1997 Management Letter - Social Services Division -

General Welfare Assistance Program

 The Strategic Policies and Priorities Committee submits, for the information of Council, the following transmittal letter (July 8, 1998) from the Audit Committee and reports having received same:

 Recommendation:

 That the report (June 25, 1998) from the City Auditor attaching the management letter of the Social Services Division - General Welfare Assistance Program, together with the report (June 26, 1998) from Commissioner of Community and Neighbourhood Services in response, be received and forwarded to Council for information.

 Background:

 On July 7, 1998, the Audit Committee had before it a report (June 25, 1998) from the City Auditor attaching the management letter of the Social Services Division - General Welfare Assistance Program, together with a report (June 26, 1998) from the Commissioner of Community and Neighbourhood Services in response.

 The Audit Committee advises that it received the aforementioned reports and directed that copies be forwarded to your Committee and City Council for information.

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 (Report dated June 25, 1998, addressed to the

Audit Committee from the

City Auditor)

 Recommendation:

 It is recommended that the 1997 management letter and the corresponding response relating to the audits of the accounts of the Social Services Division, General Welfare Assistance Program of the Department of Community and Neighbourhood Services, be received for information.

 Comments:

 I have completed the 1997 audits of the accounts of the Social Services Division, General Welfare Assistance Program, for the year ended December 31, 1997. As a bi-product of my audit, the attached management letter was issued to the Commissioner of Community and Neighbourhood Services Department. A response from the Commissioner has been received.

 Conclusion:

 I have reviewed the response to the management letter prepared by the Department. The responses are appropriate and will be followed up as part of our future audit work.

 Contact Name and Telephone No.:

 Tony Veneziano, 392-8353.

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 (Report dated June 26, 1998, addressed to the

Audit Committee from the

Commissioner of Community and Neighbourhood Services)

 Purpose:

 This report is to inform Committee on the status of the recommendations in the Management Letter of the City Auditor on the 1997 operations of the Social Services Division.

 Funding Sources:

 There are no financial implications.

 Recommendation:

 It is recommended that this report be received for information.

 Background:

 This report responds to the recommendations contained in the City Auditor's Management Letter on the 1997 operations of the Social Services Division.

 Discussion:

 The attachment to this report re-iterates the 24 recommendations in the Auditor's Management Letter and sets out the actions already undertaken by the Division or proposed to be implemented.

 Conclusions:

 In the majority of cases the Division has undertaken corrective action. Where corrective action is outstanding the Division intends to follow up. We have discussed the contents of the attachment with staff of the City Auditor and understand that they concur with the direction undertaken by the Division.

 Contact Name:

 Heather MacVicar, General Manager, 392-8952.

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 Social Services Division

Response to the 1997 Toronto Auditor's Management Letter

 Recommendation:

 (1)The agreement with Great West Life be amended such that the City has the right to audit dental billings and/or obtain audited reports on internal controls relating to dental claim processing.

 Response:

 1.The Division's expenditure on dental services has been closely monitored at the Council and staff level for several years.

 For 1997, the Division budgeted a net expenditure of $2.8 million and incurred actual net expenditures of approximately $2.0 million. The comparable figures for 1996 are $3.5 million and $2.9 million respectively, and for 1991, $9.0 million (budget actual).

 The Division will negotiate with Great West Life for the right to audit dental billings and internal controls relating to dental claims.

It should be noted that, in 1996, the Division conducted a survey with 500 clients to evaluate the service quality provided by Great West Life. This review directly verified that services billed for these clients had in fact been provided. Further, at the time of contract renewal, an informal review of the controls in effect at Great West Life was undertaken. (The results of the review indicated these controls to be significantly superior to those in place at an alternative proponent.)

 Recommendation:

 (2)The Quality Control and Assurance Group perform a periodic analysis of dental claims paid by Great West Life Insurance Company to confirm the validity of payments made.

 Response:

 2.The Division will conduct periodic reviews to confirm with clients that they have received the services billed.

 Recommendation:

 (3)To minimize the occurrence of overpayments, an analysis be conducted to determine the reasons for the overpayments, and the necessary corrective action taken. This action would include the provision of additional training to caseworkers, as required. Staff should also analyze the reasons for multiple overpayments occurring, to ensure current procedures are adequate.

 Response:

 3.The Division has conducted reviews to identify high risk areas wherein overpayments may occur. Corrective action has commenced and the outcomes will be monitored on an ongoing basis.

