Department of Veterans Affairs 

Office of Inspector General 

Audit of 

Veterans Health Administration’s

Government Purchase Card Practices 

Report No. 07-02796-203 September 11, 2008

VA Office of Inspector General 

Washington, DC 20420 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

To Report Suspected Wrongdoing in VA Programs and Operations 

Call the OIG Hotline – (800) 488-8244 

VA Office of Inspector General 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

Contents 

Executive Summary ..............................................................................................i

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

Purpose............................................................................................................................. 1

Background...................................................................................................................... 1

Scope and Methodology .................................................................................................. 3

Results and Conclusions ............................................................................................. 6

Issue 1: Controls Needed Strengthening To Ensure Government Cardholders 

Maintain Documentation Supporting Purchases ............................................................. 8 

Issue 2: Medical Facilities Needed to Monitor Compliance with Policies Addressing 

OIG Reported Deficiencies............................................................................................ 13 

Appendixes 

A. Monetary Benefits in Accordance with IG Act Amendments................................. 16 

B. Under Secretary for Health Comments.................................................................... 17 

C. OIG Contact and Staff Acknowledgments .............................................................. 21 

D. Report Distribution .................................................................................................. 22 

VA Office of Inspector General 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

Executive Summary 

Introduction 

The Office of Inspector General (OIG) conducted an audit to evaluate the effectiveness of 

controls over Veterans Health Administration’s (VHA) government purchase card 

practices. The objective of the audit was to determine if controls over VA medical 

facility practices prevented or detected questionable, improper, and potentially fraudulent 

purchase card transactions. In addition, the audit included an assessment of the price 

reasonableness of selected transactions. 

Background 

Federal Government Purchase Card Program. Since 1989, the General Services 

Administration (GSA) has administered the Federal government’s SmartPay® 

Government Purchase Card Program. The Government Purchase Card Program was 

created as a way for agencies to streamline Federal acquisition processes by providing a 

low-cost, efficient vehicle for obtaining goods and services directly from vendors. 

Federal Acquisition Regulation (FAR) designates the purchase card as the preferred 

method for micro-purchases. FAR defines a micro-purchase as any purchase under 

$3,000. (Before September 28, 2006, the micro-purchase threshold was $2,500.) 

Agencies may also use purchase cards to make payments under established contracts. 

In Fiscal Year (FY) 2007, VHA made 3.9 million purchase card transactions totaling $2.3 

billion and received purchase card rebates totaling $38.0 million from the bank that issues 

VHA’s purchase cards. 

VHA Government Purchase Card Controls. VA’s Office of Management, VHA’s 

Prosthetics and Clinical Logistics Office (P&CLO), Veterans Integrated Service 

Networks (VISNs), and medical facilities had established controls over government 

purchase card practices. The following key controls were implemented to help prevent or 

detect questionable, improper, and potentially fraudulent purchase card transactions. 

• Policies requiring cardholders to verify receipt of goods and services, reconcile 

transaction charges, and maintain supporting documentation showing purchases are 

for official government use. 

• Policies requiring approving officials to monitor purchase card use by completing an 

Approving Official Checklist, certifying cardholder reconciliations, and ensuring 

cardholders comply with Federal, VA, and local acquisition regulations. 

• Policies requiring VA medical facility Government Purchase Card Program 

Coordinators (Coordinators) to review facility compliance with policies and 

procedures and train cardholders and approving officials. 

VA Office of Inspector General i 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

• Policies requiring facility directors to certify purchase card accounting records and 

ensure program officials perform purchase card duties. 

Prior OIG Evaluation of VA Government Purchase Card Program. Our 2004 report 

Evaluation of the Department of Veterans Affairs Government Purchase Card Program 

(Report No. 02-01481-135, April 26, 2004) recommended that VA strengthen controls 

and improve oversight by requiring facilities to conduct quarterly focused reviews of 

their Government Purchase Card Program and approving officials to use checklists to 

monitor cardholders’ use of purchase cards. The report also recommended that VA 

update Directive 4080 “Government Purchase Card Procedures” to include span of 

control criteria for approving officials and periodically conduct focus audits of 

questionable transactions identified through data mining. 

Results 

VHA purchase card controls were generally effective at preventing or detecting 

questionable, improper, and potentially fraudulent medical facility purchases. All 707 

transactions reviewed were purchases of goods or services for valid medical facility 

needs. In addition, for the purchases where cardholder documentation was sufficient to 

assess price reasonableness, we determined that purchases were reasonably priced. For 

126 of the 707 transactions reviewed, we were unable to assess purchase price 

reasonableness because cardholder documentation was inadequate. VHA needed to 

ensure cardholders maintain documentation supporting purchases and medical facilities 

monitor compliance with policies addressing OIG reported deficiencies. 

The audit evaluated the effectiveness of controls for the 2-year period July 2006–June 

2008 and included a review of 707 purchase card transactions valued at $1,987,952 made 

by 11 medical facilities during the 15-month period July 2006–September 2007. Of the 

707 transactions, we selected 118 valued at $115,110 using statistical sampling to test 

controls and 589 valued at $1,872,842 using data mining to identify questionable 

transactions. Therefore, the 707 transactions were not representative of VHA-wide 

transactions. 

We classified the 707 transactions into five vendor categories. Two of the categories: 

medical, pharmacy, prosthetics and optical supplies; and miscellaneous (such as 

credentialing, medical publication, and training vendors) included transactions that were 

less likely to be inappropriate because the vendors typically sell goods or services needed 

by medical facilities. These two categories represented 442 (62.5 percent) of the 707 

transactions and $1,196,660 (60.2 percent) of the $1,987,952 value of transactions. 

The other three categories included transactions that initially appeared questionable 

because the vendors typically sell goods or services used for non-VHA purposes. These 

categories were casinos, gas stations, grocery stores, hotels, liquor stores, party stores, 

and restaurants; clothing, furniture, massage therapy, and office supply stores; and 

electronic stores and telecommunication companies. These three categories represented 

VA Office of Inspector General ii 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

265 (37.5 percent) of the 707 transactions and $791,292 (39.8 percent) of the total 

$1,987,952. 

Charts 1 and 2 show the distribution of the 707 transactions and the $1,987,952 value of 

the transactions among the five vendor categories. The slices of each pie show the 

number and value of transactions for each of the five categories. 

Chart 1. Chart 2. 

Transactions By 5 Vendor Categories Value of Transactions By 5 Vendor Categories 

 (707 Total) ($1,987,952 Total Value) 

64 $39,379 $30,913

71 (9.0%) (2.0%) (1.6%) 

378 $1,165,747 

(53.5%) (58.6%) 

$314,971

88 (15.8%)

(12.5%)

$436,942

(15.0%) (22.0%)

106 

(10.0%) 

Medical, Pharmacy, Prosthetic, and Optical Supplies Casinos, Gas, Grocery, Hotel, Liquor, Party, and Restaurant 

Electronic and Telecommunications Clothing, Furniture, Massage Therapy, and Office Supplies 

Miscellaneous 

Although transactions with vendors in three of the five categories initially appeared 

questionable, the audit concluded that all transactions were for valid medical facility 

needs. For example, the photograph below shows one vendor where a medical facility 

made several purchases. 

