Scope and Methodology

To obtain an understanding of the Forest Service’s purchase card and  convenience check policies and procedures, and the related internal  controls, we  reviewed USDA and Forest Service procurement policy, USDA PCMS  guidance, Forest Service regional purchase card program policy, U.S.  Department of the Treasury purchase card program policy, and previous  GAO reports, as well as reports issued by USDA’s IG and an independent  contractor; and  observed and documented purchase card procedures and conducted  telephone interviews with USDA and Forest Service management and  staff to identify key purchase card, convenience check, and accountable  property policies, procedures, and initiatives. To determine whether the Forest Service’s fiscal year 2001 purchase card  transactions were made in accordance with established policies and  procedures, were reasonable, and reflected a legitimate government need,  we selected transactions using three different methods. Critical Internal Control Activities Were Lacking or Inadequate

The Forest Service’s internal controls did not provide reasonable assurance  that improper purchase card and convenience check purchases would not  occur or would be detected in the normal course of business. During our review of the Forest Service purchase card program for fiscal  year 2001, we also noted that supervisory review and approval of purchase  card transactions was inadequate. However, we found instances where LAPCs had not been notified that  cards had been lost by cardholders or stolen and the cards had not been  canceled. Property Was Not Properly Tracked

Since 1999, we have designated financial management at the Forest Service  as high risk on the basis of serious financial and accounting weaknesses. As shown in table 1,  these items included all-terrain vehicles, cameras, GPS units, snowmobiles,  and night-vision goggles. These included   (1) purchases that were split into two or more transactions to circumvent  single transaction limits, (2) purchase transactions that were paid for  twice, (3) purchases of unauthorized items, (4) purchases that exceeded  single purchase limits, (5) unapproved information technology (IT)  purchases, (6) transactions charged to purchase card accounts of former  employees, and (7) convenience checks written by cardholders to  reimburse themselves. Cardholders wrote convenience checks to themselves. Poor Controls over Purchasing Practices Resulted in Certain Wasteful and Questionable Transactions

The inadequacies and ineffectiveness of internal controls were also evident  in the 779 wasteful and questionable transactions we identified that totaled  over $1 million. Wasteful Purchases

We identified 135 purchases totaling $212,104 that we determined to be  wasteful because they were excessive in cost relative to available  alternatives, of questionable government need, or both. We identified purchases for which the Forest Service was unable to  identify the purpose of the award or provide supporting documentation. For example, we  requested supporting documentation for a $2,315 transaction charged by  Unisys Corporation. Although the purchases  related to these particular transactions were not determined to be  improper, this control weakness leaves the Forest Service vulnerable to  improper purchases.
Why GAO Did This Study

Since 1999, GAO has designated Forest Service's financial management as a high-risk area because of internal control and accounting weaknesses that have been identified by the Inspector General and GAO. Given these known risks and the hundreds of millions of dollars in credit card purchases made by the agency each year, GAO was asked to review the Forest Service's fiscal year 2001 purchase card transactions to determine whether (1) existing internal controls were designed to provide reasonable assurance that improper purchases would be prevented or detected, (2) purchases were made in accordance with established policies and procedures, and (3) purchases were made for a reasonable cost and reflected a legitimate government need.

What GAO Found

Internal control weaknesses in the Forest Service's purchase card program leave the agency vulnerable to, and in some cases, resulted in, improper, wasteful, and questionable purchases. These weaknesses included inadequate segregation of duties over purchases, supervisory review and approval of purchases, monitoring activities, and control over property used in Forest Service activities. For example, GAO found instances where items highly susceptible to theft, such as all terrain vehicles, digital cameras, and snowmobiles, were purchased and retained by cardholders, but no records of the items were created in Forest Service systems. These weaknesses likely contributed to approximately $2.7 million in improper, wasteful, and questionable purchases identified in our review. GAO identified purchases that totaled over $1.6 million that were improper because they violated law, regulation, or agency policy. These included purchases that had been split into two or more segments to avoid the cardholder's single purchase limit, purchases that had been paid for twice, purchases that exceeded single transaction limits, purchases for which required approvals were not obtained, purchases of unauthorized items, transactions on accounts of former employees, and instances where cardholders wrote convenience checks to themselves. GAO also found purchases totaling $212,104 that it considered wasteful because they were excessive in cost relative to available alternatives or were for a questionable government need. Further, GAO found purchases totaling $869,825 that it considered to be questionable because the Forest Service either could not provide supporting documentation for them, or supporting documentation was incomplete or incorrect and GAO was unable to determine whether the purchases were proper.