VHA Needs to Establish Internal Controls for Developing Its Ambulatory Care Budget Estimate

Ambulatory care, which refers to medical services performed in outpatient settings, is the basis by which most care is delivered within the Veterans Health Administration (VHA) healthcare system. Because over half of VHA’s medical care budget is for ambulatory care (about $65.1 billion for FY 2023), the VA Office of Inspector General (OIG) conducted this audit to determine whether VHA has adequate controls over its budget formulation process to ensure its ambulatory care budget estimate is reliable. The OIG found that VHA could strengthen internal controls over its budget formulation process to provide reasonable assurance that the ambulatory care budget estimate is reliable. VHA lacks documented procedures, including assigned roles and responsibilities, for developing the ambulatory care budget estimate. VHA also did not establish a data governance structure with clearly defined authoritative data sources and designated data stewards. Documented procedures and a data governance structure could help maintain organizational knowledge of the process and provide reasonable assurance that VHA’s internal controls over operations, reporting, and compliance are effective. The OIG made four recommendations to strengthen internal controls over the budget formulation process.