Summary

A review of the financial controls exercised by the Veterans Administration (VA) over the Predischarge Education Program (PREP) showed that nine schools and two consultants accumulated an estimated $9.9 million in surplus funds.

The surpluses, which represent excess VA payments over costs incurred after October 1972 when legislation established reasonable costs as the basis for VA payments to PREP projects, occurred because VA did not have sufficient financial controls to assure that such payments approximated reasonable costs. The VA should recover the surplus funds; any unused inventories may be of use to the Department of Defense (DOD) or disposed of according to General Services Administration procedures.