Audit Report on Allegations Concerning the Bureau of Alcohol, Tobacco and Firearms' Administration of the National Firearms Registration and Transfer Record OIG-99-018 December 18, 1998 Office of Inspector General United States Department of the Treasury [new page] DEPARTMENT OF THE TREASURY WASHINGTON December 18, 1998 MEMORANDUM FOR DIRECTOR JOHN W. MAGAW BUREAU OF ALCOHOL, TOBACCO AND FIREARMS FROM: David C. Williams Inspector General SUBJECT: Report on the Bureau of Alcohol, Tobacco and Firearms' Administration of the National Firearms Registration and Transfer Record The attached report presents the results of our review on the Bureau of Alcohol, Tobacco and Firearms' (ATF) administration of the National Firearms Registration and Transfer Record (registry). This report is a supplement to our report (OIG-99-009) issued on October 26, 1998 to you concerning allegations of ATF mismanagement, misconduct, and improper recordkeeping of the registry. This supplemental report discusses additional issues related to the maintenance of the registry. The overall objective of this report was to determine whether ATF had properly maintained the registry. Our review disclosed that ATF had maintained the registry in accordance with laws and regulations. However, our review showed that ATF needed to: (1) strengthen certain administrative procedures over receipt of checks and records; (2) timely process correspondence and forms; (3) improve monitoring of access to the registry database; (4) improve reference to examination of research reports which support ATF decisions on classification decisions; and (5) determine the extent to which the registry lists weapons as in the possession of persons who are most likely deceased. As a result of these conditions there was an increased risk that the registry would not always accurately reflect all National Firearms Act (NFA) weapons and could adversely affect Congress' intent to control these weapons. We discussed the results of our review with ATF officials during fieldwork and on September 4, 1998. In a November 27, 1998 response to our draft report, ATF officials agreed with our recommendations or proposed alternative actions which satisfied the intent of our Page 2 - John W. Magaw recommendations. The details of these actions are described in this report. A complete text of the response is included in Appendix 2. If you have any questions or require any further assistance, you may contact me at (202) 622-1090, or a member of your staff may contact Roberta N. Rickey, Regional Director for Audit, or Robert Bronstrup, Audit Manager, at (312) 886-6300 extensions 118 and 115 respectively. We appreciate the courtesies and cooperation extended to our staff during the audit. Attachment cc: James E. Johnson, Under Secretary of the Treasury for Enforcement Richard Hankinson, Assistant Director Office of Inspection [new page] EXECUTIVE DIGEST Overview The National Firearms Act (NFA), which was enacted in 1934, requires that the Secretary of the Treasury maintain a central registry of all NFA firearms in the United States which are not in the possession of or under the control of the United States. This registry is called the National Firearms Registration and Transfer Record. Examples of the types of weapons that must be registered include machine guns, silencers, and short barrel shotguns. Bureau of Alcohol, Tobacco and Firearms' (ATF) National Firearms Act Branch maintains the registry which includes the: (a) identification of the firearm; (b) date of registration, and (c) identification and address of the person entitled to possess the firearm. The Branch's responsibility includes making adjustments to the registry to reflect: (a) changes of address of registrants; (b) lost or stolen firearms; (c) modifications to the description of firearms; (d) destruction of firearms; and (e) export of firearms. We performed this review in response to a request by the Chairman, Committee on Government Reform and Oversight to review allegations about ATF's maintenance of the registry, On October 26, 1998, we issued a report (OIG-99-009) to the Director regarding those allegations. This report supplements that report and addresses other issues that we noted during our review. Objectives, Scope and Methodology Our overall objective was to determine whether ATF needed to address specific issues in order to maintain the registry in an accurate and timely manner. The audit scope generally covered certain ATF activities over the registry for the period Fiscal Year (FY) 1997 through May 1998. To accomplish our review, we reviewed ATF's policies and procedures for registering and classifying NFA weapons. Additionally, we tested the database and original documents that support a limited part of the registry for completeness. Our scope did not include the accuracy of ATF registry searches which support ATF's certifications in criminal prosecutions that no record of a registration of a particular weapon could be found in the registry. Audit Results ATF needed to take certain actions which would help ensure the registry is maintained in a more accurate and timely manner. Specifically, our review disclosed: * ATF did not always control or process checks, forms, and other documents in accordance with procedures because employees did not always adhere to the procedures. Also, ATF did not always cancel passwords which could permit unauthorized individuals access to the registry's database. Consequently, ATF incurred an increased risk of lost checks and documents and of unauthorized access to the registry database. * Data from an old registry database did not initially reconcile to the current registry database. In September 1997, when a new database was established, ATF had performed a reconciliation but records of the reconciliation were not kept. Consequently, there was a risk that the current registry database either did not include certain required data or that it contained other errors. Resolution of these discrepancies was needed to enhance the effectiveness of the registry as an enforcement tool. ATF performed a reconciliation to resolve these discrepancies during fieldwork. * Files for certain ATF determinations on the classification of weapons did not contain reference to supporting examination reports or research. ATF procedures refer to the examiner's responsibility to perform detailed examinations and research but they do not discuss what documentation is required. Reference to supporting research materials or other work performed would help show that ATF created all inquiries consistently. * Weapons may still be registered to individuals who had registered the weapons decades ago and may be deceased. ATF requires executors and administrators of decedents' estates to notify ATF and to properly transfer the weapon. However, ATF does not periodically contact persons even if there has not been a subsequent transfer of the weapon for decades because the law does not require this activity of ATF. Unless the registry reflects the names of persons currently in possession of these weapons, the registry is less accurate and the intent of Congress to control these weapons is not fully realized. Recommendations Our draft report, issued on November 2, 1998, included five recommendations to improve: (a) controls over checks and document processing; (b) accuracy of the registry; (c) reference to documentation supporting certain determinations; and (d) assurance that the registry does not list weapons registered to persons who are deceased. ATF's November 27, 1998 response to our draft report either agreed with our recommendations or proposed alternative actions which satisfied the intent of our recommendations. In response to our draft report, ATF emphasized that registrations to deceased persons would not make the registry less effective as a law enforcement tool. The details of ATF's response and actions initiated to address our recommendations are contained in the body of this report. We believe that implementation of these recommendations will strengthen ATF's administration of the registry. ABBREVIATIONS AIS Automated Information System ATF Alcohol, Tobacco and Firearms CFR Code of Federal Regulations FTB Firearms Technology Branch GAO General Accounting Office LTR Letter NFA National Firearms Act NFRTR National Firearms Registration and Transfer Record OIG Office of Inspector General USC United States Code BACKGROUND Bureau of Alcohol, Tobacco and Firearms' (ATF) National Firearms Act (NFA) Branch is responsible for the effective administration of the National Firearms Act (26 U.S.C., Chapter 53). Congress had enacted the NFA in 1934 with a purpose to: ...provide for the taxation of manufacturers, importers, and dealers in certain firearms and machine guns, to tax the sale or other disposal of such weapons, and to restrict importation and regulate interstate transportation thereof. The implementing regulations are found in Title 27, Code of Federal Regulations (CFR), Part 178 and 179. The NFA requires the Secretary of the Treasury to maintain a central registry of certain types of firearms in the United States which are not in the possession or under the control of the United States. This registry is known as the National Firearms Registration and Transfer Record. The types of firearms that must be registered under the NFA include machine guns, destructive devices, certain other firearms, and any other weapon described in ATF Publication ATF P 5300.4 p. 25; section 5845(e). The NFA Branch maintains the registry which includes the identification of the firearm, the date of registration, and the identification and address of the person entitled to possess the firearm. The NFA Branch provides record searches and/or certifications for use in Federal court relating to the registration status of a firearm. The NFA Branch employees also testify on the registration status of NFA firearms. The NFA Branch also receives and acts upon all applications to make, export, transfer, and register NFA firearms, and notices of NFA firearms manufactured or imported. The Branch is responsible for making adjustments to the registry to reflect: * Changes in address of registrants; * Lost or stolen firearms; * Modifications to the description of firearms; * Destruction of firearms. In addition to the activities of the NFA Branch, ATF's Firearms Technology Branch is responsible for providing certain technical support on the classification of NFA weapons. Inquiries are submitted by the general public and industry concerning the classification or determination status of firearms. They typically consist of requests to: (a) remove a firearm from the provision of the NFA because of unique characteristics; and (b) determine whether a firearm qualifies as a curio, relic or antique. Firearms analysts in the Branch respond to these inquiries and requests. The following table summarizes the best available ATF data for the years 1934 through July 31, 1998 on the types of activity in the registry: Table 1 NFA Registration Activity (By Type) FORM- TYPE DESCRIPTION NUMBER F1 Application to Make and a Firearm 44,506 F2 Notice of Firearms Manufactured or Imported 1,023,157 F3 Application for Tax-Exempt Transfer of Firearms 417,866 and Registration to Special (Occupational) Taxpayer F4 Application for Tax Paid Transfer and Registration 126,291 of a Firearm F5 Application for Tax-Exempt Transfer and 572,634 Registration of a Firearm F6 Importation of a Firearm 9,626 F9 Application and Permit for Permanent Exportation of 276,223 Firearms F10 Application for Registration of Firearms Acquired by 17,534 Certain Governmental Entities LTR Letters 5,608 4467 Registrations of Certain Firearms During November 57,238 1968 OTHER Other Correspondence 21,083 Total 2,571,766 OBJECTIVES, SCOPE, AND METHODOLOGY In a June 25, 1997 letter to the Inspector General, the Chairman of the U.S. House of Representatives Committee on Government Reform and Oversight, requested