Our initial review of purchase card data determined that transactions with this vendor 

were questionable because the vendor name was Discount Gas and Liquor. However, 

VA Office of Inspector General iii 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

when we reviewed medical facility documentation for the transactions, we determined the 

purchases were for a valid medical facility need. The medical facility purchased gas 

from this vendor for shuttles that transported patients. Because the vendor was 

conveniently located only three blocks from the medical facility, frequent transactions 

with this vendor were reasonable. 

Below are additional examples of transactions from the category of casinos, gas stations, 

grocery stores, hotels, liquor stores, party stores, and restaurants that initially appeared 

questionable but were for valid medical facility needs. 

• Casinos - Lodging at a casino/hotel for veterans traveling significant distances for 

outpatient care at the VA Southern Nevada Healthcare System, Las Vegas, NV 

• Grocery Stores - Food for a veteran outreach event and tablecloths for a luncheon for 

spinal cord therapy patients 

• Hotels - Conference space for staff training seminars and ceremonies recognizing 

medical facility volunteers and veterans 

• Liquor Stores - Purchases of wine for religious services at the medical facility chapel 

• Restaurants - Monthly luncheons for veteran patients in a nursing home care unit and 

an annual lunch for medical facility volunteers 

• Party Stores - Balloons and other party items to celebrate a veteran patient’s 100th 

birthday 

Although controls were generally effective for ensuring purchased goods and services 

were for valid medical facility needs, controls needed strengthening in two areas: 

1. Ensuring cardholders maintain documentation supporting purchases 

2. Monitoring compliance with policies addressing OIG reported deficiencies 

Ensuring Cardholders Maintain Documentation Supporting Purchases. VHA 

needed to strengthen controls for ensuring cardholders maintain documentation 

supporting the receipt of goods or services and the price reasonableness of open-market 

and contract purchases. VHA policy requires cardholders to maintain purchase 

documentation for 6 years and 3 months. Acceptable documentation includes packing 

slips, receipts, and any other documents showing that goods or services were reasonably 

priced, received, and for official use. For contract purchases, documentation must also 

show that prices charged and paid were consistent with contract terms and conditions. In 

addition, approving officials must use VHA’s Approving Official Checklist to review the 

adequacy of documentation for each cardholder. 

As shown in Charts 3 and 4, cardholders did not maintain documentation supporting the 

description and quantity of goods or services received for 95 transactions totaling 

$40,087 and the price reasonableness for 65 open-market transactions totaling $131,593 

and 61 transactions totaling $668,404 that medical facilities identified as contract 

transactions. These three categories of inadequate documentation accounted for 221 

VA Office of Inspector General iv 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

(31.3 percent) of the 707 transactions reviewed and $840,084 (42.3 percent) of the 

$1,987,952 total value of transactions reviewed. 

Chart 3. Chart 4.

Adequacy of Purchase Documentation Adequacy of Purchase Documentation 

 (Number of Transactions) (Value of Transactions) 

486 

(68.7%) 

61 

(8.6%) 

95 

(13.5%) 

65 

(9.2%) 

$1,147,868 

(57.7%) 

$40,087 

(2.1%) 

$131,593 

(6.6%) 

$668,404 

(33.6%) 

Adequate Documentation Inadequate Documentation – Price Reasonableness, Open Market 

Inadequate Documentation – Receipt of Goods or Services Inadequate Documentation – Price Reasonableness, Contract 

Receipt of Goods or Services. Of the 707 transactions, 612 (486 transactions with 

adequate documentation and the 65 open market and 61 contract transactions in the two 

categories of inadequate documentation - price reasonableness) totaling $1,947,865 were 

supported by cardholder documentation showing medical facilities received the goods or 

services and were for valid VHA needs. For the remaining 95 transactions (13.4 percent) 

totaling $40,087, cardholder documentation did not adequately support the receipt of 

goods or services. For these transactions, we performed extended audit procedures of 

visiting vendor facilities, interviewing vendor representatives, obtaining vendor 

documentation, or locating the purchased items at the medical facilities. These 

procedures provided reasonable assurance that these transactions purchased goods or 

services that were also received and for valid VHA needs. 

Price Reasonableness of Purchases. Of the 707 transactions, 581 (486 transactions with 

adequate documentation and the 95 transactions in the category of inadequate 

documentation - receipt of goods or services) totaling $1,187,955 were supported by 

cardholder documentation considered sufficient to determine that the medical facilities 

paid reasonable prices for the purchases. However, for the other 126 (17.8 percent) 

transactions totaling $799,997 (40.2 percent) we were unable to assess the purchase price 

reasonableness because cardholder documentation was inadequate. These 126 

transactions included 65 open market transactions totaling $131,593 and 61 transactions 

totaling $668,404 that medical facilities identified as contract transactions. 

For the 65 open market transactions, cardholders did not maintain documentation 

showing that they had obtained price quotes from multiple sources or a written 

justification for the use of other than competitive procedures. For the remaining 61 

transactions that medical facilities identified as contract transactions, cardholders did not 

maintain documentation or could not confirm that the prices charged by the vendor and 

paid by the medical facility were the correct contract prices. The documented 

descriptions for these transactions were insufficient to reasonably conclude that the 

medical facilities paid contract prices. Thus, the VHA medical facilities reviewed as part 

VA Office of Inspector General v 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

of this audit spent $799,997 for 126 transactions that lacked evidence to confirm price 

reasonableness. Without documentation to support price reasonableness, there is no way 

to determine if funds were expended in the most cost effective manner and represented 

the best use of funds. (See Appendix A, page 16) 

Three issues caused the inadequate documentation. First, VHA’s Approving Official 

Checklist did not specifically require reviews of cardholder documentation of the receipt 

of goods and services, open market price reasonableness, and payment of contract prices. 

Second, approving officials were not consistently using the checklist. Third, medical 

facilities did not adequately monitor compliance with policies addressing deficiencies we 

previously reported. 

Monitoring Compliance with Policies Addressing OIG Reported Deficiencies. 

Medical facility directors were not adequately monitoring coordinators’ compliance with 

VHA policies addressing deficiencies identified in our 2004 report. The report 

recommended approving officials use checklists to ensure cardholders maintain adequate 

documentation and facility managers conduct quarterly reviews to ensure approving 

officials receive proper training. 

In response to our 2004 recommendations, VHA revised policies to require approving 

officials’ use of a checklist to review the adequacy of cardholder documentation and 

completion of a “Purchase Card Certification Form” when they receive initial training 

and when they receive refresher training once every 2 years. Coordinators must review 

approving official initial and refresher training by completing a “Quarterly Purchase Card 

Program Certification Report.” In addition, the revised policies require facility directors 

to perform annual reviews of their government purchase card programs to ensure all 

participants comply with VHA purchase card policies. 

During this audit, we identified 32 (45.1 percent) of 71 approving officials that were not 

consistently using the checklist and 40 (56.3 percent) that had not received the required 

training. The inconsistent use of the checklist occurred because facility directors were 

not adequately monitoring financial managers’ and coordinators’ review of approving 

official use of the checklist. Approving officials had not received the required training 

because facility directors were not ensuring coordinators, financial managers, and 

logistics officers accurately complete “Purchase Card Certification Reports.” 

