oversight

Audit of the Court Ordered Benefits Branch

Published by the Office of Personnel Management, Office of Inspector General on 2010-10-14.

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

                                                     U.S. OFFICE OF PERSONNEL MANAGErvlliNT
                                                           OFFICE OF THE INSPECTOR GENERAL
                                                                            OFFICE OF AUDITS




Final Audit Report
Subject:


           AUDIT OF THE COURT ORDERED BENEFITS

                         BRANCH



                                            Report No. 4A-RI-OO-IO-014


                                            Date: October 14, 2010




                                                            --CAUTION-­
This audit report has been distributed to Federal oflicials who are responsible for the administration of the audited program. This audit
report may contain proprietary data which is protected by Federal law (18 U.S.c. 1905). Therefore, while this audit report is available
under the Freedom of Information Act and made available to the public on the Ole webpage, caution needs to be exercised before
releasing the report to the general public as it may contain proprietary information that was redacted from the publicly distributed copy.
                        U ITED STATES OFFICE OF PERSONNEL MA AGEME T

                                             Wa hington. DC 20415


   Office of the
In pector General



                                         AUDIT REPORT




                AUDIT OF THE COURT ORDERED BENEFITS BRANCH

                              WASHINGTON, D.C.





                      Report   o. 4 -RJ-OO-IO-014        Dak: October 14, 2010




                                                              gv~~
                                                                      ichael R. E er
                                                                     Assistant In pector General
                                                                       for Audits




        www.opm.gov                                                                          www.usajobs.gov
                            UNITED STATES OFFICE OF PERSONNEL MANAGEMENT

                                                 Wa hington, DC 20415



   Office of the
Tn peetor General



                                         EXECUTIVES~Y




                       AUDIT OF THE COURT ORDERED BENEFITS BRANCH

                                     WASHINGTON, D.C.





                       Report No. 4A-RI-OO-IO-014                 Date: October 14, 2010


         The Office of the Inspector General has completed a performance audit of the Court Ordered
         Benefits Branch (COBB) of the Retirement and Benefits Office. Our main objective was to
         determine whether OPM's COBB has effective controls to process court ordered retirement
         benefits. In order to make this determination, our audit included the following specific
         objectives: (1) determine if COBB has effective controls to properly record and timely process
         court ordered payments for its customers; and (2) determine if COBB has an effective
         customer service program.

         Our audit was conducted from March 11,2010 through June 23, 2010 at the U.S. Office of
         Personnel Management's (OPM) headquarters in Washington D.C. Our audit identified three
         areas requiring improvement.

         A.         Court Order Processing

                    1.	   Inaccurate Court Order Status in Court Order Recording and              Procedural
                          Tracking System (CORTS)

                          CaRTS inaccurately reported the status of 6,841 cases as

                          "pending."


                    2.	   Untimely Court Awarded Benefit Payment                                        $5,757

                          COBB did not tim ly process the court awarded benefit payment for
                          2 of 82 court orders sampled.




                                                          1
        www.opm.goY	                                                                          www.usajobs.goY
B.   Customer Service

      1.   Inadequate Customer Service                                          Procedural

           COBB's customer service unit is not held to the same performance
           standards as Retirement and Benefits, and its telephone system is
           not equipped to handle or adequately measure call volume and other
           performance measures.




                                          11
                                    TABLE OF CONTENTS




       EXECUTIVE SUMMARY                                                                              .

  I.   INTRODUCTION AND BACKGROUND                                                                    .

 II.   OBJECTIVES, SCOPE, AND METHODOLOGy........                                                          3


III.   AUDIT FINDINGS AND RECOMMENDATIONS..                                                                5


       A. Court Order Processing
            1. Inaccurate Status of Pending Court Orders in CORTS...........                               5

            2. Untimely Court Awarded Benefit Payment. ..... .. . . ... ... ... . . ...                    6


       B. Customer Service
          1. Inadequate Customer Service. . ... .. .. . . .. . ... .. . .. .. . .. ... ... .. . ...        8




IV.    MAJOR CO TRIBUTORS TO THIS REPORT                                                                  10



       APPENDIX                (Retirement and Benefits response, dated August 19,2010, to our
                                draft report)
                    I. INTRODUCTION AND BACKGROUND


Introduction

This final audit report details the findings, conclusions, and recommendations resulting from
our performance audit of OPM's Court Ordered Benefits Branch (COBB) of the Retirement
and Benefits Office. The audit was performed by OPM's Office of the Inspector General
(OIG), as authorized by the Inspector General Act of 1978, as amended.

