Report No. 08-01987-118 April 28, 2009

VA Office of Inspector General 

Washington, DC 20420 

Department of Veterans Affairs 

Office of Inspector General 

Audit of 

Veterans Benefits Administration’s 

Loan Guaranty Program 

Risk Management 
 

 

 

To Report Suspected Wrongdoing in VA Programs and Operations 

Telephone: 1-800-488-8244 between 8:30AM and 4PM Eastern Time,

 Monday through Friday, excluding Federal holidays

 E-Mail: vaoighotline@va.gov 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

Contents 

Page 

Executive Summary ....................................................................................................i-vi

Introduction

Results and Conclusions ............................................................................................. 3

Loan Guaranty Service Needs a Comprehensive Risk Management Program .............. 3 

Conclusion ...................................................................................................................... 9 

Recommendations............................................................................................................ 9 

Appendixes

A. Scope and Methodology......................................................................................... 11

B. Risk Management Controls .................................................................................... 12 

C. Under Secretary for Benefits Comments................................................................ 14 

D. OIG Contact and Staff Acknowledgments............................................................. 17 

E. Report Distribution ................................................................................................ 18 

VA Office of Inspector General 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

Executive Summary 

Results in Brief 

The Office of Inspector General (OIG) conducted an audit to evaluate the effectiveness of 

risk management within the Veterans Benefits Administration’s (VBA) Loan Guaranty 

(LGY) Program. The audit objective was to determine if LGY Service adequately 

identified, analyzed, and reduced risks that could prevent the effective achievement of the 

LGY Program’s mission to assist veterans in purchasing and retaining homes. 

During fiscal year (FY) 2008, VBA’s LGY Program guaranteed veteran home loans 

totaling $36 billion. For most of these loans, VBA charges veterans funding fees, which 

Congress establishes through legislation, to help offset losses incurred from managing 

and selling foreclosed properties. The funding fees vary based on the veteran’s type of 

military service. 

Historically, funding fees have generally increased. In 2001 for first time homebuyers, 

the fees increased to rates ranging from 1.5 to 2.4 percent of the home value, and in 2006 

for repeat homebuyers, the fees increased to a rate of 3.35 percent. In FY 2008, funding 

fees totaled $567 million. To help prevent future increases in veteran funding fees, VBA 

needs to minimize the losses associated with foreclosed properties. 

Recently, VBA’s losses have steadily increased from $10.6 million in the 1st quarter of 

FY 2007 to $32.5 million for the 3rd quarter of FY 2008. During the first 3 quarters of 

FY 2008 alone, losses totaled about $67.6 million. Strengthening risk identification and 

analysis of losses related to foreclosed properties underscores how improving risk 

management could reduce veteran funding fees and help LGY Service better accomplish 

its mission of assisting veterans to purchase homes. 

VBA lacked reasonable assurance that LGY Service appropriately managed risks because 

the Service did not perform a comprehensive risk assessment. Risk assessments provide 

significant controls that can provide the basis for determining what actions agencies need 

to take to address problems that may limit progress toward meeting program objectives. 

LGY Service did not perform comprehensive risk assessments because VBA lacks 

policies and procedures requiring LGY Service to perform risk assessments. VBA relied 

upon a complement of external and internal risk analysis reviews. However, we found 

that certain significant risk factors, especially external risks, were not adequately 

considered as part of these reviews. Without a comprehensive approach to identifying, 

analyzing, and managing risks, threats to LGY Service’s ability to achieve its program 

objective has the potential of remaining undetected until significant problems arise. 

In addition, LGY Service needed to improve the monitoring of a control implemented to 

mitigate the risk of losses on the sale of foreclosed properties that VA acquires from 

lenders. Because LGY Service was not monitoring and adjusting the net value 

VA Office of Inspector General i 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

percentage (NVP), which LGY Service based on costs that were 9 years old, the control 

had become less effective. As a result, VA incurred return on sale losses of about $123.5 

million dollars during the 21-month period FY 2007 and FY 2008 through June 2008. 

Background 

The mission of the LGY Program is to assist eligible service members, veterans, and 

surviving spouses to purchase and retain homes. To accomplish this mission, LGY 

Service performs three key functions of guaranteeing mortgage loans, managing 

foreclosed properties, and servicing loans. VA guarantees lenders against losses due to 

foreclosure on mortgage loans established through the LGY Program. If lenders 

foreclose on guaranteed loans, VA pays the guarantees, acquires the properties that have 

the best selling potential, and then a VA contractor manages and sells the properties. A 

contractor also services VA loans on foreclosed properties by collecting mortgage 

payments and managing escrow accounts. 

Findings 

LGY Service needed a more comprehensive risk management program to improve the 

effectiveness of its risk management and to strengthen risk assessment controls in the 

areas of identification, analysis, and management (see Appendix B). LGY Service 

established some risk assessment controls, however, they did not adequately consider 

many risk factors. To comprehensively manage and control risks, LGY Service needed 

to improve these risk management controls. A discussion of our results follow. 

1. Risk Identification. 

To provide managers with the information necessary to identify risks that could impede 

the efficient and effective achievement of the LGY Program’s overall strategic objective, 

LGY Service needed to establish adequate goals and objectives. A precondition to risk 

identification, analysis, and management is the establishment of clear and consistent 

goals and objectives. LGY Service periodically reviewed goals and objectives for 

continued relevance, ensured goals and objectives complemented and reinforced each 

other, and regularly reviewed critical objectives. In addition, LGY Service ensured all 

levels of management were involved and committed to the achievement of goals. 

To obtain reasonable assurance that LGY program goals and objectives were achieved, 

however, certain risk assessments factors needed to be addressed. For example, LGY 

Service needed to improve its efforts by ensuring program officials establish and compare 

goals and objectives with industry standards. 

Comparing Goals and Objectives with Industry Standards. LGY Service needed to 

develop program goals and objectives that it can compare with industry standards 

because of the financial risks involved. VBA’s strategic objective for the LGY Program 

included meeting or exceeding lending industry standards for quality, timeliness, and 

foreclosure, but VA’s FY 2008 Performance and Accountability Report (PAR) did not 

VA Office of Inspector General ii 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

compare the LGY Program’s five strategic goal measurements with industry standards. 

