Note 1. Summary of Significant Accounting Policies
A. Summary of Reporting Entity
The AFF and SADF are a financial reporting entity of the DOJ involving specified funds, property seized for forfeiture and the transactions and program activities of DOJ AFP components and other participating agencies as described herein.
The primary mission of the DOJ AFP is to employ asset forfeiture powers in a manner that enhances public safety and security. This is accomplished by removing the proceeds of crime and other assets relied upon by criminals and their associates to perpetuate their criminal activity. Components responsible for administration and financial management of the AFP are charged with lawfully, effectively and efficiently supporting law enforcement authorities in the application of specified forfeiture statutes.
The AFF was created by the Comprehensive Crime Control Act of 1984 to be a repository of proceeds from forfeitures under any law enforced and administered by the DOJ. AFF funds are managed by the Asset Forfeiture Management Staff, Justice Management Division. The SADF was created administratively by the Department to ensure positive control over and security of funds seized by agencies participating in the Department's AFP until a decision on final forfeiture is made.
The Homeland Security Act established within the DOJ the ATF. These financial statements include the seizure and forfeiture activities of ATF as a departmental law enforcement participant in the AFP effective January 24, 2003.
B. Basis of Presentation
Generally accepted accounting principles in effect as of September 30, 2003, were followed in the preparation of these financial statements. GAAP for Federal entities are the standards prescribed by the Federal Accounting Standards Advisory Board, which is designated as the official accounting standards-setting body for the Federal Government by the American Institute of Certified Public Accountants. The statements were prepared from the books and records of the AFF and SADF in accordance with Office of Management and Budget (OMB) Bulletin No. 01-09, Form and Content of Agency Financial Statements (effective for fiscal years beginning October 1, 2001), and the AFF and SADF accounting policies which are summarized in these notes. These statements are, therefore, different from the financial reports, also prepared by the AFF and SADF pursuant to OMB directives, used to monitor and control the program's use of budgetary resources.
C. Basis of Accounting
Transactions are recorded on an accrual and a budgetary basis of accounting. Under the accrual method, revenues are recorded when earned and expenses are recorded when incurred, regardless of when cash is exchanged. Under the budgetary basis, however, funds availability is recorded based upon legal considerations and constraints. As a result, certain line items on the proprietary financial statements may not equal similar line items on the budgetary financial statements. Examples include, but are not limited to, the following:
D. Revenues and Other Financing Sources
The funds in the AFF are derived primarily from non-exchange revenue and are presented on the Statement of Changes in Net Position as other financing sources. Non-exchange revenue includes forfeited cash, proceeds from the sale of forfeited property, interest earned on investments, receipt of payments in lieu of property forfeiture, and recovery of asset management expenses. This revenue, including recovery of asset management expenses, is recognized when cash is forfeited, forfeited property is sold, or when forfeited property is placed into official use or transferred to another federal agency. The revenue from judgments is not recognized until the judgment has been enforced. Revenue from judgments is recognized at the time it is collected or when the forfeited property is sold or put into official use.Deferred revenue represents a liability for forfeited property held for sale. The deferred revenue is recorded when the property is forfeited and is reversed when the property is sold or otherwise disposed and forfeiture revenue is recorded.
The AFF recognizes exchange revenue when services to other Federal agencies have been provided. This revenue is presented on the Statement of Net Cost as earned revenue.
The funds in the SADF are held in trust until a determination is made as to their disposition. These funds include seized cash, proceeds from preforfeiture sales of seized property, and income from property under seizure. No revenue recognition is given to cash deposited in the SADF.
E. Fund Balance with the U.S. Department of Treasury and Cash
The funds in the AFF are an entity asset and are used to finance the operations of the AFP. Seized cash is deposited and accounted for in the SADF until a determination has been made as to its disposition. If title passes to the U.S. Government, the forfeited cash is then transferred from the SADF to the AFF (See Note 2). The cash balance in the SADF is a non-entity asset and is not available to finance the AFP activities.
F. Investments in U.S. Government Securities
Pursuant to 28 U.S.C. § 524(c), idle SADF and AFF cash is invested in U.S. Treasury securities. The earnings and principal on Bank of Credit and Commerce International (BCCI) funds held by the AFF are tracked separately due to special disposition requirements. Investments in U.S. Government Securities are recorded at their cost and associated premiums and/or discounts are amortized through the end of the reporting period. Investments are held to maturity; therefore, no provision is made for unrealized gains or losses on these securities.
G. Accounts Receivable
Accounts receivable consist of amounts due from other Federal agencies for goods or services provided by the AFP. Receivables from services provided to other Federal agencies are considered fully collectible. Therefore, no allowance for doubtful accounts was established.
H. Property, Plant and Equipment
Property, plant and equipment consists of enhancements to the Consolidated Asset Tracking System (CATS), which meet the SFFAS 10 definition of "internal use software." Internal use software is capitalized when developmental phase costs or enhancement costs are $500 or more and the asset has an estimated useful life of two or more years. Depreciation is calculated using the straight-line method over the useful lives of the asset. Internal use software purchases with an acquisition cost of less than $500 are expensed when purchased.