Conclusion 

Generally, controls over VHA’s government purchase card practices effectively 

prevented questionable, improper, and potentially fraudulent purchase card transactions. 

In addition, of 707 audited purchase card transactions made by 11 medical facilities, 581 

(82.6 percent) totaling $1,187,955 were considered to be reasonably priced. For the other 

126 (17.4 percent) transactions totaling $799,997, cardholders did not maintain the 

documentation needed to confirm price reasonableness or ensure the most efficient use of 

funds. Controls needed improvement to ensure cardholders maintain adequate 

documentation of the receipt of goods and services and price reasonableness. In addition, 

VA Office of Inspector General vi 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

controls needed strengthening to ensure medical facility compliance with policies 

addressing OIG reported deficiencies. VHA implementation of the following 

recommendations will address these control deficiencies at all medical facilities. They 

will also help ensure medical facilities appropriately use funds to serve the health care 

needs of veterans. 

Recommendations 

1. We recommended the Under Secretary for Health revise the Approving Official 

Checklist to include specific questions regarding the adequacy of cardholder 

documentation of the receipt of goods and services, price reasonableness of open 

market purchases, and payment of contract prices. 

2. We recommended the Under Secretary for Health provide approving officials 

refresher training on using the revised Approving Official Checklist to ensure 

cardholders maintain adequate documentation supporting purchases. 

3. We recommended the Under Secretary for Health develop a monitoring mechanism 

for financial managers and coordinators to ensure approving officials consistently use 

the Approving Official Checklist. 

4. We recommended the Under Secretary for Health develop a mechanism for medical 

facility directors to monitor review of approving official’s training by coordinators 

and completion of “Purchase Card Certification Reports” by coordinators, financial 

managers, and logistics officers. 

Under Secretary for Health Comments 

The Under Secretary for Health concurred with the audit findings, recommendations and 

estimated monetary benefit. The Under Secretary reported that VHA’s Prosthetics and 

Clinical Logistics Office Purchase Card Workgroup will develop a revised Approving 

Official Checklist with specific questions regarding the documentation of the receipt of 

goods and services. The workgroup will also develop a learning module, to be used 

when providing approving officials refresher training, which includes training on using 

the revised Approving Official Checklist. 

The Under Secretary also stated that the Prosthetics and Clinical Logistics Office will 

monitor approving official use of the checklist by requiring monthly reporting from 

facilities to ensure approving officials are consistently using the checklist. In addition, 

the Prosthetics and Clinical Logistics Office is revising VHA Handbook 1730.1, Use and 

Management of the Government Purchase Card Program to specify procedures to ensure 

facility Directors perform annual reviews of the Purchase Card Program. The Prosthetics 

and Clinical Logistics Office Purchase Card Manager will monitor facility directors’ 

review of the Purchase Card Program by producing an annual status report of each 

Veterans Integrated Service Network for leadership review. The target for completing 

VA Office of Inspector General vii 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

these actions is October 30, 2008. (See Appendix B for the full text of the Under 

Secretary’s comments.) 

OIG Response 

We consider the planned actions acceptable and will follow up on their implementation.

 (original signed by:)

 BELINDA J. FINN 

Assistant Inspector General for Auditing 

VA Office of Inspector General viii 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

Introduction 

Purpose 

The OIG conducted an audit to evaluate the effectiveness of controls over VHA’s 

government purchase card practices. The objective of the audit was to determine if 

controls over VA medical facility practices prevented or detected questionable, improper, 

and potentially fraudulent purchase card transactions. In addition, the audit included an 

assessment of the price reasonableness of selected transactions. 

Background 

Federal Government Purchase Card Program. Since 1989, the General Services 

Administration (GSA) has administered the Federal government’s SmartPay® 

Government Purchase Card Program. The Government Purchase Card Program was 

created as a way for agencies to streamline Federal acquisition processes by providing a 

low-cost, efficient vehicle for obtaining goods and services directly from vendors. 

Federal Acquisition Regulation (FAR) designates the purchase card as the preferred 

method for micro-purchases. FAR defines a micro-purchase as any purchase under 

$3,000 (before September 28, 2006, the micro-purchase threshold was $2,500). Agencies 

may also use purchase cards to make payments under established contracts. 

As the contract administrator of the program, GSA contracts with five different 

commercial banks in order to provide purchase cards to Federal employees. Citibank 

provides VA employees their purchase cards. In FY 2007, VHA made 3.9 million 

purchase card transactions totaling $2.3 billion and received purchase card rebates 

totaling $38.0 million from Citibank. GSA has also created several tools, such as Federal 

Supply Schedules, so cardholders can take advantage of favorable pricing for goods and 

services. 

Changes in VHA Purchase Card Activity. As shown in Table 1, during the 5-year 

period FYs 2003–2007, VHA purchase card spending increased 43.7 percent and the 

number of purchase card transactions increased 25.8 percent while the number of 

cardholders decreased 11.2 percent. 

Table 1. VHA Purchase Card Spending, Transactions, and Cardholders 

FYs 2003–2007 

 FY 

2003

Spending 

($ in Billions)

 $1.6 

Percent 

 Change

– 

2004 $1.8 12.5% 

2005 $1.9 5.6% 

2006 $2.1 10.5% 

2007 $2.3 9.5% 

5-Year Changes $0.7 43.7% 

Transactions Percent 

 (Millions) Change

3.1 – 

3.5 12.9% 

3.6 2.9% 

3.7 2.8% 

3.9 5.4% 

0.8 25.8% 

Cardholders 

 (Thousands)

13.4 

13.1 

12.6

11.1 

11.9 

Percent 

 Change 

– 

 -2.2% 

 -3.8% 

-11.9% 

7.2% 

-1.5 -11.2% 

VA Office of Inspector General 1 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

Generally, purchase card spending and transactions increase as VHA’s total spending 

increases. During the same 5-year period, VHA’s total spending increased 40.7 percent 

from $25.8 to $36.3 billion. The 11.2 percent decrease in the number of cardholders is 

the result of VHA actions taken after our April 2004 report Evaluation of the Department 

of Veterans Affairs Government Purchase Card Program (Report No. 02-01481-135) and 

Government Accountability Office’s (GAO) June 2004 report Audit of VHA Purchase 

Cards - Internal Controls Over the Purchase Card Program Need Improvement (GAO04-737). Both reports made recommendations to improve controls over VHA’s purchase 

card practices. The GAO report specifically recommended that VHA establish 

procedures to periodically assess whether cardholders continue to have a valid need for a 

purchase card. 

VHA Government Purchase Card Controls. VA’s Office of Management, VHA’s 

P&CLO, VISNs, and medical facilities have established the following key controls to 

help prevent and detect questionable, improper, and potentially fraudulent purchase card 

transactions. 

VA’s Office of Management 

• Establishes VA-wide policies requiring cardholders to comply with Federal and VA 

Acquisition Regulations (VAAR). 

• Performs quarterly VA-wide purchase card data mining reviews and onsite reviews of 

purchase card practices at 9 to 12 medical facilities a year. 

VHA’s P&CLO 

• Establishes VHA purchase card policies, procedures, and guidelines for training and 

ongoing reviews and performs quarterly audits of medical facility purchase card 

practices (As of July 2008, P&CLO was revising VHA Handbook 1730.1 “Use and 

Management of the Government Purchase Card Program”). 

