SOCIAL SECURITY ADMINISTRATION
DEPARTMENT OF HUMAN
SERVICES - AN ORGANIZATIONAL
REPRESENTATIVE PAYEE FOR THE
SOCIAL SECURITY ADMINISTRATION
By conducting independent and objective audits, evaluations and investigations, we inspire public confidence in the integrity and security of SSA's programs and operations and protect them against fraud, waste and abuse. We provide timely, useful and reliable information and advice to Administration officials, 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.
We strive for continual improvement in SSA's programs, operations and management by proactively seeking new ways to prevent and deter fraud, waste and abuse. We commit to integrity and excellence by supporting an environment that provides a valuable public service while encouraging employee development and retention and fostering diversity and innovation.
Date: September 2, 2008
To: Peter D. Spencer
Regional Commissioner San Francisco
From: Inspector General
Subject: Hawaii Department of Human Services - An Organizational Representative Payee for the Social Security Administration (A-09-08-28045)
Our objectives were to determine whether the Hawaii Department of Human Services (HI DHS) (1) had effective safeguards over the receipt and disbursement of Social Security benefits and (2) used and accounted for Social Security benefits in accordance with Social Security Administration (SSA) policies and procedures.
Some individuals cannot manage or direct the management of their finances because of their youth or mental and/or physical impairments. Congress granted SSA the authority to appoint representative payees to receive and manage these beneficiaries' payments. A representative payee may be an individual or an organization. SSA selects representative payees for Old Age, Survivors and Disability Insurance (OASDI) beneficiaries or Supplemental Security Income (SSI) recipients when representative payments would serve the individuals' interests. Representative payees are responsible for managing benefits in the beneficiary's best interest. Refer to Appendix B for additional representative payee responsibilities.
HI DHS is a social services agency for the State of Hawaii. HI DHS' Social Services Division, Child Welfare Services Branch, administers the foster care program for Hawaii. HI DHS provides adoption, foster care, and protective services to children and their families. From July 1, 2006 through June 30, 2007, we estimate that HI DHS received about $740,000 in OASDI and SSI benefits on behalf of 191 children who were in foster care.
As a representative payee, HI DHS uses three operational units to fulfill its responsibilities. These units include social workers, eligibility workers, and fiscal employees. The social workers maintain contact with the beneficiaries and foster homes and approve expenses necessary for the cost of care. The eligibility workers apply for sources of funding on behalf of the beneficiaries. Within the Accounting unit, the fiscal employees receive, record, and deposit the Social Security benefits.
RESULTS OF REVIEW
Our audit disclosed that HI DHS did not (1) have effective safeguards over the receipt and disbursement of Social Security benefits or (2) use and account for those benefits in accordance with SSA policies and procedures. We found that 39 (78 percent) of the 50 beneficiaries in our sample had 1 or more errors. These errors generally occurred because HI DHS did not fully understand its representative payee responsibilities, and there was a lack of communication within HI DHS and between HI DHS and SSA. As a result, HI DHS owed 36 beneficiaries $114,680 in conserved funds and needs to repay SSA $65,180 in overpayments for 8 beneficiaries. We also estimate that HI DHS owes about $323,400 in conserved funds to an additional 101 children and was overpaid about $183,790 in benefits for an additional 22 children (see Appendix D). Specifically, HI DHS
did not promptly report changes in beneficiary circumstances to SSA,
improperly accounted for the Social Security benefits of its beneficiaries, and
did not obtain SSA approval to use retroactive benefits to reimburse itself for prior foster care expenses.
Although we found significant deficiencies in HI DHS' representative payee
activities, interviews with a sample of foster care parents and children disclosed
these children's basic needs were generally met. In addition, HI DHS has taken
corrective action on
some of the errors identified during our review and initiated plans to improve its performance as a representative payee. However, SSA needs to ensure these deficiencies have been fully addressed and corrected.