The five strategic goal measurements for the LGY Program are the: (1) Foreclosure 

Avoidance Through Servicing (FATS) ratio, (2) electronic-FATS (E-FATS) ratio, (3) 

veteran satisfaction survey, (4) lender satisfaction survey, and (5) statistical quality index, 

which measures the number of correct LGY actions. 

The FATS ratio is a tool to measure VBA’s success in assisting veterans who are facing 

foreclosure. VBA developed this ratio to identify the extent to which foreclosures would 

have been greater had VBA not pursued alternatives to foreclosures. E-FATS is an 

electronic comparison measurement of dollars saved through successful loan 

interventions to dollars spent by VA. Unlike LGY Service, the lending industry does not 

use the FATS or E-FATS ratios. In addition, these ratios do not provide any information 

as to whether VBA is meeting or exceeding loan industry standards. The lending 

industry uses other standards such as the timeliness of loan underwriting and closing to 

measure performance. 

Identifying General, External, and Internal Risks. LGY Service needed to identify all 

types of risks that may threaten VBA’s ability to operate an effective and efficient 

program. LGY Service managers cannot adequately analyze or manage risks they do not 

identify. LGY Service needed to implement a more comprehensive program to ensure it 

identifies and addresses general, external, and internal risk factors. 

General Factors. LGY Service addressed general risk factors such as discussing risks at 

senior level conferences, considering the results of findings from audits and evaluations, 

and communicating employee-identified risks to senior managers. However, LGY 

Service did not address the general risk factors of determining risk rankings on a 

scheduled and periodic basis; communicating to staff how LGY Service will identify, 

rank, analyze, and mitigate risks; and identifying risks as part of short-term and long-term 

forecasting and strategic planning. 

For example, LGY Service managers needed to improve communications with 

appropriate staff on how risks needed to be identified and mitigated. Without this 

communication, staff members in the best position to address program vulnerabilities 

may not fully understand the importance of identifying and mitigating risks that could 

jeopardize the efficient accomplishment of LGY’s mission. 

External Factors. LGY Service also addressed external risk factors such as considering 

technological advancements and interacting with parties outside the federal government. 

For example, LGY Service identified an external risk that lenders and veterans may 

discontinue participation in the program if they are not satisfied. To address this specific 

risk, LGY Service developed procedures to perform lender and veteran satisfaction 

surveys and established satisfaction rate goals. However, LGY Service did not 

adequately address other external risk factors such as business and economic risks; the 

changing needs of Congress, VA officials, and the public; new legislation or regulations; 

possible natural catastrophes or criminal actions; and risks associated with major 

suppliers or contractors. The following example highlights one of the external risks. 

VA Office of Inspector General iii 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

Considering Business and Economic Risks. LGY Service did not identify or effectively 

plan to mitigate the business and economic risks caused by a depressed housing market 

and reduced property values. By establishing a structured risk management program, 

LGY Service would be in a better position to mitigate risks. These risks include 

incurring excessive property maintenance costs from the long-term retention of properties 

and losses on the sale of properties. In FY 2007, VA sold just over 6,000 properties with 

a total value of about $621.8 million for $565.9 million. As a result, VA’s return on sales 

was a loss of about $55.9 million. With the recent downturn in the housing market, the 

risk of additional losses on the return on sales remains high. 

Internal Factors. LGY service also did not adequately identify internal risk factors. For 

example, LGY Service did not adequately address the risks associated with heavy 

reliance on contractors to perform critical agency operations. The recent dramatic 

changes in the national housing market has made it imperative that LGY Service 

effectively monitor the performance of contractors that perform the critical operations of 

managing and selling VA-owned foreclosed properties. 

Improving the identification of general, external, and internal risks will help ensure LGY 

Service addresses risks that may threaten the efficient accomplishment of LGY’s mission. 

To significantly strengthen the analysis and management of program risks, LGY Service 

needs to ensure a more comprehensive risk management program is in place to enhance 

its efforts to address risks that have significant potential to negatively impact program 

performance. 

2. Risk Analysis.

LGY Service staff needed to improve the analyses of program risks. LGY Service had 

established criteria for rating risks as low, medium, or high; analyzing identified risks 

relevant to program objectives; and estimating the significance of risks. However, LGY 

Service needed to improve analyses by developing a formal process to analyze risks, 

involving management and employees in risk analyses, estimating the likelihood and 

frequency of risks, and determining how to best manage or mitigate risks. 

Involving Management and Employees in Risk Analyses. LGY Service managers and 

employees in the best position to analyze program risks, were not sufficiently involved in 

risk analyses. Instead, VA relied on three consulting groups to analyze LGY Program 

controls. VA’s Internal Control Service (ICS) used one firm to analyze the risks 

associated with controls related to VA’s overall financial statements, which included the 

LGY Program financial results. In addition, LGY Service’s Portfolio Loan Oversight 

Unit (PLOU) used two firms to analyze the risks associated with existing PLOU controls. 

However, these firms did not analyze other risks such as those arising from business, 

political, and economic changes or expectations of Congress, VA officials, and the 

public. These types of risks could jeopardize the accomplishment of LGY program 

objectives more than the types of risks analyzed by the firms. 

VA Office of Inspector General iv 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

3. Risk Management. 

LGY Service needed to improve the management of program risks. For example, LGY 

Service did not adequately address the risk management responsibilities and activities of 

establishing mechanisms to anticipate and react to risks presented by changes, using an 

approach based on how much risk can be prudently accepted, taking responsibility for 

setting tolerable risk levels, addressing condition changes at the appropriate VA level, 

and implementing and monitoring controls to manage or mitigate specific risks. 

