Department of Health and Human Services
Controls over Travel Program Are Generally Effective, but Some Improvements Are Needed Gao ID: GAO-03-334 February 21, 2003By their nature, determining and paying allowable travel costs pose substantial risk, making effective internal control crucial. Because of this and weaknesses in internal control identified in the GAO review of travel card usage at the Department of Defense, GAO was requested to review the Department of Health and Human Services' (HHS) travel program. GAO assessed whether HHS's process for monitoring travel charge cards helps minimize delinquencies, write-offs, and unauthorized use. GAO also assessed whether controls over travel voucher processing help ensure proper reimbursements. GAO tested a statistical sample of travel card transactions at each of five HHS component agencies to determine if they were for authorized purposes. GAO also reviewed related travel vouchers to determine if reimbursement amounts were proper.
HHS's process for monitoring its travel card program, which includes reviewing bank reports to identify delinquent cardholders, effectively minimized delinquencies and write-offs. However, some unauthorized use of the travel card still occurred. HHS delinquency rates were lower than governmentwide rates for most of 2001 and declined further in 2002. Also, HHS's .29 percent write-off rate--the amount of unpaid travel card charges written off as a percentage of total travel charges--was slightly lower than the governmentwide rate of .44 percent. HHS has not always identified or prevented unauthorized travel card use because its monitoring of travel card use focuses mainly on delinquencies. GAO estimated that unauthorized travel card transactions for fiscal year 2001 ranged from about 7 percent at one HHS component agency to about 22 percent at another. Examples of unauthorized charges included personal charges for meals and automated teller machine withdrawals. While unauthorized use had minimal negative monetary effect because the majority of cardholders who made these charges paid their travel card bills timely, left unchecked, such use could lead to increased delinquencies and write-offs. GAO also found weaknesses in voucher processing, inadequate review of vouchers, and poor record retention, resulting in some employees being reimbursed for more than allowable expenses and for amounts not properly supported. The excess reimbursement ranged from about $2 on one voucher to about $250 on another. While these amounts alone are insignificant and relate to only a small percentage of travel reimbursements for fiscal year 2001, excess reimbursements reduce the amount of available travel funds. Further, vouchers that are not supported by related receipts make it difficult to determine if the reimbursement amounts are proper.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-03-334, Department of Health and Human Services: Controls over Travel Program Are Generally Effective, but Some Improvements Are Needed
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United States General Accounting Office:
GAO:
Report to the Chairman, Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce, House of Representatives.
February 2003:
Department Of Health And Human Services:
Controls over Travel Program Are Generally Effective, but Some
Improvements Are Needed:
GAO-03-334:
GAO Highlights:
Highlights of GAO-03-334, a report to the Chairman, Subcommittee on
Oversight and Investigations, Committee on Energy and Commerce, House
of Representatives.
Why GAO Did This Study:
By their nature, determining and paying allowable travel costs pose
substantial risk, making effective internal control crucial. Because of
this and weaknesses in internal control identified in the GAO review of
travel card usage at the Department of Defense, GAO was requested to
review the Department of Health and Human Services‘ (HHS) travel
program. GAO assessed whether HHS‘s process for monitoring travel
charge cards helps minimize delinquencies, write-offs, and unauthorized
use. GAO also assessed whether controls over travel voucher processing
help ensure proper reimbursements. GAO tested a statistical sample of
travel card transactions at each of five HHS component agencies to
determine if they were for authorized purposes. GAO also reviewed
related travel vouchers to determine if reimbursement amounts were
proper.
What GAO Found:
HHS‘s process for monitoring its travel card program, which includes
reviewing bank reports to identify delinquent cardholders, effectively
minimized delinquencies and write-offs. However, some unauthorized use
of the travel card still occurred.
As shown below, HHS delinquency rates were lower than governmentwide
rates for most of 2001 and declined further in 2002. Also, HHS‘s .29
percent write-off rate”the amount of unpaid travel card charges written
off as a percentage of total travel charges”was slightly lower than the
governmentwide rate of .44 percent.
Figure: HHS Delinquency Rates for Fiscal Years 2001 and 2002 Compared
to Governmentwide Rates:
[Se PDF for image]
This figure is a multiple line graph. The vertical axis of the graph
represents percent from 0 to 15. The horizontal axis of the graph
represents four fiscal year quarters: FY 01, first and third quarters;
FY 02 first and third quarters. Lines depict delinquency rates in three
categories: HHS; Civilian agencies, excluding HHS; Governmentwide,
excluding HHS.
Source: General Services Administration data.
[End of figure]
HHS has not always identified or prevented unauthorized travel card use
because its monitoring of travel card use focuses mainly on
delinquencies. GAO estimated that unauthorized travel card transactions
for fiscal year 2001 ranged from about 7 percent at one HHS component
agency to about 22 percent at another. Examples of unauthorized charges
included personal charges for meals and automated teller machine
withdrawals. While unauthorized use had minimal negative monetary
effect because the majority of cardholders who made these charges paid
their travel card bills timely, left unchecked, such use could lead to
increased delinquencies and writeoffs.
GAO also found weaknesses in voucher processing, inadequate review of
vouchers, and poor record retention, resulting in some employees being
reimbursed for more than allowable expenses and for amounts not properly
supported. The excess reimbursement ranged from about $2 on one voucher
to about $250 on another. While these amounts alone are insignificant
and relate to only a small percentage of travel reimbursements for
fiscal year 2001, excess reimbursements reduce the amount of available
travel funds. Further, vouchers that are not supported by related
receipts make it difficult to determine if the reimbursement amounts
are proper.
What GAO Recommends:
GAO recommends that HHS require component agencies to:
* periodically test a sample of travel card transactions to identify
unauthorized travel card charges and;
* reinforce the requirement that voucher processing staff/reviewers
check vouchers for proper per diem amounts and amounts credited on hotel
bills and obtain and retain the necessary receipts.
HHS concurred with our recommendations and stated that it is working to
implement them.
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-334].
To view the full report, including the scope and methodology, click on
the link above. For more information, contact Linda Calbom at (202) 512-
9508 or calboml@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Scope and Methodology:
HHS Travel Card Monitoring Process Has Effectively Minimized
Delinquencies and Write-offs, but Some Unauthorized Use Still Occurs:
Controls over Travel Voucher Processing Could Be Improved:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Comments from the Department of Health and Human Services:
Appendix III: GAO Contact and Staff Acknowledgments:
Tables Table 1: Fiscal Year 2001 Travel Card Activity at HHS Component
Agencies Selected for Review:
Table 2: Write-offs of Travel Card Charges:
Table 3: Estimate of Unauthorized Fiscal Year 2001 Travel Card
Transactions:
Table 4: Number and Category of Unauthorized Travel Card Transactions:
Table 5: Estimate of Travel Vouchers Related to Fiscal Year 2001 Travel
Card Transactions That Were in Excess of Proper Travel Expenses or Were
Not Properly Supported:
Table 6: Number of Travel Vouchers Related to Fiscal Year 2001 Travel
Card Transactions That Were in Excess of Proper Travel Expenses or Were
Not Properly Supported:
Table 7: Fiscal Year 2001 Travel Card Activity at HHS Component
Agencies Selected for Review:
Table 8: Estimates of Fiscal Year 2001 Unauthorized Travel Card
Transactions:
Table 9: Summary of Cardholders with Unauthorized Transactions Who Had
Their Accounts Written Off during Fiscal Year 2001:
Table 10: Estimates of Travel Vouchers Relating to Fiscal Year 2001
Travel Card Transactions That Were Not Properly Supported or Were
Overstated:
Figure:
Figure 1: HHS Travel Card Delinquency Rates for Fiscal Years 2001 and
2002 Compared to Governmentwide Rates:
Abbreviations:
ATM: automated teller machine:
CMS: Centers for Medicare and Medicaid Services:
FDA: Food and Drug Administration:
GSA: General Services Administration:
HHS: Department of Health and Human Services:
IHS: Indian Health Service:
NIH: National Institutes of Health:
OMB: Office of Management and Budget:
OS: Office of the Secretary:
[End of section]
United States General Accounting Office:
Washington, D.C. 20548:
February 21, 2003:
The Honorable James Greenwood:
Chairman:
Subcommittee on Oversight and Investigations:
Committee on Energy and Commerce:
House of Representatives:
Dear Mr. Chairman:
The Department of Health and Human Services (HHS), like other federal
agencies, issues travel cards to personnel for expenses related to
official government travel. The travel card program is intended to
improve convenience for the traveler and to reduce the government‘s
administrative costs. By their nature, determining and paying allowable
travel costs pose substantial risk, making effective internal control
crucial. Because of this and weaknesses identified in our reviews of
travel card usage at the Department of Defense, [Footnote 1] you asked
us to review HHS‘s travel program. Specifically, you requested that we
determine whether (1) HHS has an effective process for monitoring its
travel card program to minimize delinquency rates, write-offs, and
unauthorized use of the card and (2) HHS‘s controls over travel voucher
processing are effective in helping ensure that travelers are not
receiving reimbursements in excess of proper travel expenses. This
report provides the results of our review of travel card use at five
HHS component agencies for fiscal year 2001.
