Federal Reports

We identified gaps in Ginnie Mae’s guidance and process for troubled issuers. Ginnie Mae made progress in developing an issuer default governance framework, but has not (1) defined its authorities for marketing troubled portfolios; (2) formalized guidance for how to identify potential buyers before extinguishment; (3) established expectations for determining portfolio value, price before sale, and evaluation against other options or (4) included a step to evaluate prospective purchasers’ ability to absorb an extinguished portfolio. Additionally, we found Ginnie Mae had implemented our previous recommendation to develop and implement controls to determine the total impact of a large- or multiple-issuer default, the maximum-size default Ginnie Mae could adequately execute, and individual issuers’ ability to adapt to changing market conditions, but there was a gap related to the semiannual capacity reports submitted by master subservicers (MSS).

We verified the OSMRE implemented 9 of the 11 recommendations we made in a 2017 evaluation report.

To modernize its financial and acquisition management systems, VA established the Financial Management Business Transformation (FMBT) program to replace legacy systems with a new Integrated Financial and Acquisition Management System (iFAMS). This implementation will occur in a series of 18 waves, starting with the National Cemetery Administration (NCA). The VA Office of Inspector General (OIG) conducted this audit as part of its oversight of this extensive modernization program because of risks associated with the continued use of the legacy financial systems and VA’s previous failed attempts to replace them. The OIG identified four system functionality issues and three procedural weaknesses from the first iFAMS deployment at NCA, which went live on November 9, 2020. The deputy assistant secretary for the FMBT Service concurred with the OIG’s five recommendations: (1) implement controls to mitigate the risk that data are unreliable and inconsistently recorded between the legacy system and iFAMS when staff deobligate funds for converted contracts; (2) establish and implement a methodology to prioritize user feedback in the risk management process; (3) use the risk register to document and assess the risks associated with the manual deobligation process; (4) ensure that converted contracts are included in integrated system testing and user acceptance testing; and (5) implement a process to formally acknowledge whether requests related to high-priority business intelligence reports have been accepted as requirements. Improving risk management, system testing, and communication could help the FMBT Service prevent issues from affecting a significantly greater number of staff at VA’s larger administrations and allow the FMBT Service to achieve the overall program goals of promoting operational efficiency, strengthening compliance, strengthening automated controls, mitigating long-standing audit deficiencies, and improving data reliability and reporting.