Financial Audit:

Veterans Administration's Financial Statements for Fiscal Years 1988 and 1987

AFMD-89-69: Published: Sep 15, 1989. Publicly Released: Sep 15, 1989.

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GAO examined the Veterans Administration's (VA) consolidated financial statements for the fiscal years ended September 30, 1988 and 1987, and the related consolidated statements of operations and changes in financial position and reconciliation to budget for the fiscal years then ended.

GAO found that the consolidated financial statements presented fairly the financial position of VA as of September 30, 1988 and 1987, the results of its operations, and the changes in its financial position and reconciliation to budget for the fiscal years then ended, in conformity with generally accepted accounting principles. GAO qualified its opinion, since: (1) VA did not have the documents supporting the original cost of land, buildings, and equipment which it acquired over periods dating back to its establishment in 1930; (2) although VA made significant improvements in transferring project costs from work-in-process to completed facilities, it still kept manual accounting records for land and buildings, which had errors in recorded values; (3) the financial statements reflected statutorily calculated life insurance reserves, rather than reserves calculated in accordance with generally accepted accounting principles; and (4) the VA housing credit program experienced financial problems that may require assistance beyond that identified in its current appropriation request.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: VA revised its capitalization policies and procedures in February 1991 and plans to include in its new Financial Management System a fixed asset module for standardizing real property recordkeeping, thus ensuring consistent implementation of the federal capitalization and depreciation accounting principles and policies. Installation of the fixed asset module is scheduled for October, 1994. 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.

    Recommendation: The Secretary of Veterans Affairs should direct the Controller to determine an appropriate method for achieving consistent implementation of the federal capitalization and depreciation accounting principles and policies. One possible approach would be to provide assistance and training on this matter to field station accountants during normal field station reviews.

    Agency Affected: Department of Veterans Affairs

 

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