I. Advances and Prepayments
Advances and prepayments classified as assets on the balance sheet include the current balance of travel advances issued to Federal employees in advance of official travel. Amounts issued are limited to meals and incidental expenses expected to be incurred by the employees during official travel. Payments in advance of the receipt of goods and services are recorded as prepaid charges at the time of prepayment and recognized as expenses when the related goods and services are received.
J. Seized and Forfeited Property
Property is seized in consequence of a violation of public law. Seized property can include monetary instruments, real property, and tangible personal property of others in the actual or constructive possession of the custodial agency. The value of seized property is its estimated fair market value at the time it was seized. Seized property is held by the U.S. Marshals Service from the point of seizure until its disposition. In certain cases, the investigative agency will keep seized property in its custody if the intention is to place the property into official use after forfeiture or to use the property as evidence in a court proceeding. If title passes to the U.S. Government, the proceeds from the sale of forfeited property are deposited in the AFF.Forfeited property is property for which title has passed to the U.S. Government. This property is recorded at the estimated fair market value at the time of forfeiture. The value of the property is reduced by estimated liens of record.
Amounts reported as assets of the AFF and SADF at September 30, 2003 and 2002, as well as in related revenue and liability accounts, include management's estimates of forfeitures and seizures that occurred during FY 2003 and 2002. They also include management's estimates of the value of forfeited and seized assets. The amount ultimately realized from the forfeiture and disposition of these assets could differ from the amounts reported.
Seized and forfeited property on hand with no legal market in the United States was disclosed in item number only with no value reported. In addition, the value
of unenforced forfeiture judgments has not been disclosed because there is no market value for this type of legal instrument. The judgments are collected either in total or by installments and are recognized as revenue at the time they are collected.
K. Non-Entity Assets
Non-entity assets consist of seized property and investments of seized cash and are not available to fund the operations of the AFP.
L. Liabilities and Loans and Interest Payable to the U.S. Treasury
Liabilities represent the amount of monies or other resources that are due to be paid by the AFF as the result of a transaction or event that has already occurred. All liabilities of the AFF are covered by budgetary resources, since the AFF has no imputed or unfunded costs. AFF accounts payable represent liabilities with both federal and nonfederal entities. Other liabilities include deferred revenue, the SADF and seized cash not on deposit, pending BCCI distributions (Note 10), and liability for prior year surplus allocations (Note 16A).
M. Interest on Late Payments
Pursuant to the Prompt Payment Act, 31 U.S.C. § 3901-3907, Federal agencies must pay interest on payments for goods or services made to concerns after the due date. The due date is generally 30 days after receipt of a proper invoice or acceptance of the goods or services, whichever is later.
N. Use of Estimates
The preparation of financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Note 2. Fund Balance with Treasury
The Fund Balance with Treasury consists of funds in the AFF. The balances on September 30, 2003 and 2002 are presented below.
| 2003 | 2002 | |
|---|---|---|
| Fund Balances: | ||
| Other Fund Types | $50,640 | $98,764 |
| Total Fund Balance with Treasury | $50,640 | $98,764 |
| Status of Fund Balances: | ||
| Unobligated Balance - Available | $ - | $ - |
| Unobligated Balance - Unavailable | - | - |
| Obligated Balance not yet Disbursed | 50,640 | 98,764 |
| Total Status of Fund Balances | $50,640 | $98,764 |
The status of fund balances reported above includes only fund balances with Treasury, while the AFF invests excess funds in short term securities, which are considered budgetary resources and are included with fund balance as unobligated balances on the Statement of Budgetary Resources. Because of this difference, amounts reported as obligated (or unobligated) in this note will not agree to amounts reported on the Statements of Budgetary Resources.
Note 3. Cash and Other Monetary Assets
Other monetary assets consist of seized cash deposited in the SADF and seized monetary instruments, including cash not on deposit. The balances on September 30, 2003 and 2002, are presented below.
| 2003 | 2002 | ||
|---|---|---|---|
| Cash: | |||
| Seized Cash Deposited | $51,115 | $9,533 | |
| Other Monetary Assets: | |||
| Seized Monetary Instruments | 20,218 | 26,691 | |
| Total Cash and Other Monetary Assets | $71,333 | $36,224 |
Note 4. Investments - Federal Securities, Net
Investments are short term Federal debt securities issued by the Bureau of the Public Debt and purchased exclusively through Treasury's Financial Management Service. All securities purchased by the AFF and SADF are intragovernmental, non-marketable securities. When securities are purchased, the investment is recorded at acquisition cost. Premiums and/or discounts are amortized through the end of the reporting period. Estimated market value of investments is presented for informational purposes only.
