Immigration Benefits: INS Not Making Timely Deposits of Application Fees
(Letter Report, 09/29/2000, GAO/GGD-00-185).

Pursuant to a congressional request, GAO provided information on: (1)
extent to which the Immigration and Naturalization Service (INS) made
timely deposits of the fees that it collected from aliens who applied
for benefits; and (2) potential costs to the government if INS fee
deposits were not timely.

GAO noted that: (1) because the data maintained by INS was not complete,
GAO was unable to fully determine the extent to which INS complied with
Department of the Treasury regulations requiring that receipts totalling
$5,000 or more be deposited on the same day if they were received prior
to the deposit cutoff time, or the next day if they were received too
late to meet the cutoff time; (2) INS maintained initial application
acceptance processing data for its four service centers, which handled
about 75 percent of the applications received; (3) however, INS did not
maintain such data for its 33 district offices, which handled the
remaining 25 percent of applications received; (4) in fiscal year 1999,
INS service centers did not generally make timely fee deposits; (5)
whereas Treasury requires that fees totalling $5,000 or more be
deposited on the same day or the day after they are received, INS took,
on average, at least 12 additional days beyond Treasury's time
requirement; (6) GAO estimated that the resulting interest cost to the
government, or the cost for interest incurred on debt or other
obligations, was about $640,000 in fiscal year 1999; (7) GAO estimates
are conservative because GAO did not have data on certain phases of the
fee deposit process--such as the amount of time that applications
remained unopened in service center mailrooms--that may have caused
additional delays in the time taken to deposit fees; (8) any additional
delays would have increased the amount of interest cost to the
government; and (9) INS' contract of application processing services
provided the contractor with more time to make fee deposits than is
allowed by Treasury regulations.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-00-185
     TITLE:  Immigration Benefits: INS Not Making Timely Deposits of
	     Application Fees
      DATE:  09/29/2000
   SUBJECT:  Immigrants
	     Naturalization
	     Fees
	     Treasury accounts
	     Cost control
	     Interest
	     Immigration information systems
	     Federal agency accounting systems
IDENTIFIER:  INS Immigration Examination Fee Account
	     INS Computer Linked Application Information Management
	     System
	     INS Program for Excellence and Comprehensive Tracking

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GAO/GGD-00-185

IMMIGRATION BENEFITS

INS Not Making Timely Deposits of Application Fees

United States General Accounting Office

GAO Report to the Chairman, Subcommittee on Immigration and Claims,
Committee

on the Judiciary, House of Representatives

September 2000 GAO/ GGD- 00- 185

United States General Accounting Office General Government Division
Washington, D. C. 20548

Page 1 GAO/ GGD- 00- 185 INS Fee Deposits

B- 285116 September 29, 2000 The Honorable Lamar Smith Chairman,
Subcommittee on

Immigration and Claims Committee on the Judiciary House of Representatives

Dear Mr. Chairman: One of the Immigration and Naturalization Service's (INS)
primary functions is to provide services or benefits that facilitate entry,
residence, employment, and naturalization of legal immigrants. To recover
the costs that it incurs in providing benefits, INS is authorized to charge
fees to recipients of INS services. 1 Individuals who apply for INS benefits
must send their application form and appropriate fee, if any, to one of INS'
4 regional service centers or 33 district offices. Federal agencies,
including INS, are generally required by Department of the Treasury
regulations to deposit fees totaling $5,000 or more on the same day or day
after they are collected.

This report responds to your request that we determine the (1) extent to
which INS made timely deposits of the fees that it collected from aliens who
applied for benefits, and (2) potential costs to the government if INS fee
deposits were not timely. In responding to your request, we analyzed data on
applications 2 that INS received during fiscal year 1999 and fees that INS
was to deposit into the Immigration Examinations Fee Account (IEFA) 3 in the
U. S. Treasury.

1 Generally, INS has discretion to waive application fees for applicants who
establish that they are unable to pay the fee. 2 Our analyses included both
applications and petitions received by INS. Aliens submit applications to
INS when they seek benefits for themselves, such as U. S. citizenship.
Petitions are filed on behalf of aliens, such as when employers petition on
behalf of employees or parents petition on behalf of children. For purposes
of this report, the term “application” is used to refer both to
applications and petitions.

