BASIC (03-86)

DI 39554.210 The Audit Process Under a HHS Audit --DDS

The OMB Circular —133 provisions do not limit the authority of HHS to make an independent audit of a DDS. However, if an independent audit is arranged, it will build upon the work already done by the State in the audit conducted under the OMB Circular A-133 provisions.

If there is reasonable cause to believe the OMB Circular A-133 audit is not adequate to establish that the funds furnished to a DDS have been properly accounted for, SSA may initiate an independent audit to build upon the work done by the State auditors.

  1. The objective of a HHS fiscal audit are to determine that:

    1. State agency controls are adequate to provide economical, effective administration of the disability program and to recommend appropriate action if improvement is needed.

    2. Vouchers are mathematically correct, supported by substantiating documents and in agreement with entries in the records.

    3. Expenditures for which Federal funding was claimed have been properly authorized, approved, and made in accordance with Federal and State laws, rules and regulations.

    4. Expenditures have been properly classified between the disability program and other programs of the State agency.

    5. Expenditures have actually been disbursed in the correct amount to the proper payees.

    6. Refunds or credits have been properly accounted for in computing the amount of the claim against Federal funds.

    7. The agency has properly reported its accountability for Federal funds.

      All records required to establish the correctness of the State agency's claim for Federal funds may be examined by the auditors. These records include not only those usually considered as the formal accounting system but also any other agency records which may contain information necessary to establish the facts to support a reasonable conclusion. Also subject to review when necessary are the accounts and records of State fiscal officers, if these accounts and records involve receipt, custody and disbursement of Federal funds, and the records of other State agencies where necessary to substantiate claims made against Federal funds.

  2. When medical evidence has been purchased the auditors will determine that:

    1. The action was authorized in accordance with the customary procedures of the agency;

    2. The medical evidence was secured; and

    3. In the case of medical examinations, x-rays, or laboratory tests, the expenditures did not exceed the highest rate paid by Federal or other agencies in the State for the same or similar type of service.

      The auditors are encouraged to discuss each tentative audit finding, as soon as it is developed, with the organization being audited. In addition, an exit conference at the conclusion of each audit is a standard practice. The SSA regional office will ordinarily be represented at the exit conference. If the State and/or the State agency wish to consult with the SSA regional office at any time during the audit process, it should do so. If the auditor becomes aware of irregularities in the State department, he/she will promptly notify State and Federal officials. Irregularities include such matters as conflicts of interest, falsification of records or reports, and misappropriation of funds or other assets.

      The audit report will be written and issued in accordance with HHS audit procedures. Copies of the final audit report will be send directly to the State agency with copies to the SSA Regional Commissioner and SSA central office. State agencies will either be told that they will be contacted by the Regional Commissioner or the State agency will be asked to respond to the report within 30 days and to present any additional information which may have a bearing on the issues raised in the audit report. The State agency response must discuss each recommendation contained in the audit report and must clearly indicate concurrence or non-concurrence with each recommendation. This response must be sent to the Regional Commissioner. The State will take no corrective action regarding an audit recommendation until so advised by the RO.

      The Regional Commissioner will carefully consider the audit recommendations and the State agency response; obtain any other needed information; consult with SSA central office; and issue a notice of final determination to the State agency. The State agency will also be notified of its appeal rights.

      See 20 CFR 404.1627(b) and 416.1027(b) regarding the resolution of appeal items that are questioned and reported in an audit report.

      The Regional Commissioner will followup on the implementation of the final determination that is issue