Second-Year Implementation of the Federal Managers' Financial Integrity Act in the Veterans Administration

HRD-86-20: Published: Oct 28, 1985. Publicly Released: Oct 28, 1985.

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GAO reviewed the Veterans Administration's (VA) second-year implementation of the Federal Managers' Financial Integrity Act of 1982 (FMFIA) to assess its progress in evaluating the adequacy of agency internal controls and accounting systems.

GAO found that: (1) VA made progress in establishing a framework to evaluate and report on the status of its internal controls, but VA needs to improve its assessments and reviews of internal controls and to increase the testing of its accounting operations; (2) vulnerability assessments generally lacked adequate documentation; (3) preliminary reviews did not present adequate plans for implementing review recommendations; and (4) most reviews did not complete all prescribed review tasks or include an adequate examination of internal controls. GAO also found that: (1) VA did not require internal control evaluations of its regional offices; (2) field facilities did not review some crucial operations; (3) VA made little progress in considering automatic data processing (ADP) controls as part of its internal control assessments and reviews; (4) VA needs to broaden the scope of its evaluations and improve the quality of its tests; and (5) VA should not report that it conforms with the Comptroller General's requirements until its accounting systems have been adequately evaluated in operation.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: While guidance for assessments has been issued, no instructions for ICR were developed.

    Recommendation: The Administrator of Veterans Affairs should require the Director, Office of Data Management and Telecommunications, and the Chief Medical Director to develop more specific guidelines for reviewing ADP internal controls.

    Agency Affected: Veterans Administration

  2. Status: Closed - Implemented

    Comments: VA management believes that its existing systems serve to meet requirements of the recommendations to analyze sources of problems revealed in reviews and to centrally track weaknesses by source. There are no VA plans to implement the recommendation for training.

    Recommendation: The Administrator of Veterans Affairs should direct: (1) the Chief Benefits Director to require regional offices to analyze the sources of problems revealed by the reviews required by the Department of Veterans Benefits Circular 20-84-20 and other processes; (2) the Chief Benefits Director and the Chief Medical Director to require that each field facility implement a formal, centralized tracking and follow-up system that addresses internal control weaknesses identified by any source; and (3) the Chief Benefits Director to require regional offices to train managers who are responsible for internal control evaluations.

    Agency Affected: Veterans Administration

  3. Status: Closed - Implemented

    Comments: In September 1984, VA, while GAO was conducting its review, issued guidelines incorporating the issues listed in this recommendation and provided training to its ICR teams.

    Recommendation: The Administrator of Veterans Affairs should require VA departments and offices to: (1) provide training to internal control review (ICR) team members on the ICR process, including documentation requirements; (2) fully comply with the agency's nine-step approach for conducting an ICR; and (3) implement corrective actions recommended by ICR's and track the actions to determine whether internal controls were strengthened.

    Agency Affected: Veterans Administration

  4. Status: Closed - Implemented

    Comments: VA does not plan to develop necessary documentation for vulnerability assessments and preliminary reviews, but it has implemented the other recommendations.

    Recommendation: The Administrator of Veterans Affairs should require VA departments and offices to: (1) include in vulnerability assessments an analysis of the general internal control environment, an evaluation of inherent risks, a preliminary evaluation of safeguards, and a summary of the assessment results; (2) include in vulnerability assessments documentation of what was assessed and who assessed it, and an analysis of the vulnerability of each assessable unit; (3) identify and analyze pertinent problems and concerns during preliminary reviews and select, implement, and track appropriate follow-up actions to correct them; and (4) obtain sufficient documentation during preliminary reviews to support the findings and conclusions contained therein.

    Agency Affected: Veterans Administration

  5. Status: Closed - Implemented

    Comments: VA completed its plan for reviewing the VA accounting structure. The plan calls for reviewing two components in FY 1986, two components in FY 1988, and four components in FY 1987 and 1988. The components are the major subsystem of the VA accounting structure.

    Recommendation: The Administrator of Veterans Affairs should require the Director, Office of Budget and Finance (Controller), to develop an overall plan for reviewing the VA accounting structure to provide an adequate basis for meeting the reporting requirements of section 4 of FMFIA. The plan should provide that: (1) major subsystems of the VA accounting structure are reviewed in a reasonable period of time and in priority order based on the significant risks in each of the subsystems; (2) reviews of systems include tests of transactions from their authorization through processing of data to the issuance of financial reports; (3) reviews of accounting systems be coordinated with reviews of controls that authorize disbursements for VA benefit and medical programs; and (4) reviews of accounting systems be done in conjunction with and in support of the VA 5-year ADP plan.

    Agency Affected: Veterans Administration

 

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