Background

COBB is r sponsible for processing post-adjudication court orders and employee court orders
related to retirement benefits. COBB authorizes payments in accordance with clear, specific,
and express provisions of court orders acceptable for processing under the applicable
provisions oflaw and regulation. Ifthe order is not acceptable, the parties must return to State
court to seek any necessary modifications.

A court order can apportion or divide a Civil Service Retirement ystem (CSRS) or Federal
Employees Retirement System (FERS) benefit as a result of a divorce, legal separation, or
annulment of marriage. The court order must expressly direct aPM to pay a portion of the
monthly CSRS or FERS benefits. The spouse's share must be stated as a fixed amount, a
percentage or a fraction of the annuity, or by a formula whose value is readily apparent from
the face of the order and information in OPM files. 5 CFR 838.231(a) states, "A court order
acceptable for processing is effective against employee annuity accruing beginning the first
day of the second month after aPM receives the court order."

In order to provide good customer servic concerning the processing of court orders, a tracking
system called Court Order Recording and Tracking System (CORTS) was developed and
implemented in 1997. The Court Order Assignment Case Type report was developed to
identify all court orders entered into the CORTS database that have a status recorded as
"pending." The report provides COBB management an aging of pending court orders. The
default for the order status field in CORTS is "P" for pending. Once COBB paralegals review
the submitted court order documentation and approve the award of benefits, the paralegals
should change the court order status in CORTS from "P" to "0" for open, meaning the court
order has an award that is currently in force.

The COBB customer service representatives are responsible for answering customer inquiries
and questions received via the telephone, in written correspondence, and in person. Many of
the phone calls and written correspondence ar received from employees, retirees, former
spouses, and attorneys and pertain to status of the court order processing, clarification on
documentation required to complete processing, and general questions regarding court order
benefits and the law. COBB's customer service representatives also are responsible for
entering all court order receipts and information into the tracking system for paralegal



                                                1

assignment. COBB's customer service unit has 4 phone lines with voicemail boxes that can
hold approximately 55 messages each.

When customers cannot get their inquiries resolved through COBB's customer service unit
they normally send written inquiries to their Congressmen and/or the OPM Director. In fiscal
year 2009, the Retirement and Benefits Special Inquiries Branch received approximately 532
Congressional Inquiries and 60 Director Inquiries pertaining to COBB customer service.




                                              2

              II. OBJECTIVES, SCOPE,                  D METHODOLOGY


Objectives

The primary objective of our audit was to determine whether OPM's COBB has effective
controls to process court ordered benefits.

In order to achieve our primary objective, our audit included the following specific objectives:

    1.	 Determine if COBB has effective controls to properly record and timely process court
        ordered payments for its customers; and

   2.	 Determine if COBB has an effective customer service program.

The recommendations included in this final report address these objectives.

Scope and Methodology

We conducted this performance audit in accordance with generally accepted government
auditing standards as establish d by the Comptroller General of the United tates. Those
standards required that we plan and perform the audit to obtain sufficient appropriate evidence
to provide a reasonable basis for our findings and conclusions based on our audit objectives.
W believe that the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.

The scope of our audit covered the Court Order Recording and Tracking System (CaRTS)
universe of court orders as of February 4,2010. We also considered COBB's and the
Retirement Operations' current customer service practices and performance standards.

We performed this audit from March 11,2010 through June 23, 2010 at OPM headquarters in
Washington, D.C.

To accomplish the audit objectives noted above we:

   •	  Sampled completed court orders from CaRTS and tested the timeliness of court order
       processing from the initial date of receipt of the court order by COBB to initial
       payment;
    •	 Determined the reliability and completeness of data as recorded in CORTS;
    •	 Performed a match betwe n the annuity roll data file of court orders as the key
       identifier to identify court orders incorrectly identified as pending in CaRTS; and
    •	 Interviewed COBB and Retirement Operations Customer ervice Unit Managers.

In planning our work and gaining an understanding of the internal controls over court ordered
benefits, we considered the internal control structure to the extent necessary to develop our
audit procedures. These procedures were mainly substantive in nature, although we did gain
an understanding of management procedures and controls to the extent necessary to achieve



                                                3

our audit objectives. The purpose of our audit is not to provide an opinion on internal controls
but merely to evaluate controls over the processes that were included in the scope of our audit.
Our audit included such tests of COBB's records and the Retirement Operation's customer
service performance management the Annuity Roll Processing ystem, retirement case files,
and other procedures as we considered necessary under the circumstances. The results of our
tests indicate that with respect to the items tested COBB has effective controls to ensure the
processing of court ordered benefits and effective customer service, except for the areas set
forth in the details of this audit report.

In conducting our audit, we performed a computer match which identified 6 481 pending
CORTS records with award payments to validate the match results between the CORTS data
and the annuity roll. In addition, we randomly selected a sample of 82 out 0[75,198 CORTS
pending and closed cases to assess the completeness and reliability of CORTS data and
timeliness of processing. The results from our sample were not projected to the population.




                                               4

             ID. AUDIT FINDINGS AND RECOMMENDATIONS


A.   Court Order Proce ing

     1. Inaccurate Statu of Pending Court Orders in CORTS

        As of February 4,2010, the Court Ordered Benefits Branch's (COBB) Court Order
        Recording and Tracking System (CORTS) was inaccurately reporting the status of 6481
        records with court awarded benefits in force as pending.

        The default for the order status field in CORTS is "P" for pending. Once COBB paralegals
        review the submitted court order documentation and approve the award of benefits, the
        paralegals should change the court order status in CORTS from "P" to "0" for open,
        meaning the court order has an award that is currently in force. COBB uses a management
        report to identify an aging of court orders with a pending status. This management report
        identifies the workload of court orders with processing decisions that need to be made.

        We obtained two data files from the Benefits Systems Group (B G) to assist with our
        testing of the reliability of court order status as recorded in CORTS. One file identified all
        records from the annuity roll with payment actions that pertain to an award of court ordered
        benefits. The data for this file was run by BSG on January 29, 2010. The other file
        identified all records from the CORTS database with a "pending" status as of February 4,
        2010. Using our data analysis software, we performed a match between the two data files
        to identify the CORTS records with a "pending' status that have benefits payments made.
        The computer match revealed 6,481 pending CORTS records with court ordered benefits
        payments. We tested seven cases to validate the results from the computer match. Oill
        testing revealed that all seven cases were inaccillately recorded in CORTS as "pending. '

        The General Accountability Office's (GAO) Standard for Internal Control in the Federal
        Government, dated November 1999 states, "Transactions should be promptly recorded to
        maintain their relevance and value to management in controlling operations and making
        decisions. This applies to the entire process or life cycle of a transaction or event from the
        initiation and authorization through its final classification in summary records.'

        COBB does not have a policy for the timely updating of court order status in CORTS. As a
        result, the management reports produced from CORTS are unreliable for COBB
        management to make effective workload decisions.

        Recommendation 1

        We recommend that COBB management review all 6,481 "pending' CORTS records with
        court ordered benefits identified in our computer match to ensure the rebability of the
        status in CORTS.




                                                     5

  Retirement and Benefits' Respon e:

   "Concur. COBB management submitted a 'Team Track' to Benefits Systems on
   August 18 2010 to automate this process. Benefits Systems will enhance the Court
   Ordered Records and Tracking Sub-System in ARP so that only actual pending court
   orders appear on the Court Order Assigrunent Case Type Report. This improvement will
   prevent court orders that have been completed from appearing on the report."

   Recommendation 2

   We recommend that COBB management develop and implement a policy to ensure that the
   court order status is updated timely to ensure accurate reporting in CORTS.

   Retirement and Benefits' Respon e:

   'Concur. See respon e to Recommendation 1. '

2. Untimely Court Awarded Benefit Payment

   COBB reviews the court order documentation submitted by retirees and determines if the
   court order can be approved for payment. If payment is approved, COBB will calculate the
   amount of the benefit payment based on the court order benefits requirements and will
   establish the initial payment to the benefit recipient. 5 CFR 838.231 (a) states, "A court
   order acceptable for processing is effective against employee annuity accruing beginning
   the first day of the second month after OPM receives the court order."

   Wejudgmentally selected 82 out of75,198 CaRTS pending and closed cases to assess the
   completeness and reliability of CORTS data and timeliness of processing. rom our
   review of the sample of pending and closed court ordered benefits cases, we identified one
   instance where COBB did not timely process the court awarded benefit payment and no
   retroactive benefit payment was made.

   The court order was approved by COBB on May 3 1994 as indicated by the CaRTS
   record detail. The first payment should have been made on July 1, 1994. However the
   initial payment was made on ovember 1, 1994. We were unable to identify whether a
   retroactive payment was made to bring the benefit payment into compliance with
   regulations. The total underpayment of court ordered benefits to the award recipient is
   $3,621.20 ( 905.30 for four months July 1 1994 through October 31, 1994).




                                              6

In addition, through our case review, we identified a matter worthy of attention that was
not part of our audit objectives. For one of the court order cases in our sample, a stop
order was received on June 21, 2005 to terminate the court ordered benefit in July 2005.
However, annuity deductions continued from the annuitant's monthly annuity payment for
a period of three months (July, August, and September 2005) in the amount of $712 per
month. The resulting excess annuity deduction totaled $2,136.

Recommendation 3

We recommend that COBB process and timely pay all court ordered benefits in accordance
with 5 CFR 838.231(a).

Retirement and Benefits' Response:

 Concur. And we note that the audit showed that 97.6% of the COUlt orders in the
sample were processed timely. '

Recommendation 4

We recommend that COBB review the facts of the case in question and determine if a
retroactive payment of $3,621.20 is due to the fonner spouse. If an additional payment is
due, we recommend that the additional payment be made as soon as possible.

Retirement and Benefits' Response:

"Concur. COBB has taken corrective action on the case in question. ' COBB's review of
the facts of the case indicate that no retroactive payment is due because the annuitant has
been paying the former spouse independently from an annuity deduction.

Recommendation 5

We recommend that COBB review the facts of the case in question to determine if a refund
of $2,136 in excess deductions is due to the annuitant.

Retirement and Benefits' Response:

"Concur. COBB has taken corrective action on the case in question." COBB's review of
the facts of the case concludes that a reimbursement of $2 13 6 is due to the annuitant.




                                           7

B.   Customer Service

     1. Inadequate Customer Service

       COBB's customer service is inadequate to meet customer needs, and their customer service
       unit is not held to the same customer service performance standards as the Retirement
       Information Office (RIO), the Retirement Operations main customer service unit. In
       addition, COBB's customer service unit does not have the necessary tools to handle the call
       volume received or to adequately measure customer service performance.

       RIO customer service specialists are held to a standard of production to ensure good
       custom r service is provided and agency goals are met. The performance standards have
       four elements of evaluation: quantity, quality, time management, and
       professional/teamwork.

       The GAO's Standards for Internal Control in the Federal Government, dated November
       1999 states, "Managers also need to compare actual performance to planned or expected
       results throughout the organization and analyze significant differences .... Activities need to
       be established to monitor performance measures and indicators. These controls could call
       for comparisons and assessments relating different sets of data to one another so that
       analyses of the relationships can be made and appropriate actions taken."

        Without tools and measures to effectively monitor customer service performance, customer
        service suffers, resulting in a high number of Congressional and Director Inquiries, thereby
        negatively impacting OPM's image and relationship with Congress and the general public.

        Recommendation 6

        We recommend that Retirement Operations management develop and implement methods
        for evaluating COBB s customer service performance.

        Retirement and Benefits' Respon e:

        "Concur. COBB management will evaluate the current performance standards for
        their Customer Service Specialists to determine appropriate and value-added
        measurements."




                                                    8

Recommendation 7

We recommend that Retirement Operations management ensure that COBB s customer
service representatives have tools and resources to effectively respond to inquiries.