| Unamortized | |||||
|---|---|---|---|---|---|
| Acquisition Cost | Premium | Discount | Net Investments | Market Value Disclosure | |
| Intragovernmental | |||||
| Non-marketable securities: | |||||
| Market-based | |||||
| AFF | $569,170 | $(453) | $568,717 | $568,756 | |
| SADF | 497,924 | (434) | 497,490 | 497,591 | |
| Subtotal | $1,067,094 | $(887) | $1,066,207 | $1,066,317 | |
| Accrued Interest | - | - | |||
| Total | $1,067,094 | $1,066,317 | |||
| Unamortized | |||||
|---|---|---|---|---|---|
| Acquisition Cost | Premium | Discount | Net Investments | Market Value Disclosure | |
| Intragovernmental | |||||
| Non-marketable securities: | |||||
| Market-based | |||||
| AFF | $506,106 | $- | $(766) | $505,340 | $505,453 |
| SADF | 518,181 | (822) | 517,359 | 517,485 | |
| Subtotal | $1,024,287 | $- | $(1,588) | $1,022,699 | $1,022,938 |
| Accrued Interest | - | - | |||
| Total | $1,024,287 | $1,022,938 | |||
Note 5. Accounts Receivable, Net
Accounts receivable consist of amounts owed to the AFF for CATS-related services provided to the U.S. Treasury. There is no allowance for uncollectible accounts since accounts receivable from business with other Federal entities is considered fully collectible.
| 2003 | 2002 | ||
|---|---|---|---|
| Intragovernmental | |||
| Accounts Receivable | $2,799 | $551 |
Note 6. Forfeited and Seized Property
Property seized for any purpose other than forfeiture and held by the seizing agency or a custodial agency is disclosed by the seizing agency. All property seized for forfeiture, including property with evidentiary value, is reported in the statements of the AFF/SADF. Federal Financial Accounting and Auditing Technical Release 4, "Reporting Non-Valued Seized and Forfeited Property," requires disclosure of property that does not have a legal market in the United States or does not have a value to the Federal government. The Non-Valued property category includes: alcohol, chemicals, drug paraphernalia, gambling devices, pornography, and weapons.
A. Forfeited Property
The following tables show the analysis of change in and methods of disposition of forfeited property, excluding cash, during the FYs ended September 30, 2003 and 2002. The tables reflect the addition of ATF as a departmental law enforcement participant in the AFP effective January 24, 2003.
| Forfeited Property Category | Beginning Balance | Adjustments (1) | Forfeited During the Period |
Disposed During the Period (2) |
Ending Balance | Liens and Claims | Ending Bal. Net of Liens |
|
|---|---|---|---|---|---|---|---|---|
| Financial & Other Monetary Assets |
Number | 66 | (9) | 146 | (105) | 98 | 98 | |
| Value | $3,801 | $306 | $3,626 | ($5,038) | $2,695 | --- | $2,695 | |
| Real Property | Number | 283 | 49 | 364 | (358) | 338 | 338 | |
| Value | $37,299 | $7,615 | $62,541 | ($56,161) | $51,294 | ($87) | $51,207 | |
| Personal Property | Number | 3,595 | 20 | 16,192 | (15,983) | 3,824 | 3,824 | |
| Value | $26,068 | ($540) | $76,795 | ($74,162) | $28,161 | ($1,280) | $26,881 | |
| Non-Valued | Number | 791 | 8,803 | 17,875 | (7,817) | 19,652 | 19,652 | |
| Value | --- | --- | --- | --- | --- | --- | --- | |
| Total | Number | 4,735 | 8,863 | 34,577 | (24,263) | 23,912 | 23,912 | |
| Value | $67,168 | $7,381 | $142,962 | ($135,361) | $82,150 | ($1,367) | $80,783 | |
(1) Adjustments represent changes in the valuation or status of property as a result of fair market appraisals and court orders received during the period as well as the addition of ATF as a DOJ law enforcement component, effective January 24, 2003. The ATF balances transferred to the Justice Forfeiture Program include 5 Financial & Other Monetary Assets valued at $24,000 and 8,993 Non-Valued items.
(2) Disposals in the Analysis of Change table may not agree with disposals on the Method of Disposition table as a result of partial dispositions.
| Forfeited Property Category | Converted Financial Instrument/Property & Deposit/Transfer of Seized Cash |
Destroyed/ Donated/ Transferred to GSA/ Other | Sold/ Liquidated (1) | Official Use/ Transfer for Equitable Sharing | Returned Asset | Variance (2) | Total (3) | |
|---|---|---|---|---|---|---|---|---|
| Financial & Other Monetary Assets | Number | 90 | 7 | 5 | --- | 11 | 113 | |
| Value | $4,738 | $74 | $120 | --- | $106 | --- | $5,038 | |
| Real Property | Number | 5 | 5 | 319 | --- | 29 | 358 | |
| Value | $329 | $274 | $40,540 | --- | $15,018 | --- | $56,161 | |
| Personal Property | Number | --- | 745 | 11,314 | 1,118 | 2,928 | 16,105 | |
| Value | --- | $3,699 | $32,902 | $13,497 | $24,350 | ($286) | $74,162 | |
| Non-Valued | Number | --- | 7,518 | --- | 239 | 88 | 7,845 | |
| Value | --- | --- | --- | --- | --- | --- | --- | |
| Total | Number | 95 | 8,275 | 11,638 | 1,357 | 3,056 | 24,421 | |
| Value | $5,067 | $4,047 | $73,562 | $13,497 | $39,474 | ($286) | $135,361 | |
(1) The sold/liquidated total dollar value does not agree to Donations and Forfeitures of Property on the Statment of Changes in Net Position and the Statement of Financing because the sold/liquidated amount above represents the assets at their appraised values at forfeiture, and the Donations and Forfeitures of Property on the Statement of Changes in Net Position and the Statement of Financing represents the proceeds realized upon disposition.
