oversight

U.S. Coast Guard National Pollution Funds Center: Claims Payment Process Was Functioning Effectively, but Additional Controls Are Needed to Reduce the Risk of Improper Payments

Published by the Government Accountability Office on 2003-10-03.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

United States General Accounting Office
Washington, DC 20548



          October 3, 2003

          The Honorable Lane Evans
          Ranking Minority Member
          Committee on Veterans Affairs
          House of Representatives

          The Honorable Bob Filner
          Ranking Minority Member
          Subcommittee on Coast Guard
            and Maritime Transportation
          Committee on Transportation and
            Infrastructure
          House of Representatives

          The Honorable Corrine Brown
          House of Representatives

          Subject: U.S. Coast Guard National Pollution Funds Center: Claims Payment
                   Process Was Functioning Effectively, but Additional Controls Are Needed
                   to Reduce the Risk of Improper Payments

          The Oil Spill Liability Trust Fund (Fund) is a $1 billion fund authorized by the Oil 

          Pollution Act of 1990 (OPA) to pay for (1) federal removal actions, (2) certain claims 

          for uncompensated removal costs and damages, and (3) natural resource damage and 

          restoration activities resulting from oil spills or the substantial threat of oil spills to 

          the waters or shorelines of the United States. The Fund is administered by the 

          National Pollution Funds Center (NPFC) of the U.S. Coast Guard. In May 2002, at 

          your request, our Office of General Counsel reported on legal issues and limitations 

          of the Fund and concluded that certain administrative costs were inappropriately 

          being paid out of the Fund. In light of this conclusion, you asked that we review the 

          internal controls over disbursements from the Fund. 


          This report summarizes the information provided during our briefing on our review of 

          claim payments made from the Fund, which was provided to your staff on 

          September 17, 2003. A second briefing will be provided to your staff on the results of 

          our review of controls over operating expenses and other disbursements from the 

          Emergency Fund.1 The enclosed briefing slides highlight the results of our work and 

          the information provided. Specifically, we reviewed the Fund to determine whether 


          1
           The Emergency Fund is used to pay for emergency removal activities and the initiation of natural
          resource damage assessments.


                                                     GAO-04-114R Oil Spill Liability Trust Fund Claims
(1) the design of internal controls over the claims process provides reasonable
assurance that improper payments will not occur or will be detected in the normal
course of business and (2) internal controls over the claims process are operating as
designed to help ensure proper payment of claims.

Results in Brief

The U.S. Coast Guard NPFC follows a systematic and effective process for payment
of claims. However, there are some weaknesses in the design of internal controls
over the claims process that expose the Fund to improper payments. The
weaknesses in the design of controls include (1) ineffective access restrictions to the
Authorization-to-Pay2 (ATP) form, (2) lack of segregation of duties between
individuals preparing and approving ATPs for payment, (3) lack of procedures to
verify the validity of ATPs prior to payment by the U.S. Coast Guard Finance Center,
(4) lack of compliance with certain established policies and procedures in the claims
process and the claims processing system, and (5) inadequate documentation of the
originator of actions in the claims processing system.

We found that existing internal controls related to the documentation and approval of
claims were generally operating in accordance with established policies and
procedures. Of the 88 statistically sampled paid claims for fiscal year 2002, all but 3
had adequate documentation.3 We found no exceptions with approvals for the 88
statistically sampled claims. We also found that all 88 claims met NPFC’s 10
requirements for validity, as listed in appendix I of the attached slides. Through data
         4
mining, we selected a nonstatistical sample of 50 claim payments and 8 denied
claims for fiscal years 1998 through 2002 and performed limited tests to determine if
the claims payments were valid and if the denied claims were properly processed.
While we found some documentation and approval issues, we found that the 50 claim
payments were valid and that the 8 denied claims were properly processed.

