With the annual Washington, D.C. budget negotiations underway, it’s a good time to rewind on the annual budget for the Bureau of Alcohol, Tobacco, and Firearms.   Every fiscal year, the ATF is audited by the U.S. Department of Justice, Office of the Inspector General, Audit Division, and an associated audit report is issued for public consumption.  The most recent such report issued in February 2012, and concerned ATF activity for FY 2011. What may surprise you about fiscal reports is how much the numbers reveal about Bureau philosophy and priorities.  At the end of the day, the persons heading Bureaus within the Executive Branch of the federal government, such as the ATF, are carrying out the directives of the White House.  Although Congress sets the appropriations to the Bureau, it has authority to make budget expenditures with those funds plus the revenues directly received from taxes and liquidated assets.   And, as we know the scorecard of who will be sworn in this January at our nation’s capitol, we can readily use last year’s fiscal audit to project a continuation of the goals of the current Administration. According to this most recent audit report, 99.5% of the ATF’s net costs are paid out for its strategic goals of crime prevention and law enforcement through programs on illegal firearms trafficking, firearms criminal possession and use, criminal groups and gangs, and firearms industry operations.  In dollars and cents, the budget for these programs exceeds $1.2 billion. During FY2011, the ATF initiated 27,515 firearms cases, including illegal possession and firearms trafficking.  Between 55%-60% of ATF firearms investigations result in a referral for criminal prosecution.  It appears that in FY2012 prosecutions will be trending upwards, after a 7-year decline. Criminal investigations can start with routine compliance work.  For this core function, the ATF “performance goal statement” is “Improve public safety by increasing compliance with federal laws and regulations by firearms industry members.”  As one example of routine ATF compliance work, in FY2011, the ATF inspected 50% of Federal Firearms Licensees in Texas, Arizona, New Mexico, and southern California, or, roughly 3,712 retail dealers and pawnbrokers.   As it relates to businesses operating within the firearms industry, the report highlighted key aspects of routine inspections, including:  (1) ensuring qualifications of applicants, seeking permission to enter the regulated firearms industry; (2) inspecting firearms dealers to identify any illegal purchases or diversions of firearms to criminals; (3) ensuring firearms dealers maintain accurate records for the tracing of firearms; (4) identifying illegally imported firearms, and validating those legally imported are properly marked and recorded by the importer for domestic sale; and, (5) enforcing compliance with the Gun Control Act, the National Firearms Act, and the Arms Export Control Act. If you’re concerned with compliance relative to your firearms or manufacturing business, routine government reports can be a fruitful source of information to help you prioritize.  There is no question that if you are audited, you will need to demonstrate a compliance program and an active management of all compliance issues.  However, these routine reports can serve as routine, periodic reminders for you to refresh on related parts of your compliance program.