3 The 1989 Department of Justice Appropriation Act established IEFA to
reimburse any appropriation for expenses in providing immigration and
naturalization services. P. L. 100- 459, 102 Stat. 2186, 2203 (1988). The
Illegal Immigration Reform and Immigrant Responsibility Act established the
Immigration Detention Account, into which certain additional fees for
adjustment of status are deposited. P. L. 104- 208, 110 Stat. 3009, 3009-
648, 3009- 649 (1996).

B- 285116 Page 2 GAO/ GGD- 00- 185 INS Fee Deposits

Because the data maintained by INS were not complete, we were unable to
fully determine the extent to which INS complied with Department of the
Treasury regulations requiring that receipts totaling $5,000 or more be
deposited on the same day if they were received prior to the deposit cutoff
time, or the next day if they were received too late to meet the cutoff
time. INS maintained initial application acceptance processing 4 data for
its four service centers, which handled about 75 percent of the applications
received. However, INS did not maintain such data for its 33 district
offices, which handled the remaining 25 percent of applications received.

In fiscal year 1999, INS service centers did not generally make timely fee
deposits. Whereas Treasury requires that fees totaling $5,000 or more be
deposited on the same day or the day after they are received, INS took, on
average, at least 12 additional days beyond Treasury's time requirement. We
estimate that the resulting interest cost to the government, or the cost for
interest incurred on debt or other obligations, was about $640,000 in fiscal
year 1999. Our estimates are conservative because we did not have data on
certain phases of the fee deposit process- such as the amount of time that
applications remained unopened in service center mailrooms- that may have
caused additional delays in the time taken to deposit fees. Any additional
delays would have increased the amount of interest cost to the government.
We also found that INS' contract for application processing services
provided the contractor with more time to make fee deposits than is allowed
by Treasury regulations.

We are making recommendations for INS to improve its information on
timeliness and comply with Treasury regulations. INS generally agreed with
our findings and recommendations and said that making timely and accurate
fee deposits is an agency priority. However, INS expressed several concerns
about our methodology, which we address near the end of this report.

The Department of the Treasury, in its role as chief financial agent of the
federal government, is responsible for effectively managing the cash
operating accounts and debt financing to ensure sufficient funds are
available to meet the financial obligations of the federal government when
they become due. This involves investing excess cash balances in
interestbearing accounts, holding cash at the Federal Reserve, or issuing
marketable debt securities to the public when estimated cash outlays are
expected to exceed estimated cash receipts. To accomplish effective cash

4 By initial application acceptance processing, we mean the initial clerical
stages of handling incoming applications, prior to adjudication by INS
examiners. Results in Brief

Background

B- 285116 Page 3 GAO/ GGD- 00- 185 INS Fee Deposits

management, federal agencies are required to use cash management practices
and techniques that will accelerate and control collections, ensure prompt
deposit of receipts, improve control over disbursement methods, and
eliminate idle cash balances.

At INS' four service centers, which maintain automated initial application
acceptance processing data, contractors process applications in two stages.
First, in the mailroom, INS contractor clerks are to open incoming mail,
sort it according to type of application form, and screen each application
to ensure that it is signed and that the proper fee is enclosed. If either
the signature is missing or the fee amount submitted is incorrect, the
application is to be rejected and returned to the applicant. For each
nonrejected application, a clerk is to prepare an application file. Second,
in data entry, clerks are to enter data from all applications, except
naturalization applications, into INS' Computer Linked Application
Information System (CLAIMS). Fees are to be separated from the application,
data on the fee is to be entered into the computer, and the fee is to be
prepared for deposit. For naturalization applications, the checks are to be
separated before all the application data are entered into CLAIMS. Fees are
to be en route to deposit within one workday of data entry. They are to be
deposited for credit into the IEFA account of the U. S. Treasury. At the end
of each work shift, INS' contractor is responsible for recording the number
of accepted applications of each type received and processed during the
shift, and the number remaining unprocessed at the end of the shift. The
contractor uses the Automated Task Order Management System (ATOMS), an
internal corporate management tool, to record this information and monitor
its workload and productivity. Applications are to be processed in the order
in which they were received.

