diff --git a/lib/ansible/utils.py b/lib/ansible/utils.py
index a980e49ef4f..64e8ee247bb 100644
--- a/lib/ansible/utils.py
+++ b/lib/ansible/utils.py
@@ -334,19 +334,22 @@ def varReplaceFilesAndPipes(basedir, raw):
         # Determine replacement value (if unknown variable then preserve
         # original)
 
+        replacement = m.group()
         if m.group(1) == "FILE":
+            path = path_dwim(baesdir, m.group(2))
             try:
-                f = open(path_dwim(basedir, m.group(2)), "r")
+                f = open(path, "r")
+                replacement = f.read()
+                f.close()
             except IOError:
-                raise VarNotFoundException()
-            replacement = f.read()
-            f.close()
+                raise errors.AnsibleError("$FILE(%s) failed" % path)
         elif m.group(1) == "PIPE":
             p = subprocess.Popen(m.group(2), shell=True, stdout=subprocess.PIPE)
             (stdout, stderr) = p.communicate()
-            if p.returncode != 0:
-                raise VarNotFoundException()
-            replacement = stdout
+            if p.returncode == 0:
+                replacement = stdout
+            else:
+                raise errors.AnsibleError("$PIPE(%s) returned %d" % (m.group(2), p.returncode))
 
         start, end = m.span()
         done.append(raw[:start])    # Keep stuff leading up to token