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Ineffective Oversight of 

Purchase Cards Resulted in 

Improper Purchases at 

EPA OIG

Report No. 15-B-0014 November 10, 2014

U.S. ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL

Spending Taxpayer Dollars
Report Contributors: Eileen Collins

Janet Kasper

Madeline Mullen

Abbreviations

CMM Contracts Management Manual

DIG Deputy Inspector General

EPA U.S. Environmental Protection Agency

OIG Office of Inspector General

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15-B-0014

November 10, 2014

Why We Did This Review

The Office of Inspector General 

(OIG) issued a report on the 

U.S. Environmental Protection 

Agency’s (EPA’s) purchase 

card program, Ineffective 

Oversight of Purchase Cards 

Results in Inappropriate 

Purchases at EPA, on March 4, 

2014. The Deputy Inspector 

General requested that OIG’s 

Office of Audit conduct this 

audit to determine whether OIG 

purchased items that should 

not have been purchased or did 

not comply with either EPA or 

OIG policies.

This report addresses the 

following OIG goal:

 Be responsible stewards of 

taxpayers dollars.

Send all inquiries to our public 

affairs office at (202) 566 2391

or visit www.epa.gov/oig. 

The full report is at:

www.epa.gov/oig/reports/2014/ 

20141110-15-B-0014.pdf

 

Ineffective Oversight of Purchase Cards Resulted in 

Improper Purchases at EPA OIG

 What We Found

The EPA OIG needs to improve and comply with 

internal controls for purchase cards. Our review of 48 

high risk transactions found that 46 transactions had 

internal control weaknesses or recordkeeping issues.

We did not find any fraudulent or prohibited transactions. Purchases totaling 

$36,488 were improper, as defined by Office of Management and Budget Circular 

A-123, because they were outside the cardholder’s authority or should not have 

been made under administrative requirements. This does not mean that items 

purchased with the cards could not have been purchased if proper procedures 

were followed. Internal control weaknesses included:

 Availability of funding not verified prior to placing order.

 Approving official prior approval not obtained. 

 Third party verification by other than cardholder or approving official 

not provided. 

Internal control weaknesses occurred in part because the OIG purchase card 

procedure is not consistent with the EPA’s Contracts Management Manual. As a 

result, EPA OIG purchase card holders and approvers who rely on the OIG 

purchase card procedure are unaware what is required to comply with EPA 

policies. When internal controls are not followed, it increases the risk of 

fraudulent, prohibited and improper purchases.

 Recommendations

We recommend that the Deputy Inspector General:

1. Update the OIG purchase card procedure.

2. Issue a memorandum and meet with OIG purchase cardholders and 

approving officials to discuss the results of this audit.

3. Verify that OIG cardholders and approving officials completed the EPA 

mandatory supplemental purchase card training.

4. Appoint an OIG acquisition professional who has purchase card authority.

5. Update the procedure on firearms and law enforcement equipment.

6. Institute follow-up actions to hold individuals accountable for improper 

purchases identified in the audit.

7. Conduct an assessment of compliance with the revised OIG purchase card 

procedure 6 months after it is issued.

The OIG agreed with all of the recommendations and provided corrective actions

and completion dates to address all of the draft report’s recommendations. 

U.S. Environmental Protection Agency

Office of Inspector General

At a Glance

Reviews of $62,012 in 

OIG purchases found 

that $36,488 met the 

definition of improper 

purchases.
November 10, 2014

MEMORANDUM

SUBJECT: Ineffective Oversight of Purchase Cards Resulted in 

Improper Purchases at EPA OIG

Report No. 15-B-0014

FROM: Kevin Christensen, Acting Assistant Inspector General 

Office of Audit

TO: Charles Sheehan, Deputy Inspector General

At your request, we conducted an audit of the Office of Inspector’s General (OIG) purchase card 

transactions to determine whether the OIG purchased items that should not have been purchased or did 

not comply with either U.S. Environmental Protection Agency or OIG policies. We did not find that

OIG cardholders made any fraudulent or prohibited purchases. However, when internal controls are not 

followed, it increases the risk of fraudulent, prohibited and improper purchases.

The office responsible for implementing the audit recommendations included in this report is the OIG’s 

Office of Chief of Staff. 

