Vienna Mission
Final Audit Report

4.4 COST RECOVERY

The Vienna Mission’s 1999-2000 cost recovery revenue reached almost $2.5 million ($1.7 million in 1998-99 before the Belgrade Mission’s closure). Another $1.6 million (1999–2000) is processed by satellite missions for both immigrant and non-immigrant programs.

The audit focused on the assessment of the Vienna Mission’s cost recovery control framework. This included interviews with key immigration and DFAIT staff, review of the cost recovery files as well as the arrangements for physical security of funds, and other audit tests to confirm satisfactory operation of specific cost recovery controls.

The cost recovery interrelationship with satellite offices was also reviewed. There are diverse fee payment arrangements throughout the region, combined with dispersed controls over cost recovery funds exercised by a number of DFAIT offices. The Vienna Mission has a limited role in the present set-up but would like to exercise greater control. Immediate improvement could be achieved if the Vienna Mission independently verified immigration revenue flowing through DFAIT’s accounts. A desirable long-term option is to centralize fee payment for the region through the Austrian banking network.

The cost recovery audit tests performed at the Vienna Mission did not reveal any evidence of incorrect fees, loss of public funds or misuse of documents. The recommended improvements will further strengthen the cost recovery framework.

Cost Recovery Operations - Vienna Mission

The Vienna Mission uses the 2000 version of the Point-of-Sale (POS+) cost recovery system. The cost recovery clerk (CRC) operates out of a spacious, locked, glass-enclosed office. (Section Removed)

The OM maintains the POS+ passwords in a secure location and the passwords have been granted at the appropriate level of authority. (Section Removed) the CRC remits the cost recovery funds, with the related documentation, to the Vienna Mission’s Administration Section, and the assistant accountant issues an official receipt at that time to the CRC.

The review of the cost recovery processes revealed that most of the necessary controls are in place for the receipt, recording, verification and deposit of cost recovery fees. The appropriate sign offs were found on the documentation. While the control framework was found to be good, some areas for improvement are noted in the next section.

Cost Recovery Officer

The duties of the cost recovery officer (CRO) are performed by an experienced immigration officer. The backup to the CRO is an immigration officer (second secretary), the OM and one of the DIOs. The second secretary is in travel status nearly 50 percent of time. As a result, he can seldom carry out the duties of a backup CRO.

The CRO does not perform the required random monitoring of the cost recovery transactions, such as tracing payment receipts from an application through to the entry on a 1203A, reviewing the POS+ tapes or comparing monthly revenue volumes.

Recommendation 9

(a) The CRO should randomly monitor the cost recovery system by tracking applications to fee received and reviewing tapes, for example.

(b) The backup CRO should be replaced by another immigration officer who is in the office more frequently.

Management Responses

(a) The visa officer who is also the CRO already devotes more than 20 percent of her time to overseeing and monitoring the cost recovery process. Some of that monitoring will be done on a more random basis in the future.

(b) Because Vienna is a regional office with frequent area visits, all Canada based visa officers are required to travel regularly.

Cost Recovery Clerk

During the audit, an emergency arose one day, which resulted in the CRC having to leave the office in the middle of the morning. The backup to the CRC, who is knowledgeable about the cost recovery system, did not currently have a POS+ password. Instead of obtaining a new POS+ password from the OM, the backup used the CRC’s POS+ password. The sharing of POS+ passwords should not occur.

Recommendation 10

All backups to the CRO and CRC should have their own POS+ password.

Management Response

Management agrees with this recommendation fully. That is and has normally been the case.

Cost Recovery Fees

According to the Immigration Cost Recovery and Key Document Management Handbook, the IPM should calculate the local currency change for each type of immigration transaction at the beginning of the month by using the rate of exchange provided by the Administration Section. The local fee schedule shall remain in effect until the rate of exchange currently used to calculate fees varies by more than plus or minus five percent relative to the rate of exchange appearing in the Mission’s accounts.

The fees charged in U.S. dollars in Croatia and in Deutsche Marks in Bosnia-Herzegovina have never been adjusted since these arrangements commenced in 1997. At the time of the end of the audit (December 15, 2000), applicants in Croatia were overpaying by 11 percent, while those in Bosnia were underpaying by 8 percent. The fees structured in U.S. dollars and Deutsche Marks should be adjusted and monitored monthly according to the Immigration Cost Recovery and Key Document Management Handbook.

Recommendation 11

(a) In concert with the Administration Section of the Budapest Mission, the Vienna Mission should review and adjust the cost recovery fee schedule and ask the Budapest Mission to contact banks in Zagreb and Sarajevo to effect changes.

(b) Exchange rates should be monitored monthly to determine whether there is an impact on cost recovery fees.

Management Responses

(a) Management agrees with this recommendation. Budapest has been re-opened and is issuing visitors visas, which include cost recovery fees.

(b) Management agrees with this recommendation.

Certified Cheques and Bank Drafts

Certified cheques and bank drafts are not immediately stamped “For Deposit to the Receiver General for Canada” when they are received by the CRC. This is currently done by the Administration Section after the receipts’ transfer. Since these represent negotiable instruments, however, they should be stamped by the CRC upon receipt.

Recommendation 12

Upon receipt, the CRC should stamp certified cheques and bank drafts “For Deposit to the Receiver General for Canada.”

Management Response

Management agrees with this recommendation. Stamps will be made.

