U.S. RAILROAD RETIREMENT BOARD

OFFICE OF INSPECTOR GENERAL 

Management Information Report

Management and Performance Challenges 

Facing the Railroad Retirement Board

Report No. 20-03 November 21, 2019
OFFICE OF INSPECTOR GENERAL

U.S. RAILROAD RETIREMENT BOARD

Management Information Report -

Management and Performance Challenges

Facing the Railroad Retirement Board

Report Summary November 21, 2019 Report No. 20-03

What We Found

The Reports Consolidation Act of 2000 and Office of 

Management and Budget (OMB) Circular A- 136 require the 

Inspectors General to identify what they consider the most 

serious management challenges facing its respective agency and 

briefly assess the agency's progress in addressing these 

challenges.

We present the following six major management and 

performance challenges facing the RRB:

Improve Agency Disability Program Integrity

Improve Information Technology Security and Complete 

System Modernization

Improve Management of Railroad Medicare

Improve Payment Accuracy and Transparency

Financial Management and Reporting Issues

Compliance Concerns Identified

Management’s Comments and Our 

Response

RRB provided written comments, which are reprinted in 

Appendix B. While RRB management provided comments and 

disagreements with some of the challenges we identified, our 

assessment of the major challenges facing RRB remains

unchanged.

What We Did

Our identification of management 

challenges facing the Railroad 

Retirement Board (RRB) is based 

on recent audits, evaluations, 

investigations, and current issues 

of concern to the Office of 

Inspector General (OIG). RRB OIG 

identified six major management 

challenges facing RRB during fiscal 

year 2019.

We previously provided these 

management challenges to the RRB

for inclusion in its fiscal year 2019

Performance and Accountability 

Report. 

Objective

Our objective was to identify and 

assess the most serious challenges 

facing RRB management.

Scope

The scope of the audit was fiscal 

year 2019.
OFFICE OF INSPECTOR GENERAL – U.S. RAILROAD RETIREMENT BOARD 

 

Contents

INTRODUCTION 1

MANAGEMENT’S COMMENTS AND OUR RESPONSE 2

CHALLENGE 1 – IMPROVE AGENCY DISABILITY PROGRAM INTEGRITY 3

CHALLENGE 2 – IMPROVE INFORMATION TECHNOLOGY SECURITY AND COMPLETE SYSTEM 

MODERNIZATION 4

CHALLENGE 3 – IMPROVE MANAGEMENT OF RAILROAD MEDICARE 5

CHALLENGE 4 – IMPROVE PAYMENT ACCURACY AND TRANSPARENCY 7

CHALLENGE 5 – FINANCIAL MANAGEMENT AND REPORTING ISSUES 8

CHALLENGE 6 – COMPLIANCE CONCERNS IDENTIFIED 10

APPENDIX A: AUDIT REPORTS 12

APPENDIX B: MANAGEMENT COMMENTS 14
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

Management and Performance Challenges - Report No. 20-03 1

INTRODUCTION

The Reports Consolidation Act of 2000 and Office of Management and Budget (OMB) Circular 

A- 136 require the Inspectors General to identify what they consider the most serious 

management challenges facing its respective agency and briefly assess the agency's progress in 

addressing these challenges.

The Railroad Retirement Board (RRB) is an independent agency in the executive branch of the 

Federal Government. The RRB’s primary function is to administer comprehensive 

retirement-survivor and unemployment-sickness benefit programs for the nation’s railroad 

workers and their families, under the Railroad Retirement and Railroad Unemployment 

Insurance Acts. As part of the retirement program, the RRB also has administrative 

responsibilities under the Social Security Act for certain benefit payments and railroad workers’ 

Medicare coverage.

In fiscal year 2018, the RRB paid retirement-survivor benefits of nearly $12.7 billion to about 

540,000 beneficiaries. The RRB also paid net unemployment-sickness benefits of $93 million 

(including recoveries of about $100,000 in expired temporary extended unemployment benefits 

under the American Recovery and Reinvestment Act of 2009, the Worker, Homeownership, and 

Business Assistance Act of 2009, and subsequent reauthorizing legislation) to about 24,000 

claimants.

