SSA administers the Old Age, Survivors, and Disability Insurance (OASDI) programs under Title II of the Social Security Act. About 96 percent of the nation’s work force is in social security-covered employment and pays taxes on annual earnings. When workers pay social security taxes, they earn coverage credits, and 40 credits—equal to at least 10 years of work— entitle them to social security benefits when they reach retirement age. In 1977, the Congress authorized the President to enter into totalization agreements with other countries. These bilateral agreements are intended to accomplish several purposes. First, they eliminate dual social security coverage and taxes that multinational employers and employees encounter when they operate and their workers temporarily reside in a foreign country with its own social security program. Under the agreements, U.S. employers and their workers sent temporarily abroad benefit by paying only U.S. social security taxes, and foreign businesses and their workers benefit by paying only social security taxes to their home country. Second, the agreements provide benefit protection to workers who have divided their careers between the U.S. and a foreign country, but lack enough coverage under one or both social security systems to qualify for benefits, despite paying taxes into both systems. Totalization agreements allow such workers to combine (totalize) work credits earned in both countries to meet minimum benefit qualification requirements. Third, totalization agreements generally improve the portability of social security benefits by authorizing waiver of residency requirements. SSA officials provided a description of how totalization agreements are developed. These agreements involve several steps from the time they are proposed until the time benefits are paid to beneficiaries. Before SSA can begin to develop an agreement with a foreign country, it must receive approval from the Department of State (State). If negotiations between SSA and the foreign country are successful, SSA requests authorization from State to arrange for signing the agreement. SSA reviews the draft agreement for policy implications and to ensure that the translation of the agreement (if there is one) has the same meaning in both languages. Once signed, the agreement does not become legally binding until both countries have completed their respective ratification processes. For the U.S., the ratification involves the following steps: (1) the Commissioner of SSA asks State to forward the signed agreement to the President; (2) if State concurs, it sends the agreement to the President; (3) if the President approves the agreement, he transmits it to the Congress; and (4) the agreement becomes effective on a date specified in the agreement, which must be at least 60 session days, during which at least one House of Congress was in session after the President sends it to Congress, unless either House of Congress adopts a resolution of disapproval. Table 1 shows existing agreements and the dates they became effective. To qualify for totalized U.S. social security benefits, a worker must have at least 6 but no more than 39 U.S. coverage credits. Benefit amounts are based on the portion of time worked in the United States, and thus are almost always lower than full social security benefits. As of September 2004, the average monthly totalized benefit amount for OASDI beneficiaries was about $163. Overall, SSA paid approximately $2.4 billion to about 430 thousand foreign beneficiaries in fiscal year 2004, including about $206 million paid to approximately 102,000 totalized beneficiaries. Individuals living in the U.S. may apply for totalized benefits at any of SSA’s approximately 1,300 field offices. SSA policies and procedures for processing claims are located in SSA’s Program Operations Manual System (POMS). When an applicant files for benefits in an SSA field office, a claims representative helps the individual fill out the application, reviews the applicant’s eligibility information with POMS guidance, and sends the claim packet to SSA’s OIO for final processing. The application process for individuals living abroad is essentially the same as that for domestic applicants, with one basic exception. Instead of visiting a domestic SSA field office, individuals living abroad are generally required to apply at one of numerous Foreign Service Posts located in U.S. embassies or consulates around the world, or at their country’s social security agency. Applications are processed by Foreign Service Nationals who review pertinent documentation (such as evidence of birth, and marital status) and forward the application to OIO, which requests the foreign earnings record, if one has not already been provided. The application package is then reviewed by SSA staff for completeness and compliance with SSA standards. In instances where SSA staff question the accuracy or completeness of any information, they may contact the foreign social security agency or the claimant directly to request clarification. If SSA staff determine that the application contains sufficient eligibility information and the individual is entitled to totalized OASDI benefits, then the application is approved and submitted for payment. (See fig. 1) In addition to managing and updating the agreements that are already in place, SSA continues to negotiate additional agreements with other countries. SSA has pending totalization agreements with Mexico and Japan. The President transmitted the Japanese agreement to the Congress in November 2004. The Mexican agreement was under review at SSA at the time of this study. In a prior report on the Mexican agreement, we recommended that SSA establish formal processes for entering into totalization agreements that include mechanisms to assess the risk associated with such agreements and to document the range of analyses SSA conducts. The report also recommended that reports of proposed agreements be enhanced to make them more consistent and informative and that SSA establish a regular process to reassess the accuracy of its actuarial estimates. SSA’s policies and procedures for assessing the accuracy and reliability of important information from foreign countries—such as birth and death data—when entering into totalization agreements remain generally informal, despite recent initiatives for improvement. Historically, the agency has focused on broad policy issues and systems compatibility, rather than integrity and reliability of earnings data and authenticity of evidentiary documents. For example, during preliminary negotiations for an agreement with Mexico, SSA conducted a limited review of that country’s social security system and policies in August 2002, but did not assess the accuracy and reliability of data needed to pay benefits or the relevant controls over that data. In response to our recommendations, SSA made two return visits to Mexico to more thoroughly assess its social security information system and to examine the integrity of documents submitted by claimants to establish identity and eligibility—such as birth records. In October 2003, SSA’s systems specialists and program integrity experts examined Mexico’s social security information system and earnings data. In particular, these experts assessed the integrity of processes and controls associated with the collection, maintenance and reporting of social security earnings. After reviewing processes at the Mexican social security agency’s headquarters, field offices and data storage center, SSA determined that Mexico’s policies and controls were sufficient for SSA to rely on Mexican earnings data to pay benefits. On its second review, SSA returned to Mexico in 2004 to physically examine documents submitted by claimants as evidence of identity and eligibility, and attempted to verify the authenticity of these documents with the Mexican state archives. While the agency was unable to provide us with a copy of the report because it was still being reviewed internally at the time of our study, it did share some preliminary results. Within the selected sample, SSA reported that only a small number of the documents were of questionable authenticity and concluded that most types of Mexican documents were reliable. Beyond the actions taken in Mexico, SSA officials reported that the agency is working on a number of additional initiatives to help assess the risks associated with future totalization agreements. SSA has developed a standardized questionnaire for foreign social security officials to help the agency identify and assess the reliability of earnings data in countries under consideration for future totalization agreements. This tool is designed to capture information about the technical, security, and management controls over the collection and maintenance of workers’ earnings. This questionnaire may provide the agency with a useful tool to assess the security of foreign country’s earnings data. SSA recently used this tool as part of its negotiations for entering into a totalization agreement with Japan. Agency officials reported that they made additional contacts with Japanese officials and asked them selected questions from the new questionnaire. In addition, SSA has also begun two initiatives aimed at determining which countries may be suitable for future agreements, taking into consideration the reliability of a country’s data and records. For example, SSA officials reported that the agency has held initial meetings with officials from the Departments of State and Commerce in an effort to develop a more formalized process for identifying countries for potential totalization agreements. SSA officials reported that soliciting input from other government entities will provide SSA with a broader perspective, and assist the agency in identifying potential agreement countries in a more strategic and systematic manner. In addition to seeking input from other federal agencies, SSA recently developed a matrix consisting of 14 economic and administrative factors, including known risk factors such as the availability of accurate earnings/coverage records, that may impact a country’s ability to determine individual’s eligibility for benefits under an agreement. This matrix provides a standard template to facilitate comparison among countries and assist SSA in evaluating these countries’ suitability for future totalization agreements. For example, this tool includes a step to help SSA evaluate potential problems with foreign data, including the prevalence of fraudulent or counterfeit documents in a country, or potential problems accessing critical records. In addition, the template includes factors such as projections of lost tax revenue and the number of U.S. taxpayers working in a country, which could be used to calculate the potential impact of a totalization agreement on the Social Security Trust Funds. Finally, in an effort to improve existing procedures, especially with regard to foreign eligibility evidence, SSA officials reported that they are currently conducting numerous “vulnerability assessments” to detect potential problems or limitations with the accuracy of foreign countries’ documents, including documents from totalized countries.