Recommendations for Executive Action

To improve the design of internal controls over the claims process, we recommend
that the Commandant of the U.S. Coast Guard direct the Director of the National
Pollution Funds Center to

    • require automatic control numbers for each ATP form;
    • 	 limit access to the ATP form control numbers to one individual and an
        alternate in each claims division;
    • 	 require two signatures on each ATP form, one for the preparer and one for the
        approver;



2
  An ATP is a form used to approve claim payments and generate the payments to claimants. 

3
  Based on these results, we estimate that 3.4 percent of the fiscal year 2002 paid claims lacked

adequate documentation. We are 95 percent confident that the error rate was between 1 to 9 percent

for claims paid in fiscal year 2002. 

4
  Data mining applies a search process to a data set, analyzing for trends, relationships, and interesting 

associations. For instance, it can be used to efficiently query transaction data for characteristics that

may indicate potentially improper activity. 



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    • 	 establish procedures requiring the National Pollution Funds Center to
        authenticate ATP forms prior to submitting them to the U.S. Coast Guard
        Finance Center for payment;
    • 	 establish and implement controls so that any required legal reviews of claims
        are completed before they are approved for payment;
    • 	 establish and implement controls to ensure that a release form is received
        from a claimant before a claim can be approved for payment; and
    • 	 modify the claims processing system to consistently identify the originator of
        all actions on user screens.

We also recommend that the Commandant of the U.S. Coast Guard direct the Chief
Financial Officer of the U.S. Coast Guard to require that the Finance Center verify the
validity of ATP forms prior to processing claim payments.

Agency Comments

We obtained oral comments on a draft of our briefing slides from the U.S. Coast
Guard. U.S. Coast Guard officials agreed with our findings and recommendations and
stated that they have already begun to take corrective actions to implement many of
them and will continue to take additional actions as soon as possible to address the
remaining recommendations. They provided us with a detailed list of actions taken
or to be taken, which if properly implemented, should address our recommendations.
U.S. Coast Guard officials also provided technical and clarifying comments that we
incorporated as appropriate.

Scope and Methodology

To determine whether the design of internal controls over the claims process
provided reasonable assurance that improper payments would not occur or would be
detected in the normal course of business, we (1) reviewed OPA and related sections
of the Code of Federal Regulations, (2) reviewed the Comptroller General’s
Standards for Internal Control in the Federal Government,5 (3) reviewed NPFC’s
Standard Operating Procedures related to the claims process, and (4) performed
walkthroughs of the claims process, including the claims processing system, and
compared the results to NPFC’s Standard Operating Procedures and the Comptroller
General’s Standards for Internal Control in the Federal Government.

To determine if internal controls over the claims process were operating as designed
to ensure proper payments of claims, we selected a statistical sample of 88 paid
claims for fiscal year 2002, and reviewed the related claim files and the claims
processing system records to test for adequate documentation, proper approvals, and
validity. To test for validity, we also performed limited data mining of claims paid in
fiscal years 1998 through 2002 to identify unusual transactions and patterns. Based
on the data mining, we selected a nonstatistical sample of 50 claim payments and 8
denied claims, reviewed the related documentation, and performed limited tests.



5
U.S. General Accounting Office, Standards for Internal Control in the Federal Government,
GAO/AIMD-00-21.3 (Washington, D.C.: November 1999).


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We requested comments on a draft of the enclosed briefing slides from the
Commandant of the U.S. Coast Guard or his designee and have included any
comments as appropriate in the letter and enclosed slides. We conducted our work
from December 2002 through July 2003, in accordance with generally accepted
government standards.

                                       -----

This report is available at no charge on our home page at http://www.gao.gov. If you
have any questions about this report, please contact me at (202) 512-9508 or
Rosa R. Harris, Assistant Director, Financial Management and Assurance, at
(202) 512-9492. You may also reach us by e-mail at calboml@gao.gov or
harrisrr@gao.gov. Additional contributors to this assignment were H. Donald
Campbell, Lisa J. Crye, and Edward F. Tanaka.