(2) Variances can result from differences between the value of the property when seized and the value of the property when disposed.
(3) Disposals in the Analysis of Change table may not agree with disposals on the Method of Disposition table as a result of partial dispositions.
| Forfeited Property Category | Beginning Balance | Adjustments (1) | Forfeited During the Period | Disposed During the Period (2) | Ending Balance | Liens and Claims | Ending Bal. Net of Liens | |
|---|---|---|---|---|---|---|---|---|
| Financial & Other Monetary Assets | Number | 77 | 5 | 93 | (109) | 66 | 66 | |
| Value | $3,884 | $139 | $11,377 | ($11,598) | $3,802 | ($1) | $3,801 | |
| Real Property | Number | 244 | 40 | 325 | (326) | 283 | 283 | |
| Value | $27,670 | $5,412 | $52,105 | ($47,761) | $37,426 | ($127) | $37,299 | |
| Personal Property | Number | 2,462 | 474 | 11,705 | (11,046) | 3,595 | 3,595 | |
| Value | $25,089 | $1,558 | $62,011 | ($59,224) | $29,434 | ($3,366) | $26,068 | |
| Non-Valued | Number | 886 | (132) | 705 | (668) | 791 | 791 | |
| Value | --- | --- | --- | --- | --- | --- | --- | |
| Total | Number | 3,669 | 387 | 12,828 | (12,149) | 4,735 | 4,735 | |
| Value | $56,643 | $7,109 | $125,493 | ($118,583) | $70,662 | ($3,494) | $67,168 | |
(1) Adjustments represent changes in the valuation or status of property as a result of fair market appraisals and/or court orders received during fiscal year 2002.
(2) The number of assets disposed during FY2002 only includes those assets which have been fully disposed. However, the value of assets disposed includes 80 partially disposed assets.
| Forfeited Property Category | Converted Financial Instrument/Property Deposit/Transfer of Seized Cash |
Destroyed/ Donated/ Transferred to GSA/ Other |
Sold/ Liquidated (1) | Official Use/ Transfer for Equitable Sharing | Returned Asset | Variance (2) | Total (3) | |
|---|---|---|---|---|---|---|---|---|
| Financial & Other Monetary Assets | Number | 92 | 10 | 12 | --- | 2 | 116 | |
| Value | $9,416 | $43 | $2,122 | --- | $17 | --- | $11,598 | |
| Real Property | Number | 6 | 10 | 286 | --- | 27 | 329 | |
| Value | $560 | $2,679 | $40,013 | --- | $4,526 | ($17) | $47,761 | |
| Personal Property | Number | 1 | 1,351 | 6,834 | 1,032 | 1,959 | 11,177 | |
| Value | $5 | $3,892 | $29,317 | $10,640 | $15,370 | --- | $59,224 | |
| Non-Valued | Number | --- | 670 | 4 | 5 | 14 | 693 | |
| Value | --- | --- | --- | --- | --- | --- | --- | |
| Total | Number | 99 | 2,041 | 7,136 | 1,037 | 2,002 | 12,315 | |
| Value | $9,981 | $6,614 | $71,452 | $10,640 | $19,913 | ($17) | $118,583 | |
(1) The sold/liquidated total dollar value does not agree to Donations and Forfeitures of Property on the Statement of Changes in Net Position or the Statement of Financing because the sold/liquidated amount represents the assets at their appraised values at forfeiture, and the Donations and Forfeitures of Property on the Statment of Changes in Net position and the Statement of Financing represents the proceeds realized upon disposition.
(2) The variance represents the difference between the value of the property when seized and recorded in CATS, and the value of the property when disposed.
(3) Some assets are disposed of in segments (e.g. part of an asset may be returned to the owner and part may be forfeited). As a result, the number of disposals on the A nalysis of Change may not agree to the number of disposals on the Method of Disposition.
B. Seized Property
The following tables show the analysis of change in and methods of disposition of property seized for forfeiture, excluding cash, during the FYs ended September 30, 2003 and 2002. The tables reflect the addition of ATF as a departmental participant in the AFP effective January 24, 2003.
