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

Report No. 99-i-375

Title: Survey Report on the Use of the Governmentwide Purchase Card,
       Office of the Secretary


Date:  March 30, 1999



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U.S. Department of the Interior
Office of Inspector General



SURVEY REPORT


USE OF THE
GOVERNMENTWIDE PURCHASE CARD,
OFFICE OF THE SECRETARY


REPORT NO. 99-I-375

MARCH 1999




MEMORANDUM

             TO:  The Secretary

           FROM:  Robert J. Williams
                  Acting Inspector General

SUBJECT SUMMARY:  Final Survey Report - "Use of the
                  Governmentwide Purchase Card,
                  Office of the Secretary" (No. 99-i-375)

Attached for your information is a copy of the subject final
survey report.  The objective of the survey was to determine
whether the Office of the Secretary managed the Governmentwide
Purchase Card Program in accordance with applicable laws,
regulations, and guidelines.

We found that approving officials either did not certify
cardholders' statements or certified the statements without
obtaining vendor invoices or itemized receipts to verify that
items purchased were for valid Government purposes.  We also
found that cardholders allowed noncardholders to use their cards,
split orders, or did not maintain telephone logbooks or
maintained inadequate logbooks.  In addition, cardholders did not
always adequately safeguard their purchase cards.  The
deficiencies occurred because (1) approving officials did not
perform all of the required review procedures and (2) the Office
of the Secretary did not perform periodic reviews of the Purchase
Card Program.  As a result, the Office of the Secretary did not
have reasonable assurance that improper uses of the purchase
cards would be prevented or detected in a timely manner.

Based on the Office of the Secretary's response to the draft
report, we considered one of the report's six recommendations
resolved and implemented and requested that the Interior Service
Center provide additional information for the remaining
recommendations.

If you have any questions concerning this matter, please contact
me at (202) 208-4252.

Attachment




SURVEY REPORT

Memorandum

     To:  Assistant Secretary for Policy, Management and
          Budget

   From:  Robert J. Williams
          Assistant Inspector General for Audits

Subject:  Survey Report on the Use of the Governmentwide Purchase
          Card, Office of the Secretary (No. 99-i-375)


INTRODUCTION

This report presents the results of our survey on the use of the
Governmentwide purchase card by  offices within the Office of the
Secretary and  other offices for which the Office of the
Secretary provides purchase card services (see Appendix 1). The
objective of the review was to determine whether the Office of
the Secretary managed the Governmentwide Purchase Card Program in
accordance with applicable laws, regulations, and guidelines.

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. The BankCard
System issued instructions on using credit cards and approving
credit card purchases as follows:  (1) Cardholder Instructions
for the Use of the Governmentwide Credit Card and (2) Approving
Official Instructions for the Use of the Governmentwide Credit
Card. 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 90-35.  In October 1990, the Office of Aircraft Services
issued the "Procurement Guide, for Fleet Aircraft Parts and
Services," which included Instruction 540-2, "Use of
Government-wide Commercial Credit Card."  One purpose of the
"Procurement Guide" was to supplement the Department's "Handbook"
with specific instructions pertinent to the Office of Aircraft
Services.  In June 1994, the Office of the Secretary issued its
Administrative Handbook, "Contracting and Procurement-Commercial
Credit Card." The Administrative Handbook provided information on
the proper use of the purchase card to employees of the Office of
the Secretary and the offices it services.  Within these offices,
purchase cards are used primarily for the acquisition of supplies
and services costing $2,500 or less.

On a monthly basis, the BankCard System submits invoices to the
following offices within the Office of the Secretary: the
Interior Service Center, Washington, D.C.; the Office of Trust
Funds Management,  Denver, Colorado; and the Office of Aircraft
Services,  Boise, Idaho. The monthly invoices  represent the
aggregate credit card amounts for each participating office
within the Office of the Secretary.  In addition, the BankCard
System submits to each cardholder a monthly statement that
itemizes the cardholder's transactions. Upon receipt of the
monthly cardholder statement, the cardholder is required to
reconcile the statement with the transaction documentation and
certify that all purchases listed on the statement are accurate
and were made for official Government purposes.  The cardholder
is required to forward the certified statement and all supporting
documentation to the cognizant approving official.  The approving
official is required to review the cardholder's statement and
supporting documentation and to certify that the cardholder's
purchases were made for valid Government purposes.  The BankCard
System  also submits to each approving official a statement
(Business Account Summary) that lists monthly purchase amounts
made by all cardholders assigned to the approving official.

On May 15, 1998, the Department awarded a task order under the
General Services Administration's SmartPay Program Contract with
NationsBank to provide credit card services to the Department.
This contract replaced the contract awarded by the General
Services Administration to Rocky Mountain BankCard System.  On
November 18, 1998, subsequent to the issuance of the draft
report, the Department issued revised guidelines for using the
new credit cards.  Although the new guidelines provide for an
approving official, this official is not required to certify the
cardholder's statement.  The new guidelines state that the
approving official is responsible for providing oversight of and
for monitoring  the designated cardholder's compliance with the
rules and procedures.  The guidelines further state that the
approving official is expected to review the cardholder's
transactions "on-line" and through a series of standard ad hoc
exception reports. The guidelines also require bureaus to
establish individual transaction review processes and procedures
and to submit a copy of the review with their findings to the
appropriate bureau officials.

SCOPE OF SURVEY

Our survey included purchases made with the Government purchase
card for the period of October 1996  through July 1997 by Office
of the Secretary employees and employees of the other offices and
agencies serviced by the Office of the Secretary. The 315
cardholders within these offices generated 6,452 purchases,
valued at $2.5 million. We judgmentally selected 796  purchases,
totaling $413,508, made by 53 cardholders and reviewed by 38
approving officials.  Cardholders and approving officials were
selected from each office based on the months with the highest
dollar value transactions.  We did not include purchases made by
the Office of Inspector General in our  review because of the
lack of independence.  Although we excluded the Office of the
Inspector General from this review, credit card purchases made by
Office of Inspector General cardholders during fiscal year 1997
were included in an internal management control review report
dated April 23, 1998.

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. In planning 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 no material weaknesses were
reported that directly related  to the objective and scope of our
survey.

We also evaluated the Office of the Secretary's system of
internal controls related to purchase card activities and found
weaknesses in the areas of approving officials' reviews,
unauthorized use, split purchases, telephone order logbooks, and
card security.  We also determined that the Office of the
Secretary did not provide adequate oversight of purchases made
with the cards.  These weaknesses 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 these areas.

PRIOR AUDIT COVERAGE

The Office of the Inspector General has not issued any reports
during the past 5 years concerning the Office of the Secretary's
management of the Governmentwide purchase card.  However, the
General Accounting Office issued the report "Acquisition Reform:
Purchase Card Use Cuts Procurement Costs, Improves Efficiency"
(No. GAO/NSIAD-96-138), dated August 6, 1996. 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."  Although
the Department of the Interior was included in the study, no
findings were directly related to the Department.

