---

VBA can improve the quality and uniformity
of waiver decisions.

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Report No.:  7R1-B01-047

Date:  February 21, 1997

Office of Inspector General

Washington DC  20420







1.  The Office of Inspector General conducted a review of the
Department of Veterans Affairs (VA) Veterans Benefits Administration's
(VBA) waiver decisions for compensation and pension (C&P)
debts.  The purpose of the review was to evaluate the quality
of decisions to waive the collection of C&P debts and to assess
Committee on Waivers and Compromises (COWC) program policies and
operating procedures at individual VA regional offices (VAROs).
 This review is one of a series of reviews evaluating VA debt
management.

2.  Public Law 92-328 (June 30, 1972) gives VA the authority to
waive recovery of erroneous payments made in the C&P program.
 The law established a single standard of equity and good conscience
to determine whether collection of a debt should be waived.  Current
law precludes waiver if any indication of fraud, misrepresentation,
or bad faith is found in the creation of the debt.  Implementation
guidance for COWC operations is contained in VA Manual MP-4, Part
1, Chapter 8 and VBA Training Guide Supplement to MP-4, Part
1, Chapter 8.

3.  Beneficiary requests for waivers of C&P debts are considered
by VBA's Debt Management Center (DMC) in St. Paul, MN and by COWC
staff established at 57 VAROs.  During Fiscal Year (FY) 1995,
VBA waived 31,128 debts or 53 percent, of the 58,453 debts
processed for waiver decisions.  The total value of C&P debts
waived in FY 1995 was about $67 million.

4.  The review covered COWC operations during FY 1995 and the
first half of FY 1996. We analyzed VBA's FY 1995 COWC statistics
and found a wide variance in decision results among the VAROs,
with individual VAROs granting from 27 percent to 85 percent
of waiver requests.  We found 11 VAROs granted waivers in over
70 percent of the cases, while 7 VAROs granted waivers in
under 40 percent of the cases.  This variance demonstrates a difference
in the application of waiver criteria and results in unequal treatment
of similarly situated beneficiaries who submit waiver requests.
 We also conducted a stratified statistical sample of waiver decisions
made during FY 1996 on 2,643 debts valued at nearly $11.6 million.
 We found that the waiver decision in 30 percent of the cases
reviewed was not supported by the evidence of record.  Based on
our sample results, we estimated that decisions to waive debts
valued at $3.4 million were questionable.

5.  We concluded that greater management attention was needed
in the areas of guidance and training, VARO program supervision,
and VA Central Office (VACO) oversight in order to improve the
quality of waiver decisions.  The Training Guide needs to include
examples which demonstrate to COWC staff when a finding of fraud,
misrepresentation or bad faith can be found for C&P debts.
 Additionally, the Training Guide needs to provide guidance on
actions to be taken when the claimant fails to furnish the required
Financial Status Report, and better guidance for evaluating financial
hardship.  VBA can improve the quality of waiver decisions by
enhancing guidance and training provided to COWC staff, strengthening
supervision by conducting more thorough quality reviews of waiver
cases, and increasing VACO program oversight.

6.  We recommended that you improve the quality of waiver decisions
by:

a. Enhancing guidance in the Training Guide Supplement to MP-4,
Part I, Chapter 8, Committee on Waivers and Compromises (TG-20-90-2
Revised) to provide: (1) illustrations of fraud, misrepresentation,
or bad faith; (2) greater emphasis on the necessity to obtain
financial status reports; and (3) better guidance on how to apply
the financial hardshipand beneficiary fault standards
in the decision to waive debts.

b. Conducting training for COWC personnel on waiver guidelines.

c. Requiring the COWC Chairpersons to conduct more thorough quality
reviews of waiver cases.

d. Increasing VACO oversight of the COWC program by initiating
case reviews with emphasis on decisions made by VAROs whose percentage
of cases granted are outliers, (e.g., fall above 70 percent or
below 40 percent).

7. You concurred with the findings and recommendations and provided
acceptable implementation plans.  We consider all issues resolved.
 However, we will follow up on implementation of planned actions
until they have been completed.  You did not comment on our estimate
of monetary benefits, or provide an alternative estimate.  Our
estimate of monetary impact is based on a statistical sample,
and we consider it to be reasonable and reliable.

