Financial Audit: MedPAC's Fiscal Year 1998 Schedules of Expenditures and
Budgetary Resources (Letter Report, 04/28/99, GAO/AIMD-99-134).

GAO reported on the results of the financial-related audit, conducted by
KPMG Peat Marwick LLP, of the Medicare Payment Advisory Commission's
(MedPAC) Schedules of Expenditures and Budgetary Resources for the year
ended September 30, 1998.

GAO noted that: (1) KPMG found the schedules were reliable in all
material aspects; (2) KPMG also found material weaknesses related to the
segregation of disbursement responsibilities and the recognition of
expenses and obligations; (3) there was no reportable noncompliance with
the provision of the law KPMG tested; (4) KPMG disclosed material
weaknesses and reported them in a separate management letter along with
suggestions for improvement; (5) GAO reviewed the KPMG report and
related working papers and, as necessary, made inquiries of KPMG
representatives and MedPAC's management; and (6) GAO's review disclosed
no instances in which KPMG did not comply, in all material respects,
with generally accepted government auditing standards.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  AIMD-99-134
     TITLE:  Financial Audit: MedPAC's Fiscal Year 1998 Schedules of 
             Expenditures and Budgetary Resources
      DATE:  04/28/99
   SUBJECT:  Auditing standards
             Financial statement audits
             Auditing procedures
             Internal controls
             Federal advisory bodies
             Accounting procedures
IDENTIFIER:  Medicare Program
             
Financial Audit: MedPAC's Fiscal Year 1998 Schedules of Expenditures and
Budgetary Resources (Letter Report, 04/28/99, GAO/AIMD-99-134).

GAO reported on the results of the financial-related audit, conducted by
KPMG Peat Marwick LLP, of the Medicare Payment Advisory Commission's
(MedPAC) Schedules of Expenditures and Budgetary Resources for the year
ended September 30, 1998.

GAO noted that: (1) KPMG found the schedules were reliable in all
material aspects; (2) KPMG also found material weaknesses related to the
segregation of disbursement responsibilities and the recognition of
expenses and obligations; (3) there was no reportable noncompliance with
the provision of the law KPMG tested; (4) KPMG disclosed material
weaknesses and reported them in a separate management letter along with
suggestions for improvement; (5) GAO reviewed the KPMG report and
related working papers and, as necessary, made inquiries of KPMG
representatives and MedPAC's management; and (6) GAO's review disclosed
no instances in which KPMG did not comply, in all material respects,
with generally accepted government auditing standards.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  AIMD-99-134
     TITLE:  Financial Audit: MedPAC's Fiscal Year 1998 Schedules of 
             Expenditures and Budgetary Resources
      DATE:  04/28/99
   SUBJECT:  Auditing standards
             Financial statement audits
             Auditing procedures
             Internal controls
             Federal advisory bodies
             Accounting procedures
IDENTIFIER:  Medicare Program
             
Financial Audit: MedPAC's Fiscal Year 1998 Schedules of Expenditures and
Budgetary Resources (Letter Report, 04/28/99, GAO/AIMD-99-134).

GAO reported on the results of the financial-related audit, conducted by
KPMG Peat Marwick LLP, of the Medicare Payment Advisory Commission's
(MedPAC) Schedules of Expenditures and Budgetary Resources for the year
ended September 30, 1998.

GAO noted that: (1) KPMG found the schedules were reliable in all
material aspects; (2) KPMG also found material weaknesses related to the
segregation of disbursement responsibilities and the recognition of
expenses and obligations; (3) there was no reportable noncompliance with
the provision of the law KPMG tested; (4) KPMG disclosed material
weaknesses and reported them in a separate management letter along with
suggestions for improvement; (5) GAO reviewed the KPMG report and
related working papers and, as necessary, made inquiries of KPMG
representatives and MedPAC's management; and (6) GAO's review disclosed
no instances in which KPMG did not comply, in all material respects,
with generally accepted government auditing standards.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  AIMD-99-134
     TITLE:  Financial Audit: MedPAC's Fiscal Year 1998 Schedules of 
             Expenditures and Budgetary Resources
      DATE:  04/28/99
   SUBJECT:  Auditing standards
             Financial statement audits
             Auditing procedures
             Internal controls
             Federal advisory bodies
             Accounting procedures
IDENTIFIER:  Medicare Program
             
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cover-1.book GAO United States General Accounting Office

Report to Congressional Committees

April 1999 FINANCIAL AUDIT MedPAC's Fiscal Year 1998 Schedules of
Expenditures and Budgetary Resources




GAO/AIMD-99-134

  GAO/AIMD-99-134

United States General Accounting Office Washington, D. C. 20548
Lett er

Page 1 GAO/AIMD-99-134 MedPAC Financial Audit

GAO

Accounting and Information Management Division Lett er

B-281534 Letter April 28, 1999 The Honorable William V. Roth, Jr.
Chairman The Honorable Daniel Patrick Moynihan Ranking Minority
Member Committee on Finance United States Senate

The Honorable Bill Archer Chairman The Honorable Charles B. Rangel
Ranking Minority Member Committee on Ways and Means House of
Representatives

The Honorable Thomas J. Bliley Chairman The Honorable John D.
Dingell Ranking Minority Member Committee on Commerce House of
Representatives

This report presents the results of a financial- related audit of
the Medicare Payment Advisory Commission's (MedPAC) Schedules of
Expenditures and Budgetary Resources for the year ended September
30, 1998. MedPAC is an independent federal advisory body
established by section 4022 of the Balanced Budget Act of 1997
(Public Law 105- 33) which advises and makes recommendations to
the Congress on issues affecting the Medicare

program. Section 4022 of the act subjects MedPAC to periodic
audits by the Comptroller General. The General Accounting Office
contracted with the independent public accounting firm of KPMG
Peat Marwick LLP (KPMG) for the audit. The contract required that
the audit be done in accordance with generally

accepted government auditing standards. KPMG was not required to
test compliance with laws and regulations except for compliance
with the Anti- Deficiency Act which could have a direct and
material effect on the schedules. KPMG's auditors' opinion is on
page 6.

