Justice Assets Forfeiture Fund:

Transparency of Balances and Controls over Equitable Sharing Should Be Improved

GAO-12-736: Published: Jul 12, 2012. Publicly Released: Jul 12, 2012.

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What GAO Found

Annual revenues into the Assets Forfeiture Fund (AFF) from forfeited assets increased from $500 million in 2003 to $1.8 billion in 2011, in part due to an increase in prosecutions of fraud and financial crimes cases. Expenditures in support of forfeiture activities such as equitable sharing payments to state and local law enforcement agencies and payments to victims also increased over the same 9-year period, growing from $458 million in 2003 to $1.3 billion in 2011. The Department of Justice (DOJ) uses the difference between revenues and expenditures in any year to help cover anticipated expenses in the next fiscal year. Because the AFF uses fund revenues to pay for the expenses associated with forfeiture activities, DOJ carries over funds at the end of each fiscal year to ensure it has sufficient resources to cover expenses that may not be covered by the next year’s revenues. When determining the amounts to carry over, DOJ reviews historical data on past program expenditures, analyzes known future expenses such as salaries and contracts, and estimates the costs of any potential new expenditures. However, DOJ has not documented the process for determining the amount of funds needed to cover anticipated expenditures in the next fiscal year in its annual budget justifications. Providing more transparent information as part of the AFF’s annual budget process would better inform Congress’ oversight of the AFF. Further, after DOJ obligates funds needed to cover program expenses, any remaining AFF funds identified at the end of a fiscal year may be declared an excess unobligated balance. DOJ has the authority to use these balances for any of the department’s authorized purposes. Per Office of Management and Budget guidance, in recent years, DOJ used these excess unobligated balances to help cover rescissions. Rescissions cancel the availability of DOJ’s previously enacted budget authority, making the funds involved no longer available for obligation. For example, in fiscal year 2011, DOJ used excess unobligated balances to help cover a $495 million AFF program rescission.

DOJ has established guidelines for making equitable sharing determinations, but controls to ensure consistency and transparency could be improved. For example, DOJ agencies responsible for making equitable sharing determinations may make adjustments to sharing percentages when work hours alone do not reflect the relative value of an agency’s contribution to an investigation. If a state or local law enforcement agency contributed a helicopter or a drug-sniffing dog to an investigation, its sharing percentage might be adjusted upward from what it would be based on work hours alone. However, DOJ’s guidance does not include information regarding how decisions about these adjustments to sharing determinations should be made. This is particularly important given that these determinations represent DOJ’s overall assessment of each agency’s unique contributions and are a key component of how DOJ determines how much to award to each agency. Furthermore, key information that serves as the basis for equitable sharing determinations—such as the work hours contributed by each of the participating agencies in an investigation—is not subject to review by approving authorities. Developing guidance regarding how these decisions are to be made, documenting the basis for these decisions, and subjecting them to review and approval would help ensure the consistency and transparency of equitable sharing determinations.

Why GAO Did This Study

Every year, federal law enforcement agencies seize millions of dollars in assets in the course of investigations. The AFF was established to receive the proceeds of forfeiture and holds more than $1 billion in assets. DOJ uses the proceeds from forfeitures primarily to cover the costs of forfeiture activities. DOJ also shares forfeiture proceeds with state and local agencies that participate in joint investigations through its equitable sharing program. GAO was asked to review (1) AFF’s revenues and expenditures from fiscal years 2003 through 2011 and DOJ’s processes for carrying over funds for the next fiscal year, and (2) the extent to which DOJ has established controls to help ensure that the equitable sharing program is implemented in accordance with established guidance. GAO analyzed data on AFF revenues, expenditures, and balances; interviewed DOJ officials; and analyzed a sample of 25 equitable sharing determinations, which included 5 determinations from each relevant DOJ agency. GAO’s analysis of the samples was not generalizable, but provided insight into DOJ’s decisions.

What GAO Recommends

GAO recommends that, among other things, DOJ clearly document how it determines the amount of funds that will need to be carried over for the next fiscal year, develop guidance on how components should make adjustments to equitable sharing determinations, and ensure that the basis for equitable sharing determinations is documented and subjected to review and approval. DOJ concurred with GAO’s recommendations.

