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

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

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 I know many of you here are from SSA, but I would like to give an overview of our agency to those who aren’t from SSA, or those who may be new to the agency. [You may want to do a show of hands “Who is from SSA?”] Social Security touches the lives of virtually every American – we administer programs that make up the largest social insurance system in the world: 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

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

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

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

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

SSA’s Administrative Budget In FY 2015, our administrative budget is expected to be 1.3% of benefit payments – a remarkable achievement! Administrative Budget $12.024 Billion SSA Program Budget $947 Billion

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

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

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

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

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/

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

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

Numbers are Important But They Don’t Tell The Whole Story

Challenges we Face – Keep CFO Out of Trouble!

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

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

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

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

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

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

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

Look into the Future More on-line services my Social Security Vision 2025 Continue to operate with limited resources

Questions?