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United States General Accounting Office: 
Washington, DC 20548: 

The Honorable Jo Anne B. Barnhart: 
Commissioner: 
Social Security Administration: 

Subject: Social Security Trust Funds Actuarial Estimates: Internal 
Control over Projection Process Needs Improvement: 

Dear Ms. Barnhart: 

The combined Federal Old-Age, Survivors and Disability Insurance (OASDI)
programs, commonly referred to as Social Security, provide protection 
against loss of earnings due to retirement, death, or disability. 
During calendar year 2001, the most recent year for which complete data 
were available at the time of our review, about 46 million people, 
including 91 percent of Americans age 65 or older, received $432 
billion in benefits from the trust funds maintained for these programs. 

The Board of Trustees [Footnote 1] of the trust funds is required to 
report annually on the current and projected financial status of the 
Social Security programs to the Congress and the American people. 
[Footnote 2] The Social Security Administration’s (SSA) Office of the 
Chief Actuary (OACT) provides estimates to the board to assist them in 
setting demographic, economic, and programmatic assumptions about 
OASDI’s future performance that are needed to prepare long-range and 
short-range projections of the financial status of the trust funds for 
the trustees’ reports. Based on the board’s assumptions, OACT then 
prepares the projections and the trustees’ report for the board. In its 
2002 annual report, the Board of Trustees estimated that, under current
rules, OASDI expenditures would begin to exceed revenue in calendar 
year 2017, causing the trust fund to be exhausted in 2041. 

A wide spectrum of users relies on these projections for a variety of 
purposes. These include the Congress, which needs reliable information 
about the Social Security trust funds to make informed decisions about 
the future funding and benefits of the OASDI programs. Providing 
decision makers with reasonable assurance about the reliability of 
financial reporting is one of the specific objectives of the Standards 
for Internal Control in the Federal Government [Footnote 3] issued by 
the Comptroller General. The Standards, which consider an entity’s 
internal control in terms of its control environment, risk assessment, 
control activities, information and communication, and monitoring, 
apply to all aspects of an agency’s operations: programmatic, 
financial, and compliance. Strong internal control is particularly 
important in the OACT, where making reliable projections is intensively 
people and process oriented. Control activities—the policies, 
procedures, techniques, and mechanisms that enforce management’s 
directives—are a key aspect of an effective system of internal control 
and include proper reviews, approvals, and documentation that help 
ensure work processes are carried out according to management’s 
directives. For example, control activities include checks and balances 
that provide reasonable assurance that data are entered correctly and 
calculated results are reported properly. Control activities also 
include effective management of an organization’s workforce—its human 
capital—which is essential to achieving results. Monitoring activities, 
another key aspect of internal control, help track the effectiveness of 
control activities, including those to ensure that findings of audits 
and other reviews are promptly resolved. 

We selected these activities for review because of their importance in 
the preparation of long-range financial projections for the OASDI trust 
funds. Our specific objectives were to identify and evaluate the 
adequacy of OACT’s (1) control activities over the projection process, 
(2) human capital practices related to workforce planning, and (3) 
tracking and resolution process to address recommendations from 
technical panels and other reviewers. To achieve these objectives, we 
reviewed our prior reports and reports by other reviewers, interviewed 
OACT management and staff and certain other SSA officials, and obtained 
and reviewed available documentation concerning the projection process. 
We used as a guide the Standards for Internal Control in the Federal 
Government [Footnote 4] with a focus on OACT control activities over the
long-range projection process used for the 2002 Trustees’ report. We 
conducted our work in Washington, D.C., and Baltimore, Md., from 
October 2001 through November 2002 in accordance with generally 
accepted government auditing standards. We did not evaluate the 
actuarial assumptions and methodology because they are subject to 
periodic reviews by technical panels and others. We received written 
comments on a draft of our report from the Commissioner, SSA, and have 
reprinted their comments in enclosure II. Further details of our scope 
and methodology are provided in enclosure I. 

Results in Brief: 

SSA’s OACT has implemented some control activities to help provide 
assurance over OASDI trust fund projections, including informal reviews 
of data, calculations of projection components, and final projections. 
However, we found that documentation of OACT’s long-range projection 
model, work processes, and work performed, including supervisory 
reviews, was insufficient. For example, there was no comprehensive 
description of the procedures necessary to prepare the long-range
OASDI trust fund projections for the Trustees’ reports, and 
documentation of the work performed by OACT while preparing projections 
was limited. Without explicit documentation of OACT’s work processes 
and work performed, reviewers’ opportunity for oversight was reduced, 
and the risk that errors in the projection process would go undetected 
was increased. While no major errors were identified in reviews of 
OACT’s actuarial assumptions and methodologies, reviewers have pointed 
out the need for increased documentation. [Footnote 5] According to 
OACT officials, resource constraints were a key reason limiting the 
extent to which documentation was prepared. However, in light of 
potential near-term retirement of over 30 percent of OACT staff, 
documenting the projection process is becoming increasingly important 
to efficiently transition the work to new staff. 

We also found that OACT lacked a workforce plan to help ensure the 
availability of skills needed to achieve its mission. Such planning 
would typically include analyzing current and future workloads, 
identifying likely staff turnover and possible retention strategies, 
establishing skills sets for all key positions, and training staff to 
ensure that appropriate skill needs are met. Our recently issued tool 
for agency leaders, A Model of Strategic Human Capital Management, 
[Footnote 6] provides a framework for helping agency leaders plan and 
achieve effective use of their human capital. The lack of an adequate 
workforce plan, coupled with insufficient policies and documentation,
could negatively affect OACT’s ability to achieve its mission in the 
future. [Footnote 7] 

OACT also lacks a monitoring policy and process for ensuring that 
recommendations from technical panels and other reviewers are tracked 
and addressed by OACT, leaving open the possibility that important 
initiatives and issues may not be completed in a timely manner. While 
OACT has taken steps to address some of the recommendations, it has not 
implemented a policy and associated procedures to (1) track 
recommendations it has received, (2) decide which recommendations
should be implemented, (3) determine the order of priority, and (4) 
document the resolution of each recommendation. Without an established 
tracking and resolution process, OACT lacks a mechanism to help ensure 
that it addresses identified deficiencies and continues to improve its 
operations. 

We are making recommendations aimed at strengthening OACT’s internal 
control over documenting key procedures, establishing a workforce plan, 
and addressing recommendations from reviews. In commenting on a draft 
of this report, SSA generally agreed with most of our recommendations 
but raised concerns about several areas. Most significantly, SSA agreed 
with the need to continue to better document OACT’s internal controls, 
but believed that OACT has a strong internal control process and 
culture. SSA specifically disagreed with our conclusion that the lack 
of documentation increased the risk of errors. While their practices 
might be sound, without explicit documentation of the work that is 
planned and performed, the opportunity for supervisors to identify 
errors or inconsistencies in the work is greatly impeded. This in turn 
increases the risk that errors in the projection process could go 
undetected. 

