OFFICE OF THE 

SECRETARY

Internal Controls 

for Purchase Card 

Transactions Need

to Be Strengthened

FINAL REPORT NO. OIG-13-025-A

MAY 2, 2013

U.S. Department of Commerce

Office of Inspector General

Office of Audit and Evaluation

FOR PUBLIC RELEASE
UNITED STATES DEPARTMENT OF COMMERCE 

Office of Inspector General 

Washington. D.C. 20230 

May 2, 2013 

MEMORANDUM FOR: Ellen Herbst 

Senior Adviser to the Deputy Secretary 

QjJt},~ FROM: Andrew Katsaros 

Assistant Inspector General for Audit 

SUBJECT: Internal Controls for Purchase Card Transactions Need to Be 

Strengthened 

Final Report No. OIG-13-025-A 

Attached is our final report on the Department of Commerce's controls over purchase card 

transactions. 

We found that the Department needs to strengthen transaction-level controls over the 

creation and maintenance of transaction documentation, ensure that cardholders and approving 

officials obtain annual refresher training, and ensure that state and local sales tax is not paid. 

We also discovered improper or questionable transactions, as well as procedural issues. 

Most of the control deficiencies that we found can be corrected through improved 

documentation by cardholders and improved monitoring by approving officials. Moreover, 

enhancing cardholders' and approving officials' knowledge and understanding of applicable laws 

and regulations through improved, recurring training should further strengthen internal 

controls. 

Our audit was conducted on a sample of transactions recorded October I, 20 I 0, through 

September 30, 20 I I. The Department has represented and informed us in discussions that 

since this time, it has improved its internal controls related to training and purchase card use. 

However, because these corrective actions were implemented after our audit fieldwork, our 

report does not address these changes. The Summary of Agency Response and OIG Comments 

section of the report describes the corrective actions claimed by the Department. 

In accordance with Department Administrative Order 213-5, please provide us with your 

action plan within 60 days of the date of this memorandum. We appreciate the assistance and 

courtesies extended to us by the Department and its bureaus. If you have any questions about 

this report, please contact me at (202) 482-7859 or David Sheppard, Regional Inspector 

General for Audit, at (206) 220-7970. 

Attachment 
Report In Brief 

 MAY 2, 2013

OFFICE OF THE SECRETARY 

Internal Controls for Purchase Card Transactions Need to Be 

Strengthened 

OIG-13-025-A 

WHAT WE FOUND 

Transaction documentation was incomplete. Missing documentation included 

evidence of the availability of funds and of legitimate government need, proper 

vendor invoices or payment receipts, and evidence of receipt and acceptance. 

Procedural issues exist. Cardholders inappropriately paid state and local sales tax, 

did not pay invoices within 30 days, and faxed purchase card information. 

Transactions were improper or questionable. We identified transactions that were 

split, transactions that exceeded cardholders’ single-purchase limit, and 

purchases made by employees other than the cardholder. 

Cardholders and approving officials did not obtain annual refresher training. A 

significant number of cardholders did not obtain annual refresher training. 

WHAT WE RECOMMEND 

We make the following recommendations to the Chief Financial Officer and 

Assistant Secretary for Administration: 

1. Direct cardholders to document purchase requests and approvals, budget 

approvals, and bona fide government needs for purchase card transactions.

2. Strengthen the monthly purchase card reconciliation process.

3. Ensure that purchases are equitably distributed among qualified vendors and 

that agencies determine the most efficient and effective method of obtaining 

services (i.e., insourcing versus outsourcing, purchase cards versus other 

procurement tool).

4. Develop policies and procedures to ensure that purchase card files are 

retained when cardholders or approving officials end employment with the 

Department or otherwise discontinue their functions as cardholders or 

approving officials.

5. Improve training — as well as its tracking and monitoring — for cardholders 

and approving officials on regulations over the use of purchase cards.

6. Ensure the Department’s Electronic Transmission of Personally Identifiable 

Information policy is consistent with the Commerce Acquisition Manual 

(CAM).

7. Ensure the CAM’s record retention requirements expressly state the 

National Archives and Records Administration requirements. 

Background 

In fiscal year (FY) 2011, Department 

of Commerce staff used 4,515 purchase cards for 265,423 transactions, 

spending $118,628,549. 

In September 2011, we began this 

audit on transactions initiated during 

FY 2011. We selected approximately 

850 transactions for testing through 

a stratified random sample, ensuring 

that transactions from all bureaus 

were included and that results could 

be projected to the entire Department. We also projected bureauspecific results for the Census Bureau, National Oceanic and Atmospheric Administration, and National 

Institute of Standards and Technology, because those bureaus represented the largest users of purchase 

cards. 

Why We Did This Review 

We performed this audit to determine whether the Department had 

adequate transaction-level internal 

controls over the use of purchase 

cards. 

We initiated the audit as we believe 

purchase cards are an inherently 

risky method for purchasing, due to 

the highly decentralized nature of 

the transactions, the number of 

cardholders, and the amount of 

activity. We also observed an increase in congressional interest in 

the use of purchase card by federal 

agencies, as seen by the passing of 

the Government Charge Card 

Abuse Prevention Act of 2012 on 

October 5, 2012. Additionally, 

three other recent reviews on purchase card activity within the Department identified issues such as 

internal control deficiencies, questionable transactions, split transactions, receipt discrepancies, and 

ordering violations. 
FINAL REPORT NO. OIG-13-025-A 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Contents

Introduction ....................................................................................................................................................... 1

Findings and Recommendations.................................................................................................................... 3

I. Transaction Documentation Was Incomplete .............................................................................. 3

A. Evidence of the availability of funds prior to purchase was not included........................... 3

B. Evidence of legitimate government need prior to purchase was not included ................. 4

C. Proper vendor invoices or payment receipts were not included......................................... 5

D. No evidence of receipt or acceptance was maintained .......................................................... 5

E. Purchase card files were lost or missing .................................................................................... 6

II. Procedural Issues Exist ....................................................................................................................... 7

A. Cardholders inappropriately paid state and local sales tax.................................................... 7

B. Invoices were not paid within 30 days........................................................................................ 8

C. Purchases of accountable property were not reported to property custodians or

 documented in transaction files..................................................................................................... 9

D. Purchase card information was faxed ...................................................................................... 10

E. Purchases were not distributed equitably among qualified vendors................................. 11

III. Transactions Were Improper or Questionable ........................................................................ 11

