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April 2007
NEXUS is a joint initiative of the Canada Border Services Agency (CBSA) and U.S. Customs and Border Protection (CBP) that was developed under the Smart Border Declaration for frequent travellers. It offers a simplified border clearance process to low-risk, pre-approved members.
To become a NEXUS Highway member, the focus of this audit, individuals had to send a completed application form, with a non-refundable NEXUS fee, to a CBSA processing centre for review, registration and risk assessment. The processing centre would then forward the application to an enrolment centre for risk assessment by U.S. CBP officers. Applicants who passed both the CBSA and U.S. CBP security checks would be invited to attend an interview at the enrolment centre for final processing and approval of their application.
The Internal Audit and Evaluation Committee approved this audit as part of the CBSA Risk-Based Multi-Year Audit Plan for 2005-2008.
The objective of the audit was to assess the procedures for managing the NEXUS Highway application process, the adequacy of internal controls and the extent of compliance with policies, procedures and directives. The audit was conducted at CBSA Headquarters and in the Niagara-Fort Erie and Pacific regions between January and September 2006.
Processing of NEXUS Highway applications required the cooperation and combined efforts of the CBSA and U.S. CBP. The two partners have different legislation, different currencies and separate applicant enrolment systems. Given these challenges, the audit found that the NEXUS application process had good control features and the detailed procedures established for the program were being followed in the regions visited. CBSA risk-assessment decisions to approve or reject applicants were found to be accurate, and the rate of keying errors was low. Some deficiencies in procedures were noted, and they are discussed in the body of this report. As well, strengthening the performance measurement and reporting processes, and undertaking periodic operational reviews of the application process, would provide improved information on the overall effectiveness of the NEXUS application process.
The audit also found that with the fluctuations in the Canadian/U.S. exchange rate, the NEXUS fee of CAN$80, which was set in 2002 based on the exchange rate at that time and was prescribed in regulations, no longer reflected the criterion that was used when the fee structure was first established.
A communications plan set the basis for a wide range of marketing and outreach events that had taken place, but efforts to monitor and assess the effectiveness of these activities could have been better coordinated.
The concerned branches support the overall findings and recommendations in the report.
The audit was conducted before the NEXUS harmonization. Since the amalgamation of the NEXUS Highway, Air and Marine programs into the harmonized NEXUS program, inconsistencies and inefficiencies in standard operating procedures (SOPs) have been and continue to be reviewed and resolved.
Also, with the recent transition of the policy/program aspects of the NEXUS program to the Admissibility Branch, the Operations Branch will now be able to focus more on enhancing NEXUS operational efficiencies to achieve optimum program effectiveness.
The Admissibility Branch is also responsible for redress activities and maintaining SOPs and training material on policy issues. The Innovation, Science and Technology Branch is responsible for changes to SOPs and training material as a result of NEXUS/FAST program harmonization. Both these branches will work with the Operations Branch to ensure operational procedures are consistent with policy and program changes.
NEXUS is a joint initiative of the Canada Border Services Agency (CBSA) and U.S. Customs and Border Protection (CBP) that was developed under the Smart Border Declaration for frequent travellers. As an Alternative Inspection Services (AIS) program, it offers a simplified border clearance process to low-risk, pre-approved members, allowing the CBSA and U.S. CBP to focus their efforts on travellers of unknown or high risk.
At the time of this audit, NEXUS was composed of three mode-specific components, each functioning as a separate entity. NEXUS Highway, the focus of this audit, was implemented in 2002 at selected locations and, by February 2004, it was operating at 11 high- and medium-volume border crossings in Quebec, Ontario and British Columbia. NEXUS Highway replaced CANPASS Highway, which was a Canada-only AIS program.
NEXUS Air was implemented as a pilot project at Vancouver International Airport in November 2004. The NEXUS Marine pilot project was implemented in summer 2005 in the Detroit/Windsor area. On December 14, 2006, the CBSA, with its U.S. CBP partners, jointly integrated the three components into one harmonized NEXUS program.
