Audit of the Stafford County Sheriff's Office Equitable Sharing Program Activities Stafford, VA

Office of the Inspector G eneral

U.S. Department of Justice

Audit of the Stafford County

Sheriff’s Office Equitable Sharing

Program Activities

Stafford, Virginia

Audit Division GR-30-15-003 June 2015

AUDIT OF THE STAFFORD COUNTY SHERIFF’S OFFICE

EQUITABLE SHARING PROGRAM ACTIVITIES

STAFFORD, VIRGINIA

EXECUTIVE SUMMARY

The Department of Justice (DOJ) Office of the Inspector General (OIG)

conducted an audit of the Stafford County Sheriff’s Office’s (SCSO) accounting for

and use of equitable sharing funds during its fiscal years (FY) 2013 and 2014.

Equitable sharing funds derive from the DOJ Asset Forfeiture Program, which uses

the proceeds from assets seized as part of DOJ-related law enforcement actions.

This program seeks to deter crime by depriving criminals of the proceeds from

illegal activities, while also enhancing the cooperation between federal, state, and

local law enforcement agencies. State and local law enforcement agencies that

participate in the seizure of property and funds may receive a portion the

proceeds—an equitable share of the forfeiture—to use for law enforcement

purposes. During FYs 2013 and 2014, SCSO received $1,199,308 from the DOJ

Equitable Sharing Program and spent $129,222 in equitable sharing funds.

The objective of the audit was to assess whether SCSO properly accounted

for equitable sharing funds and used such revenues for allowable purposes defined

by applicable guidelines. Although we found that SCSO complied with DOJ

guidelines for submitting equitable sharing requests and using equitable sharing

funds, our audit determined that Stafford County commingles SCSO’s DOJ equitable

sharing funds with state, and local asset forfeiture funds in a single bank account.

Because there are specific guidelines established for the accounting of DOJ

equitable sharing funds, this report recommends that Stafford County separately

track DOJ equitable sharing deposits from funds derived from other sources.

AUDIT OF THE STAFFORD COUNTY SHERIFF’S OFFICE

EQUITABLE SHARING PROGRAM ACTIVITIES

STAFFORD, VIRGINIA

TABLE OF CONTENTS

INTRODUCTION..................................................................................................1

DOJ Equitable Sharing Program ...................................................................1

Stafford County .........................................................................................1

OIG Audit Approach ...................................................................................2

FINDINGS AND RECOMMENDATION ......................................................................3

Equitable Sharing Agreements and Certification Forms ...................................3

Accounting for Equitable Sharing Receipts.....................................................3

Use of Equitable Sharing Funds....................................................................4

Supplanting...............................................................................................6

Conclusion ................................................................................................6

Recommendation.......................................................................................7

APPENDIX 1: OBJECTIVE, SCOPE, AND METHODOLOGY...........................................8

APPENDIX 2: STAFFORD COUNTY SHERIFF’S OFFICE RESPONSE TO

THE DRAFT REPORT .................................................................................10

APPENDIX 3: CRIMINAL DIVISION REPOSONSE TO THE DRAFT REPORT .................11

APPENDIX 4: OFFICE OF THE INSPECTOR GENERAL ANALYSIS AND SUMMARY OF

ACTIONS NECESSARY TO CLOSE THE REPORT.............................................12

AUDIT OF THE STAFFORD COUNTY SHERIFF’S OFFICE

EQUITABLE SHARING PROGRAM ACTIVITIES

STAFFORD, VIRGINIA

INTRODUCTION

The Department of Justice (DOJ) Office of the Inspector General (OIG)

conducted an audit of the Stafford County Sheriff’s Office (SCSO), Stafford,

Virginia, equitable sharing program activities. The audit covered Stafford County’s

fiscal years (FY) 2013 and 2014, a period beginning July 1, 2012, and ending June

30, 2014. During this period, SCSO received $1,199,308 from the DOJ and spent

$129,222 in equitable sharing funds.

DOJ Equitable Sharing Program

The DOJ Equitable Sharing Program is a national law enforcement initiative

that seeks to remove the tools of crime from criminal organizations, deter crime

and deprive offenders of the proceeds of their crimes.

