oversight

Inspectors General: Staff Resources of VA's Office of Inspector General

Published by the Government Accountability Office on 1990-04-13.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                         INSPECTORS
                         GENERAL
                         Staff Resources of
                         VA’s Office of
                         Inspector General


                                         141285




                  ----   _”   -

GAO/Ak’MI)-904;
e

                  United States
GAO               General Accounting Office
                  Washington, DC. 20548

                  Accounting and Financial
                  Management Division

                  B-233770

                  April 13,199O
              ,
                  The Honorable John Glenn
              I   Chairman, Committee on Governmental
                    Affairs
                  United States Senate

                  The Honorable Alan Cranston
                  Chairman, Committee on Veterans’ Affairs
                  United States Senate

                  The Honorable John Conyers, Jr.
                  Chairman, Committee on Government Operations
                  House of Representatives

                  The Honorable G. V. Montgomery
                  Chairman, Committee on Veterans’ Affairs
          /
          /       House of Representatives
          /
          !       The Department of Veterans Affairs Act, Public Law 100-627, estab-
          I       lished the Veterans Administration as an executive department effective
                  March 15, 1989, and redesignated it the Department of Veterans Affairs
          ,       (VA). The act also authorized 40 additional staff members for VA'S Office
                  of Inspector General (OIG) to be phased in over fiscal years 1990 and
                  1991, The conference report! accompanying the act directed GAO to
                  review the resources available to VA'S Office of Inspector General for
        ,         carrying out its statutory responsibilities. As agreed with your offices,
      I           our review evaluated the OIG’s use of its current’staff, its planned use of
     I,           the additional 40 staff members authorized by the act, and its plans to
      I           request further staff increases.

                  We found that the OIG is providing widespread coverage of VA'S opera-
                  tions through its audits and investigations of facilities, programs, and
                  functions. The 40 additional staff members authorized by the act will be
                  used to provide more in-depth coverage of VA'S operations in areas cur-
                  rently subject to OIG audit and investigation. This increase of 40 will
                  bring the authorized VA OIG staffing level to 417, which is almost the
      /
                  level it requested in budget submissions for fiscal years 1988 and 1989.
     I/           This is also the staffing level the OIG has cited as needed in its S-year
    I,

    ,
                  ‘Conference report 100-1036, dated October 3,1988, accompanied H.R. 3471, which was enacted as
                  Public Law 100-627.




                  Page1                                         GAO/AFMD-W6      VA’s Office of Impector General




                                                                                                               ,r
                                                                                                              1 rh
            B-233770




            resources plan and in hearings before the House Veterans’ Affairs
            Committee.

            The Acting Inspector General (IG) stated that he planned to request addi-
            tional staff beyond the 40 authorized by the act. Based on the results of
            a workload assessment developed in January 1989, the Acting IG submit-
            ted a budget request to VA for 80 additional staff members in fiscal year
            1991 and plans to request about an additional 80 staff members in each
            subsequent fiscal year through 1996. The workload assessment con-
            cluded that the VA OIG needed a staffing level of 809 to provide maxi-
            mum audit and investigation coverage of VA operations.

            In our view, however, the workload assessment does not adequately
            support a staffing level of 809. The OIG did not establish audit or investi-
            gative priorities for VA’S diverse facilities, programs, and functions in
            determining its staffing requirements. Guidance for establishing priori-
            ties is included in Office of Management and Budget (OMB) Circular A-73
            and OIG policies. We believe that the OIG could better identify its staffing
            requirements by establishing priorities for the facilities, programs, and
            functions identified in the assessment and by considering the impact of
            its new audit approach.

            To better identify VA OIG staffing requirements, we recommend that the
            VA Inspector General establish priorities in the OIG workload assessment
            and consider the effect of those priorities and its new audit approach on
            future staffing needs.

            In commenting on a draft of this report, the Acting IG agreed to include
            priorities in the OIG workload assessment and to consider the effect of its
            new audit approach on its staffing requirements. The Acting IG did not
            agree that the workload assessment does not adequately support a staff-
            ing level of 809.


m
B&kground   was made a statutory OIG nearly 10 months later by the Inspector Gen-
            eral Act of 1978. The OIG’S mission is to prevent, detect, and reduce
 t          fraud, waste, and abuse and to promote economy, efficiency, and effec-
 I          tiveness through audits and investigations of VA programs and opera-
            tions. The VA OIG began its operations with 156 staff members. During
            the OIG’S first year, it received a substantial staff increase, which
            brought the OIG’S total staff to 366 by the end of fiscal year 1978. Since
            that time, the OIG’S staffing levels have remained fairly constant.


            Page 2                              GAO/AFMD-!?JO4 VA’s Office of Inspector General
                        B333770




                        In fiscal year 1989, the OIG operated with an authorized staff level of
                        377 and a budget of about $21 million to provide audit and investigative
                        coverage of VA’S budget of about $30 billion and the activities of about
                        219,000 employees. While there are many other variables that can and
                        do affect the size of an OIG’S operation, we did note that in comparison
                        with other OIGS, the VA OIG ranked in the bottom third in terms of the
                        ratios of OIG employees to agency employees and OIG employees to
                        agency budgeted outlays. (See appendixes I and II for staffing, budget,
                        and coverage information on OIGS for fiscal years 1981 through 1988.)

                        The OIG requested staff increases in prior-year budgets. For fiscal years
                        1986 through 1989, the OIG requested from VA staff levels of 469,424,
                        421, and 421, respectively. While VA approved partial increases for the
                        OIG in fiscal years 1986 and 1987, OMB disapproved VA’S proposed
                        increases. VA did not approve any of the increases requested by the OIG
                        for fiscal years I988 and 1989 because of the government’s overall
                        budgetary constraints. The 40 additional staff members authorized by
                        the act will increase the OIG’s authorized staff level to 397 in fiscal year
                        1990 and to 417 in fiscal year 1991.


                        Our objectives were to evaluate the 01~'s (1) use of its current staff,
Objectives, Scope,and   (2) planned use of the additional 40 staff members authorized by the
Methodology             act, and (3) plans to request additional staff increases.

                        We examined the OIG’s operational plan for fiscal year 1988 to identify
                        the types of audits and investigations planned and the OIG coverage of VA
                        operations. We reviewed VA’S budget for fiscal year 1988 to identify its
                        major programs and functions. We also analyzed data from the OIG’S
                        management information system to determine if the OIG achieved its
                        planned audit and investigative coverage and provided coverage of VA’S
                        major programs and functions. We interviewed the Assistant Inspector                  *
                        General for Investigations, Acting Assistant Inspector General for
                        Auditing, and Deputy Assistant Inspectors General for Auditing and
                        Investigations to identify the nature and priority of work not performed
                        because of lack of staff.

                        We discussed with the Acting Inspector General and the Assistant
                        Inspector General for Policy, Planning, and Resources the intended use
                        of the additional 40 staff members authorized by the act and plans to
                        request further increases in the OIG’S staff level. We also discussed the
                        OIG’s progress in implementing a new audit approach for nationwide
                        coverage of VA’s programs.


