- The Washington Times - Wednesday, December 22, 2004

Two sets of auditors are reviewing the way costs and assets were apportioned among the 22 agencies that merged into the Department of Homeland Security, amid claims from one that it was “shortchanged” by hundreds of millions of dollars.

The probes are the latest in a string that have examined the troubled finances of Immigration and Customs Enforcement (ICE) — the agency charged with tracking money launderers, sanctions busters and human traffickers.

ICE is continuing a hiring freeze and a ban on all “non-mission critical” travel or other expenditures instituted earlier this year because of serious budget overruns.

One investigation was commissioned by the department’s chief financial officer, Andrew Maner, in an effort to sort out competing claims about the way costs should be divided when one agency pays another’s bills, or provides legal or accounting services for another element of the department.

ICE spokesman Dean Boyd said auditors from United Kingdom-based accountants Grant Thornton had completed their examination of the agency’s books, and now are expected to look at the records of other Department of Homeland Security agencies.

“These issues are very, very complex,” Mr. Boyd said. “Every agency is making claims about its costs and how the reimbursements should be done. … Going forward, we want to ensure that this is resolved.”

The department’s inspector general also is looking into the budget crisis at ICE, said Richard Berman, assistant inspector general for audit.

“We will be looking at the whole question of exactly how [ICE’s] budget problems arose and … whether the actions taken in response have had a direct and serious effect on operations,” he said.

ICE officials have insisted that operations were unaffected by the hiring freeze and other belt-tightening measures.

But Mr. Berman said his office has “heard a lot of complaints … from field offices” about the effect of the measures.

The financial crisis at ICE began during the complex merger of federal agencies from numerous departments into a not-yet-coherent whole, Mr. Berman and other officials say.

“We still consider Homeland Security to be in a startup mode,” he said, explaining that when the merger took place, many elements transferred from other agencies did not have their own accounting or legal personnel, or their own procurement systems.

ICE “lost a lot of key staff” during and after the merger, Mr. Berman said. “They got way behind” with their accounts.

There was also a lot of “cross-servicing” between agencies, with different elements of the department providing legal or other administrative functions for one another, he said.

ICE had to “use its own resources and its own budget to pay bills incurred on behalf of other elements of Homeland Security,” Mr. Berman said.

Disputes about the way those costs should be allocated dragged on throughout the 2004 fiscal year. ICE ended up “not only behind the curve on their accounts, but with serious budget problems,” he said.

As the 2004 fiscal year ended in October, ICE received a $500 million reimbursement.

But some say that solves only half the problem.

One government official familiar with the agency’s predicament said costs were allocated poorly during the merger.

Those allocations, Mr. Berman said, are what ICE officials blame for their predicament.

“That’s where they say the problems come from,” he said. “They believe they were shortchanged in the initial [budget] allocations.”

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