accountability report - atf
TRANSCRIPT
DEPARTMENT OF THE TREASURY
ACCOUNTABILITY REPORT
2000USA
Working for a Sound and Safer America. . .Through Innovation and Partnerships
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TDirector’s Message
he sensitive products that lie at the core of themission of the Bureau of Alcohol, Tobacco andFirearms (ATF) bring careful scrutiny of ouractions by all concerned. At ATF, we use the
strict accountability that flows from this scrutiny tomake a better agency that is responsive to the Ameri-can people. Our serious approach to accountability isreflected in the ways we manage our financial andother resources, and in the efficient and effectiveprograms we deploy to carry out our statutory respon-sibilities. In performing our important and oftendangerous mission, the men and women of ATF arededicated to reducing violent crime, collecting therevenue, and protecting the public. In a clear demon-stration of this dedication and commitment, this yearwe received our sixth Unqualified Audit Opinion.
Fiscal Year 2000 proved to be the gateway to a year ofe-based commerce in government. ATF followed apioneering path of instituting technology-basedprograms that facilitate our mission. This actioncovered not only our law enforcement and regulatorymission, but encompassed many of our administrativefunctions. We were pleased to roll out a new account-ing and financial management reporting system. Inthis bold step towards the future of government andbusiness, we entered into a partnership with theDepartment of the Treasury’s Financial ManagementService to develop methods for the electronic filing of tax payments and returns making it easier to conductbusiness with us. We are proud of these initiatives which demonstrate our willingness to work with all of ourcustomers.
Through technology, Fiscal Year 2000 also presented many opportunities to display ATF’s experience andexcellence in the arenas of alcohol, tobacco and firearms enforcement. A web database was introduced con-taining all Certificates of Label Approval (COLAs) issued after January 1, 1996. With more than 110,000 COLAson-line, alcohol industry members and the public are now able to view label applications. With the implementa-tion of the Federal firearms licensee eZ Check system, we have strengthened our working relationships withindustry and can further protect consumers. We also were able to encourage our law enforcement partners atthe Federal, State, and local levels everywhere to “follow the gun,” by instituting Online LEAD and requestingthat all evidentiary firearms be traced.
An indication of the efficiency and efforts of ATF is noted in our growing budget and the use of the resources weare appropriated by Congress. Land was cleared for our National Laboratory and Fire Research Center and wefinalized site selection for our new Headquarters facility. We are proud to have implemented a pay-bandingsystem for several series of positions that will focus a rating and appraisal system and enable us to hire andretain the best and the brightest chemists, fire protection engineers, and computer specialists. In addition, ourbudget has allowed for greater hiring, done in part through the initiation of the Special Agent Recruitment Centerand the implementation of “Schedule B” hiring plan for special agents.
The preceding year has been one of growth and achievement. I am proud of the work accomplished by the menand women of ATF. We strive for excellence and are always willing to accept the challenges that accompany our
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mission of reducing violent crime, collecting revenue, and protecting the public. We are proud to meet thechallenges and opportunities for continued growth with innovation, hard work, and the spirit of determination.
This annual accountability report is one of many reports that ATF has issued over the past few years, sending astrong and open message to the public and our customers. By this report, we are asking the public and thecitizens we protect and work for to review our mission, and be clear about our purpose, our policies, and ourprojects. Only through a thoughtful and meticulous accounting of our actions, revealed in this report and otherswe have produced over the years, can the public be best served and knowledgeable about this Bureau. It is anhonest and rigorous business practice that demonstrates the high standards the men and women of this Bureauproudly follow.
Thank you.
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Message from the Chief Financial Officer
W
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hen we started Fiscal Year 2000we knew there were significantchallenges ahead. In some ways itwas akin to a homeowner taking on
a total house overhaul. Our challenge was tomove from our comfortable but aging (mainframe-based) core financial system to a best ofbreed (client server) architecture.
A full-scale implementation would have to runconcurrently with the phase out of the oldsystem. In October 1999, over 500 recentlytrained users peered into the live environment forthe first time. The conversion team consisting ofATF employees and contractors worked aroundthe clock for weeks, dealing with user questionsand managing a test environment that wasstretched to the limits.
The good news is that Fiscal Year 2000 endedwith our new system in place and operating. And just as proud craftsmen would look back with pride ontheir refurbished home, our technicians and specialists who implemented the new system are extremelypleased with the product of their labors.
Though sophisticated systems enable us to work at higher levels of productivity and accuracy, it is reallythe resilience of the men and women of ATF who make great achievments seem routine.
The skilled and resolute staffs within the Bureau have made it possible for us to celebrate anotherexceptional accomplishment -- a sixth straight Unqualified Audit Opinion! Receiving this opinion is all themore impressive given the arduous task of converting data, training personnel and redefining ourfinancial culture as transitioned to our new system.
This accountability report is more than a collection of facts and numbers. It is really the story of a familyof very talented and dedicated men, women and a few canines who seek to make America a safer andfiscally sound nation. Their efforts are chronicled not only here but also in the newspapers, magazines,and documentaries published all across America over the past year.
I hope you enjoy our story. We are very proud of our accomplishments and humbled by the trust that isplaced in us to be good stewards of the taxpayer’s resources.
e-mail address [email protected]
From left to right, William T. Earle, Chief Financial Officer (CFO);Marguerite R. Moccia, Deputy CFO; and Vivian A. Baran, FinancialManager.
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Table of Contents
Message from the Director .......................................................................................................................... i
Message from the Chief Financial Officer ..................................................................................................... iii
FY 2000 Highlights .................................................................................................................................... 1
Management’s Discussion and Analysis ....................................................................................................... 5
Mission and Organizational Structure ................................................................................................ 5
Major Challenges Facing ATF ........................................................................................................... 7
Performance Goals and ResultsReduce Violent Crime ............................................................................................................... 9Collect Revenue ..................................................................................................................... 18Protect the Public ................................................................................................................... 22Bureau-wide Programs ............................................................................................................ 27
Financial Results, Position and Condition........................................................................................ 35Overview of Financial Data ...................................................................................................... 35Budget Integrity ..................................................................................................................... 35Cost Accounting and Performance Measurement ...................................................................... 38Financial Performance ............................................................................................................ 39Limitations of the Financial Statements .................................................................................... 41
Systems and Controls .................................................................................................................. 42Financial Systems .................................................................................................................. 42Federal Managers’ Financial Integrity Act (FMFIA) Summary ....................................................... 43Policies and Procedures .......................................................................................................... 43
Auditor’s Report on Financial Statements................................................................................................... 44
Financial Statements ................................................................................................................................ 50
Notes to the Financial Statements ............................................................................................................. 57
Required Supplementary Information ........................................................................................................ 73
Principal Officers of ATF............................................................................................................................ 75
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2000 Highlights
Reduce Violent Crime
❖ Conducted approximately 1,000 comprehensivecompliance inspections of Federal firearms licens-ees (FFL), based on recommendations to inspectdealers with indicators of illegal firearms traffickingin a February 2000 ATF report entitled “Commercein Firearms in the United States.” ATF inspectedretail firearm dealers who did not cooperate withfirearm traces and had more than 10 firearmstraced to them in 1999. As a result of theseinspections, 1,336 unresolved traces were com-pleted.
❖ Completed an automated referral system toprocess and track referrals received from theFederal Bureau of Investigation (FBI) to implementthe National Instant Criminal Background CheckSystem (NICS). Since the inception of NICSthrough September 30, 2000, ATF had receivedand processed over 140,000 referrals from theFBI, and after review, sent over 40,000 of thosereferrals to field offices for investigation.
❖ Trained the first group of field agents on YouthCrime Gun Interdiction Initiative (YCGII) for thepurpose of delivering firearms instruction block toState and locals. The Office of Training andProfessional Development (TPD) developed atraining CD-ROM to aid in the delivery of firearmsidentification and tracing procedures for State andlocal police officers, Federal law enforcementofficers, and ATF personnel in support of YCGII.
❖ Completed the construction of a state-of-the-arttraining facility in Front Royal, Virginia, for acceler-ant and explosives detection canines for State,local, and international law enforcement.
❖ Completed the development of and disseminatedthe InterFIRE training CD-ROM, a computerizedvirtual reality training tool for fire investigators atevery level. This training CD is complemented bythe InterFIRE website, which provides a continu-ously updated resource for in depth information onfire investigation methodologies, training, andresearch.
Collect Revenue
❖ Collected $14.1 billion in revenue generated fromFederal excise taxes imposed on alcohol, tobacco,firearms, and ammunition.
❖ Investigated 125 diversion cases of alcohol andtobacco products, resulting in 70 defendantsrecommended and $2 million in seized propertycredited to the Treasury Asset Forfeiture Fund. AUnited States distillery made restitution of $1million to the Ukrainian Republic for smugglingdistilled spirits. The distiller also had its operatingpermit suspended for seven days and submittedan offer-in-compromise for the recordkeepingviolations.
❖ Conducted 1,347 inspections at revenue produc-ing plants, resulting in 1,371 violations and $4million in additional excise taxes assessed.
❖ Implemented new field inspection targetingprograms designed to identify those operationsthat pose the greatest risk to the revenue.
❖ Entered E-Government partnership with theFinancial Management Service to develop methodsfor electronically filing ATF reports, tax payments,and returns.
Protect the Public
❖ Settled a total of nine (9) trade practice, advertis-ing, and labeling investigations; resulting in $1million in offers in compromise and one five-daysuspension.
❖ Reviewed 65 alcohol advertisements; resulting intwo investigations, 10 corrections, and threewithdrawals from the market.
❖ Implemented new field inspection targetingprograms designed to identify those operationsthat pose a risk to protect the public with regard toalcohol product integrity.
❖ · Enhanced the alcohol sampling program by select-ing seven cities for targeted sampling. Samplingfocused on imported and cultural products result-ing in over 381 products found to be not incompliance out of 1,071 tested.
❖ Found and corrected a total of 1,119 publicsafety violations during explosives complianceinspections.
❖ Launched “FFL EZ Check” — an online Federalfirearms license (FFL) authenticator website — toreach out to and develop new working relation-ships with the firearms industry and consumers,and to strengthen existing relationships. Online“FFL EZ Check” aids the firearms industry in
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preventing the fraudulent use of their licenses byindividuals who alter copies of licenses to illegallyacquire and supply firearms to criminals and youth.The web site allows a Federal firearms licenseewho has a copy of a Federal firearms license toverify or authenticate the license prior to shippingor disposing of a firearm(s) to the licensee. Theweb site verifies the information shown on thelicense.
❖ Implemented a highly trained cadre of ATF explo-sives enforcement officers who are the onlyFederal law enforcement divers in the UnitedStates qualified to dive for improvised explosivedevices (IEDs). The officers are frequently calledupon by State and local law enforcementagencies and ATF agents in support of criminalinvestigations.
❖ Developed an ATF-funded underwater explosivesrecovery school for State and local bomb techni-cians/divers. ATF co-developed this course withthe Edmond, Oklahoma Police Department.
Bureau-wide Programs
❖ Implemented Advanced Explosives DestructionTechniques training (AEDT) for State and localcertified bomb technicians and ATF certifiedexplosives specialists. This training providesadvanced instruction in the areas of destructionand disposal of bulk explosives, deterioratedexplosives, fireworks, ammunition, and precursorchemicals. This much-needed course was imple-mented following a number of fatalities to bombtechnicians during disposal operations over thelast five years.
❖ Distributed 300 inert explosives kits to ATF specialagents throughout the United States. These kitswill be used to educate law enforcement andcivilian groups in the recognition and danger ofexplosives.
❖ Successfully converted ATF’s financial systemfrom a mainframe to client-server environmentand re-engineered 20 major business processes.
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The new system was deployed to over 500 usersnationwide, and nearly 7,500 staff hours oftraining were provided in the three months priorto conversion.
❖ Upgraded the Bureau property system to theclient-server version of the software. This versionsignificantly improves performance and will allowfor access to the system throughout the Bureau.In FY 2001, ATF will evaluate several options andselect one that will best permit the integration ofthe property application with the financial system.
❖ Developed and implemented the Department ofthe Treasury’s Demonstration Project for Desig-nated Critical Positions within the Bureau. Con-verted employees into the project beginning inJanuary 2000. The pilot project, established byCongress in 1998, allows Treasury to test newpersonnel management practices designed toimprove Treasury’s capacity to recruit, develop,and retain a workforce of the highest caliber; andcovers 950 positions within ATF, Secret Service,and U.S. Customs Service. The DemonstrationProject includes a broad-banding and pay-for-performance compensation system and otherflexible recruitment and retention options; such asexpanded recruitment and relocation bonuses,retention allowances, certification and licensurebonuses, and education supplements. Approxi-mately 90 percent of the eligible employeeselected to participate in the Project. Authority forthe Project ends on October 19, 2001.
❖ Assigned a Senior Executive to head the Recruit-ment Center (RC). This new Deputy AssistantDirector will be responsible for expediting andstreamlining the recruiting and hiring process. Thenew RC will be instrumental in the hiring of inspec-tors and special agents, who are the mainlineoccupants to help fight violent crimes, collect therevenue owed, and protect the public.
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Vision“Working for a Sound and Safer America……Through Innovation and Partnerships”
The Bureau of Alcohol, Tobacco and Firearms (ATF) must respond to the public outcry againstcrime, violence, and other threats to public safety. We also must continue to do our part tomaintain the economic stability of the country. Our vision will help us chart the course tochange the way we do business and achieve new levels of effectiveness and teamwork.
ATF ValuesThe Bureau of Alcohol, Tobacco and Firearms:
We value each other and those we serve.
We will:
● Set and uphold the highest standards of excellence and integrity;
● Provide quality service and promote strong external partnerships; and
● Develop a diverse, innovative, and well-trained work force in order toachieve our goals collectively.
MissionThe Bureau of Alcohol, Tobacco and Firearms (ATF) is a law enforcement organization withinthe United States Department of the Treasury with a unique combination of responsibilitiesdedicated to reducing violent crime, collecting revenue, and protecting the public.
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Activity Programs Performance Measures
Reduce Violent Crime:
Effectively contribute to a saferAmerica by reducing the futurenumber and cost of violentcrimes.
Collect Revenue:
Maintain a sound revenuemanagement and regulatorysystem that continues reducingtaxpayer burden, improvesservice, collects the revenuedue, and prevents illegal diver-sion.
Protect the Public:
Protect the public and preventconsumer deception in ATF’sregulated commodities.
● Deny criminals access tofirearms.
● Safeguard the public fromarson and explosivesincidents.
● Remove violent offendersfrom our communities.
● Prevent violence throughcommunity outreach.
● Fully implement theNational Revenue Center.
● Collect all revenue that isrightfully due.
● Use electronic commerce.
● Assure the integrity of theproducts, people, andcompanies in the market-place.
● Ensure compliance withlaws and regulationsthrough education, inspec-tion, and investigation.
● Inform the public.
● Crime-related costs avoided.
● · Future crimes avoided.
● Number of ATF and non-ATFpersons trained/developed.
● · Number of firearms traces.
● Average trace response time.
● Taxes/Fees collected fromalcohol, tobacco, firearmsand explosives industries.
● Ratio of taxes and feescollected vs. resourcesexpended.
● Burden hours reduced.
● Response to unsafeconditions and productdeficiencies discovered(explosives).
● The number of commodityseminars held.
● Number of inspections(explosives).
● Percent of populationinspected (firearms).
ATF’s Activities, Programs,and Performance Measures
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T he Bureau of Alcohol, Tobacco and Firearms(ATF) is a Federal law enforcement organizationthat serves as the nation’s expert on four highly
regulated consumer products: alcohol, tobacco,firearms, and explosives. These products requirespecial attention due to the important social conse-quences resulting from their misuse or abuse. ATFrepresents a uniquely concentrated resource forproviding investigative; regulatory; tax collection; andtechnical, scientific, and legal expertise relating tothese products. This unique combination of tools andskills allows ATF to provide a focused, flexible, andbalanced approach to protecting the public’s legitimateaccess to these commodities while fighting unlawfuluse and trafficking.
ATF’s National Headquarters, located in Washington,DC, consists of offices that develop major policies andprograms in accordance with the applicable laws andregulations that ATF enforces. The ATF executivestructure consists of the Director, Deputy Director,Chief Counsel, and the Assistant Directors for FieldOperations; Firearms, Explosives and Arson; Alcoholand Tobacco; Inspection; Liaison and Public Informa-tion; Management/Chief Financial Officer; Science andTechnology/Chief Information Officer; and Training andProfessional Development. These executives form thecore of the Bureau’s Strategic Leadership Team andInvestment Review Board. The Office of the Directorincludes the Deputy Director, Ombudsman, andExecutive Assistants for Legislative Affairs, EqualOpportunity, and the Strategic Planning Office.
Geographically, ATF has offices in every major U.S. cityand in Mexico, Canada, Colombia, Guam, U.S. VirginIslands, the Commonwealth of Puerto Rico, andFrance. The field structure comprises twenty-three(23) Field Divisions strategically located throughoutthe United States, with a single executive headingeach office and having responsibility for all law en-
forcement and revenue activities assigned within theOffice of Field Operations. Plans are underway for fielddivisions to have on-site legal and forensic auditsupport and equal opportunity policy advisors. At thistime, ATF has Counsel offices in 15 field divisions(Atlanta, Boston, Charlotte, Chicago, Columbus, Dallas,Detroit, Miami, New Orleans, New York, Philadelphia,Phoenix, San Francisco, Tampa, and Washington).
The Office of Equal Opportunity has six Equal Employ-ment Opportunity (EEO) managers, one each in SanFrancisco, Chicago, New York, Dallas, Atlanta andHeadquarters. Each field division has been assignedto one of these six EEO managers.
In addition, ATF operates the following service centersand training facilities throughout the United States:
❖ National Tracing Center in Falling Waters, WestVirginia.
❖ National Licensing Center in Atlanta, Georgia.
❖ National Revenue Center in Cincinnati, Ohio.
❖ Laboratories in Maryland, Georgia, and California.
❖ Canine Training Center in Front Royal, Virginia.
❖ ATF Academy, located at the Federal LawEnforcement Training Center in Glynco, Georgia,and a satellite office at Fort McClellan, Alabama.
As of September 30, 2000, ATF had 4,576 employeeson board, 4,472 of which were full-time permanentemployees. Additional information on ATF’s programsis provided in the Management’s Discussion andAnalysis section of this report. ATF’s Internet site alsocontains other supporting documentation and refer-ence materials. It can be accessed at http://www.atf.treas.gov.
Management’s Discussion and AnalysisMission and Organizational Structure
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Department of the TreasuryBureau of Alcohol, Tobacco and Firearms
Organizational Structure
Executive Staff
Assistant DirectorFirearms, Explosives
& Arson
Assistant DirectorField Operations
Assistant DirectorAlcohol & Tobacco
Assistant DirectorTraining &
ProfessionalDevelopment
Assistant DirectorInspection
Assistant DirectorManagement/CFO
Assistant DirectorScience &
Technology CIO
Assistant DirectorLiaison & Public
Information
Executive AssistantLegislative Affairs
Executive AssistantEqual Opportunity
ChiefStrategic Planning
Office
DeputyChief Counsel
Chief CounselOmbudsman
Deputy Director
Director
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Major ChallengesFacing ATFAt the beginning of fiscal year 2000, ATF faced anumber of challenges, including the calendar year2000 conversion (Y2K), which was of universalconcern. A more immediate concern was the conver-sion of the accounting system from the mainframe-based Financial Management Information system(FMIS) to the client-server-based Financial ResourceDesktop System (FReD). ATF was also involved in apilot of a Treasury-wide human resource system. Inaddition, looming on the horizon was the prospect ofobtaining approval on a new ATF Headquarters buildingand the ground breaking for a new National LaboratoryCenter (NLC).
ATF successfully met the challenge of implementingthe new accounting system; had no glitches duringthe Y2K rollover; and encountered few problems inits participation in the human resources pilot. Theobjectives associated with the new ATF Headquartersbuilding and the NLC are intact and moving forward.Ultimately, the new facilities will improve morale, andin the case of the NLC, provide a platform for newperformance challenges for future ATF programs.
New Buildings Projects
Initiatives and final congressional authorization leadingto new technologically upgraded and safer facilitiesfor the Bureau were met in fiscal year 2000. The goalis to occupy both buildings within the next four years.The completion of these two facilities for ATF will pro-vide radically improved efficiency of mission functions.The technology infrastructure capabilities for ATF’sfuture will be upgraded; and the Bureau will be situatedtoward the forefront of investigative and regulatorysupport, law enforcement operations, and delivery ofservices to industry, State and local customers, andthe public.