a review of ATF's administration of the National Firearms Registration and Transfer Record (registry). On October 26, 1998, we issued a special report (OIG-99-009), which addressed specific allegations by an individual regarding ATF's administration of the registry. Our second report addresses certain other performance issues resulting from this review. Our overall objective was to determine whether ATF needed to address specific registry activities in order to maintain the registry in an accurate and timely manner. Specifically, we determined whether the: * NFA Branch has adequate management controls over administrative activities; * registry database and supporting records contains a significant amount of errors; * Firearms Technology Branch processes on a consistent basis those inquiries from individuals or institutions to reclassify NFA weapons or to remove the firearms from the registry; and * registry lists weapons as registered to persons who had initially registered the weapons decades ago and are likely deceased. To accomplish our review, we conducted work at ATF Headquarters and at the ATF National Tracing Center in Falling Waters, West Virginia. We reviewed the policies and procedures of the National Firearms Act Branch and of the Firearms Technology Branch applicable to the registry. We also interviewed employees and officials of these offices about their activities. Additionally, we reviewed certain activities of the National Tracing Center which maintains the original registry documents. We also evaluated the controls over the registration documents and databases that ATF maintains for the registry. To test the accuracy of the registry, we randomly sampled [footnote 1] entries in the registry database and compared the information to the original transfer records for Form 4467, "Letters" and "Other" documents. We limited our review to these specific documents because the allegations were specifically directed at ATF's administration of them. We also randomly sampled original transfer records and compared data from those records to the database to determine any omissions from the registry. ------------------------------------ 1. See Appendix 1 for detailed methodology. Our scope did not include a review of the accuracy of ATF's certifications in criminal prosecutions that no record of registration of a particular weapon could be found in the registry. We also did not evaluate the procedures that ATF personnel use to search the registry to enable them to provide an assurance to the court that no such registration exists in specific cases. Accordingly, this report does not provide an opinion as to the accuracy of the registry searches conducted by ATF. Audit work was performed from October 1997 through May 1998. Our review generally covered ATF's administration of the registry for the period October 1, 1996 through March 31, 1998. Our work was conducted in accordance with Government Auditing Standards issued by the Comptroller of the United States, and included such audit tests as we determined necessary. AUDIT RESULTS Finding 1. Certain Controls Over The Registry Needed Strengthening The NFA Branch did not have adequate controls to ensure that certain administrative tasks were handled in an efficient and timely manner. Our review showed that: * remittance checks were not always safeguarded until they were deposited; * registration and transfer forms were not always processed in a timely manner; * passwords allowing access to the registry database included those which should have been purged from the authorized list. ATF had policies and procedures for controlling checks, forms and access to the registry, however employees did not always follow these procedures. In addition to strengthening certain controls, ATF needs to ensure that planned software enhancements contain adequate tracking and aging functions for correspondence and forms processing. Otherwise, ATF has less assurance that all checks, forms and correspondence will be timely processed and that access to the registry database is controlled. During the course of our review the NFA Branch acted to correct these conditions and to improve controls. Recommendations The Director of ATF should ensure that: 1. Reports to monitor pending workloads and show registration activity are fully developed; 2. Access to the registry database is monitored regularly and that passwords are purged as necessary. Management Response and OIG Comments ATF agreed with our recommendations. The response reiterated that a Phase II of the NFA database program, which houses the registry, is to provide enhanced retrieval and report functions. ATF intends to accelerate the implementation of Phase II and intends to complete this task by the end of the current fiscal year. ATF stated it has also taken action to ensure that database access is routinely monitored. We believe ATF's actions meet the intent of our recommendations. ATF's response did not provide specific details on the action taken to ensure that database access is routinely monitored. Accordingly, we request documentation which supports ATF's statement. Details Checks Received Should Be Secured We observed checks which were not secured properly before they were sent to the lockbox for deposit. In a 4 month period during our review, the NFA Branch received checks that averaged about $2,500 a week. Persons seeking approval to transfer firearms should send their application forms to ATF Headquarters and the tax payments to a lockbox in Chicago, IL. However, in some instances these checks are received at the NFA Branch with NFA registrations and transfer forms because the taxpayer inadvertently included the check with the forms. The NFA Branch keeps the checks and forwards them to the lockbox in Chicago using an overnight delivery service once a week. Internal controls require employees to properly safeguard checks until the checks are sent to the lockbox. Employees had a safe in which to keep the checks until they were mailed to the lockbox, but they did not always use the safe until the checks were mailed. Consequently, there was an increased risk that the checks may be misplaced or lost. We discussed this issue with the NFA Branch Chief who took prompt steps to improve controls over checks until they are sent to the lockbox. Employees who were responsible for processing checks were instructed to ensure that all checks are stored in the safe until sent to the lockbox. MFA Correspondence And Forms Should Be Timely Processed And Tracked All correspondence and other forms that individuals had sent to the NFA Branch were not processed timely. For example our review of an assignment tracking system in December 1997 showed there were 785 unanswered correspondence dating as far back as September 1996. NFA Branch procedures require that letters and memorandums designated by supervisors as needing an immediate response be processed no later than two business days after the receipt of the assigned completion date. All other responses must be prepared within 5 working days after the assigned completion date. If letters and memorandum are not processed within these time frames, there is a greater chance that gun owners will not be in compliance with applicable firearm regulations as quickly as possible. Similarly we observed that Branch employees had not processed pending registration and transfer forms in accordance with procedures. These procedures also require that all applications and notices must be entered into the registry database within 5 days of receipt. If these forms are not entered timely, ATF's response to individuals about the status of their application may take an excessive amount of time. Officials stated however, that since application approvals are posted immediately into ATF records, NFA Branch record searches by field personnel are not affected. Employees explained that forms had not been entered into the new database because the system was new and they were unfamiliar with the entry procedures for the new system. As a result, forms were not timely distributed to legal examiners for processing. We discussed our observation with supervisory officials who acted to address these conditions. Employees reviewed the correspondence log and began to complete processing of unresolved correspondence. Second, to ensure that forms were entered into the new database, supervisory officials assigned additional employees to the task of entering unprocessed forms into the new database system. We agree with these steps that supervisors took to ensure documents were processed timely. Registry Reports Should Be Developed Further The registry could not produce certain reports that would help officials manage the activities of the NFA Branch more effectively. For example the new registry database could not produce timely or accurate status reports to show registration activity or cumulative weapons registrations. In addition, the system could not produce a report that was designed to provide managers with the status of documents that were outstanding and needed processing. The NFA Branch has requested that this type of report capability be added to the database as soon as possible. The new system has a second phase of implementation where certain reports like the reports cited are to be either corrected or implemented. However, this phase, at the time we completed fieldwork, had been deferred due to other priorities. We believe the priority of this phase should be reconsidered and implementation accelerated considering the issues raised in this audit. These reports will assist managers in more effectively administering the registry. User Access To The NFA Database Should Be Regularly Reviewed And Limited Our review of a list of individuals who had access to the registry database disclosed five passwords that were traced to former ATF or contract employees. Consequently, to the extent these passwords could be used by unauthorized individuals there was an increased risk of unauthorized access to the registry database. ATF restricts access to the database because it is deemed taxpayer data in accordance with Internal Revenue Code section 6103, "Confidentiality and Disclosure of Returns and Return Information. Accordingly, ATF has recognized the importance of limiting access to its various databases. To ensure that access to its databases is limited to authorized individuals, ATF Order 7500.2 dated July 17, 1997, states that the local Automated Information System (AIS) Security Administrator is responsible for: * requesting and/or granting access to AIS based on management authorization; * removing or modifying user access based on authorized requests; and * conducting authorized reviews of user access to assure timely detection of suspicious, inappropriate, or unauthorized activity. Since the new database software had recently been installed, a timely review of passwords giving access to the database was not made, and five user passwords remained available for use in the database. For example, one of the passwords was initially created for employees installing the database. According to ATF officials, after completion of the system implementation, employees no longer required access to the system and the user passwords could have been deleted but were not. ATF took steps to eliminate the invalid passwords and stated that regular reviews will be made of the list of employees who have access to the database and of their passwords. Finding 2. Registry Database Discrepancies Need To Be Resolved ATF documentation initially did not show that all entries in an old registry database had been transferred to the new registry database. Consequently, ATF did not have adequate assurance that all of the entries had been transferred in order to make the registry complete for its intended use. A limited sample of an infrequently used forms and other correspondence showed that certain original documents could not be located. ATF has formal