Archived - Audit of Commercial Air Cargo

July 2014

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1.0 Introduction

The Canada Border Services Agency (CBSA or the Agency) is mandated to balance national security and public safety with the facilitation of legitimate cross-border trade and travel. The Agency has been invested with the legislative and regulatory authority to control the flow of people and goods by the Government of Canada. Program specific policies and procedures prescribe how the program will be delivered and implemented.

Commercial cargo arrives in Canada in the land, marine, air, rail and postal streams of importation. The Commercial Borders Program Division (CBPD) is responsible for developing, implementing and monitoring national program performance and ensuring compliance with policies, processes, procedures, regulations and legislation related to the movement of commercial goods in all streams, including commercial air cargo (Air Cargo Program-ACP).Footnote 1 It is accountable for managing commercial related projects at Headquarters (HQ) and in the regions through the design, development and implementation of business transformation strategies. It also provides functional direction to the regions and consults with other government departments and external clients with regard to the processing of commercial imports.

Regional border services officers (BSOs) deliver the ACP by reviewing and processing cargo and conveyances, by making final release decisions and ensuring necessary admissibility requirements are met by clients. BSOs also ensure that where there is noncompliance, the necessary enforcement action is taken.

2.0 Significance Of The Audit

This audit is of interest to management because the commercial air cargo stream represents diverse and high risk origins for commercial imports. Commercial air cargo accounts for approximately 25% of all shipments arriving in Canada. Thirteen percent of the drug seizures that occurred in the air commercial stream accounted for 44% of the value of all Agency drug seizures in all modes in 2012. [*]

3.0 Statement Of Conformance

The audit conforms to the Internal Auditing Standards for the Government of Canada, as supported by the results of the quality assurance and improvement program. The audit approach and methodology followed the International Standards for the Professional Practice of Internal Auditing as defined by the Institute of Internal Auditors and the Internal Auditing Standards for the Government of Canada, as required by the Treasury Board’s Policy on Internal Audit.

4.0 Audit Opinion

The Air Cargo Program is functioning in a manner sufficient to meet the Agency’s strategic objectives of facilitating the flow of low-risk and intercepting high-risk goods into Canada. The audit found, however, that there are opportunities for the Agency to improve its at-border control over commercial air cargo.

This results in a medium risk exposure to the Agency.

5.0 Key Findings

The roles and responsibilities of operational staff in the regions are defined and documented. The role of the Programs Branch within HQ is also well understood as the functional authority for developing policies and guidelines. However, interviews with management at the ports of entry (POEs) and with management at HQ identified that Operations Branch’s role within HQ is not well understood in relation to the ACP.

Although policies and procedures related to examinations are generally well understood by the staff delivering the ACP, the approach to seeking functional direction related to commercial air cargo operations is inconsistent. Some staff contacted their regional program officers while others contacted either Programs or Operations within HQ.

The Agency has established clear guidelines to override system-generated commercial examinations. These guidelines were not always followed by the POEs. The Agency is currently undertaking efforts to ensure regional operations understand and comply with guidelines relating to overrides.

Regional site visits validated that commercial air cargo examinations were entered into the Agency systems. However, there was no national system or protocol to enter examinations results related to aircraft examinations.

In 2012, CBPD took the initiative to identify the gaps in the ACP through the [*] which identified eight areas for improvement. Similar to the findings identified in this audit, the CBPD also identified gaps in detection technology and training. CBPD is currently progressing towards implementing its action items as part of it’s [*] to address the gaps identified.

6.0 Summary Of Recommendations

The audit made the following three recommendations:

  • Strengthen the oversight of commercial air cargo
  • Ensure standardized delivery of commercial training
  • Complete the [*] to address gaps in detection technology

7.0 Management Response

The CBSA agrees with the audit recommendations and has taken steps to begin to address the risks identified to enhance the integrity of our air cargo program.

The Agency conducted an [*] in 2011 which identified a number of issues. Subsequently, an action plan was developed that was to be implemented over three years from 2012–2013 to 2014–2015. The Agency has also conducted a risk assessment of Air Cargo operations and the Agency is aware of its various risks. A number of initiatives have been undertaken through the continuous implementation of the action plan, recognizing that volumes of air cargo continue to increase and that internal conspiracy is a risk in all modes.