• Monitors and analyzes Citibank purchase card data for questionable, improper, and 

potentially fraudulent purchases. 

VISNs 

• Coordinates Heads of Contracting Activity oversight of medical facilities purchase 

card practices and delegate purchase limits and warrant authority to cardholders. 

• Performs onsite reviews of medical facility purchase card practices and provides 

training to Coordinators and Dispute Officers. 

Medical Facilities 

• Facility directors are required to certify FY purchase card accounting records and 

ensure program officials perform purchase card duties. 

• Coordinators must review facility compliance with VHA policies and procedures, 

such as maintaining purchase documentation and training cardholders and approving 

officials. 

VA Office of Inspector General 2 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

• Dispute officers are required to coordinate and monitor disputed procurements, 

credits, and billing errors. 

• Billing officers must review single and monthly purchase limits and certify legitimacy 

of procured items. 

• Approving officials are required to monitor purchase card use, review documentation 

to ensure transactions are for official Government purposes, certify cardholder 

reconciliations, and ensure that cardholders follow Federal, VA, and local acquisition 

regulations to obtain reasonable prices. 

• Cardholders are required to purchase and ensure the receipt of goods and services, 

reconcile transaction charges, and maintain documentation to support that purchases 

are for official Government use. 

Prior OIG Evaluation of VA Government Purchase Card Program. Our 2004 report 

Evaluation of the Department of Veterans Affairs Government Purchase Card Program 

(Report No. 02-01481-135, April 26, 2004) recommended that VA strengthen controls 

and improve oversight by requiring facilities to conduct quarterly focused reviews of 

their Government Purchase Card Program and approving officials to use checklists to 

monitor cardholders’ use of purchase cards. The report also recommended that VA 

update Directive 4080 “Government Purchase Card Policy” to include span of control 

criteria for approving officials and periodically conduct focus audits of questionable 

transactions identified through data mining. 

GAO Audits. GAO’s 2004 report Audit of VHA Purchase Cards - Internal Controls 

Over the Purchase Card Program Need Improvement (GAO-04-737, June 2004) made 36 

recommendations to address VHA Government Purchase Card Program control and 

compliance issues. GAO recommended improvements in the segregating of duties, 

maintaining documentation supporting purchases, identifying and obtaining vendor 

discounts, and monitoring controls. 

In March 2008, GAO issued a report titled Governmentwide Purchase Cards - Actions 

Needed to Strengthen Internal Controls to Reduce Fraudulent, Improper, and Abusive 

Purchases (GAO-08-333) that made 13 recommendations to the Office of Management 

and Budget (OMB) and GSA to strengthen agencies’ purchase card controls. These 

recommendations included providing agencies guidance on how cardholders can 

document independent receipt and acceptance of purchased items by someone other than 

the cardholder and what items agencies consider sensitive and pilferable property. 

Scope and Methodology 

The audit covered controls over medical facility purchase card practices during the 2-year 

period July 2006–June 2008. The audit did not include a review of controls over medical 

facility credit cards used to purchase official Government travel (Travel Cards) and to 

pay Fee Basis Program healthcare providers (Payment Only Cards). 

VA Office of Inspector General 3 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

To assess the effectiveness of controls over VHA’s government purchase card practices, 

we applied the principles contained in FAR, VA, and VHA purchase card policies and 

procedures, and GAO’s Audit Guide: Auditing and Investigating the Internal Control of 

Government Purchase Card Programs (GAO-04-87G, November 2003). 

The audit included onsite reviews at VA’s Office of Management in Washington, D.C. 

and Management Quality Assurance Service in Austin, TX and VHA’s P&CLO and 

Chief Financial Office in Washington, D.C. At these offices, we interviewed program 

officials and reviewed Government Purchase Card Program policies and procedures. In 

addition, we evaluated Management Quality Assurance Service’s data mining procedures 

and reviews of four medical facilities’ purchase card practices. 

To test controls and identify questionable, improper, and potentially fraudulent purchase 

card activity, we reviewed 707 purchase card transactions totaling $1,987,952 that the 

following 11 medical facilities made during the 15-month period July 2006–September 

2007. 

1. John J. Pershing VA Medical Center, Poplar Bluff, MO 

2. Marion VA Medical Center, Marion, IL 

3. St. Louis VA Medical Center, St. Louis, MO 

4. VA Southern Nevada Healthcare System, Las Vegas, NV 

5. VA Sierra Nevada Healthcare System, Reno, NV 

6. Bay Pines VA Healthcare System, Bay Pines, FL 

7. Canandaigua VA Medical Center, Canandaigua, NY 

8. Eureka Veterans Clinic, Eureka, CA 

9. Spokane VA Medical Center, Spokane, WA 

10. VA Illiana Healthcare System, Danville, IL 

11. VA Health Administration Center, Denver, CO 

Of the 707 transactions, we selected 118 valued at $115,110 using statistical sampling 

and 589 valued at $1,872,842 using data mining.1 

Statistical Sampling. The 118 statistically sampled transactions were selected from a 

population of 79,063 purchase card transactions totaling about $51.5 million that were 

made during the 1-year period July 2006–June 2007 by the first three facilities listed 

above. These transactions were selected using the Department of Health and Human 

Services OIG’s RAT-STATS computer software with a confidence level of 90 percent, a 

desired precision rate of ±10 percent, and an expected error rate of 10 percent. (RATSTATS is a statistical software package that assists auditors in selecting random 

samples.) 

1

Data mining applies a search process to a data set, analyzing for trends, relationships, and interesting associations. 

For instance, data mining can be used to query transaction data for characteristics that may indicate potentially 

improper activity. 

VA Office of Inspector General 4 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

Data Mining. The other 589 transactions were selected using data mining and included 

transactions from all 11 medical facilities during the 15-month period of July 2006– 

September 2007. We analyzed purchase card data and selected questionable transactions 

that were more likely to be improper or fraudulent. The selected transactions had one or 

more of the following characteristics: 

• Made with Questionable Merchants - Merchant names that included words, such as 

casino, entertainment, or liquor, which indicated they were more likely to offer goods 

or services that were personal in nature or of a questionable government need 

• Duplicate - Two or more transactions with the same date, dollar amount, and vendor 

• Possible Split Purchases - Multiple transactions to the same vendor within 1 or 2 days 

just below the $3,000 micro-purchase limit ($2,500 before September 28, 2006) 

• Made on Holidays and Weekends - Transactions made on non-business days 

• Made with Cancelled Purchase Cards - Transactions processed after Citibank 

reported card cancellation dates 

• High Dollar - Transactions with unusually high dollar amounts 

• Made by Cardholders with Situational Pressures - Transactions made by cardholders 

who received a less than fully satisfactory performance rating, were reprimanded, 

filed a grievance, were placed on a performance improvement plan, or used less than 

40 hours of leave within a year. 

During the 9-month period October 2007–June 2008, we reviewed the 118 statistically 

sampled transactions and the 589 data mined transactions by performing the following 

audit work. For the first five facilities listed on page 4, the audit was performed onsite. 

