Audit of the Immigration Program at the Canadian Mission in Beijing

Audit Report
Internal Audit and Accountability Branch
Citizenship and Immigration Canada
October 2008

Table of Contents

• List of acronyms
• 1.0 Introduction
  • 1.1 Background
  • 1.2 Audit Objectives
  • 1.3 Audit Criteria
  • 1.4 Audit Scope
  • 1.5 Audit Methodology
• 2.0 Audit Conclusions
• 3.0 Observations and Recommendations
  • 3.1 Governance Framework
  • 3.2 Risk Management
  • 3.3 Internal Control Framework
• Appendix A: Beijing Mission Organizational Chart
• Appendix C: Management Action Plan
• Appendix D: Audit Time Line

List of acronyms

1.0 Introduction

The Citizenship and Immigration Canada (CIC) Risk-Based Audit Plan for 2007–2010 calls for the conduct of mission audits. The Canadian Embassy in Beijing was selected in consultation with the International Region (IR) Branch at CIC national headquarters (NHQ) and the selection was based on an assessment of the mission’s operations in relation to other offices. The on-site field work was done February 18–29, 2008.

1.1 Background

1.1.1 Operations

CIC is responsible for the recruitment, selection and processing of foreign nationals who wish to come to Canada on a temporary or a permanent basis for reasons that will stimulate economic growth and enrich Canada’s social and cultural environment. Within the Department, this responsibility has been assigned to the Operations Sector, which is divided into domestic and overseas operations. Overseas operations fall under the responsibility of the IR Branch. IR accomplishes this through its network of visa offices (or missions) abroad. These are broken down into regional program centres (RPCs), full-service centres, satellites and specialized offices. RPCs and full-service centres are responsible for the delivery of the full range of immigration services in the countries they serve. The difference between the two is that RPCs are responsible for overseeing satellite offices. Satellites and specialized program offices do not deliver the full range of immigration services.

The Beijing mission, an RPC, is one of the largest visa offices in Canada’s overseas network. The visa section has a large complement of staff as follows:

• 15 Canada-based officers (CBOs);
• 8 locally engaged officers; and
• 69 locally engaged staff (LES).

Appendix A presents the Beijing organizational chart on September 1, 2007.

As an RPC, Beijing oversees satellite offices in Shanghai, which handles temporary residence applicants from four Chinese provinces, and Guangzhou, which handles the migration integrity officer (MIO) program in southern China. Beijing also acts as area coordinator for the North Asia Area Network, which includes missions in China, Hong Kong, Taipei, Tokyo and Seoul. The office is divided into three distinct streams of work: immigration application processing, medical assessment and overseas health services, and migration integrity. The immigration application processing unit oversees the processing of immigrant and non-immigrant immigration applications and is further subdivided into teams to support applications for the various business lines. The medical unit oversees the medical screening of immigration applicants, supports the mission management, and also supports the delivery of the public service health program at five missions (Beijing, Shanghai, Hong Kong, Guangzhou and Chongqing). The MIO unit is responsible for overseeing interdiction duties. The immigration application processing unit is the focus of this audit. It is important to note that the geographic area of responsibility is different for all three of these units.

The mission processes immigration applications for permanent residence and temporary residence from the People’s Republic of China, the Democratic People’s Republic of Korea (North Korea) and Mongolia. In 2007, the mission’s overall visa target for permanent residence applications was 9,050. The inventory of applicants awaiting a decision at the mission as of January 4, 2008, was 23,470. On the temporary resident side, the office issued 66,265 temporary resident visas (visitors), 8,631 student visas and 1,249 temporary worker visas in 2006 compared to 65,431, 9,260 and 2,126 respectively in 2007. Mission statistics for 2007, 2006 and 2005 are summarized in Table 1 below.

Table 1. Beijing Statistics

1.1.2 Environmental Context

This section of the report highlights some of the operating environment issues facing the mission. They are presented here in no particular order for information purposes only.

