OFFICE OF
THE INSPECTOR GENERAL

SOCIAL SECURITY ADMINISTRATION

SINGLE AUDIT OF THE
COMMONWEALTH OF PUERTO RICO
DEPARTMENT OF THE FAMILY
FOR THE FISCAL YEAR
ENDED JUNE 30, 2006

A-77-09-00011

August 2009

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: August 5, 2009 Refer To:

To: Candace Skurnik
Director
Audit Management and Liaison Staff

From: Inspector General

Subject: Management Advisory Report: Single Audit of the Commonwealth of Puerto Rico, Department of the Family, for the Fiscal Year Ended June 30, 2006 (A-77-09-00011)

This report presents the Social Security Administration’s (SSA) portion of the single audit of the Commonwealth of Puerto Rico, Department of the Family (PRDF), for the Fiscal Year ended June 30, 2006. Our objective was to report internal control weaknesses, noncompliance issues, and unallowable costs identified in the single audit to SSA for resolution action.

The audit firm Torres Llompart, Sanchez Ruiz L.L.P., performed the audit. We have not received the results of the desk review conducted by the U.S. Department of Agriculture (USDA). We will notify you when we receive the results if USDA 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 Torres Llompart, Sanchez Ruiz L.L.P., and the reviews performed by USDA. 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 Puerto Rico Disability Determination Services (DDS) performs disability determinations under SSA’s DI program in accordance with Federal regulations. The Puerto Rico DDS is reimbursed for 100 percent of allowable costs. The PRDF is the Puerto Rico DDS’ parent agency.

The single audit reported PRDF:

1. Did not submit the single audit report to OMB’s Federal Audit Clearinghouse within 9 months after the fiscal year-end (Attachment A, Page 1). The corrective action plan indicated PRDF will establish reliable and effective processes to comply with the reporting requirements.
2. Had deficient accounting policies, procedures, and financial reporting practices including a lack of a self-balancing set of accounts, and inappropriate and/or incomplete monthly and year-end closing procedures (Attachment A, Pages 2 through 4). The corrective action plan indicated that a customized application system was being developed that will provide accurate and complete financial and budgetary information.
3. Had an inadequate filing system that did not permit the prompt retrieval of payment and other documents requested (Attachment A, Pages 5 and 6). The corrective action plan indicated a Document Control System was developed that includes a Central File Division to maintain the supporting documents of all fiscal transactions.
4. Had multiple documents missing from its personnel files, and was not properly monitoring payroll transactions (Attachment A, Pages 7 through 10). The corrective action plan indicated that a taskforce was organized to review 3,000 personnel files to verify full compliance with all State regulations.
5. Did not have an effective property and equipment system (Attachment A, Pages 11 through 13). The corrective action plan indicated that PRDF was developing a customized automated Property Management System.
6. Charged expenditures to SSA for obligations that were incurred after the end of the period of availability, resulting in questioned costs totaling $559,157 (Attachment A, Pages 14 through 17). The corrective action plan indicated that PRDF will implement a mechanized application of budget control and financial transaction's register for Federal and State funds that will facilitate fiscal compliance with Federal regulations.

We recommend SSA ensure PRDF:

1. Established reliable and effective processes that will allow it to comply with the requirement that the single audit report be submitted to the Federal Audit Clearinghouse within nine months after the fiscal year-end.

2. Developed adequate accounting policies, procedures and reporting practices.

3. Established a filing system that allows the prompt retrieval of Puerto Rico DDS payment and other documents.

4. Corrected the personnel file deficiencies for Puerto Rico DDS staff.

5. Established adequate procedures to monitor payroll transactions.

6. Developed an equipment and property inventory system for the Puerto Rico DDS that complies with SSA policy.

7. Established a system to properly account for SSA funds provided to the Puerto Rico DDS.

We also recommend that SSA:

8. Determine whether the obligations recorded after the period of availability resulted in unallowable charges and if so, request a refund of the unallowable costs.

The single audit also disclosed the following findings that may impact the DDS’ operations although they are 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.

• PRDF’s recordkeeping system did not provide for the immediate identification of payment documents and the system lacked adequate internal controls (Attachment B, Pages 1 through 9).

• PRDF did not have adequate procedures and controls over its cash management program (Attachment B, Pages 10 through 14).

Please send copies of the final Audit Clearance Document to Ken Bennett. If you have questions contact Ken Bennett at (816) 221-0315 extension 1558.

/s/
Patrick P. O’Carroll, Jr.

Attachments

 

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.