Office of the Inspector General

James M. Fornataro
Associate Commissioner for Acquisition and Grants

Assistant Inspector General for Audit

Costs Claimed by the State of Washington on the Social Security Administration’s Contract Number 600-95-22678 (A-15-99-51014)

The attached final report presents the results of our audit. Our objective was to determine if costs claimed by the State of Washington for Contract Number

600-95-22678, were allowable, allocable, and reasonable in accordance with Federal regulations and the terms of the contract.

Please comment within 60 days from the date of this memorandum on corrective action taken or planned on each recommendation. If you wish to discuss the final report, please call me or have your staff contact Frederick C. Nordhoff, Director, Financial Management and Performance Monitoring Audit Division, at (410) 966-6676.

Steven L. Schaeffer

Attachment

Office of the Inspector General

James M. Fornataro
Associate Commissioner for Acquisition and Grants

Assistant Inspector General for Audit

Costs Claimed by the State of Washington on the Social Security Administration’s Contract Number 600-95-22678 (A-15-99-51014)

OBJECTIVE

Our objective was to determine if costs claimed by the State of Washington for Contract Number (CN) 600-95-22678 were allowable, allocable, and reasonable in accordance with Federal regulations and the terms of the contract.

We limited our audit to the review of costs incurred by the State of Washington and its subcontractor for CN 600-95-22678. We did not assess and do not express an opinion of the overall acceptability of the State of Washington’s or its subcontractor’s internal controls or accounting systems.

However, we reviewed, on a limited basis, the contractor’s and subcontractor’s internal controls. Since we had no prior experience with the contractor or the subcontractor, we preliminarily assessed the control risk as "High." Therefore, we expanded our substantive tests, which our audit reflects and provides a reasonable basis for our conclusions. We also examined, on a judgmental basis, evidence supporting the amounts claimed by inspecting disclosures in the data; reviewing records; assessing the accounting principles used and significant estimates made by the contractor; and evaluating the overall data and records presentation.

To evaluate claimed costs, we referenced OMB Circulars A-87 and A-122 and the terms and conditions of the contract. We questioned the costs that did not meet the requirements of these circulars and the contract to determine the allowable costs for this contract.

We performed our fieldwork in Lacey, Washington and at the State of Washington’s subcontractor, Therapeutic Health Services, in Seattle, Washington. We also performed work at SSA Headquarters, located in Baltimore, Maryland, from March 2001 through April 2001. This audit was conducted in accordance with generally accepted government auditing standards.

We determined the costs claimed by the State of Washington for CN 600-95-22678, were allowable, allocable, and reasonable in accordance with applicable Federal Regulations and the terms of the contract. Details of the costs are shown below:

We recommend that SSA close out the State of Washington CN 600-95-22678 in the amount of $2,010,794.

Steven L. Schaeffer

Appendices

APPENDIX A - Acronyms

APPENDIX B - OIG Contacts and Staff Acknowledgments

Appendix A

Acronyms

CN Contract Number

DA&A Drug Addicts and Alcoholics

OMB Office of Management and Budget

RMA Referral and Monitoring Agency

SSA Social Security Administration

SSI Supplemental Security Income

Appendix B

OIG Contacts and Staff Acknowledgments

In addition to those named above:

For additional copies of this report, please contact the Office of the Inspector General’s Public Affairs Specialist at (410) 966-5998. Refer to Common Identification Number A-15-99-51014.