A program to make decisions for military veterans incapable of managing their own affairs has significant shortcomings and should be either phased out or at least made more self-supporting, auditors reported Tuesday.

The Department of Veterans’ Services’ fiduciary program has struggled with record-keeping problems and other shortcomings that have resulted in substandard services and the deficiencies have been only partially corrected, the Auditor General’s Office said.

Under the program, the state acts on behalf of hundreds of veterans who are unable to make medical, financial or other decisions for themselves or their estates. Most of the cases are under court appointments.

Cited shortcomings have included inaccurate and incomplete inventories of clients’ assets, incomplete records, inaccurate account records and reports to courts, tardy filings with courts and inadequate procedures to reconcile financial account.

Only Oregon has a similar state fiduciary program for veterans and Arizona should consider phasing out its program, the report said.

The program is not mandated by state law and dozens of public and private alternatives exist to provide such services, the report said.

The department’s response said the agency agreed with the auditors’ findings and is taking steps to improve training and its ability to keep track of cases and deadlines.

“We’re not where we need to be,” department Director Joey Strickland acknowledged in an interview. “We haven’t done anything wrong or illegal to hurt the veterans. Most of it is in the reporting process.”

Strickland also said the department will consider terminating the program but that an alternative course may be to increase its fees, which would require legislative approval.

Fees now cover approximately 60 percent of the program’s costs, with an average of $508,000 of tax dollars paying the rest in recent fiscal years, the report said.

If the department decides to phase out the program, it would not accept new clients and would find possible replacement fiduciaries for existing clients, Strickland said.

The program also has been the subject of critical reviews conducted by courts.

It’s a separate program from the departments’ residential home for veterans.

That facility in Phoenix was the subject of complaints and critical inspection reports that found insufficient staffing and substandard care that resulted in abuse and mismanagement in 2007.

Strickland said operation of the home has improved and that it has passed recent inspections.

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