REPORTING CHANGES IN BENEFICIARY CIRCUMSTANCES
Our review disclosed that HI DHS did not promptly report changes in beneficiary circumstances to SSA. Specifically, we found that HI DHS did not timely notify SSA about (1) children who were no longer in its care, (2) children who moved into Hawaii Department of Health (HI DOH) foster homes, and (3) children who received concurrent SSI and Title IV E benefits.
SSA policy requires that representative payees report any changes to SSA that may affect the individual's entitlement or amount of payment. Representative payees must report any changes of custody and return any benefits to which the beneficiary is not entitled. Any conserved funds or unused benefits must be returned to SSA. In addition, SSA's Guide for Organizational Representative Payees requires that payees report to SSA if a child beneficiary moves, dies, works, is incarcerated, begins to live with someone else, is adopted or marries.
Children Who Were No Longer in HI DHS' Care
HI DHS did not timely report to SSA nine children who were no longer in its care. We found that four of these children had been adopted and the remaining five were not in HI DHS' care for various reasons, such as incarceration. Since SSA was unaware of these changes, it continued to make payments to HI DHS on behalf of these children. As a result, HI DHS received $51,300 in improper payments, including $30,470 in overpayments and $20,830 in benefits that should have been returned to SSA.
HI DHS had not established adequate controls to report changes in custody to SSA timely. HI DHS relied on its social workers to notify both SSA and its Accounting unit when a child had left its care. However, HI DHS did not ensure that changes in custody were reported timely.
For example, in October 2003, HI DHS was selected as the representative payee for a child who received SSI. The child was incarcerated in June 2004 and remained confined until April 2007. HI DHS' jurisdiction over this child was terminated in June 2006. However, SSA was not notified about these events and continued to make SSI payments to HI DHS through April 2007. Although HI DHS did not pay for any costs of the child's care after June 2004, the Accounting unit placed all the SSI payments in Hawaii's general fund to reimburse the State for its care. As a result, HI DHS improperly received $19,496 in SSI payments for 33 months after the child had been incarcerated. Finally, as a result of our audit, SSA obtained the dates the child was incarcerated so it could establish and recover the overpayment.
Children Who Moved into HI DOH Foster Homes
HI DHS did not report to SSA that four children had moved into HI DOH foster homes. These children were placed in therapeutic foster homes and residential settings that provided specialized services through HI DOH. Although HI DHS still had legal custody of these children, it did not pay for the cost of the children's care during their time in the foster homes. SSA continued to disburse OASDI and SSI payments to HI DHS because it was not aware of these changes. The Accounting unit was also unaware of these changes and improperly placed most of the benefits in Hawaii's general fund to reimburse itself for the cost of the children's care. As a result, HI DHS received $29,790 in SSI overpayments and $12,600 in OASDI and SSI payments that should have been saved or used for the children's other needs.
Two of the four children were receiving OASDI benefits. HI DHS should have saved or spent these benefits for the children's other needs. The remaining two children received SSI payments that should have been saved or spent on their behalf. Had most of these benefits been saved, the children would have exceeded the $2,000 SSI resource limit in about 5 months after they entered the HI DOH foster homes. Since the Accounting unit was unaware that HI DHS had not paid for the cost of care for these four children, it improperly placed $42,390 into Hawaii's general fund rather than saving or spending the benefits on the children's behalf.
Children Who Received Concurrent SSI and Title IV E Benefits
HI DHS did not report to SSA that it received Title IV E benefits for two SSI recipients. Although HI DHS generally does not obtain Title IV E benefits for children who receive SSI payments, it needs to ensure these events are reported to SSA timely. As a result, two SSI recipients were overpaid $4,920 from July 2006 to June 2007.
SSA policy states that, if the source of payments for the care is federally funded income based on need (for example, foster care under Title IV E), the total payment is considered cash income to the individual, and the SSI payment is reduced dollar for dollar.