                        Page 3                              GAO/AF’MD-30-g VA’s OfYice of Inspector General
                      B-233770




-
                      We examined the OIG’s workload assessment and related staffing
                      requirements profile completed in January 1989. We also examined the
                      legislative history related to the growth of the OIG and its
                      responsibilities.

                      We obtained information on actual staff levels of OIGS at selected agen-
                      cies and their budget outlays for fiscal years 1981 through 1988 from
                      the President’s Council on Integrity and Efficiency. For fiscal year 1988,
                      we computed the ratios of the OIGS' staffs to their respective agencies’
                      budget outlays and numbers of employees. We also obtained information
                      on the VA OIG’S prior years’ budgets submitted to VA and OMB and the
                      actions taken on its budgets for fiscal years 1990 and 1991.

                      We performed our work at VA OIG headquarters in Washington, DC. Our
                      work was performed between February and October 1989 and was con-
                      ducted in accordance with generally accepted government auditing
                      standards.


                      We found that in recent years, the OIG has provided widespread audit
OI/GProvides          and investigation coverage of VA’S operations with its authorized staff
Widespread Coverage   levels. In our quality assessment review2 of the VA OIG’S operations, we
of !VA’sOperations    reported that in fiscal year 1987, the OIG conducted audits and investiga-
                      tions in areas of VA’S operations that accounted for about 97 percent of
With Its Resources    VA’S $27.6 billion budget. These areas of coverage included income secu-
   /                  rity for veterans; veterans education, training, and rehabilitation; veter-
                      ans housing; other veterans benefits and services, such as cemeteries;
                      and hospital and medical care for veterans. For fiscal year 1988, the OIG
                      provided audit and investigative coverage in these areas of VA opera-
                      tions. The OIG’S annual planning process identified vulnerabilities in
                      these areas and developed operational plans to provide coverage of the
                      most vulnerable areas identified.

                      The OIG provides audit and investigation coverage and oversight of VA’S
                      facilities, programs, and functions through its three major offices: the
                      Office of Policy, Planning, and Resources; the Office of Investigations;
                      and the Office of Auditing. In addition to its central office, the OIG has
                      eight regional offices and a field data processing center. At the end of
                      fiscal year 1988, the OIG had 398 staff members which were distributed
                      as follows: 45 in the Office of Policy, Planning, and Resources; 76 in the

                      21nspe~rs   General: Compliance With Professional   Standards by the VA Office of Inspector General
                      (GAO/mD       -89 _76 , July 3,19s9).




                      Page 4                                          GAO/AFMD9O4        VA’s OffIce of Inspector General
B-333770




Office of Investigations; 274 in the Office of Auditing; and 3 in the      IG’S
office.

The Office of Policy, Planning, and Resources is primarily responsible
for developing OIG policy, plans, and budgets and for administering the
training and other needs of OIG staff. This office is also responsible for
providing oversight of VA’S quality assurance program for the delivery
of medical care, VA medical inspector operations, and VA’S contract audit
process. In addition, this office operates the VA fraud hotline and per-
forms oversight of VA security functions.

The Office of Investigations provides coverage of VA primarily through
investigations of alleged wrongdoing brought to the OIG’S attention. Its
investigations mainly focus on veterans benefits, with the largest
caseload involving veterans pension benefits. For the 6-month period
ended September 30,1988, the OIG reported that about 70 percent of its
investigations were in the area of veterans benefits. During fiscal year
1988, the Office of Investigations also conducted some self-initiated
investigations, primarily of VA’S multibillion-dollar home loan guaranty
program.

The Office of Auditing provides coverage through performance audits of
VA facilities, programs, and functions. For the 20-month period ended
May 26, 1989, the Office of Auditing spent approximately half of its
audit staff days reporting on facilities and half reporting on programs
and functions. The Office of Auditing generally reviews 230 of VA’S 701
facilities on a cyclical basis over a 3-year period-approximately     77
facilities annually. The 230 facilities included in the 3-year audit cycle
provide medical and benefit services to veterans in program areas which
accounted for 96 percent of VA’S $29.6 billion budget for fiscal year
1988. Similarly, the majority of the audit coverage of programs and
functions focused on VA’S major medical and benefits program areas.

During fiscal year 1988, the Office of Auditing began implementing a
new audit approach to provide increased nationwide coverage of VA’S
programs and functions. The objective of the new approach is to pro-
duce audit results on a nationwide basis rather than focusing on individ-
ual VA facilities. In the past, the OIG selected a few facilities for review
during its program or function audits, which resulted in the identifica-
tion of problems at those specific facilities. Under the new audit
approach, the OIG will use the approximately 77 cyclic facility audits
and audits of other selected facilities to review nationwide aspects of VA
programs and functions. The Acting IG believes that reviewing programs


Page 5                              GAO/AFMD-30.6 VA’s Office of InspeCtor General
                      E283770




                     and functions on this basis will be more comprehensive and enable the
                     OIG to identify and report on systemic problems and to make recommen-
                     dations with broader impact.


                     The Acting IG said that the 40 additional staff members authorized by
                     the act for fiscal years 1990 and 1991 will be used to provide more in-
                     depth coverage of VA operations currently under review. The 40 addi-
                     tional staff members will provide the OIG with a staff level that approxi-
                     mates the levels it requested in its 1988 and 1989 budget submissions to
                     VA and will meet the levels identified in its S-year resources plan. This
                     staffing level is also consistent with information presented by the for-
                     mer IG in October 1987 to the House Committee on Veterans’ Affairs
                     that 40 additional staff members were needed to provide more in-depth
                     coverage of VA’s large programs.

                     The OIG will allocate 32 of the additional 40 staff members to the Office
                     of Auditing and 8 to the Office of Investigations. With the additional 40
                     staff members, the OIG intends to increase its coverage of such VA pro-
                     gram areas as procurement and veterans life insurance, which had not
                     received in-depth coverage in the past. We believe that the OIG’s ratio-
                     nale for assigning the staff to these areas is reasonable, based on its
                     concerns about the vulnerabilities within VA’S procurement and insur-
                     ance programs. The OIG requested appropriations for these additional 40
                     staff members in its budgets for fiscal years 1990 and 1991. For fiscal
                     year 1990,” the OIG will receive about $21.8 million. According to OIG
                     officials, this amount will support a staff level of 389, while 397 staff
                     were authorized. The VA budget request for fiscal year 1991 includes
                     about $26.9 million for the OIG, which will support a staff level of 437,
                     which is greater than the 417 staff authorized for that year.


                     The OIG plans to request additional staff beyond the 40 authorized by
The OIG Plans to     the act. Based on the results of a workload assessment that it completed
Request Additional   in January 1989, the OIG submitted a budget request to VA for 80 addi-
Staff                tional staff members for fiscal year 1991 and plans to request about 80
                     additional staff members in each of the subsequent fiscal years through
                     1996. The assessment concluded that the OIG required a staff level of


                     3The OIG’s fiscal year 1990 budget was the first funded under a separate appropriation account
                     authorized for all OIGs by the Inspector General Act Amendments of 1988. Previously, the VA OIG’s
                     budget request and operations were part of VA’s general operating expenses account.




