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7.3 Objective 3 - Adequacy of the Management Control Framework

7.3.1 Delegated Authority

Responsibility for the control and spending of public money is assigned to the Minister of departments through annual appropriation acts and FAA regulations. The Minister and Deputy Heads use written delegation to delegate financial authority to the appropriate positions, where responsibility can be most effectively exercised and where accountability for results can be established.

A specimen signature of an individual with delegated signing authority is needed for verification of the signature. The policies and procedures of VAC's Delegated Authorities Manual ensure that up-to-date, valid specimen signatures are available to all who require them. The audit team reviewed specimen signature cards from various district offices for those who are delegated Section 34 of the FAA for health related travel. All signatures were on file with dollar limits defined. However, there were no specifics around the dollar limits in respect to the scope. For example, if the limit is $1000, it is not clear if this is per claim, per transaction, or per daily batch. Some district Offices are using the limit on a per claim basis, but there is obvious lack of clarity on how to apply the limits.

A review of work descriptions and specimen signature cards indicate that the authority for health related travel is formally delegated. There were inconsistencies in work descriptions reviewed in the selected regions, but there was mention of processing health related travel. Work descriptions for some positions were under review at the time of the audit. VAC employees currently processing health related travel have various classification levels (WP-2, CR-04, etc.). Some processors of health related travel have expanded job duties outside of health related travel and are not dedicated to health related travel and therefore have different classifications.

The authority to initiate an expenditure is exercised when decisions are made to obtain goods or services that will result in the expenditure of funds, such as to authorize travel. The objective of this authority is to give operational managers the primary responsibility for initiating expenditures charged to their budgets.

Expenditure initiation for health related travel is provided for in the VHCR legislation. A client who is in receipt of treatment benefits is eligible to receive supplementary benefits, such as the reimbursement of the cost of travel to receive the treatment benefits and the costs of an escort to accompany the client to receive treatment benefits. Clients receiving rehabilitation services or vocational assistance from the Department are also eligible to have the cost of their health related travel paid by the Department.

The audit team observed that employees are often only verifying that a client is eligible for health care treatment rather than verifying the travel was to receive a treatment benefit. Payment should only be made when confirmation that the travel is related to an approved treatment benefit. The definition of a treatment benefit and in what instances VAC will pay for travel will need to be addressed, as recommended in Section 7.1.1. In order to determine the nature of the travel, it would be useful for VAC to request the purpose of travel, which currently is not captured the claim form. Often, a doctor's signature is provided as confirmation of attendance to a medical appointment, not information on the purpose of the appointment. Preauthorization of travel would be ideal; however, this was deemed too resource intensive by those interviewed over the course of the audit.

Recommendation 7 (Important)

It is recommended that the Director General, Finance Division, in consultation with the Director General, Service Delivery Management, clarify the dollar limits established for delegated authority. Processors need to be clear on how to apply the limit (i.e. per transaction. Per claim etc.)

Management Response

Management agrees.

Management Action Plan

Management Action Plan
Corrective Actions to be taken OPI (Office of Primary Interest) Target Date
The dollar limits established for delegated authority will be clarified to ensure that processors are clear on how to apply the limit (i.e. per transaction, per claim). DG, FIN

March 31, 2010

7.3.2 Clarity and Adequacy of Policies and Procedures

Staff interviewed find policies and business processes inadequate. Most offices have undocumented internal policies and procedures that have led to inconsistences in service and reimbursement across the country. Staff identified the need for clarification in regards to escorts, taxi waivers, and distance allowance.

The Policy on Escorts is perceived to be unfair in respect to the half day and full day rates. Employees are sometimes unclear as to when to approve the half day versus a full day rate. Escorts are reimbursed a half day rate if the travel from the veteran's home, to the appointment and back takes less than four hours and a full day rate after that point. For example, if an escort is providing support for four hours and five minutes, they are reimbursed the full day rate and escorts spending ten hours with a veteran are still paid the same rate. Staff felt this is an inequity and suggested an hourly rate would be more suitable.