IMPROPER ACCOUNTING FOR BENEFITS
Our review disclosed that HI DHS did not properly account for the Social Security benefits of its beneficiaries. Specifically, we found that HI DHS (1) improperly used OASDI benefits of children who also received Title IV E benefits, (2) did not conserve or return funds to SSA, (3) had not accurately recorded expenditures, (4) did not timely record benefit payments, (5) had not established a dedicated account for SSI recipients, and (6) did not establish direct deposit for all beneficiaries.
Use of OASDI Benefits for Children Who Received Title IV E Benefits
HI DHS did not properly account for the OASDI benefits received for 13 children who also received Title IV E benefits. Contrary to Federal regulations, HI DHS used OASDI benefits to partially reimburse itself for the foster care payments it disbursed to the children's providers. HI DHS was unaware that it could not reimburse itself for the State's share of Title IV E costs from a child's OASDI benefits. As a result, 13 children did not receive $43,050 in OASDI benefits to which they were entitled.
The Foster Care and Adoption Assistance Program, authorized under Title IV E of the Social Security Act, helps States provide care for children who need placement in a foster family home or institution. The program provides Federal matching funds to States that administer the program. Title IV E benefits are administered by the Department of Health and Human Services, Administration for Children and Families.
Federal regulations prohibit HI DHS from using a child's OASDI benefits to reimburse itself for the State's share of Title IV E costs. To receive Federal Title IV E benefits, HI DHS must pay its share of the foster care costs with State funds. Therefore, the OASDI benefits for a child who also receives Title IV E benefits must be saved or used for a child's other needs.
For example, HI DHS received Title IV E benefits for a child who received $492 in monthly OASDI benefits. The Accounting unit placed all the OASDI benefits in Hawaii's general fund to reimburse the State for the $529 of monthly foster care payments it made to provide care for the child. Therefore, none of the $5,332 in OASDI benefits was saved or used for the child's other needs from July 2006 to June 2007. As a result of our audit, HI DHS plans to revise its procedures to require that the Accounting unit properly account for OASDI benefits for children who also receive Title IV E benefits.
Funds Not Conserved or Returned to SSA
HI DHS did not return $19,710 in conserved funds to SSA for five children who were no longer in its care. In addition, HI DHS did not return $3,500 in erroneous SSI payments to SSA for three children and conserve $7,270 in excess funds for four children. As a result, HI DHS improperly held $23,210 in funds for eight children and did not conserve $7,270 for four children.
SSA policy requires that representative payees who are no longer serving as payee for an individual return any funds to SSA for reissuance to either the successor payee or the beneficiary in direct payment. Any benefits a former representative payee receives must be returned to SSA. SSA policy also requires that representative payees use OASDI and SSI payments for the immediate or reasonably foreseeable needs of the beneficiary. Any remaining benefits must be conserved or invested for the beneficiary. In addition, SSA policy states that SSI dedicated funds can only be used for a child's medical treatment, education or job skills training, expenses related to his personal needs assistance, special equipment, housing modification, therapy or rehabilitation, or other items or services approved by SSA.
HI DHS had not established adequate controls to ensure conserved funds or benefit payments received after a child is no longer in its care are returned to SSA. HI DHS relied on its social workers to notify its Accounting unit when funds should be returned to SSA. However, HI DHS did not always adjust its accounting ledgers for unreported changes in custody. Therefore, HI DHS often did not return any funds or the correct amount to SSA because the accounting ledgers were not accurate.
For 5 children, HI DHS did not return conserved funds to SSA for beneficiaries who were no longer in its care. For three children, HI DHS did not return erroneous SSI payments to SSA. For three children, HI DHS received benefits in excess of the foster care payments but did not instruct the Accounting unit to conserve any benefits. For one child, HI DHS improperly used SSI dedicated account funds that should have been conserved for the beneficiary.