| Seized Property Category | Beginning Balance | Adjustments (1) | Seized During the Period | Disposed During the Period (2) | Ending Balance | Liens and Claims | Ending Bal. Net of Liens | |
|---|---|---|---|---|---|---|---|---|
| Financial & Other Monetary Assets | Number | 432 | (218) | 323 | (158) | 379 | 379 | |
| Value | $38,433 | ($21,286) | $27,959 | ($3,162) | $42,044 | ($208) | $41,836 | |
| Real Property | Number | 301 | 15 | 312 | (305) | 323 | 323 | |
| Value | $47,385 | $2,132 | $57,338 | ($57,230) | $49,625 | ($7,992) | $41,633 | |
| Personal Property | Number | 8,123 | 781 | 19,027 | (18,940) | 8,991 | 8,991 | |
| Value | $83,977 | ($3,182) | $129,249 | ($113,551) | $96,493 | ($14,456) | $82,037 | |
| Non-Valued | Number | 625 | 44,007 | 13,508 | (18,194) | 39,946 | 39,946 | |
| Value | --- | --- | --- | --- | --- | --- | --- | |
| Total | Number | 9,481 | 44,585 | 33,170 | (37,597) | 49,639 | 49,639 | |
| Value | $169,795 | ($22,236) | $214,546 | ($173,943) | $188,162 | ($22,656) | $165,506 | |
(1) Adjustments represent changes in the valuation or status of property as a result of fair market appraisals and court orders received during the period as well as the addition of ATF as a DOJ law enforcement component, effective January 24, 2003. The ATF balances transferred to the Justice Forfeiture Program include 21 Financial & Other Monetary Assets valued at $94,000,478 Personal Property items valued at $3,419,000 and 43,698 Non-Valued items.
(2) Disposals in the Analysis of Change table may not agree with disposals on the Method of Disposition table as a result of partial dispositions.
| Seized Property Category | Converted Financial Instrument/Property and Deposit/Transfer of Seized Cash |
Destroyed/ Donated/ Transferred to GSA/ Other |
Sold/ Liquidated | Returned Asset | Forfeited (1) | Variance (2) | Total (3) | |
|---|---|---|---|---|---|---|---|---|
| Financial & Other Monetary Assets | Number | --- | 8 | --- | 47 | 103 | 158 | |
| Value | --- | $17 | --- | $1,423 | $1,722 | --- | $3,162 | |
| Real Property | Number | 2 | 10 | 5 | 29 | 261 | 307 | |
| Value | $120 | $500 | $1,089 | $4,785 | $50,736 | --- | $57,230 | |
| Personal Property | Number | --- | 129 | 8 | 2,638 | 16,173 | 18,948 | |
| Value | --- | $3,689 | $173 | $33,076 | $76,613 | --- | $113,551 | |
| Non-Valued | Number | --- | 52 | --- | 295 | 17,847 | 18,194 | |
| Value | --- | --- | --- | --- | --- | --- | --- | |
| Total | Number | 2 | 199 | 13 | 3,009 | 34,384 | 37,607 | |
| Value | $120 | $4,206 | $1,262 | $39,284 | $129,071 | --- | $173,943 | |
(1) Forfeitures reported on the Analysis of Change in Forfeited Property may be greater because some assets are not seized until after they are declared forfeited.
(2) Variances can result from differences between the value of the property when seized and the value of the property when disposed.
(3) Disposals in the Analysis of Change table may not agree with disposals on the Method of Disposition table as a result of partial disposition.
| Seized Property Category | Beginning Balance | Adjustments (1) | Seized During the Period | Disposed During the Period (2) | Ending Balance | Liens and Claims | Ending Bal. Net of Liens | |
|---|---|---|---|---|---|---|---|---|
| Financial & Other Monetary Assets | Number | 429 | (24) | 145 | (118) | 432 | 432 | |
| Value | $38,753 | ($1,398) | $6,011 | ($4,705) | $38,661 | ($228) | $38,433 | |
| Real Property | Number | 203 | 125 | 275 | (302) | 301 | 301 | |
| Value | $46,416 | $17,033 | $38,234 | ($46,533) | $55,150 | ($7,765) | $47,385 | |
| Personal Property | Number | 5,307 | 1,483 | 15,192 | (13,859) | 8,123 | 8,123 | |
| Value | $63,707 | $4,034 | $121,391 | ($91,977) | $97,155 | ($13,178) | $83,977 | |
| Non-Valued | Number | 822 | (203) | 722 | (716) | 625 | 625 | |
| Value | --- | --- | --- | --- | --- | --- | --- | |
| Total | Number | 6,761 | 1,381 | 16,334 | (14,995) | 9,481 | 9,481 | |
| Value | $148,876 | $19,669 | $165,636 | ($143,215) | $190,966 | ($21,171) | $169,795 | |
(1) Adjustments represent changes in the valuation or status of property as a result of fair market appraisals and/or court orders received during fiscal year 2002.
