Overall, SSA paid approximately $2.4 billion  to about 430 thousand foreign beneficiaries in fiscal year 2004, including  about $206 million paid to approximately 102,000 totalized beneficiaries. SSA has pending totalization agreements with Mexico and  Japan. SSA Lacks A Formal Process to Assess the Accuracy and Reliability of Foreign Countries’ Data When Entering into Totalization Agreements, but Recent Initiatives Appear Promising

SSA’s policies and procedures for assessing the accuracy and reliability of  important information from foreign countries—such as birth and death  data—when entering into totalization agreements remain generally  informal, despite recent initiatives for improvement. Historically, the  agency has focused on broad policy issues and systems compatibility,  rather than integrity and reliability of earnings data and authenticity of  evidentiary documents. For example, during preliminary negotiations for  an agreement with Mexico, SSA conducted a limited review of that  country’s social security system and policies in August 2002, but did not  assess the accuracy and reliability of data needed to pay benefits or the  relevant controls over that data. SSA has developed a  standardized questionnaire for foreign social security officials to help the  agency identify and assess the reliability of earnings data in countries  under consideration for future totalization agreements. As a result of this review, SSA reported that it is  scrutinizing documents from that country more closely to ensure that only  truly entitled beneficiaries receive payments. All these initiatives are positive steps in SSA’s efforts to identify and assess  the potential risks posed by inaccurate or unreliable foreign data when  entering into totalization agreements. In particular, without a  more formal mechanism in place, given expected retirement of key  management officials in coming years, SSA risks the loss of critical  institutional knowledge, thus diminishing the agency’s ability to effectively  assess risks associated with future agreements. SSA Is Limited In Its Ability to Verify Individuals’ Initial and Continuing Eligibility for Benefits

We identified potential vulnerabilities in SSA’s existing policies and  procedures for verifying individuals’ eligibility for benefits once an  agreement is in force. First, under existing totalization agreements, SSA  generally accepts documentation from foreign countries’ social security  agencies with no independent verification of this information when  establishing an individuals’ initial eligibility for benefits. While SSA lacks the ability to perform  this type of independent verification with foreign countries, it does have  some tools at its disposal—validation surveys and personal  questionnaires—to verify an individual’s identity and continuing eligibility. Other countries such as Sweden  may only be reviewed once every 30 years. However, these questionnaires typically  rely on beneficiaries to accurately self-report such information with no  independent verification to determine the reliability of the responses. Moreover, while SSA routinely uses computer matches with databases in  the U.S. to help it verify domestic beneficiaries’ initial and continuing  eligibility for benefits, it does not currently have the capacity to perform  such matches for foreign beneficiaries. While  officials reported that such a match would be a useful tool for identifying  unreported deaths, SSA is partly limited in its ability to conduct such  matches with all other totalized countries because it does not currently  capture foreign social insurance numbers on its computer systems. Given the likely  growth in the number of foreign beneficiaries in coming years, including  totalized beneficiaries, the trust funds will likely face increased exposure  if existing processes are not improved. 2. SSA also commented on our observation that it regularly accepts critical  documentation from foreign countries without independently verifying the  accuracy of such information.
Why GAO Did This Study

Since 1977, the U.S. has entered into bilateral social security totalization agreements with 20 foreign countries. In fiscal year 2004, the Social Security Administration (SSA) paid approximately $206 million to 102,000 beneficiaries in these countries based on their eligible periods of coverage. If put into force, pending agreements with Mexico and Japan will increase the number of beneficiaries receiving totalized benefits, as well as the amount of benefits paid. Given the costs to the Social Security Trust Funds posed by existing and pending agreements, GAO was asked to (1) document SSA's policies and procedures for assessing the accuracy of foreign countries' data when entering into a totalization agreement, and (2) examine SSA's processes for verifying beneficiaries' initial and continuing eligibility for benefits once an agreement is in force.

What GAO Found

SSA's policies and procedures for assessing the accuracy and reliability of important information from foreign countries--such as birth and death data--when entering into totalization agreements remain generally informal, but recent initiatives for improvement seem promising. Historically, SSA has conducted only limited reviews, focusing primarily on broad policy issues and systems compatibility, rather than the integrity and reliability of earnings data and evidentiary documents. For example, during preliminary negotiations with Mexico, SSA conducted a limited review of that country's social security system but did not assess the reliability of that country's data. SSA has also developed several initiatives to identify risks associated with totalization agreements. These include: developing a standardized questionnaire for assessing the reliability of foreign earnings data, soliciting input from other government agencies, and using a matrix to compare potential agreement countries. SSA is also conducting "vulnerability assessments" to detect potential problems with foreign countries' documents. All of these tools are positive steps to help SSA assess potential risks posed by unreliable foreign data. However, SSA has not integrated these initiatives into formal procedures. Given the upcoming retirement of key management officials, SSA may lose critical institutional knowledge, which may limit the agency's ability to assess risks associated with future agreements. Our review identified potential vulnerabilities in SSA's policies and procedures for verifying individuals' eligibility for benefits once an agreement is in force. When establishing an individual's initial eligibility for benefits, the agency generally accepts critical documentation from foreign countries, without independently verifying the accuracy of such information. We also found that SSA's two primary tools for determining an individual's continuing eligibility--validation surveys and personal questionnaires--may be insufficient to ensure that only truly eligible individuals receive benefits. For example, SSA mails questionnaires to all beneficiaries living abroad (including totalized beneficiaries) at least once every 2 years requesting information on their eligibility status, but does not independently verify the responses on these questionnaires. These questionnaires rely on beneficiaries to accurately self-report important information that may affect their eligibility for benefits, with no additional verification. SSA does not currently have the ability to independently verify the responses on these questionnaires using computer matches or other forms of third-party verification, as it does with domestic beneficiaries. The agency's inability to conduct matches with foreign countries is partly because it does not capture beneficiaries' foreign social insurance numbers on its systems.