Department of Veterans Affairs 

Office of Inspector General 

Audit of 

Veterans Health Administration's 

Accounting and Oversight of 

Hurricane Katrina Costs 

Report No. 06-00595-101 March 15, 2007

VA Office of Inspector General 

Washington, DC 20420 
To Report Suspected Wrongdoing in VA Programs and Operations 

Call the OIG Hotline – (800) 488-8244 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs 

Table of Contents 

Page 

Executive Summary ..............................................................................................i

Introduction ..........................................................................................................1

Purpose............................................................................................................................. 1

Background...................................................................................................................... 1

Scope and Methodology .................................................................................................. 3

Results and Conclusions ....................................................................................4

Accounting Controls Needed Strengthening ................................................................... 4 

Appendixes 

A. Acting Under Secretary for Health Comments.......................................................... 8 

B. Monetary Benefits in Accordance with IG Act Amendments................................. 13

C. OIG Contact and Staff Acknowledgments............................................................... 14

D. Report Distribution .................................................................................................. 15

VA Office of Inspector General 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs 

Executive Summary 

Introduction 

On August 29, 2005, Hurricane Katrina devastated the Gulf Coast states of Louisiana, 

Mississippi, Alabama, and Florida. The VA Southeast Louisiana Veterans Health Care 

System in New Orleans, LA, and the VA Gulf Coast Veterans Health Care System in 

Gulfport, MS, were severely damaged and remain nonoperational. As a result of 

widespread congressional and public interest in the Federal response to Hurricane 

Katrina, the President’s Council on Integrity and Efficiency (PCIE) established a working 

group that developed a coordinated hurricane oversight effort. The purpose was to 

summarize the audit efforts by the inspectors general community in their oversight of 

response and recovery efforts related to Hurricane Katrina. Our oversight responsibilities 

included an audit of internal controls associated with the recovery of Hurricane Katrina. 

Results 

While VHA employees demonstrated heroic efforts in overseeing the evacuation of 166 

patients in Mississippi and Louisiana following Hurricane Katrina, our audit showed that 

VHA did not have sufficient internal controls in place to effectively account for costs 

resulting from relief activities. We determined that when accounting for disaster relief 

costs, VHA needed to: (1) improve tracking and reporting, (2) ensure routine costs are 

not reported as disaster relief costs, (3) establish fund control points, and (4) develop 

more comprehensive policies and procedures. We attributed the deficiencies to the lack 

of a reliable methodology to track and report costs related to a Federally declared 

emergency. As a result, $13.7 million (26 percent) of $52.5 million was incorrectly 

accounted for as disaster relief costs. The $13.7 million in overstated costs was 

comprised of routine medical costs, costs reported as both an obligation and expenditure, 

and estimated costs instead of actual costs. 

Recommendations 

We recommended that the Acting Under Secretary for Health establish controls or 

mechanisms to ensure costs resulting from Hurricane Katrina are accurately identified, 

recorded, and reported; ensure the $0.6 million for prescriptions provided by temporary 

mobile health clinics is not included as disaster relief costs; ensure distributed funds are 

based on actual costs; and establish fund control points to account for disaster relief costs. 

Acting Under Secretary for Health Comments 

The Acting Under Secretary for Health agreed with the findings and recommendations 

and provided acceptable implementation plans. (See Appendix A, pages 8–12 for the full 

text of the Under Secretary’s comments.) The Acting Under Secretary reported that 

VISN 16 has already made significant progress in strengthening needed internal controls 

to ensure that costs incurred by Hurricane Katrina relief efforts are clearly tracked and 

VA Office of Inspector General i 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs 

validated. He also reported VHA will cooperate fully with the Offices of the Assistant 

Secretary for Management and the Assistant Secretary for Policy and Planning to develop 

comprehensive national policies and procedures to account for disaster relief costs. He 

also provided technical comments that we incorporated into our report where appropriate. 

We will follow up on the implementation of planned improvement actions until they are 

complete. 