procedures for controlling forms and for entering data into the registry. However, these procedures were not always followed. During our review, ATF performed a reconciliation of the data in the current and old registry databases and certified to the Office of Inspector General (OIG) that all data from the old database had been transferred to the new database. Additionally, ATF has initiated other steps to review and correct other errors that may exist in the registry. Recommendation The Director, Bureau of Alcohol, Tobacco, and Firearms should: (a) ensure actions to eliminate database discrepancies are completed; and (b) perform periodic reviews of the database for accuracy and completeness. Management Response and OIG Comments ATF agreed with our recommendation. ATF intends to compare the index of imaged documents referred to in this report to the registry database to identify possible discrepancies for resolution. This specific project may take several years. The project will involve the review of more than 2.5 million database records and a larger number of documents. ATF stated that it needs to evaluate these numbers and estimate cost and personnel needs before it can project a completion date. In order to provide additional assurance of search results, ATF intends to conduct a search of the imaging index in conjunction with its search of the registry database to determine the registration status by name or serial number. ATF believes there is sufficient data in the index for it to query. We agree with these actions. After ATF evaluates the cost and personnel needed to complete the cited project, we request documentation which shows an estimated projected completion date. Details Our review of database records did not provide assurance that all of the records contained in an old registry database had been successfully transferred to a new registry database in September 1997. An initial review by the OIG showed that the prior registry reflected a total registration of 2,545,425 compared to a total registration of 2,548,918 in the new database. However, the registry consists of several subcategories and we could not be assured that over and under statement errors did not exist in those subcategories which netted out to a small difference. ATF officials advised us that in September 1997, they had reconciled the two databases, but they did not keep any record of it. In June 1998, ATF performed a detailed reconciliation as assurance that the new database reflected all records that were in the old database. As a result of the reconciliation, ATF reported to us that 407 records (entries) from the old database were not found in the new database. ATF provided us a certification dated June 16, 1998 which shows ATF's resolution of these 407 discrepancies. In addition to the discrepancies between the old and the new databases, we observed discrepancies between the database and original registration documents. Table 2 summarizes the discrepancies in our sample of three registration categories--Form 4467, 'Letter," and "Other. " These registration categories are defined as follows: * Form 4467 - used by ATF during the period November 2, 1968 through December 1, 1968 provides amnesty registration of unregistered NFA weapons. * Letter - contained correspondence between applicants and the NFA branch regarding weapons registrations, transfers, and assorted communications. * Other - contained mostly facsimiles from companies who requested authorization to transfer NFA weapons between armorers and movie production companies. If form numbers were incorrectly entered into the registry, the entry would also be included in this category. Table 2 SUMMARY OF SAMPLE DISCREPANCIES FORM 4467 LETTER OTHER TOTAL Sample Size 141 179 202 522 Discrepancies on Registry Database Reports Name: Missing 2 1 0 3 Incorrect 0 0 0 0 Serial Number: Missing 0 0 0 0 Incorrect 1 0 0 1 Computer 0 10 0 10 Records Not Found Original 0 4 16 20 Records Not Found Miscellaneous 3 0 0 3 [footnote 2] TOTALS 6 15 16 37 Source: Database analysis results are dependent on the retrieval methods used. The results shown above are based on a combination of data retrieval methods. ATF has certain formal procedures for entering data into the registry's database. However, the data entry errors such as those we found in our sample occurred because employees had not correctly entered some data. Also, supervisors or other employees did not always verify data entered into the database because of time limitations and other priorities. In response to our draft report, ATF officials also believed the discrepancies summarized in our table may be data entry errors and/or failures to enter information in accordance with established procedure. ATF provided copies of other records to clarify the discrepancies in our table. These other records, for example, included microfiche records and other registry database reports. We examined these records but we could not fully determine if the records sufficiently resolved the discrepancies. The OIG intends to conduct additional audit work on the registry which will determine the accuracy of these records and reports. -------------- 2. Form 4467 registration dates past the close of the amnesty period. Regardless, ATF officials concluded that none of the identified discrepancies would affect the accuracy of a certificate of non-registration prepared by the NFA Branch for use in support of a criminal prosecution in United States district court. In a memorandum, dated November 24, 1998, ATF stated that most of the record searches ATF conducts in support of criminal investigations provide negative results, that is, the subject has no firearms registered or the firearm is not registered to any person. Therefore, it designed search procedures to retrieve as many records as possible to limit the possibility of not identifying a record of registration. As a result of these search methods, ATF stated that it can identify all records that might possibly be the record sought. ATF then reviews each possible match and excludes unrelated records based on all known information about the suspect or firearm. Actions To Improve Database Accuracy The NFA Branch Chief believed the database may contain other data entry errors and initiated steps to improve its accuracy. First, the Branch Chief requested additional overtime funds in 1998 to have employees review the registry and correct mistakes in names, weapon descriptions, and other data in the registry. A second ATF action is the digital reproduction of original documents. The original documents are "scanned", (digitally reproduced) as a computer record. The digital representation provides a visual image of the "scanned" form. Quality control of the process is accomplished by comparing the index of the "scanned" images to a microfilm copy of the original document. The employees verify the serial number, name, trade name, state, document form, and approval date in this process. Third, NFA Branch personnel also reviewed all certifications of registration or non-registration prepared at the request of U.S. Attorneys Offices after September 17, 1997, the date that registry data was migrated from the old database to the new database. The review included a query of both databases to ensure that the certification was accurate. All court certifications beginning September 2, 1997 to June 8, 1998 were checked by ATF in the former and current databases. A total of 130 certifications were reviewed by employees and found to be accurate. Officials subsequently advised us that on September 1, 1998, they evaluated the record search process and decided to eliminate the search of the old database from the routine procedure for searching the registry. Officials eliminated the search because they (a) believed all of the data in the old database bad been entered into the new database as a result of their reconciliation efforts; (b) found no discrepancies in conducting record searches in both systems; and (c) had not entered data into the old database for almost one year. Officials added that the new database provides for more search flexibility which also eliminated the need to conduct searches of the old database. Finding 3. Certain Weapon Determinations Need Reference To Supporting Documentation ATF files contained letters explaining its determinations on whether weapons should either be reclassified as curios and relics or removed from the registry because of unique characteristics. However, complete supporting documentation of the analyst's examination and research was not referred to in the files for certain determinations because procedures for these types of determinations do not include documentation requirements. Consequently, ATF's decisions regarding these determinations is less evident to outside reviewers, and in certain instances could be challenged. Without reference to supporting documentation, there is less assurance to outside reviewers that all classification decisions are performed consistently. Recommendation The Director, Bureau of Alcohol, Tobacco and Firearms should ensure that files for determinations contain references to supporting documentation on research and examinations performed. Management Response and OIG Comment ATF agreed with our finding and recommendation. The response stated that it had instituted action to ensure that files for other than routine classifications contain supporting documentation. Although ATF's response agreed with our recommendation, it did not provide specific details on the actions taken. Accordingly, we request specific documentation that supports ATF actions to address this recommendation. Details We examined 83 requests by the public to reclassify or remove weapons from the registry. All of the related folders for the requests contained letters by ATF analysts explaining their determinations on those weapons. The letters typically included reference to: * sections of the CFR applicable to the firearm under review; * information provided by the individual and ATF's research or examination of the weapon; * ATF's finding and supporting statements such as specific statutes applicable to licensed collectors. The folders, however, did not contain reference to supporting documents prepared by the analyst on any research performed by the analyst as stated in ATF's letter. Additionally, the folders did not contain reference to examination reports or other documents describing the examinations made by the analysts. ATF has formal procedures which describe the responsibilities of the Branch for performing weapon reviews and documentation requirements for certain types of determinations. These procedures explain that examinations and research are important activities of the analysts in their weapon determinations. The procedures also explain that the analyst in performing an examination, is not generally bound by any prescribed procedure but can involve any method suitable to the situation. An analyst's own experience or special knowledge may suggest the method of approach. Deviations from established and recognized procedures shall be used only with the approval of the Branch Chief. The procedures, however, do not describe the specific documentation which must be included in the files to support the examination or research performed by the analyst. Most of the determinations involved either curios or relics. Curios or relics are defined in 27 CFR, Part 178.11 as firearms of "special interest" to collectors by reason of some quality other than is associated with the firearms intended for sporting use or as offensive or defensive weapons. Part 178.26 specifies the practice of obtaining a "curio/relic" determination. Officials explained that other determinations are for "antiques" such as the Winchester rifle made in or before 1898. These firearms are subject to Title 26, Chapter 53, section 5845(g). In these specific determinations, according to ATF officials, no research or