OFFICE OF 

INSPECTOR GENERAL

Farm Credit Administration's 

Purchase Card Program

I-17-01

Inspection Report 

Inspector

Ava Bell

Issued March 7, 2017

FARM CREDIT ADMINISTRATION
Farm Credit Administration Office of Inspector General

1501 Farm Credit Drive

McLean, Virginia 22102-5090

 

 

 

March 7, 2017 

The Honorable Dallas P. Tonsager, Board Chairman 

The Honorable Kenneth A. Spearman, Board Member

The Honorable Jeffery S. Hall, Board Member 

Farm Credit Administration

1501 Farm Credit Drive

McLean, Virginia 22102-5090

 

Dear Board Chairman Tonsager and Board Members Spearman and Hall:

The Office of Inspector General (OIG) completed an inspection of the Farm Credit Administration’s (FCA or 

Agency) Purchase Card Program. The objective of this inspection was to determine whether FCA’s oversight of the 

purchase card program was effective. 

We found FCA’s oversight of the purchase card program is generally effective. FCA established and implemented 

controls over the program. No instances of potentially fraudulent or illegal purchases were identified in our 

review. We identified some opportunities to improve the purchase card program. In response to our report, the 

Agency agreed to:

1. Follow up on previous agreed-upon actions by reminding current cardholders and approving officials of 

the importance of:

• Obtaining written prior approval from the approving official for all transactions unless there is a 

standard agency buy approval in place.

• Maintaining a purchase activity log and submitting it to the approving official for review and signature 

on a monthly basis. 

2. Review and update Office of Agency Services Directive 6 to ensure guidance is current.

The Office of Agency Services (OAS) corresponded with cardholders and approving officials by email, 

reemphasizing requirements. These requirements include: 1) obtaining written approval from the approving 

official prior to making purchases for non-standard supplies; and 2) maintaining a monthly purchase activity log 

submitted for review and signature to the approving official. OAS Directive 6, Charge Card Operating Procedures, 

was also updated. Therefore, the agreed-upon actions are resolved and considered closed. 

We appreciate the courtesies and professionalism extended by FCA personnel to the OIG staff. If you have any 

questions about this inspection, I would be pleased to meet with you at your convenience.

Respectfully,

Elizabeth M. Dean

Inspector General

Enclosure
The Farm Credit Administration (FCA or Agency) is an independent Federal agency 

responsible for regulating, examining, and supervising the Farm Credit System and the 

Federal Agricultural Mortgage Corporation. 

The objective of this inspection was to determine if FCA’s oversight of the purchase card 

program was effective. We found FCA’s oversight is generally effective:

• No instances of potentially fraudulent or illegal purchases were identified in our 

review. 

• The process for reviewing and approving purchase card transactions is generally 

followed. 

• Purchase card records are generally well organized with thorough 

documentation. 

• Cardholder limits match established Agency limits, with a few exceptions 

appropriately justified based on position (e.g., contract specialist) or volume of 

transactions required. 

• No exceptions were noted during our review of sampled cardholder training 

certifications. 

• Purchase card accounts are closed in a timely manner following a cardholder’s 

separation from the Agency. 

We identified some opportunities to further improve the purchase card program.

Purchase card procedures require cardholders to document approval from the 

approving official (AO) prior to making a purchase, and have their monthly purchase 

activity logs signed by the AO. Although most cardholders obtained prior approval for 

purchases and maintained a monthly purchase activity log with approvals, a few 

cardholders did not do so. 

Responding to the inspection recommendations, the Office of Agency Services (OAS) 

prepared and corresponded by email with cardholders and AOs. The correspondence 

reemphasized requirements previously identified, including: 1) obtaining written 

approval from the AO prior to making purchases for non-standard supplies; and 2) 

maintaining a monthly purchase activity log submitted to the AO for review and 

signature. OAS Directive 6, Charge Card Operating Procedures, was also updated, 

including the current single purchase amount limit. Therefore, the agreed-upon actions 

are resolved and considered closed.

AGREED-UPON ACTIONS: 

 

In order to improve the 

purchase card program, the 

Agency agreed to: 

1. Follow up on previous 

agreed-upon actions by 

reminding current 

cardholders and 

approving officials of the 

importance of:

a. Obtaining written 

prior approval from 

the approving official

for all transactions 

unless there is a 

standard agency buy 

approval in place.

b. Maintaining a 

purchase activity log 

and submitting it to 

the approving official 

for review and 

signature on a 

monthly basis.

2. Review and update Office 

of Agency Services

Directive 6 to ensure 

guidance is current.
TABLE OF CONTENTS

BACKGROUND_______________________________________________________ 1

Prior Reviews_____________________________________________________________________ 1 

INSPECTION RESULTS ________________________________________________ 2

Purchase Card Administration_______________________________________________________ 2 

Purchase Card Controls_____________________________________________________________ 3 

Agreed-Upon Actions ______________________________________________________________ 5 

OBJECTIVE, SCOPE, AND METHODOLOGY _______________________________ 6

ACRONYMS _________________________________________________________ 7
1 

BACKGROUND 

The Farm Credit Administration (FCA or Agency) is an independent Federal agency responsible for 

regulating, examining, and supervising the Farm Credit System and the Federal Agricultural Mortgage 

Corporation. The mission of the Agency is to ensure a safe, sound, and dependable source of credit and 

related services for agriculture and rural America. 

FCA participates in the General Services 

Administration’s SmartPay Program to make official 

purchases related to the Agency’s mission. FCA 

provides purchase cards to employees with a 

certified need to make purchases for their office. The 

Agency contracts with the Bureau of the Fiscal 

Service (BFS) for purchase card program 

administration and services. BFS has contracted with 

Citibank MasterCard for its card program. FCA’s 

Office of Agency Services is responsible for the 

overall administration of the purchase card program. 

FCA maintains written policies and procedures related to the administration of the purchase card 

program in accordance with the requirements of Office of Management and Budget (OMB) Circular A123, Appendix B, Improving the Management of Government Charge Card Programs. The requirements 

include an annual submission of the Agency’s Charge Card Management Plan that outlines FCA’s system 

of internal controls over the charge card programs. 

Additionally, the Government Charge Card Abuse Prevention Act of 2012 (Charge Card Act) 

supplemented OMB Circular A-123, Appendix B with reporting and audit requirements and 

augmentation of existing controls. The Charge Card Act and OMB Memorandum M-13-21, 

Implementation of the Government Charge Card Abuse Prevention Act of 2012, also mandated each 

Inspector General perform assessments of charge card programs.

1 The Office of Inspector General (OIG) 

completes an annual risk assessment and initiated this inspection as part of our ongoing efforts in this 

area.

Prior Reviews

The OIG has conducted several reviews of the purchase card program, including: 

• The OIG performed an inspection, Distribution, Usage and Control of Purchase and Travel Cards 

at the Farm Credit Administration (I-09-01), June 2009. The objective was to determine the 

effectiveness and efficiency of the implementation of government purchase and travel cards at 

FCA. For purchase cards, the inspection found FCA had adequate controls over the program and 

there were no notable delinquencies or misuses. The Agency agreed to update the purchase 

card policy and procedures to: include a link to the FCA Credit Card Management Plan (updated 

 

1 FCA does not meet the threshold for a required travel audit set forth in the Charge Card Act. The Charge Card Act did not 

establish a threshold for purchase card programs. Inspectors General must perform an annual assessment of purchase cards. As 

part of our ongoing efforts, the OIG performs an annual assessment of all charge card programs.
2 

and submitted to OMB annually); consolidate existing guidance on purchase cards; and include a 

section on inappropriate actions and/or charges.

All agreed-upon actions were addressed and closed by September 2009.

• In 2014, the OIG conducted an audit, Farm Credit Administration’s Purchase Card Program (A14-02), Sept. 2014. The objective of this audit was to determine whether FCA’s oversight of the 

purchase card program was effective. The Agency agreed to:

1. Provide education to cardholders and Approving Officials on the light refreshments 

policy and the preapproval, purchase activity log, convenience check, and 

documentation requirements. 

2. Distribute a template of an acceptable standard agency buy form to cardholders. 

3. Document justifications for cardholders with higher limits. 

4. Document exceptions to current processes and ensure purchase cardholders and 

Approving Officials understand the need for documenting approvals when departing 

from policies and procedures. 

All agreed-upon actions were addressed and closed in September 2014.

INSPECTION RESULTS

The inspection objective was to determine whether FCA’s oversight of the purchase card program is 

effective. During our review, we found FCA’s oversight of the program is effective. 

FCA has established and implemented controls over the purchase card program, limiting risk for the 

Agency. Specifically, FCA has a documented process for reviewing purchase card transactions. The 

process requires the Approving Official (AO) to review all transactions at the cardholder level. A staff 

member of the Operations Division reviews all purchase card transactions each month. The Bureau of 

the Fiscal Service (BFS) performs an annual audit of cardholder transactions. 