As a result of the [*], Programs Branch took steps to improve oversight and enhance communication between the regions and Headquarters by establishing a regular Air Chief conference call to identify and resolve Air Examination Program issues. A generic mailbox was also created to establish a centralized mechanism for the regions to bring forward operational issues. Additionally, a more refined and detailed process for analyzing and reporting on examination results was implemented. In an effort to continue to strengthen governance, clarification of roles and responsibilities between Programs and Operations Branches will be provided to the regions in June 2014.

To ensure that operations are effective and employees are trained and knowledgeable, the Human Resources Branch has implemented National Training Standards for the border services officers working in commercial operations in order to ensure consistency. The National Training Plan identifies the number of training sessions to be delivered per region for each training course related to commercial operations. Commercial training will be further strengthened by implementing a tracking system to ensure all officers working in commercial operations receive core training and by establishing a pool of qualified trainers.

The Agency has invested in detection technology at air cargo operations for two decades. Work has been completed to identify air cargo port specific risks and the suite of detection technology needs to mitigate them. Building on this experience, Programs, Operations and Information, Science and Technology Branches will update the mitigation strategy which addresses risks and vulnerabilities identified in air cargo operations. The Branches will further refine the suite of appropriate detection technology ideal for specific types of ports, based on risks, size of ports and volumes. Further work will be completed to ensure the strategic placement and use of detection technology at the highest risk Air Cargo locations.

8.0 Audit Findings

The CBPD is responsible for developing, implementing and monitoring national program performance and ensuring compliance with policies, processes, procedures, regulations and legislation related to the movement of commercial goods in all modes. The Agency does not have a branch or division dedicated to the design and management of the air cargo commercial stream specifically. The audit identified several key findings that should be addressed.

8.1 Program Design

Audit Criteria:

  • Roles and responsibilities of air cargo management and other related Agency stakeholders are clearly defined and communicated.
  • Clear objectives, processes, and procedures for cargo and aircraft examinations have been developed and communicated with the regions.
  • Program management provides appropriate program guidance and supports regional activities.
  • Overrides are issued according to the Agency guidelines and only under appropriate circumstances.
  • Cargo and aircraft examination results are entered into the appropriate systems according to guidelines and are monitored by superintendents and chiefs.
  • Sufficient, timely and accurate information is collected, analyzed and communicated to the regions and appropriate decision-making bodies.
  • New initiatives relating to air cargo are planned, in consultation with regional and stakeholder input, and risks and impacts of the initiatives have been identifiedand communicated with the regions.

8.1.1 Roles and Responsibilities

Regional BSOs were able to articulate their roles and responsibilities, and the activities they are expected to perform in delivering the ACP. Their roles and responsibilities were communicated through training, hands-on experience, and guidance and procedural documentation such as the Agency’s Enforcement Manual. At the POEs, over half of the BSOs interviewed did describe ACP’s objective as intercepting high-risk and facilitating low-risk shipments. Some BSOs were not certain whether the ACP’s priority was facilitation or enforcement.

Intelligence Officers described their roles in relation to ACP as providing tactical and operational intelligence to the POEs such as the identification of high-risk aircrafts or cargo and act as a liaison between HQ intelligence, BSOs and other enforcement agencies. Intelligence Officers also work with intelligence analysts by providing them with information needed to develop trend analyses.

Most of the program officers interviewed were also able to articulate their roles and responsibilities in supporting the ACP. They described their role as being responsible for supporting operations by providing clarification on guidelines and policies, liaising with HQ in regards to any outstanding concerns/questions, and providing POEs with updates on Agency’s initiatives. Interviews with the BSOs and superintendents indicated that the regional program officers did not always have commercial air cargo knowledge, making it difficult to obtain operational guidance.

Regional employees were clear on the role played by the Programs Branch in terms of program and policy development but they could not articulate the role Operations Branch played in the delivery of the ACP. Management at HQ acknowledged that roles and responsibilities for the ACP had not been clearly defined since the Agency reorganization in 2010, and that they were still in the process of establishing clear roles and responsibilities. As well, the [*] identified confusion of overlapping roles and responsibilities as an issue between the regions and HQ. During the site visits, Regional Program Officers, responsible for liaising with HQ for POE staff, indicated that they had difficulties seeking the appropriate HQ branch or unit for assistance.

