Many individuals receiving monthly compensation and pension benefits from the VA have mental impairments that can prevent them from managing their finances. These conditions may result from injury, disease, or infirmities of age. In 1935, Congress created an early version of the VA Fiduciary Program to select and oversee responsible third parties, called fiduciaries, who help manage and protect beneficiaries’ funds. In fiscal year 2008, fiduciaries managed approximately $1.5 billion in VA benefits for more than 103,000 beneficiaries. The VA Fiduciary Program matches beneficiaries who are unable to manage their financial affairs with a fiduciary, giving preference to spouses. If VA is unable to locate a qualified spouse who is willing to serve in this capacity, an individual or other entity, such as a lawyer or nursing home, will be appointed. Fiduciaries who are appointed by VA who are not dependents or close family members can collect a fee for their services (up to 4 percent of a beneficiary’s annual benefit amount) and can oversee multiple beneficiaries. Whether a fiduciary is a family member or a professional, the responsibilities are generally the same and may include receiving the beneficiary’s VA benefits, paying the beneficiary’s expenses, maintaining the beneficiary’s budget, and generally seeing to the financial well-being—and, in some cases, the physical well-being—of the beneficiary. Finally, if a court has already determined that a beneficiary is unable to handle his or her own affairs and has appointed its own fiduciary, VA must assess the performance of the fiduciary and determine if he or she is suitable for the position given the needs and welfare of the beneficiary. If VA decides to use the court-appointed fiduciary, the agency generally defers to certain rules set by the court, such as those pertaining to the fee amount that the fiduciary can charge the beneficiary for his or her services. VA has established a number of policies to guide the selection of qualified fiduciaries and ensure regular monitoring of them. The procedures for carrying out these policies include the following: Visits to beneficiaries and fiduciaries. VA policy requires staff to conduct initial visits to assess the competence and welfare of the beneficiary, determine whether a fiduciary is required and, if so, select and appoint the most appropriate type of fiduciary. These evaluations typically include a general background check of the potential fiduciary, which could include contacting character witnesses and reviewing a recent credit report. VA staff, in conjunction with potential fiduciaries, may develop a spending plan for the beneficiary’s funds. Once the fiduciary is selected, staff conduct periodic subsequent visits to reevaluate the beneficiary’s condition and to determine if funds have been properly used and protected. The first routine follow-up visit generally takes place 1 year after a fiduciary is selected, and subsequent visits typically take place every 1 to 3 years thereafter. Unscheduled visits may also be conducted under certain circumstances. Annual reviews of financial reports. VA policy generally requires staff to obtain yearly financial reports and bank statements from some fiduciaries to determine how beneficiary funds were used. Reports are generally due on the anniversary of a fiduciary’s appointment or as otherwise required in the case of court-appointed fiduciaries. When fiduciaries do not submit their financial reports on time, staff are required to follow-up with them to obtain these reports and to document these contacts in the beneficiaries’ files. For example, if a report is not received within 90 days of the deadline, VA staff can follow-up with fiduciaries by letter, telephone, or face-to-face contact and may describe the possible repercussions of failing to supply the report, which could include legal action or referral to the OIG. Confirmation of surety bond acquisition. When it is necessary to protect the interests of the beneficiary, VA generally requires staff to obtain a surety bond from fiduciaries overseeing estates with a value of $20,000 or more that is attributable to VA funds. A bond ensures that the beneficiary’s estate will be reimbursed in the event of fiduciary mismanagement or abuse of beneficiary funds. Generally, the bond amount should be adequate to cover the value of the beneficiary’s accumulated estate derived from VA funds plus 1 year of VA benefits. Fiduciary Program staff are required to obtain documentation showing that the fiduciary has an adequate bond. VA is required to assess the need for a bond and the bond amount each time it reviews the fiduciary’s yearly financial report. Periodic on-site reviews of professional fiduciaries. In addition to visits, VA staff are required to conduct on-site reviews of professional fiduciaries who oversee more than 20 beneficiaries with combined benefits of at least $50,000 once every 3 years. Unscheduled reviews may also be conducted as needed. During the on-site reviews, staff are to examine the financial records of multiple beneficiaries concurrently and examine any questionable expenses. VA developed this policy in 2005 as a result of new requirements included in the Veterans’ Benefits Improvement Act of 2004. Fiduciary Program policies and procedures are developed by Fiduciary Program Central Office staff under the Office of Policy and Program Management within the Veterans Benefits Administration. Individual Fiduciary Program units are generally colocated in VA regional offices that also oversee other Veterans Benefits Administration programs. One major exception to this is the Western Area Fiduciary Hub, where Fiduciary Program units and files from 14 western VA regional offices were merged into a single unit colocated in the VA regional office in Salt Lake City, Utah, beginning in January 2008. Each regional office is held accountable for meeting performance measures established by VA, including workload timeliness and accuracy measures. For example, performance measures for Fiduciary Program units include the timeliness of visits and the accuracy of beneficiary case file documentation, as measured through VA’s internal quality review processes. VA tracks Fiduciary Program performance measures for timeliness by generating reports based on case-level data recorded in its electronic case management system, known as the Fiduciary Beneficiary System (FBS). Because FBS only maintains this case-level data for about 30 days, we could not validate the accuracy of the performance reports and, therefore, could not use them in our study. VA’s OIG has reported on the inappropriate use of beneficiary funds by fiduciaries over the years, and Congress, GAO, and VA’s OIG have cited a number of concerns with VA’s efforts to safeguard beneficiaries’ assets. In 2006, VA’s OIG noted concerns regarding overdue visits, which may increase the risk of inappropriate use of beneficiary funds. In addition, the report cited concerns with VA’s efforts to follow up with fiduciaries and obtain late financial reports. The report further noted concerns regarding missing or undocumented bond information, as well as the adequacy of the amount of coverage required under the bond. In 2004, GAO cited concerns about the lack of systematic coordination between VA, the courts, and other federal agencies in regards to overseeing third parties who manage the funds of others. Although VA has established Fiduciary Program policies intended to ensure that qualified fiduciaries are selected and regularly monitored, staff did not always take required actions within established time frames or document in the case files that required actions were taken. Such actions included conducting initial and follow-up visits to beneficiaries and fiduciaries, following up with fiduciaries to obtain late financial reports, and ensuring that fiduciaries managing large beneficiary estates purchased bonds. VA policy states that initial visits to appoint fiduciaries are to be conducted within 45 days of a request for a fiduciary, and VA’s performance goal is to conduct at least 90 percent of these visits on time. Conducting initial visits on time is important because fiduciaries cannot begin receiving and handling VA benefits until these visits are completed, and beneficiaries may depend on VA funds for basic living expenses. We sampled and reviewed 67 case files in which initial visits were supposed to be conducted between July 1, 2006, and June 9, 2009, and found that 37 visits were conducted within the 45-day time frame, and 10 were from 3 to 39 days late. For one case, the file lacked documentation that an initial visit was made at all. Managers and staff in some offices we visited said compliance with the timeliness policy for initial visits was improving, but was still a concern. They attributed some compliance issues to a continued lack of staff and resources. According to VA managers, it is VA’s policy that follow-up visits to fiduciaries are to be conducted within 120 days of the scheduled date, and the on-time goal for these visits is also 90 percent. Timely follow-up visits are important to determine the continued suitability of the fiduciary and to protect beneficiaries from potential misuse of their funds. Our sample estimated that approximately 61,000 adult beneficiaries were supposed to have had at least one follow-up visit between July 1, 2006, and June 9, 2009. We estimated that 76 percent of these visits occurred within the 120-day time frame, and approximately 12 percent were 1 to 216 days late. About 6 percent of cases lacked documentation to indicate that a scheduled follow-up visit occurred at all and, in the most extreme case, there was no documentation that a follow-up visit had been conducted although it was overdue by 16 months as of June 9, 2009. Finally, an additional estimated 6 percent lacked documentation as to when the visits were conducted. Similar to initial visits, program managers and staff noted that compliance with the 120-day time frame for follow-up visits can be challenging due in part to a lack of staff and time. Program managers said that conducting visits in a timely manner may be especially challenging in regional offices with only one or two Fiduciary Program staff who may also have responsibilities outside of the Fiduciary Program. In addition, managers and staff noted that conducting timely visits can be challenging in areas where staff must drive long distances to see beneficiaries and fiduciaries.