VA is responsible for providing federal benefits to veterans. Headed by the Secretary of Veterans Affairs, VA operates nationwide programs for health care, financial assistance, and burial benefits. According to VA, in fiscal year 2009 the department received appropriations of almost $97 billion, including over $50 billion in discretionary funding, primarily for health care and approximately $47 billion in mandatory funding, primarily for disability compensation, pensions, and education benefit programs. VA is organized into three administrations to provide health care, financial, and burial benefits to veterans and their families: The Veterans Health Administration (VHA) provides a broad range of primary health care, specialized care, and related medical and social support services through its network of more than 1,200 medical facilities. The Veterans Benefit Administration (VBA) distributes financial benefits to veterans and their families related to compensation and pension, vocational rehabilitation and employment, home loans, life insurance, and education. The National Cemetery Administration (NCA) maintains national cemeteries and provides burial and memorial services to veterans. The Chief Financial Officers (CFO) of the 24 major departments and agencies identified in 31 U.S.C. § 901(b) are required to, among other things, develop and maintain integrated accounting and financial management systems, including financial reporting and internal controls, and to direct, manage, and provide policy guidance and oversight of all agency financial management activities. These CFOs are also required to assist the heads of their agencies with annually preparing and submitting to Congress and the Office of Management and Budget audited financial statements and statements of assurance on the effectiveness of their agencies’ systems of internal control. The Comptroller General’s Standards for Internal Control in the Federal Government (the Green Book) provides that federal agencies should establish policies and procedures to ensure that the findings of audits and other reviews are promptly resolved. In addition, Office of Management and Budget (OMB) Circular No. A-123, Management’s Responsibility for Internal Control, requires management to develop corrective action plans for material weaknesses—identified through management reviews, OIG and GAO reports, program evaluations, and financial statement audits— and periodically assess and report on the progress of those plans. Further, the CFOC A-123 Guidance provides that agencies construct a corrective action planning framework to facilitate plan preparation, accountability, monitoring, and communication. The guidance provides that agency managers are responsible for developing and implementing action plans for taking timely and effective action to correct deficiencies. The CFOC A- 123 Guidance is widely viewed as a “best practices” methodology for executing the requirements of Appendix A of OMB Circular No. A-123. In the independent auditor’s report on VA’s fiscal year 2008 financial statements, the auditor identified the following three material weaknesses: Financial management system functionality—reported since fiscal year 2000, is linked to VA’s outdated legacy financial systems impacting VA’s ability to prepare, process, and analyze financial information that is reliable, timely, and consistent. Legacy system deficiencies necessitated significant manual processing of financial data and a large number of adjustments to the balances in the system, thereby increasing the risk of processing errors and misstatements in the financial statements. IT security controls—also reported as a material weakness since fiscal year 2000, resulted from the lack of effective implementation and enforcement of an agencywide information security program. Security weaknesses in the areas of access control, segregation of duties, change control, and service continuity continued to place VA’s program and financial data at risk. For example, weaknesses in information security controls placed sensitive financial and veterans’ medical and benefit information at risk of inadvertent or deliberate misuse, improper disclosure, theft, or destruction, possibly occurring without detection. Financial management oversight—reported as a material weakness beginning in fiscal year 2005 and as a significant deficiency in fiscal years 2000 through 2004. This weakness stemmed from a number of control deficiencies whose operational causes varied. Common issues included the recording of financial data without sufficient review and monitoring, a lack of human resources with the appropriate skills, and a lack of capacity to effectively process a significant volume of transactions. When aggregated, the independent auditor found that these deficiencies suggested a recurring theme of inadequate or ineffective financial management oversight. To help resolve the financial management system functionality material weakness, modernize the IT environment, and implement an integrated financial management system, VA established the Financial and Logistics Integrated Technology Enterprise (FLITE) program, managed by the FLITE Program Office, to replace its current legacy systems. The FLITE Program involves a multiple-year phased approach comprised of three major components: the Strategic Asset Management (SAM) project, a logistics and asset management system; the Integrated Financial Accounting System (IFAS), which focuses on financial management; and a data warehouse that is intended to assist in financial reporting. As of January 2009, VA planned to complete FLITE implementation in fiscal year 2014. Although VA had eliminated some significant deficiencies in prior years, other deficiencies have emerged that require attention. As a result of its recurring internal control weaknesses in financial reporting, VA continues to be at risk of processing errors and misstatements in VA’s financial reports. The financial management system functionality material weakness, which is linked to VA’s outdated financial systems, consists of seven underlying significant deficiencies. The following four significant deficiencies were newly reported in fiscal year 2008. VBA Benefit Delivery Network (BDN) and Veterans Services Network (VETSNET) had insufficient audit trail documentation for the transfer of data to a data warehouse and the storage of such data, increasing the risk of misstatements in the financial statements and other financial reports. VETSNET lacked data mining capabilities, thereby preventing VA financial managers from analyzing transactions at a level needed to prepare routine reconciliations on billions of dollars in transactions. Automated inventory systems at the Consolidated Mail Order Pharmacy facilities could not provide the data needed to properly record the cost of inventory, resulting in potential misstatements in the financial statements and other financial reports. VA lacked a system to track obligations and purchases by vendors resulting in VA relying on vendors to supply operational sales data on medical center purchases. Three of the seven significant deficiencies were repeat conditions: Inadequate year-end closing procedures for the financial system and related records, reported since fiscal year 2000, created a significant risk of error in the annual financial statements. Business line system integration problems, reported since fiscal year 2004, resulted in inadequate support for amounts recorded in the general ledger, such as VETSNET accounts receivables, and the potential for misstatements in the financial statements and other financial reports. Fixed asset reporting limitations, reported since fiscal year 2007, prohibited VA from readily identifying all current year PP&E additions and reclassifications of work in process. The financial management oversight material weakness, reflecting a recurring theme of inadequate or ineffective financial management oversight, consisted of nine underlying significant deficiencies. The following three were newly reported in fiscal year 2008: Missing records in the mortgage loan portfolio maintained by an outside contractor resulted in unsupported amounts and potential errors in the general ledger. Incorrect formulas for estimating the projected default rate for guaranteed and direct loans in VA’s housing model could lead to material misstatements of estimated costs of guaranteed and direct loans in the financial statements and other financial reports. Incorrect expensing and capitalization of software development costs could result in an understatement of PP&E and an overstatement of operating program costs. Six of the nine significant deficiencies were repeat conditions: A lack of adequate review and follow-up procedures for accrued services payable and undelivered orders, reported since fiscal year 2007, resulted in invalid balances for obligations and accrued services payable and potential misstatements in the financial statements and other financial reports. VA reported a total of $8 billion in undelivered orders in fiscal year 2008. Untimely depreciation, improper recording of disposed assets, discrepancies in estimated useful life of equipment, and other inadequate capitalization and accounting for PP&E, reported since fiscal year 2000, could result in misstated PP&E and related expense accounts. VA reported a $13 billion PP&E balance in fiscal year 2008. Inconsistent methodologies and unsupported estimates for environmental and disposal liabilities, reported since fiscal year 2004, could lead to misstatements in the financial statements. VA reported a $928 million balance in environmental and disposal liabilities in fiscal year 2008. Inadequate review of unbilled receivables and contractual adjustments, reported since fiscal year 2007, could lead to misstatements of account receivable balances. VA reported over $1.7 billion in accounts receivable for fiscal year 2008. Inadequate BDN and VETSNET reconciliations, reported since fiscal year 2007, increased the likelihood that an error in the financial statements will occur and go undetected. BDN and VETSNET processed over $40 billion in compensation, pension, education, and vocational rehabilitation and employment benefits in fiscal year 2008. Inadequate reconciliations of the data input to the compensation and pension actuarial liability model, reported since fiscal year 2007, could result in misstatements in the financial statements. VA reported a $1.4 trillion actuarial liability in fiscal year 2008. In fiscal year 2008, VA reported successfully eliminating two prior significant deficiencies concerning insufficient follow-up of accounts receivable collections and errors in payroll data submissions to the Office of Personnel Management underlying the financial management oversight material weakness, as well as a prior material weakness regarding the retention of computer-generated detail records for benefit payments. VA has established corrective action plans intended to remediate many of its 16 significant deficiencies in the near term independent of FLITE implementation. However, although VA had corrective action plans in place, many of these corrective action plans did not contain the detail needed to provide VA or congressional oversight officials with assurance that the plans had near-term actions that could be effectively implemented on schedule. As shown in the table 1, VA planned to remediate 9 deficiencies in fiscal year 2009, 3 in fiscal year 2010, 3 in fiscal year 2012, and 1 in fiscal year 2014.