For more information, contact David C. Maurer at (202) 512-9627 or maurerd@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In fiscal year 2013, DOJ established more detailed guidance that clarified carryover decision making, which it included in the fiscal year 2014 Congressional Budget Justification. The detailed guidance provided in the 2014 Congressional Budget Justification specifies how carryover estimates are determined so as to maintain the operation of the program from one fiscal year to the next. For example, DOJ added to the Congressional Budget Justification that the carryover estimate should include, among other things, one quarter of the previous year's funding to cover pending expenses with state and local law enforcement agencies that participated in joint law enforcement operations, and half of the previous year's expense for government salaries that have been approved by the Attorney General. As a result of these actions, Congress has more detailed information on how DOJ determines the amount of funds to carry over, which improves transparency and better informs Congress' oversight of the AFF by making it easier to evaluate whether the funds carried over adequately reflect the AFF's needed resources.

    Recommendation: To help improve transparency over the AFF's use of funds, the Attorney General should provide more detailed information to Congress as part of the AFF's annual budget process, clearly documenting how DOJ determines the amount of funds to be carried over into the next fiscal year.

    Agency Affected: Department of Justice

  2. Status: Closed - Implemented

    Comments: In 2013, DOJ revised its Asset Forfeiture Policy Manual to require the equitable sharing decision maker, as a general rule, to make sharing allocations based on a comparison of the work hours and qualitative contributions of each federal, state, and local law enforcement agency that participated in the law enforcement effort resulting in forfeiture. Additionally, in 2014, DOJ revised its Guide to Equitable Sharing for State and Local Law Enforcement to provide more guidance for the decision maker and to highlight the quantitative and qualitative factors that decision makers may consider when determining equitable sharing percentages. According to DOJ, it also conducted outreach and training with federal, state, and local law enforcement regarding the proper administration of the equitable sharing program and it policies and procedures. This outreach included the proper application of the qualitative factors set forth in the Asset Forfeiture Policy Manual, and the Guide to Equitable Sharing for State and Local Law Enforcement. As a result of these actions, DOJ's law enforcement agencies have better guidance on how to apply qualitative factors when making adjustments to equitable sharing percentages.

    Recommendation: To help improve management controls over the equitable sharing program, the Attorney General should direct the Asset Forfeiture and Money Laundering Section (AFMLS) to develop and implement additional guidance on how DOJ agencies should apply qualitative factors when making adjustments to equitable sharing percentages.

    Agency Affected: Department of Justice

  3. Status: Closed - Implemented

    Comments: DOJ established a new online website called the eShare Portal to ensure that agency contributions are transparent and available to agency headquarters officials and decision makers. In addition, DOJ updated the form that state and local law enforcement officers complete for an equitable share of federally forfeited property to emphasize work hours and qualitative factors. The updated form also requires a detailed narrative by the state and local law enforcement agency. Further, DOJ updated its policy regarding the Federal Contribution Form, which captures work hours and contributions of federal law enforcement agencies, to require federal agencies in joint investigations to document work hours in all cases. As a result of these actions, DOJ helped improve management controls over the equitable sharing program.

    Recommendation: To help improve management controls over the equitable sharing program, the Attorney General should direct AFMLS to establish a mechanism to ensure that the basis for equitable sharing determinations-including the work hours contributed by all participating agencies and the rationale for any adjustments to sharing percentages-are recorded in the documents provided to agency headquarters officials for review and approval.

    Agency Affected: Department of Justice

  4. Status: Closed - Implemented

    Comments: DOJ created an eShare portal to monitor whether key information--such as work hours--in support of equitable sharing determination and its accompanying supporting documentation is recorded. State and local law enforcement agencies use the website to documents work hours, qualitative factors, and a detailed narrative of the agency's contribution. DOJ officials plan to monitor sharing submissions and conduct random samplings to ensure adherence to related guidance. As a result of these actions, DOJ helped improve management controls over the equitable sharing program, and has better assurances that equitable sharing determinations are made in accordance with established guidance.

    Recommendation: To help improve management controls over the equitable sharing program, the Attorney General should direct AFMLS to develop a risk-based mechanism to monitor whether key information in support of equitable sharing determinations is recorded and the extent to which sharing determinations are made in accordance with established guidance.

    Agency Affected: Department of Justice

 

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