For example, in August 2007, a social worker submitted a request to the Accounting unit to return $2,900 in OASDI funds to SSA for a child who was adopted in February 2006. However, the Accounting unit was unaware the child had been adopted and continued to account for the benefits and expenses as if the child was still in HI DHS' custody. Since the Accounting unit did not correct the accounting records after it learned of the adoption, HI DHS only returned $2,900 of the $8,720 owed the child. The remaining $5,820 in conserved funds was not returned.
Expenditures Not Recorded Accurately
HI DHS did not accurately record expenditures for seven children. We found that HI DHS recorded monthly expenditures of $13,670 when the correct amount should have been $5,950. These errors primarily occurred because the social workers did not notify the Accounting unit of changes in the amount of monthly expenses for its beneficiaries. As a result, HI DHS overstated the monthly foster care expenses by $7,720 and did not conserve these funds for its beneficiaries.
SSA policy requires that representative payees use OASDI and SSI payments for the immediate or reasonably foreseeable needs of the beneficiary. Any remaining benefits must be conserved or invested for the beneficiary.
Benefit Payments Not Recorded Timely
HI DHS did not record benefit deposits timely for 40 beneficiaries. HI DHS received the OASDI or SSI payments by direct deposit but did not obtain bank deposit information from its Department of Budget and Finance for about 45 days after the month in which the deposit was made. Therefore, the Accounting unit recorded deposits to the accounting ledgers about 2 or 3 months after the benefits were deposited. As a result, HI DHS was unable to adequately monitor the amount of resources for SSI recipients or timely determine the amount of benefits available for each child.
SSA's Guide for Organizational Representative Payees requires that such payees establish some form of a payee accounting system that will track for each beneficiary the amount of benefits received, expended, and saved. The Guide also requires that the payee post all income and expenses in a timely manner.
HI DHS stated it has initiated corrective action to post benefit deposits timely. During our review, the Department of Budget and Finance agreed to provide the Accounting unit with deposit information each week.
Dedicated Account Not Established for SSI Recipients
HI DHS had not established a dedicated account for large past due payments for SSI recipients. This occurred, in part, because of misinformation about the options available for establishing these accounts as well as complexities in Hawaii's accounting and banking procedures. Because of the lack of a dedicated account, SSA did not disburse $29,700 in past due SSI payments to four disabled foster care children.
The Act requires that representative payees establish and maintain an account in a financial institution for certain large past due payments for SSI recipients under age 18. These dedicated accounts must be maintained separately from other savings or checking accounts for the beneficiary. A representative payee may use an approved collective account for more than one beneficiary's dedicated account funds. Except for certain past due payments that may be received later, no additional funds can be deposited in the separate account. In addition, the Act restricts how dedicated account funds may be used. A representative payee is allowed to use the funds for the child's medical treatment and education or job skills training. Other expenses may be allowed if they benefit the child or are related to the child's impairment.
HI DHS was unaware it could open a collective account for the dedicated funds. Instead, HI DHS believed that a separate bank account for each child was required. HI DHS had explored various options to establish dedicated accounts but encountered problems because of the State's accounting and banking procedures. However, during our review, HI DHS stated it could obtain a collective account, in its State accounting system, for dedicated funds.
During an interview with the foster parent of a child who was owed $4,672 in dedicated funds, we were informed the child had needs that could have been met with these funds. The foster parent indicated the child needed a new pair of special shoes with braces, which cost about $600. Unless a dedicated account is established, SSI recipients may not receive large past due payments to which they are entitled.
Direct Deposit Not Established for All Beneficiaries
We found that 35 (29 percent) of the 120 beneficiaries in current pay status received their benefits by paper checks rather than direct deposit. After SSA reviewed HI DHS' representative payee activities in 2006, HI DHS converted most of its beneficiaries to direct deposit. However, many of the children who entered HI DHS' custody after that time still received paper checks.
SSA's Guide for Organizational Representative Payees encourages that such payees have funds directly deposited to an interest bearing account. Direct deposit is a more secure way of receiving payments and protects beneficiaries from the loss, theft, or delays associated with mailing paper checks. In addition, direct deposit saves the time and effort of processing benefit checks.