In its audit of the schedules, KPMG found:

B-281534 Page 2 GAO/AIMD-99-134 MedPAC Financial Audit

 The schedules were reliable in all material aspects.  Material
weaknesses related to the segregation of disbursement

responsibilities and the recognition of expenses and obligations.
There was no reportable noncompliance with the provision of the
law it tested.

KPMG disclosed material weaknesses and reported them in a separate
management letter along with suggestions for improvement. In an
exhibit to the management letter, KPMG provided comments and
suggestions to MedPAC's management on less significant internal
control matters. We have included the management letter on page
16. KPMG also requested

comments from MedPAC's Executive Director on a draft of its audit
report and management letter. In commenting on the report and
management letter, MedPAC's Executive Director agreed with KPMG's
findings and provided responses to the recommendations. MedPAC's
responses are included in the management letter.

In connection with the contract, we reviewed the KPMG report and
related working papers and, as necessary, made inquiries of KPMG
representatives and MedPAC's management. Our procedures, as
differentiated from an audit in accordance with generally accepted
government auditing standards, was not intended to enable us to
express, and we do not express

opinions on MedPAC's schedules or compliance with the Anti-
Deficiency Act. KPMG is responsible for the attached auditors'
report, dated January 25, 1999, and for the conclusions expressed
in the report. However, our review disclosed no instances in which
KPMG did not comply, in all material respects, with generally
accepted government auditing standards.

This letter is intended for use by the Congress, Department of
Treasury, Office of Management and Budget (OMB), and MedPAC's
management. We are sending copies of this report to Senator Arlen
Spector, Chairman, and Senator Tom Harkin, Ranking Minority
Member, Labor, Health and Human Services, and Education
Subcommittee, Senate Committee on Appropriations; Representative
John E. Porter, Chairman, and Representative David R. Obey,
Ranking Minority Member, Labor, Health and Human Services, and
Education Subcommittee, House Committee on Appropriations; the
Honorable Robert E. Rubin, Secretary of the Treasury;

the Honorable Jacob J. Lew, Director of OMB; and the Honorable
Gail R. Wilensky, Chairman of MedPAC. This letter is a matter of
public record and its distribution is not limited. Consequently,
copies will be made available

B-281534 Page 3 GAO/AIMD-99-134 MedPAC Financial Audit

to others upon request. Should you or your staffs have any
questions concerning our review of the audit, please contact me on
(202) 512- 4476 or Steven Haughton, Assistant Director, on (202)
512- 5999.

Gloria L. Jarmon Director, Health, Education and Human Services
Accounting and Financial Management Group

Page 4 GAO/AIMD-99-134 MedPAC Financial Audit

Contents Letter 1 Audit of MedPAC's Schedules 6

Independent Auditors' Report 6 Medicare Payment Advisory
Commission Annual Financial Report 8 Medicare Payment Advisory
Commission Overview 9 Schedule of Expenditures 11 Schedule of
Budgetary Resources 12 Note to the Schedules 13

Independent Auditors' Management Letter 16

Abbreviations

MedPAC Medicare Payment Advisory Commission OMB Office of
Management and Budget

Contents Page 5 GAO/AIMD-99-134 MedPAC Financial Audit

Page 6 GAO/AIMD-99-134 MedPAC Financial Audit

Audit of MedPAC's Schedules

Independent Auditors' Report

Audit of MedPAC's Schedules Page 7 GAO/AIMD-99-134 MedPAC
Financial Audit

Audit of MedPAC's Schedules Page 8 GAO/AIMD-99-134 MedPAC
Financial Audit

Medicare Payment Advisory Commission Annual Financial Report

Audit of MedPAC's Schedules Page 9 GAO/AIMD-99-134 MedPAC
Financial Audit

Medicare Payment Advisory Commission Overview

Audit of MedPAC's Schedules Page 10 GAO/AIMD-99-134 MedPAC
Financial Audit

s

Audit of MedPAC's Schedules Page 11 GAO/AIMD-99-134 MedPAC
Financial Audit

Schedule of Expenditures

Audit of MedPAC's Schedules Page 12 GAO/AIMD-99-134 MedPAC
Financial Audit

Schedule of Budgetary Resources

Audit of MedPAC's Schedules Page 13 GAO/AIMD-99-134 MedPAC
Financial Audit

Note to the Schedules

Audit of MedPAC's Schedules Page 14 GAO/AIMD-99-134 MedPAC
Financial Audit

Audit of MedPAC's Schedules Page 15 GAO/AIMD-99-134 MedPAC
Financial Audit

Page 16 GAO/AIMD-99-134 MedPAC Financial Audit

Independent Auditors' Management Letter

Independent Auditors' Management Letter Page 17 GAO/AIMD-99-134
MedPAC Financial Audit

Independent Auditors' Management Letter Page 18 GAO/AIMD-99-134
MedPAC Financial Audit

Independent Auditors' Management Letter Page 19 GAO/AIMD-99-134
MedPAC Financial Audit Lett er

Independent Auditors' Management Letter Page 20 GAO/AIMD-99-134
MedPAC Financial Audit

)

(916265) Lett er

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