LGY Service needed to improve the monitoring of a control implemented to mitigate the 

risk of losses on the sale of foreclosed properties that VA acquires from lenders. LGY 

Service uses net value percentage (NVP), which is calculated based on historical VA 

costs of managing foreclosed properties, as a control to help ensure VA does not acquire 

foreclosed properties that may result in return on sale losses. To optimize the 

effectiveness of the NVP control, LGY Service must update the NVP annually. Annually 

updating the NVP has become especially important due to the recent dramatic downturn 

in the national housing market. As of August 2008, LGY Service was using a NVP based 

on the 1999 costs of managing foreclosed properties. Because LGY Service was not 

monitoring and adjusting the NVP, which was based on costs that were 9 years old, the 

control had become less effective. 

For the 21-month period FY 2007 

and FY 2008 through June 2008, 

the Property Management 

Oversight Unit (PMOU) provided 

LGY Service seven quarterly 

reports showing that VA’s property 

management contractor’s return on 

sales ranged from 78.4 to 94.9 

percent. As shown in Figure 1, VA 

incurred losses ranging from $10.6 

million in the 1st quarter of FY 

2007 to $32.5 million for the 3rd 

quarter of FY 2008. In the first 3 

quarters of FY 2008, VBA lost 

about $67.6 million. VA’s total 

losses during the entire 21-month period were $123.5 million. Because LGY Service did 

not annually update the NVP, we could not determine the portion of the $123.5 million 

return on sale losses that VA could have avoided. 

Figure 1. VA Return On Sales of Foreclosed Properties

Loss Per Quarter (FY 2007 and FY 2008 through June 2008) 

$32.5

$19.0

$15.

$15.2

$16.1

5

$14.6

$10.6

$10

$15

$20

$25

$30

$35

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 

FY 2007 FY 2008

Millions

Figure 1. VA Return On Sales of Foreclosed Properties

Loss Per Quarter (FY 2007 and FY 2008 through June 2008) 

$32.5

$19.0

$15.

$15.2

$16.1

5

$14.6

$10.6

$10

$15

$20

$25

$30

$35

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 

FY 2007 FY 2008

Millions

Conclusion 

LGY Service needed to improve the management of program risk to provide a 

systematic, organized, and structured analysis of operations by performing sustained 

comprehensive assessments of the risks that could limit VBA’s ability to improve 

VA Office of Inspector General v 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

VA Office of Inspector General vi 

veterans’ purchase and retention of homes. Overall, LGY Service needed to improve risk 

assessment controls relating to risk identification, risk analysis, and risk management. 

LGY Service did not perform comprehensive risk assessments because VBA had not 

established policies and procedures requiring LGY Service to perform a comprehensive 

risk assessment. Instead, LGY Service relied upon a complement of external and internal 

risk analysis reviews that were not coordinated or sufficiently comprehensive to fully 

identify and manage all potentially significant risks. 

In addition, LGY Service needed to improve the monitoring of a control implemented to 

mitigate the risk of losses on the sale of foreclosed properties that VA acquires from 

lenders. Because LGY Service was not monitoring and adjusting the NVP, which LGY 

Service based on costs that were 9 years old, the control had become ineffective. 

Without a comprehensive approach to risk management, threats to LGY Service’s ability 

to achieve the program goals and objectives have the potential to go undetected until 

significant problems arise. 

Recommendations 

1. We recommended the Under Secretary for Benefits establish policies and procedures 

requiring LGY Service to implement a comprehensive risk management program that 

includes adequate mechanisms for identifying, analyzing, and managing risks. 

2. We recommended the Under Secretary for Benefits ensure LGY Service establish 

policies that define the decision authority to make NVP changes based on annual 

analyses of the potential financial impact and projected changes in financial risk 

tolerance levels. 

Management Comments and OIG Response 

The Under Secretary agreed with our findings and recommendations and provided 

acceptable implementation plans (see Appendix C). We will follow up on the 

implementation of the Recommendation 1 planned improvement actions. The completed 

actions for Recommendation 2 are acceptable and we consider this recommendation 

closed. 

 (original signed by:)

BELINDA J. FINN 

Assistant Inspector General 

for Auditing 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

Introduction 

Purpose 

The OIG conducted an audit to evaluate the effectiveness of risk management within 

VBA’s Loan Guaranty (LGY) Program. The audit objective was to determine if LGY 

Service adequately identified, analyzed, and reduced risks that could prevent the effective 

achievement of the LGY Program’s mission to assist veterans in purchasing and retaining 

homes. 

Background 

Loan Guaranty Program. The mission of the LGY Program is to assist eligible service 

members, veterans, and surviving spouses to purchase and retain homes. To accomplish 

this mission, LGY Service performs three key functions of guaranteeing mortgage loans, 

managing foreclosed properties, and servicing loans. 

Guaranteeing Mortgage Loans. In FY 2008, VBA’s LGY Program guaranteed $36 

billion in home loans. For veterans who are eligible for mortgage loans through the LGY 

Program, VA guarantees lenders against losses due to foreclosure. The guaranty provides 

private mortgage lenders an incentive to offer mortgage loans to veterans without 

requiring a down payment. VBA issues certificates of eligibility to veterans enabling 

them to apply to a VA-approved mortgage lender for a guaranteed home loan. To help 

keep veterans in their homes, LGY Service provides supplemental servicing for VA 

guaranteed home loans if veterans experience payment difficulties. 

Managing Foreclosed Properties. During the period August 2003–August 2008, VA 

contracted with Ocwen, a property management company, to manage and sell VA-owned 

foreclosed properties. In July 2008, VA awarded a new contract to Countrywide Home 

Loans (CHL). VA-owned foreclosed properties are available for sale to the public. After 

VA accepts conveyance of the properties, the contractor is responsible for managing and 

selling the properties. The contractor offers the properties for sale for cash or by offering 

VA financing. As of September 30, 2007, VA had an inventory of 6,975 foreclosed 

properties and 4,696 properties in the process of foreclosure. During FY 2007, VBA’s 

property management contractor sold 6,073 foreclosed properties. The costs of managing 

the sold properties totaled $98.7 million, averaging about $16,300 per property. 

Servicing Loans. Since November 2000, VA has contracted with CHL to provide 

servicing on loans made by VA. CHL collects mortgage payments and manages loan 

escrow accounts, including the payment of property taxes and insurance. During FY 

2007, VA paid CHL about $3 million to service over 12,000 loans. The average cost of 

servicing a loan was about $250. 