 Most recoverable overpayments result from client errors, unintentional or otherwise, such as: client delays in reporting changes in circumstances; failure to disclose facts; misrepresentation of facts; or, deliberate intention to defraud the system. Given their nature, these kinds of client errors are difficult for the Division to detect and control. This is exacerbated given the existing complexity of the prevailing legislation, frequent legislative changes and limitations of the current technology.

 The balance of active overpayments as at April 30, 1998 was approximately $10.8 million. If this amount (which is a cumulative total over several years) is compared against the annual expenditure on welfare payments, it represents about one per cent. The average overpayment per case with an overpayment is approximately $1,100.00. This represent the total overpayment per case which is approximately 9,000 cases.

The balance in the overpayment category is due in no small measure to follow up by Division staff. Cases with multiple overpayments are the result of fraud investigations by staff.

 Under the General Welfare Act, the Division was obligated to provide assistance if the client was in need, regardless of whether there was a history of overpayments. Under the Ontario Works Act, which came into effect June 1, 1998, should a client be convicted of social assistance fraud, assistance may be withheld for three months for a first offence and six months for a subsequent offence.

 To improve verification processes at the point of application, the Division intends to pilot a modified Consolidated Verification Process (C.V.P.). C.V.P. is a recent initiative under the auspice-of the Business Transformation Project at the Province Level to review former Family Benefit cases prior to transfer to municipal service delivery agents. It uses a streamlined process, with a highly formalized assessment tool to detect incorrect self declared information for high risk cases, including cases with multiple overpayments. The Division has volunteered to work with the Province to modify the process for use in a municipal setting, with particular emphasis on application at point of intake.

 In addition, revised overpayment policy and procedural guidelines were implemented in 1998 to assist the Division in the management of overpayments. Legislative changes have recently been enacted, resulting in changes to the overpayment policy and procedural guidelines. Training will be provided to address these changes.

 Recommendation:

 (4)More aggressive recovery efforts be undertaken with respect to collecting outstanding overpayments from individuals no longer receiving welfare.

 Response:

 4.The balance of identifiable inactive accounts is estimated to be approximately $11.5 million. In a pilot project commencing March 1996, the Division committed additional resources to establish and collect overpayments from inactive cases using the Province's Priority Initiative Funding. Recent (less than four years) inactive overpayments are pursued by a dedicated resource at each local office. Cases which have been inactive for four years or more are dealt with at the Central Overpayment and Recoveries Unit where five full-time administrative support staff (along with two caseworkers and one supervisor part-time) are responsible for tracking, monitoring and recovering these overpayments.

 Once a review of the total inactive cases is completed, the Division will work with the Province and our Finance Department to write off uncollectible accounts and establish write-off procedures to ensure that a substantial build-up of old uncollectible accounts does not recur.

Recommendation:

 (5)Documentation required to assess the eligibility of a welfare application be documented and copies retained in the client's file. Staff be directed to obtain the most reliable form of identification when processing applications for welfare assistance.

 Response:

 5.It is the Division's current policy to obtain, verify and retain in the client's file, copies of required documentation such as bank accounts and lease rental agreements. At the time of the audit, Social Insurance Numbers were not a mandatory legislated requirement for the purpose of assessing eligibility, since not all applicants have Social Insurance Numbers. Nevertheless, it has been always a practice to advise clients to apply for their cards immediately (with subsequent follow up to ensure this is done).

 While the policy has always been that acceptable identification be produced, the General Welfare Act gave no legislative authority to enforce this requirement. The new Ontario Works Directives require that Social Insurance Numbers and Health Card Numbers be examined and noted on file. The Division is currently revising its identification guidelines to meet the new Ontario Works Act requirements.

 Recommendation:

 (6)The Policy and Administrative Unit conduct comprehensive eligibility entitlement reviews in selected area offices on a cyclical basis. An audit program should also be developed to facilitate these reviews.

 Response:

 6.The Division agrees with the principle of this recommendation in a static environment; however, the Division is going through massive changes in legislation this year. New changes must be implemented first, and the associated high risk areas identified. Priorities for review can then be assessed.

 Recommendation:

 (7)Annual work plans, developed for both P.A.R.U. and C.B.A.U., take into account high risk areas and critical issues, and include performance objectives against which the Units' activities can be measured. Reports issued to senior management should identify significant trends and problem areas, and recommend corrective action. Best practices identified at a particular area office should also be reported to management so that these practices can be implemented, as appropriate, throughout the Division.

 Response:

 7.Although formal risk assessment was not used to prepare the 1997 work plan, the work plan was developed based on priorities and critical issues identified by Divisional senior management and local area office managers.