Action Required

In response to the draft report, and during the exit conference, you provided corrective actions that 

addressed the recommendations and established milestone dates. Therefore, a response to the final report 

is not required. 

We will post this report to our website at http://www.epa.gov/oig.

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C. 20460

OFFICE OF

INSPECTOR GENERAL
U.S. Environmental Protection Agency

Office of Inspector General

Ineffective Oversight of Purchase 

Cards Resulted in Improper Purchases 

at EPA OIG

Report No. 15-B-0014 

November 10, 2014f
2

Reason for Review

The Deputy Inspector General (DIG) requested that 

the Office of Inspector General’s (OIG’s) Office of Audit 

conduct this audit to determine whether the OIG 

purchased items that should not have been purchased 

or did not comply with either U.S. Environmental 

Protection Agency (EPA) or OIG policies. 

15-B-0014
3

Scope and Methodology

 Performed fieldwork from April 15, 2014, to August 27, 2014.

 Conducted assignment in accordance with generally 

accepted government auditing standards issued by the 

Comptroller General of the United States.

 Reviewed EPA and OIG policies, procedures and manuals 

relevant to purchase cards. 

 Selected and reviewed documentation for 48 high risk 

transactions the OIG made from October 1, 2012, through 

April 9, 2014, for review (this included three convenience 

checks).

15-B-0014
4

The Act

 The Government Charge Card Abuse Prevention Act of 2012 

was signed into law on October 5, 2012. The Act is designed 

to prevent abuse of government charge cards. The law 

requires agencies to take appropriate adverse personnel 

actions for employees who violate purchase card guidelines 

or make erroneous, improper or illegal purchases. 

 Requires periodic (annual) assessments of agency purchase 

card and convenience check programs.

15-B-0014
5

Contracts Management Manual 

 The EPA provides cardholders with the authority to make 

purchases using the governmentwide commercial purchase 

card, under a policy established in Contracts Management 

Manual (CMM) Section 13.3.

 The CMM identifies transactions that are prohibited, are 

restricted, or require special prior approvals. For example, 

some transactions are restricted to acquisition professional 

cardholders rather than program office cardholders. These 

transactions include terms, specifications, statements of work 

or advanced payment (CMM 13.3.5.4(B)).

15-B-0014
6

Contracts Management Manual (cont.)

The EPA provides certain OIG employees with the 

authority to use purchase cards. The letter giving 

employees authority to use the purchase card requires 

compliance with the CMM. 

15-B-0014
7

OIG Procedures

 Relevant OIG procedures reviewed include:

o OIG Procedure 011, OIG Purchase Card Procedure (discussed further 

on slide 14).

o OIG Procedure 317, Office of Inspector General Training and 

Development Guidance Procedures.

o OIG Procedure 204, Firearms and Law Enforcement Equipment.

15-B-0014
8

What is an Improper Purchase?

 Office of Management and Budget Circular A-123, Appendix B, defines an 

improper purchase as any purchase that should not have been made or 

that was made in an incorrect amount under statutory, contractual, 

administrative or other legally applicable requirements. An improper 

purchase may include any of the following purchases:

o Made for an ineligible recipient or an ineligible service.

o Fraudulent. 

o Services not received.

o Incorrect amount.

o Made in the absence of available funding.

o Made outside of the cardholder’s purchasing authority. 

15-B-0014
9

Results

 We did not find fraudulent or prohibited transactions.

 We found that of $62,012 in purchases, $36,488 in purchases 

were improper because they were: 

o Made outside of the cardholder’s authority.

o Not in compliance with administrative requirements. 

 In addition, other internal control and recordkeeping 

deficiencies were identified. 

15-B-0014
10

Internal Control Deficiencies 

Deficiency 

Note: Transactions may have more than one deficiency, so the total number of 

transactions exceeds 48. 

Number of 

transactions 

Availability of funding not verified prior to placing order 33

Restricted transaction not made by acquisition professional 

cardholder

15

Approving official prior approval not obtained 11

Third party verification by other than cardholder or approving

official not provided 

11

Purchase card log either not reviewed and approved timely or not 

reviewed and approved by approving official 

7

15-B-0014
11

Internal Control Deficiencies (cont.) 

