Immigration and Naturalization Service Expenditures Charged to the Organized Crime Drug Enforcement Task Forces Program for Fiscal Years 1997 - 2002
Report No. 04-03
Office of the Inspector General
Our review of INS's OCDETF costs for fiscal years 1997 through 2002 found approximately $6.7 million of questioned costs. This amount consists of $3.1 million of non-OCDETF costs and $3.6 million of unsupported costs that had been billed and paid. These amounts do not include any questioned costs for salary and benefits for fiscal years 1997 and 1998 because supporting documentation was not retained past three years. They also do not include any questioned costs for fiscal year 2002 other direct costs, which could not be tested because INS had not yet finalized their billings for this period. Additionally, the unsupported costs represent only the questioned costs from items actually tested and do not contain any projected error.
Our audit determined that certain INS OCDETF dedicated agents reported time to non-OCDETF related investigation codes on their monthly investigation time reports (G-22.12). However, the full cost of their salary and benefits were billed to the EO contrary to EO's policy that only OCDETF-related investigation costs are reimbursable. We were unable to determine if all of the other direct costs we tested were for OCDETF related investigations because documentation was not provided or it did not evidence that costs were incurred for an OCDETF related purpose. Exhibit No. 3 provides a summary of questioned costs by fiscal year.
Exhibit No. 3 - Summary of Questioned Costs
Non-OCDETF costs represent salary and benefit costs that we calculated to be related to non-OCDETF investigations, and include both tested and projected costs. Non-OCDETF costs were determined by obtaining monthly investigation time reports for a sample of INS OCDETF agents and if applicable, calculating the agent's full-time regular pay that was related to non-OCDETF investigations. Applying this error rate to the remaining salary and benefit costs (excluding certain exempted full-time regular pay)7 of all INS OCDETF dedicated agents, allowed us to project the non-OCDETF related salary and benefits costs that may have been erroneously billed to the EO (see projected column). Unsupported costs represent salary, benefit, and other direct costs (e.g., supplies, transportation, etc.) where we were not able to conclude whether the costs were OCDETF related because sufficient documentation was not provided. In the following sections, we discuss in detail the results of our testing of salary, benefits, and other direct costs for all fiscal years under review.
Salary and Benefits
Non-OCDETF and unsupported costs were calculated based on our testing of INS OCDETF dedicated agents' monthly investigation time reports. Payroll records were not used to determine whether non-OCDETF related time was being reported because INS's payroll records do not track time by investigation. INS personnel are assigned in the payroll system to a program code and, in general, all payroll time reported by INS personnel would be reported in INS's financial records in the program to which the person was assigned. As a result, an INS OCDETF dedicated agent who reported non-OCDETF time on a monthly investigation time report would still have his full salary and benefit costs charged to the OCDETF Program, and ultimately these costs would be billed to the EO.
Our testing of salary and related benefit costs invoiced by the INS to the EO differed depending on the fiscal year under review.8 For fiscal years 1997 and 1998, we did not test salary and related benefit costs because INS officials informed us that retention policies in place within the agency required that monthly investigation time reports only be maintained for period of three years. Accordingly, we were unable to test any salary and related benefit costs for fiscal years 1997 and 1998 due to the timing of this audit. Exhibit No. 4 depicts the total non-OCDETF and unsupported salary and benefit costs for the four years we reviewed.
Exhibit No. 4 - Total Non-OCDETF and Unsupported Salary & Benefit Costs
The certainty column represents those INS OCDETF dedicated agents that we had identified during the survey phase of our audit as reporting non-OCDETF investigative time on monthly investigation time reports. We selected these agents with certainty because they represented a known population of dedicated agents who had reported non-OCDETF time, and we planned to test whether this was a one-time event or whether these agents consistently incurred non-OCDETF investigation time in each fiscal year. As can be seen in the Appendices, our testing indicated that agents repeatedly incurred non-OCDETF investigation time in each fiscal year.
The random column represents INS OCDETF dedicated agents whom we selected at random to determine whether they reported non-OCDETF investigation time on their monthly investigation time reports. The selected dedicated agents' non-OCDETF investigation time divided by their total time reported represented the error rate that was applied to all INS OCDETF dedicated agents' salary and related benefit costs to project the non-OCDETF related costs that are summarized in the projected column above. Finally, the unsupported column represents the full-time regular payroll costs for those agents we selected for testing (either certainty or randomly) that INS was not able to provide their monthly investigation time reports as support for our testing.
