State of New York Office of the State Comptroller Division of Management Audit and State Financial Services DIVISION OF VETERANS AFFAIRS ADMINISTRATION AND COORDINATION OF VETERANS SERVICES REPORT 98-S-56 H. Carl McCall Comptroller
State of New York Office of the State Comptroller Division of Management Audit and State Financial Services Report 98-S-56 Mr. George P. Basher Director Division of Veterans' Affairs Corning Tower Empire State Plaza Albany, NY 12223 Dear Mr. Basher: The following is our report on the administration and coordination of veterans services by the Division of Veterans Affairs. This audit was performed pursuant to the State Comptroller's authority as set forth in Article V, Section 1 of the State Constitution and Article II, Section 8 of the State Finance Law. We list major contributors to this report in Appendix A. December 13, 1999 OSC Management Audit reports can be accessed via the OSC Web Page : http://www.osc.state.ny.us. If you wish your name to be deleted from our mailing list or if your address has changed, contact the Management Audit Group at (518) 474-3271 or at the Office of the State Comptroller, Alfred E. Smith State Office Building, 13th Floor, Albany, NY 12236.
Executive Summary Division of Veterans Affairs Administration and Coordination of Veterans Services Background The Division of Veterans Affairs (Division) was created in 1945 to coordinate programs and activities that aid members of the armed forces, veterans, and their families. The principal function of the Division is to help veterans, their dependents and their survivors obtain the veterans' benefits to which they are entitled. The Division accomplishes its mission through benefits counseling, community out-reach, and specific programs. The Division employs 127 individuals, 101 of whom are deployed in field offices located in 53 counties throughout New York State. Our audit addressed the following questions about the Division s administration and coordination of veterans services for the period January 1, 1998 through March 31, 1999:! Was an appropriate system of internal control established by Division management?! Did the Division coordinate veterans services provided by Federal, local and other State agencies?! Did the Division provide sufficient resources to its counselors to fulfill the Division s mission? Audit Observations and Conclusions We identified significant weaknesses in the Division s internal controls. As a result of these weaknesses, systems were not established for ensuring coordination between the Division and other entities providing veterans services. We also found that improvements were needed in the resources provided to Division counselors. An organization needs an effective system of internal control if it is to accomplish its mission. However, we found the Division lacked fundamental controls, such as written procedures and monitoring systems. We found little evidence of guidance and communication to field counselors. Because field counselors apparently received little direction from Division management, the Division s objectives were less likely to be accomplished. We believe the poor control environment can be attributed, in part, to the Division s former Director, who resigned in December 1998. During the tenure of the former Division Director, there were no formal goals and objectives and no performance criteria or measures. Also, there
were few written policies and procedures specific to Division operations, counselors in field offices received little or no direction from Division management, and daily operations were not adequately monitored by Division management. Some of the control weaknesses identified by our audit could be addressed by initiatives that have been proposed by the Division s new Director. (See pp. 5-7) The Division is expected to coordinate the veterans services provided by Federal, local and other State agencies. However, the Division has not developed procedures describing how these services should be coordinated and does not monitor the extent to which the services are coordinated. Rather, field counselors are expected to perform any such coordination on their own. We found that, while services are coordinated in some locations, there is little coordination in others. We recommend that Division management actively direct and monitor such coordination. We also recommend that the Division develop formal communication systems with other agencies, and consider establishing a multi-agency task force to address the needs of veterans who are served by more than one organization. (See pp. 9-11) Improvements are needed to the extent and quality of resources provided to Division counselors. For example, even though counselors rely on certain reference materials to be kept informed about veterans benefits, the reference materials provided by the Division are seriously outdated. We also found that counselors field offices are often poorly equipped and the amount of training provided to counselors may not be sufficient. (See pp. 13-15) Comments of Division Officials Division officials generally agreed with our conclusions and recommendations, and stated that they have begun several new initiatives to improve their overall operation and delivery of services.
