SOCIAL SECURITY

MEMORANDUM

Attached is a copy of our final report. Our objectives were to determine whether the Jackson County Public Administrator (1) had effective safeguards over the receipt and disbursement of Social Security benefits and (2) ensured Social Security benefits were used and accounted for in accordance with the Social Security Administration’s policies and procedures.

Please comment within 60 days from the date of this memorandum on corrective action taken or planned on each recommendation. If you wish to discuss the final report, please call me or have your staff contact Steven L. Schaeffer, Assistant Inspector General for Audit, at (410) 965-9700.

James G. Huse, Jr.

Executive Summary

Our objectives were to determine whether the Jackson County Public Administrator (JCPA) (1) had effective safeguards over the receipt and disbursement of Social Security benefits and (2) ensured Social Security benefits were used and accounted for in accordance with the Social Security Administration’s (SSA) policies and procedures.

Some beneficiaries cannot manage or direct the management of their finances because of their age or mental and/or physical impairments. Congress granted SSA the authority to appoint representative payees (Rep Payee) to receive and manage these beneficiaries’ payments. A Rep Payee may be an individual or an organization. SSA selects Rep Payees for Old-Age, Survivors and Disability Insurance beneficiaries or Supplemental Security Income recipients when representative payments would serve the individuals' interests.

Rep Payees are responsible for using benefits to serve the best interests of the beneficiary or recipient. Their duties include:

• using benefits to meet the beneficiary’s current and foreseeable needs;

• conserving and investing benefits not needed to meet the individual's current needs;

• maintaining accounting records of how the benefits are received and used;

• reporting events to SSA that may affect the individual's entitlement or benefit payment amount;

• reporting any changes in circumstances that would affect their performance as Rep Payees; and

• providing SSA an annual Representative Payee Report (RPR) accounting for how benefits were spent and invested.

JCPA is a county agency that reports to the Probate Division of the Circuit Court of Jackson County in Kansas City, Missouri. JCPA has 31 employees and serves as an Organizational Rep Payee for SSA. During our audit period, JCPA served as Rep Payee for 704 SSA beneficiaries. In addition, JCPA serves as the court-appointed guardian/conservator for individuals who have no one else to care for them.

Except for the lack of adequate documentation supporting the personal needs allowance of institutionalized beneficiaries, JCPA had effective safeguards over the receipt and disbursement of Social Security benefits and ensured Social Security benefits were used and accounted for in accordance with SSA’s policies and procedures. JCPA did not have adequate documentation to support the personal needs allowance of institutionalized beneficiaries. This lack of documentation was mitigated by the fact that most of the benefit payments JCPA received were for the cost of beneficiaries’ care.

Of the 50 beneficiaries included in our sample, 44 lived in institutions (for example, nursing homes), and 6 lived in private residences. For the 44 institutionalized beneficiaries, JCPA provided the institutions a $30 monthly personal needs allowance. The institutions were allowed to determine how the monthly personal needs allowance was spent and were required to provide JCPA quarterly reports detailing the expenditures. However, JCPA did not require the institutions to retain and/or submit documentation supporting the expenditures (that is, receipts, cash disbursement ledgers, etc). The absence of supporting documentation prevented us from independently verifying that the beneficiaries for which the monthly personal needs allowance was intended actually received and/or benefited from the funds.

Based on the results of our statistical sample, we estimate that JCPA provided at least $170,070 to institutions for monthly personal needs allowances from May 1, 2000 through April 30, 2001. The $170,070 represents 5.4 percent of at least $3,147,515 in SSA benefits JCPA received for the 704 beneficiaries.

We could not determine whether JCPA properly reported to SSA how benefits were used in all cases because SSA did not provide 11 of the 41 RPRs we requested. Also, discrepancies regarding the numbers of beneficiaries for which JCPA served as Rep Payee were identified within various Representative Payee System queries. These two issues are discussed in the Other Matters section of this report.

We recommend that SSA ensure JCPA maintains the proper level of documentation to account for and safeguard the monthly personal spending allowances of SSA beneficiaries living in institutions.

In response to our draft report, SSA agreed with our recommendation. See Appendix B for the full text of SSA’s comments to our draft report.

JCPA did not provide comments to our draft report.

Table of Contents

APPENDIX B – Agency Comments

APPENDIX C – OIG Contact and Staff Acknowledgments

Acronyms

JCPA Jackson County Public Administrator
OASDI Old-Age, Survivors and Disability Insurance
Rep Payee Representative Payee
RPS Representative Payee System
RPR Representative Payee Report
SSA Social Security Administration
SSI Supplemental Security Income

Introduction

OBJECTIVE

Our objectives were to determine whether the Jackson County Public Administrator (JCPA) (1) had effective safeguards over the receipt and disbursement of Social Security benefits and (2) ensured Social Security benefits were used and accounted for in accordance with the Social Security Administration’s (SSA) policies and procedures.

