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resources; participate in the design of ac
counting and information systems to en sure that appropriate internal controls are
built into the systems; and assist in inter nal investigations where auditing expertise
may be crucial in developing evidence for a successful criminal prosecution.
The people working in Internal Audit are mostly professional auditors,
many of whom have attained professional recognition as Certified Public Account ants. They are governed by the rules of
professional conduct issued by the Amer ican Institute of Certified Public Ac
countants, as well as auditing standards published by the General Accounting Of fice, which is the Federal Government's principal internal audit organization. Professional rules of conduct and audit ing standards are extremely important. They serve as the foundation for ensur ing that the auditors' conclusions are consistently fair. And it is this consistency that gives management the confidence that the auditor's products are reliable and useful as a management tool.
Independence, objectivity and fair ness are the key elements of those rules
and standards. Independence means that the auditor and the audit organization re main separate from Customs' day-to-day activities so as to minimize the possibility of conflicts of interest. Objectivity re
quires that the method used to conduct an audit be based on established, scien
tific techniques and accepted audit prin
ciples and standards designed to ensure that conclusions made by auditors in a
report are dependable and free from material errors. This last point is impor
tant because it gets to the core of an auditor's product, which is an opinion about the state or condition of the activity being audited.
So, what kinds of things are audited, and how does the auditor go about it? For
all practical purposes, almost any activity
can be audited. But generally, audits
focus on management systems, especially
those that are closely related to the con
trol of resources—which are money, peo
ple and property. Typical examples of
these systems are: financial accounting
procedures and records used to account
for Customs use of public funds, time-
and-attendance systems used for payroll
purposes and property records used to ensure that supplies and equipment are
used for their intended purposes. Because an auditor seldom has the opportunity to make a 100-percent examination of records, he or she must rely on statistical sampling techniques.
Audits may also look at operational
programs. For example, a recent audit was conducted to see if the resources de
voted to Operation EXODUS were con sistent with those authorized by Congress to stem the flow of strategic technology out of the United States. An important area of audit interest is contracts. As mentioned earlier, pre-award contract audits are conducted to see if the prices contractors want to charge Customs are reasonable and fair. Other contract audits are done to verify that contractors are living up to their agreements with Customs.
As you can see, all of these kinds of
audits lead to one point of interest: the
reasonable assurance that Customs is get
ting a decent bang for its buck. Probably
the single most important reason for
auditing is that programs, systems and
activities, are designed and run by peo
ple. People are not perfect; they some times make mistakes—honestly or other
wise. Add to this the complexity of modern business and government, where
systems are often beyond the understand
ing of any one individual and effective communication is difficult at best.
The report is issued in draft form, to
the audited program's officials for their
review and comment. This gives them a
chance to spot any material errors and to
explain their points of view on issues where they differ with the auditor. These
comments are used to make corrections to the report, and are included as a part
of the final report, giving a balanced pre sentation of the opinions of the auditors and the audited program's officials.
The Management Inspection Function
The Office of Management Inspec tion was established in 1979. The Office was created in order to provide an objec tive review of the management of a total
region, crossing all major program and
organizational lines. During a fiscal year, the Office normally conducts two re
gional inspections and two follow-up
inspections. The latter inspections are scheduled six months after issuance of a
final management inspection report.
The management inspection report is not at the level of detail of an audit report, nor does it take the form of a
compliance survey conducted by a func tional office. Rather, the management
inspection report analyzes specific Head quarters and Regional programs and
policies as examples of overall manage ment effectiveness. The reports not only
identify program and management areas requiring corrective action, but also iden tify innovative local practices which would be applicable on a broader basis throughout the Service. Report recom mendations are directed at management
officials who are in the best position to facilitate corrective steps, whether located in Service Headquarters, the region, district or ports.
Following completion of the on-site
phase of an inspection, which normally takes from three to five weeks (including
interviews at the regional headquarters, all districts and selected ports), a close- out presentation is given to the Regional Commissioner. This briefing includes written identification of inspection find
ings and is intended to bring to the Regional Commissioner's attention a synopsis of inspectional findings. This meeting also provides a forum to correct any errors of fact. A draft report, in cluding comments from the region, is subsequently sent to all Assistant Com missioners, the affected Regional Com missioner, and the Commissioner. After receiving comments from each of these senior level managers, a final report is issued. This report describes the com ments of all interested parties and identi fies the actions that are required by the Commissioner.
In Fiscal Year 1983, the Office
assumed oversight responsibilities for the
program evaluation function in Service
Headquarters. As part of this respon
sibility, all projected Headquarters evaluations are reported to the Deputy
Commissioner at the start of a fiscal year. This report not only provides manage ment with an identification of pending evaluations, but also provides oppor tunities for redirecting efforts when priorities require a change or if duplica tion of effort is evident. In addition, the Office of Management Inspection inde pendently conducts program evaluations at the request of the Commissioner, Deputy Commissioner, or Assistant Commissioners. Management Inspec tion has conducted the following program evaluations: Office of Investigations Case Management, Sector Communications, Operation Exodus and Custody of Seizures.
Personnel assigned to the Office of
Management Inspection are selected based on their in-depth knowledge of a
particular Customs discipline: classifica tion and value, inspection and control,
enforcement, administration, et al. Pres
ently, there are 11 full-time professionals on the staff. In addition, both manage
ment inspections and program evalua tions often require staff augmentation
through the detailed assignment of Customs field managers. This provides
the Office with current expertise in a par ticular functional program area and also
permits field managers to broaden their understanding of the Customs mission.
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