FINDING REFERENCE NUMBER 2023-055 (See Finding Reference Number 2023-024)
FEDERAL PROGRAM (ALN – 96.001) SOCIAL SECURITY–DISABILITY INSURANCE
U.S. SOCIAL SECURITY ADMINISTRATION
AWARD NUMBERS 1804RQD100; 1904RQD100; 2004RQD100; 2104RQD100; 2204RQD100; 2304RQD100 (Federal Award Years: 2018 through 2023)
ADMINISTRATION OFFICE OF THE SECRETARIAT
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA According to the Program Operations Manual (POMS) DI 39506.203-Updating and Reconciling Unliquidated Obligations published by the Social Security Administration (SSA), legitimate unliquidated obligations must be backed up by records or papers that explain the nature of the obligations and provide evidence for the amounts reported. It is also crucial that the agency's reported unliquidated obligations reflect any modifications or cancellations of Consultative Examinations (CE) and Medical Evidence of Record (MER) authorizations. State authorities should check CE authorizations to see if the unliquidated obligation is an authorization that is still in existence and evaluate unliquidated obligations at least once a month to cancel those that are no longer valid.
POMS 39506.210 Preparations Instructions for Form SSA-4513 instructs the State Agency to check the appropriate box in the report to indicate the attachment of Form-871.
Uniform Guidance at 2 CFR §200.302 Financial Management Section (a) establish the administrative requirements for the program, which include the requirement that state and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.
STATEMENT OF CONDITION The State Agency Report of Obligations for SSA Disability Programs, Form Report SSA-4513, was incomplete and inaccurate. During the audit procedures the following deficiencies were noted by us:
i.
It was not specified in the Puerto Rico Disability Determination Services (PR-DDS) Accounting Department's Form SSA-4513 for September 2022 and June 2023 if Form SSA-871, State Agency Schedule for Equipment Purchases for SSA Disability Programs, had to be included with Form SSA-4513 for FYs 2023, 2022, 2021, 2020, 2019, and 2018. Whether this was necessary or not is unknown.
ii.
Information about unliquidated obligations for FYs 2023, 2022, 2021, 2020, 2019, and 2018 were absent from September 2022 Form SSA-4513.
iii.
Information regarding Unliquidated Obligations for each of the specified reporting periods was absent from June 2023 Form SSA-4513.
1)
FY 2023's unliquidated obligations are not detailed. In its Form SSA-4513, the PR-DDS included unliquidated commitments, which accounted for 20% of the overall obligation balances.
2)
The reported balances of unliquidated commitments for FY 2022 are not supported by any information. In its Form SSA-4513, the PR-DDS included unliquidated commitments, which accounted for 8% of the overall obligation balances.
3)
Reported balances of unliquidated debts for FYs 2021, 2020, and 2019 are not supported by any information.
iv.
There were discrepancies between the accounting system and the total amount of disbursements on Form SSA-4513 for June 2023, and no observations were submitted in the report remarks section.
1) $237,231 discrepancy in FY 2022
2) $40,907 discrepancy in FY 2021
3) $8,800 discrepancy in FY 2020
4) $33,458 discrepancy in FY 2019
5) $49,179 discrepancy in FY 2018
v.
The PR-DDS paid back $112,443 to the Puerto Rico Treasury Department in fiscal year 2023 to offset FY 2018 expenses that were not fully utilized in prior years. Because an expense is reported at the time a request is registered by the PR-DDS Accounting Department Special Payer, this resulted in an overstatement in the Schedule of Expenditures of Federal Awards and in the quarterly reports.
vi.
The PR-DDS Accounting Department received a request refund of $1,242,212 from the SSA for fiscal years 2019, 2020, and 2021 during March 2023 SSA-4513. Because there was not enough evidence in the March report to warrant an increase in obligations, the request was based on excess withdrawals exceeding total commitments recorded in FORM SSA-4513 for March 2023. In fiscal year 2023, $397,740 was repaid by the PR-DDS Accounting Department.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This is a systematic deficiency. Information needed to effectively generate financial reports should be available through the financial management system.
STATEMENT OF CAUSE Internal controls is not in place in the PR-DDS Accounting Department to ensure that vendor payments are processed on schedule. Furthermore, as mandated by DI 39506.203, the PR-DDS Accounting Department has not put monitoring measures in place to routinely assess unliquidated commitments. Furthermore, the PR-DDS Accounting Department lacks internal procedures for recording discrepancies between financial reporting and accounting systems.
POSSIBLE ASSERTED EFFECT The PR-DDS raises the possibility of incurred costs without the option to obtain reimbursement from the Federal grant if appropriate procedures are not in place to pay suppliers on time and liquidate obligations on time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the Accounting Department of PR-DDS establish procedures to make sure Form SSA-4513 is properly examined, recorded, and compliant with POMS DI 39506.203.
To cancel commitments that are no longer valid, we advise the PR-DDS Accounting Department to check unliquidated obligations at least once a month. For FYs 2020 and 2021, we advise the PR-DDS to ascertain the number of disbursements, restrict the reimbursement to that sum prior to deducting money, and repay SSA for any overdrafts that remain. Furthermore, we recommend a formal reconciliation between the quarterly reports and the accounting system-documented disbursements, with an explanation of any discrepancies included in remarks of the Form SSA-4513.