VA Office of Inspector General 1 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

Reviews of the Loan Guaranty Program. During the 4-year period 2004–2007, Office 

of Management and Budget (OMB), the Government Accountability Office (GAO), and 

VA’s Internal Control Service (ICS) reviewed the LGY Program. 

Office of Management and Budget Evaluation. In 2004, OMB reviewed the LGY 

Program using its questionnaire-driven methodology called Program Assessment Rating 

Tool (PART). The PART contains 25 questions pertaining to a program’s design and 

purpose, strategic planning capability, quality of performance measurements, financial 

oversight, and reporting of accurate and consistent performance data. The LGY 

Program’s PART score of 35 percent was the second lowest score received by VA’s 10 

major programs, which include medical care, research, compensation, pension, and 

burial. The LGY Program also received a PART rating of “results not demonstrated.” In 

addition, OMB made three improvement recommendations related to developing and 

reporting meaningful program performance measurements. As a result of the 2004 

review, OMB recommended that LGY Service: (1) develop analyses of how results of 

new measures are used and impact program performance, (2) develop the capability to 

begin reporting on the new long-term performance measures that meaningfully reflect the 

purpose of the program, and (3) develop the capability to report on mortgage 

delinquencies earlier than the requirement of 105 days delinquent. 

Government Accountability Office Audit. More recently, GAO issued Department of 

Veterans Affairs Actions Needed to Strengthen VA’s Foreclosed Property Management 

Contractor Oversight (GAO Report 08-60, November 2007). The report identified a 

substantial number of property management deficiencies, such as failure to make needed 

repairs, which may reduce property marketability. GAO also reported that VA’s 

automated Property Management System did not include real-time property maintenance 

and repair information, including expense data, and VA’s contract did not include 

sufficient authority to impose penalties for unsatisfactory performance. GAO 

recommended that VA take several steps in designing, negotiating, and awarding a new 

contract for property management. 

Internal Control Service Review. In 2006, VA’s Office of Business Oversight 

established ICS to assess the departmental network of risk management and control 

processes. ICS reviews focus on gaining assurance for accurate financial reporting on 

material weaknesses. The ICS reviews do not provide a comprehensive assessment of 

program risks because they only analyze risks associated with established controls. They 

do not analyze other risks, such as those arising from business, political, and economic 

changes or expectations of Congress, VA officials, and the public. 

In 2007, ICS, in conjunction with VA’s contracted accounting firm, reviewed LGY 

controls as part of its assessment of major program internal controls for compliance with 

OMB Circular A-123, Appendix A. In July 2008, ICS issued their draft report for its 

review of the LGY Program. The report identified no internal control weaknesses but 

observed that LGY Service needed to improve the timeliness of recording appraisals in 

VA’s automated appraisal system. 

VA Office of Inspector General 2 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

VA Office of Inspector General 3 

Results and Conclusions 

Loan Guaranty Service Needs a Comprehensive Risk 

Management Program 

VBA lacked reasonable assurance that LGY Service appropriately managed risks because 

the Service did not perform a comprehensive assessment of risks that could limit the 

effective and efficient achievement of its mission. The national housing market has 

recently experienced a significant downturn. For example, in calendar year (CY) 2007, 

the national housing market had about a 14.6 percent decline in the number of homes sold 

and an approximate 79.0 percent increase in home loan foreclosures.1

 In this market 

environment, during FY 2007, VBA’s LGY Program guaranteed $25 billion in home 

loans and sold 6,073 foreclosed properties. In addition, instead of a positive return on 

sales of foreclosed properties, the sales resulted in significant losses. VBA lost about 

$55.9 million during FY 2007 and about $67.6 million during the first 3 quarters of FY 

2008, for a total of $123.5 million. 

LGY Service also did not effectively monitor a control mechanism established to mitigate 

the risk of VA losses on the sale of foreclosed properties that VA acquired from lenders. 

Because LGY Service did not calculate the net value percentage (NVP) annually as 

required, we cannot determine its true impact on VA’s return on sales total losses of 

$123.5 million. 

LGY Service did not perform comprehensive risk assessments because VBA lacks 

policies and procedures requiring LGY Service to perform the risk assessments. Instead, 

VBA relied on OMB, GAO, and ICS reviews. However, these reviews were not 

coordinated or sufficiently comprehensive for LGY to fully identify and manage all 

potentially significant risks. Without a comprehensive approach to identifying, 

analyzing, and managing risks, threats to LGY Service’s ability to achieve the program 

objective of helping veterans purchase and retain a home has the potential of remaining 

undetected until significant problems arise. LGY Service needed to improve risk 

assessment controls in the areas of risk identification, risk analysis, and risk management. 

(See Appendix B) 

1. Risk Identification. 

To provide managers with the information necessary to identify risks that could impede 

the efficient and effective achievement of the LGY Program’s overall strategic objective, 

LGY Service needed to establish adequate goals and objectives. A precondition to risk 

identification, analysis, and management is the establishment of clear and consistent 

goals and objectives. 

 

1

The 14.6 percent decline in home sales was calculated using home sales data from the U.S. Census Bureau and the 

National Association of Realtors. The 79 percent increase in home loan foreclosures was reported in a Realty Trac® 

press release and USA Today, January 29, 2008. 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

LGY Service addressed some risk assessment factors pertaining to goals and objectives. 

For example, LGY Service periodically reviewed goals and objectives for continued 

relevance, ensured goals and objectives complimented and reinforced each other, 

regularly reviewed critical objectives, and ensured all levels of management are involved 

and committed to the achievement of goals. 

However, LGY Service did not address other risk assessment factors pertaining to the 

element of goals and objectives such as linking LGY Program goals and objectives to 

VBA’s objectives and strategic plans, establishing goals and objectives for key 

operational and support activities, comparing goals and objectives with industry 

standards, establishing measurement criteria for each goal and objective, and identifying 

what must occur or happen to meet VBA’s objectives. 

The following examples address factors LGY Service needed to improve. 

