THE INSPECTOR GENERAL
SOCIAL SECURITY ADMINISTRATION
CLAIMED BY THE FLORIDA
DIVISION OF DISABILITY
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
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.
Date: September 25, 2003
To: Paul D. Barnes
Regional Commissioner Atlanta
From: Assistant Inspector General for Audit
Subject: Administrative Costs Claimed by the Florida Division of Disability Determinations (A-08-03-13006)
The objectives of our audit were to (1) evaluate the Florida Division of Disability Determinations’ (FL-DDD) and the Florida Department of Health’s (FL-DH) internal controls over the accounting and reporting of administrative costs and (2) determine whether costs claimed were allowable and properly allocated and funds were properly drawn.
The Disability Insurance (DI) program was established in 1954 under Title II of the Social Security Act (Act). The program provides a benefit to wage earners and their families in the event the wage earner becomes disabled. The Supplemental Security Income (SSI) program was created as a result of the Social Security Amendments of 1972 with an effective date of January 1, 1974. SSI (Title XVI of the Act) provides a nationally uniform program of income to financially needy individuals who are aged, blind, and/or disabled.
The Social Security Administration (SSA) is primarily responsible for implementing policies governing the development of disability claims under the DI and SSI programs. Disability determinations under both DI and SSI are performed by Disability Determination Services (DDS) in each State or other responsible jurisdictions. Such determinations are required to be performed in accordance with Federal law and underlying regulations. In carrying out its obligation, each DDS is responsible for determining claimants' disabilities and ensuring adequate evidence is available to support its determinations. To assist in making proper disability determinations, each DDS is authorized by SSA to purchase such consultative medical examinations as x-rays and laboratory tests to supplement evidence obtained from the claimants' physicians or other treating sources.
SSA authorizes an annual budget to reimburse the DDS for 100 percent of allowable expenditures. Once SSA approves the annual budget, the DDS withdraws Federal funds through the Department of the Treasury's (Treasury) Automated Standard Application for Payments system. The DDS is required to draw funds according to Federal regulations and in accordance with intergovernmental agreements entered into by Treasury and the States under the authority of the Cash Management Improvement Act of 1990 (CMIA). At the end of each fiscal quarter, each DDS is required to submit to SSA a State Agency Report of Obligations for SSA Disability Programs (Form SSA-4513) to account for program disbursements and unliquidated obligations.
FL-DDD is a component of the FL-DH. Indirect costs are allocated according to the FL-DH Cost Allocation Plan, which is required to be approved by the Department of Health and Human Services (HHS) on behalf of the Government. Before January 1, 2000, FL-DDD was a component of the Florida Department of Labor (FL-DL). The Division of Disability Determinations was transferred to FL-DH effective January 1, 2000, and FL-DL ceased to exist on July 1, 2002.
SCOPE AND METHODOLOGY
We reviewed the administrative
costs FL-DDD reported on its Form SSA-4513 for Fiscal Years (FY) 1999 through
For the periods reviewed, we obtained
evidence to evaluate recorded financial transactions and determine whether
they are allowable under Office of Management and Budget (OMB) Circular A-87,
Cost Principles for State, Local and Indian Tribal Governments, and appropriate,
as defined by SSA’s Program Operations Manual System (POMS).
• reviewed applicable Federal regulations and pertinent parts of POMS, DI 39500, DDS Fiscal and Administrative Management, and other instructions pertaining to administrative costs incurred by FL-DDD and draw down of SSA funds covered by the CMIA;
• interviewed staff at FL-DDD, FL-DH and SSA Region IV Center for Disability Operations;
• reviewed State policies and procedures related to personnel, medical services, and all other non-personnel costs;
• reviewed the Memorandum of Understanding between SSA and the FL-DH for non-SSA work;
• evaluated and tested internal controls regarding accounting and financial reporting and cash management activities;
• reviewed the reconciliation of official State accounting records to the administrative costs reported by FL-DDD on Form SSA-4513 for FYs 1999 through 2001;
• examined the administrative
expenditures (personnel, medical service, and all other non-personnel costs)
incurred and claimed by FL-DDD for FYs 1999
through 2001 on Form SSA-4513. We used statistical sampling to select documents
to test for support of the medical service and all other non-personnel costs
(see Appendix B);
• examined the indirect costs claimed by FL-DDD for FYs 1999 through 2001 and the corresponding FL-DH Cost Allocation Plans;
• compared the amount of SSA funds drawn to support program operations to the allowable expenditures reported on Form SSA-4513;
• reviewed the State of Florida Auditor General’s Single Audit reports for the period July 1, 1998 through June 30, 2001; and
• conducted a physical inventory test including (1) equipment items FL-DH purchased during our audit period and (2) selected computer hardware items SSA provided FL-DDD.
