Federal Reports

This report presents the results of our verification inspection of a June 2014 Office of Inspector General (OIG) audit of SBA’s 7(a) loan guaranty approval process, performance audit report 14-13. The review determined significant opportunities existed to improve the management of the 7(a) loan guaranty approval process to mitigate its risk of loss and protect the integrity of the program. Specifically, the audit found that processing center management emphasized quantity over quality for 7(a) loan reviews, and processing center loan specialists were not provided adequate guidance and training to conduct their 7(a) loan review activities.A verification inspection is a short review that focuses on closed recommendations from prior OIG reports. This inspection focuses on recommendation 1, which recommended that SBA revise management reports to measure quality against established targets, ensure production credit is given for all loan review actions, and promote compliance with SBA requirements.We found SBA effectively implemented recommendation 1 by revising its management reports to include key factors for measuring the quality and complexity of loan reviews to promote compliance with SBA requirements.

The Veterans Benefits Administration (VBA) provides disability compensation benefits to eligible veterans and may require medical examinations to determine the severity of their conditions. Some conditions may change or improve over time, which may require veterans to be reexamined. In a July 2018 report, the VA Office of Inspector General (OIG) found claims processors did not consistently follow VBA policy that requires reexaminations of veterans be requested only when necessary. VBA has taken steps to reduce the number of unwarranted reexaminations with the creation of “batch jobs” intended to automatically cancel reexaminations meeting certain parameters. However, the OIG found that VBA carried out two batch cancellation jobs that mistakenly included reexaminations that should not have been canceled because they were required by law. This resulted in required future reexaminations being canceled, potentially causing veterans to receive monthly compensation benefits that are not consistent with their current levels of disability—higher or lower. After the OIG raised concerns, VBA suspended a scheduled batch cancellation job and reestablished workload controls to determine if reexaminations were necessary.The OIG recognizes VBA’s efforts to be responsive to prior OIG recommendations and to use automation, when possible, to minimize unnecessary medical reexamination requests. Since VBA took responsive action, the OIG did not further review the batch cancellation jobs. The OIG provided this memorandum to formally convey the information necessary for VBA leaders to further research the matter, assess the magnitude of the issue, and determine if additional actions are warranted. The OIG requested that VBA inform the OIG what action is taken to address the issues identified in this memorandum regarding batch cancellations involving medical reexaminations and appreciates VA’s response as to planned improvements.