There are apparently millions of dollars worth of cigarettes out there that the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives was supposed to have in its possession, says an audit released yesterday by the Department of Justice’s Inspector General. The report says there are 2 million cartons of cigarettes just out there somewhere, worth about $127 million.

The audit says the ATF can’t account for smokes gone missing during cigarette-selling stings, and that the group misused proceeds from such efforts as well, reports the Milwaukee Journal Sentinel.

As an example: One sting was reportedly done without approval of ATF supervisors and involved an informant who ended up with almost all of the $5 million in profit, which was chalked up to expenses and commissions. The ATF didn’t have any paperwork on the informant’s expenses, says the audit.

From there, the money was deposited into the account of an entirely separate ATF sting in another state, which is against the rules. The report doesn’t say if ATF agents are under investigation for that particular effort or for the millions worth in missing cigarettes.

Inspector General Michael Horowitz’s auditors found there was “a serious lack of oversight” on behalf of the ATF when it would do these “churning investigations,” so-called because they bring in money that the agency then spends on other operations.

ATF agents pose undercover as cigarette salesmen out to make a buck, selling off cases of illegal, untaxed cigarettes to people and seeing if they bite. The agency conducted 36 such operations between 2006 and 2011, and none of them were by the book, says the audit.

Of those, the audit looks at 20 particular investigations, which reported a total revenue of almost $162 million. The inaccurate inventories and transactions were often delayed, said auditors, providing an atmosphere where “”embezzlement, theft, misuse and mishandling of funds” could happen.

ATF’s cigarette stings had ‘serious lack of oversight,’ audit finds [Milwaukee Journal Sentinel]

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