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National Laboratory Center
The new ATF National Laboratory Center (NLC) on theAmmendale Business Park Campus in Northern PrinceGeorges County, Maryland, is being developed by theGeneral Services Administration (GSA) for ATF. TheNLC will provide new, modern space to conductinvestigations and testing, more effective facilitiestechnologies, and improved safety conditions meetinglaboratory accreditation requirements. The NLC alsohas been designed to facilitate the investigation,research and data collection of fire and arson cases forATF and the international fire science community. Thedevelopment of the new NLC is crucial to the success-ful implementation of ATF’s Strategic Plan, a portion ofwhich addresses improved investigations in support ofcriminal enforcement in all ATF jurisdictional areas,including bombings and major fires.
The new NLC will house three different laboratories andcontinue as the administrative headquarters for theentire ATF Laboratory System. The Forensic ScienceLaboratory (FSL) and Alcohol and Tobacco Laboratory(ATL) will be relocated from their current location inRockville, Maryland. The third laboratory, the FireResearch Laboratory (FRL) will provide a new researchcapability for the Bureau. The new NLC was designedto meet the requirements of each laboratory’s uniquefunctions and critical demand.
The FSL’s mission is to support crime scene investiga-tions for ATF and State and local law enforcementagencies relating to firearms, bombings and majorfires.
The ATL conducts chemical, physical and instrumentalanalyses on the alcohol and tobacco products that ATFregulates. This work supports the Bureau’s regulatoryenforcement activities to collect the revenue due thegovernment and to protect the public in their con-sumption of these products.
The FRL will concentrate on forensic re-search and testing to support fire investiga-tions. It will also support partnerships andthe sharing of information among other firescience organizations around the globe. Thenew FRL will allow ATF scientists and engi-neers to recreate large fire scenarios undercontrolled and environmentally safe condi-tions. Where the handful of other firelaboratories in the world focus on consumerand industry safety, the ATF fire researchprogram and facilities are being carefullydesigned to conduct the unique kind offorensic testing that will provide the tools
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prosecutors and Certified Fire Investigators need toconvict arsonists. The FRL will also serve as aninternational training and education center for theadvancement of knowledge and technology transferrelated to fire scene investigation.
As of the end of FY 2000, GSA has awarded a totalof $27.7 million in contracts towards the new ATF Labproject, or 38% of the entire appropriated projectfunds. The NLC is scheduled for a 24-month construc-tion period and will be ready for occupancy in thesummer of 2002.
ATF National Headquarters
During fiscal year 2000, the ATF Headquarters projectalso moved forward. Activities included the signing ofan agreement with the Government of the District ofColumbia (DC) and other invested parties to developthe new ATF HQ on parcel 710 of the New York Av-enue Gateway Corridor; completion of the Environmen-tal Impact Statement with associated public hearings;GSA Design Excellence solicitation for architect andengineering services, including a design competition;
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GSA negotiated terms and conditions with the DCGovernment for land conveyance; updating of theoriginal ATF space program; and obtaining full authori-zation for construction by the U. S. House Committeeon Transportation and Infrastructure. The DC Govern-ment secured congressional appropriations and aprivate-sector tax assessment charter for a newMetrorail station adjacent to the proposed ATF site.
The new ATF National Headquarters will be the firstFederal construction project to incorporate the fulllevel of the GSA and Interagency Security Committee’ssecurity design criteria in an urban environment. The1,100 ATF Headquarters employees will remain a vitalpart of the local community and broaden ATF’s out-reach and support efforts in education and preventionprograms.
The ATF Headquarters project schedule remainedsteady during FY 2000. The building and developmentdesign will begin in January 2001, and the first con-struction activities will commence in late summer2001, with completion and occupancy targeted forJuly 2004.
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Reduce Violent CrimeThrough this activity, ATF enforces the provisions ofthe Gun Control Act of 1968, the National FirearmsAct, the Brady Law, the Violent Crime Control and LawEnforcement Act of 1994, the Organized CrimeControl Act of 1970, the Anti-Arson Act of 1982, theChurch Arson Prevention Act of 1996, and the Antiter-rorism and Effective Death Penalty Act of 1996.Because many Federal laws contain provisions formandatory extended sentences, ATF strives to in-crease State and local awareness of Federal prosecu-tion available under these statues.
Strategic Goal: Effectively contribute to a saferAmerica by reducing the future number and cost ofviolent crimes.
Programs: This strategic goal is accomplishedthrough four programs:
☛ Deny Criminals Access to Firearms
☛ Safeguard the Public from Arson and ExplosivesIncidents
☛ Remove Violent Offenders from our Communities
☛ Prevent Violence through Community Outreach
Performance Measure: Crime-related costs avoided(in billions).
This measure tracks the estimated costs saved byincarcerating violent career criminals. Measures referto firearms-related programs only.
Crime-Related Costs Avoided(in billions)
2.0
1.0
0.0
1.0
3.0
FY 1998Plan
FY 1998Actual
FY 1999Plan
FY 1999Actual
FY 2000Plan
FY 2000Actual
0.99 1.0 1.05 1.01.56
The continued reduction could be contributed to anoverall reduction in homicides, robberies, rapes, andaggravated assaults.
Performance Measure: Future crimes avoided.
This measure represents the number of crimes thatare prevented when armed career criminals andfirearms traffickers are incarcerated. The number ofcriminals sentenced is multiplied by the number ofcrimes that would have been committed by thesecriminals during the course of their incarceration.Measures refer to firearms-related programs only.
Performance Measure: Number of ATF and non-ATFpersons trained/developed.
This measure tracks the number of ATF personneltrained, and the number of individuals who are trainedby ATF personnel including Federal, State, local,international law enforcement personnel, and industrymembers who attend ATF seminars.
The FY 1999 and FY 2000 actual (53,385 and 87,859respectively) represents the number of ATF and non-ATF persons trained/developed. The FY 1998 actual(49,047) only represents the number of non-ATFpersons trained/developed.
Future Crimes Avoided
200,000
0FY 1998
PlanFY 1998Actual
FY 1999Plan
FY 1999Actual
FY 2000Plan
FY 2000Actual
743,706
450,000542,560
450,000503,955440,000
400,000
600,000
800,000
1,000,000
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Number of ATF and Non-ATF PersonsTrained/Developed
20,0000
FY 1998Plan
FY 1998Actual
FY 1999Plan
FY 1999Actual
FY 2000Plan
FY 2000Actual
87,859
52,00053,38552,00049,04752,000
40,00060,00080,000
100,000120,000
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Performance Measure: Number of firearms traces.
This measure reflects the number of trace requestssubmitted during the fiscal year.
The FY 2000 goal, which was not met, was basedon expected expansion of comprehensive tracing ona nation-wide basis similar to that of YCGII cities.However, it should be noted that several police depart-ments are participating and ATF has provided technicalequipment to 117 law enforcement agencies fortracing. Approximately 70 of the agencies are nowperforming comprehensive tracing.
In FY 1998, the National Tracing Center underwent acomplete change over in the systems platform for theFirearms Tracing System Database. This impacted theFY 1998 projection of a 12-day average per trace,resulting in an average of 18.8 days.
Performance Measure: Average trace response time(# of days).
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Number of Firearms Traces
170,000
FY 1998Plan
FY 1998Actual
FY 1999Plan
FY 1999Actual
FY 2000Plan
FY 2000Actual
209,369
225,000
209.126200,000
188,299
225,000
180,000190,000200,000210,000220,000230,000
160,000
Average Trace Response Time(number of days)
FY 1998Plan
FY 1998Actual
FY 1999Plan
FY 1999Actual
FY 2000Plan
FY 2000Actual
12
0
5
10
15
20 18.8
11.5 11.4 11.5 10.2
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Program: Deny CriminalsAccess to Firearms
Illegal Firearms Trafficking
ATF reduces the criminal availability of firearms byidentifying illegal sources of firearms and recommend-ing prosecution of illegal firearms traffickers. Overallgoals include investigating the most active illegalfirearms traffickers, preventing future firearms crimes,and reducing crime-associated costs by incarceratingillegal firearms traffickers. This program has bothdomestic and international components.
Youth Crime Gun Interdiction Initiative(YCGII)
This component of ATF’s nationwide Firearms Traffick-ing Program identifies and investigates the illegalsources of firearms to youths. As of FY 2000, ATF hadimplemented the program in 38 cities, with plans toexpand coverage to 75 cities within the next fewyears. Two major goals of YCGII are to encouragecomprehensive crime gun tracing by State and locallaw enforcement agencies and to provide crime gunmarket analyses to break the chain of illegal supply offirearms to youths.
International Firearms and ExplosivesTrafficking
ATF is responsible for investigating the illegal move-ment of firearms, explosives, and ammunition ininternational traffic and preventing such arms frombeing used throughout the world to commit acts ofterrorism, to subvert restrictions posed by othernations on their residents, and to be used as com-modities in organized crime and narcotics-relatedactivities.
In conjunction with the U.S. Customs Service, ATF alsoparticipates in foreign country firearm traffickingassessments and training programs funded by theDepartment of State, Bureau of International Narcoticsand Law Enforcement Affairs (INL).
Brady/NICS Investigations
ATF is responsible for enforcing the provisions of theGun Control Act of 1968 (GCA), which includes theBrady Act amendments and provisions for the estab-lishment of the National Instant Criminal BackgroundCheck System (NICS). All FFLs must directly contactNICS, which is administered by the FBI, or a State pointof contact (POC), which conducts a similar backgroundcheck prior to the transfer of a firearm to unlicensedindividuals.
All referrals to ATF as a result of NICS rejections arereviewed for disposition. ATF has made the investiga-tion of felons, domestic violence violators, and otherprohibited individuals who attempt to illegally obtainfirearms, a top priority.
In FY 2000, ATF completed an automated referralsystem to process and track referrals received fromthe FBI. To date, ATF has received, processed andreviewed more than 140,000 referrals. Of the140,000 referrals, more than 40,000 were sent tofield offices for investigation.
National Tracing Center
With restructuring effective October 1, 1999, ATF’sNational Tracing Center (NTC), Falling Waters, WV,became a division within ATF’s Office of Firearms,Explosives and Arson. The new division comprises theformer National Tracing Center Branch of the Firearms,Explosives and Arson Services Division, and the CrimeGun Analysis Branch.
The NTC is the only operation of its kind in the world.This facility conducts traces of firearms recovered atcrime scenes and from youth for any Federal, State,local, or international law enforcement agency. Thespecific goal of the NTC is to increase the number oftrace requests via increased electronic access to NTCinformation. In FY 2000, the NTC processed 209,369crime gun traces. The NTC is the only repository for allFFL out-of-business records, where millions of recordsare currently stored.
ATF developed and initiated the Electronic TraceSubmission System (ETSS). ETSS is currently de-ployed in 117 law enforcement agencies. Policedepartments in the YCGII cities can now electronicallytransmit crime gun trace requests to NTC.
The Crime Gun Analysis Branch provides ATFpersonnel and other law enforcement agencies withcrime gun data specific to their geographical areas.The Branch uses crime gun data amassed by the NTCto identify illegal firearms trafficking patterns andtrends throughout the world. The Branch conducts in-depth analysis using graphs and maps to providevisual effects. Online LEAD, a computerizedinvestigative tool, is used by ATF personnel to identifyillegal trafficers. The web-based Online LEAD softwareprovides ATF field personnel and industry memberswith real-time statistical information concerning thesegments of the firearms industry regulated by ATF.
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In FY 2000, the Crime Gun Analysis Branch madeapproximately 2,127 referrals to ATF field divisions. Atotal of 115 proactive referrals were also made to ATFfield divisions. Crime Gun Analysis Branch employeesconducted more than 32,000 queries. A total of1,302 queries were processed for either a FFL historyquery or an individual history query. The Crime GunAnalysis Branch processed over 50 GeographicInformation System (GIS) mapping projects. Inaddition, GIS maps were completed for each cityreceiving YCGII funding.
Stolen Firearms
This project, designed to assist the Firearms TraffickingProgram, seeks to reduce thefts of firearms fromFederal firearm licensees and interstate carrierstransporting firearms. This is accomplished throughcollecting and analyzing firearm licensee and interstatecarrier theft information, and providing investigativeleads to special agents and inspectors. In FY 2000,the Stolen Firearms Program staff received 2,562reports of theft/loss of firearms from FFLs with 16,265firearms reported lost/stolen. It also received 862reports of firearms missing/stolen from interstateshipments with 1,747 firearms reported lost/stolen.Firearm theft recoveries reported in FY 2000 were18,012.
All of these reports of thefts and recoveries wereprovided to ATF field offices for their consideration inopening a criminal investigation.
Program: Safeguard thePublic From Arson andExplosive Incidents
An integral part of ATF’s overall violent crime reductionstrategy, ATF’s arson and explosives projects aredirected toward preventing the criminal misuse ofexplosives and the crime of arson, as well as providingeffective post-incident response. ATF measures itssuccess by the amount it saves the public through itsproactive investigations of such crimes as arson-for-profit schemes.
Prevent Criminal Misuse of ExplosivesThrough this program, ATF provides resources toidentify and pursue those who misuse explosivematerials in bombings and arson fires. ATF has acadre of explosive technologists with unique capabili-ties in explosives and bomb disposal. Their experi-ence ranges from the ability to construct facsimiles of
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explosive and incendiary devices to assisting the StateDepartment and the Diplomatic Security Service inconducting antiterrorism capability assessmentsoutside of the continental United States.
National Repository
Information about arson and explosives incidents isavailable for statistical research and analysis, investiga-tive leads, and intelligence. The Arson and ExplosivesIncidents System (AEXIS) is an enhancement of theATF Explosives Incidents System (EXIS) and incorpo-rates information from Federal, State, and local fire,service/law enforcement personnel, bomb technicians,and explosives investigators. The principal Federalpartners in the data collection effort are ATF, the FBI,and the United States Fire Administration (USFA).
The National Repository Branch trained 19 ATF fielddivisions on AEXIS. The Branch provided internationaltraining on AEXIS to law enforcement officials in theUnited Kingdom, Australia, Germany, and France.
Church Fires
In early 1996, Federal officials detected a sharp rise inthe number of reported attacks at houses of worship,especially among African-American churches in theSouth. In June 1996, President Clinton formed theNational Church Arson Task Force (NCATF) and madethe investigation of these fires a top priority of Federallaw enforcement. The task force combined the effortsof ATF, the FBI, Justice Department attorneys, FederalEmergency Management Administration, Departmentof Housing and Urban Development, and the Commu-nity Relations Service of the Department of Justice.ATF was designated as the lead Federal agency toinvestigate the origin and cause of fire and bombingincidents at houses of worship.
The task force has opened 813 arson/bombing investi-gations. A total of 353 defendants have beenarrested nationwide, which solved 286 of the 813investigations. ATF’s Intelligence Division has reviewed6,301 investigative leads and entered information on1,395 crime scenes into its analytical database.
The task force continues to investigate arsons, bomb-ings, and attempted bombings that are targeted athouses of worship and will continue to promote churcharson awareness through outreach efforts across thecountry.
The Task Force attributes the reduction of church firesto a variety of factors, including increased vigilance,well-publicized arrests, and ongoing prevention efforts.On July 11, 2000 Jay Scott Ballinger pleaded guilty tosetting 26 churches on fire in eight states between
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Canine Training Facility in Front Royal, VA.
Congressional staff members learn about ATF’s explosivesdetection canines on a visit to the canine training facility.
1994 and 1999. Federal prosecutors are seeking asentence of more than 42 years in prison. TheBallinger pleas represent the largest number of fireslinked to a single defendant since the Task Force wascreated.
Canines
The Accelerant Detection Canine Program began as aproduct of a joint ATF/ Connecticut State Policeendeavor to place accelerant detection canines withState and local agencies to support their arsoninvestigation activities. ATF currently has 46accelerant detecting canines working for State andlocal agencies. In 2000, ATF trained 15 additionalaccelerant detection canine teams at the CanineTraining Center in Front Royal, Virginia.
Research Initiatives
In FY 1999, in conjunction with the U.S. Army Corps ofEngineers, the National Security Council, and theDefense Nuclear Agency, ATF continued to participatein a project known as Dipole Might. The objective ofthe program is to create a computer database andinvestigative protocol to assist investigators whenprocessing large car bomb scenes. In 1999, the testsincluded the evaluation of road sign damage fromblasts, taggant survival/retrieval, and explosivesresidue testing.
Currently, ATF has two full-time fire protection engi-neers, making it the only Federal enforcement agencythat employs this level of specialized, professionalexpertise. ATF’s fire protection engineers are dedi-cated solely to the analyses of origins and dynamics offire as they pertain to criminal investigations. Addi-tional fire scientists and engineers are being recruitedin order to support criminal investigations and the newFire Research Laboratory at the National LaboratoryCenter.
Under a training arrangement with the U.S. Departmentof State, ATF trains explosive detection canines forforeign countries to be used overseas in the waragainst terrorism and to protect American travelersabroad against terrorism. Since 1990, ATF hascertified 225 canine teams for the program, deployedin 12 countries worldwide. In FY2000, A TF trained 20additional canine teams and six canine trainers for theDepartment of State, Office of Antiterrorism Assis-tance. ATF continues to perform assessments ofadditional foreign countries for placement in thisprogram.
In 1997, ATF began training explosives detectioncanine teams for State, local and other Federal agen-cies. Currently, there are 28 ATF-certified explosivesdetection canine teams working throughout the UnitedStates. Six of these teams are ATF special agent/canine teams. They are stationed in Atlanta, Dallas,Miami, Los Angeles, San Francisco, and Washington,DC.
Law enforcement officials observe the destruction to a carfrom a pipe bomb and C-4 plastic explosives.
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National response team in action; team member briefs ATFDirector, Deputy Director, and Assistant Director (OST).
Effective Post-Incident Response
ATF believes that a coordinated and rapid deploymentof highly trained and well-equipped individuals andrelated support functions is critical to the investigationof any arson or explosives incident. This “teamapproach” is the basis for ATF’s National ResponseTeam (NRT), its International Response Team, divisionresponse teams, and arson task forces.
The NRT can respond within 24 hours to major bomb-ing and fire scenes anywhere in the United States. InFY 2000, the team provided effective post-incidentresponse in 32 activations. These incidents involved$179.5 million in damages and were responsible forfour fatalities and 17 injuries. Arrests were made in42 percent of the criminal incidents investigated by
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the NRT, a percentage considerably greater than thatfor like incidents investigated nationwide. ATF contin-ues to conduct customer satisfaction surveys of thosewho used the NRT this year, using the tabulated datato determine the NRT’s effectiveness.
ATF provides vital resources to local communities inthe wake of arson and explosives incidents. ATFpioneered the development of multi-agency taskforces designed to pool resources and expertise inareas experiencing significant arson problems. In FY2000, ATF led formal arson task forces in 16 majormetropolitan areas throughout the United States.
A Certified Fire Investigator (CFI) and Certified Explo-sives Specialist (CES) are critical to the success of acomprehensive post incident response. ATF’s CFIs arethe only investigators trained by a Federal law enforce-ment agency to qualify as expert witnesses in firecause determinations. In FY 2000, there were 76 ofthese investigators stationed throughout the UnitedStates. Eight CFI candi-dates will be certified inFY 2001. This allows forthe strategic placementof investigators through-out the country to assistFederal, State, and localagencies with fire originand cause determina-tions and training. ATF’s250 CES personnel, whohave developed anunmatched level ofexpertise in post-blastanalysis through yearsof experience, are pro-ficient in all aspects ofexplosive identification,handling, instruction,demonstration, and destruction.
Because many arson crimes involve insurance, bank,mail, and other types of fraud, these investigationsoften require complex forensic financial analyses.These complex financial investigations are providedthrough ATF’s Office of Science and Technology, AuditServices Division. The office also provides compre-hensive forensic science services; supporting the taskforces with financial auditing services, informationsystems and equipment, and high-speed data commu-nications. This includes Internet access to facilitatethe research and exchange of national and interna-tional technical data and intelligence.
Final delivery of the InterFIRE virtual reality CD-ROMtraining package was accomplished in FY 2000.
15
Bomb technician students are taught proper and safedisposal through a controlled explosive shot.
Federal, State, and local investigators across thecountry received this resource, which combines thelatest investigative techniques with state-of-the-artinteractive computer training technology to create themost comprehensive fire investigation training tool todate. ATF received a Hammer Award from VicePresident Gore’s National Performance Review, recog-nizing the value of this to law enforcement for investi-gating the crime of arson.