At these facilities, we interviewed coordinators; approving officials; cardholders; and 

dispute and billing officers. We also reviewed VISN and medical facility purchase card 

policies, procedures, and documentation supporting purchases, such as purchase orders, 

invoices, and receiving reports. For the other six facilities, we obtained and reviewed 

cardholder documentation supporting purchases. 

To accomplish the audit objective, we used Citibank computer-generated purchase card 

data. To assess the reliability of this data, we compared relevant data with hardcopy 

purchase documentation, such as invoices and receipts. The data was sufficiently reliable 

for the audit objective. 

We conducted this performance audit in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the audit to obtain 

sufficient and appropriate evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on our audit objective. 

VA Office of Inspector General 5 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

Results and Conclusions 

VHA purchase card controls were generally effective at preventing or detecting 

questionable, improper, and potentially fraudulent medical facility purchases. All 707 

transactions reviewed were purchases of goods or services for valid medical facility 

needs. In addition, for the purchases where cardholder documentation was sufficient to 

assess price reasonableness, we determined that purchases were reasonably priced. For 

126 of the 707 transactions reviewed, we were unable to assess purchase price 

reasonableness because cardholder documentation was inadequate. VHA needed to 

ensure cardholders maintain documentation supporting purchases and medical facilities 

monitor compliance with policies addressing OIG reported deficiencies. 

The audit evaluated the effectiveness of controls for the 2-year period July 2006–June 

2008 and included a review of 707 purchase card transactions valued at $1,987,952 made 

by 11 medical facilities during the 15-month period July 2006–September 2007. Of the 

707 transactions, we selected 118 valued at $115,110 using statistical sampling to test 

controls and 589 valued at $1,872,842 using data mining to identify questionable 

transactions. The 707 transactions were not representative of VHA transactions 

nationally. 

The two categories of medical, pharmacy, prosthetics and optical supplies and 

miscellaneous (such as credentialing, medical publication, and training vendors) included 

transactions that were less likely to be inappropriate because the vendors typically sell 

goods or services needed by medical facilities. These two categories represented 442 

(62.5 percent) of the 707 transactions and $1,196,660 (60.2 percent) of the $1,987,952 

value of transactions. 

The other three categories included transactions that initially appeared questionable 

because the vendors typically sell goods or services used for non-VHA purposes. These 

categories were casinos, gas stations, grocery stores, hotels, liquor stores, party stores, 

and restaurants; clothing, furniture, massage therapy, and office supply stores; and 

electronic stores and telecommunication companies. These three categories represented 

265 (37.5 percent) of the 707 transactions and $791,292 (39.8 percent) of the total 

$1,987,952. 

Charts 1 and 2 show the distribution of the 707 transactions and the $1,987,952 value of 

the transactions among five vendor categories. The slices of each pie show the number 

and value of transactions for each of the five categories. 

VA Office of Inspector General 6 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

Chart 1. Chart 2. 

Transactions By 5 Vendor Categories Value of Transactions By 5 Vendor Categories 

 (707 Total) ($1,987,952 Total Value) 

64 $39,379 $30,913 

(9.0%) 

378 

(53.5%) 

106 

(15.0%) 

88 

(12.5%) 

71 

(10.0%) $1,165,747 

(58.6%) 

(2.0%) (1.6%) 

$436,942 

(22.0%) 

$314,971 

(15.8%) 

Medical, Pharmacy, Prosthetic, and Optical Supplies Casinos, Gas, Grocery, Hotel, Liquor, Party, and Restaurant 

Electronic and Telecommunications Clothing, Furniture, Massage Therapy, and Office Supplies 

Miscellaneous 

Although transactions with vendors in three of the five categories initially appeared 

questionable, the audit concluded that the transactions were for valid medical facility 

needs. For example, the photograph below shows one vendor where a medical facility 

made several purchases. 

Our initial review of purchase card data determined that transactions with this vendor 

were considered questionable because the vendor name was Discount Gas and Liquor. 

However, when we reviewed medical facility documentation for the transactions, we 

determined the purchases were for a valid medical facility need. The medical facility 

purchased gas from this vendor for shuttles that transported patients. Because the vendor 

was conveniently located only three blocks from the medical facility, frequent 

transactions with this vendor were reasonable. 

The following purchases are additional examples of transactions from these three 

categories that initially appeared questionable but were for valid medical facility needs: 

VA Office of Inspector General 7 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

• Casinos - Lodging at a casino/hotel for veterans traveling significant distances for 

outpatient care at the VA Southern Nevada Healthcare System, Las Vegas, NV 

• Grocery Stores - Food for a veteran outreach event and tablecloths for a luncheon for 

spinal cord therapy patients 

• Hotels - Conference space for staff training seminars and ceremonies recognizing 

medical facility volunteers and veterans 

• Liquor Stores - Purchases of wine for religious services at the medical facility chapel 

• Restaurants - Monthly luncheons for veteran patients in a nursing home care unit and 

an annual lunch for medical facility volunteers 

• Party Stores - Balloons and other party items to celebrate a veteran patient’s 100th 

birthday 

Clothing, furniture, massage, and office supply store transactions included: 

• Clothing Stores - Jeans and shirts for Engineering Service staff work uniforms 

• Furniture Stores - Chairs for patient waiting areas and tables for Radiology Service 

and the Eye Clinic 

• Massage Stores - Heat packs and pain reliever gel for patients when they receive 

physical therapy 

• Office Supply Stores - Ink and toner cartridges for Facility Management Service and 

calculators and scissors for the Primary Care Clinic 

Electronic store and telecommunication company transactions included: 

• Electronic Stores - Digital video disc (DVD) recorders for Medical Media Service and 

Human Resources, Education Department 

• Telecommunication Companies - Cable television service for patient waiting areas at 

a medical facility 

Although controls were generally effective for ensuring purchased goods and services 

were for valid medical facility needs, controls needed strengthening in two areas: 

1. Ensuring cardholders maintain documentation supporting purchases 

2. Monitoring compliance with policies addressing OIG reported deficiencies 

Issue 1: Controls Needed Strengthening To Ensure Government 

Cardholders Maintain Documentation Supporting Purchases 

VHA needed to strengthen controls for ensuring cardholders maintain documentation 

supporting the receipt of goods or services and the price reasonableness of open-market 

and contract purchases. VHA policy requires cardholders to maintain purchase 

documentation for 6 years and 3 months. Acceptable documentation includes packing 

VA Office of Inspector General 8 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

slips, receipts, and any other documents showing that goods or services were reasonably 

priced, received, and for official use. For contract purchases, documentation must also 

show that contract prices were charged and paid. In addition, approving officials must 

use VHA’s Approving Official Checklist to review the adequacy of documentation for 

each cardholder. 

Of the 707 transactions totaling $1,987,952, cardholders did not maintain adequate 

documentation for 221 (31.3 percent) transactions totaling $840,084 (42.3 percent). As 

shown in Charts 3 and 4, cardholders did not maintain documentation supporting the 

description and quantity of goods or services received for 95 transactions totaling 

$40,087 and the price reasonableness for 65 open-market transactions totaling $131,593 

and 61 transactions totaling $668,404 that medical facilities identified as contract 

transactions. 

Ade

Chart 3. 

quacy of Purchase Documentation

 (Number of Transactions) 

Chart 4.