                     Page 6                                         GAO/AFMD-904 VA’s Office of Inspector General
 5333770




809 to provide maximum audit and investigation coverage of VA opera-
tions. The assessment stated that the 809 staff members would be allo-
cated as follows: 679 to the Office of Auditing, 160 to the Office of
Investigations, and 80 to the Office of Policy, Planning, and Resources
and the IG'S office.

Our analysis of the 1989 assessment showed that the OIG did not estab-
lish priorities for its audit and investigation universes in determining its
staffing requirements for audits and investigations of VA'S diverse facili-
ties, programs, and functions. Requirements for establishing priorities
are stated in OMB Circular A-73, “Audit of Federal Operations and Pro-
grams,” and in the VA OIG'S written guidance for prioritizing investiga-
tions, “Investigative Priority Codes.” In addition, the OIG did not
consider the impact of its new audit approach in developing the
assessment.

OMB  Circular A-73 requires that an audit organization periodically
review its audit universe-facilities,  programs, and functions-and
determine the coverage, frequency, and priority of audits required to
cover the components of the audit universe. Priorities should be based
on consideration of such criteria as the vulnerability of each of the areas
to fraud, waste, and abuse; size of the budget for each area; coverage of
the areas by GAO; and Federal Managers’ Financial Integrity Act reviews
of the agency’s internal operations. By applying the criteria in OMB Cir-
cular A-73 to the components of the OIG'S audit universe identified in the
workload assessment, we believe that the frequency and depth of cover-
age of the components would be impacted and, correspondingly, the
01~'s staffing requirements could be affected.

While the assessment indicated that a staff level of S7g4 was necessary
for audits of VA'S diverse facilities, programs, and functions, it did not
consider the factors previously discussed for establishing priorities and
determining OIG staffing requirements. For example, the assessment
showed that the OIG would audit the 701 VA facilities every 3 years,
including VA'S 111 cemeteries which accounted for less than 1 percent of
VA'S $29.6 billion budget for fiscal year 1988. Similarly, among VA'S
diverse programs and functions, the coverage of burial programs, which
also accounted for less than 1 percent of the fiscal year 1988 budget, is
not based on consideration of the factors previously discussed.


4The OIG intends to use 24 of the 679 staff members to audit, over a B-year period, 400 private
mortgage lenders that are involved in VA’s housing program.




Page 7                                           GAO/AF’MD-30-6 VA’s OfTlce of Inspector General
                                                                         ,


B-233770




The OIG’s “Investigative Priority Codes” require that investigations be
classified as priority 1 to 4, depending on factors such as the dollar
amount of potential loss to the government. Priority 1 investigations
involve potential losses of over $25,000; priority 2 investigations
involve losses between $10,000 and $25,000; priority 3 investigations
involve losses between $1,000 and $10,000; and priority 4 investigations
involve losses below $1,000. For investigations, the workload assess-
ment showed that a staff level of 150 was necessary for total coverage
of areas, including low-priority investigations of VA employees and
investigative-type hotline cases. In July 1988, the Assistant Inspector
General for Investigations analyzed the OIG’S past investigative efforts
and concluded that additional investigative staff would enable all of the
lower priority 3 and 4 investigative cases to be addressed as well as the
higher priority cases which are currently addressed.

While the OIG currently establishes priorities for the cases it investi-
gates, priorities were not included for the diverse investigation universe
identified in the workload assessment. Prioritizing the work would help
the OIG determine whether areas warrant expanded or reduced coverage.
For example, we found in our quality assessment review of the VA OIG
that OIG referrals of lower priority hotline cases to VA program offices
were resolved administratively to the 010’S satisfaction. Therefore, we
believe that the consideration of such priorities in this area would affect
the staffing requirements included in the assessment.

In addition, the workload assessment did not consider the impact of the
new audit approach on the OIG’S staffing requirements. Specifically,
under the new audit approach, the Acting IG stated that the audit cycle
of the 230 facilities would be lengthened or shortened to reflect each
facility’s vulnerability to fraud, waste, and abuse and to make more
staff available for program and function audits. However, the assess-
ment showed that all 701 facilities-including    the original 230 facili-
ties-would     be audited on a 3-year cycle. We believe that the new audit
approach will impact the frequency of the OIG’S audit cycle and, as a
result, will affect its staffing requirements,

The Acting IG said that the workload assessment will be periodically
updated and that requests for additional staff must be justified on the
basis of evaluations of the productivity and benefits from the OIG’s cur-
rent staff and any additional staff it receives. The OIG plans to update
the assessment every 2 years and has identified a variety of factors
which it plans to use in its evaluation of staff productivity and benefits.
These factors include the monetary savings identified by audits and


Page 8                              GAO/AF’MD-90-6 VA’s Office of Inspector General
                      B-223770




                      investigations, new and changed legislation resulting from OIG work,
                      changes in VA’S management and procedures, numbers of reports, and
                      more efficient audits in terms of reduced staff days.


                      The OIG provides widespread coverage of VA’S operations through its
Con lusions           audits and investigations of the agency’s facilities, programs, and func-
                      tions. The OIG will provide more in-depth coverage of VA’S operations
   F                  with the additional 40 staff members authorized for fiscal years 1990
                      and 1991. With the additional 40 staff members, the OIG will almost
                      reach the staffing level it requested in recent budget submissions and
                      cited as needed in its S-year plan and in hearings before the House Vet-
                      erans’ Affairs Committee.

                      The OIG plans to request additional staff beyond the 40 authorized by
                      the act. Based on the results of its workload assessment indicating a
                      need for a staff level of 809, the OIG submitted a budget request to VA for
                      80 additional staff members for fiscal year 1991 and plans to request
                      about 80 additional staff members in each subsequent fiscal year
                      through 1995. In our view, however, the workload assessment does not
                      adequately support a staffing level of 809. In determining its staffing
                      requirements, the OIG did not establish audit or investigation priorities,
                      which could impact the frequency and depth of coverage, or consider
                      the impact of the OIG’s new audit approach. By establishing priorities
                      and including their effect and the effect of the new audit approach
                      when determining its staffing requirements, we believe that the OIG
                      could better identify its staffing requirements.

   I
                      To better identify VA OIG staffing requirements, we recommend that the
Reckmmendation        Inspector General establish priorities in the OIG workload assessment
                      and consider the effect of those priorities and its new audit approach on
                      future staffing needs.


                      The Secretary of the Department of Veterans Affairs and the Acting
Agdncy Comments and   Inspector General provided written comments on a draft of this report.
Ouq”Evaluation        (See appendixes III and IV.) The Secretary commented that while the
  /                   overall staffing level of the OIG is approved in VA’S internal planning and
                      budget process, the allocations of staff are left to the discretion of the
              J       Inspector General. Our evaluation of the Acting IG’S specific comments is
  /                   provided in appendix IV.



                      Page 9                              GAO/AFMIMM    VA’s Office of Inspector General
5223770




The Acting IG agreed to include priorities in the workload assessment
and to consider the impact of the OIG’S new audit approach on its staff-
ing requirements. However, the Acting IG did not agree with our conclu-
sion that the workload assessment does not adequately support a
staffing level of 809. The Acting IG stated that including priorities would
have no impact on the OIG's overall staffing needs and that the impact of
the new audit approach on staffing requirements was, at a minimum,
resource neutral and would likely require additional staff resources
because audit coverage would be both broader and deeper.

