A recent report by the Office of the Inspector General (OIG) for the Environmental Protection Agency (EPA) found abuse of the EPA’s purchase cards and significant problems with the agency’s system for ensuring that charge cards are not misused.
The OIG looked at the 67,000 EPA charge card purchases made in fiscal year 2012 and selected an 80-charge sample, worth $152,602. The OIG found 75 of the 80 purchases, totaling $79,259, were prohibited, improper, or erroneous. This sample was not random. The OIG specifically looked for purchases that were atypical in some way in order to better test the controls that the EPA had in place to prevent prohibited transactions: 69 were selected because of a higher risk merchant code, and 11 for being inherently suspicious merchant codes.
Of the 80 highlighted transactions, the OIG identified several internal control oversight issues. The biggest issue was that the cardholders did not verify that they received the item in question, which accounted for 28 of the 80 charges. The second biggest issue was that cardholders did not get prior approval of their purchase, a problem in 24 cases. Other problems the OIG identified: transactions were not funded prior to purchase, the purchase logs were not reviewed, records were not maintained, and prohibited transactions were approved, among other issues.
The OIG conducted this analysis to comply with the Government Charge Card Abuse Protection Act of 2012, which was enacted to address the serious problem of government purchase card fraud, waste, and abuse. Purchase cards had been used to purchase breast implants, lingerie, iPods, and party supplies, all on the taxpayers’ dime. The law requires agencies to maintain records on who uses the charge cards and what they use them for, and requires that the Inspector General perform periodic assessments of the controls that agencies put in place to monitor the use of the charge cards.
The OIG found that the EPA’s oversight was not effective because of inattention by everyone involved, and inadequate training. A recurring theme in the report is the claim by employees that they did not realize they were violating policy. In addition, the internal EPA team responsible for reviewing charge card purchases admitted that they had not been reviewing certain purchases due to a lack of staff. The OIG found that employees did not have training on how to stay compliant with charge card procedures, which created non-compliance with the EPA policies on purchase cards.
While the report notes that the EPA intends to make a number of improvements to auditing and supervision systems, it does not undo the fact that the agency wasted almost $80,000 in FY 2012, plus whatever improper purchases the OIG didn’t catch. These abuses of the purchase card system are remnants of a past where there was little oversight of these programs, and they cannot be allowed to continue into the future. Hopefully by improving its oversight, the EPA can create a more open and transparent system for ensuring that charge cards—and taxpayer dollars—are not misused.