THE INSPECTOR GENERAL
SOCIAL SECURITY ADMINISTRATION
AUDIT OF THE
COMMONWEALTH OF PUERTO RICO
DEPARTMENT OF THE FAMILY
FOR THE FISCAL YEAR ENDED
JUNE 30, 2002
MANAGEMENT ADVISORY REPORT
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.
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.
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.
Date: April 15, 2004
To: Candace Skurnik
Director Audit Management and Liaison Staff
From: Assistant Inspector General for Audit
Subject: Management Advisory Report: Single Audit of the Commonwealth of Puerto Rico, Department of the Family, for the Fiscal Year Ended June 30, 2002 (A-77-04-00013)
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, 2002. Our objective was to report internal control weaknesses, noncompliance issues, and unallowable costs identified in the single audit to SSA for resolution action.
Ernst & Young LLP performed the audit. 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. In reporting the results of the single audit, we relied entirely on the internal control and compliance work performed by Ernst & Young LLP and the reviews performed by HHS.
For single audit purposes, the Office of Management and Budget assigns Federal programs a Catalog of Federal Domestic Assistance (CFDA) number. SSA's Disability Insurance (DI) and Supplemental Security Income (SSI) programs are identified by CFDA number 96. SSA is responsible for resolving single audit findings reported under this CFDA number.
The Puerto Rico Disability Determination Services (DDS) performs disability determinations under SSA's DI and SSI programs in accordance with Federal regulations. The DDS is reimbursed for 100 percent of allowable costs. DoF is the Puerto Rico DDS' parent agency.
The single audit reported that:
1. DoF could not supply all of the required documentation for its contracts. The corrective action plan indicated that a process to update contract files with required documentation was initiated (Attachment A, pages 1 and 2).
2. The Time Report of Personnel Services (SSA-4514) was not submitted timely. The corrective action plan indicated that the DDS and DoF will coordinate their efforts to ensure the reports are prepared and submitted timely (Attachment A, page 3).
We recommend SSA:
1. Ensure the DDS implemented procedures to maintain required documentation for contracts.
2. Verify that adjustments were made to ensure the DDS complies with established due dates for Federal reports.
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. I am bringing these matters to your attention as they represent potentially serious service delivery and financial control problems for the Agency (Attachment B, pages 1 through 23).
DoF has significant deficiencies (10) in its internal control structure, accounting and financial management systems, budgetary controls and financial reporting practices (Attachment B, pages 1 through 5).
DoF did not have an effective filing system (Attachment B, pages 6 and 7).
Federal reports (9) were not submitted timely (Attachment B, page 8).
Supporting documentation for employee files and accounting records (24) was not retained for expenditures charged to Federal funds (Attachment B, pages 9 and10).
Payment vouchers (4) were incomplete (Attachment B, pages 11 and 12).
Property and equipment management procedures (7) were not adequate (Attachment B, pages 13 and 14).
Financial Status Reports (6) were not reconciled with the General Ledger (Attachment
B, pages 15 and 16).
Federal funds (2) were disbursed prior to receiving a signed contract or after their effective date (Attachment B, pages 17 and 18).
Evidence to support the drawdown of Federal funds (7) could not be located (Attachment B, pages 19 and 20).
DoF paid for obligations made after the allowed time period (Attachment B, page 21).
DoF made a Federal disbursement (2) for an unallowed activity (Attachment B, pages 22 and 23).
Please send copies of the final Audit Clearance Document to Shannon Agee and Rona Rustigian. If you have questions contact Shannon Agee at (816) 936 5590.
Steven L. Schaeffer
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 the Chief 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, rather than detecting problems after they occur.
Office of Executive Operations
The Office of Executive Operations (OEO) supports the Office of the Inspector General (OIG) by providing information resource management; systems security; and the coordination of budget, procurement, telecommunications, facilities and equipment, and human resources. In addition, this office is the focal point for the OIG's strategic planning function and the development and implementation of performance measures required by the Government Performance and Results Act. OEO is also responsible for performing internal reviews to ensure that OIG offices nationwide hold themselves to the same rigorous standards that we expect from SSA, as well as conducting investigations of OIG employees, when necessary. Finally, OEO administers OIG's public affairs, media, and interagency activities, coordinates responses to Congressional requests for information, and also communicates OIG's planned and current activities and their results to the Commissioner and Congress.
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.