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The federal agency responsible for capturing terrorists, busting street gangs and investigating money laundering has started hiring new agents after almost a year and a half in limbo, marking a turning point for a bureau that has been riddled with financial problems.

The Homeland Security Department's Immigration and Customs Enforcement bureau had been under a hiring freeze since March 2004 as it underwent an intensive effort to overcome budgetary problems. Financial challenges remain, but the agency received more than $450 million in emergency money from Congress this summer and has started hiring again, ICE spokesman Dean Boyd said Wednesday.

Meanwhile, the department's inspector general is on the verge of releasing the results of the first phase of an investigation into whether ICE violated the Anti-Deficiency Act, which prohibits agencies from spending more money than they have been appropriated. The investigation was requested by former Rep. Jim Turner, D-Texas, last summer when he was ranking member of the House Homeland Security Committee.

DHS Inspector General Richard Skinner touched off a controversy last week when he told the House Government Reform Subcommittee on Management, Finance and Accountability that ICE is failing to account for millions of dollars in spending each month, and the reasons for the discrepancies are unclear.

The IG's office declined to comment on the findings of the investigation because they have not been released yet. But the office said it already has started a second phase of the review that picks up where the first leaves off.

ICE has been trying to dig itself out of a financial hole since it was created by Congress in 2003 through a merger of the enforcement and investigation divisions of the former Customs Service, Immigration and Naturalization Service and Federal Protective Service.

Agents in the field told Turner last year that financial problems hindered their ability to carry out national security work, which prompted the lawmaker to ask for the investigation. Some agents have told Government Executive they left or are planning to leave ICE out of frustration over financial mismanagement.

Homeland Security officials acknowledge that ICE still faces financial challenges, but disputed claims that the agency is in financial disarray.

"I don't believe there is missing money at ICE," said Andrew Maner, the department's chief financial officer. "Fixing ICE financially -- whether it be accounting, whether it be budgeting -- fundamentally takes an improvement in their people, their processes and their systems. You can't just change one of them. You need to change all of them, and they are working now to affect all three of them."

A year ago, DHS officials still were grappling with how to dissolve the former INS budget and determine how much money ICE actually needed, Maner said. With the recent emergency appropriation and the fiscal 2006 budget request, DHS officials think they won't have to ask Congress for extra money next year.

But ICE still has to reconcile what auditors call "abnormal balances" in its books. ICE personnel have to manually track credit and debit accounts to reconcile differences. Maner said ICE has seven material weaknesses in financial management, all of which are being worked on.

He said that ICE now has a corrective action plan to eliminate its abnormal balances by October. He noted that the agency also has hired an acting chief financial officer and a director of finances.

"What I profess is progress every year toward the ultimate goal of a totally clean financial situation in two years," Maner said.

DHS is required to have an independent auditor issue an opinion on the department's internal accounting controls starting in fiscal 2006.

After Skinner made his comments last week about ICE, the department quickly sent the subcommittee a two-page fact sheet on the bureau's financial situation. DHS also gave the subcommittee a 100-page document before the hearing outlining how it is preparing for the upcoming audit.

Subcommittee spokeswoman Tabetha Mueller said DHS has been proactive but more needs done.

"It's definitely a good start, but this is not it. We will be following up, and in not too long a time we will want to hear what the next step is," she said. "We just can't have a situation happen again where you've got such a horrible impact on the agents."

She added: "The biggest thing we can show to people is that we're keeping track of the money."

ICE spokesman Dean Boyd said the agency's top hiring priorities are filling spots that have become empty through attrition. He said the agency is recruiting and hiring for special agents, officers for the Detention and Removal Office, and specific positions identified by Congress.

"After a long break," he said, "we are back in hiring mode."