ARCHIVED - Audit of the Control and Disposal of Goods Seized Under the Customs Act

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Internal Audit Report
February 2009

Table of Contents

• Executive Summary
• Introduction
  • Background
  • Risk Assessment
  • Audit Objective and Scope
  • Approach and Methodology
  • Audit Criteria
  • Statement of Assurance
• Audit Opinion
• Findings, Recommendations and Management Action Plan
  • Adequacy and effectiveness of the control framework
  • Safeguard of assets
  • Compliance with authorities
• Appendix A — Seizures made under the Customs Act in 2007
• Appendix B — Branch responsibilities
• Appendix C — Acronyms, forms and terms

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Executive Summary

Background

The Canada Border Services Agency (CBSA) processes goods that are being imported, collects duties and taxes, and enforces Canadian law. Goods that are not in compliance with the law may be seized. Goods taken into the custody of the CBSA are considered assets under the Government Security Policy and must be protected from loss or damage. The CBSA is required to maintain secure storage facilities that safeguard seized goods. These facilities are called bond rooms or Queen's warehouses. Seized goods are rarely suitable for sale and are disposed of in compliance with the law. With respect to seized goods, the CBSA's Admissibility, Enforcement and Comptrollership branches are responsible for program policies and the Operations Branch is responsible for program delivery.

In June 2006, the former Internal Audit and Evaluation Committee approved an audit of the control and disposal of seized goods as part of the CBSA's three-year, risk-based internal audit plan.

Objective and Scope

The objective of the audit was to assess the adequacy and effectiveness of the framework for managing the control and disposal of goods seized under the Customs Act.

The audit scope included goods seized under the Customs Act and the secure storage in bond rooms and Queen's warehouses. However, the findings of the audit could apply to goods seized or detained under other legislation. Audit tests for physical security, access control, inventory control, facility capacity, monitoring, storage, packaging and disposal practices were conducted in three of the CBSA's eight regions.

The audit was conducted between January and June 2008 and included ports of entry (airports, commercial offices and postal plants), Queen's warehouses, affiliated intelligence and investigation storage facilities and regional security and accommodations. Seizures that took place from January to June 2007 were sampled and traced from inception to disposal.

Statement of Assurance

This audit engagement was planned and conducted in accordance with the Internal Auditing Standards for the Government of Canada.

Audit Opinion

The control framework for the management of seized goods was not effective in providing assurance to management that seized goods were safeguarded, accounted for and properly disposed of. The framework had control gaps and existing controls were not fully applied.

Main Observations

At the time of the audit, there was no office of primary interest to provide overall direction, accountability and coordination for the control and disposal of seized goods. After bringing this to the attention of senior management during the course of the audit, the Operations Branch was identified as the lead to provide direction and coordination.

Policies and procedures on seizure processes were available; however, other policies and procedures on storage and disposal were incomplete. Furthermore, automated Integrated Customs Enforcement System controls were not working as intended.

Specific employees had been assigned to manage seized goods at two thirds of facilities visited. Security and access control to storage facilities were below standard and storage requirements for drugs, firearms and ammunition were not consistently met. Inventory was traced; however, inventory control was inadequate. At Queen's warehouses in two of three regions, there was no segregation or rotation of duties. Disposal of goods was not fully compliant with authorities, procedures under the Process Monitoring Framework were not completed and there were risk areas that were not detected or properly managed.

Management Response

The Agency agrees with the findings and recommendations in this report. The current control framework for the management of seized goods is not effective.

Effective immediately, the Operations Branch will take responsibility for ensuring the deficiencies identified in the audit are addressed by the accountable branches. We have developed a strategy for the management action plan (MAP) that assumes that the Agency should not tolerate any further exposure to risk. As such, our actions are prioritized as follows:

• In the short term: By February 13, 2009, a memo will be issued to regional directors general identifying the most critical deficiencies in this report. The memo will direct them to take immediate corrective action and report back about their completed actions to the Operations Branch by March 31, 2009.
• In the medium term: By April 30, 2009, and in response to recommendation 1.3, the Operations Branch will develop and issue interim standard operating procedures (SOPs) to provide guidance and improve the management of storage and disposal practices in the regions.
• In the longer term: By December 2009, comprehensive storage and disposal policies, procedures and monitoring mechanisms will be developed and implemented to replace the above-mentioned SOPs. On-site physical security and storage assessments will be completed by March 2010.

The management action plan will also address the storage and disposal issues covered by recommendation 5.91 of the October 2007 Report of the Auditor General of Canada, Chapter 5, “Keeping the Border Open and Secure”.

CBSA management recognizes the importance of uniform and formalized procedures, facilities and monitoring mechanisms and these will be identified, developed and implemented as quickly as possible to address issues and discrepancies identified in the audit.

Introduction

Background

The Canada Border Services Agency (CBSA) processes goods that are being imported, collects duties and taxes, and enforces Canadian law. Goods that are not in compliance with the law may be seized or detained.

Seizures are executed for serious infractions or on undeclared goods under section 110 of the Customs Act or subsection 489(2) of the Criminal Code. Detained goods are kept under section 101 of the Customs Act because their admissibility was not established yet they were declared.

In 2007, the CBSA executed over 29,460 seizures of goods under the Customs Act with a total value of $401 million; these goods were documented on K19 forms and recorded in an electronic seizure system – the Integrated Customs Enforcement System (ICES). Commodities commonly subject to seizure action under the Customs Act were drugs, firearms, prohibited weapons and devices, child pornography, alcohol, tobacco, vehicles, trailers, jewellery and undeclared dutiable goods such as clothing, footwear, tools and electronic equipment. A breakdown of seizures by description can be found in Appendix A.

The CBSA deals with seized admissible goods (from travellers) by applying “terms of release” (TOR) whereby the importer can keep his or her goods by paying an amount of money. If an importer cannot pay immediately, the CBSA takes custody of the goods and the goods are released only if the TOR is paid. The introduction of the Administrative Monetary Penalty System eliminated the seizure of goods of a commercial nature, unless there are extraneous circumstances or the goods are inadmissible into Canada.

For serious infractions, such as the undeclared import of drugs, prohibited/restricted firearms, prohibited weapons or child pornography, the goods are seized with no TOR and the goods are taken into the custody of the CBSA. As well, there is no TOR for seized cigarettes, tobacco or alcoholic beverages.

Seized and detained goods taken into the custody of the CBSA are considered assets under the Government Security Policy and must be protected from loss or damage. The CBSA is required to maintain secure storage facilities that safeguard seized goods. These facilities are called bond rooms or Queen's warehouses. A bond room is a single office storage facility located in a particular CBSA office. A Queen's warehouse is a large multi-office collection facility for the extended storage and disposal of seized, detained and unclaimed goods. Seized and detained goods taken into the custody of the CBSA are rarely suitable for sale.

In executing its trade and traveller facilitation, revenue collection and law-enforcement mandates, the CBSA must respect Canadian laws concerning the handling, storage and disposal of goods, including requirements of other government departments.

Furthermore, sensitive seized goods such as drugs, firearms, prohibited weapons and devices, and child pornography are evidence and could result in criminal charges against the importer. For legal reasons, the chain of custody must be controlled and documented. To maintain the sterility of the chain of custody, seized goods must be segregated from other non-seized or non-detained goods. Drugs, firearms, ammunition and other sensitive contraband should be stored in limited-access security containers, such as safes or individual lockers, located within the bond room or Queen's warehouse.

