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North Dakota Veterans' personal information at risk, audit says

BISMARCK—In an extensive report, the Office of the State Auditor recently expressed concerns with the North Dakota Department of Veterans Affairs' handling of the veteran aid loan, hardship assistance grant, impact grant and highly rural transportation grant programs.

The report stems from a performance audit conducted on the NDDVA beginning in October 2017 and concluding on March 28, 2018. The effort was headed by Rep. Chet Pollert, R-Carrington, and the Legislative Audit and Fiscal Review Committee.

The Veterans Aid Loan Program is a permanent revolving fund for eligible veterans and surviving spouses to receive funds for relief or assistance. The audit found that to obtain a loan, the Administrative Committee on Veterans Affairs required applicants to have the financial ability to repay the loan. However, neither ACOVA or the NDDVA had established underwriting guidelines to use when determining an applicant's financial ability to repay the loan.

Additionally, ACOVA required the NDDVA to obtain credit reports and bankruptcy checks for every application, despite no guidelines existing with regard to how to respond to an applicant with a bankruptcy, or how to use a credit score in the determination process.

According to the audit, such practices fostered an environment whereby loan determinations were based primarily on the department's discretion.

Most notably, the audit found that the Veteran Aid Loan System was outsourced to a vendor without the department receiving an exemption from the Information Technology Department, meaning that, since 2005, information from veterans including credit history, debt-to-income ratio, discretionary income, spousal income, discharge information and more were hosted by an unvetted vendor.

The report also highlighted concerns with the use of state resources, specifically recommending that the Department of Veterans Affairs begin using state resources and expenditures of private funds in accordance with state law — which the NDDVA had not been doing.

The Department of Veterans Affairs was found to have been using state resources for the benefit of two private organizations without legislative authorization. The report details how the NDDVA solicited donations in support of one of the private organizations, and processed applications and payments for impact grants.

According to the attorney general's office, the North Dakota Constitution provides that the State may not "loan or give its credit to or in aid of a non-governmental entity unless authorized by state law." The audit found that the Commissioner of Veterans Affairs violated the law by using work time and state resources for the benefit of private organizations.

During the audit period, the department received $115,778 from the Impact Foundation and deposited the funds in a Veterans Postwar Trust Fund. Portions of said funds were later used by the department to cover funding shortfalls in the Hardship Assistance Grants program in noncompliance with the standards for internal control in federal government issued by the Comptroller General of the United States.

"The audit was conducted by unbiased professionals who discovered several serious deficiencies," said Mark Landis, president of the Professional Veterans Advocates of North Dakota. "Our hope is that our elected officials in North Dakota take corrective action."

Attempts to reach North Dakota Department of Veterans Affairs Commissioner Lonnie Wangen and Administrative Committee on Veterans Affairs Chairman Dean Overby for comment went unanswered.

The audit report was forwarded by State Auditor Joshua Gallion to the offices of Governor Doug Burgum, members of the North Dakota Legislative Assembly, the Administrative Committee on Veterans Affairs, the Department of Veterans Affairs and Budget Subcommittee and to the Commissioner of the Department of Veterans Affairs on March 28.

The full audit outlining the various discrepancies, violations and recommendations can be found online at