a

GAO

United States General Accounting Office

Report to Congressional Requesters

December 2002 TRAVEL CARDS 

Air Force Management 

Focus Has Reduced 

Delinquencies, but 

Improvements in 

Controls Are Needed 

GAO-03-298
Air Force management has reduced travel card delinquencies through greater

command attention and the use of travel card audits to identify problems and

needed corrective actions. As of March 2002, the Air Force delinquency rate

on average was about 5 percentage points lower than the rest of DOD and 1

percentage point higher than the federal civilian agencies. The Air Force’s

overall delinquency and charge-off problems were primarily associated with

lower paid, low- to midlevel enlisted military personnel.

Despite these improvements, a weak control environment contributed to

significant abuse and potential fraud. For example, many of the problem cases

identified were due to ineffective controls over the issuance and cancellation

of travel cards and weaknesses in the assignment and training of agency

program coordinators. During the period of our review, over 400 Air Force

cardholders committed potential bank fraud by writing three or more

nonsufficient fund (NSF) checks to Bank of America. Also, as shown in the

table, many cardholders used their cards for inappropriate purchases, such as

cruises and event tickets.

Examples of Abusive Air Force Travel Card Activity

Category Examples of vendors

Number of

transactions

Approximate

dollar

amount

Cruises Carnival, Celebrity, Norwegian, and Princess 70 $ 31,000

Gambling GCA*- Global Cash Access 79 14,000

Sports, concerts,

and other events

Dallas Cowboys, Backstreet Boys, Janet

Jackson, and other Ticketmaster purchases 223 31,000

Gentlemen's clubs

Spearmint Rhino, Cheetah's Lounge, and

Déjà Vu Showgirls 187 32,000

A significant relationship also existed between potential travel card fraud,

abuse, and delinquencies and individuals with substantial credit history

problems. Some cardholders had personal accounts placed in collection while

others had filed bankruptcies prior to receiving government travel cards. Also,

the issuance of the travel cards to virtually everyone who applied for them

compounded these problems.

GAO found documented evidence of disciplinary actions in less than half of

the cases reviewed where cardholders wrote NSF checks, or their accounts

were charged off or placed in salary offset. GAO also found that over half of

the cases reviewed involved individuals who still had secret or top-secret

security clearances. Other control weaknesses related to the Air Force’s

failure to provide the necessary agency program coordinator training, and

infrequent or nonexistent monitoring of travel card activities.

The recently enacted fiscal year 2003 Defense appropriations and

authorization acts require the Secretary of Defense to establish guidelines and

procedures for disciplinary actions and to deny issuance of travel cards to

individuals who are not creditworthy.

TRAVEL CARDS

Air Force Management Focus Has

Reduced Delinquencies, but

Improvements in Controls Are Needed

www.gao.gov/cgi-bin/getrpt?GAO-03-298.

To view the full report, including the scope

and methodology, click on the link above.

For more information, contact Gregory Kutz,

(202) 512-9505.

Highlights of GAO-03-298, a report to

Congressional requesters

December 2002

Poor oversight and management of

the Department of Defense (DOD)

travel card program has led to high

delinquency rates costing DOD

millions in lost rebates and

increased ATM fees. As a result,

Congress asked GAO to report on

(1) the magnitude, impact, and

cause of delinquencies, (2) the

types of fraudulent and abusive

uses of travel cards, and (3) the

effectiveness of internal controls

over DOD’s travel card program.

GAO previously reported on travel

card management at the Army and

Navy. This report focuses on travel

card management at the Air Force.

GAO recommendations to DOD and

the Air Force include the following:

• Provide sufficient training to

agency program coordinators

to promote proper oversight of

the travel card program,

including effective monitoring

for inappropriate transactions;

• Review the security clearances

of cardholders with financial

problems; and

• Strengthen procedures for

canceling cards of employees

leaving the service.

DOD and the Air Force concurred

on our recommendations and said

that they had actions underway to

address many of them.
Page i GAO-03-298 Air Force Travel Card Controls

Contents

Letter 1

Results in Brief 3

Lower Air Force Travel Card Delinquencies and Charge-offs 6

Improved Travel Card Control Environment Contributed to Reduced 

Delinquencies 21

Further Improvements in Controls Are Needed 24

Statistical Tests of Key Control Activities 30

Potentially Fraudulent and Abusive Travel Card Activity 35

Recent Actions 49

Conclusions 50

Recommendations for Executive Action 50

Agency Comments and Our Evaluation 53

Appendixes

Appendix I: Background 55

Travel Card Program Guidelines 57

Air Force Travel Process 57

Appendix II: Objectives, Scope, and Methodology 67

Appendix III: Air Force Major Command Delinquency Rates 75

Appendix IV: Air Force Personnel Grade, Rank, and Associated Basic Pay 

Rates 77

Appendix V: GAO Contacts and Staff Acknowledgments 78

Tables Table 1: Quarterly Air Force Travel Card Delinquency Rates for 

Fiscal Years 2000 through 2002 9

Table 2: Cumulative Charge-offs and Delinquencies by Military 

Service between November 30, 1998, and March 31, 

2002 10

Table 3: Five Major Commands with Highest Outstanding 

Delinquent Balance and Percentage of Total Air Force 

Delinquencies as of March 31, 2002 14

Table 4: APC Span of Control at Selected Air Force Locations in 

Fiscal Year 2002 29

Table 5: Results of Testing of Key Internal Controls 31

Table 6: Examples of Cases in Which Cardholders Wrote Three or 

More NSF Checks to Bank of America and Accounts Were 

Charged Off and/or Placed in Salary Offset from October 

2000 through March 2002 36
Contents

Page ii GAO-03-298 Air Force Travel Card Controls

Table 7: Examples of Abusive Air Force Travel Card Activity 

(October 1, 2000, to March 31, 2002) 41

Table 8: Examples of Abusive Travel Card Activity Where Accounts 

Were Charged Off and/or Placed in Salary Offset from 

October 2000 through March 2002 42

Table 9: Examples of Abusive Activity Where the Cardholders Paid 

Their Bills from October 2000 through March 2002 47

Table 10: Comparison of Number of Individually Billed Travel 

Cardholders and Related Charges for DOD versus Total 

Federal Government for Fiscal Year 2001 56

Table 11: Population of Fiscal Year 2001 Travel Transactions at 

Selected Air Force Bases 70

Table 12: Fiscal Year 2001 Transactions That Failed Control Tests for 

Approved Travel Orders 72

Table 13: Fiscal Year 2001 Transactions That Failed Control Tests for 

Accurate Travel Voucher Review and Reimbursement 73

Table 14: Fiscal Year 2001 Transactions That Failed Control Tests for 

Timely Submission of Travel Vouchers by Employees 

(5-day Rule) 73

Table 15: Fiscal Year 2001 Transactions That Failed Control Tests for 

Timely Approval and Payment Processing of Travel 

Vouchers (30-day Rule) 74

Table 16: Air Force Major Command Delinquency Ratesa (by 

Quarter) for the Two Years Ending March 31, 2002 75

Table 17: Outstanding Balance and Delinquency Rate as of March 31, 

2002, by Major Air Force Commands 76

Table 18: Air Force Military Grades, Ranks, and Associated Basic 

Pay Rates for Fiscal Year 2001 77

Table 19: Air Force Civilian Grades and Associated Basic Pay Rates 

for Calendar Year 2001 77

Figures Figure 1: Air Force, Non-Air Force DOD, and Civilian Agency 

Travel Card Delinquency Rates for the 2-Year Period 

Ending March 31, 2002 8

Figure 2: Army, Navy/Marines, and Air Force Travel Card 

Delinquency Rates for the 2-Year Period Ending March 31, 

2002 9

Figure 3: Air Force Delinquent and Total Outstanding Travel Card 

Balances for Military and Civilian Employees as of 

September 30, 2001 11
Contents

Page iii GAO-03-298 Air Force Travel Card Controls

Figure 4: Air Force Delinquency Rate by Military Grade and 

Civilian Populations Compared to Air Force’s Average as 

of September 30, 2001 12

Figure 5: Fiscal Year 2001 Air Force Charge-offs by Military Grade 

and Total Civilian Populations 13

Figure 6: Air Force Travel Card Charge-off and Recovery History 

from October 1, 2000, to March 31, 2002 18

Figure 7: Overview Flowchart of the Air Force Travel Process 58

Figure 8: Travel Card Application 60

Figure 9: Required DOD and Bank of America Delinquency Process 

Management Actions 64

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Page 1 GAO-03-298 Air Force Travel Card Controls

United States General Accounting Office

Washington, D.C. 20548

A

December 20, 2002 Letr

The Honorable Charles E. Grassley

Ranking Minority Member

Committee on Finance 

United States Senate 

The Honorable Stephen Horn 

Chairman

The Honorable Janice D. Schakowsky

Ranking Minority Member 

Subcommittee on Government Efficiency, 

Financial Management and Intergovernmental Relations 

Committee on Government Reform 

House of Representatives 

In fiscal year 2001, the Air Force had about 500,000 individually billed travel 

card accounts, and about $831 million in related travel card charges.

1 In 

contrast to the purchase card program, where charges are billed directly to the 

government for payment, the individually billed travel cardholder is directly 

responsible for all charges incurred on his or her travel card account and 

for remitting payments on the monthly bill. The cardholder is expected to 

use the government travel card only for valid expenses related to official 

travel and to submit a properly documented voucher to get reimbursed by 

the Air Force for valid expenses. The intent of the travel card program was 

to improve convenience for the traveler and to reduce the government’s 

costs of administering travel. If properly controlled, the travel card would 

provide an efficient and effective method for administering the travel 

program. Appendix I provides additional background information on the 

Air Force’s travel card program. 

1

 The travel card program includes both individually billed accounts—that is accounts held 

by individual cardholders, used to purchase transportation and other related travel services, 

and paid by individual cardholders based on reimbursement of expenses incurred while on 

official government travel—and centrally billed accounts that are used for the travel 

expenses of a unit and are paid directly by the government. This report covers transactions 

charged to individually billed accounts only.
Page 2 GAO-03-298 Air Force Travel Card Controls

We performed our work in response to your request for a comprehensive 

examination of the Department of Defense’s (DOD) and the military 

services’ purchase and travel card programs. We have previously testified 

and reported on the Army’s2

 and Navy’s3 controls over their travel card 

programs. This report provides details and results of our Air Force travel 

card audit. The objectives of our audit of the Air Force’s travel card 

program were to determine, for fiscal year 2001 and the first 6 months of 

fiscal year 2002, (1) the reported magnitude and impact of delinquent and 

charged-off Air Force travel card accounts, along with an analysis of 

related causes, (2) the effectiveness of the overall control environment and 

key internal controls for the Air Force’s travel program, (3) whether 

indications existed of potentially fraudulent and abusive activity4

 related to 

the Air Force travel cards, and (4) whether abusive activity associated with 

the travel card is effectively linked to disciplinary actions and security 

clearances. To achieve these objectives, we analyzed Air Force account 

delinquency and charge-off information and compared it to non-Air Force 

DOD components and federal civilian agencies. We reviewed the adequacy 

of DOD and Air Force policies and procedures related to travel card use 

and tested the effectiveness of key internal control activities at three Air 

Force installations. We also used data mining and analytical procedures to 

identify and examine potentially fraudulent and abusive travel card activity. 

Appendix II provides details of our objectives, scope, and methodology.

2

 U.S. General Accounting Office, Travel Cards: Control Weaknesses Leave Army 

Vulnerable to Potential Fraud and Abuse, GAO-02-863T (Washington, D.C.: July 17, 2002) 

and Travel Cards: Control Weaknesses Leave Army Vulnerable to Potential Fraud and 

Abuse, GAO-03-169 (Washington, D.C.: Oct. 11, 2002).

3

 U.S. General Accounting Office, Travel Cards: Control Weaknesses Leave Navy Vulnerable 

to Fraud and Abuse, GAO-03-148T (Washington, D.C.: Oct. 8, 2002).

4

 We defined potentially fraudulent activity as any scheme, or pattern of activity, related to 

the use of a travel card in apparent violation of federal or state criminal code. For purposes 

of this report, we considered as potentially fraudulent, cases where cardholders wrote three 

or more nonsufficient fund checks or checks on closed accounts to pay their Bank of 

America bills. We considered abusive travel card activity to include (1) personal use of the 

card—any use other than for official government travel—regardless of whether the 

cardholder paid the bill and (2) cases in which cardholders were reimbursed for official 

travel and then did not pay Bank of America, and thus benefited personally. Some of the 

travel card activity that we categorized as abusive would be potentially fraudulent if it can 

be established that the cardholder violated any element of federal or state criminal code. In 

both types of activities in which the cardholder did not pay the bill, we considered abuses to 

include cardholders whose accounts were eventually charged off by Bank of America or 

referred to a payment plan by salary offset or other fixed pay agreement.
Page 3 GAO-03-298 Air Force Travel Card Controls

We selected the three installations we audited by first identifying the three 

Air Force Commands with the largest number of travel card transactions, 

payments, and delinquencies. We then identified one Air Force installation 

within each of the three commands based on the magnitude of travel card 

transactions, payments, and delinquencies. Appendix III presents data on 

delinquency rates by major command. We tested key control activities, 

including documented evidence of travel authorization, accurate travel 

voucher processing, timely submission of the travel voucher by the 

employee, and timely payment of the travel reimbursement to the 

employee. Our statistical sample test results can be projected only to the 

individual installations where we performed the testing and cannot be 

projected to the command level or to the Air Force as a whole. We used 

data mining procedures across the universe of individually billed Air Force 

travel card activity to identify potentially fraudulent and abusive travel card 

activity, based on the nature, amount, merchant, and other identifying 

characteristics of the transactions. While we identified numerous 

examples of potentially fraudulent and abusive travel card activity, our 

work was not designed to identify, and we cannot determine, the extent of 

potentially fraudulent and abusive activity. 

We conducted our audit work from January 2002 through mid-November 

2002 in accordance with U.S. generally accepted government auditing 

standards, and we performed our investigative work in accordance with 

standards prescribed by the President’s Council on Integrity and Efficiency.

Results in Brief The Air Force had substantially lower delinquency rates and fewer 

accounts being charged off than the Army and the Navy in fiscal year 2001, 

and it had lower delinquency rates for the first 6 months of fiscal year 2002. 

The Air Force’s delinquency rates are slightly higher than the non-DOD 

federal civilian agencies delinquency rate; however, the delinquency rate 

for Air Force civilian employees of 3.6 percent is 1.4 percentage points 

lower than the estimated 5.0 percent delinquency rate for civilian agencies. 

We found that Air Force delinquency rates were lower than Army and Navy 

delinquency rates due, in part, to measures the Air Force has taken, such as 

increased management attention and command focus, numerous travel 

card program audits and actions on recommendations for corrective 

action, and greater emphasis on the split disbursement payment process,5

5

 Split disbursement payment percentages for the three services as of June 2002 were 39 

percent for the Air Force, 34 percent for the Army, and 26 percent for the Navy.
Page 4 GAO-03-298 Air Force Travel Card Controls

where all or a portion of the travel card reimbursement is made directly to 

the bank. However, even though the Air Force had lower numbers of 

delinquent and charged off accounts than the Army and the Navy, we found 

control environment weaknesses and breakdowns in key controls at the 

three Air Force installations we audited. We also found instances of 

potential fraud and abuse similar to those we found in our Army and Navy 

work, such as personal use of the travel card for a variety of goods and 

services, including at gentlemen’s clubs, and failure to pay travel card bills 

after reimbursements were received. 

Most Air Force travel cardholders used the travel cards for authorized 

government travel expenses and paid amounts owed to Bank of America on 

time. From November 1998 through March 2002, Bank of America charged 

off about 9,000 Air Force travel card accounts totaling approximately $11.6 

million, the lowest among the three services. The Air Force’s delinquency 

and charge-off problems are primarily associated with low- and midlevel 

enlisted military personnel. These delinquencies and charge-offs have cost 

the Air Force thousands of dollars in lost rebates, higher fees, and 

substantial resources spent pursuing and collecting on delinquent 

accounts. To address these problems, the Air Force and DOD began 

offsetting wages of certain military and civilian employees in November 

2001 as well as retirement benefits of military retirees whose accounts 

were delinquent or had been charged off. These and other actions have 

significantly reduced the number and dollar value of charge-offs during 

fiscal year 2002. However, these actions are primarily focused on treating 

the symptoms, or “back-end” result of the problems, such as delinquencies 

and charge-offs, rather than addressing weaknesses in the “front-end” 

(preventive) controls. 

Further, we found a number of areas where additional improvements in 

DOD and Air Force controls are needed. For example, many of the 

problem cases we reviewed were related to inadequate training and 

collateral duty responsibilities of installation agency program coordinators, 

including failure to ensure that all unit program coordinators received 

timely training. Other problems were caused by ineffective controls over 

(1) the issuance of travel cards and (2) the transfer or cancellation of 

accounts when individuals transferred, separated, or retired. Air Force 

practice is to facilitate Bank of America issuing travel cards—with few 

credit restrictions—to all applicants regardless of whether they have 

histories of credit problems. We found that those who committed travel 

card fraud and abuse tended to be individuals who had histories of prior 

credit problems. The prior and current credit problems we identified for 
Page 5 GAO-03-298 Air Force Travel Card Controls

Air Force travel cardholders included charged off credit card accounts, 

bankruptcies, judgments, collection actions, and multiple nonsufficient 

fund (NSF), or “bounced” checks. 

As a result of similar findings from our previous work on DOD travel card 

programs, Congress included provisions in the fiscal year 2003 Defense 

Appropriations Act, Public Law 107-248, to require the Secretary of Defense 

to establish guidelines and procedures to (1) deny the issuance of cards to 

individuals who are not creditworthy and (2) prescribe for disciplinary 

actions to be taken against cardholders for fraudulent or abusive use of 

government travel cards. 

We identified numerous instances of potentially fraudulent and abusive 

travel card activity during fiscal year 2001 and the first 6 months of fiscal 

year 2002. During this period, more than 400 Air Force employees may 

have committed bank fraud by writing three or more NSF checks. In 

addition, Air Force travel cards were used for numerous abusive 

transactions that were clearly not related to government travel, including 

cruise lines, Internet gambling sites, sporting and concert events, and 

gentlemen’s clubs. For example, Air Force personnel used their travel 

cards to make 223 charges totaling over $31,000 for tickets to activities 

such as Dallas Cowboys football games, Janet Jackson and NSYNC 

concerts, and other Ticketmaster purchases; and 121 Air Force personnel 

charged nearly $32,000 at gentlemen’s clubs, such as Spearmint Rhino, Can 

Can, Cheetah’s Lounge, and Déjà Vu Showgirls.

Another form of abuse identified was the failure to pay the travel card bill. 

Some individuals used the cards for inappropriate purposes and failed to 

pay their accounts. Others abused the travel card by failing to pay charges 

associated with official government travel, even though they have been 

reimbursed. In addition, we did not find documented evidence of 

disciplinary actions against many Air Force personnel who abused their 

travel cards. Of the 10 cases that we audited involving individuals who 

made improper charges but paid their bills, we found evidence that only 

two of these individuals had received disciplinary action. In addition, of 

the 58 cases we audited involving individuals who wrote NSF checks or 

whose accounts were charged off or put in salary offset, we found no 

evidence of disciplinary action for 39 of the individuals. 

