Eager to reduce spending, the Bush administration falsely claimed savings of more than $1.3 billion in the Department of Veterans Affairs to justify cuts to health care services, congressional investigators say.

The report by the Government Accountability Office is the latest to document funding woes at the VA, which currently offers health care to 7 million out of 24 million eligible veterans. It found that the agency used misleading accounting methods and lacked documentation to prove its claimed savings.

The audit, released Thursday, comes amid growing political debate about streamlining veterans health care. In the last fiscal year, more than 260,000 veterans considered to have higher incomes could not sign up for services because of cost-cutting, a move decried by Democrats.

"It's unconscionable," said Rep. Lane Evans, D-Ill., the ranking Democrat on the House Veterans' Affairs Committee, who requested the audit. "Veterans needing health care are being penalized because of an accounting deception promulgated by this administration."

In a written response, the VA acknowledged that its accounting practices aren't "perfect" and should be improved. But it rejected the report's finding that the agency was motivated simply "to fill the budget gap."

"Proper stewardship of taxpayer resources requires that VA strive to become more effective and more efficient in delivering timely, high-quality health care for our veterans," wrote Gordon Mansfield, deputy secretary of Veterans Affairs.

The GAO report found several flaws in VA's accounting to justify smaller budget requests for the agency while claiming that the quality of health care wasn't hurt. For instance, the VA:

—Lacked adequate documentation for $1.3 billion it reported as "management efficiency savings" in fiscal years 2003 and 2004.

—Claimed savings of more than $3 million due to "efficiencies" from reduced overtime and delayed hiring at VA offices without explaining how the savings were achieved without a reduction in the quality of service.

—Often double-counted savings from volume purchasing in government contracts from year to year, resulting in overinflated figures. Audits from the GAO and VA inspector general last year found the VA could negotiate reduced prices totaling more than $1 billion.

"VA officials told us that the management efficiency savings assumed were savings goals ... to fill the gap between the cost associated with VA's projected demand for health care services and the amount the president was willing to request," the GAO report stated.

In recent years, Bush's budgets have included proposals to require some veterans to pay a portion of their care with co-payments, but Congress has repeatedly rejected that idea.

Although Congress has increased VA's budget in recent years, the agency found itself with a gaping budget hole last year and had to ask Congress for emergency funding. Veterans groups and some lawmakers say the agency's increases have been inadequate, but others say the agency has to set priorities on who gets care.

Congress provided about $23.3 billion for VA medical services for this fiscal year, above Bush's request, with about $1.2 billion set aside for when VA declares the money is needed for an emergency.

In 1996 Congress ordered the agency to open health care to nearly all veterans. However, lawmakers also gave authority to the VA secretary to suspend enrollments as needed.