Audit of VA’s Financial Statements for FYs 2018 and 2017

The VA Office of Inspector General (OIG) contracted with the independent public accounting firm, CliftonLarsonAllen LLP (CLA), to audit VA’s financial statements as of September 30, 2018 and 2017, and for the fiscal years (FY) then ended. This audit is an annual requirement of the Chief Financial Officers Act. CLA provided an unmodified opinion on VA’s financial statements for FYs 2018 and 2017. With respect to internal control, CLA identified five material weaknesses: (1) community care obligations, reconciliations, and accrued expenses; (2) financial systems and reporting; (3) information technology security controls; (4) compensation, pension, burial, and education actuarial estimates; and (5) entity level controls including chief financial officer organizational structure. CLA further identified two significant deficiencies: (1) loan guarantee liability; and (2) procurement, undelivered orders, accrued expenses, and reconciliations. CLA also reported VA’s substantial noncompliance with federal financial management systems requirements and the United States Standard General Ledger at the transaction level under the Federal Financial Management Improvement Act. CLA noted improvements were needed to fully comply with the intent of the Federal Managers’ Financial Integrity Act. They cited instances of noncompliance with Title 38 United States Code §5315 pertaining to the charging of interest and administrative costs and Title 38 United States Code §3733 pertaining to the vendee loan program. They noted VA reported one violation of the Antideficiency Act and was in the process of reporting a second one. VA identified five other violations carried forward from prior years that are under further discussion. They also noted noncompliance with the Improper Payments Elimination and Recovery Act for FY 2017, as reported by the OIG. CLA made recommendations for addressing each of the material weaknesses and significant deficiencies. CLA is responsible for its audit report dated November 26, 2018, and the conclusions expressed in it.