Audit Report

OIG-04-029

MANUFACTURING OPERATIONS: Control Weaknesses and Poor 

Management Oversight in the Mint’s Purchase Card Program

March 2, 2004

Office of

Inspector General

Department of the Treasury

Contents 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 1 

Audit Report.................................................................................................. 3 

 Results in Brief............................................................................................. 4 

 Background ................................................................................................. 5 

 Findings and Recommendations ..................................................................... 9 

Inadequate Controls Leave the Mint Vulnerable to Misuse and Potentially 

 Fraudulent Purchase Card Transactions................................................... 9 

 Recommendations.................................................................................. 17 

 

 Purchase Card Transactions Are Not Properly Recorded and Documented..... 19 

 Recommendations....................................................................................21 

 Improper and Questionable Purchases Are Not Identified and Addressed....... 22 

 Recommendation .................................................................................... 27 

 The Training Program Needs To Be Enhanced............................................ 27 

 Recommendation ................................................................................... 28 

Appendices

 Appendix 1: Objective, Scope, and Methodology........................................ 31 

 Appendix 2: Additional Transactions and Other Issues 

 for Management Attention.................................................... 34 

 Appendix 3: Management Response ......................................................... 39 

 Appendix 4: Major Contributors To The Report........................................... 45 

 Appendix 5: Report Distribution................................................................ 46 

Abbreviations

 APC Agency Program Coordinator 

 AO Approving Official 

 
Contents 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 2 

 FAR Federal Acquisition Regulations 

 GAO General Accounting Office 

 GPO Government Printing Office 

 GSA General Services Administration 

 OMB Office of Management and Budget 

 SOP Standard Operating Procedure 

 TD Treasury Directive 

 TFM Treasury Financial Manual
OIG Audit 

Report

The Department of the Treasury 

Office of Inspector General 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 3 

 March 2, 2004

 Henrietta Holsman Fore 

 Director 

 United States Mint 

Since 1998, the Mint has been using Citibank’s MasterCard to 

make micro-purchases. During fiscal year 2002, Mint purchase 

cards were used to make over 12,000 purchases totaling $5.4 

million. Purchase cards are available to federal agencies under a 

General Services Administration (GSA) SmartPay Master contract 

and may be used to make purchases with minimal paperwork. 

Individual agencies are required to administer their own purchase 

card program and set the parameters for use by authorizing 

employees, establishing purchase limits, and monitoring usage. 

The benefits of using purchase cards versus traditional payment 

processes are lower transaction processing costs and less “red 

tape” for both the government and vendors. While the purchase 

card program streamlines the government’s acquisition processes, 

it is important that agencies have adequate internal controls in 

place to protect the government from fraud, waste, and abuse. 

Given the inherent risk of, and in response to General Accounting 

Office (GAO) and Congressional concerns on the use of 

Government purchase cards, this review became part of the Office 

of Inspector General’s (OIG) planned series of Treasury bureauwide audits. Our objective was to determine whether adequate 

controls exist at the Mint to ensure Government purchase cards are 

being used for their intended purpose. The scope of review 

involved purchase card transactions that occurred in FY 2002. We 

conducted our work from September 2002 to March 2003 at all 

Mint locations in accordance with generally accepted government 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 4 

auditing standards. A more detailed description of our objective, 

scope and methodology is provided in Appendix 1. 

Results in Brief 

We found that internal control weaknesses made the agency 

vulnerable to, and in some cases resulted in improper, wasteful, and 

questionable purchases. During our review, we found that the Mint: 

(1) did not comply with GAO/Treasury/Mint policies, directives and 

other sound management practices; (2) did not have adequate 

documentation to support all purchases; (3) made improper and 

questionable transactions; and (4) lacked a comprehensive training 

program. 

The Treasury Financial Manual (TFM) and Treasury Directive (TD) 

related to Government purchase cards are intended to provide 

guidance in establishing adequate internal controls. In developing their 

own internal purchase card policy, the Mint has not included many of 

these core requirements. 

In addition, we found that the Mint cardholders did not have adequate 

documentation to support all purchases. Specifically, of the 

transactions randomly selected, 23 percent were not recorded in a 

purchase log; 11 percent did not have a receipt; and 30 percent did 

not record when items were received. We recommend that Mint 

require receipts for all purchases, improve training, and hold both 

cardholders and approving officials accountable. 

We judgmentally selected a number of transactions that appeared to 

have contradicted Mint purchase policy. These improper transactions 

include split purchases, ammunition, and travel expenses. We also 

noted the purchase of gift cards and certain food items that are 

questionable.

Our report contains recommendations that will improve the controls 

and oversight of the purchase card program. These recommendations 

involve modifying Mint purchase card policy; improving Agency 

Program Coordinator’s oversight; developing enhanced training; and 

requiring improved documentation standards. 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 5 

In its written response, Mint management appreciated our 

observations and recommendations and further agreed that agencies 

should have adequate internal controls in place to protect the 

Government from fraud, waste, and abuse. The Mint also stated that 

since the period covered by our audit, it has strengthened the controls 

over its purchase card program through improved training and 

issuance of new policies regarding monitoring, tracking, and approval 

of transactions, obtaining receipts, use of a purchase card log, and 

maintenance of records. However, they took exception to references 

in our draft report that the Mint must follow the guidance and 

standards provided in TD 76-04, Government Purchase Card Program,

and GAO’s Principles of Appropriations Law. TD 76-04 establishes 

policy for the use of purchase cards and applies to all bureaus and 

offices, without exception. Likewise, the language in 31 USC 5136, 

and TD 12-11, Procurement Authority, which exempts the Mint’s 

program and operation-related procurement from provisions of law 

governing procurement or public contracts does not exempt them from 

internal Departmental directives that establish policy. 

Although GAO’s Principles of Appropriations Law is not binding, its 

guidance for the use of all public funds is persuasive. Our intent was 

not to create a debate as to whether or not the Mint must follow 

these criteria in managing its purchase card program, but rather to 

provide some widely accepted principles of sound management 

practices and standards of good internal controls. We believe that the 

issues, findings, and recommendations raised in this report could stand 

alone regardless of any criteria or best practices concept used, and 

appropriately, Mint management agreed with these recommendations 

and their written response provided their planned corrective actions. 

The complete text of Mint management’s response is provided as 

Appendix 3. 

Background

The Office of Management and Budget (OMB) established the 

Government Purchase Program in 1989 and requested that the 

Government Services Administration (GSA) administer the program 

under a single contract. As a result, the SmartPay® contract was 

created and competitively awarded to a few select commercial banks. 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 6 

The SmartPay® contract has three components: 1) Purchase, 2) Fleet, 

and 3) Travel in order to meet different procurement needs. Currently 

the Mint, along with other Treasury bureaus, has contracted with 

Citibank MasterCard. 

Once established, the Government purchase card program allows nonprocurement personnel to directly make purchases at or below the 

micro-purchase threshold (currently $2,500) without a competitive 

quotation if the cardholder determines that the price for the purchase 

is reasonable. In addition, the purchase card is encouraged as a 

payment mechanism for purchases up to $25,000 with proper 

authority and documentation. This approach is intended to streamline 

payment procedures by minimizing paperwork and administrative 

costs. 