Contents Introduction Internal Controls Coordination of Services Division Resources Appendix A Appendix B Background...1 Audit Scope, Objective and Methodology... 2 Response of Division Officials...2 Control Environment...5 Risk Assessment...6 Control Activities...6 Information and Communication...6 Monitoring...7 Recommendation...7...9 Recommendations... 11... 13 Recommendations... 15 Major Contributors to This Report Comments of Division Officials
Introduction Background The Division of Veterans' Affairs was created in 1945 to coordinate programs and activities that aid members of the armed forces, veterans, and their families. The principal function of the Division is to help veterans, their dependents and their survivors obtain the veterans' benefits to which they are entitled. These benefits include monthly payments to compensate for a disability or disease incurred during active service, health care at certain facilities, exemption from local property taxes, education assistance, certain advantages in obtaining civil service jobs and promotions, and burial in certain cemeteries. The Division also performs the following functions:! analyzes veterans' needs and advocates at the State and Federal level for those needs,! administers an annuity program that provides financial aid to blind veterans and eligible surviving spouses,! advises active duty personnel on military law and the military medical system,! coordinates programs and services offered to veterans by other State agencies,! helps veterans, armed force members, their dependents and their survivors obtain other support services, and! provides assistance in any other activities involving veterans in New York State. The Division accomplishes its mission through benefits counseling, community out-reach, and specific programs. For the 1997-98 fiscal year, the Division was budgeted $7.2 million. A total of 127 individuals were employed by the Division. Twenty-six of these staff were employed in the Albany central office, while the remaining 101 staff (66 counselors and 35 support staff) were employed in offices located throughout New York State to serve veterans in all 62 counties.
Audit Scope, Objective and Methodology We examined the Division s administration and coordination of veterans services for the period January 1, 1998 through March 31, 1999. Our audit focused on the Division s (1) internal control structure, (2) coordination of services with Federal, local and other State agencies, and (3) staffing and resources available to the staff. The objective of our performance audit was to evaluate the effectiveness of the Division s system of internal control. To accomplish this objective, we interviewed 14 of 66 Division counselors located in major urban and some rural areas throughout the State. We also interviewed Division officials, as well as officials at Federal Veterans Centers and Veterans Administration Hospitals in Albany, Buffalo, Rochester, Syracuse and New York City. We also interviewed staff from the New York State Office of Alcoholism and Substance Abuse Services (OASAS) and Office of Mental Health (OMH). We were unable to interview the former Director who was heading the agency for the majority of the scope period as he resigned in December 1998. In addition, we reviewed applicable laws, policies and procedures, and reviewed relevant Division records. We conducted our audit in accordance with generally accepted government auditing standards. Such standards require that we plan and perform our audit to adequately assess those operations which are included in our audit scope. Further, these standards require that we understand the Division's internal control structure and its compliance with those laws, rules and regulations that are relevant to the operations included in our audit scope. An audit includes examining, on a test basis, evidence supporting transactions recorded in the accounting and operating records and applying such other auditing procedures as we consider necessary in the circumstances. An audit also includes assessing the estimates, judgments, and decisions made by management. We believe that our audit provides a reasonable basis for our findings, conclusions and recommendations. We use a risk-based approach when selecting activities to be audited. This approach focuses our audit efforts on operations that have been identified through a preliminary survey as having the greatest probability for needing improvement. Consequently, by design, finite audit resources are used to identify where and how improvements can be made. Thus, little audit effort is devoted to reviewing operations that may be relatively efficient or effective. As a result, our audit reports are prepared on an "exception basis." This report, therefore, highlights those areas needing improvement and does not address activities that may be functioning properly. Response of Division Officials A draft copy of this report was provided to Division officials for their review and comment. Their comments were considered in preparing this report and are included as Appendix B. 2
Division Officials generally agreed with our conclusions and recommendations, and stated that they have begun several new initiatives to improve their operation and delivery of services. Within 90 days after final release of this report, as required by Section 170 of the Executive Law, the Director of the Division of Veterans Affairs shall report to the Governor, the State Comptroller and the leaders of the Legislature and fiscal committees, advising what steps were taken to implement the recommendations contained herein, and where recommendations were not implemented, the reasons therefor. 3
4
