However, The Veterans Corporation faces  several challenges, described in our previous report, that still impede its  progress in fulfilling other mandates under the Act. Since then, The Veterans Corporation has expanded or added  several services primarily in the areas of finance, accounting, and  contracting-related opportunities:   Veterans Marketplace. Veterans Small Business Finance Program. L. No. 106-50). For example, the VET program provides small  business training to veterans. In June 2004, The Veterans Corporation  began a marketing effort to identify the veteran-owned business  population. Additionally, without meaningful performance measures, The Veterans  Corporation has been unable to provide Congress, through its annual  report, with an assessment of its progress or outcomes of its efforts. Thus, they tended to focus on program outputs and activities,  such as the number of veterans receiving training, rather than on their  impact on veterans, such as the number of new businesses opened by  program participants or the amount of revenue generated by veteran- owned businesses. Without outcome-oriented goals, The  Veterans Corporation will have difficulty demonstrating that achieving all  its goals and objectives would lead to the fulfillment of its mission to assist  veteran entrepreneurs. Thus, it was output-, rather than  outcome-oriented. Challenges to Achieving Financial Self-sufficiency Included Lack of Comprehensive Self- sufficiency Plan

The Veterans Corporation continues to face several challenges in achieving  financial self-sufficiency. In its current plan, The Veterans Corporation has pushed back its  estimated date for becoming self-sufficient from fiscal year 2004 to 2009  and based its revenue assumptions on three major sources—an electronic  marketplace for veteran-owned goods and services; affinity programs  including a credit card, loans, and insurance offered to veteran-owned  businesses; and fund-raising. The Veterans Corporation Has Revised Its Self- sufficiency Plan

The Act requires that The Veterans Corporation implement a plan to  generate private funds and become a self-sustaining corporation. As a result, The  Veterans Corporation has developed another strategy in an effort to  identify this population. Notably, its self-sufficiency plan,  which did not contain meaningful information on the key assumptions  underlying revenue projections, is dependent on building an extensive  database of veteran-owned businesses and marketing its services  effectively to this population. To evaluate The Veterans Corporation’s internal controls including  strategic planning and its use of federal funds, we   obtained and analyzed The Veterans Corporation’s fiscal year 2003  financial statements, audit reports, and management letter for 2003; we  did not evaluate the quality of the external auditor’s work on the  financial statement or conduct our own tests of the financial statement  balances;   analyzed 10 functional expenses to determine the nature of the expense  and a description of how the expense benefited The Veterans  Corporation;  obtained and reviewed The Veterans Corporation’s check registers for   reviewed The Veterans Corporation’s contract with the external auditor  responsible for the 2003 financial statement audit to understand the  nature of the audit services to be provided and what work the auditor  proposed to assess internal controls;  communicated with The Veterans Corporation’s external auditor to  determine the audit procedures performed to assess internal controls  during its audit of The Veterans Corporation;  obtained and reviewed minutes of meetings of the board of directors  and the board’s executive committee to determine the board’s policies  as they related to the disbursement and use of federal funds;  interviewed The Veterans Corporation’s Chief Executive Officer/Chief  Financial Officer, Senior Vice President, and staff to obtain an  understanding of internal controls related to cash disbursements;   tested relevant internal controls over cash disbursements to determine  if the controls were operating effectively;  interviewed members of the board of directors to determine the board’s  oversight roles and responsibilities;  reviewed The Veterans Corporation’s planning and reporting   consulted with government and nonprofit strategic planning experts;  reviewed strategic planning literature;   gathered and analyzed salary surveys and literature about nonprofit   interviewed representatives from the Urban Institute’s Center on  Nonprofits and Philanthropy to discuss executive compensation in the  nonprofit sector. Establish Professional Certification Advisory Board.
Why GAO Did This Study

The National Veterans Business Development Corporation (The Veterans Corporation) was created under Pub. L. No. 106-50 to provide veterans with small business and entrepreneurship assistance. The Act authorized, and Congress has appropriated to the corporation, $12 million in funding over 4 years, ending September 30, 2004. The Act also required that The Veterans Corporation implement a plan to raise private funds and become a self-sustaining corporation. GAO evaluated the corporation's: (1) efforts in providing small business assistance to veterans; (2) internal controls, including strategic planning; and (3) progress in becoming financially self-sufficient.

What GAO Found

Since GAO's April 2003 report (GAO-03-434), The Veterans Corporation has continued to expand programs and refocus services in its efforts to provide small business assistance to veterans while achieving financial self-sufficiency. The centerpiece of The Veterans Corporation's efforts remains its Veterans Entrepreneurial Training program, which offers classroom instruction to veterans on how to successfully start and expand their own businesses. It also has expanded or added several services primarily in the areas of finance, accounting, and contracting. However, The Veterans Corporation reported that it continues to face ongoing challenges to fulfilling its mission. These problems stem from its responsibility for the Professional Certification Advisory Board, difficulties in identifying the veteran-owned business population, and conflicting views about its legal status as a private versus public entity. Additionally, The Veterans Corporation lacked important internal or operational controls. Specifically, its strategic plan and annual report to Congress lacked measurable goals and outcome-oriented measures. Without outcome-oriented measures, such as the number of new veteran-owned businesses or the amount of revenue generated for veteran-owned businesses, it was difficult to determine what the impact of the programs on veterans has been. In the same vein, without meaningful performance measures, The Veterans Corporation has been unable to provide Congress with significant data on its progress or the outcomes of its efforts. Finally, The Veterans Corporation faces a number of challenges in achieving self-sufficiency. Dramatically lower-than-expected revenues have resulted in the corporation revising its currently estimated date for achieving self-sufficiency from fiscal year 2004 to fiscal year 2009. Its self-sufficiency strategy is heavily dependent on its ability to develop a database of veteran-owned businesses and successfully marketing its services to these businesses. However, the plan did not discuss how The Veterans Corporation will identify this population or contain meaningful information on key assumptions underlying revenue projections. As such, it would be difficult for Congress and other stakeholders to judge the feasibility or reasonability of the corporation's estimates and projections.