Beijing is one of the largest visa offices within CIC’s network of overseas offices. The mission management indicated that it faced the following challenges:

• Complex regulatory environment: places significant restrictions on how business is conducted in China.
• Strong Chinese economy: a major factor that has contributed to the decrease in applications for permanent residence from economic class applicants.
• Higher language requirements imposed by the Immigration and Refugee Protection Act: another factor that has contributed to the decrease in the number of economic class applications.
• High levels of organized fraud: increases the review and scrutiny required when processing applications.
• Decrease in number of staff in 2006–2007: has had the greatest impact on clerical support for the temporary residence unit.
• Significant increase in temporary residence applications: the bulk of the increase has come from the student and temporary worker programs. It should be noted, however, that in 2007, Beijing surpassed Taipei as the largest temporary resident visa issuing office in the world.
• Large area of responsibility: as an RPC, Beijing oversees satellite offices in Shanghai and Guangzhou, is responsible for processing applications for permanent residence and temporary residence from three countries in the region, and acts as area coordinator for the North Asia network.
• Anticipated large turnover in staff in the short and medium term: because of changes in human resources (HR) management and the upcoming Olympic games, a number of resignations are anticipated that would leave the mission short-staffed during the peak season.
• Uncertainty of the case processing system: the Department has delayed the implementation of a new case processing system to replace the current legacy system. While all offices will be affected by this new system, the Beijing mission will likely see a greater impact on its operations as it has implemented many technological tools based on the current application processing system. The impact of this is uncertain at this time.
• Implementation of visa application centres (VACs): because of problems in the regulatory environment, the implementation of the VACs was delayed. We have noted, however, that they opened for operation in June 2008.

1.2 Audit Objectives

The audit objectives are to assess:

• the adequacy of the governance framework in place at the mission to administer the immigration program;
• the adequacy of the risk management processes and practices that support the achievement of the program’s objectives; and
• the adequacy of the internal control framework in place for the financial, administrative and operational activities of the mission.

1.3 Audit Criteria

The criteria that were used in the audit are based on the applicable legislation, policies and directives of the Treasury Board and CIC. The detailed criteria for the audit are presented in Appendix B.

1.4 Audit Scope

The audit only involved operations at the Canadian mission in Beijing. The scope covered all significant aspects of CIC operations at the mission. This included the full range of immigrant and non-immigrant program activities with associated financial and administrative components typically found in a full-service centre. The audit examined the activities of the mission from January 1, 2007, to February 29, 2008, the end of the on-site examination period. It did not include an examination of the cost-recovery controls in place at the mission.[Note 1]

1.5 Audit Methodology

There were three lines of enquiry for the audit: governance framework, risk management practices and the internal control framework.

As part of our examination of the governance framework and risk management, we interviewed immigration staff as well as other embassy staff with links to immigration operations; reviewed documents; observed processes; documented controls; tested information; and reviewed samples of management files to test for compliance.

As part of our examination of the internal control framework, we examined controls over the application processing, the Computer-Assisted Immigration Processing System (CAIPS), controlled documents, and travel and hospitality expenditures.

In our examination of application processing, we examined all decisions related to permanent resident determination travel documents, temporary resident and permanent resident cases, and temporary resident permits finalized over the period of January 1 to December 31, 2007, to test compliance with delegated authorities. We also conducted interviews with immigration staff and other embassy staff with links to immigration operations, reviews of documentation, observation of processes and documentation of controls.

The audit also examined a judgmental sample of five permanent resident determination travel documents, 40 temporary resident cases and 50 permanent resident cases finalized between January 1 and December 31, 2007, to assess compliance with the legislation, regulations and policy requirements of the case file. The sample size took mission processing volumes into consideration. Individual sample cases were selected randomly from the population. The file review of sample cases was done to validate our observations from interviews, documentation reviews and observation of procedures in place at the mission.

As part of our review of internal controls, we also conducted interviews with immigration and other embassy staff with links to immigration operations, reviews of documentation, observation of processes and documentation of controls. Specifically, we examined CAIPS user profiles, tested CAIPS inventory controls, tested samples of controlled documents inventory transactions, and reviewed a sample of travel and hospitality claims to assess compliance with the applicable legislation, policies and procedures and draw conclusions on the state of controls in place.

The audit was conducted in accordance with the Government of Canada’s Policy on Internal Audit and based on the auditing standards set out by the Institute of Internal Auditors.

2.0 Audit Conclusions

We found that:

• the mission had well-developed governance practices in place to administer the immigration program;
• the mission had well-developed risk management processes and practices in place to support the achievement of its objectives; and
• the internal control framework to support the operational delivery at the mission and safeguard assets was adequate in three of the areas examined, but in the fourth, related to controlled documents, we found that there was some room for improvement of controls.

