VA's Fiduciary Program:

Improved Compliance and Policies Could Better Safeguard Veterans' Benefits

GAO-10-241: Published: Feb 26, 2010. Publicly Released: Mar 29, 2010.

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Many individuals receiving monthly compensation and pension benefits from the Department of Veterans Affairs (VA) have mental impairments that prevent them from managing their finances. VA's Fiduciary Program selects and oversees third parties, called fiduciaries, to help manage and protect beneficiaries' funds. GAO examined (1) how effective program policies and procedures are in monitoring fiduciaries and safeguarding beneficiary assets, and (2) challenges VA faces in improving program performance and oversight. GAO reviewed program policies, analyzed a nationally representative random sample of case files, interviewed Central Office managers and staff, and conducted three site visits to Fiduciary Program offices which accounted for 25 percent of program beneficiaries. During these visits GAO interviewed regional office managers and staff and conducted 32 file reviews.

VA's Fiduciary Program has policies in place that are intended to ensure that qualified fiduciaries are selected and regularly monitored; however, insufficient staff compliance with some policies and weaknesses in others hinder VA's ability to safeguard veterans' benefits. For example, VA was late in conducting required follow-up visits to monitor fiduciaries or provided insufficient documentation to show whether these visits were conducted in about 18 percent of the cases GAO reviewed. In addition, while GAO estimated that nearly 40 percent of fiduciaries who were required to submit financial reports to demonstrate how beneficiary funds are managed turned their reports in late, VA did not always take actions to obtain them on time or provide documentation that an attempt had been made, as required by VA policy. GAO also found that files did not always contain documentation that a bond was secured when required to safeguard beneficiary estates or that the requirement was waived. Fiduciary Program managers and staff said that they did not always comply with VA policies due, in part, to a lack of time, resources, and staff. In addition, VA's policies for conducting on-site reviews of professional fiduciaries who manage funds for multiple beneficiaries do not ensure these fiduciaries are effectively identified and monitored. For example, VA's policy may not ensure that all fiduciaries who need to be reviewed are identified because the agency's policy allows the use of the fiduciary's name--which may be entered inconsistently--to match them to beneficiaries rather than requiring a unique identifier, such as a Social Security number. Moreover, VA does not have a nationwide quality review process to ensure that these reviews are conducted properly and consistently. GAO identified two key challenges that hinder VA's ability to improve Fiduciary Program performance and oversight. First, managers and staff in the three regional offices visited said VA's electronic fiduciary case management system does not provide sufficient information and is cumbersome to use. For example, the system limits staff's ability to track multiple actions on a case or enter all needed information. Also, the system does not generate comprehensive management reports that would facilitate effective oversight. In addition, managers and staff indicated that available training may not be sufficient to ensure they have the necessary expertise to carry out program responsibilities. Moreover, many managers and staff had less than 2 years of program experience, and the lack of sufficient training may have contributed to inconsistent compliance with some program policies. VA is developing standardized training that it expects to implement some time in fiscal year 2010. VA is also piloting a consolidated Fiduciary Program unit covering 14 western units, in part, to address program challenges. While the pilot is intended to improve program performance and oversight, managers and staff noted that difficulties, such as not having resources in place and up-to-date case files, impeded effective implementation. VA has not yet evaluated the impact and effectiveness of this model.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In a November 2010 update on this recommendation, VBA stated that they have evaluated alternate approaches to meet the electronic case management needs of the Fiduciary Program and have decided to replace the Fiduciary Beneficiary System. A Request for Information has been prepared and released to the private sector to accomplish this.

    Recommendation: To ensure that maximum efforts are made to safeguard beneficiary assets, the Secretary of Veterans Affairs should evaluate alternative approaches to effectively and efficiently meet the electronic case management system needs of Fiduciary Program managers and staff. This could include developing or acquiring a replacement system or enhancing the existing system.

    Agency Affected: Department of Veterans Affairs

  2. Status: Closed - Implemented

    Comments: In an April 2010 Fast Letter, the Department of Veterans Affairs (VA) directed its staff to collect a unique identifier on all fiduciaries and input this information into the Fiduciary Beneficiary System (FBS). In a subsequent conversation, a Fiduciary Program Central Office official told GAO that one of the ways the unique identifiers will be used is to determine whether professional fiduciaries meet the criteria for having a financial audit, known as an on-site review. The same FAST letter also requires VA regional offices to submit all signed on-site review reports and supporting documentation to the Central Office within 10 days of completion for a quality review.

    Recommendation: To ensure that maximum efforts are made to safeguard beneficiary assets, the Secretary of Veterans Affairs should improve the policies for periodic on-site reviews of professional fiduciaries by taking additional actions such as: (1) requiring a unique identifier for all fiduciaries to better determine which professional fiduciaries meet the criteria to have on-site reviews; and (2) implementing a nationwide systematic quality review process to examine completed on-site review reports.

    Agency Affected: Department of Veterans Affairs

  3. Status: Closed - Implemented

    Comments: In VA's response to our recommendations and its November 2010 update, the agency stated that it has issued guidance and provided extensive training to both management and staff on a variety of issues, including file documentation, bond acquisition and follow-up with fiduciaries on late financial reports.

    Recommendation: To ensure that maximum efforts are made to safeguard beneficiary assets, the Secretary of Veterans Affairs should ensure that policies regarding file documentation, follow-up with fiduciaries for late financial reports, and bond acquisition are understood and carried out by staff. This might be accomplished by increasing standardized training for staff, clarifying certain policies, and improving management review and oversight.

    Agency Affected: Department of Veterans Affairs

  4. Status: Closed - Implemented

    Comments: In November 2010, VBA stated that it has conducted a full analysis of the Western Fiduciary Hub pilot project, including lessons learned.

    Recommendation: To ensure that maximum efforts are made to safeguard beneficiary assets, the Secretary of Veterans Affairs should move forward with developing a plan to systematically evaluate the extent to which the hub pilot project is addressing identified program weaknesses. This could include documenting lessons learned during implementation.

    Agency Affected: Department of Veterans Affairs


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