USE OF RETROACTIVE BENEFITS TO OFFSET PRIOR FOSTER CARE EXPENSES
HI DHS did not obtain SSA approval to reimburse itself for prior foster care expenses from the retroactive benefit payments of two children. For some children, the first check received by a representative payee is for past-due benefits. For two children in our sample, HI DHS received $14,000 in past-due benefits. HI DHS stated that most of its employees were not aware of the requirement to obtain SSA approval before reimbursing itself for prior foster care expenses from a child's retroactive benefit payment.
Generally, a representative payee may satisfy beneficiaries' past debts if their current and reasonably foreseeable needs are met. However, a creditor payee must obtain SSA approval before it uses benefits to reimburse itself. For foster care agencies that request payment of past charges for care and maintenance, SSA must obtain a bill or statement of the amount owed. The statement should designate the months for which care was provided and the monthly customary care charges.
CONCLUSIONS AND RECOMMENDATIONS
HI DHS had significant internal control weaknesses that prevented it from meeting its responsibilities as a representative payee. In addition, SSA previously identified and reported many of these same weaknesses during prior reviews. We found that 39 (78 percent) of the 50 beneficiaries in our sample had 1 or more errors. These errors generally occurred because HI DHS did not fully understand its representative payee responsibilities, and there was a lack of communication within HI DHS and between HI DHS and SSA. As a result, HI DHS owed 36 beneficiaries $114,680 in conserved funds and needs to repay SSA $65,180 in overpayments for 8 beneficiaries. We also estimate that HI DHS owes about $323,400 in conserved funds to an additional 101 children and was overpaid about $183,790 in benefits for an additional 22 children (see Appendix D).
HI DHS had taken corrective action on some of the errors identified during our review and initiated plans to improve its performance as a representative payee. However, HI DHS should provide SSA with a corrective action plan to ensure these deficiencies are fully addressed. Given the pervasiveness of the conditions identified, we believe SSA and HI DHS should thoroughly review the receipt and disbursement of Social Security benefits for all beneficiaries in HI DHS' care. We recommend that SSA ensure HI DHS:
1. Returns or conserves $98,610 in benefits for 15 children because HI DHS did not report changes in beneficiary circumstances affecting their entitlement to benefits. This consists of
- $51,300 in improper payments disbursed to HI DHS for nine children who are no longer in its care.
- $29,790 in SSI overpayments to SSA for two children who had moved into HI DOH foster homes.
- $12,600 in OASDI and SSI benefits that should have been saved for four children who had moved into HI DOH foster homes.
- $4,920 in overpaid benefits for two SSI recipients who also received Title IV E benefits.
2. Improves its controls over reporting changes in beneficiary circumstances that affect their eligibility for benefits (for example, changes in custody and Title IV E benefits payable to SSI recipients).
3. Returns or conserves $81,250 in funds for 32 children because HI DHS did
not properly account for benefit payments received. This consists of
- $43,050 in unrecorded OASDI funds for 13 children who also received Title IV E benefits.
- $19,710 in funds for five children who are no longer in its care, $3,500 in SSI payments not returned to SSA for three children, and $7,270 in excess funds not conserved for four children.
- $7,720 in monthly benefits in excess of the monthly foster care payments for seven children.
4. Improves its controls to ensure the proper accounting for OASDI and SSI
benefits. Specifically, HI DHS needs to ensure it
- saves or spends OASDI benefits on behalf of children who also receive Title IV E benefits.
- returns conserved funds that belong to beneficiaries no longer in its care and benefit payments received after HI DHS no longer has legal custody of children to SSA.
- accurately records the expenses of each child.
- records benefit deposits in a timely manner.
- establishes a dedicated account for large past due payments for SSI recipients.
- establishes direct deposit for all beneficiaries in its care.