(2) The number of assets disposed during FY2002 only includes those assets which have been fully disposed. However, the value of assets disposed includes 9 partially disposed assets.
| Seized Property Category | Converted Financial Instrument/Property and Deposit/Transfer of Seized Cash |
Destroyed/ Donated/ Transferred to GSA/ Other | Sold/ Liquidated | Returned Asset | Forfeited (1) | Variance (2) | Total (3) | |
|---|---|---|---|---|---|---|---|---|
| Financial & Other Monetary Assets | Number | 2 | 8 | --- | 30 | 78 | 118 | |
| Value | $75 | $278 | --- | $342 | $4,011 | --- | $4,706 | |
| Real Property | Number | --- | 2 | 3 | 29 | 268 | 302 | |
| Value | --- | $155 | $370 | $2,020 | $43,988 | --- | $46,533 | |
| Personal Property | Number | --- | 146 | 6 | 2,034 | 11,684 | 13,870 | |
| Value | --- | $461 | $45 | $30,452 | $61,018 | --- | $91,976 | |
| Non-Valued | Number | --- | 15 | --- | 20 | 683 | 718 | |
| Value | --- | --- | --- | --- | --- | --- | --- | |
| Total | Number | 2 | 171 | 9 | 2,113 | 12,713 | 15,008 | |
| Value | $75 | $894 | $415 | $32,814 | $109,017 | --- | $143,215 | |
(1) Forfeitures reported on the Analysis of Change in Forfeited Property may be greater because some assets are not seized until after they are declared forfeited.
(2) The variance represents the difference between the value of the property when seized and recorded in CATS, and the value of the property when disposed.
(3) Some assets are disposed of in segments (e.g., part of an asset may be returned to the owner and part may be forfeited). As a result, the number of disposals on the Analysis of Change may not agree to the number of disposals on the Method of Disposition.
C. Anticipated Equitable Sharing in Future Periods
The statute governing the use of the AFF (28 U.S.C. §524(c)) permits the payment of equitable shares of forfeiture proceeds to participating foreign governments and state and local law enforcement agencies. The statute does not require such sharing and permits the Attorney General wide discretion in determining those transfers. Actual sharing is difficult to predict because many factors influence both the amount and time of disbursement of sharing payments, such as the length of time required to move an asset through the forfeiture process to disposition, the amount of net proceeds available for sharing, the elapse of time for Departmental approval of equitable sharing requests for cases with asset values exceeding $1 million, and appeal of forfeiture judgments. Because of uncertainties surrounding the timing and amount of any equitable sharing payment, an obligation and expense are recorded only when the actual disbursement of the equitable sharing payment is imminent. From 1998 through 2003, equitable sharing allocation levels averaged $246,045. The anticipated equitable sharing allocation level for FY 2004 is $236,000.
Note 7. General Property, Plant and Equipment (PP&E)
| Acquisition Cost | Accumulated Depreciation | Net Book Value | Useful Life | |
|---|---|---|---|---|
| Internal Use Software in Development | $2,409 | - | $2,409 | 7 years |
| Acquisition Cost | Accumulated Depreciation | Net Book Value | Useful Life | |
|---|---|---|---|---|
| Internal Use Software in Development | $842 | - | $842 | 7 years |
Note 8. Other Assets
| 2003 | 2002 | ||
|---|---|---|---|
| Intragovernmental | |||
| Advances to Others | $2,426 | $2,688 | |
| Total Other Assets | $2,426 | $2,688 |
Note 9. Non-Entity Assets
| 2003 | 2002 | |
|---|---|---|
| Intragovernmental | ||
| Investments, Net | $497,490 | $517,359 |
| Total Intragovernmental | $497,490 | $517,359 |
| Cash and Other Monetary Assets | 71,333 | 36,224 |
| Total Non-Entity Assets | $568,823 | $553,583 |
| Total Entity Assets | 707,783 | 675,356 |
| Total Assets | $1,276,606 | $1,228,939 |
Note 10. Other Liabilities
Other liabilities include seized funds invested in U.S. Treasury securities and seized cash not on deposit with the U.S. Treasury. In addition, the AFF is expected to pay third party claimants proceeds from the BCCI case. All other liabilities are liabilities with the public and are current liabilities of the AFF/SADF.
| Current | |
|---|---|
| Liability for Deposit Fund | $20,218 |
| Other Liabilities: | |
| Pending BCCI Distributions | 6,379 |
| Total Other Liabilities | $26,597 |
| Current | |
|---|---|
| Liability for Deposit Fund | $26,691 |
| Other Liabilities: | |
| Pending BCCI Distributions | 6,305 |
| Total Other Liabilities | $32,996 |
Note 11. Contingencies and Commitments
SFFAS No. 5 and SFFAS No. 12 contain the criteria for recognition and disclosure of contingent liabilities. A loss contingency is an existing condition, situation, or set of circumstances involving uncertainty as to possible loss. The uncertainty should ultimately be resolved when one or more future events occur or fail to occur. The likelihood that the future event or events will confirm the loss or the incurrence of a liability can range from probable to remote.
The AFF and SADF are parties to various legal actions and claims, some of which are purported class actions relating to seizure and forfeiture activity. These actions typically allege, among other things, the improper retention of earnings on seized assets or that forfeitures are invalid. In the opinion of management, the ultimate resolution of the proceedings, actions and claims will not materially affect the financial position or cost of operations of the AFF and SADF. The amount of loss or range of loss cannot be determined. However, management believes that the Government has meritorious defenses to these actions and that it acted properly at all times in administering seizure and forfeiture actions.
