Financial Management Practices Can Be Improved to Promote the Efficient Use of Financial Resources

The VA Office of Inspector General (OIG) reviewed whether the Veterans Health Administration (VHA) established adequate financial management practices at the VA Southeast Network and the VA Great Lakes Health Care System to promote the efficient use of their financial resources. The audit team found that VHA’s financial management practices did not include adequate controls, such as financial performance indicators, to assess whether its regional networks and medical centers used funds in a cost-effective manner. The use of financial performance indicators would allow VHA and its regional networks to identify inefficiencies that could indicate wasteful spending. VHA-wide indicators could also highlight trends and provide insights that help VHA develop best practices to enhance financial efficiency in its operations. VHA lacked an effective financial management structure to promote adequate controls. Under VHA’s current reporting structure, regional networks do not have uniform financial management functions and do not conduct oversight that promotes financial efficiency. Rather, regional oversight focuses on achieving reliable financial reporting, allocating financial resources, addressing budget excesses and shortfalls, and monitoring planned versus actual obligations of appropriated funds. The OIG recommended that VHA (1) establish key performance indicators that align with medical center operations and can be used to assess the efficient use of operating funds, (2) specify the office responsible for establishing financial controls that address the efficient use of funds at regional networks and medical centers, and (3) require VHA to establish and publish organizational charts that identify the appropriate financial management reporting lines of authority and to develop familiarization training on the reporting lines of authority at the VISN and medical center levels, as appropriate.