RESULTS OF SURVEY

We found that for 192 ($142,446) of the 796 ($413,508)
transactions reviewed, the approving  officials either did not
certify the cardholders' statements or certified the statements
without obtaining vendor invoices or itemized receipts to verify
that the items purchased were for valid Government purposes.  We
also found that cardholders allowed noncardholders to use their
card for 12 purchases, totaling $4,235; split orders for 41
purchases, totaling $56,923; and either did not maintain
telephone logbooks or maintained inadequate logbooks for 433
purchases, totaling $247,883.  In addition, we found that 19 of
the 53 cardholders included in our review did not adequately
safeguard their purchase cards.  The instructions and procedures
for the use of the Governmentwide purchase card are included in
the Bankcard System's Cardholder Instructions and Approving
Officials Instructions, the Department's "Handbook," the Office
of the Secretary's Administrative Handbook, and Aircraft Services
Procurement Guide.  The deficiencies occurred because (1)
approving officials did not perform all of the required review
procedures and (2) the Office of the Secretary did not perform
periodic  reviews of the Purchase Card Program.  As a result, the
Office of the Secretary did not have reasonable assurance that
improper use of the purchase cards would be prevented or detected
in a timely manner for the transactions reviewed.

Approving Officials' Reviews

Section IV of the Department's "Handbook" states that approving
officials are responsible for (1) maintaining a current listing
of all cardholders under their purview, (2) reviewing
cardholders' transactions and performing a monthly reconciliation
and certification of each cardholder's statement against the
monthly Business Account Summary submitted to the approving
officials by the Bankcard System, (3) verifying that all
transactions were made for valid Government purposes, and (4)
ensuring that all goods and/or services have been received.
After certifying that the cardholders' statements are accurate,
the approving official is to forward the original statements to
the appropriate finance  office.  In order to adequately verify
that the purchases made by the cardholders are for valid
Government purposes, approving officials need to (1) review the
approving officials' statements to ensure that all cardholders
have submitted their statements; (2) review all of the
documentation, such as invoices or  itemized receipts, required
by the Department's "Handbook," the Administrative Handbook, and
the Procurement Guide; and (3) ensure that a description of the
items purchased is annotated on the statement by the cardholder
and that the statement is in agreement with the description on
the invoice or the itemized receipt.

We found that for 192 (24 percent) of the 796  transactions we
reviewed, 28 (74 percent) of the 38 approving officials either
did not certify the cardholders' statements or certified the
cardholders' statements without reviewing documents such as
vendor invoices or itemized receipts to verify that the purchases
were for valid Government purposes.  In addition, 18 of the 38
approving officials did not reconcile the cardholders' statements
to the corresponding approving officials' Business Account
Summary to ensure that all cardholders who made purchases
submitted their statements.  By not reviewing receipts and
invoices and by not reconciling the Business Account Summary with
the cardholders' statements, inappropriate purchases could be
made and not be detected. Examples of the lack of certification
and/or documentation and  the lack of approving officials'
reconciliation are as follows:

    -  A Space and Facilities Management Division cardholder's
    statement containing three transactions, valued at $5,400,
    was paid, even though there was no invoice for one purchase,
    valued at $2,400, and the statement had not been certified by
    an approving official.  According to the description provided
    by the cardholder on the statement, these purchases consisted
    of services for water treatment and duct cleaning.  The
    cardholder stated that the vendor did not provide him with an
    invoice for the cleaning service and that the approving
    official had retired by the time that the statement had
    arrived for processing.  The cardholder further stated that
    as such, he gave the statement to an employee who was to
    become his approving official.  However, this employee said
    that he never received the statement. Consequently, we could
    not verify that  this purchase was for a valid Government
    purpose.

    - Three transactions of a cardholder, valued at $1,518, were
    paid, even though neither the cardholder nor the approving
    official in the Interior Service Center's Division of
    Communication and Information Systems and Services had
    certified that the purchases were valid and necessary. We
    found that 8 months later, the statement, dated June 13,
    1997,  was still in the cardholder's desk drawer.  Section
    7.E of the Administrative Handbook provides 5 days for the
    cardholder's approval, 7 days for the approving official's
    review and certification, and 3 days for mailing the
    statement. Furthermore, there were no invoices and/or
    receipts on file for two of the three purchases, nor was
    there any description on the cardholder's statement of what
    was purchased.  Therefore, we could not determine what types
    of items were purchased. The cardholder told us that she was
    not certain as to  why the statement had not been processed
    properly, and the approving official stated that she had "no
    way of knowing" that the cardholder had a statement which had
    not been processed.  However, this discrepancy could have
    been detected if the approving official had reviewed and
    reconciled the Business Account Summary to the cardholder's
    statements.

    - An approving official within the Office of Aircraft
    Services approved 26 transactions, valued at  $61,325, even
    though there were no invoices and/or receipts for 12
    purchases, totaling $42,833. In addition, the cardholder had
    not provided a description for the 26 items on the statement.
    Based on the descriptions on the purchase requisitions, we
    determined that items such as computer equipment, airplane
    parts, and training were ordered.  The approving official
    told  us that her review consisted only  of checking the
    cardholder's statement for transactions in excess of $2,500.
    The approving official further stated that for six
    transactions which  exceeded $2,500 ($51,823 ), she tried  to
    ensure that there was evidence of competition. In addition,
    the approving official told us that she does not review the
    Business Account Summary because it generally arrives about 5
    days after she has reviewed the cardholder's statements.

    - Both a cardholder and the approving official within the
    Office of Aircraft Services certified  payment for a
    transaction valued at $654 on the cardholder's July 11, 1997,
    statement. The purchase was described by the cardholder as
    "services to provide helicopter." The vendor's invoice, dated
    June 18,1997, was for 5 hours of flight time, 1 night of per
    diem, and 2 days of wages.  In addition, a letter from the
    vendor requesting payment stated,"The job that I almost did."
    The cardholder told us that the vendor did not perform any
    services because the services requested were canceled.  At
    the exit conference on June 30, 1998, the approving official
    stated that she would send us documentation that the vendor
    had flown a helicopter to the work location.  The
    documentation, which was provided on July 2, 1998, included a
    memorandum prepared by the cardholder that we had not
    previously reviewed during our site visit, which stated that
    the vendor had incurred mobilization expenses.  On July 8,
    1998, we asked the cardholder to explain what types of
    expenses were included in the mobilization expenses.  The
    cardholder stated, in writing, that the mobilization expenses
    consisted solely of labor costs.  On July 16, 1998, the
    approving official sent us additional written information to
    explain the services provided.  The information provided
    stated that the expenses consisted of (1) $425 for fuel costs
    to "fly a pilot employed by the vendor, from his heliport to
    the designated start point of the contract, "which was
    approximately 3 1/2 hours each way; (2) $66 for 1 night per
    diem for overnight expenses at the location; and (3) 2 days
    of wages for a pilot.  Based on the conflicting information
    provided by the cardholder and the approving official, we
    contacted the vendor, who stated that he did not incur any
    expenses relating to the Office of Aircraft Services project.
    However, he also stated that he believed he should be paid
    because his pilot was ready to start the Office of Aircraft
    Services project and he had to hire another pilot to perform
    a previously scheduled job that his pilot was to perform.
    The bill the vendor submitted was based on the costs incurred
    on the previously scheduled project.  Consequently, the
    cardholder and the approving official approved this document
    without sufficient information concerning the nature of the
    charges.  In addition, the vendor was paid for a service that
    was not provided to the Office of Aircraft Services.