Results in Brief:
HHS‘s process for monitoring its travel card program has been effective
in minimizing delinquencies and write-offs. HHS‘s travel card
delinquency rates were lower than the governmentwide rates in fiscal
years 2001 and 2002. For example, in December 2001, the governmentwide
rate was 12.6 percent, compared to HHS‘s rate of 9.3 percent, and in
August 2002, the governmentwide rate was 6.6 percent, while HHS‘s rate
had declined sharply to 1.9 percent. Similarly, HHS‘s write-off
rate”the amount of unpaid travel card charges written off as a
percentage of total travel card charges”was slightly lower than the
governmentwide rate. The HHS travel card write-off rate was .29 percent
as compared to the governmentwide rate, which was .44 percent.
[Footnote 2]
We attribute HHS‘s better-than-average performance to its monitoring
process, which includes reviews of monthly bank reports by program
coordinators to identify delinquent cardholders and actions such as
contacting the cardholders and their supervisors to inform the
cardholders that they need to pay their travel card bills. The low
delinquency and writeoff rates can also be attributed to workforce
demographics. HHS employees whose jobs require travel tend to be higher
paid and have many years of work experience making them more likely to
pay their bills on time.
While HHS‘s monitoring efforts help keep delinquencies and write-offs
lower than other federal agencies, the efforts have not always
identified or prevented unauthorized use of the card. We found
instances of unauthorized travel card use at each of the five component
agencies we reviewed. The percentage of unauthorized transactions
ranged from 7 percent at one component to 22 percent at another.
[Footnote 3] Examples of unauthorized use included (1) personal charges
for meals and automated teller machine (ATM) withdrawals, (2) charges
that were for business-related purposes, but still unauthorized, such
as parking for local meetings, and (3) charges for which the component
agencies did not provide us with documentation supporting that the
transactions were related to official government travel. When employees
are issued travel cards, they sign agreements that they will use the
travel cards only for authorized official government travel expenses.
The cases of unauthorized use we identified had minimal negative effect
because the majority of the cardholders who made these charges paid
their travel card bills on time. At the same time, using the travel
card for unauthorized purposes violates the Federal Travel Regulation,
and, left unchecked, could lead to increased delinquencies and write-
offs in the future.
Our review also determined that weaknesses in HHS controls over travel
voucher processing at five component agencies resulted in some
employees being reimbursed for amounts that were not correct or not
properly supported, mainly because of inadequate review of travel
vouchers and poor record retention. The most common errors that we
identified were reimbursement for (1) per diem in excess of authorized
amounts and (2) items such as telephone calls and hotel taxes that the
hotel charged to the traveler, and then credited to the traveler‘s
account. We found such errors in 20 of the 349 vouchers we reviewed.
The amount of excess reimbursements we identified ranged from about $2
on one voucher to over $250 on another. While these amounts alone are
insignificant, they relate to only a small percentage of travel
reimbursements for fiscal year 2001, and if extrapolated to all travel
reimbursements, the amounts could be significant. Excess amounts
reimbursed reduce the amount of travel funds available during the year
for other mission-related activities requiring travel. In addition, we
could not determine the validity of reimbursements for 14 of the 349
vouchers because the component agencies did not maintain adequate
supporting documentation. Therefore, neither they nor we can determine
if the travel voucher reimbursements are proper.
This report makes recommendations that, if fully implemented, will help
HHS to reduce unauthorized and personal use of travel cards and help
ensure that travelers are not receiving reimbursements in excess of
proper travel expenses. HHS concurred with our recommendations and
stated that it is working to implement them. HHS‘s written comments and
separate technical comments are evaluated in the ’Agency Comments and
Our Evaluation“ section near the end of our report.
Background:
HHS is the U.S. government‘s principal agency for protecting the health
of all Americans and providing essential human services. To help
fulfill its mission, HHS requires many of its employees to travel
throughout the country, and the world, to inspect food and drug
manufacturers, administer Medicare and Medicaid programs, attend
conferences, and perform other functions in furthering its mission.
Federal regulations require most HHS employees who travel to use the
government travel card”a type of charge card”for all official travel-
related expenses. The federal government‘s travel card program is
significantly different from its purchase card program in that the
cardholder is directly responsible for all charges incurred on his or
her travel card account and the monthly bill is sent to the cardholder
for payment. The cardholder is responsible for submitting a properly
documented travel voucher and is reimbursed by HHS for all valid
expenses related to official government travel. In contrast, all
purchase card charges are billed directly to the government for
payment.
Travel Cards:
In 1983, the General Services Administration (GSA) awarded a
governmentwide master contract with a private company to provide
government-sponsored, contractor-issued travel cards to federal
employees to be used to pay for costs incurred on official government
travel. The intent of the travel card program was to improve convenience
for the traveler and to reduce the government‘s cost of administering
travel by reducing the need for cash advances to the traveler and the
administrative workload associated with processing and reconciling
travel advances. Under the current GSA master contract, HHS entered
into a task order with U.S. Bank to provide travel card services.
The Travel and Transportation Reform Act of 1998 (P.L. 105-264) expanded
the use of government travel cards by mandating the use of the cards
for all official travel expenses unless specifically exempted. The act
is intended to further reduce the overall cost of travel to the federal
government through reduced administrative costs and by taking advantage
of rebates from the travel card contractor based on the volume of
transactions incurred using the card and on cardholders paying their
monthly travel card bills on time. To help cardholders pay their
monthly bills on time, the act also requires that agencies reimburse
cardholders for proper travel claims within 30 days of submission of
proper travel vouchers. Further, the act allows, but does not require,
agencies to offset a cardholder‘s pay for amounts the cardholder owes
to the travel card contractor as a result of travel card delinquencies
not disputed by the cardholder. As required by the act, GSA
incorporated its requirements into the Federal Travel Regulation, which
governs travel and transportation and relocation allowances for all
federal government employees, including overall policies and procedures
governing the use of government travel cards. Agencies are required to
follow the requirements of GSA‘s Federal Travel Regulation, but can
augment these with their own implementing regulations.
In accordance with the act, HHS employees are required to use the travel
card for official travel expenses, including cash advances through ATM
machines. Travelers do not have to use their travel cards for laundry
and dry cleaning, parking, taxi, tips, meals when the use of the card
is not practical, and in cases where the vendor does not accept the
card. The travel card is not to be used for personal purchases or ATM
withdrawals unrelated to official travel. In fiscal year 2001, HHS had
almost 40,000 individually billed travel card accounts and about $73.4
million in related travel card charges.
