IG: Major weakness in HHS financial systems, security programs

The Health and Human Services Department has serious weaknesses in its financial systems and processes for producing financial statements and inadequate internal controls over Medicare information systems, the HHS Office of Inspector General said in its semiannual report to Congress.

However, HHS produced a clean financial statement for the first half of fiscal 2004, the Inspector General's office said in the report released yesterday. The fact that HHS fairly presented its financial position enabled the department to meet the Nov. 15, 2003, accelerated date for submitting financial statements and audit results to the Office of Management and Budget.

The continuing material weaknesses, which are systemic across a number of operating divisions, were related to financial statement preparation, financial management systems, financial analyses and reporting. The Medicare information systems lacked satisfactory controls to ensure the security and integrity of data processing operations and data files, the report said.

Further, 'While progress had been made in securing critical systems, OIG identified fundamental security program weaknesses that inhibited the department's ability to create a more mature security environment,' Dara Corrigan, acting principal deputy inspector general, said in the report. The evaluation found 71 vulnerabilities, 34 of them significant.

Most weaknesses were due to HHS' failure to develop an effective information security management program structure to ensure that sensitive data and critical operations received adequate attention. The department also failed to apply appropriate security controls to protect systems, the report said.

The Office of Inspector General's report chiefly sums up the savings the department has accrued through audits and cutting fraud and abuse of federal health care programs and their beneficiaries, typically through civil actions.

For October through March, HHS reported savings of $16.8 billion as a result of recommendations to put funds to better use, audits of claims coming in and payments going out and investigations. HHS is the largest health care payer through its Medicare and Medicaid programs for seniors and low-income persons.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.

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