THE INSPECTOR GENERAL
SOCIAL SECURITY ADMINISTRATION
SINGLE AUDIT OF THE
COMMONWEATH OF PUERTO RICO,
DEPARTMENT OF THE FAMILY
FOR THE FISCAL YEAR ENDED
JUNE 30, 1998
We improve SSA programs and operations and protect them against fraud, waste, and abuse by conducting independent and objective audits, evaluations, and investigations. We provide timely, useful, and reliable information and advice to Administration officials, the Congress, and the public.
The Inspector General Act created independent audit and investigative units, called the Office of Inspector General (OIG). The mission of the OIG, as spelled out in the Act, is to:
Conduct and supervise independent and objective audits and investigations relating to agency programs and operations.
Promote economy, effectiveness, and efficiency within the agency.
Prevent and detect fraud, waste, and abuse in agency programs and operations.
Review and make recommendations regarding existing and proposed legislation and regulations relating to agency programs and operations.
Keep the agency head and the Congress fully and currently informed of problems in agency programs and operations.
To ensure objectivity, the IG Act empowers the IG with:
Independence to determine what reviews to perform.
Access to all information necessary for the reviews.
Authority to publish findings and recommendations based on the reviews.
By conducting independent and objective audits, investigations, and evaluations, we are agents of positive change striving for continuous improvement in the Social Security Administration's programs, operations, and management and in our own office.
Office of the Inspector General
Management Analysis and Audit Program Support Staff
From: Assistant Inspector General for Audit
Subject: Single Audit of the Commonwealth of Puerto Rico, Department of the Family for the Fiscal Year Ended June 30, 1998 (A-77-02-00006)
This report presents the Social Security Administration's (SSA) portion of the single audit of the Commonwealth of Puerto Rico, Department of the Family (DOF) for the Fiscal Year ended June 30, 1998. Deloitte & Touche, Certified Public Accountants (CPA) performed the audit and its reports on compliance and internal controls are attached (see Appendix A). Results of the desk review conducted by the Department of Health and Human Services (HHS) have not been received. We will notify you when the results are received if HHS determines the audit did not meet Federal requirements.
The Puerto Rico Disability Determination Services (DDS) performs disability determinations under SSA's Disability Insurance (Dl) and Supplemental Security Income (SSI) programs in accordance with Federal regulations. The DDS is reimbursed for 100 percent of allowable costs. The Puerto Rico DOF is the Puerto Rico DDS' parent agency.
For single audit purposes, the Office of Management and Budget assigns Federal programs a Catalog of Federal Domestic Assistance (CFDA) number. 88A's Dl and 881 programs are identified by CFDA number 96. 88A is responsible for resolving single audit findings reported under this CFDA number.
The single audit reported the following findings (see Appendix B)
Documentation to support expenditures was not available to test the base used for indirect costs. The corrective action plan indicates that DOF disagrees with the finding and that documentation was available but not requested by the auditors.
A reconciliation of physical inventory results with the accounting records was not performed, and accurate records for acquisitions and dispositions of property acquired with SSA funds were not maintained. The corrective action plan indicates that DOF corrected the equipment inventory listing and is working to improve the process and the documentation of its inventory.
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DDS expenditures of $170,768 were not supported by documentation. The corrective action plan indicates that DOF disagrees with the finding and states that documentation was provided for all disbursements requested by the auditors.
We recommend that SSA:
1. Ensure that the DDS has a system in place to retain accounting records and supporting documentation for the time period required by applicable requirements and regulations.
2. Verify that the DDS has procedures in place to reconcile inventory results with accounting records and to maintain accurate records for acquisition and disposition of property purchased with SSA funds.
3. Determine whether the $170,768 in undocumented expenditures was allowable and recover any portion which is not allowable.
The single audit also disclosed the following findings that may impact DDS operations, although they were not specifically identified to SSA. Some of these findings were reported for several DOF programs indicating pervasive problems within DOF. If the finding was reported in more than one DOF program, we identify the number of times the finding was reported in parenthesis at the end of each finding. I am bringing these matters to your attention as they represent potentially serious service delivery and financial control problems for the Agency (see Appendix C).
