OFFICE
OF
THE INSPECTOR GENERAL
SOCIAL SECURITY ADMINISTRATION
SINGLE AUDIT OF THE
COMMONWEATH OF PUERTO RICO,
DEPARTMENT OF THE FAMILY
FOR THE FISCAL YEAR ENDED
JUNE 30, 1999
January 2002
A-77-02-00007
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
Office of the Inspector General
MEMORANDUM
Date: JAN 30, 2002
Refer To:
Dan Sweeney
Acting Director
Management Analysis and Audit Program Support Staff
From: Assistant Inspector General for Audit
Subject: Single Audit of the Commonwealth of Puerto Rico, Department of the
Family for the Fiscal Year Ended June 30, 1999 (A-77-02-00007)
This report presents the Social Security Administration's (SSA) portion of the
single audit of the Commonwealth of Puerto Rico, Department of the Family (DOF),
for the Fiscal Year ended June 30, 1999. Deloitte & Touche LLP, Certified
Public Accountants
(CPA) 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 Puerto Rico 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 Puerto Rico DOF is the DDS's parent
agency.
For single audit purposes, the Office of Management and Budget 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.
The single audit reported the following findings (See Appendix B):
Documentation to support expenditures was not available to test the base used
for indirect costs. The corrective action plan indicates that DOF disagrees
with the finding and that documentation was available but not requested by the
auditors.
Fiscal evaluations were not performed to ensure that disbursements of $172,354
were allowable. The corrective action plan indicates that DOF disagrees with
the finding stating that the Department's manual does not require a formal fiscal
evaluation for each purchase.
Page 2 - Dan Sweeney
DDS expenditures of $4,214,001 were not supported by documentation. The corrective
action plan indicates that DOF disagrees with the finding citing that all documents
were available except for one job plan which was subsequently provided to the
auditors.
The Financial Status Reports claimed expenditures of $899,764 greater than amounts
recorded in the general ledger. The corrective action plan indicates that reconciliations
were not up to date and coordination between Program and Department officials
will be scheduled to resolve this issue.
We recommend that SSA:
1. Ensure the DDS has a system in place to retain accounting records and supporting
documentation for the time period required by applicable requirements and regulations.
2. Ensure the DDS has procedures in place for performing fiscal evaluations
including comparing expenditures with budget amounts prior to making disbursements.
3. Determine whether expenditures of $172,354 not properly reviewed prior to
disbursement are allowable and recover that portion which is not allowable.
4. Determine whether the $4,214,001 in undocumented expenditures was allowable
and recover that portion which is not allowable.
5. Ensure that procedures are in place to reconcile the Financial Status Reports
to the general ledger.
6. Determine whether the Financial Status Report incorrectly overstated DDS
expenditures by $899,764 and recover any unallowable costs.
The single audit also disclosed the following findings that may impact DDS operations,
although they were not specifically identified to SSA. Some of these findings
were reported for several DOF programs indicating pervasive problems within
DOF. If the finding was reported in more than one DOF program, we identify the
number of times the finding was reported in parenthesis at the end of each finding.
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).
Financial statements were not prepared in conformity with Generally Accepted
Accounting Principles due to a lack of policies, procedures, and financial reporting
practices. Therefore, management did not have accurate and complete financial
information on a timely basis to carry out other duties.
Page 3 - Dan Sweeney
Procedures were not in place to ensure financial reports are completed and submitted
timely (3).
Supporting documentation and accounting records were not retained for expenditures
charged to Federal funds (19).
DOF did not verify if parties were debarred or suspended when contracting for
services or procuring goods with Federal funds.
A system was not in place to prepare and implement corrective action plans and
clear audit findings in a timely fashion.
Payroll disbursements were not properly recorded.
Property and equipment management procedures were not adequate (4).
DOF did not follow required bidding procedures for procurement and contracting
activities (2).
The Financial Status Report did not agree with the general ledger (2).
DOF expended Federal funds for costs that benefited other programs (6).
Periodic reviews of cash management transactions for compliance with the Cash
Management Improvement Act (CMIA) agreement were not conducted.
Fiscal evaluations were not performed to ensure funds were expended for allowable
activities (2).
Evidence to support the drawdown of Federal funds could not be located.
Page 4 -Dan Sweeney
Please send copies of the final Audit Clearance Document to Mark Bail.ey in.
-.
Kansas City and Paul Wood in Baltimore. If you have questions contact Mark Bailey
at (816) 936-5591.
Attachments
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.