Federal Reports

During the reporting period, the Office of Audits completed and published the Fiscal Year (FY) 2023 and FY 2024 Federal Information Security Modernization Act (FISMA) audits and the Payment Integrity Information Act audit; the latter two were completed by independent public accountants (IPAs) overseen by the Office of Audits. Additionally, the audit team began work on the following audits: FY 2024 CFTC Financial Statements; FY 2024 CFTC Customer Protection Fund Financial Statements; CFTC’s Compliance with the Government Charge Card Act; and CFTC’s Enterprise Risk Management Program. The audit team is also working with the Council of Inspectors General on Financial Oversight (CIGFO) in its review of the effectiveness and internal operations of the Financial Stability Oversight Council (FSOC) designation of nonbank financial companies. In addition, we established the Office Evaluations and initiated an evaluation into the CFTC’s non-disclosure policies, forms, and agreements to assess compliance with the Whistleblower Protection Enhancement Act of 2012.

Dependency and Indemnity Compensation is a monthly benefit paid to eligible survivors of service members who died in the line of duty or as a result of a service related injury or illness. Under the PACT Act, survivors with previously denied claims may be newly eligible for Dependency and Indemnity Compensation related to toxic exposure. These survivors may reapply for benefits and might receive retroactive payments dating back to the original date of entitlement. The OIG conducted this review to assess the accuracy of VBA’s processing of Dependency and Indemnity Compensation claims reopened under the PACT Act.

The OIG team reviewed two statistical samples of claims that were reopened under the PACT Act after having previously been denied. One set were claims that, after being reprocessed, were again denied; the other set were claims that were granted after being reprocessed. Both sets involved claims completed from January 1 through July 31, 2023. The OIG found that pension management center staff generally denied these claims appropriately; however, there were some inaccuracies when claims were granted. Errors stemmed from unclear guidance on how to reevaluate claims and from a lack of information system enhancements and resulted in a projected $33.1 million in underpayments to survivors. The OIG made three recommendations to correct errors and improve the claims process.

We audited WSFR grants awarded by FWS to the North Carolina Department of Environmental Quality, Division of Marine Fisheries to ensure compliance and cost allowability.

The PACT Act significantly expanded veterans’ eligibility for disabilities that VA presumes are related to exposure to toxic substances. The VA Office of Inspector General (OIG) conducted this review to determine whether Veterans Benefits Administration (VBA) staff processed PACT Act claims for presumptive disabilities in accordance with applicable laws and procedures before denying them.

This report highlights that claims processors sometimes requested unwarranted examinations, which delayed claims processing and burdened veterans, or the processors did not return examinations for clarification when there was insufficient or conflicting information. Claims processors also sometimes requested medical opinions to determine service connection for disabilities the PACT Act presumed to be connected to service. These errors resulted in unnecessary payments for examinations and medical opinions, as well as underpayments to veterans. Additional errors had the potential to affect veterans’ benefits, such as when claims processors prematurely based decisions on inadequate or inconsistent examination results before denying veterans’ claims.

The OIG team also identified errors in claims processing that, while correctly denying service connection, resulted in an estimated $1.4 million in unnecessary costs for unwarranted examinations and medical opinions in the six-month review period. Underpayments were also identified totaling about $56,700 for two veterans’ claims during the same period who were improperly denied service connection. The team also found an estimated minimum of 870 potential errors that could affect veterans’ benefits. The OIG acknowledges that VBA has taken steps to address these kinds of errors for examinations, but that work is ongoing.

VBA concurred with the OIG’s two recommendations to update the claims processing manual to clarify when examinations and medical opinions are needed and to continue to develop tools to aid claims processors in determining when they are needed and to evaluate their effectiveness.