OFFICE OF
THE INSPECTOR GENERAL

SOCIAL SECURITY ADMINISTRATION

SINGLE AUDIT OF THE
STATE OF MONTANA
FOR THE 2-YEAR PERIOD
ENDED JUNE 30, 2007

February 2009

A-77-09-00006

MANAGEMENT
ADVISORY REPORT

Mission

By conducting independent and objective audits, evaluations and investigations, we inspire public confidence in the integrity and security of SSA’s programs and operations and protect them against fraud, waste and abuse. We provide timely, useful and reliable information and advice to Administration officials, 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

We strive for continual improvement in SSA’s programs, operations and management by proactively seeking new ways to prevent and deter fraud, waste and abuse. We commit to integrity and excellence by supporting an environment that provides a valuable public service while encouraging employee development and retention and fostering diversity and innovation.

MEMORANDUM

Date: February 4, 2009 Refer To:

To: Candace Skurnik
Director
Audit Management and Liaison Staff

From: Inspector General

Subject: Management Advisory Report: Single Audit of the State of Montana for the 2-Year Period Ended June 30, 2007 (A-77-09-00006)

This report presents the Social Security Administration’s (SSA) portion of the single audit of the State of Montana for the 2-year period ended June 30, 2007. Our objective was to report internal control weaknesses, noncompliance issues, and unallowable costs identified in the single audit to SSA for resolution action.

The Montana Legislative Audit Division performed the audit. We have not received the results of the desk review conducted by the Department of Health and Human Services (HHS). 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 the Legislative Audit Division 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 (OMB) 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 Montana Disability Determination Services (DDS) performs disability determinations under SSA’s DI and SSI programs in accordance with Federal regulations. The Montana DDS is reimbursed for 100 percent of allowable costs. The Social and Rehabilitation Services Division (SRS) is the Montana DDS’ parent agency.

The single audit reported:

1. Volume discount rebates totaling $32,597 from credit card companies for the State’s purchase card and State-wide fueling network programs were not credited to the appropriate Federal award programs (Attachment A, Pages 1 and 2). The corrective action plan indicates the State has implemented a process, with the Federal Government’s approval, where the Federal share of the rebates will paid to HHS (Attachment A, Page 9).

2. The Montana Department of Administration did not have appropriate controls over the contractor that prepared the Montana Statewide Cost Allocation Plan (SWCAP). Specifically, controls did not exist to ensure the SWCAP was submitted in a timely manner and prepared in accordance with Federal regulations (Attachment A, Pages 3 and 4). The corrective action plan indicates that the Montana Department of Administration has assumed the SWCAP preparation process (Attachment A, Page 9).

3. State policies and procedures regarding limits for the accumulation of employee vacation leave were not followed, resulting in unallowable costs of $57,777 being charged to various Federal agencies (Attachment A, Pages 5 and 6). The corrective action plan indicates that policies and procedures will be followed to ensure compliance with State laws (Attachment A, Page 10).

4. Funds from a partial federally funded employee group benefit plan account were inappropriately used for costs associated with the voluntary employee healthcare reimbursement fund (Attachment A, Pages 7 and 8). The corrective action plan indicates that the Department of Administration is seeking sufficient revenue to reimburse the fund (Attachment A, Page 11).

We recommend that SSA:

1. Determine whether recovery of SSA’s portion of the $32,597 in volume discount rebates identified in the single audit and future rebates is appropriate based on the agreement between HHS and the State of Montana.

2. Ensure the Montana Department of Administration has developed adequate controls over the accurate and timely completion of the SWCAP.

3. Determine the portion of the $57,777 from excess vacation leave that was charged to SSA and recover the unallowable costs.

4. Verify that the employee group benefit plan was reimbursed.

Please send copies of the final Audit Clearance Document to Shannon Agee. If you have questions contact Shannon Agee at (816) 936 5590.

/s/
Patrick P. O’Carroll, Jr.

Attachment

Overview of the Office of the Inspector General
The Office of the Inspector General (OIG) is comprised of an Office of Audit (OA), Office of Investigations (OI), Office of the Counsel to the Inspector General (OCIG), Office of External Relations (OER), and Office of Technology and Resource Management (OTRM). To ensure compliance with policies and procedures, internal controls, and professional standards, the OIG also has a comprehensive Professional Responsibility and Quality Assurance program.

Office of Audit

OA conducts 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 reviews and program evaluations on issues of concern to SSA, Congress, and the general public.

Office of Investigations

OI conducts investigations 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 liaison to the Department of Justice on all matters relating to the investigation of SSA programs and personnel. OI also conducts joint investigations with other Federal, State, and local law enforcement agencies.

Office of the Counsel to the Inspector General

OCIG provides independent legal advice and counsel to the IG on various matters, including statutes, regulations, legislation, and policy directives. OCIG 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. Also, OCIG administers the Civil Monetary Penalty program.

Office of External Relations

OER manages OIG’s external and public affairs programs, and serves as the principal advisor on news releases and in providing information to the various news reporting services. OER develops OIG’s media and public information policies, directs OIG’s external and public affairs programs, and serves as the primary contact for those seeking information about OIG. OER prepares OIG publications, speeches, and presentations to internal and external organizations, and responds to Congressional correspondence.

Office of Technology and Resource Management

OTRM supports OIG by providing information management and systems security. OTRM also coordinates OIG’s budget, procurement, telecommunications, facilities, and human resources. In addition, OTRM is the focal point for OIG’s strategic planning function, and the development and monitoring of performance measures. In addition, OTRM receives and assigns for action allegations of criminal and administrative violations of Social Security laws, identifies fugitives receiving benefit payments from SSA, and provides technological assistance to investigations.