Federal Reports

The Veterans Benefits Administration (VBA) compensation program provides monthly tax-free, service-connected benefits to veterans as compensation for the effects of disabilities caused by diseases or injuries incurred or aggravated during active military service. Special monthly compensation (SMC) recognizes the severity of certain disabilities or combinations of disabilities by paying additional benefits, such as housebound entitlement. In a September 2016 report, the VA Office of Inspector General (OIG) found that VBA incorrectly processed about 27 percent of high-risk cases for veterans receiving compensation at the housebound rate.The OIG conducted this review to determine whether VBA effectively implemented the recommendations from the 2016 OIG report and found that VBA has not improved the accuracy of processing high-risk SMC housebound cases that were active as of September 24, 2020. In fact, VBA continues to have an estimated 27 percent error rate, resulting in about $165 million in improper payments. This occurred, in part, because VBA leaders did not establish adequate governance to effectively implement the OIG’s September 2016 recommendations and failed to make system-level changes to improve the accuracy of the claims process. Without improvements in oversight, accountability, monitoring, and the information system, VBA risks continuing to make improper payments, potentially wasting taxpayer dollars and subjecting veterans to undue financial hardship if overpayments must be repaid.The OIG made six recommendations. The acting under secretary for benefits should review all active high-risk SMC housebound cases and conduct ongoing periodic reviews, update and monitor SMC housebound training, ensure system enhancements are created and cannot be bypassed, and correct all processing errors identified by the review team and report the results to the OIG.

The OIG examined whether VA has an effective governance structure for ensuring deceased veterans whose remains are unclaimed are interred with dignity in a final resting place, such as burial in a national cemetery. The review was initiated in response to reports that deceased veterans’ unclaimed remains were being kept in a funeral home’s storage for decades, and may be indicative of a nationwide problem. VA is required by law to ensure that deceased veterans without next of kin receive these burials. Yet, the responsibility for providing related benefits and services is dispersed among VA’s three administrations.The review team found ineffective governance in three key areas:• VA missed opportunities to collaborate with entities that tracked unclaimed remains to help identify deceased veterans or engage funeral homes and others to locate them. The review team identified more than 400 probable veterans with records in a Department of Justice database of unclaimed deceased persons. The team also noted 1,700 cases in which VA confirmed that veterans in an external database were eligible for burials, but could not demonstrate they had been interred.• The department could not identify potential fraud or duplicate payments for burial benefits and services because payments cannot be reconciled across administrations that can reimburse for similar services (for example, two administrations could reimburse the costs of transportation for interment at a national cemetery).• Oversight was hampered by the lack of a single VA office or executive responsible for coordinating approximately 27 offices that provide some benefits and services for these veterans.The result is the lack of an accurate count of veterans whose remains are unclaimed and the risk that those left unidentified could be placed in mass graves or stored for years unnoticed.VA concurred with the OIG’s 11 recommendations to address the issues identified.

The NCUA Office of Inspector General contracted with Moss Adams LLP to conduct a Material Loss Review of Indianapolis’ Newspaper Federal Credit Union, a federally insured credit union. We reviewed the Credit Union to: (1) determine the cause(s) of the Credit Union’s failure and the resulting estimated $2.29 million loss to the Share Insurance Fund, (2) assess the NCUA’s supervision of the Credit Union, including implementation of the prompt corrective action requirements of Section 216 of the Federal Credit Union Act, and (3) provide appropriate observations and/or recommendations to prevent future losses.

Management Letter: Fiscal Year 2021 Financial Statement Audit