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Office of Budget

Fiscal Year 2004 Performance and Accountability Report
Published November 15, 2004

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Management Controls, Systems, and Compliance with Laws and Regulations

The auditors' report on internal controls, prepared at the completion of VA's FY 2004 financial statement audit, includes two repeat material weaknesses: "Information Technology (IT) Security Controls" and "Integrated Financial Management System." In the IT finding, the auditors reported that VA's program and financial data continue to be at risk due to serious weaknesses related to access control, segregation of duties, and service continuity. In the second finding, the auditors reported continuing difficulties related to the preparation, processing, and analysis of financial information to support the efficient and effective preparation of VA's consolidated financial statements.

The Department has made progress in correcting the IT Security Controls material weakness. Resources have been maximized to make improvement in the overall security posture. Although work continued during FY 2004 on the Integrated Financial Management System material weakness, final resolution of this weakness is a multi-year effort. VA is proceeding with a plan to address this material weakness.

The auditors' report on compliance with laws and regulations, also prepared as a result of the FY 2004 financial statement audit, discusses Departmental noncompliance with the Federal Financial Management Improvement Act requirements concerning Lack of Integrated Financial Management System and Information Technology (IT) Security Controls. Except for these instances of non-compliance, the report concludes that for the items tested, VA complied with those laws and regulations materially affecting the financial statements.