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Independent News For The Australian Public Service
Edition Number 415. Updated Tuesday, 24 June 2014

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Audit finds flaws in DVA care service
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An audit of the Department of Veterans' Affairs (DVA) residential care service for returned war veterans has found serious shortcomings dating back six years, with millions of dollars incorrectly allocated to caring for ineligible clients.

In his report, Administration of Residential Care Payments, Auditor-General, Ian McPhee said DVA's administration of residential care payments had not been fully effective.

He said this was due to "shortcomings for over six years in the Department's ability to accurately identify eligible DVA clients in residential care, resulting in incorrect and unauthorised payments to approved providers and the absence over the past two years of legal delegations necessary for DVA officials to validly exercise powers and perform decision‑making functions under the Aged Care Act."

Mr McPhee said the Audit found the Department has missed opportunities to mitigate these program risks through its internal risk management processes and procedural controls.

Funds incorrectly allocated

According to Mr McPhee, each year more than one million older people received some form of government funded aged care in Australia, with more than 27,000 Department of Veterans' Affairs clients residing in Australian Government funded residential care facilities in June 2013.

He said the Australian Government provided approximately $1.4 billion in residential care subsidies for DVA clients in 2012-13.

Mr McPhee said weaknesses in the integrity of DVA's data and exchange processing had affected the Department's ability to correctly identify its eligible clients, resulting in DVA exchanging incorrect client data with Human Services for more than six years.

He said as a consequence, responsibility for the payment of residential care costs had often been assigned to the wrong Agency, resulting in payments being made from the wrong appropriation.

Mr McPhee said in 2012, DVA identified that it had incorrectly funded the residential care costs of 1,130 ineligible residents, necessitating an adjustment to DVA financial records of $39 million to account for the overpayments.

He said in 2013, DVA identified 770 instances where it had incorrectly identified clients as eligible and provided funding for their care, resulting in overpayments of $35.8 million and further overpayments were forecast for 2013-14.

Mr McPhee said the Audit had made four recommendations, including that the slow progress in addressing the backlog of incorrect records to identify ineligible payments required review by the Department.

The Audit team included Kay Robinson, Michael Masters, Denis Preston and Fiona Knight.

The Auditor-General's full report can be accessed at this PS News link.

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