Linking Goals and Objectives to Strategic Plans. To fully support VBA’s strategic 

objective for the LGY Program, LGY Service needed to establish additional goals and 

objectives that are linked to the strategic objective. VBA’s strategic objective for the 

LGY Program is to: 

Improve the ability of veterans to purchase and retain a home by meeting 

or exceeding lending industry standards for quality, timeliness, and 

foreclosure avoidance. 

To help improve the ability of veterans to retain their homes and avoid foreclosure, LGY 

Service established a FATS ratio goal. However, LGY Service did not establish goals or 

objectives for helping improve veterans’ ability to purchase a home. 

Establishing Goals for Key Activities. LGY Service needed to establish goals for the key 

functions of managing foreclosed properties and servicing loans. During FY 2007, 

VBA’s property management contractor sold 6,073 foreclosed properties. The costs of 

managing these properties totaled about $98.7 million, averaging $16,300 per property. 

These costs included expenses for property maintenance, repairs, and taxes. Also during 

FY 2007, VBA’s loan servicing contractor serviced over 12,000 home loans. The costs 

of servicing these loans totaled about $3 million which averaged about $250 per loan. 

The costs associated with managing properties and servicing loans create significant 

business risks that LGY Service goals and objectives did not address. These business 

risks include increased costs that could occur from maintaining a large inventory of 

foreclosed properties, retaining foreclosed properties for extended periods, or contractor 

overcharges for property management and loan servicing. 

Comparing Goals and Objectives with Industry Standards. VBA’s strategic objective for 

the LGY Program included meeting or exceeding lending industry standards for quality, 

timeliness, and foreclosure avoidance. However, VA’s FY 2008 PAR did not compare 

the LGY Program’s five strategic goal measurements with industry standards. The five 

strategic goal measurements for the LGY Program are the: (1) FATS ratio, (2) E-FATS 

VA Office of Inspector General 4 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

ratio, (3) veteran satisfaction survey, (4) lender satisfaction survey, and (5) statistical 

quality index, which measures the number of correct LGY actions. 

The FATS ratio is a tool to measure VBA’s success in assisting veterans who are facing 

foreclosure. VBA developed this ratio to identify the extent to which foreclosures would 

have been greater had VBA not pursued alternatives to foreclosures. E-FATS is an 

electronic comparison measurement of dollars saved through successful loan 

interventions to dollars spent by VA. Unlike LGY Service, the lending industry does not 

use the FATS or E-FATS ratios. In addition, these ratios do not provide any information 

as to whether VBA is meeting or exceeding loan industry standards. 

The lending industry uses other standards such as the timeliness of loan underwriting and 

closing to measure performance. LGY Service needed to develop program goals and 

objectives that it can compare with industry standards because of the financial risk 

involved. If VBA does not meet or exceed lending industry standards, lenders may elect 

not to underwrite VA guaranteed home loans for veterans. 

Identifying General, External, and Internal Risks. LGY Service needed to identify all 

types of risks that may threaten VBA’s ability to operate an effective and efficient 

program. LGY Service managers cannot adequately analyze or manage risks they do not 

identify. LGY Service needed to implement a more comprehensive program to ensure it 

identifies and addresses general, external, and internal risk factors. 

General Factors. LGY Service addressed certain general risk identification factors such 

as discussing risks at senior level conferences, considering the results of findings from 

audits and evaluations, and communicating employee-identified risks to senior managers. 

However, LGY Service did not address the general risk identification factors of 

determining risk rankings on a scheduled and periodic basis; communicating to staff how 

LGY Service will identify, rank, analyze, and mitigate risks; and identifying risks as part 

of short-term and long-term forecasting and strategic planning. The following example 

highlights a factor LGY Service needed to improve. 

Determining Risk Rankings on a Scheduled and Periodic Basis. LGY Service needed to 

determine relative risk rankings of low, medium, and high on a more consistent and 

frequent basis. In 2006, VA’s Office of Business Oversight established ICS to evaluate 

VA’s network of risk management and control processes. In 2007, ICS reviewed LGY 

Service’s controls and ranked 20 controls as low, medium, or high risk. However, an ICS 

manager stated that the next review would be in 2010. In addition, LGY Service had 

performed functional area control reviews. However, LGY Service reviewed only two of 

six functional areas during FYs 2007 and 2008 (through July 2008). LGY Service did 

not review the other four functions for periods ranging from 4 to 18 years. 

External Factors. LGY Service addressed certain external risk identification factors 

such as considering technological advancements and interactions with parties outside the 

Federal Government. For example, LGY Service identified an external risk that lenders 

and veterans may discontinue participation in the program if they are not satisfied. To 

VA Office of Inspector General 5 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

address this specific risk, LGY Service developed procedures to perform lender and 

veteran satisfaction surveys and established satisfaction rate goals. 

However, LGY Service did not adequately address the external risk identification factors 

of considering business and economic risks; the changing needs of Congress, VA 

officials, and the public; new legislation or regulations; possible natural catastrophes or 

criminal actions; and risks associated with major suppliers or contractors. The following 

example highlights a factor LGY Service needed to improve. 

Considering Business and Economic Risks. LGY Service did not identify or effectively 

plan to mitigate the business and economic risks caused by a depressed housing market 

and reduced property values. By establishing a structured risk management program, 

LGY Service would be in a better position to mitigate risks. Business risk can be the 

result of internal or external factors that may be evident in the wider business community. 

Economic risk is a condition of the economy that negatively affects buying and selling of 

goods and services. 

A depressed housing market and reduced property values are business and economic risks 

that LGY Service did not identify. For example, VA could incur excessive property 

maintenance costs resulting from the long-term retention of properties and losses on the 

sale of properties. In FY 2007, VA sold 6,073 properties with a total value of about 

$621.8 million for $565.9 million. VA’s return on sales was a loss of about $55.9 

million. With the recent downturn in the housing market, the risk of additional losses on 

the return on sales remains high. 

Internal Factors. LGY Service did not adequately address internal risk identification 

factors such as: 

1. Business process reengineering or redesign of operating processes, 

2. Disruption of information systems processes and availability of backup systems, 

3. Qualifications and training of personnel, 

4. Heavy reliance on contractors to perform critical agency operations, 

5. Major changes in managerial responsibilities, 

6. Succession planning and retaining key personnel, and 

7. Availability of future funding. 

The following example highlights a factor LGY Service needed to improve. 

Identifying Business Process Reengineering Risks. LGY Service needed to identify the 

risks of reengineering the default, servicing, and foreclosure process by transferring these 

critical functions from Regional Loan Centers (RLCs) to lenders. As of May 2008, LGY 

Service began the transfer of these functions by providing training to two lenders’ 

employees and granting these lenders access to the VA Loan Electronic Reporting 

Interface system. However, before beginning the transfer of these functions, LGY 

VA Office of Inspector General 6 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

Service did not identify the potential risks of allowing lender employees to perform 

functions previously performed by VBA employees. Identifying these risks is important 

because if lenders do not provide veterans every opportunity to avoid foreclosure, 

veterans could lose their homes, and VBA costs to manage and market these foreclosed 

properties could increase. 

2. Risk Analysis.

LGY Service staff needed to improve the analyses of program risks. LGY Service 

program officials cannot adequately manage risks if they do not properly analyze risks. 

Once LGY Service staff identify program risks, they need to perform thorough and 

complete risk analyses to determine the possible effect on program goals and objectives. 

LGY Service considered risk analysis factors such as establishing criteria for rating risks 

as low, medium, or high; analyzing identified risks relevant to program objectives; and 

estimating the significance of risks. However, LGY Service needed to improve the 

analyses of risks in the areas of developing a formal process to analyze risks, involving 

management and employees in risk analyses, estimating the likelihood and frequency of 

risks, and determining how to best manage or mitigate risks. The following highlights 

two factors LGY Service needed to improve. 

Involving Management and Employees in Risk Analyses. LGY Service managers and 

employees, who are in the best position to analyze program risks, were not sufficiently 

involved in risk analyses. Instead, VA relied on three private consulting firms to analyze 

LGY Program controls. VA’s ICS used one firm to analyze the risks associated with 

controls related to VA’s overall financial statements, which included the LGY Program 

financial results. LGY Service’s PLOU used two firms to analyze the risks associated 

with existing PLOU controls. However, these firms did not analyze other risks such as 

those arising from business, political, and economic changes or expectations of Congress, 

VA officials, and the public. These types of risks could jeopardize the accomplishment 

of LGY program objectives more than the types of risks analyzed by the firms. 

Estimating the Likelihood and Frequency of Risks. LGY Service managers needed to 

analyze the likelihood and frequency of risks such as increasing home foreclosures, 

decreasing home values, and potential congressional legislation and its effect on the LGY 

Program. LGY Service managers did not analyze these types of risks because they relied 

on contractors’ risk analyses, which did not analyze the likelihood and frequency of risks.

3. Risk Management.

LGY Service needed to improve the management of program risks. In recent years, the 

importance of LGY Service risk management has increased because the depressed 

national housing market has the potential to influence the cost-effective accomplishment 

of certain LGY Program functions such as the management of foreclosed properties. 

LGY Service did not adequately address the risk management factors of establishing 

mechanisms to anticipate and react to risks presented by changes, using an approach 

based on how much risk can be prudently accepted, taking responsibility for setting 

VA Office of Inspector General 7 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

tolerable risk levels, addressing condition changes at the appropriate VA level, and 

implementing and monitoring controls to manage or mitigate specific risks. The 

following example highlights a risk management factor LGY Service needed to improve. 

Implementing and Monitoring Controls to Manage or Mitigate Specific Risks. LGY 

Service needed to improve the monitoring of a control implemented to mitigate the risk 

of losses on the sale of foreclosed properties that VA acquires from lenders. LGY 

Service uses a NVP, which is calculated based on historical VA costs of managing 

foreclosed properties, as a control to help ensure VA does not acquire foreclosed 

properties that may result in return on sale losses. To optimize the effectiveness of the 

NVP control, LGY Service must update the NVP annually. Annually updating the NVP 

has become especially important due to the recent dramatic downturn in the national 

housing market. As of August 2008, LGY Service was using a NVP based on the 1999 

costs of managing foreclosed properties. Because LGY Service was not monitoring and 

adjusting the NVP, which was based on costs that were 9 years old, the control had 

become less effective. 

For the 21-month period FY 2007 

and FY 2008 through June 2008, 

PMOU provided LGY Service 

seven quarterly reports showing 

that VA’s property management 

contractor’s return on sales ranged 

from 78.4 to 94.9 percent. As 

shown in Figure 2, VA incurred 

losses ranging from $10.6 million 

during the 1st quarter of FY 2007 to 

$32.5 million for the 3rd quarter of 

FY 2008. In the first 3 quarters of 

FY 2008, VBA lost about $67.6 

million. VA’s total losses during 

the entire 21-month period were 

$123.5 million. Because LGY Service did not annually update the NVP, we could not 

determine the portion of the $123.5 million return on sale losses that VA could have 

avoided. 

Figure 2. VA Return On Sales of Foreclosed Properties

Loss Per Quarter (FY 2007 and FY 2008 through June 2008) 

$32.5

$19.0

$16.1

$15.2

$15.5

$14.6

$10 $10.6

$15

$20

$25

$30

$35

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 

FY 2007 FY 2008

Millions

Figure 2. VA Return On Sales of Foreclosed Properties

Loss Per Quarter (FY 2007 and FY 2008 through June 2008) 

$32.5

$19.0

$16.1

$15.2

$15.5

$14.6

$10 $10.6

$15

$20

$25

$30

$35

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 

FY 2007 FY 2008

Millions

During FY 2008, VBA’s LGY Program guaranteed veteran home loans totaling $36 

billion. For most of these loans, VBA charges veterans funding fees, which Congress 

establishes through legislation, to help offset losses incurred from managing and selling 

foreclosed properties. The funding fees vary based on the veteran’s type of military 

service. Historically, funding fees have generally increased. In 2001 for first time 

homebuyers, the fees increased to rates ranging from 1.5 to 2.4 percent of the home value 

and in 2006 for repeat homebuyers, the fees increased to a rate of 3.35 percent. In FY 

2008, funding fees totaled $567 million. To help prevent future increases in veteran 

funding fees, VBA needs to minimize the losses associated with foreclosed properties. 