 (original signed by:) 

 BELINDA J. FINN 

 Assistant Inspector General 

 for Auditing

VA Office of Inspector General ii 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs 

Introduction 

Purpose 

As a result of widespread congressional and public interest in the Federal response to 

Hurricane Katrina, we conducted an audit to determine whether VHA had controls in 

place that were operating effectively to account for costs resulting from Hurricane 

Katrina relief activities. 

Background 

On August 29, 2005, Hurricane Katrina devastated the Gulf Coast states of Louisiana, 

Mississippi, Alabama, and Florida with Category 4 winds and torrential rains. Katrina 

was the third strongest hurricane in history to hit the United States and the sixth strongest 

hurricane ever recorded in the Atlantic basin.1

 VA has major health care systems located 

in the affected areas. 

Hurricane Katrina Impact. Hurricane Katrina caused severe damage to the VA 

Southeast Louisiana Veterans Health Care System in New Orleans, LA, and the VA Gulf 

Coast Veterans Health Care System in Gulfport, MS. Both are part of Veterans 

Integrated Service Network (VISN) 16, the South Central VA Health Care Network. 

Both facilities remain nonoperational as of the date of this report. Hurricane Katrina’s 

impact on the VA Gulf Coast Veterans Health Care System in Gulfport is depicted below 

in the photograph of the facility. 

The VA Southeast Louisiana Veterans Health Care System experienced severe flooding, 

and the VA Gulf Coast Veterans Health Care System had extensive wind and water 

 

1

 Department of Veterans Affairs, "VA Hurricane Katrina Pre-Landfall VA Actions," dated October 2005. 

VA Office of Inspector General 1 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs 

damage. Patients from the VA Gulf Coast Veterans Health Care System in Gulfport were 

transferred to the VA Gulf Coast Veterans Health Care System in Biloxi, MS. Patients 

from the VA Southeast Louisiana Veterans Health Care System in New Orleans were 

transferred to various medical facilities within VISN 16. Also, VA established temporary 

outpatient clinics in the New Orleans area to meet the health care needs of its remaining 

patients. 

Compendium of Hurricane Oversight. The PCIE established a working group that 

developed a coordinated hurricane oversight effort to summarize the audit efforts by the 

inspectors general community in their oversight of response and recovery efforts related 

to Hurricane Katrina. The Compendium of Hurricane Oversight in the Gulf States, 

published in December 2005, identified management reviews, audits, and investigations 

to be performed by the inspectors general community. Our oversight responsibilities 

consist of audits of internal controls, contract actions, purchase card transactions, and 

program management. 

Gulf Coast Recovery Supplemental Appropriation. The Department of Defense, 

Emergency Supplemental Appropriations to Address Hurricanes in the Gulf Of Mexico, 

and Pandemic Influenza Act of 2006 provided a $198.3 million supplemental 

appropriation to reimburse VA for medical services.2

 

VA Employees Honored for Hurricane Relief Efforts. By unanimous consent, the 

U.S. Senate adopted a resolution of praise for VA employees for their heroic efforts 

following Hurricane Katrina. The resolution stated that before the storm hit, employees 

oversaw the evacuation of 166 patients in Mississippi and Louisiana and that employees 

had the foresight to transfer copies of electronic medical records from the health care 

system in New Orleans to other VA facilities so that those records would be available on 

a national level.3

 

Prior Hurricane After Action Reports. On December 15, 2004, after Hurricanes 

Charley, Frances, Ivan, and Jeanne had made landfall during the year, VHA’s internal 

assessment revealed that major emergencies, such as hurricanes, usually require VHA to 

seek supplemental funds for cost reimbursements.4

 Knowing that response timeframes 

are usually short in emergent situations, VHA concluded that designing a system for 

tracking impact costs could improve accuracy of VHA’s accountability of recovery 

efforts. On December 23, 2005, VHA reported the completion of procedures to capture 

reimbursable and nonreimbursable expenditures for major emergencies. 

 

2

 Public Law 109-148, December 30, 2005. 

3

 Senate Resolution 263, “Commending the Efforts of the Department of Veterans Affairs in Responding to 

Hurricane Katrina,” October 3, 2005. 

4

 This issue is discussed in VHA’s After Action Report 2004, Hurricanes Charley, Frances, Ivan, and Jeanne, dated 

December 15, 2004. 

VA Office of Inspector General 2 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs 

Scope and Methodology 

To address the objectives of the audit, we interviewed operations and financial 

management employees at VISN 16; G.V. Sonny Montgomery VA Medical Center 

(VAMC); Jackson, MS; VA Medical Center Alexandria, LA; VA Gulf Coast Veterans 

Health Care System; the Michael E. DeBakey VAMC in Houston, TX; and at the VA 

Office of Finance and VHA’s Office of the Deputy Under Secretary for Health for 

Operations and Management located at VA Central Office (VACO). We also reviewed 

impact cost reports, purchase orders, vendor invoices, receiving reports, accounts payable 

schedules, and submissions for allocations of supplemental appropriation funds. We 

conducted onsite work at the Michael E. DeBakey VAMC; the VA Gulf Coast Veterans 

Health Care System; the Alexandria VAMC in Alexandria, LA; the G.V. Sonny 

Montgomery VAMC and VISN 16 in Jackson, MS; and VHA’s Business Liaison Office 

at VACO. 

We assessed compliance with VA policies and Federal laws that addressed accounting 

and oversight of obligations and expenditures related to Hurricane Katrina damages 

reimbursable under the Gulf Coast recovery supplemental appropriation. In addition, we 

reviewed a number of background documents as well as Government Accountability 

Office reports and congressional testimony. On November 10, 2005, we attended the 

Senate Committee on Veterans’ Affairs hearing on rebuilding the Gulf Coast following 

Hurricane Katrina. 

Our scope covered the period August 29, 2005, to January 15, 2006. We conducted 

onsite work from December 6, 2005, to March 17, 2006. In planning and performing the 

audit, we relied on computer-generated data. To test the reliability of this data, we 

compared relevant electronic data elements with supporting expenditure and obligation 

documents. We found the computer-generated data to be sufficiently reliable for our 

audit objectives. 

Our assessment of internal controls was reported to the PCIE Compendium of Hurricane 

Oversight and focused only on those controls related to our audit objective of 

determining whether controls over accounting for costs resulting from Hurricane Katrina 

relief activities were operating effectively. Our assessment was not intended to form an 

opinion on the adequacy of internal controls overall, and we do not render such an 

opinion. In all other aspects, the audit was conducted in accordance with Generally 

Accepted Government Auditing Standards. 

 

VA Office of Inspector General 3 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs 

Results and Conclusions 

Accounting Controls Needed Strengthening 

Findings 

Controls to account for disaster relief costs needed strengthening. We determined that 

improvements in key accounting controls could reduce the risk of unreliable tracking and 

reporting of disaster relief costs. Our audit revealed that when accounting for disaster 

relief costs, VHA needed to: (1) improve tracking and reporting, (2) establish fund 

control points, and (3) develop more comprehensive policies and procedures. We 

attributed the deficiencies to the lack of a reliable methodology to track and report costs 

related to Hurricane Katrina disaster relief activities. As a result, $13.7 million (26 

percent) of $52.5 million was incorrectly accounted for as disaster relief costs. The 

$13.7 million in overstated costs was comprised of routine medical costs, costs reported 

as both an obligation and expenditure, and estimated costs instead of actual costs. This 

could affect the availability of Gulf Coast Recovery Supplemental Appropriation 

funding. 

The Office of Management and Budget Circular A-123, Management’s Responsibility for 

Internal Control, dated December 21, 2004, requires that managers establish internal 

controls for financial reporting and for improving the accountability and effectiveness of 

Federal programs and operations. The proper stewardship of Federal resources is an 

essential responsibility of agency managers and staff. 

Tracking and Reporting of Disaster Relief Costs Needed Improvement. As of 

February 2006, VHA identified $52.5 million in disaster relief costs relating to Hurricane 

Katrina relief efforts. Our audit revealed $13.7 million (26 percent) of the costs were 

incorrectly reported. We determined that: (1) $11 million of routine medical services 

costs were included as disaster relief costs, (2) VHA’s Business Liaison Center managers 

inadvertently reported $1.9 million of modular building costs as both an obligation and 

expenditure, and (3) approximately $0.8 million of estimated costs instead of actual costs 

were reported when accounting for computer equipment and employee lodging. 

Routine Costs Were Identified as Disaster Relief Costs. Our audit revealed that routine 

medical services costs were identified and reported as disaster relief costs. Of the 

$52.5 million in reported costs, we determined $11 million (21 percent) was not related to 

relief efforts. The table on the following page depicts the costs. 

VA Office of Inspector General 4 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs 

 Table 1. Routine Costs Reported as Disaster Relief Costs 

Description of Routine Costs 

Dollars 

(in millions) 

Patient Care $ 8.5 

Patient Prescriptions 1.6 

Prescriptions Provided by Temporary Mobile Health Clinics 0.6 

Patients Placed in Nursing Homes 0.2 

Other Costs Associated with Patient Care 0.1 

Total $11.0

On February 13, 2006, VISN 16 managers agreed that the initial $10.4 million we 

identified should be classified as routine medical costs rather than disaster relief costs. 

VISN managers made the appropriate adjustment. The $10.4 million consisted of 

$8.5 million for patient care services, $1.6 million for patient prescriptions, $0.2 million 

of nursing home services for patients that were relocated, and $0.1 million for various 

miscellaneous costs associated with patient care. 

Subsequent to the $10.4 million adjustment made by VHA, we identified an additional 

$0.6 million for prescriptions provided by temporary mobile health clinics that were 

reported as disaster relief costs. These costs were actually normal operating costs for 

providing medical services to eligible veterans. 

VHA Reported Costs as Both an Obligation and an Expenditure. VHA Capital 

Improvement Projects managers obligated $7.1 million for site preparation and 

acquisition of two modular buildings, which were to be used as temporary administrative 

space for displaced employees from the VA Gulf Coast Veterans Health Care System. In 

January 2006, VISN 16 managers reported expenditures of $1.9 million against the 

$7.1 million obligation. VHA Business Liaison Office managers added the $7.1 million 

obligation to VISN 16’s reported expenditures. Consequently, the $1.9 million for the 

buildings was reported as both an obligation and expenditure. 

Disaster Relief Costs Included Estimates. We determined that a distribution of 

appropriated funds that included $813,185 of estimated, not incurred, costs was 

requested. The Department of Defense, Emergency Supplemental Appropriations to 

Address Hurricanes in the Gulf of Mexico, and Pandemic Influenza Act of 2006

appropriated $198.3 million to reimburse VA for medical services costs incurred related 

to the 2005 Gulf Coast hurricanes. The act explicitly states that distribution of funds 

from the supplemental appropriation is for actual expenses, not estimated or unobligated 

costs. The Acting Under Secretary of Health reported that VISN 16 and medical facility 

fiscal managers tracked and validated all distributed funds to ensure that they were 

utilized for actual costs incurred as a result of hurricane relief efforts rather than 

estimated costs. 

Fund Control Points Should Be Established to Track Disaster Relief Costs. Three of 

the four facilities we visited had not established fund control points to account for 

VA Office of Inspector General 5 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs 

obligations and expenditures related to disaster relief costs reimbursable under the 

supplemental appropriation. We identified one instance where a fund control point was 

established to account for relief costs related to travel for displaced employees at the 

medical center at New Orleans, LA. As a result, VISN 16 managers had difficulty 

segregating hurricane-related expenditures from normal operating costs within the 

Financial Management System (FMS), VA’s core financial computer accounting system. 

More Comprehensive Policies and Procedures Should Be Developed to Track 

Disaster Relief Costs. More comprehensive policies and procedures were needed to 

account for Hurricane Katrina relief activities. The Department of Homeland Security 

issued the National Response Plan (NRP) in December 2004. The NRP provides the 

framework for each Federal agency to establish effective administrative control of funds 

and ensure that the costs incurred are consistent and reasonable. Within VA, the Office 

of Management has primary responsibility for developing a plan to identify relief costs 

for any Federally declared emergency. 

While the Office of Management issued a handbook that requires VA to develop plans 

for the identification of costs related to any declared emergency, VHA had not 

established a comprehensive process for identifying, recording, and reporting relief 

costs.5

 On August 30, 2005, VHA issued guidance via an e-mail requiring the use of a 

Microsoft Excel® template to gather Hurricane Katrina costs. The template categorized 

costs by operational, travel, equipment, and non-recurring maintenance. It further 

categorized the costs by appropriation. However, the guidance did not: (1) define costs 

related to Federally declared emergencies, (2) prescribe cost accounting procedures, or 

(3) provide a mechanism for segregating routine and declared emergency expenditures 

within FMS. 

Conclusion 

We concluded that VHA needs to strengthen controls over its accounting for disaster 

relief costs. For instance, we determined routine medical services costs were included in 

disaster relief costs, fund control points had not been established to account for 

obligations and expenditures related to disaster relief costs, and more comprehensive 

policies and procedures were needed to account for relief activities. 

Recommended Improvement Action 1. We recommended that the Acting Under 

Secretary for Health:

a. Establish controls or mechanisms to ensure costs resulting from Hurricane Katrina are 

accurately identified, recorded, and reported. 

 

5

 VA Handbook 0320, Comprehensive Emergency Management Program, dated March 24, 2005. 

VA Office of Inspector General 6 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs 

b. Ensure the $0.6 million for prescriptions provided by temporary mobile health clinics 

is not included as Hurricane Katrina disaster relief costs. 

c. Ensure funds distributed under The Department of Defense, Emergency Supplemental 

Appropriations to Address Hurricanes in the Gulf of Mexico, and Pandemic Influenza 

Act of 2006 are based on actual costs incurred. 

d. Establish fund control points to account for disaster relief costs. 

The Acting Under Secretary for Health agreed with the recommendations. He reported 

that VISN 16 has already made significant progress in strengthening needed internal 

controls to ensure that costs incurred by Hurricane Katrina relief efforts are clearly 

tracked and validated. He also reported VHA will cooperate fully with the Offices of the 

Assistant Secretary for Management and the Assistant Secretary for Policy and Planning 

to develop comprehensive national policies and procedures to account for disaster relief 

costs. The improvement actions are acceptable, and we will follow up on the completion 

of planned actions. 

VA Office of Inspector General 7 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs

Appendix A 

Acting Under Secretary for Health Comments 

Department of 

Veterans Affairs Memorandum

Date: December 21, 2006 

From: Acting Under Secretary for Health (10)

Subject: Audit of VHA’s Accounting and Oversight of Hurricane 

Katrina Costs (Project No. 2006-00595-R9-0057/ 

 WebCIMS 367524) 

To: Assistant Inspector General for Auditing (52) 

1. Thank you for the opportunity to review and respond to this draft report. I 

concur with your findings and recommendations, and I am attaching the 

Veterans Health Administration’s (VHA) plan of corrective action in 

response to each recommendation. 

2. I wholeheartedly endorse your acknowledgment that VHA employees 

demonstrated heroic efforts throughout the hurricane’s tragic aftermath, and 

commend all involved for the vital services they managed to sustain in 

support of our veterans, despite overwhelming obstacles. Under the 

circumstances, it is understandable that immediate humanitarian response 

took precedence over stringent documentation of expenditures. Nevertheless, 

lessons learned from the disaster point to a need for the Department to 

develop comprehensive national policies and procedures to account for 

disaster relief costs, as you also recommend. VHA will cooperate fully with 

the Offices of the Assistant Secretary for Management and the Assistant 

Secretary for Policy and Planning in this endeavor. VHA’s Office of Finance 

and Office of Public Health and Environmental Hazards, in conjunction with 

the South Central VA Health Care Network (also known as the Veterans 

Integrated Service Network [VISN] 16), are also coordinating actions to 

develop and implement VHA-specific policy and standard operating 

procedures for fiscal management of disaster relief expenditures. I anticipate 

that the guidance will be finalized for field distribution by the end of 

February 2007. 

VA Office of Inspector General 8 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs

Appendix A 

Page 2 

Office of Inspector General (OIG) Draft Report: Audit of Veterans Health 

Administration’s Accounting and Oversight of Hurricane Katrina Costs 

(Project Number 2006-00595-R9-0057/WebCIMS 367524) 

3. Regionally, VISN 16 has already made significant progress in 

strengthening needed internal controls to ensure that costs incurred by 

Hurricane Katrina relief efforts are clearly tracked and validated. For 

example, disaster relief fund control points have been established at all VISN 

medical centers. Through careful manual tracking of expenditures, VISN 

fiscal managers have also verified that all appropriated supplemental funds 

have been utilized for actual costs incurred by the hurricane. Related 

accounting records were reviewed with your auditors, who questioned a few 

items, particularly in relation to costs associated with prescriptions provided 

by the temporary mobile clinics, which you initially identified as “normal 

operating costs.” Subsequent clarification of mobile clinic workload 

breakdowns, however, indicated that almost 70 percent of those prescriptions 

were actually provided to non-veterans, who, based on a decision by the 

Secretary, were not billed for the provided services. In addition, a portion of 

the remaining 30 percent of the prescriptions provided for veterans were 

assumed to be emergency replacements of lost medications. VISN 16 has 

subsequently completed a comprehensive review of pharmaceutical costs for 

prescriptions dispensed to veterans by the mobile clinics. Based on that 

analysis, $641,237 of costs originally included in the emergency 

supplemental hurricane appropriations will be re-designated as normal 

operating costs and transferred back to the regular appropriation. This figure 

represents the reduced portion of the total retail price paid to supplier WalMart ($1,246,740) that VA would normally pay through our national 

purchasing agreements. The VISN also reports that unallocated funds still 

remaining from the supplemental appropriation will be used to cover 

additional actual hurricane-related costs that are anticipated during this fiscal 

year. 

4. VISN 16’s efforts have resulted in a broad range of cost accountability 

procedures that can be applied in any declared emergency situation. For 

example, the VISN is currently refining a mechanism that will provide for 

immediate activation of government purchase cards for multiple users in the 

event of another disaster. As I indicated earlier, VISN managers will work in 

close coordination with our national program offices to develop VHA’s 

systemwide procedural guidance for disaster-related cost management. 

VA Office of Inspector General 9 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs

Appendix A 

Page 3 

OIG Draft Report: Audit of Veterans Health Administration’s Accounting 

and Oversight of Hurricane Katrina Costs (Project Number 2006-00595-R9-

0057/WebCIMS 367524) 

5. Hurricane Katrina and its aftermath have prompted increased scrutiny of 

our cost accounting processes at all organizational levels, and I am confident 

that in the unfortunate event of another national emergency, our medical 

facilities will be significantly better equipped to activate established 

operational procedures. 

Thank you for your assistance is helping us to prioritize needed actions. If 

additional information is required, please contact Margaret M. Seleski, 

Director, Management Review Service (10B5), at 565-7638. 

 (original signed by:) 

Michael J. Kussman, MD, MS, MACP 

Attachment 

VA Office of Inspector General 10 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs

Appendix A 

VHA ACTION PLAN 

OIG Draft Report: Audit of Veterans Health Administration’s Accounting and 

Oversight of Hurricane Katrina Costs

(Project No. 2006-00595-R9-0057/WebCIMS 367524)

___________________________________________________________________________ 

Recommendations/ Status Completion 

Actions Date 

______________________________________________________________________________ 

Recommended Improvement Action 1. We recommend that the Acting Under 

Secretary for Health: 

a. Ensure costs resulting from Hurricane Katrina are accurately identified, 

recorded, and reported. 

Concur

VISN 16 and involved medical facilities continue to make significant progress in 

finalizing validation assessment of all Hurricane Katrina-related costs. Utilizing lessons 

learned from the Katrina disaster, the VISN will also work in close coordination with 

VACO program offices to develop standardized national operating procedures for system 

wide application in national emergency situations. 

 In Process February 2007 

b. Ensure any non-Hurricane Katrina pharmaceuticals dispersed by temporary 

mobile health clinics are not included as disaster relief costs. 

Concur

Hurricane-related prescription workload statistics for the mobile health clinics have 

subsequently clarified that almost 70 percent of the prescriptions were actually filled for 

non-veterans, who were not billed for the pharmaceuticals, following a decision by the 

Secretary. VISN 16 has recently completed an analysis of pharmaceutical costs for 

prescriptions dispensed to veterans from the mobile clinics. Based on the findings, 

$641,237 of those costs will be re-designated as normal operating costs, and fund control 

adjustments will be made by the end of the First Quarter, Fiscal Year 2007. 

 In Process January 2007 

VA Office of Inspector General 11 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs

Appendix A 

Page Two 

VHA Action Plan/OIG Draft Report: Audit of Veterans Health Administration’s 

Accounting and Oversight of Hurricane Katrina Costs 

c. Ensure funds distributed under The Department of Defense, Emergency 

Supplemental Appropriations to Address Hurricanes in the Gulf of Mexico, and 

Pandemic Influenza Act of 2006 are based on actual costs incurred. 

Concur

VISN 16 and medical facility fiscal managers have carefully tracked and validated all 

distributed funds to ensure that they were utilized for actual costs incurred as a result of 

hurricane relief efforts. Accounting records were reviewed with the OIG auditors, and 

items in question were re-examined and validated, particularly in relation to costs 

associated with dispensing of prescriptions through the mobile health clinics. 

 Completed 

d. Establish fund control points to account for disaster relief costs. 

Concur

Disaster relief fund control points are now established in all VISN medical centers and 

other internal controls have been strengthened to ensure that the costs are tracked and 

validated. 

 Completed 

VA Office of Inspector General 12 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs

 Appendix B 

Monetary Benefits in Accordance with 

IG Act Amendments 

Recommendation Explanation of Benefit(s)

Better Use of 

Funds

1a Ensure costs resulting from 

Hurricane Katrina are accurately 

identified, recorded, and reported. 

The $13.7 million in overstated 

costs was comprised of routine 

medical costs, costs reported as 

both an obligation and 

expenditure, and estimated costs 

instead of actual costs. This 

could affect the availability of 

Gulf Coast Recovery 

Supplemental Appropriation 

funding. 

$13.7 million 

VA Office of Inspector General 13 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs

 Appendix C 

OIG Contact and Staff Acknowledgments 

OIG Contact Michael A. Raponi (727) 395-2422 

Acknowledgments Charles F. Chiarenza 

Thomas J. McPherson 

B. Craig Ward 

VA Office of Inspector General 14 
Audit of VHA’s Accounting and Oversight of Hurricane Katrina Costs

Appendix D 

Report Distribution 

VA Distribution

Office of the Secretary 

Veterans Health Administration 

Veterans Benefits Administration 

National Cemetery Administration 

Assistant Secretaries 

Office of General Counsel 

Director, VISN 16 (10N16) 

Director, Southeast Louisiana Veterans Health Care System (629/00) 

Director, Gulf Coast Veterans Health Care System (520/00) 

Director, Michael E. DeBakey VAMC (580/00) 

Director, Alexandria VAMC (502/00) 

Director, G.V. Sonny Montgomery VAMC (586/00) 

Non-VA Distribution

House Committee on Veterans’ Affairs 

House Committee on Appropriations, Subcommittee on Military Construction, Veterans

Affairs, and Related Agencies

House Committee on Oversight and Government Reform 

Senate Committee on Veterans’ Affairs 

Senate Committee on 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/. This report will remain on the OIG Web site 

for at least 2 fiscal years after it is issued. 

VA Office of Inspector General 15