We do not believe that the impact of adding priorities and the new audit
approach to the workload assessment can be determined at this time.
The staffing level of 809 is intended for maximum audit and investiga-
tion coverage of the audit and investigation universes identified in the
assessment. The OIG’s staffing level is based on a 3-year audit cycle for
all VA facilities, programs, and functions identified in the assessment,
without consideration of such criteria as the vulnerabilities of the com-
ponents of the audit universe to fraud, waste, and abuse cited in OMB
Circular A-73 for prioritizing audit universes. It is also based on the
premise that the OIG will provide maximum investigative coverage of its
investigation universe, without regard to the priority system the OIG has
established for its own work.

We believe that establishing priorities in accordance with OMR Circular
A-73 could change the 3-year audit cycle and depth of coverage of VA
facilities, programs, and functions identified in the assessment and, con-
sequently, could impact staffing requirements. The new audit approach,
which requires more comprehensive coverage of the programs and func-
tions at VA facilities, could also change the frequency of the individual
cyclic audits of facilities and thus impact the staff requirements for
audits of VA facilities, programs, and functions. In addition, applying its
criteria for prioritizing investigations could also change the frequency
and depth of coverage of the OIG’S investigation universe. By including
priorities and the impact of its new audit approach in the OIG workload
assessment, we believe the OIG will be better able to identify its staffing
requirements.

Unless you publicly announce the contents of this report, we will not
distribute copies until 16 days after it is issued. At that time, we will
send copies to the Secretary of Veterans Affairs, the Acting Inspector
General, and other interested parties. Copies will also be made available
to others upon request.



Page10                              GAO/AFMD4O8V!'eOf!lceofInspectmGenerd
This report was prepared under the direction of John J. Adair, Director,
Audit Oversight and Policy, who may be reached on (202) 275-9369 if
you or your staff have any questions. Other major contributors are
listed in appendix V.




Donald H. Chapin
Assistant Comptroller General




Page 11                            GAO/~M       VA’s Office of Inspector General
                                                                         ,



Cbntents


Letter
Adpendix I
St ’ff and Budget
Le els of Offices of
In ” pectors General
                                                                                 16




Adpendix III                                                                     18
Cobents From the
Secretary of
VeberansAffairs
Apipendix IV                                                                     19
Cobents From VA’s
Acting Inspector
Geherd
Appendix V                                                                      27
M&or Contributors to
This Report




                       Page 12   GAO/AF’MD-SO-6   VA’s Of’fice of Inspector General
Tal   E?S   Table 1.1: Staff Levels of Offices of Inspectors General for                    14
                 Fiscal Years 1981 to 1988
            Table 1.2: Budget Outlays of Offices of Inspectors General                      16
                for Fiscal Years 1981 to 1988
            Table II. 1: OIG Coverage of Agency Funds for Fiscal Year                       16
                 1988
            Table 11.2:OIG Coverage of Agency Staff for Fiscal Year                         17
                 1988




            Abbreviations

            IG        inspector general
            OIG       Office of Inspector General
            OMB       Office of Management and Budget
            VA        Department of Veterans Affairs


            Page 13                             GAO/AFMD&Ui   VA’s Oi’fice of Impector General
 Apphdix           I

 Sl@ffand Budget Levels of Offices of
 Inspectors General

TabId 1.1:Staff Levels of Offices of Inspectors Qeneral for Fiscal Years 1981 to 1988
Agen(cy/Deprrtment                                      1981       1982     1983      1984                          1985        1986         1987        1988
Agric&ire’-                                                         900          872         897         879          891         820          818         818
Kgay --.-.-_
----+      ..-for-_---
                   International Development                        179          171         160         179          192         175          183         205
Comn)erce
----.+---.--.-..                                                    171          176         2a7         215          208         206          192         206

P?f”!$--“.-..-..-
-._.___+-..---            ..-                                       385
                                                                    284          496
                                                                                 269         937
                                                                                             283         900
                                                                                                         299        1,081
                                                                                                                      304       1,080
                                                                                                                                  272        1,334
                                                                                                                                               278       1,380
                                                                                                                                                           320
--....
EnergJ-._-_.^ -_._.. - _.._-_-_-                                    125          153         178         180          178         178          178         178
Envircjnmental~___   Protection Agency                              142          174         180         229          256         260          256         280
Gene&l
.-.-.- _-..-Services
           ._-. ..~-    Administration                              531          483         404         419          400         361          364         452
         _.-- -..---- Services
                 Human        __-.---                               867          922       1,280       1,317        1,307       1,225        1,204       1,236
          a and Urban Develooment                                   481          499         499         488          498         472          469         493
lnteridr
----+--.---...            .------                                   189          206         278         317          314         289          278         300
Labor,
- -A- .--__-.---- ..---                                             439         430          471         528          524         562          519         530
Natio al Aeronautics and Soace Administration                       100          100         102         100           97          98          111         131
Railroad Retirement Board                                            NA          NA           NA          NA           NA          NA           22          45
                  .--_-~      .. ---___-~                           124          140         133         124          124         120          125         132
                                                                     67           67          69          82           88          98          149         181
                                                                    448         445          436         434          462         457          456         451
-..-- -t. --...---.-         -.-            -~____                   27           27          86         117          120         117          112         114
Veterans
_‘-“.-.,       Affairs
         c ..--._...._.
                    -- ..__.
                          ~..-_^..-- -----_--                       330         342          345         356          385         385         381         381
U.S. llilformation Aaencv                                            NA          NA           NA          NA           NA          36          36          44
Total 1                                                          5,789        5,972       6,938        7,163       7,429       7,211        7,465       7,877
                                                     Note: Staff levels are actual full-time equivalent employees. NA denotes that data were not available
                                                     because the OlGs were either not yet established or not fully operational.
                                                     aDefense figures reflect the Office of the Assistant to the Secretary for Oversight and Review and the
                                                     statutory Defense OIG (created in 1983) and do not include the inspectors general of the military depart-
                                                     ments or Defense audit and investigation organizations.
                                                     Source: President’s Council on Integrity and Efficiency




                                                     Page 14                                           GAO/AFMD-908 VA’s Office of Inspector General
                                                        Staff and Budget Leveb of OffIws of
                                                        Inapectora General