The former Canada Customs and Revenue Agency previously audited the program area that dealt with seized and detained goods in 1998. Relevant key findings were the following:

• Physical control and security deficiencies, lack of access control, lack of secure outdoor storage facilities and improper storage of firearms and ammunition. The audit recommended that threat and risk assessments be conducted at all offices and that access be controlled.
• Record-keeping deficiencies and lack of an electronic national inventory control system. ICES had been introduced, but it did not provide inventory control.
• Headquarters monitoring was (almost) non-existent; line managers were responsible for monitoring checks of their own areas and were usually not able to provide evidence that checks had been done; discrepancies that should have been detected through monitoring were undetected. The audit recommended that a monitoring and reporting process be developed and implemented to ensure appropriate security and control over held goods.

The October 2007 Report of the Auditor General of Canada, Chapter 5, “Keeping the Border Open and Secure,” reported that processes for seized goods needed improvement and noted poor control (at certain locations) over the administration and handling of seized goods, manual cataloguing of seized goods and the continued storage of seized firearms.

The Admissibility, Enforcement and Comptrollership branches are responsible for program policies and the Operations Branch is responsible for program delivery. A list of branch responsibilities can be found in Appendix B.

In June 2006, the former Internal Audit and Evaluation Committee approved an audit of the control and disposal of seized goods as part of the CBSA's three-year risk-based internal audit plan.

Risk Assessment

The risk assessment, combined with preliminary findings based on research, analysis and consultations held with the Admissibility, Enforcement, Comptrollership and Operations branches, determined that the audit would cover the following key risk areas:

• Adequacy and effectiveness of the control framework;
• Physical security, access control and facility capacity;
• Inventory control; and
• Storage, packaging and disposal of seized goods.

The risk assessment concluded that the audit be limited to goods seized under the Customs Act. Managing, safeguarding and disposing of these seized goods held in CBSA bond rooms and Queen's warehouses is an area of known risks.

Hence detained goods, such as those accounted for on K24, K26 and K27 forms (see Appendix C), were excluded from the transaction tracing. This audit did not cover currency seized under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act as this area was audited in 2005-2006. Nor did the audit cover items (mostly identity documents) seized under the Immigration and Refugee Protection Act because preliminary research indicated the seizure of these items is a separate process that is best addressed in a stand-alone audit. The audit did not cover revenue collection, recording or cost recovery as there is little revenue generated from seized goods.

Audit Objective and Scope

The objective of the audit was to assess the adequacy and effectiveness of the framework for managing the control and disposal of goods seized under the Customs Act.

The audit scope included goods seized under the Customs Act and the secure storage in bond rooms and Queen's warehouses. However, the findings of the audit could apply to goods seized or detained under other legislation. Audit tests for physical security, access control, inventory control, facility capacity, monitoring, storage, packaging and disposal practices were conducted in three of the CBSA's eight regions: Quebec, Greater Toronto Area and Windsor-St. Clair.

The audit was conducted between January and June 2008 and included ports of entry (airports, commercial offices and postal plants), Queen's warehouses, affiliated intelligence and investigation storage facilities and regional security and accommodations. Seizures that took place from January to June 2007 were sampled and traced from inception to disposal.

Approach and Methodology

Audit procedures included the following:

• A review of legislation, policies, procedures and guidelines.
• Analysis of data and information from various sources such as, but not limited to, the Customs Management Reporting System and ICES.
• Interviews with key stakeholders in the Operations, Enforcement, Admissibility and Comptrollership branches.
• Documentation, analysis and an assessment of the control framework to determine design adequacy and the presence and appropriateness of preventive, detective and corrective controls.
• Visits to selected regions to interview management, inspect storage facilities and review seizure files. The objective was to test controls through compliance measurement of physical security, access control, inventory control, facility capacity, monitoring, storage, packaging and disposal practices. A total of 37 CBSA locations encompassing 57 interior storage facilities and 11 exterior storage areas were inspected at ports of entry (airports, land border crossings and postal plants) and at regional operations such as Queen's warehouses and investigation and intelligence facilities.[ 1 ]
• A sampling of K19 forms (seizure files) from the period of January to June 2007 using stratified random sampling to assess if disposal practices were in compliance with authorities and within time limits. K19 forms (seizure files) were selected from the following targeted commodities: drugs, firearms, child pornography, prohibited weapons and devices, alcohol, tobacco, vehicles and high-value dutiable goods such as jewellery. Seizures were reviewed and traced from inception to disposal.

Audit Criteria

Based on the preliminary findings from the planning phase and the results of the risk assessment, it was determined that the audit would cover the following criteria:

Management Accountability Framework[ 2 ] Elements	Lines of Enquiry	Criteria
Governance, policy and programs	Adequacy and effectiveness of the control framework	Management has established an adequate and effective national and regional control framework: Policies and procedures ICES automated controls Risk assessment Monitoring
Stewardship	Safeguard of assets	Storage facilities are physically secure.
		Access to storage facilities is controlled.
		An inventory control system is in place.
		Storage facilities have adequate capacity.
	Compliance with authorities	Seized goods are stored and packaged in compliance with authorities.
		Seized goods are disposed of in compliance with authorities.

 

Statement of Assurance

This audit engagement was planned and conducted in accordance with the Internal Auditing Standards for the Government of Canada.

Audit Opinion

The control framework for the management of seized goods was not effective in providing assurance to management that seized goods were safeguarded, accounted for and properly disposed of. The framework had control gaps and existing controls were not fully applied.

Findings, Recommendations and Management Action Plan

Adequacy and effectiveness of the control framework

An adequate and complete control framework requires accountability and responsibility, with clearly defined roles and responsibilities, a complete set of policies and procedures, appropriate infrastructure (facilities and systems), knowledgeable people and accountable program oversight, monitoring and risk assessment. An effective control framework for seized goods would ensure that goods are kept secure, accounted for and disposed of in compliance with authorities.

Accountability and responsibility

At the time of the audit, there was no office of primary interest to provide overall direction and coordination for the control and disposal of seized goods. After bringing this to the attention of senior management during the course of the audit, the Operations Branch was identified as the lead to provide direction and coordination.

The disparate division of responsibilities between the branches created a leadership and accountability void whereby there was no centralized structure providing direction and coordination. This resulted in a lack of accountability and a partial loss of program oversight. The organizational capability of the CBSA to provide timely guidance to ports of entry and regions, to effectively monitor program activities and risks, to collect accurate information for decision making and to move forward to address program management deficiencies was compromised.

Policies and procedures

The Customs Enforcement Manual provides detailed guidance on the seizure process and it was electronically available to CBSA offices. Guidance on facility construction of bond rooms, Queen's warehouses and fenced areas was included in CBSA publications, such as the Land Border Design Guide 2003, and in RCMP physical security publications.

The Comptrollership Manual, Security Volume, Chapter 11, “Security Design of Canada Border Services Agency Facilities,” was published electronically and was available, but it did not specifically discuss bond rooms or Queen's warehouses. In addition, there was no electronic link to the Appendix A, “Physical Security Standards and Design Specifications Guide.” There was a link to RCMP security policies, but the application of RCMP lead agency policies to the CBSA environment, such as to bond rooms and Queen's warehouses, would not be evident to an uninformed person.