Background: 

The Social Security program was developed to provide income security to 
citizens and permanent residents of the United States under specific 
circumstances as a responsibility of the government. SSA is responsible 
for administering the nation’s Old-Age and Survivors Insurance (OASI), 
Disability Insurance (DI), and other income security programs. OASI 
provides benefits to retired workers and their families and to 
survivors of deceased workers. DI pays benefits to disabled workers and 
their families. The OASDI programs are funded by payroll taxes, taxes 
on self-employment income, and income from the taxation of benefits. 
Income in excess of expenditures is held in the OASDI trust funds and 
invested in federal government securities. 

OACT’s mission involves reviewing the balance between future benefit 
payments and future income of the OASDI programs. Further, evaluating 
the cost of proposals to change the programs is an important task of 
OACT. One of the recurring reports prepared by OACT is the annual 
report of the Board of Trustees on the OASDI trust funds and the 
current and projected financial condition of the funds based on 
assumptions set by the Trustees. Although preparing the Trustees’ 
report is only one of OACT’s activities, of the 51 full-time equivalent 
(FTE) staff on board, approximately 20 participate directly in 
preparing the long-range projections of OASDI for the reports, which, 
for the most part, takes place between September and March. OACT has 
organized its staff into three teams that focus on specialized areas 
for the long-range estimates. The demographics team estimates the 
social security population. The economics team estimates the covered-
worker population, as well as future income to the trust funds. The 
program team estimates future benefits, cost projections, and the long-
range trust fund financial status. 

The Trustees’ reports present both short-range (10-year) and long-range 
(75-year) projections of the OASDI trust funds’ future financial 
condition. The estimates are made based on current law and board-
approved assumptions about factors that affect the income and 
expenditures of the trust funds. The long-range projections are 
generated using a complex, computerized model consisting of many 
interrelated programs. Some of the data that are used in the long-range 
projections come from external sources such as the Census Bureau, 
National Center for Health Statistics, Bureau of Economic Analysis, and 
Bureau of Labor Statistics. 

The Board of Trustees’ projection assumptions and OACT’s actuarial 
projection methodology are subject to periodic review by independent 
experts to help ensure their validity and reasonableness. The Social 
Security Advisory Board periodically convenes technical panels 
consisting of expert actuaries, economists, and demographers to review 
the assumptions and methods underlying the projections included in the 
Trustees’ reports. [Footnote 8] The Technical Panel reports typically 
include recommendations primarily relating to actuarial methodologies 
and assumptions. [Footnote 9] In addition, in January 2000, we reported 
on an evaluation of actuarial methods, techniques, and assumptions used 
in preparing the actuarial projections of the Social Security trust 
funds contained in the 1999 Trustees’ report. [Footnote 10] To make 
these determinations, we contracted with PricewaterhouseCoopers, an 
independent accounting and consulting firm, to evaluate the actuarial 
methodologies and assumptions. While OACT has been subjected to reviews 
by technical panels and others, internal control over its projection 
processes had not been independently reviewed previously. 

Although projections are inherently uncertain because they depend on 
assumptions about the occurrence of future events, an effective system 
of internal control can help provide reasonable assurance that 
projections included in financial reports are reliable. The Comptroller 
General issues standards for internal control in the federal government 
[Footnote 11] that provide the overall framework for management to 
establish and maintain internal control and to identify and address 
major performance and management challenges. According to these 
standards, internal control, also referred to as “management control,” 
comprises the plans, methods, and procedures used to meet the missions, 
goals, and objectives of an organization. One of its objectives is the 
reliability of financial reporting, including financial statements and 
other reports for internal and external use. 

The Federal Accounting Standards Advisory Board [Footnote 12] (FASAB) 
promulgates federal accounting standards, which form the foundation for 
preparing consistent and meaningful financial statements both for 
individual agencies and the government as a whole. FASAB is currently 
reviewing the accounting and financial reporting requirements for 
social insurance trust funds. The provisions of Statement of Federal
Financial Accounting Standards No. 17 currently require reporting 
certain social insurance information as Required Supplementary 
Stewardship Information, [Footnote 13] resulting in limited audit 
coverage. Reclassifying the required information as basic financial 
information, as currently discussed by FASAB, would subject the 
information to more extensive audit scrutiny. While specific procedures 
to audit social insurance projections have not been developed, typical 
audit procedures would likely include obtaining an understanding of 
policies and procedures, assessing the adequacy of internal control, 
and analyzing key projections. 

Limited Documentation Reduced Effectiveness of Control Activities: 

Although the Standards for Internal Control in the Federal Government 
[Footnote 14] call for clear documentation of policies, procedures, and 
actions, we found that OACT has not fully implemented these key control 
activities. While OACT has documented some portions of the complex 
model used to generate long-range projections for the OASDI trust 
funds, OACT has not fully documented the model. Also, the procedures
needed to prepare the projections for the Trustees’ reports have not 
been fully documented, although descriptions of some portions have been 
drafted. Further, when preparing the projections, staff did not 
adequately document the work they performed, including adjustments and 
changes to data or results, nor did management or supervisors document 
their reviews of various phases of the process. OACT management cited 
resource constraints as a key reason for not performing these tasks. 
The lack of documented planned procedures, work performed, and reviews 
increases the risk that errors in the projection process could go 
undetected and impedes efforts by those who evaluate the projections. 

According to the Standards for Internal Control in the Federal 
Government, management is responsible for developing the detailed 
policies, procedures, and practices to fit their agency’s operations 
and ensuring that internal control is built into and is an integral 
part of operations. The Standards also provide that procedures need to 
be clearly documented, documentation should be readily available for 
examination, and documentation should be properly managed and 
maintained. Furthermore, actuarial standards of practice [Footnote 15] 
state that actuaries should identify the data, assumptions, and methods 
they use with sufficient clarity so that another actuary qualified in 
the same practice area could evaluate the reasonableness of the work. 
[Footnote 16] These standards also stipulate that this documentation be 
retained for a reasonable period of time. 

OACT has not developed a comprehensive flow chart or description of the 
model used to produce the long-range projection. OACT has documented 
portions of their actuarial methodology in actuarial studies, such as 
the social security population projection used in preparing the 1997 
Trustees' report, [Footnote 17] but an overall description of the long-
range projection model has not been fully documented. Furthermore, 
although one supervisory actuary required his staff to document the 
procedures they used after they had prepared certain portions of the 
2002 Trustees’ report projection, a complete procedural description of 
the process in standardized form and content has not been prepared. 

We also found that OACT had not documented acceptable ranges for 
fluctuation in ratios and trends between reporting periods to provide 
guidance for consistently judging reasonableness from year to year. 
Establishing and documenting acceptable ranges for reasonableness tests 
of ratios and trends is important because SSA actuaries use these tests 
to judge the reasonableness of results from the overall model as well 
as discrete portions of the model. 

