Government Purchase Cards: Control Weaknesses Expose Agencies to Fraud and Abuse Page: 3 of 14
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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
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 programs3
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.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
3Our 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
4U.S. General Accounting Office, Internal Control: Standards for Internal Control in the
Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).
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United States. General Accounting Office. Government Purchase Cards: Control Weaknesses Expose Agencies to Fraud and Abuse, text, May 1, 2002; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc289449/m1/3/: accessed December 19, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.