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Immigration and Naturalization Service Collection of Fees at Air Ports of Entry
Report No. 02-42
Office of the Inspector General
Sufficient criteria exist to guide federal agencies concerning the proper accountability of resources, such as cash. The Comptroller General's Standards for Internal Controls in the Federal Government (CG Standards), issued in 1999, contain the internal control standards to be followed by federal agencies in establishing and maintaining systems of internal control. In addition, the Office of Management and Budget Circular A-123, Management Accountability and Control (OMB Circular A-123), provides guidelines for improving accountability and establishing management control. Based on the requirements of these criteria, we identified four major controls (described in the following four paragraphs) that should be in place for the fee collection and deposit processes.
Supervision of the Processes. According to the CG Standards, managers must continuously review and approve the work of their staff. OMB Circular A-123 requires managers to exercise appropriate oversight to ensure that individuals do not exceed or abuse their assigned authorities. The INS Fee Collection Procedures manual5 (the Manual) outlines supervisors' responsibilities for the oversight of the fee collection and deposit processes.
Segregation of Duties. OMB Circular A-123 requires that key cash handling duties and responsibilities for authorizing, processing, and recording transactions be separated among individuals. The Manual states that if adjudicating applications, the INS employee must not accept fee payments or perform cashier duties, except when only one INS employee is assigned to a POE.
Reconciliations. The CG Standards recommend that periodic reconciliations be made between resources and records and that the frequency of such comparisons be determined by the vulnerability of the asset, with cash being one of the most vulnerable assets. The Manual requires that at the end of each shift, in the presence of a supervisor or a person designated by the supervisor, the cashier must perform a prompt and thorough reconciliation of the fees collected. The Manual specifically states that the following items must be reconciled:
Furthermore, the Manual directs that the reconciliation must be documented on a locally generated worksheet and have the concurrence of a second person. If a shortage is discovered, the cashier must assume personal liability for the loss and submit a memorandum to the port director acknowledging the discrepancy and explaining the circumstances.
Restricted Access to Resources. The CG Standards also require managers to restrict access to cash to authorized individuals so that the risk of loss is reduced. According to OMB Circular A-123, accountability for the custody of cash should be assigned and maintained. The Manual requires that each employee who collects fees maintain a cash box, separate from the applications processed, and safeguard keys, if issued. The Manual also requires inspectors to keep originals or photocopies of applications in a locked box until the end of the work shift. The Manual further states, "These documents [applications] will form a transaction record independent from the Cashier and will be counted to establish the proper amount of fees collected that should be produced by the Cashier."
Responsibilities and Duties
The Manual states that port directors must appoint a principal officer whose primary responsibilities are to oversee the fee collection process, to train and manage the staff engaged in fee collections, and to ensure the security and accountability of funds received by INS employees. The Manual outlines numerous duties for the principal officer.
A single person designated as principal officer at each POE is important, especially at POEs with several fee collection points, such as multiple-terminal airports. Having one person to oversee the process can improve controls and help ensure that fee collections are conducted consistently among multiple locations. Of the eight air POEs we tested, however, only four (Chicago, JFK, Los Angeles, and Miami) designated a principal officer, as the Manual requires. Moreover, even the designated principal officers at those four air POEs were not fulfilling all applicable duties listed in the Manual.
In addition to the guidelines already discussed, the Manual includes the following duties and responsibilities for cashiers and supervisors to safeguard cash during the fee collection process:
Overview of the Manual Receipt System
The eight air POEs we reviewed used manually prepared receipts or a nonintegrated, stand-alone computer system to collect and record fees. As a result, the entire fee collection process used handwritten or computer-generated receipts and other support documents instead of cash registers. When applicants paid a fee, they received a receipt from an immigration inspector or supervisor who functioned as the cashier. Currently, the INS uses two types of individual receipts: (1) the G-211, which provides an original receipt for the applicant and one copy for the accounting records and (2) the G-711, which provides an original receipt for the applicant and two copies for the accounting records. The G-711 is a prenumbered form. Some of the G-211 receipts we observed were prenumbered and some were not. Even if prenumbered, both types of receipts were unaccountable forms.
The next step in the process is the completion of the Daily Register. Its purpose is to manually record and account for fees received and accepted by the POE. Most of the information contained on the Daily Register is duplicative of the information on the individual receipts. The Daily Register is neither prenumbered nor accountable. A supervisor, or a person designated by the supervisor, manually numbers the Daily Register. According to the Manual, the Daily Register numbers should include the office location code, the last two digits of the fiscal year, and a consecutively assigned number.
The Manual states that at the end of each shift employees shall reconcile the fees collected with the entries on the Daily Register, and the collections and supporting documents shall be deposited in a drop safe or transferred to another employee for safekeeping. To maintain accountability for the fees collected, the transfer must be documented on a Receipt for Funds and Valuables Transferred (Form G-714).