    - An approving official within the Office of Aircraft
    Services approved a cardholder's February 13, 1997,
    statement, which contained a $4,089 charge for the annual
    inspection and repair of an aircraft, even though the
    cardholder had not provided a description of the services
    purchased, and, at the time of our visit, no invoice was on
    file.  After our visit, Office of Aircraft Services officials
    forwarded the supporting invoice and charge slip for the
    transaction.  In addition, the cardholder did not sign the
    statement certifying that the purchase was valid and
    necessary.  Morever, the purchase was certified for payment 4
    months late.  We also found that four other cardholders'
    statements, totaling $16,354, were certified 2 to 4 months
    late. The approving official told us that since she was the
    only approving official for the 50 pilots, most of her
    statements were signed late because of "higher priority
    duties and lack of time to accomplish all tasks."  According
    to Aircraft Service's September 16, 1998, response to the
    draft report, the approving official also stated that
    "choices had to be made between paying interest . . . on
    $50,000 contract payments or reconciling statements that were
    already paid and were not accumulating interest charges" and
    that "review of cardholder statements was not a high priority
    because the pilots have been conscientious with the use of
    their purchase cards and the risk of abuse was considered
    minimal."   During the annual inspection, which cost  $765,
    the vendor identified repairs of $3,324 that were needed to
    certify the aircraft as "airworthy."  The cardholder
    authorized the vendor to make the repairs to the aircraft.
    The approving official told us that the cardholder should
    have notified her when it was determined that the estimated
    cost of repairs would exceed $2,500 and that she had
    "problems" with the cardholder (the pilot) in the past "doing
    what he wanted to do."

We asked the credit card coordinator how this purchase could be
processed since it exceeded the $2,500 limit by $1,589. The
credit card coordinator stated that the Chief, Division of
Acquisition Management, stipulated in an August 2, 1996,
memorandum, that the single purchase procurement threshold for
all pilots who were issued credit cards be reduced from $10,000
to $2,500, with a monthly limit of $10,000, to comply with the
single purchase threshold contained in the Department's
"Handbook."  The memorandum further stated that the Office of
Aircraft Services had requested authority to permit the pilots to
make single purchases in the amount of $10,000 and that, until
approval was received, all purchases of more than  $2,500 were
required to be made by a contracting officer. A memorandum  was
sent to the Director, Office of Acquisition and Property
Management, Assistant Secretary for Policy, Management and
Budget, on July 29, 1996, which requested that the single
purchase limit be increased to $10,000 for only 8 of the 50
pilots.  However, the Rocky Mountain Bank had not been notified
of the change; therefore, all 50 of the pilots were able to
purchase items in excess of the $2,500 threshold.  According to
the credit card coordinator, the request was denied, and  Office
of Aircraft Services officials told us that they had notified
Rocky Mountain Bank to reduce the pilots' single purchase limit
to $2,500.  Rocky Mountain Bank officials said that one of the
five pilots we reviewed still had a $10,000 single purchase
limit.

Other Deficiencies

Cardholders did not follow all purchase card procedures for 486
purchases, totaling $309,041.  Specifically, individuals who were
not authorized cardholders made 12 purchases, totaling $4,235; 13
orders were split into 41 purchases, totaling $56,923, therefore
staying within the single purchase threshold; and cardholders
either did not maintain a logbook or maintained an inadequate
logbook for 433 purchases, valued at $247,883, that were made by
telephone.  As a result, there was an increased risk that the
card could be used for personal use and that purchase limits
could be exceeded.

    Unauthorized Use. The Department's "Handbook" (Section X) and
    the Administrative Handbook (Section 8. D) require that the
    purchase card be used only by the cardholder.  However, for
    12 purchases, totaling $4,235, the sales receipts were signed
    by three individuals who were not the authorized cardholders.
    The respective cardholders told us that they allowed their
    assistants to use their cards and sign for some local
    purchases "as a matter of convenience."

    Split Purchases. The Department's "Handbook" (Section VII),
    the Administrative Handbook (Section 5.F(1)), and the
    Procurement Guide (Introduction) stipulate that payment for
    purchases not be split to stay within the cardholders' single
    purchase threshold.  However, cardholders split 13 orders for
    similar items from the same vendor into 41 purchases,
    totaling $56,923.  The total amount paid  to  each vendor for
    the items exceeded the single purchase limit.  For example, a
    cardholder within the Office of the Solicitor purchased toner
    with a total value of $8,742 on September 26, 1997, and,
    according to the cardholder's bank card  telephone order log,
    split the purchase into nine purchases with the same vendor.
    Each of the nine purchases was under the cardholder's $2,500
    threshold.

    Telephone Order Logbooks.  The Department's "Handbook"
    (Attachment C), the Administrative Handbook (Section 7(2)),
    and the Procurement Guide (Illustration 2) require that
    purchase card users maintain a logbook of all transactions
    made by telephone.  Each purchase card transaction is to be
    entered in the logbook at the time the order is placed, and
    the documentation should be used to verify the purchases
    shown on the cardholder's monthly statement.  According to
    the guidance, the logbook also should be maintained so that
    individual and cumulative costs of orders can be tracked to
    ensure that the delegated monthly limit is not exceeded.  The
    monthly limit is the amount a cardholder may spend in a
    30-day period and is established by the approving official
    based on anticipated use and budgetary considerations.  The
    monthly limit for the cardholders reviewed ranged from $2,500
    to $150,000.  We found that cardholders did not maintain a
    logbook for 386 telephone purchases, valued at $156,426, of
    the 433 telephone purchases reviewed.  Although the remaining
    47 purchases, totaling $81,957, were recorded in Aircraft
    Services logbook, the logbook did not contain all of the
    information required by Aircraft Services Procurement Guide.
    Specifically, the logbook used did not contain the dates the
    order was placed and received or the quantity of items
    ordered, information that was needed by the cardholder and
    the approving official to adequately certify that the
    cardholder's statement was accurate.