 Adequacy of Purchase Documentation 

(Value of Transactions) 

486 

(68.7%) 

61 

(8.6%) 

95 

(13.5%) 

65 

(9.2%) 

$1,147,868 

(57.7%) 

$40,087 

(2.1%) 

$131,593 

(6.6%) 

$668,404 

(33.6%) 

Adequate Documentation Inadequate Documentation – Price Reasonableness, Open Market 

Inadequate Documentation – Receipt of Goods or Services Inadequate Documentation – Price Reasonableness, Contract 

Receipt of Goods or Services. Of the 707 transactions, 612 (486 transactions with 

adequate documentation and the 65 open market and 61 contract transactions in the two 

categories of inadequate documentation - price reasonableness) totaling $1,947,865 were 

supported by cardholder documentation showing medical facilities received the goods or 

services and were for valid VHA needs. For the remaining 95 transactions (13.4 percent) 

totaling $40,087, cardholder documentation did not adequately support the receipt of 

goods or services. For these transactions, we performed extended audit procedures of 

visiting vendor facilities, interviewing vendor representatives, obtaining vendor 

documentation, or locating the purchased items at the medical facilities. These 

procedures provided reasonable assurance that these transactions purchased goods or 

services that were also received and for valid VHA needs. 

Price Reasonableness of Purchases. Of the 707 transactions, 581 (486 transactions with 

adequate documentation and the 95 transactions in the category of inadequate 

documentation - receipt of goods or services) totaling $1,187,955 were supported by 

cardholder documentation considered sufficient to determine that the medical facilities 

paid reasonable prices for the purchases. However, for the other 126 (17.8 percent) 

transactions totaling $799,997 (40.2 percent) we were unable to assess the purchase price 

reasonableness because cardholder documentation was inadequate. These 126 

VA Office of Inspector General 9 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

transactions included 65 open market transactions totaling $131,593 and 61 transactions 

totaling $668,404 that medical facilities identified as contract transactions. 

For the 65 open market transactions, cardholders did not maintain documentation 

showing that they had obtained price quotes from multiple sources or a written 

justification for the use of other than competitive procedures. For the remaining 61 

transactions that medical facilities identified as contract transactions, cardholders did not 

maintain documentation or could not confirm that the prices charged by the vendor and 

paid by the medical facility were the correct contract prices. The documented 

descriptions for these transactions were insufficient to reasonably conclude that the 

medical facilities paid contract prices. Thus, the VHA medical facilities reviewed as part 

of this audit spent $799,997 for 126 transactions that lacked evidence to confirm price 

reasonableness. Without documentation to support price reasonableness, there is no way 

to determine if funds were expended in the most cost effective manner and represented 

the best use of funds. (See Appendix A, page 16) 

Inadequate Documentation - Receipt of Goods or Services. For 95 (13.5 percent) of 

the 707 transactions, cardholders did not maintain documentation supporting the 

description and quantity of goods or services received. VHA policy requires cardholders 

to maintain documentation including packing slips, receipts, and any other documents 

needed to show that purchased goods or services were received and were for valid 

medical facility needs. For purchases that are likely to appear questionable, such as 

restaurant meals or clothing, additional documentation showing the name of the patient or 

staff member who received the good or service is also required. Examples 1 and 2 

illustrate how cardholders needed to improve documentation showing the receipt of 

goods and services. 

Example 1 Two cardholders at one facility made 28 transactions valued at $2,238 

with a local casino/hotel for lodging of veteran patients under VHA’s Hoptel 

Program. The Hoptel Program offers temporary lodging to eligible veterans who 

travel 50 miles or at least 2 hours for outpatient appointments at VHA medical 

facilities. The 28 transactions included lodging for cancer patients receiving 

chemotherapy. For these transactions, the cardholders did not maintain 

documentation showing that the veterans had scheduled appointments or that the 

clinicians had approved the veterans’ participation in the Hoptel Program. In 

addition, the cardholder did not maintain hotel receipts confirming the veteran’s 

overnight stay at the casino/hotel. Although we obtained the appropriate 

documentation from clinicians and the casino/hotel, the cardholders and approving 

official had not confirmed that the veterans received the purchased service. 

Example 2 Three cardholders at one facility did not maintain supporting 

documentation for four prosthetic transactions valued at $11,776 to be delivered 

directly to veterans. Three of the purchases were vacuum-assisted closure devices 

and the fourth purchase was a scooter seat. Although the cardholders purchased 

the wound vacs at the contract price and the scooter seat for a reasonable price on 

VA Office of Inspector General 10 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

the open market, the cardholders did not have invoices or receiving reports 

confirming that veterans received the goods. All three cardholders stated that they 

had contacted the veterans to confirm they had received the goods. However, the 

cardholders did not document their contacts with the veterans. We contacted the 

veterans and confirmed that they had received the purchased goods. 

Inadequate Documentation - Price Reasonableness, Open Market. For 65 (9.2 

percent) of the 707 transactions, cardholders did not maintain adequate documentation 

supporting open-market price reasonableness. VHA policy states that cardholders must 

maintain documentation that establishes that purchased goods or services appear to be 

reasonably priced. In addition, FAR requires cardholders who make purchases above the 

micro-purchase threshold ($2,500 before and $3,000 on or after September 28, 2006) to 

promote competition to the maximum extent practicable when making such purchases. 

For these purchases, cardholders must consider solicitations from at least three sources 

and document the use of competition or provide a written justification for the use of other 

than competitive procedures. 

Of the 65 open-market transactions with inadequate price reasonableness documentation, 

53 with a total value of $21,132 were below the micro-purchase threshold and 12 with a 

total value of $110,460 were above the micro-purchase threshold. Examples 3 and 4 

illustrate how cardholders needed to improve the documentation of open market price 

reasonableness for purchases above and below the micro-purchase threshold. 

Example 3 A cardholder purchased an intercom system for the medical facility’s 

operating rooms and nursing stations on the open market for a cost of $9,848, 

which was above the micro-purchase threshold. The cardholder had not 

documented any efforts to determine if the $9,848 price was reasonable. In 

addition, the cardholder’s approving official had not reviewed the intercom 

purchase using the Approving Official Checklist. If the approving official had 

consistently used a revised checklist that included specific questions about 

soliciting quotes from at least three sources, the cardholder might have identified a 

source offering a lower price and saved funds that the medical facility could have 

used for other purposes. 

Example 4 A cardholder purchased rental space at a local hotel for a volunteer 

award ceremony for a cost of $2,468, which was below the micro-purchase 

threshold. VAAR requires that before cardholders purchase rental space, they 

must exhaust all efforts to secure rent-free facilities and document these efforts. If 

cardholders cannot obtain rent-free facilities, they must maintain documentation 

that establishes price reasonableness. The cardholder had not performed or 

documented any efforts to obtain free rental space. The cardholder did not comply 

with the VAAR requirement because the Approving Official Checklist did not 

include a specific question about documenting the price reasonableness of open 

market purchases. 