 During 1997, the Division's protocol for reviews was revised thoroughly and consolidated in a document titled "Performance Improvement Protocol". Therefore, commencing late that year, all review reports were to identify problem areas, make recommendations for improvement and follow up and to identify any significant trends, (and - where applicable - best of practices). Structure is in place to enable senior management of the Division to review the reports and implement any required corrective action.

Further, as a result of the revised protocol, the units incorporated the use of risk assessment in developing the 1998 work plan.

 Recommendation:

 (8)The mandate of both these units be reviewed and clarified, and consideration be given to consolidating these units. Staffing levels should be reviewed and allocated based on the number of reviews to be performed annually.

 Response:

 8.The mandates of these two units have been reviewed and subsequently the name of the two units are changed to reflect the re-defined roles and purposes in the Division.

 The Policy and Administrative Review Unit is now called Program Review Unit and Cost Benefit Unit is now called Process Review Unit and both of these units are under the Performance Improvement Unit. Plans are underway to consolidate the two units. Staffing levels will also be addressed.

 Recommendation:

 (9)Actual time spent on each project should be maintained and compared against budgeted time. Supervisors should obtain explanations of significant variances and institute any corrective action required.

 Response:

 9.The Division concurs and will establish procedures to ensure that projects are completed on schedule.

 Recommendation:

(10)Management take the necessary action to ensure that Policy and Administrative Review Unit and Cost Benefit Analysis Unit staff have the necessary auditing, project management and analytical skills to effectively carry out their responsibilities.

 Response:

 10.A number of staff have already received training to improve their auditing, risk assessment, project management and analytical skills, and the intent is to adequately equip all staff with the appropriate skills. In addition, unit staff have been provided training the following areas:

 (i)computer Software such as Microsoft Access and Excel;

(ii)survey techniques;

(iii)statistical sampling;

(iv)report writing; and

(v)team building.

 Upgrading of staff skills will continue.

 Recommendation:

 (11)Social Services staff, in consultation with the Year 2000 Project Director, expedite the completion of the systems inventory, identify and prioritize critical systems that must be year 2000 compliant, and determine the resources required in this regard. The status of provincial and other external systems that impact on the Social Services Division should be determined and appropriate action taken to ensure that the Division's operations are not adversely impacted.

 Response:

 11.Since October 1997, the Division has been meeting on an ongoing basis with the Ministry of Community & Social Services on the Year 2000 issue for the Provincial social assistance benefit insurance system (MAIN).

 Under the leadership of the Y2K Corporate Committee, in May 1998, the Division completed and provided the Committee with the Y2K survey for the Division's mission critical systems, hardware inventory, software inventory, and listing of vendors. All mission critical systems are under evaluation within the guidelines of the Division, Department and the Corporation. It is anticipated that all Y2K issues within the control of the Division will be addressed by the end of 1998, and the Division continues to vigorously pursue the Province to expeditiously undertake its responsibilities with respect to the benefit issuance system.

 Recommendation:

 (12)Procedures be established such that backup copies of information residing on the Caseworker Technology System, Ontario Works Technology System, Welfare Fraud Database and Appeals Database are stored off-site.

 Response:

 12.The Division now has back-up and off-site storage policies and procedures in operation. In general all file servers (Caseworker Technology, Ontario Works Technology, Novell) in the Division are backed up every night on cartridge. Once a week, the back up cartridge is forwarded by courier to the Corporate Archives and Record Centre for off-site storage. An off-site log is kept in each location for control and audit purpose.

 The Appeals and the Provincial Fraud databases are backed up every night locally by the Systems Support Person and, every week, the disks are sent off-site to Metro Hall, 12th floor for storage.

 Recommendation:

 (13)A listing of all overpayments maintained as a memorandum record in client files be developed and maintained on an ongoing basis, until conversion to C.I.M.S.

 Response:

 13.The Division will regularly prepare and maintain a list of overpayments currently not captured by MAIN, due to the limitation of the system, in amounts over $9,999.98.

 Recommendation:

 (14)Social Services staff take the necessary action to ensure that passwords are not shared by staff.

 Response:

 14.There are technical limitations on security features for the provincial NT585 data entry computer since this is part of the MAIN system which was implemented in the early 1970's. Each area office was allotted a limited number of passwords. Also, there is no audit trail within the NT585 data input screen. Consequently there is no ability for management to identify who is doing the input. However, as specified in the Division's Automation Handbook - Let's Get Technical, data operators should not share the same password while they are performing data input. This policy will be re-enforced.