Linda M. Calbom 

Director, Financial Management and Assurance 


Enclosure 





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Enclosure




            U.S. Coast Guard

            National Pollution Funds Center


            Claims Payment Process Was Functioning Effectively, but
            Additional Controls Are Needed to Reduce the Risk
            of Improper Payments


            Briefing to the Staff of the Committees on Veterans Affairs and
            Transportation and Infrastructure, House of Representatives

            September 17, 2003

                                                                              1




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                                                                   Table of Contents




            •   Introduction and Objectives
            •   Results in Brief
            •   Background
            •   Overview of Effective Internal Control
            •   Internal Control Design
            •   Internal Control Operation
            •   Conclusions
            •   Recommendations
            •   Agency Comments
            •   Scope and Methodology




                                                                                   2




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                                                                    Introduction and Objectives



            •	 The Oil Spill Liability Trust Fund (Fund) is a $1 billion fund authorized to
               pay for (1) federal removal actions, (2) certain claims for
               uncompensated removal costs and damages, and (3) natural resource
               damage assessments and restoration activities by designated federal,
               state, or Indian tribe officials, resulting from oil spills or the substantial
               threat of oil spills to the waters or shorelines of the United States.

            •	 In May 2002, at your request, the GAO Office of General Counsel
               (OGC) reported on legal issues related to the uses and limitations of the
               Fund.

            •	 The U.S. Coast Guard reported that the Fund was being used to pay not
               only uncompensated claims, but also costs associated with processing
               those claims, including salaries and other administrative expenses.
               OGC concluded that the Fund is not available to pay employee salaries
               and other administrative expenses.

                                                                                                3




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                                                                                   Introduction and Objectives (cont.)



            •	 In light of this conclusion, you asked that we review the controls over
               disbursements from the Fund. This is the first of two briefings on our
               review of disbursements from the Fund. This briefing covers the results
               of our work related to the review of claim payments made from the Fund.
               A second briefing on the results of our review of controls over operating
               expenses and other disbursements from the Emergency Fund1 will be
               presented at a later date.

            • Specifically, we reviewed the Fund to determine whether

                 •	 the design of internal controls over the claims process provides
                    reasonable assurance that improper payments will not occur or will
                    be detected in the normal course of business and

                 •	 internal controls over the claims process are operating as designed
                    to help ensure proper payment of claims.

             1TheEmergency Fund is used to pay for emergency removal activities and the initiation of natural resource damage
             assessments.

                                                                                                                                4




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                                                                           Results in Brief



            •	 The U.S. Coast Guard National Pollution Funds Center (NPFC)
               generally follows a systematic process for payment of claims. However,
               we found some weaknesses in the design of internal controls over the
               claims process that increase the risk of improper payments.

            • Weaknesses in the design of the controls included

               •	 ineffective access restrictions to the Authorization-to-Pay (ATP)
                  form,

               •	 lack of segregation of duties between individuals preparing ATPs
                  and approving ATPs for payment,

               •	 lack of procedures to verify the validity of ATPs prior to payment by
                  the U.S. Coast Guard Finance Center,

                                                                                          5




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                                                                Results in Brief (cont.)




            •	 lack of compliance with certain established policies and procedures
               in the claims process and the claims processing system, and

            •	 inadequate documentation of the originator of actions in the claims
               processing system.




                                                                                      6




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                                                                                                           Results in Brief (cont.)



            •	 We also found that, generally, existing internal controls related to
               documentation and approval of claims were operating in accordance
               with established policies and procedures.

                    •	 We statistically sampled 88 paid claims for fiscal year 2002. Of
                       these, 3 did not have adequate documentation. We found no
                       instances of invalid claim payments.

                    •	 We selected a nonstatistical sample  of 50 claim payments and 8
                       denied claims through data mining2 for fiscal years 1998 through
                       2002. While we found some documentation and approval issues,
                       we found no instances of invalid claim payments. The 8 denied
                       claims were properly processed.




