Audit of VA's Financial Statements for Fiscal Years 2016 and 2015

We contracted with an independent public accounting firm to audit VA’s FY 2016 financial statements as required by the Chief Financial Officers Act of 1990. VA received an unmodified opinion meaning that its financial statements were materially accurate. The contractor identified six material weaknesses: IT security controls; education benefits accrued liability; control environment surrounding the compensation, pension, and burial actuarial estimates; community care obligations, reconciliations, and accrued expenses; financial reporting; and CFO organizational structure for VA and VHA. The contractor further identified two significant deficiencies: procurement, undelivered orders, accrued expenses, and reconciliations; and loan guaranty liability estimate. It also reported VA’s substantial noncompliance with applicable Federal financial management systems requirements and the United States Standard General Ledger at the transaction level under the Federal Financial Management Improvement Act (FFMIA). It noted improvements were needed in complying with the Federal Managers’ Financial Integrity Act. The contractor cited instances of noncompliance with section 5315, title 38, United States Code, pertaining to the charging of interest and administrative costs; noncompliance with section 3733, title 38, United States Code, pertaining to the vendee loan program and six violations of the Antideficiency Act identified by VA.