Purchase Card Guidance

The Treasury Financial Manual (TFM) requires all offices and 

bureaus to have their own internal procedures for using purchase 

cards. The TFM also mandates specific processing and internal 

controls that must be in place prior to using the Government 

purchase card. Specifically, each office or bureau should: (1) 

establish a designated office to manage the program to insure that 

training is provided, maintain a current list of cardholders and 

approving officials, and perform an annual oversight review of the 

program; (2) provide for a written delegation of authority for each 

cardholder; (3) establish approved uses and limitations on the types 

of purchases and the dollar amounts; (4) establish procedures for 

timely submission of cardholder statements to the agency billing 

office; (5) establish procedures for maintaining security of the 

cards; (6) establish procedures for handling disputes and returned, 

refused, damaged, or unacceptable items and partial deliveries; and 

(7) establish card renewal procedures. 

The Treasury Department issued Treasury Directive 76-04, 

Government Purchase Card Program, in April 2000 (TD 76-04), to 

establish the purchase card policy for all Treasury bureaus. TD 76-

04 sets the micro-purchase limit at $2,500; instructs cardholders 

to make an effort to use small, disadvantaged and/or womenowned businesses; and states that training should include 

information on procurement regulations in the small business 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 7 

program and the environmental affirmative procurement program. 

Additional guidance concerning purchase cards is shown in 

Treasury Directive 78-01, Printing and Publishing Management 

Program, issued in February 2000 (TD 78-01). TD 78-01 prohibits 

the use of Government purchase cards to obtain printing and 

duplicating services, except for authorized purchases from the 

Government Printing Office (GPO) or purchases covered by waiver.

The Mint established its own purchase card policy with POLICY 

MEMO PROC-15, Purchase Cards issued September 20, 1999 with 

a subsequent revision on March 7, 2001. This policy differs in 

certain aspects from TD 76-04. The Mint’s micro-purchase limit is 

$5,000 (twice the amount set in TD 76-04) and the Mint policy 

does not restrict sources of procurement or encourage cardholders 

to purchase from small, disadvantaged and/or women-owned 

businesses. The justification that the Mint gives for this deviation is 

that The Mint Public Enterprise Fund exempts the Mint from the 

Federal Acquisition Regulation (FAR), which deals with acquisition 

law. Two other Mint policies that address purchase card use are

Memo DIR-10, Purchase of Food and Beverages, issued February 

14, 2001, which requires pre-approval for refreshments and 

luncheons, and Memo CFO-PROC-06-R, U.S. Mint Procurement 

Guidelines, issued December 3, 1999, which makes the purchase 

card the preferred purchase/payment method for commercial items 

valued up to $5,000 and states that competitive quotes are 

generally not sought for such purchases. The Mint’s Purchase 

Card Handbook incorporates these policies and serves as the 

primary training tool for cardholders and approving officials. 

GSA also provides training that is available to cardholders, 

approving officials, and program coordinators. For example, GSA’s 

Blueprint For Success: Purchase Card Oversight was prepared by a 

working group of agency program coordinators (APC) and provides 

general program guidance to APCs in performing their job 

responsibilities. GSA also offers SmartPay online training designed 

to help cardholders and Approving Officials (AOs) understand the 

program and their responsibilities. 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 8 

Purchase Card Program Participants Responsibilities 

Agency Program Coordinators (APC) are responsible for setting up 

and maintaining all accounts, developing internal program 

guidelines and procedures, ensuring that cardholders and approving 

officials receive proper training, and monitoring for fraud and 

abuse. Each agency must designate an APC to function as the 

agency’s primary liaison to the contract bank and to GSA. The 

Mint has one lead APC in Washington and four regional APCs in 

Philadelphia, West Point, Denver, and San Francisco. The 

Washington APC monitors the cardholders at Fort Knox. Each 

regional APC acts relatively independent from headquarters. 

Cardholders are responsible for understanding and complying with 

purchasing policies and procedures, maintaining records and 

receipts of all purchases, reconciling their purchases to their 

monthly statements, and preparing and submitting required 

property management forms for assets purchased. Each 

cardholder’s designated approving official is responsible for 

reviewing the cardholder’s transactions to assure they are properly 

documented, comply with purchasing policies, and are necessary 

for accomplishing the mission of the agency. Approving officials 

are also responsible for reporting fraudulent or improper use of the 

card. 

During FY 2002 the Mint had 268 cardholders who made 

approximately 12,000 purchase transactions valued at over $5.4 

million. As of September 30, 2002, 210 of approximately 2500 

Mint employees (8%) currently had purchase cards, most of which 

had single purchase limits of $5,000 (range between $200 and 

$100,000) and a monthly purchase limit between $200 and 

$540,000. 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 9 

Findings and Recommendations 

Finding 1 Inadequate Controls Leaves the Mint Vulnerable to 

Misuse and Potentially Fraudulent Purchase Card 

Transactions

The Mint did not incorporate certain TFM-mandated requirements 

into its own purchase card program. The reason for this condition 

may be that the Mint management does not believe it has to 

comply with Treasury purchase card guidance because of the 

Mint’s Public Enterprise Fund, which exempts the agency from 

procurement laws. However, we believe that this waiver does not 

exempt it from Treasury policies that were intended to provide 

adequate internal controls of the purchase card program. As a 

result, the risk of fraud, waste, and abuse is elevated. 

To determine whether the Mint adequately addressed the 

mandatory purchase card program requirements, we reviewed its 

purchase card program policies and procedures along with any local 

guidance; analyzed training information; and assessed reviews 

conducted at the various field locations. 

We found that the mandatory requirements were either not 

considered or adequately addressed. 

We found five areas in which the Mint does not adequately comply 

with the TFM or sound management control practices. 

Specifically, (1) Agency Program Coordinators do not consistently 

conduct adequate annual reviews and maintain adequate records; 

(2) approving official oversight is lacking; (3) unauthorized card 

sharing occurs; (4) written delegations of authority are not issued 

to all cardholders; and (5) purchase cards are not properly secured. 

The TFM prescribes program requirements that all Federal agencies 

must establish prior to use of the Government purchase card. 

Specific purchase card program controls mandated for all agencies 

include: (1) annual oversight reviews; (2) each agency is to 

maintain a current list of cardholders, their purchase limits, and 

approving officials; (3) cardholder statements are to be reviewed by 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 10 

the cardholder and approving official before being sent to the 

designated billing office for payment; (4) the cardholder is the only 

authorized user of the card; (5) written delegation of authority 

given to each cardholder; and (6) purchase cards are to be secured 

in a safe when not in use. TD 76-04 reiterates many of these 

mandates. 

Details of the conditions we found in the five mentioned areas 

follow. 

I. APC Oversight is Lacking

APCs are not adequately monitoring the purchase card program. 

Specifically, APCs are not (1) consistently conducting adequate 

annual reviews, and (2) maintaining adequate records. We believe 

the reason for these deficiencies is a lack of national oversight and 

accountability. 

