Government Purchase Cards
Control Weaknesses Expose Agencies to Fraud and Abuse Gao ID: GAO-02-676T May 1, 2002The use of government purchase cards has increased in recent years as agencies have sought to eliminate the bureaucracy and paperwork long associated with small purchases. At the same time, agencies need to have adequate internal controls in place to protect the government from waste, fraud, and abuse. GAO found significant internal control weaknesses in agency purchase card programs, including inadequate review and approval processes, a lack of training for both cardholders and approving officials, and poor monitoring. This lax environment allowed cardholders to make fraudulent, improper, abusive, and questionable purchases. Weak controls also resulted in lost, missing, or misused government property.
GAO-02-676T, Government Purchase Cards: Control Weaknesses Expose Agencies to Fraud and Abuse
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United States General Accounting Office:
GAO:
Testimony:
Before the Subcommittee on Oversight and Investigations, Committee on
Energy and Commerce, House of Representatives:
For Release on Delivery:
Expected at 10 a.m.
Wednesday, May 1, 2002:
Government Purchase Cards:
Control Weaknesses Expose Agencies to Fraud and Abuse:
Statement of Linda M. Calbom:
Director, Financial Management and Assurance:
GAO-02-676T:
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to provide an overview of our reviews of
the government purchase card programs at two federal agencies and how
the control weaknesses we have identified made these agencies
vulnerable to improper or questionable purchases. At the outset, I want
to make clear our support in concept for the purchase card program. The
use of purchase cards has dramatically increased in past years as
agencies have sought to eliminate the bureaucracy and paperwork long
associated with making small purchases. The benefits of using purchase
cards are lower costs and less red tape for both the government and the
vendor community.
At the same time, given the nature, scale, and increasing use of
purchase cards, it is important that agencies have adequate internal
controls in place to help ensure proper use of purchase cards and thus
to protect the government from waste, fraud, and abuse. Our audits to
date have identified serious internal control weaknesses. In the past
year, we have found improper and fraudulent use of purchase cards at
two Navy units reviewed and at the Department of Education.[Footnote 1]
In addition, a number of Inspectors General (IG) have identified and
reported on control weaknesses in the purchase card programs at their
agencies, including the Departments of Agriculture, the Interior, and
Transportation.[Footnote 2]
Government purchase cards, a type of credit card, are available to
agencies as part of the Governmentwide Commercial Purchase Card Program,
which was established to streamline federal agency acquisition
processes by providing a low-cost, efficient vehicle for obtaining
goods and services directly from vendors. The Federal Acquisition
Regulation, Part 13, ’Simplified Acquisition Procedures,“ establishes
criteria for using purchase cards to place orders and make payments.
The Department of the Treasury requires agencies to establish approved
uses of the purchase card and to set spending limits. According to the
General Services Administration (GSA), which administers the
governmentwide contract for this program, in fiscal year 2001, over
400,000 cardholders in about 60 agencies made purchases totaling about
$13.8 billion. Given this widespread usage, you asked us to provide an
overview of internal control weaknesses we have found in our reviews of
purchase card programs at two Navy units and the Department of
Education and improvements needed to correct these weaknesses.
In order to respond to your request, we reviewed our previous reports
and testimonies in this area, as well as reports issued by various IGs.
In our purchase card program reviews, we assessed the internal controls
over two Navy units‘ and the Department of Education‘s purchase card
programs[Footnote 3] and used forensic auditing techniques, such as
database searches, file comparisons, and other detailed analyses to
identify unusual transactions and payment patterns.
As you know, internal controls serve as the first line of defense in
safeguarding assets and in preventing and detecting fraud, abuse, and
errors. Heads of agencies are required to establish a system of internal
control consistent with our Standards for Internal Control in the
Federal Government.[Footnote 4] My testimony today discusses some of
the common control weaknesses we and the IGs have identified in agency
purchase card programs, including weaknesses in the review and approval
processes, lack of training for cardholders and approving officials,
and ineffective monitoring. These weaknesses created a lax control
environment that allowed cardholders to make fraudulent, improper,
abusive, and questionable purchases. Weak controls also resulted or
contributed to lost, missing, or misused government property. I will
now describe some of the problems we found and then provide specific
examples of improper payments we and various IGs identified. I will
also lay out some of the key recommendations we and the IGs have made
to address these problems.
Inadequate Review and Approval Processes:
According to our Standards for Internal Control in the Federal
Government, transactions and other significant events should be
authorized and executed only by persons acting within the scope of their
authority. Although review of transactions by persons in authority is
the principal means of assuring that transactions are valid, we found
that the review and approval process for purchase card purchases was
inadequate in all the agencies reviewed.
At the Department of Education, we found that 10 of its 14 offices did
not require cardholders to obtain authorization prior to making some or
all purchases, although Education‘s policy required that all requests to
purchase items over $1,000 be made in writing to the applicable
department executive officer. We also found that approving officials did
not use monitoring reports that were available from Bank of America
[Footnote 5] to identify unusual or unauthorized purchases.
Additionally, Education‘s 1990 purchase card policy, which was in effect
during the time of our review (May 1998 through September 2000), stated
that an approving official was to ensure that all purchase card
transactions were for authorized Education purchases and in accordance
with departmental and other federal regulations. The approving official
signified that a cardholder‘s purchases were appropriate by reviewing
and signing monthly statements. To test the effectiveness of Education‘s
approving officials‘ review, we analyzed 5 months of cardholder
statements and found that 37 percent of the 903 monthly cardholder
statements we reviewed were not approved by the appropriate official.
The unapproved statements totaled about $1.8 million. Further, we found
that Education employees purchased computers using their purchase
cards, which was a violation of Education‘s policy prohibiting the use
of purchase cards for this purpose. As I will discuss later, several of
the computers that were purchased with purchase cards were not entered
in property records, and we could not locate them. If approving
officials had been conducting a proper review of monthly statements,
the computer purchases could have been identified and the practice
halted, perhaps eliminating this computer accountability problem.
Education implemented a new approval process during our review. We
assessed this new process and found that while approving officials were
generally reviewing cardholder statements, those officials were not
ensuring that adequate supporting documentation existed for all
purchases.
Weaknesses in the approval process also existed at the two Navy units we
reviewed. During our initial review, approving officials in these two
units told us that they did not review support for transactions before
certifying monthly statements for payment because (1) they did not have
time and (2) Navy policy[Footnote 6] did not specifically require that
approving officials review support. At one of the Navy units, one
approving official was responsible for certifying summary billing
statements covering an average of over 700 monthly statements for 1,153
cardholders. Further, Navy‘s policy allows the approving official to
presume that all transactions are proper unless notified to the
contrary by the cardholder. The policy appears to improperly assign
certifying officer accountability to cardholders and is inconsistent
with Department of Defense regulations, which state that certifying
officers are responsible for assuring that payments are proper.
During our follow-up review, we found that throughout fiscal year 2001,
approving officials in the two units still did not properly review and
certify the monthly purchase card statements for payment. Although the
Department of Defense Purchase Card Program Management Office issued
new guidance in July 2001 that would reduce the number of cardholders
for which each approving official was responsible, neither of the two
units met the suggested ratio of five to seven cardholders to one
approving official until well after the start of fiscal year 2002.
[Footnote 7] Further, the Department of Defense agreed with our
recommendation that Navy revise its policy to assure that approving
officials review the monthly statements and the supporting
documentation prior to certifying the statements for payment. However,
for the last quarter of fiscal year 2001, one of the Navy units
continued to inappropriately certify purchase card statements for
payment. The other unit issued local guidance that partially implements
our recommendation.
IGs at the Departments of Agriculture, the Interior, and Transportation
also identified weaknesses in the review and approval processes at these
agencies. For example, Agriculture‘s IG reported that the department has
not effectively implemented an oversight tool in its Purchase Card
Management System (PCMS), the system that processes purchase card
transactions. This tool is an alert system that monitors the database
for pre-established conditions that may indicate potential abuse by
cardholders. Responsible officials are to periodically access their
alert messages and review the details for questionable transactions.
These reviewing officials should contact cardholders, if necessary, so
that cardholders can verify any discrepancies or provide any additional
information in order to resolve individual alert messages. In order to
close out alert messages, reviewers must change the message status to ’
read“ and explain any necessary details to resolve the alerts.
According to Agriculture‘s IG, only about 29,600 out of 50,500 alerts
in the database during fiscal years 1999 and 2000 had been read as of
January 9, 2001, and only about 6,100 of the alerts that were read
contained responses. The inconsistent use of this oversight tool means
that Agriculture management has reduced assurance that errors and abuse
are promptly detected and that cardholders are complying with purchase
card and procurement regulations.
Interior‘s IG reported that it reviewed the work of 53 reviewing
officials and found that 42 of them performed inadequate reviews. The
IG defined an adequate review as one in which the reviewing official,
on a monthly basis, reconciled invoices and receipts to the purchase
card statements to ensure that all transactions were legitimate and
necessary. The IG found that several reviewing officials signed off on
monthly statements indicating completed reviews where supporting
documentation was not available.
Lack of Training:
Another common internal control weakness we identified was lack of or
inadequate training related to the use of purchase cards. Our Standards
for Internal Control in the Federal Government emphasize that effective
management of an organization‘s workforce”its human capital”is
essential to achieving results and is an important part of internal
control.
Training is key to ensuring that the workforce has the skills necessary
to achieve organizational goals. Lack of or inadequate training
contributed to the weak control environments at several agencies.
Navy‘s policies required that all cardholders and approving officials
must receive initial purchase card training and refresher training
every 2 years. We determined that the two Navy units lacked
documentation to demonstrate that all cardholders and approving
officials had received the required training. We tested $68 million of
fiscal year 2000 purchase card transactions at the two Navy units and
estimated that at least $17.7 million of transactions were made by
cardholders for whom there was no documented evidence they had received
either the required initial training or refresher training on purchase
card policies and procedures. Although we found during our follow-up
work that the two Navy units had taken steps to ensure cardholders
receive training and to document the training, many cardholders at one
of the units still had not completed the initial training or the
required refresher training. Similarly, at Education, we found that
although the policy required each cardholder and approving officials to
receive training on their respective responsibilities, several
cardholders and at least one approving official were not trained.
Interior‘s IG also reported a lack of training related to the purchase
card program. Specifically, the IG reported that although Interior
provided training to individual cardholders, it did not design or
provide training to reviewing officials. According to the IG, several
reviewing officials said that they did not know how to conduct a review
of purchase card transactions, nor did they understand how and why to
review supporting documentation. As previously mentioned, the IG found
that many reviewing officials were not performing adequate reviews.
Ineffective Monitoring:
Our Standards for Internal Control in the Federal Government state that
internal control should generally be designed to assure that ongoing
monitoring occurs in the course of normal operations. Internal control
monitoring should assess the quality of performance over time and ensure
that findings of audits and other reviews are promptly resolved. Program
and operational managers should monitor the effectiveness of control
activities as part of their regular duties.
At the two Navy units we reviewed, we found that management had not
established an effective monitoring and internal audit function for the
purchase card program. The policies and procedures did not require that
the results of internal reviews be documented or that corrective
actions be monitored to help ensure they are effectively implemented.
The NAVSUP Instruction calls for semiannual reviews of purchase card
programs, including adherence to internal operating procedures,
applicable training requirements, micro-purchase procedures, receipt
and acceptance procedures, and statement certification and prompt
payment procedures. These reviews are to serve as a basis for
initiating appropriate action to improve the program and correct
problem areas.
Our analysis of fiscal year 2000 agency program coordinator reviews at
one of the Navy units showed that the reviews identified problems with
about 42 percent of the monthly cardholder statements that were
reviewed. The problems identified were consistent with the control
weaknesses we found. Unit management considered the findings but
directed that corrective actions not be implemented because of
complaints about the administrative burden associated with the
procedural changes that would be needed to address the review findings.
These reviews generally resulted in the reviewer counseling the
cardholders or in some instances, recommending that cardholders attend
purchase card training. As a result, the agency program coordinator had
not used the reviews to make systematic improvements in the program.
During our follow-up work, we noted that this unit had recently made
some efforts to implement new policies directed at improving internal
review and oversight activities. However, these efforts are not yet
complete.
At the time of our review, Education did not have a monitoring system in
place for purchase card activity. However, in December 2001, the
department issued new policies and procedures that, among other things,
establish a quarterly quality review of a sample of purchase card
transactions to ensure compliance with key aspects of the department‘s
policy.
Transportation‘s IG reported that the Federal Aviation Administration
(FAA) had not performed required internal follow-up reviews on purchase
card usage since 1998. A follow-up review is to consist of an
independent official (other than the approving official) reviewing a
sample of purchase card transactions to determine whether purchases
were authorized and that cardholders and approving officials followed
policies and procedures.
The types of weaknesses that I have just described create an environment
where improper purchases could be made with little risk of detection. I
will now provide a few examples of how employees used their purchase
cards to make fraudulent, improper, abusive, and questionable purchases.
We also found that property purchased with the purchase cards was not
always recorded in agencies‘ property records, which could have
contributed to missing or stolen property.
Poor Controls Resulted in Fraudulent, Improper, Abusive, and
Questionable Purchases:
In a number of cases, the significant control weaknesses that we and the
IGs identified resulted in or contributed to fraudulent, improper,
abusive, and questionable purchases. We considered fraudulent purchases
to be those that were unauthorized and intended for personal use.
Improper purchases included those for government use that were not, or
did not appear to be, for a purpose permitted by law or regulation. We
defined abusive or questionable transactions as those that, while
authorized, were for items purchased at an excessive cost, for a
questionable government need, or both. Questionable purchases also
include those for which there was insufficient documentation to
determine whether they were valid.
For example, at Education, we found an instance in which a cardholder
made several fraudulent purchases from two Internet sites for
pornographic services. The name of one of the sites”Slave Labor
Productions.com”should have caused suspicion when it appeared on the
employee‘s monthly statement. We obtained the statements containing the
charges and noted that they contained handwritten notes next to the
pornography charges indicating that these were charges for
transparencies and other nondescript items. According to the approving
official, he was not aware of the cardholder‘s day-to-day
responsibilities, and therefore, could not properly review the
statements. The approving official stated that the primary focus of his
review was to ensure there was enough money available in that
particular appropriation to pay the bill. As a result of investigations
related to these pornography purchases, Education management issued a
termination letter, prompting the employee to resign.
We also identified questionable charges by an Education employee
totaling $35,760 over several years for herself and a coworker to
attend college. Some of the classes the employees took were apparently
prerequisites to obtain a liberal arts degree, but were unrelated to
Education‘s mission. The classes included biology, music, and theology,
and represented $11,700 of the $35,760. These classes costing $11,700
were improper charges. The Government Employees Training Act, 5 U.S.C.
4103 and 4107, requires that training be related to an employee‘s job
and prohibits expenditures to obtain a college degree unless
necessitated by retention or recruitment needs, which was not the case
here. We also identified as questionable purchases totaling more than
$152,000 for which Education could not provide any support and did not
know specifically what was purchased, why it was purchased, or whether
these purchases were appropriate.