Deficiency Number of 

transactions

Records not retained (purchase card log, receipts) 4

Cardholder did not have authority to make OIG purchases with 

card

4

Special prior approvals not obtained 3

Required or priority sources not utilized (available on General 

Services Administration Advantage for lower price)

3

Closer scrutiny not conducted (clothing, novelty items and 

non-monetary awards) 

3

15-B-0014
12

Internal Control Deficiencies (cont.) 

Deficiency Number of 

transactions

Sales tax not recovered (U.S. government purchases are tax 

exempt)

2

Purchase of law enforcement equipment not listed in OIG policy 2

15-B-0014
13

Recordkeeping Issues

 Cardholders did not always maintain required 

documentation. However, upon request, either the 

cardholders or the OIG team were able to obtain the 

documentation, with a few exceptions as noted in the 

previous table. Such documentation included third party 

verification, receipts, etc. 

 Approving officials did not always provide a date when: 

o Pre-approving a purchase.

o Signing the purchase card log.

 We did not include these as internal control deficiencies. 

15-B-0014
14

How Did This Happen?

 Although OIG Purchase Card Procedure 011 references the 

CMM, it is not consistent. The OIG procedure: 

o Does not identify when the availability of funding should be verified. 

o Does not require approving official prior approval, use of purchase 

card logs or third party verification for training.

15-B-0014
15

How Did This Happen? (cont.)

 The OIG Purchase Card Procedure 011 does not explain:

o Restricted transactions and when an acquisition professional 

cardholder must be involved. 

o Transactions requiring closer scrutiny or additional “special” prior 

approvals, i.e., the EPA’s facilities manager approval.

15-B-0014
16

How Did This Happen? (cont.)

 OIG cardholders and their approving officials rely on the OIG 

procedure rather than the CMM. 

 Changes to the OIG purchase card procedure were issued in 

an email but the procedure was not updated. The OIG 

training procedure was updated to reflect the email changes. 

The training and purchase card procedures now contradict 

each other. 

 OIG cardholders and approving officials did not recognize or 

understand when transactions are restricted and need to be 

made by an acquisition professional cardholder. 

15-B-0014
17

How Did This Happen? (cont.)

 Purchase card internal controls have not been emphasized in 

OIG as evidenced by misconceptions:

o Approving officials seemed confused about acquisition 

professionals.

o One cardholder said that a restricted transaction was okay because 

the dollar amount was within the card limit. 

o Cardholders did not understand or request clarification about 

special approvals such as facilities manager. 

15-B-0014
18

Why Is This Important?

 Review of the EPA’s purchase card transactions identified 

similar issues to those found in OIG. 

 The percentage of improper purchases is over half of the 

transaction dollars. 

 OIG should lead by example in accountability for responsible 

use of government funds.

15-B-0014
19

Recommendations

We recommend that the EPA OIG Deputy Inspector General:

1. Update OIG Procedure 011 to be consistent with CMM 13.3. The 

procedure should include a requirement that all approvals be in 

electronic format.

 DIG Response and OIG Evaluation:

o The DIG agreed with this recommendation. Procedure 011 will 

be revised to be consistent with the CMM 13.3 by March 31, 

2015. The OIG will also require use of the new automated 

system and the electronic purchase card log.

o We concur with this corrective action. When implemented, the 

corrective action should address this recommendation.

15-B-0014
20

Recommendations

2. Issue a memorandum and meet with OIG cardholders and 

approving officials to discuss the results of this audit.

 DIG Response and OIG Evaluation:

o The DIG agreed with this recommendation. A memorandum 

will be distributed requiring cardholders and approving 

officials to comply with CMM 13.3 and to use the new 

automated system and electronic purchase card log. Outreach 

sessions will be conducted to discuss audit results. Corrective 

actions will be completed by November 15, 2014.

o We concur with these corrective actions. An outreach session 

was conducted on October 29, 2014, to discuss audit results. 

When implemented, the corrective actions should address this 

recommendation. 

15-B-0014
21

Recommendations

3. Verify that OIG cardholders and approving officials completed 

the EPA mandatory supplemental purchase card training by 

September 13, 2014. 

 DIG Response and OIG Evaluation:

o The DIG agreed with this recommendation. Office of Chief of 

Staff will reach out to the EPA to obtain a list of cardholders 

and approving officials who have completed the training. The 

anticipated date for completion is October 31, 2014. 

o Office of Chief of Staff indicated on October 29, 2014, that all 

OIG cardholders and approving officials have completed the 

training. This corrective action addressed the recommendation. 

