Audit Report 

OIG-04-014 

FINANCIAL MANAGEMENT: 

Purchase Card Internal Control Weaknesses Expose FMS 

Headquarters to Improper and Questionable Purchases 

December 19, 2003 

Office of 

Inspector General 

Department of the Treasury
Contents 

Audit Report.................................................................................................. 2 

 Results in Brief............................................................................................. 3 

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

Findings and Recommendations ..................................................................... 6 

 Enhancements to Purchase Card Handbook Needed ..................................... 6 

 Recommendations.................................................................................... 9 

Aspects of the Purchase Card Program Warrant Further Evaluation .............. 11 

 Recommendations.................................................................................. 15 

 Improper Purchases................................................................................. 17 

 Recommendations................................................................................... 24 

Appendices

 Appendix 1: Objectives, Scope, and Methodology ...................................... 27 

Appendix 2: Possible Split Purchases and Purchases Over the Single 

 Purchase Limit...................................................................... 29 

 Appendix 3: Management Comments........................................................ 38 

 Appendix 4: Major Contributors To This Report.......................................... 41 

 Appendix 5: Report Distribution................................................................ 42 

Abbreviations

 AO Approving Official 

 APC Agency Program Coordinator 

 FAR Federal Acquisition Register 

 FMS Financial Management Service 

 MCC Merchant Category Code 

 OIG Office of Inspector General 

 TD Treasury Directive 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 1 
OIG Audit 

Report

The Department of the Treasury 

Office of Inspector General 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 2 

 December 19, 2003 

 Richard L. Gregg 

 Commissioner 

 Financial Management Service 

This report covers the use of purchase cards at the Financial 

Management Service (FMS). The audit was limited to purchase 

card usage at FMS Headquarters in Washington DC during fiscal 

year (FY) 2002, as 80% of FMS purchase cards were held by 

headquarters personnel. Purchase card usage at FMS Regional 

Financial Centers will be the subject of a separate audit. FMS 

Headquarters’ purchase card activity totaled more than 6,300 

transactions for nearly $4 million in FY 2002. These transactions 

involved 148 cardholders or about 10% of headquarters 

employees. 

The objective of the audit was to assess whether FMS had 

adequate internal controls over the Government Purchase Card 

program to ensure that purchase cards were used in compliance 

with policy, for their intended purpose, and that FMS was 

achieving maximum benefit from the program. 

From the 6,300 purchases and return transactions, we sampled for 

testing a total of 226 purchase transactions totaling $182,000 by 

73 cardholders. We tested the sampled transactions for 

compliance with FMS’ purchase card polices and procedures; 

interviewed the cardholders and some of their approving officials; 

and also reviewed any required supporting documentation, such as 

monthly card statements, invoices, and purchase authorizations. 

In a few instances, sampled transactions were expanded to cover 

additional transactions due to what appeared to be material 

deviations from prescribed polices and procedures. A detailed 

discussion of the audit objectives, scope and methodology is 

provided in Appendix 1. 
Results in Brief

Internal control weaknesses in the Purchase Card program expose 

FMS to, and in some case resulted in, improper and questionable 

purchases. For example, FMS lacked fundamental separation of 

duties to prevent cardholders from performing incompatible 

functions. Consequently, some cardholders directed all aspects of 

a purchase card transaction from initiating purchases through 

approving final payment. We also found extensive deviations from 

prescribed policies and procedures that occurred throughout the

purchase card process, beginning with the authorizing official level 

and extending to the cardholders and those responsible for post 

reviews. Specifically, procedural deviations included purchase 

authorizations, record keeping, monthly statement approvals, 

account reconciliations and periodic reviews. Of the total 226 

sampled purchase card transactions totaling $182,000, 164 (73%) 

totaling $137,000 (75%) contained at least one or more deviations 

from policies and procedures. 

Furthermore, existing controls and procedures that could be 

reasonably expected to prevent or detect deviations from 

prescribed policies and procedures were often not followed. In 

50% of the transactions that we reviewed the authorizing officials 

did not adequately oversee or monitor purchases, billing 

reconciliations, and payment. For example, many did not review 

monthly reconciliations of card statements; program managers did 

not sufficiently utilize the issuing bank’s commodity and merchant 

blocking features; purchase limits were seldom if ever reviewed, 

despite over 31 percent of all cardholders never charging more

than half their monthly purchase limit. 

While the purchase card facilitates small and recurring purchases,

existing controls do not sufficiently mitigate the risk of nonadherence to federal acquisition regulations. We found card 

purchases of construction services exceeding the $2,000 limit, 

employee awards ceremony expenditures exceeding the $250 limit 

for food, and split purchases that circumvented the $2,500 single 

purchase limit. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 3 
Finally, inventory controls over nonexpendable items obtained with 

purchase cards were not always followed. Out of a sample of 29 

nonexpendable items amounting to $35,000, FMS’ inventory 

system could not account for 2 (7%) items worth approximately 

$2,000 (6%). An additional 5 items were not entered in the 

inventory system until shortly after our inquiry. Contrary to 

prescribed procedures, the FMS Property Branch had not been 

made aware of the purchases for entry into the property tracking 

system. 

We attributed these internal control weaknesses and deviations to 

FMS policies and procedures that were unclear or contained gaps,

coupled with insufficient staffing to oversee the Purchase Card 

program. Staffing has increased since we started the audit, but 

previously only a single program coordinator had been responsible 

for overseeing the 148 cardholders and 6,300 transactions. 

We make several recommendations to improve FMS’ internal 

control weaknesses, including developing a strategy for achieving 

compliance with departmental and agency purchase card policies 

and procedures, clarifying guidance to FMS’ policies and 

procedures, ensuring effective oversight, and providing additional 

cardholder training on changes to policies and procedures. 

In response to our draft report, FMS concurred with the 

recommendations and had either already implemented most of the 

recommendations or had planned for the remaining actions to be 

addressed in a subsequent Corrective Action Plan. These actions 

included increased staffing; implementing CitiDirect to enhance 

controls, such as independent supervisory approvals and 

monitoring; canceling purchase cards for the holders with minimum 

usage; issuing a revised Purchase Card Policy; reviewing the OIG’s 

reported split purchase transactions and began to take steps to 

implement new procurement strategies to address split purchases. 

We believe that FMS’ implemented and planned management 

corrective actions collectively address our findings and 

recommendations if properly implemented. Indeed, FMS has 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 4 
committed to and accomplished much to strengthen their Purchase 

Card Program. The complete text of FMS’ response has been 

incorporated in its entirety in Appendix 3. 

Background

The Office of Management and Budget established the Government 

Purchase Card program in 1989 as a means to acquire goods and 

services and to streamline the acquisition of small dollar 

requirements allowing non-procurement personnel to buy goods 

and services directly. The purchase card operates similar to a 

personal credit card but can only be used for Official Government 

business. In 1998, the Department of Treasury selected CitiBank 

to provide all card services – purchase card, travel card, and fleet 

card – to all its bureaus. 

Treasury issued Treasury Directive (TD) 76-04 to provide bureaus 

guidance on the use of purchase cards. TD 76-04 states that the 

card is the preferable method for making micro-purchases up to

$2,500. It also requires agencies, such as FMS, to establish 

approved uses and limitations on the types of purchases and 

spending limits. The Directive also requires cardholder training 

prior to receiving a purchase card. 

Along with the Directive, FMS developed a handbook, “FMS 

Purchase Card Handbook,” dated March 5, 2000, outlining the 

policies and procedures applicable to the Purchase Card program. 

According to the Handbook, Micro-purchases are exempt from

most Federal Acquisition Regulation requirements (FAR), such as 

obtaining competitive quotes if the cardholder determines that a 

price is reasonable. 