A. Cardholders split purchases to avoid exceeding limits........................................................ 11

B. Transactions exceeded cardholders’ single-purchase limit................................................. 12

C. Cardholders allowed other employees to make purchases with their purchase cards 13

D. Questionable transactions.......................................................................................................... 13

IV. Cardholders and Approving Officials Did Not Obtain Annual Refresher Training.......... 14

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

Summary of Agency Response and OIG Comments............................................................................. 17

Appendix A: Objective, Scope, and Methodology.................................................................................. 19

Appendix B: Agency Response ................................................................................................................... 21

COVER: Detail of fisheries pediment,

U.S. Department of Commerce headquarters,

by sculptor James Earle Fraser, 1934
FINAL REPORT NO. OIG-13-025-A 1 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Introduction 

We performed a department-wide review of purchase card transactions to determine if the

Department has adequate transaction-level internal controls. Table 1 contains the 

Department’s purchase card activity for fiscal years (FYs) 2009–2011.1

Table 1. Purchase Card Activity for FYs 2009–2011 

FY 2009 FY 2010 FY 2011

Number of purchase 

cards 5,181 4,905 4,515 

Total transactions 301,791 338,615 265,423

Total spending $146,394,819 $167,776,743 $118,628,549 

Source: U.S. General Services Administration SmartPay statistics (https://smartpay.gsa.gov)

There have been three other recent reviews on purchase card activity within the Department: 

(1) a 2010 OIG audit of purchase card activity related to the Census Partner Support Program,

2

(2) a 2011 Ernst & Young performance audit of entity-level purchase card controls,

3

 and (3) a 

2011 audit of the Census Bureau’s purchase card program by external auditors.4

As part of the decennial census work, OIG reviewed purchase card activity related to the 

Partner Support Program. The final report identified internal control deficiencies and 

questionable transactions and recommended improvements in several areas, such as 

reconciliation and tracking processes, management oversight for the identification of 

noncompliance with policies and procedures, and cardholder training. 

The Ernst & Young audit performed minimal transaction testing and focused primarily on highlevel controls for the entire purchase card program. The report’s recommendations included

updates to the Commerce Acquisition Manual (CAM) and Charge Card Management Plan and 

development of an in-house training program. 

The Census Bureau’s review concentrated on internal controls in place during the decennial 

census and identified issues such as split transactions, receipt discrepancies, and ordering 

violations. 

In September 2011, we began this audit on transactions initiated during FY 2011. We selected 

approximately 850 transactions for testing through a stratified random sample, ensuring that 

 

1 Reported activity also includes convenience checks, which are part of the purchase card program and are issued 

to authorized cardholders. The checks are written against the cardholder’s purchase card account. They can be 

used in instances where a merchant does not accept purchase cards. 2 U.S. Department of Commerce Office of Inspector General, November 18, 2010. 2010 Census: The Partner 

Support Program Lacked Adequate Controls for Monitoring Purchases and Ensuring Compliance, OIG-11-013-A. 

Washington, D.C.: Department of Commerce OIG. 3 Ernst & Young, OMB Circular A-123 Support, Task Order 0002–Internal Control Review for Department-wide 

Purchase Card. Confidential. 4 Erimax, Inc., memorandum for L. Andrecs and C. Munno, February 23, 2011.
FINAL REPORT NO. OIG-13-025-A 2 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

transactions from all bureaus were included in the sample and that results could be projected 

to the entire Department. We also projected bureau-specific results for the Census Bureau, 

National Oceanic and Atmospheric Administration (NOAA), and National Institute of 

Standards and Technology (NIST), because those bureaus represented the largest users of 

purchase cards. See appendix A for details regarding our audit objective, scope, and 

methodology.

Our audit was conducted on a sample of transactions recorded October 1, 2010, through 

September 30, 2011. The Department has represented and informed us in discussions that

since this time, it has improved its internal controls related to training and purchase card use. 

However, because these corrective actions were implemented after our audit fieldwork, our 

report does not address these changes. The Summary of Agency Response and OIG Comments 

section of this report describes the corrective actions claimed by the Department.
FINAL REPORT NO. OIG-13-025-A 3 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Findings and Recommendations

In general, the Department needs to strengthen transaction-level controls over the creation 

and maintenance of transaction documentation, ensure that cardholders and approving officials 

obtain annual refresher training, and ensure that state and local sales tax is not paid. We also 

discovered improper or questionable transactions, as well as procedural issues. Most of the 

controls we found that need to be strengthened can be corrected through improved 

documentation by cardholders and improved monitoring by approving officials. However, 

enhancing cardholders’ and approving officials’ knowledge and understanding of applicable laws 

and regulations through improved, recurring training should further correct the deficiencies we 

found. 

I. Transaction Documentation Was Incomplete

Documentation that is required before a transaction can be made, such as evidence that 

funds are available and that a legitimate government need exists, was missing from 

transaction files. The files were also missing proper vendor receipts and invoices and 

evidence that purchased goods and services had been received and accepted. In addition, 

several cardholders’ files had been lost or destroyed in violation of records retention 

requirements.

The Department does not have prescribed or standardized forms that must be used by 

cardholders or bureaus, though the CAM describes the types of documentation required 

for all transaction files. While this allowed each bureau and office throughout the 

Department the autonomy to create documentation specific to their circumstances, 

improved guidance should be provided to ensure all cardholders are maintaining all required 

transaction documentation. 

A. Evidence of the availability of funds prior to purchase was not included

A significant number of transactions did not include documentation that the availability of 

funds had been verified beforehand (see table 2). This occurred primarily because personnel 

were unaware of this requirement or because many cardholders and approving officials 

believed that signatures by the approving official indicated that the availability of funds had 

been verified. However, based on the documentation available, this had never been 

explicitly stated. 

Cardholders should ensure that there is sufficient funding available before making a 

purchase and should document the availability of funds.5 Purchases could be considered

unallowable if there is insufficient funding. Furthermore, appropriations may be exceeded if 

purchases are not carefully tracked, resulting in violations of the Antideficiency Act.6

 

5 OMB Circular A-123, appendix B, section 4.8. CAM 1313.301, section 3.1 (Jan. 2010). CAM 1313.301, section 

3.11.2 (May 2012).

