The preliminary report submitted to senior VA officials and to Congress by Richard Griffin, the agency's acting inspector general, is the first independent word since lawmakers and the White House demanded answers this month on the controversy over allegations of delayed care nationwide.
The report also found "numerous allegations" of "daily of mismanagement, inappropriate hiring decisions, sexual harassment, and bullying behavior by mid- and senior-level managers" at the Phoenix facility.
But the inspector general's report does not make any broader conclusions on whether delays in scheduling affected treatment, and the investigation continues.
The VA is under fire over allegations of alarming shortcomings at medical facilities nationwide. The controversy involves of delayed care with potential fatal consequences in possibly dozens of cases.
In Phoenix, the VA used fraudulent record-keeping -- including an alleged secret list -- that covered up excessive waiting periods for veterans, some of whom died in the process.
Overall, the number of VA facilities under investigation has expanded to 26, the inspector general's office said Tuesday.
Sen. John McCain, R-Ariz., said Griffin's initial findings were terrible and said it was "about time" the Justice Department launched its own investigation.
He also said embattled VA Secretary Eric Shinseki should probably resign, which the Cabinet officer has said he has no plans to do.
"I haven't said this before, but I think it's time for General Shinseki to move on," McCain said.
There have been calls from other members of Congress for him to step down over the scandal, but McCain's voice on military issues carries enormous weight considering his experience as a combat veteran and a Vietnam prisoner of war.