Federal Reports

The VA Office of Inspector General (OIG) conducted this inspection to assess the stewardship and oversight of funds by the VA New York Harbor Healthcare System. This inspection assessed financial activities and administrative processes to determine whether appropriate controls and oversight were in place. These included open obligations, purchase card use, inventory and supply management, and pharmacy operations.The inspection team could not verify that anyone reviewed 10 of 19 selected inactive obligations, and from a separate sample of 10 open obligations more than three months, four had amount discrepancies totaling more than $15,000, which the fiscal staff corrected after the team’s visit.When assessing purchase card use, the team determined the healthcare system had deficiencies in supporting documentation for sampled transactions. Cardholders did not always obtain prior approval for purchases and perform required reconciliations. The team also estimated about $44.1 million in questioned costs due to noncompliance errors in approximately 90 percent of 46,900 transactions.The team found that inventory management could improve by updating monthly usage data so the prime vendor can keep necessary items in stock and by consistently using contract waivers when purchasing items from a nonprime vendor.The team found that pharmacy efficiency could improve by narrowing the gap between observed and expected costs, bringing turnover rates closer to the recommended level, using the inventory process required by VA, and meeting reconciliation reporting requirements.The OIG made 14 recommendations to the healthcare system director, such as implementing plans to ensure staff review open obligations and pharmacy reconciliations, cardholders receive prior approval for and properly document purchases, inventory staff update usage and use the prime vendor, and the pharmacy increases inventory turnover and audits inventory.

The OIG identified 10 industry best practices for managing major investments organized across three interconnected categories: people, process, and technology. In terms of the role of people, best practices include using internal cross-functional teams and engaging with both internal and external stakeholders. Best practices for improving processes include analyzing market trends and competitor strategies, using data to adapt to changes in volume and capacity, and real-time monitoring of investment performance. Finally, best practices that leverage technology include implementing innovative network designs, standardizing facility designs, adopting flexible technology, and promoting environmentally sustainable technology.

The audit objectives were to determine whether program funds were managed in accordance with the ARC and Federal grant requirements.