In fiscal year 1999, INS deposited $628 million into IEFA. INS maintained
initial application acceptance processing data for its 4 service centers,
which together accounted for 75 percent of applications that INS received in
fiscal year 1999. However, such data were not maintained for INS' 33
district offices, which accounted for approximately 25 percent of
applications received. Therefore, we could not calculate how long district
offices took to process applications and deposit fees, or what additional
costs the government may have incurred if deposits were not timely. INS' Fee
Deposit Data

Incomplete

B- 285116 Page 4 GAO/ GGD- 00- 185 INS Fee Deposits

Our analysis of fiscal year 1999 data indicated that INS service centers did
not, on average, deposit application fees within the time period required by
Treasury regulations. In addition, INS provided more time to its contractor
to make fee deposits than is allowed by Treasury regulations. To reduce the
processing float and improve the availability of funds, Department of the
Treasury regulations require that federal agencies deposit fees totaling
$5,000 or more on the same day that they are received prior to the deposit
cutoff time. Money received too late in the day to meet the deposit cutoff
time is to be deposited on the following business day. 5 Collections
totaling less than $5, 000 may be accumulated and deposited when the total
reaches $5,000. However, deposits are to be made by Thursday of each week,
regardless of the amount accumulated. According to INS officials, service
centers receive more than $5,000 in application fees each day. INS requires
its contractor to complete initial application acceptance processing (i. e.,
key data into a computer system on the application and fee) within 2
workdays after the applications are received, and to ensure that fees are en
route to deposit within 1 workday of completing initial application
acceptance processing.

In fiscal year 1999, INS service centers took, on average, at least 12
additional days beyond Treasury's time requirement to make fee deposits.
Because INS often did not deposit its cash receipts, cash that would
otherwise have been invested in an interest- bearing account, disbursed to
settle financial obligations, or used to buy back debt securities to lower
financing costs remained idle. We estimate that the resulting interest cost
to the government, or the cost for interest incurred on debt or other
obligations, was about $640,000 in fiscal year 1999. Our figures on time and
cost are lower- bound estimates because we did not have data to determine
the amount of time that (1) applications remained unopened in service center
mailrooms, or (2) it took service centers to deposit fees after completing
data entry. In addition, we did not have data to determine how much
additional cost INS may have incurred if district offices did not deposit
fees on the same day of or the next day after receipt.

Our analysis indicated that, throughout fiscal year 1999, there were delays
in making fee deposits in each of the four service centers. Although there
may have been several reasons for the delays, our analysis indicates that a
1999 change in the naturalization application fee may have been associated
with an increase in INS' application workload. The increase in workload was
temporary, but it may have contributed to delays in processing applications.
On January 15, 1999, the fee for naturalization applications

5 Treasury Financial Manual, vol. 1, part 6, sec. 8030.20. Delays in Making
Fee

Deposits Resulted in Interest Costs to the Government

B- 285116 Page 5 GAO/ GGD- 00- 185 INS Fee Deposits

increased from $95 to $225. During the month of the fee increase, service
centers received a total of about 274,000 naturalization applications,
substantially more than in any prior or subsequent month of the fiscal year.
In January, the number of naturalization applications received was over 3
times greater than the number received in October or November 1998, over 2
times greater than the number received in December 1998, and over 7 times
greater than the number received during any single month from February to
September 1999. Counting all application types, the total number of
applications received by INS service centers in January 1999 was about
496,000, while no more than 379,000 applications were received during any
other month of the fiscal year. Although we did not have the data to
determine whether most of the applications that INS received in January
arrived before January 15, it is possible that applicants sought to submit
their applications prior to January 15 in order to avoid paying the higher
fee, thereby contributing to a large application workload, processing
delays, and untimely fee deposits.

In a September 1998 management letter report to INS, the Justice Inspector
General noted INS' lack of timeliness in making fee deposits. Based on a
sample of INS cash receipts from fiscal year 1998, the Inspector General
found that INS did not consistently and in a timely manner deposit and
record the cash receipts.

INS officials told us that they are aware that a discrepancy exists between
Treasury's fee deposit requirement for agencies and INS' performance
requirement for its service center contractor. They acknowledged that INS'
contract for initial acceptance application processing provides up to 3 days
for the contractor to deposit fees totaling $5,000 or more, whereas
Treasury's requirement is that such amounts be deposited on the same day of
or the next day after receipt. They said that in their next contract for
service center operations support services, which is to be awarded on
September 30, 2000, they planned to require the contractor to conform with
Treasury's deposit guidelines.

INS has some procedures in place to determine whether its offices have made
timely fee deposits. From September 1998 through September 1999, INS' Office
of Internal Audit conducted seven reviews as part of INS' Program for
Excellence and Comprehensive Tracking (INSpect). INSpect reviews are
internal reviews of district offices and service centers 6 and

6 Since 1995, INS' Office of Internal Audit has conducted such management
effectiveness reviews of agency field offices. INSpect reviews are to focus
on areas that are vulnerable to fraud, waste, abuse, or mismanagement;
determine compliance with rules, regulations, and procedures; and assess
management effectiveness. The functions reviewed include finance, records,
files and forms,

B- 285116 Page 6 GAO/ GGD- 00- 185 INS Fee Deposits

include procedures for determining whether fees totaling $5,000 or more are
deposited within 24 hours of receipt. In its INSpect reviews, INS determines
compliance with the fee deposit requirement by using a 24hour criterion. Of
the seven reviews, INS found that three districts deposited fees within 24
hours of receipt, and that one district did not. In the remaining three
reviews, covering two service centers and one district office, INS did not
cover the timeliness of deposits. According to INS officials, application
acceptance processing at these three locations was done by contractor staff,
and INS quality analysts were responsible for monitoring their performance.

To determine the extent to which INS service centers made timely fee
deposits in fiscal year 1999, we analyzed data from the ATOMS database,
which contained the contractor's daily data on the number of applications
received, processed, and pending at the service centers. We used the data to
estimate the average number of days it took INS to make fee deposits beyond
Treasury's time requirement. We calculated the average by summing the total
number of excess processing days in fiscal year 1999 and dividing by the
total number of applications processed during that year. To obtain the total
number of excess processing days, we summed the number of applications that
remained unprocessed each day in each service center's mail room and data
entry stage for each application type over all the days of the fiscal year.

We estimated the interest cost to the government for each application type
by first multiplying the application type's fee by the total number of
excess processing days and the fiscal year 1999 Marketable Treasury Bill
average interest rate of 4.9 percent. We then divided the result by the
number of days in the fiscal year. To obtain the total interest cost, we
summed the interest cost accumulated each excess day in each service
center's mail room and data entry for each application type over all the
days of the fiscal year.

We did not independently verify the reliability or completeness of the ATOMS
database. However, key contractor staff assured us that ATOMS data integrity
was high, and we performed limited testing to determine if data were
accurately entered into the ATOMS database.

adjudications, detention and deportation, inspections, investigations,
security, property management, facilities, procurement, human resources and
development, equal employment opportunity, legal proceedings, and
intelligence. Scope and

Methodology

B- 285116 Page 7 GAO/ GGD- 00- 185 INS Fee Deposits

The appendix provides additional detail on our methodology for calculating
excess processing days and the associated interest cost to the government.

We performed our work between October 1999 and July 2000 in accordance with
generally accepted government auditing standards.

INS did not have the data necessary to determine how long district offices
took to deposit application fees after applications arrived in their
mailrooms. Based on data that were available, we estimate that in fiscal
year 1999, INS service centers did not make timely deposits of applications
fees, resulting in about $640,000 in interest cost to the government. In
addition, INS' contract for application processing services provided more
time for the contractor to deposit fees than is allowed by Treasury
regulations.

We recommend that the INS Commissioner

ï¿½ institute procedures for recording information on application acceptance
processing at district offices to include data that would permit INS to
monitor district compliance with Treasury deposit regulations,

ï¿½ implement INS plans to require that the contractor make fee deposits in
accordance with Treasury regulations,

ï¿½ determine which service centers and district offices do not comply with
the fee deposit requirement and why the noncompliance occurs, and

ï¿½ take appropriate action to ensure that timely fee deposits are made. We
requested comments on a draft of this report from the Attorney General and
the Secretary of the Treasury.

The Treasury Department had no comments on the draft report. On September
13, 2000, we met with INS' Associate Commissioner for Service Center
Operations, Assistant Director for Internal Audit, and other INS officials
to obtain their oral comments on the draft report. INS generally agreed with
our findings and agreed with our recommendations in principle. It stated
that making timely and accurate fee deposits is a priority for INS and a
working group has been formed to examine cash management practices. However,
INS expressed several concerns about our review, including (1) our focus on
a fiscal year that INS considered to be atypical because of changes in
application fee structure, (2) our use of Conclusions

Recommendations Agency Comments and Our Evaluation

B- 285116 Page 8 GAO/ GGD- 00- 185 INS Fee Deposits

the contractor's ATOMS database for determining fee deposit timeliness, and
(3) uncertainty about how we did our analyses.

With respect to INS' concern that fiscal year 1999 was atypical because INS
changed its application fee structure during that year, we agree that fiscal
year 1999 was atypical in this particular respect. We present analysis
results in this report that indicate that the January 15, 1999, change in
the naturalization fee may have contributed to an increase in workload and
processing delays. However, the report also notes that the Justice Inspector
General found problems with INS fee deposits in fiscal year 1998. We have no
basis for determining how typical or atypical application acceptance
processing was in fiscal year 1999 relative to other years. A number of
factors- including changes in fees, laws, policies, and agency priorities-
can affect the number of applications received by INS and the amount of time
INS takes to process them. INS is responsible for timely processing of
applications regardless of the year- to- year fluctuation in receipts. Our
specific reason for focusing on fiscal year 1999 was that we were asked to
review data from 1999 and it was the most current year for which complete
data were available.

With respect to INS' concern that the contractor's ATOMS database was not
designed to track time frames for processing applications and therefore may
not have been an appropriate information source for determining fee deposit
timeliness, we disagree. Prior to deciding to use ATOMS data, we consulted
with INS officials about what data system( s) were available to address the
objectives of our review. We learned that ATOMS contained daily workload
data that could be used to provide a useful measure of fee deposit
timeliness and interest cost. We also learned that ATOMS was, and still is,
the only comprehensive data system containing information on every
application type submitted to INS. Finally, as we indicate in the report,
although we did not independently verify the reliability or completeness of
the ATOMS database, we did limited testing to determine if data were
accurately entered into ATOMS. We also interviewed the key contractor staff
responsible for managing the system and they assured us that data integrity
was high. Although INS acknowledged that making timely fee deposits can be
problematic, it remained skeptical about the number of excess days that we
obtained in our calculations. INS indicated that it planned to engage in
efforts to use its own data- rather than contractor- maintained data- to
monitor the timeliness of fee deposits in the future.

Finally, with respect to INS' questions about how we did our data analyses,
we provided an explanation in our meeting, and we added a Scope and

B- 285116 Page 9 GAO/ GGD- 00- 185 INS Fee Deposits

Methodology appendix to the report that expanded our description of the
analytic approach. Additionally, during the course of the review, we engaged
in three meetings with INS officials and technical staff to discuss our
methodology. We believe that the information we have added to the report
clarifies our analytic methodology.

We are providing copies of this report to Representative Sheila Jackson Lee,
Ranking Minority Member of your Subcommittee; Senators Spencer Abraham and
Edward Kennedy, Chairman and Ranking Minority Member, Senate Judiciary
Subcommittee on Immigration; the Honorable Janet Reno, Attorney General; and
the Honorable Doris Meissner, Commissioner, Immigration and Naturalization
Service. We will make copies available to others upon request.

If you have any questions, please contact Evi L. Rezmovic or me at 202- 512-
8777. The key contributors to this assignment were Jay Jennings, Jim Fields,
and George Quinn.

Sincerely yours, Richard M. Stana Associate Director, Administration of

Justice Issues

Appendix Scope and Methodology

Page 10 GAO/ GGD- 00- 185 INS Fee Deposits

To determine the extent to which INS service centers made timely fee
deposits in fiscal year 1999, we analyzed data from the ATOMS database,
which contained the contractor's daily data on the number of applications
received, processed, and pending at the service centers. The ATOMS database
includes the number of unprocessed applications of each type held each night
in the contractor's workload inventory. The data for each type are available
separately for the mail room and data entry stage for each service center.

We estimated the average number of days that INS took to deposit fees beyond
Treasury's time requirement by summing the total number of excess processing
days in fiscal year 1999 and dividing by the total number of applications
processed during that year. We took a conservative approach to determining
whether applications accumulated excess processing days. If our calculations
indicated that a group of applications remained unprocessed for one full day
and two consecutive nights, then we calculated that each application in the
group accumulated one excess processing day. Although we did not have
individual application- level data, we could calculate this because INS
officials told us that service centers always process applications, within
any particular application type, in the order in which they are received.
Therefore, to determine the number of unprocessed applications each day, we
used the number of applications that had been held overnight before a
processing day began and then subtracted the number processed during the
day.

To obtain the total number of excess processing days, we summed the number
of excess processing days accumulated each day in each service center's mail
room and data entry stage for each application type over all the days of the
fiscal year. We adjusted the data to account for the fact that a portion of
applications did not proceed from the mail room to data entry, possibly
because they were rejected in the mail room because they lacked a signature
or the alien submitted an incorrect fee. We reduced the number of
unprocessed applications in the mail room stage by 11 percent for
naturalization applications, 20 percent for applications with fees that
changed in October 1999, and 15 percent for applications with no fee change
in fiscal year 1999.

We calculated that, in fiscal year 1999, INS accumulated 43,717,722 excess
days of unprocessed applications, and that INS service centers processed
3,621,962 applications in the data entry stage. Dividing the excess days by
the total number of processed applications, we arrived at an average of 12
additional days beyond Treasury's time requirement for INS to make fee
deposits in fiscal year 1999.

Appendix Page 11 GAO/ GGD- 00- 185 INS Fee Deposits

We estimated the interest cost to the government for each application type
by first multiplying the application type's fee by the total number of
excess processing days and the fiscal year 1999 Marketable Treasury Bill
average interest rate of 4.9 percent. We then divided the result by the
number of days in the fiscal year. To obtain the total interest cost, we
summed the interest cost accumulated each excess day in each service
center's mail room and data entry for each application type over all the
days of the fiscal year.

To illustrate our method for calculating the number of excess days and
interest costs, suppose that, on a given Tuesday morning in November 1999,
contractor clerks in a service center mail room began their day with 1,000
Petitions for Alien Relatives (Form I- 130) held over from the previous day.
If the mail room processed 375 I- 130s during the two shifts on that
Tuesday, then 625 I- 130s would have remained unprocessed and left over for
the first shift on Wednesday. Of the 625 unprocessed I- 130s, we calculated
that 125, or 20 percent, would later be rejected, and 500 would not be
rejected. Because the 500 non- rejected I- 130s were not processed on either
Monday or Tuesday, we calculated that they would have accounted for 500
excess days of interest cost. The fee for each I- 130 was $110 in November,
so the 500 forms would have had $55,000 in fees attached to them. The
associated interest cost to the government for the 500 unprocessed I- 130s
in that service center on that single day would have been $7.38. 1 The daily
interest cost is calculated by multiplying the collected fee total of
$55,000 by the fiscal year average interest rate of 4.9 percent and dividing
by 365.

We performed a similar calculation for the data entry stage for the same day
and same service center. For example, if the first data entry shift on
Tuesday had 3,000 I- 130s left over from the last shift on Monday, and if
the data entry staff processed 400 I- 130s during the two shifts on Tuesday,
then 2,600 I- 130s remained for the next day's shift. Since fees from these
2,600 forms were not deposited on either Monday or Tuesday, INS would have
incurred 2, 600 excess interest days for Tuesday. We would calculate that
the 2,600 undeposited I- 130 fees accounted for $286,000 in collected fees
(2,600 times $110) and $38.39 in interest costs ($ 286,000 times 4. 9
percent divided by 365) for the Tuesday in question.

For forms that entered the mail room or data entry stage on Friday or
Saturday, we did not begin computing interest costs associated with

1 As explained later in the appendix, we adjusted our final estimate of
interest cost to account for the fact that INS waived the fee for a portion
of the applications.

Appendix Page 12 GAO/ GGD- 00- 185 INS Fee Deposits

unprocessed forms until Monday because the fees from these forms could not
have been deposited on Saturday or Sunday. We also did not count holidays as
contributing to interest costs in these cases. For unprocessed forms that
entered the mail room or data entry stage on days other than Friday or
Saturday, we computed interest costs for the weekend because the fees from
these forms could have earned interest during that time had they been
deposited without delay. In these cases, we counted holidays as contributing
to interest costs.