Some beneficiaries cannot manage or direct the management of their finances because of their age or mental and/or physical impairments. Congress granted SSA the authority to appoint representative payees (Rep Payee) to receive and manage these beneficiaries and recipients’ benefit payments. A Rep Payee may be an individual or an organization. SSA selects Rep Payees for Old-Age, Survivors and Disability Insurance (OASDI) beneficiaries or Supplemental Security Income (SSI) recipients when representative payments would serve the individuals' interests.

Rep Payees are responsible for using benefits to serve the best interests of the beneficiary or recipient. Their duties include:

• using benefits to meet the beneficiary’s current and foreseeable needs;

• conserving and investing benefits not needed to meet the individual's current needs;

• maintaining accounting records of how the benefits are received and used;

• reporting events to SSA that may affect the individual's entitlement or benefit payment amount;

• reporting any changes in circumstances that would affect their performance as Rep Payees; and

• providing SSA an annual Representative Payee Report (RPR) accounting for how benefits were spent and invested.

About 7 million individuals have Rep Payees—approximately 4.4 million are OASDI beneficiaries, 2 million are SSI recipients, and 600,000 are entitled to both OASDI and SSI. The following chart reflects the types of Rep Payees and the number of individuals they serve.

JCPA is a county agency that reports to the Probate Division of the Circuit Court of Jackson County in Kansas City, Missouri. JCPA has 31 employees and serves as an Organizational Rep Payee for SSA. During our audit period, JCPA served as Rep Payee for 704 SSA beneficiaries. JCPA also serves as the court-appointed guardian/conservator for individuals who have no one else to care for them. As guardian, JCPA is responsible for the individuals’ living conditions and medical treatment. As conservator, JCPA is responsible for their financial matters. JCPA receives a fee from the State of Missouri for the services it provides as guardian/conservator. JCPA conducts periodic site visits to the institutions and private residences that house the individuals in its care including SSA beneficiaries. During the site visits, JCPA ensures that beneficiaries are residing in acceptable living conditions and that their needs are being met.

As shown in the table below, SSA paid $255,437 to JCPA for the sample of 50 beneficiaries from May 1, 2000 through April 30, 2001.

Our audit covered the period May 1, 2000 through April 30, 2001. To accomplish our objectives, we:

• Reviewed the Social Security Act, SSA regulations, rules, policies and procedures pertaining to Rep Payees.

• Contacted the Kansas City, Missouri, SSA Regional Office and the Kansas City, Missouri, (South) field office staff to obtain background information about the Rep Payee’s performance.

• Obtained from SSA’s Representative Payee System (RPS) a list of beneficiaries who were in the Rep Payee’s care during our audit period (May 1, 2000 through April 30, 2001).

• Obtained from the Rep Payee a list of beneficiaries who were in its care as of July 6, 2001.

• Compared and reconciled the RPS and the Rep Payee’s listings to identify a population of 704 SSA beneficiaries who were in the Rep Payee’s care during our audit period.

• Reviewed and tested the Rep Payee’s internal controls over the receipt and disbursement of OASDI benefits and SSI payments.

• Performed the following tests for the 50 beneficiaries included in our sample.

• Compared and reconciled benefit amounts paid according to the Rep Payee’s records to benefit amounts paid according to SSA’s records.

• Reviewed the Rep Payee’s accounting records to determine whether benefits were properly spent or conserved on the individual’s behalf. We also determined whether SSA was due a refund for any overpaid benefits.

• Traced a sample of recorded expenses to source documents and examined the underlying documentation for reasonableness and authenticity.

• Used statistical sampling to estimate (1) the amount JCPA provided to institutions for monthly personal needs allowances during our audit period and (2) the total SSA benefits received by JCPA for the 704 beneficiaries during our audit period (see Appendix A).

• Interviewed a sample of the Rep Payee’s beneficiaries, personal guardians, or caregivers to determine whether their basic needs were being met.

• Reviewed a sample of RPRs to determine whether the Rep Payee properly reported to SSA how benefits were used.

• Reviewed six Forms SSA-11 (Request to Be Selected As Payee) submitted to SSA by JCPA to ensure proper signature by the Rep Payee.

We performed our audit at JCPA in Kansas City, Missouri, and SSA’s Kansas City, Missouri, (South) field office between July and November 2001. We conducted our audit in accordance with generally accepted government auditing standards.

Except for the lack of adequate documentation supporting the personal needs allowance of institutionalized beneficiaries, JCPA had effective safeguards over the receipt and disbursement of Social Security benefits and ensured Social Security benefits were used and accounted for in accordance with SSA’s policies and procedures. JCPA did not have adequate documentation supporting the monthly personal needs allowance of institutionalized beneficiaries. This lack of documentation was mitigated by the fact that most of the benefit payments JCPA received were for the cost of beneficiaries’ care.

We could not determine whether JCPA properly reported to SSA how benefits were used in all cases because SSA did not provide 11 of the 41 RPRs we requested. Also, discrepancies regarding the numbers of beneficiaries for which JCPA served as Rep Payee were identified within various RPS queries. These two issues are discussed in the Other Matters section of this report.

