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093085 1 (1974-11-14)

handle is hein.gao/gaobacwzb0001 and id is 1 raw text is: i C, U MY 1 4 174 Mr. Clyde C. Cook, Director Veterans Canteen Service LM093085 Veterans Administration Vermont Avenue between H and I Streets, NW. Washington, D.C. 20420 Dear Mr. Cook: As you know, we have comnleted our audit of the Veterans Canteen Service (VCS) fiscal year 1974 financial statenents and our report to the Congress is in process. Several minor matters disclosed by our audit were discussed and satisfactorily resolved with VCS officials at the Washington Field Office and at the Central Office Finance Division. We did note one matter which we believe warrants your attention since it presents the opportunity for improveient in the financial management controls of VCS. As a part of our audit each year, we review the efforts of the VCS internal audit staff. 1We found this year, as in previous years, that we could rely on their work to reduce the scope of our own detailed exainina- tion. We have observed, however, that the position of the internal audit staff in the VCS organization could be changed to provide a greater degree of independence for the auditors. GAO recently published a booklet on Internal Auditing in Federal Agencies (copy enclosed) which emphasizes the need for independence for the internal auditor, stating that his position in the organization should be such that he is independent of the officials who are directly .responsible for the operations he reviews. The booklet points out that, to provide an adequate degree of independence, the internal auditor should be responsible to the highest practical organizational level, preferably the agency head. We found that although audit reports are addressed to the Director, the internal audit staff is organizationally positioned under the Chief of Finance Branch, the official directly responsible for the financial operations the auditor reviews. There is no indication that this o73aoff~ UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON REGIONAL OFFICE FIFTH FLOOR 803 WEST EBROAD STREET FALLS CHURCH, VIRGINIA 22046 7/'A>?- _ rh

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