We are no longer reporting on challenges of the RRB oversight of the National Railroad 

Retirement Investment Trust (NRRIT) and human capital management. The NRRIT has been 

removed as a separate challenge because they have been unresponsive to the audit concerns 

we expressed in numerous audit reports regarding the need to ensure effective management of 

the net assets the NRRIT holds for the RRB which was approximately $26.6 billion as of 

September 30, 2018. The challenge for human capital management has been removed because 

the agency has taken some steps regarding this challenge as a result of a review conducted by 

the Office of Personnel Management.
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Management and Performance Challenges - Report No. 20-03 2

This year we are introducing new challenges for financial management and reporting concerns 

and compliance issues. This year's management challenges are:

 Improve Agency Disability Program Integrity

 Improve Information Technology Security and Complete System Modernization

 Improve Management of Railroad Medicare

 Improve Payment Accuracy and Transparency

 Financial Management and Reporting Issues

 Compliance Concerns Identified

The challenges this year include items relating to prior Office of Inspector General (OIG) 

concerns or those identified in prior audits, the President’s Management Agenda, and areas 

related to the RRB’s ability to meet its core mission.

Management’s Comments and Our Response

These management challenges were provided to RRB for inclusion in its fiscal year 2019 

Performance and Accountability Report. Subsequently, RRB management provided written 

comments, which are provided in Appendix B. In the response, RRB management described 

actions implemented and approaches taken to improve the functions and operations of the 

agency to address the challenges identified. Actions as described by the RRB as they relate to 

these challenges do not always meet the intent of OIG recommendations nor do they always 

address the weaknesses that remain. While RRB management provided comments and 

rebuttals, our assessment of the major challenges facing RRB remains unchanged. As 

responsible public stewards, RRB management must implement an effective control system to 

ensure that all agency programs are managed efficiently.
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Management and Performance Challenges - Report No. 20-03 3

Challenge 1 – Improve Agency Disability Program Integrity 

Why is this a serious management challenge? The OIG has remained concerned since 

uncovering a fraud scheme at the Long Island Rail Road that remained undetected by RRB 

management.1

The RRB approves and processes disability benefit payments to railroad employees in support 

of total and permanent and occupational disabilities. Occupational disabilities are awarded if a 

physical or mental impairment permanently disqualifies the railroad employee from performing 

his or her regular railroad occupation, even though the employee may be able to perform other 

types of work.

The OIG identified deficiencies in the occupational disability program and has made numerous 

recommendations for improvement in program integrity. While the RRB has taken some actions 

to address the challenge, additional improvements are needed. The approval rate for 

occupational disabilities remained close to 100 percent at 97.8 percent during fiscal year 2018 

and has remained consistent through July 2019. During fiscal year 2018, the RRB paid 

approximately $697 million to 16,000 occupationally disabled annuitants. The average monthly 

occupational disability annuity was $3,164. 

As a result of prior concerns expressed by the OIG, the RRB developed a disability program 

improvement plan (DPIP) to track improvements to its disability program. An OIG contracted 

audit of the DPIP found that the actions taken as a result of the DPIP were not fully effective in 

establishing a risk based approach to prevent future fraud and abuse in RRB’s disability 

programs. Specifically, the actions taken did not (1) establish a dedicated entity within RRB to 

lead the fraud risk management process, (2) establish a fraud risk assessment process tailored 

to the disability programs that routinely determines and updates the fraud risk profile for the 

programs, and (3) establish an ongoing fraud risk monitoring process to evaluate the 

effectiveness of corrective actions and identify new risks. The Office of Programs concurred 

with the three recommendations to address these weaknesses, but indicated they do not have 

the authority to take the recommended actions and will forward them to the RRB Board.

The OIG contracted two other audits of the agency’s disability program. These audits 

determined that the RRB did not effectively consider fraud risk indicators in the disability 

decision process and provided three recommendations. They also determined that RRB medical 

experts did not always reach a consistent medical assessment based on the medical evidence 

and provided two recommendations. RRB management did not concur with any of these 

recommendations.