extensive examination is required which needs additional documentation in the file. Accordingly, the analysts did not prepare research or examination reports which are referred to in ATF letters back to the applicant. Of the 83 selected requests we reviewed, 51 involved either a Winchester or Martin rifle made in or prior to 1898. For other types of determinations, however, the folders did not refer to supportive research or examination documentation. We discussed 24 of these determinations with the Branch Chief who provided thorough explanations for these determinations. Officials explained that the Firearms Technology Branch (FTB) believes it unnecessary to include a complete description of all the research materials used and the legal basis for their classification decisions in their classification letters due to a number of reasons. For example, the vast majority of curios or relic determinations are based on a finding that they are at least 50 years old. The FTB relies on a number of published works to establish the age of particular firearms and does not include a detailed description of their research in the classification letter. Other curio classifications are based upon a historical event such as World War II. In such classifications, ATF does not include a detailed description of why the FTB believes the firearm was used during World War II. Many removal requests involve the same model of firearm and the FTB maintains separate files containing research materials on that particular firearm model. Since the research material can be easily found, technicians do not copy the material and place it in the file for every classification. Officials stated that this has allowed the FTB to efficiently process 1,500 to 2,000 classification requests yearly. Additionally, ATF stated it has never lost a classification case on the basis that the administrative record was insufficient for the reviewing court to determine the legality of the classification. We agree that in cases like those cited involving curios or relics, the folders should not unnecessarily contain copies of documentation that is easily accessible by the analysts. However, in cases we examined that involved less common weapons there should be references to supporting research or examinations reports. This action will help show that ATF reviews all inquiries thoroughly and equally. Finding 4. NFA Weapons May Be Registered To Persons Now Deceased The registry lists thousands of NFA weapons identified to persons who initially registered the weapon decades ago. These individuals, in many cases, may be deceased and the executor or administrators of these estates may not have transferred the weapons in accordance with the law. Unless the registry reflects the current owner of the weapon, it is less effective in controlling these weapons. This condition occurred because the law does not require ATF to periodically validate registrations. Accordingly, ATF has no procedure to determine the extent to which the registry lists weapons registered to persons who may be deceased. Recommendation We recommend the Director (a) determine the extent to which ATF can legally obtain data to update the registry; and (b) develop a course of action considering the cost and benefits that would be realized by updating the registry so that it reflects the persons currently in possession of these weapons. Management Response and OIG Comments ATF stated that the law imposes no obligation on ATF to update the information on firearms transactions reported to ATF. However, ATF is willing to consider whether it would be beneficial to periodically sample older registrations to determine whether the weapon is still in the possession of the registrant. Such a program would have validity from a law enforcement perspective since it could identify possible violations of the NFA. ATF will set up a study group to examine options for obtaining data on older registrations and to determine the costs and benefits of such a program. ATF anticipates that the study will be completed by June 30, 1999. We believe this action satisfies the intent of our recommendation and will address Congress' concerns to control NFA weapons and to reduce negative public perceptions concerning ATF's administration of the law. We request a copy of the study upon its completion. Details The registry lists thousands of weapons owned by persons who may be deceased. The following table shows by time period, the number of firearms still registered to persons or government entities who originally registered or acquired the weapon during that same time period. Table 3 Number of Original Registrants Still Listed in The Registry As in Current Possession of the NFA Weapon As of September 30, 1997 [footnote 3] Period Total by Cumulative Period Total 1960 to 1969 65,017 104,357 1950 to 1959 9,564 39,340 1940 to 1949 18,597 29,776 Prior to 1939 11,179 As the table shows the registry contains 11,179 registrations that were made by individuals or Government entities from 1934 to 1939 and who are still listed in the registry as owning the weapon. When these individuals die, ATF's Federal Firearms Regulations Guide (ATF P 5300.4; dated 10/95) states that a reasonable time is allowed for transfer of lawfully registered firearms in a decedent's estate. The guidance also states that it is the responsibility of the executor or administrator of an estate to transfer firearms registered to a decedent. As stated in congressional testimony, an internal 1981 ATF report recognized a risk that the registry listed weapons owned by individuals who had registered the weapon in 1939 or prior years and who were likely deceased. The report stated in part: We have the condition where people who registered firearms under the original National Firearms Act at age 65 would now be 112 years old. We know that these people are dead and their heirs have not taken the necessary steps to contact us so that the involuntary transfer created by the registrant's death can be formalized. -------------------------- 4. Data of September 30, 1998 was obtained, however, it does not reconcile with the database. Therefore data as of September 30, 1997 was used. In April 1997 testimony, an individual testified [footnote 4] that based on his analysis of ATF records more than 78 percent of the people or Government agencies that registered NFA firearms or obtained them by a lawful transfer from 1934 to 1939 still currently own them. Since a person who was 21 in 1939 would turn 79 in 1997, it appeared likely that many of these persons are deceased. This individual also advised the Committee that of the 58,904 firearms registered in 1968, 85.4 percent are still currently owned by the person or Government entity that registered or acquired the weapon in 1968. Our sample of 115 registry documents showed four instances of NFA firearms that either Government agencies or individuals had registered between 1934 and 1935 with no subsequent transfer of the weapon. Since the date of birth was not required on the registration form at that time, Form 1 (August 1934), we could not determine the age of an individual still listed as the owner of the weapon. ATF did not have an analysis that verified the extent to which this condition currently exists. Officials explained that the NFA imposes no obligation on ATF to confirm or update information in the registry. In addition, registered NFA weapons are rarely used in crimes. Accordingly, ATF has not developed a process to periodically contact individuals who initially registered an NFA weapon decades ago and who may likely be deceased. Instead, officials explained that they work with executors of estates when contacted by them to assist in properly transferring and registering firearms. In response to our draft report, ATF emphasized that registrations to deceased persons would not make the registry less effective as a law enforcement tool. Officials believed the registry is reliable and effective for law enforcement purposes if it accurately reflects the identity of the person legally entitled to possess a firearm. For example, ATF's response stated that a query of the registry for a particular machine gun may disclose that the firearm was registered in 1938 to an individual who was then 60 years old. If the firearm is in the possession of any person other than the registrant, a certification issued by the NFA Branch would correctly state that the firearm is not ----------------------------- 4. Testimony prepared by Eric M. Larson, for presentation before the Subcommittee on Treasury, Postal Service and General Government of the Committee on Appropriations, House of Representatives. registered to that person. The fact that the registrant is deceased would not affect the accuracy of the certification or the validity of the registration to the decedent. This is because the registry would correctly indicate that the decedent, and only the decedent, is legally entitled to the possession of the registered weapon. ATF's response added that the NFA imposes an obligation on the manufacturer, maker, or importer of a firearm to register it with ATF and imposes an obligation on the transferor and transferee to transfer firearms in accordance with the law. Since there are currently over 700,000 firearms registered in the database, ATF stated it cannot review each of these registrations to determine whether registrants are still in possession of firearms legally registered to them. We agree with the action ATF plans to take. Although the accuracy of the certification may not be affected, we believe that unless ATF acts to address this issue the number of deceased registrants will become greater as time passes and could adversely impact Congress' intention to control these weapons. ATF could be subject to further criticism from the public which would reflect negatively on ATF's efforts to administer the registry. Accordingly, the study group should determine if additional action can legally be taken to address this issue. If so, a course of action should be developed considering the benefits and costs involved and the intent of Congress in establishing the registry. For example, ATF could determine whether its records could be compared to Social Security records to help determine if the registered person is deceased. Appendix 1 METHODOLOGY Due to the number of records in the registry and the amount of information contained within those records, we decided to test for errors using discovery sampling. Statisticians from the U.S. General Accounting Office (GAO) assisted us in developing our sampling plan. We used discovery sampling to help us determine whether an unacceptable error rate for certain characteristics was present in the sample. In concert with ATF officials, we established an error rate of 5 percent. In this type of sampling, auditors select a simple random sample of items and look for a specified rate of errors. This basic test does not allow the results to be projected to the entire database. It is critical to note that our discovery sample was limited to one infrequently used form and other correspondence of the registry because of the allegations described in our "Special Report on Allegations concerning the Bureau of Alcohol, Tobacco and Firearms' Registration and Recordkeeping of the National Firearms Registration and Transfer Record" (OIG-99-009), dated October 26, 1998. Accordingly, we cannot make any probability statement or draw any other conclusions concerning the more commonly used forms and corresponding data in the registry. Further, the scope of our review and sample did not include determining whether ATF failed to process documents submitted by specific individuals or entities. With these limitations, we sampled 209 NFA records from the database to trace to the original documents and 313 original records were selected to trace to the database in our random, discovery sample. Our sample selection included Forms 4467, Other, and