For The Assistant Inspector General for Auditing

[Signed]

THOMAS L. CARGILL, JR.

Director, Bedford Audit Operations Division











Page

Memorandum to the Acting Under Secretary for
Benefits (20)i

RESULTS AND RECOMMENDATIONS

VBA Can Improve the Quality and Uniformity of Waiver
Decisions    1

Conclusion    5

Recommendations    6

APPENDICES

IBACKGROUND  7

IIOBJECTIVES, SCOPE AND
METHODOLOGY  8

IIIFY 1995 WAIVER DECISIONS
STRATIFIED

BY PERCENTAGE GRANTED    9

IVDETAILS OF REVIEW 
  11

VMONETARY BENEFITS IN
ACCORDANCE

WITH IG ACT ADMENDMENTS    12

VIMANAGEMENT ADVISORY
   13

VIIMEMORANDUM FROM THE
ACTING

UNDER SECRETARY FOR BENEFITS    14

VIIIFINAL REPORT DISTRIBUTION
   15



VBA Can Improve the Quality and Uniformity
of Waiver Decisions

Our review of the Department of Veterans Affairs (VA) Veterans
Benefits Administration's (VBA) Committee on Waivers and Compromises
(COWC) decisions for Compensation and Pension (C&P) debts
showed that significant variations in decision results among VA
Regional Offices (VARO) could be reduced and the quality of decisions
could be improved.  Analysis of VBA's Fiscal Year (FY) 1995 COWC
statistics showed a wide variance in decision results among the
VAROs with individual VAROs granting from 27 percent to 85 percent
of waiver requests.  A stratified statistical sample of 2,643
debts, valued at nearly $11.6 million, found that the waiver decisions
in 30 percent of the cases reviewed were not supported by the
evidence of record.  Based on our sample results, we estimate
that decisions to waive debts valued at $3.4 million werequestionable.
 VBA can improve the quality and uniformity of waiver decisions
by enhancing guidance furnished VARO COWC staff, conducting training
for COWC staff on waiver guidelines, strengthening supervision
by conducting more thorough quality reviews of waiver cases, and
increasing VA Central Office (VACO) program oversight.

Background

Public Law 92-328 (June 30, 1972) gives VA the authority to waive
recovery of erroneous payments made in the C&P program.  The
law established a single standard of equity and good conscience
to determine whether collection of a debt should be waived.  Current
law precludes waiver if any indication of fraud, misrepresentation,
or bad faith is found in the creation of the debt.  After determining
that a debtor who is requesting waiver is free from fraud, misrepresentation,
or bad faith, the COWC must next apply the standard of equity
and good conscience to determine whether the waiver should be
granted.  To apply the equity and good conscience standard, the
COWC must consider the following:

- The debtor's (and also VA's) degree of fault in the creation
of the debt.
- Any unjust enrichment to the debtor as a result of the debt.
- The detriment that the collection of the debt will cause the
debtor (undue financial hardship/defeat the purpose of the benefit
program).
- The detriment already incurred by the debtor (changed position)
in reliance on the VA overpayment or erroneous advice.



Implementation guidance for COWC operations is contained in VA
Manual MP-4, Part 1, Chapter 8 and VBA Training Guide Supplement
to MP-4, Part 1, Chapter 8, Committee on Waivers and Compromises
(TG-20-90-2, Revised).

Beneficiary requests for waivers of C&P debts are considered
by VBA's Debt Management Center (DMC) in St. Paul, MN, and by
COWC staff established at 57 VAROs.  During FY 1995, VBA
waived 31,128 debts or 53 percent, of the 58,453 debts processed
for waiver.  The total value of C&P debts waived in FY 1995
was about $67 million.

