GAO 

United States Government Accountability Office

Report to the Chairman, Subcommittee 

on Disability Assistance and Memorial 

Affairs, Committee on Veterans’ Affairs, 

House of Representatives 

VA’S FIDUCIARY 

PROGRAM 

Improved Compliance 

and Policies Could 

Better Safeguard 

Veterans’ Benefits 

February 2010 

GAO-10-241 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

February 2010

VA’S FIDUCIARY PROGRAM 

Improved Compliance and Policies Could Better 

Safeguard Veterans’ Benefits

Highlights of GAO-10-241, a report to the 

Chairman, Subcommittee on Disability 

Assistance and Memorial Affairs, 

Committee on Veterans' Affairs, House of 

Representatives 

Many individuals receiving monthly 

compensation and pension benefits 

from the Department of Veterans 

Affairs (VA) have mental 

impairments that prevent them 

from managing their finances. VA’s 

Fiduciary Program selects and 

oversees third parties, called 

fiduciaries, to help manage and 

protect beneficiaries’ funds. GAO 

examined (1) how effective 

program policies and procedures 

are in monitoring fiduciaries and 

safeguarding beneficiary assets, 

and (2) challenges VA faces in 

improving program performance 

and oversight. GAO reviewed 

program policies, analyzed a 

nationally representative random 

sample of case files, interviewed 

Central Office managers and staff, 

and conducted three site visits to 

Fiduciary Program offices which 

accounted for 25 percent of 

program beneficiaries. During 

these visits GAO interviewed 

regional office managers and staff 

and conducted 32 file reviews. 

What GAO Recommends

GAO recommends that VA 

strengthen Fiduciary Program 

policies for monitoring fiduciaries; 

improve staff compliance with 

program policies; evaluate 

alternative approaches to meet 

electronic case management 

system needs; and evaluate the 

effectiveness of consolidating 14 

western Fiduciary Program units. 

VA agreed with our 

recommendations and noted plans 

to address them. 

VA’s Fiduciary Program has policies in place that are intended to ensure that 

qualified fiduciaries are selected and regularly monitored; however, 

insufficient staff compliance with some policies and weaknesses in others 

hinder VA’s ability to safeguard veterans’ benefits. For example, VA was late 

in conducting required follow-up visits to monitor fiduciaries or provided 

insufficient documentation to show whether these visits were conducted in 

about 18 percent of the cases GAO reviewed. In addition, while GAO 

estimated that nearly 40 percent of fiduciaries who were required to submit 

financial reports to demonstrate how beneficiary funds are managed turned 

their reports in late, VA did not always take actions to obtain them on time or 

provide documentation that an attempt had been made, as required by VA 

policy. GAO also found that files did not always contain documentation that a 

bond was secured when required to safeguard beneficiary estates or that the 

requirement was waived. Fiduciary Program managers and staff said that they 

did not always comply with VA policies due, in part, to a lack of time, 

resources, and staff. In addition, VA’s policies for conducting on-site reviews 

of professional fiduciaries who manage funds for multiple beneficiaries do not 

ensure these fiduciaries are effectively identified and monitored. For example, 

VA’s policy may not ensure that all fiduciaries who need to be reviewed are 

identified because the agency’s policy allows the use of the fiduciary’s name—

which may be entered inconsistently—to match them to beneficiaries rather 

than requiring a unique identifier, such as a Social Security number. Moreover, 

VA does not have a nationwide quality review process to ensure that these 

reviews are conducted properly and consistently. 

GAO identified two key challenges that hinder VA’s ability to improve 

Fiduciary Program performance and oversight. First, managers and staff in the 

three regional offices visited said VA’s electronic fiduciary case management 

system does not provide sufficient information and is cumbersome to use. For 

example, the system limits staff’s ability to track multiple actions on a case or 

enter all needed information. Also, the system does not generate 

comprehensive management reports that would facilitate effective oversight. 

In addition, managers and staff indicated that available training may not be 

sufficient to ensure they have the necessary expertise to carry out program 

responsibilities. Moreover, many managers and staff had less than 2 years of 

program experience, and the lack of sufficient training may have contributed 

to inconsistent compliance with some program policies. VA is developing 

standardized training that it expects to implement some time in fiscal year 

2010. VA is also piloting a consolidated Fiduciary Program unit covering 14 

western units, in part, to address program challenges. While the pilot is 

intended to improve program performance and oversight, managers and staff 

noted that difficulties, such as not having resources in place and up-to-date 

case files, impeded effective implementation. VA has not yet evaluated the 

impact and effectiveness of this model. 

View GAO-10-241 or key components.

For more information, contact Daniel Bertoini 

at (202) 512-7215 or bertonid@gao.gov. 
Page i GAO-10-241 

Contents 

Letter 1

Background 3 

Inconsistent Compliance with Some Policies and Weaknesses in 

Others Hinder VA’s Ability to Monitor Fiduciaries and Safeguard 

Benefits 7 

System Limitations and Insufficient Training Hamper Program 

Performance and Oversight; However, VA Is Taking Steps That 

May Help 14 

Conclusions 20 

Recommendations for Executive Action 21 

Agency Comments and Our Evaluation 21 

Appendix I Objectives, Scope, and Methodology 24 

Appendix II Comments from the Department of Veterans 

Affairs 29 

Appendix III GAO Contact and Staff Acknowledgments 32 

Tables 

Table 1: Timeliness and Documentation of Financial Reports 9 

Table 2: Timeliness of First Follow-Up Action for Cases with 

Seriously Late Delinquent Financial Reports 11 

 Safeguarding Veterans' Resources 
Abbreviations 

FBS Fiduciary Beneficiary System 

OIG Office of Inspector General 

SDP supervised direct payment 

VA Department of Veterans Affairs 

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Page ii GAO-10-241 Safeguarding Veterans' Resources
Page 1 GAO-10-241 

 

United States Government Accountability Office

Washington, DC 20548 

 

February 26, 2010 

The Honorable John J. Hall 

Chairman 

Subcommittee on Disability Assistance 

 and Memorial Affairs 

Committee on Veterans’ Affairs 

House of Representatives 

Dear Mr. Chairman: 

Each year, the Department of Veterans Affairs (VA) pays billions of dollars 

in compensation and pension benefits to disabled veterans and their 

dependents. For those beneficiaries who are unable to manage their own 

affairs due to mental impairments,1

 VA appoints a third party to help 

manage and protect the beneficiary’s funds. This third party, called a 

fiduciary, can be a spouse or other family member, or an entity such as a 

law firm, hospital, or nursing home. Fiduciaries are selected and 

monitored through VA’s Fiduciary Program. In fiscal year 2008, this 

program oversaw fiduciaries for more than 103,000 beneficiaries, and 

these individuals managed nearly 4 percent of the $38.6 billion in 

compensation and pension benefits VA paid out in that year. Moreover, the 

average annual benefit amount for beneficiaries in this program was 

approximately $14,400 in fiscal year 2008, which is about $4,200 more per 

year than the average for all VA compensation and pension beneficiaries. 

VA’s oversight of beneficiary funds is especially important because the 

financial management of a person’s funds is entrusted to a third party, 

thus, there is a risk that these funds could be used inappropriately. 

Over the years, both Congress and VA’s Office of Inspector General (OIG) 

have expressed concern that VA is not fully safeguarding beneficiaries’ 

assets in the Fiduciary Program. Areas of concern included delays in 

conducting visits to select fiduciaries and insufficient monitoring of VA 

fund usage by fiduciaries on behalf of beneficiaries. As a result, the 

Veterans’ Benefits Improvement Act of 2004 increased the degree to which 

VA is held accountable to its beneficiaries by requiring it to reissue any 

1

VA regulations state that the agency may appoint fiduciaries for beneficiaries and 

beneficiaries’ dependents who are mentally ill (incompetent) or under legal disability by 

reason of minority or court action. 38 C.F.R. § 13.55. 

 Safeguarding Veterans' Resources 
 

benefit amount that is misused by a fiduciary due to VA’s negligence.2 The 

act also increased VA’s fiduciary oversight authority and responsibilities. 