Travel cardholders are responsible for paying their travel card bills
upon receipt of their monthly statements. The bank may suspend an
account if payment for any undisputed principal amount is not received
within 60 calendar days from the closing date on the statement on which
the unpaid charge first appeared. Suspension means the cardholder will
be unable to use the travel card until the bank receives payment. The
bank may cancel an account if (1) the account has been suspended twice
during a 12-month period for nonpayment of undisputed principal amounts
and is past due again with payment not received within 45 calendar days
from the closing date on the billing statement in which the charge
first appeared or (2) the account is 126 days past due from the closing
date on the billing statement in which the unpaid charge first
appeared. When the card is canceled due to nonpayment, the bank may
report the delinquency to credit bureaus and refer the account to
collection agencies. If an account becomes 180 days past due, the bank
can write off the account.
HHS component agencies receive quarterly rebates from U.S. Bank based
on the volume of transactions incurred using the card and on cardholders
paying their monthly travel card bills on time. The rebate amount is
reduced if significant numbers of cardholders do not pay their bills on
time.
Each of the component agencies has program coordinators [Footnote 4]
who are responsible for the travel card program in their offices. We
were told that individuals were given this responsibility as a
collateral duty, in addition to other travel-related or administrative
duties. [Footnote 5] The program coordinators monitor travel card
usage, serve as focal points for answering questions, submit travel
card applications to the bank on behalf of the travelers, issue travel
cards, and retrieve the cards from employees when they leave HHS.
Program coordinators told us they monitor travel card usage by
reviewing monthly reports from U.S. Bank, mainly to identify delinquent
cardholders. Once the delinquent cardholders are identified, the
program coordinators told us that they contact the cardholders and
their supervisors to take action to get the bills paid.
Travel Process:
Each of the five component agencies we reviewed has its own travel
process and system, although they all operate similarly. In most cases,
travel orders and travel vouchers are prepared and approved
electronically. When a cardholder is required to travel for official
government purposes, either administrative staff or the traveler
prepares a travel order by entering travel information in the component
agency‘s automated travel system. The information entered includes
duration and points of travel, amounts of per diem and ATM advances
authorized, and mode of travel. The travel order is then automatically
routed to the appropriate authorizing official(s) for approval.
Within 5 working days of return, the traveler is required to submit a
voucher claiming allowable expenses incurred while on travel. The
traveler (or the agency‘s administrative staff) prepares a travel
voucher, which includes an itemized list of travel expenses. The
automated system routes the travel voucher to one or more persons for
approval. The final approving official, depending on the component
agency, may be the traveler‘s supervisor or a staff member in the
travel/financial management office. The approving official is to ensure
proper receipts are attached, per diem rates are correct, and expenses
are properly claimed.
The voucher is then routed to the payment office for reimbursement to
the traveler. Some vouchers are selected for audit either before or
after payment is made, depending on the component agency. These audits
are to consist of a complete, thorough review of the voucher, including
verifying that (1) correct per diem rates were used, (2) applicable
receipts are attached and the amounts claimed on the voucher are
supported by the receipts, (3) all other expenses are properly claimed,
and (4) calculations are correct. The vouchers selected for audit
include (1) all vouchers for senior executive staff and political
appointees, (2) all vouchers over $1,500 or $2,500, depending on the
component agency, (3) all relocation vouchers, and (4) a sample of the
remaining vouchers. In accordance with the Travel and Transportation
Reform Act of 1998 and implementing federal regulations, HHS has 30
days after the traveler submits a proper travel voucher to reimburse
the traveler.
Scope and Methodology:
We selected five HHS component agencies for review based on the amount
of travel card activity and delinquency rates in fiscal year 2001.
Table 1 shows the amounts of travel card activity for these component
agencies in fiscal year 2001. These five component agencies, which
incurred approximately 370,000 transactions in the amount of $48.8
million, covered nearly 70 percent of HHS‘s travel card activity in
fiscal year 2001.
Table 1: Fiscal Year 2001 Travel Card Activity at HHS Component
Agencies Selected for Review:
Component agency: Centers for Medicare and Medicaid Services (CMS);
Number of travel card transactions: 68,248;
Dollar value of transactions: $9.0 million.
Component agency: Food and Drug Administration (FDA);
Number of travel card transactions: 83,552;
Dollar value of transactions: $14.2 million.
Component agency: Indian Health Service (IHS);
Number of travel card transactions: 99,167;
Dollar value of transactions: $7.6 million.
Component agency: National Institutes of Health (NIH);
Number of travel card transactions: 43,173;
Dollar value of transactions: $7.6 million.
Component agency: Office of the Secretary (OS);
Number of travel card transactions: 75,700;
Dollar value of transactions: $10.4 million.
Source: U.S. Bank data provided by HHS.
[End of table]
To determine whether HHS has an effective process for monitoring its
travel card program to minimize delinquency rates, write-offs, and
unauthorized use of the card, we obtained an understanding of the travel
card program, both departmentwide and for the five individual component
agencies. We interviewed HHS staff and officials and reviewed HHS‘s
departmentwide and individual component agencies‘ policies and
procedures to identify procedures for monitoring their travel card
programs. We also obtained data from GSA on delinquency rates and
writeoffs and compared HHS to other federal agencies. We did not assess
the reliability of the GSA data.
To determine the extent of unauthorized use of travel cards during
fiscal year 2001, we tested a statistical sample of travel card
transactions from each of the five component agencies. To select the
sample, we obtained (1) a database of HHS travel card transactions for
fiscal year 2001 from U.S. Bank, the contractor that administers the
HHS travel card program, and (2) lists of fiscal year 2001 travel
orders and vouchers from the five component agencies. From the U.S.
Bank data, we selected random samples of travel card transactions for
each of the five component agencies. Using the list of travel orders
and vouchers and information about each travel card transaction (i.e.,
date of transaction, location of merchant, etc.), we determined whether
the selected transactions were for expenses of official travel. We also
used information provided by the component agencies about individual
transactions to determine whether they were authorized. Using the U.S.
Bank data, we determined whether those cardholders who used their
travel cards for unauthorized purposes paid their bills timely.
To determine whether controls over travel voucher processing are
effective in helping ensure that travelers are not receiving
reimbursements in excess of proper travel expenses, we identified the
travel voucher covering each of the transactions in our statistical
sample and tested whether the reimbursement amount was proper. For each
voucher in the sample, we verified that correct per diem rates were
used, verified that ATM cash withdrawal fees were calculated correctly,
determined if the necessary receipts were attached and the correct
amounts were claimed on the voucher, and verified that the calculations
on the voucher were accurate.
Appendix I provides further detail on our scope and methodology. We
conducted our work from May 2002 through November 2002 in accordance
with generally accepted government auditing standards. We requested
comments on a draft of this report from the Secretary of Health and
Human Services or his designee. We received written comments as well as
separate technical comments which we have considered and incorporated
into our report as appropriate. We have reprinted the written comments
in appendix II.
HHS Travel Card Monitoring Process Has Effectively Minimized
Delinquencies and Write-offs, but Some Unauthorized Use Still Occurs:
Two key indicators of how well agencies monitor their travel card
programs are delinquency rates [Footnote 6] and write-off rates.
[Footnote 7] For the past 2 years, HHS‘s delinquency rates and write-
off rates have been lower than the governmentwide rates. HHS‘s lower
delinquency and write-off rates indicate that its monitoring process is
effective, but also can be attributed to demographics of the workforce.
Travel card program coordinators monitor monthly bank reports to
identify delinquent cardholders and follow up with them to get their
bills paid. However, because the monitoring efforts focus primarily on
delinquencies, some unauthorized use goes undetected. We found
unauthorized transactions such as charges for personal meals and
charges for business-related purposes that should not have been paid
for with the travel card. In assessing the impact that unauthorized use
had on the travel card program, we determined that the majority of the
employees responsible for the unauthorized use paid their bills timely,
thus having minimal effect on the rebate amount. However, when
employees use their travel cards for unauthorized purposes, it
increases the risk that they could become delinquent and have their
accounts written off, thus reducing the agency‘s future rebates.