5. Develops procedures to obtain SSA's approval to reimburse itself for prior foster care expenses from a child's retroactive benefit payment. In addition, HI DHS should provide supporting documentation to SSA for how it used the $14,000 in past-due benefits for two children.
6. Reviews and takes corrective actions for all beneficiaries in its care to identify payment errors because HI DHS (1) did not report changes in beneficiary circumstances affecting their entitlement to benefits or (2) improperly accounted for benefit payments received.
SSA and HI DHS agreed with all of our recommendations. See Appendices E and F for the text of SSA's and HI DHS' comments.
While conducting our review, we identified three areas where SSA needs to improve its performance. Specifically, SSA (1) did not terminate benefit payments timely after HI DHS reported that four children were no longer in its care, (2) paid incorrect SSI amounts to three SSI recipients, and (3) improperly sent dedicated account funds to HI DHS for one SSI recipient.
Terminating Benefit Payments
SSA did not terminate benefit payments timely after HI DHS reported that four children were no longer in its care. On four occasions, HI DHS reported to SSA that three siblings had been appointed a guardian in October 2004. However, SSA continued to disburse OASDI benefits to HI DHS for another 28 months. As a result, SSA improperly sent $18,027 in benefits to HI DHS that should have been paid to the children's new legal guardian. HI DHS also reported to SSA that a child was adopted in February 2006, but SSA continued to disburse benefits through January 2007. As a result, SSA improperly sent $7,602 in benefits to HI DHS for 11 months.
Incorrect SSI Payments
SSA paid the incorrect amount of SSI payments for three recipients. SSA counted
the foster care payments HI DHS made to the foster parents as income to the
children, resulting in a $207 monthly decrease in their SSI payments during
2007. The source of funding for the foster care payments was the SSI payments
and State foster care funds. Therefore, the children paid their food and shelter
costs using their own income, not income from a third party. In general, SSI
payments of children in traditional foster care are not reduced if they pay
for their food and shelter with their own income. As a result, these children
were underpaid approximately $2,480 in benefits annually.
Dedicated Account Funds
SSA improperly sent dedicated account funds to HI DHS for one SSI recipient. Although HI DHS had not established a dedicated account to receive large past due payments for SSI recipients, SSA disbursed $4,557 in dedicated funds to HI DHS for one recipient.
Patrick P. O'Carroll, Jr.
APPENDIX A - Acronyms
APPENDIX B - Representative Payee Responsibilities
APPENDIX C - Scope and Methodology
APPENDIX D - Sampling Methodology and Results
APPENDIX E - Agency Comments
APPENDIX F - Hawaii Department of Human Services Comments
APPENDIX G - OIG Contacts and Staff Acknowledgments
Act Social Security Act
C.F.R. Code of Federal Regulations
HI DHS Hawaii Department of Human Services
HI DOH Hawaii Department of Health
OASDI Old Age, Survivors and Disability Insurance
OIG Office of the Inspector General
POMS Program Operations Manual System
SSA Social Security Administration
SSI Supplemental Security Income
Representative Payee Responsibilities
Representative payees are responsible for using benefits to serve the beneficiary's best interests. The responsibilities include the following.
Determine the beneficiary's current needs for day to day living and use his or her payments to meet those needs.
Conserve and invest benefits not needed to meet the beneficiary's current needs.
Maintain accounting records of how the benefits are received and used.
Report events to the Social Security Administration (SSA) that may affect the individual's entitlement or benefit payment amount.
Report any changes in circumstances that would affect their performance as a representative payee.
Provide SSA an annual Representative Payee Report to account for benefits spent and invested.
Return any payments to SSA for which the beneficiary is not entitled.
Return conserved funds to SSA when no longer serving as the representative payee for the beneficiary.
Scope and Methodology
Our audit covered the period July 1, 2006 through June 30, 2007. However, we expanded our scope to include additional months before and after this period to fully develop the effect of some issues, such as changes in custody that were not reported timely. To accomplish our objectives, we:
Reviewed applicable Federal laws and regulations and Social Security Administration (SSA) policies and procedures for representative payees.