8.1.2 Policies, Procedures and Support

Several key documents assist BSOs in the performance of their day-to-day activities. The Agency’s Enforcement Manual provides operational policy and procedural guidance, authorities, and roles and responsibilities for the ACP’s activities. This manual includes chapters on commercial shipment examination and commercial aircraft examination. Agency Departmental Memoranda are public documents used to inform BSOs and users of Agency services of program changes, Agency legislative and regulatory authorities, and their compliance obligations.

The majority of those interviewed reported that the policies and procedures were reasonably clear and comprehensive. Also, operational staff interviewed noted they regularly sought guidance from more experienced BSOs, Superintendents, Intelligence Officers, other commercial air cargo operations, Regional Program Officers and HQ contacts.

In terms of ongoing support, the POEs were not always aware of who to contact within HQ if functional guidance was required. Some superintendents and chiefs dealt directly with regional program officers if they felt the officer had sufficient cargo experience. Some contacted staff within HQ, either in Programs or Operations, with whom they have been in contact in the past. Many interviewees cited that after the reorganization in HQ, it was not clear who within HQ was responsible for addressing regional concerns. Consequently, one region created its own committee in order to analyze regional issues and derive appropriate solutions.

With the exception of Pearson International Airport, commercial air cargo services are not offered on a 24-hour basis. [*]

The [*], the [*], the [*] and audit interviews identified the collusion for criminal purposes of non-CBSA employees working in the airport environment as the highest risk facing commercial air cargo operations. The responsibility for addressing this risk begins outside of Canada at the foreign airport departure. Within Canada, the responsibility is shared by all airport stakeholders, including Transport Canada, airlines, the airport authorities, local police and the Agency. In 2013, the Agency took a key step to mitigate this risk with the phasing in of Customs Controlled Areas, which provide the Agency with the authority to question domestic workers on their activities within designated areas of airports. In addition, regional intelligence officers work with BSOs at airports and tactical intelligence is provided by Intelligence Operations and Analysis within the Operations Branch. The [*] has identified strategies to mitigate this risk.

8.1.3 Overrides

Overrides provide commercial management with the ability to cancel a system-generated examination when operational circumstances warrant. These circumstances have been codified in the Accelerated Commercial Release Operations Support System (ACROSS) Reference Guide. An Agency Enforcement Manual provides the guidelines for overriding examination referrals.

The audit examined all 434 targeted examination overrides in the commercial air cargo stream for the period June 2011 to July 2013. [*]

Regional employees were aware of the reasons for overriding examinations and the requirement for approval. [*] If examinations are not recorded correctly, key information used to identify trends and needed to build more effective and intelligence based pre-arrival cargo risk assessment scenarios may be lost.

The Agency is engaged in an ongoing process to clearly document the reasons for overriding and for improving the use of override codes. Further, the current state of override usage is provided by CBPD in the quarterly publication of the [*] and statistics on random referral overrides are captured as part of the quarterly Agency Performance Summary which are shared with regional management.

8.1.4 Cargo and Aircraft Examinations

As part of the site visits, auditors confirmed that commercial air cargo examinations are being entered into the appropriate reporting systems. The monitoring of the examination results, which is a responsibility of the superintendents, was not always being performed. Although the majority of the superintendents were aware of the number of examinations being performed, they were not cognisant of the quality of the results being entered into the systems. If there is a complaint, examination results are reviewed and corrected. Although this issue may not be unique to commercial air cargo, it creates a risk that the information collected by HQ for the purpose of performance monitoring and measurement may not be accurate.

Currently, there is no national electronic system for recording the results of aircraft examinations. Agency guidelines require aircraft examinations to be recorded on the paper-based K158 form and maintained at the port of examination and reported to Headquarters in the G11 report. [*] Opportunities exist to strengthen the process for recording aircraft examination results.