See Appendix A for a list of relevant reports. 

 1 In 2007, OIG initiated a joint investigation with the Federal Bureau of Investigation that identified a far 

reaching occupational disability fraud scheme perpetrated by a number of Long Island Rail Road retirees, 

doctors, and disability facilitators. This case was prosecuted by the U.S. Attorney’s Office for the Southern 

District of New York.
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Management and Performance Challenges - Report No. 20-03 4

Challenge 2 – Improve Information Technology Security and Complete 

System Modernization 

Why is this a serious management challenge? Improving cybersecurity and modernizing the 

RRB’s systems is vital to support the ability to meet its core mission. Managing cybersecurity 

risks is critical to improvement of the security posture of the federal networks and critical 

infrastructure. Executive Order 13800 emphasizes the importance of strengthening the 

cybersecurity of federal networks. In the fiscal year 2020 RRB Budget Justification, RRB 

acknowledged that they received $20 million towards information technology modernization in 

fiscal years 2018 and 2019.

RRB is required by the Federal Information System Modernization Act (FISMA) to report the 

status of its information security program to the OMB and FISMA metrics to the Department of 

Homeland Security. An annual independent assessment of the agency’s IT program is 

performed of the cybersecurity of federal networks and critical infrastructure.

In the annual FISMA audit for fiscal year 2018, the OIG’s contractor found that RRB did not 

comply with FISMA legislation and OMB guidance and that sampled security controls selected 

from National Institute of Science and Technology Special Publication 800-53, Rev. 4 

demonstrated ineffectiveness, and thus the RRB’s Information Security Program did not provide 

reasonable assurance of adequate security. The overall information security program has 

weaknesses that impact the cybersecurity framework that include deficiencies in the areas of 

risk management, configuration management, identity and access management, data 

protection and privacy, security training, information security continuous monitoring, incident 

response, and contingency planning. A total of 31 recommendations were made and although 

these findings are consistent with prior FISMA audit results, RRB management disagreed with 

the conclusion that the RRB’s Information Security Program is not providing adequate 

assurance of adequate security. RRB has taken action to implement two of these 

recommendations.

OIG recently completed an audit of selected Federal Information System Controls Audit Manual 

controls and determined that the selected information system controls were not always 

adequate. The audit determined that the agency did not update all management control review 

and assessable unit documentation, the budget allocation prevented necessary 

reinvestigations, and they did not maintain comprehensive personal identity verification 

replacement policy and procedures. Of the four recommendations, the agency concurred with 

two and did not concur with the other two. 

In fiscal year 2019, the Chief Information Officer introduced an initiative called “On Track to 

Tomorrow.” The initiative is composed of several information technology projects that will 

improve efficiency of operations, adhere to governance, and provide increased value to the 

railroad community. The OIG contracted for two IT audits related to RRB’s modernization 

program in fiscal year 2019. A contracted audit of the mainframe applications re-platform 

determined that the plan is progressing in accordance with established project goals and the 

RRB’s goals are reasonable and attainable. The audit did not result in any recommendations. 
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Management and Performance Challenges - Report No. 20-03 5

The contracted audit of the legacy systems modernization initiatives determined that the 

project is progressing effectively for phase one of the four phase project. The contractor 

determined that the legacy systems migration services project was managed effectively and 

completed. The re-engineering assessment project is underway. They assessed that the status 

of project outcomes and anticipated improvements were realized for the applications that were 

converted. The audit did not result in any recommendations. The assessment of the 

re-engineering mission essential programs could not be fully assessed for effectiveness because 

the project was awarded after the audit scope ended.

Refer to Appendix A for a list of relevant reports for this challenge.

Challenge 3 – Improve Management of Railroad Medicare

Why is this a serious management challenge? The Medicare topic is included on the 

President’s Management Agenda.