Personnel with security clearances who have financial problems may pose 

security risks to the Air Force. Of the 58 cases we audited involving 

individuals who wrote NSF checks, or had their travel card accounts 
Page 6 GAO-03-298 Air Force Travel Card Controls

charged off or put in salary offset, 32 had active secret or top-secret 

clearances as of August 2002. For example, a technical sergeant 

maintained his secret clearance even though he used his travel card 

reimbursements to support a gambling habit and had his travel account 

placed in salary offset. While the individual was warned several times that 

the failure to pay his travel card account “would not be tolerated,” he was 

allowed to continue using his travel card because of his expertise on C-5 

cargo aircraft repairs. To support his gambling habit, the individual 

eventually stole and sold protective gear, including body armor and 

biochemical and biological masks, which had been loaded on C-5 aircraft 

destined for Afghanistan. These thefts were not discovered, or his security 

clearance revoked, until after the C-5 aircrafts arrived in Afghanistan 

during the fall of 2001.

This report includes recommendations to the Air Force and DOD to 

strengthen specific internal controls within its travel card program in the 

areas of travel card issuance, travel card monitoring, and disciplinary 

actions. In oral comments on a draft of this report, DOD and the Air Force 

concurred with all of our recommendations and stated that they had taken 

action or had actions underway to address many of them. A detailed 

discussion of the DOD and Air Force comments is presented in the “Agency 

Comments and Our Evaluation” section of this report.

Lower Air Force Travel 

Card Delinquencies 

and Charge-offs

Air Force travel card delinquency rates and amounts charged off were 

substantially lower than non-Air Force DOD components, and 

delinquencies were about 1 percent higher than non-DOD federal civilian 

agencies.6

 Cumulative Air Force charge-offs since the inception of the 

travel card program with Bank of America in November 1998 are 

approximately $11.6 million, the lowest of the three services. Our analysis 

of available data showed that the travel cardholder’s rank and pay rate are 

strong predictors of delinquency problems. We found that the Air Force’s 

delinquency and charge-off problems are primarily associated with low and 

mid-level enlisted military employees. As discussed in following sections 

of this report, improvements in the Air Force’s overall control environment 

improved Air Force delinquency rates, but DOD’s overall high delinquency 

and default rates resulted in contentious relations with Bank of America. 

6

 We calculated delinquency rates using the proportion of dollars of accounts delinquent to 

the total dollars of accounts outstanding, according to industry standards set by the Federal 

Financial Institutions Examination Council.
Page 7 GAO-03-298 Air Force Travel Card Controls

The bank threatened to end its participation in the program, but eventually 

agreed to contract modifications that included increased fees. Past 

delinquencies and charge-offs have cost the Air Force, the federal 

government, and the taxpayers thousands of dollars in lost rebates, and 

substantial resources spent pursuing and collecting on past due accounts. 

We also estimate that contract modifications will cost the Air Force 

millions of dollars in the future due to higher fees.

The Air Force has taken a number of positive actions to address its 

delinquency and charge-off rates, and data for the first half of fiscal year 

2002 show a significant drop in charged-off accounts. For example, this 

reduction is, in part, attributable to a salary and military retirement offset 

program—similar to garnishment—which was initiated in November 2001. 

Other Air Force actions included encouraging the use of the split 

disbursement payment process, in which the Defense Finance and 

Accounting Service (DFAS) sends a portion of the traveler’s reimbursement 

directly to the bank rather than the cardholder, and increased management 

attention and focus on the delinquency issue. However, except for split 

disbursements, Air Force actions primarily address the symptoms or backend result of delinquency and charge-offs after they have already occurred. 

As noted in the following sections of this report, additional emphasis on 

front-end management of the travel card program, such as more selective 

procedures for issuing the cards and overseeing the proper use of the 

cards, could further improve the Air Force travel card program.

The Air Force’s 

Delinquencies and Chargeoffs

As of March 31, 2002, approximately 8,000 Air Force cardholders had over 

$5 million in delinquent debt. Over the last 2 years, Air Force delinquency 

rates fluctuated from 5 to 11 percent and on average were about 5 

percentage points less than the Army’s and the Navy’s and 1 percentage 

point higher than non-DOD federal civilian agencies. The Air Force has set 

a goal of no more than a 4 percent delinquency rate. As discussed later, 

greater emphasis on commander responsibility and accountability, 

contributed, at least in part, to lower Air Force delinquency rates. Figure 1 

compares delinquency rates among the Air Force, Non-Air Force DOD, and 

the 23 largest civilian agencies.7

 

7

 The civilian agencies included in our analysis are the 23 executive branch agencies covered 

under the Chief Financial Officers Act, as amended.
Page 8 GAO-03-298 Air Force Travel Card Controls

Figure 1: Air Force, Non-Air Force DOD, and Civilian Agency Travel Card 

Delinquency Rates for the 2-Year Period Ending March 31, 2002 

In addition, as shown in figure 2, Air Force travel card delinquency rates for 

the eight quarters ending March 31, 2002, were significantly less than Army 

and Navy travel card delinquency rates.

0

2

4

6

8

10

12

14

16

18

20

2000 

3rd qtr.

2000 

4th qtr.

2001 

1st qtr.

2001 

2nd qtr.

2001 

3rd qtr.

2001 

4th qtr.

2002 

1st qtr.

2002 

2nd qtr.

DOD delinquency rate excluding Air Force

Air Force delinquency rate

Government-wide delinquency rate excluding DOD

100 Percent

Fiscal year

Source: Bank of America and General Services Administration data.
Page 9 GAO-03-298 Air Force Travel Card Controls

Figure 2: Army, Navy/Marines, and Air Force Travel Card Delinquency Rates for the 

2-Year Period Ending March 31, 2002 

Further analysis revealed that Air Force travel card delinquency rates have 

decreased from 16.9 percent as of December 31, 1999 to 6.0 percent as of 

March 31, 2002. Table 1 shows the decrease in Air Force delinquency rates 

since December 1999, as well as the cyclical nature of Air Force travel card 

delinquency rates. 

Table 1: Quarterly Air Force Travel Card Delinquency Rates for Fiscal Years 2000 

through 2002

Source: GAO analysis of Bank of America data.

 Fiscal year 2000 Fiscal year 2001 Fiscal year 2002

First quarter 16.9% 10.9% 7.7% 

Second quarter 10.2% 6.5% 6.0%

Third quarter 6.4% 5.3% 4.6%

Fourth quarter 8.2% 6.2% 4.9%

Army

Navy/Marines

Air Force

0

2

4

6

8

10

12

14

16

18

20

2000 

3rd qtr.

2000 

4th qtr.

2001 

1st qtr.

2001 

2nd qtr.

2001 

3rd qtr.

2001 

4th qtr.

2002 

1st qtr.

2002 

2nd qtr.

100 Percent

Fiscal year

Source: GAO analysis of Bank of America data.
Page 10 GAO-03-298 Air Force Travel Card Controls

Since the inception of the travel charge card task order between DOD and 

Bank of America on November 30, 1998, Bank of America has charged off 

about 9,000 Air Force travel card accounts with nearly $11.6 million of bad 

debt. While not an excellent track record, it is lower than the Army’s 

approximate 23,000 charged-off accounts valued at nearly $34 million and 

Navy’s approximate 13,800 charged-off accounts valued at nearly $16.6 

million. Task order modifications during fiscal year 2001 allowed Bank of 

America to institute a salary offset provision against DOD military 

personnel whose travel card accounts were previously charged off or were 

more than 120 days past due. Table 2 provides a comparison of cumulative 

charge-offs and delinquencies by military service as of March 31, 2002.

Table 2: Cumulative Charge-offs and Delinquencies by Military Service between 

November 30, 1998, and March 31, 2002

Source: GAO analysis of Bank of America and General Services Administration data.

a Cumulative charge-offs and recoveries are for November 1998 through March 2002.

b Recoveries represent amounts recovered through collection actions, which includes salary offsets, on 

accounts previously charged off. 

c Delinquencies represent amounts not paid within 60 days of the travel card monthly statement closing 

date, which is the cutoff date for charges to be included in the monthly statement. Under the terms of 

the travel cardholder’s agreement with Bank of America, payment of the travel card statement is due to 

Bank of America within 25 to 30 days of the statement closing date.

Dollars in millions

DOD service

Cumulative 

charge-offsa

Cumulative 

recoveriesa, b

Net chargeoffsa

Delinquencies 

as of March 31, 

2002c

Air Force $11.6 $4.7 $6.9 $5.0

Navy 16.6 6.2 10.4 6.0

Army 33.5 12.9 20.6 8.4
Page 11 GAO-03-298 Air Force Travel Card Controls

Rank, Grade, and Pay Rates 

Are Correlated to 

Delinquency and Charge-off 

Problems

Our analysis showed a correlation between certain demographic factors 

and high delinquency and charge-off rates. Available data showed that the 

travel cardholder’s rank or grade (and associated pay)8

 is a strong predictor 

of delinquency problems. As shown in Figure 3, Air Force delinquency and 

charge-off problems are primarily associated with low- and midlevel 

enlisted military personnel in grades E-1 (airman) to E-6 (technical 

sergeant), with relatively low incomes and little experience in handling 

personal finances. Appendix IV presents information on military and 

civilian grades and pay rates.

Figure 3: Air Force Delinquent and Total Outstanding Travel Card Balances for 

Military and Civilian Employees as of September 30, 2001 

Available data indicate that military personnel grades E-1 to E-6 account for 

about 69 percent of all Air Force military personnel. These enlisted 

military personnel have basic pay levels ranging from $11,500 to $27,600. 

8

App. IV provides a description of each of these military grades and their associated military 

rankings and pay, along with corresponding civilian grade and pay data.

9.9%

15.7% 3.8% 2.4% 3.6%

0

5

10

15

20

25

30

35

E1-E3 E4-E6 E7-E9 O1-O10 Civilian

Delinquent balance

Outstanding balance

Dollars in millions

Source: GAO analysis of Bank of America data.
Page 12 GAO-03-298 Air Force Travel Card Controls

These individuals were responsible for 41 percent of the total outstanding 

Air Force travel card balances as of September 30, 2001.

Figure 4 compares the delinquency rates by military grade and civilian 

personnel to the average Air Force delinquency rate as of September 30, 

2001. As shown, the delinquency rates were as high as 15.7 percent for E-1 

to E-3 and 9.9 percent for E-4 to E-6, compared to the Air Force overall 

delinquency rate of 6.2 percent. These rates were markedly higher than the 

rates for officers, which was 2.4 percent. These rates were also 

substantially higher than that of Air Force civilians, which at 3.6 percent 

was 1.4 percentage points lower than the federal civilian agencies rate 

shown in figure 1. 

Figure 4: Air Force Delinquency Rate by Military Grade and Civilian Populations 

Compared to Air Force’s Average as of September 30, 2001

The delinquency rate for military personnel in grades E-4 to E-6 in 

particular had an important negative impact on the Air Force’s delinquency 

rate. Specifically, these are senior airmen to technical sergeants in the Air 

15.7

9.9

6.2

3.8

3.6

2.8

2.0

0.3

0 2 4 6 8 10 12 14 16 18

E1 - E3

E4 - E6

Air Force

average

E7 - E9

Civilian

O1 - O3

O4 - O6

O7 - O10

Delinquency rate as a percentage of outstanding balance

Rank

Source: GAO analysis of Bank of America data.
Page 13 GAO-03-298 Air Force Travel Card Controls

Force. Pay levels for these personnel, excluding supplements such as 

housing, range from $18,600 to $27,600. As shown by Bank of America 

data, personnel in grades E-4 to E-6 accounted for 37 percent of the total 

Air Force outstanding balance. High delinquency rates for the E-1 through 

E-6 grades combined with their extensive use of the travel card have a 

significant impact on the Air Force wide delinquency rate. 

Figure 5 shows Air Force fiscal year 2001 charge-offs. Charge-off amounts 

of about $2.6 million for military personnel in grades E-1 through E-6 

accounted for 79 percent of the $3.3 million in total Air Force charge-offs in 

fiscal year 2001. 

Figure 5: Fiscal Year 2001 Air Force Charge-offs by Military Grade and Total Civilian 

Populations

An Air Force travel card program official told us that a major factor of the 

service’s travel card delinquencies relates to first-term enlisted personnel. 

An Air Force member can normally attain the E-4 grade within 3-1/2 years 

in his or her first term. According to Air Force data, over half of the 

personnel in grades E-1 to E-6 are in grades E-4 and below. The official 

commented that if the members are not committed to an Air Force career 

and plan to serve only one tour, temptation exists to misuse the card before 

they separate from the Air Force. In addition, as discussed below, the Air 

Dollars

Source: GAO analysis of Bank of America data.

Grade/classification

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

E1-E3 E4-E6 E7-E9 O1-O10 Civilians Other
Page 14 GAO-03-298 Air Force Travel Card Controls

Force did not exempt personnel with poor credit histories from required 

use of travel cards. Consequently, these low and mid-level enlisted military 

personnel are often issued travel cards even though they may already be in 

serious financial trouble and, therefore, may not have been appropriate 

credit risks. 

Five Major Air Force 

Commands Account for 

Majority of Delinquencies 

As shown in table 3, five Air Force major commands accounted for about 

63 percent of the Air Force travel card delinquencies as of March 31, 2002. 

Table 3: Five Major Commands with Highest Outstanding Delinquent Balance and 

Percentage of Total Air Force Delinquencies as of March 31, 2002

Source: GAO analysis of Bank of America data.

Air Force National Guard and Air Force Reserve Command officials 

attributed their high delinquent balances to the recent activation of guard 

and reserve forces, the associated increase in travel card use, and 

inadequate employee training on travel voucher preparation. In addition, 

the officials explained that National Guard and Reserve forces that report 

to duty intermittently may not become aware of problems with travel 

voucher accuracy and late submission of payment vouchers until they 

report for their next duty assignment—several days to a month after a 

problem has occurred. Further, the officials told us that many of their 

members have not been trained on proper travel voucher preparation 

procedures, and controls over travel card use and payment of travel card 

bills are weak. One reserve official cited the lack of specific guidance for 

disciplinary action in DOD’s Financial Management Regulation as a 

contributing factor. 

Air Force major command

Outstanding delinquent 

balance

Percentage of total 

Air Force delinquent 

balance

Air National Guard $901,864 17.8

Air Force Reserve Command 778,230 15.4

Air Combat Command 650,110 12.9

Air Mobility Command 436,280 8.6

Air Force Materiel Command 420,982 8.3

Subtotal of above five commands $3,187,466 63.0

Total all other commands $1,868,523 37.0
Page 15 GAO-03-298 Air Force Travel Card Controls

According to Air Force officials, the Air Combat Command, Air Force 

Materiel Command, and Air Mobility Command have all experienced 

significant increases in travel and deployments since September 11, 2001. 

Our audit work showed instances in which extended travel and back-toback deployments resulted in delays in travel voucher preparation and 

submission. To reduce delinquencies associated with late payment of 

travel card bills by deployed units, the Air Force has emphasized the use of 

the split disbursement payment process and interim travel vouchers. 

Delinquency and Charge-off 

Rates Have Resulted in 

Increased Costs to the 

Government

Delinquencies and charge-offs within DOD have resulted in increased costs 

to the Air Force and the other services. In fiscal year 2001, DOD entered 

into an agreement with Bank of America to adjust the terms of its travel 

card contract. DOD agreed to increased fees and a change in rebate 

calculation. These changes cost the Air Force about $350,000 in lost 

rebates on individually billed accounts and centrally billed accounts in 

fiscal year 2001, and could cost an estimated $1.6 million in increased ATM 

fees annually. Other costs are real but not easily measurable, such as the 

increased administrative burden to the Air Force to identify and address 

delinquent accounts. 

Dispute Between Contractor and 

DOD 

Unexpectedly high defaults by DOD’s travel cardholders resulted in a 5-

month legal dispute with Bank of America over the continuation of the 

travel card contract. In 1998, under the provisions of the General Services 

Administration’s (GSA) master contract with Bank of America, DOD 

entered into a tailored task order with Bank of America to provide travel 

card services for a period of 2 years, ending November 29, 2000. Under the 

terms of the task order, DOD had three 1-year options to unilaterally renew 

the contract. On September 29, 2000, prior to the expiration of the initial 

task order, DOD gave notice to Bank of America that it intended to exercise 

its option to extend the task order for an additional year. In November 

2000, Bank of America contested the provisions of the DOD task order with 

the GSA contracting officer. Bank of America claimed that the task order 

was unprofitable due to required “contract and program management 

policies and procedures” associated with higher-than-anticipated credit 

losses, including an estimated 43,000 DOD employees had defaulted on 

more than $59 million in debts. Consequently, in April 2001, the master 

contract and the related DOD tailored task order for travel card services 

were renegotiated. Specifically, Bank of America was able to increase its 

revenue by instituting additional fees, such as higher cash advance and late 

payment fees; offsetting credit losses against rebates as explained later; 

facilitating the collection of delinquent and charged off amounts through 
Page 16 GAO-03-298 Air Force Travel Card Controls

salary and military retirement pay offset; and encouraging DOD personnel 

participation in split disbursements, in which the government sends part or 

all of the travel voucher reimbursements to Bank of America directly.

Effect of Increased Fees One of the terms of the renegotiated task order was that, effective August 

10, 2001, the travel card cash advance fee would be increased from 1.9 

percent to 3 percent, with a minimum fee of $2. The Air Force reimburses 

all cash advance fees9

 related to authorized cash withdrawals. We estimate 

that this contract modification will result in approximately $1.6 million of 

increased costs to the Air Force each year. Our estimate was made by 

applying the new fee structure that went into effect in mid-August 2001 to 

cash advances made during fiscal year 2001. Other fee increases agreed to 

in the renegotiation, such as the fee for expedited travel card issuance, will 

also result in additional cost to the Air Force.

Delinquent Account Payment 

Affects Rebates to the Air Force 

The GSA master contract modification also changed the rebate calculation, 

making it imperative that the Air Force (and the other services) improve 

their payment rates to receive the full benefits of the program. Under the 

GSA master contract, credit card companies are required to pay a quarterly 

rebate, also known as a refund, to agencies and GSA based on the amount 

charged to both individually billed and centrally billed cards. The rebate to 

the agency is reduced, or eliminated, if significant numbers of an agency’s 

individual cardholders do not pay their accounts timely. Specifically, credit 

losses or balances that reach 180 calendar days past due reduce the rebate 

amounts. Effective January 2001, the contract modification changed the 

way that rebates are calculated and how credit losses are handled. If the 

credit loss of an agency’s individually billed travel card accounts exceeds 

30 basis points—or 30 one-hundredths of a percent (.003)—of net sales10 on 

the card, the agency is assessed a credit loss fee, or rebate offset, against 

the rebate associated with both individually billed and centrally billed 

travel card accounts.

9

 Cash advance fees are also referred to as automated teller machine (ATM) fees. ATMs 

allow cardholders to withdraw cash with a travel card. For each cash advance withdrawal, 

cardholders are charged either a set amount or a percentage of the amount of the 

withdrawal.

10 Net sales consists of all purchases and other charges less any credits, such as returns, 

other than payments to the accounts. Other charges include ATM use, traveler’s checks, and 

any other fees.
Page 17 GAO-03-298 Air Force Travel Card Controls

This credit loss fee, or rebate offset, which resulted solely from individually 

billed account losses, significantly affected the amount of rebate the Air 

Force received as a result of combined individually and centrally billed net 

sales in fiscal year 2001. In fiscal year 2001, the Air Force collected about 

$1.4 million of the $1.8 million in rebates that we estimated it would have 

received, based on fiscal year 2001 dollar volume if the individually billed 

account payments had been timely. 

Other costs, such as the administrative burden of monitoring delinquent 

accounts, are harder to measure, but no less real. For example, employees 

with delinquent accounts must be identified, counseled and disciplined, 

and their account activity closely monitored. In addition, employees with 

financial problems who have access to sensitive data may pose a security 

risk, as discussed later in this report. 

Air Force Charge-offs Have 

Decreased

In addition to having the lowest net charge-off amount of the three 

services, $6.9 million, the quarterly dollar amount of Air Force accounts 

charged off has decreased substantially. As shown in figure 6, at the start 

of fiscal year 2001, the charged off balance greatly exceeded the recovery 

amount. Starting in the third quarter of fiscal year 2001, the amount 

charged off started to decline so that in the first quarter of fiscal year 2002, 

recoveries, for the first time, exceeded the amounts being charged off. 

