FAA’s purchase card program also includes the use of convenience checks  to pay vendors that do not accept credit cards. With respect to its purchase card program, we  found  inadequacies in the segregation of purchasing duties, the supervisory  review and approval process, and the tracking of accountable property  and award inventories;  improper purchases, such as purchases that were split to circumvent  purchase limits, restricted items that were purchased without required  approvals, and items that were not bought from required vendors and  lacked the necessary waivers to do so;  purchases of expensive items such as flat panel computer monitors  costing over $3,000 each and PDAs ranging from $300 to over $500 each;  and  a decentralized operating environment and a lack of training that  contributed to these weaknesses. Our May 2002 report on FAA’s Alaskan Region  purchases and this report identified many of the same weaknesses  reported by the OIG as well as other findings. As described above, our review of FAA’s purchase card activities identified  numerous policy violations that resulted in improper purchases. Poor Controls Resulted in Some Wasteful and Questionable Purchases

The inadequacies and ineffectiveness of internal controls were also evident  in the number of transactions identified that we classified as wasteful— that is, were excessive in cost compared to other available alternatives  and/or were for questionable government needs. Poor Controls Contributed to Wasted or Missing Assets

In reviewing purchases of computers and other portable assets bought with  purchase cards, we found that FAA lacked adequate controls over such  purchases to ensure that they were properly recorded and accounted for. As a result, we  identified 262 asset-related transactions totaling $4.1 million that contained  one or more property items that had not been recorded in FAA’s property  management system. In addition to the items we found missing, the  property management division at one FAA location identified during its  physical inventory counts over 800 items totaling almost $2 million that  were lost or stolen in fiscal years 2001 and 2002. Given the systemic  weaknesses we identified in FAA’s property controls, the actual amount of  missing or stolen equipment agencywide could be much higher. Of the 692 items we  attempted to observe, we found that FAA could not locate 238 items (34  percent) totaling $287,766 at the time of our observation. Order by Mail or Phone

	To Report Fraud, Waste, and Abuse in Federal Programs

	Public Affairs
Why GAO Did This Study

In May 2002, GAO reported on breakdowns in purchasing controls at the Federal Aviation Administration's (FAA) Alaskan Region that resulted in improper and wasteful purchases. Many of the weaknesses were associated with the use of government credit cards--referred to as purchase cards--and raised concerns that similar problems might exist FAA-wide. As a result, GAO was asked to determine whether FAA's purchase card controls reasonably ensured that purchases were proper, at a reasonable cost, and for valid government needs. GAO also assessed whether assets bought with purchase cards were being properly safeguarded and recorded.

What GAO Found

Weaknesses in FAA's purchase card controls resulted in instances of improper, wasteful, and questionable purchases, as well as missing and stolen assets. These internal control weaknesses included inadequate segregation of duties, lax supervisory review and approval, missing purchase documentation, inadequate training, and insufficient program monitoring activities, all of which created an environment vulnerable to fraud, waste, and abuse. These weaknesses contributed to the $5.4 million of improper purchases GAO identified. Among these were purchases that were split into two or more segments to circumvent single purchase limits. GAO also identified over $630,000 in purchases that were considered wasteful--that is, excessive in cost, for questionable government needs, or both--or were considered questionable because they were missing a receipt to show what was actually purchased. In addition, over half of the asset purchases--such as computers and other equipment--that GAO examined had not been recorded in FAA's property system, increasing the risk of loss or theft. As a result, FAA could not locate or document the location of over a third of the 692 items that GAO attempted to observe. These missing items totaled almost $300,000. In separate internal reviews, one FAA location identified over 800 items, totaling almost $2 million, that were lost or stolen in fiscal years 2001 through 2002. Given systemic weaknesses in FAA's property controls, the actual amount of missing or stolen equipment FAA-wide could be much higher.