Internal Controls Management is responsible for establishing, maintaining and monitoring appropriate systems of internal control. An effective system of internal control is essential in order for an agency to accomplish its mission and objectives. The five interrelated components to a good internal control system include the control environment, risk assessment, control activities, information and communication, and monitoring. Based on our audit, we conclude that Division management was not committed to establishing and maintaining appropriate internal controls. In fact, fundamental controls and procedures were absent. Field personnel, who are the front line people dealing with the needs of veterans, were essentially on their own with little guidance or support from Division management. In December 1998, the Division s former Director resigned. In January 1999, a new Director was appointed to oversee Division operations. The Director had served the Division for two years as Western Region Deputy Director. Since his appointment, the Director has met with us on numerous occasions to discuss audit results and recommendations. He informed us that he is planning several new initiatives which will address many of the concerns cited in our report. Control Environment The control environment is an integral component of an internal control system. The control environment should set the tone for the organization and provide an atmosphere conducive to carrying out control responsibilities. The control environment includes the integrity, ethical values and competence of the agency s people; management s philosophy and operating style; and the way management assigns authority and responsibility. The control environment of an organization can be significantly affected by the actions of top management that provide direction on major policy and program issues. Specifically, the level of attention and direction by top management helps set the tone of an organization and influences the control consciousness, philosophy and operating style of management. During the tenure of the former Division Director, there were no formal goals and objectives and no performance criteria or measures. As will be described later in this report, there were few written policies and procedures specific to Division operations, counselors in field offices received little or no direction from Division management, there was inadequate communication between central office managers and field personnel, daily operations were not adequately monitored by Division 5
management, field counselors were provided with limited support staff and inadequate resources, and systems were not established to ensure that services were coordinated with Federal, local and other State agencies. Risk Assessment Control Activities Information and Communication Every organization faces a variety of risks from external and internal sources. Risk assessment is the identification and analysis of the risks relevant to an organization s objectives. Through risk assessment, managers identify and analyze the risks that can jeopardize the achievement of these objectives, and determine how best to manage these risks. To address the risks, management develops control activities, which are polices and procedures for employees to follow. The Division has never conducted a comprehensive risk assessment of its operations. Control activities are the policies and procedures established to help ensure that management directives are carried out. We found that Division management has not developed a complete policy and procedure manual for Division operations. The Division's internal control program is a general one-page statement with no detailed written procedures and controls to support it. Further, the Division's internal control policy and procedure manual is a binder containing policy memorandums that were issued in 1992 and 1993, and there are no policies and procedures setting forth management roles and responsibilities. Pertinent information must be identified, captured and communicated in a form that enables people to carry out their responsibilities. Information systems produce reports containing operational, financial and compliance related information. Generally, the Division s information systems are not automated. For example, counselors complete monthly activity reports showing the number of veterans services provided and mail the activity reports to the central office for manual compilation into an annual report. Even though the Division is decentralized, it does not have an automated network linking its central office and field offices. During our field review, 5 of 14 counselors interviewed informed us that there is very little communication between the central office and field personnel. We identified no evidence to the contrary. Moreover, even though the veterans services provided by other State agencies should be coordinated by the Division, the Division does not formally communicate or exchange information with these State agencies. 6
Monitoring Internal control systems and other agency operations need to be monitored to ensure that they are functioning as intended. However, we found that the Division does not adequately monitor its internal control systems or its other operations. For example, the Division has never done an internal audit of any aspect of its operations and has performed no other formal reviews of its operations. The Division also does not periodically test or review the routine activities of its employees. Recommendation 1. Develop an effective system of internal control that includes oversight, guidance and support for field staff. Conduct periodic internal control self assessments. 7
8
