However, we found little  evidence of improper or potentially fraudulent purchases. The Department of the Interior (DOI) was  not included in our government-wide analysis because the agency did not  require one transaction review requirement in our test of the approval  process, which may increase the risk that fraudulent, improper, and other  abusive activity could occur without detection. According to OMB guidance,  documentation that a purchase cardholder should maintain to minimize  erroneous and improper purchases includes documentation of the  purchase request and preapproval for self-generated purchases. The Department of Defense Level of Incomplete Documentation and the Government-Wide Rate Are Similar, while the Department of Veterans of Affairs Had More Complete Documentation

On the basis of our samples, we estimated that 23 percent of DOD  transactions and 13 percent of VA transactions had incomplete  documentation associated with the approval process for purchase card  transactions. Together, DOD and VA accounted for over three-fourths of  all purchase card spending and about two-thirds of all micropurchase  spending in fiscal year 2014. Additionally, our targeted data mining of selected categories for  potentially improper purchases found little evidence of improper  purchases, including potentially fraudulent purchases, among  micropurchase transactions made using government purchase cards. While federal government  purchases are vast and varied, of the agencies we reviewed only DOI  granted blanket purchase authority for cardholders for most transactions  under the micropurchase limit in fiscal year 2014. This blanket authority  increases the risk that fraudulent, improper, and other abusive activity  could occur for DOI’s micropurchase spending, which was about $395  million in fiscal year 2014. Recommendations for Executive Action

To help strengthen the documentation of the purchase card transaction  approval process, which can help to prevent improper and fraudulent  micropurchases, we recommend that  1.  the Administrator of GSA direct the head of the Center for Charge  Card Management to provide guidance to agency purchase card  managers reemphasizing the need to obtain and retain complete  documentation in support of purchase card transactions, per OMB  specifications and  2.  the Secretary of the Interior direct the head of Office of Acquisition  and Property Management to reexamine the agency’s Integrated Card  Program policy to require that cardholders maintain documentation of  purchase requests and preapproval for self-generated purchases for  purchase card transactions. GSA noted that it is developing a comprehensive plan to address this  recommendation. Appendix I: Objectives, Scope, and Methodology

This report examines (1) what actions the General Services  Administration (GSA) and the Office of Management and Budget (OMB)  have taken since 2008 to enhance program controls over micropurchases  made using government purchase cards, and (2) whether weaknesses  exist in the approval process for micropurchase transactions and, if so,  whether there are indicators of improper or potentially fraudulent  purchases. To determine what actions GSA and OMB may have taken to enhance  program controls over micropurchases in the federal purchase card  program, we reviewed purchase card policies and guidance issued by  OMB and GSA since 2008. In addition, we obtained and analyzed purchase card training data from  2011 to 2015 from GSA, which were the most recently available data at  the time of our review. From these data, we extracted and tested a random, stratified statistical  sample of 300 transactions from a population of over 17 million  micropurchases that were posted during fiscal year 2014.
Why GAO Did This Study

For fiscal year 2014, the most recently available data at the time of GAO's review, the federal government spent $8.7 billion in micropurchases using purchase cards. In its last government-wide review of the program in 2008, GAO found that internal control weaknesses in agency purchase card programs left the government vulnerable to fraud, waste, and abuse. GAO was asked to review purchase card micropurchases to determine whether weaknesses still exist.
GAO examined (1) what actions GSA and OMB have taken since 2008 to enhance program controls over micropurchases and (2) whether weaknesses exist in the approval process for them and, if so, whether there are indicators of improper or potentially fraudulent purchases. GAO analyzed purchase card policies and guidance issued by OMB and GSA; obtained purchase card data on fiscal year 2014 transactions; tested three elements of the approval process through a generalizable random, stratified sample of 300 transactions from a population of over 17 million across the government; and conducted targeted data mining for improper or potentially fraudulent purchases.

What GAO Found

Since 2008, the General Services Administration (GSA) and the Office of Management and Budget (OMB) have taken several steps, in part to address prior GAO recommendations, to enhance purchase card program controls over micropurchases, which are currently capped at $3,500 for most purchases. These steps include developing training, monitoring tools, and guidance. For example, according to OMB guidance, a cardholder should maintain documentation to minimize risk of erroneous and improper purchases, including documentation of the purchase request and preapproval for self-generated purchases.
GAO's government-wide review found some weaknesses in the approval process for micropurchases due to inadequate documentation. Specifically, in its sample, GAO found that 22 percent of transactions government-wide did not have complete documentation to substantiate the transactions' approval process. Additionally, GAO estimated that 23 percent of Department of Defense (DOD) transactions and 13 percent of Department of Veterans Affairs (VA) transactions had incomplete documentation. Together, DOD and VA accounted for about two-thirds of all micropurchase spending in fiscal year 2014.
GAO's government-wide review and targeted data mining of selected categories for potentially improper purchases found little evidence of improper or potentially fraudulent purchases among micropurchase transactions. However, incomplete documentation increases the risk that fraud, charge card misuse, and other abusive activity could occur without detection. One agency, the Department of the Interior (DOI), granted blanket purchase authority for cardholders for most transactions under the micropurchase limit, and therefore did not require any documentation of the purchase request or preapproval. This blanket authority may increase the risk that fraudulent, improper, and other abusive activity could occur. Following OMB guidance for documentation can help reduce such risks.

What GAO Recommends

GAO recommends that GSA reemphasize OMB guidance to obtain and retain complete documentation of micropurchases, and that DOI require cardholders to document purchase request and preapproval for self-generated purchases. GSA concurred with GAO's recommendation. DOI partially agreed, noting potential challenges with requiring preapproval. GAO still believes this recommendation is valid.