Decision Results Vary Widely Among VAROs

Our analysis of VBA's FY 1995 COWC statistics showed a wide variance
in decision results among the 57 VAROs with individual VAROs granting
from 27 percent to 85 percent of waiver requests.  We
found 11 VAROs granted waivers in over 70 percent of the cases,
while 7 VAROs granted waivers in under 40 percent of the cases.
 This variance in waiver decisions results in unequal treatment
of similarly situated beneficiaries who submit waiver requests.
 (See Appendix III on page 9 for a listing of VAROs stratified
by percentage of waivers granted.)  Based on questionnaires
sent to 56 VAROs (VARO Manila, PI, was excluded) we also
found that there was no standard organizational structure for
processing waiver cases.  At 30 VAROs, the COWC function was decentralized
and was staffed by an average of 12.5 individuals who were assigned
waiver cases intermittently.  At 26 VAROs, the COWC function was
centralized with an average of 2.6 individuals assigned COWC case
work.  VBA management informed us that a task force was reviewing
COWC operations and had concluded that centralizing COWC activities
at all VAROs would increase the accuracy and consistency of waiver
decisions within and between VAROs.  At the time of our review
VBA management was in the process of mandating a centralized structure
at all VAROs.

Decisions to Waive Debts Were Not Supported by
Evidence of Record

We conducted a stratified statistical sample of waiver decisions
for 2,643 C&P debts valued at nearly $11.6 million. 
We reviewed 230 of these waiver cases, which were valued at a
total of $1,253,647.  We identified 70 cases (30 percent), where
the waiver decisions were not supported by the evidence of record.
 Based on our sample results, we estimate that the 2,643 case
population contained 894 cases with debts totaling nearly $3.4 million
in which decisions to grant waivers were questionable based on
evidence of record (See Appendix IV on page 11 for more details
regarding our statistical sampling plan and results).

·In 37 cases, valued at $226,344,
VARO staff found claimants were free from fraud, misrepresentation,
or bad faith even though claimants were overpaid directly based
on their signed Eligibility Verification Reports (EVRs) incorrectly
stating they were not working and had no earnings and/or other
income.  For example:



A veteran received pension overpayments totaling $3,675, based
on his signed EVRs for 1992, 1993, and 1994, incorrectly stating
he had no retirement income.  VA's Income Verification Match (IVM)
program confirmed that the veteran's actual retirement income
was $11,864 in 1992, $12,289 in 1993, and $12,725 in 1994.  The
VARO COWC waived the entire debt of $3,675 finding that the veteran
was free from fraud, misrepresentation, or bad faith.



·In 11 cases, VARO staff found
claimants were free from fraud, misrepresentation, or bad faith
and waived the entire overpayment even though the claimants were
at fault by accepting monthly benefit overpayments totaling $4,970,
after being put on notice that they were being overpaid.  For
example:



A veteran received pension overpayments totaling $996 based on
the failure to report receipt of Social Security benefits.  On
May 3, 1995, VA was advised by the Social Security Administration
(SSA) that the veteran was in receipt of Social Security payments
starting in March 1995.  On May 19, 1995, the veteran
was notified by VA of the amount of income SSA reported he was
receiving and the proposed reduction of $332 in his monthly VA
pension effective April 1, 1995.  The veteran was advised the
adjustment would result in an overpayment.  The veteran was further
advised that VA would wait 60 days before reducing his benefits
in order to allow time for him to submit evidence showing the
reduction should not take place.  The letter specifically advised
the veteran: "You may not be due the full amount paid for
the next 60 days.  If you accept the payments and we decide to
take the proposed action, you will have to repay all or part of
the benefits you receive during the 60 days.  We can reduce the
potential overpayment by adjusting your benefits before the 60-day
period ends.  If you would like us to take this action, send us
a statement asking that we adjust your payments beginning with
your next check."  The veteran did not submit any evidence
and accepted checks of $332 each for May (received June 1, 1995)
and June (received July 1, 1995).  In this case it would have
been appropriate to grant a partial waiver of $332, as provided
by VA policy, and deny waiver of the $664 representing payments
received after receiving notice of the overpayment on May 19,
1995.

·In 11 cases totaling $37,441,
VARO staff waived debts when Financial Status Reports submitted
by the claimants indicated the ability to pay the debt.  For example:



A veteran received overpayment of compensation totaling $1,994,
resulting from an amended apportionment decision retroactively
awarding a portion of his benefits to support his dependents.
 The COWC correctly determined the veteran was free from fraud,
misrepresentation, or bad faith in the creation of the overpayment.
 However, the COWC's decision to waive the debt based on financial
hardship was not supported by evidence shown on the veteran's
Financial Status Report.  Analysis of the Financial Status Report
showed the veteran had monthly income of $3,922 and monthly expenses
of $3,042, providing a balance of $880 with which to pay his VA
debt without incurring financial hardship.

