GAO issues purchase card guide

GAO Audit Guide: Auditing and Investigating the Internal Control of Government Purchase Card Programs

The General Accounting Office on May 30 released a guide designed to help agencies better manage their purchase card programs, many of which have been criticized for being misused.

The document provides "practical guidance" that agencies can use when they audit and investigate their purchase card programs, according to GAO. Agency managers can also use the guide to help them evaluate policies, procedures and internal controls of their purchase card programs, GAO said.

Purchase card programs are growing in popularity, accounting for $15.2 billion in government expenditures in fiscal 2002. The Defense Department is the largest user of the card, with 214,000 cardholders accounting for $6.8 billion in purchases in fiscal 2002.

However, the DOD and other agency programs have been criticized for their lack of management oversight. One cardholder, for instance, spent $12,832 on unauthorized car repairs, groceries and other personal items, and an inmate at a local county jail used a lost or stolen purchase card to buy flowers at a local business.

The guide, which is an exposure draft, is not the one and only document agencies can or should use, GAO said. But it will help auditors, investigators and managers identify the potential for fraud and abuse and recognize suspicious purchase card transactions.

GAO based the guide on its own approach and experience in auditing agencies' purchase card programs. In general, GAO said it:

* Gains an understanding of an agency's purchase card program and of its overall organization.

* Uses that information and other needed reviews to make a preliminary assessment.

* Tests the effectiveness of internal controls.

* Uses data mining to detect instances of fraudulent, improper and abusive transactions.

GAO also gives specific steps agencies can take under each of the four areas. For instance, it provides its approach to data mining as a method of uncovering red flags in an agency's purchase card program.