6 Antideficiency Act, 31 U.S.C. § 1341.
FINAL REPORT NO. OIG-13-025-A 4 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

However, this issue may be largely resolved through improved pretransaction 

documentation. 

Table 2. Purchases That Occurred Without Prior Evidence of Funds Availability

Estimated Percentage of Transactions

with Errors Estimated Value of Transactions with Errors

Commerce Census NIST NOAA Commerce Census NIST NOAA

Estimated

errors 80.23 98.01 69.60 84.93 $95,179,192 $7,253,217 $20,937,120 $52,419,829

Note: The Commerce column contains the estimated results for all bureaus within the Department, including Census, NIST, and 

NOAA. The range of estimated transactions with errors is based on a 95 percent confidence level and a margin of error of 3.55

percent ($4,207,996) for Commerce, 1.91 percent ($141,671) for Census, 6.27 percent ($1,887,514) for NIST, and 4.76 percent

($2,939,577) for NOAA. Therefore, while we have estimated an expected error rate for all transactions, we are 95 percent 

confident that the true error rate falls within the margin of error from the estimate.

B. Evidence of legitimate government need prior to purchase was not included

For a significant number of transactions, there was no documentation that a legitimate 

government need existed before the transaction took place (see table 3). This 

documentation can be a request from agency personnel to a cardholder, notes from the 

cardholder regarding the requestor’s information and order content, or approval from 

an approving official.7

 

The primary reasons that no documentation existed were that approving officials were 

not requiring that it be included with cardholder files and a number of approving officials 

had provided blanket preapprovals to their cardholders to make any purchases under a 

specific dollar value throughout the year in lieu of documenting the need for each 

purchase. Although this may appear to increase the efficiency of the transaction process, 

we believe it is contrary to the review and oversight process envisioned by the CAM 

and OMB Circular A-123, appendix B. 

Table 3. Purchases That Occurred Without Prior Evidence of Legitimate Need 

Estimated Percentage of Transactions 

with Errors Estimated Value of Transactions with Errors

Commerce Census NIST NOAA Commerce Census NIST NOAA

Estimated

errors 47.02 50.30 7.77 62.25 $55,785,310 $3,722,661 $2,336,317 $38,420,401

Note: The Commerce column contains the estimated results for all bureaus within the Department, including Census, NIST, and 

NOAA. The range of estimated transactions with errors is based on a 95 percent confidence level and a margin of error of 4.34

percent ($5,149,889) for Commerce, 6.76 percent ($500,318) for Census, 3.62 percent ($1,087,621) for NIST, and 6.45

percent ($3,980,284) for NOAA. Therefore, while we have estimated an expected error rate for all transactions, we are 95 

percent confident that the true error rate falls within the margin of error from the estimate. 

 

7 OMB Circular A-123, appendix B, section 4.8. CAM 1313.301, sections 3.12.2 and 3.14.2 (Jan. 2010). CAM 

1313.301, sections 3.11.2 and 3.13.2 (May 2012).
FINAL REPORT NO. OIG-13-025-A 5 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

C. Proper vendor invoices or payment receipts were not included

Many transactions were not supported by a proper vendor invoice or payment receipt, 

as required by the Department (see table 4).

8 This occurred because monitoring 

controls over monthly credit card reconciliations are weak. Cardholders should 

maintain a file for each purchase card transaction, which includes a copy of an online 

transaction, cash register receipt, itemized receipt, or faxed verification of order.9

Although cardholders were, in some instances, able to identify alternative sources of 

documentation to support transactions, this resulted in some transactions being judged 

to be questionable (see subfinding III.D). 

During the review of the monthly reconciliation of cardholders’ accounts, approving 

officials are required to ensure that all transactions were necessary government 

purchases and complied with all applicable laws, regulations, and policies and guidance.10

Without proper vendor invoices and receipts, approving officials are not able to 

adequately determine what was purchased, review a breakdown of costs, or determine

whether all applicable requirements were met. 

Table 4. Transactions That Were Not Supported by a Vendor Invoice or Receipt

Estimated Percentage of Transactions

with Errors Estimated Value of Transactions with Errors

Commerce Census NIST NOAA Commerce Census NIST NOAA

Estimated 

errors 8.52 28.07 3.31 7.09 $10,104,158 $2,077,416 $994,473 $4,376,541 

Note: The Commerce column contains the estimated results for all bureaus within the Department, including Census, NIST, and 

NOAA. The range of estimated transactions with errors is based on a 95 percent confidence level and a margin of error of 2.62

percent ($3,110,286) for Commerce, 6.09 percent ($450,983) for Census, 2.35 percent ($706,128) for NIST, and 3.41 percent

($2,105,584) for NOAA. Therefore, while we have estimated an expected error rate for all transactions, we are 95 percent 

confident that the true error rate falls within the margin of error from the estimate.

D. No evidence of receipt or acceptance was maintained

We found transactions that did not have evidence of receipt or acceptance for the 

purchased good(s) or service(s) (see table 5). Similar to the maintenance of proper 

vendor support, this occurred because monitoring controls over monthly credit card 

reconciliations are weak. Cardholders should maintain delivery receipts and immediately 

inspect supplies to ensure that orders are complete and items are in acceptable 

 

8 CAM 1313.301, section 3.12.2 (Jan. 2010) and section 3.11.2 (May 2012), requires a “copy of online transaction, 

cash register receipt, itemized receipt, or faxed verification of order” to be included in transaction file 

documentation. “Merchants are required to provide a transaction record (receipt) that details the items 

purchased, the dollar amount of each item and the total amount of the transaction for each charge placed on the 

card. Phone, fax and Internet orders should provide the receipt with the order shipment.” J.P.Morgan, Cardholder 

User Guide. 9 CAM 1313.301, section 3.12.2 (Jan. 2010). CAM 1313.301, section 3.11.2 (May 2012).

10 CAM 1313.301, section 3.14.2 (Jan. 2010). CAM 1313.301, section 3.13.2 (May 2012).
FINAL REPORT NO. OIG-13-025-A 6 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

condition.11 If delivery or receipt cannot be confirmed, there is no proof the item or 

service was received, increasing the potential risk that it was not received or was an 

improper purchase. 