 In the Division, all data entry, with the exception of the Income Reporting Statement, has now been transferred to Caseworker Technology. Effective July 1998, Caseworker Technology will be enhanced with Income Reporting capability. All data entry will therefore be handled completely by CWT which has a much more advanced and superior security system.

 Recommendations:

 (15)Systems staff investigate the problem with respect to loss of file information from the Appeals Log System and corrective action be taken immediately.

 (16)Procedures be established such that passwords are changed periodically and that log on identifications are deleted from the system when staff leave or are transferred out of the Appeals Unit.

 Response:

 15,16.The Appeals Data Base is currently being converted into a more functional and accurate Access programme.

 Information which formerly could not be retrieved on the FoxBASE appeals database was old data therefore the decision was made to convert the information currently on the FoxBASE system onto an Access programme. This programme is currently in the testing phase.

 Procedures have been put in place to ensure that the passwords for the staff who have edit rights to the appeals data is changed every three months. This information/change date will be centralized with the local systems support person.

 Also, procedures have been established to ensure that when staff leave or are transferred out of the Appeals unit they are immediately denied system access.

 Recommendation:

  (17)A summary report be developed for senior management, highlighting key statistics, trends and providing analysis with respect to variances between area offices and against pre- determined standards.

 Response:

 17.During the past year and more, the monthly statistical package has undergone continuous revisions in order to better organize and provide meaningful information. Currently, there is an executive summary that meets senior management's requirements, and local office breakdowns have been incorporated. All other identified senior management needs are expected to be incorporated in the June 1998 report.

 Recommendation:

 (18)The monthly statistical report be revised to provide a breakdown of statistical information by area office, distinguish between active and inactive outstanding overpayment balances, as well as provide a status of backlogs and a reconciliation of the disposition of items.

 Response:

 18.As stated in the response to recommendation 17, the monthly statistical report has undergone substantial revisions which include incorporating breakdowns of statistical information by local office. The reporting of active outstanding overpayments is now done separately by way of individual sections in the monthly statistical report, and this practice will be extended to inactive cases. Where information is available it has been reconciled and accounted for. The Division has initiated an Information Technology project to assist in its ability to collect all required information necessary for better caseload management.

 Recommendation:

 (19)Cheque signing procedures be reviewed at all area offices and revised, such that the custody of blank cheques, plates and keys is segregated.

 Response:

 19.The practice for most area offices is to segregate the storage of blank cheques, signature plate and keys in different safes in instances where there is more than one safe and this practice is operationally efficient. In some area offices, e.g. Area Office E, where physical space is limited and there is only one safe, the plate will be stored in a locked container in the safe.

 Recommendation:

 (20)The Daily Payment Reject Report be forwarded directly to a Supervisor for review and to ensure necessary corrective action is taken.

 Response:

 20.The Division will ensure that supervisors will oversee the completion of this process and review the work done by the Clerk II.

 Recommendation:

 (21)Area office staff be directed to investigate cashed cheques not on the issuance report immediately upon receipt of the listing from the Financial Services Unit. Any cashed cheques outstanding for more than three months should be reported by the Financial Services Unit to the Quality Control and Administration Group for follow up.

 Response:

 21.This is the Division's current policy. However, a number of limitations in MAIN have been identified by the local offices which prevented this task to be done in the time frame required. The Division will conduct a review to identify the source of the problems and recommend appropriate procedures to resolve this issue.

 Recommendation:

 (22)The total of uncashed cheques shown as a reconciling item on the bank reconciliation be supported by a listing of the cheques, and any old outstanding cheques be followed up on a timely basis.

 Response:

 22.This has been done. A supporting schedule of any reconciling item is attached to the reconciliation and any old outstanding cheque is followed up on a timely basis as appropriate.

 Recommendations:

 23.The sample of attendance records be selected from the Time Entry System for verification.

 24.Attendance recording procedures at all area offices should be reviewed and any unnecessary recording of information be eliminated.

 Response:

 23,24.The Division will ensure that the sample for review will be selected from the Time Entry System and periodic follow up reviews will be conducted by the Performance Improvement Unit to ensure continuous compliance. Any unnecessary recording of information will be eliminated.

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 (Copy of the 1997 audits of the accounts of the Social Services Division, General Welfare Assistance Program for the year ended December 31, 1997, has been forwarded to all Members of Council with the agenda of the Strategic Policies and Priorities Committee for its meeting on July 24, 1998, and a copy thereof is on file with the City Clerk.)