Recoveries also exceeded charge-offs in the second quarter of fiscal year 

2002. The institution of the salary and military retirement offset program 

has contributed to the reduction in Air Force travel card charge-offs, 

primarily by eliminating the need to charge off past due balances by 

transferring these balances to the salary off-set program.
Page 18 GAO-03-298 Air Force Travel Card Controls

Figure 6: Air Force Travel Card Charge-off and Recovery History from October 1, 

2000, to March 31, 2002

0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

2001 

1st qtr.

2001 

2nd qtr.

2001 

3rd qtr.

2001 

4th qtr.

2002 

1st qtr.

2002 

2nd qtr.

Dollars in millions

Charge-offs

Charge-off recoveries

Source: GAO analysis of Bank of America data.
Page 19 GAO-03-298 Air Force Travel Card Controls

Salary and Military Retirement 

Offset Program

Starting in fiscal year 2002, DOD began to offset the retirement benefits of 

military retirees and the salaries of certain civilian and military employees 

against the delinquent and charged off balances on travel card accounts. 

The DOD salary offset program11 implements a provision of the Travel and 

Transportation Reform Act of 1998 (TTRA)12 that allows any federal agency, 

upon written request from the travel card contractor, to collect by 

deduction from the amount of pay owed to an employee (or military 

member) any amount of funds the employee or military member owes on 

his or her travel cards as a result of delinquencies not disputed by the 

employee.13 The salary and military retirement offset program was 

implemented DOD-wide.

The offset program came into being as part of the task order modification. 

Between April and August 2001, DOD and the Bank of America worked 

together to establish program protocols. Starting in August 2001, the Bank 

of America sent demand letters to cardholders whose accounts were more 

than 90 days delinquent. The Defense Finance and Accounting Service 

processed the initial offsets of delinquent accounts in October 2001 in the 

various DOD pay systems. The first deductions were made from the 

November pay period and paid to Bank of America starting December 2001. 

Figure 6 illustrates the initial impact salary offset had in the first quarter of 

fiscal year 2002. The Bank of America can also use the offset program to 

recover amounts that were previously charged off. January 2002 was the 

first month in which Bank of America requested offsets for such accounts. 

The effect, shown in figure 6, was recoveries amounting to over three times 

more than charge-offs for the second quarter of fiscal year 2002. 

The offset program works as follows. When an account is 90 days 

delinquent, Bank of America may send a demand letter to the individual 

cardholder requesting payment in full within 30 days. The demand letter 

specifies that salary offsets will be initiated if payment is not made in full 

within 30 days. The cardholder may negotiate an installment agreement or 

dispute the charges with the bank. The cardholder has a right to review all 

11 DOD’s salary offset program covers salaries paid by DOD through its active duty, reserve, 

and civilian pay systems, and retirement benefits paid through its military retirement pay 

system.

12 Section 2(d), Public Law 105-264, 112 Stat. 2350 (5 U.S.C. 5701 note).

13 Cardholder debts to Bank of America are not subject to the Debt Collection Improvement 

Act of 1996, which is limited to the collection of certain debts owed to the federal 

government. 
Page 20 GAO-03-298 Air Force Travel Card Controls

records such as invoices and to request a hearing if the bank’s disposition 

of the dispute is not satisfactory.

After the 30 days have elapsed, if payment is not made and the cardholder 

does not dispute the debt, the bank includes the account in the list of 

accounts that it sends to DFAS requesting offsets. Individuals in the 

following categories may not be accepted for offset.

• Civilian employees in bargaining units that have not agreed to the salaryoffset program do not qualify for the program. According to a DFAS 

official, 1,002 of 1,227 DOD bargaining units had agreed to participate in 

the program as of July 2002.

• Individuals with debts to the federal government or other garnishments 

already being offset at 15 percent of disposable pay are considered to be 

in protected status and are not eligible for the offset program. 

• Individuals who cannot be located in the various payroll and military 

retirement (active, reserve, retired military, or civilian) systems cannot 

be accepted for offset.

• Civilian retirees. The authorizing statutes for both the Civil Service 

Retirement System14 and the Federal Employee’s Retirement System15 in 

effect at the time of our audit specified that retirement benefits may be 

offset only to the extent expressly authorized by federal statutes. TTRA, 

Section 2, provided authority to offset salaries of “employees” of 

agencies but does not provide such authority for civilian employee 

retiree annuitants.16

14 5 U.S.C. 8346.

15 5 U.S.C. 8470.

16 Section 1008 of the Bob Stump National Defense Authorization Act for Fiscal Year 2003 

granted the Secretary of Defense authority to offset delinquent travel card debt against the 

retired pay of both civilian and military DOD retirees. Public Law 107-314 (H.R. Conf. Rep. 

No. 107-772). 
Page 21 GAO-03-298 Air Force Travel Card Controls

Once an individual is accepted for offset, the related debt is established in 

the appropriate pay system and DFAS can deduct up to 15 percent of 

disposable pay. Disposable pay is defined in GSA’s Federal Travel 

Regulation17 as an employee’s compensation remaining after the deduction 

from an employee’s earnings of any amounts required by law to be withheld 

(e.g., tax withholdings and garnishments). The amounts collected are paid 

to the bank on a monthly basis for military personnel and retirees and 

biweekly for civilian personnel. It takes approximately 2 months from the 

time an offset is initiated to the first bank payment.

According to DFAS, from October 2001 through July 2002, Bank of America 

referred 53,462 DOD-wide cases with debt of $77.5 million to DOD for 

offset. DOD accepted and started offset for 74 percent of the cases and 69 

percent of the debt amounts referred. The number and debt amount of Air 

Force-specific cases forwarded by Bank of America were not available. 

From November 2001 through July 2002, DFAS collected $2.7 million from 

active and retired Air Force military personnel through the offset program. 

During the same period, DOD collected $1.6 million from all DOD civilian 

employees. However, DFAS was unable to provide this amount by military 

service. 

Improved Travel Card 

Control Environment 

Contributed to 

Reduced Delinquencies 

We found that Air Force management encouraged a culture that 

emphasized the importance of integrity and ethical values and was involved 

in monitoring travel card delinquencies. According to travel card program 

officials and documentation we obtained, Air Force officials, from the Vice 

Chief of Staff to wing commanders, have strongly emphasized for the past 2 

to 3 years that the travel card program is a “commander’s program” and 

commanders are responsible for managing their delinquency rates. They 

explained that officials throughout the Air Force chain of command have 

monitored travel card delinquency rates and discussed the topic at their 

respective staff meetings. Documentation we obtained confirmed the use 

of detailed statistical reports to monitor installation-level delinquencies. 

Commanding officers are holding unit commanders with excessive 

delinquency rates accountable to make improvements to reduce 

delinquencies. Travel card delinquency statistics are discussed at 

command staff meetings, and unit commanders are held accountable for 

17 41 C.F.R. section 301-54.2. 
Page 22 GAO-03-298 Air Force Travel Card Controls

reducing their delinquencies. The importance of the tone at the top cannot 

be overstated. 

Other factors contributing to the reduction in Air Force delinquency rates 

include the following.

• Air Force emphasis on financial management training. Each Air 

Force installation has a Financial Services Office with a trained financial 

management staff that oversee the travel card program. The Air Force 

also provides personal financial training to all inductees, which includes 

developing personal budget plans, balancing checkbooks, preparing tax 

returns, and financial responsibility. The training also covers 

disciplinary action and consequences for financial irresponsibility by 

service members. The Air Force also provides financial counseling and 

training classes through the Family Services Centers at each base and 

contracts for professional counselors and trainers. 

• Travel card program audits. The Assistant Secretary of the Air Force 

(Financial Management and Comptroller) requested Air Force Audit 

Agency audits of the travel card program, which resulted in 

recommendations to management and resultant program 

improvements. According to a DOD Inspector General report,18 the Air 

Force Audit Agency issued 27 audit reports on the travel card program 

from fiscal year 1999 through fiscal year 2001. For example, in April 

2001, the Air Force Audit Agency issued an audit report on Travis Air 

Force Base (AFB),19 one of the sites we audited. The report identified 

numerous systemic problems, including inadequate agency program 

coordinator (APC) oversight due to insufficient training, which resulted 

in unauthorized transactions not being identified. The Air Force Audit 

Agency made numerous recommendations for corrective actions, and 

our audit work showed that Travis AFB had taken actions on many of 

them.

18 Department of Defense Office of the Inspector General, Acquisition: Summary of DOD 

Travel Card Program Audit Coverage, Report No. D-2002-065 (Arlington, Va.: Mar. 18, 

2002).

19 Air Force Audit Agency, Government Travel Charge Card Program, 60th Air Mobility 

Wing, Travis AFB, CA, Report No. WM001042 (Washington, D.C.: Apr. 26, 2001).
Page 23 GAO-03-298 Air Force Travel Card Controls

• DOD and Air Force initiatives. In March 2000, Air Force travel card 

delinquency rates were in the double digits—10.2 percent—similar to 

the Army and Navy delinquency rates.20 The Air Force initiated a 

number of actions in the fall of 2000 to reduce its delinquency rate. For 

example, in December 2000, Air Force headquarters sent an E-mail 

message to travel card APCs asking them to (1) promote the split 

disbursement payment process, (2) turn off accounts for infrequent 

travelers, (3) use Bank of America Electronic Account Government 

Ledger System (EAGLS) reports to monitor and detect problem 

accounts, (4) include procedures to deactivate the travel card when a 

member changes duty location, and (5) correct discrepancies between 

organizational codes assigned to cardholder accounts and their current 

assigned units to ensure accurate reporting and effective monitoring of 

accounts. As an aid in correcting organizational coding, the E-mail 

included a directory for APCs to use to resolve problems with accounts 

that were incorrectly assigned to them—referred to as “orphan” 

accounts—by identifying where those accounts should be properly 

assigned. 

Further, in response to June and September 2001 DOD policy 

memorandums to heads of military departments, the Air Force 

identified 100,000 travel cards for cancellation due to lack of use. 

According to an Air Force headquarters official, approximately 90,000 

travel cards were cancelled in October 2001. In addition, salary offset 

procedures were implemented in November 2001, resulting in a 

significant decrease in charged-off accounts in the first 6 months of 

fiscal year 2002. Also in November 2001, the Air Force Comptroller 

issued a letter to all major commands, highlighting the use of the split 

disbursement payment process and interim vouchers21 as options for 

preventing delinquent balances when members are on long-term 

deployments. According to Bank of America data, the Air Force 

increased the number of payments remitted to Bank of America via the 

split disbursement payment process from 20,487 payments, or 17 

percent of all payments, totaling $12 million in October 2000, to 54,337 

20 In March 2000, the delinquency rates for the three Services were: Air Force—10.2 percent, 

Army 16.9 percent, and Navy 11.5 percent.

21 Interim vouchers permit cardholders to request reimbursement of their travel 

expenditures periodically during long deployments, thereby enabling them to pay monthly 

travel card bills as they are received, rather than waiting for a lump sum reimbursement at 

the end of their deployment.
Page 24 GAO-03-298 Air Force Travel Card Controls

payments, or 39 percent of all payments, totaling $44 million in June 

2002. Officials at the sites we audited told us that they emphasized that 

cardholders use the split disbursement payment process. For example, 

Hill Air Force Base comptroller personnel told us that they have 

increased use of the split disbursement payment process from 23 

percent during the fourth quarter of fiscal year 2001 to 35 percent 

during the third quarter of fiscal year 2002. In addition, as of September 

17, 2002, Travis AFB implemented a new policy that made the split 

disbursement process the default, or automatic, payment method for all 

active duty military employees who use the government travel card 

with the provision that if an employee chooses not to use the split 

disbursement payment method, approval from the unit commander or 

first sergeant is required.

Further Improvements 

in Controls Are Needed

While the Air Force has made improvements in its control environment that 

have resulted in lower delinquency rates than the Army’s and the Navy’s, 

additional improvements could further reduce Air Force delinquency rates. 

In addition, similar to our Army and Navy findings, control environment 

weaknesses contributed to significant potential fraud and abuse of the Air 

Force travel card. Many of the problem cases that we reviewed were due 

to ineffective controls over the issuance of travel cards and the transfer or 

cancellation of accounts when individuals moved to other duty locations, 

separated, or retired. We also found that improvements are needed in the 

assignment and training of APCs. 

Inadequate Controls over 

Travel Card Issuance 

The Air Force’s ability to prevent potentially fraudulent and abusive 

transactions that can eventually lead to additional delinquencies and 

charge-offs is significantly weakened if individuals with histories of 

financial irresponsibility are permitted to receive travel cards. Although 

the DOD policy provides that all DOD personnel are to use the travel card 

to pay for official business travel, the policy also provides that exemptions 

may be granted under a number of circumstances, including financial 

irresponsibility. However, DOD’s policy is not clear as to what level of 

financial irresponsibility by a travel card applicant would constitute a basis 

for such an exemption. The Air Force’s practice is to facilitate the issuance 

of travel cards—with few credit restrictions—to all applicants regardless of 

whether they have histories of credit problems. We found no evidence that 

the Air Force exempted any individuals or groups from required 
Page 25 GAO-03-298 Air Force Travel Card Controls

acceptance and use of travel cards, even those with histories of severe 

credit problems. 

DOD’s Financial Management Regulation provides that credit checks be 

performed on all travel card applicants, unless an applicant declines the 

conduct of a credit check. 22 In July 1999, Bank of America began 

conducting credit checks on DOD travel card applicants and used the 

resulting information as a basis for determining the type of account—

restricted or standard—it would recommend for new DOD travel 

applicants. 

DOD policy also permits APCs to raise the credit and ATM limits on 

restricted cards based on travel requirements. Our analysis of credit 

application scoring models and credit risk scores used by major credit 

bureaus confirmed that applicants with low credit scores due to histories 

of late payments are poor credit risks. Credit bureau officials told us that if 

their credit rating guidelines for decisions on commercial credit card 

application approvals were used to make decisions on travel card 

applicants, a significant number of low- and mid-level enlisted Air Force 

cardholders would not even qualify for the restricted limit cards. A credit 

history showing accounts with collection agency action or charge-offs 

poses an even higher credit risk. Any of these problems can be a reason for 

denying credit in the private sector. However, in DOD, individuals with no 

credit history, or little credit history, are generally issued restricted cards 

with lower credit limits.

Credit industry research and the results of our work demonstrate that 

individuals with previous late payments are much more likely to have 

payment problems in the future. As discussed in this report, many of the 

Air Force travel cardholders that we audited who wrote numerous NSF 

checks, had severe prior financial problems, including accounts charged 

off, histories of delinquencies and charge-offs relating to other credit cards, 

and accounts in collection, or numerous bankruptcies.

22 DOD Financial Management Regulation, Volume 9, Chapter 3. The regulation further 

provides that individuals who do not consent to a credit check may only receive a restricted 

card.
Page 26 GAO-03-298 Air Force Travel Card Controls

In response to similar findings in our audit of the Army travel card program 

and an amendment proposed by Senators Byrd and Grassley, the Congress 

included a provision in the Department of Defense Appropriations Act for 

fiscal year 2003 requiring the Secretary of Defense to evaluate whether an 

individual is creditworthy before authorizing the issuance of any 

government charge card. 23 If effectively implemented, this requirement 

should improve delinquency rates and reduce potential fraud and abuse. 

Inadequate Controls over 

Travel Card Transfer or 

Cancellation 

We found numerous examples in which the APCs failed to deactivate or 

close accounts when cardholders retired, were dismissed, or separated 

from the service, or the APCs failed to take the proper action to transfer 

accounts when employees were reassigned to other Air Force locations. 

The Air Force lacks sufficient guidance and management focus in this area. 

DOD’s Financial Management Regulation requires APCs to terminate 

travel cards when cardholders die, retire, or are dismissed or separated 

from DOD. Bank of America has issued procedural guidance for 

transferring and terminating cardholder accounts. However, we found 

instances in which failure to follow these procedures—specifically with 

respect to travel card transfer and termination—resulted in travel card 

abuses and charge-offs. The cardholders benefited by using the travel 

cards to purchase a variety of goods and services for their personal use. 

Some did not pay their monthly bills, thereby essentially obtaining personal 

items for no cost. The following examples illustrate the effect of not taking 

appropriate actions to transfer, deactivate, or close travel card accounts. 

• A Langley AFB APC failed to close an enlisted member’s account after 

the individual left the service. The member left the service in January 

2001, but continued to use his card until March 2001. Because the card 

was not canceled immediately upon the member’s separation, the 

account remained open with a $5,000 credit limit allowing the member 

to charge unauthorized ATM withdrawals and purchases. The member 

was not disciplined because he had already left the service. The APC 

stated that she was not aware of the misuse of the travel card until the 

account was charged off in April 2002 with an unpaid balance of $3,729.

23 Section 8149 (b), Public Law 107-248, 116 Stat., 1519, 1572 does not define the term 

creditworthy. However, the conferees on the DOD appropriations act expressed their view 

that the statutory prohibition would permit “an individual with no credit history to be issued 

a restricted-use charge...card.”
Page 27 GAO-03-298 Air Force Travel Card Controls

• At Hill AFB, a senior airman (E-4) transferred to Yokota Air Base, Japan, 

in July 2001. The APC was unaware that the individual had transferred 

until his travel card account appeared as delinquent on the Bank of 

America reports. The APC deactivated the card in September 2001 and 

made repeated, unsuccessful attempts to contact the individual and the 

APC at Yokota Air Base. In January 2002, Bank of America placed the 

account totaling $1,918 in salary offset. Although the individual had 

continued to appear on Hill AFB delinquency reports, Hill AFB officials 

could not take any disciplinary action because the individual was no 

longer assigned to them. The account was eventually transferred from 

Hill to Yokota Air Base in March 2002. According to EAGLS data, the 

individual issued two nonsufficient fund (NSF) checks to Bank of 

America in March and April 2002 in payment of his account. Bank of 

America closed the account in June 2002. 

• Brooks AFB travel card officials failed to cancel the travel card account 

when a civilian employee (GS-13) separated from the service in January 

2000 and began working for a private contractor. The civilian continued 

to use his travel card after separation, charging over $17,000 in 

unauthorized purchases. The charges included approximately $1,000 in 

cash advances and several charges for an on-line dating service. The 

cardholder was not disciplined for the abuse because he had separated 

from the service. Information from EAGLS shows that the account was 

closed on September 13, 2002, and as of October 25, 2002, the account 

had an unpaid balance of approximately $1,600, which had not yet been 

charged off.

Insufficient Commitment to 

Human Capital Practices

We found a lack of emphasis on APC training and inadequate monitoring of 

APC training at two of our three case study locations—Nellis AFB and 

Travis AFB. As in our Army and Navy travel card audits, we found that Air 

Force APCs had excessive responsibilities. For example, APC duties were 

being assigned as collateral duties and certain APCs were responsible for 

as many as 1,200 accounts. We also found excessive turnover associated 

with military APCs at Nellis AFB and Travis AFB.

GAO’s internal control standards state that management’s commitment to 

competence and good human capital practices are critical factors in 

establishing and maintaining a strong internal control environment. 

Specifically, our standards state that management should identify 

appropriate knowledge and skills required for various jobs and should 

provide needed training. The standards also state that establishing 
Page 28 GAO-03-298 Air Force Travel Card Controls

appropriate human capital practices, including hiring, training, evaluating, 

counseling, and disciplining personnel, is another critical control 

environment factor. 

Lack of Emphasis and 

Inadequate Monitoring of APC 

Training

The emphasis on APC training varied across the three case study sites. 

Nellis AFB did not have a control mechanism in place to help ensure that 

all APCs received appropriate training and Travis AFB did not train APCs in 

a timely manner. Specifically, Travis AFB APCs told us that they did not 

receive timely training on how to access and use Bank of America EAGLS 

data to monitor travel card activity when they were assigned APC duties. 

However, we determined that Hill AFB had a mechanism in place to 

monitor APC training, and it provided that training in a timely manner.

DOD policy provides that travel card training materials are to be 

distributed throughout the department and that APCs are to be informed of 

policy and procedural changes relating to the travel card program. 

However, neither DOD nor Air Force-wide procedures detail requirements 

for the extent, timing, and documentation of travel program training for 

APCs. APCs are not required to receive training on the duties of the 

position or on how to use available Web-based tools and reports from Bank 

of America before they assume their APC duties. The lack of emphasis on 

training could negatively impact APCs’ ability to monitor delinquencies and 

promptly detect and prevent potentially fraudulent and abusive activities. 

Excessive APC Turnover and 

Responsibilities

As in our Army and Navy work, we determined that most Air Force APC 

duties were usually given to military personnel. As a result, APC positions 

usually have high turnover rates which, in many cases, have resulted in less 

effective performance of APC duties, such as monitoring cardholder travel 

card activity. For example, at Nellis AFB, the average length of assignment 

for APCs was approximately 12 months, and at Travis AFB assignments for 

military APCs were generally from 12 to 15 months. In addition, a Pacific 

Air Force official reported that during a recent 3-month period, one base 

experienced turnover in 18 of its 30 APC positions. In contrast, at Hill AFB, 

where most of the APCs were civilians, the average term for civilian APCs 

was approximately 20 months. 

Further, we found that Air Force APC duties at the locations we audited 

were “other duties as assigned.” The primary duties for certain APCs that 

we interviewed included data systems management and aircraft 

maintenance. As prescribed by the DOD Financial Management 

Regulation, APCs “are responsible for the day-to-day operations of the 

DOD Travel Card Program.” Volume 9, Chapter 3 of the DOD Financial 
Page 29 GAO-03-298 Air Force Travel Card Controls

Management Regulation provides that APCs are responsible for a variety 

of key duties, including establishing and canceling cardholder accounts, 

tracking cardholder transfers and terminations, monitoring and taking 

appropriate actions with respect to account delinquencies, interacting with 

the bank, and fielding questions about the program from both cardholders 

and supervisors. APCs are also required to notify commanders and 

supervisors of all travel card misuse so they can take appropriate actions. 

Several APCs that we interviewed told us they did not receive training on 

the full range of their APC duties until at least six months after they were 

assigned APC responsibilities. The APCs also told us they were not trained 

in using EAGLS until six months or more after they were assigned APC 

responsibilities. 

In addition to the part-time nature of APC duties, the number of travel 

cardholders assigned to APCs can result in excessive span of control, 

which impacts an APC’s ability to effectively perform monitoring and 

oversight. If the span of control is excessive, APCs may not be able to 

provide the necessary oversight to prevent the misuse of the travel cards. 

Table 4 shows the average span of control and incidences of APCs with a 

span of control greater than 100 cardholders.

Table 4: APC Span of Control at Selected Air Force Locations in Fiscal Year 2002 

Source: GAO analysis of Air Force data.

As shown in table 4, average APC span of control ratios varied at our case 

study locations. We also found that a high percentage of APCs had a span 

of control that exceeded Bank of America guidelines of 100 cardholders per 

APC. While we did not evaluate the guidance provided by Bank of America, 

we believe that one APC cannot effectively carry out all necessary 

management and oversight responsibilities if he or she, even working fulltime, has responsibility for hundreds of cardholders.

Air Force Location

Average ratio of open 

cardholder accounts to 

APC

Percent and number of APCs with 

a span of control greater than 

100 open cardholder accounts

Hill AFB 209 to 1 62% (23)

Nellis AFB 132 to 1 35% (16)

Travis AFB 264 to 1 84% (21)
Page 30 GAO-03-298 Air Force Travel Card Controls

Access Controls over Bank 

of America’s Travel Card 

System

Thousands of Bank of America and DOD employees had access to Bank of 

America’s travel card transaction data system, known as EAGLS. 

Computer system access controls are intended to permit authorized users 

to access the system to perform their assigned duties and preclude 

unauthorized persons from gaining access to sensitive information. Access 

to EAGLS is intended to be limited to authorized users to meet their 

information needs and organizational responsibilities. Authorized EAGLS 

users include both customers (APCs requiring access to travel data for 

cardholders under their purview and individual travelers requiring access 

to their own travel transaction histories) and Bank of America employees 

who may be granted one of five different levels of access depending on 

their assigned duties. The highest level of Bank of America employee 

access to EAGLS is the “super user” level. According to Bank of America 

security officials, this level of access—which provides users the ability to 

add, delete, or modify anything in the system, including creating accounts 

and editing transaction data in the system—should be granted to as few 

individuals as possible.

We found that 1,127 Bank of America employees had some level of access 

to the EAGLS system, including 285 with super user level access. After we 

brought this matter to the attention of Bank of America security officials, 

they reviewed employee access and deactivated access for 655 employees 

that they determined should not have had any level of access. Further, 

Bank of America has since initiated periodic reviews to ensure that it 

maintains appropriate levels of employee access.

In addition, DOD employees retained APC access to EAGLS after 

relinquishing their APC duties or after they may have been transferred or 

terminated. In a 2000 survey of 4,952 individuals with APC-level access to 

EAGLS, DOD found that approximately 10 percent could not be located 

and may have been transferred or terminated or no longer had APC 

responsibilities. Because of concern that many of these accounts should 

be deactivated, Bank of America has begun a review to determine if DOD 

employees with APC-level access no longer have APC responsibilities or 

have left the service. 

Statistical Tests of Key 

Control Activities 

Of the four key control activities associated with the fiscal year 2001 travel 

payment process that we tested, we found breakdowns associated with a 

lack of documentation to support the accuracy of travel reimbursements at 

all three locations and significant breakdowns in controls at two locations 
Page 31 GAO-03-298 Air Force Travel Card Controls

related to requirement for employees to submit vouchers within 5 days of 

completing travel. On a positive note, we found that travel vouchers were 

almost always paid within 30 days of submission. As a result, we ruled out 

late payment of travel vouchers as a contributing factor to travel card 

delinquencies at the three Air Force locations we audited. Our test results 

also showed that most travel charges were supported by approved travel 

orders, indicating minimal personal use—2 percent or less—of the travel 

card. This is considerably lower than the Army sites we audited, where we 

estimated that personal charges were as high as 45 percent at one location. 

It is also significantly lower than the Navy sites we audited, where we 

estimated that personal charges were as high as 26 percent at one location. 

However, as discussed later in this report, our overall Air Force data mining 

found several instances of personal use of the government travel card.

Table 5 below shows the results of our statistical sampling tests. Appendix 

II includes the specific criteria we used to conclude on the effectiveness of 

these controls.

Table 5: Results of Testing of Key Internal Controls 

Source: GAO analysis of Air Force travel process documents.

Note. The numbers in the table represent estimated percentages of failures in the population based on 

our sampling tests. The confidence intervals for our sampling estimates and the basis for our 

assessment of the effectiveness of the control activities tested are presented in app. II.

a

Hill AFB used two systems to process travel vouchers during fiscal year 2001. Only travel vouchers 

processed through the Integrated Automated Travel System were tested for this attribute. 

Controls over Travel 

Voucher Review and 

Accuracy

We found a lack of required receipts for hotel and rental car costs in the 

voucher packages associated with a number of transactions in our sample, 

indicating that these expenses should not have been reimbursed to the 

employees. For the three units we audited, Air Force Financial Services 

Percentage of failure

Air Force base, major 

command

Travel orders are 

approved prior 

to travel 

Travel voucher 

reimbursements 

are accurate

Travel vouchers are 

submitted within 5 days 

of travel completion

Travel vouchers are

paid within 30 days 

of submission

Nellis AFB, Air Combat 

Command 1 16 5 0

Travis AFB, Air Mobility 

Command 2 39 17 0

Hill AFB, Air Force Materiel 

Command 1 13a 25 1
Page 32 GAO-03-298 Air Force Travel Card Controls

Offices were responsible for processing vouchers to ensure that only 

authorized, properly supported travel charges were reimbursed and that 

the expenses claimed were accurately calculated. In our samples, we 

found that most errors were in the following categories.

• Missing receipts – At all three case study locations, we found the 

majority of errors related to instances in which voucher packages did 

not include all required receipts to support claims, based on DOD 

regulations. For example, a Nellis AFB cardholder was paid for over 

$700 in lodging costs on a voucher for which required receipts were not 

attached to the copy of the travel voucher we reviewed. The Nellis AFB 

Comptroller told us that he believed the receipts were most likely lost 

between the processing of the voucher at Nellis AFB and the filing of the 

voucher at the Defense Finance and Accounting Service (DFAS) in 

Denver. DFAS Denver officials stated that all of the receipts in the 

voucher package were copied for our review. We were unable to 

determine whether the missing receipts may have resulted from poor 

record retention by DFAS Denver or erroneous payments of expenses 

without required receipts. In either case, the process for obtaining and 

retaining required receipts was inadequate.

• Errors in amounts paid – We found instances at all three case study 

locations in which Financial Services Office personnel used incorrect 

per diem rates24 for lodging and meals and incidental expenses to 

calculate the reimbursement amount, resulting in overpayments to the 

traveler. 

Controls over Timely 

Voucher Submission

Two of the case study sites we audited—Travis AFB and Hill AFB—had 

ineffective controls for ensuring that vouchers were submitted in a timely 

manner. DOD policy requires the traveler to submit a travel voucher within 

5 days of return from travel.25 The failure rates we identified involved late 

submission of vouchers ranging from 8 to 87 days. Late submission of a 

travel voucher increases the likelihood that travel card bills could become 

due before the employee receives a reimbursement for travel expenses. 

24 Per diem is a daily allowance paid to travelers in lieu of actual subsistence expenses. GSA 

publishes per diem rates for various geographic areas. 

25 DOD’s Financial Management Regulation provides that for long-term travel, cardholders 

are expected to file interim vouchers every 30 days. 
Page 33 GAO-03-298 Air Force Travel Card Controls

Other Control Weaknesses 

Identified

Some of the transactions in our statistical sample could not be evaluated 

for key control attributes due to data management problems, which 

represent additional control weaknesses. These weaknesses included data 

entry errors, such as incorrect social security numbers, and organizational 

coding problems related to “orphan” accounts—accounts that fell into 

limbo because transferring units did not deactivate travel card accounts 

when cardholders transferred to new Air Force units and the cardholders 

did not check in with the gaining unit APCs to ensure that their travel card 

accounts were coded to their new unit organization codes. When the 

account of a transferring cardholder falls into this limbo status, the losing 

unit continues to receive reports on the account status, but has no control 

over the cardholder, and the gaining unit’s reports contain no information 

on the cardholder’s account status. Based on our Nellis AFB statistical 

testing, we estimated that approximately 2 percent of the fiscal year 2001 

transactions were affected by data entry problems and another 4 percent 

were orphan accounts. 

We estimated that approximately 1 percent of the Hill AFB transactions and 

5 percent of the Travis AFB transactions were associated with orphaned 

accounts. Our testing did not identify any data entry problems at either Hill 

AFB or Travis AFB. 

Electronic Data Processing 

Control Weaknesses in IATS

Our limited review of selected travel system controls at the three case 

study locations found problems in key systems controls, including access 

controls, segregation of duties, and transaction histories. Travel vouchers 

that we examined at the three test locations were processed through the 

Integrated Automated Travel System (IATS), DOD’s primary travel voucher 

processing system. Air Force Audit Agency’s February 2002 report on IATS 

controls identified similar problems at 10 other Air Force locations.26

Because the IATS performs all processing functions from initiating travel 

account records through disbursing travel pay, it is critical that system 

controls are in place to protect against fraudulent payments. Access 

controls for computer systems must be designed to provide protection 

against unauthorized access to computer resources. One form of access 

controls is the use of password cracker programs to test the effectiveness 

26 Air Force Audit Agency, Controls Over the Integrated Automated Travel System, F2002-

0002-B05400 (Washington, D.C.: Feb. 15, 2002).
Page 34 GAO-03-298 Air Force Travel Card Controls

of passwords currently in use. These programs were not being used at the 

three sites, therefore making passwords vulnerable. Another control, 

required by Air Force Manual 33-223, Identification and Authentication, is 

that individual passwords are to be revised every 90 days. However, we 

found that this requirement was not implemented at one of our three case 

study locations, and supervisors at Nellis AFB did not follow up to 

determine if password change instructions were followed.

We also found a lack of appropriate segregation of duties resulting in 

access to incompatible duties in IATS at all three of our test locations. 

Users should have access only to data and system functions required to 

accomplish their stated responsibilities and they should not have the ability 

to perform duties incompatible with their assigned responsibilities. We 

found that IATS users at all three case study locations had conflicting levels 

of access and, as a result, were able to not only create travel vouchers, but 

also to update and audit the same records. For example, our review of 

access privileges at Hill AFB found that assigned privileges for four users 

afforded them the ability to perform duties such as creating, updating, and 

auditing travel vouchers. 

After we called this problem to the attention of the IATS manager, he 

immediately revised user access levels to ensure that auditors could not 

also create and update travel voucher information. According to the Air 

Force Audit Agency report issued in February 2002, this problem is 

attributable in some measure to an inherent weakness in the software 

design. Although IATS contains various levels of privileges that can be 

assigned to individual users, the software design does not effectively limit 

access to preclude the assignment of incompatible access privileges. 

In addition, we found that travel voucher data in IATS did not include 

transaction histories or audit trails. This problem also was identified by the 

Air Force Audit Agency as a systemic problem. Because IATS software 

design does not provide the capability to track changes, it is impossible to 

obtain transaction histories to determine whether changes were made, or 

who may have made changes, to a particular voucher. This makes the 

system vulnerable to individuals who could use inappropriate IATS access 

to create a fictitious travel voucher, process a payment, and subsequently 

delete the travel record. According to the Air Force Audit Agency report, 

this problem is being addressed in the design of WINIATS. WINIATS, a 

Windows-based software application--is targeted to replace IATS in June 

2003. 
Page 35 GAO-03-298 Air Force Travel Card Controls

Potentially Fraudulent 

and Abusive Travel 

Card Activity

Our work identified numerous instances of potentially fraudulent and 

abusive activity associated with the Air Force’s travel card program during 

fiscal year 2001 and the first 6 months of fiscal year 2002, similar to the 

types of cases we found in our Army and Navy work. For purposes of this 

report, we characterized as potentially fraudulent those cases where 

cardholders might have committed bank fraud by writing three or more 

NSF checks or by writing checks on closed accounts to pay their Bank of 

America bills. 

We considered abusive travel card activity to include (1) personal use of 

the cards—any use other than for official government travel—regardless of 

whether the cardholders paid the bills and (2) cases in which cardholders 

were reimbursed for official travel and then did not pay Bank of America 

and thus benefited personally. In addition, some of the travel card activity 

that we categorized as abusive may be fraudulent if it can be established 

that the cardholder violated any element of federal or state criminal codes. 

Failure to implement controls to reasonably prevent such transactions can 

increase the Air Force’s vulnerability to additional delinquencies and 

charge-offs. 

Potentially Fraudulent 

Transactions

During the 18-month period covering fiscal year 2001 and the first half of 

fiscal year 2002, over 6,300 individuals wrote nonsufficient fund (NSF) 

checks, or “bounced checks,” to Bank of America as payment for their 

travel card bills,27 including over 400 individuals who wrote three or more 

NSF checks— potentially fraudulent acts.28 Potentially fraudulent NSF 

cases identified in our work include one individual who had charged over 

$13,000 to the travel card account and wrote seven NSF checks to Bank of 

America. The Air Force court-martialed the individual and imposed a 90-

day confinement. Table 6 includes details on 10 individuals who committed 

27 Of the over 400 cardholders who wrote three or more NSF checks, over 100 had accounts 

that were eventually charged off or put in salary offset.

28 Bank fraud is defined by 18 U.S.C. 1344 as any execution of, or attempt to execute, a 

scheme or artifice to defraud a financial institution or to obtain any of the moneys, funds, 

credits, assets, securities, or other assets owned by, or under the custody or control of, a 

financial institution, by means of false or fraudulent pretenses, representations, or 

promises. Further, it is a violation of the Uniform Code of Military Justice article 123a when 

a soldier makes, draws, or utter (verbally authorizes) a check, draft, or order without 

sufficient funds and does so with intent to defraud.
Page 36 GAO-03-298 Air Force Travel Card Controls

potentially fraudulent acts by writing three or more NSF checks to pay 

their travel card accounts. 

Table 6: Examples of Cases in Which Cardholders Wrote Three or More NSF Checks to Bank of America and Accounts Were 

Charged Off and/or Placed in Salary Offset from October 2000 through March 2002

Cardholder Grade Unit 

Total number/ 

amount of NSF 

checks

Total charge-off or 

salary offset 

amount Credit history problems 

Documented 

disciplinary action

1 E-6 Barksdale AFB 3 / $3,214, plus 1 

forged check for 

$260

Charge-off

$6,666

Judgment, automobile 

repossession, past due 

accounts, collection actions, and 

one charge-off prior to card 

issuance; several chargeoffs after card issuance.

Other than honorable 

discharge for travel 

card abuse.

2 E-3 Tinker AFB 7 / $23,137 Charge-off 

$13,908;

 salary offset

No credit problems prior card 

issuance; delinquencies, 

collection actions, and chargeoffs after card issuance.

Court-martial, 90-

day confinement for 

travel card abuse. 

3 E-6 WrightPatterson AFB3 / $6,235 Charge-off

$7,679

No credit problems prior to card 

issuance; judgment, bankruptcy, 

and one charge-off after card 

issuance.

Court martial, 12 

months in jail, and 

reduction in rank to 

E-1 for travel card 

abuse.

4a E-3 March AFB 4 NSF checks 

and 3 checks on 

closed accounts 

totaling $26,356 

Charge-off

$17,436

Bankruptcies and one chargeoff prior to card issuance; 

automobile repossession, 

charge-offs and collection 

actions after card issuance.

Discharge for travel 

card abuse is 

pending.

5 N/A Virginia state 

employee 

assigned to Air 

National Guard

4 / $6,048 Charge-off

$2,127; account 

paid off in June 

2002 

No credit problems prior to card 

issuance; judgment, charge-offs, 

collection actions, and 

delinquencies after card 

issuance.

None. Individual 

was not an Air Force 

employee.

6 E-4 North Carolina 

Air National 

Guard

4 / $3,022 Charge-off

$3,037

Collection actions prior to card 

issuance; collection actions and 

charge-offs after card issuance.

None. Discharged in 

July 2002 for being 

absent without leave.

7 E-8 McChord AFB 4 / $4,058 Charge-off

$4,066

 

Delinquencies and bankruptcy 

prior to card issuance; 

bankruptcy, real estate 

foreclosure and a charge-off 

after card issuance. 

None. Individual 

retired in July 2001.
Page 37 GAO-03-298 Air Force Travel Card Controls

Source: GAO analysis of Air Force, Bank of America, and credit history data.

a

 Cardholder obtained two accounts from Bank of America using different social security numbers. 

The first account was opened in January 2000 and was closed in February 2001 with an unpaid 

balance of $4,771, which was subsequently charged off. The cardholder wrote two checks on a closed 

account to pay travel card bills associated with this account.

Of the ten cardholders included in table 6, six had significant credit 

problems prior to card issuance, such as charged-off credit card accounts 

and automobile loans, bankruptcies, and referrals to collection agencies for 

unpaid bills. The following provides detailed information on some of these 

cases. 

• Cardholder #1 was a reservist technical sergeant (E-6) who served one 

weekend each month. Bank of America records showed that the travel 

card account was opened on December 22, 1999, and that the individual 

subsequently wrote three NSF checks totaling $3,214 in payment of his 

travel card bills. In addition, the individual forged a check in the amount 

of $260. The individual’s account was closed on January 9, 2002, and an 

unpaid balance of $6,666 was charged off. The individual’s credit report 

showed that he had credit problems prior to issuance of the government 

travel card, including repossession of an automobile and a charged-off 

account.

Bank representatives had numerous conversations with the individual 

about his account. We found that the individual’s travel card account 

was included on monthly delinquency reports. Bank of America 

ultimately charged off the travel card account. The individual was 

discharged from the Air Force under “Other Than Honorable 

8 E-4 Ft. Walton Beach 1 NSF check and 

7 checks on 

closed accounts 

totaling $7,489

Charge-off

$2,111

No credit problems prior to card 

issuance; automobile 

repossession, several chargeoffs, and collection actions after 

card issuance.

None. Individual left 

the service in 

January 2001.

9 E-5 McChord AFB 7 / $4,750 Charge-off

$3,781;

salary offset

A charge-off and collection 

action prior to card issuance; 

charge-offs and collection 

actions after card issuance.

None.

10 GS-7 Hill AFB 3 / $5,867 Charge-off

$5,952

Charge-offs and collection 

actions prior to card issuance; 

redeemed repossession after 

card issuance.

None.

(Continued From Previous Page)

Cardholder Grade Unit 

Total number/ 

amount of NSF 

checks

Total charge-off or 

salary offset 

amount Credit history problems 

Documented 

disciplinary action
Page 38 GAO-03-298 Air Force Travel Card Controls

Conditions” for failure to pay his military travel card bills on time and 

using his travel card for unauthorized purposes. 

• Cardholder #2 was an airman (E-3) at Tinker AFB, Oklahoma. Bank of 

America records showed that the individual’s account was opened on 

August 25, 2000, and that the individual subsequently wrote seven NSF 

checks totaling $23,137 in payment of her travel card bills. The 

individual submitted NSF checks, which made the account appear to 

have available credit—a practice known as “boosting”— thus enabling 

the individual to make cash withdrawals and additional purchases. 

Bank of America records also showed that bank representatives had 

numerous conversations with the individual about her travel card debt. 

The individual’s account was placed in the salary-offset program on 

March 19, 2001, with monthly payments of $169. The travel card 

account was closed on July 18, 2002, and an unpaid balance of $13,908 

was charged off. The individual’s credit report showed that the 

individual did not have credit problems prior to the issuance of the 

travel card.

Bank of America notified the squadron about the NSF checks issued in 

payment of the individual’s travel card account. A subsequent Air 

Force investigation identified numerous abuses of the travel card, 

including multiple uses of the card in 1 day for personal ATM 

withdrawals, and 187 other instances of misuse totaling approximately 

$13,700, including personal purchases at vendors such as Victoria’s 

Secret. These findings resulted in the individual being court-martialed, 

fined $5,000, and initially sentenced to confinement on the base for 

about 135 days; however, the base commander reduced the sentence to 

less than 90 days due to the cardholder’s pregnancy. 

• Cardholder #3 was a technical sergeant (E-6) stationed at WrightPatterson AFB, Ohio, and was the APC for his unit. Bank of America 

records showed that the individual’s account was opened on October 10, 

1998, and that the cardholder subsequently wrote three NSF checks 

totaling $6,235. The individual’s travel card account was closed on May 

3, 2002, and an unpaid balance of $7,679 was charged off. The bank’s 

customer contact log indicates that bank representatives had numerous 

conversations with the individual about the delinquent account. The 

individual’s credit report showed significant credit problems prior to the 

individual receiving the travel card. 
Page 39 GAO-03-298 Air Force Travel Card Controls

Bank of America notified the squadron that the individual had 

submitted several NSF checks to Bank of America. According to an Air 

Force official, the problems reported by the bank were especially 

disturbing because the individual was a trusted combat veteran with 

many years of service, who also functioned as the squadron’s APC. An 

Air Force investigation of the individual’s travel card abuses revealed 

that the individual (1) made approximately $6,000 in personal, 

nonauthorized charges, (2) submitted a $4,500 NSF check to the bank 

to boost the amount of available credit on his account to permit 

additional cash advances, and (3) unrelated to his travel card abuses, 

the individual also stole checks in the amount of $7,500 from the U.S. 

mail. The individual was court-martialed for travel card abuse and theft 

of U.S. mail and sentenced to 1 year in jail, reduced in pay grade to E-1, 

and discharged from the military for “financial difficulties.” 

• Cardholder #4 was an airman (E-3) reservist assigned to March AFB, 

California, who was also a full-time DOD employee (GS-9) in a position 

involving similar work. Our analysis of Bank of America records 

showed that the individual obtained two travel card accounts during 

two different periods. The individual issued NSF checks and other 

checks to Bank of America on closed accounts in payment of both travel 

card accounts. The first account, which was opened in January 2000, 

was closed in February 2001 with an unpaid balance of $4,771 that was 

subsequently charged off. Air Force officials told us that the individual 

obtained the second account in October 2001 by having a different 

superior officer, who was unaware of the previous travel card account, 

sign the application for the new card. The individual fraudulently used a 

relative’s social security number to apply for the second travel card 

account. In payment of his second travel card account, the individual 

wrote seven checks to Bank of America, consisting of four NSF checks 

totaling $7,131, on an open bank account and three checks totaling 

$19,225 on a closed bank account. The cardholder used NSF checks to 

make large payments, which enabled him to boost his available balance 

and permit cash withdrawals from the account. An Air Force official 

stated he was unaware of the problem because the NSF checks masked 

the delinquency problem. The individual’s second travel card account 

was closed on June 3, 2002, and an unpaid balance of $12,665 was 

charged off. Bank of America’s customer contact log indicates that its 

representatives had numerous conversations with the individual about 

this account.
Page 40 GAO-03-298 Air Force Travel Card Controls

The cardholder resigned his civilian DOD position and was charged 

with (1) identity theft related to the use of his relative’s social security 

number, (2) being absent without leave, (3) failure to participate in 

monthly training, and (4) financial irresponsibility related to personal 

use of the government card when not on military orders. The individual 

was in the process of being discharged from his military E-3 reservist 

position in October 2002. The individual’s credit report showed he had 

several credit problems, including bankruptcies and a charge-off prior 

to his receiving a government travel card.

• Cardholder #5 was a Virginia state employee assigned to the Air 

National Guard in Richmond, Virginia. Bank of America records 

showed that the individual’s account was opened on March 18, 1999. 

The individual wrote four NSF checks totaling $2,818 and stopped 

payment on two checks totaling $3,230 to Bank of America. The 

individual’s travel card account was closed on November 26, 2001, and 

an unpaid balance of $2,127 was charged off. The cardholder paid off 

the account on June 17, 2002. Bank of America records indicate that 

bank representatives had numerous conversations with the cardholder 

about this account. The individual’s credit report did not show any 

significant credit problems prior to issuance of the card.

The current APC, who assumed that role in July 2001, determined the 

individual was delinquent on his government travel card account when 

he reviewed Bank of America delinquency reports. The APC referred 

the matter to the individual’s unit commander who subsequently 

counseled the individual on “multiple” occasions regarding the card’s 

use and delinquency. The APC told us that because the individual was a 

state employee and not a member of the Air National Guard, the 

individual was not eligible for the Air Force travel card and should not 

have been granted a card. 

Analysis of Abusive Travel 

Card Use

We also found numerous examples of Air Force personnel misusing and 

abusing their government travel cards by making transactions that were 

clearly not for the purpose of government travel, similar to those we 

reported in our Army and Navy reports. As discussed further in appendix 

II, we used data mining procedures to identify transactions that we 

believed to be potentially fraudulent or abusive based upon the nature, 

amount, merchant, and other identifying characteristics of the transaction. 

As a result of these procedures, we found instances in which cardholders 

abused their travel cards by purchasing a wide variety of personal goods or 
Page 41 GAO-03-298 Air Force Travel Card Controls

services that were unrelated to official government travel. As shown in 

table 7, we were able to determine that during an 18-month period, Air 

Force cardholders charged approximately $31,000 to purchase admission 

to entertainment events, such as NFL football games and a Janet Jackson 

concert. We also identified travel card transactions totaling approximately 

$14,000 for gambling; $31,000 for cruise packages; and $32,000 coded as 

purchases at gentlemen’s clubs, which provide adult entertainment. The 

examples shown in table 7 include both instances where the cardholders 

paid their bills and where they did not. 

Table 7: Examples of Abusive Air Force Travel Card Activity (October 1, 2000, to 

March 31, 2002)

Source: GAO analysis of Bank of America data.

Our investigative work showed that gentlemen’s clubs were sometimes 

used to convert the travel card to cash by supplying cardholders with 

actual cash or “club cash” for a 10 percent fee. To illustrate, an Air Force 

employee that charged $440 to their government travel card at one of these 

clubs, would receive $400 in cash. Such charges are processed by the 

establishment’s merchant bank, and authorized by Bank of America, in part 

because the merchant category code (MCC),29which identifies the nature 

Category Examples of vendors 

Number of 

transactions

Approximate 

dollar amount 

Cruises Carnival, Celebrity, Norwegian, 

and Princess 70 $ 31,000

Gambling GCA*- Global Cash Access, and

www.PROCCY 79 14,000

Sports, concerts, 

and other events

Dallas Cowboys, Backstreet Boys, 

Janet Jackson, and other 

Ticketmaster purchases 223 31,000

Gentlemen's clubs Spearmint Rhino, Can Can, 

Cheetah's Lounge, and Déjà Vu 

Showgirls 187 32,000 

Legalized brothels 40 Bar Ranch and Madam 

Butterfly 3 1,000

29 MCCs are established by the banking industry for commercial and consumer reporting 

purposes. Currently, about 800 category codes are used to identify the nature of the 

merchants’ businesses or trades, such as airlines, hotels, ATMs, jewelry stores, casinos, 

gentlemen’s clubs, and theatres.
Page 42 GAO-03-298 Air Force Travel Card Controls

of the transactions and is to be used by Bank of America to block improper 

purchases, are circumvented when the establishments reported the 

charges as restaurant, dining, or bar charges. Subsequently, the club would 

receive payment for a $440 restaurant charge.

Examples of Travel Card Abuse We found cases where individuals used their travel cards for both official 

and personal reasons, but failed to pay their accounts, thereby resulting in 

accounts that were charged off and/or included in salary offset and fixed 

payment plans. Table 8 provides examples of those cases. 

Table 8: Examples of Abusive Travel Card Activity Where Accounts Were Charged Off and/or Placed in Salary Offset from 

October 2000 through March 2002 

Cardholder Grade Unit 

Total chargeoff or salary 

offset amount

Transactions contributing 

to charge-off or salary 

offset

Credit history 

problems 

Documented 

disciplinary action

1 E-5 Idaho Air 

National Guard

Charge-off

$7,258

Employee’s spouse used his 

travel card for Internet 

gambling.

No prior credit 

problems. Due to 

inability to pay wife’s 

excessive gambling 

debt, the cardholder 

filed for bankruptcy.

None. 

2 E-6 Travis AFB Charge-off 

$1,008;

Salary offset

Failure to pay travel card bill 

after receiving reimbursement 

for government travel 

expenses.

Credit card 

delinquencies prior to 

card issuance; chargeoffs, collection actions, 

and automobile 

repossession after card 

issuance.

Counseled, letters of 

reprimand, Article 15s, 

court-martialed and 

sentenced to 5 years in 

jail, and dishonorable 

discharge for theft of 

government property.

3 E-4 New York Air 

National Guard

Salary offset

$6,086

Personal use including long 

distance calls, rental car, and 

contact lenses.

Bankruptcy filed and 

automobile 

repossession prior to 

card issuance; several 

delinquencies after 

card issuance. 

Four letters of 

counseling and intent to 

discharge related to 

failure to pay travel card 

bills.

4 GS-15 Patrick AFB Salary offset

$3,174

Failure to pay travel card bill 

after receiving reimbursement 

for government travel 

expenses.

Bankruptcy filed 1 

month after travel card 

issuance and a chargeoff in 2002. 

None. Balance was 

paid off on August 14, 

2002, due to GAO 

scrutiny of account.

5 E-5 Langley AFB Charge-off

$3,729

Personal use including ATMs, 

restaurants, and veterinary 

services after separation from 

the service.

Judgment prior to card 

issuance; bankruptcy, 

multiple charged-off 

accounts, and multiple 

collection actions since 

card issuance.

None.
Page 43 GAO-03-298 Air Force Travel Card Controls

Source: GAO analysis of Air Force, Bank of America, and credit history data.

a

Wage Grade (WG) positions are paid at hourly rates and generally pertain to government positions, 

such as maintenance, printing, and landscaping.

The following examples include details of cases summarized in table 8.

• Cardholder #1 is a staff sergeant (E-5) in the Idaho Air National Guard 

who is employed full-time as a juvenile counselor at a county 

6 E-5 Nellis AFB -

transferred to 

Cannon AFB in 

November 

2001

Salary offset

$2,224

Used government travel card 

to pay for gambling, adult 

entertainment at gentlemen’s 

clubs, and miscellaneous 

personal services. 

Bankruptcy, chargeoffs, and collection 

actions prior to card 

issuance; 

repossession, chargeoffs, and delinquency 

since card issuance.

Article 15 and reduction 

in grade to E-4 for 

travel card abuse.

7 O-1 Nellis AFB Salary offset

$7,223

Spouse made ATM 

withdrawals and numerous 

personal charges at grocery 

stores, gas stations; 6 NSF 

checks written to pay travel 

card bill.

Automobile 

repossession prior to 

card issuance and 

credit card 

delinquencies and 

charge-offs since card 

issuance. 

Letter of 

admonishment.

8 E-4 Nellis AFB Salary offset

$446

ATM withdrawals, wrote 7 

NSF checks to pay travel card 

bill.

Collection and chargeoff actions prior to card 

issuance; collection 

actions, charge-offs, 

and judgment after card 

issuance.

None. Court-martial 

and discharge for other 

than travel card issues.

9 WG-10a Hill AFB Charge-off

$3,066

Failure to pay travel card bill 

after receiving reimbursement 

for government travel 

expenses.

Credit card 

delinquencies and an 

automobile 

repossession prior to 

travel card issuance. 

Filed Chapter 7 

bankruptcy in June 

2002. 

Written documentation 

of counseling.

10 WG-10 a Hill AFB Charge-off

$1,029

Failure to pay travel card bill 

after receiving reimbursement 

for government travel 

expenses.

Collections, 

delinquencies, 

repossession, and 

charge-offs prior to 

travel card issuance. 

Bank of America report 

indicates that 

cardholder has filed for 

bankruptcy.

None.

(Continued From Previous Page)

Cardholder Grade Unit 

Total chargeoff or salary 

offset amount

Transactions contributing 

to charge-off or salary 

offset

Credit history 

problems 

Documented 

disciplinary action
Page 44 GAO-03-298 Air Force Travel Card Controls

correctional facility. The cardholder told our investigators that from 

December 22, 2000, to February 19, 2001, his wife used his government 

travel card without his knowledge or consent. Bank of America records 

showed that transactions for the above period totaled over $13,000, of 

which over $10,000 was for on-line gambling charges and another $3,000 

was for ATM withdrawals. There were also several credits to the 

cardholder’s account totaling over $5,000 from his wife’s gambling 

winnings. The cardholder’s wife admitted to a gambling addiction and 

to using their personal bank debit card and her husband’s government 

travel card to fund her addiction. 

Upon discovering his wife’s abusive use of his government travel card, 

the cardholder immediately briefed his commanding officer, who 

informed the APC, and the account was closed. The cardholder also 

contacted Bank of America to work out a payment plan for the debt but 

no agreement could be reached. As a result of his inability to pay the 

debt incurred by his wife, the cardholder filed for Chapter 7 

bankruptcy. On September 3, 2001, Bank of America charged off an 

unpaid balance of $7,258 on the cardholder’s travel card account. To 

date, no criminal charges have been initiated against the cardholder’s 

now ex-wife.

In researching this case, we noted that although DOD has requested 

that Bank of America block certain merchant category codes to help 

prevent improper travel card transactions, such as transactions for online gambling at www.PROCCY, merchants are able to circumvent such 

restrictions by assigning permissible merchant codes to otherwise 

improper transactions. For example, in this case, to mask gambling 

activity, the on-line gambling establishments with whom the 

cardholder’s wife dealt used the merchant category codes for 

“Miscellaneous and Specialty Retail Stores” and “Professional 

Services—Not Elsewhere Classified” instead of the merchant category 

code for “Betting—Including Lottery, Gaming Chips, Track Wagers.” 

However, these establishments credited the wife’s winnings to the 

cardholder’s account using the merchant category code for “Betting—

Including Lottery, Gaming Chips, Track Wagers.” Active monitoring by 

the APC of ongoing travel card activity would have helped detect the 

problem transactions sooner.
Page 45 GAO-03-298 Air Force Travel Card Controls

• Cardholder #2 was a highly skilled technical sergeant (E-6) at Travis 

AFB, California, who held a secret clearance and worked on C-5 aircraft, 

large cargo aircraft designed for airlifting weapons and supplies. Our 

discussions with base officials and our review of the cardholder’s 

personnel file and credit report revealed that the cardholder had several 

credit card delinquencies prior to issuance of the travel card. In March 

1998, prior to being assigned to Travis AFB, the cardholder had received 

an Article 1530 for wrongfully using his American Express government 

travel card for personal gain and blaming the misuse of the travel card 

on another family member. 

In March 2001, when the individual transferred to Travis AFB, his new 

APC noted that the individual’s travel card account had a past due 

balance of $2,257. The APC reported this information to the 

cardholder’s unit commander. At that time, the account was suspended 

and Bank of America closed and canceled the cardholder’s account a 

week later. However, Travis AFB officials told us that they asked Bank 

of America to keep the individual’s travel card account open so that he 

could travel where necessary to make repairs to downed C-5 aircraft. 

The officials told us that the cardholder was one of a few experts who 

could supervise repairs on the C-5 aircraft. According to the officials, 

when problems arose with the aircraft, repairs had to be made 

immediately to get the plane back in the air. 

On April 16, 2001, the unit commander counseled the cardholder and 

gave him a letter of reprimand for nonpayment of his travel card bill. 

On June 25, 2001, the cardholder received another Article 15 for failure 

to pay his “Military Star Account” with the base Army and Air Force 

Exchange Service (AAFES) store. Both Article 15s and the letter of 

reprimand contained statements indicating that this behavior would 

not be tolerated. It is apparent that this statement on the documents 

did not deter the individual from being delinquent, nor did the officials 

abide by these statements. 

During the fall of 2001, Air Force investigators were notified that 

personal protective gear, including body armor and biochemical and 

biological protective masks, was missing from C-5s arriving in 

Afghanistan. The cardholder came under suspicion as one of a few 

30 Article 15 of the Uniform Code of Military Justice provides for non-judicial punishment 

imposed by a commander and accepted by the member.
Page 46 GAO-03-298 Air Force Travel Card Controls

individuals with access to C-5 aircraft. During the ensuing investigation 

involving the individual, his security badge was revoked and he had to 

be escorted to and from his worksite. Shortly thereafter, Air Force 

investigators videotaped the individual selling military protective gear 

in a town near the base, and the individual was arrested and charged 

with theft and sale of government property. Investigators determined 

that the individual was addicted to gambling and had used his 

government travel card reimbursements and the proceeds from the sale 

of stolen government property to finance his gambling habit. In 

January 2002, the individual was court-martialed, and in March 2002, he 

was convicted of theft and sale of $50,000 in government property and 

was dishonorably discharged. He was sentenced to a 5-year jail term. 

