Opportunities for Improving VA's Internal Accounting Controls and Procedures
AFMD-89-35, Aug 11, 1989
GAO reviewed the Department of Veterans Affairs' (VA) financial management systems, focusing on how VA could improve internal accounting controls and financial management.
GAO found that VA: (1) made significant progress in preparing its consolidated financial statements in accordance with generally accepted accounting principles, although statements did not always agree with underlying accounting systems and general ledger balances and had undocumented or poorly supported consolidation and closing procedures; (2) did not adequately implement internal controls for medical care cost recovery; (3) lacked automated system internal controls to ensure complete and accurate processing of compensation, pension, and education benefit payments data; (4) did not obtain proper authorization for releasing payments over threshold amounts; (5) did not meet requirements in such areas as timely collection on accounts receivable, recognition and recording of liabilities, and prompt and accurate accumulation and reporting of obligational data on all appropriated funds; (6) improved principal controls in its housing credit assistance area, although remaining weaknesses included the lack of an established system for recognizing losses on guaranteed loans, lack of reconciliation between the general ledger control account and subsidiary ledger balances, and improper documentation and approval of journal vouchers; (7) lacked effective payroll system controls for implementing proper pay changes for all employees, resulting in incorrect payments; and (8) did not perform pay verifications and reconciliations to ensure correct processing of payroll data.
- Review Pending
- Closed - implemented
- Closed - not implemented
Recommendation for Executive Action
Recommendation: The Secretary of Veterans Affairs should direct the Chief Benefits Director and the Controller to develop a plan for implementing corrective action on the internal control problems that the GAO audit disclosed in the housing credit area. VA requirements for reconciliation of account balances and documentation and proper authorization of accounting transactions are excellent internal control techniques for ensuring the integrity of data contained in the VA financial accounting system. Accordingly, the plan for corrective action should include procedures for ensuring compliance with agency policies and procedures. In addition, the Controller should clarify the policy regarding approval of journal vouchers to require an individual not directly involved in voucher preparation to approve vouchers initiated by the Chief, Accounting Section.
Agency Affected: Department of Veterans Affairs
Status: Closed - Implemented
Comments: This recommendation is being addressed as part of the most current audit efforts of the VA Office of Inspector General. Because VA is required to continue its audits on an annual basis as a result of the Chief Financial Officers Act of 1990, similar or identical recommendations will be repeated until corrective action has been achieved. Therefore, VA considers prior-year recommendations closed. However, corrective actions continue.