The Social Security Administration gave RRB legislative authority to administer certain 

provisions of the Medicare program for railroad employees. These provisions included 

enrollment, premium collection, and payment of benefits, selection of a carrier to process 

Medicare Part B claims nationwide, and management and oversight of the contract carrier. RRB 

is also responsible for administering a contract with its Part B carrier, Palmetto, GBA. At the end 

of fiscal year 2018, approximately 475,000 qualified Railroad Retirement beneficiaries were 

enrolled in Railroad Medicare (RM), and approximately 455,000 were also enrolled in Medicare 

Part B. During calendar year 2018, Palmetto processed more than 8.5 million RM claims, and 

made approximately $867 million in payments for Part B medical services. The Centers for 

Medicare and Medicaid Services (CMS) reimbursed RRB for $31.4 million in RM program costs 

during fiscal year 2018: Of that amount, $16.7 million was for the RRB’s railroad specialty 

Medicare administrative contractor (SMAC) and $14.7 million was for RRB expenses incurred 

for administering the program.2

In response to our recent audits, agency management indicated that it will no longer provide 

the required reporting and oversight responsibilities for the RM program. This response is of 

concern given the authority and reporting responsibility the RRB has for the Medicare Part B 

program. We disagree that the RRB is not responsible for oversight and reporting 

responsibilities for this program, and therefore stand by the recommendations made in our 

recent audit reports. 

Our audits have identified improper payments that could have been prevented, improvements 

needed for improper payment reporting, and the need for improved controls and support to 

validate the accuracy of reimbursements the RRB receives to administer the RM program. 

While benefits received under RM are solely for retired railroad workers, the quality of 

healthcare, monthly premium cost, and customer service are not distinct from traditional 

 2 Palmetto GBA is the Railroad Specialty Medicare Administrative Contractor (RRB SMAC) and 

processes Part B claims for Railroad Retirement beneficiaries nationwide. As the SMAC, Palmetto has 

administrative responsibility for processing Railroad Retirement beneficiary claims only.
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Management and Performance Challenges - Report No. 20-03 6

Medicare. If RRB management denies ownership of its RM program responsibilities and does 

not accept responsibility for minimizing improper payments, there is no practical reason for its 

existence. 

Oversight to Prevent Improper Payments

OIG has determined that Palmetto’s controls were not fully adequate to detect and prevent the 

payment of improper evaluation and management (E/M) services and to ensure that the 

services were in accordance with Medicare’s coverage and medical necessity requirements. 

E/M services represent different types of physician/patient encounters, such as office visits or 

hospital visits. Within each type of encounter, there are different levels of care. Medicare only 

allows payment where the E/M service is medically necessary. Palmetto’s medical review 

coverage of E/M services was minimal and only represented approximately one percent of E/M 

services. We identified additional edits that were agreed to by Palmetto and which would help 

to detect and prevent improper payments. We identified estimated improper payments ranging 

from $0.9 million to $3.5 million for E/M services. In our most recent audit report of RRB 

Medicare, RRB management did not concur with 32 of our 34 recommendations for 

improvement. Management stated that it is not responsible for the RM program and only 

reviews Palmetto’s contract performance and it believes the E/M improper payments can only 

be recovered under special limited circumstances. Because our findings addressed Palmetto’s 

Statement of Work functional requirements under the RRB’s contract authority, we continue to 

see the need for these corrective actions.

Reporting Improper Payments

OIG has determined that improvements were needed regarding RRB’s reporting for RM 

improper payments. We disagreed with management’s response that they will no longer report 

RM improper payments because such reporting is redundant to Medicare improper payment 

reporting completed by the United States Department of Health and Human Services (HHS). 

Although the RRB received RRB Board approval to cease the reporting of improper RM payment 

data, such approval is not sufficient because IPERA does not provide authority to the RRB’s 

Board to grant relief from reporting. Under IPERA, OMB approval is needed to provide RRB with 

any reporting relief. The RRB identified RM as being susceptible for improper payments, thus 

subjecting the program to improper payment reporting requirements. Once an agency starts 

reporting, they must report for a minimum of two consecutive years before requesting that 

OMB grant them relief from annual reporting. 

RRB Cost Allocation Plan

CMS reimburses the RRB for Medicare related work performed. We previously determined that 

reimbursements the RRB received for Medicare related work was unsupported and therefore 

the reimbursements could be inaccurate. We audited the RRB’s cost allocation plan which is the 

basis for reimbursement and found that RRB controls were not adequate to ensure that the 

RRB’s cost allocation plan and reimbursement calculations were accurate and supported. We 

made 26 recommendations for corrective action and RRB management concurred with 10. The 

RRB has only implemented four of these audit recommendations. 
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Management and Performance Challenges - Report No. 20-03 7

See Appendix A for a list of relevant reports.

Challenge 4 – Improve Payment Accuracy and Transparency 

Why is this a serious management challenge? The topics of data, accountability and 

transparency are included on the President’s Management Agenda. Recent audits identified the 

need for improved payment accuracy and transparency.

One of the key drivers in the President’s Management Agenda is an initiative to improve 

delivery of better results to the public and improving accountability to taxpayers. A specific 

strategy to accomplish this initiative is to improve the data available for decision-making and 

accountability. Fostering accountability and transparency is one way to improve data for both 

internal and external uses. Recent audits have identified instances where inaccurate reporting 

indicates the need to improve transparency at RRB.

Payment Accuracy to Recover Improper Payments

As previously discussed in Challenge 3, we identified that RRB SMAC controls were considered 

ineffective. We also identified improper payments for 50 percent of the high risk E/M tests that 

we performed. Because RRB management stated that the improper payments cited in our audit 

report can only be recovered under special limited circumstances, it is apparent that they do 

not plan to recover the improper payments ranging from $0.9 million to $3.5 million cited in 

our audit report. We found that recovery of the cited improper payments is not restricted to 

special limited circumstances. Therefore, we cite the need to improve payment accuracy for the 

RM program through recovery of improper payments.

Transparency

RRB must improve transparency by publishing accurate data. We cite instances in a Digital 

Accountability and Transparency Act (DATA Act) audit, improper payments audit, and an 

Acquisition Management audit.

Our previous audit under the DATA Act found that the files submitted for the first quarter of 

fiscal year 2017 were incomplete, inaccurate, and did not agree to RRB’s source systems. The 

purpose of the submissions for the DATA Act reporting is to provide full disclosure of federal 

funds on a public website. RRB management has submitted closure requests for all seven 

recommendations that are being verified in the current Data Act audit. 

Our most recent improper payments audit addressed transparency concerns for future 

reporting for the RM program. As discussed in Challenge 3, RRB management stated that it

does not plan to report RM anymore because it is redundant to reporting completed by HHS. 

We responded that because the RRB’s improper payment rate for RM exceeded the allowable 

threshold as provided by law, improper payment reporting for this program should not be 

combined with the larger HHS reporting. To combine RM with HHS reporting would decrease 

transparency and conceal the true state of improper payment errors within the RM program. 

According to OMB guidance, agencies should not put programs or activities into groupings that 

may mask significant improper payment rates by the large size or scope of a grouping. The 
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

Management and Performance Challenges - Report No. 20-03 8

intent of the guidance is to provide transparency of improper payment rates for the programs 

an agency is responsible for overseeing and administering. While maintaining the same 

principle of the guidance, a significant improper payment error rate of a small program should 

not be combined with a large program to allow the noncompliant smaller program to become 

compliant. We determined that because RM is administered by the RRB, and has a separate 

contractor, its improper payment reporting should also remain separate. RRB must improve 

transparency and accountability by reporting the RM program amounts.

In a recent audit of the acquisition management function at RRB, the OIG contractor found 

several instances of inaccurate reporting to the Federal Procurement Data System (FPDS). In a 

statistical sample, the OIG contractor identified several instances where the contract number 

reported on FPDS was incorrect and instances where amounts were reported under incorrect 

contract numbers. Inaccurate information reported to FPDS decreases transparency. RRB 

management agreed to take corrective action to ensure future information reported to FPDS 

will be accurate.

See Appendix A for a list of relevant reports.

Challenge 5 – Financial Management and Reporting Issues

Why is this a serious management challenge? Financial management and reporting is being 

presented as a new challenge this year as a result of recognizing the need for improvements in 

the areas as identified in the annual mandated financial statement audit and performance 

audits of 1) unapplied cash, 2) waivers and the write-off process, and 3) cash statements. 

OIG has rendered a disclaimer audit opinion on the RRB’s financial statements since fiscal 

year 2013 because OIG auditors have not been permitted to communicate with the RRB’s 

component auditor as required by financial statement audit guidance. The audit firm employed 

by the National Railroad Retirement Investment Trust (NRRIT) is the RRB’s component auditor. 

The NRRIT held approximately $26.6 billion of the RRB’s $33.5 billion assets as reported in the 

RRB’s fiscal year 2018 financial statements. The auditor’s opinion also included two material 

weaknesses: financial reporting and deficient internal controls at the agency-wide level. 

The material weakness for financial reporting has been reported since fiscal year 2014. During 

our fiscal year 2018 audit, we continued to find the need for internal control improvements and 

found that monetarily significant approvals were being made without adequate review of 

supporting documentation. The material weakness for deficient internal controls at the agencywide level was reported for the first time. OMB guidance states that an evaluation of internal 

controls must be performed for the agency as a whole. If control principles or components have 

not been fully designed and implemented, they cannot be tested and must be considered 

ineffective. This material weakness was reported because the five required components of 

internal control were not designed, implemented, and operating effectively. The five required 

components of internal control consist of: control environment, risk assessment, control 

activities, information and communication, and monitoring. Corrective actions related to the 

material weaknesses remain unimplemented. 
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Management and Performance Challenges - Report No. 20-03 9

The unapplied cash and waiver/write-off audits identified improvements needed to ensure 

1) the accuracy and integrity of agency records, 2) protection of RRB trust funds, 3) internal 

controls, and 4) internal control supporting documentation. In these audits, we found that 

documented controls were outdated and incomplete and that other controls were not 

performing or were inadequate. 

Unapplied cash consists of cash remittances that cannot be applied with the typical reasons 

being: the related debt has not been established or the remittance does not match an existing 

debt balance. The RRB has to examine its records to determine what debt to record the 

remittance against or to issue a refund for the remittance. In 2016, the records of unapplied 

cash were migrated from an older system to a new system. We determined that after the 

migration, improvements were still needed. Agency management concurred with only 5 of our 

14 recommendations. All of the recommendations remain unimplemented.

A waiver may be requested by a beneficiary who has been determined to have received an 

erroneous overpayment. A waiver may be granted if the RRB determines that (1) the overpaid 

person is without fault and (2) recovery would be contrary to the purpose of the Railroad 

Retirement Act or the Railroad Unemployment Insurance Act, or would be against equity or 

good conscience. A write-off is the suspension or termination of collection action and a waiver 

of recovery is the RRB waiving its right to collect. Agency management concurred with three of 

our recommendations and partially concurred with one. These four recommendations remain 

unimplemented. 

Our contracted audit determined that several control weaknesses in the preparation of the 

Statement of Changes in Cash and Investment Balances (SCCIB) could affect the reliability of the 

statements. These statements are used by the various bureaus within the RRB including 

Bureaus of Actuary and Legislative Affairs. The audit also determined that the universe of 

general ledger transactions supporting SCCIB funds do not reconcile with the respective 

subsidiary ledgers and related trial balance. The audit concluded that these internal control 

matters coupled with the exceptions noted in the transactions significantly affects the reliability 

of amounts reported in the SCCIB. RRB management did not concur with any of the 17 

recommendations made to address the issues noted and indicated they will stop preparing 

these statements because it is not cost effective.

Refer to Appendix A for a list of relevant reports for this challenge.
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Management and Performance Challenges - Report No. 20-03 10

Challenge 6 – Compliance Concerns Identified 

Why is this a serious management challenge? Our audits have shown that the RRB has been 

noncompliant with various guidance. This can have a far reaching impact on the protection of 

federal trust funds, assets, government wide improper payments, and the effectiveness of 

agency operations.

Recent audits, found that the RRB was not in compliance in the following areas:

Improper Payment Reporting 

The RRB was noncompliant with IPERA because the improper payment rate of 10.53 percent for 

the RM exceeded the 10 percent threshold defined in the law. Although RRB management 

asserted they will no longer report RM improper payments, OIG disagreed and stated that the 

RRB should continue to report RM improper payments. The RRB is required to fulfill its 

responsibility for having appropriate procedures to ensure beneficiaries cannot erroneously or 

fraudulently receive RM Part B benefits or pay premiums for such benefits. Additionally, the

RRB’s SMAC determines if RM payments to providers should be made on behalf of the RRB’s 

beneficiaries. RM payment errors were caused by incorrect coding, insufficient documentation, 

and medical necessity as reported by the RRB in its Fiscal Year 2018 Performance and 

Accountability Report. The RRB is responsible for oversight of its SMAC, including determining if 

the SMAC had fulfilled its contractual obligations and if they should be paid for work 

performed.

If the RRB follows through with its intentions of not reporting next year, it will be masking the 

fact that its SMAC performance in reducing improper payments has deteriorated further 

because we have documentation to show that next year’s RM improper payment rate will be 

12.5 percent. 

Enterprise Risk Management

The RRB’s enterprise risk management (ERM) process was not fully effective because RRB had 

not complied with all of the internal control requirements specified in OMB guidance and did 

not implement the ERM process agency-wide. ERM is a discipline that deals with identifying, 

assessing, and managing risks. It provides an enterprise wide, strategically aligned portfolio 

view that provides better insight about how to most effectively prioritize resource allocations 

to ensure successful mission delivery. Revised OMB guidance emphasizes the importance of 

coordinating ERM activities with the strategic planning and review process, and internal 

controls required by the Federal Managers’ Financial Integrity Act and Government 

Accountability Office’s Standards for Internal Control in the Federal Government. We made ten 

recommendations, of which seven remain unimplemented.
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Management and Performance Challenges - Report No. 20-03 11

Federal Travel Regulations

A 2017 OIG audit found that the RRB did not always comply with the federal travel regulations 

(FTR) because internal controls were not always enforced or adequate. This audit report 

included 19 recommendations citing noncompliance with FTR and RRB policies and procedures. 

Although RRB management concurred with 13 of the recommendations and corrective actions 

are pending they have not been completed.

Acquisition Management 

RRB did not always adhere to Federal Acquisition Regulations (FAR) guidance. Per FAR 

guidance, closeout procedures include ensuring that excess funds are de-obligated. Our 

contracted audit identified six RRB acquisitions where obligated funds remained in the agency’s 

financial reporting system beyond the closeout date. FAR guidance also provides for ensuring 

that timely and accurate reporting of contractual actions in the FPDS. The contracted audit also 

identified 12 instances where the contract number was incorrectly reported. 

Refer to Appendix A for a list of relevant reports for this challenge.

We plan to continue our oversight in all areas emphasized in this letter through audits, 

investigations, and other follow-up activities. We encourage RRB to take meaningful action on 

these challenges in order to prevent fraud, waste, and abuse in the programs and operations of 

RRB, and to reduce improper payments in all of its programs. 

Original Signed By:

Martin J. Dickman 

Inspector General
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

Management and Performance Challenges - Report No. 20-03 12

APPENDIX A: AUDIT REPORTS

Please visit https://www.rrb.gov/OurAgency/InspectorGeneral/Library for our audit reports.

Improve Agency Disability Program Integrity

 Railroad Retirement Board (RRB) Office of the Inspector General (OIG), The 

Implementation of the Disability Program Improvement Plan at the Railroad Retirement 

Board Did Not Result in a Fully Established Fraud Risk Assessment Process, 

Report No. 19-15 (Chicago, IL: September 27, 2019).

 RRB OIG, The Railroad Retirement Board Disability Programs Do Not Effectively Consider 

Fraud Risk Indicators in the Disability Process, Report No. 19-16 (Chicago, IL: 

September 27, 2019).

 RRB OIG, The Use of Medical Experts During Disability Determinations at the Railroad 

Retirement Board Can Be Improved, Report No. 19-17 (Chicago, IL: September 27, 2019).