In addition to limited documentation of the overall long-range 
projection model and planned procedures to follow in preparing the 
projection, OACT could provide little documented evidence of the 
procedures performed by staff during the projection process. According 
to OACT staff, some of the steps performed during preparation of the 
Trustees’ report include reasonableness reviews of source data, the 
entry of data into the model, reasonableness tests of component 
calculations of the projection, and adjustments made to preliminary 
results. OACT could not provide documented evidence of adjustments made 
to data or component calculations based on reasonableness reviews and 
tests performed by staff. For example, an OACT staff member told us 
that immigration source data were recognized as problematic, that 
adjustments to that data were required regularly, and that most of the 
time devoted to processing that portion of the population model was 
spent analyzing the data. However, no documentation of related 
adjustments was available. Proper documentation of these types of 
changes would allow effective review, showing why a problem occurred, 
what was done to address the problem, who addressed it, and who 
approved the action taken. 

We found that evidence documenting supervisory actuaries’ reviews of 
the work done by staff and of projection results was lacking, although 
demographics team actuaries told us that they meet weekly to discuss 
work performed and problems encountered during the preparation of the 
long-range projection. Also, there was limited documented evidence of 
product reviews and reasonableness checks performed at the management 
level. According to the actuaries in OACT, reasonableness checks of 
data and projection results are done at many levels, including those 
done by supervisory actuaries and OACT management. As an example, 
another OACT staff member told us that he reviewed the numbers and 
graphs presented in the 2002 Trustees’ report to determine that they 
agreed with the projection calculations prepared by OACT for that 
report. He presented a copy of the report containing markings that 
indicated work had been done but explanation of the markings, the 
procedures performed, and the conclusions were not documented. 
Supervisory actuaries told us that one type of reasonableness check is 
a reconciliation performed between the first 10 years of the long-range 
projection and the 10-year short-range projection to compare results 
and identify differences. The effect of this reconciliation is to 
smooth the differences between the two projection models. OACT could 
not provide documentation showing that the reconciliation had been
performed. 

According to OACT staff, resource constraints have prevented completion 
of documentation of the projection model and the work plan, although 
numerous attempts have been made. Staff also attributed the lack of 
documentation of work performed and supervisory reviews to resource 
constraints. According to OACT management, while demands placed on the 
office in recent years have stretched existing resources, the knowledge 
and experience of OACT staff provide assurance of projection 
reliability. Accordingly, OACT management has not developed policy
guidance concerning documentation requirements. 

Similarly, the 1999 Technical Panel recognized the extraordinary 
demands placed on OACT for analysis of legislative proposals and the 
difficulty of adequately addressing the need for thorough documentation 
of all areas involved in making financial projections given OACT’s 
current resources. [Footnote 18] The 1999 Technical Panel also reported 
that OACT’s work was outstanding and the projection methodology 
reasonable as a whole, but recommended that adequate resources be 
provided to help document the current projection system. Further, the 
panel identified no major errors. Also, our January 2000 report 
[Footnote 19] stated that comprehensive documentation would benefit 
those who evaluate or assist in the development of the financial 
projections. While we reported that the actuarial methods and 
techniques used in preparing the long-range projection were sound and 
the assumptions were reasonable, our report specifically noted that, 
“although not explicitly within the specific scope of this project, we 
observed that there are a number of gaps in the documentation of 
current practice.” 

Collectively, the lack of complete and current documentation of the (1) 
entire model, (2) projection work plan, (3) work completed during the 
projection process including adjustment of data and component 
calculation results, and (4) reviews by supervisors and managers, 
increases the risk that errors could occur in future projections and not
be detected. In addition, these documentation deficiencies limit: 

* guidance available to staff regarding projection preparation; 
* evidence that proper practices are consistently followed from year to 
year, as planned; 
* assurance to OACT’s management regarding projection reliability; 
* opportunities to provide staff, especially new staff, with an 
overview of the entire projection process; and; 
* the effectiveness and efficiency of reviews within and outside of 
OACT, such as OACT’s ability to effectively and efficiently communicate 
its projection procedures. 

In addition, increased audit scrutiny that could result from FASAB’s 
current consideration of changes to social insurance reporting 
requirements would magnify the need for documentation of the long-range 
projection work plan and steps performed. Furthermore, as discussed in 
the next section, retirement eligibility will seriously impact OACT in 
the next 5 years. When experienced actuaries retire and less 
experienced actuaries replace them, the documentation needed to bridge 
the knowledge gap becomes more critical. In consideration of potential 
near-term retirements and associated staff changes, documenting the 
projection process is critical for an efficient transition of the 
workload. 

Inadequate Workforce Plan Could Negatively Affect OACT’s Ability to 
Achieve Its Mission: 

While OACT currently has qualified, experienced staff, it is aware that 
the potential retirement of more than 30 percent of its staff, 
including key management and professional personnel, over the next 5 
years will expose the office to a loss of institutional knowledge that 
is vital to its operations. In response to this potential loss of 
experience and knowledge, OACT has stepped up recruiting efforts and is
encouraging staff to sit for actuarial exams. OACT has not, however, 
developed a workforce plan for hiring and training future staff and 
management based on an assessment of current skill levels and future 
skill needs. Lack of an adequate workforce plan could impede OACT’s 
ability to achieve its mission in the future. 

According to the Standards for Internal Control in the Federal 
Government, effective management of an organization’s workforce—its 
human capital—is essential to achieving results and an important part 
of internal control. Management should ensure that skill needs are 
continually assessed and that the organization is able to obtain a 
workforce that has the required skills that match those necessary to
achieve organizational goals. According to our recently issued tool for 
agency leaders, A Model of Strategic Human Capital Management, 
[Footnote 20] high-performing organizations identify their current and 
future human capital needs, including the appropriate number of 
employees, the key competencies and skills mix for mission 
accomplishment, and the appropriate deployment of staff across the 
organization, and then create strategies for identifying and filling 
gaps. According to the International Personnel Management Association’s 
workforce planning guide, [Footnote 21] a good workforce plan would 
include: 

* analyzing present workload, workforce, and competencies; 
* identifying workload, workforce, and competencies needed for the 
future; 
* comparing the present workload, workforce, and competencies to future 
needs to identify gaps and surpluses; 
* preparing and implementing plans to build the workforce needed for 
the future; and; 
* evaluating the success of the workforce planning model to ensure it 
remains valid and objectives are being met. 

OACT, however, has not performed an in-depth analysis to identify 
issues such as workloads, skill gaps, and succession plans as outlined 
in SSA’s Future Workforce Transition Plan. [Footnote 22] As of November 
15, 2002, OACT had a staff of 51 FTEs, 16 of whom have been part of 
OACT for fewer than 5 years. Moreover, OACT does not have a succession 
plan to address the potential retirement of its managers and staff. 
With over 30 percent of its staff eligible to retire in the next 5 
years, including 7 management and 7 professional staff, OACT has 
accelerated its recruiting efforts, but the lack of a well-considered 
workforce analysis increases the potential for vital knowledge to be 
lost when experienced actuaries retire or otherwise leave the agency. 

