SOCIAL SECURITY ADMINISTRATION

SINGLE AUDIT OF THE

STATE OF MICHIGAN

FAMILY INDEPENDENCE AGENCY

FOR THE 2-YEAR PERIOD ENDED

SEPTEMBER 30, 2000

November 2001

A-77-02-00003

AUDIT REPORT

Mission

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.

Authority

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.

Vision

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.


SOCIAL. SECURITY

MEMORANDUM

Date: NOV 2O, 2001

Office of the Inspector General

Refer To:

To: Dan Sweeney
Acting Director
Management Analysis and Audit Program Support Staff

From: Assistant Inspector General for Audit

Subject: Single Audit of the State of Michigan, Family Independence Agency for the 2-Year Period Ended September 30, 2000 (A-77-02-00003)

This report presents the Social Security Administration's (SSA) portion of the single audit of the State of Michigan, Family Independence Agency for the 2-year period ended September 30, 2000. The Michigan Office of the Auditor General 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 Michigan 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 Michigan Family Independence Agency (FIA) isthe Michigan DDS's parent agency.

For single audit purposes, the Office of Management and Budget (OMB) 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.

1. On the Schedule of Expenditures of Federal Awards (SEFA), FIA did not list the Dl program, CFDA 96.0011 as an individual grant of the DI/SSI cluster, and did not report the correct Federal assistance program title for the Dl program. The FIA's corrective action plan indicates that the Federal Reporting and Cost Allocation Section will review the SEFA against the CFDA to ensure that names and clusters are correctly reported.

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2. The DDS did not have certifications to document that 4 of 13 sampled employees worked solely on SSA’s disability programs as required by OMB Circular A-87. The lack of certifications resulted in questioned costs of $9,186 ($2,809 and $6,377 for Fiscal Years 1999 and 2000, respectively). FIA’s corrective action plan indicates that a process has been established to document and maintain payroll certifications for staff whose personnel costs are charged to Federal programs. A process has also been implemented for interagency agreements with other State departments.

We recommend that SSA:

1. Verify that FIA has internal controls in place to ensure that the DI program, CFDA 96.001, is accurately recorded on the SEFA report.

2. Determine that procedures have been established to record and maintain payroll certifications for personnel costs charged to SSA's disability programs.

3. Recover the unallowable personnel costs of $9,186.

The single audit also disclosed the following findings that may impact DDS operations, although they were not specifically identified to SSA. 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).

FIA did not comply with prescribed Human Resources System’s internal control procedures for preparing time and attendance records. Internal controls were not maintained over the processing of personnel and payroll transactions in the following instances:

• Timekeeping procedures disclosed that FIA’s internal controls did not ensure that biweekly time and attendance summaries were prepared and certified by authorized personnel.

• Control personnel for the FIA personnel and payroll information system did not maintain the required internal controls for entering and reconciling payroll and personnel information.

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Please send copies of the final Audit Clearance Document to Mark Bailey in Kansas City and Paul Wood in Baltimore. If you have questions contact Mark Bailey at (816) 936-5591.

Steven L. Schaeffer

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
Public Affairs
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.