Our calculations of timeliness and interest cost to the government took into
account (1) the changes in fee schedules in fiscal year 1999; (2) that many
of the applications processed in the period following the fee change dates
were accompanied by fees at the previous, lower rates; (3) the number of
applications that were rejected during initial processing without their fees
being accepted; (4) the additional days of interest cost during weekends and
holidays; (5) that the naturalization application fee is removed from the
application and may be sent for deposit before data entry, and (6) that INS
waived the fee on approximately 13,000 applications in fiscal year 1999.

Since we could not determine from the data which applicants had their fee
waived by INS, our initial analyses assumed that fees were submitted with
all applications. We then reduced our estimate of the total interest cost by
the amount of interest cost that about 13,000 applications would have
generated. To do this, we made the assumption that the average waived fee
was $225, that applications with waived fees had an average of 12 excess
interest days, and that all of the waived fees were from service centers. We
calculated that the applications with waived fees accounted for less than
$5,000 in interest cost in fiscal year 1999, an amount that did not alter
our overall estimate of about $640,000.

In October 1998 and January 1999, INS increased the fees for most
application types. We factored these changes into our analyses by
calculating a lag time associated with processing applications received
under the former fee structure. That is, we considered the fact that some of
the previous lower- fee forms would continue to be processed even after the
fee change date. For example, the fee for naturalization applications
increased from $95 to $225 on January 15, 1999. On January 26, the number of
unprocessed naturalization applications at the data entry stage reached a
peak of 354,347, and our analyses assumed that all of them were submitted
with a $95 rather than a $225 fee. Our analyses indicated that service
center mail rooms completed processing of 354,347 naturalization
applications on June 24. Therefore, we assumed that all naturalization

Appendix Page 13 GAO/ GGD- 00- 185 INS Fee Deposits

applications processed through June 24 had payments of $95 accompanying
them. This assumption had the effect of underestimating INS' accumulated
interest cost because it is likely that some naturalization applications
received for mail room processing between January 15 and June 24 were
submitted with the higher payment of $225.

The reported interest cost of about $640,000 underestimates the total cost
due to untimely deposits because we did not have data to measure the length
of time that applications may have remained unopened in service center
mailrooms before processing began. We also could not determine how long it
took service centers to deposit the fees after contractor staff completed
initial application acceptance processing. INS does not have a single
database that would enable us to determine how much additional time these
steps in the process take. Our calculations assumed that there were no
delays during these additional stages. Additionally, our calculations
assumed that naturalization fees were deposited on the date that they were
separated from the applications, even if the deposits were made after data
entry. Finally, because data maintained by INS were incomplete, we assumed
that there were no delays in initial application acceptance processing at
INS' 33 district offices, where about 25 percent of the applications were
processed.

We did not independently verify the reliability or completeness of the ATOMS
database. However, we took two steps that assured us that the ATOMS data
were sufficiently reliable and complete to meet the objectives of the
review. First, we interviewed the key INS contractor staff responsible for
managing the system to obtain information on the reliability and
completeness of ATOMS data. The contractor staff told us that the
application acceptance processing information captured in ATOMS is of high
quality. ATOMS data integrity is reportedly high for several reasons,
including (1) employees are trained in data entry, (2) supervisors routinely
review the information to ensure no over- or undercounting, (3) staff are
paid on the basis of productivity information recorded in the system, and
(4) intensive repeated reliance on the system validates its accuracy.
Second, we performed limited testing to determine if data were accurately
entered into the ATOMS database. Over a 2- day period in July 1998, we
observed and spoke with contractor staff who processed applications in the
mail room and data entry stage in INS' Nebraska Service Center. For one
application type, we compared the total number of hard copy application
files processed by the contractor to the numbers they reported to their
shift supervisor. These totals were entered into ATOMS and used to generate
summary productivity reports. In addition, we tallied the total number of
applications processed each day

Appendix Page 14 GAO/ GGD- 00- 185 INS Fee Deposits

and compared it to the totals that appeared on the summary report for those
days. We found no discrepancies in the reported totals for the mail room and
data entry stages for those days.

In addition to performing analyses of the data, we interviewed INS
officials, reviewed INS internal inspection reports, and reviewed Justice's
report on the Office of Inspector General's 1998 financial audit of INS.
Determining the causes for delays in initial application acceptance
processing was outside the scope of this review.

Page 15 GAO/ GGD- 00- 185 INS Fee Deposits

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