3.0 Observations and Recommendations

3.1 Governance Framework

The audit examined six areas of the governance framework: governance and strategic direction; values and ethics; people; client-focused service; results and performance; and learning, innovation and change management. We expected to find that accountabilities were appropriate; values and ethics were promoted and reinforced; the office was managed to ensure an effective workplace; services delivered by the office reflected the requirements of its clients; information on results was gathered, used to make decisions and reported; and learning and development activities were in place.

In general, we found that the governance framework in place at the mission was adequate to administer the immigration program and ensure the attainment of the mission’s objectives.

3.1.1 Governance and Strategic Direction

In reviewing governance and strategic direction, we expected that structures would be in place to ensure that accountabilities were adequately discharged. Specifically, we expected to find clear reporting and accountability lines that demonstrated appropriate delegations. We also expected to find integrated planning, budgeting and monitoring, and that communication protocols for partner stakeholders were in place and functioning as intended.

The audit found that clearly defined reporting and accountability lines were in place. A review of the organizational chart with respect to policies indicated that reporting lines appeared to be clear and appropriate, and interviews with staff indicated that they were aware of their reporting relationships and duties.

Our audit also found that processes existed for integrated planning, budgeting, monitoring and performance management. A review of planning and budgeting documents revealed linkages from both high-level and mission-level performance expectations. We found that performance information was captured and that progress toward the achievement of targets established in planning documents was monitored at the mission.

Lastly, the audit found that communication protocols for clients, partners, employees and external stakeholders were in place at the mission and functioning as intended. Various stakeholders interviewed indicated that good relations were in place and mechanisms to exchange information were clear and functioning appropriately.

3.1.2 Values and Ethics

In our audit of this area, we expected to find that management promoted public service values and ethics and that employees were aware of these.

The audit found that values and ethics were promoted and reinforced in an appropriate manner and that staff were aware of these at the mission. Our interviews and the documents we reviewed indicated that immigration mission management reinforced and promoted values and ethics. The audit found that management periodically provided training in this area and that it reinforced this through communication in meetings and the management of the HR process.

Our review of a sample of HR staff files found that the mission provided a copy of the code of conduct to staff. Moreover, training materials, the staff meeting notes and operational instructions reviewed supported management’s assertion that values and ethics were promoted and reinforced through management’s actions.

3.1.3 People

The audit expected to find that the management of human resources ensured employees were aware of their responsibilities and received feedback on their performance, and that in general, HR practices complied with appropriate legislation and policies.

The audit found that controls were in place to ensure an effective workplace for staff to contribute successfully to the work objectives. Processes exist to provide employees with the necessary training, tools and resources to discharge their responsibilities. Our interviews with staff confirmed that they received the necessary training.

In general, HR management at Beijing starts with the setting of high-level mission objectives which are then delegated to staff, resulting in annual performance objectives being documented in staff HR files to complement general job-related tasks captured in job descriptions. Where necessary, learning plans are also developed to ensure that staff are able to meet these objectives. The achievement of these objectives is periodically evaluated throughout the year and in a more formal documented fashion once a year. As part of our audit testing, we examined a sample of 15 staff files and found that in a small number of cases, some documents were not on file but that overall, no material weaknesses were found in the HR process.

3.1.4 Client-Focused Service

We expected to find that services delivered by the office reflected the requirements of its clients. Specifically, we expected to find that processes were in place to establish, maintain and monitor service principles and standards for clients. We also expected to find that processes were in place for the effective tracking and resolution of complaints.

The audit found that the services delivered by the mission met the requirements of its clients. Specifically, it found that the mission established and monitored service principles and standards for clients and that it had processes in place that allowed for the effective tracking and resolution of complaints.

The mission had established service standards that were available to all staff through e-mails from management and, in certain cases, the Beijing immigration intranet. These standards were monitored both formally and informally. It should be noted that the office benefited from its innovative use of macros and public folders which allowed it to provide enhanced client services as well as a means of tracking and monitoring the performance of these services. These innovations helped to minimize the duplication of work and improved efficiency in communication, delegation and the achievement of goals. In this way, the mission established an efficient process to document and track this work, taking advantage of technological capabilities, while at the same time providing management with the capacity to monitor performance.