Purchase Card Administration 

The Agency Organization Program Coordinator is responsible for initiating and maintaining cardholder 

accounts, overseeing internal reviews of cardholder accounts, and canceling the accounts of separated 

employees. We reviewed FCA’s listing of 22 active purchase cardholders and identified three employees 

who had separated from the Agency on the list, as well as one current cardholder who was not on the 

list. BFS records showed the accounts had been closed in a timely manner (two accounts closed within 

one week of separation from the Agency, and one account within three weeks of separation). However, 

the Agency’s list of current cardholders was not updated. 

Cardholder limits generally match established Agency limits, which are $3,500 for a single purchase and 

$10,000 for total monthly purchases. There are four exceptions to the established limits. We reviewed 

these exceptions and found them appropriate based on position (e.g., contract specialist) or volume of 
3 

transactions required for the cardholder’s office. All exceptions were documented in FCA records and 

justifications were appropriate based on the position of the individual.

Cardholders are required to take training when they initially receive a purchase card and every three 

years thereafter for refresher training. Cardholders must pass a test following review of the purchase 

card guidelines and training course. Cardholders certify they have read the procedures and understand 

the possible consequences of card misuse. We judgmentally sampled and reviewed the training 

certifications for employees who were issued cards after the OIG’s 2014 purchase card audit. We found 

no exceptions in the training records. 

Purchase Card Controls 

Cardholder and Approving Official (AO) responsibilities are described in: 

• OAS Directive 6, Charge Card Operating Procedures

• Operational Handbook for the Purchase Card Program

• FCA Charge Card Management Plan

• BFS purchase card procedures

All guidance is current, except the office directive has not been updated since September 2009, and 

does not have the current single purchase limit amount in its guidance (increased from $3,000 to $3,500 

in 2015). 

The guidance establishes cardholders are required to: 

• confirm funding is available for the purchase;

• obtain written approval from his/her AO prior to making a purchase; 

• document proof of the purchase and/or receipt of the goods and services; 

• maintain a monthly purchase activity log of all transactions, signed by the AO; 

• review the electronic monthly statement (e-statement) and reallocate each transaction to the 

appropriate accounting code; and 

• submit the e-statement for AO review and approval. 

The cardholder’s AO is responsible for:

• providing written prior approval for the cardholder’s purchases or designating routine items as a 

“standard agency buy”;

• reviewing the monthly purchase activity log and providing written approval;

• reviewing the transactions and accounting codes on the monthly e-statement; and

• submitting the e-statement.
4 

PURCHASING PROCESS FOR THE CARDHOLDER

Identify need Confirm funding

Obtain written 

approval prior to 

purchase

Ensure IT 

compatibility and 

508 compliance, 

if applicable

Ensure appropriate 

source with fair 

and reasonable 

pricing

Complete and 

document 

transaction

Complete entry in 

purchase activity 

log

Reconcile 

e-statement

Assign accounting 

codes 

Submit 

e-statement

Provide activity log 

and supporting 

documentation to 

AO for approval

Retain files and 

supporting 

documentation

To test purchase card controls, we reviewed purchase card activity from Fiscal Years (FY) 2015-2016, 

totaling 2,820 transactions. We reviewed the transactions for potentially improper, erroneous, and 

illegal activity, including transactions with merchants that might be at higher risk for card misuse, such 

as online retailers, bulk purchase warehouses, grocery stores, and restaurants. We judgmentally 

sampled 354 transactions for further review of supporting documentation. After reviewing merchant 

category codes, descriptions, names, amounts, dates, and supporting documentation, we identified no 

instances of potentially fraudulent or illegal purchases.

We requested documentation for the sampled transactions to review:

• written prior approval; 

• proof of purchase or receipt of the goods or services; and

• monthly purchase activity log, with AO signature. 

Purchase card records are required to be maintained for six years and three months following the 

month of the transaction. Most purchase cardholders maintained well organized and thorough 

documentation. However, we found some cardholders had not always followed the process. Exceptions 

generally fell into one of two categories:

1. Approval prior to the date of the transaction

Twelve cardholders were missing documentation of written prior approval for 43 transactions. 

