Financial Efficiency Inspection of the VA North Texas Health Care System

Report Information

Issue Date
Closure Date
Report Number
23-02181-98
VA Office
Veterans Health Administration (VHA)
Report Author
Office of Audits and Evaluations
Report Type
Financial Inspection
Report Topic
Financial Management
Major Management Challenges
Stewardship of Taxpayer Dollars
Recommendations
9
Questioned Costs
$24,170,500
Better Use of Funds
$12,200,000
Congressionally Mandated
No

Summary

Summary

The OIG conducted this inspection from June 2023 to January 2024 to assess the stewardship and oversight of funds by the VA North Texas Health Care System. This inspection assessed the following financial activities and administrative processes to determine whether appropriate controls and oversight were in place: managerial cost accounting information, open obligations oversight, purchase card use, and inventory and supply chain management.

Though the healthcare system used managerial cost accounting information to compare budgeted amounts to actual results as VA policy requires, that information was not used to make effective economic choices.

Further, the OIG found the healthcare system did not always perform monthly reviews and reconciliations of open obligations to release unneeded funds. As a result, an estimated $14 million in open obligations were invalid, of which $12.2 million could have been put to better use. The healthcare system also was using funds from future obligations to pay for current-year services, which may have violated law and regulations.

Purchase card transactions at the healthcare system were not always processed as required. The team sampled 66 transactions totaling about $292,000 from May 1, 2022, through March 31, 2023, and found 20 did not comply. The OIG also found 12 sampled transactions where healthcare system officials could have considered using a contract.

Finally, the healthcare system could benefit from improving the efficiency of inventory oversight by ensuring inventory values are recorded accurately. The OIG also found the healthcare system did not conduct thorough supply chain management oversight or establish and follow inventory procedures.

The OIG made eight recommendations to the healthcare system director and one to the Veterans Integrated Service Network 17 director. The recommendations address issues that, if left unattended, may eventually interfere with financial efficiency practices and the stewardship of VA resources.

Open Recommendation Image, SquareOpenClosed and Implemented Recommendation Image, CheckmarkClosed-ImplementedNot Implemented Recommendation Image, X character'Closed-Not Implemented
No. 1
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 1/27/2025

Establish a plan to use VA’s cost accounting system information to identify alternative ways to reduce costs, enhance efficiency, and inform business decisions as identified by VA financial policy.

No. 2
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 12/2/2024

Ensure healthcare system staff responsible for labor cost and workload mapping are responding in a timely manner to the results of managerial cost accounting audits and correcting all identified issues.

No. 3
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 1/27/2025

Consider a plan to align VA North Texas Health Care System financial management practices with federal financial accounting standard practices. This could include using cost information for performance measurement, budgeting, and cost control, and making economic choices.

No. 4
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 12/2/2024

Ensure that healthcare system staff are made aware of policy requirements and the responsible finance office conducts monthly reviews and reconciliations on all open obligations for financial validity and take appropriate actions as required by VA Financial Policy, vol. 2, chap. 5, “Obligations” (2020), updated May 2023.

No. 5
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 2/11/2025

Consult with Office of General Counsel and Office of Acquisitions, Logistics and Construction to determine if any further actions are necessary, including contract modifications, to remedy and prevent future purpose statute and bona fide needs rule violations.

No. 6
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 12/2/2024

Establish controls to ensure cardholders comply with record retention requirements, confirm approving officials and cardholders review purchases for VA policy compliance, and ensure contracting is used when it is in the best interest of the government.

No. 7
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 12/2/2024

Require cardholders to submit a request for ratification for any unauthorized commitments identified.

No. 8
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 12/2/2024

Develop and implement a plan to ensure data accuracy and reliability in the Generic Inventory Package in accordance with Veterans Health Administration policy.

No. 9
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 1/27/2025

Continue to develop and implement processes to ensure all necessary reports are monitored routinely and appropriate steps are taken to ensure all supply chain performance measures are maintained in compliance with policy.

Total Monetary Impact of All Recommendations
Open: $ 0.00
Closed: $ 36,370,500.00