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Audit Report - A-05-95-00017


Office of Audit


Procedures for Collecting Social Security Administration/Railroad Retirement Board Combined Benefit Payments Issued After Death - A-05-95-00017 - 3/13/97

The purpose of our audit was to determine if the Social Security Administration`s (SSA) share of payments issued after death by the Railroad Retirement Board (RRB) to combined Retirement, Survivors, and Disability Insurance (RSDI) and Railroad Retirement (RR) beneficiaries, were returned to SSA. The death of a combined RSDI and RR beneficiary often results in the issuance of one or more incorrect payments by the RRB because the notification of death is not received and posted until after the cutoff date for submission of the payment tape to the U.S. Department of the Treasury (Treasury Dept.).

RRB is responsible for identifying and collecting incorrect payments from the combined beneficiary`s account. RRB is also responsible for returning RSDI’s share of the combined payments to the Treasury Dept. for credit to RSDI trust funds. However, SSA and RRB do not share payment and receivable information on an individual beneficiary basis. Also, SSA systems account for expected rather than actual payments made to RSDI/RR combined beneficiaries. As a result, SSA is unable to determine if combined payments were issued after death, and what related amounts may be due from the RRB.

We reviewed case records for a random sample of 200 beneficiaries who were receiving RSDI/RR combined benefit payments which were terminated due to death during Fiscal Year (FY) 1994. Documentation at SSA and RRB shows that incorrect payments issued after death were not always identified and recovered by RRB. As a result, RSDI’s share of these payments was not returned to RSDI trust funds. Our projections show that, during FY 1994, RRB issued an estimated $3.5 million in RSDI benefit payments after death. We estimated that $391,716 of the $3.5 million was not returned to the RSDI trust funds. For details of our sample results refer to Appendix A.

We are recommending that SSA:

(1) request RRB calculate and return to SSA its share of incorrect payments issued during FYs 1994 through 1996 which were not returned to RSDI trust funds, we estimate the amount of these incorrect payments to be $391,716 for FY 1994;
(2) develop a method of accounting for RSDI payments issued to SSA/RRB combined beneficiaries;
(3) establish an accounts receivable for RSDI payments due from RRB for incorrect payments issued after death; and
(4) ensure that RSDI beneficiary records accurately reflect combined benefit payment and collection information.

SSA agreed with our recommendations and stated that the Railroad Certification (RRCERT) monitoring system, which is part of title II redesign and scheduled to be implemented by July 1999, would monitor trust fund transfers between SSA and RRB. In our opinion, the RRCERT monitoring system may be a long term solution, however, we believe that SSA should institute an immediate control over transfers of trust fund monies until such time as the controls envisioned by title II redesign are operational.

BACKGROUND

The Railroad Retirement Act of 1974 provides that persons eligible for retirement, survivors, and disability benefits under both the Railroad Retirement Act and the Social Security Act have their benefits combined and paid with one check. SSA certifies the amount of SSA benefits to RRB via a magnetic tape and, as a result, authorizes RRB to issue the combined check to the beneficiary. The certification tape only contains payment data for new beneficiaries and those beneficiaries whose monthly benefit payable amount has changed since the prior month. The RRB runs this tape to update their beneficiary information systems.

When a beneficiary receiving a combined benefit check dies, the RRB requests the Treasury Dept. begin reclamation proceedings for any incorrect payments that have been identified. When payments are recovered, RRB initiates the transfer of SSA`s share of the collected payments to RSDI trust funds. The transfer to SSA is an aggregate amount. The RRB provides a paper canceled check listing with the detailed beneficiary information.

In March 1986, a Department of Health and Human Services, Office of Inspector General report was issued regarding SSA/RRB data transfers. The report recommended that SSA: (i) establish accounts receivable controls and reporting requirements to manage the transfer of funds due SSA from RRB, and (ii) revise policies and procedures to ensure that transfer of funds data received from RRB are recorded on beneficiary records. In response, SSA designed the RRCERT system to address these recommendations. However, neither the system nor the procedures have been fully implemented.

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SCOPE

The audit was conducted in accordance with generally accepted government auditing standards. The objectives were to determine: (i) if adequate methods exist to ensure that SSA`s share of combined benefit payments incorrectly issued after death are returned to RSDI trust funds, and (ii) whether SSA beneficiary records accurately reflect combined RSDI/RR payment and collection transactions.

To achieve our objectives we:

  • selected a random sample of 200 beneficiaries, who were receiving combined benefit payments that were terminated due to death during FY 1994;
  • reviewed SSA policies and procedures relating to RSDI/RR combined benefits;
  • interviewed SSA and RRB personnel responsible for processing and accounting for combined benefit payments; and
  • reviewed RSDI and RR beneficiary system records, case folders, and accounting records.

We conducted our audit at RRB headquarters and the Harold Washington Social Security Center in Chicago, Illinois, and SSA headquarters in Baltimore, Maryland. The field work was done from April to December 1995.

RESULTS OF AUDIT

SSA does not have a system to account for payments made to RSDI/RR combined beneficiaries. Thus, SSA is unable to determine if RRB accurately identifies, recovers, and returns incorrect payments issued after death to the trust funds. SSA relies on RRB to: (i) identify all incorrect payments issued after death, (ii) recover the incorrect payments issued, and (iii) return SSA`s share of the payments to the trust funds. Based on our sample results, RRB has not consistently identified and recovered incorrect payments.

