Charge Card Abuse? Who Cares?

By on April 11, 2008 in Current Events with 0 Comments

Getting a handle on a government-wide program is a monumental task. And, if the program makes the management of the agency quicker and easier, there is not much incentive to make changes.

A good example is the recent GAO report on government purchase cards. In its summary, GAO says that it "asked agencies to provide documentation on selected transactions to prove that the purchase of goods or services had been properly authorized and that when the good or service was delivered, an individual other than the cardholder received and signed for it."

That sounds simple and straightforward and a decent system of records should have provided the information.

But it didn’t work. "Using a statistical sample of purchase card transactions from July 1, 2005, through June 30, 2006, GAO estimated that nearly 41 percent of the transactions failed to meet either of these basic internal control standards. Using a second sample of transactions over $2,500, GAO found a similar failure rate—agencies could not demonstrate that 48 percent of these large purchases met the standard of proper authorization, independent receipt and acceptance, or both."

Any system that does not have checks and balances is going to result in problems. There are always people who will take advantage of a system that allows them to line their own pockets.

And GAO found plenty of examples of federal employees who were engaging in activity that certainly appears suspicious. From the Department of Agriculture cardholder who used convenience checks to embezzle funds for over six years to the four cardholders at the Department of Defense who purchased expensive suits and accessories from expensive clothing stores, federal employees were taking advantage of a system that lacks checks and balances.

It isn’t that GAO is identifying a problem has just surfaced for the first time. Various reports have cited problems with government credit cards for years. Every time a report such as this comes out, the nation’s papers are filled with editorials lamenting the lack of government responsibility and waste of taxpayer money. This latest report also has a timing factor in its favor: It has come out just as millions of Americans are filing their tax returns and then reading about a federal employee using a purchase card for a dating service and to visit pornographic sites or embezzlement of government money.

The reality is that reports such as this undermine confidence in government. As American citizens read about events such as these, even when it concerns a relatively small percentage of the entire federal workforce, it creates a lack of respect for federal employees and agencies and makes it easier for others to justify similar behavior because "everyone else does it." In reading the GAO report, it brought to mind a quote from Leona Helmsley that "We don’t pay taxes. Only the little people pay taxes." Of course, she spent time in prison but her view was that she was not subject to the normal rules and laws. If a government is going to issue rules and regulations and expect the American people to follow them, a government that does not follow its own rules when it is inconvenient is likely to have a problem with compliance.

Significant changes, at least in the short term, are unlikely, despite the arm-waving in the press and by GAO. In its response to the GAO report, the General Services Administration states that the GAO report does not "adequately acknowledge the great strides agencies have made in overseeing purchase card transactions in the past 8 years…." GSA also says that the report does not acknowledge that prior to the purchase card program being implemented, the data that was used by GAO to write the report did not exist or was difficult to obtain. GSA also notes that agencies made about $174 million in refunds from card companies as a result of the purchase card transactions in fiscal year 2007. In short, GSA says this is an issue of "personal responsibility and effective management oversight."

With regard to the issue of "personal responsibility" for the use of government credit cards, we can look to the Merit Systems Protection Board where it isn’t at all certain that an agency’s disciplinary action against an employee will be upheld. See "Ethics, Credit Cards and Government Leaders")

And many federal employees don’t see the issue as a major problem either. I realize the difference between purchase cards and travel cards. The MSPB case above cited travel cards. But the mentality is the same. A number of people with the cards take the position that using a government card for personal use is not a problem. Obviously, GAO found a similar mentality among some purchase cardholders.

GSA sees it as an issue of personal responsibility. Many employees with cards do not see using a government card for personal purchases as a problem. The MSPB may, or may not, uphold a disciplinary action and a majority of the Board will not always see a looming moral issue here. As noted in the case write-up in Bullock over a year ago: "Perhaps outrage about agency employees who make unauthorized charges to government cards totaling tens of millions of dollars is misplaced. The time and money spent by GAO and IG offices to try and correct the problem throughout government may be a waste of time spent on an unimportant issue."

In short, the reaction of many in the government community: "Thanks for the report We don’t really care."

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters onĀ federal human resources.

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