1) Annual Reviews. The TFM states that the office managing the 

program will make assurances that there is an annual oversight 

review of the program. The purpose of a comprehensive review is 

to identify and correct program weaknesses. In an effort to assist 

agencies in achieving this criterion, GSA offers a guide on creating 

a standardized annual review policy. The guide is designed to 

document findings and identify problem areas. The Mint does not 

have program review guidelines and APCs do not consistently 

conduct adequate annual reviews. 

Three of the five APCs stated that they did not conduct annual 

reviews of the program. Of the two that said they did conduct 

annual reviews, only one could provide written evidence of the 

results. However, all APCs said that they conducted monthly or 

quarterly reviews by scanning purchase card transaction data 

looking for suspicious or unusual activity. Most APCs stated that if 

a questionable purchase is discovered, the cardholder was 

contacted and verbally counseled. At three of the locations, the 

APC also informed the approving official of an improper 

transaction. However at the other two locations, only the 

cardholder was notified. At one of these locations, the 2001 

annual review found that 21% of cardholders reviewed failed to 

follow Mint purchase card procedures (splitting purchases, lack of 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 11 

documentation, and an inappropriate purchase). Although these 

cardholders were counseled, there is no indication that their AO or 

supervisor was informed. Another location conducted a limited 

review, which found cardholders who did not follow Mint purchase 

card procedures. However, individual cardholders were not 

identified by name, making it difficult to discern accountability. 

During these informal reviews, APCs stated that they make notes 

of problem areas. While this method has some merit, it is not an 

acceptable substitute for a structured, documented annual review. 

The lack of written documentation of these informal monthly 

reviews makes verification difficult in addition to difficulties in 

tracking issues and following up on potentially abusive cardholders. 

Since there is no national oversight, APCs are not held accountable 

for conducting annual reviews. It is left to the discretion of each 

APC to take initiative and conduct their own review in whatever 

form they choose. As a result, for the calendar years 1999-2002, 

no location consistently conducted an annual review. The reviews 

conducted were considered insufficient because the scope and 

methodology was undefined; findings were vague; often no 

recommendations were given; and there is no indication that any 

follow-up was conducted. 

The effect of not conducting adequate annual reviews is that the 

program is not being adequately monitored. For example, there is 

no evidence that the Mint was reimbursed after a cardholder was 

counseled for purchasing flowers for a co-worker. 

2) Record Maintenance. We found a general lack of record 

maintenance. Some APCs could not easily determine all of the 

following information: cardholder name, approving official name, 

purchase limits (single, monthly, and convenience check limits), 

account number, date training was received, if any improper 

transactions or other deficiencies had occurred, follow up or 

disciplinary action taken, and finally, when an account was closed 

and the card destroyed. While the quality of record keeping varied 

among APCs, overall, improvements could be made. Specifically, 

improvements could be made in the areas of (a) cardholder files, (b)

cardholder and AO lists, and (c) closing of accounts. 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 12 

a) Cardholder Files. Generally, we were unable to determine 

when cardholders were trained; who their approving official was 

at different times; what their purchase limits were at different 

times; or if there were any improper transactions. This data 

was found in such ad hoc sources as training sign-in sheets, 

emails, and APC notes. The overall condition of these files 

makes monitoring the program more difficult. In addition, it is 

unclear if all verbal admonishments were documented. For 

example, one cardholder stated that she had accidentally used 

her government purchase card for personal use (Citgo, $13.45) 

and had reimbursed the Mint. Because the APC does not keep 

individual cardholder files, this occurrence may not have been 

recorded for follow-up and tracking purposes. The annual 

review conducted by the APC did not mention any verbal 

admonishments given during the year. In cases of multiple 

abuses, appropriate disciplinary action may be complicated by 

the lack of written documentation. With the inherent risk of 

purchase cards, a simple verbal admonishment of “Don’t do it 

again,” is insufficient. 

b) List of Cardholders and Approving Officials. The TFM requires 

agencies to maintain a current list of all cardholders and 

approving officials. We believe that the Mint should maintain its 

own lists of information to serve as a check against bank 

records. We found that the two largest locations relied 

exclusively on Citibank’s website to access cardholder and 

approving official data. An APC at another location had an 

independent list, but it was difficult to review because of 

illegible handwriting and lack of descriptive column headings. 

Having an accurate, easily retrievable and readable list is 

necessary for proper monitoring of the purchase card program. 

c) Closed Accounts. TD 76-04, Government Purchase Card 

Program, requires each agency to set up a system to control 

revocation of cards. While the Mint’s training materials state 

that purchase cards are to be returned to the APC if a 

cardholder leaves the Mint, there was no documentation on the 

destruction of any of the cards. In one case, a cardholder 

whose account had been closed was still in possession of her 

card. Another issue concerning closed accounts is record 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 13 

retention. We had difficulty locating records of cardholders 

who had left the Mint. At one location, purchase records of 

former Mint cardholders were often missing and the Accounting 

Office did not have any back up copies. At another location, 

cardholders had destroyed all their purchase card records prior 

to leaving the Mint, but copies were found in the Accounting 

Office. 

The apparent cause of these deficiencies is that there is a lack of 

emphasis on the purchase card program. APC duties are often 

considered collateral duties. Four of the five APCs stated that they 

are not rated on their purchase card duties during their annual 

evaluation. 

II. Approving official oversight is lacking

AOs are the first level of approving authority to ensure against 

improper purchases because they have detailed knowledge of the 

type of products and services the cardholders should be 

purchasing. This internal control is crucial and TD 76-04, 

Government Purchase Card Program, requires cardholder 

statements to be signed by the AO before being sent to the 

designated billing office. However, we found the Mint’s 

supervisory review process was inadequate for ensuring that 

purchases were proper. Specifically, we found numerous 

transactions that had the following control deficiencies: (1) no 

evidence of an AO signature; (2) approved transactions that lacked 

key supporting documents; (3) were not in compliance with one or 

more policies or procedures; or (4) were wasteful or unnecessary 

purchases. 

Although the Mint Purchase Card Handbook states that AOs will 

review and approve cardholder purchases, this was not 

consistently done. Specifically, in our statistically based sample of 

the 299 purchase and credit transactions, 24 percent lacked 

written evidence of AO review. (Washington had an error rate of 

69 percent). Based on the results of our review of these 

transactions, we estimate that 3,225 transactions during FY 2002 

lacked proper approval. We also randomly selected 66 transactions 

that were judged to have a higher susceptibility to being improper, 

and found that 51 percent of the dollar amount spent also lacked 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 14 

evidence of AO review. From this we can project, with 90 percent 

confidence, that over $400,000 in purchases were not properly 

approved. 

While Mint policy allows AOs to approve purchases under $100 

without a receipt, we found that 3 percent or 7 of the purchases 

reviewed were approved despite being in excess of $100 and 

lacking a receipt. These transactions ranged in dollar value from 

$112 to $9,059. The largest dollar items lacking receipts include: 

• Stanley Storage System $9,059 

• McMillan Bros. Electric $4,914 

One factor that might contribute to the Mint’s inadequate AO 

review is that there is no accountability for AOs that do not 

challenge improper purchases. For example, at one location where 

an APC had conducted an annual review and found improper 

transactions (split purchases) in two consecutive years, the 

cardholder was counseled but there was no mention of the AO 

having been given similar feedback. Because the AO review is the 

first, and sometimes only, line of review for detecting improper 

transactions, it is critical that AOs perform and document 

adequate, timely reviews. 