Card Security

The Department's "Handbook" (Section X) states that purchase
cards should be safeguarded in the same manner as cash.  The
Administrative Handbook (Section 8D) and the Procurement Guide
(Section 3.6) state that the  cardholder is responsible for the
proper use and the safeguarding of the purchase card.  However,
we found that 19 of the 53 cardholders in our sample were not
properly safeguarding their purchase cards in that they kept
their cards in unlocked desks or file cabinets.  The lack of
security over purchase cards increases the potential for cards to
be lost or stolen or used for inappropriate purposes.

Oversight Reviews

The Department's "Handbook" (Section XVI) and the Procurement
Guide (540-2(7)) require that credit card transactions be
reviewed annually to ensure that the credit card is used
properly. The Administrative Handbook does not address this
annual review requirement.  The program coordinator for the
Office of Aircraft Services told us, in writing, that "to the
best of my knowledge my predecessor . . . , did not conduct any
type of annual review.  However, a review will be conducted (by
me) on FY [fiscal year] 97 transactions.  This review is
scheduled to begin on 15 Oct 97."  However, this review was not
performed.  The program coordinator for the Office of the
Secretary told us that she manages the purchase card program in
addition to other responsibilities and therefore did not have the
time to perform the required review.  Without the required
oversight reviews, there was no assurance  that all items
purchased were for valid Government purposes.

Recommendations

We recommend that the Assistant Secretary for Policy, Management
and Budget:

    1.Ensure that approving officials follow the review
    procedures established by the Department and their respective
    offices when reviewing cardholders' statements.

    2.Ensure that cardholders' statements are reviewed timely by
    the approving officials.

    3.Notify the Rocky Mountain Bank that it should reduce the
    spending threshold of  all of the Office of Aircraft Services
    pilots to $2,500.

    4.Ensure that cardholders comply with purchase card policies
    and procedures concerning unauthorized purchases, split
    purchases, and telephone orders.

    5.Ensure that purchase cards are adequately safeguarded.

    6.Ensure that annual reviews of purchase card transactions
    are performed in accordance with Departmental guidance.

Office of the Secretary Response and Office of Inspector General
Reply

In a September 11, 1998, memorandum to the Office of Inspector
General, the Director of Administration, Office of the Secretary,
said that he had requested the Director of Aircraft Services and
the Director of the Interior Service Center to provide a response
to the draft survey report on behalf of the Office of the
Secretary.

In its September 16, 1998, response (Appendix 2) to our draft
report, the Office of Aircraft Services concurred with all six of
the recommendations and indicated that it had implemented the
recommendations.  In its September 25, 1998, response (Appendix
3) to the draft report, the Interior Service Center concurred
with the five recommendations (Nos. 1, 2, 4, 5, and 6) applicable
to the Center and stated that corrective actions would be taken
for those recommendations. Although  Aircraft Services and the
Service Center concurred with Recommendation 1 in the draft
report, we revised Recommendation 1 to reflect the changes as
stated in the recently issued guidelines.  These guidelines no
longer require the approving officials to certify their
cardholders' statements each month and state only that the
approving official should review cardholders' transactions
on-line. Since the monthly certification requirement has been
eliminated, we believe it is critical for the approving officials
to provide the required oversight and monitoring to ensure
cardholders' compliance with the new guidelines and timely
detection of misuse of the purchase card.  Based on the
responses, we consider Recommendation 3 resolved and implemented
and request that the Service Center provide target dates and
titles of the officials responsible for implementing
Recommendations 1, 2, 4, 5, and 6 (see Appendix 6).

Aircraft Services and the Service Center also provided additional
comments on information presented in the report.  Aircraft
Services and the Service Center's comments and our replies to
these comments are presented in Appendices 4 and 5, respectively.

In accordance with the Departmental Manual (360 DM 5.3), we are
requesting a written response to this report by May 7, 1999.  The
response should provide the information requested in Appendix 6.

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 Office of the Secretary personnel
in the conduct of our survey.


                                                       APPENDIX 1

OFFICES SELECTED FOR REVIEW FOR WHICH PURCHASE CARD SERVICES WERE
PROVIDED BY THE OFFICE OF THE SECRETARY

Secretary's Immediate Office
Assistant Secretary  for Indian Affairs
Assistant Secretary  for  Fish and Wildlife and Parks
Assistant Secretary  for  Land and Minerals Management
Assistant Secretary  for Water and Science
Assistant Secretary for Policy, Management and Budget
     Division of Space and Facilities Management (Now the
     Facilities and Management Service)
     Interior Service Center (Now the National Business Center)
     Office of Acquisition and Property Management
     Office of Policy Analysis
     Office of Budget
     Office of Information Resources Management
     Office of Managing Risk and Public Safety
     Office of Hearings and Appeals
     Office of Small and Disadvantaged Business Utilization
     Office of Aircraft Services
     Office of Insular Affairs
     Office of Financial Management
     Office of Personnel
     Office of Environmental Policy and Compliance
     Office of Communications and Information Services
Office of the Solicitor
Office of Trust Funds Management
Advisory Council of Historic Preservation


                                                       APPENDIX 4
                                                     Page 1 of 10

OFFICE OF AIRCRAFT SERVICES COMMENTS
AND OFFICE OF INSPECTOR GENERAL REPLIES

In its September 16, 1998, response, the Office of Aircraft
Services presented additional comments on the audit report.
Aircraft Services comments and our replies are presented in the
paragraphs that follow.

Office of Aircraft Services Comments.   Aircraft Services said
that it "object[ed] to the tone used throughout the report,
misquotes of our [Aircraft Services] staff, and inaccuracies in
the report."  Aircraft Services also stated that although these
"inaccuracies" were brought to our attention at the exit
conference, they were still included in the draft report.

Office of Inspector General Reply.  We believe that our report is
objective, as required by the "Government Auditing Standards,"
issued by the Comptroller General.  Specifically, our report is
balanced in content and tone as it presents our findings on
Aircraft Services compliance with regulations and procedures for
use of the Government purchase card.  Although Aircraft Services
did not identify the quotes it considered to be in error, the
quotes relating to Aircraft Services staff were contained in
documents written by those individuals or were made by those
individuals during interviews which were attended by usually two
Office of Inspector General staff and documented in the working
papers.

Regarding "inaccuracies" in the preliminary draft report,
Aircraft Services provided us with approximately 63 documents
subsequent to our field visit. The majority of the documents,
which consisted of purchase card statements, invoices,
requisitions, business account summaries, and packing slips, were
already in our files.  When the additional documents  provided
adequate support for the purchases, we made changes to the draft
report as appropriate.  However, the remaining  documentation did
not support that information in the report was inaccurate.

Office of Aircraft Services Comments.  Aircraft Services stated
that "the approach used in this [our] report to convey the minor
compliance deficiencies found in [Aircraft Services] oversight of
the Governmentwide Purchase Card Program does not reflect the
Inspector General's role as an `agent of positive change.'"
Aircraft Services further stated that the "approach impedes
positive working relationships" and could "undermine the
integrity, credibility, professionalism, and objectivity of the
auditing organization."

Office of Inspector General Reply.  We disagree that the
compliance deficiencies were "minor."  As stated in the report
(pages 3 and 4), we found that approving officials and
cardholders did not follow the established regulations and
guidelines for 192 ($142,446) of the 796 ($413,508) transactions,
which represents 24 percent of the transactions and 34 percent of
the value of the  purchases reviewed.  In our opinion, the report
does reflect the Inspector General's role as an "agent of
positive change" in that it  reports areas where controls are not
adequate or not followed, as indicated by the Office of the
Secretary's acceptance of all six of the report's
recommendations.

Office of Aircraft Services Comment.  Aircraft Services stated,
"Had the auditors taken the time to brief our staff and
management on preliminary findings and noted examples prior to
departing the audit site, many of the inaccuracies could have
been resolved . . . ."

Office of Inspector General Reply.  All deficiencies noted during
our review were discussed with each of the applicable cardholders
and approving officials prior to our departing the audit site.
In addition, a copy of our preliminary draft report was provided
to  the Office of Aircraft Services prior to our June 30, 1998,
exit conference. When additional information was provided, we
changed the report as appropriate.  The preliminary draft is
provided to management as an opportunity to address identified
weaknesses before a draft report is issued. However, some of the
documentation provided, such as  purchase card statements,
requisitions, packing slips, and other internally prepared
documents, were already in our files and  did not support
Aircraft Service's statement that information in the report was
inaccurate.

Office of Aircraft Services Comment. Aircraft Services stated
that we "overlooked positive program and operational
accomplishments that can be directly attributed to Aircraft
Services' implementation of the Governmentwide Purchase Card
Program."  Aircraft Services stated that these accomplishments
included "[a] noticeable reduction in . . . purchase orders
required and . . . payments processed," "[a] method to make
payments quickly to small and disadvantaged businesses," and
"[m]ore timely completion of maintenance repairs on fleet
aircraft."

Office of Inspector General Reply.  As stated in our report
(Prior Audit Coverage section), the General Accounting Office
recently issued a report on the use of the purchase card that
stated, "Agencies have found they can support their missions at
reduced costs by having program staff use the purchase card."
Since the General Accounting Office addressed the benefits of
using the purchase card, we did not believe that a similar review
was warranted.  Furthermore, Aircraft Services did not provide
any details supporting its statements on the accomplishments
cited during the audit, at the exit conference, or in the
response to the draft report.

Office of Aircraft Services Comment.  Aircraft Services stated
that although our review "identified compliance deficiencies, . .
. [it] did not identify any purchases that would constitute
fraud, waste or abuse of Government resources or any funding that
could have been put to better use.  In essence, there was no
monetary effect of the deficiencies identified."

Office of Inspector General Reply.  Any purchases in which  fraud
or abuse was suspected would not have been specifically
identified in the report but would have been referred for further
review to the Assistant Inspector General for Investigations. We
referred one such purchase to Investigations for review.
Although the report did not identify any funding that could have
been put to better use, we believe, based on the deficiencies
identified in the report, that the Office of the Secretary did
not have reasonable assurance that the improper use of the
purchase cards would be prevented or detected in a timely manner.
Further, the purpose of an audit is to identify internal controls
that are inadequate or controls that are not being followed so
that the potential for fraud, waste, and abuse is minimized.

Office of Aircraft Services Comment.  Aircraft Services stated
that it agrees that approving officials should review all of the
documentation but that the documentation "is not limited to
invoices or receipts."

Office of Inspector General Reply.  During our review of
individual purchases, we accepted not only vendor invoices and
receipts but also charge slips and any other documents from the
vendor that contained a description of the item and the amount
charged.

Office of Aircraft Services Comments.  Aircraft Services stated
that its office accounted for 27 of the 192 purchases identified
in the report for which the cardholders' statements were not
certified by the approving official or were certified without
adequate documentation.  However, Aircraft Services stated that
its own review identified only two transactions which did not
have supporting documentation.  Aircraft Services further stated
that while only one purchase included an invoice or a receipt as
part of the cardholder's statement, the documentation for the
other transactions "included a combination of 1) a `Small
Purchase Documentation Sheet' . . . ; 2) a `Request,
Authorization, Agreement, and Certification of Training, Form
SF182'; 3) packing slips either with or without dollar values; 4)
price quotation sheets provided from the vendor; and 5) the
requisition from the individual requesting the order be placed."
Aircraft Services  stated that it disagreed with our "narrow
definition of supporting documentation" and our "refusal to
accept anything but an invoice or receipt as support."

Office of Inspector General Reply.  While the documents cited by
Aircraft Services were attached to the cardholders' statements,
we determined that only documents obtained from the vendor which
included a description of the item purchased and the amount
charged  provided assurance that the items listed on the
statements and the prices paid were valid. The documents cited
were primarily requests for services and not evidence of the
receipt of such. As  previously stated, we did accept packing
slips from vendors as adequate support if they included a
description  of the item and the price.

Office of Aircraft Services Comments.  Aircraft Services stated
that it had provided us with  supporting documentation as a
result of a statement made at the exit conference that some
transactions did not have supporting documents.  Aircraft
Services also stated that it sent "one page of a three-page
[cardholder's] statement  with supporting documentation" and that
it "informed the auditors that . . . [it] had sent only the one
page because of the length of the statement and the supporting
documentation."  Aircraft Services also said that it would "send
the additional pages" if requested.  Aircraft Services further
stated that because it did not receive an additional request for
information, it "believed that . . . [the auditors] were
satisfied with the documentation provided."

Office of Inspector General Reply.  We did not request additional
documentation  because all of the documents provided with the
first page and the "supporting documentation" for the other two
pages were obtained during the audit, and copies were included in
our files.  The 32 documents provided included the first page of
the cardholder's statement, invoices, requisitions, requests for
training, and other internally prepared documents.  All copies of
invoices or other vendor documents provided by Aircraft Services
that included a description of items purchased and the price were
considered adequate support and were already in our files.  The
documents provided by Aircraft Services that were not in our
files supported that the goods or services had been requested but
not that they had been received.