For example, the act requires VA to conduct periodic on-site reviews of 

professional fiduciaries3

 who oversee more than 20 beneficiaries with total 

combined benefits exceeding $50,000. You asked us to examine current 

policies and procedures the VA Fiduciary Program uses to select and 

monitor fiduciaries, as well as their effectiveness in safeguarding benefits 

and estates of beneficiaries. Specifically, we examined: (1) how effective 

VA policies and procedures are in monitoring fiduciaries and safeguarding 

beneficiary assets and (2) challenges VA faces in improving program 

performance and oversight. 

To address the first objective, we reviewed the Fiduciary Program’s 

policies and procedures manuals and applicable federal laws and 

regulations. In addition, we collected and analyzed case-level data from a 

nationwide stratified random sample of 205 beneficiary case files. We 

selected these files using data as of March 31, 2009, from VA’s electronic 

case information and workload management system, which we found to 

be sufficiently reliable for the purpose of sampling cases for review. Our 

selection methodology allowed us to generalize some of the data we 

obtained from our case file review to nearly all adult beneficiaries within 

the Fiduciary Program.4

 All percentage estimates in this report have a 

margin of error of plus or minus 10 percentage points or less, unless 

otherwise noted. We also used the same electronic case management 

system data to assess how reliably fiduciaries managing multiple 

beneficiaries could be identified. To obtain information on both objectives, 

we interviewed appropriate managers at VA’s Central Office and 

conducted site visits to 3 of 43 Fiduciary Program units located in VA 

regional offices—St. Petersburg, Florida; Cleveland, Ohio; and Salt Lake 

City, Utah—where we interviewed managers and staff about program 

policies and procedures, as well as VA’s internal controls for meeting the 

 

2

Pub. L. No. 108-454. 

3

For purposes of this report, professional fiduciaries include institutions (such as nursing 

homes), professional fiduciary services, nonprofit agencies, and state hospitals. 

4

We analyzed case files from a population of about 103,700 adult beneficiaries. This 

excluded beneficiaries whom VA monitored with alternate methods (such as those who 

managed their own funds for a probationary period and those who VA monitored through 

letters or phone calls in lieu of some personal visits), as well as those who had negative 

estate values. 

Page 2 GAO-10-241 Safeguarding Veterans' Resources
 

program’s mission and goals and ensuring its integrity.5 During these site 

visits and in Washington, D.C., we also spoke with veterans service 

organization representatives regarding their experiences working with 

beneficiaries under the Fiduciary Program. In addition, during our site 

visits we conducted 32 file reviews based on a judgmental sample of cases 

where either VA suspected that fiduciaries were inappropriately using 

beneficiary funds or fiduciaries were seriously late in submitting one or 

more annual financial reports that documented how beneficiary funds 

were spent. We also collected and reviewed 12 VA on-site reviews of the 

performance of professional fiduciaries. We chose these reviews based on 

professional fiduciaries identified in our 32 site visit file reviews. We 

selected the sites we visited based on differences in geographic location, 

size of the Fiduciary Program unit, and number of cases with misuse 

allegations. We specifically selected the Salt Lake City regional office 

because it is the site of a pilot project to merge 14 western Fiduciary 

Program units into one hub office. 

We conducted this performance audit from December 2008 to February 

2010, in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives. Further details on our 

objectives, scope, and methodology can be found in appendix I. 

Many individuals receiving monthly compensation and pension benefits 

from the VA have mental impairments that can prevent them from 

managing their finances.6

 These conditions may result from injury, 

disease, or infirmities of age. In 1935, Congress created an early version of

the VA Fiduciary Program to select and oversee responsible third parties, 

called fiduciaries, who help manage and protect beneficiaries’ funds. In 

fiscal year 2008, fiduciaries managed approximately $1.5 billion in VA 

benefits for more than 103,000 benefi

Background 

ciaries. 

 

5

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: Nov. 1999). 

6

Beneficiaries can be veterans, surviving spouses, or veterans’ dependent children or 

parents. 

Page 3 GAO-10-241 Safeguarding Veterans' Resources
 

The VA Fiduciary Program matches beneficiaries who are unable to 

manage their financial affairs with a fiduciary, giving preference to 

spouses. If VA is unable to locate a qualified spouse who is willing to serve 

in this capacity, an individual or other entity, such as a lawyer or nursing 

home, will be appointed. Fiduciaries who are appointed by VA who are not 

dependents or close family members can collect a fee for their services 

(up to 4 percent of a beneficiary’s annual benefit amount) and can oversee 

multiple beneficiaries. Whether a fiduciary is a family member or a 

professional, the responsibilities are generally the same and may include 

receiving the beneficiary’s VA benefits, paying the beneficiary’s expenses, 

maintaining the beneficiary’s budget, and generally seeing to the financial 

well-being—and, in some cases, the physical well-being—of the 

beneficiary. Finally, if a court has already determined that a beneficiary is 

unable to handle his or her own affairs and has appointed its own 

fiduciary, VA must assess the performance of the fiduciary and determine 

if he or she is suitable for the position given the needs and welfare of the 

beneficiary. If VA decides to use the court-appointed fiduciary, the agency 

generally defers to certain rules set by the court, such as those pertaining 

to the fee amount that the fiduciary can charge the beneficiary for his or 

her services. 

VA has established a number of policies to guide the selection of qualified 

fiduciaries and ensure regular monitoring of them. The procedures for 

carrying out these policies include the following: 

• Visits to beneficiaries and fiduciaries. VA policy requires staff to 

conduct initial visits to assess the competence and welfare of the 

beneficiary, determine whether a fiduciary is required and, if so, select and 

appoint the most appropriate type of fiduciary. These evaluations typically 

include a general background check of the potential fiduciary, which could 

include contacting character witnesses and reviewing a recent credit 

report. VA staff, in conjunction with potential fiduciaries, may develop a 

spending plan for the beneficiary’s funds. Once the fiduciary is selected, 

staff conduct periodic subsequent visits to reevaluate the beneficiary’s 

condition and to determine if funds have been properly used and 

protected. The first routine follow-up visit generally takes place 1 year 

Page 4 GAO-10-241 Safeguarding Veterans' Resources
 

after a fiduciary is selected, and subsequent visits typically take place 

every 1 to 3 years thereafter.7

 Unscheduled visits may also be conducted 

under certain circumstances. 

• Annual reviews of financial reports. VA policy generally requires staff to 

obtain yearly financial reports and bank statements from some fiduciaries 

to determine how beneficiary funds were used. Reports are generally due 

on the anniversary of a fiduciary’s appointment or as otherwise required in 

the case of court-appointed fiduciaries.8

 When fiduciaries do not submit 

their financial reports on time, staff are required to follow-up with them to 

obtain these reports and to document these contacts in the beneficiaries’ 

files. For example, if a report is not received within 90 days of the 

deadline, VA staff can follow-up with fiduciaries by letter, telephone, or 

face-to-face contact and may describe the possible repercussions of failing 

to supply the report, which could include legal action or referral to the 

OIG. 

• Confirmation of surety bond acquisition. When it is necessary to protect 

the interests of the beneficiary, VA generally requires staff to obtain a 

surety bond from fiduciaries overseeing estates with a value of $20,000 or 

more that is attributable to VA funds. A bond ensures that the beneficiary’s 

estate will be reimbursed in the event of fiduciary mismanagement or 

abuse of beneficiary funds. Generally, the bond amount should be 

adequate to cover the value of the beneficiary’s accumulated estate 

derived from VA funds plus 1 year of VA benefits.9

 Fiduciary Program staff 

are required to obtain documentation showing that the fiduciary has an 

adequate bond.10 VA is required to assess the need for a bond and the bond 

amount each time it reviews the fiduciary’s yearly financial report. 

 

7

In some cases, such as when the fiduciary is a spouse or when the beneficiary is 

institutionalized, some of the subsequent visits may be substituted for with letters or phone 

calls. 

8

Financial reports are required for fiduciaries who oversee beneficiary estates of $10,000 or 

more, who are appointed by a court, who are authorized to collect a fee, who oversee 

estates of beneficiaries who receive the maximum disability payment possible, who are 

appointed temporarily, or in other situations. Some exceptions generally include fiduciaries 

who are spouses and chief officers of federal institutions. The time frame for submitting 

financial reports may vary for court-appointed fiduciaries based on an agreement with the 

courts. 