Table 1.h: Budget Outlays of Offices of Inspectors General for Fiscal Years 1981 to 1988
Dollars ih millions
GGGGGartment
-2z----L~:--.------
                                                                      1981         1982         1983        1984         1985      1988        1987         1988
Agricult
_---      re--- ._._
                   ---                                                $37.7       $40.2        $41 .o       $42.3        $45.6     $43.1       $45.6        $47.7
Aaencv t-for International Develooment                                 11.4        14.2         13.7         14.2         17.5      13.7        18.4         22.8
                                                                        7.0         6.9          9.5         12.2         13.3      12.8        12.8         13.9
                                                                       16.1        25.7         35.1         44.9         55.1      63.7        73.5         83.8
                                                                        9.8         9.4         13.1         14.1         15.2      14.3        15.3         16.9
                                                                        5.5         6.4         11.2         13.7         23.3      18.3        21 .l        20.0
 Environmental Protection Agency                                        9.7        11.9         11.7         13.7         18.4      15.1        18.0         21.5
s’
--            Services Administration
           a---~                          --                           19.8        17.9         17.8         19.4         21.2      19.6        19.7         24.1
 Health nd Human Servicesb                                             35.7        37.2         56.5         66.4         73.1      68.7        69.0         71.8
Housinb
--C...-.-..-..~and Urban Development    -...___-__-                    16.9        18.9         20.6         21 .l        24.7      23.1        20.2         25.8
Interior
.---4.-     ;                                                           9.1        13.5         21.9         21.9         16.9      14.8        15.9         17.9
Labor /                                                                22.3        23.7         24.6         36.4         43.7      38.7        40.8         42.4
Nationalc--..-:---.-----
--..           Aeronautics and -.Space Administration                   3.9         4.4          4.9          4.7          5.0       5.4         6.0          7.9
Railroad Retirement Board                                               NA          NA           NA           NA           NA        NA          1.1          2.2
Small &siness Administration                                            5.3         5.6          5.7          5.5          5.8       5.7         6.3          7.4
-&-f
--___..l p_-. -.---.---  --.-     -.-.--__-                             3.5         3.6          3.8          3.8          4.8       5.6        10.3         14.9
Transpbrtatron--..:”
               -...._   -          _._--.----.--
                                                                       21.5        23.3         24.4         21.6         23.8      25.6        26.0         28.3
Treasury
---.‘-+
__-.-.---r----.-.--p.                                                   1.0         1.o          3.1          4.3          4.9       4.9         5.0          5.7
Veterans
I .- _-...,~.,_-Affairs
                      . .._.._-..-~~~~______.                          12.3        14.8         16.4         17.1         19.5      18.2        18.9         19.6
U.S. lnqormation Agency                                                 NA          NA           NA           NA           NA        2.7          2.3         2.8
‘f&l    i        ..                                                $248.5       $278.8       $335.0       $377.3       $431.8     $414.6     $446.2       $4972
                                                        Note: NA denotes that data were not available because the OlGs were either not yet established or not
                                                        fully operational.
                                                        aDefense figures reflect the Office of the Assistant to the Secretary for Oversight and Review and the
                                                        statutory Defense OIG (created in 1983) and do not include the inspectors general of the military depart-
                                                        ments or Defense audit and investigation organizations.
                                                        bThese data are figures for obligational authority rather than outlays.
                                                        Source: President’s Council on Integrity and Efficiency.




                            Y




                                                        Page 15                                             GAO/AF’MD90-6 VA’s Office of Inspector General
Apkndix     II

OiG Coverage of Agency Funds and Staff


Tab16 ll.1: OIG Coverage of Agency
Fun& for Flacal Year 1968            Dollars in millions
                                                                                                                                 Ratio of OIG
                                                                                                                                      staff to
    //                                                                                  Budgeted            Number of OlC3
                                     Agency/Depattment                             agency outlays                    staff          bu:litY~:
                                     Agency for International
                                        Development                                            $1,319                  205              1 toS6
                                     Commerce                                                   2,279                  206              1 to11
                                     Interior                                                   5,147                  300              1 to17
                                     Environmental Protection Agency                            4,871                  280              1 to17
                                     State                                                      3,421                  181              1 to19
                                     U.S. Information Agency                                      843                   44              1 to19
                                     Housing and Urban Development                             18,938                  493              1 to38
                                     Labor                                                     21,870                  530              1 to41
                                     Agriculture                                               44,003                  818              1 to64
                                     Education                                                 18,246                  320              1 to 57
                                     Transportation                                            26,404                  451              1 to 59
                                     Energy                                                    11,166                  178              1 to63
                                     National Aeronautics and Space
    I                                   Administration                                         9,092                    131              1 to 69
    /
                                     Veterans Affairs                                         29,271 a                  381              1 to 77
    I                                Railroad Retirement Board                                 4,147                     45              1 to 92
                                     Defense                                                 303,984                 1,380b            1 to 220
                                     Health and Human Services                               373,560c                 1,236            1 to 302
                                     Treasury                                                202,386                    114b         1 to 1,775
                                     TotaId                                             $1,080,927                   7,293           1 to $148
                                     8The VA data exclude government liability for $170 billion in home loan guarantees and $201 billion in
                                     veterans insurance policies in force.

                                     bDefense and Treasury have substantial audit and investigation      resources that supplement their OIG
                                     staff resources.
                                     ‘This figure includes the Social Security program of $214.5 billion,

                                     dTotals exclude the General Services Administration and Small Business Administration      because they
                                     had negative budgeted outlays for fiscal year 1988.




                                     Page 16                                             GAO/AFMD-908 VA% Office of Inqectm            General
Table 1112:OIQ Coverage of Agency staff
for Flrdal Year 1988                                                                                                             Ratio of 010
                                                                                            Number of      Number otst$       staff to age$z#
                                          Aaency/Department                               agency Miff
                                          Education                                                4,516               320              1 to14
                                          Agency for International
                                             Development                                           4,582               205             1 to 22
                                          Housing and Urban Development                           12,971               493             1 to 26
                                          Small Business Administration                            4,105               132             1 to31
                                          Labor                                                   18.178               530             1 to34
                                          Railroad Retirement Board                                1,527                45             1 to 34
                                          General Services Administration                         18,807               452             1 to42
                                          Environmental Protection Aaencv                         14.389               280             1 to 51
                                          Energy                                                  16,258               178             1 to91
                                          Health and Human Services                              118,734             1,236             1 to 96
                                          Agriculture                                            106,552               818            1 to 130
                                          Transportation                                          61,330               451            1 to 136
                                          State                                                   25,482               181            1 to 141
                                          Commerce                                                35,000               206            1 to 170
                                          National Aeronautics and Space
                                             Administration                                      22,326                131             1 to 170
                                          U.S. Information Agency                                 8,796                 44            1 to 200
                                          Interior                                               70,336                300             1 to 234
                                          Veterans Affairs                                      214,433                381             1 to 563
                                          Defense                                             1,052,84ea             1,380b           1 to763
                                          Treasury                                              153,063                114b         1 to 1,343
                                          Total                                              1.964.233              7.877             1 to 249
                                          aThe number of Defense staff includes civilian personnel only.
                                          bDefense and Treasury have substantial audit and investigation resources that supplement their OIG
                                          staff resources.




                                          Page 17                                           GAO/APMD-W-6 VA’s Office of Ins-r         General
                                                                                               1         .p,

App&dix   III                                                                                      ‘Y-




C&nments From the Secretary of
V&er~ Affairs


                                         THE SECRETARY OF VETERANS AFFAIRS
                                                       WASHINGTON




                Mr. Donald H. Chapin
                Assistant  Comptroller   General
                Accounting and Financial    Management
                  Division
                General Accounting Office
                Washington, DC 20548
                Dear Mr. Chapin:
                     This   letter  responds to your December 8, 1989, draft report,
                                      I stairice                 1           0 f InsueotgE
                m         (GAO/AFWD-90-L).       After reviewing   the Acting Inspector
                General's   comments, dated January 11, 1990, I am providing          these
                remarks separately.
                        I believe  it is important   to note that,    while the overall
                staffing    level for the Office of Inspector General is approved in
                the Department of Veterans Affairs        internal planning   and budget
                process, the allocations      of the staff are left to the discretion
                of the Inspector     General.
                     Thank you for   the opportunity      to comment on your draft   report.