III. Unauthorized Card Sharing 

The TFM states, “The card bears the employee’s name and can be 

used only by that employee for official purchases...” We found 

that of the 132 cardholders asked nationwide, 30 percent told us 

that they allow others to use their card. 

The Washington APC gives cardholders the option of allowing 

others to use their purchase cards. The result is that 60 percent of 

Washington cardholders said that others use their card. All 

regional APCs stated that they disallowed card sharing. 

Despite the APCs’ disapproval, we found two locations where card 

sharing occurred. At one location 41 percent of cardholders stated 

they shared their cards, while at the other location 10 percent did 

so. 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 15 

In addition, we found that 2 percent of the cardholders stated that 

they allow their AO to use their card. As a result, there is no 

separation of duties. In one case, between the cardholder’s last 

day of work and the closing of the account, there were 11 

purchases totaling $3,191. We selected one of these transactions 

($600 at Radio Shack) for review and found no support documents 

nor any record of the purchaser’s identity. In another case, a 

cardholder allowed up to 13 staff members to use his card. 

Cardholders are responsible for purchases on their account. At the 

same time, some Mint business units expect cardholders to allow 

others to use their card if the cardholders are not available to make 

the purchase themselves. As a result, some cardholders expressed 

discomfort in allowing others to use their card. Cardholders should 

not be placed in such a compromising position. In addition, 

untrained persons should not be unofficially delegated purchasing 

authority. The practice of card sharing leaves the Mint vulnerable 

to abuse. 

IV. Lack of Written Delegation of Authority for Cardholders

A good system of internal controls, in addition to the TFM and TD 

76-04, require agencies to issue written delegation of authority to 

each cardholder. A typical written delegation of authority informs 

a cardholder of their single purchase limit, monthly purchase limit, 

and assigned AO, as well as impresses upon them the importance 

of their duties and responsibilities. Only one APC has issued a 

written delegation of authority for all of their cardholders. At 

another location, the APC has begun issuing designation letters to 

cardholders; however, at the time of our interviews, 45 percent of 

cardholders stated that they had not received a written delegation 

of authority. Nationwide, we found that of the 130 cardholders 

interviewed, 72 percent did not have written delegations of 

authority. We believe that this condition has resulted in a 

significant portion of cardholders not being aware of their purchase 

limits and designated AO. Of the 73 current cardholders 

interviewed, we found: 

• 16 percent stated that they did not know their single 

purchase limit, while another 16 percent gave incorrect 

responses. 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 16 

• 26 percent stated that they did not know their monthly 

purchase limit, while another 16 percent gave incorrect 

responses. 

• 20 percent did not accurately name their assigned AO. 

• The CitiBank Declined Authorization Report revealed 34 

occasions when a cardholder attempted to exceed their 

single purchase limit and 279 occasions when a cardholder 

attempted to exceed their monthly purchase limit. This 

finding is an indication that either cardholders do not know 

their limits or are not tracking their purchases well enough to 

know their available credit line. 

V. Lack of Security Over Purchase Cards

A basic tenet of a system of internal controls is to safeguard 

assets. In addition, the TFM states that purchase cards are to be 

“safeguarded in the same manner as cash” , which is later defined 

as “in a safe” in the Cashier’s Manual. Mint cardholders are 

instructed in the Purchase Card Handbook to keep their cards in a 

safe place. The Washington APC explained this to mean a locked 

drawer or on their person. 

Our review showed only 4 percent of the cardholders properly 

secured their purchase cards in a safe. Eleven percent had their 

purchase card stored in an unlocked drawer and thirty-three

percent kept their Government purchase card in their wallet or 

purse commingled with personal credit cards. Our review disclosed 

an instance of a Government purchase card being mistaken for a 

personal credit card and used for a personal purchase. We 

observed three purses containing Government purchase cards left 

unsecured within the office. One cardholder could not produce 

their card, explaining that they had left it at home. 

During FY 2002, we noted that one purchase card was stolen and 

one purchase card was lost. Dealing with lost or stolen cards, 

along with unintentional usage, increases the maintenance cost of 

the program and makes the Mint vulnerable to fraudulent charges. 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 17 

Recommendations

The Director of the Mint should: 

1. Establish annual review and record maintenance guidelines to 

each individual APC. 

Management Response 

The Mint agrees with the recommendation. By the end of January 

2004, the Mint’s Procurement Policy, OCFO-PROC-15, will be 

revised to mandate an annual review by each local purchase card 

coordinator and that proper documentation is maintained for each 

purchase. 

OIG Evaluation 

We believe this recommendation to have a management decision. 

2. Instruct each individual APC to contact and inform AOs of 

improper transactions and hold them accountable for their 

cardholders. Also have a policy in place requiring 

documentation of offense and establish disciplinary guidelines. 

Management Response 

The Mint agrees with the recommendation. By the end of January 

2004, the Mint’s Procurement Policy, OCFO-PROC-15, will be 

revised to identify appropriate disciplinary actions to be taken by 

Mint management. If the appropriate officials do not take action 

within 10 days of notification, the matter will be brought to the 

attention of the Mint’s Chief Financial Officer. 

OIG Evaluation 

We believe this recommendation to have a management decision. 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 18 

3. Prohibit card sharing. 

Management Response 

The Mint agrees with the recommendation. By the end of January 

2004, the Mint’s Procurement Policy, OCFO-PROC-15, will be 

revised to prohibit the sharing of purchase cards among employees. 

The revised policy will require that emergency purchase needs be 

brought to the attention of the servicing Procurement office for 

assistance. 

OIG Evaluation 

We believe this recommendation to have a management decision. 

4. Require that each cardholder acknowledge, in writing, that they 

have been informed of their responsibilities, purchase card 

limits, and the name of their approving official. 

Management Response 

The Mint agrees with the recommendation. The Mint plans to 

include a tear-out sheet in the 2004 Purchase Card Handbook to 

serve as a signatory audit trail. By signing this sheet, each 

cardholder will acknowledge he or she has been informed of his or 

her responsibilities, card limits, and the name of his or her 

approving official. The 2004 Handbook is scheduled for issuance 

and distribution in February 2004. 

OIG Evaluation 

We believe this recommendation to have a management decision. 

5. Train cardholders to store their purchase cards in a safe, or at 

the very least a locked drawer at work, when not in use. 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 19 

Management Response 

The Mint agrees with the recommendation. By the end of January 

2004, the Mint’s Procurement Policy, OCFO-PROC-15, will be 

revised to require purchase card holders to keep their purchase 

card in a locked drawer in their office when not in use. 

OIG Evaluation

We believe this recommendation to have a management decision. 

Finding 2 Purchase Card Transactions Are Not Properly Recorded 

and Documented

The ability to verify whether a purchase is proper is dependent on 

the availability of support documents. Verbal assurances are not 

adequate. Signed monthly statements, receipts, purchase logs, 

and written approved justifications for normally prohibited items are 

essential documents if assurances are to be given that a purchase 

card program has adequate controls. We found a number of areas 

where support documentation was lacking or could be improved. 