9

Bond amounts may vary for court-appointed fiduciaries. 

10If it is not reasonable or practical to require a surety bond, VA may, in some cases, instead 

require that the fiduciary enter into a “withdrawal agreement,” by which the fiduciary may 

only withdraw beneficiary funds from a financial institution with the written consent of VA. 

Page 5 GAO-10-241 Safeguarding Veterans' Resources
 

• Periodic on-site reviews of professional fiduciaries. In addition to visits, 

VA staff are required to conduct on-site reviews of professional fiduciaries 

who oversee more than 20 beneficiaries with combined benefits of at least 

$50,000 once every 3 years. Unscheduled reviews may also be conducted 

as needed. During the on-site reviews, staff are to examine the financial 

records of multiple beneficiaries concurrently and examine any 

questionable expenses. VA developed this policy in 2005 as a result of new 

requirements included in the Veterans’ Benefits Improvement Act of 2004. 

Fiduciary Program policies and procedures are developed by Fiduciary 

Program Central Office staff under the Office of Policy and Program 

Management within the Veterans Benefits Administration. Individual 

Fiduciary Program units are generally colocated in VA regional offices that 

also oversee other Veterans Benefits Administration programs. One major 

exception to this is the Western Area Fiduciary Hub, where Fiduciary 

Program units and files from 14 western VA regional offices were merged 

into a single unit colocated in the VA regional office in Salt Lake City, 

Utah, beginning in January 2008.11

Each regional office is held accountable for meeting performance 

measures established by VA, including workload timeliness and accuracy 

measures. For example, performance measures for Fiduciary Program 

units include the timeliness of visits and the accuracy of beneficiary case 

file documentation, as measured through VA’s internal quality review 

processes. VA tracks Fiduciary Program performance measures for 

timeliness by generating reports based on case-level data recorded in its 

electronic case management system, known as the Fiduciary Beneficiary 

System (FBS). Because FBS only maintains this case-level data for about 

30 days, we could not validate the accuracy of the performance reports 

and, therefore, could not use them in our study. 

VA’s OIG has reported on the inappropriate use of beneficiary funds by 

fiduciaries over the years, and Congress, GAO, and VA’s OIG have cited a 

number of concerns with VA’s efforts to safeguard beneficiaries’ assets. In 

2006, VA’s OIG noted concerns regarding overdue visits, which may 

 

11Fiduciary Program units that were merged into the hub were units from the following VA 

regional offices: Albuquerque, Anchorage, Boise, Denver, Fort Harrison (Montana), 

Honolulu, Los Angeles, Oakland, Phoenix, Portland, Reno, Salt Lake City, San Diego, and 

Seattle. 

Page 6 GAO-10-241 Safeguarding Veterans' Resources
 

increase the risk of inappropriate use of beneficiary funds.12 In addition, 

the report cited concerns with VA’s efforts to follow up with fiduciaries 

and obtain late financial reports. The report further noted concerns 

regarding missing or undocumented bond information, as well as the 

adequacy of the amount of coverage required under the bond. In 2004, 

GAO cited concerns about the lack of systematic coordination between 

VA, the courts, and other federal agencies in regards to overseeing third 

parties who manage the funds of others.13

Inconsistent 

Compliance with 

Some Policies and 

Weaknesses in Others 

Hinder VA’s Ability to 

Monitor Fiduciaries 

and Safeguard 

Benefits 

Program Staff Do Not 

Always Comply with 

Policies for Conducting 

Visits and Obtaining 

Timely Financial Reports 

and Bonds 

Although VA has established Fiduciary Program policies intended to 

ensure that qualified fiduciaries are selected and regularly monitored, staff 

did not always take required actions within established time frames or 

document in the case files that required actions were taken. Such actions 

included conducting initial and follow-up visits to beneficiaries and 

fiduciaries, following up with fiduciaries to obtain late financial reports, 

and ensuring that fiduciaries managing large beneficiary estates purchased 

bonds. 

VA policy states that initial visits to appoint fiduciaries are to be 

conducted within 45 days of a request for a fiduciary, and VA’s 

Initial Visits 

 

12See, for example, Department of Veterans Affairs Office of Inspector General, Audit of 

Veterans Benefits Administration Fiduciary Program Operations, Report No. 05-01931-

158 (Washington, D.C.: June 27, 2006) and Audit and Appointment and Supervision of 

Fiduciaries, Report No. 7R5-B13-074 (Washington, D.C.: May 1, 1997). 

13GAO, Guardianships: Collaboration Needed to Protect Incapacitated Elderly People, 

GAO-04-655 (Washington, D.C.: July 13, 2004). 

Page 7 GAO-10-241 Safeguarding Veterans' Resources
 

performance goal is to conduct at least 90 percent of these visits on time. 

Conducting initial visits on time is important because fiduciaries cannot 

begin receiving and handling VA benefits until these visits are completed, 

and beneficiaries may depend on VA funds for basic living expenses. 

We sampled and reviewed 67 case files in which initial visits were 

supposed to be conducted between July 1, 2006, and June 9, 2009,14 and 

found that 37 visits were conducted within the 45-day time frame, and 10 

were from 3 to 39 days late.15 For one case, the file lacked documentation 

that an initial visit was made at all.16 Managers and staff in some offices we 

visited said compliance with the timeliness policy for initial visits was 

improving, but was still a concern. They attributed some compliance 

issues to a continued lack of staff and resources. 

According to VA managers, it is VA’s policy that follow-up visits to 

fiduciaries are to be conducted within 120 days of the scheduled date, and 

the on-time goal for these visits is also 90 percent. Timely follow-up visits 

are important to determine the continued suitability of the fiduciary and to 

protect beneficiaries from potential misuse of their funds. 

Follow-up Visits 

Our sample estimated that approximately 61,000 adult beneficiaries were 

supposed to have had at least one follow-up visit between July 1, 2006, and 

June 9, 2009. We estimated that 76 percent of these visits occurred within 

the 120-day time frame, and approximately 12 percent were 1 to 216 days 

late. About 6 percent of cases lacked documentation to indicate that a 

scheduled follow-up visit occurred at all and, in the most extreme case, 

there was no documentation that a follow-up visit had been conducted 

 

14VA implemented recommendations from VA OIG’s June 2006 report on the Fiduciary 

Program (Report No. 05-01931-158) by July 1, 2006. Recommendations involved VA’s efforts 

to conduct visits, obtain and review fiduciary financial reports, and obtain fiduciary bonds. 

As such, we chose this as the start date of our analysis. The concluding date of June 9, 

2009, is the date by which we requested all files be sent to us. 

15We could not determine if VA met its nationwide performance goal of conducting at least 

90 percent of initial visits on time because the number of cases in our sample for which we 

could assess initial visit timeliness between July 1, 2006, and June 9, 2009, was too small to 

project our results to the population. 

16While the remaining 19 cases included documentation that an initial visit occurred; we 

were unable to assess the timeliness of these visits because documents in the file lacked 

the date stamps needed to determine when the visits were requested and/or completed. 

Lack of date stamps could indicate that the photocopies of the files that VA provided us 

were of poor quality or that the documents in the original files were never stamped with 

one or both of the necessary dates needed to assess timeliness. 

Page 8 GAO-10-241 Safeguarding Veterans' Resources
 

although it was overdue by 16 months as of June 9, 2009. Finally, an 

additional estimated 6 percent lacked documentation as to when the visits 

were conducted.17 Similar to initial visits, program managers and staff 

noted that compliance with the 120-day time frame for follow-up visits can 

be challenging due in part to a lack of staff and time. Program managers 

said that conducting visits in a timely manner may be especially 

challenging in regional offices with only one or two Fiduciary Program 

staff who may also have responsibilities outside of the Fiduciary Program. 

In addition, managers and staff noted that conducting timely visits can be 

challenging in areas where staff must drive long distances to see 

beneficiaries and fiduciaries. 

VA policy generally requires that some fiduciaries submit annual financial 

reports documenting how they managed beneficiaries’ funds. Based on our 

nationwide sample, we estimate that fiduciaries for about 33,000 

beneficiaries were required to submit such reports for the time period we 

reviewed. Table 1 shows that, for more than one-half of these files, 

fiduciaries either submitted their financial reports late or it was not 

possible to determine if or when they were submitted. Late financial 

reports were submitted between 1 and 140 days late. 