Our review of approximately 50 INS dedicated agents per year identified that for the fiscal years 1999 through 2002, 10.5 percent of INS OCDETF dedicated agents' time was related to non-OCDETF investigations as reported by agents on their monthly investigation time reports. In addition, we were not able to determine whether non-OCDETF investigation time was reported for 13.3 percent of the agents' investigation hours because we were not provided with all of their monthly investigation time reports. Exhibit No. 5 lists the percentages of OCDETF, non-OCDETF, and unsupported time as reported on monthly investigation time reports.
Exhibit No. 5 - Percentage of Investigation Hours by Fiscal Year
INS officials and regional OCDETF coordinators informed us that it was not unusual for Special Agents In-Charge of INS District Offices to assign INS OCDETF dedicated agents administrative tasks or emergency duty in times of staff shortages or other special circumstances. INS officials stated that these assignments tended to be short in duration and would, in general, not adversely affect the case assignments of INS OCDETF dedicated agents; however, we identified that 64 percent of the INS OCDETF dedicated agents in our sample reported non-OCDETF investigation time. In some instances, agents reported over 40 percent of their total investigation time to non-OCDETF investigations. INS officials also stated that these results might be misleading since some agents may have misreported on their time reports immigration-related duties performed during an OCDETF investigation. However, the INS officials did not provide any documentation to substantiate this claim.
Other Direct Costs
With respect to other direct costs, we selected obligations occurring during the period October 1, 1996 to September30, 2001 that were either material to the amount of other direct costs in each fiscal year quarter's billing by the INS, or where the obligation had been reported in a certain object-classification. We selected non-representative samples because the amount of other direct costs billed in any one year were immaterial to the overall costs the INS invoiced the EO. The objective of our testing of other direct costs was to determine whether the amounts invoiced to the EO were actually expended by the INS,9 and whether they were related to an OCDETF investigation. We did not test other direct costs incurred during fiscal year 2002 because the INS had not finalized their billings to the EO at the time this reported was drafted. Exhibit No. 6 depicts, by fiscal year, the total unsupported other direct costs for the items we selected for testing.
Exhibit No. 6 - Results of Other Direct Cost Testing
For the majority of the other direct costs we selected for testing, we were not provided with sufficient documentation to allow us to determine if goods or services were actually received by the INS or whether the costs were incurred for an OCEDTF related purpose.10 For example, most of the documentation provided consisted of obligating documents or credit card statements. There were no invoices, receiving reports, or other documentation evidencing receipt of the goods or services acquired by the INS. Also, the documentation was often annotated with the INS's program code for OCDETF costs, but documentation supporting the OCDETF related purpose of the goods or services acquired was not provided.
We recommend that the EO Director:
As part of our audit objectives, we reviewed both EO's and INS's11 internal controls over the requirements for and preparation of the OCDETF bills. The EO could improve the language of its reimbursable agreements as well as its processes for review and approval of INS invoices. We also noted areas in which INS could amend its practices for preparing quarterly invoices and maintaining supporting documentation.
Management of the INS and the EO is responsible for establishing and maintaining accounting systems and internal control. In fulfilling this responsibility, estimates and judgments are required to assess the expected benefits and related costs of internal control policies and procedures. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that: (1) transactions are properly recorded, processed, and summarized; (2) assets are safeguarded against loss from unauthorized acquisition, use, or disposition; and (3) transactions are executed in accordance with applicable laws and regulations. Because of inherent limitations in any internal control, errors or fraud may nevertheless occur and not be detected. Also, projection of any evaluation of internal control to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate.
In planning and performing our audit of INS's billings to the EO, we obtained an understanding of the design of significant internal controls in order to determine the nature and extent of our auditing procedures. Our purpose was not to provide an opinion on INS's or the EO's internal controls; accordingly, we do not express such an opinion.
We noted the following matters that we consider to be reportable conditions under Government Auditing Standards. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of internal control that, in our judgment, could adversely affect INS or EO's ability to meet the internal control objectives described above. Our consideration of internal control would not necessarily disclose all matters that might be reportable conditions.
We identified the following conditions that should be addressed by EO:
The EO's reimbursable agreements with the INS do not include specific requirements that clearly identify the nature and extent of costs that are reimbursable under the agreement.