Specific areas of improvement include: (1) increased effort to retain 

itemized receipts; and (2) completion of purchase logs. 

Retention of Itemized Receipts. As a general rule, cardholders are 

to attach all receipts to their monthly statement before passing the 

support documents to their AO and ultimately the billing office. 

However, Mint policy states that AOs, APCs and the Office of 

Accounting have the discretion to approve and pay when receipts 

are not available and/or when discrepancies in billing are within a 

tolerance of 100 percent of purchase price, not to exceed $100. 

Because the receipt serves as verification of the items bought as 

listed in the purchase log, we believe the document should be 

required for all purchases, regardless of amount. Documents that 

do not list items purchased, such as a credit card slip, which only 

shows the merchant name and total amount spent, or a printout of 

a “shopping cart” list when purchasing online, do not provide the 

same level of documentation as to the propriety of a purchase as 

an itemized receipt. Ideally, the receipt should be signed by the 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 20 

cardholder to verify that all items were indeed received. We found 

that 11 percent of purchases in our statistical sample lacked 

receipts. Based on this condition, we can project that 1,478 

transactions did not have a receipt. The majority of these occurred 

in Washington where 26 percent of transactions lacked receipts. 

This same location did not require cardholders to pass their receipts 

on to the Accounting Office. Purchases within our statistical 

sample that did not have a receipt include: 

• Mid City Camera $89 

• Office Depot $112

• Wal-Mart $27 

We also discovered that of the 11 percent of purchases that lacked 

receipts, 64 percent of these transactions also did not have an AO 

signature. Some examples include: 

• Washington Music Center $4,009 

• Washington Spring Auto Repair $979 

• Rainbow II (Down payment for a fundraising outing-fishing 

trip for Mint employees) $300 

• Linens N Things $185 

• Oriental Trading Company $135 

• Radio Shack $54 

• World Market $51 

• Best Buy $31 

Purchase cards are vulnerable for abuse when cardholders are not 

held accountable by their AO to retain itemized receipts. 

Lack of Purchase Logs. Mint purchase card training materials that 

were developed by the Washington APC and a Citibank 

representative in 1999 instruct cardholders to keep a log of their 

purchases. Purchase logs are a best practice for purchase card 

programs because they are designed to capture essential 

information that may not be available elsewhere such as what was 

purchased, when it was ordered, and when it was received. 

During our review, we specifically looked to see if the date an item 

was received was recorded. We found that 30 percent or a 

projected 4,031 of purchase documents examined lacked this 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 21 

information. This condition was due in large part because of the 

lack of purchase logs. We found that 23 percent or a projected 

3,090 transactions in our statistical sample were not logged. Of 

those not logged, about 76 percent occurred in Washington. Two 

locations had all their purchases logged. 

Without documentation, one could not discern if, or when, a paid 

item was received. Most cardholders stated either they remember 

receiving the item, or if it were sent to the requestor, they would 

have been contacted if the item did not arrive. Without using logs, 

a comprehensive audit trail of purchased goods or services leaves 

the Mint vulnerable to fraud and abuse. 

Recommendations

The Director of the Mint should: 

6. Modify policies and procedures instructing cardholders to make 

every effort to obtain and retain original, itemized receipts, even 

if it is under $100. Cardholders should be instructed to sign 

receipts indicating that all items were received. AOs should not 

approve purchases exceeding $100 without a receipt. 

Management Response 

The Mint agrees with the recommendation. Mint-Wide Policy 

Memo CFO-ACCT-06/13/03 directs cardholders to obtain receipts 

for purchases and submit these receipts along with their purchase 

card log and bank statement to their approving official. By the end 

of January 2004, the Mint’s Procurement Policy, OCFO-PROC-15, 

will be revised to direct cardholders to obtain a receipt for all 

purchases, regardless of the dollar amount. In addition, the revised 

OCFO-PROC-15 will re-emphasize the requirement that cardholders 

maintain and provide copies of all supporting documentation to 

their respective approving official. 

OIG Evaluation

We believe this recommendation to have a management decision. 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 22 

7. Conduct periodic reviews to ensure that cardholders are 

completing their purchase logs in a timely manner. 

Management Response 

The Mint agrees with the recommendation. Mint-Wide Policy Memo 

CFO-ACCT-06/13/03 directs the approving official to review and 

confirm the accuracy of each cardholder’s purchase card log. In 

addition, by the end of January 2004, the Mint’s Procurement Policy, 

OCFO-PROC-15, will be revised to require the timely submission of the 

documentation required for payment to the Office of Accounting. 

OIG Evaluation 

We believe this recommendation to have a management decision. 

Finding 3 Improper and Questionable Purchases Are Not Identified 

and Addressed

Mint policy prohibits cardholders from purchasing certain items, 

including gifts for separating employees, travel expenses, gasoline 

or oil, weapons and ammunition. Split purchases are also 

specifically prohibited. In addition, food purchases are permitted 

only when granted pre-approval by an Associate Director or Plant 

Manager. Finally, using purchase cards to pay for printing and 

publishing costs is against Treasury policy. 

In our review of sampled transactions, we found a number of 

transactions that appear to have not complied with Mint or 

Treasury policy. While some cardholders claim to have been 

granted verbal permission for a restricted purchase, there was no 

documented approval. For example, one cardholder who had spent 

$115 at a Shoppers Grocery Store on food items did not have 

written pre-approval as required. 

We have categorized examples of these improper and/or 

questionable purchases: 

Splitting Purchases. Mint training materials specifically prohibit 

splitting purchases to enable a purchase amount to be within a 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 23 

cardholder’s limit. Despite this prohibition, we found 15 

purchases, totaling over $100,000 that we determined to be split 

purchases. Ten of these split purchases occurred in Philadelphia. 

Also at this same location, we found a trend where large purchases 

were split between two different cardholders in the same division. 

An example of a split purchase is $5,431 spent at Moviegift. The 

cardholder had a $3,500 single purchase limit. An attempt was 

made to process the entire transaction. After the transaction was 

automatically declined, the transaction was split into $3,121 and 

$2,310, which allowed the purchase to be processed. 

We believe that these split purchases may be caused by either poor

AO oversight or that AOs overlook the practice. This practice does 

not allow competitive quotes to be obtained for products and 

services exceeding $5000 as required. 

Food. Since February 2001, the Mint has required advance written 

approval by an Associate Director or Plant Manager for catered 

light refreshments or luncheons. The purpose of pre-approval is to 

give assurances that the purchase is proper. Mint Form 1013 is 

used to provide the purpose, details, attendees, and justification for 

the purchase. We examined Citibank transaction data and 

identified 215 food purchases worth over $51,000 by isolating 

food related merchants such as restaurants and grocery stores. 

We judgmentally selected and examined 50 food transactions, 

totaling over $25,000. Of these, 70 percent did not have the 

proper pre-approval. 

Examples of food purchases without pre-approval are Furins of 

Georgetown ($1,850) and Warner Theater Café ($638). 