Reviewed the Hawaii Department of Human Services' (HI DHS) procedures over its representative payee activities.
Interviewed SSA employees at the San Francisco Regional Office and Honolulu Field Office to obtain background information about the performance of HI DHS.
Interviewed employees from the Department of Health and Human Services, Administration for Children and Families.
Obtained from SSA's payment records and Representative Payee System a list of individuals who were in the representative payee's care.
Compared and reconciled SSA's payment records to the Representative Payee System list to identify the population of beneficiaries who received one or more benefit payments from July 1, 2006 through June 30, 2007.
Reviewed the representative payee's internal controls over the receipt and disbursement of Social Security benefits.
Reviewed the receipt and expenditure of Social Security benefits for 50 beneficiaries from July 1, 2006 through June 30, 2007.
Determined whether HI DHS reported any changes or events for its beneficiaries that could affect their amount of or entitlement to OASDI or SSI benefits.
Performed the following tests for a random sample of 50 beneficiaries:
Compared and reconciled benefit amounts received according to HI DHS' records to benefit amounts paid according to SSA's records.
Reviewed HI DHS' accounting records to determine whether benefits were properly spent or conserved on the beneficiary's behalf.
Reviewed case records to determine whether the children were still in HI DHS' care from July 1, 2006 through June 30, 2007.
Interviewed 10 beneficiaries to determine whether their basic needs were being met.
We determined the computer processed data to be partially reliable for our intended use. We tested the receipt of Social Security benefits recorded in HI DHS' accounting system. We performed tests to determine the completeness, accuracy, and validity of the data. These tests allowed us to assess the reliability of the data and achieve our audit objectives. However, because of weaknesses in HI DHS' controls over the disbursement of Social Security benefits, we could not rely on the information in its accounting records.
We performed our field work in Honolulu, Hawaii, and Richmond, California, between August 2007 and April 2008. We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
Sampling Methodology and Results
We obtained from the Social Security Administration's (SSA) payment records and Representative Payee System a list of individuals who were in the representative payee's care during the period of July 2006 through June 2007. Using these data, we identified a population of 191 beneficiaries for whom the Hawaii Department of Human Services (HI DHS) received at least 1 benefit payment during this period.
We selected a random sample of 50 beneficiaries for review. For each beneficiary, we (1) determined whether HI DHS reported any changes or events for its beneficiaries that could affect their amount of, or entitlement to, Old Age, Survivors and Disability Insurance or Supplemental Security Income payments; (2) compared and reconciled benefit amounts received per HI DHS' records and benefit amounts paid per SSA's records; (3) reviewed HI DHS' accounting records to determine whether benefits were properly spent or conserved on the beneficiary's behalf, and (4) reviewed HI DHS records to determine whether the beneficiaries were still in HI DHS' care from July 2006 to June 2007.
We found that 39 (78 percent) of the 50 beneficiaries in our sample had 1 or more errors. As a result, HI DHS owed 36 beneficiaries $114,680 in conserved funds and needs to repay SSA $65,180 in overpayments for 8 beneficiaries. Based on our sample findings, we also estimate that HI DHS owes about $323,400 in conserved funds to an additional 101 children and was overpaid about $183,790 in benefits for an additional 22 children. The following tables provide the details of our sample results and estimates.
Table 1: Population and Sample Size Population Sample Size
Beneficiaries 191 50
Table 2: Conserved Funds Number Amount
Sample Results 36 $114,682
Estimate of additional beneficiaries affected 101 $323,403
Estimate of total beneficiaries affected 137 $438,085
Table 3: Overpayments Number Amount
Sample Results 8 $65,175
Estimate of additional beneficiaries affected 22 $183,793
Estimate of total beneficiaries affected 30 $248,968
Wednesday, August 20, 2008
SF Reply -- Signed Draft Report (A-09-08-28045)
Thank you for the opportunity to comment on the OIG draft report, "Hawaii Department of Human Services - An Organizational Representative Payee for the Social Security Administration" Number A-09-08-28045.
