Summary: Among the Federal agencies reviewed by GAO in regard to policies and procedures for combating fraud, the Veterans Administration (VA) has a history of sporadic and disjointed attempts to overcome the problem, although abuses have been detected for many years. VA regional and headquarters offices have identified fraud on a case-by-case basis and have referred offenders to the Department of Justice for prosecution. There has been no separate fraud group. Because VA has devoted its time and attention to serving veterans, it has been lax about locating and prosecuting fraud, but the agency believes that fraud has been an insignificant problem. Because of the billions of dollars expended annually by VA for benefits and service programs, GAO believes the agency is vulnerable to fraud, and past audit reviews by GAO are cited to illustrate this point. The abuses include programs in the Philippines, the Virgin Islands, and Puerto Rico; the Predischarge Education Program (PREP); the education loan program; the Kansas City, Missouri VA Medical Center; the proposed transfer of the VA Records Processing Center in St. Louis, Missouri to the General Services Administration; and disability retirement processing. Currently, GAO is readying an examination of VA procurement practices and is reviewing the agency's collection actions on overpayment debts. The GAO Special Task Force for the Prevention of Fraud has gathered allegations against VA in several areas of abuse. The principal reaction to these allegations has been for VA to establish an Office of Inspector General and to propose legislation to prevent waste and abuse. GAO prefers a combination of criminal investigative capability as a corrective measure, with internal auditing, as a preventive device. In any case, a more active, systematic approach to the identification of fraud is necessary, reinforced by the oversight function of congressional committees, but the use of agency budget cuts as a disciplinary tactic should be managed in a gingerly fashion to assure that the correct programs are affected.
