I am trying to add a new user to my ubuntu 14.04 os. I go System Settings -> User Accounts and try to click the [+] button, but nothing happens it is grayed out. The system did not ask me for administrator password, why? Is this a bug?
You are doing right. There is no bug other than bug in GUI design - there is an Unlock button in the upper right corner of the User Accounts window, but it is hardly noticeable. Click it and you will be asked for password, and the [+] and [-] keys will be enabled.
You can also add a new user account via command line:
sudo adduser johndoe
It will create a new user as well.