Program: Remove ViolentOffenders From OurCommunities
This program involves projects and services toinvestigate, arrest, and recommend for prosecution,the most violent criminals who use firearms andexplosives in their criminal activity.
Armed ViolentCriminalApprehensionProgram
This program usesspecific provisionsof the 1968 GunControl Act, asamended, whichmandate extendedperiods of incar-ceration for themost dangerous,armed careercriminals andarmed drug traffick-ers to remove
them from the streets. This is accomplished byidentifying, investigating, and recommending theprosecution of individuals who use or carry firearmsduring and in relation to crimes of violence and drugtrafficking offenses, and individuals who are activelyinvolved in other armed violent crimes. Further, thefirearms they possess yield valuable informationregarding their previous criminal acts and criminalassociates. Through the firearms tracing process, theillegal firearms sources for these violent criminals areinvestigated under ATF’s Firearms Trafficking Program.These two complementary programs strive to incarcer-ate armed violent criminals for longer periods of timeto prevent future crimes of violence and the costs ofthose crimes to the American public.
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EXILE sign near the nation’s capital.
An ATF employee examining ballistic results using IBIS.
ATF also participates in numerous task forces nation-wide with Federal, State, and local agencies; andsupports intensive prosecution efforts, such as ProjectExile. Exile, which began as a Federal initiative, hasalso been replicated at the State level, such as inVirginia.
delineates overall responsibility for all current andfuture system sites, including the conversion of theFBI’s existing DRUGFIRE hardware to IBIS equipment.The FBI will establish and maintain a high-speed,secure communication network.
ATF will deploy additional IBIS units in FY 2001 afterthe Department of Treasury approves a revised stan-dard memorandum of understanding that ATF mustexecute among the partner agencies. This MOUoutlines program responsibilities of each agencyregarding the management of this program.
National Integrated Ballistics InformationNetwork (NIBIN) Program
The purpose of this program is to provide support tolaw enforcement agencies experiencing seriousfirearms-related violent crime. The program goal isto provide focused investigative assistance to ATF’spartners through the integration of ATF’s variousfirearms enforcement and forensic technology re-sources. The NIBIN concept combines ATF’s formerCEASEFIRE and the FBI’s DRUGFIRE Program initiativesinto a federally sponsored initiative that creates apartnership among ATF, the FBI, and State and locallaw enforcement. Under the NIBIN Program, ATF isutilizing state-of-the-art equipment, known as theIntegrated Ballistics Identification System (IBIS), thatallows firearms technicians to digitize, correlate, andcompare bullet and shell casing signatures automati-cally at a greatly accelerated rate. The equipmentexpeditiously provides investigators with leads to solvea greater number of crimes in a shorter period of time.
ATF, the FBI, and a representative from State and locallaw enforcement have formed a partnership to ensurethat agencies have the opportunity to acquire auto-matic ballistics technology. In December 1999, ATFand the FBI signed a memorandum of understanding(MOU) agreeing to merge their ballistics imagingtechnology programs into one jointly managed programwith a single unified computer system. The MOU
Program: Prevent ViolenceThrough CommunityOutreach
This program focuses on community efforts designedto encourage and participate in the prevention ofviolence.
G.R.E.A.T. Program
The mission of the Gang Resistance Education andTraining (G.R.E.A.T.) Program is to provide classroominstruction for school-aged children and a wide rangeof community-based activities that result in thenecessary life skills, a sense of competency, useful-ness, and personal empowerment needed to avoidinvolvement in youth violence and criminal activity.The Bureau provided funding to 209 different agenciesto support their participation in the G.R.E.A.T. programin FY 2000. Over 1,608 agencies have over 4,440officers certified to teach the program. During FY
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G.R.E.A.T. program participants in Atlanta.
2000, G.R.E.A.T. officers around the country havetaught approximately 336,959 school-aged children.
As a result of a partnership established with Boysand Girls Clubs and the National Police ActivitiesLeague (PAL) last year, G.R.E.A.T. officers taught theG.R.E.A.T. program in over 50 cities nationwide innon-school environments. Students continue to havepositive role models and adult leadership to reinforcethe lessons taught in G.R.E.A.T. at school and through-out the summer months.
In FY 2000, G.R.E.A.T.’s five regional training partners:in LaCrosse, Wisconsin; Phoenix, Arizona; OrangeCounty, Florida; Portland, Oregon; and Philadelphia,Pennsylvania; conducted 30 weeks of G.R.E.A.T.Officer Training programs, including two remotelocations in Arizona and Florida.
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Collect RevenueATF plays a critical role in the Federal Government’s taxcollection process. Through this activity, in FY 2000,the Bureau collected over 14.1 billion dollars in excisetaxes levied on alcohol [wine, distilled spirits, and maltbeverages] and tobacco products, firearms, andammunition.
Strategic Goal: Maintain a sound revenue manage-ment and regulatory system that continues reducingtaxpayer burden, improves service, collects therevenue due, and prevents illegal diversion.
Programs: This strategic goal is accomplishedthrough three programs:
☛ Fully Implement the National Revenue Center
☛ Collect All Revenue that is Rightfully Due
☛ Use Electronic Commerce
Performance Measure: Taxes/fees collected fromalcohol, tobacco, firearms and explosives industries(in billions).
This measure includes revenue collected throughalcohol, tobacco, firearms, and ammunition excisetaxes, firearms and explosives license/permit fees,and special occupational taxes.
Performance Measure: Ratio of taxes and feescollected vs. resources expended.
This measure represents the amount of taxes and feescollected, divided by the amount of resources tocollect such taxes and fees.
Performance Measure: Burden hours reduced.
This measure reflects the reduction in hours requiredby ATF customers, e.g. FFLs, excise tax payees, etc.,to complete standard ATF forms and comply with ATFregulations, including the preparation of forms.
An example of an unforseen change impacting thegoal occurred when Section 9302(j) of the BalancedBudget Act of 1997, called for a floor stocks tax onall cigarettes held for sale January 1, 2000. Therequirement to make a record of physical inventoriesor a record inventory with appropriate source docu-mentation, resulted in an increase in burden hours of1.5 million.
Burden Hours Reduced
FY 1998Plan
FY 1998Actual
FY 1999Plan
FY 1999Actual
FY 2000Plan
FY 2000Actual
482,0006,922500,000
0
1,000,000
1,500,000
2,000,000
2,500,000
484,600606,630
963,570
1,450,681
Ratio of Revenue Collected to Dollars Expended
0FY 1998
PlanFY 1998Actual
FY 1999Plan
FY 1999Actual
FY 2000Plan
FY 2000Actual
224 248 250193 195 207
100
200
300
400
Taxes/Fees Collected (in billions)
11FY 1998
PlanFY 1998Actual
FY 1999Plan
FY 1999Actual
FY 2000Plan
FY 2000Actual
12.812.4 12.4
12.112.3
14.1
11.512
12.513
13.514
14.515
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Program: Fully Implementthe National RevenueCenter (NRC)
Effective management of taxpayer accounts andproper receipt of tax returns and payments ensure thatATF accurately collects and reports all revenue receiv-ables. The business processes performed by theemployees and contractor personnel assigned to theNational Revenue Center (NRC) in Cincinnati, Ohio, areessential to ATF’s effective management of excisetaxpayers’ accounts and collection of receivables.
The principal activities of the National Revenue Centerare:
❖ the audit of tax returns, claims, and reports;
❖ collection actions;
❖ review and approval of applications for permits;
❖ registration of plants and surety bonds; and
❖ custody of official case files.
During FY 2000, the NRC continued to consolidatebusiness processes by reducing the number of Techni-cal Services offices from two to one. The PhiladelphiaTechnical Services office closed on June 30, 2000,with the San Francisco Technical Services officescheduled to close on December 31, 2000. DuringFY 2000, the NRC began processing all tax mattersnationwide and is processing all permits mattersexcept for California wholesalers and importers. NRCwill assume permit matters responsibilities for thesegroups when the San Francisco Technical Servicescloses.
The NRC has made strides in the area of internallygenerated reports which allow monitoring the timeli-ness of taxpayers’ filing of tax returns. The NRC isheavily involved in and very dependent on the elec-tronic commerce initiatives which are discussed inmore detail in a later section of this report. The FY2001 initiatives most critical to the NRC include a pilotproject to allow for electronic filing of tax returnsthrough Treasury’s Pay.Gov website; a project thatallows industry members to electronically completeand submit qualifying documents and periodic reports.
Conveyance area between distilledspirits bottling line and finished
goods warehouse.
Program: Collect AllRevenue that is RightfullyDue
ATF collected $14.1 billion, before refunds, in taxes,interest, penalties, and fees in FY 2000. Ninety-six(96) percent of this revenue was derived from pay-ments of alcohol [wine, distilled spirits, and maltbeverages] and tobacco excise taxes. ATF’s revenuemanagement program includes a variety of processesand functions based on reviewing, auditing, andrecording of tax returns, deposits, and operatingreports. The program includes the accounting for alldeposits and payments for taxes and fees from thealcohol, tobacco, firearms, ammunition, and explosivesindustries.
In FY 2000, ATF implemented new field inspectionprograms designed to target those operations thatpose the greatest jeopardy to the revenue. During FY2000, ATF conducted 1,347 inspections at revenueproducing plants resulting in 1,371 violationsdetected, 1,534 tax adjustments, and $4 million inadditional tax revenue. ATF focuses its on-siteinspections of alcohol, tobacco, firearms, andammunition taxpayers to those facilities which posethe greatest risk to revenue. The factors consideredinclude, among other things, volume of operations,compliance history, internal controls, and financialcondition. A more detailed description of the varioustypes and sources of revenues follows in the FinancialStatements, Note 14, Non-exchange Revenue. TheNational Revenue Center and Technical Servicescontinued to monitor tax collections by auditing taxreturns; levying assessments; initiating enforcedcollection action; analyzing required reports; requestingfield verifications; and accounting for tax paymentsand related refunds. During FY 2000, ATF processed663 assessments and 9 offers-in-compromiseresulting in $1.67 million, and the suspension of 8permits for a total of 547 days. Seventy-four (74)permits were revoked and two permit applicationswere denied.
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Distilled spirits bottling line.
Various cases of cigarettes seized as a result of diversioninvestigations.
Seizure of 468 sixty-six gallon drums of grain neutralspirits headed for Luzern, Switzerland, with the requiredATF paperwork altered.
Diversion and Smuggling
ATF is engaged in an ongoing effort to reduce a risingtrend in the illegal diversion of cigarettes and distilledspirits products. Diversion activity generally occurswhen legally manufactured or produced alcohol andtobacco products deviate from their normal legaldistribution method to an illegal unregulated scheme.In the illegal schemes, the products are being divertedand sold in violation of Federal laws and regulations.Diversion activities also defraud the United States oftax revenue. For example, cigarettes and distilledspirits products are often fraudulently claimed forexport markets (for which there is no tax liability)
when, in fact, they are being divertedinto the United States domesticmarket for sale (where there is taxliability). ATF’s goal to ensure compli-ance with U.S. laws will greatly reducethe illegal diversion of alcohol andtobacco products. During FY 2000,ATF clarified requirements for theindustry regarding the exportation ofalcohol and tobacco products toprevent potential diversion of suchproducts. These requirements werealso posted on ATF’s web page foreasy access.
In addition to criminal penalties, ATFpursues tax assessments againstdomestic producers and individualswhen ATF determines that the docu-mentation supporting tax-free exporta-tion of these products is counterfeit,inaccurate, or non-existent. During
FY 2000, a United States distiller was found smugglingdistilled spirits disguised as windshield washer fluidand other solvents in the Ukrainian Republic and theRussian Federation. This distiller made restitution of$1 million to the Ukrainian Republic, had its U.S.operating permit suspended for seven days, andsubmitted a $1 million offer-in-compromise for therecordkeeping violations.
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Money seized during tobacco diversion investigation.
over $250,000 in taxes which equates to five timesthe value of tobacco products imported.
Program: Use ElectronicCommerce
During FY 2000, ATF entered a partnership with theFinancial Management Service (FMS) to developmethods for electronically filing ATF tax payments andreturns, reports, and other forms. Many ATF formsare already available for downloading from the ATFwebsite.
During FY 2001, ATF will pilot the electronic filing oftobacco tax returns and is working toward a project, tobegin in the first quarter of FY 2001, that will allowseven tobacco industry members to file tax returnsthrough Treasury’s Pay.Gov website. If successful, ATFwill expand the project to include other tobaccoindustry members and then to other regulated indus-tries. This will reduce industry burden. The ultimategoal is to allow permittees and taxpayers to file alldocuments with the NRC online. Another initiative ofthe Pay.Gov website is to allow taxpayers to pay bycredit card. While that is not part of the pilot project, itis anticipated that this option will be available by theend of FY 2001.
Customers interested in the requirements to qualify asa manufacturer of alcohol and tobacco use the ATFwebsite as an early point of contact in seeking infor-mation. ATF has responded by answering questions,sending out application packets, and steering custom-ers toward the proper state and local authorities.
In addition to alcohol and tobacco export fraud, ATFalso enforces several statutes that deal with the illegalinterstate trafficking of alcohol and tobacco products.Illegal commerce occurs with the trafficking of alcoholand tobacco products from a state with a low excisetax rate to a state with a high excise tax rate. Theprofits can be significant and the states are often notprepared to deal with these multi-state criminalconspiracies. ATF agents, inspectors, and auditorswork closely with their state counterparts during thesetypes of investigations.
In FY 2000 the seizures of cash, vehicles, beveragealcohol, and tobacco products during diversion investi-gations by ATF agents, inspectors, and auditorsresulted in over $2 million being credited to theTreasury Asset Forfeiture Fund. In FY 2000, 125diversion cases resulted in 70 defendants recom-mended for prosecution.
During FY 2000, ATF conducted seven seminars withforeign governments and other U.S. Federal and Stateagencies on diversion of alcohol and tobacco products.ATF also assisted the Republic of Georgia and theRussian Federation by providing excise tax and diver-sion training.
As a result of the enactment of the Balanced BudgetAct of 1997, ATF implemented regulations relating tothe tobacco excise tax increase and restrictions on theimportation of previously exported tobacco productsand cigarette papers and tubes. Under the newregulations, only tobacco products manufacturers orexport warehouses may receive such products. Theseproducts can only be destroyed or re-exported, or inthe case of a manufacturer, re-packaged and removedfor sale in the domestic market. The regulationsprevent such products with export markings fromentering the domestic market. During FY 2000, ATFconducted an investigation that disclosed an importa-tion of cigarettes under these provisions resulting in
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Protect the PublicThrough this activity, ATF complements reducingviolent crime and collecting revenue with training andprevention strategies through law enforcement,industry regulation, industry partnerships, and reducingpublic safety risk and consumer deception on regu-lated commodities.
Strategic Goal: Protect the public and preventconsumer deception in ATF’s regulated commodities.
Programs: This strategic goal is accomplishedthrough three programs:
☛ Assure the Integrity of the Products, People, andCompanies in the Marketplace
☛ Ensure Compliance with the Laws andRegulations through Education, Inspection, andInvestigation
☛ Inform the Public
Performance Measure: Response to unsafeconditions and product deficiencies discovered(explosives).
This measure tracks the number of corrections madeto unsafe conditions reported to ATF and from inspec-tion activities.
Performance Measure: The number of commodityseminars held.
Commodity seminars are held to provide informationto industry members, law enforcement, and the publicabout the laws and regulations that ATF is responsiblefor enforcing. These seminars are periodically given tonew industry members and others to educate andinform them about recent changes in these laws andregulations.
Workload Measure: Number of inspections(explosives).
Workload Measure: Percent of population inspected(firearms).
Number of Corrections Made to UnsafeConditions Reported to ATF and from
Inspection Activities
1000
500
0
677
1500
FY 1998Plan
FY 1998Actual
FY 1999Plan
FY 1999Actual
FY 2000Plan
FY 2000Actual
1,071 825 923 825 1,119
2000
50
100
150
200
250
300
Number of Commodity Seminars Held
0FY 1998
PlanFY 1998Actual
FY 1999Plan
FY 1999Actual
FY 2000Plan
FY 2000Actual
175175
229
175
227
122
8,000
Number of Explosives Inspections
0FY 1998
PlanFY 1998Actual
FY 1999Plan
FY 1999Actual
FY 2000Plan
FY 2000Actual
8,000
4,000
6,000
10,000 8,908 9,0007,443 8,000
4,983
2,000
12,000
22
5%
Percentage of Firearms LicenseesInspected
0%FY 1998
PlanFY 1998Actual
FY 1999Plan
FY 1999Actual
FY 2000Plan
FY 2000Actual
10%10%
15% 11.3% 12% 10.47% 11%8%
20%
In September, 1999, the FEA Directorate reviseddownward to 5,250 its previous estimate of thenumber of explosives inspections to be completed inFY 2000. The adjusted goal was established after anotable loss of experienced inspectors and the subse-quent requirement to hire and train new inspectors.The available resources were concentrated on thoselicensees or permittees with previous public safetyviolations or history of non-compliance.
The explosives inspections completed in FY 2000, fellonly 267 inspections short of the adjusted goal. Thisshortfall can be explained by the fact that during Juneand July of 2000, virtually all inspection resourceswere redirected to a major firearms inspection programinitiative.
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ATF chemist examines alcohol beverages submitted by ATFinspectors for analysis.
Program: Assure theIntegrity of the Products,People, and Companies inthe Marketplace
This program ensures that commodities meet safetyand product identity standards, and keeps ineligibleor prohibited persons from entering the regulatedindustries.
Assuring Alcohol Product Integrity
ATF conducts a full range of regulatory functions in thebeverage alcohol industry. The Federal AlcoholAdministration Act, passed shortly after the repeal ofProhibition, coupled with certain Internal RevenueCode provisions and the Alcohol Beverage LabelingAct, authorize ATF to regulate the alcohol industry andprovide protection to consumers of alcohol beverages.
Each year, through the alcohol sampling program, ATFcollects alcohol products from the marketplace foranalysis by ATF’s laboratories. During FY 2000, ATFenhanced the alcohol sampling program by identifyingnew criteria, selecting seven cities and focusingsampling to imported and cultural products. DuringFY 2000, over 200 products out of 719 tested werefound not to be in compliance due to labeling viola-tions, over and under proof and fill violations, impropertax class classifications, and potability violations of nonbeverage products where the methanol limitation wasexceeded.
ATF also investigates consumer/other agency com-plaints regarding contaminated or adulterated bever-age alcohol products. In FY 2000, ATF responded to57 consumer complaints regarding alcohol products.Laboratory testing of the products disclosed noevidence of tampering or adulteration of the products.All cases resulted from natural occurring spoilage,crystallization due to age of product, or allergic reac-tions to sulfites.
ATF labs work closely with counterparts at the UnitedStates Food and Drug Administration, state laborato-ries, and regulatory agencies in many foreign coun-tries. The laboratories exchange information onexisting and new analytical methods and on productcontamination or adulteration issues discovered bygovernmental laboratories, both domestic and foreign.This level of cooperation enhances ATF’s proactivestance to ensure that contaminated or adulteratedproducts do not reach the United States marketplace.
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ATF chemist analyzes a wine sample for possibleadulteration.
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ATF chemist analyzes imported products to assure conform-ance to U.S. regulations.
Beverage Alcohol Labeling and Advertising
ATF is charged with protecting the consumer bypreventing false or misleading claims on beveragelabels and in advertising. ATF enforces theGovernment Health Warning Statement requirements,prohibits unbalanced and unsubstantiated healthclaims or misleading and deceptive claims, monitorsindustry advertising, and conducts investigations ofsuspected label fraud.
During FY 2000, ATF conducted two public hearingsregarding health claims on alcohol beverage labels andin advertising. The hearings were held in Washington,DC and San Francisco, California, where ATF receivedfeedback from industry and other interested parties.ATF will continue to analyze the public hearing trans-cripts and over 530 comments received from thenotice of proposed rulemaking on this issue duringFY 2001.
centers” (with the National Revenue Center, theNational Tracing Center, and the National LicensingCenter) and to further meet the concerns of theregulated industry.
During FY 2000, ATF examined 65 alcohol advertise-ments that resulted in two investigations, ten correc-tions, and three withdrawals from the market. Inaddition, ATF settled nine trade practice, advertising,and labeling investigations. These investigationsresulted in $1.1 million accepted in compromise of theviolations, and one five-day suspension of operations.