·In 11 cases totaling $16,946,
VARO staff waived the debts based on financial hardship when claimants
had failed to furnish requested Financial Status Reports which
would disclose the claimant's income, assets, and financial obligations.
 For example:



A veteran received overpayment of pension totaling $558 based
on a retroactive reduction of benefits due to not reporting Social
Security income in a timely manner.  The COWC correctly determined
the veteran was free from fraud, misrepresentation, or bad faith.
 However, the decision to waive the $558 debt based on financial
hardship was made without receiving a Financial Status Report
which was requested from the veteran.  VA policy provides that
when a Financial Status Report is requested and not provided by
the debtor, the COWC has no other alternative but to find that
collection of the debt will not create a financial hardship.

Factors Contributing to Variations in Decision
Results and Improper Decisions

Greater management attention is needed to reduce significant variations
in waiver decisions among VAROs and improve the quality of waiver
decisions.  Management emphasis is needed in:

- Staff Guidance and Training
- VARO Program Supervision
- VACO Program Oversight



Staff Guidance and Training - Key waiver case processing
guidance used by VARO staff includes the Training Guide Supplement
to MP-4, Part I, Chapter 8 - Committee on Waivers and Compromises
(TG-20-90-2 Revised).  The Training Guide should have case illustrations
to demonstrate to COWC staff when a finding of fraud or misrepresentation
or bad faith could be made.  Additionally, the Training Guide
needs to provide better case illustrations for evaluating financial
hardship or guidance on actions to be taken when the claimant
fails to furnish the required Financial Status Report.  We noted
during our site visits that COWC chairpersons and members applied
different interpretations of waiver policy and criteria.

For example, current law precludes waiver if any indication of
fraud, misrepresentation, or bad faith on the part of the debtor
is found.  Some COWC chairpersons and members told us fraud, misrepresentation
or bad faith should never be found or could only be found when
supported by evidence beyond a reasonable doubt (a legal standard
applicable to criminal trials).  However, other COWC chairpersons
and staff told us that they could deny waivers based on fraud,
misrepresentation, or bad faith in cases where the claimants submitted
false income statements.

If the COWC determines a debtor is free from fraud, misrepresentation,
or bad faith, the COWC must then apply the standard of equity
and good conscience to determine whether a waiver should be granted.
 Key considerations in applying the standard of equity and good
conscience are whether the debtor would be unjustly enriched by
not repaying the debt or suffer financial hardship if required
to repay.  To reach a decision to waive a debt the COWC needs
to analyze the claimants' income, assets, and financial obligations.
 However, some COWC chairpersons and members told us that obtaining
financial data from claimants was not essential or if the claimant
was free of fraud, misrepresentation, or bad faith, the waiver
should generally be granted regardless of ability to repay the
debt.  By contrast, other COWC chairpersons and staff told us
they deny waiver requests when claimants do not submit required
financial information.

Responses to our questionnaire from 56 VAROs also support the
need for enhanced guidance and training.  We found that of 445
individuals working on COWC cases nearly 25 percent had less than
2 years tenure (as of March 31, 1996).  VA policy requires training
for newly assigned COWC members and training for all COWC members
at least once per year.  However 23 (41 percent) of 56 VAROs reported
that newly assigned staff received only on the job training and
26 (46 percent) VAROs reported less than 1 hour of training
was provided, with 4 VAROs reporting that no training was given
during FY 1995.  The quality of waiver decisions will be
improved if COWC staff are provided better written guidance and
more training.  VBA management also agreed with the need to enhance
guidance and training on waiver cases.

VARO Program Supervision - COWC Chairpersons are required
by VA policy to conduct quarterly quality reviews of waiver decisions.
 Most VARO COWC Chairpersons (64 percent) did not identify waiver
case processing deficiencies through local quality reviews conducted
during FY 1995 and the first 6 months of FY 1996.  Our analysis
of quarterly quality review reports, involving about 2,800 waiver
case decisions, showed that Chairpersons identified only 98 (3.5
percent) of the cases as having decision deficiencies.  By contrast,
our statistical sample found a deficiency error rate of 30 percent.
 Chairpersons can improve the quality of waiver decisions by conducting
more thorough quality reviews of waiver decisions.