Monitoring Process Is Generally Effective:
Travel card program coordinators monitor monthly bank reports to
identify delinquent cardholders. According to the program coordinators,
when they identify these cardholders, they take action, such as
contacting the cardholders and their supervisors to inform them that
they need to pay their travel card bills so that the delinquencies do
not continue. These procedures have been effective in minimizing HHS‘s
delinquency rates and write-off amounts. At the end of fiscal year
2001, HHS‘s delinquency rate was lower than the governmentwide rate.
Figure 1 shows HHS‘s delinquency rates for fiscal years 2001 and 2002
(through August) compared to the governmentwide rates, excluding HHS,
and to the rates of other civilian agencies, excluding HHS.
Figure 1: HHS Delinquency Rates for Fiscal Years 2001 and 2002 Compared
to Governmentwide Rates:
[Se PDF for image]
This figure is a multiple line graph. The vertical axis of the graph
represents percent from 0 to 15. The horizontal axis of the graph
represents four fiscal year quarters: FY 01, first and third quarters;
FY 02 first and third quarters. Lines depict delinquency rates in three
categories: HHS; Civilian agencies, excluding HHS; Governmentwide,
excluding HHS.
Source: GSA data.
[End of figure]
Paying travel card bills on time and, thus, maintaining low delinquency
and write-off rates is important to the travel card program because
banks that administer the program offer agencies incentives in the form
of rebates. The GSA master contract requires the banks to pay a
quarterly rebate to agencies and GSA related to card usage. The rebate
to the agency is reduced, or eliminated, if significant numbers of an
agency‘s cardholders do not make timely payments. Because the vast
majority of HHS cardholders pay their bills on time, write-offs as a
percentage of total travel card charges were lower than the
governmentwide write-offs. Table 2 shows a comparison, based on the
best available data, of the amount and percentage of write-offs since
inception of the travel card contract on November 30, 1998, through
August 2002 to total charges over a similar period for HHS,
governmentwide excluding HHS, and other civilian agencies excluding
HHS. [Footnote 8]
Table 2: Write-offs of Travel Card Charges (Cumulative: fiscal years
1999 through 2002):
Agency: HHS;
Travel card write-offs[A]: $885,534;
Travel card charges[B]: $307,709,183;
Write-offs as a percentage of charges: .288%.
Agency: Governmentwide, excluding HHS;
Travel card write-offs[A]: $79,732,485
Travel card charges[B]: $18,066,158,852
Write-offs as a percentage of charges: .441%.
Agency: Civilian agencies, excluding HHS;
Travel card write-offs[A]: $18,172,713;
Travel card charges[B]: $5,976,032,608;
Write-offs as a percentage of charges: .304%.
Source: GSA data.
[A] Amount of write-offs since inception of the travel card program in
November 1998.
[B] Amount of travel card charges for fiscal years 1999 through 2002
(as of August).
[End of table]
The monitoring process that HHS has in place for its travel card program
has helped it achieve better-than-average travel card performance. HHS
designates program coordinators to monitor the travel card program in
each HHS component agency and take corrective or disciplinary action
when necessary. Each month, U.S. Bank sends reports to the department
and to the component agencies. These reports contain information on
delinquencies and details on each cardholder‘s travel card usage. The
department‘s Office of Financial Policy also sends a monthly report
that it prepares based on U.S. Bank data to each of the component agency
program coordinators, which summarizes data on delinquencies and
writeoffs. The Office of Financial Policy includes messages with these
reports reminding each component agency about the need to monitor the
travel card program effectively. Program coordinators told us they
routinely review the U.S. Bank reports to identify delinquent
cardholders, and during this review, they may also identify
unauthorized charges. One program coordinator told us he specifically
looks for potential unauthorized or personal use by all cardholders by
checking the location where transactions occurred (to detect purchases
in the local area where employees work) and the name of merchants where
transactions occurred. However, others only focused on delinquent
cardholders.
Program coordinators issue messages to all staff reminding them of their
responsibility to pay their travel card bills on time and that the card
is to be used only for authorized expenses related to official travel.
In addition, U.S. Bank staff, departmental staff, and component agency
program coordinators participate in monthly conference calls to discuss
issues related to travel card policy and identify areas where
additional monitoring may be needed.
As monitoring procedures have identified agency- or employee-specific
problems, component agencies have implemented corrective or
disciplinary actions to address the problems. For example, at the
beginning of fiscal year 2002, IHS limited ATM withdrawals to $60 per
day not to exceed $360 per week, from the prior limits of $300 per day
not to exceed $600 per week. It also lowered the credit limit for most
of its cardholders to $3,500 per month. The limits had been as high as
$15,000. In addition, the IHS program coordinator sends letters to
cardholders, their supervisors, and unit managers containing specific
details of the problems and actions that can or will be taken. These
additional controls may have contributed to the decrease in IHS‘s
delinquency rate from almost 11 percent at the end of fiscal year 2001
to 3.8 percent in August 2002.
CMS staff members told us of recent actions taken by CMS related to its
travel card program. CMS has designated a staff member to work full-time
on monitoring travel card use and delinquencies. They also told us that
CMS lowered the travel card monthly purchase limits to $7,500 from prior
limits that were as high as $25,000.
HHS component agencies have also taken disciplinary action against
cardholders who become delinquent and in danger of having their accounts
canceled or written off and who use their travel cards for unauthorized
purposes. These actions range from verbally reprimanding employees to
canceling travel card accounts. Specific examples are discussed in the
next section.
In addition to monitoring travel cards and taking action when problems
arise, HHS staff members responsible for the travel card program told us
that low delinquency and write-off rates can also be attributed to the
demographics of its workforce. They told us that most HHS employees in
the component agencies we reviewed whose jobs require travel tend to be
mid- to higher-level workers who have many years of work experience and
higher rates of pay. An exception is IHS, which had the highest
delinquency rates of the five component divisions we reviewed.
[Footnote 9] According to IHS officials, its traveling workforce tends
to be less experienced and lower paid than employees in the other
component agencies. We found similar circumstances during our review of
travel at the Army. [Footnote 10] We reported that most of the
cardholders responsible for the Army‘s high delinquency and write-off
rates were young, low- and mid-level enlisted military personnel with
relatively low incomes and little experience in handling personal
finances.
HHS continues developing plans to implement more controls over its
travel card program. In June 2002, HHS established a remedial action
plan for its travel card program in response to the Office of
Management and Budget‘s (OMB) request that all federal agencies develop
remedial action plans to ensure the integrity of their travel card
programs. In its plan, HHS listed some other controls it is
implementing HHS-wide, including the following:
* Adjusting spending limits”HHS will work with U.S. Bank to review
spending patterns of cardholders and to establish criteria for lowering
authorized spending limits.
* Putting a message on billing statements”HHS will work with U.S. Bank
to use the billing statement message space to remind cardholders to file
timely vouchers and pay travel card bills on time.
* Canceling cards that are used infrequently”Departmental management
will ask component agencies to consider deactivation, or cancellation,
of infrequently used travel cards.
HHS has also established a goal for further reducing its delinquencies.
In its letter to OMB, HHS noted that although it recognizes that there
will always be some delinquencies, the department has established a
goal of reducing its delinquency rate to 1 percent or less by September
30, 2003. We agree that the delinquency rate should be minimal because
the program is designed so that employees receive reimbursement for
their travel expenses, which they are to use to pay their travel card
bills. Implementing its planned actions and continuing its monitoring
efforts will be key to HHS achieving this goal.
Despite Monitoring Efforts, Unauthorized Use Still Occurs:
Federal regulations, HHS policies, and the agreement a cardholder signs
with U.S. Bank when obtaining a travel card all state that the travel
card may be used only for official travel-related expenses. For each of
the five component agencies, we tested a random sample of 86 fiscal
year 2001 travel card transactions (for a total of 430 transactions) to
determine whether the transactions were for authorized purposes related
to official government travel. At each of the five HHS components we
reviewed, we found transactions that we characterized as unauthorized,
either because we determined that they were for personal use or the
component agencies were unable to provide approved travel orders or
other documentation to demonstrate that the transactions were official
travel expenses. Table 3 shows the estimate of unauthorized fiscal year
2001 travel card transactions. [Footnote 11]
Table 3: Estimate of Unauthorized Fiscal Year 2001 Travel Card
Transactions:
Component agency: CMS;
Estimates of the percentage of unauthorized travel card
transactions[A]: 17%.