3.1.5 Results and Performance

The audit expected that relevant information on results would be gathered, used to make decisions and reported. Specifically, we expected to find that performance measures were in place and monitored, that measures were updated to reflect the work carried out by the mission, and that results were analysed and used in decision making.

The audit found that relevant information on results was gathered, used to make decisions and reported. We found that management had identified appropriate performance measures and that processes were in place to monitor actual performance against the planned results and to adjust as required. A review of the performance information captured by the mission found that it was captured on a regular basis, reviewed and taken into consideration in planning and forecasting. Our interviews and review of the documents found that this information was also used to provide feedback to staff and management on the achievement of individual and mission objectives.

3.1.6 Learning, Innovation and Change Management

The audit expected to find that the office employed learning and development activities to promote innovation and change management in order to learn from its performance.

The audit found that the office did employ learning and development activities that promoted innovation and change management in order to learn from its performance. The office had processes in place to identify change opportunities and requirements. The organization had processes and practices in place to ensure that change initiatives were properly implemented and well communicated.

For instance, the mission was in the process of implementing new temporary resident application procedures which call on the use of service provider organizations for upfront application processing. Discussions with management and our review of documentation indicated that management had identified this opportunity by staying abreast of the operating and regulatory environment. Moreover, in reviewing the implementation of documents, we found that staff were consulted during the implementation process and that plans for training and release appeared to be appropriate, which indicated that plans for full implementation were in place.

3.2 Risk Management

As part of our Beijing audit, we examined the adequacy of the risk management processes and practices in place to support the achievement of the mission’s objectives. We specifically expected to see that processes were in place to identify, assess, mitigate and monitor risks, that management appropriately communicated risk and risk management strategies to key stakeholders, and that planning and resource allocation took risk information into consideration.

We found that adequate risk management processes and practices were in place to support the achievement of the mission’s objectives. In reviewing the mission’s documents provided during the audit, it was apparent that risk assessments were undertaken, operations were reviewed taking into consideration these assessments, and changes occurred as needed based on reviews. Moreover, the mission benefited from solid quality assurance (QA) practices that were well integrated into the mission’s operations. In Beijing, risk information is used to identify areas requiring QA, which is then performed. The results are then used to validate management’s decisions, such as changes to program design.

3.3 Internal Control Framework

In our audit of the internal control framework, we examined the controls in place over application processing, CAIPS, controlled documents, and travel and hospitality expenditures.

The audit found that the internal control framework over application processing, safeguarding CAIPS and processing travel and hospitality claims met our expectations. However, the control framework in place over controlled documents only partially met our expectations and consequently, we identified some areas where the mission could improve its controls. Our observations are discussed in the following sections.

3.3.1 Application Processing

The audit of application processing examined the degree of compliance of practices and procedures with the applicable legislation and policies associated with the delivery of the immigration program at the Beijing mission. To this end, immigrant and non-immigrant processing was examined. We expected to find that application decisions were adequately documented, processes and procedures complied with the applicable legislation and policies, sufficient controls were in place at the mission to ensure that admissibility requirements were met, and delegated authorities for decisions were appropriate and in compliance with departmental policy.

We found that practices and procedures in place to process immigration applications at the Beijing mission complied with the applicable legislation and policies.

As part of this audit, we interviewed staff involved in the immigration application processing, reviewed standard operating procedures and observed the processes. Staff were found to be knowledgeable about legislative requirements and policies. Moreover, a review of standard operating procedures and our observation of the procedures in place indicated that practices seemed to meet all requirements. However, we noted that a few minor procedures were not documented as per departmental policy, but none would impact decision making. We advised the mission management of these practices for their consideration.

Our audit reviewed NHQ database information and examined all decisions made on cases finalized between January 1 and December 31, 2007, to ensure that only authorized decision makers rendered decisions. We found that all selection (whether an applicant meets the definition of the immigration category) and final (whether an applicant meets the definition of an immigrant category and has passed all admissibility requirements) decisions were made by authorized decision makers.

For immigration applications, we found that a number of admissibility decisions, normally restricted to CBOs, had been entered by unauthorized decision makers. Mission management has asserted that this occurred because of a misunderstanding within the mission regarding who is authorized to enter these decisions. In total, we found that seven staff members had rendered these decisions. The frequency of this practice varied depending on the type of decision, but did not constitute a large proportion of the total number of cases finalized in the review period. The bulk of these were entered by former LES hired as program officers who happened to be Canadian as opposed to CBOs.

