Analysis 7
Overview of CBP         Aircraft passengers processed  over 102 million        Prohibited plant and animal materials seize...
Overview of CBP Integrated Strategies CBP mission success improves when operational strategies integrate with external partners, including federal, state, local, tribal, and foreign law enforcement organizations, businesses, and community organizations. Through strategic engagement with all partners, CBP becomes more effective. The following summarizes FY 2013 efforts to integrate strategies and how these efforts will continue in FY 2014: Campaign Planning In FY 2012, the Border Patrol introduced sector-level Operational Implementation Plans (OIPs) to identify threats and risk, quantify and qualify Border Patrol capabilities, develop measureable objectives, and reduce risk. The Border Patrol still uses OIPs to implement its 2012-2016 strategic plan. To facilitate corridor-level campaign planning, in FY 2013 the Border Patrol broadened the sector focus to group its sectors into corridors. Sectors that were not in a corridor were arranged into planning partnerships with fellow sectors. The map below outlines the corridors: 8 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  Integrated Strategies CBP mission success improves when operational strategies integrate with external pa...
Overview of CBP South Texas Campaign The South Texas Campaign (STC) signifies a paradigm shift in information sharing and collaboration in border law enforcement practice. STC breaks down traditional barriers that prevent synergy in targeting transnational criminal organizations (TCOs) within the South Texas Corridor. The STC has successfully disrupted TCOs in five ways: 1. Integrating intelligence, analysis, and targeting throughout the South Texas Corridor; 2. Engaging communities of interest to degrade TCOs operating in the corridor; 3. Working with the government of Mexico to degrade TCOs in the South Texas Corridor and adjoining Mexican states; 4. Incorporating a flexible STC workforce to address emerging threats; and 5. Disrupting established air, land, and sea smuggling routes. The many STC accomplishments in FY 2013 include: •• Opening the South Texas Border Intelligence Center, an information clearinghouse for intelligence collection, analysis, and dissemination. By integrating CBP components and partners in the intelligence cycle, the STC more effectively targets TCO members and associates that pose the greatest threat to border security. •• Implementing standardized targeting to ensure corridor-wide proficiency in targeting criminals. These intelligence and targeting capabilities resulted in the arrest of TCO members in South Texas, which dropped Laredo, Texas, from first place in the number of stolen cars per capita in the U.S. in 2009 to 74th, in just three years. •• The development of an Enforcement and Removal workgroup that worked with U.S. Citizenship and Immigration Services (USCIS) to speed the record creation process. The pilot program used CBP’s e3 portal in the Enforcement Integrated Database to automatically deliver subject information to USCIS for record creation in the Central Index System. The pilot program expanded nationwide to potentially save millions of dollars in staff hours and resources annually. New Mexico/ West Texas Alliance to Combat Transnational Threats Unified Command Formed in 2007, the New Mexico/West Texas Alliance to Combat Transnational Threats Unified Command followed the success of a similar collaboration in Arizona, a structural response to TCO threats within that corridor. The New Mexico/West Texas unified command includes state and federal agencies that address and respond to the risks in the corridor. The command directs DHS components and other law enforcement entities in intelligence-driven operations against TCO networks. •• FY 2013 Successes ◊◊ Supported the Joint Task Force-North deployment of Defense Department ground and air detection/monitoring gear in Big Bend and El Paso Sectors. ◊◊ Became the first corridor to officially agree on the Bi-national Threat Assessment between U.S. federal agencies and Mexico. Management’s Discussion and Analysis 9
Overview of CBP  South Texas Campaign The South Texas Campaign  STC  signifies a paradigm shift in information sharing and...
Overview of CBP ◊◊ Improved communication and information sharing with Mexico, which has led to productive border operations including Operations Lifeguard and Iron Horse. ◊◊ The Unified Command Intelligence Center identified five common threats: Mexican Drug Trafficking Organizations, Human Trafficking/Alien Smuggling, Public Corruption, Crimes Against Children, and Counter Intelligence. •• FY 2014 Goals ◊◊ Promote the Unified Command common lexicon and establish an intelligence fusion mechanism. ◊◊ Implement a Corridor Campaign Plan for the alliance that demonstrates a sound whole-ofgovernment approach. ◊◊ Establish a common threat mitigation strategy and execute multi-agency operations/investigations against identified multi-agency threats. Arizona Alliance to Combat Transnational Threats Operation Alliance to Combat Transnational Threats (ACTT) leverages resources among all law enforcement agencies operating in Arizona and the government of Mexico. ACTT targets individuals and criminal organizations posing a transnational threat. The ACTT strategy deters, denies, degrades, disrupts and applies consequences to illegal activity and dismantles criminal operations. The ACTT Unified Command directs operational activities and releases resources for participating law enforcement and public safety agencies. In coordination with Mexico, the ACTT is: •• Focusing border enforcement operations at and between ports of entry; •• Defending in depth, including checkpoints and other enforcement efforts along routes of egress; •• Focusing investigative efforts in Tucson and Phoenix; •• Dispatching Mobile Response Teams; •• Deploying detection and surveillance technology; and •• Deploying additional assets to bolster enforcement as needed. •• FY 2013 Successes ◊◊ Maintained significant enforcement gains in Tucson Sector while reducing the number of externally detailed resources. •• FY 2014 Goals ◊◊ Creating a hostile operating environment for TCOs that denies freedom of action throughout the Arizona Corridor utilizing the following objectives: ■■ ■■ Enhancing response to and resolution of threats; ■■ ■■ 10 Disrupting TCOs throughout the corridor; Enhancing integration among ACTT partners, including interagency participation, transparency, and information sharing; Increasing unity of effort among all ACTT law enforcement partners, including Mexico; U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP         Improved communication and information sharing with Mexico, which has led to productive border ope...
Overview of CBP Developing a common intelligence picture to enhance understanding of the operating environment; ■■ ■■ ■■ Focusing partner agency intelligence efforts to give operational elements sufficient information to analyze, plan, and execute the mission; and Jointly targeting TCO counterintelligence activities. Joint Field Command - Arizona In January 2011, CBP established the Joint Field Command in Arizona, an organizational realignment of assets that tied together field components under a single operational command structure. The Joint Field Command has integrated CBP’s border security, commercial enforcement, and trade facilitation missions to effectively meet Arizona’s unique border challenges. The command’s priorities are border management, expedited lawful trade and travel, risk management, and mission integration. The ACTT coordinates with all law enforcement partners to minimize risks and maximize capabilities. Bi-national Joint Operations Southern Border Bi-national Operations: Bi-national operations focus on expanding enforcement against the trafficking of narcotics, weapons, ammunition, humans, and currency. Improved information gathering and analysis among international partners increases efficiency so terrorist and transnational criminal threats can be interdicted outside of U.S. borders. During the past several years, bi-national border security operations have improved operational and situational awareness. These successes are a testament to the maturing partnership between the U.S. and the Government of Mexico. In July 2013, the Border Patrol began the Cross Border Coordination Initiative to conduct simultaneous operations with the Mexico Federal Police in mutually agreed-upon zones. The initiative degrades TCO activity on both sides of the border through: •• The exchange of information and assessments, mapping and geo-referencing of criminal activity zones; •• Physical officer presence on both sides of the border and coordinated response during peak periods of criminal activity; and •• Increased officer training in both countries. International Liaison Units CBP established International Liaison Units (ILU) to foster partnerships, open communication, and coordinate law enforcement between CBP and its Mexican counterparts. The Border Patrol advises sector leadership on matters related to CBP-Mexico relationships. ILU agents facilitate coordinated measures to restrict smuggling and trafficking of narcotics, weapons, ammunition, humans and cur- Management’s Discussion and Analysis 11
Overview of CBP  Developing a common intelligence picture to enhance understanding of the operating environment           ...
Overview of CBP rency. They serve as points of contact for local, state, federal, and foreign law enforcement agencies when preparing for and/or responding to border violence. Northern Border Bi-national Operations The Canadian border is a diverse environment unified by a common feature: the close cooperation between the U.S. and Canada. This partnership continues to expand as outlined in “Beyond the Border,” a 2011 agreement. The Beyond the Border Action Plan specifies joint initiatives to improve border management in: 1. Addressing threats early; 2. Facilitating trade, economic growth and jobs; 3. Enforcing laws across the border; and 4. Safeguarding critical infrastructure and cyber-security. The U.S. and Canada continue to implement the Beyond the Border Action Plan, laying the foundation for security and economic prosperity. Cross Border Crime Forum The Cross-Border Crime Forum, established in 1997, facilitates cooperative U.S.-Canada investigations of cross-border crime. Led by the U.S. attorney general, the secretary of Homeland Security, the minister of Public Safety Canada, and the minister and attorney general of the Department of Justice Canada, the forum focuses on cross-border issues, including narcotics trafficking. Integrated Border Enforcement Teams Canada and the U.S. have cooperated since 1997 through 15 Integrated Border Enforcement Team (IBET) regions. Intelligence-driven enforcement teams comprised of U.S. and Canadian federal, state/provincial, tribal and local law enforcement personnel cooperate along the Northern border. IBETs operate in an integrated environment and support the Beyond the Border Action Plan. The ShipRider program is the IBET maritime operational arm. Operation Stonegarden Grant Program Grants from Operation Stonegarden improve law enforcement synergies to secure U.S. borders. Stonegarden funds increase operational capabilities for multijurisdictional law enforcement entities, promoting a layered, coordinated approach to law enforcement. The Border Patrol and Federal Emergency Management Agency (FEMA) work together to determine allocations and analyze border security risk. Analysis of three factors—threat, vulnerability, and 12 U.S. Customs and Border Protection • Performance and Accountability Report A Palm Beach County marine unit assists Coast Guard and Border Patrol with a search of an overturned vessel in June 2013 with suspected migrants in the water.
Overview of CBP  rency. They serve as points of contact for local, state, federal, and foreign law enforcement agencies wh...
Overview of CBP consequence—involves determining probability, as well as the ability and intent, of a TCO to commit an act. Vulnerability is determined as a function of various factors, including environment, personnel, technology for detection capability and tactical infrastructure and access. Eligible Stonegarden grant applicants include local government units and federally recognized tribal governments in border states. Participating agencies have provided law enforcement coverage in Border Patrol areas of responsibility. Sectors have the ability to move resources to areas quickly and to respond to emerging or immediate threats. Stonegarden participants also provide deterrence in lower-risk areas resulting in increased seizures and illegal alien apprehensions. DHS, FEMA, and CBP work together in managing Operation Stonegarden. Pima County, Arizona, Sheriff’s Border Crimes Unit Border Patrol sectors have been integrating intelligence, analysis and targeting with Stonegarden partners to disrupt, degrade and dismantle TCOs. In January 2013, a Bisbee, Arizona, police department and Border Patrol joint Stonegarden operation resulted in a seizure of marijuana and a small arsenal of weapons. Border Community Liaison February 2013, Nueces County Deputies stopped a The Border Community Liaison Program enhances CBP 2009 Ford Expedition near Agua Dulce, Texas, which interaction with communities and promotes agency unresulted in the seizure of marijuana. derstanding of community views, concerns, and issues. The liaison program designates a community point of contact at CBP offices and encourages communication between CBP and border communities. CBP’s local engagement provides opportunities for community feedback that is shared with DHS and other partners. The outreach strengthens relationships in the communities where we live and work. The State of the Border One of the key 2012—2016 Border Patrol Strategic Plan initiatives in FY 2014 will integrate CBP components to expand risk—based operations. This network approach will enable rapid, effective response to prioritized threats. CBP strategic objectives will guide 1) targeted; focused enforcement; 2) operational discipline; and 3) unified and joint commands. CBP intends to maximize information and intelligence to prioritize threats, analyze risk, and anticipate emerging trends as TCOs adjust to CBP operations. Management’s Discussion and Analysis 13
Overview of CBP  consequence   involves determining probability, as well as the ability and intent, of a TCO to commit an ...
Overview of CBP Evaluation of the following help gauge the extent to which our border is secure and at a condition of “low risk”: •• Intelligence estimates regarding the intent and capability of terrorists and transnational criminal organizations and associated networks to exploit the border; •• Assessment of the geography and topography of particular border areas and the likelihood of exploitation (Geospatial Intelligence); •• Analysis of data to include unique subjects, recidivism, average apprehension per recidivist and drug weight-to-frequency rate; •• Effectiveness ratios in corridors characterized by significant cross border entries; and •• Traditional “third party indicators” (such as crime levels in border communities) that will assist as a “check and balance” against our own internal metrics. Situational Awareness To fully implement risk—informed, intelligence—driven operations that focus CBP’s capabilities against prioritized threats, CBP must consistently enhance and maintain situational awareness through a comprehensive understanding of the threat environment. Situational awareness provides an in-depth picture of current operating conditions within a specific region of the border and facilitates predictive analysis. Situational awareness requirements vary according to different areas of the border. Along the Southwest border, areas are categorized as either “Deployment Density” or “Geospatial Intelligence (GEOINT) areas.” Deployment Density areas are those where traditionally higher threats/higher activity require an enhanced enforcement posture and concentration of resources to mitigate risk. Categorization of areas as Deployment Density allows the Border Patrol to effectively “shrink” the areas of primary concern on the border, so that our principal concentration in terms of enforcement capability is on the highest risk areas, enabling us to better achieve our outcomes in these areas. In Density Deployment areas, leadership must continually assess the environment through situational awareness to ensure that deployment postures and tactics, techniques, and procedures are sufficiently employed to maintain superior capability over the adversary, including a capability to respond to and interdict illicit cross-border activity. GEOINT areas are those with historically lower threat/lower activity conditions. GEOINT areas thus require fewer resources, but still require an ability to continuously validate the lower assessed risk and detect any change that would require a response. This intelligence analyzes imagery and other geospatial information to detect changes on the border. GEOINT capabilities typically come from high altitude aerial platforms equipped with Intelligence, Surveillance, and Reconnaissance technology (ISR), such as the Office of Air and Marine’s (OAM) Unmanned Aircraft System (UAS). The use of these assets requires significant collaborative efforts with OAM and the Office of Intelligence and Investigative Liaison (OIIL). To prioritize the use of GEOINT in low activity areas, CBP has developed three FY 2014 milestones: 14 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  Evaluation of the following help gauge the extent to which our border is secure and at a condition of    ...
Overview of CBP •• Establish requirements for GEOINT; •• Develop interface with OIIL to transfer requirements and receive products; and •• Develop uniform Standard Operating Procedures for field response to OIIL products. GEOINT products from OAM and OIIL are a key requirement for gaining and maintaining situational awareness along the U.S. border; they are also finite. CBP must be prepared to rely upon traditional tactics, techniques, and procedures to facilitate situational awareness in remote, low risk areas. These techniques include (but are not limited to) periodic reconnaissance patrols, sign-cutting operations, and the deployment of mobile detection, monitoring, and surveillance resources. Interdiction Effectiveness Rate The Border Patrol introduced a new performance measure in FY 2013: the Interdiction Effectiveness Rate (IER). IER is measured by: (Apprehensions + Turnbacks / Apprehensions + Turnbacks + Gotaways) The IER is being used along the Southwest border, with a goal to attain at least 90 percent IER by FY 2019. Post-Apprehension Measures After a Border Patrol apprehension, the operational focus shifts to applying effective consequences. Border security is enhanced by applying consistent, effective consequences to disrupt the smuggling cycle and dissuade illegal re-entry attempts. The Consequence Delivery System tracks the progress of each Border Patrol sector through several metrics, including: recidivism, average number of apprehensions per recidivist during a specified period, and displacement. The rate of recidivism is indicative of the agency’s ability to utilize more effective and efficient consequences, in an effort to influence a person’s desire and ability to attempt future illegal entries. By lowering recidivism, CBP reduces the number of people that may attempt multiple illegal entries, and decreases the level of risk posed to its resources and Border Security. Recidivism has continued to decrease for the third year in a row since the implementation of the Consequence Delivery System, throughout CBP operations, beginning in January FY 2011. Additionally, the consistent and systematic application of consequences to aliens that enter the United States illegally, over time, has contributed to the reduction of recidivism to 16 percent in FY 2013, significantly lower than 24 percent in FY 2010, the year before implementation. The Average Number of Apprehensions per Recidivist provides CBP with a measure of the workload associated with each recidivist and the agency’s ability to reduce the number of illegal re-entry attempts through the application of effective and efficient consequences over time. Additionally, by measuring the specific activity of the recidivist population when combined with other indicators, CBP validates the achievement of reducing illegal cross border activity. The Average Number of Apprehensions per Recidivist has continued to decrease for the third year in a row since the imple- Management’s Discussion and Analysis 15
Overview of CBP         Establish requirements for GEOINT         Develop interface with OIIL to transfer requirements and...
Overview of CBP mentation of the Consequence Delivery System, throughout CBP operations, beginning in January of FY 2011. Additionally, the consistent and systematic application of consequences to aliens that enter the United States illegally, multiple times, has contributed to the reduction to an average of 2.41 apprehensions per recidivist in FY 2013, significantly lower than 2.66 in FY 2010, the year before implementation. The following graphs show the changes from FY 2005 to FY 2013 in recidivism and average apprehensions per recidivist. Other Indicators: Drug Weight to Frequency Ratio: the average weight per seizure, or average seizure size, of marijuana on the Southwest border. •• Increases or decreases in the average size of illegal drug loads can indicate an important behavioral change by smugglers, and can occur independently of increases or decreases in the overall levels of illegal activity at the border. •• Increases in the average size of seized illegal drug loads may indicate: 1. A temporary spike caused by external pressure, such as increased military or law enforcement activity by the government of Mexico; or 2. An emerging trend. ◊◊ Barring external influence, when TCOs are comfortable sending larger loads of illegal drugs across the border or through checkpoints, they do so because they perceive that CBP enforcement efforts have a lower likelihood of interdicting these loads or that the loss of these loads will be more than offset by profits on other loads. ◊◊ When TCOs perceive that CBP has a greater likelihood of interdicting illegal drug loads or that the costs of losing large loads will be too great, the load size may be decreased to evade detection and reduce losses. Smaller shipments dilute profits by increasing risk, time, guides, “mules,” stash locations, drivers and vehicles needed to move more shipments. 16 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  mentation of the Consequence Delivery System, throughout CBP operations, beginning in January of FY 2011....
Overview of CBP Border Security Readiness One goal of the 2012–2016 Border Patrol Strategic Plan is operationally focused—Secure America’s Borders ­ and the other is mission support focused­­ Strengthen the Border Patrol. The two goals — , are interdependent—mission support activities enable and sustain Border Patrol law enforcement. In implementing its strategic plan, the Border Patrol plans to measure how its many resources and programs affect Border Patrol mission readiness. Land Border Integration: Office of Field Operations CBP is expanding innovative technologies and processes to further security and facilitation at land borders. The key to land border integration is the Triangle Strategy, which authenticates travelers entering and leaving the U.S. and those inspected at checkpoints away from the land ports of entry. This focuses CBP investments in outbound enforcement operations, inbound processing (vehicle and pedestrian), and Border Patrol checkpoint processing. Strategies include automated/advanced information, active lane management, mobile technologies, traveler communication, and traffic flow optimizations. Automated/Advance Information Inbound Radio Frequency Identification (RFID) Saturation. Nearly 22.8 million enabled RFID travel documents have been issued since January 2008. RFID travel documents, when used in CBP Ready Lanes created only for RFID document holders, reduce processing time compared to general vehicle lanes. In addition, Ready Lanes leverage travelers’ investments in RFID-enabled documents by ensuring, through CBP’s Active Lane Management (ALM), that Ready Lane wait times are significantly reduced compared to general lanes. During FY 2013, the average vehicle processing time was 50.9 seconds. Pedestrian Reengineering. Along the Southwest border, CBP has deployed kiosks that query pedestrian travel documents and a transit-style gate system that queries their documents and verifies biometrics prior to inspection. In FY 2013, CBP completed the deployment to El Paso, Texas (Paso Del Norte Bridge) with nine kiosks and to Otay Mesa, California, with three kiosks. In addition, CBP deployed pedestrian kiosks at Brownsville, Texas (Gateway Bridge), Nogales, Arizona (DeConcini), Calexico West, California, and Laredo, Texas (Convent Street Bridge), and San Ysidro, California. At these locations, CBP has launched pedestrian Ready Lanes for travelers with RFID-enabled travel documents. Through active lane management, CBP ensures that Ready Lane wait times are less than half the wait times of general pedestrian lanes. Automation at Outbound and Checkpoints. CBP is infusing technologies for outbound vehicle and Border Patrol checkpoint processing on the Southwest border. During FY 2013, CBP upgraded outbound locations on the Southwest border to include fixed license plate readers and the Outbound Primary Client, an application similar to the Inbound Vehicle Primary Client and mobile handheld devices. CBP also deployed similar technology at Border Patrol checkpoints. In FY 2013, the new outbound technologies on the Southwest border facilitated the seizure of more than $22.3 in currency, 81 firearms, 35,692 rounds of ammunition, and the arrest of nearly 2,447 wanted fugitives or violators of export laws. Management’s Discussion and Analysis 17
Overview of CBP  Border Security Readiness One goal of the 2012   2016 Border Patrol Strategic Plan is operationally focus...
Overview of CBP Active Lane Management. CBP’s traffic management policy established maximum wait time targets for inbound vehicle processing at all land border ports. Dedicated commuter lanes will always have the shortest wait time, followed by Ready Lanes, and lastly, the general lanes. When the dedicated commuter lane wait times are longer than 15 minutes, general lanes will be re-designated. If Ready Lane wait times are more than half as long as general lanes, additional lanes will be re-designated as Ready Lanes. CBP actively tracks violations of these targets. Active lane management’s existing initiatives, such as automated wait time measurement, Ready Lanes, Trusted Traveler Programs, and variable message signage, help port directors optimize resources to reduce wait times and encourage travelers to participate in dedicated commuter lanes and Ready Lanes. Mobile Technology Solutions. Handheld Devices augment operations by automatically capturing and querying license plate images, enabling document machine-readable zone swipes, and providing the results to officers or agents. CBP plans to expand this capability for inbound processing. CBP’s Enforcement Link Mobile Operations (ELMO) provides real-time tactical targeting data to field personnel via a smartphone or tablet device. The ELMO tool, for use by all CBP frontline personnel, has helped interdict undocumented aliens, narcotics, unreported currency, and weapons in the air, land, and sea environments. Variable Message Signage. CBP deployed variable message signs to nine ports of entry during FY 2013, raising the total to 33 ports nationwide. Variable message signage enables CBP to better manage traffic flow and provide information to travelers. The signs use Light-Emitting Diode (LED) technology and are positioned above each vehicle lane to inform travelers of processing mode (dedicated commuter lane, Ready Lane or general), lane status (open or closed), and processing procedures and policies. Border Security Deployment Program (BSDP). CBP continues to expand the BSDP integrated surveillance and intrusion detection system of more than 7,000 cameras and microphones, providing security, motion detection, and remote monitoring capabilities across every U.S. land port of entry. During FY 2013, CBP installed BSDP in the CBP commissioner’s situation room and the National Targeting Center, enabling CBP leadership to view, in real-time, events occurring at any U.S. land port of entry. Also in FY 2013, BSDP helped create an automated kiosk to manage pedestrian border crossings in Boquillas, Texas. Outbound. CBP ensures that travelers and commerce departing the U.S. comply with U.S. export laws and regulations. CBP’s outbound mission is to interdict the illegal export of unreported currency (including the proceeds from narcotics trafficking), firearms, ammunition, and stolen property; prevent international terrorist groups and rogue nations from obtaining sensitive and controlled commodities; arrest fugitives; and increase export compliance. CBP uses a risk-based strategy to inspect people, cargo, and conveyances departing the U.S. through all airports, seaports, land border crossings, and international mail/courier facilities. CBP conducts outbound enforcement actions while remaining unpredictable to smuggling organizations and facilitating the flow of legitimate trade and travel. CBP’s outbound layered enforcement strategy uses experienced CBP officers, currency/firearms 18 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  Active Lane Management. CBP   s traffic management policy established maximum wait time targets for inbou...
Overview of CBP canine teams; human and network intelligence, cooperation with foreign, U.S. federal, state, local and tribal law enforcement agencies, and various inspection tools. Enhancements to CBP license plate readers and outbound Automated Targeting Systems on the Southwest border will increase CBP’s capabilities to identify and interdict fugitives, persons of interests or contraband (such as illicit currency, firearms smuggling, or stolen vehicles) before they depart the U.S. In FY 2012, CBP deployed handheld wireless technology to detect and identify high-risk travelers at all Southwest border ports of entry. In FY 2014, CBP will deploy temporary outbound infrastructure at designated Southwest border crossings, including canopies for operations under inclement weather, improved lighting for night operations, traffic control devices for officer safety, and connectivity to CBP automated databases. Canine Enforcement Teams CBP has the largest and most diverse law enforcement canine program in the U.S. CBP canine officers and Border Patrol agents use specially trained canines to combat terrorist threats and interdict concealed persons, currency, firearms, agriculture products, narcotics, and other contraband at ports of entry, traffic checkpoints, at international mail facilities, commercial carrier hubs, and along the border between the ports of entry. Some CBP canines are trained to perform search and rescue missions. The Border Patrol Tactical Unit (BORTAC) Canine program has teams for use in tactical high-stress situations. The Border Patrol has a canine horse CBP canines are trained to detect illegal immigrants and contraband. patrol unit that allows the canine to work alongside the handler riding on horseback. CBP has more than 1,500 canine teams deployed nationwide. In FY 2013, these CBP Canine Teams were responsible for apprehending 55,604 illegal aliens, and seizing 403,478 pounds of narcotics. CBP has two canine training facilities, located in Front Royal, Virginia, and El Paso, Texas. In FY 2013, 378 students graduated from these academies as Canine Handlers or Canine Instructors; of those, 52 students were trained for the Government of Mexico and State/Local Law Enforcement Agencies. Non-Intrusive Inspection The Non-Intrusive Inspection (NII) and Radiation Detection Technology program allows CBP to scan a larger portion of inbound traffic for the presence of contraband in less time while facilitating legitimate trade and travel. At the end of FY 2013, CBP had 315 large-scale NII imaging systems deployed to air, land, and sea ports of entry and to Border Patrol checkpoints. These systems include large-scale X-ray and gamma-ray imaging systems, as well as small-scale, portable, and hand-held technologies. Through the end of FY 2013, CBP had deployed 1,397 radiation portal monitors, 2,812 radiation isotope identification devices, and 29,373 personal radiation detectors nationwide. Management’s Discussion and Analysis 19
Overview of CBP  canine teams  human and network intelligence, cooperation with foreign, U.S. federal, state, local and tr...
Overview of CBP CBP officers employ risk analysis, targeting information, and/or officer discretion to use NII to scan conveyances for contraband. When an anomaly is discovered, a more intensive inspection is conducted. Without NII systems, suspect cargo would require a more time-consuming manual examination that could negatively impact the flow of commerce. NII technology can make an image of a conveyance’s contents in minutes, while a manual inspection can take several hours. This equipment identifies a variety of illegal activity and contraband, including human smuggling, narcotics, weapons, and explosives. CBP scans cargo containers for radioactive materials as the containers pass through vehicleprocessing lanes at land border ports as well as when they are off-loaded from ships at seaports, at select airports, and all express consignment/mail courier facilities. Officers also use equipment to ensure personal safety and scan for identifying signs of radioactive materials as they inspect smaller vehicles, private aircraft, and shipments. Special tools, such as density meters and fiberoptic scopes, allow officers to peer inside suspicious containers. Finally, if necessary, containers are unloaded and opened for a more intensive manual inspection. Container Security Initiative Almost half of incoming U.S. trade (by value) arrives by containers onboard ships. In FY 2013, more than 11 million cargo containers arrived on ships and were off-loaded at U.S. seaports. Through the Container Security Initiative (CSI), CBP identifies and examines sea cargo that poses a risk for terrorism at foreign ports before they are shipped to the U.S. CSI operates at 58 foreign seaports, and the majority of the containerized maritime cargo destined for the U.S. originates in or transits through a CSI port. CBP receives the bill of lading and manifest data on sea cargo 24 hours before the containers are loaded on U.S.-bound vessels. Through partnerships with foreign governments, CSI deploys teams of CBP officials to work with their host nation counterparts to examine cargo that poses a terrorism risk. CSI extends the U.S. zone of security outward so that America’s borders are the last line of defense, not the first. In FY 2013, CBP officers reviewed 11,228,203 bills of lading and conducted 103,999 examinations of high-risk cargo in cooperation with host country counterparts. During the year, CSI continued to transition CSI temporary duty assignment personnel to permanent status and place resources at National Targeting Center-Cargo to reduce the number of CBP officers deployed. CSI will continue to evaluate and adjust personnel levels at CSI ports to achieve desired staffing levels. CBP’s intent for the CSI program in the next two fiscal years includes: •• ­ Becoming a hybrid of different operational models based upon individual ports and host governments; •• ­ Evaluating deployments and foreign footprint and aligning staff based upon the different operational models; •• ­ Continuing to work with host country counterparts that are willing to expand the scope of targeting to all threats to include narcotics, trade violations and transnational criminal activity; •• ­ Continuing to offer host counterparts both dual-use commodity training and targeting training. 20 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  CBP officers employ risk analysis, targeting information, and or officer discretion to use NII to scan co...
Overview of CBP Advance Passenger Information System The Advance Passenger Information System (APIS) is the single most critical element in CBP’s ability to identify dangerous individuals entering or departing the U.S. Through this system, CBP receives biographical and travel document information on passengers and crew arriving in and departing from the U.S. by air, sea and, in some cases, land (from commercial bus and rail operators). APIS data is received in advance of a traveler: boarding commercial and private aircraft that are arriving into or departing from the U.S., and departing onboard a commercial vessel and in advance of arrival on a commercial vessel entering the U.S. APIS allows CBP to screen all travelers against government watch lists and send a screening response to commercial air carriers and private aircraft operators. CBP receives advance information on passengers and crew that is used for automated law enforcement queries that seek matches to multi-agency law enforcement alerts, immigrant visas, and historical databases. The APIS process has been modified to incorporate Electronic System for Travel Authorization (ESTA) screening, to allow carriers to use the existing APIS processes to meet ESTA requirements. The CBP APIS document validation program verifies that travelers possess a valid document before they board an aircraft. CBP is currently piloting this program with carriers to verify all individuals who need a visa have a valid visa prior to traveling to the U.S. This initiative will facilitate arrival and departure for legitimate travelers, while preventing travelers with fraudulent or invalid documents from boarding aircraft at the foreign airport, extending border security beyond U.S. ports of entry. Electronic System for Travel Authorization The ESTA allows CBP to screen the information provided by Visa Waiver Program (VWP) travelers effectively to determine whether an alien presents a security risk and is eligible to travel to the U.S. under the VWP. CBP screens travelers against appropriate databases to identify potential threats to U.S. security. Inadmissible travelers are denied a travel authorization via ESTA and are unable to travel to the U.S. under VWP. Those denied via ESTA are given the opportunity to apply for a visa to the U.S. at the nearest U.S. Embassy or Consulate. Determining eligibility for VWP travel in advance of travel reduces the times that an VWP ineligible traveler arrives in the U.S. and is denied admission. In such cases, the traveler’s immediate return to the country of origin incurs additional expense for the carrier. Currently, the ESTA website appears in English and 23 other languages and has the full capacity to process the total volume of VWP travelers arriving to the U.S. ESTA became mandatory for all VWP travelers in January 2009. In January 2010, CBP began enforcing compliance by requiring airlines to verify ESTA status before boarding passengers. CBP is redesigning the ESTA website to make the application process easier and to facilitate payments on multiple applications at the same time. CBP is additionally, exploring new payment types. Management’s Discussion and Analysis 21
Overview of CBP  Advance Passenger Information System The Advance Passenger Information System  APIS  is the single most c...
Overview of CBP Admissibility Review Office CBP’s Admissibility Review Office (ARO) provides a consistent decision-making approach to admissibility and exercises discretion for inadmissible aliens under the Immigration and Nationality Act. The ARO works extensively with the Department of State and other agencies to determine whether inadmissible aliens can legally travel as non-immigrants with waivers. The office balances each alien’s reason(s) for travel with the seriousness of his or her ineligibility, weighed against any benefit or potential risk of harm to society if CBP were to admit the alien. ARO currently processes and adjudicates all waivers of inadmissibility that the State Department consular officers recommend worldwide. The ARO decides all high profile “seat of government” nonimmigrant waivers. It also processes and adjudicates all waiver applications submitted directly to CBP by eligible individual international travelers. Fraudulent Document Analysis Unit The Fraudulent Document Analysis Unit (FDAU) collects and analyzes fraudulent travel documents seized by CBP officers nationwide. The unit’s mission is to remove fraudulent travel documents from circulation and prevent the use of these documents by mala fide travelers attempting to enter the U.S. Since its inception, the FDAU has received more than 12,692 fraudulent documents. The FDAU manages the CBP Fraud Prevention Program, which increases the detection of fraudulent documents. The program gives CBP officers standardized training, high quality document examination equipment, and current information on fraudulent document use. The FDAU collaborates with the Department of State, the Transportation Security Administration and other federal, state and local law enforcement agencies to conduct document examination training. The FDAU also manages the Carrier Liaison Program, which increases commercial carriers’ effectiveness in identifying improperly documented passengers destined for the U.S. Since its inception, the program has standardized training materials for the carrier industry and has developed carrier and vessel inspection guides. DHS partners with the Netherlands, Canada, Australia, United Arab Emirates and INTERPOL (International Criminal Police Organization), for Edison TD, a global database to verify travel and identity documents. The FDAU is responsible for the input of travel and identity documents into the Edison TD database. Immigration Advisory Program / Joint Security Program The Immigration Advisory Program (lAP) is part of CBP’s pre-departure strategy to prevent terrorists, high-risk, and improperly documented travelers from boarding U.S.-bound commercial flights. The Joint Security Program (JSP) is a component of the IAP that partners CBP officers with host country law enforcement to disrupt terrorist travel and interdict the smuggling of narcotics, bulk currency, illegal migrants and fugitives. IAP focuses on screening U.S.-bound passengers. JSP engages targeted travelers arriving into and departing from the host country (both U.S.-bound and foreign-to-foreign). 22 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  Admissibility Review Office CBP   s Admissibility Review Office  ARO  provides a consistent decision-maki...
Overview of CBP lAP and JSP officers serve as on-site experts in U.S. entry requirements, provide document training to carriers, conduct onsite passenger assessment and are supported by advance targeting to identify potentially high-risk passengers without delaying, canceling or diverting flights. In FY 2013, IAP and JSP officers issued 3,501 “No board” recommendations to carriers and host governments regarding passengers bound for the U.S. IAP and JSP efforts to prevent terrorists, criminals, and inadmissible aliens from boarding aircraft have resulted in an estimated $8.75 million cost savings for CBP. National Agriculture Release Program The National Agriculture Release Program (NARP) is a national agricultural cargo release program developed by the U.S. Department of Agriculture Animal and Plant Health Inspection Service (APHIS), Plant Protection and Quarantine (PPQ) division, in cooperation with CBP. The NARP identifies high volume imports of regulated agricultural commodities that represent a low risk for exotic plant pest or pathogen introduction. APHIS-PPQ has determined that these high-volume, low-risk commodities can be inspected at reduced rates and would not compromise U.S. agricultural resources. Entry/Exit Transformation The Entry/Exit Transformation program (EXT) enhances immigration system integrity by assuring the identity of foreign nationals arriving and departing the U.S. EXT leverages innovative business process re-engineering and identifies capabilities to improve the entry/exit process. This enables CBP to process more travelers in less time with a higher degree of confidence in security and immigration integrity. Enhanced entry-exit matching will improve immigration enforcement operations for both CBP and Immigration and Customs Enforcement (ICE) and enable DHS to better manage the Visa Waiver Program. EXT will analyze the costs and benefits of new technology and business processes at selected ports of entry. It will enhance cost-effective biometric and biographic technologies at airports to inspect travelers entering the U.S. In 2013, working with the U.S. Office of Biometric Identity Management and Canadian governmental partners, EXT established electronic biographic traveler data sharing between the U.S. and Canada, allowing each to track the exit of foreign nationals. EXT and DHS Science and Technology established the Air Entry Exit Reengineering (AEER) project, which will identify and test cost-effective ways to use biometrics in the air entry/exit process. EXT began incorporating Mexican APIS biographic exit data into the Arrival and Departure Information System (ADIS). Other initiatives include an accuracy audit of the Air Passenger Information System exit manifest data and developing a Southwest border strategy for tracking the entry and exit of foreign travelers. National Targeting Center CBP created the National Targeting Center (NTC) to be the single point of reference for CBP anti-terrorism efforts. The NTC encompasses two facilities—the National Targeting Center-Passenger (NTCP) and the National Targeting Center-Cargo (NTC-C). Management’s Discussion and Analysis 23
Overview of CBP  lAP and JSP officers serve as on-site experts in U.S. entry requirements, provide document training to ca...
Overview of CBP National Targeting Center – Passenger NTC-P plays a vital role in identifying people who pose a national security concern overseas, at ports of entry and at Border Patrol checkpoints. While the vast majority of travelers are legitimate, NTC-P identifies and examines those who may be involved in terrorism or its attendant concerns (such as money laundering). NTC-P is staffed with permanent and temporary duty analysts, as well as interagency liaisons, to provide 24x7 tactical targeting and analytical research for CBP anti-terrorism efforts. NTC-P uses numerous automated enforcement data processing systems that detect and prevent terrorist access to the U.S., including the Automated Targeting System-Passenger (ATS-P) and the Targeting Framework. These systems allow NTC-P to screen passenger manifests and related information prior to U.S. arrival. The pre-departure targeting mission is to maximize the effectiveness of advanced technology, intelligence information, domestic and international partnerships, and well-trained human resources to effectively screen, review, identify, and prioritize passengers across all international modes of transportation, inbound and outbound. This includes: •• Targeting ATS-P pre-departures; •• Targeting outbound inspections; •• Adjudicating of all Department of Defense biometric matches to derogatory information; •• Supporting Immigration Advisory Program and Joint Security Program teams through targeting; •• Enhancing ATS-P entity resolution and infrastructure and improving quality of commercial carrier- provided passenger name recognition data; •• Improving the accuracy and integrity of the Terrorist Watch List in collaboration with the DHS National Counterterrorism Center; •• Coordinating with Department of State and ICE to automate vetting of U.S. non-immigrant visa application information prior to the applicant’s interview or visa issuance; •• Vetting of valid U.S. nonimmigrant and immigrant visas to identify changes in a traveler’s visa status in near real-time; •• Screening and vetting of ESTA applications; •• Implementing the National Targeting Strategy: ◊◊ Create a unified NTC; establish a joint NTC facility; ◊◊ Expand all-modes pre-departure targeting; ◊◊ National oversight of Passenger Analytical Unit policy. NTC-P collaborates with the Centers for Disease Control, Central Intelligence Agency, ICE, Federal Bureau of Investigations (FBI), Transportation Security Administration’s (TSA) Office of Intelligence, TSA Secure Flight, Federal Air Marshals, State Department Consular Affairs, Diplomatic Security Service, US Coast Guard, INTERPOL, and U.S. Citizenship and Immigration Services’ Fraud Detection and National Security unit. CBP and TSA have established a joint targeting workgroup to leverage CBP targeting capabilities with TSA authorities to screen high-risk passengers prior to boarding 24 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  National Targeting Center     Passenger NTC-P plays a vital role in identifying people who pose a nationa...
Overview of CBP a U.S.-bound conveyance. NTC-P has also instituted an International Targeting Center, with onsite representatives from the United Kingdom, Australia and Canada, to stop the smuggling of people, weapons, and contraband. National Targeting Center – Cargo NTC-C supports CBP’s anti-terrorism activities relating to cargo in all modes of transportation by targeting and coordinating examinations of high-risk shipments. NTC-C conducts continual strategic and operational analysis to identify and counter threats, such as narcotics smuggling, agricultural pests and diseases, trade-based money laundering, intellectual property rights violations, trafficking in illicit weapons, and other threats to U.S. physical and economic security. NTC-C operates 24x7, staffed by a cadre of highly experienced targeting analysts. NTC-C supports CBP’s ports of entry and field offices in the U.S. and at nearly 58 foreign locations. The NTC-C’s partnerships and liaisons with numerous federal agencies gains information to identify and examine cargo shipments that may threaten the U.S. The NTC-C also helps other countries to develop anti-terrorism security systems by hosting foreign customs officials under the International Fellowship Program. The NTC-C includes distinct operational units and activities to address specific threats and provide tailored support to CBP ports of entry, partner government agencies, and international partners. These include: •• Air Cargo Advance Screening – A collaborative effort between CBP, TSA and the commercial aviation and air cargo carriers to prescreen inbound air cargo. •• Container Security Initiative Targeting Support – An initiative that provides cargo targeting support for all 58 overseas CSI locations. •• International Cargo Targeting Fellowship Program – A collaboration with international partners to identify, prevent, deter, disrupt and manage risks in the cargo environment through dynamic information and knowledge sharing, by hosting foreign customs officials at the NTC-C. •• Field Support Unit (FSU) – The primary point of contact for ports of entry providing intake services to handle special research requests, high-risk commodity targeting, and screening of business and individual shippers who may have connections to terrorism or smuggling. •• Outbound Program – The targeting of exports to support counter proliferation efforts. •• Narcotics Unit – Conducting post-seizure analyses of all large-scale narcotics interdictions in the cargo environment and targets entities and addresses to identify potential air and sea narcotics shipments. •• Tactical Trade Targeting Unit (T3U) – Coordination of CBP’s tactical trade assets and close collaboration with ICE/Homeland Security Investigations to support investigations and increase interdictions domestically and abroad. •• Agricultural / Biological Terrorism Countermeasures – Targeting agricultural and biological shipments that have a nexus to terrorism or national security. Management’s Discussion and Analysis 25
Overview of CBP  a U.S.-bound conveyance. NTC-P has also instituted an International Targeting Center, with onsite represe...