In November 2002 FMS conducted a partial internal review of the 

Purchase Card program in anticipation of our audit. The problems 

identified were similar to the control weaknesses we found in our 

audit. FMS’ review included an overview of the program with 

management interviews and a review of program regulations and 

internal policies and procedures. However, transaction testing was 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 5 
 

limited, as the agency suspended testing when they received 

notification of our audit. Our audit also covered control activities 

with an expanded review of transactions and cardholder records. 

Accordingly, we were able to comment specifically on exceptions 

to policies and procedures, such as purchases exceeding the single 

purchase limit and split purchases. We also covered purchase 

limits relative to card usage and the resulting potential exposure to 

fraud, waste and abuse. 

Findings and Recommendations 

Finding 1 Enhancements to Purchase Card Handbook Needed 

 

Our transaction testing and review of FMS’s prescribed policies and 

procedures indicated that enhancements are needed, and that 

management had not sufficiently emphasized internal control 

activities. Internal control activities are the policies, procedures, 

techniques, and mechanisms that enforce management’s 

directives.1

 Although the Purchase Card program provides 

efficiencies in transactions processing for small and recurring 

purchases, observed procedural and control weaknesses expose 

FMS to potentially fraudulent, improper, and abusive purchases. 

In testing transactions for compliance, we identified internal control 

weaknesses involving FMS policies and procedures that were 

unclear or contained gaps. One major control weakness involved 

the lack of adequate separation of duties to prevent cardholders

from performing incompatible functions. We found 50% of the 

card transactions that we reviewed were approved by an 

Approving Official (AO) while the other 50% were not. 

Apparently, some managers saw the need for an approval policy 

and implemented it informally. Further, 14 of the 148 cardholders 

directed all aspects of a purchase card transaction from initiating 

1 According to GAO’s Standards for Internal Control in the Federal Government (November 1999, GAO/AIMD-00-21.3.1), control 

activities are one of five standards for internal control. lnternal control activities help ensure that employees carry out 

management directives. The control activities should effectively and efficiently accomplish agency control objectives. They 

include a wide range of diverse activities such as approvals, authorizations, verifications, reconciliations, and performance 

reviews. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 6 
purchases through approving final payment. Separation of duties 

was not implemented for these cardholders, who also had authority 

to authorize their own purchases. These cardholders could initiate, 

approve and place their own orders, pay with the purchase card, 

ship ordered goods directly to themselves and record receipt of the 

goods. To reduce the risk of error or abuse, individuals should 

generally be prohibited from controlling key aspects of a single 

purchase transaction. 

Another observed control weakness involved purchase 

authorizations made by a funding/budget official rather than the 

unit manager or a supervisor authorized to approve purchases. 

Specifically, a budget official would verify that funding was 

available for the purchase, however a supervisory official’s 

approval was not required before the purchase was made. Hence, 

in many instances cardholders’ purchases were approved based 

only on budget approvals that funding had been available and not 

whether it was an authorized or previously planned purchase by the 

unit manager or supervisor. We attribute this internal control gap 

to the specific omission within FMS’ Purchase Card Handbook. 

The Handbook did not have a prescribed procedure requiring that

purchases be approved by an AO. 

Also, the Handbook did not have a requirement for AOs to validate 

purchases or sign off on the reconciliation process. After the 

cardholder has verified that all transactions recorded on the 

Purchase Card Log agree with the items listed on the bank’s 

monthly card statement and that all charges are proper, the billing 

process should call for an AO to conduct an independent review of 

the information for propriety before signing the reconciliation and 

approving payment. 

We interviewed 73 cardholders, tested 226 transactions, and as 

shown in Table 1 we found deviations from prescribed policies and 

procedures occurring throughout the purchase card process, 

beginning with the authorizing official level and extending to the 

cardholders and those responsible for post reviews. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 7 
Table 1 

Testing of Purchase Card Transactions 

Control 

Activity 

What We Looked For 

 in Cardholder Files 

Deviations 

from Policies 

and 

Procedures 

Date Item 

Received 

Purchase Card Log information and/or

packing slips showing that goods 

ordered were in fact received. 

71 

Advance 

Purchase

Authorization 

Approving Official’s signature or email 

authorizing the purchase. 

48 

Purchase Log 

Preparation 

Purchase Card Log 24 

Purchase

Receipt on File 

Vendor invoice 38 

Bank 

Statement on 

File 

Bank Statements of Account 1 

Bank 

Statement 

Approved

Bank Statements of Account with: 

1) cardholder’s signature verifying 

that charges were correct and 

account was reconciled and 

2) Approving Official’s signature

verifying that charges are 

approved, account is reconciled 

and invoice is certified for 

payment. 

114 

Bank Account 

Reconciled 

Entries on Purchase Card Log agree 

with charges on bank Statement of 

Account 

25 

At Least One 

Deviation All of the above 164 

Source: Cardholders’ Records 

The high percentage of deviations, as well as information obtained 

from cardholder interviews, indicates that the responsible 

cardholders and managers did not effectively implement internal

controls. We found that 164 (73%) of 226 transactions totaling 

$137,000 (75%) of $182,000, contained at least one deviation 

from FMS’ policies and procedures. In terms of cardholders, 60 

(82%) of 73 in our sample were responsible for transactions with 

deviations. We believe the high frequency of deviations was due 

to a lack of emphasis by unit managers to adhere to purchase card 

policies and procedures. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 8 
The most prevalent deviation entailed the AO or supervisor’s 

review and approval of the monthly bank statement reconciliation 

prior to payment. We found an inconsistency in the work 

performed by AOs. In 114 (50%) of 226 transactions we 

reviewed, AOs did not conduct the necessary review and 

certification. This involved 43 (59%) of sampled cardholders. We 

believe this inconsistency can be attributed to FMS’ Purchase Card 

Handbook not clearly spelling out the AO’s responsibility for 

reviewing and approving the relevant documentation prior to 

payment. It should be noted that 28 AOs took it upon themselves 

to complete this fundamental control process despite the absence 

of clear prescribed guidance. 

We believe that FMS is vulnerable to error and abuse over the use 

of purchase cards, given the observed frequency of deviations from 

FMS policies and procedures, coupled with the internal control

gaps within the Purchase Card Handbook. 

Recommendations 

FMS needs to pay greater attention to processes and controls to

reduce the risk of card abuse. Accordingly, the FMS Commissioner 

needs to: 

1. Assess whether the internal controls in the Purchase Card 

program, such as separation of duties and supervisory 

reviews, are adequate to prevent and detect fraud, waste 

and abuse. 

Management Response and OIG Comments

FMS concurred, and has undertaken a number of reviews 

and analysis addressing many of the internal control issues 

raised in the report. As reflected by either the implemented 

or planned corrective actions, some control assessments 

were completed prior to our draft report, and others were 

ongoing at the time. FMS has also committed to any 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 9 
remaining ones as part of their plans for a detailed corrective 

action plan as deemed appropriate. 

With respect to the separation of duties and supervisory 

review issues, FMS has enhanced controls in several ways. 

Budget officials are no longer permitted to have purchase 

cards, cardholders can no longer approve their own Blanket 

Purchase Agreement Calls, and CitiDirect was implemented 

in October 2003 which amongst other things entails 

certification and monitoring of transactions online. 

Given the breadth of the different areas to be covered, we 

believe that the scope and timing for completing the control 

assessments is a management prerogative. Moreover, we 

believe that the implemented and planned actions sufficiently 

address the intent of the recommendation if properly 

completed as noted in FMS’ response to the draft report. 

