Report Summary

Title: Review of Alleged Improper Advances of VHA Appropriated Funds to the U.S. Government Printing Office
Report Number: 14-00730-206 Download
Report
Issue Date: 6/17/2015
City/State:
VA Office: Veterans Health Administration (VHA)
Office of Acquisitions, Logistics, and Construction (OALC)
Office of Human Resources and Administration
Report Author: Office of Audits and Evaluations
Report Type: Audit
Release Type: Unrestricted
Summary:

The Office of Inspector General (OIG) received a hotline allegation that the Department of Veterans Affairs (VA) had “parked” approximately $43 million in annual appropriations at the U.S. Government Printing Office (GPO) and that the funds remained unexpended with little activity since the transfer of funds in 2011. “Parking” refers to the transfer of funds to a revolving fund through an intra-agency agreement in an attempt to keep the funds available for new work after the period of availability for the funds expires. We initiated this review to determine if VA officials appropriately managed these funds. We substantiated that VA parked $43 million dollars at GPO for an excessively long period. VA had no contract or agreement with GPO on the specific need for these funds. We found that approximately $35.2 million of approximately $43.1 million remained at the GPO unused as of July 2014, in a deposit account for enrollment communications. We identified approximately $5.6 million had been paid to the VA Supply Fund as service fees, despite there being no services rendered. In addition, VA only expended approximately $2.3 million over the 34 month period from October 2011 through July 2014, which was not used consistently with the intended need. We determined Veterans Health Administration (VHA) Chief Business Office (CBO) officials, in conjunction with VA Supply Fund officials, accepted almost $43.1 million of fiscal year (FY) 2011 funds from within VHA without a bona fide need. CBO transferred approximately $43.1 million in FY 2011 appropriations to the Supply Fund to print and distribute tailored handbooks, but the funds were deposited in an unrelated account designated for enrollment communications at GPO. As such, CBO officials were able to use the funds in the GPO account at their discretion with no designated purpose. Supply Fund management acknowledged that they should not have accepted the funds without a bona fide need or charged fees on funds transferred through these accounts. We found that Supply Fund staff did not provide adequate fiscal oversight of the transferred funds. Supply Fund staff did not regularly review open obligations as required by VA policy or reconcile VA’s financial accounting records with source documents related to the transferred funds. Thus, this funding went essentially unmanaged for 3 fiscal years. Then in April 2014, Supply Fund management inappropriately changed the funds’ obligation end dates without ensuring that the obligations were still valid. Further, we found a lack of transparency in VA’s financial accounting records with respect to the change of obligation end dates. We concluded a breakdown of VA fiscal controls and a lack of oversight led to the parking of funds for an excessively long period and the failure to detect and properly use and manage these funds. VA financial and Supply Fund policies contain provisions on the management, use, and oversight of appropriated funds. However, the policies were not followed and there was a lack of supervisory review to ensure the policies were implemented properly. We recommended VA consult with the VA Office of General Counsel to remedy the inappropriate expenditure of approximately $2.3 million of expired funds, take action to deobligate any outstanding balances as deemed appropriate, and evaluate the need for Supply Fund to refund the service fees valued at $5.6 million. We also recommended VA implement corrective actions to ensure fiscal controls are enforced to avoid future misuse of appropriated funds. We recommended VA review fiscal controls in the Financial Management System to ensure data integrity and an audit trail that reflects the occurrence and source of any accounting record changes. Finally, we recommended VA confer with the Office of Human Resources and the VA Office of General Counsel to determine the appropriate administrative action to take, if any, against management for directing the misuse of approximately $43.1 million of FY 2011 appropriated funds.

The Principal Executive Director for the Office of Acquisition, Logistics, and Construction agreed with our findings and recommendations and provided plans to implement acceptable corrective actions. The Deputy Assistant Secretary for Finance also concurred and will put processes in place to track the history of new obligations. The Deputy Under Secretary for Health for Operations and Management concurred and will confer with the Office of General Counsel to determine the appropriate administrative action to take.