The former Canada Customs and Revenue Agency's policy on disposal, the Finance and Administration Manual, Chapter 2, section 6, subsection 2, “Disposal of Seized, Abandoned and Forfeited Goods,” was not comprehensive and had not been rolled over into a CBSA policy. In addition, the guidelines and procedures section, which provided the most useful disposal advice, was no longer electronically available.

Except for the Customs Enforcement Manual, there were no comprehensive CBSA policies and procedures specific to the control and disposal of seized goods readily available to location managers so that they could self-assess and self-correct deficiencies. For example, there were CBSA policy and procedural gaps in the following areas:

• Security of seized goods, control of access and security zone management of bond rooms and Queen's warehouses.
• Storage requirements of seized goods (i.e. drugs, firearms and ammunition), acceptable security containers and the segregation of seized goods.
• Disposal of seized goods.
• The environmental, health and safety issues surrounding handling, storage and disposal of seized goods.

Policies were found to be out of date, such as Memorandum D19-9-2, Regulations of Narcotics and Controlled and Restricted Drugs - Narcotic Control Act, Food and Drugs Act. Certain policies were not assigned to an Agency branch, such as Memorandum D4-1-6, Disposal of Abandoned and Forfeited Goods. The audit found that existing policies and procedures were not consolidated into a central reference tool, such as an intranet website.

Policy and procedural gaps were caused by the lack of central accountability and responsibility for the program area, which resulted in a partial loss of policy and procedural oversight, and a lack of expertise on how to manage seized goods.

ICES controls

Seizures are electronically recorded by border services officers in ICES, along with the details of all seized goods, making this system an integral part of the seizure process. As well, supporting narrative reports justifying the seizure action are documented in ICES; this information is available to managers and at CBSA Headquarters (HQ).

Seizures automatically roll over onto an ICES seizure review work list for a superintendent to review. This control ensures that seizures are appropriate and properly documented, and that seized goods are delivered to the bond room or released upon payment of the TOR. If the border services officer has omitted to enter critical data into the seizure file (e.g. a narrative report), then this will be indicated to the superintendent via the seizure review work list. Seizures on the work list should be reviewed within five working days.[ 3 ] To review this list, the superintendent selects a completed seizure and indicates in ICES that the electronic and paper seizure files are complete and submitted.

Nineteen port-of-entry work lists associated with the CBSA offices visited were accessed and reviewed (see Table 1 below). The audit found seizures on the work lists dating back as far as June 2000. A subsequent review of the same work lists in September 2008 found further degradation, primarily linked to three ports of entry; other port-of-entry work lists remained nearly static or showed slight improvement.

Table 1: ICES seizure review work lists

Date	Total number of seizures on the work lists	Seizures 30-90 days old	Seizures 91-365 days old	Seizures older than 365 days
November 2007	1,455	606	334	134
September 2008	3,326	1,318	1,166	204

Occasionally, seizures may be cancelled out of ICES due to data errors or because the circumstances did not warrant a seizure. Users assigned a superintendent profile have this privilege and, when seizures are cancelled, the replacement seizure number, or the explanation, should be recorded in the “reason for cancellation” field. Once cancelled, seizure details are no longer accessible to users in the regions, but if needed these details can be obtained from HQ.

A sample of 62 cancelled seizures was selected and traced to a replacement seizure or to a reasonable explanation. All but one seizure was traceable to a satisfactory explanation. The audit found that half of cancelled seizures replaced with another seizure (23 of 46) did not have the replacement seizure number quoted in ICES. Furthermore, the audit noted there was no secondary review or control over cancelled seizures and there was no “cancelled seizure review work list” available in ICES for a chief's review.

Overdue work lists and lack of the replacement seizure numbers were caused by inattentive superintendents. Chiefs did not adequately monitor the activities of superintendents in ICES; for example, at visited ports of entry only 10 (of 27) chiefs had access to ICES. When seizure review work lists are not kept up to date, management cannot detect and correct seizure deficiencies. If replacement seizure numbers are not recorded in ICES, then tracing and monitoring of cancelled seizures may be more difficult. If there is no “cancelled seizure review work list” available in ICES, then cancelled seizures may not be reviewed and monitored. It is important to control and monitor the cancellation of seizures because there is a risk that users could cancel seizures to misappropriate seized goods.

Risk assessment

It is Treasury Board policy to “identify, and reduce or eliminate risks to its property, interests and employees, to minimize and contain the costs and consequences in the event of harmful or damaging incidents arising from those risks, and to provide for adequate and timely compensation, restoration and recovery.”[ 4 ]

This audit noted the following risk areas that had not been detected or properly dealt with:

• National program accountability, oversight, monitoring and risk assessment;
• Proper security management of storage facilities and seized goods;
• Adequate inventory control procedures;
• Disposal of seized goods in compliance with authorities; and
• Appropriate segregation of duties for managing seized goods at Queen's warehouses.

These risk areas were not detected or properly dealt with due to a lack of centralized accountability, coordination and direction, which may increase the probability that control vulnerabilities and failures will not be detected and corrected.

Monitoring

The Process Monitoring Framework (PMF) was developed by the CBSA in 2007. It is a set of self-monitoring procedures. Tier one monitoring is performed biannually by local CBSA offices. Tier two and tier three monitoring will be performed annually by Planning and Program Integration divisions (Operations Branch) and at HQ respectively. Tier one monitoring procedures were implemented in spring 2007 and included procedures on monitoring bond rooms, seized goods inventory and ICES.

The locations and regions visited were asked to provide proof of monitoring. One region provided a report on a review of seized goods. The other regions and locations could not provide evidence to support that PMF procedures had been implemented for seized goods as required. The audit concluded that PMF monitoring procedures were not consistently completed (see Table 2 below).

Table 2: PMF exception reports compared to audit findings

PMF monitoring procedures	Fall 2007 PMF exceptions[ 5 ]	Winter 2008 Audit findings
Verify that seizure reports are documented in ICES and reviewed by superintendents within five days of completion (ICES superintendent review work lists).	Seizures were not reviewed within five days. The five-day standard is impossible to adhere to.	Superintendent work lists were overdue and dated back to 2000. Two thirds of the seizures were older than 30 days and one third were older than 90 days.
Sample closed records to ensure they are properly acquitted with signatures.	No exceptions reported to HQ.	Closed records were missing proof of disposal (e.g. 12 of 129 drug files were missing proof of transfer to the police).
Verify that an annual report is prepared on the disposal of seized goods, including the method of disposal.	One region reported to HQ that there were no annual reports. The other two regions reported no exceptions.	Annual reports were not prepared or sent to HQ.
Verify that seized goods are disposed of appropriately (in accordance with policy and within proper timelines).	No exceptions reported to HQ.	Inappropriate disposals were noted. One fifth of seizures were kept too long; a few were destroyed too soon. The audit found continued storage of drug seizures (back to 2005), firearm seizures (back to 2003) and other inventory dating back to 2001.
Verify that security measures for bond rooms are in place, such as cameras and the “two person policy.”[ 6 ]	No exceptions reported to HQ for the “two person policy.” One region reported there were no cameras. The other two regions reported no exceptions for cameras.	Only one operation (two locations with three facilities) adhered to the “two person policy.” Cameras were not installed in facilities (except one). Of 68 facilities, 48 were not continuously monitored (by employees, motion detectors or cameras).
Verify that the access system to the bond room is maintained and that only authorized persons have access.	Two regions reported isolated access control issues: Bond room controlled by a non-CBSA entity Theft of goods from caged area Key stored in an unlocked key box	The audit found that access was not controlled in 54 of 68 facilities. In 15 (of the 54) facilities, non-government persons had access. Physical security was below standard for half of the interior facilities and all of the exterior facilities.