15-B-0014
22

Recommendations (cont.)

4. Appoint an OIG acquisition professional who has purchase card 

authority to perform restricted transactions. 

 DIG Response and OIG Evaluation:

o The DIG agreed with this recommendation. An acquisition 

professional who has purchase card authority will be 

appointed to perform restricted purchases by November 30, 

2014. 

o We concur with this corrective action. When implemented, this 

corrective action should address the recommendation. 

15-B-0014
23

Recommendations (cont.)

5. Update OIG Procedure 204 to include a process for approving the 

purchase of items not specifically listed in the procedure. 

 DIG Response and OIG Evaluation:

o During the exit conference, the DIG agreed that the 

Procedure 011 revision will include a requirement for 

documenting the bona fide need for purchase of all items. 

The DIG determined that Procedure 011 was the appropriate 

place to address the issue of purchase of law enforcement 

equipment. The completion date for Procedure 011 is 

March 31, 2015. 

o We concur with this corrective action. When implemented, 

this corrective action should address the recommendation. 

15-B-0014
24

Recommendations (cont.)

6. Institute follow-up actions to hold individuals accountable and, if 

necessary, recover the funds used for improper purchases identified 

in this audit.

 DIG Response and OIG Evaluation:

o During the exit conference, the DIG agreed with this 

recommendation and stated that letters will be issued to 

individuals and approving officials where there was a violation 

of OIG and EPA procedures. The anticipated completion date is 

November 30, 2014. 

o We concur with this corrective action. When implemented, this 

corrective action should address the recommendation. 

15-B-0014
25

Recommendations (cont.)

7. Conduct an assessment of compliance with the revised OIG 

purchase card procedure 6 months after it is issued.

 DIG Response and OIG Evaluation:

o The DIG agreed with this recommendation and will conduct an 

assessment of compliance with the revised OIG procedure 

during the fiscal year 2016 biennial purchase card review. The 

anticipated completion date is September 30, 2016.

o We concur with this corrective action. When implemented, this 

corrective action should address the recommendation. 

15-B-0014
15-B-0014 26

Status of Recommendations and 

Potential Monetary Benefits

RECOMMENDATIONS

POTENTIAL MONETARY 

BENEFITS (in $000s)

Rec. 

No.

Page 

No. Subject Status1 Action Official

Planned 

Completion 

Date

Claimed 

Amount

Agreed-To 

Amount

1 19 Update OIG Procedure 011 to be consistent with 

CMM 13.3. The procedure should include a 

requirement that all approvals be in electronic 

format.

O Deputy Inspector General 03/31/15

2 20 Issue a memorandum and meet with OIG 

cardholders and approving officials to discuss the 

results of this audit.

O Deputy Inspector General 11/15/14

3 21 Verify that OIG cardholders and approving officials 

completed the EPA mandatory supplemental 

purchase card training by September 13, 2014.

C Deputy Inspector General 10/31/14

4 22 Appoint an OIG acquisition professional who has 

purchase card authority to perform restricted 

transactions.

O Deputy Inspector General 11/30/14

5 23 Update OIG Procedure 204 to include a process for 

approving purchase of items not specifically listed 

in the procedure. 

O Deputy Inspector General 03/31/15

6 24 Institute follow-up actions to hold individuals 

accountable and, if necessary, recover the funds 

used for improper purchases identified in this audit.

O Deputy Inspector General 11/30/14 $36

7 25 Conduct an assessment of compliance with the 

revised OIG purchase card procedure 6 months 

after it is issued.

O Deputy Inspector General 09/30/16

1 O = Recommendation is open with agreed-to corrective actions pending. 

C = Recommendation is closed with all agreed-to actions completed. 

U = Recommendation is unresolved with resolution efforts in progress.
15-B-0014 27

Appendix A

Response to Draft Report

OCT 06 2014

MEMORANDUM

SUBJECT: Response to Office of Inspector General Draft Report of Audit OA-FY14-0235, EPA 

OIG Needs to Comply With EPA Purchase Card Policies to Avoid Improper Purchases, 

August 27, 2014

FROM: Charles Sheehan

Deputy Inspector General

TO: Kevin Christensen, Acting Assistant Inspector General

Office of Audit

The Office of Inspector General (OIG) for the U.S. Environmental Protection Agency (EPA) has 

reviewed Draft OIG audit OA-FY14-0235 and provides the following information in response to the 

audit recommendations. 

