Summary

GAO reviewed the Veterans Administration's (VA) second-year implementation of the Federal Managers' Financial Integrity Act of 1982 (FMFIA) to assess its progress in evaluating the adequacy of agency internal controls and accounting systems.

GAO found that: (1) VA made progress in establishing a framework to evaluate and report on the status of its internal controls, but VA needs to improve its assessments and reviews of internal controls and to increase the testing of its accounting operations; (2) vulnerability assessments generally lacked adequate documentation; (3) preliminary reviews did not present adequate plans for implementing review recommendations; and (4) most reviews did not complete all prescribed review tasks or include an adequate examination of internal controls. GAO also found that: (1) VA did not require internal control evaluations of its regional offices; (2) field facilities did not review some crucial operations; (3) VA made little progress in considering automatic data processing (ADP) controls as part of its internal control assessments and reviews; (4) VA needs to broaden the scope of its evaluations and improve the quality of its tests; and (5) VA should not report that it conforms with the Comptroller General's requirements until its accounting systems have been adequately evaluated in operation.