Our January 2000 report noted that OACT has hired qualified staff. To 
develop staff, OACT provides some cross-training and conducts on-the-
job training. OACT also provides training opportunities by allowing 
staff to use work time to study for exams given by the Society of 
Actuaries [Footnote 23] and, if funds are available, by paying for the 
exam fees, books, and other study material to help staff successfully 
complete the exams. However, OACT does not have a formal plan for staff 
training and development and has no requirements for continuing 
professional education. 

A Model of Strategic Human Capital Management [Footnote 24] recognizes 
that people are assets whose value can be enhanced through investment. 
In addition, our analysis of training programs at federal agencies 
[Footnote 25] emphasized that to design and implement effective 
training programs, agencies must (1) identify the competencies needed to
achieve their specific mission and goals and measure the extent to 
which their employees exhibit those competencies, (2) identify training 
and development needs to be addressed, and (3) evaluate the extent to 
which their training programs are actually increasing employees’ 
individual competencies and individual and overall organization 
performance levels. Our analyses found that effective training programs
(1) include training curricula for developing employee skills in 
selected occupations, (2) require or recommend that employees complete 
training on specific topics or meet a minimum number of training hours, 
and (3) make training slots available each year on the basis of 
estimated needs, priorities, and available resources. 

Effective human capital strategies can enable an organization to have 
the right people, with the right skills, doing the right jobs, in the 
right place, at the right time. [Footnote 26] 

Without a workforce plan that is predicated on an analysis that 
integrates with SSA’s overall workforce analysis and planning efforts, 
OACT lacks a strategic focus on its human resource issues, which 
impedes its ability to align those resources with completion of 
critical tasks now and in the future. 

Lack of a Formal Policy and Process to Track and Address 
Recommendations Could Reduce Opportunity for Improvements: 

Technical panels and other reviewers have provided recommendations to 
OACT management about technical issues and documentation concerning the 
projection system. While OACT management has taken action on some of 
those recommendations, it has not developed a monitoring policy and 
process to respond to individual recommendations and track steps taken 
to address those requiring action. Accordingly, OACT could not readily 
provide us with the status of actions taken to respond to 
recommendations from technical panels and our January 2000 report. 
Although there is no requirement to respond to recommendations made by
technical panels, without a tracking process, important improvements to 
the projection process may be overlooked or may not be completed in a 
timely manner. 

According to the Standards for Internal Control in the Federal 
Government, monitoring of internal control should include policies and 
procedures for ensuring that the findings of audits and other reviews 
are promptly resolved. The standards further state that the resolution 
process begins when audit or other review results are reported to 
management, and is completed only after action has been taken that (1) 
corrects identified deficiencies, (2) produces improvements, or (3) 
demonstrates that the findings and recommendations do not warrant 
management action. The Office of Management and Budget (OMB) Circular A-
50, Audit Followup, provides policies for executive branch agencies to 
use when following up on our reports and reports issued by the 
Inspectors General (IG) and others, and emphasizes the importance of 
establishing a system to provide a complete record of action taken on
recommendations. In accordance with OMB Circular A-50, SSA has 
implemented an agencywide system to monitor our and IG engagements and 
facilitate follow-up by components, such as OACT, on recommendations 
resulting from these engagements. [Footnote 27] This system relies on 
periodic updates from components on the status of recommendations and 
does not include recommendations from technical panels. 

OACT has not developed a process to track steps taken to address 
recommendations made in technical panel reports and other reviews. 
Therefore, OACT cannot readily supply updates to the agencywide system 
on our report and similar reports, nor provide the status of updates on 
technical panel recommendations efficiently and effectively. Such a 
tracking process would typically include documenting management’s 
position on recommendations, establishing a timetable for resolving the 
recommendations, and designating a management official to oversee the 
resolution of corrective action, issues which are discussed in OMB 
Circular A-50 as applying to audits. 

Three technical panels have been convened since 1991 by the Social 
Security Advisory Board or its predecessor, the Social Security 
Advisory Council, to review the assumptions and methodology used to 
project the future financial status of the OASDI trust funds. As 
previously discussed, both the 1991 and the 1999 technical panels urged 
further documentation of the current projection system and made
several recommendations relating to technical issues surrounding it. 
[Footnote 28] 

In response to our request for an update on the status of 
recommendations from our January 2000 report, [Footnote 29] which 
included recommendations for improving documentation, developing 
assumptions, and performing additional sensitivity testing, it was 
necessary for OACT management to research each of the recommendations 
to determine if and how they had been resolved. In addition, OACT could 
not readily describe actions taken on recommendations of the 1999 
Technical Panel. Management cannot remain informed of the status and 
resolution of recommendations nor can they respond to recommendation 
resolution status requests efficiently and effectively unless a 
tracking system that provides information on decisions and actions for 
each recommendation is implemented and maintained. 

OACT officials told us there is no requirement for OACT to respond, 
either formally or informally, to recommendations made by the technical 
panels and that limited resources restrict OACT’s ability to formally 
track recommendation resolution. However, management cannot be assured 
that all technical panel recommendations were considered and that those 
providing for improved or corrected results have been implemented 
unless actions to address recommendations, particularly those bearing 
on the projection methodology, are documented as provided for in OMB
Circular A-50 regarding audit follow-up. [Footnote 30] Also, without 
tracking and documenting action taken in response to recommendations, 
responding to follow-up inquiries concerning recommendations will 
remain a labor-intensive and inefficient exercise. Further, unless OACT 
management develops and implements a tracking and resolution process to 
address recommendations, it leaves open the possibility that important 
initiatives will not be completed in a timely manner or will go 
uncompleted, thus effectively wasting the resources expended by 
technical panels and other reviewers. 

Conclusion: 

The Congress and other decision makers rely on SSA’s OACT to provide 
reliable estimates of future OASDI expenditures and income. While OACT 
has indicated that many informal control activities are taking place, 
internal control over OACT’s long-range projection processes regarding 
documentation, workforce planning, and its policies for resolving 
recommendations are inadequate. Incomplete documentation of the 
projection model and procedures, work completed during the projection
process, and the reviews of projection work and products by supervisors 
and managers, increases the risk that errors could occur in future 
projections and not be detected. Documenting all tasks is important to 
the efficient transfer of knowledge concerning policies, procedures, 
and processes to new staff. While resource constraints might have 
impeded OACT’s efforts to properly document policies and projection 
procedures, the lack of a workforce plan has prevented systematic 
analysis of OACT’s workload, identification of the skill mix needed to 
accomplish that work, identification of the skill levels of current 
staff, and the identification of supporting resources needed to perform 
these and other critical OACT functions. Moreover, OACT management has 
not documented the priority and status of actions planned and taken to 
address recommendations from auditors, including GAO, technical panels, 
and other reviewers, increasing the risk that significant 
recommendations might not be addressed in a timely manner. 