Furthermore, one third of interviews with port-of-entry managers (6 of 19) revealed that monitoring had not been done at least once per year; the other two thirds could not provide proof of monitoring. Queen's warehouse keepers in two of three regions admitted that they had no time to monitor inventory.

HQ has yet to implement the tier two and tier three monitoring procedures from the PMF that includes the regional and HQ monitoring of ports of entry. Lack of a quality assurance process to validate tier one monitoring results may increase the risk that loss of seized goods will not be detected.

This audit noted that current findings related to the control framework are recurrent of the findings of the prior internal audit report and of the October 2007 Report of the Auditor General of Canada, Chapter 5, “Keeping the Border Open and Secure,” except that current audit findings indicate further degradation from previous audit findings.

Recommendations

• 1. The Vice-President of the Operations Branch, in collaboration with the Enforcement, Admissibility and Comptrollership branches, should improve the control framework for seized goods by undertaking the following:
  • 1.1 Create an adequate oversight function at HQ.
  • 1.2 Ensure that policies and procedures for managing seized goods are complete and consolidated into an easy reference tool.
  • 1.3 Conduct a risk assessment to address any deficiencies.

Management Action Plan	Completion Date
1.1 — The Operations Branch will assume the lead responsibility for the control and disposal of seized and abandoned goods. It will provide operational direction to staff in the regions and, where necessary, will coordinate the effective support of the accountable branches as outlined by their responsibilities in Appendix B of this report.	Completed
In the short term, a memo will be issued to regional directors general identifying the most critical deficiencies in this report. The memo will direct them to take immediate corrective action and report back about their completed actions to the Operations Branch by March 31, 2009.	February 13, 2009
The Director General, Operational Programs Directorate, will follow up on this action plan and report results to the Director General Management Advisory Committee (DG MAC) on a quarterly basis.	First report due March 31, 2009.
1.2 — The Comptrollership Branch, in collaboration with other branches, will develop the Control of Seized Goods Policy and the Disposal of Seized and Abandoned Goods Policy. These policies will be consolidated into the Centralized Total Asset Management (CTAM) Volume of the Comptrollership Manual on the intranet, with references to program policies and manuals, where applicable.	December 31, 2009
The Operational Performance Division of the Operations Branch will update the Performance Monitoring Framework (PMF) modules to monitor the procedures that support the Control of Seized Goods Policy and the Disposal of Seized and Abandoned Goods Policy.	The PMF will be updated as part of its annual update and will be issued by April 30, 2010.
1.3 — The Operational Performance Division of the Operations Branch will establish a working group (with representatives from the Admissibility, Comptrollership, Enforcement and Strategy and Coordination branches) to identify storage and disposal risks. These risks will be prioritized with interim storage and disposal standard operating procedures developed to mitigate areas of highest risk until finalized policies and procedures are fully developed, approved and implemented. Interim measures will allow the Agency to address the deficiencies of highest risk and those identified in the audit by April 30, 2009. These interim measures will protect employees and the Agency in the event detailed procedures are delayed.	April 30, 2009
The Operational Performance Division of the Operations Branch will update the PMF, where necessary, to reflect any interim procedures developed as part of the Agency's interim storage and disposal risk mitigation standard operating procedures flowing from the response to recommendation 1.3.	To be issued as a mid-year update by October 30, 2009.

• 2. The Vice-President of the Operations Branch, in collaboration with the Enforcement and Innovation, Science and Technology branches, should improve ICES controls by undertaking the following:
  • 2.1 Ensure that superintendent seizure review work lists in ICES are kept up to date.
  • 2.2 Ensure that replacement seizure numbers are recorded in ICES against the cancelled seizure number.
  • 2.3 Design and implement a cancelled seizure review work list in ICES so that chiefs can review and approve cancelled seizures.
  • 2.4 Ensure that chiefs have access to ICES.

Management Action Plan	Completion Date
2.1, 2.2 — The Vice-President of the Operations Branch will issue a memo to all regions advising them of the requirement for superintendents to eliminate the backlog of seizures to be reviewed and to keep lists current. The memo will also detail the requirement to ensure that replacement seizure numbers are recorded in ICES against the cancelled seizure number and to have their work lists current by March 31, 2009.	February 13, 2009
The Operational Performance Division of the Operations Branch will update the PMF in April 2009 to include monitoring activities that ensure superintendents'seizure review work lists are kept up to date and that replacement seizure numbers are recorded in ICES against the cancelled seizure number.	April 30, 2009
2.3 — The Enforcement Branch, in consultation with the Innovation, Science and Technology Branch, will consider the feasibility of system changes to ICES to create a cancelled seizure review work list for chiefs to review.	April 30, 2009
2.4 — Access to and use of ICES will be mandatory for all chiefs. Training will be provided as required. The Innovation, Science and Technology Branch will continue to work with stakeholders on training personnel on the proper use of ICES functionality, including using replacement seizure numbers and ensuring seizure review work lists are up to date.	Ongoing

• 3. The Vice-President of the Operations Branch should improve monitoring processes by undertaking the following:
  • 3.1 Ensure that PMF procedures are fully implemented by all offices and that the results are documented.
  • 3.2 Develop a process to ensure the quality of the performance information reported.

Management Action Plan	Completion Date
3.1 — The Operational Performance Division of the Operations Branch will prepare a memorandum and hold a national conference call to remind all ports of entry (via the PMF national network) of the importance of performing the PMF monitoring and documenting the results.	December 2008 – Completed
3.2 — The Operational Performance Division of the Operations Branch will implement the PMF monitoring by the regions and HQ, which should improve the quality of information reported and help identify and address reporting and monitoring deficiencies at the port level.	Implementation – April 2009

Safeguard of assets

Security

Physical security and facility capacity

To be rated as being compliant with physical security standards, the facility had to comply with the following:

• Exterior storage facilities and areas: Perimeter Security — Your First Line of Defence, CBSA Queen's Warehouse Seized Vehicle Storage, CBSA, February 1998.
• Interior storage facilities: A bond room built to SR-1 standards as outlined in the RCMP G1-029 guide, Secure Rooms.

The audit found that half of the interior storage facilities (27 of 55)[ 7 ] and all exterior storage areas (11) were below physical security standards. Two thirds of the below standard interior storage facilities (18 of 27) were located deep within CBSA offices; risk was therefore only slightly elevated. However, exterior storage areas and nine interior storage facilities had elevated risk levels for unauthorized intrusion.

To be rated as having adequate capacity, the facility had to be a minimum of 10 square metres[ 8 ] or be large enough to handle all seized and detained goods. Storage facilities do not need to be built at all locations, but at a minimum, a dedicated seized goods safe or a plan for the same day movement of seized goods to a proper storage facility is needed.

Five locations (of 37) had capacity pressures, meaning their facilities were too small for current volumes. An additional eight locations (of 35) did not have a dedicated bond room. Inadequate capacity and a lack of bond rooms resulted in the storage of seized goods in less secure areas.

The audit noted that many facilities had been constructed prior to current requirements and volumes. Location managers were not familiar with facility construction standards and did not know their facilities were deficient because policies on physical security were not readily available. When physical security is lower than standard, or seized goods are stored in less secure areas, then the risk of unauthorized intrusion and loss of seized goods increases.