To become a NEXUS Highway member, individuals had to send a completed application form, along with a non-refundable NEXUS fee, to one of the three CBSA processing centres in Canada for review, registration and risk assessment by CBSA officers. The centres would then forward the original applications to an enrolment centre where they would undergo security screening by U.S. CBP officers. Applicants who passed both the CBSA and U.S. CBP risk assessments would be invited to attend an interview at the enrolment centre for final processing and approval of their application. NEXUS membership is valid for five years. Applicants wishing to renew their membership are required to submit a new application form with the applicable fee.
As of March 31, 2006, the CBSA processing centres had accepted 101,583 of the 128,210 NEXUS Highway applications they had received from Canadian and U.S. applicants. The NEXUS Highway program had enrolled 92,835 members by March 31, 2006, and reached its 100,000th member mark on September 21, 2006.
The Travellers Program Design and Development Division of the Major Project Design and Development Directorate, Innovation, Science and Technology Branch, was responsible for the design, development and implementation of NEXUS. Responsibility for the day-to-day operations of the NEXUS Highway component was transferred to the Operations Branch in June 2006. In mid-January 2007, the Admissibility Branch assumed responsibility for the policies and procedures on the NEXUS harmonized program.
The Internal Audit and Evaluation Committee approved this audit as part of the CBSA Risk-Based Multi-Year Audit Plan for 2005-2008.
The objective of the audit was to assess the procedures for managing the NEXUS Highway application process, the adequacy of internal controls and the extent of compliance with policies, procedures and directives.
The audit was conducted at CBSA Headquarters (HQ) and in the Niagara-Fort Erie and Pacific regions between January and September 2006. The audit examined the management practices of the NEXUS Highway program, including the marketing strategy and the rationale used for establishing the NEXUS application fee. It included a review of the CBSA procedures for processing NEXUS Highway applications at the CBSA processing centres and the enrolment centres in the two regions. In addition, the audit examined a selected sample of NEXUS Highway applications that had been processed in the two regions between January 1, 2005, and March 31, 2006.
This audit followed the Treasury Board’s Policy on Internal Audit. The approach used in carrying out the audit included the following:
The NEXUS Highway application process required the combined efforts of the CBSA and its U.S. partner, CBP. This presented challenges to the CBSA, which had to work around differences in each country’s legislation, two applicant enrolment systems and different currencies for the fee.
Given the challenges facing both countries, the audit found that the CBSA had developed a process that was supported by detailed procedures and good control features. Some deficiencies in procedures were noted during the course of the audit with respect to file management, data capture of applicant information and the checking of memberships in other alternative inspection programs for failed NEXUS applicants. These issues are discussed in the sections that follow.
The audit found that, overall, the CBSA rate of compliance with procedures was good, risk-assessment decisions were accurate and the rate of keying errors was low. Some instances of non-compliance were noted but were not considered systematic.
The Canadian fee of $80, which was set in 2002 based on the exchange rate at that time, was no longer equivalent to the NEXUS US$50 fee, given the decrease in value of the U.S. dollar. In addition, the Regulations Amending the Presentation of Persons (2003) Regulations did not support the actual Canadian/U.S. fee structure in place.
A communications plan set the basis for a wide range of marketing and outreach events that had taken place, but monitoring and evaluation of these activities should be better coordinated.
Management rely on timely, complete and accurate information on program performance to support decision making. Additional efforts are needed to ensure that the required tools and systems are in place to provide management with reliable performance information.
With the fluctuations in the Canadian/U.S. exchange rate, the CAN$80 NEXUS fee prescribed in the Regulations no longer reflects the criterion that was used when the fee structure was first established in 2002.
According to the NEXUS Web site and brochure, all applicants 18 years of age or older have to include a non-refundable fee of CAN$80 or US$50 with their completed application form. Payments could be made, payable to the Receiver General for Canada, by international money order or certified cheque in Canadian or U.S. dollars. Applicants could also pay by providing a valid credit card number on their application form.
The guiding principle in determining the fee for the NEXUS program in 2002 was the US$25 application fee that U.S. CBP was charging at that time for its dedicated commuter lane program. This U.S. rate formed the basis of the US$50 NEXUS fee, which was to be shared equally between the CBSA and U.S. CBP. The CAN$80 fee represented the approximate Canadian dollar equivalent of US$50 in 2002.
