EPA Purchase Card and Check Program At Risk for Abuse

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By on March 5, 2017 in Agency News with 0 Comments

Two Visa credit cards sitting on dollar bills

The Office of Inspector General (OIG) for the Environmental Agency (EPA) has found significant risk for the agency in the agency’s purchase card and convenience check program.

Government Charge Card Abuse Prevention Act of 2012

The program at EPA came under investigation as the Government Charge Card Abuse Prevention Act of 2012 requires the Inspector General of each executive agency to conduct periodic assessments of the program. The law was passed after numerous examples of purchases made on government cards in a variety of agencies were improper. Agencies have been making headlines for a number of years with reports of improper items purchased with these federal cards.

At the time the bill was passed, Senator Susan Collins (R-ME) said:

This bill would require agencies to ensure that purchase and travel cards are used only for approved spending to take action for misuse of cards.  While purchase and travel cards have been important tools in meeting the government’s procurement needs in a timely and cost-efficient manner, their use often has been subject to some malfeasance and inappropriate purchases by individual card holders.  American taxpayers get the bill for these federal credit cards and they deserve complete assurance that their money is going to legitimate business purposes.

Perhaps the results of the initial investigation by the Inspector General at EPA indicate that the law is working as intended. The objective of the OIG was to “assess the risk of illegal, improper and erroneous purchases made through the EPA’s purchase card and convenience check program and determine the nature, timing and extent of testing necessary.”

The results were not encouraging. The conclusion:

We assessed that the risk for the EPA’s purchase card and convenience check program is high enough to warrant an audit because of noncompliance with existing controls.

We assessed that the risk for the EPA’s purchase card and convenience check program is high enough to warrant an audit because of noncompliance with existing controls. According to EPA reports, for the first nine months of fiscal year 2016, the EPA had a total of 38,928 purchase card and convenience transactions totaling $19,048,218.

Risk Assessment Findings

The IG’s risk assessment noted the following concerns:

  • None of the 18 transactions reviewed complied with all 14 internal controls tested.
  • Two of the 18 transactions, totaling $14,985, were for fitness memberships improperly paid for in advance.
  • The agency blocked high-risk Merchant Category Codes that would cause the transactions to be declined, but this internal control did not work.
  • The Office of Acquisition Management did not document regular reviews of individual card holder transaction reports.
  • Other instances of noncompliance, which did not affect the risk of illegal, improper and erroneous purchases but are nonetheless being reported, include the following:
    • The EPA did not review all rebate information for accuracy.
    • Rebates received by the agency were returned to the originating office from which funds were spent but not necessarily the original appropriation.
    • The agency did not have a specific policy regarding the number of purchase cards.

On November 17, 2016, the EPA did send out an email to agency card holders and approving officials. It cited record-keeping requirements, which systems to use, and when the information is to be entered or uploaded to those systems.

Guidance from GSA on Government Purchase Cards

The General Services Administration says this with regard to federal purchase cards:

In the case of government purchase cards, intentional use of the purchase card for other than official government transactions constitutes misuse. And depending on the facts, it may involve fraud. The employing agency of a cardholder employee who misuses the card or who participates in fraud may cancel the purchase card and take disciplinary action against the employee, as appropriate. In the case of card misuse, the employee will be held personally liable to the government for the amount of any unauthorized (non-government) transaction.

What Comes Next?

As this was a risk assessment, no recommendations were made for fixing the apparent problems. But, since the inspection found the agency was not in compliance with its internal controls, it will do a full audit for fiscal year 2017 instead of a risk assessment.

Based on past findings by government investigators on items purchased with federal charge cards, the results of this investigation are likely to prove interesting as controls were not in place or followed at EPA.

Risk for EPA’s Fiscal Year 2016 Purchase Card and Convenience Check Program

© 2019 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

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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 on federal human resources. Follow Ralph on Twitter: @RalphSmith47

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