                   Page18                                    GAO/~~VA's~~ofInspectorGeneral
         I4

App&n&x IV

&nments From VA’s Acting Inspector General


Note: GpiO comments
supplemgnting those in the
report te$t appear at the
end of this appendix.                                                                              Otf3tfs;;f Inspector                   Washington DC 20420



                                    Department of
                                    Veterans Affairs


                                    .

                                 Mr. Donald      H. Chapin
                                 Assistant      Comptroller       General
                                 Accounting      and Financial        Management
                                    Division
                                 General     Accounting     Office
                                 Washington,      DC 20548

                                 Dear      Mr.     Chapin:

                                 We appreciate                the    opportunity               to     comment   on your                draft     report
                                 titled   “Staff             Resources      of VA’s             Office    of Inspector                 General.”

                                 While     we were      pleased        that       the    General         Accounting         Office         (GAO)
                                 recognizes        the     VA Office              of    In.spector          General        is      providing
See conjment 1.                  widespread       coverage       of VA’s’operations                  with     its    current        staffing
                                 level,      we cannot         agree        with      the      overal     1 conclusion             that       the
                                 workload      assessment        does not adequately                    support      a staffing            level
                                 of 809.       The workload          assessment          was developed             in accordance             with
                                 Off ice    of Management            and Budget           (OMB) Circular              A-73     and in our
                                 opinion     accurately       reflects          the total        staffing         needs of the Office
                                 of Inspector        General       to accomplish             all    of its       mission      workload.

                                 We agree        with     GAO’s recommendation             to include         priorities          in our
                                 next    workload        assessment.            Currently,     the 010 does prioritize                  its
See cofjment   1.                workload        as a part          of     the    annual   planning        and budget          process.
                                 These     priorities          will       now be added        to the       workload         assessment
                                 document.            In   our      opinion,        adding    priorities        to      the    workload
                                 assessment          document       will      have no impact           on our overall          staffing
                                 needs.

                                 We agree           with     GAO’s recommendation                       to consider              the impact           of the
                                 new overall               audit      approach           on future            staffing            needs.          While       we
See comment 1,                   agree       that      the new approach                 will       impact     on the future               cycle     at each
                                 location,            we believe          that       GAO’s silence             on how this            will       impact       on
                                 resource          requirements             may likely             lead the report              reader       to conclude
                                 that       it     wi 11 lessen            the       need        for    audit        resources.               While       this
                                 revised          approach         is too new to precisely                            identify         its      impact        on
                                 future        resource          needs,        it is our belief                 that,        as a minimum,              it is
                                 resource            neutral         (i.e.          requires           about        the       same       resources            as
                                 identified              in the       workload             assessment           for      ‘cyclical          audits)         and
                                 likely          will        require          more           overal    1 resources                 because          of      the
                                 concentration              on more national                   programs       and functions              together         with
                                 more      problem-plagued                  facilities.                  Audit        coverage          will       be both
                                 broader          and deeper.                In our            next     workload           assessment,             we will
                                 attempt         to measure           the impact              of this      approach            on future          resource
                                 needs.


                             L




                                        Page 19                                                           GAO/~99-9                 VA% OfWe of Inspector General
     NW*       N
     CommentaFrom VA’sActing
     hwpestor General




Our specific         comments,     keyed     by page     number    to the   GAO draft
report,     are    enclosed.         If    you   have    any   questions    about  our
comments,     please     do not   hesitate     to call     me.

Sincerely,




Enclosure




    Page 20                                         GAO/AFMD-904 VA’sOffice of Inspector General
                               Mm* w
                               Comments From VA’s Acting
                               Insjmctor General




          4


                                                    VA OFFICE OF INSPECTOR GENERAL
                                                     COMMENTS ON GAO DRAFT REPORT
                                   “STAFF      RESOURCES OF VA’S OFFICE OF INSPECTOR                             GENERAL”


                                                              GAO’s comments          regarding     the staffing      levels
                        requested         in its     B-year      resources        plan are incorrect.           The 010, in
                         its    5-year      resources        plans,      submitted       in FY 1984,      1985,    and 1986,
See c01 nent 2.         all      requested       substantial          increases        (as many as 301 FTE) in OIG
                        resources.            The fact       that     these     large     increases     were    not granted
                        because        of budgetary          constraints         on the VA does not mean that              the
                        workload         does not exist           or that       the    resources     were    not otherwise
                        justified         and needed.

                            In addition,         we believe       the statements           attributed          to the IO at
                        the hearings       before       the House Veterans’          Affairs       Committee       are taken
See car       lent 3.   out of context.             The IG's remarks          were tempered             by the realities
                        of the budget          climate.        He was      aware    that      40 additional           FTE was
                        al 1, at that       time,     that    could    be funded       by the VA: therefore,              his
                        remarks    reflect        a realistic        estimate      of what          resources       could   be
                        obtained     given      the extremely        tight     budget      situation         in the VA.

                                                               The OIG does          not agree        that     the workload
                        assessment         does not support              a staffing       level    of 809.        We believe
                        that       it is a reasonable           estimate       of the staffing          needed to perform
See car   I+rent   1.   the OIG's mission
                        priorities           should
                                                     workload.
                                                          change
                                                                        We disagree
                                                                       (lower)      this
                                                                                         with     GAO’s assumption
                                                                                              estimate.           Priorities
                                                                                                                             that

                        determine         which     parts     of the       workload      are covered        first      and the
                        depth        of that    coverage.

                            We believe            it  is standard          practice         in the       OIG community                to
                        identify       staffing      needs based on overall                estimates        of the workload.
                        In today’s          world    of limited        resources,          OIGs cannot           realistically
                        expect      to be fully        staffed   at these         levels;       therefore,         each OIG has
                        established           a formalized       planning          process        that     allocates           scarce
                        resources         to     the    highest     priority          workload.            We believe             this
                        process       is in accordance          with      OMB Circular           A-73.

                                                              We believe           the     VA OIG’s         resource          levels
                        relative      to other       Inspectors        General       and the Departments              they audit
                        and investigate           are a strong          indicator        of the inadequacy              of the VA
See coriment       4.   OIG's resources.                GAO recognizes            that      the    VA OIG ranks              in the
                        bottom      third      in     these       comparisons;           however,        the     rest        of    the
                        narrative        in GAO’s report             is silent         on the significance                 of this
                        fact     or its     impact      on the adequacy             of the justification                 for     more
                        resources.         We believe           this     is an important            point      and should            be
                        stressed       and highlighted             in a separate           section      of the report              and
                        in the summary          paragraph         of GAO’s report.