2. Reassess the adequacy of the Purchase Card Handbook in 

terms of any added enhancements, such as prescribed 

separation of duties to avoid allowing a single individual from 

controlling the entire purchase transaction, and procedural 

clarifications, such as the specific supervisory reviews and 

approvals needed before payments are approved. 

Management Response and OIG Comments

FMS concurred and is in the process of finalizing a major 

rewrite of the FMS Purchase Card Handbook that had just 

been issued in July 2003. FMS anticipates completing these 

revisions in late December/early January 2004. Major 

improvements include areas such as requirements and 

procedures associated with oversight reviews. We believe 

the planned management corrective action, in concert with 

some of the other related corrective actions discussed 

below, adequately address the recommendation if properly 

completed. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 10 
3. To address the OIG’s observed level of deviations from 

prescribed policies and procedures, formally communicate 

and emphasize with unit managers their responsibilities with 

respect to adherence to policies and procedures. And to 

that end, also assess the need for periodic training. 

Management Response and OIG Comments

FMS concurred and has trained all approving officials, giving 

special emphasis to requiring reviews of purchase logs and 

documentation before approving purchase card statements. 

We believe that FMS’ corrective action addresses the intent 

of the recommendation. Although FMS did not specifically 

address periodic training, we believe this aspect would be 

inevitable, given FMS’ planned major revisions to the

Purchase Card Policy, as well as their commitment to 

prepare a detailed corrective action plan to address 

remaining recommendations as subsequently deemed 

appropriate. 

Finding 2 Aspects of the Purchase Card Program Warrant Further 

Evaluation 

In the previous finding, we discussed control weaknesses and 

vulnerabilities based on our detailed testing of transactions by the 

73 individual cardholders. Those results, in turn, surfaced aspects 

of the card program warranting further review and evaluation. 

These program aspects include card purchase limits that far 

exceeded actual monthly usage, the issuing card bank’s control 

feature restricting purchases from certain types of vendors and or 

commodity type, and controls over expendable property purchases, 

and post reviews. 

Monthly Card Limits Far Exceeded Actual Usage 

FMS had not conducted periodic reviews of cardholder monthly 

credit limits compared to actual usage so that past utilization could 

be considered in determining appropriate credit limits. We found 

that most cardholder monthly purchase limits far exceeded actual 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 11 
usage and FMS could not explain the basis for authorizing a 

purchase limit of $10,000. Given the observed extensive 

deviations from prescribed policies and procedures, as discussed in 

Finding 1, we believe the large purchase card limits unnecessarily 

expose FMS to added risks of financial loss should cards be abused 

or inadvertently lost. 

From the CitiBank cardholder listing and interviews with 

cardholders and program officials, we found that 52 (71%) of 73 

cardholders were arbitrarily assigned the $10,000 monthly 

purchase limit. The remaining 21 (29%) had even higher assigned 

limits based on anticipated higher monthly expenditures, such as

training and wireless telephone charges. From the issuing card 

bank’s records, we analyzed monthly spending patterns. As 

shown in the following table, actual usage typically fell far below 

the purchase limit. 

 

Table 2 

Percent of Monthly Limits Used 

FY 2002 

No. of 

Cards

Card Limit Used 

Based on 

Peak Purchases

23 (31%) Less than 50% 

26 (36%) 50 through 80% 

24 (33%) More than 80% 

73 (100%) Total 

Source: CitiDirect® Card Management System 

We found that 23 (31%) cardholders used less than 50% of their 

authorized monthly limit. With over half the cardholders using less 

than 80% of their purchase limit, actual usage suggests that 

varying purchase limits rather than an arbitrary setting of $10,000 

would reduce FMS’ potential loss exposure. 

Furthermore, we found that 23 purchase cards with a credit 

exposure of $1,239,999, representing about 13% of the issued 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 12 
cards had not been used in FY 2002. The number of unused cards 

seemed excessive and FMS had not reevaluated the need for these 

cards. 

MCC Codes Not Fully Utilized 

Another monitoring control issue involves FMS not fully utilizing 

Merchant Category Codes (MCC) to their advantage in designating 

certain establishments that are not authorized for card purchases. 

The credit card company has designated MCCs for all vendors. 

Agencies can screen questionable vendors before a purchase is 

approved. When an unauthorized code is used it will cause a 

purchase to be rejected. While FMS had invoked a limited number 

of MCCs, many of Treasury Department’s recommended MCC

blocks had not been implemented. For example, specific hotel 

codes, automotive repair, health care, restaurant, and fashion 

apparel codes were not blocked. According to program personnel, 

MCCs were not used more extensively because of limited personnel 

resources assigned to the program. 

Control of Property Could Be Strengthened 

We also found that FMS’ inventory controls of nonexpendable

items obtained with purchase cards could be strengthened. Areas 

warranting closer management attention included tracking and 

safeguarding nonexpendable items in coordination with the 

Property and Supply Branch. The primary control breakdown was 

the lack of adherence to FMS prescribed policies and procedures by 

purchase cardholders and the absence of mitigating controls. 

We tested card purchases for nonexpendable items with a stated 

cost of $300 or more. Of the 29 items tested with a combined 

value of $35,000, we found 7 items worth approximately $8,000 

had not been recorded in FMS’ asset management system when 

we attempted to trace each item to its purchasing unit in March 

2003. We determined these 7 items without barcodes had been

delivered directly to cardholders between January and July 2002, 

at least 8 months prior to our inquiry. However, cardholders had 

not requested barcodes for 5 of the items until May 2003, shortly 

after we inquired about the items. The 2 (7%) remaining items

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 13 
worth $2,000 were still without barcodes when we conducted our

on-site inventory. The types of nonexpendable items that had not

been recorded in the property system included paper shredders, 

laserjet printers, digital cameras, monitors and scanners. 

We believe that this weakness arose primarily because cardholders 

frequently bypassed the procedure of shipping nonexpendable

property directly to the Property and Supply Branch, as required 

under FMS’ Handbook. As a result, most items were not barcoded or entered into the inventory system when received. 

Instead, items were shipped directly to the cardholders’ unit 

location. Out of the 29 items tested, only 7 had been shipped 

directly to the Property and Supply Branch. 

Cardholders were aware of the requirement to notify Property and 

Supply Branch, but these deviations were attributed to shipping 

instructions misrouted due to human error or to an urgent need for 

the equipment by the department. Although some cardholders did 

adhere to policy, it should be noted that the required procedure 

regarding accountable items may not be clearly obvious as a 

footnote in the Handbook under another topic. 

Lack of Post Review 

The FMS Purchase Card Handbook designates the Agency Program 

Coordinator (APC) to conduct audits/reviews of cardholder files. 

The APC would conduct random reviews of cardholders to assess 

their compliance with program requirements. However, the 

program guidance did not elaborate on review frequency or 

compliance standards. Further, it did not require that the results of 

internal reviews be documented or that corrective actions be 

monitored to help ensure effective implementation. 

According to a program official, five informal reviews were 

conducted at headquarters in 2002. The frequency of reviews was 

affected by staffing. A program coordinator had been responsible 

for overseeing 148 cardholders and reviewing the 6300 

transactions at headquarters. We found no substantive 

documentation supporting that the reviews had been conducted. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 14 
We believe that the lack of post reviews contributed to not

surfacing the problems identified in findings 1 and 2. Since the 

start of our audit, FMS had increased the staffing in this area from 

one to two people. 

Recommendations 

To further enhance FMS’ Purchase Card program, the FMS 

Commissioner needs to: 

4. Ensure purchase card limits are periodically reviewed to 

better align monthly purchase limits to actual or planned 

usage. 

