The government agency overseeing compensation payments to veterans has allowed claims to become "lost" for up to 183 days and delayed while handled by officials, the national auditor says.
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A report on Wednesday found the Department of Veterans' Affairs had been slowed in dealing with some claims as staff made multiple requests for information from third parties and the same voluminous case files were subjected to agency review multiple times.
The Australian National Audit Office found it dealt with most cases within agency targets and that average times dealing with claims had fallen since 2015.
But the department was failing to monitor for long-delayed claims that threatened to damage its reputation and could significantly affect veterans.
The auditor found one claim was effectively "lost" for 183 days before it was assigned to an official.
There was limited transparency or control over processing, and the department focused its monitoring of speed on claims more than 240 days old and the "top 20" oldest claims in the system.
"There is limited management visibility over claims that have not yet reached these thresholds."
The auditor urged an overhaul of how compensation claims were managed with a series of changes identifying problematic cases and cutting delays, agreed to by the department, which is undergoing government-funded reforms.
"The majority of DVA rehabilitation and compensation services are being delivered to veterans and their dependents within DVA’s time based performance targets, however a minority of claims take an excessively long period to process due to inefficient handling," it said.
"These delays can have significant impacts for these veterans."
The worst delayed claims were slowed by medical reviews, and "excessive time" not acting on cases despite having all required information.
"The monitoring and reporting of claims is not effective in alerting management to those which are at risk of taking excessive time to process."
The Department of Veterans' Affairs said it was rolling out a single rehabilitation and compensation processing system and would scrap 18 separate legacy systems.
This would alert staff when processing milestones were not met and would allow better monitoring of claims, a spokesman said.