            2Data mining applies a search process to a data set, analyzing for trends, relationships, and interesting associations.
            For instance, it can be used to efficiently query transaction data for characteristics that may indicate potentially
            improper activity.
                                                                                                                                      7




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                                                                   Results in Brief (cont.)



            •	 We are making several recommendations intended to improve the
               design of internal controls over the claims process.

            •	 U.S. Coast Guard officials agreed with our recommendations and
               indicated that they have already prepared an action plan to address
               them.




                                                                                         8




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                                                                                         Background



            •	 The Oil Pollution Act of 1990 (OPA)3 authorized the Fund to pay claims
               for certain costs resulting from oil spills or the substantial threat of oil
               spills. The act also

                  •	 authorized the President to make available from the Fund without
                     further congressional appropriation up to $50 million each year to
                     pay for emergency removal costs and initiation of natural resource
                     damage assessments resulting from oil spills,

                  • authorized an appropriation from the Fund of not more than
                    $25 million each year for operating expenses incurred by the U.S.
                    Coast Guard to implement the act, and

                  •	 provided authorization for the appropriation of funds for other uses,
                     such as research, development, testing, and evaluation, and
                     acquisition, construction, and improvements.

              3
               Pub. L. No. 101-380, 104 Stat. 484 (1990).
                                                                                                  9




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                                                                       Background(cont.)



            •	 Administration of the Fund was delegated to the U.S. Coast Guard by
               Executive Order, and in February 1991, NPFC was commissioned to
               perform this function as an independent headquarters unit reporting
               directly to the Coast Guard Chief of Staff.

            • NPFC administers and manages uses of the Fund by

               •	 making funds available for immediate federal oil removal activities
                  and the initiation of natural resource damage assessments,

               • paying claims for losses or damages associated with an oil spill, and

               • recovering costs from responsible parties.




                                                                                        10




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                                                                     Background (cont.)



            • NPFC has two claims processing divisions:

               •	 Claims – adjudicates claims for uncompensated removal costs and
                  damages from oil spills

               •	 Natural Resource Damage Claims – adjudicates natural resource
                  damage (NRD) claims from federal, state, Indian tribe, or foreign
                  trustees as designated pursuant to OPA




                                                                                      11




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                                                                                      Background (cont.)



            Claims paid in fiscal years 1998 through 2002

                               Fiscal year            Number of paid       Total dollars
                                                         claims             (millions)
                                   1998                       598             $ 3.7
                                   1999                       507              10.4
                                   2000                       601               2.4
                                   2001                       311              16.8
                                   2002                       300               7.0
                                  Totals                     2,317            $ 40.3

            Source: NPFC’s data file for fiscal years 1998 through 2002.


                                                                                                      12




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                                                                      Background (cont.)



            • NPFC’s Standard Operating Procedures (SOP)

               •	 provides guidance and requirements for the Claims and Natural
                  Resource Damage Claims Divisions for the adjudication and
                  payment of uncompensated removal costs and damages and NRD
                  claims and

               • describes the responsibilities and conduct for each division.

            •	 The claims processing system (CPS) is NPFC’s current automated
               system for tracking and controlling claims.




                                                                                      13




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                                                                           Overview of Effective Internal Control



            As discussed in GAO’s Standards for Internal Control in the Federal
            Government,4

             •	 internal control—a major part of managing an organization—is a
                continuous, built-in component of operations that provides
                reasonable, not absolute, assurance of meeting agency objectives;

             •	 internal control consists of the plans, methods, and procedures used
                to meet the agency’s missions, goals, and objectives; and

             •	 internal control should be designed to provide reasonable assurance
                regarding prevention or prompt detection of unauthorized
                acquisition, use, or disposition of an agency’s assets.

             4
              Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1, which was prepared to fulfill our
             statutory requirement under the Federal Managers’ Financial Integrity Act, provides an overall framework for
             establishing and maintaining internal control and for identifying and addressing major performance and management
             challenges and areas at greatest risk of fraud, waste, abuse, and mismanagement.