Management Response and OIG Comments

FMS concurred and conducted an extensive review of 

cardholders’ usage. As a result, purchase cards were

cancelled for 32 cardholders with minimum usage. In the 

coming months, FMS will establish a procedure for reviewing 

spending patterns with the objective of adjusting monthly 

spending limits based on usage. We believe FMS’ 

management corrective actions adequately address the 

recommendation. 

5. Give further consideration to assessing the need to make 

greater use of the issuing card bank’s control of blocking 

certain types of commodities and vendors that would not

normally be used by FMS. 

Management Response and OIG Comments

FMS concurred and established 8 MCC templates to restrict 

cardholders’ access to those MCC codes designated as “high 

risk” and to limit cardholder access only to the MCC codes 

required to meet their needs. Cardholder accounts have also 

been modified with Citibank to further enforce these 

restrictions. We believe FMS’ management corrective 

actions adequately address the recommendation. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 15 
6. Revise the Handbook to make more readily apparent the 

shipment instructions for nonexpendable equipment for 

inventory control. Also assess the need for added 

procedures to ensure that the Property and Supply Branch is 

made aware of when nonexpendable items have been 

purchased. 

Management Response and OIG Comments

FMS concurred and will include in their revised Handbook

shipping instructions for accountable property to ensure that 

property valued at $1,000 or more is entered into the 

property system. Additionally, the Property and Supply 

Branch was provided limited access to CitiDirect in October 

2002 to aid in the identification of accountable property 

items and to facilitate tracking and inclusion into the 

property system. Procedures will also be developed to 

provide for periodic reviews to identify and resolve 

discrepancies between purchase records and property 

records. We believe FMS’ management corrective actions 

adequately address the recommendation. 

7. Improve the internal review process, by clearly spelling out

the frequency and extent of internal reviews, the stated 

frequency based on a documented risk assessment, and 

establishing minimum documentation requirements 

supporting these reviews. 

Management Response and OIG Comments

FMS concurred and noted that a Purchase Card Review 

Program had been established in May 2003 to provide 

internal review of all FMS purchase card actions on a 

monthly basis. FMS further noted in their response to the 

draft report that in addition to reviewing various CitiDirect 

reports each month, the APC is to randomly select at least 

14 cardholders each month for documentation reviews. The 

selected cardholders are required to provide copies of their 

monthly statement and back-up documentation. Following 

the review, a written summary is to be prepared to identify 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 16 
deficiencies or areas requiring improvement. Given the 

additional staffing under the Purchase Card program added 

after the start of our audit, we believe the cited internal 

review procedures are more likely to be accomplished than 

what we had found during the audit. Accordingly, we 

believe FMS’ management corrective actions adequately 

address the intent of the recommendation. 

Finding 3 Improper Purchases 

As previously discussed above, we believe that the extensive level 

of deviations from prescribed purchase card policy and procedures, 

coupled with an inadequate internal review function leaves FMS 

vulnerable to improper use of the government purchase card. 

Indeed, our detailed testing surfaced several such instances 

involving split purchases, purchases exceeding spending limits for 

certain items, and improper purchases. 

Split Purchases 

The Federal Acquisition Regulation and FMS Purchase Card 

Handbook policies and procedures prohibit splitting a transaction 

into more than one segment to avoid exceeding the $2,500 micropurchase threshold and the competitive bidding process. For 

Treasury offices and bureaus, the micro-purchase threshold for 

construction services is set at $2,000. Items exceeding the 

threshold are to be purchased in accordance with the normal 

procurement process, which involves a minimum of three 

competitive bids. 

We identified split purchases by analyzing cardholder transactions 

in the CitiDirect® Card Management System by dates, amounts, 

and vendors. We also reviewed supporting documentation in the 

cardholders’ files to obtain details of the transactions. We found 6 

cardholders with purchases reflecting split transactions. This 

entailed multiple purchases made with the same vendor, within 3 

days, that exceeded the micro-purchase limit and would have 

precluded obtaining competitive bids. One exception to the 3-day 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 17 
period involved a confirmed split purchase made by a cardholder 

that took place over 7 days. The following table details the split 

purchase transactions from our sample. 

Table 3 

Seven Split Purchases Found in the Sampled Transactions 

Card 

Holder

Date of 

Transaction

Vendor 

Name Description

Transaction 

Amount

7 Split 

Purchases

1 1/20/02 B

Installed partitions, doors, ceiling tile, 

painting Room 135 $2,325

1 1/20/02 B

Furnish and install 2 vision panels for 

rooms 101A and 127 $400

1 2/26/02 A Electrical work $2,480

1 2/26/02 A Relocated and rewired fixtures $2,310

2 8/29/02 C 6 - 3 drawer lateral file $2,500

2 8/29/02 C 4 - 3 drawer lateral file $1,670

3 8/5/02 D 5 - Windows XP software sets $2,419

3 8/6/02 D 1 - Notebook PC $2,453

4 2/20/02 E $1,000

4 2/27/02 E $696

4 2/27/02 E $1,000

5 5/29/02 F

Graphs work on Treasury symbols, 

used for all trade shows $2,485

5 5/29/02 F

Screen & Setup - 1 color imprint 

($35), 1000 stress balls @ $1.20 - 

IPAC (Intergovernmental Payment & 

Cell system) logo, conference to 

promote system $1,280

5 5/30/02 F

500 stress balls @ $1.20 - GOALS 

(Government Online Accounting Link 

System) II logo $657

6 7/3/02 E Supplies $101

6 7/3/02 E Supplies $2,435

 Total $26,211

$2,725

$4,790

$4,170

$4,872

Vendor sent single invoice for $2,696 

for 2-cross cut shredders @ $1,100 

and 78 personal shredders @ $1,559 

plus tax. $2,696

$4,422

$2,536

Source: CitiDirect® Card Management System and Cardholders’ Records 

As shown above, the purchases included such items as notebook 

computers, paper shredders, file cabinets, and construction 

services. We found one vendor invoice stating the full amount of 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 18 
the goods ordered, yet the payments were divided into 3 smaller 

amounts. 

We expanded our testing for split purchases focusing on 

construction services and identified at least 26 transactions made 

by 3 cardholders with 4 vendors totaling nearly $41,000. As 

shown below in Table 4, we found a pattern of construction 

service purchases with the same vendor, within 3 days, with 

aggregated amounts that exceeded the FMS construction purchase 

limit had the purchases not been split. To identify split purchases 

we used the same 3-day guideline that FMS used for its internal 

reviews. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 19 
 Table 4 

Split Purchases of Construction Services in 

FY 2002 

Card 

Holder

Date of 

Transaction

Frequent Use 

Construction 

Service Vendors

7 Exceed 

$2,000 

Single 

Purchase 

Limit

Transaction 

Amount

9 Split 

Purchases

1 1/20/02 B X $2,325

1 1/20/02 B 400

1 2/26/02 A 58

1 2/26/02 A X 2,480

1 2/26/02 A X 2,310

1 3/14/02 A X 2,497

1 3/14/02 A X 2,256

1 3/14/02 A 1,325

1 3/14/02 A 312

1 3/14/02 A 113

1 6/4/02 U X 2,360

1 6/4/02 U 432

1 6/4/02 U 1,296

1 6/24/02 A 1,920

1 6/25/02 A 1,898

1 7/30/02 U 1,950

1 8/1/02 U 1,902

13 12/12/01 A 1,767

13 12/12/01 A 1,786

13 12/12/01 A X 2,172

13 12/12/01 A 1,340

13 12/12/01 A 854

13 1/24/02 L 1,800

13 1/24/02 L 1,380

28 9/25/02 L 1,982

28 9/25/02 L 1,650

 Total $40,565

3,818

3,632

$2,725

6,503

4,088

4,848

3,852

7,919

3,180

Source: CitiDirect® Card Management System and Cardholders’ Records 

When aggregated some of the 9 split purchases were the 

equivalent of 2, 3, or 4 times the single purchase limit. None of

the 4 construction service vendors had been subject to normal 

procurement procedures provided by the FAR to obtain competitive 

bids. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 20 
In addition to split purchase transactions, 18 transactions alone 

exceeded Treasury’s purchase card limit of $2,000 for construction 

services. According to one cardholder, FMS observed a 

construction purchase limit of $2,500 in FY 2002. However, FMS 

was unable to provide us with documentation or an explanation as 

to the basis for FMS’ increased limit over Treasury’s purchase limit. 