Overview of CBP •• Rail Targeting Unit (RTU) – Collaboration between CBP and representatives of the rail freight industry to target and analyze rail shipments. Office of Air and Marine The Office of Air and Marine is the largest aviation and maritime law enforcement organization, and is a critical component of CBP’s layered enforcement strategy for border security. OAM uses its sophisticated fleets to detect, sort, intercept, track, and apprehend criminals in diverse environments at and beyond U.S. borders. Currently, 10 unmanned aircraft systems operate from three sites: Ft. Huachuca, Arizona; Corpus Christi, Texas.; and Grand Forks, North Dakota. Jacksonville, Florida, is slated to begin federated (nonlaunch and recovery) operations with other National Air Security Centers in FY 2014. As OAM’s unmanned Unmanned Aircraft System aircraft capabilities have grown over time, it has achieved increasing annual UAS flight hours, culminating in 5,117.5 UAS flight hours in FY 2013. OAM Transit Zone Initiatives OAM P-3 aircrafts have been an integral part of the successful counter-narcotic missions operating in Source and transit zones. Drug smugglers bound for Mexico and the U.S. with contraband from the source zone countries of South America pass through a 42 million-square mile cocaine transit zone. This includes independent nations, the Pacific Ocean, Caribbean Sea, Gulf of Mexico, and the seaboard approaches to the United States. In FY 2011, 88 percent of OAM-funded P-3 flight time was in direct support of the Joint Interagency Task Force–South, whose mission is to remove 40 percent of all documented cocaine movement through the transit zone by 2015. Air and Marine Operations Center The Air and Marine Operations Center (AMOC) is the nation’s only federal law enforcement center that coordinates interdiction operations in the Western Hemisphere. The AMOC was established in 1988 to counter the airborne drug smuggling threat. OAM has expanded the AMOC’s role in air and marine interdiction. Today, AMOC provides detection, monitoring, sorting, tracking, and coordination of law enforcement response to suspect airborne and maritime activity at, beyond, and inside our nation’s borders. The center has conducted unmanned aircraft and airspace security operations; responded to natural disasters, covert and overt electronic target tracking; and determined general aviation aircraft threat. AMOC has acted as the clearinghouse for information and mission tasking during special events, such as the Super Bowl, and national disasters, such as Hurricane Katrina. 26 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP         Rail Targeting Unit  RTU      Collaboration between CBP and representatives of the rail freight  i...
Overview of CBP The AMOC’s staff employs sophisticated systems and technology to identify existing and emerging homeland security threats. Detection specialists use live radar presentations overlaid on detailed topographical maps and aviation charts, extensive law enforcement databases, and tracking and communications networks to detect, identify, track, and coordinate interdiction of suspect targets. The Domain Awareness System combines Federal Aviation Administration (FAA) and Department of Defense radars, OAM airborne systems, and other sensors into a single facility, capable of the real-time tracking of more than 50,000 individual targets. Currently, AMOC accesses approximately 50 percent of FAA radars, and is awaiting FAA permission and authorization to share data from another recently upgraded FAA radar data distribution network. Out of approximately 10,000 air tracks active at any given moment, AMOC investigates more than 25,000 domestic and foreign flights per month to separate legal air traffic from potential violators and terrorists. Staff is then able to precisely direct law enforcement personnel to suspect targets. In late 2011, the AMOC incorporated Canadian radar feeds into its surveillance network, allowing for situational awareness well beyond the U.S. land border and enhancing cooperation between the U.S. and Canadian governments. OAM Partnerships Overcoming transnational threats requires teamwork with a range of partners. When constructing integrated layers of security, each layer may be the responsibility of a different entity, including governments as well as various commercial, regulatory, intelligence, diplomatic, military, and law enforcement entities. Integrating these disparate security layers involves unity of effort, shared responsibility, partnership, and mutual support. OAM uses its unique capabilities to support the efforts of its international partners, the larger DHS community, and other federal agencies, joint interagency task forces and local law enforcement. OAM’s National Air Security Operations, in coordination with the Joint Interagency Task Force – South, deploy P-3 aircrews in the source and transit zone to support the National Drug Control Strategy. As delineated in the National Interdiction Command and Control Plan, the task force is tasked with supporting the detection, monitoring, and interdiction of illicit trafficking within the prescribed joint operating area. OAM also supports interior operations with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. This support enables OAM to provide investigative and surveillance support throughout the U.S. In FY 2012, OAM established the Chicago Air Unit, which supports investigations conducted in the Chicago metropolitan area. OAM’s partnerships extend to the AMOC, which hosts OAM personnel as well as operations personnel and staff officers from the U.S. Coast Guard, Department of Defense, FAA, and the Mexican government. OAM also supports other federal agencies, such as the FBI. Management’s Discussion and Analysis 27
Overview of CBP  The AMOC   s staff employs sophisticated systems and technology to identify existing and emerging homelan...
Overview of CBP Enhancing Prosperity A secure U.S. border enhances American prosperity and adds value to our nation. When CBP expedites lawful trade, while preventing the transit of contraband, and facilitates legal travel, while impeding the illegal movement of people, we enable our economy to thrive. By managing risk, we can focus our law enforcement resources where they are most needed—on the goods and people who pose threats to our safety and prosperity—and thus strengthen security while facilitating legitimate commerce and travel. Trusted Traveler Program CBP operates four trusted traveler programs, Nothern Exchange with United States (NEXUS), Secure Electronic Network for Travelers Rapid Inspection (SENTRI), Fast and Secure Trade (FAST), and Global Entry. These programs provide dedicated inspection processes to expedite CBP processing for pre-approved, “low-risk” trusted travelers. The programs allow CBP to focus on unknown, potentially higher risk travelers. Applicants can apply online through CBP’s Global Online Enrollment System (GOES). All applicants are subject to background checks, collection of biometrics, and interview with a CBP officer. Participation in these fee-based programs is voluntary, and upon approval, membership is valid for five years. Once applicants are enrolled in the program, certain law enforcement checks are run every 24 hours. All trusted traveler members are issued Radio Frequency Identification (RFID) enabled cards for use at the land borders. NEXUS is a bi-national cooperative effort, partnering Canada Border Services Agency (CBSA) and CBP. The NEXUS program was implemented as a result of the Smart Border Declaration signed by Canada and the U.S. in December 2001. U.S. citizens and lawful permanent residents, as well as Canadian citizens and permanent residents, are eligible for NEXUS. Like all trusted traveler applicants, NEXUS applicants undergo a thorough background check. However, NEXUS members are interviewed by both CBP and CBSA officers. NEXUS offers expedited entry into both the U.S. and Canada in the land, air, and sea environments. Applicants who wish to take advantage of NEXUS Air must have their iris scan collected by CBSA. SENTRI is a land border management process that provides expedited CBP processing into the U.S. from Mexico through the use of dedicated commuter lanes. SENTRI is open to anyone who wants to apply; there is no citizenship requirement. SENTRI offers both a vehicle and pedestrian benefit. Members use their RFID-enabled card for identification and status validation upon arrival at the U.S. port of entry. The FAST program is a commercial clearance program for known low-risk shipments entering the U.S. from Canada and Mexico. This trusted traveler/trusted shipper program allows expedited processing for commercial carriers who have completed background checks and fulfill certain eligibility requirements. FAST vehicle lanes process cargo at land border ports of entry that serve commercial cargo. Participation in FAST requires that every link in the supply chain, from manufacturer to carrier to driver to importer, certified under the Customs-Trade Partnership Against Terrorism program. Among the key benefits of FAST enrollment are: access to dedicated lanes for greater speed and efficiency in processing transborder shipments; reduction in the number of 28 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  Enhancing Prosperity A secure U.S. border enhances American prosperity and adds value to our nation. When...
Overview of CBP inspections, resulting in reduced delays at the border; and priority, front-of-the-line processing for CBP inspections. Global Entry is a program operated by CBP to allow for the expedited clearance of pre-approved low-risk air travelers into the U.S. This program, while maintaining border security, allows members to use automated kiosks at designated airports to bypass the regular Passport Control queues, and enter the U.S. without routine CBP questioning (unless chosen for a selective or random secondary referral). U.S. citizens, U.S. lawful permanent residents, Mexican nationals, citizens of the Netherlands, and citizens of South Korea may apply for Global Entry. Fully reciprocal arrangements are in place with the Netherlands and South Korea. CBP is operating pilot programs with Germany, Qatar, and the United Kingdom, allowing limited numbers of their citizens to participate in Global Entry. CBP has signed joint statements with Australia, Israel, New Zealand, Panama and Saudi Arabia to develop programs with these countries. All NEXUS program members may use the Global Entry kiosks. U.S. citizens and U.S. lawful permanent residents enrolled in SENTRI may also use the Global Entry kiosks. The automated kiosks are located in the Federal Inspection Services area of each program airport. Through fingerprint biometrics and passport or lawful permanent resident card data, the Global Entry kiosk validates membership eligibility, performs real-time law enforcement database queries, and allows the traveler to complete CBP declaration questions via touchscreen. Global Entry operates at 44 U.S. ports, as well as all 10 Canadian preclearance sites, and both preclearance sites in Ireland. Trusted Trader Program The Customs-Trade Partnership Against Terrorism (C-TPAT) program is a vital component in CBP’s layered cargo enforcement strategy that safeguards global trade by strengthening supply chain security. C-TPAT members commit to ensuring that their supply chains meet or exceed C-TPAT’s minimum-security criteria and to verifying that their supply chain business partners also comply with the same security guidelines. In exchange, C-TPAT partners receive various types of incentives. Once a company becomes a certified partner in the program, C-TPAT’s security specialists validate the company’s supply-chain security procedures. Validation is required under the Security and Accountability For Every (SAFE) Port Act of 2006 and is essential to verify the company’s commitment to supply chain security. In FY 2013, C-TPAT completed the validation/revalidation of 2,325 companies. C-TPAT continually looks for ways to expand the program. Some C-TPAT’s accomplishments in FY 2013 include: •• ­ Improved efficiency and reduced redundancy with other government agencies through information sharing and foreign validation activities; ◊◊ C-TPAT implemented the initial strategy for TSA and CBP to create a joint trusted shipper program for inbound international air cargo; ■■ CBP and TSA completed six joint validations during 2013. The teams conducted side-by-side evaluations of the programs and developed solutions when gaps were evident. Management’s Discussion and Analysis 29
Overview of CBP  inspections, resulting in reduced delays at the border  and priority, front-of-the-line processing for CB...
Overview of CBP ■■ TSA and CBP plan to complete a memorandum of agreement in FY 2014 whereby TSA will complete all C-TPAT air carrier foreign validation site visits, resulting in a more efficient process. •• ­ Increased the number of C-TPAT participants over the next 5-7 years without compromising security standards; ◊◊ As of Sept. 30, 2013, C-TPAT had 10,662 program participants. ◊◊ Program expansion efforts: ■■ ■■ Developing the eligibility requirements and security criteria for exporters. Exploring the addition of new entities such as: Foreign Trade Zones, domestic transportation hubs, bonded warehouses, and bonded highway carriers. •• ­ trengthened scrutiny of future and current members. During the validation process, C-TPAT tested S company security procedures and gathered evidence of implementation; and •• Linked various international industry partnership programs through mutual recognition and technical assistance training. ◊◊ C-TPAT completed Phases 1 and 2 of the mutual recognition process with Israel’s authorized economic operator program. Phase 3, the signing of a mutual recognition arrangement, is tentatively scheduled for early FY 2014. ◊◊ C-TPAT completed Phase 1 of the mutual recognition process with Mexico in May 2013, and is working towards completion of Phase 2 of the joint work plan. ◊◊ C-TPAT completed Phase 1 of the mutual recognition process with China in August 2013. C-TPAT and China began joint validations in September 2013. ◊◊ C-TPAT has begun the mutual recognition process with India by comparing each program’s security criteria. ◊◊ C-TPAT is assisting in the establishment of Brazil’s authorized economic operator program with a goal of mutual recognition. 30 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP          TSA and CBP plan to complete a memorandum of agreement in FY 2014 whereby TSA will complete all C...
Overview of CBP Office of International Affairs CBP’s Office of International Affairs (INA) helps CBP to fulfill its international mission of securing the global supply chain and the global travel network. This requires CBP coordination with the private sector, foreign governments, and other federal agencies. Establishing relationships and building capacity at the international level allows CBP to identify, intercept, and neutralize threats to the U.S. before they reach the country’s borders. CBP implements these international programs through INA. The following flow chart illustrates how CBP’s international programs create and foster these relationships. Expedi'ng  Secure  Flows  of  Trade  and  Travel     CAPACITY  BUILDING   PROGRAMS ADVANCED  INFORMATION   SHARING  PROGRAMS TRUSTED  PARTNER   PROGRAMS   InternaNonal  Visitor   Pre-­‐Clearance  /     Advance  Passenger  InformaNon   System  (APIS)   Global  Entry  /     Free  and  Secure  Trade  (FAST)     Technical  Assistance  and   Training   ImmigraNon  Advisory  Program   (IAP)  /     Joint  Security  Program  (JSP)   Electronic  System  for  Travel   AuthorizaNon  (ESTA)   Advice  and  Assessments   Container  Security  IniNaNve  (CSI)  /   Secure  Freight  IniNaNve  (SFI)   Northern  Exchange  with  United   States  (NEXUS)  -­‐  Canada   Exchanges  and   Fellowships   Automated  Commercial   Environment  (ACE)     Secure  Electronic  Network  for   Travelers’  Rapid  InspecNon   (SENTRI)  -­‐  Mexico   AFaché  and  Advisor   Engagement   Automated  TargeNng  Systems   (ATS)   Customs  –  Trade  Partnership   Against  Terrorism  (C-­‐TPAT)     TexNle  ProducNon   VerificaNon  Teams  (TPVT)   Customs  Mutual  Assistance   Agreements  (CMAA)   Authorized  Economic  Operator   (AEO)  /  Mutual  RecogniNon   Arrangements  (MRA)   Intellectual  Property   Rights  (IPR)  OperaNons   Free  Trade  Agreements  (FTA)   Centers  of  Excellence  and   ExperNse  (CEE)     Importer  Self  Assessment  (ISA)     Reducing Risk International Partnership Programs INA administers several international partnership programs including, but not limited to, the AsiaPacific Economic Cooperation, the International Law Enforcement Academies, the Colombia-Andean Initiative, the Export Control and Border Security Program, Reconstruction and Stabilization Assistance, and the World Customs Organization. The key CBP objectives for these international partnership programs are to: • Develop, promote, and implement CBP’s international strategy; • Negotiate international agreements and other instruments, such as bilateral agreements and letters of intent for CBP; Management’s Discussion and Analysis 31
Overview of CBP  Office of International Affairs CBP   s Office of International Affairs  INA  helps CBP to fulfill its in...
Overview of CBP •• Advance CBP’s international policy initiatives in international forums; and •• Develop and maintain strategic international relationships. INA strives to extend U.S. borders by implementing programs and initiatives that promote anti-terrorism efforts, global border security, non-proliferation, export controls, legal immigration, capacity building, and facilitating legitimate trade. INA focuses on international cooperation and strengthening multi- and bi-lateral relationships to achieve international agreements and other joint efforts. Capacity Building Capacity building is a holistic process of training, mentoring, and providing resources to a partner administration that results in sustainable changes. It is a long-term, comprehensive, and repetitive process to improve the abilities of a CBP partner administration through the development or acquisition of skills, tools, processes and resources. These efforts improve international relationships and enhance border security by supporting best practices and infrastructure development that will allow foreign partners to keep pace with global changes and secure the safe flow of people and goods. Capacity building and technical assistance programs have equipped international customs administrations with the tools to control their own borders more effectively, especially in the Western Hemisphere (Mexico and Panama). Enlisting the support and participation of the trade industry has helped address trade violations, ushering in an era of expedited commerce and trusted shipper and traveler programs. CBP recognizes that wherever our engagement is strongest overseas, our programs are also markedly more effective and successful. The Customs Mutual Assistance Agreement (CMAA) is one of the key foundational milestones that further initiatives can be built upon, such as CBP trusted partner programs. CBP’s international capacity building efforts are focused on the following areas: international narcotics and crime control, non-proliferation, export control and related border security, commercial enforcement operations, and private sector partnership programs. Each program begins with a border security assessment designed to determine the type of training and/or equipment needed to improve operations within the host foreign country. Additionally, the assessments provide the host government with a better understanding of its border control vulnerabilities. During FY 2013, CBP provided 140 capacity building sessions for foreign partners including 28 courses at the International Law Enforcement Academy, and provided capacity building support in more than 57 countries. Trade Transformation CBP is moving forward with Trade Transformation initiatives to enhance the Nation’s economic competitiveness by creating efficiencies that drive down costs for business and Government while also enhancing the efficacy of CBP’s enforcement protocols. Central to CBP’s work on Trade Transformation is the strength of partnerships with the private sector. The ability to co-create mutually benefi- 32 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP         Advance CBP   s international policy initiatives in international forums  and        Develop and m...
Overview of CBP cial strategies with the trade community has proven to be a successful approach for CBP to develop key trade initiatives. Examples of Trade Transformation initiatives include Centers of Excellence and Expertise and Simplified Processes. The establishment of the Centers of Excellence and Expertise is a transformative effort to focus on maintaining a strong and competitive U.S. economy through innovative trade management techniques. Centers align CBP trade resources by industry and manage importers by account, rather than by individual transaction. By virtually linking trade personnel across the country into multidisciplinary teams that are industry based, CBP can more effectively facilitate trade and develop a deeper understanding of industry practices, risk areas, and enforcement issues. Ten Centers are now open and conducting entry summary activities for participating importers: •• Agriculture & Prepared Products (Miami) •• Apparel, Footwear & Textiles (San Francisco) •• Automotive & Aerospace (Detroit) •• Base Metals (Chicago) •• Consumer Products & Mass Merchandising (Atlanta) •• Electronics (Los Angeles) •• Industrial & Manufacturing Materials (Buffalo) •• Machinery (Laredo) •• Petroleum, Natural Gas & Minerals (Houston) •• Pharmaceuticals, Health & Chemicals (New York) The Simplified Process Joint Industry-CBP Workgroup was established in April 2011 with the goal of formulating viable solutions to diminish the administrative burden related to importing into the United States by reducing duplicative data elements required to obtain the release of products for cargo. The ultimate objective is to streamline the release of goods and enhance cargo security by segregating the filing of transportation information from the filing of entry information. The Automated Commercial Environment (ACE) Cargo Release (formerly also known as Simplified Entry) test pilot program for the air mode of transportation is operational at 16 airports for 20 filers. More than 159,000 ACE Cargo Release entries have been filed for more than 1,100 importers, as of September 2013. CBP established the Broker Workgroup in January 2011, in partnership with the National Customs Brokers and Forwarders Association of America, to address the challenges of 21st century commerce. Importer Self-Assessment The Importer Self-Assessment program (ISA) allows qualified importers to assume the responsibility for self-monitoring their compliance in exchange for less intrusion by CBP. The program goal is for the importer to maintain a system of internal control that will mitigate risk while achieving a high level of trade compliance. CBP is exploring new initiatives to broaden the scope of the self-assessment program and provide additional benefits to its members. Some of these initiatives are: Management’s Discussion and Analysis 33
Overview of CBP  cial strategies with the trade community has proven to be a successful approach for CBP to develop key tr...
Overview of CBP •• The ISA-Product Safety test pilot, announced in October 2008, is a partnership of CBP, the Consumer Product Safety Commission (CPSC), and importers to maintain a high level of product safety compliance. Any importer who participates in the ISA program may apply for the pilot. •• Under the Beyond the Border initiative, introduced in February 2012, the U.S. and Canada use a common framework for trusted trader programs. ISA and Canada Self-Assessment (CSA) have completed a side-by-side comparison of trusted trader programs. The study indicated similarities in vetting and evaluation, through differences in member benefits. ISA and CSA met jointly with stakeholders to identify more ways to expedite border processes. •• On April 17, 2013, CBP announced in the Federal Register, a Broker ISA Pre-Certification pilot to certify and provide guidance for qualified brokers to conduct ISA evaluations and reports. The certified brokers perform a comprehensive review of an ISA applicant’s package and evaluate the importer’s system of internal controls before presenting the ISA candidate to CBP. •• CBP published a Federal Register notice announcing ISA program changes. The program now allows importers, who have successfully completed a Focused Assessment audit and have been found to pose an acceptable risk to CBP, eligible to transition into the ISA program without further review, provided they agree to fulfill the program requirements. Enforcement of Anti-dumping and Countervailing Duty Laws CBP’s Re-Engineering Dumping (RED) team, which is composed of offices throughout CBP, actively develops ways to strengthen CBP’s Anti-dumping and Countervailing Duties (AD/CVD) enforcement. The group focuses on transshipment, under-collections, the role of shell companies, and other gaps, vulnerabilities, and challenges. The RED Team seeks to strengthen AD/CVD enforcement, reduce the AD/CVD administrative burden to free up resources for enforcement, and increase communication with the Department of Commerce, ICE Homeland Security Investigations (HSI), and the trade community. The accomplishments of the RED team include: •• Creation of policy guidelines and factual scenarios for the CBP field to increase the use of Single Transaction Bonds (STB) to stop AD/CVD evasion and reduce the uncollectible amount of AD/CVD; •• Development of and implementation of procedures to proactively enforce AD/CVD cases, and to prepare CBP to enforce new AD/CVD orders; •• Establishment of trade intelligence groups with the steel and seafood industry to enhance CBP’s AD/CVD enforcement; •• Conducted of the first joint CBP and Commerce training webinar to CBP field staff on an AD/CVD order, and planned other joint webinars; and •• Updated an automated scripting program to complete no-change AD/CVD liquidations. Protection of Intellectual Property Rights Intellectual Property Rights (IPR) are a top enforcement priority. CBP launched the first ever joint IPR enforcement operation with China Customs, and also conducted operations with French Customs and with Asia-Pacific Economic Cooperation members. In addition, CBP handled forfeitures for web- 34 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP         The ISA-Product Safety test pilot, announced in October 2008, is a partnership of CBP, the  Consum...
Overview of CBP sites closed by ICE for trafficking in counterfeit goods. IPR seizures led to arrests, indictments, and prosecutions. Internet sales of IPR infringing merchandise have dramatically increased imports of small packages via mail and express carriers. IPR enforcement for these small packages requires substantial CBP resources because the same due process applies to these small seizures as to seizures of container loads of counterfeit goods. To enhance IPR enforcement capability at ports of entry, CBP conducted integrated IPR field training on legal authorities, targeting, and policy at high-risk ports. CBP also deployed new authentication tools to streamline IPR infringement determinations and facilitate the quick release of legitimate shipments. CBP launched IPR strike units, multi-discipline CBP and ICE IPR enforcement teams to deter IPR infringements through penalties and prosecutions. CBP is a partner in the National IPR Coordination Center and is the primary source of referrals of IPR violations to the IPR Center for criminal investigation by ICE. Advancing Import Safety CBP reinforces its commitment to import safety by working with other government agencies to prevent unsafe products from entering the U.S. CBP plays an essential role in interagency import safety by promoting risk management strategies and developing uniform enforcement strategies, such as detention, seizure, and destruction policies. Fostering interagency coordination, CBP chairs the Border Interagency Executive Council, which is the agencies’ foundation for enhancing import safety and trade enforcement. Participating agencies analyze operations, policy, and regulatory powers to identify efficiencies and synergies. CBP agriculture officers inspect flowers for dangerous exotic pests and diseases. CBP also works with other agencies to expand the Import Safety Commercial Targeting and Analysis Center (CTAC). Currently the center hosts eight partner agencies, including the Consumer Product Safety Commission, ICE, Food Safety Inspection Service (FSIS), Animal and Plant Health Inspection Service, Environmental Protection Agency (EPA), Pipeline and Hazardous Materials Safety Administration, and the National Highway Traffic Safety Administration (NHTSA), and CBP. All the agencies together target imports that should be examined for safety violations. CTAC has launched two national targeting programs to address import safety. The First-Time Manufacturer Program addresses the elevated risk associated with new foreign manufacturers. The Supply Chain Program addresses known risk with foreign manufacturers who have previously violated Management’s Discussion and Analysis 35
Overview of CBP  sites closed by ICE for trafficking in counterfeit goods. IPR seizures led to arrests, indictments, and p...
Overview of CBP import safety laws. Dozens of illicit and unsafe vehicles, including illegally imported vehicles, have been kept off American roads as a result of joint CTAC targeting. CTAC also met with international customs representatives to improve customs practices. Attachés from Canada, Germany and Turkey continue working to establish a unified approach to protect the health and safety of their citizens through coordinated customs enforcement. Trade Agreements Enforcement CBP is enforcing trade agreements that provide duty-free or reduced-duty access to the U.S. market. The U.S. currently has free trade agreement in force with 20 countries and several preferential trade programs. CBP has strengthened field expertise through focused training for import specialists, auditors, and employees of the Centers of Excellence and Expertise. The small investment in training resulted in 1,497 invalidated trade preference claims with a revenue recovery of $5.6 million during FY 2013. In FY 2013, CBP finalized its interim regulations in the Code of Federal Regulations (title 19) on the U.S. – Peru Free Trade Agreement as well as the U.S. – Korea Free Trade Agreement. Enforce Trade Law and Collect Revenue CBP collects duties, taxes, and fees tied to U.S. cargo imports. CBP deposits, reconciles and manages collections for more than a dozen government agencies, collecting $40.9 billion in 2013. CBP processes associated trade payments that relate to refunds of duty, drawback, and distribution of funds collected related to specific trade programs, such as payments to wool manufacturers and the Continued Dumping and Subsidy Offset Act of 2000. CBP also manages surety bond documents, helping to secure trade revenue. Mitigating Revenue Risk To stop the circumvention of U.S. trade laws, CBP identifies high-risk areas and acts to enforce U.S. trade laws and collect revenue. CBP uses automated systems to evaluate entry reviews, perform post audits and examine cargos. CBP’s divisions on Antidumping and Countervailing Duties and Revenue provide referrals to CBP’s Regulatory Audit Division for investigation of noncompliance. If criminal activities are suspected, cases are referred to Homeland Security Investigations. CBP coordinates internally and with other government agencies to apply enforcement actions consistently. Events are uniformly recorded, results are integrated, and trade information is shared among partners. CBP provides field personnel with the knowledge, tools, and training to identify and address violations related to priority trade issues, including AD/CVD, Import Safety, Intellectual Property Rights, Textiles and Wearing Apparel, and Trade Agreements. CBP’s fines, penalties, and forfeitures officers and seized property specialists take enforcement actions to punish non-compliant importers and deter future non-compliance. 36 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  import safety laws. Dozens of illicit and unsafe vehicles, including illegally imported vehicles, have be...
Overview of CBP Implementation of the National Annual Audit Plan The Office of International Trade’s Regulatory Audit (RA) conducts post-entry compliance audits of large multinational companies and audits of various entities active in importing merchandise into the United States. RA examines the records, accounts and internal controls of entities to ascertain the accuracy and potential liability for duties, fees and/or taxes due to the U.S. government. Each year RA develops a National Annual Audit Plan (NAAP) to respond to DHS and CBP priorities and to provide critical information to stakeholders. In FY 2013, the NAAP was developed to provide audit support for trade fraud, facilitation, enforcement initiatives, import safety, and trade partnerships. The NAAP incorporated Priority Trade issues including Antidumping/Countervailing Duties, Intellectual Property Rights, Import Safety, Trade Agreements and Textiles/Wearing Apparel. The NAAP also supported user fee collections and Partner Government Agencies. In FY 2013: •• The NAAP was comprised of 679 assignments. There were 424 assignments completed and 266 assignments were in progress. •• Recommended revenue recoveries totaled $132.8 million. •• Action officials accepted revenue recoveries totaled $185.9 million (included penalties and interest). •• Collections totaled $89.4 million (included duties, fees, interest, and penalties, paid to the Federal government for current and prior audits.) Regulations and Rulings The Office of International Trade’s Regulations and Rulings (RR) provides legal guidance for CBP’s trade operations and much of CBP’s border operations. Through its administrative decisions and rulings role, RR provides binding uniform guidance for the application of customs and trade laws. By issuing final administrative decisions and advice on major penalty and other civil enforcement matters, RR ensures impartial law enforcement while facilitating trade. Providing and enforcing uniform guidance adds value to national security by placing all stakeholders on a level playing field and punishing violators of the law. In its regulatory development role, RR provides the legal and administrative framework for CBP’s trade and border security operations and programs. These legal tools streamline trade and CBP’s ability to protect the homeland. Management’s Discussion and Analysis 37
Overview of CBP  Implementation of the National Annual Audit Plan The Office of International Trade   s Regulatory Audit  ...
Overview of CBP Definition of Form I-94 to include electronic format On March 27, 2013, CBP published an interim final rule titled “Definition of Form I-94 to Include Electronic Format.” CBP issues the Form I-94 to certain aliens and uses the Form I-94 for various purposes such as documenting status in the United States, approved length of stay, and departure. CBP generally issues the Form I-94 to aliens at the time they lawfully enter the United States. The rule amended the DHS regulations (at title 8 of the Code of Federal Regulations) to add a new definition of the term “Form I-94,” which includes the collection of arrival/departure and admission or parole information by DHS, whether in paper or electronic format. The definition also clarified various terms that are associated with the use of the Form I-94 to accommodate an electronic version of the Form I-94. The rule also added a valid, unexpired nonimmigrant DHS admission or parole stamp in a foreign passport to the list of documents designated as evidence of alien registration. These revisions to the regulations will enable CBP to transition to an automated process whereby CBP will create a Form I-94 in an electronic format based on passenger, passport and visa information CBP currently obtains electronically from air and sea carriers and the Department of State as well as through the inspection process. Due in part to the substantial costs savings that will result when this rule is implemented, this interim final rule was a very high priority for CBP. Administrative Efficiency CBP meets the challenge of maximizing the agency’s resources, managing thousands of employees in hundreds of worldwide locations. The agency applies advanced technology and innovative processes to reduce costs and expand border security. These efficiencies add bottom-line value to U.S. prosperity and security. The Office of Administration The Office of Administration (OA) is responsible for all aspects of financial management including accounting, budget, financial systems, procurement, facilities and engineering, asset management, investment management, and oversight of all CBP financial operations. As the leader of stewardship for the agency’s resources, OA plays a critical role to ensure CBP is planning strategically and responsibly for the resources required to successfully execute the agency’s mission. This is especially imperative as the federal government continues to face relative austerity, requiring CBP to become more efficient and limit lower priority activities. OA partners with CBP mission support offices, the Department, and external public and private sector stakeholders to deliver sound, mission-enabling business solutions that ready CBP personnel to succeed at protecting the Homeland and fostering economic security. OA also administers processes, delivers services, and manages programs for: 38 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  Definition of Form I-94 to include electronic format On March 27, 2013, CBP published an interim final ru...
Overview of CBP •• CBP employee payroll payments, vendor payments, travel, and employee relocations; •• Preparation and execution of the CBP budget, managerial cost accounting reports, and financial information and metrics; •• Procurement of supplies, equipment, and services that enable CBP mission and oversight of all contractual agreements; •• CBP’s core financial accounting and annual financial reporting programs; •• CBP real property portfolio, vehicles, uniforms, and personal property assets; •• Transportation services within the National Capital Region, a nationwide transportation incentive program, and parking; •• National mail management, forms, and printing and graphics design; •• CBP efficiency and business improvement initiatives; •• Strategic alignment and performance of CBP mission operations and support programs and investments; and •• Collection of $40.9 billion in revenue for the agency, Treasury, and other government agencies. Below are some examples of OA’s FY 2013 efforts to enhance mission performance: Achieved Financial Management Process Efficiencies •• Designated a federal government shared service provider to DHS components for financial management services demonstrating CBP’s qualification as a center of excellence. •• Improved the monitoring and management of a national overtime and premium pay by providing staff coverage at the ports to avoid increases in wait times. •• Drove modernization of revenue systems and processes in support of Trade to enhance revenue collection internal controls. •• Established a purchase request review process providing CBP with a strategic view and decision criteria for evaluating planned procurements resulting in cost savings. •• Engaged in shifting to the use of contract types that are more advantageous to the government and posting summaries for key CBP procurements on CBP.gov. •• Facilitated vendor outreach events to focus on small business opportunities, connecting industry with the government, and agile information technology. Strengthened Agency Planning, Performance, Risk and Accountability Practices •• Integrated disparate resources plans to provide a deliberate and transparent linkage between payroll, spend, and budget plans, enabling CBP leaders to manage and report against a single, comprehensive view of their resource landscape, proactively target spending reductions and efficiencies, monitor payroll projections to avoid shortfalls to meet staffing mandates, and ensure strategic investment of resources to critical, high priority areas. •• Developed a cost and performance model to evaluate frontline personnel hiring processes in a manner to inform resourcing decisions and investment prioritization. Management’s Discussion and Analysis 39
Overview of CBP         CBP employee payroll payments, vendor payments, travel, and employee relocations         Preparati...
Overview of CBP •• Developed a dashboard that allows for a comprehensive view of CBP’s financial statement audit findings and remediation performance to inform future corrective action planning and other risk management-related activities. •• Received an ‘Achieves Excellence’ with special acknowledgement for contributions to the Chief Acquisition Officer Affordable Readiness iTeam, designed to allow DHS to do more with fewer taxpayer dollars through collaboration, integration, best practice adoption, innovation and leveraging successes. •• Automated conference processing, approval and reporting processes for all of CBP through enhanced internal controls and policy development. Enhance Timeliness and Adaptability of Real and Personal Property Solutions •• Achieved a space reduction in the CBP National Capital Region portfolio by implementing mobile work space, technology and policy that lowered energy and environmental resource usage, while reducing CBP operating costs. •• Implemented innovative Land Port of Entry (LPOE) prototype designs allowing CBP to modernize more LPOEs than originally planned. •• Redesigned the CBP Uniform Program, to increase quality, service and stewardship by strengthening internal controls, defining processes to perform data modeling and forecasting of uniform needs and establishing an inventory tracking system, uniform testing improvements, and a complete revision and streamlining of specifications. •• Initiated the Personal Property Management Oversight Board (PPMOB) to adjudicate specific cases of high-risk asset losses to include root cause and trends analysis, and recommendation of corrective actions. The Office of Human Resources Management The Office of Human Resources Management (HRM) provides centralized human resources support to approximately 60,000 CBP employees nationwide and overseas. HRM services support leadership, the operational requirements of program offices, and the needs of CBP employees. HRM’s operational scope is broad and addresses challenges including: operating in a tight fiscal environment, competing for talent while maintaining congressionally mandated staffing levels, and delivering quality services with higher workloads. HRM delivers customer-centric support, services, and solutions responsive to changing mission requirements. HRM also delivers service by: •• Recruiting, assessing, and hiring candidates to maintain a highly skilled, diverse, and mission- ready workforce; •• Leveraging technology to improve human resources business processes and service delivery; •• Providing medical, benefit, retirement, and work life advisory services; •• Promoting a safe and healthy work environment; 40 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP         Developed a dashboard that allows for a comprehensive view of CBP   s financial statement audit  f...
Overview of CBP •• Facilitating organizational effectiveness, including integration and reorganization efforts; •• Administering and guiding implementation of human capital policies; and •• Managing CBP’s labor and employee relations programs. Below are some examples of HRM’s FY 2013 efforts to enhance mission performance: •• Modified the application and written test registration steps for frontline entry-level job announcements by introducing a pretest as part of the application process. Individuals gained a better understanding of the test content and difficulty before completing their application; CBP avoided testing costs for the large number of applicants who began but did not complete their application. •• Partnered with the Offices of Internal Affairs and Chief Counsel to revise suitability questions in frontline entry-level job announcements. This allowed CBP to screen out unsuitable applicants early in the pre-employment process, reducing costs and focusing limited resources on the best applicants. •• Implemented electronic collection and storage of applicant data, eliminating the need for paper systems. •• Fully implemented USA Staffing Onboarding Manager at both hiring centers to benefit from OPM’s e-Gov initiative to reduce costs and improve services. •• Expanded the use of popular technologies and social media, e.g., podcasts, webinars, LinkedIn, Facebook, Twitter and YouTube, to communicate information about CBP’s mission, career opportunities, and job openings. •• Restructured the Workers Compensation Program to establish an overall strategic case management process to reduce chargeback costs and return CBP employees to work who are injured on duty. This included the adoption of Nurse Case Management services for cases beginning in FY 2014. HRM is improving customer service processes using Information Technology (IT) and Business Process Management, a flexible approach to design and implement process workflows. The Human Resources Business Engine (HRBE), a web-based workflow engine, supports HRM’s pre-employment processes in the Indianapolis and Minneapolis Hiring Centers. In FY 2013, HRM improved program efficiencies by implementing: •• HRBE-Performance Management to automate the non-executive annual performance process; •• HRBE-Voluntary Early Retirement Authority to project and track voluntary retirement eligibility; •• HRBE-Internal Affairs Bi-Directional Feed to replace a mainframe system and gain efficiencies in the background investigation process; •• HRBE-Employee Contact and Accountability Process for personnel notifications in case of disaster; and •• HRBE-Personnel Action Request Tracking System, which replaces another mainframe system and will be deployed fully in FY 2014. Management’s Discussion and Analysis 41
Overview of CBP         Facilitating organizational effectiveness, including integration and reorganization efforts       ...
Overview of CBP These enhancements offer cost savings and fully support CBP’s business transformation efforts for greater efficiency. Workforce Development The Office of Training and Development (OTD) is responsible for formal training and education programs for employees world-wide and for use of force, canine, and leadership development programs. With a training enterprise comprised of two training academies and three training centers, OTD delivers instructor-led classroom training as well as online training courses through CBP’s Virtual Learning Center. OTD ensures that all training efforts support the CBP mission and strategic goals and meets the needs of a diverse and dispersed workforce. OTD establishes standards and policies for designing, developing, delivering, and evaluating training. The Office directly executes career development programs, basic and advanced training to all occupations (e.g., anti-terrorism training to CBP Officers, Border Patrol Agents, and other occupations), and management and executive development programs. OTD develops and implements the annual training plan for the agency. OTD defines and implements evaluation measures, data collection processes, and inspection methods for ongoing assessment of all CBP training programs. OTD is responsible for the continuous improvement and expansion of CBP learning capabilities. Resource Optimization Strategy CBP’s integrated Resource Optimization Strategy for the Office of Field Operations has three main components (1) optimize current business processes, (2) accurately identify staffing requirements, and (3) explore alternative funding strategies to increase revenue sources supporting staffing. To ensure business process efficiency, the first component of the strategy contains a series of business transformation initiatives. These involve reassessing core processes, incorporating technology and business process enhancements, assessing law enforcement staffing, and developing automation. CBP’s Workload Staffing Model (WSM) is the tool at the core of the second component—accurately informing staffing decisions at air, land and seaports. The WSM uses a data-driven methodology to identify staffing requirements. The WSM accounts for all business processes required of CBP officers and the time required to complete those processes. The WSM identifies the personnel necessary to accomplish the CBP mission and estimates future staffing requirements for new or enhanced facilities, technology deployments, and growth in trade and travel. The final component of the strategy is exploring alternative funding to increase revenue to support staffing. DHS is pursuing several legislative proposals as alternative funding options for future staffing needs. These proposals include (1) increasing traveler fees, (2) maintaining authority to be reimbursed by stakeholders for new or expanded services and (3) investing in modernization initiatives such as mobile technology and kiosks for travelers at airports and land border ports of entry. 42 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  These enhancements offer cost savings and fully support CBP   s business transformation efforts for great...