We performed work at FL-DDD
offices in Tallahassee and Jacksonville, Florida, and FL-DH offices in Tallahassee,
Florida. We conducted our audit from June 2002 through May 2003 in accordance
with generally accepted government auditing standards.
RESULTS OF REVIEW
The FL-DH and FL-DDD had adequate internal controls over accounting and reporting of administrative costs and draw downs. Our tests of the amounts FL-DH reported on Forms SSA 4513 provided reasonable assurance FL-DH had correctly reported the administrative costs ($207,863,679) FL-DDD incurred for disability determination activities during our audit period (see Table 1 and Appendix C). Our tests of FL-DH’s claimed costs also showed the sampled expenditures were allowable and allocable and funds were properly drawn.
Table 1: FL-DDD Administrative Cost Claimed for FYs 1999 through 2001
Obligations Total Disbursements Unliquidated
Personnel $118,501,359 $118,501,138 $ 221
Medical 56,471,081 56,400,806 70,275
Indirect 8,034,396 8,034,373 23
All Other 24,856,843 24,855,306 1,537
Total $207,863,679 $207,791,623 $72,056
We concluded FL-DH and FL-DDD complied with laws, regulations, policies and procedures governing expenditures and obligations incurred for SSA’s disability program for FYs 1999 through 2001. Specifically, we concluded FL-DH and FL-DDD had adequate internal controls over accounting and reporting of administrative costs and draw downs of SSA funds for the period under review. Administrative costs claimed were allowable and properly allocated, and funds were properly drawn.
Steven L. Schaeffer
APPENDIX A – Acronyms
APPENDIX B – Sampling Methodology
APPENDIX C – Florida Division of Disability Determinations Reported Versus Allowed Obligations
APPENDIX D – Social Security Administration Comments
APPENDIX E – Florida Division of Disability Determinations’ Comments
APPENDIX F – OIG Contacts and Staff Acknowledgments
Act Social Security Act
C.F.R. Code of Federal Regulations
CMIA Cash Management Improvement Act
DI Disability Insurance
DDS Disability Determination Services
FL-DL Florida Department of Labor
FL-DDD Florida Division of Disability Determinations
FL-DH Florida Department of Health
FY Fiscal Year
HHS Department of Health and Human Services
OIG Office of the Inspector General
OMB Office of Management and Budget
POMS Program Operations Manual System
SSA Social Security Administration
SSI Supplemental Security Income
Treasury Department of the Treasury
U.S.C. United States Code
Our sampling methodology encompassed the four general areas of costs as reported on Form SSA-4513: (1) Personnel, (2) Medical, (3) Indirect, and (4) All Other Non-personnel Costs. We obtained computerized data from the Florida Division of Disability Determinations (FL-DDD) for Fiscal Years (FY) 1999 through 2001 for use in statistical sampling. After selecting and reviewing randomly selected samples, we did not identify errors we felt warranted audit projection.
We judgmentally sampled seven employees and three contractors from one pay period in each of the FYs 1999 through 2001. We tested FL-DDD’s payroll records to ensure it correctly paid employees and adequately documented these payments.
We sampled 150 items (50 items from each FY) using a stratified random sample. We stratified medical costs into Medical Evidence of Record and Consultative Examinations and selected more consultative examination invoices because these costs represented 74 percent of all medical costs.
We reviewed the indirect cost base and computations used to determine those costs for reimbursement purposes. Our objective was to ensure the Social Security Administration reimbursed FL-DDD in compliance with the State Cost Allocation Plan. We reviewed the spreadsheets and traced the base amounts back to Form SSA-4513 for the indirect cost computation components.
