Report on the Department of Health and Human Services, Program Support Center, Division of Payment Management's Policies and Procedures in Operation and Tests of Operating Effectiveness

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.

---