VA Office of Inspector General 11 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

Inadequate Documentation - Price Reasonableness, Contract. For 61 (8.6 percent) of 

the 707 transactions, cardholders did not maintain documentation supporting the payment 

of contract prices. As previously discussed, VHA policy requires cardholders to maintain 

documentation that shows prices are reasonable. In addition, FAR requires contracting 

officers to ensure prices are fair and reasonable when establishing contracts to procure 

goods and services. While the cardholder is not responsible for ensuring the 

reasonableness of contract prices, the cardholder is responsible for ensuring the vendor 

charges and the medical facility pays prices that are consistent with contract terms and 

conditions. Example 5 illustrates how cardholders needed to improve documentation to 

show that contract prices are paid. 

Example 5 A cardholder purchased 640 patient breathing system components for 

11 different unit prices for a total cost of $65,105 from an appropriate contract 

source. The purchase order documented the contract number and the receiving 

report documented that the medical facility received the 640 components in five 

separate shipments. However, the cardholder did not maintain or could not 

provide the contract price list needed to confirm that each of the prices charged by 

the vendor and paid by the medical facility were the contract prices for the correct 

component. In addition, the approving official authorized payment of the 

completed order without confirming that contract prices were paid and without 

reviewing the purchase using the Approving Official Checklist. 

Causes of Inadequate Documentation. Three issues caused inadequate cardholder 

documentation. First, VHA’s Approving Official Checklist did not specifically require 

reviews of cardholder documentation of the receipt of goods and services, open market 

price reasonableness, and payment of contract prices. Second, approving officials did not 

consistently use the checklist. Third, VHA did not adequately monitor compliance with 

policies addressing deficiencies we previously reported. (See Issue 2 for a discussion of 

the third cause.) 

The first two causes related to the Approving Official Checklist. The first cause was that 

the checklist did not include questions related to specific cardholder transaction 

documentation requirements. The checklist had two questions related to cardholder 

documentation. 

• Have you reviewed the applicable documentation for this transaction? 

• Have you reviewed all your cardholders in the last year to verify that they maintain 

proper documentation for purchases? 

These questions were not sufficiently specific to ensure cardholders documented the 

receipt of goods and services, open market price reasonableness, and payment of contract 

prices. 

VA Office of Inspector General 12 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

The second cause was that approving officials were not consistently using the checklist to 

review the adequacy of cardholder documentation. Of 71 approving officials 

interviewed, 32 (45 percent) were not consistently using the checklist. This occurred 

because medical facilities did not have a monitoring mechanism for financial managers 

and coordinators to review approving officials use of the checklist. 

If approving officials consistently and properly used the checklist to ensure compliance 

with documentation requirements, cardholders would maintain documentation supporting 

purchases. To strengthen controls, Coordinators needed to monitor approving officials’ 

use of the checklist. Inadequate documentation caused the key control of approving 

official reviews to be ineffective. This ineffective control increased the risk of 

questionable, improper, and potentially fraudulent transactions. 

Issue 2: Medical Facilities Needed to Monitor Compliance with 

Policies Addressing OIG Reported Deficiencies 

Our 2004 report Evaluation of the Department of Veterans Affairs Government Purchase 

Card Program (Report No. 02-01481-135, April 26, 2004) identified two Government 

Purchase Card Program control weaknesses that were also identified as control 

weaknesses during this audit. These control weaknesses were that cardholders did not 

maintain documentation supporting purchases as discussed above, and approving officials 

did not receive and document required training as discussed below. 

To address these control weaknesses, our 2004 report recommended approving officials 

use checklists to ensure cardholders’ maintain documentation supporting purchases and 

facility managers conduct quarterly reviews to provide greater assurance that 

coordinators properly train approving officials. In response to the recommendation on 

maintaining documentation supporting purchases, VHA issued “Purchase Card 

Approving Official Desk Reference” in April 2005. In addition, in June 2005, VHA 

issued a revised VHA Handbook 1730.1 “Use and Management of the Government 

Purchase Card Program.” 

The desk reference includes a checklist for use by approving officials to review the 

adequacy of documentation for each cardholder. In addition, VHA policy requires 

approving officials to use the checklist annually to confirm that cardholders maintain 

proper documentation for all purchases. However, because approving officials did not 

always use the checklist, cardholders did not maintain documentation supporting all 

purchases. 

The revised handbook requires approving officials to complete a “Purchase Card 

Certification Form” after they receive initial training and refresher training once every 2 

years. The handbook also requires coordinators, finance officers, and logistics officers to 

document their review of approving official initial and refresher training by completing a 

“Quarterly Purchase Card Program Certification Report.” In addition, the handbook 

requires facility directors to perform annual reviews of their government purchase card 

VA Office of Inspector General 13 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

programs to ensure all participants comply with VHA purchase card policies, including 

training requirements. 

Despite the requirements discussed above, 40 (56.3 percent) of 71 approving officials 

interviewed had not received adequate training. Of these 40 approving officials, 33 had 

not received refresher training once every 2 years, 5 had not received initial training, and 

2 had not received either type of training. The 33 approving officials had not received 

refresher training for periods ranging from 2 to 6 years. 

The inadequate transaction documentation and approving official training occurred 

because medical facilities were not monitoring compliance with policies revised to 

address our previously reported deficiencies. To strengthen controls for addressing these 

deficiencies, medical facility directors needed to monitor coordinators, financial 

managers, logistics officers, and approving officials’ compliance with the revised 

policies. 

Conclusion 

Generally, controls over VHA’s government purchase card practices effectively 

prevented questionable, improper, and potentially fraudulent purchase card transactions. 

In addition, of 707 audited purchase card transactions made by 11 medical facilities, 581 

(82.6 percent) totaling $1,187,955 were considered to be reasonably priced. For the other 

126 (17.4 percent) transactions totaling $799,997, cardholders did not maintain the 

documentation needed to confirm price reasonableness or ensure the most efficient use of 

funds. Controls needed improvement to ensure cardholders maintain adequate 

documentation of the receipt of goods and services and price reasonableness. In addition, 

controls needed strengthening to ensure medical facility compliance with policies 

addressing OIG reported deficiencies. VHA implementation of the following 

recommendations will address these control deficiencies at all medical facilities. They 

will also help ensure medical facilities appropriately use funds to serve the health care 

needs of veterans. 

Recommendations 

1. We recommended the Under Secretary for Health revise the Approving Official 

Checklist to include specific questions regarding the adequacy of cardholder 

documentation of the receipt of goods and services, price reasonableness of open 

market purchases, and payment of contract prices. 

2. We recommended the Under Secretary for Health provide approving officials 

refresher training on using the revised Approving Official Checklist to ensure 

cardholders maintain adequate documentation supporting purchases. 

3. We recommended the Under Secretary for Health develop a monitoring mechanism 

for financial managers and coordinators to ensure approving officials consistently use 

the Approving Official Checklist. 

VA Office of Inspector General 14 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

4. We recommended the Under Secretary for Health develop a mechanism for medical 

facility directors to monitor review of approving official’s training by coordinators 

and completion of “Purchase Card Certification Reports” by coordinators, financial 

managers, and logistics officers. 

Under Secretary for Health Comments 

The Under Secretary for Health concurred with the audit findings, recommendations and 

estimated monetary benefit. The Under Secretary reported that VHA’s Prosthetics and 

Clinical Logistics Office Purchase Card Workgroup will develop a revised Approving 

Official Checklist with specific questions regarding the documentation of the receipt of 

goods and services. The workgroup will also develop a learning module, to be used 

when providing approving officials refresher training, which includes training on using 

the revised Approving Official Checklist. 

