DHS OIG, OIG-19-25, Review of U.S. Immigration and Customs Enforcement's Fiscal Year 2018 Detailed Accounting Submission for Drug Control Funds (2019)

Review of U.S. Immigration and Customs Enforcement’s Fiscal Year 2018 Detailed Accounting Submission for Drug Control Funds March 7, 2019 OIG-19-25 DHS OIG HIGHLIGHTS Review of U.S. Immigration and Customs Enforcement’s Fiscal Year 2018 Detailed Accounting Submission for Drug Control Funds What We Found Williams, Adley & Company –DC, LLP (Williams Adley), under contract with the Department of Homeland Security OIG, issued an Independent Accountant’s Report on U.S. Immigration and Customs Enforcement’s (ICE) Detailed Accounting Submission. ICE’s management prepared the Table of FY 2018 Drug Control Obligations and related disclosures in accordance with the requirements of ONDCP Circular, Accounting of Drug Control Funding and Performance Summary, dated May 8, 2018 (the Circular). Based on its review, nothing came to Williams Adley’s attention that caused it to believe that ICE’s FY 2018 Detailed Accounting Submission is not presented in conformity with the criteria in the Circular. Williams Adley did not make any recommendations as a result of its review.

March 7, 2019 Why We Did This Review The Office of National Drug Control Policy’s (ONDCP) Circular, Accounting of Drug Control Funding and Performance Summary, requires each National Drug Control Program agency to submit to ONDCP Director a detailed accounting of all funds expended for National Drug Control Program activities during the previous fiscal year. The Office of Inspector General (OIG) is required to conduct a review of the agency’s submission and provide a conclusion about the reliability of each assertion in the report. For Further Information: Contact our Office of Public Affairs at (202) 981-6000, or email us at [email protected] www.oig.dhs.gov OIG-19-25 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Washington, DC 20528 / www.oig.dhs.gov MEMORANDUM FOR: Stephen Roncone March 7, 2019 FROM: SUBJECT: Chief Financial Officer U.S. Immigration and Customs Enforcement Sondra F. McCauley Assistant Inspector General for Audits Review of U.S. Immigration and Customs Enforcement’s Fiscal Year 2018 Detailed Accounting Submission for Drug Control Funds Attached for your information is our final report, Review of U.S. Immigration and Customs Enforcement’s Fiscal Year 2018 Detailed Accounting Submission for Drug Control Funds. U.S. Immigration and Customs Enforcement (ICE) management prepared the Table of FY 2018 Drug Control Obligations and related disclosures to comply with requirements of the Office of National Drug Control Policy’s Circular, Accounting of Drug Control Funding and Performance Summary, dated May 8, 2018.

We contracted with the independent public accounting firm Williams, Adley & Company –DC, LLP (Williams Adley) to review ICE’s Detailed Accounting Submission. Williams Adley is responsible for the attached Independent Accountant’s Report, dated February 19, 2019, and the conclusions expressed in it. Williams Adley’s report contains no recommendations. Consistent with our responsibility under the Inspector General Act, we will provide copies of our report to congressional committees with oversight and appropriation responsibility over the Department of Homeland Security.

We will post the report on our website for public dissemination. Please call me with any questions at (202) 981-6000, or your staff may contact Maureen Duddy, Deputy Assistant Inspector General for Audits, at (617) 565-8723. Attachment www.oig.dhs.gov Independent Accountant’s Report Acting Inspector General United States Department of Homeland Security We have reviewed management’s assertions related to the Detailed Accounting Submission (D!S) of the U.S. Department of Homeland Security’s (DHS) U.S. Immigration and Customs Enforcement (ICE) for the year ended September 30, 2018. ICE management is responsible for the preparation of the DAS in conformity with the requirements of the Office of National Drug Control Policy Circular: Accounting of Drug Control Funding and Performance Summary, dated May 8, 2018 (the Circular).

Our responsibility is to express a conclusion about management’s assertions. Our review was conducted in accordance with generally accepted government auditing standards, which incorporate the attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the review to obtain limited assurance about whether any material modifications should be made to the DAS or DAS assertions in order for them to be in accordance with the Circular. A review is substantially less in scope than an examination, the objective of which is to obtain reasonable assurance about whether ICE’s D!S and DAS assertions are in accordance with the Circular, in all material respects, in order to express an opinion.

Accordingly, we do not express such an opinion. We believe that our review provides a reasonable basis for our conclusion. Based on our review, we are not aware of any material modifications that should be made to the DAS or the DAS assertions for the year ended September 30, 2018, in order for them to be in conformity with the requirements set forth in the Circular. This report is intended solely for the information and use of ICE, and is not intended to be, and should not be, used by anyone other than the specified parties.