Recommendation 1—Update OIG Procedure 011 to be consistent with the EPA’s Contract 

Management Manual (CMM) 13.3. The procedure should include a requirement that all approvals be in 

electronic format.

Deputy Inspector General (DIG) Response: The OIG agrees with this recommendation and by 

March 31, 2015, OIG’s Office of Chief of Staff (OCOS) will revise Policy and Procedure 011, OIG 

Purchase Cards, to be consistent with CMM 13.3. The OIG will also the require use of the new 

automated system and the electronic purchase card log. 

Recommendation 2—Issue a memorandum and meet with OIG cardholders and approving officials to 

discuss the results of this audit. 

DIG Response: The OIG agrees with this recommendation. By October 15, 2014, OCOS will 

develop and distribute a memorandum (signed by the Inspector General) to notify Assistant 

Inspectors General about policy and procedures that require all OIG purchase cardholders and 

approving officials to comply with CMM 13.3, and to use the new automated system and electronic 

purchase card log. By November 15, 2014, OCOS will conduct outreach sessions for all purchase 

cardholders and approving officials to discuss audit results.

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C. 20460

OFFICE OF

INSPECTOR GENERAL
15-B-0014 28

Recommendation 3—Ensure OIG cardholders and approving officials have completed the EPA’s 

mandatory supplemental purchase card training by September 13, 2014. 

DIG Response: The OIG agrees with this recommendation. Tracking purchase card training is an 

EPA-owned system, and the OIG does not have access. OCOS will reach out to the EPA for a listing 

of completions. Anticipated completion date is October 31, 2014. 

Recommendation 4—Ensure the OIG has an acquisition professional who has purchase card authority 

to perform restricted transactions. 

DIG Response: The OIG agrees with this recommendation and by November 30, 2014, OCOS will 

appoint an acquisition professional who has purchase card authority to perform restricted purchases. 

Recommendation 5—Update OIG Procedure 204 to include a process for approving the purchase of 

items not specifically listed in the procedure. 

DIG Response: The OIG does not agree with this recommendation. Inclusion of the process for 

purchase card approval in OIG Procedure 204 is not appropriate because the purpose of that 

directive is management of the assets, not their purchase. The agency CMM covers the process for 

purchase cards and OIG management action on recommendation 1 to this report will cover 

implementation of the CMM.

Recommendation 6—Institute follow-up actions to hold individuals accountable and, if necessary, 

recover the funds used for improper purchases identified in this audit. 

DIG Response: The OIG agrees with the intent of this recommendation. Purchase cardholders and 

approving officials have been guided by OIG Policy and Procedure 011, OIG Purchase Cards, 

which needs to be updated to follow agency policy and procedures (see Recommendation 1). The 

flaw in Policy and Procedure 011 was a significant reason why improper payments were identified 

by the audit. Under these circumstances, additional follow-up actions to hold individual cardholders 

accountable are not appropriate. Instead, by March 31, 2015, the OIG will include in its revised 

Policy and Procedure 011, a requirement to hold purchase cardholders and approving officials 

responsible when requirements in the revised directives are not followed. In addition, the outreach 

sessions conducted as part of corrective action for Recommendation 2 will include information 

about the specific payments the audit identified as improper. These sessions will conducted by 

November 15, 2014.

Recommendation 7—Conduct an assessment of compliance with the revised OIG purchase card 

procedure 6 months after it is issued. 

DIG Response: The OIG agrees with this recommendation and, led by OCOS, plans to complete an 

assessment of compliance with the revised OIG purchase card policy and procedure during the fiscal 

year 2016 biennial purchase card review. Anticipated completion date is September 30, 2016.

cc: Assistant Inspectors General
15-B-0014 29

Appendix B

EPA OIG Distribution

Inspector General 

Deputy Inspector General 

Counsel to the Inspector General 

Chief of Staff, Office of Inspector General 

Assistant Inspector General for Audit

Assistant Inspector General for Investigations

Assistant Inspector General for Mission Systems

Assistant Inspector General for Program Evaluation

Deputy Assistant Inspector General for Congressional and Public Affairs