The VA Office of Inspector General (OIG) conducted this inspection to assess the stewardship and oversight of funds by the VA Palo Alto Health Care System in California. This inspection assessed financial activities and administrative processes to determine whether appropriate controls and oversight were in place. These included open obligations, purchase card use, inventory and supply management, and pharmacy operations.
Because personnel were not aware of review requirements, the team could not verify that anyone reviewed 10 obligations as required. VA’s reconciliation reports in the financial and accounting systems reflected accurate dates and order amounts for the 10 obligations; however, two had residual funds totaling approximately $3,102 that should have been deobligated.
When assessing purchase card use, the team estimated that the healthcare system could have identified noncompliance errors in approximately 7,200 of 16,700 transactions, totaling about $26.9 million in costs.
The team found that the effectiveness and efficiency of inventory management could improve by ensuring stock levels and inventory values are correct, establishing processes and procedures for monitoring inventory, implementing a training plan, and ensuring supply chain performance measures are maintained.
The team found that pharmacy efficiency could improve by narrowing the gap between observed and expected costs, bringing turnover rates closer to the recommended level, and meeting reconciliation reporting requirements.
The OIG made nine recommendations to the healthcare system director and one to the director of contracting for the Network Contracting Office 21 including making staff aware of requirements, conducting reviews on inactive open obligations, deobligating excess funds, complying with record retention requirements, and establishing controls for purchase card and contract use. The recommendations also specified providing supply chain procedures training, improving inventory system data reliability, ensuring physical inventory compliance, implementing a plan to increase inventory turnover, and consistent and timely reconciliation.
The report can be found online here.
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