The use of purchase cards has expanded at a rapid rate since the mid-1990s. Spurred by legislative and regulatory reforms designed to increase purchase card use for small acquisitions, the dollar volume of federal government purchase card transactions grew from $527 million in FY1993, to $19.3 billion in FY2009. While the use of purchase cards has been credited with reducing administrative costs, audits of agency purchase card programs have found varying degrees of waste, fraud, and abuse. One of the most common risk factors cited by auditors is a weak internal control environment: many agencies have failed to implement adequate safeguards against card misuse, even as their purchase card programs grew. In response to these findings, Congress has held hearings and introduced legislation that would enhance the management and oversight of agency purchase card programs. This report begins by providing background on agency purchase card programs. It then discusses identified weaknesses in agency purchase card controls that have contributed to card misuse, and examines legislation introduced in the 111 th Congress that would address these weaknesses. The bill would also mandate that non-DOD agencies develop penalties for card misuse and report on agency employees that violate purchase card policies, and require agency IGs to conduct periodic risk assessments and audits of agency purchase card programs to identify waste, fraud, and abuse. Provisions specific to DOD would require increased use of technology to prevent and identify fraudulent purchases, expanded risk assessment and audit practices, and development of more specific rules regarding card deactivation of former DOD employees.
Since the mid-1990s, the use of government purchase cards has expanded at a rapid rate. Spurred by legislative and regulatory reforms designed to increase the use of purchase cards for small acquisitions, the dollar volume of government purchase card transactions grew from $527 million in FY1993, to $19.3 billion in FY2009. While the use of purchase cards has been credited with reducing administrative costs, audits of agency purchase card programs have found varying degrees of waste, fraud, and abuse. One of the most common risk factors cited by auditors is a weak internal control environment: many agencies have failed to implement adequate safeguards against card misuse, even as their purchase card programs grew.
In response to these findings, Congress has held hearings and introduced legislation that would enhance the management and oversight of agency purchase card programs. One of the most comprehensive proposals in recent years is the Government Credit Card Abuse Prevention Act of 2009. Drawing on GAO recommendations, the bill would require agencies, other than the Department of Defense (DOD), to implement a specific set of internal controls, establish penalties for employees who misuse agency purchase cards, and conduct periodic risk assessments and audits of agency purchase card programs. DOD would be required to expand its use of technology to prevent and identify fraudulent purchases, conduct periodic risk assessments and audits, and develop more specific rules regarding card deactivation of former DOD employees.
This report begins by providing background on agency purchase card programs. It then discusses identified weaknesses in agency purchase card controls that have contributed to card misuse, and examines legislation introduced in the 111th Congress that would address these weaknesses. The report will be updated as events warrant.