A review of the Regulations approved on November 28, 2005, confirmed that the fee for the issuance or renewal of a five-year NEXUS membership had been prescribed at CAN$80.
Since the implementation of NEXUS Highway in 2002, the value of the U.S. dollar has decreased significantly. An analysis of Bank of Canada exchange rates indicated that US$50 was equivalent to less than CAN$60 during the period of January to September 2006. While Canadian applicants had the option to pay the NEXUS fee in U.S. dollars, such payment had to be made by international money order, certified cheque or a U.S.-issued credit card. Applicants paying by Canadian-issued credit cards would automatically be charged the CAN$80 fee.
Therefore, the fee structure that was originally set in 2002 was no longer equitable in 2006 and favoured U.S. applicants. In addition, by accepting a NEXUS fee payment of US$50, in 2006 the CBSA was collecting less than the amount prescribed in the Regulations.
Recommendation
Management Action Plan | Completion Date |
---|---|
The Admissibility Branch, in consultation with U.S. CBP, will re-examine the fee structure, including the costs associated with processing applications for NEXUS and the related Regulations Amending the Presentation of Persons (2003) Regulations, to support a consistent fee arrangement between Canada and the United States. The Innovation, Science and Technology Branch will remain a stakeholder in the NEXUS/FAST (Free and Secure Trade) harmonization project. |
End of the 2007-2008 fiscal year |
There were good control features built into the NEXUS Highway application process; however, procedures should be improved for keying applicant history data in the system, for verifying memberships in other AIS programs when NEXUS applicants fail risk assessments, and for retention of files.
Detailed standard operating procedures (SOPs) were available and posted on the CBSA intranet site for employees’ use. Walkthroughs and a review of the SOPs revealed that good control features had been built into the NEXUS application process. For example:
According to the SOPs, CBSA officers were required to perform risk assessments of all Canadian and U.S. applicants using five enforcement databases. Applicants who failed the risk assessment would be denied NEXUS membership. However, there were no clear and detailed procedures in the SOPs for CBSA officers to check if failed applicants had memberships, and to verify continued eligibility, in other CBSA AIS programs such as CANPASS Air.
Applicants were required to complete a five-year address history on the application form, but the SOPs stipulated that the primary address only, which was a system requirement, had to be keyed into the system. Review of system applicant data for sample NEXUS applications revealed that almost one-third of the applications reviewed at one region did not have the complete address history in the system. Ensuring a complete address history in the system for all applications would facilitate risk assessment for CBSA officers doing security checks.
The SOPs outlined the filing requirements for NEXUS applications only. The filing procedures did not cover reports or risk assessment worksheets used by CBSA risk assessment officers. This resulted in inconsistencies at both regions visited.
Recommendation
Management Action Plan | Completion Date |
---|---|
The Admissibility Branch will work with the Operations Branch on the review of SOPs related to eligibility criteria for NEXUS. The Operations Branch will continue to review the SOPs to ensure that appropriate operational guidelines are provided in all situations, including where applicants fail the CBSA risk assessment. The Operations Branch will ensure all application information is captured electronically and protocols are in place for file management. These modifications will be made on an ongoing basis to the SOPs and training material. Periodic reviews will also be undertaken to ensure compliance with the SOPs and training provided. |
Ongoing, commencing April 1, 2007 |
Revised SOPs and training material will be available on the CBSA intranet site. |
September 2007 |
Compliance with procedures was good, the rate of keying errors was low and risk-assessment decisions were accurate. Periodic operational reviews would reinforce compliance with procedures.
The CBSA processing centres keyed the information from each NEXUS application into the CBSA system once the application had been verified for proper completion and payment. The audit examined 153 sample applications to compare the information on the application form to the applicant data in the system and found minimal keying errors. These included errors related to gender, country of residence and document identification numbers.
