Department Of Veterans Affairs: Improvements Needed in Corrective Action Plans to Remediate Financial Reporting Material Weaknesses

In December 2009, VA issued a revised policies and procedures manual relating to their internal control processes and the stakeholders involved in the processes. This manual includes (among other items) processes on how to initiate, record, track, and approve corrective action plans (CAPs). The manual also describes the steps for monitoring, verifying, and validating the corrective action plans. The manual also prescribes a standard template for all CAPs which includes descriptions of actions to be taken, key dates for expected completion, interim steps, and final approval, and total cost of the corrective action. VA's manual and template are applicable for all financial reporting deficiencies, including those identified through VA's assessment of its internal control (as required by OMB Circular A-123), financial statement audit findings, and any other findings requiring a CAP.

In 2009, VA established the Senior Assessment Team (SAT), chaired by the Assistant Secretary for Management, to oversee remediation of control weaknesses. In addition, VA issued a revised policies and procedures manual relating to its internal control processes and the stakeholders involved in the processes. This manual includes (among other items) processes on how to initiate, record, track, and approve corrective action plans (CAP). The manual also describes the steps for monitoring, verifying, and validating the corrective action plans. Included in the manual is a matrix of all the steps related to the CAP process and which individual or groups are responsible or involved in each step. The manual also describes the roles and responsibilities of each stakeholder in the process, including the role of the SAT, the team of senior VA officials who have the ultimate decision-making authority on the timelines of CAPs and whether each CAP has been fully implemented. VA's Office of Financial Process Improvement and Audit Readiness (FPIAR) is in charge of VA's CAP process. The FPIAR works with the process owner of the finding to develop a strategy to remediate the weakness and the FPIAR is in charge of keeping track of all CAPs to ensure that the CAPs are proceeding according to schedule. The FPIAR will then review the documentation to verify evidence of completion of the CAP. The FPIAR also reports to the SAT on a monthly basis on the status of CAPs, including any CAPs that might require more time or resources to complete. The FPIAR will then work with the process owner of the CAP to develop strategies to mitigate missed timelines, per the SAT's instructions. According to VA, the FPIAR office is staffed to allow for alignment of resources with the workload which and provides sufficient resources to meet its current needs.

In August 2009, VA issued new policies and procedures regarding the timely capitalization of property, plant, and equipment (PP&E) which identified specific actions and time frames. The procedures provide, among other things, that property should be capitalized no later than the end of the fiscal month following the month that the property is put into use or accepted by VA. VA implemented their new PP&E policies, and in fiscal years 2010 and 2011. Further, VAs's external financial auditor no longer reported timely capitalization of PP&E as a significant deficiency.