United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office Accounting and Information Management Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1999-03-24 monographic deposited born digital 46 p. GA 1.13:AIMD-99-24 https://www.govinfo.gov/app/details/GAOREPORTS-AIMD-99-24 P0b002ee180392d4b f:ai99024 DGPO 2010-08-12 2011-03-24 GAOREPORTS-AIMD-99-24 machine generated eng fdlp REPORT GAOREPORTS-AIMD-99-24 AIMD-99-24 Loan accounting systems Accounting standards Internal controls Government guaranteed loans Financial statement audits Direct loans Accountability Contract oversight Financial management Federal property management VA Housing Credit Assistance Program VA Loan Servicing Automated Management System VA Portfolio Loan System Letter Report AIMD

Pursuant to a legislative requirement, GAO provided information on: (1) the level of Department of Veterans Affairs' (VA) accountability and control over its Housing Credit Assistance (HCA) program direct loan and loan sale activities: and (2) actions needed to improve VA's internal control environment and financial and budgetary reporting for these activities.<p/>GAO noted that: (1) VA did not have appropriate management and operational controls in place to maintain accountability over its direct loan and loan sale activities; (2) VA provided little oversight of contractors that were managing billions of dollars of assets on its behalf and did not ensure that revenues and expenses were accurate or that cash receipts were deposited promptly in Treasury accounts; (3) when VA outsourced the servicing of its direct loan portfolio to a contractor in fiscal year 1997, it did not adequately plan or manage the transfer; (4) it concurrently shut down its automated district loan system and surrendered almost all hard copy loan records to the contractor without retaining basic information needed to confirm or reconcile the number and value of loans serviced by the contractor; (5) as a result, VA was unable to appropriately manage its loan portfolio; (6) further, the data transferred to the contract servicer, which up to that point had been maintained by more than 40 VA regional offices, were incomplete and inconsistent; (7) this immediately created loan servicing problems; (8) there were delays in allocating payments to borrowers' accounts and in paying property taxes on behalf of borrowers as well as property taxes on VA-owned houses; (9) VA lacked assurance that receipts from loans were properly collected and allocated to borrowers' accounts, and did not determine the propriety of property tax expenses associated with VA-owned property and, accordingly, could not be confident that appropriate amounts were transmitted to the government; (10) in addition, VA lacked a basis for properly reconciling the financial activity reported by the contractor to the data recorded in VA's general ledger; (11) GAO found that VA's failure to timely monitor the contractors that service the loans, representing roughly $9 billion since 1992, allowed servicing inefficiencies and improper actions by two servicers to cause financial losses to VA; (12) GAO found that VA's financing and accounting for the guarantees associated with the loan sales in effect masked both the existence of the estimated liability for defaulted loans as well as the sources of funds being used to finance those liabilities; and (13) until 1997, VA had not reported or disclosed the loan sales in its financial statements or budget reports or requested funding to cover the cost of these guarantees. https://www.govinfo.gov/content/pkg/GAOREPORTS-AIMD-99-24/html/GAOREPORTS-AIMD-99-24.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-AIMD-99-24/pdf/GAOREPORTS-AIMD-99-24.pdf GAO/AIMD-99-24 https://www.govinfo.gov/app/details/GAOREPORTS-AIMD-99-24 Letter Report GAO/AIMD-99-24; Internal Controls: VA Lacked Accountability Over Its Direct Loan and Loan Sale Activities; Loan accounting systems Accounting standards Internal controls Government guaranteed loans Financial statement audits Direct loans Accountability Contract oversight Financial management Federal property management VA Housing Credit Assistance Program VA Loan Servicing Automated Management System VA Portfolio Loan System Title 31 Section 3302(b) 31 U.S.C. 3302(b)