8.1.5 Collection and Sharing of Information

To report on commercial air cargo performance, the Agency gathers key information such as number of referrals, number of shipments examined and number of shipments examined which contained inadmissible goods. Ideally, HQ should have the capability to monitor and report on the performance of regional operations by extracting data from the Agency’s system. However, the data in the Agency’s systems are not currently viewed as reliable by the Commercial Secondary Unit (CSU), which is responsible for national programs related to at-border secondary examinations or cargo and conveyances. As a result, CSU compiles monthly statistics on the number of cargo and aircraft examinations performed. These statistics are manually maintained by the POEs. During the site visits, the auditors confirmed that HQ requests the POEs to manually provide information relating to the number examination conducted. Although the examination results are entered into the Agency systems, the POEs maintain a manual log of the number of examinations conducted in order to provide HQ with accurate data. These reporting practices pose several risks to the Agency in terms of data integrity, accuracy and efficiency. This issue was also identified in the [*] and the majority of the action items related to this gap have been implemented.

Although the [*] was approved by the Director of CBPD in March 2012 and was shared with regional air chiefs in August 2013 upon the establishment of the National Air Chief Teleconference, there was no evidence that it was shared with oversight committees who play a role in governing the ACP. During the regional site visits, it was also confirmed that the [*] were not shared broadly with regional operations. Without effective information sharing with regions and senior management, the Agency’s efforts to address issues facing the ACP may not be acted upon.

8.1.6 New Initiatives Impact

The ACP has been proceeding with a number of initiatives which contribute to the Agency’s border modernization agenda. Three initiatives include: (i) the 4.2 Commercial Release, a CBSA Deficit Reduction Action Plan (DRAP) initiative, which uses Machine Release Selection in ACROSS to increase the percentage of automatic risk-assessed releases based on pre-determined criteria; (ii) the 4.3 Cargo Control Sufferance Warehouse Modernization Initiative, also a part of DRAP, which has the intent to simplify and automate cargo control and warehouse processes, reducing paper-based control process; and (iii) the Customs Controlled Areas initiative.

The audit found that the Programs Branch had documented project and implementation plans describing these initiatives, which were communicated with the regions. The audit also identified that HQ had conducted several consultations with external stakeholders through various Agency committees such as the Border Commercial Consultative Committee. While strategic discussions occurred with the regions’ senior management teams and training was developed and offered for Customs Controlled Areas, interviewees indicated that there was insufficient consultation on the operational impacts of the initiatives conducted with staff responsible for delivering the day-to-day operations of the ACP. Although concerns over the interdependencies of the initiatives were provided to HQ, there was no evidence that these concerns were addressed. The audit found evidence of risk assessments for the implementation of these initiatives but the impact of some of the initiatives was not fully assessed as they were related to DRAP, which did not permit for detailed consultation prior to implementation. As a result, strategies for addressing any potential risks were not developed.

Recommendation 1:

The Vice-President of the Programs Branch, in collaboration with the Vice-President of the Operations Branch, should strengthen overall governance of commercial air cargo, including clearly defining the roles and responsibilities of Programs and Operations Branches within HQ and improving the monitoring and reporting to the Agency’s oversight committees.

Management Response Completion Date

The Programs and Operations Branches agree with this recommendation.

The Programs and Operations Branches are working together closely to strengthen the governance of commercial air cargo. In 2013, building on the [*], Programs Branch implemented a regular Commercial Air Chief Conference Call to improve the line of communication between the regions and Headquarters, as well as to identify and resolve issues pertaining to the Air Examination Program. Looking forward, by June 2014, the Programs and Operations Branches will provide field officers with increased clarity regarding the roles and responsibilities of Headquarters teams relating to the air cargo program and will strengthen communications with the regions.

With respect to monitoring and reporting, the Programs Branch monitored the recording of examination results in CBSA systems on a monthly basis from September 2011 to March 2013, as a means to “close the loop” in the commercial examination process. The input of quality examination results plays a key role in reporting accurate statistics, identifying new trends and patterns and refining future targeting. Findings have been communicated to the Executive Committee, Commercial Port of Entry Program Management Table, and each report prepared since 2011 has been shared with the regions in order for them to take corrective action. In October 2013, Programs Branch developed a policy on resultant examinations and released an operational bulletin providing regional operations with clearer direction and specific definitions for each examination resultant code applicable to ACROSS. To further improve program monitoring and reporting of program results, the Programs Branch has completed comprehensive business requirements for enhancement to the automated data collection of referrals and related examination results in CBSA systems.

