Audit of VHA's Use of Appropriations to Develop a System Enhancement and Mobile Health Applications

Veterans Health Administration’s (VHA) Chief Business Office (CBO) misused approximately $3.1 million of Medical Support and Compliance (MS&C) appropriations when they funded the Debt Management Center’s (DMC) development of the Veterans Health Information Systems and Technology Architecture (VistA) system enhancement. The former Deputy Director, Finance and Logistics for the CBO Revenue Operations, stated she thought she could obligate the MS&C appropriation because it was the only funding available and the DMC recovers costs through its customers. However, public law states that MS&C appropriations are only authorized for necessary expenses in the administration of medical, hospital, nursing home, domiciliary, construction, supply, and research activities—not information technology (IT) development. As a result of our work, in June 2016, the Office of Management reimbursed the VHA the approximately $3.1 million inappropriately used from the MS&C appropriation. We also found that VHA used the MS&C, Medical Services, and IT Systems appropriations to finance five mobile health application development contracts. Public funds may be used only for the purpose for which they were appropriated. However, when an agency has two appropriations available for the same purpose, the agency must select which one to use. The agency must continue to use that appropriation for that purpose unless the agency informs Congress of its intent to change appropriations. VHA’s use of multiple appropriations for the same purpose occurred because it had not updated its financial policies to include how VHA should fund mobile health application development. As a result, VHA lacked consistency and transparency in the execution of its appropriations. We made three recommendations. VA concurred with the recommendations and has taken acceptable corrective actions. The OIG considers the recommendations closed.