Letter categories. The population sizes of these categories were 57,237, 6,690, and 5,511 respectively. Sample selections were provided by our OIG Office of Information Technology Specialists using computer software to randomly generate the selections. Random items sampled originated from the computer records, while other items were selected from the hard copy files and traced back to the computer database. Hard copy selections were selected based on a random alphabet provided by the GAO. Our samples examined several characteristics of the registry database listed in the following table. FORM 4467 OTHER LTR Constraints 1. Serial No. Serial No. Serial No. No errors 2. Name Name Name No misspelling of last name 3. Address Address Address One error permitted 4. Date Received Date Date Date Required Received Received 5. Date of Birth Date Required 6. Weapon Blank description not permitted Additionally, we judgmentally sampled 98 Form 4467s to specifically address concerns over the 2,496 registrations that were shown in the computer data in years 1969 and after. Because of the error rate we found in our discovery sample and actions that ATF had underway to improve the quality of the registry, we did not implement a full statistical sampling plan. As ATF completes these actions, the OIG will perform additional reviews to fully ascertain the accuracy of the registry. Appendix 2 MANAGEMENT RESPONSE DEPARTMENT OF THE TREASURY BUREAU OF ALCOHOL, TOBACCO AND FIREARMS WASHINGTON DC 20226 NOV 27 1998 F:SD:NFA:GS 179.101 MEMORANDUM TO: Assistant Inspector General for Audit Office of Inspector General FROM: Director SUBJECT: Review of Audit Report (A-CH-98-001) On "ATF'S FIREARMS REGISTRATION PROCEDURES" We have reviewed the draft of the subject audit report and appreciate the opportunity for review. Our comments, which follow, first address the recommendations from the findings and then provide several technical and clarifying suggestions. Finding 1 (Certain Controls Over The Registry Needed Strengthening) recommends that we fully develop reports (1) to monitor pending workloads and to show registration activity and (2) to monitor database access. We agree with these recommendations. As you are aware, Phase II of the National Firearms Act (NFA) database program, which houses the National Firearms Registration and Transfer Record (NFRTR), is to provide enhanced retrieval and report functions. We will accelerate the implementation of Phase II and intend to complete this task the end of the current fiscal year. We have also taken action to ensure that database access is routinely monitored. Finding 2 (Registry Database Discrepancies Need to Be Resolved) recommends that we complete actions to (1) eliminate database discrepancies and (2) perform periodic reviews of the database for accuracy and completeness. We agree with these recommendations and will - 2 - Assistant Inspector General for Audit Office of Inspector General implement them. We intend to compare the index of imaged (digitally reproduced) documents referred to in the report to the NFRTR database to identify possible discrepancies for resolution. As you are aware, the imaging of our registration documents and the indexing of information from the documents are on going projects and will not be completed for several years. The proposed comparison will involve the review of more than 2.5 million database records (in the NFRTR database) and a larger number of documents. We need to evaluate these numbers and estimate cost and personnel needs before we can project a completion date. Because this comparison encompasses an overall review, we will not revise our procedures to routinely review the database until the imaging is completed. In the meantime, to provide additional assurance of search results, we will conduct a search of the imaging index in conjunction with our search of the NFRTR database to determine registration status by name or serial number. As noted above, the imaging and indexing project is not complete, but there is sufficient data in the index for us to query. Table 2, entitled "SUMMARY OF SAMPLE DISCREPANCIES," in this finding contains a number of alleged discrepancies identified during the audit, while these may be data entry errors and/or failures to enter information in accordance with established procedure, we have concluded that none of the identified discrepancies would affect the accuracy of a certificate of non-registration prepared by the NFA Branch for use in support of a criminal prosecution in United States district court. We have attached a memorandum dated November 24, 1998, in support of this conclusion. - 3 - Assistant Inspector General for Audit Office of Inspector General Finding 3 (Certain Weapon Determinations Need Reference To Supporting Documentation) recommends that we should ensure files for determinations on the classification of firearms as curios or relics or for the removal of firearms from the registry contain references to supporting documentation on research and examinations performed. We agree with the recommendation and have instituted action to ensure that files for other than routine classifications contain supporting documentation. Finding 4 (NFA Weapons May Be Registered to Persons Now Deceased) recommends that we (1) determine the extent to which we can legally obtain data to update the registry and (2) develop a course of action considering the cost and benefits that would be obtained by updating the registry so that it reflects the persons currently in possession of these firearms. Before responding to the specific recommendations, we would strongly disagree with your statement on page 18 of the Report that registrations to deceased persons could make the registry less effective as a law enforcement tool. The registry is reliable and effective for law enforcement purposes if it accurately reflects the identity of the person legally entitled to possess a particular firearm. Thus, for example, a query of the registry for a particular machinegun may disclose that the firearm was registered in 1938 to an individual who was then 60 years old. If the firearm is in the possession of any person other than the registrant, a certification issued by the NFA Branch would correctly state that the firearm is not registered to that person. The fact that the registrant is deceased would not affect the accuracy of the certification or the validity of the registration to the decedent. This is because the registry would correctly indicate that the decedent, and only the decedent, is legally entitled to possession of the registered weapon. - 4 - Assistant Inspector General for Audit Office of Inspector General The NFA imposes an obligation on the manufacturer, maker, or importer of a firearm to register it with ATF and imposes an obligation on the transferor and transferee to transfer firearms in accordance with the law. Since there are currently over 700,000 firearms registered in the database, it is apparent that ATF cannot review each of these registrations to determine whether registrants are still in possession of firearms legally registered to them. While the law imposes no obligation on ATF to update the information on firearms transactions reported to ATF, we are willing to consider whether it would be beneficial to periodically sample older registrations to determine whether the weapon is still in the possession of the registrant. Such a program would have validity from a law enforcement perspective, since it could identify possible violations of the National Firearms Act. Such a program would also address some of the concerns outlined in your report, such as Congress' intention to control NFA weapons and to deflect negative public perceptions concerning ATF's administration of the law. For these reasons, we will carefully consider the recommendations you have made concerning this finding. We will set up a study group to examine options for obtaining data on older registrations and to determine the costs and benefits of such a program. We anticipate that the study will be completed by June 30, 1999. The following are the technical or clarifying suggestions for changes to the report. Executive Digest, Page ii, 2nd paragraph The body of the report in the Audit Results section, Finding 2, page 9, states that "ATF documentation initially (emphasis added) did not show that all entries in an old registry database had been transferred to the new registration database." We request that "initially" be added to the Executive Digest. - 5 - Assistant Inspector General for Audit Office of Inspector General Background. page 1, 2nd paragraph The first sentence refers to a central registry of "all" firearms in the United States. To be accurate, "all" should be changed to "certain." Objectives. Scope and Methodology. page 3, 1st paragraph This paragraph should be revised to reflect the issuance of the report (OIG-99-009), dated October 26, 1998. Audit Results The recommendations section for the findings should be consistent in the subsection identification: Finding 1 has numerical subsections, while Findings 3 and 4 have alphabetical subsections. Finding 2, pages 9 - 10 There appears to be a phrase missing between the end of the last paragraph on page 9 and the first paragraph on page 10. A prior version included "In addition to the discrepancies between the old and new database, we observed..." We appreciate the time and careful attention your office has given to this important ATF system. Your work and the recommendations you have made will help us improve our processes. We would also extend our appreciation for the courteous, cooperative and professional manner in which your personnel conducted the review. Should any additional information be needed, please contact Mr. Walfred A. Nelson, Deputy Assistant Director (Firearms, Explosives and Arson) at (202) 927-7940. John W. Magaw Attachment Appendix 3 MANAGEMENT RESPONSE- ATTACHMENT DEPARTMENT OF THE TREASURY BUREAU OF ALCOHOL, TOBACCO AND FIREARMS WASHINGTON DC 20226 24 NOV 1998 F:SD:NFA:GS 179.101 MEMORANDUM TO: Deputy Assistant Director (Firearms, Explosives and Arson) FROM: Chief, Firearms, Explosives and Arson Services Division SUBJECT: Analysis of Alleged Discrepancies in OIG Chart (Draft) As you are aware, the Office of the Inspector General (OIG), based on allegations made by an individual, reviewed our administration of the National Firearms Registration and Transfer Record (NFRTR), and issued a report (OIG-99-009), dated October 26, 1998, of the findings that addressed the specific allegations. While conducting this audit, in a draft report (A-CH-98-001) on "ATF's Firearms Registration Procedures, " the OIG raised other issues, including the identification of what they believe are discrepancies in the current NFRTR database. This report includes a table summarizing the records examined and discrepancies the OIG determined. The OIG provided us with this information for review. This document details our review and analysis as to whether any of the 39 alleged discrepancies noted in Table 2 of draft report A-CH- 98-001 would adversely affect a search of the NFRTR resulting in the issuance of a certificate of non-registration for use in a district court of the United States based on the procedures used by the National Firearms Act (NFA) Branch. We determined that four of these discrepancies are violations of procedure, but that none of the discrepancies would adversely affect the accuracy of certifications provided to the court. The discrepancies noted by the OIG reflect variations in name, serial number, firearm description, status date, or application type. The OIG also noted instances where registration documents could not be located or there was missing information. - 2 - Deputy Assistant Director (Firearms, Explosives and Arson) Because most of the record searches we conduct in support of criminal investigations provide negative results, that is, the subject has no firearms