Manual cash collection systems are especially vulnerable to manipulation and, thus, require more supervisory involvement and oversight. In our judgment, the current design of the INS's manual receipt system is cumbersome and labor-intensive. Furthermore, controls over the process are weakened because:
Our audit testing focused on evaluating the air POEs' compliance with the guidelines for safeguarding fees. We observed the process and reviewed accounting records at the eight air POEs in our sample. The following table shows a comparison by POE of the discrepancies we found. An "X" indicates an observed weakness.
|Weaknesses in Receipt Procedures Used by the POEs|
|Source: Data based on OIG observations.|
|a Four air POEs (Detroit, JFK, Los Angeles, and San Francisco) did not maintain copies of applications at the POE. For those POEs, we were unable to determine (UTD) supervisory approval of fee waivers, or the results in the table are based on POE-processed applications found at another office, such as a district office.|
As demonstrated in the table, we found a large number of significant control weaknesses at the air POEs. As a result, we believe the risk is very high that loss or theft of fees could occur with little or no chance of being discovered.
Forms Integration Management System
When the Forms Integration Management System (FIMS) was designed by the INS Buffalo District Office in the early 1990s, the goal was to provide an efficient method for the POEs to collect and arrange administrative and enforcement data into a usable format. The FIMS system is a nonintegrated, stand-alone computer system that has a number of optional features. The data stored is port-specific; that is, the system stores data specific to each POE, but the information is not shared among POEs or other INS systems.
During our review of our eight sample ports, we found that Atlanta and Toronto routinely used the Forms Integration Management System to print applications and generate the G-211 receipts and the Daily Register. The Toronto POE is by far the most extensive user of the FIMS. In Los Angeles and San Francisco, some inspectors occasionally used the FIMS just to print applications and generate a G-211 receipt. Chicago and Detroit only used the FIMS to print readable versions of the applications but did not use the system for receipt generation or as a log of receipts issued. Miami and New York did not have a copy of the FIMS at their POEs. We also found different versions of the FIMS in use at the air POEs that used the system.
At Chicago, one INS official told us that the Buffalo District no longer provides adequate technical support for the Forms Integration Management System. Another official at INS Headquarters told us that the FIMS was not approved for use with INS fee collections. Furthermore, a request from the Assistant Attorney General for Administration, dated September 8, 1999, directed all DOJ components to submit to the Department's Information Management and Security Staff a plan for certification of each information technology system in use. As of January 2002, the FIMS was not on the INS's accredited and certified information systems list, nor was the system recognized in the Manual.
We found that the FIMS can be easily compromised.
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When combined with inadequate separation of duties where an inspector adjudicates the application, collects the fee, and generates a G-211 receipt, there is a high risk of thefts of fees occurring without detection. Inadequate end-of-shift reconciliations further increases the risk. Therefore, in our judgment, the POEs should not use this system for fee collections.
Facilities and Supplies
During our testing, we observed situations where controls on INS fee collecting at air POEs were weakened by facilities constraints. For example,
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In our judgment, port directors and principal officers should be cognizant of such risks and take steps to minimize these weaknesses at their POEs, as delineated in the Manual.
Our observations also raised concerns with regard to rubber stamps used during the fee collection process, specifically the restrictive endorsement stamp for checks and the "fee paid" stamp.
Restrictive Endorsement Stamp. Placing a restrictive endorsement on a check or money order immediately upon receipt is crucial to reducing the risk of misappropriation. The Manual states that every POE should have a rubber stamp for endorsing checks. During our observations, however, we found that the POEs either did not have the required stamp or the stamp was available only to the deposit preparer and not the cashiers.
As shown in our preceding table, we credit only one of the eight POEs in our sample, JFK, with immediately endorsing checks upon receipt. Although we did not observe any checks received for fees during our site visit, the Deputy Area Port Director at JFK told us that they endorse checks by hand upon receipt because they did not have an endorsement stamp at the airport.
Atlanta, Los Angeles, Miami, and San Francisco did not have endorsement stamps nor make endorsements upon receipt of checks. In Los Angeles, the endorsement was typed on the check when the deposit was prepared. In Atlanta, Miami, and San Francisco, checks were not endorsed until they reached the district offices and then were endorsed as part of the deposit process.
Fee Paid Stamp. Some of the air POEs we reviewed used a fee paid stamp to show fee payment information on the application. Much of the information on the rubber stamp was duplicative of the information on the individual receipt, such as receipt number, amount paid, and the name or inspector number of the cashier. Further, where used, we observed that the fee paid stamps were not specifically assigned to those performing cashier duties and the stamps were not secured when not in use. Furthermore, the Manual does not address the use of fee paid stamps in conjunction with the manual receipt process.
We agree that POEs using the manual receipt system need some method to annotate the application with fee payment information. However, a rubber fee paid stamp is easily compromised. If air POEs had operated with a cash register system, the applications would be validated by the INS cash register to reflect payment information rather than using a rubber stamp.
In our judgment, if rubber stamps are to be used in the fee collection process, the use and control of fee paid stamps should be similar to access to a cash register. That is, managers must maintain segregation of duties, and fee paid stamps must be secured when not in use so that cashiers can be held accountable in the event of a loss or shortage. And, at the same time, managers must ensure an adequate audit trail exists.