In addition to not having written pre-approval, 14 percent of the 

food purchases reviewed also did not have a receipt and there was 

no AO signature. For example, a purchase at Margarita Man and 

two other purchases at Giant Food had no documentation. Also, 

three transactions totaling $638 at Warner Theater Café not only 

lacked documentation, but also the cardholder claimed to have no 

knowledge of the purchases. Another 6 percent had an AO 

signature but no receipt or written pre-approval. Examples include 

Casual Catering ($224) and Old City Pizza ($509), which occurred 

on a Sunday. 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 24 

Typically, food purchases for Government employees are restricted 

to limited situations. GAO’s Principles of Appropriation Law

outlines the conditions that must be met for food purchases to be 

considered acceptable. For example, refreshments at an awards 

ceremony or official reception may be permissible, but coffee for 

employees on a routine basis is not. Therefore, advance written 

approval does not necessarily make a food purchase proper. For 

example, we found written approval justifying pizza as, “To speed 

the recovery from blood drive.” The actual amount spent ($210) 

exceeded the approved amount by 68 percent. Another food 

reward for participation in a volunteer activity was catered 

refreshments from Furin’s of Georgetown ($335) for participants of 

the Combined Federal Campaign. 

Another case of where approved food purchases may have 

contradicted government restrictions is in the area of Equal 

Employment Opportunity (EEO) events. EEO objectives are to 

increase employee appreciation for the cultural heritage of differing 

ethnic groups. It has been determined that ethnic food samples 

(not meals) may be served if they serve an educational, and not 

merely entertainment, function. Therefore the purchase of nonalcoholic margaritas for Hispanic Heritage Month may be justified. 

However, the appropriateness of purchasing cake and punch for 

Disability Awareness Month that cost $61.72, and salads for 

Women’s History Month that cost $1,188.85 is not as clear and 

should be justified. 

 

Although funds spent on employee appreciation meals are 

allowable, collectively the amount spent appears excessive. Of the 

$26,000 in food purchases reviewed, $13,000 was spent at one 

location for performance achievement and appreciation related 

meals. One of these was an employee appreciation lunch for 410 

people costing $9,661. 

Gifts and Gift Certificates. We noted that GAO previously 

reviewed the Mint’s practice of giving complimentary specimens or 

commemorative coins and medals to customers whose orders had 

been mishandled and found it to be justified. But, we questioned 

the necessity of giving non-merit gifts to employees and the 

volume of gift cards given. We noted that the Mint’s Public 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 25 

Enterprise Fund statute, 31 USC 5136, generally states that 

provisions of law governing procurement or public contracts will 

not be applicable to the procurement of goods and services 

necessary for carrying out the Mint’s programs and operations. 

But, the practice of giving non-merit gifts to employees, in our 

opinion, is not justified as a good business practice, or as 

necessary for carrying out its programs or operations. 

Non-merit gifts to employees include: 

• Gift cards given to participants of the Combined Federal 

Campaign ($200). 

• Coffee mugs given to customer care staff after moving into 

the HQ office ($304). 

While merit based gift certificates may be permissible, such 

purchases may appear improper when given in large amounts. At 

one location, we found the following gifts and gift cards totaling 

$7,629: 

• Movie tickets and concession certificates ($5,431). 

• Gift cards (Blockbuster, Wherehouse Music & Target) for 

implementation of beneficial suggestions ($783). 

• Gift cards (Jamba Juice) for teamwork improvement ($500). 

• Incentive gifts to employees (Big Lots, World Market & 

Aaron Brothers) ($915). 

In addition to gift cards, all Mint employees received bonuses 

averaging $1,266 each for achieving performance goals in FY 

2002. 

Other gifts that may be improper are gifts to contractors. We 

identified $546 of these type transactions. CFO-PROC-10

authorizes the giving of Mint-related products to contractor staff 

not to exceed $100. CFO-PROC-10 states, The Mint’s unique 

Public Enterprise Fund and procurement authorities allow the giving 

of promotional items that promote and further the mission of the 

Mint. This justification does not meet the necessary expense 

doctrine. Being awarded the contract already rewards contractors. 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 26 

The Mint Purchase Card Handbook instructs cardholders not to 

purchase gifts for separating employees. Despite this prohibition, 

we found Mint proof sets, which totaled $36, being purchased for 

a retiring employee. 

Travel Expenses. We found five transactions that were business 

travel that should have been placed on an individual’s travel card. 

Three of these purchases were cardholders who were making 

travel arrangements for their supervisor. While one of these had 

the charge credited, the other two remained uncorrected.

Gasoline and Auto Repairs. We found 11 transactions involving 

prohibited gasoline and oil purchases. Further inquiries indicated 

that these purchases were for legitimate purposes (gas for 

maintenance equipment, rental vehicles used in a non-travel status 

capacity, and when a vehicle’s Fleet card malfunctioned). 

However, we also noted 11 auto repair transactions that 

cardholders should have charged to the vehicles’ Fleet card. We 

reviewed five of these transactions totaling $2,146 in Washington 

and none had documentation. Therefore, we could not determine 

what vehicles were repaired or what the chargers were for. 

Ammunition. A receipt from Gilbert Indoor Range lists ammunition 

as being purchased. Five other purchases from shooting ranges or 

firearm vendors lack itemized receipts, which indicate the 

possibility of more improper ammunition purchases. A $1,123 

purchase at Sigarms, a weapons vendor, did not have an itemized 

receipt.

Improper Printing Charges. Treasury Directive 78-01, Printing and 

Publishing Management Program, prohibits the use of the 

Government purchase card to obtain printing and duplicating 

services, except for authorized purchases from the Government 

Printing Office (GPO) or purchases covered by a waiver. We 

identified over $72,000 in printing and duplicating services 

expenditures with no evidence that the Mint had obtained waivers. 

Of this amount, cardholders outside of the printing and graphics 

and procurement offices (both have contracting authority for 

printing purchases) spent approximately $45,000. By using a 

purchase card to acquire printing and duplicating services, the Mint 

is not complying with Treasury policy. Also, cardholders who 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 27 

independently select their own source for printing services may not 

be achieving economies of scale. 

Recommendation

The Director of the Mint should: 

8. Re-emphasize the duties and responsibilities of AOs and APCs 

with particular attention to the various restrictions and 

prohibitions against improper purchase transactions like gifts to 

nonemployees. 

Management Response 

The Mint agrees with the recommendation. The Mint APC issues a 

Purchase Card Handbook to each cardholder annually. The 

Handbook serves as a guide and references agency-wide and other 

policies regarding proper use of the purchase card. The 2004 

Handbook is scheduled for issuance and distribution in February 

2004. In addition, the Mint no longer gives promotional items to 

contractors or their employees. 

OIG Evaluation 

We believe this recommendation to have a management decision. 

In the draft report we referenced GAO’s Principles of 

Appropriations Law in the context that revolving funds should be 

treated as appropriated funds and, as such, expenditures should be 

justified and contribute to the Mint’s performance. Although 

GAO’s Principles of Appropriations Law is not binding on executive 

branch agencies, the guidance found in these principles reflect 

good business practices for any program or operation. 