Annual Financial Reports 

Table 1: Timeliness and Documentation of Financial Reports 

Submission of financial reports Percentage

Financial reports submitted on time 47a

Financial reports submitted late 39b

No documentation that financial reports were ever submitted 8c

No documentation of when financial reports were submitted 6d

Total 100

Source: GAO analysis of VA documents. 

a

The margin of error was approximately plus or minus 13 percent. 

b

The margin of error was approximately plus or minus 12 percent. 

c

The margin of error was approximately plus or minus 11 percent. 

d

These reports lacked the date stamps necessary to assess timeliness. 

VA policy requires staff to contact fiduciaries when their financial reports 

are 35 to 65 days late and again when they are 90 days late. At that time, 

they may inform the fiduciary of the possible repercussions of a failure to 

 

17In this 6 percent, while the files contained the report documenting that the visit had 

occurred, these reports lacked the date stamp necessary to assess timeliness. 

Page 9 GAO-10-241 Safeguarding Veterans' Resources
 

comply, which may include legal actions, a referral to the OIG, or other 

actions.18 After 120 days, the financial reports are considered “seriously 

delinquent,” and appropriate action is to be taken. Staff in one regional 

office we visited acknowledged that follow-up contact is important 

because without it, precedent can be set for fiduciaries to continually turn 

in late financial reports. Moreover, failure to take action to secure timely 

financial reports may result in a finding of negligence, which will require 

VA to reissue any misused benefits.19

Our nationwide sample and site visit file reviews showed that follow-up 

contact was frequently not done or not documented by program staff. Of 

the 30 case files in our sample where financial reports were submitted 

more than 65 days late, 19 case files either lacked documentation of any 

follow-up actions or showed that such actions were not taken within VA 

established time frames. This included two cases where the files did not 

contain any documentation of follow-up actions, and the most recent 

financial reports were submitted nearly 5 months late. Moreover, we found 

additional instances of inadequate staff follow-up on seriously delinquent 

financial reports during our site visit file reviews. We reviewed 20 such 

cases, and table 2 shows that, for the most recent financial reports 

submitted in these cases, staff were generally either late in conducting 

such follow-up actions or did not document the file to show if such actions 

were taken. The 14 late actions in table 2 were between 3 days and about 

11 months late, with 8 actions being more than 4 months late. 

 

18VA primarily tracks case file referrals to its OIG using its electronic case management 

system, FBS. We did not use this information in our study, however, because we could not 

validate its accuracy. This is because FBS does not retain information on referrals beyond 

30 days after the referral is acted upon. 

19The statute provides that if there is a negligent failure to investigate or monitor a fiduciary 

that results in a misuse of benefits, VA will make up that loss to the beneficiary. 38 U.S.C. § 

6107. 

Page 10 GAO-10-241 Safeguarding Veterans' Resources
 

Table 2: Timeliness of First Follow-Up Action for Cases with Seriously Late 

Delinquent Financial Reports 

Follow-up actions 

Number of 

cases

Timely first follow-up action (within 65 days of financial reports being 

late) 

1

Untimely first follow-up action 14

No documentation that actions occurred 4

No documentation of when actions occurred 1

Total number of cases 20

Source: GAO analysis of VA documents. 

In one case, a fiduciary’s financial report was submitted more than 2 years 

later than the original due date, and only after VA initiated action to 

suspend payment. However, VA’s policy notes that this action can be taken 

when a fiduciary is more than 90 days late submitting a financial report. In 

another case, a financial report due in June 2006 was not submitted until 

nearly 2 years later. The file did not indicate that any follow-up actions had 

occurred, although the case is now being investigated for possible misuse 

of funds. Staff in all regional offices we visited said that they sometimes 

did not take follow-up actions or failed to document actions they did take, 

in part, because they lacked the time or believed that some actions did not 

warrant documentation. 

According to VA managers, VA policy generally requires staff to consider 

requiring fiduciaries who oversee estates with a value of $20,000 or more 

in VA funds to purchase a bond to protect beneficiaries’ estates. Our 

nationwide sample showed that program staff sometimes failed to obtain 

proof that a fiduciary purchased a bond, when required, or did not 

adequately document in the beneficiary case files that the bond 

requirement was waived.20 Of the 52 case files in our sample for which 

fiduciaries were required to purchase a bond, 8 case files lacked adequate 

documentation to indicate whether a bond was purchased or that the bond 

requirement was waived because the fiduciary met conditions for an 

exception. Some of the 8 cases involved substantial benefit amounts. For 

example, 2 cases in our sample, which contained no documentation that 

bonds were purchased, had VA estate values of approximately $82,000 and 

Bonds 

 

20The number of cases in our sample requiring a bond was too small to project our results 

to the population. 

Page 11 GAO-10-241 Safeguarding Veterans' Resources
 

$62,000—leaving these beneficiaries and VA vulnerable to a substantial 

loss if funds were misused. Some staff in regional offices we visited said 

that they were often uncertain about what types of bonds are required for 

certain types of fiduciaries, and this was confirmed by our site visit file 

reviews. For example, in one case, a Fiduciary Program staff member was 

told by a fiduciary who was an attorney that an individual bond was 

unnecessary because the fiduciary had a “blanket” bond that covered all 

VA responsibilities. Although this staff member documented in the case 

file that he was unsure if this was correct, he took the fiduciary’s word 

that an additional bond was not required. However, we were told by 

managers and staff that a blanket bond was most likely not acceptable in 

this case, and the staff person should have required the fiduciary to obtain 

an individual bond.21

VA’s Policy for Periodic 

On-site Reviews Does Not 

Ensure Effective 

Monitoring of Professional 

Fiduciaries 

In 2005, VA developed a new policy requiring Fiduciary Program staff to 

conduct periodic on-site reviews of professional fiduciaries22 as required 

by the Veterans’ Benefits Improvement Act of 2004.23 These financial 

reviews examine records kept by fiduciaries who manage funds for 

multiple beneficiaries. Cumulatively, such benefits can be a substantial 

amount of money and the reviews can help detect discrepancies among 

beneficiary accounts, which may not be detected by examining annual 

financial reports for a single beneficiary. Though managers and staff in 

regional offices we visited and in the Central Office said that on-site 

reviews are useful when conducted properly, we found two associated 

policy weaknesses: (1) not all fiduciaries who need these reviews can be 

reliably identified and (2) VA lacks a nationwide quality review process to 

ensure that these on-site reviews are conducted properly and consistently. 

Not all fiduciaries who need reviews can be reliably identified. While VA 

is required to conduct periodic on-site reviews for professional fiduciaries 

who oversee more than 20 beneficiaries with combined benefits totaling 

$50,000 or more, we found that VA cannot reliably identify all those who 

meet this criteria. Each Fiduciary Program unit generates a list of 

 

21Central Office explained that fiduciaries typically need a bond for each individual 

beneficiary. A blanket bond is generally only acceptable if the fiduciary is a government 

entity, in which case a blanket bond covering all of their beneficiaries would be acceptable 

as long as the amount was adequate. 

22VA began conducting these reviews in 2006. 

23Pub. L. No. 108-454, § 504 (codified at 38 U.S.C. § 5508). 

Page 12 GAO-10-241 Safeguarding Veterans' Resources
 

fiduciaries meeting this criteria by using VA’s electronic case management 

system to link or match a fiduciary to all of their beneficiaries. However, 

this computer match is based on a fiduciary’s name, rather than a unique 

identifier, such as the fiduciary’s Social Security number or tax 

identification number. Central Office managers and staff, as well as 

managers in two regional offices we visited, acknowledged that these 

matches may not reliably identify all the beneficiaries managed by a 

fiduciary because fiduciary names can be entered inconsistently into the 

system. For example, if a fiduciary’s name is entered using different 

spellings or abbreviations, such as JOHN SMITH versus JON H. SMITH, it 

may not show up in the system as the same fiduciary across multiple 

beneficiary case files. While VA’s case management system includes a field 

for unique fiduciary identifiers, VA policy does not require this 

information. Central Office staff acknowledged that requiring a unique 

identifier would decrease VA’s chances of making mistakes in identifying 

fiduciaries with multiple beneficiaries who require reviews. 