VACO Program Oversight - Management advised us that because
of staffing constraints waiver case decisions were not reviewed
at VACO.  Our analysis of COWC decisions showed significant variations
among VAROs.  We believe management should initiate reviews of
waiver decisions by VAROs whose percentage of cases granted are
outliers, (e.g. fall above 70 percent or below 40 percent).
 VBA management could not provide an explanation for the significant
variances.  However, VBA management believes that, based on a
recent task force study that one explanation for variation was
the lack of a centralized COWC structure (See Management Advisory
on page 13 for more details).

Conclusion

VBA can improve the quality and uniformity of waiver decisions
by enhancing guidance furnished VARO COWC staff, conducting training
for COWC staff on waiver guidelines, requiring more thorough quality
reviews of waiver cases and increasing VACO program oversight.

Recommendations

We recommend that the Acting Under Secretary for Benefits improve
the quality of waiver decisions by:

a. Enhancing guidance in the Training Guide Supplement to MP-4,
Part I, Chapter 8, Committee on Waivers and Compromises (TG-20-90-2
Revised) to provide: (1) illustrations of fraud, misrepresentation,
or bad faith; (2) greater emphasis on the necessity to obtain
financial status reports; and (3) better guidance on how to apply
the financial hardship and beneficiary faultstandards
in the decision to waive debts.

b. Conducting training for COWC personnel on waiver guidelines.

c. Requiring the COWC Chairperson to conduct more thorough quality
reviews of waiver cases.

d. Increasing VACO oversight of the COWC program by initiating
case reviews with emphasis on decisions made by VAROs whose percentage
of cases granted are outliers, (e.g., fall above 70 percent or
below 40 percent).

Monetary impact associated with the recommendation is shown
in Appendix V on page 12.

Acting Under Secretary for Benefits Comments

The Acting Under Secretary for Benefits concurred with the findings
and recommendations, and offered no comment on the estimated monetary
impact.

Implementation Plan

The Acting Under Secretary's implementation plan addressed all
recommendations and corrective actions are to be fully implemented
by July 1998.  (See Appendix VII on page 14 for the full text
of the Acting Under Secretary for Benefits comments.)

Office of Inspector General Comments

The implementation plan is acceptable and we consider all issues
resolved.  However, we will follow up on the implementation of
planned actions until they have been completed.  The Acting Under
Secretary did not comment on our estimate of monetary impact or
provide an alternative estimate.  Our estimate of monetary impact
is based on a statistical sample, and we consider it to be reasonable
and reliable.

APPENDIX I



Public Law 92-328 (June 30, 1972) consolidated authority for waiver
of Department of Veterans Affairs (VA) benefit debts.  The legislation
also established  a single standard of equity and good conscience
to determine whether the collection of a debt should be waived.
 Waiver was precluded if any indication of fraud, misrepresentation,
material fault, or lack of good faith was found in creation of
the debt.  Public Law 101-237 (December 18, 1989) removed the
elements of material fault and lack of good faith and replaced
them with the element of bad faith.  VA program officials indicate
that congressional intent was to liberalize the waiver program
by waiving more debts.

Authority to make waiver determinations is delegated to the St.
Paul Debt Management Center and to the Committee on Waivers and
Compromises (COWC) established at each of the 57 Veterans Benefits
Administration (VBA) Regional Offices (VAROs).  The regional office
Director appoints the Committee chairperson, members, and alternate
members from station employees, who may perform their functions
as full time or as an adjunct duty.  The COWCs have independent
decision making authority in waiver decisions.  Recovery of all
or part of an erroneous payment of any VA administered benefit
can be waived provided that the beneficiary requests a waiver
within the allowable time limit, that there is no indication of
fraud, misrepresentation or bad faith, and that a determination
is made that collection of the debt would be against equity and
good conscience.  Implementing guidance for COWC staff is contained
in VA Manual MP-4, Part I, Chapter 8 and Training Guide Supplement
to MP-4, Part I, Chapter 8 - Committee on Waivers and Compromises
(TG-20-90-2 Revised).

During Fiscal Year  (FY) 1995, VBA waived beneficiary debts owed
to the VA valued at about $67 million.  The VBA's COWC completed
a total of 58,453 cases submitted for waiver decisions, with 31,128
(53 percent) having waivers of debt granted in full or in part.
 VBA statistics for FY 1995 COWC decisions show that individual
VAROs granted from 27 percent to 85 percent of waiver requests
processed.

APPENDIX II



Objectives

The purpose of the review of Committee on Waivers and Compromises
(COWC) decisions for Compensation and Pension (C&P) debts
was to evaluate the quality of decisions to waive the collection
of debts and to assess COWC program policies and operating procedures
at individual regional offices.

Scope and Methodology

The review focused on COWC decisions made during FY 1995 and the
first half of FY 1996.  During FY 1995 Veterans Benefits Administration
(VBA) waived beneficiary debts valued at about $67 million.  As
of September 30, 1995 there were 2,643 debts, valued at about
$11.6 million pending waiver decisions.  Our review methodology
included the following:

1. Reviewed the applicable VBA policy and procedures for COWC
operations.

2. Discussed the scope and objectives of our review with VBA and
Assistant Secretary  for Management officials.

3. Reviewed and analyzed FY 1995 waiver decisions made by each
VARO.

4. Statistically sampled 230 of the 2,643 cases pending waiver
decisions as of

September 30, 1995.

5. Reviewed waiver decision cases between April and July 1996,
after COWCs had

completed waiver decisions.

6. Visited four VBA Regional Offices (VAROs) to test policies
and procedures.

7. Analyzed results of questionnaires sent to 56 VAROs regarding
VARO COWC  policies, operating procedures, functions, organizational
structures and staff training.

8. Briefed VBA program officials during the review process to
discuss findings and  proposed recommendations.

The review was conducted in accordance with government auditing
standards for qualifications, independence, and due professional
care.

APPENDIX III

Page 1 of 2





|Strata    | Station          | Station Number | Processed | Waived | Percentage
|--------- | ---------------- | -------------- | --------- | ------ | ----------
|UNDER 40% |                  |                |           |        |           
|          | Columbia         | 319            | 1203      | 323    | 27        
|          | Jackson          | 323            | 984       | 284    | 29        
|          | Little Rock      | 350            | 1035      | 319    | 31        
|          | St. Petersburg   | 317            | 3020      | 1057   | 35        
|          | Cleveland        | 325            | 1530      | 551    | 36        
|          | Buffalo          | 307            | 1255      | 465    | 37        
|          | Seattle          | 346            | 437       | 166    | 38        
|40% - 69% |                  |                |           |        |           
|          | San Juan         | 355            | 427       | 173    | 41        
|          | Newark           | 309            | 673       | 284    | 42        
|          | St. Paul         | 335            | 496       | 207    | 42        
|          | Albuquerque      | 340            | 265       | 114    | 43        
|          | Manila           | 358            | 162       | 69     | 43        
|          | Atlanta          | 316            | 1886      | 832    | 44        
|          | St. Paul DMC     | 389            | 5175      | 2278   | 44        
|          | Salt Lake City   | 341            | 316       | 142    | 45        
|          | Des Moines       | 333            | 484       | 228    | 47        
|          | Togus            | 402            | 217       | 101    | 47        
|          | Fort Harrison    | 436            | 309       | 146    | 47        
|          | Philadelphia     | 310            | 1132      | 542    | 48        
|          | Louisville       | 327            | 719       | 343    | 48        
|          | Phoenix          | 345            | 793       | 383    | 48        
|          | Portland         | 348            | 663       | 322    | 49        
|          | Boston           | 301            | 3020      | 1554   | 51        
|          | St. Louis        | 331            | 1606      | 821    | 51        
|          | Detroit          | 329            | 1496      | 796    | 53        
|          | Lincoln          | 334            | 346       | 183    | 53        
|          | San Diego        | 377            | 374       | 200    | 53        
|          | Houston          | 362            | 1916      | 1049   | 55        
|          | White River Jct. | 405            | 73        | 40     | 55        
|          | Fargo            | 437            | 178       | 98     | 55        
|          | Wichita          | 452            | 348       | 192    | 55        
|          | Indianapolis     | 326            | 475       | 268    | 56        
|          | New York         | 306            | 2280      | 1323   | 58        

APPENDIX III

Page 2 of 2

|Strata            | Station       | Station Number | Processed | Waived | Percentage
|----------------- | ------------- | -------------- | --------- | ------ | ----------
|40% - 69%
Cont'd |               |                |           |        |           
|                  | Pittsburgh    | 311            | 783       | 452    | 58        
|                  | Huntington    | 315            | 389       | 227    | 58        
|                  | Chicago       | 328            | 1705      | 986    | 58        
|                  | Los Angeles   | 344            | 1942      | 1134   | 58        
|                  | Montgomery    | 322            | 891       | 525    | 59        
|                  | San Francisco | 343            | 1989      | 1182   | 59        
|                  | Washington    | 372            | 615       | 364    | 59        
|                  | Nashville     | 320            | 985       | 592    | 60        
|                  | Reno          | 354            | 303       | 185    | 61        
|                  | Providence    | 304            | 176       | 109    | 62        
|                  | Muskogee      | 351            | 3013      | 1862   | 62        
|                  | Honolulu      | 459            | 506       | 312    | 62        
|                  | Denver        | 339            | 1029      | 663    | 64        
|                  | Wilmington    | 460            | 61        | 40     | 66        
|70% +             |               |                |           |        |           
|                  | Milwaukee     | 330            | 658       | 461    | 70        
|                  | Anchorage     | 463            | 73        | 51     | 70        
|                  | Manchester    | 373            | 278       | 196    | 71        
|                  | Baltimore     | 313            | 1177      | 852    | 72        
|                  | Roanoke       | 314            | 992       | 711    | 72        
|                  | Boise         | 347            | 250       | 188    | 75        
|                  | New Orleans   | 321            | 1572      | 1210   | 77        
|                  | Waco          | 349            | 2056      | 1579   | 77        
|                  | Sioux Falls   | 438            | 195       | 152    | 78        
|                  | Winston-Salem | 318            | 1311      | 1062   | 81        
|                  | Hartford      | 308            | 211       | 180    | 85        
|TOTALS            |               |                | 58,453    | 31,128 |           

APPENDIX IV





Review Universe

We identified C&P accounts receivable which had a waiver request
pending Committe on Waivers and Compromises (COWC) decision as
of September 30, 1995.  The population consisted of 2,643 records
valued at about $11.6 million.

Sample Design

The statistical sample included 230 randomly selected cases based
on a stratified sampling design at a 95 percent confidence level.
 The 2,643 case population was divided into three strata: (1)
cases with debts exceeding $19,999, (2) cases pending at VAROs
Columbia, Little Rock, New Orleans and Winston-Salem, and (3)
cases in the remaining 53 VAROs with debts under $19,999

Sample Results

Our review of 230 waiver decisions, with debts totaling $1,253,647,
identified 70 cases (30 percent) with debts totaling $285,701,
where the waiver decisions were not supported by the evidence
of record.  Based on our sample results, we estimate that the
2,643 case population contained 894 cases with debts totaling
nearly $3.4 million in which decisions to grant waivers were questionable.
 The sample results and projections are limited to the 2,643 cases
in our review and do not necessarily reflect conditions in untested
populations.  The stratified sampling and projections analysis
at a 95 percent confidence level is as follows:

|Population Size | Sample Size | Number Excepted | Projected Number of Cases | Questioned Amount | Dollar Estimate
|--------------- | ----------- | --------------- | ------------------------- | ----------------- | ---------------
|102             | 15          | 4               | 27                        | $98,829           | $672,037       
|343             | 124         | 34              | 94                        | $83,666           | $231,430       
|2198            | 91          | 32              | 773                       | $103,206          | $2,492,821     
|2,643           | 230         | 70              | 894                       | $285,701          | $3,396,288     

APPENDIX V





REPORT TITLE:Review
of Waiver Decisions for Compensation and Pension Debts

PROJECT NUMBER:
6R1-059

Recommendation  Category/Explanation  Better use

Numberof Benefitsof Funds

a - d   Better Use Of Funds   $3,396,288

Improve the Quality

of Waiver Decisions

APPENDIX VI



COWC Structure

VBA management believes that, based on a recent task force study,
one explanation for the variation in waiver decision results was
the lack of a centralized COWC structure.  We found COWCs were
structured in one of two ways at individual VAROs.  At 30 VAROs,
the COWC function was decentralized and was staffed by an average
of 12.5 individuals who were assigned COWC cases intermittently
during the month.  These individuals performed COWC case reviews
as an additional duty to their primary assignments.  The COWC
chairperson did not have direct supervision of COWC members except
for COWC case processing.  At 26 VAROs, COWC members were centralized
with an average of 2.6 individuals who were assigned COWC case
work as a principal duty under the supervision of the COWC chairperson.
 We contacted COWC chairpersons at 10 VAROs which had changed
to the centralized structure and were advised that, based on their
experience, they would recommend that other VAROs convert to the
centralized system.  The COWC chairpersons cited improvements
in efficiency, file control, timeliness, and supervision as reasons
for operating under a centralized system.  The COWC chairpersons
also felt the quality and consistency of the waiver decisions
improved because staff were assigned cases as a principal duty
and took more care in working the cases.

Discussions with COWC staff at some of the VAROs visited indicated
that many staff regard COWC case work as an added burden to their
regular duties.  For example, when adjudicators work COWC cases,
they see themselves as being taken off their normal adjudicative
case work.  Adjudicators are chiefly evaluated based on the number
of adjudicative benefit cases they complete.  When performing
COWC case work, adjudicators are working cases for the COWC chairperson
who is generally not one of their immediate supervisors.  VBA
management believes that by centralizing the COWC structure some
negative aspects of a decentralized structure would be eliminated
and there would be more opportunities to further improve COWC
operations.  VBA management informed us that they are in the process
of mandating a centralized COWC structure at all VAROs.

APPENDIX VII





|Department of
Veterans Affairs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Memorandum
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------
|Date:February 4, 1997
From:Acting Under Secretary for Benefits (20)Subj:Draft Report - Review of Waiver Decisions for Compensation and Pension DebtsTo:Assistant Inspector General for Auditing (52)1.We have reviewed the revised draft report received January 28, 1997.  Based upon our own independent audits and reviews of Committee on Waiver and Compromise processing at our Regional Offices, we concur with all four recommendations in the report.2. Our implementation plan for the recommendations in your draft report is as follows:a. Enhance guidance in the Training Guide Supplement to MP-4, Part I, Chapter 8, Committee on Waivers and Compromises, by September 1997.b. Conduct training for COWC personnel on waiver guidelines, by July 1998.c. Require the COWC Chairperson to conduct more thorough quality reviews of decisions, by December 1997.d. Increase VACO oversight of the COWC program by initiating case reviews, by March 1998.3. We greatly appreciate your effort in conducting this review and your recommendations, confirming that additional resources are needed for this veterans' program.[Signed]Stephen L. Lemons
|VA Form 2105
Mar 1989                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



APPENDIX VIII



VA Distribution

Secretary (00)

Under Secretary for Benefits (20A11)

Assistant Secretary for Management (004)

Assistant Secretary for Policy and Planning (008)

General Counsel (02)

Deputy Assistant Secretary for Congressional Affairs (60)

Deputy Assistant Secretary for Public Affairs (80)

Director, Office of Management Controls (004B)

Chief Financial Officer (24)

Non-VA Distribution

Office of Management and Budget

U.S. General Accounting Office

Congressional Committees:

Chairperson, Senate Committee on Governmental Affairs

Senate Ranking Minority Member, Committee on Governmental Affairs

Chairperson, Senate Committee on Veterans Affairs

Senate Ranking Minority Member, Committee on Governmental Affairs

Chairperson, Senate Committee on Appropriations

Senate Ranking Minority Member, Committee on Appropriations

Chairperson, Subcommittee on VA, HUD, and Independent Agencies,
Senate     Committee on Appropriations

Senate Ranking Member, Subcommittee on VA, HUD, and Independent
Agencies,    Committee on Appropriations

Chairperson, House Committee on Government Reform and Oversight

House Ranking Minority Member, Committee on Government Reform
and Oversight

Chairperson, House Committee on Veterans' Affairs

House Ranking Minority Member, Committee on Veterans' Affairs

Chairperson, House Committee on Appropriations