Finding 4 The Training Program Needs To Be Enhanced 

APCs are responsible for ensuring that participants of the purchase 

card program are properly trained. The Washington APC states 

when she issues a new card, she meets with the cardholder, gives 

them the Mint Purchase Card Handbook, and tells them to read the 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 28 

material. This training may not be adequate for all cardholders. Of 

the cardholders interviewed in Washington, 30 percent stated that 

they felt that the training was inadequate. Approving Official 

training appeared less clear. While all current AOs recently 

received refresher training, it is not clear whether these individuals 

had any basic training before then. We believe incorporating many 

of the practices identified in the online GSA SmartPay training 

module could strengthen the Mint’s purchase card program. This 

online training program was compared to the Mint’s Purchase Card 

Handbook. The SmartPay online training included many important 

internal controls that the Mint Handbook lacks, including:

 

1) Stresses that the only authorized user is the cardholder. 

2) Outlines cardholder responsibilities, including maintaining a 

 purchase log. 

3) Addresses standards of ethical conduct. 

4) Assists cardholders in avoiding state taxes by referring them to 

 a website with each state’s tax exemption letter. 

5) When placing orders by phone, fax, or online, cardholders are 

 told to make sure an itemized shipping document or invoice is 

 included in the shipment. 

6) The date an item is received is to be recorded in a log. 

7) States cardholders may be liable for unapproved purchases. 

8) States that cardholders should reconcile credits back to the 

 original invoice. 

9) States “neither permanent nor temporary single and monthly 

 purchase card dollar limits can ever be higher than a 

 cardholder’s Delegation of Authority.”

The Washington APC says she spends 5% of her time managing 

the program and believes that the program is well managed. 

Recommendation

The Director of the Mint should: 

9. Develop more comprehensive training materials and written 

 guidance for all those participants in the Purchase Card 

 Program. Once developed, Headquarters personnel should 

 ensure consistent compliance nationwide. 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 29 

Management Response 

The Mint agrees with the recommendation. The revision to OCFOPROC-15, due by the end of January 2004, will provide additional 

guidance. The revised Purchase Card Handbook will be distributed 

in February 2004. Training issues are being re-evaluated in light of 

issuance of these new materials, and an enhanced training program 

is expected to result from this effort. 

OIG Evaluation 

We believe this recommendation to have a management decision. 

In its response, the Mint did not provide a planned completion date 

for the corrective action relating to an enhanced training program. 

We also identified additional transactions and other issues for 

management attention that are listed in Appendix 2. We believe 

the recommendations stated in this report would satisfactorily 

correct these weak controls; therefore, we have not recommended 

additional corrective actions related to these deficiencies. 

Conclusion 

Although purchase card programs provide efficiency and savings to 

the Government, they are considered high-risk because there is no 

pre-approval for making a micro-purchase and the Government is 

liable for payment. Purchase cards allow the same individual to 

order, obligate funds, and receive goods and services. 

Therefore, fraud, abuse and improper transactions may occur if not 

carefully monitored. An effective purchase card program depends 

on a good system of controls, adequate training, and management 

oversight. 

* * * * * * 
Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 30 

We would like to extend our appreciation for the cooperation and 

courtesies extended to our staff during the review. If you have any 

questions, please contact me at (202) 927-5904 or Michael Sinko, 

Audit Manager, at (202) 927-5775. 

Thomas E. Byrnes 

Director of Manufacturing Audits 
Appendix 1 

Objective, Scope, and Methodology 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 31 

Our review objective was to determine if the Mint had adequate 

internal controls over its Government purchase card program. To 

achieve our objective, we reviewed applicable laws, regulations, 

directives, and manuals dealing with the Government purchase 

card program. We interviewed key Treasury Departmental Offices 

and GSA personnel involved in the procurement process. We 

gained access to CitiDirect, Citibank’s online database, to review 

transactions and cardholder data. We also conducted interviews 

with Mint purchase card coordinators, cardholders, approving 

officials and accounting staff. We conducted site visits to all six 

Mint locations, which included 

• Headquarters, Washington, D.C., 

• Fort Knox, Kentucky, 

• San Francisco, California, 

• Denver, Colorado, 

• Philadelphia, Pennsylvania, and 

• West Point, New York 

The scope of our review was all individual transactions posted 

during FY 2002 (October 1, 2001 through September 30, 2002) 

thru CitiDirect. The universe consisted of 13,436 transactions, 

with $5.4 million in purchases. 

To test internal controls over transactions and determine whether 

expenditures were made in compliance with policies and 

procedures, were reasonable, and had a valid government need, we 

selected transactions using three different methods. For each 

method of selection, we met with the cardholder or in cases of 

where the cardholder had left the Mint, the holder of the purchase 

card records. We requested and reviewed related supporting 

documentation. The three methods are as follows: 

1) Statistical sampling. We drew a stratified random (statistical) 

sample of 299 transactions from the total transaction universe of 

13,436 for our tests. The results have a sampling precision of 5.6 

percent at 95 percent level of confidence. The total value of the 

sample was $133,000. We tested for specific control features, 

such as segregation of duties, evidence of approving official 
Appendix 1 

Objective, Scope, and Methodology 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 32 

review, and adequacy of supporting documentation; whether the 

purchase complied with purchasing policies; and whether the 

purchases appeared reasonable and had a valid government need. 

Results from the statistical sample were projected to the population 

of Mint purchase card transactions for FY 2002. 

2) Judgmental sampling. We also selected transactions on a 

nonstatistical basis to allow us to identify transactions that 

appeared to have a higher risk of being improper, although the 

results cannot be projected to the overall population of purchases. 

To select these transactions, we first performed data mining on FY 

2002 transactions to identify purchases from certain vendors that 

would be more likely to be selling unauthorized or personal use 

item such as food, travel, automotive, florists, jewelers, sporting 

goods, discount stores, and medical-related. This resulted in 2013 

transactions identified, from which we then randomly selected, on 

a judgmental basis, 66 transactions totaling $750,000 to test 

whether these purchases were made for questionable government 

needs, and whether they complied with selected purchasing 

policies and procedures. The test results are valid within a 10 

percent margin of error at 90 percent confidence level. 

3) Data mining. We performed data mining of Citibank’s database 

of the Mint’s FY 2002 purchase card transactions for indicators of 

potential noncompliance with established policies and procedures. 

Specifically, we looked for purchases that exceeded cardholder or 

convenience check spending limits, split purchases, cardholders 

with multiple purchase cards, transactions occurring after the 

cardholder had left the Mint, and vendors that were suspect for 

selling personal use items (e.g. Linens n Things). We select 236 of 

these transactions totaling over $165,000 for review. 
Appendix 1 

Objective, Scope, and Methodology 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 33 

Finally, we physically inventoried certain purchases at each location 

to determine whether goods and services were received and used 

for government purposes. 

We conducted our audit between September 2002 and March 

2003 in accordance with generally accepted government auditing 

standards. 
Appendix 2 

Additional Transactions and Other Issues for Management Attention 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 34 

Weak Controls in the Office of Protection

During our review, we noted a high percentage of missing 

documents, lack of AO signatures and questionable purchases 

within the Office of Protection. None of the cardholder statements 

in the Headquarters Office of Protection were signed by the AO. 