Financial statements were not prepared in conformity with Generally Accepted Accounting Principles due to a lack of policies, procedures, and financial reporting practices. Therefore, management did not have accurate and complete financial information on a timely basis to carry out other duties.
Procedures were not in place to ensure financial reports are completed and submitted timely (2).
Supporting documentation and accounting records were not retained for expenditures charged to Federal funds (18).
DOF did not verify if parties were debarred or suspended when contracting for services or procuring goods with Federal funds (2).
A system was not in place to prepare and implement corrective action plans and clear audit findings in a timely fashion.
DOF did not follow required bidding procedures for procurement and contracting activities (5).
Property and equipment management procedures were not adequate (2).
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Transactions were not reviewed to ensure that payments agree with invoice amounts.
DOF expended Federal funds for costs that benefited other programs (6).
Periodic reviews of cash management transactions for compliance with the Cash Management Improvement Act (CMIA) agreement were not conducted.
The Financial Status Report did not agree with the general ledger (2).
DOF did not calculate and report interest liabilities that may be owed to the Federal government.
Fiscal evaluations were not performed to ensure funds were expended for allowable activities.
DOF expended Federal funds for unallowable costs (4 ). .
Please send copies of the final Audit Clearance Document to Mark Bailey in Kansas City and Paul Wood in Baltimore. If you have questions contact Mark Bailey at (816) 936-5591.
Some items such as graphics
or charts used in reports were unable to be converted to internet format at
this time. Therefore, if you would like a copy of the full report please write:
Office of the Inspector General
300 Altmeyer Bldg.
6401 Security Blvd.
Baltimore MD 21235
Overview of the Office of the Inspector General
Office of Audit
The Office of Audit (OA) conducts comprehensive financial and performance audits of the Social Security Administration’s (SSA) programs and makes recommendations to ensure that program objectives are achieved effectively and efficiently. Financial audits, required by theChief Financial Officers Act of 1990, assess whether SSA’s financial statements fairly present the Agency’s financial position, results of operations, and cash flow. Performance audits review the economy, efficiency, and effectiveness of SSA’s programs. OA also conducts short-term management and program evaluations focused on issues of concern to SSA, Congress, and the general public. Evaluations often focus on identifying and recommending ways to prevent and minimize program fraud and inefficiency.
Office of Executive Operations
The Office of Executive Operations (OEO) provides four functions for the Office of the Inspector General (OIG) – administrative support, strategic planning, quality assurance, and public affairs. OEO supports the OIG components by providing information resources management; systems security; and the coordination of budget, procurement, telecommunications, facilities and equipment, and human resources. In addition, this Office coordinates and is responsible for the OIG’s strategic planning function and the development and implementation of performance measures required by the Government Performance and Results Act. The quality assurance division performs internal reviews to ensure that OIG offices nationwide hold themselves to the same rigorous standards that we expect from the Agency. This division also conducts employee investigations within OIG. The public affairs team communicates OIG’s planned and current activities and the results to the Commissioner and Congress, as well as other entities.
Office of Investigations
The Office of Investigations (OI) conducts and coordinates investigative activity related to fraud, waste, abuse, and mismanagement of SSA programs and operations. This includes wrongdoing by applicants, beneficiaries, contractors, physicians, interpreters, representative payees, third parties, and by SSA employees in the performance of their duties. OI also conducts joint investigations with other Federal, State, and local law enforcement agencies.
Counsel to the Inspector General
The Counsel to the Inspector General provides legal advice and counsel to the Inspector General on various matters, including: 1) statutes, regulations, legislation, and policy directives governing the administration of SSA’s programs; 2) investigative procedures and techniques; and 3) legal implications and conclusions to be drawn from audit and investigative material produced by the OIG. The Counsel’s office also administers the civil monetary penalty program.