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Chairman Bergman Opening Statement: VA Financial Management

Today, the Subcommittee on Oversight and Investigations, chaired by Rep. Jack Bergman, held a hearing to examine the Department of Veterans Affairs financial management. 

Below are Chairman Bergman's opening remarks from the hearing:

Opening Remarks As Prepared for Delivery:

Earlier today we had the opportunity to hear from Secretary Shulkin about the Administration’s budget priorities for the Department of Veterans Affairs.  Now we will examine how VA actually manages the money the taxpayers provide.

Many of the numbers involved are astoundingly large, and the audit speak can be confusing.  But the core of the issue is very simple. 

The VA Chief Financial Officer must move the right amount of money from Point A to Point B at the right time.  The CFO must have strong internal controls, effective employees, and IT systems that work in order to do that.

We will hear about VA’s fiscal year 2016 financial report, and the Office of Inspector General will present its audit of those financial statements.  OIG and the Government Accountability Office will explain their work on the troubling issue of improper payments.  The American Legion will also share its observations on VA’s debt collection practices.

The Department has a troubling number of weaknesses and deficiencies in internal financial controls.  First, persistent IT security weaknesses are, unfortunately, well known to this Committee.  The financial IT systems are inadequate, obsolete, and potentially only a few years away from complete failure.  However, the problems go well beyond IT. 

The CFO organization is weak and hobbled by fragmentation.  VA struggled to account for its education, mortgage, compensation, and pension liabilities. 

For years, VA has had difficulties in obligating and de-obligating funds, especially in the areas of Community Care and undelivered orders.  In other words, VA has a hard time estimating how much a purchase will cost, setting aside the money when it will be needed, and then reclaiming the unspent money to use for other purposes.  Billions of dollars are often tied up on the books, unavailable for the intended use.

Last year, VA had about $5.5 billion of improper payments.  An improper payment, as our fine witnesses will explain, is one that should not have been made, is the wrong amount, went to the wrong person, was made for items not received, or lacks necessary documentation.  Not all improper payments are lost, but they represent a significant amount of government waste. 

VA has never been able to fully comply with the Improper Payments Elimination and Recovery Act, and the improper payments are forecast to continue rising.  VA deserves credit for its transparency on improper payments.  But beyond transparency, I look forward to hearing a credible plan to solve the problem.

Finally, sometimes benefits are paid out incorrectly, and recouping the improper payments necessarily entails debt collection.  VA’s Debt Management Center in St. Paul, Minnesota does this work.  In most instances, especially when the improper payment is through no fault of the veteran, the Debt Management Center operates flexibly and constructively.  VA policy is not to charge interest on these debts. 

However, after a debt is delinquent for 120 or 180 days, the law requires VA to turn it over to the Treasury for collection. 

The Treasury operates much more aggressively and adds interest and fees that can be substantial.  This debt collection system must operate to the highest standard.  Administrative errors have grave consequences for veterans and their beneficiaries. 

In conclusion, Members of Congress and Presidents of both parties have demonstrated a commitment to funding the benefits our veterans have earned.  But no matter how many resources are provided, if the dollars are mismanaged or wasted, VA will not succeed in its mission.

I now yield to my friend Ranking Member Kuster for her opening remarks.

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