registered or the firearm is not registered to any person, we designed our search procedures to retrieve as many records as possible to limit the possibility of not identifying a record of registration. Accordingly, our procedures are designed to allow for variations in registration information in conjunction with the identification of registration records. Our initial searches are generally conducted by name or serial number. We conduct name searches beginning with the first three letters of the subject's last name or trade name to provide as many associations as possible. We initially conduct serial number searches using the exact serial number. We then conduct subsequent searches excluding any prefix or suffix. By using these methods, we can identify all records that might possibly be the record sought. We then review each possible match and exclude it based on all known information about the suspect or firearm. To document our search procedures, we have attached a copy of the document entitled "NATIONAL FIREARMS REGISTRATION AND TRANSFER RECORD STANDARD OPERATING PROCEDURES RECORD SEARCHES" (Attachment 1) and a portion of the document "NFA USER'S MANUAL" (Attachment 2) [footnote 1]. The former document was written to conduct searches based on the previous database's capabilities. As you are aware, the previous database was a mainframe-type computer application that provided only basic information. In September 1997, a new database was implemented on a client/server-type application. This new database contains additional information fields and enhanced search capabilities. However, the basic procedures for conducting searches of the record remain the same for both systems. The --------------------------- 1. These documents as well as all other attachments mentioned in this Appendix 3 were not included in Management's response to our draft audit report, but can be obtained from ATF. - 3 - Deputy Assistant Director (Firearms, Explosives and Arson) procedures for a search by serial number are found on pages 6 and 7. The procedures for a name search are found on pages 13 through 16. The latter document provides instructions on how to search in the current database. The use of the "wildcard character" as described on pages 8-5 through 8-7 allows us to broaden our search. The fact that ATF is not able to locate a hard copy of a registration document would generally not affect a record search. If we identify a database record of registration, we would advise the investigator that there is evidence of registration. A database entry indicating registration of a firearm to a suspect, even when hard copies of the documents can not be located, is sufficient evidence of registration so that ATF would not, absent other facts and circumstances, certify to non-registration of the firearm. For the purposes of this report, we have attached a copy of the serial number file card that was used in the original manual system to record registration information for the instances noted by the OIG where we could not locate the registration document. There were also several instances noted in the OIG report where the registration information on the document did not appear in the database. When the conversion from a manual card system to an automated retrieval system began in 1984, procedures were implemented to ensure the consistency of the data entered and how the data was to be entered. Among the decisions made were: (1) not to enter registration information for firearms that had already been exported and (2) to enter only registration information concerning the current registrant and, if more than one registrant was involved, the two preceding registrants. Thus, if a firearm had been registered and transferred ten times, only the information for three most current registrants would be entered into the database. A guide for data entry - 4 - Deputy Assistant Director (Firearms, Explosives and Arson) personnel was prepared at that time. However, we cannot locate a copy at this time. The information relating to the procedures in place at the time of conversion was gained from the recollections of NFA Branch personnel. The OIG examined three registration categories - Form 4467, Letter (LTR), and "Other." These categories are described as follows: * Form 4467 - used to register firearms during the amnesty period in 1968. * Letter (LTR) - correspondence between applicants and the NFA Branch regarding firearms registrations, transfers, and other assorted communications. Letter applications for transfer were used in lieu of NFA forms primarily during the period 1968 through 1971. * Other - used to record the temporary transfer of firearms between movie supply houses and production companies. Also contains records where the form number was incorrectly entered, for example, F35 (a non-existent form number). For the purpose of analyzing the alleged discrepancies, we based our determination on whether the error in the record or the absence of the record would have resulted in an inability to locate a registration based on the basic parameters of our search procedures: (1) a name search is conducted starting with the first three letters of the subject's name and (2) a serial number search is conducted using the exact serial number first and subsequent searches are conducted with the elimination of any prefix or suffix. The purpose of this analysis is to determine whether certifications of non-registration issued by the NFA Branch in a criminal case would be inaccurate due to the alleged discrepancy. - 5 - Deputy Assistant Director (Firearms, Explosives and Arson) The majority of our record searches are conducted on firearms more modern than those registered 30 years ago during the amnesty period. Thus, we believe a discrepancy noted in these categories would have less of an impact upon an investigation. In addition, to the best of our knowledge, we have never issued a certification for court where we were later advised that a registration was disclosed that was issued during the amnesty period pursuant to a letter application. The discrepancies are discussed in order of the analysis number assigned by the OIG. A39. This document is a form 4467 (amnesty registration) The database name and serial number match the document. The database date does not match the document date. The application date is after the close of the amnesty period. We cannot document why this occurred, but it may have been because of the assignment of serial numbers to the hundreds of items registered by this person. However, the application date would not adversely affect a search because the search would not be conducted on the status date of the registration. A search by name or serial number would identify the registration. A46. This document is a Form 4467 (amnesty registration) The database serial number matches the document. The document reflects that the registration was filed by "Mrs. (husband's name)" and the database does not contain this reference. An NFA search would identify the registration unless the search was requested under the wife's actual name (this information does not appear on the registration document). Based on the information we have, a search by name or serial number would identify the registration and not adversely affect the record search. - 6 - Deputy Assistant Director (Firearms, Explosives and Arson) A62. This document is a Form 4467 (amnesty registration) The database entry of the name contains a typographical error within the first three positions. The serial number on the registration document matches the database entry. The application date is past the close of the amnesty period. The explanation in item A39 applies as to why the application was accepted. The typographical error in the name field would adversely affect a search conducted by name because we would not be able to identify the record by name based on the search criteria. However, we would be able to identify the registration by conducting a search of the system by the serial number of the firearm. A70. This document is a Form 4467 (amnesty registration). The database name matches the document. The database serial number entry does not contain the prefix "CSRG" shown on the document. As noted above, NFA Branch procedures require that a serial number be searched with and without the prefix (or suffix). As a result, the registration of the firearm by serial number would be identified and this would not adversely affect a search. A search by name would identify the registration A70. This document is a Form 4467 (amnesty registration). The database name and serial number match the document. The database date does not match the document date. The application date is after the close of the amnesty period. We cannot document why the application was approved with that date. However, the application date would not adversely affect a search because the search would not be conducted on the status date of the registration. A search by name or serial number would identify the registration. B55. This document is a Form 4467 amnesty registration. The database entry for the name matches the amnesty registration document. The database entry for the serial number does not reflect the serial number as described on - 7 - Deputy Assistant Director (Firearms, Explosives and Arson) the document. The application status date in the database does not match the approval date on the document. The difference in dates would not adversely affect a search because the search would not be conducted on the status date of the registration. However, because there is a discrepancy within the body of the serial number, this would adversely affect a search because we would not be able to identify the record by serial number. We would be able to identify the registration by name. C29. The database name and serial number match the registration document. Other original documentation could not be located. Because we would be able to identify a registration by the name and serial number database entry, the lack of the registration document would not adversely affect a search. C55. The database name entry does not contain the full middle name, only the initial for the middle name. The database serial number matches the registration document. The database date precedes the document application date. The application date would not adversely affect a search because the search would not be conducted on the date. Since our search procedures require a broad search by the last name of the subject, the registration would be identified and this would not adversely affect a search. A search by serial number would identify the registration. Please note also that the database entry in question is one that reflects an address change for the registrant. The actual registration to the possessor is the previous database entry on Form 5. A copy of the database entry chronology is attached (referencing C55). C62. This entry relates to a letter application transferring a firearm from a Federal firearms licensee to a Federal government agency. The "hard" copy of the letter cannot be located. The database entry for this letter (LTR) transaction does not reflect the full name of registrant or correct city and state. The database entry - 8 - Deputy Assistant Director (Firearms, Explosives and Arson) for the serial number matches the serial number card (attached, referencing (C62). The serial number card describes a transfer from a licensed manufacturer to a United States government agency. The transaction should have been on Form 5. We cannot document why a letter application was used since the registration document could not be located. The lack of the document would not adversely affect a record search because we could identify a registration by serial number. The error in the name field would adversely affect a search conducted by the name of the registrant. C63. This entry relates to a letter application for the transfer of a firearm