Overview of CBP Information and Technology CBP’s network infrastructure and data center capabilities are the information and technology backbone of CBP systems, which ensure delivery of critical information. The IT systems provide effective information sharing among trade and law enforcement agencies. CBP’s IT infrastructure serves a wide variety of government agencies focused on protecting the American people. The IT systems assist CBP frontline officers and agents in identifying potential threats, including terrorists, weapons of mass destruction and bioterrorism. IT also supports trade law enforcement and tax and tariff collection. The CBP IT infrastructure enables the agency to continually improve the movement of low-risk cargo, vehicles and people over the border. CBP’s IT systems process millions of international visitors to the U.S. every day. The processing of cargo and passengers, as well as the collection of fees, duties, and tariffs, results in high message and database traffic with partner agencies, passenger carriers, cargo brokers, trade representatives, and airlines. CBP’s rate of online database queries is among the highest in the world. Sustaining these capabilities requires a robust IT infrastructure and operations and maintenance strategy that responds to daily challenges. In addition, the Office of Information and Technology (OIT) is focusing on the future. Technology such as social media and cloud computing are rapidly changing the IT landscape. In response to the scope of threats and budget constraints, CBP is improving business processes and updating service delivery. To address the required technology changes, OIT has been reviewing technology capabilities and updating processes. OIT has started to simplify production applications and shift applications to DHS data centers. These efforts will continue through FY 2014, provided funding is made available from the DHS Chief Information Officer’s budget. Tactical Communications Modernization The Tactical Communications (TACCOM) is a modernization effort. TACCOM focuses on upgrading aging infrastructure from analog to digital, expanding coverage and capacity, and providing Advanced Encryption Standard protection to law enforcement sensitive communication in three areas: Houlton, Maine; Rio Grande Valley, along the Gulf Coast of Texas and El Paso, western Texas (both of which became operational in FY 2013), and New Mexico. TACCOM is conducting a Digital-in-Place as a capstone project. Its goal is to set the baseline configuration and to replace/upgrade existing land mobile radio analog equipment with Project 25/ Advanced Encryption Standard digital equipment. Next Generation TACCOM, known as TacNet, will analyze the potential for mission-grade broadband wireless service; leverage commercial or public safety networks; and provide broadband voice, video, and data at reduced per-user cost. The TACCOM Acquisition Program received Acquisition Decision Event 1 approval from DHS on March 31, 2011 to pursue this program. Management’s Discussion and Analysis 43
Overview of CBP  Information and Technology CBP   s network infrastructure and data center capabilities are the informatio...
Overview of CBP Laboratories and Scientific Services Laboratories and Scientific Services (LSS), the scientific arm of the Office of Information and Technology, provides technical support on trade, weapons of mass destruction, and forensic issues. LSS field personnel support trade enforcement by analyzing samples of imported commodities for classification and admissibility, offering Intellectual Property Rights (IPR) evaluation and support, and providing scientific advice on anti-dumping and countervailing duties. Samples are analyzed both in the laboratory and at the ports of entry in mobile laboratories. The labs are equipped with high tech analytical scientific instrumentation. As a result of LSS trade enforcement CBP agriculture officer inspects pest. analysis, CBP collects millions of dollars in additional duties and penalties. LSS IPR support gives the agency the legal basis to interdict and seize counterfeit merchandise, including counterfeit pharmaceuticals and electronics. CBP forensics services support multiple law enforcement agencies with fingerprint identification, digital forensics, audio/video enhancement and duplication, crime scene processing, and controlled substances analysis. The forensics program supports prosecution of border violators, such as human traffickers. Through fingerprint analysis, new suspects may be linked to criminal events. The DNA program helps prosecutions related to the smuggling of endangered animal species and protected plant life. LSS operates a Tele-forensic Center that provides field personnel with scientific resources to resolve threats related to chemical, biological, radiological or nuclear materials. The center’s resources facilitate the smooth flow of container traffic over the border. Field scientists have also been trained to use sophisticated scientific instruments to detect weapons of mass destruction materials. These mobile laboratory instruments support the ports of entry. The general engineers, physical scientists, and project managers in the Interdiction Technology Branch ensure that field personnel have the best enforcement equipment and expertise available. As DHS and other organizations conduct multiple research and development projects for next generation equipment, this branch assesses the readiness of equipment proposed for field validation and deployment. It also tests factory acceptance, certifies installation of new enforcement equipment and tests tunnel detection equipment along the southern U.S. border. TECS Modernization TECS is a key border enforcement system supporting the inspection of travelers entering the U.S. and vetting inquiries of other federal agencies. The TECS modernization program primarily focuses on updating server infrastructure, databases, and user interfaces that sustain and improve current screening capabilities. 44 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  Laboratories and Scientific Services Laboratories and Scientific Services  LSS , the scientific arm of th...
Overview of CBP The general TECS modernization objective is to establish a foundation that readily accepts new technology in response to new threats and mission requirements. This will transition TECS from mainframe technology to the CBP enterprise architecture. The modernization will improve search capability using linguistic searches and create a service-oriented architecture. Results include improved interoperability through user interfacing applications, standardized query processing, and transition system-tosystem interfaces with external data sources. The user interfaces will be Web based, user friendly and more intuitive, prepopulating data where possible to minimize reentry of information. Automated Commercial Environment CBP‘s Automated Commercial Environment (ACE) program has shifted to an Agile development methodology and is planning to complete core ACE processing capabilities by FY 2016. The core features will include full Cargo Release, Export, e-Manifest: Air, and Entry Summary, and will implement remaining system improvements. CBP tested Agile software development methodology during a pilot in FY 2013. In June 2013, DHS approved a revised program baseline for the completion of ACE by the end of calendar year 2016. International Trade Data System CBP’s International Trade Data System (ITDS) will provide all parties involved in trade and transport with a single entry point to fulfill all import, export, and transit-related regulatory requirements. ACE provides the single window to facilitate the exchange of information to improve business operations and trade. ITDS requirements are incorporated with ACE requirements. A cross-functional CBP team works with ITDS to integrate partner government agencies with ACE. The team will first address those ITDS agencies that impact the import/export process at the border. CBP is working with partner agencies to identify the technical solutions that best support their mission objectives. CBP is pursuing three projects as key deliverables in the Beyond the Border Action Plan Single Window Initiative: •• Measure 1: In FY 2013 CBP developed the infrastructure to capture and store the partner government agencies’ specific trade data in conjunction with ACE Entry Summary or ACE Simplified Entry (SE). •• Measure 2: The trade community can submit electronic image files of documents related to ACE Entry Summaries through the Digital Imaging System, including export manifests. The Environmental Protection Agency is piloting a program to test this capability. •• Measure 3: CBP developed technical standards to allow other agencies to receive trade data automatically and implemented the new interface with CPSC and the FSIS. Management’s Discussion and Analysis 45
Overview of CBP  The general TECS modernization objective is to establish a foundation that readily accepts new technology...
Overview of CBP CBP Achievements with ACE and ITDS Include: ACE e-Manifest: Rail and Sea •• Decommissioned the old Automated Manifest System for rail and sea, making ACE the only CBP- approved electronic data interchange for transmitting rail and sea manifests and related Automated Broker Interface in-bonds. Cargo Release •• Cargo Release pilot program streamlines the data required to release cargo, eliminating the current document (CBP Form 3461) for those transactions. •• In October 2012, the Cargo Release/SE pilot was expanded to new trade participants. Phase 1, for the air mode of transportation is operational at 16 major airports. As of June 2013, more than 159,000 Simplified Entries were filed for more than 1,100 importers. •• CBP has completed the first stage for Cargo Release Entry Corrections/Cancellations, which automated the receipt, review and processing of entry correction/cancellation requests. This feature will expand the Cargo Release/SE pilot. •• Agile developments will expand the capabilities of the Cargo Release/SE pilot by 1) connecting the partner government agency message set to SE to enhance automated data sharing and 2) implementing entry corrections/cancellations for Simplified Entries, which will allow CBP to electronically process corrections/cancellations transmitted by trade users. Exports CBP is developing a single processing platform for all export manifest and commodity transactions through ACE. This effort keeps with the President’s National Export Initiative and the Export Control Reform Initiative. Plans call for the development of an automated export manifest system for all transportation modes to be coordinated with the Census Bureau and other government agencies involved in export licensing and commodity transactions. CBP is using agile development methods to move the legacy Automated Export System from the mainframe and create a single automated export processing platform for export manifest, commodity and export control, and licensing transactions. Also underway is an interim export manifest pilot using the Digital Imaging System: •• The pilot allows for emailed submission and automated processing of Export Manifests in the previously paper-based ocean mode of transportation; •• CBP is receiving a near 100 percent success rate for export manifests submitted as part of this pilot, which is open to all seaports and ocean carriers. 46 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  CBP Achievements with ACE and ITDS Include  ACE e-Manifest  Rail and Sea        Decommissioned the old Au...
Overview of CBP ITDS Initiatives These three key ITDS initiatives automate and enhance interaction between international trade partners, CBP and partner government agencies by facilitating electronic collection, processing, sharing, and review of required import and export trade data and documents. The initiatives will increase efficiency and reduce costs. •• Partner Government Agency Message Set This capability introduces a harmonized set of data for electronic collection from international traders. It will replace the paper forms currently submitted by the trade community during cargo importation. The Message Set will be piloted with two agencies. The first phase of the pilot will include: •• Meat, poultry, and egg product entry data for FSIS; and •• Notice of arrival for ozone-depleting substances, vehicles and engines for EPA In May 2013, CBP integrated the message set with the Entry Summary. The next phase will integrate the message set with the ACE Entry Summary and EPA and FSIS requirements. •• Interfaces/ Interoperability Web Services (IWS) IWS automates CBP’s sharing of information, documents, and events of interest with partner government agencies. It allows CBP’s and others’ systems to communicate, giving greater access to needed data and increasing interagency collaboration. •• FSIS, Consumer Product Safety Commission, Agricultural Marketing Service, and the Coast Guard are receiving automated production manifest, entry, and/or entry summary data directly from CBP. In the third quarter of FY 2013, CBP transitioned 11 additional agencies into the interoperability environment. Document Image System Document Image System (DIS) allows trade members to electronically supply documentation needed during the cargo release and entry summary processes to CBP and other federal agencies. Entry Summary Nearly 99 percent of all entry summaries (formal, informal, and antidumping/countervailing duty) are eligible to be filed in ACE. In FY 2013, the number of eligible entry summaries filed in ACE continued to grow, from 18 to 26 percent. In May 2013, CBP developed the ability to check the quality of incoming entry summary data as part of the Agile pilot. Increment 1 work began with Harbor Maintenance Fee validations. CBP has developed a business rules engine that enables development teams to more easily capture, update, and maintain the business rules for validations. Developing the remaining system edits or checks that validate the accuracy of the data being submitted is critical. Management’s Discussion and Analysis 47
Overview of CBP  ITDS Initiatives These three key ITDS initiatives automate and enhance interaction between international ...
Overview of CBP As development progresses and CBP gains more experience with Agile development, increasingly complex validations will be added. The second development increment will focus on coding validations related to classification. Strategic Air and Marine Plan As the Strategic Air and Marine Plan enters its final two years, the progress to date remains remarkable. CBP has successfully merged the two independent legacy air and marine organizations into a single, highly-effective national service; redeployed its assets and resources to meet the challenges of its homeland security missions; replaced or recapitalized many of its aging aircraft and marine vessels; introduced high-end UAS that provide unparalleled air surveillance capabilities; and obtained new sensors that provide capabilities not imagined just four years ago. To date, CBP has purchased 20 EC-120 helicopters, which are used primarily in the Southwest border region to track ground signs, and AS-350 A-Stars, which are equipped with day/night infrared cameras. CBP has acquired seven DHC-8 medium-range patrol aircraft, and all are in operation. They are equipped with SeaVue maritime radars, day/night infrared cameras, and the capability to support eight-hour missions. Because this type of aircraft is no longer manufactured, CBP shifted to the Multi-role Enforcement Aircraft (MEA). The first four twin-engine MEAs, which were replacements for 26 aging C-12, PA-42, and B-200 type aircraft, have been delivered. From FY 2008 and into FY 2012, Congress provided funding for 11 new marine units, 197 new marine agents, and 101 new marine vessels, including 63 new interceptors of all types. In late FY 2008, CBP acquired an Advanced Concept Technology Demonstration vessel, which enabled OAM to define its requirements for a highly capable replacement for the slower, aging Midnight Express Coastal Interceptor Vessels (CIVs), which are undergoing service life extension (see next section in Administrative Efficiency). OAM also acquired 172 new and used vessels (this number reflects the merging of Border Patrol and OAM assets), including 32 coastal and SAFE Boat interceptors, 12 coastal enforcement vessels, 12 airboats, and 114 riverine vessels of various types, mainly through the transfer of used SAFE Boat and other riverine craft from the Coast Guard. Over the same period, OAM retired 87 aged and unserviceable vessels, mainly through the General Services Administration sales/exchange program that enabled the funds obtained to be reinvested in new boats and equipment, thus reducing the need for appropriated funds. As of this update, CBP has gained the equivalent of more than $22.7 million in acquisition cost avoidance through these efforts, and has returned 76 used vessels to service. Only two marine vessel procurements remain to be completed for the marine program to achieve its original objectives. The new CIV contract was awarded in early FY 2012, and is currently funded to provide 17 new vessels, the first production prototypes were delivered in September 2012. The contract for the new Riverine Shallow Draft Vessel (RSDV) was awarded in late FY 2011, and is funded to provide up to 31 vessels. 48 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  As development progresses and CBP gains more experience with Agile development, increasingly complex vali...
Overview of CBP Service Life Extension Plan for Midnight Express Coastal Interceptor Vessels CBP is also pursuing a service life extension for its current fleet of Midnight Express CIVs to cover operational needs until the new class of CIVs is delivered. The upgrades include the replacement of the vessel transom and molded fuel tank, extending the life of each vessel by five to seven years. The work is conducted at the CBP National Marine Center in St. Augustine, Florida, and is funded through the General Services Administration sales/exchange program. As of September 30, 2013, work on 10 vessels has been completed and more vessels could be upgraded until the new interceptors are received and deployed. Black Hawk A to L Conversion Program Started in 2008, the Black Hawk A to L conversion program is also a service life extension effort to extend the lives of 16 helicopters another 15 to 18 years and to reduce annual maintenance costs by as much as 37 percent (U.S. Army projections). The overhaul of a Black Hawk involves completely breaking down the aircraft and rebuilding it as new. On average, rebuilds take nearly two years and cost between $16 million and $18 million per aircraft, depending on the condition of the helicopter and flight history. Two UH-60A model helicopters have been converted to “L” models. Two more UH-60A helicopters are currently undergoing “L” conversion at the Corpus Christi Army Depot. At current rates, all of the 16 UH-60A helicopters should be upgraded to “L” models by FY 2025. P-3 Re-winging Despite the success of OAM P-3s in the Source and Transit Zones, every P-3 airframe in the fleet is more than 40 years old and experiencing fatigue. OAM initiated an innovative two-step Service Life Extension Program (SLEP), with the following objectives: •• Extend P-3 airframe life by 15,000 hours (18 to 20 years of additional service) •• Upgrade aircraft material condition •• Improve aircraft safety, reliability, maintainability, and operational availability The P-3 SLEP is a 10-year, $420 million effort entering its eighth year of execution. Designed to be completed in two phases, it is on-cost and ahead of schedule. The first phase involved special structural inspections and repairs designed to keep some of the 16 aircraft flying while all new wing and tail assemblies were purchased to enable safe operations for another 18 to 20 years. This effort is expected to see 14 of the 16 aircraft returned to flight for an average cost of $28 million per aircraft, which is highly cost effective because a new aircraft with the same capabilities as the P-3 cannot now be purchased for under $279 million per copy. To date, approximately $369 million has been invested in SLEP. Eight aircraft have been completed, with the 14th aircraft due for return to operations by the middle of FY 2016. Management’s Discussion and Analysis 49
Overview of CBP  Service Life Extension Plan for Midnight Express Coastal Interceptor Vessels CBP is also pursuing a servi...
Overview of CBP Radar and Sensor Upgrades OAM is working to install day/night infrared cameras and large screen monitors on C-206 single-engine patrol aircraft to expand their capability, to support ground interdiction missions at night. OAM is also considering a demonstration of new, compact electronic sensors that can provide broad area search capabilities to small single- and twin-engine aircraft, greatly increasing the area that can be covered by aircraft currently available on the borders. Coincident with the SLEP, OAM pursued two key sensor upgrades. The first upgrade involved installing SeaVue broad area maritime search radars on the long-range trackers, while the second upgrade installed electro-optical/infrared sensors on some of the P-3 aircraft. The combined result of the installations freed the two types of P-3 aircraft to operate independently, increasing the ocean area that can be covered by the combined P-3 wing. In addition, OAM is installing the OSI target sorting and collection software on the P-3 that already deployed on the Guardian UAS and DHC-8 aircraft. This will enable faster target classification and sorting, as well as the hand-off of targeting information between aircraft arriving and leaving a patrol zone. OAM is also testing a Ku-Band satellite downlink capability as part of a long-term effort to link high-patrol assets. The most important enhancement to the UAS Program has been the introduction of the Vehicle and Dismounted Exploitation Radar (VADER). VADER is a strategic intelligence sensor that also provides comprehensive situational awareness for an expanded target area. Since VADER was made operational in February 2012, OAM has used the Predator B UAS as the persistent surveillance platform for VADER operations. VADER operations have focused on the West Desert area of the Arizona (AZ) Joint Field Command (JFC) Area of Responsibility (AOR). VADER provides detection, identification, classification and tracking capability to the JFC-AZ AOR to increase the likelihood of interdiction. The culmination of both a Wide Area Aerial Surveillance and operational capability enables CBP to better coordinate tactical operations, operational planning, and to identify and mitigate potential gaps in border security. OAM and the Office of Information and Technology have developed BigPipe, a cross-domain network, infrastructure, and system that distributes operational mission data to federal, state, and local law enforcement customers. This system allows stakeholders to view real-time mission data and to make critical decisions during the detection, tracking, and interdiction phases of operations. BigPipe offers situational awareness and fidelity in combating threats, capabilities previously unrealized from the command and control arena. The data BigPipe makes available consist of wide-area or narrow-focused electro-optical/infrared imaging of maritime and ground targets, along with mapping information of the target area. BigPipe allows registered users in any approved location with access to the Internet to display a mission or video file that they have been authorized to view. Safety and Standardization OAM has developed and instituted a Crew Resource Management (CRM) policy, which began in the third quarter of FY 2011, requiring all OAM pilots and aircrew members to attend eight hours of CRM training. CRM is the a dynamic decision-making process that continually optimizes all available resources—people, equipment, capabilities, and procedures—to safely, efficiently, and effectively 50 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  Radar and Sensor Upgrades OAM is working to install day night infrared cameras and large screen monitors ...
Overview of CBP complete OAM operations. It encourages input from all crewmembers to establish a logical conclusion to a particular event or circumstance. Follow-on training for the CRM program will be conducted on an annual basis via the Virtual Learning Center with practical application being evaluated. The CRM curriculum has been incorporated for all new OAM employees. Spanish Language Training Program Since its inception in 2005, OAM had been without a Spanish language training course that incorporated the specific vocabulary and scenarios to complement its mission set. The estimated cost to develop a Spanish course was $1.8 million. Due to lack of funding, the contract was not awarded. The Air and Marine Basic Spanish Training Program (AMBSTP) used the existing foundation and formalized syllabus that had undergone the scrutiny of accreditation. AMBSTP took an OFO fourweek Spanish training shell and combined it with the current OFO six-week course, exchanging OFO scenarios with applicable OAM scenarios and vocabulary. OAM ran its first AMBSTP pilot in March 2012. After revisions to the curriculum, the second pilot was held in January 2013. After the successful completion of the second pilot, OTD certified AMBSTP in March 2013. The inaugural class completed the first certified Spanish program in July 2013. Tactical/Technical Command (TTC) Program The TTC program gives first-line OAM supervisors tools to better perform their job functions. The curriculum includes an in-depth look at situational leadership, supervisory duties, risk assessment, supervisory operational reporting requirements, and other agency specific supervisory tasks. OAM’s TTC course received high marks in participant course critiques. The first certified course was completed in December 2012, with an additional class completed in March 2013. With certification, the course is now funded under the National Training Plan. Future scheduling will allow OAM supervisors to complete supervisor leadership training and begin the TTC course the following week, saving travel costs. Improved Basic Training In cooperation with CBP’s Field Operations Academy, OAM streamlined delivery of all basic training requirements. Previous deficiencies and/or gaps in basic training required several additional postacademy courses. This created a large backlog of students for these mandatory courses. Additional scheduled trainings led to increased travel costs of approximately $58,000 per academy class, as well as generating breaks in a student’s operational deployment, as basic training was stopped and started over periods as long as four years. The streamlined delivery includes these additional courses in the basic class. All training was moved to the East Coast, using ground transportation to decrease travel costs. Academy graduates now return to their duty stations with all mandatory basic training satisfied, allowing local management to focus on advanced operational training without interruption. Management’s Discussion and Analysis 51
Overview of CBP  complete OAM operations. It encourages input from all crewmembers to establish a logical conclusion to a ...
Overview of CBP Improved Accident Investigation Techniques In August 2012, the OAM Training, Safety, and Standards directorate provided Human Factors Analysis and Classification System (HFACS) training for all safety officers and accident investigators. The directorate continues to work with these field staff as accident and incident investigative procedures are fine tuned. Using the new model in FY 2013, OAM’s Safety Program is now reaching deeper into each humanfactor-related incident, moving from the operator up through the entire system/organization. HFACS provides a more systematic and objective approach to cataloging human-factor mishaps. The HFACS matrix goes beyond pilot/operator error to look at the entire system (to include technical, environmental, management, and organizational issues) to identify a more complete array of contributing factors that lead to the mishap by identifying latent conditions, before they lead to actual failures. Through incorporating the HFACS methodology and tracking its results, OAM is better equipped to transition from a reactive safety program to a proactive program. This approach to mishap investigations is part of a comprehensive safety program to identify potential hazards and countermeasures to prevent the recurrence of mishaps. Looking Ahead CBP continues to expand and enhance mission effectiveness by its forward-looking approach to secure America’s borders and the vitality of the United States economy. CBP will continue to integrate state-of-the-art technologies and traditional security infrastructures at United States POEs and along the Nation’s borders and to work in collaboration and partnership with the trade community and foreign governments to secure the United States against terrorists and terrorist weapons while facilitating world commerce. 52 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  Improved Accident Investigation Techniques In August 2012, the OAM Training, Safety, and Standards direct...
Overview of CBP Overview of CBP CBP Organization CBP Organization Commissioner Principal Executive Office of Program Development Principal Executive Office of Strategic Integration Executive Director Office of Diversity and Civil Rights Director State, Local, and Tribal Liaison Office Executive Director Office of Policy and Planning Senior Advisor Office of Trade Relations Director Office of the Executive Secretariat Executive Director Joint Operations Directorate Assistant Commissioner Office of Field Operations Chief Office of Border Patrol Assistant Commissioner Office of Air and Marine Assistant Commissioner Office of Intelligence and Investigative Liaison Assistant Commissioner Office of International Affairs Assistant Commissioner Office of International Trade Assistant Commissioner Office of Congressional Affairs Assistant Commissioner Office of Administration Assistant Commissioner Office of Human Resources Management Assistant Commissioner Office of Internal Affairs Assistant Commissioner Office of Public Affairs Assistant Commissioner Office of Training and Development Assistant Commissioner Office of Technology Innovation and Acquisition Assistant Commissioner Office of Information and Technology Deputy Commissioner Chief of Staff Deputy Chief of Staff Office of Chief Counsel Management’s Discussion and Analysis 53
Overview of CBP  Overview of CBP CBP Organization CBP Organization Commissioner  Principal Executive Office of Program Dev...
Overview of CBP Headquarters Office of the Commissioner: The Commissioner is responsible for securing, managing, and controlling the Nation’s borders by advancing CBP’s priority mission of preventing terrorists and terrorist weapons from entering the United States while facilitating legitimate trade and travel. Deputy Commissioner: The Deputy Commissioner is responsible for providing leadership and executive-level direction to CBP’s day-to-day operations, including oversight of agency initiatives that facilitate the international movement of legitimate, low-risk goods and travelers, while promoting effective border security. Chief of Staff (COS): Serves as the direct liaison to DHS for all agency issues. The COS assists the Office of the Commissioner in formulating and implementing policies through coordination with other CBP office components, DHS, and Other Government Agencies (OGA). The COS provides advice and counsel to the Commissioner in defining priorities to accomplish CBP mission and goals. Office of Chief Counsel (OCC): Serves as the chief legal officer of CBP and reports to the General Counsel of DHS. The Chief Counsel serves as the Ethics Officer for the Agency and is the principal legal advisor to the Commissioner of CBP. OCC provides legal advice to and legal representation of CBP officers in matters relating to the activities and functions of CBP. Office of Program Development (OPD): Is responsible for transitioning CBP from a budget-centric process to a planning and programming process that is driven by goals and objectives. OPD was established in FY 2011 and is responsible for integrating and executing the Planning, Programming, Budgeting, and Accountability (PPBA) process within CBP. This includes: establishing repeatable processes and structures; establishing priorities and capabilities required to achieve a strategy; making informed; cross-cutting operational and resource decisions consistent with DHS and Commissioner priorities and goals; increasing transparency through more detailed; focused budget; and performing and monitoring the achievement of goals and the spending of plans. Office of Strategic Integration (OSI): Is responsible for facilitating the development of a mature strategic integration culture across CBP and all its stakeholders, both internal and external. OSI was established in FY 2011 and is responsible for managing the integration of the CBP portfolio of strategies, ensuring the maximization of value, balance in approach, alignment to business strategy, and balance in resource requirements. Privacy and Diversity Office (PDO): Is responsible for developing and administering all CBP programs and activities necessary to ensure compliance with the Federal anti-discrimination laws, regulations and policies, and civil rights and civil liberties requirements necessary to facilitate lawful individual travel and trade across the United States borders, while ensuring national security and economic prosperity. PDO implements initiatives that sustain, retain, and advance a highly qualified ethical workforce that attracts the most qualified candidates that America has to offer. In addition, PDO ensures that CBP is a progressive champion of diversity and inclusion by providing activities and programs that celebrate and honor all individuals. 54 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  Headquarters Office of the Commissioner  The Commissioner is responsible for securing, managing, and cont...
Overview of CBP Office of State, Local, and Tribal Liaison (SLT): Advises the Commissioner, Deputy Commissioner, and program offices regarding the impact of CBP policies and initiatives on state and local stakeholders. SLT also acts as the primary conduit for information to, and guidance from, the DHS Office of Intergovernmental Affairs. SLT informs state and local stakeholders of current and proposed CBP programs, assists these stakeholders in addressing concerns with CBP programs, and assist in building and maintaining partnerships between CBP and state and local governments. Office of Policy and Planning (OPP): Directly supports the Commissioner and his principal staff officers through deliberate and rapid planning processes to fully inform and influence CBP policies, strategies, integrated planning, and decision support. OPP works closely with the Commissioner, CBP leadership, homeland security partners and stakeholders in defining and advancing the Agency priorities through the development, review, and implementation of key policy and planning initiatives. The OPP staff is responsible for facilitating and coordinating strategic, operational, and institutional planning functions of the Agency and for integrating processes in support of the CBP governance framework. OPP promotes analytic rigor, strategic foresight, and integrated risk management to empower CBP leadership to make the best informed decisions for safety, security, and prosperity. Office of Trade Relations (OTR): Is responsible for managing CBP’s outreach and communications with the international trade community. OTR ensures that the trade community and the public understand that trade is an integral part of CBP’s mission to make America safer, stronger, more prosperous, and economically competitive. OTR’s mission is to continually improve relations between CBP and the trade community, by enhancing collaboration, and cooperation and by informing decision-making at all levels including operational, legislative, and political. OTR is also responsible for organizing and presenting formal CBP outreach efforts to the trade community, including CBP’s annual Trade Symposiums, monthly trade day meetings, trade roundtable meetings, and webinars. OTR manages the Advisory Committee on Commercial Operations of U.S. Customs and Border Protection (COAC), a congressionally mandated trade advisory group. OTR is the designated regulatory fairness representative for the agency with responsibility for promoting compliance with the Small Business Regulatory Enforcement Fairness Act (SBREFA). Office of Executive Secretariat (OES): Is responsible for ensuring appropriate and expeditious action on all requests for information, executive correspondence, and official memoranda addressed to the Commissioner and other CBP and DHS senior officials. OES provides direct support to the Commissioner and Deputy Commissioner, as well as related support to leadership and management across the agency. Management’s Discussion and Analysis 55
Overview of CBP  Office of State, Local, and Tribal Liaison  SLT   Advises the Commissioner, Deputy Commissioner, and prog...
Overview of CBP Component Organizations and Field Structure CBP is organized into 14 separate offices, each of which report directly to the Commissioner. The mission of each office is described briefly below: Office of Field Operations (OFO): Enforces customs, immigration, and agriculture laws and regulations at U.S. borders and has the primary responsibility for preventing terrorists and their weapons from entering the United States at the Ports of Entry (POE). OFO maintains programs at 20 field operation offices; 328 POEs; 15 pre-clearance stations in Canada, the Caribbean, and Ireland; and 58 CSI ports worldwide. A Director of Field Operations heads each field office, and Port Directors oversee POEs in their operational areas, where virtually all conveyances, passengers, and goods legally enter and exit the United States. OFO oversees the enforcement of laws and regulations while ensuring the safe and efficient flow of goods and people through the POEs. Office of Border Patrol (OBP): Serves as the CBP law enforcement organization with the primary responsibility of preventing terrorists, weapons of terrorism, illegal aliens, drugs, and those who smuggle them, from entering the United States between the POEs. The Border Patrol is organized into 20 sectors along the southwestern, northern, and coastal areas of the United States. Office of Air and Marine (OAM): Protects the American people and critical infrastructure through the coordinated use of integrated air and marine forces. These forces detect, interdict, and prevent acts of terrorism and the unlawful movement of people, illegal drugs, and other contraband toward or across the borders of the United States. OAM’s core competencies include air and marine interdiction, air and marine law enforcement, and national border domain security. OAM further supports DHS missions such as the response and recovery to natural disasters and terrorism. Office of Intelligence and Investigative Liaison (OIIL): Develops, coordinates, and implements intelligence capabilities to support the execution of CBP’s mission to secure America’s borders while facilitating legitimate trade and travel. OIIL serves as a coordinating facilitator that integrates CBP’s diverse intelligence capabilities into a single cohesive intelligence enterprise. OIIL supports CBP’s mission through a multi-layered approach, which includes collection and analysis of advance traveler and cargo information, use of enhanced law enforcement technical collection capabilities, delivery of timely analysis of intelligence and information, and establishment of intelligence-sharing relationships with Federal, state, local, and tribal agencies and intelligence agencies. Office of International Affairs (INA): Coordinates and supports CBP’s foreign initiatives, programs, and activities. To support CBP’s mission, INA establishes essential partnerships with US government agencies, foreign administrations, and international organizations. Through its 22 Attaché and 5 Advisory office locations, INA coordinates CBP’s international engagement efforts by implementing programs and initiatives that promote border enforcement best practices and capacity building globally. Office of International Trade (OT): Provides unified strategic direction for trade policy and program development. OT directs national enforcement responses and takes punitive actions against companies participating in predatory trade practices, including textile transshipment and intellectual property rights infringement. OT directs CBP risk-based investigation detection and prevention 56 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  Component Organizations and Field Structure CBP is organized into 14 separate offices, each of which repo...
Overview of CBP programs designed to identify the importation of contaminated agricultural products and goods that present health or safety risk, and products requiring protection from unfair trade practices. OT streamlines the flow of legitimate shipments and fosters corporate self-governance to achieve compliance with trade laws, regulations, and international trade agreements. Finally, OT provides the legal tools to promote facilitation and compliance with customs, trade, and border security requirements by issuing CBP regulations, binding rulings and decisions, compliance publications, and by offering training and outreach on trade laws and regulations. Office of Congressional Affairs (OCA): Coordinates all CBP congressional and legislative activities to ensure that the full range of policy, operational, technical, and programmatic aspects are appropriately considered. These functions and activities include work performed in the congressional arena, relationships with Members of Congress and their staffs, and requests for information, briefings, meetings, hearings, tours, or other forms of assistance received from Congress. Office of Administration (OA) and Chief Financial Officer (CFO): Oversees all financial operations, procurement, asset management, and budget activities within CBP. OA is responsible for administering $12.9 billion, that is budgeted annually for law enforcement and trade operations, and processing collections of $40.9 billion in custodial and entity revenue annually. OA is responsible for administering the broad range of financial management activities delineated under the CFO Act of 1990, including accounting, budgeting, procurement, asset management, financial systems, and financial management. Office of Human Resources Management (HRM): Manages a centralized human resources program for all CBP employees nationwide and overseas. HRM supervises all matters involving human resources, including organizational structure, staffing, compensation administration, benefits, workplace safety, personnel actions, labor relations, and employee relations. HRM also assists employees by providing recruitment services, retention support, benefits information, and employee health and wellness programs. Office of Information and Technology (OIT) and Chief Information Officer (CIO): Provides CBP with information, services, and technology solutions to secure the border; prevents the entry of terrorists or terrorist weapons; and facilitates legitimate trade and travel. In addition, OIT operates a worldwide, round-the-clock secure, stable, and high-performance IT infrastructure, while supporting tactical communications, scientific solutions, and forensic services. OIT implements and supports CBP’s IT, automation, and technology strategies. OIT personnel manage all computers and related resources, including all operational aspects of the IT Security (cyber security) Program. OIT establishes the technical requirements for system interfaces between CBP and various trade groups and Government agencies and manages matters related to automated import processing and systems development. Office of Internal Affairs (IA): Serves as the designated Office of Security for CBP and manages a wide range of investigative and security functions and programs, including applicant and employee background investigations and clearances; employee integrity and misconduct investigations; credibility assessments including polygraph examination; operational field testing; integrity awareness and corruption detection; deterrence and prevention of internal corruption; physical, informational, Management’s Discussion and Analysis 57
Overview of CBP  programs designed to identify the importation of contaminated agricultural products and goods that presen...
Overview of CBP operational, industrial and internal security; management inspections; audit liaison; and cyber security counter intelligence policies, instructions, procedures, control systems, networks and methods. IA’s mission promotes the integrity and security of the CBP workforce. Office of Public Affairs (OPA): Communicates CBP’s mission and operations to the agency’s chief stakeholders, which includes the American public, foreign nationals who conduct business in the United States, international trade entities, and travelers who cross U.S. borders. Tools used in the national and international public communication process include media outreach and public information campaigns conducted via media events, video, photography, and informational brochures. CBP maintains a public website at (www.cbp.gov) and a national customer service call center, CBP INFO Center, to address public questions and complaints. OPA also keeps the CBP workforce informed through the CBPnet Intranet site, the weekly e-mailed news compilation, “Frontline News,” and mass e-mails. A bimonthly newsletter, “CBP Today,” is distributed to CBP personnel and other stakeholders nationwide. Office of Technology Innovation and Acquisition (OTIA): Ensures that all of CBP’s applied technology efforts are properly focused on the mission and are well integrated across the agency. In addition, OTIA is charged with strengthening CBP’s expertise and effectiveness in acquisition and program management of contractor-delivered products and services. This office is headed by an Assistant Commissioner, who also serves as CBP’s Component Acquisition Executive (CAE), providing oversight to all CBP acquisition programs to ensure they are managed in compliance with DHS and CBP regulations and policies. Office of Training and Development (OTD): Provides centralized leadership and direction to all CBP training programs for the entire workforce. OTD ensures that all training supports the CBP mission and strategic goals and that the workforce is prepared to meet the challenges faced in the performance of mission critical operations by establishing CBP training standards and policies; leading the development, delivery and evaluation of training; and procuring the necessary tools. 58 U.S. Customs and Border Protection • Performance and Accountability Report
Overview of CBP  operational, industrial and internal security  management inspections  audit liaison  and cyber security ...
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Performance Goals and Results In FY 2011, the Commissioner issued CBP’s Missions, Goals, and Priorities, FY 2011–2013, a document that articulates the missions, goals, objectives, and priority initiatives for the Agency. The document was designed to shape planning and policy development for CBP’s offices, to guide resource allocation, and to direct the focus and efforts of senior executives. Performance Goals and Results Lin ka ge s an dF ee db ac k CBP’s Performance Management Framework (PMF) provides CBP with performance management In FY and oversight capabilities that improve the efficiency and effectiveness of CBPaprograms, initiatives, 2011, the Commissioner issued CBP’s Missions, Goals, and Priorities, FY 2011–2013, document that articuand operations through improved measurement, analysis, and reporting. The PMF meets reporting lates the missions, goals, objectives, and priority initiatives for the Agency. The document was designed to shape and budgeting requirements CBP’s offices, to guide resource allocation, and to direct the focus and efforts planning and policy development for established by the Office of Management and Budget, the Government Performance and Results Act (GPRA) of 1993, and the GPRA Modernization Act of 2010. The PMF of senior executives. also supports management decision-making processes associated with agency-wide strategic planning, requirements determination, and resource allocation using performance information in the CBP’s Performance Management Framework (PMF) provides CBP with performance management and oversight execution of the annual budget. capabilities that improve the efficiency and effectiveness of CBP programs, initiatives, and operations through The associated CBP Performance Measurement Hierarchy contains statutory of performance meaimproved measurement, analysis, and reporting. The PMF was designed to meetfive levelsreporting and budgeting sures: established by the Office of Management and Budget, the Government Performance hierarchy sets requirementslong-term, strategic, management, operational, and investment measures. The and Results Act the 1993, and for performance measure of 2010. The and reporting. (GPRA) offoundationthe GPRA Modernization Actpresentation PMF also supports management decision-making processes associated with Agency-wide strategic planning, requirements determination, and resourceannual Long-term level measures are those that cross multiple fiscal years and are not tied to an allocation through the use of performance information in the to manage and report accomplishments of DHS stratebudget. Strategic level measures are used execution of the annual budget. gic goals and objectives, thus demonstrating the value that CBP programs provide to the American The associatedManagement level measures inform internal CBP decision-making processes to determine people. CBP Performance Measurement Hierarchy contains five levels of performance measures: long-term, strategic, management, operational,resources, and monitor progress and performance. Operational level program priorities, allocate and investment measures. The Hierarchy sets the foundation for performance measures inform management of the effectiveness and and methods tailored program operations. measure presentation and reporting through a variety of formats efficiency of individualto the decision-making Investment level measures are to serve. processes that the Hierarchy is intendedassociated with CBP’s major capital investments and map to the Federal Enterprise Architecture Performance Reference Model. Long-Term Measures that are multi-year in nature and do not tie to our annual budget. Strategic Management Measures that communicate achievement of strategic goals and objectives. Measures that gauge program results and tie to resource requests. Operational Measures that inform the management of operations and activities. Investment Measures that gauge program management and results delivered by capital investments. Long-term level measuresProtection • Performance and Accountability Report and are not tied to an annual budget. Strategic 62 U.S. Customs and Border are those that cross multiple fiscal years level measures are used to manage and report accomplishments of CBP strategic goals and objectives, thus demon-
Performance Goals and Results In FY 2011, the Commissioner issued CBP   s Missions, Goals, and Priorities, FY 2011   2013,...
Performance Goals and Results Performance Management Two key pieces of legislation provide the framework for government-wide performance improvement and guide CBP’s performance management efforts. The GPRA of 1993 established a foundation for results-oriented planning, measurement, and reporting in the Federal Government. The GPRA Modernization Act of 2010 promoted the consistent use of performance measurement and reporting outcomes to drive management decision-making and resource use. CBP uses performance measures to assess outputs and outcomes in comparison with desired results, thereby indicating the agency’s accomplishments. CBP is dedicated to continuously refining and improving its performance measures. The goal is to ensure that the data it reports internally and externally is useful to senior executives who make programming and funding decisions. FY 2013 Performance by Mission Set This section highlights FY 2013 performance objectives and related key performance measures for each of CBP’s Mission Sets. Additional performance measures and results are located in the “Performance Section” under “Performance Summary,” beginning on page 78. Mission Set 1: Securing America’s Borders As a frontline border security agency, CBP has a multifaceted and complex mission of protecting the Nation against cross-border violations of various types. All CBP efforts to secure the border, including the mission of enforcing the immigration, customs, trade, agriculture, and other laws of the United States contribute to the mission of thwarting terrorism. Performance Objective–Secure the U.S. border in areas deemed as high priority for terrorist threat potential or other national security objectives. CBP will continue its efforts to improve security at and between the POEs by using information and intelligence to focus resources in a more effective, risk-based manner. Providing security along our northern, southern, and coastal borders requires collaboration with CBP international, Federal, state, local, and tribal partners in order to leverage and focus joint resources. Management’s Discussion and Analysis 63
Performance Goals and Results  Performance Management Two key pieces of legislation provide the framework for government-w...
Performance Goals and Results Measure: Percent of people apprehended multiple times along the Southwest border Description of Measure: This measure examines the percent of deportable individuals who have been apprehended multiple times by the U.S. Border Patrol. This measure calculates the number of people apprehended multiple times divided by the total number of apprehensions of people during a fiscal year. Effective and efficient application of consequences for illegal border crossers will, over time, reduce overall recidivism. Fiscal Year: Target: Actual: FY 2009 N/A N/A FY 2010 FY 2011 FY 2012 FY 2013 N/A N/A N/A ≤18.00% N/A N/A N/A 16.00% Target Met—Recidivism has decreased since implementation of the Consequence Delivery System, which guides the consistent and systematic application of consequences to aliens that enter the United States illegally. Recidivism fell to 15.80%, exceeding the target of less than or equal to 18%. Contributing factors to the reduction included 1) reducing the percent of apprehensions resulting in a Voluntary Return—the Explanation of FY 2013 Results least effective and efficient consequence—from 59 percent in FY 2010 to 12 percent in FY 2013 2) applying more effective and efficient consequences to illegal aliens with a higher probability of making subsequent illegally entries and 3) an increase in the number of Other than Mexicans attempting to cross the border illegally. This increase in a population that historically has a lower opportunity and capability to attempt multiple illegal entries resulted in lower overall recidivism rate. Recommended Action N/A Percent of People Apprehended Multiple Times Along the Southwest Border   25% Percent of People Apprehended Multiple Times 20% Actual 15% 10% 64 Target <=18.0% 16% FY 2009 FY 2010 FY 2011 U.S. Customs and Border Protection • Performance and Accountability Report FY 2012 FY 2013
Performance Goals and Results  Measure  Percent of people apprehended multiple times along the Southwest border Descriptio...