Component agency: FDA;
Estimates of the percentage of unauthorized travel card
transactions[A]: 17%.
Component agency: IHS;
Estimates of the percentage of unauthorized travel card
transactions[A]: 22%.
Component agency: NIH;
Estimates of the percentage of unauthorized travel card
transactions[A]: 19%.
Component agency: OS;
Estimates of the percentage of unauthorized travel card
transactions[A]: 7%.
Source: GAO analysis.
[A] See app. I for confidence intervals associated with these
estimates.
[End of table]
Unauthorized transactions we identified that were for personal use
included charges for lodging, meals, and ATM withdrawals unrelated to
official government travel. In some of these cases, cardholders
indicated that they inadvertently used the travel card, rather than
their personal credit card. For other transactions, the component
agency provided documentation, such as a local travel voucher, that
indicated the transaction was business related but was unauthorized.
Table 4 shows the number of the unauthorized transactions (out of the
86 tested at each component agency) we identified in the following
categories: (1) personal, (2) business related but unauthorized, and
(3) charges for which the component agencies did not provide us with
adequate documentation to make such a determination.
Table 4: Number and Category of Unauthorized Travel Card Transactions:
Component agency: CMS;
Category of unauthorized use: Personal use: 1;
Category of unauthorized use: Business related: 2;
Category of unauthorized use: Inadequate support: 12;
Category of unauthorized use: Totals: 15.
Component agency: FDA;
Category of unauthorized use: Personal use: 1;
Category of unauthorized use: Business related: 1;
Category of unauthorized use: Inadequate support: 13;
Category of unauthorized use: Totals: 15.
Component agency: IHS;
Category of unauthorized use: Personal use: 14;
Category of unauthorized use: Business related: 0;
Category of unauthorized use: Inadequate support: 5;
Category of unauthorized use: Totals: 19.
Component agency: NIH;
Category of unauthorized use: Personal use: 10;
Category of unauthorized use: Business related: 4;
Category of unauthorized use: Inadequate support: 2;
Category of unauthorized use: Totals: 16.
Component agency: OS;
Category of unauthorized use: Personal use: 3;
Category of unauthorized use: Business related: 1;
Category of unauthorized use: Inadequate support: 2;
Category of unauthorized use: Totals: 6.
Component agency: Total;
Category of unauthorized use: Personal use: 29;
Category of unauthorized use: Business related: 8;
Category of unauthorized use: Inadequate support: 34;
Category of unauthorized use: Totals: 71.
Source: GAO analysis.
[End of table]
IHS had the marginally highest rate of unauthorized use, 19 of the 86
sampled transactions. We estimate that 22 percent [Footnote 12] of IHS
travel card transactions for fiscal year 2001 were for unauthorized
purposes. Most of the IHS unauthorized use was for personal purchases,
such as gas and ATM charges, or purchases made while on local travel.
In one of these cases, IHS told us that the employee was terminated in
October 2001 for misuse of his travel card. In another case, IHS told
us the card had been canceled, and in a third case, the employee had
received a verbal reprimand for the personal transaction. In other
cases, IHS told us the matter was referred to the cardholder‘s
administrative officer to determine action.
At NIH, we found that 16 of the 86 sampled transactions we reviewed were
considered unauthorized use of the travel card. We estimate that 19
percent [Footnote 13] of the NIH travel card transactions for fiscal
year 2001 were used for unauthorized purposes. Ten of the 16
unauthorized transactions were for personal charges, including a charge
at The Sports Authority. Four of the 16 were for business-related
purposes, such as using the card for parking and registration fees for
local meetings. This may indicate that some cardholders are not aware
that these types of charges are unauthorized.
At CMS and FDA, we estimate that 17 percent [Footnote 14] of travel
card transactions for fiscal year 2001 at each component were for
unauthorized purposes. These instances of unauthorized use mainly
represent transactions for which the component agencies did not provide
documentation to support that the transactions were authorized and for
official travel or were unauthorized.
At OS, we estimate that 7 percent [Footnote 15] of fiscal year 2001
travel card transactions were unauthorized. We identified personal
charges for gas and ATM withdrawals and one business-related
transaction for parking at a meeting.
In some cases, the component agencies had already identified
unauthorized transactions that were in our sample and had taken action,
and in other cases, the component agencies were not aware of the
unauthorized use until we brought it to their attention. For example,
one of the transactions in our NIH sample was a personal purchase of
gasoline. NIH provided documentation showing that the cardholder had
several prior instances of personal use of the card and had been
delinquent in paying his travel card bill. NIH canceled his travel card
in June 2002, and the employee voluntarily resigned. For two other
unauthorized transactions in our sample, NIH told us that the purchases
were not identified until we started our review. NIH also told us that
in June 2002, it sent a document containing the policy on proper use of
the travel card to all cardholders who had to certify that they read
and understood the rules.
In addition to our assessment of unauthorized use, we took steps to
determine the potential impact that these instances of unauthorized use
had on the travel card program. Specifically, we determined whether the
employees responsible for the unauthorized use were late in paying their
bills or had their accounts written off. This is key because
unauthorized use of the travel card by itself has no direct negative
monetary affect on the government unless the cardholders do not pay
their bills on time. Delinquencies and write-offs affect how the bank
calculates the amount of an agency‘s rebate. We reviewed U.S. Bank data
for fiscal year 2001 to determine whether those cardholders in our
sample whose transactions were personal, unauthorized, or undocumented
paid their bills on time. Of the 71 unauthorized or undocumented
transactions that we reviewed, 3 were made by cardholders who did not
pay their bills timely and had their accounts written off. These 3
write-offs totaled $13,446.
While the majority of the cardholders in our samples who used their
travel cards for unauthorized and personal purposes paid their bills
timely, using the card for these purposes is against government
regulations. Because HHS‘s monitoring efforts focus on identifying
delinquent accounts, they may not identify the majority of personal and
other unauthorized use. Although HHS‘s delinquency rates are
comparatively low, left unchecked, personal and other unauthorized use
of travel cards has the potential to increase delinquencies and write-
offs in the future.
Controls over Travel Voucher Processing Could Be Improved:
To assess whether controls over travel voucher processing were effective
in helping to ensure that travelers were not receiving reimbursements
for unallowable expenses or in excess of proper travel expenses,
[Footnote 16] we tested 349 travel vouchers [Footnote 17] related to
the sample of travel card transactions we discussed earlier. While we
did not find any cardholders who were reimbursed for outright
unallowable expenses, we did find some errors that were not caught
during the voucher review process, resulting in reimbursements that
exceeded proper expenses. The two most common types of errors we
identified were reimbursement for (1) per diem in excess of authorized
amounts and (2) items such as telephone calls and hotel taxes that the
hotel charged to the traveler, and then credited to the traveler‘s
account. We could not determine the validity of some reimbursements
because the component agencies did not provide us with all the receipts
supporting the reimbursement amounts. Without the proper supporting
documentation, neither we nor the travel voucher reviewers can
determine with certainty whether reimbursements of travel expenses are
proper and correct.
Table 5 shows the estimate of travel vouchers in which the reimbursement
amounts were in excess of proper travel expenses or were not properly
supported.
Table 5: Estimate of Travel Vouchers Related to Fiscal Year 2001 Travel
Card Transactions That Were in Excess of Proper Travel Expenses or Were
Not Properly Supported:
Component agency: CMS;
Estimates of the percentage of travel vouchers that were overstated or
were not properly supported[A]: 10%.
Component agency: FDA;
Estimates of the percentage of travel vouchers that were overstated or
were not properly supported[A]: 13%.