VA lacks a nationwide quality review process to ensure that periodic onsite reviews are conducted properly and consistently. While VA has 

nationwide quality review processes to ensure that actions—such as 

conducting visits and obtaining financial reports and bonds—are carried 

out in accordance with VA policies, Central Office managers 

acknowledged that VA lacks a similar process for on-site reviews.24 Having 

such a process is not only a key internal control,25 but it is also important 

for ensuring that the on-site reviews are conducted properly and 

consistently across all Fiduciary Program units nationwide. While local 

managers are required to examine the on-site review files and reports after 

completion, our examination of 12 files from the three regional offices we 

visited suggests that requiring only a local review may be insufficient. Four 

of the files we examined lacked key case selection information, preventing 

managers from determining whether cases were selected according to VA 

policy. This policy states that cases associated with beneficiary complaints 

or those with a history of late or questionable financial reports should 

receive priority consideration for review. In addition, although VA policy 

 

24Both regional office managers and Central Office managers and staff regularly review a 

set number of beneficiary case files on either a monthly or yearly basis. 

25Internal controls should generally be designed to ensure that ongoing monitoring occurs 

in the course of normal operations, including regular management and supervisory 

activities, comparisons, reconciliations, and other actions people take in performing their 

duties. See GAO/AIMD-00-21.3.1. 

Page 13 GAO-10-241 Safeguarding Veterans' Resources
 

requires that at least 25 percent of a fiduciary’s beneficiary case files (or 

up to 25 case files) be examined during the on-site reviews, we found that 

this threshold was not met in four reports. While Central Office staff track 

whether on-site reviews are completed, and noted that they have 

considered implementing a national quality review process to ensure that 

they are conducted properly, such a process has not yet been developed. 

We identified two key challenges that limit VA’s ability to improve 

Fiduciary Program performance and oversight. First, VA’s electronic 

fiduciary case management system does not provide sufficient information 

to managers and staff about their cases, and it is cumbersome to use. 

Second, some managers and staff may not have received sufficient training 

to ensure that they have the necessary expertise to effectively monitor 

individual fiduciaries and oversee the program. VA is taking steps to build 

expertise about the case management system and the program itself by 

developing additional standardized training and piloting a consolidated 

Fiduciary Program unit covering 14 western VA regional offices. 

System Limitations 

and Insufficient 

Training Hamper 

Program Performance 

and Oversight; 

However, VA Is 

Taking Steps That 

May Help 

VA’s Fiduciary Case 

Management System 

Provides Insufficient 

Information and Is 

Cumbersome to Use 

VA’s electronic fiduciary case management system, FBS, does not provide 

sufficient data to effectively manage the Fiduciary Program. FBS provides 

some useful information on individual case files, pending workloads, and 

program performance; however, many managers and staff characterized it 

as an antiquated system that is cumbersome to use. Several system 

limitations hamper the agency’s ability to maintain accurate and timely 

data and provide management with quality information about the 

program—typical internal control standards by which government 

agencies are expected to operate.26 Managers and staff cited several 

system weaknesses, including: (1) data field limitations and (2) difficulties 

generating useful management information. 

Data field limitations: The accuracy and completeness of the information 

that FBS provides is limited because the system’s data fields are 

configured to track a fixed number of pending activities and because some 

of the data fields are too restrictive. As a result, fiduciaries may be 

ineffectively monitored. For example, a required visit might not be 

 

26GAO/AIMD-00-21.3.1. 

Page 14 GAO-10-241 Safeguarding Veterans' Resources
 

scheduled due to restrictive data fields that prohibit tracking crucial dates 

or omit important information about the performance of a fiduciary. 

Staff and managers in the three regional offices we visited said they often 

need to track more upcoming actions than FBS permits. For example, staff 

noted that FBS accepts only one due date for upcoming financial reports, 

even though multiple financial reports may be due simultaneously if one or 

more is late. In such cases, the due date for the most recent over-due 

report overrides the older due date, even if the older financial report has 

not yet been submitted. In one case we reviewed, Fiduciary Program staff 

had to follow up on two financial reports from a professional fiduciary 

that were due in 2006 and 2007, while simultaneously tracking an 

upcoming financial report due in 2008. To compensate for this FBS 

limitation, staff in one regional office we visited and staff in Central Office 

said that such actions are tracked manually outside of the system. Some 

staff, for example, keep personal notes as reminders of pending actions 

while others input data into spreadsheets. 

Fiduciary Program staff also told us that the usefulness of FBS is limited 

because not enough information is captured about cases due to restrictive 

data fields. For example, staff sometimes use a “remarks” data field to 

enter notes that help managers and staff understand certain events and 

oversee a case, but said they may need to omit some information because 

of limitations on the number of characters for that field. In addition, one 

Central Office official we spoke with said that some FBS data fields can be 

too general to adequately convey important case information. For 

example, one entry option in FBS to denote why a fiduciary has been 

removed from a case is “resignation”. However, fiduciaries can resign for a 

variety of reasons, such as because of changes in personal circumstances 

or because program staff encouraged the fiduciary to resign due to poor 

money management practices. Another entry option—unfit—also does not 

adequately convey the reasons for removal. For example, fiduciaries may 

become unfit due to a serious illness or may be deemed unfit because they 

were not adhering to the VA approved spending plan. The Central Office 

official we spoke with also provided further evidence that the entry 

Page 15 GAO-10-241 Safeguarding Veterans' Resources
 

options for removal are too general, stating that the option “other” was 

one that staff frequently chose, due to lack of more precise options.27

Difficulties with FBS-generated management reports: Managers at the 

three regional offices we visited told us that they do not always find the 

FBS management reports easy to generate or helpful in overseeing the 

program. For example, one manager told us that monitoring staff 

performance was difficult because the system does not generate a single 

report that shows all upcoming work that staff need to conduct over a 

certain period of time. Instead, several reports need to be generated and 

cross-referenced, which can be cumbersome. In addition, FBS does not 

store historical information beyond 30 days that would allow managers to 

examine past issues with fiduciaries or staff performance. For example, 

managers in two regional offices said that in order to look at historical 

information on seriously delinquent financial reports, they would have to 

manually examine monthly paper printouts generated in prior months by 

FBS. Managers explained that finding these printouts in their archives is 

time-consuming and, because they are not required to keep printouts 

beyond 2 years, information beyond that time may not be available. A 2007 

internal VA report also stated that FBS requires extensive knowledge to 

use, which inhibits effective oversight and management at all levels of the 

program.28 The report recommended that VA begin long-term planning to 

replace FBS with a more user-friendly workload tool that is comparable to 

other operational management systems within VA. 

Although there is acknowledgement among Fiduciary Program 

management that FBS is outdated, VA has no formal plan or time line to 

replace it. Managers and staff at the Central Office said that VA has not yet 

submitted a request to VA’s Office of Information Technology to update 

FBS. One Central Office official told us that although VA intends to make 

such a request in the future, it has not done so yet because of the need to 

focus on other aspects of the program. This official also mentioned that 

the Central Office will offer nationwide FBS training to managers in fiscal 

 

27The remaining entry options for fiduciary removal include “death of a fiduciary,” 

“beneficiary moved to a new jurisdiction,” and “misuse of funds.” Central Office officials 

noted that the “misuse of funds” option was only to be used in cases of proven illegal 

misuse of funds. 

28VA, Fiduciary and Field Examination Pilot Implementation Team Report (Washington, 

D.C.: Nov. 5, 2007). 

Page 16 GAO-10-241 Safeguarding Veterans' Resources
 

year 2010 to increase both managers’ knowledge about the system and 

their willingness to use it. 

