U.S.
Department of Labor Office of Inspector General
Audit Report
SPECIAL REPORTS RELATING TO THE FEDERAL EMPLOYEES'
COMPENSATION SPECIAL BENEFIT FUND AS OF AND FOR THE YEAR ENDED SEPTEMBER
30, 1997
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This report reflects the findings of the Office of Inspector General
at the time that the audit report was issued. More current information
may be available as a result of the resolution of this audit by the Department
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Report Title: Special Reports Relating to the Federal
Employees' Compensation Sepcial Benefit Fund as of and for the Year ended
September 30, 1997
Report Number: 12-98-001-04-431
Issue Date: January 9, 1998
The Federal Employees' Compensation Act Special Benefit Fund, was established
by the Federal Employees' Compensation Act to provide income and medical
cost protection worldwide for job-related injuries, diseases, or deaths
of civilian employees of the Federal Government and certain other designated
groups. The U. S. Department of Labor, Employment Standards Administration
(ESA), Office of Workers' Compensation (OWCP), has the responsibility to
provide actuarial liability and benefit payment data to the 24 Chief Financial
Officers (CFO) Act agencies in regard to the Federal Employees' Compensation
Act (FECA) future workers' compensation benefits.
The report describes audit testing and agency operating procedures.
The report includes a complete discussion of the FECA program, the sampling
methodology used, specific procedures performed (both statistical and non-statistical)
and the detailed results of those procedures. We tested 261 compensation
and 290 medical statistically selected payment items. Additionally, we
tested non-statistical items in regard to potential duplicate payments,
multiple claim compensation payments, third party payment cases, gross
override cases and high dollar compensation and medical payments.
Report Results
-
Benefit Payments - We projected that compensation and medical
bill payments (for the sampling period, October 1, 1996 to May 31, 1997)
are understated by as low as $2.8 million, but overstated as high as $18.2
million. This overstatement is within the materiality limits established
by the sampling plan.
-
Our procedures disclosed 39 medical bill payments (out of 290 statistically
selected sample items tested) paid in error or that represented duplicate
payments for a total overstatement of $35,999. For the sampling period,
we are 90 percent confident that such medical bill payments are overstated
as low as $4 million, but as high as $16 million, which is within the materiality
limits established by the sampling plan.
-
Our procedures disclosed 27 compensation payments (out of 261 statistically
selected sample items tested) paid in error for a total overstatement of
$13,450. For the sampling period, we are 90 percent confident that such
compensation payments are understated as low as $4 million, or overstated
as high as $6 million, which is within the materiality limits established
by the sampling plan.
-
Documentation required by FECA policy to establish continuing eligibility
was not obtained as required in 13 of 63 instances. For the sampling period,
we are 95 percent confident, using a one-sided confidence level, that the
projected deviation rate could be as high as 22 percent. These cases involved
injuries which were well established, documented and long standing. While
these errors are procedural problems, they did not impact the eligibility
of the claimants.
-
Information contained in the ACPS such as addresses and chargeback codes
were not updated. For the sampling period, we are 95 percent confident,
using a one-sided confidence level, that the projected deviation rate would
be no more than 7 percent. We determined that these errors did not result
in payment errors or an incorrect agency being charged.
-
EDP General Controls and Security - FECA's electronic data
processing systems were not sufficiently documented, an appropriate disaster
plan was not in place, user IDs and passwords were not safeguarded, and
Year 2000 changes within the chargeback system had not yet been made. We
did not identify any errors or incorrect payments as a result of these
weaknesses.
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