Performance Goals and Results Measure: Number of smuggled outbound weapons seized at the ports of entry Description of Measure: This measure provides the total number of illegal weapons seized during outbound inspection of exiting passengers and vehicles, both privately-owned and commercial. Weapons are defined as pistols, rifle-shotgun combinations, rifles, revolvers, shotguns, disguised weapons, machine guns, submachine guns, or machine pistols. This includes assembled weapons as well as major pieces of weapons. Seizing weapons being smuggled for criminal purposes strengthens our border security by preventing the movement of assault weapons and ammunition. FY 2010 FY 2011 FY 2012 FY 2013 N/A N/A N/A 400 N/A N/A N/A 731 Target Met—This is a cumulative national-level measure with the target specified as the number of weapons to be seized by the Explanation of FY 2013 Results end of the year. CBP conducts risk-based outbound enforcement activities on an ongoing basis. Recommended Action N/A Fiscal Year: Target: Actual: FY 2009 N/A N/A Number of Smuggled Outbound Weapons Seized at the Ports of Entry 1000 Number of Weapons Seized 731 500 Target Actual 400 0 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Mission Set 2: Securing and Expediting the Movement of People and the Flow of Goods In order to meet the dual goals of security and facilitation, CBP develops and implements programs that expedite the processing of people and goods at land border ports, airports, and seaports, while at the same time securing the global trade environment and strengthening supply chain security. CBP focuses its resources on identifying and responding to high-risk travelers and conveyances. CBP employs a risk-based, layered enforcement approach using accurate advance information; the most advanced inspection, screening, and scanning technology available; modernized systems for Management’s Discussion and Analysis 65
Performance Goals and Results  Measure  Number of smuggled outbound weapons seized at the ports of entry Description of Me...
Performance Summary cargo processing; and international and trade compliance partnership programs. Modern trade practices make it essential for CBP to provide risk-based, predictable, transparent, and efficient procedures for the clearance of goods, while simultaneously addressing increasingly complex trade compliance requirements and evolving security challenges. Performance Objective–Improve the targeting, screening, and apprehension or seizure of high-risk international travelers and cargo away from the physical border in order to prevent terrorist attacks and criminal activity while expediting the processing of legitimate travelers and cargo. CBP’s ability to process people, products, and conveyances expeditiously is dependent on its ability to identify high-risk travelers and goods for inspection. High-risk targeting allows law-abiding travelers and commerce to move without unnecessary delay. CBP applies its targeting methods against data to identify which passengers or shipments need to be segregated for closer inspections. CBP uses the Automated Targeting System and associated databases to provide CBP officers (including those stationed overseas) with advance notice of travelers and goods arriving at U.S. POEs, allowing the officers to crosscheck the passenger and cargo manifests against databases such as TECS and the National Crime Information Center. Measure: Percent of cargo by value imported to the U.S. by participants in CBP trade partnership programs Description of Measure: This measure describes the percent of all cargo that is imported from CBP trade partnership programs based on the value compared to total value of all imports. Partnership programs include both Customs–Trade Partnership Against Terrorism and Importer SelfAssessment. CBP works with the trade community through these voluntary public private partnership programs, wherein some members of the trade community adopt tighter security measures throughout their international supply chain and in return are afforded benefits. A variety of trade actors are included in these partnership programs, such as importers, carriers, brokers, consolidators/third-party logistic providers, Marine Port Authority and Terminal Operators, and foreign manufacturers. Fiscal Year: Target: Actual: FY 2009 N/A N/A FY 2010 N/A N/A FY 2011 45.00% 55.07% FY 2012 45.00% 54.66% FY 2013 57.00% 55.20% Target Not Met—Although outreach efforts have surpassed expectations, FY 2013 total import value and total entry count are Explanation of FY 2013 Results down 0.85 percent and 0.43 percent, respectively from FY 2012, offsetting gains in the number of actual trade partners. Recommended Action 66 CBP will continue to engage with trade partners to increase participation in approved shipper programs. U.S. Customs and Border Protection • Performance and Accountability Report
Performance Summary  cargo processing  and international and trade compliance partnership programs. Modern trade practices...
Performance Summary Percent of Cargo by Value Imported to the United States by Participants in CBP Trade Partnership Programs 60% 57% 55% 55.07% Percent of Cargo by Value Imported 54.66% 55.20% 50% Actual 45% 40% Target 45% FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Measure: Percent of inbound cargo identified by CBP as potentially high-risk that is assessed or scanned prior to departure or at arrival at a U.S. port of entry Description of Measure: This measure gauges the percent of international cargo coming to the United States via air, land, and sea identified as potentially high-risk using the Automated Targeting System that is assessed or scanned prior to lading or at arrival at a U.S. port of entry. Assessing, resolving, and, when necessary, scanning potentially high-risk cargo prior to lading or at arrival at the ports of entry ensures the safety of the U.S. public and minimizes the impact to the trade, through the effective use of risk-focused targeting. Fiscal Year: Target: Actual: FY 2009 N/A N/A FY 2010 N/A N/A FY 2011 FOUO FOUO FY 2012 FOUO FOUO FY 2013 FOUO FOUO Explanation of FY 2013 Results Target Not Met—This measure gauges the overall percent of inbound cargo in the air and sea environments identified as potentially high risk by the Automated Targeting System that is reviewed, scanned, or otherwise examined prior to lading or at arrival at a U.S. ports of entry. A small percentage of cargo is not reviewed due to status changes en route, information processing and data entry errors, or logistical and scheduling anomalies. The results are For Official Use Only (FOUO). Recommended Action The Office of Field Operations will continue to work with the Targeting & Analysis System Program Office, shippers, and carriers to resolve identified issues and implement permanent process improvements. Performance Section 67
Performance Summary  Percent of Cargo by Value Imported to the United States by Participants in CBP Trade Partnership Prog...
Performance Summary Mission Set 3: Sustaining Investment in People and Capabilities In order for CBP to remain a successful law enforcement organization, it will invest in its people. This investment includes providing training for CBP agents, officers, and mission support personnel to ensure they are proficient in their job-related skills and are prepared for future leadership opportunities. This investment also includes addressing any integrity issues that may arise. Performance Objective–Improve mission effectiveness and efficiency by integrating, unifying, and leveraging resources to support CBP’s operational offices. While the activities that fall under this mission set are important to CBP’s success, CBP does not have GPRA or Strategic measures that align to this mission set due to the mission support nature of its activities. Operational measures exist within this Mission Set and are used in internal decisionmaking processes. 68 U.S. Customs and Border Protection • Performance and Accountability Report
Performance Summary  Mission Set 3  Sustaining Investment in People and Capabilities In order for CBP to remain a successf...
Management Assurances Overview CBP management is responsible for establishing, maintaining, and assessing internal control to provide reasonable assurance that the objectives of the Federal Managers’ Financial Integrity Act, Sections 2 and 4, and the Federal Financial Management Improvement Act are met. CBP also supports DHS compliance with the DHS Financial Accountability Act. Both require an annual assurance statement regarding CBP’s management and financial system controls, internal controls over financial reporting, and performance data and its impact on DHS operations. Any reportable conditions, deficiencies, or instances of non-conformance are reported in the statements. Information for this statement is derived from Government Accountability Office (GAO) and DHS Office Inspector General (OIG) audits, independent reviews, and self-assessments conducted by CBP management. Federal Managers’ Financial Integrity Act (FMFIA) In accordance with FMFIA and Office of Management and Budget Circular A-123, CBP evaluated its management controls and financial management systems for the fiscal year ending September 30, 2013. As a result of this evaluation, CBP is reporting 1 material weakness and 3 instances of nonconformance. Drawback Controls CBP’s Automated Commercial System (ACS) has inherent limitations in detecting and preventing excessive drawback claims. The strengthening of drawback controls is dependent upon legislation to simplify the drawback process and to revise documentation retention requirements for the trade, and enhancing systems to implement the legislative changes. Until the legislative changes and system improvements are realized, CBP expects Drawback Controls to remain a material weakness. Financial Systems Security The DHS OIG continues to identify IT general and application control weaknesses at CBP. A number of issues were resolved during FY 2013 and remediation will continue into FY 2014. Core Financial Systems An Accounts Receivable module and data associated with inventory items held for use are not integrated with the CBP general ledger at the transaction level. Information Technology Infrastructure A technical assessment to identify issues and analyze associated mission risks of CBP’s data center and network technology infrastructure was performed in FY 2012. Remediation efforts initiated in FY 2012 continued during FY 2013. Management’s Discussion and Analysis 69
Management Assurances Overview CBP management is responsible for establishing, maintaining, and assessing internal control...
Management Assurances DHS Financial Accountability Act The DHS Financial Accountability Act requires an assertion of internal controls over financial reporting. CBP’s assessment of internal control over financial reporting included performing tests of operational effectiveness throughout FY 2013 and verification and validation of corrective action effectiveness as of September 30, 2013. Federal Financial Management Improvement Act (FFMIA) FFMIA instructs agencies to maintain an integrated financial management system that complies with Federal system requirements, Federal Accounting Standards Advisory Board standards (FASAB), and the U.S. Standard General Ledger at the transaction level. Although CBP has made significant improvements toward compliance we cannot claim full compliance because of the deficiencies previously discussed. Federal Information Security Management Act (FISMA) FISMA requires agencies to conduct an annual self-assessment review of their IT security programs and to develop and implement corrective actions for identified security weaknesses and vulnerabilities. CBP has completed a comprehensive self-assessment for FY 2013 and can state with reasonable assurance that the IT security controls are compliant with FISMA, with the exception of the items previously discussed. 70 U.S. Customs and Border Protection • Performance and Accountability Report
Management Assurances  DHS Financial Accountability Act The DHS Financial Accountability Act requires an assertion of inte...
Systems and Controls Overview Data Integrity: CBP is dedicated to providing clear, concise, relevant, and reliable data for managerial decision-making and program management. CBP strives to ensure that the data are both quantifiable and verifiable and provided in a timely manner. In place are internal management controls, including ongoing data reviews, annual self-inspections, audit trails, restricted access to sensitive data, and separation of duties, which are designed to safeguard the integrity and quality of CBP’s data resources. Data Systems and Controls: Performance data for the planned performance measures are generated by automated management information and workload measurement systems and reports as a byproduct of day-to-day operations. All levels of management routinely monitor the data systems and controls. CBP management has reviewed the performance measurement data for FY 2013 and has determined, with reasonable assurance, that the data is complete, accurate, and reliable. Audit of the FY 2013 CBP Consolidated Financial Statements: To assist the Department in complying with the DHS Financial Accountability Act of 2002, the DHS OIG engaged independent auditors, KPMG LLP, to audit CBP’s consolidated financial statements (Consolidated Balance Sheets, Consolidated Statements of Net Cost, Consolidated Statements of Changes in Net Position, Combined Statements of Budgetary Resources, and Consolidated Statements of Custodial Activity), hereinafter referred to as the “financial statements.” The objective of the audit was to determine whether CBP’s financial statements are fairly presented in accordance with Generally Accepted Accounting Principles (GAAP) in the United States. The Independent Auditors’ Report can be found on page 135. Management Inspections Program As part of its oversight role to promote the integrity, effectiveness, and efficiency of CBP programs and operations, the Office of Internal Affairs, Management Inspections Division (MID), performs management inspections that complement operational monitoring activities performed by CBP component offices; assists leadership in strengthening operations and management; and provides timely, objective, and reliable information and analysis concerning the effectiveness, integrity, and performance of CBP programs, operations, and offices. As part of an integrated inspections program, MID performs office inspections, program evaluations in the areas of core management responsibilities and control activities susceptible to financial, technological, and/or physical vulnerabilities and other analytical assessments of operational or management issues. MID’s work reflects a proactive approach to identifying areas of potential vulnerability or conditions that could hinder the successful accomplishment of CBP operational goals and objectives. During FY 2013, MID issued a total of 58 reports, presenting CBP executive managers with 722 recommendations to address operational, financial or administrative deficiencies identified during inspection activity. Financial Section 71
Systems and Controls Overview Data Integrity  CBP is dedicated to providing clear, concise, relevant, and reliable data fo...
Systems and Controls Self-Inspection Program The Self-Inspection Program (SIP), administered by the Office of Internal Affairs, MID, is one of the mechanisms through which CBP monitors agency performance, the adherence to established operational requirements, and the accomplishment of strategic goals and program objectives. The SIP promotes management accountability and strengthens the oversight of programs and operations. SIP also helps CBP meet Federal internal controls requirements established by the Federal Managers’ Financial Integrity Act, OMB Circular A-123, and the Department of Homeland Security Financial Accountability Act. Under SIP, CBP managers and supervisors annually conduct self-assessment activities, requiring them to verify that agency programs and operations have been implemented properly and effectively. In conducting the self-assessments, CBP managers’ report on the implementation of policies and procedures applicable to the operational, financial, and administrative functions reviewed through SIP. During the SIP cycle, CBP managers complete, certify, and approve the self-inspection worksheets related to the functions and activities under their control. Responses indicating compliance and non-compliance with the requirements, along with information supporting the responses, are recorded in the web-based Self-Inspection Reporting System. Managers reporting non-compliance with, or inconsistent implementation of, policies and procedures are required to implement corrective action to resolve each deficient condition in a timely manner. On a national level, the analysis of self-inspection results allows executive managers and national program managers to gauge the level of compliance with critical program management controls; identify programmatic issues that require national attention; and provide appropriate guidance to CBP offices and managers. For the current reporting cycle, nearly 1,800 managers in approximately 700 CBP Headquarters and Field Offices performed self-assessment activities researching, certifying, and /or approving the results of office self-inspections. CBP managers completed 13,791 selfinspection worksheets by answering a total of 86,379 questions. Audit Management and Liaison The MID Audit Management and Liaison team serves as the agency liaison to the GAO and the DHS OIG providing oversight concerning audits and reviews of CBP programs and operations. The Audit Management and Liaison team facilitates meetings between external auditors and CBP personnel, ensures timely responses to auditor requests for documents and interviews, coordinates CBP responses to audit findings and reports, tracks the status of required corrective actions, provides agency-wide audit training, and keeps senior leadership informed of high-profile audits and reviews. In FY 2013, CBP had 197 ongoing GAO and OIG audits. Of these audits, GAO initiated 41 new audits (73 audits were carried over from previous years) and issued 36 reports containing 30 recommendations. DHS OIG initiated 33 new audits (50 audits were carried over from previous years) and issued 21 reports containing 23 recommendations. As of the end of FY 2013, CBP has 131 open recommendations. 72 U.S. Customs and Border Protection • Performance and Accountability Report
Systems and Controls  Self-Inspection Program The Self-Inspection Program  SIP , administered by the Office of Internal Af...
Financial Management Overview CBP strives to be a leader in financial management by providing high-quality, cost-efficient services through customer involvement and modern, integrated financial systems. CBP is positioning to become a shared accounting service provider to other DHS components. CBP’s goal is to continuously develop and implement more effective and efficient methods to obtain, manage, and deliver the financial resources, capital assets, and financial services required to meet or exceed the needs of customers and stakeholders. Because CBP is also a revenue-collection agency, it is imperative that it accurately identify amounts owed to CBP and efficiently and effectively collect, report, and account for revenue. Providing top-quality financial management services includes translating workloads and requirements into budget requests for needed resources, allocating and distributing funds after resources are made available, acquiring and distributing goods and services used to accomplish the CBP mission, managing and paying for those goods and services, and reporting on the costs and use of personnel, goods, and services. For FY 2013, CBP continues to use SAP as its financial software. SAP is an Enterprise Resource Planning (ERP) solution that integrates budget formulation, budget execution, acquisition through the disposal of assets, requisition through payment, billing to collection of receivables, and business intelligence. SAP integrates business processes and reporting within one system, thereby eliminating unnecessary data entry, ensuring data accuracy, and enabling single system reporting and analytical reporting. SAP ensures that CBP complies with Federal Government standards and regulations for financial management systems. This single integrated solution supports program types eliminating data redundancy and inefficiencies. Overview of the Financial Statements The financial statements and footnotes appear in the “Financial Section” of this report on pages 89 through 128. The financial statements have been audited by the independent auditor engaged by the DHS OIG, KPMG LLP, who determined that the financial statements are fairly presented in accordance with GAAP. Consolidated Balance Sheet The Consolidated Balance Sheet presents the property owned by CBP (assets), amounts owed by CBP (liabilities), and the amounts of the difference (net position). As of September 30, 2013, total assets were $15.5 billion, a 2 percent decrease from FY 2012. As of September 30, 2013, total liabilities were 6 billion, a decrease of 1 percent over FY 2012. The assets and liabilities charts present a comparison of the major categories as a percentage of the totals for FY 2013 and FY 2012. Management’s Discussion and Analysis 73
Financial Management Overview CBP strives to be a leader in financial management by providing high-quality, cost-efficient...
Financial Management Other 5% 2013  Assets Duties  &  Trade   Receivables 17% Fund  Balance   with  Treasury 38% Property,  Plant   &  Equipment 40%   Refunds   Payable 3% 2013  Liabilities Other 16% Payroll  &   Benefits 24% Accounts   Payable 9%   Injured  Domestic   Industries 2% Due  to  General   Fund 46%     Consolidated Statement of Net Cost The Consolidated Statement of Net Cost presents the net cost of the major CBP programs as they relate to the goals of the 2009–2014 Strategic Plan. The gross cost less any offsetting revenue for each program equals net cost of operations. Net cost of operations was $12.6 billion. In FY 2013, CBP changed the program structure for reporting costs and revenue associated with accomplishing CBP’s mission goals. The FY 2012 presentation was not restated in the FY 2013 format because the FY 2013 programs are not applicable for FY 2012 reporting; therefore, the FY 2012 chart below is presented following the FY 2012 programs. For further information, see the Notes to the Financial Statements. 2013  Net  Program  Costs   Securing  and   Expedi8ng  Travel   31%   Intelligence  and   Targe8ng   4%   Securing  America's   Borders   41%   Securing  and   Expedi8ng  Trade   24%   74 U.S. Customs and Border Protection • Performance and Accountability Report
Financial Management  Other 5   2013     Assets  Duties           Trade      Receivables 17   Fund     Balance      with  ...
Financial Management Consolidated Statement of Changes in Net Position The Consolidated Statement of Changes in Net Position represents those accounting transactions that caused the net position of the balance sheet to change from the beginning to the end of the reporting period. CBP’s net cost of operations serves to reduce the net position. Appropriations used totaled $8.0 billion, representing 63 percent of CBP’s total financing sources. CBP collected and retained $3.8 billion of non-exchange revenue, amounting to 30 percent of total financing sources, which was used to fund CBP operations. Combined Statement of Budgetary Resources The Combined Statement of Budgetary Resources illustrates how budgetary resources were made available, as well as their status at the end of FY 2013. CBP had $16.2 billion in budgetary resources, of which $1.3 billion were unobligated. CBP incurred obligations of $14.9 billion and recorded $15.1 billion in gross outlays by the end of the Fiscal Year. Consolidated Statement of Custodial Activity The Consolidated Statement of Custodial Activity presents non-entity (financial activity conducted by CBP on behalf of others) revenue and refunds using a modified cash basis. This method reports revenue from cash collections separately from receivable accruals, and cash disbursements are reported separately from payable accruals. The custodial revenue, using the modified cash basis, for FY 2013 was $36.8 billion. 2013  Custodial  Cash  Collections Excise  Taxes 9% User  Fees 4% Other <1% Duties 87%     Limitations of the Financial Statements The principal financial statements have been prepared to report the financial position and results of the operations of CBP, pursuant to the requirements of 31 U.S.C. 3515(b). While the financial statements have been prepared from the books and records of CBP in accordance with GAAP for Federal entities and the formats prescribed by OMB, the statements are in addition to the financial reports used to monitor and control budgetary resources, which are prepared from the same books and records. The financial statements should be read with the realization that they are a component of the U.S. Government, a sovereign entity. Management’s Discussion and Analysis 75
Financial Management  Consolidated Statement of Changes in Net Position The Consolidated Statement of Changes in Net Posit...
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Performance Summary Performance Section This section provides information on CBP’s progress in achieving performance goals and objectives. Performance Section 77
Performance Summary  Performance Section  This section provides information on CBP   s progress in achieving performance g...
Performance Summary The charts below highlight CBP’s success in achieving FY 2013 performance goals. The performance measures are established as an integral part of CBP’s Missions, Goals, and Priorities, FY 2011-2013 document, the Quadrennial Homeland Security Review, and the DHS Future Years Homeland Security Program (FYHSP). The measurement data is collected through various systems and methods and then entered into the FYHSP System for tracking and compiling for management decision-making and year-end reporting. FY 2013 Performance Summary 56% Target met Target not met 44%   Security, threat, and risk analyses often necessitate changes in the agency’s focus. CBP performance measures continue to evolve to better reflect operational functions and alignment with critical missions. For FY 2013, CBP has 9 GPRA performance measures that support CBP’s Missions, Goals, and Priorities, FY 2011-2013 document. Of the 9 performance measures, 4 were met and 5 were not met. The performance data presented in this report is in accordance with the guidance provided by OMB. The data integrity discussion in the “Systems and Controls” section of the “Management’s Discussion and Analysis” (page 71) describes CBP’s commitment to providing quality and timely performance information to increase its value to CBP management and interested parties. CBP managers routinely use this data to improve the quality of program management and demonstrate accountability of program results. 78 U.S. Customs and Border Protection • Performance and Accountability Report
Performance Summary The charts below highlight CBP   s success in achieving FY 2013 performance goals. The performance mea...
Performance Summary Individual Performance Measure Results This section describes CBP’s FY 2013 results for each GPRA performance measure by the CBP Mission Set and performance objective they support. Although some of the performance measures may relate to more than one performance objective, each performance measure was aligned under the single objective considered most relevant or meaningful. Discussions of the key performance measures can be found in the “Management’s Discussion and Analysis” section under “Performance Goals and Results,” beginning on page 62. Mission Set 1: Securing America’s Borders Performance Objective–Secure the U.S. border in areas deemed as high priority for terrorist threat potential or other national security objectives. The measures aligned to this Mission Set show CBP’s effectiveness in securing the border and achieving the Mission Set’s performance objective. For example, there is a correlation between the “Number of apprehensions on the Southwest Border between the ports of entry” and the number of unlawful migrants attempting to cross the Southwest Border. By effectively utilizing a combination of additional personnel, technology, and infrastructure; delivering appropriate consequences to repeat offenders; and leveraging partnerships, CBP can decrease the “Number of apprehensions on the Southwest Border between the ports of entry” and ultimately decrease the number of unlawful migrants attempting to cross the Southwest Border as a result of deterrence. CBP is also screening southbound vehicle traffic for the illegal weapons and cash that are helping fuel the cartel violence in Mexico. The “Amount of currency seized on exit from the United States” and the “Number of weapons seized on exit from the United States” show the results of CBP’s efforts in this area. Measure: Percent of people apprehended multiple times along the Southwest border Explanation of FY 2013 Results Target Met—See page 64 for results and detailed discussion Measure: Number of smuggled outbound weapons seized at the ports of entry. Explanation of FY 2013 Results Target Met—See page 65 for results and detailed discussion Performance Section 79
Performance Summary  Individual Performance Measure Results This section describes CBP   s FY 2013 results for each GPRA p...
Performance Summary Measure: Number of apprehensions on the Southwest Border between the ports of entry Description of Measure: Protection of our Southwest border against threats from illicit crossborder activity is a key element needed to secure our country. In recent years, the Border Patrol has worked to reduce the level of threat along the border by strategically positioning personnel, technology, and defensive infrastructure; developing strong partnerships with law enforcement partners on both sides of the border; and providing a deterrent by increasing consequences to repeat offenders. One noted change to the border environment, credited in part to improved border enforcement, is a reduction in apprehensions made by Border Patrol agents along the border. Our efforts for the coming years will focus on maintaining improvements made, while striving to gradually reduce apprehensions even more. Unforeseen changes in migration patterns to the United States—influenced by events such as dramatic economic impacts to a country or region or natural disasters—could alter our projections of apprehensions. Fiscal Year: Target: Actual: FY 2009 N/A N/A Explanation of FY 2013 Results Recommended Action 80 FY 2010 FY 2011 FY 2012 FY 2013 N/A ≤ 390,000 ≤ 371,000 ≤391,000 N/A 327,577 356,873 414,397 Target Not Met—CBP’s U.S. Border Patrol made 414,397 apprehensions on the Southwest border between ports of entry in FY 2013. This remains low historically, but represents an increase of 16 percent over FY 2012. A combination of factors influenced the rise, including improvement in the U.S. economy, an increase in attempts by persons from countries other than Mexico due to U.S./foreign economic factors and emigration/immigration dynamics from sending/transit countries, and possible change in attempts due to perceptions surrounding immigration reform legislation. This measure was originally introduced to gauge short-term impacts of enforcement improvements along the Southwest Border, where apprehensions have historically been high. Due to its short-term focus, this measure will be retired and replaced with an Interdiction Effectiveness Rate measure, which better evaluates U.S. Border Patrol’s ability to apprehend or turn back would-be illegal entrants. U.S. Customs and Border Protection • Performance and Accountability Report
Performance Summary  Measure  Number of apprehensions on the Southwest Border between the ports of entry Description of Me...
Performance Summary Measure: Percent of detected conventional aircraft incursions resolved along all borders of the United States Description of Measure: The measure represents the percent of conventional aircraft, once detected visually or by radar, that are suspected of illegal cross border activity and are brought to a successful law enforcement resolution. In some cases, Office of Air and Marine assets are launched to interdict the aircraft. In most cases, resolution of the aircraft identity is made by the Air and Marine Operations Center working with interagency partners, such as the Federal Aviation Administration. If the incursion is deemed legal, OAM considers the incursion resolved. If AMOC could not identify that target in working with our partners, including OAM assets, the incursion is deemed unresolved and is thus considered illegal. Fiscal Year: Target: Actual: FY 2009 N/A N/A FY 2010 N/A N/A FY 2011 100.00% 95.30% FY 2012 100.00% 96.04% FY 2013 100.00% 99.30% Explanation of FY 2013 Results Target Not Met—FY 2013 totals were 286 of 288 border incursions resolved. The two unresolved aircraft (down from 12 in FY 2012) were visually spotted by Border Patrol/Office of Field Operations agents on the northern border and reported to Air Marine Operations Center who did not have radar data and could not identify the targets. Recommended Action The Air and Marine program will continue to evaluate and improve tactics, techniques, and procedures to track and resolve visually detected incursions in order to bring individuals that commit illegal incursions to a successful law enforcement resolution. With these limiting factors in consideration, AMOC continuously improves processes and partnerships and ingests new technologies that can mitigate our vulnerabilities and gaps thus reducing the number of “unresolved” aircraft incursions. Performance Section 81
Performance Summary  Measure  Percent of detected conventional aircraft incursions resolved along all borders of the Unite...
Performance Summary   Mission Set 2: Securing and Expediting the Movement of People and the Flow of Goods Performance Objective–Improve the targeting, screening, and apprehension or seizure of high-risk international travelers and cargo away from the physical border in order to prevent terrorist attacks and criminal activity while expediting the processing of legitimate travelers and cargo. The measures aligned to this Mission Set are focused on showing CBP’s effectiveness in preventing terrorist attacks and criminal activity while expediting the flow of people and goods. In order to achieve the performance objective, CBP has established several programs and initiatives. In 2001, CBP established the Customs-Trade Partnership Against Terrorism (C-TPAT) program as a voluntary government-business initiative to build cooperative relationships that strengthen and improve overall international supply chain and U.S. border security. By C-TPAT members complying with established security standards, CBP can expedite members’ shipments and focus on screening high-risk cargo. The “Compliance rate for C-TPAT members with the established C-TPAT security guidelines” shows the percent of C-TPAT members that were in compliance with the established security standards during their periodic validation. In addition, CBP has established revenue collection as a Priority Trade Issue (PTI). To avoid the full payment of lawfully owed duties and fees to the U.S. Government, importers are prone to use a variety of circumvention schemes. The “Percent of import revenue successfully collected” shows how effective CBP was in the past year in collecting the revenue that was due to the U.S. 82 U.S. Customs and Border Protection • Performance and Accountability Report
Performance Summary         Mission Set 2  Securing and Expediting the Movement of People and the Flow of Goods Performanc...
Performance Summary Measure: Compliance rate for Customs - Trade Partnership Against Terrorism (C - TPAT) members with the established C - TPAT security guidelines Description of Measure: This measure provides the overall compliance rate achieved for all validations performed during the Fiscal Year. After acceptance into the Customs - Trade Partnership Against Terrorism program, all C - TPAT members must undergo a periodic validation in which U.S. Customs and Border Protection examiners visit company locations and verify compliance with an industry - specific set of CBP security standards and required security practices. These validations are prepared using a weighted scoring system that is used to develop an overall compliance rate for each company. Compliance with security guidelines enhances the security of cargo shipped to the U.S. Fiscal Year: Target: Actual: FY 2009 99.00% 97.50% FY 2010 95.00% 97.80% FY 2011 100.00% 95.10% FY 2012 100.00% 94.50% FY 2013 94.00% 96.89% Explanation of FY 2013 Results Target Met—C-TPAT worked with partner companies to successfully explain the enhanced security criteria implemented over the past few years and ensure they understood the validation requirements applicable to their organization. Recommended Action N/A Compliance Rate for Customs - Trade Partnership Against Terrorism (C - TPAT) Members with the Established C - TPAT Security Guidelines 100.0% 99.0% 98.0% 96.0% Compliance Rate for CTPAT Members 94.0% 97.8% 100.0% 96.9% 97.5% Target 95.0% 95.1% 94.5% 94.0% FY 2012 Actual FY 2013 92.0% 90.0%   FY 2009 FY 2010 FY 2011 Performance Section 83
Performance Summary  Measure  Compliance rate for Customs - Trade Partnership Against Terrorism  C - TPAT  members with th...
Performance Summary Measure: Percent of Import Revenue Successfully Collected Description of Measure: This measure estimates the collected duties, taxes, and fees (called net under-collection of revenue) expressed as a percent of all collectable revenue due from commercial imports to the United States directed by trade laws, regulations, and agreements. The total collectable revenue is total collected revenue plus the estimated net under-collected revenue based on trade violations. The revenue gap is a calculation of uncollected duties (the difference between estimated under-collection and overpayment) based on statistical sampling. Fiscal Year: Target: Actual: FY 2009 N/A N/A FY 2010 N/A N/A FY 2011 100.00% 99.12% FY 2012 100.00% 98.88% FY 2013 100.00% 98.73% Target Not Met—The number of major transactional classification Explanation of FY 2013 Results discrepancies identified during the random sampling process increased resulting in a decrease in revenue collected. CBP will target importers to resolve classification errors and apply various enforcement techniques to collect the owed revenue. Recommended Action Percent of Import Revenue Successfully Collected Percent of Revenue Successfully Collected 99.12% 98.88% 98.73% 95% 90% 84 100% 100% FY 2009 FY 2010 FY 2011 U.S. Customs and Border Protection • Performance and Accountability Report FY 2012 FY 2013 Target Actual
Performance Summary  Measure  Percent of Import Revenue Successfully Collected Description of Measure  This measure estima...
Performance Summary Measure: Percent of imports compliant with applicable U.S. trade laws Description of Measure: This measure reports the percent of imports that are compliant with U.S. trade laws including customs revenue laws. Ensuring that all imports are compliant and free of major discrepancies allows for lawful trade into the U.S. Fiscal Year: Target: Actual: FY 2009 N/A N/A FY 2010 98.00% 98.89% FY 2011 98.00% 97.67% FY 2012 98.00% 96.46% FY 2013 97.50% 97.66% Target Met—CBP through ISA/CTPAT programs and Centers Explanation of FY 2013 Results for Excellence and Expertise instituted this FY 2013 - closely monitored importers to reduce the non-compliance rates. Recommended Action N/A   Measure: Percent of cargo by value imported to the U.S. by participants in CBP trade partnership programs Explanation of FY 2013 Results Target Not Met—See page 66 for results and detailed discussion Measure: Percent of inbound cargo identified by CBP as potentially high-risk that is assessed or scanned prior to departure or at arrival at a U.S. port of entry. Explanation of FY 2013 Results Target Not Met—See page 67 for results and detailed discussion Performance Section 85
Performance Summary  Measure  Percent of imports compliant with applicable U.S. trade laws Description of Measure  This me...
Performance Summary Mission Set 3: Sustaining Investment in People and Capabilities Performance Objective–Improve mission effectiveness and efficiency by integrating, unifying, and leveraging resources to support CBP’s operational offices. While the activities that fall under this Mission Set are important to CBP’s success, CBP does not have GPRA or Strategic measures that align to this Mission Set, due to the mission support nature of its activities. Operational measures exist within this Mission Set and are used in internal decision-making processes. 86 U.S. Customs and Border Protection • Performance and Accountability Report
Performance Summary  Mission Set 3  Sustaining Investment in People and Capabilities Performance Objective   Improve missi...
Financial Section This section presents CBP’s audited comparative financial statements, related note disclosures, and Independent Auditors’ Report. Performance Section 87
Financial Section  This section presents CBP   s audited comparative financial statements, related note disclosures, and I...
Message from the Chief Financial Officer Each and every day, U.S. Customs and Border Protection (CBP) works assiduously to secure our Nation’s borders and facilitate lawful international trade and travel while enforcing U.S. laws and regulations. In challenging times, such as this past fiscal year, CBP continued to focus on the mission priorities while promoting efficiencies across the Agency and making optimal use of CBP’s resources. CBP’s ability to efficiently and effectively manage resources in support of this mission includes providing citizens with timely, reliable, and useful financial and performance information. It also includes the information and analytics that facilitates informed decision-making by Departmental leadership and key stakeholders. The purpose of this report is to provide a comprehensive assessment of our Agency’s financial performance and report on our stewardship of CBP’s resources in support of our mission of securing the United States and facilitating our Nation’s prosperity during Fiscal Year (FY) 2013. CBP received an Unmodified Audit Opinion on its FY 2013 Financial Statements. This is CBP’s eighth Unmodified Audit Opinion, a track record that the Agency is very proud of and dedicated to preserving. The FY 2013 Financial Statement audit results identified financial management improvements, such as enhanced controls over and improved management and accountability of property, plant, and equipment, and a reduction in the number of information technology control issues. I can provide reasonable assurance that CBP achieved the objectives of Section 2 (Management Controls) and Section 4 (Financial Management Systems) of the Federal Managers’ Financial Integrity Act with certain exceptions identified as part of CBP’s Management Assurance. CBP is committed to addressing all of our financial management challenges by continuing to implement corrective measures designed to improve our oversight and accountability. CBP is implementing an enhanced risk management framework that prioritizes and addresses financial risks and business process weaknesses. The risk management framework will compel a more strategic view of business risk management and will result in improved coordination over distributed business processes, targeted corrective action planning, and more effective utilization of resources devoted to addressing internal controls. CBP will continue to be challenged by the issues relating to custodial revenue and drawback. The control issues associated with drawback cannot be fully resolved without legislative changes and costly system enhancements; however, we continue to identify and implement management improvements in the custodial revenue areas where these limitations exist. The diligent work of employees across CBP allows us to maintain our high standards of financial stewardship. Specifically, the Office of Administration is focused on mission first and stewardship always. A key component of these efforts is to provide timely, reliable, and useful financial management information to the U.S. Congress and the American public, and enable the managers across CBP to make smart business decisions. Deborah J. Schilling 88 U.S. Customs and Border Protection • Performance and Accountability Report
Message from the Chief Financial Officer      Each and every day, U.S. Customs and Border Protection  CBP  works assiduous...
Financial Statements Introduction The financial statements have been audited by the independent auditor engaged by the DHS OIG, KPMG LLP, who determined that the financial statements are fairly presented in accordance with GAAP. •• The Consolidated Balance Sheets present the property owned by CBP (assets), amounts owed by CBP (liabilities), and the amounts of the difference (net position). •• The Consolidated Statements of Net Cost present the net cost of the major CBP programs as they relate to the goals of the 2009–2014 Strategic Plan. •• The Consolidated Statements of Changes in Net Position represent those accounting transactions that caused the net position of the balance sheet to change from the beginning to the end of the reporting period. CBP’s net cost of operations serves to reduce the net position. •• The Combined Statements of Budgetary Resources illustrate how and in what amounts budgetary resources were made available, as well as their status at the end of FY 2013. •• The Consolidated Statements of Custodial Activity present non-entity (financial activity conducted by CBP on behalf of others) revenue and refunds using a modified cash basis. Financial Section 89
Financial Statements Introduction The financial statements have been audited by the independent auditor engaged by the DHS...
Financial Statements Customs and Border Protection Consolidated Balance Sheets As of September 30, 2013 and 2012 (in Thousands) 2013 2012 ASSETS (Note 2) Intra-governmental: Fund Balance with Treasury (Note 3) Accounts Receivable Advances and Prepayments (Note 11) Total Intra-governmental $ 5,922,817 26,584 133,918 $ 6,083,319 $ 6,248,505 17,788 175,601 $ 6,441,894 Cash and Other Monetary Assets (Note 4) Accounts Receivable, Net (Note 5) Taxes, Duties and Trade Receivables, Net (Note 6) Inventory and Related Property, Net (Note 7) General Property, Plant and Equipment, Net (Note 9) (Note 7) Other Assets (Note 11) TOTAL ASSETS 4,966 363,444 2,682,007 198,365 6,198,917 429 $15,531,447 3,632 202,180 2,700,465 190,712 6,337,045 233 $15,876,161 $ $ Stewardship Property, Plant and Equipment (Note 10) LIABILITIES (Note 12) Intra-governmental: Accounts Payable Other Due to the Treasury General Fund Accrued Federal Employees’ Compensation Act Liability (Note 12) Other Employment Liabilities (Note 12) Employee Benefits and Taxes Advances From Others Total Intra-governmental Accounts Payable Environmental and Disposal Liabilities (Notes 12 and 14) Other Accrued Payroll and Benefits (Note 13) Refunds Payable (Note 15) Deferred Revenue Injured Domestic Industries (Note 15) Liabilities for Deposit Accounts Legal Contingent Liabilities (Note 17) TOTAL LIABILITIES Commitments and Contingencies (Note 17) 201,859 238,091 2,758,418 165,071 322 131,955 1,519 $ 3,259,144 2,783,682 153,378 674 119,128 2,024 $ 3,296,977 347,919 17,524 241,941 17,610 1,475,399 167,524 45,124 105,052 250,328 381,572 $ 6,049,586 1,638,595 176,910 -140,374 203,369 374,452 $ 6,090,228 ,, ,, NET POSITION: Unexpended Appropriations Cumulative Results of Operations – Funds from Dedicated Collections (Note 18) Cumulative Results of Operations – Other Funds TOTAL NET POSITION 3,340,275 641,492 3,809,738 434,672 5,500,094 $ 9,481,861 5,541,523 $ 9,785,933 TOTAL LIABILITIES AND NET POSITION $15,531,447 $15,876,161 The accompanying notes are an integral part of these financial statements. 90 U.S. Customs and Border Protection • Performance and Accountability Report Financial Section
Financial Statements Customs and Border Protection Consolidated Balance Sheets As of September 30, 2013 and 2012  in Thous...
Financial Statements Customs and Border Protection Consolidated Statement of Net Cost For the Year Ended September 30, 2013 (in Thousands) 2013 Securing America’s Borders Gross Cost Less: Earned Revenue Net Program Costs $ 5,142,124 9,251 $ 5,132,873 Securing and Expediting Trade Gross Cost Less: Earned Revenue Net Program Costs 3,101,084 137,613 $ 2,963,471 Securing and Expediting Travel Gross Cost Less: Earned Revenue Net Program Costs 3,973,194 90,662 $ 3,882,532 Intelligence and Targeting Gross Cost Less: Earned Revenue Net Program Costs $ Total Gross Cost Less: Total Earned Revenue Net Cost of Operations (Notes 19 and 20) 12,791,283 240,182 $12,551,101 574,881 2,656 572,225 The accompanying notes are an integral part of these financial statements. Financial Section 91
Financial Statements Customs and Border Protection Consolidated Statement of Net Cost For the Year Ended September 30, 201...
Financial Statements Customs and Border Protection Consolidated Statement of Net Cost For the Year Ended September 30, 2012 (in Thousands) 2012 Border Security Inspections and Trade Facilitation at Ports of Entry Gross Cost Less: Earned Revenue Net Program Costs $ 6,609,914 161,474 $ 6,448,440 Border Security and Control Between Ports of Entry Gross Cost Less: Earned Revenue Net Program Costs 4,634,941 110,197 $ 4,524,744 Border Security Fencing, Infrastructure and Technology Gross Cost Less: Earned Revenue Net Program Costs $ 362,052 167 361,885 $ 315,615 (1) 315,616 Air and Marine Operations Gross Cost Less: Earned Revenue Net Program Costs $ 700,205 6,296 693,909 Total Gross Cost Less: Total Earned Revenue Net Cost of Operations (Notes 19 and 20) 12,622,727 278,133 $12,344,594 Automation Modernization Gross Cost Less: Earned Revenue Net Program Costs The accompanying notes are an integral part of these financial statements. 92 U.S. Customs and Border Protection • Performance and Accountability Report
Financial Statements Customs and Border Protection Consolidated Statement of Net Cost For the Year Ended September 30, 201...
Financial Statements Customs and Border Protection Consolidated Statement of Changes In Net Position For the Year Ended September 30, 2013 (in Thousands) Cumulative Results of Operations: Beginning Balances FY 2013 Funds from Dedicated Collections Consolidated Total 434,672 $ 5,541,523 $ 5,976,195 -605,005 (2,284,561) 8,015,477 7,754 2,527,939 8,015,477 612,759 243,378 --3,046,620 36,425 598,159 163,674 36,425 598,159 3,210,294 Total Financing Sources Net Cost of Operations Net Change $ 1,367,064 (1,160,244) $ 206,820 $ 11,349,428 (11,390,857) $ (41,429) $ 12,716,492 (12,551,101) $ 165,391 Cumulative Results of Operations $ 641 492 $ 5,500,094 $ 6,141,586 Unexpended Appropriations: Beginning Balance $ -- $ 3,809,738 $ 3,809,738 Budgetary Financing Sources: Appropriations Received (Note 24) Appropriations Transferred In/Out Other Adjustments Appropriations Used Total Budgetary Financing Sources Total Unexpended Appropriations $ $ ------- 8,200,559 28,767 (683,312) (8,015,477) $ ( 469,463) $ 3,340,275 8,200,559 28,767 (683,312) (8,015,477) ) $ (469,463) $ 3,340,275 Net Position $ 641,492 $ 8,840,369 $ 9,481,861 Budgetary Financing Sources: Appropriations Used Non-exchange Revenue (Note 21) Transfers In/Out Without Reimbursement (Note 21) $ All Other Funds Other Financing Sources (Non-exchange): Transfers In/Out Without Reimbursement Imputed Financing Other (Note 21) The accompanying notes are an integral part of these financial statements. The accompanying notes are an integral part of these financial statements. Financial Section 93
Financial Statements Customs and Border Protection Consolidated Statement of Changes In Net Position For the Year Ended Se...
Financial Statements Customs and Border Protection Consolidated Statement of Changes In Net Position For the Year Ended September 30, 2012 (in Thousands) Cumulative Results of Operations: Beginning Balances Adjustment: Change in Accounting Principle (Note 22) Beginning Balances, as adjusted FY 2012 Funds from Dedicated Collections All Other Funds Consolidated Total $ 1,000,085 $ 4,513,712 $ 5,513,797 (639,940) 360,145 639,940 5,153,652 -5,513,797 Budgetary Financing Sources: Appropriations Used Non-exchange Revenue (Note 21) Transfers In/Out Without Reimbursement (Note 21) -573,856 (2,218,859) 8,390,572 8,340 2,459,986 8,390,572 582,196 241,127 Other Financing Sources (Non-exchange): Transfers In/Out Without Reimbursement Imputed Financing Other (Note 21) Total Financing Sources Net Cost of Operations Net Change --2,851,583 $ 1,206,580 (1,132,053) $ 74,527 60,926 645,076 35,512 $11,600,412 (11,212,541) $ 387,871 60,926 645,076 2,887,095 $12,806,992 (12,344,594) $ 462,398 Cumulative Results of Operations $ 434,672 $ 5,541,523 $ 5,976,195 Unexpended Appropriations: Beginning Balance $ -- $ 4,253,612 $ 4,253,612 8,051,909 5,770 (110,981) (8,390,572) Total Budgetary Financing Sources Total Unexpended Appropriations $ $ ------- $ (443,874) $ 3,809,738 8,051,909 5,770 (110,981) (8,390,572) ) $ (443,874) Net Position $ 434,672 $ 9,351,261 Budgetary Financing Sources: Appropriations Received (Note 24) Appropriations Transferred In/Out Other Adjustments Appropriations Used The accompanying notes are an integral part of these financial statements. 94 The accompanying notes are anPerformance and Accountability Report U.S. Customs and Border Protection • integral part of these financial statements. $ 3,809,738 $ 9,785,933
Financial Statements Customs and Border Protection Consolidated Statement of Changes In Net Position For the Year Ended Se...
Financial Statements Customs and Border Protection Combined Statements of Budgetary Resources For the Years Ended September 30, 2013 and 2012 (in Thousands) 2013 Budgetary Resources: Unobligated balance brought forward, October 1 Adjustment to unobligated balance brought forward, October 1 (Note 22) Unobligated balance brought forward, October 1, as adjusted Recoveries of prior year unpaid obligations Other changes in unobligated balance Unobligated balance from prior year budget authority, net Appropriations (Note 24) Spending authority from offsetting collections Total Budgetary Resources 2012 $ 1,310,864 -$ 1,310,864 389,321 (95,947) $ 1,604,238 12,953,010 1,597,568 $ 16,154,816 $ 2,268,372 (639,940) $ 1,628,432 351,236 (93,385) $ 1,886,283 13,719,063 1,618,346 $ 17,223,692 $ 14,862,504 $ 15,912,828 717,874 574,438 $ 1,292,312 $ 16,154,816 638,510 672,354 $ 1,310,864 $ 17,223,692 $ 4,157,480 14,862,504 (15,109,658) (389,321) 3,521,005 $ 4,713,167 15,912,828 (16,117,279) (351,236) 4,157,480 (162,620) 10,861 (151,759) (163,896) 1,276 (162,620) Obligated Balance, Start of Year $ 3,994,860 $ 4,549,271 Obligated Balance, End of Year $ 3,369,246 $ 3,994,860 Budget Authority and Outlays, Net: Budget authority, gross Actual offsetting collections Change in uncollected customer payments from Federal sources Budget Authority, Net $ 14,550,578 (1,608,429) 10,861 $ 12,953,010 $ 15,337,409 (1,619,622) 1,276 $ 13,719,063 Status of Budgetary Resources: Obligations incurred (Note 23) Unobligated balance, end of year: Apportioned Unapportioned Total unobligated balance, end of year Total Budgetary Resources Change in Obligated Balance: Unpaid Obligations: Unpaid obligations, brought forward, October 1 (gross) Obligations incurred (Note 23) Outlays (gross) Recoveries of prior year unpaid obligations Unpaid obligations, end of year (gross) Uncollected Payments: Uncollected customer payments from Federal sources, brought forward, October 1 Change in uncollected customer payments from Federal sources Uncollected customer payments from Federal sources, end of year The accompanying notes are an integral part of these financial statements. Financial Section 95
Financial Statements Customs and Border Protection Combined Statements of Budgetary Resources For the Years Ended Septembe...
Financial Statements Customs and Border Protection Combined Statements of Budgetary Resources For the Years Ended September 30, 2013 and 2012 (in Thousands) 2013 Outlays, gross Actual offsetting collections Outlays, net Distributed offsetting receipts Agency Outlays, Net The accompanying notes are an integral part of these financial statements. 96 The accompanying notes are an integral part of these financial statements. U.S. Customs and Border Protection • Performance and Accountability Report $15,109,658 (1,608,429) $13,501,229 (3,776,910) $ 9,724,319 2012 $16,117,279 (1,619,622) $14,497,657 (3,499,993) $10,997,664
Financial Statements Customs and Border Protection Combined Statements of Budgetary Resources For the Years Ended Septembe...
Financial Statements Customs and Border Protection Consolidated Statements of Custodial Activity For the Years Ended September 30, 2013 and 2012 (in Thousands) 2013 2012 Revenue Activity (Note 28): Sources of Cash Collections: Duties User Fees Excise Taxes Fines and Penalties Interest Miscellaneous Total Cash Collections $31,709,053 1,567,987 3,162,638 61,265 (41,456) 144,392 $36,603,879 $30,532,909 1,583,511 3,104,632 61,597 58,422 137,582 $35,478,653 Accrual Adjustments (+/-) Total Custodial Revenue 221,931 $36,825,810 149,686 $35,628,339 Disposition of Collections: Transferred to Others: Treasury General Fund Accounts U.S. Department of Agriculture U.S. Army Corps of Engineers Other Federal Agencies Government of Puerto Rico Non-Federal Other (Increase)/Decrease in Amounts Yet to be Transferred Refunds and Drawbacks (Note 28) $23,662,443 9,694,052 1,523,171 97,560 6,094 72,036 271,543 1,498,911 $22,114,679 9,344,681 1,539,799 87,683 14,615 119,976 156,437 2,250,469 Total Disposition of Collections Net Custodial Activity $36,825,810 $ -- $35,628,339 $ -- The accompanying notes are an integral part of these financial statements. The accompanying notes are an integral part of these financial statements. Financial Section 97
Financial Statements Customs and Border Protection Consolidated Statements of Custodial Activity For the Years Ended Septe...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 1. Significant Accounting Policies Reporting Entity U.S. Customs and Border Protection (CBP) was created on March 1, 2003, and is a component of the U.S. Department of Homeland Security (DHS). CBP is the unified border agency whose priority mission is the prevention of terrorists and terrorists’ weapons from entering the U.S. In addition to its priority mission, CBP works to protect America and its citizens by carrying out its traditional missions more effectively using innovative approaches. These traditional missions include enforcing United States trade, immigration and other laws at the borders. Trade-related mission activities include protecting American businesses from theft of their intellectual property and unfair trade practices; regulating and facilitating international trade; collecting import duties; enforcing trade laws related to admissibility; regulating trade practices to collect the appropriate revenue; and maintaining export controls. Other traditional missions include controlling the borders by apprehending individuals attempting to enter the United States illegally; stemming the flow of illegal drugs and other contraband; protecting agriculture and economic interests from harmful pests and diseases; processing all people, vehicles and cargo entering the United States; and coordinating with the Department of Defense and others to protect the National Capital Region. Substantially all duty, tax, and fee revenues collected by CBP are remitted to various general fund accounts maintained by the U.S. Department of the Treasury (Treasury), U.S. Department of Agriculture, and U.S. Army Corps of Engineers. Treasury further distributes these revenues to other Federal agencies in accordance with various laws and regulations. CBP transfers the remaining revenue (generally less than 1 percent of revenues collected) directly to other Federal agencies, the Government of Puerto Rico and the U.S. Virgin Islands. Refunds of revenues collected from import/export activity are recorded in separate accounts established for this purpose and are funded through a permanent indefinite appropriation. These activities reflect the non-entity or custodial responsibilities that CBP, as an agency of the Federal Government, has been authorized by law to enforce. Basis of Accounting and Presentation These financial statements have been prepared from CBP’s accounting records in conformity with generally accepted accounting principles (GAAP). The Federal Accounting Standards Advisory Board (FASAB), which was designated the official accounting standard-setting body of the Federal Government by the American Institute of Certified Public Accountants, is responsible for identifying the GAAP hierarchy for Federal reporting entities. FASAB has identified the hierarchy to be used in Statement of Federal Financial Accounting Standards (SFFAS) 34, “The Hierarchy of Generally Accepted Accounting Principles, including the Application of Standards Issued by the Financial Accounting Standards Board.” The statements consist of the Consolidated Balance Sheets, Consolidated Statements of Net Cost, Consolidated Statements of Changes In Net Position, Combined Statements of Budgetary Resources, and Consolidated Statements of Custodial Activity. All statements are prepared in accordance with Office of Management and Budget (OMB) Circular A-136. In FY 2013 the presentation of the Statement of Net Cost changed to better reflect how CBP does business. See Note 19, Intra-governmental Costs and Exchange Revenue, for additional information. These financial statements should be read with the understanding that CBP is a component of a sovereign entity; for which budgetary resources cannot be liquidated without the enactment of an appropriation, and that payment of liabilities other than for contracts can be abrogated by the sovereign entity. These financial statements, with respect to the Consolidated Balance Sheets, Consolidated Statements of Net Cost and Consolidated Statements of Changes In Net Position, are reported using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recognized when a liability is incurred without regard to receipt or payment of cash. The Combined Statements of Budgetary Resources are reported using the budgetary basis of accounting. Budgetary accounting facilitates compliance with legal constraints and controls over the use of Federal funds. It generally differs from the accrual basis of accounting in that obligations are recognized when new orders are placed, contracts awarded and services received that will require payments during the same or future period. CBP non-entity revenue and refunds are reported on the Consolidated Statements 98 U.S. Customs and Border Protection • Performance and Accountability Report
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 1.  Significant Accounting Polic...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements of Custodial Activity using a modified cash basis. With this method, revenue from cash collections is reported separately from receivable accruals and cash disbursements are reported separately from payable accruals. In accordance with OMB Circular A-136, intra-CBP transactions and balances have been eliminated from the Consolidated Balance Sheets, Consolidated Statements of Net Cost, and the Consolidated Statements of Changes In Net Position. As provided for by OMB Circular A-136, the Combined Statements of Budgetary Resources is presented on a combined basis; therefore, intra-CBP transactions and balances have not been eliminated from this statement. Funds from Dedicated Collections SFFAS No. 27, Identifying and Reporting Earmarked Funds as amended by SFFAS No. 43, Funds from Dedicated Collections, requires CBP to identify and report separately funds from dedicated collections. See Note 18, Funds from Dedicated Collections, for specific required disclosures related to CBP’s funds from dedicated collections. CBP has program management responsibility for the following funds from dedicated collections: Appropriation 70X4363 70X5087 70X5089 70X5451 70X5543 70X5569 70X5595 70X5694 70X5695 70X8870 Title Enhanced Inspectional Services CBP - Immigration User Fees Land Border Inspection Fees Enforcement Fines Account International Registered Traveler APEC Business Travel Card Fee Electronic Systems for Travel Authorization Fees Small Airports User Fees Customs User Fees Account Harbor Maintenance Fee Collections Assets and Liabilities Intra-governmental assets and liabilities result from activity with other Federal agencies. All other assets and liabilities result from activity with parties outside the Federal Government, such as domestic and foreign persons, organizations or governments. Fund Balance with Treasury, Cash and Other Monetary Assets Entity Fund Balance with Treasury represents funds remaining from which CBP is authorized to make expenditures and pay liabilities resulting from operational activity, except as restricted by law. Non-entity Fund Balance with Treasury represents funds available to pay refunds and drawbacks claims of duties, taxes, fees, and other non-entity amounts to be distributed to the Treasury General Fund and other Federal accounts in a future period. Advances and Prepayments Intra-governmental advances and prepayments consist of amounts paid to Federal agencies prior to CBP receipt of goods and services. Advances and prepayments to the public consist primarily of travel and salary advances and prepaid rent. Accounts Receivable Intra-governmental accounts receivable represent amounts due from Federal agencies. These receivables are expected to be fully collected. Accounts receivable from reimbursable services and user fees represent amounts due from non-Federal sources for services performed. By law, collections of these receivables can be credited to the Financial Section 99
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements of Custodial Activity using a mo...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements appropriation accounts from which the related costs were paid. These receivables are net of amounts deemed uncollectible which are determined by considering the debtor’s current ability to pay, payment record, as well as the probable recovery of amounts from secondary sources, such as sureties, and an analysis of aged receivable activity. The user fee receivable is based on a calculated estimate using historical user fee collections. Title 19 of the United States Code, chapter 1, section 58c, authorizes CBP, formerly known as the United States Customs Service, to collect user fees for services provided in connection with the processing of commercial air and commercial vessel passengers, loaded or partially loaded railroad cars carrying passengers or commercial flights arriving into the Customs territory as defined in general note 2 of the Harmonized Tariff Schedule of the United States (some exceptions apply). Title 8 of the United States Code, chapter 12, subchapter II, part IX, section 1356, authorizes CBP to collect immigration user fees for inspection or pre-inspection of passengers arriving at a port of entry in the United States (as defined in Title 8, chapter 12, subchapter I, section 1101) aboard a commercial aircraft and commercial vessel (some exceptions apply). Receivables accrue for commercial airline and commercial vessel user fees on a quarterly basis. Payment is due any time within thirty-one days after the quarter in which the fees are collected, except the July and August fees collected from airline passengers shall be made ten days before the end of the fiscal year. Each quarterly payment shall include any collection made in the preceding quarter that was not remitted with the previous payment. Railroad car fees accrue on a monthly basis and the payments are due to CBP on or before the date that is 60 days after the applicable month. Due to the Treasury General Fund Due to the Treasury General Fund is the offsetting liability to non-entity collections and non-entity receivables. Taxes, Duties and Trade Receivables Taxes, Duties and Trade Receivables consist of duties, user fees, fines and penalties, refunds and drawbacks overpayments, and interest associated with import/export activity, which have been established as a specifically identifiable, legally enforceable claim which remain uncollected as of year-end. These receivables are net of amounts deemed uncollectible which were determined by considering the debtor’s payment record and ability to pay, the probable recovery of amounts from secondary sources, such as sureties, and an analysis of aged receivable activity. CBP’s non-entity receivables are described in more detail in Note 6, Taxes, Duties and Trade Receivables, Net. Inventory and Related Property Inventory and Related Property consists of aircraft parts, vessel parts, Office of Technology Innovation and Acquisition (OTIA) parts, and CBP uniforms classified as operating materials and supplies to be used in CBP’s operations. Aircraft and OTIA parts and materials are recorded at average unit cost, and vessel parts and uniforms are recorded using the First-In-First-Out valuation method. Both methods approximate actual acquisition costs. CBP records an operating expense when inventory is ultimately used in operations. Seized and Forfeited Property Prohibited seized and forfeited property results primarily from CBP criminal investigations and passenger/cargo processing. Seized property is not considered an asset of CBP and is not reported as such in CBP’s financial statements; however, CBP has a stewardship responsibility until disposition of the seized items is determined. Nonprohibited seized property, including monetary instruments, real property and tangible personal property of others in the actual or constructive possession of CBP will be transferred to the Treasury Forfeiture Fund and is not presented in the accompanying CBP Consolidated Balance Sheets or Note 8, Seized and Forfeited Property. Forfeited property is property for which the title has passed to the U.S. Government. As noted above, non-prohibited forfeited property or currency become assets of the Treasury Forfeiture Fund. However, prohibited forfeited items, such as narcotics and firearms, are held by CBP until disposed or destroyed. In accordance with SFFAS No. 3, 100 U.S. Customs and Border Protection • Performance and Accountability Report
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements appropriation accounts from whic...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements Accounting for Inventory and Related Property, analysis of changes in seized and forfeited property of prohibited items are disclosed in Note 8, Seized and Forfeited Property. General Property, Plant and Equipment CBP capitalizes property, plant and equipment, excluding land, with an acquisition value of $50 thousand or greater, and a useful life of two years or greater. CBP capitalizes all land. Expenditures for normal repairs and maintenance are charged to expense as incurred. When expenditures greater than $50 thousand extend an asset’s useful life they are capitalized. Depreciation and amortization are computed using the straight line method over the estimated useful lives of the assets ranging from 4 to 30 years for equipment and software, 2 to 30 years for leasehold improvements, and 5 to 40 years for buildings, structures and land improvements. Amortization of capitalized software begins on the date of acquisition if purchased or when the module or component has been successfully tested if contractor or internally developed. Accounts Payable A portion of the accounts payable balance related to commercial vendors and travel activities is estimated and recorded through an accrual. This estimate is created using a historical ratio of subsequent disbursements to undelivered orders. The ratio is then applied to the year-end undelivered order balance to arrive at estimated accounts payable. Accrued Annual, Sick and Other Leave and Compensatory Time Annual leave, compensatory time and other leave time are accrued when earned. The accrual is presented as a component of the payroll and benefits liability in the Consolidated Balance Sheets and is adjusted for changes in compensation rates and reduced for annual leave taken. Sick leave is expensed when used. For additional information see Note 13, Accrued Payroll and Benefits. Pension Costs, Other Retirement Benefits and Other Post-Employment Benefits Most CBP employees hired prior to January 1, 1984 participate in the Civil Service Retirement System (CSRS). CBP contributes 7 percent of base pay for regular employees, and 7.5 percent for law enforcement agents. Employees hired after December 31, 1983 are automatically covered by the Federal Employees’ Retirement System (FERS) and Social Security. A primary feature of FERS is that it offers a savings plan to which CBP automatically contributes 1 percent of base pay and matches any employee contributions up to an additional 4 percent of base pay. For most employees hired after December 31, 1983, CBP also contributes the employees’ matching share for Social Security. For the FERS basic benefit for employees hired before January 1, 2013, CBP contributes 11.9 percent of base pay for regular employees and 26.3 percent for law enforcement agents. For the FERS basic benefit for employees hired after December 31, 2012, CBP contributes 9.6 percent of base pay for regular employees and 24 percent for law enforcement agents. The pay base for determining CBP contributions to CSRS and FERS for inspectors and canine officers includes regular pay and up to a maximum of $17.5 thousand in certain overtime earnings for FY 2013 and 2012. CBP recognizes the full costs of its employees’ pension benefits including the portion paid by the Office of Personnel Management (OPM) as required by law; however, the liability associated with these costs is recognized by OPM. Similar to Federal retirement plans, OPM, rather than CBP, reports the liability for future payments to retired employees who participate in the Federal Employees Health Benefits Program and the Federal Employees Group Life Insurance Program. Financial Section 101
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements Accounting for Inventory and Rel...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements A liability for other post-employment benefits, which includes all types of benefits to former or inactive (but not retired) employees, their beneficiaries, and covered dependents, is also recognized. For additional information see Note 13, Accrued Payroll and Benefits. Workers' Compensation A liability is recorded for actual and estimated future payments to be made for workers’ compensation pursuant to the Federal Employees’ Compensation Act (FECA). The FECA program is administered by the U.S. Department of Labor (DOL), which initially pays valid claims and subsequently seeks reimbursement from Federal agencies employing the claimants. Reimbursement to DOL on payments made usually occurs approximately two years subsequent to the actual disbursement. Budgetary resources for this intra-governmental liability are made available to CBP as part of its annual appropriation from Congress in the year in which the reimbursement takes place. The liability under which unemployment compensation is recorded is entitled Other Employment Liabilities; the liability under which unfunded FECA is recorded is entitled Accrued FECA Liability and actuarial FECA is recorded in Accrued Payroll and Benefits in the accompanying Consolidated Balance Sheets. Additionally, the actuarial liability due to the public includes the expected liability for death, disability, medical and miscellaneous costs for approved compensation cases. The liability is determined using a method that utilizes historical benefit payment patterns related to a specific incurred period to predict the ultimate payments related to that period. Based on information provided by DOL, DHS allocates the actuarial liability to its components and department offices based on the payment history for the components and department offices. The accrued liability is not covered by budgetary resources and will require future funding. For additional information see Note 13, Accrued Payroll and Benefits. Unexpended Appropriations Unexpended appropriations represent the amount of CBP unexpended appropriated spending authority as of fiscal year-end that is unliquidated or is unobligated and has not lapsed, been rescinded or withdrawn. Cumulative Results of Operations Cumulative Results of Operations primarily represent the excess of user fee revenues over related expenses. It also represents the net investment in Property, Plant and Equipment, Inventory and Related Property, and transfers in of equipment, materials, and supplies from other Federal agencies without reimbursement. Also, included as a reduction in Cumulative Results of Operations, are liabilities incurred, which will require funding from future appropriations, such as accumulated annual and other leave earned but not taken, accrued workers’ compensation and contingent liabilities. The portion of Cumulative Results of Operations attributable to dedicated collections is shown separately on both the Consolidated Balance Sheets and the Consolidated Statements of Changes in Net Position. For additional information see Note 18, Funds from Dedicated Collections. Revenue, Financing Sources and Expense Recognition CBP entity activities are financed principally through appropriations, exchange revenue and non-exchange revenue. Appropriations used are recognized as a financing source when expenses are incurred or assets are purchased. Exchange revenues from reimbursable services and intra-governmental reimbursable activity are recognized as earned when the goods or services are provided and reflect the full cost of the goods or services provided. Nonexchange revenue from user fees is recognized as earned in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended. CBP may retain the user fee revenues and expend them as authorized by law for CBP inspector overtime and other activities directly related to the services to which the fees relate. CBP records deferred revenue for payments received from duties collected in Puerto Rico for which goods or services have not been fully provided to the Government of Puerto Rico. Deferred revenue is reported as a liability on the Consolidated Balance Sheets until earned in a future year. An imputed financing source is also recognized to offset costs incurred by CBP but funded by another Federal source, generally in the period in which the cost was incurred. Expenses are recognized when goods or services are received, when inventory is used, or assets are depreciated or amortized. 102 U.S. Customs and Border Protection • Performance and Accountability Report
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements A liability for other post-emplo...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements The FY 2013 and 2012 activities reported on the Consolidated Statement of Net Cost contain all resource costs assigned from CBP cost centers. An activity-based costing system derives an estimate of the agency’s cost by activity performed. The key driver behind CBP’s allocation of cost to activity is labor hours. Each pay period, all CBP personnel log their time to one or more of several hundred distinct activities. Time recorded by operational cost center is also used to assign mission support and overhead costs to field operational cost center activities. The time and attendance system used to record personnel labor hours is COSS (Customs Overtime Scheduling System). Non-entity Revenue is recognized when the cash CBP is entitled to collect on behalf of the Federal Government is earned. Primarily, these revenue collections result from current fiscal year activities. The significant types of revenues collected and related disbursements are described below: • • • • • • Duties: amounts collected on imported goods. User fees: amounts collected for certain services as provided by law. Excise taxes: amounts collected on imported distilled spirits, wines and tobacco products, and other miscellaneous taxes collected. Fines and penalties: amounts collected for violations of laws and regulations. Refunds: payments made to importers/exporters are primarily identified when the import entries are liquidated, a process in which CBP makes final determination of duties, taxes, fees and interest owed on each entry and compares it to the estimated amount previously determined and paid by the importer/broker. Interest is included in the refund generally for the period of time between when the estimated amounts were received from the importer/broker and the time the entry is liquidated. When a refund is identified prior to liquidation, the refund from this remittance is funded from the duty, tax or fee collections rather than from the Refunds and Drawbacks Account. Drawback: a remittance, in whole or in part, of duties, taxes or fees. Drawback typically occurs when the imported goods on which duties, taxes or fees have been previously paid are subsequently exported from the United States or destroyed prior to entering the commerce of the United States. Depending on the type of claim, the claimant has up to six or eight years from the date of importation to file for drawback. A financing source for refunds and drawbacks is recognized when payment is made. The financing source, representing the permanent, indefinite appropriation account used to fund the disbursement, is recorded as a decrease in the amount transferred to Treasury General Fund Accounts reported on the Statement of Custodial Activity. A transfer to the Treasury General Fund is recognized when the non-entity revenue, collected on behalf of the Federal Government, is deposited into various Treasury receipt accounts designated for the particular type of revenue collected. An accrual adjustment is included to adjust cash collections and refund disbursements with the net increase or decrease of accrued Non-entity Accounts Receivable, net of uncollectible amounts and refunds payable. Use of Estimates Management has made certain estimates and assumptions in the reporting of assets, liabilities and note disclosures in the Consolidated Balance Sheets, Consolidated Statements of Net Cost, Consolidated Statements of Changes in Net Position, Combined Statements of Budgetary Resources, Consolidated Statements of Custodial Activity and accompanying notes. Actual results could differ from these estimates. Significant estimates include: year-end accruals of accounts payable, contingent legal and environmental liabilities, accrued workers’ compensation, allowance for doubtful accounts receivable, allowance for doubtful taxes, duties and trade receivables, accruals for construction projects, retirement and post-retirement benefits assumptions, and certain non-entity receivables and payables related to custodial activities. Financial Section 103
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements  The FY 2013 and 2012 activities...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements Taxes CBP, as a Federal component, is not subject to Federal, state or local income taxes and accordingly, no provision for income taxes has been recorded in the accompanying financial statements. 2. Non-entity Assets Non-entity assets as of September 30, 2013 and 2012, consist of the following (in thousands): 2013 2012 Intra-governmental: Fund Balance with Treasury (Note 3) $ Public Cash and Other Monetary Assets (Note 4) Accounts Receivable, Net Taxes, Duties and Trade Receivables, Net (Note 6) Total Public 4,580 588 2,682,007 $ 2,687,175 3,272 493 2,700,465 $ 2,704,230 Total Non-entity Assets Total Entity Assets Total Assets 3,282,859 12,248,588 $15,531,447 3,297,979 12,578,182 $15,876,161 595,684 $ 593,749 Non-entity Fund Balance with Treasury as of September 30, 2013 and 2012 includes approximately $238.6 million and $191.5 million (deposit funds) in duties collected by CBP for U.S. Virgin Islands, U.S. Department of Agriculture and antidumping/countervailing duties and $181.4 million and $220.0 million (special funds) for Injured Domestic Industries as of September 30, 2013 and 2012, respectively. These assets are directly offset with liabilities as of September 30, 2013 and 2012. Non-entity Fund Balance with Treasury consists of special and deposit funds, permanent appropriations, and miscellaneous receipts that are available to pay non-entity liabilities. Taxes, Duties and Trade receivables from the public represent amounts due from importers for goods and merchandise imported to the United States and, upon collection, will be available to pay the accrued intra-governmental liability Due to the Treasury General Fund, which equaled $2.8 billion as of September 30, 2013 and 2012. 3. Fund Balance with Treasury Fund Balance with Treasury as of September 30, 2013 and 2012 consists of the following (in thousands): Trust Funds Special Funds General Funds Other Funds Deposit Funds Total 104 2013 $ Entity 184 475,305 3,882,869 958,302 10,473 $5,327,133 U.S. Customs and Border Protection • Performance and Accountability Report Non-entity $ -181,398 175,731 -238,555 $595,684 $ Total 184 656,703 4,058,600 958,302 249,028 $5,922,817
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements Taxes CBP, as a Federal componen...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 2012 Trust Funds Special Funds General Funds Other Funds Deposit Funds Total Entity $ 236 295,915 4,625,073 722,940 10,592 $5,654,756 Non-entity $ -220,029 182,263 -191,457 $593,749 $ Total 236 515,944 4,807,336 722,940 202,049 $6,248,505 Trust funds are both receipt accounts and expenditure accounts that are designated by law as trust funds. The entity trust fund balances result from CBP’s authority to use the proceeds from general order items sold at auction to offset specific costs incurred by CBP relating to their sale, and to use available funds from the Harbor Maintenance Fee Trust Fund to offset administrative expenses related to the collection of the Harbor Maintenance Fee. Special funds are receipt funds used for specific purposes. Entity amounts comprising the special fund balances result from CBP’s authority to assess and collect passenger and conveyance-related user fees, CBP’s authority to assess and collect fees associated with services performed at certain small airports or other facilities, and CBP’s authority to retain amounts needed to offset costs associated with collecting duties, taxes, and fees for the Government of Puerto Rico. As of September 30, 2013 and 2012, Customs User Fees Account includes approximately $110.9 million and $67.3 million, respectively; Small Airports User Fees account contained approximately $17.3 million and $17.6 million, respectively; Refunds, Transfers and Expenses of Operation of Puerto Rico account contained approximately $207.0 million and $37.7 million, respectively; and Immigration User Fees contained $8.6 million and $84.5 million, respectively. Non-entity fund balance represents amounts collected in connection with antidumping and countervailing duties of $180.6 million and $220.0 million as of September 30, 2013 and 2012, respectively. Of this balance, $105.1 million and $140.4 million are eligible for payment to qualifying Injured Domestic Industries as of September 30, 2013 and 2012, respectively. The remaining amount is Due to the Treasury General Fund. General funds consist of amounts appropriated annually by Congress to fund the operations of CBP. The non-entity general fund balance represents permanent, indefinite appropriations to pay refunds and drawbacks claims of duties, taxes, or fees. The balance is presented as a non-entity balance because the refund and drawback payments are associated with CBP custodial activity of collecting revenue on behalf of the Federal Government. The entity deposit fund balance represents amounts received as advances that are not accompanied by orders. Once the order is received, the deposit fund balance is decreased. Status of Fund Balance with Treasury as of September 30, 2013 and 2012 consists of the following (in thousands): 2013 Unobligated Balance Available Unavailable Obligated Balance not yet Disbursed Non-budgetary FBWT Total 2012 Unobligated Balance Available Unavailable Obligated Balance not yet Disbursed Non-budgetary FBWT Total Entity $ 717,720 426,518 3,193,516 989,379 $5,327,133 Entity $ 638,350 452,325 3,812,597 751,484 $5,654,756 Non-entity $ -181,398 175,731 238,555 $595,684 Non-entity $ -220,029 182,263 191,457 $593,749 Total $ 717,720 607,916 3,369,247 1,227,934 $5,922,817 Total $ 638,350 672,354 3,994,860 942,941 $6,248,505 Financial Section 105
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 2012 Trust Funds Special Funds G...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements Portions of the Unobligated Balance Unavailable include amounts appropriated in prior fiscal years that are not available to fund new obligations. However, the amounts can be used for upward and downward adjustments for existing obligations in future years. The Obligated Balance not yet Disbursed represents amounts designated for payment of goods or services ordered, but not received, or goods and services received but for which payment has not yet been made. The Non-budgetary Fund Balance with Treasury includes $639.9 million in user fees that are restricted by law for use until made available as provided in Appropriation Acts. See additional information in Adjustment to Unobligated Balance, Brought Forward, October 1, Note 22. CBP returned to Treasury $13.8 million and $213.4 million for indefinite no-year authority and retained $175.7 million and $182.3 million in authority for obligations pursuant to public law during the years ending September 30, 2013 and 2012, respectively. In accordance with Public Law 101-510, CBP is required to automatically cancel obligated and unobligated balances of appropriated funds five years after a fund expires. Obligations that have not been paid at the time an appropriation is canceled may be paid from an unexpired appropriation that is available for the same general purpose. As of September 30, 2013, CBP canceled $102.8 million from FY 2008 annual appropriations. As of September 30, 2012, CBP canceled $94.0 million from FY 2007 annual appropriations. 4. Cash and Other Monetary Assets Cash and Other Monetary Assets as of September 30, 2013 and 2012, consist of the following (in thousands): 2013 Imprest Funds Undeposited Collections Total Entity $154 232 $386 Non-entity $ -4,580 $4,580 Total $ 154 4,812 $4,966 2012 Imprest Funds Undeposited Collections Total Entity $160 200 $360 Non-entity $ -3,272 $3,272 Total $ 160 3,472 $3,632 Undeposited collection balances represent timing differences between when cash relating to duties, taxes, fees, and other trade related collections are received and the deposit occurs in a future period. Cash can either be distributed to the General Fund, other Federal agencies, other governments, or returned to the importer/broker. 5. Accounts Receivable, Net Receivables with the public as of September 30, 2013 and 2012 are as follows (in thousands): Receivable Category Reimbursable Services Customs User Fees Immigration User Fees Total 106 Gross Receivable $ 6,542 294,069 75,062 $375,673 U.S. Customs and Border Protection • Performance and Accountability Report 2013 Amounts Uncollectible $ (1,425) (2,288) (8,516) $(12,229) Total Net Receivables $ 5,117 291,781 66,546 $363,444
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements  Portions of the Unobligated Bal...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements Receivable Category Reimbursable Services Customs User Fees Immigration User Fees Total Gross Receivable $ 4,204 139,032 78,429 $221,665 2012 Amounts Uncollectible $ -(3,751) (15,734) $(19,485) Total Net Receivables $ 4,204 135,281 62,695 $202,180 In FY 2013 CBP began reporting Small Airports User Fees and Merchandise Processing Fees receivables as Accounts Receivable, Net. Historically these receivables were reported as Taxes Receivable, with an offsetting custodial liability. However, the collections for these fees are considered entity transactions, deposited into unavailable receipt accounts and ultimately transferred to CBP instead of being transferred to the Treasury General Fund. CBP determined it would be more appropriate to report these receivables as Accounts Receivable, Net. 6. Taxes, Duties and Trade Receivables, Net Receivables as of September 30, 2013 and 2012 are as follows (in thousands): Receivable Category Duties Excise Taxes User Fees Fines/Penalties Interest Antidumping/ Countervailing Duties Refunds and Drawback Total Receivable Category Duties Excise Taxes User Fees Fines/Penalties Interest Antidumping/ Countervailing Duties Refunds and Drawback Total Gross Receivable $2,474,559 149,281 68,224 458,174 566,208 2013 Amounts Uncollectible $ (130,583) (8,761) (524) (408,786) (537,546) Total Net Receivables $2,343,976 140,520 67,700 49,388 28,662 1,232,570 3,032 $4,952,048 (1,181,555) (2,286) $(2,270,041) 51,015 746 $2,682,007 Gross Receivable $2,284,738 142,685 197,613 445,238 541,130 2012 Amounts Uncollectible $ (131,347) (8,021) (9,025) (394,396) (478,438) Total Net Receivables $2,153,391 134,664 188,588 50,842 62,692 1,169,953 1,461 $4,782,818 (1,060,247) (879) $(2,082,353) 109,706 582 $2,700,465 CBP assesses duties, taxes and fees on goods and merchandise brought into the United States from foreign countries. At the time importers bring merchandise into the United States, they are required to file CBP entry documents. Generally, within 10 working days after CBP releases the merchandise into the U.S. commerce, the importer is to submit an entry document with payment of estimated duties, taxes and fees. CBP allows periodic th monthly payment that requires payment of estimated duties, taxes and fees on the 15 work day of the month following release. A receivable of $2.6 billion was recorded for 1,090,865 entries and $2.4 billion for 1,061,495 entries for merchandise released into commerce on or before September 30, 2013 and 2012, respectively. It is Financial Section 107
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements  Receivable Category Reimbursabl...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements CBP’s policy to track and demand payment of unpaid estimated duties, taxes and fees receivable amounts by establishing a liquidated damage case which generally results in a fine and penalty type receivable. As stated in Note 5, in FY 2013 CBP began reporting Small Airports User Fees and Merchandise Processing Fees receivables as Accounts Receivable, Net rather than as Taxes Receivable. A fine or penalty is established when a violation of import/export law is discovered. CBP assesses a liquidated damage or penalty for these cases to the maximum extent of the law. After receiving the notice of assessment, the importer or surety has 60 days to either file a petition requesting a review of the assessment or make payment of the assessed amount. Until this process has been completed, CBP records an allowance on fines and penalties of approximately 89.5 percent of the total assessment based on historical experience of fines and penalties mitigation and collection. Duties and taxes receivable are non-entity assets for which there is an offsetting liability due to the Treasury General Fund. 7. Inventory and Related Property, Net Operating Materials and Supplies Operating materials and supplies consist of parts and materials to repair and maintain CBP aircraft, vessels, and OTIA projects used for enforcement activities. In addition, CBP holds a stock of uniforms to be issued for the CBP academies and as needed by officers and agents until a long-term uniform contract is awarded. OTIA operating materials and supplies as of September 30, 2013 and 2012 includes $24.0 million and $25.1 million, respectively, for steel used to repair Border Patrol tactical infrastructure and $19.4 million and $26.4 million, respectively, in spare parts used to repair systems maintained by OTIA. CBP defines operating materials and supplies categorized as “Held for Repair” as items that are useable by CBP after repair. CBP defines operating materials and supplies categorized as “Excess, Obsolete, and Unserviceable” to consist of items that are no longer useable by CBP. Beginning in FY 2013, CBP estimates the net realizable value of Excess, Obsolete, and Unserviceable operating materials and supplies to be zero. CBP recorded a loss of $16.2 million in FY 2013 for revaluing that inventory to zero. Operating Materials and Supplies as of September 30, 2013 and 2012 consist of the following (in thousands): Aircraft Parts Items Held for Use Items Held for Repair Excess, Obsolete and Unserviceable items Total Aircraft Parts 2013 2012 $105,732 15,114 5,535 $126,381 Vessel Parts Items Held for Use Items Held for Repair Excess, Obsolete and Unserviceable items Total Vessel Parts $ 7,367 103 -$ 7,470 $ OTIA Parts Items Held for Use Items Held for Repair Excess, Obsolete and Unserviceable items Total OTIA Parts $ 43,041 317 -$ 43,358 $ 40,938 10,516 8 $ 51,462 Uniforms Items Held for Use Total Uniforms Total 108 $107,394 23,676 -$131,070 $ 16,467 $ 16,467 $198,365 $ 6,120 $ 6,120 $190,712 U.S. Customs and Border Protection • Performance and Accountability Report $ 6,585 129 35 6,749
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements CBP   s policy to track and dema...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 8. Seized and Forfeited Property This schedule is presented for material categories of prohibited (non-valued) seized and forfeited property only. These items are retained and ultimately destroyed by CBP and are not transferred to the Department of the Treasury Forfeiture Fund or other Federal agencies. The ending balance for firearms includes only those seized items that can actually be used as firearms. Illegal drugs are presented in kilograms and a portion of the weight includes packaging, which often cannot be reasonably separated from the weight of the drugs since the packaging must be maintained for evidentiary purposes. Firearms are presented in number of cases. Methamphetamine seizures have increased in recent years and are therefore included in the list of illegal drugs seized and forfeited in both FY 2013 and 2012. Analysis of Changes in Prohibited (Non-valued) Seized Property, September 30, 2013 Category Unit of Measurement Balance October 1 New Seizures Remissions New Forfeitures Adjustments 1 Balance September 30 Illegal Drugs Cannabis (marijuana) Kilograms 2,051 1,224,988 0 (1,231,308) 7,373 3,104 Cocaine Kilograms 83 20,528 0 (20,373) (27) 211 Heroin Kilograms 4 2,396 0 (2,392) 1 9 Ecstasy Kilograms 18 720 0 (724) 3 17 Methamphetamine Kilograms 5 11,035 0 (11,054) 25 11 Steroids Kilograms 147 734 0 (613) (4) 264 Firearms Number of Cases 3,112 4,600 (564) (3,290) (190) 3,668 (1) Adjustments are the result of changes due to inventory counts, changes in legal status or property type, and/or discontinuance of cases. Analysis of Changes in Prohibited (Non-valued) Seized Property, September 30, 2012 Category Unit of Measurement Balance October 1 New Seizures Remissions New Forfeitures Adjustments Balance September 30 1 Illegal Drugs Cannabis (marijuana) Kilograms 2,086 1,242,474 0 (1,244,141) 1,632 2,051 Cocaine Kilograms 74 19,186 0 (19,206) 29 83 Heroin Kilograms 3 1,900 0 (1,897) (2) 4 Ecstasy Kilograms 1 152 0 (151) 16 18 Methamphetamine Kilograms 11 6,579 0 (6,595) 10 5 Steroids Kilograms 165 546 0 (605) 41 147 Firearms Number of Cases 2,989 1,814 (427) (1,124) (140) 3,112 (1) Adjustments are the result of changes due to inventory counts, changes in legal status or property type, and/or discontinuance of cases. Financial Section 109
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements  8.  Seized and Forfeited Proper...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements Analysis of Changes in Prohibited (Non-Valued) Forfeited Property, September 30, 2013 Category Illegal Drugs Unit of Measurement Balance October 1 New Forfeitures Transfers Destroyed Adjustments 1 Balance September 30 Cannabis (marijuana) Kilograms 141,235 1,231,308 (152) (395,939) (833,133) 143,319 Cocaine Kilograms 24,821 20,373 (193) (22,924) (2,227) 19,850 Heroin Kilograms 2,768 2,392 (38) (1,818) (57) 3,247 Ecstasy Kilograms 921 724 (40) (496) (32) 1,077 Methamphetamine Kilograms 7,039 11,054 (77) (6,210) (326) 11,480 Steroids Kilograms 340 613 (1) (596) (21) 335 Firearms Number of Cases 1,025 3,290 (3,285) (3) 133 1,160 (1) Adjustments are the result of changes due to inventory counts, changes in legal status or property type, and/or discontinuance of cases. Analysis of Changes in Prohibited (Non-valued) Forfeited Property, September 30, 2012 Category Illegal Drugs Unit of Measurement Balance October 1 New Forfeitures Transfers Destroyed Adjustments 1 Balance September 30 Cannabis (marijuana) Kilograms 120,467 1,244,141 (912) (428,978) (793,483) 141,235 Cocaine Kilograms 23,931 19,206 (386) (19,899) 1,969 24,821 Heroin Kilograms 2,368 1,897 (2) (1,518) 23 2,768 Ecstasy Kilograms 1,058 151 (1) (308) 21 921 Methamphetamine Kilograms 5,198 6,595 0 (4,474) (280) 7,039 Steroids Kilograms 293 605 0 (558) 0 340 Firearms Number of Cases 1,011 1,124 (1,196) (5) 91 1,025 (1) Adjustments are the result of changes due to inventory counts, changes in legal status or property type, and/or discontinuance of cases. 110 U.S. Customs and Border Protection • Performance and Accountability Report
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements  Analysis of Changes in Prohibit...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 9. General Property, Plant and Equipment, Net Property, Plant and Equipment as of September 30, 2013 and 2012 consists of the following (in thousands): Categories Land and Land Rights Improvements to Land Construction in Progress Buildings, Other Structures and Facilities* Equipment: ADP Equipment Aircraft Vessels Vehicles Other Equipment Leasehold Improvements Internal Use Software Internal Use Software-in Development Total Categories Land and Land Rights Improvements to Land Construction in Progress Buildings, Other Structures and Facilities* Equipment: ADP Equipment Aircraft Vessels Vehicles Other Equipment Leasehold Improvements Internal Use Software Internal Use Software-in Development Total Useful Life (in years) N/A 5 - 40 N/A 2013 Acquisition Cost $ 176,690 2,186,940 710,029 Accumulated Depreciation/ Amortization $ -(471,149) -- Net Book Value $ 176,690 1,715,791 710,029 6 - 40 1,911,635 (318,340) 1,593,295 5 12 - 20 5 - 30 3-8 5 - 15 2 – 30 5 452,727 1,499,276 43,228 406,045 1,848,904 426,269 1,103,744 (391,518) (770,374) (20,325) (339,625) (1,216,555) (218,428) (872,991) 61,209 728,902 22,903 66,420 632,349 207,841 230,753 52,735 $10,818,222 -$(4,619,305) 52,735 $6,198,917 Acquisition Cost $ 167,863 2,056,320 1,173,411 Accumulated Depreciation/ Amortization $ -(360,213) -- Net Book Value $ 167,863 1,696,107 1,173,411 6 - 40 1,498,697 (262,844) 1,235,853 5 12 - 20 5 - 30 4-8 5 - 15 2 – 30 5 468,506 1,329,544 42,800 400,462 1,772,657 381,040 1,021,115 (371,101) (711,036) (18,875) (311,633) (1,077,729) (185,468) (774,811) 97,405 618,508 23,925 88,829 694,928 195,572 246,304 98,340 $10,410,755 -$(4,073,710) 98,340 $6,337,045 N/A Useful Life (in years) N/A 5 - 40 N/A N/A 2012 *Includes four multi-use heritage assets located in Puerto Rico with an acquisition value of $534 thousand. Financial Section 111
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements  9.  General Property, Plant and...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 10. Stewardship PP&E CBP’s Stewardship PP&E is comprised of heritage assets located in the United States, including the Commonwealth of Puerto Rico. CBP aggregates its personal property heritage assets as collections of documents and artifacts and reflects its multi-use heritage assets as number of physical units. Information related to heritage assets at September 30, 2013 and 2012 consists of the following: 2013 Categories Collection-type Assets Documents Artifacts Multi-use Heritage Assets Total Stewardship PP&E Beginning Balance Additions Withdrawals Adjustments Total 1 1 4 6 ----- ----- ----- 1 1 4 6 2012 Categories Collection-type Assets Documents Artifacts Multi-use Heritage Assets Total Stewardship PP&E Beginning Balance Additions Withdrawals Adjustments Total 1 1 4 6 ----- ----- ----- 1 1 4 6 CBP possesses a wide range of documents and artifacts which are unique due to historical, cultural, artistic, or architectural significance. These assets are used to preserve and to provide education on CBP’s history and tradition. Documents consist of dated tariff classifications, CBP regulations, ledgers of Collectors of Customs, and Customs pamphlets. Artifacts include antique scales, dated pictures of Customs Inspectors, aged tools used to sample imported commodities such as wood bales and bulk grain, and dated Customs uniforms, badges, and stamps. As of September 30, 2013 and 2012, CBP maintained four Customs houses, designated as multi-use heritage assets, located in Puerto Rico and valued at $534 thousand, which are fully depreciated. All multi-use heritage assets are reflected on the Consolidated Balance Sheets. Deferred maintenance and repairs and condition information for heritage assets are presented in the Required Supplementary Information. 11. Other Assets Advances and Prepayments Intra-governmental advances and prepayments as of September 30, 2013 and 2012, totaling $133.9 million and $175.6 million, respectively, consist primarily of advances to the Departments of Transportation and Defense for support of border security and to Department of Justice, UNICOR, for vehicle purchases. Other Other assets consists of capital assets no longer in service, pending disposal, employee travel and salary advances, and prepaid rent as of September 30, 2013 and 2012, totaling $429 thousand and $233 thousand, respectively. 112 U.S. Customs and Border Protection • Performance and Accountability Report
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements  10. Stewardship PP E CBP   s St...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 12. Liabilities Not Covered by Budgetary Resources Liabilities Not Covered by Budgetary Resources as of September 30, 2013 and 2012, consist of the following (in thousands): 2013 2012 Intra-governmental: Accrued FECA Liability Other Employment Liabilities Due to the Treasury General Fund Total Intra-governmental $ 165,071 322 2,757,534 $2,922,927 $ 153,378 674 2,782,953 $2,937,005 Public: Accrued Payroll and Benefits: Accrued Unfunded Leave (Note 13) Actuarial FECA Liability (Note 13) Environmental and Disposal Liabilities (Note 14) Legal Contingent Liabilities Total Public 405,063 1,005,111 17,524 381,572 $1,809,270 $ 395,363 882,292 17,610 374,452 $1,669,717 Total Liabilities Not Covered by Budgetary Resources Total Liabilities Covered by Budgetary Resources Total Liabilities 4,732,197 1,317,389 $6,049,586 4,606,722 1,483,506 $6,090,228 Liabilities not covered by new budget authority or other budgetary resources represent amounts owed in excess of available appropriated or other amounts. Available budgetary resources include new budget authority, unobligated balances of budgetary resources at the beginning of the year or net transfers of prior year balances during the year, spending authority from offsetting collections, and recoveries of unexpired budget authority through downward adjustments of prior year obligations. 13. Accrued Payroll and Benefits The payroll and benefits liability as of September 30, 2013 and 2012 consists of the following (in thousands): Accrued Funded Payroll and Benefits Accrued Unfunded Leave Actuarial FECA Liability Total 2013 $ 65,225 405,063 1,005,111 $1,475,399 2012 $ 360,940 395,363 882,292 $1,638,595 Actuarial workers compensation liability claims incurred for the benefit of CBP employees under FECA are administered by DOL and are ultimately paid by CBP. Future workers’ compensation estimates are generated from an application of actuarial procedures developed by DOL. 14. Environmental and Disposal Liabilities CBP is required to remediate contamination in accordance with Federal laws in order to protect human health and the environment. These laws include the Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act, the Oil Pollution Act, the Clean Water Act, the Toxic Substances Control Act, and the Clean Air Act. Financial Section 113
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements  12. Liabilities Not Covered by ...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements Estimated environmental liabilities include expected future cleanup costs and those associated with site characterization, sampling, risk assessment, removal of contamination sources, treatment, containment, and monitoring. The estimated liabilities include both friable and non-friable asbestos-related costs. Costs are recognized and disclosed in accordance with SFFAS No. 5; SFFAS No. 6; Technical Releases No. 2, 10, and 11, and DHS policy directives and memoranda. CBP records the estimated cost of environmental liabilities that are probable and measurable to the current operating period. For those probable sites where future liability is unknown or no reasonable estimate of the cost to clean up a particular site could be made, the cost of studies necessary to evaluate response or remediation requirements is reported. CBP’s environmental cleanup liability as of September 30, 2013 and 2012 was $17.5 million and $17.6 million, respectively. There were no material changes in total estimated cleanup costs due to changes in law or technology. Notable changes in estimated liabilities include: • • Estimates of liability are presented in FY 2013 dollars and have been appropriately escalated to account for inflation. Inventory of liabilities modified due to Due Care Review process. 15. Other Liabilities CBP considers $94.1 million and $87.3 million of the accrued FECA Liability, $1.0 billion and $882.3 million of the actuarial FECA Liability, and $356.5 and $353.0 million of the Legal Contingent Liabilities as non-current as of September 30, 2013 and 2012, respectively. CBP considers all remaining Other Liabilities as current. Refunds Payable Refunds Payable consists of amounts owed for refunds of duty and other trade related activity and drawback claims. These liabilities, all considered current year liabilities, are principally funded from the Refunds and Drawbacks Account. CBP accrues a liability for refunds and drawbacks claims approved at year-end, but paid subsequent to year-end. Payments made to importers/exporters are primarily identified when the import entry is liquidated, a process in which CBP makes a final determination of duties, taxes and fees owed on the entry. Due to non-liquidation of the entries, the amount to be refunded is undetermined. Therefore, a historical calculated average was used to determine a ratio for estimating the payable to be recorded. Using this average, CBP has estimated $64.7 million and $46.6 million as of September 30, 2013 and 2012, respectively, as a payable. The September 30, 2013 and 2012, accrued liability consists of the following (in thousands): Refunds Drawback Claims Total 2013 $106,062 61,462 $167,524 2012 $131,980 44,930 $176,910 Injured Domestic Industries The Continued Dumping and Subsidy Offset Act (CDSOA) of 2000 (P.L. 106-387, Title X), enacted in FY 2001, calls for CBP to collect and disburse monies received in connection with antidumping and countervailing duty orders and findings to qualifying Injured Domestic Industries (IDI). Antidumping duties are collected when it is determined that a class or kind of foreign merchandise is being released into the U.S. economy at less than its fair value to the detriment of a U.S. industry. Countervailing duties are collected when it is determined that a foreign government is providing a subsidy to its local industries to manufacture, produce, or export a class or kind of merchandise for import into the U.S. commerce to the detriment of a U.S. industry. Due to the repeal of the CDSOA in the Deficit Reduction 114 U.S. Customs and Border Protection • Performance and Accountability Report
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements  Estimated environmental liabili...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements Omnibus Reconciliation Act of 2005, only duties on entries filed prior to October 1, 2007 will eventually be distributed to affected U.S. companies pursuant to rulings by the U.S. Department of Commerce. As of September 30, 2013 and 2012, CBP recorded a liability of $105.1 million and $140.4 million, respectively. CBP makes annual payments of antidumping/countervailing duties to qualifying Injured Domestic Industries. 16. Leases Operating Leases CBP leases various facilities and equipment under leases accounted for as operating leases. The leased items consist of offices, warehouses, vehicles and other equipment. Much of the office space occupied by CBP is either owned by the Federal Government or is leased by the General Services Administration (GSA) from commercial sources. CBP is not committed to continue to pay rent to GSA beyond the period occupied providing proper advance notice is given to GSA unless the rental agreement is non-cancelable. It is expected that CBP will continue to occupy and lease office space from GSA in future years. The following schedule, by years, shows the future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year, as of September 30, 2013 (in thousands): Fiscal Year 2014 2015 2016 2017 2018 Beyond 2018 Total Future Lease Payments Facilities, Vehicles, and Equipment $ 200,856 198,571 186,243 175,025 150,215 1,002,180 $1,913,090 17. Commitments and Contingencies Legal Contingent Liabilities CBP is party to various administrative proceedings, legal actions, and claims brought by or against it. Any financially unfavorable administrative or court decision will normally be funded from either: (1) CBP appropriation for refunds and drawbacks for trade litigation issues; (2) various claims and judgment funds maintained by Treasury; or (3) CBP salary and expense appropriation. The range of estimated contingent liabilities for all probable and estimable litigation related claims as of September 30, 2013 and 2012 were $381.6 million to $1.0 billion and $374.5 million to $616.5 million, respectively. Asserted and pending legal claims for which loss is reasonably possible range from an estimated $389.7 million to $526.4 million and $473.5 million to $575.6 million as of September 30, 2013 and 2012, respectively. As of September 30, 2013, CBP had four cases considered reasonably possible for which no estimate could be made. As disclosed in the Other Liabilities note, $356.5 million and $353.0 million of the Legal Contingent Liabilities is considered non-current as of September 30, 2013 and 2012, respectively. Duty and Trade Refunds There are various other trade issues resolved by other Federal agencies, such as the Department of Commerce, which may result in refunds of duties, taxes and fees from the Refunds and Drawbacks Account. Until such time as Financial Section 115
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements Omnibus Reconciliation Act of 20...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements a decision is reached by the other Federal agencies, CBP does not have sufficient information to estimate a contingent liability amount. All known refunds as of September 30, 2013 and 2012 have been recorded. Loaned Aircraft CBP is liable to the Department of Defense for damage or loss to aircraft on loan. CBP had 16 aircraft loaned from the Department of Defense with an acquisition value of $94.4 million, as of September 30, 2013 and 2012, respectively. 18. Funds from Dedicated Collections Funds from dedicated collections are financed by specifically identified revenues, provided to the government by non-federal sources, often supplemented by other financing sources, which remain available over time. These specifically identified revenues and other financing sources are required by statute to be used for designated activities, benefits or purposes and must be accounted for separately from the Federal Government’s General Fund. Effective in FY 2013, SFFAS No. 43, Funds from Dedicated Collections: Amending Statement of Federal Financial Accounting Standards 27, changed the term “Earmarked Funds” to “Funds from Dedicated Collections.” Consolidated Omnibus Budget Reconciliation Act (COBRA) In April 1986, the President signed the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985, which authorized CBP to collect user fees for certain services. The law initially established processing fees for air and sea passengers, commercial trucks, rail cars, private vessels and aircraft, commercial vessels, dutiable mail packages, and CBP broker permits. An additional fee category, contained in tax reform legislation, for processing barges and bulk carriers for Canada and Mexico, was added later that year. The collection of the COBRA fees for CBP services began on July 7, 1986. In addition to the collection of user fees, other changes in CBP procedures were enacted due to the COBRA statute. Most importantly, provisions were included for providing non-reimbursable inspectional overtime services and paying for excess pre-clearance costs from the COBRA user fee collections. The Customs and Trade Act of 1990 amended the COBRA legislation to provide for the hiring of inspectional personnel, the purchasing of equipment, and the covering of related expenses with any surplus monies available after overtime and excess pre-clearance costs are satisfied. Expenditures from the surplus can only be used to enhance the service provided to those functions for which fees are collected. This legislation took effect on October 1, 1990. 19 USC Section 58c contains the Fees for certain Customs services. The authority to use these funds is contained in the annual Department of Homeland Security Appropriations Act. Immigration User Fees (IUF) Joint Resolution (H.J. Res. 738), making continuing appropriations for FY 1987 (the “1987 Act”) (Public Laws 99-500 and 99-591), established the Immigration User Fee Account (IUFA) requiring the collection of a $5 fee charged to each passenger arriving in the United States from foreign locations aboard commercial aircraft and commercial vessels except passengers whose journeys originated in the United States, Canada, Mexico, a territory or possession of the United States, or an adjacent island. The 1987 Act directed the Immigration and Naturalization Service (INS), beginning in FY 1987, to collect an immigration user fee for each passenger arriving in the United States by commercial air or sea conveyance (with limited exceptions). This law was codified in 8 U.S.C. 1103, 1356, section 286, the Immigration and Nationality Act (INA). In 1993, Congress amended section 286 of the INA by raising the immigration user fee from the original $5 to $6 with the passage of Public Law 103-121. In 2002, in Public Law 107-77, Congress increased the immigration user fee from $6 to $7. 116 U.S. Customs and Border Protection • Performance and Accountability Report
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements a decision is reached by the oth...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements Also in Public Law 107-77, Congress amended section 286(e) of the INA to authorize the Attorney General to charge and collect a user fee from certain previously exempt commercial vessel passengers. Prior to the enactment of this law, commercial vessel passengers whose journeys originated in Canada, Mexico, a State, territory or possession of the United States, or an adjacent island, were statutorily exempt from paying the immigration user fee prescribed by section 286(d) of the INA. While these vessel passengers were exempt from paying the fee, the INS was still required to provide inspection services. The IUFA was also established as a repository for fines imposed to prevent unauthorized landing and unlawful transport of aliens into the United States, penalties for document fraud, 31 Act overtime, and liquidated damages and expenses collected. All deposits into the IUFA are available until expended. Beginning in FY 2003, with the formation of the DHS, CBP collects and shares the revenue from the immigration user fees with Immigration and Customs Enforcement (ICE). CBP maintains approximately 82.6 percent of the user fee, while the other 17.4 percent is turned over to ICE. The following tables present condensed data relating to CBP funds from dedicated collections (disclosed in Note 1) as of and for the years ended September 30, 2013 and 2012 (in thousands). Balance Sheet Assets Fund Balance with Treasury Taxes, Duties & Trade Receivables, Net Other Assets Total Assets COBRA $ $ IUF 2013 All Others Total 110,919 -292,012 402,931 $ 44,815 -66,546 $ 111,361 $ 149,150 -2,552 $ 151,702 $ 22,811 380,120 $ $ 1,691 150,011 $ 24,502 641,492 665,994 $ 304,884 -361,110 665,994 Liabilities and Net Position Liabilities Cumulative Results of Operations $ Total Liabilities and Net Position $ 402,931 $ 111,361 $ 151,702 $ Statement of Net Cost Gross Cost Less: Earned Revenue Net Cost of Operations $ 406,464 -- $ 632,041 -- $ 124,515 2,776 $ 1,163,020 2,776 $ 406,464 $ 632,041 $ 121,739 $ 1,160,244 Statement of Changes In Net Position Net Position Beginning of Period $ 181,369 $ 147,217 $ 106,086 $ Net Costs of Operations Non-exchange Revenue Net Transfers In/Out Other (Note 21) (406,464) 448,683 (2,167,719) ) 2,324,251 (632,040) -(116,842) ) 713,026 (121,740) 156,322 -) 9,343 (1,160,244) 605,005 (2,284,561) ) 3,046,620 Change in Net Position $ 198,751 $(35,856) $ 43,925 $ Net Position End of Period $ 380,120 $111,361 $ 150,011 $ 641,492 -111,361 434,672 206,820 Financial Section 117
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements  Also in Public Law 107-77, Cong...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements COBRA 67,342 122,869 135,481 $ 325,692 $ 84,521 -62,696 $ 147,217 $106,333 1 442 $106,776 $ Liabilities and Net Position Liabilities Cumulative Results of Operations $ 144,323 181,369 $ $ 690 106,086 $ 145,013 434,672 Total Liabilities and Net Position $ 325,692 $ 147,217 $106,776 $ 579,685 Statement of Net Cost Gross Cost Less Earned Revenues Net Cost of Operations $ 472,024 -$ 472,024 $ 577,384 -$ 577,384 $ 84,330 1,685 $ 82,645 $ 1,133,738 1,685 $ 1,132,053 Statement of Changes In Net Position Net Position Beginning of Period Adjustments Net Position Beginning Balances, Adjusted $ 796,302 (639,940) $ 134,256 -- $ 69,527 -- $ 1,000,085 (639,940) 156,362 134,256 69,527 360,145 Net Costs of Operations Non-exchange Revenue Net Transfers In/Out Other (Note 21) (472,024) 463,107 (2,099,772) ) 2,133,696 (577,384) -(119,087) ) 709,432 (82,645) 110,749 -) 8,455 (1,132,053) 573,856 (2,218,859) ) 2,851,583 Change in Net Position $ 25,007 $ 12,961 $ 36,559 $ Net Position End of Period $ 181,369 $ 147,217 $106,086 $ 434,672 $ IUF 2012 Balance Sheet Assets Fund Balance with Treasury Taxes, Duties & Trade Receivables, Net Other Assets Total Assets -147,217 All Others Total $ 258,196 $$ 122,870 198,619 579,685 74,527 19. Intra-governmental Costs and Exchange Revenue Intra-governmental costs represent exchange transactions made between two reporting entities within the Federal Government and are presented separately from costs with the public (exchange transactions made between the reporting entity and a non-Federal entity). Intra-governmental exchange revenue is disclosed separately from exchange revenue with the public. The criteria used for this classification requires that the intra-governmental expenses relate to the source of goods and services purchased by the reporting entity and not to the classification of related revenue. With intra-governmental costs, the buyer and seller are both Federal entities. If a Federal entity purchases goods or services from another Federal entity and sells them to the public, the exchange revenue would be classified as “with the public,” but the related costs would be classified as intra-governmental. The purpose of this classification is to enable the Federal Government to provide consolidated financial statements, and not to match public and intra-governmental revenue with costs that are incurred to produce public and intra-governmental revenue. 118 U.S. Customs and Border Protection • Performance and Accountability Report
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements  COBRA 67,342 122,869 135,481   ...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements In FY 2013 CBP established a new structure for developing the budget, moving from an appropriations-centered process to a planning and programming process that is driven by CBP’s goals and objectives. The programs presented in the FY 2013 Statement of Net Cost align with the new Future Years Homeland Security Program structure and reflect the transition from reporting costs and revenue by major appropriation to reporting costs and revenue associated with accomplishing CBP’s missions and goals. The FY 2012 presentation was not restated in the FY 2013 format because the FY 2013 programs are not applicable for FY 2012 reporting. The table below presents how the FY 2012 program costs and revenues relate to the new FY 2013 programs structure. The costs and revenues associated with Intelligence and Targeting in FY 2013 were considered overhead in FY 2012 and were allocated in FY 2012 to Border Security Inspections and Trade Facilitation at Ports of Entry, Border Security and Control Between Ports of Entry, and Air and Marine Operations programs. FY 2012 Programs Border Security Inspections and Trade Facilitation at Ports of Entry Border Security and Control Between Ports of Entry Border Security Fencing, Infrastructure and Technology Automation Modernization Air and Marine Operations Reported Primarily in FY 2013 Programs Securing and Expediting Trade and Securing and Expediting Travel Securing America’s Borders Securing America’s Borders Securing and Expediting Trade and Securing and Expediting Travel Securing America’s Borders The Consolidated Statement of Net Cost reflects intra-governmental and public cost and exchange revenue as summarized below for the years ended September 30, 2013 and 2012 (in thousands): Financial Section 119
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements In FY 2013 CBP established a new...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements For the year ended September 30, 2013: Securing America’s Borders Intra-governmental Costs Public Costs 2013 $ 1,470,571 3,671,553 Total Securing America’s Borders Costs $ 5,142,124 Less: Intra-governmental Earned Revenue Less: Public Earned Revenue 1,604 7,647 Total Securing America’s Borders Revenue $ Securing and Expediting Trade Intra-governmental Costs Public Costs Total Securing and Expediting Trade Costs 1,040,394 2,060,690 $ 3,101,084 Less: Intra-governmental Earned Revenue Less: Public Earned Revenue Total Securing and Expediting Trade Revenue 65,666 71,947 $ Securing and Expediting Travel Intra-governmental Costs Public Costs Total Securing and Expediting Travel Costs $ 3,973,194 35,007 55,655 $ Intelligence and Targeting Intra-governmental Costs Public Costs Total Intelligence and Targeting Costs Net Cost of Operations 120 U.S. Customs and Border Protection • Performance and Accountability Report 90,662 136,107 438,774 $ Less: Intra-governmental Earned Revenue Less: Public Earned Revenue Total Intelligence and Targeting Revenue 137,613 1,282,933 2,690,261 Less: Intra-governmental Earned Revenue Less: Public Earned Revenue Total Securing and Expediting Travel Revenue 9,251 574,881 24 2,632 $ 2,656 $12,551,101
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements For the year ended September 30,...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements For the year ended September 30, 2012: Border Security Inspections and Trade Facilitation at Ports of Entry Intra-governmental Costs Public Costs Total Border Security Inspections and Trade Facilitation at Ports of Entry Costs Less: Intra-governmental Earned Revenue Less: Public Earned Revenue Total Border Security Inspections and Trade Facilitation at Ports of Entry Revenue 2012 $ 2,138,553 4,471,361 $ 6,609,914 66,508 94,966 $ 161,474 Border Security and Control Between Ports of Entry Intra-governmental Costs Public Costs Total Border Security and Control Between Ports of Entry Costs 1,506,562 3,128,379 $ 4,634,941 Less: Intra-governmental Earned Revenue Less: Public Earned Revenue Total Border Security and Control Between Ports of Entry Revenue 56,732 53,465 110,197 Border Security Fencing, Infrastructure and Technology Intra-governmental Costs Public Costs Total Border Security Fencing, Infrastructure and Technology Costs Less: Intra-governmental Earned Revenue Less: Public Earned Revenue Total Border Security Fencing, Infrastructure and Technology Revenue Automation Modernization Intra-governmental Costs Public Costs Total Automation Modernization Costs Less: Intra-governmental Earned Revenue Less: Public Earned Revenue Total Automation Modernization Revenue $ 85,315 276,737 $ 362,052 167 -- $ 167 $ 14,455 301,160 315,615 -- $ (1) (1) (xx) Air and Marine Operations Intra-governmental Costs Public Costs Total Air and Marine Operations Costs $ Less: Intra-governmental Earned Revenue Less: Public Earned Revenue Total Air and Marine Operations Revenue Net Cost of Operations 2,698 3,598 $ 6,296 $12,344,594 191,259 508,946 700,205 Financial Section 121
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements For the year ended September 30,...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 20. Sub-organization Program Costs/Program Costs by Strategic Goal CBP is the unified border agency whose priority mission is the prevention of terrorism and terrorist weapons from entering the U.S. CBP meets these responsibilities by: (1) enforcing the laws governing the flow of merchandise or commerce across the borders of the U.S.; (2) assessing and collecting duties, taxes and fees on imported and other goods and services; and (3) enforcing drug-related and other laws and regulations of the U.S. on behalf of Federal agencies and/or in conjunction with various states, local agencies and foreign countries. Operating costs are summarized in the Consolidated Statement of Net Cost by mission or major line of activity, as applicable to the reporting period. The net cost of operations is the gross (i.e. total) cost incurred by CBP less any exchange (i.e. earned) revenue. The strategic goals identified in the following tables align with the “DHS Strategic Plan for Fiscal Years (FY) 2012 – 2016.” The DHS Strategic Plan is the result of the DHS Quadrennial Homeland Security Review (QHSR), which established a unified, strategic framework for homeland security missions and goals. As stated in Note 19, in FY 2013 CBP changed the program structure for reporting costs and revenue associated with accomplishing CBP’s mission goals, which support the DHS Strategic Plan. The FY 2012 presentation was not restated in the FY 2013 format because the FY 2013 programs are not applicable for FY 2012 reporting. For the year ended September 30, 2013 (in thousands): Schedule of Net Cost by Program and Responsibility Segment Fostering a Safe & Secure Homeland Enforcing & Administering Our Immigration Laws 2013 Providing Essential Support to National, Economic and Homeland Security Securing America’s Borders Gross Costs Less: Earned Revenue Net Program Costs $ 5,138,348 62,630 $ 5,075,718 $ 50,825 $ 50,825 ---- Securing and Expediting Trade Gross Costs Less: Earned Revenue Net Program Costs $ 2,947,167 471,742 $ 2,475,425 ---- Securing and Expediting Travel Gross Costs Less: Earned Revenue Net Program Costs $ 2,545,840 541,463 $ 2,004,377 $ Intelligence and Targeting Gross Costs Less: Earned Revenue Net Program Costs Net Cost of Operations 122 682,215 14,513 $ 667,702 $10,223,222 Intra-Entity Eliminations Consolidated Total $ 47,049 53,379 $ ( 6,330) $ 5,142,124 9,251 $ 5,132,873 $947,345 148,699 $798,646 $ 793,428 482,828 $ 310,600 $ 3,101,084 137,613 $ 2,963,471 $1,912,060 433,872 $1,478,188 $ 221 1 220 $ 484,927 884,674 $(399,747) $ 3,973,194 90,662 $ 3,882,532 ---$1,529,013 ---$798,866 $ 107,334 11,857 $ 95,477 $ -- $ U.S. Customs and Border Protection • Performance and Accountability Report $ 574,881 2,656 $ 572,225 $12,551,101
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 20. Sub-organization Program Cos...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements For the year ended September 30, 2012 (in thousands): Schedule of Net Cost by Program and Responsibility Segment Border Security Inspections And Trade Facilitation at Ports Of Entry Gross Costs: Passenger Processing 2012 Fostering a Safe & Secure Homeland Enforcing & Administering Our Immigration Laws $ 2,553,008 $ 1,802,565 Trade Compliance Ensuring Resilience to Disasters $ -- Providing Essential Support to National, Economic and Homeland Security $ Intra-Entity Eliminations Consolidated Total -- $ 543,065 $ 3,812,508 2,585,461 2,181,611 -- -- 764,588 360,738 242,459 -- -- -- 30,514 211,945 Total Gross Costs $ 4,977,078 $ 1,802,565 -- $764,588 $ 934,317 $ 6,609,914 Less: Earned Revenue Net Program Costs 1,004,037 $ 3,973,041 408,924 $ 1,393,641 -$ -- 139,287 $625,301 1,390,774 $ (456,457) 161,474 $ 6,448,440 $ 5,109,073 -- -- -- $ 474,132 $ 4,634,941 147,833 $ 4,961,240 --- --- --- 37,636 $ 436,496 110,197 $ 4,524,744 $ 32,919 $ 2 $ 13,199 -- $ 362,052 Outbound Border Security and Control Between Ports of Entry Gross Costs Less: Earned Revenue Net Program Costs Border Security Fencing, Infrastructure and Technology Gross Costs $ 315,932 22 -- 8 -- 167 $ 315,795 $ 32,897 $ 2 $ 13,191 -- $ 361,885 Gross Costs Less: Earned Revenue $ 205,639 (1) $ 80,028 -- $ 8 -- $ 29,940 -- --- $ 315,615 (1) Net Program Costs $ 205,640 $ 80,028 $ 8 $ 29,940 -- $ 315,616 $ 722,285 8,614 713,671 ---- $229 30 $199 ---- $ 22,309 2,348 $ 19,961 $ $10,169,387 $1,506,566 $209 $668,432 $ $12,344,594 Less: Earned Revenue Net Program Costs 137 Automation Modernization Air and Marine Operations Gross Costs Less: Earned Revenue Net Program Costs Net Cost of Operations $ -- $ 700,205 6,296 693,909 Financial Section 123
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements For the year ended September 30,...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 21. Non-exchange Revenues and Transfers In/Out Without Reimbursement Non-exchange Revenue represents amounts collected from user fees that CBP may retain and expend as authorized by law, and is identified in Non-exchange Revenue and Other. Transfers In/Out Without Reimbursement are amounts of funds collected and transferred from CBP receipt accounts to expenditure accounts within CBP and to other Federal agencies. Non-exchange Revenue reported under Budgetary Financing Sources includes Land Border Inspection Fees, Immigration Enforcement Fees, International Registered Traveler Program Fees, Electronic Systems for Travel Authorization Fees, Customs User Fees, and amounts from Abandoned and Seized Goods. These amounts are identified as Budgetary Financing Sources because CBP recognizes budget authority related to the collections. Non-exchange Revenue reported under Other Financing Sources as Other, includes Immigration User Fees, Small Airports User Fees, and Merchandise Processing Fees, which represent revenue reported in receipt accounts for which CBP does not have available budgetary authority. Also reported under Other Financing Sources as Other, is the accounts receivable related portion of Customs User Fees. 22. Adjustment to Unobligated Balance, Brought Forward, October 1 The adjustment to unobligated balance, brought forward, October 1, 2011 consisted of $639.9 million in COBRA User Fees that resulted from a temporary fee increase and elimination of the North American Free Trade Agreement (NAFTA) country exemptions from 1994 to 1997. The fees are restricted by law for use until made available as provided in Appropriation Acts. The FY 2012 reporting change resulted from new guidance received from OMB in August 2012, which included creating a new unavailable receipt account for CBP to report these additional fees and reducing budgetary resources rather than reporting as an unapportioned balance. CBP will report the $639.9 million in user fees as “Non-budgetary” Fund Balance with Treasury until the collections are either withdrawn by Treasury from CBP’s account or made available to CBP by law. 23. Apportionment Categories of Obligations Incurred: Direct vs. Reimbursable Obligations Apportionment categories are determined in accordance with the guidance provided in OMB Circular A-11, Preparation, Submission and Execution of the Budget. Category A represents resources apportioned for calendar quarters. Category B represents resources apportioned for other time periods, activities, projects, objectives or any combination thereof (in thousands). In FY 2013 CBP changed the reporting of current year reimbursable funds’ apportionment from category A to category B to better reflect management of these funds by project rather than by quarters. 2013 Obligations Incurred – Direct Obligations Incurred - Reimbursable Total Obligations Incurred 2012 Obligations Incurred – Direct Obligations Incurred - Reimbursable Total Obligations Incurred 124 Apportionment Category A $ 9,648,928 (1,283) $ 9,647,645 Apportionment Category A $ 8,761,186 1,536,596 $10,297,782 U.S. Customs and Border Protection • Performance and Accountability Report Apportionment Category B $2,338,559 1,575,677 $3,914,236 Apportionment Category B $3,714,385 80,046 $3,794,431 Exempt from Apportionment $1,300,623 -$1,300,623 Exempt from Apportionment $1,820,615 -$1,820,615 Total $13,288,110 1,574,394 $14,862,504 Total $14,296,186 1,616,642 $15,912,828
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 21. Non-exchange Revenues and Tr...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 24. Appropriations As of September 30, 2013 and 2012, the Combined Statements of Budgetary Resources consist of appropriations totaling $12.9 billion and $13.7 billion, respectively. This differs from the Consolidated Statements of Changes in Net Position as of September 30, 2013 and 2012, which consist of appropriations received totaling $8.2 billion and $8.0 billion, respectively. This difference is due to CBP’s non-entity activity, which as of September 30, 2013 and 2012 consists of $1.3 billion and $1.8 billion, respectively, for Refund and Drawback activity, $3.7 billion and $3.5 billion, respectively, for user/inspection fees and subsidy activity, which are not reported on the Consolidated Statements of Changes in Net Position, $597.3 million and $17.0 million, respectively, in rescissions, which are reported separately on the Consolidated Statements of Changes in Net Position, and $382.9 million and $362.1 million, respectively, in non-expenditure transfers, which are reported separately on the Consolidated Statements of Changes in Net Position. Permanent indefinite appropriations refer to the appropriations that result from permanent public laws, which authorize CBP to retain certain receipts. The amount appropriated depends upon the amount of the receipts rather than on a specific amount. CBP has a permanent and indefinite appropriation, Refunds and Drawbacks, which is used to disburse tax and duty refunds and duty drawbacks. Although funded through an appropriation, refund and drawback activity is, in most instances, reported as a custodial activity. Refunds are custodial revenue-related activity in that refunds are a direct result of importer overpayments of duties, taxes and fees. Federal tax revenue received from taxpayers is not available for use in the operation of CBP and is not reported on the Consolidated Statements of Net Cost. Likewise, the refunds of overpayments are not available for use by CBP in its operations. This appropriation is not subject to budgetary ceilings established by Congress. Refunds and drawbacks payable at year-end are not subject to funding restrictions. Refund payment funding is recognized as appropriations are used. 25. Legal Arrangements Affecting the Use of Unobligated Balances Unobligated balances, whose period of availability has expired, are not available to fund new obligations. Expired unobligated balances are available to pay for current period adjustments to obligations incurred prior to expiration. For a fixed appropriation account, the balance can be carried forward for five fiscal years after the period of availability ends. For a no-year account, the unobligated balance is carried forward indefinitely until (1) specifically rescinded by law; or (2) the head of the agency concerned or the President determines that the purposes for which the appropriation was made have been carried out and disbursements have not been made against the appropriation for two consecutive years. Included in the cumulative results of operations for special funds is $548.6 billion at September 30, 2013, that represents CBP’s authority to assess and collect user fees relating to merchandise and passenger processing, to assess and collect fees associated with the services performed at certain small airports or other facilities, retain amounts needed to offset costs associated with collecting duties, and taxes and fees for the government of Puerto Rico. These special fund balances are restricted by law and in their use to offset specific costs incurred by CBP. The passenger fees in the COBRA User Fee Account, totaling approximately $135.5 million, as of September 30, 2013 are restricted by law in its use to offset specific costs incurred by CBP. The entity trust fund balances result from CBP’s authority to use the proceeds from general order items sold at auction to offset specific costs incurred by CBP relating to their sale, to use available funds in the Salaries and Expense Fund to offset specific costs for expanding border and port enforcement activities, and to use available funds from the Harbor Maintenance Trust Fund to offset administrative expenses related to the collection of the Harbor Maintenance Fee. Financial Section 125
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 24. Appropriations As of Septemb...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 26. Explanation of Differences Between the SBR and the Budget of the U.S. Government The table below documents the material differences between the FY 2012 Combined Statement of Budgetary Resources and the actual amounts reported for FY 2012 in the Budget of the United States Government. Since the FY 2013 financial statements are reported prior to the Budget of the United States Government, CBP is reporting for FY 2012 only. Typically, the Budget of the United States Government with the FY 2013 actual data is published in February of the subsequent year. Once published, the FY 2013 actual data will be available at OMB website, www.whitehouse.gov/omb. Differences between the SBR and the Budget of the US Government (in thousands): 2012 Combined Statement of Budgetary Resources Differences: Expired Appropriation not Included in President’s Budget Refunds & Drawbacks not Included in President’s Budget (70X0505) Injured Domestic Industries not Included in President’s Budget (20X5688) Offsetting Receipts not Included in the Treasury Annual Report Miscellaneous Total Differences Budget of the US Government Obligations Incurred Distributed Offsetting Receipts Net Outlays $17,223,692 $15,912,828 $(3,499,993) $10,997,664 (376,421) (91,398) -- -- (1,817,610) (1,817,610) -- (1,773,341) (638,123) (418,094) -- (418,094) -(2,000) (2,834,154) $14,389,538 -- (44,634) (1,000) (45,634) $(3,545,627) 3,499,993 1,000 1,309,558 $12,307,222 Budgetary Resources (2,327,102) $13,585,726 Expired authority represents funding for which CBP no longer has budget authority. Refund and Drawback and the Injured Domestic Industries activity is exempt from apportionment per OMB Circular A-11 and therefore is not included in the President’s Budget. 27. Undelivered Orders at the End of Period An undelivered order exists when a valid obligation has occurred and funds have been reserved, but the goods or services have not been delivered and have not been prepaid. Undelivered orders for the period ended September 30, 2013 and 2012 (in thousands): Unpaid Upward/Downward Adjustment of Prior Period Total Undelivered Orders at the End of Period 2013 $2,954,472 (364,759) $2,589,713 2012 $3,314,498 (314,629) $2,999,869 28. Custodial Revenues Custodial Revenue consists of duties, user fees, excise taxes, fines and penalties, refunds and drawbacks overpayments and interest associated with import/export activity which have been established as a specifically identifiable, legally enforceable claim and remain uncollected as of year-end. These receivables are net of amounts deemed uncollectible which were determined by considering the debtor’s payment record and willingness to pay, the probable recovery of amounts from secondary sources, such as sureties and an analysis of aged receivable activity. Interest collections on the Consolidated Statements of Custodial Activity reflect a negative balance in FY 2013 due to the current year amount including the entire change in the allowance for loss on interest receivable. The estimated 126 U.S. Customs and Border Protection • Performance and Accountability Report
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 26. Explanation of Differences B...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements uncollectible amount increased in FY 2013 more than the increase in the interest collected and accrued. Primarily, revenue collections result from current fiscal year activity. Refunds were increased in FY 2012 due to the October 21, 2011 enactment of the Trade Adjustment Assistance Extension Act of 2011 (HR2832) and the United States-Colombia Trade Promotion Agreement Implementation Act (HR 3078) which were retroactive to January 1, 2011. Refunds paid in FY 2013 are similar to amounts paid in years prior to FY 2012. Disbursements from the Refunds and Drawbacks Account for the fiscal years ended September 30, 2013 and 2012 (in thousands): Refunds Drawbacks Total 2013 $ 625,790 873,121 $1,498,911 2012 $1,511,468 739,001 $2,250,469 Amounts refunded during FY 2013 and 2012 identified by entry year consist of the following (in thousands): Entry Year 2013 2012 2011 2010 Prior Years Total 2013 $ 824,708 288,515 95,876 33,975 255,837 $1,498,911 Entry Year 2012 2011 2010 2009 Prior Years Total 2012 $ 951,810 707,087 89,277 37,503 464,792 $2,250,469 The total amount of antidumping and countervailing duties varies from year to year, depending on decisions from Department of Commerce. Antidumping and countervailing duty refunds (included in total refunds presented above) and associated interest refunded for the fiscal years ended September 30, 2013 and 2012, consisted of the following (in thousands): Antidumping and Countervailing Duty Refunds Interest Total 2013 $92,976 4,551 $97,527 2012 $133,994 7,036 $141,030 Financial Section 127
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements uncollectible amount increased i...
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 29. Reconciliation of Net Cost of Operations to Budget The following table presents CBP’s reconciliation of net cost of operations to budgetary accounts for the years ended September 30, 2013 and 2012 (in thousands). 2013 2012 Resources Used to Finance Activities: Budgetary Resources Obligated Obligations Incurred $14,862,504 $15,912,828 Less: Spending Authority from Offsetting Collections and Recoveries 1,986,889 1,969,582 Obligations Net of Offsetting Collections and Recoveries $12,875,615 $13,943,246 Less: Offsetting Receipts 3,776,910 3,499,993 Net Obligations $ 9,098,705 $10,443,253 Other Resources Transfers In/Out Without Reimbursement Imputed Financing from Costs Absorbed by Others Other (Note 21) Net Other Resources Used to Finance Activities Total Resources Used to Finance Activities 36,425 60,926 598,159 3,210,294 $ 3,844,878 $12,943,583 645,076 2,887,095 $ 3,593,097 $14,036,350 $ (429,869) 439 $ (403,627) 33,171 (515,626) 609,154 (570,282) 983,638 1,431,626 $ 1,095,724 2,204,916 $ 2,247,816 Total Resources Used to Finance the Net Cost of Operations $11,847,859 $11,788,534 Components of the Net Cost of Operations that will not Require or Generate Resources in the Current Period: Components Requiring or Generating Resources in Future Periods Increase in Annual Leave Liability and Environmental Liability Change in Actuarial FECA Liability, Legal Contingent Liabilities and Other Total Components of Net Cost of Operations that will Require or Generate Resources in Future Periods $ 9,700 141,633 $ 1,138 66,718 $ 151,333 $ 67,856 $ 676,571 (20,552) (104,110) $ 629,967 (18,760) (123,003) $ 551,909 $ 488,204 Total Components of Net Cost of Operations that will Not Require or Generate Resources in the Current Period $ 703,242 $ 556,060 Net Cost of Operations $12,551,101 Resources Used to Finance Items Not Part of the Net Cost of Operations Change in Budgetary Resources Obligated for Goods, Services and Benefits Ordered, but not yet Provided Resources that Fund Expenses Recognized in Prior Periods Budgetary Offsetting Collections and Receipts that do not Affect Net Cost of Operations Resources that Finance the Acquisition of Assets or Liquidation of Liabilities Tax Revenue Refunds and Other Resources or Adjustments to Net Obligated Resources that do not Affect Net Cost of Operations Total Resources Used to Finance Items Not Part of the Net Cost of Operations Components not Requiring or Generating Resources Depreciation and Amortization Revaluation of Assets or Liabilities Other Non-budgetary Resources Total Components of Net Cost of Operations that will Not Require or Generate Resources 128 U.S. Customs and Border Protection • Performance and Accountability Report $12,344,594
Notes to Financial Statements Customs and Border Protection Notes to Financial Statements 29. Reconciliation of Net Cost o...
Required Supplementary Information Customs and Border Protection Required Supplementary Information (Unaudited) Deferred Maintenance and Repairs Deferred maintenance and repairs are maintenance and repairs that were not performed when they should have been or were scheduled to be performed, and were delayed until a future period. Maintenance and repairs include preventive maintenance, normal repairs, replacement of parts and structural components, and other activities needed to preserve the asset so that it will continue to provide acceptable service and achieve its useful life. An assessment of “fair” means the facility/equipment condition meets minimum standards but requires additional maintenance or repair to prevent further deterioration, increase operating efficiency and to achieve normal life expectancy. An assessment of “good” means the facility/equipment condition is above minimum standards, but requires preventive maintenance or normal repairs to maintain the design intent of the building or equipment so that it continues to provide acceptable service and achieves the expected useful life. An assessment of “poor” means the facility/equipment does not meet most maintenance standards and requires frequent repairs to prevent accelerated deterioration and to provide a minimal level of operating function. In some cases, this includes condemned or failed facilities. Deferred maintenance on property, plant and equipment as measured by condition assessment survey, is comprised of (in thousands): 2013 Deferred Condition Maintenance Assessment and Repairs Building and Structures Poor to Good $181,484 Vehicles Good -Equipment Good -Multi-Use Heritage Assets Poor to Good 987 Collections (documents and artifacts) Poor to Good -Total $182,471 2012 Building and Structures Vehicles Equipment Multi-Use Heritage Assets Collections (documents and artifacts) Total Condition Assessment Poor to Good Good Good Good Poor to Good Deferred Maintenance and Repairs $97,802 ----$97,802 Financial Section 129
Required Supplementary Information Customs and Border Protection Required Supplementary Information  Unaudited  Deferred M...
Required Supplementary Information Customs and Border Protection Required Supplementary Information (Unaudited) Statement of Budgetary Resources (SBR) The total Budgetary Resources of $16.1 billion for FY 2013 includes new budget authority, unobligated balances at the beginning of the year and transferred in/out, spending authority from offsetting collections, recoveries of prior year obligations and adjustments. Schedule of Budgetary Resources by Major Budget Accounts: 2013 As of September 30, 2013 (in thousands): Budgetary Resources Unobligated balance brought forward, October 1 Adjustment to unobligated balance brought forward, October 1 Unobligated balance brought forward, October 1, as adjusted Recoveries of prior year unpaid obligations Other changes in unobligated balance Unobligated balance from prior year budget authority, net Appropriations Spending authority from offsetting collections Total Budgetary Resources Status of Budgetary Resources Obligations incurred (Note 23) Unobligated balance, end of year: Apportioned Unapportioned Total unobligated balance, end of year Total Budgetary Resources 130 Salaries & Expense $ Air & Marine BSFIT Construction Automation Other Total 268,273 $ 69,777 $407,160 $ 41,502 $ 99,244 $ 424,908 $ 1,310,864 -- -- -- -- -- -- -- 268,273 137,200 $ 69,777 68,493 $407,160 90,289 $ 41,502 60,366 $ 99,244 27,051 $ 424,908 5,922 $ 1,310,864 389,321 (92,421) (1,375) (9,031) -- 6,880 -- (95,947) 313,052 8,234,379 1,569,333 $10,116,764 136,895 758,262 2,734 $897,891 488,418 234,256 50 $722,724 101,868 209,527 -$311,395 133,175 722,847 -$856,022 430,830 2,793,739 25,451 $3,250,020 1,604,238 12,953,010 1,597,568 $16,154,816 $ 9,871,168 $825,224 $302,033 $ 233,564 $771,907 $2,858,608 $14,862,504 26,360 219,236 245,596 66,842 5,825 72,667 402,412 18,279 420,691 30,065 47,766 77,831 75,084 9,031 84,115 117,111 274,301 391,412 717,874 574,438 1,292,312 $10,116,764 $897,891 $722,724 $311,395 $856,022 $3,250,020 $16,154,816 $ U.S. Customs and Border Protection • Performance and Accountability Report
Required Supplementary Information Customs and Border Protection Required Supplementary Information  Unaudited  Statement ...
Required Supplementary Information Customs and Border Protection Required Supplementary Information (Unaudited) 2013 Salaries & Expense Change in Obligated Balance: Unpaid Obligations: Unpaid obligations brought forward, October 1 (gross) Obligations incurred (Note 23) Outlay (gross) Recoveries of prior year unpaid obligations Unpaid obligations, end of year (gross) Air & Marine BSFIT Construction Automation Other $ Total $ 1,761,724 9,871,168 (10,316,900) (137,200) 1,178,792 $ 604,631 825,224 (801,900) (68,493) 559,462 $ 644,865 302,033 (343,888) (90,289) 512,721 $ 694,687 233,564 (348,883) (60,366) 519,002 $ 177,004 771,907 (579,645) (27,051) 342,215 274,569 2,858,608 (2,718,442) (5,922) 408,813 $ 4,157,480 14,862,504 (15,109,658) (389,321) 3,521,005 (161,057) (363) (167) -- -- (1,033) (162,620) 10,974 (228) 167 -- -- (52) 10,861 (150,083) (591) -- -- -- (1,085) (151,759) Obligated Balance, Start of Year $ 1,600,667 $ 604,268 $ 644,698 $ 694,687 $ 177,004 $ 273,536 $ 3,994,860 Obligated Balance, End of Year $ 1,028,709 $ 558,871 $ 512,721 $ 519,002 $ 342,215 $ 407,728 $ 3,369,246 $ 9,803,712 (1,580,307) $ 760,996 (2,506) $ 234,306 (217) $ 209,527 -- $ 722,847 -- $ 2,819,190 (25,399) $ 14,550,578 (1,608,429) 10,974 $ 8,234,379 (228) $ 758,262 167 $ 234,256 -$ 209,527 -$ 722,847 (52) $ 2,793,739 10,861 $ 12,953,010 Outlays, gross Actual offsetting collections Outlays, net Distributed offsetting receipts $10,316,900 (1,580,307) 8,736,593 -- $ 801,900 (2,506) 799,394 -- $343,888 (217) 343,671 -- $ 348,883 -348,883 -- $ 579,645 -579,645 -- $ 2,718,442 (25,399) 2,693,043 (3,776,910) $ 15,109,658 (1,608,429) 13,501,229 (3,776,910) Agency Outlays, Net $ 8,736,593 $ 799,394 $ 343,671 $ 348,883 $ 579,645 $(1,083,867) $ Uncollected Payments: Uncollected customer payments from Federal sources brought forward from October 1 Change in uncollected customer payments from federal sources Uncollected customer payments from federal sources, end of year Budget Authority and Outlays, Net: Budget authority, gross Actual offsetting collections Change in uncollected customer payment from Federal sources Budget Authority, Net 9,724,319 Financial Section 131
Required Supplementary Information Customs and Border Protection Required Supplementary Information  Unaudited  2013 Salar...
Required Supplementary Information Customs and Border Protection Required Supplementary Information (Unaudited) Schedule of Budgetary Resources by Major Budget Accounts: 2012 As of September 30, 2012 (in thousands): Budgetary Resources Unobligated balance brought forward, October 1 Adjustment to unobligated balance brought forward, October 1 Unobligated balance brought forward, October 1, as adjusted Recoveries of prior year unpaid obligations Other changes in unobligated balance Unobligated balance from prior year budget authority, net Appropriations Spending authority from offsetting collections Total Budgetary Resources Status of Budgetary Resources Obligations incurred (Note 23) Unobligated balance, end of year: Apportioned Unapportioned Total unobligated balance, end of year Total Budgetary Resources 132 Salaries & Expense $ Air & Marine BSFIT Construction Automation Other Total 295,328 $ 79,856 $403,880 $ 52,217 $ 90,036 $1,347,055 $ 2,268,372 -- -- -- -- -- (639,940) (639,940) 295,328 138,966 (90,371) $ 79,856 25,950 (1,613) $403,880 71,894 -- $ 52,217 83,846 (1,401) $ 90,036 21,331 -- $ 707,115 9,249 -- $ 1,628,432 351,236 (93,385) 343,923 9,054,230 1,583,428 $10,981,581 104,193 503,966 4,905 $613,064 475,774 378,100 372 $854,246 134,662 236,596 -$371,258 111,367 329,275 -$440,642 716,364 3,216,896 29,641 $3,962,901 1,886,283 13,719,063 1,618,346 $17,223,692 $10,713,308 $543,287 $447,086 $329,756 $341,398 $3,537,993 $15,912,828 26,551 241,722 268,273 $10,981,581 68,239 1,538 69,777 $613,064 404,624 2,536 407,160 $854,246 91 41,411 41,502 $371,258 99,173 71 99,244 $440,642 39,832 385,076 424,908 $3,962,901 638,510 672,354 1,310,864 $17,223,692 $ U.S. Customs and Border Protection • Performance and Accountability Report
Required Supplementary Information Customs and Border Protection Required Supplementary Information  Unaudited  Schedule o...
Required Supplementary Information Customs and Border Protection Required Supplementary Information (Unaudited) Salaries & Expense Change in Obligated Balances Unpaid Obligations: Unpaid obligations brought forward, October 1 (gross) Obligations incurred (Note 23) Outlay (gross) Recoveries of prior year unpaid obligations Unpaid obligations, end of year (gross) Uncollected Payments: 2012 Air & Marine BSFIT Construction Automation Other Total $ 1,851,440 10,713,308 (10,664,058) (138,966) 1,761,724 $615,779 543,287 (528,485) (25,950) 604,631 $688,048 447,086 (418,374) (71,894) 644,866 $1,075,435 329,756 (626,659) (83,846) 694,686 $244,740 341,398 (387,803) (21,331) 177,004 $ 237,725 3,537,993 (3,491,900) (9,249) 274,569 $ 4,713,167 15,912,828 (16,117,279) (351,236) 4,157,480 (162,650) (301) -- -- -- (945) (163,896) 1,593 (62) (167) -- -- (88) 1,276 (161,057) (363) (167) -- -- (1,033) (162,620) Obligated Balance, Start of Year $ 1,688,790 $615,478 $688,048 $1,075,435 $244,740 $ 236,780 $ 4,549,271 Obligated Balance, End of Year $ 1,600,667 $604,268 $644,699 $ 694,686 $177,004 $ 273,536 $ 3,994,860 $10,637,658 (1,585,021) $508,871 (4,843) $378,472 (205) $ 236,596 -- $329,275 -- $3,246,537 (29,553) $15,337,409 (1,619,622) 1,593 $ 9,054,230 (62) $503,966 (167) $378,100 -$ 236,596 -$329,275 (88) $3,216,896 1,276 $13,719,063 $10,664,058 (1,585,021) 9,079,037 -$ 9,079,037 $528,485 (4,843) 523,642 -$523,642 $418,374 (205) 418,169 -$418,169 $ 626,659 -626,659 -$ 626,659 $387,803 -387,803 -$387,803 $3,491,900 (29,553) 3,462,347 (3,499,993) $ (37,646) $16,117,279 (1,619,622) 14,497,657 (3,499,993) $10,997,664 Uncollected customer payments from Federal sources brought forward from October 1 Change in uncollected customer payments from federal sources Uncollected customer payments from federal sources, end of year Budget Authority and Outlays, Net: Budget authority, gross Actual offsetting collections Change in uncollected customer payment from Federal sources Budget Authority, Net Outlays, gross Actual offsetting collections Outlays, net Distributed offsetting receipts Agency Outlays, Net Financial Section 133
Required Supplementary Information Customs and Border Protection Required Supplementary Information  Unaudited  Salaries  ...
Required Supplementary Information Customs and Border Protection Required Supplementary Information (Unaudited) Custodial Activity Substantially all duty, tax and fee revenues collected by CBP are remitted to various General Fund accounts maintained by Treasury and U.S Department of Agriculture. Treasury further distributes these revenues to other Federal agencies in accordance with various laws and regulations. CBP transfers the remaining revenue (less than one percent of revenues collected) directly to other Federal agencies, the Governments of Puerto Rico and the U.S. Virgin Islands. Refunds of revenues collected from import/export activities are recorded in separate accounts established for this purpose and are funded through permanent indefinite appropriations. These activities reflect the non-entity, or custodial, responsibilities that CBP, as an agency of the Federal government, has been authorized by law to enforce. CBP reviews selected documents to ensure all duties, taxes and fees owed to the Federal government are paid and to ensure regulations are followed. If CBP determines that duties, taxes, fees, fines or penalties are due in addition to estimated amounts previously paid by the importer/violator, the importer/violator is notified of the additional amount due. CBP regulations allow the importer/violator to file a protest on the additional amount due for review by the Port Director. A protest allows the importer/violator the opportunity to submit additional documentation supporting their claim of a lower amount due or to cancel the additional amount due in its entirety. During the protest period, CBP does not have a legal right to importer/violator’s assets, and consequently CBP recognizes accounts receivable only when the protest period has expired or an agreement is reached. For FY 2013 and 2012, CBP had the legal right to collect $2.7 billion of receivables. In addition, there were $2.3 billion and $2.6 billion representing records still in the protest phase for FY 2013 and 2012, respectively. CBP recognized as write-offs $288 million and $78 million of assessments that the Department has statutory authority to collect at September 30, 2013 and 2012, respectively, but has no future collection potential. Most of this amount represents trade receivables. 134 U.S. Customs and Border Protection • Performance and Accountability Report
Required Supplementary Information Customs and Border Protection Required Supplementary Information  Unaudited  Custodial ...
Auditors’ Report Independent Auditors’ Report The independent audit of CBP’s consolidated financial statements was conducted by KPMG LLP, and follows in its entirety. Financial Section 135
Auditors    Report Independent Auditors    Report The independent audit of CBP   s consolidated financial statements was c...
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Auditors’ Report Department of Homeland Security 2IÀFH RI ,QVSHFWRU *HQHUDO Independent Auditors’ Report on U.S. Customs and Border Protection’s FY 2013 Financial Statement OIG-14-59 March 2014 Financial Section 137
Auditors    Report  Department of Homeland Security  2I  FH RI ,QVSHFWRU  HQHUDO Independent Auditors    Report on U.S. Cu...
Auditors’ Report OFFICE OF INSPECTOR GENERAL Department of Homeland Security Washington, DC 20528 / www.oig.dhs.gov MAR 27 2014 MEMORANDUM FOR: Deborah J. Schilling Chief Financial Officer U.S. Customs and Border Protection FROM: Anne L. Richards Assistant Inspector General for Audits SUBJECT: Independent Auditors’ Report on U.S. Customs and Border Protection’s FY 2013 Financial Statements Attached for your action is our final report, Independent Auditors’ Report on U.S. Customs and Border Protection’s FY 2013 Financial Statements. We have incorporated the formal comments from U.S. Customs and Border Protection (CBP) in the final report. The report presents the results of CBP’s consolidated financial statement audits for fiscal years (FY) 2013 and 2012. We contracted with the independent public accounting firm KPMG LLP to perform the audits. KPMG LLP concluded that CBP’s consolidated financial statements as of and for the years ended September 30, 2013, and September 30, 2012, are presented fairly, in all material respects, in conformity with U.S. generally accepted accounting principles. The FY 2013 independent auditors’ report also contains observations and 13 recommendations related to internal control weaknesses that were considered significant deficiencies and were required to be reported in the financial statement audit report. The four significant deficiencies in internal controls are presented below; the first significant deficiency is considered to be a material weakness. Your office concurred with the one material weakness and three other significant deficiencies presented below: Significant Deficiencies in Internal Control A. Drawback of Duties, Taxes, and Fees B. Property, Plant, and Equipment C. Entry Process 1. In-Bond Program 2. Bonded Warehouse and Foreign Trade Zones 3. Entry Reports D. Information Technology 138 U.S. Customs and Border Protection • Performance and Accountability Report
Auditors    Report  OFFICE OF INSPECTOR GENERAL Department of Homeland Security Washington, DC 20528   www.oig.dhs.gov  MA...
Auditors’ Report OFFICE OF INSPECTOR GENERAL Department of Homeland Security KPMG LLP is responsible for the attached independent auditors’ report dated January 30, 2014, and the conclusions expressed in the report. We do not express opinions on financial statements or internal control or conclusions on compliance with laws and regulations. Consistent with our responsibility under the Inspector General Act, we are providing copies of our report to appropriate congressional committees with oversight and appropriation responsibility over the Department of Homeland Security. In addition, we will post a copy of the report on our website for public dissemination. Please call me with any questions, or your staff may contact Mark Bell, Deputy Assistant Inspector General for Audits, at (202) 254-4100. Attachment www.oig.dhs.gov 2 Financial Section OIG-14-59 139
Auditors    Report  OFFICE OF INSPECTOR GENERAL Department of Homeland Security  KPMG LLP is responsible for the attached ...
Auditors’ Report KPMG LLP Suite 12000 1801 K Street, NW Washington, DC 20006 Independent Auditors’ Report Inspector General U.S. Department of Homeland Security: Commissioner U.S. Customs and Border Protection: Report on the Financial Statements We have audited the accompanying consolidated financial statements of the U.S. Customs and Border Protection (CBP), which comprise the consolidated balance sheets as of September 30, 2013 and 2012, and the related consolidated statements of net cost, changes in net position, and custodial activity, and combined statements of budgetary resources for the years then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States; and Office of Management and Budget (OMB) Bulletin No. 14-02, Audit Requirements for Federal Financial Statements. Those standards and OMB Bulletin No. 14-02 require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. KPMG LLP is a Delaware limited liability partnership, the U.S. member firm of KPMG International Cooperative (“KPMG International”), a Swiss entity. 140 U.S. Customs and Border Protection • Performance and Accountability Report
Auditors    Report  KPMG LLP Suite 12000 1801 K Street, NW Washington, DC 20006  Independent Auditors    Report Inspector ...
Auditors’ Report Opinion on the Financial Statements In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of CBP as of September 30, 2013 and 2012, and its net costs, changes in net position, budgetary resources, and custodial activity for the years then ended in accordance with U.S. generally accepted accounting principles. Emphasis of Matter As discussed in Notes 19 and 20 to the consolidated financial statements, CBP changed its presentation for reporting the consolidated statement of net cost in order to better align its costs with its strategic objectives. The consolidated statement of net cost for fiscal year 2012 has not been restated in the fiscal year 2013 format since the new programs are not applicable to fiscal year 2012 reporting. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information U.S. generally accepted accounting principles require that the information in the Management’s Discussion and Analysis and Required Supplementary Information sections be presented to supplement the basic consolidated financial statements. Such information, although not a part of the basic consolidated financial statements, is required by the Federal Accounting Standards Advisory Board who considers it to be an essential part of financial reporting for placing the basic consolidated financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic consolidated financial statements, and other knowledge we obtained during our audits of the basic consolidated financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audits were conducted for the purpose of forming an opinion on the basic consolidated financial statements as a whole. The information in the Acting Commissioner’s Message, Performance Section, Message from the Chief Financial Officer, Other Information, and Acronyms as reflected in CBP’s Fiscal Year 2013 Performance and Accountability Report is presented for purposes of additional analysis and is not a required part of the basic consolidated financial statements. Such information has not been subjected to the auditing procedures applied in the audits of the basic consolidated financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards Internal Control Over Financial Reporting In planning and performing our audit of the consolidated financial statements, we considered CBP’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the consolidated financial statements, but not for the purpose of expressing an opinion on the effectiveness of CBP’s internal control. Accordingly, we do not express an opinion on the effectiveness of CBP’s internal control. We did not test all internal controls relevant to operating objectives as broadly defined by the Federal Managers’ Financial Integrity Act of 1982. Financial Section 141
Auditors    Report  Opinion on the Financial Statements In our opinion, the consolidated financial statements referred to ...
Auditors’ Report Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. However, as described in the accompanying exhibits, we identified certain deficiencies in internal control that we consider to be a material weakness and significant deficiencies. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in Exhibit I to be a material weakness. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in Exhibit II to be significant deficiencies. Compliance and Other Matters As part of obtaining reasonable assurance about whether CBP’s consolidated financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts, and certain provisions of other laws and regulations specified in OMB Bulletin No. 14-02. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests of compliance disclosed no instances of noncompliance or other matters that are required to be reported herein under Government Auditing Standards or OMB Bulletin No. 14-02. CBP’s Responses to Findings CBP’s responses to the findings identified in our audit are described in Management’s Response to the Independent Auditors’ Report. CBP’s responses were not subjected to the auditing procedures applied in the audit of the consolidated financial statements and, accordingly, we express no opinion on the responses. Purpose of the Other Reporting Required by Government Auditing Standards The purpose of the communication described in the Other Reporting Required by Government Auditing Standards section is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of CBP’s internal control or compliance. Accordingly, this communication is not suitable for any other purpose. Washington, D.C. January 30, 2014 142 U.S. Customs and Border Protection • Performance and Accountability Report
Auditors    Report  Our consideration of internal control was for the limited purpose described in the preceding paragraph...
Auditors’ Report EXHIBIT I Material Weakness A. Drawback of Duties, Taxes, and Fees Background: U.S. Customs and Border Protection (CBP) performs an important revenue collection function for the U.S. Department of the Treasury. In fiscal year (FY) 2013, CBP collected approximately $36.6 billion in import duties, taxes, and fees on merchandise arriving in the U.S. from foreign countries. Receipts of import duties and related refunds are presented in the statement of custodial activity in CBP’s consolidated financial statements. Drawback is a remittance, in whole or in part, of duties, taxes, or fees previously paid by an importer. Drawback typically occurs when the imported goods, on which duties, taxes, or fees have been previously paid, are subsequently exported from the United States or destroyed prior to entering the commerce of the United States. Depending on the type of drawback claim, the claimant has up to eight years from the date of importation to file for drawback. The conditions cited below have existed for several years; however, CBP’s planned remediation for these conditions is dependent upon funding for IT systems modernization and new system implementation. In FY 2013, CBP continued its efforts to review and reassess the drawback process as a whole. Conditions: The following weaknesses in internal control over drawback of duties, taxes, and fees paid by the importer were identified: • CBP is unable to prevent, or detect and correct excessive drawback claims against an entry summary due to the inherent limitations of CBP’s current entry/collections system and lack of controls therein. An entry summary may comprise numerous line items; however, the system does not have the capability to compare, verify, and track essential information on drawback claims to the related underlying consumption entry sheets and their individual line items, or export documentation upon which the drawback claim is based. • The drawback module within CBP’s current entry/collections system provides information at the entry summary level to prevent the total amount of a drawback claim against a given import entry from exceeding 100 percent of the total amount of duties, taxes, and fees collected. By law, the amount paid for drawback claims against a given import entry are not to exceed 99 percent of the duties, taxes, and fees collected at the individual line item level and the entry summary level. In addition, export information is not linked to the drawback module and therefore, electronic comparisons of export data cannot be performed within the system to ensure that overpayments of drawback claims are not made. • Drawback review policies do not require Drawback Specialists to review prior drawback claims against a selected import entry to determine whether an excessive amount has been claimed against the underlying consumption entry sheets. Due to system limitations, this review of prior drawback claims against a consumption entry sheet cannot be automated. CBP utilizes a validity control review process to select and trace the highest dollar invoice item on the highest dollar consumption entry sheet for claims over $50,000; however, this approach is not statistical. In addition, drawback review policy and procedures allow Drawback Specialists, with supervisory approval, to judgmentally decrease the number of consumption entry sheets reviewed for certain claims. Further, I.1 Financial Section 143
Auditors    Report EXHIBIT I Material Weakness  A. Drawback of Duties, Taxes, and Fees Background   U.S. Customs and Borde...
Auditors’ Report EXHIBIT I CBP’s sampling methodology for selecting underlying consumption entry sheets is not considered statistically valid for projecting errors. • The statutory period for document retention of a drawback claim is three years from the date of payment; however, there are several situations that could extend the life of the drawback claim well beyond three years. Therefore, documentation retention periods are not adequate to ensure that support for drawback transactions is maintained for the full lifecycle of the claim. Cause/Effect: Due to system limitations, the drawback process is mostly manual. This places an additional burden on limited resources. CBP uses a compensating manual process to sample, verify, and match consumption entry and export documentation to drawback claims from importers. However, CBP’s sampling methodology is not considered statistically valid for projecting errors over the population of drawback claims. There is a high inherent risk of fraudulent claims or claims made in error, which increases the risk for erroneous payments. Since all, or a statistically valid sample, of drawback claims are not reviewed against the corresponding import entry, it is possible that drawback claims, in aggregate, could exceed the amount of duty and tax collected on the underlying consumption entry sheet at the individual line item level. The length of the drawback claim lifecycle often extends beyond the statutorily mandated document retention period. Criteria: Presented in Index of Financial Reporting and Internal Control Criteria following Exhibit II. Recommendations: We recommend that CBP: 1. Continue to pursue alternative compensating controls that may ultimately identify the potential revenue loss exposure to CBP. These alternative internal controls over drawback claims may enhance CBP’s ability to compare, verify, and track information on drawback claims to the corresponding underlying consumption entry sheet and export documentation, and identify duplicate or excessive drawback claims; 2. Develop and implement automated controls to prevent overpayment of a drawback claim; and 3. Continue to refine the drawback review process so that valid results and meaningful analysis of data can be provided and utilized by management. 144 U.S. Customs and Border Protection • Performance and Accountability Report I.2
Auditors    Report  EXHIBIT I CBP   s sampling methodology for selecting underlying consumption entry sheets is not consid...
Auditors’ Report EXHIBIT II Other Significant Deficiencies B. Property, Plant, and Equipment Background: U.S. Customs and Border Protection (CBP) acquired new equipment, facilities, and other assets through purchase and construction in FY 2013. The increase in assets is primarily due to construction of new facilities and the purchase of inspection equipment at ports of entry. Condition: CBP has invested resources to address weaknesses in its processes for tracking and reporting property, plant, and equipment (PP&E) balances. CBP made improvements in its internal control over PP&E in FY 2013; however, several weaknesses remained. Specifically, CBP: • Did not timely and accurately record certain construction-in-progress (CIP) settlement transactions, resulting in misclassification of assets between CIP and “in-use”. • Recorded certain asset additions prior to the completion of a construction project, without proper supporting documentation. • Did not detect and correct for errors when certain assets recorded in the general ledger no longer existed. • Did not timely record certain asset retirements. Additionally, some assets were retired without approval and/or sufficient supporting documentation. Criteria: Presented in Index of Financial Reporting and Internal Control Criteria following Exhibit II. Cause/Effect: CBP personnel did not consistently adhere to established policies and procedures for recording PP&E costs, and did not have sufficient oversight, including monitoring controls over ongoing CIP projects, to ensure that all PP&E transactions were recorded timely and accurately in the general ledger. CBP’s PP&E and related depreciation balances may be misstated at certain points during the fiscal year due to untimely or inaccurate PP&E entries. Recommendations: We recommend that CBP: 1. Reinforce existing policies and procedures for recording asset additions, retirements, and settlements; and 2. Continue to enhance supervisory review and monitoring controls to review PP&E transactions in a timely manner. II.1 Financial Section 145
Auditors    Report  EXHIBIT II Other Significant Deficiencies  B. Property, Plant, and Equipment Background   U.S. Customs...
Auditors’ Report EXHIBIT II C. Entry Process 1. In-Bond Program Background: An in-bond entry allows for the movement of cargo through the United States without payment of duty or appraisement prior to entry into either domestic commerce or exportation to a foreign country. The cargo may enter U.S. commerce after it arrives at the destination port and an entry is filed, may be entered into a bonded warehouse for storage, or may be admitted into a Foreign Trade Zone. To assist with in-bond oversight functions, CBP implemented the In-Bond Compliance Module in September 2012. CBP conducts audits and examinations to assist in protecting custodial revenues related to in-bond entries of goods. CBP performs audits by reviewing entry documents or documents that show proof of subsequent export to ensure proper accounting of all merchandise has occurred. Examinations are conducted by physical inspection of the merchandise to ensure the commodity matches the entry documentation. At the end of each audit or examination, the findings, conclusions, and corrective actions recommended or taken are documented. These results assist CBP in assessing the risk of bonded carriers. Condition: The following weaknesses in internal control over compliance exams and audits were identified: • Guidance was insufficient for port personnel to implement the new in-bond compliance program. While CBP established a policy that required port personnel to perform examinations as they are assigned, CBP did not establish specific requirements for how often port personnel should query the compliance module for required examinations. • CBP personnel lacked sufficient training and understanding of the functionality of the new in-bond compliance module. • The in-bond compliance module reports did not track the number of overdue audits and examinations. The module did not have sufficient capability to generate reports that displayed inbonds selected for audit and/or examination. Criteria: Presented in Index of Financial Reporting and Internal Control Criteria following Exhibit II. Cause/Effect: CBP did not establish and distribute clear guidance, policies, and procedures for the new in-bond compliance module. Also, personnel were not adequately trained on the new requirements and use of the system tools. Finally, the system lacked sufficient reporting capability to support the program. The in-bond monitoring process supports CBP’s efforts to protect custodial revenues. The inability to effectively monitor the in-bond process could result in missed opportunities for CBP to assess fines and penalties and collect the associated revenues. 146 II.2 U.S. Customs and Border Protection • Performance and Accountability Report
Auditors    Report  EXHIBIT II C. Entry Process  1. In-Bond Program Background   An in-bond entry allows for the movement ...
Auditors’ Report EXHIBIT II Recommendations: We recommend that CBP: 1. Identify and implement a robust audit process for ensuring in-bond shipments reach the intended destination; 2. Continue to enhance the in-bond compliance module including the related systems tools; and 3. Provide additional training and guidance to personnel for the in-bond process 2. Bonded Warehouse and Foreign Trade Zones Background: Bonded Warehouses (BWs) are facilities under CBP’s supervision used to store merchandise that has not made entry into U.S. commerce. The merchandise stored in such warehouses is secured by the bond on the warehouse. Merchandise is entered into the BW by the submission of the CBP Form 7501, Entry Summary with Continuation Sheets, and can be stored in the bonded facility for up to five years. Foreign Trade Zones (FTZs) are secure areas under CBP supervision that are legally considered to be outside the commerce of the United States. Authority for establishing these facilities is granted by the Foreign Trade Zones Board under the Foreign Trade Zones Act of 1934, as amended (19 U.S.C. 81a through 81u). Foreign and domestic merchandise may be admitted into zones for operations not otherwise prohibited by law, including storage, exhibition, assembly, manufacturing, and processing. Merchandise is admitted into a FTZ using CBP Form 214, Application for Foreign-Trade Zone Admission and/or Status Designation. The monitoring of BW and FTZ operations is based on the performance of risk assessments and compliance reviews by CBP officers in the field. CBP conducts a quarterly survey of ports that have BWs and FTZs, the results of which are submitted to CBP Headquarters for compilation and analysis. Headquarters uses the survey results to assist in CBP’s determination on the effectiveness of the BW and FTZ programs. CBP developed national databases in order to maintain a centralized repository of profiles of bonded facilities including BW and FTZ sites. Condition: The following weaknesses in internal control over the BW and FTZ programs were identified: • The national databases of bonded facilities are currently not designed to document (1) the assessed risk of each BW or FTZ, (2) scheduled compliance reviews, or (3) the results of compliance reviews. • CBP has not established requirements to ensure that all compliance reviews are performed; and • For several FTZs and BWs, CBP was unable to provide evidence that risk assessments were performed at the time of the FY 2013 compliance review of the facilities. Criteria: Presented in Index of Financial Reporting and Internal Control Criteria following Exhibit II. II.3 Financial Section 147
Auditors    Report  EXHIBIT II Recommendations  We recommend that CBP   1. Identify and implement a robust audit process f...
Auditors’ Report EXHIBIT II Cause/Effect: CBP personnel did not consistently adhere to BW and FTZ policies and procedures. CBP has not established updated, formal guidance related to monitoring of the BW and FTZ programs, including procedures to assess whether all necessary compliance reviews are scheduled and completed. There is a risk that proper monitoring of BWs or FTZs will not occur if risk assessments and compliance reviews are not conducted within the guidelines. Recommendations: We recommend that CBP: 1. Continue to monitor the compliance review results and establish updated, formal guidance for monitoring and benchmarking performance; 2. Continue to enhance procedures to determine whether all BW and FTZ facilities are subject to review and monitoring processes; and 3. Develop additional training and information-sharing processes as needed. 3. Entry Reports Background: CBP personnel process and review certain entry edit/exception reports, including the following: • The B06, Weekly List of Rejected/Cancelled Entries Report, lists entries that were either cancelled or placed in rejected status. • The B07, Weekly List of Unpaid/Rejected Entries, lists entries in rejected status and entries for which duty, taxes, and fees have not been collected, or if collected, not properly posted to the entry. • The B08, Weekly Late Report: Entry Releases with No Follow-Up Summaries, is a cumulative listing of entry releases with no processing errors or follow-up entry summary on file. • The B84, Weekly Budget Clearing Account (BCA) and Suspense Item Report, is a cumulative listing of collections that are an intentional posting to a suspense account or collections in an error condition. • The S21, Cargo Selectivity Weekly Selectivity Delete Report, lists all entries that have been deleted by port personnel during the previous week. • The Q07, Monthly Unreported Quota Report, is a cumulative listing of quota entries that have not been processed through the quota module or remain in quota rejected status where processing was attempted. Condition: CBP personnel did not consistently complete and review reports in accordance with the requirements of CBP directives. Specifically, a lack of segregation of duties was identified over the review process for certain reports, some reports were untimely generated and reviewed, while other reports were not reviewed. 148 II.4 U.S. Customs and Border Protection • Performance and Accountability Report
Auditors    Report  EXHIBIT II Cause Effect  CBP personnel did not consistently adhere to BW and FTZ policies and procedur...
Auditors’ Report EXHIBIT II Criteria: Presented in Index of Financial Reporting and Internal Control Criteria following Exhibit II. Cause/Effect: CBP port personnel did not consistently follow the policies in place to ensure entry edit/exception reports were generated and reviewed in a timely manner. CBP does not have adequate controls in place to enforce the segregation of duties over the processing, review, and verification of entry edit/exception reports at the ports. Non-performance or inadequate processing, review and verification of entry edit/exception reports may cause CBP to fail to collect all revenue to which it is entitled. Specifically, there is a risk that entries may be improperly cancelled, deleted, or that the related duties would go unpaid or remain in suspense accounts. Recommendation: We recommend that CBP update its policies and procedures to establish the timeframes in which reports must be generated and reviewed. Additionally, CBP should continue to monitor the entry edit/exception reports through the Self Inspection Process and enforce adherence to policy. D. Information Technology Background: Controls over information technology (IT) and related financial systems are essential elements of financial reporting integrity. Effective IT controls in an IT financial systems environment can be defined in five key general control areas (security management, access control, configuration management, segregation of duties, and contingency planning) and four key application control areas (application level general controls, business process controls, interface controls, and data management system controls) . In addition to reliable general and application controls, financial management system functionality is important to program monitoring, increasing accountability of financial and program managers, providing better information for decision-making, and increasing the efficiency and effectiveness of services provided by the Federal government. Condition: During FY 2013, CBP took corrective actions to address and close twenty-three prior year IT control deficiencies. For example, CBP made improvements to various security agreements for connections with external systems, patching software products in a timely manner, system accreditation documentation, and controlling remote access. However, during FY 2013, new and continuing general IT control weaknesses were identified that could potentially impact CBP’s financial data. The most significant weaknesses from a financial statement audit perspective related to controls over system functionality, access, segregation of duties, and configuration management. Collectively, the general IT control weaknesses limit CBP’s ability to support assertions that critical financial and operational data confidentiality, integrity, and availability are maintained. CBP’s current system of record for entries imported into the U.S. does not fully support CBP’s custodial revenue and drawback processes. Due to the sensitive nature of these issues, we will issue a separate, restricted distribution report that discusses the general IT control and functionality deficiencies in greater detail. II.5 Financial Section 149
Auditors    Report  EXHIBIT II Criteria  Presented in Index of Financial Reporting and Internal Control Criteria following...
