Summary

GAO reviewed the Veterans Administration's (VA): (1) consolidated financial statements for the fiscal years ended September 30, 1987 and 1986; (2) internal accounting controls; and (3) compliance with laws and regulations.

GAO found that, except for two qualifications, the consolidated financial statements presented fairly: (1) the financial position of VA on September 30, 1987 and 1986; and (2) the results of VA operations, the changes in its financial position, and the budget reconciliation for fiscal year (FY) 1987. GAO qualified its opinion due to: (1) its inability to perform necessary auditing procedures to substantiate the asset and related expense accounts, due to unavailable documentation and inaccurate account balances; and (2) a $3-billion overstatement in life insurance reserves due to VA use of statutory assumptions, rather than more realistic assumptions. GAO also found: (1) that the VA manual property accounting system was inefficient; and (2) automatic data processing (ADP) internal control weaknesses at all three VA data processing centers. In addition, GAO found that VA violated laws and regulations by failing to charge: (1) interest and administrative costs on certain debts that compensation and pension programs generated; or (2) the correct interest rate on its loan guaranty accounts receivable. GAO found that: (1) VA stated that it could not charge the correct rate until 1991 when it would complete necessary computer software reprogramming; and (2) the VA cash vendor invoice payment procedures did not fully comply with regulations.