We found the draft report to be very thorough. HI-DHS has already taken corrective action on some of the errors identified during the review and initiated plans to improve its performance as a representative payee. SSA has a corrective action plan to ensure these deficiencies are fully addressed. Given the pervasiveness of the conditions identified, we agree to closely monitor the relationship between SSA and HI-DHS and thoroughly review the receipt and disbursement of Social Security benefits for all beneficiaries in HI-DHS' care as well as to ensure full compliance with the cited recommendations. These activities will be completed within 90 days of the issuance of the final report.
The field office has provided and will continue to provide the training needed, ongoing communications and support needed for the payee's compliance with SSA policies. If your staff have any questions regarding these comments, they should contact DeAnna Barrios-Terry (510) 970-8213 in our Center for Programs Support. We have attached a copy of the draft report for reference purposes.
Hawaii Department of Human Services Comments
OIG Contacts and Staff Acknowledgments
James J. Klein, Director, San Francisco Audit Division, (510) 970 1739
Jack H. Trudel, Audit Manager, (510) 970 1733
In addition to those named above:
James Sippel, Senior Auditor
Manfei Lau, Auditor
For additional copies of this report, please visit our web site at www.socialsecurity.gov/oig
or contact the Office of the Inspector General's Public Affairs Staff Assistant
at (410) 965 4518. Refer to Common Identification Number A-09-08-28045.
Overview of the Office of the Inspector General
The Office of the Inspector General (OIG) is comprised of an Office of Audit (OA), Office of Investigations (OI), Office of the Counsel to the Inspector General (OCIG), Office of External Relations (OER), and Office of Technology and Resource Management (OTRM). To ensure compliance with policies and procedures, internal controls, and professional standards, the OIG also has a comprehensive Professional Responsibility and Quality Assurance program.
Office of Audit
OA conducts financial and performance audits of the Social Security Administration's (SSA) programs and operations and makes recommendations to ensure program objectives are achieved effectively and efficiently. Financial audits assess whether SSA's financial statements fairly present SSA's financial position, results of operations, and cash flow. Performance audits review the economy, efficiency, and effectiveness of SSA's programs and operations. OA also conducts short-term management reviews and program evaluations on issues of concern to SSA, Congress, and the general public.
Office of Investigations
OI conducts investigations related to fraud, waste, abuse, and mismanagement in SSA programs and operations. This includes wrongdoing by applicants, beneficiaries, contractors, third parties, or SSA employees performing their official duties. This office serves as liaison to the Department of Justice on all matters relating to the investigation of SSA programs and personnel. OI also conducts joint investigations with other Federal, State, and local law enforcement agencies.
Office of the Counsel to the Inspector General
OCIG provides independent legal advice and counsel to the IG on various matters, including statutes, regulations, legislation, and policy directives. OCIG also advises the IG on investigative procedures and techniques, as well as on legal implications and conclusions to be drawn from audit and investigative material. Also, OCCIG administers the Civil Monetary Penalty program.
Office of External Relations
OER manages OIG's external and public affairs programs, and serves as the principal advisor on news releases and in providing information to the various news reporting services. OER develops OIG's media and public information policies, directs OIG's external and public affairs programs, and serves as the primary contact for those seeking information about OIG. OER prepares OIG publications, speeches, and presentations to internal and external organizations, and responds to Congressional correspondence.
Office of Technology and Resource Management
OTRM supports OIG by providing information management and systems security. OTRM also coordinates OIG's budget, procurement, telecommunications, facilities, and human resources. In addition, OTRM is the focal point for OIG's strategic planning function, and the development and monitoring of performance measures. In addition, OTRM receives and assigns for action allegations of criminal and administrative violations of Social Security laws, identifies fugitives receiving benefit payments from SSA, and provides technological assistance to investigations.