Mission Specific Guidelines on Cost Recovery

The Vienna Mission does not have guidelines or desk procedures covering its cost recovery activities. The CRO uses the Immigration Cost Recovery and Key Document Management Handbook for reference purposes. It is advisable to have mission specific guidelines on cost recovery.

Recommendation 13

Develop mission specific cost recovery guidelines.

Management Response

Missions have the Immigration Cost Recovery and Key Document Management Handbook at their disposal.

Opportunities for Direct Deposit

In Austria, bank transfers are the widely accepted means of payment, similar to cheques in Canada. Despite the IPM’s initiative and consultation with the Administration Section to establish a bank account for direct deposit, such an account has not materialized. Applicants who currently pay in cash could use the banking services in the building and present direct deposit receipts in settlement of fees. This would virtually eliminate cash transactions at the Vienna Mission. In addition, applicants outside Vienna would not be required to purchase Canadian dollar drafts for clearing through the Canadian banking system.

The management and consular officer (MCO) in Vienna advised the audit team that he is reluctant to establish the direct deposit facility because of the risk that the receipts received from applicants might not be bona fide. The MCO also estimated that managing and reconciling a separate immigration-only bank account would consume more of the Administration Section’s resources. He believes that Austria is only months away from a system in which the Vienna Mission could have remote, real-time access to the bank account to monitor transactions, thereby eliminating the above risk.

In the audit team’s opinion, the above risk is overstated for the simple reason that the applicants would not wish to risk visa denial, or worse, because of non-payment. Secondly, the Vienna Mission already processes direct deposit slips as proof of payment from the satellite missions of Prague, Sarajevo and Zagreb, without any guarantee either that they are genuine or that the fees are being deposited in the correct bank account. Accordingly, the view that the Vienna Mission direct deposit facility would present equal or higher risk that can be mitigated solely via remote account access cannot be supported. While the latest technology should be utilized whenever possible, the concept of direct deposit was not predicated on the availability of the type of control suggested above.

Before establishing another dedicated bank account for the Vienna Mission the Mission must take into account the impact on the Administration Section’s resources. It is the audit team’s view that the workload would not be materially affected. In fact, resource savings are more likely: eliminating cash would remove the need to count it (at both ends); the volume of tasks associated with preparing and making bank deposits could decrease; and monthly bank statement reconciliation against 1203A summaries would essentially be the same.

Currently, credit cards are not used internationally by CIC and DFAIT. CIC and DFAIT are reviewing the use of credit cards as a means of payment for international operations. In mid-April 2001, a pilot on the use of credit cards will be undertaken in the missions in New York City and London. Also, as a result of recent instances of malfeasance at some missions, DFAIT and CIC are working together to issue joint instructions on cost recovery to MCOs and IPMs.

Recommendation 14

(a) International Region and Finance should approach DFAIT (and, if necessary, Treasury Board Secretariat) with a view to reaching a standard approach, including specifying the minimum conditions that must be present, for opening official bank accounts for direct deposit of immigration fees.

(b) Subject to the first recommendation, the Vienna Mission should establish a direct deposit bank account as an option for payment.

Management Responses

(a) DFAIT was granted the authority to open bank accounts abroad by Treasury Board. The functions associated with banking are DFAIT’s sole responsibility.

(b) Direct deposit is just one of the options that will be considered in the context of discussion of this issue abroad. Until the credit card project is completed, it is premature to conclude that direct deposit will suit the Vienna Mission.

Regional Payment Process

Vienna satellites’ cost recovery procedures vary. In most cases, applicants pay the required fees to the DFAIT missions’ local bank accounts and then remit bank receipts with their applications. Exceptions are Belgrade and Prague (the payment is in person) where the clients obtain POS+ receipts, and Skopje (bank drafts only). In Sarajevo, bank payments apply to the non-immigrant program only, with immigrant fees paid via bank drafts. (Appendix B provides a more detailed overview.)

The Vienna Mission receives documents such as passports, visa applications and direct deposit receipts through the mail (by regular mail or courier, or by (section removed)) or in person. Daily, the CRC processes all received funds and receipts, and issues or mails out POS+ receipts as described earlier. Weekly, the CRC couriers completed 1203As with bank deposit receipts to the MCOs at the Prague Mission (Slovakia and the Czech Republic) and the Budapest Mission (Croatia and Bosnia-Herzegovina) for reconciliation against the bank records.

While primary responsibility for bank account reconciliation rests with the above Administration Section units, the Vienna Mission should be in a position to verify the amount of immigration revenue flowing through these accounts. To this end, copies of bank statements from Budapest, Prague and Vienna should be sent to the immigration program. Further, to simplify reconciliation processes and enhance control over immigration revenue, the Prague, Sarajevo, Vienna and Zagreb missions should open separate, dedicated, official bank accounts for the deposit of fees.

A desirable long-term solution would be to arrange through an Austrian bank, as the lead bank, a regional bank account network, with the deposit ultimately showing as a transfer from each regional location into the Vienna Mission’s dedicated bank account. Funnelling of all regional revenue through one bank account would considerably enhance the Regional Processing Centre’s control over cost recovery.

Recommendation 15

Ask the Administration Section of the missions in Budapest, Prague and Vienna to do the following:

(a) forward copies of their mission’s bank statements to the Vienna Regional Processing Centre; and

(b) in the Prague, Sarajevo, Vienna and Zagreb missions, open separate official bank accounts solely for the deposit of immigration fees.

Management Responses

DFAIT has responsibility for the reconciliation of moneys collected on behalf of CIC. Missions can assess whether the fees collected are in line with the volume of business.

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