Component agency: IHS;
Estimates of the percentage of travel vouchers that were overstated or
were not properly supported[A]: 9%.
Component agency: NIH;
Estimates of the percentage of travel vouchers that were overstated or
were not properly supported[A]: 10%.
Component agency: OS;
Estimates of the percentage of travel vouchers that were overstated or
were not properly supported[A]: 6.
Source: GAO analysis.
[A] See app. I for confidence intervals associated with these
estimates.
[End of table]
Table 6 gives a breakdown of the number of vouchers that we reviewed in
which the reimbursement amounts were in excess of proper travel
expenses or were not properly supported.
Table 6: Number of Travel Vouchers Related to Fiscal Year 2001 Travel
Card Transactions That Were in Excess of Proper Travel Expenses or Were
Not Properly Supported:
Component agency: CMS;
Reimbursement exceeds proper expenses: 3;
Not properly supported: 4;
Totals: 7.
Component agency: FDA;
Reimbursement exceeds proper expenses: 2;
Not properly supported: 7;
Totals: 9.
Component agency: IHS;
Reimbursement exceeds proper expenses: 6;
Not properly supported: 0;
Totals: 6.
Component agency: NIH;
Reimbursement exceeds proper expenses: 6;
Not properly supported: 1;
Totals: 7.
Component agency: OS;
Reimbursement exceeds proper expenses: 3;
Not properly supported: 2;
Totals: 5.
Component agency: Total;
Reimbursement exceeds proper expenses: 20;
Not properly supported: 14;
Totals: 34.
Source: GAO analysis.
[End of table]
As table 6 shows, the main reason for problems at FDA was poor record
retention. FDA did not provide sufficient documentation (mainly required
receipts for expenses like lodging and airfare) to determine whether the
reimbursements were proper. The most common type of problem that we
identified in testing vouchers for IHS and NIH was that per diem was
reimbursed for 1 day more than the number of days of actual travel or in
excess of authorized amounts. At IHS, three vouchers we tested included
reimbursement amounts totaling $95 related to excess per diem, and five
NIH vouchers we tested included reimbursement amounts totaling $378
related to excess per diem. This situation should have been identified
in the process, either by employees when they signed the vouchers before
submitting them for review, or by the reviewers before the vouchers were
paid.
The problems we found in testing vouchers for CMS and OS were lack of
receipts and excess reimbursement for items such as telephone calls and
hotel taxes that the hotel charged to the traveler, and then credited
to the traveler‘s account. The amount of excess reimbursement by CMS
for items credited to hotel bills was about $33 and the amount for OS
was about $159. We also found that CMS improperly reimbursed about $12
to a traveler for fees claimed on the voucher twice, and OS paid about
$12 in excess per diem. While these amounts are minimal, they relate to
only a small percentage of travel voucher reimbursements for fiscal
year 2001, and if extrapolated to all travel reimbursements, the amount
could be significant. Reimbursing employees for amounts that exceed
proper expenses potentially reduces the amount of travel funds
available during the year for other important mission-related
activities requiring travel. Further, in cases where the component
agencies did not maintain adequate documentation to support the amounts
reimbursed on travel vouchers, neither they nor we can determine if the
travel voucher reimbursements are proper.
Conclusions:
HHS‘s process for monitoring its travel card program has been effective
in reducing delinquencies and write-offs. However, because the focus is
primarily on identifying and addressing existing delinquencies as
opposed to preventing or detecting unauthorized use, unauthorized use
is not always identified. Unchecked, unauthorized use could lead to
increased delinquencies and write-offs, thus reducing the rebates HHS
earns on its travel card program. In addition, while component agencies
have controls over travel voucher processing, these controls were not
always effective in ensuring that per diem amounts claimed were proper
and that reimbursements did not include amounts for which travelers had
received credits on their hotel bills. Also, weaknesses in controls
related to record retention impede reviewers‘ ability to ensure that
travel voucher reimbursement amounts are proper and accurate.
Recommendations for Executive Action:
To reduce unauthorized and personal use of travel cards and help ensure
that travelers are not receiving reimbursements in excess of proper
travel expenses, we recommend that the Secretary of Health and Human
Services require component agencies to:
* include procedures in their monitoring efforts for periodically
testing a sample of travel card transactions to identify unauthorized
travel card charges and any adverse trends that would warrant further
testing or additional controls;
* issue an alert to voucher processing staff/reviewers reminding them to
check vouchers for proper per diem amounts and amounts credited on
hotel bills, and;
* issue an alert to voucher processing staff/reviewers reminding them to
obtain and retain the necessary receipts needed to determine the
correct amount of travel reimbursement.
Agency Comments and Our Evaluation:
In written comments on a draft of this report, which are reprinted in
appendix II, HHS concurred with our recommendations and stated that it
is working to implement them. According to HHS, some of the component
agencies we reviewed are taking, or have taken, various actions to
implement our recommendations. These actions should help to reduce
unauthorized and personal use of travel cards and help ensure that
travelers are not receiving reimbursement in excess of proper travel
expenses. We urge HHS to ensure that the recommendations are addressed
departmentwide.
In separate technical comments, CMS took issue with three transactions
that we determined to be unauthorized because the agency did not provide
supporting documentation. As stated in our report, we characterized
certain transactions as unauthorized because we determined that they
either were for personal use or the component agencies did not provide
us an approved travel order or other documentation to demonstrate that
the transaction was an official travel expense.
These three transactions did not have cardholder names associated with
them in U.S. Bank‘s database. CMS stated that it could not provide
documentation to support the transactions without a traveler name, and
therefore, these transactions should not be considered errors. We
disagree.
We had several conversations with representatives from U.S. Bank about
the data. Based on other data elements in its database, U.S. Bank
representatives told us that they had determined the transactions were
made with travel cards issued to CMS employees. CMS and the bank were
both aware of the account numbers associated with these three
transactions and other transaction information such as the merchant name
and address and transaction date. This information would have provided
them an avenue to ascertain the cardholder names.
As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 7 days
after its date. At that time, we will send copies to interested
congressional committees, the Secretary of Health and Human Services,
and the Director of the Office of Management and Budget. Copies will
also be made available to others upon request. In addition, this report
will be available at no charge on GAO‘s Web site at [hyperlink,
http://www.gao.gov].
Please contact me at (202) 512-9508 or by E-mail at calboml@gao.gov if
you or your staff has any questions concerning this report. An
additional GAO contact and staff acknowledgments are provided in
appendix III.
Sincerely yours,
Signed by:
Linda M. Calbom:
Director, Financial Management and Assurance:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
The objectives of our review were to determine whether (1) the
Department of Health and Human Services (HHS) has an effective process
for monitoring its travel card program to minimize delinquency rates,
writeoffs, and unauthorized use of the card and (2) HHS‘s controls over
travel voucher processing are effective in helping ensure that
travelers are not receiving reimbursements in excess of proper travel
expenses. We selected five HHS component agencies to review based on
the amount of travel card activity and delinquency rates in fiscal year
2001. Table 7 shows the amounts of travel card activity for these
component agencies in fiscal year 2001. These five component agencies,
which incurred approximately 370,000 transactions in the amount of
$48.8 million, covered nearly 70 percent of HHS‘s travel card activity
in fiscal year 2001.
Table 7: Fiscal Year 2001 Travel Card Activity at HHS Component
Agencies Selected for Review:
Component agency: Centers for Medicare and Medicaid Services (CMS);
Number of travel card transactions: 68,248;
Dollar value of transactions: $9.0 million.
Component agency: Food and Drug Administration (FDA);
Number of travel card transactions: 83,552;
Dollar value of transactions: $14.2 million.
Component agency: Indian Health Service (IHS);
Number of travel card transactions: 99,167;
Dollar value of transactions: $7.6 million.
Component agency: National Institutes of Health (NIH);
Number of travel card transactions: 43,173;
Dollar value of transactions: $7.6 million.