As to the cardholders’ rationale for splitting the purchases, one

cardholder acknowledged breaking down the invoice into several 

purchases to avoid the single purchase limit. Two other 

cardholders asserted that their purchases were not split because 

the vendors preferred to prepare separate invoices for each job 

segment. As noted before, these transactions had not been 

subject to management oversight or the internal review process. 

Further, the split purchases and the Treasury purchase limit 

deviations can also be attributed to the perception that the 

competitive bidding process would cause delays in payment and 

service. Construction purchase transactions were all made for 

leasehold improvements at FMS’ headquarters facility in 

Hyattsville, MD. According to cardholders, they used the purchase 

cards to obtain construction services because processing can be 

accomplished much more quickly than through the normal 

acquisition process, partially because the competitive bidding was 

eliminated. 

Although we did not review in detail as with the sampled 

transactions, we did expand our analysis to gauge the possible 

extent of other split purchase transactions. We identified a total of 

284 transactions involving 44 cardholders amounting to over 

$364,000 with the same indicators of split purchases, i.e., a 

common vendor, transaction dates within a 3-day timeframe, and 

when aggregated, the amounts exceeded the single purchase limit. 

This expanded analysis also surfaced 29 single transactions that 

exceeded the single purchase limit without having to be combined 

with another purchase. These 29 totaled over $86,000. See 

Appendix 2 for a detailed listing of these purchases. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 21 
Improper Purchases

Finally, we also identified improper food and decoration purchases 

totaling $1,500. Although the amounts were minor and related to 

official government usage, the identified transactions are not

permitted by law, regulation or policy. Moreover, the purchase 

card files lacked explanation or evidence indicating as to why these 

deviations were authorized for payment. 

According to the Government Employees Incentive Awards Act 

(5 U.S.C sec 4501 et seq.), agencies generally may not furnish 

meals or refreshments to employees within their official duty 

stations. However, the act authorizes agencies to incur necessary 

expenses for awards ceremonies honoring employees. FMS’ 

awards policy established that an assistant commissioner could 

approve up to $250 for light refreshments for each awards 

ceremony. The assistant commissioner of that office must sign the 

requisition and obtain the authorization of funds for such purposes 

from the appropriate contracting official prior to the ceremony. 

The requisition must show that the refreshments materially 

enhance the effectiveness of the ceremonial function. 

We identified improper transactions from our sample totaling 

$1,500. These purchases were for food purchases at FMS internal 

meetings and ceremonies and for decorations provided at holiday 

and other celebrations. Under FMS policy, the 6 transactions 

would not have been authorized, as one exceeded the $250 limit 

for food, 4 food purchases were for ceremonies having a principal 

purpose other than awards, and 2 purchases of decorations were 

clearly prohibited in FMS’ policies and procedures as shown in the 

following table. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 22 
Table 5 

Improper Purchases 

Date Amount 

Description of 

Purchase Comment/Criteria 

9/18/02 $636 Food for Combined 

event: Awards/Ethnic 

Awareness 

1) Exceeded $250 

limit for Awards 

refreshments 

2) Awards must be 

the principal purpose 

of the event 

9/12/02 $104 Decorations for Ethnic 

Awareness 

Celebration 

Decorations not 

authorized 

9/17/02 $230 Food for Combined 

event: 

Awards/Director 

Retirement 

Awards must be the 

principal purpose of 

the event 

1/9/02 $89 Food purchase for 

HRD all-employee 

breakfast 

Refreshments at 

employee meetings 

not authorized 

3/14/02 $167 Food purchase for 

HRD all-employee 

meeting 

Refreshments at 

employee meetings 

not authorized 

12/7/01 $260 Holiday decorations Decorations not 

authorized 

$1,486 Total 

Source: CitiDirect® Card Management System and Cardholders’ Records 

Based on our review of the purchase documentation, we 

determined that two of the purchases involved events that were 

combined with an awards presentation. For example, a combined 

expenditure of $740 was made for an ethnic awareness celebration 

that also involved a presentation of awards. Documentation stated 

that the awards ceremony would provide a rationale for the food 

purchase. Considering that awards were not the main purpose of 

the event, the purchases of refreshments and decorations would 

not have been authorized under FMS’ policy for refreshments at 

awards ceremonies. Another event was listed as an awards 

ceremony, but a review of the food purchase receipt found 

indications that certain items had been purchased for other reasons 

unrelated to awards. Two other purchases totaling $256 were for 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 23 
refreshments at Human Resource Department (HRD) employee 

meetings, an unauthorized expenditure. 

Recommendations 

To enhance controls preventing improper purchases with the 

purchase card, the FMS Commissioner needs to: 

8. Develop enhanced controls supplementing the Handbook to 

prevent using purchase cards to effect split purchases. In 

the interim consideration should be given to assessing the 

risk of other undetected split purchases and include linking 

this assessment to recommendation 7 with respect to 

enhanced internal reviews. 

Management Response and OIG Comments

FMS concurred and will add prohibitions against split 

purchases to their revised Handbook. In addition, FMS will 

review various CitiDirect reports that are generated monthly 

to help identify unusual and suspicious purchases, such as 

split purchases, exceeding the purchase limit, and 

unauthorized purchases. We believe FMS’ planned 

management corrective actions adequately address the 

recommendation. 

9. Emphasize with cardholders and authorizing officials the 

prohibition against splitting purchases as required by FAR. 

One means of possibly addressing the recommendation 

might be to provide additional training and guidance on the 

use of the purchase card. 

Management Response and OIG Comments

FMS concurred and analyzed the transactions in the draft 

report observing that some (level not specified) of the 

transactions were not split purchases, but gave the 

appearance of a split purchase. Of the transactions 

determined to be valid instances of split purchases (level not 

specified), most were associated with purchases of 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 24 
computer products. Accordingly, FMS has undertaken steps 

to implement new procurement strategies for these products 

to minimize the reoccurrence of split purchases. 

Additionally, FMS will include in their revised Handbook 

prohibitions against split purchases. We believe FMS’

management corrective actions taken to date as well as 

those planned adequately address the recommendation. 

 10. Examine existing purchase card guidance to determine if 

additional controls and conditions are needed when using the 

purchase card for acquiring construction services. 

Management Response and OIG Comments

FMS concurred and also analyzed the transactions noted in 

the draft report. FMS indicated that some (amount not 

specified) were not split purchases but were due to vendor

billing practices. FMS also noted that most (level not 

specified) of the valid instances were associated with 

purchases of construction services. Accordingly, FMS has 

undertaken steps to implement new procurement strategies 

for these services to minimize the reoccurrence of split 

purchases. Additionally, FMS will include in their revised 

Handbook emphasis on the $2,000 limit for construction 

services. We believe FMS’ management corrective actions 

taken to date, as well as those planned, adequately address 

the recommendation. 