Access control and security zones

Policy requires that storage facilities for seized goods be managed as high security zones.[ 9 ] The security zone[ 10 ] was determined for each facility visited. There are five security zones in government offices: public, reception, operations, security and high security. During the interviews and walk-throughs, the audit observed the number of employees with access to storage facilities for seized goods, the security zone outside the door, if access was recorded, and whether the room had a 24/7 continuous monitoring capacity, either through the presence of employees or by an alarm system.

The audit found that 51 storage facilities were managed as operations zones, 15 as public zones and 2 were managed as high security zones.

Access to storage facilities by CBSA employees was not controlled in 43 (of 57) interior storage facilities and in all exterior storage areas. The audit noted that there was no clear CBSA guideline as to what constituted proper control of access, which resulted in the interpretation that all CBSA employees may be granted access, including locations where several hundred employees worked.

Access to storage facilities by non-governmental persons was not controlled in 8 (of 57) interior storage facilities and in 7 (of 11) exterior storage areas. Lack of access control meant that non-governmental persons could easily access, without difficulty or observation that all CBSA employees may be granted access, including locations where several hundred employees worked.

Access to storage facilities by non-governmental persons, for unauthorized intrusion, was not continuous for 39 (of 57) interior storage facilities and for 9 (of 11) exterior storage areas. Unauthorized intrusion response plans were not developed or written and keyed locks and combinations were not re-tumbled at least once per year. In facilities with electronic alarm systems, managers did not know what the response plan was.

Location managers were not familiar with the application of security zones or aware that storage facilities for seized goods should be managed as high security zones. When access is not controlled and storage facilities are managed as operations or public zones, then the risk of unauthorized intrusion and loss of seized goods increases.

Threat and risk assessments

Although there are physical security, capacity and security zone standards, lower than standard security may be acceptable if the risk is minimal. The decision to operate a facility with lower than standard security should be based on a documented threat and risk assessment (TRA). The audit found that a TRA was conducted at only one location (encompassing two facilities) of the 66 storage facilities operating as operations or public zones.

Conducting a TRA was not considered a priority by location managers and TRA procedures have yet to be finalized by HQ. When lower than standard security is not based on a TRA then the risk of unauthorized intrusion and loss of seized goods increases.

Control of court evidence

Goods seized under subsections 110(1) and 110(3) of the Customs Act, or seized under paragraph 489(2)(c) of the Criminal Code, may be transferred to a CBSA Investigations division for further investigation and court proceedings. These goods are referred to as court evidence.

The Investigations division in two (of three) regions did not control access to the goods or segregate court evidence from other goods, such as office files or equipment. In addition, all investigators had unrestricted access to the evidence rooms. Officials at the third region admitted they had problems in the past but stated that corrective action had been taken prior to the audit visit. Following the audit visit, managers in one region indicated that they implemented corrective action by re-configuring existing facilities.

Improper segregation or lack of access control to court evidence could compromise court proceedings if the sterility of evidence or the chain of custody is questioned. Unsuccessful court proceedings due to the poor sterility of evidence could expose the Agency to litigation and client compensation claims.

Inventory Control

National inventory control practices require that held seized goods be manually catalogued into an inventory control ledger (Form E45, Inventory Control Log for Seized, Forfeited, Detained, Abandoned and Unclaimed Goods) or equivalent. The option to use a paper ledger or an Excel spreadsheet is at the discretion of location managers. A consolidated ledger of held goods provides an easy way to know what was held and when and how goods were disposed of. Goods are manually logged on the Form E45 (open inventory) and when goods are disposed of they are logged out with the date and method of disposal noted (closed inventory).

Although there is a national electronic system for seizures (ICES), there was no national electronic inventory control system. ICES provides a list of seizures generated from the information keyed in by a border services officer on what was seized. However, as currently designed, ICES does not provide an inventory control system because there are no fields to enter the method and date of disposal or the names of the disposing officers. In addition, there is no “inventory control work list” available in ICES to help manage and monitor open and closed inventory.

Inventory control at each office visited was reviewed and adequate inventory control was defined as the following:

• The existence of an inventory control ledger that followed (or closely approximated) the data elements of Form E45 and that contained current and historical inventory control information, along with the method and date of disposal.
• The ledger had to be up to date and accurate, with quantity and description specific enough to know exactly what and how much was held.
• Seized goods listed as current (open) in the ledger had to be in the facility, and goods in the bond room had to be recorded in the ledger.

Three (of 52) facilities and areas had adequate inventory control.[ 11 ] Others had inadequate inventory control (26) or no inventory control (23). Of the 26 with inadequate inventory control, deficiencies included non-specific descriptions and quantities, lack of complete inventory information such as date or method of disposal, removal of goods without closure in the ledger, placement of goods in the facility without entering a record in the ledger and a lack of historical inventory information.

The audit noted that there were no periodic higher-level reconciliations conducted between goods seized, goods inventoried and goods disposed of, nor was there a requirement to do so. Furthermore, there was no evidence found to support that periodic inventory reviews or counts had been done by the locations visited, nor was there any requirement that counts be segregated from the employees who work in the storage facilities.

HQ did not have direct access to inventory control information and did not monitor inventory. In addition, required annual inventory reports[ 12 ] were not submitted from the regions to HQ. The audit found no evidence that HQ was requesting and coordinating the receipt and review of these reports.

Poor inventory control was caused by current procedures, which were manual, repetitious and time-consuming. The execution of the procedures was dependent on location managers who did not always understand the importance of maintaining robust inventory control. Deficient inventory control increases the risk that goods will be lost and that loss will not be detected. Incomplete inventory information coupled with poor data integrity may result in incorrect information for decision making.

Recommendations

• 4. The Vice-President of the Comptrollership Branch, in collaboration with the Operations Branch, should conduct threat and risk assessments to determine the level of security and capacity needed for seized goods facilities.

Management Action Plan	Completion Date
4 — The Physical Security Unit of the Comptrollership Branch will undertake a review and update the physical security standards/guidelines for bond rooms and Queen's warehouses.	June 30, 2009
Upon completion of updating the standards, regional security offices will be engaged to undertake a site assessment of all bond rooms and Queen's warehouse locations and provide a report to regional directors. Action plans will be requested to address any identified deficiencies.	March 31, 2010
The Operational Performance Division of the Operations Branch will update the PMF, where necessary, to reflect the revised physical security standards/guidelines for bond rooms and Queen's warehouses.	To be issued as a mid-year update by October 30, 2009.

• 5. The Vice-President of the Operations Branch, in collaboration with the Enforcement and Comptrollership branches, should improve the security and management of court evidence by undertaking the following:
  • 5.1 Ensure that access to investigation evidence rooms is controlled and restricted to investigations management and to an evidence control officer.
  • 5.2 Ensure that investigators who need access are accompanied by management or by the evidence control officer.
  • 5.3 Ensure that the “two person policy” (two people access the evidence room together) is adhered to.
  • 5.4 Ensure that access control logs are maintained to document and support that the sterility of evidence and chain of custody were maintained.
  • 5.5 Ensure that evidence rooms are not used for office files or equipment.