The breakdown of controls at the two Navy units we reviewed made it
difficult to detect and prevent fraudulent purchases made by
cardholders. We identified over $11,000 of fraudulent purchases
including gifts, gift certificates, and clothing from Macy‘s West,
Nordstrom, Mervins, Lees Men‘s Wear, and Footlocker, and a computer and
related equipment from Circuit City.
During our follow-up work, we also identified a number of improper,
questionable, and abusive purchases at the Navy units, including food
for employees costing $8,500; rentals of luxury cars costing $7,028;
designer and high-cost leather briefcases, totes, portfolios, day
planners, palm pilot cases, wallets, and purses from Louis Vuitton and
Franklin Covey costing $33,054; and questionable contractor payments
totaling $164,143.
The designer and high-cost leather goods from Franklin Covey included
leather purses costing up to $195 each and portfolios costing up to $135
each. Many of these purchases were of a questionable government need
and should have been paid for by the individual. To the extent the day
planners and calendar refills were proper government purchases, they
were at an excessive cost and should have been purchased from certified
nonprofit agencies under a program that is intended to provide
employment opportunities for thousands of people with disabilities.
Circumventing the requirements to buy from these nonprofit agencies and
purchasing these items from commercial vendors is not only an abuse and
waste of taxpayer dollars, but shows particularly poor judgment and
serious internal control weaknesses.
The contractor payments in question were 75 purchase card transactions
with a telecommunications contractor that appeared to be advance
payments for electrical engineering services. Paying for goods and
services before the government has received them (with limited
exceptions) is prohibited by law[Footnote 8] and Navy purchase card
procedures. Navy employees told us the purchase card was used to
expedite the procurement of goods and services from the contractor
because the preparation, approval, and issuance of a delivery order was
too time-consuming in certain circumstances. For all 75 transactions,
we found that the contractor‘s estimated costs were almost always equal
or close to the $2,500 micropurchase threshold. Because we found no
documentation of independent receipt and acceptance of the services
provided or any documentation that the work for these charges was
performed, these charges are potentially fraudulent, and we have
referred them to our Office of Special Investigations for further
investigation.
IGs also identified fraudulent purchases. The Transportation
Department‘s IG reported on two cases involving employees‘ fraudulent
use of their purchase cards. In one case, a cardholder used a
government purchase card to buy computer software and other items
costing over $80,000 for a personal business. In the other case, a
cardholder made numerous unauthorized charges totaling more than
$58,000, including a home stereo system and a new engine for his car.
Additionally, Interior‘s IG identified fraudulent purchases such as
payments for monthly rent and phone bills, household furnishings,
jewelry, and repairs to personal vehicles.
One type of improper purchase we identified is the ’split purchase,“
which we defined as purchases made on the same day from the same vendor
that appear to circumvent single purchase limits. The Federal
Acquisition Regulation prohibits splitting a transaction into more than
one segment to avoid the requirement to obtain competitive bids for
purchases over the $2,500 micro-purchase threshold or to avoid other
established credit limits. For example, one cardholder from Education
purchased two computers from the same vendor at essentially the same
time. Because the total cost of these computers exceeded the cardholder‘
s $2,500 single purchase limit, the total of $4,184.90 was split into
two purchases of $2,092.45 each. We found 27 additional purchases
totaling almost $120,000 where Education employees made multiple
purchases from a vendor on the same day.
Similarly, our analysis of purchase card payments at the two Navy units
identified a number of purchases from the same vendor on the same day.
To determine whether these were, in fact, split purchases, we obtained
and analyzed supporting documentation for 40 fiscal year 2000 purchases
at the two Navy units. We found that in many instances, cardholders made
multiple purchases from the same vendor within a few minutes or a few
hours for items such as computers, computer-related equipment, and
software, that involved the same, or sequential or nearly sequential
purchase order and vendor invoice numbers. Based on our analysis, we
concluded that 32 of the 40 purchases were split into two or more
transactions to avoid the micro-purchase threshold. During our follow-
up work, we found that 23 of 50 fiscal year 2001 purchases by the two
Navy units were split into two or more transactions to avoid the micro-
purchase threshold.
