Audit of VA’s Financial Statements for Fiscal Years 2014 and 2013

We contracted with the independent public accounting firm, CliftonLarsonAllen LLP (the Contractor), to audit VA’s financial statements. This audit is an annual requirement of the Chief Financial Officers Act of 1990. The Contractor provided an unqualified opinion on VA’s fiscal year 2014 and 2013 financial statements. With respect to internal control, the Contractor identified one material weakness, information technology security controls, which is a repeat condition. They also identified two significant deficiencies, financial reporting and accrued operating expenses, which are new conditions for this year.This report has been incorporated within VA’s Performance and Accountability Report section three, made publically available on November 17, 2014. VA restated amounts previously reported for Cumulative Results of Operation and Unexpended Appropriations as of September 30, 2013, due to the correction of a material error. Those amounts were restated in the FY 2013 financial statements as presented in the FY 2014 comparative financial statements. The correction had no effect on Total Net Position. The Contractor replaced its FY 2013 report with its FY 2014 report on the restated financial statements. The Contractor reported that VA did not substantially comply with the Federal financial management systems requirements of the Federal Financial Management Improvement Act (FFMIA) of 1996. They also cited instances of non-compliance with section 5315, title 38 and section 3715, title 31, of the United States Code, pertaining to the charging of interest and recovery of administrative costs. The Contractor noted that VA is investigating two possible violations of the Antideficiency Act and is in the process of reporting two other violations. Three of these instances involve the combination of minor construction projects above the $10 million ceiling, beyond which Congressional approval for use of funds is required. The Contractor also referenced an Office of Inspector General report issued in FY 2014 that cited less than full compliance by VA in FY 2013 with the Improper Payments Elimination and Recovery Act of 2010.