EXECUTIVE SUMMARY:
The Department of Health and Human Services' (HHS) Division of Payment Management
(DPM) serves as the fiscal intermediary between awarding agencies and grant
or contract recipients. The DPM's Payment Management System (PMS) processes
approximately $170 billion in payments to recipient organizations per year.
Under contract with the HHS Office of Inspector General, Ernst & Young's
(E&Y), certified public accountants, reviewed DPM's policies and procedures
placed in operation to fulfill this responsibility.
Specifically, the objectives of E&Y's examination were to obtain reasonable
assurance regarding whether: (1) the description of the PMS application presents
fairly, in all material respects, the aspects of DPM's policies and procedures
that may be relevant to a user organization's internal control structure; (2)
the control structure policies and procedures were suitably designed to achieve
the control objectives specified in the descriptions; and (3) such policies
and procedures had been placed in operation as of July 31, 1997.
The E&Y concluded that the description of PMS applications present fairly,
in all material respects, the relevant aspects of DPM's policies and procedures
placed in operation as of July 31, 1997. Also, E&Y concluded that the control
structure policies and procedures are suitably designed to provide reasonable
assurance that the specified control objectives would be achieved. Lastly, E&Y
concluded that the control policies and procedures tested were operating with
sufficient effectiveness to provide reasonable, but not absolute, assurance
that the control objectives specified were achieved during the specified period.