1

As part of the program, the

DOJ and its components may provide a portion, or equitable share, of federally

forfeited cash, property, and proceeds to state and local law enforcement agencies

that directly participate in a federal forfeiture investigation or prosecution.

Three central DOJ components work together to administer the Equitable

Sharing Program: (1) the U.S. Marshals Service, (2) the Justice Management

Division, and (3) the Criminal Division’s Asset Forfeiture and Money Laundering

Section (AFMLS). These three components are responsible for issuing policy

statements, implementing governing legislation, and monitoring the use of DOJ

equitable sharing funds. The U.S. Marshals Service is responsible for transferring

asset forfeiture funds from DOJ to the receiving state or local agency. The Justice

Management Division manages the Consolidated Asset Tracking System, a database

used to track federally seized assets throughout the forfeiture lifecycle. AFMLS

tracks membership of state and local participants, updates the equitable sharing

program rules and policies, and monitors the allocation and use of equitable sharing

funds.

Stafford County

Stafford County is located about 40 miles south of Washington, D.C., and has

a population of over 134,000 residents living across 277 square miles. SCSO is

responsible for animal control, emergency communications, criminal investigations,

field operations, and court and civil processes. SCSO has been a member of the

1

The Comprehensive Crime Control Act of 1984 authorized the implementation of a national

asset forfeiture program, P.L. 98-473. The U.S. Department of the Treasury also administers its own

asset forfeiture programs. This audit was limited to equitable sharing revenues received through the

DOJ equitable sharing program.

DOJ Equitable Sharing program since 1999 and has participated in investigations

with the Bureau of Alcohol, Tobacco, Firearms and Explosives.

OIG Audit Approach

The objective of the audit was to assess whether SCSO properly accounted

for equitable sharing funds and used such revenues for allowable purposes defined

by applicable guidelines. We tested compliance with what we considered the most

important conditions of the DOJ equitable sharing program. We applied the AFMLS

Guide to Equitable Sharing for State and Local Law Enforcement Agencies

(Equitable Sharing Guide), issued in April 2009, as our primary criterion. The

Equitable Sharing Guide provides procedures for submitting sharing requests,

defines permissible uses, and establishes appropriate tracking and accounting

requirements for equitable sharing assets.

To accomplish the objective of the audit, we tested SCSO’s compliance with

three aspects of the DOJ equitable sharing program:

• Equitable Sharing Agreement and Certification Forms to determine if

these documents were complete and accurate.

• Accounting for equitable sharing receipts to determine whether standard

accounting procedures were used to track equitable sharing assets.

• Use of equitable sharing funds to determine if equitable sharing funds

were used for law enforcement purposes.

Appendix 1 contains additional information on our audit objective, scope, and

methodology.

2

FINDINGS AND RECOMMENDATION

SCSO received $1,199,308 in equitable sharing funds from the DOJ

during the two-year period beginning July 1, 2012, and ending June

30, 2014. We found that SCSO’s annual equitable sharing agreement

and certification forms were complete, accurate, and submitted on

time. Additionally, we found that SCSO was able to account for

individual receipts and expenditures of DOJ equitable sharing funds.

We also tested SCSO’s use of these funds and found that the office

appropriately used funds to support law enforcement activities.

However, we observed that Stafford County commingles DOJ equitable

sharing funds with local and state-level forfeiture funds, which conflicts

with DOJ guidelines for managing equitable sharing funds.

Equitable Sharing Agreements and Certification Forms

The Equitable Sharing Guide requires participating law enforcement agencies

to submit an equitable sharing agreement and certification form within 60 days

after the end of the agency’s fiscal year. The head of the law enforcement agency

and a designated official of the local governing body must sign the form. By

signing the form, the signatories agree to follow the statutes and guidelines that

regulate the equitable sharing program.

We obtained copies of SCSO’s certification forms for FYs 2013 and 2014 and

determined that the forms were complete, signed by the appropriate Stafford

County officials, and submitted within the 60-day requirement. We also verified

that the total amount of equitable sharing funds SCSO reports receiving during FYs

2013 and 2014 was accurate. We compared SCSO’s documents with the amounts

listed in the AFMLS Consolidated Asset Tracking System to verify these amounts.