VA Provides Some Training 

for Fiduciary Managers 

and Staff, but Additional 

Standardized Training Is 

Needed 

Managers and staff in all three regional offices we visited said the 

Fiduciary Program is complex and requires a great deal of specialized 

knowledge to effectively monitor fiduciaries and provide program 

oversight. Although the Fiduciary Program has a policy manual to guide 

staff in carrying out their responsibilities, managers and staff said there 

are many nuances and exceptions that take time to master, particularly 

since each fiduciary and beneficiary situation may be different. In addition 

to these program complexities, managers in all of the regional offices we 

visited said that high staff turnover has contributed to a large number of 

inexperienced managers and staff in their Fiduciary Program units who 

need training.29 For example, in two of the three regional offices we 

visited, only about one-third of staff (15 out of 47) had more than 2 years 

of experience in the program.30 In addition, we were told that many 

managers at the regional offices we visited had been in their position for 

less than 2 years and had little or no Fiduciary Program experience.31

Managers noted that limited training for these managers and staff may 

have contributed to various program problems, including failures to 

properly monitor fiduciaries or document certain actions in beneficiary 

case files. Our case file review showed that about 15 percent of the files in 

our nationwide sample lacked sufficient documentation of at least one 

required action between July 1, 2006, and June 9, 2009, making it 

impossible to know whether staff acted as required but failed to document 

it, or failed to complete the action.32

 

29One common reason managers gave for high staff turnover was that Fiduciary Program 

positions tend to have low pay grade ceilings, so if staff want to advance beyond these 

ceilings, they must leave the Fiduciary Program. We attempted to obtain VA data on staff 

turnover to determine both the Fiduciary Program turnover rate and how it compares to 

other programs, but we were told that such data was not readily available. 

30The third office, discussed in the next section, was the office which consolidated staff 

from the fiduciary units in 14 western regional offices. 

31Managers explained that regional offices may rotate managers through different units, 

and some managers we spoke to had collateral responsibilities for other units as well. 

32These actions were previously discussed in this report and include failure to properly 

document: (1) required follow-up actions to obtain late financial reports, (2) initial and 

follow-up visits to beneficiaries and fiduciaries were conducted, (3) fiduciary financial 

reports were received, and (4) the purchase of bonds or the waiving of the bond 

requirement. 

Page 17 GAO-10-241 Safeguarding Veterans' Resources
 

VA has provided some training to ensure that Fiduciary Program managers 

and staff are proficient in carrying out their responsibilities, and some 

regional offices have developed their own training. VA provides a 

standardized computer-based training program for new staff who conduct 

visits to beneficiaries and fiduciaries and for those needing a refresher. 

Central Office managers and staff also said that they hold monthly 

teleconferences and conduct periodic visits to individual Fiduciary 

Program units to discuss selected topics. In addition, managers and staff in 

all three regional offices we visited said that they conduct their own 

weekly or biweekly training sessions on selected topics, such as how to 

determine whether bonds are required, and what kinds of situations 

constitute misuse. However, they noted that individual training occurs 

primarily on the job, and the effectiveness and consistency of such 

training depends on the expertise of staff conducting the training. 

Given the complexity of the program and the level of staff experience at 

many Fiduciary Program units, managers and staff in the three regional 

offices we visited said that additional standardized training is needed. 

Central Office managers acknowledged that such training would be 

beneficial and noted that they are in the process of developing two 

standardized training programs. Central Office management said that they 

expect to implement these training programs some time in fiscal year 2010. 

VA Consolidated Western 

Fiduciary Program Units to 

Improve Performance and 

Oversight but Has Not Yet 

Evaluated the Outcomes of 

This Effort 

Beginning January 2008 through September 2008, VA consolidated 

Fiduciary Program unit managers, staff, and files from 14 western VA 

regional offices into a single location in Salt Lake City, Utah—referred to 

as the Western Area Fiduciary Hub—to improve program performance and 

oversight. VA officials expect the hub to achieve these improvements 

through increased staff expertise, more consistent training, better 

leveraging of staff resources, and increased program efficiencies. For 

example, the hub created specific management positions for the Fiduciary 

Program and divided some staff into teams to focus on specific actions 

and responsibilities in an effort to build program expertise, including 

expertise with FBS. In addition, the hub provides opportunities to train 

more staff at once, which could help to further build staff expertise and 

potentially increase the consistency of training. The hub eliminated 

jurisdictional boundaries that prevented staff from conducting visits that 

were geographically close, but outside of their assigned jurisdiction or 

area of responsibility, which VA expects will help balance workloads 

among staff and reduce travel time. Additionally, the hub moved its paperbased beneficiary case file system to an electronic file system, called 

Virtual VA, by scanning in paper documents in an attempt to more 

Page 18 GAO-10-241 Safeguarding Veterans' Resources
 

efficiently transfer information between the hub and staff conducting 

visits in other offices. 

While some VA managers and staff in the hub believe consolidation can 

help improve Fiduciary Program performance, they described some 

challenges that have impeded effective implementation of the pilot project. 

The hub’s managers explained that there had been multiple changes in 

management and, until January 2009, they did not consider the hub to be 

fully functional, which was approximately 1 year after it opened. Managers 

and staff also told us that the hub was implemented before appropriate 

planning and resources were in place. For example, new standard 

operating procedures specific to the hub, as well as new phone systems, 

were put in place over 15 months after the initial rollout. During our visit, 

managers and staff agreed that all of the necessary equipment to conduct 

visits, such as computers, printers, and navigational systems, were still not 

fully in place. Hub managers and staff also said there were unforeseen 

difficulties with Virtual VA, such as inconsistent access and system 

crashes multiple times a day. In addition, managers and staff noted that 

documents were sometimes scanned into the wrong electronic beneficiary 

case file, and a backlog of incoming documents to be scanned meant they 

could not be certain that case files in Virtual VA were up to date. Managers 

also said that the beneficiary case files they received from some regional 

offices had not been properly maintained, which slowed the hub’s ability 

to meet performance goals and time frames. In some cases, for example, 

staff had not taken required actions to address seriously delinquent 

financial reporting and that potential misuse of funds had gone 

unidentified for significant periods of time. As a result, hub staff spent a 

large portion of time updating old cases and performing necessary followup actions, in addition to completing incoming work. Managers and staff 

noted that they have gained valuable insight and knowledge in 

implementing the hub that could help inform future office consolidations. 

Because the hub is still undergoing multiple changes and has not yet been 

evaluated, it is unclear whether consolidation of Fiduciary Program units 

has improved program performance and oversight. Central Office staff told 

us that the agency has been focusing on getting the hub fully operational 

as opposed to evaluating its performance. However, a VA official from the 

Office of Field Operations said that the agency may conduct an evaluation 

of the hub in early 2010, but has not yet developed a specific time frame or 

a plan to conduct such a study. 

Page 19 GAO-10-241 Safeguarding Veterans' Resources
 

The Fiduciary Program provides a valuable service in ensuring that 

billions of dollars in benefits to one of VA’s most vulnerable populations—

those who are unable to manage their own financial affairs due to mental 

impairments—are safeguarded. 

Conclusions 

Past reports show that this program can be susceptible to misuse of funds, 

so it is important that VA take actions to minimize risks to its 

beneficiaries. Since 2005, VA has made several efforts to better monitor 

fiduciaries and oversee the program, such as adding on-site reviews to 

help ensure that professional fiduciaries are appropriately managing 

beneficiaries’ funds as required in the Veterans’ Benefits Improvement Act 

of 2004 and consolidating western Fiduciary Program units to improve 

performance. However, VA continues to face challenges safeguarding 

Fiduciary Program benefits because staff inconsistently comply with 

program policies, some policies are weak or unclear and, as program 

managers and staff stated, the program lacks adequate resources and 

tools. 

Insufficient compliance with VA policies for monitoring fiduciaries, 

including lack of timely follow-up on late financial reports, presents the 

opportunity for funds to be used inappropriately and could preclude VA’s 

prompt detection of such use. In addition, failure to ensure that fiduciaries 

purchase bonds when necessary can leave beneficiaries’ estates unsecured 

and VA liable for replacing misused funds. Further, in the absence of 

stronger policies and procedures for on-site reviews of professional 

fiduciaries, staff may lack key information to determine if fiduciaries who 

serve multiple beneficiaries are performing satisfactorily and in the best 

interest of the beneficiaries. Although improving compliance and policies 

in these areas may take additional resources, such an investment will 

likely lead to improved staff and program performance. Additionally, 

without investing in a case management system that provides sufficient 

information and can be more efficiently navigated, managers and staff may 

not readily have all the information they need to effectively monitor 

fiduciaries and oversee the program. Also, in the absence of sufficient 

standardized training, managers and staff may not have the expertise 

needed to effectively carry out program responsibilities. Finally, although 

VA’s Western Area Fiduciary Hub has the potential to enhance program 

expertise and consistency, improve the delivery of training, and help VA 

better leverage staff resources, it has not yet been evaluated. Without a 

formal evaluation of hub outcomes, VA will not be able to determine its 

impact and whether this effort can address long-standing problems in the 

program. 

