OFFICE OF
THE INSPECTOR GENERAL

SOCIAL SECURITY ADMINISTRATION

SINGLE AUDIT OF THE
STATE OF OKLAHOMA
FOR THE FISCAL YEAR ENDED
JUNE 30, 2003

FEBRUARY 2005

A-77-05-00009

MANAGEMENT ADVISORY 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.

MEMORANDUM

Date: February 22, 2005

To: Candace Skurnik
Director Audit Management and Liaison Staff

From: Inspector General

Subject: Management Advisory Report: Single Audit of the State of Oklahoma for the Fiscal Year Ended June 30, 2003 (A-77-05-00009)

This report presents the Social Security Administration's (SSA) portion of the single audit of the State of Oklahoma for the Fiscal Year ended June 30, 2003. Our objective was to report internal control weaknesses, noncompliance issues, and unallowable costs identified in the single audit to SSA for resolution action.

The Oklahoma State Auditor performed the audit. The Department of Health and Human Services' (HHS) desk review concluded that the audit met Federal requirements. In reporting the results of the single audit, we relied entirely on the internal control and compliance work performed by the Oklahoma State Auditor and the reviews performed by HHS. We conducted our review in accordance with the Quality Standards for Inspections issued by the President's Council on Integrity and Efficiency.

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 Oklahoma 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. The Oklahoma Department of Rehabilitation Services (DRS) is the Oklahoma DDS' parent agency.

The single audit reported that:

1. The auditors were not able to determine if cash draws were for immediate cash needs. Cash draws were estimated based on a monthly expenditures report and documentation was not available to verify this procedure. The corrective action plan indicated that the Cash Management Improvement Act Agreement has been modified to reflect DRS' needs and the availability of existing data for supporting documentation (Attachment A, pages 1 and 2).

2. The cost of unused leave for employees who retire or terminate employment was charged entirely to SSA programs instead of being allocated as a general administrative expense. In addition, employees were not certified as working solely on a single program. The corrective action plan indicated that adjustments were made to personnel services costs and semi-annual certifications will be completed for employees charged directly to a program (Attachment A, pages 3 and 4).

3. The Time Report of Personnel Services (SSA-4514) was inaccurate because the leave hours for nine individuals did not agree with the timesheets. The corrective action plan indicated that procedures were implemented to assure the leave hours reported on the monthly time report are the same as the leave hours that are reported on the timesheet (Attachment A, pages 4 and 5).

4. The auditors were not able to determine if the indirect costs were accurately reported because the base amount used to calculate the indirect costs could not be traced to accounting records. The corrective action plan indicated that the indirect cost computations schedule has been reviewed and bought up-to-date (Attachment A, pages 5 and 6).

These findings will be addressed in the audit of Administrative Costs Claimed by the Oklahoma DDS (A-07-05-15102) which is currently being conducted by the Office of the Inspector General. Accordingly, we are not making any recommendations .

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.

Procedures were not in place to ensure system modifications were authorized, tested and met users requirements (Attachment B, pages 1 and 2).

Procedures were not adequate to ensure system changes are independently tested and moved into production (Attachment B, Pages 3 and 4).

Controls were not in place to ensure that data and programs were restricted to authorized users (Attachment B, pages 4 and 5).

Expenditures from a prior year were paid with funds from a subsequent year (Attachment B, page 6).

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.

Patrick P. O'Carroll, Jr.

Overview of the Office of the Inspector General

The Office of the Inspector General (OIG) is comprised of our Office of Investigations (OI), Office of Audit (OA), Office of the Chief Counsel to the Inspector General (OCCIG), and Office of Executive Operations (OEO). To ensure compliance with policies and procedures, internal controls, and professional standards, we also have a comprehensive Professional Responsibility and Quality Assurance program.

Office of Audit

OA conducts and/or supervises financial and performance audits of the Social Security Administration's (SSA) programs and operations and makes recommendations to ensure program objectives are achieved effectively and efficiently. Financial audits assess whether SSA's financial statements fairly present SSA's financial position, results of operations, and cash flow. Performance audits review the economy, efficiency, and effectiveness of SSA's programs and operations. OA also conducts short-term management and program evaluations and projects on issues of concern to SSA, Congress, and the general public.

Office of Investigations

OI conducts and coordinates investigative activity related to fraud, waste, abuse, and mismanagement in SSA programs and operations. This includes wrongdoing by applicants, beneficiaries, contractors, third parties, or SSA employees performing their official duties. This office serves as OIG liaison to the Department of Justice on all matters relating to the investigations of SSA programs and personnel. OI also conducts joint investigations with other Federal, State, and local law enforcement agencies.

Office of the Chief Counsel to the Inspector General

OCCIG provides independent legal advice and counsel to the IG on various matters, including statutes, regulations, legislation, and policy directives. OCCIG also advises the IG on investigative procedures and techniques, as well as on legal implications and conclusions to be drawn from audit and investigative material. Finally, OCCIG administers the Civil Monetary Penalty program.

Office of Executive Operations

OEO supports OIG by providing information resource management and systems security. OEO also coordinates OIG's budget, procurement, telecommunications, facilities, and human resources. In addition, OEO is the focal point for OIG's strategic planning function and the development and implementation of performance measures required by the Government Performance and Results Act of 1993.