Table 5. Purchases That Occurred Without Documented Evidence of Receipt or Acceptance

Estimated Percentage of Transactions 

with Errors Estimated Value of Transactions with Errors

Commerce Census NIST NOAA Commerce Census NIST NOAA

Estimated

errors 27.64 33.91 13.92 35.68 $32,791,830 $2,509,264 $4,187,116 $22,020,973

Note: The Commerce column contains the estimated results for all bureaus within the Department, including Census, NIST, and 

NOAA. The range of estimated transactions with errors is based on a 95 percent confidence level and a margin of error of 4.17

percent ($4,951,900) for Commerce, 6.42 percent ($475,403) for Census, 4.75 percent ($1,430,141) for NIST, and 6.38 percent

($3,937,663) for NOAA. Therefore, while we have estimated an expected error rate for all transactions, we are 95 percent 

confident that the true error rate falls within the margin of error from the estimate.

E. Purchase card files were lost or missing

All original supporting documents were missing for seven transactions tested from 

seven different cardholders. However, two of the cardholders (from NOAA) were able 

to reproduce documentation for their respective transactions during the audit. Due to 

the lack of documentation, we could not complete testing for the remaining transactions 

and considered the transactions noncompliant for most testing attributes. As we did not 

attempt to identify missing documentation for all cardholders, we cannot make 

estimates for the total missing documentation throughout the Department. Three of the 

cardholders (two from NOAA and one from NIST) were missing a combined 6 months’ 

worth of purchase card documentation, representing transactions totaling 

approximately $7,881. NOAA agency officials could not find another cardholder’s files 

for FY 2011 after the cardholder’s employment ended, although the agency was working 

to reconstruct the file. The cardholder had made 55 transactions, totaling approximately 

$17,164 during FY 2011. Another cardholder’s records had been destroyed, according 

to bureau officials, after the cardholder’s employment with the Census Bureau ended. 

This cardholder had made 17 transactions, totaling approximately $4,130, during FY 

2011. 

The National Archives and Records Administration’s (NARA) General Records 

Schedule requires documentation for all transactions at or below the simplified 

acquisition threshold to be maintained for 3 years after final payment and 

documentation for all transactions exceeding the simplified acquisition threshold to be 

maintained for 6 years and 3 months after final payment.12 Although the CAM requires 

approving officials to retain cardholder files for 3 years after final payment and 

cardholders to adhere to all applicable requirements for purchases above the micropurchase limit, the CAM does not specifically mention the possibility that some records 

 

11 Where possible, purchased supplies and services should be received and accepted by someone independent of 

the purchase. CAM 1313.301, section 3.10 (Jan. 2010). CAM 1313.301, section 3.9 (May 2012).

12 National Archives and Records Administration, April 2010. General Records Schedule 3: Procurement, Supply, and 

Grant Records, 3.a.(1). http://www.archives.gov/records-mgmt/grs/grs03.html. 
FINAL REPORT NO. OIG-13-025-A 7 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

may need to be retained for more than 3 years. The CAM should expressly state the 

NARA requirement for records retention.

13 

II. Procedural Issues Exist

Cardholders inappropriately paid state and local sales tax, did not pay invoices within 30 

days, and faxed purchase card information. In other instances, purchases of accountable 

property were not referred to an accountable property custodian, and purchases were not 

distributed equitably among qualified vendors. 

A. Cardholders inappropriately paid state and local sales tax

In FY 2011, Commerce bureaus paid an estimated $292,619 in state or local sales taxes, 

which were not refunded by vendors (see table 6). Some cardholders recovered taxes; 

however, others either were not aware that they had paid taxes or did not attempt to 

recover taxes even though they were aware of the rule. 

The federal government is not required to pay state or local sales taxes.14 Cardholders 

are allowed to pay the taxes if they are subsequently refunded by the vendor. All 

instances of paid sales tax should have been identified and corrected either by the 

cardholder or the approving official during the review and reconciliation process. 

The Department previously identified this as an issue and released a memorandum in 

January 2011, reminding all purchase card program participants of the federal 

government’s sales tax exemption.15 However, a majority of the transactions where 

sales tax had been paid occurred after the memorandum’s release. 

In addition, although the Department obtains transaction data from J.P.Morgan’s 

PaymentNet system, we found the data to be inconsistent with the supporting 

documentation that we reviewed regarding paid sales tax. Most transactions were 

correctly shown in PaymentNet as not paying sales tax, although our review of the 

documentation showed that sales tax had been paid in some cases. Conversely, 

PaymentNet identified some transactions as including sales tax, although our review 

showed that they did not include sales tax. We were therefore unable to rely on these

data in our audit. Instead, we based our estimate on the results of audit testing, 

extrapolated to the untested population of transactions. If the Department is also not 

able to rely on these data, increased reliance is placed on the review by approving 

officials to identify sales tax that has been inappropriately paid. 

 

13 CAM 1313.301, section 3.14.2 (Jan. 2010). CAM 1313.301, section 3.13.2 (May 2012). CAM 1313.301, section 3.2 

(Jan. 2010 and May 2012).

14 OMB Circular A-123, appendix B, section 11.1. 15 U.S. Department of Commerce, Assistant Secretary for Administration, memorandum to Purchase, Travel, and 

Fleet Charge Card Program participants, Sales Tax Exemption, January 14, 2011.
FINAL REPORT NO. OIG-13-025-A 8 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

 Table 6. Estimated Sales Tax That Was Inappropriately Paid

Commerce Census NIST NOAA

Estimated 

sales tax paid $292,619 $5,515 $50,789 $208,872 

Note: The Commerce column contains the estimated results for all bureaus 

within the Department, including Census, NIST and NOAA. Estimates were 

based on sales taxes identified as paid in the transaction documentation.

The range of estimated sales taxes paid is based on a 95 percent confidence 

level and a margin of error of $5,990 for Commerce, $58 for Census, 

$1,336 for NIST, and $4,996 for NOAA. Therefore, while we have 

calculated an estimated amount of sales taxes paid, we are 95 percent 

confident that the actual sales taxes paid falls within the margin of error 

from the estimate. 

B. Invoices were not paid within 30 days 

Some invoices for purchase card transactions were not paid within the required 30-day 

payment period (see table 7). In addition, almost 60 percent of the late payments were 

made more than 60 days after the invoice date, and several were paid more than 1 year 

after the invoice date. Delayed payments could have been caused by vendors (late 

invoicing) or bureaus (late payment processing). However, management could not 

distinguish between these two causes because cardholders were not regularly 

documenting the date when invoices were received. This documentation could be used 

as support to extend the 30-day payment period, if delayed by vendors, and save 

taxpayers’ money. Payments were also late because cardholders were unaware that 

payment was required within 30 days.

