Transaction Testing
As shown in the following table, we tested $3.8 million of the $5.2 million (72 percent) that DOJ reported as purchase card expenditures related to hurricane relief from August – December 2005. Most of the purchase card transactions were for consumable items that fell well within the micro purchase threshold. Such items included fuel, telecommunications equipment, hydration packs, medical kits, office supplies, clothing, and batteries. Items that exceeded the micro purchase threshold included generators, trailers, and tents.
Transaction Universe and Sample
|
Sample |
Universe |
|
Component |
Number of Transactions |
Dollars |
Number of Transactions |
Dollars |
Percent of Transactions |
Percent of Dollars |
CRS |
5 |
$2,556 |
5 |
$2,556 |
100% |
100% |
OJP |
1 |
$430 |
1 |
$430 |
100% |
100% |
USMS |
81 |
$232,525 |
401 |
$368,038 |
20% |
63% |
BOP8 |
54 |
$564,179 |
|
$1,125,549 |
|
50% |
ATF |
65 |
$942,310 |
2,491 |
$1,245,852 |
3% |
76% |
FBI9 |
67 |
$1,873,599 |
507 |
$2,178,418 |
13% |
86% |
DEA |
40 |
$146,347 |
200 |
$273,238 |
20% |
54% |
EOUSA |
25 |
$35,316 |
111 |
$47,530 |
23% |
74% |
|
|
|
|
|
|
|
Totals |
338 |
$3,797,262 |
3,716 |
$5,241,611 |
8% |
72% |
Source: Component records. |
Our audit generally found that the tested purchase card transactions were authorized and valid, and that the goods or services were received. However, we noted the following exceptions:
The FBI was not able to provide adequate supporting documentation for two transactions totaling $19,374. For these transactions, the FBI was unable to provide an invoice that reconciled to the purchase card statement. According to the FBI’s criteria, when an acquisition is made using a purchase card, a receipt document shall be retained as proof of purchase. All documents, including receipts, packing slips, purchase logs, dispute forms, and invoices, pertaining to purchase card transactions, must be retained for a period of 5 years from the cardholders statement date. The FBI’s criteria also states that if for some reason a cardholder does not have a proper receipt for any transaction, a document must be prepared that contains all appropriate information normally contained on a receipt (including vendor name, date of transaction, description, and dollar amount) and an explanation as to why the original receipt is not available. For the two transactions, such a document was not prepared.
The ATF did not maintain invoices to support 4 transactions totaling $25,110. Although the ATF was able to provide the invoices after contacting the vendors, the missing invoices may indicate that the AO was not adequately reviewing cardholder reconciliations. According to the ATF’s criteria, the AO must review the monthly billings and supporting documents to ensure cardholder’s purchases were made for government purposes and are in accordance with regulations. The invoices should have been maintained in order to complete reconciliation.
We could not verify that BOP received purchased goods or services related to 17 transactions totaling $112,328 because cardholders did not retain confirmations that purchased items were received.
One USMS transaction totaling $794.43 was unsupported.
Internal Controls
As shown in the following chart, DOJ components generally had similar purchase card procedures:
PURCHASE CARD PROCEDURES
Source: OIG interviews and component policies and procedures |
Our audit found sufficient written operational procedures that were generally followed for the transactions we reviewed. However, we identified two overall areas of concern: training and the ratio of cardholders to AOs, also known as the span of control.10
Training
Cardholders, AOs, and purchase card coordinators are required to complete training prior to the issuance of a purchase card. In addition, purchase card refresher training must be completed every 3 years and ethics training every year. The training emphasizes the responsibilities of the cardholder and AO to ensure the card is not misused. As shown in the following table, all components conducted some method of initial purchase card training. However, some components indicated they did not conduct refresher training.
Component Training
Component |
Initial
Training Method |
Refresher
Course |
EOUSA |
GSA Online Training |
YES |
ATF |
GSA Online Training |
NO |
FBI |
In-House Training |
NO |
BOP |
In-House Training |
YES |
DEA |
In-House Training |
YES |
USMS |
GSA Online Training |
NO |
OJP |
In-House Training |
NO |
CRS |
GSA Online Training |
YES |
Source: Interviews with Cardholders, Approving Officials, and Program Coordinators. |
During the audit we observed instances that emphasized the need for refresher training. Those instances include:
Some cardholders were not aware that they were precluded from charging items such as hotel conference room charges, travel, and construction services.
Some cardholders did not verify the availability of funds prior to making a purchase or did not document the verification of funds, and
Some cardholders and AOs did not obtain or retain all the required supporting documentation specified by JMD in order to validate the purchase.
Span of Control
The span of control that an AO maintains may have a significant impact on the AO’s ability to provide competent and timely oversight of a purchase card’s use. In a previous OIG review, we recommended a span of control of no more than 7 cardholders to an AO, or a total of 300 transactions per month.11 Six of the 8 components maintained an average span of control of 4 cardholders to 1 AO. However, ATF has on average 65 cardholders per AO, with 23 AOs responsible for over 100 cardholders. The FBI has on average 23 cardholders per AO, with 5 AOs responsible for 50 or more cardholders. In addition, we found that ATF and FBI have AOs that are cardholders in the same group, which may allow the AOs to approve their own transactions.12
Conclusion
Our audit found that nearly all of the hurricane-related purchase card transactions we tested were authorized, valid, and the goods or services purchased were received. However, we identified internal control issues that should be corrected to ensure that future government funds are not at risk. Specifically, we found that the FBI and ATF had excessive cardholder to AO spans of control. Further, we determined that AOs and cardholders need refresher training and such training should emphasize the requirement to document the availability of funds, the prohibited purchases, and the importance of retaining adequate documentation.
Recommendations
We recommend that EOUSA, FBI, DEA, USMS, OJP, CRS, BOP, and ATF:
Ensure that cardholder profiles are updated and a maximum ratio of 7 cardholders to 1 AO, or total of 300 transactions per month is maintained.
Reinforce policies on what items are not allowed to be purchased with purchase cards, the requirement to document the availability of funds, and the importance of retaining required supporting documentation.
We recommend that ATF, FBI, USMS, and OJP:
- Institute required purchase card refresher training.
BOP did not provide individual transactions but summary totals by cardholder; therefore, the number of transactions in the universe was not available.
Three transactions tested totaling approximately $811,958 were identified by the FBI as purchase card transactions. However, we later determined that the transactions were not purchase card transactions but purchase orders. Additionally, two transactions totaling $11,580 were either not billed for as of December 31, 2005, or cancelled.
See Appendix II for a summary of internal control issues by component.
Department of Justice, Office of the Inspector General, Investigations Division, Fraud Detection Office, Review of the Department of Justice Charge Card Program, April 2005. The review noted that instead of names, cardholder profiles listed positions which made it impossible to use data mining techniques to determine the cardholder to AO ratio. During our audit we reviewed cardholder profile data and observed that some of the profiles listed positions rather than names. The report recommended that components update cardholder profile data in order to take advantage of data-mining and other techniques for reviewing purchase card transactions for possible misuse.
ATF has 35 approving officials who are cardholders in the same group. The FBI has 26 approving officials who are cardholders in the same group.
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