Audit of Procurements Using Prior-Year Funds To Maintain VA Healthcare Facilities

The Veterans Health Administration lacks effective controls over the use of prior-year funds. The audit identified unapproved and improper use of expired funds in at least 80 percent of Veterans Integrated Service Network contracting activities nationwide amounting to a total of $16.4 million during fiscal year 2007. This widespread improper use of expired funds occurred primarily because of a lack of policy clarity and other weaknesses in internal controls, such as inadequate monitoring of obligations and verification of obligation documents. This project followed-up on the May 2007 audit that substantiated similar misuse at the VA Boston Healthcare System, as discussed in a Congressional oversight hearing in June 2007. The audit report made seven recommendations to improve controls on expired funds. The Under Secretary for Health concurred with the audit recommendations and monetary benefits. He agreed to increase central control on obligations using expired funds and to provide revised guidance and training on the use of such funds and to develop procedures to verify obligation documents and adjustments to correct the funding issues we identified. He also agreed to develop controls over other activities using expired funds and to take action against contracting officers who misused expired funds. VHA’s target date for completing the last planned action is April 30, 2009.