Coordination of Services According to Article 17 of the Executive Law, the Division is expected to coordinate veterans programs and services offered by other State agencies. However, we found that the Division has not developed procedures for identifying the services that need to be coordinated and then ensuring that such services are coordinated in an effective manner. When we asked a Division manager who makes recommendations for how such services are identified and coordinated, we were told that these activities are not performed by the central office, but are the responsibility of the three Deputy Directors located in Hauppauge, Albany and Buffalo and the four senior counselors in field offices located throughout the State. We were also told that the central office does not explicitly monitor the coordination of services with other agencies, and does not formally communicate or exchange information with any other agencies. We visited the Division s field locations in Albany, Buffalo, Syracuse and New York City. We selected these locations because OMH, OASAS, and the Federal Veterans Administration, agencies which should be coordinating services with the Division, have regional offices in these locations. When we asked Division counselors in field offices how they identify services that need to be coordinated and how they coordinate such services, we learned that the extent of coordination varies with each counselor. In New York City, there is an agreement in place to facilitate that services are coordinated. For example, in November 1994, the Division entered into a memorandum of understanding with OMH, the Veterans Administration, the New York City Department of Mental Health and the New York City Department of Homeless Services to provide intensive and supportive case management services to approximately 300 mentally ill homeless veterans who were residing in New York City homeless shelters. Under this agreement, the four agencies are to identify homeless mentally ill individuals who are veterans and refer these individuals to the Division. The Division is to help these individuals maximize their veterans benefits. In addition, as part of the memorandum of understanding, the Division, OMH, the Veterans Administration, and the New York City Department of Mental Health, as well as the State Education Department and the New York State Department of Labor, agreed to work together to develop education programs, vocational training programs and employment programs for homeless mentally ill veterans in New York City. In Albany, Buffalo and Syracuse, services to veterans do not appear to be effectively coordinated. For example, a number of veterans are served by not-for-profit providers overseen by OMH and OASAS. These providers 9
are located throughout New York State. However, when we contacted the OMH field staff who oversee providers in the Buffalo area and OASAS field staff who oversee providers in the Albany area, they told us that they did not know who the Division s representatives were in their locations. The OASAS supervisor in the Syracuse area told us there is no coordination between OASAS and the Division in that area, as OASAS staff in the area do not refer veterans to the Division. In fact, we were told by the field coordinator for OMH and central office management from OASAS that they do not refer veterans to the Division for assistance. Instead, they refer veterans who are eligible for veterans benefits directly to the Veterans Administration. In addition, some individuals are served by both OMH and OASAS. The needs of such individuals are addressed by a task force administered jointly by OMH and OASAS. Even though some of these individuals are veterans and even though OMH and some OASAS staff have been trained to address problems unique to veterans (such as veterans post-traumatic stress syndrome), the Division is not involved with this task force and has created no organizational consortium to address the needs of veterans who are served by more than one State agency. We conclude that the Division could be more effective in coordinating the veterans services provided by other State agencies. Specifically, the Division needs to develop procedures for identifying the services that need to be coordinated. Once these services are identified, communication systems need to be established between the Division and the agencies providing the services, and the services must be monitored by the Division to ensure that they are coordinated. For example, if OMH provides programs to veterans whose disorders resulted from military service, the Division should routinely be made aware of these programs so that they can be utilized, monitored and coordinated by its field counselors. To ensure that veterans in all regions of the State receive appropriate services, standard procedures must be developed by the central office and the activities of the field offices must be monitored by the central office to ensure that the procedures are followed. Improvements are also needed in the Division s coordination with the Federal agencies, local government agencies, and not-for-profit organizations providing services to veterans. The Division has not developed procedures describing how these services should be coordinated, and the Division s central office does not monitor the extent to which these services are coordinated. Rather, local Division counselors are responsible for any such coordination, and as was the case with State agencies, the extent of coordination varies with each individual counselor. For example, when we spoke with officials at Federal Veterans Centers and Veterans Administration Hospitals, Center and Hospital officials in 10