                                                                                                                                 14




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                                                                Internal Control Design



            The design of internal controls over the claims process did not provide
            reasonable assurance that improper payments would not occur or would
            be detected in the normal course of business.

            Control weakness: ATPs are word-processing documents that do not
            have control numbers and can be readily created by any individual who
            has access to the ATP in the claims processing system.

             •	 Standards for Internal Control in the Federal Government states that
                access to resources and records should be limited to authorized
                individuals, and accountability for their custody and use should be
                assigned and maintained.

             •	 The lack of control over the payment phase of the claims process
                increases the risk of invalid ATPs and improper or erroneous
                payments.

                                                                                     15




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                                                           Internal Control Design (cont.)




            Control weakness: NPFC does not have controls to prevent the same
            individual from preparing and approving an ATP. Because NPFC
            policies require that an ATP be signed only by the approver, there is no
            assurance that the preparer and approver functions are separate.

             •	 Standards for Internal Control in the Federal Government states that
                key duties and responsibilities need to be divided or segregated
                among different people to reduce the risk of error or fraud.

             •	 As a result of this weakness, the risk that fictitious ATPs may be
                prepared and processed is increased.




                                                                                       16




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                                                           Internal Control Design (cont.)



            Control weakness: NPFC does not ensure that ATPs sent to the U.S.
            Coast Guard Finance Center (FINCEN) for payment are authenticated,
            nor does FINCEN verify the validity of ATPs prior to processing
            payments.

             •	 When NPFC faxes ATPs to FINCEN for payment, FINCEN
                processes payments for claimants without independently verifying
                whether ATPs have been properly authorized.

                •	 Standards for Internal Control in the Federal Government states
                   that controls should be established to ensure that all transactions
                   are authorized.

                •	 As a result of this weakness, anyone with a basic knowledge of
                   the claims payment process could divert funds. The risk of
                   duplicate or erroneous payments is also increased.

                                                                                       17




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                                                           Internal Control Design (cont.)




            Control weakness: The design of NPFC’s claims process and its CPS
            are not in accordance with all of NPFC’s policies and procedures. For
            example, NPFC does not have controls in place to prevent a payment
            from occurring (1) prior to required legal review and (2) without NPFC’s
            receipt of the claimant’s acceptance.

             •	 Standards for Internal Control in the Federal Government states that
                only valid transactions and other events should be initiated or
                entered into, in accordance with management’s decisions and
                directives. The terms of authorization should be in accordance with
                directives and within limitations established by law, regulation, and
                management.

             •	 The lack of controls to help ensure that the SOP is followed further
                increases the risk of invalid claim payments.


                                                                                       18




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                                                         Internal Control Design (cont.)



            Control weakness: Information regarding who originated claim actions
            is not always readily available for management review in the claims
            processing system. While CPS is designed to track this information, due
            to a coding issue, user screens do not always display who originated
            claim actions.

             •	 Standards for Internal Control in the Federal Government states
                that significant events need to be clearly documented, and the
                documentation should be readily available for examination.

             •	 Lack of information regarding who originated claim actions could
                impede management and others’ ability to readily assess the validity
                of the claims or the integrity of the claims process.




                                                                                     19




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                                                               Internal Control Operation



            Internal controls over the claims process were generally operating in
            accordance with established NPFC policies that are currently in place to
            help ensure proper payment of claims.

             •	 We tested a statistical sample of 88 paid claims for fiscal year 2002
                and reviewed the related claim files and CPS records to test for
                 • adequate documentation,
                 • proper approvals, and
                 • validity.




                                                                                        20




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                                                                                     Internal Control Operation (cont.)



            Documentation

                     •	 The SOP requires that claim files include supporting
                        documentation for claim payments, including documentation of
                        determinations, offers to claimants, release forms, and
                        authorizations to pay.