Washington, D.C. February 19, 2019 WILLIAMS, ADLEY & COMPANY-DC, LLP Certified Public Accountants / Management Consultants 1030 15th Street, NW, Suite 350 West • Washington, DC 20005 • (202) 371-1397 • Fax: (202) 371-9161 www.williamsadley.com Office of !he ChiefFinancial Officer I 1.S. Depar tment of Ilomcland Security 500 12th Street. SW Washington. D.C. 20536 U.S. Immigration and Customs Enforcement February 28, 20 19 Mr. Jo hn Kelly Deputy Inspector General U.S. Department of Ho meland Security Office of Inspector General Dear Mr. Kelly, In accordance with the Office of ational Drug Control Policy Circular: Accounting qfDrug Control Funding and Pe1formance Summmy, May 8, 20 18, enclosed is Immigration and Customs Enforcement' s report of FY 20 18 drug obligations, drug control methodology and assertions. If you require further assistance on this information, please contact me at (202) 732-436 l. Sincerely, Chris Maiwurm, Unit Chief Office of Budget and Program Performance U.S .

Immigration and Customs Enforcement U.S. Department of Homeland Security U.S. Immigration and Customs Enforcement Detailed Accounting Submission of Drug Control Funding during Fiscal Year 2018 A. Table of FY 2018 Drug Control Obligations Drug Resources by Budget Decision Unit and Function: FY 2018 Final Drug Resource by Drug Control Function Domestic Investigations International Operations Intelligence: Domestic Intelligence: International Total Drug Resources by Budget Decision Unit Salaries and Expenses -Immigration Enforcement Total (In Millions) $593.914 $10.753 $26.668 $0.511 $631.846 $0 $631.846 High Intensity Drug Trafficking Area (HIDTA) Transfer $2.820 HIDTA Funds represent total authorized and available during FY2018 (multi-year funds: FY17/18 and FY18/19) 1: Drug Methodology U.S. Immigration and Customs Enforcement (ICE) is a multi-mission bureau, and obligations are reported pursuant to an approved drug methodology. ICE's Homeland Security Investigations (HSI) Domestic Investigations, International Operations (IO) and Office of Intelligence uphold U.S. drug control policy delegated amid the Office of National Drug Control Policy (ONDCP) initiatives, by fully supporting the overall ICE mandate to detect, disrupt, and dismantle smuggling organizations. Therefore, separate calculations are formulated to determine obligation data for the three ICE HSI sanctioned programs that undertake counter-narcotic investigative activity, presented in the table above. Thereafter, the following three (3) sections cover each program in detail.

Domestic Investigations The methodology for HSI Domestic Investigations is based on investigative case hours recorded in ICE's automated Case Management System. ICE officers record the type of investigative work they perform in this system in the form of case hours. These case hours can then be aggregated to show 1 overall level of effort. Following the close of the fiscal year, ICE uses Investigative Case Management (ICM) reports to identify and report the total investigative case hours coded as general narcotics cases or money- laundering narcotics cases.

A second ICM report shows the total Domestic investigative case hours logged. The percentage of Domestic investigative case hours logged is derived by dividing the number of investigative case hours linked to drug-control activities by the total number of Domestic investigative case hours. This percentage may fluctuate from year to year. For FY 2018, the actual percentage for Domestic Investigations was 31.51 percent.

To calculate a dollar amount of obligation, the percentage is applied to the FY 2018 enacted Domestic Investigations budget; excluding reimbursable authority. ICE uses the Federal Financial Management System (FFMS), ICE’s general ledger system, to identify the obligations incurred. International Operations (IO) The methodology for IO is based on investigative case hours recorded in ICE's automated Case Management System. ICE officers record the type of work and related case hours they perform in this system, which interfaces with ICM.

Following the close of the fiscal year, an ICM report is run showing investigative case hours coded as general narcotics cases or money-laundering narcotics cases. A second report is run showing all investigative case hours logged for international law enforcement operations. The international investigative case hours logged percentage is derived by dividing the number of investigative case hours linked to drug-control activities by the total number of International investigative case hours. For IO, the actual percentage of hours that were general-narcotics related was 9.82 percent in FY 2018.

To calculate the dollar amount of obligations for the IO drug control function, the percentage is applied to the FY 2018 enacted IO budget, excluding reimbursable authority. The FFMS is the system used to generate the actual obligations incurred. Office of Intelligence ICE officers provide intelligence services for Domestic Investigations and IO to support criminal investigations aimed at disrupting and dismantling criminal organizations involved in transnational drug trade and associated money-laundering crimes. The methodology for the Office of Intelligence is based on intelligence case hours recorded in ICE's automated Case Management System.

ICE intelligence officers record the type of work and related case hours they perform in this system, which interfaces with ICM. Following the close of the fiscal year, a report in ICM is run showing investigative case hours coded as general-narcotics cases or money-laundering narcotics cases. A second report is generated showing all investigative case hours logged. The intelligence investigative case hours percentage is derived by dividing the number of investigative case hours linked to drug-control activities by the total number of Intelligence investigative case hours logged for the Office of Intelligence.

For FY 2018, 31.96 percent of the total case hours for the Office of Intelligence were in support of drug-control activities. To calculate the dollar amount of obligations for the Office of Intelligence drug control function, the percentage is applied to the FY 2018 enacted Intelligence budget, excluding reimbursable authority. The FFMS is the system used to 2 generate the actual obligations incurred. The Office of Intelligence case hours recorded in ICM captures both domestic and international drug- related activity.