Office of Aircraft Services Comments.  Aircraft Services stated
that although its Instruction 540-2 requires that cardholders
provide a description for each purchase on the cardholder's
statement, it does not require a complete description of each
item purchased.  Aircraft Services further stated,  "Because of
the short length of the description line provided and the detail
normally required to have the description be meaningful, the
cardholder has assigned a unique `call number' to each credit
card purchase and included it as the description on the
cardholder statement."  According to the response, the call
number "corresponds directly to the purchase documentation so it
may be easily identified and retrieved."

Office of Inspector General Reply. We agree that Instruction
540-2 requires a description of the purchase and not a complete
description of each item, and we did not suggest in the report
that a lengthy description of each item be included on the
cardholders' statements.  However, in the case where the
cardholder's statement contained a call number, the statement did
not identify the items purchased. We did not take exception to
the use of a single word to describe purchases, such as computer,
printer, software, fuel, aircraft maintenance, and training.  The
description for all of the items purchased on the cardholder's
statement identified in the report would have fit in the space
allotted on the statement.

Office of Aircraft Services Comments.  Aircraft Services took
exception to the statement in the report that "the approving
official told us that she does not review the Business Account
Summary  because it generally arrives about 5 days after she has
reviewed the cardholder's statement," stating that this statement
"did not inform the reader that the approving official has only
one cardholder assigned for her review."  Aircraft Services
stated, "[W]e fail to see the purpose of this approving
official's review of the Business Account Summary when the only
statement she will receive has been reviewed prior to receipt of
the summary."

Office of Inspector General Reply.  Regardless of the number of
cardholders assigned to an approving official, the  review of the
cardholder's statement and the Business Account Summary is the
only internal control procedure that will result in the timely
detection of  the misuse of the purchase card.  The timely
detection of purchase card misuse is as important for one
cardholder as it is for 20 cardholders.  One of the purposes of
reviewing  the  Summary is to determine whether the name of the
vendor and the amount of purchases on the cardholder's statement
agree with the information in the Summary.   The approving
official stated during an  interview with the auditors that she
does not review the  Summary.  In our opinion, she would
therefore not detect whether the cardholder had altered the
cardholder's statements to conceal misuse of the card.  In
addition, Section IV of the Department's "Handbook" states that
approving officials are responsible for performing a monthly
reconciliation of each cardholder's statement with the monthly
Summary.

Office of Aircraft Services Comments.  Aircraft Services stated
that, regarding the example of the $654 charge for helicopter
services, it  "disagree[d] with the conclusion drawn from this
failed attempt to clarify the situation and circumstances."
Aircraft Services further stated, "After many discussions with
the auditors and numerous written statements, we can only
conclude that the confusion with this credit card purchase stems
from the auditors' lack of understanding of  the concept of
`mobilization expenses.'"  Aircraft Services also stated, "As
previously defined in . . . [Aircraft Services] . . .
correspondence to the auditor, mobilization costs `typically
encompass all costs associated with readying and transporting
personnel and equipment from the vendor's place of operations to
the Government's designated base.'"  Aircraft Services further
stated that the approving official contacted the vendor's
accountant on July 16, 1998, and that the accountant confirmed
that the "invoice represented the cost incurred by the vendor to
move a pilot from Greybull, Wyoming, to the point where he was
released by Aircraft Services en route to the designated base in
Chamberlin, South Dakota."  Aircraft Services also stated that
the  release "was made after the vendor had incurred expenses."

Office of Inspector General Reply.  We do not agree that the
conclusions in the report concerning this transaction were "drawn
from this failed attempt to clarify the situation and
circumstances."  Instead, the report illustrates the conflicting
information received from the cardholder, the approving official,
and the vendor concerning the circumstances of this transaction.
After receiving conflicting information concerning the $654
charge from the cardholder and the approving official, we
contacted the vendor on July 17 and July 20, 1998, to clarify
this transaction.  The vendor said that he did not fly his
aircraft to the Office of Aircraft Services location prior to
receiving Aircraft Services cancellation notice but that in
anticipation of performing this work for Aircraft Services, he
hired another pilot to provide aircraft services to his other
clients.  According to the vendor, the hired pilot flew his
private airplane from Glendike, Montana, to the vendor's location
in Greybull.  Neither the vendor nor the hired pilot incurred any
expenses flying their aircrafts to Chamberlin.

Office of Aircraft Services Comments.  Aircraft Services stated
that it disagrees with the statement in the report that no
invoice was on file at the time of the review and stated that the
invoice was attached to the cardholder's statement.  Aircraft
Services also stated that  had the auditor informed that office
about the missing invoice, the approving official "could have
gone to the files with the auditors and shown them" the invoice.
Aircraft Services also commented on a statement in the draft
report concerning an unsigned document in the files, stating that
the cardholder was unable to sign the document because "he was no
longer employed by the agency." The approving official further
stated that she signed the cardholder's name on the document and
backdated the document "so that the auditors could identify who
had written the document and the approximate date the information
was documented."

Office of Inspector General Reply.   All  deficiencies pertaining
to the files, including the lack of an invoice in the file, were
discussed with the approving official at the time of our audit at
the Office of Aircraft Services in Boise, and those discussions
were documented in the working papers.  We have deleted reference
to the backdated document in our report  because the document did
not directly relate to our finding.

Office of Aircraft Services Comments.  Regarding the statement in
the report that the approving official told us that since she was
the only approving official for the 50 pilots, most of her
statements were signed late because of "higher priority duties
and lack of time to accomplish all tasks," Aircraft Services
stated that the "auditor, paraphrasing the approving official,
made this statement."  Aircraft Services further stated that the
approving official said that "choices had to be made between
paying interest . . . on $50,000 contract payments or reconciling
statements that were already paid and were not accumulating
interest charges."  Aircraft Services also stated that the
approving officials told the auditor that  "review of cardholder
statements was not as high a priority because the pilots have
been conscientious with the use of their purchase cards and the
risk of abuse was considered minimal."

Office of Inspector General Reply.  The statement quoted in the
report was based on notes taken during our interview with the
approving official.  During this interview, the approving
official did not discuss paying interest on $50,000 contract
payments or the fact that the pilots had been conscientious with
the use of their purchase cards.  Also, we would be concerned
that "$50,000 contract payments" would cause a 2- to 4-month
delay in approving cardholders' statements.  However, we have
revised the report to include the additional comments pertaining
to the approving official.

Office of Aircraft Services Comments.  Aircraft Services stated
that the annual inspection cost was $961.80 and that the amount
quoted in the report ($765) included only labor and not parts.
Aircraft Services also stated that the statement in the report
concerning the  circumstances of this transaction was "also
inaccurate."

Office of Inspector General Reply.  We disagree that the
circumstances of this transaction were described in the report
inaccurately. This information was included in the report to
emphasize that the cardholder should have notified the approving
official once the estimated cost of the repairs exceeded the
pilot's $2,500 single purchase limit.  According to the
documentation provided in the purchase card file, the total cost
of the inspection and all repairs was $4,089, which consisted of
$765 to perform the basic inspection and  $3,324 for labor and
parts to make  repairs that were necessary for Federal Aviation
Administration certification. The  $196.80 ($961.80 minus
$765.00) for parts cited in Aircraft Services comments is
included in the $4,089 that was charged to the purchase card.

