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DOT Needs To Enhance Oversight of Its Purchase Card Program To Mitigate Internal Control Weaknesses

Required by the Government Charge Card Abuse Prevention Act of 2012
Project ID: 
FI2020022
What We Looked At
According to U.S. Bank, Department of Transportation (DOT) employees made more than 327,000 purchase card transactions—totaling $223.7 million—from October 2016 through March 2018. In 2013, we reported several internal control weaknesses in the Department’s purchase card program, such as lack of prior approval or funding certification for purchases; use of cards by individuals other than cardholders; split purchases to circumvent single purchase limits; payments of incorrect amounts; and purchases of items not included in purchase requests. In addition, our annual charge card risk assessments disclosed areas that constitute risk to the Department’s charge card program such as purchase cardholders (PCH) not meeting training requirements and using their DOT-issued purchase cards to commit acts of fraud. As a result, we determined that another audit of this program was needed. Our objectives were to (1) test existing controls to determine if they provide reasonable assurance that improper purchases are prevented or detected in the normal course of business and (2) evaluate DOT’s policies and procedures for oversight of its purchase card program. We looked at purchase card program policies and procedures and supporting documentation for purchases.
 
What We Found
We identified internal control weaknesses in multiple areas of the purchase card program. The weaknesses show that PCHs are not consistently following existing controls to prevent improper purchases, putting the Department’s purchase card program at increased risk of misuse and abuse. Specifically, based on our findings for 44 of the 109 purchase card transactions in our sample, PCHs did not always follow prescribed controls for an estimated $86.1 million in purchases. Furthermore, we found that employees did not always use proper purchase request channels, thus putting DOT at risk for Anti-Deficiency Act violations. We also found that DOT’s policies and procedures for overseeing the purchase card program are not sufficient. For example, DOT does not review individual Operating Administrations’ purchase card guidance for compliance with the Transportation Acquisition Manual.
 
Recommendations
We made 13 recommendations to assist DOT in improving its oversight of the purchase card program and increasing the effectiveness of its internal controls. DOT fully concurred with 10 recommendations and partially concurred with 3.

Recommendations

Open

Closed

No. 1 to OST

Develop procedures to ensure purchase card files are complete. At a minimum, ensure cardholders verify that: a. supervisory and/or program office approval has been obtained prior to making purchases; b. funds availability has been confirmed prior to making purchases; c. required supporting documentation is on file; d. items purchased have been received and services have been accepted; and e. sales tax has not been charged.

No. 2 to OST

Implement procedures to ensure cardholders retain records in accordance with the National Archives and Records Administration's general records schedule.

No. 3 to OST

Update purchase card guidance to include appropriate language that states that purchase cards cannot be used to pay for unauthorized commitments without appropriate documentation showing that the unauthorized commitment has been ratified in accordance with FAR 1.602-3.

No. 4 to FAA

Develop procedures to ensure purchase card files are complete. At a minimum, ensure cardholders verify that: a. supervisory and/or program office approval has been obtained prior to making purchases; b. funds availability has been confirmed prior to making purchases; c. required supporting documentation is on file; d. payment amounts match to invoices; e. items purchased have been received and services have been accepted; and f. sales tax has not been charged.

No. 5 to FAA

Implement procedures to ensure cardholders retain records in accordance with the National Archives and Records Administration's general records schedule.

No. 6 to FAA

Update purchase card guidance to include appropriate language that states that purchase cards cannot be used to pay for unauthorized commitments without appropriate documentation showing that the unauthorized commitment has been ratified.

No. 7 to FAA

Develop and implement controls to ensure that all trainings are administered timely in FAA's electronic learning management system, and ensure cardholders complete refresher training in a timely manner.

No. 8 to FAA

Establish procedures to enforce the suspension of purchasing authority for cardholders that do not satisfy the refresher training requirement.

No. 9 to FAA

Reiterate the importance of following the employee close out and clearance process to Purchase Cardholders, Approving Officials and Agency Program Coordinators, when a cardholder separates from the agency or the purchase card program.

No. 10 to FAA

Develop and implement a process to monitor purchase transactions that involve credits to ensure the follow-up is performed and credits are received timely.

No. 11 to OST

Update TAM Chapter 1213, Appendix A to include appropriate language that indicates that purchase cards cannot be used to pay for unauthorized commitments without appropriate documentation showing that the unauthorized commitment has been ratified in accordance with FAR 1.602-3.

No. 12 to OST

Update Departmental policy and procedures to require all OAs (excluding FAA) to include a requirement to obtain supervisory and/or program office approval before purchases are made.

No. 13 to OST

Update the TAM to require OAs (excluding FAA) to certify individual purchase card program manuals to comply with TAM requirements.