Walkthroughs and the sample application review revealed minor instances of non-compliance, such as missing date stamps and incomplete address history on the application form. The walkthroughs also revealed that one of the regions visited was not processing applications on a first-in-first-out basis in accordance with the SOPs. Special procedures had been established, in cases of backlogs, to allow for partial data entry of applications with cheque and money order payments. This allowed for timely deposits, without giving priority to processing these applications. However, in one region the audit noted that applications with cheque or money order payments were given priority status when there was a backlog.
Once data entry was completed, the system would add the applicant’s name to the risk assessment work list. CBSA officers would conduct risk assessments on each NEXUS Highway applicant based on the names on these work lists.
To review the accuracy and reliability of risk assessments, the Enforcement Branch conducted an additional independent risk assessment on 93 of the 153 files in the audit sample. Subsequent analysis of the results revealed that the decisions made by the regional CBSA risk assessment officers for all 93 applicants were based on an accurate assessment.
Following the CBSA risk assessments, the CBSA processing centre would forward the original applications and supporting documents to an enrolment centre for security checks by U.S. CBP officers and final processing by CBSA and U.S. CBP officers.
Many of the functions at the enrolment centres were shared between CBSA and U.S. CBP officers. At the Pacific region, the enrolment centre was located in Blaine, Washington, where U.S. CBP officers scheduled the interviews with applicants who passed the CBSA and U.S. CBP security checks. At the Niagara-Fort Erie region, the enrolment centre was located in Fort Erie, Ontario, where a CBSA employee arranged the interviews. Generally, U.S. CBP officers interviewed Canadian residents, while CBSA officers interviewed U.S. residents.
During applicant interviews at the enrolment centre, CBSA officers posed questions related to the application, including criminal background, and verified original copies of citizenship, identification and residency documents. If approved, the officers would key applicant information into the U.S. enrolment system and take facial photos for the NEXUS membership cards. These photos were stored in the applicant’s file in the U.S. enrolment system, which then fed the information into the CBSA system. Applicant photos were a key control feature for the NEXUS program. Each time a member used the NEXUS card at the border crossing, the facial photo would be displayed on a computer screen for the CBSA border officer at the primary inspection line.
The audit found three anomalies with respect to the applicant photos in the CBSA system. In two cases, applicants who had been denied memberships had photos in the system. In the third case, the photo of the accepted applicant was not in the system. Officials were notified of these anomalies, and the auditors were advised corrective action had been taken.
Many of the NEXUS applicant files reviewed were found to be incomplete. More than half the 77 files reviewed at one of the regions had either proof of citizenship or residency, but not both as prescribed in the SOPs. Interviewing NEXUS applicants was a shared responsibility between CBSA and U.S. CBP officers. The CBSA officers interviewed indicated that they verified the citizenship and residency requirements at the time of enrolment, although copies of these documents were not always included in the files.
Guardians or non-custodial parents applying on behalf of minors had to provide appropriate legal documents attesting to their custody rights. However, the lack of clear identification of guardians or non-custodial parents on the application form made it difficult for the audit team to determine compliance with this requirement.
The final step for CBSA officers interviewing applicants was to explain the NEXUS rules and obtain signatures from applicants acknowledging that they understood the rules. The audit found that the prescribed procedures for the acknowledgements were not followed for 5 of the 77 application files reviewed at one region.
It is management’s responsibility to ensure that employees follow established procedures and perform good quality work. Reviewing the work performed by employees is an effective way of carrying out this responsibility. The audit found that management did not conduct periodic operational reviews on the functions related to processing NEXUS Highway applications. Periodic operational reviews would provide information that procedures are being followed and identify areas that needed attention. One of the regions visited, however, did introduce compliance reviews soon after the visit by the auditors.
Recommendation
Management Action Plan | Completion Date |
---|---|
The Operations Branch will develop the mechanism to carry out periodic operational reviews to obtain information on the adequacy and effectiveness of the NEXUS application process. |
End of the 2007-2008 fiscal year |
Workload and productivity were being monitored in the regions; however, monitoring and reporting on the status of NEXUS applications and related processing times could be enhanced.
As a Government of Canada agency, the CBSA has a commitment to provide quality services to NEXUS clients by continually improving work processes and management practices. This requires the establishment of service standards, performance indicators or baseline measurements as comparisons against which to measure performance.
HQ had developed activity times for officer and clerical functions at the processing centres. These were used to calculate and allocate resources to the regions. The audit found that workload, backlogs and productivity on NEXUS applications were being monitored and reported extensively at one region through daily, weekly and monthly reports, but to a lesser extent at the other region.
The NEXUS telephone information line advised callers to allow four to six weeks for application processing. The NEXUS Web site indicated that the processing time was approximately six weeks. Both HQ and one region advised the audit team that there was a goal of six to eight weeks to process applications.
The audit found that there was no system in place to measure the time taken to process applications. Processing times calculated for the sample applications, and illustrated in Figure 1, showed that 31% of the 153 applications had been processed within four weeks of the original receipt of the application, 43% within six weeks and 52% within eight weeks. By the end of 12 weeks, 70% of the applications had been processed.
Delays were often beyond the control of the CBSA and could be due to difficulties in contacting applicants to schedule interviews; elapsed time between scheduling interviews at the enrolment centre and the actual date of interview; and time taken to obtain information missing on the original application form.
Analysis of processing times by region showed differences between the two regions visited. In one region, 60% of the 75 sample applications had been processed within four weeks, 76% within six weeks and 84% within eight weeks. In the other region, 4% of the 78 sample applications analyzed had been processed within four weeks, 12% within six weeks and almost 50% within 12 weeks. A detailed breakdown of processing times, by week, for each region can be found in Appendix A.
Accurate and timely reports provide management with information on program performance and help identify problems so that necessary action can be taken.
The Agency has an automated management information system that provides support for CBSA reporting requirements. This system is linked to the NEXUS enrolment system and has the capability to provide selected information on NEXUS applications. Interviews indicated that the management information system was not being used on a regular basis.
The audit found that the regions provided monthly reports on the status of NEXUS applications to HQ, which in turn prepared a national report. These reports were produced manually from information sources that for the most part were kept manually.
In examining these monthly reports produced by the regions and HQ, some discrepancies and inconsistencies were noted. For example:
It was noted that administrative rejects accounted for approximately 25% of the NEXUS Highway applications received between July 1, 2005, and December 31, 2005. However, no action was taken to examine the causes of these rejects in order to take corrective action. Similarly, there was no analysis of errors reported on the error reports that HQ was regularly taking action to resolve discrepancies detected between the CBSA and the U.S. CBP enrolment systems.
The absence of consistent performance data on NEXUS Highway made it difficult for management to make appropriate decisions that would improve the application process and the use of automated systems.
Recommendation
Management Action Plan | Completion Date |
---|---|
The CBSA supports the value of a structured evaluation framework to guide the continued development and implementation of the NEXUS program. A Results-based Management and Accountability Framework (RMAF) for the harmonized NEXUS program was drafted in fall 2006. It was decided to postpone this exercise until the harmonization of the NEXUS and FAST programs, which will entail the development of an RMAF in consultation with the CBSA’s Evaluation Division. | The RMAF will be finalized in spring 2008 |
The Operations Branch, with its regional partners and U.S. CBP, will review the existing published performance standards for processing applications and adjust time frames as required. Revised time frames will be made available to the public on the CBSA’s Internet site and in program brochures and guides. The Branch will periodically review the progress of the CBSA’s regional partners against the published performance standards. Through operational training and support, the Operations Branch will provide its regional partners with the tools to effectively use existing automated information systems to manage and report their individual performance results. |
End of the 2007-2008 fiscal year |
A communications plan set the basis for a variety of marketing and outreach events that have taken place. A coordinated approach to assess the effectiveness of these activities could strengthen the marketing and outreach program.
The communications plan developed in 2002 by the Public Affairs Branch of the former Canada Customs and Revenue Agency set the basic framework for promoting the expansion of the NEXUS Highway program. The plan set out objectives, a communications approach, strategic considerations, target audiences, key messages and communications activities. In September 2005, a consultant prepared a marketing strategy for the CBSA to provide a strategic framework for prioritizing and focusing future communications and marketing activities on NEXUS Highway.
