JUNE 30, 2004

December 2005




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: December 21, 2005

To: Candace Skurnik
Director Audit Management and Liaison Staff

From: Inspector General

Subject: Management Advisory Report: Single Audit of the State of South Carolina for the Fiscal Year Ended June 30, 2004 (A-77-06-00002)

This report presents the Social Security Administration's (SSA) portion of the single audit of the State of South Carolina for the Fiscal Year ended June 30, 2004. Our objective was to report internal control weaknesses, noncompliance issues, and unallowable costs identified in the single audit to SSA for resolution action.

The South Carolina 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 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 South Carolina 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 South Carolina Vocational Rehabilitation Department (VR) is the South Carolina DDS' parent agency.

The single audit reported that:

1. The DDS could not locate documentation to support expenditures charged to the disability programs. The corrective action plan indicated that the DDS had no further jurisdictional responsibility for the claim since the case file was located at an SSA District Office (Attachment A, pages 1, 2, and 9).

2. DDS expenditures reported on the Schedule of Federal Financial Assistance (SFFA) did not agree with State agency accounting records. The corrective action plan indicated that actions would be taken to ensure that the SFFA is prepared in accordance with State requirements (Attachment A, pages 3, 4, and 10).

3. A vendor was reimbursed for medical evidence of record in excess of the invoiced amount. The corrective action plan indicated that internal control procedures would be implemented to ensure vendors are reimbursed the correct amount (Attachment A, pages 5, 6, and 11).

4. The State's Cost Allocation Plan (CAP) contained incorrect cost allocation rates and incorrectly omitted allocable costs. The corrective action plan indicated that revisions to the CAP were completed and submitted to the cognizant agency for approval (Attachment A, pages 7, 8, and 11).

We recommend that SSA:

1. Ensure that the DDS implements procedures to maintain documentation to support expenditures.

2. Verify that the State took appropriate actions to ensure the SFFA is accurately prepared.

3. Ensure internal control procedures over vendor payments were strengthened.

4. Work with VR to ensure indirect costs charged to its programs are distributed in an equitable manner.

Please send copies of the final Audit Clearance Document to Shannon Agee and Rona Lawson. 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.