However, we also found that mission management had taken appropriate action in the case of these seven staff members prior to the audit by monitoring and reviewing its processes, discovering the issue, seeking direction from IR and removing access for these seven individuals when they became aware of the issue. Moreover, management advised us that CBO reviews occurred at a later stage in the processing, which would include review of these decisions. Our audit found evidence of this occurring, although we did not investigate all cases to ensure that this occurred in all situations. Our audit found no additional cases where individuals rendered decisions without delegated authority after this change during the period under review.

Discussions with IR management at NHQ in Ottawa found that although this approach was minimal in terms of risk and met operational requirements, it still did not respect the delegation authorities. IR management expressed concern that the mission, because of varying circumstances, had developed approaches to the practical problems associated with balancing security against operational necessities in response to daily circumstances that did not comply with policies. Both reasons provided by mission management and IR management were plausible reasons for what we observed. We also noted that they were not mutually exclusive and our audit did not attempt to determine why mission management delegated these authorities. What the audit found was that a small number of employees were given the authority to perform tasks they should not have been authorized to perform and that these employees exercised this authority in a limited number of situations relative to the mission’s overall production. However, the audit also found that there were mechanisms in place to monitor and rectify the situation.

As part of the audit, we also examined a sample of application files to validate our findings from interviews, documentation reviews, observations and database information. To this end, we selected a sample of 50 permanent resident (applications from foreign nationals who wish to make Canada their country of permanent residence), 40 temporary resident (applications from foreign nationals who wish to come to Canada for a specified time and who require a visa to do so) and five permanent resident determination (applications from individuals who previously entered Canada as permanent residents but who have left and who now wish to resume their permanent residency but lack the documents to do so) applications. Overall, we found that the processes and procedures were compliant, but we did find some areas where management could improve its documentation procedures and we advised them of these for their consideration.

3.3.2 CAIPS

Controls over CAIPS were examined as part of the audit of the internal control framework. We expected to find that controls were in place to ensure the appropriate use of CAIPS at the mission and that CAIPS assets were safeguarded.

The audit found that the control framework for CAIPS met our expectations. Specifically, we found that reviews were undertaken to ensure that CAIPS use and access at the mission were in accordance with delegated authorities. We also found that inventory controls were in place to safeguard the CAIPS physical assets but they should be updated more often than is currently done. Our testing in both areas found minor operational issues.

With respect to use and access, we found a small number of account profiles of former staff and training accounts that required updating when reviewing current user accounts. We advised mission management of these issues and changes were implemented while the audit team was on site. Given the large size of the mission and the staffing complement with the associated turnover, it is not unreasonable to find a small number of profiles with minor issues. We also found that controls over CAIPS assets existed in the form of an inventory list. Our testing found that this list was not accurate because it was only updated once a year, but other compensating controls were in place.

3.3.3 Controlled Documents

As part of the audit of the internal control framework, we examined the controls over controlled documents. The audit expected to find that roles and responsibilities (duties) were appropriate and that there was an effective control framework in place for the custodianship, safeguarding and control of controlled documents. In missions abroad, controlled documents are comprised of counterfoils and seals and are issued together as visas. Counterfoils are documents on which missions print visa information, and seals are documents that are placed over counterfoils, both of which are placed in passports to prevent tampering.

The audit found that the roles and responsibilities were appropriate. We also found that the controls in place over counterfoils were adequate but that there was some room for improvement on the seals side of its controlled documents inventory controls.

We found that the controls in place had been strengthened over the last year by the mission in implementing the following:

• Daily reconciliation of counterfoils to seals used (as of January 2008)
• Improved documentation to record the use of counterfoils

In our audit testing, we were able to reconcile the mission’s physical inventory (counterfoils and seals) with the mission’s paper records. We also reviewed a sample sequence of counterfoils to ensure that there were no unaccounted-for counterfoils. The results of both of these activities suggest that the controls are adequate for counterfoils.

In spite of this, we still found the following practices to be non-compliant with policies for controls in place over controlled seals:

• The sealing of counterfoils was done by all visa officers, including non-immigrant officers for non-immigrant visas.
• The mission was not keeping a record of seals in compliance with established procedures in departmental policy.

