Managerial Cost Accounting Practices: Department of Health and Human Services and Social Security Administration Page: 2 of 35
This report summarizes information provided during our briefing to your staff today
concerning our review of MCA practices at the Department of Health and Human
Services (HHS) and the Social Security Administration (SSA). This was our third in a
series of briefings concerning the status of MCA activities at large government
agencies. Our first briefing covered the status of MCA activities at the Department of
Veterans Affairs and the Department of Labor.4 Our second briefing covered the
status of MCA activities at the Departments of Education, Transportation, and the
Treasury.5 The slides from today's briefing are presented in enclosure I.
MCA involves the accumulation and analysis of financial and nonfinancial data,
resulting in the allocation of costs to organizational pursuits such as performance
goals, programs, activities, and outputs. The data analyzed depend on the operations
and needs of the organization. Nonfinancial data measure the occurrences of
activities and can include, for example, the number of hours worked, units produced,
claims paid, grants managed, or time needed to perform individual activities.
Status of Efforts to Implement Managerial Cost Accounting at HHS and SSA
Similar to issues that surfaced in our earlier reports, we found a need for stronger
leadership at HHS to promote and monitor the implementation of MCA
departmentwide. SSA took a strong leadership role in implementing MCA and
promoting the use of MCA information departmentwide.
Department of Health and Human Services
According to an HHS official, MCA at the department level was limited to aggregating
costs from its operating divisions (OPDIV) to prepare the Statement of Net Cost
(SNC) and did not focus on preparing MCA information for managerial decision
making. Furthermore, HHS assigned responsibility for MCA implementation at the
component level to its 11 OPDIVs, which are disparate in mission and focus, but HHS
did not take an active leadership role to promote MCA or monitor its implementation
at its OPDIVs. As a result, department officials did not have information about which
components had and used MCA, and they had to refer to component officials to
obtain information on the status and application of MCA for their major programs
Neither of the two components we reviewed-the Centers for Medicare and Medicaid
Services (CMS), and the Centers for Disease Control and Prevention (CDC)-had an
MCA system in place at the component level to routinely allocate costs to activities,
services, and outputs in support of managerial decision making. At the CMS
Medicare Program division, an activity-based cost system was developed for
Medicare contractors to report their costs for reimbursement. CMS officials used
that cost information to compare contractor costs and seek corrective actions when
4 GAO, Managerial Cost Accounting Practices: Leadership and Internal Controls Are Key to
Successful Implementation, GAO-05-1013R (Washington, D.C.: Sept. 2, 2005).
' GAO, Managerial Cost Accounting Practices: Departments of Education, Transportation, and the
Treasury, GAO-06-301R (Washington, D.C.: Dec. 19, 2005).
GAO-06-599R Managerial Cost Accounting Practices
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United States. Government Accountability Office. Managerial Cost Accounting Practices: Department of Health and Human Services and Social Security Administration, text, April 18, 2006; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc302182/m1/2/: accessed April 18, 2019), University of North Texas Libraries, Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.