County Paid $9 Million Too Much in Welfare : Finances: Audit of two-year period finds instances of multiple checks. Agency blames an outdated computer and faulty procedures that have been corrected.

Flaws in the administration of Los Angeles County’s general relief welfare program resulted in the overpayment of nearly $9 million over a two-year period, according to a confidential audit submitted to the Board of Supervisors.

The review uncovered “weaknesses in the internal controls and processes” used to disburse funds to thousands of general relief recipients by the Department of Public Social Services, said acting auditor-controller Alan T. Sasaki.

But the audit, conducted during the 1991 and 1992 calendar years and submitted to the board last month, found no evidence of fraud on the part of county staff or welfare recipients. Instead, the main culprits were identified as an outdated computer system and inadequate management procedures that resulted in the mistaken issuance of duplicate checks.

County officials say a new, sophisticated computer system installed in April has virtually eliminated the problems that led to the overpayments.

The report comes as county officials try to close a $600-million budget gap, wrestling with options including widespread layoffs and closure of health facilities, recreation centers and libraries.

County officials have refused to make the report public, but a partial copy of the audit was obtained Tuesday by The Times.

It detailed $8.7 million in overpayments, including $6.2 million in duplicate payments--cases in which a recipient was mistakenly issued two checks.

The report noted that overpayments amounted to only 1.2% of the total $700 million general relief payroll for the two years, but said: “All of the overpayments were funded by the general fund and represented a loss exposure to the county.”

“The losses of public money are always troublesome to us . . . but we have made the changes to improve the system,” Ray Garcia, assistant director for administrative services of the Department of Public Social Services, said in an interview. “There was absolutely no indication of collusion or attempts to defraud and there are no intended prosecutions. What was found was systemwide, but it is our desire to make sure our programs are credible to maintain public confidence.”

The general relief or indigent aid program has grown dramatically over the last few years, with a 1991-92 caseload of about 58,000 people growing to more than 100,000 this year. Recipients, generally adults who do not qualify for any other type of assistance, receive a cash grant of $293 a month. County officials have proposed cutting the benefits to $212 monthly.

In most of the overpayments, clients applied for and received emergency assistance that was supposed to take the place of their regular checks. But because of computer and human error, the regularly scheduled checks were also issued.

Among the report’s major findings:

* Frequent data entry errors on the old computer system resulted in numerous instances of checks being mistakenly duplicated. The report cites a sampling of 133 checks in which 35, or 26%, appeared to have been entered incorrectly.

* Many of the duplicate payments were not detected because of lax management.

* Backup copies of records and transactions were not stored and there was no contingency plan in case of lost computer files or other disruptions of the system.

* The system suffered from lax security procedures. Not all employees working on the computers were issued user identification numbers and on at least two occasions, employees who had been terminated still had access to the system.

Little of the money has been recovered. About $2 million was reclaimed by stopping payment on checks or deducting the overpayment amounts from checks of recipients still on welfare rolls. County officials are trying to contact people they believe may have gotten excess funds, but their efforts are hampered by uncertainty over the whereabouts of many of the recipients.

Even if the recipients could be found, officials are uncertain about the prospects for recovering the funds. “It doesn’t do us any good to try to take them to court if they don’t have the ability to pay. It’s a further waste of public money,” Garcia said.

The Times has requested a full copy of the audit, citing the California Public Records Act.

But county officials say they are blocking release of the report because they fear that revelations about internal procedures could result in abuse of the system.

“We don’t want to make an audit of our internal controls public because we could compromise and expose ourselves until changes are made in the system,” Sasaki said.

But Garcia said most of the corrections are largely in place.

Under new procedures, general relief recipients no longer receive checks through the mail and must go to one of 68 county outlets to pick up a check. The general relief program also has been coordinated with the food stamp program so that checks and vouchers for both are issued at the same time. Additionally, the county has installed an automated fingerprinting system to eliminate the possibility of a person receiving duplicate checks by applying under different names, Garcia said.