The EO's reimbursable agreements include information such as the not to exceed amount; agreement term; requirements for submitting documentation; and the estimated number of positions and work years funded by the agreement. In addition, the operating plans submitted by the INS include the amount budgeted by object classification. However, we noted that the agreement does not address the following:
We noted that prior to fiscal year 2002, the INS did not request reimbursement for indirect costs, mainly because the salary and benefit costs of INS OCDETF dedicated agents and other direct program costs appears to have equaled or exceeded the amount of the reimbursable agreement. In fiscal year 2002, the INS began allocating costs of management and administrative support to the EO as a result of a 25 percent matching requirement imposed by Congress. However, the INS did not actually bill the EO for these indirect costs, but did count them as part of their 25 percent matching requirement.
We also noted that the INS did not re-submit budgets by object classification code or receive approval from the EO when funds were used for purposes other than originally intended. Failure to obtain and approve transfers of funds to other object classifications could affect the accuracy of EO's financial reporting and program performance measurement.
We recommend that the EO Director:
Improvements are needed in the review and approval of quarterly billings by the INS.
The reimbursable agreements with the INS state …INS shall submit quarterly billings directly to the EO, together with documentation on accrued expenditures... This requirement establishes the rules of what an acceptable billing should encompass in order for the INS to receive reimbursement for expenditures incurred. We obtained the quarterly bills the INS provided the EO and noted that supporting documentation typically included: a FACS Report for the INS assigned OCDETF program code that listed the total obligations incurred by the INS during that quarter by sub-object classification, a signed statement from an INS finance officer that obligations were incurred for OCDETF related purposes, and other documentation to support the calculation of the amount billed for that quarter. However, documentation was not provided for the following:
In addition to the above, we noted that for fiscal years 1997 through 2001, the INS billed the EO for obligations incurred, not for actual expenditures, and the EO approved the quarterly billings without exception. The EO was not provided, or did not request, documentation to support whether the obligations established by the INS were completely expended. In fiscal year 2002, the INS refunded the EO $626,917 for obligations that were not fully expended but were billed to the EO during fiscal years 2000 and 2001.
We recommend the EO Director:
The EO should establish appropriate criteria for documentation to adequately support costs billed by OCDETF Program participants and the record retention period for such documentation.
For fiscal years 1997 and 1998, we did not test salary and related benefit costs because INS officials informed us that retention policies in place within the agency required that monthly investigation time reports only be maintained for period of three years. These reports provide necessary information to support INS agent's time incurred on OCDETF related investigations.
With respect to most of the other direct cost obligations we selected for testing, INS regional finance offices provided us with documentation that we could not: (a) reconcile to the obligation we selected, (b) determine whether the obligation was fully expended, and/or (c) determine if the costs were incurred for an OCDETF related purpose.
We recommend the EO Director:
We identified the following conditions that should be addressed by OCDETF Program management of the INS:
Monthly investigation time reports should be used in INS's payroll cost determination to prevent billing of non-OCDETF investigation time to the EO.
The INS assigned an OCDETF related program code to the OCDETF dedicated agents in its payroll system. Bi-weekly, OCDETF dedicated agents submit a timesheet that lists the total hours incurred each day as well as other miscellaneous information; however, specific investigation codes or other OCDETF case information is not required for payroll processing.
In addition to bi-weekly timesheets, OCDETF agents prepare monthly investigation time reports. The investigation time reports require INS agents to track daily, the amount of time spent on specific types of investigation and administrative matters. There are numerous types of investigations codes that are required to be tracked (e.g., smuggling, fraud, OCDETF, etc.) each day. The monthly reports are accumulated by the district offices and then forwarded to a regional office that summarize the district office reports and submits them to the INS headquarters where they are consolidated into an agency-wide investigation time report. This report is used to provide information on INS-wide investigation efforts.
However, the monthly investigation time reports are not linked to INS's payroll system and are not used during the billing process. As a result, an OCDETF dedicated agent who was assigned to the OCDETF program code in the payroll system, but who may have reported time to another program code in monthly investigation time reports, would still have his/her entire payroll costs recorded to the OCDETF program code in the payroll system. Ultimately, these costs would be billed to the EO in their entirety even though there was non-OCDETF time reported by the agent.
We recommend the EO Director: