Human Services, Department of
Audit of the Electronic Benefits Transfer System
November 1996
Report Number 97-020
Overall Conclusion
The Electronic Benefits Transfer (EBT) system is effectively providing government benefits to recipients of food stamps and Aid to Families with Dependent Children (AFDC). However, there are opportunities to improve controls to ensure retailers are provided with correct information, access is properly restricted, automated program changes are authorized, disruptions to the system do not occur, and cards and personal identification numbers are replaced in accordance with contract requirements.
Key Facts, Findings, and Recommendations
To ensure benefits are properly distributed for this $2.2 billion (1995) program, controls should be improved by clearly defining rules and procedures in all retailer training materials and by further restricting access to the Department of Human Services' (Department) eligibility determination system and the client database. Controls should also be strengthened by improving processes to authorize and monitor EBT software modifications, communicating EBT contingency plan requirements to local offices, and developing a contingency plan for the Department's main computer.
A potential $48,900 could be saved each year in Region 6 (Houston) by having the vendor replace lost, stolen, damaged, or defective cards as specified in the EBT contract. Cost savings could be realized by other regions currently following the same practices.
Although the Department is satisfying federal requirements to ensure the food stamp portion of the EBT system is cost neutral, we were unable to evaluate the overall cost effectiveness of the EBT system during this review. Factors which prevented us from determining the system's cost effectiveness include the brevity of its statewide use and the numerous components that contribute to cost effectiveness.
Effective January 1, 1999, federal government payments other than tax refunds will be required to be made electronically. State agencies analyzing the use of the current statewide EBT system to support their payment systems are identifying obstacles with the limited data capacity of the magnetic stripe on the current EBT card. Other options are being evaluated.
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