AUDIT REPORTS OF FOOD STAMP PROGRAM LOS ANGELES COUNTY DEPARTMENT OF PUBLIC SOCIAL SERVICES, LOS ANGELES, CALIF., AS OF MARCH 14, 1974 (Report No. 2714-216-SF) Forty-five percent of the ATP's in our statistical sample were issued for improper amounts, based on supporting data in the related case files. The vast majority of these (about 39 percent) resulted in bonus coupons being issued in excess of the amounts authorized. These overissues in bonus coupons represent a potential program loss (Federal funds) of at least $756,0000 during the test month of July 1973. We also found (through the use of computer operations) 220 instances of apparent duplicate issues of ATP's during July, of which 110 were redeemed by the recipients. These redeemed duplicates represent a program loss of about $4,700 in bonus coupons. Another area of weakness concerns the county's computer-generated exception listings. These listings represent a control designed to identify ATP's that may have been redeemed by unauthorized persons, or for not being fully utilized. The types of conditions found during our current audit are similar in nature to situations we have found and reported in previous audits of this project. Prior to our releasing this report, the county prepared a comprehensive written plan aimed at correcting many of the problem areas identified by this audit. SOCIAL SERVICES ADMINISTRATION, DEPARTMENT OF HUMAN (Audit Report No. 2713-3-W) This audit was requested by the Deputy Administrator, Food and Nutrition Service and the Director, Social Services Administration. Their reasons for requesting the audit were: (1) Inadequate certification services despite joint FNS and SSA efforts to simplify procedures and substantially increase the number of food stamp caseworkers; (2) long delays by SSA in submitting monthly Reports of Participation and Coupon Issuance (Form CFP-256); and (3) an increase in the nonpublic assistance (NPA) households participating at the minimum purchase level. Our audit tests showed that SSA control of the Food Stamp Program needed improvement because: 1. Procedures permitted the improper multiple issuance (two or more) of ATP's to recipients during the same month. 2. Facilities for safeguarding ATP's and ID's were inadequate. 3. Procedures for accounting for and controlling the use of blank ATP's were inadequate. 4. The computer file of participants was not revised when ATP's were returned by the Post Office as undeliverable and security over the returned ATP's was not adequate. 5. The computer was not effectively utilized as a management tool as it was not used to: (a) identify duplicate issuances; (b) make reconciliations of ATP's issued with ATP's redeemed; (c) prepare skip pattern reports to determine irregular participants who are required to be recertified; (d) identify and eliminate those who were not participating and should be removed from food stamp rolls; and (e)research the validity of requests for manual (emergency) issuances prior to making such issuances. 6. Management took little or no action to correct weaknesses as they became aware of them. The lack of central supervision contributed to excessive delays in corrective actions because numerous discussions took place between SSA staff offices without decisions being reached and implemented. 7. SSA had not carried out its responsibility to: (a) completely account for collections certified by issuing agents as being deposited in the Federal Reserve Bank; and, (b) assure that issuing agents promptly deposited collections received from the sale of food stamps 8. SSA had not required the food stamp coupon bulk storage facility to maintain perpetual inventory records. 9. SSA had not issued complete instructions to banks and credit unions acting as issuing agents. In the audit we reconciled the listings of recipients with negotiated June ATP's and found that 738 recipients negotiated improper duplicate ATP's causing USDA to lose $47,800 (the bonus value of the erroneous food stamp issuances). In addition, in June 290 recipients negotiated expired ATP's with a bonus value totaling $9,700, COOK COUNTY PROJECT AREA, FOOD STAMP PROGRAM, FNS, CHICAGO, ILL., AS OF JUNE 30, 1972 (Audit Report No. 2714-222-C) Our audit review of 426 random sample food stamp households resulted in our identifying 30 households with an overissuance in bonus food coupons of $3,033.50 for the period August 1971 through January 1972. Since our analysis was performed using random sampling techniques, we are able to project the bonus overissuance to the entire universe of households participating in Cook County for that period. The projection so calculated is $784,000, and we can state with 95 percent certainty that the total amount of bonus coupon overissuance was at least $535,000, and not more than $1,033,000. This compares to a total bonus issued for the six months of $29,460,000. We located an additional 90 procedural errors in certification that in most cases did not result in bonus overissuance, but were caused by lax certification procedures. Certification control was considered by us to be inadequate. Our sample evaluation also identified 17 food stamp participation cases for which no case file supporting food stamp certification was available for our analysis. Again using a statistical sampling projection, we can estimate with 95 percent certainty that case files for at least 3,079 recipient households were unavailable in the public aid district offices. Consequently, there was no assurance for these cases that Federal funds involved were being properly utilized. Numerous replacement ATP cards were issued by district public aid offices to replace those cards reported lost, stolen, or destroyed. Subsequently, in some instances, both the original and its replacement card were negotiated. (About 3,800 in a year.) Some ATP cards were used by the recipients illegally, and some were negotiated by second parties not authorized in any way to negotiate the cards. Illegal bonus amounts accruing to the negotiators were $1,307 for 45 cases we analyzed in detail. Interest costs to the Federal Treasury were estimated at about $57,800 for one year because of delays in transmitting funds from the sale of food stamps to the Federal Reserve Bank. Čontrol could be improved over serially numbered emergency ATP cards. At some offices inventory and issuance controls were inadequate and resulted in cards being unaccounted for. Records supporting issuance of ATP cards were not always current because some district office personnel lacked an understanding of the need to prepare and submit updated authorization information. This resulted in bonus overissuances in some cases. FOOD AND NUTRITION SERVICE, FOOD STAMP PROGRAM, NEW JERSEY DIVISION OF PUBLIC WELFARE (MONMOUTH COUNTY), TRENTON AND ASBURY PARK, N.J., AS OF DECEMBER 15, 1972 (Audit Report No. 2713-11-N (Supplement)) The agreed to results of our audit showed that of 386 households selected for review on the basis of statistical sampling techniques, 44 or 11.4 percent were found to be ineligible for FSP participation based on various certification errors attributed to the use of "selfcertification". These ineligible households received $9,881 in bonus stamps during their respective certification periods or through March 31, 1972, whichever was shorter. We projected these audit results on the basis of statistical sampling procedures, (at a 95 percent confidence level on a one-sided basis) and concluded that at least $70,787 in bonus stamps were issued to ineligible households during the above identified periods. This projection was based upon the 3,866 NPA households participating in the FSP in Monmouth County as of October 1971. Our audit further disclosed that there were an additional 74 households which were eligible for participation in the program but were overissued bonus stamps totaling $5,139 and 50 others which were underissued bonus stamps totaling $2,052. Because management did not wish to review those cases found by audit to have been over or underissued $5 or under per month, they would not agree that 64 of these type cases were incorrectly issued food stamps. The remaining 60 cases were concurred in by management as having been over or underissued food stamps. 60-358-76- -7 HAWAII DEPARTMENT OF SOCIAL SERVICES AND HOUSING, PUBLIC WELFARE DIVISION OAHU BRANCH, HONOLULU, HAWAII-FOOD STAMP PROGRAM, AS OF OCTOBER 22, 1974 (Report No. 2714-280-SF) Forty-nine percent of the files in the statistical sample had received an incorrect issuance of food coupons. The majority of these (36 percent of the files in the sample) had received an excess issue of bonus coupons. Those overissuances in bonus coupons resulted in a program loss of federal funds of at least $51,000 during the test month of May 1974. Errors had occurred throughout the factors affecting eligibility and basis of issuance in such a manner and frequency as to make the quality of certification and recertification work unacceptable. Conditions reported in our prior audit (2714-173-S) continued to exist. Necessary claim determinations were not being prepared and collection efforts to recover overissues of bonus coupons were usually not attempted. There was an absence of control over ATP's returned as undeliverable in the mail. Some recipients received duplicate benefits during the month of May, while income to some PA households had been disregarded. WASHINGTON STATE DEPARTMENT OF SOCIAL AND HEALTH SERVICES, OLYMPIA, WASH., FOOD STAMP PROGRAM, AS OF MAY 10, 1973 (Report No. 2713-15-S) The scope of this audit was limited to a review of the State Agency's use of personnel funded by the Emergency Employment Act (EEA) and the resulting effect on the State Agency's claim for reimbursement of certain costs. Coverage was extended into all local offices. The State Agency had received payment and was preparing claims for reimbursement of costs which the State Agency did not incur. Personnel who were fully funded by the Federal Government through another Federal program had completed a significant portion of the work which the State Agency was claiming against Food and Nutrition Service (FNS) for reimbursement. Some local offices had used unqualified personnel in determining eligibility for nonassistance food stamp households. The audit recommended that $8,990.94 be recovered from the State Agency claim for reimbursement for September 1971; disallow $203,745.66 from the State Agency amended claims for reimbursement for the October 1971 through March 1973 period. SANTA CLARA COUNTY DEPARTMENT OF SOCIAL SERVICES, SAN JOSE, CALIF., AS OF NOVEMBER 27. 1974 (Report No. 2714-284-SF) Approximately 50 percent of the redemptions included in our statistical sample were issued for improper amounts, based on supporting data in the related case files. The vast majority of these (about 43 |