Split purchases were also identified by the IGs at the Departments of
Agriculture and Transportation. For example, Agriculture‘s IG reported
that it investigated two employees who intentionally made multiple
purchases of computer equipment with the same merchant in amounts
exceeding their established single purchase limits. During 3 different
months, these employees purchased computer systems totaling $121,123 by
structuring their individual purchases of components in amounts less
than the individual single purchase limit of $2,500. In September 1999,
a computer procurement totaling $47,475 was made using 20 individual
purchase card transactions during a 4-day period. Other computer
purchases were made in November 1999 involving 15 purchase card
transactions over a 3-day period totaling $36,418 and in June 2000
involving 15 individual transactions over a 5-day period totaling
$37,230. The IG reported that these procurements should have been made
by a warranted contracting officer. Similarly, Transportation‘s IG
reported that it identified 13 transactions totaling about $106,000
that violated the department‘s policies against splitting purchases.
Missing Property:
Another problem we and the IGs identified is that some property
purchased with purchase cards was not entered in agency property
records. According to our Standards for Internal Control in the Federal
Government, an agency must establish physical control to secure and
safeguard vulnerable assets. Such assets should be periodically counted
and compared to control records. Recording the items purchased in
property records is an important step to ensure accountability and
financial control over these assets and, along with periodic inventory
counts, to prevent theft or improper use of government property. At
Education and the Navy units, we identified numerous purchases of
computers and computer-related equipment, cameras, and palm pilots that
were not recorded in property records and for which the agencies could
not provide conclusive evidence that the items were in possession of
the federal government.
For example, the lack of controls at Education contributed to the loss
of 179 pieces of computer equipment costing over $200,000. We compared
serial numbers obtained from a vendor where the computers were
purchased to those in the department‘s asset management system and
found that 384 pieces of computer equipment were not listed in the
property records. We conducted an unannounced inventory to determine
whether the equipment was actually missing or inadvertently omitted from
the property records. We found 205 pieces of equipment. Education
officials have been unable to locate the remaining 179 pieces of missing
equipment. They surmised that some of these items may have been
surplused; however, there is no documentation to determine whether this
assertion is valid.
At the Navy units, our initial analysis showed that the Navy did not
record 46 of 65 sampled items in their property records. When we asked
to inspect these items, the Navy units could not provide conclusive
evidence that 31 of them”including laptop computers, palm pilots, and
digital cameras”were in the possession of the government. For example,
for 4 items, the serial numbers of the property we were shown did not
match purchase or manufacturer documentation. In addition, we were told
that 5 items were at other Navy locations throughout the world. Navy
officials were unable to conclusively demonstrate the existence and
location of these 5 items. We were unable to conclude whether any of
these 31 pieces of government property were stolen, lost, or being
misused.
We and the IGs have made recommendations to the various agencies that,
if fully implemented, will help improve internal controls over the
purchase card programs so that fraudulent and improper payments can be
prevented or detected in the future and vulnerable assets can be better
protected. These recommendations include (1) emphasizing policies on
appropriate use of the purchase card and cardholder and approving
official responsibilities, (2) ensuring that approving officials are
trained on how to perform their responsibilities, and (3) ensuring that
approving officials review purchases and their supporting documentation
before certifying the statements for payment. Agencies have taken
actions to respond to the recommendations made. However, during our
follow-up work at Education and the Navy units, we found that
weaknesses remain that continue to leave them vulnerable to fraudulent
and improper payments and lost assets. Management‘s ongoing commitment
to improving internal controls is necessary to minimize this
vulnerability.
In closing, Mr. Chairman, the use of government purchase cards has
succeeded in reducing the bureaucracy and paperwork associated with
small purchases, and we support the concept. However, control
weaknesses and the resulting abuse existing in the agencies reviewed so
far show that controls over the use of purchase cards need to be
strengthened. While the amount of fraud and abuse that we and the IGs
have identified is relatively small compared to the total amount of
purchases made each year, they represent major vulnerabilities that
could easily be exploited to a greater extent.