Management Action Plan	Completion Date
5 — The Vice-President of the Operations Branch will issue a directive to regional directors general for action by the regional directors of Enforcement and/or Investigations to ensure that current security requirements and practices for evidence rooms are reviewed and that any deficiencies identified are immediately mitigated and corrected. (Note that evidence rooms will also be reviewed as part of the national site assessments to be conducted by regional security units by March 31, 2010.)	February 13, 2009
The Enforcement Branch, in consultation with partners, will review current policy and training materials to identify the most effective options for ensuring control of evidence rooms while meeting the operational needs of criminal investigation offices.	December 31, 2009

• 6. The Vice-President of the Operations Branch, in collaboration with the Enforcement, Admissibility, Comptrollership, and Innovation, Science and Technology branches, should improve inventory control by undertaking the following:
  • 6.1 Ensure that inventory control ledgers (E45 forms) are maintained.
  • 6.2 Ensure that periodic inventory counts and reconciliations are performed.
  • 6.3 Design and implement an electronic inventory control ledger system that is accessible to HQ and has an electronic sign off by the disposing officers. (For example, a ledger system that self-populates from ICES seizure information may be evaluated as an option.)

Management Action Plan	Completion Date
6.1, 6.2 — The Vice-President of the Operations Branch will issue a directive to the regional directors general to ensure that immediate steps are taken to control inventories of all held goods and that periodic inventory counts and reconciliations are performed.	February 13, 2009
Interim procedures developed in response to recommendation 1.3 will be implemented to ensure the integrity of, and consistency with, inventory controls in bond rooms and Queen's warehouses across the Agency.	April 30, 2009
The Operational Performance Division of the Operations Branch will update the PMF, where necessary, to reflect any interim procedures developed as part of the Agency's interim storage and disposal risk mitigation standard operating procedures, developed in response to recommendation 1.3.	To be issued as a mid-year update by October 30, 2009.
6.3 — The Comptrollership Branch will initiate a request to identify options and to implement a feasible system for automating the current manual inventory control system to control all goods from the time they are taken under the control of the CBSA, transferred (internally or externally) and disposed of or released.	April 30, 2009

Compliance with authorities

Storage and Packaging

To comply with authorities, storage facilities had to meet the following criteria:

• Storage of drugs had to meet Health Canada's security level six.[ 13 ] The drugs had to be stored in a dedicated safe (rated to TL-15) that was installed in a secure storage room and bolted to the floor so that it could not be moved without first opening the door. Drugs had to be properly packaged by being sealed inside an evidence bag with the seizure number noted on the label.
• Firearms had to be disassembled, trigger-locked, or equivalent, and stored in an access-controlled locked security container. There are four acceptable security containers: a secure room, a vault, a safe or a cabinet. Ammunition had to be stored in an access-controlled locked security container, but separately from the guns.
• Seized and detained goods had to be segregated from all other goods and stored in a dedicated facility. Bond rooms were not used for the storage of tools, equipment or other non-seized or non-detained goods.

Thirty-five locations were inspected and location managers were interviewed to assess compliance to policies and regulations. Drugs were packaged in sealed evidence bags as required and the seizure number and officer's initials were written on the evidence label. The majority of locations with a bond room had proper segregation of goods, except for five locations that had office and enforcement equipment stored in the bond room with the seized goods.

Three quarters of locations (27 of 35) did not have a dedicated safe for the storage of drugs. At eight locations with a safe, the safe was not bolted to the floor. Interviews indicated that two locations had issues with and did not have (lockable) freezers for the storage of catha edulis (a leafy drug) to avoid noxious decomposition odours.

One third of locations (11 of 31) did not have a compliant firearms lock-up and more than half did not have a compliant ammunition lock-up (18 of 30). Improper storage of firearms was observed at four locations, e.g. firearms were not disassembled or trigger-locked. Overall, in two (of three) regions, knowledge of proper storage requirements for firearms and ammunition was lacking. For example, port-of-entry managers in 12 of 19 interviews did not know that ammunition should be stored separately from firearms.

Non-compliance was due to a lack of awareness of storage requirements. Managers did not know that their location lacked proper storage equipment. When storage is below standard, then the risk of unauthorized intrusion and loss of goods increases.

Disposal

There are a variety of disposal requirements for seized goods. The disposal of certain goods involves third parties such as police services or other government departments. Furthermore, seized goods may be temporarily transferred to a CBSA Investigations division for investigation and prosecution. The following table summarizes the disposal procedures.

Table 3: Disposal procedures

Commodity	Disposal Procedures
Drugs (schedules 1-5 of the Controlled Drugs and Substances Act[ 14 ])	Transfer to the RCMP (only the RCMP is authorized by Health Canada to destroy this commodity).
Other controlled drugs[ 15 ]	Transfer to the RCMP or Health Canada, or send to a Queen's warehouse for disposal/destruction.
Firearms	Transfer to the RCMP, either directly or through a Queen's warehouse.
Ammunition	Transfer to police (explosives unit) or send to a Queen's warehouse for disposal/destruction.
Child pornography[ 16 ]	Transfer to police or to a CBSA Investigations division, depending on local arrangements. When no longer needed for investigation and prosecution, send to a Queen's warehouse for destruction.
Prohibited weapons/devices	Transfer to police or send to a Queen's warehouse for disposal/destruction.
Alcohol, cigarettes, tobacco	Send to a Queen's warehouse for disposal/destruction.
Other goods	Send to a Queen's warehouse for disposal/destruction. If suitable for sale, the goods will be sold; if not saleable, the goods may be donated (if appropriate). Otherwise, the goods will be destroyed.

Held seized goods are normally inventoried (kept) pending the 90-day appeal period provided under the Customs Act and kept until the appeal is complete. Exceptions to the rule are perishable goods and hazardous items and drugs, which are usually disposed of prior to the 90 days. Location managers were interviewed on disposal practices and inventory on hand in bond rooms and Queen's warehouses was inspected. Seizure files were sampled for review and traced to disposal.

The audit noted that the disposal of seized goods was properly segregated from enforcement responsibilities. This means that ports of entry, which did enforcement actions, did not do destructions. Ports of entry turned goods over to the police, to another government department or to a CBSA Investigations division, or they sent the goods to a Queen's warehouse. At two thirds of facilities visited (45 of 68), specific employees had been assigned to manage seized goods.

The documentary trail of most sampled seizures was successfully traced from inception to disposal, but goods from four seizures (of 237) were untraceable. As well, inappropriate disposals were observed that involved goods such as drugs, child pornography, trailers, valuable goods, computers and goods kept as evidence.

Goods from 47 (of 237) sampled seizures were kept in inventory beyond necessary. For example, drug seizures dating back to 2005 were still in inventory. Four seizures (alcohol and pepper spray) were inappropriately disposed of before the expiry of the 90-day appeal time limit under the Customs Act.

Multiple file anomalies were observed, such as seizure files that could not be found, goods removed from clients without documentation, drug seizure quantity discrepancies and proof of disposal not placed on file. For example, nearly 10 percent of sampled drug seizures were missing the proof of transfer to police (12 of 129); however, these were subsequently successfully traced. Disposal anomalies and non-compliance were due to a lack of comprehensive written guidelines, poor inventory control and a lack of management monitoring.

Unavailability of drugs for laboratory analysis

The foundation for drug seizure is the Controlled Drugs and Substances Act (CDSA), which falls under the responsibility of the Minister of Health (Health Canada). When the CBSA seizes drugs it does so concurrently under both the Customs Act and the CDSA. It is CBSA policy to turn over drugs that fall under schedules 1-5 of the CDSA to the RCMP because only the RCMP is authorized by Health Canada to destroy these drugs.

The RCMP keep drugs a minimum of 60 days in accordance with section 24 of the CDSA, which is the right to “apply…for an order to return” (file an appeal). In contrast, section 129 of the Customs Act allows 90 days to “request a decision of the Minister” (file an appeal).

When drugs were not available for analysis, seizures had to be cancelled. Once drugs are turned over to the RCMP, the CBSA cannot always obtain a laboratory analysis because the CBSA has not established an agreement with the RCMP. This agreement would ensure that the RCMP retains seized drugs for a minimum period (90 days plus a grace period) and would allow the CBSA the opportunity to re-determine the goods (as substances controlled under the CDSA) if the seizure of the substance or related conveyance is appealed under the Customs Act.

Disposal of drugs

Drugs regulated under schedules 1-5 of the CDSA were sent to a Queen's warehouse and were subsequently improperly disposed of (garbage/landfill). These drugs included steroids, methadone, catha edulis, marihuana, hash, coca leaf tea, and contaminated drug paraphernalia. The audit could not perform a similar review in the other Queen's warehouses because descriptions were vague (“1 ctn meds”) or because officials at the warehouses did not provide the requested inventory report. Drugs (seized and detained) regulated under schedules 1-5 of the CDSA must be turned over to the RCMP because only the RCMP is authorized by Health Canada to destroy these substances. The audit noted that employees working in Queen's warehouses could not recognize drugs regulated under schedules 1-5 of the CDSA and did not know they should not destroy these drugs.

Furthermore, it is unclear if the CBSA understands its obligations for the disposal of other drugs (other than those regulated under schedules 1-5 of the CDSA). Disposing of drugs in a landfill (garbage) without adulteration (chemical change rendering the drug harmless) may not be appropriate. The method commonly used by law enforcement for drug disposal is incineration, which is more costly than a landfill, but compliance is assured.

To improve the management of drug seizures and to ensure proper transfer, the CBSA is actively working with the RCMP on the development of an electronic interface. This drug offence and disposition reporting process will automatically transmit drug seizure information from the CBSA's electronic system (ICES) to the RCMP. Once fully operational, this system may provide control of the transfer of drugs regulated under schedules 1-5 of the CDSA to the RCMP, providing that lines of communication are established for the reporting of discrepancies.

Goods seized as evidence under subsection 110(3)

Goods seized under subsection 110(1) of the Customs Act are forfeit upon seizure. However, other items that provide evidence to support a seizure, such as computers or cell phones, may be seized under subsection 110(3), but only temporarily.

The audit found that goods seized under subsection 110(3) of the Customs Act were not returned to the owner upon completion of court proceedings or the investigation, as required by subsection 114(3) of the Customs Act. One file was found in the K19 form tracing test and several additional files were found in a CBSA Investigations division. The goods were primarily computers seized with child pornography and had been placed into service. Furthermore, it is against CBSA policy to use seized goods, except as “show and tell” training items.

There is no time limit quoted in the Customs Act for the return of evidence. However, evidence kept under paragraph 489(2)(c) of the Criminal Code has to be returned to the owner within three months of the date of seizure, as stated in subsection 490(2), unless a justice orders the thing[ 17 ] detained, or proceedings are instituted in which the thing detained may be required.

Management of Queen's warehouses

Goods not transferred to the police, a CBSA Investigations division or another government department are sent to Queen's warehouses for disposal, including valuable, attractive goods such as jewellry, alcohol, cigarettes, tobacco, firearms and prohibited weapons and devices. It is CBSA policy that disposals and destructions be witnessed by at least two CBSA employees.[ 18 ]

The management of Queen's warehouses in two (of three) regions nullified the usefulness of tracing seizures from inception to disposal because of management control deficiencies. For example:

• There was little management oversight and monitoring of the Queen's warehouse activities and there was no rotation of duties.
• There was no segregation of duties between managing seized goods and disposing of them. There was no second person to witness the disposals of seized goods as required by policy.
• Inventory control tracking numbers were prematurely removed from goods prior to disposal. It was not possible to link the inventory control number, or the seizure number, to the goods.
• There was no cross-reference between commercial packing slips and invoices of goods sent for destruction to the inventory control, E44 form[ 19 ] or enforcement numbers.

To counteract these challenges, a higher-level reconciliation between goods recorded in ICES as seized, goods recorded in the ledger as received and goods disposed of from Queen's warehouses was attempted. Proof of disposal (such as contracts and certificates from disposal companies) was requested from Queen's warehouses.

For the region that had adequate control of its Queen's warehouses, only alcohol was contracted out for destruction and the audit successfully reconciled this. For the other two regions with deficient control over their Queen's warehouses, it was not possible to accurately reconcile goods seized with goods disposed of because inventory control practices, such as non-specific quantities and descriptions, hindered the reconciliation and quantities destroyed did not match ledger quantities.

The lack of comprehensive written guidelines on the control and management of Queen's warehouses and lack of management monitoring may result in asset misappropriation.

Recommendations

• 7. The Vice-President of the Operations Branch, in collaboration with the Comptrollership Branch, should provide proper storage equipment, such as drug safes, firearms and ammunition cabinets and (lockable) freezers, and should ensure that managers and employees who handle seized goods are aware of storage requirements.

Management Action Plan	Completion Date
7 — The physical security standards noted in recommendation 4 will identify requirements for the separate storage of highly sensitive or valuable goods. The Comptrollership Branch will support and coordinate the effective acquisition of storage containers/equipment once identified for each site.	Acquisition and implementation of these devices will follow the site security assessments to be completed by March 2010.
The lack of security awareness and application of common sense standards at inland offices, ports of entry and Queen's warehouses will be identified as priority items. These items will be addressed in procedures developed as part of the Agency's interim storage and disposal risk mitigation standard operating procedures (item 1.3 in the management action plan).	April 30, 2009

• 8. The Vice-President of the Operations Branch, in collaboration with the Enforcement and Admissibility branches, should improve the control, monitoring and management of disposals by undertaking the following:
  • 8.1 Ensure that seized goods are disposed of in compliance with authorities.
  • 8.2 Establish proper disposal methods for drugs and ensure that managers and employees who handle drugs are aware of drug disposal requirements.
  • 8.3 Establish an agreement with the RCMP for the RCMP to retain seized drugs for a minimum of 90 days, plus a grace period, so that the CBSA can recall the drugs for laboratory analysis when the drug seizure is appealed under the Customs Act.

Management Action Plan	Completion Date
8.1, 8.2 — Disposal methods for seized drugs (as defined in the Controlled Drugs and Substances Act, schedules 1-5) will be reviewed by the Admissibility Branch, in consultation with the Enforcement Branch, to confirm roles and responsibility for all policies and procedures related to drugs under the CDSA are clearly defined. Timelines and responsibilities for updating Memorandum D19-9-2, Regulations of Narcotics and Controlled and Restricted Drugs - Narcotic Control Act, Food and Drug Act, will also be confirmed with the Enforcement Branch to ensure that the proper disposal methods are clearly indicated. Monitoring practices to address timeliness, methods, quantity discrepancies and confirmation of disposal will be identified as priority items. These items will be addressed in procedures developed as part of the Agency's interim storage and disposal risk mitigation standard operating procedures (item 1.3 in the management action plan).	April 30, 2009
In the longer term, specific and consolidated procedures identified by the Admissibility, Enforcement and Comptrollership branches will be incorporated into the CBSA Control of Seized Goods Policy and the Disposal of Seized and Abandoned Goods Policy, currently under development by the Comptrollership Branch (item 1.2 in the management action plan).	December 31, 2009
8.3 — The Enforcement Branch will establish an agreement with the RCMP as described above.	December 31, 2009
The Operational Performance Division of the Operations Branch will update the PMF, where necessary, after the applicable elements of this recommendation (disposal of seized goods policies and memorandums of understanding) are in place.	April 30, 2010

• 9. The Vice-President of the Operations Branch, in collaboration with the Comptrollership Branch, should review and improve the management of Queen's warehouses. Proper management controls should be implemented, including rotating duties and segregating seized goods disposal from seized goods management.