                              Page 21                                                    GAO/AFMD-90-g VA’s Office of hqector              General
                                  APpe-     Iv
                                  commentll From VA’s Acting
                                  Inspector General




                                                               The GAO information               relative       to  the    010
                           requests         for additional        data   is     incorrect        and misleading.            A5
                           stated      earlier,    the OIG requested           large      increases        in its  resource
See cbmments 2 and 5       levels;       but for    the most       part,    these      requests        were disproved        by
                           Agency      management      because     of limited        funding      VA-wide.

                                                                  GAO’s description              of    the functions           assigned
                           to   the      Office     of        Policy,        Planning         and      Resources        excludes        an
See cbmment 6.             important       function         of this      Office--Contract               Audits,        This function
                           accounted        for   more      than      50 percent       of     the     audit     reports      issued     in
                           FY 1989.

                                                                         GAO’s description            of the objective               of the
                           OIG’s      new audit            approach         is not entirely          correct.       Since     1981,      the
                           010 has provided                   nationwide          coverage      of VA programs         and functions
                           through       its centrally                directed       audits.      The new approach,           which      did
See cjomment 7.            not begin         until           FY 1989,         is an attempt         to “increasingly”              produce
                           results        on a nationwide                      basis     through      a more      direct       blend       of
See cpmment 8.             facility        audits          and coverage           of VA programs         and functions.             The new
                           approach        will        still        include        a focus      on individual        VA facilities,
                           and we will           still          maintain         an average       cycle      among all      facilities
See +mment   1,            of about        3 years.              As noted         by GAO, about         50 percent       of our staff
                           time is devoted                to cyclical            audits      of VA facilities;          and we expect
                           this     to continue.

                                                                   We believe           that  the     GAO should           put     its
                           comments       regarding         the    5-year        resources      plans       in context.              As
                           discussed        in our prior         comments,         the recent      5-year       resource        plans
                           were     geared      to what       resources         we reasonably          could      expect       to be
See cjomment 2.            given--not         to our       overall        needs       as supported          by the        workload
                           assessment         that    existed        at    that      time.      We believe           this     was a
                           prudent      decision      in light       of the Agency’s          budget      situation;         but in
                           no way should           it be construed             to mean that         this      represented          our
                           entire     budgetary       needs.

                                                              Since     the      GAO draft          report      was    issued,
                           events     have occurred      that    changed      the status          of the OIG’s         FY 1990
See comment 9.             budget.       As a result      of the sequestration                action,      the new amount
                           appropriated        for   the OIG is $21.0            million.          This    funding       is  not
                           sufficient       to support     the 397 personnel              authorized        by Congress        as
                           a part      of the Departmental          Legislation.              The latest        estimate       of
                           personnel      for    the OIG for     FY 1990 is 389.

                                                                 We believe      that      GAO has misinterpreted                   the
                           requirements         of   OMB Circular       A-73,    “Audit      of Federal       Operations            and
                           Programs.        ” We     believe     that   the determination             of audit       priorities
See ciomment 10.           referred        to in     OM8 Circular        A-73 relates          to the planning              process
                           that     prioritizes            areas    for    audit      within       available         resources.
                           Nowhere       in OMB      Circular      A-73 does it state            that     the priority           of     a




                       L




                                 Page 22                                                     GAO/AFMD-904 VA’s Office of Inspector General
                          Appemix IV
                          Commenta F’rom VA’s Acting
                          Inqeclmr General




                     particular         program           should      be     used      to           determine      an    audit
                     organization’s         staffing          needs.     Furthermore,               the provisions      of OMB
See corn ent 11.     Circular       A-73 are       limited        to audit    operations;               yet GAO appears        to
                     attempt      to apply     this      circular     to investigative                 and other   non-audit
                     functions       of the OIG.
         r”
                          In      addition,         the      prioritization                  system     for     investigations
                     referred         to by GAO is an operational                       and planning         mechanism       to deal
See corn L ent 12.   with      the serious         shortfall          of resources             in the OIG’s       investigation
                     staff.         The GAO implies            that       we should          not consider       lower      priority
                     cases       as workload.             The only         real     difference        in the investigative
                     priority         system     is the dollar              magnitude          of the offense.           We do not
                     believe         we should            exclude          these        low-priority          cases      from       our
                     workload          assessment          simply         because         of    the  dollar       value      ‘of    the
                     fraud.         We should        investigate            all   fraud       cases;    but,    unfortunately,
                     we only          have    the       resources           to   investigate           a few--so,           we must
                     prioritize           our efforts.

        //                                                                                                     We believe          that
                     this      paragraph        contains       further       misinterpretations                of OMB Circular
See comment 13,      A-73.         The priorities           of areas,          to include          all   the factors           listed
                     by GAO in this             paragraph,         are for planning              purposes.         In fact,          OMB
                     Circular          A-73,     paragraph         S.F.,     clearly        states      that,     based       on the
                     considerations             set forth        in paragraph          8.~.      (Determination            of Audit
                     Priorities),            each audit        organization           will     prepare        an audit      plan      at
                     least       annual 1 y.        It is clear          to us that        the priorities            referred         to
                     in paragraph            8.c.:      (1) relate         only     to audit        and (2) relate            to the
                     planning         process,        not the process            of identifying            an organization’s
                     total        workload       requirements.

                                                                  The GAO did not put               its   reference         to the
                     audit     of VA cemeteries                    in proper         perspective        with      the    workload
                     assessment.             While       it    is true      that      the 111 VA cemeteries               account
See comment 14.      for    less     than      1 percent            of VA’s        budget,      the workload          assessment
                     showed      11 staff           years,         or  51 ightl      y more than         1 percent         of the
                     workload,        attributable              to audits        of cemeteries.          The difference           is
                     not statistically                significant          and too small           to be used by GAO as
                     a part       of       the     justification              to     conclude       the    entire        workload
                     assessment         was inadequate.

                         GAO’s second example     on burial   programs      is even less significant.
                     The workload    assessment     shows one FTE devoted           to these      programs.
                     This    one  FTE represents       about    one-tenth        of  1 percent       of    the
                     resources    in the workload      assessment.        Again,    this    sample     should
                     not be used to conclude      that   the overal     1 workload     assessment      is not
                     adequate.

                                                                The GAO report                implies   that    the            OIG’s
See cohment   15.    workload       assessment           includes       investigative             staff  to perform               all
                     employee       cases   and       other     hotline      cases       that     are now referred              to




                         Page 22                                                      GAO/AFMD-90-6 VA’s Of%e of Inspector General
                                  A&w*     Iv
                                  Comments From VA’eActing
                                  Inspes2t.m
                                           General




                         program        officials           for resolution.                In fact,        the assessment              includes
                          investigative              staff         to     perform       about        50 percent           of      this       work.
                         Furthermore,              with       the       current       limited         staffing,         the 010 has no
                         choice          but      to       refer         these       cases        to       program        officials             for
                         resolution.               Unfortunately,                these       program          officials        are       in many
                         cases closely              linked         with     the allegations;               and we believe              that,       if
                         staffing         permitted,             it would        be far better              if the OIG investigated
                         these       issues       rather         than      the program          officials.

