(CBS) The U.S. government's system for tracking foreign students is inadequate and the planned improvements won't be ready by a January deadline, the U.S. Justice Department said Monday, in a report examining the movements of two terrorists who flew jetliners into the World Trade Center on Sept. 11.

The report from the department's Office of Inspector General, an oversight office, faults "untimely and significantly flawed" procedures at the beleaguered Immigration and Naturalization Service.

"The INS's foreign student program historically has been dysfunctional, and the INS has acknowledged for several years that it does not know how many foreign students are in the United States," the report states.

It indicates that a 10-month paperwork backlog allowed Mohamed Atta and his cousin, Marwan Al-Shehhi, to finish flight-training at a Florida school more than six months before U.S. officials even could decide whether to give them permission.

But the report does not suggest that the INS could have identified Mohamed Atta and his cousin, Marwan Al-Shehhi, as potential terrorists before Sept. 11, or that the agency acted improperly in allowing each to enter the country three times.

"There was not intelligence information available that these men were terrorists or a threat to the United States at the time of their admission," INS spokesman William Strassberger said.

The report describes computer information — at the heart of the method for tracking foreign students — as "riddled with inaccuracies."

But a new system for tracking foreign students will not be ready by a January 2003 deadline, the report said.

U.S. Attorney General John Ashcroft asked the inspector general to investigate why the INS sent visa approval notices for Atta and Al-Shehhi to the Florida flight school in March, more than six months after the terror attacks. The report faulted the INS for not pulling these follow-up notifications out of its system after the attacks.

"No one thought to even inquire" where Atta's and Al-Shehhi's paperwork was after Sept. 11, the report said. "This was a widespread failure on the part of many individuals."

News of the visa approval sparked outrage from President Bush, who ordered an investigation.

The incident added to scrutiny of the INS in the wake of the Sept. 11 attacks. Congress is enacting legislation to abolish the INS in its current form and split its law enforcement and immigration services functions.

Monday's report came on the heels of another investigative report from the Social Security Association that showed that tens of thousands of foreigners were illegally obtaining Social Security numbers by using fake documents.

The report Monday also said the INS should not have formally approved the requests by Atta and Al-Shehhi for flight training because they left the country before the government gave them permission to become students.

Requests from immigrants who leave the United States before the INS grants approval for their requests are deemed "abandonments" and should be rejected, the inspector general found.

Atta flew to Madrid and Switzerland in January 2001, and Al-Shehhi flew to Morocco and the Netherlands while immigration officials were considering their applications.

U.S. authorities believe Atta, an Egyptian, flew American Airlines Flight 11 into the north tower of the trade center. Al-Shehhi, from the United Arab Emirates, flew United Airlines Flight 175 into the trade center's south tower.

The Justice Department report offers an unprecedented glimpse into the movements of the two hijackers before Sept. 11.

Atta returned to the United States for the third and last time on July 19, arriving at Hartsfield Atlanta International Airport. Al-Shehhi arrived for the last time on May 2 at Miami International Airport. Each time the men arrived, they were routinely questioned and admitted.

Atta underwent additional questioning when he arrived Jan. 10 at Miami, and Al-Shehhi underwent additional questioning Jan. 18 at John F. Kennedy Airport in New York. The report said INS officials knew the pair had previously requested permission to become students and should have presented student visas, not tourist visas.

But the oversight report noted that Atta and Al-Shehhi would have been permitted into the United States if they had told inspectors they planned to attend classes part-time, and it said the INS routinely granted waivers to students before Sept. 11 without the proper paperwork.

"The INS' prevailing philosophy in dealing with foreign students ... before Sept. 11 was that students were not a concern or a significant risk worthy of special scrutiny," the report said.

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