Page 20 GAO-10-241 Safeguarding Veterans' Resources
 

To ensure that maximum efforts are made to safeguard beneficiary assets, 

we recommend that the Secretary of Veterans Affairs take the following 

four actions: 

• Ensure that policies regarding file documentation, follow-up with 

fiduciaries for late financial reports, and bond acquisition are understood 

and carried out by staff. This might be accomplished by increasing 

standardized training for staff, clarifying certain policies, and improving 

management review and oversight. 

• Improve the policies for periodic on-site reviews of professional 

fiduciaries by taking additional actions such as: 

• Requiring a unique identifier for all fiduciaries to better determine 

which professional fiduciaries meet the criteria to have on-site 

reviews. 

• Implementing a nationwide systematic quality review process to 

examine completed on-site review reports. 

• Evaluate alternative approaches to effectively and efficiently meet the 

electronic case management system needs of Fiduciary Program managers 

and staff. This could include developing or acquiring a replacement system 

or enhancing the existing system. 

• Move forward with developing a plan to systematically evaluate the extent 

to which the hub pilot project is addressing identified program 

weaknesses. This could include documenting lessons learned during 

implementation. 

We provided a draft of this report to VA for review and comment. VA 

generally agreed with our conclusions and concurred with our 

recommendations. Its written comments are reproduced in appendix II. 

Recommendations for 

Executive Action 

Agency Comments 

and Our Evaluation 

VA agreed with our recommendation that it ensure that policies regarding 

file documentation, follow-up with fiduciaries for late financial reports, 

and bond acquisition are understood and carried out by staff and cited 

actions it is taking to do so. VA’s actions include preparing additional 

interim guidance and standardized training that, among other things, will 

address file documentation and appropriate follow-up. The standardized 

training, which will be provided to all fiduciary managers and staff 

nationwide who are directly involved in administering the Fiduciary 

Page 21 GAO-10-241 Safeguarding Veterans' Resources
 

Program, is scheduled to begin in March 2010. VA is also planning a 

Fiduciary Managers Training Conference in 2010 to provide in-depth 

training on a variety of fiduciary topics. In addition, VA expects to publish 

a revised policy manual by September 30, 2010, that will clarify existing 

guidance, establish new policies, and enhance oversight. 

VA also agreed with our recommendation that it improve its policies and 

procedures for conducting on-site reviews of professional fiduciaries. The 

agency stated that its revised policy will require staff to obtain Social 

Security numbers or tax identification numbers for organizations and 

businesses that serve as fiduciaries, in addition to its current practice of 

requiring this information on individual fiduciaries. The agency plans to 

issue interim guidance and standardized training on this new requirement 

in March 2010. Also effective March 31, 2010, VA will begin requiring that 

all completed on-site reviews of professional fiduciaries be submitted to 

its Central Office for review and analysis. The Central Office’s assessment 

of on-site reviews is an important first step in ensuring that these reviews 

are conducted consistently across all offices and in accordance with 

program policy. 

VA also agreed with our recommendation to evaluate alternative 

approaches to effectively and efficiently meet the electronic case 

management system needs of the Fiduciary Program. VA has established a 

work group that will evaluate the current FBS and submit its findings and 

recommendations in June 2010 for either enhancing or replacing the 

system. 

Finally, VA agreed with our recommendation to move forward with 

developing and implementing a plan to systematically evaluate the extent 

to which the Western Area Fiduciary Hub is addressing identified program 

weaknesses. VA intends to complete such an evaluation by September 30, 

2010. We encourage VA to take steps to ensure that the evaluation’s design 

and criteria yield valid information that will help the agency decide 

whether the consolidation of the western Fiduciary Program units has 

effectively addressed identified program weaknesses. 

VA noted a concern in its comments regarding GAO’s extrapolation of case 

data across the Fiduciary Program population. Specifically, VA 

commented that a stratified random sample of 205 cases is not large 

enough to provide precise predictions about the 106,000 adults in the 

Fiduciary Program. However, we determined our estimates regarding the 

overall population based on this sample with a precision of plus or minus 

10 percentage points. We believe that this was sufficient for the purposes 

Page 22 GAO-10-241 Safeguarding Veterans' Resources
 

of our report and that our sample size was large enough to achieve this 

precision. In addition, all margins of error have been disclosed in the 

report, including footnotes for those estimates of subpopulations with 

margins of error larger than plus or minus 10 percentage points. 

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Secretary of Veterans 

Affairs and others who are interested. The report also will be available at 

no charge on the GAO Web site at http://www.gao.gov. 

If you or your staff have any questions concerning this report, please 

contact me at (202) 512-7215 or bertonid@gao.gov. Contact points for our 

Office of Congressional Relations and Public Affairs may be found on the 

last page of this report. Staff members making key contributions to this 

report are listed in appendix III. 

Sincerely yours, 

Director, Education, Workforce, 

ecurity Issues 

Daniel Bertoni 

 and Income S

Page 23 GAO-10-241 Safeguarding Veterans' Resources
Appendix I: 

Methodology 

Objectives, Scope, and 

Page 24 GAO-10-241 

Appendix I: Objectives, Scope, and 

Methodology 

The objectives of our report on the Department of Veterans Affairs (VA) 

Fiduciary Program were to examine (1) how effective program policies 

and procedures are in monitoring fiduciaries and safeguarding beneficiary 

assets and (2) challenges VA faces in improving program performance and 

oversight. 

Effectiveness of Program 

Policies and Procedures 

To address the first objective, we reviewed existing information on the 

Fiduciary Program. We then collected and analyzed data from a stratified 

random sample of 205 beneficiary case files. We also assessed the 

reliability of VA’s Fiduciary Beneficiary System (FBS) because it was the 

source for our sample selection. We found the data to be reliable for the 

purpose of providing a sampling frame. 

To address both the first objective and obtain necessary background 

information on the program, we reviewed available information on the 

Fiduciary Program, such as the Fiduciary Program’s policies and 

procedures manuals and internal program documents. These included the 

FBS user’s guide to learn how VA tracks and measures Fiduciary Program 

performance, such as the timeliness of visits. We also reviewed relevant 

federal laws and regulations. In addition, we examined VA Office of 

Inspector General (OIG) reports and congressional hearings about the 

Fiduciary Program to understand previously identified weaknesses in 

safeguarding beneficiary assets. 

We also collected and analyzed case-level data from a stratified random 

sample of 205 beneficiary case files to generate performance estimates for 

processes that Fiduciary Program staff use to monitor fiduciaries, such as 

the timeliness in obtaining financial reports or conducting visits.1

 Our 

sample was from a population of over 106,000 adult beneficiaries and was 

stratified based on estate values that were $20,000 and under, and over 

$20,000. The data was also stratified based on the beneficiary’s status as a 

supervised direct payment (SDP) beneficiary.2

 Ultimately, our analysis did 

not focus on the SDP strata because we found that these cases 

 

1

We requested 209 files from VA, but the agency was unable to provide four of them 

because the cases had been closed and the files destroyed. 

2

SDP beneficiaries manage their own funds under VA supervision for a probationary period 

of up to 3 years, after which program policy requires that they either be moved out of the 

program or assigned a fiduciary, unless extenuating circumstances justify their remaining 

in SDP status. 

 Safeguarding Veterans' Resources 
Appendix I: Objectives, Scope, and 

Methodology 

represented such a small portion of all Fiduciary Program activity.3 After 

excluding these SDP cases, our sample allowed us to generalize to a 

population of over 103,000 adult beneficiaries and to some subpopulations. 