Management Action Plan	Completion Date
9 — The lack of security awareness and application of common sense practices at Queen's warehouses, such as the rotation of duties and the segregation of seized goods disposal from seized goods management, will be identified as priority items. These items will be addressed in procedures developed as part of the Agency's interim storage and disposal risk mitigation standards operating procedures (item 1.3 in the management action plan).	April 30, 2009
The Operational Performance Division of the Operations Branch will update the PMF, where necessary, to reflect any interim procedures developed as part of the Agency's interim storage and disposal risk mitigation standard operating procedures developed in response to recommendation 1.3.	To be issued as a mid-year update by October 30, 2009.
The Comptrollership Branch will develop and implement policies on the control and disposal of seized goods in the Queen's warehouses as part of item 1.2 in the management action plan.	December 31, 2009

Appendix A — Seizures made under the Customs Act in 2007

Seizure description	No terms of release	Terms of release	K19 forms (Customs seizure receipts) in 2007
Drugs	X		10,434
Child pornography	X		142
Prohibited firearms, parts thereof and prohibited ammunition (e.g. automatic firearms, short-barrelled handguns, sawed-off firearms)	X		201
Restricted and non-restricted firearms, parts thereof and ammunition	X	X	318
Prohibited weapons (e.g. switchblades, butterfly knives, nunchakus, shurikens, morning stars, stun guns, tasers, spiked wristbands, knife combs)	X		1,147
Prohibited devices (e.g. silencers, large-capacity magazines, replica firearms)	X		93
Alcoholic beverages	X		3,014
Cigarettes and tobacco products	X		3,872
All other seizures	X	X	10,244
Total K19 forms in 2007*			29,465

* Figures extracted from the Integrated Customs Enforcement System on July 22, 2008.

Appendix B — Branch responsibilities

Note that these responsibilities were those in place at the time of the audit.

Operations Branch

• Delivering regional programs including seizing and detaining goods imported or exported at border locations.
• Safeguarding, monitoring and disposing of seized goods.
• Following established policy but not responsible for establishing policy.
• Developing, implementing, maintaining and reporting on the Process Monitoring Framework.

Enforcement Branch

• Granting access to the Integrated Customs Enforcement System (ICES).
• Customs Enforcement Manual (including its seizure, detention and other enforcement policies and procedures).
• Memorandum D19-14-1, Cross-Border Currency and Monetary Instruments Reporting.

Comptrollership Branch

• Policies on the sale of seized goods when the services of Public Works and Government Services Canada are used.
• Policies on the recording of revenues realized from sales.
• Policies on physical security and facility construction.

Admissibility Branch

• Policies and procedures on the import and export requirements of commercial and non-commercial goods, including other government department requirements outlined in the D19 and R19 series of memoranda (except Memorandum D19-14-1 noted above).
• Policies and procedures relating to obscene material and hate propaganda.
• Policies and procedures on the Administrative Monetary Penalty System
• Polices and procedures on the seizure appeal process under the Customs Act.
• Safeguarding and monitoring seized weapons when the classification of these weapons has been appealed to the Canadian International Trade Tribunal.

Appendix C — Acronyms, forms and terms

Acronym	Description
CBSA	Canada Border Services Agency
CDSA	Controlled Drugs and Substances Act
HQ	CBSA Headquarters
ICES	Integrated Customs Enforcement System
PMF	Process Monitoring Framework
RCMP	Royal Canadian Mounted Police
TOR	terms of release
TRA	threat and risk assessment

Form	Title
E44	Notice – Unclaimed Goods
E45	Inventory Control Log for Seized, Forfeited, Detained, Abandoned, and Unclaimed Goods
K19	Seizure Receipt
K24	Non-monetary General Receipt
K26	Notice of Detention
K27	Notice of Detention/Determination

Term	Definition
bond room	A room at a local CBSA office for the storage of seized and detained goods.
Queen's warehouse	A centralized warehouse to which seized and detained goods are sent from local CBSA bond rooms for extended storage or disposal.

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Notes

1. Certain locations had two or more distinct facilities (rooms or places) where seized goods were stored. Twenty-five locations had interior storage facilities only, two locations had exterior storage areas only and nine locations had both interior facilities and exterior storage areas. One location did not store goods and officials there stated they were using the facilities of another location. [Return to text]
2. Management Accountability Framework, Treasury Board of Canada Secretariat, 2003. [Return to text]
3. Customs Enforcement Manual, Part 7, Customs Enforcement Systems, Information, and Intelligence, Chapter 1, “Integrated Customs Enforcement System (ICES) Policy,” 2004. [Return to text]
4. Risk Management Policy, Treasury Board of Canada Secretariat, 1994. [Return to text]
5. Issues of concern are reported as exceptions on template PMF reports. [Return to text]
6. The “two person policy” means a person should not enter a bond room unless there are at least two persons present. [Return to text]
7. Two locations had bond rooms divided by a metal cage, and each area had distinct access control procedures (57 facilities counted). However, physical security was identical (55 facilities counted). [Return to text]
8. Land Border Design Guide 2003 CBSA. [Return to text]
9. Land Border Design Guide 2003 CBSA. [Return to text]
10. Guide to the Application of Physical Security Zones, G1-026, RCMP. [Return to text]
11. Certain locations with multiple facilities and areas maintained one inventory control system for two or more facilities and areas. Overall, there were 29 inventory control systems kept, with an additional 23 facilities or areas that should have had an inventory control system but did not. [Return to text]
12. Finance and Administration Manual, Chapter 2, section 6, subsection 2, “Disposal of Seized, Abandoned, and Forfeited Goods,” paragraph 25, Canada Customs and Revenue Agency, 1998. [Return to text]
13. Land Border Design Guide 2003, CBSA. [Return to text]
14. The Controlled Drugs and Substances Act (CDSA) schedules 1-5 drugs include heroin, opium, cocaine, marihuana, hash, amphetamines, barbiturates, catha edulis, steroids and other narcotic drugs and their intermediates, alkaloids, salts, derivatives, analogues and any other related preparations. [Return to text]
15. Other controlled drugs are listed in the Controlled Drugs and Substances Act, schedule 6 (precursors), and in the Food and Drugs Act and related drug regulations. [Return to text]
16. Processes currently under review. [Return to text]
17. The word “thing” is extracted from the Criminal Code; the Customs Act uses the word “goods.” [Return to text]
18. Finance and Administration Manual, Chapter 2, section 6, subsection 2, "Disposal of Seized, Abandoned and Forfeited Goods, Guidelines and Procedures,’’ paragraph 4, Canada Customs and Revenue Agency, 1998. [Return to text]
19. The reference number on Form E44, Notice – Unclaimed Goods, is commonly used as the inventory control number. [Return to text]