Retirement and Benefits' Response:

"Concur. We note that OPM is scheduled to receive a new phone system in the fall
 of 20] 0, and we will maximize the use of new features in order to garner the greatest
 impact for responding to inquiries."




                                            9

          IV. MAJOR CO TRIBUTORS TO THIS REPORT

 Internal Audits Group

           Auditor
             Auditor-in-Charge
• • • • • •Senior Team Leader
            Jr., Chief




                                 10

                                                                                                                       APPENDIX



                               UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
                                                              Washington, DC 20415



Retirement and
   Benefits	                                                   August 19,2010


   MEMORANDUM FOR

                                       Chief, Internal Audits Group

   FROM:
                                            Chief
                                       Quality Assurance
                                       Retirement and Benefits

   SUBJECT:	                           Draft Report on the Audit of the Court Ordered Benefits Branch
                                       Report No. 4A-RI-00-I0-01A


   The following is our confirmation of concurrence with both the findings and
   recommendations previously provided by the management of Court Ordered Benefits
   Branch (COBB), updated with the current status of any corrective actions. If you need
   any further information, please let us know.


   Response to Findings and Recommendations

   A. Court Order Processing

        1. Inaccurate Court Order Status in Court Order Recording and Tracking
        System (CORTS)

                 CORTS inaccurately reported the status of 6,481 cases as "pending."

                 Recommendation 1:

                 We recommend that COBB management review all 6,481 "pending" CORTS
                 records with court ordered benefits identified in our computer match to ensure the
                 reliability of the status ofCORTS.

                 R&B RESPONSE: Concur. COBB management submitted a "Team Track" to
                 Benefits Systems on August 18,2010 to automate this process. Benefits Systems
                 will enhance the Court Ordered Records and Tracking Sub-System in ARPS so
                 that only actual pending court orders appear on the Court Order Assignment Case
                 Type Report. This improvement will prevent court orders that have been
                 completed from appearing on the report.




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   Recommendation 2:

   We recommend that COBB management develop and implement a policy to
   ensure that the court order status is updated timely to ensure accurate repOlting in
   CORTS.

   R&B RESPONSE: Concur. See response to Recommendation 1.

2. Untimely Court Awarded Benefit Payment

  COBB did not timely process the court awarded benefit payment for 2 of 82 court

  orders sampled.


  Recommendation 3:


  We recommend that COBB process and timely pay all court ordered benefits in

  accordance with 5 CFR 838.231(a).

  R&B RESPO SE: Concur. And we not that the audit showed that 97.6% of the

  court ord rs in the sample were processed timely.


  Recommendation 4:


  We recommend that COBB review the facts of the case in question and determine

  if a retroactive payment is due to the former spouse. If an additional payment is
  due, we recomm nd that the additional payment be made as soon as possible.

  R&B RESPO SE: Concur. COBB has taken corrective action on the case in
  question.

  Recommendation 5:

  We recommend that COBB review the facts of the case in question to determine if
  a refund of excess deductions is due to the annuitant.

  R&B RESPONSE: Concur. COBB has taken corrective action on the case in
  question.
B. Customer Service

   1. Inadequate Customer Service

       COBB's customer service unit is not held to the same performance standards as
       RIO, RO's main customer service unit, and the telephone system is not equipped
       to track call volume, and other performance measures.

       Recommendation 6:

       We recommend that Retirement Operations management develop and implement
       methods for evaluating COBB's customer service perfOImance.

       R&B RESPO SE: Concur. COBB management will evaluate the current
       performance standards for their Customer Service Specialists to determine
       appropriate and value-added measurements.

       Recommendation 7:

       We recommend that Retirement Operations manag ment ensure that COBB's
       customer service representatives have tools and resources to effectively respond
       to inquiries.

       R&B RESPO SE: Concur. We note that OPM is scheduled to receive a new
       phone system in the fall of2010, and we will maximize the use of new features in
       order to gamer the greatest impact for responding to inquiries.

An additional note: the last paragraph on page 2 refers to the number of Congressional
and Director inquiries received by the Special Inquiries Branch, and the percentage
attributable to COBB customer service deficiencies. Please clari fy the universe is
inquiries re: court ordered benefits in general vs. all Congressional and Director inquiries
received.