Looking forward, the Operations Branch will conduct Port Programs Assessments to improve the quality of examination results recorded in the system by field officers by November 2014.

November 2014

8.2 Program Delivery

Audit Criteria:

  • Staff responsible for the administration and delivery of air cargo is provided with effective and efficient tools, training and support for the delivery of the program.

8.2.1 Training, Tools and Support

The Agency’s commercial training curriculum is the foundational tool commercial operations BSOs receive prior to regional deployment. In the regions, BSOs complete their commercial training through work experience and at-port mentoring. The Officer Induction Training Program curriculum includes a basic three-day commercial training component to be followed by 10 days of mode-specific training completed by officer trainees at their assigned ports of entry. Basic commercial training also includes a module on cargo examinations and documenting commercial examinations.

The Human Resources Branch designs and delivers training for BSOs which includes commercial training. The 2013 National Training Standards for BSOs establishes training expectations in order to function in the commercial mode. In addition, the Human Resources Branch (HRB) conducts regular reviews, such as the training needs analysis conducted in 2008 and the Training Gap Analysis completed in 2010, and updates the commercial training in order to reflect the current state of the commercial modes.

The audit found that while commercial ACP training is being delivered regionally by local instructors, the content of this training is a mode-specific adaptation of the national commercial training material. This introduces a risk that non-standardized commercial training and delivery will result in the ACP being delivered inconsistently across the regions.

Ports of Entry are expected to be equipped with detection technology that is commensurate to the risks associated with the port. The availability and functionality of examination tools varied across the ports visited. [*]

Gaps relating to training and detection technology were identified by CBPD in the [*] along with six other areas for improvement. An action plan was developed to address these gaps. The action plan contained several action items for addressing the gaps related to detection technology and training. While some of the action items have been implemented, the Agency is progressing towards implementing the remaining items and has planned to fully implement the action plan by 2014–2015.

Recommendation 2:

The Vice-President of the Human Resources Branch, in collaboration with the Vice-Presidents of the Programs and Operations branches, should develop and implement a mechanism to ensure standardized commercial training is delivered in a consistent manner across the regions.

Management Response Completion Date

The HRB, Programs and Operations Branches agree with the recommendation listed in the report on the audit of Air Cargo and will consult with the lead program areas within the Agency to implement national mechanisms to ensure consistency in the delivery of all commercial training across the organization. The HRB Management Action Plan (MAP) builds upon work already in progress such as the implementation of:

  • the National Training Plan, an overarching approach to ensure that all CBSA employees receive the appropriate training to fully exercise their core roles and responsibilities in line with Agency priorities and allocated funds, as well as,
  • National Training Standards are the foundational components that establish national consistency in the overall training program for functional communities.

The MAP will be implemented through the national network of the CBSA College and its satellite campuses to deliver a revised national commercial training curriculum with a coordinated plan for ongoing maintenance and tracking participants.

April 2015

Recommendation 3:

The Vice-President of the Programs Branch should implement the detection technology-related actions developed following the [*] to address the lack of appropriate detection tools based on the risk associated with each POE.

Management Response Completion Date

The Programs, Operations and Information, Science and Technology Branches agree with this recommendation. Detection equipment has been used for two decades to increase the efficiency and effectiveness of examinations. Further to the [*] and its subsequent [*], the Programs Branch completed the “Ideal Port Plan”, reviewed the deployed technology at air cargo locations and conducted a risk assessment of the ten largest air cargo operations to identify port specific risks.

Building on this experience, the Programs Branch will implement measures to further assess port-specific risks and to address key gaps. It should be noted that the absence of detection technology does not prevent effective examinations as border services officers are appropriately trained to conduct examinations without such technology; however, its presence improves the efficiency of examinations.

The Programs Branch, in collaboration with Operations Branch, will use the [*], programmatic assessments, and business cases developed by the regions to further validate risks and vulnerabilities in the air cargo operations. Leveraging the headquarters/regional working group that meets monthly to identify and address detection technology issues, we will update mitigation strategies to address the risks and vulnerabilities identified. The results of this work will be used to modify the “Ideal Port Plan” which identifies a suite of detection technology that would be appropriate for each air cargo operation.