Deny Prohibited or Ineligible Persons Entryinto the Regulated Industries
During FY 2000, ATF implemented the permit require-ments for importers of tobacco products and manufac-turers of roll-your-own tobacco, in accordance with theprovisions of the Balanced Budget Act of 1997. ATFreceived 385 applications for tobacco importer permitsduring FY 2000. Alcohol and tobacco producers,wholesalers and importers of alcohol beverages,importers of tobacco products, tobacco export ware-houses, and users of industrial alcohol must meetcertain mandatory requirements and apply for andobtain a Federal permit. ATF examines and verifiesapplications, bonds, and other documents; conductsinvestigations of high risk applicants; and determineseligibility for permits. Regulatory requirements areexplained throughout the application process.
The Gun Control Act of 1968 mandates that everymanufacturer, importer, or dealer in firearms, obtain aFederal firearms license (FLL). ATF conducts inspec-tions of applicants for Federal firearm licenses. Duringthese inspections, ATF inspectors explain the Federalfirearm laws and regulations, and determine if theapplicants are bona fide candidates for licenses.Where inspection reveals conflicts with state laws andlocal ordinances, inspectors make referrals to theappropriate regulatory agency such as a zoning,occupancy, fire code, or law enforcement agency.
ATF recognizes the value of averting accidents andkeeping explosives from the hands of those who areprohibited from possessing them. ATF enforcementprovides a system of industry regulation, emphasizinga proactive approach to the problem. Similar to thefirearms industry, all manufacturers, importers, anddealers must obtain a Federal license from ATF toconduct business, and certain users of explosives arerequired to obtain a Federal permit.
With limited exceptions, ATF issues Certificates ofLabel Approval for all domestic and imported beveragealcohol products offered for sale in the United States.ATF processed approximately 69,000 new andamended label applications during FY 2000.
ATF remains committed to improving customer servicefor label and formula approvals. In FY 2000, ATFimplemented the methods identified by the BeverageAlcohol Streamlining Team (BAST) with the goal ofimproving ATF business processes, thereby improvingcustomer service. ATF created the Alcohol Labelingand Formulation Division in an effort to recognize theimportance of the label and formula approval pro-cesses as one of four national ATF “customer service
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Program: EnsureCompliance with Laws andRegulations ThroughEducation, Inspection, andInvestigation
Once a person or entity is licensed or obtains a permitto conduct a regulated business, ATF monitors andenforces compliance with applicable laws andregulations. Inspections of firearms licensees focuson ensuring that firearms are properly accounted for.Licensees are selected for focused inspections whendata from the NTC and other information indicate thatillicit trafficking may be taking place. In the explosivesindustry, ATF emphasizes the safe and secure storageof explosives as well as accountability. ATF inspectorscheck on compliance with product and trade practiceprovisions. Education initiatives such as industryseminars are utilized in all industries.
Federal Firearms Licenses and Inspections
ATF is responsible for enforcing the licensing provi-sions of Federal firearms and explosives laws andregulations. These laws mandate that every manufac-turer, importer, or dealer in firearms or explosivesobtain a FFL or explosives license, and that certainusers of explosives obtain a Federal permit. TheNational Licensing Center (NLC) is responsible forissuing these licenses and/or permits.
Through its programs, ATF ensures that explosivesare safely and securely stored - which is vital to publicsafety, curbing the illegal use of firearms and explo-sives, and enforcing Federal firearms and explosiveslaws. These public safety issues warrant the work ofthe NLC to issue firearms and explosives licenses/permits only to those individuals who are qualified topossess them. ATF will soon announce the launchingof “FFL e-Z Check” - an online FFL authenticator service- that will aid the firearms industry in preventing thefraudulent use of their licenses by individuals alteringa copy of the license to illegally acquire and supplyfirearms to criminals and youth. A firearms licenseewill be able to verify or authenticate another firearmslicense prior to shipping or disposing of firearms to thelicensee.
Once a licensee is engaged in business, inspectorsensure the licensee’s compliance with Federal lawsand specific recordkeeping regulations. ATF enforces
the licensing provisions of the Gun Control Act of1968 by conducting routine on-premises inspections,including focused inspections on problem areasthroughout the United States.
During FY 2000, ATF conducted approximately 1,000comprehensive compliance inspections of FFLs basedon issues identified in ATF’s February 2000 reportentitled Commerce in Firearms in the United States.ATF inspected licensees who were either uncoopera-tive with firearms traces or who had 10 or morefirearms traced to them in 1999. As a result of theseinspections, inspectors resolved more than 1,336unsuccessful firearms traces and 24,101 inventorydiscrepancies, and identified nearly 500 licensees foradverse action as the result of regulatory violations.
ATF implemented procedures for routinely providingthe Chief Law Enforcement Officer in each jurisdictioninformation on the status of FFLs in that area. Workingin partnership with State and local law enforcementofficials, ATF can effectively address licensing andillegal firearms trafficking problems.
Alcohol Industry Inspections
In addition to the beverage sampling program, ATFinspects alcohol plants (distilleries, wineries, andbreweries) to assure that product manufacturingcomplies with approved formula processes and thatproducts fulfill labeling and advertising claims. ATFcollects samples of manufactured products which aresent to ATF Labs for analysis to assure product compli-ance. ATF investigates anti-competitive businesspractices between alcohol beverage suppliers andretailers to preserve the retailers’ economic indepen-dence and protect the consumer.
Explosives Licenses/Permits and Inspections
ATF maintains a regular program of on-site inspectionsto ensure that explosives are stored in approvedfacilities, that are secure from theft and located atprescribed distances from inhabited buildings,railways, and roads. Immediate action is taken toresolve unsafe storage conditions. These inspectionsensure that the licensees and permittees keepaccurate records of the receipt and disposition ofexplosive materials that are verified through actualinventories of explosives in storage. Unusualdiscrepancies in records are referred immediately tothe appropriate office for further investigation.Inspectors also conduct “forward trace” inquiries orfield inspections on persons who purchase explosivesfrom a licensee without the benefit of a user’s permitfor “same day use with no overnight storage.”
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ATF initiated a program that requires each field areaoffice to notify the local fire department of licensees/permittees storing explosive materials, and thelocation of the storage. This was done to minimizeaccidental injury to fire officials fighting fires in build-ings or structures that may house explosive materials.
Industry Seminars
ATF conducts seminars for firearms and explosivepermittees and licensees, providing current informa-tion on the laws and regulations pertaining to thesecommodities. Through these seminars, ATF hasfostered partnerships with firearms and explosiveindustry members to prevent tragedies stemmingfrom the illegal use of firearms and explosives. Semi-nar attendees include industry officials, licensees,permittees, and State and local law enforcementofficials.
ATF also conducts seminars for alcohol and tobaccopermittees. These seminars focus on current markettrends, compliance concerns, changes in laws, regula-tions, or Bureau policies, and industry-raised issues.In partnership with the states, ATF conducts theseminars with the state alcohol beverage controlagencies to provide the total compliance enforcementpicture to those in attendance. In FY 2000, ATFconducted 27 alcohol and tobacco seminars.
National Firearms Act
The National Firearms Act requires that certain firearmsbe registered in the National Firearms Registration andTransfer Record. Firearms requiring registration aremachine guns, silencers, short-barreled rifles andshotguns, destructive devices, and certain concealableweapons classified as “any other weapons.” ATFprocesses all applications to make, export, transfer,transport, and register National Firearms Act firearms,as well as notices of the National Firearms Act firearmsmanufactured or imported. The registration informa-tion supports the field programs to inspect firearmslicenses and to conduct criminal investigations. TheNFA Branch continually provides technical informationto industry and the public.
Firearms and Ammunition Importation
ATF regulates the importation of firearms, ammunition,and other defense-related articles through the issu-ance of import permits, and maintains close liaisonwith the Department of State to ensure that thepermits issued do not conflict with the foreign policyand national security interests of the United States.
Program: Inform the Public
This program publicizes information on ATF policiesand regulations, product safety, and theft preventionusing the Internet, trade publications, seminars, andindustry meetings and works in partnership with othersto inform, advise, and educate the public.
Industry and State Partnerships
ATF continued its liaison with other Governmentagencies working toward a common goal of ensuringsafety in the explosives industry. In FY 2000, ATFspecialists met with Department of Transportation(DOT) and Consumer Product Safety Commission(CPSC) representatives on issues of mutual concern.ATF also worked with the Department of Defense(DOD) and the Occupational Safety and Health Admin-istration (OSHA) in developing or updating memorandaof understanding in the regulation of persons andcompanies in the explosive industry. Further, CPSCand DOT have been instrumental in providing instruc-tion at the Advanced Explosives Training sessions. Inaddition, ATF continues to work with the FederalAviation Administration regarding that agency’s storageof explosives materials on or near airport property.
ATF is working with the National Shooting SportsFoundation on a variety of firearms commerce relatedissues. These include the development of jointseminars for firearms dealers on firearms law andregulations, best business practices, and licenseesafety and security issues. ATF is also looking at waysto educate firearms dealers on “straw purchaser”recognition.
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ATF continued to emphasize a strong and efficient organization in order to accomplish its programmatic goalseffectively. The programs that support ATF’s three major activities; Reduce Violent Crime, Collect Revenue, andProtect the Public, are highlighted below:
Bureau-wide Programs
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TRAININGThe Office of Training and Professional Development’s(TPD) high quality, innovative training programsimprove the performance of the Bureau’s employees,and enhance the skills of thousands of State, local,and international personnel each year, all in support ofATF’s Strategic Plan. These programs are delivered atBureau Headquarters, the ATF Academy, field divi-sions, or at various satellite training sites across thecountry and the world. Although training of ATF’spersonnel is part of our commitment to develop atalented and effective workforce, ATF is also charged,as part of its core mission, to train State and local lawenforcement and industry personnel in ATF’s areas ofexpertise.
New Professional Joint Agent/InspectorTraining
A record number of new ATF inspectors and specialagents completed New Professional Training (NPT) atthe ATF Academy. Joint agent/inspector trainingconsisted of three weeks of training on topics ofshared responsibility. NPT affords agents and inspec-tors the opportunity to build solid working relationshipsand to learn information uniformly relative to theircollaborative responsibilities. At the conclusion of jointagent/inspector training, agents receive another tenweeks and inspectors another six weeks of occupa-tion-specific training on technical issues. There werea total of 159 agents and 64 inspectors trained fromOctober 1999 through September 2000, bringing thetotal number of inspectors trained to 143 and the totalnumber of agents trained to 419 since NPT began inFY 1998.
Other TPD FY 2000 accomplishmentsincluded the following:
❖ Provided over 500 weeks of in-service and/or out-Bureau training to ATF personnel;
❖ Continued to ensure the ongoing administrationand completion of the Bureau’s Critical IncidentManagement Divisional Training (CIMRT). Thisincluded the completion of joint training for theremaining six field divisions in the first quarter ofFY 2000. In February 2000, the second phase ofCIMRT Divisional training commenced and sevenfield divisions were trained separately in a moreadvanced CIMRT environment designed to ad-equately prepare personnel for field trainingexercises (FTXs) scheduled to begin FY 2002;
❖ Conducted Close Quarter Countermeasures (CQC)defensive tactics basic training for Bureau Head-quarters agents and explosives enforcementofficers (EEOs); conducted initial training forcertified instructors with the goal of training everyfield agent and EEO by the end of calendar year2000;
❖ Created the Use of Force Training Guide supple-ment which contains standard tactical lesson plansto ensure consistent training Bureau-wide;
❖ Provided 24 YCGII Training classes to 1,661participants which included ATF, Federal, State andlocal law enforcement personnel;
❖ A joint Department of Justice-ATF TraffickingSeminar was presented to approximately 150 U.S.attorneys and State and local law enforcementofficers. As a direct result of this effort, ATFexperts now teach U.S. attorneys at the AdvocacyCenter, the types of assistance and analysis thatATF can provide in Federal firearms traffickingcases;
❖ Produced the video “Women in Federal LawEnforcement (WIFLE): Pioneers in Valor and Vision”for the 2000 WIFLE Conference and future ATF andother law enforcement recruitment efforts;
❖ Designed and delivered a Director of IndustryOperations (DIO) training conference to 32 DIOs;
❖ Instituted and coordinated the Institute forManagement Studies (IMS) initiative offeringmonthly; one-day leadership seminars to ATFmanagers of all levels in Headquarters and 17 fielddivisions nationwide;
❖ Planned and facilitated 11 CORE classes inWashington, DC, with 225 ATF employeesattending.
State, Local, and International Training:
❖ In concert with Bureau Field Offices and otherHeadquarters Directorates, TPD provided trainingto 87,859 other Federal, State and local, interna-tional law enforcement officers; industry person-nel; civilians; and civic organizations. Topicsincluded arson investigation, explosives identifica-tion and regulation, firearms trafficking/ identifica-tion, gangs, post-blast investigations, advancedinterviewing techniques, and firearms serialnumber restoration;
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❖ Provided international training courses to morethan 850 participants, from more than 45 differentcountries, which included basic and advancedfirearms and explosives identification, post-blastinvestigation, and alcohol and tobacco diversion;
❖ Delivered Seminar in Explosives and Bomb ThreatManagement (SEMTEX) at two U.S. airports (onein San Juan, Puerto Rico) to more than 500 lawenforcement and airline/airport security personnel;
❖ Conducted the fourth annual International FirearmsTrafficking Seminar in Niagara Falls, Canada.Because of its caliber, the course is mandatorytraining for all personnel in several Canadian lawenforcement departments.
SCIENCE AND TECHNOLOGYThe Office of Science and Technology/Chief Informa-tion Officer (CIO) plays a key role in support of theBureau’s enforcement and revenue programs. The CIOalso served as the senior executive for the Year 2000Century Date Change Project, an aggressive multi-year,inter-Bureau effort to identify and bring ATF’s informa-tion technology (IT) and non-IT systems into compli-ance as ATF moves forward into the new millennium.
Information Infrastructure
ATF modernized its IT through deployment of theEnterprise Systems Architecture (ESA), an infrastruc-ture that ensures that ATF’s strategic and day-to-daybusiness requirements are supported by IT that issecure, reliable, available, Y2K date compliant, andmaintainable. ESA provides ATF with the ability tocollect, clarify, and communicate the informationneeded to accomplish its mission to reduce violentcrime, collect revenue, and protect the public.
ESA supports approximately 4,100 employees and1,200 contractor workstations nationwide. Fieldpersonnel, i.e., agents, inspectors, and auditors, usenotebook PCs with docking stations; and employeesand contractor personnel assigned to offices areequipped with desktop PCs. All employee worksta-tions are connected via local area networks (LANs).The LANs are connected via a high-speed, wide-areanetwork that serves as the electronic backbone ofATF’s data communications. Every employee isequipped with a Pentium or Pentium II computerrunning Microsoft Corporation’s Windows 95 operatingsystem and the Office 97 Professional Office Suite,anti-virus software, Microsoft Exchange electronic mail,and security software to encrypt data stored onnotebook PCs.
Data Communications Infrastructure
A Frame Relay Network Upgrade Project was under-taken to design, coordinate, implement, and test theupgrade of the entire wide area frame relay network.While transparent to the ATF user community, thisupgrade increased minimum bandwidth of ATF’s wide-area network from 32 kilobytes (kbs) to 128 Kbs toapproximately 200 ATF points of presence in thecontinental United States. The upgrade provided ATFwith the ability to place into production and supportmany significant software engineering investmentssuch as ATF’s National Field Office Case InformationSystem (N-FOCIS), Forensics Automated Case andExam Tracking System (FACETS), Firearms TracingSystem (FTSWEB), and Online-LEAD. This upgrade hasalso enabled applications such as Exchange Mail andTivoli to function reliably on the wide-area network.The re-engineering effort provides backup and en-hanced stability of the network. The project was amajor success by implementing state-of-the-artapplications through the network in support of ATF’smission activities.
Laboratory Services
In FY 2000, Laboratory Services, with the support ofATF’s Office of Training and Professional Developmentand the Association of Firearm and Toolmark Examin-ers (AFTE), graduated the first class of the ATF Na-tional Firearm Examiner Academy. In addition, thesecond class commenced in July 2000. With fullLaboratory Services support, AFTE implemented thefirst professional certification program for Firearm andToolmark Examiners. ATF examiners assisted indeveloping the testing procedures.
Laboratory Services continued its support and leader-ship in partnerships with the University of CentralFlorida (arson and explosives methods); the Universityof Maryland (fire research center development); andthe U.S. Customs Service (imported tobacco productauthentication).
Laboratory Services developed new analytical ap-proaches for supporting alcohol and tobacco diversionand smuggling investigations and have used themsuccessfully in critical investigations. In FY 2000,Laboratory Services personnel completed 2,682forensic cases, analyzed 6,052 alcohol and tobaccoproduct samples and processed 8,500 alcohol productformula applications. Personnel also provided 282days of instruction to ATF and other Federal, State andlocal law enforcement agencies; spent 184 daysproviding expert testimony in courts of law; and spent239 days providing scientific advice and support atATF-investigated crime scenes.
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ATF chemist prepares wine for heavy metal analysis.
An imported cigar is measured to assist in productclassification.
Mobile state-of-the-art van makes the tactical officers’ jobeasier by providing the equipment needed in the field.
Audit Services
The Audit Services Division (ASD) continues to providean important investigative link in both criminal andregulatory enforcement investigations such as arsonand bombings-for-profit, alcohol and tobacco diversion,firearms and drug trafficking cases, gang-relatedactivities, and money laundering schemes. In additionto these investigations, ASD has worked closely withinspectors on regulatory investigations in the revenueprogram area, specifically on National Brewery Auditsperformed during FY 2000.
An important enhancement to ASD during FY 2000was the implementation of a Financial InvestigationInformation Repository. ASD designed and imple-mented an information repository to warehouse thetacit knowledge (real-life experiences) of forensicauditors with the goals of providing more efficienttraining and standardizing forensic accounting and
auditing investigative practices. Thisrepository also categorizes the type offinancial investigations performed in orderto accumulate and segregate the similaritiesand differences unique to each financialinvestigation.
Technical Support
Technical support to field agents andinspectors is provided by the TechnicalSupport Division which comprises theTechnical Operations Branch (TOB), theRadio Branch, and the Visual InformationBranch.
TOB has three sections: the ElectronicSurveillance/Technical Surveillance Counter-measure Section, the Computer Forensics
Section, and a Logistics Section. TOB purchasesinvestigative equipment, investigative supplies, agentsafety equipment including body armor, law enforce-ment vehicles, and electronic surveillance equipment.TOB evaluates new technology, and trains tacticaloperations officers and technical enforcement officers.
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The Computer Forensics Section provides trainedpersonnel who extract information from seized com-puters and assist in computer crime and Internetinvestigation. In FY 2000, the Computer ForensicsSection trained an additional ten Computer Investiga-tive Specialists in the Basic Evidence Recovery Schooland 12 Computer Investigative Specialists in theAdvanced Evidence Recovery School, where they wereintroduced to Linux Operating Systems and networktechniques.
The Radio Branch provides a national wireless commu-nications system, managed by a network of deployedradio technicians who maintain the ATF Radio infra-structure and provide tactical communication assis-tance.
The Visual Information Branch processed severalthousand requests for audio/visual, graphics, andphotographic support from internal ATF customers aswell as external customers including the Departmentof the Treasury, and State and local law enforcementagencies.
LIAISON AND PUBLICINFORMATIONThe Liaison and Public Information office serves asprincipal advisor on matters relating to the public,media, and industry information; and policies andcompliance with the Freedom of Information andPrivacy Acts. The office establishes and maintainsEmbassy contacts and police official liaisons, andreviews responses to all inquiries received from theDepartment of the Treasury and Congressional offices,as well as correspondence for the Director.
ATF continues to expand the use of its Internet site toinclude ATF and Treasury reports, special notices toindustry members, and FFL eZ-Check access to FFLverification. ATF has also launched the Nibin.govwebsite to serve as a entry point for the public and aresource to the law enforcement community on theNational Integrated Ballistics Information Network. Onehighlight for the year was the number of televisionshows that featured ATF employees. The DiscoveryChannel, the History Channel, and A&E showed ATF’sinvestigative work in various shows.
The ATF website is fully accessible to the handicappedand meets the requirements of Section 508. Thewebsite continues to grow in its use by the public,industry members, Congress, and the media. Visits tothe site average 150,000 per day. The number ofemail inquiries are approximately 15,000 for FY 2000.