Note 12. Gross Cost and Earned Revenue by Budget Functional Classification
| Budget Functional Classification | Gross Cost | Earned Revenue |
Net Cost |
|---|---|---|---|
| Administration of Justice - 750 | |||
| AFP Expenses | |||
| Payment to Third Parties | $78,612 | $- | $78,612 |
| Asset Management Expenses | 24,329 | - | 24,329 |
| Special Contract Services | 55,269 | (3,473) | 51,796 |
| ADP Equipment | 14,802 | - | 14,802 |
| Forfeiture Case Prosecution | 14,094 | - | 14,094 |
| Forfeiture Training and Printing | 3,453 | - | 3,453 |
| Other Program Management | 14,562 | - | 14,562 |
| Distributions of Revenue | |||
| Equitable Sharing | 178,257 | - | 178,257 |
| Awards for Information | 14,641 | - | 14,641 |
| Purchase of Evidence | 4,378 | - | 4,378 |
| Equipping Conveyances | 443 | 443 | |
| Joint Law Enforcement Operations | 33,773 | - | 33,773 |
| Contracts to Identify Assets | 2,400 | - | 2,400 |
| Net Cost of Operations | $439,013 | $(3,473) | $435,540 |
| Budget Functional Classification | Gross Cost | Earned Revenue |
Net Cost |
|---|---|---|---|
| Administration of Justice - 750 | |||
| AFP Expenses | |||
| Payment to Third Parties | $229 | $- | $229 |
| Asset Management Expenses | 13,931 | - | 13,931 |
| Special Contract Services | 27,638 | (3,473) | 24,165 |
| ADP Equipment | 6,028 | - | 6,028 |
| Forfeiture Case Prosecution | 7,362 | - | 7,362 |
| Forfeiture Training and Printing | 2,880 | - | 2,880 |
| Other Program Management | 13,338 | - | 13,338 |
| Distributions of Revenue | |||
| Equitable Sharing | - | - | - |
| Awards for Information | 15,235 | - | 15,235 |
| Purchase of Evidence | 4,556 | - | 4,556 |
| Equipping Conveyances | - | - | - |
| Joint Law Enforcement Operations | 19,073 | - | 19,073 |
| Contracts to Identify Assets | 2,497 | - | 2,497 |
| Net Cost of Operations | $112,767 | $(3,473) | $109,294 |
| Budget Functional Classification | Gross Cost | Earned Revenue |
Net Cost |
|---|---|---|---|
| Administration of Justice - 750 | |||
| AFP Expenses | |||
| Payment to Third Parties | $32,988 | $- | $32,988 |
| Asset Management Expenses | 55,231 | - | 55,231 |
| Special Contract Services | 49,786 | (3,661) | 46,125 |
| ADP Equipment | 8,710 | - | 8,710 |
| Forfeiture Case Prosecution | 11,206 | - | 11,206 |
| Forfeiture Training and Printing | 3,519 | - | 3,519 |
| Other Program Management | 14,295 | - | 14,295 |
| Distributions of Revenue | |||
| Equitable Sharing | 232,825 | - | 232,825 |
| Awards for Information | 16,956 | - | 16,956 |
| Purchase of Evidence | 4,167 | - | 4,167 |
| Equipping Conveyances | 364 | - | 364 |
| Joint Law Enforcement Operations | 31,072 | - | 31,072 |
| Contracts to Identify Assets | 2,223 | - | 2,223 |
| Net Cost of Operations | $463,342 | $(3,661) | $459,681 |
| Budget Functional Classification | Gross Cost | Earned Revenue |
Net Cost |
|---|---|---|---|
| Administration of Justice - 750 | |||
| AFP Expenses | |||
| Payment to Third Parties | $- | $- | $- |
| Asset Management Expenses | 22,605 | - | 22,605 |
| Special Contract Services | 31,484 | (3,661) | 27,823 |
| ADP Equipment | 369 | - | 369 |
| Forfeiture Case Prosecution | 5,867 | - | 5,867 |
| Forfeiture Training and Printing | 2,444 | - | 2,444 |
| Other Program Management | 11,463 | - | 11,463 |
| Distributions of Revenue | |||
| Equitable Sharing | - | - | - |
| Awards for Information | - | - | - |
| Purchase of Evidence | - | - | - |
| Equipping Conveyances | - | - | - |
| Joint Law Enforcement Operations | 28,403 | - | 28,403 |
| Contracts to Identify Assets | 2,460 | - | 2,460 |
| Net Cost of Operations | $105,095 | $(3,661) | $101,434 |
Note 13. Permanent Indefinite Appropriations
28 U.S.C. § 524(c)(4) authorized the Attorney General to retain AFF receipts to pay program operations expenses, equitable sharing to state and local law enforcement agencies who assist in forfeiture cases, and lienholders. This permanent indefinite authority is open-ended in its period of availability and amount.
