Audit of VA’s Consolidated Financial Statements for Fiscal Year 2010

We contracted with the independent public accounting firm, Clifton Gunderson LLP, to audit VA’s consolidated financial statements as of September 30, 2010, and for the year then ended. This audit is an annual requirement of the Chief Financial Officers Act of 1990. The results of Clifton Gunderson LLP’s audit are presented in the attached reports. Clifton Gunderson LLP provided an unqualified opinion on VA’s fiscal year 2010 consolidated financial statements. They also identified one material weakness, information technology security controls, which is a repeat condition. The Department has taken corrective actions sufficient to eliminate one material weakness previously cited last year and reduce two others to significant deficiencies in this year’s internal control report. Clifton Gunderson LLP reported that VA is not in substantial compliance with the Federal Financial Management Improvement Act (FFMIA) of 1996 because VA did not substantially comply with Federal financial management systems requirements. They also noted instances of non-compliance with the Debt Collection Improvement Act of 1996. Clifton Gunderson LLP is responsible for the attached auditor’s reports dated November 10, 2010, and the conclusions expressed in the reports. We do not express opinions on VA’s financial statements, internal control, or compliance with FFMIA. We also do not express conclusions on VA’s compliance with laws and regulations. The independent auditors will follow up on these internal control findings and evaluate the adequacy of corrective actions taken during the fiscal year 2011 audit of VA’s consolidated financial statements.