Mr. Chairman, this concludes my statement. I would be happy to answer
any questions you or other members of the subcommittee may have.
Contact and Acknowledgments:
For information about this statement, please contact Linda Calbom,
Director, Financial Management and Assurance, at (202) 512-9508 or at
calboml@gao.gov or Gregory D. Kutz, Director, Financial Management and
Assurance at (202) 512-9095 or at kutzg@gao.gov. Individuals who made
key contributions to this testimony include Diane Morris, Lisa Crye, and
Gayle Fischer. Numerous other individuals made contributions to the work
at the Navy units and the Department of Education.
[End of section]
Footnotes:
[1] U.S. General Accounting Office, Purchase Cards: Control Weaknesses
Leave Two Navy Units Vulnerable to Fraud and Abuse, [hyperlink,
http://www.gao.gov/products/GAO-01-995T] (Washington, D.C.: July 30,
2001); Purchase Cards: Control Weaknesses Leave Two Navy Units
Vulnerable to Fraud and Abuse, [hyperlink,
http://www.gao.gov/products/GAO-02-32] (Washington, D.C.: November 30,
2001); Purchase Cards: Continued Control Weaknesses Leave Two Navy
Units Vulnerable to Fraud and Abuse, [hyperlink,
http://www.gao.gov/products/GAO-02-506T] (Washington, D.C.: March 13,
2002); Education Financial Management: Weak Internal Controls Led to
Instances of Fraud and Other Improper Payments, [hyperlink,
http://www.gao.gov/products/GAO-02-406] (Washington, D.C.: March 28,
2002); and Education Financial Management: Weak Internal Controls Led
to Instances of Fraud and Other Improper Payments, [hyperlink,
http://www.gao.gov/products/GAO-02-513T] (Washington, D.C.: April 10,
2002).
[2] U.S. Department of Agriculture, Office of Inspector General,
Financial and IT Operations Audit Report: Some Changes Would Further
Enhance Purchase Card Management System Internal Controls, 50099-26-FM
(Washington, D.C.: August 2001); U.S. Department of the Interior,
Office of Inspector General, Department of the Interior, Integrated
Charge Card Program, 2002-I-0011 (Washington, D.C.: December 2001); and
U.S. Department of Transportation, Office of Inspector General, Use of
Government Credit Cards, Department of Transportation, FI-2001-095
(Washington, D.C.: September 24, 2001).
[3] Our initial reviews of purchase card programs covered controls in
place and purchases made (1) in fiscal year 2000 for the Navy and (2)
from May 1998 through September 2000 for Education. Because both
agencies changed their policies and procedures, we performed follow-up
work to assess the changes. We reviewed controls in place, including
implemented or planned improvements at the two Navy units for fiscal
year 2001, and we reviewed a sample of purchase card transactions for
the fourth quarter of fiscal year 2001. We also performed follow-up
work at Education to review changes to its policies and procedures, and
we reviewed purchase card transactions for the fourth quarter of fiscal
year 2001.
[4] U.S. General Accounting Office, Internal Control: Standards for
Internal Control in the Federal Government, [hyperlink,
http://www.gao.gov/products/GAO/AIMD-00-21.3.1] (Washington, D.C.:
November 1999).
[5] Bank of America services the purchase card program at Education.
[6] Navy‘s purchase card policy is contained in two documents”Navy
Supply Command (NAVSUP) Instruction 4200.94 issued September 20, 2000,
and a June 3, 1999, policy memorandum from the Navy Comptroller‘s
office.
[7] Although the ratio was met in total by both Navy units, one unit
still had 23 approving officials who were responsible for more than 7
cardholders.
[8] Section 3324 of title 31, United States Code.
[End of section]
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