The Prompt Payment Act requires purchase card payments to be made within 30 days 

after a proper invoice has been received for the amount due.16 Whenever an agency fails 

to annotate the invoice with the date of receipt, an invoice is considered to be received 

on the date of the invoice.

17 If payments are not made within 30 days, the Department is 

liable for interest on the unpaid balance. Interest will accrue on an unpaid balance 

starting the day after the due date through the payment date and shall be paid without 

regard to whether the vendor has requested payment for the penalty. A notice should 

accompany the payment, stating the amount of interest penalty, number of days late, and 

the rate used to calculate interest owed.

18 

 

16 5 CFR § 1315.4(g)(iv). 17 5 CFR § 1315.4(b)(2). 18 5 CFR § 1315.10.
FINAL REPORT NO. OIG-13-025-A 9 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Table 7. Transactions Not Paid Within 30 Days

Estimated Percentage of Transactions

with Errors Estimated Value of Transactions with Errorsa 

Commerce Census NIST NOAA Commerce Census NIST NOAA

Estimated

errors 4.49 3.25 2.66 3.50 $5,322,766 $240,243 $799,208 $2,163,071 

Note: The Commerce column contains the estimated results for all bureaus within the Department, including Census, 

NIST, and NOAA. The range of estimated transactions with errors is based on a 95 percent confidence level and a 

margin of error of 2.00 percent ($2,375,529) for Commerce, 2.37 percent ($175,153) for Census, 2.16 percent

($648,680) for NIST, and 2.38 percent ($1,468,223) for NOAA. Therefore, while we have estimated an expected error 

rate for all transactions, we are 95 percent confident that the true error rate falls within the margin of error from the 

estimate. a Values do not include interest or penalties.

C. Purchases of accountable property were not reported to property custodians or documented in 

transaction files

In six transactions tested, the purchase of accountable property was not reported to the 

property custodian (see table 8). In eight transactions tested, purchased accountable 

property was reported to the property custodian, but documentation was not 

maintained with the transaction files, as required. 

Accountable personal property totaling $5,000 or items considered sensitive, regardless 

of cost, should be reported to a property custodian for tracking.19 If accountable 

property is not submitted to the property officer for inventory purposes, there is an 

increased risk for inaccurate property inventory listings and possible theft. During the 

monthly account reconciliation, approving officials are required to ensure that 

cardholders have completed and submitted the proper accountable property 

documentation to the accountable property office. When documentation has not been 

maintained in the transaction file, approving officials cannot ensure the property office 

has been informed, as required. 

 

19 CAM 1313.301, section 3.11 (Jan. 2010). CAM 1313.301, section 3.10 (May 2012).
FINAL REPORT NO. OIG-13-025-A 10

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Table 8. Reporting of Accountable Property Purchases

Number of Transactions Value of Transactions (Rounded)

Commerce NIST NOAA OSEC Commerce NIST NOAA OSEC

Total purchases 

of accountable 

property 22 9 12 1 $34,640 $12,390 $16,731 $5,519

Property 

purchased and 

not reported to 

accountable 

property 

custodian 6 1 4 1 9,133 331 3,284 5,519

Property 

purchases 

reported, but 

no transaction 

file documentation 8 4 4 0 11,832 4,820 7,012 0

Note: The Commerce column contains the total results for all bureaus within the Department, including NIST, NOAA, and 

OSEC. Due to the small number of transactions in the sample that included the purchase of accountable property, we were 

not able to extrapolate the results of testing to the entire population without an unreasonably high margin of error, which 

would make the results statistically unreliable. Therefore, we are only reporting actual results of testing.

D. Purchase card information was faxed

Nineteen cardholders faxed their purchase card account number information, which is 

specifically prohibited, for 21 separate transactions (see table 9).

20 Transmitting such 

sensitive information in this manner leads to an increased risk of fraud, waste, or abuse

due to associated security issues. We observed, however, that the Department’s 

Electronic Transmission of Personally Identifiable Information (PII) Policy allows 

purchase card information to be faxed in some circumstances.21 This policy should be 

updated to be consistent with the CAM.

 

20 CAM 1313.301, section 2.9 (Jan. 2010 and May 2012). 21 U.S. Department of Commerce, Office of the Chief Information Officer, Electronic Transmission of Personally 

Identifiable Information Policy, July 30, 2009.
FINAL REPORT NO. OIG-13-025-A 11

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

 Table 9. Faxed Purchase Card Information

Bureau

Number of 

Cardholders

Number of 

Transactions

Census 7 9

ITA 1 1

NIST 11 11

Total 19 21

Note: Compliance with this requirement was not part of our 

standard testing for all transactions. Therefore, we were not able 

to project an estimated error rate to the untested population of 

transactions.

 

E. Purchases were not distributed equitably among qualified vendors

Several NIST cardholders primarily used a single vendor for moving and related services 

instead of distributing purchases equally among qualified suppliers. The cardholders 

made 434 payments, totaling $315,379, to one vendor during FY 2011. NIST officials had 

identified two competitors for the vendor but made only 71 payments, totaling $16,921, 

to one competitor and no payments to the other during FY 2011. Cardholders are 

required to distribute purchases equitably among qualified suppliers.22 Furthermore, the 

excessive use of one vendor, and lack of consideration for alternative methods of 

procurement or insourcing, denied NIST the benefits of competition for these services. 

The cardholders explained that the vendor was selected based on the bureau’s past 

experience with the vendor. 

Additionally, according to one NIST employee, the decision to outsource the services 

was based on an OMB Circular A-76 study performed by NIST in 1989. NIST should 

determine whether the continued outsourcing of these services to a vendor without a 

contract is still the most efficient and effective method of obtaining the services 

required. 

III. Transactions Were Improper or Questionable 

We identified transactions that were split, transactions that exceeded cardholders’ singlepurchase limit, purchases made by employees other than the cardholder, and a few 

questionable transactions. 

A. Cardholders split purchases to avoid exceeding limits

Some transactions for goods and services were split into multiple orders without 

justification. When we questioned the cardholders and approving officials, they could 

not give adequate reasons for the multiple orders. We believe that, at least in some 

instances, this was done to avoid exceeding authorized limits on individual purchase card 

transactions (see table 10). Cardholders are not permitted to split a purchase into 

multiple purchases to avoid exceeding their single-purchase limit, the micro-purchase 

 

22 CAM 1313.301, section 3.1 (Jan. 2010 and May 2012).
FINAL REPORT NO. OIG-13-025-A 12

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

threshold, or any other purchase card limit.