                          •	 We found that 3 of the 88 claims did not have adequate
                             documentation in the claim files. For example, the claim
                             payment amounts were not fully supported.

                          •	 Based on these results, we estimate that 3.4 percent of the 5
                             fiscal year 2002 paid claims lacked adequate documentation.
                          •	 While we found some exceptions, NPFC is generally
                             documenting the claims process in accordance with its
                             policies and procedures.

            5
                We are 95 percent confident that the error rate was between 1 and 9 percent for claims paid in fiscal year 2002.

                                                                                                                                   21




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                                                       Internal Control Operation (cont.)



            Approvals

               •	 The SOP requires proper approvals of offers to claimants; legal
                  reviews, in certain cases; and approvals of payments to
                  claimants.

               •	 We found no exceptions with approvals of claims for the 88
                  statistically sampled claims.

            Validity

               •	 The SOP requires that a claim meet the 10 initial review
                  requirements to be valid (see app. I).

               •	 We found no exceptions with the validity of the 88 statistically
                  sampled claims.
                                                                                       22




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                                                         Internal Control Operation (cont.)



            Through data mining, we selected a nonstatistical sample of 50 claim
            payments and 8 denied claims and performed limited tests to determine
            if the claims were valid and if the denied claims were properly
            processed.

             •	 We found that the claim payments were valid and that the denied
                claims were properly processed.

             •	 While we were able to satisfy ourselves with the validity of the
                claims, we found some documentation and approval issues.




                                                                                         23




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                                                                             Conclusions



            •	 The U.S. Coast Guard NPFC has a systematic and effective process for
               payment of claims. However, certain weaknesses in the design of
               internal controls over the claims process expose the Fund to improper
               payments. While we found no instances of invalid claim payments in our
               testing, the weaknesses we identified, if left uncorrected, make the Fund
               vulnerable to future improper payments.




                                                                                       24




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                                                                    Recommendations



            To improve the design of internal controls over the claims process, we
            recommend that the Commandant of the U.S. Coast Guard direct the
            Director of NPFC to

             • require automatic control numbers for each ATP;

             •	 limit access to ATP control numbers to one individual and an
                alternate in each claims division;

             •	 require two signatures on each ATP, one for the preparer and one
                for the approver;

             •	 establish procedures requiring NPFC to authenticate ATPs prior to
                submitting them to the U.S. Coast Guard Finance Center for
                payment;


                                                                                     25




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                                                             Recommendations (cont.)



            •	 establish and implement controls so that any required legal reviews
               of claims are completed before they are approved for payment;

            •	 establish and implement controls so that a release form is received
               from a claimant before a claim can be approved for payment; and

            •	 modify the claims processing system to consistently identify the
               originator of all actions on user screens.




                                                                                     26




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                                                               Recommendations (cont.)



            We also recommend that the Commandant of the U.S. Coast Guard
            direct the Chief Financial Officer of the Coast Guard to require that the
            Finance Center verify the validity of ATPs prior to processing payments.




                                                                                    27




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                                                                      Agency Comments



            •	 U.S. Coast Guard officials agreed with our recommendations and stated
               that they have already begun to take corrective actions to implement
               many of them and will continue to take additional actions as soon as
               possible to address the remaining recommendations. They provided us
               with a detailed list of actions taken or to be taken, which if properly
               implemented, should address our recommendations. U.S. Coast Guard
               officials also provided technical and clarifying comments, which we
               incorporated as appropriate.




                                                                                     28




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                                                              Scope and Methodology




            To determine whether the design of internal controls over the claims
            process provides reasonable assurance that improper payments would
            not occur or would be detected in the normal course of business, we

             •	 reviewed OPA and related sections of the Code of Federal
                Regulations;

             • reviewed Standards for Internal Control in the Federal Government;

             •	 reviewed NPFC’s Standard Operating Procedures related to the
                claims process; and

             •	 performed walkthroughs of the claims process, including the claims
                processing system, and compared the results to NPFC’s Standard
                Operating Procedures and GAO’s Standards for Internal Control in
                the Federal Government.