Four cardholders had prior approval from a senior staff member who is not their AO for 21 

transactions. Eleven of these transactions were instances of the cardholder ordering for another 

office that did not have a current purchase cardholder. Purchase card procedures state that only 

the AO may approve transactions for the cardholder. Additionally, a cardholder may have an 

alternate AO approve transactions.
5 

2. Approval signature on the monthly purchase activity log

Six cardholders did not consistently submit their monthly purchase activity logs to their AO for 

review and signature. Agency procedures require cardholders to have their monthly purchase 

activity logs reviewed and signed by the AO.

In response to our last purchase card audit in 2014, the Agency issued an email to cardholders and AOs 

on pre-approval, purchase activity log, and documentation requirements, noting some cardholders had 

not consistently followed established policies and procedures. The 2015 BFS audit results and the 2016 

Internal Control Review for purchase cards both showed some cardholders persist in not following the 

purchase card policies and procedures for required approvals and documentation. 

Agreed-Upon Actions

In order to improve the purchase card program, the Agency agreed to: 

1. Follow up on previous agreed-upon actions by reminding current cardholders and approving 

officials of the importance of:

• Obtaining written prior approval from the approving official for all transactions unless there 

is a standard agency buy approval in place.

• Maintaining a purchase activity log and submitting it to the approving official for review and 

signature on a monthly basis. 

2. Review and update Office of Agency Services Directive 6 to ensure guidance is current. 

Responding to the inspection recommendations, OAS prepared and corresponded by email with 

cardholders and approving officials. The correspondence reemphasized requirements previously 

identified, including: 1) obtaining written approval from the approving official prior to making purchases 

for non-standard supplies; and 2) maintaining a monthly purchase activity log submitted for review and 

signature to the approving official. OAS Directive 6, Charge Card Operating Procedures, was also 

updated, including the current single purchase amount limit. Therefore, the agreed-upon actions are 

resolved and considered closed.
6 

OBJECTIVE, SCOPE, AND METHODOLOGY

The inspection objective was to determine whether FCA’s oversight of the purchase card program is 

effective. We conducted the inspection at FCA’s Headquarters in McLean, Virginia from October 2016 

through February 2017. We limited our scope to Fiscal Years 2015 and 2016.

We took the following steps to accomplish the objective:

• Identified and reviewed applicable Federal laws, regulations, and guidance related to the 

inspection objective.

• Considered results from prior reviews related to the inspection objective. 

• Conducted interviews with personnel from the Office of Agency Services. 

• Identified and reviewed applicable internal FCA policies and procedures. 

• Requested and reviewed FCA’s listing of all active purchase card accounts and purchase limits 

for each account as of October 2016. Compared listing to current employees to determine if 

separated employees were removed. 

• Determined if purchase limits were within established guidelines and appropriate.

• Judgmentally sampled training records of new cardholders to ensure training certificates were 

completed. 

• Requested and reviewed transaction activity on each purchase card account for Fiscal Years 

2015 and 2016 for potentially improper, illegal, or erroneous charges. Judgmentally sampled

charges for further review based on merchant category codes and names, descriptions, 

amounts, and dates of transactions. Verified documentation maintained by the cardholders. 

Because our sample was judgmental, it cannot be projected to the entire population.

This inspection was performed in accordance with the Council of the Inspectors General on Integrity and 

Efficiency’s Quality Standards for Inspection and Evaluation. Those standards require that we plan and 

perform the inspection to obtain sufficient, competent and relevant evidence that supports a 

reasonable basis for our findings, conclusions and recommendations. We assessed internal controls, 

laws and regulations to the extent necessary to satisfy the objective. Because our review was limited, it 

would not necessarily have disclosed all internal control deficiencies that may have existed at the time 

of our inspection. We assessed the information and data collected during the inspection and determined 

it was sufficiently reliable and valid for use in meeting the inspection objective. We assessed the risk of 

fraud related to our inspection objective in the course of evaluating evidence. Overall, we believe the 

evidence obtained is sufficient to provide a reasonable basis for our findings and conclusions based on 

the inspection objective. 
7 

ACRONYMS

AO Approving Official

BFS Bureau of the Fiscal Service

FCA Farm Credit Administration

FY Fiscal Year

OAS Office of Agency Services

OIG Office of Inspector General

OMB Office of Management and Budget
REPORT

Fraud | Waste | Abuse | Mismanagement

FARM CREDIT ADMINISTRATION

OFFICE OF INSPECTOR GENERAL

Phone: Toll Free (800) 437-7322; (703) 883-4316

Fax: (703) 883-4059

E-mail: fca-ig-hotline@rcn.com

Mail: Farm Credit Administration

Office of Inspector General

1501 Farm Credit Drive

McLean, VA 22102