Paid escort fees are to be authorized and are often approved for specific time periods. A Veteran could be authorized for a permanent escort or an escort for specific appointments only or for specified periods of time. Processors of health related travel sometimes assume if the client was reimbursed on a prior claim for an escort, then the client is approved for an escort in all circumstances. This is not always the case as the escort could have been approved temporarily. Authorizations and approvals should always be verified for each and every claim and transaction, but this is not the practice.

Health related travel reimburses mileage claimed by veteran's for travel to health related appointments. Often the mileage claimed is accurate and other times it is not. To confirm the mileage, processors of health related travel will employ various on line mapping tools. Discrepancies in mileage can be revealed through this process, but the process can only be as accurate as the tools being used to validate the mileage. To compensate for lack of accuracy, some district offices have implemented their own allowable buffer when processing mileage claims. For example, one district office uses an allowance of 10 km each way to allow for any discrepancy that may occur, while another office uses 10% allowable discrepancy.

The audit team also examined the extent that VAC provides employees with the necessary training, tools, resources, and information to support the discharge of their responsibilities.

VAC Intranet searches were conducted to examine the extent of business process information available to processors of health related travel. Several documents were found, but these documents did not reflect the current health related travel process. Some changes in processing have been implemented in the past six months to a year and need to be reflected in current user documentation. Online guidelines and supporting information should be updated and maintained regularly.

Some employees interviewed expressed the desire for more training, particularly in regards to linkage to pensioned condition and processing travel for clients in the rehabilitation program. There is no evidence that a formal, national training initiative is required for health related travel, however, there is evidence that an understanding of the roles and responsibilities certifying section 34, and oversight (i.e., QA) is required to ensure compliance with governing authorities. Training issues should be managed on a case by case basis as determined by financial and program managers in the district and regional offices.

A toolkit is available on the intranet for employees to access information and guidance on health related travel, including kilometric and meal rates. The audit team reviewed the information and identified inaccurate and contradicting rates.

Recommendation 8a (Essential)

It is recommended that the Director General, Service Delivery Management, in consultation with the Director General, Finance Division, provide guidance on any allowance for kilometer distance discrepancies;

Recommendation 8b (Important)

It is recommended that the Director General, Service Delivery Management, update and maintain business processes and information available on the intranet.

Management Response

Management agrees that guidance is required on allowances provided for kilometre distance discrepancies. Service Delivery Management will initiate discussions with Finance Division to develop an acceptable allowance.

Management also agrees that Health Related Travel business processes and related information on the VAC Intranet needs to be updated and maintained. Substantial work has been completed in this area over the past year by the Health Related Travel working group. health related travel National Guidelines, a Business Process as well as a national form were developed and implemented. Service Delivery Management will collaborate with other OPIs to ensure that progress continues in this area.

Management Action Plan

Management Action Plan
Corrective Actions to be taken OPI (Office of Primary Interest) Target Date
8a. Consult with Finance to determine an acceptable allowance (variance) DG, SDM
February 2010
Identify an acceptable process for calculating distances ( ie use of tool such as Map Quest) DG, SDM
February 2010
Prepare an operational directive and communicate to staff DG, SDM March 2010
8b. Review current Health Related Travel business process and guidelines and update gaps identified in the audit DG, SDM February 2010
Update business processes and guidelines and communicate DG, SDM June 2010

7.3.3 Adequate Controls Are in Place

Appropriate business processes and controls are essential to ensure programs and benefits are managed properly and appropriate safeguards are in place to mitigate risk. The audit team mapped the business process for health related travel to a flow chart and control points were evaluated by the audit team. Applicable control points were noted and compared to current processes in the district and regional offices where health related travel is being processed. Offices among the regions use different health related travel processes. Without standardization the current process was not able to be captured in a succinct process flow.

The first control point in the process is verification of the claim. Processors must verify the presence of the client's signature, that the claim is date stamped, and that supporting documentation included. A review of claims as part of the review of transactions in FHCPS revealed that veterans' signatures are not on the claim but may be included elsewhere on supporting documentation. Subsequent interviews revealed that the third party contractor will not process a claim without a signature of the Veteran somewhere in the documentation.