Recommendations for Executive Action: 

To address the internal control weaknesses we identified related to 
policy development, documentation, workforce management planning, and 
monitoring follow-up of external review recommendations, we recommend 
that the Commissioner of SSA direct the Chief Actuary to: 

* develop and implement policies regarding documentation of the work 
performed by OACT; 

* document the: 
- projection model; 
- procedures needed to generate the projections, including acceptable 
ranges for reasonableness tests; 
- work performed by staff to prepare projections, and; 
- supervisory and management reviews; 

* develop and implement a workforce plan that integrates with SSA’s 
Future Workforce Transition Plan and includes the following elements: 
- analyzing present workload, workforce, and competencies; 
- identifying workload, workforce, and competencies needed for the 
future; 
- comparing the present workload, workforce, and competencies to future 
needs to identify gaps and surpluses; 
- preparing and implementing plans to build the workforce needed for 
the future, and; 
- evaluating the success of the workforce planning model to ensure it 
remains valid and objectives are being met; and; 

* develop and implement a formal policy to track, follow up, and 
resolve findings and recommendations of external audits and reviews. 

In addition, to overcome the challenge of limited resources, we 
recommend that the Commissioner of SSA, in consultation with the Chief 
Actuary, consider using alternative approaches, such as contractor 
assistance, to address the above recommendations. 

Agency Comments and Our Evaluation: 

In written comments (reprinted in enclosure II) on a draft of this 
report, SSA generally agreed with most of our recommendations but 
raised concerns about several areas. 

Concerning our conclusion and recommendations related to OACT’s limited
documentation of procedures and processes, SSA commented that, while it 
agreed that more formal documentation of internal control could be of 
value, it disagreed with the conclusion that current OACT procedures 
increase the risk of errors. While OACT’s current procedures might be 
sound, without explicit documentation of the work that is planned and 
performed, the opportunity for supervisors to identify errors or 
inconsistencies in the work is greatly impeded. This in turn increases 
the risk that errors in the projection process could go undetected. 

SSA agreed that written documentation of reviews would assist in 
assuring auditors that the reviews were done and discussed the 
additional documentation of reviews that they have begun. However, SSA 
also stated that documentation of reviews, perhaps in the form of 
"check-off lists," would not necessarily reduce the risk of errors and 
that overdependence on sequential check-off lists could pose a risk by
implying that work checked off was not subject to subsequent necessary 
revision. We disagree. Documentation, whether in a checklist or another 
form, provides a degree of assurance to management, as well as 
auditors, that planned procedures have been properly completed. It is 
not a substitute for technical expertise or professional judgment but 
complements those integral components of competent performance that are 
especially critical in OACT. 

In its comments, SSA stated that it does not believe the limited focus 
of our review allowed us to understand the extent of OACT’s present 
documentation of the projection model. Our review focused exclusively 
on OACT’s controls over the projection process and provided a 
sufficient basis to identify shortfalls in OACT’s documentation. Our 
report points out that, while portions of the model and their 
procedures have been partially documented, neither an overall summary 
of the model for OACT’s long-range projection nor a work plan to 
prepare the projection exists. These basic documents are needed to 
provide (1) an overview of the entire projection process and detailed 
guidance about projection preparation for new OACT staff, (2) 
additional assurance that proper practices are consistently followed 
from year to year, and (3) a means for OACT to effectively and 
efficiently communicate its procedures to reviewers within and outside 
of OACT. Further, in its technical comments, SSA suggested that we 
revise our recommendations to essentially eliminate our recommendation 
to document the projection model. Because of its importance, we are 
retaining the recommendation to document the projection model and 
encourage SSA to complete this essential documentation. 

Regarding our recommendation that OACT document acceptable ranges for
reasonableness tests, SSA stated that because outputs of the projection 
involve yearly changes in input data, assumptions, and methodology, 
absolute standards cannot be set for such reasonableness tests. We did 
not recommend establishing absolute standards but instead call for 
acceptable ranges to provide guidance for consistently making 
reasonableness judgments from year to year. We understand that elements 
of the model change each year. Because of these changes, it is 
especially important to provide guidance to ensure that differences 
that exceed a predetermined range or criteria are uniformly identified 
and questioned by staff, especially junior staff, and reviewers. The 
intent of our recommendation is to help ensure that appropriate 
attention is focused on changes in data and results that exceed the 
criteria. 

In response to our recommendations concerning development and 
implementation of a workforce plan and a policy to track, follow up, 
and resolve audit and review findings and recommendations, SSA 
described actions it has planned. In both areas, we believe additional 
steps are needed to obtain the greatest benefit. SSA described how its 
training and development process is focused on on-the-job training.
However, as discussed in the report, our analysis of training programs 
at federal agencies emphasized the importance of formal training in 
addition to on-the-job training to help ensure staff skills are fully 
developed. Regarding follow-up of audit and review recommendations, SSA 
noted that there is a tracking system in place for audits. However, as 
we reported, SSA’s system depends on timely periodic updates from 
components such as OACT. Neither SSA nor OACT could readily provide us
with the status of actions to respond to recommendations from our 
January 2000 report. SSA also outlined its plans for OACT to implement 
a tracking system for technical panels and other reviews. SSA’s stated 
plan is a good start as described, but is missing a key step to enhance 
accountability for completing corrective actions by assigning 
responsibility to individuals. This step would be consistent with the
provisions of OMB Circular A-50 and provide a mechanism of 
accountability and assurance to management that corrective actions are 
completed. We believe it would benefit OACT to consolidate its process 
to follow up on recommendations from all reviews and audits so that 
they can be efficiently tracked and resolved. 

SSA did not comment on our recommendation to consider alternative 
approaches, such as contractor assistance, to address our other 
recommendations. However, during a subsequent conversation with an SSA 
official, we were advised that OACT management is discussing 
alternative approaches such as contractor assistance. 

This report contains recommendations to you. The head of a federal 
agency is required by 31 U.S.C. 720 to submit a written statement on 
actions taken on these recommendations to the Senate Committee on 
Governmental Affairs and the House Committee on Government Reform and 
Oversight within 60 days of the date of this report. You must also send 
a written statement to the House and Senate Committees on 
Appropriations with the agency’s first request for appropriations more 
than 60 days after the date of this report. 

We are sending copies of this report to the Chairman and Ranking 
Minority Member, Senate Committee on Governmental Affairs; the Chairman 
and Ranking Minority Member, Senate Committee on Finance; the Chairman 
and Ranking Minority Member, House Committee on Government Reform; the 
Chairman and Ranking Minority Member, House Committee on Ways and 
Means; the Chairman and Ranking Minority Member, Subcommittee on Social 
Security, House Committee on Ways and Means; and other interested 
congressional committees. In addition, this report is available at no 
charge on our Internet home page at [hyperlink, http://www.gao.gov]. If 
you have any questions about this report, please contact me at (202) 
512-9508 or Kay L. Daly, Assistant Director, at (202) 512-9312. You may 
also reach us by e-mail at calboml@gao.gov or dalykl@gao.gov. Key 
contributors to this assignment were Joseph Applebaum, Lisa Crye, Marie 
Novak, Taya Tasse, Jack Warner, and Brooke Whittaker. 