A Rep Payee’s duties include ensuring that SSA beneficiary’s needs are met. SSA’s policy states that the Rep Payee of all institutionalized beneficiaries should provide at least $30 each month for the beneficiaries’ personal needs. Furthermore, the Rep Payee should keep written records of all payments received from SSA and how they are spent and/or saved.

Of the 50 beneficiaries included in our sample, 44 lived in institutions (for example, nursing homes), and 6 lived in private residences. For the 44 institutionalized beneficiaries, JCPA provided the institutions with a $30 monthly personal needs allowance. The institutions were allowed to determine how the monthly personal needs allowance was spent and were required to provide JCPA quarterly reports detailing the expenditures. However, JCPA did not require the institutions to retain and/or submit documentation supporting the expenditures (that is, receipts, cash disbursement ledgers, etc).

We reviewed 20 beneficiaries’ quarterly reports provided by institutions to JCPA in support of the monthly personal needs allowance expenditures. The expenditures on these quarterly reports appeared reasonable. However, the absence of supporting documentation prevented us from independently verifying that the beneficiaries for which the monthly personal needs allowance was intended actually received and/or benefited from the allowance. The lack of documentation was mitigated by the fact that most of the benefit payments JCPA received were for the cost of beneficiaries’ care.

Based on the results of our statistical sample, we estimate that JCPA provided at least $170,070 to institutions for monthly personal needs allowances from May 1, 2000 through April 30, 2001. The $170,070 represents 5.4 percent of at least $3,147,515 in SSA benefits received by JCPA for the 704 beneficiaries.

JCPA should have a system in place to account for beneficiaries’ $30 personal needs allowance. At a minimum, JCPA should require the institutions to maintain a ledger with the beneficiary’s signature for cash disbursements and receipts for all noncash distributions.

Recommendation

We recommend that SSA ensure JCPA maintains the proper level of documentation to account for and safeguard the monthly personal spending allowances of SSA beneficiaries living in institutions.

In response to our draft report, SSA agreed with our recommendation. See Appendix B for the full text of SSA’s comments to our draft report.

JCPA did not provide comments to our draft report.

Other Matters

To determine whether JCPA properly reported to SSA how benefits were used, we requested from SSA the most recently completed RPRs for 41 of our sample of 50 beneficiaries. While JCPA staff stated they submitted RPRs to SSA for all of JCPA’s beneficiaries, SSA was unable to provide 11 of the 41 RPRs we requested. Because SSA did not provide all the RPRs requested, we could not independently confirm that JCPA met its reporting responsibilities. For the 11 RPRs SSA could not provide, we do not know whether the RPRs were actually submitted to SSA by JCPA or whether JCPA provided them to SSA and SSA could not locate them.

To determine the number of beneficiaries for which JCPA served as Rep Payee, we accessed the "RP screening query response" within RPS. The query identified JCPA as the Rep Payee for 697 beneficiaries. However, the "organization/institution query response" within RPS identified JCPA as the Rep Payee for 899 beneficiaries. Both queries should have reported the same number of beneficiaries. We discussed this discrepancy with SSA field office staff who indicated that it was a systems-related problem beyond their control. We also contacted SSA’s Office of Systems in Baltimore, Maryland, but staff was unable to explain why discrepancies existed in the two queries.

We obtained from the Representative Payee System (RPS) and the representative payee (Rep Payee) separate listings of beneficiaries who were in the Rep Payee’s care and had received Social Security Administration (SSA) funds or had left the Rep Payee’s care during our audit period. We compared and reconciled the Rep Payee’s list with the RPS list and identified a population of 704 SSA beneficiaries under the Rep Payee’s care during our audit period. From this population, we obtained a random sample of 50 cases.

The Rep Payee received $255,437 in SSA funds for the 50 sampled individuals from May 1, 2000 through April 30, 2001 of which $13,740 was for the monthly personal needs allowance. Based on the results of our statistical sample, we estimate that the Rep Payee provided at least $170,070 to institutions for monthly personal needs allowances during the time period of May 1, 2000 through April 30, 2001. The $170,070 represents 5.4 percent of at least $3,147,515 in SSA benefits received by the Rep Payee for the 704 beneficiaries.

Thank you for the opportunity to comment on the Draft Report of the Financial-Related Audit of Jackson County Public Administrator. Based on our involvement in the representative payee process, we believe the findings are valid and the one recommendation made is reasonable.

The recommendation (that SSA ensure JCPA maintains the proper level of documentation to account for and safeguard the monthly personal spending allowances of SSA beneficiaries living in institutions) will be addressed by the local field office with assistance from the Regional office, working with JCPA.

If there are any questions, please contact Fran Woods, Director, Center for Systems and Programs, 816-936-5621.

Dorothy E. Mask for Michael W. Grochowski

Appendix C

Acknowledgments

In addition to the persons named above: