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Legislative Analyst's OfficeAnalysis of the 2002-03 Budget Bill |
The Office of the Inspector General for Veterans Affairs (OIGVA) was established in January 2000. The office was created to provide independent review of the operations and financial conditions of the state's veterans programs, such as the veterans' homes and the Cal-Vet Farm and Home Loan Program administered by the state Department of Veterans Affairs (DVA). The office also operates a toll-free complaint hotline for veterans.
The budget proposes total expenditures of $531,000 for the office in 2002-03, about $24,000 less than estimated current-year expenditures. General Fund expenditures would be $441,000, about $29,000 less than the estimated current-year level.
We find that the report submitted to the Legislature by the Office of the Inspector General for Veterans Affairs does not provide sufficient information to determine whether its staffing is adequate to meet its statutory responsibilities.
Supplemental Report. The Supplemental Report of the 2001 Budget Act directed the OIGVA to report to the Legislature by December 1, 2001 regarding: (1) the office's statutory requirements, (2) the funding necessary to comply with its statutory responsibilities, (3) workload measures and performance standards the office would use to evaluate its compliance with its statutory responsibilities, and (4) a staffing schedule for meeting its workload measures and performance standards. The language also directed the Legislative Analyst to comment on the findings and recommendations in OIGVA's report. We received this report on January 17, 2002. Accordingly, we provide our comments below.
Statutory Requirements. The report fully documents the office's statutory requirements. Those requirements include review of the veterans' homes, the Cal-Vet loan program, other programs such as the County Veterans Service Offices, and any investigations involving DVA employee misconduct. The requirements also include an obligation to respond to requests for information from the Governor, the California Veterans Board, the secretary of the department, the Veterans Home Allied Council, the Legislature, and veterans receiving services.
Funding Needed to Comply with Statutory Requirements. The OIGVA's office consists of the OIGVA, one investigator, one auditor, and an executive assistant. The OIGVA's budget also contains some funding that the OIGVA has used to hire retired annuitants on a temporary basis to assist with its workload. Although the office had requested additional positions in past years, the office has not requested or provided justification for augmenting their staff for the budget year. The OIGVA reports that its current funding and staffing levels are adequate to meet its statutory responsibilities. Although current funding and staffing may be adequate, as we discuss further below, the report does not substantiate this finding.
Workload Measures and Performance Standards. The OIGVA's report indicates that professional auditing standards are used in determining workload. Those standards are used in developing the office's annual audit plan, which includes a summary of the number of hours budgeted for scheduled audits. The report contains the audit plan for 2001-02.
Further, the report refers to the office's strategic plan as containing the office's performance measures used to evaluate the effectiveness of the audit and investigative work. We have reviewed a draft of the plan. The performance measures listed appear to be reasonable and complete for evaluating the office's compliance with most of its statutory responsibilities.
Staffing Schedule. The staffing schedule submitted by OIGVA accounts for the office's allocation of staff time for direct auditing work that is 35 percent of the budgeted time for full-time staff. However, the staffing schedule does not account for other anticipated workload. For example, the plan does not account for the staff time that would be devoted to handling complaints and conducting investigations, or for indirect activities such as administration, budget, or planning.
Although the workload associated with many of the office's responsibilities (such as conducting investigations) may be difficult to predict, the absence of this information from the report means the staffing schedule that was submitted is incomplete. Therefore, it is difficult to assess from the information contained in the report whether the staffing provided to the office is adequate to meet its responsibilities.
We recommend that the office report at budget hearings on the relative priority the office is placing on completing internal control reviews, and that the office provide the Legislature with its schedule for completing internal control reviews in the current and budget years.
Responsibility for Internal Control Reviews. The state's Financial Integrity and State Manager's Accountability Act (FISMA) requires that certain internal control reviews be completed for every state agency every two years. These reviews are important because they reveal critical information about the financial and administrative management of the department and provide the basis for any corrective action that the department needs to take. These reviews previously were the responsibility of DVA's internal auditors. They effectively became OIGVA's responsibility upon the creation of that office.
The FISMA also requires state agencies to report to the Department of Finance on the adequacy of their internal control reviews every odd-numbered calendar year. According to a recent report by the Bureau of State Audits (BSA), DVA had not filed such reports since 1995. We are advised that DVA did, however, file a report for 2001.
The OIGVA's report indicates that one permanent position, with help from retired annuitants that have been devoted to such review work, is sufficient to conduct the priority internal control reviews within the time limits established under state law. Further, the OIGVA's audit plan described above allocates time to perform four internal control reviews. However, as of January 2002, the OIGVA had conducted only one of the four internal control reviews. Given that each review is budgeted for 564 hours (equivalent to 14 weeks for one person's time), it is unclear whether the office can complete the scheduled reviews before the end of the fiscal year. Notably, the internal control reviews are not identified as one of the major goals in the office's draft strategic plan. As a result, it is unclear whether the completion of these reviews is a priority for the office.
Analyst's Recommendation. In our view, it is important that DVA's internal control reviews be completed within the timelines established in state law. However, it appears that the OIGVA may be having difficulty fulfilling its responsibility to carry out these reviews, even though it says it has the staffing it needs to do so. Accordingly, we recommend that the OIGVA report at budget hearings on the relative priority the office is placing on completing internal control reviews, and that the office provide the Legislature with its schedule for completing internal control reviews in the current and budget years.