Office of Aircraft Services Comment.  Aircraft Services stated
that the approving official did say that she should have been
notified when the $2,500 purchase limit was exceeded but that she
"never said that the pilot had been a problem in the past."

Office of Inspector General Reply.  The statement made by the
approving official was documented in writing during an interview
with the auditors.

Office of Aircraft Services Comments.  Aircraft Services stated
that it had requested that all pilot cardholder limits be reduced
on February 18, 1998, after official notification of denial was
received.  Aircraft Services further stated that "a review was
performed of the approving official's March 1998 Business Account
Summary," which showed that the limits had been reduced for all
but one of the pilots.  Aircraft Services also stated that Rocky
Mountain Bank had been notified of the error and that the limit
had been reduced.

Office of Inspector General Reply.   Aircraft Services
notification to the Bank to reduce the pilots' limit should
resolve this deficiency.

Office of Aircraft Services Comment.  Aircraft Services stated
that the report's statement that purchases were split "`in order
to stay within the $2,500 threshold' does not correspond to the
example given for Aircraft Services, which was a $25,000
threshold."

Office of Inspector General Reply.  We agree that the threshold
for some cardholders exceeds $2,500, including the cardholder
cited in the example.  Therefore, we have changed the report
(page 7) to read "within the single purchase threshold."

Office of Aircraft Services Comments.  Aircraft Services  stated
that it "disagree[d] with the inferences drawn from the facts
cited" regarding split purchases.  Aircraft Services further
stated that it "agrees that the cardholder's single purchase
limit was inadvertently exceeded"  but that the cardholder is
also a warranted contracting officer with warrant authority of
$100,000 and that the cardholder had been told and "erroneously
believed" that her single purchase threshold was $75,000.
Aircraft Services also stated, "The cardholder placed one
telephone order with the vendor for $31,974.  It would have been
illegal for the vendor to charge the total amount prior to
shipment of the goods."  Aircraft Services further stated that
since the vendor shipped the goods on three different days, the
charges did not exceed the cardholder's single purchase limit.
Aircraft Services stated that had all of the goods been shipped
on the same day, the $25,000 single purchase threshold would have
been brought to the attention of the cardholder.  Aircraft
Services further stated that after this purchase was brought to
the cardholder's attention by the auditors, the threshold was
increased to $100,000.

Office of Inspector General Reply.  When an employee is
designated as a cardholder, the bank mails a purchase card to the
cardholder.  In order to activate the card for use, the
cardholder must provide the bank with the single purchase limit,
the 30-day purchase limit, and any merchant category code
restrictions. In addition, the single purchase and 30-day
purchase limits are printed on cardholders' monthly statements.
Therefore, the cardholder should have been aware that her single
purchase threshold was only $25,000.  The fact that the
cardholder has warrant authority of $100,000 does not
automatically supersede the limit established by Aircraft
Services for this individual's purchase card. As stated in the
report, the cardholder should not have charged the purchase to
her credit card.  The purchase should have been made using a
different procurement method.  Although the cardholder exceeded
her single purchase threshold, we agree that the purchase was
technically not a split order. Therefore, we have deleted this
example from the report.

Office of Aircraft Services Comments.   Regarding our finding
that cardholders did not maintain a logbook for  433 telephone
purchases, Aircraft Services stated that of the 72 purchases
cited for not being recorded in a telephone logbook, it agreed
with our conclusion for 25 purchases.  Aircraft Services further
stated that although a formal logbook was not maintained for the
remaining 47 purchases, the cardholder maintained a "Visa Charge
Log" and a "Small Purchase Documentation Sheet."  Aircraft
Services also stated that these documents "fulfill the `logbook'
requirement for telephone orders."

Office of Inspector General Reply.   Based on the information
provided by Aircraft Services, we have reduced  the number of
transactions identified as not being recorded in a logbook from
72 to 25.  However, we have revised the report (pages 7 and 8 )
to state that while the remaining 47 purchases were recorded in a
logbook ("Visa Charge Log"), the logbook, in our opinion, did not
provide the approving official with all of the information needed
to properly certify the cardholder's statement, such as the dates
the order was placed and received or the quantity of items
ordered.

Office of Aircraft Services Comments.  Aircraft Services stated
that it disagreed that the use of a telephone logbook would
increase the risk that the card could be used for personal use
and that purchase limits could be exceeded.  Aircraft Services
also stated,  "The cardholders' honesty and integrity are solely
responsible for preventing misuse of the purchase card."

Office of Inspector General Reply.  The statement  in our report
that "because the cardholder did not follow purchase card
procedures, there was an increased risk that the card could be
used for personal use and that purchase limits could be exceeded"
refers to the  effect of the three areas under the section "Other
Deficiencies" in the report (that is, unauthorized use, split
purchases, and telephone order logbooks) and not specifically to
the use of the logbook. In that regard, we agree that the use of
a logbook would not detect personal use of the card.
Accordingly, we have revised the report (pages 7 and 8) to
clarify our conclusion.  However, we believe that  the use of a
logbook would assist the cardholder in ensuring that the 30-day
purchase limit is not exceeded.   We disagree that  the
cardholder is solely responsible for preventing misuse of the
purchase card.  Internal controls are designed to transcend the
honesty and integrity of individuals.  Office of the Secretary
personnel are also responsible for ensuring that management
controls for preventing and detecting improper use are
established and  followed.

Office of Aircraft Services Comment.  Aircraft Services stated
that the program coordinator did not conduct a formally
documented review because it "did not believe it would be an
efficient or effective use of time to review information already
audited" by the Office of Inspector General.

Office of Inspector General Reply.  The Department's "Handbook"
requires that an annual review of credit card transactions be
conducted to ensure that the credit card is used properly.   The
information quoted in the report stating that Aircraft Services
did not conduct any type of annual review and that a review would
be scheduled by October 15, 1997, was provided in writing by the
program coordinator. The written document provided by the program
coordinator did not state that the reason for not conducting a
review was  because it would not be an efficient and effective
use of Aircraft Services time to review documents already audited
by us.  Also, we found no documentation that Aircraft Services
had ever conducted such a review.  We agree that it would not
have been an efficient and effective use of time and staff of
Aircraft Services to review the information which we audited, but
we believe that the staff should perform the reviews in future
years, as required by the Department's "Handbook."

Office of Aircraft Services Comments. Aircraft Services stated
that it disagreed with the report's conclusion that "without the
reviews, there was little assurance that all items purchased were
for valid Government purposes."  Aircraft Services also stated,
"Decisions on the appropriateness of a purchase are the approving
official's responsibility."  It also stated that "the approving
official has a better understanding of the program" and reviews
and certifies each credit card statement.

