Summary: GAO discussed the progress the Railroad Retirement Board has made in responding to its problems and the status of the internal audit function at the Railroad Retirement Board. The Board needs to improve the accuracy, timeliness, and uniformity of eligibility decisions and payments to beneficiaries and to make more effective use of its resources in other areas as well. The actions that the Board needs to take are grouped under three headings: (1) claims processing, (2) investment opportunities, and (3) internal audit. Claims processing has: (1) large backlogs in claims processing and benefit adjustments; (2) an inadequate work measurement system; (3) insufficient monitoring of applicants' eligibility and weak quality controls; and (4) delayed reconciliations of employers' tax and compensation reports. The Board began a system to automate the manual operations used in claims processing, and a new work measurement system has been implemented. For some eligibility requirements, the Board had no monitoring system and relied on self-reporting by beneficiaries, but for others the Board had procedures for continuous monitoring that were not always used. This increased the likelihood of overpayments and hardships for beneficiaries when the overpayments had to be collected. Also, the Board lacked a comprehensive quality control program to identify erroneous payments for major beneficiary groups and high-risk situations in need of more monitoring. A study was authorized to determine the best responses to the eligibility monitoring and quality control problems. The Board must be more flexible and dynamic in managing its investments. The Treasury agreed to give the Board more control over the investment of its funds. Treasury and the Board began a float arrangement which allows the Board to earn from 2 to 5 additional days of interest each month on benefit payments not paid by direct deposit. The Board's internal audit activities were limited in scope. These limited efforts were attributable to a manpower shortage in the staff's many administrative duties which did not relate to performing audits. Some progress has been made in developing a comprehensive internal audit program. GAO strongly supports the concept of a statutory Inspector General and its independent status.