Over 4,000 special agent and 3,000 inspector-relatede-mail inquiries were received for positions that wereadvertised on the ATF Internet and OPM Job sites.
The ATF IntraWeb is an internal “bulletin board” de-signed to provide daily updates and other informationthat employees need to do their jobs. The site is alsolinked to the Treasury IntraWeb. An Ethics site wasadded this year to provide online resources andopinions to employees on various ethics relatedissues.
INSPECTIONATF maintains an Office of Inspection (OI) with primaryresponsibilities to plan, direct, and coordinate inspec-tion and internal affairs activities. It appraises theeffectiveness of operations, assesses the quality ofmanagement and supervision, and determines adher-ence to organizational policies, regulations, andprocedures. The OI conducts employee integrityinvestigations, either criminal or administrative, andother sensitive investigations assigned by the Director.
The OI Inspection Division is responsible for inspecting(on a three-year cycle) all directorates in the field andat Headquarters, as well as associated administrativefunctions. These inspections determine administrativeand operational efficiencies, and ensure that compo-nent offices are in compliance with ATF and Treasuryrules and regulations.
The OI Investigations Division reviews all complaintsand allegations involving personnel to determine if aninvestigation is warranted. Every effort is made toinvestigate these allegations in a timely manner toresolve issues that impact upon the Bureau andemployees. The Inspection Division remains sensitiveto the rights of employees and balances that with theobligation to conduct thorough investigations. TheDivision also provides training to all employees in orderto prevent misconduct, and as a result, reassures thepublic that ATF adheres to the highest standards ofethics and integrity.
The OI Personnel Security Branch is responsible forconducting background investigations for all tentativelyselected ATF applicants, as well as certain contractorsassigned to Bureau projects or those working in ATFspace. The Personnel Security Branch conductsperiodic reinvestigations on current employees.Executive Order 12958 mandates periodic reinvestiga-tions every five years for critical-sensitive positionsand every ten years for non-critical positions. Thisoffice is also responsible for position sensitivity anddebriefing of employees at Headquarters who areresigning or retiring from ATF.
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Special agents participating in a Critical IncidentManagement Support Team activation.
A special agent conducts business in the EmergencyOperations Center.
SPECIAL OPERATIONSDuring FY 2000, polygraph program examiners con-ducted approximately 400 examinations of suspects,informants, and witnesses. Of the tests conducted,conclusive opinions were rendered over 90 percent ofthe time. Additionally, 130 pre-employment polygraphscreening exams were conducted this fiscal year.
The National Communications Center/EnforcementOperations Center provides Bureau-wide tacticalcommunications and record communications supportand access to various law enforcement informationdata bases. During FY 2000, the National Communica-tions Center/Enforcement Operations Center receivedand assisted in 177 hotline calls, 854 Federal firearmslicensee calls, and 67 National Response Team/SpecialResponse Team callouts. Additionally, this Branchprocessed 4,021 National Instant Criminal BackgroundCheck System (NICS) referrals. Furthermore, thisBranch entered 1,927 ATF wanted persons into NCIC,and 1,814 ATF wanted persons were arrested andcleared from NCIC. Finally, the Branch received a totalof 68,430 telecommunications messages from ATF,other law enforcement agencies, and various world-wide communications centers.
training for both field and Headquarters personnel.Further, this Section manages the Crisis NegotiationsProgram, which is comprised of special agents spe-cially trained to communicate with subjects causingvolatile or threatening situations.
The Tactical Response Section oversees the SpecialResponse Teams (SRTs) and the ATF OperationalMedical Support Program, and monitors the divisiontactical advisors (DTAs). ATF’s five SRTs are com-prised of highly trained special agents who conduct“high risk” operations, including arrests, search war-rants, undercover operations, and protection details.The SRTs also assist in providing tactical training.During FY 2000, the SRTs were activated a total of 84times and were involved in 119 operations. The ATFOperation Medical Support Program consists of spe-cially trained special agents capable of providingadvanced and basic life support. The DTAs are taskedwith providing standardized tactical direction to ensurethat the most current and safe tactics are beingemployed as well as serving as advance planningassets to division personnel for non-SRT operations.
The Enforcement Support Branch oversees the follow-ing ATF programs: airborne operations, coordination ofspecial event/major event support (e.g. 2002 WinterOlympic Games, NATO 50 celebration, Republican andDemocratic National conventions), protective missionsupport to the U.S. Secret Service and State Depart-ment, participation in gang enforcement programs andconferences, coordination of the Interagency CrimeDrug Enforcement (or OCDETF) Task Force program,the Victim/Witness Assistance program, Federaldeputation through the U.S. Marshals Service, loss/theft of agent cashier funds reporting, maintenance ofEmergency Expense Fund, and coordination of re-quests from the field for Department of Justice andOffice of Enforcement Operations services (e.g.Witness Security Program, international prisoner
The Critical Incident Management Branch is comprisedof the Critical Incident Management Section and theTactical Response Section. The Critical IncidentManagement Section coordinates ATF’s preparation forcritical incidents. The Section also coordinates theactivities of the Critical Incident Management Re-sponse and Support Teams as well as assisting in the
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transfer program, S-Visa applications, use of Federalinmates in investigations).
STRATEGIC INTELLIGENCEThe critical tool of strategic intelligence supportremains a vital force multiplier by which ATF success-fully accomplishes its strategic goals of ReducingViolent Crime, Collecting Revenue, and Protecting thePublic. Major milestones reached in FY 2000 were:
❖ Field Intelligence Capability Expansion
In FY 2000, ATF continued developing Field DivisionIntelligence Groups at each of its 23 Field Divisionsstrategically located throughout the United States.These Intelligence Groups meld the training andexperience of special agents, intelligence researchspecialists, industry operations inspectors, and supportstaff who focus on providing tactical intelligencesupport for their respective field divisions and theirexternal law enforcement partners. FY 2000 saw theselection of supervisory special agents to head eachField Intelligence Group. The Intelligence GroupSupervisors are coordinated by, and work in conjunc-tion with, the Intelligence Division to form a Bureau-wide intelligence infrastructure. During FY 2000,the Intelligence Division provided indoctrination andtraining for all Field Intelligence Group Supervisors,Intelligence Officers, and Intelligence ResearchSpecialists.
❖ Partnerships
ATF maintains intelligence partnerships with theNational Drug Intelligence Center (NDIC), El PasoIntelligence Center (EPIC), Financial Crime Enforce-ment Network (FinCEN), Interpol, the Federal Bureauof Investigation Counter Terrorism Center (FBI/CTC)and other international intelligence sources. Further-more, ATF maintains a Memorandum of Understanding(MOU) with the nation’s six Regional InformationSharing Systems (RISS) which represent thousands ofState and local law enforcement agencies, pledging toshare unique and vital intelligence resources. Theseexternal partners are a key component of ATF’sStrategic Intelligence Plan and the means by which ATFensures a maximum contribution to the nation’s lawenforcement and intelligence communities.
During FY 2000, the Intelligence Division spearheadedthe formulation of a MOU with the FBI concerningcollaborating on investigations conducted by JointTerrorism Task Forces located throughout the UnitedStates. This MOU brings to bear ATF’s unique knowl-edge and skills of explosives and firearms violations to
bear in conjunction with the FBI’s expertise in terrorism.
❖ Technological Advancements
In FY 2000, Phase 1 of a multi-phased, state-of-the-artautomated case management/intelligence reportingsystem entitled N-FOCIS (National Field Office CaseInformation Systems) continued to receive minorenhancements. N-FOCIS comprises two companionapplications: N-FORCE for special agents and N-SPECTfor industry operations inspectors. Both eliminateredundant manual data entry on hardcopy forms andprovide a comprehensive reporting and informationmanagement application in a secure electronic envi-ronment.
N-FOCIS constitutes an on-line case managementsystem and electronic central information repositorythat allows ATF to analyze and fully exploit investiga-tive intelligence. N-FOCIS epitomizes the strength andunique value of ATF’s combined criminal and industryoperations enforcement missions. During FY 2000,the Intelligence Division provided in-service training tomany of ATF’s 23 field division special agents, investi-gative assistants, and inspectors on the use of theN-FOCIS applications. ATF is planning to expand theN-FOCIS functionality and to integrate N-FOCIS withseveral key ATF applications including the NationalRevenue Center, the National Tracing Center, NationalArson and Explosive Repository, and the IntelligenceDivision’s Text Management System. This integrationplan establishes N-FOCIS as the Bureau’s informationbackbone supporting its Strategic Goals.
In FY 2000, the Intelligence Division played an integralrole in the development of the computer applicationN-Quire. N-Quire is a relational database that willreplace the Advanced Serial Case Management system(ASCMe) as the Bureau’s primary lead tracking system,and is a component of N-FOCIS. N-Quire will beintegrated with ATF’s investigative reporting system,N-Force. It will offer ATF personnel a cutting-edge casemanagement tool that retains all the functionality ofASCMe, but in an intuitive, user-friendly format. Thisyear, Intelligence Division personnel worked alongsidecomputer programmers at every stage in the develop-ment of N-Quire, ensuring that it would meet thedemanding, specific needs of the ATF investigator andanalyst. N-Quire will be available to the field by mid-FY 2001.
❖ Accomplishments
Noteworthy accomplishments during FY 2000:
● Assisted the Department of Energy (DOE) with on-site threat assessments of seven special nuclearmaterials facilities across the United States;
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ATF maintains the highest standard for OPSEC inFederal law enforcement and has set the example ofhow an OPSEC Office should function in support ofoperations.
LEGALATF’s Office of Chief Counsel provides a full range oflegal support to the Bureau’s varied missions. TheChief Counsel is a member of the Executive Staff andprincipal legal advisor for the Director, Deputy Director,and Assistant Directors. The Chief Counsel operatesunder general direction of the General Counsel and theAssociate General Counsel (Enforcement) of theDepartment of the Treasury.
Attorneys advise ATF personnel on issues related toalcohol, tobacco, firearms, explosives, arson, andadministrative law. They also prepare, review, or assistin the preparation of proposed legislation, regulations,and executive orders relating to the laws affecting andenforced by ATF; make recommendations to theDepartment of Justice concerning litigation involvingATF; and represent ATF in administrative proceedings.
ATF currently has attorneys in 16 of 23 field divisionsand plans to have all field divisions staffed with attor-neys by FY 2003. The integration of legal servicesinto the field structure will serve ATF well while en-countering the ever-increasing challenges presentedby ATF’s mission.
MANAGEMENT
The Office of Management (OM) provides leadershipto and works in partnership with other senior Bureauofficials in executing ATF’s core business processes(finance, human resources, procurement, and adminis-trative programs) to support the Bureau’s mission.
In FY 2000, OM continued its focus on operating in afiscally sound manner, meeting external mandates,protecting Bureau resources, and improving customerservice. Specific accomplishments include:
❖ Audit OpinionLed the effort that resulted in ATF receiving anUnqualified Audit Opinion for the sixth consecutiveyear;
❖ Conversion of Finance SystemCompleted the first full year converting ATF’sfinancial system from a mainframe to client-serverenvironment and deploying of the system to over500 users nationwide. This conversion movedATF closer to its financial management vision
● Reviewed over 107,000 intelligence communityelectronic messages;
● Assumed a lead role in the National ViolenceAgainst Health Care Provider Task Force wherein1,566 investigative leads have been analyzedsince the Task Force’s inception in December1998;
● Developed and presented intelligence trainingcurriculum to all ATF Intelligence Group Supervi-sors, Intelligence Officers, Intelligence ResearchSpecialists, newly hired special agents and inspec-tors undergoing New Professional Training, allpersonnel undergoing alcohol and tobacco diver-sion investigation training, all special agent super-visors at the first-line and mid-management level,and all personnel undergoing Critical IncidentManagement and Response Team training;
● In FY 2000, a Knowledge Management (KM)initiative was begun in ATF. This initiative involvesthe web-enablement of all mission-critical data-bases to provide “need to know” access to ATFemployees and customers as appropriate. ATFhas established three employee-accessible pilotKM modules on the ATF Intraweb in Audit Services,Arson Investigations, and Alcohol and TobaccoDiversion Investigations for those areas of exper-tise. As these pilots prove successful, ATF willdevelop KM modules for other ATF expert commu-nities of interest in FY 2001.
Operation Security (OPSEC)
The most significant event for the ATF OPSEC ProgramOffice this year was the arrival and appointments ofnew OPSEC Officers. Out of the six selected, fourhave reported and are active in ATF operations. Duringthe past year, the OPSEC Office has been involved inthree major cases providing Threat and Vulnerabilityassessments and performing its primary duty asoperational OPSEC Advisory to each Incident Com-mander. During the duration of each of these cases,the OPSEC Office, in concert with Special OperationsDivision, Intelligence Division and the primary fielddivision, successfully executed enforcement opera-tions on three Outlaw Motorcycle Organizations. Theseoperations were of the largest magnitude in ATF’shistory. During these operations, no ATF personnelwere injured, no suspects were seriously injured andno operational information was leaked to compromisethe operation.
With the support of Division Directors and the trainingand education conducted by the OPSEC Office, re-quest for OPSEC support has increased by over 150%.With the appointment of the new Regional OPSECOfficers, ATF anticipates that this number will betterthan triple during FY 2001.
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of 100% electronic transaction processing,real time financial data, and integration withother major systems. This conversionprovides:
● electronic requisitions, reprogramming offunds, goods and services receiving reports,and travel funds commitments;
● email notification of payment to ATF employ-ees and vendors;
● electronic submission of payment data to theTreasury disbursing agency versus creating atape and sending it Federal Express to Phila-delphia, Pennsylvania, to generate payments;and
● elimination of paper statements associatedwith Small Purchase credit card transactionsand daily draw downs against budgets.
❖ Implementation of the Civil Asset ForfeitureReform Act of 2000With the enactment of the Civil Asset ForfeitureReform Act in April 2000, OM lead the effort toprovide training to 23 field divisions by firstconducting a train-the-trainers conference. Provid-ing additional support to the trainers resulted inthe successful training of special agents andattorneys in the field prior to the August 2000effective date of implementation of the Act.
❖ Human ResourcesHired 208 new agents; 54 have been cleared andare ready to report in FY 2001; and 116 areawaiting clearance. In addition, under new hiringprocedures, over 1100 applicants took the Trea-sury Enforcement Agent Examination during thefiscal year; 760 passed and are eligible to advancein the hiring process.
❖ Construction of the Canine Training FacilityCompleted the construction of a new CanineTraining Facility, which provides state-of-the-artfacilities for training ATF handlers and canines.The 24,000 square-foot facility located in FrontRoyal, Virginia, houses a staff of 21 personnel.
Financial Results, Positionand Condition
Overview of Financial Data
ATF’s financial management vision is “to enable ATF towork better and cost less by financial and programpersonnel working in partnership, using modernmanagement techniques and integrated financialsystems. Together, we will ensure the integrity ofinformation, make informed decisions, and measureperformance to achieve desirable outcomes and realcost effectiveness.”
A number of enhancements were made during FY2000 to comply fully with the Chief Financial OfficersAct of 1990, the Government Management ReformAct of 1994, the Government Performance andResults Act of 1993, the Debt Collection ImprovementAct of 1996, the Federal Managers’ Financial IntegrityAct of 1982, the Federal Financial ManagementImprovement Act of 1996, and a number of GSA-mandated travel regulation changes. ATF completedits financial system conversion from a mainframe toclient-server environment. The Bureau converted allATF cardholders to a new Treasury-wide credit cardprogram, standardized its expenditure categories tomeet Treasury-wide requirements, and enhanced itscost accounting to incorporate payroll expendituresdown to Bureau programs and project levels.
ATF continues to make progress in implementingFederal financial management reforms and incorporat-ing advances in information management technologyinto its processes. This has contributed to ATF againreceiving an unqualified audit opinion fromPricewaterhouseCoopers LLP for FY 2000.
Budget Integrity
Sources of Funds
The total budget authority available for use by ATF inFY 2000 was $676.0 million. Of that amount, theCongress appropriated $566.0 million for the Bureau’sSalaries and Expenses Fund and $40.9 million for theViolent Crime Reduction Trust Fund. An additional$69.1 million was made available from other sources.These other sources included the following: no-yearcarryover funds of $19.6 million; appropriation trans-
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Sources of FundsFY 2000
(Dollars in Millions)
$0.4 HIDTATransfer
ReimbursableAuthority
Other
AnnualAppropriations
$69.1
$606.9 $1.8CarryoverAuthority
No-Year Carryover
Total: $676.0 Million
$19.6 $47.3
Sources of FundsFY 1999
(Dollars in Millions)
$0.6 HIDTATransfer
ReimbursableAuthority
Other
AnnualAppropriations
$63.0
$572.1
$20.1 $41.4
$0.9CarryoverAuthority
No-Year Carryover
Total: $635.1 Million
fers of $.4 million from the Office of National DrugControl Policy to support ATF efforts in High IntensityDrug Trafficking Areas (HIDTA); $47.3 million in
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reimbursable authority from other Government agen-cies; and $1.8 million, which represents 50 percent ofthe FY 1999 unobligated balance.
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Uses of Funds
ATF incurred obligations of $654.5 million duringFY 2000. Of the $16.7 million in budget authority thatwas not obligated in FY 2000, $3.8 million representsthe Bureau’s Salaries and Expenses; $.05 millionrepresents HIDTA funding; and $12.83 million repre-sents no-year appropriation carryover funds availablefor use in FY 2001. The aforementioned fundsinclude $.03 million transferred to the Depart-ment in support of the Honors Attorney Program;$2.56 million transferred to the US Secret Service,
of which $1.8 million was from prior-year unobligatedfunds and $.7 million from No-year funds; $1.1 millionrepresenting the rescission of No-year funding and $1.2million representing the rescission of Salaries andExpenses.
In FY 2000, the Bureau’s full-time equivalent (FTE)level increased by 309 FTE. This increase was thebasis for a corresponding increase in salaries andbenefits and fixed costs; thus, a decrease in opera-tional costs.
Uses of FundsFY 1999
(Dollars in Millions)Total: $612.3 Million
Employee Salaries &Benefits Operational
Costs
$168.0$341.7
$102.6
Fixed Costs
Uses of FundsFY 2000
(Dollars in Millions)Total: $654.5 Million
Employee Salaries &Benefits
OperationalCosts
Fixed Costs
$160.7
$382.7
$111.1
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Cost Accounting and PerformanceMeasurement
ATF continued its multi-year effort to develop andimplement a Bureau-wide planning and reportingframework in the cost accounting and performancemeasurement area. In FY 1998, ATF implemented anew cost structure and laid the groundwork to stan-dardize the cost structure for all Bureau systems thatcapture resource data. This new framework was also
utilized in developing ATF’s FY 2001 and 2002 budgetsubmissions. The new framework links strategicplanning, budgeting, and program planning into asingle, integrated package, permitting the Bureau toimprove formulation and execution of its programs.During FY 2000, the Bureau furthered its implementa-tion of Cost Accounting requirements by havingemployees directly charge their time against theBureau’s activities at the project level in a new stan-dardized time reporting format.
Cost by ActivityFY 1999
Reduce ViolentCrime77%
Protectthe Public
11%Collect
Revenue12%
Cost by ActivityFY 2000
Reduce ViolentCrime78%
Protectthe Public
10%Collect
Revenue12%
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Financial Performance
ATF’s annual financial management performance plancontains key financial performance indicators. Thereare three major activities identified in ATF’s FinancialManagement Performance plan. These activities are:1) provide leadership to promote the acquisition andmanagement of ATF’s resources, revenue, and assets;2) provide quality financial services; and 3) providefinancial information on ATF operations that supportsreporting and decision making. Strategic goals, annualperformance goals, and measures were developed toachieve these three financial management activities.Several of the key goals and measures in the FY 2000Financial Management Performance Plan are displayedbelow.
❖ Activity: To provide quality financial services.
Strategic Goal: Focus on customer service andinnovate financial processes.
Annual Performance Goal: Compliance withPrompt Pay Act (PPA).
Performance Measure: Percentage paid late.
<2.0%
FY 2000 Actual
FY 2000 Plan
FY 1999 Actual
FY 1999 Plan <2.0%
5.0%
22.0%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
In FY 2000, the Bureau’s annual delinquent rateincreased to 22.0 percent, from 5.0 percent inFY 1999. At the beginning of FY 2000, ATF convertedfrom a mainframe-based financial management system to a client-server system. The conversiondecentralized many centralized accounting featuresand impacted payments. The Treasury benchmark is 2 percent, which ATF will strive to meet in FY 2001.