Air Force investigative and legal officials told us that the individual’s 

failure to pay his travel card debt was considered in the sentencing 

decision. 

If Travis AFB officials had acted sooner to cancel the technical 

sergeant’s travel card account, revoke his security clearance, and 

discharge him from the service, they may have prevented the theft of 

critical protective gear needed by troops deployed in Afghanistan.

Travel Card Abuse Where 

Cardholders Paid Their Bank of 

America Bills 

Further, we found examples where individuals used their government 

travel cards for personal use on purchases of items, such as computers, 

entertainment, college tuition, and jewelry, but kept their accounts current 

by paying their travel card bills in a timely manner. We considered these 

purchases to be abusive travel card activity because the travel card may 

only be used for official government travel expenses. Personal use of the 

travel card may increase the risk of charge-offs, which are costly to the 

government and the taxpayer. In addition, instances of personal use are 

indicative of internal control breakdowns, such as the failure of the APCs 

to monitor travel card activities. Table 9 provides details on 10 cases where 

the cardholders made personal purchases but paid their accounts. 
Page 47 GAO-03-298 Air Force Travel Card Controls

Table 9: Examples of Abusive Activity Where the Cardholders Paid Their Bills from October 2000 through March 2002

Source: GAO analysis of Air Force and Bank of America data.

The instances illustrated in this report clearly represent abusive use of the 

government travel card. Air Force personnel are informed that these types 

of transactions are not permitted. All Air Force cardholders are required to 

sign a statement of understanding that the card is to be used only for 

authorized official government travel expenses.

Cardholder Unit Grade Vendor Amount Nature of transactionDocumented 

disciplinary action

1 Nellis AFB E-5 Global Casino,

ATM cash

$2,081 Gambling Letter of reprimand for 

misuse of government 

travel card. 

2 Office of the 

Secretary of 

the Air Force, 

Space & 

Technology

GS-9 Strayer University 1,980 College tuition None. Member had left 

the Air Force over 2 

years prior to the 

charge.

3 Nellis AFB -

transferred to 

Eglin AFB in 

July 2002 

E-5 Casino Cash and 

ATM 

7,826 Gambling None.

4 Vermont Air 

National Guard 

E-4 Wells Fargo Home 

Mortgage

350 Payment to mortgage 

company

None.

5 Pope AFB E-6 Best Buy 1,401 Computer purchase None. 

6 Nellis AFB O-3 Caesar’s Palace 1,566 Internet gambling Court-martial for travel 

card abuse is pending.

7 New York Air 

National Guard 

E-7 Ticketmaster 185 Tickets for NSYNC concert None.

8 Arkansas Air 

National Guard 

E-5 Gateway.com 2,689 Computer purchase None. 

9 Edwards AFB GS-13 Disneyland tickets 260 Personal entertainment None.

10 Air Force 

Strategic 

Command

E-5 Helzberg Diamonds 370 Jewelry purchase None.
Page 48 GAO-03-298 Air Force Travel Card Controls

Abusive Activity Not 

Effectively Linked to 

Disciplinary Action and 

Security Clearances

Air Force policy provides commanders with a wide variety of disciplinary 

options for addressing misconduct by service members. The means of 

discipline include counseling, oral and written reprimands, creating an 

unfavorable information file, issuing Article 15s, and court-martial. The 

policy leaves the means of discipline and the actual punishment to the 

discretion of the individual commander based upon the facts of each case. 

However, for the cases involving 58 cardholders whose accounts involved 

NSF checks, charge-offs, or salary offsets, we found documented evidence 

of disciplinary actions in only 19 cases. Our analysis of cases where travel 

card accounts had been charged off, were in salary offset, or involved NSF 

checks showed that when the Air Force took disciplinary actions, those 

actions ranged from counseling to court-martial and discharge from the 

service. In certain cases where documentation of disciplinary actions was 

not available, Air Force officials told us that verbal counseling had been 

provided, but was not documented. In other cases where documentation 

was not available, Air Force officials claimed that disciplinary actions had 

been taken, but records had not been retained because the individuals had 

transferred or left the service. At Hill AFB, most of the cases we reviewed 

involved civilians. Air Force Instruction 36-704, Discipline and Adverse 

Actions, provides guidance on disciplinary action for civilians who fail to 

honor valid debts or legal obligations. However, the guidelines limit 

disciplinary action to reprimands, even after the third offense.

In addition, we found that 32 of the 58 most severe abusers of the travel 

card still had secret or top secret clearances in August 2002. According to 

Air Force Instruction 31-501, Personnel Security Program Management, 

military units are responsible for maintaining unfavorable information files 

on individuals, and are supposed to notify the central security facility of 

instances of financial irresponsibility or other behavioral problems that 

may affect an individual’s security clearance. However, we determined that 

the Air Force does not have consistent procedures in place to link travel 

card account delinquencies or charge-off status to an individual’s security 

clearance.31 Some of the Air Force personnel holding security clearances 

who have had difficulty paying their travel card bills may present security 

risks to the Air Force. We have referred the names of these individuals to 

the Air Force Central Adjudication Facility for appropriate evaluation.

31Air Force Instruction 31-501 incorporates the security standards set forth in DOD 

publication, 5200.2-R, Personnel Security Program, which covers “excessive indebtedness, 

recurring financial difficulties, or unexplained affluence.”
Page 49 GAO-03-298 Air Force Travel Card Controls

Linking disciplinary actions and security clearances to misuse of travel 

cards was recently addressed by the fiscal year 2003 Defense 

Appropriations Act. In addition to requiring the Secretary of Defense to 

establish guidance and procedures for disciplinary actions, section 8149(c) 

of the act states that such actions may include (1) review of the security 

clearance of the cardholders in cases of misuse of the government travel 

card, and (2) modification or revocation of the security clearance in light of 

such review.

Recent Actions Since March 2002, DOD and the Air Force have taken additional actions to 

reduce delinquencies in the travel card program. For example, the DOD 

Comptroller established a Charge Card Task Force to address management 

issues related to DOD’s purchase and travel card programs. The task force 

issued its final report on June 27, 2002, which called for additional actions 

to improve the controls over the travel card program. However, to date, 

many of the actions that DOD has taken primarily address the symptoms 

rather than the underlying causes of the problems with the program. 

Specifically, actions to date have focused on dealing with accounts that are 

seriously delinquent, which are “back end” or detective controls rather 

than preventive controls.

On September 27, 2002, the Air Force Assistant Secretary for Financial 

Management (Comptroller) issued a memorandum emphasizing travel card 

management tools and policy updates to assist local commanders in the 

detection of travel card misuse. Specifically, the memorandum (1) directed 

that travel cards that have had no activity within the last 12 months be 

canceled, (2) emphasized that program coordinators should use new 

EAGLS exception reports to help identify suspicious card activity that may 

indicate abuse or potential delinquency problems before they appear on 

delinquency reports, and (3) noted that the Air Force is conducting a 

thorough review of MCCs to ensure that cards cannot be used at 

establishments that are not travel related. In addition, Air Force officials 

told us they also are considering contracting for data mining services to 

support their oversight of the travel card program.

The Congress has recently addressed several of the key issues we identified 

in our Army and Navy work. Section 8149(b) of the Department of Defense 

Appropriations Act, 2003, requires creditworthiness evaluations of all 

potential cardholders and guidelines and procedures for disciplining 

individuals for fraudulent and abusive use of government travel cards. 

Further, section 1008(a) and (b) of the Bob Stump National Defense 
Page 50 GAO-03-298 Air Force Travel Card Controls

Authorization Act for Fiscal Year 2003 provides authority for the Secretary 

of Defense to require (1) use of the split disbursement process, where any 

part of a DOD employee’s or service member’s travel reimbursement is paid 

directly to the travel card-issuing bank, and (2) deductions of prescribed 

amounts from salary and retirement pay of DOD employees or service 

members who have delinquent travel card balances and payment of those 

amounts to the travel card-issuing bank.

Conclusions The intent of the travel card program was to improve convenience for the 

traveler and to reduce the government’s costs of administering travel. 

Since implementation of the travel card as part of its travel program, the 

Air Force changed its management strategies to oversee the use of 

government travel cards. What once was a weak internal control 

environment in the travel program has been strengthened, resulting in a 

decrease in delinquency rates and charge-offs of bad debts. Despite these 

efforts, the Air Force continues to experience potentially fraudulent and 

abusive travel card activity. 

Air Force and DOD actions addressed many areas in the program needing 

improvements. However, DOD and the Air Force will need to implement 

further improvements to more effectively prevent potentially fraudulent 

and abusive activity and further reduce severe credit problems associated 

with the travel card. A focus on additional “front-end” or preventive 

controls will be paramount. In this regard, section 8149(c) of the fiscal year 

2003 DOD Appropriations Act requires creditworthiness evaluations of all 

potential cardholders and guidelines and procedures for disciplining 

individuals for fraudulent and abusive use of government charge cards. 

Recommendations for 

Executive Action

To strengthen the overall control environment and improve internal control 

for the Air Force’s travel card program, we recommend that the Secretary 

of the Air Force take the following actions. We also recommend that the 

Under Secretary of Defense (Comptroller) assess the following 

recommendations and, where applicable, incorporate them into or 

supplement the DOD Charge Card Task Force recommendations to 

improve travel card policies and procedures throughout DOD.
Page 51 GAO-03-298 Air Force Travel Card Controls

Travel Card Issuance We recommend that the Secretary of the Air Force establish specific 

policies and procedures governing the issuance of individual travel cards to 

military and civilian employees, including the following. 

• In accordance with recently enacted legislation, provide individuals who 

have no prior credit histories “restricted” travel cards with low credit 

and ATM limits.

• Develop procedures to periodically evaluate the frequency of 

cardholders’ travel card use and close accounts of infrequent travelers 

in order to minimize exposure to fraud and abuse. In conjunction with 

the periodic reviews, cancel accounts for current infrequent travelers as 

noted in the Charge Card Task Force report. 

• Evaluate the feasibility of activating and deactivating travel cards, 

regardless of whether they are standard or restricted cards, so that they 

are available for use only during the period authorized by the 

cardholders’ travel orders. At a minimum, this policy should focus on 

controlling travel card use by “high-risk” enlisted military personnel in 

the E-1 to E-6 grades.

• Develop comprehensive, consistent Air Force-wide initial training and 

periodic refresher training for travel cardholders that focuses on the 

purpose of the program and appropriate uses of the card. The training 

should emphasize the prohibitions on personal use of the card, including 

gambling, personal travel, and adult entertainment. Such training 

should also address the policies and procedures of the travel order, 

voucher, and payment processes. For entry-level personnel, the training 

should also include information on basic personal financial 

management techniques to help avoid financial problems that could 

affect an individual’s ability to pay his or her travel card bill. 

Monitoring and Review 

Actions

We recommend that the Secretary of the Air Force establish the following 

specific policies and procedures to strengthen controls to address 

improper use of the travel card.

• Establish guidance regarding the knowledge, skills, and abilities 

required to carry out APC responsibilities effectively.
Page 52 GAO-03-298 Air Force Travel Card Controls

• Establish guidance on APC span of control responsibilities so that such 

responsibilities are properly aligned with time available to ensure 

effective performance. Determine whether certain APC positions 

should be staffed on a full-time basis rather than as collateral duties.

• Establish Air Force-wide procedures to provide assurance that APCs 

receive training on their APC responsibilities, including requirements 

for monitoring cardholders’ travel card use. The training should include 

how to use EAGLS transaction reports and other available data to 

monitor cardholder use of the travel card—for example, reviewing 

account transactional histories to ascertain whether transactions are 

incurred during periods of authorized travel and appear to be 

appropriate travel expenses and are from approved MCCs. 

• Require agency program coordinators to review EAGLS reports to 

identify cardholders who have written NSF checks for payment on their 

account balances and refer this data to the employee’s immediate 

supervisor. 

• Review, in conjunction with Bank of America, APC-level access to 

EAGLS to limit such access to only those individuals with current APC 

duties. 

• Establish Air Force procedures detailing how APCs should carry out 

their responsibility to monitor travel card use for all cardholders 

assigned to them. Include in the procedures the development of a data 

mining program that would enable APCs to easily identify potentially 

inappropriate transactions for further review.

• Enforce controls for canceling accounts after employees transfer to 

other units to avoid “orphan” accounts that are not subject to effective 

management oversight.

• Require cognizant APCs to retain records documenting any cardholder’s 

fraudulent or abusive use of the travel card and require that this 

information be provided to the gaining APC when the cardholder is 

transferred. 

• Review records of individuals whose accounts had been charged off or 

placed in salary offset to determine whether they have been referred to 

Air Force Central Adjudication Facility for a security review. 
Page 53 GAO-03-298 Air Force Travel Card Controls

• Strengthen procedures regarding employees leaving the service to 

assure that all travel card accounts are deactivated or closed and that 

repayment of any outstanding debts is arranged. Perform a review to 

determine that these procedures are implemented effectively and that 

accounts of departed cardholders are deactivated or closed in a timely 

manner.

• Develop procedures to identify active cards of departed cardholders, 

including comparing cardholder and payroll data.

Agency Comments and 

Our Evaluation 

In oral comments on a draft of this report, DOD and the Air Force 

concurred on all 16 of our recommendations and stated that it had taken 

actions or had actions underway to address many of them. For example, 

with respect to actions completed, DOD stated that the Air Force recently 

implemented procedures to (1) evaluate the frequency of cardholder travel 

card use and close travel card accounts that were not used in the past year 

and (2) work with Bank of America to perform semi-annual reviews of 

travel card use. With respect to actions underway, (1) the Air Force has 

started a project to evaluate the feasibility of deactivating travel cards so 

that they are available for use only during periods of authorized travel and 

(2) DOD is evaluating travel card training and developing revised policy 

requirements for APC span of control and travel card management 

responsibilities. 

As agreed with your offices, unless you announce the contents of this 

report earlier, we will not distribute this report until 30 days from its date. 

At that time, we will send copies to interested congressional committees; 

the Secretary of Defense; the Under Secretary of Defense (Comptroller); 

the Secretary of the Air Force; the Assistant Secretary of the Air Force for 

Financial Management (Comptroller); the Director of the Defense Finance 

and Accounting Service; and the Director of the Office of Management and 

Budget. We will make copies available to others upon request. In addition, 

the report will be available at no charge on the GAO Web site at 

http://www.gao.gov.

Please contact Gregory D. Kutz at (202) 512-9505 or kutzg@gao.gov, John J. 

Ryan at (202) 512-9587 or ryanj@gao.gov, or Gayle L. Fischer at (202) 512-

9577 or fischerg@gao.gov, if you or your staffs have any questions 
Page 54 GAO-03-298 Air Force Travel Card Controls

concerning this report. Major contributors to this report are acknowledged 

in appendix V. 

Gregory D. Kutz

Director

Financial Management and Assurance

Robert J. Cramer

Managing Director

Office of Special Investigations
Page 55 GAO-03-298 Air Force Travel Card Controls

Appendix I

Background AAppenednxidexiIs

In 1983, the General Services Administration (GSA) awarded a 

governmentwide master contract with a private company to provide 

government-sponsored, contractor-issued travel cards to federal 

employees to be used to pay for costs incurred on official business travel. 

The intent of the travel card program was to provide increased 

convenience to the traveler and lower the government’s cost of travel by 

reducing the need for cash advances to the traveler and the administrative 

workload associated with processing and reconciling travel advances. The 

travel card program includes both individually billed accounts—accounts 

held and paid by individual cardholders—and centrally billed accounts that 

are used to purchase transportation or are used for the travel expenses of a 

unit and are paid directly by the government. As of the end of fiscal year 

2001, over 2.1 million individually billed travel cards were issued to federal 

government travelers. These travel cardholders charged $3.6 billion during 

the same fiscal year. 

Under the current GSA master contract, the Department of Defense 

entered into a tailored task order with Bank of America32 to provide travel 

card services to DOD and the military services, including the Air Force. 

Table 10 provides the number of individually billed travel cards outstanding 

and related dollar amount of travel card charges by DOD and its 

components in relation to the total federal government.

32 The Department of Defense contracted with NationsBank of Delaware, N.A., which 

subsequently merged into the Bank of America, N.A., under a Tailored Task Order under the 

GSA Master Contract Award for the travel card program. The period of performance under 

the task order was November 30, 1998, through November 29, 2000, with three 1-year 

options. The task order also allowed for five additional 1-year options under the GSA 

master contract renewal provisions.
Appendix I

Background

Page 56 GAO-03-298 Air Force Travel Card Controls

Table 10: Comparison of Number of Individually Billed Travel Cardholders and 

Related Charges for DOD versus Total Federal Government for Fiscal Year 2001 

Source: Bank of America data.

As shown in table 10, DOD accounts for about 1.4 million, or 66 percent, of 

the total number of the individually billed travel cards issued by the entire 

federal government, and DOD’s cardholders charged about $2.1 billion, or 

about 59 percent of the federal government’s travel card charges during 

fiscal year 2001. Table 10 also shows that the Air Force provided 501,306 

individually billed cards to its civilian and military employees as of 

September 2001. These cardholders charged an estimated $831 million to 

their travel cards during fiscal year 2001.

Entity

Number of individually 

billed travel card 

accounts as of 

September 30, 2001

Fiscal year 2001 

individually billed travel 

card charges

(dollars in millions)

Air Force 501,306 $831

Navy (includes Marine Corps) 394,952 510

Army 432,460 619

Other DOD 86,922 174

Total DOD 1,415,640 $2,134

Total federal government 2,132,031 $3,634

DOD percentage of total 

federal government 66% 59%
Appendix I

Background

Page 57 GAO-03-298 Air Force Travel Card Controls

Travel Card Program 

Guidelines

The Travel and Transportation Reform Act of 1998 (Public Law 105-264) 

expanded the use of government travel cards by mandating the use of the 

cards for all official travel unless specifically exempted. The act is 

intended to reduce the overall cost of travel to the federal government 

through reduced administrative costs and by taking advantage of rebates 

from the travel card contractor. The act requires that agencies reimburse 

cardholders for proper travel claims within 30 days of submission of 

approved travel vouchers by the cardholders.33 Further, the act allows, but 

does not require, agencies to offset a cardholder’s pay for amounts the 

cardholder owes to the travel card contractor as a result of travel card 

delinquencies not disputed by the cardholder. The act calls for GSA to 

issue regulations incorporating the requirements of the act.

GSA incorporated the act’s requirements into the Federal Travel 

Regulation. The Federal Travel Regulation governs travel and 

transportation and relocation allowances for all federal government 

employees, including overall policies and procedures governing the use of 

government travel cards. Agencies are required to follow the requirements 

of GSA’s Federal Travel Regulation, but can augment these regulations 

with their own implementing regulations.

DOD issued its Financial Management Regulation (FMR), Volume 9, 

Chapter 3, “Travel Policies and Procedures,” to supplement GSA’s travel 

regulations. DOD’s Joint Travel Regulations, Volume 1, “Uniformed 

Service Members,” and Volume 2, “Civilian Personnel,” refer to the FMR as 

the controlling regulation for DOD’s travel cards. 

Air Force Travel 

Process

As shown in figure 7, the Air Force’s travel card management program for 

individually billed travel card accounts encompasses card issuance, travel 

authorization, cardholders charging goods and services on their travel 

33 The act also requires agencies to pay cardholders a late payment fee if they do not 

reimburse cardholders within the 30-day period allowed. Specifically, Federal Travel 

Regulations prescribed by the Administrator of General Services require agencies to either 

(1) calculate late payment fees using the prevailing Prompt Payment Interest Rate beginning 

the 31st day after submission of a proper travel claim and ending on the date on which 

payment is made or (2) reimburse the traveler a flat fee of not less than the prompt pay 

amount, based on an agencywide average of travel claim payments. In addition to the fee 

required in the items above, the agency must also pay the traveler an amount equivalent to 

any late payment charge that the card contractor would have been able to charge the 

traveler had the traveler not paid the bill. 41 CFR Section 301-52.20. 
Appendix I

Background

Page 58 GAO-03-298 Air Force Travel Card Controls

cards, travel voucher processing and payment, and managing travel card 

usage and delinquencies. 

