[Survey Report on the Use of the Governmentwide Purchase Card, Bureau of Indian Affairs]
[From the U.S. Government Printing Office, www.gpo.gov]
Report No. 98-I-283
Title: Survey Report on the Use of the Governmentwide Purchase Card,
Bureau of Indian Affairs
Date: March 2, 1998
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U.S. Department of the Interior
Office of Inspector General
SURVEY REPORT
USE OF THE GOVERNMENTWIDE PURCHASE CARD,
BUREAU OF INDIAN AFFAIRS
REPORT NO. 98-I-283
FEBRUARY 1998
SURVEY REPORT
Memorandum
To: Assistant Secretary for Indian Affairs
From: Robert J. Williams
Acting Inspector General
Subject: Survey Report on the Use of the Governmentwide Purchase
Card, Bureau of Indian Affairs (No. 98-I-283)
INTRODUCTION
This report presents the results of our survey of the use of the
Governmentwide purchase card at the Bureau of Indian Affairs. The
original objective of the audit was to evaluate the economy and
efficiency of the Bureau's Governmentwide Purchase Card Program and
to determine whether the Program was managed 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) on August 6, 1996. The
report stated: "The use of purchase cards for small purchases can
reduce agencies' mission support, labor, and payment processing costs
50 percent by moving simple purchases from procurement offices to
program offices and consolidating payments. In addition, some
agencies found that purchase card use has helped them absorb the
impact of administrative staff reductions and improve service
delivery." Therefore, based on these statements, we revised our
objective to determine whether the Program was managed in accordance
with applicable laws, regulations, and guidelines rather than to
evaluate the Program's efficiency and economy.
BACKGROUND
In 1989, the General Services Administration awarded a contract to
Rocky Mountain BankCard System (Rocky Mountain Bank) to provide
purchase card services within the Federal Government. The purchase
card was intended to streamline the small purchase and payment
process 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 in which the bureaus could develop their
own card procedures. In November 1995, the Bureau implemented the
Governmentwide Purchase Card Program and issued its own guidance in
its "Bureau of Indian Affairs I.M.P.A.C. [International Merchant
Purchase Authorization Card] User's Guide."
Cardholders were selected by Bureau managers and supervisors or
approving officials. Each authorized cardholder was issued a
Delegation of Authority, which identified a maximum dollar amount for
each single purchase and a total dollar amount for all purchases per
month that the cardholder could make. Most single purchases were
limited to $2,500 or the cardholder's maximum warrant authority for
warranted cardholders. To ensure that cardholders complied with the
Federal Acquisition Regulation and Bureau policies and procedures,
each cardholder and approving official certified that they had
received training on how to make small purchases. Training could be
obtained through a formal training class, or the trainee could view a
videotape on how to use the card. Each cardholder and approving
official also received a copy of the Bureau Guide. The Guide
contained instructions, requirements, and information on how to
cancel a card, the responsibilities of the cardholder and approving
official, restrictions on use of the card and restricted or
unallowable purchases, requirements to verify availability of funds,
and how to process the monthly statement. To process the statement
each month, the cardholder was required to review it for accuracy;
add the description of each item purchased, along with the document
control number to be charged; and sign and submit the original
statement, along with the sales receipts for all purchases, to the
approving official. The approving official reviewed the information
in the statement and attachments and compared this information with
that contained in the Business Account Summary provided by Rocky
Mountain Bank to the approving official of each cardholder before
signing the statement and approving it for payment. The statement was
then forwarded to the Branch of Payments, Division of Accounting
Management, in Albuquerque, New Mexico, for payment.
Personnel in the Branch of Payments matched the information in the
statement with the information in the invoice received from Rocky
Mountain Bank and recorded the document control number from the
statement in the accounting system before the invoice was paid.
However, the Branch of Payments could process the payment of the
invoice without the required information by using default accounting
codes to establish obligations.
Statements that resulted in a credit balance (when the amount of
credits totaled more than the amount of charges) were not recorded in
the accounting system. In addition, if the cardholder noted an
erroneous charge on the statement, the charge was paid by the Bureau
and the cardholder was responsible for obtaining a credit for the
erroneous charge from Rocky Mountain Bank. The cardholder was
responsible for monitoring the statements to ensure that the proper
credits were received from the vendor and Rocky Mountain Bank.