In collaboration with the Information, Science and Technology and Operations Branches, the Programs Branch is commencing the second year of the Agency’s three-year detection technology procurement plan to replace the inventory of detection technology at Air Cargo operations across the country. Based on the updated “Ideal Port Plan” and the current inventory of detection technology, we will ensure the strategic placement and use of detection technology is deployed to the highest risk air cargo locations. These deliverables will be accomplished by March 2015.

March 2015

Appendix A – About The Audit

Audit Objectives And Scope

The Audit Committee of the CBSA approved the Audit of Air Cargo as part of the Risk-Based Audit Plan 2013–2014 to 2015–2016.

The objective of the audit was to determine whether controls and procedures associated with the management and delivery of commercial air cargo examinations were effective and working as intended.

The scope of the audit addressed controls over commercial air cargo shipments arriving at Canadian airports. Effective at-border controls enable Agency personnel to maintain control over goods from the point of entry to final release. The scope of audit fieldwork covered the period between April 2011 and March 2013.

The audit team visited ports of arrival that had the three highest volume commercial air cargo: Toronto, Vancouver and Montréal. The audit team visited three lower volume air cargo ports of entry in order to cover off different sized air cargo processing facilities.

The audit did not examine pre-border processes including air cargo targeting, advanced commercial information, air cargo risk assessment and the machine release selection.

Risk Assessment

A preliminary risk assessment was conducted based on a series of interviews with CBSA program and operational personnel involved with commercial air cargo, and a review of documentation, such as the [*] and the [*].

The risk assessment conducted during the planning phase identified the following high risk areas for Air Cargo:

  • [*]
  • There is a risk that inadmissible shipments are released without detection [*]. As a result, contraband and other unacceptable items could be brought into Canada.
  • [*]

Approach And Methodology

The audit was conducted in accordance with the Treasury Board of Canada Secretariat’s Internal Auditing Standards for the Government of Canada. The audit gathered evidence through interviews and documentation reviews, and analyzed and evaluated the governance and program performance frameworks against select criteria.

The examination phase of this audit was performed using the following approach:

  • Analyzed and assessed the adequacy of management controls in place for air cargo examination.
  • Reviewed risk assessment processes, mitigation strategies and implementation of mitigation strategies.
  • Conducted site visits at airports, conducting interviews and walkthroughs of processes.
  • Interviewed various stakeholders within the Programs and Operations Branches on roles and responsibilities and oversight and monitoring functions in relation to air cargo examination.
  • Reviewed examination overrides that occurred between 2011–2012 and 2012–2013 to ensure they were in compliance with Agency guidelines.

Audit Criteria

Given the preliminary findings from the planning phase, the following criteria were chosen:

Lines of Enquiry Audit Criteria
1. Program Design
  • Roles and responsibilities of air cargo management and other related Agency stakeholders are clearly defined and communicated.
  • Clear objectives, processes, and procedures for cargo and aircraft examinations have been developed and communicated with the regions.
  • Program management provides appropriate program guidance and supports regional activities.
  • New initiatives relating to air cargo are planned, in consultation with regional and stakeholder input, and risks and impacts of the initiatives have been identified and communicated with the regions.
2. Program Delivery
  • Staffs responsible for the administration and delivery of air cargo are provided with effective and efficient tools, training and support for the delivery of the program.
  • Overrides are issued according to the Agency guidelines and only under appropriate circumstances.
  • Cargo and aircraft examination results are entered into the appropriate systems according to guidelines and are monitored by superintendents and chiefs.

Appendix B – List of Acronyms

ACP
Air Cargo Program
ACROSS
Accelerated Commercial Release Operations Support System
Agency or CBSA
Canada Border Services Agency
BSO
Border services officer
CBPD
Commercial Border Program Division
DRAP
Deficit Reduction Action Plan
HQ
Headquarters
POE
Port of entry

Footnotes

Footnote 1

Note: For the purpose of this audit all activities, at HQ and the Regions, performed in relation to commercial air cargo will be referred to as the Air Cargo Program.

Return to footnote 1 referrer

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