We believe it is incumbent on the port directors and principal officers to ensure cashiers have the necessary supplies readily available to adequately perform their cashier duties. Further, those officials should ensure that all rubber stamps used during the manual receipt process are appropriately secured to prevent abuse or unauthorized use.
Retention of Applications
To ensure that all fees collected are accounted for and deposited, a system of management controls must be in place that identifies when and where a collection has occurred and what type of application was processed. Further, the records should be available for audit trail purposes to show that a fee was collected when an applicable INS service was provided. The air POEs in Detroit, JFK, Los Angeles, Miami, San Francisco, and Toronto did not have documentation readily available that supported the fees collected or the reported workload statistics because they forwarded the adjudicated applications to another office.
In our judgment, INS's processed applications are accounting records and the National Archives and Records Administration requires accounting records to be maintained for six years, three months. Therefore, at a minimum, copies of the applications should be maintained at the POEs so that POE management can reconcile the number of applications adjudicated with the number and amount of fees collected and waived, thereby being assured that the fees deposited were the amounts actually collected.
The following table shows a comparison by air POE of the applications retained and forwarded to other offices.
|Application Retention Locations|
|Source: Based on OIG observations.
A - Filed at airport
F - Forwarded to another office
N - No copy kept
- - Application not processed
We also found that the INS does not use a standard form or application to document Trade NAFTA adjudications. Instead, some of the ports kept copies of letters from employers. At Miami, for instance, we observed 4 of 17 Trade NAFTAs processed during three sample months without a letter of request from an employer. At Atlanta and Los Angeles, no documents of Trade NAFTA adjudications were kept; only the G-211 receipt was available to support that a Trade NAFTA was processed. From the results, we believe the INS should develop a standard form, such as the local form developed by staff at the San Francisco air POE, to document all Trade NAFTA fee collections.
Overview of the Deposit Process
Safeguarding fee collections during the deposit process requires strong management controls because the cash must be properly accounted for as it is transferred from one individual to another. According to the Manual, the following two principles apply at every stage of the fee collection process:
The Manual also specifies procedures and responsibilities for the principal officer and supervisors that are applicable to the deposit process. The principal officer must ensure that neither the money nor the applications processed are counted by one person alone. Supervisors' responsibilities include certification of the completeness and accuracy of the deposit amount and deposit documentation.
In addition to the guidelines and responsibilities stated above, the Manual includes other procedures to safeguard cash during the verification, final preparation, and delivery of deposits. Key procedures include:
In accordance with Department of Treasury regulations, the Manual requires that receipts totaling $5,000 or more be deposited on the same day. The Manual allows collections totaling less than $5,000 to be accumulated and deposited when the total reaches $5,000. However, deposits must be made by Thursday of each week, regardless of the amount accumulated, except in extremely remote locations with little collection activity. None of the air POEs we reviewed was considered a remote location.
Our audit testing focused on evaluating the POEs' compliance with the above procedures and requirements. We observed the deposit process and reviewed the accounting records at each of the eight air POEs in our sample. The following table shows a comparison by POE of the discrepancies we found in the deposit process. An "X" in the table indicates an observed weakness.
|Weaknesses in Deposit Procedures Used by POEs|
|Source: Data based on OIG observations.
a The July 2000 version of the Manual requires that Form G-712 be completed for deposits. However, in December 2001, officials at the Debt Management Center told us they did not require the form for deposits pending a revision of the process.
b Only POEs that prepared and packaged their own deposits and used the Deposit Ticket (SF-215) would have the Form G-221 as part of their accounting records.
We found that the deposit procedures used were not consistent among the eight air POEs. At the time of our fieldwork, Atlanta,7 Chicago, Miami, and San Francisco did not prepare their own deposits. Instead, they transferred the fees collected to their respective district office, and the air POEs' cash and checks were commingled with district office monies in preparation for the district office's deposit. JFK, Los Angeles, and Toronto prepared their deposits and made their deposits at a bank. Detroit prepared the deposit, but then transferred the fees and deposit documents in a sealed bank bag to a major land POE. The frequency with which the POEs prepared and made deposits also varied, ranging from every few days to once a month, regardless of the amount collected.
The weaknesses we identified are evidence that INS management did not have adequate controls in place to safeguard fees during the deposit process. INS staff were permitted unmonitored access to the cash and accounting records, staff did not adequately maintain accountability when fees were transferred between individuals, and supervisors did not always ensure the accuracy of the fees being deposited.
In our judgment, each air POE should prepare its own deposits using a unique POE identifier on the Deposit Ticket (SF-215). This procedure strengthens controls, improves accountability at the ports, and increases the accuracy of workload statistical reporting. The fees and applicable supporting documentation should be sealed in a bag at the POE, ready for delivery to the bank, before being transferred to an onward office, such as a district office.
Officials at the Debt Management Center told us in January 2002 that they eliminated the requirement to complete the Summary of Fees (G-712) in favor of using the more detailed Daily Register (G-253). We believe that completion of the G-712 form would strengthen controls because air POEs would have to account for all individual receipts and thus improve the Center's oversight of the fee collection process at air POEs.
We recommend that the INS: