Audit of Overpayment Recoveries Pertaining to the Aid to Families With Dependent Children Program Administered by the State of Tennessee

EXECUTIVE SUMMARY:

The objective of this audit was to determine whether the State had established systems and procedures to properly monitor, report, identify, collect and write-off Aid to Families with Dependent Children (AFDC)  overpayments.  The State's systems and procedures generally appeared adequate to assure that overpayments were processed accurately, timely, and in compliance with Federal regulations.  Cash collections of AFDC overpayments were properly returned to the Administration for Children and Families (ACF).  However, for the period October 1996 through October 2001, the State did not return to ACF the AFDC overpayment recoveries collected through benefit reduction (recoupments).  For the period July 1997 through October 2001, the State identified $1,429,030 [$938,015 Federal Financial Participation (FFP)] of AFDC overpayment recoveries collected through benefit reduction that had not been returned to ACF.  For the period October 1996 through June 1997, the State had not set up their computer system to capture and store information that split AFDC and Temporary Assistance to Needy Families recoupments.  As a result, the AFDC recoupment information for the period October 1996 through June 1997 was lost because the original files were copied over each night with new information.  In addition to procedural recommendations, we recommended that the State refund to ACF $938,015.  State officials generally agreed with our findings and recommendations.