Buffalo and Albany told us that they have good working relationships with Division counselors. However, Center officials in Syracuse told us they do not have much of a working relationship with Division counselors, and officials at the Brooklyn Veterans Administration Hospital told us they did not know that a Division counselor was located in the building. Recommendations 2. Develop procedures describing how the veterans services provided by other government agencies and not-for-profit providers should be coordinated by the Division. 3. Monitor the field offices coordination of services with other government agencies and not-for-profit providers. 4. Consider establishing a multi-agency consortium to address the needs of veterans who are served by more than one organization. 5. Develop systems to improve the communication among the Division, other government agencies and not-for-profit providers. 11
12
Division Resources We examined whether the resources provided to Division counselors were sufficient for fulfilling the Division s mission. We were told by a Deputy Director that there has been a drastic reduction in support staff and that counselors now have to do much of the paperwork previously done by secretaries leaving them less time for counseling veterans. Further, we identified key reference materials that were outdated and found that equipment was not always adequate. Also, a Deputy Director informed us that the Division s training efforts need to be improved. According to the Division s annual reports, during 1997 (the latest data available at the time of our fieldwork), Division counselors provided a total of 267,162 services to clients (examples of these services include completing a claim form for veterans benefits to be filed with the Veterans Administration, or helping a veteran appeal his or her military discharge status). In comparison, during 1994, Division counselors reportedly provided a total of 133,801 services to clients. The Director informed us that these numbers may be inflated. Therefore, the Division needs to verify the number of services provided to adequately justify existing and/or additional resource needs. If Division counselors are to ensure that their clients receive all the veterans benefits to which they are entitled, the counselors must be adequately informed about available benefits. To be informed about these benefits, counselors rely on reference materials such as the Code of Federal Regulations (CFR) manual relating to veterans benefits. However, we found that the Division s CFR manual has not been updated since 1992, despite repeated requests for updating by the Deputy Director, Division s training coordinator, and field counselors. As a result, the counselors may not be adequately informed about the benefits available to their clients. Division managers told us that in 1997 they tried to replace the outdated CFR manual with a CD-ROM containing up-to-date reference material, but the software was incompatible with Division hardware. We also note that updated parts of the CFR manual are available through the Internet. However, the Division does not provide counselors with access to the Internet. Some of the counselors told us they used their own on-line personal accounts to access the updated CFR manual. Many work processes can be performed more efficiently and effectively when they are automated. For example, according to Division managers, 13
the CD-ROM that can replace the CFR manual has the ability to search a topic much more extensively and efficiently. Despite the advantages of automation, the Division did not start using computers until 1988, and has yet to link its central office to the field offices through an automated network. In addition, field counselors were never trained in the use of computers and computer applications. When we visited 14 counselors located in field offices, we observed that their working conditions were often poor. Four of the counselors told us that if they and their support staff are to have usable furniture, they must scrounge among the items that have been discarded by other agencies and organizations. Four told us that they purchase their own printers, postage, and office supplies. One counselor showed us a software package that he had personally purchased in order to develop a database of homeless veterans. During our field visit to the Division s New York City Office, we were told by counselors that some New York City field offices were in general disrepair, and that some offices were infested with vermin. Such poor working conditions may affect the quality of the services provided by the counselors, negatively impact the morale of staff and could discourage clients from visiting the offices. If Division counselors are to perform their jobs as effectively as possible, they need to be adequately trained. The Division provides new counselors with three days of training shortly after they are hired, and provides all other counselors with three to four days of training annually. The annual training addresses benefit claim procedures and regulations. While this is an important topic, we question whether it is sufficient to meet all the needs of the counselors. For example, the effectiveness of the counselors might be enhanced if they also received training in computer use, interpersonal skills, specialized counseling skills, time management and other such topics. 14
Recommendations 6. Determine whether the number of counselors and related support staff is sufficient to fulfill the Division s mission. 7. Ensure that counselors have access to adequate reference materials. 8. Ensure that Division operations are automated to achieve efficiency and improvements in overall operations. 9. Ensure that working conditions in field offices are adequate. 10. Determine whether additional training should be provided to the counselors. 11. To the extent that a determination is made that additional resources are needed, develop a budget proposal, with adequate justification and support, for submission to the Division of the Budget. 15
Major Contributors to This Report William Challice William Nealon Ron Skantze Charles Krahula Deb Spaulding Amy Dauscher Augustine Ogagan Dana Newhouse Appendix A
Appendix B
B-2
B-3
B-4
B-5
B-6