Component agency: Office of the Secretary (OS);
Number of travel card transactions: 75,700;
Dollar value of transactions: $10.4 million.
Source: U.S. Bank data provided by HHS.
[End of table]
To determine whether HHS has an effective process for monitoring its
travel card program to minimize delinquency rates, write-offs, and
unauthorized use of the card, we obtained an understanding of the travel
card program, both departmentwide and for the five individual component
agencies. We interviewed HHS staff members and officials and reviewed
HHS‘s departmentwide and individual component agencies‘ policies and
procedures to identify procedures for monitoring their travel card
programs. We also obtained data from the General Services Administration
on delinquency rates and write-offs and compared HHS to other federal
agencies.
To determine the extent of unauthorized use of travel cards during
fiscal year 2001, we tested random samples of travel card transactions
from each of the five component agencies. To select the samples, we
obtained (1) a database of HHS travel card transactions for fiscal year
2001 from U.S. Bank, the contractor that administers the HHS travel
card program, and (2) lists of fiscal year 2001 travel orders and
vouchers from the five component agencies. We verified that the
population of transactions in the database agreed with control totals
for the number and amount of transactions provided by U.S. Bank. We
were not able to verify the completeness of the lists of travel orders
and vouchers.
From the U.S. Bank data, we selected random samples of 86 travel card
transactions for each of the five component agencies, for a total of 430
transactions. Then, based on the date of the transactions and the dates
of travel, we identified the travel order related to each transaction.
We asked the component agencies to provide the travel order, travel
voucher, and all documentation and receipts supporting the amount
claimed on the travel voucher for each of the sampled transactions.
Because we were not able to ensure that the lists of travel orders were
complete, in cases where we could not identify a related order, we
provided the component agencies with information on the transactions,
including cardholders‘ names and account numbers, merchant names and
addresses, and dates of transaction, so that they could try to identify
the related orders through other means. In some cases, the component
agencies were able to locate the related travel orders and vouchers,
and they provided the documents to us, or they provided us with
documentation stating that the transactions were not for authorized
expenses related to official travel. In other cases, the component
agencies provided us with travel orders and vouchers, but we determined
that they did not relate to the transactions, or the component agencies
did not provide any documentation for some transactions. We concluded
that a transaction was an authorized use of the travel card if there
was an approved travel order related to the transaction. We concluded
the transaction was unauthorized if (1) the component agency
acknowledged unauthorized use, (2) the travel order we were provided
did not relate to the transaction, or (3) we were not provided with any
documentation. Table 8 shows the results of our tests, including the
point estimates and the two-sided, 95 percent confidence intervals for
fiscal year 2001 travel card transactions that were unauthorized.
Table 8: Estimates of Fiscal Year 2001 Unauthorized Travel Card
Transactions:
Component agency: CMS;
Number of unauthorized transactions: 15 of 86;
Estimate of percentage of unauthorized transactions: 17%;
Confidence interval at a 95 percent confidence level: 10% to 27%.
Component agency: FDA;
Number of unauthorized transactions: 15 of 86;
Estimate of percentage of unauthorized transactions: 17%;
Confidence interval at a 95 percent confidence level: 10% to 27%.
Component agency: IHS;
Number of unauthorized transactions: 19 of 86;
Estimate of percentage of unauthorized transactions: 22%;
Confidence interval at a 95 percent confidence level: 14% to 32%.
Component agency: NIH;
Number of unauthorized transactions: 16 of 86;
Estimate of percentage of unauthorized transactions: 19%;
Confidence interval at a 95 percent confidence level: 11% to 29%.
Component agency: OS;
Number of unauthorized transactions: 6 of 86;
Estimate of percentage of unauthorized transactions: 7%;
Confidence interval at a 95 percent confidence level: 3% to 15%.
Source: GAO analysis.
[End of table]
To determine the potential impact that the unauthorized transactions had
on the travel card program, [Footnote 18] we reviewed the U.S. Bank
data and determined whether those cardholders who used their travel
cards for unauthorized purposes paid their bills on time. Table 9 shows
the number of cardholders with unauthorized transactions who were
delinquent and who had their accounts written off during fiscal year
2001.
Table 9: Summary of Cardholders with Unauthorized Transactions Who Had
Their Accounts Written Off during Fiscal Year 2001:
Component agency: CMS;
Number of unauthorized transactions (cardholders): 15;
Number of cardholders who were delinquent: 5;
Number of delinquent cardholders whose accounts were written off: 0;
Total balances written off: [Empty].
Component agency: FDA;
Number of unauthorized transactions (cardholders): 15;
Number of cardholders who were delinquent: 4;
Number of delinquent cardholders whose accounts were written off: 0;
Total balances written off: [Empty].
Component agency: IHS;
Number of unauthorized transactions (cardholders): 19;
Number of cardholders who were delinquent: 12;
Number of delinquent cardholders whose accounts were written off: 2;
Total balances written off: $6,600.42.
Component agency: NIH;
Number of unauthorized transactions (cardholders): 16;
Number of cardholders who were delinquent: 6;
Number of delinquent cardholders whose accounts were written off: 1;
Total balances written off: $6,845.23.
Component agency: OS;
Number of unauthorized transactions (cardholders): 6;
Number of cardholders who were delinquent: 1;
Number of delinquent cardholders whose accounts were written off: 0;
Total balances written off: [Empty].
Component agency: Total;
Number of unauthorized transactions (cardholders): 71;
Number of cardholders who were delinquent: 28;
Number of delinquent cardholders whose accounts were written off: 3;
Total balances written off: $13,445.65.
Source: GAO analysis of U.S. Bank data.
To determine whether controls over travel voucher processing are
effective in helping ensure that travelers are not receiving
reimbursements in excess of proper travel expenses, we tested the
travel voucher covering each of the authorized transactions in our
samples to determine whether the reimbursement amount was properly
supported and not overstated. For each voucher in the sample, we
verified that correct per diem rates were used; verified that automated
teller machine cash withdrawal fees were calculated correctly, ensured
that the necessary receipts were attached and the correct amounts were
claimed on the voucher, and verified that the calculations on the
voucher were accurate. Table 10 shows the results of our tests,
including the point estimates and the two-sided, 95 percent confidence
intervals for fiscal year 2001 travel vouchers relating to
authorized travel card transactions.
Table 10: Estimates of Travel Vouchers Relating to Fiscal Year 2001
Travel Card Transactions That Were Not Properly Supported or Were
Overstated:
Component agency: CMS;
Number of vouchers not properly supported or overstated: 7 of 67;
Estimate of percentage of travel vouchers not properly supported or
overstated: 10%;
Confidence interval at a 95 percent confidence level: 4% to 20%.
Component agency: FDA;
Number of vouchers not properly supported or overstated: 9 of 70;
Estimate of percentage of travel vouchers not properly supported or
overstated: 13%;
Confidence interval at a 95 percent confidence level: 6% to 23%.
Component agency: IHS;
Number of vouchers not properly supported or overstated: 6 of 67;
Estimate of percentage of travel vouchers not properly supported or
overstated: 9%;
Confidence interval at a 95 percent confidence level: 3% to 19%.
Component agency: NIH;
Number of vouchers not properly supported or overstated: 7 of 67;
Estimate of percentage of travel vouchers not properly supported or
overstated: 10%;
Confidence interval at a 95 percent confidence level: 4% to 20%.
Component agency: OS;
Number of vouchers not properly supported or overstated: 5 of 78;
Estimate of percentage of travel vouchers not properly supported or
overstated: 6%;
Confidence interval at a 95 percent confidence level: 2% to 14%.
Source: GAO analysis.
[End of table]
We conducted our work from May 2002 through November 2002 in
accordance with generally accepted government auditing standards. We
requested comments on a draft of this report from the Secretary of
Health and Human Services or his designee. Written comments were
received from HHS and are reprinted in appendix II. These written
comments and separate technical comments we received are evaluated in
the ’Agency Comments and Our Evaluation“ section near the end of our
report.