23 Because the noted error rate was not 

significant, we found controls in this area to be generally effective and make no 

recommendation.24

Table 10. Split Purchases

Estimated Percentage of Transactions with 

Errors

Estimated Value of Transactions

with Errors

Commerce Census NIST NOAA Commerce Census NIST NOAA

Estimated 

errors 0.74 0.38 0.21 1.10 $883,472 $27,811 $62,443 $681,297 

Notes: The Commerce column contains the estimated results for all bureaus within the Department, including Census, NIST and 

NOAA. The range of estimated transactions with errors is based on a 95 percent confidence level and a margin of error of 0.79

percent ($939,783) for Commerce, 0.39 percent ($29,017) for Census, 0.17 percent ($50,361) for NIST, and 1.29 percent

($795,336) for NOAA. Therefore, while we have estimated an expected error rate for all transactions, we are 95 percent 

confident that the true error rate falls within the margin of error from the estimate.

B. Transactions exceeded cardholders’ single-purchase limit 

We found transactions that were above cardholders’ single-purchase limit when the 

cardholders did not meet the special provisions required to increase their limit (see 

table 11). This occurred because agency program coordinators temporarily gave the 

cardholders increases in their single-purchase limits and then lowered the limits after 

the purchase was made. These purchases should have been made by a cardholder with a 

higher authorized single-purchase limit or through a different purchasing method. 

The single-purchase limit for cardholders who are not in an acquisition position is 

generally the micro-purchase threshold ($3,000) unless the cardholder has met certain

requirements.

25 In addition to the training an individual must complete to become a 

cardholder, cardholders requesting a single-purchase limit above the micro-purchase 

threshold must also complete the Federal Acquisition Certification in Contracting 

training and document completion in various areas of education, experience, and 

training.26 

Purchase cards may be used to make micro-purchases, place a task or delivery order, or 

make payments on other contractual instruments when agreed on by the contractor.27

For purchases that exceed the micro-purchase limit or are outside these categories, 

cardholders should consider other methods of procurement such as purchase orders or 

blanket purchase agreements.28

 

23 CAM 1313.301, section 3.1 (Jan. 2010 and May 2012). 24 Assessment of significance is based on auditor judgment in relation to the tested control. 25 Federal Acquisition Regulation (FAR) subpart 13.201(b) and CAM 1313.301, section 2.1.1 (Jan. 2010 and May 

2012). 26 CAM 1313.301, section 2.1.1.2 (Jan. 2010 and May 2012). 27 FAR subpart 13.301(c). 28 See FAR subpart 13.302-307. 
FINAL REPORT NO. OIG-13-025-A 13

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Existing controls prevent purchase card transactions that exceed a cardholder’s singlepurchase limit from going through. Only through direct intervention of these controls 

can such transactions even be executed. Because the noted error rate was not 

significant, we found controls in this area to be generally effective and make no 

recommendation.29

 Table 11 Purchases Exceeding Cardholder Single-Purchase Limits

Estimated Percentage of Transactions

with Errors

Estimated Value of Transactions

with Errors

Commerce Census NIST NOAA Commerce Census NIST NOAA

Estimated 

errors 0.04 0.00 0.00 0.00 $46,669 $0 $0 $0

Note: The Commerce column contains the estimated results for all bureaus within the Department, including 

Census, NIST, and NOAA. The range of estimated transactions with errors is based on a 95 percent confidence 

level and a margin of error of 0.03 percent ($33,501) for Commerce, 0.00 percent ($0) for Census, 0.00 percent

($0) for NIST, and 0.00 percent ($0) for NOAA. Therefore, while we have estimated an expected error rate for 

all transactions, we are 95 percent confident that the true error rate falls within the margin of error from the 

estimate.

C. Cardholders allowed other employees to make purchases with their purchase cards

We found four separate transactions with evidence that cardholders had allowed other 

employees to make purchases using their purchase card: two at NOAA, one at Census, 

and one at NIST. Only assigned cardholders are allowed to make purchases with their 

purchase cards.30 Although cardholders are required to certify that they have read and 

understand the policies and procedures outlined in the CAM, which prohibits sharing 

purchase cards with others, the cardholders stated they were not aware of this 

restriction. For the four cardholders’ remaining transactions, we were not able to 

determine which transactions were made by the cardholders or by other individuals, 

and therefore how pervasive the problem was, without reviewing all transactions by 

each of the cardholders. As this issue was not included in our standard testing for each 

transaction, we were unable to project these issues to the untested population of 

transactions. Nonetheless, the Department should review transactions associated with 

these cards further to confirm the integrity of related purchases.

D. Questionable transactions

We found transactions we considered to be questionable (see table 12). Most of these 

transactions occurred because adequate documentation was not maintained to support 

the allowability of the purchase. We also found transactions for unallowable goods or 

services, such as the purchase of bottled water,31 and transactions that were improperly 

executed with a purchase card or convenience check.32 This occurred primarily because 

 

29 Assessment of significance is based on auditor judgment in relation to the tested control. 30 CAM 1313.301, sections 2.9 and 3.1 (Jan. 2010 and May 2012). 31 CAM 1313.301, section 3.8.3 (Jan. 2010), and CAM 1313.301, section 3.7.3 (May 2012), state that bottled water 

is considered a personal expense.

32 CAM 1313.301, section 4.2 (Jan. 2010 and May 2012), states that convenience checks shall not be used for an 

honorarium fee to a non-U.S. citizen not authorized to receive the payment in accordance with the terms and 
FINAL REPORT NO. OIG-13-025-A 14

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

adequate documentation was not maintained to support the allowability of purchases

and purchases were not sufficiently monitored. Cardholders should ensure that 

purchases are for an allowable purpose.33 Transactions were also considered to be 

questionable if there was not sufficient documentation available to support their 

allowability (see subfindings I.C and I.E). Because the noted error rate was not 

significant, we found controls in this area to be generally effective and make no 

recommendation.34

Table 12. Questionable Purchase Card Transactions

Estimated Percentage of Transactions 

with Errors

Estimated Value of Transactions with Errors

Commerce Census NIST NOAA Commerce Census NIST NOAA

Estimated 

errors 2.78 1.48 0.99 3.30 $3,302,808 $109,714 $298,188 $2,039,872 

Note: The Commerce column contains the estimated results for all bureaus within the Department, including Census, NIST, and 

NOAA. The range of estimated transactions with errors is based on a 95 percent confidence level and a margin of error of 1.73

percent ($2,046,790) for Commerce, 1.65 percent ($122,383) for Census, 1.36 percent ($410,355) for NIST, and 2.38 percent

($1,467,278) for NOAA. Therefore, while we have estimated an expected error rate for all transactions, we are 95 percent 

confident that the true error rate falls within the margin of error from the estimate. 