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❖ Activity: To provide financial information on ATFoperations which supports reporting and decisionmaking.
Strategic Goal: Provide complete and accuratefinancial statements.
Annual Performance Goal: Implement newschedules required under OMB Bulletin 97-01.
Performance Measure: Earn an unqualifiedaudit opinion on ATF’s Financial Statements.
2000 Plan: Unqualified Opinion2000 Actual Results: Unqualified Opinion
Annual Performance Goal: Compliance withelectronic funds transfer (EFT) legislation.
Performance Measure: Percentage of vendors paid via EFT.
95.0%
FY 2000 Actual
FY 2000 Plan
FY 1999 Actual
FY 1999 Plan 95.0%
95.0%
88.8%
84.0% 86.0% 88.0% 90.0% 92.0% 94.0% 96.0%
Note: Total number of vendor payments in FY 2000 was 11,822.
Cash Management
ATF is complying with existing cash management lawsand regulations and is aggressively working to enhanceits cash management policies and operations throughthe implementation of new or improved technologies.Its activities in the cash management area are detailedbelow:
❖ Debt Collection Improvement Act Compliance.This act requires the use of electronic fundstransfer for all Federal payments made afterJanuary 1, 1999.
Vendor payments: In FY 2000, ATF paid 89percent of its vendors electronically,seven percent less than in FY 1999. ATF attrib-utes the drop in EFT payments to the systemconversion that resulted in several paymentconfiguration issues. For example,ATF lost the ability to make lump-sum paymentsto some of its vendors, who were consequentlypaid via check.
40
Performance Measure: Dollar amount of interest paid.
<$10,000
FY 2000 Actual
FY 2000 Plan
FY 1999 Actual
FY 1999 Plan <$10,000
$35,581
$44,838
$0 $10,000 $30,000 $40,000$20,000 $50,000
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Employee payments: ATF processes travelpayments 100 percent electronically within oneweek of receiving a completed travel voucher.The significant reduction inprocess time ensures that travelersreceive reimbursement in their bank accountswithin four to eleven days after submitting vouch-ers. Nearly all of ATF’s employeesreceive salary payments via electronic fundstransfer.
❖ Collection Mechanisms. ATF uses the automatedFEDWIRE Deposit System and ACH RemittanceExpress Program to collect alcohol and tobaccoexcise taxes from taxpayers who pay more than$5 million in taxes per calendar year. In addition,ATF uses lockboxes provided through the Treasurylockbox network to collect other excise taxes,firearms license and permit fees, and SpecialOccupational Taxes.
ATF has entered into a Memorandum of Agree-ment with the Financial Management Service(FMS) and a commercial bank to accept creditcards for the payment of licensing fees and othertaxes. Once implemented, ATF plans to expand toinclude accepting credit card transactions over theInternet.
❖ Credit Cards. In FY 1999, ATF implemented thenew government-wide credit card program, withCitibank as its vendor and MasterCard as its brand.ATF has over 3,500 purchase cardholders who usethe card primarily for small purchases (under$2,500). In FY 2000, cardholders purchasedgoods and services in excess of $14 million withthe cards. Over 4,200 ATF employees have travelcards for use while on official government travel;In FY 2000, these individuals used their travelcards to cover travel and transportation expensesin excess of $23 million.
❖ Imprest Funds. ATF closed all miscellaneousimprest funds nation-wide at the end of FY 1999and is encouraging employees to use the pur-chase card whenever possible. ATF cardholdersare authorized to write convenience checks againsttheir purchase cards. In FY 2000, thesecardholders used convenience checks to purchaseover $218,000 in goods and services.
Limitations of the Financial Statements
The financial statements were prepared to report thefinancial position and results of operations pursuantto the requirements of 31 U.S.C. 3515(b). Thestatements have been prepared from the books and
records of ATF according to formats prescribed by theOffice of Management and Budget. The statementsare in addition to the financial reports used to monitorand control budgetary resources prepared from thesame books and records. The statements should beread with the realization that they are for a componentof the U.S. Government, a sovereign entity. Oneimplication of this is that liabilities cannot be liquidatedwithout legislation that provides resources to do so.
Management Responsibilities
Bureau management is responsible for the fair presen-tation of information contained in the principal financialstatements, in conformity with generally acceptedaccounting principles (GAAP) and the form andcontent for entity financial statements specified by theOffice of Management and Budget (OMB) in OMBBulletin 97-01. Management is also responsible forthe fair presentation of ATF’s performance measures inaccordance with OMB requirements. The quality of theBureau’s internal control structure rests with manage-ment, as does the responsibility for identification andcompliance with pertinent laws and regulations.
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T
42
Systems and Controls
he Bureau’s systems modernization efforts aredesigned to improve the effectiveness andefficiency of financial data processing and
reporting capabilities. Planned improvements to theBureau’s financial systems address integrating allfinancial-related systems and establish direct linksbetween program costs and performance measures.
The following were financial management systemaccomplishments in FY 2000:
❖ Continued the rollout and stabilization of theBureau’s new financial system;
❖ Implemented four electronic interfaces with coresystem;
❖ Reconciled and closed out the conversion of fiveyears of historical data;
❖ Completed baseline implementation, including:
● Payroll Interface;● Additional Reports;
❖ Completed documentation of Time & Attendancesystem requirements;
❖ Began phased implementation of new HumanResources system.
FY 2001 Plans:
❖ Upgrade financial system software and hardware;
❖ Configure automated financial statements;
❖ Document Space Management and PropertySystem interface requirements;
❖ Conduct new user and refresher training;
❖ Implement Fleet Card Program with interface tothe core financial system;
❖ Increase number of financial system users inBureau program offices;
❖ Identify integration requirements for Revenuesystems;
❖ Continue phased rollout of HR system.
Integrated Tax Collection System
The Integrated Tax Collection System (ICS) is a long-range project to integrate Bureau revenue manage-ment, including operational and financial processes.Areas specifically targeted for improvement are ATFbusiness processes; revenue collection; managementand accounting practices; and system flexibility torespond to changing functional and informationrequirements.
This project integrates numerous stand-alone tax andfee databases to provide comprehensive revenuemanagement information for Bureau program manag-ers. Completion of the ICS will reduce the risk ofrevenue loss, eliminate duplication found in multipledatabases, and increase ATF’s tax return and claimverification efficiency.
FY 2000 accomplishments:
In late FY 1999 and early FY 2000, ATF deployed Year2000 date compliant applications on an Oracle basedclient-server architecture for the legacy revenuesystems that had been on a mainframe platform.After defining a priority listing of issues which had thepotential to impact adversely the findings of out-yearCFO Act reviews, we expended additional maintenancefunds for solutions to these issues. As part of thesystems development life cycle process, ATF con-tracted for a feasibility study, cost/benefits analysis,and project planning efforts for the Revenue SystemsIntegration project. In addition, ATF prepared thebusiness case for an e-Government initiative in FY2002. The business case presented to ATF’s Invest-ment Review Board and to the Department ofTreasury’s Capital Investment Review Board, has beenwell received and is moving forward for funding in FY2002. ATF would use the e.Government initiative topilot the Pay.gov which is being developed byTreasury’s Financial Management Service. The initiativewould allow ATF to comply with the October 21, 2003mandate of the Government Paperwork Elimination Actand would result in improved customer service.
FY 2001 plans:ATF will continue its efforts to resolve deficienciesidentified in CFO Act reviews of currently deployedrevenue applications. In addition, with the findings andrecommendations of the systems integration study,ATF hopes to address the requirements and designphases of revenue systems integration.
Financial Systems
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Federal Managers’ Financial Integrity Act(FMFIA) Summary
Annual Assurance Statement for FY 2000
ATF has evaluated its management controlsand financial management system for thefiscal year ending September 30, 2000, asrequired by the Federal Managers’ FinancialIntegrity Act (FMFIA) of 1982 and the FederalFinancial Management Improvement Act(FFMIA) of 1996. ATF provides a “reasonableassurance” that the objectives of FMFIA (bothSections 2 and 4) have been achieved andbelieves that it is in “substantial compliance”with the FFMIA. As a result, there is a reason-able assurance that (1) obligations and costsare in compliance with applicable laws andassets are safeguarded; (2) operationalrevenues and expenditures are properlyrecorded and accounted for; (3) accountingsystems conform to the Comptroller General’saccounting principles and standards; and (4)sound business practices are used to manageBureau resources. In addition, ATF has imple-mented and maintained financial systems thatcomply substantially with Federal financialmanagement systems requirements, appli-cable Federal accounting standards, and theUnited States Government Standard GeneralLedger at the transaction level.
FMFIA Highlights
The Bureau centrally manages the Federal Managers’Financial Integrity Act (FMFIA) program, with oversightresponsibilities assigned to the CFO. However, eachexecutive office maintains responsibility for a cost-effective system of controls to provide reasonableassurance that Government resources are protectedagainst fraud, waste, abuse, mismanagement, ormisappropriation. The Executive Staff’s responsibilitiesinclude ensuring that new and existing programs andadministrative support activities are managed effi-ciently and effectively. All Executive Staff membersand managers are accountable for safeguardingresources and are also evaluated as financial manag-ers. In addition, the CFO Steering Committee, chairedby the Deputy CFO, is comprised of the deputies ofeach major Bureau component. This committeeprovides a forum for monitoring progress, resolvingproblems, providing coordination, and developingconsensus recommendations regarding issues that
arise from the Bureau’s audit and its management andinternal control environment.
2000 FMFIA STATUS
ATF’s FY 2000 annual statement of assurance indi-cated that the Bureau could reasonably assure that:
(1) obligations and costs are in compliance withapplicable laws and assets are safeguarded;
(2) operational revenues and expenditures areproperly recorded and accounted for; and
(3) accounting systems conform to the ComptrollerGeneral’s accounting principles and standards.
The reasonable assurance was based on the Bureau’scontinued effort to improve its systems of manage-ment controls and aggressive steps to improveautomated systems. No FMFIA deficiencies wereidentified during FY 2000.
Policies and Procedures
In FY 2000, the Bureau resolved two of the threereportable conditions from FY 1999. The remainingreportable condition requires the further strengtheningof controls to protect information. Due to the sensi-tive nature of this finding, ATF is unable to provideadditional information.
Monthly Accountability Plan
The Monthly Accountability Plan (MAP) continued in FY2000 as a reporting mechanism used to monitorcritical, key activities that must be accomplished inorder to achieve an efficient and effective integratedfinancial management process. Included in the MAPare data on key operating duties and indicators, suchas account reconciliations, system assurance, financialreporting, and workload statistics.
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44
Auditor’s Report on Financial Statements
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Department of the Treasury
BUREAU OF ALCOHOL, TOBACCO AND FIREARMSBALANCE SHEET
As of September 30, 2000 and 1999
2000 1999(In Thousands)
ASSETSEntity Assets
Intragovernmental Assets:Fund Balance with Treasury (Note 2) $ 205,950 $ 191,532Accounts Receivable (Note 3) 23,326 27,849Prepayments 8,686 6,251
Total Intragovernmental Assets 237,962 225,632
Cash (Note 2) 2,136 2,291Property and Equipment, Net (Note 4) 95,754 90,776Other Assets (Note 5) 782 389
Total Entity Assets 336,634 319,088
Non-Entity AssetsIntragovernmental Assets:
Fund Balance with Treasury (Note 2) 2,741 2,520Accounts Receivable (Note 3) 10,225 13,044
Total Intragovernmental Assets 12,966 15,564
Accounts Receivable, Net (Note 3) 3,095 1,413Total Non-Entity Assets 16,061 16,977
TOTAL ASSETS $ 352,695 $ 336,065
The accompanying notes are an integral part of these statements.
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The accompanying notes are an integral part of these statements.
Department of the Treasury
BUREAU OF ALCOHOL, TOBACCO AND FIREARMSBALANCE SHEET
As of September 30, 2000 and 1999
51
2000 1999(In Thousands)
LIABILITIESLiabilities Covered by Budgetary Resources
Intragovernmental Liabilities:Accounts Payable $ 10,078 $ 2,410Payable to Treasury 3,093 1,354
Total Intragovernmental Liabilities 13,171 3,764
Accounts Payable 46,572 31,667Accrued Funded Payroll Benefits 22,835 18,871Other Liabilities (Note 6) 5,215 4,388
Total Liabilities Covered by Budgetary Resources 87,793 58,690
Liabilities Not Covered by Budgetary ResourcesIntragovernmental Liabilities:
Accrued FECA Liability Payable 19,571 18,265Total Intragovernmental Assets 19,571 18,265
Accrued Leave 29,161 27,765FECA Actuarial Liability 102,014 82,139Lease Liability (Note 7) 2,388 10,135Contingent Liabilities (Note 8) 1,865 10,800
Total Liabilities Not Covered by Budgetary Resources 154,999 149,104
TOTAL LIABILITIES $ 242,792 $ 207,794
NET POSITION (Note 9)Unexpended Appropriations $ 160,345 $ 180,296Cumulative Results of Operations (50,442) (52,025)
TOTAL NET POSITION 109,903 128,271
TOTAL LIABILITIES AND NET POSITION $ 352,695 $ 336,065
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The accompanying notes are an integral part of these statements.
Department of the Treasury
BUREAU OF ALCOHOL, TOBACCO AND FIREARMSSTATEMENT OF NET COST
For the Years Ended September 30, 2000 and 1999
2000 1999(In Thousands)
COSTS:REDUCE VIOLENT CRIME
Program CostsIntragovernmental $ 45,275 $ 33,931Public 419,251 368,071Total Program Costs 464,526 402,002
Less: Earned Revenues (Note 10) (17,935) (17,321)
Net Program Costs 446,591 384,681
PROTECT THE PUBLICProgram Costs
Intragovernmental 5,550 4,823Public 51,394 52,315Total Program Costs 56,944 57,138
Less: Earned Revenues (Note 10) (15) -
Net Program Costs 56,929 57,138
COLLECT THE REVENUEProgram Costs
Intragovernmental 6,714 5,370Public 62,172 58,250Total Program Costs 68,886 63,620
Less: Earned Revenues (Note 10) (832) (861)
Net Program Costs 68,054 62,759
Costs Not Assigned to Programs 80,212 86,824
NET COST OF OPERATIONS $ 651,786 $ 591,402
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The accompanying notes are an integral part of these statements.
Department of the Treasury
BUREAU OF ALCOHOL, TOBACCO AND FIREARMSSTATEMENT OF CHANGES IN NET POSITION
For the Years Ended September 30, 2000 and 1999
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2000 1999(In Thousands)
NET COST OF OPERATIONS $ 651,786 $ 591,402
Financing SourcesAppropriations Used 615,369 546,955Donations 438 -Imputed Financing (Note 11) 24,086 24,300Transfers-in (Note 12) 13,476 19,381
Total Financing Sources 653,369 590,636
Net Results of Operations 1,583 (766)
Increase (Decrease) in Unexpended Appropriations (19,951) 17,116
Change in Net Position (18,368) 16,350
Net Position - Beginning of Period 128,271 111,921
NET POSITION - END OF PERIOD $ 109,903 $ 128,271
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The accompanying notes are an integral part of these statements.
Department of the Treasury
BUREAU OF ALCOHOL, TOBACCO AND FIREARMSSTATEMENT OF BUDGETARY RESOURCES
For the Years Ended September 30, 2000 and 1999
2000 1999(In Thousands)
BUDGETARY RESOURCES (Note 13)Budget Authority $ 607,212 $ 572,753Unobligated Balance - Beginning of Period 37,182 27,572Net Transfers, Prior Year Balance (4,325) (925)Spending Authority from Offsetting Collections 46,982 41,196Adjustments 39,009 47,055
TOTAL BUDGETARY RESOURCES $ 726,060 $ 687,651
STATUS OF BUDGETARY RESOURCESObligations Incurred $ 695,703 $ 650,469Unobligated Balances - Available 16,629 20,986Unobligated Balances - Not Available 13,728 16,196
TOTAL, STATUS OF BUDGETARY RESOURCES $ 726,060 $ 687,651
OUTLAYSObligations Incurred $ 695,703 $ 650,469Less: Spending Authority From Offsetting
Collections and Adjustments (93,443) (92,203)Obligated Balance, Net - Beginning of the Period 154,773 168,421Less: Obligated Balance, Net - End of the Period (175,255) (154,773)
TOTAL OUTLAYS $ 581,778 $ 571,914
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The accompanying notes are an integral part of these statements.
Department of the Treasury
BUREAU OF ALCOHOL, TOBACCO AND FIREARMSSTATEMENT OF FINANCING
For the Years Ended September 30, 2000 and 1999
2000 1999(In Thousands)
OBLIGATIONS AND NONBUDGETARY RESOURCESObligations Incurred $ 695,703 $ 650,469Less: Spending Authority From Offsetting
Collections and Adjustments (93,443) (92,203)Financing Imputed for Cost Subsidies (Note 11) 24,086 24,300Transfers-in (Note 12) 13,476 19,381Revenue Not in the Budget (51) (16)
Total Obligations as Adjusted and Nonbudgetary Resources $ 639,771 $ 601,931
RESOURCES THAT DO NOT FUND NET COST OF OPERATIONSChange in Amount of Goods, Services and Benefits
Ordered but Not Yet Provided (1,167) (8,232)Change in Unfilled Customer Orders 14,303 2,395Costs Capitalized on the Balance Sheet (43,748) (43,802)Gain on Sale of Assets - (474)Other (40) (5,055)
Total Resources That Do Not Fund Net Cost of Operations (30,652) (55,168)
COSTS THAT DO NOT REQUIRE RESOURCESDepreciation and Amortization 31,787 28,216Liquidation of Prepayments 4,605 9,440Loss on Disposition of Assets 380 -
Total Costs That Do Not Require Resources 36,772 37,656
FINANCING SOURCES YET TO BE PROVIDED 5,895 6,983
NET COST OF OPERATIONS $ 651,786 $ 591,402
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The accompanying notes are an integral part of these statements.
Department of the Treasury
BUREAU OF ALCOHOL, TOBACCO AND FIREARMSSTATEMENT OF CUSTODIAL ACTIVITY
For the Years Ended September 30, 2000 and 1999
2000 1999(In Thousands)
REVENUE ACTIVITYSources of Cash Collections (Note 14)
Tax Revenues $ 14,105,744 $12,136,139Penalties and Fines 168 79Interest 87 61Other Custodial Revenue 259 306
Total Cash Collections 14,106,258 12,136,585
Accrual Adjustment 4,559 (656)Total Custodial Revenue 14,110,817 12,135,929
DISPOSITION OF COLLECTIONSTransferred to Others 13,844,539 11,870,308(Increase) Decrease in Amounts to be Transferred (1,740) 1,112Refunds and Other Payments (Note 14) 268,018 264,509
Total Disposition of Collections 14,110,817 12,135,929
NET CUSTODIAL REVENUE ACTIVITY $ - $ -
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NOTE 1Summary of Significant Accounting Policies
REPORTING ENTITYThe Bureau of Alcohol, Tobacco and Firearms (ATF orthe Bureau), an enforcement agency within theDepartment of the Treasury, was given full Bureaustatus in 1972. ATF’s mission is to enforce theFederal laws and regulations relating to alcohol,tobacco, firearms, explosives and arson. In addition,ATF is responsible for the collection of excise taxesand fees from the alcohol, tobacco, firearms andammunition industries, as well as Special OccupationalTaxes from certain businesses in the alcohol, tobaccoand firearms industries.
BASIS OF PRESENTATIONThe financial statements were prepared to report thesignificant assets, liabilities, net cost of operations,changes in net position, budgetary resources andcustodial activity of ATF. The financial statements havebeen prepared from the books and records of ATF inconformity with generally accepted accounting prin-ciples (GAAP), and the form and content for entityfinancial statements specified by the Office of Manage-ment and Budget (OMB) in OMB Bulletin 97-01. ATF’saccounting policies are summarized in this note.GAAP for Federal entities are the standards prescribedby the Federal Accounting Standards Advisory Board(FASAB), which was designated the official accountingstandards-setting body for the Federal Government bythe American Institute of Certified Public Accountants.These statements are different from the financialreports, also prepared by ATF, pursuant to OMB direc-tives that are used to monitor and control ATF’s use ofbudgetary resources.
Entity financial resources of ATF present only thoseresources which will be consumed in current or futureoperating cycles, while the non-entity categoriescontain resources relating to ATF fiduciary activities ofrevenue collection.