[End of section]
Appendix II: Comments from the Department of Health and Human Services:
Department of Health and Human Services:
Office of the Inspector General:
Washington, DC 20201:
February 4, 2003:
Ms. Linda M. Calbom:
Director, Financial Management and Assurance:
United States General Accounting Office:
Washington, D.C. 20548:
Dear Ms. Calbom:
Enclosed are the department's comments on your draft report entitled,
"Department of Health and Human Services: Controls Over Travel Program
Are Generally Effective, But Some Improvements Are Needed." The
comments represent the tentative position of the department and are
subject to reevaluation when the final version of this report is
received.
The department also provided several technical comments directly to
your staff.
The department appreciates the opportunity to comment on this draft
report before its publication.
Sincerely,
Signed by:
Janet Rehnquist:
Inspector General:
Enclosure:
[The Office of Inspector General (OIG) is transmitting the department's
response to this draft report in our capacity as the department's
designated focal point and coordinator for General Accounting Office
reports. The OIG has not conducted an independent assessment of these
comments and therefore expresses no opinion on them.]
Comments of the Department of Health and Human Services on the General
Accounting Office's Draft Report, "Department of Health and Human
Services: Controls Over Travel Program Are Generally Effective, But
Some Improvements Are Needed" (GAO-03-334):
The Department of Health and Human Services (department) appreciates
the opportunity to comment on this draft report.
Recommendations for Executive Action:
To reduce unauthorized and personal use of travel cards and help ensure
that travelers are not receiving reimbursements in excess of proper
travel expenses, we recommend that the Secretary of Health and Human
Services:
* Require component agencies to include procedures in their monitoring
efforts for periodically testing a sample of travel card transactions
to identify unauthorized travel card charges and any adverse trends
that would warrant further testing or controls;
* Require component agencies to issue an alert to voucher processing
staff/reviewers reminding them to check vouchers for proper per diem
amounts and amounts credited on hotel bills;
* Require component agencies to issue an alert to voucher processing
staff/reviewers reminding them to obtain and retain the necessary
receipts needed to determine the correct amount of travel
reimbursement.
Department Response:
The department concurs with these recommendations and is working to
implement the GAO's recommendations.
With regards to the first recommendation, the National Institutes of
Health (NIH) plans to instruct their travel card coordinators to
perform this sampling on a quarterly basis. The size of the sample will
vary and assistance will be provided to the travel coordinators in
determining an appropriate sample size. W hen the final GAO report is
issued, NIH will summarize the recommendations and incorporate them
into travel alerts.
The Centers for Medicare and Medicaid Services (CMS) will work with
U.S. Bank to develop specifications to generate a sample of travel card
transactions. On a semiannual basis, CMS will try to match these
transactions back to the travel orders and travel vouchers contained in
its automated system. For those selected transactions, a review will be
undertaken to determine if the travel reimbursements are proper
according to Federal Travel Regulations (FTR) and existing policies and
that all required receipts arc attached.
With regards to the second and third recommendations, CMS plans to
issue notices to travel approvers on an ongoing basis reminding them of
their responsibilities when processing travel vouchers for
reimbursements. These instructions will include an alert that vouchers
be reviewed for proper per diem amounts and amounts credited on hotel
bills. The instructions will also include the types of receipts that
are required by FTR to support expenses claimed as well as length of
time all receipts must be maintained to support amounts reimbursed.
Also regarding the second and third recommendations, the Food and Drug
Administration's (FDA) travel processes have changed significantly
since fiscal year (FY) 2001, which was the year that the GAO reviewed
for the audit. Since FY 2001, FDA has implemented an automated travel
system, Travel Manager by Gelco, to process all FDA travel. Travel
Manager obligates, authorizes, audits, and pays each voucher. In
addition to the automated audit of every travel voucher to ensure
compliance with the travel regulations and policies, FDA has developed
a post-audit review that manually reviews a sufficient sample of all
travel vouchers. Currently, Travel Manager has been implemented at
approximately 50 percent of the agency. The FDA expects complete
implementation of Travel Manager by the end of FY 2003.
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Kimberly Brooks, (202) 512-9038:
Acknowledgments:
In addition to the contact named above, Sharon Byrd, Don Campbell,
Johnny Clark, Lisa Crye, Harold Fulk, Darren Goode, Kelly Lehr, Diane
Morris, Chanetta Reed, Taya Tasse, and Cynthia Teddleton made key
contributions to this report.
[End of section]
Footnotes:
[1] U.S. General Accounting Office, Travel Cards: Control Weaknesses
Leave Army Vulnerable to Potential Fraud and Abuse, GAO-02-863T
(Washington, D.C.: July 17, 2002); Travel Cards: Control Weaknesses
Leave Navy Vulnerable to Fraud and Abuse, GAO-03-148T (Washington,
D.C.: Oct. 8, 2002); and Travel Cards: Control Weaknesses Leave Army
Vulnerable to Potential Fraud and Abuse, GAO-03-169 (Washington, D.C.:
Oct. 11, 2002).
[2] The amount of write-offs is for the period from the inception of
the current travel card contract in November 1998 through August 2002.
The total amount of travel card charges is for all of fiscal years 1999-
2001 and fiscal year 2002 through August.
[3] See app. I for confidence intervals associated with these
estimates.
[4] Program coordinators are also called travel card coordinators,
agency/organization program coordinators, and agency points of contact.
[5] As we discuss later in this report, Centers for Medicare and
Medicaid Services staff members told us that they have recently
designated a staff member to work full-time on travel card monitoring.
[6] An account is delinquent when it has a balance outstanding for 61
or more days. The delinquency rate is the percentage of the travel card
balances outstanding for 61 or more days. Under the terms of the
cardholder‘s agreement with U.S. Bank, payment of the travel card
statement is due to U.S. Bank upon receipt.
[7] The write-off rate is the total amount of unpaid travel card
charges written off as a percentage of total travel card charges.
[8] Governmentwide is defined as the 24 Chief Financial Officers Act
agencies. However, the amounts of travel card charges for the Agency
for International Development and the Office of Personnel Management
were not available for fiscal year 1999, and Department of the Interior
data were not available for fiscal year 2000 and Interior‘s fiscal year
2001 and 2002 amounts included amounts for some purchase card charges.
We used cumulative write-off amounts because they were the best
available data.
[9] According to U.S. Bank data provided by HHS, at the end of fiscal
year 2001, IHS‘s delinquency rate was 11.6 percent while the rates for
CMS, FDA, NIH, and OS ranged from 1.3 percent to 3.5 percent.
Similarly, in August 2002, IHS‘s delinquency rate was 3.8 percent and
the other four component agency rates ranged from 1.5 percent to 2.9
percent.
[10] GAO-03-169.
[11] For comparison, the estimate of the percentage of unauthorized use
at four Army sites we reviewed and reported on earlier this year ranged
from 15 percent at one site to 45 percent (at a 95 percent confidence
level) at another site. At three Navy sites we reviewed and reported
on, the estimate of unauthorized use ranged from 7 percent to over 26
percent (at a 95 percent confidence level).
[12] We are 95 percent confident that the actual percentage lies
between 14 percent and 32 percent.
[13] We are 95 percent confident that the actual percentage lies
between 11 percent and 29 percent.
[14] We are 95 percent confident that the actual percentage lies
between 10 percent and 27 percent.
[15] We are 95 percent confident that the actual percentage lies
between 3 percent and 15 percent.
[16] We found some underpayments but did not include them as errors.
[17] The number of vouchers tested (349) is less than the number of
transactions tested (430) because (1) there are no travel vouchers for
the unauthorized transactions, (2) some authorized transactions, such
as airfare, were charged, but then the trips were canceled so no
vouchers were prepared, and (3) we did not receive complete copies of
some vouchers from HHS, so we were not able to review them.
[18] If cardholders do not pay their bills timely, the agency‘s rebate
amount can be reduced or eliminated.
[End of section]
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