Compensation and Pension Proceeds Were Generally Handled Accurately but Some Were Delayed

The VA Office of Inspector General (OIG) audited the Veterans Benefits Administration’s (VBA) handling of “proceeds” to determine whether they are completed accurately and timely. A proceed is an actionable item in the veteran’s or beneficiary’s record that is created when benefits payments are returned to VA instead of being paid, including reasons such as a change of bank account number, a change of address, or a veteran’s death. On December 18, 2019, VBA had more than 7,500 open proceeds totaling about $13 million. At that time, veterans service centers at each regional office handled compensation proceeds. Some veterans and beneficiaries had to wait months to have their funds returned to them, potentially causing financial hardship. The OIG determined that VBA generally handled proceeds accurately but did not always close them within 90 days, a benchmark the OIG used for this audit. The team reviewed 150 closed sample proceeds and determined that 96 percent were handled correctly. However, VBA took more than 90 days to close some proceeds, which totaled an estimated $2.1 million. Service and pension center staff do not have timeliness measures for proceeds incorporated in their performance standards. Setting a timeliness standard would help encourage the closing of these proceeds. The OIG also found that ineffective monitoring contributed to delays in handling proceeds. The Debt Management Center had only limited internal monitoring but instituted new practices for monitoring proceeds in February 2020, shortly after this audit began. VA concurred with the OIG’s recommendations that VBA set a standard time for closing proceeds and develop oversight and monitoring procedures to ensure proceeds are closed promptly.