 11. Institute enhanced controls either through the Handbook or 

post reviews to better ensure against the use of the 

purchase card for prohibited items. 

Management Response and OIG Comments

FMS concurred and will include in their revised Handbook a 

“Don’t Buy List” to ensure a clear understanding of 

purchases that are prohibited. Additionally, FMS’ response 

to recommendation 7 above regarding internal reviews 

indicated that the reviews might also provide a means for 

identifying fraud, waste or serious misuse of the purchase 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 25 
card. We believe FMS’ planned management corrective 

action adequately addresses the recommendation. 

To address the improper purchases identified in this report, the 

FMS Commissioner needs to: 

12. Assess the need to pursue administrative action in 

 accordance with the Handbook section XIV, “Penalty for 

 Misuse.” 

Management Response and OIG Comments

FMS concurred and developed draft guidance regarding 

administrative action that should be taken for purchase card 

misuse and violations. Guidance will be finalized in 2004. 

Additionally, upon receipt of the final report, FMS will 

prepare a detailed corrective action plan to address the 

remaining recommendations, as appropriate. We believe 

FMS’ planned management corrective actions adequately 

address the intent of the recommendation with respect to 

improper purchases noted in the report. 

****** 

We would like to extend our appreciation to FMS for its 

cooperation and courtesies extended to our audit staff during the 

audit. If you have any questions, please contact me at (415) 977-

8810 ext.222 or Garrett Gee, Audit Manager, at (415) 977-8810 

ext.227. Major contributors to the report are listed in Appendix 4. 

Benny W. Lee /S/ 

Director, Western Field Audit Office 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 26 
Appendix 1 

Objectives, Scope, and Methodology

Our overall objective was to assess whether FMS’ internal controls 

over the Government Purchase Card program ensure that purchase 

cards are used in compliance with policy and for their intended 

purpose and that FMS is achieving maximum benefit from the

program. Specifically, we sought to determine if FMS’ Purchase 

Card program management policies and procedures are reasonably 

effective in preventing FMS from being vulnerable to fraud, waste 

and abuse. 

We visited FMS headquarters facilities in Washington, D.C. and 

Hyattsville, Maryland between February and May 2002 and 

obtained program information, such as policies and procedures, 

regulations, and related information over the Purchase Card 

program. Our original scope was to cover headquarters in 

Washington, D.C. and various field locations throughout the 

country. However, we deferred the field locations until a later date 

to focus on headquarters where 80% of the purchase cards are

based. 

We first determined the universe of cardholders at FMS by 

reconciling a CitiBank purchase card report with a cardholder report 

maintained by FMS. The CitiBank report, entitled “Statistical 

Summary Report (CD900)”, provides the total number of accounts 

and the number and total dollar amount of transactions. A CitiBank 

detail listing shows cardholder names, account numbers and credit 

limits. The FMS report is the Cardholder’s Listing which shows 

cardholder names, account numbers and credit limits. 

We downloaded cardholder transaction files from the bank’s 

CitiDirect® Card Management System for the period September 29, 

2001 through September 30, 2002. The download captured 123 

active cards at headquarters facilities, and over 6,300 transactions 

totaling nearly $4 million. From the universe of 6,300 FMS 

cardholder transactions, we randomly sampled 147, which 

exceeded the minimum of 128 needed to attain a 95% confidence 

level for random statistical sampling. We judgmentally sampled an 

additional 79 questionable transactions for compliance for a total of 

226 transactions. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 27 
Appendix 1 

Objectives, Scope, and Methodology

We interviewed 73 of the 148 cardholders assigned to 

headquarters facilities to determine if their responsibilities and 

authority were in line with FMS’ Purchase Card program policies 

and procedures. We also interviewed approving officials 

concerning their oversight of the purchases. We reviewed 

cardholder files comparing the cardholder documentation with the 

downloaded data from the CitiDirect® database to verify that 

cardholders accounted for all sampled transactions. We reviewed 

transaction documentation for purchase requests, the cardholder 

purchase log, reconciled purchase invoices, unusual vendor

transactions, approved packing slips, approved receiving 

documents, and approved bank statements. 

When we identified split purchases and purchases exceeding the 

single purchase limit, we expanded our testing of transactions to 

include all fiscal year 2002 purchases and to assess the possible 

extent of split purchases and over-the-limit purchases. See 

Appendix 2. 

We identified 29 nonexpendable property items (original cost of 

$300 or more) that were purchased with the card. We conducted 

a physical inventory of the items to verify they were physically 

present at FMS’ headquarters. To verify that equipment serial 

numbers and barcode numbers matched the numbers recorded in 

FMS’ property system, we visited FMS’ Property and Supply 

Branch at Ardmore, interviewed the Manager and reviewed system 

property records. 

To evaluate FMS’ exposure to potential loss resulting from 

unnecessarily high credit limits, we analyzed transaction data for 

the 73 cardholders in our sample to understand monthly peak 

spending. We compared monthly peak purchases with cardholders’ 

limits and determined the amount that was unused. 

We conducted our audit between February 2003 and October

2003 in accordance with generally accepted government auditing 

standards. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 28 
Appendix 2 

Possible Split Purchases and Transactions Exceeding the 

Single Purchase Limit for FY 2002 

Count Cardholder Date

Posted

Amount

Split

Purchase

Amount

Transactions 

Over Single 

Purchase 

Limit* Vendor

1 1 1/20/02 $2,325 $2,325 B

2 1 1/20/02 400 $2,725 B

3 1 2/26/02 58 A

4 1 2/26/02 2,480 2,480 A

5 1 2/26/02 2,310 4,848 2,310 A

6 1 3/14/02 2,497 2,497 A

7 1 3/14/02 2,256 2,256 A

8 1 3/14/02 1,325 A

9 1 3/14/02 312 A

10 1 3/14/02 113 6,503 A

11 1 4/2/02 518 DD

12 1 4/3/02 2,472 2,990 DD

13 1 6/4/02 2,360 2,360 U

14 1 6/4/02 432 U

15 1 6/4/02 1,296 4,088 U

16 1 6/24/02 1,920 A

17 1 6/25/02 1,898 3,818 A

18 1 7/9/02 2,110 2,110 A

19 1 7/30/02 1,950 U

20 1 8/1/02 1,902 3,852 U

21 2 5/17/02 1,544 C

22 2 5/17/02 1,039 2,583 C

23 2 7/17/02 2,498 D

24 2 7/17/02 2,498 4,996 D

25 2 8/29/02 2,500 C

26 2 8/29/02 1,670 4,170 C

27 3 8/5/02 2,419 D

28 3 8/6/02 2,453 D

29 3 8/7/02 484 5,356 D

30 4 12/31/01 1,701 S

31 4 12/31/01 1,852 S

32 4 12/31/01 1,020 4,573 S

33 4 1/14/02 2,376 OO

34 4 1/15/02 1,719 4,095 OO

35 4 7/9/02 2,500 T

36 4 7/9/02 263 T

37 4 7/9/02 2,500 5,263 T

(continued on next page) 

*The single purchase limits are $2,000 for construction services and $2,500 for 

 non-construction. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 29 
Appendix 2 

