Financial Controls Exercised by the Veterans Administration over the Predischarge Education Program

HRD-78-20: Published: Dec 8, 1977. Publicly Released: Dec 8, 1977.

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A review of the financial controls exercised by the Veterans Administration (VA) over the Predischarge Education Program (PREP) showed that nine schools and two consultants accumulated an estimated $9.9 million in surplus funds.

The surpluses, which represent excess VA payments over costs incurred after October 1972 when legislation established reasonable costs as the basis for VA payments to PREP projects, occurred because VA did not have sufficient financial controls to assure that such payments approximated reasonable costs. The VA should recover the surplus funds; any unused inventories may be of use to the Department of Defense (DOD) or disposed of according to General Services Administration procedures.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: VA should: conduct or provide audits of the nine schools and two consultants GAO visited to establish the amount of recoverable surplus; conduct or provide audits, as appropriate, at the remaining 200 schools to identify whether additional recoverable surpluses exist; take action to recover those surplus funds that have been identified; and determine if the unused PREP inventories at Olympic College can be used by DOD for its military personnel still in training. If PREP resumes as planned in 1979, the VA should issue regulations which clearly define the types and amounts of PREP costs for which reimbursement will be made and make appropriate audits of schools' and consultants' PREP financial records to determine if there is compliance with appropriate regulations. Before VA resumes operation of PREP, it should determine, in conjunction with DOD, the need to participate in this type of program. If DOD is providing this type of training, the VA should develop an appropriate legislative proposal to remove PREP from VA statutes and eliminate future VA activities in the program.

    Agency Affected:


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