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, 1999
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
Date: JAN 30, 2002
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, 1999 (A-77-02-00007)
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, 1999. Deloitte & Touche LLP, 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 DDS's parent agency.
For single audit purposes, the Office of Management and Budget assigns Federal programs a Catalog of Federal Domestic Assistance (CFDA) number. SSA's Dl and SSI programs are identified by CFDA number 96. SSA 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.
Fiscal evaluations were not performed to ensure that disbursements of $172,354 were allowable. The corrective action plan indicates that DOF disagrees with the finding stating that the Department's manual does not require a formal fiscal evaluation for each purchase.
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DDS expenditures of $4,214,001 were not supported by documentation. The corrective action plan indicates that DOF disagrees with the finding citing that all documents were available except for one job plan which was subsequently provided to the auditors.
The Financial Status Reports claimed expenditures of $899,764 greater than amounts recorded in the general ledger. The corrective action plan indicates that reconciliations were not up to date and coordination between Program and Department officials will be scheduled to resolve this issue.
We recommend that SSA:
1. Ensure 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. Ensure the DDS has procedures in place for performing fiscal evaluations including comparing expenditures with budget amounts prior to making disbursements.
3. Determine whether expenditures of $172,354 not properly reviewed prior to disbursement are allowable and recover that portion which is not allowable.
4. Determine whether the $4,214,001 in undocumented expenditures was allowable and recover that portion which is not allowable.
5. Ensure that procedures are in place to reconcile the Financial Status Reports to the general ledger.
6. Determine whether the Financial Status Report incorrectly overstated DDS expenditures by $899,764 and recover any unallowable costs.
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.
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Procedures were not in place to ensure financial reports are completed and submitted timely (3).
Supporting documentation and accounting records were not retained for expenditures charged to Federal funds (19).
DOF did not verify if parties were debarred or suspended when contracting for services or procuring goods with Federal funds.
A system was not in place to prepare and implement corrective action plans and clear audit findings in a timely fashion.
Payroll disbursements were not properly recorded.
Property and equipment management procedures were not adequate (4).
DOF did not follow required bidding procedures for procurement and contracting activities (2).
The Financial Status Report did not agree with the general ledger (2).
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.
Fiscal evaluations were not performed to ensure funds were expended for allowable activities (2).
Evidence to support the drawdown of Federal funds could not be located.
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Please send copies of the final Audit Clearance Document to Mark Bail.ey 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.