Possible Split Purchases and Transactions Exceeding the 

Single Purchase Limit for FY 2002 

Count Cardholder Date

Posted

Amount

Split 

Purchase 

Amount

Transactions 

Over Single 

Purchase 

Limit* Vendor

38 4 8/14/02 $2,500 T

39 4 8/14/02 2,500 T

40 4 8/14/02 132 T

41 4 8/14/02 132 $5,264 T

42 4 9/16/02 2,491 SS

43 4 9/17/02 225 2,716 SS

44 5 5/29/02 2,485 F

45 5 5/29/02 1,280 F

46 5 5/30/02 657 4,422 F

47 6 7/3/02 101 E

48 6 7/3/02 2,435 E

49 6 7/5/02 160 2,696 E

50 7 12/28/01 2,065 EEE

51 7 12/28/01 1,975 4,040 EEE

52 7 9/23/02 1,331 G

53 7 9/23/02 1,331 2,662 G

54 8 4/24/02 304 S

55 8 4/24/02 2,480 2,784 S

56 9 4/26/02 1,246 D

57 9 4/26/02 1,246 D

58 9 4/26/02 302 D

59 9 4/26/02 302 3,096 D

60 10 5/7/02 1,470 I

61 10 5/7/02 1,677 3,147 I

62 10 9/23/02 789 AAA

63 10 9/23/02 2,221 3,010 AAA

64 11 1/28/02 1,455 FFF

65 11 1/28/02 1,455 2,910 FFF

66 11 3/20/02 1,295 EE

67 11 3/21/02 1,295 2,590 EE

68 11 3/26/02 1,295 EE

69 11 3/27/02 1,295 2,590 EE

70 11 7/8/02 1,470 I

71 11 7/9/02 1,410 2,880 I

(continued on next page) 

*The single purchase limits are $2,000 for construction services and $2,500 for 

 non-construction. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 30 
Appendix 2 

Possible Split Purchases and Transactions Exceeding the 

Single Purchase Limit for FY 2002 

 

Count Cardholder Date

Posted 

Amount

Split 

Purchase 

Amount

Transactions

Over Single

Purchase

Limit* Vendor 

72 12 11/14/01 $164 J

73 12 11/14/01 360 J

74 12 11/14/01 1,658 J

75 12 11/14/01 610 J

76 12 11/14/01 880 $3,672 J

77 12 6/18/02 840 OOO

78 12 6/18/02 840 OOO

79 12 6/18/02 840 2,520 OOO

80 12 8/29/02 1,800 GGG

81 12 8/29/02 1,764 3,564 GGG

82 12 9/9/02 1,875 J

83 12 9/9/02 1,178 J

84 12 9/9/02 1,885 J

85 12 9/9/02 1,982 J

86 12 9/9/02 165 J

87 12 9/9/02 650 7,735 J

88 13 11/13/01 1,224 K

89 13 11/13/01 1,469 2,693 K

90 13 12/5/01 1,098 FF

91 13 12/6/01 1,464 2,562 FF

92 13 12/12/01 1,767 A

93 13 12/12/01 1,786 A

94 13 12/12/01 2,172 2,172 A

95 13 12/12/01 1,340 A

96 13 12/12/01 854 7,919 A

97 13 1/24/02 1,800 L

98 13 1/24/02 1,380 3,180 L

99 13 2/19/02 2,150 2,150 M

100 13 4/18/02 2,200 2,200 U

101 14 6/28/02 568 PPP

102 14 6/28/02 664 PPP

103 14 6/28/02 664 PPP

104 14 6/28/02 568 PPP

105 14 6/28/02 568 PPP

106 14 6/28/02 664 3,696 PPP

(continued on next page) 

*The single purchase limits are $2,000 for construction services and $2,500 for 

 non-construction. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 31 
Appendix 2 

Possible Split Purchases and Transactions Exceeding the 

Single Purchase Limit for FY 2002 

Count Cardholder Date

Posted

Amount

Split 

Purchase 

Amount

Transactions 

Over Single 

Purchase

Limit* Vendor 

107 15 8/29/02 $2,455 NN

108 15 8/31/02 1,386 $3,841 NN

109 16 1/15/02 2,375 D

110 16 1/16/02 1,400 D

111 16 1/16/02 36 D

112 16 1/16/02 158 3,969 D

113 16 5/9/02 2,092 D

114 16 5/9/02 2,400 4,492 D

115 16 6/24/02 2,400 D

116 16 6/25/02 1,507 3,907 D

117 16 7/10/02 2,144 D

118 16 7/11/02 322 D

119 16 7/12/02 2,146 4,612 D

120 17 1/30/02 2,400 2,400 GG

121 17 2/26/02 2,400 2,400 GG

122 17 5/14/02 2,035 2,035 M

123 17 6/17/02 2,183 2,183 TT

124 17 6/24/02 2,169 2,169 A

125 17 7/9/02 2,498 2,498 A

126 17 7/26/02 2,493 2,493 A

127 17 7/30/02 2,367 2,367 TT

128 18 1/28/02 2,529 2,529 N

129 19 7/19/02 2,494 QQQ

130 19 7/20/02 2,376 4,870 QQQ

131 19 8/15/02 230 QQQ

132 19 8/16/02 2,495 2,725 QQQ

133 19 8/20/02 1,446 QQQ

134 19 8/21/02 1,914 3,360 QQQ

135 20 2/7/02 1,910 D

136 20 2/7/02 1,910 D

137 20 2/7/02 1,910 5,730 D

138 20 3/27/02 2,500 II

139 20 3/28/02 981 3,481 II

140 21 8/7/02 3,650 3,650 JJ

141 22 7/12/02 2,243 Q

142 22 7/13/02 1,500 3,743 Q

(continued on next page) 

*The single purchase limits are $2,000 for construction services and $2,500 for 

 non-construction. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 32 
Appendix 2 

Possible Split Purchases and Transactions Exceeding the 

Single Purchase Limit for FY 2002 

Count Cardholder Date

Posted

Amount

Split 

Purchase 

Amount

Transactions 

Over Single 

Purchase 

Limit* Vendor 

143 23 3/5/02 $995 KK

144 23 3/7/02 995 KK

145 23 3/7/02 995 $2,985 KK

146 24 6/19/02 2,360 Q

147 24 6/20/02 2,360 4,720 Q

148 25 11/14/01 2,057 LL

149 25 11/14/01 1,962 4,019 LL

150 26 1/28/02 2,488 D

151 26 1/28/02 2,472 4,960 D

152 26 2/6/02 695 LLL

153 26 2/7/02 2,500 3,195 LLL

154 26 2/26/02 2,381 R

155 26 2/26/02 590 R

156 26 2/26/02 190 3,161 R

157 27 7/17/02 2,498 D

158 27 7/17/02 2,498 4,996 D

159 27 9/27/02 2,441 NN

160 27 9/28/02 1,290 3,731 NN

161 28 9/25/02 1,982 L

162 28 9/25/02 1,650 3,632 L

163 28 9/25/02 2,450 KKK

164 28 9/25/02 500 2,950 KKK

165 29 8/13/02 375 LLL

166 29 8/13/02 545 LLL

167 29 8/13/02 545 LLL

168 29 8/15/02 625 LLL

169 29 8/15/02 575 LLL

170 29 8/15/02 825 3,490 LLL

171 30 12/12/01 692 PP

172 30 12/12/01 2,076 2,768 PP

173 30 4/9/02 495 LLL

174 30 4/9/02 495 LLL

175 30 4/11/02 575 LLL

176 30 4/11/02 575 LLL

177 30 4/11/02 575 LLL

178 30 4/11/02 575 3,290 LLL

(continued on next page) 

*The single purchase limits are $2,000 for construction services and $2,500 for 

 non-construction. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 33 
Appendix 2 