in 1971 to a Federal firearms licensee. The database name and serial number match the serial number card (copy attached, referencing C63). While the registration document could not be located, a search would not be adversely affected since a registration would be identified by a name or serial number search. In addition, the firearm is no longer registered to the person involved in this transaction and this person is not legally entitled to possess it. C68. This entry relates to a letter application for the transfer of a firearm in 1971 to a State government agency. The database name and serial number match the serial number card (copy attached, referencing C68), although the entry was made in violation of branch procedure which requires an "ST:" prefix. While the registration document could not be located, a search would not be adversely affected since a registration would be identified by a name or serial number search. In addition, the firearm is no longer registered to the agency and the agency is not legally entitled to possess it. - 9 - Deputy Assistant Director (Firearms, Explosives and Arson) D3. The database serial number matches the serial number card (copy attached, referencing D3). This type of transaction (coded "TWX" in the database) was filed by Telex (a telegraph system) by a movie production supply house and reflects the rental of the firearm for movie production use. The file of these transactions was kept separately by the NFA Branch because the transaction was temporary. This file cannot be located. However, the database was posted to reflect these transactions and, in fact, the database chronology (attached, referencing D3) reflects the return of the firearm on a "TWX" transaction to the supplier and additional "TWX" transactions. Thus, while the registration document could not be located, a search would not be adversely affected since a registration would be identified by.a name or serial number search. D4. The database serial number matches the serial number card (copy attached, referencing D4). This type of transaction (coded "TWX" in the database) was filed by Telex (a telegraph system) by a movie production supply house and reflects the rental of the firearm for movie production use. The file of these transactions was kept separately by the NFA Branch because the transaction was temporary. This file cannot be located. However, the database was posted to reflect these transactions and, in fact, the database chronology (attached referencing D4) reflects the return of the firearm on a "TWX" transaction to the supplier and additional "TWX" transactions. Thus, while the registration document could not be located, a search would not be adversely affected since a registration would be identified would be identified by a name or serial number search. D5. The database serial number matches the serial number card (copy attached, referencing D5). This type of transaction (coded "TWX" in the database) was filed by Telex (a telegraph system) by a movie production supply - 10 - Deputy Assistant Director (Firearms, Explosives and Arson) house and reflects the rental of the firearm for movie production use. The file of these transactions was kept separately by the NFA Branch because the transaction was temporary. This file cannot be located. However, the database was posted to reflect these transactions. Thus, while the registration document could not be located, a search would not be adversely affected since a registration would be identified by a name or serial number search. D8. The database serial number matches the serial number card (copy attached, referencing D3]. This type of transaction (coded "TWX" in the database) was filed by Telex (a telegraph system) by a movie production supply house and reflects the rental of the firearm for movie production use. The file of these transactions was kept separately by the NFA Branch because the transaction was temporary. This file cannot be located. However, the database was posted to reflect these transactions. Thus, while the registration document could not be located, a search would not be adversely affected since a registration would be identified by a name or serial number search. D9. The database entry of the name contains a typographical error within the first three positions. The database serial number matches the registration document. The transaction described is the transfer of a firearm from a manufacturer to a State agency in 1991 and was classified as an "Other" transaction because the form type in the database shows a reversal of the characters (5F instead of F5). The wrong form would not adversely affect a search because the search would not be conducted on the form type. The error in the name field would adversely affect a search conducted by name because we would not be able to identify the record by name based on the search criteria. However, we would be able to identify the registration by conducting a search by the serial number. - 11 - Deputy Assistant Director (Firearms, Explosives and Arson) D15. The database name and serial number match the serial number card (attached, referencing D15). This entry is classified as "Other" because no form number is reflected in the database. There is no form number on the card. The lack of form number would not adversely affect a search because a search would not be conducted on the form type. The registration document from 1934 could not be located. The serial number card reflects a subsequent transaction during World War II by the registrant in question. Since a registration would be identified by a name or serial number search, this would not adversely affect a search. D22. The database name and serial number match the serial number card (attached, referencing D22). This entry is classified as "Other" because no form number is reflected in the database. There is no form number on the card. The lack of form number would not adversely affect a search because a search would not be conducted on the form type. The registration document from 1935 could not be located. However, the serial number card reflects that the registrant subsequently transferred the firearm in question. Since a registration would be identified by a name or serial number search, this would not adversely affect a search. D23. The database name and serial number match the serial number card (attached, referencing D23). This entry is classified as "Other" because no form number is reflected in the database. There is no form number on the card. The lack of a form number would not adversely affect a search because a search would not be conducted on the form type. The registration document from 1934 could not be located. However, the serial number card reflects that the registrant subsequently transferred the firearm in question. Another serial number card (with an "M" prefix to the serial number) reflects an additional registration by the transferee. Since a registration would be identified by a name or serial number search, this would not adversely affect a search. - 12 - Deputy Assistant Director (Firearms, Explosives and Arson) D28. The database name and serial number match the serial number card (attached, referencing D28). This entry is classified as "Other" because no form number is reflected in the database. There is no form number on the card. The lack of a form number would not adversely affect a search because a search would not be conducted on the form type. The registration document from 1935 could not be located. However, the serial number card reflects that the registrant subsequently transferred the firearm in question. Since a registration would be identified by a name or serial number search, this would not adversely affect a search. D30. The database serial number matches the serial number card (copy attached, referencing D30). This type of transaction (coded "TWX" in the database) was filed by Telex (a telegraph system) by a movie production supply house and reflects the rental of the firearm for movie production use. The file of these transactions was kept separately by the NFA Branch because the transaction was temporary. This file cannot be located. However, the database was posted to reflect these transactions (chronology attached, referencing D30). Thus, while the registration document could not be located, a search would not be adversely affected since a registration would be identified by a name or serial number search. D31. The database name and serial number match the serial number card (attached, referencing D31). This entry is classified as "Other" because no form number is reflected in the database. There is no form number on the card. The lack of a form number would not adversely affect a search because a search would not be conducted on the form type. The registration document from 1935 could not be located. Since a registration would be identified by a name or serial number search, this would not adversely affect a search. - 13 - Deputy Assistant Director (Firearms, Explosives and Arson) D33. The database serial number matches the serial number card (copy attached, referencing D33). This type of transaction (coded "TWX" in the database) was filed by Telex (a telegraph system) by a movie production supply house and reflects the rental of the firearm for movie production use. The file of these transactions was kept separately by the NFA Branch because the transaction was temporary. This file cannot be located. However, the database was posted to reflect these transactions and, in fact, the database chronology (attached, referencing D33) reflects the return of the firearm on a "TWX" transaction to the supplier. Thus, while the registration document could not be located, a search would not be adversely affected since a registration would be identified by a name or serial number search. D46. The description of the firearm on the serial number card (attached, referencing D46) is that of a conventional handgun (Savage, model 1917, semiautomatic pistol) and it is not subject to the purview of the NFA. The document was probably destroyed when it was discovered that this handgun was not subject to the NFA. D53. The database name and serial number match the serial number card (attached, referencing D53). This entry was classified as "Other" because no form number is reflected in the database. There is no form number on the card. The lack of form number would not adversely affect a search since a search would not be conducted on the form type. The registration document from 1934 could not be located. However, the serial number card reflects that the registrant subsequently transferred the firearm in question. Since a registration would be identified by a name or serial number search, this would not adversely affect a search. - 14 - Deputy Assistant Director (Firearms, Explosives and Arson) D55. The database name and serial number match the serial number card (attached, referencing D55). This entry was classified as "Other" because no form number is reflected in the database. There is no form number on the card. The lack of form number would not adversely affect a search since a search would not be conducted on the form type. The registration document from 1935 could not be located. However, the serial number card reflects that the registrant subsequently transferred the firearm in question. Since a registration would be identified by a name or serial number search, this would not adversely affect a search. D63. The database name and serial number match the serial number card (attached, referencing D63). This entry is classified as "Other" because an incorrect form number ("FE") is reflected in the database rather than Form 3 as noted on the card. The lack of form number would not adversely affect a search since a search would not be conducted on the form type. The registration document from 1935 could not be located. The registration document from 1942 could not be located. However, the serial number card