We found that 153 of 200 sampled beneficiaries were incorrectly issued combined benefit payments after death. These 153 beneficiaries received 171 incorrect payments totaling $91,125. RRB did not return SSA`s share of 19 payments to the trust funds. RRB did not identify and collect 18 of these payments, and 1 payment was identified but never returned to the SSA trust funds due to a human error. SSA’s share of the 19 payments not returned to the trust funds by RRB totaled $10,253. During FY 1994, we estimate that RRB issued about $3.5 million in RSDI benefits incorrectly after death, of which $391,716 was not returned to the trust funds. The remaining 152 (171 less 19) incorrect payments were identified and collected, and SSA`s share was returned to the trust funds. As a result of our audit, RRB has taken action to recover the outstanding payments and return SSA`s share for the remaining 19 incorrect payments identified in our sample.

The unidentified and uncollected payments from our sample were referred to a RRB task force. The task force reviewed the cases to determine the causes and found that two types of system output forms used to record death terminations were not properly processed. RRB responded that it designed an automated system to identify incorrect payments and overpayments caused by termination of benefits. RRB implemented the Automated Receivables, Reclamations, and Credits (ARRC) System in July 1995. This system automatically reviews all terminations to determine if payments occurred after death. When payments are identified, the system is designed to: (i) calculate the overpayment amount, (ii) establish a receivable, (iii) initiate reclamation, and (iv) record payments or returned checks. The RRB`s Bureau of Quality Assurance is reviewing the ARRC System.

The SSA designed a system (RRCERT) to account for all combined benefit payments issued, including payments issued after death. The RRCERT system became operational in July 1995, but only in a modified format. RRCERT was not fully implemented due to other priority workloads and will not be expanded due to the Title II Redesign Project. As designed, RRCERT was intended to monitor RRB disbursements and ensure that SSA`s share was issued correctly. If a discrepancy existed between SSA and RRB payment data for a beneficiary, an alert would be produced by the system. The alert would then be processed to resolve the discrepancy and to update beneficiary records. However, the modified version of RRCERT is unable to generate these alerts or monitor the accuracy of payment information contained on the records for SSA/RRB combined beneficiaries.

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RECOMMENDATIONS

We recommend that SSA:

1. Request RRB calculate and return to SSA its share of incorrect payments issued during FYs 1994 through 1996 which were not returned to the trust funds. For FY 1994, we estimate this amount to be $391,716.

SSA Comments: We agree and will immediately proceed to implement necessary billing to RRB for the estimated $391,716 identified in the report as not returned to the SSA trust funds.

2. Develop a monitoring system to account for the transfer of trust fund monies to and from RRB. The system should identify beneficiaries who were issued incorrect payments after death. The system should also identify amounts due from RRB for the purpose of monitoring credits to the trust funds.

SSA Comments: We agree and are developing the RRCERT monitoring system, which will be fully implemented as part of the title II redesign effort scheduled for July 1999. Without the full-scale RRCERT monitoring system, SSA has no cost-effective means to monitor trust fund transfers between SSA and RRB. Consistent with an earlier memorandum to the Chairman of the RRB, dated June 12, 1995, we believe the more prudent approach is to postpone interim enhancements to the RRCERT system pending full implementation in the title II redesign system

OIG Response: The RRCERT monitoring system, which is part of title II redesign and scheduled to be implemented by July 1999, is a good long-term solution, however, we believe that SSA should institute an immediate control over transfers of trust fund monies until such time as the controls envisioned under title II redesign are operational.

3. Establish an accounts receivable amount due from RRB for incorrect payments issued after death.

SSA Comments: We agree and will take the necessary steps to ensure that the monies are returned to the trust fund once RRB begins to provide information on incorrect payments.

OIG Response: We do not believe that establishing an accounts receivable based on information provided by RRB will provide SSA the capability of insuring that the information provided is complete and accurate.

4. Ensure that SSA beneficiary records accurately reflect SSA/RRB combined benefit payment and collection information.

SSA Comments: We agree. The issues identified in our previous comments concerning the title II redesign system also apply to this recommendation.

OIG Response: As stated above, we believe that SSA should institute immediate controls to ensure the accuracy of beneficiary records until such time as the controls envisioned under title II redesign are operational.

David C. Williams

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APPENDICES

Appendix A

SAMPLE ANALYSIS AND PROJECTION ESTIMATES

Population: 7,641 beneficiaries receiving SSA/RRB combined benefit payments terminated due to death during Fiscal Year 1994

Sample Size: 200 beneficiaries

Sample Selection: Random

Characteristics: 1) number and amount of payments issued after death 2) number and amount of payments not returned to the SSA trust funds

Number Identified in Sample: 1) 171 payments totaling $91,125 were issued after death 2) 19 payments totaling $10,253 were not returned to the SSA trust funds

Projected Amounts: 1) payments totaling $3,481,431 issued after death 2) payments totaling $391,716 not returned to the SSA trust funds

90 Percent Confident Population Mean is Between: 1) $3,087,404 and $3,875,458 2) $171,704 and $611,728

Appendix C

MAJOR CONTRIBUTORS TO THIS REPORT

Office of the Inspector General

Roger Normand, Acting Director, Program Audits
Ross Anderson, Team Leader
Sheri Fulcher, Senior Auditor
David Markulin, Auditor
Robert Lenz, Auditor
Lisa McAllister, Auditor

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