We found that the agreement and certification forms matched the AFMLS report.

Accounting for Equitable Sharing Receipts

DOJ’s Equitable Sharing Guide requires that law enforcement agencies use

standard accounting procedures and internal controls to track and account for

equitable sharing receipts. Such accounting procedures include establishing a

separate revenue account or accounting code to track DOJ equitable sharing funds.

The Equitable Sharing Guide also requires that recipients avoid commingling DOJ

equitable sharing funds with funds from any other sources.

During FYs 2013 and 2014, SCSO reported receiving one electronic funds

transfer for $1,199,308 from the United States Marshals Service through the

3

Service’s E-Share.

2

We obtained an AFMLS Consolidated Asset Tracking System

report that details this disbursement.

Stafford County deposits DOJ equitable sharing funds into one bank account

with U.S. Department of the Treasury, state, and local asset forfeiture revenues.

We found that Stafford County uses one accounting code for these funds rather

than assigning separate accounting codes for each source. Although the SCSO

records how it uses DOJ equitable sharing funds, the method of using a single bank

account and accounting code for all deposits does not comply with DOJ guidelines

to avoid commingling DOJ funds with funds from any other sources. The Criminal

Division has specific guidelines governing the proper use of DOJ equitable sharing

funds, and the guidelines require recipients to segregate or otherwise separately

account for these funds. As such, we recommend that the Criminal Division ensure

that Stafford County segregate or otherwise separately account for DOJ equitable

sharing revenues from other sources of forfeiture proceeds.

Additionally, SCSO deposits funds for certain drug enforcement investigation

activities, such as “buy money” to procure illegal drugs, into a second bank account

containing DOJ equitable sharing funds, state, and locally seized funds. SCSO has

established controls over this account by ensuring that officers use all of the

commingled funds in accordance with DOJ’s equitable share guidelines regardless of

funding source. For example, while state and local guidelines allows officers to

purchase food, the SCSO prohibits using any of the funds in the commingled

account to purchase food. Although the SCSO has established controls for

managing asset forfeiture and its investigations accounts, these controls are not

aligned with the requirements from DOJ’s Equitable Sharing Guide. We believe that

SCSO should segregate or establish separate accounting codes for DOJ equitable

sharing revenues in this investigations account in order to comply with equitable

sharing program guidelines.

Use of Equitable Sharing Funds

The Equitable Sharing Guide requires participating agencies to use equitable

sharing funds for law enforcement purposes. Table 1 summarizes the Equitable

Sharing Guide’s allowable and unallowable uses for equitable sharing funds.

2

E-Share is the United States Marshals Service program used to make equitable sharing

payments to federal, state, and local law enforcement agencies through electronic funds transfers. E-

Share changes equitable sharing payments from a paper U.S. Treasury check to a direct deposit into

the state or local law enforcement agency’s bank account.

4

Table 1

Summary of Allowable and Unallowable Uses

for Equitable Sharing Funds

Allowable Uses

Unallowable Uses

Law Enforcement Investigations Extravagant Expenditures

Law Enforcement Training Food and Beverages

Law Enforcement Equipment Education-Related Costs

Asset Accounting and Tracking

Uses Contrary to the Laws of the State or Local

Jurisdiction

Law Enforcement Awards and Memorials Non-Official Government Use of Shared Assets

Law Enforcement Travel and Transportation

Use of Forfeited Property by Non-Law

Enforcement Personnel

Law Enforcement and Detention Facilities

Salaries and Benefits of Current Law

Enforcement Personnel (with some exceptions)

Source: DOJ Equitable Sharing Guide

We found that SCSO used $129,222 in equitable sharing funds in 10

transactions to support its Criminal Investigation Division’s counter-narcotics

operations, and to purchase law enforcement equipment, forensic equipment, and

multimedia training materials. Table 2 summarizes SCSO expenditures.

