GAO issues recommendations for improving purchase card program

Veterans Health Administration employees continue to make improper, wasteful and questionable purchases due to a lack of agency oversight, according to a new General Accounting Office report.

The report (GAO-04-737) makes 36 recommendations to VHA and the Veterans Affairs Department that focus on segregating duties, better documentation, vendor discounts and program monitoring.

GAO found that a failure to segregate duties allowed for questionable purchasing. While the health agency does require that those who authorize transactions be separated from those who make the purchases and record the transactions, it does not require that an independent person receive the merchandise.

According to the auditors, if the worker who receives the purchase is different than the one who buys, the merchandise more likely will be intended for government, not personal, use. "We believe documented independent receiving is a basic internal control activity that provides additional assurance to the government that purchased items come into the possession of the government," the report said.

The watchdog agency also found numerous instances where purchases were not accompanied by supporting documents, such as authorizations or vendor invoices. The auditors said the agency should expect an almost zero failure rate for having documentation since invoices are easily obtained or replaced if accidentally lost. The report said missing invoices should be a red flag for potential fraud.

The report's sampling found that cardholders rarely take advantage of vender-offered discounts, or sometimes credit the discounts toward their own account instead of toward the purchase. Part of the problem, the auditors said, is a lack of agency-established policies to ensure that cardholders take advantage of these discounts. They also said that monitoring officials need to track occurrences to address why and how often discounts are passed over, to allow officials to pinpoint savings opportunities.

GAO's review found that the agency lacked procedures to ensure that cardholder accounts were closed when employees leave the agency, and that credit limits closely match actual needs and spending. One aspect of this, according to the auditors, was a lack of human capital resources to do the monitoring.

The report also detailed training needed to prevent questionable or wasteful purchases. It said that a lack of controls resulted in purchases that violated laws or agency policy. These included food, clothing and gift certificates that were for personal use.

The report urged the agency to take "appropriate disciplinary or corrective action for purchases determined to be not for a legitimate government need."

In response to a draft of the report, Veterans Affairs Department officials agreed with the majority of recommendations, saying the agency "has actions already in place or planned that meet the intent of the recommendations." The agency also pointed out that the reported $435,900 in fraudulent purchases is less than .01 percent of all purchase card activity.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care


When you download a report, your information may be shared with the underwriters of that document.