Office of Inspector General Reply.  As noted in the report, the
approving officials were not always certifying the cardholders'
statements or were certifying statements without reviewing the
supporting documentation for the purchases.  However, management
is responsible for establishing controls to ensure that
Government funds are expended for valid Government purposes and
for conducting management control reviews to ensure that the
controls are in place and followed.  To fulfill this
responsibility, the Department requires that an annual review of
the credit card program be conducted.  We believe that this
review will help ensure not only that cardholders are complying
with established procedures but also that the approving officials
are properly reviewing purchases for appropriateness.

                                                       APPENDIX 5
                                                      Page 1 of 3

INTERIOR SERVICE CENTER COMMENTS
AND OFFICE OF INSPECTOR GENERAL REPLIES

In its September 25, 1998, response (Appendix 3), the Interior
Service Center provided additional comments on our audit report.
The Service Center's comments and our replies are presented in
the paragraphs that follow.

Interior Service Center Comments.  The Interior Service Center
stated that, based on its review of the draft report, it could
not determine whether it was "non-compliant with any internal
controls related to bank card use per departmental regulation, or
if there was a deficiency with respect to the level of our
oversight provided." The Service Center further stated that the
draft report and the debrief provided "were too broad to agree
with the general statements" made in paragraph 3 in the Scope of
Survey section of the report.

Office of Inspector General Reply.  The Interior Service Center's
seven cardholders included in our review accounted for 28 (15
percent)  of the 192 transactions that were either not certified
or were certified without sufficient supporting documentation to
verify that the items purchased were for valid Government
purposes and for 38 (less than 1 percent) of the 486 transactions
where cardholders allowed  other employees to use their card, did
not maintain telephone logbooks or maintained inadequate
logbooks, and split purchases.  However, in addition to ensuring
compliance with the purchase card procedures for its own
employees, the Service Center is also responsible for ensuring
that all cardholders within the Office of the Secretary are using
the credit cards properly.

Paragraph 3 of the Scope of Survey section of our report states
that the Office of Inspector General evaluated the Office of the
Secretary's system of internal controls related to purchase card
activities (which included the Interior Service Center) and found
weaknesses in the areas of approving officials' reviews,
unauthorized use of the card, split purchases, telephone order
logbooks, and card security.  The paragraph also states that the
Office of Secretary did not provide adequate oversight of
purchases made with the card.  In our opinion, internal control
weaknesses relating to the use of the purchase card are
exemplified by the following:  192 (24 percent) of the 796
transactions reviewed either were not certified or were certified
without sufficient supporting documentation to verify that the
items were for valid Government purposes, and cardholders, for
486 transactions, allowed other employees to use their card, did
not maintain telephone logbooks or maintained inadequate
logbooks, and split purchases.  In addition, our statement
regarding inadequate oversight of the purchases made with the
card is supported by our determination that the Office of the
Secretary did not perform any of the required annual reviews of
credit card transactions to ensure that the credit cards were
used properly.

Interior Service Center Comments.  The Service Center  stated
that it "cannot concur with the alleged weaknesses noted in the
report" because "some important basic facts" about it "were not
correctly reflected in the report."  The Service Center further
stated that while the report stated that the Office of the
Secretary had 1,440 cardholders, the Service Center is
responsible for 300 purchase cards and the Office of Aircraft
Services has fewer than 100 purchase cards.  The Service Center
also stated that for the period of May 1997 to May 1998, it had
approximately 2,700 transactions and that if the Office of
Aircraft Services also had 2,700 transactions, the total for both
would be 5,400, which is "still significantly less than the 6650
transactions cited in the report."  The Service Center further
stated that the  discrepancies cited "bring into question the
validity of the 796 sample transactions which were reviewed in
the survey and the 192 transactions which were alleged to be
faulty. . . ."

Office of Inspector General Reply.  The numbers of cardholders
and transactions cited in the Background section of the draft
report were in error, and we have revised the report (page 2) to
reflect the correct numbers of 315 cardholders  and 6,452
transactions.  However, this information was for background
purposes only and did not affect the numbers of cardholders or
transactions that were selected for review or the results of our
review.

Interior Service Center Comments.  The Service Center stated that
of the examples of "faulty transactions provided in the report,
only six . . . were directly controlled" by the Service Center
purchase card program.  The Service Center further stated that
these few examples do not support the 25 percent error rate
"alleged in the report" and that all 796 sample transactions
"need to be examined closely to determine which ones were, in
fact, the responsibility of " the Service Center.

Office of Inspector General Reply.  The specific transactions
discussed in the report were just a few examples of the 192
transactions in which the approving officials either did not
certify the cardholders' statements or certified the statements
without obtaining vendor invoices or itemized receipts.  While
only 28 (15 percent) of the 192 purchases were made by Service
Center personnel, the Service Center has overall responsibility
for ensuring compliance with the purchase card procedures for all
cardholders within the Office of the Secretary.  Subsequent to
our audit, we  provided the Service Center with detailed results
of our review, which included information on the transactions for
which  the Service Center was responsible.

Interior Service Center Comments.  The Interior Service Center
stated that since purchases made by cardholders within the Office
of Inspector General "contribute a significant percentage to the
total purchase card dollars" within the Service Center, it
"recommend[s] consideration be given to including the OIG [Office
of Inspector General] in future audits. "

Office of Inspector General Reply.  The Office of Inspector
General's  transactions were excluded to ensure independence and
objectivity.  As stated in the report ( page 2), purchases made
by cardholders within the Office of Inspector General during
fiscal year 1997 were reviewed as part of the Office's internal
management control review.  These reviews will be conducted
periodically.  Therefore, we will not include transactions of the
Office of Inspector General in any subsequent audits of the
Department's credit card program.


                                                       APPENDIX 5
                                                      Page 3 of 3

STATUS OF SURVEY REPORT RECOMMENDATIONS

Finding/Recommendation

Reference              Status              Action Required

1, 2, 4, 5, and 6      Management          Provide target dates
                       concurs:            and titles of
                                           officials responsible
                                           for implementation.
                       additional
                       information needed.


3                      Implemented.        No further
                                           action is required.



ILLEGAL OR WASTEFUL ACTIVITIES SHOULD BE REPORTED

TO THE OFFICE OF INSPECTOR GENERAL BY:

Sending written documents to:



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

Calling:

Our 24 hour
Telephone HOTLINE
1-800-424-5081 or
(202) 208-5300

TDD for hearing impaired
(202) 208-2420 or
1-800-354-0996



Outside the Continental United States


Caribbean Region

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

Calling:
(703) 235-9221


North Pacific Region

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


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