The Importance of Accounting at the Social Security Administration

Peter D. Spencer

Deputy Commissioner for Budget, Finance, Quality, and Management

Chief Financial Officer

November 19, 2014

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Presentation Objectives•Provide an overview of the agency and BFQM

•Discuss how our operations tie into accounting

•Review major challenges we face as accountants

•Discuss initiatives to address challenges

•Look into the future of Social Security

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About the Social Security Administration

• Social Security touches the lives of virtually every American, as our programs provide a safety net for millions of people:

In FY 2014, we paid over 63 million Americans $894 billion in benefits

We issued 16 million new and replacement cards

We handled more than 37 million calls on our 800 Number

We assisted over 40 million visitors to our field offices

Received 5 million applications for benefits

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About the Social Security Administration

• We need a vast network of facilities, technology, and skilled staff to serve the public:

The agency is led by Acting Commissioner Carolyn Colvin, who reports directly to the President

82,000 Federal and State employees

Nationwide network of 1,400 offices

International offices in hundreds of countries

Work with 54 States to make disability determinations

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Budget, Finance, Quality, & Management

•Budget policy, formulation, and execution

•Accounting policy and operations

•Acquisition and grants programs

•Forms, publications, and printing program

•Facilities and supply management

•Environmental health and safety programs

•Quality reviews and improvement

•Security and emergency preparedness

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Budget Information

•On a given day, SSA is working on three fiscal years of budgets simultaneously

•Our budgets are performanced-based/workload driven

•Our budget and accounting processes are very closely linked

•Information from accounting system is used as a baseline to develop following year’s budget

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SSA’s Budget Account Structure

•Program Budget

Covers benefit payments to individuals

Mandatory portion of the Federal budget

• Administrative Budget Covers the cost of accomplishing our mission

Discretionary spending

Must compete for scarce resources with other agencies

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SSA’s Administrative Budget

In FY 2015, our administrative budget is expected to be 1.3% of benefit payments –

a remarkable achievement!

SSA Program Budget

$947 Billion

Administrative Budget$12.024 Billion

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Importance of Accounting• The Government is accountable for the use of its

resources

• Providing our financial report to our stakeholders enables them to:

Assess our accountability and stewardship of public resources

Determine whether our services improved or declined from the previous year

Evaluate whether we provided services efficiently and effectively

• Financial information enables Congress and Government Managers to make political, social, and economic decisions

• We use financial information as a tool to demonstrate funding needs to Congress for specific workloads

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SSA’s Complex Accounting System• SSA has a unique accounting structure compared to

other agencies: General fund for Supplemental Security Income (SSI)

Trust funds for Social Security and Disability Insurance

Administrative expenses

Initially charged to one fund

Must allocate portions of administrative expenses to proper fund

Funded by the general fund and the OASI, DI, HI, and SMI trust funds

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Accounting Cycle

• The accounting cycle covers: Budgeting – Tracks authorized spending of public

resources Cost analysis – Determines the cost of producing public

services Performance measures– Link between outputs and

outcomes, which provides a complete picture of how we are using our resources

Financial Accounting - Recording consequences of actual transactions and events

• We report the outcome of these transactions and events in our Agency Financial Report

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Transactions and Events• Some examples of transactions and events that affect

our financial reports:

Benefit payments

Benefits due and payable

Payroll

Supplies and equipment

Leasing office space

Building maintenance

Security measures in field offices

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Agency Financial Report

• Provides information to the President, Congress, and the public to assess our stewardship over the financial resources entrusted to us

 • Includes annual audited financial statements required by the Chief

Financial Officers Act and satisfies several other legislative reporting requirements:

the Federal Managers’ Financial Integrity Act management’s assurance

the Debt Collection Improvement Act

the Improper Payments reporting

• Also includes performance discussion, auditor’s opinion and IG’s major management challenges

• Available at www.ssa.gov/finance/

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Agency Financial Report•Producing the report is a team effort

•FY 2014 marks the 28th year that we published audited financial statements

•21st year we received a clean audit opinion

•Hoping to receive our 17th consecutive CEAR Award

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Enhancing Financial Information

•Social Security Online Accounting and Reporting System (SSOARS)

•SSOARS Financial Information System Upgrade

•Social Security Electronic Remittance System (SERS)

•Improved Administrative Payments Technology

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Numbers are Important But They

Don’t Tell The Whole Story

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Challenges we Face – Keep CFO Out of Trouble!

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Challenges We Face – Audit Process

•Financial Statement Audit Constant communication with auditors Address issues early in the process

•Evolving compliance standards Stay on top of emerging guidance Active in shaping accounting

requirements

•Managing Multiple Audits OIG, GAO, and Financial Management

System Reviews Stay involved from start to finish

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Challenges We Face – Risk •Information Technology Risks Maintain secure and reliable IT services Address significant deficiency in

information controls identified by auditors

Risk-Based Corrective Action Plans

•Improper Payments Risk Assessment Improper Payments Governance Board Risk of beneficiaries receiving incorrect

payments Review of administrative payments

•Reputation Risk

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Challenges We Face – Data Quality

•We must make data-driven decisions

•Ensure reliable, accurate, and consistent data

•Collaborate throughout agency

•Comply with Open Government Initiatives

Office of Open Government SAO for Federal Spending

•Validate data on USASpending.gov with financial information

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Challenges We Face – Benchmarking

•President’s Management Agenda (PMA) Initiative

•Establishes cost, quality and performance metrics for mission support functions Acquisition Financial Management Real Property

•Working with OMB and GSA on metrics

•Agency missions and needs are different, so difficult to measure across the board

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Challenges We Face – Fraud•Zero tolerance for fraud

•Fraud is increasing

•85 anti-fraud initiatives

•Centralized anti-fraud unit“To be the driving force behind the Social Security

Administration’s anti-fraud efforts by sponsoring new initiatives, supporting component anti-fraud efforts, and ensuring agency vigilance at preventing, detecting, and

investigating fraud.”

•National Anti-Fraud Committee

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National Anti Fraud Committee

•NAFC was reestablished to oversee agency’s efforts and milestones in anti-fraud initiatives

•The Inspector General O'Carroll and I co-chair

•We report our progress on initiatives to Ways and Means Subcommittee on Social Security

•NAFC conference held September 2014

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National Anti Fraud Committee

•Anti-Fraud initiatives include:

Increasing continuing disability reviews Expand Cooperative Disability Units Data analytics Anti-Fraud training

• NAFC conference September 2014

• Anti-Fraud suggestions mailbox

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Look into the Future

•More on-line services

•my Social Security

•Vision 2025

•Continue to operate with limited resources

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Questions?