Table 2

Summary of SCSO DOJ Equitable Sharing Program

Expenditures FYs 2013 and 2014

Expenditure

Purpose

($)

1. Forensic Equipment

7,874

2. Training Video Production

19,500

3. Speed Detection Display

4,955

4. Handheld Radar

3,625

5. Drug Enforcement Investigations (08/2012)

20,000

6. Handheld Radar

1,813

7. Surveillance Robot

16,361

8. Drug Enforcement Investigations (03/ 2013)

20,000

9. Drug Enforcement Investigations (08/ 2013)

20,000

10. Flashlights and Tactical Equipment

15,094

Total

$129,222

Source: SCSO

We reviewed all 10 transactions for fiscal years 2013 and 2014 to determine

whether these expenditures were supported and allowable under the equitable

sharing guidelines. We evaluated the nature and purpose of these expenditures

and found that all of the expenditures appeared to be allowable and consistent with

DOJ requirements.

Additionally, we found that SCSO established adequate controls over

requesting and using equitable sharing funds. The SCSO process is as follows:

5

1. All proposed uses of funds are approved by senior-level officers and

then presented to the Sheriff for authorization.

2. At least two officials in SCSO’s finance department review the proposed

use of funds, determine whether the funds are available in the

equitable shares fund, and issue a purchase request.

3. Stafford County’s Finance and Budget Office reviews SCSO’s purchase

requests. Once reviewed, Finance and Budget Office sends purchase

orders to SCSO, which then purchases the requested items.

4. The SCSO purchasing department receives the items, records the

receipt and transfers the item to the requesting officers. The

purchasing department reconciles invoices, payments, and verifies the

receipt of items to determine their accuracy. SCSO requires at least

two officers approve cash disbursements for drug enforcement

investigations.

Supplanting

According to the Equitable Sharing Guide, equitable sharing funds must be

used to increase or supplement the resources of the receiving state or local law

enforcement agency or any other recipient agency. Equitable sharing resources

should not be used to replace or supplant the appropriated resources of the

recipient. The recipient agency must benefit directly from the equitable sharing

funds. For example, if a police department received $100,000 in equitable sharing

funds only to have its budget cut $100,000 by the city council, the police

department ultimately received no direct benefit. Rather, the entire city benefited

from the equitable sharing funds.

We examined SCSO’s total budgets for five fiscal years (FYs 2011 through

2015) to determine whether SCSO used equitable sharing funds to supplant its

budgets. We found that the SCSO’s budget increased during these years at an

average of 4.5 percent, and that equitable sharing expenditures appeared to

supplement the budget. Accordingly, we found no evidence that SCSO used

equitable sharing funds to supplant any portion of its budget.

Conclusion

We found that SCSO properly used equitable sharing funds throughout the

scope of the audit. However, we found that the method by which Stafford County

and SCSO maintain DOJ equitable sharing receipts in an account with forfeiture

receipts from the U.S. Department of the Treasury and state and local agencies,

results in commingling DOJ equitable sharing funds. Although SCSO records how it

uses DOJ equitable sharing funds, segregating the funds or using separate

accounting codes would ensure compliance with the DOJ Equitable Sharing Guide

requirements.

6

Recommendation

We recommend that the Criminal Division:

1. Ensure that Stafford County segregate or otherwise separately account

for DOJ equitable sharing revenues from other sources of forfeiture

proceeds.

7

APPENDIX 1

OBJECTIVE, SCOPE, AND METHODOLOGY

We conducted this performance audit in accordance with generally accepted

government auditing standards. Those standards require that we plan and perform

the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for

our findings and conclusions based on our audit objectives. We believe that the

evidence obtained provides a reasonable basis for our findings and conclusions

based on our audit objective.

Objective

The objective of the audit was to assess whether the Stafford County

Sheriff’s Office (SCSO) accounted for equitable sharing funds properly and used

such revenues for allowable purposes defined by applicable guidelines. We tested

compliance with the conditions of the Department of Justice’s (DOJ) Equitable

Sharing Program. We reviewed laws, regulations, and guidelines governing the

accounting for and use of DOJ equitable sharing receipts, including the DOJ’s Guide

to Equitable Sharing for State and Local Law Enforcement Agencies, dated April

2009. Unless otherwise stated in our report, the criteria used during the audit were

contained in this document.