The next control point is verification of a duplicate payment. Within VAC, there is no consistency in verification of duplicate payments nor a business process to follow prior to sending to the third party contractor for payment. The contractor has a verification process implemented in FHCPS to ensure duplicate payments do not occur. A review of the process would be beneficial to determine if the duplication of effort is necessary. In addition, the auditors observed that verification of duplication between Free Balance, the Department's main accounting system that has payment functionality, and FHCPS is not occurring and interviews with financial officers stated that duplication between the two systems was a concern.

Verification that the correct amount has been requested is also required. In July 2009, the third party contractor has agreed to check the TBS website on a frequent basis and change the system verification in FHCPS to ensure the correct kilometric and meal rates are used. Although the system verification will ensure fewer errors in relation to rates, there are costs associated with this process, and the increase in costs may not be value added. As part of processing the claim, VAC employees refer to the rates and calculate entitlement for the request for payment, but the system edit ensures the correct rate and calculation is used.

VAC verifies the invoices sent by the contractor reconcile to the system that reports the payments made to clients and the number of transactions processed. This situation is not ideal in that both the invoice and the system that VAC reconciles with is created by the third party contractor, but was described as the most cost-effective method and enables VAC to determine that the invoice is correct. However, VAC does no reconciliation or tracking to determine if the claims submitted by VAC have in fact been received and paid. Reconciliations do not occur to determine if all the travel claims received have been paid and in the proper amount.

The processing of health related travel is highly manual which increases the likelihood of errors. Transaction and claim information is transposed several times when generating a payment for a client, leading to an increased risk of human error. Receipts are written out manually 1-2 times on various forms, transactions are manually entered in CSDN on the claim form, and claims are sent to the contractor via mail, where the transactions are once again entered manually into FHCPS. The audit team noted several instances where payments were made for the wrong date or amount due to manual data entry errors.

The client and payment systems used to process health related travel claims are not interfaced. The CSDN (Payment request system) and FHCPS (payment issuance system) are the two systems used to process health related travel claims, however, there is no connection between the two. In order to get an accurate picture of client eligibility, approvals, waivers and exceptional circumstances, the person preparing the claim must look in different areas in the two systems. This increases the likelihood of error or omission, and is a time consuming, often frustrating, process. A central repository for health related travel information would ensure efficiencies.

An interface between the payment request and payment issuance systems would reduce the number of transpositions required, and ensure duplication of effort is minimized, thus reducing the likelihood of errors. Other programs of choice are processed directly into the FHCPS system by VAC employees, without numerous transpositions. The Programs of Choice Analysis Audit noted there are issues with the process in terms of segregation of duties. Once a resolution is determined, consideration of this process would be recommended for processing health related travel.

A quality management review for Health Related Travel was conducted in March 2007 recommending a rules based system for those individuals completing the account verification. A rules based system would help standardize the health related travel process and would help lower error rates. An example of a rules based system would be a smart form where rates for mileage, meals etc. would auto-populate the correct rate based on the date of transaction. This form could also be uploaded to FHCPS electronically, creating an exception report for errors (problem transactions) and increasing the turn around time for payment. Electronic upload or direct access to payment input in FHCPS for VAC users would also reduce the risk of claims getting misplaced when sent in the mail.

Recommendation 9 (Critical)

It is recommended that the Director General, Service Delivery Management, explore opportunities for streamlining and modernizing the processing of health related travel. There are opportunities for greater automation and less duplication of effort and could include rules-based tools, smart forms, and system interfacing.

Management Response

Management acknowledges the improvements that have been gained in the past year in the processing of Health Related Travel but agrees that there is still a need to explore additional opportunities for streamlining and modernization.

Management will seek input from VAC subject matter experts across the country who have been involved in the adjudication, processing, and management of the Health Related Travel program. Best practices and initiatives that have proven successful in certain Regions will be reviewed for national relevancy.

Management Action Plan

Management Action Plan
Corrective Actions to be taken OPI (Office of Primary Interest) Target Date
Consult with subject matter experts across the country to identify ways to streamline and modernize health related travel and to identify best practices currently underway. DG, SDM April 2010
Develop options. DG, SDM June 2010
Make recommendations to Management. DG, SDM June 2010
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