Report No. 32, March 1999

Chapter 4

The Administration of the Comprehensive Social Security
Assistance and Social Security Allowance Schemes

Summary and key findings

A. Introduction. The Social Welfare Department (SWD) administers a number of non-contributory social security schemes, including the Comprehensive Social Security Assistance (CSSA) and the Social Security Allowance (SSA) Schemes. The overall objective of these schemes is to provide for the basic and special needs of the members of the community who are in need of financial assistance. The total expenditure of these two schemes amounted to some $14 billion in 1997-98 (paras. 1.2 and 1.3). B. Audit review. Audit conducted a review to examine the SWD administration of the CSSA and SSA Schemes. Audit found the work of the SWD management and staff to be generally satisfactory. The SWD is continuously improving the effectiveness of its operations. However, Audit has identified some areas for further improvement (paras. 8.3 and 8.4). C. Determination of eligibility for welfare assistance. Audit has identified a need for the SWD to improve its checking of welfare applicants to determine their initial and continued eligibility for welfare assistance. The SWD current practices are to limit the checking to only the information voluntarily disclosed by the applicants and to rely on the beneficiaries to voluntarily report changes in circumstances. Audit considers that these practices are not entirely satisfactory and improvements are needed (paras. 2.9 and 3.12). D. Administration of special grants. Apart from standard allowances, special grants are given to beneficiaries to meet their special needs. Audit considers that there is a need to strengthen the administrative controls over these grants to ensure that they are only given to those who are genuinely in need of such special assistance (paras. 4.19 and 4.26). E. Overpayment classification. The number of fraud/abuse cases reported by the SWD was small. Audit considers that the SWD current practice of classifying and reporting overpayment cases may have distorted the true levels of fraud/abuse committed by beneficiaries (paras. 4.35 to 4.37). F. Data matching. Data matching is cost-effective for detecting potential welfare cheats. The results from the two experimental data matching exercises conducted by Audit and the SWD own data matching exercises have demonstrated its usefulness. There is a need for the SWD to consider expanding its current data matching arrangements (para. 5.11). G. Risk management. The SWD has yet to approach its business risks in a systematic manner. It has not formulated a comprehensive department-wide strategic plan to effectively manage its business risks. Audit considers that it is time for the SWD to strategically reassess its operation and to consider adopting risk management as soon as possible (paras. 7.12 and 7.13). H. Audit recommendations. To further improve the administration of the CSSA and SSA Schemes, Audit has recommended that the Director of Social Welfare should address a number of issues. He should: (a) conduct a review of the effectiveness of the checking procedures (para. 2.10); (b) carry out more practicable and cost-effective checks with third parties, e.g. data matching, to independently verify the overall financial position of applicants (para. 2.10); (c) provide proper guidance to the field staff on how they should deal with, in a consistent manner, the disposal of assets by applicants prior to the submission of welfare applications (para. 2.15); (d) send a simple "changes in circumstances" form to CSSA beneficiaries periodically asking them to report whether or not there have been changes in circumstances (para. 3.14); (e) develop and incorporate special functions into the new Computerised Social Security System to keep track of and to report unusual and frequent claims for special grants by individual beneficiaries (para. 4.20); (f) issue clear guidance and, if necessary, provide training to the field staff to enable them to effectively manage special grants (para. 4.27); (g) tighten the managerial controls over the classification of overpayment cases into their correct categories, so as to improve the reliability and accuracy of the overpayment statistics (para. 4.38); (h) where it is necessary and cost-effective to do so, expand the scope of data matching by making arrangements with appropriate organisations which agree to provide collaborating evidence for the verification of welfare beneficiary eligibility (paras. 2.10 and 5.12); and (i) adopt risk management for the SWD business operations as soon as possible (para. 7.14). I. Response from the Administration. The Director of Social Welfare has accepted the audit recommendations. He has said that he will make continuous improvements in the policy and operations of the various social security schemes to ensure that, on one hand, the needs of those most vulnerable in society are met, and on the other, all public funds are properly disbursed. He welcomes Audit contribution to this goal. The Secretary for the Treasury has said that this audit investigation is most timely. She is in full support of the recommendations put forward in the audit report (paras. 8.5 and 8.6).