Improve Information Technology Security and Complete System Modernization

 RRB OIG, Performance Audit of RRB's Compliance with the Federal Information Security 

Modernization Act of 2014 Fiscal Year 2018, Report No. 19-03 (Chicago, IL: 

December 19, 2018).

 RRB OIG, Selected General Information System Controls at the Railroad Retirement 

Board Were Not Always Adequate, Report No. 19-07 (Chicago, IL: May 14, 2019).

 RRB OIG, Mainframe Applications Re-Platform Initiative at the Railroad Retirement 

Board is Progressing in Accordance with Established Project Goals, Report No. 19-11

(Chicago, IL: September 26, 2019).

 RRB OIG, The Legacy Systems Modernization Initiatives at the Railroad Retirement Board 

are Progressing Effectively, Report No. 19-12 (Chicago, IL: September 26, 2019).

Improve Management of Railroad Medicare

 RRB OIG, Railroad Retirement Board Did Not Calculate Reimbursed Medicare Costs in 

Accordance with Federal Requirements, Report No. 16-10 (Chicago, IL: August 22, 2016).

 RRB OIG, Audit of Railroad Retirement Board's Compliance with Improper Payments 

Elimination and Recovery Act in Fiscal Year 2018 Performance and Accountability Report,

Report No. 19-09 (Chicago, IL: May 30, 2019).

 RRB OIG, Railroad Medicare Controls Over Evaluation and Management Services Were 

Not Fully Adequate, Report No. 19-10 (Chicago, IL: August 5, 2019).

Improve Payment Accuracy and Transparency

 RRB OIG, Railroad Retirement Board’s Initial DATA Act Submission, While Timely, Was 

Not Complete or Accurate, Report No. 18-01 (Chicago, IL: November 8, 2017).
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Management and Performance Challenges - Report No. 20-03 13

 RRB OIG, Audit of Railroad Retirement Board's Compliance with Improper Payments 

Elimination and Recovery Act in Fiscal Year 2018 Performance and Accountability Report,

Report No. 19-09 (Chicago, IL: May 30, 2019).

 RRB OIG, Railroad Medicare Controls Over Evaluation and Management Services Were 

Not Fully Adequate, Report No. 19-10 (Chicago, IL: August 5, 2019).

 RRB OIG, The Acquisition Management Function at the Railroad Retirement Board Was 

Not Fully Adequate or Effective, Report No. 19-14 (Chicago, IL: September 27, 2019).

Financial Management and Reporting Issues

 RRB OIG, Report on the Railroad Retirement Board's Financial Statements Fiscal Year 

2018, Report No. 19-01 (Chicago, IL: November 15, 2018).

 RRB OIG, Railroad Retirement Board Write-off and Waiver Processes were not Fully 

Efficient, Effective, or Adequate, Report No. 19-05 (Chicago, IL: Revised April 23, 2019).

 RRB OIG, Improvements Needed for the Unapplied Cash Process at the Railroad 

Retirement Board, Report No. 19-08 (Chicago, IL: May 16, 2019).

 RRB OIG, Internal Control Weaknesses Noted in the Preparation of the Railroad 

Retirement Board’s Statement of Changes in Cash and Investment Balances Could Affect 

Reliability of the Statements, Report No. 19-13 (Chicago, IL: September 27, 2019).

Compliance Concerns Identified

 RRB OIG, Railroad Retirement Board Did Not Always Comply with the Federal Travel 

Regulation, Report No. 17-04 (Chicago, IL: April 11, 2017).

 RRB OIG, Enterprise Risk Management Process at The Railroad Retirement Board Was 

Not Fully Effective, Report No. 18-07 (Chicago, IL: July 9, 2018).

 RRB OIG, Audit of Railroad Retirement Board's Compliance with Improper Payments 

Elimination and Recovery Act in Fiscal Year 2018 Performance and Accountability Report,

Report No. 19-09 (Chicago, IL: May 30, 2019).

 RRB OIG, The Acquisition Management Function at the Railroad Retirement Board Was 

Not Fully Adequate or Effective, Report No. 19-14 (Chicago, IL: September 27, 2019).
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

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APPENDIX B: MANAGEMENT COMMENTS
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