reflects that the registrant subsequently transferred the firearm in question. Since a registration would be identified by a name or serial number search, this would not adversely affect a search. D65. The database serial number matches the serial number card (copy attached, referencing D33). This type of transaction (coded "TWX" in the database) was filed by Telex (a telegraph system) by a movie production supply house and reflects the rental of the firearm for movie production use. The file of these transactions was kept separately by the NFA Branch because the transaction was temporary. This file cannot be located. However, the database was posted to reflect these transactions and, in fact, the database chronology (attached, referencing D65) - 15 - Deputy Assistant Director (Firearms, Explosives and Arson) reflects the return of the firearm on a "TWX" transaction to the supplier. Thus, while the registration document could not be located, a search would not be adversely affected since a registration would be identified. In addition, the registrant's first name was missing (last and middle name are in the database entry) from database entry. The registration would have been located because name search would have been done by use of the first three letters of the last name of the subject in accordance with the search criteria. There were other records for this subject so the connection would be made and a search would not be adversely affected. A search by serial number would identify the registration. E11. The database name, serial number, and status date match the registration document. Cancellation of approved application noted in database. This would not adversely affect a search since a search by name and serial number would identify a registration. G3. The registration by name was not found in the database. The source document was a letter registration approved December 10, 1969. The database entry for the serial number matches the serial number card (attached, referencing G3). This registrant was the 5th previous registration record at the time of database entry and, since procedures required only the entry of the current and two previous registrant names, the name information was not entered. We have attached a copy of the serial number card (referenced as G3) to document the registration chronology. G18. The registration by name was not found in database. However, the serial number matches. This registrant was the 4th record at the time of database entry and, since procedures required only the entry of the current and two previous registrant names, the name information was not entered. We have attached a copy of the serial number card (referenced as G18) to document the registration chronology. - 16 - Deputy Assistant Director (Firearms, Explosives and Arson) G31. This entry relates to a letter registration transferring a firearm in 1970 between Federal firearms licensees. The registration by name was not found in database. However, the serial number matches. A search by serial number would identify a registration. Although the registrant was not the current owner at the time of database entry, procedures required that the current and two previous registrant names be entered. This registrant was the 2nd previous registrant and should have been entered into the database. We have attached a copy of the serial number card (referenced as G31) to document the registration chronology. While we concede that the nonentry is a violation of procedure and a discrepancy, it would not adversely affect a search resulting in the issuance of a certificate because the firearm is no longer registered to the person and the person is not legally entitled to possess it. G33. This entry related to a letter registration transferring a firearm in 1970 between Federal firearms licensees. The registration by name was not found in the database. However, the serial number matches. A search by serial number would identify a registration. Although the registrant was not the current owner at the time of database entry, procedures required that the current and two previous registrant names be entered. This registrant was the 2nd previous registrant and should have been entered into the database. We have attached a copy of the serial number card [referenced as G33) to document the registration chronology, While we concede that the nonentry is a violation of procedure and a discrepancy, it would not adversely affect a search resulting in the issuance of a certificate because the firearm is no longer registered to the person and the person is not legally entitled to possess it. - 17 - Deputy Assistant Director (Firearms, Explosives and Arson) G40. This entry related to a letter registration transferring a firearm in 1970 between Federal firearms licensees. The registration by name was not found in the database. However, the serial number matches. This registrant was the 4th record at the time of database entry and, since procedures required only the entry of the current and two previous registrant names, the name information was not entered. We have attached a copy of the serial number card (referenced as G40) to document the registration chronology. G43. This entry related to a letter registration transferring a firearm in 1970 between Federal firearms licensees. The registration by name was not found in the database. However, the firearm description on the document matches the database entry. A search by serial number would identify a registration. Although the registrant was not the current owner at the time of database entry, procedures required that the current and two previous registrant names be entered. This registrant was within these parameters and should have been entered into the database. The serial number card could not be located as documentation. While we concede that the non-entry is a violation of procedure and a discrepancy, it would not adversely affect a search resulting in the issuance of a certificate because the firearm is no longer registered to the person and the person is not legally entitled to possess it. G44. The serial number card (copy attached, referencing G44) for this firearm reflects that the firearm was exported prior to database entry. The card is stamped "EXPORTED" and while there is no date of export provided, there is the notation "82-I-8011" encircled on the lower left corner of the reverse of the card. This notation refers to a transaction being processed in Fiscal Year 1982 ("82"), by the Industry Control section of the branch - 18 - Deputy Assistant Director (Firearms, Explosives and Arson) ("I"), with a control log sequence number ("8011"). We believe this to be the exportation permit issued on Form 9. The Industry Control section no longer exists nor do the transaction logs maintained at that time. The procedures at the time of database entry excluded the entry of information relating to previously exported firearms. We do not believe this is a discrepancy. G46. This entry related to a letter registration transferring a firearm in 1970 between Federal firearms licensees. The database name and serial number match the registration document. The database application type (Form 1) does not match the document type classification that should have been used (LTR). This would not adversely affect a search because the search would not be conducted on the application type of the registration. A search by name or serial number would identify the registration. G55. The database name and serial number match the registration document. The audit found that the transfer of the firearm had been approved on April 27, 1971, but that a letter, dated April 26, 1971, from the transferor cancellation of the application, had not been posted in the database. The letter of April 26th was noted "VOID" in handwriting. Our research showed another letter, dated May 12, 1971, from the transferor requesting a copy of the approved application. We believe the "VOID" notation on the letter of April 26th was an ATF notation to cancel the request for cancellation and that the transferor decided to continue with the transfer as evidenced by the May 12th letter. As a result, since the transaction took place, the database required no entry. This is further evidenced by the fact that this firearm was subsequently transferred by the registrant. We have attached (referencing G55) a copy of the serial number card, cited correspondence, and a copy of the database chronology. Thus, we do not believe this finding is a discrepancy. - 19 - Deputy Assistant Director (Firearms, Explosives and Arson) G71. The source document provided through the audit concerned a letter (microfilm number 0571029) request of April 21, 1980, for the cancellation of approved applications for the transfer of machineguns. The control number cited (19805673) is for the transfer of an M16A1 machinegun in 1980. Based on our research, we determined that the cited letter concerns transactions other than the one involving the M16A1 machinegun. We have attached copies of the documents immediately succeeding the cited letter (note the microfilm numbers an the top of the letter and documents). These documents reflect the cancellation of five Form 3 applications, each approved September 27, 1979, for the transfers of FN machineguns. The receipt date of the letter (reverse side of the letter is attached) is April 24, 1980. Each of the Form 3 applications is noted in the lower left corner with "VOID" and a date of April 25, 1980. Although five machineguns are involved, there are two copies of each document attached. The last microfilm copy (number 0571039) was attached to show the end of the sequence of associated documents attached. We have attached copies of these documents (referencing G71). There is no reference to the M16A1 machinegun as an attachment to the April 21th letter. Since the approval date of the Form 3 application for the transfer of this machinegun is May 27, 1980, we do not believe that there is any association between the transactions and, thus, this is not a discrepancy. To summarize our analysis of the alleged discrepancies, there are a number of data entry errors and failures to enter information in accordance with established procedure. As we have advised you previously, ATF is making every effort to correct these errors and to minimize future errors in the database. However, none of the discrepancies outlined above would affect the accuracy of a certificate - 20 - Deputy Assistant Director (Firearms, Explosives and Arson) of non-registration prepared by the NFA Branch prior to trial. At this stage of an investigation both the name of the suspect and a complete weapon description, including serial number, would be available. By conducting searches of the database by both name and serial number, all of the registrations noted above would have been located. Accordingly, we conclude that none of the alleged discrepancies would adversely affect the accuracy of certifications provided for use in NFA criminal cases. Should any additional information be needed, please contact Gary Schaible in the NFA Branch at 927-8330. Philip R. Horbert Attachments Appendix 4 MAJOR CONTRIBUTORS TO THIS REPORT Central Region Roberta N. Rickey, Regional Director for Audit Robert K. Bronstrup, Audit Manager Gary R. Wilk, Auditor Office of Counsel Ric Doery, Deputy Counsel to the Inspector General Appendix 5 REPORT DISTRIBUTION Treasury Departmental Offices Office of the Under Secretary of the Treasury for Enforcement Office of the Assistant Secretary of the Treasury for Management Chief Financial Officer Director, Office of Organizational Improvement Director, Office of Strategic Planning Desk Officer, Office of Accounting and Internal Control Office of Budget, Financial Management Division Management Controls Branch Bureau of Alcohol, Tobacco and Firearms (ATF) Director Assistant Director, Office of Inspection Assistant Director, Firearms, Explosives and Arson Programs