The Bureau records entity accounting transactions onboth an accrual basis of accounting as well as abudgetary basis. Under the accrual method, revenueis recognized when earned and expenses are recog-nized when a liability is incurred, without regard toreceipt or payment of cash. Budgetary accountingfacilitates compliance with legal constraints andcontrols over the use of Federal funds.
BUDGETS AND BUDGETARY ACCOUNTINGCongressional appropriations provide financing sourceson an annual and no-year basis. These appropriationsfinance operating expenses and the purchase ofproperty and equipment as specified by law. Appro-
priations are also received to meet specific programobjectives. The Bureau’s activities are funded by thefollowing:
● 20-0-1000 - Salaries and ExpensesAppropriation
● 20-0-1000 - Salaries and ExpensesReimbursable Authority
● 20-X-1000 - No-year Appropriation● 20-9/0-1000 - Prior-year Appropriation● 20-9/1-1000 – Y2K Contingent Emergency
Fund● 20-0-1000 - Appropriation Transfers● 20-X-1003 - Laboratory Facilities● 20-X-8526 and 20-X-8528 - Violent Crime
Trust Funds
All of these appropriations and the related gross costs,revenues and net cost as shown in the Statement ofNet Cost are in federal budget functional classification750, Administration of Justice.
The accompanying financial statements of ATF includethe accounts of the above funds under ATF control.
EXCHANGE REVENUE, NON-EXCHANGE REVENUE ANDOTHER FINANCING SOURCES
EXCHANGE REVENUESExchange revenues are inflows of resources to aGovernment entity that the entity has earned. Theyarise from exchange transactions, which occur wheneach party to the transaction sacrifices value andreceives value in return. That is, exchange revenuearises and is recognized when a Government entityprovides something of value to the public or anotherGovernment entity at a price.
ATF provides a number of services including enforce-ment, training and professional development, andscience and information technology that are providedto other government agencies on reimbursable agree-ments. ATF does not make goods to order.
Most of the funds received by ATF on a reimbursablebasis result from the Bureau’s agreement with the U.S.Department of State to train explosives-detectingcanines for foreign countries. The canines will be usedoverseas in the war against terrorism and protectingAmerican travelers abroad. Similarly, ATF is funded ona reimbursable basis for activity related to drug en-forcement activity through the Interagency Crime andDrug Enforcement (ICDE) program formerly managedby the Justice Department.
NON-EXCHANGE REVENUESNon-exchange revenues are inflows of resources thatthe Government demands or receives by donation.
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Such revenue is recognized when a specifically identifi-able, legally enforceable claim to resources arises, tothe extent that collection is probable (more likely thannot) and the amount is reasonably estimable.
Non-exchange revenue is reported on the modifiedcash basis of accounting and is recognized when taxesare remitted or assessed. Refunds are also reportedon the modified cash basis of accounting. Liabilitiesfor approved but unpaid refunds of tax payments areaccrued at year end.
As an agent of the Federal Government and as autho-rized by 26 U.S.C. § 6301, ATF collects excise taxesfrom the alcohol, tobacco, firearms and ammunitionindustries, as well as permit and license fees. Inaddition, Special Occupational Taxes are collected fromproducers, distributors and retailers of liquor; dealersin industrial alcohol; and certain firearms businesses.ATF receives no dedicated collections.
Substantially all of the taxes and fees collected by ATFnet of related refund disbursements are remitted tothe Department of the Treasury General Fund. TheDepartment of the Treasury further distributes thisrevenue to Federal agencies in accordance withvarious laws and regulations. Revenue collected fromfirearms and ammunition taxes is transferred directlyto the Interior Department’s Federal Aid to WildlifeRestoration Fund under provisions of the Pittman-Robertson Act of 1937 to support its mission. ATFdisburses refunds to taxpayers and license applicantsas well as monthly payments to the Governments ofPuerto Rico and the Virgin Islands. These paymentsare used to “cover over” (rebate) excise taxes col-lected for alcohol (mostly rum) produced in theseterritories and used by U.S. producers to supporteconomic revitalization. The amount covered over tothese governments is based on the consolidation offigures obtained from the U.S. Customs Service,Census Bureau, domestic distilleries and the PuertoRico field office. The Bureau also refunds excise taxesto taxpayers who use distilled spirits in the manufac-ture of non-beverage products such as medicines,food products and flavorings.
Receivables are established when assessments aremade for delinquent taxes or penalties and interest.ATF recognizes revenue when accounts receivable areestablished.
FINANCING SOURCESFinancing sources provide inflows of resources duringthe reporting period and include appropriations usedand financing imputed with respect to any cost subsi-dies. Unexpended appropriations are recognizedseparately in determining net position, but are not
financing sources until used.
ATF receives the majority of the funding needed tosupport the Bureau through congressional appropria-tions. ATF receives both annual and no-year appropria-tions that may be used, within statutory limits, foroperating and capital expenditures (primarily equip-ment, furniture and furnishings).
Appropriations are recognized as a financing sourceat the time the related program or administrativeexpense is incurred. Appropriations expended forproperty are recognized as a financing source whenthe asset is consumed in operations (depreciation).
Costs financed by other Federal entities on behalf ofATF are recognized as imputed financing sources asrequired by SFFAS No. 5, “Accounting for Liabilities ofthe Federal Government.”
Other financing sources result from distributions ATFreceives from the Treasury Asset Forfeiture Fund.These resources finance the Youth Crime Gun Interdic-tion Initiative and other law enforcement initiatives,including seizing and forfeiting property of partiesengaged in unlawful activities.
ASSETSEntity intragovernmental assets include the fundbalance with Treasury, amounts due from other Federalagencies under contractual agreements or otherarrangements for services or activities performed byATF, and prepayments for authorized goods andservices for Treasury’s working capital fund. Entityassets include property and equipment, as well asother assets comprising advances and amounts duefrom employees or vendors.
Non-entity intragovernmental assets also include thefund balance with Treasury and accounts receivabledue from Treasury to disburse approved refund claimsof excise taxes and fees. Non-entity assets consistprincipally of receivables for excise taxes and feeswhich are to be distributed to the Treasury, otherFederal agencies and other governments. None ofthe non-entity assets is considered a financing source(revenue) available to offset operating expenses ofATF.
FUND BALANCE WITH TREASURY AND CASHThe Department of the Treasury processes theBureau’s cash receipts and disbursements. Entity fundbalance with Treasury and cash are primarily appropri-ated funds available to pay current liabilities and tofinance authorized purchase commitments. Non-entityfund balance with Treasury is primarily escrow accountsdesignated to finance offers-in-compromise and cash
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bonds held in lieu of corporate surety bonds guaran-teeing payment of taxes.
PREPAYMENTSPrepayments are payments made to cover certainperiodic expenses before those expenses are incurred.In accordance with Public Law 91-614, ATF participatesin the Treasury Department’s Working Capital Fundactivity, for which it receives services on a reimburs-able basis. Payments made in advance are authorizedfor services that have been deemed as more advanta-geous and more economical when provided centrally.The services provided include those for Telecommuni-cations, Payroll/Personnel Systems, Printing, and othercentral services. The amount reported represents thebalance available at the end of the fiscal year aftercharges/expenses incurred by the Fund are deducted.
PROPERTY AND EQUIPMENTAt September 30, 2000, ATF was in the process ofconstructing a laboratory in College Park, Md. and acanine kennel in Front Royal, Va. These costs arecapitalized as construction in progress and will betransferred to the appropriate property account uponcompletion. ATF owns the land that the laboratory isbeing constructed upon and the building for the caninetraining facility. ATF has no deferred maintenance orcleanup costs.
Equipment purchased or donated with a cost or fairmarket value greater than or equal to $25,000 per unitand a useful life of two years or more is capitalized atthe lower of cost or fair market value and depreciated.Other equipment is expensed when purchased.Normal repairs and maintenance are charged toexpense as incurred.
Equipment with a unit price less than $25,000 that ispurchased in bulk, totaling $250,000 or greater, forspecial projects or start up activities is also capitalized.Bulk purchases are grouped according to commoditytype and depreciated using the same methodology assingle capitalized purchases.
LIABILITIESLiabilities represent the amount of monies or otherresources that are likely to be paid by ATF as the resultof a transaction or event that has already occurred.However, no liability can be paid by ATF absent anappropriation. Liabilities for which an appropriation hasnot been enacted are classified as Liabilities NotCovered by Budgetary Resources and there is nocertainty that an appropriation will be enacted. Also,liabilities of ATF arising from other than contracts canbe abrogated by the Government, acting in its sover-eign capacity.
Intragovernmental liabilities consist of amountspayable to the Treasury for collections on excise tax,fee receivables, payables to other Federal agenciesand accrued FECA charges. Liabilities also consist ofamounts due to be refunded to taxpayers, as well asamounts held in escrow for offers-in-compromise andcash bonds held in lieu of corporate surety bondsguaranteeing payment of taxes.
ANNUAL, OTHER AND SICK LEAVEAnnual and other types of leave are accrued asearned, and the accrual is reduced as leave is taken.The balance reflects current pay rates. Sick leave isexpensed as taken.
FEDERAL EMPLOYEES’ COMPENSATION ACTThe Federal Employees’ Compensation Act (FECA)provides income and medical cost protection tocovered Federal civilian employees injured on the joband employees who have incurred a work-related injuryor occupational disease. The future workers’ compen-sation estimates were generated from an applicationof actuarial procedures developed to estimate theliability for FECA benefits. The actuarial liability esti-mates for FECA benefits include the expected liabilityfor death, disability, medical, and miscellaneous costsfor approved compensation cases. The liability isdetermined using the paid losses extrapolationmethod which is calculated over the next 37-yearperiod. This method utilizes historical benefit paymentpatterns related to a specific incurred period to predictultimate payments related to that period.
LITIGATION CONTINGENCIES AND SETTLEMENTSProbable and estimable unsettled litigation and claimsagainst ATF are recognized as a liability and expensefor the full amount of the expected loss as required byInterpretation of Federal Financial Accounting Stan-dards No. 2. Expected litigation and claim lossesinclude settlements to be paid from the TreasuryJudgment Fund (Judgment Fund) on behalf of ATF andsettlements to be paid from Bureau appropriations.
Settlements paid from the Judgment Fund for ATF arerecognized as an expense and imputed financingsource as required by Interpretation No. 2.
RETIREMENT PLANMost ATF employees hired prior to January 1, 1984participate in the Civil Service Retirement System(CSRS), to which ATF contributes 8.51 percent ofbasic pay (9.01 percent for those personnel classifiedas law enforcement agents) and the employee contrib-utes 7.40 percent (7.90 percent for those personnelclassified as law enforcement agents) for a totalcontribution rate of 15.91 percent in FY 2000 (16.91percent for those personnel classified as law enforce-
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ment agents). On January 1, 1984, the FederalEmployees’ Retirement System (FERS) went intoeffect pursuant to Public Law 99-335. Employeeshired after December 31, 1983 are automaticallycovered by FERS and Social Security. For mostemployees hired after December 31, 1983, ATF alsocontributes the employer’s matching share of SocialSecurity. For FERS basic benefit, the employeecontributes 1.2 percent of basic pay (1.7 percent forthose personnel classified as law enforcement agents)while ATF contributes 10.7 percent (23.3 percent forthose personnel classified as law enforcement agents)for a total contribution of 11.9 percent in FY 2000(25.0 percent for those personnel classified as lawenforcement agents). The cost of providing a FERSbasic benefit as provided by OPM is equal to theamounts contributed by ATF and the employeesbecause the plan is fully funded.
All employees are eligible to contribute to the ThriftSavings Plan (TSP). For those employees participatingin the FERS, a TSP account is automatically estab-lished, and ATF makes a mandatory 1 percent contri-bution to this account. In addition, ATF makes match-ing contributions, ranging from 1 to 4 percent, forFERS eligible employees who contribute to their TSP
accounts. Matching contributions are not made to theTSP accounts established by CSRS employees.
ATF recognized the full cost of providing future pen-sion and other retirement benefits (ORB) for currentemployees as required by SFFAS No. 5. Full costincludes pension and ORB contributions paid out ofBureau appropriations and costs financed by the Officeof Personnel Management (OPM). Reporting amountssuch as plan assets, accumulated plan benefits, orunfunded liabilities, if any, is the responsibility of theOPM.
USE OF ESTIMATESThe preparation of financial statements requiresmanagement to make estimates and assumptions thataffect the reported amount of assets and liabilities, aswell as the disclosure of contingent liabilities at thedate of the financial statements, and the amount ofrevenues and costs reported during the period. Actualresults could differ from those estimates.
RECLASSIFICATIONSCertain prior year balances have been reclassified toconform with current year’s presentation.
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NOTE 2Fund Balance with Treasury &and Cash
Fund balance with Treasury and cash as of September30, 2000 and 1999 are provided in the charts shownbelow.
Other fund types include proceeds from the sales ofsurplus vehicles and amounts held in suspenseaccounts.
Cash available for ATF use represents agent cashierfunds. The agent cashier funds are used to financethe purchase of evidence and information frominformants in open ATF investigations and enforce-
ment operations.
Non-entity fund balance consists of offers-in-compro-mise held in escrow accounts representing reducedpayments received by ATF from parties assessedtaxes, penalties, interest and fees awaiting resolution.
Non-entity fund balance also consists of cash bondsreceived (money orders or cash) in lieu of corporatesurety bonds guaranteeing payment of taxes. Theseamounts are reflected as liabilities covered by budget-ary resources, and other liabilities on the BalanceSheet. These funds are restricted solely for thepurposes described and are unavailable to fund ATFoperations.
FY 2000(In Thousands)
UnobligatedEntity: Obligated Available Restricted Total
Trust Funds $ 27,658 $ 8,934 $ - $ 36,592Appropriated Funds 147,618 19,266 - 166,884Other Fund Types - 2,474 - 2,474Fund Balance $ 175,276 $ 30,674 $ - $ 205,950
Cash $ 2,136 $ - $ 2,136
Non-Entity:
Fund Balance $ 2,741 $ 2,741
FY 1999(In Thousands)
UnobligatedEntity: Obligated Available Restricted Total
Trust Funds $ 17,961 $ 7,939 $ - $ 25,900Appropriated Funds 135,214 28,550 - 163,764Other Fund Types - 1,868 - 1,868Fund Balance $ 153,175 $ 38,357 $ - $ 191,532
Cash $ 2,291 $ - $ 2,291
Non-Entity:
Fund Balance $ 2,520 $ 2,520
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NOTE 3Accounts Receivable
Accounts receivable as of September 30, 2000 and1999 are provided in the chart shown below.
Intragovernmental entity receivables representamounts due under reimbursable agreements withFederal entities for services provided by ATF.
Intragovernmental non-entity receivables consistprincipally of funds due to ATF from the Treasury torefund certain excise tax and license fee claims.
An allowance for receivables deemed uncollectible wasnot established for these amounts because moniesdue from other Federal entities are considered fullycollectible.
(In Thousands) FY 2000 FY 1999Entity Non-Entity Entity Non-Entity
Intragovernmental Receivables $ 23,326 $ 10,225 $ 27,849 $ 13,044
Receivables:Taxes/Fees $ 124,728 $ 14,041Interest 29,663 $ 3,583Penalties 6,069 2,054Restitution Cases 550 196
161,010 19,874
Less:Allowance for Uncollectible Accounts (157,915) (18,461)
Receivables, Net$ 3,095 $ 1,413
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Non-entity receivables consist principally of outstand-ing excise and Special Occupational Taxes, fees, fines,penalties and interest that have been assessed andremain unpaid at year end.
An allowance for uncollectible amounts has beenrecognized for non-entity receivables. The allowanceis based on an analysis of individual receivable bal-ances, historical collections and the application ofestimated collectible amounts to categories of receiv-able balances at year end. As of September 30,2000 and 1999, approximately $140.0 million and$13.5 million of the allowance, respectively, werebased on cases that ATF had entered into negotiationsfor payment through offers-in-compromise, which hadnot yet been finalized.
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NOTE 4Property and Equipment
Property and equipment as of September 30, 2000and 1999 are provided in the charts shown below.
Depreciation and amortization are calculated using thestraight-line method. Leasehold improvements areamortized over the lesser of the life of the lease oruseful life of the asset. Assets under capital lease arecapitalized at the lesser of present value of futurepayments or fair market value at the time of acquisi-
tion and depreciated under the guidelines of therespective property categories or the life of the lease,whichever is shorter. Construction in progress repre-sents initial costs of developing Bureau requirementsfor the construction of a laboratory in College Park, Md.and a canine kennel in Front Royal, Va. The landlocated in College Park, Md. is recorded at its acquisi-tion value and the owned building for the caninetraining facility was completed in FY 2000. There areno restrictions on the use or convertibility of propertyand equipment.
FY 2000Service Acquisition Accumulated
(In Thousands) Life (Years) Value Depreciation Net Book Value
ADP Software 3 $ 7,574 $ 4,599 $ 2,975Equipment 2-10 131,885 74,287 57,598Leasehold Improvements 2-5 16,822 6,071 10,751Assets Under Capital Lease 26,476 21,837 4,639Construction in Progress 15,379 - 15,379Land 3,200 - 3,200Buildings 40 1,243 31 1,212
Total Property & Equipment $ 202,579 $ 106,825 $ 95,754
FY 1999Service Acquisition Accumulated
(In Thousands) Life (Years) Value Depreciation Net Book Value
ADP Software 3 $ 6,232 $ 2,395 $ 3,837Equipment 2-10 121,652 59,795 61,857Leasehold Improvements 2-5 8,332 4,627 3,705Assets Under Capital Lease 26,327 13,106 13,221Construction in Progress 8,156 - 8,156
Total Property & Equipment $ 170,699 $ 79,923 $ 90,776
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NOTE 5Other Assets
Other assets as of September 30, 2000 and 1999 areprovided in the chart shown below.
Advances and amounts Due From Employees are cashoutlays made to its employees, contractors, granteesor others to cover a part or all of the recipients’anticipated expenses or as advance payments for thecosts of goods and services the entity receives.
NOTE 6Other Liabilities
Other Liabilities Covered by Budgetary Resourcesincludes current amounts held for offers-in-compro-mise, cash bonds, and deposit fund amounts held inescrow.
(In Thousands) FY 2000 FY 1999
Entity Entity
Other Assets:
Advances $232 $282
Due From Employees 550 107
Total Other Assets $782 $389
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NOTE 7Leases
CAPITAL LEASES
For Assets Under Capital Lease, the acquisition valueof machinery and equipment, which representscomputer hardware, laboratory and other office equip-ment, is $21,751. The remaining $4,725 is theacquisition value of related computer software.
Future minimum lease payments due for capital leaseson machinery, equipment and related computersoftware as of September 30, 2000 and 1999 areprovided in the chart shown below.
In FY 1998, ATF entered into a capital lease, moderniz-ing its Information Technology through Bureau-wide
deployment of its Enterprise Systems Architecture.Under this capital lease agreement, the contractor isproviding computers and related software for ATF’sstrategic and day-to-day business requirements. Inaddition to this major program, the Bureau has enteredinto a number of smaller capital lease agreements forlaboratory and other office equipment.
Assets acquired by capital lease agreements arereported on the accompanying Balance Sheet basedon the lesser of the present value of the futureminimum lease payments or the fair market value ofthe asset. Imputed interest rates range from 3.9 to13.9 percent.
The capital lease liability is expected to be funded fromfuture sources and is presented on the Balance Sheet,as a component of other liabilities not covered bybudgetary resources.
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OPERATING LEASESThe Bureau leases various copiers, fax machines andvehicles under agreements accounted for as operatingleases. Future commitments under operating leases
for equipment as of September 30, 2000 and 1999are provided in the chart shown below.
(In Thousands) FY 2000 FY 1999Fiscal Year2000 $ - $8,3672001 2,286 2,2352002 95 442003 84 342004 66 152005 44 -Future Lease Payments $2,575 $10,695Less: Imputed Interest (187) (560)
Net Capital Lease Liability $2,388 $10,135
Liabilities not covered by budgetary resources $2,388 $10,135
(In Thousands)Fiscal Year FY 2000 FY 1999
2000 $ - $5962001 629 2482002 256 1432003 94 252004 37 42005 9 -Total Future Lease Payments $1,025 $1,016
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NOTE 8Contingent Liabilities
A loss contingency is an existing condition, situation,or set of circumstances involving uncertainty as topossible loss to an entity. The uncertainty shouldultimately be resolved when one or more future eventsoccur or fail to occur. The likelihood that the futureevent or events will confirm the loss or the incurrenceof a liability can range from probable to remote.SFFAS No. 5 and SFFAS No. 12 contain the criteria forrecognition and disclosure of contingent liabilities.
