This  flawed policy has resulted in a proliferation of purchase cards at the two  units. Potentially Abusive Transactions

We also identified a number of potentially abusive transactions. Conclusions

The serious breakdown in internal controls at SPAWAR San Diego and  Navy Public Works San Diego are the result of a weak overall internal  control environment, flawed or nonexistent policies and procedures, and  employees that do not adhere to valid policies. The proliferation of  cardholders at these two activities resulted in over 1,700 cardholders with  essentially the authority to make their own purchase decisions in an  environment that lacked basic controls over receipt of government  property, certification of monthly statements, and accountability over  sensitive property items. The combination of these factors also  contributed to the five known fraud cases and leaves the government  highly vulnerable to significant additional fraud, waste, and abuse from the  purchase card program at these two Navy units. Objectives, Scope, and Methodology

Pursuant to Senator Grassley’s request, we obtained and reviewed  information on five fraud cases related to Navy purchase card programs in  the San Diego, California, area and to review purchase card controls and  accounting for two Navy units based in San Diego—the Space and Naval  Warfare Systems Command (SPAWAR) Systems Center and the Navy  Public Works Center.
Why GAO Did This Study

This testimony discusses internal controls weaknesses that left two Navy units in San Diego, California, vulnerable to purchase card fraud and abuse.

What GAO Found

GAO found a proliferation of purchase cards at the two units in San Diego--the Space and Naval Warfare Systems Command and the Navy Public Works. In the end, more than 1,700 cardholders essentially had the authority to make their own purchase decisions. A serious breakdown in internal controls over the receipt of government property and the certification of monthly statements, coupled with flawed or nonexistent policies and procedures and the failure of Navy employees to adhere to valid policies and procedures, led to (1) the loss, theft, and misuse of government property; (2) the potential abuse of purchase cards; and (3) payments of potentially fraudulent charges. Five fraud cases have already been identified, and the government remains extremely vulnerable to fraud, waste, and abuse arising from the purchase card program at the two Navy units. This testimony summarized the November report, GAO-02-32 .