VA appointed fiduciaries who  are not dependents or close family members can collect a fee for their  services (generally up to 4 percent of a beneficiary’s annual benefit  amount) and can oversee multiple beneficiaries. Inconsistent Compliance with Some Policies and Weaknesses in Others Hinder VA’s Ability to Safeguard Beneficiary Assets

Our February 2010 report noted that VA Fiduciary Program staff did not  always take required actions within established time frames or document  in the case files that the required actions were taken. Below are four areas  where program staff did not always comply with program policies and, per  our recommendations, how VA plans to address them. Initial Visits to Beneficiaries and Fiduciaries. Follow-Up Visits to Beneficiaries and Fiduciaries. In about 18 percent of the cases,  however, VA did not conduct these required follow-up visits on time or  provided insufficient documentation to show whether these visits were  conducted at all. Annual Financial Reports. When fiduciaries do not  submit their financial reports on time, staff are required to follow-up with  them and document such actions in the beneficiaries’ files. The  file did not indicate that any follow-up actions had occurred, although the  case is now being investigated for possible misuse of funds. Surety Bonds. For example, VA stated that it would roll out additional training  for staff in March of this year and expects to hold a manager’s training  conference later in the year. The agency also intends to revise the  program’s policy manual this year to clarify existing guidance, establish  new policies and procedures, and enhance oversight of fiduciary activities. In addition to compliance issues, we identified weaknesses in VA’s policy  for conducting periodic on-site reviews of professional fiduciaries who  manage funds for multiple beneficiaries. This computer match is based on a fiduciary’s name,  rather than a unique identifier, such as the fiduciary’s Social Security  number (SSN) or tax identification number (TIN). We also found that VA lacks a nationwide quality review process to ensure  that on-site reviews are conducted properly and consistently. While VA has  quality review processes to ensure that actions—such as conducting initial  visits and obtaining financial reports and bonds—are carried out in  accordance with VA policies, Central Office managers acknowledged that  VA lacks a similar process for on-site reviews. In addition, although VA policy requires that at least 25 percent of a  fiduciary’s beneficiary case files (or up to 25 case files) be examined  during the on-site reviews, we found that this threshold was not met in  four instances. System Limitations and Insufficient Training Hamper Program Performance and Oversight; However, VA Is Taking Steps That May Help

We identified two key challenges that limit VA’s ability to improve  Fiduciary Program performance and oversight. First, VA’s electronic  fiduciary case management system does not provide sufficient information  to managers and staff about their cases, and it is cumbersome to use. Second, some managers and staff may not have received sufficient training  to ensure that they have the necessary expertise to effectively monitor  individual fiduciaries and oversee the program. VA is taking steps to build  expertise about the case management system and the program itself by  developing additional standardized training and piloting a consolidated  Fiduciary Program unit covering 14 western VA regional offices. The Fiduciary  Beneficiary System (FBS), VA’s electronic fiduciary case management  system, does not provide sufficient data to effectively manage the  Fiduciary Program. Managers and staff in all three  regional offices we visited said the Fiduciary Program is complex and  requires a great deal of specialized knowledge to effectively monitor  fiduciaries and provide program oversight. Central Office managers and staff also said that they hold monthly  teleconferences and conduct periodic visits to individual Fiduciary  Program units to discuss selected topics. Conclusions

One of VA’s most vulnerable populations—beneficiaries who are unable to  manage their own financial affairs—rely on VA’s Fiduciary Program to  ensure that their benefits are safeguarded. To better serve beneficiaries  and protect their benefits, VA has taken or plans to take a number of  actions intended to increase staff understanding and compliance with  polices as well as enhance program oversight.
Why GAO Did This Study

The Department of Veterans Affairs (VA) pays billions of dollars in compensation and pension benefits to disabled veterans and their dependents. For those beneficiaries who are unable to manage their own affairs, VA appoints a third party, called a fiduciary, to manage their VA funds. Congress, VA's Office of Inspector General (OIG) and GAO have noted that VA does not always have, or adhere to, effective policies for selecting and monitoring fiduciaries and therefore, does not fully safeguard the assets of beneficiaries in the Fiduciary Program. GAO was asked to discuss the Fiduciary Program and possible ways that it could be improved to better serve veterans, their families, and survivors. This statement is based on GAO's February 2010 report (GAO-10-241), which examined (1) VA policies and procedures for monitoring fiduciaries and safeguarding beneficiary assets and (2) challenges VA faces in improving program performance and oversight. To conduct that work, GAO reviewed program policies and relevant federal laws and regulations, analyzed a nationally representative random sample of case files, interviewed Central Office managers and staff, and conducted three site visits to Fiduciary Program offices, which accounted for 25 percent of program beneficiaries.

What GAO Found

Inconsistent staff compliance with some Fiduciary Program policies and weaknesses in others hinder VA's ability to effectively safeguard beneficiary assets; however, per GAO's recommendations, VA plans to take steps to improve the program. GAO found that VA did not always take required actions to monitor fiduciaries within established time frames or document in the beneficiary's case file that these actions were taken. Inconsistent staff compliance occurred in four areas: (1) initial visits to beneficiaries and fiduciaries, (2) follow-up visits to beneficiaries and fiduciaries, (3) follow up to obtain annual financial reports, and (4) oversight of surety bonds. For example, in about 18 percent of the cases GAO reviewed, VA was late in conducting required follow-up visits to monitor fiduciaries or did not provide sufficient documentation to show whether these visits were conducted. Similarly, while GAO estimated that about 39 percent of fiduciaries did not submit required annual financial reports on time, VA staff did not consistently follow-up with fiduciaries or failed to document actions that were taken. In addition to compliance issues, VA's policies for conducting on-site reviews of professional fiduciaries who manage funds for multiple beneficiaries do not ensure that these fiduciaries are effectively identified and monitored. For example, the agency's case management system uses the fiduciary's name - which may be entered inconsistently - to match them to beneficiaries, rather than requiring a unique identifier, such as a Social Security number. As a result, VA cannot always identify the fiduciaries that need to be reviewed. Moreover, VA does not have a nationwide quality review process to ensure that on-site reviews are conducted properly and consistently. Per GAO's February 2010 report recommendations, VA agreed to revise its Fiduciary program policies in an effort to enhance its oversight role, increase staff understanding and staff compliance, and better safeguard beneficiary assets. Two key challenges hinder VA's ability to improve Fiduciary Program performance and oversight, but VA has plans to address these challenges. First, managers and staff said that limitations with VA's electronic fiduciary case management system hinder their ability to capture key information. Per GAO's recommendation, VA has established a work group to evaluate alternative system modifications to meet the program's case management needs. Second, managers and staff indicated that training may not be sufficient to ensure that they have the expertise to properly carry out program responsibilities, as many of them had less than 2 years of program experience. In its response to GAO's recommendations, VA stated that it would begin providing additional standardized training for managers and staff this year. VA is also piloting a consolidated Fiduciary Program unit covering 14 VA regional offices to improve program performance and oversight. VA encountered a number of challenges during the pilot's implementation and has not yet evaluated it, but per our recommendation, plans to do so by September of this year.