ATF is a party to various administrative proceedings,legal actions, and claims brought by or against it.These claims are of a nature considered normal for agovernment law enforcement agency. Most financialliabilities resulting from litigation and claims againstATF are payable from the permanent judgment appro-priation established by 31 U.S.C. Section 1304 Trea-sury Judgment Fund (Judgment Fund). In the opinionof the Bureau’s management, the ultimate resolutionof these proceedings, actions and claims will notmaterially affect the financial position or cost ofoperations of ATF.
At September 30, 2000, ATF legal counsel wasprocessing approximately 291 of these actions againstthe Bureau. ATF identified and accrued, at September30, 2000, $1.9 million as a contingent liability. Theseamounts represent those costs which ATF believes areprobable and reasonably estimable. These liabilitiesresult from administrative tort and employee claims,lawsuits filed under the Federal Tort Claims Act, andpersonnel and EEO cases.
The change in contingent liabilities from September30, 1999 resulted from the resolution of variousadministrative tort and employee claims, lawsuits filedunder the Federal Tort Claims Act, and the reclassifyingof a lawsuit filed under the Federal Tort Claims Actfrom probable to reasonably possible.
ATF counsel identified at September 30, 2000, $31.1million which ATF has not recorded an accrual for,because in management’s opinion, an unfavorableoutcome is reasonably possible but not probable.
These cases result from administrative tort and em-ployee claims, contract takings, patent infringementand tax claims lawsuits, personnel and EEO cases,administrative EEO/personnel cases, and lawsuits filedunder the Federal Tort Claims Act.
As of September 30, 2000, there was one large groupof Federal Tort Claims Act administrative claimsinvolving the bombing of the Federal building inOklahoma City, Oklahoma. This group entailed 655individual claims seeking over $16 billion in damages.The Department of Justice is the lead agency and ishandling the claims as they involve allegations ofnegligence by a number of Federal agencies, includingATF. ATF believes that it has meritorious defenses tothese claims and that ATF acted properly at all times inthese matters. In addition, there were eight lawsuitsfiled under the Federal Tort Claims Act against theUnited States involving actions by ATF employeesacting within the scope of their employment at theBranch Davidian compound near Waco, Texas. Theplaintiffs were seeking approximately $7.36 billion.The district court issued a favorable decision, but theplaintiffs have filed an appeal. ATF believes thesecases are without merit and is aggressively defendingthe cases on appeal. ATF believes that it has strongarguments that the district court’s decision was properand that ATF’s agents acted properly. Accordingly, ATFhas not recorded any loss provision relative to dam-ages sought by the plaintiffs for these cases.
Public Law 101-510, enacted November 5, 1990,requires Federal agencies to automatically cancelobligated balances on annual appropriated funds afterspecific future time periods, even though the agencyremains contingently liable to pay valid contractorinvoices for services received under contracts signedin the year of obligation. Legitimately incurred obliga-tions that have not been paid at the time an appropria-tion is canceled must be paid from current appropria-tions available for the same purpose. ATF canceledapproximately $51,000 of obligations relating toappropriations canceled at the end of FY 2000. ATFestimates obligations relating to canceled appropria-tions that will be paid from future appropriations willnot exceed $1.0 million in any fiscal year.
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NOTE 10Earned Revenue
Earned revenue represents amounts earned forservices provided by the Bureau to other governmentagencies under reimbursable agreements. ATF hasentered into a variety of reimbursable agreements toprovide services such as enforcement, training andprofessional development, science and informationtechnology, and the management of common areas.These agreements are with agencies such as the
NOTE 9Net Position
Net position of the Bureau as of September 30, 2000and 1999 is provided in the charts shown below.
Unexpended appropriations represent the amount ofspending authorized as of year-end that is unliquidatedor unobligated and which has not lapsed, been re-
FY 2000 Trust Appropriated(In Thousands) Funds Funds Other Total
Unexpended Appopriations:Unobligated - Available $ 8,929 $ 19,154 - $28,083Unobligated - Unavailable - - - -Undelivered Orders 17,755 114,507 - 132,262
Total Unexpended Appropriations 26,684 133,661 - 160,345Cumulative Results of Operations 12,686 (63,128) - (50,442)Net Position $ 39,370 $ 70,533 - $ 109,903
FY 1999 Trust Appropriated(In Thousands) Funds Funds Other Total
Unexpended Appopriations:Unobligated - Available $ 7,936 $ 28,784 - $ 36,720Unobligated - Unavailable - - - -Undelivered Orders 14,480 129,096 - 143,576
Total Unexpended Appropriations 22,416 157,880 - 180,296Cumulative Results of Operations 16,340 (68,365) - (52,025)Net Position $ 38,756 $ 89,515 - $ 128,271
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scinded, or been withdrawn. No-year appropriationsremain available for obligation until expended. Annualappropriations remain available for upward or down-ward adjustment of obligations until expired.
Cumulative results of operations are the net results ofoperations since inception plus the cumulative amountof prior period adjustments.
Secret Service, the Department of Justice, the NationalDrug Intelligence Center, the Department of Housingand Urban Development, the Department of State, theEnvironmental Protection Agency, and other compo-nents of the Department of the Treasury. ATF main-tains a reimbursable agreement with the governmentsof Puerto Rico and the Virgin Islands which stipulatesthat any expenses incurred by the Department of theTreasury at these sites are to be fully offset from taxcollections related to distilled spirits production ormanufacture in those territories.
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(In Thousands) FY 2000 FY 1999
Funds paid by the Judgement Fund $ 1,327 $ 806Future pension and other retirement benefits financed by OPM 22,759 23,494
Total Imputed Financing $ 24,086 $ 24,300
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NOTE 11Imputed Financing
Imputed financing for the year ended September 30,2000 and 1999 is provided in the chart shown below.
Imputed financing sources represent amounts paid inFY 2000 by the Judgement Fund to settle lawsuits andclaims against the Bureau. Additional imputed financ-ing is recognized for amounts financed in FY 2000 byOPM to provide future pension and other retirementbenefits to current ATF employees.
The cost of providing a CSRS benefit is more than theamounts contributed by ATF and its employees. Inaccordance with SFFAS No. 5, bureaus are required toreport the full cost of providing pension benefits toinclude the cost financed by OPM. This additionalexpense totaling $12.0 million is included as anexpense and as an imputed financing source in thefinancial statements for FY 2000.
ATF does not report CSRS assets, FERS assets,accumulated plan benefits or unfunded liabilities, ifany, applicable to retirement plans because theaccounting for and reporting of such amounts is theresponsibility of OPM. Total contributions by ATF of$43.7 million related to these plans were made for FY2000. OPM, rather than ATF, reports liabilities forfuture payments to retired employees who participatein the Federal Employees Health Benefits Program(FEHBP) and Federal Employees Group Life Insurance(FEGLI) Program. In accordance with SFFAS No. 5, ATFis required to report the full cost of providing otherretirement benefits (ORB). Currently, ATF does notrecognize expenses or contribute funds for the cost to
provide health benefits and life insurance to its retir-ees. The FY 2000 FEHBP cost factor applied to aweighted average number of employees enrolled inthe FEHBP is $2,733, which is provided by OPM. TheFEHBP ORB amount totaling $10.7 million is includedas an expense and imputed financing source in ATF’sfinancial statements for FY 2000. The FY 2000 FEGLIcost factor for employees enrolled in the FEGLI pro-gram, as provided by OPM, is .02 percent of theirbasic pay. The FEGLI ORB amount totaling $49,000 isincluded as an expense and imputed financing sourcein ATF’s financial statements for FY 2000.
Total imputed financing sources for FY 2000 equalabout $22.7 million (the sum of $12.0 million forpension expense, $10.7 million for FEHBP ORB and$49,000 for FEGLI ORB).
ATF’s contributions for active employees who partici-pate in the FEHBP were $13.5 million for FY 2000.ATF’s contributions for active employees who partici-pate in the FEGLI programs were $508,000 for FY2000.
In addition to requiring ATF to record the full cost forpensions and ORB, SFFAS No. 5 requires recognitionof an expense and liability for other postemploymentbenefits (OPEB), which includes all types of benefits toformer or inactive employees, their beneficiaries, andcovered dependents. ATF recognizes an expense andliability for OPEB when a future outflow or othersacrifice of resources is probable and measurable onthe basis of events occurring on or before the end ofthe fiscal year. The OPEB amount totaling $51,700 isincluded as an expense and liability in ATF’s financialstatements for FY 2000.
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NOTE 12Transfers-In
Transfers-in consist of funds received by ATF fromTreasury’s Executive Office for Asset Forfeiture (EOAF)to perform the Bureau’s role as a law enforcemententity supporting law enforcement initiatives. EOAF,also known as the Treasury Asset Forfeiture Fund, wasestablished pursuant to the Treasury Forfeiture FundAct of 1992 and 31 U.S.C. 9703. The Fund serves as
NOTE 13Budgetary Resource Information
Budgetary resource information as of September 30,2000 and 1999 is provided in the charts shown below.
Adjustments during the period included recovery ofprior year obligations and cancellation of FY 1995 and1994 appropriations in the amount of $3.3 and $4.0
FY 2000(In Thousands)
Net Amount of Budgetary Resources Obligated for Undelivered Orders at Year End $ 157,570
Available Borrowing and Contract Authority at Year End $ -
Adjustments During the Reporting Period to Budgetary Resources Available at the Beginning of the Year $ 46,462
Amount of Contributed Capital Received During the Reporting Period $ -
FY 1999(In Thousands)
Net Amount of Budgetary Resources Obligated for Undelivered Orders at Year End $ 156,330
Available Borrowing and Contract Authority at Year End $ -
Adjustments During the Reporting Period to Budgetary Resources Available at the Beginning of the Year $ 51,007
Amount of Contributed Capital Received During the Reporting Period $ -
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the Department’s central funding source for financingasset seizure and forfeiture law enforcement initia-tives. Although the Fund is the Department’s centralfunding source for these initiatives, EOAF cannotundertake asset seizure and forfeiture. Only lawenforcement agencies, including ATF, are lawfullyauthorized to perform these duties. Consequently,EOAF distributes a portion of the Fund’s resources toATF.
million respectively. Based on reviews conducted byATF at mid-year and year-end, recoveries include anyopen obligation where all goods and services werereceived and final payments made were liquidated. OnSeptember 30th of the 5th fiscal year after the periodof availability for obligation of an annual appropriation(FY 1995), the account is closed and funds returnedto Treasury’s general fund.
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NOTE 14Non-Exchange Revenue
As of September 30, 2000, Non-Exchange revenuecollections and refunds consisted of the following:
(In Thousands) CumulativeCash Collections Prior
Tax Year Received FY 2000 2000 1999 1998 Years
Excise Taxes $ 13,733,630 $ 10,422,871 $ 3,309,694 $ 207 $ 858Fees and Licenses 372,114 371,727 204 78 105Fines, Penalties, Interest 514 252 157 75 30 and Other Revenue
Total Non-Exchange Revenue Collections $ 14,106,258 $ 10,794,850 $ 3,310,055 $ 360 $ 993
(In Thousands) CumulativeCash Collections Prior
Tax Year Received FY 1999 1999 1998 1997 Years
Excise Taxes $ 12,024,863 $ 8,811,181 $ 3,212,528 $ 467 $ 687Fees and Licenses 111,276 103,848 7,161 171 96Fines, Penalties, Interest 446 339 21 56 30 and Other Revenue
Total Non-Exchange Revenue Collections $ 12,136,585 $ 8,915,368 $ 3,219,710 $ 694 $ 813
(In Thousands)Refunds Prior
Tax Year Disbursed FY 2000 2000 1999 1998 Years
Excise Taxes $ 267,388 $ 135,290 $ 126,311 $ 3,033 $ 2,754Fees and Licenses 630 431 112 53 34Fines, Accounts Receivable - - - - - and Other Revenue
Total Non-Exchange Revenue Refunds $ 268,018 $ 135,721 $ 126,423 $ 3,086 $ 2,788
(In Thousands)Refunds Prior
Tax Year Disbursed FY 1999 1999 1998 1997 Years
Excise Taxes $ 264,007 $ 133,548 $ 126,372 $ 3,048 $ 1,039Fees and Licenses 502 346 96 49 11Fines, Accounts Receivable - - - - - and Other Revenue
Total Non-Exchange Revenue Refunds $ 264,509 $ 133,894 $ 126,468 $ 3,097 $ 1,050
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NOTE 15Analyses of Changes in Seized and Forfeited Property
ATF uses the Department of Justice’s ConsolidatedAsset Tracking System (CATS) to support its fiduciarystewardship responsibilities as they relate to seizedand forfeited property. ATF is a full participatingmember of the Department of the Treasury ForfeitureFund (TFF).
Accounting methodologies for seized and forfeitedproperty reflect standards published in SFFAS No. 3,Accounting for Inventory and Related Property; OMBBulletin No. 97-01; and Departmental accountingpolicy. All property seized or forfeited by ATF for Title18 forfeiture is accounted for in the financial state-ments of the TFF. Seized and forfeited propertyactivity is also reported in the notes to the TFF finan-cial statements.
All contraband (prohibited) property such as illegalfirearms, ammunition, and explosives which no longerhave intrinsic economic value and will not be reintro-duced into the open marketplace are subject todestruction. ATF does maintain fiduciary stewardshipresponsibility for contraband property from time ofreceipt through final disposition.
The following schedules represent an analysis of thechanges in seized and forfeited property holdings forthe years ended September 30, 2000 and 1999. ATFreports year-end seized and forfeited property bal-ances based on the most recent information from theUnited States Attorneys and the Federal Courts on thelegal status of this property. Net adjustments topreviously recorded balances result primarily from thereceipt of updated information on the legal status ofthis property.
FY 2000 Analysis of Changes in Seized Property(Number of Transactions)
Balance Net Cash Other Balance10/1/99 Adjustments Seizures Adjustments Remissions Disposals Forfeitures 9/30/00
General Property -Prohibited Units 25,035 805 12,897 - (1,502) (23) (7,186) 30,026
For material categories, the ending balances for material non-valued seized property are also presented inquantity of items, in compliance with Federal Financial Accounting and Auditing Technical Release Number 4.The ending balances are as follows:
Seized FY 2000 FY 1999Handguns 10,535 10,333Machineguns 955 718Other 28,532 52,603Rifle 9,824 9,026Shotguns 3,472 3,256Total 53,318 75,936
The following analysis of change in material non-valued seized property during Fiscal Years 2000 and 1999,presented by the number of line items seized, are as follows:
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FY 1999 Analysis of Changes in Seized Property(Number of Transactions)
Balance Net Cash Other Balance10/1/98 Adjustments Seizures Adjustments Remissions Disposals Forfeitures 9/30/99
General Property -Prohibited Units 20,950 (497) 10,142 - (314) (30) (5,216) 25,035
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FY 2000 Analysis of Disposition of Forfeited Property(Number of Transactions)
Balance Net Transfers to Balance10/1/99 Adjustments Forfeitures Deposits Sales Transfers Third Parties Destructions 9/30/00
General Property -Prohibited Units 2,703 197 7,186 - (1) (114) (57) (5,583) 4,331
FY 1999 Analysis of Disposition of Forfeited Property(Number of Transactions)
Balance Net Transfers to Balance10/1/98 Adjustments Forfeitures Deposits Sales Transfers Third Parties Destructions 9/30/99
General Property -Prohibited Units 2,318 (132) 5,216 - - (112) (29) (4,558) 2,703
For material categories, the ending balances for material non-valued seized property are also presented inquantity of items, in compliance with Federal Financial Accounting and Auditing Technical Release Number 4.The ending balances are as follows:
Forfeited FY 2000 FY 1999Handguns 1,660 1,115Machineguns 83 98Other 28,607 26,580Rifle 956 603Shotguns 639 340Total 31,945 28,736
The following analysis of change in material non-valued forfeited property during Fiscal Years 2000 and 1999,presented by number of line items seized, are as follows:
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Budgetary Information (Unaudited)
Budgetary Information as of September 30, 2000 and1999 is provided in the following charts.
RequiredSupplementaryInformation
Claims for Refunds not Accrued (Unaudited)
At September 30, 2000 and 1999, ATF had approxi-mately $36.8 and $24.6 million, respectively, inrefund claims under audit by the Tax Processing Centerand the Technical Services offices. Refunds arepayable upon approval.
Abatements/Write-offs (Unaudited)
At September 30, 2000 and 1999, ATF had approxi-mately $5.9 and $1.6 million, respectively, of assess-ments the entity still has statutory authority to collectat the end of the period, but has no future collectionpotential and are therefore defined as write-offs.
FY 2000(In Thousands) Appropriated Revolving Trust Other
Funds Funds Funds Fund Types Total
Budgetary Resources:
Budget Authority $ 566,292 $ - $ 40,920 $ - $ 607,212Unobligated Balance - Beginning of period 29,246 - 7,936 - 37,182Net Transfers, Prior Year Balance (734) - (3,591) - (4,325)Spending Authority from Offsetting Collections 46,813 - 169 - 46,982Adjustments, Anticipated for Rest of Year 38,049 - 960 - 39,009Total Budgetary Resources $ 679,666 $ - $ 46,394 - $ 726,060
Status of Budgetary Resources:
Obligations Incurred $ 658,238 $ - $ 37,465 $ - $ 695,703Unobligated Balances - Available 7,700 - 8,929 - 16,629Unobligated Balances - Not Available 13,728 - - - 13,728Total Status of Budgetary Resources $ 679,666 $ - $ 46,394 $ - $ 726,060
Outlays:
Obligations $ 658,238 $ - $ 37,465 $ - $ 695,703Less: Spending Authority from Offsetting Collections and Adjustments (91,194) - (2,249) - (93,443)Obligated Balance, Net-Beginning of the Period 136,809 - 17,964 - 154,773Less: Obligated Balance, Net-End of the Period (147,592) - (27,663) - (175,255)Total Outlays $ 556,261 - $ 25,517 $ - $ 581,778
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FY 1999(In Thousands) Appropriated Revolving Trust Other
Funds Funds Funds Fund Types Total
Budgetary Resources:
Budget Authority $ 566,753 $ - $ 16,000 $ - $ 572,753Unobligated Balance - Beginning of period 18,902 - 8,670 - 27,572Net Transfers, Prior Year Balance (925) - - - (925)Spending Authority from Offsetting Collections 41,196 - - - 41,196Adjustments, Anticipated for Rest of Year 43,799 - 3,256 - 47,055Total Budgetary Resources $ 659,725 $ - $ 27,926 - $ 687,651
Status of Budgetary Resources:
Obligations Incurred $ 630,479 $ - $ 19,990 $ - $ 650,469Unobligated Balances - Available 16,620 - 4,366 - 20,986Unobligated Balances - Not Available 12,626 - 3,570 - 16,196Total Status of Budgetary Resources $ 659,725 $ - $ 27,926 $ - $ 687,651
Outlays:
Obligations $ 630,479 $ - $ 19,990 $ - $ 650,469Less: Spending Authority from Offsetting Collections and Adjustments (88,946) - (3,257) - (92,203)Obligated Balance, Net-Beginning of the Period 147,978 - 20,443 - 168,421Less: Obligated Balance, Net-End of the Period (136,809) - (17,964) - (154,773)Total Outlays $ 552,702 - $ 19,212 $ - $ 571,914
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Principal Officers of ATF
Director .................................................................................................Bradley A. Buckles
Deputy Director ........................................................................................ Patrick D. Hynes
Chief Counsel .......................................................................................... John J. Manfreda
Assistant Director (Alcohol and Tobacco Programs) ................................. Arthur J. Libertucci
Assistant Director (Field Operations) ........................................................... David L. Benton
Assistant Director (Firearms, Explosives and Arson Programs) ....................... John P. Malone
Assistant Director (Inspection) ............................................................ Richard J. Hankinson
Assistant Director (Liaison and Public Information).......................................... Mark C. Logan
Assistant Director (Management)/CFO .......................................................... William T. Earle
Assistant Director (Science and Technology)/CIO ................................ Partrick R. Schambach
Assistant Director (Training and Professional Development) ........................ Gale D. Rossides
For additional information contact:
Office of Public InformationBureau of Alcohol, Tobacco and Firearms
650 Massachusetts Avenue, N.W.Washington, D.C. 20226-0013
(202) 927-8500Internet Address
(http://www.atf.treas.gov)
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ATF P1992.1 (5/2001)