As of February 1996, the Bureau had 316 cardholders. In fiscal year
1995, Bureau cardholders used the Government purchase card to make
purchases totaling approximately $2.2 million. From October 1, 1995,
to February 29, 1996, cardholders made purchases totaling $1.8
million.
SCOPE OF SURVEY
Our survey included small purchases made with the Government purchase
card by Bureau personnel during fiscal years 1995 and 1996 (through
February 1996). We reviewed the overall administration of the Program
and Program records to determine whether acquisition procedures were
followed and whether the disbursement records and the purchases made
with the card were appropriate and supported. Our survey fieldwork
was conducted at the Navajo and the Albuquerque Area Offices, in
Gallup and Albuquerque, New Mexico, respectively; the Central Office
West (including the Division of Accounting Management) and the Office
of Trust Funds Management, both in Albuquerque; and the Eastern
Navajo and the Fort Defiance Agencies at Crownpoint, New Mexico, and
Fort Defiance, Arizona, respectively.
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 under the circumstances.
As part of our survey, we reviewed the Department's Accountability
Report for fiscal year 1996, which includes information required by
the Federal Managers' Financial Integrity Act, and determined that
none of the reported weaknesses were within the objective and scope
of our audit. We also evaluated the Bureau's system of internal
controls related to purchase card activities and found that, overall,
the Bureau of Indian Affairs provided adequate management controls of
the purchases made with the card. However, we did find some areas in
which improvements were needed. The improvements and recommended
corrective actions are discussed in the Results of Survey section of
this report. The recommendations, if implemented, should improve the
internal controls in those areas discussed.
PRIOR AUDIT COVERAGE
Neither the Office of Inspector General nor the General Accounting
Office has issued any audit reports during the past 5 years that
specifically addressed our survey objective. However, as discussed
previously, the General Accounting Office's August 6, 1996, report
stated that agency studies revealed that use of the purchase card
reduced labor and payment purchasing costs. Although the Department
of the Interior was included in the study, no findings were directly
addressed to the Department.
RESULTS OF SURVEY
We concluded that, overall, the Bureau of Indian Affairs
Governmentwide Purchase Card Program was managed in accordance with
applicable laws, regulations, and guidelines. Therefore, we
terminated the audit at the end of the survey. However, we noted that
funds were obligated twice for the same purchases (duplicate
obligations), credit balances on monthly statements were not recorded
in the accounting records, former employees' cards were not canceled,
and periodic reviews of the purchases were not performed by
appropriate officials. These conditions occurred because the Bureau's
administrative procedures and controls over the obligation of funds,
payments, cancellation of cards, and review of purchases needed to be
improved.
Duplicate Obligations
Management control procedures allowed both Branch of Payments
personnel and the cardholders to obligate funds for the same
purchases. This occurred when invoices were received from the Rocky
Mountain Bankcard System on which obligations had not been
established by the cardholder or the charges shown on the invoices
could not be matched with obligations in the accounting system. As a
result, personnel in the Branch of Payments entered default document
control numbers into the accounting system and established
obligations based on the information in the invoices. However,
duplicate obligations were created for the same purchases when either
the cardholders routinely obligated funds after the items were
purchased or the cardholder and the approving official obligated the
funds upon purchasing the items but did not submit the monthly
purchase card statements to the Branch of Payments within 10 days, as
required by Section 3 of the Bureau Guide. We also noted that Branch
of Payments procedures did not provide for the accounting technicians
to contact the cardholders to obtain the statements and to resolve
defaulted obligations. Further, cardholders and approving officials
did not monitor their card statements and the accounting transactions
to ensure that the transactions were recorded correctly. At the time
of our survey, we were provided with a 15-page report on defaulted
obligations transactions that were unresolved. The report included
approximately 445 transactions, totaling $594,000, that were
attributable to credit card transactions.