Other factors that indicate poor internal controls over purchase 

cards in the Office of Protection include: 

• 58 percent of Washington’s purchases reviewed in the 

statistical sample did not have a receipt (the national average 

was 11 percent). 

• None of the Protection cardholders in Washington had 

purchase logs. 

• 42 percent of transactions reviewed in Washington did not 

have a monthly statement. 

• The APC discovered an improper purchase of an outdoor grill 

that was placed on the Protection patio. The union 

reimbursed the Mint and the equipment was removed. 

• Eleven auto repair payments (totaling $3,639) that should 

have been placed on the vehicle’s Fleet card were not only 

paid for with a purchase card but also had no support 

documents. 

• A Protection cardholder held a hotel room for a Mint official 

with her purchase card; was charged for the room; and later 

had to have the charge removed from her account. 
Appendix 2 

Additional Transactions and Other Issues for Management Attention 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 35 

• One cardholder, who had difficulty finding support 

documents, stated that someone else in her office actually 

did the bulk of the purchasing using her purchase card and 

then expressed that she did not want the responsibility. 

• A conference table was purchased for $1,022 without 

written authorization. Mint policy states that only 

cardholders in Procurement or the Office of Business 

Alignment (OBA) may purchase furniture. The cardholder 

says they were given verbal permission since the purchase 

was under $2500. 

• IT equipment costing $584 was purchased. The cardholder 

says the Office of Information Technology (OIT) gave them 

verbal permission; however, we could not identify any 

written authorization. Mint policy states that only 

Procurement and OIT may purchase IT equipment. 

• A sporting goods store charge, which the cardholder says 

were registration fees for two Fort Knox officers to 

participate in the Police Olympics ($204), had no supporting 

documentation. 

• The officer who had purchased ammunition stated that she 

was unaware of any restrictions on that type of purchase. 

• Officers attended a lunch at a restaurant for a law 

enforcement meeting ($131). The Mint food purchase policy 

does not extend to providing food or drink in restaurants. 

While this purchase occurred at West Point, a Mint official in 

Washington directed the meeting. 
Appendix 2 

Additional Transactions and Other Issues for Management Attention 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 36 

In addition to the above issues, we questioned the payment of 

membership fees/dues. Appropriated funds may not be used to 

pay membership fees of an employee in a society or association, 

regardless of the resulting benefit to the agency. This prohibition 

does not apply if the fee is a necessary cost directly related to 

training or if the membership is in the name of the agency. 

Examples of membership fees/dues paid within the Office of 

Protection are International Association of Law Enforcement ($50), 

International Association of Chiefs of Police ($100) and Rocky 

Mountain Tactical ($50). In the latter example, a convenience 

check was made out to the employee for reimbursement. 

The cause of these deficiencies, in our opinion, is poor oversight by 

the AO, and indicates a need for increased training of Office of 

Protection cardholders and the AO, as well as increased oversight 

by the APC to ensure these deficiencies do not reoccur. 

Support Documents Not Sent to the Accounting Office 

A system of good internal controls, which is mandated in the TFM, 

requires cardholders’ statements to be submitted to the designated 

billing office within a time frame that allows them to process and 

pay the consolidated invoice. While the Prompt Payment Act 

permits payment of the consolidated invoice in a timely manner, 

even if all cardholder statements are not received, this should be 

the exception not the norm. We found that Mint headquarters did 

not require the Accounting Office to receive any signed cardholder 

statements or support documents during FY 2002. As a result, 

payments were made without adequate assurance that they were 

proper. 
Appendix 2 

Additional Transactions and Other Issues for Management Attention 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 37 

On December 10, 2001, Treasury Office of Procurement issued 

AMAR 02-01-Mint, which cited the Mint for not properly tracking 

purchase card purchases to the appropriate accounts. It 

recommended that the Accounting Office notify the APC on a 

monthly basis about cardholder statements that are not received in 

a timely manner. The report recommended that the purchase card 

policy PROC-15 be amended to require monthly review and 

approval of all card statements by the AO. Not only has PROC-15 

not been amended, but, as stated earlier, the Accounting Office did 

not receive any cardholder statements for FY 2002 at this location. 

However in July 2002, the Mint issued a standard operating 

procedure (SOP) that complies with the Treasury Office of 

Procurement’s recommendation. The SOP gives cardholders five 

business days once statements are available online to submit their 

signed statements, purchase logs and receipts to the Accounting 

Office. Cardholders who fail to submit require documents in a 

timely manner will have their cards revoked. 

Working Lunches 

According to GAO’s Principles of Appropriation Law, furnishing 

free food to employees at their official duty station, even when 

they are working under unusual circumstances, is not a permissible 

practice. Furthermore, furnishing free food might violate 5 USC 

5536, which prohibits an employee from receiving compensation in 

addition to the pay and allowances fixed by law. The National 

Partnership Council (NPC) is comprised of Mint Directors, Plant 

Managers and Union Presidents and meets periodically throughout 

the year. Food costs incurred for these meetings approximate 

$400 for working lunches and $200 for refreshments. The Council 

participants are either on travel and have per diem to pay for food, 

or are at their own duty station where they are responsible for their 

own meals. 
Appendix 2 

Additional Transactions and Other Issues for Management Attention 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 38 

Photo Developing

The general rule is that photographs of individual government 

employees are a personal expense not chargeable to appropriated 

funds in the absence of specific statutory authority. However, the 

expense is permitted where it clearly constitutes a means of 

affecting a proper agency function and disallowed where adequate 

justification does not exist. For example, photos taken at events 

and distributed as mementos are disallowed as personal gifts. 

When we isolated photo-developing transactions using the 

merchant category code, we found nearly $5,700 worth of 

purchases. Of these, over $2,000 were at Tech World One Hour 

Photo. The actual amount spent on photo development is higher 

because these charges are also classified under other less specific 

merchant types such as drug stores. 
Appendix 3 

Management Response 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 39 
Appendix 3 

Management Response 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 40 
Appendix 3 

Management Response 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 41 
Appendix 3 

Management Response 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 42 
Appendix 3 

Management Response 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 43 
Appendix 3 

Management Response 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 44 
Appendix 4 

Major Contributors To The Report 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 45 

Thomas E. Byrnes, Director, Manufacturing Audits 

William S. Schroeder, Audit Manager 

Michael Sinko, Audit Manager 

Tammy Stephens, Auditor 

Robert E. Ferrara, Auditor 

Gale H. Dwyer, Auditor 

Christopher Picollo, Auditor 
Appendix 5 

Report Distribution 

Control Weaknesses and Poor Management Oversight in the Mint’s 

Purchase Card Program (OIG-04-029) 

Page 46 

The Department of the Treasury

 Office of Strategic Planning and Evaluations 

 Office of Accounting and Internal Control 

 Office of Budget 

The U.S. Mint

 Director 

Associate Director/Chief Financial Officer 

Deputy Associate Director/Deputy CFO 

 Assistant Director for Procurement 

 Audit Liaison

Office of Management and Budget

 OIG Budget Examiner