Scope and Methodology

Our audit concentrated on, but was not limited to, SCSO’s equitable sharing

receipts from July 1, 2012, to June 30, 2014. SCSO received $1,199,308 in DOJ

equitable sharing funds during this period. We also reviewed all 10 of the SCSO’s

expenditures during this period, which totaled about $129,222.

We performed audit work at SCSO’s headquarters, located in Stafford,

Virginia. To accomplish the objective of the audit, we interviewed Sheriff’s

Department and County Treasurer’s Office officials and examined their records of

federal asset forfeiture revenues and expenditures of DOJ equitable sharing funds.

In addition, we relied on computer-generated data from DOJ’s Consolidated Asset

Tracking System to determine the equitable sharing revenues awarded to SCSO

during the audit period. We did not establish the reliability of the data contained in

the DOJ Consolidated Asset Tracking System as a whole. However, when the data

is viewed in context with other available evidence, we believe the opinions,

conclusions, and recommendations included in this report are valid.

Our audit specifically evaluated SCSO’s compliance with three essential

equitable sharing guidelines: (1) Equitable Sharing Agreement and Certification

Forms, (2) Accounting for equitable sharing receipts, and (3) Use of equitable

sharing funds. In planning and performing our audit, we considered the internal

controls established and used by SCSO over DOJ equitable sharing receipts to

accomplish our audit objective. We did not assess the reliability of SCSO’s financial

8

management system, the internal controls of that system, or whether the office, as

a whole, complied with laws and regulations.

Our audit included an evaluation of the Stafford County’s Comprehensive

Annual Financial Reports, which contain Single Audit Reports for fiscal years 2013

and 2014. The Single Audit Reports were prepared under the provisions of Office of

Management and Budget Circular A-133. We found that the independent auditor’s

assessments did not disclose control weaknesses or significant noncompliance

issues related specifically to the auditee.

9

~0)

- 0 -

'(;mlll//I.tl It I.

m/lom

APPENDIX 2

STAFFORD COUNTY SHERIFF’S OFFICE

RESPONSE TO THE DRAFT REPORT

Sheriff Charles E. Je

tt

Stafford County Sheriff's Office

A

Sute

Accredited

Law

Enforcement Agency

May 19, 2015

Mr

. Jo

hn

Manning

Regional Audit Manager

Washington Regional Audit Office

Offi

ce

of

the

In

spector General

U.S.

Department

of

Jus

ti

ce

1300 North 17

th

Street Suite 3400

Arlingto

n,

VA 22209

D

ear

Mr.

Marming

:

The following is in response to the reconmlcndation of the United Stales Department

of

Justice Audit afme

Stafford

Co

unty She

riff's

Office Equitable Sharing Program Ac

ti

viti

es

for

th

e period

of

July 1, 2012 to

June

30

, 20

14

.

• Ensure that Stafford Co

un

w segregate or

olhen\

'ise

se

parat

e

ly

account for DOJ equitable

sharing revenu

es

from other

so

u

rce!!

of f

or

fe

itur

e

pr

oceeds.

Stafford County Finance/Budgel Department agrees with the segregations

of

funds which are

received from either

DOlor

the Treasury Department. We are currently only separating State and

Federal Funds. We

will

establish new accounting codes by

th

e end

of

May 2015 to comply with

the

OOJ Equitable Sharing Guide's requirements.

• After review

of

the auditor

's

report, we \\-ould like to clarifY

our

current purchasing procedures.

which

are

slightly different than

th

ose noted in the report.

Page

9

of

the Draft Audit Report sta

te

s:

The

SCSO

se

nd

s the purchase req

ll

est

to

the Stafford

County TreaJurer's Office, where the

Tr

easurer tlnd County Administrator review the request.

These officials approve the use

ollu

nds

{lncl

ar

e responsible/or purchasing the item.

