Significant Weaknesses in Fiduciary Activities, VAOIG Report 10-01607-110

"We found VBA’s existing controls for managing retroactive and one-time payments to incompetent beneficiaries have significant weaknesses. VBA did not effectively ensure these payments valued at $10,000 or greater were effectively coordinated among VBA offices or that Fiduciary Activities completed required account management and estate protection actions. Fiduciary Activities failed to conduct at least one required account management or estate protection action for 72 (40 percent) of the 180 payments reviewed."

Full Report at: Audit of VBA's Retroactive and One-Time Payments to Incompetent Beneficiaries

Report Number 10-01607-110, 3/3/2011 | Full Report (PDF)

We conducted this audit to determine if the VBA properly managed retroactive and one-time payments of $10,000 or greater awarded to incompetent beneficiaries served by legal custodians. Veterans Benefits Administration’s (VBA) Fiduciary Program oversees VA benefits paid to beneficiaries who are incapable of managing their funds. We found VBA’s existing controls for managing retroactive and one-time payments to incompetent beneficiaries have significant weaknesses. VBA did not effectively ensure these payments valued at $10,000 or greater were effectively coordinated among VBA offices or that Fiduciary Activities completed required account management and estate protection actions. Fiduciary Activities failed to conduct at least one required account management or estate protection action for 72 (40 percent) of the 180 payments reviewed. This occurred because VBA relied on manual notification processes, lacked policies and procedures to perform required program actions, and did not ensure sufficient management oversight; and most Fiduciary Activities either did not provide any training specific to the management of retroactive and one-time payments to incompetent beneficiaries or the training was informal and/or unstructured. We recommended VBA develop an automated award notification process, establish appropriate oversight mechanisms, and ensure training associated with the management of retroactive and one-time payments to incompetent beneficiaries is developed and disseminated appropriately. In addition, we recommended VBA enhance existing policies and procedures to ensure that necessary account management steps are taken on retroactive and one-time payments to incompetent beneficiaries. The Acting Under Secretary for Benefits agreed with our findings and recommendations and plans to complete all corrective actions by September 30, 2011.