Possible Split Purchases and Transactions Exceeding the 

Single Purchase Limit for FY 2002 

Count Cardholder Date

Posted

Amount

Split 

Purchase

Amount

Transactions 

Over Single 

Purchase 

Limit* Vendor 

179 30 8/14/02 $1,323 JJJ

180 30 8/15/02 1,323 $2,646 JJJ

181 31 9/4/02 2,500 QQ

182 31 9/5/02 2,500 5,000 QQ

183 32 3/8/02 975 MMM

184 32 3/8/02 975 MMM

185 32 3/8/02 975 MMM

186 32 3/8/02 975 MMM

187 32 3/8/02 975 MMM

188 32 3/9/02 975 5,850 MMM

189 32 9/16/02 662 V

190 32 9/17/02 440 V

191 32 9/17/02 338 V

192 32 9/17/02 338 V

193 32 9/17/02 338 V

194 32 9/17/02 338 V

195 32 9/17/02 338 V

196 32 9/17/02 338 V

197 32 9/17/02 338 V

198 32 9/17/02 338 V

199 32 9/17/02 662 V

200 32 9/17/02 662 V

201 32 9/17/02 662 V

202 32 9/17/02 662 V

203 32 9/17/02 662 V

204 32 9/17/02 662 V

205 32 9/17/02 440 8,218 V

206 33 1/25/02 5,580 5,580 RR

207 34 9/18/02 2,750 2,750 W

208 34 9/19/02 1,750 4,500 W

209 35 6/12/02 532 E

210 35 6/12/02 1,950 E

211 35 6/13/02 435 E

212 35 6/14/02 65 E

213 35 6/14/02 368 3,350 E

(continued on next page) 

*The single purchase limits are $2,000 for construction services and $2,500 for 

 non-construction. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 34 
Appendix 2 

Possible Split Purchases and Transactions Exceeding the 

Single Purchase Limit for FY 2002 

Count Cardholder Date

Posted

Amount

Split

Purchase 

Amount

Transactions 

Over Single 

Purchase

Limit* Vendor

214 36 8/30/02 $6,995 6,995 G

215 36 7/21/02 1,880 D

216 36 7/22/02 302 D

217 36 7/23/02 535 $2,717 D

218 37 12/17/01 624 N

219 37 12/18/01 2,230 2,854 N

220 38 1/28/02 666 RRR

221 38 1/28/02 465 RRR

222 38 1/29/02 2,442 3,573 RRR

223 38 2/25/02 1,995 AAA

224 38 2/25/02 665 2,660 AAA

225 39 8/14/02 2,360 NNN

226 39 8/16/02 139 2,499 NNN

227 40 1/25/02 2,700 2,700 BBB

228 41 4/23/02 2,000 Y

229 41 4/23/02 440 Y

230 41 4/23/02 400 Y

231 41 4/23/02 210 3,050 Y

232 42 2/5/02 689 DDD

233 42 2/5/02 124 DDD

234 42 2/5/02 27 DDD

235 42 2/6/02 1,409 DDD

236 42 2/6/02 250 DDD

237 42 2/7/02 9 2,508 DDD

238 42 9/18/02 2,370 ZZ

239 42 9/19/02 237 2,607 ZZ

240 43 10/3/01 417 N

241 43 10/4/01 2,425 N

242 43 10/4/01 2,009 4,851 N

243 43 12/10/01 1,417 N

244 43 12/11/01 1,856 N

245 43 12/12/01 964 4,237 N

246 43 1/17/02 3,758 3,758 III

247 43 1/25/02 319 CCC

248 43 1/26/02 1,975 CCC

249 43 1/26/02 439 2,733 CCC

250 43 2/26/02 2,700 2,700 Z

251 43 3/25/02 8,750 8,750 Z

(continued on next page) 

*The single purchase limits are $2,000 for construction services and $2,500 for 

 non-construction. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 35 
Appendix 2 

Possible Split Purchases and Transactions Exceeding the 

Single Purchase Limit for FY 2002 

 

Count Cardholder Date

Posted

Amount

Split

Purchase 

Amount

Transactions 

Over Single 

Purchase

Limit* Vendor

252 43 5/14/02 $1,095 HHH

253 43 5/14/02 495 HHH

254 43 5/14/02 995 HHH

255 43 5/14/02 1,095 HHH

256 43 5/14/02 1,095 HHH

257 43 5/14/02 495 HHH

258 43 5/14/02 995 $6,265 HHH

259 43 9/27/02 2,307 BB

260 43 9/27/02 2,495 BB

261 43 9/27/02 2,307 7,109 BB

262 44 9/16/02 662 V

263 44 9/16/02 662 V

264 44 9/16/02 662 V

265 44 9/17/02 662 V

266 44 9/17/02 662 V

267 44 9/17/02 662 V

268 44 9/17/02 440 V

269 44 9/17/02 662 5,074 V

270 45 4/24/02 2,426 E

271 45 4/25/02 2,440 4,866 E

272 45 7/22/02 2,274 E

273 45 7/23/02 2,246 4,520 E

274 46 7/22/02 662 V

275 46 7/22/02 662 V

276 46 7/22/02 662 V

277 46 7/22/02 662 V

278 46 7/22/02 662 V

279 46 7/22/02 662 V

280 46 7/22/02 662 V

281 46 7/22/02 662 5,296 V

282 46 9/16/02 662 V

283 46 9/17/02 662 V

284 46 9/17/02 662 V

285 46 9/17/02 662 V

286 46 9/17/02 662 V

287 46 9/17/02 662 V

288 46 9/17/02 662 4,634 V

 (continued on next page)

*The single purchase limits are $2,000 for construction services and $2,500 for 

 non-construction. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 36 
Appendix 2 

Possible Split Purchases and Transactions Exceeding the 

Single Purchase Limit for FY 2002 

 

Source: CitiDirect® Card Management System 

Count Cardholder Date

Posted

Amount

Split 

Purchase 

Amount

Transactions 

Over Single 

Purchase 

Limit* Vendor 

289 47 2/11/02 $2,368 VV

290 47 2/12/02 2,369 VV

291 47 2/13/02 39 $4,776 VV

292 47 5/22/02 2,368 VV

293 47 5/23/02 799 3,167 VV

294 47 6/10/02 2,369 VV

295 47 6/11/02 2,368 VV

296 47 6/12/02 2,369 7,106 VV

297 47 7/29/02 2,369 WW

298 47 7/30/02 2,389 WW

299 47 7/31/02 2,455 7,213 WW

300 48 3/25/02 112 D

301 48 3/27/02 2,498 2,610 D

302 48 8/14/02 2,100 2,100 L

303 48 9/26/02 3,146 3,146 CC

304 48 12/21/01 1,040 JJJ

305 48 12/21/01 2,079 3,119 JJJ

Total $364,443 $86,063

Number of

items 91 29

*The single purchase limits are $2,000 for construction services and $2,500 for 

 non-construction. 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 37 
Appendix 3 

Management Comments

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 38 
Appendix 3 

Management Comments

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 39 
Appendix 3 

Management Comments

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 40 
Appendix 4 

Major Contributors To This Report

Garrett Gee, Audit Manager 

John Mansfield, Auditor-in-Charge 

Aldon Hedman, Auditor 

Charlotte Bergh, Auditor 

Feliser Lee, Intern 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 41 
Appendix 5 

Report Distribution

The Department of the Treasury

Director, Office of Accounting and Internal Control 

Director, Office of Strategic Planning and Evaluation 

Assistant Secretary, Public Affairs 

Purchase Card Coordinator, Departmental Offices 

Financial Management Service

Commissioner 

Deputy Commissioner 

Assistant Commissioner, Management 

Director, Program Integrity Division 

Director, Acquisition Management Division 

Office of Management and Budget

OIG Budget Examiner 

Purchase Card Internal Control Weaknesses Expose FMS Headquarters to 

Improper and Questionable Purchases (OIG-04-014) 

Page 42