IV. Cardholders and Approving Officials Did Not Obtain Annual Refresher 

Training

For each transaction tested, we reviewed whether the cardholder and their approving 

official had received refresher training during FY 2011. A significant number of cardholders 

and/or approving officials did not meet the annual training requirements.35 Lack of training 

can lead to misuse of the purchase card and failure to comply with requirements of the 

purchase card program. Furthermore, failure to complete required refresher training should 

have led to suspension of cardholder and approving official purchase card accounts until 

training was successfully completed, although we did not observe this.

36 The Department 

did not have sufficient internal controls to monitor or identify whether cardholders and 

approving officials were obtaining refresher training as required. 

During the course of this audit, the Department made some progress in ensuring that 

cardholders and approving officials obtain required training. The Department released an 

updated CAM in May 2012, which requires that all cardholders and approving officials obtain 

6 hours of purchase card training each fiscal year no later than July 30. The Department has 

also worked with an external vendor to develop a more comprehensive purchase card 

training class. However, we found that many cardholders and approving officials were not 

 

conditions of their visa. We found that NIST paid an honorarium to a non-U.S. citizen without verifying that the 

payment was authorized by their visa.

33 CAM 1313.301, sections 3.1 and 3.8 (Jan. 2010). CAM 1313.301, sections 3.1 and 3.7 (May 2012). 34 Assessment of significance is based on auditor judgment in relation to the tested control. 35 CAM 1313.301, section 2.1.3 (Jan. 2010 and May 2012). 36 CAM 1313.301, section 2.1.3 (Jan. 2010 and May 2012).
FINAL REPORT NO. OIG-13-025-A 15

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

aware of the new requirements or the requirements from the previous CAM, released in 

January 2010. 

Table 13. Transactions by Personnel Who Did Not Meet Training Requirements During FY 2011

Estimated Percentage of Transactions by 

Personnel Who Did Not Meet Training 

Requirements

Estimated Value of Transactions by Personnel Who Did Not 

Meet Training Requirements

Commerce Census NIST NOAA Commerce Census NIST NOAA

Estimated 

cardholders 39.65 24.61 13.85 51.21 $47,031,581 $1,821,532 $4,166,138 $31,606,088

Estimated 

approving 

officials 40.29 57.58 9.00 48.20 $47,797,044 $4,261,435 $2,707,669 $29,748,942

Note: The Commerce column contains the estimated results for all bureaus within the Department, including Census, NIST, and 

NOAA. The range of estimated transactions made by cardholders who did not obtain training is based on a 95 percent 

confidence level and a margin of error of 4.55 percent ($5,393,692) for Commerce, 5.75 percent ($425,269) for Census, 4.73

percent ($1,423,531) for NIST, and 6.63 percent ($4,094,898) for NOAA. The range of estimated transactions approved by

approving officials who did not obtain training is based on a 95 percent confidence level and a margin of error of 4.55 percent

($5,399,508) for Commerce, 6.59 percent ($488,017) for Census, 3.91 percent ($1,174,781) for NIST, and 6.62 percent

($4,083,579) for NOAA. Therefore, while we have estimated an expected error rate for all transactions, we are 95 percent 

confident that the true error rate falls within the margin of error from the estimate.

Recommendations

We make the following recommendations to the Chief Financial Officer and Assistant 

Secretary for Administration: 

1. Direct cardholders to document purchase requests and approvals, budget approvals, 

and bona fide government needs for all purchase card transactions. 

2. Strengthen the monthly purchase card reconciliation process by requiring approving 

officials to ensure all transactions have proper receipt or invoice support, evidence 

of receipt and acceptance for goods and services received, and evidence that 

accountable property purchases were forwarded to property custodians, when

applicable. The reconciliation should also identify and initiate corrective action when 

sales taxes have been paid or invoices have not been paid within the 30-day payment 

period. 

3. Ensure that purchases are equitably distributed among all qualified vendors and that 

agencies determine the most efficient and effective method of obtaining services (i.e. 

insourcing versus outsourcing, purchase cards versus other procurement tool). 

4. Develop policies and procedures to ensure that purchase card files are retained 

when cardholders and/or approving officials end employment with the Department

or otherwise discontinue their functions as cardholders and approving officials. 

5. Improve training for cardholders and approving officials to ensure that all purchase 

card program participants have an adequate understanding of all applicable laws and 
FINAL REPORT NO. OIG-13-025-A 16

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

regulations over the use of purchase cards, including the proper security of purchase 

cards. 

6. Improve the tracking and monitoring of training to ensure that all cardholders and 

approving officials receive the required annual refresher training and that accounts 

are suspended when they do not. 

7. Ensure the Department’s Electronic Transmission of PII Policy is consistent with the 

CAM regarding the faxing of purchase card information. 

8. Ensure the CAM’s record retention requirements expressly state the NARA

requirements. 
FINAL REPORT NO. OIG-13-025-A 17

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Summary of Agency Response and OIG 

Comments

On April 17, 2013, OIG received the Department’s comments on the draft report, which we 

include as appendix B of this report. We consider the Department’s reply to be nonresponsive 

because it did not state concurrence or nonconcurrence with the recommendations. According 

to Department Administrative Order 213-3, when responding to an audit, Department officials 

must state concurrence or reasons for nonconcurrence with the recommendations.

37 

The Department stated that it has already implemented a series of corrective actions based on 

other reviews of its purchase card program. The Department represented that it has improved 

tracking of cardholders and approving officials who have not obtained refresher training and will 

suspend accounts that fail to complete refresher training. The Department stated it has also 

developed and implemented enhanced in-class training and is completing development of an

enhanced online training class, which cardholders, approving officials, and agency program 

coordinators will be required to complete each fiscal year, before July 30. As these corrective 

actions occurred subsequent to completion of our fieldwork, they are not covered in our audit. 