                                                                    The new approach               to facility         audits        was not
                         considered             in the workload              assessment           because      it was implemented
                         after       the workload            assessment           was developed.              While      we agree          with
See domment 1,           GAO that          the new approach               would       affect       the cycle         at a particular
                         facility           (i.e.        some would          now be done             on a P-year           cycle         while
                         others        would       be done on a 4-year               cycle),        on average,         the cycle          will
                         remain        close        to 3 years         overall.             In addition,           those      facilities
                         placed        on a P-year          cycle     would        generally         be the larger         facilities;
                         and those            placed       on a 4-year            cycle      would      tend     to be the smaller
                         facilities.               As a result,         the new approach                could     actually        increase
                         the overall              staffing        needs       since      the     010 would         be concentrating
                         more often            on the larger          facilities,             which     may require         1,000        staff
                         days or more to complote                      a comprehensive                audit.

                                                                                          We cannot       agree with    GAO’s
                         conclusion           that     the     workload       assessment        is    not     a reasonable
See domments 1 and 14.   estimate       of the VA OIG’s             overall     workload      and staffing       needed      to
                         perform      the identified            workload.        We believe        the examples      (audits
                         of burial         programs        and cemeteries)          cited    by GAO, as part          of the
                         basis    for     this     conclusion,        are insignificant          and cannot     be used as
                         a basis      to state        the whole        assessment       is inadequate.

                              The 010           believes           the    prioritization                process           is     a planning
See bomment 10           function          that        is      necessary           to    make      the       best        use       of        scarce
                          resources.              OMB Circular              A-73       does     not       require          priorities                of
                          individual          areas        be considered              when an organization                     develops            its
                         overall        workload          assessment.            Furthermore,            GAO implies             that,          if we
                         used this         priority           system,      the workload           assessment             would       result          in
See iomment   1.         a lower        overall         staffing       figure.           We disagree.               The assignment                   of
                         priorities          would tend to be resource                       neutral      --with         higher          priority
                         workload         requiring             more    resources           and      lower       priority            requiring
                         fewer       resources.              In our opinion,              GAO has not shown that                          even       if
                         we assigned               priorities           to     the       workload          assessment,                it       would
                         materially          affect         the outcome           of the staffing              needs         identified              in
                         the workload             assessment.

                              The VA OIG will          consider     the impact      of its new approach         to audits
                         in future        workload      assessments.        At this     point      in time,   we believe
                         this     approach,        if anything,        will   require     more resources         to fully
                         implement.           GAO has not made a case that                 this      would  not happen:
                         yet,    the implications            in the report      are that      this    new approach    will
                         require       less    overall      resources.




                                  Page 24                                                          GAO/~SO-6                 VA’s Offlce of Inspector Generd
 *
                 Appendx TV
                 Commenta From VA’s   Acting
                 In8pector General




                The following are GAO’S comments on the Department of Veterans
                Affairs Acting Inspector General’s letter dated January 11, 1990.


                 1. See the “Agency Comments and Our Evaluation” section of the report.
GAc/ Comments
                2. No change necessary to the report. In our review, we used the OIG's
                fiscal year 1989 S-year resources plan, which showed a need for 40
                additional staff over a S-year period. We believe that the OIG'S most cur-
                rent resources plan best reflects the OIG'S staffing requirements based on
                its current workload.

                3. No change necessary to the report. We believe that our report accu-
                rately reflects the former IG’s response to the House Veterans’ Affairs
                Committee when asked whether the OIG was adequately staffed. The for-
                mer IG responded that the OIG’s S-year resources plan (for fiscal year
                1988) reflected a need for 40 additional personnel over a S-year period
                and that an increase in staff would allow the OIG to provide more in-
                depth coverage of VA’S large programs.

                4. No change necessary to the report. We do not believe that the
                resource levels of the other OIGs are a strong indicator that the VA 01~‘s
                resource level is inadequate. We believe that the important factors in
                determining OIG staffing levels include the agency’s mission, the nature
                of its programs and functions, and the vulnerabilities of its programs
                and functions to fraud, waste, and abuse.

                6. No change necessary to the report. The staff levels reported as
                requested by the OIG for fiscal years 1986 through 1989 are based on
                data in the OIG’S budget submissions to VA.

                6. We revised the report to reflect that the oversight responsibilities of
                the Office of Policy, Planning, and Resources include contract audits.

                7. No change necessary to the report. The OIG began implementing its
                new audit approach in fiscal year 1988, as noted in its semiannual
                report for the period ending September 30, 1988.

                8. We revised the report to state that the new approach will increase the
                OIG’snationwide coverage.

                9. We revised the report to reflect the OIG’S fiscal year 1990 appropria-
                tion as reported in the President’s Budget for Fiscal Year 1991.


                Page 25                             GAO/AFMD-904 VA’s Off&   of Inspector General
AppendixIV
Comments From VA’e Acting
In8peet.m General




10. No change necessary to the report. We do not believe that OMB Circu-
lar A-73 requires that audit priorities be established only during the
planning process for the next year’s work. (See comment 13 for further
discussion of this issue.) We agree that the requirements of OMB Circular
A-73 do not specifically relate to the OIG'S staffing requirements. How-
ever, the OIG chose to use its workload assessment, which contains its
audit universe, as the basis for determining its staffing requirements.

11. No change necessary to the report. The report states that the OIG
should use its own “Investigative Priority Codes” for prioritizing the
investigation universe.

12. No change necessary to the report. The report states that the OIG
should establish priorities for its audit and investigation universes,
which include all components of its universes.

13. No change necessary to the report. OMB Circular A-73 clearly states
in section 8(b) that an audit organization is to identify its audit universe,
and in section 8(c) that priorities are to be established for the compo-
nents of that audit universe. (In the case of the VA OIG, these components
would be the facilities, programs, and functions of VA.) Section 8(f) cited
by the OIG states that the planning of work for the year is to be accom-
plished in accordance with the earlier sections, including 8(b) and 8(c).
Consequently, to meet the requirements of section 8(f), an audit organi-
zation must accomplish 8(b) and 8(c) which require that the audit uni-
verse be identified first and then priorities be established for the
components of that universe.

 14. No change necessary to the report. The OIG has placed all VA facili-
ties, programs, and functions on a 3-year audit cycle. As a result of not
using the criteria in OMB Circular A-73, the OIG did not determine the
frequency and depth of coverage required for each of the components of
its audit universe. Although we chose to use the smallest facilities and
programs in our examples, we could have chosen any of the types of
facilities and programs in the assessment to demonstrate our point that
the frequency and depth of coverage could change and affect staffing, if
prioritization were considered.

16. We revised the report to show that the maximum investigation cov-
erage to be provided by the 160 staff relates to investigation-related
hotline cases rather than to hotline cases to be addressed by audit or
other type of review.



Page 26                             GAO/AFMD-90-6 VA’s Office of Inspector General
AJpGJ
Ma ior Contributors to This Report


_~--
                         Marsha L. Boals, Assistant Director, (202) 276-8646
Accc unting and          Bernard J. Trescavage, Evaluator-in-Charge
Fina Kid Management      William E. Adams, Evaluator
Divil ion, Washington,
D.C    ,   ,
           I




(811640)                                                    GAO/~90.0    VA’r Office of Inspector General
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