[Survey Report on the Use of the Governmentwide Purchase Card,  National Park Service]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 97-I-875

Title: Survey Report on the Use of the Governmentwide Purchase
       Card,  National Park Service

Date: June 13, 1997

                  **********DISCLAIMER**********

This file contains an ASCII representation of an OIG report.  No attempt has been made to display
graphic images or illustrations.  Some tables may be included, but may not resemble those in the
printed version.

A printed copy of this report may be obtained by referring to the PDF file or by calling the Office
of Inspector General, Division of Acquisition and Management Operations at (202) 208-4599.
                  ******************************

E-IN-NPS-016-96

United States Department of the Interior

OFFICE OF INSPECTOR GENERAL
Washington, D.C. 20240 

SURVEY REPORT

Memorandum

To:  Director, National Park Service

From:     Robert J. Williams
     Assistant Inspector

Subject:  Survey Report on the Use of the Governmentwide Purchase Card,  
National Park Service (No. 97-I-875)

INTRODUCTION

This report presents the results of our survey on the use of the Governmentwide purchase
card at the National Park Service. The original objective of the review was to determine
whether the Park Service managed the Governmentwide Purchase Card Program in an
efficient and economical manner and in accordance with applicable laws, regulations, and
guidelines. However, during our survey, the General Accounting Office issued the report
entitled "Acquisition Reform, Purchase Card Use Cuts Procurement Costs, Improves
Efficiency" (No. GAO/NSIAD-96-138). The report stated: "Agencies have found they can
support their missions at reduced costs by having program staff use the purchase card for
simple purchases. Further, agency studies have shown that purchase card use reduces labor
and payment processing costs." Therefore, based on these statements, we addressed the
management of the Park Service's Program rather than the Program's efficiency and
economy.

BACKGROUND

In 1989, the General Services Administration awarded a contract to Rocky Mountain
BankCard System to provide credit card services within the Federal Government. The card
was intended to streamline the small purchase and payment processes and to be used only
for official purposes. On June 28,1990, the Department of the Interior issued the "Handbook
for Utilization of the Governmentwide Commercial Credit Card" under Department of the
Interior Acquisition Policy Release (DIAPR) 90-35. According to the Release, the
Department's intent in issuing the Handbook was to "present the general policy within which
each bureau could develop its own credit card policy." In March 1995, the Park Service
implemented the Governmentwide Purchase Card Program and issued its own guidance in
its Governmentwide Purchase Card Manual and its Governmentwide Purchase Card Training



 


Manual. According to the Purchase Card Manual, the purchase card may be used for the
acquisition of supplies and services using small purchase procedures except for some
specified categories, such as meals, lodging, and telecommunications equipment.

The Rocky Mountain Bank submits monthly invoices to the Park Service's Accounting
Operations Center office in Reston, Virginia. The monthly invoices represent the aggregate
purchase card amounts for each Park Service entity (for example, systems support offices and
national park clusters) that participates in the Program. In addition, the Bank submits to each
cardholder a monthly statement that itemizes the cardholder's transactions. Within 5 days
of receiving the statement, the cardholder is required to review, reconcile, and certify that the
transactions were recorded accurately. The cardholder is then required, by the Purchase Card
Manual, to forward the certified statement and ail applicable supporting documentation to
the cognizant approving offtcial. The approving official is required to certify the
cardholder's statement within 10 days of receiving the documentation and to determine
whether the purchases were appropriate and were recorded accurately. The Purchase Card
Manual further states that untimely certification by the cardholder may result in revocation
of the card.