The Under Secretary also stated that the Prosthetics and Clinical Logistics Office will 

monitor approving official use of the checklist by requiring monthly reporting from 

facilities to ensure approving officials are consistently using the checklist. In addition, 

the Prosthetics and Clinical Logistics Office is revising VHA Handbook 1730.1, Use and 

Management of the Government Purchase Card Program to specify procedures to ensure 

facility Directors perform annual reviews of the Purchase Card Program. The Prosthetics 

and Clinical Logistics Office Purchase Card Manager will monitor facility directors’ 

review of the Purchase Card Program by producing an annual status report of each 

Veterans Integrated Service Network for leadership review. The target for completing 

these actions is October 30, 2008. (See Appendix B for the full text of the Under 

Secretary’s comments.) 

OIG Response 

We consider the planned actions acceptable and will follow up on their implementation. 

VA Office of Inspector General 15 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

Appendix A 

Monetary Benefits in Accordance with 

IG Act Amendments 

Recommendations Explanation of Benefit(s) Better Use of Funds 

1–3 Improve cardholder documentation $799,997 

in support of purchase card 

transactions by revising the 

Approving Official Checklist to 

include specific questions regarding 

the adequacy of cardholder 

documentation, providing approving 

officials refresher training on using 

the revised checklist, and 

developing a monitoring mechanism 

to ensure approving officials 

consistently use the checklist. 

VA Office of Inspector General 16 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

Appendix B 

Under Secretary for Health Comments 

VA Office of Inspector General 17 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

Appendix B 

Under Secretary for Health Comments 

to Office of Inspector General’s Report 

The following Under Secretary for Health comments are submitted 

in response to the recommendations in the Office of Inspector 

General’s Report: 

Recommendation 1: We recommend the Under Secretary for 

Health revise the Approving Official Checklist to include specific 

questions regarding the adequacy of cardholder documentation of 

the receipt of goods and services, price reasonableness of open 

market purchases, and payment of contract prices. 

Response: Concur. The VHA Prosthetics and Clinical Logistics 

Office Purchase Card Workgroup will develop an Approval 

Official Checklist with specific questions regarding the 

documentation of the receipt of goods and services. Instructions on 

how to complete the Checklist will be included in the Standard 

Operating Procedure (SOP) for the official use of the purchase 

card. This SOP will require each approving official to complete 

the Checklist. 

Target Completion Date: October 30, 2008 

Recommendation 2: We recommend the Under Secretary for 

Health provide approving officials refresher training on using the 

revised Approving Official Checklist to ensure cardholders 

maintain adequate documentation supporting purchases. 

Response: Concur. The revision of VHA Handbook 1730.1, Use 

and Management of the Government Purchase Card Program, 

paragraph 15, Responsibilities of the Approving Official, addresses 

this issue by specifying the procedures to ensure that each 

approving official and their alternate receive refresher training on 

purchase cards every 2 years. The Prosthetics and Clinical 

Logistics Office Purchase Card Workgroup will develop a learning 

module that includes training on using the revised Approving 

Official Checklist to ensure cardholders maintain adequate 

documentation supporting purchases. 

Target Completion Date: October 30, 2008 

VA Office of Inspector General 18 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

Appendix B 

Under Secretary for Health Comments 

to Office of Inspector General’s Report, continued 

Recommendation 3: We recommend the Under Secretary for 

Health develop a monitoring mechanism for financial managers 

and coordinators to ensure approving officials consistently use the 

Approving Official Checklist. 

Response: Concur. The Prosthetics and Clinical Logistics Office 

Purchase Card Workgroup will create a Standard Operating 

Procedure (SOP) for the official use of purchase cards. This SOP 

will include an Approving Official Checklist, referencing detailed 

questions about the documentation of the receipt of goods and 

services. The Prosthetics and Clinical Logistics Office will require 

monthly reporting from facilities to ensure approving officials are 

consistently using the Checklist. 

Target Completion Date: October 30, 2008 

Recommendation 4: We recommend the Under Secretary for 

Health develop a mechanism for medical facility directors to 

monitor review of approving official’s training by coordinators and 

completion of “Purchase Card Certification Reports” by 

coordinators, financial managers, and logistics officers. 

Response: Concur. The revision of VHA Handbook 1730.1, 

Use and Management of the Government Purchase Card 

Program, paragraph 7, Responsibilities of the Facility Director, 

addresses this issue by specifying the procedures to ensure 

facility Directors perform annual reviews of the Purchase Card 

Program. This review will be performed by a team of 

knowledgeable individuals, including the Prosthetics and 

Clinical Logistics Office Purchase Card Manager, who will 

produce an annual status report of each Veterans Integrated 

Service Network for leadership review. 

Target Completion Date: October 30, 2008 

Estimate of Monetary Benefit: Improve cardholder 

documentation in support of purchase card transactions by 

revising the Approving Official Checklist to include specific 

questions regarding the adequacy of cardholder documentation, 

VA Office of Inspector General 19 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

Appendix B 

Under Secretary for Health Comments 

to Office of Inspector General’s Report, continued 

providing approving officials refresher training on using the 

revised checklist, and developing a monitoring mechanism to 

ensure approving officials consistently use the checklist. 

Better Use of Funds Amount: $799,997. 

Response: Concur. VHA Prosthetics and Clinical Logistics 

Office will provide refresher training on using the revised 

Approving Official Checklist. The refresher training is included 

in the strategic plan to implement revised VHA Handbook 

1730.1, Use and Management of the Government Purchase Card 

Program, and will address the revised checklist. 

VA Office of Inspector General 20 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

Appendix C 

OIG Contact and Staff Acknowledgments 

OIG Contact Kent Wrathall (404) 929-5921 

Acknowledgments Alvin Wiggins 

Willie Toomer 

Al Tate 

Felicia Stovall 

Leon Roberts 

George Patton 

Helen Jakimenko 

Nathaniel Holman 

Harvey Hittner 

Melissa Colyn 

Elizabeth Butler 

George Boyer 

VA Office of Inspector General 21 
Audit of Veterans Health Administration’s Government Purchase Card Practices 

Appendix D 

Report Distribution 

VA Distribution 

Office of the Secretary 

Veterans Health Administration 

Veterans Benefits Administration 

National Cemetery Administration 

Assistant Secretaries 

Office of General Counsel 

Non-VA Distribution 

House Committee on Veterans’ Affairs 

House Appropriations Subcommittee on Military Construction, Veterans Affairs, and 

Related Agencies 

House Committee on Oversight and Government Reform 

Senate Committee on Veterans’ Affairs 

Senate Appropriations Subcommittee on Military Construction, Veterans Affairs, and 

Related Agencies 

Senate Committee on Homeland Security and Governmental Affairs 

National Veterans Service Organizations 

Government Accountability Office 

Office of Management and Budget 

This report will be available in the near future on the OIG’s Web site at 

http://www.va.gov/oig/publications/reports-list.asp. This report will remain on the OIG 

Web site for at least 2 fiscal years after it is issued. 

VA Office of Inspector General 22