Note 14. Statement of Budgetary Resources vs Budget of the United States Government
Reconciliations of budgetary resources, obligations incurred, and outlays from the Statement of Budgetary Resources to amounts included in the Budget of the United States Government for the year ending September 30, 2002 is presented below. The reconciliation as of September 30, 2003, is not presented because the Budget of the United States Government is not available for that period.
| Budgetary Resources |
Obligations Incurred |
Outlays | |
|---|---|---|---|
| As of September 30, 2002 | |||
| Statement of Budgetary Resources | $882,00 | $486,000 | $475,000 |
| Unavailable Collections Carried Forward | (113,000) | - | - |
| Forfeiture Activity not in the Budget | (85,000) | (40,000) | (45,000) |
| Unfilled Customer Orders not Realized | 2,000 | - | - |
| Other | (1,000) | (1,000) | |
| Budget of the United States Government | $685,000 | $445,000 | $430,000 |
In addition to the above, a reconciliation with the SF-133, Report on Budget Execution and Budgetary Resources, was also performed and confirmed that differences between the Statement of Budgetary Resources and the SF-133 are also the result of the adjustments identified above.
Note 15. Apportionment Categories of Obligations Incurred
Apportionment categories are determined in accordance with the guidance provided in OMB Circular A-34, Instructions on Budget Execution. Category A represents resources apportioned for calendar quarters. Category B represents resources apportioned for program operations expenses, equitable sharing payments, and prior year surplus allocations.
| Direct Obligations | Reimbursable Obligations | Total Obligations Incurred | |||
|---|---|---|---|---|---|
| For the Year Ended September 30, 2003 | |||||
| Amounts Apportioned Under: | |||||
| Category A | $16,314 | $- | $16,314 | ||
| Category B | 461,828 | 3,473 | 465,301 | Total | $478,142 | $3,473 | $481,615 |
| For the Year Ended September 30, 2002 | |||||
| Amounts Apportioned Under: | |||||
| Category A | $18,331 | $- | $18,331 | ||
| Category B | 464,425 | 3,661 | 468,086 | Total | $482,756 | $3,661 | $486,417 |
Note 16. Allocation Transfers of Appropriation
Allocation transfers by the AFF include transfers of Super Surplus Allocations and transfers of forfeited property to participating agencies for official use:
| 2003 | 2002 | |
|---|---|---|
| Transfers-out of Super Surplus Allocations | $11,699 | $18,937 |
| Transfers-out of Forfeited Property for Official Use | 8,403 | 6,134 |
| Total Allocation Transfers-out | $20,102 | $25,071 |
| 2003 | 2002 | |
|---|---|---|
| Community Relations Service | $- | $374 |
| Executive Office of U.S. Attorneys | - | 44 |
| Information Resources Management Staff, Justice Management Division |
- | 3,791 |
| Office of the Inspector General | - | 220 |
| Office of Justice Programs | 9,452 | 25,000 |
| U.S. Marshals Service | - | 2,000 |
| Total Allocations | $9,452 | $31,429 |
| 1992 Super Surplus | $3,390 | $3,553 |
| 1993 Super Surplus | 1,483 | 1,483 |
| 1996 Super Surplus | 64 | 108 |
| 1998 Super Surplus | - | 239 |
| 1999 Super Surplus | 4,515 | 26,046 |
| Total Allocations | $9,452 | $31,429 |
During FY 2003, $11,699 in prior years' surpluses were transferred out to the agencies listed above, $8,329 was owed and $2,426 was advanced to these agencies for super surplus allocations in the current and prior years. On September 30, 2002, $18,937 was transferred out, $8,563 was owed, and $2,688 was advanced.
Non-exchange revenue consists of income from the investment of the AFF and SADF in U.S. Treasury securities. The earnings of BCCI funds held by the AFF and SADF are tracked separately due to special disposition requirements.
| 2003 | 2002 | ||
|---|---|---|---|
| Income from AFF investments | $5,986 | $9,706 | |
| Income from SADF investments | 6,631 | 10,703 | |
| Income from BCCI investments | 74 | 111 | |
| Total Investment Income | $12,691 | $20,520 |
Note 18. Donations and Forfeitures
Forfeiture income includes forfeited cash, sales of forfeited property, penalties in lieu of forfeiture, recovery of returned asset management costs, judgment collections, and other miscellaneous income. Net forfeiture income totaled $486,120 and $423,628 in FYs 2003 and 2002, respectively.
Forfeiture income is returned to certain individuals or agencies that participated
in seizures that led to forfeiture and is a component of net forfeiture income,
above.
| 2003 | 2002 | ||
|---|---|---|---|
| Payments to individuals or organizations for proceeds
from assets forfeited and deposited into the AFF and subsequently returned to them through a settlement agreement or by court order. |
$12,786 | $7,107 | |
| Return of forfeiture income to the Treasury Forfeiture
Fund for its participation in seizures that led to forfeiture. |
16,871 | 14,329 | |
| Return of forfeiture income to the U.S. Postal
Service for its participation in seizure that led to forfeiture. |
2,230 | 3,212 | |
| Return of forfeiture income to other Federal agencies
for their participation in seizures that led to forfeiture. |
880 | 741 | |
| Return to
the Resolution Trust Corporation, the FDIC or other Federal financial institutions or regulatory agency monies recovered under FIRREA. |
4 | 6,532 | |
| Total Return of Forfeiture Income | $32,771 | $31,921 |