Sincerely yours, 

Signed by: 

Linda Calbom: 
Director, Financial Management and Assurance: 

Enclosures: 

[End of correspondence] 

Enclosure I: 

Scope and Methodology: 

Because of the importance of long-range projections, their inclusion in 
agency and governmentwide financial reports, and the potential for 
their being subjected to increased audit scrutiny as basic financial 
information, we focused on internal control over the procedures used by 
OACT to prepare the 2002 long-range projection. Throughout our work, we 
used as a guide the Standards of Internal Control in the Federal 
Government. [Footnote 31] Because of the technical nature of OACT’s 
work, we focused on assessing control activities, including human 
capital management, and monitoring activities, including recommendation 
follow-up. 

To achieve our overall objectives, we obtained and reviewed past 
Trustees’ reports, technical panel reports, and GAO work to gain an 
understanding of the assumptions and methods used by OACT. We also 
reviewed pertinent documentation provided by OACT and actuarial 
standards of practice promulgated by the Actuarial Standards Board. 

To identify and evaluate OACT’s control activities over documentation 
of the projection process, we interviewed OACT managers and staff to 
identify policies and procedures, including reviews made by supervisors 
and managers of interim and final results. We also reviewed available 
paper and electronic documentation from OACT, including descriptions of 
steps needed to complete the projections, computer spreadsheets, trend 
analyses, graphs, and other printouts used to conduct reasonableness 
reviews, and actuarial standards of practice relating to actuarial 
communications and documentation. 

To identify and evaluate OACT’s human capital control activities, we 
made inquiries of managers in OACT to assess their approach to human 
capital management, including skill needs assessments, training, 
supervision, and succession planning. We also discussed training and 
supervision practices with OACT staff. Further, we interviewed 
officials from SSA’s Office of Personnel to identify agency and OACT
human capital practices and reviewed SSA’s Future Workforce Transition 
Plan to identify overall agency human capital initiatives. 

To assess OACT’s tracking and resolution process to address 
recommendations, we interviewed OACT management and officials from 
SSA’s Offices of the Inspector General and Management Analysis and 
Audit Program Support about policies and procedures for ensuring that 
the findings of audits and other reviews are promptly resolved. We also 
obtained documentation of OACT’s response to recommendations included 
in our January 2000 report on an evaluation of actuarial methods, 
techniques, and assumptions used in preparing the actuarial projections 
of the Social Security trust funds contained in the 1999 Trustees’ 
report. 

When controls were identified, we evaluated whether the controls as 
designed and implemented would provide management with reasonable 
assurance that the control objectives were achieved. We confirmed our 
understanding of the internal control system currently in place through 
discussions with OACT officials. We did not evaluate the assumptions 
and methods used by OACT or the accuracy of the data and information 
they used. Our work was not designed to assess the effect of control
weaknesses that we identified on the reliability of previous 
projections prepared by OACT. We conducted our work from October 2001 
through November 2002, in Washington, D.C., and Baltimore, Md., in 
accordance with generally accepted government auditing standards. We 
requested and obtained written comments on a draft of this report from 
the Commissioner of SSA. Those comments are reprinted in enclosure II. 

[End of enclosure] 

Enclosure II: 

Comments from the Social Security Administration: 

Social Security: 
The Commissioner: 
Social Security Administration: 
Baltimore, MD 21235-0001: 

February 5, 2003: 

Ms. Linda M. Calbom: 
Director: 
Financial Management and Assurance: 
U.S. General Accounting Office: 
Washington, DC 20548: 

Dear Ms. Calbom: 

Thank you for the opportunity to review and comment on the preliminary 
draft report "Social Security Trust Funds Actuarial Estimates: Internal 
Control Over Projection Process Needs Improvement (GAO-03-246R)." I 
recognize the critical importance of the work performed in the Office 
of the Chief Actuary (OACT) and of effective internal controls. The 
work of the OACT has been reviewed on a regular basis by outside panels 
of experts. These experts have found the work of the office to be sound 
and the staff to be highly competent. Although we agree with the need 
to continue to better document OACT's internal controls, we believe 
that OACT has a strong internal control process and culture. 

Our comments on your report are enclosed. Staff questions may be 
directed to Alice Wade, Deputy Chief Actuary for Long-Range Estimates. 
Ms. Wade can be reached by phone at 410-965-3002 or by email at 
Alice.H.Wade@ssa.gov. 

Sincerely, 

Signed by: 

Jo Anne B. Barnhart: 

Enclosure: 

Comments On The General Accounting Office (GAO) Report "Social Security 
Trust Funds Actuarial Estimates: Internal Control Over Projection 
Process Needs Improvement" (GAO-03-246R): 

We appreciate the opportunity to review the subject report. The 
Commissioner of Social Security recognizes the critical importance of 
the work performed in the Office of the Chief Actuary (OACT) and of 
effective internal controls. For over 65 years, OACT has made financial 
evaluations of the Social Security program and proposals to change the 
program. These evaluations are considered authoritative and serve as 
the basis for analyzing the financial status of the Social Security 
program. Over the years, data, assumptions, and methodologies used in 
these financial evaluations have been provided to experts both inside 
and outside government for their use and their review. Experts outside 
the government include faculty of universities specializing in 
demographic and economic research. In addition, the work of OACT has 
been reviewed on a regular basis by outside panels. These experts and 
panels have found the work of the office to be sound and the staff to 
be highly competent. Moreover, the competence of the OACT staff, 
combined with the review of Trustees' staff, has resulted in 
projections for the Annual Reports of the Board of Trustees that have 
been virtually free of significant errors starting with the first 
report, issued in 1940. 

For this report, GAO did not review the technical accuracy of the 
evaluations made by OACT but rather focused on the documentation of 
internal controls over the projection process. Although we agree with 
the need to continue to better document OACT's internal controls, we 
believe that OACT has a strong internal control process and culture. 

General Comments: 

Section 1-Limited Documentation Reduced Effectiveness of Control 
Activities: 

The Office of the Chief Actuary performs many checks on its work 
throughout the process of producing the annual Trustees Reports. GAO 
suggests a more formal documentation process for these checks. We agree 
that more formal documentation of internal checks could be of value. 
However, we disagree with the conclusion that current OACT procedures 
increase the risk of errors. In fact, inputs and results of each stage 
of the process of developing assumptions and projections are reviewed 
as a matter of course for every projection. Because the projections are 
performed, of necessity, in a linear fashion, there is no risk that any 
stage of development will escape the attention of supervisors and 
managers because of contemporaneous developments. Reviews are performed 
in detail by supervisors and team leaders, and higher level managers 
perform a secondary review for reasonableness. These reviews are 
performed routinely at every stage before the results are accepted and 
"locked" into subsequent stages of the projection process. 

While we agree that written documentation of the performance of these 
reviews, perhaps in the form of "check-off lists," would assist in 
assuring auditors that the reviews have been done, we do not believe 
that this documentation will necessarily reduce the risk of errors in 
the process. In practice, the effects of changes in one stage of the 
projection process often do not manifest themselves in. a significant 
way until the results of later stages are reviewed. Over dependence on 
a sequential check-off list for reviews at each stage could, in fact, 
pose a potential risk of missing the implications of earlier changes, 
because it might be assumed that each earlier stage was correct as 
checked off. 