VA Office of Inspector General 8 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

Conclusion 

LGY Service needed to improve the management of program risk to provide a 

systematic, organized, and structured analysis of operations by performing sustained 

comprehensive assessments of the risks that could limit VBA’s ability to improve 

veterans’ purchase and retention of homes. Overall, LGY Service needed to improve risk 

assessment controls relating to risk identification, risk analysis, and risk management. 

LGY Service did not perform comprehensive risk assessments because VBA had not 

established policies and procedures requiring LGY Service to perform a comprehensive 

risk assessment. Instead, LGY Service relied upon a complement of external and internal 

risk analysis reviews that were not coordinated or sufficiently comprehensive to fully 

identify and manage all potentially significant risks. 

In addition, LGY Service needed to improve the monitoring of a control implemented to 

mitigate the risk of losses on the sale of foreclosed properties that VA acquires from 

lenders. Because LGY Service was not monitoring and adjusting the NVP, which LGY 

Service based on costs that were 9 years old, the control had become ineffective. 

Without a comprehensive approach to risk management, threats to LGY Service’s ability 

to achieve the program goals and objectives have the potential to go undetected until 

significant problems arise. 

Recommendations 

1. We recommended the Under Secretary for Benefits establish policies and procedures 

requiring LGY Service to implement a comprehensive risk management program that 

includes adequate mechanisms for identifying, analyzing, and managing risks. 

2. We recommended the Under Secretary for Benefits ensure LGY Service establish 

policies that define the decision authority to make NVP changes based on annual 

analyses of the potential financial impact and projected changes in financial risk 

tolerance levels. 

Under Secretary for Benefits Comments 

The Under Secretary agreed with our findings and recommendations. LGY Service will 

establish new policies and procedures to implement a comprehensive risk management 

program by March 31, 2010. After a comprehensive risk assessment, LGY will initiate 

formal A-123 reviews for each of the high-risk LGY functional areas and processes. The 

A-123 reviews will then be used to conduct annual risk assessments. 

On April 14, 2009, LGY established policy requiring the Service Director to concur in 

the annual NVP analysis, justification, and recommendation. Calculation of property 

acquisition and management costs will be completed annually in November for the prior 

fiscal year. Analysis and publication of the NVP in the Federal Register (if necessary) 

will occur annually in December. VBA requested closure of this recommendation. 

VA Office of Inspector General 9 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

VA Office of Inspector General 10 

OIG Response 

The planned actions for Recommendation 1 are acceptable and we will follow up on their 

implementation. The completed actions for Recommendation 2 are acceptable and we 

consider this recommendation closed. 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

Appendix A 

VA Office of Inspector General 11 

Scope and Methodology 

The audit covered LGY Program risk management controls during the 22-month period 

October 2006–July 2008 and included on-site reviews at eight locations: 

VBA Central Office, Washington, DC PMOU, Nashville, TN 

LGY Service, Washington, DC PLOU, Indianapolis, IN 

RLC, Atlanta, GA ICS, Austin, TX 

Loan Management Unit, Nashville, TN

Administrative and Loan Accounting Center, Austin, TX

At these locations, we interviewed program officials and staff. We also reviewed 

policies, procedures, property management and loan servicing contracts, and other key 

documents related to internal controls and risk management. Documents reviewed 

included a Grant Thornton Limited Liability Partnership July 2007 report on LGY 

Program compliance with OMB Circular A-123, Appendix A and a Kearney & Company 

October 2007 report on PLOU’s invoice certification process. We also analyzed PMOU 

return on sales data for properties acquired through foreclosure. 

To assess the effectiveness of LGY Program risk management controls, we used OMB’s 

Circular A-123 and GAO’s Internal Control Management and Evaluation Tool 

(August 2001, GAO-01-1008G). The circular requires federal managers to establish and 

assess the effectiveness of internal controls. The tool assists agencies in implementing or 

maintaining effective controls and in determining what, where, and how improvements 

can be made. GAO recommends federal managers use the tool to perform a systematic 

and structured assessment of the internal control structure. 

The audit focused on controls related to the audit objectives. The audit was not intended 

to form an opinion on the adequacy of VBA controls overall, and the report does not 

render such an opinion. We conducted this performance audit in accordance with 

generally accepted government auditing standards. Those standards require that we plan 

and perform the audit to obtain sufficient and 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 objective. 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

Appendix B 

VA Office of Inspector General 12 

Risk Management Controls 

Effective risk management controls include the following four main elements. When 

operating effectively, these elements create a risk control process that minimizes program 

inefficiencies. 

1. Program Goals and Objectives. Goals and objectives are the starting point for risk 

management and need to be established for operational and support activities. Goals and 

objectives should be reviewed to assure they have continued relevance and are consistent 

with industry or business norms. Management also needs to establish measurement 

criteria for each goal and objective. 

2. Risk Identification. Program officials need to implement mechanisms to identify 

internal and external risks that could impede the achievement of program goals and 

objectives. Internal risks include relying on contractors to perform critical program 

operations and risks associated with changes in managerial responsibilities. External 

risks include business and economic changes and new legislation or regulations. 

3. Risk Analysis. Management needs to establish policies and procedures to analyze 

identified risks and determine the possible effects on program goals and objectives. 

Appropriate levels of management and employees must be involved in the analysis, and 

they need to determine the best approach for managing or mitigating the risks. 

4. Risk Management. Program officials need to implement mechanisms for managing 

risks by anticipating and reacting to governmental, economic, industry, business, or 

regulatory changes. Management needs to give special attention to changes that can have 

a more dramatic and pervasive effect on the program. Effective risk management will 

help mitigate risk and provide better assurance that program goals and objectives are 

successfully accomplished. 

LGY Service Controls. LGY Service had established Regional Loan Centers to assist 

veterans and lenders with guaranteed mortgage loans and three units to monitor, oversee, 

and control the performance of the three functions of guaranteeing mortgage loans, 

managing foreclosed properties, and servicing loans. 