The use of the purchase card within the Park Service has increased significantly since the
first year the Program was implemented in 1995 and has continued to increase to
approximately 3,500 purchase cards nationwide, as shown in the following table:

April 13.1995   April 12.1996
(First billing)    (Test month)

May 13.1996

Participating Entities
Active Accounts
Approving Officials
Purchase Cards
Purchase Transactions
Net Purchases

SCOPE OF SURVEY

Our survey was conducted from May through September 1996 and included purchases made
with the purchase card by Park Service employees for the monthly billing cycle ending
April 12, 1996 (the most recent billing at the beginning of our survey). We judgmentally
selected 123 of the 3,261 purchase cards for cardholders who worked at 16 of the 17
participating Park Service entities (see Appendix 1). The 123 cardholders were selected
based on those who had the highest dollar value transactions for the month, which involved
1,712 of the 5,905 individual transactions. These transactions totaled $557,700 (51 percent)
of the $1.1 million listed on the Park Service's monthly billing. Survey fieldwork was

2

 
conducted at the Park Service's Accounting Operations Center office in Reston, Virginia,
where the supporting documents were located. In addition, we contacted 20 individual
cardholders and 2 approving officials.

Our survey was made in accordance with the "Government Auditing Standards," issued by
the Comptroller General of the United States. Accordingly, we included such tests of records
and other auditing procedures that were considered necessary to accomplish our objective.
In planning our survey, we reviewed the Department of the Interior's Annual Statement and
Report, which is required by the Federal Managers' Financial Integrity Act, for fiscal year
1995 and determined that the Department did not report any material weaknesses related to
the objective and scope of our review. We also evaluated the Park Service's system of
internal controls related to purchase card activities and found that the Park Service did not
provide adequate management oversight of purchases made with the card. This weakness
and the recommended corrective actions are discussed in the Results of Survey section of this
report. The recommendations, if implemented, should improve the internal controls in this
area.

PRIOR AUDIT COVERAGE

Neither the Office of Inspector General nor the General Accounting Office has issued any
reports since the Park Service's inception of the purchase card program in April 1995 that
specifically addressed our survey objective. However, the General Accounting Office report
entitled "Acquisition Reform, Purchase Card Use Cuts Procurement Costs, Improves
Efficiency" (No. GAO/NSIAD-96-138) stated, "Agencies have found [that] they can support
their missions at reduced costs by having program staff use the purchase card for simple
purchases." Although the Department of the Interior was included in the study, there were
no recommendations in the report directed to the Department.

RESULTS OF SURVEY

We concluded that the Park Service did not ensure that holders of the Governmentwide
purchase card complied with established purchase card procedures. In addition, the Park
Service did not have detailed procedures regarding the receipt of purchases ordered by
telephone. Specifically, we found deficiencies in the transactions of 56 of the 123
cardholders tested. These deficiencies consisted of use by unauthorized personnel, purchase
of restricted items, and improper payment of sales taxes. The procedures established in the
Departmental Handbook and the Park Service manuals were not followed because Park
Service management did not provide adequate oversight of the Purchase Card Program. As
a result, the potential existed for the Program to be subject to waste and abuse.

 
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Unauthorized Use

The Departmental Handbook (Section X) and the Park Service's Purchase Card Manual
(Section II, Part F) and Training Manual (Unit Two) require that the purchase card be used
only by the cardholder. However, we found 5 1 purchase transactions, totaling $13,400,
involving 22 cardholders in which the sales drafts were signed by individuals other than the
authorized cardholder. Of the 22 cardholders, we were able to contact 20 and determined
that 19 of the cardholders placed telephone orders and that 1 cardholder gave the purchase
card to another individual. The 20 cardholders contacted provided the following reasons why
other individuals signed the purchase card sales drafts:

- The purchased goods or services were for another person's use.

- The cardholder was either "unavailable" or was "too busy" to pick up or sign for the
delivered item.

Although the Park Service manuals authorize telephone orders, the manuals do not contain
specific guidance concerning the receipt of the items.  In our opinion, Park Service
employees who are not cardholders but who receive delivery of purchases ordered by
telephone should be instructed not to sign the sales draft but should sign a delivery receipt.
The delivery receipt should then be provided to the cardholder for use in reconciling the
monthly purchase statement. During our review, a Park Service official said that the Park
Service may also need to review its procedures to ensure that cards are issued to the
appropriate personnel, which would reduce the need for cardholders to make purchases on
behalf of others.