The practice in place at the mission when we were on site was for the Forms Control Officer (FCO) to release two sets of seals to two officers for visa issuance during the day. One set would be provided to an officer on the immigrant team and the other to an officer on the non-immigrant team. In having more officers involved in the sealing process and not maintaining a record of the seals used as per policy, there is an increased risk of seals going missing. Increasing access provides more individuals with the opportunity to take seals and without a record of use, it would be more difficult for an office to determine when seals go missing, should this occur. Although we note that while the mission does not keep a record of the seals used as prescribed by policy, there were controls in place allowing the mission to know which officer was given seals for the purposes of visa issuance in any given day. We also note that opportunity does not necessarily mean that an incident will happen. It is important to note that controls are not only designed to prevent and detect inappropriate activities, but also to protect staff from suspicion in the event that they do occur.

Management at NHQ designated the IMM seals as controlled forms requiring secure storage and handling due to their vulnerability to theft and misuse. Consequently, controlled forms contain a numerical sequence allowing for the control of their use. Furthermore, policy set by management at NHQ restricts the responsibility for placing seals on visas to Canada-based staff and designated immigration officers and expects the offices to maintain a record of the counterfoils and seals used. However, we note that management in the field is constantly faced with the problem of maintaining a balance between efficiency and effectiveness in their operations while maintaining controls over areas of risk.

Recommendation
Mission management to ensure that established procedures are followed so that seals are safeguarded.

Management Response
Mission management will review the procedures to ensure that they comply with policy.

In addition, IR at NHQ will conduct a formal risk assessment of immigration controlled forms and the required procedures. This will be explored with Operational Management and Coordination and the Information Management Directorate.

3.3.4 Travel and Hospitality

In our audit of the internal control framework, we examined controls over travel and hospitality expenditures. The audit expected that controls would be in place to ensure that travel and hospitality transactions were processed in compliance with the applicable policies and regulations.

Discussions with staff and a review of a sample of travel and hospitality claims (representing 95% and 33% of funds expended, respectively, for the current fiscal year) indicated that all were processed in compliance with the policies and that the controls in place were functioning as intended.

Appendix A: Beijing Mission Organizational Chart, September 1, 2007

Text version: Organizational Chart

Appendix B: Detailed Criteria for the Audit

Objective 1: Governance Framework

The adequacy of the management framework will be assessed against the following criteria:

• Governance structures are in place to ensure that accountabilities are adequately discharged.
• Values and ethics are promoted and reinforced.
• The office is managed to ensure an effective workplace for staff to successfully contribute to the work objectives.
• Services delivered by the office reflect the requirements of its clients.
• Processes are in place at the office for the identification and development of risk mitigation strategies.
• Relevant information on results is gathered, used to make decisions and reported.
• The office employs learning and development activities to promote innovation and change management in order to learn from its performance.

Objective 2: Risk Management

The adequacy of risk management practices and procedures associated with the delivery of the immigration program will be assessed against the following criteria:

• Processes are in place to identify, assess, mitigate and monitor risks.
• Management appropriately communicates risk and risk management strategies to key stakeholders.
• Planning and resource allocation consider risk information.

Objective 3: Internal Controls

The adequacy of the internal control framework in place over financial, administrative and operational activities will be assessed under the following lines of enquiry and against the following criteria:

• Application processing
  • Decisions are adequately documented, and the required supporting documentation is maintained.
  • Delegated authorities for decisions are appropriate and in compliance with departmental policy.
  • Appropriate controls are in place at the mission to ensure that admissibility requirements are met.
• CAIPS management
  • Appropriate controls are in place for the management and use of CAIPS user accounts at the mission.
  • Appropriate controls are in place to safeguard CAIPS assets at the mission.
• Controlled documents
  • Roles and responsibilities (duties) are appropriate for the custodianship, safeguarding and control of controlled documents.
  • Adequate controls are in place for the custodianship, safeguarding and control of controlled documents.
• Travel and hospitality
  • Internal controls should be in place to ensure that travel and hospitality transactions comply with policies and regulations to protect against fraud, financial negligence and other violations of rules and principles.

Appendix C: Management Action Plan

Appendix D: Audit Time Line

Footnote

• [1] Because of a change in audit staff availability at the time of the examination. [back to note 1]