Auditors’ Report EXHIBIT II Criteria: Presented in Index of Financial Reporting and Internal Control Criteria behind Exhibit II. Cause/Effect: Funding for IT development and implementation, as well as for IT support staff has been reduced in recent years. This has prolonged implementation of systems that would replace or enhance current systems, and has had an impact on providing IT support resources. In addition, because of the presence of IT control and financial system functionality weaknesses, there is additional pressure on the manual, mitigating processes and controls. Recommendation: We recommend that CBP improve the general and application controls over its financial systems to ensure adequate security, protection, and functionality of the information systems. 150 II.6 U.S. Customs and Border Protection • Performance and Accountability Report
Auditors    Report  EXHIBIT II Criteria  Presented in Index of Financial Reporting and Internal Control Criteria behind Ex...
Auditors’ Report Index Index of Financial Reporting and Internal Control Criteria (Listed Alphabetically by Criteria Source) Criteria Reference Report Exhibit Title 19 CFR § 19.4 (a) and 19 CFR §146.3 (a) II-C-2 Title 19 Section 18.2(d), Section 18.6 (b), and Section 18.8(b) II-C-1 Title 19, Volume 1, Section 111.23 2013 Code of Federal Regulations (CFR) Title 19, Volume 1, Section 111.25 Title 19, Volume 2, Part 191.38 I-A Title 19, Volume 2, Section 163.4 (a)-(b) Title 19, Volume 2, Section 191.15 The Federal Manager’s Financial Integrity Act (FMFIA) of 1982 Federal Accounting Standards Advisory Board (FASAB) Statement of Federal Financial Accounting Standards (SFFAS) No. 6, Accounting for Property, Plant, and Equipment Office of Management and Budget (OMB) Circular No. A-123, Management’s Responsibility for Internal Control GAO Standards for Internal Control in the Federal Government (Standards) Section 2 I-A, II-B Chapter 2, Paragraph 34 II-B Chapter 2, Paragraphs 38-39 II-B Section I II-C-3 Section I, paragraph 2; Section IV, paragraph 1 I-A Section II. Standards I-A, II-B Segregation of Duties II-C-3 Index.1 Financial Section 151
Auditors    Report  Index  Index of Financial Reporting and Internal Control Criteria  Listed Alphabetically by Criteria S...
Auditors’ Report 152 U.S. Customs and Border Protection • Performance and Accountability Report
Auditors    Report  152  U.S. Customs and Border Protection     Performance and Accountability Report
Auditors’ Report OFFICE OF INSPECTOR GENERAL Department of Homeland Security � Appendix�A�� Report�Distribution�� � Department�of�Homeland�Security� � Secretary� Deputy�Secretary� Chief�of�Staff�� Deputy�Chief�of�Staff� General�Counsel� Executive�Secretary� Director,�GAO/OIG�Liaison�Office� Assistant�Secretary�for�Office�of�Policy� Assistant�Secretary�for�Office�of�Public�Affairs� Assistant�Secretary�for�Office�of�Legislative�Affairs� Chief�Privacy�Officer� Chief�Financial�Officer� Chief�Information�Officer� � U.S.�Customs�and�Border�Protection� � Commissioner�� � Chief�Financial�Officer� Chief�Information�Officer� � Office�of�Management�and�Budget� � Chief,�Homeland�Security�Branch� DHS�OIG�Budget�Examiner� � Congress� � Congressional�Oversight�and�Appropriations�Committees,�as�appropriate� Financial Section 153
Auditors    Report  OFFICE OF INSPECTOR GENERAL Department of Homeland Security       Appendix   A       Report   Distribu...
Auditors’ Report ADDITIONAL INFORMATION To view this and any of our other reports, please visit our website at: www.oig.dhs.gov. For further information or questions, please contact Office of Inspector General (OIG) Office of Public Affairs at: DHS-OIG.OfficePublicAffairs@oig.dhs.gov, or follow us on Twitter at: @dhsoig.” OIG HOTLINE To expedite the reporting of alleged fraud, waste, abuse or mismanagement, or any other kinds of criminal or noncriminal misconduct relative to Department of Homeland Security (DHS) programs and operations, please visit our website at www.oig.dhs.gov and click on the red tab titled "Hotline" to report. You will be directed to complete and submit an automated DHS OIG Investigative Referral Submission Form. Submission through our website ensures that your complaint will be promptly received and reviewed by DHS OIG. Should you be unable to access our website, you may submit your complaint in writing to: Department of Homeland Security Office of Inspector General, Mail Stop 0305 Attention: Office of Investigations Hotline 245 Murray Drive, SW Washington, DC 20528-0305 You may also call 1(800) 323-8603 or fax the complaint directly to us at (202) 254-4297. The OIG seeks to protect the identity of each writer and caller. 154 U.S. Customs and Border Protection • Performance and Accountability Report
Auditors    Report  ADDITIONAL INFORMATION To view this and any of our other reports, please visit our website at  www.oig...
Auditors’ Report Other Information This section includes CBP’s Schedule of Spending and information on CBP’s Revenue Gap, Revenue Collections, Improper Payments Information, and Summary of Financial Statement Audit Management Assurances. This section is unaudited. Financial Section 155
Auditors    Report  Other Information  This section includes CBP   s Schedule of Spending and information on CBP   s Reven...
Other Information Customs and Border Protection Other Information (Unaudited) Schedule of Spending For the Year Ended September 30, 2013 (in thousands) What Money is Available to Spend? Total Resources Less: Amount Available but Not Agreed to be Spent Less: Amount Not Available to be Spent Total Amounts Agreed to be Spent How was the Money Spent/Issued? Salaries & Expenses Personnel Compensation and Benefits Contractual Services and Supplies Acquisition of Assets Refunds Other Automation Modernization Personnel Compensation and Benefits Contractual Services and Supplies Acquisition of Assets Construction Personnel Compensation and Benefits Contractual Services and Supplies Acquisition of Assets BSFIT Personnel Compensation and Benefits Contractual Services and Supplies Acquisition of Assets Air & Marine Personnel Compensation and Benefits Contractual Services and Supplies Acquisition of Assets Other Personnel Compensation and Benefits Contractual Services and Supplies Acquisition of Assets Refunds Total Amounts Agreed to be Spent 156 U.S. Customs and Border Protection • Performance and Accountability Report 2013 $16,154,816 717,874 574,438 $14,862,504 $ 8,055,942 1,644,432 168,050 2,276 468 167,843 379,291 224,773 29,921 160,387 43,256 1,330 243,467 57,236 269,675 479,498 76,051 1,136,220 266,297 22,242 1,433,849 $14,862,504
Other Information Customs and Border Protection Other Information  Unaudited  Schedule of Spending For the Year Ended Sept...
Other Information Customs and Border Protection Other Information (Unaudited) Who did the Money go to? Individuals Government For Profit Higher Education Other Total Amounts Agreed to be Spent $ 6,247,205 4,935,832 3,636,481 34,616 8,370 $14,862,504 Who did the Money go to? Federal Non-Federal Total Amounts Agreed to be Spent $ 4,947,085 9,915,419 $14,862,504 Much of what is reported on this schedule, primarily personnel expenses and payments to other federal agencies, is excluded from the USASpending.gov reporting. USASpending.gov reports primarily payments made on commercial contracts. CBP’s financial reporting is within 5% of the spending reported on the USASpending.gov website. Revenue Gap The Entry Summary of Trade Compliance Measurement (TCM) program collects objective statistical data to estimate the compliance level of commercial imports with U.S. trade laws, regulations and agreements, and is used to produce a dollar amount for Estimated Net Under-collections, and a percent of Revenue Gap. The Revenue Gap is a calculated estimate that measures potential loss of revenue owing to noncompliance with trade laws, regulations, and trade agreements using a statistically valid sample of the revenue losses and overpayments detected during TCM entry summary reviews conducted throughout the year. FY 2013 (Preliminary)! FY 2012 (Final)! ! Estimated Revenue Gap! $530.4 mil! $635.6 mil! Estimated Revenue Gap of all collectable revenue for year (%)! 1.27%! 1.59%! Estimated Over-Collection! $73.5 mil! $70.5 mil! Estimated Under-Collection! $603.9 mil! $706.1 mil! Estimated Overall Trade Compliance Rate (%) 97.7% 95.9% ! The preliminary overall compliance rate for FY 2013 is 97.7 percent. The final overall trade compliance rate and estimated revenue gap for FY 2013 will be issued in February 2014. Financial Section 157
Other Information Customs and Border Protection Other Information  Unaudited  Who did the Money go to  Individuals Governm...
Other Information Customs and Border Protection Other Information (Unaudited) Petitioned and Protested Schedule An analysis of the changes in petitioned and protested assessed amounts during FY 2013 and 2012 is as follows (in thousands): Balance October 1 Duties $ 319,525 Taxes 313 Fees 8,287 Fines/Penalties 1,926,647 Interest 172,404 Antidumping/ 204,116 Countervailing Duty Refunds & Drawbacks 4,626 Total $2,635,918 Balance October 1 Duties $ 212,000 Taxes 688 Fees 1,167 Fines/Penalties 1,583,741 Interest 185,336 Antidumping/ Countervailing Duty 293,242 Refunds & Drawbacks 6,810 Total $2,282,984 158 Additional Assessments 2013 Net Reduction Protest in Favor Administrative Process of Debtor Additional Receivable Balance September 30 $ 253,822 1,862 3,339 454,961 51,436 $ (7,092) (8) (71) (776,023) (3,389) $(174,037) (800) (10,189) (122) (20,176) $ ---(263,225) -- $ 392,218 1,367 1,366 1,342,238 200,275 173,784 10,692 $949,896 (4,595) (1,027) $(792,205) (60,188) (5,563) $(271,075) --$(263,225) 313,117 8,728 $2,259,309 Additional Assessments 2012 Net Reduction Protest in Favor Administrative Process of Debtor Additional Receivable Balance September 30 $ 189,374 1,049 9,822 901,794 3,883 $ (4,685) -(67) (181,751) (2,889) $ (77,164) (1,424) (2,635) (112) (13,926) $ ---(377,025) -- $ 319,525 313 8,287 1,926,647 172,404 (29,518) 3,565 $1,079,969 (5,125) (431) $(194,948) (54,483) (5,318) $(155,062) --$(377,025) 204,116 4,626 $2,635,918 U.S. Customs and Border Protection • Performance and Accountability Report
Other Information Customs and Border Protection Other Information  Unaudited  Petitioned and Protested Schedule An analysi...
Other Information Customs and Border Protection Other Information (Unaudited) CBP reviews selected entry documentation to determine whether importer payment estimates of duties, taxes and fees were accurate or whether additional supplemental amounts are owed and should be billed. CBP regulations allow the importer 180 days (or 90 days for entries before December 18, 2004) from the bill date to file a protest and application with the Port Director challenging the assessment of supplemental duties, taxes and fees and requesting further review of the protest by CBP Office of Regulations and Rulings. If the Port Director denies the protest and application for further review, the protestor has an additional 60 days from the denial date for a review of the application by the Commissioner of CBP. Consequently, CBP recognizes accounts receivables only when the protested period has elapsed or when a protest decision has been rendered in CBP’s favor. Additionally, importers and their sureties also have the option to petition for relief after receipt of CBP’s notice that a fine or penalty has been assessed when a violation of law or regulation is discovered. The importer or surety has 60 days to file a petition for relief or make payment of the assessed amount. If a petition is received and CBP finds there are extenuating circumstances such as an incorrect assessment, which warrants mitigation, relief is granted as prescribed by CBP’s mitigation guidelines and directives. Consequently, CBP recognizes accounts receivables only when the petition period has elapsed or when a petition decision has been rendered. Accounts Receivable with Public, Net An aging of Accounts Receivable with the Public as of September 30, 2013 and 2012 is as follows (in thousands): Aged Period 2013 Reimbursable Services User Fees Gross Receivables Less: Uncollectible Amounts Net Receivables <=90 days $ 2,639 355,617 $358,256 91 days–1 year $1,716 3,144 $4,860 1-2 years $ 775 686 $1,461 2-3 years $ 399 106 $ 505 3+ years $ 1,013 9,578 $10,591 1,863 $356,393 36 $4,824 685 $ 776 104 $ 401 9,541 $ 1,050 12,229 $363,444 2012 Reimbursable Services User Fees Gross Receivables Less: Uncollectible Amounts Net Receivables <=90 days $ 532 196,201 $196,733 91 days–1 year $1,595 755 $2,350 1-2 years $914 80 $994 2-3 years $ 110 1,447 $1,557 3+ years $ 1,053 18,978 $20,031 Total $ 4,204 217,461 $221,665 -$196,733 -$2,350 77 $917 601 $ 956 18,807 $ 1,224 19,485 $202,180 Aged Period Total 6,542 369,131 $375,673 $ Financial Section 159
Other Information Customs and Border Protection Other Information  Unaudited  CBP reviews selected entry documentation to ...
Other Information Customs and Border Protection Other Information (Unaudited) Taxes, Duties and Trade Receivables, Net An analysis of the changes in Taxes, Duties, and Trade Receivables during FY 2013 and 2012 is as follows (in thousands): Receivable Category Duties Excise Taxes Fees Fines/Penalties Interest Antidumping/ Countervailing Duty Refunds/Drawbacks Total Less: Uncollectible Amounts Net Receivables Receivable Category Duties Excise Taxes Fees Fines/Penalties Interest Antidumping/ Countervailing Duty Refunds/Drawbacks Total Less: Uncollectible Amounts Net Receivables 2013 Balance October 1 $2,284,738 142,685 197,613 445,238 541,130 Receivables Recorded During the Fiscal Year $27,522,198 2,505,738 2,978,414 603,051 81,298 Collections $(16,823,348) (764,567) (1,850,234) (57,740) (10,987) Write-offs $ (20,727) --(93,643) (71,917) Adjustments $(10,488,302) (1,734,575) (1,257,569) (438,732) 26,684 Balance September 30 $2,474,559 149,281 68,224 458,174 566,208 1,169,953 1,461 $4,782,818 130,578 5,705 $33,826,982 (30,989) (868) $(19,538,733) (101,531) -$(287,818) 64,559 (3,266) $(13,831,201) 1,232,570 3,032 $4,952,048 2,082,353 2,270,041 $2,700,465 $2,682,007 2012 Balance October 1 $2,352,720 164,325 148,479 437,141 453,070 Receivables Recorded During the Fiscal Year $18,362,637 869,796 2,066,555 795,557 120,385 Collections $(16,723,972) (793,251) (1,937,872) (57,804) (17,499) Write-offs $ (6,629) --(52,184) (6,139) Adjustments $(1,700,018) (98,185) (79,549) (677,472) (8,687) Balance September 30 $2,284,738 142,685 197,613 445,238 541,130 885,087 657 $4,441,479 328,855 2,808 $22,546,593 (59,160) (1,960) $(19,591,518) (7,806) -$(72,758) 22,977 (44) $(2,540,978) 1,169,953 1,461 $4,782,818 1,709,714 2,082,353 $2,731,765 $2,700,465 The beginning and ending balances for the “Antidumping/Countervailing Duty” Receivable Category represent only receivables resulting from Supplemental Duty Bills. The FY 2012 information has been reclassified in order to reflect only Supplemental Duty Bill activity in the “Antidumping/Countervailing Duty” Receivable Category. 160 U.S. Customs and Border Protection • Performance and Accountability Report
Other Information Customs and Border Protection Other Information  Unaudited  Taxes, Duties and Trade Receivables, Net An ...
Other Information Customs and Border Protection Other Information (Unaudited) An aging of Taxes, Duties, and Trade Receivables as of September 30, 2013 and 2012 is as follows (in thousands): Aged Period 2013 Duties Excise Taxes User Fees Fines/Penalties Interest Antidumping/ Countervailing Duty Refunds and Drawbacks <=90 days $2,317,496 140,021 67,626 91,022 134 91 days–1 year $ 28,703 234 17 97,066 8,060 1-2 years $ 15,877 83 7 81,483 41,331 2-3 years $ 6,699 16 54 50,834 62,899 3+ years $ 105,784 8,927 520 137,769 453,784 Total $2,474,559 149,281 68,224 458,174 566,208 110 2,161 66,466 106 231,568 -- 210,231 78 724,195 687 1,232,570 3,032 Gross Receivables Less: Uncollectible Amounts $2,618,570 $200,652 $370,349 $330,811 $1,431,666 $4,952,048 84,857 180,813 348,866 317,595 1,337,910 2,270,041 Net Receivables $2,533,713 $ 19,839 $ 21,483 $ 13,216 93,756 $2,682,007 <=90 days $2,132,980 133,617 187,877 81,914 87 91 days–1 year $ 10,990 83 8,743 73,239 25,870 3+ years $ 88,214 6,931 609 181,493 390,677 Total $2,284,738 142,685 197,613 445,238 541,130 --$2,536,475 179,314 476 $298,715 211,519 78 $342,088 245,164 -$402,753 533,956 907 $1,202,787 1,169,953 1,461 $4,782,818 75,837 271,812 315,225 376,021 1,043,458 2,082,353 $2,460,638 $ 26,903 $ 26,863 $ 26,732 $ 159,329 $2,700,465 2012 Duties Excise Taxes User Fees Fines/Penalties Interest Antidumping/ Countervailing Duty Refunds and Drawbacks Gross Receivables Less: Uncollectible Amounts Net Receivables Aged Period 1-2 years 2-3 years $ 8,370 $ 44,184 45 2,009 129 255 66,057 42,535 55,890 68,606 $ Financial Section 161
Other Information Customs and Border Protection Other Information  Unaudited  An aging of Taxes, Duties, and Trade Receiva...
Other Information Customs and Border Protection Other Information (Unaudited) CBP Collections by Category (in thousands) 2009 Duties Consumption Entries Warehouse Withdrawals Mail Entries Passenger Baggage Entries Crew Baggage Entries Military Baggage Entries Informal Entries Vessel Repair Entries Other Duties Total Duties 2010 2011 2012 2013 (Unaudited) $22,759,054 61,638 3,132 3,217 5 2 47,596 39,240 33,237 $22,947,121 (Unaudited) $25,312,699 54,214 3,354 3,616 9 2 56,200 21,521 9,747 $25,461,362 (Unaudited) $29,522,341 41,907 3,159 3,652 6 3 63,689 30,381 8,359 $29,673,497 (Unaudited) $30,860,080 38,676 2,028 4,085 5 5 65,543 16,710 18,868 $31,006,000 (Unaudited) $32,246,586 58,065 2,721 4,738 60 2 138,076 11,613 24,904 $32,486,765 59,709 39 19,413 110,425 1,125,008 8,397 2,258,027 276 7 30,623 22,331 60,380 58 20,382 120,637 1,221,712 7,817 2,440,275 188 -13,555 15,329 61,532 64 21,845 120,704 1,469,109 5,904 2,779,483 164 -35,577 13,838 52,451 4,157 21,745 131,680 1,539,799 7,392 3,439,523 469 -40,173 22,412 51,846 3,394 21,752 146,016 1,523,171 8,730 3,680,658 240 3 1,050 22,142 Total Miscellaneous $ 3,634,255 $ 3,900,333 $ 4,508,220 $ 5,259,801 $ 5,459,002 Internal Revenue Taxes Total Collections 2,468,617 $29,049,993 2,782,240 $32,143,935 2,796,788 $36,978,505 2,995,140 $39,260,941 3,039,640 $40,985,407 Miscellaneous Violations of CBP Law Testing, Inspecting & Grading Miscellaneous Taxes USDA Collections Harbor Maintenance Fee Fees User Fee Account Unclaimed Funds Recoveries Interest Other CBP Receipts These schedules will not equal amounts reported on the Consolidated Statement of Custodial Activity due to timing adjustments and entity collections which are not reported on the Consolidated Statement of Custodial Activity but are included in this schedule. 162 U.S. Customs and Border Protection • Performance and Accountability Report
Other Information Customs and Border Protection Other Information  Unaudited  CBP Collections by Category  in thousands  2...
Other Information Customs and Border Protection Other Information (Unaudited) CBP Collections by Major Processing Port Locations (in thousands) 2009 2010 2011 (Unaudited) (Unaudited) (Unaudited) Boston $ 399,974 $ 352,710 $ 345,490 Buffalo-Niagara Falls 242,514 342,659 294,659 Ogdensburg 119,537 132,890 132,567 Portland, Maine 55,795 54,993 60,124 Providence 75,706 82,532 112,008 St. Albans 43,030 46,778 46,145 Baltimore 544,222 615,025 629,569 Philadelphia 456,252 422,253 448,508 Newark 4,036,961 4,347,759 5,025,814 JFK Airport 863,404 961,149 1,017,668 Charleston 820,601 858,098 1,043,719 Miami 520,283 600,506 771,770 San Juan 106,167 101,368 117,235 St. Thomas 15,301 16,720 14,948 Savannah 1,408,693 1,643,027 1,985,424 Tampa 358,532 425,038 447,629 Wilmington 267,905 294,996 304,612 Norfolk 634,642 604,357 704,551 NFC Indianapolis/Washington 1,107,891 1,418,106 1,650,976 Mobile 157,615 168,661 180,997 New Orleans 942,917 1,011,820 1,232,590 Dallas/Ft Worth 409,354 428,898 527,570 El Paso 140,143 139,378 144,829 Houston 764,115 735,314 919,704 Laredo 371,492 424,299 583,472 Port Arthur 33,665 28,584 30,079 Nogales 73,703 84,353 96,259 Los Angeles 7,468,426 8,565,244 9,715,689 San Diego 218,071 216,275 221,490 Anchorage 106,594 124,792 134,253 Honolulu 32,732 32,816 36,089 Portland 318,839 303,922 312,337 San Francisco 1,035,916 1,115,329 1,301,094 Seattle 1,122,774 1,145,325 1,307,307 Chicago 1,407,416 1,602,089 1,916,811 Cleveland 1,293,102 1,490,599 1,710,571 Detroit 446,972 528,280 625,148 Milwaukee 24,687 24,786 23,183 Minneapolis 170,645 187,866 244,880 Pembina 23,254 23,483 25,078 St. Louis 273,758 304,941 364,369 Great Falls Total Revenues Collected 136,393 $29,049,993 135,917 $32,143,935 171,290 $36,978,505 2012 (Unaudited) $ 363,497 317,012 147,013 62,517 126,627 50,206 654,950 461,559 5,219,277 981,040 1,184,188 803,266 125,899 12,550 2,047,913 492,541 266,326 736,196 1,870,288 185,049 1,303,706 574,583 152,491 1,116,282 656,435 20,869 94,566 10,268,894 252,688 118,389 37,192 365,043 1,405,650 1,354,234 2,009,737 1,810,848 677,489 31,130 265,195 31,373 426,942 179,291 $39,260,941 2013 (Unaudited) $ 364,986 322,727 143,957 55,223 146,914 51,063 701,463 511,088 5,113,482 1,056,601 1,123,350 836,692 279,092 12,110 2,073,771 488,510 280,096 808,177 2,328,877 204,101 1,351,597 625,293 200,830 1,121,159 674,221 17,125 110,129 10,858,809 268,872 94,208 36,037 338,674 1,449,926 1,300,806 2,013,849 1,938,792 696,579 23,548 262,182 36,254 486,737 177,500 $40,985,407 These schedules will not equal amounts reported on the Consolidated Statements of Custodial Activity due to timing adjustments and entity collections which are not reported on the Consolidated Statements of Custodial Activity but are included in these schedules. Financial Section 163
Other Information Customs and Border Protection Other Information  Unaudited  CBP Collections by Major Processing Port Loc...
Other Information Summary of Financial Statement Audit and Management Assurances Table 1 and Table 2 below provide a summary of the financial statement and management assurances for FY 2013. Table I. FY 2013 Summary of the Financial Statement Audit AUDIT OPINION Restatement Material Weakness Drawback Controls Total Material Weaknesses UNMODIFIED No Beginning Balance New Resolved Consolidated Ending Balance 1 0 0 0 1 1 0 0 0 1 In FY 2013, the Independent Auditors’ consolidated financial statement report identified one material weakness, Drawback Controls, for CBP. 164 U.S. Customs and Border Protection • Performance and Accountability Report
Other Information  Summary of Financial Statement Audit and Management Assurances Table 1 and Table 2 below provide a summ...
Other Information Table 2. FY 2013 Summary of Management Assurances Effectiveness of Internal Control over Financial Reporting (FMFIA Section 2) Statement of Assurance Qualified Beginning New Resolved Consolidated Reassessed Balance Drawback Controls 1 0 0 0 0 Total Material Weaknesses 1 0 0 0 0 Ending Balance 1 1 Effectiveness of Internal Controls over Operations (FMFIA Section 2) Statement of Assurance Unqualified Beginning Material Weaknesses New Resolved Consolidated Reassessed Balance Total Material Weaknesses 0 0 0 0 0 Ending Balance 0 Material Weakness Conformance With Financial Management System Requirements (FMFIA Section 4) Statement of Assurance Systems conform except for the below non-conformance(s) Non-Conformances Beginning New Resolved Consolidated Reassessed Ending Balance Balance Financial Systems Security 1 0 0 0 0 1 Core Financial Systems 1 0 0 0 0 1 Information Technology 1 0 0 0 0 1 Infrastructure Total Non-Conformances 3 0 0 0 0 3 Compliance with Federal Financial Management Improvement Act (FFMIA) Overall Substantial Compliance 1. System Requirements 2. Accounting Standards 3. US Standard General Ledger at Transaction Level CBP No No Yes No Financial Section 165
Other Information  Table 2. FY 2013 Summary of Management Assurances Effectiveness of Internal Control over Financial Repo...
Other Information Customs and Border Protection Other Information (Unaudited) Improper Payments Information Act of 2002 (IPIA) The Improper Payments Information Act (IPIA) of 2002 was amended by the Improper Payments Elimination and Recovery Act (IPERA) of 2010 and the Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA). CBP identified and performed a risk assessment on all ten programs, one of which, Custodial Refund and Drawback, was identified as high risk. Border Security Fencing (BSF) was deemed low risk according to the FY 2012 risk assessment. However, the Office of Inspector General (OIG) mandated the disbursements be independently tested for FY 2012 to ensure compliance with adequate segregation of duties. Congress requires funds allocated to agencies under the American Recovery and Reinvestment Act (ARRA) be tested regardless of risk assessment outcome. Per OMB guidance, if an agency has documented a minimum of two consecutive years of improper payments that are less than 1.5 percent, the agency may request relief from the annual reporting requirements for this program or activity. CBP’s total extrapolated error rate was less than 0.1 percent for the past two years. The DHS Chief Financial Officer (CFO) signed a memorandum dated April 11, 2013 approving cessation of segregated testing for ARRA FY 2012 disbursements due to the consistent low error rate. The Custodial Refund and Drawback payment testing yielded an estimated improper payment amount of $7 million of the $1.9 billion, or 0.37 percent, disbursed during FY 2012. The BSF payment testing yielded an estimated improper payment amount of $4 thousand of the $173 million testing population, or <.01 percent, disbursed during FY 2012. Overpayments Recaptured Outside of Payment Recapture Audits Agency Source IPIA Sampling SelfReporting Public Reporting (1) (2) Amount Identified CY Amount Recovered CY Amount Identified PY CBP Mission Cumulative Amount Identified (CY+PYs) Cumulative Amount Recovered (CY+PYs) $100,049 $104,871 (1) $ 13,214 $ 8,392 $ 359,018 $ 359,018 $499,503 $539,607 (2) $205,854 $165,750 $ 879,802 $ 879,802 $148,023 $148,023 $ 88,425 $ 88,425 $1,492,954 $1,492,954 $ 4,822 recovered from PY Identified $40,104 recovered from PY Identified Program or Activity Amount Recovered PY Type of Payment (contract, grant, benefit, loan other) Contract Disposition of Recaptured Funds Agency Expenses to Administer the Program Payment Recapture Auditor Fees Financial Management Improvement Activities Original Purpose Office of Inspector General Returned to Treasury $0 $25,012 $0 $75,037 $0 $0 CY + 1 Recovery Rate Target CY + 2 Recovery Rate Target CY + 3 Recovery Rate Target 100% 100% 100% Payment Recapture Audit Targets Program or Activity CBP Mission Type of Payment (contract, grant, benefit, loan other) Contract CY Amount Identified CY Amount Recovered $100,049 $100,049 CY Recovery Rate (Amount Recovered / Amount Identified) 100% Aging of Outstanding Overpayments Program or Activity CBP Mission 166 Type of Payment (contract, grant, benefit, loan other) Contract CY Amount Outstanding (0 – 6 months) CY Amount Outstanding (6 months to 1 year) CY Amount Outstanding (over 1 year) $0.00 $0.00 $0.00 U.S. Customs and Border Protection • Performance and Accountability Report
Other Information Customs and Border Protection Other Information  Unaudited  Improper Payments Information Act of 2002  I...
Other Information Customs and Border Protection Other Information (Unaudited) CBP also identified amounts for recovery during the Improper Payment Information Act (IPIA) review of FY 2012 disbursements. The IPIA results are as follows (dollars in thousands): Custodial Refunds and Drawbacks Border Security Fencing Total Amounts Identified as Improper Payments $10 Amounts Identified for Recovery $0 Amounts Recovered $ 2 $12 $2 $2 $2 $2 $0 Recoveries for Custodial Refunds and Drawbacks Program payments are restricted by regulations governing collections of duty, taxes, and fees associated with trade-related activity. Amounts identified as recovery of improper payments for BSF were for Prompt Payment Interest that was paid but not earned in the amount of $2,151. This amount was recovered October 2, 2012. Improper Payment Reduction Outlook ($ in millions) Source of Recovery High-Dollar Overpayments Reporting IPIA High-Risk Program Testing Post Payment Reviews CBP Totals Cumulative Amount Recovered (CY+PYs) ($000) $2.4 $0.6 $0.6 $0.3 $0.3 Cumulative Amount Identified (CY+PYs) ($000) $2.4 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.1 $0.1 $>.1 $>.1 $0.3 $0.3 $0.7 $0.7 $0.3 $0.3 $2.7 $2.7 Amount Identified (CY) ($000) Amount Recovered (CY) ($000) Amount Identified (PY) ($000) Amount Recovered (PY) ($000) Financial Section 167
Other Information Customs and Border Protection Other Information  Unaudited  CBP also identified amounts for recovery dur...
Other Information Customs and Border Protection Other Information (Unaudited) Payment Recapture Audit Reporting CBP contracted the audit recovery work for disbursements made during FY 2012. The results of the recovery audit efforts continue to identify negligible recovery amounts. The recovery audit results are reported below: Program or Activity CBP Mission Program or Activity CBP Mission Contract Amount Subject to Review for CY Reporting Actual Amount Reviewed and Reported CY Amounts Identified for Recovery CY Amounts Recovered CY % of Amount Recovered out of Amount Identified CY Amount Outstanding CY % of Amount Outstanding out of Amount Identified CY Amount Determined Not to be Collectable CY $1,549,336,346 Type of Payment (contract, grant, benefit, loan, or other) $1,549,336,346 $100,049 $104,871 100% $0 0% $0 Type of Payment (contract, grant, benefit, loan, or other) % of Amount Determined Not to be Collectable out of Amount Identified CY Amounts Identified for Recovery PY Amounts Recover ed PY Cumulative Amounts Identified for Recovery (CY+PY) Cumulative Amounts Recovered (CY+PY) Cumulative Amounts Outstanding (CY+PY) Cumulative Amounts Determined Not to be Collectable (CY+PY) Contract 0% $13,214 $8,392 $359,018 $359,018 $0 $0 Improper Payment Reduction Outlook (in millions) 2012 2012 2012 2013 2013 2013 2013 2013 2014 2014 2014 2015 2015 2015 2016 2016 2016 Program PY Outlays PY % PY $ CY Outlays CY IP % CY IP $ CY Overpayment $ CY Underpayment $ CY + 1 est. Outlays CY + 1 IP % CY + 1 IP $ CY + 2 est. Outlays CY + 2 IP % CY + 2 IP $ CY + 3 est. Outlays CY + 3 IP % CY + 3 IP $ Refunds & Drawbacks $1,937 .36 $7 $1,300 .02 $2 $0 $0 $1,300 .02 $2 $1,300 .02 $2 $1,300 .02 $2 Border Security Fencing $173 <.01 $0 $159 <.01 $0 $0 $0 $157 <.01 $0 Unavailable Unavailable The forecast of activity related to Refunds and Drawbacks depends on indeterminable factors including the volume of trade activity and various trade related issues addressed and ruled on by the Department of Commerce. 168 U.S. Customs and Border Protection • Performance and Accountability Report
Other Information Customs and Border Protection Other Information  Unaudited  Payment Recapture Audit Reporting CBP contra...
Other Information Office of Inspector General (OIG) Report on Major Management Challenges The DHS OIG’s report on Major Management Challenges Facing the Department of Homeland Security, OIG-14-17, dated December 11, 2013, and the agency’s progress addressing these challenges are addressed at the DHS consolidated level and are incorporated into the DHS Fiscal Year 2013 Agency Financial Report. Financial Section 169
Other Information  Office of Inspector General  OIG  Report on Major Management Challenges The DHS OIG   s report on Major...
Acronyms Acronyms ACE ACS ACTT AD/CVD ADIS AEER ALM AMBSTP AMOC APHIS APIS ARO ATS ATSP AZ BORTAC BSDP BW CAE CBP CBSA CDS CDSOA CEE CFO CIO CIV CMAA COAC COBRA COS 170 Automated Commercial Environment Automated Commercial System Alliance to Combat Transnational Threats Antidumping and Countervailing Duties Arrival and Departure Information System Air Entry Exit Reengineering Active Lane Management Air and Marine Basic Training Program Air Marine Operations Center Animal and Plant Health Inspection Service Advance Passenger Information System Admissibility Review Office Automated Targeting System Automated Targeting SystemPassenger Arizona Border Patrol Tactical Unit Border Security Deployment Program Bonded Warehouse Component Acquisition Executive U.S. Customs and Border Protection Canadian Border Services Agency Consequence Delivery System Continued Dumping and Subsidy Act Centers of Excellence and Expertise Chief Financial Officer Chief Information Officer Coastal Interceptor Vessels Customs Mutual Assistance Agreement Commercial Operations Advisory Committee Consolidated Omnibus Budget Reconciliation Chief of Staff COSS CPSC CRM CSA CSI CSRS CTAC C-TPAT DHS DIS DOC DOD DOL ECC ELMO EPA ERP ESTA EXT FAA FASAB FAST FBI FDAU FEA FECA FEMA FERS FFMIA FISMA U.S. Customs and Border Protection • Performance and Accountability Report Customs Overtime Scheduling System Consumer Product Safety Commission Crew Resource Management Canada Self-Assessment Container Security Initiative Civil Service Retirement System Commercial Targeting and Analysis Center Customs Trade Partnership Against Terrorism Department of Homeland Security Digital Imaging System Department of Commerce Department of Defense Department of Labor Equipment Control Classes Enforcement Link Mobile Operations Environmental Protection Agency Enterprise Resource Planning Electronic System for Travel Authorization Entry/Exit Transformation Program Federal Aviation Administration Federal Accounting Standards Advisory Board Free and Secure Trade Federal Bureau of Investigation Fraudulent Document Analysis Unit Federal Electronic Assets Federal Employees’ Compensation Act Federal Emergency Management Agency Federal Employees’ Retirement System Federal Financial Management Improvement Act Federal Information Security Management Act of 2002
Acronyms Acronyms ACE  ACS  ACTT  AD CVD  ADIS  AEER  ALM  AMBSTP  AMOC  APHIS  APIS   ARO  ATS  ATSP  AZ  BORTAC  BSDP  B...
Acronyms FMFIA Federal Managers’ Financial Integrity Act FOUO For Official Use Only FSIS Food Safety Inspection Service FSU Field Support Unit FTZ Foreign Trade Zone FY Fiscal Year FYHSP Future Year Homeland Security Program GAAP Generally Accepted Accounting Principles GAO Government Accountability Office GEOINT Geospatial Intelligence GOES Global Online Enrollment System GPRA Government Performance and Results Act GPRMA Government Performance and Results Modernization Act GSA General Services Administration HFACS Human Factors Analysis and Classification System HRBE Human Resources Business Engine HRM Human Resources Management HR/S High/Risk Sensitive HSI Homeland Security Investigations IA Internal Affairs IAP Immigration Advisory Program IBET Integrated Border Enforcement Teams ICE Immigration and Customs Enforcement ICS International Container Security IDI Injured Domestic Industries IER Interdiction Effectiveness Rate ILU International Liaison Unit INA Immigration and Nationality Act INTERPOL International Criminal Police Organization IPR Intellectual Property Rights ISA Importer Self-Assessment ISR Intelligence, Surveillance, Reconnaissance IT Information Technology ITDS International Trade Data System IUF IUFA IWS JFC JOD JSP LED LPO LPOE LSS MEA MID NAAP NARP NEXUS NHTSA NII NTCC NTCP OA OAM OBP OCA OCC OES OFO OGA OIG OIIL OIP OIT OMB OPA OPD OPM OPP OSI OT OTIA Immigration User Fees Immigration User Fees Accounts Interoperability Web Service Joint Field Command Office of Joint Operations Directorate Joint Security Program Light-Emitting Diode Local Property Officer Land Port of Entry Laboratories and Scientific Services Multi-role Enforcement Aircraft Management Inspection Division National Audit Plan National Agriculture Release Program Northern Exchange with United States National Highway Traffic Safety Administration Non-Intrusive Inspection National Targeting Center-Cargo National Targeting Center-Passenger Office of Administration Office of Air and Marine Office of Border Patrol Office of Congressional Affairs Office of Chief Counsel Office of Executive Secretariat Office of Field Operations Other Government Agencies Office of Inspector General Office of Intelligence and Investigative Liaison Operational Implementation Plan Office of Information and Technology Office of Management and Budget Office of Public Affairs Office of Program Development Office of Personnel Management Office of Policy and Planning Office of Strategic Integration Office of International Trade Office of Technology Innovation and Acquisition Acronyms 171
Acronyms  FMFIA   Federal Managers    Financial Integrity Act FOUO  For Official Use Only FSIS  Food Safety Inspection Ser...
Acronyms OTD OTM OTR PAR PC PDO PMF POE PPBA PPMOB PPQ PTI QHSR RA RED RFID RR RSDV RTU SAFE SAP SBREFA 172 Office of Training and Development Other Than Mexican Office of Trade Relations Performance and Accountability Report Property Coordinator Privacy and Diversity Office Performance Management Framework Port of Entry Planning, Programming, Budgeting, and Accounting Personal Property Management Oversight Board Plant Protection and Quarantine Priority Trade Issues Quadrennial Homeland Security Review Regulatory Audit Re-Engineering Team Radio Frequency Identification Regulations and Rulings Riverine Shallow Draft Vessel Rail Targeting Unit Security and Accountability For Every Systems, Applications, and Products Small Business Regulatory Enforcement Fairness Act SE SENTRI SFFAS SIP SLEP SLT SOP StAMP STB STC T3U TACCOM TCO TSA TTC UAS US USCIS VADER VWP WSM U.S. Customs and Border Protection • Performance and Accountability Report Simplified Entry Secure Electronic Network for Traveler Rapid Inspection Statement of Federal Financial Accounting Standards Self-Inspection Program Service Life Extension Program Office of State, Local, and Tribal Liaison Standard Operating Procedures Strategic Air and Marine Plan Single Transaction Bond South Texas Campaign Tactical Trade Targeting Unit Tactical Communication Modernization Program Transnational Criminal Organization Transportation Security Agency Tactical/Technical Command Unmanned Aircraft System United States United States Citizenship and Immigration Services Vehicle and Dismounted Exploitation Radar Visa Waiver Program Workload Staffing Model
Acronyms  OTD  OTM  OTR  PAR  PC  PDO  PMF  POE  PPBA  PPMOB  PPQ  PTI  QHSR  RA  RED  RFID  RR  RSDV  RTU  SAFE  SAP  SBR...
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Office of Administration 1331 Pennsylvania Avenue Room 950, National Place Washington, DC 20229 Please visit the U.S. Customs and Border Protection website at www.cbp.gov To report suspicious activity, call 1-800-BE ALERT
Office of Administration 1331 Pennsylvania Avenue Room 950, National Place Washington, DC 20229 Please visit the U.S. Cust...