Purchase of Restricted Items

The Departmental Handbook (Section VII) and the Park Service's Purchase Card Manual
(Section II, Part G) and Training Manual (Unit One) list specific items or services, such as
meals, lodging, and telecommunication equipment, that should not be acquired with the
purchase card. According to these manuals, these "restricted" items are to be acquired using
another procurement method, such as blanket purchase agreements or Government-sponsored
individual travel charge cards. However, we found that in 57 transactions, totaling $32,600,
restricted purchases were made. Specifically, purchases were made for the following
restricted items:

- Telecommunications and telephone equipment (6 cardholders, totaling 7 transactions).

- Lodging (1 cardholder, totaling 2 transactions).

- Meals/groceries (4 cardholders, totaling 9 transactions).

4

 
- Gasoline and oil for Government vehicles (8 cardholders, totaling 16 transactions).

- Repair parts, products, or services for Government vehicles (2 cardholders, totaling 4
transactions).

Also included in the 57 transactions was accountable and sensitive property, such as
computers, portable power tools, tool sets, printers, a videocassette recorder, furniture, and
computer modems, that was acquired by cardholders who were not contracting officers (10
cardholders, totaling 19 transactions). However, both the Purchase Card Manual
(Section II, Part G) and the Training Manual (Unit One) specify that accountable and
sensitive property items should be purchased only by cardholders who are also contracting
officers.

Sales Tax Exemptions

The Departmental Handbook (Section III, Part V) and the Purchase Card Manual (Section III,
Part B) state that purchase card transactions are not subject to state or local sales taxes and
that the cardholders should notify merchants of the tax exempt status of these transactions.
In addition, the purchase card is imprinted with the statement "U.S. GOVERNMENT TAX
EXEMPT." Further, the Purchase Card Manual states, "The purchase should not be made
if the vendor refuses to omit taxes from the fmal purchase price." However, we found that
sales taxes totaling $1,395 were charged on 127 transactions for 28 cardholders. In three
instances, the cardholders indicated that requests for sales tax refunds were in process or that
Accounting Operations Center personnel had notified cardholders that the purchases should
have been tax exempt.

Summary

The deficiencies cited occurred because Park Service management did not provide adequate
oversight of the Purchase Card Program.  The procedures established for ensuring
compliance with Program objectives are contained in the Purchase Card Manual, which
requires that:

- The Park Service provide training for prospective cardholders and approving officials
before it issues purchase cards (Section II, Part D).

- Cardholders review monthly statements for accuracy (Section IV, Part A).

- Approving officials review monthly statements to determine whether the items
purchased were appropriate and were accurately recorded (Section IV, Part B).

 
,
i

- The Park Service conduct periodic, but not less than annual, reviews of the use of the
Governmentwide purchase card and submit copies of the reviews to the Park Service Agency
Program Coordinator (Section V, Part G).

- The Accounting Operations Center "audit" all cardholders' monthly statements to
ensure that purchases are in compliance with applicable regulations and notify approving
officials of "any questionable purchases for clarification or appropriate action" (Section IV,
Part D).

Although procedures were specified in the Purchase Card Manual, we found no documented
instances in which: (1) approving officials noted any noncompliance issues on cardholders'
statements and (2) Accounting Operations Center personnel contacted approving officials
concerning noncompliance issues. Center personnel stated that they contacted cardholders
mainly by telephone or by electronic mail transfer; however, these contacts were usually not
documented or references to them were not retained in the tiles. In addition, the Park
Service's Agency Program Coordinator told us that no regional reviews had been conducted
of the Purchase Card Program.

Recommendations

We recommend that the Director, National Park Service, direct appropriate staff to:

1. Ensure that established Purchase Card Program policies and procedures are
complied with and that any deficiencies, including use of the purchase card by unauthorized
personnel, the purchase of restricted items, and the improper payment of sales taxes, are
reported and corrected in a timely manner.