The Office of Intelligence calculates the total percentage of case hours that support Domestic and International drug enforcement activity by adding the end of the year total number of Intelligence Domestic and Intelligence Office of International Operations drug-controlled investigative hours in ICM and dividing these totals by the total number of Domestic drug-controlled investigative hours and IO drug-controlled investigative hours. The resulting percentage is used to determine the amount that Intelligence does for international activities (1.88 percent) and domestic activities (98.12 percent) in FY 2018. The respective percentages are applied to the total Office of Intelligence drug- related obligations as determined above to identify the relative international and domestic obligations expended by the Office of Intelligence for drug-control activities. 2: Methodology Modifications There were no modifications to the drug methodology from the previous year to report.

3: Material Weaknesses or Other Findings In the Fiscal Year 2018 Department of Homeland Security (DHS or the Department) Financial Statement Audit, ICE contributed to material weaknesses in the areas of Financial Reporting and Information Technology (IT) Controls and System Functionality. Specifically, ICE recognizes weaknesses in financial reporting related to untimely obligation of executed contracts, specifically, ensuring there was an executed contract and corresponding obligation of funds prior to incurring expenses, as well as ineffective design of the Procurement Request Information System Management (PRISM) to Federal Financial Management System (FFMS) and Bond Management Information System (BMIS) to FFMS reconciliations. ICE must improve and automate the controls related to the analysis of outstanding obligations, and improve controls to ensure timeliness of execution of contracts and corresponding obligations. Additionally, ICE must improve the tools used to reconcile PRISM and FFMS, to ensure all contracts awarded in PRISM are recorded in FFMS and implement timeliness policies to ensure unreconciled items in both reconciliations are cleared timely.

ICE must also focus heavily on access controls for all financial related systems, such as the systems used for financial management, invoice management, real property, time/attendance, bond management and procurement. ICE has completed a full assessment of application controls for all CFO designated systems, will execute corrective actions for new weaknesses, and conduct routine verification and validation to ensure improvements are being sustained. The contributions to the material weaknesses identified above did not impair ICE's ability to report complete and accurate obligation data in the Table of FY 2018 Drug Control Obligations. 4: Reprogrammings or Transfers During FY 2018, ICE had reprogrammings and transfers.

As a component of DHS, ICE submits all 3 reprogramming and transfer requests through the Department for approval, and the impact of these changes is assessed by the Department. In FY 2018, the Department determined there were no reprogrammings or transfers that materially impacted ICE’s drug-related obligations reported in the Table of FY 2018 Drug Control Obligations. 5: Other Disclosures There are no other disclosures ICE feels are necessary to clarify any issues regarding the data reported. B. Assertions 1: Obligations by Budget Decision Unit Not Applicable - As a multi-mission agency, ICE is exempt from reporting under this section as noted in the Office of National Drug Control Policy (ONDCP) Circular: Accounting of Drug Control Funding and Performance Summary, dated May 8, 2018.

2: Drug Methodology The methodology used to calculate obligations of budgetary resources by budget decision unit and function is reasonable and accurate in regard to the workload data employed and the estimation methods used. The workload data derived from ICM, discussed in the methodology section above, is based on work performed between October 1, 2017 and September 30, 2018. There are no other estimation methods used. The financial system used to calculate the drug-related budget obligations is the FFMS, which is reliable and capable of yielding data that fairly presents, in all material respects, aggregate obligations.

3: Application of Drug Methodology The methodology disclosed in Section A, Disclosure No. 1 was the actual methodology used to generate the Table of FY 2018 Drug Control Obligations. 4: Reprogrammings or Transfers The data presented are associated with obligations against a financial plan that properly reflects all changes in drug-related budgetary resources that occurred during the fiscal year, including reprogrammings or transfers. Although the Department determined there was no material impact to drug-related obligations, the ONDCP approved all reprogrammings or transfers in excess of $1 million in FY 2018. 5: Fund Control Notices No Fund Control Notice was issued, as defined by the ONDCP Director under 21 U.S.C. Section 1703(f) and Section 9 of the ONDCP Circular: Budget Execution, to ICE in FY 2018.

4 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Appendix A Report Distribution Department of Homeland Security Secretary Deputy Secretary 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 U.S. Immigration and Customs Enforcement Director Chief Financial Officer Audit Liaison Office of Management and Budget Chief, Homeland Security Branch DHS OIG Budget Examiner Congress Congressional Oversight and Appropriations Committees Office of National Drug Control Policy Associate Director for Management and Administration www.oig.dhs.gov OIG-19-25 Additional Information and Copies 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 Public Affairs at: [email protected]. Follow us on Twitter at: @dhsoig. OIG Hotline  To report fraud, waste, or abuse, visit our website at www.oig.dhs.gov and click on the red "Hotline" tab.

If you cannot access our website, call our hotline at (800) 323-8603, fax our hotline at (202) 254-4297, or write to us at: Department of Homeland Security Office of Inspector General, Mail Stop 0305 Attention: Hotline 245 Murray Drive, SW Washington, DC 20528-0305