Navy units urged to put controls on purchase card use

Officials at two Navy commands should adopt stringent internal controls over purchase card transactions in order to staunch fraud and misuse, the General Accounting Office has recommended in a new report. Purchase cards have been adopted across government to circumvent the time-consuming and costly procurement process for relatively small, routine purchases. The cards may be used for official purchases of up to $2,500 without going through the paperwork required for major acquisitions. However, in July, GAO officials told the House Government Reform Subcommittee on Government Efficiency, Financial Management and Intergovernmental Affairs that weak internal controls led to purchase card abuse by employees at the Space and Naval Warfare Systems Center (SPAWAR) and the Navy Public Works Center, both in San Diego. Some of the abuses included purchases of $500 worth of Mary Kay cosmetics, $700 in compact discs and a $400 designer briefcase. GAO's report, "Purchase Cards: Control Weaknesses Leave Two Navy Units Vulnerable to Fraud and Abuse" (GAO-02-32) summarizes the results of its review of purchase card internal controls at the two Navy units. To prevent future abuses, GAO recommended the two installations minimize the number of cardholders, set credit limits for individual users and require credit checks of prospective cardholders. Both units should also develop effective internal review programs that would require a review of monthly statements to identify potentially fraudulent purchases, and implement procedures for documenting confirmation of items and services paid for by purchase cards, GAO said. Most importantly, the report noted, the Navy should include specific consequences for misusing the cards in its policies and regulations. Defense Department officials disagreed with some of GAO's recommendations, including limiting the number of cardholders and developing specific penalties for misuse of the cards. Defense officials said the number of purchase cards issued in each Navy command is based on mission requirements. They also said policies currently in place clearly identify the consequences for misusing purchase cards, by stating that deliberate misuse may be prosecuted as fraud.
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