Monthly Statements With Credit Balances
The Branch of Payments did not record negative (credit) balances on
the monthly statements in the Bureau's accounting system. A credit
statement results when the amount of credits attributable to returns
and adjustments exceeds the amount of purchases. The accounting
technicians in the Branch of Payments said that these credits were
not recorded because they were not aware, because of a lack of
training, that negative amounts could be recorded in the accounting
system. The Federal Financial System User's Guide provides
instructions on how to use the Federal Financial System and describes
how a credit voucher (negative amount) can be recorded in the Federal
Financial System. As a result of the deficiency, the credit balances
on the monthly statements were not recorded in the accounting system,
which resulted in overstated expenses being reported. In addition,
Bureau personnel could not identify the number of unrecorded credit
transactions because the purchase card statements with the credit
balances had been commingled and filed with the statements that had
been processed.
Cancellation of Cards
We found, in our test of 14 employees who were no longer with the
Bureau or who had transferred to another Bureau office, that the
purchase cards had not been canceled for 8 of these employees. The
approving officials responsible for canceling the eight cards stated
that they were either uncertain of the procedures for canceling the
cards or did not ensure that the actions taken resulted in the cards
being canceled. The Bureau Guide contains instructions for canceling
the purchase cards of employees who leave the Bureau or who are
transferred to another Bureau office. Our test of the purchase card
transactions for these eight employees did not disclose that any of
the uncanceled cards had been used.
Annual Review of Purchases
The Bureau's warranted procurement and approving officials did not
conduct periodic reviews of card purchases, as required by
Departmental policy. According to Section XVI of the Departmental
Handbook, warranted procurement officials and approving officials are
to review and evaluate, at least annually, the adequacy and accuracy
of the records related to Government purchase card acquisitions to
ensure that the cards are used properly by Bureau personnel.
According to Bureau personnel, the reviews were not performed
(despite the Departmental requirement) because the Bureau had not
established its own policies and procedures to conduct the periodic
reviews of the purchase card records in its Guide.
Recommendations
We recommend that the Assistant Secretary for Indian Affairs:
1. Ensure that cardholders and approving officials submit the purchase
card monthly statements to the Division of Accounting Management
within 10 calendar days, as required by the Bureau Guide.
2. Require the Branch of Payments to notify the cardholders of all
current and future defaulted accounting transactions and ensure that
the cardholders take action to have duplicate transactions
deobligated.
3. Require that all credit transactions on the purchase card
statements which have not been recorded and all future credit
transactions listed on purchase card statements be identified and
recorded in the Federal Financial System.
4. Ensure that supervisors are properly trained regarding the need to
cancel the purchase cards whenever a cardholder leaves the Bureau or
is transferred to another Bureau office.
5. Require that purchases are reviewed by warranted procurement and
approving officials at least annually, as described in Section XVI of
the Departmental Handbook.
Bureau of Indian Affairs Response and Office of Inspector General
Reply
In the February 16, 1998, response (Appendix 1) to the draft report
from the Assistant Secretary for Indian Affairs, the Bureau concurred
with four recommendations and partially concurred with one
recommendation. Although the Bureau only partially concurred with
Recommendation 3, the alternative actions taken were sufficient for
us to consider the recommendation resolved and implemented. Based on
the response, we consider Recommendation 2 resolved but not
implemented and Recommendations 1, 3, 4, and 5 resolved and
implemented. Accordingly, the unimplemented recommendation will be
referred to the Assistant Secretary for Policy, Management and Budget
for tracking of implementation.
Since the report's recommendations are considered resolved, no further
response to the Office of Inspector General is required (see Appendix
2).
The legislation, as amended, creating the Office of Inspector General
requires semiannual reporting to the Congress on all audit reports
issued, 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 Bureau personnel in the conduct of our
survey.
APPENDIX 2
STATUS OF AUDIT REPORT RECOMMENDATIONS
Finding/Recommendation
Reference
1, 3, 4, and 5
2
Status
Implemented.
Resolved; not implemented.
Action Required
No further action is required. No further response to the
Office of Inspector General is required. The recommendation will be
referred to the Assistant Secretary for Policy, Management and Budget
for tracking of implementation.
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