2. Revise the purchase card manuals to include procedures for the receipt of goods
purchased through telephone orders.

3. Review whether the cards are issued to appropriate personnel or additional cards
should be issued.

National Park Service Response and Office of Inspector General Reply

In the April 11, 1997, response (Appendix 2) to our draft report from the Acting Associate
Director, Administration, National Park Service, the Park Service generally concurred with
the finding and all three recommendations. Based on the response, we have revised
Recommendation 3 and request that the Park Service respond to the revised
recommendation. Also based on the response, additional information is needed for
Recommendations 1 and 2 (see Appendix 3).

6

 
. I

Recommendation 1. Concurrence stated.

National Park Service Response. The Park Service stated that the NPS Purchase Card
Manual was being revised "to again highlight the purchase of restricted items and the
restrictions concerning the payment of sales taxes" and to include "an administrative review
of randomly selected purchase cards."

Offke of Inspector General Reply. This revision sufficiently addresses part of our
recommendation. However, the Park Service needs to indicate what actions it will take to
emphasize the need for the =provinP officials to perform thorough reviews of the
cardholders' purchases and to ensure that deficiencies identified during reviews by approving
officials are reported and corrected in a timely manner.

Recommendation 2. Concurrence stated.

National Park Service Response. The Park Service said that it had revised its manual
to include procedures for instances in which someone other than the cardholder receives the
item ordered. The Park Service also stated that the procedures require the cardholder to pick
up items ordered by telephone and to sign the receipt when so required by the vendor.
Further, according to the response, if no signature is required by the vendor, someone else
can receive the item.

Office of Inspector General Reply. We believe that the revision regarding telephone
orders strengthens controls over the signing of credit card receipts, which authorizes payment
for goods and services purchased. However, we believe that when no signature is required
on the credit card receipt, the Park Service should require the person accepting delivery of
the item to sign a delivery receipt, which should then be provided to the cardholder for use
in reconciling to the monthly invoice. Therefore, we believe that the Park Service should
include procedures in its manual for how the signature of the individual other than the
cardholder is obtained.

Recommendation 3. Concurrence stated.

National Park Service Response. The Park Service stated that, based on its review
of procedures for issuing the Governmentwide purchase card to Program personnel to
determine whether the cards are issued to the appropriate personnel or additional cards
should be issued, it found that "the procedures now in place are satisfactory." The Park
Service further stated that the Program Manager who wants to use the purchase card, rather
than those individuals responsible for administration of the Program, determines who is
"appropriate" and whether additional cards should be issued.

Office of Inspector General Reply. We made this recommendation at the request of
Park Service personnel who indicated that the problems identified in our report regarding the

7

 
unauthorized use of the card may have been caused, in part, by a need for additional cards.
Therefore, based on the Park Service's response, we have revised the recommendation to
require that Program Managers who use the card determine whether the need exists for
additional cards so as to preclude the unauthorized use of the card. Accordingly, we request
that the Park Service respond to the revised recommendation.

In accordance with the Departmental Manual (360 DM 5.3), we are requesting a written
response to this report by June 30, 1997. The response should provide the information
requested in Appendix 3.

The legislation, as amended, creating the Office of Inspector General requires semiannual
reporting to the Congress on all audit reports issued, the monetary impact of audit findings,
actions taken to implement audit recommendations, and identification of each significant
recommendation on which corrective action has not been taken.

We appreciate the assistance of Park Service personnel in the conduct of this survey.

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APPENDIX 1

NATIONAL PARK SERVICE ENTITIES PARTICIPATING
     IN THE PURCHASE CARD PROGRAM

Southwest Systems Support Office*
Mid-Atlantic Regional Office
Administrative Program Center
National Capital Regional Office
Alaska Regional Office
North Atlantic Regional Office
Pacific West Area Office
Midwest Regional Offtce
Columbia Cascades Cluster
Southeast Regional Offtce
Rocky Mountain Regional Office
Harpers Ferry Center**
Washington Area Service Office* * *

*There are four entities within the geographical area covered by the Southwest Systems Support
Office.

**The geographical area covered by Harpers Ferry Center has two entities.

***Not selected for transaction testing.

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APPENDIX 2
Page 1 of 3

IN REPLY REFER TO:
S72(2623)

United States Department of the Interior

NATIONAL PARK SERVICE
   P.O. Box 37127
Washington, D.C. 20013-7127

Memorandum

To:


Through:

Robert J. Williams
Acting Assistant Inspector General for Audits

From:

Subject:

Response to Draft Survey Report on the Use of the Governmentwide Purchase
Card (Assignment No. E-IN-NPS-016-96)

Since the National Park Service (NPS) implemented its Governmentwide Purchase Card
Program in March 1995, the goals and objectives were to streamline the procurement
bureaucracy encountered by vendors and Program personnel. Like other Federal
agencies, and as indicated by the National Performance Review (NPR), the NPS
determined that such implementation would support its reorganizational efforts by
reducing labor and payment processing costs, as well as providing a means for further
decentralizing the procurement process to allow program staff the ability to do their own
purchasing. The Program's efficiency and effectiveness were always an intended part of
this goal. In response to subject report, the NPS however, welcomed the review
performed by the Office of Inspector General (OIG), and generally concur with the
findings and recommendations stated. Based on those recommendations, the following
comments are offered.

1.  To Ensure that established Purchase Card Program policies and procedures are
complied with, and that any deficiencies, including use of the purchase card by
unauthorized personnel, the purchase of restricted items, and the improper payment of
sales taxes, are reported and corrected in a timely manner, the NPS Purchase Card
Manual is currently being revised to again highlight the purchase of restricted items and
the restrictions concerning the payment of sales taxes. The revision will include an
annual review checklist form and will require an administrative review of randomly
selected purchase cards within each Region, Program/Service Center, and Support Office.
One of the items on the checklist specifically addresses whether persons other than the
cardholder have made purchases. Completed checklist forms will be due to each

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APPENDIX 2
Page 2 of 3

Regional Program Coordinator (RPC) by December 3 1 of each year. The Accounting
Operations Center (AOC) will immediately notify via cc: Mail, the cardholder, approving
official, and RPC, of any indication that someone other than the cardholder has placed an
order.

In addition, to address the concerns regarding "restricted" purchases, the NPS revised its
Purchase Card Manual to be more specific concerning restricted items. This should
eliminate the "questionable" items such as telephone and telecommunication equipment,
and will also be covered by the administrative review checklist. The AOC will continue
to review cardholder statements and will immediately notify via cc: Mail, the cardholder,
approving official, and the RPC, of any purchases of restricted items. Further, to
address the issue concerning the payment of sales taxes, which we agree is an
unnecessary expense and should be eliminated, the Purchase Card Manual has been
revised to outline some options available to the cardholder in dealing with vendors who
require that sales tax be paid as part of the transaction. The cardholder is instructed to
inform the vendor that the Federal Government is tax exempt and to attempt to resolve
the issue prior to making the purchase. If the vendor is unwilling to cooperate, then the
cardholder is to shop elsewhere. Following these guidelines should help to eliminate the
payment of sales taxes. The AOC will immediately notify via cc: Mail, the cardholder,
approving official, and RPC, on any instances where sales taxes have been charged by the
vendor.

The NPS expects the revised Purchase Card Manual to be released not later than June 30,
1997.

In October 1996, the Department of the Interior's Office of Acquisition and Property
Management (PAM) formally announced its new acquisition management control system
called QUIC, "Quality in Contracting," which replaces the traditional Acquisition
Management Review (AMR) Program. The NPS will be piloting this new system at its
Midwest Field Area in May, 1997. If successful, the new QUIC Program could also
provide the means for determining the strengths and weaknesses as they pertain to NPS
Governmentwide Purchase Card utilization.