Our current process states: Purchase requests are reviev.'ed

and

processed by the Stafford County

FinancefBudgel Office,

Th

e

PO

is issu

ed

by

the

Pur

chasing Division in Finance/Budget. The PO

is then sent back

10

th

e SCSO Finance Office, recorded and given to the

SCSO

Purchasing

Deptlrtment.

Appr

opriate internal controls are in

pla

ce

and

(ludiled by the Ca

um

y 's external

auditor!>

' on a

ye

arl

y

!xu

·is.

Thank

yo

u for bringing this motter to o

ur

attention, We welcome

yo

ur help to ensure

we

are using the

Asset Forfeiture Funds in the required mann

er

and adhering to all OOJ Equitable Sharing

Guide's

requirements.

Sincerely,

C?

\

SheriffC.E. Jett

Qrk-

l225

Courthouse Road, Stafford.

Virginia

22554

Maili

ng Address: P.O. Box

189

, Stafford.

Vuginia

22555-Ol89

_.co..staffo

r

d.va.wlsheriff

O!li=

(540) 658-4450 •

F=

(54

0) 658-8570

10

APPENDIX 3

CRIMINAL DIVISION RESPONSE TO THE DRAFT REPORT

11

U.S.

Department

of

Justice

Criminal

Di

vision

Washington,

D.C

205.W

May

15,2015

Asset

Forfeilure

and

.'l;foney

Laundering Sectioll

MEMORANDUM

TO:

John Manning

Regional Audit Manager

Office

of

the Inspector General (OlG)

FROM:

Jennifer

Bickfor~=~'\

""{,;,;)!

ciljl'v/\

Assistant Deputy

cb;J

\ .

..'

C J

Asset Forfeiture and Money

Laundering Section

SUBJECT:

Draft Audit Report - Stafford County

Sheriffs

Office

Equitable Sharing Program Activities

Tn

a memorandum dated May 6, 2015,

your

office summarized the preliminary findings

from the audit performed

on

the Stafford County

Sheriffs

Office (SCSO). This draft report

refercnl~ed

the

actions necessary for

final

closure

of

the outstanding audit recommendations

below.

Recommendations:

1.

Ensure

that

Stafford County segregate

or

otherwise separately

account

for DOJ

equitable sharing revenues from other sources

of

forfeiture proceeds.

The Asset Forfeiture and Money Laundering Section (AFMLS) concurs with the finding.

AFMLS

will coordinate with the SCSO to implement the corrective actions after the issuance

of

the final audit report.

If

you have any questions, please contact Brian Boykin, Equitable Sharing

Progr1:lm

Manager. at 202-598-2306.

Ct';

Denise Turcotte, Audit Liaison

Criminal Division

APPENDIX 4

OFFICE OF THE INSPECTOR GENERAL

ANALYSIS AND SUMMARY OF ACTIONS

NECESSARY TO CLOSE THE REPORT

The OIG provided a draft of this audit report to the Stafford County Sheriff’s

Office (SCSO) and U.S. Department of Justice Asset Forfeiture and Money

Laundering Section (AFMLS). SCSO’s response is incorporated in Appendix 2, and

AFMLS’ response is incorporated in Appendix 3 of this final report.

The following provides the OIG analysis of the responses and summary of

actions necessary to close the report.

Analysis of SCSO’s Response

In response to our audit report, SCSO concurred with our recommendations

and discussed the actions it will implement in response to our findings.

Additionally, SCSO provided technical comments clarifying the procedures for

purchase requests. We incorporated SCSO’s technical comments into this report,

as appropriate.

Recommendation:

1. Ensure that Stafford County segregate or otherwise separately

account for DOJ equitable sharing revenues from other sources of

forfeiture proceeds.

Resolved. Both SCSO and AFMLS concurred with our recommendation. In

its response to our recommendation, SCSO stated that currently it only

separates state and federal funds, but it would establish new accounting

codes to comply with the Equitable Sharing Guide.

This recommendation can be closed when we receive evidence that SCSO

segregates or separately accounts for DOJ equitable sharing revenues from

other sources of forfeiture proceeds in accordance with Equitable Sharing

program requirements.

12