                                                                                     29




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                                                                                      Scope and Methodology (cont.)



            To determine if internal controls over the claims process were operating
            as designed to help ensure proper payments of claims, we

                •	 selected a statistical sample6 of 88 claims paid in fiscal year 20027
                   and

                •	 reviewed the related claims files and CPS records to test for
                   adequate documentation, proper approvals, and validity.




            6
             Our sample was based on a 95 percent confidence level and an expected error rate of 3 percent.

            7
             We selected claims from fiscal year 2002 because we were assessing the condition of current controls and because this 

            was the most recent information available at the time of review.




                                                                                                                                 30




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                                                        Scope and Methodology (cont.)



            •	 To test for adequate documentation, we reviewed the claims files
               and CPS records to determine if

               • the claim payments were adequately supported and

               •	 the files and records were complete and included the offer letters
                  to the claimants, summary/recommendation forms, claimant
                  release forms, and the ATP forms.




                                                                                   31




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                                                        Scope and Methodology (cont.)



            •	 To test for proper review and approval, we reviewed the claim files
               and CPS records to determine if the

               •	 Claims Division Branch Chief approved the determination letter
                  prior to the payment of a claim,
               •	 legal reviews were obtained for policy and determinations when
                  required,
               •	 determination letters for reconsiderations were properly
                  approved,
               •	 claims manager signed the determination letter prior to payment
                  of a claim,
               • claimant signed the release form, and
               •	 Division or Branch Chief approved the ATP prior to payment of a
                  claim.



                                                                                     32




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                                                          Scope and Methodology (cont.)



            To test for validity, we

             •	 reviewed documentation for the 88 statistically sampled claims and
                performed tests to determine if they met the 10 SOP initial review
                requirements;

             •	 performed limited data mining of claims paid in fiscal years 1998
                through 2002 to identify unusual transactions and patterns,
                specifically looking for claims with even dollar amounts, large dollar
                amounts, multiple payments of the same dollar amounts, multiple
                payments to the same claimant for the same incident, incorrect
                coding, questionable status, and claims that had been denied; and

                 •	 selected, based on our data mining, a nonstatistical sample of 50
                    claim payments and 8 denied claims, reviewed the related
                    documentation, and performed limited tests.

                                                                                         33




Page 37                                 GAO-04-114R Oil Spill Liability Trust Fund Claims
Enclosure



                                                             Scope and Methodology (cont.)



            •	 We requested comments on a draft of these briefing slides from the U.S.
               Coast Guard. We received oral comments from U.S. Coast Guard
               officials that were incorporated into these briefing slides as appropriate.

            •	 We conducted our work from December 2002 through July 2003 in
               accordance with generally accepted government auditing standards.




                                                                                         34




Page 38                                    GAO-04-114R Oil Spill Liability Trust Fund Claims
Enclosure



                                                                                                      Appendix I


             Ten Initial Review Requirements

              The incident is after the implementation of OPA
              (Aug.18, 1990).                                   The claim is not currently the subject of litigation
                                                                in any court.
              The incident involved the discharge, or
              substantial threat of discharge, of oil from a    The claimant has not waived right of recourse
              covered source.
                                                                against any party relative to the incident giving
                                                                rise to the claim.
              The discharge was into or upon the navigable
              waters of the United States, their adjoining
              shorelines, or the Exclusive Economic Zone of     The claimant has signed the claim in ink.
              the United States.
                                                                The claimant has not already been
              The claimant has demonstrated an injury that      compensated for the costs or damages in the
              was caused by the incident described above, or    current claim.
              by the response to that incident.

              The claim has been presented to NPFC within       The claim has been properly presented to the
              the applicable statute of limitations.            responsible party prior to submission to the
                                                                Fund.




                                                                                                                    35




(190113) 



Page 39                                               GAO-04-114R Oil Spill Liability Trust Fund Claims
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