This population included all adult beneficiaries, other than those who VA 

planned to monitor with a method other than visits and those who had 

negative estate values, as of March 31, 2009. All estimates in this report 

have a margin of error of plus or minus 10 percentage points or less, at the 

95 percent confidence level, unless otherwise noted. We developed a data 

collection instrument to record information from the case files.4

 Activities 

documented in the beneficiary case files after July 1, 2006, provided the 

basis for our analysis of recent case activities. We chose to focus our 

analysis on these recent case activities because, by this date, VA had 

implemented recommendations from the agency’s June 2006 OIG report 

on the Fiduciary Program. The end date for our sample file review was 

June 9, 2009.5

 One limitation of the file review was that a limited number 

of cases did not contain the relevant information we needed to complete 

our review. One reason was that VA provided us with photocopies of the 

case files, and some of the date stamps VA used to assess the timeliness of 

staff activities may not have been legible on the copies. In other instances,

the original documents may never have been stamped with the date that 

the actions began or were completed. For some categories (such as followup visits), we used the date that the appropriate document was signed 

approximate a missing date stamp in a particular case. We did this when 

the average difference for all cases in that category which included both 

the date signed and the date stamped was no more than 7 days. For initial 

and follow-up visits, we substituted the date signed for the date stamped, 

respectively, in 10 and 25 cases. For categories where such a difference 

exceeded this average (such as the request for an initial visit), or if we 

to 

 

3

The population contained fewer than 3,000 SDP cases, which was approximately 2.5 

percent of the population. 

4

To ensure that our data collection efforts conformed to GAO’s data quality standards, all 

cases that GAO analysts recorded were reviewed by another GAO analyst. When the 

analysts’ views on how the data were recorded differed, they met to reconcile any 

differences. 

5

To determine if the activity was within our time frame of interest, we looked to the 

documentation of the bond requirement, or to the end date of the financial reporting 

period. For initial and follow-up visits, we looked to the date stamp indicating that VA 

received the report of the visit, or if this was not available, to the date the report was 

signed. For one initial visit, the date stamped received or signed was not available, so we 

calculated whether the activity would be within our time frame based on VA guidelines for 

the maximum time allowed between the request date and the date the report of the visit 

should have been stamped. 

Page 25 GAO-10-241 Safeguarding Veterans' Resources
Appendix I: Objectives, Scope, and 

Methodology 

could not otherwise substitute the missing date stamp to calculate 

timeliness, we simply classified cases as having missing date stamps.6

Additionally, if there was an indication in the file that a visit was 

scheduled but there was no documentation that the visit occurred, or if a 

financial report or bond was due, but there was no indication that it was 

submitted, we classified the activity as having no documentation.7

Further, we conducted several tests to assess the reliability of FBS as the 

source for our sample selection and for other case file information 

because prior VA OIG findings and some of our interviews raised 

questions about some FBS data. First, we reviewed existing 

documentation about FBS and prior VA OIG reports that discussed FBS, 

and we interviewed knowledgeable staff about how FBS data was 

collected, stored, and used. Second, we conducted electronic testings of 

FBS data reliability, such as checking for missing data elements. Third, we 

traced selected information to the source documents in the case files. 

Specifically, we compared the estate values in FBS with the documented 

estate values in the case files for 10 randomly selected cases and found 

them to be accurate enough for our purposes. Overall, we found FBS to be 

sufficiently reliable for the purposes of sampling cases for review. We also 

used FBS data to assess how reliably fiduciaries managing multiple 

beneficiaries could be identified. 

Program Effectiveness and 

Challenges 

To obtain information for both objectives, we interviewed managers and 

staff at VA’s Central Office. We also conducted site visits to three 

Fiduciary Program units in VA regional offices to assess how Fiduciary 

Program units oversee fiduciary cases. Finally, we spoke with 

representatives from veterans service organizations and other Fiduciary 

Program units. 

During our interviews with Fiduciary Program managers and staff at VA’s 

Central Office and regional offices, we asked about program policies and 

 

6

There were three cases for which, while the initial visit occurred, the request date for the 

initial visit was missing. We classified these visits as having no date stamp because we did 

not have the dates necessary to calculate the timeliness. 

7

For seven cases, the file indicated that a follow-up visit was scheduled to occur within our 

time frame of interest, but the file had no documentation that the visit occurred. For these 

exams, we determined that the visit should have occurred within our time frame by 

reviewing the scheduled date as written in the previous visit and checking the file to ensure 

that the visit was not postponed for an acceptable reason. 

Page 26 GAO-10-241 Safeguarding Veterans' Resources
Appendix I: Objectives, Scope, and 

Methodology 

procedures and internal control standards used to ensure effective 

program performance and safeguard cash benefits.8

 We also asked about 

program performance goals and standards, and how the Fiduciary 

Program interacts with other VA offices and programs. Among others, we 

spoke with the Chief Fiduciary and his staff, officials from the Office of 

Enterprise Development, Compensation and Pensions, and staff familiar 

with FBS. 

Of the 43 Fiduciary Program Units in VA regional offices, we conducted 

site visits to three—St. Petersburg, Florida; Cleveland, Ohio; and Salt Lake 

City, Utah—during which we interviewed staff and managers, reviewed 

case files, and examined on-site reviews of professional fiduciaries. We 

considered several factors in selecting the Fiduciary Program units to visit. 

First, we wanted to maximize the number of beneficiary cases being 

handled at the offices we visited. Taken together, these three sites 

oversaw more than 25 percent of all Fiduciary Program beneficiaries in 

fiscal year 2008. Second, to obtain geographical variation, we chose units 

in three of the four regions.9

 Third, we selected the Salt Lake City regional 

office because it is the site of a pilot project that consolidated 14 western 

regional offices into one hub. Our purpose in conducting these site visits 

was to gather information about how individual units handled fiduciary 

cases, including the extent to which staff complied with policies and 

procedures, and managers and staff understood them and found them 

useful. To do so, we interviewed program managers and staff and also 

reviewed a total of 32 site visit files for which there were allegations of 

misuse or for which financial reports were more than 120 days overdue. 

We selected these files based on a judgmental sample of files stored at the 

three VA regional offices we visited. We also collected and reviewed 12 onsite reviews of professional fiduciaries who managed funds for more than 

20 beneficiaries with total combined benefits of at least $50,000. We 

chose these fiduciaries from our 32 site visit file reviews. 

Finally, to gain further perspective on the program, we interviewed 

representatives from 10 veterans service organizations during our site 

 

8

See GAO/AIMD-00-21.3.1. 

9

We visited offices in the Southern, Western, and Eastern regions, but not the Central 

region. 

Page 27 GAO-10-241 Safeguarding Veterans' Resources
Appendix I: Objectives, Scope, and 

Methodology 

visits and in Washington, D.C.,10 and spoke to managers and staff at 

Fiduciary Program units in Oakland, California, and Baltimore, Maryland. 

We conducted this performance audit from December 2008 to February 

2010, in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives. 

 

10The American Legion, AMVETS, Catholic War Veterans of the USA, Inc., Disabled 

American Veterans, Florida Department of Veterans’ Affairs, Military Order of the Purple 

Heart, Paralyzed Veterans of America, Utah Department of Veterans’ Affairs, Veterans of 

Foreign Wars of the United States, and Vietnam Veterans of America. 

Page 28 GAO-10-241 Safeguarding Veterans' Resources
Appendix II: Comments from the Department Appendix II: Comments from the Department of Veterans Affairs 

of Veterans Affairs 

Page 29 GAO-10-241 Safeguarding Veterans' Resources 
Appendix II: Comments from the Department 

of Veterans Affairs 

Page 30 GAO-10-241 Safeguarding Veterans' Resources
Appendix II: Comments from the Department 

of Veterans Affairs 

Page 31 GAO-10-241 Safeguarding Veterans' Resources
Appendix III: GAO

A

 Contact and Staff 

cknowledgments 

Page 32 GAO-10-241 

Appendix III: GAO Contact and Staff 

Acknowledgments 

Daniel Bertoni, Director, (202) 512-7215 or bertonid@gao.gov

In addition to the individual named above, Shelia Drake, Assistant 

Director; Nancy Cosentino; Laura Henry; Wiktor Niewiadomski; Nhi 

Nguyen; and Nyree Ryder Tee made significant contributions to this 

report. Roger Thomas provided legal assistance; Jim Ashley, Melinda 

Cordero, and Walter Vance provided assistance with design methodology 

and data analysis; and Kathleen Van Gelder assisted in report 

development. 

 Safeguarding Veterans' Resources 

GAO Contact 

Staff 

Acknowledgments 

(130893) 
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