Regional Loan Centers (RLC). LGY Service has nine RLCs responsible for providing 

services to both lenders and veterans. RLCs provide training to lenders and real estate 

professionals to educate and encourage the lenders to offer mortgage loans to veterans 

with favorable credit terms. RLCs also work with veterans and lenders to arrange 

alternatives to foreclosure when veterans face financial difficulty. 

Loan Monitoring Unit (LMU). The LMU in Nashville, TN monitors VA-approved 

mortgage lenders’ underwriting practices to ensure adherence to VA standards and 

regulations. This includes monitoring lenders’ establishment, underwriting, and closing 

of guaranteed home loans. 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

Appendix B 

VA Office of Inspector General 13 

Property Management Oversight Unit (PMOU). The PMOU in Nashville, TN provides 

oversight of the property management contract. PMOU staff perform contract 

monitoring, including inspections of foreclosed properties owned by the VA. PMOU 

staff also review contract invoices to ensure they are accurate, verifiable, and 

documented. The PMOU staff then approves the invoices for payment. 

Portfolio Loan Oversight Unit (PLOU). The PLOU in Indianapolis, IN provides 

oversight of the loan servicing contract. PLOU staff perform contract monitoring, 

including the review of pending property rights and foreclosure litigation. PLOU staff 

also review contract invoices to ensure they are accurate, verifiable, and documented. 

The PLOU staff then approves the invoices for reimbursement. 

In addition, VBA’s Administrative and Loan Accounting Center in Austin, TX provides 

financial management services to LGY Service. These services involve financial 

oversight and control of the LGY Program, including reviewing voucher accuracy, 

paying vouchers, reconciling loan accounts, and offering financial advisory services. 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

Appendix C 

Under Secretary for Benefits Comments 

VA Office of Inspector General 14 

Department of 

Veterans Affairs Memorandum 

Date: April 15, 2009

From: Under Secretary for Benefits (20) 

Subj: Audit of Veterans Benefits Administration’s Loan Guaranty 

Program Risk Management

To: Assistant Inspector General for Auditing (52) 

1. Attached are VBA’s comments to OIG’s Draft Report: Audit 

of Veterans Benefits Administration’s Loan Guaranty Program 

Risk Management. 

2. Questions may be referred to Nancy Holly, Program Analyst, 

at 202-461-9199. 

(original signed by:)

P. W. Dunne 

Attachments 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

Appendix C 

VA Office of Inspector General 15 

Under Secretary for Benefits Comments 

to Office of Inspector General’s Report 

The following Under Secretary’s comments are submitted in 

response to the recommendations in the Office of Inspector 

General’s Report: 

OIG Recommendations

Recommendation 1. We recommend the Under Secretary 

for Benefits establish policies and procedures requiring LGY 

Service to implement a comprehensive risk management 

program that includes mechanisms for identifying, analyzing, 

and managing risks. 

VBA Response Concur: Loan Guaranty Service (LGY) 

currently conducts internal control reviews to identify, 

analyze, and manage risks. However, the scope, frequency, 

documentation, and concurrence process were not deemed by 

OIG to be sufficient. Therefore, LGY Service will establish 

new policies and procedures to implement a comprehensive 

risk management program. 

After a comprehensive risk assessment, LGY will initiate 

formal A-123 reviews for each of the high-risk LGY 

functional areas and processes. The A-123 reviews will then 

be used to conduct annual risk assessments going forward. 

More frequent risk reviews and analyses will be conducted as 

necessary to address new risks or changes in risk impact, 

which may be a result of internal or external events. 

Target Completion Date: March 31, 2010 

Recommendation 2. We recommend the Under Secretary 

for Benefits ensure LGY Service establish policies that define 

the decision authority to make NVP changes based on annual 

analyses of the potential financial impact and projected 

changes in financial risk tolerance levels. 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management 

Appendix C 

VA Office of Inspector General 16 

VBA Response Concur: Based on this recommendation, 

LGY will continue to perform annual calculations of property 

acquisition, management and resale costs as described in the 

definition of net value in 38 CFR 36.4301. In addition, LGY 

will analyze the results of these calculations and balance the 

potential financial impact on the program with the potential 

negative consequences on future credit availability for 

veterans when deciding the rate to use each year. 

LGY established policy requiring the Service Director to 

concur in the annual net value percentage (NVP) analysis, 

justification, and recommendation. Calculation of property 

acquisition and management costs will be completed annually 

in November for the prior fiscal year. Analysis and 

publication of the NVP in the Federal Register (if necessary) 

will occur annually in December. VBA requests closure of 

this recommendation. 

Target Completion Date: April 14, 2009 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management

Appendix D 

VA Office of Inspector General 17 

OIG Contact and Staff Acknowledgments 

OIG Contact Kent Wrathall (404) 929-5921 

Acknowledgments E. Marcia Drawdy 

Harvey Hittner 

Nathaniel Holman 

Earl Key 

Whittie Lockett 

George Patton 

Cheri Preston 

Al Tate 

Alvin Wiggins 
Audit of Veterans Benefits Administration’s Loan Guaranty Program Risk Management

Appendix E 

VA Office of Inspector General 18 

Report Distribution 

VA Distribution

Office of the Secretary 

Veterans Health Administration 

Veterans Benefits Administration 

National Cemetery Administration 

Assistant Secretaries 

Office of General Counsel 

Director, Loan Guaranty Service (26) 

Non-VA Distribution

House Committee on Veterans’ Affairs 

House Appropriations Subcommittee on Military Construction, Veterans Affairs, and 

Related Agencies 

House Committee on Oversight and Government Reform 

Senate Committee on Veterans’ Affairs 

Senate Appropriations Subcommittee on Military Construction, Veterans Affairs, and 

Related Agencies 

Senate Committee on Homeland Security and Governmental Affairs 

National Veterans Service Organizations 

Government Accountability Office 

Office of Management and Budget 

This report will be available in the near future on the OIG’s Web site at 

http://www.va.gov/oig/publications/reports-list.asp. This report will remain on the OIG 

Web site for at least 2 fiscal years after it is issued.