Audit

Department of Homeland Security shall submit a report not later than October 15, 2017, to the DHS Office of Inspector General listing all grants and contracts awarded by other than full and open competition (OTFOC) during fiscal years 2016 and 2017. We contracted with Williams, Adley & Company-DC, LLC to review the OTFOC report and assess DHS compliance with applicable laws, regulations, and departmental procedures.  Williams Adley concluded that DHS complied with applicable statutes, regulations, and policies governing grants and contracts awarded by OTFOC in FY 2017. During that year, DHS awarded 62 noncompetitive grants worth about $140 million and 121 noncompetitive contracts worth about $118 million through OTFOC. The independent auditors determined that DHS’ Report on OTFOC for FY 2017 as well as the information related to these grants and contracts in the Federal Procurement Data System – Next Generation and USASpending.gov were accurate. The auditors also found that DHS followed written policies and procedures and the requirements of the Federal Funding Accountability and Transparency Act of 2006 when awarding grants and contracts

noncompetitively.

KPMG, under contract with DHS OIG, audited the Management Directorate’s financial statements and internal control over financial reporting.  The resulting management letter discusses five observations related to internal control for management’s consideration.  These issues were related to journal entry review; financial system reconciliations; ineffective obligation analysis; contract expense approval, improper invoice posting; and intra-governmental payment and collection expense approval.  These deficiencies are not considered significant and were not required to be reported in our Independent Auditors' Report on DHS’ FY 2016 Financial Statements and Internal Control over Financial Reporting, dated November 14, 2016, included in the DHS FY 2016 Agency Financial Report.

KPMG, under contract with DHS OIG, audited the National Protection and Programs Directorate’s financial statements and internal control over financial reporting.  The resulting management letter discusses 14 observations related to internal control for management’s consideration.  The auditors identified internal control deficiencies in several processes including revenue accrual, personnel actions, journal entry reviews, performance reviews, contract expense approvals, time keeping, and intra-governmental payment and collection expense approvals.  These deficiencies are not considered significant and were not required to be reported in our Independent Auditors' Report on DHS’ FY 2016 Financial Statements and Internal Control over Financial Reporting, dated November 14, 2016, included in the DHS FY 2016 Agency Financial Report.

KPMG, under contract with DHS OIG, audited the United States Coast Guard’s financial statements and internal control over financial reporting.  The resulting management letter discusses 12 observations related to internal control for management’s consideration.  The auditors identified internal control deficiencies in several processes including financial disclosure reports; accounts receivable; civilian and military payroll; financial reporting process; and accounts payable accrual.  These deficiencies are not considered significant and were not required to be reported in our Independent Auditors' Report on DHS’ FY 2016 Financial Statements and Internal Control over Financial Reporting, dated November 14, 2016, included in the DHS FY 2016 Agency Financial Report.

KPMG, under contract with DHS OIG, audited Customs and Border Protection’s (CBP) fiscal year (FY) 2016 consolidated financial statements.  The resulting management letter discusses 12 observations related to internal control for management’s consideration.  The auditors identified internal control deficiencies in a number of processes, including deobligation of undelivered orders, review of Federal Employee Compensation Act claims, and the seized and forfeited property inventory.  These deficiencies are not considered significant and were not required to be reported in our Independent Auditors' Report on U.S. Customs and Border Protection’s FY 2016 Consolidated Financial Statements, dated January 18, 2017, included in CBP’s FY 2016 Performance and Accountability Report.

KPMG LLP, under contract with DHS OIG, audited the United States Secret Service’s financial statements and internal control over financial.  The resulting management letter discusses four observations related to internal control for management’s consideration.  The auditors identified internal control deficiencies in several processes including financial reporting; time and attendance approval; invoice entry and disbursements; and confidential financial disclosure reporting.  These deficiencies are not considered significant and were not required to be reported in our Independent Auditors' Report on DHS’ FY 2016 Financial Statements and Internal Control over Financial Reporting, dated November 14, 2016, included in the DHS FY 2016 Agency Financial Report.

KPMG LLP, under contract with DHS OIG, audited the Office of Financial Management’s financial statements and internal control over financial reporting.  The resulting management letter discusses four observations related to internal control for management’s consideration.  The auditors identified internal control deficiencies and the need for improvement in several processes including financial disclosure reviews; designation of intra-governmental transactions as non-acquisition; reconciliation of unfilled customer order and undelivered order balances; and inadequate review of closing package notes.  These deficiencies are not considered significant and were not required to be reported in our Independent Auditors' Report on DHS’ FY 2016 Financial Statements and Internal Control over Financial Reporting, dated November 14, 2016, included in the DHS FY 2015 Agency Financial Report.

KPMG LLP, under contract with DHS OIG, audited USCIS’ financial statements and internal control over financial reporting.  The resulting management letter discusses four observations related to internal control for management’s consideration.  The auditors identified internal control deficiencies in several processes including monitoring and recording employee completion of the annual ethics and integrity training; review and approval of H1-B and L fraud fee journal entries; recording of property, plant, and equipment; and inaccurate and unsupported data in some systems.  These deficiencies are not considered significant and were not required to be reported in our Independent Auditors' Report on DHS’ FY 2016 Financial Statements and Internal Control over Financial Reporting, dated November 14, 2016, included in the DHS FY 2016 Agency Financial Report.

Most of the deficiencies identified by the independent public accounting firm KPMG LLP were related to access controls and configuration management of Office of Financial Management (OFM) and Office of the Chief Information Officer (OCIO) core financial and feeder systems.  The deficiencies collectively limited OFM’s and OCIO’s ability to ensure that critical financial and operational data were maintained in such a manner as to ensure their confidentiality, integrity, and availability.  We recommend that OFM and OCIO make improvements to DHS’ financial management systems and associated information technology security program.

KPMG LLP, under contract with DHS OIG, audited the S&T financial statements and internal control over financial reporting.  The resulting management letter discusses three observations related to internal control for management’s consideration.  The auditors identified internal control deficiencies in several processes including journal entry review processes; procurement and financial management system reconciliations; and intra-governmental payment and collection expense review and approval.  These deficiencies are not considered significant and were not required to be reported in our Independent Auditors' Report on DHS’ FY 2016 Financial Statements and Internal Control over Financial Reporting, dated November 14, 2016, included in the DHS FY 2016 Agency Financial Report.