Figure 7: Overview Flowchart of the Air Force Travel Process

Bank issues travel card

Bank credit card data in EAGLS

DFAS paysa voucher

Traveler requests travel card

Payment

Payment

Payment

Billing

information

Billing

Source: GAO analysis.

APC monitors card usage and 

delinquenciesb by accessing 

EAGLS

APC processes travel card application 

approved by supervisor and controls 

credit limits

Merchant (e.g., rental car co.)

provides goods/services and 

charges travel card

Merchant bank accepts 

transaction deposit slips and 

transfers payment

Bank processes card 

charges, pays merchant

bank, and bills traveler

Official government travel 

authorized (travel order)

Traveler charges goods 

and services on travel card

Traveler prepares voucher 

and provides to supervisor 

for review and submission to 

voucher processing unit

Installation voucher processing 

unit processes voucher and 

submits to DFAS

APC terminates or suspends card

for traveler leaving Air Force or moving

Traveler leaves service 

or moves
Appendix I

Background

Page 59 GAO-03-298 Air Force Travel Card Controls

a

 The Defense Finance and Accounting Service allows a traveler to direct a portion, or all, of the 

voucher reimbursement to Bank of America. 

b See figure 9 for specific actions to be taken by the agency program coordinator.

Travel Card Issuance and 

Termination

When an Air Force civilian or military employee or the employee’s 

supervisor determines that he or she will need a travel card, the employee 

contacts the unit’s travel card agency program coordinator (APC) to 

complete an individually billed card account application form. As shown in 

figure 8, the application requires the applicant to provide pertinent 

information, including full name and social security number, and indicate 

whether he or she is an active, reserve, or a civilian employee of the Air 

Force. The applicant is also required to initial a statement on the 

application acknowledging that he or she has read and understands the 

terms of the travel card agreement and agrees to be bound by these terms, 

including a provision acknowledging that the card will be used only for 

official travel. The APC is required to complete the portion of the 

member’s application concerning who will be responsible for managing the 

use and delinquencies related to the card. Bank of America is required to 

issue a travel card to all applicants for whom it receives completed 

applications signed by the applicants, the applicants’ supervisors, and the 

APCs.
Appendix I

Background

Page 60 GAO-03-298 Air Force Travel Card Controls

Figure 8: Travel Card Application

Bank of America issues travel cards with either a standard or restricted 

credit limit. If an employee has little or no credit history or poor credit 

based on a credit check performed by Bank of America, Bank of America 

PART 1: TO BE COMPLETED BY EMPLOYEE (Optional fields are italicized and noted by an asterisk) PLEASE TYPE OR PRINT ALL INFORMATION 

Cardholder name as it should appear on the card (First Name , Middle Name or Middle Initial and Last Name):

Social Security Number: Employment Status: 

— — Active Reserve Guard Civilian 

Military Rank and Pay Grade/Civilian Pay Grade (example: E-05, O-03, GS-09, WG-07, etc.): 

Military Rank: Military Pay Grade: – Civilian Pay Grade: – 

Commercial Office Phone: Home Phone: 

Statement Mailing Address: (Indicate Street or P.O. Box) Card Mailing Address*: (if different from statement address) 

City or APO/FPO: State: City or APO/FPO*: State*: 

Zip/Postal Code: Country: Zip/Postal Code*: Country*: 

E-mail Address*: 

Card Delivery*: The card will arrive approximately 10 to 14 business days after Bank of America receives the application. Expedited card delivery is available, 

however, the applicant will be charged $20. Is expedited card delivery needed? Yes No . 

Signature and Agreement: After reading the attached Agreement between Department of Defense Employee and Bank of America, N.A. (USA) 

(“Agreement”): 1. Initial either A or B below; 2. Sign; 3. Obtain your supervisor’s approval; and 4. Forward the completed form to your APC.

A. ____ By signing below, I acknowledge that I have read and 

understand, and agree to be bound by, the terms and conditions of 

the Agreement including Bank of America’s right to obtain credit 

reports as described in the Agreement. I attest to the best of my 

knowledge, that the information I have provided herein is true and 

correct. 

B. ____ By signing below, I acknowledge that I have read and understand, and 

agree to be bound by, the terms and conditions of the Agreement; however, I do 

not authorize Bank of America to obtain credit reports and therefore I will not be 

eligible for a standard account. I attest to the best of my knowledge, that the 

information I have provided herein is true and correct. 

This application is for a Government Card Account, which may be standard or restricted, as described in the attached Agreement. I expressly 

agree to accept whichever type of account is established.

Applicant’s Signature: Date: 

Supervisor’s Approval Signature: Date: 

PART 2: TO BE COMPLETED BY AGENCY PROGRAM COORDINATOR (APC) PLEASE TYPE OR PRINT ALL INFORMATION 

(Optional fields are italicized and noted by an asterisk)

Central Account No. 4 4 8 6 — 1 2 — — 

Account Hierarchy: Specify the complete Hierarchy Level (HL) number that pertains to your organization. For example, 0000001 2000005 3012345.

HL1 HL2 HL3 HL4 HL5 HL6 HL7 HL8 

0000001 

Organization/Unit Name: 

FIPS Code: Is the applicant eligible to obtain Contract City Pair airline fares?* +If eligible, participation is*: 

Yes+ No Mandatory Non-mandatory 

Account Type*: (Check one. If the applicant initialed B in the above Signature and Agreement section, then only a restricted card may be issued. For a restricted card, if no 

activation/deactivation dates are provided below, the card will issued in a deactivated status and can only be activated by the APC.)

Standard Restricted If Restri cted, Date to Activate: Month Day Year 

 Date to Deactivate: Month Day Year 

Card Design Type*: Cash Access* : Authorized to Receive Travelers Checks*: 

Standard Quasi-Generic Yes No Yes No 

By signing below, I hereby authorize, on behalf of the Agency/Organization indicated above, that a Government Card be issued to the employee named above. PLEASE RETAIN COPY

FOR YOUR RECORDS. Retur n copy to: Bank of A merica, Attn: GCSU, P.O. Box 52304, Phoenix, A Z, 85072-9419, Facsim ile: 1.877.217.1033 or 1.888.698.5631

APC: Date: 

 

Name & Title/Rank (Please print) Signature 

Address Line 1: City: State: 

Address Line 2*: Zip Code: Country: 

Address Line 3*: Commercial Telephone: 

Individually Billed Card Account Setup/Application Form

(Department of Defense Travel Card Program) 

Source: Department of Defense.

Form: S02D0400/OCR 24000 Revised: 05/29/01 
Appendix I

Background

Page 61 GAO-03-298 Air Force Travel Card Controls

may suggest to the service that the applicant receive a restricted credit 

limit of $2,000 instead of the standard credit limit of $5,000. However, as 

shown in figure 8, the application allows the employee to withhold 

permission for Bank of America to obtain credit reports. If this option is 

selected, Bank of America automatically issues a restricted credit limit 

card to the applicant. 

Before cardholders leave the Air Force, they are required to contact their 

APCs and notify them of their planned departure. Based on this 

notification from the cardholders, the APCs are to deactivate or terminate 

the cardholders’ accounts. 

Travel Authorization When a cardholder is required to travel for official government purposes, 

he or she is issued a travel order authorizing travel. The travel order is 

required to specify the timing and purpose of the travel authorized. For 

example, the travel order is to authorize the mode of transportation, the 

duration and points of the travel, and the amounts of per diem and any cash 

advances. Further, the Air Force can limit the amount of authorized 

reimbursement to military members based on the availability of lodging 

and dining facilities at military installations.

Using the Travel Card for 

Official Travel Expenses

For authorized travel, travelers must use their cards to pay for allowable 

expenses such as hotels, rental cars, and airfare. The travel card can also 

be used for meals and incidental expenses or cash can be obtained from an 

automatic teller machine.

When the travel card is submitted to a merchant, the merchant will process 

the charge through its banking institution, which in turn charges Bank of 

America. At the end of each banking cycle (once each month), Bank of 

America prepares a billing statement that is mailed to the cardholder for 

the amounts charged to the card. The statement also reflects all payments 

and credits made to the cardholder’s account. Bank of America requires 

that the cardholder make payment on the account in full within 30 days of 

the statement closing date. If the cardholder does not pay his or her 

monthly billing statement in full, and does not dispute the charges within 

60 days of the statement closing date, the account is considered delinquent.
Appendix I

Background

Page 62 GAO-03-298 Air Force Travel Card Controls

Travel Voucher Submission 

and Processing

Within 5 duty days of return from travel, the cardholder is required to 

submit a travel voucher claiming legitimate and allowable expenses 

incurred while on travel. Further, the standard is for the cardholder to 

submit an interim voucher every 30 days for extended travel of more than 

45 days. The amount that cardholders are reimbursed for their meals and 

incidental expenses and hotels is limited by geographical rates established 

by GSA. 

Upon submission of a proper voucher by the cardholder, DOD has 30 days 

in which to make reimbursement without incurring late payment fees. 

Cardholders are required to submit their travel vouchers to their 

supervisors or other designated approving officials who must review the 

vouchers and approve them for payment. If the review finds an omission or 

error in a voucher or its required supporting documentation, the approving 

official must inform the traveler of the error or omission. 

After the supervisor approves a cardholder’s travel voucher package for 

payment, the voucher-processing unit at the location to which the 

cardholder is assigned processes it. The voucher-processing unit enters 

travel information from the approved voucher into DOD’s Integrated 

Automated Travel System (IATS). IATS calculates the amount of per diem 

authorized in the travel order and voucher and the amount of mileage, if 

any, claimed by the cardholder. In addition, any other expenses claimed 

and approved are entered into IATS. If problems with the voucher are 

found during the initial entry of the information into IATS or during audits 

after the initial entry, the voucher can be rejected and returned to the 

cardholder for correction. Once the vouchers are processed and possibly 

audited, they are sent to DFAS for payment to the cardholder or to Bank of 

America and the cardholder, if the cardholder elected to use the split 

disbursement payment process whereby part of the reimbursement is sent 

directly to Bank of America. If the payment of the approved proper 

voucher takes longer than 30 days, DOD is required to pay the cardholder a 

late payment fee plus an amount equal to the amount Bank of America 

would have been entitled to charge the cardholder had the cardholder not 

paid the bill by the due date.

Monitoring Travel Card 

Transaction Activity

In addition to controlling the issuance and credit limits related to the travel 

card, APCs are also responsible for monitoring the use of and 

delinquencies related to travel card accounts for which they have been 

assigned management responsibility. Bank of America’s Web-based 
Appendix I

Background

Page 63 GAO-03-298 Air Force Travel Card Controls

Electronic Account Government Ledger System (EAGLS) provides on-line 

tools that are intended to assist APCs in monitoring travel card activity and 

related delinquencies. Specifically, APCs can access EAGLS to monitor 

and extract reports on their cardholders’ travel card transaction activity 

and related payment histories.

Managing Delinquent 

Cardholder Accounts

Both the Air Force and Bank of America have a role in managing travel 

card delinquencies under GSA’s master contract. While APCs are 

responsible for monitoring cardholders’ accounts and for working with 

cardholders’ supervisors to address any travel card payment delinquencies, 

Bank of America is required to use EAGLS to notify the designated APCs if 

any of their cardholders’ accounts are in danger of suspension or 

cancellation. When Bank of America has not received a required payment 

on any travel cardholder’s account within 60 days of the billing statement 

closing date, it is considered delinquent. As summarized in figure 9, there 

are specific actions required by both the Air Force and Bank of America 

based on the number of days a cardholder’s account is past due.
Appendix I

Background

Page 64 GAO-03-298 Air Force Travel Card Controls

Figure 9: Required DOD and Bank of America Delinquency Process Management 

Actions

Note: Starting in fiscal year 2002, DOD began to offset the salary of certain civilian employees and 

military and retired military members from all services including the Air Force, for the amounts 

delinquent or charged off on travel card accounts.

The following is a more detailed explanation of the required actions by the 

Air Force and/or Bank of America with respect to delinquent travel card 

accounts. 

Mails a precharge-off letter to the cardholders 

for accounts not in salary offset or other payment

agreements.

DOD actions Bank of America actions

Sends statement to cardholder.

Sends a delinquency reminder to cardholder.

Sends a presuspension letter to the cardholder.

Suspends the account prohibiting purchases.

Mails suspension letter to cardholder.

Assesses late fee every 30 days.

Sends 90-day letter to cardholder

Sends letter to cardholder of intent

to initiate salary offset.

Sends a precancellation letter to the cardholder.

Requests DFAS to offset salary.

Closes account, mails notice of cancellation letter

to cardholder.

Charges off account for which no payments were

being made.

APC issues 60-day delinquency notification

memorandum to the cardholder and 

immediate supervisor. Supervisor investigates

and takes appropriate disciplinary action.

APC issues 90-day delinquency notification

memorandum to the cardholder, immediate 

supervisor, and the company commander 

who investigates and takes appropriate 

disciplinary action.

APC issues a 120-day delinquency

notification memorandum to the commander.

The commander investigates and takes

appropriate disciplinary action.

DFAS offsets salary.

Statement

date

30 days

45 days

55 days

60 days

75 days

90 days

120 days

126 days

150 days

180 days

210 days

Source: GAO analysis.
Appendix I

Background

Page 65 GAO-03-298 Air Force Travel Card Controls

• 45 days past due—Bank of America is to send a letter to the cardholder 

requesting payment. Bank of America has the option to call the 

cardholder with a reminder that payment is past due and to advise the 

cardholder that the account will be suspended if it becomes 60 days past 

due.

• 55 days past due—Bank of America is to send the cardholder a 

presuspension letter warning that Bank of America will suspend the 

account if it is not paid. If Bank of America suspends a travel card 

account, the card cannot be used until the account is paid.

• 60 days past due—The APC is to issue a 60-day delinquency notification 

memorandum to the cardholder and to the cardholder’s immediate 

supervisor, informing them that the cardholder’s account has been 

suspended due to nonpayment. The next day, a suspension letter is to 

be sent by Bank of America to the cardholder providing notice that the 

card has been suspended until payment is received.

• 75 days past due—Bank of America is to assess the account a late fee. 

The late fee charged by Bank of America was $20 through August 9, 

2001. Effective August 10, 2001, Bank of America increased the late fee 

to $29 under the terms of the contract modification between Bank of 

America and DOD. Bank of America is allowed to assess an additional 

late fee every 30 days until the account is made current or charged off.

• 90 days past due—The APC is to issue a 90-day delinquency notification 

memorandum to the cardholder, the cardholder’s immediate supervisor, 

and the company commander (or unit director). The company 

commander is to initiate an investigation into the delinquency and take 

appropriate action, at the company commander’s discretion. At the 

same time, Bank of America is to send a “due process letter” to the 

cardholder providing notice that the account will be canceled if 

payment is not received within 30 days unless he or she enters into a 

payment plan, disputes charge(s) in question, or declares bankruptcy.

• 120 days past due—The APC is to issue a 120-day delinquency 

notification memorandum to the cardholder’s commanding officer. At 

126 days past due, the account is to be canceled by Bank of America. 

Beginning in October 2001, once accounts were 120 days past due, Bank 

of America began sending files to DFAS listing these accounts for salary 

offset. 
Appendix I

Background

Page 66 GAO-03-298 Air Force Travel Card Controls

• 150 days past due—The point at which DFAS generally initiates action 

for salary offset.

• 180 days past due—Bank of America is to send a “precharge-off” or last 

call letter to the cardholder informing him or her that Bank of America 

will charge-off the account and report the cardholder to a credit bureau 

if payment is not received. A credit bureau is a service that reports the 

credit history of an individual. Banks and other businesses assess the 

credit-worthiness of an individual using credit bureau reports. 

• 210 days past due—Bank of America is to charge off the delinquent 

account and, if the balance is $50 or greater, report it to a credit bureau. 

Some accounts are pursued for collection by Bank of America’s recovery 

department; others are sent to attorneys or collection agencies for 

recovery. The delinquency management process can be suspended when a 

cardholder’s APC informs Bank of America that the cardholder is on 

official travel and is unable to submit vouchers and pay his or her account 

in a timely manner, through no fault of his or her own. Under such 

circumstances, the APC is to notify the Bank of America that the 

cardholder is in “mission-critical” status. By activating this status, the Bank 

of America is precluded from identifying the cardholder’s account as 

delinquent until 45 days after such time as the APC determines the 

cardholder is to be removed from mission-critical status. According to 

Bank of America, approximately 800 to 1,000 cardholders throughout DOD 

were in this status at any given time throughout fiscal year 2001.
Page 67 GAO-03-298 Air Force Travel Card Controls

Appendix II

Objectives, Scope, and Methodology ApendxiI

Pursuant to a joint request by the Chairman and Ranking Minority Member 

of the Subcommittee on Government Efficiency, Financial Management 

and Intergovernmental Relations, House Committee on Government 

Reform, and the Ranking Minority Member of the Senate Committee on 

Finance, we audited the controls over the issuance, use, and monitoring of 

individually billed travel card accounts and associated travel processing 

and management for the Department of the Air Force. Our assessment 

covered

• the reported magnitude and impact of delinquent and charged off Air 

Force travel card accounts for fiscal year 2001 and the first 6 months of 

fiscal year 2002, along with an analysis of causes and related corrective 

actions;

• an analysis of the universe of Air Force travel card transactions during 

fiscal year 2001 and the first 6 months of fiscal year 2002 to identify 

potentially fraudulent and abusive activity related to the travel card; 

• the Air Force overall management control environment and the design 

of selected Air Force travel program management controls, including 

controls over (1) travel card issuance, (2) agency program coordinators 

(APC) capacity to carry out assigned duties, (3) limiting card activation 

to meet travel needs, (4) transferred and “orphan” accounts, (5) 

procedures for terminating accounts when cardholders leave military 

service, and (6) access to Bank of America’s travel card database; and

• tests of statistical samples of transactions to assess the implementation 

of key management controls and processes for three Air Force units’ 

travel card activity including (1) travel order approval, (2) accuracy of 

travel voucher payments, (3) the timely submission of travel vouchers 

by travelers to the approving officials, and (4) the timely processing and 

reimbursement of travel vouchers by the Air Force and DOD. 
Appendix II

Objectives, Scope, and Methodology

Page 68 GAO-03-298 Air Force Travel Card Controls

We used as our primary criteria applicable laws and regulations, including 

the Travel and Transportation Reform Act of 1998 (Public Law 105-264),34

the General Services Administration’s (GSA) Federal Travel Regulation,35

and the Department of Defense (DOD) Financial Management 

Regulation, Volume 9, “Travel Policies and Procedures.” We also used as 

criteria our Standards for Internal Control in Federal Government36 and 

our Guide to Evaluating and Testing Controls Over Sensitive Payments.

37 

To assess the management control environment, we applied the 

fundamental concepts and standards in our internal control standards to 

the practices followed by management in the six areas reviewed.

To assess the magnitude and impact of delinquent and charged-off 

accounts, we compared the Air Force’s delinquency and charge-off rates to 

those of other DOD services and federal civilian agencies. We also 

analyzed the trends in the delinquency and charge-off data from the third 

quarter of fiscal year 2000 through the first half of fiscal year 2002.