The Innovation, Science and Technology Branch worked with the regions in coordinating the marketing activities and promoting NEXUS Highway according to the communications plan. Interviews and a review of marketing logs showed that a wide range of marketing events and outreach activities had taken place in the two regions:
A review of NEXUS reports and interviews showed that efforts had been made to examine the effectiveness of marketing on program awareness and to explore additional opportunities for program promotion. This included the issuance of client surveys to 6,250 randomly selected NEXUS members as part of the NEXUS Highway post-implementation reviews conducted in British Columbia and Southern Ontario during 2003 and 2004. In 2005, the CBSA engaged the services of a consultant to conduct focus groups to explore awareness and perceptions of the NEXUS Highway and Air programs among Canadian residents travelling frequently to the United States.
Interviews indicated that other efforts to monitor and assess NEXUS marketing and outreach activities had been initiated. These included using marked applications at trade exhibitions and conducting multiple-choice surveys with applicants at the enrolment centres. However, there was no subsequent analysis of the data or reports to show the results of these efforts. These were opportunities that could have provided the CBSA with valuable information on NEXUS marketing.
CBSA management has made good use of the redesigned NEXUS application form by including a question on how applicants heard about NEXUS. This should provide a valuable new source of information for assessing outreach and marketing activities.
Recommendation
Management Action Plan | Completion Date |
---|---|
The Innovation, Science and Technology Branch, in conjunction with the Admissibility Branch, will develop a coordinated approach on marketing and outreach activities for NEXUS and ensure any policy implications are resolved before the publication of new or updated communications products. Revised NEXUS communications products have been produced as part of the NEXUS harmonized program and are in warehouses. | End of the 2007-2008 fiscal year |
A new NEXUS marketing plan is being prepared as part of the NEXUS Air launch, focus group testing is being planned and a media placement plan will follow later this spring. The effectiveness of related marketing activities will be measured. |
End of the 2007-2008 fiscal year |
CBSA Media Monitoring and Media Relations will continue to evaluate and monitor the media environment for information related to the Shared Border Accord and the new harmonized NEXUS program. Communications products will be enhanced or amended as necessary. | Ongoing |
The table below shows the number of weeks taken, by region, to process NEXUS Highway applications from the date of receipt to the date the application was denied or approved. Applications could be denied at the time of security screening by the CBSA risk assessment officer or the U.S. CBP officer or at the time of the interview with the applicant at the enrolment centre.
No. of Weeks | Region 1 | Region 2 | ||
---|---|---|---|---|
Applications Processed | Cumulative Totals | Applications Processed | Cumulative Totals | |
<=1 week | 4 (5.3%) | 4 (5.3%) | 0 | 0 |
> 1 & <=2 wks | 13 (17.3%) | 17 (22.6%) | 1 (1.3%) | 1 (1.3%) |
> 2 & <=3 wks | 23 (30.7%) | 40 (53.3%) | 1 (1.3%) | 2 (2.5%) |
> 3 & <=4 wks | 5 (6.7%) | 45 (60.0%) | 1 (1.3%) | 3 (3.8%) |
> 4 & <=5 wks | 5 (6.7%) | 50 (66.6%) | 2 (2.6%) | 5 (6.3%) |
> 5 & <=6 wks | 7 (9.3%) | 57 (76.0%) | 4 (5.1%) | 9 (11.4%) |
> 6 & <=7 wks | 2 (2.7%) | 59 (78.6%) | 6 (7.7%) | 15 (19.0%) |
> 7 & <=8 wks | 4 (5.3%) | 63 (84.0%) | 1 (1.3%) | 16 (20.3%) |
> 8 & <=9 wks | 2 (2.7%) | 65 (86.6%) | 7 (9.0%) | 23 (29.1%) |
> 9 & <=10 wks | 1 (1.3%) | 66 (88.0%) | 4 (5.1%) | 27 (34.2%) |
>10 & <=11 wks | 1 (1.3%) | 67 (89.3%) | 7 (9.0%) | 34 (44.3%) |
>11 & <=12 wks | 0 | 67 (89.3%) | 6 (7.7%) | 40 (51.9%) |
Over 12 wks | 8 (10.7%) | 75 (100%) | 38 (48.7%) | 78 (100%) |