All Other Non-personnel Costs
We selected a stratified random sample of 162 items (54 expenditures from
each FY) from All Other Non-personnel Costs. We stratified All Other Non-personnel
Costs into seven cost categories: (1) Care and Subsistence, (2) Staff Travel,
(3) Communications, (4) Equipment and Capital Outlays, (5) Independent Contractors,
(6) Miscellaneous, and (7) Occupancy. We selected a stratified random sample
of 50 items from each FY based on the percentage of costs in each category
(excluding occupancy) to total costs. We also selected a judgmental sample
of occupancy expenditures from each FY for the Occupancy category. We did not
identify errors we felt warranted audit projection.
FLORIDA DIVISION OF DISABILITY DETERMINATIONS REPORTED VERSUS ALLOWED OBLIGATIONS
Fiscal Year 2001
Disbursements Personnel Medical Indirect All Other Total
As Reported by the FL-DDD $41,389,684 $19,639,290 $3,571,704 $7,883,999 $72,484,677
Unliquidated Obligations 221 70,275 23 1,537 72,056
Allowed as a Result of Audit $41,389,905 $19,709,565 $3,571,727 $7,885,536 $72,556,733
Fiscal Year 2000
Disbursements Personnel Medical Indirect All Other Total
As Reported by the FL-DDD $39,509,823 $18,810,744 $2,275,076 $8,598,979 $69,194,622
Unliquidated Obligations 0 0 0 0 0
Allowed as a Result of Audit $39,509,823 $18,810,744 $2,275,076 $8,598,979 $69,194,622
Fiscal Year 1999
Disbursements Personnel Medical Indirect All Other Total
As Reported by the FL-DDD $37,601,631 $17,950,772 $2,187,593 $8,372,328 $66,112,324
Unliquidated Obligations 0 0 0 0 0
Allowed as a Result of Audit $37,601,631 $17,950,772 $2,187,593 $8,372,328 $66,112,324
Social Security Administration Comments
Date: September 11, 2003
To: Assistant Inspector General for Audit
From: Regional Commissioner Atlanta
Subject: Florida State DDS Audit -- RESPONSE to Your Memorandum (undated)
Thank you for the opportunity to comment on the validity of the facts and reasonableness of the recommendations presented in your report of the audit (# A 08-03-13006) on the Administrative Costs Claimed by the Florida Disability Determination Services (DDS).
There were no recommendations made from this audit because the auditors concluded that the Florida Department of Health and the Florida DDS complied with laws, regulations, policies and procedures governing expenditures and obligations incurred for SSA’s disability program for Fiscal Years 1999 through 2001.
Please contact me if I can be of further assistance. Staff questions should be referred to Karen Killam (404) 562-5727 or Josie Irwin at (404) 562-1407.
Paul D. Barnes
[SSA also provided a technical
comment which has been addressed in this report.]
Florida Division of Disability Determinations’ Comments
OIG Contacts and Staff Acknowledgments
Walter Bayer, Director, (215) 597-4080
Jeff Pounds, Deputy Director, (205) 801-1606
In addition to those named
Kathy Youngblood, Senior Auditor
Ellen Justice, Auditor
Theresa Roberts, Auditor
Kimberly Beauchamp, Writer/Editor
For additional copies of this report, please visit our web site at www.ssa.gov/oig or contact the Office of the Inspector General’s Public Affairs Specialist at (410) 966-1375. Refer to Common Identification Number A-08-03-13006.
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 the Chief 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, rather than detecting problems after they occur.
Office of Executive Operations
The Office of Executive
Operations (OEO) supports the Office of the Inspector General (OIG) by providing
resource management; systems security;
and the coordination of budget, procurement, telecommunications, facilities
and equipment, and human resources. In addition, this office is the focal point
for the OIG’s strategic planning function and the development and implementation
of performance measures required by the Government Performance and Results
Act. OEO is also responsible for performing internal reviews to ensure that
OIG offices nationwide hold themselves to the same rigorous standards that
we expect from the Agency, as well as conducting employee investigations within
OIG. Finally, OEO administers OIG’s public affairs, media, and interagency
activities and also communicates OIG’s planned and current activities
and their results to the Commissioner and Congress.
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