In addition, we used data mining to select Air Force units for audit and 

identify individually billed travel card transactions for further analysis. Our 

data mining procedures covered the universe of individually billed Air 

Force travel card activity during fiscal year 2001 and the first six months of 

fiscal year 2002 and identified transactions that we believed were 

34 Travel and Transportation Reform Act of 1998 (Public Law 105-264, Oct. 19, 1998) includes 

requirements that federal employees use federal travel charge cards for all payments of 

expenses of official government travel, requires the government to reimburse employees 

who have submitted proper vouchers within 30 days of submission of the vouchers, and 

allows for the offset of pay for employees with undisputed travel card charge delinquencies 

in an amount up to 15 percent of the amount of disposable pay of the employee for a pay 

period.

35 Federal Travel Regulation, 41 C.F.R., chapters 300-304, issued by the Administrator of 

General Services, governs travel and transportation allowances and relocation allowances 

for federal civilian employees.

36 U.S. General Accounting Office, Standards for Internal Control in Federal Government,

GAO/AIMD-00-21.3.1, (Washington, D.C.: November 1999). This document was prepared to 

fulfill our statutory requirement under the Federal Managers’ Financial Integrity Act to issue 

standards that provide the overall framework for establishing and maintaining internal 

control and for identifying and addressing major performance and management challenges 

and areas at greatest risk of fraud, waste, abuse, and mismanagement.

37 U.S. General Accounting Office, Guide to Evaluating and Testing Controls Over 

Sensitive Payments, GAO/AFMD-8.1.2, (Washington, D.C.: May 1993). This document 

provides a framework for evaluating and testing the effectiveness of internal controls that 

have been established in various sensitive payment areas.
Appendix II

Objectives, Scope, and Methodology

Page 69 GAO-03-298 Air Force Travel Card Controls

potentially fraudulent or abusive. However, our work was not designed to 

identify, and we did not determine, the extent of any potentially fraudulent 

or abusive activity related to the travel card. In performing our data 

mining, we obtained and analyzed information on travel card account 

status and credit history, security clearance, and disciplinary action. 

To assess the overall control environment for the travel card program at the 

Department of the Air Force, we obtained an understanding of the travel 

process, including travel card management and oversight, by interviewing 

officials from the Office of the Undersecretary of Defense, Comptroller; 

Department of the Air Force; Defense Finance and Accounting Service 

(DFAS); Bank of America; and GSA. We reviewed applicable policies, 

procedures, and program guidance they provided. We visited three Air 

Force units to “walk through” the travel process, including the 

management of travel card use and delinquency. Further, we contacted one 

of the three largest U.S. credit bureaus to obtain credit history data and 

information on how credit-scoring models are developed and used by the 

credit industry for credit reporting.

At each of the Air Force locations we audited we also used our review of 

policies and procedures and the results of our “walk-throughs” of travel 

processes and other observations to assess the effectiveness of controls 

over segregation of duties among persons responsible for issuing travel 

orders, preparing travel vouchers, processing and approving travel 

vouchers, and certifying travel voucher payments. 

We performed a limited review of access controls for travel voucher 

processing at our three case study locations. We did not assess electronic 

signature controls over the electronic data processing of Air Force travel 

card transactions. We also reviewed computer system access controls for 

the Electronic Account Government Ledger System (EAGLS)—the system 

used by Bank of America to maintain DOD travel card data. To determine 

whether access controls for EAGLS were effective, we interviewed Bank of 

America officials and observed EAGLS functions and capabilities.

To test the implementation of key controls over individually billed Air 

Force travel card transactions processed through the travel system—

including the travel order, travel voucher, and payment processes—we 

obtained and used the Bank of America database of fiscal year 2001 Air 

Force travel card transactions to review random samples of transactions at 

three Air Force locations. Because our objective was to test controls over 

travel card expenses, we excluded credits and miscellaneous debits (such 
Appendix II

Objectives, Scope, and Methodology

Page 70 GAO-03-298 Air Force Travel Card Controls

as fees) from the population of transactions used to select random samples 

of travel card transactions to review at each of three Air Force units we 

audited. Each sampled transaction was subsequently weighted in the 

analysis to account statistically for all charged transactions at each of the 

three units, including those that were not selected. We did not verify the 

accuracy of the data in the Air Force travel card database.

We selected three Air Force case study locations for testing controls over 

travel card activity by first selecting three large commands based on the 

number of travel card accounts, outstanding balances, and delinquencies. 

The three commands we selected accounted for about 38 percent of the 

total number of Air Force travel card accounts, 41 percent of the 

outstanding balance of travel card charges, and about 33 percent of the 

travel card delinquencies. We selected one installation from each of these 

commands for detailed testing based on the volume of travel card activity 

and delinquencies. Table 11 presents the sites selected and the number of 

fiscal year 2001 transactions at each location.38

Table 11: Population of Fiscal Year 2001 Travel Transactions at Selected Air Force 

Bases

Source: GAO analysis of Bank of America Air Force travel card database.

Note. Transactions represent charges for sales and cash advances and exclude credits and fees.

We performed tests on statistical samples of travel card transactions at 

each of the three case study sites to assess whether the system of internal 

38 The populations from which we selected our samples included some transactions that 

were not supported by travel orders or vouchers, such as personal charges made by a 

cardholder. We excluded such transactions from our selections for travel order, voucher, 

and payment process controls. However, we included such transactions in order to project 

the percentage of personal use transactions.

Air Force base/command

Number of travel 

card transactions

Dollar value of travel

 card transactions

Nellis AFB 

Air Combat Command 69,104 $ 7,804,254

Travis AFB 

Air Mobility Command 105,997 13,465,225

Hill AFB 

Air Force Materiel 

Command 119,533 18,400,779
Appendix II

Objectives, Scope, and Methodology

Page 71 GAO-03-298 Air Force Travel Card Controls

controls over the transactions was effective, as well as to provide an 

estimate of the percentage of transactions by unit that were not for official 

government travel. For each transaction in our statistical sample, we 

assessed whether (1) there was an approved travel order prior to the trip, 

(2) the travel voucher payment was accurate, (3) the travel voucher was 

submitted within 5 days of the completion of travel, and (4) the travel 

voucher was paid within 30 days of submission of an approved travel 

voucher. We considered transactions not related to authorized travel to be 

abuse and incurred for personal purposes. Although we projected the 

results of our samples of these control attributes, as well as the estimate 

for personal use—or abuse—related to travel card activity to the 

population of transactions at the respective case study locations, the 

results cannot be projected to the population of Air Force transactions or 

the installations as a whole.

Tables 12 through 15 show (1) the results of our tests of key control 

attributes, (2) the point estimates of the failure rates for the attributes, 

(3) the two-sided 95 percent confidence intervals for the failure rates for 

each attribute, (4) our assessments of the effectiveness of the controls, and 

(5) the relevant lower and upper bounds of a one-sided confidence interval 

for the failure rate. All percentages in these tables are rounded to the 

nearest percentage point. We use one-sided confidence bounds to classify 

the effectiveness of a control activity. If the 1-sided lower bound does not 

exceed 5 percent, then the control activity is effective. If the 1-sided lower 

bound exceeds 10 percent, then the control is ineffective. Otherwise, we 

say that the control is partially effective. Partially effective controls may 

include those for which there is not enough evidence to assert either 

effectiveness or ineffectiveness. For example, if we were 95 percent 

confident that the 1-sided lower bound of a failure rate for a particular 

control is 3 percent, we would categorize that control activity as “effective” 

because 3 percent is less than the 5 percent standard. Similarly, if we were 

95 percent confident that the 1-sided upper bound of a failure rate for a 

particular control is 72 percent, we would categorize that control as 

“ineffective” because 72 percent is greater than the 10 percent standard. 

Table 12 shows the results of our test of the key control related to the 

authorization of travel—approved travel orders were prepared prior to 

dates of travel.
Appendix II

Objectives, Scope, and Methodology

Page 72 GAO-03-298 Air Force Travel Card Controls

Table 12: Fiscal Year 2001 Transactions That Failed Control Tests for Approved 

Travel Orders

Source: GAO analysis. 

a

The percentages represent point estimates for the population based on our sampling tests.

Table 13 shows the results of our test for effectiveness of controls in place 

over the accuracy of travel voucher payments. Our test work included 

determining whether (1) the travel voucher information was consistent 

with dates and locations of travel authorized on the related travel order,

(2) per diem was paid in the proper amount, and (3) transactions for 

lodging, air fare, and other expenses over $75 were supported by required 

receipts.

Air Force base/ 

command

Number 

of failed 

transactions

Estimated failure 

rate (95% 2-sided 

confidence 

interval)a

Assessment of 

effectiveness of 

controls (and relevant 

bounds of 95% 1-sided 

confidence intervals)

Nellis AFB 

Air Combat Command

1 of 96 1 %

(0 % to 6 %)

Effective

upper bound = 5%

Travis AFB 

Air Mobility Command

2 of 96 2%

(0 % to 7 %)

Partially effective

lower bound = 0%, or

upper bound = 6%

Hill AFB 

Air Force Materiel 

Command

1 of 96 1 %

(0 % to 6 %)

Effective

upper bound = 5%
Appendix II

Objectives, Scope, and Methodology

Page 73 GAO-03-298 Air Force Travel Card Controls

Table 13: Fiscal Year 2001 Transactions That Failed Control Tests for Accurate Travel 

Voucher Review and Reimbursement

Source: GAO analysis.

a

 The percentages represent point estimates for the population based on our sampling tests.

b

Hill AFB used two systems to process travel vouchers. We included only the 61 travel vouchers 

processed through the Integrated Automated Travel System in our tests for this attribute. The 

remaining 35 vouchers were processed through the other system, PerDiemAzing, which DOD is pilot 

testing as part of its effort to reengineer the current travel process.

Table 14 shows the results of our tests of key controls related to timely 

processing of claims for reimbursement of expenses related to government 

travel—timely submission of the travel voucher by the employee. 

Table 14: Fiscal Year 2001 Transactions That Failed Control Tests for Timely 

Submission of Travel Vouchers by Employees (5-day Rule)

Source: GAO analysis.

a

 The percentages represent point estimates for the population based on our sampling tests.

Air Force base/ 

command

Number

of failed 

transactions

Estimated 

failure rate

(95% 2-sided 

confidence 

interval) a

Assessment of 

effectiveness of 

controls (and relevant 

bounds of 95% 1-sided 

confidence intervals)

Nellis AFB 

Air Combat Command

15 of 96 16 %

(9 % to 24 %)

Partially effective

lower bound = 10%

Travis AFB 

Air Mobility Command

37 of 96 39 %

(29 % to 49 %)

Ineffective

lower bound = 30%

Hill AFB 

Air Force Materiel 

Command

8 of 61b 13%

(6 % to 24 %)

Partially effective

lower bound = 7%, or

upper bound = 22%

Air Force base/ 

command

Number

of failed 

transactions

Estimated 

failure rate

(95% 2-sided 

confidence

interval) a

Assessment of 

effectiveness of 

controls (and relevant 

bounds of 95% 1-sided 

confidence intervals)

Nellis AFB

Air Combat Command

5 of 96 5%

(2% to 12%)

Partially effective

lower bound = 2%, or

upper bound = 11%

Travis AFB 

Air Mobility Command

16 of 96 17 %

(10% to 26 %)

Ineffective

lower bound = 11%

Hill AFB 

Air Force Materiel 

Command

24 of 96 25 %

(17 % to 35%)

Ineffective

lower bound = 18%
Appendix II

Objectives, Scope, and Methodology

Page 74 GAO-03-298 Air Force Travel Card Controls

Table 15 shows the results of our tests of key controls related to timely 

processing of claims for reimbursement of expenses related to government 

travel—timely travel voucher approval and payment processing. To 

determine if cardholders were reimbursed within 30 days, we used the 

DFAS payment dates. We did not independently validate the accuracy of 

these reported payment dates.

Table 15: Fiscal Year 2001 Transactions That Failed Control Tests for Timely 

Approval and Payment Processing of Travel Vouchers (30-day Rule)

Source: GAO analysis.

a

The percentages represent point estimates for the population based on our sampling tests.

We briefed DOD managers, including DFAS officials in DOD’s Office of the 

Under Secretary of Defense (Comptroller) and Air Force officials in the 

office of the Assistant Secretary of the Air Force (Financial Management 

and Comptroller); and unit commanders; comptrollers; and installation 

agency program coordinators on the details of our audit, including our 

findings and their implications. On November 26, 2002, we requested 

comments on a draft of this report. We received oral comments on 

December 17, 2002, and have summarized those comments in the “Agency 

Comments and Our Evaluation” section of this report. We conducted our 

audit work from January 2002 through mid-November 2002 in accordance 

with U.S. generally accepted government auditing standards, and we 

performed our investigative work in accordance with standards prescribed 

by the President’s Council on Integrity and Efficiency.

Air Force base/ 

command

Number of 

failed 

transactions

Estimated 

failure rate

(95% 2-sided 

confidence

interval) a

Assessment of 

effectiveness of controls 

(and relevant bounds of 

95% 1-sided 

confidence intervals)

Nellis AFB

Air Combat Command

0 of 96 0%

(0% to 4%)

Effective

upper bound = 3%

Travis AFB 

Air Mobility Command

0 of 96 0 %

(0% to 4%)

Effective

upper bound = 3%

Hill AFB 

Air Force Materiel 

Command

1 of 96 0 %

(0 % to 6%)

Effective

upper bound = 5%
Page 75 GAO-03-298 Air Force Travel Card Controls

Appendix III

Air Force Major Command Delinquency Rates ApendxiI

Table 16 shows the travel card delinquency rates for Air Force’s major 

commands (and other Air Force organizational units at a comparable level) 

that had outstanding balances over $1 million during the 2-year period 

ending March 31, 2002. Commands with a March 31, 2002, balance 

outstanding under $1 million have been combined into “all other 

commands.” The Air Force’s commands and other units are listed in 

descending order based on their respective delinquency rates as of 

March 31, 2002. 

Table 16: Air Force Major Command Delinquency Ratesa (by Quarter) for the Two Years Ending March 31, 2002

Source: GAO calculation based on information provided by Bank of America.

a

The delinquency rates shown represent the total amount delinquent (amounts not paid within 60 days 

of the travel card monthly statement closing date) as a percentage of total amounts owed by the 

command’s travel cardholders at that time.

Table 17 shows outstanding balances and delinquency rates by major 

command listed in descending order of outstanding balances as of March 

31, 2002.

Major Command

June 

2000

Sept. 

2000

Dec. 

2000

Mar. 

2001

June 

2001

Sept. 

2001

Dec. 

2001

Mar. 

2002

Air Force Special Operations Command 6.4% 7.5% 10.8% 5.5% 6.6% 6.0% 10.0% 10.3%

Pacific Air Forces 7.2% 8.6% 11.8% 9.4% 6.8% 9.4% 12.2% 9.7%

US Air Forces in Europe 7.2% 9.2% 14.1% 7.5% 6.7% 6.5% 10.9% 7.6%

Air Force Reserve Command 7.9% 10.5% 14.0% 8.2% 6.6% 9.1% 8.1% 7.3%

Air National Guard 8.8% 11.7% 16.7% 9.4% 6.6% 8.3% 8.3% 6.5%

Air Intelligence Agency 5.9% 6.6% 8.8% 6.4% 4.7% 5.5% 9.2% 6.4%

Air Combat Command 6.6% 8.5% 12.1% 7.6% 5.9% 6.2% 8.1% 6.3%

Air Education and Training Command 7.1% 8.1% 9.8% 6.8% 5.5% 5.8% 8.3% 6.1%

Air Mobility Command 6.8% 8.2% 8.7% 5.1% 4.5% 5.5% 6.8% 4.9%

Air Force Space Command 4.9% 4.8% 7.3% 4.1% 4.1% 4.1% 6.6% 4.5%

Head Quarters 11th Wing 3.7% 4.9% 5.7% 3.9% 3.2% 4.4% 4.3% 3.8%

Air Force Materiel Command 4.0% 5.5% 7.5% 4.1% 3.5% 3.9% 5.5% 3.6%

All other commands combined 4.6% 6.2% 8.1% 4.3% 4.0% 4.9% 5.2% 4.1%

Air Force-wide 6.4% 8.2% 10.9% 6.5% 5.3% 6.2% 7.7% 6.0%
Appendix III

Air Force Major Command Delinquency 

Rates

Page 76 GAO-03-298 Air Force Travel Card Controls

Table 17: Outstanding Balance and Delinquency Rate as of March 31, 2002, by Major 

Air Force Commands 

Source: GAO calculation based on information from Bank of America.

a

Delinquency rates shown represent the total amount delinquent (amounts not paid within 60 days of 

the travel card monthly statement closing date) as a percentage of total amount outstanding for all 

travel card accounts in the command at that point in time. 

Major Air Force command with outstanding 

balance of $1 million or over 

Outstanding 

balancea

Delinquency 

ratea

Air National Guard $13,859,727 6.5

Air Force Materiel Command 11,755,489 3.6

Air Force Reserve Command 10,637,088 7.3

Air Combat Command 10,263,862 6.3

Air Mobility Command 8,825,579 4.9

U.S. Air Forces Europe 4,676,442 7.6

Air Education and Training Command 4,632,847 6.1

Pacific Air Forces 4,243,264 9.7

Air Force Space Command 4,096,380 4.5

Headquarters 11th Wing 2,490,170 3.8

Air Intelligence Agency 2,422,309 6.4

Air Force Special Operations 1,678,599 10.3

All Other Commands Combined 5,074,653 4.1
Page 77 GAO-03-298 Air Force Travel Card Controls

Appendix IV

Air Force Personnel Grade, Rank, and 

Associated Basic Pay Rates ApendxiIV

Tables 18 and 19 show the grade, rank (where relevant), and the associated 

basic pay rates for 2001 for Air Force’s military and civilian personnel. The 

basic 2001 pay rates shown exclude other considerations such as locality 

pay and any allowances for housing or cost of living. 

Table 18: Air Force Military Grades, Ranks, and Associated Basic Pay Rates for 

Fiscal Year 2001

Source: U.S. Air Force.

Table 19: Air Force Civilian Grades and Associated Basic Pay Rates for Calendar 

Year 2001

Source: Office of Personnel Management.

Military grades Military rank Fiscal year 2001 pay rates

Enlisted personnel

E-1 to E-3 Airman $11,496 to $15,197

E-4 to E-6 Senior Airman to Technical 

Sergeant 

$18,591 to $27,571

E-7 to E-9 Master Sergeant to Chief Master 

Sergeant

$32,497 to $46,204

Officers

O-1 to O-3 Second Lieutenant, First 

Lieutenant, and Captain

$26,470 to $44,738

O-4 to O-6 Major, Lieutenant Colonel, and 

Colonel

$56,122 to $83,783

O-7 to O-10 General $98,980 to $133,700

Civilian grade Calendar year 2001 pay rates

General schedule employees

GS-1 to GS-3 $14,244 to $22,712

GS-4 to GS-5 $19,616 to $28,535

GS-6 to GS-8 $24,463 to $39,143

GS-9 to GS-12 $33,254 to $62,686

GS-13 to GS-15 $57,345 to $103,623

Senior Executive Service

ES-01 to ES-05 $109,100 to $125,700
Page 78 GAO-03-298 Air Force Travel Card Controls

Appendix V

GAO Contacts and Staff Acknowledgments ApendxiV

GAO Contacts Gayle L. Fischer, (202) 512-9577

Sheila D. M. Miller, (303) 572-7378

Acknowledgments Staff making key contributions to this report include: Mario L. Artesiano, 

Paul S. Begnaud, Bertram J. Berlin, Fannie M. Bivins, Francine M. 

DelVecchio, Donald H. Fulwider, C. Robin Hodge, Woodward H. Hunt, 

Jeffrey A. Jacobson, Jr., Jonathan T. Meyer, Sue Piyapongroj, John R. Ryan, 

Sidney H. Schwartz, Robert A. Sharpe, Bennet E. Severson, and Lisa M. 

Warde. 

(192077)
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