In its report GAO states, "there was no comprehensive description of 
the procedures necessary to prepare the long-range OASDI trust fund 
projections for the Trustees' reports, and documentation of the work 
preformed by OACT while preparing projections was limited." The long-
range Office of the Chief Actuary is comprised of different areas 
(population, economics, disability, fully insured, beneficiaries, and 
costs) with staff in each area maintaining their own programming code 
for producing projections. The input assumptions are identified within 
this code, and values for the assumptions are recommended, developed, 
and/or obtained by staff in the area. Each area also maintains its 
detailed procedures for preparing and executing program code. For OACT 
staff trained and experienced in these specific methodologies, the 
programming code is largely self-documenting. Only the code itself can 
convey the full detail of the procedure, and a working knowledge of the 
code is necessary and largely sufficient for OACT staff documentation. 

Section 2-Inadequate Workforce Plan Could Negatively Affect OACT's 
Ability to Achieve Its Mission: 

The OACT is now in the process of working with the Office of Human 
Resources (SSA) in developing a formal plan for future staffing needs. 
However, it should be noted that since OACT's organizational status was 
clarified in 1996 as reporting directly to the SSA Commissioner, 
staffing has been part of each budget submission. OACT has been 
supported in its efforts to plan for expected retirements and has been 
able to carry out the recruitment efforts mentioned in GAO's report. As 
noted in the report, this recruitment effort has resulted in 16 of the 
51 staff members being a part of OACT for fewer than five years. During 
this period, three experienced actuaries, one Fellow and two Associates 
of the Society of Actuaries have been hired. In addition, we have hired 
one Ph.D. economist and 3 Ph.D.'s in mathematics who are now 
successfully progressing in the actuarial exam series. Thus, over 40 
percent of the recent hires have been highly qualified, experienced 
individuals. 

OACT has an active staff training and development process although we 
agree that it could be better documented. OACT's staff development is 
rooted in learning by doing and mentoring. Newly hired individuals are 
assigned areas of work under a supervisor or team leader, and often in 
association with one or more experienced actuaries. These individuals 
are developed through on-the job training. After some time, individuals 
are often rotated to other areas in the office in order to broaden 
their knowledge and experience with OACT projection procedures. 

OACT also encourages professional actuarial and economic training and 
involvement with the relevant professional organizations and academic 
institutions. OACT's professional staff consists of 41 actuaries and 4 
economists. The 2 most recently hired economist are Ph.D's. Of the 41 
actuaries 22 are members of the Society of Actuaries, i.e., are 
Associates or Fellows of the Society, and 16 are actively taking exams 
and pursuing professional status. OACT offers full support and 
encouragement to all employees studying to attain professional 
actuarial status. 

GAO Recommendation 1: 

1. The Commissioner of Social Security direct the Chief Actuary to: 

* Develop and implement policies regarding documentation of the work 
performed by OACT. 

* Document the: 
- Projection model, 
- Procedures needed to generate the projections, including acceptable 
ranges for reasonableness tests, 
- Work performed by staff to prepare projections, and; 
- Supervisory and management reviews. 

SSA Response: 

We agree with first bullet. Based on discussions with GAO staff, a more 
formal documentation of the review process for developing projections 
for the Trustees Reports has already begun. Beginning with the work 
done for the 2003 Trustees Reports, everyone working on the long-range 
projection model will complete a sheet detailing the checks that they 
perform. Managers will be required to sign off on these sheets as well 
as perform their own checks. These sheets, and all supporting papers, 
will be retained for subsequent review. It will be emphasized that sign 
off on work in any area will not change the fact that the work product 
is still considered preliminary and subject to further review at 
subsequent stages of the projection process. With this emphasis we hope 
to avoid introducing the risk that "signed off" work might be 
considered to be final and absolutely correct. 

We agree only partially with the second bullet. We do not believe the 
limited focus of the review (which excluded review of assumptions, 
formulas, or methods used in the projection models) allowed GAO to 
understand the extent of OACT's present documentation of the projection 
model. The Office of the Chief Actuary has significantly enhanced 
documentation of the assumptions, formulas, and methods during the last 
few years. First, revisions to the Trustees Report in 2001 included 
enhanced documentation of the projection methodology. This report 
provided fuller descriptions and presentations of the economic and 
demographic assumptions and potential outcomes under those assumptions. 
For one specific example, cohort life expectancies were included with 
period life expectancies for the first time in this report. Second, 
much more detail has been provided through OACT's Internet site. Third, 
additional studies and notes have been written. A list of these 
released studies can also be found on OACT's web site. Lastly, we have 
made significant progress in the documentation within our program code. 
We have worked to make the program code more readable by (1) making the 
code more efficient, compartmentalized, and compact (2) adding more 
documentation within the code and (3) making variables and indices more 
descriptive. 

We do not believe that acceptable ranges for reasonableness testing can 
be determined as an absolute standard. The output results depend on (1) 
changes in input data, (2) changes in assumptions, and (3) changes in 
methodology. As these components change every year, they need to be 
considered when determining if particular output is reasonable and, in 
fact, reasonability determinations are being done presently. 
Reasonableness assessments, considering changes in the components given 
above, will be documented more formally in the review process. 

We do recognize the need for a substantial summary of OACT procedures 
for experts and panels that review the work. We will compile 
substantial descriptions of these procedures and include a flow chart 
showing how the areas interact. The end product will be a comprehensive 
description of the work flow (input, procedures, output) necessary to 
prepare the long-range OASDI trust fund projections for the Trustees' 
reports, and to document the work preformed by OACT while preparing 
projections. 

GAO Recommendation 2: 

2. The Commissioner of Social Security direct the Chief Actuary to 
develop and implement a workforce plan that integrates with SSA's 
Future Workforce Transition Plan and includes the following elements: 

* Analyzing present workload, workforce, and competencies; 

* Identifying workload, workforce, and competencies needed for the 
future; 

* Comparing the present workload, workforce, and competencies to future 
needs to identify gaps and surpluses; 

* Preparing and implementing plans to build the workforce needed for 
the future; and; 

* Evaluating the success of the workforce planning model to ensure it 
remains valid and objectives are being met. 

SSA Response: 

We agree. As stated in the general comments on Section 2, OACT has 
worked effectively for many years to acquire and develop a highly 
qualified, professional staff that do an outstanding job. However, as 
GAO has recommended, OACT will work with staff in the Office of the 
Deputy Commissioner for Human Resources to develop and implement an 
OACT workforce plan that is integrated with SSA's plan. 

GAO Recommendation 3: 

3. The Commissioner of Social Security direct the Chief Actuary to 
develop and implement a formal policy to track, follow-up, and resolve 
findings and recommendations of external audits and reviews. 

SSA Response: 

Agree for reviews, but we note that there is already a tracking system 
in place for audits. SSA has a computerized tracking system, the 
Automated Audit Management System (AAMS), for all audits, including 
recommendations, received by the General Accounting Office (GAO) and 
the Office of the Inspector General (OIG). 