The Department explained that it has also improved oversight and enforcement to ensure 

accounts and transactions are reconciled timely. While making those improvements is 

commendable, this audit did not take issue with reconciliations not being performed. Our audit 

determined that the quality of the review of account reconciliations and supporting 

documentation by approving officials was not adequate. Many of the findings in this audit, 

including incomplete documentation, procedural issues, and questionable or improper 

transactions, could have been discovered and corrected during a proper review of transaction 

files by approving officials. 

The Department stated it will ensure that its PII policy is consistent with the CAM but 

disagreed with our assessment that the CAM’s guidance for records retention was not 

consistent with NARA guidance. The Department believes that a blanket statement within the 

CAM requiring that cardholders with authority to use the purchase card above the micropurchase threshold comply with all requirements of federal and departmental acquisition laws, 

regulations, policies, and guidance is sufficient. As indicated in the report, the CAM lists 

approving officials as being responsible for ensuring that cardholder files are retained for 3 years 

from final payment, without distinguishing between transactions above or below any threshold.

We believe the guidance within the CAM should expressly state the NARA guidance, as noted 

in our recommendation. 

The Census Bureau also provided feedback regarding specific transactions included in our 

findings. We reviewed the transactions and updated our findings as appropriate.

 

37 Department Administrative Order 213-3, section 5.06(b)(1); see also Department Administrative Order 213-5, 

section 5.01(d)(2)–(3). 
FINAL REPORT NO. OIG-13-025-A 18

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

We look forward to receiving the Department’s action plan, addressing our report 

recommendations. 
FINAL REPORT NO. OIG-13-025-A 19

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Appendix A: Objective, Scope, and 

Methodology

The objective of this review was to determine if the Department has adequate transaction-level

internal controls over purchase card transactions. The audit scope included all transactions 

from all bureaus, except for the Office of Inspector General, occurring during FY 2011 

(October 1, 2010, through September 30, 2011). We conducted fieldwork from March 2012 

through September 2012 at various bureau locations throughout the country.

To accomplish our audit objective, we did the following: 

• Obtained data from J.P.Morgan’s PaymentNet system for all purchase card transactions 

created from October 1, 2010, through September 30, 2011. We analyzed the data for 

evidence of potential risk factors using SAS and classified transactions as potentially 

higher or lower risk based on the results. 

• Developed a random statistical sample by stratifying transactions by bureau and by 

potentially higher or lower risk transactions. Transactions were selected for testing in 

each strata based on random number generation and availability of staff within various 

locations. 

• Reviewed previous reports of audits and reviews of the Department’s purchase card 

program and applicable criteria, including Federal Acquisition Regulation subpart 13, 

Commerce Acquisition Manual 1313.301, and OMB Circular A-123, appendix B, and 

Executive Order 12931 (Federal Procurement Reforms). 

• Reviewed documentation supporting purchase card transactions and followed up on 

issues identified. Issues found in the tested transactions were projected to the universe 

of untested transactions. 

We reviewed internal controls significant within the context of the audit objective by 

interviewing Department officials, examining policies and procedures, reviewing written 

assertions of Department officials, and reviewing transaction documentation for evidence of 

internal controls. We found that the Department needs to improve several aspects of its 

internal controls. These issues are discussed in the findings of this report.

To assess the reliability of computer-processed data obtained from J.P.Morgan’s PaymentNet 

system, we (1) looked for obvious errors in accuracy and completeness, (2) interviewed 

Commerce and J.P.Morgan officials who were knowledgeable about the data, and (3) directly 

tested against supporting documentation. We determined that the data were sufficiently reliable 

for the purpose of this report. While we found J.P.Morgan’s sales tax transaction data to be 

unreliable, we did not rely upon the data for the findings or conclusions in this report. 

The review was conducted under the authority of the Inspector General Act of 1978, as 

amended, and the Department Organization Order 10-13, dated August 31, 2006. We 
FINAL REPORT NO. OIG-13-025-A 20

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

conducted this audit in accordance with generally accepted government auditing standards.

Those standards require that we plan and perform the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and conclusions based on our audit 

objectives. We believe that the evidence obtained provides a reasonable basis for our findings 

and conclusions.
FINAL REPORT NO. OIG-13-025-A 21

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Appendix B: Agency Response

APR 17 2013 

MEMORANDUM FOR: 

FROM: 

SUBJECT: 

Andrew Katsaros 

UN liED STATES DEPARTMENT OF COMMERCE 

Chief Financial Officer and 

Assistant Secretary tor- Administration 

Washington, D.C. 20230 

Assistant Inspector General for Audit 

Barry E. Berkowitz ~n -~-I .L 

Senior Procurement Executive ~ ~ P... 

and Director for Acquisition Management 

Response to Internal Controls for Purchase Card 

Transactions Need to Be Strengthened Draft Report 

The Office of Acquisition Management appreciates the opportunity to comment on the 

Office of Inspector General's (OIG) draft report on the Department of Commerce's 

(DOC) controls over purchase card transactions. The draft report provides preliminary 

conclusions and suggested recommendations for strengthening internal controls for the 

purchase card program based on FY11 data. The draft report was not particularly 

helpful since many of the findings included within the report were previously identified 

during the Department's Fiscal Year 2010 A-123 Internal Controls Review and OAM has 

implemented corrective actions to address those findings and other corrective actions 

are currently underway. As the impact of those tightened controls was not assessed, we 

feel that the report may not be relevant. 

Recommendations: 

The Department has developed and implemented various corrective actions to enhance 

its purchase card program. The recommendations presented by the OIG, in summary, 

request the Department to provide enhanced training and guidance to cardholders; 

strengthening monthly reconciliation processes; and improve tracking of training. 

1. Provide direction to cardholders and approving officials to document pre. 

purchase approvals; ensure purchases are equitably distributed among all 

qualified vendors; Develop policies and procedures to enhance training: 

improve tracking of refresher training requirement 

The Department updated its purchase card policy, Commerce Acquisition Manual 

1313.301 · Revised May 2012, which was issued to all cardholders, approving 
FINAL REPORT NO. OIG-13-025-A 22

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL
FINAL REPORT NO. OIG-13-025-A 23

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

11200000130