2.  To ensure that procedures are available for the receipt of goods purchased through
telephone orders, the NPS has revised its manual to include such procedures in cases
where someone other that the cardholder will be receiving the item called for. The
procedures direct the cardholder to inquire if the vendor requires someone to sign the
transaction receipt prior to picking up the order. If a signature is required, then the item
must be picked up and signed for by the cardholder. If no signature is required, then
someone else can receive the item. These procedures should provide clear direction and
eliminate having someone other than the cardholder sign a receipt when the item is
ordered by telephone when using the Government wide Purchase Card.

3.  The NPS has reviewed its procedures for issuing the Governmentwide Purchase
Card to Program personnel to determined if the cards are issued to the appropriate

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APPENDIX 2
Page 3 of 3

personnel or determine if additional cards should be issued. As a result of this review,
the NPS findings are that the procedures now in place are satisfactory. Currently, it is
the nonprocurement Program Manager who determines which program staff will be a
cardholder for his or her office, and who determines if additional cards are needed to
carry on program functions. The Contracting Team provides the required guidance and
training to the approving official and those selected as potential cardholders. The
determination of who is "appropriate" and whether additional cards should be issued, is
left to the Program Manager who wants to use the Purchase Card, rather than to those
responsible for administration of the Purchase Card Program. While use of the Purchase
Card by all Program Managers servicewide is desirable, use of the card is not mandatory.
This responsibility for Purchase Card utilization provides the Program Manager the
flexibility envisioned by the National Performance Review for acquisition reform.



If you have questions or require any additional information as they pertain to the response
to this report, please contact Samuel W. Brown, Agency Program Coordinator and
Manager, Contracts and Property Programs, at (202) 565-1160 or 565-1163.

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APPENDIX 3

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STATUS OF AUDIT REPORT RECOMMENDATIONS

Finding/Recommendation

2

3

Management  concurs;   Indicate how the need for
additional  information   thorough  reviews by
needed.         approving officials will be
           emphasized  and how
           deficiencies  identified
           during  reviews by
           approving officials will be
           reported and corrected.

Management  concurs;   Revise the purchase card
additional  information   manual to  include
needed.         procedures for how the
           signature  of  the
           noncardholder will be
           obtained.

Unresolved.

Provide a response to the
revised recommendation.
If  concurrence  is
indicated,  provide an
action plan that includes
target dates and titles of
officials responsible for
implementation.   If
nonconcurrence   is
indicated, provide reasons
for the nonconcurrence.

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ILLEGAL OR WASTEFUL ACTIVITIES
   SHOULD BE REPORTED TO
THE OFFICE OF INSPECTOR GENERAL BY:

Sending written documents to:            Calling:

Within the Continental United States

U.S. Department of the Interior
Office of Inspector General
1849 C Street, N.W.
Mail Stop 5341
Washington, D.C. 20240

Our 24-hour
Telephone HOTLINE
l-800-424-508 1 or
(202) 208-5300

TDD for hearing impaired
(202) 208-2420 or
l-800-354-0996

Outside the Continental United States

Caribbean Retion

U.S. Department of the Interior
Office of Inspector General
Eastern Division - Investigations
1550 Wilson Boulevard
Suite 410
Arlington, Virginia 22209

(703) 2359221

North Pacific Retion

U.S. Department of the Interior
Office of Inspector General
North Pacific Region
238 Archbishop F.C. Flores Street
Suite 807, PDN Building
Agana, Guam 96910

(700) 550-7428 or
COMM 9-011-671-472-7279

 
, I

Toll Free Numbers:
l-800-424-5081
TDD l-800-354-0996

FTS/Commercial Numbers:
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TDD (202) 208-2420

HOTLINE

1849 C Street, N.W.
Mail Stop 5341
Washington, D.C. 20240