Recommendation from technical panels are specific to the Office of the 
Chief Actuary and are not included in the Agency-wide AAMS. Thus, the 
Office of the Chief Actuary will initiate a formal process for tracking 
and resolving recommendations from technical panels and other reviews 
of this nature. For each set of recommendations, the process will 
include: 

1. A list of all recommendation. 

2. Determinations of what actions, if any, are to be taken in response 
to each recommendation. (If no action is to be taken then skip to the 
last step) 

3. An assignment of a priority to each recommendation and a date to 
review the actions determined in step 2. 

4. On the review date, a documentation of the steps taken to date will 
be made. Steps 2 and 3 are repeated until a resolution is complete. 
When a resolution is complete, go to the last step. 

5. Documentation of resolution of recommendation. 

Technical Comments: 

We suggest the bullets for the first recommendation be changed to: 

* Develop and implement a formal process of documenting internal 
reviews and approvals to help demonstrate that work processes are 
carried out correctly. 

* Develop a comprehensive description of the work flow (input, 
procedure, output) necessary to prepare the long-range OASDI trust fund 
projections for the Trustee's reports, and document the work performed 
by the Office of the Chief Actuary while preparing projections. 

[End of enclosure] 

Footnotes: 

[1] The Social Security Board of Trustees was established under the 
Social Security Act, as amended, to oversee the financial operation of 
the Old-Age and Survivors Insurance and Disability Insurance trust 
funds. The Board of Trustees is composed of the Commissioner of Social 
Security, the Secretary of the Treasury, the Secretary of Labor, the 
Secretary of Health and Human Services, and two members of the public, 
who are nominated by the President and confirmed by the Senate. 

[2] 42 U.S.C. 401(c). 

[3] U.S. General Accounting Office, Standards for Internal Control in 
the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 
1999). 31 U.S.C. 3512(c),(d) (The Federal Managers’ Financial Integrity 
Act of 1982 (FMFIA) requires GAO to issue standards for internal control
in the federal government. 

[4] GAO/AIMD-00-21.3.1. 

[5] The Social Security Technical Panel Report to the 1991 Advisory 
Council on Social Security, (Washington, D.C.: August 1990) and The 
1999 Technical Panel on Assumptions and Methods, Report to the Social 
Security Advisory Board (November 1999). 

[6] U.S. General Accounting Office, A Model of Strategic Human Capital 
Management, GAO-02-373SP (Washington, D.C.: Mar. 15, 2002). 

[7] OACT’s workforce plan should be performed in coordination with 
SSA’s agencywide human capital plan, which, as we reported in U.S. 
General Accounting Office, Performance and Accountability Series, Major 
Management Challenges and Program Risks: Social Security 
Administration, GAO-01-261 (Washington, D.C.: January 2001), needs 
further attention. 

[8] The Social Security Advisory Board was created by the Social 
Security Independence and Program Improvements Act of 1994. The Social 
Security Advisory Board appoints technical panels to advise on the 
assumptions and methods used in the Trustees’ reports. In 1999, the 
Social Security Advisory Board convened its first technical panel. 
Similar technical panels have been convened periodically since 1971 by 
other advisory authorities. 

[9] The most recent technical panel reports are available on SSA’s Web 
site: [hyperlink, http://www.ssa.gov]. 

[10] U.S. General Accounting Office, Social Security: Actuarial 
Projections of the Trust Funds, GAO/AIMD-00-53R (Washington, D.C.: Jan. 
14, 2000). 

[11] GAO/AIMD-00-21.3.1. 

[12] In October 1990, the Secretary of the Treasury, the Director of 
the Office of Management and Budget, and the Comptroller General 
(Principals) established FASAB to develop a set of generally accepted
accounting standards for the federal government. Effective July 1, 
2002, FASAB is comprised of six nonfederal or public members and 
representatives of the three Principals. 

[13] Federal Accounting Standards Advisory Board (FASAB), Statement of 
Federal Financial Accounting Standards No. 17, Accounting for Social 
Insurance, August 1999. 

[14] GAO/AIMD-00-21.3.1. 

[15] Actuarial standards of practice are promulgated by the Actuarial 
Standards Board. These standards are designed to provide practicing 
actuaries with a basis for assuring that their work will conform to
generally accepted principles and practices and to assure the public 
that actuaries are professionally accountable. 

[16] Actuarial Standard of Practice Number 41, Actuarial Communications 
(Washington, D.C.: March 2002). 

[17] Actuarial Study Number 112, Social Security Area Population 
Projections: 1997 (Baltimore, Md.: August 1997). 

[18] The 1999 Technical Panel on Assumptions and Methods, Report to the 
Social Security Advisory Board (November 1999). 

[19] GAO/AIMD-00-53R. 

[20] GAO-02-373SP. 

[21] International Personnel Management Association, Workforce Planning 
Resource Guide for Public Sector Human Resource Professionals 
(Alexandria, Va.: 2002). 

[22] SSA issued its Future Workforce Transition Plan in June 2000, 
which encompasses strategies that address workforce planning/analysis 
(including retirement analysis), recruitment and retention, and 
training. Since 1993, we have reported a number of concerns with SSA’s 
overall human capital planning efforts that the agency is taking steps 
to address such as by developing the Future Workforce Transition Plan. 
However, to be more useful in making workforce and information 
technology decisions, we have stressed that a more detailed service 
delivery plan is needed that spells out who will provide what type of 
services in the future. 

[23] The Society of Actuaries (SOA) is an educational, research, and 
professional membership organization with the purpose of advancing 
actuarial knowledge and enhancing the ability of actuaries. To become a 
member of SOA, one must successfully complete a series of SOA 
examinations. 

[24] GAO-02-373SP. 

[25] U.S. General Accounting Office, Design, Implementation and 
Evaluation of Training at Selected Agencies, GAO/T-GGD-00-131 
(Washington, D.C.: May 18, 2000). 

[26] GAO-02-373SP. 

[27] When we contacted agency officials who maintain this system, we 
found that recommendations contained in our January 2000 report were 
not in the system, because the recommendations were included in our 
consultants’ report, which was an enclosure to our report. 

[28] The Social Security Technical Panel Report to the 1991 Advisory 
Council on Social Security (Washington, D.C.: August 1990) and The 1999 
Technical Panel on Assumptions and Methods, Report to the Social 
Security Advisory Board (November 1999). 

[29] GAO/AIMD-00-53R, 100-101. 

[30] While the policies outlined in OMB Circular A-50 are applicable to 
audit follow-up, and the review by the Technical Panel would not appear 
to be considered an audit for purposes of the Circular, we view these 
policies as critical in providing assurance to OACT management that the 
resolution process has been properly completed. Documentation under the 
Circular would include outlining a course of action for implementing 
recommendations that management agrees with and providing reasons for 
taking no course of action for those that management disagrees with. 

[31] GAO/AIMD-00-21.3.1. 

[End of section] 

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U.S. General Accounting Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: